Exhibit 10.08

LOAN AND SECURITY AGREEMENT

by and among

PAINCARE HOLDINGS, INC.

as Parent

and

EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

HBK INVESTMENTS L.P.

as the Arranger and Administrative Agent

Dated as of May 10, 2005

 

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LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT (this “Agreement”), is entered into as of
May 10, 2005, between and among, on the one hand, the lenders identified on the
signature pages hereof (such lenders, together with their respective successors
and assigns, are referred to hereinafter each individually as a “Lender” and
collectively as the “Lenders”), HBK INVESTMENTS L.P., a Texas limited
partnership, as the arranger and administrative agent for the Lenders (in such
capacity, together with its successors and assigns in such capacity, “Agent”),
and, on the other hand, PAINCARE HOLDINGS, INC., a Florida corporation
(“Parent”), and each of Parent’s Subsidiaries identified on the signature pages
hereof (such Subsidiaries are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”).

The parties agree as follows:

 

1. DEFINITIONS AND CONSTRUCTION.

1.1 Definitions. As used in this Agreement, the following terms shall have the
following definitions:

“2003 Subordinated Note Refinance Date” means the date that is 90 days before
the date when all or any portion of the principal balance of the Indebtedness
evidenced by the 2003 Subordinated Notes is due and payable.

“2003 Subordinated Notes” means the notes issued by Parent in connection with
that certain Securities Purchase Agreement dated as of December 17, 2003, by and
among Parent and the Subordinated Lenders.

“2004 Subordinated Note Refinance Date” means the date that is 90 days before
the date when all or any portion of the principal balance of the Indebtedness
evidenced by the 2004 Subordinated Notes is due and payable.

“2004 Subordinated Notes” means the notes issued by Parent in connection with
that certain Securities Purchase Agreement dated as of July 1, 2004, by and
among Parent and the Subordinated Lenders.

“Account” means an account (as that term is defined in the Code).

“Account Debtor” means any Person who is obligated on an Account, chattel paper,
or a General Intangible.

“Acquisition” means (a) any Stock Acquisition, or (b) any Asset Acquisition.

“Acquisition Documents” means each agreement or other document executed or
delivered in connection with any Acquisition that was consummated on or before
the Closing Date, which shall be in form and substance satisfactory to Agent.

 

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“Additional Documents” has the meaning set forth in Section 4.4(c).

“Administrative Borrower” has the meaning set forth in Section 17.9.

“Affiliate” means, as applied to any Person, any other Person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such Person. For purposes of this definition,
“control” means the possession, directly or indirectly through one or more
intermediaries, of the power to direct the management and policies of a Person,
whether through the ownership of Stock, by contract, or otherwise; provided,
however, that, for purposes of Section 7.13 hereof: (a) any Person which owns
directly or indirectly 10% or more of the Stock having ordinary voting power for
the election of directors or other members of the governing body of a Person or
10% or more of the partnership or other ownership interests of a Person (other
than as a limited partner of such Person) shall be deemed an Affiliate of such
Person, (b) each director (or comparable manager) of a Person shall be deemed to
be an Affiliate of such Person, and (c) each partnership or joint venture in
which a Person is a partner or joint venturer shall be deemed an Affiliate of
such Person.

“Agent” has the meaning set forth in the preamble to this Agreement.

“Agent Advances” has the meaning set forth in Section 2.3(e)(i).

“Agent-Related Persons” means Agent, together with its Affiliates, officers,
directors, employees, attorneys, and agents.

“Agent’s Account” means the Deposit Account of Agent identified on Schedule A-1.

“Agent’s Liens” means the Liens granted by Borrowers or their Subsidiaries to
Agent under this Agreement or the other Loan Documents.

“Agreement” has the meaning set forth in the preamble hereto.

“Applicable Prepayment Premium” means, as of any date of determination, an
amount equal to (a) during the period from and after the date of the execution
and delivery of this Agreement up to the date that is the first anniversary of
the Closing Date, the greater of (i) the Yield Maintenance Amount, and
(ii) $750,000, (b) during the period from and including the date that is the
first anniversary of the Closing Date up to the date that is the second
anniversary of the Closing Date, $500,000, and (c) during the period of time
from and including the date that is the second anniversary of the Closing Date
up to the date that is the third anniversary of the Closing Date, $250,000.

“Asset Acquisition” means any purchase or other acquisition by any Borrower, any
Guarantor, or any of their respective wholly-owned Subsidiaries of all or
substantially all of the assets of any other Person or the operations of a
Medical Practice from any other Person.

 

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“Assignee” has the meaning set forth in Section 14.1(a).

“Assignment and Acceptance” means an Assignment and Acceptance Agreement
substantially in the form of Exhibit A-1.

“Authorized Person” means any officer or employee of Administrative Borrower.

“Bankruptcy Code” means title 11 of the United States Code, as in effect from
time to time.

“Base LIBOR Rate” means the rate per annum, determined by Agent in accordance
with its customary procedures, and utilizing such electronic or other quotation
sources as it considers appropriate (rounded upwards, if necessary, to the next
1/100%), to be the rate at which Dollar deposits (for delivery on the first day
of the requested Interest Period) are offered to major banks in the London
interbank market 2 Business Days prior to the commencement of the requested
Interest Period, for a term and in an amount comparable to the Interest Period
and the amount of the LIBOR Rate Loan requested (whether as an initial LIBOR
Rate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of a Base
Rate Loan to a LIBOR Rate Loan) by Administrative Borrower in accordance with
this Agreement, which determination shall be conclusive in the absence of
manifest error.

“Base Rate” means, the rate of interest announced, from time to time, by
JPMorgan Chase Bank, or any successor thereto, as its “prime rate”, with the
understanding that the “prime rate” is not necessarily the lowest rate available
from such financial institution.

“Base Rate Loan” means the portion of the Term Loans that bears interest at a
rate determined by reference to the Base Rate.

“Base Rate Term Loan Margin” means 4.50 percentage points.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Parent, any Borrower or any Subsidiary or ERISA Affiliate of
Parent or any Borrower has been an “employer” (as defined in Section 3(5) of
ERISA) within the past six years.

“Board of Directors” means the board of directors (or comparable managers) of
Parent or any committee thereof duly authorized to act on behalf of the board of
directors (or comparable managers).

“Books” means all of Parent’s and its Subsidiaries’ now owned or hereafter
acquired books and records (including all of their Records indicating,
summarizing, or evidencing their assets (including the Collateral) or
liabilities, all of Parent’s and its Subsidiaries’ Records relating to their
business operations or financial condition, and all of their goods or General
Intangibles related to such information).

 

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“Borrower” and “Borrowers” have the respective meanings set forth in the
preamble to this Agreement.

“Borrower Collateral” means all of each Borrower’s now owned or hereafter
acquired right, title, and interest in and to each of the following:

(a) all of its Accounts,

(b) all of its Books,

(c) all of its commercial tort claims described on Schedule 5.7(d),

(d) all of its Deposit Accounts,

(e) all of its Equipment,

(f) all of its General Intangibles,

(g) all of its Inventory,

(h) all of its Investment Property (including all of its securities and
Securities Accounts),

(i) all of its Negotiable Collateral,

(j) all of its Supporting Obligations,

(k) money or other assets of each such Borrower that now or hereafter come into
the possession, custody, or control of any member of the Lender Group, and

(l) the proceeds and products, whether tangible or intangible, of any of the
foregoing, including proceeds of insurance covering any or all of the foregoing,
and any and all Accounts, Books, Deposit Accounts, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, Supporting Obligations, money, or other tangible or intangible
property resulting from the sale, exchange, collection, or other disposition of
any of the foregoing, or any portion thereof or interest therein, and the
proceeds thereof.

The foregoing to the contrary notwithstanding, Borrower Collateral shall not
include the Excluded Assets.

“Borrowing” means a borrowing hereunder consisting of term loans made on the
same day by the Lenders (or Agent on behalf thereof), or by Agent in the case of
an Agent Advance, in each case, to Administrative Borrower.

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which banks are authorized or required to close in the state of New York, except
that, if a

 

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determination of a Business Day shall relate to a LIBOR Rate Loan, the term
“Business Day” also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.

“Canadian Guarantor” means Rothbart Pain Management Clinic, Inc., an Ontario
corporation.

“Canadian Guarantor Security Agreement” means the security agreement executed
and delivered by Canadian Guarantor in favor of Agent, in form and substance
satisfactory to Agent.

“Canadian Guaranty” means the guaranty executed and delivered by Canadian
Guarantor in favor of Agent, in form and substance satisfactory to Agent.

“Capital Expenditures” means, with respect to any Person for any period, the
aggregate of all expenditures by such Person and its Subsidiaries during such
period that are capital expenditures as determined in accordance with GAAP,
whether such expenditures are paid in cash or financed, excluding all
expenditures in respect of Permitted Acquisitions.

“Capitalized Lease Obligation” means that portion of the obligations under a
Capital Lease that is required to be capitalized in accordance with GAAP.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Cash Equivalents” means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable from either
Standard & Poor’s Rating Group (“S&P”) or Moody’s Investors Service, Inc.
(“Moody’s”), (c) commercial paper maturing no more than 270 days from the date
of creation thereof and, at the time of acquisition, having a rating of at least
A-1 from S&P or at least P-1 from Moody’s, (d) certificates of deposit or
bankers’ acceptances maturing within 1 year from the date of acquisition thereof
issued by any bank organized under the laws of the United States or any state
thereof having at the date of acquisition thereof combined capital and surplus
of not less than $250,000,000, (e) Deposit Accounts maintained with (i) any bank
that satisfies the criteria described in clause (d) above, or (ii) any other
bank organized under the laws of the United States or any state thereof so long
as the amount maintained with any such other bank is less than or equal to
$100,000 and is insured by the Federal Deposit Insurance Corporation, and
(f) Investments in money market funds substantially all of whose assets are
invested in the types of assets described in clauses (a) through (e) above.

“Cash Management Account” has the meaning set forth in Section 2.7(a).

 

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“Cash Management Agreements” means those certain cash management agreements, in
form and substance satisfactory to Agent, each of which is among Parent or one
of its Subsidiaries, Agent, and one of the Cash Management Banks.

“Cash Management Bank” has the meaning set forth in Section 2.7(a).

“Change of Control” means that (a) Permitted Holders sell, dispose or otherwise
transfer, directly or indirectly, more than 33% of the Stock of Parent held by
Permitted Holders on the Closing Date, (b) any “person” or “group” (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 20%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors,
or (c) a majority of the members of the Board of Directors do not constitute
Continuing Directors, or (d) any Borrower or any Guarantor ceases to own,
directly or indirectly, and control (i) 100% of the outstanding Stock of each of
its Subsidiaries (other than PSHS Alpha Partners, Ltd.) in existence as of the
Closing Date, and (ii) 67.5% of the outstanding Stock of PSHS Alpha Partners,
Ltd.

“Closing Date” means the date of the making of the initial Term Loan (or other
extension of credit) hereunder.

“Closing Date Business Plan” means the set of Projections of Borrowers for the 4
year period following the Closing Date (on a year by year basis, and for the 1
year period following the Closing Date, on a month by month basis), in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent.

“Code” means the New York Uniform Commercial Code, as in effect from time to
time; provided, however, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection, priority, or
remedies with respect to Agent’s Lien on any Collateral is governed by the
Uniform Commercial Code as enacted and in effect in a jurisdiction other than
the State of New York, the term “Code” shall mean the Uniform Commercial Code as
enacted and in effect in such other jurisdiction solely for purposes of the
provisions thereof relating to such attachment, perfection, priority, or
remedies.

“Collateral” means all assets and interests in assets and proceeds thereof now
owned or hereafter acquired by Administrative Borrower or its Subsidiaries in or
upon which a Lien is granted under any of the Loan Documents.

“Collateral Access Agreement” means a landlord waiver, bailee letter, or
acknowledgement agreement of any lessor, warehouseman, processor, consignee, or
other Person in possession of, having a Lien upon, or having rights or interests
in Administrative Borrower’s or its Subsidiaries’ Books, Equipment or Inventory,
in each case, in form and substance satisfactory to Agent.

 

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“Collections” means all cash, checks, notes, instruments, and other items of
payment (including insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds).

“Commercial Tort Claim Assignment” has the meaning set forth in Section 4.4(b).

“Commitment” means, with respect to each Lender, its Term Loan Commitment, or
its Total Commitment, as the context requires, and, with respect to all Lenders,
their Term Loan Commitments, or their Total Commitments, as the context
requires, in each case as such Dollar amounts are set forth beside such Lender’s
name under the applicable heading on Schedule C-1 or in the Assignment and
Acceptance pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 14.1.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 delivered by the chief financial officer of Parent to Agent.

“Continuing Director” means (a) any member of the Board of Directors who was a
director (or comparable manager) of Parent on the Closing Date, and (b) any
individual who becomes a member of the Board of Directors after the Closing Date
if such individual was appointed or nominated for election to the Board of
Directors by a majority of the Continuing Directors, but excluding any such
individual originally proposed for election in opposition to the Board of
Directors in office at the Closing Date in an actual or threatened election
contest relating to the election of the directors (or comparable managers) of
Parent and whose initial assumption of office resulted from such contest or the
settlement thereof.

“Control Agreement” means a control agreement, in form and substance
satisfactory to Agent, executed and delivered by Parent or one of its
Subsidiaries, Agent, and the applicable securities intermediary (with respect to
a Securities Account) or bank (with respect to a Deposit Account).

“Daily Balance” means, as of any date of determination and with respect to any
Obligation, the amount of such Obligation owed at the end of such day.

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that fails to make any Term Loan (or other
extension of credit) that it is required to make hereunder on the date that it
is required to do so hereunder.

“Defaulting Lender Rate” means (a) for the first 3 days from and after the date
the relevant payment is due, the Base Rate, and (b) thereafter, the interest
rate then applicable to portions of the Term Loans that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).

 

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“Deposit Account” means any deposit account (as that term is defined in the
Code).

“Designated Account” means the Deposit Account of Administrative Borrower
identified on Schedule D-1.

“Designated Account Bank” has the meaning ascribed thereto on Schedule D 1.

“Designated Stock” means the Stock that has been pledged by Parent or one of its
Subsidiaries to secure any outstanding Indebtedness in respect of Existing
Seller Notes and Earn-Out Obligations, Seller Notes or Earn-Out Arrangements
that has not expired.

“Diagnostic Center” means a Person which provides medical diagnostic services.

“Disbursement Letter” means an instructional letter executed and delivered by
Borrowers to Agent regarding the extensions of credit to be made on the Closing
Date, the form and substance of which is satisfactory to Agent.

“Doctor Departures” means the failure of one or more doctors who were employed
by Parent or any of its Subsidiaries or any Medical PC on or after the Closing
Date to continue to be so employed for any period of time.

“Dollars” or “$” means United States dollars.

“Earn-Out Arrangements” shall mean payments pursuant to a Purchase Agreement to
be made by a Borrower or a Guarantor (other than any Existing Seller Notes and
Earn-Out Obligations) based on the performance of the entity acquired (or
allocated to assets acquired) in connection therewith (or the related Medical
PC).

“EBITDA” means, with respect to any Person for any fiscal period, such Person’s
and its Subsidiaries’ consolidated net earnings (or loss), minus extraordinary
gains and interest income, plus interest expense, income taxes, and depreciation
and amortization for such period, in each case, as determined in accordance with
GAAP.

“Eligible Transferee” means (a) a commercial bank organized under the laws of
the United States, or any state thereof, and having total assets in excess of
$250,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $250,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in

 

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making, purchasing, or otherwise investing in commercial loans in the ordinary
course of its business and having (together with its Affiliates) total assets in
excess of $250,000,000, (d) any Affiliate (other than individuals) of a Lender,
(e) so long as no Event of Default has occurred and is continuing, any other
Person approved by Agent and Administrative Borrower (which approval of
Administrative Borrower shall not be unreasonably withheld, delayed, or
conditioned), and (f) during the continuation of an Event of Default, any other
Person approved by Agent.

“Employment Agreements” means the employment agreements executed by Parent or
any of its Subsidiaries with respect to the officers or senior management
employees of Parent and such Subsidiaries, including without limitation, Randy
Lubinsky, Mark Szporka and Ronald Riewold.

“Environmental Actions” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, judicial or administrative
proceeding, judgment, letter, or other communication from any Governmental
Authority, or any third party involving violations of Environmental Laws or
releases of Hazardous Materials from (a) any assets, properties, or businesses
of Parent, any Borrower, any other Subsidiary of Parent, or any of their
predecessors in interest, (b) from adjoining properties or businesses, or
(c) from or onto any facilities which received Hazardous Materials generated by
Parent, any Borrower, any other Subsidiary of Parent, or any of their
predecessors in interest.

“Environmental Law” means any applicable federal, state, provincial, foreign or
local statute, law, rule, regulation, ordinance, code, binding and enforceable
guideline, binding and enforceable written policy or rule of common law now or
hereafter in effect and in each case as amended, or any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment, in each case, to the extent binding on
Parent, any Borrower or any other Subsidiary of Parent, relating to the
environment, the effect of the environment on employee health, or Hazardous
Materials, including the Comprehensive Environmental Response Compensation and
Liability Act, 42 USC §9601 et seq. (“CERCLA”); the Resource Conservation and
Recovery Act, 42 USC §6901 et seq. (“RCRA”); the Federal Water Pollution Control
Act, 33 USC § 1251 et seq; the Toxic Substances Control Act, 15 USC § 2601 et
seq; the Clean Air Act, 42 USC § 7401 et seq.; the Safe Drinking Water Act, 42
USC § 3803 et seq.; the Oil Pollution Act of 1990, 33 USC § 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of 1986, 42 USC § 11001
et seq.; the Hazardous Material Transportation Act, 49 USC § 1801 et seq.; and
the Occupational Safety and Health Act, 29 USC §651 et seq. (to the extent it
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.

“Environmental Liabilities and Costs” means all liabilities, monetary
obligations, losses, damages, punitive damages, consequential damages, treble
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental Action.

 

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“Environmental Lien” means any Lien in favor of any Governmental Authority for
Environmental Liabilities and Costs.

“Equipment” means equipment (as that term is defined in the Code), and includes
machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), computer hardware, tools, parts, and goods (other
than consumer goods, farm products, or Inventory), wherever located, including
all attachments, accessories, accessions, replacements, substitutions,
additions, and improvements to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto.

“ERISA Affiliate” means (a) any Person subject to ERISA whose employees are
treated as employed by the same employer as the employees of Parent, a Borrower
or any other Subsidiary of Parent under IRC Section 414(b), (b) any trade or
business subject to ERISA whose employees are treated as employed by the same
employer as the employees of Parent, a Borrower or any other Subsidiary of
Parent under IRC Section 414(c), (c) solely for purposes of Section 302 of ERISA
and Section 412 of the IRC, any organization subject to ERISA that is a member
of an affiliated service group of which a Borrower or a Subsidiary of a Borrower
is a member under IRC Section 414(m), or (d) solely for purposes of Section 302
of ERISA and Section 412 of the IRC, any Person subject to ERISA that is a party
to an arrangement with Parent, a Borrower or any other Subsidiary of Parent and
whose employees are aggregated with the employees of Parent, a Borrower or any
other Subsidiary of Parent under IRC Section 414(o).

“Event of Default” has the meaning set forth in Section 8.

“Excess Cash Flow” means, with respect to Parent and its Subsidiaries for any
period, (a) EBITDA of Parent and its Subsidiaries for such period, less (b) all
scheduled and optional cash principal payments on the Term Loans made during
such period, and all scheduled and mandatory cash principal payments on other
Indebtedness (including Capitalized Lease Obligations) of Borrower or any of its
Subsidiaries during such period to the extent such other Indebtedness is
permitted to be incurred, and such payments are permitted to be made, under this
Agreement or any other Loan Document, less (c) the cash portion of Capital
Expenditures made by Borrower and its Subsidiaries during such period to the
extent permitted to be made under this Agreement.

“Exchange Act” means the Securities Exchange Act of 1934, as in effect from time
to time.

“Excluded Assets” means the Designated Stock, solely to the extent that any
Indebtedness in respect of the Existing Seller Notes and Earn-Out Obligations,
Seller Notes or Earn-Out Arrangements that is secured by such Designated Stock
remains outstanding and

 

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has not expired; provided, however, that to the extent that all such
Indebtedness in respect of the Existing Seller Notes and Earn-Out Obligations,
Seller Notes or Earn-Out Arrangements that is secured by any Designated Stock
but is no longer outstanding or has expired, thereafter the Excluded Assets
shall not include (and therefore Borrower Collateral shall include) such
Designated Stock without any further action on the part of the owner of such
Designated Stock or Agent.

“Existing Lenders” means South Louisiana Bank and Fifth Third Bank.

“Existing Seller Notes and Earn-Out Obligations” means those obligations
described on Schedule E-1.

“Extraordinary Receipts” means any Collections received by a Person or any of
its Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.4(c)(i) hereof), including, (a) foreign, United
States, state or local tax refunds, (b) pension plan reversions, (c) proceeds of
insurance (including proceeds of key man life insurance policies), (d) proceeds
of judgments, proceeds of settlements, or other consideration of any kind in
connection with any cause of action, (e) condemnation awards (and payments in
lieu thereof), (f) indemnity payments, and (g) any purchase price adjustment
received in connection with any purchase agreement.

“Family Member” means, with respect to any individual, any other individual
having a relationship by blood (to the second degree of consanguinity),
marriage, or adoption to such individual.

“Family Trusts” means, with respect to any individual, trusts or other estate
planning vehicles established for the benefit of such individual or Family
Members of such individual and in respect of which such individual serves as
trustee or in a similar capacity.

“Fee Letter” means that certain fee letter, dated as of even date herewith,
between Borrowers and Agent, in form and substance satisfactory to Agent.

“Filing Authorization Letter” means a letter duly executed by each Borrower and
each Guarantor authorizing Agent to file appropriate financing statements
without the signature of such Borrower or such Guarantor, as applicable, in such
office or offices as may be necessary or, in the opinion of Agent, desirable to
perfect the security interests purported to be created by the Loan Documents.

“Free Cash Flow” means with respect to Parent and its Subsidiaries for any
period, the result of (a) EBITDA for such period minus (b) the aggregate amount
of all payments required to be made during such period in respect of
(i) Indebtedness in respect of Earn-Out Arrangements, (ii) Existing Seller Notes
and Earn-Out Obligations, or (iii) Indebtedness evidenced by Seller Notes.

“Funded Debt” of any Person means Indebtedness of such Person that by its terms
matures more than one year after the date of creation or matures within one year
from

 

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such date but is renewable or extendible, at the option of such Person, to a
date more than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during a
period of more than one year after such date, including all amounts of Funded
Debt of such Person required to be paid or prepaid within one year after the
date of determination.

“Funding Date” means the date on which a Borrowing occurs.

“Funding Losses” has the meaning set forth in Section 2.13(b)(ii).

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

“General Intangibles” means general intangibles (as that term is defined in the
Code), including payment intangibles, contract rights, rights to payment, rights
arising under common law, statutes, or regulations, choses or things in action,
goodwill, patents, trade names, trade secrets, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders, customer lists, monies due or
recoverable from pension funds, route lists, rights to payment and other rights
under any royalty or licensing agreements, infringement claims, computer
programs, information contained on computer disks or tapes, software,
literature, reports, catalogs, insurance premium rebates, tax refunds, and tax
refund claims and any other personal property other than Accounts, Deposit
Accounts, goods, Investment Property, and Negotiable Collateral.

“Georgia Surgical” means Georgia Surgical Center, Inc., a Georgia corporation.

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational documents of such
Person.

“Governmental Authority” means any federal, state, local, or other governmental
or administrative body, instrumentality, board, department, or agency or any
court, tribunal, administrative hearing body, arbitration panel, commission, or
other similar dispute-resolving panel or body.

“Governmental Receivables” means Accounts owing to Parent or any of its
Subsidiaries on which any Governmental Authority is the Account Debtor.

“Guarantors” means (a) Parent and each Subsidiary of Parent that is not a
Borrower and “Guarantor” means any one of them.

“Guarantor Security Agreement” means one or more security agreements executed
and delivered by each Guarantor other than Canadian Guarantor in favor of Agent,
in each case, in form and substance satisfactory to Agent.

 

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“Guaranty” means that certain general continuing guaranty executed and delivered
by each Guarantor other than Canadian Guarantor in favor of Agent, in form and
substance satisfactory to Agent.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

“HBK” means HBK Investments L.P., a Texas limited partnership.

“Hedge Agreement” means any and all agreements, or documents now existing or
hereafter entered into by Parent or any of its Subsidiaries that provide for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging Parent’s or any of its Subsidiaries’
exposure to fluctuations in interest or exchange rates, loan, credit exchange,
security or currency valuations or commodity prices.

“Holdout Lender” has the meaning set forth in Section 15.2(a).

“Indebtedness” means (a) all obligations for borrowed money, (b) all obligations
evidenced by bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products, (c) all
obligations as a lessee under Capital Leases, (d) all obligations or liabilities
of others secured by a Lien on any asset of a Person or its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations to pay the deferred purchase price of assets (including all Existing
Seller Notes and Earn-Out Obligations, and Seller Notes and Earn-Out
Arrangements but excluding trade payables incurred in the ordinary course of
business and repayable in accordance with customary trade practices), (f) all
obligations owing under Hedge Agreements, and (g) any obligation guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse) any obligation of any other Person
that constitutes Indebtedness under any of clauses (a) through (f) above.

“Indebtedness Documents” means any agreement or other document executed or
delivered with respect to or in connection with the Indebtedness described in
Section 7.1(b) of this Agreement, which shall be in form and substance
satisfactory to Agent.

 

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“Indemnified Liabilities” has the meaning set forth in Section 11.3.

“Indemnified Person” has the meaning set forth in Section 11.3.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar relief.

“Intercompany Subordination Agreement” means a subordination agreement executed
and delivered by Parent, Borrowers and each of their respective Subsidiaries and
Agent, the form and substance of which is satisfactory to Agent.

“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan (or the
continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a
LIBOR Rate Loan) and ending 1, 2, or 3 months thereafter; provided, however,
that (a) if any Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended (subject to clauses (c)-(e) below) to the
next succeeding Business Day, (b) interest shall accrue at the applicable rate
based upon the LIBOR Rate from and including the first day of each Interest
Period to, but excluding, the day on which any Interest Period expires, (c) any
Interest Period that would end on a day that is not a Business Day shall be
extended to the next succeeding Business Day unless such Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (d) with respect to an Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period), the Interest Period shall end on the last Business Day of the calendar
month that is 1, 2, or 3 months after the date on which the Interest Period
began, as applicable, and (e) Borrowers (or Administrative Borrower on behalf
thereof) may not elect an Interest Period which will end after the Maturity
Date.

“Inventory” means inventory (as that term is defined in the Code).

“Investment” means, with respect to any Person, any investment by such Person in
any other Person (including Affiliates) in the form of loans, guarantees,
advances, or capital contributions (excluding (a) commission, travel, and
similar advances to officers and employees of such Person made in the ordinary
course of business, and (b) bona fide Accounts arising in the ordinary course of
business consistent with past practice), purchases or other acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other
Person (or of any division or business line of such other Person), and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.

“Investment Property” means investment property (as that term is defined in the
Code).

 

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“IRC” means the Internal Revenue Code of 1986, as in effect from time to time.

“Lender” and “Lenders” have the respective meanings set forth in the preamble to
this Agreement, and shall include any other Person made a party to this
Agreement in accordance with the provisions of Section 14.1.

“Lender Group” means, individually and collectively, each of the Lenders and
Agent.

“Lender Group Expenses” means all (a) costs or expenses (including taxes, and
insurance premiums) required to be paid by a Borrower or its Subsidiaries under
any of the Loan Documents that are paid, advanced, or incurred by the Lender
Group, (b) fees or charges paid or incurred by Agent in connection with the
Lender Group’s transactions with Borrowers or their Subsidiaries, including,
fees or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, litigation, and
UCC searches and including searches with the patent and trademark office, the
copyright office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic collateral appraisals or business
valuations to the extent of the fees and charges (and up to the amount of any
limitation) contained in this Agreement, real estate surveys, real estate title
policies and endorsements, and environmental audits, (c) costs and expenses
incurred by Agent in the disbursement of funds to or for the account of
Borrowers or other members of the Lender Group (by wire transfer or otherwise),
(d) charges paid or incurred by Agent resulting from the dishonor of checks,
(e) reasonable costs and expenses paid or incurred by the Lender Group to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of Agent related to audit examinations of the Books to the extent
of the fees and charges (and up to the amount of any limitation) contained in
this Agreement, (g) reasonable costs and expenses of third party claims or any
other suit paid or incurred by the Lender Group in enforcing or defending the
Loan Documents or in connection with the transactions contemplated by the Loan
Documents or the Lender Group’s relationship with any Borrower or any Subsidiary
of a Borrower, (h) Agent’s and each Lender’s reasonable costs and expenses
(including reasonable attorneys fees) incurred in advising, structuring,
drafting, reviewing, administering, syndicating, or amending the Loan Documents,
and (i) Agent’s and each Lender’s reasonable costs and expenses (including
reasonable attorneys, accountants, consultants, and other advisors fees and
expenses) incurred in terminating, enforcing (including reasonable attorneys,
accountants, consultants, and other advisors fees and expenses incurred in
connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning any Borrower or any Subsidiary of a Borrower or in exercising rights
or remedies under the Loan Documents), or defending the Loan Documents,
irrespective of whether suit is brought, or in taking any Remedial Action
concerning the Collateral.

 

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“Lender-Related Person” means, with respect to any Lender, such Lender, together
with such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

“Leverage Ratio” means, on any date with respect Parent and its Subsidiaries,
the ratio of (a) the outstanding balance of the Obligations on such date, to
(b) the TTM EBITDA of Parent and its Subsidiaries as of such date.

“LIBOR Deadline” has the meaning set forth in Section 2.13(b)(i).

“LIBOR Notice” means a written notice in the form of Exhibit L-1.

“LIBOR Option” has the meaning set forth in Section 2.13(a).

“LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate
per annum determined by Agent (rounded upwards, if necessary, to the next
1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.

“LIBOR Rate Loan” means each portion of the Term Loans that bears interest at a
rate determined by reference to the LIBOR Rate.

“LIBOR Rate Term Loan Margin” means 7.25 percentage points.

“Lien” means any interest in an asset securing an obligation owed to, or a claim
by, any Person other than the owner of the asset, irrespective of whether
(a) such interest is based on the common law, statute, or contract, (b) such
interest is recorded or perfected, and (c) such interest is contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances. Without limiting the generality of the foregoing,
the term “Lien” includes the lien or security interest arising from a mortgage,
deed of trust, encumbrance, pledge, hypothecation, assignment, deposit
arrangement, security agreement, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also includes
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.

“Loan Account” has the meaning set forth in Section 2.10.

“Loan Documents” means this Agreement, the Canadian Guarantor Security
Agreement, the Canadian Guaranty, the Cash Management Agreements, the Control
Agreements, the Disbursement Letter, the Fee Letter, the Guarantor Security
Agreement, the Guaranty, the Intercompany Subordination Agreement, the Stock
Pledge Agreement, the Subordination Agreement, any note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower and the Lender Group in connection with this Agreement.

 

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“Management Agreements” means those certain management agreements entered into
from time to time by a Borrower and a Person which owns or operates a Medical
Practice which the business operations are managed (in whole or in part) by
Parent or any of its Subsidiaries.

“Market Capitalization” means, as of any date, the product of (a) the aggregate
number of shares of common Stock of Parent outstanding as of such date times
(b) the price per share at which the common Stock of Parent is available on any
public stock exchange as of the close of business on such date.

“Material Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrowers and their Subsidiaries, taken as a whole,
(b) a material impairment of a Borrower’s or any of its Subsidiaries’ ability to
perform its obligations under the Loan Documents to which it is a party or of
the Lender Group’s ability to enforce the Obligations or realize upon the
Collateral, or (c) a material impairment of the enforceability or priority of
the Agent’s Liens with respect to the Collateral.

“Maturity Date” has the meaning set forth in Section 3.4.

“Medical PC” means a medical professional corporation, association or limited
liability company which has entered into a Management Agreement with Parent or
any of its Subsidiaries in connection with an Acquisition.

“Medical Practice” means a Person that provides medical services (including
without limitation a Diagnostic Center and a Surgery Practice).

“Negotiable Collateral” means letters of credit, letter of credit rights,
instruments, promissory notes, drafts, documents, and chattel paper (including
electronic chattel paper and tangible chattel paper).

“Net Cash Proceeds” means, (i) with respect to any disposition by any Person or
any of its Subsidiaries, the amount of cash received (directly or indirectly)
from time to time (whether as initial consideration or through the payment or
disposition of deferred consideration) by or on behalf of such Person or such
Subsidiary, in connection therewith after deducting therefrom only (A) the
amount of any Indebtedness secured by any Permitted Lien on any asset (other
than Indebtedness assumed by the purchaser of such asset) which is required to
be, and is, repaid in connection with such disposition (other than Indebtedness
under this Agreement), (B) reasonable expenses related thereto incurred by such
Person or such Subsidiary in connection therewith, (C) transfer taxes paid to
any taxing authorities by such Person or such Subsidiary in connection
therewith, and (D) net income taxes to be paid in connection with such
disposition (after taking into account any tax credits or deductions and any tax
sharing arrangements) and (ii) with respect to the issuance or incurrence of any
Indebtedness by any Person or any of its Subsidiaries, or the sale or issuance
by any Person or any of its Subsidiaries of any shares of its Stock, the
aggregate amount of cash received (directly or indirectly) from time to time
(whether as initial consideration or through the

 

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payment or disposition of deferred consideration) by or on behalf of such Person
or such Subsidiary in connection therewith, after deducting therefrom only
(A) reasonable expenses related thereto incurred by such Person or such
Subsidiary in connection therewith, (B) transfer taxes paid by such Person or
such Subsidiary in connection therewith and (C) net income taxes to be paid in
connection therewith (after taking into account any tax credits or deductions
and any tax sharing arrangements); in each case of clause (i) and (ii) to the
extent, but only to the extent, that the amounts so deducted are (x) actually
paid to a Person that, except in the case of reasonable out-of-pocket expenses,
is not an Affiliate of such Person or any of its Subsidiaries and (y) properly
attributable to such transaction or to the asset that is the subject thereof.

“Obligations” means all loans (including the Term Loans), debts, principal,
interest (including any interest that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), premiums, liabilities
(including all amounts charged to Borrowers’ Loan Account pursuant hereto),
obligations (including indemnification obligations), fees (including the fees
provided for in the Fee Letter), charges, costs, Lender Group Expenses
(including any fees or expenses that accrue after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding), lease payments, guaranties,
covenants, and duties of any kind and description owing by Borrowers to the
Lender Group pursuant to or evidenced by the Loan Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including all interest not paid when due and all Lender Group Expenses that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise. Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all extensions, modifications, renewals, or
alterations thereof, both prior and subsequent to any Insolvency Proceeding.

“Originating Lender” has the meaning set forth in Section 14.1(e).

“Overadvance” has the meaning set forth in Section 2.5.

“Parent” has the meaning set forth in the preamble to this Agreement.

“Participant” has the meaning set forth in Section 14.1(e).

“Pay-Off Letters” means one or more letters, each in form and substance
satisfactory to Agent, from each Existing Lender to Agent respecting the amount
necessary to repay in full all of the obligations of Parent, Borrowers and their
respective Subsidiaries owing to such Existing Lender and obtain a release of
all of the Liens (if any) existing in favor of such Existing Lender in and to
the assets of Parent, Borrowers and their respective Subsidiaries.

“PCRL” means PCRL Investments L.P., a Texas limited partnership.

 

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“Permitted Acquired Indebtedness” means Indebtedness assumed in connection with
an Acquisition so long as (a) such Indebtedness is Funded Debt, and (b) such
Indebtedness exists at the time the Stock or assets are acquired and is not
created in anticipation of such Acquisition.

“Permitted Acquisition” means any Acquisition so long as:

(a) after giving effect to the proposed Acquisition, Borrower has Qualified Cash
of at least $2,000,000,

(b) the consideration is payable in cash (except for any Earn-Out Arrangements,
Seller Notes or Permitted Acquired Indebtedness) or in Stock in Parent, which
shall be allocated as follows, unless the prior written consent of Agent is
obtained (which consent shall not be unreasonably withheld):

(i) with respect to an Acquisition of a Medical Practice that does not
constitute a Surgery Practice or a Diagnostic Center: (A) up to 75% of the
purchase price consideration is payable at the closing of such Acquisition (the
“Closing Consideration”), (B) between 40% and 60% of the Closing Consideration
is payable in cash and the balance of the Closing Consideration is payable in
Stock of Parent, (C) the balance of the consideration is payable in cash over
time in between two and four annual installments (the “Installment Payments”),
and (D) between 40% and 60% of the Installment Payments are payable in cash and
the balance of such Installment Payments are payable in Stock of Parent;
(ii) with respect to an Acquisition of a Surgery Practice or a Diagnostic
Center: (A) up to 100% of the purchase price consideration is payable at the
closing of such Acquisition in any combination of cash and Stock of Parent, and
(B) the balance, if any, of such consideration is payable in up to four annual
installments of any combination of cash and Stock of Parent;

(c) the total value of the consideration (including any Earn-Out Arrangements,
Seller Notes, or Permitted Acquired Indebtedness) payable by Parent or its
Subsidiaries in connection with the proposed Acquisition and all other related
Acquisitions does not exceed $40,000,000 in the aggregate (of which not more
than $20,000,000 is payable in cash or Cash Equivalents),

(d) the total value of the consideration (including any Earn-Out Arrangements,
Seller Notes or Permitted Acquired Indebtedness) payable by Parent or its
Subsidiaries in connection with all Acquisitions (including the proposed
Acquisition) consummated since the Closing Date does not exceed $200,000,000 in
the aggregate (of which not more than $100,000,000 is payable in cash or Cash
Equivalents),

(e) no Default or Event of Default has occurred and is continuing as of the date
of consummation of the proposed Acquisition or would result therefrom,

 

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(f) the assets being acquired, or the Person whose Stock is being acquired,
(i) are useful in or engaged in, as applicable, the health care services
performed by Parent and its Subsidiaries as of the date of this Agreement, and
(ii) shall be located or organized, as applicable, within the United States or
Canada,

(g) Parent has provided Agent with written confirmation, supported by reasonably
detailed calculations (unless Agent determines in its Permitted Discretion that
the delivery of such calculations is not warranted), that (i) on a pro forma
basis (with giving effect to all Indebtedness and Fixed Charges of the Person
being acquired but not the historical EBITDA of such Person), Parent and its
Subsidiaries will be in compliance with each of the financial covenants in
Section 7.18 hereof, and an Event of Default under Section 8.14 will not have
occurred, in each case, after giving effect to such Acquisition and as of the
last day of each quarter during the 12 month period following the date of such
acquisition, and (ii) the EBITDA of such Person being acquired is projected to
be greater than zero for each twelve month period ending on the last day of any
fiscal quarter during the following twelve months,

(h) Agent has completed any due diligence as it determines in its Permitted
Discretion to be appropriate with respect to the assets or Person that is to be
the subject of the proposed Acquisition and the results thereof are reasonably
satisfactory to Agent, with the understanding that unless the Agent provides
written notice of its objection to such Acquisition to the Administrative
Borrower within 15 days after the date when Agent has received (i) the documents
required to be delivered pursuant to clause (i)(i) below, and (ii) the written
notice required to be delivered pursuant to subsection (r) below, then such
proposed Acquisition shall deemed to be satisfactory solely for the purposes of
this clause (h) (and subject to the satisfaction of each of the other conditions
set forth in this definition),

(i) (i) promptly following a request therefor, Agent has received copies of such
information or documents relating to such Acquisition as Agent shall have
reasonably requested, and (ii) within 30 days after the consummation of such
Acquisition, Agent shall have received certified copies of the agreements,
instruments and documents in connection with such Acquisition, which shall be
substantively identical to the documents provided pursuant to subclause (i) of
this clause (i),

(j) in the case of an Asset Acquisition, the subject assets are being acquired
by a Borrower,

(k) in the case of a Stock Acquisition, the subject Stock is being acquired in
such Acquisition directly by a Borrower,

(l) the Pro Forma TTM EBITDA of the subject Person(s) of the Acquisition, shall
be positive (on a combined basis for all Persons subject of the Acquisition) as
determined based upon such Person’s financial statements for its most recently
completed interim financial period as of the consummation of the Acquisition,

 

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(m) in the case of an Asset Acquisition, the applicable Borrower shall have
executed and delivered or authorized, as applicable, any and all security
agreements, UCC-1 financing statements, fixture filings, and other documentation
reasonably requested by Agent in order to include the newly acquired assets
within the Collateral,

(n) in the case of a Stock Acquisition, the applicable Borrower shall have
executed and delivered a supplement to the Stock Pledge Agreement in order to
include the Stock being acquired thereunder (or in the case of a merger whereby
a Subsidiary of Parent is the surviving Person, the Stock of such Subsidiary)
and shall have delivered to Agent possession of the original Stock certificates
respecting all of the issued and outstanding shares of Stock of such acquired
Person (or in the case of a merger whereby a Subsidiary of Parent is the
surviving Person, the Stock of such Subsidiary), together with stock powers with
respect thereto endorsed in blank, in each case, to the extent that such Stock
does not constitute Excluded Assets,

(o) in the case of a Wholly Owned Stock Acquisition, the applicable Borrower
shall have caused such acquired Person (or in the case of a merger whereby a
Subsidiary of Parent is the surviving Person, such Subsidiary) to execute and
deliver a joinder to the Guaranty in order to make such Person a party thereto,
together with a joinder to the Guarantor Security Agreement (or a joinder to
this Agreement, if the acquired Person (or in the case of a merger whereby a
Subsidiary of Parent is the surviving Person, such Subsidiary) is to become a
Borrower hereunder), any and all UCC-1 financing statements, fixture filings,
and other documentation reasonably requested by Agent in order to cause such
cause acquired Person (or in the case of a merger whereby a Subsidiary of Parent
is the surviving Person, such Subsidiary) to be obligated with respect to the
Obligations and to include the assets of the acquired Person (or in the case of
a merger whereby a Subsidiary of Parent is the surviving Person, such
Subsidiary) within the Collateral; provided, that in each case, such security
documents shall not include any assets in the Collateral that constitute
Excluded Assets,

(p) any Indebtedness or Liens assumed in connection with the proposed
Acquisition are otherwise permitted under Section 7.1 or 7.2, respectively and
no additional Indebtedness or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of Parent and its
Subsidiaries after giving effect to such Acquisition, except to the extent
expressly permitted by the terms of the Agreement,

(q) the proposed Acquisition shall be consensual and shall have been approved by
the board of directors of the Person whose Stock or assets are proposed to be
acquired and shall not have been preceded by an unsolicited tender offer for
such Stock by, or proxy contest initiated by, Parent or any of its Subsidiaries,

(r) Parent shall provide Agent and each Lender with prior written notice (which
notice shall not be less than 15 days prior to the closing date of the proposed
Acquisition and which notice shall include, without limitation, a reasonably
detailed description of such Acquisition) of such Acquisition, together with
copies of all financial information, financial analysis, documentation and other
information relating to such acquisition as Agent or any Lender shall reasonably
request,

 

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(s) on or prior to the date of the proposed Acquisition, Agent and each Lender
shall have received copies of the acquisition agreement, related contracts and
instruments and all opinions, certificates, lien search results and other
documents reasonably requested by Agent and any Lender and any such opinion
shall be addressed to Agent and Lenders or accompanied by a written
authorization from the firm or Persons delivering such opinion stating that
Agent and Lenders may rely on such opinion as though it were addressed to them,

(t) at the time of the proposed Acquisition and after giving effect thereto, all
representations and warranties contained in Section 5 of this Agreement and in
the other Loan Documents shall be true and correct in all respects (which in
each case shall be deemed to have been made on the date of such Acquisition
after giving effect thereto), and

(u) prior to the closing of the proposed Acquisition, the chief executive
officer or the chief financial officer of Borrower shall have delivered to Agent
a certificate as to each of the items set for in the foregoing clauses (a), (b),
(c), (d), (e), (f), (g), (l), (p), (q) and (t).

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured lender) business judgment.

“Permitted Dispositions” means (a) sales or other dispositions of Equipment that
is substantially worn, damaged, no longer in use or obsolete in the ordinary
course of business, (b) sales of Inventory to buyers and patients in the
ordinary course of business, (c) the use or transfer of money or Cash
Equivalents in a manner that is not prohibited by the terms of this Agreement or
the other Loan Documents, and (d) the licensing, on a non-exclusive basis, of
patents, trademarks, copyrights, and other intellectual property rights in the
ordinary course of business.

“Permitted Holders” means Randy Lubinsky, Mark Szporka, Ronald Riewold, their
respective Family Members, and Family Trusts.

“Permitted Investments” means (a) Investments in cash and Cash Equivalents,
(b) Investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) Investments received in settlement of amounts due to a Borrower or
any Subsidiary of a Borrower effected in the ordinary course of business or
owing to a Borrower or any Subsidiary of a Borrower as a result of Insolvency
Proceedings involving an Account Debtor or upon the foreclosure or enforcement
of any Lien in favor of a Borrower or any Subsidiary of a Borrower, and
(e) Permitted Acquisitions.

“Permitted Liens” means (a) Liens held by Agent, (b) Liens for unpaid taxes that
either (i) are not yet delinquent, or (ii) do not constitute an Event of Default
hereunder

 

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and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1,
(d) the interests of lessors under operating leases, (e) purchase money Liens or
the interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof,
(f) Liens arising by operation of law in favor of warehousemen, landlords,
carriers, mechanics, materialmen, laborers, or suppliers, incurred in the
ordinary course of Borrowers’ business and not in connection with the borrowing
of money, and which Liens either (i) are for sums not yet delinquent, or
(ii) are the subject of Permitted Protests, (g) Liens on amounts deposited in
connection with obtaining worker’s compensation or other unemployment insurance,
(h) Liens on amounts deposited in connection with the making or entering into of
bids, tenders, or leases in the ordinary course of business and not in
connection with the borrowing of money, (i) Liens on amounts deposited as
security for surety or appeal bonds in connection with obtaining such bonds in
the ordinary course of business, (j) Liens resulting from any judgment or award
that is not an Event of Default hereunder, (k) with respect to any Real
Property, easements, rights of way, and zoning restrictions that do not
materially interfere with or impair the use or operation thereof, (l) Liens
granted in and to the Excluded Assets, solely to the extent that such assets
constitute Excluded Assets, and (m) Liens securing Permitted Acquired
Indebtedness in an aggregate outstanding amount not in excess of $200,000.

“Permitted Protest” means the right of Administrative Borrower or any of its
Subsidiaries to protest any Lien (other than any Lien that secures the
Obligations), taxes (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the Books in such amount as is
required under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by Administrative Borrower or any of its Subsidiaries, as applicable,
in good faith, and (c) Agent is satisfied that, while any such protest is
pending, there will be no impairment of the enforceability, validity, or
priority of any of the Agent’s Liens.

“Permitted Purchase Money Indebtedness” means, as of any date of determination,
Purchase Money Indebtedness incurred after the Closing Date in an aggregate
amount outstanding at any one time not in excess of $4,800,000.

“Person” means natural persons, corporations, limited liability companies,
limited partnerships, general partnerships, limited liability partnerships,
joint ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.

“Projections” means Parent’s forecasted (a) balance sheets, (b) profit and loss
statements, and (c) cash flow statements, all prepared on a basis consistent
with Parent’s historical financial statements, together with appropriate
supporting details and a statement of underlying assumptions.

 

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“Pro Forma EBITDA” means, with respect to any Person that is the subject of a
Permitted Acquisition for any period ending on or before the date of the
consummation of such Permitted Acquisition, (a) such Person’s EBITDA for such
period, plus (b) the aggregate amount of expenditures deducted in the
calculation of such Person’s EBITDA for such period that constitute
compensation, benefits or perquisites paid to or for the benefit of the owners
of such Person or one of the doctors employed by such Person, minus (c) the
salary projected to be paid to the doctors who will be employed by the acquired
Person after giving effect to the proposed Acquisition (for a period comparable
to the applicable measurement period), and as further adjusted in a manner which
is mutually acceptable to Agent and Parent, by taking into consideration such
other reasonable assumptions, events and conditions as are mutually acceptable
to Agent and Parent.

“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Lender’s obligation to make a Term Loan and receive
payments of interest, fees, and principal with respect thereto, (i) prior to the
Term Loan Expiration Date, the percentage obtained by dividing (y) the sum of
(A) such Lender’s remaining Term Loan Commitment, and (B) the outstanding
principal balance of such Lender’s Term Loans, by (z) the sum of (A) the
aggregate amount of all Lenders’ remaining Term Loan Commitments, and (B) the
aggregate outstanding principal balance of all Term Loans, and (ii) from and
after the Term Loan Expiration Date, the percentage obtained by dividing (y) the
outstanding principal balance of such Lender’s Term Loans by (z) the aggregate
outstanding principal balance of all Term Loans, and

(b) with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 16.7), the percentage obtained
by dividing (i) the sum of (A) such Lender’s remaining Term Loan Commitment (if
any), and (B) the outstanding principal balance of such Lender’s Term Loans, by
(ii) the sum of (A) the aggregate amount of all Lenders’ remaining Term Loan
Commitments (if any), and (B) the aggregate outstanding principal balance of all
Term Loans.

“Purchase Agreement” means an agreement entered into by Parent or any of its
Subsidiaries and a Medical Practice or a manager of Medical Practices whereby
Parent or such Subsidiary has acquired or will acquire all or substantially all
of the assets or stock of such Medical Practice or such manager of Medical
Practices.

“Purchase Money Indebtedness” means Indebtedness (other than the Obligations,
but including Capitalized Lease Obligations), incurred at the time of, or within
20 days after, the acquisition of any fixed assets for the purpose of financing
all or any part of the acquisition cost thereof.

“Qualified Cash” means, as of any date of determination, the amount of
unrestricted cash and Cash Equivalents of Borrowers and their Subsidiaries that
is in Deposit Accounts or in Securities Accounts, or any combination thereof,
and which such Deposit Account or Securities Account is the subject of a Control
Agreement and is maintained by a branch office of the bank or securities
intermediary located within the United States.

 

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“Real Property” means any estates or interests in real property now owned or
hereafter acquired by any Borrower or a Subsidiary of any Borrower and the
improvements thereto.

“Record” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

“Related Fund” means a fund, money market account, investment account or other
account managed by a Lender or an Affiliate of a Lender or its investment
manager or an Affiliate of its investment manager.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate,
contain, treat, monitor, assess, evaluate, or in any way address Hazardous
Materials in the indoor or outdoor environment, (b) prevent or minimize a
release or threatened release of Hazardous Materials so they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) restore or reclaim natural resources or the
environment, (d) perform any pre-remedial studies, investigations, or
post-remedial operation and maintenance activities, or (e) conduct any other
actions with respect to Hazardous Materials authorized by Environmental Laws.

“Replacement Lender” has the meaning set forth in Section 15.2(a).

“Report” has the meaning set forth in Section 16.17.

“Required Lenders” means, at any time, Lenders whose aggregate Pro Rata Shares
(calculated under clause (b) of the definition of Pro Rata Shares) equal or
exceed 50.1%.

“Required Liquidity” means that the result of (a) Borrowers’ Qualified Cash
minus (b) the aggregate amount, if any, of all trade payables of Parent and its
Subsidiaries aged in excess of historical levels with respect thereto and all
book overdrafts of Parent and its Subsidiaries in excess of historical practices
with respect thereto, in each case as determined by Agent in its Permitted
Discretion, exceeds $2,500,000.

“Required Locations” means the locations of Borrowers representing, in the
aggregate, at least 67% of the EBITDA of Parent and its Subsidiaries for the
fiscal year ending December 31, 2004.

“Reserve Percentage” means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not
required or directed under applicable regulations to maintain such reserves, the
Reserve Percentage shall be zero.

 

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

“Securities Account” means a “securities account” as that term is defined in the
Code.

“Seller Notes” shall mean those promissory notes delivered by Parent or a
Borrower in connection with the closing of an acquisition pursuant to a Purchase
Agreement.

“Solvent” means, with respect to any Person on a particular date, that, at fair
valuations, the sum of such Person’s assets is greater than all of such Person’s
debts.

“Stock” means all shares, options, warrants, interests, participations, or other
equivalents (regardless of how designated) of or in a Person, whether voting or
nonvoting, including common stock, preferred stock, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

“Stock Acquisition” means (a) a Wholly Owned Stock Acquisition, or (b) solely
with respect to an acquisition of a Surgery Practice or a Diagnostic Center, the
purchase or other acquisition by Parent or its wholly-owned Subsidiaries of at
least (i) 51% of the Stock in the Person which is the owner of such Surgery
Practice or Diagnostic Center, or (ii) if such Person is a limited partnership,
at least 100% of the general partnership interest in such Person.

“Stock Pledge Agreement” means a stock pledge agreement, in form and substance
satisfactory to Agent, executed and delivered by each Borrower and each
Guarantor.

“Subordination Agreement” means that certain subordination agreement dated
contemporaneously herewith by and between Agent and Subordinated Lenders, which
is in form and substance satisfactory to Agent.

“Subordinated Lenders” means Midsummer Investment, Ltd., a Bermuda limited
partnership, and Islandia, L.P., a Delaware limited partnership.

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.

“Supporting Obligation” means a letter-of-credit right or secondary obligation
that supports the payment or performance of an Account, chattel paper, document,
General Intangible, instrument, or Investment Property.

 

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“Surgery” means PainCare Surgery Centers, Inc., a Florida corporation.

“Surgery Practice” means a Person which provides surgical services.

“Taxes” has the meaning set forth in Section 16.11.

“Term Loan” and “Term Loans” have the respective meanings set forth in
Section 2.2.

“Term Loan Amount” means $25,000,000.

“Term Loan Commitment” means, with respect to each Lender, its Term Loan
Commitment, and, with respect to all Lenders, their Term Loan Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Acceptance
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to assignments made in
accordance with the provisions of Section 14.1.

“Term Loan Expiration Date” means the earlier to occur of (a) November 10, 2006,
and (b) the date of termination of this Agreement, whether by its terms, by
prepayment, or by acceleration.

“Total Commitment” means, with respect to each Lender, its Total Commitment,
and, with respect to all Lenders, their Total Commitments, in each case as such
Dollar amounts are set forth beside such Lender’s name under the applicable
heading on Schedule C-1 attached hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignments made in accordance with the provisions of Section 14.1.

“TTM EBITDA” means, as of any date of determination with respect to any Person,
the EBITDA of such Person and its Subsidiaries for the 12 consecutive month
period most recently ended on or prior to such date of determination.

“United States” means the United States of America.

“Voidable Transfer” has the meaning set forth in Section 17.6.

“Wholly Owned Stock Acquisition” means the purchase or other acquisition by
Parent or its wholly-owned Subsidiaries of all of the Stock of any other Person.

“Yield Maintenance Amount” means, as of any date prior to the first anniversary
of the Closing Date, an amount equal to the product of (a) the greater of
(i) $10,000,000 and (ii) the outstanding principal balance of the Term Loan as
of such date times (b) a per annum rate for the period between such date and the
first anniversary of the Closing Date equal to the LIBOR Rate as of such date
plus the LIBOR Rate Term Loan Margin.

 

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1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP. When used herein, the term “financial
statements” shall include the notes and schedules thereto. Whenever the term
“Borrowers” or the term “Parent” is used in respect of a financial covenant or a
related definition, it shall be understood to mean Parent and its Subsidiaries
on a consolidated basis unless the context clearly requires otherwise.

1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein,
provided, however, that to the extent that the Code is used to define any term
herein and such term is defined differently in different Articles of the Code,
the definition of such term contained in Article 9 shall govern.

1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the terms “includes”
and “including” are not limiting, and the term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or.” The words
“hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement
or any other Loan Document refer to this Agreement or such other Loan Document,
as the case may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified. Any reference in this Agreement or in the other Loan
Documents to any agreement, instrument, or document shall include all
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein). Any reference herein to the
satisfaction or repayment in full of the Obligations shall mean the repayment in
full in cash of all Obligations. Any reference herein to any Person shall be
construed to include such Person’s successors and assigns. Any requirement of a
writing contained herein or in the other Loan Documents shall be satisfied by
the transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.

1.5 Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

 

2. LOAN AND TERMS OF PAYMENT.

2.1 [Intentionally Omitted]

2.2 Term Loans. Subject to the terms and conditions of this Agreement, each
Lender with a Term Loan Commitment agrees (severally, not jointly or jointly and
severally) to make term loans (each a “Term Loan” and collectively, the “Term
Loans”) to Borrowers from time to time from the Closing Date until the Term Loan
Expiration Date, or until the earlier reduction of its Term Loan Commitment to
zero in accordance with the terms hereof,

 

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in an aggregate principal amount not to exceed the unused portion of such
Lender’s Term Loan Commitment. The aggregate principal amount of the Term Loans
(based on initial principal amount) shall not exceed the Term Loan Amount. The
Term Loan Commitment of each Lender shall (x) automatically and permanently be
reduced to the extent that such Lender makes a Term Loan to Borrowers, and
(y) automatically and permanently be reduced to zero on the Term Loan Expiration
Date. Each Term Loan requested by Borrowers pursuant to this Section 2.2 shall
be in a minimum amount of $2,500,000. Any principal amount of the Term Loans
that is repaid or prepaid may not be reborrowed. The outstanding principal of
the Term Loans shall be repayable by the Borrowers in consecutive quarterly
installments, on the first day of each April, July, October and January,
commencing on April 1, 2006 and ending on the Maturity Date (or if earlier than
the Maturity Date, the date that the Term Loans have been repaid in full)
consisting of (i) during the period from April 1, 2006 to January 1, 2007,
quarterly payments of $625,000, (ii) during the period from April 1, 2007 to
January 1, 2008, quarterly payments of $1,250,000, and (iii) during the period
from April 1, 2008 to the Maturity Date, equal quarterly payments which, in the
aggregate, equal the remaining outstanding principal balance of the Term Loans;
provided, that the last such installment shall be in the amount necessary to
repay in full the unpaid principal amount of the Term Loans; provided, further,
for the avoidance of doubt, no installment shall be due during any period where
the outstanding principal amount of the Term Loans has been repaid in full. The
outstanding unpaid principal balance and all accrued and unpaid interest under
the Term Loans shall be due and payable on the date of termination of this
Agreement, whether by its terms, by prepayment, or by acceleration. All amounts
outstanding under the Term Loans shall constitute Obligations.

 

  2.3 Borrowing Procedures and Settlements.

(a) Procedure for Borrowing. Each Borrowing shall be made by an irrevocable
written request by an Authorized Person delivered to Agent. Such notice must be
received by Agent no later than 11:00 a.m. (Texas time) on the Business Day that
is three (3) Business Days prior to the requested Funding Date specifying
(i) the amount of such Borrowing, and (ii) the requested Funding Date, which
shall be a Business Day. At Agent’s election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.

(b) [Intentionally Omitted]

(c) Making of Loans.

(i) Promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 2:00 p.m. (Texas
time) on the Business Day that is three (3) Business Days prior to the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each

 

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Lender shall make the amount of such Lender’s Pro Rata Share of the requested
Borrowing available to Agent in immediately available funds, to Agent’s Account,
not later than 10:00 a.m. (Texas time) on the Funding Date applicable thereto.
After Agent’s receipt of the proceeds of such Borrowing, Agent shall make the
proceeds thereof available to Administrative Borrower on the applicable Funding
Date by transferring immediately available funds equal to such proceeds received
by Agent to Administrative Borrower’s Designated Account; provided, however,
that, subject to the provisions of Section 2.3(i), Agent shall not request any
Lender to make, and no Lender shall have the obligation to make, any Term Loan
if Agent shall have actual knowledge that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied on the
requested Funding Date for the applicable Borrowing unless such condition has
been waived, or (2) the requested Borrowing would exceed the unused portion of
the Term Loan Commitments.

(ii) Unless Agent receives notice from a Lender prior to 5:00 p.m. (Texas time)
on the Business Day immediately preceding the Funding Date with respect to such
Borrowing, that such Lender will not make available as and when required
hereunder to Agent for the account of Administrative Borrower the amount of that
Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has
made or will make such amount available to Agent in immediately available funds
on the Funding Date. If and to the extent any Lender shall not have made its
full amount available to Agent in immediately available funds, Agent shall not
be obligated to make such amount available to Borrowers. The failure of any
Lender to make any Term Loan on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make its Term Loan on such Funding Date,
but no Lender shall be responsible for the failure of any other Lender to make
the its Term Loan to be made by such other Lender on any Funding Date.

(iii) Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in
the absence of such transfer to the Defaulting Lender, Agent shall transfer any
such payments to each other non-Defaulting Lender member of the Lender Group
ratably in accordance with their Commitments (but only to the extent that such
Defaulting Lender’s Term Loan was funded by the other members of the Lender
Group) or, if so directed by Administrative Borrower and if no Default or Event
of Default had occurred and is continuing (and to the extent such Defaulting
Lender’s Term Loan was not funded by the Lender Group), retain same to be
re-advanced to Borrower as if such Defaulting Lender had made such Term Loan to
Borrowers. Subject to the foregoing, Agent may hold and, in its Permitted
Discretion, re-lend to Borrowers for the account of such Defaulting Lender the
amount of all such payments received and retained by Agent for the account of
such Defaulting Lender. Solely for the purposes of voting or consenting to
matters with respect to the Loan Documents, such Defaulting Lender shall be
deemed not to be a “Lender” and such Lender’s Commitment shall be deemed to be
zero. This Section shall remain effective with respect to such Lender until
(x) the Obligations under this Agreement shall have been declared or shall have
become immediately due and payable, (y) the non-Defaulting Lenders, Agent, and
Administrative Borrower shall have waived such Defaulting Lender’s default in
writing, or (z) the Defaulting Lender makes its Pro Rata Share of the applicable
Term Loan and pays to Agent

 

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all amounts owing by Defaulting Lender in respect thereof. The operation of this
Section shall not be construed to increase or otherwise affect the Commitment of
any Lender, to relieve or excuse the performance by such Defaulting Lender or
any other Lender of its duties and obligations hereunder, or to relieve or
excuse the performance by Borrowers of their duties and obligations hereunder to
Agent or to the Lenders other than such Defaulting Lender. Any such failure to
fund by any Defaulting Lender shall constitute a material breach by such
Defaulting Lender of this Agreement and shall entitle Administrative Borrower at
its option, upon written notice to Agent, to arrange for a substitute Lender to
assume the Commitment of such Defaulting Lender, such substitute Lender to be
acceptable to Agent. In connection with the arrangement of such a substitute
Lender, the Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of Assignment and
Acceptance in favor of the substitute Lender (and agrees that it shall be deemed
to have executed and delivered such document if it fails to do so) subject only
to being repaid its share of the outstanding Obligations without any premium or
penalty of any kind whatsoever; provided, however, that any such assumption of
the Commitment of such Defaulting Lender shall not be deemed to constitute a
waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any
such Defaulting Lender arising out of or in relation to such failure to fund.

(d) [Intentionally Omitted]

(e) Agent Advances.

(i) Agent hereby is authorized by Borrowers and the Lenders, from time to time
in Agent’s sole discretion, (1) after the occurrence and during the continuance
of a Default or an Event of Default, or (2) at any time that any of the other
applicable conditions precedent set forth in Section 3 have not been satisfied,
to make additional term loans to Borrowers on behalf of the Lenders that Agent,
in its Permitted Discretion deems necessary or desirable (A) to preserve or
protect the Collateral, or any portion thereof, (B) to enhance the likelihood of
repayment of the Obligations, or (C) to pay any other amount chargeable to
Borrowers pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in Section 10 (any of the
term loans described in this Section 2.3(e) shall be referred to as “Agent
Advances”). Each Agent Advance shall be deemed to be a portion of the Term Loans
hereunder, except that (without the prior written consent of Agent) no such
Agent Advance shall be eligible to be a LIBOR Rate Loan and all payments thereon
shall be payable to Agent solely for its own account.

(ii) The Agent Advances shall be repayable on demand, secured by the Agent’s
Liens granted to Agent under the Loan Documents, constitute Obligations
hereunder, and bear interest at the rate applicable from time to time to
portions of the Term Loans that are Base Rate Loans.

(f) [Intentionally Omitted]

(g) Notation. Agent shall record on its books the principal amount of the Term
Loans owing to each Lender, including Agent Advances owing to Agent, and the

 

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interests therein of each Lender, from time to time and such records shall,
absent manifest error, conclusively be presumed to be correct and accurate. In
addition, each Lender is authorized, at such Lender’s option, to note the date
and amount of each payment or prepayment of principal of such Lender’s Term
Loans in its books and records, including computer records.

(h) Lenders’ Failure to Perform. All Term Loans (other than Agent Advances)
shall be made by the Lenders contemporaneously and in accordance with their Pro
Rata Shares. It is understood that (i) no Lender shall be responsible for any
failure by any other Lender to perform its obligation to make any Term Loan (or
other extension of credit) hereunder, nor shall any Commitment of any Lender be
increased or decreased as a result of any failure by any other Lender to perform
its obligations hereunder, and (ii) no failure by any Lender to perform its
obligations hereunder shall excuse any other Lender from its obligations
hereunder.

 

  2.4 Payments.

(a) Payments by Borrowers.

(i) (i) Except as otherwise expressly provided herein, all payments by Borrower
shall be made to Agent’s Account for the account of the Lender Group and shall
be made in immediately available funds, no later than 2:00 p.m. (Texas time) on
the date specified herein. Any payment received by Agent later than 2:00 p.m.
(Texas time) shall be deemed to have been received on the following Business Day
and any applicable interest or fee shall continue to accrue until such following
Business Day.

(ii) Unless Agent receives notice from Administrative Borrower prior to the date
on which any payment is due to the Lenders that Borrowers will not make such
payment in full as and when required, Agent may assume that Borrowers have made
(or will make) such payment in full to Agent on such date in immediately
available funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent Borrowers do not make such
payment in full to Agent on the date when due, each Lender severally shall repay
to Agent on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.

(b) Apportionment and Application.

(i) Except as otherwise provided with respect to Defaulting Lenders and except
as otherwise provided in the Loan Documents (including agreements between Agent
and individual Lenders), aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid principal balance
of the Obligations to which such payments relate held by each Lender) and
payments of fees and expenses (other than fees or expenses that are for Agent’s
separate account, after giving effect to any agreements between Agent and
individual Lenders) shall be apportioned ratably

 

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among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. All payments shall be remitted to
Agent and all such payments, and all proceeds of Collateral received by Agent,
shall be applied as follows:

(A) first, to pay any Lender Group Expenses then due to Agent under the Loan
Documents, until paid in full,

(B) second, to pay any Lender Group Expenses then due to the Lenders under the
Loan Documents, on a ratable basis, until paid in full,

(C) third, to pay any fees then due to Agent (for its separate accounts, after
giving effect to any agreements between Agent and individual Lenders) under the
Loan Documents until paid in full,

(D) fourth, to pay any fees then due to any or all of the Lenders (after giving
effect to any agreements between Agent and individual Lenders) under the Loan
Documents, on a ratable basis, until paid in full,

(E) fifth, to pay interest due in respect of all Agent Advances, until paid in
full,

(F) sixth, ratably to pay interest due in respect of the Term Loans (other than
portions of the Term Loans consisting of Agent Advances) until paid in full,

(G) seventh, to pay the principal of all Agent Advances until paid in full,

(H) eighth, ratably to pay all principal amounts then due and payable (other
than as a result of an acceleration thereof) with respect to the Term Loans
until paid in full,

(I) ninth, if an Event of Default has occurred and is continuing, to pay the
outstanding principal balance of the Term Loans (in the inverse order of the
maturity of the installments due thereunder) until the Term Loans are paid in
full,

(J) tenth, if an Event of Default has occurred and is continuing, to pay any
other Obligations, and

(K) eleventh, to Borrowers (to be wired to the Designated Account) or such other
Person entitled thereto under applicable law.

(ii) Agent promptly shall distribute to each Lender, pursuant to the applicable
wire instructions received from each Lender in writing, such funds as it may be
entitled to receive.

 

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(iii) In each instance, so long as no Event of Default has occurred and is
continuing, this Section 2.4(b) shall not apply to any payment made by Borrowers
to Agent and specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of this
Agreement.

(iv) For purposes of the foregoing, “paid in full” means payment of all amounts
owing under the Loan Documents according to the terms thereof, including loan
fees, service fees, professional fees, interest (and specifically including
interest accrued after the commencement of any Insolvency Proceeding), default
interest, interest on interest, and expense reimbursements, whether or not any
of the foregoing would be or is allowed or disallowed in whole or in part in any
Insolvency Proceeding.

(v) In the event of a direct conflict between the priority provisions of this
Section 2.4 and other provisions contained in any other Loan Document, it is the
intention of the parties hereto that such priority provisions in such documents
shall be read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.

 

  (c) Mandatory Prepayments.

(i) Immediately upon any sale or disposition by Parent or any of its
Subsidiaries of property or assets (other than sales or dispositions which
qualify as Permitted Dispositions under clauses (b) and (c) of the definition of
Permitted Dispositions), Borrowers shall prepay the Term Loans in an amount
equal to 100% of the Net Cash Proceeds received by such Person in connection
with such sales or dispositions. Nothing contained in this subclause (ii) shall
permit Parent or any of its Subsidiaries to sell or otherwise dispose of any
property or assets other than in accordance with Section 7.4.

(ii) Immediately upon the receipt by Parent or any of its Subsidiaries of any
Extraordinary Receipts, Borrowers shall prepay the Term Loans in an amount equal
to 100% of such Extraordinary Receipts, net of any reasonable expenses incurred
in collecting such Extraordinary Receipts.

(iii) Immediately upon (A) the issuance or incurrence by Parent or any of its
Subsidiaries of any Indebtedness (other than Indebtedness permitted to be
incurred pursuant to Section 7.1), or (B) the sale or issuance by Borrower or
any of its Subsidiaries of any shares of its Stock, Borrower shall prepay the
Term Loans in an amount equal to 100% of the Net Cash Proceeds received by
Parent or its Subsidiaries in connection with such sale, issuance, or
incurrence. The provisions of this subsection (iv) shall not be deemed to be
implied consent to any such sale, issuance, or incurrence otherwise prohibited
by the terms and conditions of this Agreement.

(iv) Each prepayment of the Term Loans pursuant to Section 2.4(c) shall be
accompanied by the payment of interest accrued to the date of such prepayment on
the amount prepaid, and shall be applied against the remaining installments of
principal of the Term Loans in the inverse order of maturity.

 

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  2.5 [Intentionally Omitted].

 

  2.6 Interest Rates: Rates, Payments, and Calculations.

(a) Interest Rates. Except as provided in clause (c) below, all Obligations that
have been charged to the Loan Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof as follows (i) if the relevant Obligation
is a portion of the Term Loans that is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the LIBOR Rate Term Loan Margin and (ii) if the
relevant Obligation is a portion of the Term Loans that is a Base Rate Loan, at
a per annum rate equal to the Base Rate plus the Base Rate Term Loan Margin.

(b) [Intentionally Omitted]

(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default (and at the election of Agent or the Required Lenders), all Obligations
that have been charged to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum rate equal to 3
percentage points above the per annum rate otherwise applicable hereunder.

(d) Payment. Except as provided to the contrary in Section 2.11, interest, and
all other fees payable hereunder shall be due and payable, in arrears, on the
first day of each month at any time that Obligations or Commitments are
outstanding. Borrowers hereby authorize Agent, from time to time, without prior
notice to Borrowers, to charge all interest and fees (when due and payable), all
Lender Group Expenses (as and when incurred), all fees and costs provided for in
Section 2.11 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document (including the amounts due and
payable with respect to the Term Loans) to Borrowers’ Loan Account, which
amounts thereafter shall constitute Term Loans hereunder and shall accrue
interest at the rate then applicable to the Term Loans hereunder. Any interest
not paid when due shall be compounded by being charged to Borrowers’ Loan
Account and shall thereafter accrue interest at the rate then applicable to the
Term Loans that are Base Rate Loans hereunder.

(e) Computation. All interest and fees chargeable under the Loan Documents shall
be computed on the basis of a 360 day year for the actual number of days
elapsed. In the event the Base Rate is changed from time to time hereafter, the
rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.

(f) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the

 

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Lender Group, in executing and delivering this Agreement, intend legally to
agree upon the rate or rates of interest and manner of payment stated within it;
provided, however, that, anything contained herein to the contrary
notwithstanding, if said rate or rates of interest or manner of payment exceeds
the maximum allowable under applicable law, then, ipso facto, as of the date of
this Agreement, Borrowers are and shall be liable only for the payment of such
maximum as allowed by law, and payment received from Borrowers in excess of such
legal maximum, whenever received, shall be applied to reduce the principal
balance of the Obligations to the extent of such excess.

 

  2.7 Cash Management.

(a) Administrative Borrower shall establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each, a “Cash Management Bank”), and deposit
or cause to be deposited promptly, and in any event no later than the first
Business Day after the date of receipt thereof, all Collections received by
Administrative Borrower into a bank account in Administrative Borrower’s name (a
“Cash Management Account”) at one of the Cash Management Banks.

(b) Each Cash Management Bank shall establish and maintain Cash Management
Agreements with Agent and Borrower, in form and substance acceptable to Agent.
Each such Cash Management Agreement shall provide, among other things, that
(i) all items of payment deposited in such Cash Management Account and proceeds
thereof are held by such Cash Management Bank as agent or bailee-in-possession
for Lender, (ii) the Cash Management Bank has no rights of setoff or recoupment
or any other claim against the applicable Cash Management Account other than for
payment of its service fees and other charges directly related to the
administration of such Cash Management Account and for returned checks or other
items of payment, and (iii) from and after the giving of notice by Agent to the
Cash Management Bank, the Cash Management Bank shall immediately comply with any
instructions originated by Agent directing the disposition of the funds in the
Cash Management Account without further consent of Parent or any of its
Subsidiaries. Agent agrees that it will not give such notice to the Cash
Management Bank unless an Event of Default has occurred and is continuing.
Except as set forth in Section 2.7(c), no arrangement contemplated by this
Section 2.7 shall be modified without the prior written consent of Agent. Upon
the occurrence and during the continuance of an Event of Default, Agent may
elect to notify the Cash Management Bank (without notice to any Borrower, to any
Guarantor or to any other Person) to remit all amounts received in the Cash
Management Account to the Agent’s Account.

(c) At any time that the balance in any Deposit Account or Securities Account of
Parent or any of its Subsidiaries (other a Deposit Account or Securities Account
that is subject to a Control Agreement) exceeds the amount set forth on Schedule
2.7(c) with respect to such Subsidiary of Parent, Administrative Borrower shall
immediately (i) transfer or cause to be transferred into the Cash Management
Account all such excess amounts in

 

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such Deposit Account or Securities Account, or (ii) deliver a Control Agreement
to Agent with respect to such Deposit Account or Securities Account.

(d) So long as no Default or Event of Default has occurred and is continuing,
Administrative Borrower may amend Schedule 2.7(a) to add or replace a Cash
Management Bank or Cash Management Account; provided, however, that (i) such
prospective Cash Management Bank shall be reasonably satisfactory to Agent, and
(ii) prior to the time of the opening of such Cash Management Account, Parent
(or its Subsidiary, as applicable) and such prospective Cash Management Bank
shall have executed and delivered to Agent a Cash Management Agreement. Parent
(or its Subsidiaries, as applicable) shall close any of its Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent’s reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash Management Accounts or Agent’s liability under any
Cash Management Agreement with such Cash Management Bank is no longer acceptable
in Agent’s reasonable judgment.

(e) The Cash Management Accounts shall be cash collateral accounts subject to a
Control Agreement, with all cash, checks and similar items of payment in such
accounts securing payment of the Obligations, and in which each Borrower hereby
grants a Lien to Agent.

2.8 Crediting Payments. The receipt of any payment item by Agent (whether from
transfers to Agent by the Cash Management Banks pursuant to the Cash Management
Agreements or otherwise) shall not be considered a payment on account unless
such payment item is a wire transfer of immediately available federal funds made
to the Agent’s Account or unless and until such payment item is honored when
presented for payment. Should any payment item not be honored when presented for
payment, then Borrowers shall be deemed not to have made such payment and
interest shall be calculated accordingly. Anything to the contrary contained
herein notwithstanding, any payment item shall be deemed received by Agent only
if it is received into the Agent’s Account on a Business Day on or before 11:00
a.m. (Texas time). If any payment item is received into the Agent’s Account on a
non-Business Day or after 11:00 a.m. (Texas time) on a Business Day, it shall be
deemed to have been received by Agent as of the opening of business on the
immediately following Business Day.

2.9 Designated Account. Agent is authorized to make the Term Loans under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to
Section 2.6(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Term Loans requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Agent Advance or the Term Loans requested by Borrowers and made by Agent or
the Lenders hereunder shall be made to the Designated Account.

 

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2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the “Loan Account”)
on which Borrowers will be charged with the Term Loans (including Agent
Advances) made by Agent or the Lenders to Borrowers or for Borrowers’ account
and with all other payment Obligations hereunder or under the other Loan
Documents, including, accrued interest, fees and expenses, and Lender Group
Expenses. In accordance with Section 2.8, the Loan Account will be credited with
all payments received by Agent from Borrowers or for Borrowers’ account,
including all amounts received in the Agent’s Account from any Cash Management
Bank. Agent shall render statements regarding the Loan Account to Administrative
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements, absent manifest error, shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.

2.11 Fees. Borrowers shall pay to Agent the following fees and charges, which
fees and charges shall be non-refundable when paid (irrespective of whether this
Agreement is terminated thereafter) and shall be apportioned among the Lenders
in accordance with the terms of agreements between Agent and individual Lenders:

(a) Fee Letter Fees. As and when due and payable under the terms of the Fee
Letter, the fees set forth in the Fee Letter, and

(b) Audit, Appraisal, and Valuation Charges. Audit, appraisal, and valuation
fees and charges as follows (i) a fee of $850 per day, per auditor, plus
out-of-pocket expenses for each financial audit of a Borrower performed by
personnel employed by Agent, (ii) if implemented, a fee of $850 per day, per
applicable individual, plus out of pocket expenses for the establishment of
electronic collateral reporting systems, (iii) a fee of $1,500 per day per
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral, or
any portion thereof, performed by personnel employed by Agent, and (iv) the
actual charges paid or incurred by Agent if it elects to employ the services of
one or more third Persons to perform financial audits of Borrowers or their
Subsidiaries, to establish electronic collateral reporting systems, to appraise
the Collateral, or any portion thereof, or to assess Borrowers’ and their
Subsidiaries’ business valuation; provided, however, that so long as no Default
or Event of Default has occurred and is continuing, Borrowers shall not be
required to reimburse Agent for more than two (2) such financial audits or
appraisals and two (2) such business valuations during any fiscal year of
Parent.

 

  2.12 [Intentionally Omitted]

 

  2.13 LIBOR Option.

 

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(a) Interest and Interest Payment Dates. In lieu of having interest charged at
the rate based upon the Base Rate, Borrowers shall have the option (the “LIBOR
Option”) to have interest on all or a portion of the Term Loans be charged at a
rate of interest based upon the LIBOR Rate. Interest on LIBOR Rate Loans shall
be payable in accordance with Section 2.6(d). On the last day of each applicable
Interest Period, unless Administrative Borrower properly has exercised the LIBOR
Option with respect thereto, the interest rate applicable to such LIBOR Rate
Loan automatically shall convert to the rate of interest then applicable to Base
Rate Loans of the same type hereunder. At any time that an Event of Default has
occurred and is continuing, Borrowers no longer shall have the option to request
that the Term Loans bear interest at a rate based upon the LIBOR Rate and Agent
shall have the right to convert the interest rate on all outstanding LIBOR Rate
Loans to the rate then applicable to Base Rate Loans hereunder.

(b) LIBOR Election.

(i) Administrative Borrower may, at any time and from time to time, so long as
no Event of Default has occurred and is continuing, elect to exercise the LIBOR
Option by notifying Agent prior to 11:00 a.m. (Texas time) at least 3 Business
Days prior to the commencement of the proposed Interest Period (the “LIBOR
Deadline”). Notice of Administrative Borrower’s election of the LIBOR Option for
a permitted portion of the Term Loans and an Interest Period pursuant to this
Section shall be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline, or by telephonic notice received by Agent before the
LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received
by Agent prior to 5:00 p.m. (Texas time) on the same day). Promptly upon its
receipt of each such LIBOR Notice, Agent shall provide a copy thereof to each of
the Lenders.

(ii) Each LIBOR Notice shall be irrevocable and binding on Borrowers. In
connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and
hold Agent and the Lenders harmless against any loss, cost, or expense incurred
by Agent or any Lender as a result of (a) the payment of any principal of any
LIBOR Rate Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of
any LIBOR Rate Loan other than on the last day of the Interest Period applicable
thereto, or (c) the failure to borrow, convert, continue or prepay any LIBOR
Rate Loan on the date specified in any LIBOR Notice delivered pursuant hereto
(such losses, costs, and expenses, collectively, “Funding Losses”). Funding
Losses shall, with respect to Agent or any Lender, be deemed to equal the amount
determined by Agent or such Lender to be the excess, if any, of (i) the amount
of interest that would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would have been
applicable thereto, for the period from the date of such event to the last day
of the then current Interest Period therefor (or, in the case of a failure to
borrow, convert or continue, for the period that would have been the Interest
Period therefor), minus (ii) the amount of interest that would accrue on such
principal amount for such period at the interest rate which Agent or such Lender
would be offered were it to be offered, at the commencement of such period,
Dollar deposits of a comparable amount and

 

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period in the London interbank market. A certificate of Agent or a Lender
delivered to Administrative Borrower setting forth any amount or amounts that
Agent or such Lender is entitled to receive pursuant to this Section 2.13 shall
be conclusive absent manifest error.

(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in effect at any
given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate Loans of
at least $1,000,000 and integral multiples of $500,000 in excess thereof.

(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any time; provided,
however, that in the event that LIBOR Rate Loans are prepaid on any date that is
not the last day of the Interest Period applicable thereto, including as a
result of any automatic prepayment through the required application by Agent of
proceeds of Borrowers’ and their Subsidiaries’ Collections in accordance with
Section 2.4(b) or for any other reason, including early termination of the term
of this Agreement or acceleration of all or any portion of the Obligations
pursuant to the terms hereof, each Borrower shall indemnify, defend, and hold
Agent and the Lenders and their Participants harmless against any and all
Funding Losses in accordance with clause (b)(ii) above.

(d) Special Provisions Applicable to LIBOR Rate.

(i) The LIBOR Rate may be adjusted by Agent with respect to any Lender on a
prospective basis to take into account any additional or increased costs to such
Lender of maintaining or obtaining any eurodollar deposits or increased costs,
in each case, due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes in tax
laws (except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, the affected Lender shall
give Administrative Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender, Administrative
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Administrative Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under clause (b)(ii) above).

(ii) In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation of
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Rate Loans or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Agent and Administrative Borrower and
Agent promptly shall transmit the notice to each other Lender and (y) in the
case of any LIBOR Rate Loans of such Lender that are outstanding, the date

 

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specified in such Lender’s notice shall be deemed to be the last day of the
Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at the rate then applicable to
Base Rate Loans, and (z) Borrowers shall not be entitled to elect the LIBOR
Option until such Lender determines that it would no longer be unlawful or
impractical to do so.

(e) No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate. The
provisions of this Section shall apply as if each Lender or its Participants had
match funded any Obligation as to which interest is accruing at the LIBOR Rate
by acquiring eurodollar deposits for each Interest Period in the amount of the
LIBOR Rate Loans.

2.14 Capital Requirements. If, after the date hereof, any Lender determines that
(i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender’s or
such holding company’s capital as a consequence of such Lender’s Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender’s or such holding company’s then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity’s capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender’s calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods. The foregoing
to the contrary notwithstanding, no Lender shall make any such demand for
payment if such demand is not generally consistent with such Lender’s treatment
of similarly situated customers of such Lender whose transactions with such
Lender are similarly affected by the change in circumstances giving rise to such
demand for payment.

 

  2.15 Joint and Several Liability of Borrowers.

(a) Each Borrower is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by the Lender Group under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.

 

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(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and performance
of all of the Obligations (including, without limitation, any Obligations
arising under this Section 2.15), it being the intention of the parties hereto
that all the Obligations shall be the joint and several obligations of each
Borrower without preferences or distinction among them.

(c) If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrowers will make such payment with respect to, or perform, such
Obligation.

(d) The Obligations of each Borrower under the provisions of this Section 2.15
constitute the absolute and unconditional, full recourse Obligations of each
Borrower enforceable against each Borrower to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Agreement or any other circumstances whatsoever.

(e) Except as otherwise expressly provided in this Agreement, each Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
any Term Loan issued under or pursuant to this Agreement, notice of the
occurrence of any Default, Event of Default, or of any demand for any payment
under this Agreement, notice of any action at any time taken or omitted by Agent
or Lenders under or in respect of any of the Obligations, any requirement of
diligence or to mitigate damages and, generally, to the extent permitted by
applicable law, all demands, notices and other formalities of every kind in
connection with this Agreement (except as otherwise provided in this Agreement).
Each Borrower hereby assents to, and waives notice of, any extension or
postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Agent or Lenders at any time or times in respect of any default by any Borrower
in the performance or satisfaction of any term, covenant, condition or provision
of this Agreement, any and all other indulgences whatsoever by Agent or Lenders
in respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Borrower. Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on the part of
any Agent or Lender with respect to the failure by any Borrower to comply with
any of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this Section 2.15 afford grounds for terminating, discharging or
relieving any Borrower, in whole or in part, from any of its Obligations under
this Section 2.15, it being the intention of each Borrower that, so long as any
of the Obligations hereunder remain unsatisfied, the Obligations of each
Borrower under this Section 2.15 shall not be discharged except by performance
and then only to the extent of such performance. The Obligations of each
Borrower under this Section

 

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2.15 shall not be diminished or rendered unenforceable by any winding up,
reorganization, arrangement, liquidation, reconstruction or similar proceeding
with respect to any Borrower or any Agent or Lender.

(f) Each Borrower represents and warrants to Agent and Lenders that such
Borrower is currently informed of the financial condition of Borrowers and of
all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Agent and Lenders that such Borrower has read and understands
the terms and conditions of the Loan Documents. Each Borrower hereby covenants
that such Borrower will continue to keep informed of Borrowers’ financial
condition, the financial condition of other guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.

(g) Each Borrower waives all rights and defenses arising out of an election of
remedies by Agent or any Lender, even though that election of remedies, such as
a nonjudicial foreclosure with respect to security for a guaranteed obligation,
has destroyed Agent’s or such Lender’s rights of subrogation and reimbursement
against such Borrower by the operation of Section 580(d) of the California Code
of Civil Procedure or otherwise:

(h) Each Borrower waives all rights and defenses that such Borrower may have
because the Obligations are secured by Real Property. This means, among other
things:

(i) Agent and Lenders may collect from such Borrower without first foreclosing
on any Collateral pledged by Borrowers.

(ii) If Agent or any Lender forecloses on any Real Property pledged by
Borrowers:

(A) The amount of the Obligations may be reduced only by the price for which
that collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price.

(B) Agent and Lenders may collect from such Borrower even if Agent or Lenders,
by foreclosing on the Real Property Collateral, has destroyed any right such
Borrower may have to collect from the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.

(i) The provisions of this Section 2.15 are made for the benefit of Agent,
Lenders and their respective successors and assigns, and may be enforced by it
or them from time to time against any or all Borrowers as often as occasion
therefor may arise and without requirement on the part of any such Agent,
Lender, successor or assign first to marshal any

 

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of its or their claims or to exercise any of its or their rights against any
Borrower or to exhaust any remedies available to it or them against any Borrower
or to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any Borrower, or otherwise, the provisions of
this Section 2.15 will forthwith be reinstated in effect, as though such payment
had not been made.

(j) Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against any other Borrower with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Agent or Lenders with respect to any of the Obligations
or any collateral security therefor until such time as all of the Obligations
have been paid in full in cash. Any claim which any Borrower may have against
any other Borrower with respect to any payments to any Agent or Lender hereunder
or under any other Loan Documents are hereby expressly made subordinate and
junior in right of payment, without limitation as to any increases in the
Obligations arising hereunder or thereunder, to the prior payment in full in
cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.

(k) Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior payment in full in cash of the Obligations.
Each Borrower hereby agrees that after the occurrence and during the continuance
of any Default or Event of Default, such Borrower will not demand, sue for or
otherwise attempt to collect any indebtedness of any other Borrower owing to
such Borrower until the Obligations shall have been paid in full in cash. If,
notwithstanding the foregoing sentence, such Borrower shall collect, enforce or
receive any amounts in respect of such indebtedness, such amounts shall be
collected, enforced and received by such Borrower as trustee for Agent, and such
Borrower shall deliver any such amounts to Agent for application to the
Obligations in accordance with Section 2.4(b).

2.16 Registration of Notes. Agent, acting solely for this purpose as a
non-fiduciary agent for Borrowers, agrees to record each Term Loan on the
Register referred to in Section 14.1(h). Each Term Loan recorded on the Register
may not be evidenced by promissory notes other than Registered Notes (as defined
below). Upon the registration of each Term Loan, each Borrower agrees, at the
request of any Lender, to execute and deliver to such Lender a promissory note,
in conformity with the terms of this Agreement, in registered form to evidence
such Registered Loan, in form and substance reasonably

 

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satisfactory to such Lender, and registered as provided in Section 14.1(h) (a
“Registered Note”), payable to the order of such Lender and otherwise duly
completed. Once recorded on the Register (or comparable register), each Term
Loan may not be removed from the Register (or comparable register) so long as it
or they remain outstanding, and a Registered Note may not be exchanged for a
promissory note that is not a Registered Note.

2.17 Securitization. Each Borrower hereby acknowledges that each Lender with a
Term Loan Commitment and each of its Affiliates and Related Funds may sell or
securitize the Term Loans (a “Securitization”) through the pledge of the Term
Loans as collateral security for loans to such Lender or its Affiliates or
Related Funds or through the sale of the Term Loans or the issuance of direct or
indirect interests in the Term Loans, which loans to such Lender or its
Affiliates or Related Funds or direct or indirect interests will be rated by
Moody’s, S&P or one or more other rating agencies (the “Rating Agencies”).
Borrowers agree to cooperate with such Lenders and their Affiliates and Related
Funds to effect the Securitization by (a) executing such additional documents,
as reasonably requested by such Lenders in connection with the Securitization,
provided that (i) any such additional documentation does not, in the aggregate,
impose additional costs or liabilities on Borrowers (other than costs or
liabilities of a de minimis nature), and (ii) any such additional documentation
does not, in the aggregate, adversely affect the rights (other than affects of a
de minimis nature), or increase the obligations, of Borrowers under the Loan
Documents (other than increases of a de minimis nature) or change or affect in a
manner adverse to Borrowers the financial terms of the Term Loans (other than
changes or affects of a de minimis nature) and (b) providing such written
information as may be reasonably requested by such Lenders in connection with
the rating of the Term Loans or the Securitization.

 

3. CONDITIONS; TERM OF AGREEMENT.

3.1 Conditions Precedent to the Initial Extension of Credit. The obligation of
each Lender to make its initial extension of credit provided for hereunder, is
subject to the fulfillment, to the satisfaction of Agent and each Lender (the
making of such initial extension of credit by a Lender being conclusively deemed
to be its satisfaction or waiver of the following), of each of the following
conditions precedent:

(a) the Closing Date shall occur on or before May 11, 2005;

(b) Agent shall have received a Filing Authorization Letter, duly executed by
each Borrower and each Guarantor, together with appropriate financing statements
duly filed in such office or offices as may be necessary or, in the opinion of
Agent, desirable to perfect the Agent’s Liens in and to the Collateral, and
Agent shall have received searches reflecting the filing of all such financing
statements;

(c) Agent shall have received each of the following documents, in form and
substance satisfactory to Agent, duly executed, and each such document shall be
in full force and effect:

(i) the Canadian Guarantor Security Agreement,

 

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(ii) the Canadian Guaranty,

(iii) the Cash Management Agreements,

(iv) the Disbursement Letter,

(v) the Fee Letter,

(vi) the Guarantor Security Agreement,

(vii) the Guaranty,

(viii) the Intercompany Subordination Agreement,

(ix) the Pay-Off Letters, together with termination statements and other
documentation evidencing the termination by Existing Lenders of their Liens in
and to the properties and assets of Borrowers and their Subsidiaries,

(x) the Stock Pledge Agreement, together with all certificates representing the
shares of Stock pledged thereunder, as well as Stock powers with respect thereto
endorsed in blank,

(xi) the Subordination Agreement, and

(d) Agent shall have received a certificate from the Secretary of each Borrower
(i) attesting to the resolutions of such Borrower’s Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which such Borrower is a party, (ii) authorizing
specific officers of such Borrower to execute the same, and (iii) attesting to
the incumbency and signatures of such specific officers of such Borrower;

(e) Agent shall have received copies of each Borrower’s Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of such Borrower;

(f) Agent shall have received a certificate of status with respect to each
Borrower, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Borrower, which certificate shall indicate that such Borrower is in good
standing in such jurisdiction;

(g) Agent shall have received certificates of status with respect to each
Borrower, each dated within 30 days of the Closing Date, such certificates to be
issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Borrower) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;

 

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(h) Agent shall have received a certificate from the Secretary of each Guarantor
(i) attesting to the resolutions of such Guarantor’s board of directors
authorizing its execution, delivery, and performance of the Loan Documents to
which such Guarantor is a party, (ii) authorizing specific officers of such
Guarantor to execute the same, and (iii) attesting to the incumbency and
signatures of such specific officers of such Guarantor;

(i) Agent shall have received copies of each Guarantor’s Governing Documents, as
amended, modified, or supplemented to the Closing Date, certified by the
Secretary of such Guarantor;

(j) Agent shall have received a certificate of status with respect to each
Guarantor, dated within 10 days of the Closing Date, such certificate to be
issued by the appropriate officer of the jurisdiction of organization of such
Guarantor, which certificate shall indicate that such Guarantor is in good
standing in such jurisdiction;

(k) Agent shall have received certificates of status with respect to each
Guarantor, each dated within 30 days of the Closing Date, such certificates to
be issued by the appropriate officer of the jurisdictions (other than the
jurisdiction of organization of such Guarantor) in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Guarantor is in good standing in such
jurisdictions;

(l) [Intentionally Omitted]

(m) [Intentionally Omitted]

(n) Agent shall have received opinions of Borrowers’ counsel in form and
substance satisfactory to Agent;

(o) Agent shall have received satisfactory evidence (including a certificate of
the chief financial officer of Parent) that all tax returns required to be filed
by Borrowers and their Subsidiaries have been timely filed (or if not filed,
extensions for such tax returns have been filed) and all taxes upon Borrowers
and their Subsidiaries or their properties, assets, income, and franchises
(including Real Property taxes, sales taxes, and payroll taxes) have been paid
prior to delinquency, except such taxes that are the subject of a Permitted
Protest;

(p) Borrowers shall have the Required Liquidity after the payment of all fees
and expenses required to be paid by Borrowers on the Closing Date under this
Agreement or the other Loan Documents, and after giving effect to the payments
and transactions contemplated by this Agreement;

(q) Agent shall have completed its business, legal, and collateral due
diligence, the results of which shall be satisfactory to Agent;

 

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(r) Agent shall have received completed reference checks with respect to
Borrowers’ senior management, the results of which are satisfactory to Agent in
its sole discretion;

(s) Agent shall have received Borrowers’ Closing Date Business Plan;

(t) Borrowers shall have paid all Lender Group Expenses incurred in connection
with the transactions evidenced by this Agreement;

(u) Agent shall have received copies of each of the Acquisition Documents, the
Management Agreements, the Employment Agreements, and the Indebtedness
Documents, together with a certificate of the Secretary of Parent certifying
each such document as being a true, correct, and complete copy thereof;

(v) Borrowers and each of their Subsidiaries shall have received all licenses,
approvals or evidence of other actions required by any Governmental Authority in
connection with the execution and delivery by Borrowers or their Subsidiaries of
the Loan Document or with the consummation of the transactions contemplated
thereby; and

(w) all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Agent.

3.2 Conditions Subsequent to the Initial Extension of Credit. The obligation of
the Lender Group (or any member thereof) to continue to make the Term Loans (or
otherwise extend credit hereunder) is subject to the fulfillment, on or before
the date applicable thereto, of each of the conditions subsequent set forth
below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):

(a) within 10 days of the Closing Date, deliver to Agent opinions of counsel to
Parent and its Subsidiaries which is reasonably satisfactory to Agent with
respect to (i) the due incorporation, valid existence and good standing of
Georgia Surgical, the power and authority of Georgia Surgical to execute the
Loan Documents to which it is a party, the execution of such Loan Documents by
Georgia Surgical, the perfection of the Liens granted by Georgia Surgical to
Agent, the lack of any conflict between the Loan Documents executed by Georgia
Surgical with any of its Governing Documents, and any other matters with respect
to Georgia Surgical as may be reasonably requested by Agent (each such opinion
being provided under the laws of the state of Georgia), in form and substance
satisfactory to Agent, and (ii) with respect to each Borrower and each
Guarantor, such opinions as Agent shall require with respect to Regulations T, U
and X of the Board of Governors of the Federal Reserve System of the United
States, in form and substance satisfactory to Agent;

(b) within 30 days of the Closing Date, Agent shall have received such evidence
as it shall require to evidence the termination of the following Uniform
Commercial Code financing statements: (i) the initial financing statement filed
by Fleet National Bank

 

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with the Main Secretary of State on or about March 14, 2003, identified as
initial filing number 2030001583778-94 and naming Bejamin Zolper, M.D., LLC as
the debtor, (ii) the initial financing statement filed by CIT Financial USA Inc.
in Barrow County, Georgia with the Georgia Cooperative Authority on or about
June 29, 2005, identified as initial filing number 007-2000-007840 and naming
Georgia Pain Physicians, P.C. as the debtor, and (iii) any and all filings in
respect of tax liens or other judgments naming Christopher E. Cenac M.D. as the
debtor;

(c) within 30 days of the Closing Date, Parent shall cause the Governing
Documents of Parent or any of its Subsidiaries that provide for preemptive
rights for such Person’s shareholders to be amended to eliminate any such
provision, in each case in form and substance satisfactory to Agent;

(d) Parent and Borrowers shall use their best efforts to deliver to Agent within
60 days of the Closing Date Collateral Access Agreements with respect to the
location of Parent’s chief executive office, as well as each of the Required
Locations; and

(e) within 60 days of the Closing Date, deliver to Agent certificates of
insurance, together with certified copies of the policies of insurance, together
with the endorsements thereto, in each case as are required by Section 6.8, the
form and substance of each of which shall be satisfactory to Agent and its
counsel.

3.3 Conditions Precedent to all Extensions of Credit. The obligation of the
Lender Group (or any member thereof) to make the Term Loans hereunder at any
time (or to extend any other credit hereunder) shall be subject to the following
conditions precedent:

(a) the representations and warranties contained in this Agreement and the other
Loan Documents shall be true and correct in all material respects on and as of
the date of such extension of credit, as though made on and as of such date
(except to the extent that such representations and warranties relate solely to
an earlier date);

(b) no Default or Event of Default shall have occurred and be continuing on the
date of such extension of credit, nor shall either result from the making
thereof;

(c) no injunction, writ, restraining order, or other order of any nature
restricting or prohibiting, directly or indirectly, the extending of such credit
shall have been issued and remain in force by any Governmental Authority against
any Borrower, Agent, any Lender, or any of their Affiliates; and

(d) no Material Adverse Change shall have occurred.

3.4 Term. This Agreement shall continue in full force and effect for a term
ending on May 10, 2009 (the “Maturity Date”). The foregoing notwithstanding, the
Lender Group, upon the election of the Required Lenders, shall have the right to
terminate its obligations under this Agreement immediately and without notice
upon the occurrence and during the continuation of an Event of Default.

 

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3.5 Effect of Termination. On the date of termination of this Agreement, all
Obligations immediately shall become due and payable without notice or demand.
No termination of this Agreement, however, shall relieve or discharge Borrowers
or their Subsidiaries of their duties, Obligations, or covenants hereunder or
under any other Loan Document and the Agent’s Liens in the Collateral shall
remain in effect until all Obligations have been paid in full and the Lender
Group’s obligations to provide additional credit hereunder have been terminated.
When this Agreement has been terminated and all of the Obligations have been
paid in full and the Lender Group’s obligations to provide additional credit
under the Loan Documents have been terminated irrevocably, Agent will, at
Borrowers’ sole expense, execute and deliver any termination statements, lien
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent’s Liens
and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.

3.6 Early Termination by Borrowers. Borrowers have the option, at any time upon
30 days prior written notice by Administrative Borrower to Agent, to terminate
this Agreement by paying to Agent, in cash, the Obligations, in full, together
with the Applicable Prepayment Premium (to be allocated based upon agreements
between Agent and individual Lenders). If Administrative Borrower has sent a
notice of termination pursuant to the provisions of this Section, then the
Commitments shall terminate and Borrowers shall be obligated to repay the
Obligations, in full, together with the Applicable Prepayment Premium, on the
date set forth as the date of termination of this Agreement in such notice. In
the event of the termination of this Agreement and repayment of the Obligations
at any time prior to the Maturity Date, for any other reason, including
(a) termination upon the election of the Required Lenders to terminate after the
occurrence and during the continuation of an Event of Default, (b) foreclosure
and sale of Collateral, (c) sale of the Collateral in any Insolvency Proceeding,
or (d) restructure, reorganization or compromise of the Obligations by the
confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrowers shall pay the Applicable Prepayment Premium to Agent (to
be allocated based upon agreements between Agent and individual Lenders),
measured as of the date of such termination.

 

4. CREATION OF SECURITY INTEREST.

4.1 Grant of Security Interest. Each Borrower hereby grants to Agent, for the
benefit of the Lender Group, a continuing security interest in all of its right,
title, and interest in all currently existing and hereafter acquired or arising
Borrower Collateral in order to secure prompt repayment of any and all of the
Obligations in accordance with the terms and conditions of the Loan Documents
and in order to secure prompt performance by Borrowers of each of their
covenants and duties under the Loan Documents. The Agent’s Liens in and

 

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to the Borrower Collateral shall attach to all Borrower Collateral without
further act on the part of Agent or Borrowers. Anything contained in this
Agreement or any other Loan Document to the contrary notwithstanding, except for
Permitted Dispositions, Borrowers and their Subsidiaries have no authority,
express or implied, to dispose of any item or portion of the Collateral.

4.2 Negotiable Collateral. In the event that any Borrower Collateral, including
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that Agent determines that perfection or priority of Agent’s security
interest is dependent on or enhanced by possession, the applicable Borrower,
promptly upon the request of Agent, shall endorse and deliver physical
possession of such Negotiable Collateral to Agent.

4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral. At
any time after the occurrence and during the continuation of an Event of
Default, Agent or Agent’s designee may (a) notify Account Debtors of Borrowers
that Borrowers’ Accounts, chattel paper, or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, or (b) collect
Borrowers’ Accounts, chattel paper, or General Intangibles directly and charge
the collection costs and expenses to the Loan Account. Upon the occurrence and
during the continuance of and Event of Default, each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group’s trustee, any of
its or its Subsidiaries’ Collections that it receives and immediately will
deliver such Collections to Agent or a Cash Management Bank in their original
form as received by such Borrower or its Subsidiaries (except for those amounts
required by mandatory provisions of applicable law or by a Governmental
Authority to be retained by such Borrower).

4.4 Filing of Financing Statements; Commercial Tort Claims; Delivery of
Additional Documentation Required.

(a) Borrowers authorize Agent to file any financing statement necessary or
desirable to effectuate the transactions contemplated by the Loan Documents, and
any continuation statement or amendment with respect thereto, in any appropriate
filing office without the signature of Borrowers where permitted by applicable
law. Borrowers hereby ratify the filing of any financing statement filed without
the signature of Borrowers prior to the date hereof.

(b) If Borrowers or their Subsidiaries acquire any commercial tort claims after
the date hereof, Borrowers shall promptly (but in any event within 3 Business
Days after such acquisition) deliver to Agent a written description of such
commercial tort claim and shall deliver a written agreement, in form and
substance satisfactory to Agent, pursuant to which such Borrower or its
Subsidiary, as applicable, shall grant a perfected security interest in all of
its right, title and interest in and to such commercial tort claim to Agent, as
security for the Obligations (a “Commercial Tort Claim Assignment”).

(c) At any time upon the request of Agent, Borrowers shall execute or deliver to
Agent and shall cause their Subsidiaries to execute or deliver to Agent any and
all financing statements, original financing statements in lieu of continuation
statements,

 

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amendments to financing statements, fixture filings, security agreements,
pledges, assignments, Commercial Tort Claim Assignments, endorsements of
certificates of title, and all other documents (collectively, the “Additional
Documents”) that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to create, perfect, and continue perfected or
to better perfect the Agent’s Liens in the assets of Borrowers and their
Subsidiaries (whether now owned or hereafter arising or acquired, tangible or
intangible, real or personal), to create and perfect Liens in favor of Agent in
any owned Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents. To the maximum extent permitted by applicable law, each Borrower
authorizes Agent to execute any such Additional Documents in the applicable
Borrower’s name and authorizes Agent to file such executed Additional Documents
in any appropriate filing office. In addition, on such periodic basis as Agent
shall require, Borrowers shall (i) provide Agent with a report of all new
material patentable, copyrightable, or trademarkable materials acquired or
generated by any Borrower or its Subsidiaries during the prior period,
(ii) cause all material patents, copyrights, and trademarks acquired or
generated by Borrowers or their Subsidiaries that are not already the subject of
a registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of such Borrower’s or such
Subsidiary’s ownership thereof, and (iii) cause to be prepared, executed, and
delivered to Agent supplemental schedules to the applicable Loan Documents to
identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder; provided, however, that none of Borrowers
or their Subsidiaries shall register with the U.S. Copyright Office any
unregistered copyrights (whether in existence on the Closing Date or thereafter
acquired, arising, or developed) unless (i) the applicable Person provides Agent
with written notice of its intent to register such copyrights not less than 30
days prior to the date of the proposed registration, and (ii) prior to such
registration, the applicable Person executes and delivers to Agent a copyright
security agreement in form and substance satisfactory to Agent, supplemental
schedules to any existing copyright security agreement, or such other
documentation as Agent reasonably deems necessary in order to perfect and
continue perfected Agent’s Liens on such copyrights following such registration.

4.5 Power of Attorney. Each Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent’s officers, employees, or agents designated by
Agent) as such Borrower’s true and lawful attorney, with power to (a) if such
Borrower refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of such Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign such Borrower’s name on any invoice or bill of lading
relating to the Borrower Collateral, drafts against Account Debtors, or notices
to Account Debtors, (c) send requests for verification of Borrowers’ or their
Subsidiaries’ Accounts, (d) endorse such Borrower’s name on any of its payment
items (including all of its Collections) that may come into the Lender Group’s
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Borrower’s policies
of insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of

 

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Default has occurred and is continuing, settle and adjust disputes and claims
respecting Borrowers’ or their Subsidiaries’ Accounts, chattel paper, or General
Intangibles directly with Account Debtors, for amounts and upon terms that Agent
determines to be reasonable, and Agent may cause to be executed and delivered
any documents and releases that Agent determines to be necessary. The
appointment of Agent as each Borrower’s attorney, and each and every one of its
rights and powers, being coupled with an interest, is irrevocable until all of
the Obligations have been fully and finally repaid and performed and the Lender
Group’s obligations to extend credit hereunder are terminated.

4.6 Right to Inspect. Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect the Books and make copies or abstracts thereof and to
check, test, and appraise the Collateral, or any portion thereof, in order to
verify Borrowers’ and their Subsidiaries’ financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.

4.7 Control Agreements. Borrowers agree that they will and will cause their
Subsidiaries to take any or all reasonable steps in order for Agent to obtain
control in accordance with Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the
Code with respect to (subject to the proviso contained in Section 7.12) all of
their Securities Accounts, Deposit Accounts, electronic chattel paper,
Investment Property, and letter-of-credit rights. Upon the occurrence and during
the continuance of a Default or Event of Default, Agent may notify any bank or
securities intermediary to liquidate the applicable Deposit Account or
Securities Account or any related Investment Property maintained or held thereby
and remit the proceeds thereof to the Agent’s Account.

4.8 Governmental Receivables. Notwithstanding any provision in the Loan
Documents to the contrary, neither the Agent nor any Lender shall have any
rights (whether by power of attorney or other provision of any Loan Document)
with respect to any Governmental Receivables or any Deposit Account into which
any proceeds of any Governmental Receivables are initially deposited, solely to
the extent of such proceeds of Governmental Receivables (it being understood
that the foregoing shall not limit the rights of the Agent or the Lenders with
respect to proceeds of Governmental Receivables which have been transferred from
the Deposit Account into which such Governmental Receivables were initially
deposited to any other Deposit Account (including without limitation, any Cash
Management Account)).

 

5. REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, Parent and
each Borrower makes the following representations and warranties to the Lender
Group which shall be true, correct, and complete, in all material respects, as
of the date hereof, and shall be true, correct, and complete, in all material
respects, as of the Closing Date, and at and as of the date of the making of
each Term Loan (or other extension of credit) made thereafter, as though made on
and as of the date of such Term Loan (or other extension of credit) (except to
the extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:

 

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5.1 No Encumbrances. Parent, each Borrower and their respective Subsidiaries
each have good and indefeasible title to, or a valid leasehold interest in,
their personal property assets and good and marketable title to, or a valid
leasehold interest in, their Real Property, in each case, free and clear of
Liens except for Permitted Liens.

5.2 [Intentionally Omitted].

5.3 [Intentionally Omitted].

5.4 Equipment. All of the Equipment of Parent, Borrowers and their respective
Subsidiaries is used or held for use in their business and is fit for such
purposes, ordinary wear and tear excepted.

5.5 Location of Equipment. The Equipment of Parent, Borrowers and their
respective Subsidiaries are not stored with a bailee, warehouseman, or similar
party and are located only at, or in-transit between, the locations identified
on Schedule 5.5 (as such Schedule may be updated pursuant to Section 6.9).

5.6 [Intentionally Omitted].

5.7 State of Incorporation; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.

(a) The jurisdiction of organization of Parent, each Borrower and each of their
respective Subsidiaries is set forth on Schedule 5.7(a).

(b) The chief executive office of Parent, each Borrower and each of their
respective Subsidiaries is located at the address indicated on Schedule 5.7(b)
(as such Schedule may be updated pursuant to Section 6.9).

(c) Parent, each Borrower’s and each of their respective Subsidiaries’
organizational identification number, if any, are identified on Schedule 5.7(c).

(d) As of the Closing Date, Parent, Borrowers and their respective Subsidiaries
do not hold any commercial tort claims, except as set forth on Schedule 5.7(d).

5.8 Due Organization and Qualification; Subsidiaries.

(a) Parent and each Borrower is duly organized and existing and in good standing
under the laws of the jurisdiction of its organization and qualified to do
business in any state where the failure to be so qualified reasonably could be
expected to result in a Material Adverse Change.

 

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(b) Set forth on Schedule 5.8(b), is a complete and accurate description of the
authorized capital Stock of Parent and each Borrower, by class, and, as of the
Closing Date, a description of the number of shares of each such class that are
issued and outstanding. Other than as described on Schedule 5.8(b), there are no
subscriptions, options, warrants, or calls relating to any shares of Parent’s
and each Borrower’s capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. None of Parent or any
Borrower is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock.

(c) Set forth on Schedule 5.8(c), is a complete and accurate list of Parent’s
direct and indirect Subsidiaries (other than Borrowers), showing: (i) the
jurisdiction of their organization, (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries, and
(iii) the number and the percentage of the outstanding shares of each such class
owned directly or indirectly by Parent. All of the outstanding capital Stock of
each such Subsidiary has been validly issued and is fully paid and
non-assessable.

(d) Except as set forth on Schedule 5.8(c), there are no subscriptions, options,
warrants, or calls relating to any shares of Parent’s Subsidiaries’ capital
Stock, including any right of conversion or exchange under any outstanding
security or other instrument. None of Parent, any Borrower or any of their
respective Subsidiaries is subject to any obligation (contingent or otherwise)
to repurchase or otherwise acquire or retire any shares of Parent’s or any
Borrower’s Subsidiaries’ capital Stock or any security convertible into or
exchangeable for any such capital Stock.

 

  5.9 Due Authorization; No Conflict.

(a) As to each Borrower, the execution, delivery, and performance by such
Borrower of this Agreement and the other Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.

(b) As to each Borrower, the execution, delivery, and performance by such
Borrower of this Agreement and the other Loan Documents to which it is a party
do not and will not (i) violate any provision of federal, state, or local law or
regulation applicable to any Borrower, the Governing Documents of any Borrower,
or any order, judgment, or decree of any court or other Governmental Authority
binding on any Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of any Borrower, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of Borrower, other than Permitted Liens, or (iv) require any approval
of any Borrower’s interestholders or any approval or consent of any Person under
any material contractual obligation of any Borrower, other than consents or
approvals that have been obtained and that are still in force and effect.

 

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(c) Other than the filing of financing statements, the execution, delivery, and
performance by each Borrower of this Agreement and the other Loan Documents to
which such Borrower is a party do not and will not require any registration
with, consent, or approval of, or notice to, or other action with or by, any
Governmental Authority, other than consents or approvals that have been obtained
and that are still in force and effect.

(d) As to each Borrower, this Agreement and the other Loan Documents to which
such Borrower is a party, and all other documents contemplated hereby and
thereby, when executed and delivered by such Borrower will be the legally valid
and binding obligations of such Borrower, enforceable against such Borrower in
accordance with their respective terms, except as enforcement may be limited by
equitable principles or by bankruptcy, insolvency, reorganization, moratorium,
or similar laws relating to or limiting creditors’ rights generally.

(e) The Agent’s Liens are validly created, perfected, and first priority Liens,
subject only to Permitted Liens.

(f) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party have been duly authorized by all necessary
action on the part of such Guarantor.

(g) The execution, delivery, and performance by each Guarantor of the Loan
Documents to which it is a party do not and will not (i) violate any provision
of federal, state, or local law or regulation applicable to such Guarantor, the
Governing Documents of such Guarantor, or any order, judgment, or decree of any
court or other Governmental Authority binding on such Guarantor, (ii) conflict
with, result in a breach of, or constitute (with due notice or lapse of time or
both) a default under any material contractual obligation of such Guarantor,
(iii) result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor, other than Permitted
Liens, or (iv) require any approval of such Guarantor’s interestholders or any
approval or consent of any Person under any material contractual obligation of
such Guarantor, other than consents or approvals that have been obtained and
that are still in force and effect.

(h) Other than the filing of financing statements, the execution, delivery, and
performance by each Guarantor of the Loan Documents to which such Guarantor is a
party do not and will not require any registration with, consent, or approval
of, or notice to, or other action with or by, any Governmental Authority, other
than consents or approvals that have been obtained and that are still in force
and effect.

(i) The Loan Documents to which each Guarantor is a party, and all other
documents contemplated hereby and thereby, when executed and delivered by such
Guarantor will be the legally valid and binding obligations of such Guarantor,
enforceable against such Guarantor in accordance with their respective terms,
except as enforcement may be limited by equitable principles or by bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or limiting
creditors’ rights generally.

 

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5.10 Litigation. Other than those matters disclosed on Schedule 5.10, and other
than matters arising after the Closing Date that reasonably could not be
expected to result in a Material Adverse Change, there are no actions, suits, or
proceedings pending or, to the best knowledge of Parent and each Borrower,
threatened against Parent, any Borrower or any of their respective Subsidiaries.

5.11 No Material Adverse Change. All financial statements relating to Borrowers
and their Subsidiaries or Guarantors that have been delivered by Borrowers to
the Lender Group have been prepared in accordance with GAAP (except, in the case
of unaudited financial statements, for the lack of footnotes and being subject
to year-end audit adjustments) and present fairly in all material respects,
Borrowers’ and their Subsidiaries’ (or any Guarantor’s, as applicable) financial
condition as of the date thereof and results of operations for the period then
ended. There has not been a Material Adverse Change with respect to Borrowers
and their Subsidiaries (or any Guarantor, as applicable) since the date of the
latest financial statements submitted to Agent on or before the Closing Date.

5.12 Fraudulent Transfer.

(a) Parent and each of its Subsidiaries is Solvent.

(b) No transfer of property is being made by Parent or any of its Subsidiaries
and no obligation is being incurred by Parent or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement or the other
Loan Documents with the intent to hinder, delay, or defraud either present or
future creditors of Parent or any of its Subsidiaries.

5.13 Employee Benefits. None of Parent, Borrowers, any of their respective
Subsidiaries, or any of their ERISA Affiliates maintains or contributes to any
Benefit Plan.

5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
Parent’s or Borrowers’ knowledge, none of Parent, Borrowers’ or their respective
Subsidiaries’ properties or assets has ever been used by Parent, Borrowers,
their respective Subsidiaries, or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such production, storage, handling, treatment,
release or transport was in violation, in any material respect, of applicable
Environmental Law, (b) to Parent’s or Borrowers’ knowledge, none of Parent’s,
Borrowers’ nor their respective Subsidiaries’ properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) none of Parent, Borrowers
nor any of their respective Subsidiaries have received notice that a Lien
arising under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Parent, Borrowers or their respective
Subsidiaries, and (d) none of Parent, Borrowers nor any of their respective
Subsidiaries have received a summons, citation, notice, or directive from the
United States Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Parent, any Borrower or
any Subsidiary of Parent or a Borrower resulting in the releasing or disposing
of Hazardous Materials into the environment.

 

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5.15 Brokerage Fees. Except as set forth on Schedule 5.15, Parent, Borrowers and
their respective Subsidiaries have not utilized the services of any broker or
finder in connection with obtaining financing from the Lender Group under this
Agreement and no brokerage commission or finders fee is payable by Parent,
Borrowers or their respective Subsidiaries in connection herewith.

5.16 Intellectual Property. Parent, each Borrower and each Subsidiary of Parent
or a Borrower owns, or holds licenses in, all trademarks, trade names,
copyrights, patents, patent rights, and licenses that are necessary to the
conduct of its business as currently conducted, and attached hereto as Schedule
5.16 (as updated from time to time) is a true, correct, and complete listing of
all material patents, patent applications, trademarks, trademark applications,
copyrights, and copyright registrations as to which Parent, any Borrower or one
of their respective Subsidiaries is the owner or is an exclusive licensee.

5.17 Leases. Parent, Borrowers and their respective Subsidiaries are in
possession of all leased properties under all leases material to their business
and to which they are parties or under which they are operating (which
possession has not been interrupted, interfered with or otherwise disturbed
(whether by an action by the owner of the leased premises to regain possession
of such premises or otherwise)) and all of such leases are valid and subsisting
and no material default by Parent, Borrowers or their respective Subsidiaries
exists under any of them.

5.18 Deposit Accounts and Securities Accounts. Set forth on Schedule 5.18 is a
listing of all of Parent’s, Borrowers’ and their respective Subsidiaries’
Deposit Accounts and Securities Accounts, including, with respect to each bank
or securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.

5.19 Complete Disclosure. All factual information (taken as a whole) furnished
by or on behalf of Parent, Borrowers or their respective Subsidiaries in writing
to Agent or any Lender (including all information contained in the Schedules
hereto or in the other Loan Documents) for purposes of or in connection with
this Agreement, the other Loan Documents or any transaction contemplated herein
or therein is, and all other such factual information (taken as a whole)
hereafter furnished by or on behalf of Parent, Borrowers or their respective
Subsidiaries in writing to Agent or any Lender will be, true and accurate in all
material respects on the date as of which such information is dated or certified
and not incomplete by omitting to state any fact necessary to make such
information (taken as a whole) not misleading in any material respect at such
time in light of the circumstances under which such information was provided. On
the Closing Date, the Closing Date Projections represent, and as of the date on
which any other Projections are delivered to Agent, such additional Projections
represent Borrowers’ good faith best estimate of Parent’s and its Subsidiaries’
future performance for the periods covered thereby.

5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete list of all
Indebtedness of Parent or any of its Subsidiaries outstanding immediately prior
to the Closing Date that is to remain outstanding after the Closing Date and
such Schedule accurately reflects the aggregate principal amount of such
Indebtedness and describes the principal terms thereof.

 

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6. AFFIRMATIVE COVENANTS.

Parent and each Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Parent and Borrowers
shall and shall cause each of their respective Subsidiaries to do all of the
following:

6.1 Accounting System. Maintain a system of accounting that enables Parent and
its Subsidiaries to produce financial statements in accordance with GAAP and
maintain records pertaining to the Collateral that contain information as from
time to time reasonably may be requested by Agent.

6.2 Collateral Reporting. Provide Agent (and if so requested by Agent, with
copies for each Lender) with the following documents at the following times in
form satisfactory to Agent:

 

Monthly (not later

than the 10th day

of each month)

 

(a) a detailed list of all Medical PCs and new medical offices or laboratories
opened or acquired by Parent or its Subsidiaries during such period,

 

(b) a detailed list of all Doctor Departures since the Closing Date, and

 

(c) a detailed report regarding Borrowers’ and their Subsidiaries’ cash and Cash
Equivalents including an indication of which amounts constitute Qualified Cash,
and

 

Upon request by

Agent

  (d) such other reports as to the Collateral or the financial condition of
Borrowers and their Subsidiaries, as Agent may reasonably request.

6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with copies
to each Lender:

(a) as soon as available, but in any event within 45 days after the end of each
month during each of Parent’s fiscal years,

(i) an unaudited consolidated and consolidating balance sheet, income statement,
and statement of cash flow covering Parent’s and its Subsidiaries’ operations
during such period, and

 

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(ii) a Compliance Certificate,

(b) as soon as available, but in any event within 90 days after the end of each
of Parent’s fiscal years,

(i) consolidated and consolidating financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified, without any
qualifications, (including any (A) ”going concern” or like qualification or
exception, (B) qualification or exception as to the scope of such audit, or
(C) qualification which relates to the treatment or classification of any item
and which, as a condition to the removal of such qualification, would require an
adjustment to such item, the effect of which would be to cause any noncompliance
with the provisions of Section 7.18 or 8.14), by such accountants to have been
prepared in accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if prepared,
such accountants’ letter to management),

(ii) a certificate of such accountants addressed to Agent and the Lenders
stating that such accountants do not have knowledge of the existence of any
Default or Event of Default under Section 7.18 or 8.14, and

(iii) a Compliance Certificate,

(c) as soon as available, but in any event within 30 days prior to the start of
each of Parent’s fiscal years, copies of Borrowers’ Projections, in form and
substance (including as to scope and underlying assumptions) satisfactory to
Agent, in its Permitted Discretion, for the forthcoming 4 years, year by year,
and for the forthcoming fiscal year, quarter by quarter, certified by the chief
financial officer of Parent as being such officer’s good faith estimate of the
financial performance of Parent and its Subsidiaries during the period covered
thereby,

(d) if and when filed by any Borrower,

(i) Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current
reports,

(ii) any other filings made by any Borrower with the SEC,

(iii) copies of Borrowers’ federal income tax returns, and any amendments
thereto, filed with the Internal Revenue Service, and

(iv) any other information that is provided by Parent to its shareholders
generally,

(e) promptly, but in any event within 5 Business Days after Parent or any
Borrower has knowledge of any event or condition that constitutes a Default or
an Event of Default, notice thereof and a statement of the curative action that
Borrowers propose to take with respect thereto,

 

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(f) promptly, but in any event within 1 Business Day after Parent has knowledge
of any event or condition that would result in the obligation of Parent to make
a payment to a Subordinated Lender which constitutes Liquidated Damages (as such
term is defined in the Subordination Agreement),

(g) promptly after the commencement thereof, but in any event within 5 Business
Days after the service of process with respect thereto on Parent or any Borrower
or any Subsidiary of a Borrower, notice of all actions, suits, or proceedings
brought by or against any Borrower or any Subsidiary of a Borrower before any
Governmental Authority which, if determined adversely to such Borrower or such
Subsidiary, reasonably could be expected to result in a Material Adverse Change,
and

(h) upon the request of Agent, any other information reasonably requested
relating to the financial condition of Parent, Borrowers or their respective
Subsidiaries.

In addition, Parent agrees that no Subsidiary of Parent will have a fiscal year
different from that of Parent. Borrowers agree to cooperate with Agent to allow
Agent to consult with their independent certified public accountants if Agent
reasonably requests the right to do so and that, in such connection, their
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning
Borrowers or their Subsidiaries that Agent reasonably may request.

6.4 Guarantor Reports. Cause each Guarantor to deliver its annual financial
statements at the time when Parent provides its audited financial statements to
Agent, but only to the extent such Guarantor’s financial statements are not
consolidated with Parent’s financial statements, and copies of all federal
income tax returns as soon as the same are available and in any event no later
than 30 days after the same are required to be filed by law.

6.5 [Intentionally Omitted].

6.6 Maintenance of Properties. Maintain and preserve all of their properties
which are necessary or useful in the proper conduct to their business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all leases to which it is a party as lessee, so as
to prevent any loss or forfeiture thereof or thereunder.

6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against Parent,
Borrowers, their respective Subsidiaries, or any of their respective assets to
be paid in full, before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment or tax shall
be the subject of a Permitted Protest. Parent and Borrowers will and will cause
their respective Subsidiaries to make timely payment or deposit of all tax
payments and withholding taxes required of them by applicable laws, including
those laws

 

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concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Agent with proof satisfactory to
Agent indicating that Parent, the applicable Borrower or Subsidiary of Parent or
a Borrower has made such payments or deposits.

6.8 Insurance.

(a) At Borrowers’ expense, maintain insurance respecting their and their
Subsidiaries’ assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses in the same or similar
geographic location. Parent and Borrowers also shall maintain business
interruption, public liability, and malpractice insurance, as well as insurance
against larceny, embezzlement, and criminal misappropriation. All such policies
of insurance shall be in such amounts and with such insurance companies as are
reasonably satisfactory to Agent. Borrowers shall deliver copies of all such
policies to Agent with an endorsement naming Agent as the sole (or if another
Person is also required to be a loss payee, an additional) loss payee (under a
satisfactory lender’s loss payable endorsement) or additional insured, as
appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than 30 days prior written notice to
Agent in the event of cancellation of the policy for any reason whatsoever.

(b) Administrative Borrower shall give Agent prompt notice of any loss covered
by such insurance. Agent shall have the exclusive right to adjust any losses
claimed under any such insurance policies in excess of $250,000 (or in any
amount after the occurrence and during the continuation of an Event of Default),
without any liability to Borrowers whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies) or as payment of any award or
compensation for condemnation or taking by eminent domain, shall be paid over to
Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or shall be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction.

(c) Parent and Borrowers will not, and will not suffer or permit their
respective Subsidiaries to, take out separate insurance concurrent in form or
contributing in the event of loss with that required to be maintained under this
Section 6.8, unless Agent is included thereon as an additional insured or loss
payee under a lender’s loss payable endorsement. Administrative Borrower
promptly shall notify Agent whenever such separate insurance is taken out,
specifying the insurer thereunder and full particulars as to the policies
evidencing the same, and copies of such policies promptly shall be provided to
Agent.

6.9 Location of Equipment. Keep Parent’s Borrowers’ and their respective
Subsidiaries’ Equipment only at the locations identified on Schedule 5.5 and
their chief

 

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executive offices only at the locations identified on Schedule 5.7(b); provided,
however, that Administrative Borrower may amend Schedule 5.5 and Schedule 5.7 so
long as such amendment occurs by written notice to Agent not less than 30 days
prior to the date on which such Equipment is moved to such new location or such
chief executive office is relocated, so long as such new location is within the
continental United States, and so long as, at the time of such written
notification, the applicable Borrower provides Agent a Collateral Access
Agreement with respect thereto.

6.10 Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority (including, without
limitation, Section 1877 of Title 18 of the Social Security Act, 42 U.S.C.
§1320a-7b, the Health Insurance Portability and Accountability Act of 1996, Fla.
Stat. §456.053, and any other federal, state or local “anti-kickback statutes”
or “self-referral” statutes applicable to Parent or any of its Subsidiaries),
other than laws, rules, regulations, and orders the non-compliance with which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change.

6.11 Leases. Pay when due all rents and other amounts payable under any material
leases to which Parent, any Borrower or any of their respective Subsidiaries is
a party or by which Parent’s, any Borrower’s or any of their respective
Subsidiaries’ properties and assets are bound, unless such payments are the
subject of a Permitted Protest.

6.12 Existence. At all times preserve and keep in full force and effect
Parent’s, each Borrower’s and each of their respective Subsidiaries’ valid
existence and good standing and any rights and franchises material to their
businesses.

6.13 Environmental.

(a) Keep any property either owned or operated by Parent, any Borrower or any of
their respective Subsidiaries free of any Environmental Liens or post bonds or
other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, (c) promptly notify Agent of any release of a
Hazardous Material in any reportable quantity from or onto property owned or
operated by Parent, any Borrower or any of their respective Subsidiaries and
take any Remedial Actions required to abate said release or otherwise to come
into compliance with applicable Environmental Law, and (d) promptly, but in any
event within 5 Business Days of its receipt thereof, provide Agent with written
notice of any of the following: (i) notice that an Environmental Lien has been
filed against any of the real or personal property of Parent, any Borrower or
any of their respective Subsidiaries, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against Parent, any
Borrower or any of their respective Subsidiaries, and (iii) notice of a
violation, citation, or other administrative order which reasonably could be
expected to result in a Material Adverse Change.

 

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6.14 Disclosure Updates. Promptly and in no event later than 5 Business Days
after obtaining knowledge thereof, notify Agent if any written information,
exhibit, or report furnished to the Lender Group contained, at the time it was
furnished, any untrue statement of a material fact or omitted to state any
material fact necessary to make the statements contained therein not misleading
in light of the circumstances in which made. The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the affect of
amending or modifying this Agreement or any of the Schedules hereto.

6.15 Formation of Subsidiaries; Additional Collateral.

(a) At the time that any Borrower or any Guarantor forms any direct or indirect
Subsidiary or acquires any direct or indirect Subsidiary after the Closing Date,
such Borrower or such Guarantor shall (i) cause such new Subsidiary to provide
to Agent a joinder to this Agreement or the Guaranty and the Guarantor Security
Agreement, together with such other security documents (including mortgages or
deeds of trust with respect to any Real Property of such new Subsidiary), as
well as appropriate financing statements (and with respect to all Real Property
that forms part of the Collateral, fixture filings), all in form and substance
satisfactory to Agent (including being sufficient to grant Agent a first
priority Lien (subject to Permitted Liens) in and to the assets of such newly
formed or acquired Subsidiary), (ii) other than with respect to Excluded Assets
(subject to the provisions of Section 6.15(b) below), provide to Agent a pledge
agreement and appropriate certificates and powers or financing statements,
hypothecating all of the direct or beneficial ownership interest in such new
Subsidiary, in form and substance satisfactory to Agent, and (iii) provide to
Agent all other documentation, including one or more opinions of counsel
satisfactory to Agent, which in its opinion is appropriate with respect to the
execution and delivery of the applicable documentation referred to above
(including policies of title insurance or other documentation with respect to
all Real Property that forms part of the Collateral). Any document, agreement,
or instrument executed or issued pursuant to this Section 6.15(a) shall be a
Loan Document.

(b) At any time that any Designated Stock no longer constitutes a portion of the
Excluded Assets, each Borrower or Guarantor which has an interest in such
Designated Stock shall (i) provide to Agent a pledge agreement and appropriate
certificates and powers or financing statements, hypothecating all of the direct
or beneficial ownership interest in such Designated Stock, in form and substance
satisfactory to Agent, and (ii) provide to Agent all other documentation,
including one or more opinions of counsel satisfactory to Agent, which in its
opinion is appropriate with respect to the execution and delivery of the
applicable documentation referred to above. Any document, agreement, or
instrument executed or issued pursuant to this Section 6.15(b) shall be a Loan
Document.

 

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7. NEGATIVE COVENANTS.

Parent and each Borrower covenants and agrees that, until termination of all of
the Commitments and payment in full of the Obligations, Parent and Borrowers
will not and will not permit any of their respective Subsidiaries to do any of
the following:

7.1 Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:

(a) Indebtedness evidenced by this Agreement and the other Loan Documents,

(b) Indebtedness set forth on Schedule 5.20,

(c) Permitted Purchase Money Indebtedness,

(d) refinancings, renewals, or extensions of Indebtedness permitted under
clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not, in Agent’s reasonable
judgment, materially impair the prospects of repayment of the Obligations by
Borrowers or materially impair Borrowers’ creditworthiness, (ii) such
refinancings, renewals, or extensions do not result in an increase in the
principal amount of, or interest rate with respect to, the Indebtedness so
refinanced, renewed, or extended or add one or more Borrowers as liable with
respect thereto if such additional Borrowers were not liable with respect to the
original Indebtedness, (iii) such refinancings, renewals, or extensions do not
result in a shortening of the average weighted maturity of the Indebtedness so
refinanced, renewed, or extended, nor are they on terms or conditions, that,
taken as a whole, are materially more burdensome or restrictive to the
applicable Borrower, (iv) if the Indebtedness that is refinanced, renewed, or
extended was subordinated in right of payment to the Obligations, then the terms
and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness, and (v) the Indebtedness that is refinanced, renewed, or
extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to the
Indebtedness that was refinanced, renewed, or extended,

(e) Existing Seller Notes and Earn-Out Obligations,

(f) Earn-Out Arrangements and Seller Notes not in excess of the amounts set
forth in clause (c) and (d) of the definition of Permitted Acquisition and to
the extent permitted under Section 7.12,

(g) Indebtedness constituting Permitted Acquired Indebtedness not in excess of
the amounts set forth in clause (c) and (d) of the definition of Permitted
Acquisition,

(h) endorsement of instruments or other payment items for deposit, and

 

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(i) Indebtedness composing Permitted Investments.

7.2 Liens. Create, incur, assume, or suffer to exist, directly or indirectly,
any Lien on or with respect to any of its assets, of any kind, whether now owned
or hereafter acquired, or any income or profits therefrom, except for Permitted
Liens (including Liens that are replacements of Permitted Liens to the extent
that the original Indebtedness is refinanced, renewed, or extended under
Section 7.1(d) and so long as the replacement Liens only encumber those assets
that secured the refinanced, renewed, or extended Indebtedness).

7.3 Restrictions on Fundamental Changes.

(a) Enter into any merger, consolidation, reorganization, or recapitalization,
or reclassify its Stock, other than in connection with Permitted Acquisitions
(so long as (x) with respect to any merger, consolidation, reorganization, or
recapitalization involving a Borrower, either such Borrower is the survivor
thereof or the survivor thereof is joined to this Agreement and each other Loan
Document to which a Borrower is a party as a Borrower, (y) with respect to any
merger, consolidation, reorganization, or recapitalization involving a Guarantor
and any Person other than a Borrower or another Guarantor, such Guarantor is the
survivor thereof or the survivor thereof is joined to the Guaranty and each
other Loan Document to which a Guarantor (other than Parent) is a party as a
Guarantor, and (z) any such merger, consolidation, reorganization, or
recapitalization does not impair or otherwise impact the corporate existence of
Parent or PainCare, Inc.), and stock splits (forward or reverse) involving the
Stock of the Parent.

(b) Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution).

(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in
one transaction or a series of transactions, all or any substantial part of its
assets.

7.4 Disposal of Assets. Other than Permitted Dispositions, convey, sell, lease,
license, assign, transfer, or otherwise dispose of any of the assets of Parent,
any Borrower or any of their respective Subsidiaries.

7.5 Change Name. Change Parent’s, any Borrower’s or any of their respective
Subsidiaries’ name, organizational identification number, state of organization,
or organizational identity; provided, however, that Parent, a Borrower or a
Subsidiary of Parent or a Borrower may change its name upon at least 30 days
prior written notice by Administrative Borrower to Agent of such change and so
long as, at the time of such written notification, Parent, such Borrower or such
Subsidiary provides any financing statements necessary to perfect and continue
perfected the Agent’s Liens.

7.6 Nature of Business. Make any material change in the principal nature of
their business.

 

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7.7 Prepayments and Amendments; Agreements With Medical PCs.

(a) Except in connection with a refinancing permitted by Section 7.1(d),

(i) optionally prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower or any Subsidiary of a Borrower, other than the
Obligations in accordance with this Agreement, or

(ii) directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under
Section 7.1(b), (c), (e), (f) or (g) in a manner that is adverse to the
interests of Parent or any of its Subsidiaries or to the interests of the Lender
Group,

(b) Make any payments in respect of any Indebtedness that is owed by Parent to
any Subordinated Lender in any form other than the issuance of common Stock of
Parent to such Subordinated Lenders, to the extent that such payments in respect
of such Indebtedness may be paid by Parent in the form of common Stock in
Parent,

(c) directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, or other writing
evidencing or concerning the relationship between each Medical PC and Parent or
any of its Subsidiaries except (i) to the extent required by any Governmental
Authority’s interpretation of law or regulatory determination if disclosed to
Borrowers after the Closing Date, (ii) required by mandatory provisions of
applicable law effective after the Closing Date, or (iii) such other amendments,
modifications, alterations, increases, or changes that do not adversely affect
the interests of the Agent or any Lender in any respect, or

(d) enter into a new Management Agreement or other agreement with a Medical PC
which is on terms materially less favorable to Parent and its Subsidiaries or
the Lender Group than the agreements previously entered into with other Medical
PCs prior to the Closing Date.

7.8 Change of Control. Cause, permit, or suffer, directly or indirectly, any
Change of Control.

7.9 [Intentionally Omitted]

7.10 Distributions. Other than distributions or declaration and payment of
dividends by a Borrower or a Guarantor to a Borrower, or distributions or
declaration and payment of dividends by a Borrower or a Guarantor to a Guarantor
for the purpose of (x) funding the purchase price permitted to be paid hereunder
with respect to a Permitted Acquisition or (y) making payments in respect to
administrative expenses incurred on behalf of the Borrowers in an aggregate
amount not in excess of $30,000,000, make any distribution or declare or pay any
dividends (in cash or other property, other than common Stock) on, or purchase,
acquire, redeem, or retire any of Parent’s, any Borrower’s or any of their
respective Subsidiaries’ Stock, of any class, whether now or hereafter
outstanding.

 

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7.11 Accounting Methods. Modify or change their fiscal year or their method of
accounting (other than as may be required to conform to GAAP) or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Parent’s, Borrowers’ or their respective Subsidiaries’
accounting records without said accounting firm or service bureau agreeing to
provide Agent information regarding Parent’s, Borrowers’ and their respective
Subsidiaries’ financial condition.

7.12 Investments. Except for Permitted Investments, directly or indirectly, make
or acquire any Investment, or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
Parent and its Subsidiaries shall not have Permitted Investments (other than in
the Cash Management Accounts) in Deposit Accounts or Securities Accounts in an
aggregate amount with respect to any Medical Practice in excess of the
applicable amount set forth on Schedule 2.7(c) at any one time unless Parent or
its Subsidiary, as applicable, and the applicable securities intermediary or
bank have entered into Control Agreements governing such Permitted Investments
in order to perfect (and further establish) the Agent’s Liens in such Permitted
Investments. Subject to the foregoing proviso, Borrowers shall not and shall not
permit their Subsidiaries to establish or maintain any Deposit Account or
Securities Account unless Agent shall have received a Control Agreement in
respect of such Deposit Account or Securities Account.

7.13 Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any transaction with any Affiliate of any Borrower except for
transactions that (a) are in the ordinary course of Borrowers’ business, (b) are
upon fair and reasonable terms, (c) if they involve one or more payments by
Parent, any Borrower or any of their respective Subsidiaries in excess of
$250,000, are fully disclosed to Agent, and (d) are no less favorable to Parent,
Borrowers or their respective Subsidiaries, as applicable, than would be
obtained in an arm’s length transaction with a non-Affiliate.

7.14 Suspension. Suspend or go out of a substantial and material portion of
their business.

7.15 Compensation. Increase the annual fee or per-meeting fees paid to the
members of its board of directors during any year by more than 25% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of the
amount provided for in the Employment Agreements (as the Employment Agreements
are in effect on the date hereof), or amend or agree to amend any such
Employment Agreement to the extent that such amendment would permit such
compensation to be increased, or would otherwise be materially adverse to the
interests of Parent and its Subsidiaries or the Lender Group.

7.16 Use of Proceeds. Use the proceeds of the Term Loans for any purpose other
than (a) on the Closing Date, (i) to repay in full the outstanding principal,
accrued interest, and accrued fees and expenses owing to Existing Lenders, and
(ii) to pay transactional fees, costs, and expenses incurred in connection with
this Agreement, the other Loan Documents,

 

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and the transactions contemplated hereby and thereby, and (b) to finance
Permitted Acquisitions described on Schedule 7.16 or which are consummated on or
after the Closing Date (including costs and expenses incurred in connection
therewith).

7.17 Equipment with Bailees. Store the Equipment of Parent, Borrowers or their
respective Subsidiaries at any time now or hereafter with a bailee,
warehouseman, or similar party.

7.18 Financial Covenants.

(a) Fail to maintain or achieve:

(i) Minimum EBITDA. EBITDA for Parent and its Subsidiaries, measured on a
month-end basis, of at least the required amount set forth in the following
table for the applicable period set forth opposite thereto:

 

Applicable Amount    Applicable Period

$4,700,000.00

  

For the 3 month period ending June 30, 2005

$6,000,000.00

  

For the 3 month period ending September 30, 2005

$7,000,000.00

  

For the 3 month period ending December 31, 2005

$8,000,000.00

  

For the 3 month period ending March 31, 2006

$8,000,000.00

  

For the 3 month period ending June 30, 2006

$8,000,000.00

  

For the 3 month period ending September 30, 2006

$9,000,000.00

  

For the 3 month period ending December 31, 2006

$10,000,000.00

  

For the 3 month period ending March 31, 2007

$10,000,000.00

  

For the 3 month period ending June 30, 2007

$11,000,000.00

  

For the 3 month period ending September 30, 2007

$11,000,000.00

  

For the 3 month period ending December 31, 2007

$11,000,000.00

  

For the 3 month period ending March 31, 2008

$12,000,000.00

  

For the 3 month period ending June 30, 2008, and for each

3 month period ending on the last day of any fiscal quarter

thereafter

 

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(ii) Minimum Free Cash Flow. Free Cash Flow, measured on a month-end basis, of
at least the required amount set forth in the following table for the applicable
period set forth opposite thereto:

 

Applicable Amount    Applicable Period $9,000,000.00    For the 12 month period
ending June 30, 2005 $12,000,000.00    For the 12 month period ending September
30, 2005 $13,000,000.00    For the 12 month period ending December 31, 2005
$17,000,000.00    For the 12 month period ending March 31, 2006 $19,000,000.00
   For the 12 month period ending June 30, 2006 $20,000,000.00    For the 12
month period ending September 30, 2006 $20,000,000.00    For the 12 month period
ending December 31, 2006 $20,000,000.00    For the 12 month period ending March
31, 2007 $20,000,000.00    For the 12 month period ending June 30, 2007
$24,000,000.00    For the 12 month period ending September 30, 2007
$25,000,000.00    For the 12 month period ending December 31, 2007, and for each
12 month period ending on the last day of any fiscal quarter thereafter

(iii) Leverage Ratio. A Leverage Ratio of not more than 2.25:1.00 as of any
date.

(iv) Market Capitalization. A Market Capitalization of at least $50,000,000 as
of any date.

(b) Make:

 

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(i) Capital Expenditures. Capital Expenditures in any fiscal year in excess of
the amount set forth in the following table for the applicable period:

 

Fiscal Year

2005

   Fiscal Year
2006    Fiscal Year
2007    Fiscal Year
2008    Fiscal Year
2009

$2,250,000.00

   $ 3,500,000.00    $ 4,000,000.00    $ 4,500,000.00    $ 4,500,000.00

(c) Trading of Stock. Permit, at any time, the trading of the common Stock of
Parent to be halted or suspended for more than five (5) consecutive Business
Days, or for such common Stock to be delisted (and not be listed for trading on
another similar public stock exchange within five (5) Business Days of such
delisting), in each case by any public stock exchange on which its shares of
common Stock were being traded at the time of such halt, suspension or
delisting.

 

8. EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1 If Borrowers fail to pay (a) within 3 days of the date when due and payable
or when declared due and payable, all or any portion of the Obligations in
respect of interest, fees or reimbursement of Lender Group Expenses (including
any of the foregoing that accrue after the commencement of an Insolvency
Proceeding, regardless of whether allowed or allowable in whole or in part as a
claim in any such Insolvency Proceeding) and said amount remains unpaid for 3
days after the date when such amount is due and payable, or (b) when due and
payable or when declared due and payable, all or any portion of the Obligations
in respect of principal or any other amount constituting Obligations;

8.2 If Parent, Borrowers or any of their respective Subsidiaries (a) fail to
perform, keep, or observe any term, provision, condition, covenant, or agreement
contained in Sections 6.6, 6.9, 6.10 or 6.11 of this Agreement and such failure
continues for a period of 5 days, or (b) fail to perform, keep, or observe any
other term, provision, condition, covenant, or agreement contained in this
Agreement or in any of the other Loan Documents not described above in
Section 8.2(a);

8.3 If any material portion of Parent’s, any Borrower’s or any of their
respective Subsidiaries’ assets, taken as a whole, is attached, seized,
subjected to a writ or distress warrant, levied upon, or comes into the
possession of any third Person;

8.4 If an Insolvency Proceeding is commenced by Parent, any Borrower or any of
their respective Subsidiaries;

8.5 If an Insolvency Proceeding is commenced against Parent, any Borrower or any
of their respective Subsidiaries, and any of the following events occur:
(a) Parent, the

 

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applicable Borrower or the applicable Subsidiary consents to the institution of
the Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted; provided, however, that, during the
pendency of such period, each member of the Lender Group shall be relieved of
its obligations to extend credit hereunder, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 60 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
each member of the Lender Group shall be relieved of its obligation to extend
credit hereunder, (d) an interim trustee is appointed to take possession of all
or any substantial portion of the properties or assets of, or to operate all or
any substantial portion of the business of, Parent, any Borrower or any of their
respective Subsidiaries, or (e) an order for relief shall have been entered
therein;

8.6 If Parent, any Borrower or any of their respective Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;

8.7 If a notice of Lien, levy, or assessment is filed of record with respect to
Parent’s, any Borrower’s or any of their respective Subsidiaries’ assets by the
United States, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes or debts owing
at any time hereafter to any one or more of such entities becomes a Lien,
whether choate or otherwise, upon Parent’s, any Borrower’s or any of their
respective Subsidiaries’ assets and the same is not paid before such payment is
delinquent;

8.8 If a judgment or other claim for the payment of money exceeding $1,000,000
in the aggregate becomes a Lien or encumbrance upon any portion of Parent’s, any
Borrower’s or any of their respective Subsidiaries’ assets;

8.9 If there is a default in any material agreement to which Parent, any
Borrower or any of their respective Subsidiaries is a party (including, in the
case of the Subordinated Debt Documents (as such term is defined in the
Subordination Agreement), any default thereunder, and failure to comply
therewith, or any other event which results in an obligation of the Parent to
make one or more payments to any Subordinated Lender which constitute Liquidated
Damages (as such term is defined in the Subordination Agreement)), and such
default, failure or event (a) occurs at the final maturity of the obligations
thereunder, (b) results in a right by the other party thereto, irrespective of
whether exercised, to accelerate the maturity of Parent, the applicable
Borrower’s or the applicable Subsidiary’s obligations thereunder, or to
terminate such agreement, or (c) in the case of Indebtedness owed by Parent to
the Subordinated Lenders, such default, failure or event results in an
obligation of Parent to make any payment which constitutes Liquidated Damages
(as such term is defined in the Subordination Agreement);

8.10 If Parent, any Borrower or any of their respective Subsidiaries makes any
payment on account of Indebtedness that has been contractually subordinated in
right of payment to the payment of the Obligations, except to the extent such
payment is permitted by the terms of the subordination provisions applicable to
such Indebtedness;

 

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8.11 If any misstatement or misrepresentation exists as of the date when made or
deemed made, in any warranty, representation, statement, or Record made to the
Lender Group by Parent, any Borrower, or any their respective Subsidiaries, or
any officer, employee, agent, or director of Parent, any Borrower or any of
their respective Subsidiaries;

8.12 If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor thereunder;

8.13 If this Agreement or any other Loan Document that purports to create a
Lien, shall, for any reason, fail or cease to create a valid and perfected and,
except to the extent permitted by the terms hereof or thereof, first priority
Lien on or security interest in the Collateral covered hereby or thereby, except
as a result of a disposition of the applicable Collateral in a transaction
permitted under this Agreement;

8.14 If, at any time (each, a “Measurement Time”), the aggregate number of
Doctor Departures since the Closing Date exceeds 33% of the aggregate number of
doctors employed by Parent, any of its Subsidiaries or any Medical PC at such
Measurement Time;

8.15 If (a) at any time on or after the 2003 Subordinated Note Refinance Date,
any Indebtedness owing to any Subordinate Lender and evidenced by the 2003
Subordinated Notes has not been converted into common Stock of Parent,
refinanced in its entirety on terms that are satisfactory to Agent and the
Required Lenders, or amended such that no portion of the principal balance of
such Indebtedness is due and payable on or before the date that is 90 days after
the 2003 Subordinated Note Refinance Date, or (b) at any time on or after the
2004 Subordinated Note Refinance Date, any Indebtedness owing to any Subordinate
Lender evidenced by the 2004 Subordinated Notes has not been converted into
common Stock of Parent, refinanced in its entirety on terms that are
satisfactory to Agent and the Required Lenders, or amended such that no portion
of the principal balance of such Indebtedness is due and payable on or before
the date that is 90 days after the 2004 Subordinated Note Refinance Date; or

8.16 Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by Parent, any Borrower or any of their respective Subsidiaries, or a
proceeding shall be commenced by Parent, any Borrower or any of their respective
Subsidiaries, or by any Governmental Authority having jurisdiction over Parent,
any Borrower or any of their respective Subsidiaries, seeking to establish the
invalidity or unenforceability thereof, or Parent, any Borrower or any of their
respective Subsidiaries shall deny that it has any liability or obligation
purported to be created under any Loan Document.

 

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9. THE LENDER GROUP’S RIGHTS AND REMEDIES.

9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice of
their election and without demand) may authorize and instruct Agent to do any
one or more of the following on behalf of the Lender Group (and Agent, acting
upon the instructions of the Required Lenders, shall do the same on behalf of
the Lender Group), all of which are authorized by Borrowers:

(a) Declare all or any portion of the Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;

(b) Cease advancing money or extending credit to or for the benefit of Borrowers
under this Agreement, under any of the Loan Documents, or under any other
agreement between Borrowers and the Lender Group;

(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of the Lender Group, but without affecting any of
the Agent’s Liens in the Collateral and without affecting the Obligations;

(d) Settle or adjust disputes and claims directly with Borrowers’ Account
Debtors for amounts and upon terms which Agent considers advisable, and in such
cases, Agent will credit the Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all Lender Group
Expenses incurred or expended in connection therewith;

(e) Cause Borrowers to hold all of their returned Inventory in trust for the
Lender Group and segregate all such Inventory from all other assets of Borrowers
or in Borrowers’ possession;

(f) Without notice to or demand upon any Borrower, make such payments and do
such acts as Agent considers necessary or reasonable to protect its security
interests in the Collateral. Each Borrower agrees to assemble the Collateral if
Agent so requires, and to make the Collateral available to Agent at a place that
Agent may designate which is reasonably convenient to both parties. Each
Borrower authorizes Agent to enter the premises where the Collateral is located,
to take and maintain possession of the Collateral, or any part of it, and to
pay, purchase, contest, or compromise any Lien that in Agent’s determination
appears to conflict with the priority of the Agent’s Liens in and to the
Collateral and to pay all expenses incurred in connection therewith and to
charge Borrowers’ Loan Account therefor. With respect to any of Borrowers’ owned
or leased premises, each Borrower hereby grants Agent a license to enter into
possession of such premises and to occupy the same, without charge, in order to
exercise any of the Lender Group’s rights or remedies provided herein, at law,
in equity, or otherwise;

(g) Without notice to any Borrower (such notice being expressly waived), and
without constituting an acceptance of any collateral in full or partial
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all

 

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(i) balances and deposits of any Borrower held by the Lender Group (including
any amounts received in the Cash Management Accounts), or (ii) Indebtedness at
any time owing to or for the credit or the account of any Borrower held by the
Lender Group;

(h) Hold, as cash collateral, any and all balances and deposits of any Borrower
held by the Lender Group, and any amounts received in the Cash Management
Accounts, to secure the full and final repayment of all of the Obligations;

(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Borrower
Collateral. Each Borrower hereby grants to Agent a license or other right to
use, without charge, such Borrower’s labels, patents, copyrights, trade secrets,
trade names, trademarks, service marks, and advertising matter, or any property
of a similar nature, as it pertains to the Borrower Collateral, in completing
production of, advertising for sale, and selling any Borrower Collateral and
such Borrower’s rights under all licenses and all franchise agreements shall
inure to the Lender Group’s benefit;

(j) Sell the Borrower Collateral at either a public or private sale, or both, by
way of one or more contracts or transactions, for cash or on terms, in such
manner and at such places (including Borrowers’ premises) as Agent determines is
commercially reasonable. It is not necessary that the Borrower Collateral be
present at any such sale;

(k) Except in those circumstances where no notice is required under the Code,
Agent shall give notice of the disposition of the Borrower Collateral as
follows:

(i) Agent shall give Administrative Borrower (for the benefit of the applicable
Borrower) a notice in writing of the time and place of public sale, or, if the
sale is a private sale or some other disposition other than a public sale is to
be made of the Borrower Collateral, the time on or after which the private sale
or other disposition is to be made; and

(ii) The notice shall be personally delivered or mailed, postage prepaid, to
Administrative Borrower as provided in Section 12, at least 10 days before the
earliest time of disposition set forth in the notice; no notice needs to be
given prior to the disposition of any portion of the Borrower Collateral that is
perishable or threatens to decline speedily in value or that is of a type
customarily sold on a recognized market;

(l) Agent, on behalf of the Lender Group may credit bid and purchase at any
public sale;

(m) Agent may seek the appointment of a receiver or keeper to take possession of
all or any portion of the Borrower Collateral or to operate same and, to the
maximum extent permitted by law, may seek the appointment of such a receiver
without the requirement of prior notice or a hearing; and

(n) The Lender Group shall have all other rights and remedies available at law
or in equity or pursuant to any other Loan Document.

 

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The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrowers.

9.2 Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

 

10. TAXES AND EXPENSES.

If any Borrower fails to pay any monies (whether taxes, assessments, insurance
premiums, or, in the case of leased properties or assets, rents or other amounts
payable under such leases) due to third Persons, or fails to make any deposits
or furnish any required proof of payment or deposit, all as required under the
terms of this Agreement, then, Agent, in its sole discretion and without prior
notice to any Borrower, may do any or all of the following: (a) make payment of
the same or any part thereof, or (b) in the case of the failure to comply with
Section 6.8 hereof, obtain and maintain insurance policies of the type described
in Section 6.8 and take any action with respect to such policies as Agent deems
prudent. Any such amounts paid by Agent shall constitute Lender Group Expenses
and any such payments shall not constitute an agreement by the Lender Group to
make similar payments in the future or a waiver by the Lender Group of any Event
of Default under this Agreement. Agent need not inquire as to, or contest the
validity of, any such expense, tax, or Lien and the receipt of the usual
official notice for the payment thereof shall be conclusive evidence that the
same was validly due and owing.

11. WAIVERS; INDEMNIFICATION.

11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.

11.2 The Lender Group’s Liability for Borrower Collateral. Each Borrower hereby
agrees that: (a) so long as Agent complies with its obligations, if any, under
the Code, the Lender Group shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Borrower Collateral, (ii) any loss
or damage thereto occurring or arising

 

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in any manner or fashion from any cause, (iii) any diminution in the value
thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Borrower Collateral shall be borne by Borrowers.

11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold the
Agent-Related Persons, the Lender-Related Persons, and each Participant (each,
an “Indemnified Person”) harmless (to the fullest extent permitted by law) from
and against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all reasonable attorneys fees and disbursements
and other costs and expenses actually incurred in connection therewith or in
connection with the enforcement of this indemnification (as and when they are
incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them (a) in connection with or as a
result of or related to the execution, delivery, enforcement, performance, or
administration (including any restructuring or workout with respect hereto) of
this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby or the monitoring of Borrowers’ and their
Subsidiaries’ compliance with the terms of the Loan Documents, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Loan Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the “Indemnified Liabilities”). The
foregoing to the contrary notwithstanding, Borrowers shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person. This provision shall survive the termination of this Agreement and the
repayment of the Obligations. If any Indemnified Person makes any payment to any
other Indemnified Person with respect to an Indemnified Liability as to which
Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

 

12. NOTICES.

Unless otherwise provided in this Agreement, all notices or demands by Borrowers
or Agent to the other relating to this Agreement or any other Loan Document
shall be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, electronic mail (at such email
addresses as Administrative Borrower or Agent, as applicable,

 

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may designate to each other in accordance herewith), or telefacsimile to
Borrowers in care of Administrative Borrower or to Agent, as the case may be, at
its address set forth below:

 

If to Administrative

Borrower:

   PAINCARE SURGERY CENTERS, INC.   

1030 North Orange Avenue

Suite 105

Orlando, Florida 32801

Attn: Randy Lubinsky, Chief Executive Officer

Fax No.: (407) 926-6616

Email: randy@paincare.com

with copies to:

  

E. Nicholas Davis, III

12200 West Colonial Drive, Suite 303

Winter Garden, Florida 34787

Fax No.: (407) 905-9695

Email: ndavis@cloverleafcapital.com

If to Agent:

  

HBK INVESTMENTS L.P.

300 Crescent

Court Suite 700

Dallas, Texas 75201

Attn: Legal Department

Fax No.: (214) 758-1207

with copies to:

  

PAUL, HASTINGS, JANOFSKY & WALKER, LLP

Twenty-Fifth Floor

515 South Flower Street

Los Angeles, CA 90071

Attn: John Francis Hilson, Esq.

Fax No.: (213) 996-3300

Agent and Borrowers may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 12, other
than notices by Agent in connection with enforcement rights against the Borrower
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
the Lender Group in connection with the exercise of enforcement rights against
Borrower Collateral under the provisions of the Code shall be deemed sent when
deposited in the mail or personally delivered, or, where permitted by law,
transmitted by telefacsimile or any other method set forth above.

 

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13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a) PURSUANT TO THE PROVISIONS OF THE SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAWS, THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.

(b) PURSUANT TO THE PROVISIONS OF THE SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAWS, THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK, PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. BORROWERS AND EACH MEMBER OF THE LENDER GROUP WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE
DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY
PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).

(c) BORROWERS AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. BORROWERS AND EACH MEMBER OF THE LENDER GROUP
REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.

 

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14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

  14.1 Assignments and Participations.

(a) Any Lender may assign and delegate to one or more assignees (each an
“Assignee”) that are Eligible Transferees all, or any ratable part of all, of
the Obligations, the Commitments and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$5,000,000 (except such minimum amount shall not apply to (x) an assignment or
delegation by any Lender to any other Lender or an Affiliate of any Lender or
any Related Fund or (y) a group of new Lenders, each of whom is an Affiliate of
each other or a fund or account managed by any such new Lender or an Affiliate
of such new Lender to the extent that the aggregate amount to be assigned to all
such new Lenders is at least $5,000,000); provided, however, that Borrowers and
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance, and (iii) the assigning Lender or Assignee has paid to Agent for
Agent’s separate account a processing fee in the amount of $5,000. Anything
contained herein to the contrary notwithstanding, the payment of any fees shall
not be required and the Assignee need not be an Eligible Transferee if such
assignment is in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the business or loan
portfolio of the assigning Lender.

(b) From and after the date that Agent notifies the assigning Lender that it has
received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, (i) the Assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assigning
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 11.3 hereof)
and be released from any future obligations under this Agreement (and in the
case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender’s rights and obligations under this Agreement and the other
Loan Documents, such Lender shall cease to be a party hereto and thereto), and
such assignment shall effect a novation between Borrowers and the Assignee;
provided, however, that nothing contained herein shall release any assigning
Lender from obligations that survive the termination of this Agreement,
including such assigning Lender’s obligations under Article 16 and Section 17.7
of this Agreement.

(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (1) other than as provided in
such Assignment

 

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and Acceptance, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Loan Document furnished pursuant hereto, (2) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrowers or the
performance or observance by Borrowers of any of their obligations under this
Agreement or any other Loan Document furnished pursuant hereto, (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance,
(4) such Assignee will, independently and without reliance upon Agent, such
assigning Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement, (5) such
Assignee appoints and authorizes Agent to take such actions and to exercise such
powers under this Agreement as are delegated to Agent, by the terms hereof,
together with such powers as are reasonably incidental thereto, and (6) such
Assignee agrees that it will perform all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.

(d) Immediately upon Agent’s receipt of the required processing fee payment and
the fully executed Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.

(e) Any Lender may at any time, with the written consent of Agent, sell to one
or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a “Participant”) participating interests in all or
any portion of its Obligations, the Commitment, and the other rights and
interests of that Lender (the “Originating Lender”) hereunder and under the
other Loan Documents (provided that no written consent of Agent shall be
required in connection with any sale of any such participating interests by a
Lender to an Eligible Transferee); provided, however, that (i) the Originating
Lender shall remain a “Lender” for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrowers,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A)

 

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extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or substantially all of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant through such Lender, or (E) change the amount or due dates of
scheduled principal repayments or prepayments or premiums, and (v) all amounts
payable by Borrowers hereunder shall be determined as if such Lender had not
sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement. The rights of any Participant only shall be derivative through
the Originating Lender with whom such Participant participates and no
Participant shall have any rights under this Agreement or the other Loan
Documents or any direct rights as to the other Lenders, Agent, Borrowers, the
Collections of Borrowers or their Subsidiaries, the Collateral, or otherwise in
respect of the Obligations. No Participant shall have the right to participate
directly in the making of decisions by the Lenders among themselves.

(f) In connection with any such assignment or participation or proposed
assignment or participation, a Lender may, subject to the provisions of
Section 17.7, disclose all documents and information which it now or hereafter
may have relating to Borrowers and their Subsidiaries and their respective
businesses.

(g) Any other provision in this Agreement notwithstanding, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of (i) any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR § 203.24, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law, and
(ii) any Person providing financing or other credit support to a Lender or any
of its Affiliates or Related Funds, including as contemplated by Section 2.17.

(h) Agent (acting solely for this purpose as a non-fiduciary agent for
Borrowers) shall maintain, or cause to be maintained, a register (the
“Register”) on which it enters the name of a Lender as the registered owner of
each Term Loan held by such Lender. Other than in connection with an assignment
by a Lender of all or any portion of its Term Loan to an Affiliate of such
Lender or a Related Fund of such Lender (i) a Registered Loan (and the
Registered Note, if any, evidencing the same) may be assigned or sold in whole
or in part only by registration of such assignment or sale on the Register (and
each Registered Note shall expressly so provide) and (ii) any assignment or sale
of all or part of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by registration of such assignment or
sale on the Register, together with the surrender of the

 

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Registered Note, if any, evidencing the same duly endorsed by (or accompanied by
a written instrument of assignment or sale duly executed by) the holder of such
Registered Note, whereupon, at the request of the designated assignee(s) or
transferee(s), one or more new Registered Notes in the same aggregate principal
amount shall be issued to the designated assignee(s) or transferee(s). Prior to
the registration of assignment or sale of any Registered Loan (and the
Registered Note, if any evidencing the same), Borrowers shall treat the Person
in whose name such Loan (and the Registered Note, if any, evidencing the same)
is registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding notice to the contrary.

(i) In the event that a Lender sells participations in the Registered Loan, such
Lender, acting solely for this purpose as a non-fiduciary agent for Borrowers,
shall maintain a register on which it enters the name of all participants in the
Registered Loans held by it (the “Participant Register”). A Registered Loan (and
the Registered Note, if any, evidencing the same) may be participated in whole
or in part only by registration of such participation on the Participant
Register (and each Registered Note shall expressly so provide). Any
participation of such Registered Loan (and the Registered Note, if any,
evidencing the same) may be effected only by the registration of such
participation on the Participant Register.

14.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that Borrowers may not assign this Agreement or any rights or duties hereunder
without the Lenders’ prior written consent and any prohibited assignment shall
be absolutely void ab initio. No consent to assignment by the Lenders shall
release any Borrower from its Obligations unless otherwise agreed in writing by
each member of the Lender Group. A Lender may assign this Agreement and the
other Loan Documents and its rights and duties hereunder and thereunder pursuant
to Section 14.1 hereof and, except as expressly required pursuant to
Section 14.1 hereof, no consent or approval by any Borrower is required in
connection with any such assignment.

 

15. AMENDMENTS; WAIVERS.

15.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective, but only in
the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:

(a) increase or extend any Commitment of any Lender,

 

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(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

(c) reduce the principal of, or the rate of interest on, any loan or other
extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document,

(d) change the Pro Rata Share that is required to take any action hereunder,

(e) amend or modify this Section or any provision of the Agreement providing for
consent or other action by all Lenders,

(f) other than as permitted by Section 16.12, release Agent’s Lien in and to any
of the Collateral,

(g) change the definition of “Required Lenders” or “Pro Rata Share”,

(h) contractually subordinate any of the Agent’s Liens,

(i) release any Borrower or any Guarantor from any obligation for the payment of
money,

(j) change the definition of Term Loan Amount or Term Loan Expiration Date, or

(k) amend any of the provisions of Section 16.

and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, affect the rights or duties of Agent
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.

 

  15.2 Replacement of Holdout Lender.

(a) If any action to be taken by the Lender Group or Agent hereunder requires
the unanimous consent, authorization, or agreement of all Lenders, and a Lender
(“Holdout Lender”) fails to give its consent, authorization, or agreement, then
Agent, upon at least 5 Business Days prior irrevocable notice to the Holdout
Lender, may permanently replace the Holdout Lender with one or more substitute
Lenders (each, a “Replacement Lender”), and the Holdout Lender shall have no
right to refuse to be replaced hereunder. Such notice to replace the Holdout
Lender shall specify an effective date for such replacement, which date shall
not be later than 15 Business Days after the date such notice is given.

 

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(b) Prior to the effective date of such replacement, the Holdout Lender and each
Replacement Lender shall execute and deliver an Assignment and Acceptance,
subject only to the Holdout Lender being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Risk
Participation Liability) without any premium or penalty of any kind whatsoever.
If the Holdout Lender shall refuse or fail to execute and deliver any such
Assignment and Acceptance prior to the effective date of such replacement, the
Holdout Lender shall be deemed to have executed and delivered such Assignment
and Acceptance. The replacement of any Holdout Lender shall be made in
accordance with the terms of Section 14.1. Until such time as the Replacement
Lenders shall have acquired all of the Obligations, the Commitments, and the
other rights and obligations of the Holdout Lender hereunder and under the other
Loan Documents, the Holdout Lender shall remain obligated to make the Holdout
Lender’s Pro Rata Share of the Term Loans.

15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by Borrowers of any
provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

 

16. AGENT; THE LENDER GROUP.

16.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints HBK as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
provisions of this Section 16 (other than the proviso to Section 16.11(a)) are
solely for the benefit of Agent, and the Lenders, and Borrowers and their
Subsidiaries shall have no rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set forth herein,
nor shall Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word “Agent” is for convenience only, that HBK is
merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from

 

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exercising any discretionary rights or taking or refraining from taking any
actions that Agent expressly is entitled to take or assert under or pursuant to
this Agreement and the other Loan Documents. Without limiting the generality of
the foregoing, or of any other provision of the Loan Documents that provides
rights or powers to Agent, Lenders agree that Agent shall have the right to
exercise the following powers as long as this Agreement remains in effect:
(a) maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the Collateral, the
Collections of Borrowers and their Subsidiaries, and related matters,
(b) execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents,
(c) make Term Loans, for itself or on behalf of Lenders as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Borrowers and their Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of
Borrowers and their Subsidiaries, (f) perform, exercise, and enforce any and all
other rights and remedies of the Lender Group with respect to Borrowers, the
Obligations, the Collateral, the Collections of Borrowers and their
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.

16.2 Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

16.3 Liability of Agent. None of the Agent Related Persons shall (a) be liable
for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers’ Subsidiaries or Affiliates.

 

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16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to Borrowers or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the requisite Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Lenders.

16.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.” Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.

16.6 Credit Decision. Each Lender acknowledges that none of the Agent Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of Borrowers and their
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
Borrowers and any other Person party to a Loan Document, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this

 

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Agreement and to extend credit to Borrowers. Each Lender also represents that it
will, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person party to a Loan Document.
Except for notices, reports, and other documents expressly herein required to be
furnished to the Lenders by Agent, Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of Borrowers and any other Person party to a Loan
Document that may come into the possession of any of the Agent Related Persons.

16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent reasonably deems necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including court costs, attorneys fees and expenses, fees
and expenses of financial accountants, advisors, consultants, and appraisers,
costs of collection by outside collection agencies, auctioneer fees and
expenses, and costs of security guards or insurance premiums paid to maintain
the Collateral, whether or not Borrowers are obligated to reimburse Agent or
Lenders for such expenses pursuant to this Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from the
Collections of Borrowers and their Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses from the Collections of Borrowers and their Subsidiaries received by
Agent, each Lender hereby agrees that it is and shall be obligated to pay to or
reimburse Agent for the amount of such Lender’s Pro Rata Share thereof. Whether
or not the transactions contemplated hereby are consummated, the Lenders shall
indemnify upon demand the Agent Related Persons (to the extent not reimbursed by
or on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to any Agent Related Person of any portion of such Indemnified
Liabilities resulting solely from such Person’s gross negligence or willful
misconduct nor shall any Lender be liable for the obligations of any Defaulting
Lender in failing to make a Term Loan or other extension of credit hereunder.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for such Lender’s Pro Rata Share of any costs or out of pocket expenses
(including attorneys, accountants, advisors, and consultants fees and expenses)
incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that Agent is
not reimbursed for such expenses by or on behalf of Borrowers. The undertaking
in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.

 

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16.8 Agent in Individual Capacity. HBK and its Affiliates and Related Funds may
make loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking, trust,
financial advisory, underwriting, or other business with Borrowers and their
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though HBK were not Agent hereunder, and, in each case, without notice to or
consent of the other members of the Lender Group. The other members of the
Lender Group acknowledge that, pursuant to such activities, HBK or its
Affiliates or Related Funds may receive information regarding Borrowers or their
Affiliates and any other Person party to any Loan Documents that is subject to
confidentiality obligations in favor of Borrowers or such other Person and that
prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its reasonable best
efforts to obtain), Agent shall not be under any obligation to provide such
information to them. The terms “Lender” and “Lenders” include HBK in its
individual capacity.

16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent’s resignation hereunder as Agent, the provisions of this Section 16 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent’s
notice of resignation, the retiring Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.

16.10 Lender in Individual Capacity. Any Lender and its respective Affiliates
and Related Funds may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though such Lender were not a Lender hereunder without
notice to or consent of the other members of the Lender Group. The other members
of the Lender Group acknowledge that, pursuant to such activities, such Lender
and its respective Affiliates and Related Funds may receive information
regarding Borrowers or their Affiliates and any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrowers
or such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such

 

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circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.

16.11 Withholding Taxes.

(a) All payments made by any Borrower hereunder or under any note or other Loan
Document will be made without setoff, counterclaim, or other defense. In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, each Borrower shall comply with
the penultimate sentence of this Section 16.11(a). “Taxes” shall mean, any
taxes, levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding any tax imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein measured by or based on the
net income or net profits of Lender) and all interest, penalties or similar
liabilities with respect thereto. If any Taxes are so levied or imposed, each
Borrower agrees to pay the full amount of such Taxes and such additional amounts
as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 16.11(a) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts if the
increase in such amount payable results from Agent’s or such Lender’s own
willful misconduct or gross negligence (as finally determined by a court of
competent jurisdiction). Each Borrower will furnish to Lender as promptly as
possible after the date the payment of any Tax is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by any Borrower.

(b) If a Lender claims an exemption from United States withholding tax, Lender
agrees with and in favor of Agent, to deliver to Agent:

(i) if such Lender claims an exemption from United States withholding tax
pursuant to its portfolio interest exception, (A) a statement of the Lender,
signed under penalty of perjury, that it is not a (I) a “bank” as described in
Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within
the meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to any Borrower within the meaning of Section 864(d)(4) of
the IRC, and (B) a properly completed and executed IRS Form W-8BEN, before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent;

(ii) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty, properly completed and executed IRS Form
W-8BEN before receiving its first payment under this Agreement and at any other
time reasonably requested by Agent;

 

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(iii) if such Lender claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected with a
United States trade or business of such Lender, two properly completed and
executed copies of IRS Form W-8ECI before receiving its first payment under this
Agreement and at any other time reasonably requested by Agent; or

(iv) such other form or forms, including IRS Form W-9, as may be required under
the IRC or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding or backup withholding tax before
receiving its first payment under this Agreement and at any other time
reasonably requested by Agent.

Lender agrees promptly to notify Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.

(c) If a Lender claims an exemption from withholding tax in a jurisdiction other
than the United States, Lender agrees with and in favor of Agent, to deliver to
Agent any such form or forms, as may be required under the laws of such
jurisdiction as a condition to exemption from, or reduction of, foreign
withholding or backup withholding tax before receiving its first payment under
this Agreement and at any other time reasonably requested by Agent.

Lender agrees promptly to notify Agent of any change in circumstances which
would modify or render invalid any claimed exemption or reduction.

(d) If any Lender claims exemption from, or reduction of, withholding tax and
such Lender sells, assigns, grants a participation in, or otherwise transfers
all or part of the Obligations of Borrowers to such Lender, such Lender agrees
to notify Agent of the percentage amount in which it is no longer the beneficial
owner of Obligations of Borrowers to such Lender. To the extent of such
percentage amount, Agent will treat such Lender’s documentation provided
pursuant to Sections 16.11(b) or 16.11(c) as no longer valid. With respect to
such percentage amount, Lender may provide new documentation, pursuant to
Sections 16.11(b) or 16.11(c), if applicable.

(e) If any Lender is entitled to a reduction in the applicable withholding tax,
Agent may withhold from any interest payment to such Lender an amount equivalent
to the applicable withholding tax after taking into account such reduction. If
the forms or other documentation required by subsection (b) or (c) of this
Section 16.11 are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.

(f) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender due to a failure on the part of
the Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall

 

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indemnify and hold Agent harmless for all amounts paid, directly or indirectly,
by Agent, as tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to Agent under this
Section 16.11, together with all costs and expenses (including attorneys fees
and expenses). The obligation of the Lenders under this subsection shall survive
the payment of all Obligations and the resignation or replacement of Agent.

16.12 Collateral Matters.

(a) The Lenders hereby irrevocably authorize Agent, at its option and in its
sole discretion, to release any Lien on any Collateral (i) upon the termination
of the Commitments and payment and satisfaction in full by Borrowers of all
Obligations, (ii) constituting property being sold or disposed of if a release
is required or desirable in connection therewith and if Administrative Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry), (iii) constituting property
in which no Borrower or its Subsidiaries owned any interest at the time the
Agent’s Lien was granted nor at any time thereafter, or (iv) constituting
property leased to a Borrower or its Subsidiaries under a lease that has expired
or is terminated in a transaction permitted under this Agreement. Except as
provided above, Agent will not execute and deliver a release of any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or substantially all of the Collateral, all of the Lenders, or
(z) otherwise, the Required Lenders. Upon request by Agent or Administrative
Borrower at any time, the Lenders will confirm in writing Agent’s authority to
release any such Liens on particular types or items of Collateral pursuant to
this Section 16.12; provided, however, that (1) Agent shall not be required to
execute any document necessary to evidence such release on terms that, in
Agent’s opinion, would expose Agent to liability or create any obligation or
entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

(b) Agent shall have no obligation whatsoever to any of the Lenders to assure
that the Collateral exists or is owned by Borrowers or is cared for, protected,
or insured or has been encumbered, or that the Agent’s Liens have been properly
or sufficiently or lawfully created, perfected, protected, or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent pursuant to any of the Loan Documents, it being understood and agreed that
in respect of the Collateral, or any act, omission, or event related thereto,
subject to the terms and conditions contained herein, Agent may act in any
manner it may deem appropriate, in its sole discretion given Agent’s own
interest in the Collateral in its capacity as one of the Lenders and that Agent
shall have no other duty or liability whatsoever to any Lender as to any of the
foregoing, except as otherwise provided herein.

 

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16.13 Restrictions on Actions by Lenders; Sharing of Payments.

(a) Each of the Lenders agrees that it shall not, without the express written
consent of Agent, and that it shall, to the extent it is lawfully entitled to do
so, upon the written request of Agent, set off against the Obligations, any
amounts owing by such Lender to Borrowers or any deposit accounts of Borrowers
now or hereafter maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so in writing by Agent,
take or cause to be taken any action, including, the commencement of any legal
or equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral.

(b) If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s ratable portion of all such
distributions by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (2) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

16.14 Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected only by possession or
control. Should any Lender obtain possession or control of any such Collateral,
such Lender shall notify Agent thereof, and, promptly upon Agent’s request
therefor shall deliver possession or control of such Collateral to Agent or in
accordance with Agent’s instructions.

16.15 Payments by Agent to the Lenders. All payments to be made by Agent to the
Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.

16.16 Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other

 

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Loan Documents. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the exercise by Agent of its powers set forth
therein or herein, together with such other powers that are reasonably
incidental thereto, shall be binding upon all of the Lenders.

 

  16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:

(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report (each a
“Report” and collectively, “Reports”) prepared by Agent, and Agent shall so
furnish each Lender with such Reports,

(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,

(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding Borrowers and will
rely significantly upon the Books, as well as on representations of Borrowers’
personnel,

(d) agrees to keep all Reports and other material, non-public information
regarding Borrowers and their Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner in accordance
with Section 17.7, and

(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any such other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
fail to take or any conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan

 

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Documents, to request additional reports or information from Borrowers, any
Lender may, from time to time, reasonably request Agent to exercise such right
as specified in such Lender’s notice to Agent, whereupon Agent promptly shall
request of Administrative Borrower the additional reports or information
reasonably specified by such Lender, and, upon receipt thereof from
Administrative Borrower, Agent promptly shall provide a copy of same to such
Lender, and (z) any time that Agent renders to Administrative Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.

16.18 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 16.7, no member of the Lender Group shall have any
liability for the acts or any other member of the Lender Group. No Lender shall
be responsible to any Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.

16.19 Legal Representation of Agent. In connection with the negotiation,
drafting, and execution of this Agreement and the other Loan Documents, or in
connection with future legal representation relating to loan administration,
amendments, modifications, waivers, or enforcement of remedies, Paul, Hastings,
Janofsky & Walker LLP (“PHJW”) only has represented and only shall represent HBK
in its capacity as Agent and PCRL in its capacity as a Lender. Each other Lender
hereby acknowledges that PHJW does not represent it in connection with any such
matters.

 

17. GENERAL PROVISIONS.

17.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrowers, Agent, and each Lender whose signature is provided for on
the signature pages hereof.

17.2 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

 

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17.3 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group or Borrowers, whether under
any rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.

17.4 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5 Counterparts; Electronic Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

17.6 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by any Borrower or any Guarantor or the transfer to the Lender
Group of any property should for any reason subsequently be declared to be void
or voidable under any state or federal law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrowers
or Guarantors automatically shall be revived, reinstated, and restored and shall
exist as though such Voidable Transfer had never been made.

17.7 Confidentiality. Agent and Lenders each individually (and not jointly or
jointly and severally) agree that material, non-public information regarding
Borrowers and their Subsidiaries, their operations, assets, and existing and
contemplated business plans shall be treated by Agent and the Lenders in a
confidential manner, and shall not be disclosed by Agent and the Lenders to
Persons who are not parties to this Agreement, except: (a) to attorneys for and
other advisors, accountants, auditors, and consultants to any member of the
Lender Group, (b) to Subsidiaries, Affiliates and Related Funds of any member of
the Lender Group, provided that any such Subsidiary, Affiliate or Related Fund
shall have agreed to receive such information hereunder subject to the terms of
this Section 17.7, (c) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (d) as

 

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may be agreed to in advance by Administrative Borrower or its Subsidiaries or as
requested or required by any Governmental Authority pursuant to any subpoena or
other legal process, (e) as to any such information that is or becomes generally
available to the public (other than as a result of prohibited disclosure by
Agent or the Lenders), (f) in connection with any assignment, prospective
assignment, sale, prospective sale, participation or prospective participations,
or pledge or prospective pledge of any Lender’s interest under this Agreement,
provided that any such assignee, prospective assignee, purchaser, prospective
purchaser, participant, prospective participant, pledgee, or prospective pledgee
shall have agreed in writing to receive such information hereunder subject to
the terms of this Section, and (g) in connection with any litigation or other
adversary proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents. The provisions of this Section 17.7
shall survive for 2 years after the payment in full of the Obligations.

17.8 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

17.9 Surgery as Agent for Borrowers. Each Borrower hereby irrevocably appoints
Surgery as the borrowing agent and attorney-in-fact for all Borrowers (the
“Administrative Borrower”) which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to the Term Loans obtained for the benefit of any
Borrower and all other notices and instructions under this Agreement and (ii) to
take such action as the Administrative Borrower deems appropriate on its behalf
to obtain Term Loans and to exercise such other powers as are reasonably
incidental thereto to carry out the purposes of this Agreement. It is understood
that the handling of the Loan Account and Collateral of Borrowers in a combined
fashion, as more fully set forth herein, is done solely as an accommodation to
Borrowers in order to utilize the collective borrowing powers of Borrowers in
the most efficient and economical manner and at their request, and that Lender
Group shall not incur liability to any Borrower as a result hereof. Each
Borrower expects to derive benefit, directly or indirectly, from the handling of
the Loan Account and the Collateral in a combined fashion since the successful
operation of each Borrower is dependent on the continued successful performance
of the integrated group. To induce the Lender Group to do so, and in
consideration thereof, each Borrower hereby jointly and severally agrees to
indemnify each member of the Lender Group and hold each member of the Lender
Group harmless against any and all liability, expense, loss or claim of damage
or injury, made against the Lender Group by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the Loan
Account and Collateral of Borrowers as herein provided, (b) the Lender Group’s
relying on any instructions of the Administrative Borrower, or (c) any other
action taken by the Lender Group hereunder or under the other Loan Documents,
except that Borrowers will have no liability to the relevant

 

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Agent-Related Person or Lender-Related Person under this Section 17.9 with
respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Agent-Related Person or Lender-Related Person, as the
case may be.

[Signature pages to follow.]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

 

PAINCARE HOLDINGS, INC.

a Florida corporation

By:

    

Name:

    

Title:

    

 

PAINCARE SURGERY CENTERS, INC.

a Florida corporation

By:

    

Name:

    

Title:

    

 

ADVANCED ORTHOPAEDICS OF
SOUTH FLORIDA II, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

 

PAIN AND REHABILITATION
NETWORK, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

 

MEDICAL REHABILITATION
SPECIALISTS II, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

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

PAINCARE ACQUISITION COMPANY
V, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
VI, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

 

HEALTH CARE CENTER OF TAMPA, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
VIII, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
IX, INC.

a Florida corporation

By:

    

Name:

    

Title:

    

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

PAINCARE ACQUISITION COMPANY
X, INC.

a Florida corporation

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
XI, INC.

a Florida corporation

By:

    

Name:

    

Title:

    

GEORGIA SURGICAL CENTERS, INC.

a Georgia corporation

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
XIII, INC.,

a Florida corporation

By:

    

Name:

    

Title:

    

 

BENJAMIN ZOLPER, M.D., INC.

a Florida corporation

By:

    

Name:

    

Title:

    

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

PAINCARE ACQUISITION COMPANY
XV, INC.

a Florida corporation

 

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
XVII, INC.

a Florida corporation

 

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
XIX, INC.

a Florida corporation

 

By:

    

Name:

    

Title:

    

 

PAINCARE ACQUISITION COMPANY
XVIII, INC.

a Florida corporation

 

By:

    

Name:

    

Title:

    

 

PAINCARE SURGERY CENTERS I, INC.

a Florida corporation

 

By:

    

Name:

    

Title:

    

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

HBK INVESTMENTS L.P.,

a Texas limited partnership, as Agent

By:

         

Its authorized signatory

PCRL INVESTMENTS L.P.,

a Texas limited partnership, as Lender

By:

         

Its authorized signatory

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EXHIBITS AND SCHEDULES

 

Exhibit A-1    Form of Assignment and Acceptance Exhibit C-1    Form of
Compliance Certificate Exhibit L-1    Form of LIBOR Notice Schedule A-1   
Agent’s Account Schedule C-1    Commitments Schedule D-1    Designated Account
Schedule E-1    Existing Seller Notes and Earn-Out Obligations Schedule P-1   
Permitted Liens Schedule 2.7(a)    Cash Management Banks Schedule 2.7(c)   
Excess Deposits Schedule 5.5    Locations of Inventory and Equipment Schedule
5.7(a)    States of Organization Schedule 5.7(b)    Chief Executive Offices
Schedule 5.7(c)    Organizational Identification Numbers Schedule 5.7(d)   
Commercial Tort Claims Schedule 5.8(b)    Capitalization of Borrowers Schedule
5.8(c)    Capitalization of Borrowers’ Subsidiaries Schedule 5.10    Litigation
Schedule 5.14    Environmental Matters Schedule 5.15    Broker Fees Schedule
5.16    Intellectual Property Schedule 5.18    Deposit Accounts and Securities
Accounts Schedule 5.20    Permitted Indebtedness Schedule 7.16    Pre-Closing
Permitted Acquisitions

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Schedule A-1

Agent’s Account

An account at a bank designated by Agent from time to time as the account into
which Borrowers shall make all payments to Agent for the benefit of the Lender
Group and into which the Lender Group shall make all payments to Agent under
this Agreement and the other Loan Documents; unless and until Agent notifies
Administrative Borrower and the Lender Group to the contrary, Agent’s Account
shall be that certain deposit account bearing account number 8900562668 (Ref:
Paincare Holdings, Inc.) and maintained by Agent with The Bank of New York, ABA
#021-000-018.

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Schedule C-1

Commitments

 

Lender   Term Loan
Commitment   Total Commitment

PCRL INVESTMENTS L.P.

  $25,000,000.00   $25,000,000.00                                        

All Lenders

  $25,000,000.00   $25,000,000.00

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Schedule D-1

Designated Account

Account number              of Administrative Borrower maintained with
Administrative Borrower’s Designated Account Bank, or such other deposit account
of Administrative Borrower (located within the United States) that has been
designed as such, in writing, by Administrative Borrower to Agent.

“Designated Account Bank” means                     , whose office is located at
            , and whose ABA number is                     .