exv10w1



 





Execution
Version




CREDIT AND SECURITY AGREEMENT




     THIS CREDIT AND SECURITY AGREEMENT (as the same may be amended, supplemented, restated or
otherwise modified from time to time, the
“Agreement”) is dated as of November 21, 2007 by and
among (a) NXSTAGE MEDICAL, INC., a Delaware corporation, EIR MEDICAL, INC., a Massachusetts
corporation, MEDISYSTEMS SERVICES CORPORATION, a Nevada corporation, and MEDISYSTEMS CORPORATION, a
Washington corporation, and any additional Borrower that may hereafter be added to this Agreement
(each individually as a “Borrower” and collectively as “Borrowers”), (b) MERRILL LYNCH CAPITAL, a
division of Merrill Lynch Business Financial Services Inc., individually as a Lender, and as
Administrative Agent, Sole Lead Arranger and Sole Bookrunner, and (c) the financial institutions or
other entities from time to time parties hereto, each as a Lender.



RECITALS



Borrowers have requested that Lenders make available to Borrowers the financing facilities as
described herein. Lenders are willing to extend such credit to Borrowers under the terms and
conditions herein set forth.




AGREEMENT



NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, Borrowers, Lenders and Administrative Agent agree as follows:




ARTICLE 1 — DEFINITIONS




     Section 1.1 Certain Defined Terms.



     The following terms have the following meanings:



     “Account Debtor” means “account debtor”, as defined in Article 9 of the UCC, and any other
obligor in respect of an Account.



     “Accounts” means collectively any “account” (as defined in Article 9 of the UCC), any accounts
receivable (whether in the form of payments for services rendered or goods sold, rents, license
fees or otherwise), any “payment intangibles” (as defined in Article 9 of the UCC), and IP Proceeds
and all other rights to payment and/or reimbursement of every kind and description, whether or not
earned by performance.



     “Administrative Agent” means Merrill Lynch, in its capacity as administrative agent for the
Lenders hereunder, as such capacity is established in, and subject to the provisions of,
Article 11, and the successors of Merrill Lynch in such capacity.



     “Affiliate” means with respect to any Person (a) any Person that directly or indirectly
controls such Person, (b) any Person which is controlled by or is under common control with such
controlling Person, and (c) each of such Person’s (other than, with respect to any Lender, any
Lender’s) officers or directors (or Persons functioning in substantially similar roles) and the
spouses, parents, descendants and siblings of such officers, directors or other Persons. As used
in this definition, the term “control” of a Person means the possession, directly or indirectly, of
the power to vote ten percent (10%) or more of any class of voting securities of such Person or to
direct or cause the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.



     “Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering, including
Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the Laws comprising
or implementing the Bank Secrecy Act, and the Laws administered by OFAC.



     “Approved Fund” means any (i) investment company, fund, trust, securitization vehicle or
conduit that is (or will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar



 









 







extensions of credit in the ordinary course of its business or (ii) any Person (other than a
natural person) which temporarily warehouses loans for any Lender or any entity described in the
preceding clause (i) and that, with respect to each of the preceding clauses (i) and (ii), is
administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) a Person (other than a
natural person) or an Affiliate of a Person (other than a natural person) that administers or
manages a Lender.



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



     “Assignment Agreement” means an agreement substantially in the form of Exhibit A
hereto.



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



     “Base Rate” means the LIBOR Rate.



     “Base Rate Margin” means (a) three and three-quarters percent (3.75%) per annum with respect
to the Revolving Loans and other Obligations (other than the Term Loan), and (b) six percent
(6.00%) per annum with respect to the Term Loan.



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



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



     “Borrower Representative” means Principal Borrower, in its capacity as Borrower Representative
pursuant to the provisions of Section 2.9, or any successor Borrower Representative selected by
Borrowers and approved by Administrative Agent.



     “Borrowing Base” means:



          (a) the product of (i) eighty percent (80.0%) multiplied by (ii) the aggregate amount at such
time of the Eligible Accounts; plus




          (b) thirty three percent (33.0%) multiplied by the value of the Eligible Inventory, valued at
the lower of cost (weighted average) or market (the net realizable value), and after factoring in
all rebates, discounts and other incentives or rewards associated with the purchase of the
applicable Inventory; plus




          (c) twenty five percent (25.0%) multiplied by the Net Book Value of the Eligible FF&E; minus




          (d) the amount of any reserves and/or adjustments provided for in this Agreement.



Notwithstanding the foregoing, in no event shall the components described in subparts (b) and (c)
above comprise more than 50% of the Borrowing Base.




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



2









 





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



     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of
1980.



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



     “Closing Date” means the date of this Agreement.



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



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



     “Commitment Annex” means Annex A to this Agreement.



     “Commitment Expiry Date” means forty two (42) months from the Closing Date.



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



     “Contingent Obligation” means, with respect to any Person, any direct or indirect liability of
such Person: (a) with respect to any Debt of another Person (a “Third Party Obligation”) if the
purpose or intent of such Person incurring such liability, or the effect thereof, is to provide
assurance to the obligee of such Third Party Obligation that such Third Party Obligation will be
paid or discharged, or that any agreement relating thereto will be complied with, or that any
holder of such Third Party Obligation will be protected, in whole or in part, against loss with
respect thereto; (b) with respect to any undrawn portion of any letter of credit issued for the
account of such Person or as to which such Person is otherwise liable for the reimbursement of any
drawing; (c) under any swap agreement or other derivative instrument, to the extent not yet due and
payable; (d) to make take-or-pay or similar payments if required regardless of nonperformance by
any other party or parties to an agreement (excluding purchase contracts for a specified amount of
goods at a specified price in the Ordinary Course of Business and consistent with past practices);
or (e) for any obligations of another Person pursuant to any guaranty or pursuant to any agreement
to purchase, repurchase or otherwise acquire any obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to preserve the
solvency, financial condition or level of income of another Person. The amount of any Contingent
Obligation shall be equal to the amount of the obligation so guarantied or otherwise supported or,
if not a fixed and determinable amount, the maximum amount so guarantied or otherwise supported.



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



     “Credit Exposure” means any period of time during which the Revolving Loan Commitment or Term



3









 







Loan Commitment is outstanding or any Loan, Reimbursement Obligation or other Obligation
remains unpaid or any Letter of Credit or Support Agreement remains outstanding; provided, however,
that no Credit Exposure shall be deemed to exist solely due to the existence of contingent
indemnification liability, absent the assertion of a claim, or the known existence of a claim
reasonably likely to be asserted, with respect thereto.



     “Credit Party” means any guarantor under a guaranty of the Obligations or any part thereof,
any Borrower and any other Person (other than Administrative Agent, a Lender or a participant of a
Lender), whether now existing or hereafter acquired or formed, that becomes obligated as a
borrower, guarantor, surety, indemnitor, pledgor, assignor or other obligor under any Financing
Document; and “Credit Parties” means all such Persons, collectively.



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



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



     “Defaulted Lender” means, so long as such failure shall remain in existence and uncured, any
Lender which shall have failed to make any Loan or other credit accommodation, disbursement,
settlement or reimbursement required pursuant to the terms of any Financing Document.



     “Deposit Account” means a “deposit account” (as defined in Article 9 of the UCC).



     “Deposit Account Control Agreement” means an agreement, in form and substance reasonably
satisfactory to Administrative Agent, among Administrative Agent, any applicable Borrower and each
bank or financial institution in which such Borrower maintains a Deposit Account pursuant to which
Administrative Agent shall obtain “control” (as defined in Article 9 of the UCC) over such Deposit
Account.



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



     “Eligible Accounts” means, subject to the criteria below, an Account of a Borrower, which was
generated in the Ordinary Course of Business, which was generated originally in the name of such
Borrower and not acquired via assignment or otherwise. The net amount of Eligible Accounts at any
time shall be (a) the face amount of such Eligible Accounts as originally billed minus all cash
collections and other proceeds of such Account received from or on behalf of the Account Debtor
thereunder as of such date and any and all returns, rebates, discounts (which may, at
Administrative Agent’s option, be calculated on shortest terms), credits, allowances or excise
taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or
payable in connection with such Accounts at such time, and (b) adjusted by applying percentages
(known as “liquidity factors”) by payor and/or payor class based upon the applicable Borrower’s
actual recent collection history for each such payor and/or payor class in a manner consistent with
Administrative Agent’s underwriting practices and procedures. Such liquidity factors may be
adjusted by Administrative Agent from time to time as warranted by Administrative Agent’s
underwriting practices and procedures and using Administrative Agent’s good faith credit judgment.
Without limiting the generality of the foregoing, no Account shall be an Eligible Account if:



4









 





     (a) the Account remains unpaid more than the lesser of (i) ninety (90) days past the due date
specified in the invoice or (ii) one-hundred twenty (120) days after the applicable goods or
services have been rendered or delivered;



     (b) the Account is subject to any defense, set-off, recoupment, counterclaim, deduction,
discount, credit, chargeback, freight claim, allowance, or adjustment of any kind (but only to the
extent of such defense, set-off, recoupment, counterclaim, deduction, discount, credit, chargeback,
freight claim, allowance, or adjustment), or the applicable Borrower is prohibited from commencing
suit or otherwise enforcing its remedies against the Account Debtor through judicial process;



     (c) if the Account arises from the sale of goods, any part of any goods the sale of which has
given rise to the Account has been returned, rejected, lost, or damaged (but only to the extent
that such goods have been so returned, rejected, lost or damaged);



     (d) if the Account arises from the sale of goods, the sale was not an absolute, bona fide
sale, or the sale was made on consignment or on approval or on a sale-or-return or bill-and-hold or
progress billing basis, or the sale was made subject to any other repurchase or return agreement
(except for return rights for goods on terms consistent with Borrowers’ purchase contracts provided
to Administrative Agent on or prior to the Closing Date), or the goods have not been shipped to the
Account Debtor or its designee or the sale was not made in compliance with applicable Laws;



     (e) if the Account arises from the performance of services, the services have not actually
been performed or the services were undertaken in violation of any law or the Account represents a
progress billing for which services have not been fully and completely rendered;



     (f) the Account is subject to a Lien other than a Permitted Lien, or Administrative Agent does
not have a Lien on such Account;



     (g) the Account is evidenced by Chattel Paper or an Instrument of any kind, or has been
reduced to judgment, unless Administrative Agent has “control” (as defined in Article 9 of the UCC)
over and/or possession of (as applicable depending on whether such asset is tangible or electronic)
such Chattel Paper or Instrument (other than FF&E leases which comply with the terms of Section
9.2(c)(i));



     (h) the Account Debtor is an Affiliate or Subsidiary of a Credit Party, or if the Account
Debtor holds any Debt of a Credit Party (but only to the extent of the Credit Party’s Debt held by
the Account Debtor);



     (i) more than thirty percent (30%) of the aggregate balance of all Accounts owing from the
Account Debtor obligated on the Account are ineligible under subclause (a) above (in which case,
all Accounts from such Account Debtor shall be ineligible);



     (j) without limiting the provisions of subclause (i) above, fifty percent (50%) or more of the
aggregate unpaid Accounts from the Account Debtor obligated on the Account are not deemed Eligible
Accounts under this Agreement for any reason;



     (k) the total unpaid Accounts of (i) Henry Shein, Inc. exceed 45% and (ii) any other single
Account Debtor (other than DaVita) obligated on the Account exceed twenty percent (20%), in each
case, of the net amount of all Eligible Accounts owing from all Account Debtors (but only the
amount of the Accounts of such Account Debtor exceeding such limitation shall be considered
ineligible);



     (l) any covenant, representation or warranty contained in the Financing Documents with respect
to such Account has been breached in any material respect;



     (m) the Account is unbilled or has not been invoiced to the Account Debtor in accordance with
the procedures and requirements of the applicable Account Debtor;



5









 





     (n) the Account is an obligation of an Account Debtor that is the federal (or local)
government or a political subdivision thereof, unless Administrative Agent has agreed to the
contrary in writing and Administrative Agent has received from the Account Debtor the
acknowledgement of Administrative Agent’s notice of assignment of such obligation pursuant to this
Agreement but only to the extent (i) any such Account exceeds 2% and (ii) all such Accounts exceed
5%, in each case of (i) and (ii), of the net amount of all Eligible Accounts owing from all Account
Debtors;



     (o) the Account is an obligation of an Account Debtor that has suspended its business, made a
general assignment for the benefit of creditors, is unable to pay its debts as they become due or
as to which a petition has been filed (voluntary or involuntary) under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors;



     (p) the Account Debtor has its principal place of business or executive office outside the
United States;



     (q) the Account is payable in a currency other than United States dollars (but only to the
extent the Account is so payable);



     (r) the Account Debtor is an individual;



     (s) the Borrower owning such Account has not signed and delivered to Administrative Agent
notices, in the form requested by Administrative Agent, directing the Account Debtors to make
payment to the applicable Lockbox Account;



     (t) the Account includes late charges or finance charges (but only such portion of the Account
shall be ineligible);



     (u) the Account arises out of the sale of any Inventory upon which, immediately prior to the
sale, any other Person holds a Lien or asserts a lien through a filing in a court or official
registry; or



     (v) the Account or Account Debtor fails to meet such other specifications and requirements
which may from time to time be established by Administrative Agent in its good faith credit
judgment and discretion; provided, however, that if such other specifications or requirements have
not previously been imposed by Administrative Agent and would have the effect of excluding from
eligibility an entire class of Accounts that had previously been Eligible Accounts (as opposed to
exclusion of specific Accounts), then such other specifications or requirements shall not take
effect until that date which is five (5) days after Administrative Agent has given notice to
Principal Borrower of such other specifications or requirements.


For purposes of the definition of Eligible Account only, Account shall only mean an account
receivable.




     “Eligible Assignee” means (a) any Lender and any Affiliate of any Lender, (b) any commercial
bank, savings and loan association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act) which extends credit or buys loans
as one of its businesses, including insurance companies, mutual funds, lease financing companies
and commercial finance companies, in each case, which has a rating of BBB or higher from S&P and a
rating of Baa2 or higher from Moody’s at the date that it becomes a Lender and in each case of
clauses (a) and (b), which, through its applicable lending office, is capable of lending to
Borrowers without the imposition of any withholding or similar taxes, and (c) any other Person or
party consented to by each Lender (such consent not to be unreasonably withheld or delayed);
provided, that no Person proposed to become a Lender after the Closing Date and determined
by Administrative Agent after due inquiry to be (1) any Person engaged in substantially the same
business as the Borrowers unless an Event of Default under Sections 10.1 (e) or (f) shall have
occurred or Required Lenders shall have accelerated the Loans, or (2) any Person acting in the
capacity of a vulture fund or distressed debt purchaser, shall be an Eligible Assignee, and no
Person or Affiliate of such Person proposed to become a Lender after the Closing Date and that
holds any subordinated debt or stock issued by Borrower shall be an Eligible Assignee.
Notwithstanding the foregoing, in connection with assignments by a Lender due to a forced
divestiture at the request of any regulatory agency or a sale by such Lender



6









 







of a material amount of its assets, the restrictions set forth herein shall not apply and Eligible
Assignee shall mean any Person or party.



     “Eligible FF&E” means FF&E owned by any Borrower and used by any Borrower in the Ordinary
Course of Business that Administrative Agent, in its good faith credit judgment and discretion,
deems to be Eligible FF&E. Without limiting the generality of the foregoing, no FF&E shall be
Eligible FF&E if:



     (a) such FF&E is not owned by Borrowers free and clear of all Liens and rights of any other
Person;



     (b) such FF&E is covered by a negotiable document of title, unless such document has been
delivered to Administrative Agent with all necessary endorsements, free and clear of all Liens
except those in favor of Administrative Agent;



     (c) such FF&E is obsolete, materially shopworn or damaged, is of substandard quality or is not
of good quality, free from any material defects that affect its use;



     (d) such FF&E is not subject to a first priority Lien in favor of Administrative Agent;



     (e) such FF&E consists of goods that can be transported or sold only with licenses that are
not readily available or of any substances defined or designated as hazardous or toxic waste,
hazardous or toxic material, hazardous or toxic substance, or similar term, by any environmental
law or any Governmental Authority applicable to Borrowers or their business, operations or assets;



     (f) such FF&E is not covered by casualty insurance reasonably acceptable to Administrative
Agent;



     (g) any covenant, representation or warranty contained in the Financing Documents with respect
to such FF&E has been breached in any material respect;



     (h) such FF&E is located on premises (other than the premises of a customer or patient) with
respect to which Agent has not received a landlord, warehouseman, bailee and mortgagee letter
acceptable in form and substance to Administrative Agent;



     (i) such FF&E does not meet all applicable standards imposed by any Governmental Authority
with respect to its use or ownership (as the case may be);



     (j) such FF&E is rented or leased by or on behalf of Borrowers from any third party;



     (k) such FF&E is subject to any licensing, patent, royalty, trademark, trade name or copyright
agreement with any third parties which restricts the ability of the Administrative Agent or any
Lender to sell or otherwise dispose of such FF&E; or



     (l) such FF&E fails to meet such other specifications and requirements which may from time to
time be established by Administrative Agent in its good faith credit judgment; provided, however,
that if such other specifications or requirements have not previously been imposed by
Administrative Agent and would have the effect of excluding from eligibility an entire class of
FF&E that had previously been Eligible FF&E (as opposed to exclusion of specific FF&E), then such
other specifications or requirements shall not take effect until that date which is five (5) days
after Administrative Agent has given notice to Principal Borrower of such other specifications or
requirements. Notwithstanding the foregoing, the valuation of FF&E shall be subject to any legal
limitations on sale and transfer of such FF&E.



     “Eligible Inventory” means Inventory owned by Borrowers and acquired and dispensed by
Borrowers in the Ordinary Course of Business that Administrative Agent, in its good faith credit
judgment and discretion, deems to be Eligible Inventory. Without limiting the generality of the
foregoing, no Inventory shall be Eligible Inventory if:



7









 





     (a) such Inventory is not owned by Borrowers free and clear of all Liens and rights of any
other Person (including the rights of a purchaser that has made progress payments and the rights of
a surety that has issued a bond to assure Borrowers’ performance with respect to that Inventory);



     (b) such Inventory is placed on consignment or is in transit;



     (c) such Inventory is covered by a negotiable document of title, unless such document has been
delivered to Administrative Agent with all necessary endorsements, free and clear of all Liens
except those in favor of Administrative Agent;



     (d) such Inventory is excess, obsolete, unsalable, materially shopworn, seconds, materially
damaged, unfit for sale, unfit for further processing, is of substandard quality or is not of good
and merchantable quality, free from any defects;



     (e) such Inventory consists of display items or packing or shipping materials, manufacturing
supplies or Work-In-Process;



     (f) such Inventory is not subject to a first priority Lien in favor of Administrative Agent;



     (g) such Inventory consists of goods that can be transported or sold only with licenses that
are not readily available or of any substances defined or designated as hazardous or toxic waste,
hazardous or toxic material, hazardous or toxic substance, or similar term, by any environmental
law or any Governmental Authority applicable to Borrowers or their business, operations or assets;



     (h) such Inventory is not covered by casualty insurance reasonably acceptable to
Administrative Agent;



     (i) any covenant, representation or warranty contained in the Financing Documents with respect
to such Inventory has been breached in any material respect;



     (j) such Inventory is located on premises where the aggregate amount of all Inventory (valued
at cost) of Borrowers located thereon is less than $10,000;



     (k) such Inventory is located on premises not owned by a Credit Party and with respect to
which Administrative Agent has not received a landlord, warehouseman, bailee or mortgagee letter
acceptable in form and substance to Administrative Agent;



     (l) such Inventory consists of (A) discontinued items, (B) slow-moving or excess items held in
inventory, or (C) used items held for resale;



     (m) such Inventory does not consist of finished goods;



     (n) such Inventory does not meet all applicable standards imposed by any Governmental
Authority, including with respect to its production, acquisition or importation (as the case may
be);



     (o) such Inventory has an expiration date within the next three (3) months;



     (p) such Inventory consists of products for which Borrowers have a greater than twelve (12)
month supply on hand;



     (q) such Inventory is held for rental or lease by or on behalf of Borrowers from or to any
third party;



     (r) such Inventory is subject to any licensing, patent, royalty, trademark, trade name or
copyright agreement with any third parties, which agreement restricts the ability of Administrative
Agent or any Lender to sell or otherwise dispose of such Inventory; or



8









 





     (s) such Inventory fails to meet such other specifications and requirements which may from
time to time be established by Administrative Agent in its good faith credit judgment; provided,
however, that if such other specifications or requirements have not previously been imposed by
Administrative Agent and would have the effect of excluding from eligibility an entire class of
Inventory that had previously been Eligible Inventory (as opposed to exclusion of specific
Inventory), then such other specifications or requirements shall not take effect until that date
which is five (5) days after Administrative Agent has given notice to Principal Borrower of such
other specifications or requirements. Administrative Agent and Borrowers agree that Inventory
shall be subject to periodic appraisal by Administrative Agent and that valuation of Inventory
shall be subject to adjustment pursuant to the results of such appraisal. Notwithstanding the
foregoing, the valuation of Inventory shall be subject to any legal limitations on sale and
transfer of such Inventory.



     “Environmental Laws” means any and all applicable Laws relating to the environment or the
effect of the environment on human health or to emissions, discharges or releases of pollutants,
contaminants, medical wastes, Hazardous Materials or wastes into the environment, including ambient
air, surface water, ground water or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants,
medical wastes, Hazardous Materials or wastes or the clean-up or other remediation thereof.



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



     “ERISA Affiliate” shall mean any person required to be aggregated with any Borrower or any of
its Subsidiaries under Section 414(b), 414(c), 414(m) or 414(o) of the Code.



     “ERISA Employee Benefit Plan” means any employee benefit plan within the meaning of Section
3(3) (other than a Pension Plan or a Multiemployer Plan) which is maintained or otherwise
contributed to by any Borrower or any Subsidiary of any Borrower or any other ERISA Affiliate.



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



     “Excluded Property” has the meaning set forth in Schedule 9.1.



     “FF&E” means all present and future Field Equipment upon which a first priority security
interest may be perfected under the UCC by the filing of a financing statement and which filed
security interest cannot be primed by some other means of perfection under the UCC, and
specifically excluding any vehicles and any goods or other personal property upon which a lien or
security interest may be acquired or perfected under laws other than the UCC.



     “Field Equipment” means only System One cyclers, Pure Flow systems and all components thereof,
and similar products that are updates thereto or developments thereon, which are leased to end
users.



     “Financing Documents” means this Agreement, any Notes, the Security Documents, any fee letter
among Merrill Lynch and any of the Borrowers relating to the transactions contemplated hereby, any
subordination or intercreditor agreement pursuant to which any Debt and/or any Liens securing such
Debt is subordinated to all or any portion of the Obligations and all other documents, instruments
and agreements related to the Obligations and heretofore executed, executed concurrently herewith
or executed at any time and from time to time hereafter, as any or all of the same may be amended,
supplemented, restated or otherwise modified from time to time.



     “GAAP” means generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and authority within the
United States accounting profession), which are applicable to the circumstances as of the date of
determination.



9









 





     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, and any agency, department or Person exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government and any corporation
or other Person owned or controlled (through stock or capital ownership or otherwise) by any of the
foregoing, whether domestic or foreign.



     “Hazardous Materials” means (a) any “hazardous substance” as defined in CERCLA, (b) any
“hazardous waste” as defined by the Resource Conservation and Recovery Act, (c) asbestos,
(d) polychlorinated biphenyls, (e) petroleum, its derivatives, by-products and other hydrocarbons,
(f) mold, and (g) any other pollutant, medical waste, toxic, radioactive, caustic or otherwise
hazardous substance regulated under Environmental Laws.



     “Indemnitees” has the meaning set forth in Section 12.15.



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



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



     “IP Proceeds” has the meaning set forth in Schedule 9.1.



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



     “LC Issuer” means one or more banks, trust companies or other Persons in each case expressly
identified by Administrative Agent from time to time, in its sole discretion, as an LC Issuer for
purposes of issuing one or more Letters of Credit hereunder. Without limitation of Administrative
Agent’s discretion to identify any Person as an LC Issuer, no Person shall be designated as an LC
Issuer unless such Person maintains reporting systems acceptable to Administrative Agent with
respect to letter of credit exposure and agrees to provide regular reporting to Administrative
Agent satisfactory to it with respect to such exposure.



     “Lender” means each of (a) Merrill Lynch, in its capacity as a lender hereunder, (b) each
other Person party hereto in its capacity as a lender hereunder, (c) each other Person that becomes
a party hereto as Lender pursuant to Section 12.6, and (d) the respective successors of all of the
foregoing, and “Lenders” means all of the foregoing.



     “Lender Letter of Credit” means a Letter of Credit issued by an LC Issuer that is also, at the
time of issuance of such Letter of Credit, a Lender.



     “Letter of Credit” means a standby letter of credit issued for the account of any Borrower by
an LC Issuer which expires by its terms within one year after the date of issuance.
Notwithstanding the foregoing, a Letter of Credit may provide for automatic extensions of its
expiry date for one or more
successive one (1) year periods




10












 




provided that the LC Issuer that issued such Letter of Credit has the right to terminate such
Letter of Credit on each such annual expiration date.




     “Letter of Credit Liabilities” means, at any time of calculation, the sum of (a) without
duplication, the amount then available for drawing under all outstanding Lender Letters of Credit
and all Supported Letters of Credit, in each case without regard to whether any conditions to
drawing thereunder can then be met, plus (b) without duplication, the aggregate unpaid amount of
all reimbursement obligations in respect of previous drawings made under all such Lender Letters of
Credit and Supported Letters of Credit.



     “LIBOR Rate” means a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) equal to (a) the rate of interest which is identified and normally published by Bloomberg
Professional Service Page BBAM 1 as the offered rate for loans in United States dollars for the
period of one (1) month under the caption British Bankers Association LIBOR Rates as of 11:00 a.m.
(London time) as adjusted on a daily basis and effective on the second full Business Day after each
such day (unless such date is not a Business Day, in which event the next succeeding Business Day
will be used); divided by (b) the sum of one minus the daily average during the preceding month of
the aggregate maximum reserve requirement (expressed as a decimal) then imposed under Regulation D
of the Board of Governors of the Federal Reserve System (or any successor thereto) for
“Eurocurrency Liabilities” (as defined therein). If Bloomberg Professional Service (or another
nationally-recognized rate reporting source acceptable to Administrative Agent) no longer reports
the LIBOR or Administrative Agent determines in good faith that the rate so reported no longer
accurately reflects the rate available to Administrative Agent in the London Interbank Market or if
such index no longer exists or if Page BBAM 1 no longer exists or accurately reflects the rate
available to Administrative Agent in the London Interbank Market, Administrative Agent may select a
comparable replacement index or replacement page, as the case may be, that has been accepted as
comparable by the London Interbank Market.



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



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



     “Loan(s)” means the Term Loan, the Revolving Loans and each and every advance under the Term
Loan, the Revolving Loans or any combination of the foregoing, as the context may require. All
references herein to the “making” of a Loan or words of similar import shall mean, with respect to
the Term Loan, the making of any advance in respect of a Term Loan.



     “Lockbox” has the meaning set forth in Section 2.11.



     “Lockbox Account” means an account or accounts maintained at the Lockbox Bank into which
collections of Accounts are paid.



     “Lockbox Bank” has the meaning set forth in Section 2.11.



     “Material Adverse Effect” means with respect to any event, act, condition or occurrence of
whatever nature (including any adverse determination in any litigation, arbitration, or
governmental investigation or proceeding), whether singly or in conjunction with any other event or
events, act or acts, condition or conditions, occurrence or occurrences, whether or not related, a
material adverse change in, or a material adverse effect upon, any of (i) the financial condition,
operations, business or properties of the Credit Parties taken as a whole, (ii) the rights and
remedies of Administrative Agent or Lenders under any Financing Document, or the ability of the
Credit Parties to perform any of their material obligations under any Financing Document to which
any is a party, (iii) the legality, validity or enforceability of any Financing Document, (iv) the
existence, perfection or priority of any



11









 







security interest granted in any Financing Document, or (v) the value of any material
Intellectual Property or material Collateral.



     “Material Contracts” means (a) employment agreements covering the management of any Credit
Party, (b) collective bargaining agreements or other similar labor agreements covering any
employees of any Credit Party, (c) agreements for managerial, consulting or similar services to
which any Credit Party is a party or by which it is bound (other than those agreements with
employees and other regularly provided legal and accounting services), (d) agreements regarding any
Credit Party, its assets or operations or any investment therein to which any of its equityholders
is a party or by which it is bound, (e) real estate leases, Intellectual Property licenses,
agreements providing for the sale or transfer of rights to Intellectual Property providing for
ongoing royalty or similar payment to the seller or transferor, or other lease or license
agreements to which any Credit Party is a party, either as lessor or lessee, or as licensor or
licensee (other than “shrinkwrap” licenses or other licenses arising from the purchase of “off the
shelf” products), or seller/transferor or buyer/transferee, (f) customer, distribution, marketing
or supply agreements to which any Credit Party is a party that require payment of more than
$2,000,000 in any year, (g) partnership agreements to which any Credit Party is a general partner
or joint venture agreements to which any Credit Party is a party, (h) third party billing
arrangements to which any Credit Party is a party, or (i) any other agreements or instruments to
which any Credit Party is a party, and the breach, nonperformance or cancellation of which, or the
failure of which to renew, could reasonably be expected to have a Material Adverse Effect, provided
that, in each case with respect to the preceding clauses (a), (c), (d) and (e) such agreement or
contract requires payment of more than $250,000 in any year.



     “Maximum Lawful Rate” has the meaning set forth in Section 2.7.



     “Merrill Lynch” means Merrill Lynch Capital, a division of Merrill Lynch Business Financial
Services Inc., and its successors.



     “Multiemployer Plan” means a multiemployer plan within the meaning of Section 4001(a)(3) of
ERISA.



     “Net Book Value” means book value (which is based on the cost to Borrowers net of
depreciation) calculated in accordance with GAAP.



     “Non-Funding Lender” means a Lender that has delivered a notice to the Administrative Agent
stating that such Lender shall cease making Revolving Loans and/or advances in respect of the Term
Loan (if any portion of the Term Loan Commitment remains unfunded and available at the applicable
time) due to the non-satisfaction of one or more conditions set forth in Article 7, and specifying
any such non-satisfied conditions; provided, however, that any Lender delivering any such notice
shall be a Non-Funding Lender solely over the period commencing on the Business Day following
receipt by Administrative Agent of such notice, and terminating on such date that such Lender has
either revoked the effectiveness of such notice or acknowledged to Administrative Agent the
satisfaction of the condition specified in such notice.



     “Notes” shall have the meaning set forth in Section 2.3.



     “Notice of Borrowing” means a notice of a Responsible Officer of Borrower Representative,
appropriately completed and substantially in the form of Exhibit D hereto.



     “Notice of LC Credit Event” means a notice from a Responsible Officer of Borrower
Representative to Administrative Agent with respect to any issuance, increase or extension of a
Letter of Credit specifying: (a) the date of issuance or increase of a Letter of Credit; (b) the
identity of the LC Issuer with respect to such Letter of Credit; (c) the expiry date of such Letter
of Credit; (d) the proposed terms of such Letter of Credit, including the face amount; and (e) the
transactions that are to be supported or financed with such Letter of Credit or increase thereof.



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



12









 







now or hereafter existing, or due or to become due. In addition to, but without duplication
of, the foregoing, the Obligations shall include, without limitation, all obligations, liabilities
and indebtedness arising from or in connection with all Support Agreements and all Lender Letters
of Credit.



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



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



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



     “Organizational Documents” means, with respect to any Person other than a natural person, the
documents by which such Person was organized (such as a certificate of incorporation, certificate
of limited partnership or articles of organization, and including, without limitation, any
certificates of designation for preferred stock or other forms of preferred equity) and which
relate to the internal governance of such Person (such as by-laws, a partnership agreement or an
operating, limited liability or members agreement).



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



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



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



     “Pension Plan” means an employee pension benefit plan (other than a Multiemployer Plan) which
is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of
the Code.



     “Permits” means all governmental licenses, authorizations, provider numbers, supplier numbers,
registrations, permits, drug or device authorizations and approvals, certificates, franchises,
qualifications, accreditations, consents and approvals required under all applicable Laws and
required in order to carry on its business as now conducted.



     “Permitted Acquisitions” means (i) the acquisition of all or substantially all of the assets
of another Person, or of a business line or a unit or division of another Person or (ii) a merger,
consolidation, or amalgamation of any Borrower or Subsidiary (A) that is a transaction among one or
more Borrowers and/or Subsidiaries or (B) is among one or more Borrowers and/or Subsidiaries and
one or more other Persons in which only a Borrower is the surviving entity; provided, that
after giving effect to such acquisition, merger, consolidation, or amalgamation, (1) no Event of
Default has occurred and is continuing or would exist after giving effect to such acquisition,
merger, consolidation, or amalgamation (including, without limitation, a Change in Control), (2)
there shall be no decrease in Borrowers’ tangible net worth after giving effect to such
acquisition, mergers, consolidations, or amalgamations (as confirmed to Administrative Agent
pursuant to a written certificate from a Responsible Officer of Borrowers) and (3) the aggregate
amount of cash paid by Borrowers in connection with such acquisitions, mergers, consolidations, or
amalgamations, in each case, during the term of this Agreement (together with the aggregate amount
of all acquisitions permitted under clause (h) of the definition of Permitted Investments during
the term of this Agreement) shall not exceed $5,000,000 per year or $10,000,000 in the aggregate.



     “Permitted Affiliate” means with respect to any Person (a) any Person that directly or
indirectly controls such Person, and (b) any Person which is controlled by or is under common
control with such controlling Person. As used in this definition, the term “control” of a Person
means the possession, directly or indirectly, of the power to



13









 







vote eighty percent (80%) or more of any class of voting securities of such Person or to
direct or cause the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.



     “Permitted Asset Dispositions” means the following Asset Dispositions provided that at the
time of such Asset Disposition, no Default or Event of Default exists or would result from such
Asset Disposition: (i) dispositions of Inventory and FF&E in the Ordinary Course of Business and
not pursuant to any bulk sale, (ii) the granting of non-exclusive licenses, (iii) Asset
Dispositions of obsolete or worn out property, (iv) other Asset Dispositions of up to $2,000,000 in
the aggregate per fiscal year and (v) dispositions approved by the Required Lenders.



     “Permitted Contest” means, with respect to any tax obligation or other obligation allegedly or
potentially owing from any Borrower to any governmental tax authority or other third party, a
contest maintained in good faith by appropriate proceedings promptly instituted and diligently
conducted and with respect to which such reserve or other appropriate provision, if any, as shall
be required in conformity with GAAP shall have been made on the books and records and financial
statements of the applicable Borrower(s); provided, however, that (a) compliance with the
obligation that is the subject of such contest is effectively stayed during such challenge;
(b) Borrowers’ title to, and its right to use, the Collateral is not adversely affected thereby and
Administrative Agent’s Lien and priority on the Collateral are not adversely affected, altered or
impaired thereby; (c) the Collateral or any part thereof or any interest therein shall not be in
any danger of being sold, forfeited or lost by reason of such contest by Borrowers; (d) to the
extent that the obligation exceeds $100,000, Borrowers have given Administrative Agent notice of
the intent to so contest the obligation and the commencement of such contest and upon request by
Administrative Agent, from time to time, notice of the status of such contest by Borrowers and/or
confirmation of the continuing satisfaction of this definition; and (e) upon a final determination
of such contest, Borrowers shall promptly comply with the requirements thereof.



     “Permitted Contingent Obligations” means: (a) Contingent Obligations arising in respect of
the Debt under the Financing Documents and Letter of Credit Liabilities; (b) Contingent Obligations
outstanding on the date of this Agreement and set forth on Schedule 5.1 (but not including
any refinancings, extensions, increases or amendments to the indebtedness underlying such
Contingent Obligations other than extensions of the maturity thereof without any other change in
terms); (c) Contingent Obligations incurred in the Ordinary Course of Business with respect to
surety and appeal bonds, performance bonds, customs bonds and other similar obligations not to
exceed $500,000 in the aggregate at any time outstanding and with respect to bonds provided to
utilities with respect to utility services provided to Borrowers in the Ordinary Course of
Business; (d) Contingent Obligations resulting from endorsements for collections or deposits in the
Ordinary Course of Business; (e) Contingent Obligations arising from warranty and indemnity claims
resulting from Permitted Asset Dispositions; (f) Contingent Obligations arising from a Permitted
Contest, (g) Contingent Obligations constituting Permitted Liens; (h) Contingent Obligations, if
any, arising under swap agreements or other derivative instruments entered into by a Borrower; and
(i) other Contingent Obligations not permitted by the preceding clauses, not to exceed $250,000 in
the aggregate at any time outstanding.



     “Permitted Distributions” means the following Restricted Distributions: (a) dividends by any
Subsidiary of any Borrower to such parent Borrower; (b) dividends payable solely in common stock;
and (c) repurchases of stock of former employees, directors or consultants pursuant to stock
repurchase agreements so long as an Event of Default does not exist at the time of such repurchase
and would not exist after giving effect to such repurchase, provided that such repurchases do not
exceed $250,000 in the aggregate per fiscal year.



     “Permitted Indebtedness” means: (a) Borrower’s Debt to Administrative Agent and each Lender
under this Agreement and the other Financing Documents; (b) Debt incurred as a result of endorsing
negotiable instruments received in the Ordinary Course of Business; (c) purchase money Debt not to
exceed $2,500,000 at any time (whether in the form of a loan or a lease) used solely to acquire or
refinance equipment used in the Ordinary Course of Business and secured only by such equipment and
related attachments; (d) Debt existing on the date of this Agreement and described on Schedule
5.1 (but not including any refinancings, extensions, increases or amendments to such Debt other
than extensions of the maturity thereof without any other change in terms), provided, that the
letters of credit listed thereon shall be subject to subpart (h) of this definition; (e) Debt, if
any, arising under swap agreements or other derivative instruments; (f) trade accounts payable
arising and paid on a



14









 







timely basis and in the Ordinary Course of Business and obligations to employees, consultants,
independent contractors, and professionals in the Ordinary Course of Business; (g) Debt in the form
of insurance premiums financed through the applicable insurance company; (h) obligations in the
form of letters of credit existing on the Closing Date issued by KeyBank in an amount not to exceed
$1,300,000 (as adjusted to reflect any decrease in the value of Dollars to the Euro) in the
aggregate until such time as such letters of credit are replaced by Letters of Credit or
terminated; (i) Debt among Credit Parties; (j) Debt exclusively among any Subsidiaries of any
Borrower that are not Credit Parties; (k) non-cash Debt among Credit Parties and Subsidiaries that
are not Credit Parties that constitute transfer pricing adjustments in the Ordinary Course of
Business, consistent with past practices; (l) all other Debt from Subsidiaries that are not Credit
Parties to Credit Parties and Investments permitted pursuant to subpart (j) of the definition of
Permitted Investments in an aggregate amount not to exceed $2,500,000 at any time (such amount
shall include any such Debt existing on the Closing Date and described on Schedule 5.1); and (m)
other Debt not permitted by the preceding clauses, not to exceed $250,000 in the aggregate at any
time outstanding.



     “Permitted Investments” means: (a) Investments shown on Schedule 5.5 and existing on
the Closing Date; (b) (i) cash equivalents, and (ii) any similar short term Investments permitted
by Borrowers’ investment policy, as amended from time to time, provided that any new investment
policy (and any material amendments to the current policy or any new policy, including the current
policy) has been approved in writing by Administrative Agent in its reasonable discretion; (c)
Investments consisting of the endorsement of negotiable instruments for deposit or collection or
similar transactions in the Ordinary Course of Business; (d) Investments consisting of loans to
employees, officers or directors relating to the purchase of equity securities of Borrowers or
their Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrowers’
Board of Directors (or other governing body), but the aggregate of all such loans outstanding may
not exceed $250,000 at any time; (e) Investments consisting of relocation loans or advances to
current or prospective employees in an amount not to exceed $200,000 in the aggregate at any time;
(f) Investments (including debt obligations) received in connection with the bankruptcy or
reorganization of customers or suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers arising in the Ordinary Course of Business; (g) Investments
consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers
and suppliers who are not Affiliates, in the Ordinary Course of Business; provided that this
subpart (h) shall not apply to Investments of Borrowers in any Subsidiary; (i) Investments
consisting of Deposit Accounts or Securities Accounts subject to a Deposit Account Control
Agreement or Securities Account Control Agreement in favor of Administrative Agent or which are
otherwise permitted under Section 5.9; (j) Investments by Credit Parties to Subsidiaries that are
not Credit Parties and Debt permitted pursuant to subpart (l) of the definition of Permitted
Indebtedness in an aggregate amount not to exceed $2,500,000 at any time; (k) Investments
consisting of the acquisition of all or substantially all of the capital stock of another Person or
the formation of a new Subsidiary provided that after giving effect to such acquisition, no Event
of Default has occurred and is continuing or would exist after giving effect to such acquisition,
there shall be no decrease in the Borrowers’ tangible net worth after giving effect to such
acquisition (as confirmed to Administrative Agent pursuant to a written certificate from a
Responsible Officer of Borrowers), the aggregate amount of such acquisitions during the term of
this Agreement (together with all Permitted Acquisitions during the term of this Agreement) shall
not exceed $5,000,000 per year or $10,000,000 in the aggregate and the Borrowers shall have
complied with Section 5.5(b); and (l) other Investments in an amount not exceeding $250,000 in the
aggregate, at any time.



     “Permitted Liens” means: (a) deposits or pledges of cash to secure obligations under
workmen’s compensation, social security or similar laws, or under unemployment insurance (but
excluding Liens arising under ERISA) pertaining to a Borrower’s employees, if any; (b) deposits or
pledges of cash to secure bids, tenders, contracts (other than contracts for the payment of money
or the deferred purchase price of property or services), leases, statutory obligations, surety and
appeal bonds and other obligations of like nature arising in the Ordinary Course of Business;
(c) carrier’s, warehousemen’s, mechanic’s, workmen’s, materialmen’s or other like Liens on
Collateral, other than Intellectual Property and any Collateral which is part of the Borrowing
Base, arising in the Ordinary Course of Business with respect to obligations which are not due, or
which are being contested pursuant to a Permitted Contest; (d) Liens on Collateral, other than
Intellectual Property and Accounts, for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or the subject of a Permitted Contest;
(e) attachments, appeal bonds, judgments and other similar Liens on Collateral other than
Intellectual Property and Accounts, for sums not exceeding $250,000 in the aggregate arising in
connection with court proceedings; provided, however, that the execution or other enforcement of
such Liens is effectively stayed and the claims secured thereby are the subject of a Permitted
Contest; (f) Liens and encumbrances in favor of Administrative



15









 







Agent under the Financing Documents; (g) Liens on assets, other than Intellectual Property and
Accounts, to the extent existing on the date hereof and set forth on Schedule 5.2; (h) any
Lien on any equipment securing Debt permitted under subpart (c) of the definition of Permitted
Indebtedness provided, however, that such Lien attaches concurrently with or within twenty (20)
days after the acquisition thereof; (i) any immaterial real estate easement, right of way,
restriction, defect or irregularity in title; and (j) Liens on cash in a segregated account in an
amount not to exceed $1,500,000 to secure Debt permitted pursuant to subpart (h) of Permitted
Indebtedness.



     “Permitted Modifications” means (a) such amendments or other modifications to a Borrower’s
Organizational Documents as are required under this Agreement or by applicable Law and fully
disclosed to Administrative Agent within thirty (30) days after such amendments or modifications
have become effective, (b) such amendments or modifications to a Borrower’s Organizational
Documents (other than those involving a change in the name of a Borrower or involving a
reorganization of the Borrower under the laws of a different jurisdiction) that (i) are necessary
to issue stock otherwise permitted hereunder or (ii) would not otherwise adversely affect the
rights and interests of the Administrative Agent or Lenders and fully disclosed to Administrative
Agent within thirty (30) days after such amendments or modifications have become effective, and (c)
such modifications to the name of a Borrower or involving a reorganization of the Borrower under
the laws of a different jurisdiction so long as the provisions of Section 9.2(a) are fully complied
with prior to the effectiveness of such amendments or modifications.



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



     “Principal Borrower” means NxStage Medical, Inc., a Delaware corporation.



     “Pro Rata Share” means (a) with respect to a Lender’s obligation to make advances in respect
of a Term Loan and such Lender’s right to receive payments of principal and interest with respect
to the Term Loans, the Term Loan Commitment Percentage of such Lender, (b) with respect to a
Lender’s obligation to make Revolving Loans, such Lender’s right to receive payments of principal
and interest with respect thereto, such Lender’s right to receive the unused line fee described in
Section 2.2(b), and such Lender’s obligation to share in Letter of Credit Liabilities and to
receive the related Letter of Credit fee described in Section 2.5(b), the Revolving Loan Commitment
Percentage of such Lender, and (c) for all other purposes with respect to any Lender, the
percentage obtained by dividing (i) the sum of the Revolving Loan Commitment Amount and Term Loan
Commitment Amount of such Lender (or, in the event the Revolving Loan Commitment or Term Loan
Commitment shall have been terminated, such Lender’s then existing Revolving Loan Outstandings and
then outstanding principal advances of such Lender under the Term Loan, as applicable), by (ii) the
sum of the Revolving Loan Commitment and Term Loan Commitment Amount (or, in the event the
Revolving Loan Commitment or Term Loan Commitment shall have been terminated, the then existing
Revolving Loan Outstandings and then outstanding principal advances of such Lenders under the Term
Loan, as applicable) of all Lenders.



     “Reimbursement Obligations” means, at any date, the obligations of each Borrower then
outstanding to reimburse (a) Administrative Agent for payments made by Administrative Agent under a
Support Agreement, and/or (b) any LC Issuer, for payments made by such LC Issuer under a Lender
Letter of Credit.



     “Required Lenders” means at any time Lenders holding in the aggregate (a) sixty percent (60%)
or more of the sum of the Revolving Loan Commitment and the Term Loan Commitment (taken as a
whole), or (b) if the Revolving Loan Commitment or Term Loan Commitment has been terminated, sixty
percent (60%) or more of the sum of (x) the then aggregate outstanding principal balance of the
Loans plus (y) the then aggregate amount of Letter of Credit Liabilities; provided,
however, that so long as a party that is a Lender hereunder on the Closing Date does not
assign any portion of its Revolving Loans and/or Term Loan, such Lender shall be deemed to be a
Required Lender. For purposes of this definition only, a Lender shall be deemed to include itself,
and any Lender that is an Affiliate or Approved Fund of such Lender.



     “Responsible Officer” means any of the Chief Executive Officer or Chief Financial Officer of
the applicable Borrower.



16









 





     “Restricted Distribution” means as to any Person (a) any dividend or other distribution
(whether in cash, securities or other property) on any equity interest in such Person (except those
payable solely in its equity interests of the same class), (b) any payment on account of (i) the
purchase, redemption, retirement, defeasance, surrender, cancellation, termination or acquisition
of any equity interests in such Person or any claim respecting the purchase or sale of any equity
interest in such Person or (ii) any option, warrant or other right to acquire any equity interests
in such Person, (c) any management fees, salaries or other fees or compensation to any Person
holding an equity interest in a Borrower or a Subsidiary of a Borrower (other than (A) payments of
ordinary compensation consistent with past practices to individuals, (B) directors fees, (C) the
issuance of stock options or restricted stock to employees and board members, and (D) advances and
reimbursements to employees or directors, all in the Ordinary Course of Business and consistent
with past practices), an Affiliate of a Borrower or an Affiliate of any Subsidiary of a Borrower,
or (d) any lease or rental payments to an Affiliate or Subsidiary of a Borrower except allocations
or other payments at fair market value reasonably proportionate to actual use.



     “Revolving Lender” means each Lender having a Revolving Loan Commitment Amount in excess of
zero (or, in the event the Revolving Loan Commitment shall have been terminated at any time, each
Lender at such time having Revolving Loan Outstandings in excess of zero).



     “Revolving Loan Availability” means, at any time, the Revolving Loan Limit less the Revolving
Loan Outstandings.



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



     “Revolving Loan Commitment” means the sum of each Lender’s Revolving Loan Commitment Amount,
which is equal to Twenty Million Dollars ($20,000,000).



     “Revolving Loan Commitment Amount” means, (i) as to any Lender that is a Lender on the Closing
Date, the dollar amount set forth opposite such Lender’s name on the Commitment Annex under the
column “Revolving Loan Commitment Amount”, as such amount may be adjusted from time to time by any
amounts assigned (with respect to such Lender’s portion of Revolving Loans outstanding and its
commitment to make Revolving Loans) pursuant to the terms of any and all effective assignment
agreements to which such Lender is a party and (ii) as to any Lender that becomes a Lender after
the Closing Date, the amount of the “Revolving Loan Commitment Amount(s)” of other Lender(s)
assigned to such new Lender pursuant to the terms of the effective assignment agreement(s) pursuant
to which such new Lender shall become a Lender, as such amount may be adjusted from time to time by
any amounts assigned (with respect to such Lender’s portion of Revolving Loans outstanding and its
commitment to make Revolving Loans) pursuant to the terms of any and all effective assignment
agreements to which such Lender is a party.



     “Revolving Loan Commitment Percentage” means, as to any Lender, (a) on the Closing Date, the
percentage set forth opposite such Lender’s name on the Commitment Annex under the column
“Revolving Loan Commitment Percentage” (if such Lender’s name is not so set forth thereon, then, on
the Closing Date, such percentage for such Lender shall be deemed to be zero), and (b) on any date
following the Closing Date, the percentage equal to the Revolving Loan Commitment Amount of such
Lender on such date divided by the Revolving Loan Commitment on such date.



     “Revolving Loan Limit” means, at any time, the lesser of (a) the Revolving Loan Commitment and
(b) the Borrowing Base.



     “Revolving Loan Note” means any Note evidencing any portion of any Revolving Loan.



     “Revolving Loan Outstandings” means at any time of calculation the sum of the then existing
aggregate outstanding principal amount of Revolving Loans and the then existing Letter of Credit
Liabilities.



     “Revolving Loans” has the meaning set forth in Section 2.1(b)(i).



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



17









 





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



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



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



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



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



     “Support Agreement” has the meaning set forth in Section 2.5(a).



     “Supported Letter of Credit” means a Letter of Credit issued by an LC Issuer in reliance on
one or more Support Agreements.



     “Taxes” has the meaning set forth in Section 2.8.



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



     “Term Loan Commitment” means the sum of each Lender’s Term Loan Commitment Amount, which is
equal to Thirty Million Dollars ($30,000,000).



     “Term Loan Commitment Amount” means, at any time, (i) as to any Lender that is a Lender on the
Closing Date, the dollar amount equal to the dollar amount set forth opposite such Lender’s name on
the Commitment Annex under the column “Term Loan Commitment Amount”, as such amount and such
Lender’s Term Loan Commitment Percentage may be adjusted from time to time by any amounts assigned
(with respect to such other Lender’s portion of Term Loans outstanding) pursuant to the terms of
any and all effective Assignment Agreement to which such Lender is a party and (ii) as to any
Lender that becomes a Lender after the Closing Date,



18









 







the amount of the “Term Loan Commitment Amount(s)” of other Lender(s) assigned to such new
Lender pursuant to the terms of the effective Assignment Agreement(s) pursuant to which such new
Lender shall become a Lender, as such amount may be adjusted from time to time by any amounts
assigned pursuant to the terms of any and all effective Assignment Agreement to which such Lender
is a party.



     “Term Loan Commitment Percentage” means, at any time, (i) as to any Lender that is a Lender on
the Closing Date, the percentage set forth opposite such Lender’s name on the Commitment Annex
under the column “Term Loan Commitment Percentage”, as such percentage may be adjusted from time to
time by any portions thereof assigned (with respect to such other Lender’s portion of Term Loans
outstanding and its commitment to make Term Loans) pursuant to the terms of any and all effective
assignment agreements to which such Lender is a party, and (ii) as to any Lender that becomes a
Lender after the Closing Date, the portion of the “Term Loan Commitment Percentage(s)” of other
Lender(s) assigned to such new Lender pursuant to the terms of the effective assignment
agreement(s) pursuant to which such new Lender shall become a Lender, as such percentage may be
adjusted from time to time by any portions thereof assigned (with respect to any such other
Lender’s portion of Term Loans outstanding and its commitment to make Term Loans) pursuant to the
terms of any and all effective assignment agreements to which such Lender is a party.



     “Term Note” means any Note evidencing any portion of the Term Loan.



     “Termination Date” means the earlier to occur of (a) the Commitment Expiry Date, or (b) any
date on which Required Lenders elect, pursuant to Section 10.2, to accelerate the maturity of the
Loans or terminate either of the Revolving Loan Commitment or Term Loan Commitment in full.



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



     “United States” means the United States of America.



     “Work-In-Process” means Inventory that is not a product that is finished and approved by a
Borrower in accordance with applicable Laws and such Borrower’s normal business practices for
release and delivery to customers.



     Section 1.2 Accounting Terms and Determinations. Accounting terms not defined in this
Agreement shall be construed following GAAP, and calculations and determinations must be made
following GAAP, in each case, applied on a basis consistent with the most recent audited financial
statements of Principal Borrower delivered to Administrative Agent prior to the Closing Date;
provided, however, that if at any time any change in GAAP would affect the computation of any
financial ratio or financial requirement set forth in any Financing Document, and either Borrowers,
the Administrative Agent or the Required Lenders shall so request, the Administrative Agent and
Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original
intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders).



     Section 1.3 Other Definitional Provisions. References in this Agreement to “Articles”,
“Sections”, “Annexes”, “Exhibits” or “Schedules” shall be to Articles, Sections, Annexes,
Exhibits or Schedules of or to this Agreement unless otherwise specifically provided. Any term
defined herein may be used in the singular or plural. “Include”, “includes” and “including” shall
be deemed to be followed by “without limitation”. Except as otherwise specified or limited herein,
references to any Person include the successors and assigns of such Person. References “from” or
“through” any date mean, unless otherwise specified, “from and including” or “through and
including”, respectively. References to any statute or act shall include all related current
regulations and all amendments and any successor statutes, acts and regulations. References to any
statute or act, without additional reference, shall be deemed to refer to federal statutes and acts
of the United States. References to any agreement, instrument or document shall include all
schedules, exhibits, annexes and other attachments thereto. As used in this Agreement, the meaning
of the term “material” or the phrase “in all material respects” is intended to refer to an act,
omission, violation or condition which reflects or could reasonably be expected to result in a
Material Adverse Effect. References to capitalized terms that are not defined herein, but are
defined in the UCC, shall have the meanings given them in the UCC. All Riders attached hereto are
hereby incorporated herein by this reference and made a part hereof. Headings and captions used in
the Financing Documents (including the Exhibits, Schedules and Annexes



19









 







hereto and thereto) are included for convenience of reference only and shall not be given any
substantive effect.



ARTICLE 2 — LOANS AND LETTERS OF CREDIT




     Section 2.1 Loans.



     (a) Term Loans.



          (i) Term Loan Amounts. On the terms and subject to the conditions set forth herein, each
Lender severally agrees to make to Borrowers a term loan in an original principal amount equal to
such Lender’s Term Loan Commitment Percentage (collectively, the “Term Loan”). Each Lender’s
obligation to fund the Term Loan shall be limited to such Lender’s Term Loan Commitment Percentage,
and no Lender shall have any obligation to fund any portion of any Term Loan required to be funded
by any other Lender, but not so funded. No Borrower shall have any right to reborrow any portion
of the Term Loan that is repaid or prepaid from time to time. The Term Loan may be funded in two
advances (each, a “Tranche”): Twenty Five Million Dollars ($25,000,000) shall be drawn on the
Closing Date (“Tranche A”) and an additional Five Million Dollars ($5,000,000) may be drawn during
the first six (6) months from the Closing Date (“Tranche B”), in an aggregate amount not to exceed
the Term Loan Commitment, but no advances under the Term Loan shall be made after the six (6) month
anniversary date of the Closing Date, and any portion of the Term Loan Commitment not funded as of
the close of business on the six (6) month anniversary date of the Closing Date shall thereupon
automatically be terminated and the Term Loan Commitment Amount of each Lender as of such date
shall be reduced by such Lender’s Pro Rata Share of such total reduction in the Term Loan
Commitment. If Borrowers have not drawn Tranche B as of the close of business on the six (6) month
anniversary of the Closing Date, Borrowers shall pay to Administrative Agent, for the benefit of
all Lenders committed to make Term Loan advances on the Closing Date a non-utilization fee of Two
Hundred Thousand Dollars ($200,000). Notwithstanding anything to the contrary provided for in the
foregoing or otherwise in this Agreement, as of the close of business on the six (6) month
anniversary date of the Closing Date, if the total aggregate amount of all advances under the Term
Loan requested by Borrowers and funded by Lenders as of such date shall not equal Thirty Million
Dollars ($30,000,000), then as of such date the Term Loan Commitment shall be automatically reduced
by an amount equal to the difference between Thirty Million Dollars ($30,000,000) and such total
aggregate amount of all advances under the Term Loan made as of such date and the Term Loan
Commitment Amount of each Lender as of such date shall be reduced by such Lender’s Pro Rata Share
of such total reduction in the Term Loan Commitment. If drawn, Tranche B shall be drawn by
Borrowers in its entirety. Borrowers shall deliver to Administrative Agent a Notice of Borrowing
with respect to each proposed Term Loan advance, such Notice of Borrowing to be delivered no later
than noon (Chicago time) two (2) Business Days prior to such proposed borrowing.




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




               (A) There shall become due and payable, and Borrowers shall repay the Term Loan through,
scheduled payments as set forth on Schedule 2.1 attached hereto. Notwithstanding the
payment schedule set forth above, on the Termination Date, there shall become due, and Borrower
shall pay, the entire outstanding principal amount of the Term Loan, together with accrued and
unpaid interest thereon.



               (B) There shall become due and payable and Borrowers shall prepay the Term Loan in the
following amounts and at the following times:



                    (i) on the date on which any Credit Party (or Administrative Agent as loss payee or assignee)
receives any casualty proceeds in excess of $1,000,000 annually of assets upon which Administrative
Agent maintained a Lien, an amount equal to one hundred percent (100%) of such proceeds (net of
out-of-pocket expenses, any taxes due and repayment of secured debt permitted under clause (c) of
the definition of Permitted Indebtedness and encumbering the property that suffered such casualty),
or such lesser portion of such proceeds as Administrative Agent (with the consent of the Required
Lenders) shall elect to apply to the Obligations;



                    (ii) an amount equal to any interest that is deemed to be in excess of the Maximum Lawful Rate
(as defined below) and is required to be applied to the reduction of the principal balance of




20












 




the Loans by any Lender as provided for in Section 2.7;



Notwithstanding the foregoing clause (a)(ii)(B)(i) and so long as no Event of Default or Default
has occurred and is continuing, any such casualty proceeds in excess of the $1,000,000 threshold
above may be used, or contractually committed to be used, by Borrowers within one hundred eighty
(180) days from the receipt of such proceeds to replace or repair any assets in respect of which
such proceeds were paid so long as (x) prior to the receipt of such proceeds, Borrowers have
delivered to Administrative Agent a reinvestment plan detailing such replacement or repair
acceptable to Administrative Agent in its reasonable discretion and (y) such proceeds are deposited
into an account with Administrative Agent promptly upon receipt by such Borrower. All sums held by
Administrative Agent pending reinvestment as described in the foregoing shall be deemed additional
Collateral for the Obligations and may be commingled with the general funds of Administrative
Agent.




               (C) Borrowers may from time to time, with at least two (2) Business Days prior delivery to
Administrative Agent of an appropriately completed Payment Notification, prepay the Term Loan in
whole but not in part (other than mandatory partial prepayments required under this Agreement);
provided, however, that each such prepayment shall be accompanied by any prepayment fees required
hereunder.



          (iii) All Prepayments. Except as this Agreement may specifically provide otherwise, all
prepayments of the Term Loan shall be applied by Administrative Agent to the outstanding principal
balance of the Term Loan in inverse order of maturity of the scheduled payments thereon. The
payments required under Schedule 2.1 shall continue in the same amount (for so long as the
Term Loan and/or (if applicable) any advance thereunder shall remain outstanding) notwithstanding
any partial prepayment, whether mandatory or optional, of the Term Loan. Notwithstanding anything
to the contrary contained in the foregoing, in the event that there have been multiple advances
under the Term Loan each of which such advances has a separate amortization schedule of principal
payments under Schedule 2.1 attached hereto, each prepayment of the Term Loan shall be applied by
Administrative Agent to reduce and prepay the principal balance of the earliest-made advance then
outstanding in the inverse order of maturity of the scheduled payments with respect to such advance
until such earliest-made advance is paid in full (and to the extent the total amount of any such
partial prepayment shall exceed the outstanding principal balance of such earliest-made advance,
the remainder of such prepayment shall be applied successively to the remaining advances under the
Term Loan in the direct order of the respective advance dates in the manner provided for in this
sentence).




     (b) Revolving Loans.



          (i) Revolving Loans and Borrowings. On the terms and subject to the conditions set forth
herein, including, without limitation, the establishment of a Lockbox in accordance with Section
2.11, each Lender severally agrees to make Loans to Borrowers from time to time as set forth herein
(each a “Revolving Loan”, and collectively, “Revolving Loans”) equal to such Lender’s Revolving
Loan Commitment Percentage of Revolving Loans requested by Borrowers hereunder, provided, however,
that after giving effect thereto, the Revolving Loan Outstandings shall not exceed the Revolving
Loan Limit. Borrowers shall deliver to Administrative Agent a Notice of Borrowing with respect to
each proposed Revolving Loan Borrowing, such Notice of Borrowing to be delivered no later than noon
(Chicago time) two (2) Business Days prior to such proposed borrowing. Each Borrower and each
Revolving Lender hereby authorizes Administrative Agent to make Revolving Loans on behalf of
Revolving Lenders, at any time in its sole discretion, (A) as provided in Section 2.5(c), with
respect to obligations arising under Support Agreements and/or Lender Letters of Credit, and (B) to
pay principal owing in respect of the Loans and interest, fees, expenses and other charges of any
Credit Party from time to time arising under this Agreement or any other Financing Document. The
Borrowing Base shall be determined by Administrative Agent based on the most recent Borrowing Base
Certificate delivered to Administrative Agent in accordance with this Agreement and such other
information as may be available to Administrative Agent. Without limiting any other rights and
remedies of Administrative Agent hereunder or under the other Financing Documents, the Revolving
Loans shall be subject to Administrative Agent’s continuing right, subject to the terms of this
Agreement, to withhold from the Borrowing Base reserves, and to increase and decrease such reserves
from time to time, if and to the extent that in Administrative Agent’s good faith credit judgment
and discretion, such reserves are necessary.




          (ii) Mandatory Revolving Loan Repayments and Prepayments.




21









 








               (A) The Revolving Loan Commitment shall terminate on the Termination Date. On such
Termination Date, there shall become due, and Borrowers shall pay, the entire outstanding principal
amount of each Revolving Loan, together with accrued and unpaid interest thereon.



               (B) If at any time the Revolving Loan Outstandings exceed the Revolving Loan Limit, then, on
the next succeeding Business Day, Borrowers shall repay the Revolving Loans or cash collateralize
Letter of Credit Liabilities in the manner specified in Section 2.5(e) or cancel outstanding
Letters of Credit, or any combination of the foregoing, in an aggregate amount equal to such
excess.



               (C) Principal payable on account of Revolving Loans shall be payable by Borrowers to
Administrative Agent (A) immediately upon the receipt by any Borrower or Administrative Agent of
any payments on or proceeds from any of the Accounts, to the extent of such payments or proceeds,
and (B) in full on the Termination Date.



          (iii) Optional Prepayments. Borrowers may from time to time prepay the Revolving Loans in
whole or in part; provided, however, that any such partial prepayment shall be in an amount equal
to $100,000 or a higher integral multiple of $25,000.




     Section 2.2 Interest, Interest Calculations and Certain Fees.



     (a) Interest. From and following the Closing Date, the Loans and the other Obligations shall
bear interest at the sum of the Base Rate plus the applicable Base Rate Margin subject to the
provisions of Section 10.4 below regarding default rates of interest. The Base Rate for each Term
Loan shall be fixed as of the date of such Term Loan advance and will apply to that portion of the
Term Loan advanced for so long it is outstanding. Interest on the Loans shall be paid in arrears
on the first (1st) day of each month and on the Termination Date. Interest on all other
Obligations shall be payable on demand and on the Termination Date. All interest accruing on and
after the Termination Date shall be immediately due and payable as it accrues. For purposes of
calculating interest, all funds transferred from the Payment Account for application to any
Revolving Loans shall be subject to a three (3) Business Day clearance period.



     (b) Unused Line Fee. From and following the Closing Date, Borrowers shall pay Administrative
Agent, for the benefit of all Lenders committed to make Revolving Loans, in accordance with their
respective Pro Rata Shares, a fee in an amount equal to (i) (A) the Revolving Loan Commitment minus
(B) the average daily balance of the sum of the Revolving Loan Outstandings during the preceding
month, multiplied by (ii) seventy-five one hundredths of one percent (0.75%) per annum. Such fee
is to be paid monthly in arrears on the first day of each month.



     (c) Collateral Fee. From and following the Closing Date, Borrowers shall pay Administrative
Agent, for its own account and not for the benefit of any other Lenders, a fee in an amount equal
to (i) the average daily balance of the sum of the Revolving Loan Outstandings during the preceding
month, multiplied by (ii) five tenths of one percent (0.50%) per annum. Such fee is to be paid
monthly in arrears on the first day of each month.



     (d) Deferred Revolving Loan Commitment Fee. If Lenders’ funding obligations in respect of the
Revolving Loan Commitment under this Agreement terminate for any reason (whether by voluntary
termination by Borrowers, by reason of the occurrence of an Event of Default or otherwise) prior to
the Commitment Expiry Date, Borrowers shall pay to Administrative Agent, for the benefit of all
Lenders committed to make Revolving Loans on the Closing Date, a fee as compensation for the costs
of such Lenders being prepared to make funds available to Borrowers under this Agreement, equal to
an amount determined by multiplying the Revolving Loan Commitment by the following applicable
percentage amount: four percent (4.0%) for the first year following the Closing Date, two percent
(2.0%) for the second year following the Closing Date, and one percent (1.0%) thereafter. All fees
payable pursuant to this paragraph shall be deemed fully earned and non-refundable as of the
Closing Date.



     (e) Exit Fee. Borrowers shall pay to Administrative Agent, for the benefit of all Lenders
committed to make Term Loan advances on the Closing Date as compensation for the costs of making
funds available to Borrowers under this Agreement, an exit fee (the “Exit Fee”) payable as
calculated in accordance with this



22









 







subsection and upon the date or dates required under this subsection. The Exit Fee shall be equal
to Nine Hundred Thousand Dollars ($900,000). Upon any repayment of any portion of the Term Loan
(whether voluntary, involuntary or mandatory) other than scheduled amortization payments (if any)
and the final payment of principal in respect of the Term Loan, a portion of the Exit Fee shall be
due in the following amount: that percentage which is obtained by dividing the amount prepaid by
the then outstanding principal balance of the Term Loan. Any remaining unpaid amount of the Exit
Fee shall be due and payable on the Termination Date. All fees payable pursuant to this paragraph
shall be deemed fully accrued and earned as of the Closing Date.



     (f) Prepayment Fee. If any advance under the Term Loan is prepaid at any time, in whole or in
part, for any reason (whether by voluntary prepayment by Borrowers, by reason of the occurrence of
an Event of Default or the acceleration of the Term Loan, or otherwise), or if the Term Loan shall
become accelerated and due and payable in full or if the Lenders’ funding obligations in respect of
any unfunded portion of the Term Loan shall terminate prior to the Commitment Expiry Date,
Borrowers shall pay to Administrative Agent, for the benefit of all Lenders committed to make Term
Loan advances on the Closing Date, as compensation for the costs of such Lenders making funds
available to Borrowers under this Agreement, a prepayment fee (the “Prepayment Fee”) calculated in
accordance with this subsection. The Prepayment Fee shall be equal to the principal amount of the
Term Loan being prepaid multiplied by (i) four percent (4.0)% if prepaid prior to the first
anniversary of the Closing Date; (ii) two percent (2.0%) if prepaid on or after the first
anniversary of the Closing Date but prior to the second anniversary of the Closing Date; and (iii)
one percent (1.0%) if prepaid on or after the second anniversary of the Closing Date but prior to
the date on which the final amortization payment is due. The Prepayment Fee shall not apply to or
be assessed upon any prepayment made by Borrowers (A) if such payments were required by
Administrative Agent to be made pursuant to Section 2.1(a)(ii)(B) subpart (i) (relating to casualty
proceeds) or subpart (ii) (relating to payments exceeding the Maximum Lawful Rate); or (B) on
Merrill Lynch’s Term Loan Commitment Percentage of the Term Loan being repaid in connection with
the refinancing of the Loans by a debt facility underwritten by Merrill Lynch. All fees payable
pursuant to this paragraph shall be deemed fully earned and non-refundable as of the Closing Date.



     (g) Audit Fees. Borrowers shall pay to Administrative Agent, for its own account and not for
the benefit of any other Lenders, all reasonable fees and expenses in connection with audits and
inspections of Borrowers’ books and records, audits, valuations or appraisals of the Collateral,
audits of Borrowers’ compliance with applicable Laws and such other matters as Administrative Agent
shall deem appropriate, which shall be due and payable on the later of (i) the first Business Day
of the month following the date of issuance by Administrative Agent of a written request for
payment thereof to Borrowers, or (ii) the tenth (10th) day following the issuance of
such notice; provided, that so long as no Event of Default or Default has occurred, Borrowers shall
be liable for such fees and expenses for no more than four (4) such audits in any given calendar
year.



     (h) Wire Fees. Borrowers shall pay to Administrative Agent, for its own account and not for
the account of any other Lenders, on written demand, any and all fees, costs or expenses which
Administrative Agent pays to a bank or other similar institution (including, without limitation,
any fees paid by Administrative Agent to any other Lender) arising out of or in connection with
(i) the forwarding to Borrowers or any other Person on behalf of Borrowers, by Administrative
Agent, of proceeds of the Loans made by any Lender to Borrowers pursuant to this Agreement, and
(ii) the depositing for collection, by Administrative Agent, of any check or item of payment
received or delivered to Administrative Agent on account of Obligations.



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



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



23









 





     (k) Automated Clearing House Payments. If Administrative Agent so elects, monthly payments of
interest and amortization shall be paid to Administrative Agent by Automated Clearing House debit
of immediately available funds from the financial institution account designated by Borrower
Representative in the Automated Clearing House debit authorization executed by Borrowers or
Borrower Representative in connection with this Agreement, and shall be effective upon receipt.
Borrowers shall execute any and all forms and documentation necessary from time to time to
effectuate such automatic debiting. In no event shall any such payments be refunded to Borrowers
unless required by applicable law.



     Section 2.3 Notes. The portion of the Loans made by each Lender shall be evidenced, if so
requested by such Lender, by one or more promissory notes executed by Borrowers on a joint and
several basis (each, a “Note”) in an original principal amount equal to such Lender’s Revolving
Loan Commitment or Term Loan Commitment.



     Section 2.4 Reserved



     Section 2.5 Letters of Credit and Letter of Credit Fees.



     (a) Letter of Credit. On the terms and subject to the conditions set forth herein, the
Revolving Loan Commitment may be used by Borrowers, in addition to the making of Revolving Loans
hereunder, for the issuance, prior to that date which is thirty (30) days prior to the Termination
Date, by (i) Administrative Agent, of letters of credit, guaranties or other agreements or
arrangements (each, a “Support Agreement”) to induce an LC Issuer to issue or increase the amount
of, or extend the expiry date of, one or more Letters of Credit and (ii) a Lender, identified by
Administrative Agent, as an LC Issuer, of one or more Lender Letters of Credit, so long as, in each
case:



          (i) Administrative Agent shall have received a Notice of LC Credit Event at least five (5)
Business Days before the relevant date of issuance, increase or extension; and




          (ii) after giving effect to such issuance, increase or extension, (A) the aggregate Letter of
Credit Liabilities under all Letters of Credit do not exceed Five Million Dollars ($5,000,000) and
(B) the Revolving Loan Outstandings do not exceed the Revolving Loan Limit.



Nothing in this Agreement shall be construed to obligate any Lender to issue, increase the amount
of or extend the expiry date of any letter of credit, which act or acts, if any, shall be subject
to agreements to be entered into from time to time between Borrowers and such Lender. Each Lender
that is an LC Issuer hereby agrees to give Administrative Agent prompt written notice of each
issuance of a Lender Letter of Credit by such Lender and each payment made by such Lender in
respect of Lender Letters of Credit issued by such Lender.



Notwithstanding anything herein to the contrary, for so long as any letter of credit Debt permitted
by subpart (h) of the definition of Permitted Indebtedness remains outstanding, there shall be
deemed to be a Letter of Credit outstanding with Letter of Credit Liabilities equal to $1,500,000
(a “Deemed Letter of Credit”). Borrowers shall pay fees on such Deemed Letter of Credit and such
Deemed Letter of Credit Liabilities shall be included in the Revolving Loan Outstandings, in each
case, as if such Deemed Letter of Credit was a Letter of Credit.




     (b) Letter of Credit Fee. Borrowers shall pay to Administrative Agent, for the benefit of the
Revolving Lenders in accordance with their respective Pro Rata Shares, a letter of credit fee with
respect to the Letter of Credit Liabilities for each Letter of Credit, computed for each day from
the date of issuance of such Letter of Credit to the date that is the last day a drawing is
available under such Letter of Credit, at a rate per annum equal to the Base Rate Margin then
applicable to Revolving Loans. Such fee shall be payable monthly in arrears on the first day of
each calendar month and on the Termination Date. In addition, Borrowers agree to pay promptly to
the LC Issuer any fronting or other fees that it may routinely charge in connection with any Letter
of Credit.



     (c) Reimbursement Obligations of Borrowers. If either (i) Administrative Agent shall make a
payment to an LC Issuer pursuant to a Support Agreement, or (ii) any Lender shall honor any draw
request under, and make payment in respect of, a Lender Letter of Credit, (A) the applicable
Borrower shall reimburse



24









 







Administrative Agent or such Lender, as applicable, for the amount of such payment by the end of
the day on which Administrative Agent or such Lender shall make such payment and (B) Borrowers
shall be deemed to have immediately requested that Revolving Lenders make a Revolving Loan, in a
principal amount equal to the amount of such payment (but solely to the extent such Borrower shall
have failed to directly reimburse Administrative Agent or, with respect to Lender Letters of
Credit, the applicable LC Issuer, for the amount of such payment). Administrative Agent shall
promptly notify Revolving Lenders of any such deemed request and each Revolving Lender (other than
any such Revolving Lender that was a Non-Funding Lender at the time the applicable Supported Letter
of Credit or Lender Letter of Credit was issued) hereby agrees to make available to Administrative
Agent not later than noon (Chicago time) on the Business Day following such notification from
Administrative Agent such Revolving Lender’s Pro Rata Share of such Revolving Loan. Each Revolving
Lender (other than any applicable Non-Funding Lender specified above) hereby absolutely and
unconditionally agrees to fund such Revolving Lender’s Pro Rata Share of the Loan described in the
immediately preceding sentence, unaffected by any circumstance whatsoever, including, without
limitation, (x) the occurrence and continuance of a Default or Event of Default, (y) the fact that,
whether before or after giving effect to the making of any such Revolving Loan, the Revolving Loan
Outstandings exceed or will exceed the Revolving Loan Limit, and/or (z) the non-satisfaction of any
conditions set forth in Section 7.2. Administrative Agent hereby agrees to apply the gross
proceeds of each Revolving Loan deemed made pursuant to this Section 2.5(c) in satisfaction of
Borrowers’ reimbursement obligations arising pursuant to this Section 2.5(c). Borrowers shall pay
interest, on demand, on all amounts so paid by Administrative Agent pursuant to any Support
Agreement or to any applicable Lender in honoring a draw request under any Lender Letter of Credit
for each day from the date of such payment until Borrowers reimburse Administrative Agent or the
applicable Lender therefore (whether pursuant to clause (A) or (B) of the first sentence of this
subsection (c)) at a rate per annum equal to the interest rate applicable to Revolving Loans for
such day plus, to the extent the Revolving Loan Outstandings exceed the Revolving Loan Limit, two
percent (2%).



     (d) Reimbursement and Other Payments by Borrowers. The obligations of each Borrower to
reimburse Administrative Agent and/or the applicable LC Issuer pursuant to Section 2.5(c) shall be
absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the
terms of this Agreement, under all circumstances whatsoever, including the following:



          (i) any lack of validity or enforceability of, or any amendment or waiver of or any consent to
departure from, any Letter of Credit or any related document;




          (ii) the existence of any claim, set-off, defense or other right which any Borrower may have
at any time against the beneficiary of any Letter of Credit, the LC Issuer (including any claim for
improper payment), Administrative Agent, any Lender or any other Person, whether in connection with
any Financing Document or any unrelated transaction, provided, however, that nothing herein shall
prevent the assertion of any such claim by separate suit or compulsory counterclaim;




          (iii) any statement or any other document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;




          (iv) any affiliation between the LC Issuer and Administrative Agent; or




          (v) to the extent permitted under applicable law, any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.




     (e) Deposit Obligations of Borrowers. In the event any Letters of Credit are outstanding at
the time that Borrowers prepay or are required to repay the Obligations or the Revolving Loan
Commitment is terminated, Borrowers shall (i) deposit with Administrative Agent for the benefit of
all Revolving Lenders cash in an amount equal to one hundred and ten percent (110%) of the
aggregate outstanding Letter of Credit Liabilities to be available to Administrative Agent, for its
benefit and the benefit of issuers of Letters of Credit, to reimburse payments of drafts drawn
under such Letters of Credit and pay any fees and expenses related thereto, and (ii) prepay the fee
payable under Section 2.5(b) with respect to such Letters of Credit for the full remaining terms of
such Letters of Credit assuming that the full amount of such Letters of Credit as of the date of
such repayment or termination remain outstanding until the end of such remaining terms. Upon
termination of any such Letter of Credit and



25









 







provided no Event of Default has occurred and is continuing, the unearned portion of such prepaid
fee attributable to such Letter of Credit shall be refunded to Borrowers, together with the deposit
described in the preceding clause (i) to the extent not previously applied by Administrative Agent
in the manner described herein.



     (f) Participations in Support Agreements and Lender Letters of Credit.



          (i) Concurrently with the issuance of each Supported Letter of Credit, Administrative Agent
shall be deemed to have sold and transferred to each Revolving Lender (other than any Non-Funding
Lenders at the time of such issuance), and each such Revolving Lender shall be deemed irrevocably
and immediately to have purchased and received from Administrative Agent, without recourse or
warranty, an undivided interest and participation in, to the extent of such Lender’s Pro Rata Share
of the Revolving Loan Commitment, Administrative Agent’s Support Agreement liabilities and
obligations in respect of such Supported Letter of Credit and Borrowers’ Reimbursement Obligations
with respect thereto. Concurrently with the issuance of each Lender Letter of Credit, the LC
Issuer in respect thereof shall be deemed to have sold and transferred to each Revolving Lender
(other than any Non-Funding Lenders at the time of such issuance), and each such Revolving Lender
shall be deemed irrevocably and immediately to have purchased and received from such LC Issuer,
without recourse or warranty, an undivided interest and participation in, to the extent of such
Lender’s Pro Rata Share of the Revolving Loan Commitment, such Lender Letter of Credit and
Borrowers’ Reimbursement Obligations with respect thereto. Any purchase obligation arising
pursuant to the immediately two preceding sentences shall be absolute and unconditional and shall
not be affected by any circumstances whatsoever.




          (ii) If either (x) Administrative Agent makes any payment or disbursement under any Support
Agreement and/or (y) an LC Issuer makes any payment or disbursement under any Lender Letter of
Credit, and (A) Borrowers have not reimbursed Administrative Agent or the applicable LC Issuer, as
applicable, in full for such payment or disbursement in accordance with Section 2.5(c), or (B) any
reimbursement under any Support Agreement or Lender Letter of Credit received by Administrative
Agent or any LC Issuer, as applicable, from Borrowers is or must be returned or rescinded upon or
during any bankruptcy or reorganization of any Credit Party or otherwise, each Revolving Lender
(other than any Revolving Lender that was a Non-Funding Lender at the time of the issuance of such
Supported Letter of Credit or Lender Letter of Credit) shall be irrevocably and unconditionally
obligated to pay to Administrative Agent or the applicable LC Issuer, as applicable, its Pro Rata
Share of such payment or disbursement (but no such payment shall diminish the Obligations of
Borrowers under Section 2.5(c)). To the extent any such Revolving Lender shall not have made such
amount available to Administrative Agent or the applicable LC Issuer, as applicable, by noon
(Chicago time) on the Business Day on which such Lender receives notice from Administrative Agent
or the applicable LC Issuer, as applicable, of such payment or disbursement, or return or
rescission, as applicable, such Lender agrees to pay interest on such amount to Administrative
Agent or the applicable LC Issuer, as applicable, forthwith on demand accruing daily at the Federal
Funds Rate, for the first three (3) days following such Lender’s receipt of such notice, and
thereafter at the Base Rate plus the Base Rate Margin in respect of Revolving Loans. Any Revolving
Lender’s failure to make available to Administrative Agent or the applicable LC Issuer, as
applicable, its Pro Rata Share of any such payment or disbursement, or return or rescission, as
applicable, shall not relieve any other Lender of its obligation hereunder to make available such
other Revolving Lender’s Pro Rata Share of such payment, but no Revolving Lender shall be
responsible for the failure of any other Lender to make available such other Lender’s Pro Rata
Share of any such payment or disbursement, or return or rescission.




     Section 2.6 General Provisions Regarding Payment; Loan Account.



     (a) All payments to be made by each Borrower under any Financing Document, including payments
of principal and interest made hereunder and pursuant to any other Financing Document, and all
fees, expenses, indemnities and reimbursements, shall be made without set-off, recoupment or
counterclaim, in lawful money of the United States and in immediately available funds. If any
payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension (it being understood and
agreed that, solely for purposes of calculating financial covenants and computations contained
herein and determining compliance therewith, if payment is made, in full, on any such extended due
date, such payment shall be deemed to have been paid on the original due date without giving effect
to any extension thereto). Any payments received in the Payment Account before noon (Chicago time)
on any date shall be deemed received



26









 







by Administrative Agent on such date, and any payments received in the Payment Account after noon
(Chicago time) on any date shall be deemed received by Administrative Agent on the next succeeding
Business Day. Unless otherwise specified herein, the settlement of all payments and fundings
hereunder between or among the parties hereto shall be made in lawful money of the United States
and in immediately available funds.



     (b) Administrative Agent shall endeavor to provide Borrowers with a monthly statement
regarding the Loans hereunder (but neither Administrative Agent nor any Lender shall have any
liability if Administrative Agent shall fail to provide any such statement). Unless any Borrower
notifies Administrative Agent of any objection to any such statement (specifically describing the
basis for such objection) within ninety (90) days after the date of receipt thereof, it shall be
deemed final, binding and conclusive upon Borrowers in all respects as to all matters reflected
therein, absent manifest error.



     Section 2.7 Maximum Interest. In no event shall the interest charged with respect to the
Loans or any other Obligations of any Borrower under any Financing Document exceed the maximum
amount permitted under the laws of the State of Illinois or of any other applicable jurisdiction.
Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest
payable hereunder or under any Note or other Financing Document (the “Stated Rate”) would exceed
the highest rate of interest permitted under any applicable law to be charged (the “Maximum Lawful
Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest
payable shall be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the Stated Rate is less than the Maximum Lawful Rate, each Borrower shall, to the extent
permitted by law, continue to pay interest at the Maximum Lawful Rate until such time as the total
interest received is equal to the total interest which would have been received had the Stated Rate
been (but for the operation of this provision) the interest rate payable. Thereafter, the interest
rate payable shall be the Stated Rate unless and until the Stated Rate again would exceed the
Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total
interest received by any Lender exceed the amount which it could lawfully have received had the
interest been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding
the prior sentence, any Lender has received interest hereunder in excess of the Maximum Lawful
Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or
to other amounts (other than interest) payable hereunder, and if no such principal or other amounts
are then outstanding, such excess or part thereof remaining shall be paid to Borrowers. Any such
reduction in the principal balance shall be applied to the Obligations owing to Lenders in
accordance with the Pro Rata Share of each Lender. In computing interest payable with reference to
the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in which such
calculation is made.



     Section 2.8 Taxes; Capital Adequacy.



     (a) All payments of principal and interest on the Loans and all other amounts payable
hereunder shall be made free and clear of and without deduction for any present or future income,
excise, stamp, documentary, payroll, employment, property or franchise taxes and other taxes, fees,
duties, levies, assessments, withholdings or other charges of any nature whatsoever (including
interest and penalties thereon) imposed by any taxing authority, excluding taxes imposed on or
measured by Administrative Agent’s or any Lender’s net income by the jurisdictions under which
Administrative Agent or such Lender is organized or conducts business (other than solely as the
result of entering into any of the Financing Documents or taking any action thereunder) (all
non-excluded items being called “Taxes”). If any withholding or deduction from any payment to be
made by any Borrower hereunder is required in respect of any Taxes pursuant to any applicable Law,
then Borrowers will: (i) pay directly to the relevant authority the full amount required to be so
withheld or deducted; (ii) promptly forward to Administrative Agent an official receipt or other
documentation reasonably satisfactory to Administrative Agent evidencing such payment to such
authority; and (iii) pay to Administrative Agent for the account of Administrative Agent and
Lenders such additional amount or amounts as is necessary to ensure that the net amount actually
received by Administrative Agent and each Lender will equal the full amount Administrative Agent
and such Lender would have received had no such withholding or deduction been required. If any
Taxes are directly asserted against Administrative Agent or any Lender with respect to any payment
received by Administrative Agent or such Lender hereunder, Administrative Agent or such Lender may
pay such Taxes and Borrowers will promptly pay such additional amounts (including any penalty,
interest or expense) as is necessary in order that the net amount received by such Person after the
payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such
Person would have received had such Taxes not been asserted so long as such amounts have accrued



27









 







on or after the day which is one hundred eighty (180) days prior to the date on which
Administrative Agent or such Lender first made written demand therefor.



     (b) If any Borrower fails to pay any Taxes when due to the appropriate taxing authority or
fails to remit to Administrative Agent, for the account of Administrative Agent and the respective
Lenders, the required receipts or other required documentary evidence, Borrowers shall indemnify
Administrative Agent and Lenders for any incremental Taxes, interest or penalties that may become
payable by Administrative Agent or any Lender as a result of any such failure.



     (c) Each Lender that (i) is organized under the laws of a jurisdiction other than the United
States, and (ii)(A) is a party hereto on the Closing Date or (B) purports to become an assignee of
an interest as a Lender under this Agreement after the Closing Date (unless such Lender was already
a Lender hereunder immediately prior to such assignment) (each such Lender a “Foreign Lender”)
shall execute and deliver to each of Borrowers and Administrative Agent one or more (as Borrowers
or Administrative Agent may reasonably request) United States Internal Revenue Service Forms
W-8ECI, W-8BEN, W-8IMY (as applicable) and other applicable forms, certificates or documents
prescribed by the United States Internal Revenue Service or reasonably requested by Administrative
Agent certifying as to such Lender’s entitlement to a complete exemption from withholding or
deduction of Taxes. Borrowers shall not be required to pay additional amounts to any Lender
pursuant to this Section 2.8 with respect to United States withholding and income Taxes to the
extent that the obligation to pay such additional amounts would not have arisen but for the failure
or inability of such Lender to comply with this paragraph other than as a result of a change in
law.



     (d) If any Lender shall determine in its commercially reasonable judgment that the adoption or
taking effect of, or any change in, any applicable Law regarding capital adequacy, in each
instance, after the Closing Date, or any change after the Closing Date in the interpretation,
administration or application thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation, administration or application thereof, or the compliance by
any Lender or any Person controlling such Lender with any request, guideline or directive regarding
capital adequacy (whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency adopted or otherwise taking effect after the Closing Date, has or
would have the effect of reducing the rate of return on such Lender’s or such controlling Person’s
capital as a consequence of such Lender’s obligations hereunder or under any Support Agreement or
Lender Letter of Credit to a level below that which such Lender or such controlling Person could
have achieved but for such adoption, taking effect, change, interpretation, administration,
application or compliance (taking into consideration such Lender’s or such controlling Person’s
policies with respect to capital adequacy) then from time to time, upon written demand by such
Lender (which demand shall be accompanied by a statement setting forth the basis for such demand
and a calculation of the amount thereof in reasonable detail, a copy of which shall be furnished to
Administrative Agent), Borrowers shall promptly pay to such Lender such additional amount as will
compensate such Lender or such controlling Person for such reduction, so long as such amounts have
accrued on or after the day which is one hundred eighty (180) days prior to the date on which such
Lender first made demand therefor.


If any Lender requests any payments under Section 2.8(a) or (d), then such Lender shall, if
requested by Borrowers, use reasonable efforts (subject to overall policy considerations of such
Lender) to designate a different lending office for funding or booking the Obligations owing to it
hereunder, to assign its rights and obligations hereunder to another of its offices, branches or
affiliates or to take such other actions as such Lender determines, if, in the sole judgment of
such Lender, such designation, assignment or other action (a) would eliminate or reduce amounts
payable pursuant to this Section 2.8(a) or (d) in the future, (b) would not subject such Lender to
any unreimbursed cost or expense and such Lender would not suffer any economic, legal or regulatory
disadvantage, (c) would not require such Lender to disclose any confidential information
(including, without limitation, its tax returns and other reports, disclosures and calculations),
and (d) would not be otherwise disadvantageous to such Lender. Borrowers agree to pay all
reasonable costs and expenses incurred by such Lender in connection with any such designation,
assignment or other action.



Amounts under Sections 2.8(a), (b), (c), and (d) will be due without duplication of one another.




     Section 2.9 Appointment of Borrower Representative. Each Borrower hereby designates Borrower
Representative as its representative and agent on its behalf for the purposes of giving
instructions with



28









 







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



     Section 2.10 Joint and Several Liability. Borrowers are defined collectively to include all
Persons named as one of the Borrowers herein; provided, however, that any references herein to “any
Borrower”, “each Borrower” or similar references, shall be construed as a reference to each
individual Person named as one of the Borrowers herein. Each Person so named shall be jointly and
severally liable for all of the obligations of Borrowers under this Agreement. Each Borrower,
individually, expressly understands, agrees and acknowledges, that the credit facilities would not
be made available on the terms herein in the absence of the collective credit of all of the Persons
named as the Borrowers herein, the joint and several liability of all such Persons, and the
cross-collateralization of the Collateral of all such Persons. Accordingly, each Borrower,
individually acknowledges that the benefit to each of the Persons named as one of the Borrowers as
a whole constitutes reasonably equivalent value, regardless of the amount of the credit facilities
actually borrowed by, advanced to, or the amount of Collateral provided by, any individual
Borrower. In addition, each entity named as one of the Borrowers herein hereby acknowledges and
agrees that all of the representations, warranties, covenants, obligations, conditions, agreements
and other terms contained in this Agreement shall be applicable to and shall be binding upon and
measured and enforceable individually against each Person named as one of the Borrowers herein as
well as all such Persons when taken together. By way of illustration, but without limiting the
generality of the foregoing, the terms of Section 10.1 of this Agreement are to be applied to each
individual Person named as one of the Borrowers herein (as well as to all such Persons taken as a
whole), such that the occurrence of any of the events described in Section 10.1 of this Agreement
as to any Person named as one of the Borrowers herein shall constitute an Event of Default even if
such event has not occurred as to any other Persons named as the Borrowers or as to all such
Persons taken as a whole.



     Section 2.11 Collections and Lockbox Account.



     (a) Borrowers shall maintain a lockbox (the “Lockbox”) with a United States depository
institution designated from time to time by Administrative Agent (the “Lockbox Bank”), subject to
the provisions of this Agreement, and shall execute with the Lockbox Bank a Deposit Account Control
Agreement and such other agreements related to such Lockbox as Administrative Agent may require.
Borrowers shall ensure that all collections of Accounts are paid directly from Account Debtors into
the Lockbox for deposit into the Lockbox Account and/or directly into the Lockbox Account;
provided, however, unless Administrative Agent shall otherwise direct by written notice to
Borrowers, Borrowers shall be permitted to cause Account Debtors who are individuals to pay
Accounts directly to Borrowers, which Borrowers shall then administer and apply in the manner
required below.



     (b) All funds deposited into a Lockbox Account shall be transferred into the Payment Account
by the



29









 




close of
each Business Day.



     (c) Notwithstanding anything in any lockbox agreement or Deposit Account Control Agreement to
the contrary, Borrowers agree that they shall be liable for any fees and charges in effect from
time to time and charged by the Lockbox Bank in connection with the Lockbox and the Lockbox
Account, and that Administrative Agent shall have no liability therefor. Borrowers hereby
indemnify and agree to hold Administrative Agent harmless from any and all liabilities, claims,
losses and demands whatsoever, including reasonable attorneys’ fees and expenses, arising from or
relating to actions of Administrative Agent or the Lockbox Bank pursuant to this Section or any
lockbox agreement or Deposit Account Control Agreement or similar agreement, except to the extent
of such losses arising solely from Administrative Agent’s gross negligence or willful misconduct.



     (d) Administrative Agent shall apply, on a daily basis, all funds transferred into the Payment
Account pursuant to this Section to reduce the outstanding Revolving Loans in such order of
application as Administrative Agent shall elect. Administrative Agent shall have no obligation to
apply any funds transferred into the Payment Account pursuant to this Section to reduce the
outstanding Term Loan, but Administrative Agent shall have the option to apply such funds to any
Term Loan to the extent of any payments (whether of principal, interest or otherwise) due and
payable in respect thereof. If as the result of collections of Accounts pursuant to the terms and
conditions of this Section a credit balance exists with respect to the Payment Account, such credit
balance shall not accrue interest in favor of Borrowers, but Administrative Agent shall transfer
such funds into an account designated by Borrower Representative for so long as no Default exists.



     (e) To the extent that any collections of Accounts or proceeds of other Collateral are not
sent directly to the Lockbox but are received by any Borrower, such collections shall be held in
trust for the benefit of Administrative Agent pursuant to an express trust created hereby and
immediately remitted, in the form received, to the applicable Lockbox and Lockbox Account. No such
funds received by any Borrower shall be commingled with other funds of the Borrowers.



     (f) Borrowers acknowledge and agree that compliance with the terms of this Section is
essential, and that Administrative Agent and Lenders will suffer immediate and irreparable injury
and have no adequate remedy at law, if any Borrower, through acts or omissions, causes or permits
Account Debtors to send payments other than to the Lockbox, or if any Borrower fails to immediately
deposit collections of Accounts or proceeds of other Collateral in the Lockbox Account as herein
required. Accordingly, in addition to all other rights and remedies of Administrative Agent and
Lenders hereunder, Administrative Agent shall have the right to seek specific performance of
Borrowers’ obligations under this Section, and any other equitable relief as Administrative Agent
may deem necessary or appropriate, and Borrowers waive any requirement for the posting of a bond in
connection with such equitable relief.



     (g) Borrowers shall not, and Borrowers shall not suffer or permit any Credit Party to,
(i) withdraw any amounts from any Lockbox Account, (ii) change the procedures or sweep instructions
under the agreements governing any Lockbox Accounts, or (iii) send to or deposit in any Lockbox
Account any funds other than payments made with respect to and proceeds of Accounts or other
Collateral. Borrowers shall, and shall cause each Credit Party to, cooperate with Administrative
Agent in the identification and reconciliation, as promptly as practicable and consistent with past
practices, of all amounts received in or required to be deposited into the Lockbox Accounts such
that if more than five percent (5%) of the collections of Accounts received by Borrowers during any
given fifteen (15) day period is not identified or reconciled to the reasonable satisfaction of
Administrative Agent within ten (10) Business Days of receipt, Administrative Agent shall not be
obligated to make further advances under this Agreement until such amount is identified or is
reconciled to the reasonable satisfaction of Administrative Agent, as the case may be. In
addition, if any such amount cannot be identified or reconciled to the reasonable satisfaction of
Administrative Agent, Administrative Agent may utilize its own staff or, if it deems necessary,
engage an outside auditor, in either case at Borrowers’ expense (which in the case of
Administrative Agent’s own staff shall be in accordance with Administrative Agent’s then prevailing
customary charges (plus reasonable expenses)), to make such examination and report as may be
necessary to identify and reconcile such amount.



     (h) If any Borrower breaches its obligation to direct payments of the proceeds of the
Collateral to the Lockbox Account, Administrative Agent, as the irrevocably made, constituted and
appointed true and lawful attorney for Borrowers, may, by the signature or other act of any of
Administrative Agent’s officers
(without




30












 




requiring any of them to do so), direct any Account Debtor to pay proceeds of the Collateral
to Borrowers by directing payment to the Lockbox Account.



Borrowers’ obligations under this 2.11 are subject to the timing requirements provided for in
Section 4.12; provided, that no Revolving Loan Borrowings shall occur until Borrowers are
in compliance with this Section 2.11 or such provisions are otherwise waived by Administrative
Agent.




ARTICLE 3 — REPRESENTATIONS AND WARRANTIES




     To induce Administrative Agent and Lenders to enter into this Agreement and to make the Loans
and other credit accommodations contemplated hereby, each Borrower hereby represents and warrants
to Administrative Agent and each Lender that:



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



     Section 3.2 Organization and Governmental Authorization; No Contravention; Binding Effect.
The execution, delivery and performance by each Credit Party of the Financing Documents to which it
is a party are within its powers, have been duly authorized by all necessary action pursuant to its
Organizational Documents, require no further action by or in respect of, or filing with, any
Governmental Authority and do not violate, conflict with or cause a breach or a default under
(a) any Law applicable to any Credit Party or any of the Organizational Documents of any Credit
Party, or (b) any agreement or instrument binding upon it, except for such violations, conflicts,
breaches or defaults as could not, with respect to this clause (b), reasonably be expected to have
a Material Adverse Effect. This Agreement and each of the other Financing Documents to which any
Credit Party is a party constitutes a valid and binding agreement or instrument of such Credit
Party, enforceable against such Credit Party in accordance with its respective terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency or other similar laws relating to
the enforcement of creditors’ rights generally and by general equitable principles.



     Section 3.3 Capitalization. The authorized equity securities of each of the Credit Parties as
of the Closing Date, including all preemptive or other outstanding rights, options, warrants,
conversion rights or similar agreements or understandings, are as set forth on
Schedule 3.3.



     Section 3.4 Financial Information; Solvency. All information delivered to Administrative Agent
and pertaining to the financial condition of any Credit Party fairly presents in all material
respects, when considered together, the financial position of such Credit Party as of such date in
conformity with GAAP (and as to unaudited financial statements, subject to normal year-end
adjustments and the absence of footnote disclosures). As of December 31, 2006, there has been no
material adverse change in the business, operations, properties or financial condition of any
Credit Party. Each Borrower and each additional Credit Party is Solvent.



     Section 3.5 Anti-Terrorism Laws. None of the Credit Parties, their Affiliates or any of their
respective agents acting or benefiting in any capacity in connection with the transactions
contemplated by this Agreement (i) is in violation of any Anti-Terrorism Law, (ii) engages in or
conspires to engage in any transaction that evades or avoids, or has the purpose of evading or
avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or
(iii) is a Blocked Person. No Credit Party nor, to the knowledge of any Credit Party, any of its
Affiliates or agents acting or benefiting in any capacity in connection with the transactions



31









 




contemplated by this Agreement, (x) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals
in, or otherwise engages in any transaction relating to, any property or interest in property
blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism
Law.




     Section 3.6 Full Disclosure. None of the written information (financial or otherwise)
furnished by or on behalf of any Credit Party to Administrative Agent or any Lender in connection
with the consummation of the transactions contemplated by the Financing Documents and/or in
connection with the Financing Documents after the Closing Date, when considered together, contains
any untrue statement of a material fact or omits to state a material fact necessary to make the
statements contained herein or therein not misleading in light of the circumstances under which
such statements were made (it being recognized by Administrative Agent and Lenders that the
projections and forecasts provided by Borrowers in good faith and based upon reasonable assumptions
are not viewed as facts and that actual results during the period or periods covered by such
projections and forecasts may differ from the projected or forecasted results).



     Section 3.7 Interest Rate. The rate of interest paid under the Notes and the method and
manner of the calculation thereof do not violate any usury or other law or applicable Laws, any of
the Organizational Documents or any of the Financing Documents.



     Section 3.8 Taxes. All material Federal, state and local tax returns, reports and statements
(including all such with respect to employee income tax withholding, social security and
unemployment taxes) required to be filed by or on behalf of each Credit Party have been filed with
the appropriate Governmental Authorities in all jurisdictions in which such returns, reports and
statements are required to be filed for all periods for which returns were due and, except to the
extent subject to a Permitted Contest, all material taxes (including real property taxes, employee
income tax withholding, social security and unemployment taxes) and other charges shown to be due
and payable in respect thereof have been timely paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for nonpayment thereof (and, with respect to any
employee income tax withholding, social security and unemployment taxes not yet due, adequate
provision for the payment thereof has been made). Except to the extent subject to a Permitted
Contest, all state and local sales and use Taxes required to be paid by each Credit Party have been
paid.



     Section 3.9 Compliance with Covenants. Each Credit Party is in full compliance with all of
the terms and provisions of this Agreement and the other Financing Document, specifically including
without limitation each of the affirmative and negative covenants contained in Articles 4 and 5
below, and no Default or Event of Default has occurred and is continuing.



     Section 3.10 Litigation. There is no litigation or governmental proceeding pending or
threatened in writing against any Credit Party which could reasonably be expected to have a
Material Adverse Effect or which challenges the validity and enforceability of the Financing
Documents.



     Section 3.11 Reserved



     Section 3.12 Ownership of Property. Each Borrower and each of its Subsidiaries is the lawful
owner of, has good and marketable title to and is in lawful possession of, or has valid leasehold
interests in, all material properties and other assets (real or personal, tangible, intangible or
mixed) purported or reported to be owned or leased (as the case may be) by such Person.



     Section 3.13 No Default. No Event of Default, or to such Borrower’s knowledge, Default, has
occurred and is continuing. No Credit Party is in breach or default under or with respect to any
contract, agreement, lease or other instrument to which it is a party or by which its property is
bound or affected, which breach or default could reasonably be expected to have a Material Adverse
Effect.



     Section 3.14 Labor Matters. As of the Closing Date, there are no strikes or other labor
disputes pending or, to any Borrower’s knowledge, threatened against any Credit Party. Hours
worked and payments made to the employees of the Credit Parties have not been in violation of the
Fair Labor Standards Act or any other applicable Law dealing with such matters other than
violations that are both unintentional and immaterial. All



32









 




payments due from the Credit Parties, or for which any claim may be made against any of them, on
account of wages and employee and retiree health and welfare insurance and other benefits have been
paid or accrued as a liability on their books, as the case may be, except for the unintentional
failure to make immaterial payments. The consummation of the transactions contemplated by the
Financing Documents will not give rise to a right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to which it is a party or by which it
is bound.




     Section 3.15 Regulated Entities. No Credit Party is an “investment company” or a company
“controlled” by an “investment company” or a “subsidiary” of an “investment company,” all within
the meaning of the Investment Company Act of 1940.



     Section 3.16 Margin Regulations. None of the proceeds from the Loans have been or will be
used, directly or indirectly, for the purpose of purchasing or carrying any “margin stock” (as
defined in Regulation U of the Federal Reserve Board), for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any “margin stock” or for any other
purpose which might cause any of the Loans to be considered a “purpose credit” within the meaning
of Regulation T, U or X of the Federal Reserve Board.



     Section 3.17 Compliance With Laws. Each Credit Party is in compliance with the requirements
of all applicable Laws, except for such noncompliance which could not reasonably be expected to
have a Material Adverse Effect.



     Section 3.18 Compliance with ERISA.



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



     (b) During the thirty-six (36) month period prior to the Closing Date or the making of any
Loan, (i) no steps have been taken to terminate any Pension Plan and (ii) no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to a Lien under Section
302(f) of ERISA. No condition exists or event or transaction has occurred with respect to any
Pension Plan which could result in the incurrence by any Credit Party of any material liability,
fine or penalty. No Credit Party has incurred liability to the PBGC (other than for current
premiums) with respect to any employee Pension Plan. All contributions (if any) have been made on
a timely basis to any Multiemployer Plan that are required to be made by any Credit Party or any
other member of the Controlled Group under the terms of the plan or of any collective bargaining
agreement or by applicable Law; no Credit Party nor any member of the Controlled Group has
withdrawn or partially withdrawn from any Multiemployer Plan, incurred any withdrawal liability
with respect to any such plan or received notice of any claim or demand for withdrawal liability or
partial withdrawal liability from any such plan, and no condition has occurred which, if continued,
could result in a withdrawal or partial withdrawal from any such plan, and no Credit Party nor any
member of the Controlled Group has received any notice that any Multiemployer Plan is in
reorganization, that increased contributions may be required to avoid a reduction in plan benefits
or the imposition of any excise tax, that any such plan is or has been funded at a rate less than
that required under Section 412 of the Code, that any such plan is or may be terminated, or that
any such plan is or may become insolvent.



     Section 3.19 Compliance with Environmental Requirements; No Hazardous Materials.



     Except in each case as set forth on Schedule 3.19:



     (a) no notice, notification, demand, request for information, citation, summons, complaint or
order has been issued, no complaint has been filed, no penalty has been assessed and no
investigation or review is pending, or to such Borrower’s knowledge, threatened to or against any
Credit Party or any Credit Party’s real or



33









 




personal property (now owned or leased or previously owned or leased) by any Governmental
Authority or other Person with respect to any (i) alleged violation by any Credit Party of any
Environmental Law, (ii) alleged failure by any Credit Party to have any Permits under any
Environmental Law or relating to any Hazardous Materials required in connection with the conduct of
its business or to comply with the terms and conditions thereof, (iii) generation, treatment,
storage, recycling, transportation or disposal of any Hazardous Materials, or (iv) release of
Hazardous Materials in each case where the notice, notification, demand, request for information,
citation, summons, complaint or order could be reasonably expected to have a Materially Adverse
Effect; and




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


For purposes of this Section 3.19, each Credit Party shall be deemed to include any business or
business entity (including a corporation) that is, in whole or in part, a predecessor of such
Credit Party.




ARTICLE 4 — AFFIRMATIVE COVENANTS




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



     Section 4.1 Financial Statements and Other Reports. Each Borrower will deliver to
Administrative Agent: (1) as soon as available, but no later than the period then allowed for
fiscal quarterly reporting to the SEC per SEC Regulation S-K, a company prepared consolidated
balance sheet, cash flow and income statement covering such Borrower’s consolidated operations
during the period, prepared under GAAP, consistently applied, certified by a Responsible Officer
and in a form reasonably acceptable to Administrative Agent; (2) as soon as available, but no later
than the period then allowed for fiscal annual reporting to the SEC per SEC Regulation S-K after
the last day of the Borrower’s fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified opinion on the financial statements
from Ernst & Young or another independent certified public accounting firm acceptable to the
Administrative Agent in its reasonable discretion; (3) within five (5) days of delivery or filing
thereof, copies of all statements, reports and notices made available to Borrowers’ security
holders and copies of all reports and other filings made by Borrower with any stock exchange on
which any securities of any Borrower are traded and/or the SEC; (4) a prompt report of any legal
actions pending or threatened against any Borrower or any of its Subsidiaries that could result in
damages or costs to any Borrower or any of its Subsidiaries of $250,000 or more; (5) prompt written
notice after any Borrower becomes aware of an event that materially and adversely affects the value
of any Intellectual Property; and (6) budgets, sales projections, operating plans and other
financial information and information, reports or statements regarding the Borrowers, their
business and the Collateral as Administrative Agent may from time to time reasonably request. Each
Borrower will, in conjunction with the delivery of each set of financial statements required under
clause (l) above, deliver to Administrative Agent, a duly completed Compliance Certificate signed
by a Responsible Officer which shall, inter alia, set forth calculations showing compliance with
the financial covenants (if any) set forth in this Agreement. Promptly upon their becoming
available, Borrowers shall deliver to Administrative Agent copies of all swap agreements or other
derivative instruments to which any Borrower is a party. Each Borrower will, within ten (10) days
after the last day of each month, deliver to Administrative Agent a duly completed Borrowing Base
Certificate signed by a Responsible Officer, with (i) aged listings of accounts receivable and
accounts payable (by invoice date), (ii) the perpetual Inventory and (ii) a schedule of each
Borrower’s Equipment.



     Documents required to be delivered pursuant to this Section 4.1 (to the extent any such
documents are included in materials otherwise filed with the SEC) may be delivered electronically
and if so delivered, shall be deemed to have been delivered on the date on which Borrowers post
such documents, or provide a link thereto on the Principal Borrower’s website on the Internet at
the Principal Borrower’s website address of www.nxstage.com (or such other website address as
Borrowers may provide to Administrative Agent in writing from time to time);



34









 




provided, that: (x) to the extent Administrative Agent is otherwise unable to receive any
such electronically delivered documents, Borrowers shall, upon request by Administrative Agent,
deliver paper copies of such documents to Administrative Agent until a written request to cease
delivering paper copies is given by Administrative Agent and (y) Borrowers shall notify
Administrative Agent (by telecopier or electronic mail) of the posting of any such documents or
provide to Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such
documents.




     Section 4.2 Payment and Performance of Liabilities and Obligations. Each Borrower will (and
will cause each of its Subsidiaries to): (a)  pay and discharge at or prior to maturity, all of
their respective obligations and liabilities, including all tax liabilities of all kind, except for
such obligations and/or liabilities (i) that may be the subject of a Permitted Contest, and
(ii) the nonpayment or nondischarge of which could not reasonably be expected to have a Material
Adverse Effect; (b)  maintain in accordance with GAAP, appropriate reserves for the accrual of all
of their respective obligations and liabilities, including all tax liabilities of all kind; and
(c)  not breach or permit any Subsidiary to breach, or permit to exist any default under, the terms
of any Material Contract or any other lease, commitment, contract, instrument or obligation to
which it is a party, or by which its properties or assets are bound, except for such breaches or
defaults which could not reasonably be expected to have a Material Adverse Effect.



     Section 4.3 Maintenance of Existence; Property; Insurance.



     (a) Each Borrower will preserve, renew and keep in full force and effect and in good standing
(i) their respective existence and (ii) their respective rights, privileges and franchises
necessary in the normal conduct of business.



     (b) Each Borrower will, and will cause each of its Subsidiaries to, at all times be the lawful
owner of, have good and marketable title to and be in lawful possession of, or have valid leasehold
interests in, all material properties and other assets (real or personal, tangible, intangible or
mixed) purported or reported to be owned or leased (as the case may be) by such Person. Each
Borrower will keep all material property useful and necessary in its business in good working order
and condition, ordinary wear and tear excepted. If all or any material part of the Collateral
useful or necessary in its business, or upon which any Borrowing Base is calculated, becomes
damaged or destroyed, each Borrower will promptly and completely repair, replace and/or restore the
affected Collateral in a good and workmanlike manner.



     (c) Each Borrower will, and will cause each of its Subsidiaries to, maintain (i) all insurance
described on Schedule 4.3, upon the terms and with the coverages and rights in favor of
Administrative Agent and Lenders as described in Schedule 4.3, and (ii) such other
insurance coverage in such amounts and with respect to such risks as may be available at
commercially reasonable rates and as may be customary in the Borrowers’ business and industry and
that Administrative Agent may reasonably from time to time request provided, however, that, in no
event shall such insurance be in amounts or with coverage less than, or with carriers with
qualifications inferior to, any of the insurance or carriers in existence as of the Closing Date
(or required to be in existence after the Closing Date under a Financing Document), as evidenced by
the insurance certificates attached hereto as Schedule 4.3. All such insurance shall be
provided by insurers having an A.M. Best policyholders rating reasonably acceptable to
Administrative Agent. Borrowers will deliver to Administrative Agent (i) at least 30 days prior
to expiration of any policy of insurance, evidence of renewal of such insurance upon the terms and
conditions herein required, (ii) upon the request of any Lender through Administrative Agent from
time to time full information as to the insurance carried, (iii) within five (5) days of receipt of
notice from any insurer, a copy of any notice of cancellation, nonrenewal or material change in
coverage from that existing on the date of this Agreement, and (iv) forthwith, notice of any
cancellation or nonrenewal of coverage by any Borrower. In the event any Borrower (i) fails to
maintain the insurance coverage required by this Agreement, or (ii) fails to provide Administrative
Agent with evidence of the insurance coverage required by this Agreement and such failure to
provide evidence continues for five (5) Business Days, Administrative Agent may (but shall have no
obligation to) purchase insurance at Borrowers’ expense to protect Administrative Agent’s and each
Lender’s interests in the Collateral and to protect Administrative Agent and Lenders from liability
claims relating to the Borrowers’ operations, and the costs and expenses of Administrative Agent in
obtaining and paying the premiums on any such insurance shall constitute part of the Obligations
for which the Borrowers are jointly and severally liable hereunder and which are secured by the
Collateral. Subject to Section 2.1(a)(i)(B) and without limiting the generality of the foregoing,
in the event that any



35









 




Credit Party shall at any time receive any insurance proceeds under any property or casualty
insurance maintained by any Credit Party in connection with any casualty event involving the
Collateral, Borrowers shall and shall cause each Credit Party to immediately turn over and deliver
to Administrative Agent any and all such proceeds in the form received together with any necessary
endorsement thereto by any and all applicable Credit Parties.




     Section 4.4 Compliance with Laws and Contracts. Each Borrower will, and will cause each of
its Subsidiaries to, comply with the requirements of all applicable Laws and all Material
Contracts, except to the extent that failure to so comply could not reasonably be expected to
(a) have a Material Adverse Effect, or (b) result in any Lien other than a Permitted Lien upon
either (i) a material portion of the assets of any such Person in favor of any Governmental
Authority or (ii) any Collateral upon which the Borrowing Base is calculated. Schedule 4.4
sets forth a complete list of Material Contracts as of the Closing Date, and the closing on and
consummation of the transactions contemplated by the Financing Documents will not give rise to a
right of termination under any such Material Contract listed on Schedule 4.4 in favor of any party
(other than a Credit Party) to such Material Contract.



     Section 4.5 Inspection of Property, Books and Records. Each Borrower will permit at the sole
cost of Borrowers (subject, however, to any limitations set forth in Section 2.2(g)),
representatives of Administrative Agent and of any Lender to visit and inspect any of their
respective properties, to examine and make abstracts or copies from any of their respective books
and records, to conduct a collateral audit and analysis of their respective operations and the
Collateral, and to discuss their respective affairs, finances and accounts with their respective
officers, employees and independent public accountants as often as may reasonably be desired. In
the absence of an Event of Default, Administrative Agent or any Lender exercising any rights
pursuant to this Section shall give the applicable Borrower or any applicable Subsidiary
commercially reasonable prior notice of such exercise and shall attempt to schedule visits at
reasonable times so as to minimize the disruption to the Borrowers. No notice shall be required
during the existence and continuance of any Event of Default or any time during which
Administrative Agent reasonably believes an Event of Default exists.



     Section 4.6 Use of Proceeds. No portion of the proceeds of the Loans will be used for family,
personal, agricultural or household use.



     Section 4.7 Estoppel Certificates. After written request by Administrative Agent, Borrowers,
within fifteen (15) days and at their expense no more than twice a year unless an Event of Default
has occurred and is continuing, will furnish Administrative Agent with a statement, duly
acknowledged and certified, setting forth (a) the amount of the original principal amount of the
Notes, and the unpaid principal amount of the Notes, (b) the rate of interest of the Notes, (c) the
date payments of interest and/or principal were last paid, (d) any offsets or defenses to the
payment of the Obligations, and if any are alleged, the nature thereof, (e) that the Notes and this
Agreement have not been modified or if modified, giving particulars of such modification, and
(f) that there has occurred and is then continuing no Default or Event of Default or if such
Default or Event of Default exists, the nature thereof, the period of time it has existed, and the
action being taken to remedy such Default or Event of Default. After written request by
Administrative Agent, Borrowers, within fifteen (15) days and at their expense no more than twice a
year unless an Event of Default has occurred and is continuing, will furnish Administrative Agent
with a certificate, signed by a Responsible Officer of Borrowers, updating all of the
representations and warranties contained in this Agreement and the other Financing Documents and
certifying that all of the representations and warranties contained in this Agreement and the other
Financing Documents, as updated pursuant to such certificate, are true, accurate and complete as of
the date of such certificate.



     Section 4.8 Notices of Certain Events.



     (a) Borrowers will give, prompt written notice to Administrative Agent (a) of any litigation
or governmental proceedings pending or threatened (in writing) against Borrowers or other Credit
Party which would reasonably be expected to have a Material Adverse Effect with respect to
Borrowers or any other Credit Party or which challenges the validity or enforceability of any
Financing Document, (b) upon any Borrower becoming aware of the existence of any Default or Event
of Default, (c) if any Credit Party is in breach or default under or with respect to any Material
Contract, or if any Credit Party is in breach or default under or with respect to any other
contract, agreement, lease or other instrument to which it is a party or by which its property is
bound or affected, which breach or default could reasonably be expected to have a Material Adverse
Effect, (d) of any strikes or other labor disputes pending or, to any Borrower’s knowledge,
threatened against any Credit Party, (e) if there is any



36









 




infringement or claim of infringement by any other Person with respect to any Intellectual Property
rights of any Credit Party that could reasonably be expected to have a Material Adverse Effect, or
if there is any written claim by any other Person that any Credit Party in the conduct of its
business is infringing on the Intellectual Property Rights of others that could reasonably be
expected to have a Material Adverse Effect, and (f) of all returns, recoveries, disputes and claims
that involve more than $100,000. Borrowers represent and warrant that Schedule 4.8 sets
forth a complete list of all matters existing as of the Closing Date for which notice would be
required under this Section and all litigation or governmental proceedings pending or threatened
(in writing) against Borrowers or other Credit Party as of the Closing Date.




     (b) Without limiting the generality of the foregoing, Borrowers will give prompt written
notice to Administrative Agent (a) of the issuance of any notice, notification, demand, request for
information, citation, summons, complaint or order, filing of any complaint, assessment of any
penalty or initiation or initiation or threat to initiate any investigation or review , in each
such case whether by any Governmental Authority or other Person, with respect to any (i) alleged
violation by any Credit Party of any applicable Environmental Law, (ii) alleged failure by any
Credit Party to have any Permits relating to or granted under any applicable Environmental Law
required in connection with the conduct of its business or to comply with the terms and conditions
thereof, except where the failure to have such Permits relating to or granted under any
Environmental Law could not reasonably be expected to have a Material Adverse Effect, (iii) any
generation, treatment, storage, recycling, transportation or disposal of any Hazardous Materials by
any Credit Party, or (iv) release of Hazardous Materials by any Credit Party; (b) if any property
now owned or leased by any Credit Party or, to the knowledge of any Borrower, any property
previously owned or leased by any Credit Party, to which any Credit Party has, directly or
indirectly, transported or arranged for the transportation of any Hazardous Materials, becomes
listed or, to any Borrower’s knowledge, becomes proposed for listing, on the National Priorities
List promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any similar state list or
becomes the subject of Federal, state or local enforcement actions or, to the knowledge of any
Borrower, other investigations which may lead to claims against any Credit Party for clean-up
costs, remedial work, damage to natural resources or personal injury claims, including, without
limitation, claims under CERCLA. Borrowers represent and warrant that Schedule 4.8 sets
forth a complete list of all matters existing as of the Closing Date for which notice could be
required under this Section. For purposes of this Section 4.8(b), each Credit Party shall be
deemed to include any business or business entity (including a corporation) that is, in whole or in
part, a predecessor of such Credit Party to the extent such Credit Party could reasonably be
expected to incur liability in connection therewith.



     Section 4.9 Intellectual Property. Each Credit Party owns and shall own, is and will be
licensed to use or otherwise has and will have the right to use, all Intellectual Property that is
material to the condition (financial or other), business or operations of such Credit Party,
provided, that each Credit Party is and shall conduct its business without infringement or
claim of infringement of any Intellectual Property rights of others and there is no infringement or
claim of infringement by others of any Intellectual Property rights of any Credit Party, which
infringement or claim of infringement could reasonably be expected to have a Material Adverse
Effect. All such Intellectual Property registered with any United States or foreign Governmental
Authority (including without limitation any and all applications for the registration of any such
Intellectual Property with any such United States or foreign Governmental Authority) and all
licenses under which any Borrower is the licensee of any such registered Intellectual Property (or
any such application for the registration of Intellectual Property) owned by another Person are, as
of the Closing Date and updated as required below, set forth on Schedule 4.9. Such
Schedule 4.9 indicates in each case whether such registered Intellectual Property (or
application therefor) is owned or licensed by such Credit Party, and in the case of any such
licensed registered Intellectual Property (or application therefor), lists the name and address of
the licensor and the name and date of the agreement pursuant to which such item of Intellectual
Property is licensed and whether or not such license is an exclusive license and indicates whether
there are any purported restrictions in such license on the ability to such Credit Party to grant a
security interest in and/or to transfer any of its rights as a licensee under such license. Except
as indicated on Schedule 4.9, the applicable Credit Party is and all times shall be the
sole and exclusive owner of the entire and unencumbered right, title and interest in and to each
such registered Intellectual Property (or application therefor) purported to be owned by such
Borrower, free and clear of any Liens and/or licenses in favor of third parties or agreements or
covenants not to sue such third parties for infringement. All Intellectual Property of each Credit
Party is and shall be fully protected and/or duly and properly registered, filed or issued in the
appropriate office and jurisdictions for such registrations, filings or issuances, except where the
failure to do so would not reasonably be expected to have a Material Adverse Effect. Borrowers are
not and shall not become a party to, nor become bound by, any material license or other agreement



37









 




with respect to which any Borrower is the licensee that prohibits or otherwise restricts such
Borrower from granting a security interest in such Borrower’s interest in such license or agreement
or other property. Each Credit Party shall, to the extent it determines, in the exercise of its
reasonable business judgment, that it is prudent to do the following: (a) protect, defend and
maintain the validity and enforceability of its Intellectual Property; and (b) not allow any
Intellectual Property material to Borrower’s business to be abandoned, forfeited or dedicated to
the public without Administrative Agent’s written consent. Notwithstanding the foregoing,
Borrowers shall only be required to update Schedule 4.9 within 30 days of the end of each
calendar year beginning following the 2008 calendar year; provided, that, each
Credit Party shall provide Administrative Agent with written notice of any new registration of its
Intellectual Property with any Governmental Authority within 15 days of such registration;
provided, further, that it is understood that no Default or Event of Default will
result if a Borrower shall fail to include each item of registered Intellectual Property if such
Borrower is exercising commercially reasonable diligence when complying with such disclosures.




     Section 4.10 Further Assurances.



     (a) Each Borrower will, at its own cost and expense, cause to be promptly and duly taken,
executed, acknowledged and delivered all such further acts, documents and assurances as may from
time to time be necessary or as Administrative Agent or the Required Lenders may from time to time
reasonably request in order to carry out the intent and purposes of the Financing Documents and the
transactions contemplated thereby.



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



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



     (d) Before the Closing Date, and up to once per year thereafter (as and when determined by
Administrative Agent in its discretion), Administrative Agent shall have the right to perform, all
at Borrowers’ expense, the searches described in clauses (a), (b), (c) and (d) of this subsection
against Borrowers and any other Credit Party, the results of which are to be consistent with
Borrowers’ representations and warranties under this Agreement and the satisfactory results of
which shall be a condition precedent to all advances of Loan proceeds, all issuances of Lender
Letters of Credit and all undertakings in respect of Support Agreements: (a) UCC searches with the
Secretary of State of each jurisdiction in which the applicable Person is organized, and, if
applicable, local UCC fixture filings searches in each jurisdiction where any real estate
Collateral or fixtures Collateral is located; (b) judgment, pending litigation, federal tax lien,
personal property tax lien, and corporate and partnership tax lien searches, in the state and/or
local filing offices (as applicable) of each jurisdiction where the applicable Person maintains its
executive offices, a place of business, or assets and the jurisdiction in which the applicable
Person is organized; (c) real property title and lien searches in each jurisdiction in which any
real property Collateral owned by a Credit Party is located; and (d) searches of applicable
corporate, limited liability company, partnership and related records to confirm the continued
existence, organization and good standing of the applicable Person and the exact legal name under
which such Person is organized.



     (e) Upon the request of Administrative Agent, Borrowers shall make available to Administrative
Agent, without expense to Administrative Agent, Borrowers and their officers, employees and agents
and Borrowers’ books and records, to the extent that Administrative Agent may deem them reasonably
necessary to



38









 




prosecute or defend any third-party suit or proceeding instituted by or against Administrative
Agent or any Lender with respect to the Financing Documents, any Collateral or relating to any
Borrower.




     Section 4.11 Power of Attorney. Each of the officers of Administrative Agent is hereby
irrevocably made, constituted and appointed the true and lawful attorney for Borrowers (without
requiring any of them to act as such) with full power of substitution to do the following:
(a) endorse the name of Borrowers upon any and all checks, drafts, money orders, and other
instruments for the payment of money that are payable to Borrowers and constitute collections on
Borrowers’ Accounts; (b) so long as Administrative Agent has provided not less than ten (10)
Business Days’ prior written notice to Borrowers to perform the same and Borrowers have failed to
take such action, execute in the name of Borrowers any schedules, assignments, instruments,
documents, and statements that Borrowers are obligated to give Administrative Agent under this
Agreement; (c) after the occurrence and during the continuance of a Default, take any action
Borrowers are required to take under this Agreement; (d) so long as Administrative Agent has
provided not less than three (3) Business Days’ prior written notice to Borrowers to perform the
same and Borrowers have failed to take such action, do such other and further acts and deeds in the
name of Borrowers that Administrative Agent may deem necessary or desirable to perfect
Administrative Agent’s security interest or Lien in any Collateral; and (e) after the occurrence
and during the continuance of an Event of Default, do such other and further acts and deeds in the
name of Borrowers that Administrative Agent may deem necessary or desirable to enforce, and enforce
its rights with regard to, any Account or other Collateral. This power of attorney shall be
irrevocable and coupled with an interest.



     Section 4.12 Post Closing Requirements. Borrowers shall complete each of the post closing
obligations and/or provide to Administrative Agent each of the documents, instruments, agreements
and information listed on Schedule 4.12 attached hereto on or before the date set forth for
each such item thereon, each of which shall be completed or provided in form and substance
satisfactory to Administrative Agent.



     Section 4.13 Hazardous Materials; Remediation.



     (a) If any release or disposal of Hazardous Materials shall occur or shall have occurred on
any real property or any other assets of any Borrower or any Subsidiary or any other Credit Party,
such Borrower will cause, or direct the applicable Subsidiary or Credit Party to cause, the prompt
containment and removal of such Hazardous Materials and the remediation of such real property or
other assets as is necessary to comply with all applicable Environmental Laws and to preserve the
value of such real property or other assets unless failure to do so would not have a Materially
Adverse Effect. Without limiting the generality of the foregoing, each Borrower shall, and shall
cause each other Subsidiary and Credit Party to, materially comply with each applicable
Environmental Law requiring the performance at any real property by any Borrower or any other
Subsidiary or Credit Party of activities in response to the release or threatened release of a
Hazardous Material.



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



ARTICLE 5 — NEGATIVE COVENANTS




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



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



39









 





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



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



     Section 5.4
Consolidations,
Mergers and Sales of Assets; Change in Control. No Borrower will, or will permit any Subsidiary to, directly or indirectly (a) consolidate or merge or amalgamate with or into any other Person other than another Borrower other than a Permitted Acquisition or (b) consummate any Asset Dispositions other than Permitted Asset Dispositions. No Borrower will suffer or permit to
occur any Change in Control with respect to itself, any Subsidiary or any guarantor of the Obligations.



     Section 5.5
Purchase of Assets, Investments; New Subsidiaries.



     (a)
No
Borrower will, or will permit any Subsidiary to, directly or indirectly, without the prior written consent of Administrative Agent, (a) acquire or enter into any agreement to acquire any assets other than in the Ordinary Course of Business or Permitted Acquisitions; (b) engage or enter into any agreement to engage in any joint venture or partnership with any other Person; or (c) form, acquire or own
 or enter into any agreement to form, acquire or own any Investment in any Person, including any new Subsidiary, other than pursuant to Permitted Investments or Permitted Acquisitions.



     (b)
Upon
the formation or acquisition of a new Subsidiary as part of a Permitted Investment, Borrowers shall (i) pledge, have pledged or cause or have caused to be pledged to Administrative Agent pursuant to a pledge agreement in form and substance reasonably satisfactory to Administrative Agent, all of the outstanding equity interests of such new Subsidiary owned directly or indirectly by any Borrower, along with undated stock or equivalent powers for such equity interests, executed in
blank; (ii) unless Administrative Agent shall agree otherwise in writing, cause the new Subsidiary to take such other actions (including entering into or joining any Security Documents) as are necessary or advisable in the reasonable opinion of the Administrative Agent in order to grant the Administrative Agent, acting on behalf of the Lenders, a first priority Lien to secure the Obligations of all Credit Parties on all real and personal property and leasehold estates of such Subsidiary
in existence as of such date and in all after acquired property; (iii) unless Administrative Agent shall agree otherwise in writing,
cause such new Subsidiary to either (at the election of Administrative Agent) become a Borrower hereunder with joint and several liability
for all obligations of Borrowers hereunder and under the other Financing Documents pursuant to a joinder agreement or other similar
agreement in form and substance satisfactory to Administrative Agent or to become a guarantor of the Obligations pursuant to a guaranty and suretyship agreement in form and substance satisfactory to Administrative Agent; and (iv) cause the new Subsidiary to deliver certified copies of such Subsidiary’s certificate or articles of incorporation, together with good standing certificates, by-laws (or other operating agreement or governing documents), resolutions of the Board of
Directors or other governing body, approving and
authorizing the execution and delivery of the Security Documents, incumbency certificates and to execute and/or deliver such other
documents and legal opinions or to take such other actions as may be requested by the Administrative Agent, in each case, in form and substance satisfactory to the Administrative Agent. Notwithstanding the foregoing, if a Subsidiary that is so formed or acquired is a “controlled foreign corporation” (as such term is defined in the Code) and if Principal Borrower can reasonably demonstrate to Administrative Agent that the granting of a Lien in the assets of such Subsidiary would result in a material increase in the tax
liability to Borrowers, then clause (ii) and (iii) of the immediately preceding sentence shall not be applicable and, with
respect to clause (i) of the immediately preceding sentence, such pledge (or other appropriate security document) shall be limited to
65% of the voting power of all classes of capital stock of such Subsidiary entitled to vote; provided, that immediately upon the amendment
of the Code to allow for the pledge of a greater percentage of the voting power of capital stock in such Subsidiary without adverse tax
consequences, such pledge shall include such greater percentage of capital stock of such Subsidiary from that time forward.



     Section 5.6
Transactions
with Affiliates. Except as otherwise disclosed on
Schedule 5.6, and except for transactions that (i) are among Borrowers, (ii) are disclosed to
Administrative Agent in advance of being entered into and which
contain terms that are no less favorable to the applicable Borrower or any Subsidiary,
as the case may be, than those which might be obtained from a third party not an Affiliate of any Credit Party, (iii)




40












 




constitute Permitted
Indebtedness or Permitted Investments, or (iii) have a value of less than $250,000, no Borrower
will, or will permit any Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or the rendering of
any service) with any Affiliate of any Borrower.




     Section 5.7 Modification of Organizational Documents. No Borrower will, or will permit any
Subsidiary to, directly or indirectly, amend or otherwise modify any Organizational Documents of
such Person, except for Permitted Modifications.



     Section 5.8 Conduct of Business. No Borrower will, or will permit any Subsidiary to, directly
or indirectly, engage in any line of business other than those businesses engaged in on the Closing
Date and described on Schedule 5.8 and businesses reasonably related thereto.



     Section 5.9 Deposit Accounts and Securities Accounts. No Borrower will, or will permit any
Subsidiary to, directly or indirectly, establish any new Deposit Account or Securities Account
without prior written notice to Administrative Agent and unless Administrative Agent, such Borrower
or such Subsidiary and the bank, financial institution or securities intermediary at which the
account is to be opened enter into a Deposit Account Control Agreement or Securities Account
Control Agreement prior to or concurrently with the establishment of such Deposit Account or
Securities Account; provided, however, Subsidiaries that are not Credit Parties
shall be permitted to maintain (i) no more than $1,000,000 in the aggregate, of cash, Investment
Property, Securities or other assets in Deposit Accounts or Securities Accounts and (ii) a cash
collateral account as permitted pursuant to subpart (j) of Permitted Liens, in each case, in which
Administrative Agent does not have a perfected security interest. Borrowers represent and warrant
that Schedule 5.9 lists all of the Deposit Accounts and Securities Accounts of each
Borrower as of the Closing Date. The provisions of this Section requiring Deposit Account Control
Agreements shall not apply to (i) Deposit Accounts exclusively used for payroll, payroll taxes and
other employee wage and benefit payments to or for the benefit of Borrowers’ employees and
identified to Administrative Agent by Borrowers as such, (ii) the BankNorth escrow account
maintained for the benefit of Ozzy Property Management and its Affiliates as security for
obligations under real property leases with respect to premises leased by Borrowers in Lawrence and
Andover, MA, to the extent such escrow account’s balance does not exceed $275,000 and (iii) other
Deposit Accounts to the extent their aggregate balances do not exceed $25,000.



     Section 5.10 Reserved.



     Section 5.11 Compliance with Anti-Terrorism Laws. Administrative Agent hereby notifies
Borrowers that pursuant to the requirements of Anti-Terrorism Laws, and Administrative Agent’s
policies and practices, Administrative Agent is required to obtain, verify and record certain
information and documentation that identifies Borrowers and its principals, which information
includes the name and address of each Borrower and its principals and such other information that
will allow Administrative Agent to identify such party in accordance with Anti-Terrorism Laws. No
Borrower will, or will permit any Subsidiary to, directly or indirectly, knowingly enter into any
Material Contracts with any Blocked Person or any Person listed on the OFAC Lists. Each Borrower
shall immediately notify Administrative Agent if such Borrower has knowledge that any Borrower or
any additional Credit Party becomes a Blocked Person or becomes listed on the OFAC Lists or (a) is
convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over
on charges involving money laundering or predicate crimes to money laundering. No Borrower will,
or will permit any Subsidiary to, directly or indirectly, (i) conduct any business or engage in any
transaction or dealing with any Blocked Person, including, without limitation, the making or
receiving of any contribution of funds, goods or services to or for the benefit of any Blocked
Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests
in property blocked pursuant to Executive Order No. 13224, any similar executive order or other
Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or
avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in Executive Order No. 13224 or other Anti-Terrorism Law.



     Section 5.12 Regulated Entities and Activities; Pensions. No Borrower will, or will permit
any of its Subsidiaries (or, in the case of clauses (c), (d), (e) or (f), any ERISA Affiliate) to,
(a) become an “investment company” or a company “controlled” by an “investment company” or a
“subsidiary” of an “investment company,” all within the meaning of the Investment Company Act of
1940; (b) undertake as one of its important activities



41









 




extending credit to purchase or carry
“margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve System)
or use any of the proceeds of any Loan directly or indirectly for the purchase of purchasing or
carrying, or for the purpose of reducing or retiring any indebtedness which was originally used to
purchase or carry, any margin stock or for any other purpose which might cause any of the Loans to
be considered a “purpose credit” within the meaning of Regulation T, U or X of the Federal Reserve
Board; (c) maintain or contribute to or become obligated to maintain or contribute to any Pension
Plan or any Multiemployer Plan or incur any material liability under Title IV of ERISA; (d) fail to
meet the applicable minimum funding requirements of ERISA with respect to any ERISA Employee
Benefit Plan (to the extent any such minimum funding requirements exist with respect to any such
ERISA Employee Benefit Plan), or permit a “reportable event”, as defined in Section 4043(c) of
ERISA (other than an event for which the notice requirement is waived), or a non-exempt prohibited
transaction, as described in Section 406 of ERISA, to occur with respect to any Pension Plan, or
make any amendment to any ERISA Employee Benefit Plan which will result or could reasonably be
expected to result in the imposition of a Lien on any property or assets of any Borrower or any
such Subsidiary (or ERISA Affiliate) or the requirement that any Borrower or any such Subsidiary
(or ERISA Affiliate) post a bond or provide other security under ERISA or the Code; (e) withdraw or
permit any such Subsidiary (or ERISA Affiliate) to withdraw from participation in, permit partial
or complete termination of, or permit the occurrence of any other event with respect to, any
present Pension Plan that could reasonably be expected to result in any liability of any Borrower
to the Pension Benefit Guaranty Corporation or its successors or any other governmental agency; (f)
 fail to pay (or cause its Subsidiaries to pay) all amounts and make all contributions necessary to
fund all present Pension Plans in accordance with their terms, or fail to fund or make any and all
contributions to any “401(k)”, “profit sharing” or similar defined contribution plan except to the
extent that failure to so fund or make contributions to any such “401(k)”, “profit sharing” or
similar defined contribution plan would not reasonably be expected to have a Material Adverse
Effect, or (g) fail to comply with the Federal Fair Labor Standards Act other than failures that
are both unintentional and immaterial.




     Section 5.13 Reserved.



     Section 5.14 Specified Contracts. No Borrower will, or will permit any Subsidiary to, amend,
modify, waive or terminate any material term of (i) the License Agreement dated as of June 1, 2007
by and between DSU Medical Corporation, as licensor, and Medisystems Corporation, as licensee, in
any manner nor, (ii) as to any other contract specified on Schedule 5.14 hereto, in any
manner that could reasonably be expected to cause a violation of Section 6.2.



ARTICLE 6 — FINANCIAL COVENANTS




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



     “Approved Goods and Services” means goods sold and/or services rendered by Borrowers in the
Ordinary Course of Business, in compliance with all Laws in all material respects, and consistent
with the type of goods sold and/or services rendered by Borrowers throughout all or substantially
all of its business operations as of the Closing Date or otherwise expressly permitted hereunder.



     “Consolidated EBITDA” means, for any period of four consecutive fiscal quarters, Consolidated
Net Income for such period plus (a) without duplication and to the extent deducted in determining
such Consolidated Net Income, the sum of (i) consolidated interest expense for such period, (ii)
consolidated income tax expense for such period, (iii) all amounts attributable to depreciation and
amortization for such period, (iv) noncash equity-based compensation expense for such period and
(v) any nonrecurring noncash charges for such period, and minus (b) to the extent included in
determining such Consolidated Net Income, any nonrecurring gains for such period; all determined on
a consolidated basis in accordance with GAAP.



     “Consolidated Net Income” means, for any fiscal period, the net income of the the Borrowers
and their Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.




     “MDS EBITDA” means, for any period of four consecutive fiscal quarters, MDS Net Income for
such period plus (a) without duplication and to the extent deducted in determining such MDS Net
Income, the sum of (i)




42









 







interest expense for such period, (ii) income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such period, (iv) noncash
equity-based compensation expense for such period and (v) any nonrecurring noncash charges for such
period, and minus (b) to the extent included in determining such MDS Net Income, any nonrecurring
gains for such period; all determined on a stand-alone basis in accordance with GAAP and consistent
with Medisystems Corporation’s financial statements prior to its acquisition by the Principal
Borrower.




     “MDS Net Income” means, for any fiscal period, the pro forma net income of Medisystems
Corporation for such period, determined on a stand-alone basis in accordance with GAAP and
consistent with Medisystems Corporation’s financial statements prior to its acquisition by the
Principal Borrower.



     “MDS Net Revenues” means Net Revenues of Medisystems Corporation, determined on a stand-alone
basis in accordance with GAAP and consistent with Medisystems Corporation’s financial statements
prior to its acquisition by the Principal Borrower.



     “Net Revenues” means revenue from Approved Goods and Services when earned in accordance with
GAAP, net of discounts to customers, customer rebates and sales returns and allowances.



     “Positive Consolidated EBITDA Date” means the last day of the second consecutive calendar
quarter for which Consolidated EBITDA is greater than zero.



     Section 6.2 Minimum Net Revenues. Borrowers agree that an Event of Default shall be deemed to
have occurred under this Agreement if the Borrowers’ Net Revenues for any twelve month trailing
period preceding the end of each calendar quarter below (which shall be the Defined Period) shall
be less than the amounts set forth below:



	 	 	 
	Defined Period Ending	 	Minimum Net Revenues for Defined Period
	 
	December 31, 2007
	 	$44,900,000
	March 31, 2008
	 	$62,000,000
	June 30, 2008
	 	$80,000,000
	September 30, 2008
	 	$97,000,000
	December 31, 2008
	 	$105,000,000
	March 31, 2009
	 	$118,000,000
	June 30, 2009
	 	$132,000,000
	September 30, 2009
	 	$146,000,000
	December 31, 2009
	 	$160,000,000
	March 31, 2010
	 	$180,000,000
	June 30, 2010
	 	$200,000,000
	September 30, 2010
	 	$223,000,000
	December 31, 2010
	 	$242,000,000
	March 31, 2011
	 	$260,000,000
	June 30, 2011
	 	$276,000,000






     Section 6.3 Minimum MDS EBITDA. Borrowers agree that an Event of Default shall be deemed to
have occurred under this Agreement if, prior to the Positive Consolidated EBITDA Date, both (a) MDS
EBITDA as of the end of any calendar quarter is below $6,000,000 for the twelve month trailing
period preceding the end of such calendar quarter and (b) MDS Net Revenues as of the end of such
calendar quarter are less than $50,000,000 for such twelve month trailing period.



     Section 6.4 Evidence of Compliance. Borrowers shall furnish to Administrative Agent, together
with the financial reporting required of Borrowers in Section 4.1 hereof, evidence (in form and
content satisfactory
to Lender) of Borrowers’ compliance with the covenants in this Article and evidence that no Event
of Default specified in this Article has occurred. Such evidence shall include, without
limitation, (a) a statement and report, on a form approved by Administrative Agent, detailing
Borrowers’ calculations, and (b) if reasonably requested by Administrative Agent, back-up
documentation (including, without limitation, invoices, receipts and other evidence



43









 




of costs
incurred during such quarter as Administrative Agent shall reasonably require) evidencing the
propriety of the calculations.




ARTICLE 7 — CONDITIONS




     Section 7.1 Conditions to Closing. The obligation of each Lender to make the initial Loans,
of Administrative Agent to issue any Support Agreements on the Closing Date and of any LC Issuer to
issue any Lender Letter of Credit on the Closing Date shall be subject to the receipt by
Administrative Agent of each agreement, document and instrument set forth on the closing checklist
prepared by Administrative Agent or its counsel, each in form and substance satisfactory to
Administrative Agent and Lenders, and such other closing deliverables reasonably requested by
Administrative Agent and Lenders, and to the satisfaction of the following conditions precedent,
each to the satisfaction of Administrative Agent and Lenders and their respective counsel in their
sole discretion: (a) the payment of all fees, expenses and other amounts due and payable under
each Financing Document; (b) the absence, as of December 31, 2006, of any material adverse change
in any aspect of the business, operations, properties or financial condition of any Credit Party,
or any event or condition which could reasonably be expected to result in such a material adverse
change; and (c) the receipt by Administrative Agent of such other documents, instruments and/or
agreements as Administrative Agent may reasonably request.



     Section 7.2 Conditions to Each Loan, Support Agreement and Lender Letter of Credit. In
addition to the conditions set forth in Section 7.1, the obligation of the Lenders to make a Loan
(other than Revolving Loans made pursuant to Section 2.5(c)) or an advance in respect of any Loan,
of Administrative Agent to issue any Support Agreement or of any LC Issuer to issue any Lender
Letter of Credit, including on the Closing Date, is subject to the satisfaction of the following
additional conditions, compliance with which shall be determined by Administrative Agent: (a) the
fact that, immediately before and after such advance or issuance, no Default or Event of Default
shall have occurred and be continuing; (b) the fact that the representations and warranties of each
Credit Party contained in the Financing Documents shall be true, correct and complete in all
material respects on and as of the date of such advance or issuance, except to the extent that any
such representation or warranty relates to an earlier date in which case such representation or
warranty shall be true and correct in all material respects as of such earlier date; (c) the fact
that no adverse change in the financial condition, properties, business, prospects, or operations
of Borrowers or any other Credit Party taken as a whole shall have occurred and be continuing with
respect to Borrowers or any Credit Party since the date of this Agreement; and (d) with respect to
the making of Revolving Loans, the establishment of a Lockbox in accordance with Section 2.11.
Each giving of a Notice of LC Credit Event hereunder, each giving of a Notice of Borrowing
hereunder and each acceptance by any Borrower of the proceeds of any Loan made hereunder shall be
deemed to be a representation and warranty by each Borrower on the date of such notice or
acceptance as to the facts specified in this Section.



ARTICLE 8 – RESERVED




ARTICLE 9 — SECURITY AGREEMENT




     Section 9.1 Generally. As security for the payment and performance of the Obligations, and
without limiting any other grant of a Lien and security interest in any Security Document,
Borrowers hereby grant and pledge to Administrative Agent, for the benefit of Lenders and
Administrative Agent, a continuing first priority Lien on and security interest in, upon, and to
the personal property set forth on Schedule 9.1 attached hereto and made a part hereof.



     Section 9.2 Representations and Warranties and Covenants Relating to Collateral.



     (a) Borrowers shall not, and shall not permit any Credit Party to, take any of the following
actions or make any of the following changes unless Borrowers have given at least thirty (30) days
prior written notice to Administrative Agent of Borrowers’ intention to take any such action (which
such written notice shall include an updated version of any Schedule impacted by such change) and
have executed any and all documents, instruments
and agreements and taken any other actions which Administrative Agent may reasonably request
after receiving such written notice in order to protect and preserve the Liens, rights and remedies
of Administrative Agent with respect to the Collateral: (i) change the legal name or
organizational identification number of any Borrower as it appears in official filings in the
jurisdiction of its organization, (ii) change the jurisdiction of incorporation or



44









 




formation of any
Borrower or Credit Party or allow any Borrower or Credit Party to designate any jurisdiction as an
additional jurisdiction of incorporation for such Borrower or Credit Party, or change the type of
entity that it is, or (iii) change its chief executive office, principal place of business, or the
location of its records concerning the Collateral or move any Collateral to or place any Collateral
on any location that is not then listed on the Schedules and/or establish any business location at
any location that is not then listed on the Schedules.




     (b) Borrowers shall not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any Account Debtor, or allow any credit or discount thereon (other than
adjustments, settlements, compromises, credits and discounts in the Ordinary Course of Business,
made while no Default or Event of Default exists and in amounts which are not material and which,
after giving effect thereto, do not cause the Borrowing Base to be less than the Revolving Loan
Outstandings) without the prior written consent of Administrative Agent. Without limiting the
generality of this Agreement or any other provisions of any of the Financing Documents relating to
the rights of Administrative Agent after the occurrence and during the continuance of an Event of
Default, Administrative Agent shall have the right at any time after the occurrence and during the
continuance of an Event of Default to: (i) exercise the rights of Borrowers with respect to the
obligation of any Account Debtor to make payment or otherwise render performance to Borrowers and
with respect to any property that secures the obligations of any Account Debtor or any other Person
obligated on the Collateral, and (ii) adjust, settle or compromise the amount or payment of such
Accounts.



     (c) (i) Borrowers shall deliver to Administrative Agent all Tangible Chattel Paper and all
Instruments and Documents owned by any Borrower and constituting part of the Collateral duly
endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to Administrative Agent. Borrowers shall provide Administrative Agent with
“control” (as defined in Article 9 of the UCC) of all Electronic Chattel Paper owned by any
Borrower and constituting part of the Collateral by having Administrative Agent identified as the
assignee on the records pertaining to the single authoritative copy thereof and otherwise complying
with the applicable elements of control set forth in the UCC. Borrowers also shall deliver to
Administrative Agent all security agreements securing any such Chattel Paper and securing any such
Instruments. Borrowers will mark conspicuously all such Chattel Paper and all such Instruments and
Documents with a legend, in form and substance satisfactory to Administrative Agent, indicating
that such Chattel Paper and such Instruments and Documents are subject to the security interests
and Liens in favor of Administrative Agent created pursuant to this Agreement and the Security
Documents. Borrowers shall comply with all the provisions of Section 5.9 with respect to the
Deposit Accounts and Securities Accounts of Borrowers. Notwithstanding the foregoing, no FF&E
leases constituting Chattel Paper shall be required to be delivered to Administrative Agent unless
an Event of Default occurs and is continuing; provided, that, (i) each such FF&E
lease is listed on Schedule 9.2(c) and such schedule is updated on a monthly basis, (ii) only one
original of each such FF&E lease shall be created, (iii) all original FF&E leases shall be stored
in Principal Borrower’s chief executive office and (iii) copies of representative examples of such
FF&E leases containing proper legends in accordance with this Section 9.2(c) shall be delivered to
Administrative Agent upon request.



          (ii) Except for Letters of Credit with an aggregate face amount of less than $250,000 at any
time, Borrowers shall deliver to Administrative Agent all letters of credit on which any Borrower
is the beneficiary and which give rise to Letter-of-Credit Rights owned by such Borrower which
constitute part of the Collateral in each case duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to Administrative
Agent. Borrowers shall take any and all actions as may be necessary or desirable, or that
Administrative Agent may request, from time to time, to cause Administrative Agent to obtain
exclusive “control” (as defined in Article 9 of the UCC) of any such Letter-of-Credit Rights in a
manner acceptable to Administrative Agent.




          (iii) Except for Commercial Tort Claims in an aggregate amount of less than $250,000 at any
time, Borrowers shall promptly advise Administrative Agent upon any Borrower becoming aware that it
has any interests in any Commercial Tort Claim that constitutes part of the Collateral, which such
notice shall include descriptions of the events and circumstances giving rise to such Commercial
Tort Claim and the dates such events
and circumstances occurred, the potential defendants with respect such Commercial Tort Claim and
any court proceedings that have been instituted with respect to such Commercial Tort Claim, and
Borrowers shall, with respect to any such Commercial Tort Claim, execute and deliver to
Administrative Agent such documents as




45









 







Administrative Agent shall request to perfect, preserve or
protect the Liens, rights and remedies of Administrative Agent with respect to any such Commercial
Tort Claim.




          (iv) Except for Accounts and Inventory in an aggregate amount not to exceed $250,000 and FF&E,
no Accounts or Inventory or other Collateral shall at any time be in the possession or control of
any warehouse, consignee, bailee or any of Borrowers’ agents or processors without prior written
notice to Administrative Agent and the receipt by Administrative Agent, if Administrative Agent has
so requested, of warehouse receipts, consignment agreements or bailee lien waivers (as applicable)
reasonably satisfactory to Administrative Agent prior to the commencement of such possession or
control. Borrowers have notified Administrative Agent that Inventory is currently located at the
locations set forth on Schedule 9.2. Borrowers shall, upon the request of Administrative
Agent, notify any such warehouse, consignee, bailee, agent or processor of the security interests
and Liens in favor of Administrative Agent created pursuant to this Agreement and the Security
Documents, instruct such Person to hold all such Collateral for Administrative Agent’s account
subject to Administrative Agent’s instructions and shall obtain an acknowledgement from such Person
that such Person holds the Collateral for Administrative Agent’s benefit.




          (v) Upon request of Administrative Agent, Borrowers shall promptly deliver to Administrative
Agent any and all certificates of title, applications for title or similar evidence of ownership of
all such tangible Personal Property and shall cause Administrative Agent to be named as lienholder
on any such certificate of title or other evidence of ownership. Borrowers shall not permit any
such tangible Personal Property to become Fixtures to real estate unless such real estate is
subject to a Lien in favor of Administrative Agent.




          (vi) Each Borrower hereby authorizes Administrative Agent to file without the signature of
such Borrower one or more UCC financing statements relating to liens on personal property relating
to all or any part of the Collateral, which financing statements may list Administrative Agent as
the “secured party” and such Borrower as the “debtor” and which describe and indicate the
collateral covered thereby as all or any part of the Collateral under the Financing Documents, in
such jurisdictions as Administrative Agent from time to time determines are appropriate, and to
file without the signature of such Borrower any continuations of or corrective amendments to any
such financing statements, in any such case in order for Administrative Agent to perfect, preserve
or protect the Liens, rights and remedies of Administrative Agent and Lenders with respect to the
Collateral.




          (vii) Borrowers shall furnish to Administrative Agent from time to time any statements and
schedules further identifying or describing the Collateral and any other information, reports or
evidence concerning the Collateral as Administrative Agent may reasonably request from time to
time.




          (viii) Subject to Section 11.17, Borrowers hereby acknowledge and agree that, at all times
during which any of the Lenders have any obligations or commitments to make loans or extensions of
credit under this Agreement and/or any of the Obligations (other than contingent indemnification
obligations with respect to matters not yet known to Administrative Agent) are not yet paid in
full, then, as between Borrowers on the one hand and Administrative Agent and Lenders on the other
hand, any Lender (and/or any Affiliate of any Lender) that has control over and a Lien on any
Deposit Account or Security Account of any Borrower to secure any indebtedness, liabilities or
obligations other than the Obligations under the Financing Documents shall be deemed to hold such
Lien and to have control over any such Deposit Accounts or Security Accounts both for its own
benefit to secure such other indebtedness, liabilities and obligations and as agent for perfection
for the benefit of the Administrative Agent and the Lenders to secure the Obligations under the
Financing Documents (and to the extent such a dual Lien in any such Deposit Account or Securities
Account has not yet been granted to any such Lender (or Affiliate of Lender), Borrowers hereby make
such grant), all subject, as among the Lenders and Administrative Agent but without creating any
third party beneficiary rights in Borrowers to any additional agreement among Lenders and
Administrative Agent (including any such agreement in Article 11 below) regarding their respective
rights and remedies with respect to such Deposit Accounts and Securities Accounts.



     Section 9.3 UCC Remedies.



     (a) Upon the occurrence of and during the continuance of an Event of Default under this
Agreement 


46









 








or the other Financing Documents, Required Lenders may direct Administrative Agent to
commence the exercise of rights and remedies against Borrowers and the Collateral for its benefit
and for the benefit of the Lenders. Upon (but not before) receipt by Administrative Agent of such
a direction from Required Lenders, Administrative Agent shall so commence such exercise of rights
and remedies, and Administrative Agent (without the need for further instructions or direction or
consent of Required Lenders), in addition to all other rights, options, and remedies granted to
Administrative Agent under this Agreement or at law or in equity, may exercise, either directly or
through one or more assignees or designees, all rights and remedies granted to it under all
Financing Documents and under the UCC in effect in the applicable jurisdiction(s) and under any
other applicable law; including, without limitation:



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




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




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




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




          (v) The right to enforce Borrowers’ rights against Account Debtors and other obligors,
including, without limitation, (i) the right to collect Accounts directly in Administrative Agent’s
own name (as agent for Lenders) and to charge the collection costs and expenses, including
attorneys’ fees, to Borrowers, and (ii) the right, in the name of Administrative Agent or any
designee of Administrative Agent or Borrowers, to verify the validity, amount or any other matter
relating to any Accounts by mail, telephone, telegraph or otherwise, including, without limitation,
verification of Borrowers’ compliance with applicable Laws. Borrowers shall cooperate fully with
Administrative Agent in an effort to facilitate and promptly conclude such verification process.
Such verification may include contacts between Administrative Agent and applicable federal, state
and local regulatory authorities having jurisdiction over the Borrowers’ affairs, all of which
contacts Borrowers hereby irrevocably authorize.




     (b) Each Borrower agrees that a notice received by it at least ten (10) days before the time
of any intended public sale, or the time after which any private sale or other disposition of the
Collateral is to be made, shall be deemed to be reasonable notice of such sale or other
disposition. If permitted by applicable law, any perishable Collateral which threatens to speedily
decline in value or which is sold on a recognized market may be sold immediately by Administrative
Agent without prior notice to Borrowers. At any sale or disposition of Collateral in an exercise
of rights and remedies, Administrative Agent may (to the extent permitted by applicable law)
purchase all or any part of the Collateral, free from any right of redemption by Borrowers, which
right is hereby waived and released. Each Borrower covenants and agrees not to interfere with or
impose any obstacle to Administrative Agent’s exercise of its rights and remedies with respect to
the Collateral. Administrative Agent shall have no obligation to clean-up or otherwise prepare the
Collateral for sale. Administrative Agent may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and compliance
will not be considered to



47









 




adversely affect the commercial reasonableness of any sale of the
Collateral. Administrative Agent may sell the Collateral without giving any warranties as to the
Collateral. Administrative Agent may specifically disclaim any warranties of title or the like.
This procedure will not be considered to adversely affect the commercial reasonableness of any sale
of the Collateral. If Administrative Agent sells any of the Collateral upon credit, Borrowers will
be credited only with payments actually made by the purchaser, received by Administrative Agent and
applied to the indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, Administrative Agent may resell the Collateral in an exercise of rights and remedies
and Borrowers shall be credited with the proceeds of the sale. Borrowers shall remain liable for
any deficiency if the proceeds of any such sale or disposition of the Collateral are insufficient
to pay all Obligations.




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



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



ARTICLE 10 — EVENTS OF DEFAULT




     Section 10.1 Events of Default.



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



     (a) any Borrower shall fail to pay when due any principal, interest, premium or fee under any
Financing Document or any other amount payable under any Financing Document, in each case within
three (3) Business Days after any such principal, interest or fee becomes due, or there shall occur
any default in the performance of or compliance with Section 2.11 or 4.14;



     (b) any Credit Party defaults in the performance of or compliance with any term contained in
this Agreement or in any other Financing Document (other than occurrences described in other
provisions of this Section 10.1 for which a different grace or cure period is specified or for
which no grace or cure period is specified and thereby constitute immediate Events of Default) and
such default is not remedied by the Credit Party or waived by Administrative Agent within (i) with
respect to any default under Article 5, Section 4.1, Section 4.3(a), or Section 4.3(c), upon the
occurrence of such default or the event giving rise to such default; (ii) with respect to all other
matters, thirty (30) days after the earlier of the date on which (x) any Borrower has actual
knowledge of such default or (y) Borrower Representative receives notice thereof from
Administrative Agent or the Required Lenders;



     (c) any representation, warranty, certification or statement made by any Credit Party or any
other Person in any Financing Document or in any certificate, financial statement or other document
delivered pursuant to any Financing Document is incorrect in any respect (or in any material
respect if such representation, warranty, certification or statement is not by its terms already
qualified as to materiality) when made (or deemed made);



     (d) failure of any Credit Party to pay when due or within any applicable grace period any
principal, interest or other amount on Debt (other than the Loans), or the occurrence of any
breach, default, condition or event with respect to any Debt (other than the Loans), if the effect
of such failure or occurrence is to cause or to permit the



48









 




holder or holders of any such Debt to
cause Debt or other liabilities having an individual principal amount in excess of $250,000 or
having an aggregate principal amount in excess of $1,000,000 to become or be declared due prior to
its stated maturity;




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



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



     (g) (i) institution of any steps by any Person to terminate any Pension Plan of any Borrower,
or any of its Subsidiaries or ERISA Affiliates (if any such Pension Plan exists) if as a result of
such termination any Credit Party or any ERISA Affiliate could reasonably be expected to be
required to make a contribution to such Pension Plan, or could reasonably be expected to incur a
liability or obligation to such Pension Plan, in excess of $1,000,000, (ii) a contribution failure
occurs with respect to any Pension Plan of any Borrower, or any of its Subsidiaries or ERISA
Affiliates (if any such Pension Plan exists) sufficient to give rise to a Lien on any property or
assets of any Borrower or any of its Subsidiaries or ERISA Affiliates under Section 302(f) of
ERISA, or (iii) there shall occur any complete withdrawal or partial withdrawal from a
Multiemployer Plan by any Borrower, or any of its Subsidiaries or ERISA Affiliate (if any such
Multiemployer Plan to which any Borrower, or any of its Subsidiaries or ERISA Affiliate contributes
exists) and the withdrawal liability (without unaccrued interest) of Borrowers, and their
Subsidiaries and ERISA Affiliates to Multiemployer Plans to which any of them contributes or has
contributed (including any outstanding withdrawal liability that such Borrower, or any applicable
Subsidiary or ERISA Affiliate has incurred on the date of such withdrawal) exceeds $1,000,000;



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



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



     (j) the institution by any Governmental Authority of criminal proceedings against any Credit
Party involving (i) moral turpitude or (ii) a felony;



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



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



49









 





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



     (n) the occurrence of any fact, event or circumstance that has or that could reasonably be
expected to result in a Material Adverse Effect.



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



     Section 10.2 Acceleration and Suspension or Termination of Revolving Loan Commitment and Term
Loan Commitment. Upon the occurrence and during the continuance of an Event of Default,
Administrative Agent shall if required by Required Lenders (but not until so requested), (a) by
notice to Borrower Representative suspend or terminate the Revolving Loan Commitment and Term Loan
Commitment and the obligations of Administrative Agent and Lenders with respect thereto, in whole
or in part (and, if in part, each Lender’s Revolving Loan Commitment and Term Loan Commitment shall
be reduced in accordance with its Pro Rata Share), and/or (b) by notice to Borrower Representative
declare the Obligations to be, and the Obligations shall thereupon become, immediately due and
payable without presentment, demand, protest or other notice of any kind, all of which are hereby
waived by each Borrower and Borrowers will pay the same; provided, however, that in the case of any
of the Events of Default specified in Section 10.1(e) or 10.1(f) above, without any notice to any
Borrower or any other act by Administrative Agent or the Lenders, the Revolving Loan Commitment and
Term Loan Commitment and the obligations of Administrative Agent and the Lenders with respect
thereto shall thereupon immediately and automatically terminate and all of the Obligations shall
become immediately and automatically due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by each Borrower and Borrowers will pay the
same.



     Section 10.3 Cash Collateral. If (a) any Event of Default specified in Section 10.1(e) or
10.1(f) shall occur, (b) the Obligations shall have otherwise been accelerated pursuant to
Section 10.2, or (c) the Revolving Loan Commitment and the obligations of Administrative Agent and
the Lenders with respect thereto shall have been terminated pursuant to Section 10.2, then without
any request or the taking of any other action by Administrative Agent or the Lenders, Borrowers
shall immediately comply with the provisions of Section 2.5(e) with respect to the deposit of cash
collateral to secure the existing Letter of Credit Liability and future payment of related fees.



     Section 10.4 Default Rate of Interest. At the election of Administrative Agent or Required
Lenders, after the occurrence of an Event of Default and for so long as it continues, (a) the Loans
and other Obligations shall bear interest at rates that are five percent (5.0%) per annum in excess
of the rates otherwise payable under this Agreement, and (b) the fee described in Section 2.5(b)
shall increase by a rate that is five percent (5.0%) in excess of the rate otherwise payable under
such Section; provided that, notwithstanding anything to the contrary contained in the foregoing or
otherwise in this Agreement, the increased rates of default interest and fees under Section 2.5(b)
provided for in this section shall be applicable automatically and immediately upon the occurrence
and during the continuance of any Event of Default occurring under Section 10.1(e) or 10.1(f) above
without the necessity of any further affirmative action by any party.



     Section 10.5 Setoff Rights. During the continuance of any Event of Default, each Lender is
hereby authorized by each Borrower at any time or from time to time, with reasonably prompt
subsequent notice to such Borrower (any prior or contemporaneous notice being hereby expressly
waived) to set off and to appropriate and to apply any and all (a) balances held by such Lender or
any of such Lender’s Affiliates at any of its offices for the account of such Borrower or any of
its Subsidiaries (regardless of whether such balances are then due to such Borrower or its
Subsidiaries), and (b) other property at any time held or owing by such Lender to or for the credit
or for the account of such Borrower or any of its Subsidiaries, against and on account of any of
the Obligations; except that no Lender shall exercise any such right without the prior written
consent of Administrative Agent, subject to Section 11.17. Any Lender exercising a right to set
off shall purchase for cash (and the other Lenders shall sell) interests in each of such other
Lender’s Pro Rata Share of the Obligations as would be necessary to cause all
Lenders to share the amount so set off with each other Lender in accordance with their respective
Pro Rata Share of the Obligations. Each Borrower agrees, to the fullest extent permitted by law,
that any Lender and any of such Lender’s Affiliates may exercise its right to set off with respect
to the Obligations as provided in this Section.




50












 





     Section 10.6 Application of Proceeds. Notwithstanding anything to the contrary contained in
this Agreement, upon the occurrence and during the continuance of an Event of Default, (a) each
Borrower irrevocably waives the right to direct the application of any and all payments at any time
or times thereafter received by Administrative Agent from or on behalf of such Borrower or any
other Credit Party of all or any part of the Obligations, and, as between Borrowers on the one hand
and Administrative Agent and Lenders on the other, Administrative Agent shall have the continuing
and exclusive right to apply and to reapply any and all payments received against the Obligations
in such manner as Administrative Agent and Required Lenders may deem advisable notwithstanding any
previous application by Administrative Agent, and (b) the proceeds of any sale of, or other
realization upon, all or any part of the Collateral shall be applied: first, to all fees,
costs, indemnities, liabilities, obligations and expenses incurred by or owing to Administrative
Agent, in its capacity as Administrative Agent and not in its capacity as a Lender, with respect to
this Agreement, the other Financing Documents or the Collateral; second, to all fees,
costs, indemnities, liabilities, obligations and expenses incurred by or owing to any Lender with
respect to this Agreement, the other Financing Documents or the Collateral; third, to
accrued and unpaid interest on the Obligations (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts); fourth, to the
principal amount of the Obligations outstanding and to provide cash collateral to secure any and
all Letter of Credit Liability and future payment of related fees, as provided for in Section
2.5(e); and fifth to any other indebtedness or obligations of Borrowers owing to
Administrative Agent or any Lender under the Financing Documents. Any balance remaining shall be
delivered to Borrowers or to whoever may be lawfully entitled to receive such balance or as a court
of competent jurisdiction may direct. In carrying out the foregoing, (x) amounts received shall be
applied in the numerical order provided until exhausted prior to the application to the next
succeeding category, and (y) each of the Persons entitled to receive a payment in any particular
category shall receive an amount equal to its pro rata share of amounts available to be applied
pursuant thereto for such category.



          Section 10.7 Waivers and Remedies.




     (a) Except as otherwise provided for in this Agreement and to the fullest extent permitted by
applicable law, each Borrower waives: (i) presentment, demand and protest, and notice of
presentment, dishonor, intent to accelerate, acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all Financing Documents, the Notes
or any other notes, commercial paper, Accounts, contracts, Documents, Instruments, Chattel Paper
and guaranties at any time held by Lenders on which any Borrower may in any way be liable, and
hereby ratifies and confirms whatever Lenders may do to effect this; (ii) all rights to notice and
a hearing prior to Administrative Agent’s or any Lender’s taking possession or control of, or to
Administrative Agent’s or any Lender’s replevy, attachment or levy upon, any Collateral or any bond
or security which might be required by any court prior to allowing Administrative Agent or any
Lender to exercise any of its remedies; and (iii) the benefit of all valuation, appraisal,
marshalling and exemption Laws. The rights and remedies herein and therein provided shall be
cumulative and not exclusive of any rights or remedies provided by law. Any reference in any
Financing Document to the “continuing” nature of any Event of Default shall not be construed as
establishing or otherwise indicating that any Borrower or any other Credit Party has the
independent right to cure any such Event of Default, but is rather presented merely for convenience
should such Event of Default be cured or waived in accordance with the terms of the applicable
Financing Documents.



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



     (c) Any delay or forbearance by Administrative Agent or any Lender in exercising any right or
remedy under any of the Financing Documents, or otherwise afforded by applicable law, including any
failure to



51









 




accelerate the maturity date of the Loans, shall not be a waiver of or preclude the exercise of any
right or remedy nor shall it serve as a novation of the Notes or as a reinstatement of the
Revolving Loan Commitments, Term Loan Commitments or Loans or a waiver of such right of
acceleration or the right to insist upon strict compliance of the terms of the Financing Documents.
Administrative Agent’s or any Lender’s acceptance of payment of any sum secured by any of the
Financing Documents after the due date of such payment shall not be a waiver of Administrative
Agent’s and such Lender’s right to either require prompt payment when due of all other sums so
secured or to declare a default for failure to make prompt payment.




     (d) Without limiting the generality of anything contained in this Agreement or the other
Financing Documents, each Borrower agrees that if an Event of Default is continuing
(i) Administrative Agent and Lenders shall not be subject to any “one action” or “election of
remedies” law or rule, and (ii) all Liens and other rights, remedies or privileges provided to
Administrative Agent or Lenders shall remain in full force and effect until Administrative Agent or
Lenders have exhausted all remedies against the Collateral and any other properties owned by
Borrowers and the Financing Documents and other security instruments or agreements securing the
Loans have been foreclosed, sold and/or otherwise realized upon in satisfaction of Borrowers’
obligations under the Financing Documents.



     (e) At the request of the Required Lenders, Administrative Agent shall have the right from
time to time to partially foreclose upon any Collateral in any manner and for any amounts secured
by the Financing Documents then due and payable. Notwithstanding one or more partial foreclosures,
any unforeclosed Collateral shall remain subject to the Financing Documents to secure payment of
sums secured by the Financing Documents and not previously recovered. To the fullest extent
permitted by law, each Borrower, for itself and its successors and assigns, waives in the event of
foreclosure of any or all of the Collateral any equitable right otherwise available to any Credit
Party which would require the separate sale of any of the Collateral or require Administrative
Agent or Lenders to exhaust their remedies against any part of the Collateral before proceeding
against any other part of the Collateral; and further in the event of such foreclosure each
Borrower does hereby expressly consent to and authorize, at the option of Administrative Agent, the
foreclosure and sale either separately or together of each part of the Collateral.



     Section 10.8 Injunctive Relief. The parties acknowledge and agree that, in the event of a
breach or threatened breach of any Credit Party’s obligations under any Financing Documents,
Administrative Agent and Lenders may have no adequate remedy in money damages and, accordingly,
shall be entitled to an injunction (including, without limitation, a temporary restraining order,
preliminary injunction, writ of attachment, or order compelling an audit) against such breach or
threatened breach, including, without limitation, maintaining any cash management and collection
procedure described herein. However, no specification in this Agreement of a specific legal or
equitable remedy shall be construed as a waiver or prohibition against any other legal or equitable
remedies in the event of a breach or threatened breach of any provision of this Agreement. Each
Credit Party waives, to the fullest extent permitted by law, the requirement of the posting of any
bond in connection with such injunctive relief. By joining in the Financing Documents as a Credit
Party, each Credit Party specifically joins in this Section as if this Section were a part of each
Financing Document executed by such Credit Party.



ARTICLE 11 – ADMINISTRATIVE AGENT




     Section 11.1 Appointment and Authorization. Each Lender hereby irrevocably appoints and
authorizes Administrative Agent to be the agent of Lender under and with respect to this Agreement
and the other Financing Documents and to enter into each of the Financing Documents to which it is
a party (other than this Agreement) on its behalf and to take such actions as Administrative Agent
on its behalf and to exercise such powers under the Financing Documents as are delegated to
Administrative Agent by the terms thereof, together with all such powers as are reasonably
incidental thereto. Subject to the terms of Section 12.5 and to the terms of the other Financing
Documents, Administrative Agent is authorized and empowered to amend, modify, or waive any
provisions of this Agreement or the other Financing Documents on behalf of Lenders. The provisions
of this Article 11 are solely for the benefit of Administrative Agent and Lenders and neither
Borrowers nor any other Credit Party shall have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this Agreement, Administrative
Agent shall act solely as agent of Lenders and does not assume and shall not be deemed to have
assumed any obligation toward or relationship of agency or trust with or for Borrowers



52









 







or any other Credit Party. Administrative Agent may perform any of its duties hereunder, or
under the Financing Documents, by or through its own agents or employees.



     Section 11.2 Administrative Agent and Affiliates. Administrative Agent shall have the same
rights and powers under the Financing Documents as any other Lender and may exercise or refrain
from exercising the same as though it were not Administrative Agent, and Administrative Agent and
its Affiliates may lend money to, invest in and generally engage in any kind of business with each
Credit Party or Affiliate of any Credit Party as if it were not Administrative Agent hereunder.



     Section 11.3 Action by Administrative Agent. The duties of Administrative Agent shall be
mechanical and administrative in nature. Administrative Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Lender. Nothing in this Agreement or any of
the Financing Documents is intended to or shall be construed to impose upon Administrative Agent
any obligations in respect of this Agreement or any of the Financing Documents except as expressly
set forth herein or therein.



     Section 11.4 Consultation with Experts. Administrative Agent may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.



     Section 11.5 Liability of Administrative Agent. Neither Administrative Agent nor any of its
directors, officers, agents or employees shall be liable to any Lender for any action taken or not
taken by it in connection with the Financing Documents, except that Administrative Agent shall be
liable with respect to its specific duties set forth hereunder, but only to the extent of its own
gross negligence or willful misconduct in the discharge thereof as determined by a final
non-appealable judgment of a court of competent jurisdiction. Neither Administrative Agent nor any
of its directors, officers, agents or employees shall be responsible to any Lender for or have any
duty to any Lender to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with any Financing Document or any borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements specified in any Financing
Document; (iii) the satisfaction of any condition specified in any Financing Document; (iv) the
validity, effectiveness, sufficiency or genuineness of any Financing Document, any Lien purported
to be created or perfected thereby or any other instrument or writing furnished in connection
therewith; (v) the existence or non-existence of any Default or Event of Default; or (vi) the
financial condition of any Credit Party. Administrative Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement, or other writing (which may be
a bank wire, telex, facsimile or electronic transmission or similar writing) believed by it to be
genuine or to be signed by the proper party or parties. Administrative Agent shall not be liable
to any Lender for any apportionment or distribution of payments made by it in good faith and if any
such apportionment or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover from other Lenders
any payment in excess of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments received by them).



     Section 11.6 Indemnification. Each Lender shall, in accordance with its Pro Rata Share,
indemnify Administrative Agent (to the extent not reimbursed by Borrowers) upon demand against any
cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from Administrative Agent’s gross negligence or willful misconduct
as determined by a final non-appealable judgment of a court of competent jurisdiction) that
Administrative Agent, in its capacity as Administrative Agent and not in its capacity as a Lender,
may suffer or incur in connection with the Financing Documents or any action taken or omitted by
Administrative Agent hereunder or thereunder. If any indemnity furnished to Administrative Agent
for any purpose shall, in the opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts
indemnified against even if so directed by Required Lenders until such additional indemnity is
furnished.



     Section 11.7 Right to Request and Act on Instructions. Administrative Agent may at any time
request instructions from Lenders with respect to any actions or approvals which by the terms of
this Agreement or of any of the Financing Documents Administrative Agent is permitted or desires to
take or to grant, and if such instructions are promptly requested, Administrative Agent shall be
absolutely entitled to refrain from taking any action or to withhold any approval and shall not be
under any liability whatsoever to any Person for refraining from



53









 







any action or withholding any approval under any of the Financing Documents until it shall
have received such instructions from Required Lenders or all or such other portion of the Lenders
as shall be prescribed by this Agreement. Without limiting the foregoing, no Lender shall have any
right of action whatsoever against Administrative Agent as a result of Administrative Agent acting
or refraining from acting under this Agreement or any of the other Financing Documents in
accordance with the instructions of Required Lenders (or all or such other portion of the Lenders
as shall be prescribed by this Agreement) and, notwithstanding the instructions of Required Lenders
(or such other applicable portion of the Lenders), Administrative Agent shall have no obligation to
take any action if it believes, in good faith, that such action would violate applicable Laws or
exposes Administrative Agent to any liability for which it has not received satisfactory
indemnification in accordance with the provisions of Section 11.6.



     Section 11.8 Credit Decision. Each Lender acknowledges that it has, independently and without
reliance upon Administrative Agent or any other Lender, and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without reliance upon
Administrative Agent or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking any
action under the Financing Documents.



     Section 11.9 Collateral Matters. Lenders irrevocably authorize Administrative Agent, at its
option and in its discretion, to (x) release any Lien granted to or held by Administrative Agent
under any Security Document (i) upon (a) termination of the Term Loan Commitment and Revolving Loan
Commitment, (b) payment in full of all Obligations and (c) the expiration, termination or cash
collateralization (to the satisfaction of Administrative Agent) of all Letters of Credit; or
(ii) constituting property sold or disposed of as part of or in connection with any disposition
permitted under any Financing Document (it being understood and agreed that Administrative Agent
may conclusively rely without further inquiry on a certificate of a Responsible Officer as to the
sale or other disposition of property being made in full compliance with the provisions of the
Financing Documents) and (y) release or subordinate any Lien granted to or held by Administrative
Agent under any Security Document constituting property which is the subject of a Permitted Asset
Disposition (it being understood and agreed that Administrative Agent may conclusively rely without
further inquiry on a certificate of a Responsible Officer as to the identification of any property
which is the subject of a Permitted Asset Disposition). Upon request by Administrative Agent at
any time, Lenders will confirm Administrative Agent’s authority to release and/or subordinate
particular types or items of Collateral pursuant to this Section.



     Section 11.10 Agency for Perfection. Administrative Agent and each Lender hereby appoint each
other Lender as agent for the purpose of perfecting Administrative Agent’s security interest in
assets which, in accordance with the Uniform Commercial Code in any applicable jurisdiction, can
be perfected by possession or control. Should any Lender (other than Administrative Agent) obtain
possession or control of any such assets, such Lender shall notify Administrative Agent thereof,
and, promptly upon Administrative Agent’s request therefor, shall deliver such assets to
Administrative Agent or in accordance with Administrative Agent’s instructions or transfer control
to Administrative Agent in accordance with Administrative Agent’s instructions. Each Lender agrees
that it will not have any right individually to enforce or seek to enforce any Security Document or
to realize upon any Collateral for the Loans unless instructed to do so by Administrative Agent (or
consented to by Administrative Agent, as provided in Section 10.5), it being understood and agreed
that such rights and remedies may be exercised only by Administrative Agent.



     Section 11.11 Notice of Default. Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default except with respect to defaults in
the payment of principal, interest and fees required to be paid to Administrative Agent for the
account of Lenders, unless Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of Default and stating that
such notice is a “notice of default”. Administrative Agent will notify each Lender of its receipt
of any such notice. Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by Required Lenders (or all or such other portion of the
Lenders as shall be prescribed by this Agreement) in accordance with the terms hereof. Unless and
until Administrative Agent has received any such request, Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable or in the best interests of Lenders.



54









 





     Section 11.12 Successor Administrative Agent. Administrative Agent may at any time give
notice of its resignation to the Lenders and Borrowers. Upon receipt of any such notice of
resignation, Required Lenders shall have the right, without the requirement of any consent of
Borrowers, to appoint a successor Administrative Agent. Upon the acceptance of a successor’s
appointment as Administrative Agent hereunder and notice of such acceptance to the retiring
Administrative Agent, such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring (or retired) Administrative Agent, the retiring
Administrative Agent’s resignation shall become immediately effective and the retiring
Administrative Agent shall be discharged from all of its duties and obligations hereunder and under
the other Financing Documents (if such resignation was not already effective and such duties and
obligations not already discharged, as provided below in this paragraph). The fees payable by
Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between Borrowers and such successor. If no such successor shall have been
so appointed by Required Lenders and shall have accepted such appointment within thirty (30) days
after the retiring Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may on behalf of the Lenders (but without any obligation) appoint a successor
Administrative Agent. From and following the expiration of such thirty (30) day period,
Administrative Agent shall have the exclusive right, upon one (1) Business Days’ notice to
Borrowers and the Lenders, and the delivery to a Lender, for the benefit of all Lenders, of all
Collateral in the possession of the retiring Administrative Agent, to make its resignation
effective immediately. From and following the effectiveness of such notice, (i) the retiring
Administrative Agent shall be discharged from its duties and obligations hereunder and under the
other Financing Documents and (ii) all payments, communications and determinations provided to be
made by, to or through Administrative Agent shall instead be made by or to each Lender directly,
until such time as Required Lenders appoint a successor Administrative Agent as provided for above
in this paragraph. The provisions of this Agreement shall continue in effect for the benefit of
any retiring Administrative Agent and its sub-agents after the effectiveness of its resignation
hereunder and under the other Financing Documents in respect of any actions taken or omitted to be
taken by any of them while the retiring Administrative Agent was acting or was continuing to act as
Administrative Agent.



     Section 11.13 Disbursements of Loans; Payment and Sharing of Payment.



     (a) Loan Advances, Payments and Settlements; Interest and Fee Payments.



          (i) Administrative Agent shall have the right, but in no event shall be obligated, to, on
behalf of Lenders (other than Non-Funding Lenders), disburse funds to Borrowers for all Loans or
advances thereof requested or deemed requested by Borrowers pursuant to the terms of this Agreement
regardless of whether the conditions precedent set forth in Section 7.2 are then satisfied,
including the existence of any Default or Event of Default either before or after giving effect to
the making of such Loans or advances; provided, that Administrative Agent shall not advance
proceeds of any Revolving Loan pursuant to this clause (i) if, to the knowledge of Administrative
Agent, the Revolving Loan Outstandings exceed the Revolving Loan Limit, either before or after
giving effect to the making of any proposed Revolving Loan. Administrative Agent shall be
conclusively entitled to assume, for purposes of the preceding sentence, that each Lender, other
than any Non-Funding Lenders, will fund its Pro Rata Share of all Loans and advances thereof
requested by Borrowers. Each Lender (other than any Non-Funding Lender) shall reimburse
Administrative Agent weekly, in accordance with the provisions of the immediately following
paragraph, for all funds disbursed on its behalf by Administrative Agent pursuant to the first
sentence of this clause (i). Nothing in this Section or elsewhere in this Agreement or the other
Financing Documents shall be deemed to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice any rights that Administrative Agent or Borrowers may have
against any Lender as a result of any default by such Lender hereunder.




          (ii) On a Business Day of each week as selected from time to time by Administrative Agent
(each such day being a “Settlement Date”), Administrative Agent will advise each Lender by
telephone, facsimile or e-mail of the amount of each such Lender’s percentage interest of the
applicable Loan balance as of the close of business of the Business Day immediately preceding the
Settlement Date. In the event that payments are necessary to adjust the amount of such Lender’s
actual percentage interest of the applicable Loan balance to such Lender’s required percentage
interest of the applicable Loan balance as of any Settlement Date, the party from which such
payment is due shall pay Administrative Agent, without setoff or discount, to the Payment Account
not later than noon (Chicago time) on the first Business Day following the Settlement Date the full
amount necessary to make such adjustment; provided, that Administrative Agent shall
be (i) the Lender of record for any Loans Administrative




55









 




Agent elects to advance on behalf of the Lenders as permitted by this Section 11.13(a) and (ii)
entitled to receive interest and late charges applicable to any such Loans advanced until full
payment is made by the applicable Lender. Any obligation arising pursuant to the immediately
preceding sentence shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever. In the event settlement shall not have occurred by the date and time
specified in the second preceding sentence, interest shall accrue on the unsettled amount at the
Base Rate plus the Base Rate Margin applicable to the applicable Loan under which the advance is
made.




          (iii) On each Settlement Date, Administrative Agent shall advise each Lender by telephone,
facsimile or e-mail of the amount of such Lender’s percentage interest of principal, interest and
fees paid for the benefit of Lenders with respect to each applicable Loan, to the extent of such
Lender’s Revolving Loan Commitment Percentage or Term Loan Commitment Percentage with respect
thereto, and shall make payment to such Lender not later than noon (Chicago time) on the Business
Day following the Settlement Date of such amounts in accordance with wire instructions delivered by
such Lender to Administrative Agent, as the same may be modified from time to time by written
notice to Administrative Agent; provided, that, in the case such Lender is a Defaulted Lender,
Administrative Agent shall be entitled to set off the funding short fall against that Defaulted
Lender’s respective share of all payments received from Borrowers.




          (iv) On the Closing Date, Administrative Agent, on behalf of the Lenders, may elect to advance
to Borrowers the full amount of the initial Loans to be made on the Closing Date prior to receiving
funds from the Lenders, in reliance upon each Lender’s commitment to make its Pro Rata Share of
such Loans to Borrowers in a timely manner on such date.




          (v) Notwithstanding anything to the contrary in this Agreement, repayment of Loans by
Administrative Agent shall be made first in respect of Loans made at the time any Non-Funding
Lenders exist, and second in respect of all other outstanding Loans.




          (vi) The provisions of this Section 11.13(a) shall be deemed to be binding upon Administrative
Agent and Lenders notwithstanding the occurrence of any Default or Event of Default, or any
insolvency or bankruptcy proceeding pertaining to Borrowers or any other Credit Party.




     (b) Term Loan Payments. Payments of principal, interest and fees in respect of the Term Loans
will be settled on the date of receipt if received by Administrative Agent on the last Business Day
of a month or on the Business Day immediately following the date of receipt if received on any day
other than the last Business Day of a month.



     (c) Return of Payments.



          (i) If Administrative Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Administrative Agent from
Borrowers and such related payment is not received by Administrative Agent, then Administrative
Agent will be entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind, together with interest accruing on a daily basis at the
Federal Funds Rate.




          (ii) If Administrative Agent determines at any time that any amount received by Administrative
Agent under this Agreement must be returned to Borrowers or paid to any other Person pursuant to
any insolvency law or otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Financing Document, Administrative Agent will not be required to distribute
any portion thereof to any Lender. In addition, each Lender will repay to Administrative Agent on
demand any portion of such amount that Administrative Agent has distributed to such Lender,
together with interest at such rate, if any, as Administrative Agent is required to pay to
Borrowers or such other Person, without setoff, counterclaim or deduction of any kind.




     (d) Defaulted Lenders. The failure of any Defaulted Lender to make any Loan or any payment
required by it hereunder shall not relieve any other Lender of its obligations to make such Loan or
payment, but neither any other Lender nor Administrative Agent shall be responsible for the failure
of any Defaulted Lender to make a Loan or make any other payment required hereunder.
Notwithstanding anything set forth herein to the contrary, a Defaulted Lender shall not have any
voting or consent rights under or with respect to any Financing



56









 







Document or constitute a “Lender” (or be included in the calculation of “Required Lenders”
hereunder) for any voting or consent rights under or with respect to any Financing Document.



     (e) Sharing of Payments. If any Lender shall obtain any payment or other recovery (whether
voluntary, involuntary, by application of setoff or otherwise) on account of any Loan (other than
pursuant to the terms of Sections 2.9(d)) in excess of its pro rata share of payments entitled
pursuant to the other provisions of this Section, such Lender shall purchase from the other Lenders
such participations in extensions of credit made by such other Lenders (without recourse,
representation or warranty) as shall be necessary to cause such purchasing Lender to share the
excess payment or other recovery ratably with each of them; provided, however, that
if all or any portion of the excess payment or other recovery is thereafter required to be returned
or otherwise recovered from such purchasing Lender, such portion of such purchase shall be
rescinded and each Lender which has sold a participation to the purchasing Lender shall repay to
the purchasing Lender the purchase price to the ratable extent of such return or recovery, without
interest. Borrowers agree that any Lender so purchasing a participation from another Lender
pursuant to this clause (e) may, to the fullest extent permitted by law, exercise all its rights of
payment (including pursuant to Section 10.5) with respect to such participation as fully as if such
Lender were the direct creditor of Borrowers in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a secured claim in lieu
of a setoff to which this clause (e) applies, such Lender shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent with the rights of the
Lenders entitled under this clause (e) to share in the benefits of any recovery on such secured
claim.



     Section 11.14 Right to Perform, Preserve and Protect. If any Credit Party fails to perform
any obligation hereunder or under any other Financing Document and such performance is necessary or
desirable to preserve or protect the Collateral, Administrative Agent itself may, but shall not be
obligated to, cause such obligation to be performed at Borrowers’ reasonable expense.
Administrative Agent is further authorized by Borrowers and the Lenders to make expenditures from
time to time which Administrative Agent, in its reasonable business judgment, deems necessary or
desirable to preserve or protect the business conducted by Borrowers, the Collateral, or any
portion thereof. Borrowers hereby agree to reimburse Administrative Agent on demand for any and
all reasonable costs, liabilities and obligations incurred by Administrative Agent pursuant to this
Section. Each Lender hereby agrees to indemnify Administrative Agent upon demand for any and all
reasonable costs, liabilities and obligations incurred by Administrative Agent pursuant to this
Section, in accordance with the provisions of Section 11.6.



     Section 11.15 Additional Titled Agents. Except for rights and powers, if any, expressly
reserved under this Agreement to any bookrunner, arranger or to any titled agent named on the cover
page of this Agreement, other than Administrative Agent (collectively, the “Additional Titled
Agents”), and except for obligations, liabilities, duties and responsibilities, if any, expressly
assumed under this Agreement by any Additional Titled Agent, no Additional Titled Agent, in such
capacity, has any rights, powers, liabilities, duties or responsibilities hereunder or under any of
the other Financing Documents. Without limiting the foregoing, no Additional Titled Agent shall
have nor be deemed to have a fiduciary relationship with any Lender. At any time that any Lender
serving as an Additional Titled Agent shall have transferred to any other Person (other than any
Affiliates) all of its interests in the Loans and in the Term Loan Commitment and Revolving Loan
Commitment, such Lender shall be deemed to have concurrently resigned as such Additional Titled
Agent.



     Section 11.16 Definitions. As used in this Article 11, the following terms have the following
meanings:



     “Federal Funds Rate” means, for any day, the rate of interest per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%) equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided, however, that (a) if such day is not a Business
Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day, and (b) if no such rate is so published on such next preceding Business
Day, the Federal Funds Rate for such day shall be the average rate quoted to Administrative Agent
on such day on such transactions as determined by Administrative Agent.



57









 





     “Revolving Loan Exposure” means, with respect to any Lender on any date of determination, the
percentage equal to the amount of such Lender’s Revolving Loan Outstandings on such date divided by
the aggregate Revolving Loan Outstandings of all Lenders on such date.



     Section 11.17 Cash Collateral. The parties acknowledge that Borrowers may in the future
desire to pledge cash and/or securities in connection with the provision by Silicon Valley Bank
(“SVB”) to Borrower of certain cash management services, such as the issuance of credit cards and
the like (collectively, “Cash Management Services”). The parties further acknowledge that
Borrower does presently and will continue to maintain Deposit Account(s) and/or Securities
Account(s) with SVB. The parties agree that notwithstanding anything to the contrary contained in
this Agreement, Borrowers may pledge cash and/or securities to SVB as collateral to secure its
obligations to SVB relating to Cash Management Services in an amount not to exceed $250,000 (such
cash and/or securities and the proceeds thereof not exceeding such amount (but expressly excluding
any other Collateral) being hereinafter referred to as the “Cash Collateral”). The parties
further agree that (x) notwithstanding anything to the contrary contained in this Agreement, SVB’s
lien on the Cash Collateral shall be senior in priority to the liens of Administrative Agent and
Lenders under this Agreement to the extent of Borrower’s reimbursement obligations in respect of
Cash Management Services (collectively, the “Reimbursement Obligations”), and (y) SVB may
extend credit to Borrower in connection with the provision of Cash Management Services and take
such action as SVB deems necessary to enforce its rights and remedies to satisfy the Reimbursement
Obligations in respect to Cash Management Services, all without prior notice to or the consent of
Lenders. SVB agrees to use its best efforts to give immediate notice to Lenders of such action
being taken, and neither Administrative Agent nor any Lender may foreclose upon, or force SVB to
take any actions with respect to, the Cash Collateral notwithstanding anything in this Agreement to
the contrary. SVB consents to Borrower’s grant to Lenders of liens and security interests against
the Cash Collateral (and agrees that it shall hold such Cash Collateral both to perfect its own
security interests therein as provided for in this paragraph and also as bailee and agent for
Administrative Agent and Lenders to perfect their security interests therein granted under this
Agreement, however, SVB may release the Cash Collateral without the consent of the other Lenders),
and the parties agree that (i) the Cash Collateral and proceeds thereof shall be distributed to SVB
and other Lenders and Administrative Agent, after satisfaction of the Reimbursement Obligations to
SVB, in the manner and order set forth herein, and (ii) to the extent that the Cash Collateral is
insufficient to satisfy the Reimbursement Obligations to SVB in full (a “Deficiency”), any
such Deficiency cannot be repaid by Borrower (and SVB shall not accept or receive any payments as
to such Deficiency) and SVB shall not be entitled to receive the proceeds of any Collateral other
than the Cash Collateral until the Borrower’s indebtedness to Lenders under this Agreement and the
other Financing Documents has been fully repaid and the Revolving Loan Commitment and Term Loan
Commitments have been terminated. For the avoidance of doubt, notwithstanding anything to the
contrary contained in this Agreement, any Deposit Account Control Agreement entered into between
Administrative Agent in its capacity as a secured creditor and SVB or any of its Affiliates in such
entity’s capacity as the financial institution at which any Borrower maintains any Deposit Accounts
or Securities Accounts (and not in its capacity as Lender hereunder) (each of SVB and its
Affiliates in such capacity, “SVB Account Institution”) (each such agreement, an “SVB DACA”) or any
other financing agreement, (x) the provisions of such SVB DACA dealing with such SVB Account
Institution’s rights (and with the priority of such rights) to have and exercise claims against any
and all such Deposit Account(s) and Securities Account(s) of Borrower maintained with such SVB
Account Institution (each such account, a “Borrower SVB Account”) with respect to such matters as
items deposited in such Borrower SVB Account returned unpaid (whether for insufficient funds or any
other reason), overdrafts on any Borrower SVB Account, automated clearing house entries relating to
any such Borrower SVB Account, any provisional credit granted by the applicable SVB Account
Institution to any such Borrower SVB Account, claims of breaches of UCC transfer and presentment
warranties made in connection with items deposited in such Borrower SVB Account and customary
account maintenance fees and charges and commissions for services rendered in connection with any
Borrower SVB Account and other similar matters shall control with regard to such rights (and the
priority of such rights) regardless of any provision to the contrary contained in this Agreement or
any other Financing Document other than such applicable SVB DACA and (y) any provisions of any such
SVB DACA purporting to deal with such SVB Account Institution’s and/or Administrative Agent’s
respective rights and priorities with respect to any cash collateral pledged to such SVB Account
Institution to secure (or with respect to any rights of setoff or other similar banker’s liens or
rights of such SVB Account Institution regarding) any other claim of such SVB Account Institution
not covered by the preceding clause (x), specifically including any such cash collateral or rights
relating to the Cash Management Services described in this Section 11.17, shall be subject to and
superseded by the provisions of this Section 11.17 and any other applicable sections of this
Agreement.



58









 





ARTICLE 12 — MISCELLANEOUS




     Section 12.1 Survival. All agreements, representations and warranties made herein and in
every other Financing Document shall survive the execution and delivery of this Agreement and the
other Financing Documents. The provisions of Sections 2.8, 11.6 and 12.15 shall survive the
payment of the Obligations (both with respect to any Lender and all Lenders collectively) and any
termination of this Agreement and any judgment with respect to any Obligations, including any final
foreclosure judgment with respect to any Security Document, and no unpaid or unperformed, current
or future, Obligations will merge into any such judgment.



     Section 12.2 Time. Time is of the essence in each Borrower’s and each other Credit Party’s
performance under this Agreement and all other Financing Documents.



     Section 12.3 Notices.



     (a) All notices, requests and other communications to any party hereunder shall be in writing
(including prepaid overnight courier, facsimile transmission or similar writing) and shall be given
to such party at its address, facsimile number or e-mail address set forth on the signature pages
hereof (or, in the case of any such Lender who becomes a Lender after the date hereof, in an
assignment agreement or in a notice delivered to Borrower Representative and Administrative Agent
by the assignee Lender forthwith upon such assignment) or at such other address, facsimile number
or e-mail address as such party may hereafter specify for the purpose by notice to Administrative
Agent and Borrower Representative; provided, however, that notices, requests or other
communications shall be permitted by electronic means only in accordance with the provisions of
Section 12.3(b) and (c); provided, further, that a copy of all notices sent to any Borrower shall
be sent to Wilmer Hale, 60 State Street, Boston, MA 02109, fax: 617-526-5000, Attn: George W.
Shuster, Jr.. Each such notice, request or other communication shall be effective (i) if given by
facsimile, when such notice is transmitted during normal business hours to the facsimile number
specified by this Section and the sender receives a confirmation during normal business hours of
transmission from the sending facsimile machine, or (ii) if given by mail, prepaid overnight
courier or any other means, when received or when receipt is refused at the applicable address
specified by this Section 12.3(a).



     (b) Notices and other communications to the parties hereto may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved from time to time by Administrative Agent, provided, however, that the
foregoing shall not apply to notices sent directly to any Lender if such Lender has notified the
Administrative Agent that it is incapable of receiving notices by electronic communication. The
Administrative Agent or Borrower Representative may, in their discretion, agree to accept notices
and other communications to them hereunder by electronic communications pursuant to procedures
approved by it, provided, however, that approval of such procedures may be limited to particular
notices or communications.



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



     Section 12.4 Severability. In case any provision of or obligation under this Agreement or any
other Financing Document shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be affected or impaired
thereby.



     Section 12.5 Amendments and Waivers.



59









 





     (a) No provision of this Agreement or any other Financing Document may be amended, waived or
otherwise modified unless such amendment, waiver or other modification is in writing and is signed
or otherwise approved by Borrowers and the Required Lenders; provided that



          (i) no such amendment, waiver or other modification that would have the effect of increasing
or reducing a Lender’s Revolving Loan Commitment Amount or Term Loan Commitment Amount or Revolving
Loan Commitment Percentage or Term Loan Commitment Percentage shall be effective as to such Lender
without such Lender’s written consent;




          (ii) no such amendment, waiver or modification that would affect the rights and duties of
Administrative Agent shall be effective without Administrative Agent’s written consent or
signature;




          (iii) no such amendment, waiver or other modification shall, unless signed by all the Lenders
directly affected thereby, (A) reduce the principal of, rate of interest on or any fees with
respect to any Loan or forgive any principal, interest (other than default interest) or fees (other
than late charges) with respect to any Loan (B) postpone the date fixed for, or waive, any payment
of principal of any Loan or of interest on any Loan (other than default interest) or any fees
provided for hereunder (other than late charges or for any termination of any commitment; (C)
change the definition of the term Required Lenders or the percentage of Lenders which shall be
required for Lenders to take any action hereunder; (D) subordinate or release all or substantially
all or any material portion of the Collateral, authorize any Borrower to sell or otherwise dispose
of all or substantially all or any material portion of the Collateral or release any guarantor of
all or any portion of the Obligations or its guaranty obligations with respect thereto, except, in
each case with respect to this clause (D), as otherwise may be expressly permitted under this
Agreement or the other Financing Documents (including in connection with any disposition permitted
hereunder); (E) amend, waive or otherwise modify this Section 12.5 or the definitions of the terms
used in this Section 12.5 insofar as the definitions affect the substance of this Section 12.5; (F)
consent to the assignment, delegation or other transfer by any Credit Party of any of its rights
and obligations under any Financing Document or release any Borrower of its payment obligations
under any Financing Document, except, in each case with respect to this clause (F), pursuant to a
merger or consolidation permitted pursuant to this Agreement; (G) amend any of the provisions of
Section 10.6 or amend any of the definitions Pro Rata Share, Revolving Loan Commitment, Term Loan
Commitment, Revolving Loan Commitment Amount, Term Loan Commitment Amount, Revolving Loan
Commitment Percentage, Term Loan Commitment Percentage or that provide for the Lenders to receive
their Pro Rata Shares of any fees, payments, setoffs or proceeds of Collateral hereunder; (H)
amend, waive, or otherwise modify Article 6; (I) amend any Borrowing Base advance rate; or (J)
release any Borrower as a party to this Agreement. It is hereby understood and agreed that all
Lenders shall be deemed directly affected by an amendment, waiver or other modification of the type
described in the preceding clauses (C), (D), (E), (F), (G) and (H) of the preceding sentence; and




          (iv) the provisions of the foregoing clauses (i), (ii) and (iii) are subject to the provisions
of any interlender or agency agreement among the Lenders and Administrative Agent pursuant to which
any Lender may agree to give its consent in connection with any amendment, waiver or modification
of the Financing Documents only in the event of the unanimous agreement of all Lenders.




     Section 12.6 Assignments; Participations; Replacement of Lenders.



     (a) Assignments.



          (i) Any Lender may at any time assign to one or more Eligible Assignees all or any portion of
such Lender’s Loans and interest in the Revolving Loan Commitment and Term Loan Commitment,
together with all related obligations of such Lender hereunder. Except as Administrative Agent may
otherwise agree, the amount of any such assignment (determined as of the date of the applicable
Assignment Agreement or, if a “Trade Date” is specified in such Assignment Agreement, as of such
Trade Date) shall be in a minimum aggregate amount equal to $1,000,000 or, if less, the assignor’s
entire interests in the Revolving Loan Commitment and Term Loan Commitment and outstanding Loans;
provided, that, in connection with simultaneous assignments to two or more related Approved Funds,
such Approved Funds shall be treated as one assignee for purposes of determining compliance with
the minimum assignment size referred to above. Borrowers and Administrative Agent shall be
entitled to continue to deal solely and directly with such Lender in connection with the interests
so assigned to an





60












 




Eligible Assignee until Administrative Agent shall have received and accepted an effective
Assignment Agreement executed, delivered and fully completed by the applicable parties thereto,
such other information regarding such Eligible Assignee as Administrative Agent reasonably shall
require and a processing fee of $3,500; provided, only one processing fee shall be payable in
connection with simultaneous assignments to two or more related Approved Funds.




          (ii) From and after the date on which the conditions described above have been met, (i) such
Eligible Assignee shall be deemed automatically to have become a party hereto and, to the extent of
the interests assigned to such Eligible Assignee pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (ii) the assigning Lender, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement,
shall be released from its rights and obligations hereunder (other than those that survive
termination pursuant to Section 12.1). Upon the request of the Eligible Assignee (and, as
applicable, the assigning Lender) pursuant to an effective Assignment Agreement, Borrowers shall
execute and deliver to Administrative Agent for delivery to the Eligible Assignee (and, as
applicable, the assigning Lender) Notes in the aggregate principal amount of the Eligible
Assignee’s percentage interest in the Revolving Loan Commitment and Term Loan Commitment (and, as
applicable, Notes in the principal amount of that portion of the Revolving Loan Commitment or Term
Loan Commitment retained by the assigning Lender). Upon receipt by the assigning Lender of such
Note, the assigning Lender shall return to Borrowers any prior Note held by it.




          (iii) Administrative Agent, acting solely for this purpose as an agent of Borrowers, shall
maintain at its offices located in Chicago, Illinois a copy of each Assignment Agreement delivered
to it and a register for the recordation of the names and addresses of each Lender, and the
commitments of, and principal amount of the Loans owing to, such Lender pursuant to the terms
hereof. The entries in such register shall be conclusive absent manifest error, and Borrowers,
Administrative Agent and Lenders may treat each Person whose name is recorded therein pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. Such register shall be available for inspection by Borrowers and any Lender, at
any reasonable time upon reasonable prior notice to Administrative Agent.




          (iv) Notwithstanding the foregoing provisions of this Section 12.6(a) or any other provision
of this Agreement, any Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge
or assignment shall release such Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.




          (v) Notwithstanding the foregoing provisions of this Section 12.6(a) or any other provision of
this Agreement, Administrative Agent has the right, but not the obligation, to effectuate
assignments of Loans and Revolving Loan Commitments and Term Loan Commitments via an electronic
settlement system acceptable to Administrative Agent as designated in writing from time to time to
the Lenders by Administrative Agent (the “Settlement Service”). At any time when the
Administrative Agent elects, in its sole discretion, to implement such Settlement Service, each
such assignment shall be effected by the assigning Lender and proposed assignee pursuant to the
procedures then in effect under the Settlement Service, which procedures shall be consistent with
the other provisions of this Section 12.6(a). Each assigning Lender and proposed Eligible Assignee
shall comply with the requirements of the Settlement Service in connection with effecting any
assignment of Loans and Revolving Loan Commitments and Term Loan Commitments pursuant to the
Settlement Service. With the prior approval of each of Administrative Agent and the Borrower,
Administrative Agent’s and the Borrower’s approval of such Eligible Assignee shall be deemed to
have been automatically granted with respect to any transfer effected through the Settlement
Service (without any cost to Lender except for the processing fee referred to in clause (i) above).
Assignments and assumptions of the Loans and Revolving Loan Commitments and Term Loan Commitments
shall be effected by the provisions otherwise set forth herein until Administrative Agent notifies
Lenders of the Settlement Service as set forth herein.




     (b) Participations. Any Lender may at any time, without the consent of, or notice to,
Borrowers or Administrative Agent, sell to one or more Persons participating interests in its
Loans, commitments or other interests hereunder (any such Person, a “Participant”). In the event
of a sale by a Lender of a participating interest to a Participant, (a) such Lender’s obligations
hereunder shall remain unchanged for all purposes, (b) Borrowers and Administrative Agent shall
continue to deal solely and directly with such Lender in connection with such Lender’s



61









 




rights and obligations hereunder and (c) all amounts payable by Borrowers shall be determined as if
such Lender had not sold such participation and shall be paid directly to such Lender. No
Participant shall have any direct or indirect voting rights hereunder except with respect to any
event described in Section 12.5 expressly requiring the unanimous vote of all Lenders or, as
applicable, all affected Lenders. Borrowers agree that if amounts outstanding under this Agreement
are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts owing under this
Agreement and with respect to any Letter of Credit to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this Agreement; provided that
such right of set-off shall be subject to the obligation of each Participant to share with Lenders,
and Lenders agree to share with each Participant, as provided in Section 10.5.




     (c) Replacement of Lenders. Within thirty (30) days after: (i) receipt by Administrative
Agent of notice and demand from any Lender for payment of additional costs as provided in Section
2.8(d), which demand shall not have been revoked, (ii) Borrowers are required to pay any additional
amount to any Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.8(a), (iii) any Lender is a Defaulted Lender, and the circumstances causing such status
shall not have been cured or waived, or (iv) any failure by any Lender to consent to a requested
amendment, waiver or modification to any Financing Document in which the Lenders required hereunder
have already consented to such amendment, waiver or modification but the consent of another Lender
or Lenders is required with respect thereto (each relevant Lender in the foregoing clauses (i)
through (iv) being an “Affected Lender”), Administrative Agent may, at its option, notify such
Affected Lender of such Person’s intention to obtain, at Borrowers’ expense, a replacement Lender
(“Replacement Lender”) for such Lender, which Replacement Lender shall be an Eligible Assignee and,
in the event the Replacement Lender is to replace an Affected Lender described in the preceding
clause (iv), such Replacement Lender consents to the requested amendment, waiver or modification
making the replaced Lender an Affected Lender. In the event Administrative Agent obtains a
Replacement Lender within ninety (90) days following notice of its intention to do so, the Affected
Lender shall sell, at par, and assign all of its Loans and funding commitments hereunder to such
Replacement Lender in accordance with the procedures set forth in Section 12.6(a); provided, that
(i) Borrowers shall have, as applicable, reimbursed such Lender for its increased costs and
additional payments for which it is entitled to reimbursement under Section 2.8, as applicable, of
this Agreement through the date of such sale and assignment and (ii) Borrowers shall pay to
Administrative Agent the $3,500 processing fee in respect of such assignment. In the event that a
replaced Lender does not execute an Assignment Agreement pursuant to Section 12.6(a) within five
(5) Business Days after receipt by such replaced Lender of notice of replacement pursuant to this
Section 12.6(c) and presentation to such replaced Lender of an Assignment Agreement evidencing an
assignment pursuant to this Section 12.6(c), such replaced Lender shall be deemed to have consented
to the terms of such Assignment Agreement, and any such Assignment Agreement executed by
Administrative Agent, the Replacement Lender and, to the extent required pursuant to
Section 12.6(a), Borrower, shall be effective for purposes of this Section 12.6(c) and Section
12.6(a). Upon any such assignment and payment, such replaced Lender shall no longer constitute a
“Lender” for purposes hereof, other than with respect to such rights and obligations that survive
termination as set forth in Section 12.1.



     (d) Credit Party Assignments. No Credit Party may assign, delegate or otherwise transfer any
of its rights or other obligations hereunder or under any other Financing Document without the
prior written consent of Administrative Agent and each Lender.



     Section 12.7 Confidentiality. Administrative Agent and each Lender shall hold all non-public
information regarding the Credit Parties and their respective businesses in accordance with such
Person’s customary procedures for handling information of such nature, except that disclosure of
such information may be made (a) to their respective agents, employees, Subsidiaries, Affiliates,
attorneys, auditors, professional consultants, rating agencies, insurance industry associations and
portfolio management services, (b) to prospective transferees or purchasers of any interest in the
Loans, provided, however, that any such Persons shall have agreed to be bound by the provisions of
this Section, (c) as required by Law, subpoena, judicial order or similar order and in connection
with any litigation, (d) as may be required in connection with the examination, audit or similar
investigation of such Person, and (e) to a Person that is a trustee, investment advisor, collateral
manager, servicer, noteholder or secured party in a Securitization (as hereinafter defined) in
connection with the administration, servicing and reporting on the assets serving as collateral for
such Securitization. For the purposes of this Section, “Securitization” shall mean a public or
private offering by a Lender or any of its Affiliates or their respective successors and assigns,
of securities which represent an interest in, or which are collateralized, in whole or in part, by
the Loans. Confidential



62









 




information shall not include information that either: (i) is in the public domain, or
becomes part of the public domain after disclosure to such Person through no fault of such Person,
or (ii) is disclosed to such Person by a Person other than a Credit Party, provided, however,
Administrative Agent does not have actual knowledge that such Person is prohibited from disclosing
such information. The obligations of Administrative Agent and Lenders under this Section shall
supersede and replace the obligations of Administrative Agent and Lenders under any confidentiality
agreement in respect of this financing executed and delivered by Administrative Agent or any Lender
prior to the date hereof.




     Section 12.8 Waiver of Consequential and Other Damages. To the fullest extent permitted by
applicable law, no Borrower shall assert, and each Borrower hereby waives, any claim against any
Indemnitee (as defined below), on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as
a result of this Agreement, any other Financing Document or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated hereby or thereby, any Loan or Letter
of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages
arising from the use by unintended recipients of any information or other materials distributed by
it through telecommunications, electronic or other information transmission systems in connection
with this Agreement or the other Financing Documents or the transactions contemplated hereby or
thereby.



     Section 12.9 GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS AGREEMENT, EACH NOTE AND EACH
OTHER FINANCING DOCUMENT, AND ALL MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM (WHETHER
SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. EACH BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN CHICAGO, STATE OF ILLINOIS AND IRREVOCABLY AGREES THAT, SUBJECT TO ADMINISTRATIVE
AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
OTHER FINANCING DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH BORROWER EXPRESSLY SUBMITS AND
CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE UPON SUCH BORROWER BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO SUCH BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND
SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.



     Section 12.10 WAIVER OF JURY TRIAL. EACH BORROWER, ADMINISTRATIVE AGENT AND THE LENDERS
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND
AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
EACH BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE WAIVER IN ENTERING
INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND THAT EACH WILL CONTINUE TO RELY ON THIS
WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH BORROWER, ADMINISTRATIVE AGENT AND EACH LENDER
WARRANTS AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL
COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.



     Section 12.11 Publication; Advertisement.



     (a) Publication. No Credit Party will directly or indirectly publish, disclose or otherwise
use in any public disclosure, advertising material, promotional material, press release or
interview, any reference to the name, logo or any trademark of Merrill Lynch, any Lender or any of
their respective Affiliates or any reference to this Agreement or the financing evidenced hereby,
in any case except (i) as required by Law (including SEC reporting requirements), subpoena or
judicial or similar order, in which case the applicable Credit Party shall give



63









 




Administrative Agent prior written notice of such publication or other disclosure, or (ii) with
Merrill Lynch’s or such Lender’s prior written consent. For the avoidance of doubt, the Borrowers
may file a copy of this Agreement with the SEC to the extent required by the SEC.




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



     Section 12.12 Counterparts; Integration. This Agreement and the other Financing Documents may
be signed in any number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. Signatures by facsimile or
by email delivery of an electronic version of an executed signature page shall bind the parties
hereto. This Agreement and the other Financing Documents constitute the entire agreement and
understanding among the parties hereto and supersede any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.



     Section 12.13 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.



     Section 12.14 Lender Approvals. Unless expressly provided herein to the contrary, any
approval, consent, waiver or satisfaction of Administrative Agent or Lenders with respect to any
matter that is the subject of this Agreement, the other Financing Documents may be granted or
withheld by Administrative Agent and Lenders in their sole and absolute discretion and credit
judgment.



     Section 12.15 Expenses; Indemnity



     (a) Borrowers agree to pay all reasonable legal, audit and appraisal fees and all other
reasonable out-of-pocket charges and expenses incurred by Administrative Agent and Lenders
(including the fees and expenses of Administrative Agent’s counsel, advisors and consultants) in
connection with the negotiation, preparation, legal review and execution of each of the Financing
Documents, including but not limited to UCC and judgment lien searches and UCC filings and fees for
post-closing UCC and judgment lien searches. In addition, Borrowers shall pay all such fees and
expenses associated with any amendments, modifications and terminations to the Financing Documents
following closing. If Administrative Agent or any Lender uses in-house counsel for any of these
purposes, Borrowers further agree that the Obligations include reasonable charges for such work
commensurate with the fees that would otherwise be charged by outside legal counsel selected by
Administrative Agent or such Lender for the work performed.



     (b) Borrowers agree to pay all reasonable out-of-pocket charges and expenses incurred by
Administrative Agent (including the fees and expenses of Administrative Agent’s counsel, advisers
and consultants) in connection with the administration of this Agreement and the other Financing
Documents and the credit facilities provided hereunder and thereunder, the administration,
enforcement, protection or preservation of any right or claim of Administrative Agent, the
termination of this Agreement, the termination of any Liens of Administrative Agent on the
Collateral, or the collection of any amounts due under the Financing Documents, including any such
charges and expenses incurred in connection with any “work-out” or with any proceeding under the
Bankruptcy Code with respect to any Credit Party. If Administrative Agent uses in-house counsel for
any of these purposes (i.e., for any task in connection with the enforcement, protection or
preservation of any right or claim of Administrative Agent



64









 




and Lenders and the collection of any amounts due under the Financing Documents or in connection
with any other purpose mentioned in the foregoing sentence), Borrowers further agree that the
Obligations include reasonable charges for such work commensurate with the fees that would
otherwise be charged by outside legal counsel selected by Administrative Agent for the work
performed.




     (c) Borrowers hereby indemnify and agree to defend (with counsel reasonably acceptable to
Administrative Agent) and hold harmless Administrative Agent, each Lender, and their respective
shareholders, directors, partners, officers, agents and employees (collectively in the singular,
“Indemnitee”) from and against any liability, loss, cost, expense (including reasonable attorneys’
fees and expenses for both in-house and outside counsel), claim, damage, suit, action or proceeding
ever suffered or incurred by any Indemnitee or in which an Indemnitee may ever be or become
involved (whether as a party, witness or otherwise) (a) arising from any Credit Party’s failure to
observe, perform or discharge any of its covenants, obligations, agreements or duties under the
Financing Documents, (b) arising from the breach of any of the representations or warranties
contained in any Financing Document, (c) arising by reason of this Agreement, the other Financing
Documents or the transactions contemplated hereby or thereby, or (d) relating to claims of any
Person with respect to the Collateral; provided, however, Borrowers shall not be liable under this
Section 12.15(c) to the extent such loss is solely related to Indemnitee’s gross negligence or
willful misconduct as determined by a final non-appealable judgment of a court of competent
jurisdiction.



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



     Section 12.16 Reinstatement. This Agreement shall remain in full force and effect and
continue to be effective should any petition or other proceeding be filed by or against any Credit
Party for liquidation or reorganization, should any Credit Party become insolvent or make an
assignment for the benefit of any creditor or creditors or should an interim receiver, receiver,
receiver and manger or trustee be appointed for all or any significant part of any Credit Party’s
assets, and shall continue to be effective or to be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the
Obligations, whether as a fraudulent conveyance, preference or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.



[SIGNATURES APPEAR ON FOLLOWING PAGES]





65












 





     IN WITNESS WHEREOF, intending to be legally bound, and intending that this document constitute
an instrument executed and delivered under seal, the parties hereto have caused this Agreement to
be duly executed under seal by their respective authorized officers as of the day and year first
above written.



BORROWER:




	 	 	 	 	 
	NXSTAGE MEDICAL, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jeffrey H. Burbank
 

	 	 
	Name:

	 	Jeffrey H. Burbank	 	 
	Title:

	 	President	 	 





Address:



439 South Union Street, 5th Floor

Lawrence, MA 01843

Attn: Chief Executive Officer

With copy to General Counsel

Telephone: (978) 687-4700

Facsimile: (978) 687-4825




	 	 	 	 	 
	EIR MEDICAL, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jeffrey H. Burbank
 

	 	 
	Name:

	 	Jeffrey H. Burbank	 	 
	Title:

	 	President	 	 





Address:



c/o NxStage Medical, Inc.

439 South Union Street, 5th Floor

Lawrence, MA 01843

Attn: Chief Executive Officer

With copy to General Counsel

Telephone: (978) 687-4700

Facsimile: (978) 687-4825




	 	 	 	 	 
	MEDISYSTEMS SERVICES CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jeffrey H. Burbank
 

	 	 
	Name:

	 	Jeffrey H. Burbank	 	 
	Title:

	 	President	 	 





Address:



c/o NxStage Medical, Inc.

439 South Union Street, 5th Floor

Lawrence, MA 01843

Attn: Chief Executive Officer

With copy to General Counsel

Telephone: (978) 687-4700

Facsimile: (978) 687-4825




 









 








	 	 	 	 	 
	MEDISYSTEMS CORPORATION	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jeffrey H. Burbank
 

	 	 
	Name:

	 	Jeffrey H. Burbank	 	 
	Title:

	 	President	 	 





Address:



c/o NxStage Medical, Inc.

439 South Union Street, 5th Floor

Lawrence, MA 01843

Attn: Chief Executive Officer

With copy to General Counsel

Telephone: (978) 687-4700

Facsimile: (978) 687-4825



AGENT:




	 	 	 	 	 
	MERRILL LYNCH CAPITAL,	 	 
	a division of Merrill Lynch Business Financial Services Inc.,
	as Administrative Agent and a Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ William D. Gould
 

	 	 
	Name:

	 	William D. Gould	 	 
	Title:

	 	Director	 	 





Address:



222 N. LaSalle Street, 16th Floor

Chicago, Illinois 60601

Attn: Account Manager for MLC-HCF NXSTAGE MEDICAL, INC. transaction

Facsimile: (866) 231-8408



E-Mail: MLC_HCF_ABL1@ml.com



With copies to:



Merrill Lynch Capital

222 N. LaSalle Street, 16th Floor

Chicago, Illinois 60601

Attn: Group Senior Transaction Attorney, Healthcare Finance

Facsimile Number: (312) 499-3245



Merrill Lynch Capital

7700 Wisconsin Ave., Suite 400

Bethesda, Maryland 20814

Attn: Group Senior Transaction Attorney, Healthcare Finance

Facsimile Number: (866) 341-9053




 









 







Payment Account Designation:



LaSalle Bank

200 West Monroe

Chicago, IL 60606

ABA #: 071000505

Account Name: MLBFS Healthcare Finance

Account #: 5800395088

Attention: NxStage Medical, Inc.




	 	 	 	 	 
	LENDERS:	 	 
	 
	MERRILL LYNCH CAPITAL,	 	 
	a division of Merrill Lynch Business Financial Services Inc.,

as Lender	 	 
	 
	 	 	 	 
	By:

	 	/s/ William D. Gould
 

	 	 
	Name:

	 	William D. Gould	 	 
	Title:

	 	Director	 	 





Address:



222 N. LaSalle Street, 16th Floor

Chicago, Illinois 60601

Attn: Account Manager for MLC-HCF NXSTAGE MEDICAL, INC. transaction

Facsimile: (866) 231-8408

E-Mail: MLC_HCF_ABL1@ml.com



With copies to:



Merrill Lynch Capital

222 N. LaSalle Street, 16th Floor

Chicago, Illinois 60601

Attn: Group Senior Transaction Attorney, Healthcare Finance

Facsimile Number: (312) 499-3245



Merrill Lynch Capital

7700 Wisconsin Ave., Suite 400

Bethesda, Maryland 20814

Attn: Group Senior Transaction Attorney, Healthcare Finance

Facsimile Number: (866) 341-9053




	 	 	 	 	 
	SILICON VALLEY BANK	 	 
	 
	 	 	 	 
	By:
	 	/s/ Bernadette M. Michaud 	 	 
	 

	 	 

	 	 
	Name:
	 	Bernadette M. Michaud 	 	 
	 

	 	 

	 	 
	Title:
	 	Relationship Manager 	 	 
	 

	 	 

	 	 





Address:



One Newton Executive Park

2221 Washington St.

Newton, MA 02462

Attn: Bernadette M. Michaud

Facsimile: (617) 969-5973

E-Mail:bmichaud@svb.com




 









 








	 	 	 	 	 
	OXFORD FINANCE CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	/s/ T.A. Lex 	 	 
	 

	 	 

	 	 
	Name:
	 	T.A. Lex 	 	 
	 

	 	 

	 	 
	Title:
	 	Chief Operating Officer 	 	 
	 

	 	 

	 	 





Address:



133 North Fairfax Street

Alexandria, VA 22314

Attn: John G. Henderson

Facsimile: (703) 519-5225