[EXECUTION
COPY]





Exhibit
10.44





AMENDED
AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT





THIS AMENDED AND RESTATED REVOLVING
CREDIT AND SECURITY AGREEMENT (the “Agreement”) dated as of April
26, 2010 is entered into between NeoGenomics Laboratories,
Inc., a Florida corporation (“Borrower”), NeoGenomics, Inc., a Nevada
corporation (“Guarantor”, together with
Borrower, individually a “Credit Party” and
collectively, the “Credit
Parties”) and CAPITALSOURCE FINANCE LLC, a
Delaware limited liability company (the “Lender”).




WHEREAS,
Credit Parties and Lender are party to that certain Revolving Credit and
Security Agreement, dated as of February 1, 2008 (as in effect, together with
all amendments and modifications thereto, the “Original Credit Agreement”),
pursuant to which Lender, provided a revolving credit facility (the “Revolving Facility”) in a
maximum principal amount at any time outstanding of up to Three Million
($3,000,000) Dollars and (the “Original Facility
Cap”);




WHEREAS,
the Credit Parties have requested that Lender continue to make available to
Borrowers the Revolving Facility  and extend term thereof and increase
the amount of the Original Facility Cap to an amount equal to Five Million
($5,000,000) Dollars (such Original Facility Cap, as extended and increased, the
“Facility Cap”);
and




WHEREAS,
Lender is willing to continue to make the Revolving Facility available to
Borrower and to amend and restate the Original Credit Agreement upon the terms
and subject to the conditions set forth herein.




NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and adequacy of which hereby are acknowledged, and
intending to be legally bound, Credit Parties and Lender hereby agree as
follows:




1.
            DEFINITIONS




1.1.
            General
      Terms




In
addition to the definitions above and elsewhere in this Agreement, the terms
listed in Annex
I hereto shall have the meanings given such terms in Annex I, which are
incorporated herein and made a part hereof.  All capitalized terms
used which are not specifically defined herein shall have meanings provided in
Article 9 of the UCC to the extent the same are used or defined
therein.  Unless otherwise specified herein or in Annex I, any
agreement, contract or instrument referred to herein or in Annex I shall mean
such agreement, contract or instrument as modified, amended, restated or
supplemented from time to time.  Unless otherwise specified, as used
in the Loan Documents or in any certificate, report, instrument or other
document made or delivered pursuant to any of the Loan Documents, all accounting
terms not defined in Annex I or elsewhere
in this Agreement shall have the meanings given to such terms in and shall be
interpreted in accordance with GAAP.  References herein to “Eastern Time” shall
mean eastern standard time or eastern daylight savings time as in effect on any
date of determination in the eastern United States of America.  The
terms “herein”,
“hereof” and
similar terms refer to this Agreement as a whole.  In the computation
of periods of time from a specified date to a later specified date in any Loan
Document, the terms “from” means “from and
including” and the words “to” and “until” each mean “to
but excluding” and the word “through” means “to
and including.”  In any other case, the term “including” when used
in any Loan Document means “including without limitation.”  The term
“documents”
means all writings, however evidenced and whether in physical or electronic
form, including all documents, instruments, agreements, notices, demands,
certificates, forms, financial statements, opinions and reports.  The
term “incur”
means incur, create, make, issue, assume or otherwise become directly or
indirectly liable in respect of or responsible for, in each case whether
directly or indirectly, and the terms "incurrence" and "incurred" and similar
derivatives shall have correlative meanings.  Unless otherwise
expressly indicated, the meaning of any term defined (including by reference) in
any Loan Document shall be equally applicable to both the singular and plural
forms of such term.









In the
event that any Accounting Change (as defined below) shall occur and such change
results in a change in the method of calculation of financial covenants,
standards or terms in this Agreement, then Borrower and Lender agree to
enter into good faith negotiations in order to amend such provisions of this
Agreement so as to equitably reflect such Accounting Change with the
desired result that the criteria for evaluating Borrower’s financial
condition shall be the same after such Accounting Change as if such
Accounting Change had not been made.  Until such time as such an
amendment shall have been executed and delivered by Borrower and Lender, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Change had not
occurred.




1.2.
            Definitions




“Acceptance Notice”
shall have the meaning given such term in Section
8.11.




“Accounting Change”
refers to changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants or, if
applicable, the U.S. Securities and Exchange Commission.




“Accounts” shall mean
“accounts” as defined in Section 9-102 of the UCC (including Health Care
Insurance Receivables).




“Account Debtor” shall
mean “account debtor” as defined in Section 9-102 of the UCC.




“Accumulated
Distribution” shall have the meaning given to it in the definition of
“Permitted
Distribution”.




“Accumulated Distribution
Fiscal Quarter” shall have the meaning given to it in the definition of
“Permitted
Distribution”.




“Advance” shall mean a
borrowing under the Revolving Facility.  Any amounts paid by Lender on
behalf of Borrower or Guarantor under any Loan Document shall be an Advance for
purposes of the Agreement.




“Affiliate” shall
mean, as to any Person (a) any other Person that, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, such Person, (b) any other Person who is a director or officer (i)
of such Person, (ii) of any Subsidiary of such Person, or (iii) of any Person
described in clause (a) above with respect to such Person, (c) any other Person
which, directly or indirectly through one or more intermediaries, is the
beneficial or record owner (as defined in Rule 13d-3 of the Securities Exchange
Act of 1934, as amended, as the same is in effect on the date hereof) of five
percent (5%) or more of any class of the outstanding voting stock, securities or
other equity or ownership interests of such Person and (d) in the case such
Person is an individual, any other Person who is an immediate family member,
spouse or lineal descendant of individuals of such Person or any Affiliate of
such Person.  For purposes of this definition, the term “control” (and
the correlative terms, “controlled by” and “under common control with”) shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies, whether through ownership of securities
or other interests, by contract or otherwise.  “Affiliate” shall
include any Subsidiary.  Notwithstanding anything herein to the
contrary, in no event shall Lender be considered as “Affiliate” of Borrower or
Guarantor.


2




“Applicable Rate”
shall mean the interest rate applicable from time to time to Loans under the
Agreement.




“Availability” shall
mean the value, in U.S. Dollars of eighty-five percent (85%) of the Borrowing
Base minus, if applicable amounts reserved pursuant to this
Agreement.




“Borrowing Base” shall
mean, as of any date of determination, the net collectible Dollar value of
Eligible Accounts, as determined with reference to the most recent Borrowing
Certificate and otherwise in accordance with the Agreement; provided, however, that if as
of such date the most recent Borrowing Certificate is of a date more than four
Business Days before or after such date, the Borrowing Base shall be determined
by Lender in its Permitted Discretion. For purposes hereof, the net collectible
Dollar value of Eligible Accounts is the amount due to Borrower as a result of a
contractual right of payment from third-party payors less deductible obligations
and contractual allowances as determined and approved by Lender in its Permitted
Discretion.




“Borrowing
Certificate” shall mean a Borrowing Certificate substantially in the form
of Exhibit A
attached hereto.




“Borrowing Date” shall
the mean the date requested for an Advance by Borrower pursuant to Section
2.3.




“Business Day” shall
mean any day other than a Saturday, Sunday or other day on which the Federal
Reserve or Lender is closed.




“Capital Expenditures”
shall mean, for any Test Period, the sum (without duplication) of all
expenditures (whether paid in cash or accrued as liabilities) during the Test
Period that are or should be treated as capital expenditures under
GAAP.




“Capital Lease” shall
mean, as to any Person, a lease of any interest in any kind of property or asset
by that Person as lessee that is, should be or should have been recorded as a
“capital lease” in accordance with GAAP.




“Capital Stock” shall
mean any and all shares, interests, participations or other equivalents (however
designated) of capital stock of a corporation, any and all equivalent ownership
interests in a Person (other than a corporation) and any and all warrants,
rights or options to purchase any of the foregoing.




“Capitalized Lease
Obligations” shall mean all obligations of any Person under Capital
Leases, in each case, taken at the amount thereof accounted for as a liability
in accordance with GAAP.


3


“Change of Control”
shall mean, with respect to Borrower or Guarantor, the occurrence of any of the
following:  (i) a merger, consolidation, reorganization,
recapitalization or share or interest exchange, sale or transfer or any other
transaction or series of transactions in which its stockholders, managers,
partners or interest holders immediately prior to such transaction or series of
transactions receive, in exchange for the stock or interests owned by them,
cash, property or securities of the resulting or surviving entity or any
Affiliate thereof, and, as a result thereof, Persons who, individually or in the
aggregate, were holders of fifty percent (50%) or more of its voting stock,
securities or equity, partnership or ownership interests immediately prior to
such transaction or series of transactions hold less than fifty percent (50%) of
the voting stock, securities or other equity, partnership or ownership interests
of the resulting or surviving entity or such Affiliate thereof, calculated on a
fully diluted basis, (ii) a direct or indirect sale, transfer or other
conveyance or disposition, in any single transaction or series of transactions,
of all or substantially all of its assets, (iii) the initial public offering of
its securities, (iv) any “change in/of control” or “sale” or “disposition” or
similar event as defined in any document governing indebtedness of such Person
which gives the holder of such indebtedness the right to accelerate or otherwise
require payment of such indebtedness prior to the maturity date thereof, or (v)
the replacement of a majority of the board of directors of Borrower over a
one-year period from the directors who constituted the board of directors of
such Borrower at the beginning of such period and such replacement shall not
have been approved by a vote of at least a majority of the board of directors of
such Borrower then still in office who either are members of such board of
directors at the beginning of such period or whose election as a member of such
board of directors was previously so approved.




“Chattel Paper”
shall mean “chattel paper” as defined in Section 9-102 of the UCC, whether
tangible or electronic.




“Closing” shall mean
the satisfaction, or written waiver by Lender, of all of the conditions
precedent set forth in the Agreement required to be satisfied prior to the
consummation of the transactions contemplated hereby to be consummated following
the amendment and restatement of the Original Credit Agreement.




“Closing Date” shall
mean the date upon which the Closing occurs.




“Collateral” shall
mean all of the property described below in, to, or under which a Borrower now
has or hereafter acquires any right, title or interest, whether present, future,
or contingent, including any such property acquired by assignment:




(a)           All
of Borrower’s now-owned and hereafter acquired or arising Accounts, accounts
receivable and rights to payment of every kind and description related to
Accounts, and all of Borrower’s contract rights, chattel paper, documents and
instruments with respect to such Accounts and accounts receivable, and all of
Borrower’s rights, remedies, security and liens, in, to and in respect of the
Accounts, including, without limitation, rights of stoppage in transit,
replevin, repossession and reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, guaranties or other contracts of
suretyship with respect to the Accounts, deposits, Letters of Credit, Supporting
Obligations or other security for the obligation of any Account Debtor, and
credit and other insurance relating to such Accounts and accounts
receivable;




(b)           All
of Borrower’s right, title and interest in, to and in respect of all goods
relating to, or which by sale have resulted in, Accounts, including, without
limitation, all goods described in invoices or other documents or instruments
with respect to, or otherwise representing or evidencing, any Account, and all
returned, reclaimed or repossessed goods;




(c)           All
of Borrower’s now owned or hereafter acquired (i) Lockbox Accounts (and the
funds contained therein) and (ii) any deposit accounts (and the funds contained
therein), other than the Lockbox Accounts, into which Accounts are deposited, to
the extent Accounts are contained therein;


4




(d)           All
of Borrower’s now owned and hereafter acquired or arising general intangibles
and other property of every kind and description with respect to, evidencing or
relating to its Accounts and other rights to payment, including, but not limited
to, all existing books and records, as the same relate to the
Accounts;




(e)           The
proceeds of all of the foregoing (including, without limitation, insurance
proceeds) related to losses with respect to Collateral such as business
interruption insurance or other insurance proceeds related specifically to
losses from the Collateral.




“Collateral Management
Fee” shall mean a monthly fee to be paid by Borrower to Lender in an
amount equal to 0.0417% per month calculated on the basis of the daily average
amount of the balances under the Revolving Facility outstanding during the
preceding month.




“Commercial Tort
Claims” shall mean “Commercial Tort Claims” as defined in Section 9-102
of the UCC.




“Compliance
Certificate” shall mean a compliance certificate substantially in the
form of Exhibit
B attached hereto.




“Concentration
Account” shall mean a depository account maintained by Lender or an
affiliate of Lender at such bank as Lender may communicate to Borrower from time
to time.




“Credit Party” shall
have the meaning set forth in the first paragraph of this
Agreement.




“Debtor Relief Law”
shall mean, collectively, the Bankruptcy Code of the United States of America
and all other applicable federal and state liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally, as amended and in effect from time to time.




“Default” shall mean
any event, fact, circumstance or condition that, with the giving of applicable
notice or passage of time or both, would constitute or be or result in an Event
of Default.




“Default Rate” shall
mean at any time the Applicable Rate in effect at such time plus three percent
(3%) per annum.




“Denial Disclosure”
shall have the meaning given to it in Section
7.18.




“Deposit Accounts”
shall mean “deposit accounts” as defined in Section 9-102 of the
UCC.




“Distribution” shall
mean any direct or indirect dividend, distribution or other payment of any kind
or character (whether in cash, securities or other property) in respect of any
equity interests.




“Documents” shall mean
“documents” as defined in Section 9-102 of the UCC.




“Dollars” and the sign
“$” each mean
the lawful money of the United States of America.




“Eligible Accounts”
shall mean each Account arising in the ordinary course of Borrower’s business
from the sale or lease of goods or rendering of Services which Lender, in its
Permitted Discretion, deems an Eligible Account unless:




5




(a)          such
Account is not subject to a valid perfected first priority security interest in
favor of Lender, subject to no other Lien;




(b)          such
Account is not evidenced by an invoice, statement or other documentary evidence
satisfactory to Lender;




(c)          such
Account or any portion thereof (in which case only such portion shall not be an
Eligible Account) is payable by a beneficiary, recipient or subscriber
individually and not directly by a Medicaid/Medicare Account Debtor or
commercial medical insurance carrier, or client acceptable to Lender in its
Permitted Discretion;




(d)          such
Account arises out of Services rendered or a sale or lease made to, or out of
any other transaction between Borrower or any of its Subsidiaries and, one or
more Affiliates of Borrower;




(e)          such
Account remains unpaid for longer than (i) one hundred fifty (150)calendardays after the
applicable Services were rendered with respect to Accounts payable by a
Medicaid/Medicare Account Debtor or commercial medical insurance carrier
acceptable to Lender and (ii) one hundred twenty (120) calendar days after the
applicable Services were rendered with respect to all other Account
Debtors;




(f)           with
respect to all Accounts owed by any particular Account Debtor (other than
Accounts from Medicaid/Medicare Account Debtors) or its Affiliates, if more than
twenty five percent (25%) of the aggregate balance of all such Accounts owing
from such Account Debtor and its Affiliates are ineligible due to the
requirements of clause (e) of this Section or such higher threshold which may be
agreed in writing by Lender for any specific Account Debtor;




(g)          with
respect to all Accounts owed by any particular Account Debtor or its Affiliates,
twenty-five percent (25%) or more of all such Accounts are deemed not to be
Eligible Accounts for any reason hereunder (which percentage may, in Lender’s
Permitted Discretion, be increased or decreased);




(h)          with
respect to all Accounts owed by any particular Account Debtor or its Affiliates
(other than Medicaid/Medicare Account Debtors) if such Accounts exceed twenty
percent (20%) of the net collectible Dollar value of all Eligible Accounts at
any one time (including Accounts from Medicaid/Medicare Account Debtors), then
the amount by which such Accounts for that particular Account Debtor or its
Affiliates exceed twenty percent (20%) of the net collectible Dollar value of
all Eligible Accounts shall not be included as Eligible Accounts;




(i)           any
covenant, agreement, representation or warranty contained in any Loan Document
with respect to such Account has been breached and remains uncured;




(j)           the
Account Debtor for such Account has commenced a voluntary case under any Debtor
Relief Law or has made an assignment for the benefit of creditors, or a decree
or order for relief has been entered by a court having jurisdiction in respect
of such Account Debtor in an involuntary case under any Debtor Relief Law, or
any other petition or application for relief under any Debtor Relief Law has
been filed against such Account Debtor, or such Account Debtor has failed,
suspended business, ceased to be solvent, called a meeting of its creditors, or
has consented to or suffered a receiver, trustee, liquidator or custodian to be
appointed for it or for all or a significant portion of its assets or
affairs;


6




(k)           such
Account arises from the sale or lease of property or Services rendered to one or
more Account Debtors outside the United States (including any territory or
possession of the United States that has adopted Article 9 of the UCC) or that
have their principal place of business or chief executive offices outside the
United States (including any territory or possession of the United States that
has adopted Article 9 of the UCC);




(l)           such
Account represents the sale or lease of goods or rendering of Services to an
Account Debtor on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
Chattel Paper or an Instrument of any kind or has been reduced to
judgment;




(m)         the
applicable Account Debtor for such Account is any Governmental Authority
(excluding Medicaid/Medicare Account Debtors), unless rights to payment of such
Account have been assigned to Lender pursuant to the Assignment of Claims Act of
1940, as amended (31 U.S.C. Section 3727, et seq. and 41 U.S.C.
Section 15, et seq.), or otherwise only if all applicable statutes or
regulations respecting the assignment of Government Accounts have been complied
with as determined by Lender in its Permitted Discretion;




(n)          such
Account is subject to any offset, credit (including any resource or other income
credit or offset) deduction, defense, discount, chargeback, freight claim,
allowance, adjustment, dispute or counterclaim (each an “Adjustment”), or is
contingent in any respect or for any reason; provided, that, the discounted
amount of such Account after giving effect to such Adjustment will be considered
an Eligible Account;




(o)           there
is any agreement with an Account Debtor for any deduction from such Account;
provided, that, the discounted
amount of such Account after giving effect to such discounts and allowances
shall be considered an Eligible Account;




(p)          any
return, rejection or repossession of goods or Services related to it has
occurred;




(q)          such
Account is not payable to Borrower;




(r)           a
Borrower has agreed to accept or has accepted any non-cash payment for such
Account;




(s)           with
respect to any Account arising from the sale of goods, the goods have not been
shipped to the Account Debtor or its designee;




(t)           with
respect to any Account arising from the performance of Services, the Services
have not been actually performed or the Services were undertaken in violation of
any law; or




(u)          such
Account fails to meet such other specifications and requirements which may from
time to time be established by Lender or is not otherwise satisfactory to
Lender, as determined in Lender’s Permitted Discretion.




“EMTALA” shall mean
the Emergency Medical Treatment and Active Labor Act, as amended, and the
regulations thereunder.


7


“Environmental Laws”
shall mean any and all laws, rules, orders, regulations, statutes, ordinances,
guidelines, codes, decrees, or other legally enforceable requirements
(including, without limitation, common law) of any international authority,
foreign government, the United States, or any state, local, municipal or other
governmental authority, regulating, relating to or imposing liability or
standards of conduct concerning protection of the environment, or protection of
human health or employee health and safety (as affected by the environment or by
any substance the exposure to which is reasonably suspected of causing harm to
human health), as has been, is now, or may at any time hereafter be, in effect
to which the Borrower is subject.




“Equipment” shall mean
“equipment” as defined in Section 9-102 of the UCC.




“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereunder.




“Event of Default”
shall mean the occurrence of any event set forth in Article X.




“Excess Cash Flow”
shall mean, for any fiscal year (or for such other period as may be specifically
provided for herein), as calculated for Borrowers and their Subsidiaries on a
consolidated basis, without duplication, an amount equal to the sum of (a) Net
Income (as defined in Annex I) for such period, plus (b) an amount equal to the
amount of depreciation expenses, amortization expense (including the
amortization of goodwill), accrued non-cash interest expense and all other
non-cash charges deducted in arriving at such Net Income, plus (c) an amount
equal to the aggregate Net Cash Proceeds of the sale, lease, transfer or other
disposition of assets by Borrowers during such period to the
extent  not required to be applied to mandatory prepayments or
payments on the Loans,  plus (d) an amount equal to the net loss on
the sale, lease, transfer or other disposition of assets by Borrowers during
such period to the extent deducted in arriving at such Net Income, plus (e) an
amount equal to any tax refunds or credits received by Borrowers during such
period, plus (f) other extraordinary or non-recurring charges that would not
have otherwise been incurred in the ordinary course of business, less (g) an
amount equal to the unfinanced permitted Capital Expenditures of Borrowers for
such period, less (h) an amount equal to the sum of all regularly scheduled
payments (to the extent such payments have not already been deducted in arriving
at Net Income) and optional and mandatory prepayments of principal on
Indebtedness for money borrowed actually made during such period to the extent
permitted hereunder, less (i) an amount equal to the net gain on the sale,
lease, transfer or other disposition of assets by Borrowers during such period
to the extent included in arriving at such Net Income, less (j) other
extraordinary or non-recurring gains that would not have otherwise been incurred
in the ordinary course of business.




“Facility Cap” shall
have the meaning given the term in the Recitals of this Agreement.




“Federal Reserve”
shall mean the Federal Reserve Bank of the United States.




“Fixtures” shall mean
“fixtures” as defined in Section 9-102 of the UCC.




“GAAP”
shall mean generally accepted accounting principles in the United States as in
effect on the Closing Date.




“General Intangibles”
shall mean “general intangibles” as defined in Section 9-102 of the
UCC.




“Goods” shall mean
“goods” as defined in Section 9-102 of the UCC.




“Government Account”
shall mean all Accounts arising out of or with respect to any Government
Contract.




8




“Government Contract”
shall mean all contracts with any Governmental Authority.




“Governmental
Authority” shall mean any federal, state, municipal, national, local or
other governmental department, court, commission, board, bureau, agency or
instrumentality or political subdivision thereof, or any entity or officer
exercising executive, legislative or judicial, regulatory or administrative
functions of or pertaining to any government or any court, in each case, whether
of the United States or a state, territory or possession thereof, a foreign
sovereign entity or country or jurisdiction or the District of
Columbia.




“Guaranteed
Obligations” shall have the meaning given such term in Section 14.1
hereof.




“Guarantor” shall have
the meaning set forth in the first paragraph of this Agreement.




“Guaranty” shall mean,
collectively and each individually, all guaranties executed by
Guarantor.




“Hazardous Substances”
shall mean, without limitation, any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
hazardous wastes, hazardous or toxic substances or related materials as defined
in or subject to any applicable Environmental Law.




“Healthcare Laws”
shall mean all applicable statutes, laws, ordinances, rules and regulations of
any Governmental Authority with respect to regulatory matters primarily relating
to patient healthcare, healthcare providers and healthcare services (including
without limitation Section 1128B(b) of the Social Security Act, as amended,
42 U.S.C. Section 1320a-7(b) (Criminal Penalties Involving Medicare or
State Health Care Programs), commonly referred to as the “Federal Anti-Kickback
Statute,” and the Social Security Act, as amended, Section 1877, 42 U.S.C.
Section 1395nn (Prohibition Against Certain Referrals), commonly referred to as
“Stark Statute”), and 31 U.S.C. Section 3279 et seq. (the False
Claims Act) to which Borrower is subject.




“HIPAA” shall mean the
Health Insurance Portability and Accountability Act of 1996 (Pub. L. No.
104-191) and the regulations promulgated thereunder.




“HUD Application”
shall have the meaning given such term in Section
8.11.




“Indebtedness” of any
Person shall mean, without duplication, (a) all obligations for borrowed
money, (b) all obligations evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations in respect of
letters of credit or bankers acceptances, (c) all Capitalized Lease
Obligations, (d) all obligations or liabilities of others secured by a Lien
on any asset of such Person or its Subsidiaries, irrespective of whether such
obligation or liability is assumed, (e) all obligations to pay the deferred
purchase price of assets (other than trade payables incurred in the ordinary
course of business and not outstanding more than one hundred twenty (120)
calendar days after the date such payable was created) or such longer period as
shall be agreed in writing by Lender and Borrower, (f) all net obligations
owing to counterparties under Hedging Agreements, (g) all obligations with
respect to redeemable Capital Stock or repurchase obligations under any Capital
Stock issued by such Person, (h) the present value of future rental payments
under all synthetic leases (excluding specifically any operating leases or real
estate leases) and (i) any obligation guaranteeing or intended to guarantee
(whether directly or indirectly guaranteed, endorsed, co-made, discounted, or
sold with recourse) any obligation of any other Person that constitutes
Indebtedness under any of clauses (a) through (h) above.





“Indemnified Person”
shall have the meaning given such term in Section
15.4.


9




“Initial Advance”
shall mean the initial Advance.





“Instrument” shall
mean “instrument” as defined in Section 9-102 of the UCC.





“Insured Event” shall
have the meaning given such term in Section
15.4.


“Insurer” shall mean a
Person that insures another Person against any costs incurred in the receipt by
such other Person of Services, or that has an agreement with Borrower to
compensate it for providing Services to such Person.





“Intellectual
Property” shall mean all patents, patent applications, trademarks,
trademark applications, service marks, registered copyrights, copyright
applications, copyrights, trade names, trade secrets and software and all rights
in the foregoing.





“Inventory” shall mean
“inventory” as defined in Section 9-102 of the UCC.




“Investment Property”
shall mean “investment property” as defined in Section 9-102 of the
UCC.




“Landlord Waiver and
Consent” shall mean a waiver/consent from the owner/lessor/mortgagee of
any premises either owned or occupied by Borrower at which any of the Collateral
is now or hereafter located for the purpose of providing Lender access to such
Collateral, in each case as such may be modified, amended or supplemented from
time to time.




“Letter of Credit
Rights” shall mean “letter of credit rights” as defined in Section 9-102
of the UCC, whether or not the letter of credit is evidenced by a
writing.




“Liability Event”
shall mean any event, fact, condition or circumstance (i) in or for which
Borrower becomes liable or otherwise responsible for any amount over $50,000
owed or owing to any Medicaid,  Medicare or CHAMPUS/TRICARE program by
a provider under common ownership with such Borrower or any provider owned by
such Borrower pursuant to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority after the failure of any such provider
to pay any such amount when owed or owing, (ii) in which Medicaid, Medicare or
CHAMPUS/TRICARE payments to Borrower are lawfully set-off against payments to
such Borrower to satisfy any liability of or for any amounts over $50,000 owed
or owing to any Medicaid, Medicare or CHAMPUS/TRICARE program by a provider
under common ownership with such Borrower or any provider owned by such Borrower
pursuant to any applicable law, ordinance, rule, decree, order or regulation of
any Governmental Authority, or (iii) any of the foregoing under clauses
(i) or (ii) in each case pursuant to statutory or regulatory provisions
that are similar to any applicable law, ordinance, rule, decree, order or
regulation of any Governmental Authority referenced in clauses (i) and (ii)
above or successor provisions thereto.




“LIBOR” shall mean a
rate of interest equal to the rate per annum (rounded upwards to the nearest
1/100th of 1%) at which Dollar deposits for a period of one month are offered in
the London interbank eurodollar market as displayed in the Bloomberg Financial
Markets system (or as otherwise determined by Lender in its sole discretion) as
of 11:00 A.M. (London time) on the applicable date of
determination.




“Lien” shall mean any mortgage, pledge,
security interest, encumbrance, restriction, lien or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any lease in the nature thereof), or any
other arrangement pursuant to which title to the property is retained by or
vested in some other Person for security purposes.


10




“Liquidity Factors”
shall mean percentages which Lender, in its credit judgment, may apply to
Eligible Accounts by payor class based upon Borrower’s actual recent collection
history for each such payor class (i.e. Medicare, Medicaid, commercial
insurance, etc.) in a manner consistent with Lender’s underwriting practices and
procedures, including, without limitation, Lender’s review and analysis of,
among other things, Borrower’s historical returns, rebates, discounts, credits
and allowances, to adjust the Availability.




“Loan” or “Loans” shall mean,
individually and collectively, all Advances.




“Loan Documents” shall
mean, collectively and each individually, this Agreement and all other
agreements, documents, instruments and certificates heretofore or hereafter
executed or delivered to, or on behalf of, Lender in connection with this
Agreement or the Loans, as the same may be amended, modified or supplemented
from time to time.




Lockbox Accounts”
shall mean, collectively and each individually, the Deposit Accounts maintained
by Borrower at the Lockbox Banks into which all collections or payments on
Borrower’s Accounts and other Collateral are paid and which Accounts and other
Collateral are subject to Lender’s security interest granted by a
Borrower.




“Lockbox Agreement”
shall mean an agreement among Lender, Borrower who has granted a security
interest in a Deposit Account and any of the Lockbox Banks governing the Lockbox
Accounts, in form and substance satisfactory to Lender.




“Lockbox Banks”
shall  mean, collectively and each individually, the federally insured
banks acceptable to Lender where Borrower who have granted security interests in
a Lockbox Account shall maintain the Lockbox Accounts.




“Management or Service
Fee” shall mean any management, service or related or similar fee paid by
Borrower to any Person with respect to any facility owned, operated or leased by
Borrower.




“Material Adverse
Change” shall mean any event, condition or circumstance or set of events,
conditions or circumstances or any change(s) which (i) has, had or would
reasonably be likely to have any material adverse effect upon or change in the
validity or enforceability of any Loan Document, (ii) has been or would
reasonably be expected to be adverse to the value of any material portion of the
Collateral, or to the priority of Lender’s security interest in any portion of
the Collateral, (iii) has been or would reasonably be expected to be materially
adverse to the business, operations, prospects, properties, assets, liabilities
or financial condition of any Credit Party, either individually or taken as a
whole, or (iv) has materially impaired or would reasonably be likely to
materially impair the ability of any Borrower to pay any portion of the
Obligations or otherwise perform the Obligations or to consummate the
transactions under the Loan Documents executed by such Person.




“Materials of Environmental
Concern” shall mean  any gasoline or petroleum (including crude
oil or any fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos, pollutants, contaminants, radioactivity,
and any other substances or forces of any kind, whether or not any such
substance or force is defined as hazardous or toxic under any Environmental Law,
that is regulated pursuant to or would reasonably be expected to give rise to
liability under any Environmental Law.




11




“Medicaid/Medicare Account
Debtor” shall mean any Account Debtor which is (i) the United States of
America acting under the Medicaid or Medicare program established pursuant to
the Social Security Act or any other federal healthcare program, including,
without limitation, TRICARE (f/k/a CHAMPUS), (ii) any state or the District of
Columbia acting pursuant to a health plan adopted pursuant to Title XIX of the
Social Security Act or any other state health care program, or (iii) any agent,
carrier, administrator or intermediary for any of the foregoing.




“Minimum Termination
Fee” shall mean (for the time period indicated) the amount equal to (i)
3.0% of the Facility Cap, if the Revolver Termination is at any time before
February 1, 2011; (ii) 2.0% of the Facility Cap, if the Revolver Termination is
after February 1, 2011 but before February 1, 2012; and (iii) 1.0% of the
Facility Cap, if the Revolver Termination is on or after February 1,
2012.  There shall be no Minimum Termination Fee if the Revolver
Termination occurs within five (5) days of the end of the Term.





“Net Cash Proceeds”
shall mean, with respect to any sale, lease, transfer or other disposition of
assets by any Person, the amount of cash received (directly or indirectly) from
time to time (whether as initial consideration or through the payment or
disposition of deferred consideration) by or on behalf of such Person in
connection therewith after deducting therefrom (A) the amount of any Permitted
Indebtedness secured by any Permitted Lien on such property which is required to
be, and is, repaid in connection with such disposition, (B) reasonable expenses
related thereto incurred by such Person in connection therewith, (C) transfer
taxes paid to any taxing authorities by such Person in connection therewith, (D)
net income taxes to be paid in connection with such disposition and (E) with
respect to any lease, the cost of any tenant improvements paid by Borrower in
connection therewith.





“Note” or “Notes” shall mean any
promissory note or notes issued pursuant to Section
2.7.




“Obligations” shall
mean all present and future obligations, Indebtedness and liabilities of
Borrower or Guarantor to Lender at any time and from time to time of every kind,
nature and description, direct or indirect, secured or unsecured, joint and
several, absolute or contingent, due or to become due, matured or unmatured, now
existing or hereafter arising, contractual or tortious, liquidated or
unliquidated, (whether or not evidenced by a Note), including, without
limitation, all principal, interest, applicable fees, charges and expenses and
all amounts paid or advanced by Lender on behalf of or for the benefit of
Borrower or Guarantor for any reason at any time, including in each case
obligations of performance as well as obligations of payment and interest that
accrue after the commencement of any proceeding under any Debtor Relief Law by
or against any such Person.




“OFAC” shall mean the
U.S. Department of Treasury’s Office of Foreign Assets Control.




“Organizational and Good
Standing Documents” shall mean, for any Person (i) a copy of the
certificate of incorporation or formation (or other like organizational
document) certified as of a date satisfactory to Lender before the Closing Date
by the applicable Governmental Authority of the jurisdiction of incorporation or
organization of such Person, (ii) a copy of the bylaws or similar organizational
documents of certified as of a date satisfactory to Lender before the Closing
Date by the corporate secretary or assistant secretary of such Person,
(iii) an original certificate of good standing as of a date acceptable to
Lender issued by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of such Person and of every other jurisdiction in
which such Person has an office or conducts business or is otherwise required to
be in good standing, and (iv) copies of the resolutions of the board of
directors or managers (or other applicable governing body) and, if required,
stockholders, members or other equity owners authorizing the execution, delivery
and performance of the Loan Documents to which such Person is a party, certified
by an authorized officer of such Person as of the Closing Date.


12




“Paid in Full” and
“Payment in
Full” mean, with respect to the Obligations, all amounts owing with
respect thereto (including any interest accruing thereon after the commencement
of any proceeding under any Debtor Relief Law by or against Borrower, whether or
not allowed as a claim against such Borrower in such proceeding, but excluding
as yet unasserted contingent obligations), have been fully, finally and
completely paid in cash.




“Parent Indebtedness”
shall mean Indebtedness incurred by Borrower from Guarantor, provided, that, such
Indebtedness shall be (i) up to $2,000,000 outstanding in the aggregate at any
time, (ii) on an unsecured basis, (iii) subordinated in remedies to all of the
Obligations and to all of Lender’s rights in form and substance satisfactory to
Lender and (iv) be subordinate in right of payment to the Obligations and shall
only be repaid pursuant to a Permitted Distribution until the Obligations are
Paid in Full; provided, that, at the request
of Lender, the terms of the provisions of (iii) and (iv) shall be contained in a
written subordination agreement between Lender and Parent acknowledged and
agreed by Borrower, in form and substance satisfactory to Lender.




“Patriot
Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L.
107-56, as amended.




“Payment Intangible”
shall mean “payment intangible” as defined in Section 9-102 of the
UCC.




“Payment Office” shall
mean initially the address set forth beneath Lender’s name on the signature page
of the Agreement, and thereafter, such other office of Lender, if any, which it
may designate by notice to Borrower to be the Payment Office.




“Permit” shall mean
collectively all licenses, leases, powers, permits, franchises, certificates,
authorizations, approvals, certificates of need, provider numbers and other
rights.




“Permitted
Acquisition” shall mean any acquisition by Borrower, whether through a
purchase of stock, membership interests or otherwise or the purchase of assets
or through a merger, consolidation or amalgamation, of another Person, or the
assets constituting an entire or any portion of any business or operating
business unit or division of another Person or securities of such other Person
that satisfies the requirements set forth in Sections 8.14 and
9.4
hereof.




“Permitted
Discretion”shall mean a
determination or judgment made by Lender in good faith in the exercise of
reasonable (from the perspective of a secured lender) business
judgment.


13


“Permitted
Distributions” shall mean Distributions to Guarantor for the purpose of
making principal payments on the Parent Indebtedness and/or as periodic cash
distributions to Guarantor as a shareholder of Borrower, provided, that (i) such
Permitted Distributions are made no more than once per fiscal quarter thereafter
and (ii) all of the following conditions are satisfied with respect to each such
Distribution: (a) no Default or Event of Default has occurred and is continuing
or would arise as a result of such Distribution, (b) after giving effect to such
Distribution, Borrower is in compliance on a pro forma basis with the financial
covenants set forth in Annex 1 (recomputed for the most recent three month
period for which monthly financial statements have been delivered in accordance
with the terms hereof after giving effect thereto); provided, however, that in
situations where there is an Accumulated Distribution (as defined below) being
made with respect to any Accumulated Distribution Fiscal Quarters, only that
portion of the Distribution that is not related to the Accumulated Distributions
shall be included in Fixed Charges for the purpose of calculating the pro forma
Fixed Charge Coverage Ratio in Annex I for the most recent three-month period),
(c) the aggregate amount of such Distributions shall not exceed fifty percent
(50%) of undistributed Excess Cash Flow for the three month period immediately
preceding such distribution, as determined pursuant to the Distribution Notice,
(d) Lender shall have received written notice (the “Distribution Notice”) from
Borrower, of Borrower’s intention to make such Distribution at least five (5)
Business Days prior to the date of such proposed Distribution, which such notice
shall include a detailed calculation satisfactory to Lender in its Permitted
Discretion evidencing Excess Cash Flow for such three month period (except that
for any amounts included in such Distribution that are a result of Accumulated
Distributions, in which case, the Excess Cash Flow so measured shall be
applicable to the appropriate Accumulated Distribution Fiscal Quarters to which
they relate), as applicable, (e) Lender shall have consented in writing to such
Distribution Notice prior to the making of such proposed Distribution, such
consent not to be unreasonably withheld, and (g) until such time as the Parent
Indebtedness is paid in full in cash, any such Distribution payable to Guarantor
shall be utilized by Guarantor solely to repay the Parent Indebtedness; provided, that, if Borrower
chooses not to make a Permitted Distribution (the “Accumulated
Distribution”) in any fiscal quarter (the “Accumulated Distribution
Fiscal Quarter”) Borrower may make such Accumulated Distribution in any
of the subsequent three consecutive fiscal quarters following the Accumulated
Distribution Fiscal Quarter; provided, that, Borrower
provides Lender with Evidence of Compliance with the criteria set forth in the
definition of Permitted Distribution for the Accumulated Distribution as of the
end of the Accumulated Distribution Fiscal Quarter, except, that, the
Distribution Notice shall not have been made in the Accumulated Distribution
Fiscal Quarter but rather shall be made (5) Business Days prior to the date the
Accumulated Distribution is to be distributed.




“Permitted
Indebtedness” shall mean any of the following: (i) Indebtedness under the
Loan Documents, (ii) any Indebtedness set forth on Schedule 9.2,
(iii) Capitalized Lease Obligations and Indebtedness incurred to purchase Goods
and secured by purchase money Liens constituting Permitted Liens: (A) in
aggregate amount outstanding at any time not to exceed (1) $6,000,000 at any
time before February 1, 2011, (2) $9,000,000 on or after February 1, 2011 but
before February 1, 2012, and (3) $12,000,000 on or after February 1, 2012, in
each of (1), (2) and (3) less the outstanding amount of such Indebtedness
identified on Schedule
9.2 upon the incurrence of such Indebtedness and after giving effect
thereto no Default or Event of Default shall exist and be continuing and (B) in
an aggregate amount in excess of any of the thresholds specified in subparagraph
(A), provided,
that, (1) ten
(10) Business Days prior to the incurrence of such Indebtedness Borrower shall
have provided pro forma financial statements along with any other supporting
documentation required by Lender evidencing that Borrower would have been in
compliance with the financial covenants set forth on Annex 1 hereto for the
immediately preceding Test Period (as defined on Annex 1 hereto), if such
Indebtedness had been incurred on the first day of such Test Period, (2) prior
to the incurrence of such Indebtedness Borrower shall have received Lender’s
written confirmation of its agreement with such pro forma financial statements;
and (3) upon the incurrence of such Indebtedness and after giving effect thereto
no Default or Event of Default shall exist and be continuing, (iv) the
accounts payable set forth on Schedule 1.2 and accounts payable to trade
creditors and current operating expenses (other than for borrowed money) which
are not aged more than one hundred twenty calendar days from the date such
payable was created or such longer period as shall be agreed in writing by
Lender, except, in each case incurred in the ordinary course of business and
paid within such time period, unless the same are being contested in good faith
and by appropriate and lawful proceedings and such reserves, if any, with
respect thereto as are required by GAAP shall have been reserved, (v) borrowings
incurred in the ordinary course of business and not exceeding $2,000,000
individually or in the aggregate outstanding at any one time; provided, however, that such
Indebtedness (A) shall not be secured by Collateral, any cash, money, Investment
Property or Deposit Accounts; (B) the debt service for such Indebtedness shall
not exceed $400,000 for any twelve (12) month period; (C)  ten (10)
Calendar Days prior to the incurrence of such Indebtedness Borrower shall have
provided pro forma financial statements along with any other supporting
documentation required by Lender evidencing that Borrower would have been in
compliance with the financial covenants set forth on Annex 1 hereto for the
immediately preceding Test Period (as defined on Annex 1 hereto), if such
Indebtedness had been incurred on the first day of such Test Period, (D) prior
to the incurrence of such Indebtedness Borrower shall have received Lender’s
written confirmation of its agreement with such pro forma financial statements
(which confirmation or denial shall be promptly provided by Lender to Borrower
within ten (10) calendar days of Lender’s receipt of such financial statements);
(E) upon the incurrence of such Indebtedness and after giving effect thereto no
Default or Event of Default shall exist and be continuing, (F) such Indebtedness
shall be subordinated in right of repayment and remedies to all of the
Obligations and to all of Lender’s rights pursuant to a written agreement among
Lender, Borrower and the lender with respect to such Indebtedness, in form and
substance satisfactory to Lender and (vi) Parent Indebtedness.




14




“Permitted Liens”
shall mean with respect to the Borrower any of the following: (i) Liens under
the Loan Documents or otherwise arising in favor of Lender, (ii) Liens imposed
by law for taxes (other than payroll taxes), assessments or charges of any
Governmental Authority for claims not yet due or which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained by such Person in
accordance with GAAP to the satisfaction of Lender in its Permitted Discretion,
(iii) (A) statutory Liens of landlords (provided, that, with respect to
Required Locations any such landlord has executed a Landlord Waiver and Consent
in form and substance satisfactory to Lender) and of carriers, warehousemen,
mechanics, materialmen, and (B) other Liens imposed by law or that arise by
operation of law in the ordinary course of business from the date of creation
thereof, in each case only for amounts not yet due or which are being contested
in good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained by such Person in
accordance with GAAP to the satisfaction of Lender in its Permitted Discretion,
(iv) Liens (A) incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal bonds) in connection
with workers’ compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations, or (B) arising as a result of progress
payments under government contracts, (v) purchase money Liens (A) securing
the type of Permitted Indebtedness set forth under clause (iii) of the
definition of “Permitted Indebtedness”, or (B) in connection with the
purchase by such Person of equipment in the normal course of business, provided, that, such payables
shall not exceed any limits on Indebtedness provided for herein and shall
otherwise be Permitted Indebtedness hereunder; (iv) liens securing the
Indebtedness set forth in clause (v) of Permitted Indebtedness on assets other
than: (A) the Collateral, (B) cash or other money of Borrower, (C) Deposit
Accounts of Borrower and (D) Investment Property of Borrower; and (vii) Liens
disclosed on Schedule
7.4B and Schedule
9.3.




“Person” shall mean an
individual, a partnership, a corporation, a limited liability company, a
business trust, a joint stock company, a trust, an unincorporated association, a
joint venture, a Governmental Authority or any other entity of whatever
nature.




“Pledge Agreement”
shall mean that certain negative Pledge Agreement by and between Guarantor and
Lender executed in connection herewith, as such may be modified, amended,
restated or supplemented from time to time.




“Receipt” shall have
the meaning given such term in Section
15.5.




“Required Locations”
shall mean collectively: (a) the leased premises located at 12701 Commonwealth
Drive, Suite 9, Fort Myers, Florida 33913, and (b) any location leased by
Borrowers at which books and records relating to Accounts are kept of which
duplicates are not kept at the location identified in (a)
above.


15




“Released Parties”
shall have the meaning given such term in Section
15.11.




“Releasing Parties”
shall have the meaning given such term in Section
15.11.




“Revolver Termination”
shall mean the termination of the Revolving Facility for any reason
whatsoever.




“Revolving Loan
Obligations” shall mean all of the Obligations related to the Revolving
Facility.




“Services” shall mean
medical and health care services provided to a Person, including, but not
limited to, medical and health care services (including diagnostic testing and
other testing services) which are covered by a policy of insurance issued by an
Insurer, physician services, nurse and therapist services, dental services,
hospital services, skilled nursing facility services, comprehensive outpatient
rehabilitation services, home health care services, residential and out-patient
behavioral healthcare services.




“Software” shall mean
“software” as defined in Section 9-102 of the UCC.




“Solvency Certificate”
shall mean a Solvency Certificate substantially in the form of Exhibit C attached
hereto.




“Subsidiary” shall
mean, (i) as to Borrower, any Person in which more than fifty percent (50%) of
all equity, membership, partnership or other ownership interests is owned
directly or indirectly by such Borrower or one or more of its Subsidiaries, and
(ii) as to any other Person, any Person in which more than fifty percent (50%)
of all equity, membership, partnership or other ownership interests is owned
directly or indirectly by such Person or by one or more of such Person’s
Subsidiaries.




“Supporting
Obligations” shall mean “supporting obligations” as defined in Section
9-102 of the UCC.




“Term” shall mean the
period commencing on the Closing Date and ending on February 1,
2013.




“Termination Date”
shall mean the date of termination of this Agreement set forth in any notice of
termination delivered by Borrower in accordance with Section
13.1(a).




“Transaction” shall
have the meaning given such term in Section
8.11.




“Transferee” shall
have the meaning given such term in Section
15.2.




“UCC” shall mean the
Uniform Commercial Code as in effect in the State of Maryland from time to
time.




“Unused Line Fee”
shall mean a fee to be paid by Borrower to Lender on a monthly basis in an
amount equal to  0.0417% (per month) of the difference derived by
subtracting (i) the daily average amount of the balances under the Revolving
Facility outstanding during the preceding month, from (ii) the Facility
Cap.




“US Labs Award” shall
mean any award in connection with the litigation between Borrower and Accupath
Diagnostic Laboratories, Inc. described on Schedule
7.6.




16




2.
            ADVANCES,
      PAYMENT AND INTEREST




2.1.
            The
      Revolving Facility




(a)           Subject
to the provisions of this Agreement, Lender shall make Advances to Borrower
under the Revolving Facility from time to time during the Term, unless this Agreement is
terminated earlier, provided that,
notwithstanding any other provision of this Agreement to the contrary, the
aggregate amount of all Advances at any one time outstanding under the Revolving
Facility shall not exceed the lesser of (a) the Facility Cap, and (b) the
Availability.  The Revolving Facility is a revolving credit facility,
which may be drawn, repaid and redrawn, from time to time as permitted under
this Agreement.  Any determination as to whether there is Availability
for Advances shall be made by Lender in its Permitted Discretion and is final
and binding upon Borrower.  Unless otherwise permitted by Lender, each
Advance shall be in an amount of at least $1,000.  Subject to the
provisions of this Agreement, Borrower may request Advances under the Revolving
Facility up to and including the value, in Dollars, of the
Availability.  Advances under the Revolving Facility shall
automatically be made for the payment of interest on the Loans and other
Obligations on the date when due to the extent available and as provided for
herein.




(b)           Lender
in its Permitted Discretion may further adjust the Availability and the advance
rate by applying Liquidity Factors.  The Liquidity Factors and the
advance rate for Availability may be adjusted by Lender throughout the Term as
warranted by Lender’s underwriting practices and procedures in its credit
judgment.  Also, Lender shall have the right to establish from time to
time, in its Permitted Discretion, reserves against the Borrowing Base, which
reserves shall have the effect of reducing the amounts otherwise eligible to be
advanced to Borrower under the Revolving Facility pursuant to this
Agreement.




(c)           Borrower
shall at all times, from and after the Closing Date, maintain a minimum
outstanding principal balance under the Revolving Facility of at least
$2,000,000 (the “Minimum
Revolving Facility Balance”).  If Borrower fails to maintain
the Minimum Revolving Facility Balance at any time, such failure shall not be
deemed a Default or Event of Default; however, in
consideration and as a result of such failure Lender shall be entitled to charge
and collect interest and all applicable fees on such Minimum Revolving Facility
Balance (calculated in accordance with the terms of this Agreement for Advances
under the Revolving Facility) as if such Minimum Revolving Facility Balance were
outstanding at such time, and Borrower shall pay such interest and applicable
fees thereon in accordance with the terms of this Agreement (and any failure by
Borrower to timely pay such interest shall be deemed an Event of Default under
Section
10(a)).  Lender agrees that in the event that the outstanding
principal balance under the Revolving Facility falls below the Minimum Revolving
Facility Balance at any time.  Lender will within twenty four (24)
hours, without the necessity of receiving written request from the Borrower,
provide an Advance to the Borrower in an amount equal to the difference between
the Minimum Revolving Facility Balance and the amount of the principal amount
then outstanding under the Revolving Facility; provided, however,
Lender shall not be obligated to make such automatic Advances if Borrower has
not met the conditions to funding Advances set forth in this Agreement (except
for the requirement for the delivery of a Borrowing Certificate as set forth in
Section
6.2(a)).  For the avoidance of doubt, the foregoing requirement
for Borrower to maintain the Minimum Revolving Facility Balance shall not be
construed to obligate Lender to fund such minimum amount or otherwise limit any
of Lender’s rights set forth herein, including any of Lender’s rights to
determine, apply or adjust the Availability, the Liquidity Factors or the
Borrowing Base.


17




2.2.
            The
      Revolving Loans; Maturity




All of
the Revolving Loan Obligations shall be due and payable in full in cash, if not
earlier in accordance with this Agreement, on the last day of the
Term.




2.3.
            Revolving
      Facility Disbursements; Requirement to Deliver Borrowing
      Certificate




So long
as no Default or Event of Default shall have occurred and be continuing,
Borrower may give Lender irrevocable written notice requesting an Advance under
the Revolving Facility by delivering to Lender not later than 12:00 p.m.
(Eastern Time) at least one but not more than four Business Days before the
proposed Borrowing Date of such requested Advance, a completed Borrowing
Certificate and relevant supporting documentation satisfactory to
Lender.  Each time a request for an Advance is made, and, in any event
and regardless of whether an Advance is being requested, on Tuesday of each week
during the Term
(and more frequently if Lender shall so request)until the Obligations are
Paid in Full and fully performed and this Agreement is terminated,Borrower shall deliver to Lender a Borrowing Certificate accompanied by a
separate detailed aging and categorizing of Borrower’s accounts receivable and
such other supporting documentation as Lender shall reasonably request from time
to time.  On each Borrowing Date, Borrower irrevocably authorizes
Lender to disburse the proceeds of the requested Advance to the appropriate
Borrower’s account(s) as set forth on Schedule 2.3, in all
cases for credit to the appropriate Borrower (or to such other account as to
which the appropriate Borrower shall instruct Lender in writing) via Federal
funds wire transfer no later than 4:00 p.m. (Eastern Time).




2.4.
            Promise
      to Pay; Manner of Payment




The
Borrower absolutely and unconditionally promises to pay principal, interest and
all other Obligations payable hereunder, or under any other Loan Document,
without any defense, right of rescission and without any deduction whatsoever,
including any deduction for any setoff, counterclaim or recoupment, and
notwithstanding any damage to, defects in or destruction of the Collateral or
any other event, including obsolescence of any property or
improvements.  All payments made by the Borrower (other than payments
automatically paid through Advances under the Revolving Facility as provided
herein), shall be made only by wire transfer on the date when due in Dollars, in
immediately available funds to such account as may be indicated in writing by
Lender to the Borrower from time to time.  Any such payments received
after 4:00 p.m. (Eastern Time) on the date when due shall be deemed received on
the following Business Day.  Whenever any payment hereunder shall be
stated to be due or shall become due and payable on a day other than a Business
Day, the due date thereof shall be extended to, and such payment shall be made
on, the next succeeding Business Day, and such extension of time in such case
shall be included in the computation of payment of any interest (at the interest
rate then in effect during such extension) and fees, as the case may
be.




2.5.
            Repayment
      of Excess Advances




Any balance of Advances under the
Revolving Facility outstanding at any time in excess of either the Facility Cap
or the Availability shall be immediately due and payable by Borrower without the
necessity of any demand, at the Payment Office.




18




2.6.
            Payments
      by Lender




If the Borrower fails to make any
payment required under any Loan Document as and when due and within any
applicable grace period, Lender may make such payment, which payment shall be an
Advance as of the date such payment is due notwithstanding the Availability, and
the Borrower irrevocably authorizes disbursement of any such funds to Lender by
way of direct payment of the relevant amount.   No payment or
prepayment of any amount by Lender or any other Person shall entitle any Person
to be subrogated to the rights of Lender under any Loan Document unless and
until all of the Obligations have been fully performed Paid in Full and this
Agreement has been terminated.  Any sums expended by Lender in its
Permitted Discretion as a result of Borrower’s or Guarantor’s failure to pay,
perform or comply with any Loan Document or any of the Obligations may be
charged to Borrower’s account as an Advance under the Revolving
Facility.




2.7.
            Evidence
      of Loans




(a)           Lender
shall maintain, in accordance with its usual practice, electronic or written
records evidencing the Indebtedness and Obligations to Lender resulting from
each Loan made by Lender from time to time, including without limitation, the
amounts of principal and interest payable and paid to Lender from time to time
under this Agreement.




(b)           The
entries made in the electronic or written records maintained pursuant to
subsection (a) of this Section 2.7 (the
“Register”) shall be
prima facie evidence of the existence and amounts of the Obligations and
Indebtedness therein recorded; provided, however, that the
failure of Lender to maintain such records or any error therein shall not in any
manner affect obligations of the Borrower to repay the Loans or Obligations in
accordance with their terms.




(c)           Lender
will account to Borrower monthly with a statement of Advances under the
Revolving Facility, and any charges and payments made pursuant to this
Agreement, and in the absence of manifest error, such accounting rendered by
Lender shall be deemed final, binding and conclusive unless Lender is notified
by Borrower in writing to the contrary within fifteen calendar days of Receipt
of such accounting, which notice shall be deemed an objection only to items
specifically objected to therein.




(d)           Borrower
agrees that:




(i)           upon
written notice by Lender to Borrower that a Note or other evidence of
Indebtedness is requested by Lender to evidence the Loans and other Obligations
owing or payable to, or to be made by, Lender, Borrower shall promptly (and in
any event within three (3) Business Days of any such request) execute and
deliver to Lender an appropriate Note or Notes in form and substance reasonably
acceptable to Lender and Borrower;




(ii)           all
references to Notes in the Loan Documents shall mean Notes, if any, to the
extent issued (and not returned to the Borrower for cancellation) hereunder, as
the same may be amended, modified, divided, supplemented or restated from time
to time; and




(iii)           upon
Lender’s written request, and in any event within three (3) Business Days of any
such request, Borrower shall execute and deliver to Lender new Notes and divide
the Notes in exchange for then existing Notes in such smaller amounts or
denominations as Lender shall specify in its sole and absolute discretion; provided, that, the aggregate
principal amount of such new Notes shall not exceed the aggregate principal
amount of the Notes outstanding at the time such request is made; and provided, further, that such
Notes that are to be replaced shall then be deemed no longer outstanding
hereunder and replaced by such new Notes and returned to Borrower within a
reasonable period of time after Lender’s receipt of the replacement
Notes.


19




3.
            INTEREST
      AND FEES




3.1.
            Interest
      on the Revolving Facility




Commencing
May 1, 2010, and continuing until the later of the expiration of the Term and
the Payment in Full and full performance of all of the Obligations and
termination of this Agreement, interest on outstanding Advances under the
Revolving Facility shall be payable monthly in arrears on the first day of each
calendar month at an annual rate of LIBOR plus 4.25% in accordance with the
procedures provided for in Section 2.4 and Section 5.1; provided, however, that,
notwithstanding any provision of any Loan Document, for the purpose of
calculating interest at any time hereunder, the LIBOR shall be not less than
2.0%, in each case calculated on the basis of a 360-day year and for the actual
number of calendar days elapsed in each interest calculation
period.




3.2.
            Commitment
      Fee




On or
before the Closing Date, Borrower shall pay to Lender $33,500 as a nonrefundable
commitment fee which shall be fully earned on the date paid.  Lender
hereby acknowledges receipt of $25,000 of such commitment fee on March 26, 2010
which amount was received by Lender as an amendment fee in connection with the
Third Amendment to Revolving Credit and Security Agreement dated March 26, 2010,
which amount will be credited as a portion of the commitment fee upon the
Closing.




3.3.
            Unused
      Line Fee




Borrower
shall pay Lender the Unused Line Fee monthly in arrears on the first day of each
calendar month (starting with the calendar month immediately following the
calendar month in which the Closing Date occurs).




3.4.
            Collateral
      Management Fee




Borrower shall pay Lender as additional
interest the Collateral Management Fee.  The Collateral Management Fee
shall be payable monthly in arrears on the first day of each calendar month
(starting with the calendar month immediately following the calendar month in
which the Closing Date occurs).




3.5.
            Computation
      of Fees; Lawful Limits




All fees hereunder shall be computed on
the basis of a year of three hundred and sixty days and for the actual number of
days elapsed in each calculation period, as applicable.  In no
contingency or event whatsoever, whether by reason of acceleration or otherwise,
shall the interest and other charges paid or agreed to be paid to Lender for the
use, forbearance or detention of money hereunder exceed the maximum rate
permissible under applicable law which a court of competent jurisdiction shall,
in a final determination, deem applicable hereto.  If, due to any
circumstance whatsoever, fulfillment of any provision hereof, at the time
performance of such provision shall be due, shall exceed any such limit, then,
the obligation to be so fulfilled shall be reduced to such lawful limit, and, if
Lender shall have received interest or any other charges of any kind which might
be deemed to be interest under applicable law in excess of the maximum lawful
rate, then such excess shall be applied first to any unpaid fees and charges
hereunder, then to unpaid principal balance owed by Credit Parties hereunder,
and if the then remaining excess interest is greater than the previously unpaid
principal balance, Lender shall promptly refund such excess amount to Borrower
and the provisions hereof shall be deemed amended to provide for such
permissible rate.  The terms and provisions of this Section 3.6 shall
control to the extent any other provision of any Loan Document is inconsistent
herewith.  All fees hereunder shall be non-refundable and deemed fully
earned when due and payable.


20




3.6.
            Default
      Rate of Interest




Upon the
occurrence and during the continuation of an Event of Default, Lender may
increase the Applicable Rate of interest in effect at such time with respect to
the Obligations, without notice, to the Default Rate which Default Rate shall
continue post-judgment and subsequent to the date that the provisions of any
applicable Debtor Relief Law are exercised by or against a Borrower unless the
statutory post-judgment rate of interest is higher in which case such statutory
rate shall apply.




4.
            GRANT
      OF SECURITY INTERESTS




4.1.
            Security
      Interest; Collateral




(a)           To
secure the payment and performance in full of the Obligations, Borrower (or if
referring to another Person, such Person) hereby grants to Lender a continuing
security interest in and Lien upon, and pledges and assigns to Lender, all of
its right, title and interest in and to the Collateral, wherever located,
whether now owned or hereafter acquired or arising;




(b)           Borrower
hereby ratifies its authorization for Lender to have filed in any UCC
jurisdiction any initial financing statements or amendments thereto indicating
that those assets described in the definition of “Collateral” hereunder are
pledged to the Lender.




(c)           If
Borrower shall at any time hold or acquire a Commercial Tort Claim that arises
out of Borrower’s Accounts or account receivable or would otherwise become part
of the collateral under the definition of Collateral, Borrower shall immediately
notify Lender in a writing signed by Borrower of the particulars thereof and
grant to Lender in such a writing a security interest therein and in the
proceeds thereof, all upon the terms of this Agreement, with such writing to be
in form and substance satisfactory to Lender.




4.2.
            Power
      of Attorney




(a)           Borrower
hereby irrevocably constitutes and appoints Lender and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorneys-in-fact with full irrevocable power and authority in the place and
stead of such Borrower or in Lender’s own name, for the purpose of carrying out
the terms of this Agreement and the grant of the security interests hereunder
and under the other Loan Documents, and without limiting the generality of the
foregoing, hereby gives said attorneys the power and right, on behalf of such
Borrower (without requiring Lender to act as such, and without notice to or
assent by such Borrower) to do the following: (i) upon the occurrence and during
the continuance of an Event of Default, to receive, open and dispose of all mail
addressed to any such Person and to endorse the name of any such Person upon any
and all checks, drafts, money orders, and other instruments for the payment of
money that are payable to such Person and constitute collections on its or their
Accounts; (ii) execute in the name of such Person any financing statements,
schedules, assignments, instruments, documents, and statements that it is or
they or are obligated to give Lender under any of the Loan Documents; and (iii)
do such other and further acts and deeds in the name of such Person that Lender
may deem necessary or desirable to enforce any Account or other Collateral or to
perfect Lender’s security interest or Lien in any Collateral.  In
addition, if any such Person breaches its obligation hereunder to direct
payments of Accounts or the proceeds of any other Collateral to the appropriate
Lockbox Account, Lender, as the irrevocably made, constituted and appointed true
and lawful attorney for such Person pursuant to this paragraph, may, by the
signature or other act of any of Lender’s officers or authorized signatories
(without requiring any of them to do so), direct any federal, state or private
payor or fiscal intermediary to pay proceeds of Accounts or any other Collateral
to the appropriate Lockbox Account.


21




(b)           To
the extent permitted by law, each Credit Party hereby ratifies all that said
attorneys shall lawfully do or cause to be done by virtue
hereof.  This power of attorney is a power coupled with an interest
and is irrevocable.




(c)           The
powers conferred on Lender pursuant to this Section 4.2 are
solely to protect its interests in the Collateral and shall not impose any duty
upon it to exercise any such powers.  Lender shall be accountable only
for the amounts that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or agents
shall be responsible to Credit Party for any act or failure to act, except for
Lender’s own gross negligence or willful misconduct.




4.3.
            Further
      Assurances




Borrower
agrees, upon request of Lender, to take any and all other actions as Lender may
determine to be necessary or appropriate for the attachment, perfection
maintaining of the first priority security interest of, and for the ability of
Lender to enforce, Lender’s security interest in any and all of the Collateral,
including, without limitation, (i) executing, obtaining, delivering, filing,
registering and recording any and all financing statements, continuation
statements, stock powers, instruments and other documents, or causing the
execution, filing, registration, recording or delivery of any and all of the
foregoing, that are necessary or required under law or otherwise or reasonably
requested by Lender to be executed, filed, registered, obtained, delivered or
recorded to create, maintain, perfect, preserve, validate or otherwise protect
the pledge of the Collateral to Lender and Lender’s perfected first priority
Lien on the Collateral (and Borrower irrevocably grants Lender the right, at
Lender's option, to file any or all of the foregoing), (ii) immediately upon
learning thereof, report to Lender any reclamation, return or repossession of
goods in excess of $50,000.00 that are part of the Collateral (individually or
in the aggregate), (iii) defend the Collateral and Lender’s perfected first
priority Lien thereon against all claims and demands of all Persons at any time
claiming the same or any interest therein adverse to Lender, and pay all
reasonable costs and expenses (including, without limitation, allocable costs of
staff counsel, and diligence fees and reasonable attorneys’ fees and expenses,
provided, that, the payment of
staff counsel and reasonable attorneys’ fees shall be subject to the provisions
of Section
15.7(b)) in connection with such defense, which may at Lender’s
discretion be added to the Obligations, (iv) comply with any provision of any
statute, regulation or treaty of any Governmental Authority as to any Collateral
if compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Lender to enforce, Lender’s security interest in such
Collateral and (v) obtain governmental and other third party waivers, consents
and approvals in form and substance satisfactory to Lender, including any
consent of any licensor, lessor or other Person obligated on Collateral and any
party or parties whose consent is required for the security interest of Lender
to attach under Section 4.1.




22




5.
            ADMINISTRATION
      AND MAINTENANCE OF COLLATERAL




5.1.
            Revolving
      Facility Collections; Repayment; Borrowing Availability and
      Lockbox


Borrower
shall maintain one or more Lockbox Accounts with the Lockbox Banks, and shall
execute with each of the Lockbox Banks a Lockbox Agreement, and such other
agreements related thereto as Lender may require.  Borrower shall
ensure that all collections of their respective Accounts and all other cash
payments received by Borrower are paid and delivered directly from Account
Debtors and other Persons into the appropriate Lockbox Account.  The
Lockbox Agreements shall provide that the Lockbox Banks immediately will
transfer all funds paid into the Lockbox Accounts into the Concentration
Account.  Notwithstanding and without limiting any other provision of
any Loan Document, Lender shall apply, on a daily basis, all funds transferred
into the Concentration Account pursuant to the Lockbox Agreement and this Section 5.1 in
such order and manner as determined by Lender.  To the extent that any
Accounts are collected by Borrower or any other cash payments received by
Borrower are not sent directly to the appropriate Lockbox Account but are
received by Borrower or any of their Affiliates, such collections and proceeds
shall be held in trust for the benefit of Lender and immediately remitted (and
in any event within three (3) Business Days from receipt thereof), in the form
received, to the appropriate Lockbox Account for immediate transfer to the
Concentration Account.  Borrower acknowledges and agrees that
compliance with the terms of this Section 5.1 is an
essential term of this Agreement.  All funds transferred to the
Concentration Account for application to the Obligations under the Revolving
Facility shall be applied to reduce the Obligations under the Revolving
Facility, but, for purposes of calculating interest hereunder, shall be subject
to a three Business Day clearance period.  If as the result of
collections of Accounts and any other cash payments received by Borrower
pursuant to this Section 5.1 a credit
balance exists with respect to the Concentration Account, such credit balance
shall not accrue interest in favor of a Borrower.  If at any time
there is a credit balance in excess of $100,000, in the Concentration Account,
Lender agrees to automatically wire transfer (without Borrower’s written
request) all of such credit balance to the Borrower’s operating account
specified on Schedule 2.3 within one Business Day of such credit balance
reaching $100,000, provided, however, Lender shall not be required to make such
“no-notice” transfer more frequently than once per week. Notwithstanding the
foregoing, upon the written request of Borrower, Lender shall wire transfer any
credit balance in the Concentration Account to Borrower’s operating account
specified in Schedule 2.3., provided, that if Lender receives the written
request of Borrower no later than 12:00 p.m. (Eastern Time), then Lender shall
make such transfer the following Business Day and if Lender receives the written
request of Borrower after 12:00 p.m. (Eastern time), then Lender shall make such
transfer within two (2) Business Days from the date of receipt of such written
notice.   If applicable, at any time prior to the execution of
all or any of the Lockbox Agreements and operation of all or any of the Lockbox
Accounts, Borrower and their Affiliates shall direct all collections or proceeds
it receives on Accounts or from other Collateral to the Concentration
Account.




5.2.
            Accounts




In
determining which Accounts are Eligible Accounts, Lender may rely on all
statements and representations made by Borrower with respect to any
Account.  Unless otherwise indicated in writing to Lender, each
Account of Borrower (i) is genuine and in all respects what it purports to be
and is not evidenced by a judgment, (ii) arises out of a completed, bona fide
sale and delivery of goods or rendering of Services by a Borrower in the
ordinary course of business and in accordance with the terms and conditions of
all purchase orders, contracts, certifications, participations, certificates of
need and other documents relating thereto or forming a part of the contract
between a Borrower and the Account Debtor, (iii) is for a liquidated amount
(less any contractual allowances) maturing as stated in a claim or invoice
covering such sale of goods or rendering of Services, a copy of which has been
furnished or is available to Lender, (iv) together with Lender’s security
interest therein, is not and will not be in the future (by willful act or
omission by Borrower), subject to any offset, lien, deduction, defense, dispute,
counterclaim or other adverse condition, is absolutely owing to Borrower and is
not contingent in any respect or for any reason (except Accounts owed or owing
by Medicaid/Medicare Account Debtors that may be subject to offset or deduction
under applicable law), and (v) has been billed and forwarded to the Account
Debtor for payment in accordance with applicable laws and is in compliance and
conformance with any requisite procedures, requirements and regulations
governing payment by such Account Debtor with respect to such Account, and, if
due from a Medicaid/Medicare Account Debtor, is properly payable directly to a
Borrower.


23




5.3.
            Healthcare




(a)           Borrower
has obtained from (i) the Medicare program, approval to receive the provider
numbers which will permit Borrower to bill the Medicare program with respect to
covered services rendered to patients insured under the Medicare program, (ii)
the applicable Medicaid programs, approval to receive the provider
numbers/in-patient service contracts which will permit Borrower to bill the
Medicaid program with respect to covered services rendered to patients insured
under the Medicaid programs, and (iii) the CHAMPUS/TRICARE program, approval to
receive the provider numbers which will permit Borrower to bill the
CHAMPUS/TRICARE program with respect to covered services rendered to patients
insured under the CHAMPUS/TRICARE program.  Borrower is in compliance
with the conditions of participation in the Medicare, Medicaid and
CHAMPUS/TRICARE programs.




(b)           There
is no pending nor to the knowledge of Borrower, threatened, proceeding or
investigation of Borrower relative to EMTALA nor are there any investigations or
proceedings pending, or to the knowledge of Borrower, threatened by any
Governmental Authority with respect to the Medicare, Medicaid or CHAMPUS/TRICARE
programs with respect to the operations of Borrower, except as set forth on
Schedule 5.3A
hereto.  Without limiting or being limited by any other provision of
any Loan Document, Borrower has timely filed or caused to be filed all cost and
other reports of every kind required by law, agreement or
otherwise.  Subject to the last sentence of Section 7.18, there
are no claims, actions or appeals pending (and Borrower has not filed any claims
or reports which could reasonably result in any such claims, actions or appeals)
before any commission, board or agency or other Governmental Authority,
including, without limitation, any intermediary or carrier, the Provider
Reimbursement Review Board or the Administrator of the Centers of Medicare and
Medicaid Services, with respect to any state or federal Medicare or Medicaid or
CHAMPUS/TRICARE cost reports or claims filed by Borrower, or any disallowance by
any commission, board or agency or other Governmental Authority in connection
with any audit of such cost reports or claims.  No validation review
or program integrity review related to Borrower or the consummation of the
transactions contemplated herein or to the Collateral have been conducted by any
commission, board or agency or other Governmental Authority in connection with
the Medicare or Medicaid programs, and to the knowledge of Borrower, no such
reviews are scheduled, pending or threatened against or affecting any of the
providers, any of the Collateral or the consummation of the transactions
contemplated hereby.  Neither Credit Parties nor any of their
respective officers, directors, or managing employees, employees or agents are,
or while this Agreement shall remain in effect shall be, excluded from
participation in, or sanctioned or convicted of a crime under or with respect to
the Medicare, Medicaid or CHAMPUS/TRICARE programs, nor to the best of Credit
Parties’ knowledge, is any such exclusion threatened.  Borrower has
not received any notice from any of the Medicare, Medicaid or CHAMPUS/TRICARE
programs, or any other third party payor programs, of any pending or threatened
investigations, reviews or surveys of Borrower, its directors, officers or
managing employees, and Borrower has no actual knowledge that any such
investigation, reviews or surveys are pending or threatened.




(c)           As
of the Closing Date, Borrower has third party contracts with each of the
third-party payors listed on Schedule 5.3B (unless
noted otherwise), which constitutes (as indicated) each of the payors
representing at least five percent (5%) of Borrower’s historic third-party payor
cash receipts for the twelve month period ended December 31, 2009.




5.4.
            Medicare
      and Medicaid Account Debtors and Third-Party Payor
    Information




Borrower
(a) shall maintain applicable Medicare and Medicaid provider numbers, (b) shall
maintain applicable CHAMPUS/TRICARE provider numbers, if applicable, and (c) to
the extent Borrower shall enter into any other arrangements with
non-governmental third-party payors, Borrower shall use commercially reasonable
efforts to enter into agreements with such third-party payors in form and
substance satisfactory to Lender.




24




5.5.
            Collateral
      Administration




(a)           All
Collateral (except proceeds of Accounts which shall be deposited with the
Lockbox Banks) and records supporting the Collateral will at all times be kept
by Borrower at the locations set forth on Schedule 7.18B
hereto and shall not, without thirty calendar days prior written notice to
Lender, be moved therefrom, and in any case shall not be moved outside the
continental United States.




(b)           Borrower
shall keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit such records to Lender on such periodic
bases as Lender may request.  In addition, if Accounts of Borrower in
an aggregate face amount in excess of $100,000.00 become ineligible because they
fall within one of the specified categories of ineligibility set forth in the
definition of Eligible Accounts, Borrower shall notify Lender of such occurrence
within two Business Days following the discovery of such occurrence or upon any
submission to Lender of a Borrowing Certificate and the Borrowing Base shall
thereupon be adjusted to reflect such occurrence.




(c)           Whether
or not an Event of Default has occurred, any of Lender’s officers, employees,
representatives or agents shall have the right, at any time during normal
business hours upon reasonable notice, in the name of Lender, any designee of
Lender or Borrower, to verify the validity, amount or any other matter relating
to any Collateral.  Notwithstanding the foregoing, so long as no
Default or Event of Default has occurred and is continuing, Lender agrees to
give Borrower at least seven (7) business days’ written notice of such visit to
Borrower’s offices.  Borrower shall cooperate fully with Lender in an
effort to facilitate and promptly conclude such verification
process.




(d)           Borrower
shall endeavor in the first instance to make collection of its Accounts for
Lender.  Lender shall have the right at all times after the occurrence
and during the continuance of an Event of Default to notify (i) Account
Debtors owing Accounts to Borrower other than Medicaid/Medicare Account Debtors
that their Accounts have been assigned to Lender and to collect such Accounts
directly in its own name and to charge collection costs and expenses, including
reasonable attorney’s fees, to Borrower, and (ii) Medicaid/Medicare Account
Debtors that Borrower has waived any and all defenses and counterclaims they may
have or could interpose in any such action or procedure brought by Lender to
obtain a court order recognizing the collateral assignment or security interest
and Lien of Lender in and to any Account or other Collateral and that Lender is
seeking or may seek to obtain a court order recognizing the collateral
assignment or security interest and Lien of Lender in and to all Accounts and
other Collateral payable by Medicaid/Medicare Account Debtors.




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


25


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




6.
            CONDITIONS
      PRECEDENT




6.1.
            Conditions
      to Initial Advance and Closing




The obligations of Lender to consummate
the transactions contemplated herein and to make the Initial Advance are subject
to the satisfaction, in the sole judgment of Lender, of the
following:




(a)           Lender
shall have received information and responses to its due diligence requests, and
completed examinations related to the Collateral, the financial statements and
the books, records, business, obligations, financial condition and operational
state of each Credit Party and any other information reasonably requested by
Lender, and all such information and responses as well as the results of such
examinations and each Credit Party shall demonstrate to Lender’s satisfaction
that  (i) its operations comply, in all respects deemed material
by Lender, in its sole judgment, with all applicable federal, state, foreign and
local laws, statutes and regulations, (ii) its operations are not the
subject of any governmental investigation, evaluation or any remedial action
which could result in any expenditure or liability deemed material by Lender, in
its sole judgment, and (iii) it has no liability (whether contingent or
otherwise) that is deemed material by Lender, in its sole judgment;




(b)           (i)
Borrower shall have delivered to Lender (A) the Loan Documents to which Borrower
is a party, each duly executed by an authorized officer of such Borrower and the
other parties thereto, (B) a Borrowing Certificate for the Initial Advance under
the Revolving Facility executed by an authorized officer of Borrower and (C) (1)
audited annual consolidated and consolidating financial statements of Borrower
for Borrower’s most recently ended fiscal year, including notes thereto,
consisting of a balance sheet at the end of such completed fiscal year and the
related statements of income, retained earnings, cash flows and owner's equity
for such completed fiscal year, which financial statements shall be prepared and
certified without qualification by an independent certified public accounting
firm reasonably satisfactory to Lender/in accordance with GAAP consistently
applied with prior periods (except for changes in accounting methodology
specified in such financial statements); and (2) unaudited consolidated and
consolidating financial statements of Borrower consisting of a balance sheet
and statements of income, retained earnings, cash flows and owner's equity
for the period from the beginning of the current fiscal year through the end of
the most recently ended calendar month, which financial statements shall be
prepared in accordance with GAAP consistently applied with prior periods (except
for changes in accounting methodology which have been enacted since such prior
periods), (ii) Borrower shall have established and maintained the Lockbox
Accounts and have entered into Lockbox Agreements, all as contemplated in Section 5.1; and
(iii) Guarantor shall have delivered to Lender the Loan Documents to which such
Guarantor is a party, each duly executed and delivered by such Guarantor or an
authorized officer of such Guarantor, as applicable, and the other parties
thereto;




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


26




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




(e)           Lender
shall have received (i) a Solvency Certificate executed by the chief financial
officer (or, in the absence of a chief financial officer, the chief executive
officer) of Borrower and Guarantor, in form and substance satisfactory to Lender
and (ii) an officer’s certificate in the form attached hereto as Exhibit D, executed
by the chief executive officer or President of Borrower;




(f)           Lender
shall have completed examinations, the results of which shall be satisfactory in
form and substance to Lender, of the Collateral, the financial statements and
the books, records, business, obligations, financial condition and operational
state of Borrower and Guarantor, and each such Person shall have demonstrated to
Lender’s satisfaction that (i) its operations comply, in all respects
deemed material by Lender, in its sole judgment, with all applicable federal,
state, foreign and local laws, statutes and regulations, (ii) its
operations are not the subject of any governmental investigation, evaluation or
any remedial action which could result in any expenditure or liability deemed
material by Lender, in its sole judgment, and (iii) it has no liability
(whether contingent or otherwise) that is deemed material by Lender, in its sole
judgment;




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




(h)           all
in form and substance satisfactory to Lender in its Permitted Discretion, Lender
shall have received such consents, approvals and agreements, including, without
limitation, any applicable Landlord Waivers and Consents with respect to any and
all leases set forth on Schedule 7.4A, from
such third parties as Lender shall determine are necessary or desirable with
respect to (i) the Loan Documents and the transactions contemplated thereby, and
(ii) claims against Borrower or Guarantor or the Collateral;




(i)           Borrower
shall be in compliance with Section 8.5, and
Lender shall have received copies of all insurance policies or binders, original
certificates of all insurance policies of Borrower confirming that they are in
effect and that the premiums due and owing with respect thereto have been paid
in full and endorsements of such policies issued by the applicable Insurers and
naming Lender as loss payee or additional insured on those policies specified in
Section
8.5;




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




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




(l)           Borrower
shall have executed and delivered to Lender an IRS Form 8821;


27




(m)          Lender
shall be satisfied that there are no material defaults in any of Borrower’s
obligations under any contract required for the operation of its
business;




(n)           Lender
shall have received the Pledge Agreement, in form and substance satisfactory to
Lender, as duly authorized, executed and delivered by the parties thereto;
and




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




6.2.
            Conditions
      to Each Advance




The obligations of Lender to make any
Advance, including, without limitation, the Initial Advance, (or otherwise
extend credit hereunder) are subject to the satisfaction, in the sole judgment
of Lender, of the following additional conditions precedent:




(a)           Borrower
shall have delivered to Lender a Borrowing Certificate for the Advance executed
by an authorized officer of Borrower, which shall constitute a representation
and warranty by Borrower as of the Borrowing Date of such Advance that the
conditions contained in this Section 6.2 have been
satisfied; provided however, that any
determination as to whether to fund Advances or extensions of credit shall be
made by Lender in its Permitted Discretion;




(b)           each
of the representation and warranties made by Credit Parties in or pursuant to
this Agreement, or under the other Loan Documents or which are contained in any
certificate, document or financial or other statement furnished in connection
herewith, shall be true and correct, before and after giving effect to such
Advance;




(c)           no
Default or Event of Default shall have occurred or be continuing or would exist
after giving effect to the Advance on such date;




(d)           immediately
after giving effect to the requested Advance, the aggregate outstanding
principal amount of Advances shall not exceed the lesser of the Availability and
the Facility Cap;




(e)           at
the time of making such requested Advance, no Material Adverse Change has
occurred or is continuing; and




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




7.
            REPRESENTATIONS
      AND WARRANTIES




Credit
Parties, jointly and severally, represent and warrant as of the date hereof, the
Closing Date and each Borrowing Date.




7.1.
            Organization
      and Authority


Each Credit Party is a corporationduly organized, validly
existing and in good standing under the laws of its state of
formation.  Each Credit Party (i) has all requisite corporate or
entity power and authority to own its properties and assets and to carry on its
business as now being conducted and as contemplated in the Loan Documents,
(ii) is duly qualified to conduct business in every jurisdiction in which
failure so to qualify would reasonably be likely to result in a Material Adverse
Change, and (iii) has all requisite power and authority (A) to execute,
deliver and perform the Loan Documents to which it is a party, (B) to borrow
hereunder, (C) to consummate the transactions contemplated under the Loan
Documents, and (D) to grant the Liens with regard to the Collateral pursuant to
the Loan Documents to which it is a party.




28




7.2.
            Loan
      Documents




The execution, delivery and performance
by each Credit Party of the Loan Documents to which it is a party, and the
consummation of the transactions contemplated thereby, (i) have been duly
authorized by all requisite action of each such Person and have been duly
executed and delivered by or on behalf of each such Person; (ii) do not violate
any provisions of (A) applicable law, statute, rule, regulation, ordinance
or tariff, (B) any order of any Governmental Authority binding on any such
Person or any of their respective properties, or (C) the certificate of
incorporation or bylaws (or any other equivalent governing agreement or
document) of any such Person, or any agreement between any such Person and its
respective stockholders, members, partners or equity owners or among any such
stockholders, members, partners or equity owners; (iii) are not in conflict
with, and do not result in a breach or default of or constitute an event of
default, or an event, fact, condition or circumstance which, with notice or
passage of time, or both, would constitute or result in a conflict, breach,
default or event of default under, any indenture, agreement or other instrument
to which any such Person is a party, or by which the properties or assets of
such Person are bound; (iv) except as set forth therein, will not result in
the creation or imposition of any Lien of any nature upon any of the properties
or assets of any such Person, and (v) except as set forth on Schedule 7.2, do not
require the consent, approval or authorization of, or filing, registration or
qualification with, any Governmental Authority or any other
Person.  When executed and delivered, each of the Loan Documents to
which any Credit Party is a party will constitute the legal, valid and binding
obligation of Credit Party, enforceable against such Credit Party in accordance
with its terms.




7.3.
            Subsidiaries,
      Capitalization and Ownership
Interests




Except as listed on Schedule 7.3, no
Credit Party has any Subsidiaries.  Schedule 7.3
states the authorized and issued capitalization of each Credit Party, the number
and class of equity securities and/or ownership, voting or partnership interests
issued and outstanding of each Credit Party and the record and beneficial owners
thereof (including options, warrantsand other rights to
acquire any of the foregoing).  The ownership or partnership interests
of each Credit Party that is a limited partnership or a limited liability
company are not certificated, the documents relating to such interests do not
expressly state that the interests are governed by Article 8 of the Uniform
Commercial Code, and the interests are not held in a securities
account.  Schedule 7.3
sets forth a complete and accurate list of the directors, members, managers
and/or partners of each Credit Party.  Except as listed on Schedule 7.3, no
Credit Party owns an interest in, participates in or engages in any joint
venture, partnership or similar arrangements with any Person.




7.4.
            Properties




Each Credit Party (i) is the sole owner
and has good, valid and marketable title to, or a valid leasehold interest in,
all of its properties and assets, including the Collateral, whether personal or
real, subject to no transfer restrictions or Liens of any kind except for
Permitted Liens, and (ii) is in compliance in all material respects with each
lease to which it is a party or otherwise bound.  Schedule 7.4A
lists all real properties (and their locations) owned or leased by or to, and
all other material assets or property that are leased or licensed by, any Credit
Party and all warehouses, fulfillment houses or other locations at which any of
any Credit Party’s Inventory is located.  Each Credit Party enjoys
peaceful and undisturbed possession under all such leases and such leases are
all the leases necessary for the operation of such properties and assets, are
valid and subsisting and are in full force and effect.  Schedule 7.4B lists
all Deposit Accounts and investment accounts (and their locations) owned by any
Credit Party, and all such Deposit Accounts and investment accounts are subject
to no Liens of any kind except as expressly set forth on Schedule 7.4B, all of
which Liens constitute Permitted Liens.


29




7.5.
            Other
      Agreements




No Credit Party is (i) a party to any
judgment, order or decree or any agreement, document or instrument, or subject
to any restriction, which would affect its ability to execute and deliver, or
perform under, any Loan Document or to pay the Obligations, (ii) in default in
the performance, observance or fulfillment of any obligation, covenant or
condition contained in any agreement, document or instrument to which it is a
party or to which any of its properties or assets are subject, which default, if
not remedied within any applicable grace or cure period would reasonably be
likely to result in a Material Adverse Change, nor is there any event, fact,
condition or circumstance which, with notice or passage of time or both, would
constitute or result in a conflict, breach, default or event of default under,
any of the foregoing which, if not remedied within any applicable grace or cure
period would reasonably be likely to result in a Material Adverse Change; (iii)
a party or subject to any agreement, document or instrument with respect to, or
obligation to pay any, Management or Service Fee with respect to, the ownership,
operation, leasing or performance of any of its business or any facility, nor is
there any manager with respect to any such facility; or (iv) a party to any
contract with any Affiliate other than as set forth on Schedule 7.5, except for
employment agreements, option agreements, confidentiality agreements,
non-solicitation/non-competition agreements and other compensation, severance or
consulting arrangements with directors or officers in the ordinary course of
business that are on terms at least as favorable to such Credit Party as would
be the case in an arm’s length transaction between unrelated parties of equal
bargaining power and under which payments due from Credit Parties are not more
than $500,000 per annum per arrangement.




7.6.
            Litigation




There is
no action, suit, proceeding or investigation pending or, to the knowledge of any
Credit Party, threatened against any Credit Party (i) that challenges the
validity of any of the Loan Documents, or to enjoin the right of any Credit
Party to enter into any Loan Document or to consummate the transactions
contemplated thereby, (ii) that would reasonably be likely to be or have, either
individually or in the aggregate, any Material Adverse Change, or
(iii) that would reasonably be likely to result in any Change of
Control.  Except as set forth on Schedule 7.6, no Credit Party is a
party or subject to any order, writ, injunction, judgment or decree of any
Governmental Authority.  Except as set forth on Schedule 7.6, there
is no action, suit, proceeding or investigation initiated by any Credit Party
currently pending.




7.7.
            Environmental
      Matters




Other
than exceptions to any of the following that could not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse
Change:




(a)           Each
Credit Party and its Subsidiaries:  (i) are, and within the period of
all applicable statutes of limitation have been, in compliance with all
applicable Environmental Laws; (ii) hold all environmental Permits (each of
which is in full force and effect) required for any of their current or intended
operations or for any property owned, leased, or otherwise operated by any of
them; (iii) are, and within the period of all applicable statutes of limitation
have been, in compliance with all of their environmental Permits; and (iv)
reasonably believe that:  each of their environmental Permits will be
timely renewed and complied with, without material expense; any additional
environmental Permits that may be required of any of them will be timely
obtained and complied with, without material expense; and compliance with any
Environmental Law that is or is expected to become applicable to any of them
will be timely attained and maintained, without material
expense.


30




(b)           To
the knowledge of each Credit Party and its Subsidiaries, no Materials of
Environmental Concern (i) are present at, on, under, in, or about any real
property now owned, leased or operated by such Credit Party or any of its
Subsidiaries, or (ii) were present at any formerly owned, leased or operated
property during the period of such ownership, lease or operation by such Credit
Party or its Subsidiaries or (iii) are present at any other location (including,
without limitation, any location to which Materials of Environmental Concern
have been sent for re-use or recycling or for treatment, storage, or disposal)
which, in the case of any of clauses (i), (ii) or (iii), would reasonably be
expected to (A) give rise to liability of such Credit Party or any of its
Subsidiaries under any applicable Environmental Law or otherwise result in costs
to such Credit Party or any of its Subsidiaries, (B) interfere with the
continued operations of such Credit Party or any of its Subsidiaries, or (C)
impair the fair saleable value of any real property owned or leased by such
Credit Party or any of its Subsidiaries.




(c)           There
is no judicial, administrative, or arbitral proceeding (including any notice of
violation or alleged violation) under or relating to any Environmental Law to
which any Credit Party or any of such Credit Party’s Subsidiaries is, or to the
knowledge of such Credit Party or any of its Subsidiaries will be, named as a
party that is pending or, to the knowledge of such Credit Party or any of its
Subsidiaries, threatened.




(d)           No
Credit Party, nor any of Credit Parties’ Subsidiaries, has received any written
request for information, or been notified that it is a potentially responsible
party under or relating to the federal Comprehensive Environmental Response,
Compensation, and Liability Act or any similar Environmental Law, or with
respect to any Materials of Environmental Concern.




(e)           No
Credit Party, nor any of Credit Parties’ Subsidiaries, has entered into or
agreed to any consent decree, order, or settlement or other agreement, or is
subject to any judgment, decree, or order or other agreement, in any judicial,
administrative, arbitral, or other forum for dispute resolution, relating to
compliance with or liability under any Environmental Law.




(f)           No
Credit Party, nor any of Credit Parties’ Subsidiaries, has assumed or retained,
by contract or operation of law, any liabilities of any kind, fixed or
contingent, known or unknown, under any Environmental Law or with respect to any
Material of Environmental Concern.




7.8.
            Potential
      Tax Liability; Tax Returns; Governmental
Reports




(a)           Except
as disclosed in Schedule 7.8, no
Credit Party (i) has received any oral or written communication from any taxing
authority with respect to any investigation or assessment relating to such
Credit Party directly, or relating to any consolidated tax return which was
filed on behalf of such Credit Party, (ii) is aware of any year which remains
open pending tax examination or audit by any taxing authority, and (iii) is
aware of any information that could give rise to any  tax liability or
assessment.




(b)           Each
Credit Party (i) has filed all federal, state, foreign (if applicable) and local
tax returns and other reports which are required by law to be filed by such
Credit Party, and (ii) has paid all taxes, assessments, fees and other
governmental charges, including, without limitation, payroll and other
employment related taxes, in each case that are due and payable, except only for
items that such Credit Party is currently contesting in good faith with adequate
reserves under GAAP, which contested items are described on Schedule
7.8.


31




7.9.
            Financial
      Statements and Reports




All financial statements and financial
information relating to Credit Parties that have been or may hereafter be
delivered to Lender by Credit Parties are accurate and complete (as of the date
they were prepared) and all financial statements have been prepared in
accordance with GAAP consistently applied with prior periods except for any
normal quarter and year-end adjustments which may be applied in future periods
and for any changes in accounting methodology that may have been applied since
any prior period.  Credit Parties have no material obligations or
liabilities of any kind not disclosed in such financial information or
statements, and since the date of the most recent financial statements submitted
to Lender, there has not occurred any Material Adverse Change or Liability Event
or, to Credit Parties’ knowledge, any other event or condition that could
reasonably be expected to have a Material Adverse Change or Liability
Event.




7.10.
            Compliance
      with Law




(a)           Each
Credit Party has been and is currently in compliance, and is presently taking
and will continue to take all actions necessary to assure that it shall, on or
before each applicable compliance date and continuously thereafter, comply with
HIPAA.  Borrower has not received any notice from any Governmental
Authority that such Governmental Authority has imposed or intends to impose any
enforcement actions, fines or penalties for any failure or alleged failure to
comply with HIPAA or its implementing regulations. Each Credit Party (i) is in
compliance with all laws, statutes, rules, regulations, ordinances and tariffs
of any Governmental Authority applicable to such Credit Party and such Credit
Party’s business, assets or operations, including, without limitation, ERISA and
Healthcare Laws, and (ii) is not in violation of any order of any Governmental
Authority or other board or tribunal, except where noncompliance or violation
could not reasonably be expected to result in a Material Adverse
Change.  There is no event, fact, condition or circumstance which,
with notice or passage of time, or both, would constitute or result in any
noncompliance with, or any violation of, any of the foregoing, in each case
except where noncompliance or violation could not reasonably be expected to
result in a Material Adverse Change.  No Credit Party has received any
notice that such Credit Party is not in compliance in any respect with any of
the requirements of any of the foregoing.  No Credit Party has (a)
engaged in any Prohibited Transactions as defined in Section 406 of ERISA
and Section 4975 of the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder, (b) failed to meet any applicable
minimum funding requirements under Section 302 of ERISA in respect of its
plans and no funding requirements have been postponed or delayed, (c) any
knowledge of any event or occurrence which would cause the Pension Benefit
Guaranty Corporation to institute proceedings under Title IV of ERISA to
terminate any of the employee benefit plans, (d) any fiduciary responsibility
under ERISA for investments with respect to any plan existing for the benefit of
Persons other than its employees or former employees, or (e) withdrawn,
completely or partially, from any multi-employer pension plans so as to incur
liability under the MultiEmployer Pension Plan Amendments of
1980.  With respect to each Credit Party, there exists no event
described in Section 4043 of ERISA, excluding Subsections 4043(b)(2)
and 4043(b)(3) thereof, for which the required thirty (30) day notice period has
not been waived.  Each Credit Party has maintained in all material
respects all records required to be maintained by the Joint Commission on
Accreditation of Healthcare Organizations, the Food and Drug Administration,
Drug Enforcement Agency and State Boards of Pharmacy and the federal and state
Medicare and Medicaid programs as required by the Healthcare Laws and, to the
best knowledge of each Credit Party, there are no presently existing
circumstances which likely would result in material violations of the Healthcare
Laws.


32


(b)           No
Credit Party (i)  is a Person whose property or interest in property is
blocked or subject to blocking pursuant to Section  1 of Executive Order
13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) engages in any dealings or transactions prohibited by Section 2 of
such executive order, or is otherwise associated with any such Person in any
manner violative of such Section 2, or (iii) is a Person on the list of
Specially Designated Nationals and Blocked Persons or subject to the limitations
or prohibitions under any other OFAC regulation or executive order.




(c)           Each
Credit Party is in compliance, in all material respects, with the Patriot
Act.




7.11.
            Intellectual
      Property




Schedule 7.11 lists,
as of the Closing Date, all (a) registered Intellectual Property (including
applications for registration) owned by Borrower and (b) licenses of rights in
Intellectual Property (other than non-customized mass market licenses of rights
in Intellectual Property) pursuant to which Borrower licenses rights in
Intellectual Property either from or to another Person, whether on an exclusive
or non-exclusive basis.




7.12.
            Licenses
      and Permits; Labor




Each
Credit Party is in compliance with and has all Permits and Intellectual Property
necessary or required by applicable law or Governmental Authority for the
operation of its businesses as currently conducted.  All of the
foregoing is in full force and effect and not in known conflict with the rights
of others.  No Credit Party is (i) in breach of or default under the
provisions of any of the foregoing, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would constitute or
result in a conflict, breach, default or event of default under, any of the
foregoing which, if not remedied within any applicable grace or cure period
could reasonably be expected to result in a Material Adverse Change, (ii) a
party to or subject to any agreement, instrument or restriction that is so
unusual or burdensome that it might have a Material Adverse Change, and/or (iii)
and has not been, involved in any labor dispute, strike, walkout or union
organization which could reasonably be expected to result in a Material Adverse
Change.  Borrower has obtained, and currently has, all Permits
necessary in the generation of each Account.




7.13.
            No
      Default




There does not exist any Default or
Event of Default.




7.14.
            Disclosure




No Loan
Document nor any other agreement, document, certificate, or statement furnished
to Lender by or on behalf of any Credit Party in connection with the
transactions contemplated by the Loan Documents, nor any representation or
warranty made any by Credit Party in any Loan Document, contains any untrue
statement of material fact or omits to state any fact necessary to make the
statements therein not materially misleading as of the date such statements were
delivered.  There is no fact known to any Credit Party which has not
been disclosed to Lender in writing which could reasonably be expected to result
in a Material Adverse Change.




7.15.
            Existing
      Indebtedness; Investments, Guarantees and Certain
  Contracts


Except as contemplated by the Loan
Documents or as otherwise set forth on Schedule 7.15A,
no Credit Party (i) has any outstanding Indebtedness other than Permitted
Indebtedness, (ii) is not subject or party to any mortgage, note, indenture,
indemnity or guarantee of, with respect to or evidencing any Indebtedness of any
other Person, or (iii) owns or holds any equity or long-term debt investments
in, and has any outstanding advances to or any outstanding guarantees for the
obligations of, or any outstanding borrowings from, any Person.  Each
Credit Party has performed all material obligations required to be performed by
such Credit Party pursuant to or in connection with any items listed on Schedule 7.15A
and there has occurred no breach, default or event of default under any document
evidencing any such items or any fact, circumstance, condition or event which,
with the giving of notice or passage of time or both, would constitute or result
in a breach, default or event of default thereunder.  Schedule 7.15B sets
forth all Indebtedness with a maturity date during the Term, and identifies such
maturity date. No Credit Party has any existing accrued and unpaid Indebtedness
owing to any Governmental Authority or any other governmental
payor.




33




7.16.
            Other
      Agreements




Except as set forth on Schedule 7.16,
(i)there are no existing or proposed agreements,  arrangements,
understandings or transactions between any Credit Party and any of such Credit
Party’s officers, members, managers, directors, stockholders, partners, other
interest holders, employees or Affiliates or any members of their respective
immediate families, other than employment agreements, option agreements,
confidentiality agreements, non-solicitation/non-competition agreements and
other compensation, severance or consulting arrangements with directors or
officers in the ordinary course of business that are on terms at least as
favorable to such Credit Party as would be the case in an arm’s length
transaction between unrelated parties of equal bargaining power and under which
payments due from Credit Parties are not more than $500,000 per annum per
arrangement, (ii) none of the foregoing Persons are directly or indirectly,
indebted to or have any direct or indirect ownership, partnership or voting
interest in, to such  Credit Party’s knowledge, any Affiliate of such
Credit Party or any Person that competes with such Credit Party (except that any
such Persons may own stock in, but not exceeding two percent (2%) of the
outstanding capital stock of, any publicly traded company that may compete with
such Credit Party (iii) no director or officer of any Credit Party has received
any compensation of any kind in consideration or otherwise of such Credit Party
entering into this Agreement, and (iv) neither Lender nor any of its Affiliates
has paid or offered to pay any compensation to any director or officer of any
Credit Party in consideration of such Credit Party’s entering into the Loan
Documents.




7.17.
            Insurance




Credit Parties have in full force and
effect such insurance policies as are customary in its industry and as may be
required pursuant to Section 8.5
hereof.  All such insurance policies are listed and described on Schedule
7.17.




7.18.
            Names;
      Location of Offices, Records and
Collateral




During
the preceding five years, Borrower has not conducted business under, filed any
tax return under, or used any name (whether corporate, partnership or assumed)
other than as shown on Schedule
7.18A.  Borrower is the sole owner of all of its names listed
on Schedule
7.18A, and any and all business done and invoices issued in such names
are Borrower’s sales, business and invoices.  Each trade name of
Borrower represents a division or trading style of Borrower.  Borrower
maintains its places of business and chief executive offices only at the
locations set forth on Schedule 7.18B, and
all Accounts of Borrower arise, originate and are located, and all of the
Collateral and all books and records in connection therewith or in any way
relating thereto or evidence the Collateral are located and shall be only, in
and at such locations.  All of the Collateral is located only in the
continental United States.  There are no facts, events or occurrences
which in any way impair the validity or enforceability thereof or tend to reduce
the amount payable thereunder from the face amount of the claim or invoice and
statements delivered to Lender with respect thereto.  To the best of
Credit Parties’ knowledge, (A) the Account Debtor thereunder had the capacity to
contract at the time any contract or other document giving rise thereto was
executed, (B) such Account Debtor is solvent, and, (C) subject to the final
sentence of this Section 7.18, there
are no proceedings or actions which are threatened or pending against any
Account Debtor thereunder which might result in any Material Adverse Change in
such Account Debtor’s financial condition or the collectability
thereof.  Borrower has obtained and currently has all Permits
necessary in the generation of each Account of Borrower and Borrower has
disclosed to Lender on each Borrowing Certificate (a “Denial
Disclosure”) the amount of all Accounts of Borrower for which Medicare is
the Account Debtor and for which payment has been denied and subsequently
appealed pursuant to the procedure described in the definition of Eligible
Accounts hereof, and Borrower is pursuing all available appeals in respect of
such Accounts, provided, that, Borrower shall
not be required to make a Denial Disclosure for up to $50,000 in the aggregate
that remain uncorrected at any time for claims denied due to coding and clerical
errors for the period covered by such Borrowing Certificate.


34




7.19.
            Lien
      Perfection and Priority




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




7.20.
            Investment
      Company Act




No Credit Party is required to register
as an “investment company” within the meaning of the Investment Company Act of
1940, as amended.




7.21.
            Regulations
      T, U and X




No Credit
Party is engaged in the business of extending credit for the purpose of
purchasing or carrying any “margin stock” or “margin security” (within the
meaning of Regulations T, U or X issued by the Board of Governors of the Federal
Reserve System), and no proceeds of the Loans will be used to purchase or carry
any margin stock or margin security or to extend credit to others for the
purpose of purchasing or carrying any margin stock or margin
security.




7.22.
            Survival




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




8.
            AFFIRMATIVE
      COVENANTS




Each Credit Party, jointly and
severally, covenants and agrees that, until all of the Obligations have been
fully performed and Paid in Full, and this Agreement has
terminated:




35




8.1.
            Financial
      Statements, Borrowing Certificate, Financial Reports and Other
      Information


(a)           Financial
Reports.  Credit Parties shall furnish to Lender (i) as soon as
available and in any event when submitted to the Securities and Exchange
Commission but no later than one hundred and five (105) calendar days after the
end of each fiscal year of Credit Parties, audited annual consolidated and
consolidating financial statements of Credit Parties, including the notes
thereto, consisting of a consolidated and consolidating balance sheet at the end
of such completed fiscal year and the related consolidated and consolidating
statements of income, retained earnings, cash flows and owners’ equity for such
completed fiscal year, which financial statements shall be prepared by an
independent certified public accounting firm satisfactory to Lender and
accompanied by related management letters, if available; provided that no going concern
opinion shall be issued in connection with such financial statements, (ii) as
soon as available and in any event within thirty calendar days after the end of
each calendar month (fifty calendar days after the end of any month which
coincides with the end of a fiscal quarter and sixty days after the end of any
month which coincides with the end of a fiscal year), unaudited financial
statements of Credit Parties consisting of a balance sheet and statements of
income and cash flows as of  the end of the immediately preceding
calendar month. Monthly financial statements provided to the Lender which have
been internally prepared by Borrower for any month which corresponds with the
end of a fiscal quarter or fiscal year will be subject to further adjustments by
the Credit Parties’ outside auditors before being finalized.  All such
financial statements shall be prepared in accordance with GAAP consistently
applied with prior periods except for any normal quarter and year-end
adjustments which may be applied in future periods and for any changes in
accounting methodology that may have been applied since any prior
period.  With each such financial statement, Credit Parties shall also
deliver a certificate of its chief financial officer or principal accounting
officer in substantially the form of Exhibit B hereto (a
“Compliance
Certificate”) stating that (A) such person has reviewed the relevant
terms of the Loan Documents and the condition of Credit Parties, (B) no Default
or Event of Default has occurred or is continuing, or, if any of the foregoing
has occurred or is continuing, specifying the nature and status and period of
existence thereof and the steps taken or proposed to be taken with respect
thereto, and (C) Credit Parties are in compliance with all financial covenants
attached as Annex I hereto.  Such certificate shall be accompanied by
the calculations necessary to show compliance with the financial covenants in a
form satisfactory to Lender and (iii) simultaneously with the delivery of
monthly financial statements for any given month, an accounts payable aging
schedule showing a reconciliation to the amounts reported in the monthly
financial statements.




(b)           Other
Materials.  Credit Parties shall furnish to Lender as soon as
available, and in any event within ten calendar days after the preparation or
issuance thereof or at such other time as set forth below:  (i) copies
of such financial statements (other than those required to be delivered pursuant
to Section 8.1(a))
prepared by, for or on behalf of Credit Parties and any other notes, reports and
other materials related thereto, including, without limitation, any pro forma
financial statements, (ii) any reports, returns, information, notices and other
materials that any Credit Party shall send to its stockholders, members,
partners or other equity owners at any time unless such materials are publicly
available at www.sec.gov, (iii) all Medicare and Medicaid cost reports and other
documents and materials filed by Borrower and any other reports, materials or
other information regarding or otherwise relating to Medicaid or Medicare
prepared by, for or on behalf of Borrower other than internal working analyses,
(iv) simultaneously with the provision of any monthly financial statements
provided pursuant to Section 8(a) above to
the extent such information has not been already reflected in a Borrowing
Certificate submitted to Lender: (A) a report of the status of all payments,
denials and appeals of all Medicare and Medicaid Accounts (unless such denials
were due to clerical errors in an amount which does not require a Denial
Disclosure, and (B) a sales and collection report and accounts receivable aging
schedule, including a report of sales, credits issued and collections received,
all such reports showing a reconciliation to the amounts reported in the monthly
financial statements, (v) promptly upon receipt thereof, copies of any reports
submitted to a Borrower by its independent accountants in connection with any
interim audit of the books of such Person or any of its Affiliates and copies of
each management control letter provided by such independent accountants, (vi)
within thirty (30) calendar days after the execution thereof, a copy of any
contracts with the federal government or with a Governmental Authority in the
State of New York, Vermont or Washingtonand (vii) such
additional information, documents, statements, reports and other materials as
Lender may reasonably request from a credit or security perspective or otherwise
from time to time.


36




(c)           Notices.  Credit
Parties shall promptly, and in any event within four calendar days after
Borrower or any authorized officer of Borrower obtains knowledge thereof, notify
Lender in writing of (i) any pending or threatened litigation, suit,
investigation, arbitration, dispute resolution proceeding or administrative
proceeding brought against or initiated by Borrower or otherwise affecting or
involving or relating to Borrower or any of its property or assets to the extent
(A) the amount in controversy exceeds $125,000.00, or (B) to the extent any of
the foregoing seeks injunctive relief (except for actions in which Borrower is
seeking injunctive relief against former employees of Borrower in order to
enforce a confidentiality, non-solicitation, non-competition agreement or other
similar agreement), (ii) any Default or Event of Default, which notice shall
specify the nature and status thereof, the period of existence thereof and what
action is proposed to be taken with respect thereto, (iii) any other
development, event, fact, circumstance or condition that would reasonably be
expected to result in a Material Adverse Change, in each case describing the
nature and status thereof and the action proposed to be taken with respect
thereto, (iv) any notice received by a Borrower from any payor of a claim, suit
or other action such payor has, claims or has filed against such Borrower, (v)
any matter(s) affecting the value, enforceability or collectability of any of
the Collateral, including, without limitation, claims or disputes in the amount
of $100,000.00 or more, singly or in the aggregate, in existence at any one
time, (vi) any notice given by Borrower to any other lender of such Borrower and
shall furnish to Lender a copy of such notice, (vii) receipt of any notice or
request from any Governmental Authority or governmental payor regarding any
liability or claim of liability in excess of $100,000.00 singly or in the
aggregate, (viii) receipt of any notice by Borrower regarding termination of any
manager of any facility owned, operated or leased by such Borrower, (ix) if any
Account becomes evidenced or secured by an Instrument or Chattel Paper and (x)
any pending, threatened or actual investigation or survey of Borrower, its
directors, officers or managing employees by any of the Medicare, Medicaid or
CHAMPUS/TRICARE programs, or any other third party payor programs, (xi) Borrower
becoming a party to a Corporate Integrity Agreement with the Office of Inspector
General of the Department of Health and Human Services, (xii) Borrower becoming
subject to reporting obligations pursuant to any settlement agreement entered
into with any Governmental Authority, (xiii) Borrower becoming the subject of
any government payor program investigation conducted by any federal or state
enforcement agency, (xiv) Borrower becoming a defendant in any qui tam/False
Claims Act litigation, (xv) Borrower being served with or received any search
warrant, subpoena, civil investigative demand or contact letter by or from any
federal or state enforcement agency relating to an investigation or (xvi)
Borrower becoming subject to any written complaint filed with or submitted to
any Governmental Authority having jurisdiction over such Borrower or filed with
or submitted to such Borrower pursuant to such Borrower’s policies relating to
the filing or submissions of such types of complaints, from employees,
independent contractors, vendors, physicians, or any other person that would
indicate that such Borrower has violated any law, regulation or
law.




(d)           Consents.  Credit
Parties shall use their best efforts to obtain and deliver from time to time all
required consents, approvals and agreements from such third parties as Lender
shall determine are necessary or desirable in its Permitted Discretion, each of
which must be satisfactory to Lender in its Permitted Discretion and acceptable
to such third party, with respect to (i) the Loan Documents and the transactions
contemplated thereby, (ii) claims against a Borrower or the Collateral, and/or
(iii) any agreements, consents, documents or instruments to which Borrower is a
party or by which any properties or assets of Borrower or any of the Collateral
is or are bound or subject, including, without limitation, Landlord Waivers and
Consents with respect to leases.


37


(e)           Operating
Budget.  Credit Parties shall furnish to Lender on or prior to
the Closing Date and for each fiscal year of Credit Parties prior to the
commencement of such fiscal year, a draft of consolidated and consolidating
month by month projected operating budgets, annual projections, profit and loss
statements, balance sheets and cash flow reports of and for Credit Parties for
such upcoming fiscal year (including an income statement for each month and a
balance sheet as at the end of the last month in each fiscal quarter), in each
case prepared in accordance with GAAP consistently applied with prior periods,
provided, that, (A) such Budget as submitted to the Board of Directors of
Borrower for approval shall be provided to Lender by Borrower not less than
sixty (60) days after commencement of such fiscal year and (B) a final version
of the budget as approved by the Board of Directors of Borrower for each fiscal
year shall be provided to Lender by Borrower not less than ten (10) calendar
days after the approval of such budget or any revision thereof by the Board of
Directors.




(f)           Ancillary Materials to be
Furnished Upon Request.  Upon written request by Lender, Credit
Parties shall use its best efforts to furnish to Lender within ten (10) calendar
days after the request therefore the following kinds of information: (1) any
other reports, materials or other information regarding or otherwise relating to
Medicaid or Medicare prepared by, for, or on behalf of, Borrower or any of its
Subsidiaries, including, without limitation, (A) copies of licenses and permits
required by any applicable federal, state, foreign or local law, statute,
ordinance or regulation or Governmental Authority for the operation of its
business (B) Medicare and Medicaid provider numbers and agreements, (C) state
surveys pertaining to any healthcare facility operated or owned or leased by
Borrower or any of its Affiliates or Subsidiaries, (D) participating agreements
relating to medical plans (ii) copies of material licenses and permits required
by applicable federal, state, foreign or local law, statute, ordinance or
regulation or Governmental Authority for the Operation of Borrower’s
business.




8.2.
            [Reserved]




8.3.
            Conduct
      of Business and Maintenance of Existence and
  Assets




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




8.4.
            Compliance
      with Legal and Other
Obligations


Each
Credit Party shall (i) comply with all laws, statutes, rules, regulations,
ordinances and tariffs of all Governmental Authorities applicable to it or its
business, assets or operations, including applicable requirements which where
promulgated pursuant to HIPAA (ii) pay all taxes, assessments, fees,
governmental charges, claims for labor, supplies, rent and all other obligations
or liabilities of any kind, except liabilities being contested in good faith and
against which adequate reserves have been established, (iii) perform in
accordance with its terms each contract, agreement or other
arrangement  to which it is a party or by which it or any of the
Collateral is bound, except where the failure to comply, pay or perform could
not reasonably be expected to result in a Material Adverse Change, (iv) maintain
and comply with all Permits necessary to conduct its business and comply with
any new or additional requirements that may be imposed on it or its business,
and (v) properly file all Medicaid, Medicare and CHAMPUS/TRICARE cost
reports.  Without limiting the foregoing, Borrower is, and while this
Agreement shall remain in effect shall remain, qualified for participation in
the Medicare, Medicaid and CHAMPUS/TRICARE programs; Borrower has, and while
this Agreement shall remain in effect shall maintain, a current and valid
provider contract with such programs; Borrower is, and while this Agreement
shall remain in effect shall remain, in compliance with the conditions of
participation in such programs; and Borrower has, and while this Agreement shall
remain in effect shall maintain, all approvals or qualification necessary for
capital reimbursement for any facility operated by Borrower.  While
this Agreement shall remain in effect, all billing practices of Borrower with
respect to any facility operated by Borrower and all third party payors,
including the Medicare, Medicaid and CHAMPUS/TRICARE programs and private
insurance companies, shall remain in compliance with all applicable laws,
regulations and policies of such third party payors and the Medicare, Medicaid
and CHAMPUS/TRICARE programs.




38




8.5.
            Insurance




Borrower
shall keep (i) all of its insurable properties and assets adequately insured in
all material respects against losses, damages and hazards as are customarily
insured against by businesses engaging in similar activities or owning similar
assets or properties and at least the minimum amount required by applicable law,
including, without limitation, medical malpractice and professional liability
insurance, as applicable; (ii) maintain general public liability insurance at
all times against liability on account of damage to persons and property having
such limits, deductibles, exclusions and co-insurance and other provisions as
are customary for a business engaged in activities similar to those of Credit
Parties; and (iii) maintain insurance under all applicable workers’ compensation
laws; all of the foregoing insurance policies to (A) be satisfactory in
form and substance to Lender, (B) expressly provide that they cannot be amended
to reduce coverage or canceled without thirty (30) calendar days prior
written notice to Lender and that they inure to the benefit of Lender
notwithstanding any action or omission or negligence of or by such Credit Party
or any insured thereunder.  With respect to property insurance
covering business interruption, accounts receivable and the books and records in
connection therewith, Lender shall be named as loss payee and additional insured
and with respect to general liability insurance Lender shall be named as
additional insured.




8.6.
            Books
      and Records




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




8.7.
            Inspections;
      Periodic Audits and
Reappraisals


Each
Credit Party shall permit the representatives of Lender, at the expense of
Credit Parties, from time to time during normal business hours, but no more
frequently than three times per year so long as no Default or Event of Default
occurs and is continuing upon reasonable notice, to (i) visit and inspect any of
its offices or properties or any other place where Collateral is located to
inspect the Collateral and/or to examine or audit all of its books of account,
records, reports and other papers, (ii) make copies and extracts therefrom, and
(iii) discuss its business, operations, prospects, properties, assets,
liabilities, condition and/or Accounts with its officers and independent public
accountants (and by this provision such officers and accountants are authorized
to discuss the foregoing) upon seven (7) Business Days prior written notice;
provided, however, that (A) Borrower shall not be obligated to reimburse Lender
for more than three (3) visits, inspections, examinations and audits under the
foregoing clause (i) conducted during any fiscal year while no Default or Event
of Default exists at a cost of $850 per auditor per day plus all out-of-pocket
expenses of Lender (it being agreed and understood that the Borrower shall be
Obligated to reimburse Lender for all such visits, inspections, examinations and
audits conducted while any Default or Event of Default exists); and (B) no
notice shall be required to do any of the foregoing if any Event of Default has
occurred and is continuing.




39




8.8.
            Further
      Assurances; Post-Closing




At Credit Parties’ cost and expense,
each Credit Party shall (i) within five Business Days after Lender’s
request, take such further actions, obtain such consents and approvals and duly
execute and deliver such further agreements, assignments, instructions or
documents as Lender may deem necessary in its Permitted Discretion with respect
to furtherance of the purposes, terms and conditions of the Loan Documents and
the consummation of the transactions contemplated thereby, whether before, at or
after the performance or consummation of the transactions contemplated hereby or
the occurrence of a Default or Event of Default, (ii) without limiting and
notwithstanding any other provision of any Loan Document, execute and deliver,
or cause to be executed and delivered, such agreements and documents, and take
or cause to be taken such actions, and otherwise perform, observe and comply
with such obligations, as are set forth on Schedule 8.8,and (iii) upon the
exercise by Lender or any of its Affiliates of any power, right, privilege or
remedy pursuant to any Loan Document or under applicable law or at equity which
requires any consent, approval, registration, qualification or authorization of
any Governmental Authority, execute and deliver, or cause the execution and
delivery of, all applications, certificates, instruments and other documents
requested by Lender in its Permitted Discretion that may be so required for such
consent, approval, registration, qualification or
authorization.  Without limiting the foregoing, upon the exercise by
Lender or any of its Affiliates of any right or remedy under any Loan Document
which requires any consent, approval or registration with, consent,
qualification or authorization by, any Person, Credit Parties shall execute and
deliver, or cause the execution and delivery of, all applications, certificates,
instruments and other documents that Lender or its Affiliate may be required to
obtain for such consent, approval, registration, qualification or
authorization.




8.9.
            Use
      of Proceeds




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




8.10.
            [Reserved]




8.11.
            [Reserved]




40




8.12.
            Taxes
      and Other Charges


(a)           All
payments and reimbursements to Lender made under any Loan Document shall be free
and clear of and without deduction for all taxes, levies, imposts, deductions,
assessments, charges or withholdings, and all liabilities with respect thereto
of any nature whatsoever, excluding taxes to the extent imposed on Lender’s net
income.  If any Credit Party shall be required by law to deduct any
such amounts from or in respect of any sum payable under any Loan Document to
Lender, then the sum payable to Lender shall be increased as may be necessary so
that, after making all required deductions, Lender receives an amount equal to
the sum it would have received had no such deductions been
made.  Notwithstanding any other provision of any Loan Document, if at
any time after the Closing (i) any change in any existing law, regulation,
treaty or directive or in the interpretation or application thereof, (ii) any
new law, regulation, treaty or directive enacted or any interpretation or
application thereof, or (iii) compliance by Lender with any new request or
new directive (whether or not having the force of law) from any Governmental
Authority after the date of Closing:  (A) subjects Lender to any tax,
levy, impost, deduction, assessment, charge or withholding of any kind
whatsoever directly arising from any Loan Document or from payments directly
received by the Lender from any Credit Party pursuant to the Loan Documents
(except for net income taxes, franchise taxes imposed in lieu of net income
taxes, and any other taxes on the general affairs of the Lender which may be
imposed generally by federal, state or local taxing authorities with respect to
interest or commitment fees or other fees payable hereunder or changes in the
rate of tax on the overall net income of Lender), or (B) imposes on Lender any
other condition or increased cost directly in connection with the transactions
contemplated thereby or participations therein (specifically excluding any
general costs imposed on Lender by any government entity that are not directly
related to the obligations hereunder); and the result of any of the foregoing is
to directly increase the cost to Lender of making or continuing any Loan
hereunder or to reduce any amount receivable hereunder, then, in any such case,
Credit Parties shall promptly, and in any event within ten (10) Business days of
Credit Party’s receipt of notice from Lender, pay to Lender any additional
amounts necessary to compensate Lender, on an after-tax basis, for such
additional cost or reduced amount as determined by Lender.  If Lender
becomes entitled to claim any additional amounts pursuant to this Section 8.12 it shall
promptly notify Credit Parties of the event by reason of which Lender has become
so entitled and contain a calculation of such additional amounts that are
proposed to be due and payable and shall answer any questions and provide any
explanation reasonably requested by Borrower in good faith to understand the
nature and purported reason for such additional amounts.




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




8.13.
            Payroll
      Taxes




Without limiting or being limited by
any other provision of any Loan Document, each Credit Party at all times shall
retain and use a Person acceptable to Lender to process, manage and pay its
payroll taxes and shall cause to be delivered to Lender within ten calendar days
after the end of each calendar month a report of its payroll taxes for the
immediately preceding calendar month and evidence of payment
thereof.  Notwithstanding the foregoing, being copied on Borrower’s
payroll reports within the period specified in the preceding sentence shall
satisfy this requirement; provided that such payroll report sets forth the
status of payroll taxes.




8.14.
            New
      Subsidiaries




If at any time after the Closing Date
Borrower shall form or acquire any new Subsidiary, Borrower shall promptly, and
in any event not later than fifteen calendar days after the creation or
acquisition of such Subsidiary or such longer period as Lender may determine in
writing, execute, and cause such new Subsidiary to execute, and deliver to
Lender such joinder agreements and amendments to this Agreement and the other
Loan Documents, including executing and delivering allonges to any Notes to the
extent issued hereunder in form and substance satisfactory to Lender and
providing such other documentation as Lender may reasonably request, including,
without limitation, UCC searches, as applicable, and filings, legal opinions and
corporate authorization documentation, and to take such other actions in each
case as Lender deems necessary or advisable to (a) join and make such new
Subsidiary a co-Borrower hereunder and thereunder, subject to all the rights and
benefits and obligations and burdens of a Borrower hereunder, (b) grant to
Lender a perfected first priority security interest in the Collateral of such
new Subsidiary subject to no Liens other than the Permitted
Liens.


41




8.15.
            [Reserved]




9.
            NEGATIVE
      COVENANTS




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




9.1.
            Financial
      Covenants




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




9.2.
            Permitted
      Indebtedness




Borrower
shall not create, incur, assume or suffer to exist any Indebtedness, other than
Permitted Indebtedness.  Borrower shall not make prepayments on any
existing or future Indebtedness to any Person other than to Lender or to the
extent specifically permitted by this Agreement or any subsequent agreement
between Borrower and Lender.




9.3.
            Permitted
      Liens




Borrower
shall not create, incur, assume or suffer to exist any Lien upon, in or against,
or pledge of, any of the Collateral or any of its other properties or assets of
Borrower including but not limited to Deposit Accounts, cash or other money and
Investment Property, whether now owned or hereafter acquired, except Permitted
Liens.




9.4.
            Investments;
      New Facilities or Collateral;
Subsidiaries




Except as
set forth on Schedule 9.4, Borrower shall not, directly or indirectly, enter
into any agreement to, (i) purchase, own, hold, invest in or otherwise
acquire obligations or stock or securities of, or any other interest in, or all
or substantially all of the assets of, any Person or any joint venture, or
(ii) make or permit to exist any loans, advances or guarantees to or for
the benefit of any Person or assume, guarantee, endorse, contingently agree to
purchase or otherwise become liable for or upon or incur any obligation of any
Person (other than those created by the Loan Documents and Permitted
Indebtedness and other than (A) trade credit extended in the ordinary
course of business, (B) advances for business travel and similar temporary
advances made in the ordinary course of business to officers, directors and
employees, (C) investments in Cash Equivalents and (D) the endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business).  Borrower shall not, directly or
indirectly, purchase, own, operate, hold, invest in or otherwise acquire any
facility, property or assets or any Collateral that is not located at the
locations set forth on Schedule 7.18B unless
Borrower shall provide to Lender at least ten (10) Business Days prior written
notice.  Borrower shall not have any Subsidiaries other than those
Subsidiaries, if any, existing at Closing and set forth on Schedule 7.3., unless
Borrower and new Subsidiary fully complies with Section 8.14
hereof.


42


Notwithstanding
the foregoing, Borrower shall be permitted to make Permitted Acquisitions with
Lender’s prior written consent; provided, however, that the
consent of Lender shall not be required if the cash consideration paid in
respect of the Permitted Acquisition does not exceed $1,000,000 per acquisition
or $2,000,000 in the aggregate during the Term and Borrower fully complies with
Section 8.14
hereof.




9.5.
            Dividends;
      Redemptions




Borrower
shall not (i) declare, pay or make any Distribution, (ii) apply any of its
funds, property or assets to the acquisition, redemption or other retirement of
any Capital Stock, (iii) otherwise make any payments or Distributions to any
stockholder, member, partner or other equity owner in such Person’s capacity as
such, or (iv) make any payment of any Management or Service Fee; provided however, that absent
the occurrence and continuation of a Default or Event of Default, and if a
Default or Event of Default would not arise therefrom, Borrower may: (x) make
Permitted Distributions, (y) declare, pay or make Distributions payable in its
stock, or split-ups or reclassifications of its stock; and (z) redeem its
capital stock from terminated employees pursuant to, but only to the extent
required under, the terms of the related employment agreements.




9.6.
            Transactions
      with Affiliates




Except as
set forth on Schedule 9.6, Borrower shall not enter into or consummate any
transaction of any kind with any of its Affiliates or Guarantor or any of their
respective Affiliates other than: (i) salary, bonus, severance, employee stock
option and other compensation, consulting and employment arrangements with
directors or officers in the ordinary course of business, provided, that, no payment of
any cash bonus or severance shall be permitted if a Default or Event of Default
has occurred and remains in effect or would be caused by or result from such
payment, and no payment of any severance shall be made, individually or in the
aggregate, in excess of $500,000 in any twelve (12) month period, (ii)
Distributions permitted pursuant to Section 9.5, and
(iii) the making of payments permitted under and pursuant to a written agreement
entered into by and between Borrower and one or more of its Affiliates that
reflects and constitutes a transaction on overall terms at least as favorable to
Borrower as would be the case in an arm’s-length transaction between unrelated
parties of equal bargaining power; provided, that, notwithstanding
the foregoing Borrower shall not (Y) enter into or consummate any transaction or
agreement pursuant to which it becomes a party to any mortgage, note, indenture
or guarantee evidencing any Indebtedness of any of its Affiliates or otherwise
to become responsible or liable, as a guarantor, surety or otherwise, pursuant
to agreement for any Indebtedness of any such Affiliate, or (Z) make any
payments to any of its Affiliates in excess of $100,000 in the aggregate during
any consecutive twelve calendar month period without the prior written consent
of Lender (other than payments permitted pursuant to clause (i) or (ii)
above).




9.7.
            Charter
      Documents; Fiscal Year; Dissolution; Use of
  Proceeds




No Credit
Party shall (i) amend, modify, restate or change its certificate of
incorporation or formation or bylaws or similar charter documents without the
prior written consent of the Lender, which consent shall not be unreasonably
withheld,(ii) change its
fiscal year unless such Credit Party demonstrates to Lender’s satisfaction
compliance with the covenants contained herein for both the fiscal year in
effect prior to any change and the new fiscal year period by delivery to Lender
of appropriate interim and annual pro forma, historical and current compliance
certificates for such periods and such other information as Lender may
reasonably request, (iii) amend, alter or suspend or terminate or make
provisional in any material way, any material Permit without the prior written
consent of Lender, which consent shall not be unreasonably
withheld.  Notwithstanding the foregoing, the Lender acknowledges that
the following will not be deemed to be a violation of this covenant: (A) any
suspension of any license or Permit in any state caused by the departure of any
scientific or medical personnel, and (B) any amendment of a license or permit in
the ordinary course of business to enable Borrower to pursue additional
opportunities; provided that neither (A) nor (B) shall result in the impairment
of Borrower’s ability to collect any Account or account receivable,
(iv) wind up, liquidate or dissolve (voluntarily or involuntarily) or
commence or suffer any proceedings seeking or that would result in any of the
foregoing, (v) use any proceeds of any Advance for “purchasing” or “carrying”
“margin stock” as defined in Regulations U, T or X of the Board of Governors of
the Federal Reserve System, or (vi) without providing at least thirty calendar
days prior written notice to Lender, change its name or organizational
identification number, if it has one.


43




9.8.
            Truth
      of Statements




No Credit Party shall (a) furnish to
Lender any certificate or other document created or produced by Borrower that
contains any untrue statement of a material fact or that omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished as of the date it was provided to Lender; and (b)
furnish any document created or produced by a third party that Borrower knows
(A) contains any untrue statement of a material fact or (B) omits to state a
material fact necessary to make it not misleading in light of the circumstances
under which it was furnished.




9.9.
            IRS
      Form 8821




No Credit Party shall alter, amend,
restate, or otherwise modify, or withdraw, terminate or re-file the IRS Form
8821 required to be delivered pursuant to the Conditions Precedent in Section 6.1
hereof.




9.10.
            Transfer
      of Assets




Notwithstanding
any other provision of this Agreement or any other Loan Document, Borrower shall
not, nor shall it permit any of its Subsidiaries to, sell, lease, transfer,
assign or otherwise dispose of any interest in any properties or assets (other
than obsolete fixed assets or excess fixed assets no longer needed in the
conduct of the business in the ordinary course of business and sales of
Inventory in the ordinary course of business), or agree to do any of the
foregoing at any future time, except that:




(a)           Borrower
may lease or sublease (as lessor or sub-lessor) real or personal
property  pursuant to a true lease not constituting Indebtedness and
not entered into as part of a sale and leaseback transaction, in each case in
the ordinary course of business and which could not reasonably be expected to
result in a Material Adverse Effect.




(b)           Borrower
may arrange for warehousing, fulfillment or storage of Inventory at locations
not owned or leased by Borrower, in each case in the ordinary course of
business;




(c)           Borrower
may license or sublicense Intellectual Property to third parties in the ordinary
course of business; provided, that, such licenses
or sublicenses shall not interfere with the business or other operations of
Borrower; and




(d)           Borrower
may consummate such other sales or dispositions of property or assets in excess
of $50,000 (including any sale or transfer or disposition of all or any part of
its assets and thereupon and within one year thereafter rent or lease the assets
so sold or transferred) only to the extent prior written notice has been given
to Lender and to the extent Lender has given its prior written consent thereto,
subject in each case to such conditions as may be set forth in such
consent.


44




9.11.
            OFAC




(a)           No
Credit Party nor any Subsidiary of any Credit Party (i) will be or become a
Person whose Property or interests in Property are blocked or subject to
blocking pursuant to Section  1 of Executive Order 13224 of September 23,
2001 Blocking property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) will
engage in any dealings or transactions prohibited by Section 2 of such executive
order, or otherwise be associated with any such Person in any manner violative
of Section 2 of such executive order, or (iii) otherwise will become a Person on
the list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other OFAC regulation or executive
order.




9.12.
            Payroll
      Accounts




Borrower shall not maintain a greater
balance in any payroll account than is necessary to support Borrower’s current
payroll and payroll for one additional payroll cycle (bi-monthly or weekly as
applicable).




10.
            EVENTS
      OF DEFAULT




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




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




(b)           any
representation, statement or warranty made or deemed made by any Credit Party in
any Loan Document or in any other certificate, document or report delivered in
conjunction with any Loan Document, shall not be true and correct in all
material respects or shall have been false or misleading in any material respect
on the date when made or deemed to have been made;




(c)           any
Credit Party or other party thereto other than Lender shall be in violation,
breach or default of, or shall fail to perform, observe or comply with any
covenant, obligation or agreement set forth in, any Loan Document and such
violation, breach, default or failure shall not be cured within the applicable
period set forth in the applicable Loan Document; provided that, with respect to
the affirmative covenants set forth in Article VIII (other
than Sections 8.1(c),
8.3, 8.8, 8.9,for which there shall be no cure period and Section 8.5 for which
there shall be a five (5) Business Day cure period), there shall be a thirty
calendar day cure period commencing from the earlier of (i) Receipt by such
Person of written notice of such breach, default, violation or failure, and
(ii) the time at which such Person or any authorized officer thereof knew
or became aware, or should have known or been aware, of such failure, violation,
breach or default, but no Advances will be made during the cure
period;




(d)           (i)
any of the Loan Documents ceases to be in full force and effect, or (ii) any
Lien created thereunder ceases to constitute a valid perfected first priority
Lien on the Collateral in accordance with the terms thereof, or Lender ceases to
have a valid perfected first priority security interest in any of the Collateral
pledged to Lender pursuant to the Loan Documents;provided, that, with respect to
non-material breaches or violations that constitute Events of Default under
clause (ii) of this Section 10(d), there
shall be a five (5) Business Day cure period commencing from the earlier of
(A) Receipt by the applicable Person of written notice of such breach or
violation or of any event, fact or circumstance constituting or resulting in any
of the foregoing, and (B) the time at which such Person or any authorized
officer thereof knew or became aware, or should have known or been aware, of
such breach or violation and resulting Event of Default or of any event, fact or
circumstance constituting or resulting in any of the foregoing;


45




(e)           one
or more tax judgments, decrees, arbitrations or other binding award is rendered
against any Credit Party in an amount in excess of $25,000 individually or
$75,000 in the aggregate in any consecutive 12-month period, which is/are not
satisfied, stayed, vacated or discharged of record within thirty calendar days
of being rendered but no Advances will be made before the judgment is stayed,
vacated or discharged unless otherwise agreed to in writing by Lender except for
the US Labs Award;




(f)           (i) any
default occurs, which is not cured or waived, (x) in the payment when due
of any amount with respect to any Indebtedness (other than the Obligations) of
any Credit Party having an aggregate principal balance of at least $100,000,
(y) in the performance, observance or fulfillment of any provision
contained in any agreement, contract, document or instrument to which any Credit
Party is a party or to which any of their properties or assets are subject or
bound under or pursuant to which any Indebtedness having an aggregate principal
balance of at least $100,000 was issued, created, assumed, guaranteed or secured
and such default continues for more than any applicable grace period or permits
the holder of any Indebtedness to accelerate the maturity thereof, or (ii) any
Indebtedness of any Credit Party is declared to be due and payable or is
required to be prepaid (other than by a regularly scheduled payment) prior to
the stated maturity thereof, or any obligation of such Person for the payment of
Indebtedness (other than the Obligations) is not paid when due or within any
applicable grace period, or any such obligation becomes or is declared to be due
and payable before the expressed maturity thereof, or there occurs an event
which, with the giving of notice or lapse of time, or both, would cause any such
obligation to become, or allow any such obligation to be declared to be, due and
payable;




(g)           any
Credit Party shall (i) be unable to pay its debts generally as they become due,
(ii) make a general assignment for the benefit of its creditors, (iii)
commence, or consent to, a proceeding for the appointment of a receiver,
trustee, liquidator or conservator of itself or of the whole or any substantial
part of its property, or (iv) file a petition seeking reorganization or
liquidation or similar relief under any Debtor Relief Law;




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




(i)           (i)
any Change of Control occurs or any binding agreement (that does not require
Lender’s consent as a condition to closing) to cause or that may result in any
such Change of Control is entered into, (ii) any Material Adverse Change occurs
or is reasonably expected to occur, (iii) any Liability Event occurs or is
reasonably expected to occur, or (iv) any Credit Party ceases any material
portion of its business operations as currently conducted;


46




(j)           Lender
receives any indication or evidence that (i) any Credit Party may have directly
or indirectly been engaged in any type of activity, which, in Lender’s Permitted
Discretion, might result in forfeiture of any property with a value in excess of
$50,000 to any Governmental Authority which shall have continued unremedied for
a period of ten calendar days after written notice from Lender (but no Advances
will be made before any such activity ceases) or (ii) any Credit Party or any of
their respective directors or senior officers is criminally indicted or
convicted under any law that could lead to a forfeiture of any
Collateral;




(k)           uninsured
damage to, or loss, theft or destruction of, any portion of the Collateral
occurs that exceeds $50,000 in the aggregate;




(l)           the
issuance of any process for levy, attachment or garnishment or execution upon or
prior to any judgment against any Credit Party or any of their property or
assets in excess of $100,000.




Upon the
occurrence of an Event of Default, notwithstanding any other provision of any
Loan Document, Lender may, without notice or demand, do any of the following:
(i) terminate its obligations to make Advances hereunder and (ii) all or any of
the Loans and/or Notes, all interest thereon and all other Obligations shall
automatically, without any further action by Lender, be due and payable
immediately (except in the case of an Event of Default under Section 10(d), (g), or (h), in which event
all of the foregoing shall automatically and without further act by Lender be
due and payable), and (ii) prohibit any action permitted to be taken under
Article IX hereof, in each case without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Credit
Parties.




11.
            RIGHTS
      AND REMEDIES AFTER DEFAULT




11.1.
            Rights
      and Remedies




(a)           In
addition to the acceleration provisions set forth in Article X above, upon
the occurrence and continuation of an Event of Default, Lender shall have the
right to exercise any and all rights, options and remedies provided for in any
Loan Document, under the UCC or at law or in equity, including, without
limitation, the right to (i) at Credit Parties’ expense, require that all or any
part of the Collateral be assembled and made available to Lender at any place
designated by Lender, (ii) reduce or otherwise change the Facility Cap, and/or
(iii) relinquish or abandon any Collateral or any Lien
thereon.  Notwithstanding any provision of any Loan Document, Lender,
in its sole discretion, shall have the right, at any time that Credit Parties
fail to do so, and from time to time, without prior notice, to: (i) obtain
insurance covering any of the Collateral to the extent required hereunder; (ii)
pay for the performance of any of Obligations; (iii) discharge taxes or Liens on
any of the Collateral that are in violation of any Loan document unless Credit
Parties are in good faith with due diligence by appropriate proceedings
contesting those items; and (iv) pay for the maintenance and preservation of the
Collateral.  Such expenses and advances shall be added to the
Obligations until reimbursed to Lender and shall be secured by the Collateral,
and such payments by Lender shall not be construed as a waiver by Lender of any
Event of Default or any other rights or remedies of Lender.  Credit
Parties hereby waive any and all rights that they may have to a judicial hearing
in advance of the enforcement of any of Lender’s rights and remedies hereunder,
including, without limitation, its right following the occurrence of an Event of
Default  to take immediate possession of the Collateral and to
exercise its rights and remedies with respect thereto.


47


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




11.2.
            Application
      of Proceeds




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




11.3.
            Rights
      of Lender to Appoint Receiver




Without
limiting and in addition to any other rights, options and remedies Lender has
under the Loan Documents, the UCC, at law or in equity, upon the occurrence and
continuation of an Event of Default, Lender shall have the right to apply for
and have a receiver appointed by a court of competent jurisdiction in any action
taken by Lender to enforce its rights and remedies in order to manage, protect,
preserve, sell or dispose the Collateral and continue the operation of the
business of Credit Parties and to collect all revenues and profits thereof and
apply the same to the payment of all expenses and other charges of such
receivership including the compensation of the receiver and to the payments as
aforesaid until a sale or other disposition of such Collateral shall be finally
made and consummated.  To the extent not prohibited by applicable law,
each Credit Party hereby irrevocably consents to and waives any right to object
to or otherwise contest the appointment of a receiver as provided
above.  Each Credit Party (i) grants such waiver and consent knowingly
after having discussed the implications thereof with counsel, (ii) acknowledges
that (A) the uncontested right to have a receiver appointed for the foregoing
purposes is considered essential by Lender in connection with the enforcement of
its rights and remedies hereunder and under the other Loan Documents and (B) the
availability of such appointment as a remedy under the foregoing circumstances
was a material factor in inducing Lender to make the Loans to such Credit Party
and (iii) to the extent not prohibited by applicable law, agrees to enter into
any and all stipulations in any legal actions, or agreements or other
instruments required or reasonably appropriate in connection with the foregoing,
and to cooperate fully with Lender in connection with the assumption and
exercise of control by any receiver over all or any portion of the
Collateral.


48




11.4.
            Rights
      and Remedies not Exclusive




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




11.5.
            Standards
      for Exercising Remedies




To the
extent that applicable law imposes duties on Lender to exercise remedies in a
commercially reasonably manner, Credit Parties hereby acknowledge and agree that
it is not commercially unreasonable for Lender (a) to fail to incur expenses
reasonably deemed significant by Lender to prepare Collateral for disposition or
otherwise to complete raw material or work in process into finished goods or
other finished products for disposition, (b) to fail to obtain third-party
consents for access to Collateral to be disposed of, or to obtain or, if not
required by other law, to fail to obtain governmental or third party consents
for the collection or disposition of Collateral to be collected or disposed of,
(c) to fail to exercise collection remedies against account debtors or other
persons obligated on Collateral or to remove Liens against Collateral, (d) to
exercise collection remedies against account debtors and other persons obligated
on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (f) to contact other persons, whether or not in the
same business as Credit Parties, for expressions of interest in acquiring all or
any portion of the Collateral, (g) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the Collateral is of
a specialized nature, (h) to dispose of Collateral by utilizing Internet sites
that provide for the auction of assets of the types included in the Collateral
or that have the reasonable capability of doing so, or that match buyers and
sellers of assets, (i) to dispose of assets in wholesale rather than retail
markets, (j) to disclaim disposition warranties, (k) to purchase insurance or
credit enhancements to insure Lender against risks of loss, collection or
disposition of Collateral or to provide to Lender a guaranteed return from the
collection or disposition of Collateral or (l) to the extent deemed appropriate
by Lender, to obtain the services of brokers, investment bankers, consultants or
other professionals to assist Lender in the collection or disposition of any of
the Collateral.  Credit Parties further acknowledge that the purpose
of this Section
11.5 is to provide non-exhaustive indications of what acts or omissions
by Lender would not be commercially unreasonable in Lender’s exercise of
remedies against the Collateral and that other acts or omissions by Lender shall
not be deemed commercially unreasonable solely on account of not being indicated
in this Section
11.5.  Without limitation upon the foregoing, nothing contained
in this Section
11.5 shall be construed to grant any rights to Credit Parties or to
impose any duties upon Lender that would not have been granted or imposed by
this Agreement or by applicable law in the absence of this Section
11.5.


49




12.
            WAIVERS
      AND JUDICIAL PROCEEDINGS




12.1.
            Waivers




Except as
expressly provided for herein, Credit Parties hereby waive setoff, counterclaim,
demand, presentment, protest, all defenses with respect to any and all
instruments and all notices and demands of any description, and the pleading of
any statute of limitations as a defense to any demand under any Loan
Document.  Credit Parties hereby waive any and all defenses and
counterclaims they may have or could interpose in any action or procedure
brought by Lender to obtain an order of court recognizing the assignment of, or
Lien of Lender in and to, any Collateral, whether or not payable by a
Medicaid/Medicare Account Debtor.   With respect to any action
hereunder, Lender conclusively may rely upon, and shall incur no
liability to Credit Parties in acting upon, any request or other communication
that Lender reasonably believes to have been given or made by a person
authorized on Credit Parties’ behalf, whether or not such person is listed on
the incumbency certificate delivered pursuant to Section 6.1
hereof.  In each such case, Credit Parties hereby waive the right to
dispute Lender's action based upon such request or other communication, absent
manifest error.  Without limiting the generality of the foregoing,
Borrower expressly waives all rights, benefits and defenses, if any, applicable
or available to Borrower under either California Code of Civil Procedure
Sections 580a or 726, which provide, among other things, that the amount of any
deficiency judgment which may be recovered following either a judicial or
nonjudicial foreclosure sale is limited to the difference between the amount of
any indebtedness owed and the greater of the fair value of the security or the
amount for which the security was actually sold.  Without limiting the
generality of the foregoing, Borrower further expressly waives all rights,
benefits and defenses, if any, applicable or available to Borrower under either
California Code of Civil Procedure Sections 580b, providing, generally, that no
deficiency may be recovered on a real property purchase money obligation, or
580d, providing, generally, that no deficiency may be recovered on a note
secured by a deed of trust on real property if the real property is sold under a
power of sale contained in the deed of trust.




12.2.
            Delay;
      No Waiver of Defaults




No course
of action or dealing, renewal, release or extension of any provision of any Loan
Document, or single or partial exercise of any such provision, or delay, failure
or omission on Lender’s part in enforcing any such provision shall affect the
liability of any Credit Party or operate as a waiver of such provision or affect
the liability of any Credit Party or preclude any other or further exercise of
such provision.  No waiver by any party to any Loan Document of any
one or more defaults by any other party in the performance of any of the
provisions of any Loan Document shall operate or be construed as a waiver of any
future default, whether of a like or different nature, and each such waiver
shall be limited solely to the express terms and provisions of such
waiver.  Notwithstanding any other provision of any Loan Document, by
completing the Closing under this Agreement and/or by making Advances, Lender
does not waive any breach of any representation or warranty under any Loan
Document, and all of Lender’s claims and rights resulting from any such breach
or misrepresentation are specifically reserved.




12.3.
            Jury
      Waiver




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


50




12.4.
            Cooperation
      in Discovery and Litigation




In any
litigation, arbitration or other dispute resolution proceeding relating to any
Loan Document, Borrower waives any and all defenses, objections and
counterclaims it may have or could interpose with respect to (i) any of its
directors, officers, employees or agents being deemed to be employees or
managing agents of Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise), (ii) Lender’s counsel examining any such
individuals as if under cross-examination and using any discovery deposition of
any of them as if it were an evidence deposition, and (iii) using commercially
reasonable efforts to produce in any such dispute resolution
proceeding,  all Persons, documents (whether in tangible, electronic
or other form) and other things under its control that properly relate to any
matters in dispute.  Notwithstanding the foregoing, Credit Parties (A)
do not waive any rights of any directors, officers, employees or agents that
such Persons may have individually, (B) do not agree that any alternative
dispute resolution procedures other than a court trial will be automatically
applicable to the situation at hand in the event of a dispute and will only
agree to such alternative dispute resolution procedures at such time after the
facts and circumstances are known, and (C) with respect to item (iii) do not
agree to engage in any electronic discovery procedures unless agreed to at such
time in the future and at the expense of someone other than the
Borrower.




13.
            EFFECTIVE
      DATE AND TERMINATION




13.1.
            Termination
      and Effective Date Thereof




(a)           Subject to Lender’s right to
cease making Advances pursuant toSection
2.1or upon or
after any Event of Default, this Agreement shall continue in full force and
effect until the Obligations are Paid in Full, unless terminated sooner as
provided in thisSection 13.1(a).  Borrower may
terminate this Agreement at any time upon not less than thirty calendar days’
prior written notice to Lender and upon full performance and indefeasiblePayment in Fullof all
Obligations after Receipt by Lender of such written notice.  All of
the Obligations shall be immediately due and payable upon any termination by
Borrower pursuant to thisSection
13.1(a)on the
Termination Datewhich shall be the first Business Day after the thirty (30) day notice period
has elapsed, on which the Obligations have fully performed and indefeasibly Paid
in Full.Upon such full performance
and Payment in full of the Obligations Lender shall not unreasonably delay the
filing of a release of its liens.Notwithstanding any other
provision of any Loan Document, no termination of this Agreement shall affect
Lender’s rights or any of the Obligations existing as of the effective date of
such termination, and the provisions of the Loan Documents shall continue to be
fully operative until the Obligations have been fully performed andPaid in Full.  The Liens
granted to Lender under the Loan Documents and the financing statements filed
pursuant thereto and the rights and powers of Lender shall continue in full
force and effect notwithstanding the fact that Borrower’s borrowings hereunder
may from time to time be in a zero or credit position until all of the
Obligations have been fully performed and indefeasiblyPaid in Full.




(b)           Upon the occurrence of a
Revolver Termination, Credit Parties shall immediately pay Lender (in addition
to the then outstanding principal, accrued interest and other Obligations
relating to the Revolving Facility pursuant to the terms of this Agreement and
any other Loan Document), as yield maintenance for the loss of bargain and not
as a penalty, an amount equal to the applicable Minimum Termination
Fee.


51




13.2.
            Survival




All
obligations, covenants, agreements, representations, warranties, waivers and
indemnities made by Credit Parties in any Loan Document shall survive the
execution and delivery of the Loan Documents, the Closing, the making of the
Advances and any termination of this Agreement until all Obligations are fully
performed and indefeasibly paid in full in cash.  The obligations and
provisions of Sections
3.6, 12.1, 12.3, 12.4, 13.1, 13.2, 15.4, 15.7 and 15.10 shall survive
termination of the Loan Documents and any payment, in full or in part, of the
Obligations.




14.
            GUARANTY




14.1.
            Guaranty




Guarantor
hereby unconditionally and irrevocably guarantees the punctual payment when due,
whether at stated maturity, by acceleration or otherwise, of all Obligations of
each Credit Party, including, without limitation, Credit Parties, now or
hereafter existing under any Loan Document, whether for principal, interest
(including, without limitation, all interest that accrues after the commencement
of any proceeding of Borrower or any other Credit Party under any Debtor Relief
Laws), fees, commissions, expense reimbursements, indemnifications or otherwise
(such obligations, to the extent not paid by Borrower, the “Guaranteed Obligations”), and
agrees to pay any and all costs, fees and expenses (including reasonable counsel
fees and expenses) incurred by Lender in enforcing any rights under the guaranty
set forth in this Article XIV.  Without
limiting the generality of the foregoing, Guarantor’s liability shall extend to
all amounts that constitute part of the Guaranteed Obligations and would be owed
by Borrower or any other Credit Party to Lender under any Loan Document, but for
the fact that they are unenforceable or not allowable due to the existence of
any proceeding under any Debtor Relief Laws involving Borrower or any other
Credit Party.




14.2.
            Guaranty
      Absolute




Guarantor
guarantees that the Guaranteed Obligations will be paid strictly in accordance
with the terms of the Loan Documents, regardless of any law regulation or order
now or hereafter in effect in any jurisdiction affecting any such terms or the
rights of Lender with respect thereto.  The obligations of Guarantor
under this Article XIV are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against any other guarantor to enforce such
obligations, irrespective of whether any action is brought against any Credit
Party or whether any Credit Party is joined in any such action or
actions.  The liability of Guarantor under this Article XIV
shall be irrevocable, absolute and unconditional irrespective of, and, in
consideration of the direct and indirect benefits from the financing
arrangements contemplated herein enjoyed by such Guarantor. Guarantor hereby
irrevocably waives any defenses it may now or hereafter have in any way relating
to, any or all of the following: (a) any lack of validity or enforceability of
any Loan Document or any agreement or instrument relating thereto; (b) any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Guaranteed Obligations, or any other amendment or waiver of or any
consent to departure from any Loan Document, including, without limitation, any
increase in the Guaranteed Obligations resulting from the extension of
additional credit to any Credit Party or otherwise; (c) any taking, exchange,
release or non-perfection of any Collateral, or any taking, release or amendment
or waiver of or consent to departure from any other guaranty, for all or any of
the Guaranteed Obligations; (d) any change, restructuring or termination of the
corporate, limited liability company or partnership structure or existence of
any Credit Party; (e) promptness, diligence, notice of acceptance and any other
notice with respect to any of the Guaranteed Obligations and this Article XIV and
any requirement that Lender exhaust any right or take any action against any
other Credit Party or any other Person or any Collateral; or (f) any other
circumstance (including, without limitation, any statute of limitations) or any
existence of or reliance on any representation by Lender that might otherwise
constitute a defense available to, or a discharge of, any Credit Party or any
other guarantor or surety, other than the defense of payment.


52




This
Article XIV is a
continuing guaranty and shall (a) remain in full force and effect until the
indefeasible cash payment in full of the Guaranteed Obligations and all other
amounts payable under this Article XIV and
irrevocable termination of the Loan Agreement in accordance with its terms, (b)
be binding upon Guarantor, its successors and assigns and (c) inure to the
benefit of, and be enforceable by, Lender and its successors, assigns, pledgees,
transferees.  This Article XIV
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Guaranteed Obligations is rescinded or must
otherwise be returned to Lender or any other Person upon the insolvency,
bankruptcy or reorganization of Borrower or any other Credit Party or otherwise,
all as though such payment had not been made.  Guarantor hereby waives
any right to revoke this Article XIV, and
acknowledges that this Article XIV is
continuing in nature and applies to all Guaranteed Obligations, whether existing
now or in the future.




14.3.
            Subrogation




Guarantor
will not exercise any rights that it may now or hereafter acquire against any
other Credit Party or any other guarantor or that arise from the existence,
payment, performance or enforcement of its respective obligations under this
Article XIV,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of Lender against any other Credit Party or any other guarantor
or any Collateral, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law including, without limitation, the
right to take or receive from any other Credit Party or any other guarantor,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security solely on account of such claim, remedy or right,
unless and until all of the Guaranteed Obligations and all other amounts payable
under this Article XIV
shall have been indefeasibly paid in full in cash and all commitments to lend
hereunder shall have terminated.  Guarantor agrees that any payment of
any Indebtedness of Borrower now or hereafter held by such Guarantor is hereby
subordinated in right of payment to the irrevocable and indefeasible payment in
full in cash of the Guaranteed Obligations unless otherwise agreed to in writing
by Lender or provided for in this agreement.If any amount shall be
paid to a Guarantor in violation of the immediately preceding sentences, such
amount shall be held in trust for the benefit of Lender and shall forthwith be
paid to Lender to be credited and applied to the Guaranteed Obligations and all
other amounts payable under this Article XIV,
whether matured or unmatured, in accordance with the terms of this Agreement, or
to be held as Collateral for any Guaranteed Obligations or other amounts payable
under this Article XIV
thereafter arising.  If (i) a Guarantor shall make payment to Lender
of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Article XIV
shall be indefeasibly paid in full in cash and (iii) Lender’s commitment to lend
hereunder shall have been terminated, Lender will, at such Guarantor’s request
and expense, execute and deliver to such Guarantor appropriate documents,
without recourse and without representation or warranty, necessary to evidence
the transfer by subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor


53




15.
            MISCELLANEOUS




15.1.
            Governing
      Law; Jurisdiction; Service of Process;
Venue




The Loan
Documents shall be governed by and construed in accordance with the internal
laws of the State of Maryland without giving effect to its choice of law
provisions.  Any judicial proceeding against Credit Parties with
respect to the Obligations, any Loan Document or any related agreement may be
brought in any federal or state court of competent jurisdiction located in the
State of Maryland.  By execution and delivery of each Loan Document to
which it is a party, each Credit Party (i) accepts the non-exclusive
jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any
judgment rendered thereby, (ii) waives personal service of process, (iii) agrees
that service of process upon it may be made by certified or registered mail,
return receipt requested, pursuant to Section 15.5 hereof,
(iv) waives any objection to personal jurisdiction and venue of any action
instituted hereunder and agrees not to assert any defense based on lack of
jurisdiction, venue or convenience, and (v) agrees that this loan was made in
Maryland, that Lender has accepted in Maryland Loan Documents executed by such
Credit Party and has disbursed Advances under the Loan Documents in
Maryland.  Nothing shall affect the right of Lender to serve process
in any manner permitted by law or shall limit the right of Lender to bring
proceedings against such Credit Party in the courts of any other jurisdiction
having jurisdiction, including any jurisdiction in which Collateral is located
for purposes of exercising rights and remedies with respect to such
Collateral.  Any judicial proceedings against Lender involving,
directly or indirectly, the Obligations, any Loan Document or any related
agreement shall be brought only in a federal or state court located in the State
of Maryland.  All parties acknowledge that they participated in the
negotiation and drafting of this Agreement, that the parties were represented by
counsel of their choice in connection with the negotiation and drafting of this
Agreement, that the parties to this Agreement are sophisticated parties entering
into a commercial transaction, and that, accordingly, no party shall move or
petition a court construing this Agreement to construe it more stringently
against one party than against any other.




15.2.
            Successors
      and Assigns; Participations; New
Lenders




The Loan
Documents shall inure to the benefit of Lender, Transferees and all future
holders of the Loan, any Note, the Obligations and/or any of the Collateral, and
each of their respective successors and assigns.  Each Loan Document
shall be binding upon the Persons’ other than Lender that are parties thereto
and their respective successors and assigns, and no such Person may assign,
delegate or transfer any Loan Document or any of its rights or obligations
thereunder without the prior written consent of Lender.  No rights are
intended to be created under any Loan Document for the benefit of any third
party donee, creditor or incidental beneficiary of any Credit
Party.  Nothing contained in any Loan Document shall be construed as a
delegation to Lender of any other Person’s duty of
performance.  CREDIT PARTIES ACKNOWLEDGE AND AGREE THAT LENDER AT ANY
TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND RESTATE ANY NOTE, AND/OR (II)
SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART OF
ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT, LOANS, ANY NOTE, THE
OBLIGATIONS AND/OR THE COLLATERAL TO OTHER PERSONS (EACH SUCH TRANSFEREE,
ASSIGNEE OR PURCHASER, A “TRANSFEREE”).  Each
Transferee shall have all of the rights and benefits with respect to the Loans,
Obligations, any Notes, Collateral and/or Loan Documents held by it as fully as
if the original holder thereof, and either Lender or any Transferee may be
designated as the sole agent to manage the transactions and obligations
contemplated therein.  Notwithstanding any other provision of any Loan
Document, Lender may disclose to any Transferee all information, reports,
financial statements, certificates and documents obtained under any provision of
any Loan Document.  In the event of any transfer of any portion of
Lender’s right and interest in the Obligations of this Agreement, Lender agrees
to so notify the Borrower of such transfer and include such transferee’s name
and contact information, except if such transfer is to an Affiliate of Lender or
any of Lender’s financing sources.


54




15.3.
            Application
      of Payments




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




15.4.
            Indemnity




Each Credit Party jointly and
severally shall indemnify Lender, its Affiliates and its and their respective
managers, members, officers, employees, Affiliates, agents, representatives,
successors, assigns, accountants and attorneys (collectively, the “Indemnified
Persons”) from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, reasonable fees and
disbursements of counsel, allocable costs of in-house counsel, and in-house
diligence fees and expenses, subject to the provisions
governing payment of in-house counsel and outside counsel fees set forth inSection
15.7(b))which may be imposed on,
incurred by or asserted against any Indemnified Person with respect to or
arising out of, or in any litigation, proceeding or investigation instituted or
conducted by any Person with respect to any aspect of, or any transaction
contemplated by or referred to in, or any matter related to, any Loan Document
or any agreement, document or transaction contemplated thereby, whether or not
such Indemnified Person is a party thereto, except to the extent that any of the
foregoing results directly from the gross negligence or willful misconduct of
such Indemnified Person as determined by a final non-appealable judgment entered
by a court of competent jurisdiction, in which case, any
previously made reimbursements made pursuant to this indemnification clause for
claims which were due to such gross negligence or willful misconduct shall be
immediately recoverable from such Indemnified Person.  If any
Indemnified Person uses in-house counsel for any purpose for which any Credit
Party is responsible to pay or indemnify, each Credit Party expressly agrees
that its indemnification obligations include reasonable charges for the costs
allocable for such work of such in-house counsel, subject to the provisions
governing payment of in-house counsel and outside counsel fees set forth inSection
15.7(b).  Lender agrees to
give Credit Parties reasonable notice of any event of which Lender becomes aware
for which indemnification may be required under thisSection
15.4, and Lender
may elect (but is not obligated) to direct the defense thereof, provided that
the selection of counsel shall be subject to Credit Parties’ consent, which
consent shall not be unreasonably withheld or delayed.  Any
Indemnified Person may, in its reasonable discretion, take such actions as it
deems necessary and appropriate to investigateordefend any event or take
other remedial or corrective actions with respect thereto as may be necessary
for the protection of such Indemnified Person or the Collateral.Notwithstanding the
foregoing, if any insurer agrees to undertake the defense of an event (an
“Insured
Event”), Lender
agrees not to exercise its right to select counsel to defend the event if that
would cause any Credit Party’s insurer to deny coverage; provided, however, that
Lender reserves the right to retain counsel to represent any Indemnified Person
with respect to an Insured Event at its sole cost and expense.  To the
extent that Lender obtains recovery from a third party other than an Indemnified
Person of any of the amounts that any Credit Party has paid to Lender pursuant
to the indemnity set forth in thisSection
15.4, then
Lender shall promptly pay to such Credit Party the amount of such
recovery.


55




15.5.
            Notice




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




15.6.
            Severability;
      Captions; Counterparts; Facsimile
Signatures




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




15.7.
            Expenses




(a)           Credit
Parties shall pay, whether or not the Closing occurs, all costs and expenses
incurred by Lender and/or its Affiliates, including, without limitation,
documentation and diligence fees and expenses, all search, audit, appraisal,
recording, professional and filing fees and expenses and all other out-of-pocket
charges and expenses (including, without limitation, UCC and judgment and tax
lien searches and UCC filings and fees for post-Closing UCC and judgment and tax
lien searches and wire transfer fees and audit expenses), and reasonable
attorneys’ fees and expenses, (i) in any effort to enforce, protect or collect
payment of any Obligation or to enforce any Loan Document or any related
agreement, document or instrument, (ii) in connection with entering into,
negotiating, preparing, reviewing and executing the Loan Documents and/or any
related agreements, documents or instruments, (iii) arising in any way out of
administration of the Obligations, (iv) in connection with instituting,
maintaining, preserving, enforcing and/or foreclosing on Lender’s Liens in any
of the Collateral or securities pledged under the Loan Documents, whether
through judicial proceedings or otherwise, (v) in defending or prosecuting any
actions, claims or proceedings arising out of or relating to Lender’s
transactions with Credit Parties, (vi) in seeking, obtaining or receiving any
advice with respect to its rights and obligations under any Loan Document and
any related agreement, document or instrument, and/or (vii) in connection with
any modification, restatement, supplement, amendment, waiver or extension of any
Loan Document and/or any related agreement, document or
instrument.  All of the foregoing shall be charged to Credit Parties’
account and shall be part of the Obligations, and each such amount so charged
shall be deemed an Advance under the Revolving Facility and added to the
Obligations, regardless of whether a Revolver Termination has
occurred.  Lender agrees that, upon written request of Borrower, it
will provide a summary description of any legal matters which were charged to
the account of the Borrower.




(b)           If
Lender or any of its Affiliates uses in-house counsel for any purpose under any
Loan Document for which Credit Parties are responsible to pay or indemnify,
Credit Parties expressly agree that their Obligations include reasonable charges
for such work commensurate with the allocable costs of such in-house
counsel.  Notwithstanding anything to the contrary contained in this
Agreement, so long as no Default or Event of Default has occurred and is
continuing, Borrower shall not be required to pay or indemnify Lender for the
allocable cost of the work of staff counsel if Lender has engaged outside
counsel for the same work.


56




15.8.
            Entire
      Agreement




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




15.9.
            Lender
      Approvals




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




15.10.
            Confidentiality
      and Publicity




(a)           Lender
understands and acknowledges that this Agreement is a material obligation of the
Credit Parties, and as such, must be filed with the Securities and Exchange
Commission (“SEC”) and
through such action will become publicly available.  Credit Parties
agree to submit to Lender and Lender reserves the right to review and approve
all materials that Credit Parties or any of their Affiliates prepares that
contain Lender’s name or describe or refer to any Loan Document, any of the
terms thereof or any of the transactions contemplated
thereby.  Notwithstanding the foregoing, Lender acknowledges and
agrees that that a description of the principle terms of this Agreement will be
required to be stated in the Guarantor’s quarterly and annual reports filed with
the SEC, and Guarantor and its counsel shall have the final authority in any
wording so disclosed; provided, however, that Guarantor will attempt to clear
such language with the Lender prior to any filing.  Lender further
acknowledges and agrees that once such language in any SEC filings has been
finalized, it can continue to appear in subsequent SEC filings without any
further review by Lender.  Credit Parties shall not, and shall not
permit any of their Affiliates to, use Lender’s name (or the name of any of
Lender’s Affiliates) in connection with any of its business operations,
including without limitation, advertising, marketing or press releases or such
other similar purposes, without Lender’s prior written
consent.  Lender similarly agrees that it shall not, and shall not
permit any of its Affiliates to, use Credit Parties names or logos (or the names
of any Credit Parties’ Affiliates) in any advertising, marketing or press
releases or such similar purposes, without Credit Parties prior written
consent.  Nothing contained in any Loan Document is intended to permit
or authorize Credit Parties or any of their Affiliates to contract on behalf of
Lender.




(b)           Credit
Parties hereby agree that Lender or any Affiliate of Lender may disclose any and
all information concerning the Loan Documents, as well as any information
regarding Credit Party and its operations, received by Lender in connection with
the Loan Documents to its lenders or funding or financing
sources.


57




15.11.
            Release
      of Lender




Notwithstanding
any other provision of any Loan Document, each Credit Party voluntarily,
knowingly, unconditionally and irrevocably, with specific and express intent,
for and on behalf of itself,  its managers, members, directors,
officers, employees, stockholders, Affiliates, agents, representatives,
accountants, attorneys, successors and assigns and their respective Affiliates
(collectively, the “Releasing
Parties”), hereby fully and completely releases and forever discharges
the Indemnified Parties and any other Person or Insurer which may be responsible
or liable for the acts or omissions of any of the Indemnified Parties, or who
may be liable for the injury or damage resulting therefrom (collectively, with
the Indemnified Parties, the “Released Parties”), of and
from any and all actions, causes of action, damages, claims, obligations,
liabilities, costs, expenses and demands of any kind whatsoever, at law or in
equity, matured or unmatured, vested or contingent, that any of the Releasing
Parties has against any of the Released Parties as of the date of the
Closing.  Each Credit Party acknowledges that the foregoing release is
a material inducement to Lender’s decision to extend to such Credit Party the
financial accommodations hereunder and has been relied upon by Lender in
agreeing to make the Loans.




15.12.
            Agent




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




15.13.
            [Reserved]




15.14.
            Amendment
      and Restatement




This
Agreement amends and restates in its entirety the Original Credit
Agreement.  This Agreement and the other Loan Documents govern the
present relationship between the Credit Parties and the Lender.  With
respect to matters relating to the period prior to the Closing Date, all of the
provisions of the Original Credit Agreement and the security agreements, pledge
agreements, guarantees, and other documents, instruments and agreements executed
in connection therewith, are each ratified and confirmed and shall remain in
full force and effect.  This Agreement, however, is in no way
intended, nor shall it be construed, to affect, replace, impair or extinguish
the creation, attachment, perfection or priority of the security interests in,
and other Liens on, the Collateral, which security interests and other Liens
each of the Credit Parties, by this Agreement, acknowledges, reaffirms and
confirms to the Lender.  In addition, except as otherwise provided
herein, all obligations and liabilities and indebtedness created or existing
under, pursuant to, or as a result of, the Original Credit Agreement shall
continue in existence within the definition of “Obligations” under this
Agreement, which obligations, liabilities and indebtedness the Credit Parties,
by this Agreement, acknowledge, reaffirm and confirm.  Credit Parties
agree that any outstanding commitment or other obligation to make advances or
otherwise extend credit or credit support to any Credit Party pursuant to the
Original Credit Agreement is superseded by, and renewed and consolidated under,
this Agreement.  Credit Parties represent and warrant that none of
them have assigned or otherwise transferred any rights arising under the
Original Credit Agreement.  In order to induce the Lender to enter
into this Agreement on the Closing Date, each Credit Party hereby represents,
warrants and covenants to Lenders that it has determined that each Credit Party
will benefit specifically and materially from the amendment and restatement of
the Original Credit Agreement pursuant to this Agreement on the Closing
Date.


58




[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]


59


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




BORROWER:NEOGENOMICS
      LABORATORIES, INC.,a
      Florida corporationBy:
                                          /s/ George CardozaName:
                                          George CardozaIts:
                                          CFOGUARANTOR:NEOGENOMICS,
      INC.,a
      Nevada corporationBy:
                                          /s/ George CardozaName:
                                          George CardozaIts:
                                          CFOAttention:Telephone:Facsimile:E-Mail:LENDER:CAPITALSOURCE
      FINANCE LLCBy:
                                          /s/ Arturo VelezName:
                                          Arturo VelezIts:
                                          Authorized signatory4445
      Willard Avenue, 12th
      FloorChevy
      Chase, MD  20815Attention:  Healthcare
      Finance Group, Portfolio ManagerTelephone:  (301)
      841-2700Facsimile:    (301)
      841-2340E-Mail:
      _________________________________


60




EXHIBITS




Exhibit
      A
                  Form
      of Borrowing CertificateExhibit
      B
                  Form
      of Compliance CertificateExhibit
      C
                  Form
      of Solvency CertificateExhibit
      D
                  Form
      of Officer’s
Certificate







SCHEDULES




Schedule
      2.3
                  Borrower’s
      AccountsSchedule
      5.3A
                  Proceedings
      or InvestigationsSchedule
      5.3B
                  Third-Party
      ContractsSchedule
      7.11
                  Intellectual
      PropertySchedule
      7.15A
                  Existing
      Indebtedness, Investments, Guarantees and Certain
  ContractsSchedule
      7.15B
                  Indebtedness
      with a Maturity Date During the TermSchedule
      7.16
                  Other
      AgreementsSchedule
      7.17
                  InsuranceSchedule
      7.18A
                  Borrower’s
      NamesSchedule
      7.18B
                  Places
      of Business and Chief Executive OfficesSchedule
      7.18B
                  Borrower’s
      LocationsSchedule
      7.2
                  Consents,
      Approvals or AuthorizationsSchedule
      7.3
                  Capitalization;
      List of SubsidiariesSchedule
      7.4A
                  LeasesSchedule
      7.4B
                  Deposit
      Accounts and Investment AccountsSchedule
      7.5
                  Affiliate
      Contracts/AgreementsSchedule
      7.6
                  LitigationSchedule
      7.8
                  Tax
      MattersSchedule
      8.8
                  Post-Closing
      MattersSchedule
      9.2
                  IndebtednessSchedule
      9.3
                  Liens





ANNEX
I




FINANCIAL
COVENANTS




1.           
Minimum Fixed Charge Coverage Ratio (Adjusted EBITDA/Fixed Charges)




For the Test Period ending on the last
day of each calendar month the Fixed Charge Coverage Ratio shall not be less
than 1.25 to 1.0.




2.           
Minimum Cash Velocity




For each Test Period, measured as of
the last day of each calendar month ending after March 31, 2010, Collections of
Accounts of Borrowers collectively shall not be less than 87.5% of Borrowers’
net revenue for the Revenue Period less the bad debt
expense recognized on the income statement for such Revenue Period.




For
purposes of the covenants set forth in this Annex I, the terms listed below
shall have the following meanings:





“Adjusted EBITDA”
shall mean, for any period, the sum, without duplication, of the following for
Borrower collectively on a consolidated basis:  Net Income, plus, (a) Interest
Expense, (b) taxes on income, whether paid, payable or accrued, (c) depreciation
expense, (d) amortization expense, (e) all other non-cash, recurring charges and
expenses, excluding accruals for cash expenses made in the ordinary course of
business, (f) loss from any sale of assets, other than sales in the ordinary
course of business, (g) non-cash stock option and warrant based compensation
expense  and (h) other extraordinary or non-recurring charges that
would not have otherwise been incurred in ordinary course of business as
determined in accordance to GAAP, including but not limited to, severance
payments up to the amounts permitted in Section 9.6, minus (a) gains from
any sale of assets, other than sales in the ordinary course of business and (b)
other extraordinary or non-recurring gains, in each case determined in
accordance with GAAP.




“Cash Equivalents”
shall mean, as of any date of determination, (a) securities issued, or directly
and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six
months from the date of acquisition, (b) U.S. dollar denominated time deposits,
certificates of deposit and bankers’ acceptances of (i) any domestic commercial
bank of recognized standing having capital and surplus in excess of
$500,000,000, or (ii) any bank (or the parent company of such bank) whose
short-term commercial paper rating from Standard & Poor’s Ratings Services
(“S&P”) is at least
A-2 or the equivalent thereof or from Moody’s Investors Service, Inc. (“Moody’s”) is at least P-2 or
the equivalent thereof in each case with maturities of not more than six months
from the date of acquisition (any bank meeting the qualifications specified in
clauses (b)(i) or (ii), an “Approved Bank”),
(c) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a), above, entered into
with any Approved Bank, (d) commercial paper issued by any Approved Bank or by
the parent company of any Approved Bank and commercial paper issued by, or
guaranteed by, any industrial or financial company with a short-term commercial
paper rating of at least A-2 or the equivalent thereof by S&P or at least
P-2 or the equivalent thereof by Moody’s, or guaranteed by any industrial
company with a long term unsecured debt rating of at least A or A2, or the
equivalent of each thereof, from S&P or Moody’s, as the case may be, and in
each case maturing within six months after the date of acquisition and (e)
investments in money market funds substantially all of whose assets are
comprised of securities of the type described in clauses (a) through (d)
above.







“Fixed Charge Coverage
Ratio” shall mean, as of any date of determination, for Borrower
collectively on a consolidated basis, the ratio of (a) the sum of Adjusted
EBITDA for the Test Period ended as of such date plus an amount equal to the sum
of unrestricted cash on hand, unrestricted Cash Equivalents and unused
Availability as of the last day of the Test Period ended as of such date, to (b)
Fixed Charges for the Test Period ended as of such date.




“Fixed Charges” shall
mean, for any period, the sum of the following for Borrower collectively on a
consolidated basis for such period:  (a) Total Debt Service, (b)
un-financed Capital Expenditures paid in cash, (c) income taxes paid in cash or
accrued, and (d) dividends and Distributions paid or accrued or declared (except
for Accumulated Distributions from previous Accumulated Distribution Fiscal
Quarters); reduced by the amount of any equity contributions received by the
Borrower in cash during such period; provided that the amount of such reduction
shall not exceed the amount of unfinanced Capital Expenditures paid for by
Borrower in cash during such period.




“Interest Expense”
shall mean, for any period, for Borrower collectively on a consolidated basis
for such period: (a) total interest expense (including without limitation
attributable to Capital Leases in accordance with GAAP), (b) financing fees with
respect to all outstanding Indebtedness excluding amortization of capitalized
financing fees associated with the initial closing of this Agreement to interest
expense in accordance with GAAP, and commissions, discounts and other fees owed
with respect to letters of credit and bankers’ acceptance financing and net
costs under Interest Rate Agreements.   Notwithstanding the
foregoing Interest Expense shall not include any amortization of non-cash
warrant compensation that may be a result of warrants attached to any debt
instrument.




“Interest Rate
Agreement” shall mean any interest rate swap, cap or collar agreement or
other similar agreement or arrangement designed to hedge the position with
respect to interest rates.




“Net Income” shall
mean, for any period, the net income (or loss) of Borrower collectively on a
consolidated basis determined in accordance with GAAP; provided, however, that there
shall be excluded (i) the income (or loss) of any Person in which any other
Person (other than Borrower) has a joint interest, except to the extent of the
amount of dividends or other distributions actually paid to a Borrower by such
Person, (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Borrower or is merged into or consolidated with a Borrower or that
Person’s assets are acquired by a Borrower, (iii) the income of any Subsidiary
of Borrower to the extent that the declaration or payment of dividends or
similar distributions of that income by that Subsidiary is not at the time
permitted by operation of the terms of the charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) compensation expense resulting from the issuance of
capital stock, warrants, stock options or stock appreciation rights issued to
former or current employees or consultants, including officers, of a Borrower,
or the exercise of such options or rights, in each case to the extent the
obligation (if any) associated therewith is not expected to be settled by the
payment of cash by a Borrower or any affiliate thereof, and
(v) compensation expense resulting from the repurchase of capital stock,
options and rights described in clause (iv) of this definition of Net
Income.




“Revenue Period” shall
mean, for any Test Period, the three calendar month period (taken as one
accounting period) commencing the first day of the calendar month of the second
month immediately preceding the first month of the Test Period.  By
way of example, the Revenue Period for the Test Period ending June 30, 2010
shall consist of the three calendar months ending February 28, 2010, March 31,
2010 and April 30, 2010.




“Test Period” shall
mean the three most recent calendar months then ended (taken as one accounting
period), or such other period as specified in the Agreement or any Annex
thereto.


ii




“Total Debt Service”
shall mean, for any period, the sum of the following for Borrower collectively
on a consolidated basis: (i) payments of principal on Indebtedness for such
period, plus
(ii) Interest Expense for such period.




iii







AMENDED
AND RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT





between





NeoGenomics
Laboratories, Inc., a Florida Corporation, as Borrower




and




NeoGenomics,
Inc., a Nevada corporation, as Guarantor




and




CAPITALSOURCE
FINANCE LLC





Dated
as of





April
26, 2010










TABLE
OF CONTENTS





Page1.
                                        DEFINITIONS
                                        
                                        11.1.
                                        General
      Terms
                                        
                                        11.2.
                                        Definitions
                                        
                                        22.
                                        ADVANCES,
      PAYMENT AND INTEREST
                                        
                                        172.1.
                                        The
      Revolving Facility
                                        
                                        172.2.
                                        The
      Revolving Loans; Maturity
                                        
                                        182.3.
                                        Revolving
      Facility Disbursements; Requirement to Deliver Borrowing
      Certificate
                                        
                                        182.4.
                                        Promise
      to Pay; Manner of Payment
                                        
                                        182.5.
                                        Repayment
      of Excess Advances
                                        
                                        182.6.
                                        Payments
      by Lender
                                        
                                        192.7.
                                        Evidence
      of Loans
                                        
                                        193.
                                        INTEREST
      AND FEES
                                        
                                        203.1.
                                        Interest
      on the Revolving Facility
                                        
                                        203.2.
                                        Commitment
      Fee
                                        
                                        203.3.
                                        Unused
      Line Fee
                                        
                                        203.4.
                                        Collateral
      Management Fee
                                        
                                        203.5.
                                        Computation
      of Fees; Lawful Limits
                                        
                                        203.6.
                                        Default
      Rate of Interest
                                        
                                        214.
                                        GRANT
      OF SECURITY INTERESTS
                                        
                                        214.1.
                                        Security
      Interest; Collateral
                                        
                                        214.2.
                                        Power
      of Attorney
                                        
                                        214.3.
                                        Further
      Assurances
                                        
                                        225.
                                        ADMINISTRATION
      AND MAINTENANCE OF COLLATERAL
                                        
                                        235.1.
                                        Revolving
      Facility Collections; Repayment; Borrowing Availability and
      Lockbox
                                        
                                        235.2.
                                        Accounts
                                        
                                        235.3.
                                        Healthcare
                                        
                                        245.4.
                                        Medicare
      and Medicaid Account Debtors and Third-Party Payor
    Information
                                        
                                        245.5.
                                        Collateral
      Administration
                                        
                                        256.
                                        CONDITIONS
      PRECEDENT
                                        
                                        266.1.
                                        Conditions
      to Initial Advance and Closing
                                        
                                        266.2.
                                        Conditions
      to Each Advance
                                        
                                        287.
                                        REPRESENTATIONS
      AND WARRANTIES
                                        
                                        287.1.
                                        Organization
      and Authority
                                        
                                        287.2.
                                        Loan
      Documents
                                        
                                        297.3.
                                        Subsidiaries,
      Capitalization and Ownership Interests
                                        
                                        297.4.
                                        Properties
                                        
                                        297.5.
                                        Other
      Agreements
                                        
                                        307.6.
                                        Litigation
                                        
                                        307.7.
                                        Environmental
      Matters
                                        
                                        307.8.
                                        Potential
      Tax Liability; Tax Returns; Governmental Reports
                                        
                                        317.9.
                                        Financial
      Statements and Reports
                                        
                                        327.10.
                                        Compliance
      with Law
                                        
                                        327.11.
                                        Intellectual
      Property
                                        
                                        33




i





7.12.
                        Licenses
      and Permits; Labor
                        
                        337.13.
                        No
      Default
                        
                        337.14.
                        Disclosure
                        
                        337.15.
                        Existing
      Indebtedness; Investments, Guarantees and Certain
Contracts
                        
                        337.16.
                        Other
      Agreements
                        
                        347.17.
                        Insurance
                        
                        347.18.
                        Names;
      Location of Offices, Records and Collateral
                        
                        347.19.
                        Lien
      Perfection and Priority
                        
                        357.20.
                        Investment
      Company Act
                        
                        357.21.
                        Regulations
      T, U and X
                        
                        357.22.
                        Survival
                        
                        358.
                        AFFIRMATIVE
      COVENANTS
                        
                        358.1.
                        Financial
      Statements, Borrowing Certificate, Financial Reports and Other
      Information
                        
                        368.2.
                        [Reserved]
                        
                        388.3.
                        Conduct
      of Business and Maintenance of Existence and Assets
                        
                        388.4.
                        Compliance
      with Legal and Other Obligations
                        
                        388.5.
                        Insurance
                        
                        398.6.
                        Books
      and Records
                        
                        398.7.
                        Inspections;
      Periodic Audits and Reappraisals
                        
                        398.8.
                        Further
      Assurances; Post-Closing
                        
                        408.9.
                        Use
      of Proceeds
                        
                        408.10.
                        [Reserved]
                        
                        408.11.
                        [Reserved]
                        
                        408.12.
                        Taxes
      and Other Charges
                        
                        418.13.
                        Payroll
      Taxes
                        
                        418.14.
                        New
      Subsidiaries
                        
                        418.15.
                        [Reserved]
                        
                        429.
                        NEGATIVE
      COVENANTS
                        
                        429.1.
                        Financial
      Covenants
                        
                        429.2.
                        Permitted
      Indebtedness
                        
                        429.3.
                        Permitted
      Liens
                        
                        429.4.
                        Investments;
      New Facilities or Collateral; Subsidiaries
                        
                        429.5.
                        Dividends;
      Redemptions
                        
                        439.6.
                        Transactions
      with Affiliates
                        
                        439.7.
                        Charter
      Documents; Fiscal Year; Dissolution; Use of Proceeds
                        
                        439.8.
                        Truth
      of Statements
                        
                        449.9.
                        IRS
      Form 8821
                        
                        449.10.
                        Transfer
      of Assets
                        
                        449.11.
                        OFAC
                        
                        459.12.
                        Payroll
      Accounts
                        
                        4510.
                        EVENTS
      OF DEFAULT
                        
                        4511.
                        RIGHTS
      AND REMEDIES AFTER DEFAULT
                        
                        4711.1.
                        Rights
      and Remedies
                        
                        4711.2.
                        Application
      of Proceeds
                        
                        4811.3.
                        Rights
      of Lender to Appoint Receiver
                        
                        4811.4.
                        Rights
      and Remedies not Exclusive
                        
                        4911.5.
                        Standards
      for Exercising Remedies
                        
                        49




ii




12.
                          WAIVERS
      AND JUDICIAL PROCEEDINGS
                          
                          5012.1.
                          Waivers
                          
                          5012.2.
                          Delay;
      No Waiver of Defaults
                          
                          5012.3.
                          Jury
      Waiver
                          
                          5012.4.
                          Cooperation
      in Discovery and Litigation
                          
                          5113.
                          EFFECTIVE
      DATE AND TERMINATION
                          
                          5113.1.
                          Termination
      and Effective Date Thereof
                          
                          5113.2.
                          Survival
                          
                          5214.
                          GUARANTY
                          
                          5214.1.
                          Guaranty
                          
                          5214.2.
                          Guaranty
      Absolute
                          
                          5214.3.
                          Subrogation
                          
                          5315.
                          MISCELLANEOUS
                          
                          5415.1.
                          Governing
      Law; Jurisdiction; Service of Process; Venue
                          
                          5415.2.
                          Successors
      and Assigns; Participations; New Lenders
                          
                          5415.3.
                          Application
      of Payments
                          
                          5515.4.
                          Indemnity
                          
                          5515.5.
                          Notice
                          
                          5615.6.
                          Severability;
      Captions; Counterparts; Facsimile Signatures
                          
                          5615.7.
                          Expenses
                          
                          5615.8.
                          Entire
      Agreement
                          
                          5715.9.
                          Lender
      Approvals
                          
                          5715.10.
                          Confidentiality
      and Publicity
                          
                          5715.11.
                          Release
      of Lender
                          
                          5815.12.
                          Agent
                          
                          5815.13.
                          [Reserved]
                          
                          5815.14.
                          Amendment
      and Restatement
                          
                          58




iii