**Exhibit 10.30**

 

 

**REVOLVING CREDIT ANDSECURITY AGREEMENT**

 

**THISREVOLVING CREDIT AND SECURITY AGREEMENT** (the **“Agreement”**)dated as of February 5, 2004, is entered into by and among **BOSTON BIOMEDICA, INC**., aMassachusetts****corporation (“**Biomedica**”),**BBIBIOTECH RESEARCH LABORATORIES, INC.** a Massachusetts corporation (“**Biotech**”),**BBISOURCE SCIENTIFIC, INC.** a Massachusetts corporation (“**Source**”),and **BBIBIOSEQ, INC.** a Massachusetts corporation (“**Bioseq**”; individually andcollectively, the **“Borrower”**), and **CAPITALSOURCE FINANCE LLC**, aDelaware limited liability company (the **“Lender”**).

 

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

 

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

 

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

 

# ***I.             DEFINITIONS***

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## **1.1          General Terms**

 

For purposesof this Agreement, in addition to the definitions above and elsewhere in thisAgreement, the terms listed in Appendix A hereto shall have the meaningsgiven such terms in Appendix A, which is incorporated herein and made apart hereof.  All capitalized terms usedwhich are not specifically defined shall have meanings provided inArticle 9 of the UCC in effect on the date hereof to the extent the sameare used or defined therein.  Unlessotherwise specified herein or in Appendix A, any agreement or contractreferred to herein or in Appendix A shall mean such agreement asmodified, amended or supplemented from time to time.  Unless otherwise specified, as used in the Loan Documents or inany certificate, report, instrument or other document made or delivered pursuantto any of the Loan Documents, all accounting terms not defined in Appendix Aor elsewhere in this Agreement shall have the meanings given to such terms inand shall be interpreted in accordance with GAAP.

 

# ***II.            ADVANCES,PAYMENT AND INTEREST***

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## **2.1          The Revolving Facility**

 

*(a)           Subject to the provisions of thisAgreement, Lender shall make Advances to Borrower under the Revolving Facilityfrom time to time during the Term, providedthat, notwithstanding any other provision of this Agreement, the aggregateamount of all Advances at any one time outstanding under the Revolving Facilityshall not exceed either of (a)*

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

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(b)           Lender has established theabove-referenced advance rate for Availability and, in its sole creditjudgment, may further adjust the Availability and such advance rate by applyingpercentages (known as “liquidity factors”) to Eligible Receivables by payorclass based upon Borrower’s actual recent collection history for each suchpayor class (i.e., commercial contracts, government agency, etc.) in a mannerconsistent with Lender’s underwriting practices and procedures, includingwithout limitation Lender’s review and analysis of, among other things,Borrower’s historical returns, rebates, discounts, credits and allowances(collectively, the **“Dilution Items”**).  Such liquidity factors and the advance ratefor Availability may be adjusted by Lender throughout the Term as warranted byLender’s underwriting practices and procedures in its sole creditjudgment.  Also, Lender shall have theright to establish from time to time, in its sole credit judgment, reservesagainst the Borrowing Base, which reserves shall have the effect of reducingthe amounts otherwise eligible to be disbursed to Borrower under the RevolvingFacility pursuant to this Agreement.  Asof the Closing Date, Lender’s review has determined the liquidity factors to bethe following:  Biomedica - 95%, Biotech- 100%, and Source - 96%.

 

## **2.2          The Note; Maturity**

 

(a) All Advances under the Revolving Facilityshall be evidenced by the Note, payable to the order of Lender, duly executedand delivered by Borrower and dated the Closing Date, evidencing the aggregateindebtedness of Borrower to Lender resulting from Advances under the RevolvingFacility, from time to time.  Lenderhereby is authorized, but is not obligated, to enter the amount of each Advanceunder the Revolving Facility and the amount of each payment or prepayment ofprincipal or interest thereon in the appropriate spaces on the reverse of or onan attachment to the Note.  Lender willaccount to Borrower monthly with a statement of Advances under the RevolvingFacility and charges and payments made pursuant to this Agreement, and in theabsence of manifest error, such accounting rendered by Lender shall be deemedfinal, binding and conclusive unless Lender is notified by Borrower in writingto the contrary within 15 calendar days of Receipt of each accounting, whichnotice shall be deemed an objection only to items specifically objected totherein.

 

(b)  All amounts outstandingunder the Note and other Obligations shall be due and payable in full, if notearlier in accordance with this Agreement, on the earlier of (i) the occurrenceof an Event of Default if required pursuant hereto or Lender’s demand upon anEvent of Default, and (ii) the last day of the Term (such earlier date beingthe **“Revolving Facility Maturity Date”**).

 

## **2.3          Interest**

 

*Intereston outstanding Advances under the Note shall be payable monthly in arrears onthe first day of each calendar month at an annual rate of Prime Rate plus3.00%,*

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*provided*, however, that,notwithstanding any provision of any Loan Document, the Prime Rate shall be notless than 4.00%, in each case calculated on the basis of a 360-day year and forthe actual number of calendar days elapsed in each interest calculationperiod.  Interest accrued on eachAdvance under the Note shall be due and payable on the first day of eachcalendar month, in accordance with the procedures provided for in Section2.5 and Section 2.6, commencing March 1, 2004, and continuinguntil the later of the expiration of the Term and the full performance andirrevocable payment in full in cash of the Obligations and termination of thisAgreement.

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## **2.4          Revolving Facility Disbursements;Requirement to Deliver Borrowing Certificate**

 

(a)           So long as noDefault or Event of Default shall have occurred and be continuing, Borrower maygive Lender irrevocable written notice requesting an Advance under theRevolving Facility by delivering to Lender not later than 4:00 p.m. (EasternStandard Time) at least two (2) but not more than four (4) Business Days beforethe proposed borrowing date of such requested Advance (the **“Borrowing Date”**), acompleted Borrowing Certificate and relevant supporting documentation listed onSchedule 2.4 in a form reasonably satisfactory to Lender, which shall(i) specify the proposed Borrowing Date of such Advance which shall be aBusiness Day, (ii) specify the principal amount of such requested Advance,and (iii) certify the matters contained in Section 4.2.

 

(b)           Each time a requestfor an Advance is made, and, in any event and regardless of whether an Advanceis being requested, on the first and third Tuesday of each month during the Term (and more frequently if Lender shall sorequest) until the Obligations are indefeasiblypaid in cash in full and this Agreement is terminated, Borrower shalldeliver to Lender a Borrowing Certificate accompanied by a separate detailedaging and categorizing of Borrower’s accounts receivable and accounts payableand such other supporting documentation with respect to the figures andinformation in the Borrowing Certificate as Lender shall reasonably requestfrom a credit or security perspective or otherwise.

 

(c)           On each Borrowing Date, Borrower irrevocably authorizesLender to disburse the proceeds of the requested Advance to the appropriate Borrower’saccount(s) as set forth on Schedule 2.4, in all cases for credit to theappropriate Borrower (or to such other account as to which the appropriateBorrower shall instruct Lender) via Federal funds wire transfer no later than4:00 p.m. (Eastern Standard Time).

 

## **2.5          Revolving Facility Collections;Repayment; Borrowing Availability and Lockbox**

 

Each Borrowershall maintain one or more lockbox accounts (individually and collectively, the**“LockboxAccount”**) with one or more banks acceptable to Lender (each, a **“LockboxBank”**), and shall execute with each Lockbox Bank one or moreagreements acceptable to Lender (individually and collectively, the **“LockboxAgreement”**), and such other agreements related thereto as Lender mayrequire.  Lender hereby acknowledgesthat Fleet Bank is an acceptable Lockbox Bank as of the Closing Date.  Each Borrower shall ensure that allcollections of their respective Accounts are paid and delivered from AccountDebtors and other Persons into the appropriate Lockbox Account.  The Lockbox Agreements shall provide thatthe Lockbox Banks immediately will transfer all funds paid into the LockboxAccounts into a depository account or accounts maintained by Lender or anAffiliate of Lender at such bank as Lender may communicate to Borrower fromtime to time (the **“Concentration Account”**).  Notwithstanding and without limiting anyother provision of any Loan Document, Lender shall apply, on a daily basis, allfunds transferred into the Concentration Account pursuant to the LockboxAgreement and this Section 2.5 in such order and manner asdetermined by Lender

 

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

 

## **2.6          Promise to Pay; Manner of Payment**

 

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

 

## **2.7          Repayment of Excess Advances**

 

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

 

## **2.8          Payments by Lender**

 

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

 

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relevant amount, interest orObligations.  No payment or prepaymentof any amount by Lender or any other Person shall entitle any Person to besubrogated to the rights of Lender under any Loan Document unless and until theObligations have been fully performed and paid irrevocably in cash and thisAgreement has been terminated.  Any sumsactually expended by Lender as a result of any Borrower’s or any Guarantor’sfailure to pay, perform or comply with any Loan Document or any of theObligations may be charged to Borrower’s account as an Advance under theRevolving Facility and added to the Obligations.

 

## **2.9          Grant of Security Interest; Collateral**

 

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

 

(i)            allof such Borrower’s present and future Inventory, now owned or hereafteracquired;

 

(ii)           allof such Borrower’s present and future Accounts and all of the following solelyto the extent related to such Accounts: contract rights, Permits, GeneralIntangibles, Chattel Paper, Documents, Instruments, Deposit Accounts (whichshall include the Lockbox Accounts), Letter-of-Credit Rights, SupportingObligations, rights to the payment of money or other forms of consideration ofany kind, now owned or hereafter acquired;

 

(iii)          allof such Borrower’s present and future Government Contracts and rightsthereunder and the related Government Accounts and proceeds thereof, now orhereafter owned or acquired by such Borrower; provided, however,that Lender shall not have a security interest in any rights under anyGovernment Contract of such Borrower or in the related Government Account wherethe taking of such security interest would be a violation of an expressprohibition contained in the Government Contract (for purposes of thislimitation, the fact that a Government Contract is subject to, or otherwiserefers to, Title 31, § 203 or Title 41, § 15 of the UnitedStates Code shall not be deemed an express prohibition against assignmentthereof) or is prohibited by applicable law;

 

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

 

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

 

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

 

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Intangible directly related tothe Accounts which is in the nature of an Account or a right to the payment ofmoney or a proceed of, or otherwise related to the enforcement or collectionof, any Account or right to the payment of money, or goods which are thesubject of any Account or right to the payment of money, (b) any and allproceeds of any General Intangible which related to the Accounts that isotherwise excluded pursuant to subsection (i) to the extent that the assignment,pledge or encumbrance of such proceeds is not so restricted, and (c) uponobtaining the consent of any such licensor or other applicable party withrespect to any such otherwise excluded General Intangible, such GeneralIntangible as well as any and all proceeds thereof that might theretofore havebeen excluded from such grant of a security interest and from the term“Collateral.”

 

(d)           Upon the execution and delivery ofthis Agreement, and upon the proper filing of the necessary financingstatements, without any further action, Lender will have a good, valid andperfected first priority Lien and security interest in the Collateral, subjectto no transfer or other restrictions or Liens of any kind in favor of any otherPerson except for Permitted Liens.  Nofinancing statement relating to any of the Collateral is on file in any publicoffice except those (i) on behalf of Lender, and/or (ii) in connection withPermitted Liens.

 

## **2.10        Collateral Administration**

 

(a)           All Collateral (except DepositAccounts) will at all times be kept by Borrower at the locations set forth on Schedule 5.18Bhereto and shall not, without thirty (30) calendar days prior written notice toLender, be moved therefrom, and in any case shall not be moved outside thecontinental United States.

 

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

 

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

 

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

 

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Accounts directly in its ownname and to charge collection costs and expenses, including reasonableattorney’s fees, to Borrower.

 

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

 

(f)  Borrower (i) shall provide prompt written notice to its current bank totransfer all items, collections and remittances to the Concentration Account,(ii) shall direct each Account Debtor to make payments to the appropriateLockbox Account, and Borrower hereby authorizes Lender, upon any failure tosend such notices and directions within ten (10) calendar days after the dateof this Agreement (or ten (10) calendar days after the Person becomes an AccountDebtor), to send any and all similar notices and directions to such AccountDebtors, and (iii) shall do anything further that may be lawfully required byLender to create and perfect Lender’s lien on any collateral and effectuate theintentions of the Loan Documents.  AtLender’s request, Borrower shall immediately deliver to Lender all items forwhich Lender must receive possession to obtain a perfected security interestand all notes, certificates, and documents of title, Chattel Paper, warehousereceipts, Instruments, and any other similar instruments constitutingCollateral.

 

## **2.11        Power of Attorney**

 

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

 

# ***III.          FEESAND OTHER CHARGES***

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## **3.1          Commitment Fee**

 

On or before the ClosingDate, Borrower shall pay to Lender 1% of the Facility Cap as a nonrefundablecommitment fee.

 

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## **3.2          Unused Line Fee**

 

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

 

## **3.3          Collateral Management Fee**

 

Borrower shallpay Lender as additional interest a monthly collateral management fee (the **“CollateralManagement Fee”**) equal to 0.083% per month calculated on the basisof the daily average amount of the balances under the Revolving Facilityoutstanding during the preceding month. The Collateral Management Fee shall be payable monthly in arrears on thefirst day of each successive calendar month (starting with the month in whichthe Closing Date occurs).

 

## **3.4          Computation of Fees; Lawful Limits**

 

All feeshereunder shall be computed on the basis of a year of 360 days and for theactual number of days elapsed in each calculation period, as applicable.  In no contingency or event whatsoever,whether by reason of acceleration or otherwise, shall the interest and othercharges paid or agreed to be paid to Lender for the use, forbearance ordetention of money hereunder exceed the maximum rate permissible underapplicable law which a court of competent jurisdiction shall, in a finaldetermination, deem applicable hereto. If, due to any circumstance whatsoever, fulfillment of any provisionhereof, at the time performance of such provision shall be due, shall exceedany such limit, then, the obligation to be so fulfilled shall be reduced tosuch lawful limit, and, if Lender shall have received interest or any othercharges of any kind which might be deemed to be interest under applicable lawin excess of the maximum lawful rate, then such excess shall be applied firstto any unpaid fees and charges hereunder, then to unpaid principal balance owedby Borrower hereunder, and if the then remaining excess interest is greaterthan the previously unpaid principal balance, Lender shall promptly refund suchexcess amount to Borrower and the provisions hereof shall be deemed amended toprovide for such permissible rate.  Theterms and provisions of this Section 3.4 shall control to the extent anyother provision of any Loan Document is inconsistent herewith.

 

## **3.5          Default Rate of Interest**

 

Upon the occurrence andduring the continuation of an Event of Default, the Applicable Rate of interestin effect at such time with respect to the Obligations shall be increased by3.0% per annum (the **“Default Rate”**).

 

## **3.6          Acknowledgement of Joint and SeveralLiability**

 

Each Borroweracknowledges that it is jointly and severally liable for all of the Obligationsunder the Loan Documents.  Each Borrowerexpressly understands, agrees and acknowledges that (i) Borrowers are allAffiliated entities by common ownership, (ii) each Borrower desires to have theavailability of one common credit facility instead of separate creditfacilities, (iii) each Borrower has requested that Lender extend such a commoncredit facility on the terms herein provided, (iv) Lender will be lendingagainst, and relying on a lien upon, all of Borrowers’ Collateral even thoughthe proceeds of any particular loan made hereunder may not be advanced directlyto a particular Borrower, (v) each Borrower will nonetheless benefit by the

 

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making of all such loans byLender and the availability of a single credit facility of a size greater thaneach could independently warrant, and (vi) all of the representations,warranties, covenants, obligations, conditions, agreements and other termscontained in the Loan Documents shall be applicable to and shall be bindingupon each Borrower.

 

# ***IV.          CONDITIONSPRECEDENT***

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## **4.1          Conditions to Initial Advance andClosing**

 

Theobligations of Lender to consummate the transactions contemplated herein and tomake the initial Advance under the Revolving Facility (the **“Initial Advance”**) aresubject to the satisfaction, in the reasonable judgment of Lender, of thefollowing:

 

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

 

(b)           all in form and substancesatisfactory to Lender in its Permitted Discretion, Lender shall have received(i) a report of Uniform Commercial Code financing statement, tax and judgmentlien searches performed with respect to each Borrower in each jurisdictiondetermined by Lender in its Permitted Discretion, and such report shall show noLiens on the Collateral (other than Permitted Liens), (ii) each document(including, without limitation, any Uniform Commercial Code financingstatement) required by any Loan Document or under law or requested by Lender tobe filed, registered or recorded to create in favor of Lender, a perfected first priority security interest uponthe Collateral, and (iii) evidence of each such filing, registration orrecordation and of the payment by Borrower of any necessary fee, tax or expenserelating thereto;

 

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

 

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

 

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

 

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federal, state,foreign and local laws, statutes and regulations, (ii) its operations arenot the subject of any governmental investigation, evaluation or any remedialaction which could result in any expenditure or liability deemed material byLender, in its reasonable judgment, and (iii) it has no liability (whethercontingent or otherwise) that is deemed material by Lender, in its reasonablejudgment;

 

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

 

(g)           all in form and substancesatisfactory to Lender in its Permitted Discretion, Lender shall have receivedsuch consents, approvals and agreements, including, without limitation, anyapplicable Landlord Waivers and Consents with respect to any and all leases setforth on Schedule 5.4, from such third parties as Lender and its counselshall determine are necessary or desirable with respect to (i) the LoanDocuments and/or the transactions contemplated thereby, and/or (ii) claimsagainst any Borrower or the Collateral;

 

(h)           Borrower shall be in compliance with Section6.5, and Lender shall have received original certificates of all insurancepolicies of Borrower confirming that they are in effect and that the premiumsdue and owing with respect thereto have been paid in full and naming Lender asan additional insured, as such insurance relates to the Collateral;

 

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

 

(j)            Lender shall have received, in formand substance satisfactory to Lender, release and termination of any and allLiens, security interest and/or Uniform Commercial Code financing statementsin, on, against or with respect to any of the Collateral (other than PermittedLiens);

 

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

 

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

 

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

 

## **4.2          Conditions to Each Advance**

 

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

 

(a)           Borrower shall have delivered toLender a Borrowing Certificate for the Advance executed by an authorizedofficer of Borrower, which shall constitute a representation

 

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and warranty by Borrower as ofthe Borrowing Date of such Advance that the conditions contained in this Section4.2 have been satisfied;

 

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

 

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

 

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

 

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

 

# ***V.            REPRESENTATIONSAND WARRANTIES***

# *** ***

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

 

## **5.1          Organization and Authority**

 

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

 

## **5.2          Loan Documents**

 

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

 

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

 

## **5.3          Subsidiaries, Capitalization andOwnership Interests**

 

Except aslisted on Schedule 5.3, Borrower has no Subsidiaries.  Schedule 5.3 states theauthorized and issued capitalization of Borrower, the number and class ofequity securities and/or ownership, voting or partnership interests issued andoutstanding of Borrower and the record and beneficial owners thereof (includingoptions, warrants****and other rights to acquire any of the foregoing).   The outstanding equity securities and/orownership, voting or partnership interests of Borrower have been dulyauthorized and validly issued and are fully paid and nonassessable, and eachPerson listed on Schedule 5.3 owns beneficially and of record allthe equity securities and/or ownership, voting or partnership interests it islisted as owning free and clear of any Liens other than Liens created by theSecurity Documents.  Schedule 5.3also lists the directors, members, managers and/or partners of Borrower.  Except as listed on Schedule 5.3,Borrower does not own an interest in, participate in or engage in any jointventure, partnership or similar arrangements with any Person.

 

## **5.4          Properties**

 

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

 

## **5.5          Other Agreements**

 

*Borrower is not (i) a party to anyjudgment, order or decree or any agreement, document or instrument, or subjectto any restriction, which would materially adversely affect its ability toexecute and deliver, or perform under, any Loan Document or to pay theObligations, (ii) in default in the performance, observance or fulfillment ofany obligation, covenant or condition contained in any agreement, document orinstrument to which it is a party or to which any of its properties or assetsare subject, which default, if not remedied within any applicable grace or cureperiod would reasonably be likely to have a Material Adverse Effect, nor isthere*

* *

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* *

*anyevent, fact, condition or circumstance which, with notice or passage of time orboth, would constitute or result in a conflict, breach, default or event ofdefault under, any of the foregoing which, if not remedied within anyapplicable grace or cure period would reasonably be likely to have a MaterialAdverse Effect; or (iii) a party or subject to any agreement, document orinstrument with respect to, or obligation to pay any, service fee or managementfee with respect to, the ownership, operation, leasing or performance of any ofits business or any facility, nor is there any manager with respect to any suchfacility.*

* *

## **5.6          Litigation**

 

There is no action, suit, proceeding or investigation pending or, totheir knowledge, threatened against Borrower that (i) questions or couldprevent the validity of any of the Loan Documents or the right of Borrower toenter into any Loan Document or to consummate the transactions contemplatedthereby, (ii) would reasonably be likely to be or have, either individually orin the aggregate, any Material Adverse Change or Material Adverse Effect, or(iii) would reasonably be likely to result in any Change of Control orother change in the current ownership, control or management of Borrower.  Borrower is not aware that there is anybasis for the foregoing.  Borrower isnot a party or subject to any order, writ, injunction, judgment or decree ofany Governmental Authority.  There is noaction, suit, proceeding or investigation initiated by Borrower currentlypending.  Borrower has no existingaccrued and/or unpaid Indebtedness to any Governmental Authority or any othergovernmental payor.

 

## **5.7          Hazardous Materials**

 

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

 

## **5.8          Potential Tax Liability; Tax Returns;Governmental Reports**

 

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

 

(b)  Borrower (i) has filed all federal, state,foreign (if applicable) and local tax returns and other reports which arerequired by law to be filed by Borrower, and (ii) has paid all taxes,assessments, fees and other governmental charges, including, withoutlimitation, payroll and other employment related taxes, in each case that aredue and payable, except only for items that Borrower is currently contesting ingood faith with adequate reserves under GAAP, which contested items aredescribed on Schedule 5.8.

 

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## **5.9          Financial Statements and Reports**

 

All financialstatements and financial information relating to Borrower that have been or mayhereafter be delivered to Lender by Borrower are accurate and complete and havebeen prepared in accordance with GAAP consistently applied with prior periods; provided,however, that such monthly and/or quarterly statements may not containfootnotes and are subject to year-end adjustments.  Borrower has no material obligations or liabilities of any kindnot disclosed in such financial information or statements, and since the dateof the most recent financial statements submitted to Lender, there has notoccurred any Material Adverse Change, Material Adverse Effect or, to Borrower’sknowledge, any other event or condition that would reasonably be likely to havea Material Adverse Effect.

 

## **5.10        Compliance with Law**

 

Borrower (i)is in compliance with all laws, statutes, rules, regulations, ordinances andtariffs of any Governmental Authority applicable to Borrower and/or Borrower’sbusiness, assets or operations, including, without limitation, applicable requirements of the Standards forPrivacy of Individually Identifiable Health Information which were promulgatedpursuant to the Health Insurance Portability and Accountability Act of 1996(“HIPAA”), ERISA and Healthcare Laws, and (ii) is not in violation ofany order of any Governmental Authority or other board or tribunal, except inthe case of (i) and (ii) above where noncompliance or violation could notreasonably be expected to have a Material Adverse Effect.  There is no event, fact, condition orcircumstance which, with notice or passage of time, or both, would constituteor result in any noncompliance with, or any violation of, any of the foregoing,in each case except where noncompliance or violation could not reasonably beexpected to have a Material Adverse Effect. Borrower has not received any notice that Borrower is not in compliancein any respect with any of the requirements of any of the foregoing.  Borrower has (a) not engaged in anyProhibited Transactions as defined in Section 406 of ERISA andSection 4975 of the Internal Revenue Code of 1986, as amended, and therules and regulations promulgated thereunder, (b) not failed to meet anyapplicable minimum funding requirements under Section 302 of ERISA inrespect of its plans and no funding requirements have been postponed ordelayed, (c) no knowledge of any event or occurrence which would cause thePension Benefit Guaranty Corporation to institute proceedings under Title IV ofERISA to terminate any of the employee benefit plans, (d) no fiduciaryresponsibility under ERISA for investments with respect to any plan existingfor the benefit of Persons other than its employees or former employees, or (e)not withdrawn, completely or partially, from any multi-employer pension plansso as to incur liability under the MultiEmployer Pension Plan Amendments of1980.  With respect to Borrower, thereexists no event described in Section 4043 of ERISA, excluding Subsections 4043(b)(2)and 4043(b)(3) thereof, for which the thirty (30) day notice period containedin 12 C.F.R. § 2615.3 has not been waived.  Borrower has maintained in all material respects all recordsrequired to be maintained by the Joint Commission on Accreditation ofHealthcare Organizations, the Food and Drug Administration, Drug EnforcementAgency and State Boards of Pharmacy, and, to the best knowledge of Borrower,there are no presently existing circumstances which likely would result inmaterial violations of the Healthcare Laws.

 

## **5.11        Intellectual Property**

 

Borrower ownsor has the rights to all patents, patent applications, trademarks, trademarkapplications, service marks, registered copyrights, copyright applications,copyrights, trade names, trade secrets, software or licenses (collectively, the**“IntellectualProperty”**) necessary for its business.  Each Borrower’s patents and registered trademarks are listed on Schedule5.11.

 

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## **5.12        Licenses and Permits; Labor**

 

Borrower is incompliance with and has all Permits and rights to Intellectual Propertynecessary or required by applicable law or Governmental Authority for theoperation of its businesses.  All of theforegoing are in full force and effect and not in known conflict with therights of others.  Borrower is not (i)in breach of or default under the provisions of any of the foregoing, nor isthere any event, fact, condition or circumstance which, with notice or passageof time or both, would constitute or result in a conflict, breach, default orevent of default under, any of the foregoing which, if not remedied within anyapplicable grace or cure period would reasonably be likely to have a MaterialAdverse Effect  or (ii) has not beeninvolved in any labor dispute, strike, walkout or union organization whichwould reasonably be likely to have a Material Adverse Effect.

* *

## **5.13        No Default**

 

There does notexist any Default or Event of Default or any event, fact, condition orcircumstance which, with the giving of notice or passage of time or both, wouldconstitute or result in a Default or Event of Default.

 

## **5.14        Disclosure**

 

No LoanDocument nor any other agreement, document, certificate, or statement furnishedto Lender by or on behalf of Borrower in connection with the transactionscontemplated by the Loan Documents, nor any representation or warranty made byBorrower in any Loan Document, contains any untrue statement of material factor omits to state any fact necessary to make the statements therein notmaterially misleading.  There is no factknown to Borrower which has not been disclosed to Lender in writing which wouldreasonably be likely to have a Material Adverse Effect.

 

## **5.15        Existing Indebtedness; Investments,Guarantees and Certain Contracts**

 

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

 

## **5.16        Other Agreements**

 

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

 

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or any Person that competeswith Borrower (except that any such Persons may own stock in (but not exceedingtwo (2%) percent of the outstanding capital stock of) any publicly tradedcompany that may compete with Borrower.

 

## **5.17        Insurance**

 

Borrower hasin full force and effect such insurance policies as are customary in itsindustry and as may be required pursuant to Section 6.5 hereof.  All such insurance policies are listed anddescribed on Schedule 5.17.

 

## **5.18        Names; Location of Offices, Records andCollateral**

 

During the preceding five years, Borrower has not conducted businessunder or used any name (whether corporate, partnership or assumed) other thanas shown on Schedule 5.18A. Borrower is the sole owner of all of its names listed on Schedule5.18A, and any and all business done and invoices issued in such names areBorrower’s sales, business and invoices. Each trade name of Borrower represents a division or trading style ofBorrower.  Borrower maintains its placesof business and chief executive offices only at the locations set forth on Schedule5.18B, and all Accounts of Borrower arise, originate and are located, andall of the Collateral and all books and records in connection therewith or inany way relating thereto or evidencing the Collateral are located and shallonly be located, in and at such locations. All of the Collateral is located only in the continental United States.

 

## **5.19        Non-Subordination**

 

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

 

## **5.20        Accounts**

 

In determiningwhich Accounts are Eligible Receivables, Lender may rely on all statements andrepresentations made by Borrower with respect to any Account.  Unless otherwise indicated in writing toLender, (i) each Account of Borrower is genuine and in all respects what itpurports to be and is not evidenced by a judgment, (ii) each Account ofBorrower arises out of a completed, bona fide sale and delivery of goods orrendering of services by Borrower in the ordinary course of business and inaccordance with the terms and conditions of all purchase orders, contracts,certifications, participations, certificates of need and other documentsrelating thereto or forming a part of the contract between Borrower and theAccount Debtor, (iii) each Account of Borrower is for a liquidated amount maturingas stated in a claim or invoice covering such sale of goods or rendering ofservices, a copy of which has been furnished or is available to Lender, (iv)each Account of Borrower together with Lender’s security interest therein, isnot and will not be in the future (by voluntary act or omission by Borrower),subject to any offset, lien, deduction, defense, dispute, counterclaim or otheradverse condition except as reserved against in the financial statements, isabsolutely owing to Borrower and is not contingent in any respect or for anyreason, (v) except as reserved against in the financial statements, there areno facts, events or occurrences which in any way impair the validity orenforceability of any Account of Borrower or tend to reduce the amount payablethereunder from the face amount of the claim or invoice and statementsdelivered to Lender with respect thereto, (vi) (A) with respect to contracts orother documents generating more than $1000 in Accounts on an annual basis, (I)the Account Debtor under each such Account of Borrower had the capacity tocontract at the time any such contract or other document giving rise theretowas executed and (II) each such Account Debtor

 

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thereunder is solvent, and (B)with respect to contracts or other documents generating $1000 or less inAccounts on an annual basis, to the best of Borrower’s knowledge (I) theAccount Debtor under each such Account of Borrower had the capacity to contractat the time any such contract or other document giving rise thereto wasexecuted and (II) each such Account Debtor thereunder is solvent,(vii) there are no proceedings or actions which are threatened or pendingagainst any Account Debtor under any Account of Borrower which might result inany Material Adverse Change in such Account Debtor’s financial condition or thecollectability thereof, (viii) each Account of Borrower has been billed andforwarded to the Account Debtor for payment in accordance with applicable lawsand is in compliance and conformance with any requisite procedures,requirements and regulations governing payment by such Account Debtor withrespect to such Account, and (ix) Borrower has obtained and currently has allPermits necessary in the generation of each Account of Borrower.

 

## **5.21        Regulatory Requirements**

 

Without limiting or being limited by any other provision of any LoanDocument, Borrower has timely filed or caused to be filed allcost and other reports of every kind required by law, agreement orotherwise.  There are no claims, actionsor appeals pending (and Borrower has not filed any claims or reports whichcould reasonably result in any such claims, actions or appeals) before anycommission, board or agency or other Governmental Authority.

 

## **5.22        Survival**

 

Borrower makesthe representations and warranties contained herein with the knowledge andintention that Lender is relying and will rely thereon.  All such representations and warranties willsurvive the execution and delivery of this Agreement and the making of theAdvances under the Revolving Facility.

 

# ***VI.          AFFIRMATIVECOVENANTS***

 

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

 

## **6.1          Financial Statements, BorrowingCertificate, Financial Reports and Other Information**

 

*(*a)           FinancialReports.  In addition to providingthe Borrowing Certificate in accordance with Section 2.4, Borrower shallfurnish to Lender (i) as soon as available and in any event within ninety (90)calendar days after the end of each fiscal year of Borrower, audited annualconsolidated financial statements of Borrower, including the notes thereto,consisting of a consolidated balance sheet at the end of such completed fiscal yearand the related consolidated statement of income, retained earnings, cash flowsand owners’ equity for such completed fiscal year, which financial statementsshall be prepared and certified without qualification by an independentcertified public accounting firm reasonably satisfactory to Lender andaccompanied by related management letters, if available, and (ii) as soon asavailable and in any event within forty-five (45) calendar days after the endof each calendar month, unaudited consolidated and consolidating financialstatement of Borrower consisting of a balance sheet and statements of income,as of  the end of the immediatelypreceding calendar month, and unaudited statements of retained earnings, cashflows and owners’ equity as of the end of each calendar quarter.  All such financial statements shall beprepared in accordance with GAAP consistently applied with prior

 

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* *

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

* *

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

* *

*(c)           Notices.  Borrower shall promptly, and in any eventwithin two (2) calendar days after Borrower or any authorized officer ofBorrower obtains knowledge thereof, notify Lender in writing of (i) any pendingor threatened litigation, suit, investigation, arbitration, dispute resolutionproceeding or administrative proceeding brought or initiated by Borrower orotherwise affecting or involving or relating to Borrower or any of its propertyor assets to the extent (A) the amount in controversy exceeds $10,000, or (B)to the extent any of the foregoing seeks injunctive or declarative relief, (ii)any Default or Event of Default, which notice shall specify the nature andstatus thereof, the period of existence thereof and what action is proposed tobe taken with respect thereto, (iii) any other development, event, fact,circumstance or condition that would reasonably be likely to have a MaterialAdverse Effect, in each case describing the nature and status thereof and theaction proposed to be taken with respect thereto, (iv) any notice received byBorrower from any payor of a claim, suit or other action such payor has, claimsor has filed against Borrower, (v) any matter(s) affecting the value,enforceability or collectability of any of the Collateral, including, withoutlimitation, claims or disputes in the amount of $50,000 or more, singly or inthe aggregate, in existence at any one time, (vi) any notice given by Borrowerto any other lender of Borrower, which notice to Lender shall be accompanied bya copy of the applicable notice given to the other Lender, (vii) receipt of anynotice or request from any Governmental Authority or governmental payorregarding any liability or claim of liability, (viii) receipt of any notice byBorrower regarding termination of any manager of any facility owed, operated orleased by Borrower, (ix) Borrower’s execution and delivery of a new contractwith a Governmental Authority, providing Lender with an executed copy of suchcontract promptly thereafter, and/or (x) any Account becoming evidenced orsecured by an Instrument or Chattel Paper.*

* *

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

* *

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* *

*contemplatedthereby, (ii) claims against Borrower or the Collateral, and/or (iii) anyagreements, consents, documents or instruments to which Borrower is a party orby which any properties or assets of Borrower or any of the Collateral is orare bound or subject, including, without limitation, Landlord Waivers andConsents with respect to leases.*

* *

*(e)           Operating Budget.  Borrower shall furnish to Lender on or priorto the Closing Date and for each fiscal year of Borrower thereafter not lessthan ten (10) calendar days prior to the commencement of such fiscal year, consolidatedand consolidating month by month projected operating budgets, annualprojections, profit and loss statements, balance sheets and cash flow reportsof and for Borrower for such upcoming fiscal year (including an incomestatement for each month and a balance sheet as at the end of the last month ineach fiscal quarter), in each case prepared in accordance with GAAPconsistently applied with prior periods.*

* *

## **6.2          Payment of Obligations**

 

Borrower shallmake full and timely indefeasible payment in cash of the principal of andinterest on the Loans, Advances and all other Obligations.

 

## **6.3          Conduct of Business and Maintenance ofExistence and Assets**

 

*Borrowershall (i) conduct its business in accordance with good business practicescustomary to the industry, (ii) engage principally in the same or similar linesof business substantially as heretofore conducted, (iii) collect its Accountsin the ordinary course of business, (iv) maintain all of its materialproperties, assets and equipment used or useful in its business in good repair,working order and condition (normal wear and tear excepted and except as may bedisposed of in the ordinary course of business and in accordance with the termsof the Loan Documents and otherwise as determined by Borrower usingcommercially reasonable business judgment), (v) from time to time to make allnecessary or desirable repairs, renewals and replacements thereof, asdetermined by Borrower using commercially reasonable business judgment, (vi)maintain and keep in full force and effect its existence and all materialPermits and qualifications to do business and good standing in eachjurisdiction in which the ownership or lease of property or the nature of itsbusiness makes such Permits or qualification necessary and in which failure tomaintain such Permits or qualification could reasonably be likely to have aMaterial Adverse Effect; and (vii) remain in good standing in all jurisdictionsin which its operations are located.*

* *

## **6.4          Compliance with Legal and OtherObligations**

 

*Borrowershall (i) comply with all laws, statutes, rules, regulations, ordinancesand tariffs of all Governmental Authorities applicable to it or its business,assets or operations, including*applicablerequirements of the Standards for Privacy of Individually Identifiable HealthInformation which were promulgated pursuant to HIPAA; (ii) pay when due alltaxes, assessments, fees, governmental charges, claims for labor, supplies,rent and all other obligations or liabilities of any kind, except liabilities beingcontested in good faith and against which adequate reserves have beenestablished in accordance with GAAP, (iii) perform in accordance with its termseach contract, agreement or other arrangement to which it is a party or by which it or any of the Collateral is bound,except where the failure to comply, pay or perform could not reasonably beexpected to have a Material Adverse Effect, and (iv) maintain and comply withall Permits necessary to conduct its business and comply with any new oradditional requirements that may be imposed on it or its business.

 

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## **6.5          Insurance**

 

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

* *

## **6.6          True Books**

 

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

 

## **6.7          Inspection; Periodic Audits**

 

Borrower shallpermit the representatives of Lender, at the expense of Borrower, from time totime during normal business hours upon reasonable notice and in such a mannerso as not to unreasonably disrupt any Borrower’s operations, to (i) visit andinspect any of its offices or properties or any other place where Collateral islocated to inspect the Collateral and/or to examine or audit all of its booksof account, records, reports and other papers, (ii) make copies and extractstherefrom, and (iii) discuss its business, operations, prospects, properties,assets, liabilities, condition and/or Accounts with its officers andindependent public accountants (and by this provision such officers andaccountants are authorized to discuss the foregoing).  Other than during the occurrence and continuance of a Default oran Event of Default, not more than four (4) such inspections or audits relatedto any 12-month period shall be at the expense of Borrower.  Lender may increase the frequency ofinspections or audits during the occurrence and continuance of a Default or anEvent of Default.

 

## **6.8          Further Assurances; Post Closing**

 

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

 

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## **6.9          Payment of Indebtedness**

 

Except asotherwise prescribed in the Loan Documents, Borrower shall pay, discharge orotherwise satisfy at or before maturity (subject to applicable grace periodsand, in the case of trade payables, to ordinary course payment practices) allof its material obligations and liabilities, except when the amount or validitythereof is being contested in good faith by appropriate proceedings and suchreserves as Lender may deem proper and necessary in its sole discretion shallhave been made.

 

## **6.10        Lien Searches**

 

If Liens other thanPermitted Liens exist, Borrower immediately shall take, execute and deliver allactions, documents and instruments necessary to release and terminate suchLiens.

 

## **6.11        Use of Proceeds**

 

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

 

## **6.12        Collateral Documents; Security Interestin Collateral**

 

Borrower shall(i) execute, obtain, deliver, file, register and/or record any and allfinancing statements, continuation statements, stock powers, instruments andother documents, or cause the execution, filing, registration, recording ordelivery of any and all of the foregoing, that are necessary or required underlaw or otherwise or reasonably requested by Lender to be executed, filed,registered, obtained, delivered or recorded to create, maintain, perfect,preserve, validate or otherwise protect the pledge of the Collateral to Lenderand Lender’s perfected first priority Lien on the Collateral (and Borrowerirrevocably grants Lender the right, at Lender’s option, to file any or all ofthe foregoing), (ii) immediately upon learning thereof, report to Lender anyreclamation, return or repossession of goods in excess of $10,000.00(individually or in the aggregate), and (iii) defend the Collateral andLender’s perfected first priority Lien thereon against all claims and demandsof all Persons at any time claiming the same or any interest therein adverse toLender, and pay all reasonable costs and expenses (including, withoutlimitation, in-house documentation and diligence fees and legal expenses andreasonable attorneys’ fees and expenses) in connection with such defense, whichmay at Lender’s discretion be added to the Obligations.

 

## **6.13        Intentionally Deleted**

 

## **6.14        Taxes and Other Charges**

 

(a)  All payments and reimbursements to Lendermade under any Loan Document shall be free and clear of and without deductionfor all taxes, levies, imposts, deductions, assessments, charges orwithholdings, and all liabilities with respect thereto of any naturewhatsoever, excluding taxes to the extent imposed on Lender’s net income.  If Borrower shall be required by law todeduct any such amounts from or in respect of any sum payable under any LoanDocument to Lender, then the sum payable to Lender shall be increased as may benecessary so that, after making all required deductions, Lender receives anamount equal to the sum it would have received had no such deductions beenmade.  Notwithstanding any other

 

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provision of any Loan Document,if at any time after the Closing (i) any change in any existing law,regulation, treaty or directive or in the interpretation or applicationthereof, (ii) any new law, regulation, treaty or directive enacted or anyinterpretation or application thereof, or (iii) compliance by Lender withany request or directive (whether or not having the force of law) from anyGovernmental Authority:  (A) subjectsLender to any tax, levy, impost, deduction, assessment, charge or withholdingof any kind whatsoever with respect to any Loan Document, or changes the basisof taxation of payments to Lender of any amount payable thereunder (except fornet income taxes, or franchise taxes imposed in lieu of net income taxes,imposed generally by federal, state or local taxing authorities with respect tointerest or commitment fees or other fees payable hereunder or changes in therate of tax on the overall net income of Lender), or (B) imposes on Lender anyother condition or increased cost in connection with the transactionscontemplated thereby or participations therein; and the result of any of theforegoing is to increase the cost to Lender of making or continuing any Loanhereunder or to reduce any amount receivable hereunder, then, in any such case,Borrower shall promptly pay to Lender any additional amounts necessary tocompensate Lender, on an after-tax basis, for such additional cost or reducedamount as determined by Lender.  IfLender becomes entitled to claim any additional amounts pursuant to this Section6.14 it shall promptly notify Borrower of the event by reason of whichLender has become so entitled, and each such notice of additional amountspayable pursuant to this Section 6.14 submitted by Lender to Borrowershall, absent manifest error, be final, conclusive and binding for allpurposes.

 

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

 

## **6.15        Payroll Taxes**

 

Withoutlimiting or being limited by any other provision of any Loan Document, Borrowerat all times shall retain and use a Person reasonably acceptable to Lender to process,manage and pay its payroll taxes and shall cause to be delivered to Lenderwithin ten (10) calendar days after the end of each calendar month a report ofits payroll taxes for the immediately preceding calendar month and evidence ofpayment thereof.

 

# ***VII.         NEGATIVECOVENANTS***

 

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

 

## **7.1**                               Financial Covenants

 

Borrower shallnot violate the financial covenants set forth on Annex I to thisAgreement, which is incorporated herein and made a part hereof.

 

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## **7.2**                               Permitted Indebtedness

 

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

 

## **7.3          Permitted Liens**

 

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

 

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providedthat such payables shall not exceed any limits on Indebtedness provided forherein and shall otherwise be Permitted Indebtedness hereunder, (vi) Lienssecuring Permitted Mortgage Indebtedness, provided, that suchLiens shall not extend to any Collateral and Lender and the Mortgagee shallhave entered into a satisfactory intercreditor agreement, and (vii) Liensdisclosed on Schedule 7.3.

* *

## **7.4          Investments; New Facilities orCollateral; Subsidiaries**

 

Except asprovided in Schedule 7.4, Borrower, directly or indirectly, shall not,without Lender’s prior written consent (i) purchase, own, hold, invest inor otherwise acquire obligations or stock or securities of, or any otherinterest in, or all or substantially all of the assets of, any Person or anyjoint venture, or (ii) make or permit to exist any loans, advances orguarantees to or for the benefit of any Person or assume, guarantee, endorse,contingently agree to purchase or otherwise become liable for or upon or incurany obligation of any Person (other than those created by the Loan Documentsand Permitted Indebtedness and other than (A) trade credit extended in theordinary course of business, (B) advances for business travel and similartemporary advances made in the ordinary course of business to officers,directors and employees, and (C) the endorsement of negotiable instruments fordeposit or collection or similar transactions in the ordinary course ofbusiness).  Borrower, directly orindirectly, shall not purchase, own, operate, hold, invest in or otherwiseacquire any facility, property or assets or any Collateral that is not locatedat the locations set forth on Schedule 5.18B unless Borrower shallprovide to Lender at least thirty (30) Business Days prior written notice.  Borrower shall have no Subsidiaries otherthan those Subsidiaries, if any, existing at Closing and set forth in Schedule5.3.

 

## **7.5          Dividends; Redemptions**

 

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

 

## **7.6          Transactions with Affiliates**

 

Borrower shallnot enter into or consummate any transaction of any kind with any of itsAffiliates (for purposes of this Section 7.6, Affliliates shall specificallyexclude other Borrowers) or any Guarantor or any of their respective Affiliatesother than: (i) salary, bonus, employee stock option and other compensation andemployment arrangements with employees, directors or officers in the ordinarycourse of business, provided, that no payment of any bonus shall bepermitted if a Default or Event of Default has occurred and remains in effector would be caused by or result from such payment, (ii) distributions anddividends permitted pursuant to Section 7.4, (iii) transactions with Lenderor any Affiliate of Lender, and (iv) payments permitted under and pursuant towritten agreements entered into by and between Borrower and one or more

 

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of its Affiliates that both(A) reflect and constitute transactions on overall terms at least as favorableto Borrower as would be the case in an arm’s-length transaction betweenunrelated parties of equal bargaining power, and (B) are subject to such termsand conditions as determined by Lender in its Permitted Discretion; provided,that notwithstanding the foregoing but subject to the rights under Section7.2, Borrower shall not (Y) enter into or consummate any transaction oragreement pursuant to which it becomes a party to any mortgage, note, indentureor guarantee evidencing any Indebtedness of any of its Affiliates or otherwiseto become responsible or liable, as a guarantor, surety or otherwise, pursuant to agreement for anyIndebtedness of any such Affiliate, or (Z) make any payment to any of itsAffiliates in excess of $10,000 without the prior written consent of Lender.

 

## **7.7          Charter Documents; Fiscal Year; Name;Jurisdiction of Organization; Dissolution; Use of Proceeds**

 

Borrower shallnot (i) amend, modify, restate or change its certificate of incorporation orformation or bylaws or similar charter documents in a manner that would beadverse to Lender, (ii) change its fiscal year unless Borrowerdemonstrates to Lender’s satisfaction compliance with the covenants containedherein for both the fiscal year in effect prior to any change and the newfiscal year period by delivery to Lender of appropriate interim and annual proforma, historical and current compliance certificates for such periods and suchother information as Lender may reasonably request, (iii) without at least 20days prior written notice to Lender, change it’s name or change itsjurisdiction of organization; (iv) amend, alter or suspend or terminate or makeprovisional in any material way, any material Permit without the prior writtenconsent of Lender, which consent shall not be unreasonably withheld,(v) wind up, liquidate or dissolve (voluntarily or involuntarily) orcommence or suffer any proceedings seeking or that would result in any of theforegoing, or (vi) use any proceeds of any Advance for “purchasing” or“carrying” “margin stock” as defined in Regulations U, T or X of the Board ofGovernors of the Federal Reserve System.

 

## **7.8          Truth of Statements**

 

Borrower shallnot furnish to Lender any certificate or other document that contains anyuntrue statement of a material fact or that omits to state a material factnecessary to make it not misleading in light of the circumstances under whichit was furnished.

 

**7.9          IRS Form 8821**

 

Borrower shallnot alter, amend, restate, or otherwise modify, or withdraw, terminate orre-file the IRS Form 8821 required to be filed pursuant to the ConditionsPrecedent in Section 4.1 hereof.

 

## **7.11        Transfer of Assets**

 

Notwithstanding any other provision of this Agreement or any other LoanDocument, Borrower shall not sell, lease, transfer, assign or otherwise disposeof any interest in any properties or assets (other than obsolete equipment orexcess equipment no longer needed in the conduct of the business in theordinary course of business, Inventory, scrap, or licenses of GeneralIntangibles in the ordinary course of business), or agree to do any of theforegoing at any future time, except that:

 

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

 

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

 

# ***VIII.       EVENTSOF DEFAULT***

 

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

 

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

 

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

 

(c)           Borrower or any Guarantor or otherparty thereto other than Lender shall be in violation, breach or default of, orshall fail to perform, observe or comply with any covenant, obligation oragreement set forth in, any Loan Document and such violation, breach, defaultor failure shall not be cured within the applicable period set forth in theapplicable Loan Document; provided that, with respect to the affirmativecovenants set forth in Article VI (other than Sections 6.1(c), 6.2,6.3(i), (ii) and (iii), 6.5, 6.8, 6.9 and 6.11 for whichthere shall be no cure period), there shall be a fifteen (15) calendar day cureperiod commencing from the earlier of (i) Receipt by such Person ofwritten notice of such breach, default, violation or failure, and (ii) thetime at which such Person or any authorized officer thereof knew or becameaware of such failure, violation, breach or default but no Advances will bemade during the cure period;

 

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

 

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

 

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

 

(f)            (i) any default occurs, whichis not cured or waived, (x) in the payment of any amount with respect toany Indebtedness (other than the Obligations) of any Borrower or Guarantor inexcess of $10,000, (y) in the performance, observance or fulfillment ofany provision contained in any agreement, contract, document or instrument towhich any Borrower or Guarantor is a party or to which any of their propertiesor assets are subject or bound under or pursuant to which any Indebtedness wasissued, created, assumed, guaranteed or secured and such default continues formore than any applicable grace period or permits the holder of any Indebtednessto accelerate the maturity thereof, or (z) in the performance, observance orfulfillment of any provision contained in any agreement, contract, document or instrumentbetween any Borrower or Guarantor andLender or any Affiliate of Lender (other than the Loan Documents), or(ii) any Indebtedness in excess of $25,000 of any Borrower or Guarantor isdeclared to be due and payable or is required to be prepaid (other than by aregularly scheduled payment) prior to the stated maturity thereof, or anyobligation of such Person for the payment of Indebtedness (other than theObligations) is not paid when due or within any applicable grace period, or anysuch obligation becomes or is declared to be due and payable before theexpressed maturity thereof, or there occurs an event which, with the giving ofnotice or lapse of time, or both, would cause any such obligation to become, orallow any such obligation to be declared to be, due and payable;

 

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

 

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

 

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

 

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

 

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

 

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

 

(m)          any Borrower or Guarantor or any of theirrespective directors or senior officers is criminally indicted or convictedunder any law that could lead to a forfeiture of any Collateral;

 

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

 

(o)           any Borrower or Guarantor does, orenters into or becomes a party to any agreement or commitment to do, or causeto be done, any of the things described in this Article VIII or otherwiseprohibited by any Loan Document (subject to any cure periods set forththerein);

 

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

* *

# ***IX.          RIGHTSAND REMEDIES AFTER DEFAULT***

 

## **9.1          Rights and Remedies**

 

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

 

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pledged with orwithout judicial process, (iv) exercise all rights and powers with respectto the Collateral as any Borrower, as applicable, might exercise, (v) collectand send notices regarding the Collateral, with or without judicial process,(vi) by its own means or with judicial assistance, enter any premises at whichCollateral and/or pledged securities are located, or render any of the foregoingunusable or dispose of the Collateral and/or pledged securities on suchpremises without any liability for rent, storage, utilities, or other sums, andno Borrower shall resist or interfere with such action, (vii) at Borrower’sexpense, require that all or any part of the Collateral be assembled and madeavailable to Lender at any place designated by Lender, (viii) reduce orotherwise change the Facility Cap, and/or (ix) relinquish or abandon anyCollateral or securities pledged or any Lien thereon.  Notwithstanding any provision of any Loan Document, Lender, inits sole discretion, shall have the right, at any time that Borrower fails todo so, and from time to time, without prior notice, to: (i) obtain insurancecovering any of the Collateral to the extent required hereunder; (ii) pay forthe performance of any of the Obligations; (iii) discharge taxes or Liens onany of the Collateral that are in violation of any Loan document unlessBorrower is in good faith with due diligence by appropriate proceedingscontesting those items; and (iv) pay for the maintenance and preservation ofthe Collateral.  Such expenses andadvances shall be added to the Obligations until reimbursed to Lender and shallbe secured by the Collateral, and such payments by Lender shall not beconstrued as a waiver by Lender of any Event of Default or any other rights orremedies of Lender.

 

(b)           Borrower agrees that notice receivedby it at least ten (10) calendar days before the time of any intended publicsale, or the time after which any private sale or other disposition ofCollateral is to be made, shall be deemed to be reasonable notice of such saleor other disposition.  If permitted byapplicable law, any perishable Collateral which threatens to speedily declinein value or which is sold on a recognized market may be sold immediately byLender without prior notice to Borrower. At any sale or disposition of Collateral or securities pledged, Lendermay (to the extent permitted by applicable law) purchase all or any part thereoffree from any right of redemption by any Borrower which right is hereby waivedand released.  Borrower covenants andagrees not to, and not to permit or cause any of its Subsidiaries to, interferewith or impose any obstacle to Lender’s exercise of its rights and remedieswith respect to the Collateral.  Lender,in dealing with or disposing of the Collateral or any part thereof, shall notbe required to give priority or preference to any item of Collateral or otherwiseto marshal assets or to take possession or sell any Collateral with judicialprocess.

 

## **9.2          Application of Proceeds**

 

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

 

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

 

## **9.3          Intentionally Deleted**

 

## **9.4          Rights and Remedies not Exclusive**

 

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

 

# ***X.            WAIVERSAND JUDICIAL PROCEEDINGS***

 

## **10.1        Waivers**

 

Except asexpressly provided for herein, Borrower hereby waives setoff, counterclaim,demand, presentment, protest, all defenses with respect to any and allinstruments and all notices and demands of any description, and the pleading ofany statute of limitations as a defense to any demand under any LoanDocument.  Borrower hereby waives anyand all defenses and counterclaims it may have or could interpose in any actionor procedure brought by Lender to obtain an order of court recognizing theassignment of, or Lien of Lender in and to, any Collateral.  With respect to any action hereunder, Lender conclusively may relyupon, and shall incur no liability to Borrower in acting upon, any request orother communication that Lender reasonably believes to have been given or madeby a person authorized on Borrower’s behalf, whether or not such person islisted on the incumbency certificate delivered pursuant to Section 4.1hereof.  In each such case, Borrower hereby waives the right to disputeLender’s action based upon such request or other communication, absent manifesterror.

 

## **10.2        Delay; No Waiver of Defaults**

 

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

 

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

* *

## **10.3        Jury Waiver**

 

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

 

## **10.4**                        Cooperation in Discovery and Litigation

 

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

 

# ***XI.          EFFECTIVEDATE AND TERMINATION***

 

## **11.1        Termination and Effective Date Thereof**

 

(a)           Subject to Lender’s right toterminate and cease making Advances upon or after any Event of Default, thisAgreement shall continue in full force and effect until the full performanceand indefeasible payment in cash of all Obligations, unless terminated sooneras provided in this Section 11.1. Borrower may terminate this Agreement at any time upon not less thansixty (60) calendar days’ prior written notice to Lender and upon fullperformance and indefeasible payment in full in cash of all Obligations on orprior to such 60th calendar day after Receipt by Lender of suchwritten notice.  All of the Obligationsshall be immediately due and payable upon any such termination on thetermination date stated in any notice of termination (the **“Termination Date”**); provided that,notwithstanding any other provision of any Loan Document, the Termination Dateshall be effective no earlier than the first Business Day of the monthfollowing the expiration of the sixty (60) calendar days’ prior written noticeperiod.  Notwithstanding any otherprovision of any Loan Document, no termination of this Agreement shall affectLender’s rights or any of the Obligations existing as of the effective date ofsuch termination, and the provisions of the Loan Documents shall continue to befully operative until the Obligations have been fully performed andindefeasibly paid in cash in full.  TheLiens granted to Lender under the Security Documents and the financingstatements filed pursuant thereto and the rights and powers of Lender shallcontinue in full force and effect notwithstanding

 

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the fact thatBorrower’s borrowings hereunder may from time to time be in a zero or creditposition until all of the Obligations have been fully performed andindefeasibly paid in full in cash.

* *

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

 

## **11.2        Survival**

 

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

* *

# ***XII.         MISCELLANEOUS***

 

## **12.1        Governing Law; Jurisdiction; Service ofProcess; Venue**

 

The Loan Documentsshall be governed by and construed in accordance with the internal laws of theState of Maryland without giving effect to its choice of law provisions.  Any judicial proceeding against Borrowerwith respect to the Obligations, any Loan Document or any related agreement maybe brought in any federal or state court of competent jurisdiction located inthe State of Maryland.  By execution anddelivery of each Loan Document to which it is a party, Borrower (i) accepts thenon-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to bebound by any judgment rendered thereby, (ii) waives personal service ofprocess, (iii) agrees that service of process upon it may be made by certifiedor registered mail, return receipt requested, pursuant to Section 12.5hereof, (iv) waives any objection to jurisdiction and venue of any actioninstituted hereunder and agrees not to assert any defense based on lack ofjurisdiction, venue or convenience,and (v) agrees that this loan was made in Maryland, that Lender has accepted inMaryland Loan Documents executed by Borrower and has disbursed Advances underthe Loan Documents in Maryland. Nothing shall affect the right of Lender to serve process in any mannerpermitted by law or shall limit the right of Lender to bring proceedingsagainst Borrower in the courts of any other jurisdiction havingjurisdiction.  Any judicial proceedingsagainst Lender involving, directly or indirectly, the Obligations, any LoanDocument or any related agreement shall be brought only in a federal or statecourt located in the State of Maryland. All parties acknowledge that they participated in the negotiation anddrafting of this Agreement and that, accordingly, no party shall move orpetition a court construing this Agreement to construe it more stringentlyagainst one party than against any other.

 

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## **12.2        Successors and Assigns; Participations;New Lenders**

 

The Loan Documentsshall inure to the benefit of Lender, Transferees and all future holders of anyNote, the Obligations and/or any of the Collateral, and each of theirrespective successors and assigns.  EachLoan Document shall be binding upon the Persons’ other than Lender that areparties thereto and their respective successors and assigns, and no such Personmay assign, delegate or transfer any Loan Document or any of its rights orobligations thereunder without the prior written consent of Lender.  No rights are intended to be created underany Loan Document for the benefit of any third party donee, creditor orincidental beneficiary of any Borrower or Guarantor.  Nothing contained in any Loan Document shall be construed as adelegation to Lender of any other Person’s duty of performance.  BORROWER ACKNOWLEDGES AND AGREES THAT LENDERAT ANY TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND RESTATE ANY NOTE, AND/OR(II) SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANYPART OF ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT, NOTE, THEOBLIGATIONS AND/OR THE COLLATERAL TO OTHER PERSONS (EACH SUCH TRANSFEREE,ASSIGNEE OR PURCHASER, A **“TRANSFEREE”**).  Each Transferee shall have all of the rights and benefits withrespect to the Obligations, Notes, Collateral and/or Loan Documents held by itas fully as if the original holder thereof, and either Lender or any Transfereemay be designated as the sole agent to manage the transactions and obligationscontemplated therein; provided that, notwithstanding anything to thecontrary in any Loan Document, Borrower shall not be obligated to pay underthis Agreement to any Transferee any sum in excess of the sum which Borrowerwould have been obligated to pay to Lender had such participation not beeneffected.  Notwithstanding any otherprovision of any Loan Document, Lender may disclose to any Transferee allinformation, reports, financial statements, certificates and documents obtainedunder any provision of any Loan Document.

 

## **12.3        Application of Payments**

 

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

 

## **12.4        Indemnity**

 

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

 

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negligence orwillful misconduct of such Indemnified Person. If any Indemnified Person uses in-house counsel for any purpose forwhich any Borrower is responsible to pay or indemnify, each Borrower expresslyagrees that its indemnification obligations include reasonable charges for suchwork commensurate with the fees that would otherwise be charged by outsidelegal counsel selected by such Indemnified Person in its sole discretion forthe work performed.  Lender agrees togive Borrower reasonable notice of any event of which Lender becomes aware forwhich indemnification may be required under this Section 12.4, andLender may elect (but is not obligated) to direct the defense thereof, providedthat the selection of counsel shall be subject to Borrower’s consent, whichconsent shall not be unreasonably withheld or delayed.  Any Indemnified Person may, in itsreasonable discretion, take such actions as it deems necessary and appropriateto investigate, defend or settle any event or take other remedial or correctiveactions with respect thereto as may be necessary for the protection of suchIndemnified Person or the Collateral. Notwithstanding the foregoing, if any insurer agrees to undertake thedefense of an event (an **“Insured Event”**), Lender agrees not toexercise its right to select counsel to defend the event if that would causeany Borrower’s insurer to deny coverage; provided, however, thatLender reserves the right to retain counsel to represent any Indemnified Personwith respect to an Insured Event at Lender’s sole cost and expense.  To the extent that Lender obtains recoveryfrom a third party other than an Indemnified Person of any of the amounts that anyBorrower has paid to Lender pursuant to the indemnity set forth in this Section12.4, then Lender shall promptly pay to such Borrower the amount of suchrecovery.

 

## **12.5        Notice**

 

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

 

## **12.6        Severability; Captions; Counterparts;Facsimile Signatures**

 

If any provisionof any Loan Document is adjudicated to be invalid under applicable laws orregulations, such provision shall be inapplicable to the extent of suchinvalidity without affecting the validity or enforceability of the remainder ofthe Loan Documents which shall be given effect so far as possible.  The captions in the Loan Documents areintended for convenience and reference only and shall not affect the meaning orinterpretation of the Loan Documents. The Loan Documents may be executed in one or more counterparts (whichtaken together, as applicable, shall constitute one and the same instrument)and by facsimile transmission, which facsimile signatures shall be consideredoriginal executed counterparts.  Eachparty to this Agreement agrees that it will be bound by its own facsimilesignature and that it accepts the facsimile signature of each other party.

 

## **12.7        Expenses**

 

Borrower shallpay, whether or not the Closing occurs, all costs and expenses incurred byLender and/or its Affiliates, including, without limitation, documentation and

 

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diligence fees andexpenses, all search, audit, appraisal, recording, professional and filing feesand expenses and all other out-of-pocket charges and expenses (including,without limitation, UCC and judgment and tax lien searches and UCC filings andfees for post-Closing UCC and judgment and tax lien searches and wire transferfees and audit expenses), and reasonable attorneys’ fees and expenses, (i) inany effort to enforce, protect or collect payment of any Obligation or toenforce any Loan Document or any related agreement, document or instrument,(ii) in connection with entering into, negotiating, preparing, reviewing andexecuting the Loan Documents and/or any related agreements, documents orinstruments, (iii) arising in any way out of administration of the Obligations,(iv) in connection with instituting, maintaining, preserving, enforcing and/orforeclosing on Lender’s Liens in any of the Collateral or securities pledgedunder the Loan Documents, whether through judicial proceedings or otherwise,(v) in defending or prosecuting any actions, claims or proceedings arising outof or relating to Lender’s transactions with Borrower, (vi) in seeking, obtainingor receiving any advice with respect to its rights and obligations under anyLoan Document and any related agreement, document or instrument, and/or (vii)in connection with any modification, restatement, supplement, amendment, waiveror extension of any Loan Document and/or any related agreement, document orinstrument.  All of the foregoing shallbe charged to Borrower’s account and shall be part of the Obligations.  If Lender or any of its Affiliates usesin-house counsel for any purpose under any Loan Document for which Borrower isresponsible to pay or indemnify, Borrower expressly agrees that its Obligationsinclude reasonable charges for such work commensurate with the fees that wouldotherwise be charged by outside legal counsel selected by Lender or suchAffiliate in its sole discretion for the work performed.  Without limiting the foregoing, Borrowershall pay all taxes (other than taxes based upon or measured by Lender’s incomeor revenues or any personal property tax), if any, in connection with theissuance of any Note and the filing and/or recording of any documents and/orfinancing statements.

 

## **12.8        Entire Agreement**

 

This Agreementand the other Loan Documents to which Borrower is a party constitute the entireagreement between Borrower and Lender with respect to the subject matter hereofand thereof, and supersede all prior agreements and understandings, if any,relating to the subject matter hereof or thereof.  Any promises, representations, warranties or guarantees notherein contained and hereinafter made shall have no force and effect unless inwriting signed by Borrower and Lender. No provision of this Agreement may be changed, modified, amended,restated, waived, supplemented, discharged, canceled or terminated orally or byany course of dealing or in any other manner other than by an agreement inwriting signed by Lender and Borrower. Each party hereto acknowledges that it has been advised by counsel inconnection with the negotiation and execution of this Agreement and is notrelying upon oral representations or statements inconsistent with the terms andprovisions hereof.

 

## **12.9        Lender Approvals**

 

Unless expresslyprovided herein to the contrary, any approval, consent, waiver or satisfactionof Lender with respect to any matter that is subject of any Loan Document maybe granted or withheld by Lender in its sole and absolute discretion.

 

## **12.10      Publicity**

 

Borrower herebyagrees that Lender or any Affiliate of Lender may (i) disclose a generaldescription of transactions arising under the Loan Documents for advertising,marketing

 

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

 

## **12.11  Agent**

 

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

 

## **12.12  Confidentiality/ Restrictions on Securities Transactions**

 

Lender agrees to keep all non-public information confidential and notto disclose or make available any such information to any third parties otherthan to parties who agree to keep it confidential. Lender acknowledges that the United States securities laws prohibit anyperson who has material non-public information about a company from purchasingor selling securities of such company or from communicating such information toany other person under circumstances in which it is reasonably foreseeable thatsuch person is likely to purchase or sell securities.  Lender will notpurchase or sell securities of Borrower during any period when Lender possessesmaterial non-public information.

 

**[SIGNATURES APPEAR ON THE FOLLOWING PAGE]**

 

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IN WITNESSWHEREOF, each of the parties has duly executed this Revolving Credit andSecurity Agreement as of the date first written above.

 

 
|   | **BOSTON BIOMEDICA,  INC**.                                   |                                    |
|--------|---------------------------------------------------------------|-----------------------------------------|
|   | **BBI BIOTECH  RESEARCH LABORATORIES, INC.**                  |                                    |
|   | **BBI SOURCE  SCIENTIFIC, INC.**                              |                                    |
|   | **BBI BIOSEQ, INC.**                                          |                                    |
|   |                                                          |                                    |
|   |                                                          |                                    |
|   | By:                                                           | /s/ Kevin W. Quinlan                    |   |   |
|   | Name:                                                         | Kevin W. Quinlan                        |   |   |
|   | Its:                                                          | President & Chief Operating Officer |   |   |
|   |                                                          |                                    |
|   | Address for Notices:                                          |                                    |
|   | Boston Biomedica, Inc.                                        |                                    |
|   | 375 West Street                                               |                                    |
|   | West Bridgewater, MN 02379                                    |                                    |
|   | Attention:                                                    | President                               |   |
|   | Telephone:                                                    | (508) 580-1980                          |   |
|   | FAX:                                                          | (508) 580-1110                          |   |
|   |                                                          |                                    |
|   |                                                          |                                    |
|   | **CAPITALSOURCE  FINANCE LLC**                                |                                    |
|   |                                                          |                                    |
|   |                                                          |                                    |
|   | By:                                                           | /s/ Steven A. Museles                   |   |   |
|   | **Name:**                                                     | Steven A. Museles                       |   |   |
|   | Its:                                                          | Secretary                               |   |   |
|   |                                                          |                                    |
|   |                                                          |                                    |
|   | Address for Notices:                                          |                                    |
|   | CapitalSource Finance LLC                                     |                                    |
|   | 4445 Willard Avenue, 12th Floor                               |                                    |
|   | Chevy Chase, MD  20815                                   |                                    |
|   | Attention:  Healthcare Finance  Group, Portfolio Manager |                                    |
|   |                                                          |                                    |
|   | Telephone:  (301) 841-2700                               |                                    |
|   | FAX:  (301) 841-2340                                     |                                    |
|        |                                                               |                                         |  |  |  |  |  |

 

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