Document:

exv10w49

Exhibit 10.49

EXECUTION COPY

Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. Asterisks denote omissions.

AMENDMENT TO TERM LOAN AND SECURITY AGREEMENT 

     THIS AMENDMENT (“Amendment”) is made as of March 10, 2010 by and among (a) NxStage Medical,
Inc., a company organized and existing under the laws of Delaware, United States of America
(“NxStage Medical”), EIR Medical, Inc. (“EIR”), a company organized and existing under the laws of
Massachusetts, United States of America, Medisystems Services Corporation (“Medisystems Services”),
a company organized and existing under the laws of Nevada, United States of America, Medisystems
Corporation (“Medisystems”), a company organized and existing under the laws of Washington, United
States of America, each as a borrower hereunder (NxStage Medical, EIR, Medisystems Services, and
Medisystems being referred to collectively herein as the “Borrowers” and each as a “Borrower”) and
(b) Asahi Kasei Kuraray Medical Co., Ltd., a corporation organized and existing under the law of
Japan, as the lender hereunder (“Asahi”).

RECITALS 

     A. Asahi, the Borrowers and the Guarantors named therein are parties to a Term Loan and
Security Agreement dated as of June 5, 2009 (as amended, restated, supplemented or otherwise
modified from time to time, the “Loan Agreement”). Capitalized terms used herein without
definition have the meanings assigned to them in the Loan Agreement.

     B. The Borrowers have informed Asahi that they intend to enter into certain revolving loan
arrangements with Silicon Valley Bank and in connection therewith have requested that the Loan
Agreement be amended as set forth herein.

     C. Subject to certain terms and conditions, Asahi is willing to agree to the same, as
hereinafter set forth.

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:

     I. Amendments to Loan Agreement.

     A. The definition of “Financing Documents” contained in Section 1.1(27) of the Loan Agreement
is hereby amended and restated in its entirety as follows:

“‘Financing Documents’ means this Agreement, the Note and the Intercreditor
Agreement, as any or all of the same may be amended, supplemented, restated or
otherwise modified from time to time.”

     B. Subpart (k) of the definition of “Permitted Liens” contained in Section 1.1(58) of the Loan
Agreement is hereby amended and restated in its entirety as follows:

“(k) Liens securing Debt permitted pursuant to subpart (k) of the definition of
Permitted Indebtedness (i) on assets other than Collateral, and (ii) until the
Release Date, on Collateral in favor of Silicon Valley Bank pursuant to the SVB Loan
Agreement.”

     C. Section 1.1 of the Loan Agreement is hereby amended by inserting the following new
definitions of “First Amendment Effective Date”, “Intercreditor Agreement”, “Original Collateral”,
“Release

 

 

Date”, “Release Conditions”, “Restricted License”, “Silicon Valley Bank”, “SVB Loan
Agreement” and “Utterberg License” in proper alphabetical order:

“‘First Amendment Effective Date’ means March 10, 2010.”

“‘Intercreditor Agreement’ means that certain Intercreditor Agreement dated as of
March ___, 2010 by and between Asahi and Silicon Valley Bank, as the same may be
amended, modified and/or supplemented from time to time.”

“‘Original Collateral’ has the meaning given such term in Schedule 7.1
hereto.

“‘Release Date’ means the first date on which the Release Conditions have been
satisfied.”

“‘Release Conditions’ means (a) the receipt by Silicon Valley Bank of the payment in
full in cash or other immediately available funds of all obligations under the SVB
Loan Agreement and the documents executed in connection therewith, the termination
of the commitments of Silicon Valley Bank to make loans or provide further financial
accommodations to Borrower thereunder, and the release and discharge of all liens in
favor of Silicon Valley Bank securing same, and (b) there shall be no other Lien on
the Original Collateral, other than Permitted Liens (excluding Permitted Liens
described in clause (k)(ii) of the definition thereof).”

“‘Restricted License’ is any material license or other agreement with respect to
which any Borrower is the licensee (a) that prohibits or otherwise restricts such
Borrower from granting a security interest in such Borrower’s interest in such
license or agreement or any other property, or (b) for which a default under or
termination of would interfere in any material respect with Asahi’s right to sell
any Collateral.”

“‘Silicon Valley Bank’ means Silicon Valley Bank, a California corporation, and its
successors and assigns.

“‘SVB Loan Agreement’ means that certain Loan and Security Agreement dated as of
March ___, 2010 by and among the Borrowers and Silicon Valley Bank, as the same may
be amended, modified and/or supplemented from time to time.”

“‘Utterberg License’ means that certain License Agreement by and between Medisystems
and DSU Medical corporation, a Nevada corporation, dated as of June 1, 2007, as may
be amended from time to time.”

     D. Section 4.8 of the Loan Agreement is hereby amended and restated in its entirety as
follows:

	 	“4.8	 	 Intellectual Property.
	 
	 	 	 	Each of the Borrowers owns and shall own, is and will be licensed to use or
otherwise has and will have the right to use, all Intellectual Property that
is necessary to its business and operations. Each of the Borrowers shall, to
the extent it determines, in the exercise of its reasonable business judgment,
that it is prudent to do the following: (a) protect, defend and maintain the
validity and enforceability of its Intellectual Property; and (b) not allow
any Intellectual Property necessary to such Borrower’s business to be
abandoned, forfeited or dedicated to the public without

2

 

	 	 	 	Asahi’s written
consent. Upon Asahi’s request, NxStage Medical agrees to provide Asahi a list
of all issued patents and published patent applications owned by NxStage
Medical or any of its Subsidiaries. If any Borrower (i) obtains any
registered Intellectual Property, or any pending application for any of the
foregoing, or (ii) applies for any patent or the registration of any
trademark, in each case prior to the Release Date, then such Borrower shall,
on a quarterly basis, provide written notice thereof to Asahi and shall
execute such intellectual property security agreements and other documents and
take such other actions as Asahi shall reasonably request in its good faith
business judgment to perfect and maintain a perfected security interest in
favor of Asahi in such property. Prior to the Release Date, if any Borrower
decides to register any copyrights or mask works in the United States
Copyright Office, such Borrower shall: (x) provide Asahi with at least fifteen
(15) days prior written notice of such Borrower’s intent to register such
copyrights or mask works together with a copy of the application it intends to
file with the United States Copyright Office (excluding exhibits thereto); (y)
execute an intellectual property security agreement and such other documents
and take such other actions as Asahi may reasonably request to perfect and
maintain a perfected security interest in favor of Asahi in the copyrights or
mask works intended to be registered with the United States Copyright Office;
and (z) record any such intellectual property security agreement with the
United States Copyright Office contemporaneously with filing the copyright or
mask work application(s) with the United States Copyright Office. Prior to
the Release Date, upon request, each Borrower shall provide to Asahi copies of
all applications that it files for patents or for the registration of
trademarks, copyrights or mask works, and will promptly provide Asahi with
evidence of the recording of the intellectual property security agreement
necessary for Asahi to perfect and maintain a first priority security interest
in such property, in each case in accordance with the Intercreditor Agreement.
Prior to the Release Date, each Borrower shall also provide written notice to
Asahi within ten (10) Business Days of entering or becoming bound by any
Restricted License (other than open source or over-the-counter software that
is commercially available to the public and other than the Utterberg License).
Prior to the Release Date, each Borrower shall make commercially reasonable
efforts upon the request of Asahi to obtain the consent of, or waiver by, any
person whose consent or waiver is necessary for (1) any Restricted License
(other than open source or over-the-counter software that is commercially
available to the public and other than the Utterberg License) to be deemed
“Collateral” and for Asahi to have a security interest in it that would
reasonably be expected to otherwise be restricted or prohibited by law or by
the terms of any such Restricted License, whether now existing or entered into
in the future, and (2) subject to the Intercreditor Agreement, Asahi to have
the ability in the event of a liquidation of any Collateral to dispose of such
Restricted License (other than open source or over-the-counter software that
is commercially available to the public and other than the Utterberg License)
in accordance with Asahi’s rights and remedies under this Agreement and the
other Loan Documents. Prior to the Release Date, to the extent that Silicon
Valley Bank requests pursuant to the SVB Loan Agreement and obtains any such
consents and/or waivers, each Borrower shall cause Asahi to be included as a
party or named as a beneficiary of any such consent or waiver and shall cause
Asahi to have rights and benefits thereunder that are substantially similar to
those given to Silicon Valley Bank.”

     E. The following new Section 4.11 is inserted into the Loan Agreement, immediately following
Section 4.10 thereof:

3

 

	 	“4.11	 	 Additional Requirements. The Borrowers shall deliver to Asahi the
following:
	 
	 	(a)	 	On or before the 45th day following the First Amendment
Effective Date, a fully-executed landlord consent in favor of Asahi with
respect to the Borrowers’ location at 439 South Union Street, 5th
Floor, Lawrence, Massachusetts and a fully-executed bailee waiver in favor of
Asahi with respect to the Borrowers’ warehouse at 1800 Waters Ridge Drive,
Suite 100, Lewisville, TX 75057. Further, prior to the Release Date, on or
before the 45th day following the First Amendment Effective Date,
the Borrowers shall use commercially reasonable efforts to deliver
fully-executed landlord consents and bailee waivers in favor of Asahi with
respect to each of the Borrowers’ locations in existence on the First Amendment
Effective Date with assets greater than $250,000, as indicated on Exhibit
A; and
	 
	 	(b)	 	Prior to the Release Date, on or before the 180th day
following the First Amendment Effective Date, unless Silicon Valley Bank
otherwise agrees not to require the account closures or the control agreements
specified below, (i) the Borrowers shall close all of the deposit accounts
owned by Medisystems Corporation at KeyBank National Association, including
without limitation, those deposit accounts numbered [**] (all of such accounts,
collectively, the “Key Accounts”), or (ii) a control agreement over the
Key Accounts in favor of Asahi, such control agreement to be in form and
substance substantially similar to any control agreement delivered to Silicon
Valley Bank in connection with the Key Accounts. (Asahi hereby acknowledges
and agrees that notwithstanding the provisions of Section 5.7 hereof and
provided no Default or Event of Default shall have occurred and be continuing,
no control agreement shall be required with respect to the Key Accounts during
such 180 day transition period specified above). At all times prior to the
closure of the Key Accounts, the Borrowers shall immediately transfer funds in
the Key Accounts in excess of $250,000 in the aggregate to an account with
Silicon Valley Bank or another financial institution which has a control
agreement in favor of Asahi.”
	 
	 	F.	 	Section 5.7 of the Loan Agreement is hereby amended and restated in its entirety as
follows:
	 
	 	“5.7 	 	Deposit Accounts and Securities Accounts. No Borrower will, at any
time prior to the Release Date, directly or indirectly, establish any new
Deposit Account, Securities Account or commodity account (as such term is
defined in the UCC) without five (5) days prior written notice to Asahi. Prior
to the Release Date, for each Deposit Account, Securities Account or commodity
account that any Borrower at any time maintains, such Borrower shall cause the
applicable bank or financial institution at or with which any such account is
maintained to execute and deliver a control agreement or other appropriate
instrument with respect to such account to perfect Asahi’s Lien in such account
in accordance with the terms hereunder, which control agreement may not be
terminated without the prior written consent of Asahi. The provisions of the
previous two sentences shall not apply to (i) deposit accounts exclusively used
for payroll, payroll taxes and/or other employee wage and benefit payments to
or for the benefit of any Borrower’s employees and identified to Asahi by such
Borrower as such, (ii) controlled disbursement accounts held at Silicon Valley
Bank; provided that each such account has a daily balance of zero as of the end
of each day, and (iii) any account or accounts at which any Borrower maintains

4

 

	 	 	 	an aggregate amount of up to One Hundred Thousand Dollars ($100,000) for all
such accounts at any time. Notwithstanding the foregoing, at all times prior
to the Release Date, Asahi agrees that (i) to the extent any Borrower maintains
any Deposit Account, Securities Account or commodity account with a financial
institution other than Silicon Valley Bank, such Borrower shall only be
required to provide and maintain control agreements for the benefit of Asahi if
and to the extent that the Borrower is required to provide and maintain such
agreements for the benefit of Silicon Valley Bank, and (ii) any control
agreement executed and delivered in favor of Asahi shall be in form and
substance satisfactory to Asahi in its reasonable discretion. In addition,
from and after the Release Date, no Borrower will, directly or indirectly,
establish any new Deposit Account or Securities Account without prior written
notice to Asahi except for (i) accounts used exclusively for payroll or other
employment or tax related payments, (ii) accounts holding cash collateral for
letters of credit contemplated by the definition of Permitted Liens, (iii)
controlled disbursement accounts held at Silicon Valley Bank; provided that
each such account has a daily balance of zero as of the end of each day, and
(iv) other accounts holding no more than $1,000,000 in the aggregate, of cash,
Investment Property, Securities or other assets. Asahi shall cooperate with
the Borrowers (at the sole cost and expense of the Borrowers) to terminate any
control agreement to the extent any Borrower is no longer required to maintain
such control agreement hereunder.”

     G. Section 7.1 of the Loan Agreement is hereby amended and restated in its entirety as
follows:

	 	“7.1 	 	Generally. As security for the payment and performance of the
Obligations, and without limiting any other grant of a Lien and security
interest in any Security Document, each Borrower hereby grants and pledges to
Asahi, for the benefit of Asahi, a continuing Lien on and security interest in,
upon, and to the personal property set forth on Schedule 7.1 attached
hereto and made a part hereof.”

     H. Section 7.2(b) of the Loan Agreement is hereby amended and restated in its entirety as
follows:

	 	 	 	“(b) (i) Prior to the Release Date: No Collateral (other than (A) Field
Equipment maintained with any Borrower’s customers and/or end users of such
Field Equipment, and (B) other assets with a value of not more than $250,000
at any location) shall at any time be in the possession or control of any
warehouse, consignee, bailee or any of any Borrower’s agents or processors
without prior written notice to Asahi. If any Borrower intends to deliver
any portion of the Collateral (other than (x) Field Equipment maintained with
any Borrower’s customers and/or end users of such Field Equipment, and (y)
other assets with a value of not more than $250,000 at any location) to a
location, and Asahi and such warehouseman, consignee or bailee are not
already parties to a warehouse, consignee or bailee agreement governing both
the Collateral and the location to which such Borrower intends to deliver the
Collateral, then such Borrower will use commercially reasonable efforts to
deliver to Asahi a signed warehouse, consignee or bailee agreement, as
applicable, in form and substance satisfactory to Asahi in its reasonable
discretion, provided that prior to the Release Date, Borrower shall only be
required to provide warehouse receipts, consignment agreements or bailee
waivers (as applicable) for the benefit of Asahi to the extent that such
warehouse receipts, consignment agreements or bailee waivers (as applicable)
are required to be provided to Silicon Valley Bank pursuant to the SVB Loan
Agreement.

5

 

	 	 	 	(ii) On and after the Release Date: No Collateral shall at any time be in
the possession or control of any warehouse, consignee, bailee or any of
NxStage’s agents or processors without prior written notice to Asahi and the
receipt by Asahi, if Asahi has so requested, of warehouse receipts,
consignment agreements or bailee lien waivers (as applicable) reasonably
satisfactory to Asahi prior to the commencement of such possession or
control. NxStage shall, upon the request of Asahi, notify any such warehouse,
consignee, bailee, agent or processor of the security interests and Liens in
favor of Asahi created pursuant to this Agreement and the Security Documents,
instruct such Person to hold all such Collateral for Asahi’s account subject
to Asahi’s instructions (or, in the case of any Permitted Lien on such
Collateral, subject to the instructions of the holder of such Permitted Lien
in accordance with any intercreditor agreement or subordination agreement
executed by Asahi and the holder of such Permitted Lien) and shall obtain an
acknowledgement from such Person that such Person holds the Collateral for
Asahi’s benefit (and, in the case of any Permitted Lien on such Collateral,
for the benefit of the holder of such Permitted Lien in accordance with any
intercreditor agreement or subordination agreement executed by Asahi and the
holder of such Permitted Lien).”

     I. Section 7.2(f) of the Loan Agreement is hereby amended by adding the following at
the end thereof:

“Prior to the Release Date, if any Borrower shall acquire a commercial tort claim in
excess of $250,000, such Borrower shall promptly notify Asahi in a writing signed by
the applicable Borrower of the general details thereof and grant to Asahi in such
writing a security interest therein and in the proceeds thereof, all upon the terms
of this Agreement, with such writing to be in form and substance reasonably
satisfactory to Asahi. In addition, each Borrower shall at any time and from time
to time execute any further instruments and take further action as Asahi may
reasonably request to perfect or continue Asahi’s Lien in the Collateral as
contemplated by this Agreement.”

     J. The following new Section 7.4 is inserted into the Loan Agreement, immediately following
Section 7.3 thereof:

	 	“7.4	 	 Release of SVB Priority Collateral. On the Release Date, Asahi’s
security interest in, and Liens on, any Collateral not constituting Original
Collateral shall automatically be released and Asahi’s Liens and security
interests shall automatically extend solely to the Original Collateral.
Promptly upon receipt from Borrowers of release and discharge documentation
evidencing the termination of SVB’s liens on the Collateral, as provided herein,
in form and substance reasonably satisfactory to Asahi, Asahi and, to the extent
applicable, the Borrowers shall enter into such documentation, including without
limitation, UCC termination statements, intellectual property filings, releases
and discharge documents, which are reasonably necessary to effectuate such
release, all at the sole cost and expense of the Borrowers. For the avoidance
of debt, Asahi and the Borrowers agree that the first priority perfected Liens
on, and security interest of Asahi in, the Original Collateral shall at all
times remain in full force and effect, notwithstanding any release by Asahi of
the any collateral which is not Original Collateral.”

6

 

     K. The following new subparts (i), (j), (k) and (l) are hereby inserted into Section 8.1 of
the Loan Agreement immediately following Section 8.1(h) thereof:

	 	“(i)	 	 prior to the Release Date, there is, under the SVB Loan Agreement or
under any document executed in connection therewith, any default resulting in
the declaration by Silicon Valley Bank that all obligations under the SVB Loan
Agreement are immediately due and payable.
	 
	 	(j)	 	prior to the Release Date, the Intercreditor Agreement shall for any
reason be revoked or invalidated or otherwise cease to be in full force and
effect except in accordance with its terms or as a result of Asahi’s bad faith
or willful misconduct, any Person (other than Asahi) shall be in material
breach thereof or contest in any manner the validity or enforceability thereof
or deny that it has any further liability or obligation thereunder except in
accordance with its terms, or the Obligations shall for any reason be
subordinated or shall not have the priority contemplated by this Agreement or
the Intercreditor Agreement.
	 
	 	(k)	 	the Borrowers fail or neglect to perform or observe any obligation set
forth in (i) the first sentence of Section 4.11(a), or (ii) prior to the
Release Date, in Section 4.11(b).
	 
	 	(l)	 	prior to the Release Date, (i) the exercise of any remedial action by
Silicon Valley Bank with respect to any Deposit Account, Securities Account or
commodity account of a Borrower maintained at Silicon Valley Bank, or (ii) the
delivery by Silicon Valley Bank to any bank or financial institution of a
“Notice of Exclusive Control” or an “entitlement order” (as such term is
defined in Article 8 of the UCC) with respect to any Deposit Account,
Securities Account or commodities account of a Borrower.”

     L. Schedule 7.1 of the Loan Agreement is hereby amended and restated in its entirety in the
form of Schedule 7.1 attached hereto.

II. No Further Amendments. Except as specifically amended hereby, the Loan Agreement and
the other Financing Documents shall remain unmodified and in full force and effect and are hereby
ratified and affirmed in all respects, and the indebtedness of each Borrower to Asahi evidenced
thereby and by the Note is hereby reaffirmed in all respects. On and after the date hereof, each
reference in the Loan Agreement to “this Agreement”, “hereunder”, “hereof”, or words of like import
referring to the Loan Agreement, shall mean and be a reference to the Loan Agreement as amended by
this Amendment, and each reference in any of the other Financing Documents or any other documents
between any guarantor and Asahi, to the Loan Agreement, “thereunder”, “thereof”, or words of like
import referring to the Loan Agreement shall mean a reference to the Loan Agreement as amended by
this Amendment.

III. Confirmation of Security. Each Borrower hereby grants and pledges to Asahi (to the
extent not previously granted), and hereby confirms and reaffirms such Borrower’s grant and pledge
to Asahi (to the extent previously granted) of, a continuing Lien on and security interest in the
Collateral, as set forth on Schedule 7.1 after giving effect to this Amendment, as security
for the payment and performance of the Obligations. The Obligations of each Borrower to Asahi
including, without limitation, the liabilities and obligations of the Borrower to Asahi under each
of (i) the Loan Agreement, as amended hereby, and (ii) the Note shall be secured by, and entitled
to all benefits of, the Loan Agreement and any other collateral granted by each Borrower to Asahi.

7

 

IV. Certain Representations. As a material inducement to Asahi to enter into this
Amendment, each Borrower hereby represents and warrants to Asahi (which representations and
warranties shall survive the delivery of this Amendment), after giving effect to this Amendment, as
follows:

     A. The execution and delivery of this Amendment have been duly authorized by all requisite
corporate action on the part of such Borrower.

     B. The representations and warranties contained in Article 3 and Section 7.2 of the Loan
Agreement are true and correct in all material respects on and as of the date of this Amendment as
though made at and as of such date (except to the extent that such representations and warranties
expressly relate to an earlier date), and except that attached hereto as Exhibit A is list
of all locations of Collateral of the Borrowers as of the date hereof. No Default or Event of
Default has occurred and is continuing.

     C. This Amendment constitutes the legal, valid and binding obligation of each Borrower,
enforceable against each in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the rights and remedies of creditors
generally or the application of principles of equity, whether in any action at law or proceeding in
equity, and subject to the availability of the remedy of specific performance or of any other
equitable remedy or relief to enforce any right thereunder.

V. Conditions. This Amendment shall become effective on the first date on which each
Borrower shall have executed and delivered to Asahi (or shall have caused to be executed and
delivered to Asahi by the appropriate persons) the following:

     A. This Amendment;

     B. A fully-executed Intercreditor Agreement between Asahi and Silicon Valley Bank, together
with the acknowledgement of the Borrowers and the Guarantors thereto;

     C. A fully-executed Intellectual Property Security Agreement, in form and substance
satisfactory to Asahi;

     D. Fully-executed control agreements with respect to the each of the following Deposit
Accounts, Securities Accounts and commodities accounts:

	 	(i)	 	Account number [**] owned by NxStage Medical, Inc. held at Silicon Valley Bank;
	 
	 	(ii)	 	Account number [**] owned by EIR Medical, Inc. held at Silicon Valley Bank;
	 
	 	(iii)	 	Securities account number [**] owned by NxStage Medical, Inc. held at [**]; and
	 
	 	(iv)	 	Account number [**] owned by Medisystems Corporation held at Silicon Valley Bank;

     E. UCC-3 Financing Statements for each Borrower which reflect the description of the
Collateral as listed on Schedule 7.1 after giving effect to this Amendment;

     F. True and correct copies of any required consents and/or resolutions authorizing the
execution and delivery of this Amendment, which consents and/or resolutions shall be in a form
reasonably satisfactory to counsel for Asahi; and

8

 

     G. Such other supporting documents and certificates as Asahi or its counsel may reasonably
request.

VI. Miscellaneous.

     A. The Borrowers agree to reimburse Asahi upon demand for all out-of-pocket costs, charges,
liabilities, taxes and expenses of Asahi (including reasonable fees and disbursements of counsel to
Asahi) in connection with the preparation, negotiation, interpretation, execution and delivery of
this Amendment and any other agreements, instruments and documents executed pursuant or relating
hereto, including without limitation, any release and discharge documentation required by Section
7.4 of the Loan Agreement. Costs, liabilities, taxes and expenses paid under this Section VI.A
shall not be subject to, or be deemed to count against, the limitation set forth in
Section 10.11(c) of the Loan Agreement.

     B. This Amendment shall be governed by and construed in accordance with the laws of the State
of New York.

     C. This Amendment may be executed by the parties hereto in several counterparts hereof and by
the different parties hereto on separate counterparts hereof, all of which counterparts shall
together constitute one and the same agreement. Delivery of an executed signature page of this
Amendment by facsimile transmission shall be effective as an in-hand delivery of an original
executed counterpart thereof.

[The next pages are the signature pages.]

9

 

IN WITNESS WHEREOF, Asahi and each Borrower have caused this Amendment to be duly executed
as a sealed instrument by their duly authorized representatives, all as of the day and year first
above written.

	 	 	 	 	 	 	 	 	 

	BORROWERS:	 	 	 	ASAHI:
	 
	 	 	 	 	 	 	 	 
	NxStage Medical, Inc.	 	 	 	Asahi Kasei Kuraray Medical Co., Ltd.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert S. Brown
	 	 	 	By:
	 	/s/ Yasuyuki Yoshida
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Robert S. Brown
	 	 	 	Name:
	 	Yasuyuki Yoshida
	Title:

	 	Treasurer, Senior Vice President
and Chief Financial
Officer
	 	 	 	Title:
	 	President
	 
	 	 	 	 	 	 	 	 
	EIR Medical, Inc.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Robert S. Brown
 

Robert S. Brown
	 	 	 	 	 	 
	Title:

	 	Treasurer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Medisystems Services Corporation	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Robert S. Brown
 

Robert S. Brown
	 	 	 	 	 	 
	Title:

	 	Trea Yasuyuki Toshida surer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Medisystems Corporation	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Robert S. Brown
 

Robert S. Brown
	 	 	 	 	 	 
	Title:

	 	Treasurer	 	 	 	 	 	 

 

 

CONSENT AND CONFIRMATION OF GUARANTORS

     Each of undersigned hereby consent to the foregoing Amendment to Term Loan and Security
Agreement, and confirm that its irrevocable guarantee in favor of Asahi with respect to the
Obligations of each Borrower to Asahi as set forth in Article 9 of the aforementioned Term Loan and
Security Agreement remains in full force and effect in accordance with its terms.

     Dated as of March 10, 2010.

	 	 	 	 	 	 	 

	 	 	GUARANTORS:	 	 
	 
	 	 	 	 	 	 
	 	 	Medimexico s. de R.L. de C.V.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeffrey H. Burbank
 

Jeffrey H. Burbank
	 	 
	 

	 	Title:
	 	Chairman	 	 
	 
	 	 	 	 	 	 
	 	 	NxStage Verwaltungs GmbH	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeffrey H. Burbank
 

Jeffrey H. Burbank
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	NxStage GmbH & Co. KG	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeffrey H. Burbank
 

Jeffrey H. Burbank
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	Medisystems Europe S.p.A,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jeffrey H. Burbank
 

Jeffrey H. Burbank
	 	 
	 

	 	Title:
	 	Sole Director	 	 

 

 

Schedule 7.1 – Collateral

The Collateral consists of all of the Borrowers’ right, title and interest in and to the following,
whether now owned or hereafter created, acquired or arising, and all proceeds and products of the
following, whether now owned or hereafter acquired, wherever located:

1. All Intellectual Property, Equipment and Fixtures excluding FF&E.

2. All of the Borrower’s direct and indirect equity interests in its Subsidiaries;

3. All of the Borrower’s rights in real estate owned or leased by the Borrower; and

4. All of the Borrowers’ books relating to the foregoing, and all substitutions for, additions,
attachments, accessories, accessions and improvements to, and replacements and cash insurance
proceeds of, and all direct cash proceeds from the sale of, any or all of the foregoing.

Notwithstanding the foregoing, the Collateral shall not include any licenses which are now or
hereafter held by NxStage Medical as licensee if such licenses are not assignable or capable of
being encumbered under the terms of the license or other agreement applicable thereto (unless and
solely to the extent that any such restriction on assignment or encumbrance is ineffective under
the UCC or other applicable law), without the consent of the licensor thereof or other applicable
party thereto and such consent has not been obtained after using commercially reasonable efforts to
obtain such consent; provided, however, that upon obtaining the consent of any such
licensor or other applicable party to the assignment or encumbrance of such license or other
agreement, or upon the termination or expiration of any such prohibition, such license shall
automatically be subject to the security interest granted in favor of Asahi hereunder and become
part of the Collateral.

Notwithstanding the foregoing, except as expressly set forth in Paragraph 4 hereof, the Collateral
shall not consist of any of the products or proceeds of the Collateral set forth in Paragraphs 1
through 3 above. Without limiting the foregoing, the Collateral shall not include any Goods (other
than Equipment), Inventory, Accounts (other than Accounts constituting the direct cash proceeds
from the sale of any Intellectual Property), Deposit Accounts, Securities Accounts, or cash of the
Borrower or any products or proceeds of the foregoing.

All of the foregoing is sometimes referred to in the Agreement as the “Original Collateral”.

In addition, to the extent not included in the granting clause set forth above, from the date
hereof until the Release Date, the Collateral consists of all of each Borrower’s right, title and
interest in and to all personal property and other assets, whether now owned or hereafter created,
acquired or arising, wherever located and all proceeds and products thereof, whether now owned or
hereafter acquired, wherever located, including without limitation, the following:

1. All Intellectual Property, all source code, all design rights which may be available to such
Borrower, all rights, but not any obligations, to sue for and collect damages for use or
infringement of the Intellectual Property rights identified herein, and all amendments, renewals
and extensions of any Intellectual Property;

2. All Equipment (as defined in the UCC and including, without limitation all machinery, fixtures,
goods, vehicles (including motor vehicles and trailers), and any interest in any of the foregoing)
and Fixtures;

 

 

3. All of such Borrower’s direct and indirect equity interests in its Subsidiaries;

4. All of such Borrower’s rights in real estate owned or leased by the Borrower;

5. All Goods;

6. All Inventory (as defined in the UCC, and including, without limitation, all merchandise, raw
materials, parts, supplies, packing and shipping materials, work in progress and finished products,
including without limitation such inventory as is temporarily out of Borrower’s custody or
possession or in transit and including any returned goods and any documents of title representing
any of the above);

7. All Accounts (including health-care receivables);

8. All Deposit Accounts and Securities Accounts;

9. All contract rights and rights to the payment of money;

10. All leases, licenses and franchise agreements;

11. All General Intangibles (as defined in the UCC and including, without limitation, all
Intellectual Property, claims, income and other tax refunds, security and other deposits, payment
intangibles, contract rights, options to purchase or sell real or personal property, rights in all
litigation presently or hereafter pending (whether in contract, tort or otherwise), including
policies (including without limitation key man, property damage, and business interruption
insurance), payments of insurance and rights to payment of any kind);

12. All commercial tort claims;

13. All documents, instruments (including any promissory notes) and chattel paper (whether tangible
or electronic);

14. All cash;

15. All letter of credit rights (whether or not the letter of credit is evidenced by a writing);

16. All securities and all other investment property;

17. All supporting obligations and financial assets; and

18. All of each Borrower’s books and records relating to the foregoing and all claims, rights and
interests in any of the above and all substitutions for, additions, attachments, accessories,
accessions and improvements to, and replacements, products, proceeds and insurance proceeds of any
or all of the foregoing.

2

 

Schedule A

LOCATION OF COLLATERAL

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name and Address of	 	 
	 	 	 	 	Owned/Leased/	 	Owner (if leased) or Third-	 	App.
	 	 	Complete Address of	 	Operated by	 	Party Operator (if operated	 	Collateral
	Borrower	 	Location	 	Third Party	 	by a third party)	 	Value1
	NxStage Medical,
Inc.
and Eir Medical,
Inc.

	 	439 South Union St. 5th
Floor

Lawrence, MA 01843
	 	Leased
	 	Heritage Place LLC c/o

Ozzy Property Management

3 Dundee Office Park B05

Andover, MA 01810
	 	>$250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	Osburn Hessey Logistics

(OHL)

475 Willard Drive

Sparks, NV 89434
	 	Operated by Third

Party
	 	Osburn Hessey Logistics

(OHL)

(Same as indicated

previously)
	 	>$250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	Kuehne & Nagel, Inc.

1800 Waters Ridge Drive,
Suite 100

Lewisville, TX 75057
	 	Operated by Third

Party
	 	Kuehne & Nagel, Inc.

22 Spencer Street

Naugatuck, CT 06770
	 	>$250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc. and
Medisystems
Corporation

	 	Serjio Lujan & Co., Inc.

14406 Industry Ave.

International Trade Center

Laredo, TX 78041
	 	Operated by Third

Party
	 	Serjio Lujan & Col, Inc.

14406 Industry Ave.

International Trade Center

Laredo, TX 78041
	 	>$250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc. and
Medisystems
Corporation

	 	Fresnillo Industrial Park

Fresnillo, Zacatecas,

Mexico
	 	Operated by Third

Party
	 	Entrada Partners

236 Castano

San Antonio, TX 78209
	 	>$250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc. and
Medisystems
Corporation

	 	MediMexico s. de R.L. de
CV

Valle Imperial No 10523,
Parq. IND. Valle Sur CP

22180 Tijuana Baja
California

Baja California, Mexico
	 	Leased2
	 	Santa Maria Industrial
Partners L.P.

Colonia del Valle #110

Oriente 2o Piso, Colonia
del Valle

San Pedro Garza Garcia,
N.L.

Mexico C.P. 66220
	 	>$250,000

 

			
	1	 	Approximate value of inventory, equipment or other property of Borrowers is measured as of Jan. 2010.
	 
	2	 	Leased by Medimexico s. de R.L. de C.V., wholly-owned subsidiary of Medisystems Corporation.

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name and Address of	 	 
	 	 	 	 	Owned/Leased/	 	Owner (if leased) or Third-	 	App.
	 	 	Complete Address of	 	Operated by	 	Party Operator (if operated	 	Collateral
	Borrower	 	Location	 	Third Party	 	by a third party)	 	Value1
	Medisystems
Corporation and
NxStage Medical,
Inc.

	 	Kawasumi Labs (Navanakorn
factory)
Nava Nakorn Industrial
Zone, 55/26 Moo-13
Phaholyothin Rd.
Pratumtanee, Thailand
12120
	 	Operated by Third

Party

(buys goods on

consignment)
	 	Kawasumi Labs

(Same as indicated

previously)
	 	>$250,000
	 
	 	 	 	 	 	 	 	 
	 

	 	Kawasumi Labs

(Korat factory)

48 Mu 8, Ratchasima-Chok

Chai Road, Tambon

Tha Ang, Amphoe Chok,

Chai, Changwat

Nakhon Ratchasima,

Thailand 30190	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	WCG-SFO

1801 Old Bayshore Highway
Burlingame, CA 94010-2428
	 	Operated by Third

Party
	 	National Logistics Group
(Business unit of World
Courier Ground)

125 Whipple St

Providence, RI 02908
	 	Total World Courier
Ground:
 > $250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	WCG-ORD

1800 Elm Hurst Ave

Elk Grove Village, IL

60007
	 	Operated by Third

Party
	 	National Logistics Group
(Business unit of World
Courier Ground)

125 Whipple St

Providence, RI 02908	 	 
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	WCG-BOS

6 Merchant St

Sharon, MA 02067-1637
	 	Operated by Third

Party
	 	National Logistics Group
(Business unit of World
Courier Ground)

125 Whipple St

Providence, RI 02908	 	 
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	WCG-ATL

100 Pinnacle Way

Norcross, GA 30071
	 	Operated by Third

Party
	 	National Logistics Group
(Business unit of World
Courier Ground)

125 Whipple St

Providence, RI 02908	 	 
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	Hot Shot Delivery, Inc

747 N. Shepard

Houston, TX 77270-1189
	 	Operated by Third

Party
	 	National Logistics Group
(Business unit of World
Courier Ground)

125 Whipple St

Providence, RI 02908	 	 

2

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Name and Address of	 	 
	 	 	 	 	Owned/Leased/	 	Owner (if leased) or Third-	 	App.
	 	 	Complete Address of	 	Operated by	 	Party Operator (if operated	 	Collateral
	Borrower	 	Location	 	Third Party	 	by a third party)	 	Value1
	NxStage Medical,
Inc.

	 	Hi Tech Mold & Tool

One Technology Drive West

Pittsfield, MA 01201
	 	Operated by Third

Party
	 	Hi Tech Mold & Tool

One Technology Drive West

Pittsfield, MA 01201
	 	<$250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	Acro-Matics Plastics

31 Jytek Part Leominster,

MA 01453
	 	Operated by Third

Party
	 	Acro-Matics Plastics

32 Jungle Road

Leominster, MA 01453
	 	<$250,000
	 
	 	 	 	 	 	 	 	 
	Medisystems 

Services 

Corporation

	 	101 Convention Center
Drive
Suite 850

Las Vegas, NV 89109
	 	Leased
	 	Nevada Holding Services,
Inc.

Bank of America Center

101 Convention Center Drive
Suite 850

Las Vegas, NV 89109
	 	<$250,000
	 
	 	 	 	 	 	 	 	 
	NxStage Medical,
Inc.

	 	Fideltone Logistics
15600 S.
 Blackburn Ave.
Norwalk, CA 90650
	 	Operated by Third

Party
	 	Manna Freight Systems

2440 Enterprise Drive

Mendota Heights, MN 55120
	 	< $250,000
	 
	 	 	 	 	 	 	 	 
	NxStage
Medical, Inc.

	 	Reiss Manufacturing Inc.
75 Mt Vernon Rd
Englishtown, NJ 07726
	 	Operated by

Third Party
	 	Reiss Manufacturing Inc

PO Box 310

75 Mt Vernon Rd

Englishtown, NJ 07726-0310
	 	< $250,000

3exv10w1

Exhibit 10.1

FOURTEENTH AMENDMENT TO THE AMENDED AND RESTATED

KAYDON CORPORATION

EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN

	 	 	FOURTEENTH AMENDMENT to the above Plan made by the duly authorized officers of
the Company effective as provided below.

	 	1.	 	Recitation. The Employer has determined that an
amendment to the Plan is desirable to reinstate matching contributions
under the Plan at Indiana Precision, Inc.
	 
	 	2.	 	Amendment. The Plan is amended at Appendix J,
effective January 4, 2010, as follows:

     (a) At Section 4.1(f), to reinstate Matching Contributions for
Participants employed at Indiana Precision, Inc. based on elective
deferral contributions made out of Compensation earned on or after
January 4, 2010; and

     (b) At Section 6.2(f), to reinstate allocations of Matching
Contributions to Participants employed at Indiana Precision, Inc. based
on elective deferral contributions made out of Compensation earned on or
after January 4, 2010.

	 	3.	 	Substitution. The Amendment is incorporated in
revised plan pages which are attached to this Amendment. The pages have
been substituted for their respective counterparts in the Plan as amended.
The pages deleted shall be preserved, attached to the Amendment and marked
in the upper right hand corner to indicated that they were AMENDED by this
Amendment.

	 	 	 	 	 

	 	 	KAYDON CORPORATION
	 
	 	 	 	 
	 

	 	By
	 	Debra K. Crane
	 

	 	 	 	/s/ Debra K. Crane
	 

	 	 	 	Its V.P., General Counsel and Secretary
	 
	 	 	 	 
	 

	 	And
	 	Anthony T. Behrman
	 

	 	 	 	/s/ Anthony T. Behrman
	 

	 	 	 	Its V.P. – Human Resources

 

 

KAYDON CORPORATION

EMPLOYEE STOCK OWNERSHIP AND THRIFT PLAN

(As Amended and Restated February 19, 2002 Effective January 1, 1997)

 

 

KSOP 1.10

APPENDIX J

Canfield Technologies, Inc.

Tridan International, Inc. and

Indiana Precision, Inc.

The following sections of the Plan are added or modified as follows:

     Section 1.1 to add the following sentence:

     “Employees of Canfield Technologies, Inc., Tridan International, Inc. and
Indiana Precision, Inc. are added to the Plan effective October 1, 2000.

     Section 2.7 to add the following sentence:

     “Employee also excludes persons included in a collective bargaining unit at
Canfield Technologies, Inc.

     New Section 2.7A is added as follows:

     2.7A Employee Group. The Employee Groups are:

     (a) Canfield. Employees of Canfield Technologies, Inc. not included in
a collective bargaining unit.

     (b) Tridan. Employees of Tridan International, Inc.

     (c) Indiana Precision. Employees of Indiana Precision, Inc.

     (d) Other Non-Bargaining Unit. Employees of all other Employers not
included in a collective bargaining unit.

     (e) Other Bargaining Unit. Employees of all other Employers included
in a participating collective bargaining unit.

     New Section 2.10A is added as follows:

     2.10A Matching Contribution. A Matching Contribution is any Employer
Contribution made to the Plan on behalf of an Active Participant on

-3-

 

KSOP 1.10

account of an Elective Contribution made by the Active Participant for the Plan Year
or any forfeiture allocated on the basis of Matching or Elective Contributions,
excluding any contribution or allocation used to meet the top heavy minimum
contribution or benefit requirement of Code Section 416 and any Matching
Contribution to the extent considered for purposes of Code Section 401 (k) testing.

     Section 2.17(c) to add the following sentence:

     “A Year of Service also includes Years of Service credited prior to October 1,
2000 with Canfield Technologies, Inc., Tridan International, Inc., or Indiana
Precision, Inc.

     New Subsections 3.2(b)(v), (vi) and (vii) are added as follows:

     (v) Canfield. Each Employee who was a participant in the Canfield
Technologies, Inc. Simple IRA on August 27,2000 who was employed by an
Employer on October 1, 2000 became an Active Participant in this Plan on October 1,
2000;

     (vi) Tridan. Each Employee who was a participant in the Tridan
International, Inc. 401(k) Profit Sharing Plan on August 27, 2000 who was employed
by an Employer on October 1, 2000 became an Active Participant in this Plan on
October 1, 2000; and

     (vii) Indiana Precision. Each Employee who was a participant
in the Indiana Precision, Inc. 401 (k) Profit Sharing Plan on August 27, 2000 who
was employed by an Employer on October 1, 2000 became an Active Participant in this
Plan on October 1, 2000.

     Section 4.1 (b) is deleted and replaced with new Section 4.1 (b) as follows:

-4-

 

KSOP 1.10

     (b) Regular Profit Sharing. May contribute a Regular Profit Sharing
Contribution. The amount of the contribution, if any, is determined by the Board of
Directors of each Employer for its Employee Group or Groups in its discretion (or as
required by the applicable collective bargaining agreements), subject to the maximum
limitations of this Plan. The tentative contribution is reduced by the amount of
forfeitures to be reallocated to Employer Accounts on the Allocation Date after the
allocation of forfeitures as Matching Contribution. A Regular Profit Sharing
Contribution is allocated under Article VI and is subject to the applicable Vesting
Schedule.

     New Section 4.1(f) is added as follows:

     (f) Matching. For Canfield Technologies, Inc., Tridan International,
Inc. and Indiana Precision, Inc. only, contribute a Matching Contribution which is
the sum of $0.25 for each dollar of each eligible Participant’s Elective
Contributions (excluding Catch-Up Contributions) which do not exceed the appropriate
limits, except that no Matching Contribution shall be made for Participants employed
at Tridan International, Inc. based on elective deferral contributions made out of
Compensation earned on or after March 29, 2009 and no Matching Contribution shall be
made for Participants employed at Indiana Precision, Inc. based on elective deferral
contributions made out of Compensation earned on or after March 29, 2009 and prior
to January 4, 2010.

     The tentative contribution is reduced by the amount of forfeitures to be
reallocated to Employer Accounts on the Allocation Date. The Matching Contribution
is allocated under Article VI and is subject to the applicable Vesting Schedule.

     Section 6.1(a)(i) to add the following sentence:

     “This Account also includes prior plan profit-sharing amounts rolled-over into
this Plan.”

-5-

 

KSOP 1.10

     New Subsection 6.1 (a)(viii) is added as follows:

     (viii) Employer Matching Contributions Account. The Accounts to which
any Employer Matching Contributions and amounts rolled-over to this Plan are
credited;

     The preface of Section 6.2 is deleted and replaced with a new preface as follows:

     6.2 Allocation of Employer Contributions. Employer Regular Profit
Sharing Contributions for the Plan Year are allocated to the Employer Regular Profit
Sharing Accounts of Active Participants who complete one thousand (1,000) Hours of
Service during the Plan Year and are Employees in the designated Employee Group of
the Employer making the contribution on the last day of that Plan Year, or who are
Employees in that Employee Group during the Plan Year but who retire, die, or become
Disabled during the Plan Year, first, to each Employee Group as provided in a
resolution of the Employer and, second, within each Employee Group in the proportion
which the Compensation of each Active Participant within that Employee Group for the
Plan Year bears to the aggregate of the Compensation of the Active Participants
within that Employee group for the Plan Year (or as otherwise required by an
applicable collective bargaining agreement), subject to the Testing Adjustment.

     New Subsection 6.2(f) is added as follows:

     (f) Matching. Matching Contributions are allocated to the Matching
Account of each Active Participant employed by Canfield Technologies, Inc., Tridan
International, Inc. or Indiana Precision, Inc. eligible for an allocation of
Employer Regular Profit Sharing Contributions for the Plan Year based on each
eligible Active Participant’s Elective Contributions for the year which are eligible
for a Matching Contribution as provided under Article

-6-

 

KSOP 1.10

IV. The amount allocated is $0.25 for each dollar of the Participant’s Elective
Contributions up to the maximum Elective Contribution allowed the Participant for
the year, except that no Matching Contribution shall be allocated to Participants
employed at Tridan International, Inc. based on elective deferral contributions made
out of Compensation earned on or after March 29, 2009 and no Matching Contribution
shall be allocated to Participants employed at Indiana Precision, Inc. based on
elective deferral contributions made out of Compensation earned on or after March
29, 2009 and prior to January 4, 2010.

     Section 6.3 is deleted and replaced with new Section 6.3 as follows:

     6.3 Allocation of Forfeitures. Forfeitures from the Non-Vested
Accounts of participants who have incurred five (5) consecutive Breaks in Service,
received a distribution of their entire Vested Account Balance, or died after
terminating employment during the Plan Year are first allocated to reduce any
Forfeiture Restoration Contribution. Any remaining forfeitures are allocated first
in the same manner as Matching Contributions and next in the same manner as Employer
Regular Profit Sharing Contributions. Forfeitures allocated as Contributions reduce
the contribution of the Employer for the year.

     The preface of Section 6.5 is deleted and replaced with a new preface as
follows:

     6.5 Vesting. The Account Balance in each Account other than the
Employer Regular Profit Sharing and the Employer Matching Contributions Account, if
any, is fully vested and nonforfeitable at all times. The Account Balance in each
Employer Regular Profit Sharing Account and each Employer Matching Contributions
Account is fully vested and nonforfeitable upon the Participant’s attainment of
Normal Retirement Age, Death, or

-7-

 

KSOP 1.10

Disability while an employee of the Employer (or Affiliated Employer) and under one
or a combination of the following Vesting Schedules:

     New Subsection 6.5(e) is added as follows:

     (e) Matching. Effective for Matching Contributions attributable to Plan Year
beginning on and after January 1, 2002, the schedule applicable to Employer Matching
contributions is:

	 	 	 	 	 
	Years of Service for Vesting Purposes	 	Percentage
	To Date Employment Terminated	 	Vested
	Less than 1 year
	 	 	0	%
	1 year but less than 2 years
	 	 	10	%
	2 years but less than 3 years
	 	 	20	%
	3 years but less than 4 years
	 	 	40	%
	4 years but less than 5 years
	 	 	60	%
	5 years but less than 6 years
	 	 	80	%
	6 years or more
	 	 	100	%

     New Section 7.16 is added as follows:

     7.16 Loans. An Active Participant, a participant who is a party in interest
under ERISA with respect to the Plan, or a beneficiary of a deceased participant who
was a party in interest (other than an Owner-Employee or Shareholder-Employee) may
maintain a loan rolled-over to this Plan from a plan maintained by Canfield
Technologies, Inc., Tridan International, Inc. or Indiana Precision, Inc. which was
qualified under Section 401 (a) of the Code in which the participant was not an
owner-employee or a shareholder-employee. The Committee may authorize continuation
of the loan on the terms and conditions prescribed in this Section and in Appendix
J.

     (a) Maximum Amount. A loan is limited to the lesser of:

          (i) Maximum Dollar Amount. $50,000.00, reduced by the
excess of:

-8-

 

KSOP 1.10

               (A) Prior Balance. The highest outstanding balance of loans
from the Plan during the 1 -year period ending on the day before the date on
which the loan is made, over

          (B) Outstanding Balance. The outstanding balance of loans from
the Plan on the date on which the loan is made;

          (ii) One-Half Vested Account. One-half (I /2) of the participant’s
Vested Account Balance; or

               (iii) Aggregation. The amount tentatively determined in (i) or (ii)
above reduced by the aggregate outstanding principal balance of all loans from any
qualified plans maintained by the Employer (or Affiliated Employer).

     (b) Spousal Consent. The Committee may accept the loan only if spousal
consent of any Qualifying Spouse was obtained within ninety (90) days before the
loan or the Committee determines that spousal consent was not required.

     (c) Conditions. Loans: constitute an investment of the participant’s
Account; must be evidenced by a promissory note bearing a reasonable rate of
interest, providing for level amortization and having a definite maturity date or
repayment schedule with payments not less frequently than quarterly; and must be
secured by a mortgage, pledge, guarantee or other adequate collateral. The
participant must demonstrate a realistic plan and intention for repayment of any
loan.

     (d) Term. The term for repayment of the note must not exceed five (5)
years unless the participant or beneficiary certified that the proceeds of the loan
would be used for the acquisition or construction of a structure which was used,
within a reasonable time determined at the time the loan was made, as the principal
residence of the participant.

     (e) Set Off. If a participant or beneficiary dies, retires, is totally
and permanently disabled, terminates employment, revokes a payroll deduction

-9-

 

KSOP 1.10

payment authorization, requests a distribution which would cause the remaining
Account Balance to fail to be adequate security under ERISA, or defaults under the
terms of the loan or any agreement securing the loan, or if the Plan is terminated,
with all or a portion of the note (including principal and interest) outstanding,
the balance in the Account and all benefits payable under the Plan are reduced by
the outstanding amount at the earliest time which will not cause disqualification of
the Plan.

     (f) Accounting. For purposes of allocating earnings, losses and
adjustments in value of the Trust, the participant’s Account is reduced by the
principal amount of any loan outstanding. Interest paid on the loan is credited
directly to the participant’s Account.

     (g) Suspension of Loan Payments. If permitted by the administrator,
loan payments shall be suspended for a period that a Participant is on a leave of
absence either without compensation or at a level of compensation that is less than
the amount of the installment payments required under the terms of the loan.

          (i) Length of Suspension/Due Date.

     (A) Military Leave of Absence. If a Participant
is performing service in the uniformed services (as defined in
Chapter 43 of Title 38 of the United States Code), whether or not
Qualified military Service, loan payments shall be suspended until
the end of the leave of absence. The loan, including accrued
interest, must be repaid by the end of the period that equals the
original term of the loan plus the period of military service.

     (B) General Leave of Absence. For all other leaves of
absences, loan payments shall be suspended for the period of the
leave of absence, but not longer than one year. The

-10-

 

KSOP 1.10

loan, including accrued interest, must be repaid by the latest date
permitted under (c)(ii) above.

     (ii) Payments on Resumption. The installment payments due at the
end of the suspension must be at least equal to, and as frequent as, those
required under the original terms of the loan. If installment payments are not
increased on resumption of payment, the Participant must repay the entire
remaining balance of the loan on the due date specified in (i) above.

     Section 9.9 to add the following sentence:

     “Expenses not paid by Kaydon Corporation shall be charged against participants’
accounts in a reasonable manner.”

-11-

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