Exhibit 10.26

Execution Version

 

 

 

 

 

 

 

 

CREDIT, SECURITY AND GUARANTY AGREEMENT,

dated as of November 6, 2018,

by and among

 

 

 

ALPHATEC HOLDINGS, INC.,

ALPHATEC SPINE, INC., and

SAFEOP SURGICAL, INC.

each as a Borrower, and collectively as Borrowers,

the other Credit Parties party hereto,

and

SQUADRON MEDICAL FINANCE SOLUTIONS LLC

as Lender

 

 

 

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Execution Version

 

TABLE OF CONTENTS

 

Page

 

 

ARTICLE 1 – DEFINITIONS

2

 

 

    Section 1.1 Certain Defined Terms

2

 

 

    Section 1.2 Accounting Terms and Determinations

14

 

 

    Section 1.3 Other Definitional and Interpretive Provisions

14

 

 

    Section 1.4 Time is of the Essence

14

 

 

    Section 1.5 Intercreditor Agreement

15

 

 

ARTICLE 2 – LOAN

15

 

 

    Section 2.1 Term Loan

15

 

 

    Section 2.2 Interest, Interest Calculations and Certain Fees.

16

 

 

    Section 2.3 Term Note

17

 

 

    Section 2.4 General Provisions Regarding Payment; Loan Account.

17

 

 

    Section 2.5 Maximum Interest

18

 

 

    Section 2.6 Appointment of Borrower Representative

18

 

 

    Section 2.7 Joint and Several Liability; Rights of Contribution;
Subordination and

 

    Subrogation

18

 

 

    Section 2.8 Termination; Restriction on Termination

20

 

 

    Section 2.9 Closing Fee.

20

 

 

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

21

 

 

    Section 3.1 Existence and Power

21

 

 

    Section 3.2 Organization and Governmental Authorization; No Contravention

21

 

 

    Section 3.3 Binding Effect

21

 

 

    Section 3.4 Capitalization

21

 

 

    Section 3.5 Financial Information

21

 

 

    Section 3.6 Litigation

21

 

 

    Section 3.7 Ownership of Property

22

 

 

    Section 3.8 No Default

22

 

 

    Section 3.9 Labor Matters

22

 

 

    Section 3.10 Regulated Entities

22

 

 

    Section 3.11 Margin Regulations

22

 

 

    Section 3.12 Compliance With Laws; Anti-Terrorism Laws

22

 

 

    Section 3.13 Taxes

22

 

 

    Section 3.14 Compliance with ERISA

23

 

 

    Section 3.15 Consummation of Operative Documents; Brokers

23

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    Section 3.16 Related Transactions

23

 

 

    Section 3.17 Material Contracts

23

 

 

    Section 3.18 Compliance with Environmental Requirements; No Hazardous
Materials

24

 

 

    Section 3.19 Intellectual Property

24

 

 

    Section 3.20 Solvency

24

 

 

    Section 3.21 Full Disclosure

24

 

 

    Section 3.22 Interest Rate

25

 

 

    Section 3.23 Subsidiaries

25

 

 

    Section 3.24 Limited Offering of the Warrants

25

 

 

    Section 3.25 Registration Right; Issuance Taxes.

25

 

 

ARTICLE 4 - AFFIRMATIVE COVENANTS

25

 

 

    Section 4.1 Financial Statements and Other Reports

25

 

 

    Section 4.2 Payment and Performance of Obligations

25

 

 

    Section 4.3 Maintenance of Existence

26

 

 

    Section 4.4 Maintenance of Property; Insurance.

26

 

 

    Section 4.5 Compliance with Laws and Material Contracts

26

 

 

    Section 4.6 Inspection of Property; Books and Records

27

 

 

    Section 4.7 Use of Proceeds

27

 

 

    Section 4.8 Estoppel Certificates

27

 

 

    Section 4.9 Notices of Litigation and Defaults

27

 

 

    Section 4.10 Hazardous Materials; Remediation.

27

 

 

    Section 4.11 Further Assurances

28

 

 

    Section 4.12 Power of Attorney

29

 

 

ARTICLE 5 - NEGATIVE COVENANTS

29

 

 

    Section 5.1 Debt; Contingent Obligations

29

 

 

    Section 5.2 Liens

29

 

 

    Section 5.3 Restricted Distributions

29

 

 

    Section 5.4 Restrictive Agreements

29

 

 

    Section 5.5 Payments and Modifications of Subordinated Debt

29

 

 

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

30

 

 

    Section 5.7 Purchase of Assets, Investments

30

 

 

    Section 5.8 Transactions with Affiliates

30

 

 

    Section 5.9 Modification of Organizational Documents

30

 

 

    Section 5.10 Modification of Certain Agreements

30

 

 

    Section 5.11 Conduct of Business

30

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    Section 5.12 Lease Payments

30

 

 

    Section 5.13 Limitation on Sale and Leaseback Transactions

30

 

 

    Section 5.14 Compliance with Anti-Terrorism Laws

30

 

 

    Section 5.15 Orthotec Litigation

31

 

 

ARTICLE 6 - FINANCIAL COVENANT

31

 

 

    Section 6.1 Additional Defined Terms

31

 

 

    Section 6.2 Liquidity

31

 

 

    Section 6.3 Fixed Charge Coverage Ratio

32

 

 

    Section 6.4 Evidence of Compliance

32

 

 

ARTICLE 7 - CONDITIONS

32

 

 

    Section 7.1 Conditions to Closing

32

 

 

    Section 7.2 Searches

32

 

 

    Section 7.3 Post-Closing Requirements

32

 

 

ARTICLE 8 - REGULATORY MATTERS

32

 

 

    Section 8.1 Healthcare Permits.

32

 

 

    Section 8.2 FDA Regulatory Matters

33

 

 

ARTICLE 9 - SECURITY AGREEMENT

34

 

 

    Section 9.1 Generally.

34

 

 

    Section 9.2 Representations and Warranties and Covenants Relating to
Collateral.

35

 

 

ARTICLE 10 - EVENTS OF DEFAULT

36

 

 

    Section 10.1 Events of Default

36

 

 

    Section 10.2 Acceleration of Term Loan

38

 

 

    Section 10.3 UCC Remedies

38

 

 

    Section 10.4 Default Rate of Interest

39

 

 

    Section 10.5 Application of Proceeds.

39

 

 

    Section 10.6 Waivers.

40

 

 

    Section 10.7 Injunctive Relief

41

 

 

    Section 10.8 Marshalling; Payments Set Aside

41

 

 

ARTICLE 11 - MISCELLANEOUS

41

 

 

    Section 11.1 Survival

41

 

 

    Section 11.2 No Waivers

42

 

 

    Section 11.3 Notices.

42

 

 

    Section 11.4 Severability

42

 

 

    Section 11.5 Headings

42

 

 

    Section 11.6 Confidentiality

42

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    Section 11.7 Waiver of Consequential and Other Damages

43

 

 

    Section 11.8 GOVERNING LAW; SUBMISSION TO JURISDICTION.

43

 

 

    Section 11.9 WAIVER OF JURY TRIAL

43

 

 

    Section 11.10 Publication; Advertisement.

44

 

 

    Section 11.11 Counterparts; Integration

44

 

 

    Section 11.12 No Strict Construction

44

 

 

    Section 11.13 Lender Approvals

44

 

 

    Section 11.14 Expenses; Indemnity

44

 

 

    Section 11.15 Payments

45

 

 

    Section 11.16 Reinstatement

46

 

 

     Section 11.17 Successors and Assigns

46

 

 

    Section 11.18 USA PATRIOT Act Notification

46

 

 

    Section 11.19 Right to Perform, Preserve and Protect

46

 

 

ARTICLE 12 - GUARANTY

46

 

 

    Section 12.1 Guaranty

46

 

 

    Section 12.2 Payment of Amounts Owed

47

 

 

    Section 12.3 Certain Waivers by Guarantor

47

 

 

    Section 12.4 Guarantor’s Obligations Not Affected by Modifications of
Financing Documents

48

 

 

    Section 12.5 Reinstatement; Deficiency

49

 

 

    Section 12.6 Subordination of Borrowers’ Obligations to Guarantors; Claims
in Bankruptcy.

49

 

 

    Section 12.7 Maximum Liability

49

 

 

    Section 12.8 Guarantor’s Investigation

50

 

 

    Section 12.9 Termination

50

 

 

    Section 12.10 Representative

50

 

 

 

 

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CREDIT, SECURITY AND GUARANTY AGREEMENT

THIS CREDIT, SECURITY AND GUARANTY AGREEMENT (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the “Agreement”)
is dated as of November 6, 2018, by and among ALPHATEC HOLDINGS, INC., a
Delaware corporation, ALPHATEC SPINE, INC., a California corporation, SAFEOP
SURGICAL, INC., a Delaware corporation, and each additional borrower that may
hereafter be added to this Agreement (each individually as a “Borrower”, and
collectively as “Borrowers”), the other Credit Parties listed on the signature
pages hereof, and SQUADRON MEDICAL FINANCE SOLUTIONS LLC, a Delaware limited
liability company as lender (“Lender”).

RECITALS

WHEREAS, in connection with the refinancing of the continued working capital and
other needs of Borrowers and the other Credit Parties, Borrowers and the other
Credit Parties have requested, among other things, that Lender make available to
Borrowers a new term loan facility in the original principal amount of Thirty
Five Million Dollars ($35,000,000); and

WHEREAS, Lender has agreed to the request of Borrowers and the other Credit
Parties on the terms and conditions set forth herein and in the other Financing
Documents.

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

ARTICLE 1 - DEFINITIONS

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

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

“Affiliate” means, with respect to any Person, (a) any Person that directly or
indirectly controls such Person, (b) any Person which is controlled by or is
under common control with such controlling Person, and (c) each of such Person’s
(other than, with respect to Lender, Lender’s) officers or directors (or Persons
functioning in substantially similar roles) and the spouses, parents,
descendants and siblings of such officers, directors or other Persons. As used
in this definition, the term “control” of a Person means the possession,
directly or indirectly, of the power to vote five percent (5%) or more of any
class of voting securities of such Person or to direct or cause the direction of
the management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

“Affiliated Financing Documents” means any credit, loan, letter of credit or
related documents which are, by their terms and by the terms of this Agreement,
cross-defaulted with the Financing Documents, and for which a Credit Party
hereunder is liable or contingently liable for payment or as security for which
a Credit Party hereunder has pledged, assigned or subjected any assets to
Lender.

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

“Applicable Margin” means eight percent (8.00%).

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

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

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

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

“Borrower” and “Borrowers” mean the entities described in the first paragraph of
this Agreement and each of their successors and permitted assigns.

“Borrower Representative” means Holdings, in its capacity as Borrower
Representative pursuant to the provisions of Section 2.6.

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

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

“Change in Control” means any of the following events: (a) any Person or two or
more Persons acting in concert shall have acquired beneficial ownership,
directly or indirectly, of, or shall have acquired by contract or otherwise, or
shall have entered into a contract or arrangement that, upon consummation, will
result in its or their acquisition of or control over, voting stock of any
Borrower (or other securities convertible into such voting stock) representing
40% or more of the combined voting power of all voting stock of any Borrower; or
(b) Holdings ceases to own, directly or indirectly, 100% of the capital stock of
any of its Subsidiaries; or (c) any “Change of Control”, “Change in Control”, or
terms of similar import under any document or instrument governing or relating
to Debt of or equity in such Person. As used herein, “beneficial ownership”
shall have the meaning provided in Rule 13d-3 of the Securities and
Exchange  Commission under the Securities Exchange Act of 1934.

“Claim” has the meaning set forth in Section 12.3.

“Closing Date” means the date of this Agreement.

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

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

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

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

“Contingent Obligation” means, with respect to any Person, any direct or
indirect liability of such Person: (a) with respect to any Debt of another
Person (a “Third Party Obligation”) if the purpose or intent of such Person
incurring such liability, or the effect thereof, is to provide assurance to the
obligee of such Third Party Obligation

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that such Third Party Obligation will be paid or discharged, or that any
agreement relating thereto will be complied with, or that any holder of such
Third Party Obligation will be protected, in whole or in part, against loss with
respect thereto; (b) with respect to any undrawn portion of any letter of credit
issued for the account of such Person or as to which such Person is otherwise
liable for the reimbursement of any drawing; (c) to make take-or-pay or similar
payments if required regardless of nonperformance by any other party or parties
to an agreement; or (d) for any obligations of another Person pursuant to any
Guarantee or pursuant to any agreement to purchase, repurchase or otherwise
acquire any obligation or any property constituting security therefor, to
provide funds for the payment or discharge of such obligation or to preserve the
solvency, financial condition or level of income of another Person. The amount
of any Contingent Obligation shall be equal to the amount of the obligation so
Guaranteed or otherwise supported or, if not a fixed and determinable amount,
the maximum amount so Guaranteed or otherwise supported.

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

“Copyright Security Agreement” means any Copyright Security Agreement executed
and delivered by any Credit Party to Lender, in form and substance satisfactory
to Lender, as amended and in effect from time to time.

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

“Credit Party” means any Guarantor hereunder or under any other Guarantee of the
Obligations or any part thereof, any Borrower and any other Person (other than
Lender), whether now existing or hereafter acquired or formed, that becomes
obligated as a borrower, guarantor, surety, indemnitor, pledgor, assignor or
other obligor under any Financing Document and “Credit Parties” means all such
Persons, collectively; provided that no Subsidiary of Holdings as of the Closing
Date incorporated or organized under the laws of any jurisdiction other than the
United States or any other political subdivision thereof shall be required to
become a Credit Party.

“Debt” of a Person means at any date, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services, except
trade accounts payable arising and paid on a timely basis and in the Ordinary
Course of Business, (d) all capital leases of such Person, (e) all
non-contingent obligations of such Person to reimburse any bank or other Person
in respect of amounts paid under a letter of credit, banker’s acceptance or
similar instrument, (f) all equity securities of such Person subject to
repurchase or redemption other than at the sole option of such Person, (g) all
obligations secured by a Lien on any asset of such Person, whether or not such
obligation is otherwise an obligation of such Person, (h) “earnouts”, purchase
price adjustments, profit sharing arrangements, deferred purchase money amounts
and similar payment obligations or continuing obligations of any nature of such
Person arising out of purchase and sale contracts, (i) all Debt of others
Guaranteed by such Person, (j) off-balance sheet liabilities and/or Pension Plan
or Multiemployer Plan liabilities of such Person, (k) obligations arising under
non-compete agreements, and (l) obligations arising under bonus, deferred
compensation, incentive compensation or similar arrangements, other than those
arising in the Ordinary Course of Business. Without duplication of any of the
foregoing, Debt of Borrowers shall include the Term Loan.

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

“Deficiency Amount” has the meaning set forth in Section 2.7(e).

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

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

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

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

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

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

“FDA” means the U.S. Food and Drug Administration.

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

“Fiscal Quarter” means each three fiscal month period ending on March 31, June
30, September 30 or December 31.

“Forbearance Agreement” has the meaning set forth in Section 5.15.

“Fraudulent Conveyance” has the meaning set forth In Section 2.7(b).

“GAAP” means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, which are applicable
to the circumstances as of the date of determination.

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

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, and any agency, department or Person exercising
executive, legislative, judicial, regulatory or

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administrative functions of or pertaining to government and any corporation or
other Person owned or controlled (through stock or capital ownership or
otherwise) by any of the foregoing, whether domestic or foreign.

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

“Guarantor” means any Credit Party that has executed or delivered, or shall in
the future execute or deliver, this Agreement as a Guarantor or any Guarantee of
any portion of the Obligations; provided that no Subsidiary of Holdings as of
the Closing Date incorporated or organized under the laws of any jurisdiction
other than the United States or any other political subdivision thereof shall be
required to become a Guarantor. As of the Closing Date, no Credit Party is a
Guarantor.

“Hazardous Materials” means petroleum and petroleum products and compounds
containing them, including gasoline, diesel fuel and oil; explosives, flammable
materials; radioactive materials; polychlorinated biphenyls and compounds
containing them; lead and lead-based paint; asbestos or asbestos-containing
materials; underground or above-ground storage tanks, whether empty or
containing any substance; any substance the presence of which is prohibited by
any Environmental Laws; toxic mold, any substance that requires special
handling; and any other material or substance now or in the future defined as a
“hazardous substance,” “hazardous material,” “hazardous waste,” “toxic
substance,” “toxic pollutant,” “contaminant,” “pollutant” or other words of
similar import within the meaning of any Environmental Law, including: (a) any
“hazardous substance” defined as such in (or for purposes of) CERCLA, or any
so-called “superfund” or “superlien” Law, including the judicial interpretation
thereof; (b) any “pollutant or contaminant” as defined in 42 U.S.C.A. §
9601(33); (c) any material now defined as “hazardous waste” pursuant to 40
C.F.R. Part 260; (d) any petroleum or petroleum by-products, including crude oil
or any fraction thereof; (e) natural gas, natural gas liquids, liquefied natural
gas, or synthetic gas usable for fuel; (f) any “hazardous chemical” as defined
pursuant to 29 C.F.R. Part 1910; (g) any toxic or harmful substances, wastes,
materials, pollutants or contaminants (including, without limitation, asbestos,
polychlorinated biphenyls (“PCBs”), flammable explosives, radioactive materials,
infectious substances, materials containing lead-based paint or raw materials
which include hazardous constituents); and (h) any other toxic substance or
contaminant that is subject to any Environmental Laws or other past or present
requirement of any Governmental Authority.

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

“Healthcare Laws” means all applicable Laws relating to the possession, control,
warehousing, marketing, sale, distribution procurement, development,
manufacture, production, analysis, dispensing, importation, exportation, use,
handling, quality, or promotion of any drug, medical device, food, dietary
supplement, or other product (including, without limitation, any ingredient or
component of the foregoing products) subject to regulation under the Federal
Food, Drug, and Cosmetic Act and similar state and foreign laws, controlled
substances laws, pharmacy laws, or consumer product safety laws, and all Laws
pertaining to patient healthcare, patient healthcare information, rate setting,
equipment, personnel, operating policies, fee splitting, or the like, as such
Laws may be amended from time to time including all other applicable Laws,
statutes, ordinances, rules and regulations.

“Healthcare Permit” has the meaning set forth in Section 8.2.

“Healthpoint” has the meaning set forth in Section 5.15.

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“Holdings” means Alphatec Holdings, Inc., a Delaware corporation.

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

“Intellectual Property” means, with respect to any Person, all patents, patent
applications and like protections, including improvements divisions,
continuation, renewals, reissues, extensions and continuations in part of the
same, trademarks, trade names, trade styles, trade dress, service marks, logos
and other business identifiers and, to the extent permitted under applicable
law, any applications therefore, whether registered or not, and the goodwill of
the business of such Person connected with and symbolized thereby, copyright
rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative works, whether published or unpublished,
technology, know- how and processes, operating manuals, trade secrets, computer
hardware and software, rights to unpatented inventions and all applications and
licenses therefor, used in or necessary for the conduct of business by such
Person and all claims for damages by way of any past, present or future
infringement of any of the foregoing.

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

“Inventory Financing Agreement” means that certain Inventory Financing Agreement
dated as of the date hereof between Spine and Structure Medical and all
amendments, supplements, restatements or modifications.

“Investment” means any investment in any Person, whether by means of acquiring
(whether for cash, property, services, securities or otherwise), making or
holding Debt, securities, capital contributions, loans, time deposits, advances,
Guarantees or otherwise. The amount of any Investment shall be the original cost
of such Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect thereto.

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

“Lender” means the entity described in the first paragraph of this Agreement and
its successors and permitted assigns.

“LIBOR Rate” means one month LIBOR as reported in The Wall Street Journal as of
any date of determination. The LIBOR Rate shall be determined as of the first
Business Day of each month during the term of this Agreement and shall be the
rate which is in effect for such month; provided, however that the LIBOR Rate
for the period commencing on the Closing Date and ending on the last day of the
month in which the Closing Date occurs, shall be the LIBOR Rate as of the
Closing Date.

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

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

“Loan Account” has the meaning set forth in Section 2.4(b).

“Material Adverse Effect” means with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (i) the condition
(financial or otherwise), operations, business, properties or prospects of any
of the Credit Parties, (ii) the

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rights and remedies of Lender under any Financing Document, or the ability of
any Credit Party to perform any of its obligations under any Financing Document
to which it is a party, (iii) the legality, validity or enforceability of any
Financing Document, (iv) the existence, perfection or priority of any security
interest granted in any Financing Document, (v) the value of any material
Collateral, or (vi) the use or scope of any Healthcare Permits.

“Material Contracts” has the meaning set forth in Section 3.17.

“Maximum Lawful Rate” has the meaning set forth in Section 2.5.

“Maximum Liability” has the meaning set forth in Section 12.7.

“MidCap” means, collectively, MidCap Financial, LLC, MidCap Funding IV, LLC, and
their permitted successors and assigns as “Lenders” or as “Agent” under the
MidCap Facility Agreement.

“MidCap Debt” means Debt incurred pursuant to and in accordance with the terms
of the MidCap Facility Agreement or any partial or complete refinancing or
replacement thereof in a principal amount not to exceed $22,500,000.

“MidCap Facility Agreement” means: (a) that certain Amended and Restated Credit,
Security and Guaranty Agreement, dated as of August 30, 2013, as amended prior
to and as of the date hereof, among Holdings, MidCap and the other parties party
thereto and without giving effect to any further amendment, supplement,
restatement or other modification thereto other than those made in accordance
with the terms of this Agreement and (b) the ancillary agreements and documents,
other than any warrants issued in connection therewith, entered into by
Holdings, the other parties party thereto and MidCap in connection therewith, in
each case, true and complete copies of which have been provided to Lender.

“MidCap Intercreditor Agreement” means that certain Intercreditor Agreement
between Lender and any agent or lender with respect to the MidCap Debt, as the
same may be amended, supplemented, restated or otherwise modified from time to
time in accordance with the terms thereof.

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

“Obligations” means all obligations, liabilities and indebtedness (monetary
(including post- petition interest, whether or not allowed) or otherwise) of
each Credit Party under this Agreement or any other Financing Document, in each
case howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, or due or to become due.

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

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

“Operative Documents” means the Financing Documents, the Warrants, the
Registration Rights Agreement, MidCap Facility Agreement, Subordinated Debt
Documents, Safari Acquisition Agreement and all documents effecting the
acquisition of SafeOp and any documents effecting any purchase or sale or other
transaction that is closing contemporaneously with the closing of the financing
under this Agreement on the Closing Date.

“Ordinary Course of Business” means, in respect of any transaction involving any
Credit Party, the ordinary course of business of such Credit Party, as conducted
by such Credit Party in accordance with past practices.

“Organizational Documents” means, with respect to any Person other than a
natural person, the documents by which such Person was organized (such as a
certificate of incorporation, certificate of limited partnership or

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articles of organization, and including, without limitation, any certificates of
designation for preferred stock or other forms of preferred equity) and which
relate to the internal governance of such Person (such as by-laws, a partnership
agreement or an operating, limited liability company or members agreement).

“Orthotec Litigation” means litigation matters in connection with, arising from,
or related to Orthotec, LLC for which the Borrowers or their Subsidiaries face
potential exposure (monetary or otherwise).

“Orthotec Forbearance Agreement” has the meaning set forth in Section 5.15.

“Orthotec Settlement Agreement” has the meaning set forth in Section 5.15.

“Orthotec Settlement Payments” means, collectively, all amounts paid or
transferred (including cash, cash equivalents, assets and/or services) on or
after the date hereof by or on behalf of the Credit Parties and/or their
respective Subsidiaries in connection with any Orthotec, LLC matter (including
the Orthotec Litigation).

“Patent Security Agreement” means any Patent Security Agreement executed and
delivered by any Credit Party to Lender, in form and substance satisfactory to
Lender, as amended and in effect from time to time.

“Payment Acceleration Event” has the meaning set forth in Section 10.5.

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

“Payment Notification” means a written notification substantially in the form of
Exhibit D hereto.

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

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

“Permits” means all governmental licenses, authorizations, provider numbers,
supplier numbers, registrations, permits, drug or device authorizations and
approvals, certificates, franchises, qualifications, accreditations, consents
and approvals of a Credit Party required under all applicable Laws and required
for such Credit Party in order to carry on its business as now conducted,
including, without limitation, Healthcare Permits.

“Permitted Asset Dispositions” means the following Asset Dispositions, provided,
however, that at the time of such Asset Disposition, no Default or Event of
Default exists or would result from such Asset Disposition: (a) dispositions of
Inventory in the Ordinary Course of Business and not pursuant to any bulk sale,
(b) dispositions of furniture, fixtures and equipment in the Ordinary Course of
Business that the applicable Borrower or Subsidiary determines in good faith is
no longer used or useful in the business of such Borrower and its Subsidiaries,
and (c) the non-exclusive license of patent rights granted to third parties in
the Ordinary Course of Business for fair value consideration that does not
result in a legal transfer of title to the licensed property.

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

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“Permitted Contingent Obligations” means (a) Contingent Obligations arising in
respect of the Debt under the Financing Documents; (b) Contingent Obligations
resulting from endorsements for collection or deposit in the Ordinary Course of
Business; (c) Contingent Obligations outstanding on the date of this Agreement
and set forth on Schedule 5.1 (but not including any refinancings, extensions,
increases or amendments to the indebtedness underlying such Contingent
Obligations other than extensions of the maturity thereof without any other
change in terms); (d) Contingent Obligations incurred in the Ordinary Course of
Business with respect to surety and appeal bonds, performance bonds and other
similar obligations not to exceed $250,000 in the aggregate at any time
outstanding; (e) Contingent Obligations arising under indemnity agreements with
title insurers to cause such title insurers to issue to Lender mortgagee title
insurance policies; (f) Contingent Obligations arising with respect to customary
indemnification obligations in favor of purchasers in connection with
dispositions of personal property assets permitted under Section 5.6; and (g)
other Contingent Obligations not permitted by clauses (a) through (f) above, not
to exceed $250,000 in the aggregate at any time outstanding.

“Permitted Debt” means: (a) Borrowers’ and their Subsidiaries’ Debt to Lender
under this Agreement and the other Financing Documents; (b) Debt incurred as a
result of endorsing negotiable instruments received in the Ordinary Course of
Business; (c) purchase money Debt (other than purchase money Debt existing on
the date of this Agreement and described on Schedule 5.1) not to exceed
$2,000,000 at any time (whether in the form of a loan or a lease) used solely to
acquire equipment used in the Ordinary Course of Business and secured only by
such equipment; (d) Debt existing on the date of this Agreement and described on
Schedule 5.1 (but not including any refinancings, extensions, increases or
amendments to such Debt other than extensions of the maturity thereof without
any other change in terms); (e) the MidCap Debt; (f) Debt in the form of
insurance premiums financed through the applicable insurance company; (g) trade
accounts payable arising and paid on a timely basis and in the Ordinary Course
of Business; (h) Structure Medical Debt; (i) Subordinated Debt and (j) Permitted
Intercompany Advances.

“Permitted Distributions” means: (a) dividends or other distributions by any
Subsidiary of any Borrower to such parent Borrower; and (b) any repayments of or
debt service on any Permitted Intercompany Advances described in clause (a), (b)
or (d) of the definition thereof.

“Permitted Intercompany Advances” means loans, guarantees or other Investments
made by (a) a Credit Party to another Credit Party, (b) a Subsidiary of Holdings
that is not a Credit Party to another Subsidiary of Holdings that is not a
Credit Party, (c) a Subsidiary of Holdings that is not a Credit Party to a
Credit Party so long as such loan, guaranty or other Investment is subordinated
in right of payment to the Obligations on terms and conditions acceptable to
Lender, and (d) a Credit Party to a Subsidiary of Holdings that is not a Credit
Party so long as the aggregate amount of all such loans, guarantees and
Investments outstanding under this clause (d) does not exceed $200,000 (or such
greater amount as Agent may agree in its reasonable discretion) per individual
transaction, or $3,000,000 in the aggregate.

“Permitted Investments” means: (a) Investments shown on Schedule 5.7 and
existing on the Closing Date; (b) cash and cash equivalents; (c) Investments
consisting of the endorsement of negotiable instruments for deposit or
collection or similar transactions in the Ordinary Course of Business; (d)
Investments consisting of travel advances and employee relocation loans and
other employee loans and advances in the Ordinary Course of Business, but the
aggregate of all such loans outstanding may not exceed $250,000 at any time; (e)
Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the Ordinary Course of Business; (f) Investments consisting of notes
receivable of, or prepaid royalties and other credit extensions, to customers
and suppliers who are not Affiliates, in the Ordinary Course of Business,
provided, however, that this subpart (f) shall not apply to Investments of
Borrowers in any Subsidiary; (g) Investments consisting of deposit accounts; (h)
Investments by any Borrower in any other Borrower made in compliance with
Section 4.11(c); (i) Investments constituting Permitted Intercompany Advances;
(j) Investments consisting of accounts receivables from Affiliates resulting
from the sale of inventory to such Affiliates in the Ordinary Course of
Business, so long as such sales are otherwise permitted pursuant to clause (y)
of Section 5.8; (k) other Investments in an amount not exceeding $500,000 in the
aggregate and (l) “Permitted Investments” as defined in the MidCap Facility
Agreement.

“Permitted Liens” means: (a) deposits or pledges of cash to secure obligations
under workmen’s compensation, social security or similar laws, or under
unemployment insurance (but excluding Liens arising under

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ERISA) pertaining to a Borrower’s or its Subsidiary’s employees, if any; (b)
deposits or pledges of cash to secure bids, tenders, contracts (other than
contracts for the payment of money or the deferred purchase price of property or
services), leases, statutory obligations, surety and appeal bonds and other
obligations of like nature arising in the Ordinary Course of Business; (c)
carrier’s, warehousemen’s, mechanic’s, workmen’s, materialmen’s or other like
Liens on Collateral arising in the Ordinary Course of Business with respect to
obligations which are not due, or which are being contested pursuant to a
Permitted Contest; (d) Liens on Collateral for Taxes or other governmental
charges not at the time delinquent or thereafter payable without penalty or the
subject of a Permitted Contest; (e) attachments, appeal bonds, judgments and
other similar Liens on Collateral, for sums not exceeding $100,000 in the
aggregate arising in connection with court proceedings; provided, however, that
the execution or other enforcement of such Liens is effectively stayed and the
claims secured thereby are the subject of a Permitted Contest; (f) Liens and
encumbrances in favor of Lender under the Financing Documents; (g) Liens on
Collateral existing on the date hereof and set forth on Schedule 5.2; (h) any
Lien on any equipment securing Debt permitted under subpart (c) of the
definition of Permitted Debt, provided, however, that such Lien attaches
concurrently with or within twenty (20) days after the acquisition thereof; (i)
Liens and encumbrances securing Structure Medical Debt, (j) Liens and
encumbrances in favor of the holders of the Affiliated Financing Documents and
(k) Liens and encumbrances securing the MidCap Debt.

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

“Permitted Transfers” means, with respect to Holdings only, the collective
reference to one or more transfers, via a sale and not by pledge or
hypothecation, which, in the aggregate during the term of this Agreement, result
in a transfer of legal or beneficial ownership or control of up to 20% of the
direct or indirect ownership or voting interests in the Borrowers or any
Guarantor to a Person, (a) that is purchasing such ownership interest in a
public offering registered with the SEC, or (b) other than a Blocked Person,
that is (i) a venture capital investor so long as Borrowers have given Lender at
least fifteen (15) days prior written notice of the identity of the assignees,
together with such information as Lender shall deem necessary to confirm that
such assignee is not a Blocked Person or (ii) at the time of such transfer,
already a holder of direct or indirect ownership or voting interests in the
Borrowers.

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

“Pledge Agreement” means that certain Pledge Agreement, dated as of the Closing
Date, by Holdings in favor of Lender, as amended, restated, modified or
otherwise supplemented from time to time.

“Promissory Note” means any promissory note (as such term is defined in the UCC)
which evidences any loan, guarantee or other Investment described in clause (d)
of the definition of Permitted Intercompany Advances.

“Recovery Amount” has the meaning set forth in Section 2.7(e).

“Registration Rights Agreement” means the Registration Rights Agreement dated as
of the date hereof among Holdings and the holders of the Warrants.

“Responsible Officer” means any of the Chief Executive Officer, Chief Financial
Officer or any other officer of the applicable Borrower acceptable to Lender.

“Restricted Distribution” means as to any Person (a) any dividend or other
distribution (whether in cash, securities or other property) on any equity
interest in such Person (except those payable solely in its equity interests

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of the same class), (b) any payment by such Person on account of (i) the
purchase, redemption, retirement, defeasance, surrender, cancellation,
termination or acquisition of any equity interests in such Person or any claim
respecting the purchase or sale of any equity interest in such Person, or (ii)
any option, warrant or other right to acquire any equity interests in such
Person, (c) any management fees, salaries or other fees or compensation to any
Person holding an equity interest in a Borrower or a Subsidiary of a Borrower
(other than (i) payments of salaries and other employee benefits to individuals,
(ii) directors fees, (iii) advances and reimbursements to employees or
directors, all in the Ordinary Course of Business and (iv) the issuance of stock
options or restricted stock to employees and board members so long as such
Borrower or Subsidiary, as applicable, is not required to redeem any such stock
before the Termination Date), an Affiliate of a Borrower or an Affiliate of any
Subsidiary of a Borrower, (d) any lease or rental payments to an Affiliate or
Subsidiary of a Borrower or (e) repayments of or debt service on loans or other
indebtedness held by any Person holding an equity interest in a Borrower or a
Subsidiary of a Borrower, an Affiliate of a Borrower or an Affiliate of any
Subsidiary of a Borrower unless permitted under and made pursuant to a
Subordination Agreement applicable to such loans or other Debt.

“Revolving Loan Availability” has the meaning set forth in the MidCap Facility
Agreement (or in any replacement revolving loan facility entered into by
Borrowers).

“Safari Acquisition Agreement” means that certain Agreement and Plan of Merger,
dated as of March 6, 2018, by and among Holdings, Safari Merger Sub, Inc., a
Delaware corporation, SafeOp, the Key Stockholders (as defined therein), and
Safari Holding Company, LLC.

“Safari Seller Notes” means those certain (a) Convertible Promissory Notes
issued pursuant to the Safari Acquisition Agreement, each dated as of March 8,
2018, made by Alphatec Holdings and payable to each of Tullis-Dickerson Capital
Focus III, L.P., Tullis Growth Fund, L.P., James L.L. Tullis, Lighthouse
Holdings Corporation, Eugene Cattarina, Mark D’Addato, Robert Snow, Richard
O’Brien and Christopher Brown, as in effect on March 8, 2018, and (b)
Convertible Promissory Notes (if any) issued pursuant to the Safari Acquisition
Agreement, made by Holdings and payable to certain other sellers of SafeOp, in
each case, in form and substance identical to the Convertible Promissory Notes
issued on March 8, 2018; provided that each seller receiving a Safari Seller
Note described in clause (b) above shall have become a party to the Safari
Subordination Agreement; provided further that the aggregate principal amount of
all Safari Seller Notes shall not exceed $3,000,000.

“Safari Seller Subordination Agreement” means that certain Subordination
Agreement, dated as of the date hereof, among the subordinated creditors
signatory thereto and Lender, as such document may be amended, restated,
supplemented or otherwise modified from time to time after the date hereof.

SafeOp” means SafeOp Surgical, Inc., a Delaware corporation.

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

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

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

“Securitization” has the meaning set forth in Section 11.6.

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

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

“Spine” means Alphatec Spine, Inc., a California corporation.

“Stated Rate” has the meaning set forth in Section 2.5.

“Structure Medical” means Structure Medical, LLC, a Florida limited liability
company.

“Structure Medical Debt” means the Debt payable under the terms of the Inventory
Financing Agreement.

“Subordinated Debt” means any Debt of Borrowers incurred pursuant to the terms
of the Subordinated Debt Documents and with the prior written consent of Lender,
all of which documents must be in form and substance acceptable to Lender in its
sole discretion.

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

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

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

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto and all present or future stamp, court or
documentary, intangible, recording, filing or similar Taxes that arise from any
payment made under, from the execution, delivery, performance, enforcement or
registration of, from the receipt or perfection of a security interest under, or
otherwise with respect to, any Financing Document.

“Term Loan” has the meaning set forth in Section 2.1(a).

“Term Loan Borrowing” means a borrowing of a Term Loan.

“Term Note” has the meaning set forth in Section 2.3.

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“Termination Date” means the earlier to occur of (a) November 6, 2023, (b) any
date on which Lender accelerates the maturity of the Term Loan pursuant to
Section 10.2, or (c) the termination date stated in any notice of termination of
this Agreement provided by Borrowers in accordance with Section 2.8.

“Trademark Security Agreement” means any Trademark Security Agreement executed
and delivered by any Credit Party to Lender, in form and substance satisfactory
to the Lender, as amended and in effect from time to time.

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

“United States” means the United States of America.

“Warrants” means the warrants granted to Lender (including any designee of
Lender) to purchase 845,000 shares of common stock of Holdings at $3.15 per
share, which warrant shall be substantially in the form of Exhibit B.

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

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

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

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Section 1.5 Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the terms of this Agreement and the exercise of any right or remedy by
Lender hereunder or under any Financing Document with respect to the liens and
security interest granted Lender pursuant to this Agreement, is subject to the
provisions of the MidCap Intercreditor Agreement. In the event of any conflict
between the terms of the MidCap Intercreditor Agreement and this Agreement with
respect to the exercise of rights and remedies or the priority of the security
interests granted to the Agent herein, the terms of the MidCap Intercreditor
Agreement shall govern and control.

ARTICLE 2 - LOAN

Section 2.1 Term Loan.

(a) Term Loan Amount. On the terms and subject to the conditions set forth
herein, Lender hereby agrees to make to Borrowers a term loan in an aggregate
original principal amount equal to the Thirty Five Million Dollars ($35,000,000)
on the Closing Date (“Term Loan”).

(b) Scheduled Repayments; Mandatory Prepayments; Optional Prepayments.

(i) There shall become due and payable, and Borrowers shall repay the Term Loan
through, scheduled payments beginning on June 30, 2021 and continuing on the
last Business Day of each month thereafter, in monthly principal payments of
$344,827. Notwithstanding the foregoing, the outstanding principal amount of the
Term Loan shall become immediately due and payable in full on the Termination
Date.

(ii) Subject to the provisions of the MidCap Intercreditor Agreement, there
shall become due and payable and Borrowers shall prepay the Term Loan in the
following amounts and at the following times:

(A) Unless Lender shall otherwise consent in writing, on the date on which any
Credit Party (or Lender as loss payee or assignee) receives any casualty
proceeds in excess of $50,000 with respect to assets upon which Lender
maintained a Lien, an amount equal to one hundred percent (100%) of such
proceeds (net of out-of-pocket expenses and repayment of secured debt permitted
under clause (c) of the definition of Permitted Debt and encumbering the
property that suffered such casualty), or such lesser portion of such proceeds
as Lender shall elect to apply to the Obligations;

(B) an amount equal to any interest that is deemed to be in excess of the
Maximum Lawful Rate (as defined below) and is required to be applied to the
reduction of the principal balance of the Term Loan by Lender as provided for in
Section 2.5;

(C) unless Lender shall otherwise consent in writing, upon receipt by any Credit
Party of the proceeds of any Asset Disposition (other than Permitted Asset
Dispositions), an amount equal to one hundred percent (100%) of the net cash
proceeds of such Asset Disposition (net of out-of-pocket expenses and repayment
of secured debt permitted under clause (c) of the definition of Permitted Debt
and encumbering such asset), or such lesser portion as Lender shall elect to
apply to the Obligations; and

(D) unless Lender shall otherwise consent in writing, upon receipt by any Credit
Party of any extraordinary receipts or the proceeds from the incurrence of Debt
(other than Permitted Debt) or issuance and sale of any Debt or equity
securities, an amount equal to one hundred percent (100%) of such extraordinary
receipts, or such lesser portion as Lender shall elect to apply to the
Obligations.

Notwithstanding the foregoing and so long as no Event of Default or Default then
exists: (1) any such casualty proceeds in excess of $50,000, but not to exceed
$250,000 (other than with respect to Inventory and any real property, unless
Lender shall otherwise elect) may be used by Borrowers within one hundred eighty
(180) days from the receipt of such proceeds to replace or repair any assets in
respect of which such proceeds were paid so long as (x) prior to the receipt of
such proceeds, Borrowers have delivered to Lender a reinvestment plan detailing
such replacement or repair acceptable to Lender in its reasonable discretion and
(y) such proceeds are deposited into an account with Lender promptly upon
receipt by such Borrower; and (2) proceeds

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of personal property asset dispositions (other than Permitted Asset
Dispositions) may be used by Borrowers within one hundred eighty (180) days from
the receipt of such proceeds to purchase new or replacement assets of comparable
value, provided, however, that such proceeds are deposited into an account with
Lender promptly upon receipt by such Borrower. All sums held by Lender pending
reinvestment as described in subsections (1) and (2) above shall be deemed
additional collateral for the Obligations and such sums may be commingled with
the general funds of Lender.

(iii) Borrowers may from time to time, with at least two (2) Business Days prior
delivery to Lender of an appropriately completed Payment Notification, prepay
the Term Loan in whole or in part; provided, however, that each such prepayment
shall be in an amount equal to $100,000 or a higher integral multiple of $25,000
and shall be accompanied by any prepayment fees required hereunder.

(c) All Prepayments. Except as this Agreement may specifically provide
otherwise, all prepayments of the Term Loan shall be applied by Lender to the
Obligations in inverse order of maturity. The monthly payments required under
Schedule 2.1 shall continue in the same amount (for so long as the Term Loan
and/or (if applicable) any advance thereunder shall remain outstanding)
notwithstanding any partial prepayment, whether mandatory or optional, of the
Term Loan.

(d) LIBOR Rate.

(i) Except as provided in subsection (ii) below, the Term Loan shall accrue
interest at the LIBOR Rate plus the Applicable Margin; provided, however, that
in no event shall interest accrue at a rate lower than 10% per annum or greater
than 13% per annum.

(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 Lender, make it unlawful or impractical for Lender to maintain the
Term Loan bearing interest based upon the LIBOR Rate or to continue such
maintaining, or to determine or charge interest rates at the LIBOR Rate, Lender
shall give notice of such changed circumstances to Borrowers, interest shall
accrue interest at the Base Rate plus the Applicable Margin.

(iii) Anything to the contrary contained herein notwithstanding, Lender is not
required actually to acquire eurodollar deposits to fund or otherwise match fund
any Obligation as to which interest accrues based on the LIBOR Rate.

(e) Warrants. The Borrowers and the Lender hereby acknowledge and agree that,
for United States income tax purposes, for an aggregate purchase price of
$35,000,000, (i) the Lender shall make the Term Loan to the Borrowers and (ii)
the Borrowers shall sell to, and the Lender (including any designee of Lender)
shall purchase from the Borrowers, the Warrants. Furthermore, the Borrowers and
the Lender hereby acknowledge and agree that (i) the issue price (within the
meaning of Section 1273(b) of the Internal Revenue Code) of the Term Loan is
determined pursuant to Section 1272-1275 of the Code and the Treasury
Regulations thereunder and (ii) for United States federal income tax purposes,
the issue price of the Warrants within the meaning of Section 1273(b) of the
Internal Revenue Code, which issue price was determined pursuant to Section
1.1273-2(h)(1) of the Treasury Regulations, is equal to $2.00. The parties
hereto agree to report all income tax matters with respect to the Warrants
consistent with the provisions of this Section 2.1(e) unless otherwise required
due to a change in applicable Law.

Section 2.2 Interest, Interest Calculations and Certain Fees.

(a) Interest. From and following the Closing Date, except as expressly set forth
in this Agreement, the Term Loan and the other Obligations shall bear interest
at the sum of the LIBOR Rate plus the Applicable Margin. Interest on the Term
Loan shall be paid in arrears on the last Business Day of each month and on the
maturity of such Term Loan, whether by acceleration or otherwise. Interest on
all other Obligations shall be payable upon demand. For purposes of calculating
interest, all funds transferred to the Payment Account for application to any
Term Loan shall be subject to a six (6) Business Day clearance period and all
interest accruing on such funds during such clearance period shall accrue for
the benefit of Lender.

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(b) Audit Fees. Borrowers shall pay to Lender all reasonable fees and expenses
in connection with audits and inspections of Borrowers’ books and records,
audits, valuations or appraisals of the Collateral, audits of Borrowers’
compliance with applicable Laws and such other matters as Lender shall deem
appropriate, which shall be due and payable on the last Business Day of the
month following the date of issuance by Lender of a written request for payment
thereof to Borrowers.

(c) Wire Fees. Borrowers shall pay to Lender on written demand, fees incurred
for incoming and outgoing wires made for the account of Borrowers, which such
fees will be in an amount equal to the expenses incurred by Lender in making any
such wire.

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

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

Section 2.3 Term Note. The Term Loan made by Lender shall be evidenced by a
promissory note in the form attached hereto as Exhibit A executed by Borrowers
on a joint and several basis (“Term Note”) in an original principal amount equal
to Thirty Five Million Dollars ($35,000,000).

Section 2.4 General Provisions Regarding Payment; Loan Account.

(a) All payments to be made by each Borrower under any Financing Document,
including payments of principal and interest made hereunder and pursuant to any
other Financing Document, and all fees, expenses, indemnities and
reimbursements, shall be made without set-off, recoupment or counterclaim. If
any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension (it being understood and agreed that,
solely for purposes of calculating financial covenants and computations
contained herein and determining compliance therewith, if payment is made, in
full, on any such extended due date, such payment shall be deemed to have been
paid on the original due date without giving effect to any extension thereto).
Any payments received in the Payment Account before 12:00 Noon (Eastern time) on
any date shall be deemed received by Lender on such date, and any payments
received in the Payment Account at or after 12:00 Noon (Eastern time) on any
date shall be deemed received by Lender on the next succeeding Business Day. In
the absence of receipt by Lender of a written designation by Borrower
Representative, at least two (2) Business Days prior to such prepayment, that
such prepayment is to be applied to a Term Loan, Borrowers hereby authorize and
direct Lender, subject to the provisions of Section 10.5 hereof, to apply such
prepayment against Term Loan in accordance with the provisions of Section
2.1(c); provided, however, that if Lender at any time determines that payments
received by Lender were in respect of a mandatory prepayment event, Lender shall
apply such payments in accordance with the provisions of Section 2.1(b) and
shall be fully authorized by Borrowers and Lender to make corresponding Loan
Account reversals in respect thereof.

(b) Lender shall maintain a loan account (the “Loan Account”) on its books to
record the Term Loan and other extensions of credit made by Lender hereunder or
under any other Financing Document, and all payments thereon made by each
Borrower. All entries in the Loan Account shall be made in accordance with
Lender’s customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded in Lender’s books and records at any
time shall be conclusive and binding evidence of the amounts due and owing to
Lender by each Borrower absent manifest error; provided, however, that any
failure to so record or any error in so recording shall not limit or otherwise
affect any Borrower’s duty to pay all amounts owing hereunder or under any other
Financing Document. Lender shall endeavor to provide Borrowers with a monthly
statement regarding the Loan Account (but Lender shall not have any liability if
Lender shall fail to provide any such statement). Unless any Borrower notifies
Lender of any objection to any such statement (specifically describing the basis
for such objection) within ninety (90) days after the date of receipt thereof,
it shall be deemed final, binding and conclusive upon Borrowers in all respects
as to all matters reflected therein.

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Section 2.5 Maximum Interest. In no event shall the interest charged with
respect to the Term Loan or any other Obligations of any Borrower under any
Financing Document exceed the maximum amount permitted under the laws of the
State of New York or of any other applicable jurisdiction. Notwithstanding
anything to the contrary herein or elsewhere, if at any time the rate of
interest payable hereunder or under the Term Note or other Financing Document
(the “Stated Rate”) would exceed the highest rate of interest permitted under
any applicable law to be charged (the “Maximum Lawful Rate”), then for so long
as the Maximum Lawful Rate would be so exceeded, the rate of interest payable
shall be equal to the Maximum Lawful Rate; provided, however, that if at any
time thereafter the Stated Rate is less than the Maximum Lawful Rate, each
Borrower shall, to the extent permitted by law, continue to pay interest at the
Maximum Lawful Rate until such time as the total interest received is equal to
the total interest which would have been received had the Stated Rate been (but
for the operation of this provision) the interest rate payable. Thereafter, the
interest rate payable shall be the Stated Rate unless and until the Stated Rate
again would exceed the Maximum Lawful Rate, in which event this provision shall
again apply. In no event shall the total interest received by Lender exceed the
amount which it could lawfully have received had the interest been calculated
for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the
prior sentence, Lender has received interest hereunder in excess of the Maximum
Lawful Rate, such excess amount shall be applied to the reduction of the
principal balance of the Term Loan or to other amounts (other than interest)
payable hereunder, and if no such principal or other amounts are then
outstanding, such excess or part thereof remaining shall be paid to Borrowers.
In computing interest payable with reference to the Maximum Lawful Rate
applicable to Lender, such interest shall be calculated at a daily rate equal to
the Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made.

Section 2.6 Appointment of Borrower Representative. Each Borrower hereby
designates Borrower Representative as its representative and agent on its behalf
for the purposes of issuing Notices of Borrowing, and giving instructions with
respect to the disbursement of the proceeds of the Term Loan, giving and
receiving all other notices and consents hereunder or under any of the other
Financing Documents and taking all other actions (including in respect of
compliance with covenants) on behalf of any Borrower or Borrowers under the
Financing Documents. Borrower Representative hereby accepts such appointment.
Notwithstanding anything to the contrary contained in this Agreement, no
Borrower other than Borrower Representative shall be entitled to take any of the
foregoing actions. The proceeds of each Loan made hereunder shall be advanced to
or at the direction of Borrower Representative and if not used by Borrower
Representative in its business (for the purposes provided in this Agreement)
shall be deemed to be immediately advanced by Borrower Representative to the
appropriate other Borrower hereunder as an intercompany loan (collectively,
“Intercompany Loans”). All collections of each Borrower in respect of proceeds
of Collateral of such Borrower received by Lender and applied to the Obligations
shall also be deemed to be repayments of the Intercompany Loans owing by such
Borrower to Borrower Representative. Borrowers shall maintain accurate books and
records with respect to all Intercompany Loans and all repayments thereof.
Lender may regard any notice or other communication pursuant to any Financing
Document from Borrower Representative as a notice or communication from all
Borrowers, and may give any notice or communication required or permitted to be
given to any Borrower or all Borrowers hereunder to Borrower Representative on
behalf of such Borrower or all Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made
on its behalf by Borrower Representative shall be deemed for all purposes to
have been made by such Borrower and shall be binding upon and enforceable
against such Borrower to the same extent as if the same had been made directly
by such Borrower.

Section 2.7 Joint and Several Liability; Rights of Contribution; Subordination
and Subrogation.

(a) Borrowers are defined collectively to include all Persons named as one of
the Borrowers herein; provided, however, that any references herein to “any
Borrower”, “each Borrower” or similar references, shall be construed as a
reference to each individual Person named as one of the Borrowers herein. Each
Person so named shall be jointly and severally liable for all of the obligations
of Borrowers under this Agreement. Each Borrower, individually, expressly
understands, agrees and acknowledges, that the credit facilities would not be
made available on the terms herein in the absence of the collective credit of
all of the Persons named as the Borrowers herein, the joint and several
liability of all such Persons, and the cross-collateralization of the collateral
of all such Persons. Accordingly, each Borrower individually acknowledges that
the benefit to each of the Persons named as one of the Borrowers as a whole
constitutes reasonably equivalent value, regardless of the amount of the credit
facilities actually borrowed by, advanced to, or the amount of collateral
provided by, any individual Borrower. In addition, each entity named as one of
the Borrowers herein hereby acknowledges and agrees that all of the
representations,

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warranties, covenants, obligations, conditions, agreements and other terms
contained in this Agreement shall be applicable to and shall be binding upon and
measured and enforceable individually against each Person named as one of the
Borrowers herein as well as all such Persons when taken together. By way of
illustration, but without limiting the generality of the foregoing, the terms of
Section 10.1 of this Agreement are to be applied to each individual Person named
as one of the Borrowers herein (as well as to all such Persons taken as a
whole), such that the occurrence of any of the events described in Section 10.1
of this Agreement as to any Person named as one of the Borrowers herein shall
constitute an Event of Default even if such event has not occurred as to any
other Persons named as the Borrowers or as to all such Persons taken as a whole.

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

(c) Lender is hereby authorized, without notice or demand (except as otherwise
specifically required under this Agreement and subject in all respects to the
MidCap Intercreditor Agreement) and without affecting the liability of any
Borrower hereunder, at any time and from time to time, to (i) renew, extend or
otherwise increase the time for payment of the Obligations; (ii) with the
written agreement of any Borrower, change the terms relating to the Obligations
or otherwise modify, amend or change the terms of the Term Note or other
agreement, document or instrument now or hereafter executed by either Borrower
and delivered to Lender for Lender; (iii) accept partial payments of the
Obligations; (iv) take and hold any Collateral for the payment of the
Obligations or for the payment of any guaranties of the Obligations and
exchange, enforce, waive and release any such Collateral; (v) apply any such
Collateral and direct the order or manner of sale thereof as Lender, in its sole
discretion, may determine; and (vi) settle, release, compromise, collect or
otherwise liquidate the Obligations and any Collateral therefor in any manner,
all surety defenses being hereby waived by each Borrower. Without limitations of
the foregoing, with respect to the Obligations, each Borrower hereby makes and
adopts each of the agreements and waivers set forth in each Guarantee, the same
being incorporated hereby by reference. Except as specifically provided in this
Agreement or any of the other Financing Documents, Lender shall have the
exclusive right to determine the time and manner of application of any payments
or credits, whether received from any Borrower or any other source, and such
determination shall be binding on all Borrowers. All such payments and credits
may be applied, reversed and reapplied, in whole or in part, to any of the
Obligations that Lender shall determine, in its sole discretion, without
affecting the validity or enforceability of the Obligations of the other
Borrower.

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

(e) The Borrowers hereby agree, as between themselves, that to the extent that
Lender shall have received from any Borrower any Recovery Amount (as defined
below), then the paying Borrower shall have a right of contribution against each
other Borrower in an amount equal to such other Borrower’s contributive share of
such

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Recovery Amount; provided, however, that in the event any Borrower suffers a
Deficiency Amount (as defined below), then the Borrower suffering the Deficiency
Amount shall be entitled to seek and receive contribution from and against the
other Borrowers in an amount equal to the Deficiency Amount; and provided,
further, that in no event shall the aggregate amounts so reimbursed by reason of
the contribution of any Borrower equal or exceed an amount that would, if paid,
constitute or result in Fraudulent Conveyance. Until all Obligations have been
paid and satisfied in full, no payment made by or for the account of a Borrower
including, without limitation, (i) a payment made by such Borrower on behalf of
the liabilities of any other Borrower, or (ii) a payment made by any other
Guarantor under any Guarantee, shall entitle such Borrower, by subrogation or
otherwise, to any payment from such other Borrower or from or out of such other
Borrower’s property. The right of each Borrower to receive any contribution
under this Section 2.7(e) or by subrogation or otherwise from any other Borrower
shall be subordinate in right of payment to the Obligations and such Borrower
shall not exercise any right or remedy against such other Borrower or any
property of such other Borrower by reason of any performance of such Borrower of
its joint and several obligations hereunder, until the Obligations have been
indefeasibly paid and satisfied in full, and no Borrower shall exercise any
right or remedy with respect to this Section 2.7(e) until the Obligations have
been indefeasibly paid and satisfied in full. As used in this Section 2.7(e),
the term “Recovery Amount” means the amount of proceeds received by or credited
to Lender from the exercise of any remedy of Lender under this Agreement or the
other Financing Documents, including, without limitation, the sale of any
Collateral. As used in this Section 2.7(e), the term “Deficiency Amount” means
any amount that is less than the entire amount a Borrower is entitled to receive
by way of contribution or subrogation from, but that has not been paid by, the
other Borrowers in respect of any Recovery Amount attributable to the Borrower
entitled to contribution, until the Deficiency Amount has been reduced to zero
through contributions and reimbursements made under the terms of this Section
2.7(e) or otherwise.

Section 2.8 Termination; Restriction on Termination.

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

(b) Termination by Borrowers. Upon at least thirty (30) days’ prior written
notice to Lender, Borrowers may, at their option, terminate this Agreement. Any
notice of termination given by Borrowers shall be irrevocable unless Lender
otherwise agrees in writing and Lender shall not have any obligation to make the
Term Loan on or after the termination date stated in such notice. Borrowers may
elect to terminate this Agreement in its entirety only. No section of this
Agreement or type of Loan available hereunder may be terminated singly.

(c) Effectiveness of Termination. All of the Obligations shall be immediately
due and payable upon the Termination Date. All undertakings, agreements,
covenants, warranties and representations of Borrowers contained in the
Financing Documents shall survive any such termination and Lender shall retain
its Liens in the Collateral and Lender shall retain all of its rights and
remedies under the Financing Documents notwithstanding such termination until
all Obligations have been discharged or paid, in full, in immediately available
funds. Notwithstanding the foregoing or the payment in full of the Obligations,
Lender shall not be required to terminate its Liens in the Collateral unless,
with respect to any loss or damage Lender may incur as a result of dishonored
checks or other items of payment received by Lender from Borrower and applied to
the Obligations, Lender shall, at its option, (i) have received a written
agreement satisfactory to Lender, executed by Borrowers and by any Person whose
loans or other advances to Borrowers are used in whole or in part to satisfy the
Obligations, indemnifying Lender from any such loss or damage or (ii) have
retained cash Collateral or other Collateral for such period of time as Lender,
in its discretion, may deem necessary to protect Lender from any such loss or
damage.

Section 2.9 Closing Fee. The Borrowers shall pay to the Lender for its own
account (and not on behalf of any loan participant) a closing fee in the amount
of $380,000 which fee shall be fully earned when paid and shall not be
refundable for any reason whatsoever.

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ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into this Agreement and to make the Term Loan and
other credit accommodations contemplated hereby, each Credit Party hereby
represents and warrants to Lender that:

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

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

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

Section 3.4 Capitalization. The authorized equity securities of each of the
Credit Parties as of the Closing Date is as set forth on Schedule 3.4. All
issued and outstanding equity securities of each of the Credit Parties are duly
authorized and validly issued, fully paid, nonassessable, free and clear of all
Liens other than (a) those in favor of Lender for its benefit and (b) Liens
permitted pursuant to clauses (l) and (m) of the definition of Permitted Liens,
and such equity securities were issued in compliance with all applicable Laws.
The identity of the holders of the equity securities of each of the Credit
Parties (other than Holdings) and the percentage of their fully-diluted
ownership of the equity securities of each of the Credit Parties (other than
Holdings) as of the Closing Date is set forth on Schedule 3.4. No shares of the
capital stock or other equity securities of any Credit Party, other than those
described above, are issued and outstanding as of the Closing Date.

Section 3.5 Financial Information. All information delivered to Lender and
pertaining to the financial condition of any Credit Party fairly presents the
financial position of such Credit Party as of such date in conformity with GAAP
(and as to unaudited financial statements, subject to normal year-end
adjustments and the absence of footnote disclosures). Since the Closing Date,
there has been no material adverse change in the business, operations,
properties, prospects or condition (financial or otherwise) of any Credit Party.

Section 3.6 Litigation. Except as set forth on Schedule 3.6 as of the Closing
Date, and except as hereafter disclosed to Lender in writing (including
disclosures pursuant to Section 4.9 or otherwise, it being understood that any
such disclosures shall not act as a consent or waiver of any Default or Event of
Default arising under Section 4.9, Section 10.1(h) or any other provision of
this Agreement), there is no Litigation pending against, or to such Credit
Party’s knowledge threatened against or affecting, any Credit Party or, to such
Credit Party’s knowledge, any party to any Operative Document other than a
Credit Party. Other than as disclosed on Schedule 3.6,

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there is no Litigation pending in which an adverse decision could reasonably be
expected to have a Material Adverse Effect or which in any manner draws into
question the validity of any of the Operative Documents.

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

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

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

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

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

Section 3.12 Compliance With Laws; Anti-Terrorism Laws.

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

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

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

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to a Permitted Contest, all material state and local sales and use Taxes
required to be paid by each Credit Party have been paid. All federal and state
returns have been filed by each Credit Party for all periods for which returns
were due with respect to employee income tax withholding, social security and
unemployment taxes, and, except to the extent subject to a Permitted Contest,
the amounts shown thereon to be due and payable have been paid in full or
adequate provisions therefor have been made.

Section 3.14 Compliance with ERISA.

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

(b) Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, each Credit Party is in compliance
with the applicable provisions of ERISA and the provision of the Code relating
to ERISA Plans and the regulations and published interpretations therein. During
the thirty-six (36) month period prior to the Closing Date or the making of the
Term Loan, (i) no steps have been taken to terminate any Pension Plan, and (ii)
no contribution failure has occurred with respect to any Pension Plan sufficient
to give rise to a Lien under Section 302(f) of ERISA. No condition exists or
event or transaction has occurred with respect to any Pension Plan which could
result in the incurrence by any Credit Party of any material liability, fine or
penalty. No Credit Party has incurred liability to the PBGC (other than for
current premiums) with respect to any employee Pension Plan. All contributions
(if any) have been made on a timely basis to any Multiemployer Plan that are
required to be made by any Credit Party or any other member of the Controlled
Group under the terms of the plan or of any collective bargaining agreement or
by applicable Law; no Credit Party nor any member of the Controlled Group has
withdrawn or partially withdrawn from any Multiemployer Plan, incurred any
withdrawal liability with respect to any such plan or received notice of any
claim or demand for withdrawal liability or partial withdrawal liability from
any such plan, and no condition has occurred which, if continued, could result
in a withdrawal or partial withdrawal from any such plan, and no Credit Party
nor any member of the Controlled Group has received any notice that any
Multiemployer Plan is in reorganization, that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of any excise
tax, that any such plan is or has been funded at a rate less than that required
under Section 412 of the Code, that any such plan is or may be terminated, or
that any such plan is or may become insolvent.

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

Section 3.16 Related Transactions. All transactions contemplated by the
Operative Documents to be consummated on or prior to the date hereof have been
so consummated (including, without limitation, the disbursement and transfer of
all funds in connection therewith) in all material respects pursuant to the
provisions of the applicable Operative Documents, true and complete copies of
which have been delivered to Lender, and in compliance with all applicable Law,
except for such Laws the noncompliance with which would not reasonably be
expected to have a Material Adverse Effect.

Section 3.17 Material Contracts. Except for the Operative Documents and the
other agreements set forth on Schedule 3.17 (collectively with the Operative
Documents, the “Material Contracts”), as of the Closing Date, no Credit Party is
a party to (a) any “material contract” as such term is defined in Item
601(b)(10) of Regulation S-K promulgated under the Securities Act of 1933, as
amended or (b) any other agreements or instruments, the breach, nonperformance
or cancellation of which, or the failure of which to renew, could reasonably be
expected to have a Material Adverse Effect. The consummation of the transactions
contemplated by the Financing Documents will not give rise to a right of
termination in favor of any party to any Material Contract (other than any
Credit Party).

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

(a) no notice, notification, demand, request for information, citation, summons,
complaint or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending, or to such Credit
Party’s knowledge, threatened by any Governmental Authority or other Person with
respect to any (i) alleged violation by any Credit Party of any Environmental
Law, (ii) alleged failure by any Credit Party to have any Permits required in
connection with the conduct of its business or to comply with the terms and
conditions thereof, (iii) any generation, treatment, storage, recycling,
transportation or disposal of any Hazardous Materials, or (iv) release of
Hazardous Materials; and

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

Section 3.19 Intellectual Property. Each Credit Party owns, is licensed to use
or otherwise has the right to use, all Intellectual Property that is material to
the condition (financial or other), business or operations of such Credit Party.
All Intellectual Property existing as of the Closing Date which is issued,
registered or pending with any United States or foreign Governmental Authority
(including, without limitation, any and all applications for the registration of
any Intellectual Property with any such United States or foreign Governmental
Authority) and all licenses under which any Borrower is the licensee of any such
registered Intellectual Property (or any such application for the registration
of Intellectual Property) owned by another Person are set forth on Schedule
3.19. Such Schedule 3.19 indicates in each case whether such registered
Intellectual Property (or application therefore) is owned or licensed by such
Credit Party, and in the case of any such licensed registered Intellectual
Property (or application therefore), lists the name of such licensor and the
name and date of the agreement pursuant to which such item of Intellectual
Property is licensed, and copies of all such agreements have been provided to
Lender. Except as indicated on Schedule 3.19, the applicable Credit Party is the
sole and exclusive owner of the entire and unencumbered right, title and
interest in and to each such registered Intellectual Property (or application
therefore) purported to be owned by such Credit Party, free and clear of any
Liens (except for Liens granted pursuant to the MidCap Facility Agreement)
and/or licenses in favor of third parties or agreements or covenants not such
sue third parties for infringement. All registered Intellectual Property of each
Credit Party is duly and properly registered, filed or issued in the appropriate
office and jurisdictions for such registrations, filings or issuances, except
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect. No Credit Party is party to, nor bound by, any material license
or other agreement with respect to which any Credit Party is the licensee that
prohibits or otherwise restricts such Credit Party from granting a security
interest in such Credit Party’s interest in such license or agreement or other
property. To such Credit Party’s knowledge, each Credit Party conducts its
business without infringement or claim of infringement of any Intellectual
Property rights of others. There is no infringement or claim of infringement by
others of any Intellectual Property rights of any Credit Party including
infringement and claims disclosed on Schedule 3.19, which infringement or claim
of infringement could reasonably be expected to have a Material Adverse Effect.

Section 3.20 Solvency. After giving effect to the Loan advance and the
liabilities and obligations of each Credit Party under the Operative Documents,
each Borrower and each additional Credit Party is Solvent.

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

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fair and reasonable in light of current business conditions; provided, however,
that the Credit Parties can give no assurance that such projections will be
attained.

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

Section 3.23 Subsidiaries. The Credit Parties do not own any stock, partnership
interests, limited liability company interests or other equity securities except
for (i) the Subsidiaries or (ii) Permitted Investments.

Section 3.24 Limited Offering of the Warrants. The offer and sale of the
Warrants are not required to be registered pursuant to the provisions of Section
5 of the Securities Act or the registration or qualification provisions of the
blue sky laws of any state. None of the Borrowers nor any agent on the
Borrowers’ behalf, has solicited or will solicit any offers to sell all or any
part of the Warrants to any Person so as to bring the sale of the Warrants by
the Borrowers within the registration provisions of the Securities Act or any
state securities laws. All prior offerings and sales of securities of the
Borrowers were in compliance with all applicable federal and state securities
laws.

Section 3.25 Registration Right; Issuance Taxes.

(a) Except as described in the Warrants, the Registration Rights Agreement or
any registration rights agreement filed by the Company with the SEC, Holdings is
under no requirement to register under the Securities Act, or the Trust
Indenture Act of 1939, as amended, any of its presently outstanding securities
or any of its securities that may subsequently be issued.

(b) All taxes imposed on any Borrower in connection with the issuance, sale and
delivery of the Warrants have been or will be fully paid, and all laws imposing
such taxes have been or will be fully satisfied by the Borrowers.

ARTICLE 4 - AFFIRMATIVE COVENANTS

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

Section 4.1 Financial Statements and Other Reports. Holdings will deliver to
Lender within five (5) days of delivery or filing thereof, copies of all reports
and other filings made by Borrowers with any stock exchange on which any
securities of any Borrower are traded and/or the SEC, unless such reports or
other filings are otherwise available on the public website of the SEC
(www.SEC.gov). Each Borrower will, within thirty (30) days after the last day of
each Fiscal Quarter, deliver to Lender a duly completed Compliance Certificate
signed by a Responsible Officer setting forth calculations showing compliance
with the financial covenants set forth in this Agreement. Promptly upon their
becoming available, Borrowers shall deliver to Lender complete copies of all
Material Contracts that Borrowers expect to file on the public website of the
SEC in the form to be available on the public website of the SEC.

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

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properties or assets are bound, except for such breaches or defaults which could
not reasonably be expected to have a Material Adverse Effect.

Section 4.3 Maintenance of Existence. Each Credit Party will preserve, renew and
keep in full force and effect and in good standing, and will cause each
Subsidiary that owns assets, the aggregate value of which exceeds $25,000 at any
time to preserve, renew and keep in full force and effect and in good standing
(or the local equivalent), their respective existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business.

Section 4.4 Maintenance of Property; Insurance.

(a) Each Borrower will keep, and will cause each Subsidiary to keep, all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted. If all or any part of the Collateral
useful or necessary in its business becomes damaged or destroyed, each Borrower
will, and will cause each Subsidiary to, promptly and completely repair and/or
restore the affected Collateral in a good and workmanlike manner, regardless of
whether Lender agrees to disburse insurance proceeds or other sums to pay costs
of the work of repair or reconstruction.

(b) Each Borrower will maintain (i) casualty insurance on all real and personal
property on an all risks basis (including the perils of flood, windstorm and
quake), covering the repair and replacement cost of all such property and
coverage, business interruption and rent loss coverages with extended period of
indemnity (for the period required by Lender from time to time) and indemnity
for extra expense, in each case without application of coinsurance and with
agreed amount endorsements, (ii) general and professional liability insurance
(including products/completed operations liability coverage), and (iii) such
other insurance coverage in such amounts and with respect to such risks as
Lender may request from time to time, pursuant to the Insurance Requirements
attached hereto as Schedule 4.4; provided, however, that, in no event shall such
insurance be in amounts or with coverage less than, or with carriers with
qualifications inferior to, any of the insurance or carriers in existence as of
the Closing Date (or required to be in existence after the Closing Date under a
Financing Document). All such insurance shall be provided by insurers having an
A.M. Best policyholders rating reasonably acceptable to Lender.

(c) On or prior to the Closing Date, and at all times thereafter, each Borrower
will cause Lender to be named as an additional insured, assignee and lender loss
payee (which shall include, as applicable, identification as mortgagee), as
applicable, on each insurance policy required to be maintained pursuant to this
Section 4.4 pursuant to endorsements in form and substance acceptable to Lender.
Borrowers shall deliver to Lender (i) on an annual basis, and upon the request
of Lender from time to time full information as to the insurance carried, (ii)
within five (5) days of receipt of notice from any insurer, a copy of any notice
of cancellation, nonrenewal or material change in coverage from that existing on
the date of this Agreement, (iii) forthwith, notice of any cancellation or
nonrenewal of coverage by any Borrower, and (iv) at least 60 days prior to
expiration of any policy of insurance, evidence of renewal of such insurance
upon the terms and conditions herein required.

(d) In the event any Borrower fails to provide Lender with evidence of the
insurance coverage required by this Agreement, Lender may purchase insurance at
Borrowers’ expense to protect Lender’s interests in the Collateral. This
insurance may, but need not, protect such Borrower’s interests. The coverage
purchased by Lender may not pay any claim made by such Borrower or any claim
that is made against such Borrower in connection with the Collateral. Such
Borrower may later cancel any insurance purchased by Lender, but only after
providing Lender with evidence that such Borrower has obtained insurance as
required by this Agreement. If Lender purchases insurance for the Collateral,
Borrowers will be responsible for the costs of that insurance to the fullest
extent provided by law, including interest and other charges imposed by Lender
in connection with the placement of the insurance, until the effective date of
the cancellation or expiration of the insurance. The costs of the insurance may
be added to the Obligations. The costs of the insurance may be more than the
cost of insurance such Borrower is able to obtain on its own.

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

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Section 4.6 Inspection of Property; Books and Records. Each Borrower will keep,
and will cause each Subsidiary to keep, proper books of record substantially in
accordance with GAAP in which full, true and correct entries shall be made of
all dealings and transactions in relation to its business and activities.

Section 4.7 Use of Proceeds. Borrowers shall use the proceeds of the Term Loan
solely for (a) transaction fees incurred in connection with the Financing
Documents, (b) refinancing of Debt owing to Globus Medical, Inc. under the terms
of its credit agreement and (c) for general business purposes and working
capital needs of Borrowers and their Subsidiaries as permitted hereunder. No
portion of the proceeds of the Term Loan will be used for family, personal,
agricultural or household use or the purchase of margin stock.

Section 4.8 Estoppel Certificates. After written request by Lender, Borrowers,
within thirty (30) days and at their expense, will furnish Lender with a
statement, duly acknowledged and certified, setting forth (a) the amount of the
original principal amount of the Term Note, and the unpaid principal amount of
the Term Note, (b) the rate of interest of the Term Note, (c) the date payments
of interest and/or principal were last paid, (d) any offsets or defenses to the
payment of the Obligations, and if any are alleged, the nature thereof, (e) that
the Term Note and this Agreement have not been modified or if modified, giving
particulars of such modification, and (f) that there has occurred and is then
continuing no Default or if such Default exists, the nature thereof, the period
of time it has existed, and the action being taken to remedy such Default. After
written request by Lender, Borrowers, within fifteen (15) days and at their
expense, will furnish Lender with a certificate, signed by a Responsible Officer
of Borrowers, updating all of the representations and warranties contained in
this Agreement and the other Financing Documents and certifying that all of the
representations and warranties contained in this Agreement and the other
Financing Documents, as updated pursuant to such certificate, are true, accurate
and complete as of the date of such certificate.

Section 4.9 Notices of Litigation and Defaults. In addition to, but not in
duplication of the information required to be delivered pursuant to Section 4.1,
Borrowers will give prompt written notice to Lender (a) of any litigation or
governmental proceedings pending or threatened (in writing) against Borrowers or
other Credit Party which would reasonably be expected to have a Material Adverse
Effect with respect to Borrowers or any other Credit Party or which in any
manner calls into question the validity or enforceability of any Financing
Document, (b) upon any Borrower becoming aware of the existence of any Default
or Event of Default, (c) if any Credit Party is in breach or default under or
with respect to any Material Contract, or if any Credit Party is in breach or
default under or with respect to any other contract, agreement, lease or other
instrument to which it is a party or by which its property is bound or affected,
which breach or default could reasonably be expected to have a Material Adverse
Effect, (d) of any strikes or other labor disputes pending or, to any Borrower’s
knowledge, threatened against any Credit Party, (e) if there is any claim by any
other Person that any Credit Party in the conduct of its business is infringing
on the Intellectual Property Rights of others, which claim could reasonably be
expected to have a Material Adverse Effect, and (f) of all returns, recoveries,
disputes and claims related to the Collateral could reasonably be expected to
have a Material Adverse Effect.

Section 4.10 Hazardous Materials; Remediation.

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

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

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Section 4.11 Further Assurances.

(a) Each Borrower will, and will cause each Subsidiary to, at its own cost and
expense, promptly and duly take, execute, acknowledge and deliver all such
further acts, documents and assurances as may from time to time be necessary or
as Lender may from time to time reasonably request in order to carry out the
intent and purposes of the Financing Documents and the transactions contemplated
thereby, including all such actions to (i) establish, create, preserve, protect
and perfect a first priority Lien (subject only to Permitted Liens) in favor of
Lender on the Collateral (including Collateral acquired after the date hereof),
and (ii) unless Lender shall agree otherwise in writing, cause all Subsidiaries
of Borrowers to be jointly and severally obligated with the other Borrowers
under all covenants and obligations under this Agreement, including the
obligation to repay the Obligations. Without limiting the generality of the
foregoing, Borrowers shall, if requested by Lender, (x) within 60 days (or such
longer period as agreed by Lender) of an acquisition by a Credit Party of any
registered Intellectual Property or application for the registration of
Intellectual Property, deliver to Lender a duly completed and executed
supplement to the applicable Credit Party’s Patent Security Agreement or
Trademark Security Agreement in the form of the respective Exhibit thereto, and
(y) within 60 days (or such longer period as agreed by Lender) of an acquisition
by any Credit Party of any rights under a license as a licensee with respect to
any registered Intellectual Property or application for the registration of any
Intellectual Property owned by another Person, execute any documents requested
by Lender to establish, create, preserve, protect and perfect a first priority
lien in favor of Lender, to the extent legally possible, in such Borrower’s
rights under such license and shall use their commercially reasonable best
efforts to obtain the written consent of the licensor which such license to the
granting in favor of Lender of a Lien on such Borrower’s rights as licensee
under such license. Notwithstanding anything to the contrary herein, all
documentation delivered to the Lender pursuant to this Section 4.11(a)(x) or
4.11(a)(y), including but not limited to any Patent Security Agreement or
Trademark Security Agreement supplements, shall be held in accordance with
Lenders’ customary procedures for handling confidential information and shall
not be disclosed to any officer, director, employee, agent, consultant or
contractor of Lender that is involved in any capacity in the research and
development, sales, marketing, clinical, manufacturing, intellectual property or
medical education divisions of Lender.

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

(c) Upon the formation or acquisition of a new Subsidiary, or at the request of
the Lender, Borrowers shall (i) pledge, have pledged or cause or have caused to
be pledged to Lender pursuant to a pledge agreement in form and substance
satisfactory to Lender, all of the outstanding shares of equity interests or
other equity interests of such new Subsidiary owned directly or indirectly by
any Borrower, along with undated stock or equivalent powers for such
certificates, executed in blank; (ii) unless Lender shall agree otherwise in
writing, cause such new Subsidiary to take such other actions (including
entering into or joining any Security Documents) as are necessary or advisable
in the reasonable opinion of Lender in order to grant Lender a first priority
Lien on all real and personal property of such Subsidiary in existence as of
such date and in all after acquired property, which first priority Liens are
required to be granted pursuant to this Agreement; (iii) unless Lender shall
agree otherwise in writing, cause such new Subsidiary to either (at the election
of Lender) become a Borrower hereunder with joint and several liability for all
obligations of Borrowers hereunder and under the other Financing Documents
pursuant to a joinder agreement or other similar agreement in form and substance
satisfactory to Lender or to become a Guarantor of the obligations of Borrowers
hereunder and under the other Financing Documents pursuant to a guaranty and
suretyship agreement in form and substance satisfactory to Lender; and (iv)
cause such new Subsidiary to deliver certified copies of such Subsidiary’s
certificate or articles of incorporation, together with good standing
certificates, by-laws (or other operating agreement or governing documents),
resolutions of the Board of Directors or other governing body, approving and
authorize the execution and delivery of the Security Documents, incumbency
certificates and to execute and/or deliver such other documents and legal
opinions or to take such other actions as may be requested by Lender, in each
case, in form and substance satisfactory to Lender.

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(d) Upon the request of Lender, Borrowers shall use commercially reasonable
efforts to obtain a landlord’s agreement or mortgagee agreement, as applicable,
from the lessor of each leased property or mortgagee of owned property with
respect to any business location where any material portion of the Collateral,
or the records relating to such Collateral and/or software and equipment
relating to such records or Collateral, is stored or located, which agreement or
letter shall be reasonably satisfactory in form and substance to Lender.
Borrowers shall timely and fully pay and perform its obligations under all
leases and other agreements with respect to each leased location where any
Collateral, or any records related thereto, is or may be located.

Section 4.12 Power of Attorney. Each of the officers of Lender is hereby
irrevocably made, constituted and appointed the true and lawful attorney for
Borrowers (without requiring any of them to act as such) with full power of
substitution to do the following after the occurrence and during the continuance
of an Event of Default: (a) so long as Lender has provided not less than two (2)
Business Days’ prior written notice to Borrower to perform the same and Borrower
has failed to take such action, execute in the name of Borrowers any schedules,
assignments, instruments, documents, and statements that Borrowers are obligated
to give Lender under this Agreement; (b) take any action Borrowers are required
to take under this Agreement; (c) so long as Lender has provided not less than
two (2) Business Days’ prior written notice to Borrower to perform the same and
Borrower has failed to take such action, do such other and further acts and
deeds in the name of Borrowers that Lender may deem necessary or desirable to
enforce any Account or other Collateral or perfect Lender’s security interest or
Lien in any Collateral; and (d) do such other and further acts and deeds in the
name of Borrowers that Lender may deem necessary or desirable to enforce its
rights with regard to any Collateral. This power of attorney shall be
irrevocable and coupled with an interest.

 

ARTICLE 5 - NEGATIVE COVENANTS

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

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

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

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

Section 5.4 Restrictive Agreementsu No Borrower will, or will permit any
Subsidiary to, directly or indirectly (a) enter into or assume any agreement
prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired (except as provided by the
Financing Documents and the MidCap Facility Agreement), or (b) create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind (except as provided by the Financing
Documents and the MidCap Facility Agreement) on the ability of any Subsidiary
to: (i) pay or make Restricted Distributions to any Borrower or any Subsidiary;
(ii) pay any Debt owed to any Borrower or any Subsidiary; (iii) make loans or
advances to any Borrower or any Subsidiary; or (iv) transfer any of its property
or assets to any Borrower or any Subsidiary.

Section 5.5 Payments and Modifications of Subordinated Debt. No Borrower will,
or will permit any Subsidiary to, directly or indirectly (a) declare, pay, make
or set aside any amount for payment in respect of Subordinated Debt, except for
payments made in full compliance with and expressly permitted under the
Subordination Agreement, (b) amend or otherwise modify the terms of any
Subordinated Debt, except for amendments or modifications made in full
compliance with the Subordination Agreement, (c) declare, pay, make or set aside
any amount for payment in respect of any Debt hereinafter incurred that, by its
terms, or by separate agreement, is subordinated to the Obligations, except for
payments made in full compliance with and expressly permitted under the
subordination provisions applicable thereto, or (d) amend or otherwise modify
the terms of any such Debt if the effect of such amendment or modification is to
(i) increase the interest rate or fees on, or change the

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manner or timing of payment of, such Debt, (ii) accelerate or shorten the dates
upon which payments of principal or interest are due on, or the principal amount
of, such Debt, (iii) change in a manner adverse to any Credit Party or Lender
any event of default or add or make more restrictive any covenant with respect
to such Debt, (iv) change the prepayment provisions of such Debt or any of the
defined terms related thereto, (v) change the subordination provisions thereof
(or the subordination terms of any guaranty thereof), or (vi) change or amend
any other term if such change or amendment would materially increase the
obligations of the obligor or confer additional material rights on the holder of
such Debt in a manner adverse to any Borrower, any Subsidiaries or Lender.
Borrowers shall, prior to entering into any such amendment or modification,
deliver to Lender reasonably in advance of the execution thereof, any final or
execution form copy thereof.

Section 5.6 Consolidations, Mergers and Sales of Assets; Change in Control. No
Borrower will, or will permit any Subsidiary to, directly or indirectly (a)
consolidate or merge or amalgamate with or into any Person that is not a Credit
Party, or (b) consummate any Asset Dispositions other than Permitted Asset
Dispositions and other dispositions approved by Lender. No Borrower will suffer
or permit to occur any Change in Control with respect to itself, any Subsidiary
or any Guarantor other than Permitted Transfers with respect to such Persons.

Section 5.7 Purchase of Assets, Investments.  No Borrower will, or will permit
any Subsidiary to, directly or indirectly, acquire or own or enter into any
agreement to acquire or own any Investment in any Person other than Permitted
Investments.

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

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

Section 5.10 Modification of Certain Agreements. No Borrower will, or will
permit any Subsidiary to, directly or indirectly, amend or otherwise modify any
Material Contract, if such amendment or modification could reasonably be
expected to be materially adverse to the rights, interests or privileges of
Lender hereunder or its ability to enforce the same.

Section 5.11 Conduct of Business. No Borrower will, or will permit any
Subsidiary to, directly or indirectly, engage in any line of business other than
those businesses engaged in on the Closing Date and described on Schedule 5.11
and businesses reasonably related thereto.

Secion 5.12 Lease Payments. No Borrower will, or will permit any Subsidiary to,
directly or indirectly, incur or assume (whether pursuant to a Guarantee or
otherwise) any liability for rental payments except in the Ordinary Course of
Business.

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

Section 5.14 Compliance with Anti-Terrorism Laws. Lender hereby notifies
Borrowers that pursuant to the requirements of Anti-Terrorism Laws, and Lender’s
policies and practices, Lender is required to obtain, verify and record certain
information and documentation that identifies Borrowers and its principals,
which information includes the name and address of each Borrower and its
principals and such other information that will allow Lender to identify such
party in accordance with Anti-Terrorism Laws. No Borrower will, or will permit
any Subsidiary to, directly or indirectly, knowingly enter into any Material
Contracts with any Blocked Person or any Person listed on the OFAC Lists. Each
Borrower shall immediately notify Lender if such Borrower has knowledge that any

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Borrower, any additional Credit Party or any of their respective Affiliates or
agents acting or benefiting in any capacity in connection with the transactions
contemplated by this Agreement is or becomes a Blocked Person or (a) is
convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is
arraigned and held over on charges involving money laundering or predicate
crimes to money laundering. No Borrower will, or will permit any Subsidiary to,
directly or indirectly, (i) conduct any business or engage in any transaction or
dealing with any Blocked Person, including, without limitation, the making or
receiving of any contribution of funds, goods or services to or for the benefit
of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to Executive
Order No. 13224, any similar executive order or other Anti-Terrorism Law, or
(iii) engage in or conspire to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.

Section 5.15 Orthotec Litigation. Notwithstanding anything to the contrary in
this Article 5 or otherwise in this Agreement or the other Financing Documents,
Borrowers shall be permitted to make (i) pursuant to that certain Settlement and
Release Agreement dated as of August 13, 2014 (the “Orthotec Settlement
Agreement”), by and among the Alphatec Parties, the Healthpoint Parties and the
OrthoTec Parties (each as defined therein), Orthotec Settlement Payments each
quarter in an aggregate amount not to exceed one million one hundred thousand
dollars ($1,100,000) and (ii) pursuant to that certain Forbearance Agreement
dated as of July 1, 2016 (the “Forbearance Agreement”), by and among Alphatec
Holdings, Inc. and its subsidiaries and affiliates, Healthpoint Capital, LLC,
HealthpointCapital Partners, L.P., and HealthpointCapital Partners II, L.P.
(collectively, “Healthpoint”), a payment or series of payments on or prior to
September 30, 2016 to Healthpoint in an aggregate amount not to exceed nine
hundred and fifty thousand dollars ($950,000); provided, however, at the time of
each such payment, (i) no Default or Event of Default shall have occurred and be
continuing or would result therefrom, (ii) no party to that certain Settlement
Agreement or any other settlement agreement, forbearance agreement or other
settlement arrangement with respect to the Orthotec, LLC matter, including the
Orthotec Litigation (collectively, the “Orthotec Settlement Agreement”) shall
have breached or violated any such agreement or arrangement in any material
respect, which breach or violation has not been waived or cured, and the
Orthotec Settlement Agreement shall be in full force and effect and (iii) such
payment shall not be prohibited by or otherwise violate the terms of the MidCap
Facility Agreement.

ARTICLE 6 - FINANCIAL COVENANT

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

“Defined Period” means, for purposes of calculating the Fixed Charge Coverage
Ratio, for (a) each of the months ending April 30, 2020, May 31, 2020, June 30,
2020, July 31, 2020, August 31, 2020, September 30, 2020, October 31, 2020,
November 30, 2020, December 31, 2020, January 31, 2021 and February 28, 2021,
the respective one, two, three, four, five, six, seven, eight, nine, ten and
eleven month period immediately preceding such month end date (which period
shall include the month in which the respective month end date occurs), and (b)
each month thereafter, the twelve (12) month period immediately preceding such
month.

“Fixed Charge Coverage Ratio” means, for any Defined Period, the ratio of (a)
Operating Cash Flow to (b) Fixed Charges.

“Fixed Charges” has the meaning provided in the Compliance Certificate.

“Liquidity” means, the sum of (a) unrestricted cash on the balance sheet, plus
(b) Revolving Loan Availability.

“Operating Cash Flow” has the meaning provided in the Compliance Certificate.

Section 6.2 Liquidity.  Borrowers will not permit the Liquidity of Borrowers and
their Subsidiaries on a Consolidated Basis, as of the last day of each month
ending during the period from the date hereof through and including March 31,
2020, to be less than Five Million Dollars ($5,000,000.00).

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Section 6.3 Fixed Charge Coverage Ratio. Borrowers will not permit the Fixed
Charge Coverage Ratio for any Defined Period commencing on and after the period
ending April 30, 2020, as tested monthly, to be less than 1.00 to 1.00 for each
month.

Section 6.4 Evidence of Compliance. Borrowers shall furnish to Lender, together
with the financial reporting required of Borrowers in Section 4.1 hereof, a
Compliance Certificate as evidence of Borrowers’ compliance with the covenants
in this Article and evidence that no Event of Default specified in this Article
has occurred. The Compliance Certificate shall include, without limitation, (a)
a statement and report, on a form approved by Lender, detailing Borrowers’
calculations, and (b) if requested by Lender, back-up documentation (including,
without limitation, invoices, receipts and other evidence of costs incurred
during such quarter as Lender shall reasonably require) evidencing the propriety
of the calculations.

ARTICLE 7 - CONDITIONS

Section 7.1 Conditions to Closing. The obligation of Lender to make the Term
Loan and purchase the Warrants on the Closing Date shall be subject to the
receipt by Lender of each agreement, document and instrument set forth on
Schedule 7.1, each in form and substance satisfactory to Lender, and such other
closing deliverables reasonably requested by Lender, and to the payment of the
closing fee described in Section 2.9 and all expenses and other amounts due and
payable under each Financing Document.

Section 7.2 Searches. Before the Closing Date, Lender shall have the right to
perform, all at Borrowers’ expense, the searches described in clauses (a), (b),
and (c) below against Borrowers and any other Credit Party, the results of which
are to be consistent with Borrowers’ representations and warranties under this
Agreement and the satisfactory results of which shall be a condition precedent
to all advances of Loan proceeds: (a) UCC searches with the Secretary of State
of the jurisdiction in which the applicable Person is organized; (b) judgment,
pending litigation, federal tax lien, personal property tax lien, and corporate
and partnership tax lien searches, in each jurisdiction searched under clause
(a) above; and (c) searches of applicable corporate, limited liability company,
partnership and related records to confirm the continued existence, organization
and good standing of the applicable Person and the exact legal name under which
such Person is organized.

Section 7.3 Post-Closing Requirements. Borrowers shall complete each of the
post-closing obligations and/or provide to Lender each of the documents,
instruments, agreements and information listed on Schedule 7.3 attached hereto
on or before the date set forth for each such item thereon, each of which shall
be completed or provided in form and substance satisfactory to Lender.

ARTICLE 8 - REGULATORY MATTERS

Section 8.1 Healthcare Permits.

(a) Each Credit Party (i) has each Healthcare Permit and other rights from, and
has made all declarations and filings with, all applicable Governmental
Authorities, all self-regulatory authorities and all courts and other tribunals
necessary to engage in the ownership, management and operation of the businesses
of such Credit Party, and (ii) has no knowledge that any Governmental Authority
is considering limiting, suspending or revoking any such Healthcare Permit. All
such Healthcare Permits are valid and in full force and effect and Credit
Parties are in material compliance with the terms and conditions of all such
Healthcare Permits, except where failure to be in such compliance or for a
Healthcare Permit to be valid and in full force and effect would not have a
Material Adverse Effect.

(b) Each Credit Party will timely file or caused to be timely filed (after
giving effect to any extension duly obtained), all notifications, reports,
submissions, Permit renewals and reports of every kind whatsoever required by
applicable Laws (which reports will be materially accurate and complete in all
respects and not misleading in any respect).

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

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Section 8.2 FDA Regulatory Matters.

(a) Each Credit Party has all Permits issued or allowed by the FDA or any
comparable governmental authority (including but not limited to new drug
applications, abbreviated new drug applications, biologics license applications,
investigational new drug applications, over-the-counter drug monograph, device
pre-market approval applications, device pre-market notifications,
investigational device exemptions, product recertifications, manufacturing
approvals and authorizations, CE Marks, pricing and reimbursement approvals,
labeling approvals or their foreign equivalent, controlled substance
registrations, and wholesale distributor permits (hereinafter “Healthcare
Permits”) that are required to conduct its business as currently conducted, or
as proposed to be conducted. To the knowledge of Borrowers, neither the FDA nor
any comparable governmental authority is considering limiting, suspending, or
revoking such Permits or changing the marketing classification or labeling or
other significant parameter affecting the products of a Credit Party. To the
knowledge of Borrowers, there is no false or misleading information or
significant omission in any product application or other submission to the FDA
or any comparable governmental authority. Each Credit Party has fulfilled and
performed their obligations under each Permit, and no event has occurred or
condition or state of facts exists which would constitute a breach or default
under, or would cause revocation or termination of, any such Permit. To the
knowledge of Borrowers, any third party that is a manufacturer or contractor for
a Credit Party is in compliance with all Permits required by the FDA or
comparable governmental authority and all Healthcare Laws insofar as they
reasonably pertain to the manufacture of product components or products
regulated as medical devices and marketed or distributed by a Credit Party.

(b) All products designed, developed, manufactured, prepared, assembled,
packaged, tested, labeled, distributed or marketed by or on behalf of each
Credit Party that are subject to the jurisdiction of the FDA or a comparable
governmental authority have been and are being designed, developed, tested,
manufactured, prepared, assembled, packaged, distributed, labeled and marketed
in compliance with the Healthcare Laws, including, without limitation, clinical
and non-clinical evaluation, product approval or clearance, good manufacturing
practices, labeling, advertising and promotion, record-keeping, establishment
registration and device listing, reporting of recalls, and adverse event
reporting, and have been and are being tested, investigated, designed,
developed, manufactured, prepared, assembled, packaged, labeled, distributed,
marketed, and sold in compliance with all applicable Requirements of Law.

(c) Each Credit Party is not subject to any obligation arising under an
administrative or regulatory action, proceeding, or inspection by a governmental
authority, including the FDA, warning letter, notice of violation letter,
consent decree, request for information or other notice, response or commitment
made to or with the FDA or any comparable governmental authority. There is no
act, omission, event, or circumstance of which Borrowers have knowledge that
would reasonably be expected to give rise to or lead to any civil, criminal or
administrative action, suit, demand, claim, complaint, hearing, investigation,
demand letter, warning letter, proceeding or request for information pending
against Borrowers and, to Borrowers’ knowledge, Borrowers have no liability
(whether actual or contingent) for failure to comply with any Healthcare Laws.
There has not been any violation of any Healthcare Laws by Borrowers in their
product development efforts, submissions, record keeping and reports to the FDA
or any other comparable governmental authority that could reasonably be expected
to require or lead to investigation, corrective action or enforcement,
regulatory or administrative action that could reasonably be expected to have a
Material Adverse Effect. To the knowledge of Borrowers, there are no civil or
criminal proceedings relating to Borrowers or any officer, director or employee
of Borrowers that involve a matter within or related to the FDA’s any other
comparable governmental authority’s jurisdiction.

(d) As of the Closing Date, Borrowers are not undergoing any inspection related
to any activities or products of the Borrowers that are subject to Healthcare
Laws, or any other governmental authority investigation.

(e) During the period of six calendar years immediately preceding the Closing
Date, Borrowers have not introduced into commercial distribution any products
manufactured by or on behalf of Borrowers or distributed any products on behalf
of another manufacturer that were upon their shipment by Borrowers adulterated
or misbranded in violation of 21 U.S.C. § 331. Borrowers have not received any
notice or communication from the FDA or comparable governmental authority
alleging material noncompliance with any Healthcare Law. No product has been
seized, withdrawn, recalled, detained, or subject to a suspension (other than in
the Ordinary Course of Business) of research, manufacturing, distribution or
commercialization activity, and there are no facts or circumstances reasonably
likely to cause (i) the seizure, denial, withdrawal, recall, detention, public
health notification, safety alert or suspension of manufacturing or other
activity relating to any product; (ii) a change in the

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labeling of any product suggesting a compliance issue or risk; or (iii) a
termination, seizure or suspension of manufacturing, researching, distributing
or marketing of any product. No proceedings in the United States or any other
jurisdiction seeking the withdrawal, recall, revocation, suspension, import
detention, or seizure of any product are pending or threatened against any
Borrower.

(f) Neither Borrowers nor any of their respective officers, directors,
employees, agents or contractors (i) have been excluded or debarred from any
federal healthcare program (including without limitation Medicare or Medicaid)
or any other federal program or (ii) have received notice from the FDA or any
other comparable governmental authority with respect to debarment or
disqualification of any person that could reasonably be expected to have a
Material Adverse Effect. Neither Borrowers nor any of their respective officers,
directors, employees, agents or contractors have been convicted of any crime or
engaged in any conduct for which (x) debarment is mandated or permitted by 21
U.S.C. § 335a or (y) such person or entity could be excluded from participating
in the federal health care programs under Section 1128 of the Social Security
Act or any similar law. No officer and to the knowledge of any Borrower, no
employee or agent of a Borrower, has (aa) made any untrue statement of material
fact or fraudulent statement to the FDA or any other comparable governmental
authority; (bb) failed to disclose a material fact required to be disclosed to
the FDA or any other comparable governmental authority; or (cc) committed an
act, made a statement, or failed to make a statement that would reasonably be
expected to provide the basis for the FDA or any other comparable governmental
authority to invoke its policy respecting “Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities,” as set forth in 56 Fed. Reg. 46191
(September 10, 1991).

(g) Borrowers have not granted rights to design, develop, manufacture, produce,
assemble, distribute, license, prepare, package, label, market or sell its
products to any other person nor is it bound by any agreement that affects
Borrowers’ exclusive right to design, develop, manufacture, produce, assemble,
distribute, license, prepare, package, label, market or sell its products.

(h) Except as set forth on Schedule 8.2(h), (i) Borrowers and their respective
contract manufacturers are, and have been for the past six calendar years, in
compliance with, and each of its products in current commercial distribution is
designed, manufactured, prepared, assembled, packaged, labeled, stored,
installed, serviced, and processed in compliance with, the Quality System
Regulation set forth in 21 C.F.R. Part 820, or comparable quality management
system, including, but not limited to, ISO13485, as applicable, (ii) Borrowers
are in compliance with the written procedures, record-keeping and reporting
requirements required by the FDA or any comparable governmental authority
pertaining to the reporting of adverse events and recalls involving any of
Borrowers’ products, including, as the case may be, Medical Device Reporting set
forth in 21 C.F.R. Part 803 and Reports of Corrections and Removals set forth in
21 C.F.R. Part 806, (iii) Borrowers’ products are and have been labeled,
promoted, and advertised in accordance with their Permit or within the scope of
an exemption from obtaining such Permit, and (iv) Borrowers’ establishments are
registered with the FDA, as applicable, and each product of Borrowers, if any,
is listed with the FDA under the applicable FDA registration and listing
regulations for medical devices.

(i) Lender agrees that any breach of the terms of this Section 8.2 as a result
of any action or inaction on the part of Structure Medical shall not be a breach
of this Section 8.2 by Borrowers.

ARTICLE 9 - SECURITY AGREEMENT

Section 9.1 Generally.

(a) As security for the payment and performance of the Obligations, and for the
payment and performance of all obligations under the Affiliated Financing
Documents (if any), and without limiting any other grant of a Lien and security
interest in any Security Document, each Credit Party hereby assigns and grants
to Lender, for its benefit, subject to the MidCap Intercreditor Agreement, a
continuing first priority Lien on and security interest in, upon, and to the
personal property set forth on Schedule 9.1 attached hereto and made a part
hereof.

(b) Each Credit Party hereby authorizes Lender to file without the signature of
such Credit Party one or more UCC financing statements (or, with respect to any
Credit Party organized under the laws of a jurisdiction other than the United
States or any jurisdiction thereof, the local equivalent, if any) relating to
liens on personal

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property relating to all or any part of the Collateral, which financing
statements may list Lender as the “secured party” and such Credit Party as the
“debtor” and which describe and indicate the collateral covered thereby as all
or any part of the Collateral under the Financing Documents (including an
indication of the collateral covered by any such financing statement as “all
assets” of such Credit Party now owned or hereafter acquired), in such
jurisdictions as Lender from time to time determines are appropriate, and to
file without the signature of such Credit Party any continuations of or
corrective amendments to any such financing statements, in any such case in
order for Lender to perfect, preserve or protect the Liens, rights and remedies
of Lender with respect to the Collateral. Each Credit Party also ratifies its
authorization for Lender to have filed in any jurisdiction any initial financing
statements or amendments thereto if filed prior to the date hereof.

Section 9.2 Representations and Warranties and Covenants Relating to Collateral.

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

(b) Without limiting the generality of Section 3.2, except as indicated on
Schedule 3.19 with respect to any rights of any Credit Party as a licensee under
any license of Intellectual Property owned by another Person, and except for the
filing of financing statements under the UCC, as applicable, no authorization,
approval or other action by, and no notice to or filing with, any Governmental
Authority or consent of any other Person is required for (i) the grant by each
Credit Party to Lender of the security interests and Liens in the Collateral
provided for under this Agreement and the other Security Documents (if any), or
(ii) the exercise by Lender of its rights and remedies with respect to the
Collateral provided for under this Agreement and the other Security Documents or
under any applicable Law, including the UCC, if applicable, and neither any such
grant of Liens in favor of Lender or exercise of rights by Lender shall violate
or cause a default under any agreement between any Credit Party and any other
Person relating to any such collateral, including any license to which a Credit
Party is a party, whether as licensor or licensee, with respect to any
Intellectual Property, whether owned by such Credit Party or any other Person.

(c) As of the Closing Date, no Credit Party has any ownership interest in any
Chattel Paper (as defined in Article 9 of the UCC), letter of credit rights,
commercial tort claims, Instruments, documents or investment property (other
than equity interests in any Subsidiaries of such Credit Party disclosed on
Schedule 3.4) and the Credit Parties shall give notice to Lender promptly upon
the acquisition by any Credit Party of any such Chattel Paper, letter of credit
rights, commercial tort claims, Instruments, documents, investment property. No
Person other than Lender or MidCap has “control” (as defined in Article 9 of the
UCC) over any Deposit Account, investment property (including Securities
Accounts and commodities account), letter of credit rights or electronic chattel
paper in which any Credit Party has any interest (except for such control
arising by operation of law in favor of any bank or securities intermediary or
commodities intermediary with whom any Deposit Account, Securities Account or
commodities account of Borrowers is maintained).

(d) No Credit Party shall take any of the following actions or make any of the
following changes unless the Credit Parties have given at least thirty (30) days
prior written notice to Lender of Credit Parties’ intention to take any such
action (which such written notice shall include an updated version of any
Schedule impacted by such change) and have executed any and all documents,
instruments and agreements and taken any other actions which Lender may request
after receiving such written notice in order to protect and preserve the Liens,
rights and remedies of Lender with respect to the Collateral: (i) change the
legal name or organizational identification number of any Credit Party as it
appears in official filings in the jurisdiction of its organization, (ii) change
the jurisdiction of incorporation or formation of any Credit Party or allow any
Credit Party to designate any jurisdiction as an additional jurisdiction of
incorporation for such Credit Party, or change the type of entity that it is, or
(iii) change its chief executive office, principal place of business, or the
location of its records concerning the Collateral or move any Collateral to or
place any Collateral on any location that is not then listed on the Schedules
(other than any movement of Collateral in the Ordinary Course of Business)
and/or establish any business location at any location that is not then listed
on the Schedules.

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(e) Except (i) in the Ordinary Course of Business and (ii) Inventory in an
aggregate amount of $25,000, no Inventory or other Collateral shall at any time
be in the possession or control of any warehouse, consignee, bailee or any of
Credit Parties’ agents or processors without prior written notice to Lender and
the receipt by Lender, if Lender has so requested, of warehouse receipts,
consignment agreements or bailee lien waivers (as applicable) reasonably
satisfactory to Lender prior to the commencement of such possession or control.
The Credit Parties have notified Lender that Inventory is currently located at
the locations set forth on Schedule 9.2. The Credit Parties shall, upon the
request of Lender, notify any such warehouse, consignee, bailee, agent or
processor of the security interests and Liens in favor of Lender created
pursuant to this Agreement and the Security Documents, instruct such Person to
hold all such Collateral for Lender’s account subject to Lender’s instructions
and shall obtain an acknowledgement from such Person that such Person holds the
Collateral for Lender’s benefit.

(f) The Credit Parties shall cause all equipment and other tangible Personal
Property other than Inventory to be maintained and preserved in the same
condition, repair and in working order as when new, ordinary wear and tear
excepted, and shall promptly make or cause to be made all repairs, replacements
and other improvements in connection therewith that are necessary or desirable
to such end. Upon request of Lender, the Credit Parties shall promptly deliver
to Lender any and all certificates of title, applications for title or similar
evidence of ownership of all such tangible Personal Property and shall cause
Lender to be named as lienholder on any such certificate of title or other
evidence of ownership. The Credit Parties shall not permit any such tangible
Personal Property to become fixtures to real estate unless such real estate is
subject to a Lien in favor of Lender.

(g) As of the Closing Date or, if any Promissory Note is entered into after the
Closing Date, within thirty (30) days of the date of such Promissory Note, each
Credit Party shall endorse, assign and deliver each Promissory Note to the
Lender, accompanied by such instruments of transfer or assignment duly executed
in blank, in form and substance reasonably satisfactory to Lender. No Credit
Party shall, without the prior written consent of Lender, (A) waive or release
any obligation of any person that is obligated under any Promissory Note, (B)
take or omit to take any action or knowingly suffer or permit any action to be
omitted or taken, the taking or omission of which would result in any right of
offset against sums payable under the Promissory Notes, or (C) assign or
surrender its rights and interests under any Promissory Notes or terminate,
cancel, modify, change, supplement or amend the Promissory Notes.

(h) The Credit Parties shall furnish to Lender from time to time any statements
and schedules further identifying or describing the Collateral and any other
information, reports or evidence concerning the Collateral as Lender may
reasonably request from time to time.

ARTICLE 10 - EVENTS OF DEFAULT

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

(a) (i) any Borrower shall fail to pay when due any principal, interest, premium
or fee under any Financing Document or any other amount payable under any
Financing Document and such failure continues for a period of five (5) days,
(ii) there shall occur any default in the performance of or compliance with any
of the following sections of this Agreement: Section 4.4(b), Article 5 and
Article 6 and Section 7.3, or (iii) there shall occur any default in the
performance of or compliance with Section 4.1 of this Agreement and such failure
continues for a period of five (5) days;

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

(c) any representation, warranty, certification or statement made by any Credit
Party or any other Person in any Financing Document or in any certificate,
financial statement or other document delivered pursuant to

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any Financing Document is incorrect in any respect (or in any material respect
if such representation, warranty, certification or statement is not by its terms
already qualified as to materiality) when made (or deemed made);

(d) failure of any Credit Party to pay when due or within any applicable grace
period any principal, interest or other amount on Debt (other than the Term
Loan), or the occurrence of any breach, default, condition or event with respect
to any Debt (other than the Term Loan), if the effect of such failure or
occurrence is to cause or to permit the holder or holders of any such Debt, to
cause, Debt or other liabilities having an individual principal amount in excess
of $500,000 or having an aggregate principal amount in excess of $500,000 to
become or be declared due prior to its stated maturity;

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

(f) an involuntary case or other proceeding shall be commenced against any
Credit Party or any Subsidiary of a Borrower seeking liquidation, reorganization
or other relief with respect to it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of forty-five (45) days; or
an order for relief shall be entered against any Credit Party or any Subsidiary
of a Borrower under applicable federal bankruptcy, insolvency or other similar
law in respect of (i) bankruptcy, liquidation, winding-up, dissolution or
suspension of general operations, (ii) composition, rescheduling,
reorganization, arrangement or readjustment of, or other relief from, or stay of
proceedings to enforce, some or all of the debts or obligations, or (iii)
possession, foreclosure, seizure or retention, sale or other disposition of, or
other proceedings to enforce security over, all or any substantial part of the
assets of such Credit Party or Subsidiary;

(g) (i) institution of any steps by any Person to terminate a Pension Plan if as
a result of such termination any Credit Party or any member of the Controlled
Group could be required to make a contribution to such Pension Plan, or could
incur a liability or obligation to such Pension Plan, in excess of $250,000,
(ii) a contribution failure occurs with respect to any Pension Plan sufficient
to give rise to a Lien under Section 302(f) of ERISA, or (iii) there shall occur
any withdrawal or partial withdrawal from a Multiemployer Plan and the
withdrawal liability (without unaccrued interest) to Multiemployer Plans as a
result of such withdrawal (including any outstanding withdrawal liability that
any Credit Party or any member of the Controlled Group have incurred on the date
of such withdrawal) exceeds $100,000;

(h) one or more judgments or orders for the payment of money (not paid or fully
covered by insurance maintained in accordance with the requirements of this
Agreement and as to which the relevant insurance company has acknowledged
coverage) aggregating in excess of $1,000,000 shall be rendered against any or
all Credit Parties and either (i) enforcement proceedings shall have been
commenced by any creditor upon any such judgments or orders, or (ii) there shall
be any period of twenty (20) consecutive days during which a stay of enforcement
of any such judgments or orders, by reason of a pending appeal, bond or
otherwise, shall not be in effect;

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

(j) the indictment of any Credit Party for a felony or any claim of fraud,
misrepresentation or other crime of moral turpitude;

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

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

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(m) if any Borrower is or becomes an entity whose equity is registered with the
SEC, and/or is publicly traded on and/or registered with a public securities
exchange, such Borrower’s equity fails to remain registered with the SEC in good
standing, and/or such equity fails to remain publicly traded on and registered
with a public securities exchange; or

(n) there shall occur any default or event of default under the Affiliated
Financing Documents or any Material Contract which results in a liability to any
Borrower in excess of $5,000,000.

Notwithstanding the foregoing, if a Credit Party fails to comply with any same
provision of this Agreement two (2) times in any twelve (12) month period and
Lender has given to Borrower Representative in connection with each such failure
any notice to which Borrowers would be entitled under this Section before such
failure could become an Event of Default, then all subsequent failures by a
Credit Party to comply with such provision of this Agreement shall effect an
immediate Event of Default (without the expiration of any applicable cure
period) with respect to all subsequent failures by a Credit Party to comply with
such provision of this Agreement, and Lender thereupon may exercise any remedy
set forth in this Article 10 without affording Borrowers any opportunity to cure
such Event of Default.

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

Section 10.2 Acceleration of Term Loan. Upon the occurrence and during the
continuance of an Event of Default, Lender may, by notice to Borrower
Representative declare all or any portion of the Obligations to be, and the
Obligations shall thereupon become, immediately due and payable, with accrued
interest thereon, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrower and Borrowers will pay the
same; provided, however, that in the case of any of the Events of Default
specified in Section 10.1(e) or 10.1(f) above, without any notice to any
Borrower or any other act by Lender, all of the Obligations shall become
immediately and automatically due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by each
Borrower and Borrowers will pay the same.

Section 10.3 UCC Remedies.

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

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

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

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

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

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

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

(d) Lender is hereby granted a non-exclusive, royalty-free license or other
right to use, without charge, Borrowers’ labels, mask works, rights of use of
any name, any other Intellectual Property and advertising matter, and any
similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with
Lender’s exercise of its rights under this Article, Borrowers’ rights under all
licenses (whether as licensor or licensee) and all franchise agreements inure to
Lender’s benefit.

Section 10.4 Default Rate of Interest. At the election of Lender, after the
occurrence of an Event of Default and for so long as it continues, the Term Loan
and other Obligations shall bear interest at rates that are five percent (5.0%)
per annum in excess of the rates otherwise payable under this Agreement.

Section 10.5 Application of Proceeds.

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

(b) Following the occurrence and continuance of an Event of Default, but absent
the occurrence and continuance of an Acceleration Event, Lender shall apply any
and all payments received by Lender in respect of the Obligations, and any and
all proceeds of Collateral received by Lender, in such order as Lender may from
time to time elect.

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

Section 10.6 Waivers.

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

(b) Each Borrower for itself and all its successors and assigns, (i) agrees that
its liability shall not be in any manner affected by any indulgence, extension
of time, renewal, waiver, or modification granted or consented to by Lender;
(ii) consents to any indulgences and all extensions of time, renewals, waivers,
or modifications that may be granted by Lender with respect to the payment or
other provisions of the Financing Documents, and to any substitution, exchange
or release of the Collateral, or any part thereof, with or without substitution,
and agrees to the addition or release of any Borrower, endorsers, guarantors, or
sureties, or whether primarily or secondarily liable, without notice to any
other Borrower and without affecting its liability hereunder; (iii) agrees that
its liability shall be unconditional and without regard to the liability of any
other Borrower or Lender for any tax on the indebtedness; and (iv) to the
fullest extent permitted by law, expressly waives the benefit of any statute or
rule of law or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the foregoing.

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

(d) Without limiting the generality of anything contained in this Agreement or
the other Financing Documents, each Borrower agrees that if an Event of Default
is continuing (i) Lender shall not be subject to any “one action” or “election
of remedies” law or rule, and (ii) all Liens and other rights, remedies or
privileges provided

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to Lender shall remain in full force and effect until Lender has exhausted all
remedies against the Collateral and any other properties owned by Borrowers and
the Financing Documents and other security instruments or agreements securing
the Term Loan have been foreclosed, sold and/or otherwise realized upon in
satisfaction of Borrowers’ obligations under the Financing Documents.

(e) Nothing contained herein or in any other Financing Document shall be
construed as requiring Lender to resort to any part of the Collateral for the
satisfaction of any of Borrowers’ obligations under the Financing Documents in
preference or priority to any other Collateral, and Lender may seek satisfaction
out of all of the Collateral or any part thereof, in its absolute discretion in
respect of Borrowers’ obligations under the Financing Documents. In addition,
Lender shall have the right from time to time to partially foreclose upon any
Collateral in any manner and for any amounts secured by the Financing Documents
then due and payable as determined by Lender in its sole discretion, including,
without limitation, the following circumstances: (i) in the event any Borrower
defaults beyond any applicable grace period in the payment of one or more
scheduled payments of principal and/or interest, Lender may foreclose upon all
or any part of the Collateral to recover such delinquent payments, or (ii) in
the event Lender elects to accelerate less than the entire outstanding principal
balance of the Term Loan, Lender may foreclose all or any part of the Collateral
to recover so much of the principal balance of the Term Loan as Lender may
accelerate and such other sums secured by one or more of the Financing Documents
as Lender may elect. Notwithstanding one or more partial foreclosures, any
unforeclosed Collateral shall remain subject to the Financing Documents to
secure payment of sums secured by the Financing Documents and not previously
recovered.

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

Section 10.7 Injunctive Relief. The parties acknowledge and agree that, in the
event of a breach or threatened breach of any Credit Party’s obligations under
any Financing Documents, Lender may have no adequate remedy in money damages
and, accordingly, shall be entitled to an injunction (including, without
limitation, a temporary restraining order, preliminary injunction, writ of
attachment, or order compelling an audit) against such breach or threatened
breach, including, without limitation, maintaining any cash management and
collection procedure described herein. However, no specification in this
Agreement of a specific legal or equitable remedy shall be construed as a waiver
or prohibition against any other legal or equitable remedies in the event of a
breach or threatened breach of any provision of this Agreement. Each Credit
Party waives, to the fullest extent permitted by law, the requirement of the
posting of any bond in connection with such injunctive relief. By joining in the
Financing Documents as a Credit Party, each Credit Party specifically joins in
this Section as if this Section were a part of each Financing Document executed
by such Credit Party.

Section 10.8 Marshalling; Payments Set Aside. Lender shall not be under any
obligation to marshal any assets in payment of any or all of the Obligations. To
the extent that Borrower makes any payment or Lender enforces its Liens or
Lender exercises its right of set-off, and such payment or the proceeds of such
enforcement or set-off is subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required to be repaid by anyone, then to the extent
of such recovery, the Obligations or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefore, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.

ARTICLE 11- MISCELLANEOUS

Section 11.1 Survival. All agreements, representations and warranties made
herein and in every other Financing Document shall survive the execution and
delivery of this Agreement and the other Financing Documents and the other
Operative Documents. The provisions of Section 2.6 and Articles 11 and 12 shall
survive the payment of the Obligations and any termination of this Agreement and
any judgment with respect to any Obligations, including any final foreclosure
judgment with respect to any Security Document, and no unpaid or unperformed,
current or future, Obligations will merge into any such judgment.

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Section 11.2 No Waivers. No failure or delay by Lender in exercising any right,
power or privilege under any Financing Document shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein and therein provided shall be cumulative and not
exclusive of any rights or remedies provided by law. Any reference in any
Financing Document to the “continuing” nature of any Event of Default shall not
be construed as establishing or otherwise indicating that any Borrower or any
other Credit Party has the independent right to cure any such Event of Default,
but is rather presented merely for convenience should such Event of Default be
waived in accordance with the terms of the applicable Financing Documents.

Section 11.3 Notices.

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

(b) Notices and other communications to the parties hereto may be delivered or
furnished by electronic communication (including e-mail and Internet or intranet
websites) pursuant to procedures approved from time to time by Lender. Lender or
Borrower Representative may, in their discretion, agree to accept notices and
other communications to them hereunder by electronic communications pursuant to
procedures approved by it, provided, however, that approval of such procedures
may be limited to particular notices or communications.

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

Section 11.4 Severability. In case any provision of or obligation under this
Agreement or any other Financing Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

Section 11.5 Headings. Headings and captions used in the Financing Documents
(including the Exhibits, Schedules and Annexes hereto and thereto) are included
for convenience of reference only and shall not be given any substantive effect.

Section 11.6 Confidentiality.

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

(b) Subject to Section 4.11(a), Lender shall hold all non-public information
regarding the Credit Parties and their respective businesses identified as such
by Borrowers and obtained by Lender pursuant to the requirements hereof in
accordance with its customary procedures for handling information of such
nature, except

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that disclosure of such information may be made (i) to its agents, employees,
Subsidiaries, Affiliates, attorneys, auditors, professional consultants, rating
agencies, insurance industry associations and portfolio management services,
(ii) as required by Law, subpoena, judicial order or similar order and in
connection with any litigation, (iii) as may be required in connection with the
examination, audit or similar investigation of such Person, and (iv) to a Person
that is a trustee, investment advisor, collateral manager, servicer, noteholder
or secured party in a Securitization (as hereinafter defined) in connection with
the administration, servicing and reporting on the assets serving as collateral
for such Securitization. For the purposes of this Section, “Securitization”
shall mean (A) the pledge of the Term Loan as collateral security for loans to
Lender, or (B) a public or private offering by Lender or any of its Affiliates
or their respective successors and assigns, of securities which represent an
interest in, or which are collateralized, in whole or in part, by the Term Loan.
Confidential information shall include only such information identified as such
at the time provided to Lender and shall not include information that either:
(y) is in the public domain, or becomes part of the public domain after
disclosure to such Person through no fault of such Person, or (z) is disclosed
to such Person by a Person other than a Credit Party, provided, however, Lender
does not have actual knowledge that such Person is prohibited from disclosing
such information. The obligations of Lender under this Section 11.6 shall
supersede and replace the obligations of Lender under any confidentiality
agreement in respect of this financing executed and delivered by Lender prior to
the date hereof.

Section 11.7 Waiver of Consequential and Other Damages. To the fullest extent
permitted by applicable law, no Borrower shall assert, and each Borrower hereby
waives, any claim against any Indemnitee (as defined below), on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of this Agreement, any other Financing Document or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated hereby or thereby,
the Term Loan or the use of the proceeds thereof. No Indemnitee shall be liable
for any damages arising from the use by unintended recipients of any information
or other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Financing Documents or the transactions contemplated hereby or thereby.

Section 11.8 GOVERNING LAW; SUBMISSION TO JURISDICTION.

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

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

Section 11.9 WAIVER OF JURY TRIAL. EACH BORROWER AND LENDER HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH BORROWER AND LENDER
ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT
AND THE OTHER FINANCING DOCUMENTS, AND THAT EACH WILL CONTINUE TO RELY ON THIS
WAIVER IN THEIR RELATED FUTURE

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

Section 11.10 Publication; Advertisement.

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

(b) Advertisement. Each Credit Party hereby authorizes Lender to publish the
name of such Credit Party, the existence of the financing arrangements
referenced under this Agreement, the primary purpose and/or structure of those
arrangements, the amount of credit extended under each facility, the title and
role of each party to this Agreement, and the total amount of the financing
evidenced hereby in any “tombstone”, comparable advertisement or press release
which Lender elects to submit for publication. In addition, each Credit Party
agrees that Lender may provide lending industry trade organizations with
information necessary and customary for inclusion in league table measurements
after the Closing Date.With respect to any of the foregoing, Lender shall
provide Borrowers with an opportunity to review and confer with Lender regarding
the contents of any such tombstone, advertisement or information, as applicable,
prior to its submission for publication and, following such review period,
Lender may, from time to time, publish such information in any media form
desired by Lender, until such time that Borrowers shall have requested Lender
cease any such further publication.

Section 11.11 Counterparts; Integration. This Agreement and the other Financing
Documents may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. Signatures by facsimile or by electronic mail delivery of
an electronic version of any executed signature page shall bind the parties
hereto. This Agreement and the other Financing Documents constitute the entire
agreement and understanding among the parties hereto and supersede any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.

Section 11.12 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

Section 11.13 Lender Approvals. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Lender with respect
to any matter that is the subject of this Agreement, the other Financing
Documents may be granted or withheld by Lender in its sole and absolute
discretion and credit judgment. No provision of this Agreement or any other
Financing Document may be materially amended, waived or otherwise modified
unless such amendment, waiver or other modification is in writing and is signed
or otherwise approved by Borrowers and Lender.

Section 11.14 Expenses; Indemnity

(a) Borrowers hereby agree to promptly pay (i) all costs and expenses of Lender
(including, without limitation, the fees, costs and expenses of counsel to, and
independent appraisers and consultants retained by Lender) in connection with
the examination, review, due diligence investigation, documentation,
negotiation, closing and syndication of the transactions contemplated by the
Financing Documents, in connection with the performance by Lender of its rights
and remedies under the Financing Documents and in connection with the continued
administration of the Financing Documents including (A) any amendments,
modifications, consents and waivers to and/or under any and all Financing
Documents, and (B) any periodic public record searches conducted by or at the
request of Lender (including, without limitation, title investigations, UCC
searches, fixture filing searches, judgment, pending litigation and tax lien
searches and searches of applicable corporate, limited liability, partnership
and related records concerning the continued existence, organization and good
standing of certain Persons); (ii) without limitation of the preceding clause
(i), all costs and expenses of Lender in connection with the creation,

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perfection and maintenance of Liens pursuant to the Financing Documents; (iii)
without limitation of the preceding clause (i), all costs and expenses of Lender
in connection with (A) protecting, storing, insuring, handling, maintaining or
selling any Collateral, (B) any litigation, dispute, suit or proceeding relating
to any Financing Document, and (C) any workout, collection, bankruptcy,
insolvency and other enforcement proceedings under any and all of the Financing
Documents; (iv) without limitation of the preceding clause (i), all costs and
expenses of Lender in connection with Lender’s reservation of funds in
anticipation of the funding of the Term Loan to be made hereunder; and (v) all
costs and expenses incurred by Lenders in connection with any litigation,
dispute, suit or proceeding relating to any Financing Document and in connection
with any workout, collection, bankruptcy, insolvency and other enforcement
proceedings under any and all Financing Documents, whether or not Lender is a
party thereto. If Lender uses in-house counsel for any of these purposes,
Borrowers further agree that the Obligations include reasonable charges for such
work commensurate with the fees that would otherwise be charged by outside legal
counsel selected by Lender for the work performed. This Section 11.14(a) shall
not apply to any Taxes of any Lender. Notwithstanding anything to the contrary
in this Section 11.14(a), Lender shall bear its own costs and expenses in
connection with due diligence and the preparation of documentation related to
the Term Loan including the fees and expenses of Lender’s counsel.

(b) Each Borrower hereby agrees to indemnify, pay and hold harmless Lender and
the officers, directors, employees, trustees, agents, investment advisors,
collateral managers, servicers, and counsel of Lender (collectively called the
“Indemnitees”) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including the fees and
disbursements of counsel for such Indemnitee) in connection with any
investigative, response, remedial, administrative or judicial matter or
proceeding, whether or not such Indemnitee shall be designated a party thereto
and including any such proceeding initiated by or on behalf of a Credit Party,
and the reasonable expenses of investigation by engineers, environmental
consultants and similar technical personnel and any commission, fee or
compensation claimed by any broker (other than any broker retained by Lender)
asserting any right to payment for the transactions contemplated hereby, which
may be imposed on, incurred by or asserted against such Indemnitee as a result
of or in connection with the transactions contemplated hereby or by the other
Operative Documents (including (i)(A) as a direct or indirect result of the
presence on or under, or escape, seepage, leakage, spillage, discharge, emission
or release from, any property now or previously owned, leased or operated by
Borrower, any Subsidiary or any other Person of any Hazardous Materials, (B)
arising out of or relating to the offsite disposal of any materials generated or
present on any such property, or (C) arising out of or resulting from the
environmental condition of any such property or the applicability of any
governmental requirements relating to Hazardous Materials, whether or not
occasioned wholly or in part by any condition, accident or event caused by any
act or omission of Borrowers or any Subsidiary, and (ii) proposed and actual
extensions of credit under this Agreement) and the use or intended use of the
proceeds of the Term Loan, except that Borrowers shall have no obligation
hereunder to an Indemnitee with respect to any liability resulting from the
gross negligence, willful misconduct or bad faith of such Indemnitee, as
determined by a final non-appealable judgment of a court of competent
jurisdiction. To the extent that the undertaking set forth in the immediately
preceding sentence may be unenforceable, Borrowers shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable Law to the
payment and satisfaction of all such indemnified liabilities incurred by the
Indemnitees or any of them. This Section 11.14(b) shall not apply to any Taxes
other than any Taxes that represent losses, claims, damages, etc. arising from
any non-Tax claim.

(c) Notwithstanding any contrary provision in this Agreement, the obligations of
Borrowers under this Section 11.14 shall survive the payment in full of the
Obligations and the termination of this Agreement. NO INDEMNITEE SHALL BE
RESPONSIBLE OR LIABLE TO THE BORROWERS OR TO ANY OTHER PARTY TO ANY FINANCING
DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY OTHER PERSON
ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT
HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY OTHER
FINANCING DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.

Section 11.15 Payments. Payments of principal, interest and fees in respect of
the Term Loan will be settled on the date of receipt if received by Lender on
the last Business Day of a month or on the Business Day immediately following
the date of receipt if received on any day other than the last Business Day of a
month.

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Section 11.16 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition or other proceeding be
filed by or against any Credit Party for liquidation or reorganization, should
any Credit Party become insolvent or make an assignment for the benefit of any
creditor or creditors or should an interim receiver, receiver, receiver and
manager or trustee be appointed for all or any significant part of any Credit
Party’s assets, and shall continue to be effective or to be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a fraudulent preference reviewable transaction or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.

Section 11.17 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Borrowers and Lender and their respective successors and
permitted assigns. No Credit Party may assign, delegate or otherwise transfer
any of its rights or other obligations hereunder or under any other Financing
Document without the prior written consent of Lender. Lender may assign,
delegate or otherwise transfer any of its rights or obligations hereunder
(including participations) only upon (a) the written consent by the Borrowers
and (b) surrender and cancellation (with reissuance to the assignee) of the Term
Note; provided, however, that the written consent of the Borrowers shall not be
required for an assignment or the sale of a participation in the Term Note by
Lender (w) to an Affiliate of Lender, (x) in connection with a sale or transfer
of all or substantially all of the assets or capital stock of Lender to a third
party, (y) an Event of Default shall have occurred or (z) or the sale of any
participation in the Term Note. Borrower Representative shall keep at its
principal executive office a register for the registration and registration of
transfers of the Term Note. The name and address of each holder of one or more
Term Notes, each transfer thereof and the name and address of each transferee of
one or more Term Notes shall be registered in such register. Prior to due
presentment for registration of transfer, the Person in whose name Term Note
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof. If Lender sells a participation in the Term Note,
Lender shall, acting solely for this purpose as a non-fiduciary agent of the
Borrowers, maintain a register on which it enters the name and address of each
participant and the principal amounts (and stated interest) of each
participant’s interest in the Term Loan or other obligations under the Financing
Documents; provided that Lender shall have no obligation to disclose all or any
portion of the participant register (including the identity of any participant
or any information relating to a participant’s interest in any commitments,
loans, letters of credit or its other obligations under any Financing Document)
to any Person except to the extent that such disclosure is necessary to
establish that such commitment, loan, letter of credit or other obligation is in
registered form under Section 5f.103-1(c) of the United States Treasury
Regulations. The entries in the participant register shall be conclusive absent
manifest error, and Lender shall treat each Person whose name is recorded in the
participant register as the owner of such participation for all purposes of this
Agreement notwithstanding any notice to the contrary.

Section 11.18 USA PATRIOT Act Notification.  Lender hereby notifies Borrowers
that pursuant to the requirements of the USA PATRIOT Act, it is required to
obtain, verify and record certain information and documentation that identifies
Borrowers, which information includes the name and address of Borrower and such
other information that will allow Lender to identify Borrowers in accordance
with the USA PATRIOT Act.

Section 11.19 Right to Perform, Preserve and Protect. If any Credit Party fails
to perform any obligation hereunder or under any other Financing Document,
Lender itself may, but shall not be obligated to, cause such obligation to be
performed at Borrowers’ expense. Lender is further authorized by Borrowers to
make expenditures from time to time which Lender, in its reasonable business
judgment, deems necessary or desirable to (a) preserve or protect the business
conducted by Borrowers, the Collateral, or any portion thereof, and/or (b)
enhance the likelihood of, or maximize the amount of, repayment of the Loan and
other Obligations. Each Borrower hereby agrees to reimburse Lender on demand for
any and all costs, liabilities and obligations incurred by Lender pursuant to
this Agreement.

ARTICLE 12 - GUARANTY

Section 12.1 Guaranty. Each Guarantor hereby unconditionally guarantees, as a
primary obligor and not merely as a surety, jointly and severally with each
other Guarantor when and as due, whether at maturity, by acceleration, by notice
of prepayment or otherwise, the due and punctual performance of all of the
Obligations. Each

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payment made by any Guarantor pursuant to this Section 12 shall be made in
lawful money of the United States in immediately available funds.

Section 12.2 Payment of Amounts Owed. The Guarantee hereunder is an absolute,
unconditional and continuing guaranty of the full and punctual payment and
performance of all of the Obligations and not of their collectability only and
is in no way conditioned upon any requirement that Lender first attempt to
collect any of the Obligations from any Borrower or resort to any collateral
security or other means of obtaining payment. In the event of any default by
Borrowers in the payment of the Obligations, after the expiration of any
applicable cure or grace period, each Guarantor agrees, on demand by Lender
(which demand may be made concurrently with notice to Borrowers that the
Borrowers are in default of their obligations), to pay the Obligations,
regardless of any defense, right of set-off or recoupment or claims which any
Borrower or Guarantor may have against Lender. All of the remedies set forth in
this Agreement, in any other Financing Agreement or at law or equity shall be
equally available to Lender, and the choice by Lender of one such alternative
over another shall not be subject to question or challenge by any Guarantor or
any other person, nor shall any such choice be asserted as a defense, setoff,
recoupment or failure to mitigate damages in any action, proceeding, or
counteraction by Lender to recover or seeking any other remedy under this
Guarantee, nor shall such choice preclude Lender from subsequently electing to
exercise a different remedy.

Section 12.3Certain Waivers by Guarantor. To the fullest extent permitted by
law, each Guarantor does hereby:

(a) waive notice of acceptance of this Agreement by Lender and any and all
notices and demands of every kind which may be required to be given by any
statute, rule or law;

(b) agree to refrain from asserting, until after repayment in full of the
Obligations, any defense, right of set-off, right of recoupment or other claim
which such Guarantor may have against any Borrower;

(c) waive any defense, right of set-off, right of recoupment or other claim
which such Guarantor may have against Lender;

(d) waive any and all rights such Guarantor may have under any anti-deficiency
statute or other similar protections;

(e) waive all rights at law or in equity to seek subrogation, contribution,
indemnification or any other form of reimbursement or repayment from any
Borrower, any other Guarantor or any other person or entity now or hereafter
primarily or secondarily liable for any of the Obligations until the Obligations
have been paid in full;

(f) waive presentment for payment, demand for payment, notice of nonpayment or
dishonor, protest and notice of protest, diligence in collection and any and all
formalities which otherwise might be legally required to charge such Guarantor
with liability;

(g) waive the benefit of all appraisement, valuation, marshalling, forbearance,
stay, extension, redemption, homestead, exemption and moratorium laws now or
hereafter in effect;

(h) waive any defense based on the incapacity, lack of authority, death or
disability of any other person or entity or the failure of Lender to file or
enforce a claim against the estate of any other person or entity in any
administrative, bankruptcy or other proceeding;

(i) waive any defense based on an election of remedies by Lender, whether or not
such election may affect in any way the recourse, subrogation or other rights of
such Guarantor against any Borrower, any other Guarantor or any other person in
connection with the Obligations;

(j) waive any defense based on the failure of Lender to (i) provide notice to
such Guarantor of a sale or other disposition of any of the security for any of
the Obligations, or (ii) conduct such a sale or disposition in a commercially
reasonable manner;

(k) waive any defense based on the negligence of Lender in administering this
Agreement or the other Financing Documents (including, but not limited to, the
failure to perfect any security interest in any Collateral), or

47

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

 

taking or failing to take any action in connection therewith, provided, however,
that such waiver shall not apply to the gross negligence or willful misconduct
of Lender, as determined by the final, non-appealable decision of a court having
proper jurisdiction;

(l) waive the defense of expiration of any statute of limitations affecting the
liability of suchGuarantor hereunder or the enforcement hereof;

(m) waive any right to file any Claim (as defined below) as part of, and any
right to request consolidation of any action or proceeding relating to a Claim
with, any action or proceeding filed or maintained by Lender to collect any
Obligations of such Guarantor to Lender hereunder or to exercise any rights or
remedies available to Lender under the Financing Documents, at law, in equity or
otherwise;

(n) agree that Lender shall not have any obligation to obtain, perfect or retain
a security interest in any property to secure any of the Obligations (including
any mortgage or security interest contemplated by the Financing Documents), or
to protect or insure any such property;

(o) waive any obligation Lender may have to disclose to such Guarantor any facts
Lender now or hereafter may know or have reasonably available to it regarding
the Borrowers or Borrowers’ financial condition, whether or not Lender has a
reasonable opportunity to communicate such facts or have reason to believe that
any such facts are unknown to such Guarantor or materially increase the risk to
such Guarantor beyond the risk such Guarantor intends to assume hereunder;

(p) agree that Lender shall not be liable in any way for any decrease in the
value or marketability of any property securing any of the Obligations which may
result from any action or omission of Lender in enforcing any part of this
Agreement;

(q) waive any defense based on any invalidity, irregularity or unenforceability,
in whole or in part, of any one or more of the Financing Documents;

(r) waive any defense based on any change in the composition of Borrowers, and

(s) waive any defense based on any representations and warranties made by such
Guarantor herein or by any Borrower herein or in any of the Financing Documents.

For purposes of this section, the term “Claim” shall mean any claim, action or
cause of action, defense, counterclaim, set-off or right of recoupment of any
kind or nature against Lender, its officers, directors, employees, agents,
members, actuaries, accountants, trustees or attorneys, or any affiliate of
Lender in connection with the making, closing, administration, collection or
enforcement by Lender of the Obligations.

Section 12.4Guarantor’s Obligations Not Affected by Modifications of Financing
Documents. Each Guarantor further agrees that such Guarantor’s liability as
guarantor shall not be impaired or affected by any renewals or extensions which
may be made from time to time, with or without the knowledge or consent of
Guarantor for the time for payment of interest or principal or by any
forbearance or delay in collecting interest or principal hereunder, or by any
waiver by Lender under this Agreement or any other Financing Documents, or by
Lenders’ failure or election not to pursue any other remedies it may have
against any Borrower or Guarantor, or by any change or modification in the Term
Note, this Agreement or any other Financing Document, or by the acceptance by
Lender of any additional security or any increase, substitution or change
therein, or by the release by Lender of any security or any withdrawal thereof
or decrease therein, or by the application of payments received from any source
to the payment of any obligation other than the Obligations even though Lender
might lawfully have elected to apply such payments to any part or all of the
Obligations, it being the intent hereof that, subject to Lenders’ compliance
with the terms of this Section 12 and the Financing Documents, each Guarantor
shall remain liable for the payment of the Obligations, until the Obligations
have been paid in full, notwithstanding any act or thing which might otherwise
operate as a legal or equitable discharge of a surety. Each Guarantor further
understands and agrees that Lender may at any time enter into agreements with
Borrowers to amend, modify and/or increase the principal amount of, interest
rate applicable to or other economic and non-economic terms of this Agreement or
the other Financing Documents, and may waive or release any provision or
provisions of this Agreement or the other Financing Documents, and, with
reference to such instruments, may make and enter into any

48

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

 

such agreement or agreements as Lender and Borrowers may deem proper and
desirable, without in any manner impairing this Guarantee or any of Lender’s
rights hereunder or each Guarantor’s obligations hereunder, and each Guarantor’s
obligations hereunder shall apply to the this Agreement and other Financing
Documents as so amended, modified, extended, renewed or increased.

Section 12.5Reinstatement; Deficiency. This guaranty shall continue to be
effective or be reinstated (as the case may be) if at any time payment of all or
any part of any sum payable pursuant to this Agreement or any other Financing
Document is rescinded or otherwise required to be returned by Lender upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of any
Borrower, or upon or as a result of the appointment of a receiver, intervenor,
custodian or conservator of or trustee or similar officer for, any Borrower or
any substantial part of its property, or otherwise, all as though such payment
to Lender had not been made, regardless of whether Lender contested the order
requiring the return of such payment. In the event of the foreclosure of the
Financing Documents and of a deficiency, each Guarantor hereby promises and
agrees forthwith to pay the amount of such deficiency notwithstanding the fact
that recovery of said deficiency against Borrowers would not be allowed by
applicable law; however, the foregoing shall not be deemed to require that
Lender institute foreclosure proceedings or otherwise resort to or exhaust any
other collateral or security prior to or concurrently with enforcing this
guaranty.

Section 12.6Subordination of Borrowers’ Obligations to Guarantors; Claims in
Bankruptcy.

(a) Any indebtedness of any Borrower to any Guarantor (including, but not
limited to, any right of such Guarantor to a return of any capital contributed
to a Borrower), whether now or hereafter existing, is hereby subordinated to the
payment of the Obligations. Each Guarantor agrees that, until the Obligations
have been paid in full, such Guarantor will not seek, accept, or retain for its
own account, any payment from any Borrower on account of such subordinated debt.
Any payments to any Guarantor on account of such subordinated debt shall be
collected and received by such Guarantor in trust for Lender and shall be
immediately paid over to Lender on account of the Obligations without impairing
or releasing the obligations of such Guarantor hereunder.

(b) Each Guarantor shall promptly file in any bankruptcy or other proceeding in
which the filing of claims is required by law, all claims and proofs of claims
that such Guarantor may have against any Borrower or any other Guarantor and
does hereby assign to Lender or its nominee (and will, upon request of Lender,
reconfirm in writing the assignment to Lender or its nominee of) all rights of
such Guarantor under such claims. If such Guarantor does not file any such
claim, Lender, as attorney‑in‑fact for such Guarantor, is hereby irrevocably
authorized to do so in the name of such Guarantor, or in Lender’s discretion, to
assign the claim to a designee and cause proof of claim to be filed in the name
of Lender’s designee. In all such cases, whether in administration, bankruptcy
or otherwise, the person or persons authorized to pay such claim shall pay to
Lender the full amount thereof and, to the full extent necessary for that
purpose, each Guarantor hereby assigns to Lender all of such Guarantor’s rights
to any such payments or distributions to which such Guarantor would otherwise be
entitled, such assignment being a present and irrevocable assignment of all such
rights.

Section 12.7Maximum Liability. The provisions of this Section 12 are severable,
and in any action or proceeding involving any state corporate law, or any state,
federal or foreign bankruptcy, insolvency, reorganization or other law affecting
the rights of creditors generally, if the obligations of any Guarantor under
this Section 12 would otherwise be held or determined to be avoidable, invalid
or unenforceable on account of the amount of such Guarantor’s liability under
this Section 12, then, notwithstanding any other provision of this Section 12 to
the contrary, the amount of such liability shall, without any further action by
the Guarantors or Lender, be automatically limited and reduced to the highest
amount that is valid and enforceable as determined in such action or proceeding
(such highest amount determined hereunder being the relevant Guarantor’s
“Maximum Liability”). This Section 12.7 with respect to the Maximum Liability of
each Guarantor is intended solely to preserve the rights of Lender to the
maximum extent not subject to avoidance under applicable law, and no Guarantor
nor any other Person shall have any right or claim under this Section 12.7 with
respect to such Maximum Liability, except to the extent necessary so that the
obligations of any Guarantor hereunder shall not be rendered voidable under
applicable law. Each Guarantor agrees that the Obligations may at any time and
from time to time exceed the Maximum Liability of each Guarantor without
impairing this guaranty or affecting the rights and remedies of the Lender
hereunder, provided that, nothing in this sentence shall be construed to
increase any Guarantor’s obligations hereunder beyond its Maximum Liability.

49

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Section 12.8Guarantor’s Investigation. Each Guarantor acknowledges receipt of a
copy of each of this Agreement and the other Financing Documents. Each Guarantor
has made an independent investigation of the other Credit Parties and of the
financial condition of the other Credit Parties. Lender has not made and Lender
does not make any representations or warranties as to the income, expense,
operation, finances or any other matter or thing affecting any Credit Party nor
has Lender made any representations or warranties as to the amount or nature of
the Obligations of any Credit Party to which this Section 12 applies as
specifically herein set forth, nor has Lender or any officer, agent or employee
of Lender or any representative thereof, made any other oral representations,
agreements or commitments of any kind or nature, and each Guarantor hereby
expressly acknowledges that no such representations or warranties have been made
and such Guarantor expressly disclaims reliance on any such representations or
warranties

Section 12.9Termination. The provisions of this Section 12 shall remain in
effect until the payment and satisfaction in full, in immediately available
funds, of the Term Loan and other Obligations and termination of this Agreement.

Section 12.10Representative. Each Guarantor hereby designates Borrower
Representative and its representatives and agents on its behalf for the purpose
of giving and receiving all notices and other consents hereunder or under any
other Financing Document and taking all other actions on behalf of such
Guarantor under the Financing Documents. Borrower Representative hereby accepts
such appointment.

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

 

50

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IN WITNESS WHEREOF, intending to be legally bound, and intending that this
Agreement constitute an agreement executed under seal, each of the parties have
caused this Agreement to be executed under seal the day and year ftrst above
mentioned.

 

BORROWERS:

ALPHATEC HOLDINGS, INC.,

 

a Delaware corporation

 

 

 

 

 

 

 

By:

/s/ Jeffrey Black

 

Name:

Jeffrey Black

 

Title:

Chief Financial Officer

 

Address:

 

 

5818 El Camino Real

 

Carlsbad, CA 92008

 

Attn:

 

 

Email:

 

 

 

 

 

 

ALPHATEC SPINE, INC.,

 

a California corporation

 

 

 

 

 

 

 

By:

/s/ Jeffrey Black

 

Name:

Jeffrey Black

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

ALPHATEC SPINE, INC.,

 

 

a California corporation

 

 

 

 

By:

/s/ Jeffrey Black

 

Name:

Jeffrey Black

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

SAFEOP SURGICAL, INC.,

 

 

a Delaware corporation

 

 

 

 

 

 

 

By:

/s/ Jeffrey Black

 

Name:

Jeffrey Black

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

[Signatures Continue on Following Page]

Signature Page to Credit Agreement

 

 

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

 

LENDER:

SQUADRON MEDICAL FINANCE SOLUTIONS LLC, as

 

Lender

 

By:

/s/ David R. Pelizzon

 

Name:

David R. Pelizzon

 

Title:

President

 

 

 

 

Address:

 

18 Hartford Avenue

 

Granby, CT 06035

 

Email: dpeli zzon@sqdncap.com

 

 

 

 

Payment Account Designation:

 

See attached

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signature Page to Credit Agreement

 

 

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

 

EXHIBITS

 

EXHIBITS

 

 

 

Exhibit A

List of Guarantors

 

 

Exhibit B

Compliance Certificate

 

 

Exhibit C

Form of Payment Notification

 

 

 

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

 

Exhibit A to Credit Agreement

LIST OF GUARANTORS

 

As of the Closing Date, none.

 

US_AVTUVE-143086127

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

 

Exhibit B to Credit Agreement

COMPLIANCE CERTIFICATE

 

This Compliance Certificate is given
by________________________________________________, a Responsible Officer of
Alphatec Holdings, Inc., a Delaware corporation (the “Borrower Representative”),
pursuant to that certain Credit, Security and Guaranty Agreement, dated as of
_____ _____, 2018, by and among the Borrower Representative and Alphatec Spine,
Inc., a California corporation, and SafeOp Surgical, Inc., a Delaware
corporation, and any additional Borrower that may hereafter be added thereto
(each, a “Borrower”, and collectively, “Borrowers”), the other Credit Parties
party thereto, and Squadron Medical Finance Solutions, LLC, as Lender (as such
agreement may have been amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”). Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement.

 

The undersigned Responsible Officer hereby certifies to Lender that:

 

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

 

b) except as noted on Schedule 2 attached hereto, Schedule 9.2 to the Credit
Agreement contains a complete and accurate list of (i) each chief executive
office and principal place of business of each Credit Party and each of their
respective Subsidiaries and (ii) all addresses (including warehouses) at which
any of the Collateral is located and/or books and records of any Credit Party
regarding any of the Collateral are kept, and Schedule 2 specifically notes any
changes in the names under which Credit Parties and each of their respective
Subsidiaries conduct business;

 

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

 

d) except as noted on Schedule 4 attached hereto or Schedule 3.6 to the Credit
Agreement, the undersigned has no knowledge of (i) any current, pending or
threatened litigation against the Credit Parties which would reasonably be
expected to have a Material Adverse Effect with respect to Borrowers or any
other Credit Party or which in any manner calls into question the validity or
enforceability of any Financing Document or (ii) any default by the Credit
Parties under any Material Contract to which such Credit Party is a party;
provided, however, that the information required pursuant to this clause (d)
shall be deemed to have been delivered if the Credit Parties deliver to Lender
that certain litigation letter or disclosure statement delivered to Borrower
Representative’s independent public accountants on a quarterly basis at
substantially the same time such letter or disclosure statement is delivered to
Borrower Representatives independent public accountants;

 

e) [except as noted on Schedule 5 attached hereto, no Credit Party has acquired,
by purchase, by the approval or granting of any application for registration
(whether or not such application was previously disclosed to Lender by
Borrowers) or otherwise, any Intellectual Property that is registered with any
United States or foreign Governmental Authority, or has filed with any such
United States or foreign Governmental Authority, any new application for the
registration of any Intellectual Property, or acquired rights under a license as
a licensee with respect to any such registered Intellectual Property (or any
such application for the registration of Intellectual Property) owned by another
Person, that has not previously been reported to Lender on Schedule 3.19 to the
Credit Agreement or any Schedule 5 to any previous Compliance Certificate
delivered by the Borrower Representative to Lender;] [To be included in the
Compliance Certificate provided at the end of each Fiscal Quarter only]

 

 

US_AVTUVE-143086127

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

 

f) except as noted on Schedule 6 attached hereto and except in the ordinary
course of business, no Credit Party has acquired, since the Closing Date, by
purchase or otherwise, any Chattel Paper, Letter of Credit Rights, Instruments,
Documents or Investment Property that has not previously been reported to Lender
on any Schedule 6 to any previous Compliance Certificate delivered by Borrower
Representative to Lender;

 

g) [except as noted on Schedule 7 attached hereto, no Credit Party is aware of
any commercial tort claim that has not previously been reported to Lender on any
Schedule 7 to any previous Compliance Certificate delivered by Borrower
Representative to Lender; and] [To be included in the Compliance Certificate
provided at the end of each Fiscal Quarter only]

 

h) Borrowers are in compliance with the covenants contained in Article 6 of the
Credit Agreement, as demonstrated by the calculation of such covenants as set
forth in the attached worksheets [see attached worksheets], and such
calculations and the certifications contained therein are true, correct and
complete;

The foregoing certifications and computations are made as of
________________________________, 20___ (end of month) and as of _____________,
20___

 

 

Sincerely,

 

ALPHATEC HOLDINGS, INC., as

 

Borrower Representative

 

By:

 

Name:

 

Title:

 

 

 

 

US_AVTUVE-143086127

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

 

Worksheet for Calculation of EBITDA

 

EBITDA for the applicable Defined Period is calculated as follows:

 

 

 

Net income (or loss) for the Defined Period of Borrowers and their Consolidated
Subsidiaries, but excluding: (a) the income (or loss) of any Person (other than
Subsidiaries of Borrowers) in which Borrowers or any of their Subsidiaries has
an ownership interest unless received by Borrower or their Subsidiary in a cash
distribution; and (b) the income (or loss) of any Person accrued prior to the
date it became a Subsidiary of Borrowers or is merged into or consolidated with

Borrowers

 

 

 

 

$

 

 

 

 

 

Plus:

Any provision for (or minus any benefit from) income and franchise taxes
deducted in the determination of net income for the Defined Period

$

 

 

 

 

 

Plus:

Interest expense, net of interest income, deducted in the determination of net
income for the Defined Period

$

 

 

 

 

 

Plus:

Stock-based compensation expense

$

 

 

 

 

 

Plus:

Amortization and depreciation deducted in the determination of net income for
the Defined Period (including impairment charges to goodwill and write downs of
intangible assets)

$

 

 

 

 

 

Plus:

Non-recurring expenses approved by Agent (including transaction expenses and
restructuring charges related to acquisitions)

$

 

 

 

 

 

Plus:

Any effect for (or minus any benefit from) foreign currency deducted in the
determination of net income for the Defined Period

$

 

 

 

 

 

EBITDA for the Defined Period:

$

 

 

 

 

 

 

Worksheet for Calculation of Fixed Charges

 

 

 

 

 

 

Fixed Charges for the applicable Defined Period is calculated as follows:

 

 

 

 

 

Interest expense ($_______), net of interest income ($______), interest paid in
kind ($____) and amortization of capitalized fees and expenses incurred to
consummate the transactions contemplated by the Financing Documents and included
in interest expense ($____), included in the determination of net income of
Borrowers and their Consolidated Subsidiaries for the Defined Period (“Total
Interest Expense”)

 

 

 

 

$

 

 

 

 

Plus:

Any provision for (or minus any benefit from) income or franchise taxes included
in the determination of net income for the Defined Period *

$

 

 

 

 

 

Plus:

Payments of principal and interest for the Defined Period with respect to all
Debt (including the portion of scheduled payments under capital leases allocable
to principal and excluding scheduled repayments of Revolving Loans and other
Debt subject to reborrowing to the extent not accompanied by a concurrent and
permanent reduction of the Revolving Loan Commitment (or equivalent loan
commitment))

$

 

 

 

 

 

Plus:

Permitted Distributions

$

 

 

 

 

 

Fixed Charges for the applicable Defined Period:

$

 

 

 

 

 

 

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

 

Worksheet for Calculation of Operating Cash Flow

 

 

 

Operating Cash Flow for the applicable Defined Period is calculated as follows:

 

 

 

 

 

 

EBITDA for the Defined Period (calculated pursuant to the EBITDA Worksheet)

$

 

 

 

 

 

Minus:

Unfinanced capital expenditures for the Defined Period

$

 

 

 

 

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

 

Minus:

To the extent not already reflected in the calculation of EBITDA, other
capitalized costs, defined as the gross amount paid in cash and capitalized
during the Defined Period, as long term assets, other than amounts capitalized
during the Defined Period as capital expenditures for property, plant and
equipment or similar fixed asset accounts

$

 

 

 

 

Operating Cash Flow for the Defined Period:

$

 

 

Covenant Compliance:

 

 

 

 

(To be included in the Compliance Certificate for each month ending after April
30, 2020.)

 

 

 

Fixed Charge Coverage Ratio for the Defined Period

_____ to 1.0

 

 

Minimum Fixed Charge Coverage Ratio for the Defined Period

[***] to 1.0

 

 

 

In Compliance

Yes / No

 

 

 

 

Worksheet for Calculation of Liquidity

 

 

 

 

(To be included in the Compliance Certificate for each month ending prior to
March 31, 2020.)

 

 

 

 

Balance Sheet Cash

$

 

 

 

 

 

Plus:

Revolving Loan Availability

$

 

 

 

 

 

Liquidity

 

$

 

 

 

 

 

Covenant Compliance:

 

 

 

 

Liquidity

 

 

 

 

 

> $[***]

In Compliance

Yes / No

 

US_ACTIVE-143086127

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

 

Exhibit C to Credit Agreement

 

PAYMENT NOTIFICATION

 

This Payment Notification is given by_________________________, a Responsible
Officer of Alphatec Holdings, Inc., a Delaware corporation (the “Borrower
Representative”), pursuant to that certain Credit, Security and Guaranty
Agreement, dated as of [____ ___], 2018, by and among the Borrower
Representative, Alphatec Spine, Inc., a California corporation, and SafeOp
Surgical, Inc., a Delaware corporation, and any additional Borrower that may
hereafter be added thereto (each, a “Borrower”, and collectively, “Borrowers”),
and Squadron Medical Finance Solutions, LLC, a Delaware limited liability
company, as Lender (as such agreement may have been amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”).
Capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement.

 

Please be advised that funds in the amount of $__________will be wire
transferred to Lender on__________________, 20 ___. Such funds shall constitute
[an optional] [a mandatory] prepayment of the Term Loans, with such prepayments
to be applied in the manner specified in Section 2.1(c). [Such mandatory
prepayment is being made pursuant to Section _____________Credit Agreement.] of
the

 

Note: Funds must be received in the Payment Account by no later than 12:00 noon
Eastern time for same day application

 

IN WITNESS WHEREOF, the undersigned officer has executed and delivered this
Payment Notification this ________ day of _______, 20 ____.

 

Sincerely,

ALPHATEC HOLDINGS, INC.,

as Borrower Representative

 

 

 

 

By:

 

Name:

 

Title:

 

 

US_ACTIVE-143086127