Document:

exv10w2

EXHIBIT 10.2

2010-2 AMENDMENT

TO THE

STEELCASE INC.

EXECUTIVE SEVERANCE PLAN

          This 2010-2 Amendment to the STEELCASE INC. EXECUTIVE SEVERANCE PLAN (the “Plan”) is adopted
by Steelcase Inc. (the “Company”). The amendment is effective as of December 1, 2009.

          Pursuant to Section 6 of the Plan, the Company amends the Plan as follows:

A.

          Sections 1.37 and 1.45 are amended and replaced in their entirety with the following:

          SECTION 1.37 “Pro Rata Bonus” shall be the amount equal to an Eligible Employee’s
annual bonus (excluding any bonuses relating to the long-term component under the MIP or any
successor plan thereto) for the year in which the Severance occurs determined based on the actual
achievement of applicable performance targets, pro-rated for the period of the Eligible Employee’s
employment with the Company or an Affiliate during the fiscal year in which the Severance Date
occurs.

          SECTION 1.45 “Target Bonus” means with respect to calculating the Severance Pay, the
CIC Severance Pay or the CIC Pro Rata Bonus, an Eligible Employee’s target annual bonus (excluding
any bonuses relating to the long-term component under the MIP or any successor plan thereto) for
the year in which the Severance or CIC Severance occurs; provided, that where an Eligible
Employee’s target annual bonus is expressed as a percentage of base salary, then Target Bonus shall
be calculated by multiplying such percentage immediately prior to the Severance Date by the
Eligible Employee’s Base Salary.

B.

          In all other respects, the Plan remains unchanged.

          IN WITNESS OF WHICH, the Company executes this 2010-2 Amendment to the Plan.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	STEELCASE INC.
	 
	 	 	 	 	 	 
	Dated:

	 	December 10, 2009
	 	By:
	 	     /s/ Nancy W. Hickey
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Nancy W. Hickey
	 

	 	 	 	Its:
	 	Senior Vice President,
	 

	 	 	 	 	 	Chief Administrative Officerexv10w3

EXHIBIT 10.3

December 16, 2009

Mr. James G. Mitchell

[ADDRESS OMITTED]

Dear Jim:

          When signed where indicated below, this letter shall serve as an amendment to our letter
agreement dated January 20, 2003 (the “Letter Agreement”), which was amended on June 28, 2004 (the
“2004 Amendment”). The Company and the employee hereby agree as follows:

          A. Amendment to Paragraph 1 of the Letter Agreement. The definition of “Normal
Retirement” included in Paragraph 1 of the Letter Agreement shall be deleted in its entirety and
replaced with the following definition:

As it pertains to James G. Mitchell, “Early Retirement” means, for purposes of the
Steelcase Inc. Executive Supplemental Retirement Plan (the “SERP”) only, termination
of employment, for any reason other than death, at any time on or after the first date
on which the sum of Mr. Mitchell’s age and years of service equals or exceeds 73,
being November 26, 2007, and before Mr. Mitchell reaches his Normal Retirement Age.

          B. Amendment to Paragraph 3(c) of the Letter Agreement. Paragraph 3(c) of the
Letter Agreement is hereby amended and restated in its entirety as follows:

(c) Termination of Employment by Reason of Retirement. If your employment is
terminated by you or the Company for any reason or no reason after you have reached
the age of Early Retirement, you will be entitled to receive any severance payments as
may be required by the applicable employment standards legislation and the amounts
calculated and payable under the current provisions of the SERP subject to and payable
in accordance with the terms and conditions of the SERP, as amended from time to time.
You shall also be entitled to receive any base salary earned up to the date of
termination, the value of any unused vacation days accrued to the date of termination,
reimbursement of any business expenses reasonably incurred up to the date of
termination and any vested balances you have under the Plans, subject to and payable
in accordance with the terms of the Plans.

          C. Effective Date. This amendment shall be effective on December 16, 2009, regardless
of the date of execution of this amendment by the parties.

          D. Miscellaneous. All other terms of the Letter Agreement and 2004 Amendment will
continue in full force and effect until modified in accordance with their terms.

Sincerely,

James P. Hackett

President and Chief Executive Officer

Steelcase Inc.

	 	 	 	 	 
	 	 	READ, UNDERSTOOD AND ACCEPTED
	 
	 	 	 	 
	 

	 	By:
	 	/s/ James G. Mitchell
	 

	 	 	 	 
	 

	 	 	 	James G. Mitchell
	 
	 	 	 	 
	 

	 	Date:
	 	12/17/09
	 
	 	 	 	 
	 

	 	Witness:
	 	/s/ John HagenbushExhibit 10.1

Exhibit
10.1

REVOLVING CREDIT

AND

SECURITY AGREEMENT

PNC BANK, NATIONAL ASSOCIATION

(AS LENDER AND AS AGENT)

WITH

OSTEOTECH, INC.

AND

All other persons joined hereto as a borrower from time to time

(BORROWERS)

December 29, 2009

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	I. DEFINITIONS
	 	 	1	 
	1.1. Accounting Terms
	 	 	1	 
	1.2. General Terms
	 	 	1	 
	1.3. Uniform Commercial Code Terms
	 	 	21	 
	1.4. Certain Matters of Construction
	 	 	21	 
	 
	II. ADVANCES, PAYMENTS
	 	 	22	 
	2.1. Revolving Advances
	 	 	22	 
	2.2. Procedure for Revolving Advances Borrowing
	 	 	23	 
	2.3. Disbursement of Advance Proceeds
	 	 	25	 
	2.4. Reserved
	 	 	25	 
	2.5. Maximum Advances
	 	 	25	 
	2.6. Repayment of Advances
	 	 	25	 
	2.7. Repayment of Excess Advances
	 	 	26	 
	2.8. Statement of Account
	 	 	26	 
	2.9. Reserved
	 	 	26	 
	2.10. Reserved
	 	 	26	 
	2.11. Reserved
	 	 	26	 
	2.12. Reserved
	 	 	26	 
	2.13. Reserved
	 	 	26	 
	2.14. Reserved
	 	 	26	 
	2.15. Reserved
	 	 	26	 
	2.16. Reserved
	 	 	26	 
	2.17. Reserved
	 	 	26	 
	2.18. Reserved
	 	 	26	 
	2.19. Additional Payments
	 	 	27	 
	2.20. Manner of Borrowing and Payment
	 	 	27	 
	2.21. Mandatory Prepayments
	 	 	28	 
	2.22. Use of Proceeds
	 	 	29	 
	2.23. Defaulting Lender
	 	 	29	 
	 
	III. INTEREST AND FEES
	 	 	30	 
	3.1. Interest
	 	 	30	 
	3.2. Reserved
	 	 	30	 
	3.3. Closing Fee and Facility Fee
	 	 	31	 
	3.4. Collateral Evaluation Fee and Collateral Monitoring Fee
	 	 	31	 
	3.5. Computation of Interest and Fees
	 	 	31	 
	3.6. Maximum Charges
	 	 	31	 
	3.7. Increased Costs
	 	 	31	 
	3.8. Basis For Determining Interest Rate Inadequate or Unfair
	 	 	32	 
	3.9. Capital Adequacy
	 	 	33	 
	3.10. Gross Up for Taxes
	 	 	34	 
	3.11. Withholding Tax Exemption
	 	 	34	 

 

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	 	 	Page	 
	 
	 	 	 	 
	IV. COLLATERAL: GENERAL TERMS
	 	 	35	 
	4.1. Security Interest in the Collateral
	 	 	35	 
	4.2. Perfection of Security Interest
	 	 	35	 
	4.3. Disposition of Collateral
	 	 	36	 
	4.4. Preservation of Collateral
	 	 	36	 
	4.5. Ownership of Collateral
	 	 	36	 
	4.6. Defense of Agent’s and Lenders’ Interests
	 	 	37	 
	4.7. Books and Records
	 	 	37	 
	4.8. Financial Disclosure
	 	 	38	 
	4.9. Compliance with Laws
	 	 	38	 
	4.10. Inspection of Premises
	 	 	38	 
	4.11. Insurance
	 	 	38	 
	4.12. Failure to Pay Insurance
	 	 	39	 
	4.13. Payment of Taxes
	 	 	39	 
	4.14. Payment of Leasehold Obligations
	 	 	40	 
	4.15. Receivables
	 	 	40	 
	4.16. Inventory
	 	 	42	 
	4.17. Maintenance of Equipment
	 	 	43	 
	4.18. Exculpation of Liability
	 	 	43	 
	4.19. Environmental Matters
	 	 	43	 
	4.20. Financing Statements
	 	 	45	 
	 
	V. REPRESENTATIONS AND WARRANTIES
	 	 	45	 
	5.1. Authority
	 	 	45	 
	5.2. Formation and Qualification
	 	 	46	 
	5.3. Survival of Representations and Warranties
	 	 	46	 
	5.4. Tax Returns
	 	 	46	 
	5.5. Financial Statements
	 	 	46	 
	5.6. Entity Names
	 	 	47	 
	5.7. O.S.H.A. and Environmental Compliance
	 	 	47	 
	5.8. Solvency; No Litigation, Violation, Indebtedness or Default
	 	 	47	 
	5.9. Patents, Trademarks, Copyrights and Licenses
	 	 	49	 
	5.10. Licenses and Permits
	 	 	49	 
	5.11. Default of Indebtedness
	 	 	49	 
	5.12. No Default
	 	 	50	 
	5.13. No Burdensome Restrictions
	 	 	50	 
	5.14. No Labor Disputes
	 	 	50	 
	5.15. Margin Regulations
	 	 	50	 
	5.16. Investment Company Act
	 	 	50	 
	5.17. Disclosure
	 	 	50	 
	5.18. Reserved
	 	 	50	 
	5.19. Swaps
	 	 	51	 
	5.20. Conflicting Agreements
	 	 	51	 
	5.21. Application of Certain Laws and Regulations
	 	 	51	 
	5.22. Business and Property of Borrowers
	 	 	51	 
	5.23. Section 20 Subsidiaries
	 	 	51	 
	5.24. Anti-Terrorism Laws
	 	 	51	 
	5.25. Trading with the Enemy
	 	 	52	 

 

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	 	 	Page	 
	 
	 	 	 	 
	VI. AFFIRMATIVE COVENANTS
	 	 	52	 
	6.1. Payment of Fees
	 	 	52	 
	6.2. Conduct of Business and Maintenance of Existence and Assets
	 	 	52	 
	6.3. Violations
	 	 	53	 
	6.4. Government Receivables
	 	 	53	 
	6.5. Fixed Charge Coverage Ratio
	 	 	53	 
	6.6. Execution of Supplemental Instruments
	 	 	53	 
	6.7. Payment of Indebtedness
	 	 	53	 
	6.8. Standards of Financial Statements
	 	 	53	 
	6.9. Federal Securities Laws
	 	 	54	 
	 
	VII. NEGATIVE COVENANTS
	 	 	54	 
	7.1. Merger, Consolidation, Acquisition and Sale of Assets
	 	 	54	 
	7.2. Creation of Liens
	 	 	54	 
	7.3. Guarantees
	 	 	54	 
	7.4. Investments
	 	 	54	 
	7.5. Loans
	 	 	55	 
	7.6. Capital Expenditures
	 	 	55	 
	7.7. Dividends
	 	 	55	 
	7.8. Indebtedness
	 	 	55	 
	7.9. Nature of Business
	 	 	56	 
	7.10. Transactions with Affiliates
	 	 	56	 
	7.11. Leases
	 	 	56	 
	7.12. Subsidiaries
	 	 	56	 
	7.13. Fiscal Year and Accounting Changes
	 	 	56	 
	7.14. Pledge of Credit
	 	 	56	 
	7.15. Amendment of Articles of Incorporation, By-Laws
	 	 	56	 
	7.16. Compliance with ERISA
	 	 	57	 
	7.17. Prepayment of Indebtedness
	 	 	57	 
	7.18. Anti-Terrorism Laws
	 	 	57	 
	7.19. Membership/Partnership Interests
	 	 	58	 
	7.20. Trading with the Enemy Act
	 	 	58	 
	 
	VIII. CONDITIONS PRECEDENT
	 	 	58	 
	8.1. Conditions to Initial Advances
	 	 	58	 
	8.2. Conditions to Each Advance
	 	 	61	 
	 
	IX. INFORMATION AS TO BORROWERS
	 	 	61	 
	9.1. Disclosure of Material Matters
	 	 	61	 
	9.2. Schedules
	 	 	61	 
	9.3. Environmental Reports
	 	 	62	 
	9.4. Litigation
	 	 	62	 
	9.5. Material Occurrences
	 	 	62	 
	9.6. Reserved
	 	 	62	 
	9.7. Annual Financial Statements
	 	 	63	 
	9.8. Quarterly Financial Statements
	 	 	63	 

 

iii

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	9.9. Monthly Financial Statements
	 	 	63	 
	9.10. Other Reports
	 	 	63	 
	9.11. Additional Information
	 	 	63	 
	9.12. Projected Operating Budget
	 	 	64	 
	9.13. Reserved
	 	 	64	 
	9.14. Reserved
	 	 	64	 
	9.15. ERISA Notices and Requests
	 	 	64	 
	9.16. Additional Documents
	 	 	65	 
	 
	X. EVENTS OF DEFAULT
	 	 	65	 
	10.1. Nonpayment
	 	 	65	 
	10.2. Breach of Representation
	 	 	65	 
	10.3. Financial Information
	 	 	65	 
	10.4. Judicial Actions
	 	 	65	 
	10.5. Noncompliance
	 	 	65	 
	10.6. Judgments
	 	 	65	 
	10.7. Bankruptcy
	 	 	66	 
	10.8. Inability to Pay
	 	 	66	 
	10.9. Subsidiary Bankruptcy
	 	 	66	 
	10.10. Material Adverse Effect
	 	 	66	 
	10.11. Lien Priority
	 	 	66	 
	10.12. Cross Default
	 	 	66	 
	10.13. Change of Ownership
	 	 	66	 
	10.14. Invalidity
	 	 	66	 
	10.15. Licenses
	 	 	67	 
	10.16. Seizures
	 	 	67	 
	10.17. Operations
	 	 	67	 
	10.18. Pension Plans
	 	 	67	 
	 
	XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT
	 	 	67	 
	11.1. Rights and Remedies
	 	 	68	 
	11.2. Agent’s Discretion
	 	 	69	 
	11.3. Setoff
	 	 	69	 
	11.4. Rights and Remedies not Exclusive
	 	 	70	 
	11.5. Allocation of Payments After Event of Default
	 	 	70	 
	 
	XII. WAIVERS AND JUDICIAL PROCEEDINGS
	 	 	70	 
	12.1. Waiver of Notice
	 	 	70	 
	12.2. Delay
	 	 	71	 
	12.3. Jury Waiver
	 	 	71	 
	 
	XIII. EFFECTIVE DATE AND TERMINATION
	 	 	71	 
	13.1. Term
	 	 	71	 
	13.2. Termination
	 	 	71	 
	 
	XIV. REGARDING AGENT
	 	 	72	 
	14.1. Appointment
	 	 	72	 
	14.2. Nature of Duties
	 	 	72	 
	14.3. Lack of Reliance on Agent and Resignation
	 	 	73	 

 

iv

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	14.4. Certain Rights of Agent
	 	 	73	 
	14.5. Reliance
	 	 	73	 
	14.6. Notice of Default
	 	 	74	 
	14.7. Indemnification
	 	 	74	 
	14.8. Agent in its Individual Capacity
	 	 	74	 
	14.9. Delivery of Documents
	 	 	74	 
	14.10. Borrowers’ Undertaking to Agent
	 	 	74	 
	14.11. No Reliance on Agent’s Customer Identification Program
	 	 	75	 
	14.12. Other Agreements
	 	 	75	 
	 
	XV. BORROWING AGENCY
	 	 	75	 
	15.1. Borrowing Agency Provisions
	 	 	75	 
	15.2. Waiver of Subrogation
	 	 	76	 
	 
	XVI. MISCELLANEOUS
	 	 	76	 
	16.1. Governing Law
	 	 	76	 
	16.2. Entire Understanding
	 	 	77	 
	16.3. Successors and Assigns; Participations; New Lenders
	 	 	79	 
	16.4. Application of Payments
	 	 	81	 
	16.5. Indemnity
	 	 	81	 
	16.6. Notice
	 	 	82	 
	16.7. Survival
	 	 	84	 
	16.8. Severability
	 	 	84	 
	16.9. Expenses
	 	 	84	 
	16.10. Injunctive Relief
	 	 	84	 
	16.11. Consequential Damages
	 	 	85	 
	16.12. Captions
	 	 	85	 
	16.13. Counterparts; Facsimile Signatures
	 	 	85	 
	16.14. Construction
	 	 	85	 
	16.15. Confidentiality; Sharing Information
	 	 	85	 
	16.16. Publicity
	 	 	86	 
	16.17. Certifications From Banks and Participants; US PATRIOT Act
	 	 	86	 

 

v

 

LIST OF EXHIBITS AND SCHEDULES

Exhibits

	 	 	 
	Exhibit A

	 	Hospitals
	Exhibit 1.2

	 	Borrowing Base Certificate
	Exhibit 2.1(a)

	 	Revolving Credit Note
	Exhibit 8.1(k)

	 	Financial Condition Certificate
	Exhibit 16.3

	 	Commitment Transfer Supplement
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule 1.1

	 	Leasehold Interests
	Schedule 1.2

	 	Permitted Encumbrances
	Schedule 4.5

	 	Equipment and Inventory Locations
	Schedule 4.15(h)

	 	Deposit and Investment Accounts
	Schedule 4.19

	 	Real Property
	Schedule 5.1

	 	Consents
	Schedule 5.2(a)

	 	States of Qualification and Good Standing
	Schedule 5.2(b)

	 	Subsidiaries
	Schedule 5.4

	 	Federal Tax Identification Number
	Schedule 5.6

	 	Prior Names
	Schedule 5.8(b)

	 	Litigation; Indebtedness
	Schedule 5.8(d)

	 	Plans
	Schedule 5.9(a)

	 	Patents and Patent Applications
	Schedule 5.9(c)

	 	Intellectual Property Challenges
	Schedule 5.10

	 	Licenses and Permits

 

vi

 

REVOLVING CREDIT

AND

SECURITY AGREEMENT

Revolving Credit and Security Agreement dated as of December 29, 2009 among OSTEOTECH, INC., a
corporation under the laws of the State of Delaware (“Osteotech”) and each other Person joined
hereto as a borrower from time to time (Osteotech and each such Person, each a “Borrower”, and
collectively “Borrowers”), the financial institutions which are now or which hereafter become a
party hereto (collectively, the “Lenders” and individually a “Lender”) and PNC BANK, NATIONAL
ASSOCIATION (“PNC”), as agent for Lenders (PNC, in such capacity, the “Agent”).

IN CONSIDERATION of the mutual covenants and undertakings herein contained, Borrowers, Lenders
and Agent hereby agree as follows:

I. DEFINITIONS.

1.1. Accounting Terms. As used in this Agreement, the Other Documents or any certificate, report or other document
made or delivered pursuant to this Agreement, accounting terms not defined in Section 1.2 or
elsewhere in this Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided, however, whenever
such accounting terms are used for the purposes of determining compliance with financial covenants
in this Agreement, such accounting terms shall be defined in accordance with GAAP as applied in
preparation of the audited financial statements of Borrowers for the fiscal year ended December 31,
2008.

1.2. General Terms. For purposes of this Agreement the following terms shall have the following meanings:

“Accountants” shall have the meaning set forth in Section 9.7 hereof.

“Advances” shall mean and include the Revolving Advances.

“Affiliate” of any Person shall mean (a) any Person which, directly or indirectly, is
in control of, is controlled by, or is under common control with such Person, or (b) any Person who
is a director, managing member, general partner or officer (i) of such Person, (ii) of any
Subsidiary of such Person or (iii) of any Person described in clause (a) above. For purposes of
this definition, control of a Person shall mean the power, direct or indirect, (x) to vote 10% or
more of the Equity Interests having ordinary voting power for the election of directors of such
Person or other Persons performing similar functions for any such Person, or (y) to direct or cause
the direction of the management and policies of such Person whether by ownership of Equity
Interests, contract or otherwise.

“Agent” shall have the meaning set forth in the preamble to this Agreement and shall
include its successors and assigns.

“Agent Advances” shall have the meaning set forth in Section 16.2(b) hereof.

 

 

 

“Agreement” shall mean this Revolving Credit and Security Agreement, as the same may
be amended, restated, supplemented or otherwise modified from time to time.

“Alternate Base Rate” shall mean, for any day, a rate per annum equal to the highest
of (i) the Base Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such day
plus 1/2 of 1% and (iii) the Daily LIBOR Rate plus 1%. For purposes of this definition, “Daily
LIBOR Rate” shall mean, for any day, the rate per annum determined by Agent by dividing (x) the
Published Rate by (y) a number equal to 1.00 minus the percentage prescribed by the Federal Reserve
for determining the maximum reserve requirements with respect to any eurocurrency funding by banks
on such day. For the purposes of this definition, “Published Rate” shall mean the rate of interest
published each Business Day in The Wall Street Journal “Money Rates” listing under the
caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published
therein for any reason, then the Published Rate shall be the eurodollar rate for a one month period
as published in another publication determined by Agent).

“Anti-Terrorism Laws” shall mean any Applicable Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA PATRIOT Act, the Applicable Laws
comprising or implementing the Bank Secrecy Act, and the Applicable Laws administered by the United
States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Applicable
Laws may from time to time be amended, renewed, extended, or replaced).

“Applicable Law” shall mean all laws, rules and regulations (including, without
limitation, the National Organ Transplant Act, as in effect from time to time), applicable to the
Person, conduct, transaction, covenant, Other Document or contract in question, including all
applicable common law and equitable principles; all provisions of all applicable state, federal and
foreign constitutions, statutes, rules, regulations, treaties, directives and orders of any
Governmental Body, and all orders, judgments and decrees of all courts and arbitrators.

“Applicable Margin” for Revolving Advances shall mean (a) for Domestic Rate Loans, 2%;
and (b) for Eurodollar Rate Loans, 3%.

“Authority” shall have the meaning set forth in Section 4.19(d) hereof.

“Base Rate” shall mean the base commercial lending rate of PNC as publicly announced
to be in effect from time to time, such rate to be adjusted automatically, without notice, on the
effective date of any change in such rate; provided that in no event shall such rate be less than
3% per annum. This rate of interest is determined from time to time by PNC as a means of pricing
some loans to its customers and is neither tied to any external rate of interest or index nor does
it necessarily reflect the lowest rate of interest actually charged by PNC to any particular class
or category of customers of PNC.

“Blocked Accounts” shall have the meaning set forth in Section 4.15(h) hereof.

“Blocked Account Bank” shall have the meaning set forth in Section 4.15(h) hereof.

“Blocked Person” shall have the meaning set forth in Section 5.24(b) hereof.

 

2

 

“Borrower” or “Borrowers” shall have the meaning set forth in the preamble to
this Agreement and shall extend to all permitted successors and assigns of such Persons.

“Borrowers on a Consolidated Basis” shall mean the consolidation in accordance with
GAAP of the accounts or other items of the Borrowers and their respective Subsidiaries.

“Borrowers’ Account” shall have the meaning set forth in Section 2.8 hereof.

“Borrowing Agent” shall mean Osteotech.

“Borrowing Base Certificate” shall mean a certificate in substantially the form of
Exhibit 1.2 duly executed by the President, Chief Financial Officer, Treasurer or Assistant
Treasurer of the Borrowing Agent, or a designee of President, Chief Financial Officer, Treasurer or
Assistant Treasurer of the Borrowing Agent, and delivered to Agent, appropriately completed, by
which such officer shall certify to Agent the Formula Amount and calculation thereof as of the date
of such certificate.

“Business Day” shall mean any day other than Saturday or Sunday or a legal holiday on
which commercial banks are authorized or required by law to be closed for business in East
Brunswick, New Jersey and, if the applicable Business Day relates to any Eurodollar Rate Loans,
such day must also be a day on which dealings are carried on in the London interbank market.

“Capital Expenditures” shall mean expenditures made or liabilities incurred for the
acquisition of any fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal portion of
Capitalized Lease Obligations, or the development of Intellectual Property which has a useful life
of more than one year, which, in accordance with GAAP, would be classified as capital expenditures.

“Capitalized Lease Obligation” shall mean any Indebtedness of any Borrower represented
by obligations under a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.

“Cash Balance Excess” shall have the meaning set forth in Section 6.5 hereof.

“CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. §§9601 et seq.

“Change of Ownership” shall mean (a) 100% of the Equity Interests of any Subsidiary is
no longer owned (directly or indirectly) or controlled by Osteotech (including for the purposes of
any calculation of percentage ownership, any Equity Interests into which any Equity Interests of
any Subsidiary held by Osteotech are convertible or for which any such Equity Interests of any
Subsidiary or of any other Person may be exchanged and any Equity Interests issuable to Osteotech
upon exercise of any warrants, options or similar rights which may at the time of calculation be
held by Osteotech), unless any of the foregoing is the result of a transaction permitted under
Section 7.1 hereof, (b) (i) any “person” or “group of persons” (within the meaning of Section 13(d)
or 14(a) of the Exchange Act) shall have acquired beneficial ownership (within the meaning of Rule

 

3

 

13d-3
promulgated by the SEC under the Exchange Act) of 35% or more of the voting Equity Interest of Osteotech; or (ii) from and after the date hereof,
individuals who on the date hereof constitute the Board of Directors of Osteotech (together with
any new directors whose election by such Board of Directors or whose nomination for election by the
shareholders of Osteotech was approved by a vote of a majority of the directors then still in
office who were either directors on the date hereof or whose election or nomination for election
was previously approved) cease for any reason to constitute a majority of the board of directors of
Osteotech then in office; or (c) any merger, consolidation or sale of substantially all of the
property or assets of any Borrower or any direct or indirect Subsidiary of any Borrower unless any
of the foregoing is the result of a transaction permitted under Section 7.1 hereof or a transaction
in which a Subsidiary is merged into or consolidated with any other Subsidiary or a Borrower,
provided that, in the case of a merger into or consolidation with a Borrower, the Borrower is the
surviving Person (and in the case of a merger into or consolidation with Osteotech, Osteotech is
the surviving Person). For purposes of this definition, control or controlled shall mean the power
(direct or indirect) to direct or cause the direction of the management and policies of any Person,
by contract or otherwise.

“Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments,
including all net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation and property taxes, custom
duties, fees, assessments, liens, claims and charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts, imposed by any taxing or other
authority, domestic or foreign (including the Pension Benefit Guaranty Corporation or any
environmental agency or superfund), upon the Collateral or any Borrower.

“Closing Date” shall mean December 29, 2009 or such other date as may be agreed to by
the parties hereto.

“Code” shall mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import, and the rules and
regulations thereunder, as from time to time in effect.

“Collateral” shall mean, excluding the Excluded Assets:

(a) all Receivables;

(b) all Equipment;

(c) all General Intangibles;

(d) all Inventory;

(e) all Investment Property;

(f) all Subsidiary Stock;

(g) the Leasehold Interests;

 

4

 

(h) all of each Borrower’s right, title and interest in and to, whether now owned or hereafter
acquired and wherever located, (i) its respective goods and other property including, but not
limited to, all merchandise returned or rejected by Customers, relating to or securing any of the
Receivables; (ii) all of each Borrower’s rights as a consignor, a consignee, an unpaid vendor,
mechanic, artisan, or other lienor, including stoppage in transit, setoff, detinue, replevin,
reclamation and repurchase; (iii) all additional amounts due to any Borrower from any Customer
relating to the Receivables; (iv) other property, including warranty claims, relating to any goods
securing the Obligations; (v) all of each Borrower’s contract rights, rights of payment which have
been earned under a contract right, instruments (including promissory notes), documents, chattel
paper (including electronic chattel paper), warehouse receipts, deposit accounts, letters of credit
and money; (vi) all commercial tort claims (whether now existing or hereafter arising) including in
connection with Osteotech, Inc. v. Regeneration Technologies, Inc., Civil File No. 06-4249,
District of New Jersey; (vii) if and when obtained by any Borrower, all real and personal property
of third parties in which such Borrower has been granted a lien or security interest as security
for the payment or enforcement of Receivables; (viii) all letter of credit rights (whether or not
the respective letter of credit is evidenced by a writing); (ix) all supporting obligations; and
(x) any other goods, personal property or real property now owned or hereafter acquired in which
any Borrower has expressly granted a security interest or may in the future grant a security
interest to Agent hereunder, or in any amendment or supplement hereto or thereto, or under any
other agreement between Agent and any Borrower;

(i) all of each Borrower’s ledger sheets, ledger cards, files, correspondence, records, books
of account, business papers, computers, computer software (owned by any Borrower or in which it has
an interest), computer programs, tapes, disks and documents relating to (a), (b), (c), (d), (e),
(f), (g) or (h) of this Paragraph; and

(j) all proceeds and products of (a), (b), (c), (d), (e), (f), (g), (h) or (i) in whatever
form, including, but not limited to: cash, deposit accounts (whether or not comprised solely of
proceeds), certificates of deposit, insurance proceeds (including hazard, flood, liability and
credit insurance), negotiable instruments and other instruments for the payment of money, chattel
paper, security agreements, documents, eminent domain proceeds, condemnation proceeds and
commercial tort claim proceeds.

“Commitment Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any assignment by a Lender
pursuant to Section 16.3(c) or (d) hereof.

“Commitment Transfer Supplement” shall mean a document in the form of Exhibit 16.3
hereto, properly completed and otherwise in form and substance satisfactory to Agent by which the
Purchasing Lender purchases and assumes a portion of the obligation of Lenders to make Advances
under this Agreement.

“Compliance Certificate” shall mean a compliance certificate to be signed by the
President, Chief Financial Officer, Treasurer or Assistant Treasurer of the Borrowing Agent, or a
designee of Chief Financial Officer, Treasurer or Assistant Treasurer of the Borrowing Agent, which
shall state that, based on an examination sufficient to permit such officer to make an informed
statement, no Default or Event of Default exists, or if such is not the case, specifying
such Default or Event of Default, its nature, when it occurred, whether it is continuing and
the steps being taken by Borrowers with respect to such default and such certificate shall have
appended thereto calculations which set forth Borrowers’ compliance with the requirements or
restrictions imposed by Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11 hereof.

 

5

 

“Consents” shall mean all filings and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Bodies and other third parties, domestic
or foreign, necessary to carry on any Borrower’s business or necessary (including to avoid a
conflict or breach under any agreement, instrument, other document, license, permit or other
authorization) for the execution, delivery or performance of this Agreement, the Other Documents,
including any Consents required under all applicable federal, state or other Applicable Law.

“Controlled Group” shall mean, at any time, each Borrower and all members of a
controlled group of corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with any Borrower, are treated as a single
employer under Section 414 of the Code.

“Customer” shall mean and include the account debtor with respect to any Receivable
and/or the prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any contract or other
arrangement with any Borrower, pursuant to which such Borrower is to deliver any personal property
or perform any services.

“Debt Payment” shall mean collectively, Senior Debt Payments and Subordinated Debt
Payments.

“Default” shall mean an event, circumstance or condition which, with the giving of
notice or passage of time or both, would constitute an Event of Default.

“Default Rate” shall have the meaning set forth in Section 3.1 hereof.

“Defaulting Lender” shall have the meaning set forth in Section 2.23(a) hereof.

“Depository Accounts” shall have the meaning set forth in Section 4.15(h) hereof.

“Designated Lender” shall have the meaning set forth in Section 16.2(b) hereof.

“Documents” shall have the meaning set forth in Section 8.1(c) hereof.

“Dollar” and the sign “$” shall mean lawful money of the United States of
America.

“Domestic Rate Loan” shall mean any Advance that bears interest based upon the
Alternate Base Rate.

“Early Termination Date” shall have the meaning set forth in Section 13.1 hereof.

 

6

 

“Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net
income (or loss) of Borrowers on a Consolidated Basis for such period (excluding extraordinary
gains and losses), plus (ii) all interest expense of Borrowers on a Consolidated Basis for such
period, plus (iii) all charges against income of Borrowers on a Consolidated Basis for such period
for foreign, federal, state and local taxes actually paid.

“EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and Taxes
for such period plus (ii) depreciation expenses for Borrowers on a Consolidated Basis for such
period, plus (iii) amortization expenses for Borrowers on a Consolidated Basis for such period plus
(iv) stock-based compensation, plus (v) payments for all fees, commissions and charges set forth
herein and with respect to any Advances.

“Eligible Receivables” shall mean and include with respect to each Borrower, each
Receivable of such Borrower arising in the Ordinary Course of Business and which Agent, in its
reasonable credit judgment, shall deem to be an Eligible Receivable, based on such considerations
as Agent may from time to time deem appropriate in its reasonable credit judgment. A Receivable
shall not be deemed eligible unless such Receivable is subject to Agent’s first priority perfected
security interest and no other Lien (other than Permitted Encumbrances), and is evidenced by an
invoice or other documentary evidence satisfactory to Agent. In addition, no Receivable shall be
an Eligible Receivable if:

(a) it arises out of a sale made by any Borrower to an Affiliate of any Borrower or to a
Person controlled by an Affiliate of any Borrower;

(b) it is due or unpaid more than (i) ninety (90) days after the original invoice date with
regard to Receivables from any Customer that is not a Hospital, or (ii) one hundred twenty (120)
days after the original invoice date with regard to Receivables from any Customer that is a
Hospital;

(c) fifty percent (50%) or more of the Receivables from such Customer are not deemed Eligible
Receivables hereunder. Such percentage may, in Agent’s reasonable credit judgment, be increased or
decreased from time to time;

(d) any covenant, representation or warranty contained in this Agreement with respect to such
Receivable has been breached;

(e) the Customer shall (i) apply for, suffer, or consent to the appointment of, or the taking
of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property or call a meeting of its creditors, (ii) admit in writing its inability, or be
generally unable, to pay its debts as they become due or cease operations of its present business,
(iii) make a general assignment for the benefit of creditors, (iv) commence a voluntary case under
any state or federal bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition seeking to take advantage of any other law providing for the
relief of debtors, (vii) acquiesce to, or fail to have dismissed, any petition which is filed
against it in any involuntary case under such bankruptcy laws, or (viii) take any action for the
purpose of effecting any of the foregoing;

(f) the sale is to a Customer outside the continental United States of America;

 

7

 

(g) the sale to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by chattel paper;

(h) Agent believes, in its reasonable credit judgment, that collection of such Receivable is
insecure or that such Receivable may not be paid by reason of the Customer’s financial inability to
pay;

(i) the Customer is the United States of America, any state or any department, agency or
instrumentality of any of them, unless the applicable Borrower assigns its right to payment of such
Receivable to Agent pursuant to the Assignment of Claims Act of 1940, as amended (31 U.S.C.
Sub-Section 3727 et seq. and 41 U.S.C. Sub-Section 15 et seq.) or has otherwise complied with other
applicable statutes or ordinances;

(j) the goods giving rise to such Receivable have not been delivered to and accepted by the
Customer or the services giving rise to such Receivable have not been performed by the applicable
Borrower and accepted by the Customer or the Receivable otherwise does not represent a final sale;

(k) the Receivable is subject to any offset, deduction, defense, dispute, or counterclaim, but
only to the extent such offset, deduction, defense, dispute or counterclaim reduces the amount to
be paid with respect to such Receivable; the Customer is also a creditor or supplier of a Borrower,
but only to the extent of any amount owing to such Customer; or the Receivable is contingent in any
respect or for any reason;

(l) the applicable Borrower has made any agreement with any Customer for any deduction
therefrom, except for discounts or allowances made in the Ordinary Course of Business consistent
with past practices, for prompt payment, all of which discounts or allowances are reflected in the
calculation of the face value of each respective invoice related thereto;

(m) any return, rejection or repossession of the merchandise has occurred or the rendition of
services has been disputed, to the extent such dispute affects the amount to be paid; or

(n) such Receivable is not payable to a Borrower.

“Environmental Complaint” shall have the meaning set forth in Section 4.19(d) hereof.

“Environmental Laws” shall mean all federal, state and local environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating
to the protection of the environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous Substances and the rules,
regulations, policies, guidelines, interpretations, decisions, orders and directives of federal,
state and local governmental agencies and authorities with respect thereto.

“Equipment” shall mean and include as to each Borrower all of such Borrower’s goods
(other than Inventory) whether now owned or hereafter acquired and wherever located including
all equipment, machinery, apparatus, motor vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all replacements and substitutions therefor or accessions thereto.

 

8

 

“Equity Interests” of any Person shall mean any and all shares, rights to purchase,
options, warrants, general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how designated) equity of such
Person, whether voting or nonvoting, including common stock, preferred stock, convertible
securities or any other “equity security” (as such term is defined in Rule 3a11-1 of the General
Rules and Regulations promulgated by the SEC under the Exchange Act).

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

“Eurodollar Rate” shall mean for any Eurodollar Rate Loan for the then current
Interest Period relating thereto the interest rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) determined by Agent by dividing (i) the rate which appears on the Bloomberg
Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar
deposits are offered by leading banks in the London interbank deposit market), or the rate which is
quoted by another source selected by Agent which has been approved by the British Bankers’
Association as an authorized information vendor for the purpose of displaying rates at which US
dollar deposits are offered by leading banks in the London interbank deposit market (an
“Alternative Source”), at approximately 11:00 a.m., London time two (2) Business Days prior to the
first day of such Interest Period (or if there shall at any time, for any reason, no longer exist a
Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement
rate determined by the Agent at such time (which determination shall be conclusive absent manifest
error)) for an amount comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus the Reserve
Percentage.

The Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that is
outstanding on the effective date of any change in the Reserve Percentage as of such effective
date. The Agent shall give prompt notice to the Borrowing Agent of the Eurodollar Rate as
determined or adjusted in accordance herewith, which determination shall be conclusive absent
manifest error.

“Eurodollar Rate Loan” shall mean an Advance at any time that bears interest based on
the Eurodollar Rate.

“Event of Default” shall have the meaning set forth in Article X hereof.

“Exchange Act” shall have the mean the Securities Exchange Act of 1934, as amended.

“Excluded Assets” shall mean Equipment subject to a purchase money Lien or capital
lease to the extent that the instrument or other agreement evidencing the purchase money
Indebtedness or Capital Lease Obligations, as the case may be, secured by such Lien or capital
lease on such Equipment limits a Borrower’s ability to grant a security interest therein to Agent;
provided however, that such Equipment shall be excluded from the Collateral only for so long as
such purchase money Indebtedness or Capital Lease Obligations, as the case may be, remains
outstanding, and upon the earlier of the termination of such limitation or the satisfaction of
such Indebtedness, such Equipment shall be included in the term “Collateral” without any further
action on the part of any Borrower or Agent.

 

9

 

“Executive Order No. 13224” shall mean the Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.

“Federal Funds Effective Rate” for any day shall mean the rate per annum (based on a
year of 360 days and actual days elapsed and rounded upward to the nearest 1/100 of 1%) announced
by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by federal funds brokers on
the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor)
in substantially the same manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement;
provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day,
the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the
last day on which such rate was announced.

“Federal Funds Open Rate” for any day shall mean the rate per annum (based on a year
of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP
North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day
opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate),
or as set forth on such other recognized electronic source used for the purpose of displaying such
rate as selected by PNC (an “Alternate Source”) (or if such rate for such day does not appear on
the Bloomberg Screen BTMM (or any substitute screen) or on any Alternate Source, or if there shall
at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or
any Alternate Source, a comparable replacement rate determined by the PNC at such time (which
determination shall be conclusive absent manifest error); provided however, that if such day is not
a Business Day, the Federal Funds Open Rate for such day shall be the “open” rate on the
immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of
interest with respect to any advance to which the Federal Funds Open Rate applies will change
automatically without notice to the Borrowers, effective on the date of any such change.

“Fixed Charge Coverage Ratio” shall mean and include, with respect to any fiscal
period, the ratio of (a) EBITDA minus Unfinanced Capital Expenditures made during such period minus
cash taxes paid during such period minus dividends and distributions on account of any Equity
Interests paid during such period to (b) all Debt Payments made during such period.

“Formula Amount” shall have the meaning set forth in Section 2.1(a) hereof.

“GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time.

 

10

 

“General Intangibles” shall mean and include as to each Borrower all of such
Borrower’s general intangibles, whether now owned or hereafter acquired, including all payment
intangibles,
all choses in action, causes of action, corporate or other business records, inventions,
designs, patents, patent applications, equipment formulations, manufacturing procedures, quality
control procedures, trademarks, trademark applications, service marks, trade secrets, goodwill,
copyrights, design rights, software, computer information, source codes, codes, records and
updates, registrations, licenses, franchises, customer lists, tax refunds, tax refund claims,
computer programs, all claims under guaranties, security interests or other security held by or
granted to such Borrower to secure payment of any of the Receivables by a Customer (other than to
the extent covered by Receivables) all rights of indemnification and all other intangible property
of every kind and nature (other than Receivables).

“Governmental Body” shall mean any nation or government, any state or other political
subdivision thereof or any entity, authority, agency (including, without limitation, the Food and
Drug Administration), division or department exercising the legislative, judicial, regulatory or
administrative functions of or pertaining to a government.

“Guarantor” shall mean any Person who may hereafter guarantee payment or performance
of the whole or any part of the Obligations and “Guarantors” means collectively all such Persons.

“Guarantor Security Agreement” shall mean any Security Agreement executed by any
Guarantor in favor of Agent securing the Guaranty of such Guarantor, in form and substance
satisfactory to Agent.

“Guaranty” shall mean any guaranty of the obligations of Borrowers executed by a
Guarantor in favor of Agent for its benefit and for the ratable benefit of Lenders, in form and
substance satisfactory to Agent.

“Hazardous Discharge” shall have the meaning set forth in Section 4.19(d) hereof.

“Hazardous Substance” shall mean, without limitation, any flammable explosives, radon,
radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum products, methane, hazardous materials, Hazardous Wastes, hazardous or
Toxic Substances or related materials as defined in CERCLA, the Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801, et seq.), RCRA, Articles 15 and 27 of the New York State
Environmental Conservation Law or any other applicable Environmental Law and in the regulations
adopted pursuant thereto.

“Hazardous Wastes” shall mean all waste materials subject to regulation under CERCLA,
RCRA or applicable state law, and any other applicable Federal and state laws now in force or
hereafter enacted relating to hazardous waste disposal.

“Hedge Liabilities” shall have the meaning provided in the definition of
“Lender-Provided Interest Rate Hedge”.

“Hospital” shall mean each of the Customers listed on Exhibit A hereto, and such other
Customers as Agent may, in its sole discretion, designate in writing from time to time.

 

11

 

“Indebtedness” of a Person at a particular date shall mean all obligations of such
Person which in accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without limitation by
reason of enumeration, shall include all indebtedness, debt and other similar monetary obligations
of such Person whether direct or guaranteed, and all premiums, if any, due at the required
prepayment dates of such indebtedness, and all indebtedness secured by a Lien on assets owned by
such Person, whether or not such indebtedness actually shall have been created, assumed or incurred
by such Person provided that, the amount of indebtedness secured by a Lien on assets owned by such
Person which is non-recourse to such Person shall be equal to the lesser of (i) such indebtedness
and (ii) the fair market value of such assets. Any indebtedness of such Person resulting from the
acquisition by such Person of any assets subject to any Lien shall be deemed, for the purposes
hereof, to be the equivalent of the creation, assumption and incurring of the indebtedness secured
thereby, whether or not actually so created, assumed or incurred. The term “Indebtedness” as used
in this Agreement shall exclude, in any event, liabilities with respect to accrued salaries,
vacation, other employee benefits and other similar items incurred in the Ordinary Course of
Business.

“Ineligible Security” shall mean any security which may not be underwritten or dealt
in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended.

“Intellectual Property” shall mean property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask work, trade secret
or license or other right to use any of the foregoing.

“Intellectual Property Claim” shall mean the assertion by any Person of a claim
(whether asserted in writing, by action, suit or proceeding or otherwise) that any Borrower’s
ownership, use, marketing, sale or distribution of any Inventory, Equipment, Intellectual Property
or other property or asset violates of any ownership of or right to use any Intellectual Property
of such Person.

“Interest Period” shall mean the period provided for any Eurodollar Rate Loan pursuant
to Section 2.2(b) hereof.

“Interest Rate Hedge” shall mean an interest rate exchange, collar, cap, swap,
adjustable strike cap, adjustable strike corridor or similar agreements entered into by any
Borrower or its Subsidiaries in order to provide protection to, or minimize the impact upon, such
Borrower, any Guarantor and/or their respective Subsidiaries of increasing floating rates of
interest applicable to Indebtedness.

“Inventory” shall mean and include as to each Borrower all of such Borrower’s now
owned or hereafter acquired goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for sale or lease, all raw
materials, work in process, finished goods and materials and supplies of any kind, nature or
description which are or might be used or consumed in such Borrower’s business or used in selling
or furnishing such goods, merchandise and other personal property, and all documents of title or
other documents representing them.

 

12

 

“Investment Property” shall mean and include as to each Borrower, all of such
Borrower’s now owned or hereafter acquired securities (whether certificated or uncertificated),
securities entitlements, securities accounts, commodities contracts and commodities accounts.

“Leasehold Interests” shall mean all of each Borrower’s right, title and interest in
and to the premises described on Schedule 1.1.

“Lender” and “Lenders” shall have the meaning ascribed to such term in the
preamble to this Agreement and shall include each Person which becomes a transferee, successor or
assign of any Lender.

“Lender-Provided Interest Rate Hedge” shall mean an Interest Rate Hedge which is
provided by any Lender and with respect to which the Agent confirms meets the following
requirements: such Interest Rate Hedge (i) is documented in a standard International Swap Dealer
Association Agreement, (ii) provides for the method of calculating the reimbursable amount of the
provider’s credit exposure in a reasonable and customary manner, and (iii) is entered into for
hedging (rather than speculative) purposes. The liabilities of any Borrower to the provider of any
Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”) shall be “Obligations” hereunder,
guaranteed obligations under the Guaranty and secured obligations under the Guarantor Security
Agreement and otherwise treated as Obligations for purposes of each of the Other Documents. The
Liens securing the Hedge Liabilities shall be pari passu with the Liens securing all other
Obligation under this Agreement and the Other Documents.

“License Agreement” shall mean any agreement between any Borrower and a Licensor
pursuant to which such Borrower is authorized to use any Intellectual Property in connection with
the manufacturing, marketing, sale or other distribution of any Inventory of such Borrower or
otherwise in connection with such Borrower’s business operations.

“Licensor” shall mean any Person from whom any Borrower obtains the right to use
(whether on an exclusive or non-exclusive basis) any Intellectual Property in connection with such
Borrower’s manufacture, marketing, sale or other distribution of any Inventory or otherwise in
connection with such Borrower’s business operations.

“Lien” shall mean any mortgage, deed of trust, pledge, hypothecation, assignment,
security interest, lien (whether statutory or otherwise), Charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement held or asserted in
respect of any asset of any kind or nature whatsoever including any conditional sale or other title
retention agreement, any lease having substantially the same economic effect as any of the
foregoing (other than an operating lease), and the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code or comparable law of any jurisdiction (other than
cautionary filings related to operating leases).

“Lien Waiver Agreement” shall mean an agreement which is executed in favor of Agent by
a Person who owns or occupies premises at which any Collateral may be located from time to time and
by which such Person shall waive or subordinate any Lien that such Person may ever have with
respect to any of the Collateral and shall authorize Agent from time to time to enter
upon the premises to inspect or remove the Collateral from such premises or to use such
premises to store or dispose of such Collateral.

 

13

 

“Material Adverse Effect” shall mean a material adverse effect on (a) the financial
condition, results of operations, assets, business, or properties of any Borrower, (b) any
Borrower’s ability to duly and punctually pay or perform the Obligations in accordance with the
terms thereof, (c) the value of the Collateral, or Agent’s Liens on the Collateral or the priority
of any such Lien or (d) the practical realization of the benefits of Agent’s and each Lender’s
rights and remedies under this Agreement and the Other Documents.

“Maximum Revolving Advance Amount” shall mean $10,000,000.

“Modified Commitment Transfer Supplement” shall have the meaning set forth in Section
16.3(d) hereof.

“Multiemployer Plan” shall mean a “multiemployer plan” as defined in Sections 3(37)
and 4001(a)(3) of ERISA.

“Multiple Employer Plan” shall mean a Plan which has two or more contributing sponsors
(including any Borrower or any member of the Controlled Group) at least two of whom are not under
common control, as such a plan is described in Section 4064 of ERISA.

“Note” shall mean the Revolving Credit Note.

“Obligations” shall mean and include any and all loans, advances, debts, liabilities,
obligations, covenants and duties owing by any Borrower to Lenders or Agent or to any other direct
or indirect subsidiary or affiliate of Agent or any Lender of any kind or nature, present or future
(including any interest or other amounts accruing thereon after maturity, or after the filing of
any petition in bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to any Borrower, whether or not a claim for post-filing or post-petition
interest or other amounts is allowed in such proceeding), whether or not evidenced by any note,
guaranty or other instrument, whether arising under any agreement, instrument or document,
(including this Agreement and the Other Documents) whether or not for the payment of money, whether
arising by reason of an extension of credit, opening of a letter of credit, loan, equipment lease
or guarantee, under any interest or currency swap, future, option or other similar agreement
(including, without limitation, any Hedge Liabilities), or in any other manner, whether arising out
of overdrafts or deposit or other accounts or electronic funds transfers (whether through automated
clearing houses or otherwise) or out of the Agent’s or any Lenders non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository transfer check or
other similar arrangements, whether direct or indirect (including those acquired by assignment or
participation), absolute or contingent, joint or several, due or to become due, now existing or
hereafter arising, contractual or tortious, liquidated or unliquidated, regardless of how such
indebtedness or liabilities arise or by what agreement or instrument they may be evidenced or
whether evidenced by any agreement or instrument, including, but not limited to, any and all of any
Borrower’s Indebtedness and/or liabilities under this Agreement, the Other Documents or under any
other agreement between Agent or Lenders and any Borrower (specifically including, without
limitation, any debts, liabilities or obligations of any Borrower to
PNC under the P-Card Agreement or under any other purchase card or credit card facility) and
any amendments, extensions, renewals or increases and all costs and expenses of Agent and any
Lender incurred in the documentation, negotiation, modification, enforcement, collection or
otherwise in connection with any of the foregoing, including but not limited to reasonable
attorneys’ fees and expenses and all obligations of any Borrower to Agent or Lenders to perform
acts or refrain from taking any action.

 

14

 

“Ordinary Course of Business” shall mean with respect to any Borrower, the ordinary
course of such Borrower’s business as conducted on the Closing Date.

“Other Documents” shall mean the Note, the Questionnaire, the Pledge Agreement, any
Guaranty, any Guarantor Security Agreement, any Lender-Provided Interest Rate Hedge and any and all
other agreements, instruments and documents, including guaranties, pledges, powers of attorney,
consents, interest or currency swap agreements or other similar agreements and all other writings
heretofore, now or hereafter executed by any Borrower or any Guarantor and/or delivered to Agent or
any Lender in respect of the transactions contemplated by this Agreement.

“Out-of-Formula Loans” shall have the meaning set forth in Section 16.2(b) hereof.

“Participant” shall mean each Person who shall be granted the right by any Lender to
participate in any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.

“Payee” shall have the meaning set forth in Section 3.10 hereof.

“P-Card Agreement” shall mean that certain Visa Purchasing Card Agreement between
Osteotech and PNC, effective as of September 25, 2007, as may be amended from time to time.

“P-Card Reserve” shall mean an amount that Agent may reasonably determine, but in no
event to exceed the maximum amount available under the P-Card Agreement, if, at any time, the sum
of (a) cash balances on deposit at Agent plus (b) Undrawn Availability is less than
$5,000,000.

“Payment Office” shall mean initially Two Tower Center Boulevard, East Brunswick, New
Jersey 08816; thereafter, such other office of Agent, if any, which it may designate by notice to
Borrowing Agent and to each Lender to be the Payment Office.

“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA or any successor.

“Pension Benefit Plan” shall mean at any time any employee pension benefit plan
(including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of
ERISA or is subject to the minimum funding standards under Section 412 of the Code and either (i)
is maintained by any member of the Controlled Group for employees of any member of the Controlled
Group; or (ii) has at any time within the preceding five years been maintained by any entity which
was at such time a member of the Controlled Group for employees of any entity which was at such
time a member of the Controlled Group.

 

15

 

“Permitted Encumbrances” shall mean:

(a) Liens in favor of Agent for the benefit of Agent and Lenders securing the Obligations;

(b) Liens for taxes, assessments or other governmental charges not delinquent or being
Properly Contested;

(c) Liens disclosed in the financial statements referred to in Section 5.5, the existence of
which Agent has consented to in writing;

(d) deposits or pledges to secure obligations under worker’s compensation, social security or
similar laws, or under unemployment insurance;

(e) deposits or pledges to secure bids, tenders, contracts (other than contracts for the
payment of money), leases, statutory obligations, surety and appeal bonds and other obligations of
like nature arising in the Ordinary Course of Business;

(f) Liens arising by virtue of the rendition, entry or issuance against any Borrower or any
Subsidiary, or any property of any Borrower or any Subsidiary, of any judgment, writ, order, or
decree for so long as each such Lien does not cause an Event of Default and is at all times junior
in priority to any Liens in favor of Agent;

(g) Liens of landlords, Liens of collecting banks under the Uniform Commercial Code on items
in the course of collection, Liens and rights of set-off of banks (including pursuant to any
deposit account agreement), statutory and common law Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by Applicable Law or other like Liens
arising in the Ordinary Course of Business with respect to obligations which are not due or which
are being Properly Contested;

(h) Liens placed upon fixed assets hereafter acquired to secure a portion of the purchase
price thereof, provided that (x) any such lien shall not encumber any other property of any
Borrower and (y) the aggregate amount of Indebtedness secured by such Liens incurred as a result of
such purchases during any fiscal year shall not exceed the amount provided for in Section 7.6;
provided that in no event may any such Liens be in favor of Key Equipment Finance, Inc. (“Key”)
until the financing statement in favor of Key, as of record on the Closing Date, has been amended
to limit the collateral described therein to specific office equipment financed by Key;

(i) licenses (with respect to Intellectual Property and other property), leases or subleases
granted to third parties not interfering in any material respect with the ordinary conduct of the
business of any Borrower;

(j) easements, zoning restrictions, rights-of-way, covenants and other restrictions,
encroachments, and other minor defects or irregularities in title or other similar encumbrances,
in each case which do not and will not interfere in any material respect with the ordinary conduct
of the business of any Borrower;

 

16

 

(k) Liens arising from precautionary filings of Uniform Commercial Code financing statements
relating solely to leases and other transactions not prohibited by this Agreement;

(l) any (i) interest or title of a lessor or sublessor or lessee or sublessee under any lease
not prohibited by this Agreement, (ii) Lien or restriction that the interest or title of such
lessor or sublessor may be subject to, or (iii) subordination of the interest of the lessee or
sublessee under such lease to any Lien or restriction referred to in the preceding clause (ii);

(m) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation or exportation of goods;

(n) other Liens incidental to the conduct of any Borrower’s business or the ownership of its
property and assets which were not incurred in connection with the borrowing of money or the
obtaining of advances or credit, and which do not in the aggregate materially detract from Agent’s
or Lenders’ rights in and to the Collateral or the value of any Borrower’s property or assets or
which do not materially impair the use thereof in the operation of any Borrower’s business; and

(o) Liens disclosed on Schedule 1.2; provided that such Liens shall secure
only those obligations which they secure on the Closing Date and shall not subsequently apply to
any other property or assets of any Borrower.

“Person” shall mean any individual, sole proprietorship, partnership, corporation,
business trust, joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit corporation, joint
venture, entity or Governmental Body (whether federal, state, county, city, municipal or otherwise,
including any instrumentality, division, agency, body or department thereof).

“Plan” shall mean any employee benefit plan within the meaning of Section 3(3) of
ERISA (including a Pension Benefit Plan), maintained for employees of any Borrower or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the Controlled Group
is required to contribute on behalf of any of its employees.

“Pledge Agreement” shall mean the Pledge Agreement executed by Osteotech in favor of
Agent for its benefit and for the ratable benefit of Lenders, in respect of the Subsidiary Stock,
in form and substance satisfactory to Agent.

“PNC” shall have the meaning set forth in the preamble to this Agreement and shall
extend to all of its successors and assigns.

 

17

 

“Properly Contested” shall mean, in the case of any Indebtedness or Lien, as
applicable, of any Person (including any taxes) that is not paid as and when due or payable by
reason of such Person’s bona fide dispute concerning its liability to pay same or concerning the
amount thereof, (a) such Indebtedness or Lien, as applicable, is being properly contested in good
faith by appropriate proceedings promptly instituted and diligently conducted; (b) such Person has
established appropriate reserves as shall be required in conformity with GAAP; (c) the non-
payment of such Indebtedness will not have a Material Adverse Effect and will not result in
the forfeiture of any assets of such Person; (d) no Lien is imposed upon any of such Person’s
assets with respect to such Indebtedness unless such Lien is at all times junior and subordinate in
priority to the Liens in favor of the Agent (except only with respect to property taxes that have
priority as a matter of applicable state law) and enforcement of such Lien is stayed during the
period prior to the final resolution or disposition of such dispute; (e) if such Indebtedness or
Lien, as applicable, results from, or is determined by the entry, rendition or issuance against a
Person or any of its assets of a judgment, writ, order or decree, enforcement of such judgment,
writ, order or decree is stayed pending a timely appeal or other judicial review; and (f) if such
contest is abandoned, settled or determined adversely (in whole or in part) to such Person, such
Person forthwith pays such Indebtedness and all penalties, interest and other amounts due in
connection therewith.

“Purchasing CLO” shall have the meaning set forth in Section 16.3(d) hereof.

“Purchasing Lender” shall have the meaning set forth in Section 16.3(c) hereof.

“Questionnaire” shall mean the Documentation Information Questionnaire and the
responses thereto provided by Borrowing Agent and delivered to Agent.

“RCRA” shall mean the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq., as same may be amended from time to time.

“Real Property” shall mean all of each Borrower’s right, title and interest in and to
the owned and leased premises identified on Schedule 4.19 hereto or which is hereafter owned or
leased by any Borrower.

“Receivables” shall mean and include, as to each Borrower, all of such Borrower’s
accounts, contract rights, instruments (including those evidencing indebtedness owed to such
Borrower by its Affiliates), documents, chattel paper (including electronic chattel paper), general
intangibles relating to accounts, drafts and acceptances, credit card receivables and all other
forms of obligations owing to such Borrower arising out of or in connection with the sale or lease
of Inventory or the rendition of services, all supporting obligations, guarantees and other
security therefor, whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.

“Receivables Advance Rate” shall have the meaning set forth in Section 2.1(a)(y)(i)
hereof.

“Register” shall have the meaning set forth in Section 16.3(e) hereof.

“Release” shall have the meaning set forth in Section 5.7(c)(i) hereof.

“Reportable Event” shall mean a reportable event described in Section 4043(c) of ERISA
or the regulations promulgated thereunder.

“Required Lenders” shall mean Lenders holding at least fifty percent (50%) of the
Advances and, if no Advances are outstanding, shall mean Lenders holding fifty percent (50%)
of the Commitment Percentages; provided, however, if there are fewer than three (3) Lenders,
Required Lenders shall mean all Lenders.

 

18

 

“Reserve Percentage” shall mean as of any day the maximum percentage in effect on such
day as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including supplemental, marginal and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency
Liabilities”).

“Revolving Advances” shall mean Advances made under Section 2.1 hereof.

“Revolving Credit Note” shall mean, collectively, the promissory notes referred to in
Section 2.1(a) hereof.

“Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum
of the Alternate Base Rate plus the Applicable Margin with respect to Domestic Rate Loans and (b)
the sum of the Eurodollar Rate plus the Applicable Margin with respect to Eurodollar Rate Loans.

“SEC” shall mean the Securities and Exchange Commission or any successor thereto.

“Section 20 Subsidiary” shall mean the Subsidiary of the bank holding company
controlling PNC, which Subsidiary has been granted authority by the Federal Reserve Board to
underwrite and deal in certain Ineligible Securities.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Senior Debt Payments” shall mean and include the sum of (a) all cash actually
expended by any Borrower to make (i) interest payments on any Advances hereunder, plus (ii)
payments for all fees, commissions and charges set forth herein and with respect to any Advances,
plus (iii) payments on account of Capitalized Lease Obligations, plus (iv) payments with respect to
any other Indebtedness for borrowed money other than Subordinated Debt Payments, and (b) without
duplication, all interest expense accrued on Eurodollar Rate Loans.

“Settlement Date” shall mean the Closing Date and thereafter Wednesday or Thursday of
each week or more frequently if Agent deems appropriate unless such day is not a Business Day in
which case it shall be the next succeeding Business Day.

“Stock Repurchase Plan” shall mean the Osteotech stock repurchase program publicly
announced by Osteotech on December 11, 2008.

“Subordinated Debt Payments” shall mean and include all cash actually expended by any
Borrower to make payments of principal, interest and premium on account of any Subordinated Loan.

“Subordinated Loan” shall mean any loan incurred by any Borrower that is subordinated
to the Obligations on written terms and conditions satisfactory to Agent in Agent’s sole and
absolute discretion.

 

19

 

“Subsidiary” of any Person shall mean a corporation or other entity of whose Equity
Interests having ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors of such corporation,
or other Persons performing similar functions for such entity, are owned, directly or indirectly,
by such Person.

“Subsidiary Stock” shall mean 65% of the issued and outstanding Equity Interests of
OST Developpment, SA.

“Term” shall have the meaning set forth in Section 13.1 hereof.

“Termination Event” shall mean (a) a Reportable Event with respect to any Plan or
Multiemployer Plan; (b) the withdrawal of any Borrower or any member of the Controlled Group from a
Plan or Multiemployer Plan during a plan year in which such entity was a “substantial employer” as
defined in Section 4001(a)(2) of ERISA; (c) the providing of notice of intent to terminate a Plan
in a distress termination described in Section 4041(c) of ERISA; (d) the institution by the PBGC of
proceedings to terminate a Plan or Multiemployer Plan; (e) any event or condition (i) which might
constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan or Multiemployer Plan, or (ii) that may result in termination of a
Multiemployer Plan pursuant to Section 4041A of ERISA; or (f) the partial or complete withdrawal
within the meaning of Sections 4203 and 4205 of ERISA, of any Borrower or any member of the
Controlled Group from a Multiemployer Plan.

“Toxic Substance” shall mean and include any material present on the Real Property or
the Leasehold Interests which has been shown to have significant adverse effect on human health or
which is subject to regulation under the Toxic Substances Control Act (TSCA), 15 U.S.C. §§ 2601 et
seq., applicable state law, or any other applicable Federal or state laws now in force or hereafter
enacted relating to toxic substances. “Toxic Substance” includes but is not limited to asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.

“Trading with the Enemy Act” shall mean the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any enabling
legislation or executive order relating thereto.

“Transferee” shall have the meaning set forth in Section 16.3(d) hereof.

“Undrawn Availability” at a particular date shall mean an amount equal to (a) the
lesser of (i) the Formula Amount or (ii) the Maximum Revolving Advance Amount, minus (b) the sum of
(i) the outstanding amount of Advances plus (ii) all amounts due and owing to any Borrower’s trade
creditors which are outstanding sixty (60) days beyond the due date unless otherwise on formal
written extended terms, plus (iii) fees and expenses for which Borrowers are liable but which have
not been paid or charged to Borrowers’ Account.

“Unfinanced Capital Expenditures” shall mean all Capital Expenditures of Borrowers
other than those made utilizing financing provided by the applicable seller or third party lenders.
For the avoidance of doubt, Capital Expenditures made by a Borrower utilizing Revolving Advances
shall be deemed Unfinanced Capital Expenditures.

 

20

 

“Uniform Commercial Code” shall have the meaning set forth in Section 1.3 hereof.

“USA PATRIOT Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as
the same has been, or shall hereafter be, renewed, extended, amended or replaced.

“Week” shall mean the time period commencing with the opening of business on a
Wednesday and ending on the end of business the following Tuesday.

1.3. Uniform Commercial Code Terms. All terms used herein and defined in the Uniform Commercial Code as adopted in the
Commonwealth of Pennsylvania from time to time (the “Uniform Commercial Code”) shall have the
meaning given therein unless otherwise defined herein. Without limiting the foregoing, the terms
“accounts”, “chattel paper”, “commercial tort claims”, “instruments”, “general intangibles”,
“goods”, “payment intangibles”, “proceeds”, “supporting obligations”, “securities”, “investment
property”, “documents”, “deposit accounts”, “software”, “letter of credit rights”, “inventory”,
“equipment” and “fixtures”, as and when used in the description of Collateral shall have the
meanings given to such terms in Articles 8 or 9 of the Uniform Commercial Code. To the extent the
definition of any category or type of collateral is expanded by any amendment, modification or
revision to the Uniform Commercial Code, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.

1.4. Certain Matters of Construction. The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular section, paragraph or subdivision. All
references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, this Agreement. Any pronoun used shall be
deemed to cover all genders. Wherever appropriate in the context, terms used herein in the
singular also include the plural and vice versa. All references to statutes and related
regulations shall include any amendments of same and any successor statutes and regulations.
Unless otherwise provided, all references to any instruments or agreements to which Agent is a
party, including references to any of the Other Documents, shall include any and all modifications
or amendments thereto and any and all extensions or renewals thereof. All references herein to the
time of day shall mean the time in New York, New York. Unless otherwise provided, all financial
calculations shall be performed with Inventory valued on a first-in, first-out basis. Whenever the
words “including” or “include” shall be used, such words shall be understood to mean “including,
without limitation” or “include, without limitation”. A Default or Event of Default shall be
deemed to exist at all times during the period commencing on the date that such Default or Event of
Default occurs to the date on which such Default or Event of Default is waived in writing pursuant
to this Agreement or, in the case of a Default, is cured within any period of cure expressly
provided for in this Agreement; and an Event of Default shall “continue” or be “continuing” until
such Event of Default has been waived in writing by the Required Lenders. Any Lien referred to in
this Agreement or any of the Other Documents as having been created in favor of Agent, any
agreement entered into by Agent pursuant to this Agreement or any of the Other Documents, any
payment made by or to or funds received by Agent pursuant to or as contemplated by this Agreement
or any of the Other Documents, or any act taken or omitted to be taken by Agent, shall, unless

 

21

 

otherwise expressly provided, be created, entered into, made or received, or taken or omitted, for
the benefit or account of Agent and Lenders. Wherever the phrase “to the best of Borrowers’ knowledge” or
words of similar import relating to the knowledge or the awareness of any Borrower are used in this
Agreement or Other Documents, such phrase shall mean and refer to (i) the actual knowledge of a
senior officer of any Borrower or (ii) the knowledge that a senior officer would have obtained if
he had engaged in good faith and diligent performance of his duties, including the making of such
reasonably specific inquiries as may be necessary of the employees or agents of such Borrower and a
good faith attempt to ascertain the existence or accuracy of the matter to which such phrase
relates. All covenants hereunder shall be given independent effect so that if a particular action
or condition is not permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise within the limitations of, another covenant shall not avoid the
occurrence of a default if such action is taken or condition exists. In addition, all
representations and warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that another
representation or warranty concerning the same or similar subject matter is correct or is not
breached will not affect the incorrectness of a breach of a representation or warranty hereunder.

II. ADVANCES, PAYMENTS.

2.1. Revolving Advances.

(a) Amount of Revolving Advances. Subject to the terms and conditions set forth in
this Agreement including Section 2.1(b), each Lender, severally and not jointly, will make
Revolving Advances to Borrowers in aggregate amounts outstanding at any time equal to such Lender’s
Commitment Percentage of the lesser of (x) the Maximum Revolving Advance Amount or (y) an amount
equal to the sum of:

(i) up to 85%, subject to the provisions of Section 2.1(b) hereof (“Receivables Advance
Rate”), of Eligible Receivables, minus

(ii) such reserves as Agent may reasonably deem proper and necessary from time to time,
including, without limitation, the P-Card Reserve; provided that with respect to any individual
reserve in excess of $500,000 (other than the P-Card Reserve), Agent shall provide fifteen (15)
days’ prior written notice of the imposition hereof.

The amount derived from (x) Section 2.1(a)(y)(i) minus (y) Section 2.1(a)(y)(ii) at any time
and from time to time shall be referred to as the “Formula Amount”. The Revolving Advances shall
be evidenced by one or more secured promissory notes (collectively, the “Revolving Credit Note”)
substantially in the form attached hereto as Exhibit 2.1(a).

(b) Discretionary Rights. The Receivables Advance Rate may be increased or decreased
by Agent at any time and from time to time (upon five (5) Business Days’ prior notice) in the
exercise of its reasonable credit judgment, following a field examination, as a result of which
Agent reasonably determines that a change in the Receivables Advance Rate is appropriate. Each
Borrower consents to any such increases or decreases and acknowledges that decreasing the
Receivables Advance Rate or increasing or imposing reserves may limit or restrict Advances
requested by Borrowing Agent. The rights of Agent under this subsection are subject to the
provisions of Section 16.2(b).

 

22

 

2.2. Procedure for Revolving Advances Borrowing.

(a) Borrowing Agent on behalf of any Borrower may notify Agent prior to 1:30 p.m. on a
Business Day of a Borrower’s request to incur, on that day, a Revolving Advance hereunder. Should
any amount required to be paid as interest hereunder, or as fees or other charges under this
Agreement or any other agreement with Agent or Lenders, or with respect to any other Obligation,
become due, same shall be deemed a request for a Revolving Advance maintained as a Domestic Rate
Loan as of the date such payment is due, in the amount required to pay in full such interest, fee,
charge or Obligation under this Agreement or any other agreement with Agent or Lenders, and such
request shall be irrevocable.

(b) Notwithstanding the provisions of subsection (a) above, in the event any Borrower desires
to obtain a Eurodollar Rate Loan, Borrowing Agent shall give Agent written notice by no later than
12:00 p.m. on the day which is three (3) Business Days prior to the date such Eurodollar Rate Loan
is to be borrowed, specifying (i) the date of the proposed borrowing (which shall be a Business
Day), (ii) the type of borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be in an aggregate principal amount that is not less than $500,000 and integral
multiples of $100,000 in excess thereof, and (iii) the duration of the first Interest Period
therefor. Interest Periods for Eurodollar Rate Loans shall be for one, two, three or six months;
provided, if an Interest Period would end on a day that is not a Business Day, it shall end
on the next succeeding Business Day unless such day falls in the next succeeding calendar month in
which case the Interest Period shall end on the next preceding Business Day. No Eurodollar Rate
Loan shall be made available to any Borrower during the continuance of a Default or an Event of
Default. After giving effect to each requested Eurodollar Rate Loan, including those which are
converted from a Domestic Rate Loan under Section 2.2(d), there shall not be outstanding more than
three (3) Eurodollar Rate Loans, in the aggregate.

(c) Each Interest Period of a Eurodollar Rate Loan shall commence on the date such Eurodollar
Rate Loan is made and shall end on such date as Borrowing Agent may elect as set forth in
subsection (b)(iii) above provided that the exact length of each Interest Period shall be
determined in accordance with the practice of the interbank market for offshore Dollar deposits and
no Interest Period shall end after the last day of the Term.

Borrowing Agent shall elect the initial Interest Period applicable to a Eurodollar Rate Loan
by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by its notice of conversion
given to Agent pursuant to Section 2.2(d), as the case may be. Borrowing Agent shall elect the
duration of each succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not later than 12:00 p.m. on the day which is three (3) Business Days prior to the last
day of the then current Interest Period applicable to such Eurodollar Rate Loan. If Agent does not
receive timely notice of the Interest Period elected by Borrowing Agent, Borrowing Agent shall be
deemed to have elected to convert to a Domestic Rate Loan subject to Section 2.2(d) hereinbelow.

 

23

 

(d) Provided that no Event of Default shall have occurred and be continuing, Borrowing Agent
may, on the last Business Day of the then current Interest Period applicable to any outstanding
Eurodollar Rate Loan, or on any Business Day with respect to Domestic Rate
Loans, convert any such loan into a loan of another type in the same aggregate principal
amount provided that any conversion of a Eurodollar Rate Loan shall be made only on the last
Business Day of the then current Interest Period applicable to such Eurodollar Rate Loan. If
Borrowing Agent desires to convert a loan, Borrowing Agent shall give Agent written notice by no
later than 12:00 p.m. (i) on the day which is three (3) Business Days’ prior to the date on which
such conversion is to occur with respect to a conversion from a Domestic Rate Loan to a Eurodollar
Rate Loan, or (ii) on the day which is one (1) Business Day prior to the date on which such
conversion is to occur with respect to a conversion from a Eurodollar Rate Loan to a Domestic Rate
Loan, specifying, in each case, the date of such conversion, the loans to be converted and if the
conversion is from a Domestic Rate Loan to a Eurodollar Rate Loan, the duration of the first
Interest Period therefor.

(e) At its option and upon written notice given prior to 12:00 p.m. (New York time) at least
three (3) Business Days’ prior to the date of such prepayment, any Borrower may prepay the
Eurodollar Rate Loans in whole at any time or in part from time to time with accrued interest on
the principal being prepaid to the date of such repayment. Such Borrower shall specify the date of
prepayment of Advances which are Eurodollar Rate Loans and the amount of such prepayment. In the
event that any prepayment of a Eurodollar Rate Loan is required or permitted on a date other than
the last Business Day of the then current Interest Period with respect thereto, such Borrower shall
indemnify Agent and Lenders therefor in accordance with Section 2.2(f) hereof.

(f) Each Borrower shall indemnify Agent and Lenders and hold Agent and Lenders harmless from
and against any and all losses or expenses that Agent and Lenders may sustain or incur as a
consequence of any prepayment, conversion of or any default by any Borrower in the payment of the
principal of or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing of, a prepayment of or conversion of or to a Eurodollar Rate Loan after notice thereof
has been given, including, but not limited to, any interest payable by Agent or Lenders to lenders
of funds obtained by it in order to make or maintain its Eurodollar Rate Loans hereunder; provided
that no such indemnification shall be required as a result of a prepayment of a Eurodollar Rate
Loan arising from the mandatory application of proceeds of Collateral under Sections 2.7 and
4.15(d). A certificate as to any additional amounts payable pursuant to the foregoing sentence
submitted by Agent or any Lender to Borrowing Agent shall be conclusive absent manifest error.

(g) Notwithstanding any other provision hereof, if any Applicable Law, or any change therein
or in the interpretation or application thereof, shall make it unlawful for any Lender (for
purposes of this subsection (g), the term “Lender” shall include any Lender and the office or
branch where any Lender or any corporation or bank controlling such Lender makes or maintains any
Eurodollar Rate Loans) to make or maintain its Eurodollar Rate Loans, the obligation of Lenders to
make Eurodollar Rate Loans hereunder shall forthwith be cancelled and Borrowers shall, if any
affected Eurodollar Rate Loans are then outstanding, promptly upon request from Agent, either pay
all such affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans into loans
of another type. If any such payment or conversion of any Eurodollar Rate Loan is made on a day
that is not the last day of the Interest Period applicable to such Eurodollar Rate Loan, Borrowers
shall pay Agent, upon Agent’s request, such amount or amounts as may be necessary to compensate
Lenders for any loss or expense sustained or
incurred by Lenders in respect of such Eurodollar Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable by Lenders to
lenders of funds obtained by Lenders in order to make or maintain such Eurodollar Rate Loan. A
certificate as to any additional amounts payable pursuant to the foregoing sentence submitted by
Lenders to Borrowing Agent shall be conclusive absent manifest error.

 

24

 

2.3. Disbursement of Advance Proceeds. All Advances shall be disbursed from whichever
office or other place Agent may designate from time to time and, together with any and all other
Obligations of Borrowers to Agent or Lenders, shall be charged to Borrowers’ Account on Agent’s
books. During the Term, Borrowers may use the Revolving Advances by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions hereof. The proceeds of each
Revolving Advance requested by Borrowing Agent on behalf of any Borrower or deemed to have been
requested by any Borrower under Section 2.2(a) hereof shall, with respect to requested Revolving
Advances to the extent Lenders make such Revolving Advances, be made available to the applicable
Borrower on the day so requested by way of credit to such Borrower’s operating account at PNC, or
such other bank as Borrowing Agent may designate following notification to Agent, in immediately
available federal funds or other immediately available funds or, with respect to Revolving Advances
deemed to have been requested by any Borrower, be disbursed to Agent to be applied to the
outstanding Obligations giving rise to such deemed request.

2.4. Reserved.

2.5. Maximum Advances. The aggregate balance of Revolving Advances outstanding at any
time shall not exceed the lesser of (a) the Maximum Revolving Advance Amount or (b) the Formula
Amount.

2.6. Repayment of Advances.

(a) The Revolving Advances shall be due and payable in full on the last day of the Term
subject to earlier prepayment as herein provided.

(b) Each Borrower recognizes that the amounts evidenced by checks, notes, drafts or any other
items of payment relating to and/or proceeds of Collateral may not be collectible by Agent on the
date received. In consideration of Agent’s agreement to conditionally credit Borrowers’ Account as
of the next Business Day following the Agent’s receipt of those items of payment, each Borrower
agrees that, in computing the charges under this Agreement, all items of payment (other than
payments received by wire transfers, internal account transfers or electronic depository checks
which shall be deemed applied on the Business Day received) shall be deemed applied by Agent on
account of the Obligations one (1) Business Day after the Business Day on which such payment
constitutes good funds in Agent’s account. Agent is not, however, required to credit Borrowers’
Account for the amount of any item of payment which is reasonably determined to be unsatisfactory
to Agent and Agent may charge Borrowers’ Account for the amount of any item of payment which is
returned to Agent unpaid.

 

25

 

(c) All payments of principal, interest and other amounts payable hereunder, or under any of
the Other Documents shall be made to Agent at the Payment Office not later than
1:00 P.M. (New York time) on the due date therefor in lawful money of the United States of
America in federal funds or other funds immediately available to Agent. Agent shall have the right
to effectuate payment on any and all Obligations due and owing hereunder by charging Borrowers’
Account or by making Advances as provided in Section 2.2 hereof.

(d) Borrowers shall pay principal, interest, and all other amounts payable hereunder, or under
any related agreement, without any deduction whatsoever, including, but not limited to, any
deduction for any setoff or counterclaim.

2.7. Repayment of Excess Advances. The aggregate balance of Advances outstanding at
any time in excess of the maximum amount of Advances permitted hereunder shall be immediately due
and payable without the necessity of any demand, at the Payment Office, whether or not a Default or
Event of Default has occurred.

2.8. Statement of Account. Agent shall maintain, in accordance with its customary
procedures, a loan account (“Borrowers’ Account”) in the name of Borrowers in which shall
be recorded the date and amount of each Advance made by Agent and the date and amount of each
payment in respect thereof; provided, however, the failure by Agent to record the date and amount
of any Advance shall not adversely affect Agent or any Lender. Each month, Agent shall send to
Borrowing Agent a statement showing the accounting for the Advances made, payments made or credited
in respect thereof, and other transactions between Agent and Borrowers during such month. The
monthly statements shall be deemed correct and binding upon Borrowers in the absence of manifest
error and shall constitute an account stated between Lenders and Borrowers unless Agent receives a
written statement of Borrowers’ specific exceptions thereto within thirty (30) days after such
statement is received by Borrowing Agent. The records of Agent with respect to the loan account
shall be conclusive evidence absent manifest error of the amounts of Advances and other charges
thereto and of payments applicable thereto.

2.9. Reserved.

2.10. Reserved.

2.11. Reserved.

2.12. Reserved.

2.13. Reserved.

2.14. Reserved.

2.15. Reserved.

2.16. Reserved.

2.17. Reserved.

2.18. Reserved.

 

26

 

2.19. Additional Payments. Any sums expended by Agent or any Lender due to any
Borrower’s failure to perform or comply with its obligations under this Agreement or any Other
Document including any Borrower’s obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1
hereof, may be charged to Borrowers’ Account as a Revolving Advance and added to the Obligations.
Agent shall endeavor to advise Borrowers promptly of any such charges.

2.20. Manner of Borrowing and Payment.

(a) Each borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.

(b) Each payment (including each prepayment) by any Borrower on account of the principal of
and interest on the Revolving Advances, shall be applied to the Revolving Advances pro rata
according to the applicable Commitment Percentages of Lenders. Except as expressly provided
herein, all payments (including prepayments) to be made by any Borrower on account of principal,
interest and fees shall be made without set off or counterclaim and shall be made to Agent on
behalf of the Lenders to the Payment Office, in each case on or prior to 1:00 P.M., New York time,
in Dollars and in immediately available funds.

(c) (1) Notwithstanding anything to the contrary contained in Sections 2.20(a) and (b) hereof,
commencing with the first Business Day following the Closing Date, each borrowing of Revolving
Advances shall be advanced by Agent and each payment by any Borrower on account of Revolving
Advances shall be applied first to those Revolving Advances advanced by Agent. On or before 1:00
P.M., New York time, on each Settlement Date commencing with the first Settlement Date following
the Closing Date, Agent and Lenders shall make certain payments as follows: (I) if the aggregate
amount of new Revolving Advances made by Agent during the preceding Week (if any) exceeds the
aggregate amount of repayments applied to outstanding Revolving Advances during such preceding
Week, then each Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and (x) such repayments
and (II) if the aggregate amount of repayments applied to outstanding Revolving Advances during
such Week exceeds the aggregate amount of new Revolving Advances made during such Week, then Agent
shall provide each Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving Advances.

(i) Each Lender shall be entitled to earn interest at the applicable Revolving Interest Rate
on outstanding Advances which it has funded.

(ii) Promptly following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately preceding such
Settlement Date. Such certificate of Agent shall be conclusive in the absence of manifest error.

 

27

 

(d) If any Lender or Participant (a “benefited Lender”) shall at any time receive any
payment of all or part of its Advances, or interest thereon, or receive any Collateral in respect
thereof (whether voluntarily or involuntarily or by set-off) in a greater proportion than any such
payment to and Collateral received by any other Lender, if any, in respect of such other
Lender’s Advances, or interest thereon, and such greater proportionate payment or receipt of
Collateral is not expressly permitted hereunder, such benefited Lender shall purchase for cash from
the other Lenders a participation in such portion of each such other Lender’s Advances, or shall
provide such other Lender with the benefits of any such Collateral, or the proceeds thereof, as
shall be necessary to cause such benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided, however, that if all or
any portion of such excess payment or benefits is thereafter recovered from such benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest. Each Lender so purchasing a portion of another Lender’s
Advances may exercise all rights of payment (including rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.

(e) Unless Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender will not make the amount which would constitute its applicable Commitment
Percentage of the Advances available to Agent, Agent may (but shall not be obligated to) assume
that such Lender shall make such amount available to Agent on the next Settlement Date and, in
reliance upon such assumption, make available to Borrowers a corresponding amount. Agent will
promptly notify Borrowing Agent of its receipt of any such notice from a Lender. If such amount is
made available to Agent on a date after such next Settlement Date, such Lender shall pay to Agent
on demand an amount equal to the product of (i) the daily average Federal Funds Effective Rate
(computed on the basis of a year of 360 days) during such period as quoted by Agent, times (ii)
such amount, times (iii) the number of days from and including such Settlement Date to the date on
which such amount becomes immediately available to Agent. A certificate of Agent submitted to any
Lender with respect to any amounts owing under this paragraph (e) shall be conclusive, in the
absence of manifest error. If such amount is not in fact made available to Agent by such Lender
within three (3) Business Days after such Settlement Date, Agent shall be entitled to recover such
an amount, with interest thereon at the rate per annum then applicable to such Revolving Advances
hereunder, on demand from Borrowers; provided, however, that Agent’s right to such recovery shall
not prejudice or otherwise adversely affect Borrowers’ rights (if any) against such Lender.

2.21. Mandatory Prepayments. Subject to Section 4.3 hereof, when any Borrower sells
or otherwise disposes of any Collateral, other than Inventory or Equipment in the Ordinary Course
of Business consistent with past practices, Borrowers shall repay the Advances in an amount equal
to the net proceeds of such sale (i.e., gross proceeds less the reasonable costs of such sales or
other dispositions), such repayments to be made promptly but in no event more than 30 Business Days
following receipt of such net proceeds, and until the date of payment, such proceeds shall be held
in trust for Agent, provided that, (i) no such prepayment or holding in trust shall be required
with respect to such proceeds received during any fiscal year of a Borrower in an aggregate amount
not exceeding $1,000,000, (ii) no Borrower shall be required to make any such prepayment prior to
the date on which the aggregate amount of such proceeds with respect to which no such prepayment
has been made is greater than $1,000,000, (iii) no such prepayment shall be required to the extent
Borrowing Agent provides written notice to Agent within fifteen (15) Business Days following
receipt of such net proceeds of a Borrower’s intent to use such net proceeds to acquire replacement
assets within 180 days of such sale or other disposition, and (iv) such proceeds are in fact
utilized within such 180-day period. Any proceeds not so utilized shall be paid in accordance with
this Section. The foregoing shall not be
deemed to be implied consent to any such sale otherwise prohibited by the terms and conditions
hereof. Such repayments shall be applied to the Advances in such order as Agent may determine,
subject to Borrowers’ ability to reborrow Revolving Advances in accordance with the terms hereof.

 

28

 

2.22. Use of Proceeds.

(a) Borrowers shall apply the proceeds of Advances to (i) pay fees and expenses relating to
this transaction, and (ii) provide for its working capital needs.

(b) Without limiting the generality of Section 2.22(a) above, neither the Borrowers nor any
other Person which may in the future become party to this Agreement or the Other Documents as a
Borrower or Guarantor, intends to use nor shall they use any portion of the proceeds of the
Advances, directly or indirectly, for any purpose in violation of the Trading with the Enemy Act.

2.23. Defaulting Lender.

(a) Notwithstanding anything to the contrary contained herein, in the event any Lender (x)
has refused (which refusal constitutes a breach by such Lender of its obligations under this
Agreement) to make available its portion of any Advance, (y) notifies either Agent or Borrowing
Agent that it does not intend to make available its portion of any Advance or has made a public
statement to the effect that it does not intend to comply with its funding obligations (if the
actual refusal or failure to comply would constitute a breach by such Lender of its obligations
under this Agreement) or (z) (i) become or is insolvent or has a parent company that has become or
is insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee, administrator, assignee for the benefit of creditors or similar
Person charged with reorganization or liquidation of its business or custodian, appointed for it,
or has taken any action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that has become the
subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee,
administrator, assignee for the benefit of creditors or similar Person charged with reorganization
or liquidation of its business or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding
or appointment (each, a “Lender Default”), all rights and obligations hereunder of such
Lender (a “Defaulting Lender”) as to which a Lender Default is in effect and of the other
parties hereto shall be modified to the extent of the express provisions of this Section 2.23
while such Lender Default remains in effect.

(b) Advances shall be incurred pro rata from Lenders (the “Non-Defaulting Lenders”)
which are not Defaulting Lenders based on their respective Commitment Percentages, and no
Commitment Percentage of any Lender or any pro rata share of any Advances required to be advanced
by any Lender shall be increased as a result of such Lender Default. Amounts received in respect
of principal of any type of Advances shall be applied to reduce the applicable Advances of each
Lender (other than any Defaulting Lender) pro rata based on the aggregate of the outstanding
Advances of that type of all Lenders at the time of such application; provided, that, Agent shall
not be obligated to transfer to a Defaulting Lender any payments received by
Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder (including any principal, interest or fees). Amounts payable to
a Defaulting Lender shall instead be paid to or retained by Agent. Agent may hold and, in its
discretion, re-lend to a Borrower the amount of such payments received or retained by it for the
account of such Defaulting Lender.

 

29

 

(c) A Defaulting Lender shall not be entitled to give instructions to Agent or to approve,
disapprove, consent to or vote on any matters relating to this Agreement and the Other Documents.
All amendments, waivers and other modifications of this Agreement and the Other Documents may be
made without regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have either Advances
outstanding or a Commitment Percentage.

(d) Other than as expressly set forth in this Section 2.23, the rights and obligations of a
Defaulting Lender (including the obligation to indemnify Agent) and the other parties hereto shall
remain unchanged. Nothing in this Section 2.23 shall be deemed to release any Defaulting Lender
from its obligations under this Agreement and the Other Documents, shall alter such obligations,
shall operate as a waiver of any default by such Defaulting Lender hereunder, or shall prejudice
any rights which any Borrower, Agent or any Lender may have against any Defaulting Lender as a
result of any default by such Defaulting Lender hereunder.

(e) In the event a Defaulting Lender retroactively cures to the satisfaction of Agent the
breach which caused a Lender to become a Defaulting Lender, such Defaulting Lender shall no longer
be a Defaulting Lender and shall be treated as a Lender under this Agreement.

III. INTEREST AND FEES.

3.1. Interest. Interest on Advances shall be payable in arrears on the first day of
each month with respect to Domestic Rate Loans and, with respect to Eurodollar Rate Loans, at the
end of each Interest Period or, for Eurodollar Rate Loans with an Interest Period in excess of
three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate
Loan or (b) the end of the Interest Period. Interest charges shall be computed on the actual
principal amount of Advances outstanding during the month at a rate per annum equal to the
Revolving Interest Rate. Whenever, subsequent to the date of this Agreement, the Alternate Base
Rate is increased or decreased, the Revolving Interest Rate for Domestic Rate Loans shall be
similarly changed without notice or demand of any kind by an amount equal to the amount of such
change in the Alternate Base Rate during the time such change or changes remain in effect. The
Eurodollar Rate shall be adjusted with respect to Eurodollar Rate Loans without notice or demand of
any kind on the effective date of any change in the Reserve Percentage as of such effective date.
Agent shall advise Borrowers promptly after any such change. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, at the option of Agent or at the direction
of Required Lenders, and following written notice thereof to Borrowing Agent, the Obligations shall
bear interest at the applicable Revolving Interest Rate plus two (2%) percent per annum (as
applicable, the “Default Rate”).

3.2. Reserved.

 

30

 

3.3. Closing Fee and Facility Fee.

(a) Closing Fee. Upon the execution of this Agreement, Borrowers shall pay to Agent
for the ratable benefit of Lenders a closing fee of $100,000 less that portion of the commitment
fee of $25,000 heretofore paid by Borrowers to Agent remaining after application of such fee to out
of pocket expenses.

(b) Facility Fee. If, for any calendar quarter during the Term, the average daily
unpaid balance of the Revolving Advances for each day of such calendar quarter does not equal the
Maximum Revolving Advance Amount, then Borrowers shall pay to Agent for the ratable benefit of
Lenders a fee at a rate equal to one-half of one percent (.50%) per annum on the amount by which
the Maximum Revolving Advance Amount exceeds such average daily unpaid balance. Such fee shall be
payable to Agent in arrears on the first day of each calendar quarter with respect to the previous
calendar quarter.

3.4. Collateral Evaluation Fee and Collateral Monitoring Fee.

(a) Collateral Evaluation Fee. Borrowers shall pay Agent a collateral evaluation fee
equal to $750.00 per month commencing on the first day of the month following the Closing Date and
on the first day of each month thereafter during the Term. The collateral evaluation fee shall be
deemed earned in full on the date when same is due and payable hereunder and shall not be subject
to rebate or proration upon termination of this Agreement for any reason.

(b) Collateral Monitoring Fee. Borrowers shall pay to Agent on the first day of each
month following any month in which Agent performs any collateral monitoring — namely any field
examination, collateral analysis or other business analysis, the need for which is to be determined
by Agent and which monitoring is undertaken by Agent or for Agent’s benefit — a collateral
monitoring fee in an amount equal to $850.00 per day for each person employed to perform such
monitoring, plus all costs and disbursements incurred by Agent in the performance of such
examination or analysis.

3.5. Computation of Interest and Fees. Interest and fees hereunder shall be computed
on the basis of a year of 360 days and for the actual number of days elapsed. If any payment to be
made hereunder becomes due and payable on a day other than a Business Day, the due date thereof
shall be extended to the next succeeding Business Day and interest thereon shall be payable at the
Revolving Interest Rate for Domestic Rate Loans during such extension.

3.6. Maximum Charges. In no event whatsoever shall interest and other charges charged
hereunder exceed the highest rate permissible under law. In the event interest and other charges as
computed hereunder would otherwise exceed the highest rate permitted under law, such excess amount
shall be first applied to any unpaid principal balance owed by Borrowers, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders shall promptly
refund such excess amount to Borrowers and the provisions hereof shall be deemed amended to provide
for such permissible rate.

3.7. Increased Costs. In the event that any Applicable Law, or any change therein or
in the interpretation or application thereof, or compliance by any Lender (for purposes of this
Section 3.7, the term “Lender” shall include Agent or
any Lender and

 

31

 

any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any Lender (as so defined)
makes or maintains any Eurodollar Rate Loans with any request or directive (whether or not having
the force of law) from any central bank or other financial, monetary or other authority, shall:

(a) subject Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to Agent or any Lender
of principal, fees, interest or any other amount payable hereunder or under any Other Documents
(except for changes in the rate of tax on the overall net income of Agent or any Lender by the
jurisdiction in which it maintains its principal office);

(b) impose, modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of, advances or loans by, or
other credit extended by, any office of Agent or any Lender, including pursuant to Regulation D of
the Board of Governors of the Federal Reserve System; or

(c) impose on Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;

and the result of any of the foregoing is to increase the cost to Agent or any Lender of making,
renewing or maintaining its Advances hereunder by an amount that Agent or such Lender deems to be
material or to reduce the amount of any payment (whether of principal, interest or otherwise) in
respect of any of the Advances by an amount that Agent or such Lender deems to be material, then,
in any case Borrowers shall pay Agent or such Lender with reasonable promptness after demand, such
additional amount as will compensate Agent or such Lender for such additional cost or such
reduction, as the case may be, provided that the foregoing shall not apply to increased costs which
are reflected in the Eurodollar Rate, as the case may be. Agent or such Lender shall certify in
writing to Borrowing Agent the amount of such additional cost or reduced amount to Borrowing Agent,
and such certification shall be conclusive absent manifest error. Borrowers shall not be required
to compensate a Lender pursuant to this Section 3.7 for any increased cost or reduction in respect
of a period occurring more than 180 days prior to the date on which such Lender notifies Borrowing
Agent of an event giving rise to such claim and such Lender’s intention to seek compensation
therefor.

3.8. Basis For Determining Interest Rate Inadequate or Unfair. In the event that
Agent or any Lender shall have determined that:

(a) reasonable means do not exist for ascertaining the Eurodollar Rate applicable pursuant to
Section 2.2 hereof for any Interest Period; or

(b) Dollar deposits in the relevant amount and for the relevant maturity are not available in
the London interbank Eurodollar market, with respect to an outstanding Eurodollar Rate Loan, a
proposed Eurodollar Rate Loan, or a proposed conversion of a Domestic Rate Loan into a Eurodollar
Rate Loan,

 

32

 

then Agent shall give Borrowing Agent prompt written or telephonic notice of such determination.
If such notice is given, (i) any such requested Eurodollar Rate Loan shall be
made as a Domestic Rate Loan, unless Borrowing Agent shall notify Agent no later than 12:00 p.m.
(New York City time) two (2) Business Days prior to the date of such proposed borrowing, that its
request for such borrowing shall be cancelled or made as an unaffected type of Eurodollar Rate
Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have been converted to an
affected type of Eurodollar Rate Loan shall be continued as or converted into a Domestic Rate Loan,
or, if Borrowing Agent shall notify Agent, no later than 12:00 p.m. (New York City time) two (2)
Business Days prior to the proposed conversion, shall be maintained as an unaffected type of
Eurodollar Rate Loan, and (iii) any outstanding affected Eurodollar Rate Loans shall be converted
into a Domestic Rate Loan, or, if Borrowing Agent shall notify Agent, no later than 12:00 p.m. (New
York City time) two (2) Business Days prior to the last Business Day of the then current Interest
Period applicable to such affected Eurodollar Rate Loan, shall be converted into an unaffected type
of Eurodollar Rate Loan, on the last Business Day of the then current Interest Period for such
affected Eurodollar Rate Loans. Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain outstanding affected
Eurodollar Rate Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate Loan.

3.9. Capital Adequacy.

(a) In the event that Agent or any Lender shall have determined that any Applicable Law or
guideline regarding capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Agent or such Lender (for purposes of
this Section 3.9, the term “Lender” shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or such Lender (as so
defined) makes or maintains any Eurodollar Rate Loans with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return on Agent or such
Lender’s capital as a consequence of its obligations hereunder to a level below that which Agent or
such Lender could have achieved but for such adoption, change or compliance (taking into
consideration Agent’s and each Lender’s policies with respect to capital adequacy) by an amount
deemed by Agent or such Lender to be material, then, from time to time, Borrowers shall pay to
Agent or such Lender, with reasonable promptness following receipt of the certificate described in
clause (b), below, such additional amount or amounts as will compensate Agent or such Lender for
such reduction, provided that, Borrowers shall not be required to compensate Agent or a Lender
pursuant to this Section 3.9 for any such reduction in respect of a period occurring more than 180
days prior to the date on which Agent or such Lender notifies Borrowing Agent of an event giving
rise to such claim and Agent’s or such Lender’s intention to seek compensation therefor. In
determining such amount or amounts, Agent or such Lender may use any reasonable averaging or
attribution methods. The protection of this Section 3.9 shall be available to Agent and each
Lender regardless of any possible contention of invalidity or inapplicability with respect to the
Applicable Law or condition; provided that, in the event the Applicable Law or condition is found
to be invalid or inapplicable to Agent or such Lender after payment by Borrowers, Agent or such
Lender, as applicable, shall promptly refund all amounts paid by Borrowers pursuant to this Section
3.9.

 

33

 

(b) A certificate of Agent or such Lender setting forth such amount or amounts as shall be
necessary to compensate Agent or such Lender with respect to Section 3.9(a) hereof when delivered
to Borrowing Agent shall be conclusive absent manifest error.

3.10. Gross Up for Taxes. If any Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this Agreement or any of
the Other Documents to Agent, or any Lender, assignee of any Lender, or Participant (each,
individually, a “Payee” and collectively, the “Payees”), (a) the sum payable to
such Payee or Payees, as the case may be, shall be increased as may be necessary so that, after
making all required withholding or deductions, the applicable Payee or Payees receives an amount
equal to the sum it would have received had no such withholding or deductions been made (the
“Gross-Up Payment”), (b) such Borrower shall make such withholding or deductions, and (c) such
Borrower shall pay the full amount withheld or deducted to the relevant taxation authority or other
authority in accordance with Applicable Law. Notwithstanding the foregoing, no Borrower shall be
obligated to make any portion of the Gross-Up Payment that is attributable to any withholding or
deductions that would not have been paid or claimed had the applicable Payee or Payees properly
claimed a complete exemption with respect thereto pursuant to Section 3.11 hereof.

3.11. Withholding Tax Exemption.

(a) Each Payee that is not incorporated under the Laws of the United States of America or a
state thereof (and, upon the written request of Agent, each other Payee) agrees that it will
deliver to Borrowing Agent and Agent two (2) duly completed appropriate valid Withholding
Certificates (as defined under §1.1441-1(c)(16) of the Income Tax Regulations
(“Regulations”)) certifying its status (i.e., U.S. or foreign person) and, if appropriate,
making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax
treaty or an exemption provided by the Code. The term “Withholding Certificate” means a Form W-9;
a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as
required under §1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in
§1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Code or Regulations that
certify or establish the status of a payee or beneficial owner as a U.S. or foreign person.

(b) Each Payee required to deliver to Borrowing Agent and Agent a valid Withholding
Certificate pursuant to Section 3.11(a) hereof shall deliver such valid Withholding Certificate as
follows: (A) each Payee which is a party hereto on the Closing Date shall deliver such valid
Withholding Certificate at least five (5) Business Days prior to the first date on which any
interest or fees are payable by any Borrower hereunder for the account of such Payee; (B) each
Payee shall deliver such valid Withholding Certificate at least five (5) Business Days before the
effective date of such assignment or participation (unless Agent in its sole discretion shall
permit such Payee to deliver such Withholding Certificate less than five (5) Business Days before
such date in which case it shall be due on the date specified by Agent). Each Payee which so
delivers a valid Withholding Certificate further undertakes to deliver to Borrowing Agent and Agent
two (2) additional copies of such Withholding Certificate (or a successor form) on or before the
date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any
event requiring a change in the most recent Withholding Certificate so
delivered by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by Borrowing Agent or Agent.

 

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(c) Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or
exemption from U.S. withholding tax required under Section 3.11(b) hereof, Agent shall be entitled
to withhold United States federal income taxes at the full 30% withholding rate if in its
reasonable judgment it is required to do so under the due diligence requirements imposed upon a
withholding agent under §1.1441-7(b) of the Regulations. Further, Agent is indemnified under
§1.1461-1(e) of the Regulations against any claims and demands of any Payee for the amount of any
tax it deducts and withholds in accordance with regulations under §1441 of the Code.

IV. COLLATERAL: GENERAL TERMS

4.1. Security Interest in the Collateral. To secure the prompt payment and
performance to Agent and each Lender of the Obligations, each Borrower hereby assigns, pledges and
grants to Agent for its benefit and for the ratable benefit of each Lender a continuing security
interest in and to and Lien on all of its Collateral, whether now owned or existing or hereafter
acquired or arising and wheresoever located. Each Borrower shall mark its books and records as may
be necessary or appropriate to evidence, protect and perfect Agent’s security interest and shall
cause its financial statements to reflect such security interest. Each Borrower shall promptly
provide Agent with written notice of all commercial tort claims, such notice to contain the case
title together with the applicable court and a brief description of the claim(s). Upon delivery of
each such notice, such Borrower shall be deemed to hereby grant to Agent a security interest and
lien in and to such commercial tort claims and all proceeds thereof. Agent and Lenders expressly
recognize that Agent’s security interest in any human tissue held in public trust by any Borrower
pursuant to any state, federal or international law or regulation is strictly limited to the extent
of such Borrower’s right, title and interest therein.

4.2. Perfection of Security Interest. Each Borrower shall take all action that may be
necessary or desirable, or that Agent may request, so as at all times to maintain the validity,
perfection, enforceability and priority of Agent’s security interest in and Lien on the Collateral
or to enable Agent to protect, exercise or enforce its rights hereunder and in the Collateral,
including, but not limited to, (i) immediately discharging all Liens other than Permitted
Encumbrances, (ii) obtaining Lien Waiver Agreements as to premises specified by Agent in Agent’s
reasonable credit judgment, (iii) delivering to Agent, endorsed or accompanied by such instruments
of assignment as Agent may specify, and stamping or marking, in such manner as Agent may specify,
any and all chattel paper, instruments, letters of credits and advices thereof and documents
evidencing or forming a part of the Collateral, (iv) entering into warehousing, lockbox and other
custodial arrangements reasonably requested by and satisfactory to Agent, and (v) executing and
delivering financing statements, control agreements, instruments of pledge, mortgages, notices and
assignments, in each case in form and substance satisfactory to Agent, relating to the creation,
validity, perfection, maintenance or continuation of Agent’s security interest and Lien in the
Collateral under the Uniform Commercial Code or other Applicable Law. By its signature hereto,
each Borrower hereby authorizes Agent to file against such Borrower, one or more financing,
continuation or amendment statements pursuant to the Uniform Commercial Code in form and substance
satisfactory to Agent and describing the Collateral. All
charges, expenses and fees Agent may incur in doing any of the foregoing, and any local taxes
relating thereto, after notice thereof to Borrowing Agent and a request for payment, shall be
charged to Borrowers’ Account as a Revolving Advance of a Domestic Rate Loan and added to the
Obligations, or, at Agent’s option, shall be paid to Agent for its benefit and for the ratable
benefit of Lenders immediately upon demand.

 

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4.3. Disposition of Collateral. Each Borrower will safeguard and protect all
Collateral for Agent’s general account and make no disposition thereof whether by sale, lease or
otherwise except (a) the sale of Collateral and Equipment in the Ordinary Course of Business
consistent with past practices, and (b) the sale of Equipment outside the Ordinary Course of
Business in an aggregate amount not to exceed $500,000 in any fiscal year, and with respect to
clause (b), such Borrower complies with the requirements set forth in Section 2.21.

4.4. Preservation of Collateral. Following the occurrence and during the continuance
of a Default or Event of Default in addition to the rights and remedies set forth in Section 11.1
hereof, Agent: (a) may at any time take such steps as Agent deems necessary to protect Agent’s
interest in and to preserve the Collateral, including the hiring of such security guards or the
placing of other security protection measures as Agent may deem appropriate; (b) may employ and
maintain at any of any Borrower’s premises a custodian who shall have full authority to do all acts
necessary to protect Agent’s interests in the Collateral; (c) may lease warehouse facilities to
which Agent may move all or part of the Collateral; (d) may use any Borrower’s owned or leased
lifts, hoists, trucks and other facilities or equipment for handling or removing the Collateral;
and (e) shall have, and is hereby granted, a right of ingress and egress to the places where the
Collateral is located on property owned or leased by Borrower, and may proceed over and through any
of Borrower’s owned or leased property, subject to the rights of lessors of such leased property,
provided that, for any Borrower’s “clean room” environment, such right of ingress and egress may
not occur until representatives of Agent are compliant with such Borrower’s training and standard
operating procedures required for such “clean room” environment. Each Borrower shall cooperate
fully with all of Agent’s efforts to preserve the Collateral and will take such actions to preserve
the Collateral as Agent may direct. All of Agent’s expenses of preserving the Collateral,
including any expenses relating to the bonding of a custodian, shall be charged to Borrowers’
Account as a Revolving Advance maintained as a Domestic Rate Loan and added to the Obligations.

4.5. Ownership of Collateral.

(a) With respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest: (i) each Borrower shall be the sole owner of and fully authorized and able to
sell, transfer, pledge and/or grant a first priority security interest in each and every item of
its respective Collateral to Agent; and, except for Permitted Encumbrances the Collateral shall be
free and clear of all Liens and encumbrances whatsoever; (ii) each document and agreement executed
by each Borrower or delivered to Agent or any Lender in connection with this Agreement shall be
true and correct in all respects; (iii) all signatures and endorsements of each Borrower that
appear on such documents and agreements shall be genuine and each Borrower shall have full capacity
to execute same; and (iv) each Borrower’s Equipment and Inventory shall be located as set forth on
Schedule 4.5 and shall not be removed from such
location(s) without the prior written consent of Agent except with respect to the sale of
Inventory in the Ordinary Course of Business and Equipment to the extent permitted in Section 4.3
hereof.

 

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(b) (i) Subject to the final sentence of Schedule 4.5 hereto, there is no location at which
any Borrower has any Inventory (except for Inventory in transit) other than those locations listed
on Schedule 4.5; (ii) Schedule 4.5 hereto contains a correct and complete list, as of the Closing
Date, of the legal names and addresses of each warehouse at which Inventory of any Borrower is
stored; (iii) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of
(A) each place of business of each Borrower and (B) the chief executive office of each Borrower;
and (iv) Schedule 4.5 hereto sets forth a correct and complete list as of the Closing Date of the
location, by state and street address, of all Real Property owned or leased by each Borrower,
together with the names and addresses of any landlords.

4.6. Defense of Agent’s and Lenders’ Interests. Until (a) payment and performance in
full of all of the Obligations and (b) termination of this Agreement, Agent’s interests in the
Collateral shall continue in full force and effect. During such period no Borrower shall, without
Agent’s prior written consent, pledge, sell (except Collateral in the Ordinary Course of Business
to the extent permitted in Section 4.3 hereof), assign, transfer, create or suffer to exist a Lien
upon or encumber or allow or suffer to be encumbered in any way except for Permitted Encumbrances,
any part of the Collateral. Each Borrower shall defend Agent’s interests in the Collateral against
any and all Persons whatsoever other than holders of Permitted Encumbrances and purchasers of
Collateral permitted in Section 4.3 hereof. At any time following demand by Agent for payment of
all Obligations following the occurrence and during the continuance of an Event of Default, Agent
shall have the right to take possession of the indicia of the Collateral and the Collateral in
whatever physical form contained, including: labels, stationery, documents, instruments and
advertising materials. If Agent exercises this right to take possession of the Collateral
following the occurrence and during the continuance of an Event of Default, Borrowers shall, upon
demand, assemble it in the best manner possible and make it available to Agent at a place
reasonably convenient to Agent. In addition, with respect to all Collateral, Agent and Lenders
shall be entitled to all of the rights and remedies set forth herein and further provided by the
Uniform Commercial Code or other Applicable Law. Each Borrower shall upon Agent’s request during
the continuance of a Default or Event of Default, at its option, instruct all suppliers, carriers,
forwarders, warehousers or others receiving or holding cash, checks, Inventory, documents or
instruments in which Agent holds a security interest to deliver same to Agent and/or subject to
Agent’s order and if they shall come into any Borrower’s possession, they, and each of them, shall
be held by such Borrower in trust as Agent’s trustee, and such Borrower will immediately deliver
them to Agent in their original form together with any necessary endorsement.

4.7. Books and Records. Each Borrower shall (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or transactions of or
in relation to its business and affairs; (b) set up on its books accruals with respect to all
taxes, assessments, charges, levies and claims; and (c) on a reasonably current basis set up on its
books, from its earnings, allowances against doubtful Receivables, advances and investments and all
other proper accruals (including by reason of enumeration, accruals for premiums, if any, due on
required payments and accruals for depreciation, obsolescence, or amortization of properties),
which should be set aside from such earnings in connection with its business. All determinations
pursuant to this subsection shall be made in accordance with, or as required by, GAAP
consistently applied in the opinion of such independent public accountant as shall then be
regularly engaged by Borrowers.

 

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4.8. Financial Disclosure. Each Borrower hereby irrevocably authorizes and directs
all accountants and auditors employed by such Borrower at any time during the Term to exhibit and
deliver to Agent and each Lender copies of any of such Borrower’s financial statements, trial
balances or other accounting records of any sort in the accountant’s or auditor’s possession, and
to disclose to Agent and each Lender any information such accountants may have concerning such
Borrower’s financial status and business operations. Each Borrower hereby authorizes all
Governmental Bodies to furnish to Agent and each Lender copies of reports or examinations relating
to such Borrower, whether made by such Borrower or otherwise; however, Agent and each Lender will
attempt to obtain such information or materials directly from such Borrower prior to obtaining such
information or materials from such accountants or Governmental Bodies.

4.9. Compliance with Laws. Each Borrower shall comply with all Applicable Laws with
respect to the Collateral or any part thereof or to the operation of such Borrower’s business the
non-compliance with which could reasonably be expected to have a Material Adverse Effect. Each
Borrower may, however, contest or dispute any Applicable Laws in any reasonable manner, provided
that any related Lien is inchoate or stayed and sufficient reserves are established to the
reasonable satisfaction of Agent to protect Agent’s Lien on or security interest in the Collateral.
The assets of Borrowers at all times shall be maintained in accordance with the requirements of
all insurance carriers which provide insurance with respect to the assets of Borrowers so that such
insurance shall remain in full force and effect.

4.10. Inspection of Premises. At all reasonable times Agent and each Lender shall
have full access to and the right to audit, check, inspect and make abstracts and copies from each
Borrower’s books, records, audits, correspondence and all other papers relating to the Collateral
and the operation of each Borrower’s business. Agent, any Lender and their agents may enter upon
any premises of any Borrower at any time during business hours and at any other reasonable time,
and from time to time, for the purpose of inspecting the Collateral and any and all records
pertaining thereto and the operation of such Borrower’s business; provided that, for any Borrower’s
“clean room” environment, such right of entry and inspection may not occur until representatives of
Agent are compliant with such Borrower’s training and standard operating procedures required for
such “clean room” environment.

4.11. Insurance. The assets and properties of each Borrower at all times shall be
maintained in accordance with the requirements of all insurance carriers which provide insurance
with respect to the assets and properties of such Borrower so that such insurance shall remain in
full force and effect. Each Borrower shall bear the full risk of any loss of any nature whatsoever
with respect to the Collateral. At each Borrower’s own cost and expense in amounts and with
carriers acceptable to Agent, each Borrower shall (a) keep all its insurable properties and
properties in which such Borrower has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by extended coverage insurance and such other hazards, and
for such amounts, as is customary in the case of companies engaged in businesses similar to such
Borrower’s including business interruption insurance; (b) maintain a bond in such amounts as is
customary in the case of companies engaged in businesses

 

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similar to such Borrower insuring against larceny, embezzlement or other criminal misappropriation of insured’s
officers and employees who may either singly or jointly with others at any time have access to the
assets or funds of such Borrower either directly or through authority to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product liability
insurance against claims for personal injury, death or property damage suffered by others; (d)
maintain all such worker’s compensation or similar insurance as may be required under the laws of
any state or jurisdiction in which such Borrower is engaged in business; and (e) furnish Agent with
(i) copies of all policies and evidence of the maintenance of such policies by the renewal thereof
at least five (5) days before any expiration date, and (ii) appropriate loss payable endorsements
in form and substance satisfactory to Agent, naming Agent as an additional insured and lender loss
payee as its interests may appear with respect to all insurance coverage referred to in clauses (a)
and (c) above, and providing (A) that all proceeds under property casualty policies shall be
payable to Agent, (B) no such insurance shall be affected by any act or neglect of the insured or
owner of the property described in such policy, and (C) that such policy and loss payable clauses
may not be cancelled, amended or terminated unless at least thirty (30) days’ prior written notice
is given to Agent, provided that, as long as no Event of Default has occurred and is continuing,
any payments received by Agent in an aggregate amount of less than $2,000,000 shall be paid over to
Borrowing Agent. In the event of any casualty loss thereunder, the carriers named therein hereby
are directed by Agent and the applicable Borrower to make payment for such loss to Agent and not to
such Borrower and Agent jointly, provided that, as long as no Event of Default has occurred and is
continuing, any payments received by Agent in an aggregate amount of less than $2,000,000 shall be
paid over to Borrowing Agent. If any insurance losses are paid by check, draft or other instrument
payable to any Borrower and Agent jointly, Agent may endorse such Borrower’s name thereon and do
such other things as Agent may deem advisable to reduce the same to cash. Agent is hereby
authorized to adjust and compromise claims under insurance coverage referred to in clauses (a) and
(b) above after an Event of Default has occurred and is continuing. After an Event of Default has
occurred and is continuing, or with respect to any proceeds that are in an aggregate amount in
excess of $2,000,000 all such recoveries received by Agent upon any such insurance shall be
promptly applied to the Obligations, in such order as Agent in its sole discretion shall determine.
Any surplus following such application shall be paid by Agent to Borrowers or applied as may be
otherwise required by law. Any deficiency following such application thereon shall be paid by
Borrowers to Agent, on demand.

4.12. Failure to Pay Insurance. If any Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects, may obtain such
insurance and pay the premium therefor on behalf of such Borrower, and charge Borrowers’ Account
therefor as a Revolving Advance of a Domestic Rate Loan and such expenses so paid shall be part of
the Obligations.

4.13. Payment of Taxes. Each Borrower will pay, when due, all taxes, assessments and
other Charges lawfully levied or assessed upon such Borrower or any of the Collateral including
real and personal property taxes, assessments and charges and all franchise, income, employment,
social security benefits, withholding, and sales taxes. If any tax by any Governmental Body is or

 

39

 

may be imposed on or as a result of any transaction between any Borrower and Agent or any Lender
which Agent or any Lender may be required to withhold or pay or if any taxes, assessments, or other
Charges remain unpaid after the date fixed for their
payment, or if any claim shall be made which, in Agent’s or any Lender’s opinion, could
reasonably be expected to create a valid Lien on the Collateral, Agent may without notice to
Borrowers pay the taxes, assessments or other Charges and each Borrower hereby indemnifies and
holds Agent and each Lender harmless in respect thereof. Agent will not pay any taxes, assessments
or Charges to the extent that any applicable Borrower has Properly Contested those taxes,
assessments or Charges. The amount of any payment by Agent under this Section 4.13 shall be
charged to Borrowers’ Account as a Revolving Advance maintained as a Domestic Rate Loan and added
to the Obligations and, until Borrowers shall furnish Agent with an indemnity therefor (or supply
Agent with evidence satisfactory to Agent that due provision for the payment thereof has been
made), Agent may hold without interest any balance standing to Borrowers’ credit and Agent shall
retain its security interest in and Lien on any and all Collateral held by Agent.

4.14. Payment of Leasehold Obligations. Each Borrower shall at all times pay, when
and as due, its rental obligations under all leases under which it is a tenant, and shall otherwise
comply, in all material respects, with all other terms of such leases and keep them in full force
and effect and, at Agent’s request will provide evidence of having done so.

4.15. Receivables.

(a) Nature of Receivables. Each of the Receivables shall be a bona fide and valid
account representing a bona fide indebtedness incurred by the Customer therein named, for a fixed
sum as set forth in the invoice relating thereto (provided immaterial or unintentional invoice
errors shall not be deemed to be a breach hereof) with respect to a sale or lease and delivery of
goods upon stated terms of a Borrower, or work, labor or services theretofore rendered by a
Borrower as of the date each Receivable is created. Same shall be due and owing in accordance with
the applicable Borrower’s standard terms of sale without dispute, setoff or counterclaim except as
may be stated on the accounts receivable schedules delivered by Borrowers to Agent.

(b) Solvency of Customers. Each Customer, to the best of each Borrower’s knowledge,
as of the date each Receivable is created, is and will be solvent and able to pay all Receivables
on which the Customer is obligated in full when due or with respect to such Customers of any
Borrower who are not solvent such Borrower has set up on its books and in its financial records bad
debt reserves adequate to cover such Receivables.

(c) Location of Borrowers. Each Borrower’s chief executive office is located at
Eatontown, New Jersey. Until written notice is given to Agent by Borrowing Agent of any other
office at which any Borrower keeps its records pertaining to Receivables, all such records shall be
kept at such executive office.

(d) Collection of Receivables. Borrowers shall instruct their Customers to deliver
all remittances upon Receivables to such lockbox or Blocked Account as Agent shall designate from
time to time as contemplated by Section 4.15(h) hereof or as otherwise agreed to from time to time
by Agent. Notwithstanding the foregoing, to the extent any Borrower receives any remittances upon
Receivables, such Borrower will, at such Borrower’s sole cost and expense, but on Agent’s behalf
and for Agent’s account, collect as Agent’s property and in trust
for Agent all amounts received on Receivables, and shall cause such remittances to be
deposited to such lockbox or Blocked Account promptly after receipt thereof in the form received.
Each Borrower shall deposit in the Blocked Account or, upon request by Agent, deliver to Agent, in
original form and on the date of receipt thereof, all checks, drafts, notes, money orders,
acceptances, cash and other evidences of Indebtedness. All Receivables received by Agent pursuant
to this Section 4.15(d) shall be applied to pay the Obligations.

 

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(e) Notification of Assignment of Receivables. At any time after the occurrence and
during the continuance of an Event of Default, Agent shall have the right to send notice of the
assignment of, and Agent’s security interest in and Lien on, the Receivables to any and all
Customers or any third party holding or otherwise concerned with any of the Collateral. During the
continuance of an Event of Default, Agent may in its sole discretion, have the sole right to
collect the Receivables, take possession of the Collateral, or both. Agent’s actual collection
expenses, including, but not limited to, stationery and postage, telephone and telegraph,
secretarial and clerical expenses and the salaries of any collection personnel used for collection,
may be charged to Borrowers’ Account and added to the Obligations.

(f) Power of Agent to Act on Borrowers’ Behalf. In connection with the administration
of a lockbox or Blocked Account designated for deposit of remittances of payments of Receivables,
Agent shall have the right to receive, endorse, assign and/or deliver in the name of Agent or any
Borrower any and all checks, drafts and other instruments for the payment of money relating to the
Receivables, and each Borrower hereby waives notice of presentment, protest and non-payment of any
instrument so endorsed. Each Borrower hereby constitutes Agent or Agent’s designee as such
Borrower’s attorney with power (i) to endorse such Borrower’s name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (ii) after an Event of
Default has occurred and is continuing, to sign such Borrower’s name on any invoice or bill of
lading relating to any of the Receivables, drafts against Customers, assignments and verifications
of Receivables; (iii) to send verifications of Receivables to any Customer; (iv) to sign such
Borrower’s name on all financing statements or any other documents or instruments deemed necessary
or appropriate by Agent to preserve, protect, or perfect Agent’s interest in the Collateral and to
file same; (v) after an Event of Default has occurred and is continuing, to demand payment of the
Receivables; (vi) after an Event of Default has occurred and is continuing, to enforce payment of
the Receivables by legal proceedings or otherwise; (vii) after an Event of Default has occurred and
is continuing, to exercise all of such Borrower’s rights and remedies with respect to the
collection of the Receivables and any other Collateral; (viii) after an Event of Default has
occurred and is continuing, to settle, adjust, compromise, extend or renew the Receivables; (ix)
after an Event of Default has occurred and is continuing, to settle, adjust or compromise any legal
proceedings brought to collect Receivables; (x) after an Event of Default has occurred and is
continuing, to prepare, file and sign such Borrower’s name on a proof of claim in bankruptcy or
similar document against any Customer; (xi) after an Event of Default has occurred and is
continuing to prepare, file and sign such Borrower’s name on any notice of Lien, assignment or
satisfaction of Lien or similar document in connection with the Receivables; and (xii) after an
Event of Default has occurred and is continuing to do all other acts and things necessary to carry
out this Agreement. All acts of said attorney or designee are hereby ratified and approved, and
said attorney or designee shall not be liable for any acts of omission or commission nor for any
error of judgment or mistake of fact or of law, unless done maliciously or with gross (not mere)
negligence (as determined by a court of competent jurisdiction in a final non-appealable
judgment); this power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time following the occurrence and during the
continuance of an Event of Default or Default, to change the address for delivery of mail addressed
to any Borrower to such address as Agent may designate and to receive, open and dispose of all mail
addressed to any Borrower.

 

41

 

(g) No Liability. Neither Agent nor any Lender shall, under any circumstances or in
any event whatsoever, have any liability for any error or omission or delay of any kind occurring
in the settlement, collection or payment of any of the Receivables or any instrument received in
payment thereof, or for any damage resulting therefrom. Following the occurrence and during the
continuance of an Event of Default or Default Agent may, without notice or consent from any
Borrower, sue upon or otherwise collect, extend the time of payment of, compromise or settle for
cash, credit or upon any terms any of the Receivables or any other securities, instruments or
insurance applicable thereto and/or release any obligor thereof.

(h) Establishment of a Lockbox Account, Dominion Account. All proceeds of Collateral
shall be deposited by Borrowers into either (i) a lockbox account, dominion account or such other
“blocked account” (“Blocked Accounts”) established at a bank or banks (each such bank, a
“Blocked Account Bank”) pursuant to an arrangement with such Blocked Account Bank as may be
selected by Borrowing Agent and be acceptable to Agent or (ii) depository accounts (“Depository
Accounts”) established at the Agent for the deposit of such proceeds. Each applicable
Borrower, Agent and each Blocked Account Bank shall enter into a deposit account control agreement
in form and substance satisfactory to Agent directing such Blocked Account Bank to transfer such
funds so deposited to Agent, either to any account maintained by Agent at said Blocked Account Bank
or by wire transfer to appropriate account(s) of Agent. All funds deposited in such Blocked
Accounts shall immediately become the property of Agent for the purposes of perfecting Agent’s Lien
on such funds and for use by the Agent in applying such funds promptly to the Obligations.
Borrowing Agent shall obtain the agreement by each Blocked Account Bank to waive any offset rights
against the funds so deposited. Neither Agent nor any Lender assumes any responsibility for such
blocked account arrangement, including any claim of accord and satisfaction or release with respect
to deposits accepted by any Blocked Account Bank thereunder. If the outstanding balance of the
Revolving Advances is zero, Agent shall transfer any deposited funds in accordance with Borrowing
Agent’s direction. All deposit accounts and investment accounts of each Borrower and its
Subsidiaries are set forth on Schedule 4.15(h).

(i) Adjustments. No Borrower will, without Agent’s consent, compromise or adjust any
Receivables (or extend the time for payment thereof) or accept any returns of merchandise or grant
any additional discounts, allowances or credits thereon except for those compromises, adjustments,
returns, discounts, credits and allowances as have been heretofore customary in the business of
such Borrower.

4.16. Inventory. To the extent Inventory held for sale or lease has been produced by
any Borrower, it has been and will be produced by such Borrower in accordance with the Federal Fair
Labor Standards Act of 1938, as amended, and all rules, regulations and orders thereunder.

 

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4.17. Maintenance of Equipment. The Equipment shall be maintained in good operating
condition and repair (reasonable wear and tear excepted) and all necessary replacements of and
repairs thereto shall be made so that the value and operating efficiency of the Equipment shall be
maintained and preserved. No Borrower shall use or operate the Equipment in violation of any law,
statute, ordinance, code, rule or regulation.

4.18. Exculpation of Liability. Nothing herein contained shall be construed to
constitute Agent or any Lender as any Borrower’s agent for any purpose whatsoever, nor shall Agent
or any Lender be responsible or liable for any shortage, discrepancy, damage, loss or destruction
of any part of the Collateral wherever the same may be located and regardless of the cause thereof.
Neither Agent nor any Lender, whether by anything herein or in any assignment or otherwise, assume
any of any Borrower’s obligations under any contract or agreement assigned to Agent or such Lender,
and neither Agent nor any Lender shall be responsible in any way for the performance by any
Borrower of any of the terms and conditions thereof.

4.19. Environmental Matters.

(a) Borrowers shall ensure that the Real Property and all operations and businesses conducted
thereon remains in compliance with all Environmental Laws and Borrowers shall not place or permit
to be placed any Hazardous Substances on any Real Property except as permitted by Applicable Law or
appropriate governmental authorities.

(b) Borrowers shall establish and maintain a system to assure and monitor continued compliance
with all applicable Environmental Laws which system shall include periodic reviews of such
compliance.

(c) Borrowers shall (i) employ in connection with the use of the Real Property appropriate
technology necessary to maintain compliance with any applicable Environmental Laws and (ii) dispose
of any and all Hazardous Waste generated at the Real Property only at facilities and with carriers
that maintain valid permits under RCRA and any other applicable Environmental Laws. Borrowers
shall use their best efforts to obtain certificates of disposal, such as hazardous waste manifest
receipts, from all treatment, transport, storage or disposal facilities or operators employed by
Borrowers in connection with the transport or disposal of any Hazardous Waste generated at the Real
Property.

(d) In the event any Borrower obtains, gives or receives notice of any Release or threat of
Release of a reportable quantity of any Hazardous Substances at the Real Property (any such event
being hereinafter referred to as a “Hazardous Discharge”) or receives any notice of
violation, request for information or notification that it is potentially responsible for
investigation or cleanup of environmental conditions at the Real Property, demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous Discharge or
violation of Environmental Laws affecting the Real Property or any Borrower’s interest therein (any
of the foregoing is referred to herein as an “Environmental Complaint”) from any Person,
including any state agency responsible in whole or in part for environmental matters in the state
in which the Real Property is located or the United States Environmental Protection Agency (any
such person or entity hereinafter the “Authority”), then Borrowing Agent shall, within five
(5) Business Days, give written notice of same to Agent detailing facts and circumstances of which
any Borrower is aware giving rise to the Hazardous Discharge or Environmental Complaint. Such
information is to be provided to allow Agent to protect its security interest in and Lien on the
Real Property and the Collateral and is not intended to create nor shall it create any obligation
upon Agent or any Lender with respect thereto.

 

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(e) Borrowing Agent shall promptly forward to Agent copies of any request for information,
notification of potential liability, demand letter relating to potential responsibility with
respect to the investigation or cleanup of Hazardous Substances at any other site owned, operated
or used by any Borrower to dispose of Hazardous Substances and shall continue to forward copies of
correspondence between any Borrower and the Authority regarding such claims to Agent until the
claim is settled. Borrowing Agent shall promptly forward to Agent copies of all documents and
reports concerning a Hazardous Discharge at the Real Property that any Borrower is required to file
under any Environmental Laws. Such information is to be provided solely to allow Agent to protect
Agent’s security interest in and Lien on the Real Property and the Collateral.

(f) Borrowers shall respond promptly to any Hazardous Discharge or Environmental Complaint and
take all necessary action in order to safeguard the health of any Person and to avoid subjecting
the Collateral or Real Property to any Lien. If any Borrower shall fail to respond promptly to any
Hazardous Discharge or Environmental Complaint or any Borrower shall fail to comply with any of the
requirements of any Environmental Laws, Agent on behalf of Lenders may, but without the obligation
to do so, for the sole purpose of protecting Agent’s interest in the Collateral: (A) give such
notices or (B) enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by Agent) deem
reasonably necessary or advisable, to clean up, remove, mitigate or otherwise deal with any such
Hazardous Discharge or Environmental Complaint. All reasonable costs and expenses incurred by
Agent and Lenders (or such third parties) in the exercise of any such rights, including any sums
paid in connection with any judicial or administrative investigation or proceedings, fines and
penalties, together with interest thereon from the date expended at the Default Rate for Domestic
Rate Loans constituting Revolving Advances shall be paid upon demand by Borrowers, and until paid
shall be added to and become a part of the Obligations secured by the Liens created by the terms of
this Agreement or any other agreement between Agent, any Lender and any Borrower.

(g) Promptly upon the written request of Agent from time to time, Borrowers shall provide
Agent, at Borrowers’ expense, with an environmental site assessment or environmental audit report
prepared by an environmental engineering firm acceptable in the reasonable opinion of Agent, to
assess with a reasonable degree of certainty the existence of a Hazardous Discharge and the
potential costs in connection with abatement, cleanup and removal of any Hazardous Substances found
on, under, at or within the Real Property. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is charged to oversee the clean-up of such
Hazardous Discharge shall be acceptable to Agent. If such estimates, individually or in the
aggregate, exceed $100,000, Agent shall have the right to require Borrowers to post a bond, letter
of credit or other security reasonably satisfactory to Agent to secure payment of these costs and
expenses.

 

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(h) Borrowers shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their
respective employees, agents, directors and officers harmless from and against all loss, liability,
damage and expense, claims, costs, fines and penalties, including attorney’s fees, suffered or
incurred by Agent or Lenders under or on account of any Environmental Laws, including the assertion
of any Lien thereunder, with respect to any Hazardous Discharge, the presence of any Hazardous
Substances affecting the Real Property, whether or not the same originates or emerges from the Real
Property or any contiguous real estate, including any loss of value of the Real Property as a
result of the foregoing except to the extent such loss, liability, damage and expense is
attributable to any Hazardous Discharge resulting from actions on the part of Agent or any Lender.
Borrowers’ obligations under this Section 4.19 shall arise upon the discovery of the presence of
any Hazardous Substances at the Real Property, whether or not any federal, state, or local
environmental agency has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrowers’ obligation and the indemnifications hereunder shall survive the
termination of this Agreement.

(i) For purposes of Section 4.19 and 5.7, all references to Real Property shall be deemed to
include all of each Borrower’s right, title and interest in and to its owned and leased premises.

4.20. Financing Statements. Except as respects the financing statements filed by
Agent, the financing statements described on Schedule 1.2 and financing statements filed with
respect to other Permitted Encumbrances, no financing statement covering any of the Collateral or
any proceeds thereof is on file in any public office.

V. REPRESENTATIONS AND WARRANTIES.

Each Borrower represents and warrants as follows:

5.1. Authority. Each Borrower has full power, authority and legal right to enter into
this Agreement and the Other Documents and to perform all its respective Obligations hereunder and
thereunder. This Agreement and the Other Documents have been duly executed and delivered by each
Borrower, and this Agreement and the Other Documents constitute the legal, valid and binding
obligation of such Borrower enforceable in accordance with their terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors’ rights generally. The execution, delivery and performance of this Agreement
and of the Other Documents (a) are within such Borrower’s corporate powers, have been duly
authorized by all necessary corporate action, are not in contravention of Applicable Law or the
terms of such Borrower’s by-laws, certificate of incorporation or other applicable documents
relating to such Borrower’s formation or to the conduct of such Borrower’s business or of any
material agreement or undertaking to which such Borrower is a party or by which such Borrower is
bound, (b) will not conflict with or violate any Applicable Law or regulation, or any judgment,
order or decree of any Governmental Body, (c) will not require the Consent of any Governmental Body
or any other Person, except those Consents set forth on Schedule 5.1 hereto, all of which will have
been duly obtained, made or compiled prior to the Closing Date and which are in full force and
effect and (d) will not conflict with, nor result in any breach in any of the provisions of or
constitute a default under or result in the creation of any Lien except Permitted Encumbrances upon
any asset of such Borrower under the provisions
of any agreement, charter document, instrument, by-law or other instrument to which such
Borrower is a party or by which it or its property may be bound.

 

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5.2. Formation and Qualification.

(a) Each Borrower is duly incorporated and in good standing under the laws of the state listed
on Schedule 5.2(a) and is qualified to do business and is in good standing in the states listed on
Schedule 5.2(a) which constitute all states in which qualification and good standing are necessary
for such Borrower to conduct its business and own its property and where the failure to so qualify
could reasonably be expected to have a Material Adverse Effect on such Borrower. Each Borrower has
delivered to Agent true and complete copies of its certificate of incorporation and by-laws.

(b) The only Subsidiaries of Osteotech and each Borrower are listed on Schedule 5.2(b).

5.3. Survival of Representations and Warranties. All representations and warranties
of such Borrower contained in this Agreement and the Other Documents shall be true at the time of
such Borrower’s execution of this Agreement and the Other Documents, and shall survive the
execution, delivery and acceptance thereof by the parties thereto and the closing of the
transactions described therein or related thereto.

5.4. Tax Returns. Each Borrower’s federal tax identification number is set forth on
Schedule 5.4. Each Borrower has filed all federal, state and local tax returns and other reports
each is required by law to file and has paid all taxes, assessments, fees and other governmental
charges that are due and payable, except where the failure so to file or pay could not reasonably
be expected to have a Material Adverse Effect. Federal tax returns of each Borrower have been
examined and reported upon by the appropriate taxing authority or closed by applicable statute and
satisfied for all fiscal years prior to and including the fiscal year ending December 31, 2005.
The provision for taxes on the books of each Borrower is adequate for all years not closed by
applicable statutes, and for its current fiscal year, and no Borrower has any knowledge of any
deficiency or additional assessment in connection therewith not provided for on its books.

5.5. Financial Statements. The consolidated and consolidating balance sheets of
Borrowers, their Subsidiaries and such other Persons described therein (including the accounts of
all Subsidiaries for the respective periods during which a subsidiary relationship existed) as of
December 31, 2008, and the related statements of income, changes in stockholder’s equity, and
changes in cash flow for the period ended on such date, all accompanied by reports thereon
containing opinions without qualification by independent certified public accountants, copies of
which have been delivered to Agent, have been prepared in accordance with GAAP, consistently
applied (except for changes in application in which such accountants concur) and present fairly the
financial position of Borrowers and their Subsidiaries at such date and the results of their
operations for such period. Since September 30, 2009, there has been no change in the condition,
financial or otherwise, of Borrowers or their Subsidiaries as shown on the consolidated balance
sheet as of such date and no change in the aggregate value of machinery and equipment owned by
Borrowers and their respective Subsidiaries, except changes in the
Ordinary Course of Business, none of which individually or in the aggregate has been
materially adverse.

 

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5.6. Entity Names. Except as set forth on Schedule 5.6, no Borrower has been known by
any other corporate name in the past five years and does not sell Inventory under any other name,
nor has any Borrower been the surviving corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person during the preceding five (5) years.

5.7. O.S.H.A. and Environmental Compliance.

(a) Each Borrower has duly complied with, and its facilities, business, assets, property,
leaseholds, Real Property and Equipment are in compliance in all material respects with, the
provisions of the Federal Occupational Safety and Health Act, the Environmental Protection Act,
RCRA and all other Environmental Laws; there have been no outstanding citations, notices or orders
of non-compliance issued to any Borrower or relating to its business, assets, property, leaseholds
or Equipment under any such laws, rules or regulations which could reasonably be expected to have a
Material Adverse Effect.

(b) Each Borrower has been issued all required federal, state and local licenses, certificates
or permits relating to all applicable Environmental Laws.

(c) (i) There are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under or within
any Real Property or any premises leased by any Borrower; (ii) there are no underground storage
tanks or polychlorinated biphenyls on the Real Property or any premises leased by any Borrower;
(iii) neither the Real Property nor any premises leased by any Borrower has ever been used as a
treatment, storage or disposal facility of Hazardous Waste; and (iv) no Hazardous Substances are
present on the Real Property or any premises leased by any Borrower, excepting such quantities as
are handled in accordance with all applicable manufacturer’s instructions and governmental
regulations and in proper storage containers and as are necessary for the operation of the
commercial business of any Borrower or of its tenants.

5.8. Solvency; No Litigation, Violation, Indebtedness or Default.

(a) Each Borrower is solvent, able to pay its debts as they mature, has capital sufficient to
carry on its business and all businesses in which it is about to engage, and (i) as of the Closing
Date, the fair present saleable value of its assets, calculated on a going concern basis, is in
excess of the amount of its liabilities and (ii) subsequent to the Closing Date, the fair saleable
value of its assets (calculated on a going concern basis) will be in excess of the amount of its
liabilities.

(b) Except as disclosed in Schedule 5.8(b), no Borrower has (i) any pending or threatened
litigation, arbitration, actions or proceedings which could reasonably be expected to have a
Material Adverse Effect, and (ii) any Indebtedness for borrowed money or Capitalized Lease
Obligations, other than the Obligations.

 

47

 

(c) No Borrower is in violation of any Applicable Law in any respect which could reasonably be
expected to have a Material Adverse Effect, nor is any Borrower in violation of any order of any
court, Governmental Body or arbitration board or tribunal.

(d) No Borrower nor any member of the Controlled Group maintains or contributes to any Plan
other than (i) as of the Closing Date, those listed on Schedule 5.8(d) hereto and (ii)
thereafter, as permitted under this Agreement. (i) No Pension Benefit Plan has incurred any
“accumulated funding deficiency,” as defined in Section 302(a)(2) of ERISA and Section 412(a) of
the Code, whether or not waived, and each Borrower and each member of the Controlled Group has met
all applicable minimum funding requirements under Section 302 of ERISA in respect of each Pension
Benefit Plan; (ii) each Pension Benefit Plan which is intended to be a qualified plan under Section
401(a) of the Code as currently in effect has been determined by the Internal Revenue Service to be
qualified under Section 401(a) of the Code and the trust related thereto is exempt from federal
income tax under Section 501(a) of the Code; (iii) neither any Borrower nor any member of the
Controlled Group has incurred any liability to the PBGC other than for the payment of premiums, and
there are no premium payments which have become due which are unpaid; (iv) no Pension Benefit Plan
has been terminated by the plan administrator thereof nor by the PBGC, and there is no occurrence
which would cause the PBGC to institute proceedings under Title IV of ERISA to terminate any
Pension Benefit Plan; (v) at this time, the current value of the assets of each Pension Benefit
Plan exceeds the present value of the accrued benefits and other liabilities of such Pension
Benefit Plan and neither any Borrower nor any member of the Controlled Group knows of any facts or
circumstances which would materially change the value of such assets and accrued benefits and other
liabilities; (vi) neither any Borrower nor any member of the Controlled Group has breached any of
the responsibilities, obligations or duties imposed on it by ERISA with respect to any Pension
Benefit Plan; (vii) neither any Borrower nor any member of a Controlled Group has incurred any
liability for any excise tax arising under Section 4972 or 4980B of the Code, and no fact exists
which could give rise to any such liability; (viii) neither any Borrower nor any member of the
Controlled Group nor any fiduciary of, nor any trustee to, any Pension Benefit Plan, has engaged in
a material non-exempt “prohibited transaction” described in Section 406 of the ERISA or Section
4975 of the Code nor taken any action which would constitute or result in a Termination Event with
respect to any such Pension Benefit Plan which is subject to ERISA; (ix) each Borrower and each
member of the Controlled Group has made all contributions due and payable with respect to each
Pension Benefit Plan; (x) there exists no event described in Section 4043(b) of ERISA, for which
the thirty (30) day notice period has not been waived; (xi) neither any Borrower nor any member of
the Controlled Group maintains or contributes to any Plan which provides health, accident or life
insurance benefits to former employees, their spouses or dependents, other than in accordance with
Section 4980B of the Code, section 601 of ERISA or state law, or under an agreement with an
executive; (xii) neither any Borrower nor any member of the Controlled Group has withdrawn,
completely or partially, from any Multiemployer Plan so as to incur liability under the
Multiemployer Pension Plan Amendments Act of 1980 and there exists no fact which would reasonably
be expected to result in any such liability; and (xiv) to the best of each Borrower’s knowledge, no
Plan fiduciary (as defined in Section 3(21) of ERISA) has any liability for breach of fiduciary
duty or for any failure in connection with the administration or investment of the assets of a
Plan.

 

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5.9. Patents, Trademarks, Copyrights and Licenses.

(a) All patents and patent applications owned or utilized by any Borrower are valid and have
been duly registered or filed with all appropriate Governmental Bodies and are, as of the Closing
Date, set forth on Schedule 5.9(a) hereto.

(b) All trademarks, trademark applications, service marks, service mark applications,
copyrights, copyright applications, design rights, tradenames, assumed names, trade secrets and
licenses owned or utilized by any Borrower are valid and have been duly registered or filed with
all appropriate Governmental Bodies.

(c) Subject to Borrowers’ rights under Section 6.2, the intellectual property rights described
in Sections 5.9 (a) and (b) constitute all of the intellectual property rights which are necessary
for the operation of any Borrower’s business, and there is no objection to or pending challenge to
the validity of any such patent, trademark, copyright, design rights, trade name, trade secret or
license and no Borrower is aware of any grounds for any challenge, except as set forth in Schedule
5.8(b) hereto. Each patent, patent application, patent license, trademark, trademark application,
trademark license, service mark, service mark application, service mark license, design rights,
copyright, copyright application and copyright license owned or held by any Borrower and all trade
secrets used by any Borrower consist of original material or property developed by such Borrower or
was lawfully acquired by such Borrower from the proper and lawful owner thereof. Subject to
Borrowers’ rights under Section 6.2, each of such items has been maintained so as to preserve the
value thereof from the date of creation or acquisition thereof.

(d) With respect to all software used by any Borrower, such Borrower is in possession of all
source and object codes related to each piece of software or is the beneficiary of a source code
escrow agreement.

5.10. Licenses and Permits. Except as set forth in Schedule 5.10, each Borrower (a)
is in compliance with and (b) has procured and is now in possession of, all licenses or permits
required by any applicable federal, state or local law, rule or regulation for the operation of its
business in each jurisdiction wherein it is now conducting or proposes to conduct business and
where the failure to procure such licenses or permits could reasonably be expected to have a
Material Adverse Effect.

5.11. Default of Indebtedness. No Borrower is in default (a) in the payment of the
principal of or interest on any Indebtedness for borrowed money or Capitalized Lease Obligations,
or (b) under any instrument or agreement under or subject to which any Indebtedness has been issued
which would reasonably be expected to have a Material Adverse Effect, and no event has occurred
under the provisions of any such instrument or agreement which with or without the lapse of time or
the giving of notice, or both, constitutes or would constitute an event of default thereunder which
would reasonably be expected to have a Material Adverse Effect.

 

49

 

5.12. No Default. No Borrower is in default in the payment or performance of any of
its contractual obligations which would be reasonably expected to have a Material Adverse Effect
and no Default has occurred and is continuing.

5.13. No Burdensome Restrictions. No Borrower is party to any contract or agreement
the performance of which could reasonably be expected to have a Material Adverse Effect. Each
Borrower has heretofore delivered to Agent true and complete copies of all material contracts to
which it is a party or to which it or any of its properties is subject as of the Closing Date. No
Borrower has agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be
subject to a Lien which is not a Permitted Encumbrance.

5.14. No Labor Disputes. No Borrower is involved in any labor dispute; there are no
strikes or walkouts or union organization of any Borrower’s employees threatened or in existence
and no labor contract is scheduled to expire during the Term.

5.15. Margin Regulations. No Borrower is engaged, nor will it engage, principally or
as one of its important activities, in the business of extending credit for the purpose of
“purchasing” or “carrying” any “margin stock” within the respective meanings of each of the quoted
terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from
time to time hereafter in effect. No part of the proceeds of any Advance will be used for
“purchasing” or “carrying” “margin stock” as defined in Regulation U of such Board of Governors.

5.16. Investment Company Act. No Borrower is an “investment company” registered or
required to be registered under the Investment Company Act of 1940, as amended, nor is it
controlled by such a company.

5.17. Disclosure. No representation or warranty made by any Borrower in this
Agreement or in any financial statement, report, certificate or any other document furnished in
connection herewith excluding projections and pro forma financial information referred to in the
following sentence, contains any untrue statement of a material fact or, when taken as a whole,
omits to state any material fact necessary to make the statements herein or therein not misleading
in light of the circumstances in which such statements were made. Any projections and pro forma
financial information contained in such materials were based upon good faith estimates and
assumptions believed by Borrowers to be reasonable at the time made, it being recognized by Agent
and Lenders that such projections as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such projections may differ from the
projected results. There is no fact known to any Borrower or which reasonably should be known to
such Borrower which such Borrower has not disclosed to Agent in writing with respect to the
transactions contemplated by this Agreement or available to Agent and Lenders in filings with the
SEC for use in connection with the transactions contemplated hereby which could reasonably be
expected to have a Material Adverse Effect.

5.18. Reserved.

 

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5.19. Swaps. As of the Closing Date, no Borrower is a party to, nor will it be a
party to, any swap agreement whereby such Borrower has agreed or will agree to swap interest rates
or currencies.

5.20. Conflicting Agreements. No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on any Borrower or affecting the Collateral conflicts
with, or requires any Consent which has not already been obtained to, or would in any way prevent
the execution, delivery or performance of, the terms of this Agreement or the Other Documents.

5.21. Application of Certain Laws and Regulations. No Borrower is subject to any law,
statute, rule or regulation which regulates the incurrence of any Indebtedness, including laws,
statutes, rules or regulations relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public utility services.

5.22. Business and Property of Borrowers. Upon and after the Closing Date, Borrowers
do not propose to engage in any business other than the manufacture of biologic and regenerative
products used primarily in the health care industry and activities necessary to conduct the
foregoing. On the Closing Date, each Borrower will own all the property and possess all of the
rights and Consents necessary for the conduct of the business of such Borrower.

5.23. Section 20 Subsidiaries. Borrowers do not intend to use and shall not use any
portion of the proceeds of the Advances, directly or indirectly, to purchase during the
underwriting period, or for 30 days thereafter, Ineligible Securities being underwritten by a
Section 20 Subsidiary.

5.24. Anti-Terrorism Laws.

(a) General. Neither any Borrower nor, to any Borrower’s actual knowledge any
Affiliate of any Borrower, is in violation of any Anti-Terrorism Law or 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.

(b) Executive Order No. 13224. Neither any Borrower nor, to any Borrower’s actual
knowledge any Affiliate of any Borrower or their respective agents acting or benefiting in any
capacity in connection with the Advances or other transactions hereunder, is any of the following
(each a “Blocked Person”):

(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the
Executive Order No. 13224;

(ii) a Person 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, the Executive Order No.
13224;

(iii) a Person or entity with which any Lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law;

 

51

 

(iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;

(v) a Person or entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset Control at its official
website or any replacement website or other replacement official publication of such list, or

(vi) a Person or entity who is affiliated or associated with a Person or entity listed above.

Neither any Borrower nor to the knowledge of any Borrower, any of its agents acting in any capacity
in connection with the Advances or other transactions hereunder (i) 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 (ii) deals in, or otherwise engages in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order No. 13224.

5.25. Trading with the Enemy. No Borrower has engaged, nor does it intend to engage,
in any business or activity prohibited by the Trading with the Enemy Act.

VI. AFFIRMATIVE COVENANTS.

Each Borrower shall, until payment in full of the Obligations (other than unasserted
indemnification claims) and termination of this Agreement:

6.1. Payment of Fees. Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance proceeds and (b) the
establishment and maintenance of any Blocked Accounts or Depository Accounts as provided for in
Section 4.15(h). Agent may, upon notice to Borrowing Agent, charge Borrowers’ Account for all such
fees and expenses.

6.2. Conduct of Business and Maintenance of Existence and Assets. (a) Conduct
continuously and operate actively its business according to good business practices and maintain
all of its properties useful or necessary in its business in good working order and condition
(reasonable wear and tear excepted and except as may be disposed of in accordance with the terms of
this Agreement), including all licenses, patents, copyrights, design rights, tradenames, trade
secrets and trademarks and take all actions necessary to enforce and protect the validity of any
intellectual property right or other right included in the Collateral, except for licenses,
patents, copyrights, design rights, trade names, trade secrets and trademarks deemed by a Borrower
to no longer be useful in such Borrower’s business; (b) keep in full force and effect its existence
and comply in all material respects with the Applicable Laws governing the conduct of its business
where the failure to do so could reasonably be expected to have a Material Adverse Effect; and (c)
make all such reports and pay all such franchise and other taxes and license fees and do all such
other acts and things as may be lawfully required to maintain its rights, licenses, leases, powers
and franchises under the laws of the United States or any political subdivision thereof where the
failure to do so could reasonably be expected to have a Material Adverse Effect.

 

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6.3. Violations. Promptly notify Agent in writing of any violation of any law, statute, regulation or
ordinance of any Governmental Body, or of any agency thereof, applicable to any Borrower which
could reasonably be expected to have a Material Adverse Effect.

6.4. Government Receivables.
Take all steps necessary to protect Agent’s interest in the Collateral under the Federal
Assignment of Claims Act, the Uniform Commercial Code and all other applicable state or local
statutes or ordinances and deliver to Agent appropriately endorsed, any instrument or chattel paper
connected with any Receivable arising out of contracts between any Borrower and the United States,
any state or any department, agency or instrumentality of any of them, if such Receivable is
included in the Formula Amount.

6.5. Fixed Charge Coverage Ratio.
Commencing March 31, 2010, cause to be maintained as of the end of each fiscal quarter, a
Fixed Charge Coverage Ratio of not less than 1.1 to 1.0; provided that for the fiscal quarters
ending March 31, 2010, June 30, 2010, September 30, 2010 and December 31, 2010, Borrowers shall not
be obligated to maintain such minimum Fixed Charge Coverage Ratio if Borrowers maintain for each
day during any such quarter, cash balances on deposit at Agent in excess of the outstanding amount
(for such day) of Revolving Advances (the “Cash Balance Excess”). If during any such fiscal
quarter, Borrowers fail to maintain the Cash Balance Excess, then for such quarter and for each and
every fiscal quarter thereafter, Borrowers shall be obligated to maintain such minimum Fixed Charge
Coverage Ratio. The Fixed Charge Coverage Ratio shall be measured as of each fiscal quarter end on
a rolling four (4) quarter basis; provided that: (A) for the first testing period under this
Section 6.5, the Fixed Charge Coverage Ratio shall be measured on the basis of the fiscal quarter
then ending; (B) for the second test period under this Section 6.5, the Fixed Charge Coverage Ratio
shall be measured on the basis of the two consecutive fiscal quarters then ending and (C) for the
third test period under this Section 6.5, the Fixed Charge Coverage Ratio shall be measured on the
basis of the three consecutive fiscal quarters then ending.

6.6. Execution of Supplemental Instruments.
Execute and deliver to Agent from time to time, upon demand, such supplemental agreements,
statements, assignments and transfers, or instructions or documents relating to the Collateral, and
such other instruments as Agent may reasonably request, in order that the full intent of this
Agreement may be carried into effect.

6.7. Payment of Indebtedness.
Pay, discharge or otherwise satisfy at or before maturity (subject, where applicable, to
specified grace periods and, in the case of the trade payables, to normal payment practices) all
its obligations and liabilities of whatever nature, except when the failure to do so could not
reasonably be expected to have a Material Adverse Effect or when the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and each Borrower shall have
provided for such reserves as Agent may reasonably deem proper and necessary, subject at all times
to any applicable subordination arrangement in favor of Lenders.

6.8. Standards of Financial Statements.
Cause all financial statements referred to in Sections 9.7, 9.8, 9.9, 9.10, 9.11, 9.12 and
9.13 as to which GAAP is applicable to be complete and correct in all material respects (subject,
in the case of interim financial statements, to normal year-end audit adjustments and the absence
of footnotes) and to be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein
(except as concurred in by such reporting accountants or officer, as the case may be, and
disclosed therein).

 

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6.9. Federal Securities Laws.
Promptly file all periodic reports required under the Exchange Act and/or Securities Act.

VII. NEGATIVE COVENANTS.

No Borrower shall, until satisfaction in full of the Obligations (other than unasserted
indemnification claims) and termination of this Agreement:

7.1. Merger, Consolidation, Acquisition and Sale of Assets.

(a) Enter into any merger, consolidation or other reorganization with or into any other Person
or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit
any other Person to consolidate with or merge with it, provided that a Borrower may merge into or
consolidate with another Borrower or any Subsidiary, as long as a Borrower is the surviving Person
(and with respect to any merger or consolidation involving Osteotech, as long as Osteotech is the
surviving Person).

(b) Sell, lease, transfer or otherwise dispose of any of its properties or assets, except (i)
dispositions of Collateral or Equipment to the extent expressly permitted by Section 4.3 and (ii)
any other sales or dispositions expressly permitted by this Agreement.

7.2. Creation of Liens.
Create or suffer to exist any Lien or transfer upon or against any of its property or
assets now owned or hereafter acquired, except Permitted Encumbrances.

7.3. Guarantees.
Become liable upon the obligations or liabilities of any Person by assumption, endorsement
or guaranty thereof or otherwise (other than to Lenders) except the endorsement of checks in the
Ordinary Course of Business and guaranties of obligations or liabilities of Subsidiaries in an
aggregate amount, determined in accordance with GAAP, not to exceed $1,000,000 at any time.

7.4. Investments.
Purchase or acquire obligations or Equity Interests of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States of America or any agency
thereof, (b) commercial paper with maturities of not more than 180 days and a published rating of
not less than A-1 or P-1 (or the equivalent rating), (c) certificates of time deposit and bankers’
acceptances having maturities of not more than 180 days and repurchase agreements backed by United
States government securities of a commercial bank if (i) such bank has a combined capital and
surplus of at least $500,000,000, or (ii) its debt obligations, or those of a holding company of
which it is a Subsidiary, are rated not less than A (or the equivalent rating) by a nationally
recognized investment rating agency, (d) U.S. money market funds that invest solely in obligations
issued or guaranteed by the United States of America or an agency thereof, (e) investments arising
from the receipt of advance payments from Customers, (f) advances and deposits to vendors arising
in the Ordinary Course of Business, (g) loans and advances to officers and employees of such
Borrower or its Subsidiaries in the Ordinary Course of Business not to exceed the aggregate amount
of $100,000 at any time outstanding, (h) extended payment terms to Customers of such Borrower in
the Ordinary Course
of Business, provided that such extended payments terms do not affect the status of any
Receivables of such Customer as an Eligible Receivable hereunder, (i) investments held by such
Borrower in connection with the satisfaction or enforcement of debt or claims due or owing to such
Borrower or as security for any such debt or claim, (j) promissory notes and other non-cash
consideration received by such Borrower in connection with conveyances, sales leases or sub-leases,
assignments, transfers and dispositions permitted by Section 4.3, and (k) other obligations of and
interests in other Persons in an aggregate amount not to exceed $750,000 at any time.

 

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7.5. Loans.
Make advances, loans or extensions of credit to any Person, including any Subsidiary or
Affiliate, except with respect to (a) the extension of commercial trade credit in connection with
the sale of Collateral in the Ordinary Course of Business consistent with past practices, (b)
(without duplication of any investments permitted under Section 7.4), loans and advances to its
officers and employees in the Ordinary Course of Business not to exceed the aggregate amount of
$100,000 at any time outstanding, and (c) intercompany loans, excluding transactions related to the
extension of commercial trade credit in the Ordinary Course of Business, not to exceed the
aggregate principal amount of $2,000,000, plus accrued interest, outstanding at any one time.

7.6. Capital Expenditures.
Contract for, purchase or make any expenditure or commitments for Capital Expenditures in
any fiscal year in an aggregate amount for all Borrowers in excess of $4,000,000.

7.7. Dividends.
Declare, pay or make any dividend or distribution on any shares of the common stock or
preferred stock of any Borrower (other than dividends or distributions payable in its stock, or
split-ups or reclassifications of its stock) or apply any of its funds, property or assets to the
purchase, redemption or other retirement of any common or preferred stock, or of any options to
purchase or acquire any such shares of common or preferred stock of any Borrower; provided that
Osteotech may repurchase its stock pursuant to the Stock Repurchase Plan in an amount not to exceed
$500,000 in the aggregate in any fiscal year if no Event of Default or Default shall have occurred
and be continuing, or after giving effect to such repurchase would occur, on the date of such
repurchase.

7.8. Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness (exclusive of trade debt) except
in respect of (a) Indebtedness to Lenders; (b) Indebtedness incurred for Capital Expenditures
permitted under Section 7.6 hereof; (c) Indebtedness disclosed on Schedule 5.8(b) hereto, together
with any refinancing, refunding, renewal, modification, extension or replacement thereof (provided
that such refinancing, refunding, renewal, modification, extension or replacement may not increase
the principal amount or extend the maturity date of such Indebtedness), (d) Indebtedness owed to
Customers of such Borrower arising from the receipt of advance payments from a Customer, (e)
obligations of such Borrower in respect of performance bonds and completion, guarantee, surety and
similar bonds, in each case obtained in the ordinary course of business to support statutory and
contractual obligations arising in the Ordinary Course of Business, (f) Indebtedness arising from
the honoring of a bank or other financial institution of a check, draft or other similar instrument
drawn against insufficient funds in the Ordinary Course of Business, and (g) other unsecured
Indebtedness not to exceed the aggregate amount of $500,000 at any time outstanding.
Notwithstanding anything herein to the contrary, no Borrower shall, after the Closing Date, incur
any additional Indebtedness to Key until the financing
statement in favor of Key, as of record on the Closing Date, has been amended to limit the
collateral described therein to specific office equipment financed by Key.

 

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7.9. Nature of Business.
Substantially change the nature of the business in which it is presently engaged, nor
except as specifically permitted hereby purchase or invest, directly or indirectly, in any assets
or property other than in the Ordinary Course of Business for assets or property which are useful
in, necessary for and are to be used in its business as presently conducted.

7.10. Transactions with Affiliates.
Directly or indirectly, purchase, acquire or lease any property from, or sell, transfer or
lease any property to, or otherwise enter into any transaction or deal with, any Affiliate, except
(a) transactions disclosed to the Agent or which are in the Ordinary Course of Business consistent
with past practices, on an arm’s-length basis on terms and conditions no less favorable than terms
and conditions which would have been obtainable from a Person other than an Affiliate, (b) any
transaction permitted by Section 7.1(a) hereof involving a Subsidiary, any transaction permitted by
Section 7.4(g), 7.5(b) or 7.5(c) hereof or any dividend or distribution permitted by Section 7.7
hereof, (c) payment of customary fees and expenses to members of the board of directors of such
Borrower, (d) payment of employee compensation to any Affiliate who is an individual in such
Person’s capacity as an officer, employee or consultant of such Borrower, (e) extended payment
terms allowed, in the Ordinary Course of Business, by such Borrower to another Borrower or any
Subsidiary in respect of accounts receivable owed to it by such other Borrower or any Subsidiary,
and (f) purchases and sales of Inventory made between such Borrower and another Borrower or any
Subsidiary, in each case in the Ordinary Course of Business and at prices not less (in any material
respect) than the lower of cost or market value of such Inventory.

7.11. Leases.
Enter as lessee into any lease arrangement for real or personal property (unless
capitalized and permitted under Section 7.6 hereof) if after giving effect thereto, aggregate
annual rental payments for all leased property would exceed $2,500,000 in any one fiscal year in
the aggregate for all Borrowers.

7.12. Subsidiaries.

(a) Form any Subsidiary.

(b) Enter into any partnership, joint venture or similar arrangement.

7.13. Fiscal Year and Accounting Changes.
Change its fiscal year from December 31 or make any change (a) in accounting treatment and
reporting practices except as required by GAAP or (b) in tax reporting treatment except as required
by Applicable Law.

7.14. Pledge of Credit.
Now or hereafter pledge Agent’s or any Lender’s credit on any purchases or for any purpose
whatsoever or use any portion of any Advance in or for any business other than such Borrower’s
business as conducted on the date of this Agreement.

7.15. Amendment of Articles of Incorporation, By-Laws.
Amend, modify or waive any term or material provision of its Certificate of Incorporation
or By-Laws which would be adverse in any respect to Agent or a Lender, unless required by
Applicable Law. Notwithstanding the
foregoing, no Borrower may amend its Certificate of Incorporation or other applicable
organizational documents to change its jurisdiction of organization or form of entity without
thirty (30) days prior to written notice to Agent.

 

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7.16. Compliance with ERISA.
(a) (i) Maintain, or permit any member of the Controlled Group to maintain, or (ii) become
obligated to contribute, or permit any member of the Controlled Group to become obligated to
contribute, to any Pension Benefit Plan, other than those Pension Benefit Plans disclosed on
Schedule 5.8(d) or any other Pension Benefit Plan for which Agent has provided its prior
written consent, (b) engage, or permit any member of the Controlled Group to engage, in any
non-exempt “prohibited transaction”, as that term is defined in section 406 of ERISA and Section
4975 of the Code, (c) incur, or permit any member of the Controlled Group to incur, any
“accumulated funding deficiency”, as that term is defined in Section 302 of ERISA or Section 412 of
the Code, (d) terminate, or permit any member of the Controlled Group to terminate, any Pension
Benefit Plan where such event could result in any liability of any Borrower or any member of the
Controlled Group or the imposition of a lien on the property of any Borrower or any member of the
Controlled Group pursuant to Section 4068 of ERISA, (e) assume, or permit any member of the
Controlled Group to assume, any obligation to contribute to any Multiemployer Plan not disclosed on
Schedule 5.8(d), (f) incur, or permit any member of the Controlled Group to incur, any withdrawal
liability to any Multiemployer Plan; (g) fail promptly to notify Agent of the occurrence of any
Termination Event, (h) fail to comply, or permit a member of the Controlled Group to fail to
comply, with the material requirements of ERISA or the Code or other Applicable Laws in respect of
any Plan, (i) fail to meet, or permit any member of the Controlled Group to fail to meet, all
minimum funding requirements under ERISA or the Code or postpone or delay or allow any member of
the Controlled Group to postpone or delay any funding requirement with respect of any Pension
Benefit Plan.

7.17. Prepayment of Indebtedness.
At any time, directly or indirectly, prepay any Indebtedness (other than to Lenders and
other than prepayments of trade debt in the Ordinary Course of Business), or repurchase, redeem,
retire or otherwise acquire any Indebtedness of any Borrower, other than, so long as no Default or
Event of Default then exists, in an amount in excess of $1,000,000 in the aggregate during any
fiscal year.

7.18. Anti-Terrorism Laws.
No Borrower shall, until satisfaction in full of the Obligations and termination of this
Agreement, nor shall it permit any Subsidiary or agent to:

(a) Conduct any business or engage in any transaction or dealing with any Blocked Person,
including the making or receiving any contribution of funds, goods or services to or for the
benefit of any Blocked Person.

(b) Deal in, or otherwise engage in any transaction relating to, any property or interests in
property blocked pursuant to the Executive Order No. 13224.

(c) 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 the
Executive Order No. 13224, the USA PATRIOT Act or any other Anti-Terrorism Law.
Borrower shall deliver to Lenders any certification or other evidence requested from time to
time by any Lender in its sole discretion, confirming Borrower’s compliance with this Section.

 

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7.19. Membership/Partnership Interests.
Elect to treat or permit any of its Subsidiaries to (x) treat its limited liability company
membership interests or partnership interests, as the case may be, as securities as contemplated by
the definition of “security” in Section 8-102(15) and by Section 8-103 of Article 8 of Uniform
Commercial Code or (y) certificate its limited liability company membership interests or
partnership interests, as the case may be.

7.20. Trading with the Enemy Act.
Engage in any business or activity in violation of the Trading with the Enemy Act.

VIII. CONDITIONS PRECEDENT.

8.1. Conditions to Initial Advances.
The agreement of Lenders to make the initial Advances requested to be made on the Closing
Date is subject to the satisfaction, or waiver by Agent, immediately prior to or concurrently with
the making of such Advances, of the following conditions precedent:

(a) Note. Agent shall have received the Note duly executed and delivered by an
authorized officer of each Borrower;

(b) Filings, Registrations and Recordings. Each document (including any Uniform
Commercial Code financing statement) required by this Agreement, any related agreement or under law
or reasonably requested by the Agent to be filed, registered or recorded in order to create, in
favor of Agent, a perfected security interest in or lien upon the Collateral shall have been
properly filed, registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, and Agent shall have received an acknowledgment
copy, or other evidence satisfactory to it, of each such filing, registration or recordation and
satisfactory evidence of the payment of any necessary fee, tax or expense relating thereto;

(c) Corporate Proceedings of Borrowers. Agent shall have received a copy of the
resolutions in form and substance reasonably satisfactory to Agent, of the Board of Directors of
each Borrower authorizing (i) the execution, delivery and performance of this Agreement, the Notes,
and any related agreements (collectively the “Documents”) and (ii) the granting by each Borrower of
the security interests in and liens upon the Collateral in each case certified by the Secretary or
an Assistant Secretary of each Borrower as of the Closing Date; and, such certificate shall state
that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of
the date of such certificate;

(d) Incumbency Certificates of Borrowers. Agent shall have received a certificate of
the Secretary or an Assistant Secretary of each Borrower, dated the Closing Date, as to the
incumbency and signature of the officers of each Borrower executing this Agreement, the Other
Documents, any certificate or other documents to be delivered by it pursuant hereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary;

 

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(e) Certificates. Agent shall have received a copy of the Articles or Certificate of
Incorporation of each Borrower and all amendments thereto, certified by the Secretary of State or
other appropriate official of its jurisdiction of incorporation together with copies of the By-Laws
of each Borrower and all material agreements of each Borrower’s shareholders certified as accurate
and complete by the Secretary of each Borrower;

(f) Good Standing Certificates. Agent shall have received good standing certificates
for each Borrower dated not more than 15 days prior to the Closing Date, issued by the Secretary of
State or other appropriate official of each Borrower’s jurisdiction of incorporation and each
jurisdiction where the conduct of each Borrower’s business activities or the ownership of its
properties necessitates qualification;

(g) Legal Opinion. Agent shall have received the executed legal opinion of Dorsey &
Whitney, LLP in form and substance satisfactory to Agent which shall cover such matters incident to
the transactions contemplated by this Agreement, the Notes, the Other Documents, and related
agreements as Agent may reasonably require and each Borrower hereby authorizes and directs such
counsel to deliver such opinions to Agent and Lenders;

(h) No Litigation. (i) No litigation, investigation or proceeding before or by any
arbitrator or Governmental Body shall be continuing or threatened against any Borrower or against
the officers or directors of any Borrower (A) in connection with this Agreement, the Other
Documents or any of the transactions contemplated thereby and which, in the reasonable opinion of
Agent, is deemed material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction, writ, restraining order or other order of any nature
materially adverse to any Borrower or the conduct of its business or inconsistent with the due
consummation of the Transactions shall have been issued by any Governmental Body;

(i) Financial Condition Certificates. Agent shall have received an executed Financial
Condition Certificate in the form of Exhibit 8.1(k).

(j) Collateral Examination. Agent shall have completed Collateral examinations and
received appraisals, the results of which shall be satisfactory in form and substance to Lenders,
of the Receivables, Inventory, General Intangibles, and Equipment of each Borrower and all books
and records in connection therewith;

(k) Fees. Agent shall have received all fees payable to Agent and Lenders on or prior
to the Closing Date hereunder, including pursuant to Article III hereof;

(l) Insurance. Agent shall have received in form and substance satisfactory to Agent,
certificates of insurance showing Agent as lender loss payee, and certificates of Borrowers’
liability insurance policies showing Agent as an additional insured, all in accordance with the
requirements of Section 4.11;

(m) Payment Instructions. Agent shall have received written instructions from
Borrowing Agent directing the application of proceeds of the initial Advances made pursuant to this
Agreement;

 

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(n) Blocked Accounts. Agent shall have received duly executed agreements establishing
the Blocked Accounts or Depository Accounts with financial institutions acceptable to Agent for the
collection or servicing of the Receivables and proceeds of the Collateral;

(o) Consents. Agent shall have received any and all Consents necessary to permit the
effectuation of the transactions contemplated by this Agreement and the Other Documents; and, Agent
shall have received such Consents and waivers of such third parties as might assert claims with
respect to the Collateral, as Agent and its counsel shall deem necessary;

(p) No Adverse Material Change. (i) Since September 30, 2009, there shall not have
occurred any event, condition or state of facts which could reasonably be expected to have a
Material Adverse Effect and (ii) no representations made or information supplied to Agent or
Lenders shall have been proven to be inaccurate or misleading in any material respect;

(q) Leasehold Agreements. Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to all premises leased by Borrowers at
which books and records are located;

(r) Contract Review. Agent shall have reviewed all material contracts of Borrowers as
Agent may reasonably determine including leases, union contracts, labor contracts, vendor supply
contracts, license agreements and distributorship agreements and such contracts and agreements
shall be satisfactory in all respects to Agent;

(s) Closing Certificate. Agent shall have received a closing certificate signed by
the Chief Financial Officer of each Borrower dated as of the date hereof, stating that (i) all
representations and warranties set forth in this Agreement and the Other Documents are true and
correct on and as of such date, (ii) Borrowers are on such date in compliance with all the terms
and provisions set forth in this Agreement and the Other Documents and (iii) on such date no
Default or Event of Default has occurred or is continuing;

(t) Borrowing Base. Agent shall have received evidence from Borrowers that the
aggregate amount of Eligible Receivables is sufficient in value and amount to support Advances in
the amount requested by Borrowers on the Closing Date;

(u) Undrawn Availability. After giving effect to the initial Advances hereunder (if
any), and without giving effect to any cash on Borrowers’ balance sheet, Borrowers shall have
Undrawn Availability of at least $3,000,000;

(v) Compliance with Laws. Agent shall be reasonably satisfied that each Borrower is
in compliance with all Applicable Laws including those with respect to the Federal Occupational
Safety and Health Act, the Environmental Protection Act, ERISA and the Trading with the Enemy Act;
and

(w) Other. All corporate and other proceedings, and all documents, instruments and
other legal matters in connection with the Transactions shall be satisfactory in form and substance
to Agent and its counsel.

 

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8.2. Conditions to Each Advance.
The agreement of Lenders to make any Advance requested to be made on any date (including
the initial Advance), is subject to the satisfaction of the following conditions precedent as of
the date such Advance is made:

(a) Representations and Warranties. Each of the representations and warranties made
by any Borrower in or pursuant to this Agreement, the Other Documents and any related agreements to
which it is a party, and each of the representations and warranties contained in any certificate,
document or financial or other statement furnished at any time under or in connection with this
Agreement, the Other Documents or any related agreement shall be true and correct in all material
respects on and as of such date as if made on and as of such date, except to the extent such
representations and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct in all material respects on and as
of such earlier date;

(b) No Default. No Event of Default or Default shall have occurred and be continuing
on such date, or would exist after giving effect to the Advances requested to be made, on such
date; provided, however that Agent, in its sole discretion, may continue to make Advances
notwithstanding the existence of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default; and

(c) Maximum Advances. In the case of any type of Advance requested to be made, after
giving effect thereto, the aggregate amount of such type of Advance shall not exceed the maximum
amount of such type of Advance permitted under this Agreement.

Each request for an Advance by any Borrower hereunder shall constitute a representation and
warranty by each Borrower as of the date of such Advance that the conditions contained in this
subsection shall have been satisfied.

IX. INFORMATION AS TO BORROWERS.

Each Borrower shall, or (except with respect to Section 9.11) shall cause Borrowing Agent on
its behalf to, until satisfaction in full of the Obligations (other than unasserted indemnification
claims) and the termination of this Agreement:

9.1. Disclosure of Material Matters.
Immediately upon learning thereof, report to Agent all matters materially affecting the
value, enforceability or collectability of any material portion of the Collateral, including any
Borrower’s reclamation or repossession of, or the return to any Borrower of, a material amount of
goods or claims or disputes asserted by any Customer or other obligor.

9.2. Schedules.
Deliver to Agent on or before the fifteenth (15th) day of each month as and for the prior
month (a) accounts receivable agings inclusive of
reconciliations to the general ledger, (b)
accounts payable schedules inclusive of reconciliations to

 

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the general ledger, and (c) a Borrowing
Base Certificate in form and substance satisfactory to Agent (which shall be calculated as of the
last day of the prior month and which shall not be binding upon Agent or restrictive of Agent’s
rights under this Agreement). In addition, each Borrower will deliver to Agent at such intervals
as Agent may require: (i) confirmatory assignment schedules, (ii) copies of Customer’s invoices,
(iii) evidence of shipment or delivery, (iv) Inventory and deferred
processing cost reports and (v) such further schedules, documents and/or information regarding
the Collateral as Agent may require including trial balances and test verifications. Agent shall
have the right to confirm and verify all Receivables by any manner and through any medium it
considers advisable and do whatever it may deem reasonably necessary to protect its interests
hereunder. The items to be provided under this Section are to be in form satisfactory to Agent and
executed by each Borrower and delivered to Agent from time to time solely for Agent’s convenience
in maintaining records of the Collateral, and any Borrower’s failure to deliver any of such items
to Agent shall not affect, terminate, modify or otherwise limit Agent’s Lien with respect to the
Collateral.

9.3. Environmental Reports.
Furnish Agent, concurrently with the delivery of the financial statements referred to in
Sections 9.7 and 9.8, with a Compliance Certificate signed by the President of Borrowing Agent
stating, to the best of his knowledge, that each Borrower is in compliance in all material respects
with all federal, state and local Environmental Laws. To the extent any Borrower is not in
compliance with the foregoing laws, the certificate shall set forth with specificity all areas of
non-compliance and the proposed action such Borrower will implement in order to achieve full
compliance.

9.4. Litigation.
Promptly notify Agent in writing of any claim, litigation, suit or administrative
proceeding affecting any Borrower, whether or not the claim is covered by insurance, and of any
litigation, suit or administrative proceeding, which in any such case affects any material portion
of the Collateral or which could reasonably be expected to have a Material Adverse Effect.

9.5. Material Occurrences.
Promptly notify Agent in writing upon the occurrence of (a) any Event of Default or
Default; (b) any event, development or circumstance whereby any financial statements or other
reports furnished to Agent fail in any material respect to present fairly, in accordance with GAAP
consistently applied, the financial condition or operating results of any Borrower as of the date
of such statements; (c) any accumulated retirement plan funding deficiency with respect to any
Pension Benefit Plan which, if such deficiency continued for two plan years and was not corrected
as provided in Section 4971 of the Code, could subject any Borrower to a tax imposed by Section
4971 of the Code; (d) each and every default by any Borrower which might result in the acceleration
of the maturity of any Indebtedness for borrowed money or Capitalized Lease Obligations, including
the names and addresses of the holders of such Indebtedness with respect to which there is a
default existing or with respect to which the maturity has been or could be accelerated, and the
amount of such Indebtedness, (e) any lapse or other termination of any Consent issued to any
Borrower by any Governmental Body or any other Person that is material to the operation of any
Borrower’s business, (f) any refusal by any Governmental Body or any other Person to renew or
extend any such Consent, (g) filing by any Borrower of any periodic or special reports with any
Governmental Body or Person, if such reports indicate any material change in the business,
operations, affairs or condition of any Borrower (which notification shall include delivery of
copies of such reports) and (h) any other development in the business or affairs of any Borrower
which could reasonably be expected to have a Material Adverse Effect; in each case describing the
nature thereof and the action Borrowers propose to take with respect thereto.

9.6. Reserved

 

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9.7. Annual Financial Statements.
Furnish Agent and Lenders within one hundred twenty (120) days after the end of each fiscal
year of Osteotech, financial statements of Borrowers on a consolidating and consolidated basis
including, but not limited to, statements of income and stockholders’ equity and cash flow from the
beginning of the current fiscal year to the end of such fiscal year and the balance sheet as at the
end of such fiscal year, all prepared in accordance with GAAP applied on a basis consistent with
prior practices, and in reasonable detail and reported upon without qualification by an independent
certified public accounting firm selected by Borrowers and satisfactory to Agent (the
“Accountants”), it being understood and agreed that the delivery of Osteotech’s Form 10-K,
if required, promptly after the filing thereof with the Securities and Exchange Commission shall
satisfy the requirements set forth in this Section 9.7 with respect to consolidated financial
statements and reports (subject to the time periods set forth in this Section 9.7). The reports
shall be accompanied by a Compliance Certificate.

9.8. Quarterly Financial Statements.
Furnish Agent and Lenders within forty-five (45) days after the end of each fiscal quarter,
an unaudited balance sheet of Borrowers on a consolidated and consolidating basis and unaudited
statements of income and stockholders’ equity and cash flow of Borrowers on a consolidated and
consolidating basis reflecting results of operations from the beginning of the fiscal year to the
end of such quarter and for such quarter, prepared on a basis consistent with prior practices and
complete and correct in all material respects, subject to normal and recurring year end adjustments
that individually and in the aggregate are not material to Borrowers’ business, it being understood
and agreed that the delivery of Osteotech’s Form 10-Q, if required, promptly after the filing
thereof with the Securities and Exchange Commission shall satisfy the requirements set forth in
this Section 9.8 with respect to consolidated financial statements and reports (subject to the time
periods set forth in this Section 9.8). The reports shall be accompanied by a Compliance
Certificate.

9.9. Monthly Financial Statements.
Furnish Agent and Lenders within thirty (30) days after the end of each month, an unaudited
balance sheet of Borrowers on a consolidated and consolidating basis and unaudited statements of
income and stockholders’ equity and cash flow of Borrowers on a consolidated and consolidating
basis reflecting results of operations from the beginning of the fiscal year to the end of such
month and for such month, prepared on a basis consistent with prior practices and complete and
correct in all material respects, subject to normal and recurring year end adjustments that
individually and in the aggregate are not material to Borrowers’ business. The reports shall be
accompanied by a Compliance Certificate.

9.10. Other Reports.
Furnish Agent as soon as available, but in any event within ten (10) days after the
issuance thereof, with copies of such financial statements, reports and returns as each Borrower
shall be required to file under the Exchange Act or Securities Act.

9.11. Additional Information.
Furnish Agent with such additional information as Agent shall reasonably request in order
to enable Agent to determine whether the terms, covenants, provisions and conditions of this
Agreement and the Note have been complied with by Borrowers including, without the necessity of any
request by Agent, (a) copies of all environmental audits and reviews, (b) at least thirty (30) days
prior thereto, notice of any Borrower’s opening of any new office or place of business or any
Borrower’s closing of any existing office or place of business, (c) promptly upon any Borrower’s
learning thereof, notice of
any labor dispute to which any Borrower may become a party, any strikes or walkouts relating
to any of its plants or other facilities, and the expiration of any labor contract to which any
Borrower is a party or by which any Borrower is bound, and (d) copies of any material notices and
other communications from any Governmental Body or Person which specifically relate to any
Borrower.

 

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9.12. Projected Operating Budget.
Furnish Agent and Lenders, no later than thirty (30) days after approval by such Borrower’s
board of directors (which approval shall occur no later than January 31 of any year), commencing
with fiscal year 2011, a month by month projected operating budget and cash flow of Borrowers on a
consolidated and consolidating basis for such fiscal year (including an income statement for each
month and a balance sheet as at the end of the last month in each fiscal quarter), such projections
to be accompanied by a certificate signed by the President or Chief Financial Officer of each
Borrower to the effect that such projections have been prepared on the basis of sound financial
planning practice consistent with past budgets and financial statements and that such officer has
no reason to question the reasonableness of any material assumptions on which such projections were
prepared. Each Borrower shall cause its board of directors to approve such operations budget no
later than January 31 of each fiscal year.

9.13. Reserved.

9.14. Reserved.

9.15. ERISA Notices and Requests.
Furnish Agent with written notice within ten (10) days of any Borrower’s receipt of written
notice in the event that (a) any Borrower or any member of the Controlled Group knows or has reason
to know that a Termination Event has occurred, together with a written statement describing such
Termination Event and the action, if any, which such Borrower or any member of the Controlled Group
has taken, is taking, or proposes to take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, Department of Labor or PBGC with respect thereto, (b)
any Borrower or any member of the Controlled Group knows or has reason to know that a material
prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred
together with a written statement describing such transaction and the action which such Borrower or
any member of the Controlled Group has taken, is taking or proposes to take with respect thereto,
(c) a funding waiver request has been filed with respect to any Pension Benefit Plan together with
all communications received by any Borrower or any member of the Controlled Group with respect to
such request, (d) any increase in the benefits of any existing Pension Benefit Plan or the
establishment of any new Pension Benefit Plan or the commencement of contributions to any Pension
Benefit Plan to which any Borrower or any member of the Controlled Group was not previously
contributing shall occur, (e) any Borrower or any member of the Controlled Group shall receive from
the PBGC a notice of intention to terminate a Pension Benefit Plan or to have a trustee appointed
to administer a Pension Benefit Plan, together with copies of each such notice, (f) any Borrower or
any member of the Controlled Group shall receive an unfavorable determination letter from the
Internal Revenue Service regarding the qualification of a Pension Benefit Plan under Section 401(a)
of the Code, together with copies of each such letter; (g) any Borrower or any member of the
Controlled Group shall receive a notice regarding the imposition of withdrawal liability, together
with copies of each such notice; (h) any Borrower or any member of the Controlled Group shall fail
to make a required installment or any other required
payment under Section 412 of the Code on or before the due date for such installment or
payment; or (i) any Borrower or any member of the Controlled Group knows that (i) a Multiemployer
Plan has been terminated, (ii) the administrator or plan sponsor of a Multiemployer Plan intends to
terminate a Multiemployer Plan, or (iii) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan.

 

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9.16. Additional Documents.
Execute and deliver to Agent, upon request, such documents and agreements as Agent may,
from time to time, reasonably request to carry out the purposes, terms or conditions of this
Agreement.

X. EVENTS OF DEFAULT.

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

10.1. Nonpayment.
Failure by any Borrower to pay any principal or interest on the Obligations when due,
whether at maturity or by reason of acceleration pursuant to the terms of this Agreement or by
notice of intention to prepay, or by required prepayment or failure to pay any other liabilities or
make any other payment, fee or charge provided for herein when due or in any Other Document;

10.2. Breach of Representation.
Any representation or warranty made or deemed made by any Borrower in this Agreement, any
Other Document or any related agreement or in any certificate, document or financial or other
statement furnished at any time in connection herewith or therewith shall prove to have been
misleading in any material respect on the date when made or deemed to have been made;

10.3. Financial Information.
Failure by any Borrower to (a)(i) furnish financial information when due, or (ii) when
requested, or (b) permit the inspection of its books or records in accordance with this Agreement;

10.4. Judicial Actions.
Issuance of a notice of Lien, levy, assessment, injunction or attachment against any
Borrower’s Inventory or Receivables or against a material portion of any Borrower’s other property
which is not stayed or lifted within thirty (30) days;

10.5. Noncompliance.
Except as otherwise provided for in Sections 10.1, 10.3 and 10.5(b), (a) failure or neglect
of any Borrower to perform, keep or observe any term, provision, condition, covenant herein
contained, or contained in any Other Document or any other agreement or arrangement, now or
hereafter entered into between any Borrower and Agent or any Lender, or (b) failure or neglect of
any Borrower to perform, keep or observe any term, provision, condition or covenant, contained in
Sections 4.6, 4.7, 4.9, 6.1, 6.3, 6.4, 9.4 or 9.6 hereof which is not cured within ten (10) days
from the occurrence of such failure or neglect;

10.6. Judgments.
Any judgment or judgments are rendered against all Borrowers for an aggregate amount in
excess of $500,000 and (a) enforcement proceedings shall have been commenced by a creditor upon
such judgment or (b) there shall be any period of thirty (30) consecutive days during which a stay
of enforcement of such judgment, by reason of a pending appeal or otherwise, shall not be in
effect;

 

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10.7. Bankruptcy.
Any Borrower shall (a) apply for, consent to or suffer the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or similar fiduciary of itself or of all
or a substantial part of its property, (b) make a general assignment for the benefit of creditors,
(c) commence a voluntary case under any state or federal bankruptcy laws (as now or hereafter in
effect), (d) be adjudicated a bankrupt or insolvent, (e) file a petition seeking to take advantage
of any other law providing for the relief of debtors, (f) acquiesce to, or fail to have dismissed,
within sixty (60) days, any petition filed against it in any involuntary case under such bankruptcy
laws, or (g) take any action for the purpose of effecting any of the foregoing;

10.8. Inability to Pay.
Any Borrower shall admit in writing its inability, or be generally unable, to pay its debts
as they become due or cease operations of its present business;

10.9. Subsidiary Bankruptcy.
Any Subsidiary of any Borrower, shall (a) apply for, consent to or suffer the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator or similar fiduciary
of itself or of all or a substantial part of its property, (b) admit in writing its inability, or
be generally unable, to pay its debts as they become due or cease operations of its present
business, (c) make a general assignment for the benefit of creditors, (d) commence a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (e) be adjudicated a
bankrupt or insolvent, (f) file a petition seeking to take advantage of any other law providing for
the relief of debtors, (g) acquiesce to, or fail to have dismissed, within sixty (60) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or (h) take any
action for the purpose of effecting any of the foregoing;

10.10. Material Adverse Effect.
Any change in any Borrower’s results of operations or condition (financial or otherwise)
which in Agent’s reasonable opinion has a Material Adverse Effect;

10.11. Lien Priority.
Any Lien created hereunder or provided for hereby or under any related agreement for any
reason ceases to be or is not a valid and perfected Lien having a first priority interest;

10.12. Cross Default.
(a) A default of the obligations of any Borrower under the P-Card Agreement shall occur or
(b) a default of the obligations of any Borrower under any other instrument, document or agreement
to which it is a party shall occur which either (i) involves a failure to pay principal or interest
with respect to any Indebtedness for borrowed money or Capitalized Lease Obligations with a
principal amount in excess of $500,000 or (ii) materially and adversely affects any Borrower’s
condition, affairs or prospects (financial or otherwise), which default is not cured within any
applicable grace period or, so long as Agent and Lenders have not commenced the exercise of rights
and remedies hereunder, which is not otherwise waived within thirty (30) days after the expiration
of such cure period.

10.13. Change of Ownership.
Any Change of Ownership shall occur;

10.14. Invalidity.
Any material provision of this Agreement or any Other Document shall, for any reason, cease
to be valid and binding on Borrower, or any Borrower shall so claim in writing to Agent or any
Lender;

 

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10.15. Licenses.
(a) Any Governmental Body shall (i) revoke, terminate, suspend or adversely modify any
license, permit, patent trademark or trade name of any Borrower the continuation of which is
material to the continuation of any Borrower’s business, or (ii) commence proceedings to suspend,
revoke, terminate or adversely modify any such license, permit, trademark, trade name or patent and
such proceedings shall not be dismissed or discharged within sixty (60) days, or (iii) schedule or
conduct a hearing on the renewal of any license, permit, trademark, trade name or patent necessary
for the continuation of any Borrower’s business and the staff of such Governmental Body issues a
report recommending the termination, revocation, suspension or material, adverse modification of
such license, permit, trademark, trade name or patent; or (b) any agreement which is necessary or
material to the operation of any Borrower’s business shall be revoked or terminated and not
replaced by a substitute acceptable to Agent within thirty (30) days after the date of such
revocation or termination, and such revocation or termination and non-replacement would reasonably
be expected to have a Material Adverse Effect;

10.16. Seizures.
Any portion of the Collateral shall be seized or taken by a Governmental Body, or any
Borrower or the title and rights of any Borrower or any Original Owner which is the owner of any
material portion of the Collateral shall have become the subject matter of claim, litigation, suit
or other proceeding which might, in the opinion of Agent, upon final determination, result in
impairment or loss of the security provided by this Agreement or the Other Documents; or

10.17. Operations.
The operations of any Borrower’s manufacturing facility are interrupted at any time for
more than any period of 10 consecutive days, unless such Borrower shall (a) be entitled to receive
for such period of interruption, proceeds of business interruption insurance in an amount
sufficient to assure that its per diem cash needs during such period is at least equal to its
average per diem cash needs for the consecutive three month period immediately preceding the
initial date of interruption and (b) receive, or receive notice that such Borrower is entitled to
receive, such proceeds in the amount described in clause (a) preceding not later than thirty (30)
days following the initial date of any such interruption and in any event begins to receive such
proceeds within sixty (60) days of any such interruption; provided, however, that notwithstanding
the provisions of clauses (a) and (b) of this section, an Event of Default shall be deemed to have
occurred if such Borrower shall be receiving the proceeds of business interruption insurance for a
period of thirty (30) consecutive days.

10.18. Pension Plans.
An event or condition specified in Sections 7.16 or 9.15 hereof shall occur or exist with
respect to any Pension Benefit Plan and, as a result of such event or condition, together with all
other such events or conditions, any Borrower or any member of the Controlled Group shall incur, or
in the opinion of Agent be reasonably likely to incur, a liability to a Pension Benefit Plan or the
PBGC (or both) which, in the reasonable judgment of Agent, would have a Material Adverse Effect.

XI. LENDERS’ RIGHTS AND REMEDIES AFTER DEFAULT.

 

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11.1. Rights and Remedies.

(a) Upon the occurrence and during the continuance of (i) an Event of Default pursuant to
Section 10.7 all Obligations shall be immediately due and payable and this Agreement and the
obligation of Lenders to make Advances shall be deemed terminated; and, (ii) any of the other
Events of Default and at any time thereafter, at the option of Agent or at the direction of
Required Lenders, all Obligations shall be immediately due and payable and Lenders shall have the
right to terminate this Agreement and to terminate the obligation of Lenders to make Advances and
(iii) a filing of a petition against any Borrower in any involuntary case under any state or
federal bankruptcy laws, all Obligations shall be immediately due and payable and the obligation of
Lenders to make Advances hereunder shall be terminated other than as may be required by an
appropriate order of the bankruptcy court having jurisdiction over such Borrower. Upon the
occurrence and during the continuance of any Event of Default, Agent shall have the right to
exercise any and all rights and remedies provided for herein, under the Other Documents, under the
Uniform Commercial Code and at law or equity generally, including the right to foreclose the
security interests granted herein and to realize upon any Collateral by any available judicial
procedure and/or to take possession of and sell any or all of the Collateral with or without
judicial process. After the occurrence and during the continuance of an Event of Default, Agent
may enter any of any Borrower’s premises or other premises without legal process and without
incurring liability to any Borrower therefor, and Agent may thereupon, or at any time thereafter,
in its discretion without notice or demand, take the Collateral and remove the same to such place
as Agent may deem advisable and Agent may require Borrowers to make the Collateral available to
Agent at a convenient place. Upon the occurrence and during the continuance of an Event of
Default, with or without having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or place, in one or more
sales, at such price or prices, and upon such terms, either for cash, credit or future delivery, as
Agent may elect. Except as to that part of the Collateral which is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized market, Agent shall give
Borrowers reasonable notification of such sale or sales, it being agreed that in all events written
notice mailed to Borrowing Agent at least ten (10) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and become the purchaser, and
Agent, any Lender or any other purchaser at any such sale thereafter shall hold the Collateral sold
absolutely free from any claim or right of whatsoever kind, including any equity of redemption and
all such claims, rights and equities are hereby expressly waived and released by each Borrower. In
connection with the exercise of the foregoing remedies, including the sale of Inventory, Agent is
granted a perpetual nonrevocable, royalty free, nonexclusive license and Agent is granted
permission to use all of each Borrower’s (a) trademarks, trade styles, trade names, patents, patent
applications, copyrights, service marks, licenses, franchises and other proprietary rights which
are used or useful in connection with Inventory for the purpose of marketing, advertising for sale
and selling or otherwise disposing of such Inventory and (b) Equipment for the purpose of
completing the manufacture of unfinished goods. The cash proceeds realized from the sale of any
Collateral shall be applied to the Obligations in the order set forth in Section 11.5 hereof.
Noncash proceeds will only be applied to the Obligations as they are converted into cash. If any
deficiency shall arise, Borrowers shall remain liable to Agent and Lenders therefor.

 

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(b) To the extent that Applicable Law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, each Borrower acknowledges and agrees that it is not commercially
unreasonable for the Agent (i) to fail to incur expenses reasonably deemed significant by the Agent
to prepare Collateral for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (ii) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies against
Customers or other Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) to exercise collection remedies against Customers and other Persons
obligated on Collateral directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as any Borrower, for expressions of interest in
acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the Collateral is of a specialized
nature, (viii) to dispose of Collateral by utilizing internet sites that provide for the auction of
assets of the types included in the Collateral or that have the reasonable capacity of doing so, or
that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail
markets, (x) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (xi)
to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection
or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by the Agent, to obtain the
services of other brokers, investment bankers, consultants and other professionals to assist the
Agent in the collection or disposition of any of the Collateral. Each Borrower acknowledges that
the purpose of this Section 11.1(b) is to provide non-exhaustive indications of what actions or
omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Agent shall not be deemed
commercially unreasonable solely on account of not being indicated in this Section 11.1(b).
Without limitation upon the foregoing, nothing contained in this
Section 11.1(b) shall be construed
to grant any rights to any Borrower or to impose any duties on Agent that would not have been
granted or imposed by this Agreement or by Applicable Law in the absence of this Section 11.1(b).

11.2. Agent’s Discretion.
After the occurrence and during the continuance of an Event of Default, Agent shall have
the right in its sole discretion to determine which rights, Liens, security interests or remedies
Agent may at any time pursue, relinquish, subordinate, or modify or to take any other action with
respect thereto and such determination will not in any way modify or affect any of Agent’s or
Lenders’ rights hereunder.

11.3. Setoff.
Subject to Section 14.12, in addition to any other rights which Agent or any Lender may
have under Applicable Law, upon the occurrence and during the continuance of an Event of Default
hereunder, Agent and such Lender shall have a right, immediately and without notice of any kind, to
apply any Borrower’s property held by Agent and such Lender to reduce the Obligations; provided
that following such setoff and application, Agent or such Lender taking such action shall endeavor
to provide written notice thereof to Borrowing Agent.

 

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11.4. Rights and Remedies not Exclusive.
The enumeration of the foregoing rights and remedies is not intended to be exhaustive and
the exercise of any rights or remedy shall not preclude the exercise of any other right or remedies
provided for herein or otherwise provided by law, all of which shall be cumulative and not
alternative.

11.5. Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Agreement to the contrary, after the
occurrence and during the continuance of an Event of Default, all amounts collected or received by
Agent on account of the Obligations or any other amounts outstanding under any of the Other
Documents or in respect of the Collateral shall be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of the Agent in connection with enforcing its rights and the rights of the Lenders
under this Agreement and the Other Documents and any protective advances made by the Agent with
respect to the Collateral under or pursuant to the terms of this Agreement;

SECOND, to payment of any fees owed to the Agent;

THIRD, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable
attorneys’ fees) of each of the Lenders to the extent owing to such Lender pursuant to the terms of
this Agreement;

FOURTH, to the payment of all of the Obligations consisting of accrued fees and interest;

FIFTH, to the payment of the outstanding principal amount of the Obligations;

SIXTH, to all other Obligations and other obligations which shall have become due and payable
under the Other Documents or otherwise and not repaid pursuant to clauses “FIRST” through “FIFTH”
above; and

SEVENTH, to the payment of the surplus, if any, to whoever may be lawfully entitled to receive
such surplus.

In carrying out the foregoing, (i) amounts received shall be applied in the numerical order
provided until exhausted prior to application to the next succeeding category; and (ii) each of the
Lenders shall receive (so long as it is not a Defaulting Lender) an amount equal to its pro rata
share (based on the proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant to clauses
“FOURTH”, “FIFTH” and “SIXTH” above.

XII. WAIVERS AND JUDICIAL PROCEEDINGS.

12.1. Waiver of Notice.
Except as otherwise expressly provided herein, each Borrower hereby waives notice of
non-payment of any of the Receivables, demand, presentment, protest and notice thereof with respect
to any and all instruments, notice of acceptance hereof, notice of loans or advances made, credit
extended, Collateral received or delivered, or any other action
taken in reliance hereon, and all other demands and notices of any description, except such as
are expressly provided for herein.

 

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12.2. Delay.
No delay or omission on Agent’s or any Lender’s part in exercising any right, remedy or
option shall operate as a waiver of such or any other right, remedy or option or of any Default or
Event of Default.

12.3. Jury Waiver.
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY
CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES HERETO TO THE WAIVER
OF THEIR RIGHT TO TRIAL BY JURY.

XIII. EFFECTIVE DATE AND TERMINATION.

13.1. Term.
This Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of each Borrower, Agent and each Lender, shall become
effective on the date hereof and shall continue in full force and effect until December 28, 2012
(the “Term”) unless sooner terminated as herein provided. Borrowers may terminate this
Agreement at any time upon ninety (90) days’ prior written notice upon payment in full of the
Obligations. In the event the Obligations are prepaid in full prior to the last day of the Term
(the date of such prepayment hereinafter referred to as the “Early Termination Date”),
Borrowers shall pay to Agent for the benefit of Lenders an early termination fee in an amount equal
to (x) two percent (2%) of the Maximum Revolving Advance Amount if the Early Termination Date
occurs on or after the Closing Date to and including the date immediately preceding the first
anniversary of the Closing Date and (y) one-half of one percent (0.5%) of the Maximum Revolving
Advance Amount if the Early Termination Date occurs on or after the first anniversary of the
Closing Date to and including the date immediately preceding the second anniversary of the Closing
Date; provided that if the Obligations are prepaid in full pursuant to a refinancing with any other
unit within The PNC Financial Services Group, Inc., Borrowers shall not be obligated to pay any fee
set forth in clause (x) or clause (y).

13.2. Termination.
The termination of the Agreement shall not affect any Borrower’s, Agent’s or any Lender’s
rights, or any of the Obligations having their inception prior to the effective date of such
termination, and the provisions hereof shall continue to be fully operative until all transactions
entered into, rights or interests created or Obligations have been fully and

 

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indefeasibly paid, disposed of, concluded or liquidated. The security interests, Liens and
rights granted to Agent and Lenders hereunder and the financing statements filed hereunder shall
continue in full force and effect, notwithstanding the termination of this Agreement or the fact
that Borrowers’ Account may from time to time be temporarily in a zero or credit position, until
all of the Obligations of each Borrower have been indefeasibly paid and performed in full after the
termination of this Agreement or each Borrower has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect thereto. Accordingly, each Borrower
waives any rights which it may have under the Uniform Commercial Code to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be required to send such
termination statements to each Borrower, or to file them with any filing office, unless and until
this Agreement shall have been terminated in accordance with its terms and all Obligations have
been indefeasibly paid in full in immediately available funds. All representations, warranties,
covenants, waivers and agreements contained herein shall survive termination hereof until all
Obligations are indefeasibly paid and performed in full.

XIV. REGARDING AGENT.

14.1. Appointment.
Each Lender hereby designates PNC to act as Agent for such Lender under this Agreement and
the Other Documents. Each Lender hereby irrevocably authorizes Agent to take such action on its
behalf under the provisions of this Agreement and the Other Documents and to exercise such powers
and to perform such duties hereunder and thereunder as are specifically delegated to or required of
Agent by the terms hereof and thereof and such other powers as are reasonably incidental thereto
and Agent shall hold all Collateral, payments of principal and interest, fees (except the fees set
forth in Sections 3.3(a) and 3.4, charges and collections (without giving effect to any collection
days) received pursuant to this Agreement, for the ratable benefit of Lenders. Agent may perform
any of its duties hereunder by or through its agents or employees. As to any matters not expressly
provided for by this Agreement (including collection of the Note) Agent shall not be required to
exercise any discretion or take any action, but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from acting) upon the instructions of the
Required Lenders, and such instructions shall be binding; provided, however, that Agent shall not
be required to take any action which exposes Agent to liability or which is contrary to this
Agreement or the Other Documents or Applicable Law unless Agent is furnished with an
indemnification reasonably satisfactory to Agent with respect thereto.

14.2. Nature of Duties.
Agent shall have no duties or responsibilities except those expressly set forth in this
Agreement and the Other Documents. Neither Agent nor any of its officers, directors, employees or
agents shall be (a) liable for any action taken or omitted by them as such hereunder or in
connection herewith, unless caused by their gross (not mere) negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final non-appealable judgment), or (b)
responsible in any manner for any recitals, statements, representations or warranties made by any
Borrower or any officer thereof contained in this Agreement, or in any of the Other Documents or in
any certificate, report, statement or other document referred to or provided for in, or received by
Agent under or in connection with, this Agreement or any of the Other Documents or for the value,
validity, effectiveness, genuineness, due execution, enforceability or sufficiency of this
Agreement, or any of the Other Documents or for any failure of any Borrower to perform its
obligations hereunder. Agent shall not be under
any obligation to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any of the Other Documents,
or to inspect the properties, books or records of any Borrower. The duties of Agent as respects
the Advances to Borrowers shall be mechanical and administrative in nature; Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this
Agreement, expressed or implied, is intended to or shall be so construed as to impose upon Agent
any obligations in respect of this Agreement except as expressly set forth herein.

 

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14.3. Lack of Reliance on Agent and Resignation.
Independently and without reliance upon Agent or any other Lender, each Lender has made and
shall continue to make its own independent investigation of the financial condition and affairs of
each Borrower in connection with the making and the continuance of the Advances hereunder and the
taking or not taking of any action in connection herewith, and its own appraisal of the
creditworthiness of each Borrower. Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before making of the Advances or at any time or times
thereafter except as shall be provided by any Borrower pursuant to the terms hereof. Agent shall
not be responsible to any Lender for any recitals, statements, information, representations or
warranties herein or in any agreement, document, certificate or a statement delivered in connection
with or for the execution, effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of this Agreement or any Other Document, or of the financial condition of any Borrower,
or be required to make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Note, the Other Documents or the financial
condition of any Borrower, or the existence of any Event of Default or any Default.

Agent may resign on sixty (60) days’ written notice to each of Lenders and Borrowing Agent and
upon such resignation, the Required Lenders will promptly designate a successor Agent reasonably
satisfactory to Borrowers.

Any such successor Agent shall succeed to the rights, powers and duties of Agent, and the term
“Agent” shall mean such successor agent effective upon its appointment, and the former Agent’s
rights, powers and duties as Agent shall be terminated, without any other or further act or deed on
the part of such former Agent. After any Agent’s resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.

14.4. Certain Rights of Agent.
If Agent shall request instructions from Lenders with respect to any act or action
(including failure to act) in connection with this Agreement or any Other Document, Agent shall be
entitled to refrain from such act or taking such action unless and until Agent shall have received
instructions from the Required Lenders; and Agent shall not incur liability to any Person by reason
of so refraining. Without limiting the foregoing, Lenders shall not have any right of action
whatsoever against Agent as a result of its acting or refraining from acting hereunder in
accordance with the instructions of the Required Lenders.

14.5. Reliance.
Agent shall be entitled to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex, teletype or telecopier
message, cablegram, order or other document or telephone message believed by it to be genuine
and correct and to have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to this Agreement and the Other Documents and its duties hereunder,
upon advice of counsel selected by it. Agent may employ agents and attorneys-in-fact and shall not
be liable for the default or misconduct of any such agents or attorneys-in-fact selected by Agent
with reasonable care.

 

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14.6. Notice of Default.
Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder or under the Other Documents, unless Agent has received notice from a
Lender or Borrowing Agent referring to this Agreement or the Other Documents, describing such
Default or Event of Default and stating that such notice is a “notice of default”. In the event
that Agent receives such a notice, Agent shall give notice thereof to Lenders. Agent shall take
such action with respect to such Default or Event of Default as shall be reasonably directed by the
Required Lenders; provided, that, unless and until Agent shall have received such directions, 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 in the best interests of
Lenders.

14.7. Indemnification.
To the extent Agent is not reimbursed and indemnified by Borrowers, each Lender will
reimburse and indemnify Agent in proportion to its respective portion of the Advances (or, if no
Advances are outstanding, according to its Commitment Percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted
against Agent in performing its duties hereunder, or in any way relating to or arising out of this
Agreement or any Other Document; provided that, Lenders shall not be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent’s gross (not mere) negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final non-appealable judgment).

14.8. Agent in its Individual Capacity.
With respect to the obligation of Agent to lend under this Agreement, the Advances made by
it shall have the same rights and powers hereunder as any other Lender and as if it were not
performing the duties as Agent specified herein; and the term “Lender” or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual capacity as a
Lender. Agent may engage in business with any Borrower as if it were not performing the duties
specified herein, and may accept fees and other consideration from any Borrower for services in
connection with this Agreement or otherwise without having to account for the same to Lenders.

14.9. Delivery of Documents.
To the extent Agent receives financial statements required under Sections 9.7, 9.8, 9.9,
9.12 and 9.13 or Borrowing Base Certificates from any Borrower pursuant to the terms of this
Agreement which any Borrower is not obligated to deliver to each Lender, Agent will promptly
furnish such documents and information to Lenders.

14.10. Borrowers’ Undertaking to Agent.
Without prejudice to their respective obligations to Lenders under the other provisions of
this Agreement, each Borrower hereby undertakes with Agent to pay to Agent from time to time on
demand all amounts from time to
time due and payable by it for the account of Agent or Lenders or any of them pursuant to this
Agreement to the extent not already paid. Any payment made pursuant to any such demand shall pro
tanto satisfy the relevant Borrower’s obligations to make payments for the account of Lenders or
the relevant one or more of them pursuant to this Agreement.

 

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14.11. No Reliance on Agent’s Customer Identification Program.
Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates,
participants or assignees, may rely on the Agent to carry out such Lender’s, Affiliate’s,
participant’s or assignee’s customer identification program, or other obligations required or
imposed under or pursuant to the USA PATRIOT Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP
Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the
following items relating to or in connection with any Borrower or its agents, this Agreement, the
Other Documents or the transactions hereunder or contemplated hereby: (1) any identity verification
procedures, (2) any record-keeping, (3) comparisons with government lists, (4) customer notices or
(5) other procedures required under the CIP Regulations or such other laws.

14.12. Other Agreements.
Each of the Lenders agrees that it shall not, without the express consent of Agent, and
that it shall, to the extent it is lawfully entitled to do so, upon the request of Agent, set off
against the Obligations, any amounts owing by such Lender to any Borrower or any deposit accounts
of any Borrower now or hereafter maintained with such Lender. Anything in this Agreement to the
contrary notwithstanding, each of the Lenders further agrees that it shall not, unless specifically
requested to do so by Agent, take any action to protect or enforce its rights arising out of this
Agreement or the Other Documents, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Other Documents shall be taken in concert and at the
direction or with the consent of Agent or Required Lenders.

XV. BORROWING AGENCY.

15.1. Borrowing Agency Provisions.

(a) Each Borrower hereby irrevocably designates Borrowing Agent to be its attorney and agent
and in such capacity to borrow, sign and endorse notes, and execute and deliver all instruments,
documents, writings and further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.

(b) The handling of this credit facility as a co-borrowing facility with a borrowing agent in
the manner set forth in this Agreement is solely as an accommodation to Borrowers and at their
request. Neither Agent nor any Lender shall incur liability to Borrowers as a result thereof. To
induce Agent and Lenders to do so and in consideration thereof, each Borrower hereby indemnifies
Agent and each Lender and holds Agent and each Lender harmless from and against any and all
liabilities, expenses, losses, damages and claims of damage or injury asserted against Agent or any
Lender by any Person arising from or incurred by reason of the handling of the financing
arrangements of Borrowers as provided herein, reliance by Agent or any Lender on any request or
instruction from Borrowing Agent or any other action taken by
Agent or any Lender with respect to this Section 15.1 except due to willful misconduct or
gross (not mere) negligence by the indemnified party (as determined by a court of competent
jurisdiction in a final and non-appealable judgment).

 

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(c) All Obligations shall be joint and several, and each Borrower shall make payment upon the
maturity of the Obligations by acceleration or otherwise, and such obligation and liability on the
part of each Borrower shall in no way be affected by any extensions, renewals and forbearance
granted to Agent or any Lender to any Borrower, failure of Agent or any Lender to give any Borrower
notice of borrowing or any other notice, any failure of Agent or any Lender to pursue or preserve
its rights against any Borrower, the release by Agent or any Lender of any Collateral now or
thereafter acquired from any Borrower, and such agreement by each Borrower to pay upon any notice
issued pursuant thereto is unconditional and unaffected by prior recourse by Agent or any Lender to
the other Borrowers or any Collateral for such Borrower’s Obligations or the lack thereof. Each
Borrower waives all suretyship defenses.

15.2. Waiver of Subrogation.
Each Borrower expressly waives any and all rights of subrogation, reimbursement, indemnity,
exoneration, contribution of any other claim which such Borrower may now or hereafter have against
the other Borrowers or other Person directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers’ property (including, without limitation, any
property which is Collateral for the Obligations), arising from the existence or performance of
this Agreement, until termination of this Agreement and repayment in full of the Obligations.

XVI. MISCELLANEOUS

16.1. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Pennsylvania applied to contracts to be performed wholly within the Commonwealth of
Pennsylvania. Any judicial proceeding brought by or against any Borrower with respect to any of
the Obligations, this Agreement, the Other Documents or any related agreement may be brought in any
court of competent jurisdiction in the Commonwealth of Pennsylvania, United States of America, and,
by execution and delivery of this Agreement, each Borrower accepts for itself and in connection
with its properties, generally and unconditionally, the non-exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this
Agreement. Each Borrower hereby waives personal service of any and all process upon it and
consents that all such service of process may be made by registered mail (return receipt requested)
directed to Borrowing Agent at its address set forth in Section 16.6 and service so made shall be
deemed completed five (5) days after the same shall have been so deposited in the mails of the
United States of America, or, at the Agent’s option, by service upon Borrowing Agent which each
Borrower irrevocably appoints as such Borrower’s Agent for the purpose of accepting service within
the Commonwealth of Pennsylvania. Nothing herein shall affect the right to serve process in any
manner permitted by law or shall limit the right of Agent or any Lender to bring proceedings
against any Borrower in the courts of any other jurisdiction. Each Borrower waives any objection
to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum non conveniens. Each Borrower waives the
right to remove any judicial proceeding brought against such Borrower in any state court to any
federal court. Any judicial proceeding by any Borrower
against Agent or any Lender involving, directly or indirectly, any matter or claim in any way
arising out of, related to or connected with this Agreement or any related agreement, shall be
brought only in a federal or state court located in the County of Philadelphia, Commonwealth of
Pennsylvania.

 

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16.2. Entire Understanding.

(a) This Agreement and the documents executed concurrently herewith contain the entire
understanding between each Borrower, Agent and each Lender and supersedes all prior agreements and
understandings, if any, relating to the subject matter hereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have no force and effect
unless in writing, signed by each Borrower’s, Agent’s and each Lender’s respective officers.
Neither this Agreement nor any portion or provisions hereof may be changed, modified, amended,
waived, supplemented, discharged, cancelled or terminated orally or by any course of dealing, or in
any manner other than by an agreement in writing, signed by the party to be charged. Each Borrower
acknowledges that it has been advised by counsel in connection with the execution of this Agreement
and Other Documents and is not relying upon oral representations or statements inconsistent with
the terms and provisions of this Agreement.

(b) The Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrowers may, subject to the provisions of this Section 16.2 (b), from time to time enter into
written supplemental agreements to this Agreement or the Other Documents executed by Borrowers, for
the purpose of adding or deleting any provisions or otherwise changing, varying or waiving in any
manner the rights of Lenders, Agent or Borrowers thereunder or the conditions, provisions or terms
thereof or waiving any Event of Default thereunder, but only to the extent specified in such
written agreements; provided, however, that no such supplemental agreement shall, without the
consent of all Lenders:

(i) increase the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Revolving Advance Amount;

(ii) extend the maturity of any Note or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by Borrowers to Lenders pursuant to this
Agreement;

(iii) alter the definition of the term Required Lenders or alter, amend or modify this Section
16.2(b);

(iv) release any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of $1,000,000;

(v) change the rights and duties of Agent;

(vi) permit any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula
Amount for more than sixty (60) consecutive Business Days or exceed one hundred and ten
percent (110%) of the Formula Amount;

 

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(vii) increase the Receivables Advance Rate above the Receivables Advance Rate in effect on
the Closing Date; or

(viii) release any Guarantor.

Any such supplemental agreement shall apply equally to each Lender and shall be binding upon
Borrowers, Lenders and Agent and all future holders of the Obligations. In the case of any waiver,
Borrowers, Agent and Lenders shall be restored to their former positions and rights, and any Event
of Default waived shall be deemed to be cured and not continuing, but no waiver of a specific Event
of Default shall extend to any subsequent Event of Default (whether or not the subsequent Event of
Default is the same as the Event of Default which was waived), or impair any right consequent
thereon.

In the event that Agent requests the consent of a Lender pursuant to this Section 16.2 and
such consent is denied, then PNC may, at its option, require such Lender to assign its interest in
the Advances to PNC or to another Lender or to any other Person designated by the Agent (the
“Designated Lender”), for a price equal to (i) the then outstanding principal amount thereof plus
(ii) accrued and unpaid interest and fees due such Lender, which interest and fees shall be paid
when collected from Borrowers. In the event PNC elects to require any Lender to assign its
interest to PNC or to the Designated Lender, PNC will so notify such Lender in writing within forty
five (45) days following such Lender’s denial, and such Lender will assign its interest to PNC or
the Designated Lender no later than five (5) days following receipt of such notice pursuant to a
Commitment Transfer Supplement executed by such Lender, PNC or the Designated Lender, as
appropriate, and Agent.

Notwithstanding (a) the existence of a Default or an Event of Default, (b) that any of the
other applicable conditions precedent set forth in Section 8.2 hereof have not been satisfied or
(c) any other provision of this Agreement, Agent may at its discretion and without the consent of
the Required Lenders, voluntarily permit the outstanding Revolving Advances at any time to exceed
an amount equal to the Formula Amount hereof at such time by up to ten percent (10%) of the Formula
Amount for up to sixty (60) consecutive Business Days (the “Out-of-Formula Loans”);
provided, that, such outstanding Revolving Advances do not exceed the Maximum Revolving Advance
Amount. If Agent is willing in its sole and absolute discretion to make such Out-of-Formula Loans,
such Out-of-Formula Loans shall be payable on demand and shall bear interest at the Default Rate
for Revolving Advances consisting of Domestic Rate Loans; provided that, if Lenders do make
Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have changed the limits
of Section 2.1(a). For purposes of this paragraph, the discretion granted to Agent hereunder shall
not preclude involuntary overadvances that may result from time to time due to the fact that the
Formula Amount was unintentionally exceeded for any reason, including, but not limited to,
Collateral previously deemed to be “Eligible Receivables” becomes ineligible, collections of
Receivables applied to reduce outstanding Revolving Advances are thereafter returned for
insufficient funds or overadvances are made to protect or preserve the Collateral. In the event
Agent involuntarily permits the outstanding Revolving Advances to exceed the Formula Amount by more
than ten percent (10%), Agent shall use its efforts to have
Borrowers decrease such excess in as expeditious a manner as is practicable under the
circumstances and not inconsistent with the reason for such excess. Revolving Advances made after
Agent has determined the existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding sentence.

 

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In addition to (and not in substitution of) the discretionary Revolving Advances permitted
above in this Section 16.2, Agent is hereby authorized by Borrowers and the Lenders, from time to
time in Agent’s sole discretion, (A) after the occurrence and during the continuation of a Default
or an Event of Default, or (B) at any time that any of the other applicable conditions precedent
set forth in Section 8.2 hereof have not been satisfied, to make Revolving Advances to Borrowers on
behalf of Lenders which Agent, in its reasonable business judgment, deems necessary or desirable
(a) to preserve or protect the Collateral, or any portion thereof, (b) to enhance the likelihood
of, or maximize the amount of, repayment of the Advances and other Obligations, or (c) to pay any
other amount chargeable to Borrowers pursuant to the terms of this Agreement; provided, that at any
time after giving effect to any such Revolving Advances the outstanding Revolving Advances do not
exceed one hundred and ten percent (110%) of the Formula Amount.

16.3. Successors and Assigns; Participations; New Lenders.

(a) This Agreement shall be binding upon and inure to the benefit of Borrowers, Agent, each
Lender, all future holders of the Obligations and their respective successors and permitted
assigns, except that no Borrower may assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of Agent and each Lender.

(b) Each Borrower acknowledges that in the regular course of commercial banking business one
or more Lenders may at any time and from time to time sell participating interests in the Advances
to other financial institutions (each such transferee or purchaser of a participating interest, a
“Participant”). Each Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations payable hereunder as
fully as if such Participant were the direct holder thereof provided that Borrowers shall not be
required to pay to any Participant more than the amount which it would have been required to pay to
Lender which granted an interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in the Advances hereunder or other Obligations
payable hereunder and in no event shall Borrowers be required to pay any such amount arising from
the same circumstances and with respect to the same Advances or other Obligations payable hereunder
to both such Lender and such Participant. Each Borrower hereby grants to any Participant a
continuing security interest in any deposits, moneys or other property actually or constructively
held by such Participant as security for the Participant’s interest in the Advances.

 

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(c) Any Lender, with the consent of Agent (and absent the occurrence and continuance of any
Event of Default, the Borrowing Agent), which shall not be unreasonably withheld or delayed, may
sell, assign or transfer all or any part of its rights and obligations under or relating to
Revolving Advances under this Agreement and the Other Documents to one or more additional banks or
financial institutions and one or more additional banks or financial institutions may commit to
make Advances hereunder (each a “Purchasing Lender”), in
minimum amounts of not less than $5,000,000, pursuant to a Commitment Transfer Supplement,
executed by a Purchasing Lender, the transferor Lender, and Agent and delivered to Agent for
recording. Upon such execution, delivery, acceptance and recording, from and after the transfer
effective date determined pursuant to such Commitment Transfer Supplement, (i) Purchasing Lender
thereunder shall be a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender thereunder with a Commitment Percentage as
set forth therein, and (ii) the transferor Lender thereunder shall, to the extent provided in such
Commitment Transfer Supplement, be released from its obligations under this Agreement, the
Commitment Transfer Supplement creating a novation for that purpose. Such Commitment Transfer
Supplement shall be deemed to amend this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Purchasing Lender and the resulting adjustment of the Commitment
Percentages arising from the purchase by such Purchasing Lender of all or a portion of the rights
and obligations of such transferor Lender under this Agreement and the Other Documents. Each
Borrower hereby consents (subject to the first sentence of this clause (c)) to the addition of such
Purchasing Lender in accordance herewith and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other Documents. Borrowers
shall execute and deliver such further documents and do such further acts and things in order to
effectuate the foregoing.

(d) Any Lender, with the consent of Agent (and absent the occurrence and continuance of any
Event of Default, the Borrowing Agent), which shall not be unreasonably withheld or delayed, may
directly or indirectly sell, assign or transfer all or any portion of its rights and obligations
under or relating to Revolving Advances under this Agreement and the Other Documents to an entity,
whether a corporation, partnership, trust, limited liability company or other entity that (i) is
engaged in making, purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and (ii) is administered, serviced or managed by
the assigning Lender or an Affiliate of such Lender (a “Purchasing CLO” and together with each
Participant and Purchasing Lender, each a “Transferee” and collectively the “Transferees”),
pursuant to a Commitment Transfer Supplement modified as appropriate to reflect the interest being
assigned (“Modified Commitment Transfer Supplement”), executed by any intermediate purchaser, the
Purchasing CLO, the transferor Lender, and Agent as appropriate and delivered to Agent for
recording. Upon such execution and delivery, from and after the transfer effective date determined
pursuant to such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder shall be a
party hereto and, to the extent provided in such Modified Commitment Transfer Supplement, have the
rights and obligations of a Lender thereunder and (ii) the transferor Lender thereunder shall, to
the extent provided in such Modified Commitment Transfer Supplement, be released from its
obligations under this Agreement, the Modified Commitment Transfer Supplement creating a novation
for that purpose. Such Modified Commitment Transfer Supplement shall be deemed to amend this
Agreement to the extent, and only to the extent, necessary to reflect the addition of such
Purchasing CLO. Each Borrower hereby consents (subject to the first sentence of this clause (d))
to the addition of such Purchasing CLO in accordance herewith. Borrowers shall execute and deliver
such further documents and do such further acts and things in order to effectuate the foregoing.

 

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(e) Agent shall maintain at its address a copy of each Commitment Transfer Supplement and
Modified Commitment Transfer Supplement delivered to it and a register (the “Register”) for the
recordation of the names and addresses of each Lender and the outstanding principal, accrued and
unpaid interest and other fees due hereunder. The entries in the Register shall be conclusive, in
the absence of manifest error, and each Borrower, Agent and Lenders may treat each Person whose
name is recorded in the Register as the owner of the Advance recorded therein for the purposes of
this Agreement. The Register shall be available for inspection by Borrowing Agent or any Lender at
any reasonable time and from time to time upon reasonable prior notice. Agent shall receive a fee
in the amount of $3,500 payable by the applicable Purchasing Lender and/or Purchasing CLO upon the
effective date of each transfer or assignment (other than to an intermediate purchaser) to such
Purchasing Lender and/or Purchasing CLO.

(f) Each Borrower authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession concerning such Borrower
which has been delivered to such Lender by or on behalf of such Borrower pursuant to this Agreement
or in connection with such Lender’s credit evaluation of such Borrower.

16.4. Application of Payments.
Agent shall have the continuing and exclusive right to apply or reverse and re-apply any
payment and any and all proceeds of Collateral to any portion of the Obligations. To the extent
that any Borrower makes a payment or Agent or any Lender receives any payment or proceeds of the
Collateral for any Borrower’s benefit, which are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession,
receiver, custodian or any other party under any bankruptcy law, common law or equitable cause,
then, to such extent, the Obligations or part thereof intended to be satisfied shall be revived and
continue as if such payment or proceeds had not been received by Agent or such Lender.

16.5. Indemnity.
Each Borrower shall indemnify Agent, each Lender and each of their respective officers,
directors, Affiliates, attorneys, employees and agents from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind or nature whatsoever (including fees and disbursements of counsel) which
may be imposed on, incurred by, or asserted against Agent or any Lender in any claim, litigation,
proceeding or investigation instituted or conducted by any Governmental Body or instrumentality or
any other Person with respect to any aspect of, or any transaction contemplated by, or referred to
in, or any matter related to, this Agreement or the Other Documents, whether or not Agent or any
Lender is a party thereto, except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of the party being indemnified (as determined by a court of
competent jurisdiction in a final and non-appealable judgment). Without limiting the generality of
the foregoing, this indemnity shall extend to any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature
whatsoever (including fees and disbursements of counsel) asserted against or incurred by any of the
indemnitees described above in this Section 16.5 by any Person under any Environmental Laws or
similar laws by reason of any Borrower’s or any other Person’s failure to comply with laws
applicable to solid or hazardous waste materials, including Hazardous Substances and Hazardous
Waste, or other Toxic Substances. A Person seeking to be indemnified under this Section 16.5 shall
notify Borrowing

 

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Agent
of any event requiring indemnification within ten Business Days following such Person’s receipt of notice
of commencement of any action or proceeding, or such Person’s obtaining knowledge of the occurrence
of any other event, giving rise to a claim for indemnification hereunder, provided that any failure
to so notify shall not relieve Borrowers from the obligation to indemnify hereunder. Borrowers
will be entitled (but not obligated) to assume the defense or settlement of any such action or
proceeding or to participate in any negotiations to settle or otherwise resolve any claim using
counsel of its choice. If Borrowers elect to assume the defense or settlement of any such action
or proceeding, the Person to be indemnified (and its counsel) may continue to participate at its
own expense in such action or proceeding. Additionally, if any taxes (excluding taxes imposed
upon or measured solely by the net income of Agent and Lenders, but including any intangibles
taxes, stamp tax, recording tax or franchise tax) shall be payable by Agent, Lenders or Borrowers
on account of the execution or delivery of this Agreement, or the execution, delivery, issuance or
recording of any of the Other Documents, or the creation or repayment of any of the Obligations
hereunder, by reason of any Applicable Law now or hereafter in effect, Borrowers will pay (or will
promptly reimburse Agent and Lenders for payment of) all such taxes, including interest and
penalties thereon, and will indemnify and hold the indemnitees described above in this Section 16.5
harmless from and against all liability in connection therewith.

16.6. Notice.
Any notice or request hereunder may be given to Borrowing Agent or any Borrower or to Agent
or any Lender at their respective addresses set forth below or at such other address as may
hereafter be specified in a notice designated as a notice of change of address under this Section.
Any notice, request, demand, direction or other communication (for purposes of this Section 16.6
only, a “Notice”) to be given to or made upon any party hereto under any provision of this
Loan Agreement shall be given or made by telephone or in writing (which includes by means of
electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such
Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website
Posting (including the information necessary to access such site) has previously been delivered to
the applicable parties hereto by another means set forth in this Section 16.6) in accordance with
this Section 16.6. Any such Notice must be delivered to the applicable parties hereto at the
addresses and numbers set forth under their respective names on Section 16.6 hereof or in
accordance with any subsequent unrevoked Notice from any such party that is given in accordance
with this Section 16.6. Any Notice shall be effective:

(a) In the case of hand-delivery, when delivered;

(b) If given by mail, four days after such Notice is deposited with the United States Postal
Service, with first-class postage prepaid, return receipt requested;

(c) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of
such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a
facsimile or electronic transmission, a Website Posting or an overnight courier delivery of a
confirmatory Notice (received at or before noon on such next Business Day);

(d) In the case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives confirmation of the delivery
thereof from its own facsimile machine;

 

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(e) In the case of electronic transmission, when actually received;

(f) In the case of a Website Posting, upon delivery of a Notice of such posting (including the
information necessary to access such site) by another means set forth in this Section 16.6; and

(g) If given by any other means (including by overnight courier), when actually received.

Any Lender giving a Notice to Borrowing Agent or any Borrower shall concurrently send a copy
thereof to the Agent, and the Agent shall promptly notify the other Lenders of its receipt of such
Notice.

(A) If to Agent or PNC at:

	 	 	 
	 

	 	PNC Bank, National Association
	 

	 	1600 Market Street
	 

	 	Philadelphia, PA 19103
	 

	 	Attention: Craig T. Sheetz
	 

	 	Telephone: 215-585-5231
	 

	 	Facsimile: 215-585-4771
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	PNC Bank, National Association
	 

	 	PNC Agency Services
	 

	 	PNC Firstside Center
	 

	 	500 First Avenue, 4th Floor
	 

	 	Pittsburgh, Pennsylvania 15219
	 

	 	Attention: Lisa Pierce
	 

	 	Telephone: (412) 762-6442
	 

	 	Facsimile: (412) 762-8672
	 
	 	 
	 

	 	with an additional copy to:
	 
	 	 
	 

	 	Ballard Spahr LLP
	 

	 	1735 Market Street, 51st Floor
	 

	 	Philadelphia, Pennsylvania 19103
	 

	 	Attention: Steven M. Miller
	 

	 	Telephone: (215) 864-8310
	 

	 	Facsimile: (215) 933-3970

(B) If to a Lender other than Agent, as specified on the signature pages hereof.

 

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(C) If to Borrowing Agent or any Borrower:

	 	 	 
	 

	 	Osteotech, Inc.
	 

	 	51 James Way
	 

	 	Eatontown, New Jersey 07724
	 

	 	Attention: Chief Financial Officer
	 

	 	Telephone: 732-542-2800
	 

	 	Facsimile: 732-935-0626
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Dorsey & Whitney LLP
	 

	 	50 South Sixth Street, Suite 1500
	 

	 	Minneapolis, Minnesota 55402
	 

	 	Attention: L. Joseph Genereux
	 

	 	Telephone: 612-340-2600
	 

	 	Facsimile: 612-340-2643

16.7. Survival.
The obligations of Borrowers under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5 and
the obligations of Lenders under Section 14.7, shall survive termination of this Agreement and the
Other Documents and payment in full of the Obligations.

16.8. Severability.
If any part of this Agreement is contrary to, prohibited by, or deemed invalid under
Applicable Laws, such provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby and shall be given
effect so far as possible.

16.9. Expenses.
All costs and expenses including reasonable attorneys’ fees (including the allocated costs
of in house counsel) and disbursements incurred by Agent on its behalf or on behalf of Lenders (a)
in all efforts made to enforce payment of any Obligation or effect collection of any Collateral, or
(b) in connection with the entering into, modification, amendment, administration and enforcement
of this Agreement or any consents or waivers hereunder and all related agreements, documents and
instruments, or (c) in instituting, maintaining, preserving, enforcing and foreclosing on Agent’s
security interest in or Lien on any of the Collateral, or maintaining, preserving or enforcing any
of Agent’s or any Lender’s rights hereunder and under all related agreements, documents and
instruments, whether through judicial proceedings or otherwise, or (d) in defending or prosecuting
any actions or proceedings arising out of or relating to Agent’s or any Lender’s transactions with
any Borrower, or (e) in connection with any advice given to Agent or any Lender with respect to its
rights and obligations under this Agreement and all related agreements, documents and instruments,
may be charged to Borrowers’ Account and shall be part of the Obligations.

16.10. Injunctive Relief.
Each Borrower recognizes that, in the event any Borrower fails to perform, observe or
discharge any of its obligations or liabilities under this Agreement, or threatens to fail to
perform, observe or discharge such obligations or liabilities, any remedy at law may prove to be
inadequate relief to Lenders; therefore, Agent, if Agent so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.

 

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16.11. Consequential Damages.
Neither Agent nor any Lender, nor any agent or attorney for any of them, shall be liable to
any Borrower (or any Affiliate of any such Person) for indirect, punitive, exemplary or
consequential damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations or as a result of any transaction
contemplated under this Agreement or any Other Document.

16.12. Captions.
The captions at various places in this Agreement are intended for convenience only and do
not constitute and shall not be interpreted as part of this Agreement.

16.13. Counterparts; Facsimile Signatures.
This Agreement may be executed in any number of and by different parties hereto on separate
counterparts, all of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute one and the same agreement. Any signature delivered by a party by
facsimile transmission shall be deemed to be an original signature hereto.

16.14. Construction.
The parties acknowledge that each party and its counsel have reviewed this Agreement and
that the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

16.15. Confidentiality; Sharing Information.
Agent, each Lender and each Transferee shall hold all non-public information obtained by
Agent, such Lender or such Transferee pursuant to the requirements of this Agreement in accordance
with Agent’s, such Lender’s and such Transferee’s customary procedures for handling confidential
information of this nature; provided, however, Agent, each Lender and each Transferee may disclose
such confidential information (a) to its examiners, Affiliates, outside auditors, counsel and other
professional advisors, (b) to Agent, any Lender or to any prospective Transferees, and (c) as
required or requested by any Governmental Body or representative thereof or pursuant to legal
process; provided, further that (i) unless specifically prohibited by Applicable Law, Agent, each
Lender and each Transferee shall use its reasonable best efforts prior to disclosure thereof, to
notify the applicable Borrower of the applicable request for disclosure of such non-public
information (A) by a Governmental Body or representative thereof (other than any such request in
connection with an examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall Agent, any Lender or
any Transferee be obligated to return any materials furnished by any Borrower other than those
documents and instruments in possession of Agent or any Lender in order to perfect its Lien on the
Collateral once the Obligations have been paid in full and this Agreement has been terminated.
Each Borrower acknowledges that from time to time financial advisory, investment banking and other
services may be offered or provided to such Borrower (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each
Borrower hereby authorizes each Lender to share any information delivered to such Lender by such
Borrower and its Subsidiaries pursuant to this Agreement, or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of such Lender, it
being understood that any such Subsidiary or Affiliate of any Lender receiving
such information shall be bound by the provisions of this Section 16.15 as if it were a Lender
hereunder. Such authorization shall survive the repayment of the other Obligations and the
termination of this Agreement.

 

85

 

16.16. Publicity.
With the prior written consent of the applicable Borrower, not to be unreasonably withheld,
each Borrower and each Lender hereby authorizes Agent to make appropriate announcements of the
financial arrangement entered into among Borrowers, Agent and Lenders, including announcements
which are commonly known as tombstones, in such publications and to such selected parties as Agent
shall in its sole and absolute discretion deem appropriate.

16.17. Certifications From Banks and Participants; US PATRIOT Act.
Each Lender or assignee or participant of a Lender that is not incorporated under the Laws
of the United States of America or a state thereof (and is not excepted from the certification
requirement contained in Section 313 of the USA PATRIOT Act and the applicable regulations because
it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical
presence in the United States or foreign country, and (ii) subject to supervision by a banking
authority regulating such affiliated depository institution or foreign bank) shall deliver to the
Agent the certification, or, if applicable, recertification, certifying that such Lender is not a
“shell” and certifying to other matters as required by Section 313 of the USA PATRIOT Act and the
applicable regulations: (1) within 10 days after the Closing Date, and (2) as such other times as
are required under the USA PATRIOT Act.

 

86

 

Each of the parties has signed this Agreement as of the day and year first above written.

	 	 	 	 	 
	 	OSTEOTECH, INC.

 	 
	 	By:  	/s/ Mark H. Burroughs
 	 
	 	 	Name:  	Mark H. Burroughs 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	PNC BANK, NATIONAL ASSOCIATION,

as Lender and as Agent

 	 
	 	By:  	/s/ Daniel R. Stella
 	 
	 	 	Name:  	Daniel R. Stella 	 
	 	 	Title:  	Senior Vice President 	 
	 
	 	1600 Market Street

Philadelphia, PA 19103

 	 
	 	Commitment Percentage: 100%

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