Exhibit
10.1


THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “SECURITIES
ACT”) OR UNDER ANY STATE SECURITIES LAWS AND HAVE BEEN ISSUED AND SOLD IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. THESE SECURITIES
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, TO THE EFFECT THAT SUCH A REGISTRATION STATEMENT IS UNNECESSARY IN
RESPECT OF A PARTICULAR SALE, OFFER, PLEDGE, HYPOTHECATION OR OTHER TRANSFER.


HC
INNOVATIONS, INC.


SENIOR
SECURED NOTE


	
  

 	
  

 
	
 $2,400,000

 	
  

 
	
 No. 10-09-09

 	
 New York, New York

 


This 12%
Senior Secured Note (the “Note”), dated October 19, 2009, is issued by
HC Innovations, Inc., a Delaware corporation (the “Company”),
to Brahma Finance (BVI) Limited (the “Holder”).


          FOR VALUE RECEIVED, the Company hereby
unconditionally promises to pay to the order of the Holder, in lawful money of
the United States of America and in immediately available funds, the principal
sum of Two Million Four Hundred Thousand Dollars ($2,400,000) (the “Principal
Amount”). Interest shall accrue from the date hereof on the unpaid Principal
Amount of this Note at a rate equal to one percent (1%) per calendar month or
part thereof. Interest shall be compounded monthly on the first day of each
calendar month, beginning on the first day of the first calendar month
following the date of this Note, and shall continue to accrue and compound
until such Principal Amount, together with any fees, costs or charges due
hereunder, is paid in full. Interest shall be calculated on the basis of the
actual number of days elapsed and shall be paid as provided in Section 2 of
this Note. 


          1.          
Defined Terms. Capitalized terms used but not defined herein have
the meanings set forth in Annex A hereto.


          2.
          Payments. 


	
  

 	
  

 
	
  

 	
                (a)
           Maturity.
 This Note will mature and the entire unpaid Principal Amount, together with
 accrued and unpaid interest thereon, shall become due and payable in full on
 or before the earlier of (i) the date of consummation by the parties thereto
 of the transactions contemplated by that certain Standby Purchase Agreement
 dated as of August 4, 2009 between the Company and the Holder, and (ii)
 February 28, 2010 (the “Maturity Date”).

 
	
  

 	
  

 
	
  

 	
                (b)
           Payments.
 All payments under this Note shall be made in lawful money of the United
 States of America at such place as the Holder may from time to time designate
 in writing to the Company. 

 


1









	
  

 	
  

 
	
  

 	
                (c)
           Application of
 Payments. All payments shall be credited first to accrued interest then
 due and payable and the remainder applied to principal; provided, however,
 that if an Event of Default, as defined in Section 6 hereof, has occurred and
 is continuing, payments shall be credited first to the expenses of
 collection.

 
	
  

 	
  

 
	
  

 	
                (d)
           Prepayment.
 The Company may, at any time prior to the Maturity Date, upon notice as
 provided below, prepay the Principal Amount, in whole or in part, at 100% of
 the principal amount so prepaid, together with interest accrued thereon to
 the date of such prepayment. The Company will give the Holder written notice
 (a “Prepayment Notice”) of each optional prepayment under this Section 2(d)
 not less than five Business Days prior to the date fixed for such prepayment.
 Each such notice shall specify the date fixed for prepayment, the principal
 amount of this Note to be prepaid on such date, and the interest to be paid
 on the prepayment date with respect to such principal amount being prepaid.
 The principal amount of this Note to be prepaid shall mature and become due
 and payable on the date fixed for such prepayment, together with interest on
 such principal amount accrued to such date. From and after such date, unless
 the Company shall fail to pay such principal amount when so due and payable,
 together with the interest, as aforesaid, interest on such principal amount
 shall cease to accrue.

 
	
  

 	
  

 
	
  

 	
                (e)
           Fees. The
 Company shall pay to the Holder or its designee the following fees: (i) on
 the date of this Note an arrangement fee in an amount equal to two percent
 (2%) of the Principal Amount, and (ii) all of the Holder’s reasonable legal
 and professional costs incurred in connection with the transactions
 contemplated by this Note and the other Transaction Documents. 

 


          3.
          Guaranty and
Security Agreement. This Note is entitled to the benefit of that
certain Guaranty and Security Agreement (the “Guaranty and Security
Agreement”), dated of even date herewith, granted by the Company and the
Subsidiary Guarantors in favor of the Holder, pursuant to which the Company and
the Subsidiary Guarantors have guaranteed the Company’s obligations hereunder
and pursuant to which the Holder has been granted a security interest in the
Collateral.


          4.
          Representations and Warranties. The Company
hereby represents and warrants to the Holder on the date of this Note as set
forth in Annex B hereto.


          5.
          Payment of
Additional Amounts. 


          (a)
        All payments made
by the Entities to the Holder pursuant to the Transaction Documents will be
made free and clear of and without withholding or deduction for or on account
of any present or future Taxes imposed or levied by or on behalf of the United
States or any political subdivision or taxing authority thereof or therein (“US
Taxes”), unless the Entity is required to withhold or deduct any amount for or
on account of US Taxes by law or by the interpretation or administration
thereof. If any Entity is required to withhold or deduct any amount for or on
account of US Taxes from any payment made hereunder, such Entity will pay such
additional amounts (“Additional Amounts”) as may be necessary so that the net
amount received by the Holder (including Additional Amounts) after such
withholding or deduction will not be less than the amount the Holder would have
received if such US Taxes had not been withheld or deducted; provided, however,
that no such Additional Amounts will be payable with respect to a payment made
hereunder with respect to any US Taxes which would not have been imposed,
payable or due:


          (i)
        but for the fact
that the Holder is or was a domiciliary, national or resident of, or engages or
engaged in business, maintains or maintained a permanent establishment or is or
was physically present in the United States, or otherwise has some present or
former connection with the United States other than the mere holding or
enforcement of the Transaction Documents or the receipt of principal or
interest in respect thereof; or


2





          (ii)
        but for the failure
of the Holder to comply with a request by the Entity to satisfy any
certification, identification or other reporting requirements which the Holder
is legally entitled to satisfy, whether imposed by statute, treaty, regulation,
administrative practice or otherwise, concerning the nationality, residence or
connection with the United States of the Holder.


          (b)
        The obligation of
the Entities to pay Additional Amounts in respect of US Taxes shall not apply
with respect to (i) any estate, inheritance, gift, sales, transfer, personal
property or any similar Tax or (ii) any Tax which is payable otherwise than by
deduction or withholding from payments made under or with respect to the
Transaction Documents.


          (c)
        The Entities, as
applicable, will:


          (i)
         make any required
withholding or deduction;


          (ii)
        remit the full
amount deducted or withheld to the relevant authority (the “Taxing Authority”)
in accordance with applicable law;


          (iii)
      obtain certified
copies of tax receipts evidencing the payment of any Taxes so deducted or
withheld from each Taxing Authority imposing such taxes; and


          (iv)
       promptly send such
certified copies of tax receipts to the Holder. The Entities will attach to
each certified copy a certificate stating that the amount of withholding tax
evidenced by the certified copy was paid in connection with payments in respect
of the Transaction Documents.


          6.
          Events of Default


          For
purposes of this Note, an “Event of Default” shall exist if any of the
following conditions or events shall occur and be continuing:


	
  

 	
  

 
	
  

 	
                (a)
           the Company
 defaults in the payment of any principal on this Note when the same becomes
 due and payable, whether at maturity or at a date fixed for prepayment or by
 declaration or otherwise; or

 
	
  

 	
  

 
	
  

 	
                (b)
           the Company
 defaults in the payment of any interest on, or other amount payable in
 respect of, this Note for more than five (5) Business Days after the same
 becomes due and payable; or

 
	
  

 	
  

 
	
  

 	
                (c)
           the Company
 defaults in the performance of or compliance with any term contained herein
 or in any other Transaction Document (other than those referred to in paragraphs
 (a) and (b) of this Section 6); or

 
	
  

 	
  

 
	
  

 	
                (d)
           (i) a default
 shall occur in the observance or performance of any covenant or agreement
 contained in the Guarantee and Security Agreement by any Subsidiary Guarantor
 and such default shall continue beyond the period of grace, if any, allowed
 with respect thereto, or (ii) the Guarantee and Security Agreement shall
 cease to be in full force and effect for any reason whatsoever, including,
 without limitation, a determination by any governmental body or court that
 such agreement is invalid, void or unenforceable against any Subsidiary
 Guarantor or (iii) any Subsidiary Guarantor shall contest or deny the
 validity or enforceability of any of its obligations under the Guarantee and
 Security Agreement; or

 
	
  

 	
  

 
	
  

 	
                (e)
           (i) a default
 shall occur in the observance or performance of any covenant or agreement
 contained in any Security Document and such default shall continue beyond the
 period 

 


3









	
  

 	
  

 
	
  

 	
 of grace, if any,
 allowed with respect thereto, or (ii) any Security Document creating or
 granting a Lien on any Collateral shall cease to be in full force and effect,
 or (iii) the Company or any Subsidiary Guarantor shall deny or disaffirm the
 validity of any such Lien; or

 
	
  

 	
  

 
	
  

 	
           (f)
           any
 representation or warranty made in writing by or on behalf of the Company or
 any Subsidiary Guarantor or by any officer of the Company or any Subsidiary
 Guarantor in any Transaction Document or in any writing furnished in
 connection therewith proves to have been false or incorrect in any material
 respect on the date as of which made; or

 
	
  

 	
  

 
	
  

 	
           (g)
           any of the
 following occur: (i) the Company or any Subsidiary is in default (as
 principal or as guarantor or other surety) in the payment of any principal
 of, interest on, or other amount payable in respect of, any Indebtedness
 other than the Note that is outstanding in an aggregate principal amount of
 at least $250,000 beyond any period of grace provided with respect thereto, or
 (ii) the Company or any Subsidiary is in default in the performance of
 or compliance with any term of any instrument, mortgage, indenture or other
 agreement relating to any Indebtedness other than the Note in an aggregate
 principal amount of at least $250,000 or any other condition exists, and as a
 consequence of such default or condition such Indebtedness has become, or has
 been declared, due and payable or is capable of being declared due and
 payable before its stated maturity or before its regularly scheduled dates of
 payment, or (iii) as a consequence of the occurrence or continuation of
 any event or condition (other than the passage of time or the right of the
 holder of Indebtedness to convert such Indebtedness into equity interests),
 the Company or any Subsidiary has become obligated to purchase or repay
 Indebtedness other than the Note before its regular maturity or before its
 regularly scheduled dates of payment in an aggregate outstanding principal
 amount of at least $250,000; or. 

 
	
  

 	
  

 
	
  

 	
           (h)
           the Company or
 any Subsidiary (i) admits in writing its inability generally to pay its debts
 as they become due, (ii) files, or consents by answer or otherwise to
 the filing against it of, a petition for relief or reorganization or
 arrangement or any other petition in bankruptcy, for liquidation or to take
 advantage of any bankruptcy, insolvency, reorganization, moratorium or other
 similar law of any jurisdiction, (iii) makes an assignment for the
 benefit of its creditors, (iv) consents to the appointment of a
 custodian, receiver, trustee or other officer with similar powers with
 respect to it or with respect to any substantial part of its property,
 (v) is adjudicated as insolvent or to be liquidated, or (vi) takes
 corporate action for the purpose of any of the foregoing; or

 
	
  

 	
  

 
	
  

 	
           (i)
           a court or
 governmental authority of competent jurisdiction enters an order appointing,
 without consent by the Company or any of its Subsidiaries, a custodian,
 receiver, trustee or other officer with similar powers with respect to it or
 with respect to any substantial part of its property, or constituting an
 order for relief or approving a petition for relief or reorganization or any
 other petition in bankruptcy or for liquidation or to take advantage of any
 bankruptcy or insolvency law of any jurisdiction, or ordering the
 dissolution, winding-up or liquidation of the Company or any of its
 Subsidiaries, or any such petition shall be filed against the Company or any
 of its subsidiaries and such petition shall not be dismissed within
 sixty (60) days; or

 
	
  

 	
  

 
	
  

 	
           (j)
           a final judgment
 or judgments at any one time outstanding for the payment of money aggregating
 at least $250,000 are rendered against one or more of the Company or any of
 its subsidiaries and which judgments are not, within sixty (60) days
 after entry thereof, bonded, discharged or stayed pending appeal, or are not
 discharged within sixty (60) days after the expiration of such stay.

 


4





          7.
          Remedies.


          (a)
          If an Event of
Default with respect to the Company described in paragraph (h) or (i)
of Section 6 has occurred, this Note shall automatically become immediately due
and payable.


          (b)
          If any other Event
of Default has occurred and is continuing, the Holder may at any time by
written notice to the Company, declare this Note to be immediately due and
payable.


          (c)
          Upon this Note
becoming due and payable under this Section 7, whether automatically or by declaration,
this Note will forthwith mature and the entire unpaid principal amount of this
Note, plus (i) all accrued and unpaid interest thereon (to the full extent
permitted by applicable law), and (ii) all other amounts payable in connection
with this Note, shall all be immediately due and payable, in each and every
case without presentment, demand, protest or further notice, all of which are
hereby waived.


          (d)
          If any Event of
Default has occurred and is continuing, and irrespective of whether this Note
has become or been declared immediately due and payable, the Holder may proceed
to protect and enforce its rights by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement contained
herein or in any other Transaction Document, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the exercise of
any power granted hereby or thereby or by law or otherwise.


          (e)
          No course of
dealing and no delay on the part of the Holder in exercising any right, power
or remedy shall operate as a waiver thereof or otherwise prejudice the holder’s
rights, powers or remedies. No right, power or remedy conferred by this Note or
by any other Transaction Document upon the Holder shall be exclusive of any
other right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise. Without limiting the
obligations of the Company regarding transaction expenses, the Company will pay
to the Holder on demand such further amounts as shall be sufficient to cover
all costs and expenses of the Holder incurred in any enforcement or collection
hereunder including, without limitation, the reasonable attorneys’ fees,
expenses and disbursements of the Holder.


          8.
          Waiver. Except as otherwise provided
herein, the Company waives presentment and written demand for payment, notice
of dishonor, protest and notice of protest of this Note, and shall pay all
costs of collection when incurred, including, without limitation, reasonable
attorneys’ fees, costs and other expenses. THE COMPANY WAIVES ITS RIGHTS TO A
JURY TRIAL IN CONNECTION WITH ANY CLAIMS ARISING UNDER THIS NOTE TO THE FULLEST
EXTENT PERMITTED BY LAW. The right to plead any and all statutes of limitations
as a defense to any demands hereunder is hereby waived to the fullest extent
permitted by law. 


          9.
          Successors and Assigns; Assignment. The
provisions of this Note shall inure to the benefit of and be binding on any
successor to the Company and shall extend to any holder hereof. The Holder may
assign this Note to any of its affiliates. Subject to the preceding sentence,
this Note may be transferred only upon surrender of the original Note for
registration of transfer, duly endorsed, or accompanied by a duly executed
written instrument of transfer in form satisfactory to the Company. Thereupon,
a new note for the same Principal Amount and interest will be issued to, and
registered in the name of, the transferee. Interest and principal are payable
only to the registered holder of this Note. 


          10.
          Further Assurances. The Company shall, at
any time and from time to time, upon the written request of the Holder, execute
and deliver to the Holder such further documents and instruments and do such
other acts and things as the Holder may reasonably request in order to
effectuate fully the purpose and intent of this Note.


5






          11.          Notices.
Any notices, demands, consents or
other communications that are given or made hereunder shall be in writing and
shall be given or made to any party hereto by physical delivery, U.S. mail
(registered or certified mail, postage prepaid, return receipt requested) or
overnight courier or by transmission by facsimile to such party at its, his or
her address (or facsimile number) set forth below, or such other address (or
facsimile number) as shall have been specified by like notice by such party:


	
  

 	
  

 	
  

 
	
  

 	
 If to the
 Company:

 
	
  

 
	
  

 	
  

 	
 HC
 Innovations, Inc.

 
	
  

 	
  

 	
 10 Progress
 Drive

 
	
  

 	
  

 	
 Shelton, CT
 06484

 
	
  

 	
  

 	
 Tel: (203)
 538-8012

 
	
  

 	
  

 	
 Fax: (203) 926-0594

 
	
  

 	
  

 	
 Attention: John Randazzo

 
	
  

 	
  

 	
  

 
	
  

 	
 With a copy
 to:

 
	
  

 
	
  

 	
  

 	
 Gersten
 Savage, LLP

 
	
  

 	
  

 	
 600
 Lexington Avenue, 9th Floor

 
	
  

 	
  

 	
 New York,
 New York 10022

 
	
  

 	
  

 	
 Telephone:
 (212) 752-9700

 
	
  

 	
  

 	
 Facsimile:
 (212) 980-5192

 
	
  

 	
  

 	
 Attention:
 Jay M. Kaplowitz, Esq.

 
	
  

 	
  

 	
  

 
	
  

 	
 If to the
 Holder:

 
	
  

 
	
  

 	
  

 	
 Brahma
 Finance (BVI) Limited

 
	
  

 	
  

 	
 Le
 Roccabella

 
	
  

 	
  

 	
 24 Avenue
 Princesse Grace

 
	
  

 	
  

 	
 Monte-Carlo,
 MC 98000

 
	
  

 	
  

 	
 Monaco

 
	
  

 	
  

 	
 Telephone:
 +33 643 916 999

 
	
  

 	
  

 	
 Attention:
 Nicholas Barham

 
	
  

 	
  

 	
  

 
	
  

 	
           With
 a copy to:

 
	
  

 
	
  

 	
  

 	
 Thompson
 Hine LLP

 
	
  

 	
  

 	
 335 Madison
 Avenue, 12th Floor

 
	
  

 	
  

 	
 New York,
 New York 10017

 
	
  

 	
  

 	
 Tel: (212)
 908-3975

 
	
  

 	
  

 	
 Fax: (212)
 344-6101

 
	
  

 	
  

 	
 Attention:
 John Clapp, Esq.

 


Each such notice, demand, consent or other communication shall be
effective upon receipt in the case of physical delivery or overnight courier,
upon confirmation of receipt by or on behalf of the addressee in the case of
transmission by facsimile if received prior to 5:00 p.m., New York time, and,
if received after 5:00 p.m., New York time, on the next Business Day
immediately after the date of such receipt, and five Business Days after
deposit in the U.S. mails in the case of mailing.


6





          12.          Amendments.
This Note may not be amended, modified or terminated in whole or in part,
except in writing, executed by each of the Parties.


          13.          Loss of
Note. Upon receipt by the Company of reasonable evidence of the
loss, theft, destruction or mutilation of this Note or any Note exchanged for
it, and reasonable indemnity (in case of loss, theft or destruction) or
surrender and cancellation of such Note (in the case of mutilation), the
Company will make and deliver in lieu of such Note a new Note of like tenor. 


          14.          Maximum
Interest. In no event shall the amount of interest (and any other
sums or amounts that are deemed to constitute interest under applicable legal
requirements) due or payable in connection with this Note exceed the maximum
rate of interest designated by applicable legal requirements (the “Maximum
Amount”), and in the event such excess payment is inadvertently paid by the
Company or inadvertently received by the Holder, then such excess sum shall be
credited as a payment of the Principal Amount on the Note, and if in excess of
the outstanding Principal Amount of the Note, shall be immediately returned to
the Company upon such determination. It is the express intent hereof that the
Company not pay and the Holder not receive, directly or indirectly, interest in
excess of the Maximum Amount. 


          15.          Construction
and Interpretation. The headings or titles of the sections of this
Note are intended for ease of reference only and shall have no effect
whatsoever on the construction or interpretation of any provision of this Note.
All provisions of this Note have been negotiated at arms length, each party
having legal counsel, and this Note shall not be construed for or against any
party by reason of the authorship or alleged authorship of any provision
hereof. The language in this Note shall be construed as to its fair meaning and
not strictly for or against any party. 


 [signature page follows]


7





THIS NOTE HAS BEEN EXECUTED AND DELIVERED IN THE CITY OF NEW YORK,
STATE OF NEW YORK, UNITED STATES OF AMERICA. THIS NOTE SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, EXCLUDING CONFLICT OF LAWS PRINCIPLES THAT WOULD CAUSE THE APPLICATION OF
LAWS OF ANY OTHER JURISDICTION. 


	
  

 	
  

 
	
 COMPANY:

 	
 Date:
 October 19, 2009

 
	
  

 	
  

 
	
 HC INNOVATIONS, INC.

 	
  

 





	
  

 	
  

 	
  

 
	
 By:

 	
  

 	
  

 
	
  

 	 

 	
  

 
	
 Name:

 	
 John
 Randazzo

 	
  

 
	
 Title:

 	
 Interim
 Chief Executive Officer

 	
  

 









Annex A


Definitions


“Business Day” means any day, other than a Saturday, Sunday or a day on
which banking institutions in the State of New York are authorized or obligated
by law or executive order to close.


“Collateral” shall have the meaning ascribed to such term in the
Guarantee and Security Agreement.


“Entities” means the Company and its Subsidiaries.


“Fundamental Documents” means the documents by which any Person (other
than an individual) establishes its legal existence or which govern its
internal affairs. For example, the “Fundamental Documents” of a corporation
would be its articles of incorporation/certificate of incorporation and code of
regulations/bylaws.


“GAAP” shall mean generally accepted accounting principles in the
United States of America and statements and interpretations (if applicable)
issued by the Financial Accounting Standards Board, or any successor body, as
in effect from time to time, unless otherwise stated.


“Governmental Entity” means any foreign, federal, state, municipal or
other government, governmental department, commission, board, bureau, agency or
instrumentality, or any court, tribunal or arbitrator.


“Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments; (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets acquired by such Person; (d) all
obligations of such Person in respect of the deferred purchase price of
property or assets or services; (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property or assets owned or acquired
by such Person, whether or not the Indebtedness secured thereby has been
assumed; (f) all guarantees by such Person of Indebtedness of others; (g) all
capital leases of such Person (as within the meaning of GAAP); (h) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guarantee; and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances.
Indebtedness of any person shall not include current accounts payable incurred
in the ordinary course of business of such Person. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.


“Law” means any foreign, federal, state or local constitution, law,
statute, treaty, rule, directive, regulation, requirement, ordinance and any
similar provision having the force or effect of law or any Order.


“Lien” means any security interest, pledge, lien, bailment (in the
nature of a pledge or for purposes of security), mortgage, security agreement,
deed of trust, grant of a power to confess judgment, conditional sale or title
retention agreement (including any lease in the nature thereof), claim, charge,
escrow, encumbrance, easement, reservation, restriction, cloud, preemptive
right, right of first refusal or first offer, option, commitment or other
similar agreement, arrangement, contract, commitment, understanding 





or obligation, whether written or oral and whether or not relating in
any way to credit or the borrowing of money.


“Material Adverse Effect” means a material adverse effect on the
business, operations, properties, assets, condition (financial or otherwise),
prospects or results of operations of the Company and its Subsidiaries, taken
as a whole.


“Order” means any judgment, writ, decree, declaration, injunction,
order, stipulation, compliance agreement or settlement agreement issued or
imposed by, or entered into with, a Governmental Entity or arbitrator.


“Permit” shall mean any permit, license, authorization, registration,
franchise, approval, consent, certificate, variance, waiver, variance or
clearance and similar rights obtained, or required to be obtained, from
Governmental Entities.


“Permitted Liens” means (i) Liens for Taxes not yet due and payable,
(ii) workers or unemployment compensation Liens arising in the ordinary course
of business of the Company or its Subsidiaries, consistent with past practice,
(iii) mechanic’s, materialman’s, supplier’s, vendor’s or similar Liens arising
in the ordinary course of business of the Company and its Subsidiaries,
consistent with past practice, securing amounts that are not delinquent; (iv)
zoning or deed restrictions, public utility easements, rights of way, minor
title irregularities and similar matters relating to any real property of the
Company or its Subsidiaries, in all such cases having no effect which is
materially adverse as a practical matter on the ownership or use of any such
real estate in question, as such property is used in the ordinary course of
business of by the Company and its Subsidiaries; and (v) any Lien granted to
the Holder created pursuant to the Guarantee and Security Agreement for the
benefit of the Holder.


“Person” shall be construed as broadly as possible and shall include an
individual, a corporation, a company, an association, a joint stock company, a
partnership (including a limited liability partnership), a limited liability
company, a joint venture, a trust or an unincorporated organization and a
Governmental Entity.


“Security Document” means any and all of the security agreements,
pledge agreements and/or collateral assignments among the Collateral Agent and
the Company and the Subsidiary Guarantors which secure the obligations of the
Company and/or the Subsidiary Guarantors under the Transaction Documents,
whether in existence on the date hereof or hereafter entered into, in each case
as supplemented, amended, modified, renewed and replaced.


“Subsidiary” means with respect to any Person, any other Person of
which at least fifty percent (50%) of the shares of stock or other interests
entitled to vote in the election of the members of the board of directors of
such other Person or comparable Persons performing similar functions at such
other Person (excluding shares or other interests entitled to vote only upon
the failure to pay dividends thereon or other contingencies) are at the time
owned or controlled, directly or indirectly through one or more Subsidiaries,
by such Person. Unless the context otherwise requires, the term “Subsidiary”
means a Subsidiary of the Company.


“Subsidiary Guarantors” means those Subsidiaries of the Company that
will execute the Guarantee and Security Agreement.


“Taxes” means, with respect to any Person, (i) all income taxes
(including any tax on or based upon net income, gross income, income as
specially defined, earnings, profits or selected items of income, earnings or
profits) and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, 





employment, excise, severance, stamp, occupation, premium, property or
windfall profits taxes, alternative or add-on minimum taxes, customs duties,
levies, imposts, and other taxes, fees, assessments or charges of any kind
whatsoever, together with all interest and penalties, additions to tax and
other additional amounts, in each case imposed by any taxing authority
(domestic or foreign) on such Person (if any) and (ii) any liability for the
payment of any amount of the type described in clause (i) above as a result of
(A) being a “transferee” (within the meaning of Section 6901 of the Code or any
other applicable Law) of another Person, (B) being a member of an affiliated,
combined or consolidated group or (C) a contractual arrangement or otherwise.


“Transaction Documents” shall mean this Note, the Guarantee and
Security Agreement and any other document or instrument executed and delivered
by the Company in connection with this Note. 





Annex B


Representations and Warranties


          The Company
hereby represents and warrants to the Holder on the date of issuance of this
Note as follows:


Corporate Existence and Power


          Each of the
Entities has been duly incorporated or organized, as the case may be, is
validly existing as a corporation, partnership or limited liability company, as
applicable, and is in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite corporate power and
authority to own or lease and operate its properties and to conduct its
business as it is presently conducted and as proposed to be conducted. Each of
the Entities is duly qualified as a foreign corporation, partnership or limited
liability company, as applicable, to transact business and is in good standing
in each other jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property, the conduct of its business or
otherwise, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, result in a Material Adverse
Effect. The Company has made available to, and, to the extent requested,
delivered to, the Holder true, correct and complete copies of (i) the
Certificate of Incorporation of the Company, together with all amendments and
any other modifications thereto (the “Company Certificate of Incorporation”),
and (ii) the Bylaws of the Company, together with all amendments and any
other modifications thereto (the “Company Bylaws”). The Company is not in
violation or breach of any of the terms, conditions or provisions of the Company
Certificate of Incorporation or the Company Bylaws. Each of the Subsidiaries of
the Company has made available to, and, to the extent requested, delivered to,
the Holder true, correct and complete copies of its Fundamental Documents,
together with all amendments and any other modifications thereto. None of the
Subsidiaries of the Company is in violation or breach of any of the terms,
conditions or provisions of its respective Fundamental Documents.


Subsidiaries and Affiliates


          All of the
issued and outstanding capital stock or other equity or ownership interests of
each Subsidiary of the Company have been duly authorized and validly issued,
are fully paid and nonassessable and, except as contemplated by the Transaction
Documents, are owned by the Company, directly or through Subsidiaries, free and
clear of any Lien or adverse claim.


Authorization


          Each of the
Entities has the requisite corporate power and authority to execute and deliver
the Transaction Documents to which it is a party and to perform its obligations
under such Transaction Documents. The execution and delivery by each of the
Entities of the Transaction Documents to which it is a party and the
performance by each such entity of its obligations under such Transaction
Documents have been duly authorized by all necessary corporate or other
organizational action on its or their part and no other proceedings on its or
their part are necessary to authorize the execution and delivery of such
Transaction Documents or its or their performance of its or their obligations
under such Transaction Documents.


Due Execution and Delivery; Binding
Obligations


          Each
Transaction Document to which one or more of the Entities is a party has been
duly executed and delivered by an authorized representative of each such
entity, and each such Transaction 





Document constitutes the legal, valid and binding obligation of the
respective Entities, enforceable against each of them in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or conveyance or similar laws
relating to or limiting creditors’ rights generally or by equitable principles
relating to enforceability.


Issuance of Note


          The Company
has all necessary power and authority to issue the Note. The Note has been duly
authorized by all necessary corporate action by the Company. 


Collateral


          (a) The
right, title and interest of the Company and each of its Subsidiaries, as
applicable, in the Collateral is free and clear of all Liens except for (i) the
Lien granted in favor of the Holder under the Guarantee and Security Agreement
(ii) Permitted Liens and (iii) as contemplated by that certain Guarantee and
Amended and Restated Security Agreement dated as of December 23, 2008 (the
“Prior Security Agreement”), and no financing statements in respect of the
Collateral will be on file in favor of any person other than the Holder and the
Collateral Agent under the Prior Security Agreement; (b) the Guarantee and
Security Agreement creates valid security interests in, and Liens on, the
Collateral covered thereby securing the obligations of the Company and each of
its Subsidiaries to the Holder, (c) the representations and warranties of
the Company and each of its Subsidiaries in the Guarantee and Security
Agreement will be true and correct (if such representations and warranties are
not qualified with respect to materiality, in which case such representations
will be true and correct in all respects) in all material respects;
(d) upon the filing and recording of financing statements in the
appropriate jurisdictions, the Lien securing the obligations of the Company and
each of its Subsidiaries to the Holder will have been duly perfected as to the
Collateral as to which perfection may be accomplished pursuant to the
applicable Uniform Commercial Code or other applicable law in such
jurisdictions; and (e) the Lien of the Guarantee and Security Agreement
shall be prior to any other Lien on any of the Collateral, other than Permitted
Liens.


No Conflict or Violation


          The
execution and delivery by each Entity of each Transaction Document to which it
is a party, and the performance by each Entity of its obligations under each
such Transaction Document, will not result in any conflict with, or result in a
violation or breach of any of the terms, conditions or provisions of, or
constitute (with or without due notice, lapse of time or both) a default under,
or give rise to a right of termination, cancellation or acceleration of any
obligation under, or result in the creation of any Lien (other than a Permitted
Lien, any Lien granted under the Guarantee and Security Agreement and any Lien
granted under the Prior Security Agreement) upon any of the properties or assets
of any Entity under, (a) the respective Fundamental Documents of the
Entities, (b) any indenture, mortgage, loan or credit agreement, note,
contract, franchise, lease or other agreement or instrument to which any Entity
is a party or by which it or any of them may be bound, or to which any of the
property or assets of any Entity is subject; or (c) any Law, Order or
Permit applicable to any one or more of the Entities or to which any of their
respective properties or assets is subject, except, in the case of
clauses (b) and (c) above, such conflicts, violations, breaches, defaults,
rights or Liens (excluding any of the foregoing arising under, or in connection
with, the Securities Act), which would not, either individually or in the
aggregate, result in a Material Adverse Effect or affect the enforceability of
the Transaction Documents.





Consents and Approvals


          The
execution and delivery by the Entities of each Transaction Document to which
they are a party, and the performance by the Entities of their obligations
under each such Transaction Document, do not and will not require any consent,
approval, license, permit, order or authorization of, or any registration,
notification, declaration or filing with, any Person (including, without
limitation, any Governmental Entity), except for (a) such as have been
obtained or made and are in full force and effect, (b) the filing of any
notice with a Governmental Entity which may be required subsequent to the date
of this Note under the Securities Act, any state securities laws or the rules
and regulations promulgated thereunder (and which, if required, will be filed
on a timely basis as may be so required), and (c) any such consents or
approvals of, or filings with, any Persons who are not Governmental Entities,
the failure of which to be obtained would not result, either individually or in
the aggregate, in a Material Adverse Effect or affect the enforceability of the
Transaction Documents.