Exhibit 10.30

 

 

REVOLVING CREDIT AND SECURITY AGREEMENT

 

THIS REVOLVING CREDIT AND SECURITY AGREEMENT (the “Agreement”) dated as of
February 5, 2004, is entered into by and among BOSTON BIOMEDICA, INC., a
Massachusetts corporation (“Biomedica”), BBI BIOTECH RESEARCH LABORATORIES, INC.
a Massachusetts corporation (“Biotech”), BBI SOURCE SCIENTIFIC, INC. a
Massachusetts corporation (“Source”), and BBI BIOSEQ, INC. a Massachusetts
corporation (“Bioseq”; individually and collectively, the “Borrower”), and
CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (the “Lender”).

 

WHEREAS, Borrower has requested that Lender make available to Borrower a
revolving credit facility (the “Revolving Facility”) in a maximum principal
amount at any time outstanding of up to Two Million Five Hundred Thousand
Dollars ($2,500,000) (the “Facility Cap”), the proceeds of which shall be used
by Borrower to finance leasehold improvements at its Frederick and Gaithersburg,
Maryland facilities, lab improvements for its West Bridgewater, Massachusetts
location and for its working capital needs; and

 

WHEREAS, Lender is willing to make the Revolving Facility available to Borrower
upon the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which hereby are
acknowledged, Borrower and Lender hereby agree as follows:

 

I.             DEFINITIONS

 

1.1          GENERAL TERMS

 

For purposes of this Agreement, in addition to the definitions above and
elsewhere in this Agreement, the terms listed in Appendix A hereto shall have
the meanings given such terms in Appendix A, which is incorporated herein and
made a part hereof.  All capitalized terms used which are not specifically
defined shall have meanings provided in Article 9 of the UCC in effect on the
date hereof to the extent the same are used or defined therein.  Unless
otherwise specified herein or in Appendix A, any agreement or contract referred
to herein or in Appendix A shall mean such agreement as modified, amended or
supplemented from time to time.  Unless otherwise specified, as used in the Loan
Documents or in any certificate, report, instrument or other document made or
delivered pursuant to any of the Loan Documents, all accounting terms not
defined in Appendix A or elsewhere in this Agreement shall have the meanings
given to such terms in and shall be interpreted in accordance with GAAP.

 

II.            ADVANCES, PAYMENT AND INTEREST

 

2.1          THE REVOLVING FACILITY

 

(a)           Subject to the provisions of this Agreement, Lender shall make
Advances to Borrower under the Revolving Facility from time to time during the
Term, provided that, notwithstanding any other provision of this Agreement, the
aggregate amount of all Advances at any one time outstanding under the Revolving
Facility shall not exceed either of (a)

 

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the Facility Cap, and (b) the Availability.  The Revolving Facility is a
revolving credit facility, which may be drawn, repaid and redrawn, from time to
time as permitted under this Agreement.  Any determination as to whether there
is Availability for Advances shall be made by Lender in its Permitted Discretion
and is final and binding upon Borrower.  Unless otherwise permitted by Lender,
each Advance shall be in an amount of at least $1,000.  Subject to the
provisions of this Agreement, Borrower may request Advances under the Revolving
Facility up to and including the value, in U.S. Dollars, of Eighty-Five percent
(85%) of the Borrowing Base minus, if applicable, amounts reserved pursuant to
this Agreement (such calculated amount being referred to herein as the
“Availability”).  Advances under the Revolving Facility automatically shall be
made for the payment of interest on the Note and other Obligations on the date
when due to the extent available and as provided for herein.

 

(b)           Lender has established the above-referenced advance rate for
Availability and, in its sole credit judgment, may further adjust the
Availability and such advance rate by applying percentages (known as “liquidity
factors”) to Eligible Receivables by payor class based upon Borrower’s actual
recent collection history for each such payor class (i.e., commercial contracts,
government agency, etc.) in a manner consistent with Lender’s underwriting
practices and procedures, including without limitation Lender’s review and
analysis of, among other things, Borrower’s historical returns, rebates,
discounts, credits and allowances (collectively, the “Dilution Items”).  Such
liquidity factors and the advance rate for Availability may be adjusted by
Lender throughout the Term as warranted by Lender’s underwriting practices and
procedures in its sole credit judgment.  Also, Lender shall have the right to
establish from time to time, in its sole credit judgment, reserves against the
Borrowing Base, which reserves shall have the effect of reducing the amounts
otherwise eligible to be disbursed to Borrower under the Revolving Facility
pursuant to this Agreement.  As of the Closing Date, Lender’s review has
determined the liquidity factors to be the following:  Biomedica - 95%, Biotech
- 100%, and Source - 96%.

 

2.2          THE NOTE; MATURITY

 

(a) All Advances under the Revolving Facility shall be evidenced by the Note,
payable to the order of Lender, duly executed and delivered by Borrower and
dated the Closing Date, evidencing the aggregate indebtedness of Borrower to
Lender resulting from Advances under the Revolving Facility, from time to time. 
Lender hereby is authorized, but is not obligated, to enter the amount of each
Advance under the Revolving Facility and the amount of each payment or
prepayment of principal or interest thereon in the appropriate spaces on the
reverse of or on an attachment to the Note.  Lender will account to Borrower
monthly with a statement of Advances under the Revolving Facility and charges
and payments made pursuant to this Agreement, and in the absence of manifest
error, such accounting rendered by Lender shall be deemed final, binding and
conclusive unless Lender is notified by Borrower in writing to the contrary
within 15 calendar days of Receipt of each accounting, which notice shall be
deemed an objection only to items specifically objected to therein.

 

(b)  All amounts outstanding under the Note and other Obligations shall be due
and payable in full, if not earlier in accordance with this Agreement, on the
earlier of (i) the occurrence of an Event of Default if required pursuant hereto
or Lender’s demand upon an Event of Default, and (ii) the last day of the Term
(such earlier date being the “Revolving Facility Maturity Date”).

 

2.3          INTEREST

 

Interest on outstanding Advances under the Note shall be payable monthly in
arrears on the first day of each calendar month at an annual rate of Prime Rate
plus 3.00%,

 

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provided, however, that, notwithstanding any provision of any Loan Document, the
Prime Rate shall be not less than 4.00%, in each case calculated on the basis of
a 360-day year and for the actual number of calendar days elapsed in each
interest calculation period.  Interest accrued on each Advance under the Note
shall be due and payable on the first day of each calendar month, in accordance
with the procedures provided for in Section 2.5 and Section 2.6, commencing
March 1, 2004, and continuing until the later of the expiration of the Term and
the full performance and irrevocable payment in full in cash of the Obligations
and termination of this Agreement.

 

2.4          REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER BORROWING
CERTIFICATE

 

(a)           So long as no Default or Event of Default shall have occurred and
be continuing, Borrower may give Lender irrevocable written notice requesting an
Advance under the Revolving Facility by delivering to Lender not later than 4:00
p.m. (Eastern Standard Time) at least two (2) but not more than four (4)
Business Days before the proposed borrowing date of such requested Advance (the
“Borrowing Date”), a completed Borrowing Certificate and relevant supporting
documentation listed on Schedule 2.4 in a form reasonably satisfactory to
Lender, which shall (i) specify the proposed Borrowing Date of such Advance
which shall be a Business Day, (ii) specify the principal amount of such
requested Advance, and (iii) certify the matters contained in Section 4.2.

 

(b)           Each time a request for an Advance is made, and, in any event and
regardless of whether an Advance is being requested, on the first and third
Tuesday of each month during the Term (and more frequently if Lender shall so
request) until the Obligations are indefeasibly paid in cash in full and this
Agreement is terminated, Borrower shall deliver to Lender a Borrowing
Certificate accompanied by a separate detailed aging and categorizing of
Borrower’s accounts receivable and accounts payable and such other supporting
documentation with respect to the figures and information in the Borrowing
Certificate as Lender shall reasonably request from a credit or security
perspective or otherwise.

 

(c)           On each Borrowing Date, Borrower irrevocably authorizes Lender to
disburse the proceeds of the requested Advance to the appropriate Borrower’s
account(s) as set forth on Schedule 2.4, in all cases for credit to the
appropriate Borrower (or to such other account as to which the appropriate
Borrower shall instruct Lender) via Federal funds wire transfer no later than
4:00 p.m. (Eastern Standard Time).

 

2.5          REVOLVING FACILITY COLLECTIONS; REPAYMENT; BORROWING AVAILABILITY
AND LOCKBOX

 

Each Borrower shall maintain one or more lockbox accounts (individually and
collectively, the “Lockbox Account”) with one or more banks acceptable to Lender
(each, a “Lockbox Bank”), and shall execute with each Lockbox Bank one or more
agreements acceptable to Lender (individually and collectively, the “Lockbox
Agreement”), and such other agreements related thereto as Lender may require. 
Lender hereby acknowledges that Fleet Bank is an acceptable Lockbox Bank as of
the Closing Date.  Each Borrower shall ensure that all collections of their
respective Accounts are paid and delivered from Account Debtors and other
Persons into the appropriate Lockbox Account.  The Lockbox Agreements shall
provide that the Lockbox Banks immediately will transfer all funds paid into the
Lockbox Accounts into a depository account or accounts maintained by Lender or
an Affiliate of Lender at such bank as Lender may communicate to Borrower from
time to time (the “Concentration Account”).  Notwithstanding and without
limiting any other provision of any Loan Document, Lender shall apply, on a
daily basis, all funds transferred into the Concentration Account pursuant to
the Lockbox Agreement and this Section 2.5 in such order and manner as
determined by Lender

 

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provided that such amounts shall first be applied to pay any amounts then due. 
To the extent that any Accounts are collected by any Borrower or any other cash
payments received by any Borrower are not sent directly to the appropriate
Lockbox Account but are received by any Borrower or any of their Affiliates,
such collections and proceeds shall be held in trust for the benefit of Lender
and immediately remitted (and in any event within two (2) Business Days), in the
form received, to the appropriate Lockbox Account for immediate transfer to the
Concentration Account.  Borrower acknowledges and agrees that compliance with
the terms of this Section 2.5 is an essential term of this Agreement.  All funds
transferred to the Concentration Account for application to the Obligations
under the Revolving Facility shall be applied to reduce the Obligations under
the Revolving Facility, but, for purposes of calculating interest hereunder,
shall be subject to a five Business Day clearance period.  If as the result of
collections of Accounts and/or any other cash payments received by any Borrower
pursuant to this Section 2.5 a credit balance exists with respect to the
Concentration Account, such credit balance shall not accrue interest in favor of
a Borrower, but shall be promptly transferred to the appropriate Borrower upon
such Borrower’s written request.  If applicable, at any time prior to the
execution of all or any of the Lockbox Agreements and operation of all or any of
the Lockbox Accounts, each Borrower and their Affiliates shall direct all
collections or proceeds it receives on Accounts or from other Collateral to the
accounts(s) and in the manner specified by Lender in its Permitted Discretion.

 

2.6          PROMISE TO PAY; MANNER OF PAYMENT

 

Borrower absolutely and unconditionally promises to pay principal, interest and
all other amounts payable hereunder, or under any other Loan Document, without
any right of rescission and without any deduction whatsoever, including any
deduction for any setoff, counterclaim or recoupment, and notwithstanding any
damage to, defects in or destruction of the Collateral or any other event,
including obsolescence of any property or improvements.  All payments made by
Borrower (other than payments automatically paid through Advances under the
Revolving Facility as provided herein), shall be made only by wire transfer on
the date when due, without offset or counterclaim, in U.S. Dollars, in
immediately available funds to such account as may be indicated in writing by
Lender to Borrower from time to time.  Any such payment received after 5:00 p.m.
(Eastern Standard Time) on the date when due shall be deemed received on the
following Business Day.  Whenever any payment hereunder shall be stated to be
due or shall become due and payable on a day other than a Business Day, the due
date thereof shall be extended to, and such payment shall be made on, the next
succeeding Business Day, and such extension of time in such case shall be
included in the computation of payment of any interest (at the interest rate
then in effect during such extension) and/or fees, as the case may be.

 

2.7          REPAYMENT OF EXCESS ADVANCES

 

Any balance of Advances under the Revolving Facility outstanding at any time in
excess of the lesser of the Facility Cap or the Availability shall be
immediately due and payable by Borrower without the necessity of any demand, at
the Payment Office, whether or not a Default or Event of Default has occurred or
is continuing and shall be paid in the manner specified in Section 2.6.

 

2.8          PAYMENTS BY LENDER

 

Should any amount required to be paid under any Loan Document be unpaid on the
date due, such amount may be paid by Lender, which payment shall be deemed a
request for an Advance under the Revolving Facility as of the date such payment
is due, and Borrower irrevocably authorizes disbursement of any such funds to
Lender by way of direct payment of the

 

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relevant amount, interest or Obligations.  No payment or prepayment of any
amount by Lender or any other Person shall entitle any Person to be subrogated
to the rights of Lender under any Loan Document unless and until the Obligations
have been fully performed and paid irrevocably in cash and this Agreement has
been terminated.  Any sums actually expended by Lender as a result of any
Borrower’s or any Guarantor’s failure to pay, perform or comply with any Loan
Document or any of the Obligations may be charged to Borrower’s account as an
Advance under the Revolving Facility and added to the Obligations.

 

2.9          GRANT OF SECURITY INTEREST; COLLATERAL

 

(a)           To secure the payment and performance of the Obligations, each
Borrower hereby grants to Lender a continuing security interest in and Lien
upon, and pledges to Lender, all of its right, title and interest in and to the
following (collectively and each individually, the “Collateral”), which security
interest is intended to be a first priority security interest:

 

(i)            all of such Borrower’s present and future Inventory, now owned or
hereafter acquired;

 

(ii)           all of such Borrower’s present and future Accounts and all of the
following solely to the extent related to such Accounts: contract rights,
Permits, General Intangibles, Chattel Paper, Documents, Instruments, Deposit
Accounts (which shall include the Lockbox Accounts), Letter-of-Credit Rights,
Supporting Obligations, rights to the payment of money or other forms of
consideration of any kind, now owned or hereafter acquired;

 

(iii)          all of such Borrower’s present and future Government Contracts
and rights thereunder and the related Government Accounts and proceeds thereof,
now or hereafter owned or acquired by such Borrower; provided, however, that
Lender shall not have a security interest in any rights under any Government
Contract of such Borrower or in the related Government Account where the taking
of such security interest would be a violation of an express prohibition
contained in the Government Contract (for purposes of this limitation, the fact
that a Government Contract is subject to, or otherwise refers to, Title 31,
§ 203 or Title 41, § 15 of the United States Code shall not be deemed an express
prohibition against assignment thereof) or is prohibited by applicable law;

 

(iv)          All Books and Records, whether now owed or hereafter acquired; and

 

(v)           any and all additions and accessions to any of the foregoing, and
any and all replacements, products and Proceeds (including insurance proceeds)
of any of the foregoing.

 

(b)           Notwithstanding the foregoing provisions of this Section 2.9, such
grant of a security interest shall not extend to, and the term “Collateral”
shall not include, any General Intangibles of Borrower to the extent that
(i) such General Intangible does not directly relate to the Accounts; or (ii)
(A) such General Intangibles are not assignable or capable of being encumbered
as a matter of law or under the terms of any license or other agreement
applicable thereto (but solely to the extent that any such restriction shall be
enforceable under applicable law) without the consent of the licensor thereof or
other applicable party thereto, and (B) such consent has not been obtained;
provided, however, that the foregoing grant of a security interest shall extend
to, and the term “Collateral” shall include, each of the following: (a) any
General

 

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Intangible directly related to the Accounts which is in the nature of an Account
or a right to the payment of money or a proceed of, or otherwise related to the
enforcement or collection of, any Account or right to the payment of money, or
goods which are the subject of any Account or right to the payment of money,
(b) any and all proceeds of any General Intangible which related to the Accounts
that is otherwise excluded pursuant to subsection (i) to the extent that the
assignment, pledge or encumbrance of such proceeds is not so restricted, and
(c) upon obtaining the consent of any such licensor or other applicable party
with respect to any such otherwise excluded General Intangible, such General
Intangible as well as any and all proceeds thereof that might theretofore have
been excluded from such grant of a security interest and from the term
“Collateral.”

 

(d)           Upon the execution and delivery of this Agreement, and upon the
proper filing of the necessary financing statements, without any further action,
Lender will have a good, valid and perfected first priority Lien and security
interest in the Collateral, subject to no transfer or other restrictions or
Liens of any kind in favor of any other Person except for Permitted Liens.  No
financing statement relating to any of the Collateral is on file in any public
office except those (i) on behalf of Lender, and/or (ii) in connection with
Permitted Liens.

 

2.10        COLLATERAL ADMINISTRATION

 

(a)           All Collateral (except Deposit Accounts) will at all times be kept
by Borrower at the locations set forth on Schedule 5.18B hereto and shall not,
without thirty (30) calendar days prior written notice to Lender, be moved
therefrom, and in any case shall not be moved outside the continental United
States.

 

(b)           Borrower shall keep accurate and complete records of its Accounts
and all payments and collections thereon and shall submit such records to Lender
on such periodic bases as Lender may reasonably request.  In addition, if
Accounts of Borrower in an aggregate face amount in excess of $10,000 become
ineligible because they fall within one of the specified categories of
ineligibility set forth in the definition of Eligible Receivables, Borrower
shall notify Lender of such occurrence on the first Business Day following such
occurrence and the Borrowing Base shall thereupon be adjusted to reflect such
occurrence.  If requested by Lender, Borrower shall execute and deliver to
Lender formal written assignments of all of its Accounts weekly or daily as
Lender may reasonably request, including all Accounts created since the date of
the last assignment, together with copies of claims, invoices and/or other
information related thereto.  To the extent that collections from such assigned
accounts exceed the amount of the Obligations, such excess amount shall not
accrue interest in favor of Borrower, but shall be available to Borrower upon
Borrower’s written request.

 

(c)           Whether or not an Event of Default has occurred, any of Lender’s
officers, employees, representatives or agents shall have the right, at any time
during normal business hours, in the name of Lender, any designee of Lender or
Borrower, to verify the validity, amount or any other matter relating to any
Accounts of Borrower.  Borrower shall cooperate fully with Lender in an effort
to facilitate and promptly conclude such verification process.

 

(d)           To expedite collection, Borrower shall endeavor in the first
instance to make collection of its Accounts for Lender.  Lender shall have the
right at all times after the occurrence and during the continuance of an Event
of Default to notify Account Debtors owing Accounts to Borrower that their
Accounts have been assigned to Lender and to collect such

 

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Accounts directly in its own name and to charge collection costs and expenses,
including reasonable attorney’s fees, to Borrower.

 

(e)           As and when determined by Lender in its Permitted Discretion,
Lender will perform the searches described in clauses (i) and (ii) below against
Borrower and Guarantors (the results of which are to be consistent with
Borrower’s representations and warranties under this Agreement), all at
Borrower’s expense: (i) UCC searches with the Secretary of State of the
jurisdiction of organization of each Borrower and Guarantor and the Secretary of
State and local filing offices of each jurisdiction where Borrower and/or any
Guarantors maintain their respective executive offices, a place of business or
assets; and (ii) judgment, federal tax lien and corporate and partnership tax
lien searches, in each jurisdiction searched under clause (i) above.

 

(f)  Borrower (i) shall provide prompt written notice to its current bank to
transfer all items, collections and remittances to the Concentration Account,
(ii) shall direct each Account Debtor to make payments to the appropriate
Lockbox Account, and Borrower hereby authorizes Lender, upon any failure to send
such notices and directions within ten (10) calendar days after the date of this
Agreement (or ten (10) calendar days after the Person becomes an Account
Debtor), to send any and all similar notices and directions to such Account
Debtors, and (iii) shall do anything further that may be lawfully required by
Lender to create and perfect Lender’s lien on any collateral and effectuate the
intentions of the Loan Documents.  At Lender’s request, Borrower shall
immediately deliver to Lender all items for which Lender must receive possession
to obtain a perfected security interest and all notes, certificates, and
documents of title, Chattel Paper, warehouse receipts, Instruments, and any
other similar instruments constituting Collateral.

 

2.11        POWER OF ATTORNEY

 

Lender is hereby irrevocably made, constituted and appointed the true and lawful
attorney for Borrower (without requiring any of them to act as such) with full
power of substitution to do the following: (i) endorse the name of Borrower upon
any and all checks, drafts, money orders, and other instruments for the payment
of money that are payable to Borrower and constitute collections on its or their
Accounts; (ii) execute in the name of Borrower any financing statements,
schedules, assignments, instruments, documents, and statements that it is or
they or are obligated to give Lender under any of the Loan Documents; and (iii)
do such other and further acts and deeds in the name of Borrower that Lender may
reasonably deem necessary or desirable to enforce any Account or other
Collateral or to perfect Lender’s security interest or lien in any Collateral. 
In addition, if any Borrower breaches its obligation hereunder to direct
payments of Accounts or the proceeds of any other Collateral to the appropriate
Lockbox Account, Lender, as the irrevocably made, constituted and appointed true
and lawful attorney for Borrower pursuant to this paragraph, may, by the
signature or other act of any of Lender’s officers or authorized signatories
(without requiring any of them to do so), direct any federal, state or private
payor or fiscal intermediary to pay proceeds of Accounts or any other Collateral
to the appropriate Lockbox Account.

 

III.          FEES AND OTHER CHARGES

 

3.1          COMMITMENT FEE

 

On or before the Closing Date, Borrower shall pay to Lender 1% of the Facility
Cap as a nonrefundable commitment fee.

 

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3.2          UNUSED LINE FEE

 

Borrower shall pay to Lender monthly an unused line fee (the “Unused Line Fee”)
in an amount equal to 0.042% (per month) of the difference derived by
subtracting (i) the daily average amount of the balances under the Revolving
Facility outstanding during the preceding month, from (ii) the Facility Cap. 
The Unused Line Fee shall be payable monthly in arrears on the first day of each
successive calendar month (starting with the month in which the Closing Date
occurs).

 

3.3          COLLATERAL MANAGEMENT FEE

 

Borrower shall pay Lender as additional interest a monthly collateral management
fee (the “Collateral Management Fee”) equal to 0.083% per month calculated on
the basis of the daily average amount of the balances under the Revolving
Facility outstanding during the preceding month.  The Collateral Management Fee
shall be payable monthly in arrears on the first day of each successive calendar
month (starting with the month in which the Closing Date occurs).

 

3.4          COMPUTATION OF FEES; LAWFUL LIMITS

 

All fees hereunder shall be computed on the basis of a year of 360 days and for
the actual number of days elapsed in each calculation period, as applicable.  In
no contingency or event whatsoever, whether by reason of acceleration or
otherwise, shall the interest and other charges paid or agreed to be paid to
Lender for the use, forbearance or detention of money hereunder exceed the
maximum rate permissible under applicable law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto.  If, due
to any circumstance whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall exceed any such limit, then,
the obligation to be so fulfilled shall be reduced to such lawful limit, and, if
Lender shall have received interest or any other charges of any kind which might
be deemed to be interest under applicable law in excess of the maximum lawful
rate, then such excess shall be applied first to any unpaid fees and charges
hereunder, then to unpaid principal balance owed by Borrower hereunder, and if
the then remaining excess interest is greater than the previously unpaid
principal balance, Lender shall promptly refund such excess amount to Borrower
and the provisions hereof shall be deemed amended to provide for such
permissible rate.  The terms and provisions of this Section 3.4 shall control to
the extent any other provision of any Loan Document is inconsistent herewith.

 

3.5          DEFAULT RATE OF INTEREST

 

Upon the occurrence and during the continuation of an Event of Default, the
Applicable Rate of interest in effect at such time with respect to the
Obligations shall be increased by 3.0% per annum (the “Default Rate”).

 

3.6          ACKNOWLEDGEMENT OF JOINT AND SEVERAL LIABILITY

 

Each Borrower acknowledges that it is jointly and severally liable for all of
the Obligations under the Loan Documents.  Each Borrower expressly understands,
agrees and acknowledges that (i) Borrowers are all Affiliated entities by common
ownership, (ii) each Borrower desires to have the availability of one common
credit facility instead of separate credit facilities, (iii) each Borrower has
requested that Lender extend such a common credit facility on the terms herein
provided, (iv) Lender will be lending against, and relying on a lien upon, all
of Borrowers’ Collateral even though the proceeds of any particular loan made
hereunder may not be advanced directly to a particular Borrower, (v) each
Borrower will nonetheless benefit by the

 

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making of all such loans by Lender and the availability of a single credit
facility of a size greater than each could independently warrant, and (vi) all
of the representations, warranties, covenants, obligations, conditions,
agreements and other terms contained in the Loan Documents shall be applicable
to and shall be binding upon each Borrower.

 

IV.          CONDITIONS PRECEDENT

 

4.1          CONDITIONS TO INITIAL ADVANCE AND CLOSING

 

The obligations of Lender to consummate the transactions contemplated herein and
to make the initial Advance under the Revolving Facility (the “Initial Advance”)
are subject to the satisfaction, in the reasonable judgment of Lender, of the
following:

 

(a)           (i) Borrower shall have delivered to Lender (A) the Loan Documents
to which it is a party, each duly executed by an authorized officer of Borrower
and the other parties thereto, (B) a Borrowing Certificate for the Initial
Advance under the Revolving Facility executed by an authorized officer of
Borrower;

 

(b)           all in form and substance satisfactory to Lender in its Permitted
Discretion, Lender shall have received (i) a report of Uniform Commercial Code
financing statement, tax and judgment lien searches performed with respect to
each Borrower in each jurisdiction determined by Lender in its Permitted
Discretion, and such report shall show no Liens on the Collateral (other than
Permitted Liens), (ii) each document (including, without limitation, any Uniform
Commercial Code financing statement) required by any Loan Document or under law
or requested by Lender to be filed, registered or recorded to create in favor of
Lender, a perfected first priority security interest upon the Collateral, and
(iii) evidence of each such filing, registration or recordation and of the
payment by Borrower of any necessary fee, tax or expense relating thereto;

 

(c)           Lender shall have received (i) the Charter and Good Standing
Documents, all in form and substance acceptable to Lender, (ii) a certificate of
the corporate secretary or assistant secretary of each Borrower dated the
Closing Date, as to the incumbency and signature of the Persons executing the
Loan Documents, in form and substance acceptable to Lender, and (iii) the
written legal opinion of counsel for Borrower, in form and substance
satisfactory to Lender and its counsel;

 

(d)           Lender shall have received a certificate of the chief financial
officer (or, in the absence of a chief financial officer, the chief executive
officer) of each Borrower, in form and substance satisfactory to Lender (each, a
“Solvency Certificate”), certifying as to such Person’s financial resources and
ability to meet its obligations and liabilities as they become due, to the
effect that as of the Closing Date and the Borrowing Date for the Initial
Advance and after giving effect to such transactions and Indebtedness: (A) the
assets of such Person, at a Fair Valuation, exceed the total liabilities
(including contingent, subordinated, unmatured and unliquidated liabilities) of
such Person, and (B) no unreasonably small capital base with which to engage in
its anticipated business exists with respect to such Person;

 

(e)           Lender shall have completed examinations, the results of which
shall be satisfactory in form and substance to Lender, of the Collateral, the
financial statements and the books, records, business, obligations, financial
condition and operational state of each Borrower, and each such Person shall
have demonstrated to Lender’s satisfaction that (i) its operations comply, in
all respects deemed material by Lender, in its reasonable judgment, with all
applicable

 

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federal, state, foreign and local laws, statutes and regulations, (ii) its
operations are not the subject of any governmental investigation, evaluation or
any remedial action which could result in any expenditure or liability deemed
material by Lender, in its reasonable judgment, and (iii) it has no liability
(whether contingent or otherwise) that is deemed material by Lender, in its
reasonable judgment;

 

(f)            Lender shall have received all fees, charges and expenses payable
to Lender on or prior to the Closing Date pursuant to the Loan Documents;

 

(g)           all in form and substance satisfactory to Lender in its Permitted
Discretion, Lender shall have received such consents, approvals and agreements,
including, without limitation, any applicable Landlord Waivers and Consents with
respect to any and all leases set forth on Schedule 5.4, from such third parties
as Lender and its counsel shall determine are necessary or desirable with
respect to (i) the Loan Documents and/or the transactions contemplated thereby,
and/or (ii) claims against any Borrower or the Collateral;

 

(h)           Borrower shall be in compliance with Section 6.5, and Lender shall
have received original certificates of all insurance policies of Borrower
confirming that they are in effect and that the premiums due and owing with
respect thereto have been paid in full and naming Lender as an additional
insured, as such insurance relates to the Collateral;

 

(i)            all corporate and other proceedings, documents, instruments and
other legal matters in connection with the transactions contemplated by the Loan
Documents (including, but not limited to, those relating to corporate and
capital structures of Borrower) shall be satisfactory to Lender;

 

(j)            Lender shall have received, in form and substance satisfactory to
Lender, release and termination of any and all Liens, security interest and/or
Uniform Commercial Code financing statements in, on, against or with respect to
any of the Collateral (other than Permitted Liens);

 

(k)           Borrower shall have executed and filed IRS Form 8821 with the
appropriate office of the Internal Revenue Service;

 

(l)            Borrower shall provide evidence that it has engaged a nationally
recognized independent certified public accounting firm satisfactory to Lender
in its Permitted Discretion; and

 

(m)          Lender shall have received such other documents, certificates,
information or legal opinions as Lender may reasonably request, all in form and
substance reasonably satisfactory to Lender.

 

4.2          CONDITIONS TO EACH ADVANCE

 

The obligations of Lender to make any Advance (including, without limitation,
the Initial Advance) are subject to the satisfaction, in the reasonable judgment
of Lender, of the following additional conditions precedent:

 

(a)           Borrower shall have delivered to Lender a Borrowing Certificate
for the Advance executed by an authorized officer of Borrower, which shall
constitute a representation

 

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and warranty by Borrower as of the Borrowing Date of such Advance that the
conditions contained in this Section 4.2 have been satisfied;

 

(b)           each of the representations and warranties made by Borrower in or
pursuant to this Agreement (as updated from time to time by Borrower) shall be
accurate, before and after giving effect to such Advance, and no Default or
Event of Default shall have occurred or be continuing or would exist after
giving effect to the Advance under the Revolving Facility on such date;

 

(c)           immediately after giving effect to the requested Advance, the
aggregate outstanding principal amount of Advances under the Revolving Facility
shall not exceed either the Availability or the Facility Cap;

 

(d)           except as disclosed in the financial statements provided to the
Lender prior to the date of the requested Advance, there shall be no liabilities
or obligations with respect to Borrower of any nature whatsoever which, either
individually or in the aggregate, would reasonably be likely to have a Material
Adverse Effect; and

 

(e)           Lender shall have received all fees, charges and expenses payable
to Lender on or prior to such date pursuant to the Loan Documents.

 

V.            REPRESENTATIONS AND WARRANTIES

 

Each Borrower, jointly and severally, represents and warrants as of the date
hereof, the Closing Date, and each Borrowing Date as follows:

 

5.1          ORGANIZATION AND AUTHORITY

 

Borrower is a corporationduly organized, validly existing and in good standing
under the laws of its state of formation.  Borrower (i) has all requisite
corporate power and authority to own its properties and assets and to carry on
its business as now being conducted and as contemplated in the Loan Documents,
(ii) is duly qualified to do business in every jurisdiction in which failure so
to qualify would reasonably be likely to have a Material Adverse Effect, and
(iii) has all requisite power and authority (A) to execute, deliver and perform
the Loan Documents to which it is a party, (B) to borrow hereunder, (C) to
consummate the transactions contemplated under the Loan Documents, and (D) to
grant the Liens with regard to the Collateral pursuant to the Security Documents
to which it is a party.  No Borrower is an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended,
or is controlled by such an “investment company.”

 

5.2          LOAN DOCUMENTS

 

The execution, delivery and performance by Borrower of the Loan Documents to
which it is a party, and the consummation of the transactions contemplated
thereby, (i) have been duly authorized by all requisite action of each such
Person and have been duly executed and delivered by or on behalf of each such
Person; (ii) do not violate any provisions of (A) applicable law, statute, rule,
regulation, ordinance or tariff, (B) any order of any Governmental Authority
binding on any such Person or any of their respective properties, or (C) the
certificate of incorporation or bylaws (or any other equivalent governing
agreement or document) of any such Person, or any agreement between any such
Person and its respective stockholders, members, partners or equity owners or
among any such stockholders, members, partners or equity owners; (iii) are not
in conflict with, and do not result in a breach or default of or constitute an
event of

 

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default, or an event, fact, condition or circumstance which, with notice or
passage of time, or both, would constitute or result in a conflict, breach,
default or event of default under, any indenture, agreement or other instrument
to which any such Person is a party, or by which the properties or assets of
such Person are bound; (iv) except as set forth therein, will not result in the
creation or imposition of any Lien of any nature upon any of the properties or
assets of any such Person, and (v) except as set forth on Schedule 5.2, do not
require the consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other Person.  When
executed and delivered, each of the Loan Documents to which Borrower is a party
will constitute the legal, valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its terms, subject to the effect of any
applicable bankruptcy, moratorium, insolvency, reorganization or other similar
law affecting the enforceability of creditors’ rights generally and to the
effect of general principles of equity which may limit the availability of
equitable remedies (whether in a proceeding at law or in equity).

 

5.3          SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS

 

Except as listed on Schedule 5.3, Borrower has no Subsidiaries.  Schedule 5.3
states the authorized and issued capitalization of Borrower, the number and
class of equity securities and/or ownership, voting or partnership interests
issued and outstanding of Borrower and the record and beneficial owners thereof
(including options, warrants and other rights to acquire any of the
foregoing).   The outstanding equity securities and/or ownership, voting or
partnership interests of Borrower have been duly authorized and validly issued
and are fully paid and nonassessable, and each Person listed on Schedule 5.3
owns beneficially and of record all the equity securities and/or ownership,
voting or partnership interests it is listed as owning free and clear of any
Liens other than Liens created by the Security Documents.  Schedule 5.3 also
lists the directors, members, managers and/or partners of Borrower.  Except as
listed on Schedule 5.3, Borrower does not own an interest in, participate in or
engage in any joint venture, partnership or similar arrangements with any
Person.

 

5.4          PROPERTIES

 

Borrower (i) (A) is the sole owner and has good, valid and marketable title to,
or (B) has a valid leasehold interest in or license to, all of its properties
and assets, including the Collateral, whether personal or real, subject to no
transfer restrictions or Liens of any kind except for Permitted Liens, and (ii)
is in compliance in all material respects with each material lease to which it
is a party or otherwise bound.  Schedule 5.4 lists all real properties (and
their locations) owned or leased by or to, and all other assets or property with
a value in excess of $50,000 that are leased or licensed by, Borrower and all
leases (including leases of leased real property) covering or with respect to
such properties and assets.  Borrower enjoys peaceful and undisturbed possession
under all such leases and such leases are all the leases necessary for the
operation of such properties and assets, are valid and subsisting and are in
full force and effect.

 

5.5          OTHER AGREEMENTS

 

Borrower is not (i) a party to any judgment, order or decree or any agreement,
document or instrument, or subject to any restriction, which would materially
adversely affect its ability to execute and deliver, or perform under, any Loan
Document or to pay the Obligations, (ii) in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
any agreement, document or instrument to which it is a party or to which any of
its properties or assets are subject, which default, if not remedied within any
applicable grace or cure period would reasonably be likely to have a Material
Adverse Effect, nor is there

 

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any event, fact, condition or circumstance which, with notice or passage of time
or both, would constitute or result in a conflict, breach, default or event of
default under, any of the foregoing which, if not remedied within any applicable
grace or cure period would reasonably be likely to have a Material Adverse
Effect; or (iii) a party or subject to any agreement, document or instrument
with respect to, or obligation to pay any, service fee or management fee with
respect to, the ownership, operation, leasing or performance of any of its
business or any facility, nor is there any manager with respect to any such
facility.

 

5.6          LITIGATION

 

There is no action, suit, proceeding or investigation pending or, to their
knowledge, threatened against Borrower that (i) questions or could prevent the
validity of any of the Loan Documents or the right of Borrower to enter into any
Loan Document or to consummate the transactions contemplated thereby, (ii) would
reasonably be likely to be or have, either individually or in the aggregate, any
Material Adverse Change or Material Adverse Effect, or (iii) would reasonably be
likely to result in any Change of Control or other change in the current
ownership, control or management of Borrower.  Borrower is not aware that there
is any basis for the foregoing.  Borrower is not a party or subject to any
order, writ, injunction, judgment or decree of any Governmental Authority. 
There is no action, suit, proceeding or investigation initiated by Borrower
currently pending.  Borrower has no existing accrued and/or unpaid Indebtedness
to any Governmental Authority or any other governmental payor.

 

5.7          HAZARDOUS MATERIALS

 

Borrower is in compliance in all material respects with all applicable
Environmental Laws.  Borrower has not been notified of any action, suit,
proceeding or investigation (i) relating in any way to compliance by or
liability of Borrower under any Environmental Laws, (ii) which otherwise deals
with any Hazardous Substance or any Environmental Law, or (iii) which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Substance.

 

5.8          POTENTIAL TAX LIABILITY; TAX RETURNS; GOVERNMENTAL REPORTS

 

(a)  Except as disclosed in Schedule 5.8, Borrower (i) has not received any oral
or written communication from the Internal Revenue Service with respect to any
investigation or assessment relating to the Borrower directly, or relating to
any consolidated tax return which was filed on behalf of Borrower, (ii) is not
aware of any year which remains open pending tax examination or audit by the
IRS, and (iii) is not aware of any information that could give rise to an IRS
tax liability or assessment.

 

(b)  Borrower (i) has filed all federal, state, foreign (if applicable) and
local tax returns and other reports which are required by law to be filed by
Borrower, and (ii) has paid all taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
taxes, in each case that are due and payable, except only for items that
Borrower is currently contesting in good faith with adequate reserves under
GAAP, which contested items are described on Schedule 5.8.

 

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5.9          FINANCIAL STATEMENTS AND REPORTS

 

All financial statements and financial information relating to Borrower that
have been or may hereafter be delivered to Lender by Borrower are accurate and
complete and have been prepared in accordance with GAAP consistently applied
with prior periods; provided, however, that such monthly and/or quarterly
statements may not contain footnotes and are subject to year-end adjustments. 
Borrower has no material obligations or liabilities of any kind not disclosed in
such financial information or statements, and since the date of the most recent
financial statements submitted to Lender, there has not occurred any Material
Adverse Change, Material Adverse Effect or, to Borrower’s knowledge, any other
event or condition that would reasonably be likely to have a Material Adverse
Effect.

 

5.10        COMPLIANCE WITH LAW

 

Borrower (i) is in compliance with all laws, statutes, rules, regulations,
ordinances and tariffs of any Governmental Authority applicable to Borrower
and/or Borrower’s business, assets or operations, including, without limitation,
applicable requirements of the Standards for Privacy of Individually
Identifiable Health Information which were promulgated pursuant to the Health
Insurance Portability and Accountability Act of 1996 (“HIPAA”), ERISA and
Healthcare Laws, and (ii) is not in violation of any order of any Governmental
Authority or other board or tribunal, except in the case of (i) and (ii) above
where noncompliance or violation could not reasonably be expected to have a
Material Adverse Effect.  There is no event, fact, condition or circumstance
which, with notice or passage of time, or both, would constitute or result in
any noncompliance with, or any violation of, any of the foregoing, in each case
except where noncompliance or violation could not reasonably be expected to have
a Material Adverse Effect.  Borrower has not received any notice that Borrower
is not in compliance in any respect with any of the requirements of any of the
foregoing.  Borrower has (a) not engaged in any Prohibited Transactions as
defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder, (b) not
failed to meet any applicable minimum funding requirements under Section 302 of
ERISA in respect of its plans and no funding requirements have been postponed or
delayed, (c) no knowledge of any event or occurrence which would cause the
Pension Benefit Guaranty Corporation to institute proceedings under Title IV of
ERISA to terminate any of the employee benefit plans, (d) no fiduciary
responsibility under ERISA for investments with respect to any plan existing for
the benefit of Persons other than its employees or former employees, or (e) not
withdrawn, completely or partially, from any multi-employer pension plans so as
to incur liability under the MultiEmployer Pension Plan Amendments of 1980. 
With respect to Borrower, there exists no event described in Section 4043 of
ERISA, excluding Subsections 4043(b)(2) and 4043(b)(3) thereof, for which the
thirty (30) day notice period contained in 12 C.F.R. § 2615.3 has not been
waived.  Borrower has maintained in all material respects all records required
to be maintained by the Joint Commission on Accreditation of Healthcare
Organizations, the Food and Drug Administration, Drug Enforcement Agency and
State Boards of Pharmacy, and, to the best knowledge of Borrower, there are no
presently existing circumstances which likely would result in material
violations of the Healthcare Laws.

 

5.11        INTELLECTUAL PROPERTY

 

Borrower owns or has the rights to all patents, patent applications, trademarks,
trademark applications, service marks, registered copyrights, copyright
applications, copyrights, trade names, trade secrets, software or licenses
(collectively, the “Intellectual Property”) necessary for its business.  Each
Borrower’s patents and registered trademarks are listed on Schedule 5.11.

 

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5.12        LICENSES AND PERMITS; LABOR

 

Borrower is in compliance with and has all Permits and rights to Intellectual
Property necessary or required by applicable law or Governmental Authority for
the operation of its businesses.  All of the foregoing are in full force and
effect and not in known conflict with the rights of others.  Borrower is not (i)
in breach of or default under the provisions of any of the foregoing, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period would reasonably be likely to have a Material
Adverse Effect  or (ii) has not been involved in any labor dispute, strike,
walkout or union organization which would reasonably be likely to have a
Material Adverse Effect.

 

5.13        NO DEFAULT

 

There does not exist any Default or Event of Default or any event, fact,
condition or circumstance which, with the giving of notice or passage of time or
both, would constitute or result in a Default or Event of Default.

 

5.14        DISCLOSURE

 

No Loan Document nor any other agreement, document, certificate, or statement
furnished to Lender by or on behalf of Borrower in connection with the
transactions contemplated by the Loan Documents, nor any representation or
warranty made by Borrower in any Loan Document, contains any untrue statement of
material fact or omits to state any fact necessary to make the statements
therein not materially misleading.  There is no fact known to Borrower which has
not been disclosed to Lender in writing which would reasonably be likely to have
a Material Adverse Effect.

 

5.15        EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN CONTRACTS

 

Except as contemplated by the Loan Documents or as otherwise set forth on
Schedule 5.15, Borrower (i) has no outstanding Indebtedness, (ii) is not subject
or party to any mortgage, note, indenture, indemnity or guarantee of, with
respect to or evidencing any Indebtedness of any other Person, or (iii) does not
own or hold any equity or long-term debt investments in, and does not have any
outstanding advances to or any outstanding guarantees for the obligations of, or
any outstanding borrowings from, any Person.  Borrower has performed all
material obligations required to be performed by Borrower pursuant to or in
connection with any items listed on Schedule 5.15 and there has occurred no
breach, default or event of default under any document evidencing any such items
or any fact, circumstance, condition or event which, with the giving of notice
or passage of time or both, would constitute or result in a breach, default or
event of default thereunder.

 

5.16        OTHER AGREEMENTS

 

Except as set forth on Schedule 5.16, (i) there are no existing or proposed
agreements,  arrangements, understandings or transactions between Borrower and
any of Borrower’s officers, members, managers, directors, stockholders,
partners, other interest holders, employees or Affiliates or any members of
their respective immediate families, and (ii) none of the foregoing Persons are
directly or indirectly, indebted to or have any direct or indirect ownership,
partnership or voting interest in, to Borrower’s knowledge, any Affiliate of
Borrower

 

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or any Person that competes with Borrower (except that any such Persons may own
stock in (but not exceeding two (2%) percent of the outstanding capital stock
of) any publicly traded company that may compete with Borrower.

 

5.17        INSURANCE

 

Borrower has in full force and effect such insurance policies as are customary
in its industry and as may be required pursuant to Section 6.5 hereof.  All such
insurance policies are listed and described on Schedule 5.17.

 

5.18        NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL

 

During the preceding five years, Borrower has not conducted business under or
used any name (whether corporate, partnership or assumed) other than as shown on
Schedule 5.18A.  Borrower is the sole owner of all of its names listed on
Schedule 5.18A, and any and all business done and invoices issued in such names
are Borrower’s sales, business and invoices.  Each trade name of Borrower
represents a division or trading style of Borrower.  Borrower maintains its
places of business and chief executive offices only at the locations set forth
on Schedule 5.18B, and all Accounts of Borrower arise, originate and are
located, and all of the Collateral and all books and records in connection
therewith or in any way relating thereto or evidencing the Collateral are
located and shall only be located, in and at such locations.  All of the
Collateral is located only in the continental United States.

 

5.19        NON-SUBORDINATION

 

The Obligations are not subordinated in any way to any other obligations of
Borrower or to the rights of any other Person.

 

5.20        ACCOUNTS

 

In determining which Accounts are Eligible Receivables, Lender may rely on all
statements and representations made by Borrower with respect to any Account. 
Unless otherwise indicated in writing to Lender, (i) each Account of Borrower is
genuine and in all respects what it purports to be and is not evidenced by a
judgment, (ii) each Account of Borrower arises out of a completed, bona fide
sale and delivery of goods or rendering of services by Borrower in the ordinary
course of business and in accordance with the terms and conditions of all
purchase orders, contracts, certifications, participations, certificates of need
and other documents relating thereto or forming a part of the contract between
Borrower and the Account Debtor, (iii) each Account of Borrower is for a
liquidated amount maturing as stated in a claim or invoice covering such sale of
goods or rendering of services, a copy of which has been furnished or is
available to Lender, (iv) each Account of Borrower together with Lender’s
security interest therein, is not and will not be in the future (by voluntary
act or omission by Borrower), subject to any offset, lien, deduction, defense,
dispute, counterclaim or other adverse condition except as reserved against in
the financial statements, is absolutely owing to Borrower and is not contingent
in any respect or for any reason, (v) except as reserved against in the
financial statements, there are no facts, events or occurrences which in any way
impair the validity or enforceability of any Account of Borrower or tend to
reduce the amount payable thereunder from the face amount of the claim or
invoice and statements delivered to Lender with respect thereto, (vi) (A) with
respect to contracts or other documents generating more than $1000 in Accounts
on an annual basis, (I) the Account Debtor under each such Account of Borrower
had the capacity to contract at the time any such contract or other document
giving rise thereto was executed and (II) each such Account Debtor

 

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thereunder is solvent, and (B) with respect to contracts or other documents
generating $1000 or less in Accounts on an annual basis, to the best of
Borrower’s knowledge (I) the Account Debtor under each such Account of Borrower
had the capacity to contract at the time any such contract or other document
giving rise thereto was executed and (II) each such Account Debtor thereunder is
solvent, (vii) there are no proceedings or actions which are threatened or
pending against any Account Debtor under any Account of Borrower which might
result in any Material Adverse Change in such Account Debtor’s financial
condition or the collectability thereof, (viii) each Account of Borrower has
been billed and forwarded to the Account Debtor for payment in accordance with
applicable laws and is in compliance and conformance with any requisite
procedures, requirements and regulations governing payment by such Account
Debtor with respect to such Account, and (ix) Borrower has obtained and
currently has all Permits necessary in the generation of each Account of
Borrower.

 

5.21        REGULATORY REQUIREMENTS

 

Without limiting or being limited by any other provision of any Loan Document,
Borrower has timely filed or caused to be filed all cost and other reports of
every kind required by law, agreement or otherwise.  There are no claims,
actions or appeals pending (and Borrower has not filed any claims or reports
which could reasonably result in any such claims, actions or appeals) before any
commission, board or agency or other Governmental Authority.

 

5.22        SURVIVAL

 

Borrower makes the representations and warranties contained herein with the
knowledge and intention that Lender is relying and will rely thereon.  All such
representations and warranties will survive the execution and delivery of this
Agreement and the making of the Advances under the Revolving Facility.

 

VI.          AFFIRMATIVE COVENANTS

 

Each Borrower, jointly and severally, covenants and agrees that, until full
performance and satisfaction, and indefeasible payment in full in cash, of all
the Obligations and termination of this Agreement:

 

6.1          FINANCIAL STATEMENTS, BORROWING CERTIFICATE, FINANCIAL REPORTS AND
OTHER INFORMATION

 

(a)           Financial Reports.  In addition to providing the Borrowing
Certificate in accordance with Section 2.4, Borrower shall furnish to Lender (i)
as soon as available and in any event within ninety (90) calendar days after the
end of each fiscal year of Borrower, audited annual consolidated financial
statements of Borrower, including the notes thereto, consisting of a
consolidated balance sheet at the end of such completed fiscal year and the
related consolidated statement of income, retained earnings, cash flows and
owners’ equity for such completed fiscal year, which financial statements shall
be prepared and certified without qualification by an independent certified
public accounting firm reasonably satisfactory to Lender and accompanied by
related management letters, if available, and (ii) as soon as available and in
any event within forty-five (45) calendar days after the end of each calendar
month, unaudited consolidated and consolidating financial statement of Borrower
consisting of a balance sheet and statements of income, as of  the end of the
immediately preceding calendar month, and unaudited statements of retained
earnings, cash flows and owners’ equity as of the end of each calendar quarter. 
All such financial statements shall be prepared in accordance with GAAP
consistently applied with prior

 

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periods.  With each such financial statement, Borrower shall also deliver a
certificate of its chief financial officer stating that (A) such person has
reviewed the relevant terms of the Loan Documents and the condition of Borrower,
(B) no Default or Event of Default has occurred or is continuing, or, if any of
the foregoing has occurred or is continuing, specifying the nature and status
and period of existence thereof and the steps taken or proposed to be taken with
respect thereto, and (C) Borrower is in compliance with all financial covenants
attached as Annex I hereto.  Such certificate shall be accompanied by the
calculations necessary to show compliance with the financial covenants in a form
satisfactory to Lender.

 

(b)           Other Materials.  Borrower shall furnish to Lender as soon as
available, and in any event within ten (10) calendar days after the preparation
or issuance thereof or at such other time as set forth below:  (i) any reports,
returns, information, notices and other materials that Borrower shall send to
its stockholders, members, partners or other equity owners at any time, (ii)
within fifteen (15) calendar days after the end of each calendar month for such
month, a sales and collection report and accounts receivable and accounts
payable aging schedule, including a report of sales, credits issued and
collections received, all such reports showing a reconciliation to the amounts
reported in the monthly financial statements, (iii) promptly upon receipt
thereof, copies of any reports submitted to Borrower by its independent
accountants in connection with any interim audit of the books of such Person or
any of its Affiliates and copies of each management control letter provided by
such independent accountants, and (iv) such additional information, documents,
statements, reports and other materials as Lender may reasonably request from a
credit or security perspective or otherwise from time to time.

 

(c)           Notices.  Borrower shall promptly, and in any event within two
(2) calendar days after Borrower or any authorized officer of Borrower obtains
knowledge thereof, notify Lender in writing of (i) any pending or threatened
litigation, suit, investigation, arbitration, dispute resolution proceeding or
administrative proceeding brought or initiated by Borrower or otherwise
affecting or involving or relating to Borrower or any of its property or assets
to the extent (A) the amount in controversy exceeds $10,000, or (B) to the
extent any of the foregoing seeks injunctive or declarative relief, (ii) any
Default or Event of Default, which notice shall specify the nature and status
thereof, the period of existence thereof and what action is proposed to be taken
with respect thereto, (iii) any other development, event, fact, circumstance or
condition that would reasonably be likely to have a Material Adverse Effect, in
each case describing the nature and status thereof and the action proposed to be
taken with respect thereto, (iv) any notice received by Borrower from any payor
of a claim, suit or other action such payor has, claims or has filed against
Borrower, (v) any matter(s) affecting the value, enforceability or
collectability of any of the Collateral, including, without limitation, claims
or disputes in the amount of $50,000 or more, singly or in the aggregate, in
existence at any one time, (vi) any notice given by Borrower to any other lender
of Borrower, which notice to Lender shall be accompanied by a copy of the
applicable notice given to the other Lender, (vii) receipt of any notice or
request from any Governmental Authority or governmental payor regarding any
liability or claim of liability, (viii) receipt of any notice by Borrower
regarding termination of any manager of any facility owed, operated or leased by
Borrower, (ix) Borrower’s execution and delivery of a new contract with a
Governmental Authority, providing Lender with an executed copy of such contract
promptly thereafter, and/or (x) any Account becoming evidenced or secured by an
Instrument or Chattel Paper.

 

(d)           Consents.  Borrower shall obtain and deliver from time to time all
required consents, approvals and agreements from such third parties as Lender
shall determine are necessary or desirable in its Permitted Discretion, each of
which must be satisfactory to Lender in its Permitted Discretion, with respect
to (i) the Loan Documents and the transactions

 

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contemplated thereby, (ii) claims against Borrower or the Collateral, and/or
(iii) any agreements, consents, documents or instruments to which Borrower is a
party or by which any properties or assets of Borrower or any of the Collateral
is or are bound or subject, including, without limitation, Landlord Waivers and
Consents with respect to leases.

 

(e)           Operating Budget.  Borrower shall furnish to Lender on or prior to
the Closing Date and for each fiscal year of Borrower thereafter not less than
ten (10) calendar days prior to the commencement of such fiscal year,
consolidated and consolidating month by month projected operating budgets,
annual projections, profit and loss statements, balance sheets and cash flow
reports of and for Borrower for such upcoming fiscal year (including an income
statement for each month and a balance sheet as at the end of the last month in
each fiscal quarter), in each case prepared in accordance with GAAP consistently
applied with prior periods.

 

6.2          PAYMENT OF OBLIGATIONS

 

Borrower shall make full and timely indefeasible payment in cash of the
principal of and interest on the Loans, Advances and all other Obligations.

 

6.3          CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS

 

Borrower shall (i) conduct its business in accordance with good business
practices customary to the industry, (ii) engage principally in the same or
similar lines of business substantially as heretofore conducted, (iii) collect
its Accounts in the ordinary course of business, (iv) maintain all of its
material properties, assets and equipment used or useful in its business in good
repair, working order and condition (normal wear and tear excepted and except as
may be disposed of in the ordinary course of business and in accordance with the
terms of the Loan Documents and otherwise as determined by Borrower using
commercially reasonable business judgment), (v) from time to time to make all
necessary or desirable repairs, renewals and replacements thereof, as determined
by Borrower using commercially reasonable business judgment, (vi) maintain and
keep in full force and effect its existence and all material Permits and
qualifications to do business and good standing in each jurisdiction in which
the ownership or lease of property or the nature of its business makes such
Permits or qualification necessary and in which failure to maintain such Permits
or qualification could reasonably be likely to have a Material Adverse Effect;
and (vii) remain in good standing in all jurisdictions in which its operations
are located.

 

6.4          COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS

 

Borrower shall (i) comply with all laws, statutes, rules, regulations,
ordinances and tariffs of all Governmental Authorities applicable to it or its
business, assets or operations, including applicable requirements of the
Standards for Privacy of Individually Identifiable Health Information which were
promulgated pursuant to HIPAA; (ii) pay when due all taxes, assessments, fees,
governmental charges, claims for labor, supplies, rent and all other obligations
or liabilities of any kind, except liabilities being contested in good faith and
against which adequate reserves have been established in accordance with GAAP,
(iii) perform in accordance with its terms each contract, agreement or other
arrangement  to which it is a party or by which it or any of the Collateral is
bound, except where the failure to comply, pay or perform could not reasonably
be expected to have a Material Adverse Effect, and (iv) maintain and comply with
all Permits necessary to conduct its business and comply with any new or
additional requirements that may be imposed on it or its business.

 

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6.5          INSURANCE

 

Borrower shall (i) keep all of its insurable properties and assets adequately
insured in all material respects against losses, damages and hazards as are
customarily insured against by businesses engaging in similar activities or
owning similar assets or properties and at least the minimum amount required by
applicable law, and maintain general public liability insurance at all times
against liability on account of damage to persons and property having such
limits, deductibles, exclusions and co-insurance and other provisions as are
customary for a business engaged in activities similar to those of Borrower; and
(iii) maintain insurance under all applicable workers’ compensation laws; all of
the foregoing insurance policies to (A) be reasonably satisfactory in form and
substance to Lender, (B) name Lender as additional insured under such insurance
as it relates to the Collateral, and (C) expressly provide that they cannot be
altered, amended, modified or canceled without thirty (30) Business Days prior
written notice to Lender and that they inure to the benefit of Lender
notwithstanding any action or omission or negligence of or by Borrower or any
insured thereunder.

 

6.6          TRUE BOOKS

 

Borrower shall (i) keep true, complete and accurate books of record and account
in accordance with commercially reasonable business practices in which true and
correct entries are made of all of its and their dealings and transactions in
all material respects; and (ii) set up and maintain on its books such reserves
as may be required by GAAP with respect to doubtful accounts and all taxes,
assessments, charges, levies and claims and with respect to its business, and
include such reserves in its quarterly as well as year end financial statements.

 

6.7          INSPECTION; PERIODIC AUDITS

 

Borrower shall permit the representatives of Lender, at the expense of Borrower,
from time to time during normal business hours upon reasonable notice and in
such a manner so as not to unreasonably disrupt any Borrower’s operations, to
(i) visit and inspect any of its offices or properties or any other place where
Collateral is located to inspect the Collateral and/or to examine or audit all
of its books of account, records, reports and other papers, (ii) make copies and
extracts therefrom, and (iii) discuss its business, operations, prospects,
properties, assets, liabilities, condition and/or Accounts with its officers and
independent public accountants (and by this provision such officers and
accountants are authorized to discuss the foregoing).  Other than during the
occurrence and continuance of a Default or an Event of Default, not more than
four (4) such inspections or audits related to any 12-month period shall be at
the expense of Borrower.  Lender may increase the frequency of inspections or
audits during the occurrence and continuance of a Default or an Event of
Default.

 

6.8          FURTHER ASSURANCES; POST CLOSING

 

At Borrower’s cost and expense, Borrower shall (i) take such further actions,
obtain such consents and approvals and duly execute and deliver such further
agreements, assignments, instructions or documents as Lender may reasonably
request with respect to the purposes, terms and conditions of the Loan Documents
and the consummation of the transactions contemplated thereby, and (ii) without
limiting and notwithstanding any other provision of any Loan Document, execute
and deliver, or cause to be executed and delivered, such agreements and
documents, and take or cause to be taken such actions, and otherwise perform,
observe and comply with such obligations, as are set forth on Schedule 6.8.

 

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6.9          PAYMENT OF INDEBTEDNESS

 

Except as otherwise prescribed in the Loan Documents, Borrower shall pay,
discharge or otherwise satisfy at or before maturity (subject to applicable
grace periods and, in the case of trade payables, to ordinary course payment
practices) all of its material obligations and liabilities, except when the
amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Lender may deem proper and necessary in its
sole discretion shall have been made.

 

6.10        LIEN SEARCHES

 

If Liens other than Permitted Liens exist, Borrower immediately shall take,
execute and deliver all actions, documents and instruments necessary to release
and terminate such Liens.

 

6.11        USE OF PROCEEDS

 

Borrower shall use the proceeds from the Revolving Facility only for the
purposes set forth in the first “WHEREAS” clause of this Agreement.

 

6.12        COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL

 

Borrower shall (i) execute, obtain, deliver, file, register and/or record any
and all financing statements, continuation statements, stock powers, instruments
and other documents, or cause the execution, filing, registration, recording or
delivery of any and all of the foregoing, that are necessary or required under
law or otherwise or reasonably requested by Lender to be executed, filed,
registered, obtained, delivered or recorded to create, maintain, perfect,
preserve, validate or otherwise protect the pledge of the Collateral to Lender
and Lender’s perfected first priority Lien on the Collateral (and Borrower
irrevocably grants Lender the right, at Lender’s option, to file any or all of
the foregoing), (ii) immediately upon learning thereof, report to Lender any
reclamation, return or repossession of goods in excess of $10,000.00
(individually or in the aggregate), and (iii) defend the Collateral and Lender’s
perfected first priority Lien thereon against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to Lender,
and pay all reasonable costs and expenses (including, without limitation,
in-house documentation and diligence fees and legal expenses and reasonable
attorneys’ fees and expenses) in connection with such defense, which may at
Lender’s discretion be added to the Obligations.

 

6.13        INTENTIONALLY DELETED

 

6.14        TAXES AND OTHER CHARGES

 

(a)  All payments and reimbursements to Lender made under any Loan Document
shall be free and clear of and without deduction for all taxes, levies, imposts,
deductions, assessments, charges or withholdings, and all liabilities with
respect thereto of any nature whatsoever, excluding taxes to the extent imposed
on Lender’s net income.  If Borrower shall be required by law to deduct any such
amounts from or in respect of any sum payable under any Loan Document to Lender,
then the sum payable to Lender shall be increased as may be necessary so that,
after making all required deductions, Lender receives an amount equal to the sum
it would have received had no such deductions been made.  Notwithstanding any
other

 

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provision of any Loan Document, if at any time after the Closing (i) any change
in any existing law, regulation, treaty or directive or in the interpretation or
application thereof, (ii) any new law, regulation, treaty or directive enacted
or any interpretation or application thereof, or (iii) compliance by Lender with
any request or directive (whether or not having the force of law) from any
Governmental Authority:  (A) subjects Lender to any tax, levy, impost,
deduction, assessment, charge or withholding of any kind whatsoever with respect
to any Loan Document, or changes the basis of taxation of payments to Lender of
any amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of Lender), or (B) imposes on Lender any other condition or increased cost in
connection with the transactions contemplated thereby or participations therein;
and the result of any of the foregoing is to increase the cost to Lender of
making or continuing any Loan hereunder or to reduce any amount receivable
hereunder, then, in any such case, Borrower shall promptly pay to Lender any
additional amounts necessary to compensate Lender, on an after-tax basis, for
such additional cost or reduced amount as determined by Lender.  If Lender
becomes entitled to claim any additional amounts pursuant to this Section 6.14
it shall promptly notify Borrower of the event by reason of which Lender has
become so entitled, and each such notice of additional amounts payable pursuant
to this Section 6.14 submitted by Lender to Borrower shall, absent manifest
error, be final, conclusive and binding for all purposes.

 

(b)  Borrower shall promptly, and in any event within five (5) Business Days
after Borrower or any authorized officer of Borrower obtains knowledge thereof,
notify Lender in writing of any oral or written communication from the Internal
Revenue Service or otherwise with respect to any (i) tax investigations,
relating to the Borrower directly, or relating to any consolidated tax return
which was filed on behalf of Borrower, (ii) notices of tax assessment or
possible tax assessment, (iii) years that are designated open pending tax
examination or audit, and (iv) information that could give rise to an IRS tax
liability or assessment.

 

6.15        PAYROLL TAXES

 

Without limiting or being limited by any other provision of any Loan Document,
Borrower at all times shall retain and use a Person reasonably acceptable to
Lender to process, manage and pay its payroll taxes and shall cause to be
delivered to Lender within ten (10) calendar days after the end of each calendar
month a report of its payroll taxes for the immediately preceding calendar month
and evidence of payment thereof.

 

VII.         NEGATIVE COVENANTS

 

Each Borrower, jointly and severally, covenants and agrees that, until full
performance and satisfaction, and indefeasible payment in full in cash, of all
of the Obligations and termination of this Agreement:

 

7.1                               FINANCIAL COVENANTS

 

Borrower shall not violate the financial covenants set forth on Annex I to this
Agreement, which is incorporated herein and made a part hereof.

 

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7.2                               PERMITTED INDEBTEDNESS

 

Borrower shall not create, incur, assume or suffer to exist any Indebtedness,
except the following (collectively, “Permitted Indebtedness”): (i) Indebtedness
under the Loan Documents, (ii) any Indebtedness set forth on Schedule 7.2, (iii)
Capitalized Lease Obligations incurred after the Closing Date and Indebtedness
incurred pursuant to purchase money Liens permitted by Section 7.3(v), provided
that the aggregate amount of such Capitalized Lease Obligations and purchase
money indebtedness outstanding at any time shall not exceed $100,000,
(iv) Indebtedness in connection with advances made by a stockholder in order to
cure any default of the financial covenants set forth on Annex I; provided,
however, that such Indebtedness shall be on an unsecured basis or secured by
assets unrelated to the Collateral, subordinated in right of repayment and
remedies to all of the Obligations and to all of Lender’s rights pursuant to a
subordination agreement in form and substance satisfactory to Lender;
(v) accounts payable to trade creditors and current operating expenses (other
than for borrowed money) which are not aged more than 120 calendar days from the
billing date or more than 30 days from the due date, in each case incurred in
the ordinary course of business and paid within such time period, unless the
same are being contested in good faith and by appropriate and lawful proceedings
and such reserves, if any, with respect thereto as are required by GAAP and
deemed adequate by Borrower’s independent accountants shall have been reserved;
and (vi) borrowings incurred in the ordinary course of business and not
exceeding $100,000 individually or in the aggregate outstanding at any one time,
provided, however, that such Indebtedness shall be on an unsecured basis or
secured by assets other than the Collateral, subordinated in right of repayment
and remedies to all of the Obligations and to all of Lender’s rights pursuant to
a subordination agreement in form and substance satisfactory to Lender. 
Borrower shall not make prepayments on any existing or future Indebtedness to
any Person other than to Lender or to the extent specifically permitted by this
Agreement or any subsequent agreement between Borrower and Lender).

 

7.3          PERMITTED LIENS

 

Borrower shall not create, incur, assume or suffer to exist any Lien upon, in or
against, or pledge of, any of the Collateral or any of its properties or assets
or any of its shares, securities or other equity or ownership or partnership
interests, whether now owned or hereafter acquired, except the following
(collectively, “Permitted Liens”): (i) Liens under the Loan Documents or
otherwise arising in favor of Lender, (ii) Liens imposed by law for taxes (other
than payroll taxes), assessments or charges of any Governmental Authority for
claims not yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained by such Person in accordance with GAAP to the
satisfaction of Lender in its Permitted Discretion, (iii) (A) statutory Liens of
landlords (provided that any such landlord has executed a Landlord Waiver and
Consent in form and substance satisfactory to Lender) and of carriers,
warehousemen, mechanics, materialmen, and (B) other Liens imposed by law or that
arise by operation of law in the ordinary course of business from the date of
creation thereof, in each case only for amounts not yet due or which are being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being maintained by such
Person in accordance with GAAP to the satisfaction of Lender in its Permitted
Discretion, (iv) Liens (A) incurred or deposits made in the ordinary course of
business (including, without limitation, surety bonds and appeal bonds) in
connection with workers’ compensation, unemployment insurance and other types of
social security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations, or (B) arising as a result of progress payments
under government contracts, (v) purchase money Liens (A) securing Indebtedness
permitted under Section 7.2(iii), or (B) in connection with the purchase by such
Person of equipment in the normal course of business,

 

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provided that such payables shall not exceed any limits on Indebtedness provided
for herein and shall otherwise be Permitted Indebtedness hereunder, (vi) Liens
securing Permitted Mortgage Indebtedness, provided, that such Liens shall not
extend to any Collateral and Lender and the Mortgagee shall have entered into a
satisfactory intercreditor agreement, and (vii) Liens disclosed on Schedule 7.3.

 

7.4          INVESTMENTS; NEW FACILITIES OR COLLATERAL; SUBSIDIARIES

 

Except as provided in Schedule 7.4, Borrower, directly or indirectly, shall not,
without Lender’s prior written consent (i) purchase, own, hold, invest in or
otherwise acquire obligations or stock or securities of, or any other interest
in, or all or substantially all of the assets of, any Person or any joint
venture, or (ii) make or permit to exist any loans, advances or guarantees to or
for the benefit of any Person or assume, guarantee, endorse, contingently agree
to purchase or otherwise become liable for or upon or incur any obligation of
any Person (other than those created by the Loan Documents and Permitted
Indebtedness and other than (A) trade credit extended in the ordinary course of
business, (B) advances for business travel and similar temporary advances made
in the ordinary course of business to officers, directors and employees, and (C)
the endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business).  Borrower, directly or
indirectly, shall not purchase, own, operate, hold, invest in or otherwise
acquire any facility, property or assets or any Collateral that is not located
at the locations set forth on Schedule 5.18B unless Borrower shall provide to
Lender at least thirty (30) Business Days prior written notice.  Borrower shall
have no Subsidiaries other than those Subsidiaries, if any, existing at Closing
and set forth in Schedule 5.3.

 

7.5          DIVIDENDS; REDEMPTIONS

 

Borrower shall not (i) declare, pay or make any dividend or distribution on any
shares of capital stock or other securities or interests (other than dividends
or distributions payable in its stock, or split-ups or reclassifications of its
stock), (ii) apply any of its funds, property or assets to the acquisition,
redemption or other retirement of any capital stock or other securities or
interests or of any options to purchase or acquire any of the foregoing
(provided, however, that Borrower may redeem its capital stock from terminated
employees pursuant to, but only to the extent required under, the terms of the
related employment agreements as long as no Default or Event of Default has
occurred and is continuing or would be caused by or result therefrom), (iii)
otherwise make any payments or Distributions to any stockholder, member, partner
or other equity owner in such Person’s capacity as such, or (iv) make any
payment of any management or service fee, provided that Borrower shall not make
or suffer to exist any such payment described in (i) through (iv) above if a
Default of Event of Default has occurred and is continuing or would result
therefrom.

 

7.6          TRANSACTIONS WITH AFFILIATES

 

Borrower shall not enter into or consummate any transaction of any kind with any
of its Affiliates (for purposes of this Section 7.6, Affliliates shall
specifically exclude other Borrowers) or any Guarantor or any of their
respective Affiliates other than: (i) salary, bonus, employee stock option and
other compensation and employment arrangements with employees, directors or
officers in the ordinary course of business, provided, that no payment of any
bonus shall be permitted if a Default or Event of Default has occurred and
remains in effect or would be caused by or result from such payment, (ii)
distributions and dividends permitted pursuant to Section 7.4, (iii)
transactions with Lender or any Affiliate of Lender, and (iv) payments permitted
under and pursuant to written agreements entered into by and between Borrower
and one or more

 

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of its Affiliates that both (A) reflect and constitute transactions on overall
terms at least as favorable to Borrower as would be the case in an arm’s-length
transaction between unrelated parties of equal bargaining power, and (B) are
subject to such terms and conditions as determined by Lender in its Permitted
Discretion; provided, that notwithstanding the foregoing but subject to the
rights under Section 7.2, Borrower shall not (Y) enter into or consummate any
transaction or agreement pursuant to which it becomes a party to any mortgage,
note, indenture or guarantee evidencing any Indebtedness of any of its
Affiliates or otherwise to become responsible or liable, as a guarantor, surety
or otherwise, pursuant to agreement for any Indebtedness of any such Affiliate,
or (Z) make any payment to any of its Affiliates in excess of $10,000 without
the prior written consent of Lender.

 

7.7          CHARTER DOCUMENTS; FISCAL YEAR; NAME; JURISDICTION OF ORGANIZATION;
DISSOLUTION; USE OF PROCEEDS

 

Borrower shall not (i) amend, modify, restate or change its certificate of
incorporation or formation or bylaws or similar charter documents in a manner
that would be adverse to Lender, (ii) change its fiscal year unless Borrower
demonstrates to Lender’s satisfaction compliance with the covenants contained
herein for both the fiscal year in effect prior to any change and the new fiscal
year period by delivery to Lender of appropriate interim and annual pro forma,
historical and current compliance certificates for such periods and such other
information as Lender may reasonably request, (iii) without at least 20 days
prior written notice to Lender, change it’s name or change its jurisdiction of
organization; (iv) amend, alter or suspend or terminate or make provisional in
any material way, any material Permit without the prior written consent of
Lender, which consent shall not be unreasonably withheld, (v) wind up, liquidate
or dissolve (voluntarily or involuntarily) or commence or suffer any proceedings
seeking or that would result in any of the foregoing, or (vi) use any proceeds
of any Advance for “purchasing” or “carrying” “margin stock” as defined in
Regulations U, T or X of the Board of Governors of the Federal Reserve System.

 

7.8          TRUTH OF STATEMENTS

 

Borrower shall not furnish to Lender any certificate or other document that
contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.

 

7.9          IRS Form 8821

 

Borrower shall not alter, amend, restate, or otherwise modify, or withdraw,
terminate or re-file the IRS Form 8821 required to be filed pursuant to the
Conditions Precedent in Section 4.1 hereof.

 

7.11        TRANSFER OF ASSETS

 

Notwithstanding any other provision of this Agreement or any other Loan
Document, Borrower shall not sell, lease, transfer, assign or otherwise dispose
of any interest in any properties or assets (other than obsolete equipment or
excess equipment no longer needed in the conduct of the business in the ordinary
course of business, Inventory, scrap, or licenses of General Intangibles in the
ordinary course of business), or agree to do any of the foregoing at any future
time, except that:

 

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(a)           Borrower may lease (as lessee) real or personal property or
surrender all or a portion of a lease of the same, in each case in the ordinary
course of business (so long as such lease does not create or result in and is
not otherwise a Capitalized Lease Obligation prohibited under this Agreement),
provided that a Landlord Waiver and Consent and such other consents as are
required by Lender are signed and delivered to Lender with respect to any lease
of real or other property, as applicable;

 

(b)           Borrower may consummate such other sales or dispositions of
property or assets (including any sale or transfer or disposition of all or any
part of its assets and thereupon and within one year thereafter rent or lease
the assets so sold or transferred) only to the extent prior written notice has
been given to Lender and to the extent Lender has given its prior written
consent thereto, subject in each case to such conditions as may be set forth in
such consent.

 

VIII.       EVENTS OF DEFAULT

 

The occurrence of any one or more of the following shall constitute an “Event of
Default:”

 

(a)           Borrower shall fail to pay any amount on the Obligations or
provided for in any Loan Document when due (whether on any payment date, at
maturity, by reason of acceleration, by notice of intention to prepay, by
required prepayment or otherwise);

 

(b)           any representation, statement or warranty made or deemed made by
Borrower or any Guarantor in any Loan Document or in any other certificate,
document, report or opinion delivered in conjunction with any Loan Document to
which it is a party, shall not be true and correct in all material respects or
shall have been false or misleading in any material respect on the date when
made or deemed to have been made (except to the extent already qualified by
materiality, in which case it shall be true and correct in all respects and
shall not be false or misleading in any respect);

 

(c)           Borrower or any Guarantor or other party thereto other than Lender
shall be in violation, breach or default of, or shall fail to perform, observe
or comply with any covenant, obligation or agreement set forth in, any Loan
Document and such violation, breach, default or failure shall not be cured
within the applicable period set forth in the applicable Loan Document; provided
that, with respect to the affirmative covenants set forth in Article VI (other
than Sections 6.1(c), 6.2, 6.3(i), (ii) and (iii), 6.5, 6.8, 6.9 and 6.11 for
which there shall be no cure period), there shall be a fifteen (15) calendar day
cure period commencing from the earlier of (i) Receipt by such Person of written
notice of such breach, default, violation or failure, and (ii) the time at which
such Person or any authorized officer thereof knew or became aware of such
failure, violation, breach or default but no Advances will be made during the
cure period;

 

(d)           (i) any of the Loan Documents ceases to be in full force and
effect except for a Termination as provided for herein, or (ii) any Lien created
thereunder ceases to constitute a valid perfected first priority Lien on the
Collateral in accordance with the terms thereof, or Lender ceases to have a
valid perfected first priority security interest in any of the Collateral or any
securities pledged to Lender pursuant to the Security Documents;

 

(e)           one or more tax assessments, judgments or decrees is rendered
against any Borrower or Guarantor in an amount in excess of $10,000 individually
or $50,000 in the

 

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aggregate, which is/are not satisfied, stayed, vacated or discharged of record
within thirty (30) calendar days of being rendered but no Advances will be made
before the judgment is stayed, vacated or discharged;

 

(f)            (i) any default occurs, which is not cured or waived, (x) in the
payment of any amount with respect to any Indebtedness (other than the
Obligations) of any Borrower or Guarantor in excess of $10,000, (y) in the
performance, observance or fulfillment of any provision contained in any
agreement, contract, document or instrument to which any Borrower or Guarantor
is a party or to which any of their properties or assets are subject or bound
under or pursuant to which any Indebtedness was issued, created, assumed,
guaranteed or secured and such default continues for more than any applicable
grace period or permits the holder of any Indebtedness to accelerate the
maturity thereof, or (z) in the performance, observance or fulfillment of any
provision contained in any agreement, contract, document or instrument between
any Borrower or Guarantor and Lender or any Affiliate of Lender (other than the
Loan Documents), or (ii) any Indebtedness in excess of $25,000 of any Borrower
or Guarantor is declared to be due and payable or is required to be prepaid
(other than by a regularly scheduled payment) prior to the stated maturity
thereof, or any obligation of such Person for the payment of Indebtedness (other
than the Obligations) is not paid when due or within any applicable grace
period, or any such obligation becomes or is declared to be due and payable
before the expressed maturity thereof, or there occurs an event which, with the
giving of notice or lapse of time, or both, would cause any such obligation to
become, or allow any such obligation to be declared to be, due and payable;

 

(g)           any Borrower or Guarantor shall (i) be unable to pay its debts
generally as they become due, (ii) have total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) that exceed its assets, at
a Fair Valuation, (iii) file a petition under any insolvency statute, (iv) make
a general assignment for the benefit of its creditors, (v) commence a proceeding
for the appointment of a receiver, trustee, liquidator or conservator of itself
or of the whole or any substantial part of its property, or (vi) file a petition
seeking reorganization or liquidation or similar relief under any Debtor Relief
Law or any other applicable law or statute;

 

(h)           a court of competent jurisdiction shall (A) enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of any Borrower or Guarantor or the whole or any substantial part of
any such Person’s properties, which shall continue unstayed and in effect for a
period of thirty (30) calendar days, (B) shall approve a petition filed against
any Borrower or Guarantor seeking reorganization, liquidation or similar relief
under the any Debtor Relief Law or any other applicable law or statute, which is
not dismissed within thirty (30) calendar days or, (C) under the provisions of
any Debtor Relief Law or other applicable law or statute, assume custody or
control of any Borrower or Guarantor or of the whole or any substantial part of
any such Person’s properties, which is not irrevocably relinquished within
thirty (30) calendar days, or (ii) there is commenced against any Borrower or
Guarantor any proceeding or petition seeking reorganization, liquidation or
similar relief under any Debtor Relief Law or any other applicable law or
statute and either (A) any such proceeding or petition is not unconditionally
dismissed within thirty (30) calendar days after the date of commencement, or
(B) any Borrower or Guarantor takes any action to indicate its approval of or
consent to any such proceeding or petition, but no Advances will be made before
any such order, judgment or decree described above is stayed, vacated or
discharged, any such petition described above is dismissed, or any such custody
or control described above is relinquished;

 

(i)            (i) any Change of Control occurs or any agreement or commitment
to cause or that may result in any such Change of Control is entered into, (ii)
any Material Adverse Effect or Material Adverse Change occurs or is reasonably
expected to occur, or (iii) any Borrower or Guarantor ceases a material portion
of its business operations as currently conducted;

 

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(j)         Lender receives any evidence that any Borrower or Guarantor may have
directly or indirectly been engaged in any type of activity which, in Lender’s
reasonable judgment, is likely to result in forfeiture of any property to any
Governmental Authority which shall have continued unremedied for a period of ten
(10) calendar days after written notice from Lender (but no Advances will be
made before any such activity ceases);

 

(k)           an Event of Default occurs under any other Loan Document;

 

(l)            uninsured damage to, or loss, theft or destruction of, any
portion of the Collateral occurs that exceeds $10,000 in the aggregate;

 

(m)          any Borrower or Guarantor or any of their respective directors or
senior officers is criminally indicted or convicted under any law that could
lead to a forfeiture of any Collateral;

 

(n)           the issuance of any process for levy, attachment or garnishment or
execution upon or prior to any judgment against any Borrower or Guarantor or any
of their property or assets; or

 

(o)           any Borrower or Guarantor does, or enters into or becomes a party
to any agreement or commitment to do, or cause to be done, any of the things
described in this Article VIII or otherwise prohibited by any Loan Document
(subject to any cure periods set forth therein);

 

then, and in any such event, notwithstanding any other provision of any Loan
Document, Lender may, without notice or demand, do any of the following: (i)
terminate its obligations to make Advances hereunder, whereupon the same shall
immediately terminate and (ii) declare all or any of the Notes, all interest
thereon and all other Obligations to be due and payable immediately (except in
the case of an Event of Default under Section 8(d), (g), (h) or (i)(iii), in
which event all of the foregoing shall automatically and without further act by
Lender be due and payable, provided that, with respect to non-material breaches
or violations that constitute Events of Default under clause (ii) of Section
8(d), there shall be a three (3) Business Day cure period (but no Advances will
be made during any such cure period) commencing from the earlier of (A) Receipt
by the applicable Person of written notice of such breach or violation or of any
event, fact or circumstance constituting or resulting in any of the foregoing,
and (B) the time at which such Person or any authorized officer thereof knew or
became aware, or should have known or been aware, of such breach or violation
and resulting Event of Default or of any event, fact or circumstance
constituting or resulting in any of the foregoing), in each case without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower.

 

IX.          RIGHTS AND REMEDIES AFTER DEFAULT

 

9.1          RIGHTS AND REMEDIES

 

(a)           In addition to the acceleration provisions set forth in Article
VIII above, upon the occurrence and continuation of an Event of Default, Lender
shall have the right to exercise any and all rights, options and remedies
provided for in the Loan Documents, under the UCC or at law or in equity,
including, without limitation, the right to (i) apply any property of any
Borrower held by Lender to reduce the Obligations, (ii) foreclose the Liens
created under the Security Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities

 

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pledged with or without judicial process, (iv) exercise all rights and powers
with respect to the Collateral as any Borrower, as applicable, might exercise,
(v) collect and send notices regarding the Collateral, with or without judicial
process, (vi) by its own means or with judicial assistance, enter any premises
at which Collateral and/or pledged securities are located, or render any of the
foregoing unusable or dispose of the Collateral and/or pledged securities on
such premises without any liability for rent, storage, utilities, or other sums,
and no Borrower shall resist or interfere with such action, (vii) at Borrower’s
expense, require that all or any part of the Collateral be assembled and made
available to Lender at any place designated by Lender, (viii) reduce or
otherwise change the Facility Cap, and/or (ix) relinquish or abandon any
Collateral or securities pledged or any Lien thereon.  Notwithstanding any
provision of any Loan Document, Lender, in its sole discretion, shall have the
right, at any time that Borrower fails to do so, and from time to time, without
prior notice, to: (i) obtain insurance covering any of the Collateral to the
extent required hereunder; (ii) pay for the performance of any of the
Obligations; (iii) discharge taxes or Liens on any of the Collateral that are in
violation of any Loan document unless Borrower is in good faith with due
diligence by appropriate proceedings contesting those items; and (iv) pay for
the maintenance and preservation of the Collateral.  Such expenses and advances
shall be added to the Obligations until reimbursed to Lender and shall be
secured by the Collateral, and such payments by Lender shall not be construed as
a waiver by Lender of any Event of Default or any other rights or remedies of
Lender.

 

(b)           Borrower agrees that notice received by it at least ten (10)
calendar days before the time of any intended public sale, or the time after
which any private sale or other disposition of Collateral is to be made, shall
be deemed to be reasonable notice of such sale or other disposition.  If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Lender without prior notice to Borrower.  At any sale or
disposition of Collateral or securities pledged, Lender may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by any Borrower which right is hereby waived and released. 
Borrower covenants and agrees not to, and not to permit or cause any of its
Subsidiaries to, interfere with or impose any obstacle to Lender’s exercise of
its rights and remedies with respect to the Collateral.  Lender, in dealing with
or disposing of the Collateral or any part thereof, shall not be required to
give priority or preference to any item of Collateral or otherwise to marshal
assets or to take possession or sell any Collateral with judicial process.

 

9.2          APPLICATION OF PROCEEDS

 

In addition to any other rights, options and remedies Lender has under the Loan
Documents, the UCC, at law or in equity, all dividends, interest, rents, issues,
profits, fees, revenues, income and other proceeds collected or received from
collecting, holding, managing, renting, selling, or otherwise disposing of all
or any part of the Collateral or any proceeds thereof upon exercise of its
remedies hereunder shall be applied in the following order of priority: 
(i) first, to the payment of all costs and expenses of such collection, storage,
lease, holding, operation, management, sale, disposition or delivery and of
conducting Borrower’s business and of maintenance, repairs, replacements,
alterations, additions and improvements of or to the Collateral, and to the
payment of all sums which Lender may be required or may elect to pay, if any,
for taxes, assessments, insurance and other charges upon the Collateral or any
part thereof, and all other payments that Lender may be required or authorized
to make under any provision of this Agreement (including, without limitation, in
each such case, in-house documentation and diligence fees and legal expenses,
search, audit, recording, professional and filing fees and expenses and
reasonable attorneys’ fees and all expenses, liabilities and advances made or
incurred in connection therewith); (ii) second, to the payment of all
Obligations as provided

 

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herein; (iii) third, to the satisfaction of Indebtedness secured by any
subordinate security interest of record in the Collateral if written
notification of demand therefor is received before distribution of the proceeds
is completed, provided, that, if requested by Lender, the holder of a
subordinate security interest shall furnish reasonable proof of its interest,
and unless it does so, Lender need not address its claims; and (iv) fourth, to
the payment of any surplus then remaining to Borrower, unless otherwise provided
by law or directed by a court of competent jurisdiction, provided that Borrower
shall be liable for any deficiency if such proceeds are insufficient to satisfy
the Obligations or any of the other items referred to in this section.

 

9.3          INTENTIONALLY DELETED

 

9.4          RIGHTS AND REMEDIES NOT EXCLUSIVE

 

Lender shall have the right in its sole discretion to determine which rights,
Liens and/or remedies Lender may at any time pursue, relinquish, subordinate or
modify, and such determination will not in any way modify or affect any of
Lender’s rights, Liens or remedies under any Loan Document, applicable law or
equity.  The enumeration of any rights and remedies in any Loan Document is not
intended to be exhaustive, and all rights and remedies of Lender described in
any Loan Document are cumulative and are not alternative to or exclusive of any
other rights or remedies which Lender otherwise may have.  The partial or
complete exercise of any right or remedy shall not preclude any other further
exercise of such or any other right or remedy.

 

X.            WAIVERS AND JUDICIAL PROCEEDINGS

 

10.1        WAIVERS

 

Except as expressly provided for herein, Borrower hereby waives setoff,
counterclaim, demand, presentment, protest, all defenses with respect to any and
all instruments and all notices and demands of any description, and the pleading
of any statute of limitations as a defense to any demand under any Loan
Document.  Borrower hereby waives any and all defenses and counterclaims it may
have or could interpose in any action or procedure brought by Lender to obtain
an order of court recognizing the assignment of, or Lien of Lender in and to,
any Collateral.  With respect to any action hereunder, Lender conclusively may
rely upon, and shall incur no liability to Borrower in acting upon, any request
or other communication that Lender reasonably believes to have been given or
made by a person authorized on Borrower’s behalf, whether or not such person is
listed on the incumbency certificate delivered pursuant to Section 4.1 hereof. 
In each such case, Borrower hereby waives the right to dispute Lender’s action
based upon such request or other communication, absent manifest error.

 

10.2        DELAY; NO WAIVER OF DEFAULTS

 

No course of action or dealing, renewal, release or extension of any provision
of any Loan Document, or single or partial exercise of any such provision, or
delay, failure or omission on Lender’s part in enforcing any such provision
shall affect the liability of any Borrower or Guarantor or operate as a waiver
of such provision or affect the liability of any Borrower or Guarantor or
preclude any other or further exercise of such provision.  No waiver by any
party to any Loan Document of any one or more defaults by any other party in the
performance of any of the provisions of any Loan Document shall operate or be
construed as a waiver of any future default, whether of a like or different
nature, and each such waiver shall be limited solely to the express terms and
provisions of such waiver.  Notwithstanding any other

 

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provision of any Loan Document, by completing the Closing under this Agreement
and/or by making Advances, Lender does not waive any breach of any
representation or warranty under any Loan Document, and all of Lender’s claims
and rights resulting from any such breach or misrepresentation are specifically
reserved.

 

10.3        JURY WAIVER

 

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS OR IN ANY WAY
CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THE
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE.  EACH
PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS
TO TRIAL BY JURY.

 

10.4                        COOPERATION IN DISCOVERY AND LITIGATION

 

In any litigation, arbitration or other dispute resolution proceeding relating
to any Loan Document, Borrower waives any and all defenses, objections and
counterclaims it may have or could interpose with respect to (i) any of its
directors, officers, employees or agents being deemed to be employees or
managing agents of Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise), (ii) Lender’s counsel examining any such
individuals as if under cross-examination and using any discovery deposition of
any of them as if it were an evidence deposition, and/or (iii) using all
commercially reasonable efforts to produce in any such dispute resolution
proceeding, at the time and in the manner requested by Lender, all Persons,
documents (whether in tangible, electronic or other form) and/or other things
under its control and relating to the dispute.

 

XI.          EFFECTIVE DATE AND TERMINATION

 

11.1        TERMINATION AND EFFECTIVE DATE THEREOF

 

(a)           Subject to Lender’s right to terminate and cease making Advances
upon or after any Event of Default, this Agreement shall continue in full force
and effect until the full performance and indefeasible payment in cash of all
Obligations, unless terminated sooner as provided in this Section 11.1. 
Borrower may terminate this Agreement at any time upon not less than sixty (60)
calendar days’ prior written notice to Lender and upon full performance and
indefeasible payment in full in cash of all Obligations on or prior to such 60th
calendar day after Receipt by Lender of such written notice.  All of the
Obligations shall be immediately due and payable upon any such termination on
the termination date stated in any notice of termination (the “Termination
Date”); provided that, notwithstanding any other provision of any Loan Document,
the Termination Date shall be effective no earlier than the first Business Day
of the month following the expiration of the sixty (60) calendar days’ prior
written notice period.  Notwithstanding any other provision of any Loan
Document, no termination of this Agreement shall affect Lender’s rights or any
of the Obligations existing as of the effective date of such termination, and
the provisions of the Loan Documents shall continue to be fully operative until
the Obligations have been fully performed and indefeasibly paid in cash in
full.  The Liens granted to Lender under the Security Documents and the
financing statements filed pursuant thereto and the rights and powers of Lender
shall continue in full force and effect notwithstanding

 

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the fact that Borrower’s borrowings hereunder may from time to time be in a zero
or credit position until all of the Obligations have been fully performed and
indefeasibly paid in full in cash.

 

(b)           If (i) Borrower terminates the Revolving Facility under this
Section 11.1, (ii) Borrower voluntarily or involuntarily repays the Obligations
(other than reductions to zero of the outstanding balance of the Revolving
Facility resulting from the ordinary course operation of the provisions of
Section 2.5), whether by virtue of Lender’s exercising its right of set off or
otherwise; (iii)  the Obligations are accelerated by Lender (each of the events
described in (i), (ii) and (iii) above being hereinafter referred to as, a
“Revolver Termination”), then at the effective date of any such Revolver
Termination, Borrower shall pay Lender (in addition to the then outstanding
principal, accrued interest  and other Obligations relating to the Revolving
Facility pursuant to the terms of this Agreement and any other Loan Document),
to compensate Lender for the loss of bargain and not as a penalty, an amount
equal to the applicable Minimum Termination Fee.

 

11.2        SURVIVAL

 

All obligations, covenants, agreements, representations, warranties, waivers and
indemnities made by Borrower in any Loan Document shall survive the execution
and delivery of the Loan Documents, the Closing, the making of the Advances and
any termination of this Agreement until all Obligations are fully performed and
indefeasibly paid in full in cash.  The obligations and provisions of Sections
3.4, 3.5, 6.13, 10.1, 10.3, 11.1, 11.2, 12.4, 12.7 and 12.10 shall survive
termination of the Loan Documents and any payment, in full or in part, of the
Obligations.

 

XII.         MISCELLANEOUS

 

12.1        GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE

 

The Loan Documents shall be governed by and construed in accordance with the
internal laws of the State of Maryland without giving effect to its choice of
law provisions.  Any judicial proceeding against Borrower with respect to the
Obligations, any Loan Document or any related agreement may be brought in any
federal or state court of competent jurisdiction located in the State of
Maryland.  By execution and delivery of each Loan Document to which it is a
party, Borrower (i) accepts the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii)
waives personal service of process, (iii) agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, pursuant
to Section 12.5 hereof, (iv) waives any objection to jurisdiction and venue of
any action instituted hereunder and agrees not to assert any defense based on
lack of jurisdiction, venue or convenience, and (v) agrees that this loan was
made in Maryland, that Lender has accepted in Maryland Loan Documents executed
by Borrower and has disbursed Advances under the Loan Documents in Maryland. 
Nothing shall affect the right of Lender to serve process in any manner
permitted by law or shall limit the right of Lender to bring proceedings against
Borrower in the courts of any other jurisdiction having jurisdiction.  Any
judicial proceedings against Lender involving, directly or indirectly, the
Obligations, any Loan Document or any related agreement shall be brought only in
a federal or state court located in the State of Maryland.  All parties
acknowledge that they participated in the negotiation and drafting of this
Agreement and that, accordingly, no party shall move or petition a court
construing this Agreement to construe it more stringently against one party than
against any other.

 

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12.2        SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS

 

The Loan Documents shall inure to the benefit of Lender, Transferees and all
future holders of any Note, the Obligations and/or any of the Collateral, and
each of their respective successors and assigns.  Each Loan Document shall be
binding upon the Persons’ other than Lender that are parties thereto and their
respective successors and assigns, and no such Person may assign, delegate or
transfer any Loan Document or any of its rights or obligations thereunder
without the prior written consent of Lender.  No rights are intended to be
created under any Loan Document for the benefit of any third party donee,
creditor or incidental beneficiary of any Borrower or Guarantor.  Nothing
contained in any Loan Document shall be construed as a delegation to Lender of
any other Person’s duty of performance.  BORROWER ACKNOWLEDGES AND AGREES THAT
LENDER AT ANY TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND RESTATE ANY NOTE,
AND/OR (II) SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR
ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT, NOTE, THE
OBLIGATIONS AND/OR THE COLLATERAL TO OTHER PERSONS (EACH SUCH TRANSFEREE,
ASSIGNEE OR PURCHASER, A “TRANSFEREE”).  Each Transferee shall have all of the
rights and benefits with respect to the Obligations, Notes, Collateral and/or
Loan Documents held by it as fully as if the original holder thereof, and either
Lender or any Transferee may be designated as the sole agent to manage the
transactions and obligations contemplated therein; provided that,
notwithstanding anything to the contrary in any Loan Document, Borrower shall
not be obligated to pay under this Agreement to any Transferee any sum in excess
of the sum which Borrower would have been obligated to pay to Lender had such
participation not been effected.  Notwithstanding any other provision of any
Loan Document, Lender may disclose to any Transferee all information, reports,
financial statements, certificates and documents obtained under any provision of
any Loan Document.

 

12.3        APPLICATION OF PAYMENTS

 

To the extent that any payment made or received with respect to the Obligations
is subsequently invalidated, determined to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other Person under any Debtor Relief Law, common law or
equitable cause or any other law, then the Obligations intended to be satisfied
by such payment shall be revived and shall continue as if such payment had not
been received by Lender.  Any payments with respect to the Obligations received
shall be credited and applied in such manner and order as Lender shall decide in
its Permitted Discretion.

 

12.4        INDEMNITY

 

Each Borrower jointly and severally shall indemnify Lender, its Affiliates and
its and their respective managers, members, officers, employees, Affiliates,
agents, representatives, successors, assigns, accountants and attorneys
(collectively, the “Indemnified Persons”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, reasonable fees and disbursements of counsel and in-house
documentation and diligence fees and legal expenses) which may be imposed on,
incurred by or asserted against any Indemnified Person with respect to or
arising out of, or in any litigation, proceeding or investigation instituted or
conducted by any Person with respect to any aspect of, or any transaction
contemplated by or referred to in, or any matter related to, any Loan Document
or any agreement, document or transaction contemplated thereby, whether or not
such Indemnified Person is a party thereto, except to the extent that any of the
foregoing arises out of the gross

 

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negligence or willful misconduct of such Indemnified Person.  If any Indemnified
Person uses in-house counsel for any purpose for which any Borrower is
responsible to pay or indemnify, each Borrower expressly agrees that its
indemnification obligations include reasonable charges for such work
commensurate with the fees that would otherwise be charged by outside legal
counsel selected by such Indemnified Person in its sole discretion for the work
performed.  Lender agrees to give Borrower reasonable notice of any event of
which Lender becomes aware for which indemnification may be required under this
Section 12.4, and Lender may elect (but is not obligated) to direct the defense
thereof, provided that the selection of counsel shall be subject to Borrower’s
consent, which consent shall not be unreasonably withheld or delayed.  Any
Indemnified Person may, in its reasonable discretion, take such actions as it
deems necessary and appropriate to investigate, defend or settle any event or
take other remedial or corrective actions with respect thereto as may be
necessary for the protection of such Indemnified Person or the Collateral. 
Notwithstanding the foregoing, if any insurer agrees to undertake the defense of
an event (an “Insured Event”), Lender agrees not to exercise its right to select
counsel to defend the event if that would cause any Borrower’s insurer to deny
coverage; provided, however, that Lender reserves the right to retain counsel to
represent any Indemnified Person with respect to an Insured Event at Lender’s
sole cost and expense.  To the extent that Lender obtains recovery from a third
party other than an Indemnified Person of any of the amounts that any Borrower
has paid to Lender pursuant to the indemnity set forth in this Section 12.4,
then Lender shall promptly pay to such Borrower the amount of such recovery.

 

12.5        NOTICE

 

Any notice or request under any Loan Document shall be given to any party to
this Agreement at such party’s address set forth beneath its signature on the
signature page to this Agreement, or at such other address as such party may
hereafter specify in a notice given in the manner required under this Section
12.5.  Any notice or request hereunder shall be given only by, and shall be
deemed to have been received upon (each, a “Receipt”):  (i) registered or
certified mail, return receipt requested, on the date on which received as
indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier, or
(iii) facsimile transmission, upon telephone or further electronic communication
from the recipient acknowledging receipt (whether automatic or manual from
recipient), as applicable.

 

12.6        SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES

 

If any provision of any Loan Document is adjudicated to be invalid under
applicable laws or regulations, such provision shall be inapplicable to the
extent of such invalidity without affecting the validity or enforceability of
the remainder of the Loan Documents which shall be given effect so far as
possible.  The captions in the Loan Documents are intended for convenience and
reference only and shall not affect the meaning or interpretation of the Loan
Documents.  The Loan Documents may be executed in one or more counterparts
(which taken together, as applicable, shall constitute one and the same
instrument) and by facsimile transmission, which facsimile signatures shall be
considered original executed counterparts.  Each party to this Agreement agrees
that it will be bound by its own facsimile signature and that it accepts the
facsimile signature of each other party.

 

12.7        EXPENSES

 

Borrower shall pay, whether or not the Closing occurs, all costs and expenses
incurred by Lender and/or its Affiliates, including, without limitation,
documentation and

 

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diligence fees and expenses, all search, audit, appraisal, recording,
professional and filing fees and expenses and all other out-of-pocket charges
and expenses (including, without limitation, UCC and judgment and tax lien
searches and UCC filings and fees for post-Closing UCC and judgment and tax lien
searches and wire transfer fees and audit expenses), and reasonable attorneys’
fees and expenses, (i) in any effort to enforce, protect or collect payment of
any Obligation or to enforce any Loan Document or any related agreement,
document or instrument, (ii) in connection with entering into, negotiating,
preparing, reviewing and executing the Loan Documents and/or any related
agreements, documents or instruments, (iii) arising in any way out of
administration of the Obligations, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Lender’s Liens in any
of the Collateral or securities pledged under the Loan Documents, whether
through judicial proceedings or otherwise, (v) in defending or prosecuting any
actions, claims or proceedings arising out of or relating to Lender’s
transactions with Borrower, (vi) in seeking, obtaining or receiving any advice
with respect to its rights and obligations under any Loan Document and any
related agreement, document or instrument, and/or (vii) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document and/or any related agreement, document or instrument.  All of the
foregoing shall be charged to Borrower’s account and shall be part of the
Obligations.  If Lender or any of its Affiliates uses in-house counsel for any
purpose under any Loan Document for which Borrower is responsible to pay or
indemnify, Borrower expressly agrees that its Obligations include reasonable
charges for such work commensurate with the fees that would otherwise be charged
by outside legal counsel selected by Lender or such Affiliate in its sole
discretion for the work performed.  Without limiting the foregoing, Borrower
shall pay all taxes (other than taxes based upon or measured by Lender’s income
or revenues or any personal property tax), if any, in connection with the
issuance of any Note and the filing and/or recording of any documents and/or
financing statements.

 

12.8        ENTIRE AGREEMENT

 

This Agreement and the other Loan Documents to which Borrower is a party
constitute the entire agreement between Borrower and Lender with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof or thereof.  Any
promises, representations, warranties or guarantees not herein contained and
hereinafter made shall have no force and effect unless in writing signed by
Borrower and Lender.  No provision of this Agreement may be changed, modified,
amended, restated, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing or in any other manner other than by an
agreement in writing signed by Lender and Borrower.  Each party hereto
acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.

 

12.9        LENDER APPROVALS

 

Unless expressly provided herein to the contrary, any approval, consent, waiver
or satisfaction of Lender with respect to any matter that is subject of any Loan
Document may be granted or withheld by Lender in its sole and absolute
discretion.

 

12.10      PUBLICITY

 

Borrower hereby agrees that Lender or any Affiliate of Lender may (i) disclose a
general description of transactions arising under the Loan Documents for
advertising, marketing

 

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or other similar purposes and (ii) use Borrower’s or any Guarantor’s name, logo
or other indicia germane to such party in connection with such advertising,
marketing or other similar purposes.

 

12.11   AGENT

 

Lender and its successors and assigns hereby (i) designate and appoint
CapitalSource Finance LLC, a Delaware limited liability company, and its
successors and assigns (“CapitalSource”), to act as agent for Lender and its
successors and assigns under this Agreement and all other Loan Documents, (ii)
irrevocably authorize CapitalSource to take all actions on its behalf under the
provision of this Loan Agreement and all other Loan Documents, and (iii) to
exercise all such powers and rights, and to perform all such duties and
obligations hereunder and thereunder.  CapitalSource, on behalf of Lender, shall
hold all Collateral, payments of principal and interest, fees, charges and
collections received pursuant to this Agreement and all other Loan Documents. 
Borrower acknowledges that Lender and its successors and assigns transfer and
assign to CapitalSource the right to act as Lender’s agent to enforce all rights
and perform all obligations of Lender contained herein and in all of the other
Loan Documents.  Borrower shall within ten (10) Business Days after Lender’s
reasonable request, take such further actions, obtain such consents and
approvals and duly execute and deliver such further agreements, amendments,
assignments, instructions or documents as Lender may request to evidence the
appointment and designation of CapitalSource as agent for Lender and other
financial institutions from time to time party hereto and to the other Loan
Documents.

 

12.12   CONFIDENTIALITY/ RESTRICTIONS ON SECURITIES TRANSACTIONS

 

Lender agrees to keep all non-public information confidential and not to
disclose or make available any such information to any third parties other than
to parties who agree to keep it confidential.  Lender acknowledges that the
United States securities laws prohibit any person who has material non-public
information about a company from purchasing or selling securities of such
company or from communicating such information to any other person under
circumstances in which it is reasonably foreseeable that such person is likely
to purchase or sell securities.  Lender will not purchase or sell securities of
Borrower during any period when Lender possesses material non-public
information.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

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IN WITNESS WHEREOF, each of the parties has duly executed this Revolving Credit
and Security Agreement as of the date first written above.

 

 

 

BOSTON BIOMEDICA, INC.

 

 

BBI BIOTECH RESEARCH LABORATORIES, INC.

 

 

BBI SOURCE SCIENTIFIC, INC.

 

 

BBI BIOSEQ, INC.

 

 

 

 

 

 

 

 

By:

/s/ Kevin W. Quinlan

 

 

 

Name:

Kevin W. Quinlan

 

 

 

Its:

President & Chief Operating Officer

 

 

 

 

 

 

Address for Notices:

 

 

Boston Biomedica, Inc.

 

 

375 West Street

 

 

West Bridgewater, MN 02379

 

 

Attention:

President

 

 

Telephone:

(508) 580-1980

 

 

FAX:

(508) 580-1110

 

 

 

 

 

 

 

 

CAPITALSOURCE FINANCE LLC

 

 

 

 

 

 

 

 

By:

/s/ Steven A. Museles

 

 

 

Name:

Steven A. Museles

 

 

 

Its:

Secretary

 

 

 

 

 

 

 

 

 

Address for Notices:

 

 

CapitalSource Finance LLC

 

 

4445 Willard Avenue, 12th Floor

 

 

Chevy Chase, MD  20815

 

 

Attention:  Healthcare Finance Group, Portfolio Manager

 

 

 

 

 

Telephone:  (301) 841-2700

 

 

FAX:  (301) 841-2340

 

 

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