Document:

Exhibit
10.1

 

 

CREDIT
AGREEMENT

 

Among

 

MARTEK
BIOSCIENCES CORPORATION,

A
Delaware Corporation

 

“As
Borrower”

 

and

 

MANUFACTURERS
AND TRADERS TRUST COMPANY,

A New
York Banking Corporation

 

“As Agent
and Issuing Lender”

 

and

 

MANUFACTURERS
AND TRADERS TRUST COMPANY,

A New
York Banking Corporation

 

AND VARIOUS OTHER FINANCIAL INSTITUTIONS

NOW OR HEREAFTER PARTY HERETO

 

“As
Lenders”

 

Dated:  To Be Effective As Of January 21, 2010

 

 

 

TABLE OF
CONTENTS

 

	
  ARTICLE 1

  	
  CERTAIN DEFINITIONS; RULES OF
  CONSTRUCTION

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01

  	
  CERTAIN DEFINITIONS

  	
  1

  
	
  SECTION 1.02

  	
  TERMS GENERALLY

  	
  23

  
	
  SECTION 1.03

  	
  ACCOUNTING PRINCIPLES

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  CREDIT FACILITIES

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01

  	
  REVOLVING CREDIT LOANS

  	
  24

  
	
  2.01.1

  	
  Revolving
  Credit Loan Promissory Notes

  	
  24

  
	
  2.01.2

  	
  Procedure For
  Revolving Credit Loan Borrowings

  	
  24

  
	
  2.01.3

  	
  Repayment Of
  Revolving Credit Loans

  	
  25

  
	
  2.01.4

  	
  Permitted
  Purposes Of Revolving Credit Loans

  	
  25

  
	
  2.01.5

  	
  Revolving
  Credit Unused Fees

  	
  25

  
	
  2.01.6

  	
  Permanent
  Reduction Of Revolving Credit Dollar Cap

  	
  25

  
	
  2.01.7

  	
  Increase In
  Revolving Credit Commitments

  	
  26

  
	
  SECTION 2.02.

  	
  LETTER OF CREDIT SUBFACILITY

  	
  26

  
	
  2.02.1

  	
  Request for
  Issuance; Amendment; Renewal; Extension; Certain Conditions

  	
  27

  
	
  2.02.2

  	
  Expiration
  Date

  	
  27

  
	
  2.02.3

  	
  Agreement of
  Lenders To Purchase Proportionate Share of Letters of Credit

  	
  27

  
	
  2.02.4

  	
  Reimbursement
  Obligations of the Borrower

  	
  28

  
	
  2.02.5

  	
  Borrower’s
  Reimbursement Obligations Are Absolute

  	
  28

  
	
  2.02.6

  	
  Applicability
  of ISP98

  	
  28

  
	
  2.02.7

  	
  Interim
  Interest

  	
  28

  
	
  2.02.8

  	
  Cash
  Collateralization

  	
  29

  
	
  2.02.9

  	
  Letter of
  Credit Fees

  	
  29

  
	
  2.02.10

  	
  Letters of
  Credit Issued for Other Loan Parties or Subsidiaries

  	
  29

  
	
  2.02.11

  	
  Increased
  Costs

  	
  29

  
	
  SECTION 2.03.

  	
  TERM LOANS

  	
  30

  
	
  2.03.1

  	
  Term Loan
  Notes

  	
  30

  
	
  2.03.2

  	
  Payment

  	
  30

  
	
  2.03.3

  	
  Mandatory
  Prepayments

  	
  30

  
	
  2.03.4.

  	
  Voluntary
  Prepayments

  	
  31

  
	
  SECTION 2.04.

  	
  INTEREST TERMS APPLICABLE TO THE LOANS

  	
  31

  
	
  2.04.1.

  	
  Adjusted Base
  Rate

  	
  31

  
	
  2.04.2.

  	
  LIBOR
  Borrowing Option

  	
  31

  
	
  2.04.3

  	
  Calculation Of
  Interest

  	
  32

  
	
  2.04.4

  	
  Default
  Interest

  	
  33

  
	
  2.04.5

  	
  Maximum Rate
  Of Interest

  	
  33

  
	
  SECTION 2.05.

  	
  LATE PAYMENT CHARGES

  	
  33

  
	
  SECTION 2.06.

  	
  PRO RATA TREATMENT AND PAYMENTS

  	
  33

  
	
  2.06.1.

  	
  Distribution
  Of Payments To Lenders

  	
  33

  
	
  2.06.2.

  	
  Funding Of
  Loans

  	
  33

  
	
  2.06.3.

  	
  Ratable
  Sharing

  	
  34

  
	
  2.06.4.

  	
  Setoffs,
  Counerclaims, Other Payments

  	
  34

  
	
  SECTION 2.07.

  	
  APPLICATION OF PAYMENTS

  	
  34

  
	
  SECTION 2.08.

  	
  INCREASED COSTS

  	
  35

  
	
  2.08.1.

  	
  Increased
  Costs Generally

  	
  35

  
	
  2.08.2

  	
  Capital
  Requirements

  	
  35

  
	
  2.08.3

  	
  Certificate
  for Reimbursement

  	
  35

  
	
  2.08.4

  	
  Delay in
  Requests

  	
  36

  
	
  SECTION 2.09.

  	
  TAXES

  	
  36

  
	
  2.09.1

  	
  Payment Free
  of Taxes

  	
  36

  
	
  2.09.2

  	
  Payment of
  Other Taxes by the Borrower

  	
  36

  

 

i

 

	
  2.09.3

  	
  Indemnification
  by the Borrower

  	
  36

  
	
  2.09.4

  	
  Evidence of
  Payments

  	
  36

  
	
  2.09.5

  	
  Status of
  Lenders

  	
  36

  
	
  2.09.6

  	
  Treatment of
  Certain Refunds

  	
  37

  
	
  SECTION 2.10.

  	
  MITIGATION, OBLIGATIONS; REPLACEMENT OF LENDERS

  	
  37

  
	
  2.10.1

  	
  Designation of
  a Different Lending Office

  	
  37

  
	
  2.10.2

  	
  Replacement of
  Lenders

  	
  38

  
	
  SECTION 2.11.

  	
  FEES

  	
  38

  
	
  SECTION 2.12.

  	
  PAYMENTS

  	
  38

  
	
  SECTION 2.13.

  	
  ADVANCEMENTS

  	
  38

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  REPRESENTATIONS AND WARRANTIES

  	
  39

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01

  	
  ORGANIZATION AND QUALIFICATION

  	
  39

  
	
  SECTION 3.02

  	
  CAPITALIZATION AND OWNERSHIP

  	
  39

  
	
  SECTION 3.03

  	
  SUBSIDIARIES

  	
  39

  
	
  SECTION 3.04

  	
  POWER AND AUTHORITY

  	
  40

  
	
  SECTION 3.05

  	
  VALIDITY AND BINDING EFFECT

  	
  40

  
	
  SECTION 3.06

  	
  NO CONFLICT

  	
  40

  
	
  SECTION 3.07

  	
  LITIGATION

  	
  40

  
	
  SECTION 3.08

  	
  FINANCIAL CONDITION; FINANCIAL PROJECTIONS

  	
  40

  
	
  3.08.1.

  	
  Financial
  Statements

  	
  40

  
	
  3.08.2.

  	
  Books and
  Records

  	
  41

  
	
  3.08.3.

  	
  Absence of
  Material Liability

  	
  41

  
	
  3.08.4.

  	
  Financial
  Projections

  	
  41

  
	
  SECTION 3.09

  	
  MARGIN STOCK

  	
  41

  
	
  SECTION 3.10

  	
  FULL DISCLOSURE

  	
  41

  
	
  SECTION 3.11

  	
  TAX RETURNS AND PAYMENTS

  	
  41

  
	
  SECTION 3.12

  	
  CONSENTS AND APPROVALS

  	
  42

  
	
  SECTION 3.13

  	
  NO EVENT OF DEFAULT; COMPLIANCE WITH INSTRUMENTS

  	
  42

  
	
  SECTION 3.14

  	
  COMPLIANCE WITH LAWS

  	
  42

  
	
  SECTION 3.15.

  	
  ERISA COMPLIANCE

  	
  42

  
	
  3.15.1.

  	
  Plans and Contributions

  	
  42

  
	
  3.15.2.

  	
  Pending Claims

  	
  42

  
	
  3.15.3.

  	
  ERISA Events

  	
  42

  
	
  SECTION 3.16

  	
  TITLE TO PROPERTIES

  	
  43

  
	
  SECTION 3.17

  	
  INSURANCE

  	
  43

  
	
  SECTION 3.18

  	
  EMPLOYMENT MATTERS

  	
  43

  
	
  SECTION 3.19.

  	
  SOLVENCY

  	
  43

  
	
  SECTION 3.20

  	
  MATERIAL CONTRACTS; BURDENSOME RESTRICTIONS

  	
  43

  
	
  SECTION 3.21

  	
  PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.

  	
  43

  
	
  SECTION 3.22

  	
  LIENS

  	
  43

  
	
  SECTION 3.23.

  	
  ENVIRONMENTAL COMPLIANCE

  	
  43

  
	
  SECTION 3.24

  	
  ANTI-TERRORISM LAWS

  	
  44

  
	
  SECTION 3.25

  	
  ACQUISITION

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  CONDITIONS PRECEDENT

  	
  44

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  CONDITIONS TO CLOSING

  	
  44

  
	
  4.01.1.

  	
  Closing
  Submissions

  	
  44

  
	
  4.01.2.

  	
  Fees

  	
  44

  
	
  4.01.4

  	
  Closing Date

  	
  44

  
	
  4.01.4

  	
  Existing
  Revolver

  	
  44

  
	
  4.02.3

  	
  Purchase
  Agreement

  	
  44

  
	
  4.02.4

  	
  Acquisition
  Information

  	
  44

  
	
  SECTION 4.02.

  	
  CONDITIONS TO FUNDING DATE

  	
  44

  
	
  4.02.1

  	
  Funding
  Submissions

  	
  45

  
	
  4.02.2

  	
  Credit Party
  Expenses

  	
  45

  
	
  4.02.5

  	
  Senior
  Leverage Ratio

  	
  45

  
	
  4.02.6

  	
  Debt
  Capitalization Ratio

  	
  45

  

 

ii

 

	
  4.02.7

  	
  Minimum Equity

  	
  45

  
	
  4.02.8

  	
  Acquisition
  Date

  	
  45

  
	
  4.02.9

  	
  Subsidiaries

  	
  45

  
	
  4.02.10

  	
  Funding Date

  	
  45

  
	
  4.02.11

  	
  Landlord
  Warehouseman Agreements

  	
  45

  
	
  SECTION 4.03.

  	
  CONDITIONS TO ADVANCES OF PROCEEDS OF LOANS AND ISSUANCES
  OF LETTERS OF CREDIT AFTER CLOSING DATE

  	
  46

  
	
  4.03.1.

  	
  Representations
  And Warranties

  	
  46

  
	
  4.03.2.

  	
  Absence Of
  Defaults And Events Of Default

  	
  46

  
	
  4.03.3.

  	
  No Material
  Adverse Changes

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  AFFIRMATIVE COVENANTS

  	
  46

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  PAYMENT AND PERFORMANCE

  	
  46

  
	
  SECTION 5.02.

  	
  INSURANCE

  	
  46

  
	
  SECTION 5.03.

  	
  COLLECTION OF ACCOUNTS; SALE OF INVENTORY

  	
  47

  
	
  SECTION 5.04.

  	
  NOTICE OF LITIGATION AND PROCEEDINGS

  	
  47

  
	
  SECTION 5.05.

  	
  PAYMENT OF LIABILITIES TO THIRD PERSONS

  	
  47

  
	
  SECTION 5.06.

  	
  NOTICE OF CHANGE OF BUSINESS LOCATION

  	
  47

  
	
  SECTION 5.07.

  	
  PAYMENT OF TAXES

  	
  47

  
	
  SECTION 5.08.

  	
  REPORTING REQUIREMENTS

  	
  48

  
	
  5.08.1.

  	
  Inventory
  Reports

  	
  48

  
	
  5.08.2.

  	
  Receivables
  And Accounts Payable Reports

  	
  48

  
	
  5.08.3.

  	
  Quarterly
  Financial Statements

  	
  48

  
	
  5.08.4.

  	
  Annual
  Financial Statements

  	
  48

  
	
  5.08.5.

  	
  Management
  Letters

  	
  48

  
	
  5.08.6.

  	
  Compliance
  Certificate

  	
  48

  
	
  5.08.7.

  	
  Reports To
  Other Creditors

  	
  48

  
	
  5.08.8.

  	
  Management
  Changes

  	
  48

  
	
  5.08.10.

  	
  Notice of
  Defaults and Events of Default

  	
  49

  
	
  5.08.11.

  	
  SEC Filings

  	
  49

  
	
  5.08.12.

  	
  General
  Information

  	
  49

  
	
  SECTION 5.09.

  	
  PRESERVATION OF EXISTENCE, ETC.

  	
  49

  
	
  SECTION 5.10.

  	
  MAINTENANCE OF ASSETS AND PROPERTIES

  	
  49

  
	
  SECTION 5.11.

  	
  COMPLIANCE WITH LAWS

  	
  49

  
	
  SECTION 5.12.

  	
  INSPECTION RIGHTS

  	
  49

  
	
  SECTION 5.13.

  	
  ENVIRONMENTAL MATTERS AND INDEMNIFICATION

  	
  49

  
	
  SECTION 5.14.

  	
  ADDITIONAL GUARANTORS

  	
  49

  
	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  NEGATIVE COVENANTS

  	
  50

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  LIENS

  	
  50

  
	
  SECTION 6.02.

  	
  INVESTMENTS AND LOANS

  	
  50

  
	
  SECTION 6.03.

  	
  INDEBTEDNESS

  	
  50

  
	
  SECTION 6.04.

  	
  FUNDAMENTAL CHANGES

  	
  51

  
	
  SECTION 6.05.

  	
  DISPOSITIONS

  	
  51

  
	
  SECTION 6.06.

  	
  RESTRICTED PAYMENTS

  	
  51

  
	
  SECTION 6.07.

  	
  CHANGE IN NATURE OF BUSINESS

  	
  51

  
	
  SECTION 6.08.

  	
  TRANSACTIONS WITH AFFILIATES

  	
  51

  
	
  SECTION 6.09.

  	
  BURDENSOME AGREEMENTS; NEGATIVE PLEDGES

  	
  52

  
	
  SECTION 6.10.

  	
  USE OF PROCEEDS

  	
  52

  
	
  SECTION 6.11.

  	
  CONSOLIDATED LEVERAGE RATIO

  	
  52

  
	
  SECTION 6.12.

  	
  CONSOLIDATED FIXED CHARGE COVERAGE RATIO

  	
  52

  
	
  SECTION 6.13.

  	
  MINIMUM CONSOLIDATED EBITDA

  	
  52

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  EVENTS OF DEFAULT

  	
  52

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01.

  	
  FAILURE TO PAY

  	
  52

  
	
  SECTION 7.02.

  	
  VIOLATION OF COVENANTS

  	
  52

  
	
  SECTION 7.03.

  	
  REPRESENTATION OR WARRANTY

  	
  53

  
	
  SECTION 7.04.

  	
  CROSS DEFAULT

  	
  53

  

 

iii

 

	
  SECTION 7.05.

  	
  JUDGMENTS

  	
  53

  
	
  SECTION 7.06.

  	
  LEVY BY JUDGMENT CREDITOR

  	
  53

  
	
  SECTION 7.07.

  	
  INVOLUNTARY INSOLVENCY PROCEEDINGS

  	
  53

  
	
  SECTION 7.08.

  	
  VOLUNTARY INSOLVENCY PROCEEDINGS

  	
  53

  
	
  SECTION 7.09.

  	
  ATTEMPT TO TERMINATE OR LIMIT GUARANTIES

  	
  53

  
	
  SECTION 7.10.

  	
  ERISA

  	
  54

  
	
  SECTION 7.11.

  	
  INJUNCTION

  	
  54

  
	
  SECTION 7.12.

  	
  CHANGE IN CONTROL

  	
  54

  
	
  SECTION 7.13

  	
  MATERIAL ADVERSE CHANGE

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8                                                RIGHTS AND
  REMEDIES OF CREDIT PARTIES ON THE OCCURRENCE OF AN EVENT OF DEFAULT

  	
  54

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01.

  	
  CREDIT PARTIES’ SPECIFIC RIGHTS AND REMEDIES

  	
  54

  
	
  SECTION 8.02.

  	
  AUTOMATIC ACCELERATION

  	
  54

  
	
  SECTION 8.03.

  	
  CONSENT TO APPOINTMENT OF RECEIVER

  	
  54

  
	
  SECTION 8.04.

  	
  REMEDIES CUMULATIVE

  	
  54

  
	
  SECTION 8.05.

  	
  APPLICATION OF FUNDS

  	
  55

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  THE AGENT

  	
  55

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  APPOINTMENT

  	
  55

  
	
  SECTION 9.02.

  	
  EXCULPATORY PROVISIONS

  	
  56

  
	
  9.02.1.

  	
  No Fiduciary,
  Discretionary or Implied Duties

  	
  56

  
	
  9.02.2.

  	
  No Liability
  for Certain Actions

  	
  56

  
	
  9.02.3.

  	
  Knowledge

  	
  56

  
	
  9.02.4.

  	
  No Duty to
  Inquire

  	
  56

  
	
  SECTION 9.03.

  	
  RELIANCE BY AGENT

  	
  56

  
	
  SECTION 9.04.

  	
  DELEGATION OF DUTIES

  	
  57

  
	
  SECTION 9.05.

  	
  RESIGNATION OF AGENT

  	
  57

  
	
  SECTION 9.06.

  	
  NON-RELIANCE ON AGENT AND OTHER LENDERS

  	
  57

  
	
  SECTION 9.07.

  	
  AGENT MAY HOLD COLLATERAL FOR LENDERS AND OTHERS

  	
  58

  
	
  SECTION 9.08.

  	
  THE AGENT IN ITS INDIVIDUAL CAPACITY

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  MISCELLANEOUS

  	
  58

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01.

  	
  NOTICES

  	
  58

  
	
  SECTION 10.02.

  	
  COURSE OF CONDUCT

  	
  59

  
	
  SECTION 10.03.

  	
  WAIVERS AND AMENDMENTS

  	
  59

  
	
  SECTION 10.04.

  	
  EXPENSES

  	
  60

  
	
  SECTION 10.05.

  	
  INDEMNITY

  	
  60

  
	
  SECTION 10.06.

  	
  WAIVER OF CLAIMS

  	
  61

  
	
  SECTION 10.07.

  	
  SUCCESSORS AND ASSIGNS GENERALLY

  	
  61

  
	
  SECTION 10.08.

  	
  ASSIGNMENTS BY LENDERS

  	
  62

  
	
  SECTION 10.09.

  	
  REGISTER

  	
  62

  
	
  SECTION 10.10.

  	
  PROCEDURES FOR IMPLEMENTING LENDER ASSIGNMENTS

  	
  62

  
	
  SECTION 10.11.

  	
  PARTICIPATIONS

  	
  63

  
	
  SECTION 10.12.

  	
  PLEDGES

  	
  63

  
	
  SECTION 10.13.

  	
  RESIGNATION BY M&T BANK AS ISSUING LENDER

  	
  63

  
	
  SECTION 10.14.

  	
  SURVIVAL

  	
  64

  
	
  SECTION 10.15.

  	
  COUNTERPARTS AND INTEGRATION

  	
  64

  
	
  SECTION 10.16.

  	
  ELECTRONIC EXECUTION

  	
  64

  
	
  SECTION 10.17.

  	
  SEVERABILITY

  	
  64

  
	
  SECTION 10.18.

  	
  RIGHT OF SETOFF

  	
  64

  
	
  SECTION 10.19.

  	
  GOVERNING LAW

  	
  65

  
	
  SECTION 10.20.

  	
  JURISDICTION

  	
  65

  
	
  SECTION 10.21.

  	
  VENUE

  	
  65

  
	
  SECTION 10.22.

  	
  SERVICE OF PROCESS

  	
  65

  
	
  SECTION 10.23.

  	
  WAIVER OF JURY TRIAL

  	
  65

  
	
  SECTION 10.24.

  	
  TIME

  	
  65

  
	
  SECTION 10.25.

  	
  TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY

  	
  65

  

 

iv

 

	
  SECTION 10.26

  	
  ADVERTISEMENT

  	
  66

  
	
  SECTION 10.27.

  	
  ACKNOWLEDGMENTS

  	
  66

  
	
  SECTION 10.28.

  	
  USA PATRIOT ACT NOTICE

  	
  66

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule
  3.02

  	
  Capital Stock Guarantors

  	
   

  
	
  Schedule
  3.03

  	
  Subsidiaries

  	
   

  
	
  Schedule
  3.20

  	
  Material Contracts

  	
   

  
	
  Schedule 6.03

  	
  Indebtedness

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Assignment And Assumption

  	
   

  
	
  Exhibit B

  	
  Form of Compliance Certificate

  	
   

  
	
  Exhibit C

  	
  Form of Lender Addendum

  	
   

  
	
  Exhibit D

  	
  Form of Revolving Credit Note

  	
   

  
	
  Exhibit E

  	
  Form of Term Loan Note

  	
   

  
	
  Exhibit F

  	
  Opinion
  Letter Contents

  	
   

  

 

v

 

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT is dated to be effective as of
January 21, 2010, by and between MARTEK BIOSCIENCES CORPORATION, a
Delaware corporation (“Borrower”), each lender from time to time party hereto
(collectively, the “Lenders” and each a “Lender”) and MANUFACTURERS AND TRADERS
TRUST COMPANY, a New York banking corporation, as Agent and Issuing Lender.

 

RECITALS:

 

The Borrower has requested that the Lenders extend
loans and other financial accommodations to the Borrower as more particularly
described in this Credit Agreement.

 

The Lenders have agreed to provide such loans and
financial accommodations to the Borrower in accordance with the terms and
conditions contained herein.

 

NOW, THEREFORE, in consideration of the mutual
covenants and agreements hereinafter set forth, and other valuable
consideration, and intending to be legally bound hereby, the parties hereby
covenant and agree as follows:

 

ARTICLE
1

CERTAIN DEFINITIONS; RULES OF CONSTRUCTION

 

Section 1.01.                             Certain Definitions.  In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following meanings, respectively,
unless the context hereof clearly requires otherwise:

 

“Account” means any “account” within the meaning of that term
under the Uniform Commercial Code.

 

“Account Debtor” means any “account debtor” within the
meaning of that term under the Uniform Commercial Code, including any Person
who is obligated to pay an Account.

 

“Acquisition” means the Borrower’s acquisition of Amerifit
pursuant to the terms of the Purchase Agreement.

 

“Acquisition Target” means any Person (or
substantially all of the assets and business operations of any Person) which is
to be acquired in a Permitted Acquisition by the Borrower or any of its
Subsidiaries.

 

“Act” means the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA Patriot Act), Act of 2001, Pub. L.
No. 107-56, 115 Stat. 272 (codified in scattered sections of 18 U.S.C.A.).

 

“Adjusted Base Rate”
means that rate of interest equal to the Base Rate plus the Applicable
Margin.

 

“Adjusted Base Rate Borrowing”  means each amount of the unpaid principal
balance of a Loan which accrues interest at the Adjusted Base Rate.

 

“Adjusted LIBOR Rate” means for any LIBOR
Borrowing for any Interest Period, an interest rate per annum that is equal to
the LIBOR Rate for such Interest Period plus the Applicable Margin.

 

 

“Affiliate” means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.

 

“Agent” means M&T Bank, in its capacity as
administrative agent for the Lenders in accordance with this Agreement, and its
successors and assigns in such capacity as authorized by the terms of this
Agreement.

 

“Agreement” means this Credit Agreement, as it may be amended
or modified from time to time, together with all schedules and exhibits hereto.

 

“Amerifit” means Charter Amerifit, LLC, a Delaware limited
liability company, and certain of its subsidiaries, including Amerifit
Brands, Inc.

 

“Applicable Margin” means the following
percentages corresponding to the Consolidated Leverage Ratio in effect as of
the most recent Calculation Date:

 

	
   

  	
   

  	
   

  	
   

  	
  APPLICABLE MARGIN FOR

  ADJUSTED BASE RATE

  BORROWINGS

  	
   

  	
  APPLICABLE MARGIN FOR

  LIBOR BORROWINGS

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TIER

  LEVEL

  	
   

  	
  CONSOLIDATED

  LEVERAGE RATIO

  	
   

  	
  REVOLVING

  CREDIT LOANS

  	
   

  	
  TERM

  LOANS

  	
   

  	
  REVOLVING

  CREDIT LOANS

  	
   

  	
  TERM

  LOANS

  	
   

  	
  APPLICABLE MARGIN

  FOR REVOLVING

  CREDIT UNUSED FEES

  	
   

  	
  APPLICABLE MARGIN

  FOR LETTER OF

  CREDIT FEES

  	
   

  
	
  1

  	
   

  	
  X > 2.25 

  	
   

  	
  1.000

  	
  %

  	
  1.25

  	
  %

  	
  3.000

  	
  %

  	
  3.375

  	
  %

  	
  0.500

  	
  %

  	
  3.00

  	
  %

  
	
  2

  	
   

  	
  1.75 < X < 2.25

  	
   

  	
  0.750

  	
  %

  	
  1.00

  	
  %

  	
  2.625

  	
  %

  	
  3.000

  	
  %

  	
  0.250

  	
  %

  	
  2.625

  	
  %

  
	
  3

  	
   

  	
  1.25 < X < 1.75

  	
   

  	
  0.250

  	
  %

  	
  0.50

  	
  %

  	
  2.375

  	
  %

  	
  2.625

  	
  %

  	
  0.250

  	
  %

  	
  2.375

  	
  %

  
	
  4

  	
   

  	
  X < 1.25

  	
   

  	
  0.000

  	
  %

  	
  0.00

  	
  %

  	
  2.000

  	
  %

  	
  2.375

  	
  %

  	
  0.250

  	
  %

  	
  2.00

  	
  %

  

 

The initial Applicable Margin shall be based on Tier
Level 1.  Beginning with the Calculation
Date immediately following the Fiscal Quarter of the Borrower ending on
April 30, 2010 and after each consecutive Fiscal Quarter thereafter, the
Applicable Margin shall be determined and adjusted by the then current
Consolidated Leverage Ratio as determined in accordance with the quarterly
Compliance Certificates to be provided by the Borrower in accordance with this
Agreement.  If the Borrower fails to
timely provide a Compliance Certificate for any Fiscal Quarter of the Borrower
as required by and within the time limitations set forth in this Agreement, the
Applicable Margin from the applicable date of such failure shall be based on
Tier Level 1 until five (5) Business Days after a Compliance
Certificate has been provided, whereupon the applicable Tier Level shall be
determined by the Consolidated Leverage Ratio set forth in such Compliance
Certificate.  If an Event of Default has
occurred and is continuing on a Calculation Date for which there should be a
reduction in the Applicable Margin due to a reduction in the Consolidated
Leverage Ratio, such reduction in the Applicable Margin shall not take effect
until the first day of the first calendar month following the date on which
such Event of Default is waived or cured. 
Except as set forth above, each Applicable Margin shall be effective
from a Calculation Date until the next Calculation Date.  If, as a result of any restatement of or
other adjustment to the financial statements of the Borrower and its
Subsidiaries or for any other reason, the Borrower or the Lenders determine
that (a) the Consolidated Leverage Ratio (or any component thereof) as
calculated by the Borrower as of any applicable date was inaccurate, and
(b) a proper calculation would have resulted in higher pricing for such
period, the Borrower shall immediately and retroactively be obligated to pay to
the Agent for the Account of the applicable Lenders or the Issuing Lender
promptly on demand by Agent (or, after the occurrence of an actual or deemed
entry of an order for relief with respect to the Borrower under the Bankruptcy
Code, automatically and without further action by Agent, any Lender or the
Issuing Lender), an amount equal to the excess of the amount of interest and
fees that should have been paid for such period over the amount of interest and
fees actually paid for such period. 
Borrower’s obligations to make such payment shall survive the
termination of the Commitments and the repayment of all other Obligations
hereunder.

 

2

 

“Approved Fund” means a Fund that is administered or managed
by (a) a Lender, (b) an Affiliate of a Lender, or (c) an entity
or an Affiliate of an entity that administers or manages a Lender.

 

“Assignment
And Assumption”  means an
Assignment and Assumption entered into by a Lender
and an Eligible Assignee, and accepted by the Agent, substantially in the form
of Exhibit A attached hereto or any other form approved by the Agent.

 

“Attributable Indebtedness”
means, on any date, (a) in respect of any capital lease of any Person, the
capitalized amount thereof that would appear on a balance sheet of such Person prepared
as of such date in accordance with GAAP, and (b) in respect of any
Synthetic Lease Obligation, the capitalized amount of the remaining lease
payments under the relevant lease that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease were
accounted for as a capital lease.

 

“Authorized Officer” means, with respect to any
Person (other than a natural Person), any officer, partner, manager or other
representative authorized to act on behalf of such Person and shall include,
with respect to any Loan Party, those Persons duly designated as such in any
incumbency certificates delivered to the Agent from time to time.

 

“Bank Products” means any one or more of the following types
of services or facilities extended to any of the Loan Parties by any Credit
Party or Affiliate of a Credit Party: (a) Automated Clearing House (ACH)
transactions and other similar money transfer services; (b) cash
management, lockbox services and other similar services; (c) establishing
and maintaining deposit accounts; (d) credit cards or stored value cards;
and (e) other similar or related bank products and services.

 

“Bankruptcy Code” means the bankruptcy code of the United
States of America codified in Title 11 of the United States Code, as from time
to time amended or supplemented.

 

“Base Rate” means, for any day, the fluctuating rate per annum
equal to the higher of (a) the Prime Rate for such day,  (b) the Federal Funds Rate in effect on
such day plus fifty (50) Basis Points, or (c) the LIBOR Rate plus
one hundred fifty (150) Basis Points. Any change in the Base Rate shall be
effective on the opening of business on the day of such change.

 

“Basis Point” means one one-hundredth (.01)of one percent.

 

“Borrowing Date” means, any Business Day specified in a Loan Request in
accordance with Section 2.01.2 of this Agreement as a date on which the
Borrower has requested that the Lenders advance proceeds of the Revolving
Credit Loans to or for the account of the Borrower.

 

“Business Day” means (a) any day other than a Saturday
or Sunday or a legal holiday on which commercial banks in the State of New York
are authorized or required to be closed under the Laws of the State of New
York, and (b) if the applicable Business Day relates to any day for the
determination of a LIBOR Rate, any day that satisfies the conditions of clause (a) above which is
also a day on which dealings in Dollar deposits are conducted by and between
banks in the London Interbank Eurodollar Market.

 

“Calculation Date” means each of the dates
upon which the Applicable Margins are to be determined and adjusted, which
adjustments shall be made quarterly on the date occurring five
(5) Business Days after the date on which the Agent receives the quarterly
Compliance Certificate in accordance with the provisions of this Agreement, or
otherwise as required by the terms of this Agreement.

 

3

 

“Capital Stock”  means (a) in the case of a corporation,
capital stock, (b) in the case of an association or business entity, any
and all shares, interests, participations, rights or other equivalents (however
designated) of capital stock, (c) in the case of a partnership,
partnership interests (whether general or limited), (d) in the case of a
limited liability company, membership interests, and (e) any other
interest or participation that confers on a Person the right to receive a share
of the profits and losses of, or distributions of assets of, the issuing
Person.

 

“Cash Capital Expenditures” means, with respect to any
Person for any applicable period, the capital expenditures of such Person made
during such period (including any capitalized expenditures for Intangible
Assets other than goodwill, customer lists and non-compete agreements),
excluding any capital expenditures paid from proceeds of Indebtedness (other
than proceeds of Indebtedness arising from borrowings under any working capital
line of credit or similar short term financing, such as the Revolving Credit
Loans).

 

“Cash Collateral” has the meaning given to such term in
Section 2.02.8 of this Agreement.

 

“Cash Collateralize” has the meaning given to
such term in Section 2.02.8 of this Agreement.

 

“Cash Equivalents” means (a) securities
issued or directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality thereof having maturities of not
more than one year from the date of acquisition, (b) time deposits,
certificates of deposit and Eurodollar time deposits with maturities of not
more than twelve (12) months from the date of acquisition, bankers’ acceptances
with maturities not exceeding twelve (12) months from the date of acquisition
and overnight bank deposits, in each case with the Agent or any Lender or with
any domestic commercial bank having capital and surplus in excess of Five
Hundred Million Dollars ($500,000,000), (c) repurchase obligations with a
term of not more than thirty (30) days for underlying securities of any of the
types described in clause (a) or (b) and entered into with any bank
meeting the qualifications specified in clause (b) above,
(d) commercial paper with maturities not exceeding twelve (12) months
rated not lower than A-1 or A-2 by Standard & Poor’s Ratings Group or
P-1 or P-2 by Moody’s Investors Service, Inc. on the date of acquisition,
(e) readily marketable obligations issued by any State of the United
States of America or any political subdivision thereof or any authorized agency
thereof having a rating of not lower than A-1 by Standard & Poor’s
Ratings Group or P-1 by Moody’s Investors Service, Inc. on the date of
acquisition, and (f) interests in pooled investment funds (including
mutual funds and money market funds) the assets of which are invested in
investments referred to in items (a) through (d) above.

 

“Cash Taxes” means, with respect to any referenced Person, for
any applicable period, the taxes paid in cash by such Person during such
period.

 

“Casualty Event” means any loss of or damage to, or any
condemnation or other taking of, any of the Collateral for which any Loan Party
receives insurance proceeds, or proceeds of a condemnation award or other
compensation.

 

“Change in Law” means the occurrence, after the date of this
Agreement, of any of the following: (a) the adoption or taking effect of
any Law, (b) any change in any Law or in the administration,
interpretation or application thereof by any Governmental Authority, or
(c) the making or issuance of any request, guideline or directive (whether
or not having the force of law) by any Governmental Authority.

 

4

 

“Change of Control” means an event or series of events by
which:

 

(a)                                  any “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, but excluding any employee benefit plan of such person or
its subsidiaries, and any person or entity acting in its capacity as trustee,
agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time (such right, an “option right”)), directly or
indirectly, of twenty-five percent (25%) or more of the equity securities of
the Borrower entitled to vote for members of the board of directors or
equivalent governing body of the Borrower on a fully-diluted basis (and taking
into account all such securities that such person or group has the right to
acquire pursuant to any option right), or

 

(b)                                 during any period of
twenty-four (24) consecutive months, a majority of the members of the board of directors
or other equivalent governing body of the Borrower cease to be composed of
individuals (i) who were members of that board or equivalent governing
body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to
in clause (i) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body or
(iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at
least a majority of that board or the nominating committee thereof or
equivalent governing body (excluding, in the case of both clause (ii) and
clause (iii), any individual whose initial nomination for, or assumption of
office as, a member of that board or equivalent governing body occurs as a
result of an actual or threatened solicitation of proxies or consents for the
election or removal of one or more directors by any person or group other than
a solicitation for the election of one or more directors by or on behalf of the
board of directors)

 

“Closing” means the execution and delivery of this Agreement by
the parties hereto.

 

“Closing Date” means the above stated effective date of
this Agreement.

 

“Code” means 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”
means all of the tangible and intangible assets and real and personal property
of the Loan Parties which is pledged from time to time to the Credit Parties in
accordance with the Security Documents to secure the Obligations.

 

“Commitment Percentages”
means, with respect to any Lender, such Lender’s Revolving Credit Commitment
Percentage and Term Loan Commitment Percentage, and with respect to all
Lenders, all of the Revolving Credit Commitment Percentages and all of the Term
Loan Commitment Percentages.

 

“Commitment
Period”  means, with respect to
Revolving Credit Loans, the period from and including the Closing Date to but
not including the Revolving Credit Termination Date.

 

“Commitments” means, with respect to any Lender, such
Lender’s Revolving Credit Commitment and Term Loan Commitment and its
obligations hereunder to purchase participations in LC Obligations.

 

5

 

“Compliance
Certificate” means a certificate provided by the Borrower in
accordance with the requirements of Section 5.08.7 of this Agreement in
form and substance as Exhibit B attached hereto.

 

“Consolidated EBITDA” means for any period, for the Borrower
and its Subsidiaries on a consolidated basis, an amount equal to Consolidated
Net Income for such period plus (a) the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated
Interest Charges for such period, (ii) the provision for Federal, state,
local and foreign income taxes payable by the Borrower and its Subsidiaries for
such period, (iii) depreciation, amortization and other non-cash charges
or expenses for such period and (iv) to the extent not included in clause
(iii) above, non-cash expenses associated with stock compensation and/or
stock awards and minus (b) the following to the extent included in
calculating such Consolidated Net Income: (i) Federal, state, local and
foreign income tax credits of the Borrower and its Subsidiaries for such period
and (ii) all non-cash items increasing Consolidated Net Income for such
period.

 

“Consolidated
Excess Cash Flow” means the Consolidated EBITDA for any Fiscal Year, minus
(a) Consolidated Interest Charges to the extent paid in cash, minus
(b) consolidated Cash Taxes of the Borrower and its Subsidiaries, minus
(c) the aggregate amount of scheduled payments of principal made during
such year on account of the Consolidated Funded Indebtedness (excluding any
payments of principal upon the Revolving Credit Loans), minus
(d) consolidated Cash Capital Expenditures, and minus (e) for
the Fiscal Year ending October 31, 2010, the lesser of Twenty-Five Million
Dollars ($25,000,000.00) and the amount by which the aggregate principal
balance of the Revolving Credit Loans on October 31, 2010 is less than the
aggregate principal balance of the Revolving Credit Loans immediately after
closing on the Acquisition.

 

“Consolidated Fixed Charges” means for any period of
determination for the Borrower and its Subsidiaries determined on a
consolidated basis: the sum of (a) Consolidated Interest Charges,
(b) Letter of Credit Fees and other fees paid in connection with Letters
of Credit, including fronting, issuance, amendment and processing fees,
(c) scheduled principal payments upon Consolidated Funded Indebtedness
(including the principal components of capital lease payments), and
(d) Restricted Payments paid by the Borrower during such period.  The following shall not be included in the
definition of Consolidated Fixed Charges: (i) Mandatory Prepayments, and
(ii) voluntary prepayments upon Consolidated Funded Indebtedness.

 

“Consolidated Fixed Charge Coverage Ratio” means the ratio
for the four (4) consecutive Fiscal Quarters most recently ended prior to
any date of determination of (a) Consolidated EBITDA for such period minus
(i) Cash Capital Expenditures and (ii) Cash Taxes during such period to
(b) Consolidated Fixed Charges for such period.

 

“Consolidated Funded Indebtedness” means, as of any date of
determination, for the Borrower and its Subsidiaries on a consolidated basis,
the sum of (a) the outstanding principal amount of all obligations,
whether current or long-term, for borrowed money (including the Obligations
owing by the Borrower with respect to the Loans) and all obligations evidenced
by bonds, debentures, notes, loan agreements or other similar instruments,
(b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments,
(d) all obligations in respect of the deferred purchase price of property
or services (other than trade accounts payable in the ordinary course of
business), (e) Attributable Indebtedness in respect of capital leases and
Synthetic Lease Obligations, (f) without duplication, all Guarantees with
respect to outstanding Indebtedness of the types specified in clauses
(a) through (e) above of Persons other than the Borrower or any
Subsidiary, and (g) all Indebtedness of the types referred to in clauses
(a) through (f) above of any partnership or joint venture (other than
a joint venture that is itself a corporation or limited liability company) in
which the Borrower or a Subsidiary of 

 

6

 

the Borrower is a general partner or joint venturer, unless such
Indebtedness is expressly made non-recourse to the Borrower or such Subsidiary.

 

“Consolidated Interest Charges” means, for any period, for
the Borrower and its Subsidiaries on a consolidated basis, the sum of
(a) all interest, premium payments, debt discount, fees, charges and
related expenses of the Borrower and its Subsidiaries in connection with
borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP, and (b) the portion of rent expense of
the Borrower and its Subsidiaries with respect to such period under capital
leases that is treated as interest in accordance with GAAP.

 

“Consolidated Leverage Ratio” means, as of any date of
determination, the ratio of (a) (i) Consolidated Funded Indebtedness
as of such date of determination to (b) Consolidated EBITDA for the
period of the four (4) Fiscal Quarters most recently ended prior to such
date of determination.

 

“Consolidated Net Income” means, for any period, for the
Borrower and its Subsidiaries on a consolidated basis, the net income of the
Borrower and its Subsidiaries (excluding extraordinary gains and extraordinary
losses) for that period, determined in accordance with GAAP.

 

“Contamination” means the
presence of any Hazardous Substance at any real property owned or leased by any
Loan Party which may require investigation, clean-up or remediation under any
Environmental Law.

 

“Control”  means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling”
and “Controlled” have meanings correlative
thereto.

 

“Credit
Documents” means collectively, this Agreement, the Notes, the
Guaranty Agreements, the Security Documents, the LC Documents, and all
agreements, instruments and documents evidencing or securing the Obligations,
including without limitation each document listed as a “Credit Document” on a
Closing Index dated as of the Closing Date, and all amendments and
modifications thereto.

 

“Credit
Parties” means, the Agent, the Lenders and the Issuing
Lender, and their respective successors and assigns as permitted by the terms
of this Agreement.

 

“Credit
Party Expenses” means, without duplication (a) reasonable costs and expenses incurred by the Agent
and its Affiliates, including the reasonable fees, charges, and disbursements
of counsel for the Agent arising out of, pertaining to, or in any way connected
with this Agreement, any of the other Credit Documents or the Obligations, the
syndication of the credit facilities provided for herein, or otherwise in
connection with such credit facilities, (b) all costs and reimbursements
required to be paid by the Borrower to the Agent by the terms of the Credit
Documents, (c) taxes and insurance premiums advanced or otherwise paid by
the Agent or any other Credit Party in connection with the Collateral or on
behalf of the Borrower, (d) filing and recording costs, audit fees, search
fees, and other expenses paid or incurred by the Agent or any other Credit
Party, (e) reasonable costs and expenses incurred by the Agent in the
collection of the accounts (with or without the institution of legal action),
or to enforce any provision of this Agreement or any other Credit Document on
behalf of the Credit Parties, or in gaining possession of, maintaining,
handling, evaluating, preserving, storing, shipping, selling, preparing for
sale and/or advertising to sell or foreclose upon the Collateral or any other
property of any of the Loan Parties whether or not a sale is consummated,
(f) reasonable costs and expenses of litigation incurred by the Credit
Parties, including reasonable attorney’s fees, in enforcing or defending this
Agreement or any portion hereof or any other Credit Document, or in collecting
any of the Obligations after the occurrence and during the continuance of any
Event of Default, (g) reasonable attorneys’ fees and expenses incurred 

 

7

 

by the Agent in obtaining advice or the services of its attorneys with
respect to the structuring, drafting, negotiating, reviewing, amending,
terminating, waiving, enforcing or defending of this Agreement and the other
Credit Documents, or any agreement or matter related hereto, whether or not
litigation is instituted, (h) reasonable travel expenses of the Agent or
its agents related to any of the foregoing, and (i) all reasonable costs
and expenses, including reasonable attorneys’ fees and expenses, incurred by
the Issuing Lender in connection with Letters of Credit and LC Obligations.

 

“Debt Capitalization Ratio” means the ratio of
(a) Consolidated Funded Indebtedness, to (b) the sum of
(i) Consolidated Funded Indebtedness plus (ii) Shareholders’ Equity.

 

“Default” means any occurrence, event or condition which with
notice, the passage of time, or both would constitute an Event of Default.

 

“Default Rate” means the Adjusted Base Rate plus two
hundred (200) Basis Points per annum.

 

“Defaulting Lender”
means a Lender that (a) has failed to extend or fund a Loan required by
the terms of this Agreement, including the failure to fund a participation
interest of such Lender required by this Agreement, or (b) has failed to
pay to the Agent or any Lender an amount owed by such Lender pursuant to the
terms of this Agreement, or (c) has been deemed insolvent or has become
the subject of a bankruptcy or insolvency proceeding or to a receiver, trustee
or similar official.

 

“Disposition” means the sale, transfer, license, lease or
other disposition (including any sale and leaseback transaction) of any real or
personal property by any Loan Party or any Subsidiary of a Loan Party,
including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims
associated therewith, but specifically excluding:  (a) the sale or transfer of inventory or
other assets in the ordinary course of business; (b) the licensing of
intellectual property in the ordinary course of business; (c) the sale,
transfer or other disposition of obsolete or worn-out property, tools or
equipment and property, tools or equipment no longer used or useful in the
business of any Loan Party, which are sold, transferred or disposed of in the
ordinary course of business; (d) the sale, transfer or other disposition
of any property from one Loan Party to another Loan Party; (e) the sale,
transfer or other disposition of any property from the Borrower or any
Subsidiary to any Foreign Subsidiary not to exceed in the aggregate, during any
Fiscal Year, One Million Dollars ($1,000,000.00); (f) the discount or sale
of receivables over sixty (60) days or more overdue in connection with the
compromise or collection thereof, provided that the aggregate proceeds from any
such sale or discount does not exceed Two Hundred Fifty Thousand Dollars
($250,000.00); (g) Restricted Payments otherwise permitted hereunder;
(h) Dispositions in transactions permitted by Section 6.04 of this
Agreement; (i)  Investments of cash permitted pursuant to
Section 6.02 of this Agreement; (j) use of cash, Cash Equivalents and
Short-Term Investments not otherwise prohibited by this Agreement; and
(k) leases or subleases of real property to other Persons not materially
interfering with the business of the Loan Parties, taken as a whole.

 

“Dollar,” “Dollars,” “U.S. Dollars” and the symbol “$” means lawful money of the United States of America.

 

“Domestic Subsidiary”
means any Subsidiary that is organized and existing under the laws of the
United States or any state thereof or under the laws of the District of
Columbia.

 

“Eligible Assignee” means (a) a Lender,
(b) an Affiliate of a Lender, (c) an Approved Fund, and (d) any
other Person (other than a natural person) approved by (i) the Agent,
(ii) in the case of any assignment of a Revolving Credit Commitment and
the Issuing Lender, and (iii) unless a Default or Event of Default has
occurred and is continuing, the Borrower (each such approval not to be
unreasonably 

 

8

 

withheld
or delayed); provided that notwithstanding the foregoing, the definition
of “Eligible Assignee” shall not include the Borrower or any of the Borrower’s
Affiliates or Subsidiaries or any natural Person.

 

“Environmental Laws” means any Law relating to
pollution and the protection of the environment or the release of any materials
into the environment, including those related to hazardous substances or
wastes, air emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability,
contingent or otherwise (including any liability for damages, costs of
environmental remediation, fines, penalties or indemnities), of the Borrower,
any other Loan Party or any of their respective Subsidiaries directly or
indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment
or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

 

“Equity Interest”
means with respect to any Person the shares of Capital Stock of (or other
ownership or profit interests in) such Person, warrants, options or other
rights for the purchase or acquisition from such Person of shares of Capital
Stock of (or other ownership or profit interests in) such Person, securities
convertible into or exchangeable for shares of Capital Stock of (or other
ownership or profit interests in) such Person or warrants, rights or options
for the purchase or acquisition from such Person of such shares (or such other
interests), and all other ownership or profit interests in such Person, whether
voting or nonvoting, and whether or not such shares, warrants, options, rights
or other interests are outstanding on any date of determination.

 

“Equity Issuance”
means any issuance by any Loan Party to any Person which is not a Loan Party or
by any Foreign Subsidiary of a Loan Party which is not a Loan Party of any
Equity Interests.

 

“ERISA” means the Employee Retirement Income Security Act of
1974, as the same may be amended or supplemented from time to time.

 

“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common Control with the Loan Parties within
the meaning of Section 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with
respect to a Pension Plan, (b) a withdrawal by a Loan Party or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA during a
plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by a Loan Party or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan, (e) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan, or (f) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon a Loan Party or any ERISA Affiliate.

 

“Event of Default” has the meaning given to
such term in Article 7 of this Agreement.

 

“Excluded Taxes”
means, with respect to
the Credit Parties or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) taxes imposed on 

 

9

 

or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located, and
(c) in the case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.10.2), any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) or is
attributable to such Foreign Lender’s failure or inability (other than as a
result of a Change in Law) to comply with Section 2.09.5, except to the
extent that such Foreign Lender (or its assignor, if any) was entitled, at the
time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.09.1.

 

“Existing Revolver” means the
existing revolving line of credit being provided by M&T Bank, Bank of
America, N.A. and SunTrust Bank to the Borrower.

 

“Extraordinary
Receipts” means
any cash or non-cash payments or consideration received by any Loan Party or
its Subsidiaries which are (a) proceeds of a Casualty Event,
(b) proceeds of a Disposition, (c) proceeds arising from the issuance
by any Loan Party or its Subsidiaries of any Indebtedness for borrowed money
other than Indebtedness which is otherwise permitted by the terms of this
Agreement, or (d) proceeds arising from any Equity Issuances, except
(i) Equity Issuances issued upon exercise of employee and director stock
options, and (ii) Equity Issuances issued for cash for the purpose of
funding the acquisition price and related costs and expenses of one or more
Permitted Acquisitions.

 

“Federal Funds Rate” means, for any day, the rate
per annum,  (rounded, if necessary, to
the next greater 1/100 of 1%) determined (which determination shall be
conclusive and binding, absent manifest error) by the Agent to be equal to the
weighted average of the rates on overnight Federal funds transactions with
member banks of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the Business
Day next succeeding such day; provided that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such
next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Agent (in its individual capacity) on such day on
such transactions as determined by the Agent (which determination shall be
conclusive and binding, absent manifest error).

 

“Federal Reserve Board” means the Board of
Governors of the United States Federal Reserve System as constituted from time
to time.

 

“Fee Letter”
means the letter agreement dated November 13, 2009 between M&T Bank
and the Borrower.

 

“Fiscal Quarter” means each three (3) month fiscal
period of the Borrower beginning on the first (1st) day of each consecutive February, May, August, and
November during the term of this Agreement.

 

“Fiscal Year” means each 12-month fiscal period of the
Borrower beginning November 1st of each year.

 

“Foreign Lender” means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is resident for
tax purposes.  For purposes of this
definition, the 

 

10

 

United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.

 

“Foreign Subsidiary”  means any Subsidiary that is not a Domestic
Subsidiary.

 

“Fund” means any Person (other than a natural Person) that
is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit in the ordinary course of
its business.

 

“Funding Date” means the date
on which the first advance of any proceeds of the Loans is made.

 

“GAAP” means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be recognized by a significant segment
of the accounting profession, which are applicable to the circumstances as of
the date of determination, consistently applied.

 

“Governing State”
means the State of New York.

 

“Governmental Authority” means the government of the
United States of America or any other nation, or of any political subdivision
thereof, whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions
of or pertaining to government (including any supra-national bodies such as the
European Union or the European Central Bank).

 

“Guarantors”
means collectively Martek Biosciences Boulder Corporation, a Delaware
corporation, Martek Biosciences Kingstree Corporation, a Delaware corporation,
and all of the Subsidiaries of the Borrower other than Foreign Subsidiaries.

 

“Guaranty Agreements”
mean each of the guaranty agreements of the Guarantors guaranteeing the
repayment and performance of the Obligations.

 

“Guaranty Obligation” or “Guarantee”
(or “guaranty” or “guarantee”)
means any obligation, direct or indirect, by which a Person undertakes to
guaranty, assume or remain liable for the payment of another Person’s
obligations, including but not limited to (a) endorsements of negotiable
instruments, (b) discounts with recourse, (c) agreements to pay upon a
second Person’s failure to pay, (d) agreements to maintain the capital,
working capital solvency or general financial condition of a second Person, and
(e) agreements for the purchase or other acquisition of products,
materials, supplies or services, if in any case payment therefor is to be made
regardless of the nondelivery of such products, materials or supplies or the
non-furnishing of such services.

 

“Hazardous Materials” means all explosive or
radioactive substances or wastes and all hazardous or toxic substances, wastes
or other pollutants, including petroleum or petroleum distillates, asbestos or
asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious
or medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law.

 

“Increase Effective Date”
has the meaning provided to such term in Section 2.01.7(d) of this
Agreement.

 

“Indebtedness” means, as to any Person at a particular
time, without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP (a) all obligations of
such Person for borrowed money and all obligations of such Person evidenced by
bonds, 

 

11

 

debentures,
notes, loan agreements or other similar instruments, (b) all direct or
contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments, (c) net obligations of such Person
under any Interest Rate Hedge Agreement, (d) all obligations of such
Person to pay the deferred purchase price of property or services (other than
trade accounts payable in the ordinary course of business and due within six (6) months of the
incurrence thereof), (e) indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse, (f) capital leases and Synthetic Lease
Obligations, (g) all obligations of such Person to purchase, redeem,
retire, defease or otherwise make any payment in respect of any Equity Interest
in such Person or any other Person, valued, in the case of a redeemable
preferred interest, at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends, and (h) all Guarantees
of such Person in respect of any of the foregoing.  For purposes of this definition, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture (other than a joint venture that is itself a corporation or limited
liability company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse to such
Person.  The amount of any net obligation
under any Interest Rate Hedge Agreement on any date shall be deemed to be the
Swap Termination Value thereof as of such date. 
The amount of any capital lease or Synthetic Lease Obligation as of any
date shall be deemed to be the amount of Attributable Indebtedness in respect
thereof as of such date.

 

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

 

“Indemnitee” has the meaning provided to such term in
Section 10.05 of this Agreement.

 

“Information” means all information received from any Loan
Party relating to the Loan Parties or any of their respective businesses, other
than any such information that is available to the Credit Parties on a
nonconfidential basis prior to disclosure by the Loan Parties, provided
that, in the case of information received from the Loan Parties after the date
hereof, such information is clearly identified at the time of delivery as
confidential.

 

“Insolvency Proceeding” means, with respect to any
referenced Person, any case or proceeding commenced by or against such Person,
under any provision of the Bankruptcy Code or under any other federal or state
bankruptcy or insolvency law, or any assignments for the benefit of creditors,
formal or informal moratoriums, receiverships, compositions or extensions with
some or all creditors with respect to any indebtedness of such Person.

 

“Intangible Assets”
means assets that are considered to be intangible assets under GAAP, including
goodwill, customer lists, computer software, copyrights, trade names,
trademarks, patents, franchises, licenses, unamortized deferred charges,
unamortized debt discount and capitalized research and development costs.

 

 “Interest Payment Date” means (a) with respect to any
Adjusted Base Rate Borrowing, the last Business Day of each Fiscal Quarter, and
(b) with respect to any LIBOR Borrowing, the last day of the Interest
Period applicable to such Loan and, in the case of a LIBOR Borrowing with an
Interest Period of more than three (3) months’ duration, each day prior to
the last day of such Interest Period that occurs at intervals of three
(3) months’ duration after the first day of such Interest Period.

 

“Interest Period” means, with
respect to any LIBOR Borrowing, the period commencing on the date of such LIBOR
Borrowing and ending on the numerically corresponding day in the calendar month
that is one (1), two (2), three (3), or six (6) months thereafter, as the
Borrower may elect, provided that (a) if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day, unless such next succeeding Business Day
would fall in 

 

12

 

the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (b) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period,
and (c) the Borrower may not select any Interest Period which would end
after the Revolving Credit Termination Date or the Term Loan Maturity Date, as
the case may be.  For purposes hereof,
the date of a LIBOR Borrowing initially shall be the date on which such LIBOR
Borrowing is made and thereafter shall be the effective date of the most recent
conversion or continuation of such LIBOR Borrowing.

 

“Interest Rate Hedge Agreement” means any of the following,
whether currently existing or arising in the future, between any Loan Party and
any Interest Rate Hedge Provider (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any
other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any
such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations,
which are subject to the terms and conditions of, or governed by, any form of
master agreement published by the International Swaps and Derivatives
Association, Inc., any International Foreign Exchange Master Agreement, or
any other master agreement (any such master agreement, together with any
related schedules, a “Master Agreement”), including any such obligations or liabilities
under any Master Agreement.

 

“Interest Rate Hedge
Provider” means any Credit Party or Affiliate of a Credit Party
(regardless of whether such Interest Rate Hedge Provider ceases to be a Credit
Party or Affiliate of a Credit Party after such Interest Rate Hedge Agreement
is entered into) that has entered into, or subsequently enters into an Interest
Rate Hedge Agreement from time to time with a Loan Party to limit, hedge or
mitigate interest rate, fee, and other risks with respect to the Loans, the
Letters of Credit, or any of the other Obligations, but excluding, for the
avoidance of doubt, any Interest Rate Hedge Agreement entered into by a Credit
Party or its Affiliates after its Commitments have been fully cancelled in
accordance with the terms of this Agreement or after it has assigned all of its
rights under the credit facilities established by this Agreement.

 

“Investment”  means, as to any referenced Person, any direct or indirect acquisition
or investment by such Person, whether by means of (a) the purchase or
other acquisition of Capital Stock or other securities of another Person,
(b) a loan, advance or capital contribution to, guarantee or assumption of
debt of, or purchase or other acquisition of any other debt or equity
participation or interest in, another Person, including any partnership or
joint venture interest in such other Person, (c) the purchase or other
acquisition (in one transaction or a series of transactions) of assets of
another Person that constitute a business unit, or (d) any other
investment in securities, deposits, or the obligations of other Persons. For
purposes of covenant compliance, the amount of any Investment shall be the
amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.

 

“ISP” means, with respect
to any Letter of Credit, the “International Standby Practices 1998” published
by the Institute of International Banking Law & Practice (or such
later version thereof as may be in effect at the time of issuance).

 

“Issuing Lender” means M&T Bank, as the issuer of Letters
of Credit pursuant to this Agreement, and any successor to M&T Bank, as the
issuer of Letters of Credit.

 

13

 

“Law” means any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order,
injunction, writ, decree or award of any Governmental Authority.

 

“LC Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made.

 

“LC Commitment” means (a) the commitment of the Issuing
Lender to issue Letters of Credit in an aggregate amount at any time
outstanding not to exceed the Letter of Credit Sublimit, and (b)  with
respect to each Lender, the commitment of such Lender to purchase participation
interests in the LC Obligations up to such Lender’s Revolving Credit Commitment
Percentage multiplied by the Letter of Credit Sublimit.  The LC Commitment of each Lender is included
in and is part of each Lender’s Revolving Credit Commitment and is not in
addition to the Lenders’ respective Revolving Credit Commitments.

 

“LC Disbursement” means a payment made by the Issuing Lender
pursuant to a Letter of Credit, including but not limited to the amount of any
draft paid by the Issuing Lender under any Letter of Credit, and any taxes,
charges, or other costs or expenses incurred by the Issuing Lender in
connection with any such payment.

 

“LC Documents” means, with respect to any Letter of Credit,
such Letter of Credit, any amendments thereto, any documents delivered in
connection therewith, any Letter of Credit Application therefor, and any
agreements, instruments, guarantees or other documents (whether general in
application or applicable only to such Letter of Credit) governing or providing
for (a) the rights and obligations of the parties concerned, or
(b) any collateral security for such obligations.

 

“LC Expiration Date” means the day that is thirty (30) days
prior to the Revolving Credit Termination Date (or, if such day is not a
Business Day, the next preceding Business Day).

 

“LC Obligations” means, at any time, the sum of
(a) the aggregate Stated Amount of all issued and outstanding Letters of
Credit, plus (b) the aggregate amount of all LC Borrowings. For all
purposes of this Agreement, if on any date of determination a Letter of Credit
has expired by its terms but any amount may still be drawn thereunder by reason
of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be
deemed to be “outstanding” in the amount so remaining available to be drawn.

 

“Lender” means each of the financial institutions and Funds
that signs a Lender Addendum and their assignees as permitted by the terms of
this Agreement, each of which is referred to herein as a Lender.  Except where the context requires otherwise,
the term “Lender” shall also include the Issuing Lender.

 

“Lender Addendum” means a Lender Addendum substantially in
form as Exhibit C attached hereto pursuant to which a financial
institution or Fund agrees to become a Lender holding the Commitments and
Commitment Percentages set forth therein.

 

“Letter of Credit” means any letter of credit
issued by the Issuing Lender for the account of the Borrower or any Affiliate
thereof in accordance with the terms of this Agreement.

 

 “Letter of Credit Application” means the
Issuing Lender’s then current form of application and agreement for the
issuance or amendment of a Letter of Credit.

 

“Letter of Credit Fee” has the meaning provided to
such term in Section 2.02.9 of this Agreement.

 

14

 

“Letter of Credit Sublimit” means an amount equal to
Fifteen Million Dollars ($15,000,000.00).

 

“LIBOR Borrowing”
means each unpaid principal balance of a Loan which accrues interest at the
Adjusted LIBOR Rate.

 

“LIBOR Rate” means, for any LIBOR Borrowing for any Interest
Period, the higher of:  (a) one and
one-half percent (1.5%) per annum; or (b) the rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%)
obtained by dividing (i) the rate fixed by the British Bankers Association
for United States Dollar deposits in the London Interbank Eurodollar Market,
for a term comparable to such Interest Period, as determined by the Agent from
any broker, quoting service, or commonly available source utilized by the Agent
as a basis for such quotations, at approximately 11:00 a.m. London,
England time (or as soon thereafter as practicable) two (2) Business Days
prior to the first day of such Interest Period by (ii) a percentage
equal to one hundred percent (100%) minus the stated maximum rate of all
reserves required to be maintained against “Eurocurrency Liabilities” as
specified in Regulation D (or against any other category of liabilities which
includes deposits by reference to which the interest rate on LIBOR Rate loans
is determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of a bank to United States
residents) on such date to any member bank of the Federal Reserve System.

 

“Lien” means any mortgage, deed of trust, pledge, lien,
security interest, charge or other encumbrance or security arrangement of any
nature whatsoever, whether voluntarily or involuntarily given, including but
not limited to any conditional sale or title retention arrangement, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and any filed financing statement or other notice of any of the
foregoing (whether or not a lien or other encumbrance is created or exists at
the time of the filing).

 

“Loan Parties”
means, collectively, the Borrower and the Guarantors (including Persons that
become Guarantors after the Closing Date).

 

“Loan Request” means a notice from the Borrower in
accordance with Section 2.01.2 hereof.

 

“Loans” means collectively the Revolving Credit Loans and
the Term Loans.

 

“M&T Bank” means Manufacturers and Traders Trust
Company, a New York banking corporation and its successors and assigns.

 

“Mandatory Prepayments” has the meaning provided to
such term in Section 2.03.3 of this Agreement.

 

“Margin Regulations” means Regulation T, U or X
as promulgated by the Federal Reserve Board, as amended from time to time.

 

“Material Adverse Change” means any set of circumstances
or events which (a) has or could reasonably be expected to have a material
adverse effect upon the validity or enforceability of this Agreement or any of
the other Credit Documents, (b) is or could reasonably be expected to be
material and adverse to the business, properties, assets, financial condition
or results of operations of the Borrower and its Subsidiaries, taken as a
whole, (c) materially impairs or could reasonably be expected to impair
materially the ability of the Borrower and its Subsidiaries, taken as a whole,
to pay and perform the Obligations, (d) materially impairs or could
reasonably be expected to impair materially the ability of the Borrower and its
Subsidiaries, taken as a whole, to duly and punctually pay their Indebtedness,
or (e) materially impairs or could reasonably be expected to impair
materially the ability of the Credit Parties to 

 

15

 

enforce
their remedies against the Loan Parties as authorized by the terms of the Credit
Documents or pursuant to applicable Law.

 

“Maturity Dates”
means collectively (a) the Revolving Credit Termination Date, and
(b) the Term Loan Maturity Date.

 

“Minimum Borrowing Amount” means (a) with respect
to Adjusted Base Rate Borrowings Two Hundred Fifty Thousand Dollars ($250,000.00), and
(b) with respect to LIBOR Borrowings One Million Dollars ($1,000,000.00)
with minimum increments of One Hundred Thousand Dollars ($100,000.00).

 

“Multiemployer Plan” means any employee benefit
plan which is a “multiemployer plan” within the meaning of
Section 4001(a)(3) of ERISA and to which any Loan Party or any member
of the ERISA Group is then making or accruing an obligation to make
contributions or, within the preceding five (5) plan years, has made or
had an obligation to make such contributions.

 

“Net Available Proceeds” 
means any cash payments, and the fair market cash value of any non-cash
consideration, received by any Loan Party or its Subsidiaries directly or
indirectly in connection with or from any transaction, event, condition or
occurrence which generates or results in any Extraordinary Receipts, net of
(a) the amount of any legal, title, accounting, investment banking and
recording tax expenses, commissions and other reasonable and necessary fees and
expenses payable by any Loan Party or its Subsidiaries in connection with the
subject transaction, (b) any foreign or U.S. federal, state and local
income or other taxes estimated to be payable by any Loan Party or its
Subsidiaries (or their stockholders) as a result of such transaction, and
(c) any repayments (including reasonable expenses in connection therewith)
of Indebtedness to the extent that (x) such Indebtedness is secured by a
Lien on an asset that is the subject of the transaction, and (y) the transferee
of (or holder of a Lien on) such asset requires that such Indebtedness be
repaid as a condition to the subject transaction.

 

“Notes” means, collectively, the Revolving Credit Notes and
the Term Notes.

 

“Obligations” means,
collectively, the obligations of the Borrower or of any other Loan Party to pay
to the Credit Parties or to perform for the benefit of the Credit Parties,
M&T Bank or any of their Affiliates (a) sums due arising out of or in
connection with the Loans or otherwise pursuant to the terms of the Notes, and
the other Credit Documents, including without limitation all unpaid principal,
accrued interest (including interest that accrued during any Insolvency
Proceedings of the Borrower), fees and expenses, (b) indemnification and reimbursement
duties and obligations owed in accordance with the terms of any of the Credit
Documents, (c) Credit Party Expenses, (d) reimbursement, repayment or
indemnity obligations owed by the Borrower or any of the other Loan Parties to
any Credit Party or to an Affiliate of a Credit Party arising out of or related
to Bank Products, (e) all payment and indemnification obligations owed by
the Borrower to the Issuing Lender or to any other Credit Party which arise out
of or relate to any Letters of Credit, including all of the LC Obligations,
(f) all obligations, duties, or sums due to any Interest Rate Hedge
Provider pursuant to or arising from any Interest Rate Hedge Agreements,
(g) payments owed to M&T Bank in accordance with the Fee Letter, (h) any
indebtedness or liability which may exist or arise as a result of any payment
made by or for the benefit of any of the Credit Parties being avoided or set
aside for any reason including any payment being avoided as a preference under
Sections 547 and 550 of the Bankruptcy Code, as amended, or under any state law
governing insolvency or creditors’ rights, and (i) any interest on any
portion of the Loans that accrues after the commencement of any Insolvency
Proceeding.

 

“Organization Documents” means (a) with respect to any
corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction), (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement,
and (c) with respect to any partnership, joint 

 

16

 

venture, trust or other form of business entity, the partnership, joint
venture or other applicable agreement of formation or organization and any
agreement, instrument, filing or notice with respect thereto filed in
connection with its formation or organization with the applicable Governmental
Authority in the jurisdiction of its formation or organization and, if
applicable, any certificate or articles of formation or organization of such
entity.

 

“Other
Taxes”   means all present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies arising from any payment made hereunder or under any other
Credit Document or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Credit Document.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Participant” has the meaning provided to such term in
Section 10.11 of this Agreement.

 

“Participation” means an undivided participation interest
sold by a Lender, in accordance with the provisions of Section 10.11, in
such Lender’s Commitments, Loans and rights and obligations under this
Agreement and the other Credit Documents.

 

“Pension Plan” means any “employee pension benefit plan” (as
such term is defined in Section 3(2) of ERISA), other than a
Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or
maintained by the Borrower or any ERISA Affiliate or to which the Borrower or
any ERISA Affiliate contributes or has an obligation to contribute, or in the
case of a multiple employer or other plan described in
Section 4064(a) of ERISA, has made contributions at any time during
the immediately preceding five plan years.

 

“Permitted Acquisition”
means any Investment after the Closing Date by the Borrower in any Person
located within the United States, whose business operations are consistent with
the operations of the Borrower and its Subsidiaries, provided that
(a) there are no then continuing Defaults or Events of Default and no
Material Adverse Change has occurred, and immediately after giving effect to
such Investment there will not be any Defaults, Events of Default or Material
Adverse Change, (b) with respect to such Investment, the Borrower shall
have submitted to each of the Credit Parties, not less than fifteen (15) days
before the Borrower becomes bound under any agreement to make such Investment,
(i) a description of the transaction pursuant to which such Investment is
to be made, accompanied by substantially final drafts of all material
definitive documents for such transaction, (ii) pro forma financial
statements for the Borrower and its Subsidiaries after giving effect to such
Investment, (iii) updated and revised financial projections which
incorporate the Acquisition Target’s projected results of operations into the
financial projections of the Borrower and its Subsidiaries then most recently submitted
to the Credit Parties, projecting the compliance by the Borrower and its
Subsidiaries with all covenants of this Agreement after giving effect to the
Investment, (iv) a certification given by an Authorized Officer of the
Borrower to the effect that no Default or Event of Default then exists, no
Material Adverse Change has occurred, and that no Default, Event of Default or
Material Adverse Change is reasonably expected to occur upon or as a result of
the proposed acquisition, and (c) the aggregate amount of all
consideration payable for such acquisition, which when combined with the
aggregate amount of all consideration paid by the Borrower and its Subsidiaries
pursuant to other Permitted Acquisitions occurring in the same Fiscal Year,
shall not be more than Thirty Million Dollars ($30,000,000.00).

 

“Permitted Encumbrances” means collectively:

 

(a)                                  Liens for taxes,
assessments, governmental levies or similar charges incurred in the ordinary
course of business and which are not yet due and payable, or if due and
payable, (i) are being contested in good faith and by appropriate and
lawful proceedings diligently conducted, but only so long as such proceedings
could not reasonably subject any Credit Party to any civil or criminal
penalties or 

 

17

 

liabilities
and (ii) for which such reserves or other appropriate provisions, if any,
as shall be required by GAAP shall have been made and (iii) which shall be
paid in accordance with the terms of any final non-appealable judgments or
orders relating thereto within thirty (30) days after the entry of such
judgments or orders,

 

(b)                                 Pledges or deposits made in
the ordinary course of business to secure payment of worker’s compensation, or
to participate in any fund in connection with worker’s compensation,
unemployment insurance, old-age pensions, other social security programs or
similar program or to secure liability to insurance carriers under insurance or
self insurance agreements or arrangement,

 

(c)                                  Liens of mechanics, materialmen,
warehousemen, carriers, or other like Liens, securing obligations incurred in
the ordinary course of business that are not yet due and payable and Liens of
landlords securing obligations to pay lease payments that are not yet due and
payable or in default, or if such Liens are due and payable, (i) are being
contested in good faith and by appropriate and lawful proceedings diligently
conducted and (ii) for which such reserves or other appropriate
provisions, if any, as required by GAAP shall have been made and
(iii) which shall be paid in accordance with the terms of any final
non-appealable judgments or orders relating thereto within thirty (30) days
after the entry of such judgments or orders,

 

(d)                                 Pledges or deposits made in
the ordinary course of business to secure performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or leases, not in
excess of the aggregate amounts due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business,

 

(e)                                  (i) Encumbrances
consisting of zoning restrictions, easements, rights-of-way, or other
restrictions on the use of real property, (ii) defects in title to real
property, and (iii) Liens, encumbrances and title defects affecting real
property not known by the Borrower or a Subsidiary, as applicable, and not
discoverable by a search of the public records, none of which materially
impairs the use of such property,

 

(f)                                    Liens created by or
resulting from any litigation or legal proceedings which are currently being
contested in good faith by appropriate and lawful proceedings diligently
conducted and for which such reserves or other appropriate provisions, if any,
as shall be required by GAAP shall have been made and Liens arising out of
judgments or orders for the payment of money which do not constitute an Event
of Default hereunder,

 

(g)                                 Liens placed upon personal
property constituting fixed assets or equipment hereafter acquired to secure
all or a portion of the purchase price thereof, provided that any such Lien
shall not encumber any other property of any Loan Party (other than proceeds of
the foregoing) and the Indebtedness secured by any such Lien shall not be
otherwise prohibited by the terms of this Agreement,

 

(h)                                 Other Liens incidental to
the conduct of the Loan Parties’ businesses or the ownership of their
respective properties 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 the value of the Loan Parties’ properties
or assets and or which do not materially impair the use thereof in the
operation of the Loan Parties’ business,

 

(i)                                     Liens securing the Obligations,
and

 

(j)                                     Precautionary financing
statements filed in connection with leases of equipment which pertain solely to
such leased equipment.

 

18

 

“Person” means any individual, corporation, partnership, limited
liability company, association, joint-stock company, trust, unincorporated
organization, joint venture, government or political subdivision or agency
thereof, or any other entity.

 

“Plan” means any “employee benefit plan” (as such term is
defined in Section 3(3) of ERISA) established by any Loan Party or,
with respect to any such plan that is subject to Section 412 of the Code
or Title IV of ERISA, any ERISA Affiliate.

 

“Prime
Rate” means the rate of interest per annum publicly announced from time to
time by the Agent, in its sole discretion, as its prime lending rate of
interest.  Such announced rate bears no
inference, implication, representation or warranty that such announced rate is
charged to any particular customer or customers of Agent.  The Agent’s prime lending rate of interest is
but one of several interest rate bases used by the Agent.  Changes in the applicable interest rate shall
be made as of, and immediately upon the occurrence of, changes in the Agent’s
prime rate.

 

“Principal Payment Date” means the last Business Day
of each consecutive Fiscal Quarter and the Term Loan Maturity Date.  The first Principal Payment Date is the last
Business Day of the Fiscal Quarter in which the Funding Date occurs.

 

“Prohibited Transaction” shall mean any prohibited
transaction as defined in Section 4975 of the Code or Section 406 of
ERISA that is not exempt under Section 408 of ERISA and for which neither
an individual nor a class exemption has been issued by the United States
Department of Labor.

 

“Property” means, any parcel of real property, whether owned
in fee or leased, of any of the Loan Parties.

 

“Purchase Agreement” means the Agreement And
Plan of Merger by and among the Borrower, Amerifit, AB Merger Sub, Inc.,
Charter Amerifit Holding Corporation, Amerifit Brands, Inc., AB SR LLC,
and Pearl, LLC, all schedules and exhibits thereto and all agreements to be
executed in connection therewith.

 

“Register” has
the meaning given to such term in Section 10.09 of this Agreement.

 

“Regulatory Change” means any change after the
Closing Date in the Laws of the United States, any state thereof, or any other
Governmental Authority, or the adoption or making after such date, of any
interpretations, changes in convention, directives or requests applying to a
class of depository institutions, including any Lender, of or under any Laws of
the United States, any state thereof, or any other Governmental Authority
(whether or not any such interpretation, directive or request has the force of
Law).

 

“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents and advisors of such Person and of such
Person’s Affiliates.

 

“Reportable Event” means any of the events set
forth in Section 4043(c) of ERISA, other than events for which the
thirty (30) day notice period has been waived.

 

“Required Lenders” means, at any
time of determination, Lenders holding in the aggregate more than fifty-one
percent (51%) of (a) the aggregate outstanding unpaid principal balances
of the Loans plus the aggregate unused Revolving Credit Commitments at such
time (and participation interests therein) (treating for purposes hereof in the
case of LC Obligations, in the case of the Issuing Lender, only the portion of
the LC Obligations of the Issuing Lender which is not subject to the
participation interests of the other Lenders and, in the case of the Lenders
other than the Issuing Lender, 

 

19

 

only
the participation interests of such Lenders in LC Obligations hereunder as
being “held” by such Lenders) or (b) if the Revolving Credit Commitments
have been terminated, the aggregate outstanding unpaid principal balances of
the Loans and participation interests (including, in the case of the Issuing
Lender, the portion of the LC Obligations held by the Issuing Lender), provided however, the Revolving Credit Commitments and the
portions of the unpaid principal balances of the Loans held or deemed held by
any Defaulting Lenders shall be excluded for the purposes of making any
determination of Required Lenders.

 

“Restricted Payment” means collectively, with respect to the Loan
Parties and each of their Subsidiaries (a) any dividend or other payment
or distribution, direct or indirect, on account of any Equity Interest in such
Person now or hereafter outstanding, except (i) a dividend or distribution
payable solely in the same class or type of Equity Interest to the holders of
that class or type, and (ii) any distribution payable to an employee or
director pursuant to the terms of any restricted share plan in connection with
any tax liabilities of such Person, (b) any redemption, repurchase,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, by such Person of any Equity
Interest in such Person now or hereafter outstanding (other than
(i) repurchases of Equity Interests held by employees or directors
pursuant to the terms of any restricted share plan of the Borrower, which in
aggregate amount in any Fiscal Year do not exceed One Million Dollars
($1,000,000.00), and (ii) repurchase by the Borrower of Equity Interests
of the Borrower in any Fiscal Year in an aggregate amount not exceeding Five
Million Dollars ($5,000,000.00), provided that in the event there are no sums
outstanding under the Revolving Credit Loans, the Borrower may use cash and
Cash Equivalents to repurchase Equity Interests in an aggregate amount not
exceeding Twenty Million Dollars ($20,000,000.00) in any Fiscal Year),
(c) any payment made by such Person to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire Equity
Interests in such Person now or hereafter outstanding, or (d) any payment
by such Person of any management, consulting or similar fees which are not
payments in amounts comparable to sums paid in the marketplace by entities
comparable to the payor for similar services to unrelated employees or
providers of management, consulting or other services actually performed.

 

“Restricted Subsidiary”
means any Subsidiary of the Borrower which is not (and is not required by the
terms of this Agreement to be) a Guarantor.

 

“Revolving Credit
Commitment” means, as to any Lender, the amount initially set forth
as on a Lender Addendum under the heading “Revolving Credit”, and thereafter as
set forth on any relevant Assignment And Assumption.

 

“Revolving Credit
Commitment Percentage” means, as to any Lender, the percentage
initially set forth on a Lender Addendum under the heading “Revolving Credit”
and thereafter on any relevant Assignment And Assumption, if applicable, as the
same may be adjusted from time to time pursuant to this Agreement.

 

“Revolving Credit Loans”
means collectively, the Revolving Credit Loans made by the Lenders to the
Borrower in accordance with Section 2.01 of this Agreement.

 

“Revolving Credit Maximum Borrowing Amount” means Fifty
Million Dollars ($50,000,000.00), as such sum may be decreased from time to
time by the operation of Section 2.01.6 of this Agreement or increased
from time to time by the operation of Section 2.01.7 of this Agreement.

 

“Revolving Credit Notes” means, collectively, the
promissory notes of the Borrower evidencing the Revolving Credit Loans,
together with all amendments or replacements thereto.  The Revolving Credit Notes shall be in the
form of Exhibit D attached hereto.

 

20

 

“Revolving Credit Termination Date” means the third annual
anniversary date of the Funding Date.

 

“Revolving Credit Unused
Fee” has the meaning given to such term in Section 2.01.5 of
this Agreement.

 

“Security Agreement” means the
Security Agreement of even date herewith between the Borrower, the Guarantors,
and the Agent, together with all counterparts thereof hereafter executed.

 

“Security Documents” means, collectively, the
Security Agreement, all pledges, mortgages, deeds of trust, control agreements,
or other agreements, instruments, documents or filings pursuant to which any of
the Loan Parties, from time to time, pledges or grants Liens for the benefit of
the Credit Parties in or to any of the Collateral.

 

“Senior Indebtedness”
means, as of any date of determination (a) the aggregate unpaid balances
of the Loans; plus (b) the aggregate outstanding LC Obligations.

 

“Senior Leverage Ratio”
means, as of any date of determination, the ratio of (a) Senior
Indebtedness as of such date of determination to (b) Consolidated EBITDA
for the period of the four (4) Fiscal Quarters most recently ended prior
to such date of determination.

 

“Shareholders’ Equity”
means, as of any date of determination, consolidated shareholders’ equity of
the Borrower and its Subsidiaries as of that date determined in accordance with
GAAP.

 

“Short-Term Investments” means
(a) securities issued or directly and fully guaranteed or insured by the
United States Government or any agency or instrumentality thereof having
maturities of more than one year from the date of acquisition but not more than
two years from the date of acquisition, (b) time deposits, certificates of
deposit and Eurodollar time deposits with maturities of more than twelve (12)
months but not more than twenty-four (24) months from the date of acquisition
and bankers’ acceptances with maturities exceeding twelve (12) months but not
exceeding twenty-four (24) months from the date of acquisition, in each case
with the Agent or any Lender or with any domestic commercial bank having
capital and surplus in excess of Five Hundred Million Dollars ($500,000,000),
(c) repurchase obligations with a term of not more than thirty (30) days
for underlying securities of any of the types described in clause (a) or
(b) and entered into with any bank meeting the qualifications specified in
clause (b) above, (d) commercial paper with maturities exceeding
twelve (12) months but not exceeding twenty-four (24) months rated not lower
than A-1 or A-2 by Standard & Poor’s Ratings Group or P-1 or P-2 by
Moody’s Investors Service, Inc. on the date of acquisition, and
(e) interests in pooled investment funds (including mutual funds and money
market funds) the assets of which are invested in investments referred to in
items (a) through (d) above and in investments referred to in items
(a) through (d) of the definition of Cash Equivalents.

 

“Solvent” means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person
is greater than the total amount of liabilities, including, without limitation,
contingent liabilities, of such Person, (b) the present fair salable value
of the assets of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they become
absolute and matured, (c) such Person is able to pay its debts and other
liabilities as they mature in the normal course of business, (d) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in business or a transaction,
and is not about to engage in business or a transaction, for which such
Person’s property would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such Person
is engaged or about to be engaged, as the case may be. In computing the amount
of contingent liabilities at any time, it is intended 

 

21

 

that
such liabilities will be computed at the amount which, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.

 

“Stated Amount” means as to any Letter of Credit, the lesser
of (a) the face amount thereof, or (b) the remaining available
undrawn amount thereof (regardless of whether any conditions for drawing could
then be met).

 

“Subsidiary” means, with
respect to any Person (the “parent”) at any date, any corporation, limited
liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date, as well as any other corporation, limited
liability company, partnership, association or other entity of which securities
or other ownership interests representing more than fifty percent (50%) of the
equity or more than fifty percent (50%) of the ordinary voting power or, in the
case of a partnership, more than fifty percent (50%) of the general partnership
interests are, as of such date, owned, controlled or held by the parent or one
or more subsidiaries of the parent.

 

“Swap Termination Value” means, in respect of any one or more
Interest Rate Hedge Agreements, after taking into account the effect of any
legally enforceable netting agreement relating to such Interest Rate Hedge
Agreements: (a) for any date on or after the date such Interest Rate Hedge
Agreements have been closed out and termination value(s) determined in
accordance therewith, such termination value(s); and (b) for any date
prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Interest Rate Hedge Agreements, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Interest Rate Hedge
Agreements (which may include a Lender or any Affiliate of a Lender).

 

“Synthetic Lease Obligation”
means the monetary obligation of a Person under (a) a so-called synthetic,
off-balance sheet or tax retention lease, or (b) an agreement for the use
or possession of property creating obligations that do not appear on the
balance sheet of such Person but which, upon the insolvency or bankruptcy of
such Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).

 

“Tax Distributions”  means quarterly distributions by the Borrower
to its holders of Capital Stock in such amounts as are reasonably calculated to
ensure that each holders of Capital Stock shall be able to pay estimated
installments of the federal, state and local tax on the income derived by such
holders of Capital Stock for such quarter from the holder’s ownership of
Capital Stock in the Borrower.  For the
purposes of computing Tax Distributions, it shall be assumed that all income
allocated to the holders of Capital Stock of the Borrower is taxable for
estimated tax purposes by the appropriate federal, state and local taxing
authorities at the highest individual marginal tax rates.  The amount of the Tax Distributions shall be
reduced by any amounts paid or required to be paid by the Borrower on behalf of
any of its holders of Capital Stock to any taxing authorities.

 

“Taxes”  means all
present or future taxes, levies, imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by any Governmental Authority,
including any interest, additions to tax or penalties applicable thereto.

 

“Term Loan Commitment” means, as to any Lender,
the amount set forth as such on a Lender Addendum under the heading “Term
Loan”, and thereafter on any relevant Assignment And Assumption, and “Term Loan Commitments” shall mean the aggregate Term Loan
Commitments of all of the Lenders, which as of the Closing Date is the amount
of Seventy-Five Million Dollars ($75,000,000).

 

22

 

“Term Loan Commitment
Percentage” means, as to any Lender, the percentage initially set
forth as such on a Lender Addendum under the heading “Term Loan” and thereafter
on any relevant Assignment And Assumption.

 

“Term Loan Maturity Date” means the third annual
anniversary date of the Funding Date.

 

 “Term Loan Notes” means,
collectively, the promissory notes of the Borrower evidencing the Term Loans in
the form of Exhibit E attached hereto, together with all amendments and
replacements thereof.

 

“Term Loans” means collectively the term loans extended by the
Lenders to the Borrower as an obligor in accordance with the provisions of
Section 2.04 of this Agreement.

 

“Threshold Amount”
means Five Million Dollars ($5,000,000.00).

 

“Unfunded Pension Liability” means the excess of a
Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA,
over the current value of that Pension Plan’s assets, determined in accordance
with the assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.

 

“Uniform Commercial Code” or “UCC”
means the Uniform Commercial Code as adopted and in effect from time to time in
the Governing State.

 

Section 1.02.                             Terms Generally. 
The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
The words “include,” “includes” and “including” shall be deemed to be followed
by the phrase “without limitation.” The word “will” shall be construed to have
the same meaning and effect as the word “shall.”  Unless the context requires otherwise,
(a) any definition of or reference to any agreement, instrument or
document herein shall be construed as referring to such agreement, instrument
or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns,
(c) the words “herein,” “hereof” and “hereunder,” and words of similar
import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (d) 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, (e) the words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights, (f) each
reference to a time shall be a reference to the prevailing Eastern U.S. time,
and (g) Article and Section headings and the Table of Contents
used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

Section 1.03.                             Accounting Principles.  Except as otherwise provided in this Agreement, all
computations and determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement shall be made
and prepared in accordance with GAAP (including principles of consolidation
where appropriate), and all accounting or financial terms shall have the
meanings ascribed to such terms by GAAP In the event GAAP changes after the
date hereof in a manner that causes noncompliance with the covenants hereof,
the parties hereto shall agree in good faith to modify the covenants and the
related defined terms to compensate for such change in GAAP.

 

23

 

ARTICLE
2

CREDIT FACILITIES

 

Section 2.01.                             Revolving Credit Loans. During the Commitment Period, subject
to the terms and conditions of this Agreement and the other Credit Documents,
each of the Lenders severally agrees to make revolving credit loans (the
“Revolving Credit Loans”) to the Borrower from time to time until the Revolving
Credit Termination Date; provided, however, that (a) the
aggregate unpaid principal balance of the Revolving Credit Loans plus the
outstanding LC Obligations shall not at any time exceed the Revolving Credit
Maximum Borrowing Amount, and (b) with regard to each Lender, the sum of
(i) the unpaid aggregate principal balances of Revolving Credit Loans held
by such Lender, and (ii) such Lender’s LC Commitment of outstanding LC
Obligations, shall not exceed the amount of such Lender’s Revolving Credit
Commitment.  The Borrower shall not
request any advances of proceeds of the Revolving Credit Loans which would
cause the aggregate unpaid principal balances of the Revolving Credit Loans to
exceed the above-stated limitations.  In
the event that the aggregate unpaid principal balances of the Revolving Credit
Loans exceed the above-stated limitations, the Borrower shall immediately make
such payments to the Agent as will be sufficient to reduce the aggregate unpaid
principal balances of the Revolving Credit Loans to an aggregate amount which
will not be in excess of such limitations. 
Each Revolving Credit Loan extended by a Lender shall be in a principal
amount equal to the Lender’s Revolving Credit Commitment Percentage of the aggregate
principal amount of the Revolving Credit Loans requested on such occasion.  Subject to the satisfaction of the terms and
conditions of this Agreement and of the other Credit Documents, the Borrower
may borrow, prepay, and reborrow the Revolving Credit Loans in whole or in part
until the Revolving Credit Termination Date. 
Revolving Credit Loans may consist of Adjusted Base Rate Borrowings or
LIBOR Borrowings, or a combination thereof, as the Borrower may request in
accordance with the terms hereof.

 

2.01.1                  Revolving Credit Loan Promissory Notes.  The obligation of the Borrower to repay the
Revolving Credit Loans to each Lender shall be evidenced by a Revolving Credit
Note.  The Borrower shall deliver a
Revolving Credit Note on the date of Closing to each of the Lenders executed by
an Authorized Officer of the Borrower, with the face amount of each of such
Revolving Credit Notes to be in the amount of the Revolving Credit Commitment
of the respective Lender.

 

2.01.2                  Procedure For Revolving Credit Loan Borrowings.  The Borrower may borrow proceeds of the
Revolving Credit Loans until (but not including) the Revolving Credit
Termination Date, provided, that the Borrower delivers to the Agent an
irrevocable notice (“Loan Request”) from an Authorized Officer of the Borrower
(which Loan Request must be received by the Agent prior to
10:00 a.m.)  (a) two
(2) Business Days prior to the requested Borrowing Date, if all or any
part of the requested advances of proceeds of the Revolving Credit Loans are to
be initially LIBOR Borrowings, or (b) on the requested Borrowing Date if
all of the requested advances of proceeds of the Revolving Credit Loans are to
be initially Adjusted Base Rate Borrowings. 
Each Loan Request shall specify: (i) the aggregate amount to be borrowed,
(ii)  the requested Borrowing Date, 
(iii) whether the borrowing is to be a LIBOR Borrowing, an Adjusted
Base Rate Borrowing, or a combination thereof, and (iv)  if the borrowing
is to be entirely or partly a LIBOR Borrowing, the information required to be
specified in the election described in Section 2.05.2(a) of this
Agreement.  The Loan Requests may be
delivered to the Agent via facsimile or by other electronic transmission or by
telephonic request, it being agreed that the Agent may rely on the authority of
the Person making any such request without receipt of any other
confirmation.  The Agent shall promptly
notify each Lender of the Agent’s receipt of each notice and the contents
thereof.  Each Lender shall make the
amount of its pro rata share (calculated in
accordance with its respective Revolving Credit Commitment Percentage) of each
requested borrowing available to the Agent for the account of the Borrower at
the offices of the Agent specified in this Agreement prior to 12:00 Noon on the
Borrowing Date requested by the Borrower in U.S. Dollars and in funds
immediately available to the Agent.  Such
borrowing will be made available to the Borrower on or prior to 1:00 p.m.
by the Agent crediting the Borrower’s depository account maintained by the
Agent with the aggregate of 

 

24

 

the
amounts made available to the Agent by the Lenders and in like funds as
received by the Agent to an account maintained by the Borrower with the Agent.

 

2.01.3                  Repayment Of Revolving Credit Loans.  The Borrower unconditionally promises to pay
to the Agent for the accounts of the Lenders the then unpaid principal amount
of each Revolving Credit Loan of the Lenders on or before the Revolving Credit
Termination Date (or on any earlier date on which the Revolving Credit Loans
become due and payable as required by the stated provisions of this Agreement).
The Borrower unconditionally promises to pay to the Agent for the ratable
accounts of the Lenders all interest which has accrued upon the unpaid
principal amounts of the Revolving Credit Loans from time to time outstanding
from the date of Closing until the date of payment in full of the Revolving
Credit Loans at the rates per annum and on the dates set forth in Section 2.04
of this Agreement.  All sums due to the
Lenders in connection with the Revolving Credit Loans shall be paid in full on
or before the Revolving Credit Termination Date.

 

2.01.4                  Permitted Purposes Of Revolving Credit Loans.  The proceeds of the Revolving Credit Loans
shall be used by the Borrower solely for the general working capital needs and
for the general corporate purposes of the Borrower and its Subsidiaries.

 

2.01.5                  Revolving Credit Unused Fees.  For each Fiscal Quarter
until the termination of the Revolving Credit Commitments, the Borrower agrees
to pay to the Agent for the ratable accounts of the Lenders a per annum fee
(the “Revolving Credit Unused Fee”)
calculated by subtracting (a) the sum of (i) the average daily
disbursed aggregate principal balances of the Revolving Credit Loans during
such Fiscal Quarter (calculated on the basis of the actual number of days
elapsed in a year of 360 days) and (ii) the aggregate amount of LC
Obligations from (b) the Revolving Credit Maximum Borrowing Amount
(as such Revolving Credit Maximum Borrowing Amount may be reduced from time to
time in accordance with Section 2.01.6 of this Agreement or increased from
time to time in accordance with Section 2.01.7 of this Agreement), and
multiplying any positive difference thereof by the Applicable Margin then in
effect. The Revolving Credit Unused Fee shall be payable in arrears on the
first Business Day of each succeeding Fiscal Quarter with the first of such
payments to be scheduled for payment on May 1, 2010.

 

2.01.6                  Permanent Reduction Of Revolving Credit Maximum
Borrowing Amount. The Borrower shall have the right at any time, upon
not less than ten (10) Business Days prior written notice to the Agent, to
permanently reduce, in whole or in part, without premium or penalty, the
Revolving Credit Maximum Borrowing Amount, provided that (a) each
reduction shall be in an amount of not less than Two Hundred Fifty Thousand
Dollars ($250,000.00) or, if greater, a multiple of Fifty Thousand Dollars
($50,000.00), and (b) no reduction shall be permitted if, after giving
effect thereto, and to any repayments of the Revolving Credit Loans made on the
effective date thereof, the sum of the aggregate principal balances of the
Revolving Credit Loans then unpaid and outstanding plus the aggregate
amount of LC Obligations outstanding would exceed the Revolving Credit Maximum
Borrowing Amount then in effect.

 

25

 

2.01.7                  Increase in Revolving Credit Commitments.

 

(a)                                  Request
for Increase.  Provided there exists no continuing Default or
Event of Default, upon notice to each of the Credit Parties, the Borrower may
from time to time request an increase in the aggregate amount of Revolving
Credit Commitments by an amount (for all such requests) not exceeding Fifty
Million Dollars ($50,000,000.00); provided that (i) any such
request for an increase shall be in a minimum amount of Five Million Dollars
($5,000,000.00), and (ii) the Borrower may make a maximum of three
(3) such requests.  At the time of
sending such notice, the Borrower (in consultation with the Agent) shall
specify the time period within which each Lender is requested to respond (which
shall in no event be less than ten (10) Business Days from the date of
delivery of such notice to the Lenders).

 

(b)                                 Lender
Elections to Increase.  Each Lender
shall notify the Agent within such time period whether or not it agrees to
increase its Revolving Credit Commitment and, if so, whether by an amount equal
to, greater than, or less than its Revolving Credit Commitment Percentage of
such requested increase.  Any Lender not
responding within such time period shall be deemed to have declined to increase
its Commitment.

 

(c)                                  Notification
by Agent; Additional Lenders.  The Agent shall
notify the Borrower and each Lender of the Lenders’ responses to each request
made hereunder.  To achieve the full
amount of a requested increase and subject to the approval of the Agent and the
Issuing Lender (which approvals shall not be unreasonably withheld), the
Borrower may also invite additional Eligible Assignees to become Lenders
pursuant to a joinder agreement in form and substance satisfactory to the Agent
and its counsel.

 

(d)                                 Effective
Date and Allocations.  If the
aggregate amount of Revolving Credit Commitments are increased in accordance
with this Section, the Agent and the Borrower shall determine the effective
date (the “Increase Effective Date”) and the final allocation of such
increase.  The Agent shall promptly
notify the Borrower and the Lenders of the final allocation of such increase
and the Increase Effective Date.

 

(e)                                  Conditions
to Effectiveness of Increase.  As a condition
precedent to such increase, the Borrower shall deliver to the Agent a
certificate of each Loan Party dated as of the Increase Effective Date (in
sufficient copies for each Lender) signed by a Authorized Officer of such Loan
Party (i) certifying and attaching the resolutions adopted by such Loan
Party approving or consenting to such increase, and (ii) in the case of
the Borrower, certifying that, before and after giving effect to such increase,
(A) the representations and warranties of the Borrower contained in this
Agreement and the other Credit Documents are true and correct on and as of the
Increase Effective Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and (B) no Default or Event of
Default has occurred and is continuing. 
The Borrower shall prepay any Revolving Credit Loans outstanding on the
Increase Effective Date to the extent necessary to keep the outstanding
Revolving Credit Loans held by each Lender ratable with any revised Revolving
Credit Commitment Percentages arising from any nonratable increase in the
Revolving Credit Commitments under this Section.

 

(f)                                    Conflicting
Provisions.  This
Section 2.01.7 shall supersede any provisions in Section 2.06.3 or
10.03 to the contrary.

 

Section 2.02.                             Letter of Credit Subfacility. 
Subject to the terms and conditions set forth in this Agreement, the
Borrower may request the issuance of, and the Issuing Lender in reliance upon
the agreements of the Lenders set forth in Section 2.02.3 agrees to issue,
Letters of Credit for the accounts of the Borrower’s or any of its Subsidiaries,
in a form acceptable to the Issuing Lender, at any time and from time to time
on any Business Day from the Closing Date through, but not including the LC
Expiration 

 

26

 

Date, provided, however, that (a) no Default or Event of Default has
occurred and is then continuing, (b) the aggregate amount of LC
Obligations (after giving effect to any requested issuance) shall not at any
time exceed the Letter of Credit Sublimit, (c) the sum of the aggregate
unpaid balances of the Revolving Credit Loans plus the aggregate amount
of LC Obligations (after giving effect to any requested issuance) shall not
exceed the Revolving Credit Maximum Borrowing Amount, (d) all Letters of
Credit shall be denominated in Dollars, and not in any other currency,
(e) Letters of Credit shall be issued for lawful corporate purposes and
shall be issued as standby letters of credit, (f) the issuance of any
Letter of Credit shall not violate any policies of the Issuing Lender, and (g) no
Letter of Credit shall contain any provision for automatic reinstatement of the
Stated Amount after any drawing thereunder. 
In the event of any inconsistency between the terms and conditions of
this Agreement and the terms and conditions of any form of Letter of Credit
Application or other LC Document submitted by the Borrower to, or entered into
by the Borrower with, the Issuing Lender relating to any Letter of Credit, the
terms and conditions of this Agreement shall control.

 

2.02.1.               Request for Issuance; Amendment; Renewal; Extension; Certain
Conditions.  To request the issuance of a Letter of
Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit), the Borrower shall hand deliver or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Lender, to the Issuing Lender and the Agent (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended together with a Letter of Credit
Application, and specifying the proposed date of issuance, amendment, renewal
or extension (which shall be a Business Day), the date on which such Letter of
Credit is to expire (which shall comply with Section 2.02.2), the amount
of such Letter of Credit, the name and address of the beneficiary thereof and
such other information as shall be necessary to prepare, amend, renew or extend
such Letter of Credit.  Upon receipt of
the Letter of Credit Application executed by an Authorized Officer of the
Borrower, the Issuing Lender shall process such Letter of Credit Application
and issue the Letter of Credit requested thereby, provided all fees and
expenses in connection with such Letter of Credit have been paid and all other
conditions precedent to the issuance of Letters of Credit have been satisfied
and, provided further, the Issuing Lender shall not be required to issue any
Letter of Credit earlier than three (3) Business Days after receipt by the
Issuing Lender of the Letter of Credit Application and of all of the
certificates, documents and other papers and information required by the
Issuing Lender which relate thereto.  The
Issuing Lender shall promptly furnish a copy of each Letter of Credit to the
Agent, the Borrower and to each of the Lenders. 
A Letter of Credit shall be issued, amended, renewed or extended only if
(and, upon issuance, amendment, renewal or extension of each Letter of Credit,
the Borrower shall be deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension the proviso set forth
in Section 2.02(a) through (g) is satisfied.  The Issuing Lender shall not be obligated to
amend any Letter of Credit if the Issuing Lender would not be required at such
time to issue such Letter of Credit in its amended form under the terms of this
Agreement.

 

2.02.2.               Expiration Date.  Each Letter of Credit shall
expire at or prior to the close of business on the earlier of (a) the date
that is 365 days after the date of the issuance of such Letter of Credit (or,
in the case of any renewal or extension thereof, 365 days after such renewal or
extension) and (b) the LC Expiration Date, provided
that any Letter of Credit may provide for the automatic renewal thereof for
additional 365-day periods (which shall in no event extend beyond the LC
Expiration Date).

 

2.02.3.               Agreement of Lenders To Purchase Proportionate Share of Letters of
Credit.  In order to induce the Issuing Lender to issue Letters
of Credit for the account of the Borrower in accordance with the terms of this
Agreement, each Lender unconditionally and irrevocably agrees to accept and
purchase and hereby accepts and purchases from the Issuing Lender, on the terms
and conditions hereinafter stated, for such Lender’s own account and risk an
undivided interest equal to such Lender’s Revolving Credit Commitment
Percentage in the Issuing Lender’s obligations and rights under each Letter of
Credit issued hereunder and the amount of each LC Disbursement of the Issuing
Lender.  

 

27

 

Each Lender unconditionally and irrevocably covenants
to the Issuing Lender that, if an LC Disbursement is made by the Issuing Lender
with respect to any Letter of Credit for which the Issuing Lender is not
immediately reimbursed in full by the Borrower, such Lender shall pay to the
Agent, for the account of the Issuing Lender, upon the demand by the Agent, an
amount equal to such Lender’s Revolving Credit Commitment Percentage of the
unreimbursed amount of such LC Disbursement not later than 1:00 p.m. on
the Business Day specified by the Agent in its demand for payment. Any payment
made by a Lender pursuant to this paragraph to reimburse the Issuing Lender for
any LC Disbursement shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

 

2.02.4.               Reimbursement Obligations of the Borrower. 
The Borrower unconditionally and irrevocably agrees to reimburse the
Issuing Lender on each date on which either the Issuing Lender or the Agent
notifies the Borrower of an LC Disbursement for the amount of the LC
Disbursement, including but not limited to the amount of any draft so paid and
any taxes, charges, or other costs or expenses incurred by the Issuing Lender
in connection with such payment.  Each
drawing under any Letter of Credit shall be deemed to automatically constitute
a request by the Borrower to the Agent for an Adjusted Base Rate Borrowing of
proceeds of the Revolving Credit Loans in the amount of such drawing to be made
on the date on which either the Issuing Lender or the Agent notifies the
Borrower of the drawing, and the proceeds of such Adjusted Base Rate Borrowing
shall be advanced directly by the Agent to the Issuing Lender for application
to the Borrower’s reimbursement obligations set forth in this Section.

 

2.02.5.               Borrower’s Reimbursement Obligations Are Absolute. 
The Borrower’s reimbursement obligations hereunder shall be absolute and
unconditional under all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or has had
against the Agent, the Issuing Lender, any of the Lenders, any beneficiary of a
Letter of Credit or any other Person. 
The Borrower agrees that none of the Agent, the Issuing Lender, or the
Lenders shall be responsible for, nor shall the Borrower’s duties and
obligations hereunder or under the Credit Documents be affected by, among other
things (a) the form, validity, sufficiency, accuracy, genuineness or legal
effect of any documents or of any endorsements thereon presented in connection
with any draft upon a Letter of Credit, even though such documents shall in
fact prove to be invalid, fraudulent or forged, (b) any dispute between or
among the Borrower and any beneficiary of any Letter of Credit or any other
party to which such Letter of Credit may be transferred, or (c) any claims
whatsoever of the Borrower against any beneficiary of such Letter of Credit or
any such transferee.  None of the Agent,
the Issuing Lender, or any of the Lenders shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with the issuance,
administration, or payment of any drafts presented against any Letter of
Credit.  The Borrower agrees that any
action taken or omitted by the Agent, the Issuing Lender, or the Lenders under
or in connection with any Letter of Credit or the related drafts or documents
shall be binding on the Borrower and shall not result in any liability of any
of the Agent, the Issuing Lender, or the Lenders to the Borrower, absent gross
negligence or willful misconduct.  In
furtherance and not in limitation of the foregoing, the Issuing Lender may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary, and the Issuing Lender shall not be responsible
for the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.

 

2.02.6.               Applicability of ISP98. Unless otherwise expressly agreed by the Issuing
Lender and the Borrower, when a Letter of Credit is issued the rules of
the ISP shall apply to each standby Letter of Credit.

 

2.02.7.               Interim Interest.  If the Issuing Lender shall
make any LC Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including 

 

28

 

the date such LC Disbursement is made to but excluding
the date that the Borrower reimburses such LC Disbursement at the Adjusted Base
Rate then applicable to Revolving Credit Loans; provided that the
Default Rate shall apply during any continuing Event of Default.  Interest accrued pursuant to this paragraph
shall be for the account of the Issuing Lender, except that interest accrued on
and after the date of payment by any Lender pursuant to Section 2.02.3 to
purchase a participation from the Issuing Lender shall be for the account of
such purchasing Lender to the extent of such payment.

 

2.02.8.               Cash Collateralization.  Upon the
request of the Agent (a) if the Issuing Lender has honored any full or
partial drawing request under any Letter of Credit and such drawing has
resulted in an LC Borrowing (unless such LC Borrowing has been reimbursed by
the proceeds of a Revolving Credit Loan in accordance with
Section 2.02.4), or (b) if, as of the LC Expiration Date, any Letter
of Credit for any reason remains outstanding and partially or wholly undrawn,
or (c) a continuing Event of Default exists and the Loans have been
accelerated and have become due and payable in accordance with
Section 8.01 of this Agreement, the Borrower shall immediately “Cash
Collateralize” all then outstanding LC Obligations (in an amount determined as
of the date of such LC Borrowing or the LC Expiration Date or the date of
acceleration of the Loans, as the case may be). 
As used herein, the term “Cash Collateralize” means to pledge and
deposit with or deliver to the Agent, for the benefit of the Issuing Lender and
the Lenders, as collateral (“Cash Collateral”) for the LC Obligations, cash or
deposit account balances in accordance with documentation in form and substance
reasonably satisfactory to the Agent and the Issuing Lender (which documents
are hereby consented to by the Lenders). 
The Borrower hereby grants to the Agent, for the benefit of the Credit
Parties, a security interest in all of such cash, deposit accounts and all
balances therein and all proceeds of the foregoing.  Cash Collateral shall be maintained in
blocked, non-interest bearing deposit accounts held by the Agent.

 

2.02.9.               Letter of Credit Fees.                              The Borrower shall pay to the Agent, for
the ratable accounts of the Lenders, a letter of credit fee (the “Letter of
Credit Fee”) on the aggregate daily Stated Amount of the outstanding Letters of
Credit at the rate equal to the Applicable Margin for Revolving Credit Loans
LIBOR Borrowings in effect from time to time, provided, that upon the
implementation of the Default Rate and for so long as the same shall continue,
the Letter of Credit Fee shall be increased to the Default Rate.  Letter of Credit Fees shall be payable
(a) quarterly in arrears on the last Business Day of each Fiscal Quarter
occurring during the term of this Agreement, and (b) on the Revolving
Credit Termination Date or any other date on which the Revolving Credit
Commitments are terminated.  The Borrower
shall pay to the Agent, for the sole account of the Issuing Lender, a fronting
fee of 0.125% of the Stated Amount on any new or extended Letters of Credit,
plus such customary issuance, presentation, amendment and processing fees and
all standard costs or charges of the Issuing Lender relating to letters of
credit, as from time to time in effect. 
Such fees and costs and charges shall be due and payable on demand and
shall be nonrefundable.

 

2.02.10.         Letters of Credit Issued for Other Loan Parties or Subsidiaries.  Notwithstanding that a Letter of Credit issued or
outstanding hereunder is in support of any obligations of, or is for the
account of another Loan Party or a Subsidiary of the Borrower or of another
Loan Party, the Borrower shall be obligated to reimburse the Issuing Lender
hereunder for any and all drawings under such Letter of Credit.  The Borrower hereby acknowledges that the
issuance of Letters of Credit for the accounts of other Loan Parties and
Subsidiaries of the Borrower and any other Loan Party inures to the benefit of
the Borrower, and that the Borrower’s business derives substantial benefits
from the businesses of such other Loan Parties and Subsidiaries.

 

2.02.11.         Increased Costs.  To the extent that after the Closing Date
any Governmental Authority imposes any condition or requirement upon the
Issuing Lender regarding the Letters of Credit and if the result of such
condition or requirement is to directly or indirectly increase the cost to the
Issuing Lender of issuing or maintaining any Letter of Credit, or to reduce the
effective yield to the Issuing Lender of the amount receivable in respect
thereof, then the Issuing Lender may any time after the additional cost is
incurred or the yield of the amount receivable is reduced, notify the Borrower
and 

 

29

 

the Agent, and the Borrower shall pay within ten
(10) Business Days after demand such amounts as the Issuing Lender may
specify to be necessary to compensate the Issuing Lender for such additional
cost or reduced receipt, together with interest on such amount from the date of
the notice of such event which results in such increased cost or reduction in
amount receivable until payment in full thereof at a rate equal at all times to
the Adjusted Base Rate applicable to Revolving Credit Loans.  The determination by the Issuing Lender of
any amount due hereunder as set forth in a certificate setting forth the
calculation thereof, shall, in the absence of manifest error, be final and conclusive
and binding.

 

Section 2.03.                             Term Loans.                              Subject to the terms and conditions set forth herein,
each Lender severally agrees to extend a term loan (each such term loan, a
“Term Loan”) to the Borrower in the initially stated principal amount of each
Lender’s respective Term Loan Commitment. 
The Term Loans may be either Adjusted Base Rate Borrowings, or LIBOR
Borrowings, or a combination thereof.

 

2.03.1.               Term Loan Notes.  The obligations of the Borrower to repay the
Term Loans to each of the Lenders shall be evidenced by a Term Loan Note to be
issued to each Lender in the stated principal amount of each Lender’s
respective Term Loan Commitment.

 

2.03.2.               Payment.  The aggregate unpaid principal balances of
the Term Loans shall be paid to the Agent for the ratable accounts of the
Lenders in consecutive quarterly installments each in the amount of Three
Million Seven Hundred Fifty Thousand Dollars ($3,750,000.00) payable on each of
the Principal Payment Dates.  All
remaining unpaid balances of the Term Loans, including all unpaid principal, unpaid
and accrued interest and fees, shall be paid in full on the Term Loan Maturity
Date.  The Borrower unconditionally
promises to pay interest to the Agent for the accounts of the Lenders on the
unpaid principal balances of the Term Loans from time to time outstanding from
the date of Closing until the date of the payment in full of the Term Loans at
the rates per annum, and on the dates set forth in Section 2.04 of this
Agreement.

 

2.03.3.               Mandatory Prepayments.  The Borrower
shall have the obligation to pay, or cause to be paid, to the Agent for the
accounts of the Lenders the following (collectively, “Mandatory Prepayments”):

 

(a)                                  Extraordinary
Receipts.  The Borrower
shall pay, or cause to be paid, to the Agent the Net Available Proceeds of any
Extraordinary Receipts within five (5) Business Days of the receipt
thereof by any Loan Party; provided, that, at the option of the Borrower and as
long as no Default of Event of Default shall have occurred and be continuing or
would be caused thereby, Net Available Proceeds from Extraordinary Receipts
(other than from proceeds from the issuance of Indebtedness for borrowed money
or Equity Issuances) in an aggregate amount not exceeding Ten Million Dollars
($10,000,000.00) (i.e., when aggregated with all
other Net Available Proceeds not paid to the Agent as a Mandatory Prepayment)
shall not be required to be paid to the Agent as a Mandatory Prepayment so long
as an Authorized Officer of the Borrower delivers a certificate to the Agent
within five (5) Business Days of the receipt of the Net Available Proceeds
stating that the applicable Loan Party intends to use the Net Available
Proceeds from the Extraordinary Receipts (the “Reinvestable Proceeds”) to
purchase assets to be used by such Loan Party in its business (the “Qualified
Assets”) within one hundred eighty (180) days after receipt of such proceeds
and setting forth the estimated cost of the Qualified Assets.  After such election to use the Reinvestable
Proceeds, on the date which occurs one hundred eighty (180) days after the
receipt of the applicable Net Available Proceeds, the Borrower shall
(i) deliver a certificate of an Authorized Officer of the Borrower to the
Agent certifying as to the amount and use of such Reinvestable Proceeds
actually used to purchase Qualified Assets, and (ii) deliver to the Agent
for application in accordance with this Section 2.03.3, an amount equal to
the remaining unused Reinvestable Proceeds. 
The provisions of this Section 2.03.3(a) shall not be deemed a
waiver of or constitute the implied consent of the Credit Parties to any
transactions which are either prohibited by the terms of the Credit Documents
or which by the terms of any of the Credit Documents require the prior consent
of any or all of the Credit Parties.

 

30

 

(b)                                 Consolidated
Excess Cash Flow Recapture.  Commencing for the Borrower’s Fiscal Year
ending October 31, 2010, the Borrower shall pay, or cause to be paid, to
the Agent for the account of the Lenders on or before each January 31st of each successive Fiscal Year an amount equal
to fifty percent (50%) of the Consolidated Excess Cash Flow achieved by the
Borrower and its Subsidiaries for the immediately ended Fiscal Year; provided,
however, the amount required to be paid for the Fiscal Year ending
October 31, 2010 shall be prorated based on the portion of such Fiscal
Year between the Funding Date and October 31, 2010.  The amount of any Mandatory Prepayments due
from the Consolidated Excess Cash Flow in any Fiscal Year shall be reduced by
the amount of any voluntary prepayments made by the Borrower or by any other
Loan Party in accordance with Section 2.03.4 of this Agreement.

 

(c)                                  Application
Of Mandatory Prepayments.  The
Mandatory Prepayments shall be applied first to the unpaid balances of the Term
Loans, secondly to the unpaid balances of the Revolving Credit Loans, and
thirdly to any other unpaid Obligations. 
Mandatory Prepayments made upon the Term Loans shall be applied in the
inverse order of scheduled maturities.

 

2.03.4.               Voluntary Prepayments. The Borrower may, upon notice to the Agent, at any
time or from time to time voluntarily prepay the Term Loans in whole or in part
without premium or penalty; provided that (a) such notice must be
received by the Agent not later than 11:00 a.m. (i) three
(3) Business Days prior to any date of prepayment of LIBOR Borrowings, and
(ii) on the date of prepayment of Adjusted Base Rate Borrowings; and
(b) any voluntary prepayment of the Term Loans shall be in a principal
amount of not less than Five Million Dollars ($5,000,000.00).  Each such notice shall specify the date and
amount of such prepayment and, if LIBOR Borrowings are to be prepaid, the
Interest Period(s) of such LIBOR Borrowings.  The Agent will promptly notify each Lender of
its receipt of each such notice, and of the amount of such Term Loan Commitment
Percentage of such prepayment.  If such
notice is given by the Borrower, the Borrower shall make such prepayment and
the payment amount specified in such notice shall be due and payable on the
date specified therein.  Any prepayment
of a LIBOR Borrowing shall be accompanied by all accrued interest on the amount
prepaid, together with any additional amounts required pursuant to Section 2.04.2(b)(iii).  Each such prepayment shall be applied to the
Term Loans in accordance with the Term Loan Commitment Percentages of the
Lender.

 

Section 2.04.                             Interest Terms Applicable To The
Loans.  Interest shall accrue upon the unpaid
principal balances of the Loans until the Loans have been repaid in full at the
rate or rates described below in this Section 2.04.  Interest shall be paid in arrears on the
applicable Interest Payment Dates.

 

2.04.1.               Adjusted Base Rate.  Absent a timely election by
the Borrower of a LIBOR Borrowing in accordance with Section 2.04.2 of
this Agreement, the unpaid balances of the Loans, including any balances of any
LIBOR Borrowings for which the applicable Interest Period has expired, shall be
deemed automatically to bear interest at the Adjusted Base Rate.  Changes in the Adjusted Base Rate shall be
made when and as changes in the Base Rate occur.  Each election by the Borrower of an Adjusted
Base Rate Borrowing shall be in the Minimum Borrowing Amount, or any multiple thereof.

 

2.04.2.               LIBOR Borrowing Option.  Subject to the terms of this Section,
interest may accrue at the election of the Borrower for Interest Periods
selected by the Borrower, at the Adjusted LIBOR Rate on portions of the unpaid
principal balances of the Revolving Credit Loans and the Term Loans.  Any election for a LIBOR Borrowing shall be
subject to the following terms and conditions:

 

(a)                                  Notice Of Election.  An Authorized Officer of the Borrower shall
deliver by 10:00 a.m. on that Business Day which occurs two
(2) Business Days prior to the Business Day on which the Borrower desires
that an Interest Period commence, a written election to the Agent specifying:
(i) the commencement date of and length of the relevant Interest Period,
(ii) a statement as to whether the LIBOR Borrowing is to be applicable to
the Term Loans or the Revolving Credit Loans, and (iii) the 

 

31

 

Dollar
amount of that portion of the total aggregate principal amount of the Loans
identified by the Borrower, which are to bear interest at the Adjusted LIBOR
Rate, which amount: (A) shall not be less than the Minimum Borrowing
Amount; and (B) if elected with respect to the Term Loans shall not be in
a principal amount greater than that sum obtained by deducting the aggregate
amount of principal payments upon the Term Loans which are scheduled for
payment on Principal Payment Dates occurring prior to the end of the subject
Interest Period from the aggregate unpaid principal balances of the Term Loans.

 

(b)                                 Effect Of Election.  Interest shall accrue from and including the
first day of each Interest Period selected by the Borrower to (but not
including) the last day of such Interest Period at the Adjusted LIBOR Rate
determined as applicable to such Interest Period upon the amount of the unpaid
principal balances of the Loans identified by the Borrower in the Borrower’s
written election.

 

(i)                                     Interest
Periods.  There shall be no more than
eight (8) Interest Periods outstanding at any one time.  No Interest Period may expire after the Maturity
Date.

 

(ii)                                  Availability.  If prior to the commencement of any Interest
Period for a LIBOR Borrowing: (A) the Agent is advised that the Required
Lenders have determined that a Regulatory Change or a change in market
conditions has made it impractical for the Lenders to offer pricing based on
the Adjusted LIBOR Rate; or (B) the Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the LIBOR Rate for such Interest Period; or
(C) the Agent is advised by the Required Lenders that the LIBOR Rate
applicable to such Interest Period will not adequately and fairly reflect the
cost to the Lenders of making or maintaining the proposed LIBOR Borrowing for
such Interest Period; then the Agent shall give notice thereof to the Borrower
and the Lenders as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to
such notice no longer exist, (x) any request to convert any borrowing to,
or continue any borrowing as, a LIBOR Borrowing shall be ineffective and
(y) any requested LIBOR Borrowing shall bear interest at the Base Rate.

 

(iii)                               Breakage Costs. The Borrower
agrees to compensate the Lenders from time to time, upon demand from any Lender
through the Agent, for all losses, expenses, lost earnings, costs and
liabilities (including all interest paid to lenders of funds borrowed by the
Lenders to carry LIBOR Borrowings) which any of the Lenders sustains if:
(A) any repayment or prepayment of any LIBOR Borrowings (including any
payment resulting from the acceleration of the Loans in accordance with the
terms of this Agreement) or any conversion of a LIBOR Borrowing for any reason
occurs on a date which is not the last day of the applicable Interest Period;
or (B) any failure by the Borrower to borrow a LIBOR Borrowing or convert
an Adjusted Base Rate Borrowing to a LIBOR Borrowing on the date for such
borrowing or conversion specified in the relevant notice of election given by
the Borrower to the Agent in accordance with the terms of this Agreement.

 

(iv)                              Termination Of Right To Elect
LIBOR Borrowings.  Notwithstanding
anything to the contrary set forth in this Agreement, and without limiting any
other rights and remedies of the Lenders, the Required Lenders during any
continuing Default or Event of Default may suspend the right of the Borrower to
elect any new LIBOR Borrowing or to convert any Adjusted Base Rate Borrowing
into a LIBOR Borrowing or to permit any LIBOR Borrowing to be renewed as a
LIBOR Borrowing, in which case all LIBOR Borrowings shall be converted (on the
last days of the respective Interest Periods therefor) or continued, as the
case may be, as Adjusted Base Rate Borrowings.

 

2.04.3.               Calculation Of Interest. Interest shall
be calculated upon Adjusted Base Rate Borrowings on the basis of a 365 or 366
days per year factor applied to the actual days on which there exists an unpaid
balance of the Adjusted Base Rate Borrowings. 
Interest shall be calculated 

 

32

 

upon
LIBOR Borrowing on the basis of a 360 day per year factor applied to the actual
days on which there exists an unpaid balance of the LIBOR Borrowing.

 

2.04.4.               Default Interest.  The interest rates payable upon the Loans may
be increased to the Default Rate during any continuing Event of Default upon
the election of the Required Lenders until the Event of Default has been cured
to the satisfaction of the Required Lenders or waived by the Agent upon the
authorization of the Required Lenders.

 

2.04.5.               Maximum Rate Of Interest.  Any provision contained in the Credit
Documents to the contrary notwithstanding, the Lenders shall not be entitled to
receive or collect, nor shall the Borrower be obligated to pay, interest, fees,
or charges thereunder in excess of the maximum rate of interest permitted by
any applicable Law, and if any provision of this Agreement, the Notes or any of
the other Credit Documents is construed or held by any court of law or
Governmental Authority having jurisdiction to permit or require the charging,
collection or payment of any amount of interest in excess of that permitted by
such Laws, the provisions of this Section shall control and shall override
any contrary or inconsistent provision. 
The intention of the parties is to at all times conform strictly with
all applicable usury requirements and other Laws limiting the maximum rates of
interest which may be lawfully charged upon the Loans.  The interest to be paid pursuant to the Notes
shall be held subject to reduction to the amount allowed under said usury or
other Laws as now or hereafter construed by the courts having jurisdiction, and
any sums of money paid in excess of the interest rate allowed by applicable law
shall be applied in reduction of the principal amount owing pursuant to the
Notes.

 

Section 2.05.                             Late Payment Charges. 
Any payment of principal, interest or fees due upon any of the Loans
(including any final payment) which is received by the Agent more than fifteen
(15) calendar days after its due date shall incur a late payment charge equal
to five percent (5%) of the amount of the payment due, which charge shall be
immediately due and payable.  The
existence of the right by the Lenders to receive a late payment charge shall
not be deemed to constitute a grace period or provide any right to the Borrower
to make a payment other than on such payment’s scheduled due date.

 

Section 2.06.                             Pro Rata Treatment And Payments.

 

2.06.1.               Distribution Of Payments To
Lenders.  Except as
otherwise expressly provided to the contrary by the terms of this Agreement,
all payments (including prepayments) to be made by the Borrower hereunder,
whether on account of principal, interest, fees or otherwise shall be made
without set-off or counterclaim and shall be made prior to 12:00 Noon on the
due date thereof to the Agent for the accounts of the Lenders at the Agent’s
offices in Buffalo, New York in immediately available Dollars.  The Agent shall promptly distribute to each
Lender by wire transfer such Lender’s pro rata share of each of such payments
in like funds as received.  The Agent may
assume that the Borrower has made such payments on the applicable date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders or to the Issuing Lender, as the case may be, the amount due.  In such event, if the Borrower has not in
fact made such payments, then each of the Lenders or the Issuing Lender, as the
case may be, severally agrees to repay to the Agent forthwith on demand the
amount so distributed to such Lender or the Issuing Lender, in immediately
available funds with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the Agent,
at the greater of the Federal Funds Rate or a rate determined by the Agent in
accordance with banking industry customs and rules on interbank
compensation.

 

2.06.2.               Funding Of Loans.  The Lenders agree that the Agent may assume
that each Lender will fund timely its pro rata
portion of each borrowing requested by the Borrower in accordance with the
terms of this Agreement and that the Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable borrowing available to the Agent, then the
applicable Lender and the Borrower severally agree to pay to the Agent
forthwith on demand such corresponding amount in immediately 

 

33

 

available
funds with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment
to the Agent, at (a) in the case of a payment to be made by such Lender,
the greater of the Federal Funds Rate or a rate determined by the Agent in
accordance with banking industry customs and rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by the Agent in connection with the foregoing, and (b) in the case
of a payment to be made by the Borrower, the interest rate applicable to
Adjusted Base Rate Borrowings.  If the
Borrower and such Lender shall pay such interest to the Agent for the same or
an overlapping period, the Agent shall promptly remit to the Borrower the
amount of such interest paid by the Borrower for such period.  If such Lender pays its share of the
applicable borrowing to the Agent, then the amount so paid shall constitute
such share included in the subject borrowing. 
Any payment by the Borrower shall be without prejudice to any claim the
Borrower may have against a Lender that shall have failed to make such payment
to the Agent.

 

2.06.3.               Ratable Sharing.  Each borrowing by the Borrower shall be made
ratably from the Lenders in accordance with their applicable respective
Commitment Percentages.  Any reduction in
the Revolving Credit Maximum Borrowing Amount shall be made ratably among the
Lenders in accordance with their respective Revolving Credit Commitment
Percentages. Each payment (including each prepayment) by the Borrower on
account of principal and interest on the Loans shall be shared pro rata by the Lenders in accordance with their respective
balances of the Loans which are being paid.

 

2.06.4.                                                               Setoffs,
Counterclaims, Other Payments.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Loans made by it, or the participations
in LC Obligations held by it resulting in such Lender’s receiving payment
greater than its pro rata share thereof as
provided herein, then the Lender receiving such greater proportion shall
(a) notify the Agent of such fact, and (b) purchase (for cash at face
value in Dollars) participations in the Loans and participations in the LC
Obligations of the other Lenders, or make such other adjustments as shall be
equitable, so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and other amounts owing them, provided
that:

 

(i)                                     if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest; and

 

(ii)                                  the provisions
of this Section shall not be construed to apply to (A) any payment
made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or (B) any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans or
participations in LC Obligations to any assignee or participant, other than to
the Borrower or any Subsidiary thereof (as to which the provisions of this
Section shall apply).

 

Each
Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of such Loan Party in the
amount of such participation.

 

Section 2.07.                             Application Of Payments.  Except as expressly required to the contrary
by the terms of this Agreement, all payments received upon the Loans may be
applied first to Credit Party Expenses, next to late payment charges, then to
accrued interest and the unpaid principal balances of the Loans, or in such
other order as elected by the Required Lenders.

 

34

 

Section 2.08.          Increased Costs.

 

2.08.1.         Increased Costs Generally.  If any Change
In Law shall:

 

(a)     impose, modify or deem applicable any reserve,
special deposit, compulsory loan, insurance charge or similar requirement
against assets of, deposits with or for the account of, or credit extended or
participated in by, any Lender (except any reserve requirement reflected in the
Adjusted LIBOR Rate) or the Issuing Lender;

 

(b)     subject any Lender or the Issuing Lender to any tax
of any kind whatsoever with respect to this Agreement, any Letter of Credit,
any participation in a Letter of Credit or any LIBOR Borrowing made by it, or
change the basis of taxation of payments to such Lender or the Issuing Lender
in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.09
and the imposition of, or any change in the rate of, any Excluded Taxes payable
by such Lender or the Issuing Lender); or

 

(c)     impose on any Lender or the Issuing Lender or the
London Interbank Market any other condition, cost or expense affecting this
Agreement or any LIBOR Borrowing made by such Lender or any Letter of Credit or
participation therein;

 

and the result of any of the foregoing shall be to increase the cost to
such Lender of making or maintaining any LIBOR Borrowing (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
the Issuing Lender of participating in, issuing or maintaining any Letter of
Credit (or of maintaining its obligation to participate in or to issue any
Letter of Credit), or to reduce the amount of any sum received or receivable by
such Lender or the Issuing Lender hereunder (whether of principal, interest or
any other amount) then, upon request of such Lender or the Issuing Lender, the
Borrower will pay to such Lender or the Issuing Lender, as the case may be,
such additional amount or amounts as will compensate such Lender or the Issuing
Lender, as the case may be, for such additional costs incurred or reduction
suffered.

 

2.08.2.         Capital Requirements. If any Lender or the Issuing Lender determines that
any Change in Law affecting such Lender or the Issuing Lender or any lending
office of such Lender or such Lender’s or the Issuing Lender’s holding company,
if any, regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or the Issuing Lender’s capital or on the
capital of such Lender’s or the Issuing Lender’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the Issuing Lender, to a level below that which such Lender
or the Issuing Lender or such Lender’s or the Issuing Lender’s holding company
could have achieved but for such Change in Law (taking into consideration such
Lender’s or the Issuing Lender’s policies and the policies of such Lender’s or
the Issuing Lender’s holding company with respect to capital adequacy), then
from time to time the Borrower will pay to such Lender or the Issuing Lender,
as the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Lender or such Lender’s or the Issuing Lender’s holding
company for any such reduction suffered.

 

2.08.3.         Certificate for Reimbursement.  A certificate
of a Lender or the Issuing Lender setting forth the amount or amounts necessary
to compensate such Lender or the Issuing Lender or its holding company, as the
case may be, as specified in this Section 2.08 and delivered to the
Borrower shall be conclusive absent manifest error.  The Borrower shall pay such Lender or the
Issuing Lender, as the case may be, the amount shown as due on any such
certificate within ten (10) days after receipt thereof.

 

35

 

2.08.4.         Delay in Requests.  Failure or delay on the part
of any Lender or the Issuing Lender to demand compensation pursuant to this Section or
Section 2.02.11 shall not constitute a waiver of such Lender’s or the
Issuing Lender’s right to demand such compensation, provided that the
Borrower shall not be required to compensate a Lender or the Issuing Lender
pursuant to this Section for any increased costs incurred or reductions
suffered more than nine (9) months prior to the date that such Lender or
the Issuing Lender, as the case may be, notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender’s or
the Issuing Lender’s intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is
retroactive, then the nine (9) month period referred to above shall be
extended to include the period of retroactive effect thereof).

 

Section 2.09.          Taxes.

 

2.09.1.          Payments Free of Taxes.  Any and all
payments by or on account of any obligation of the Borrower hereunder or under
any other Credit Document shall be made free and clear of and without reduction
or withholding for any Indemnified Taxes or Other Taxes, provided that
if the Borrower shall be required by applicable law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (a) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Agent, Lender or Issuing Lender, as the case may be, receives
an amount equal to the sum it would have received had no such deductions been
made, (b) the Borrower shall make such deductions and (c) the
Borrower shall timely pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.

 

2.09.2.         Payment of Other Taxes by the Borrower.  Without
limiting the provisions of Section 2.09.1 above, the Borrower shall timely
pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.

 

2.09.3.         Indemnification by the Borrower.  The Borrower
shall indemnify the Agent, each Lender and the Issuing Lender, within ten (10) days
after demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Agent, such
Lender or the Issuing Lender, as the case may be, and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority.  A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing
Lender (with a copy to the Agent), or by the Agent on its own behalf or on
behalf of a Lender or the Issuing Lender, shall be conclusive absent manifest
error.

 

2.09.4.         Evidence of Payments.  As soon as
practicable after any payment of Indemnified Taxes or Other Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Agent.

 

2.09.5.         Status of Lenders.  Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is resident for tax purposes, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other
Credit Document shall deliver to the Borrower (with a copy to the Agent), at
the time or times prescribed by applicable law or reasonably requested by the
Borrower or the Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the
Borrower or the Agent, shall deliver such other documentation prescribed by
applicable law or 

 

36

 

reasonably requested by the Borrower or the
Agent as will enable the Borrower or the Agent to determine whether or not such
Lender is subject to backup withholding or information reporting requirements.

 

Without
limiting the generality of the foregoing, in the event that the Borrower is
resident for tax purposes in the United States of America, any Foreign Lender
shall deliver to the Borrower and the Agent (in such number of copies as shall
be requested by the recipient) on or prior to the date on which such Foreign
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Borrower or the Agent, but only if such Foreign Lender
is legally entitled to do so), whichever of the following is applicable:

 

(a)       duly completed copies of Internal Revenue Service Form W-8BEN
claiming eligibility for benefits of an income tax treaty to which the United
States of America is a party,

 

(b)       duly completed copies of Internal Revenue Service Form W-8ECI,

 

(c)       in the case of a Foreign Lender claiming the
benefits of the exemption for portfolio interest under section 881(c) of
the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a
“bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10
percent shareholder” of the Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed copies of  Internal Revenue Service Form W-8BEN, or

 

(d)       any other form prescribed by applicable law as a
basis for claiming exemption from or a reduction in United States Federal
withholding tax duly completed together with such supplementary documentation
as may be prescribed by applicable law to permit the Borrower to determine the
withholding or deduction required to be made.

 

2.09.6.          Treatment of Certain Refunds.  If any Credit
Party determines, in its sole discretion, that it has received a refund of any
Taxes or Other Taxes as to which it has been indemnified by the Borrower or
with respect to which the Borrower has paid additional amounts pursuant to this
Section, it shall pay to the Borrower an amount equal to such refund (but only
to the extent of indemnity payments made, or additional amounts paid, by the
Borrower under this Section with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of such Credit
Party and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the
Borrower, upon the request of such Credit Party, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to such Credit Party in the
event that such Credit Party is required to repay such refund to such
Governmental Authority.  This paragraph
shall not be construed to require such Credit Party to make available its tax
returns (or any other information relating to its taxes that it deems
confidential) to the Borrower or any other Person.

 

Section 2.10.            Mitigation Obligations;
Replacement of Lenders.

 

2.10.1.         Designation of a Different Lending Office. 
If any Lender requests compensation under Section 2.08, or requires
the Borrower to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.09, then
such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts

 

37

 

payable pursuant to Sections 2.08 and 2.09, as the case may be, in the
future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

2.10.2.         Replacement of Lenders. If any Lender
requests compensation under Sections 2.08 or 2.09, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Sections 2.08 or 2.09,
or if any Lender defaults in its obligation to fund Loans hereunder, or if in
connection with any proposed amendment, modification, termination, waiver or
consent with respect to any terms of the Credit Documents as contemplated by Section 10.03,
the consent of the Required Lenders has been obtained but the consent of a
Lender whose consent is required shall not have been obtained, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Agent, require any of such Lenders to assign and delegate, without recourse
(in accordance with and subject to the restrictions contained in, and consents
required by, Section 10.08), all of its interests, rights and obligations
under this Agreement and the related Credit Documents to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment), provided that:

 

(a)           the Borrower shall have paid to the Agent the
assignment fee specified in Section 10.08;

 

(b)           such Lender shall have received payment of an amount
equal to the outstanding principal of its Loans and participations in
LC Disbursements, accrued interest thereon, accrued fees and all other
amounts payable to it hereunder and under the other Credit Documents from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts);

 

(c)           in the case of any such assignment resulting from a
claim for compensation under Section 2.08 or payments required to be made
pursuant to Section 2.09, such assignment will result in a reduction in
such compensation or payments thereafter; and

 

(d)           such assignment does not conflict with applicable
laws.

 

A
Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

 

Section 2.11.          Fees.  The Borrower shall pay to M&T Bank for
M&T Bank’s own account such fees as are required by the terms of the Fee
Letter.

 

Section 2.12.          Payments.  All payments received by the Credit Parties
which are to be applied to reduce the Obligations shall be provisional and
shall not be considered final unless and until such payment is not subject to
avoidance under any provision of the Bankruptcy Code, as amended, including
Sections 547 and 550, or any state law governing insolvency or creditors’
rights.  If any payment is avoided or set
aside under any provision of the Bankruptcy Code, including Sections 547 and
550, or any state law governing insolvency or creditors’ rights, the payment
shall be considered not to have been made for all purposes of this Agreement
and the Credit Parties shall adjust their respective records to reflect the
fact that the avoided payment was not made and has not been credited against
the Obligations.

 

Section 2.13.          Advancements.  If the Borrower or any other Loan Party fails
to perform any of its respective agreements or covenants contained in the
Credit Documents or if the Borrower or any other 

 

38

 

Loan
Party fails to protect or preserve the Collateral or any other security for the
Obligations or the status and priority of the Liens of the Credit Parties in
the Collateral or in any other security for the Obligations and such failure
shall remain uncured for three (3) Business Days after the Agent shall
have notified the Borrower thereof, the Agent for the account of the Lenders
may make advances to perform the same on behalf of the Borrower or other Loan
Party to protect or preserve the Collateral or any other security for the
Obligations or the status and priority of the Liens of the Credit Parties in
the Collateral or in any other security for the Obligations, and all sums so
advanced shall immediately upon such advance become secured by the Liens
granted in the Credit Documents and any other security for the Obligations, and
shall become part of the principal amount owed to the Lenders with interest to
be assessed at the Default Rate.  The
Borrower shall repay on demand all sums so advanced on the Borrower’s behalf,
plus all expenses or costs incurred by the Agent, on account of the Lenders,
including reasonable legal fees, with interest thereon.  The provisions of this Section shall not
be construed to prevent the institution of the rights and remedies of the Agent
upon the occurrence of an Event of Default. 
The authorization contained in this Section is not intended to
impose any duty or obligation on the Agent or any other Credit Party to perform
any action or make any advancement on behalf of the Borrower and is intended to
be for the sole benefit and protection of the Credit Parties.

 

ARTICLE 3

REPRESENTATIONS
AND WARRANTIES

 

The
Borrower makes the following representations and warranties to the Credit
Parties as of the Closing Date and, as of each date on which any Revolving
Credit Loan is requested or made or any Letter of Credit is requested or issued
(for purposes hereof, each extension or other amendment of a Letter of Credit
shall constitute an issuance thereof), and as of each date on which any Loan or
portion of a Loan is converted to or continued as a LIBOR Borrowing:

 

Section 3.01.          Organization and Qualification. 
Each Loan Party and each Subsidiary of each Loan Party (a) is a
corporation, limited liability company or partnership duly organized, validly existing
and in good standing under the laws of the state (or nation and/or province or
other applicable jurisdiction, in the case of a Foreign Subsidiary) of
incorporation or organization of such Loan Party or Subsidiary, (b) has
the lawful power to own or lease its properties and to engage in the business
it presently conducts or proposes to conduct, and (c) is duly licensed or
qualified and in good standing in all jurisdictions where the property owned or
leased by it or the nature of the business transacted by it makes such
licensing or qualification necessary (except to the extent that the failure to
be licensed, qualified or in good standing is not reasonably likely to cause a
Material Adverse Change).

 

Section 3.02.          Capitalization and Ownership. 
As of the Closing Date, the authorized Capital Stock and the issued and
outstanding Capital Stock of the respective Guarantors consists of those shares
of common stock described as disclosed on Schedule 3.02, having such par value
as may be indicated therein, of which that number of shares indicated therein
as issued and outstanding are in fact issued and outstanding.  All of the Capital Stock of the Guarantors
indicated as issued and outstanding has been validly issued and is fully paid
and nonassessable.  As of the Closing
Date, there are no options, warrants or other rights outstanding to purchase
any Capital Stock of any Guarantor, except as disclosed on Schedule 3.02.

 

Section 3.03.          Subsidiaries.  No Loan Party
nor any Subsidiary of a Loan Party has any Subsidiaries as of the Closing Date,
except as disclosed on Schedule 3.03. 
Each Loan Party has good and marketable title to all the Capital Stock
of any Subsidiary which such Loan Party owns, free and clear of any Lien other
than Permitted Encumbrances.  There are
no options, warrants or other rights outstanding to purchase any shares of
Capital Stock of any Subsidiary  of any
Loan Party or, to the best of the Borrower’s knowledge, any Restricted
Subsidiary, nor are any securities of any Subsidiary or, to the best of the
Borrower’s knowledge, any Restricted Subsidiary, convertible into or
exchangeable for their 

 

39

 

common stock. 
Except for any investments in such assets permitted under the provisions
of this Agreement, (a) no Loan Party or, to the best of the Borrower’s
knowledge, Restricted Subsidiary, owns directly or indirectly any Capital Stock
of any other Person, (b) no Loan Party or, to the best of the Borrower’s
knowledge, Restricted Subsidiary, is a partner (general or limited) of any
partnership, and (c) no Loan Party or, to the best of the Borrower’s
knowledge, Restricted Subsidiary is a party to any joint venture and or
otherwise owns (beneficially or of record) any Equity Interest or similar
interest in any other Person.

 

Section 3.04.          Power and Authority.  Each of the
Loan Parties has the full power to enter into, execute, deliver, carry out and
perform this Agreement and the Credit Documents to which it is a party, to
incur the Indebtedness contemplated by the Credit Documents and to perform its
respective obligations under the Credit Documents to which it is a party and
all of such actions have been duly authorized in each instance by all necessary
corporate proceedings.

 

Section 3.05.          Validity and Binding Effect. 
This Agreement has been, and each Credit Document, when executed and
delivered by the respective Loan Parties, will have been, duly and validly
executed and delivered by the Loan Parties which are signatories thereto.  This Agreement and each of the other Credit
Documents executed and delivered by the respective Loan Parties will, upon such
execution and delivery, constitute the legal, valid and binding obligations of
such Loan Parties, enforceable against the respective Loan Parties in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
reorganization moratorium or similar laws affecting the rights of creditors
generally and to the effect of general principles of equity whether applied by
a court of law or equity.

 

Section 3.06.          No Conflict.  Neither the
execution and delivery by the Borrower of this Agreement nor the execution and
delivery by any other Loan Party of any Credit Documents to which it is a
party, nor the consummation of the transactions herein or therein contemplated,
nor compliance with the terms and provisions hereof or thereof by the Borrower
or the other Loan Parties will (a) conflict with, constitute a default
under or result in any breach of (i) the terms and conditions of the
Organization Documents of any Loan Party or (ii) any Law or any agreement
or instrument or order, writ, judgment, injunction or decree to which any Loan
Party is a party or by which it is bound or to which it is subject, which
conflict, default or breach would cause a Material Adverse Change, or (b) result
in the creation or enforcement of any Lien upon any property (now or hereafter
acquired) of any of the Loan Parties (other than Liens securing the Obligations
and the Permitted Encumbrances).

 

Section 3.07.          Litigation.  Except as
otherwise set forth in the Borrower’s Form 10-K for the Fiscal Year ending
October 31, 2009, there are no actions, suits, proceedings or
investigations pending or, to the knowledge of the Borrower, threatened against
any Loan Party or any Restricted Subsidiary, at law or in equity, before any
Governmental Authority which individually or in the aggregate, could be
reasonably expected to result in any Material Adverse Change; and no Loan Party
or Restricted Subsidiary is in violation of any order, writ, injunction or
decree of any Governmental Authority, the violation of which could reasonably
be expected to result in any Material Adverse Change.

 

Section 3.08.          Financial Statements; Financial Projections.

 

3.08.1.         Financial Statements.  The Borrower
has previously delivered to the Agent correct and complete copies of the
audited consolidated balance sheets and statements of income, retained earnings
and cash flows of the Borrower and its Subsidiaries as of and for its Fiscal
Year ended October 31, 2009, including the footnotes thereto.  Such financial statements fairly present, in
all material respects, the financial condition of the Borrower and its
Subsidiaries as at the end of the periods covered thereby and the results of
the Borrower’s and its Subsidiaries’ operations and the changes in the Borrower’s
and its Subsidiaries’ financial positions for the periods covered thereby, and
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby subject.

 

40

 

3.08.2.         Books and Records. (a)  The books of account and other financial
records of the Borrower and its Subsidiaries as in effect on the Closing Date
are correct and complete in all material respects, represent actual, bona fide
transactions and have been maintained in accordance with sound business and
accounting practices; and (b) as of the Closing Date, the Borrower and its
Subsidiaries maintain an adequate system of internal accounting controls and do
not engage in or maintain any off-the-books accounts or transactions.

 

3.08.3.         Absence of Material Liability.  As of the
Closing Date, except with respect to the Acquisition, neither the Borrower nor
any of its Subsidiaries have any material liabilities of any kind, whether
direct or indirect, fixed or contingent or otherwise which is not disclosed
upon the consolidated financial statements of the Borrower and its Subsidiaries
which have been provided to the Credit Parties; other than executory obligations
under contracts, leases, or other agreements which GAAP would not require to be
set forth in the consolidated financial statements of the Borrower and its
Subsidiaries.

 

3.08.4.         Financial Projections.  The Borrower
has delivered to the Credit Parties financial projections of the Borrower and
its Subsidiaries for the period 
commencing November 1, 2010 and ending October 31, 2012.  Such projections set forth in the judgment of
the Borrower a reasonable range of possible results in light of the history of the
businesses of the Borrower and its Subsidiaries, and present reasonably
foreseeable conditions and the intentions of the management of the Borrower and
its Subsidiaries.  In the reasonable
judgment of the Borrower, such projections accurately reflect the liabilities
of the Borrower and its Subsidiaries on the Closing Date, after giving effect
to the transactions contemplated by this Agreement.  No events have occurred since the preparation
of the projections which would cause the projections, taken as a whole, not to
be reasonably attainable; provided, however, that such projections are subject
to significant uncertainties and contingencies, many of which are beyond the
Borrower’s control, that no assurances can be given that any such projections
will be realized and that actual results may differ from any such projections
and such differences may be material.

 

Section 3.09.          Margin Stock.  Neither the
Borrower nor any of its Subsidiaries engages or intends to engage principally,
or as one of its important activities, in the business of incurring
Indebtedness or extending credit to others for the purpose, immediately,
incidentally or ultimately, of purchasing or carrying “margin stock” (within
the meaning of Regulation U issued by the Federal Reserve Board).  No part of the proceeds of any Loan or other
extension of credit hereunder has been or will be used, to purchase or carry
any margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock or to refund or retire Indebtedness originally
incurred for such purpose.  As of the
Closing Date neither the Borrower nor any of its Subsidiaries intends to hold
any margin stock.

 

Section 3.10.          Full Disclosure.  Neither this
Agreement nor any Credit Document, nor any certificate, statement, agreement or
other document furnished to the Credit Parties in writing by the Loan Parties,
contains any misstatement of a material fact or, taken as a whole, omits to
state a material fact necessary in order to make the statements contained herein
and therein, in light of the circumstances under which they were made, not
misleading.  As of the Closing Date,
there is no fact known to the Borrower which materially adversely affects the
business, property, assets, financial condition, results of operations or
prospects of the Borrower and its Subsidiaries, taken as a whole, which has not
been set forth in this Agreement or the Credit Documents or in the
certificates, statements, agreements or other documents furnished in writing to
the Credit Parties before or at the date hereof in connection with the
transactions contemplated hereby and thereby.

 

Section 3.11.          Tax Returns and Payments. 
All federal and state tax returns that are required by applicable Law to
be filed by the Borrower and its Subsidiaries, which are material to the
conduct of their business, have been filed or properly extended.  All taxes, assessments and other governmental
charges 

 

41

 

levied upon the Borrower and its Subsidiaries, or any
of their respective properties, assets, income or franchises which are due and
payable have been paid in full other than (a) those presently payable
without penalty or interest, (b) those which are being contested in good
faith by appropriate proceedings, and (c) those which, if not paid, would
not, in the aggregate, constitute a Material Adverse Change; and as to each of
items (a), (b) and (c) the Borrower and its Subsidiaries have
established reserves for such claims as have been determined to be adequate by
application of GAAP consistently applied. 
There are no agreements or waivers extending the statutory period of
limitations applicable to any consolidated federal income tax return of the
Borrower and its Subsidiaries for any period.

 

Section 3.12.          Consents and Approvals. 
No consent, approval, exemption, order or authorization of, or a
registration or filing with any Governmental Authority or any other Person is
required by any Law or any agreement (other than the Credit Documents) in
connection with the execution, delivery and carrying out of this Agreement and
the Credit Documents to which any Loan Party is a party.

 

Section 3.13.          No Event of Default; Compliance with Instruments. 
No event has occurred and is continuing and no condition exists or will
exist after giving effect to the Loans which constitutes an Event of Default or
a Default. No Loan Party or Subsidiary of a Loan Party is in material violation
of any term of its Organization Documents.

 

Section 3.14.          Compliance with Laws.  Each of the
Loan Parties and their respective Subsidiaries are in compliance in all
material respects with all applicable Laws in all jurisdictions in which any of
the Loan Parties or their Subsidiaries are presently doing business, the
non-compliance with which could reasonably be likely to be, or result in, a
Material Adverse Change.

 

Section 3.15.          ERISA Compliance.

 

3.15.1.         Plans and Contributions.  Each Plan is in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state Laws.  Each Plan that is
intended to qualify under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (“IRS”) or an application for such a letter is currently
being processed by the IRS with respect thereto and, to the best knowledge of
the Borrower, nothing has occurred which would prevent, or cause the loss of,
such qualification.  The Loan Parties and
each ERISA Affiliate have made all required contributions to each Plan subject
to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan.

 

3.15.2.         Pending Claims.  There are no pending or, to the best
knowledge of the Borrower, threatened claims, actions or lawsuits, or action by
any Governmental Authority, with respect to any Plan that could reasonably be
expected to result in a Material Adverse Change.  There has been no Prohibited Transaction or
violation of the fiduciary responsibility rules with respect to any Plan
that has resulted or could reasonably be expected to result in a Material
Adverse Change.

 

3.15.3.         ERISA Events.  (a) No ERISA Event has occurred or
is reasonably expected to occur, (b) no Pension Plan has any Unfunded
Pension Liability, (c) no Loan Party and no ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of ERISA with
respect to any Pension Plan (other than premiums due and not delinquent under Section 4007
of ERISA), (d) neither the Borrower nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan, and (e) neither the Borrower nor any ERISA Affiliate
has engaged in a transaction that could be reasonably subject to Section 4069
or 4212(c) of ERISA.

 

42

 

Section 3.16.          Title to Properties.  The Loan
Parties and their Subsidiaries have good title to, or a valid leasehold
interest in, all their respective real and personal property material to the
conduct of their businesses, taken as a whole.

 

Section 3.17.          Insurance.  There are in
full force and effect for the benefit of the Loan Parties and their
Subsidiaries insurance policies and bonds providing adequate coverage from
reputable and financially sound insurers in amounts sufficient to insure the
assets and risks of the Loan Parties and their Subsidiaries in accordance with
prudent business practices in the respective industries of the Loan Parties and
their Subsidiaries.  As of the Closing
Date, and, as of each subsequent reaffirmation of this representation and
warranty, except as otherwise previously disclosed in writing to the Agent, no
notice has been given or claim made and to the knowledge of the Loan Parties,
no grounds exist, to cancel or void any of such policies or bonds or to reduce the
coverage provided thereby.

 

Section 3.18.          Employment Matters.  Each Loan
Party and each Subsidiary of a Loan Party is in material compliance with all
employee benefit plans, employment agreements, collective bargaining agreements
and labor contracts and all applicable Laws thereto.  There are no outstanding grievances,
arbitration awards or appeals relating to any of the foregoing plans,
agreements or contracts, or, to the knowledge of the Borrower, threatened strikes,
picketing, handbilling or other work stoppages or slowdowns at facilities
of any Loan Party or any Subsidiary of a Loan Party which could reasonably be
expected to result in any Material Adverse Change.  All payments due or to become due from any
Loan Party or the Subsidiary of the Loan Party on account of obligations in
respect of employee health and welfare insurance which could reasonably be
expected to have a Material Adverse Change if not paid have been paid or, in
the case of such amounts not yet due, have been recorded as liabilities on the
books of the Borrower and its Subsidiaries.

 

Section 3.19.          Solvency.  As of the
Closing Date, and as of the date of each advance of the proceeds of any Loan
and each issuance or renewal of any Letter of Credit, as the case may be, and
after giving effect to such advances or issuances or renewals, each of the Loan
Parties and each Subsidiary of a Loan Party, taken as a whole is, and will
remain, Solvent.

 

Section 3.20.          Material Contracts; Burdensome Restrictions. 
Except as otherwise disclosed on Schedule 3.20, as of the Closing Date,
all contracts required to be filed by the Borrower with the Securities and
Exchange Commission pursuant to Item 1.01 of Form 8K relating to the
business operations of the Loan Parties and their Subsidiaries, are valid, binding
and enforceable upon the Loan Parties and their Subsidiaries, and to the
knowledge of the Borrower, the other parties thereto, without any material
defaults thereunder.

 

Section 3.21.          Patents, Trademarks, Copyrights, Licenses, Etc. 
Each Loan Party owns or possesses all the patents, trademarks, service
marks, trade names, copyrights, licenses, registrations, franchises, permits
and rights which are materially necessary to own and operate its assets and to
carry on its business as presently conducted and the Borrower has no knowledge
that any such intellectual property materially infringes upon the valid and
enforceable rights of any other Persons.

 

Section 3.22.          Liens.  The Liens in
the Collateral granted to the Credit Parties pursuant to the Credit Documents
constitute and will continue to constitute valid and enforceable Liens under
all applicable Laws, having the priority required herein and in the other
Credit Documents, and are entitled to all the rights, benefits and priorities
provided by applicable Law.  All filing
fees and other expenses in connection with each such action have been or will
be paid by the Borrower.

 

Section 3.23.          Environmental Compliance. 
The Borrower’s and the other Loan Parties’ businesses, operations and
Properties, are in compliance with applicable Environmental Laws, and neither
the Borrower nor any Loan Party has any Environmental Liabilities, taken as a
whole, which could, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change.

 

43

 

Section 3.24.          Anti-Terrorism Laws.  The making and funding of the Loans, the
Borrower’s use of the proceeds thereof, the issuance of the Letters of Credit
hereunder and the use thereof will not violate the Act or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto, and shall not be in violation of any federal statute or
Presidential Executive Order, including Executive Order 13224 66 Fed. Reg.
49079 (September 25, 2001) (Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten To Commit, or Support Terrorism).

 

Section 3.25.          Acquisition. 
The Borrower has delivered to the Agent full and complete copies of the
Purchase Agreement.

 

ARTICLE 4

CONDITIONS
PRECEDENT

 

Section 4.01.          Conditions to Closing. 
Prior to the Agent’s and Lender’s execution of this Agreement each of
the following conditions shall be satisfied:

 

4.01.1.         Closing Submissions.  The Agent’s receipt of the following,
each properly executed by an Authorized Officer of the signing Loan Party, each
dated either the Closing Date (or, in the case of certificates of governmental
officials, a recent date before the Closing Date) and each in form and
substance reasonably satisfactory to the Agent and its counsel, (a) executed
counterparts of this Agreement and the other Credit Documents, (b) Notes
executed by the Borrower in favor of each Lender requesting a Note for each
Loan extended by such Lender, (c) such certificates of resolutions or
other action, incumbency certificates and/or other certificates of Authorized
Officers of each Loan Party as the Agent may require evidencing the identity,
authority and capacity of each Authorized Officer thereof authorized to act as
a Authorized Officer in connection with this Agreement and the other Credit
Documents to which such Loan Party is a party, (d) such documents and
certifications as the Agent may reasonably require to evidence that each Loan
Party is duly organized or formed, and that each Loan Party is validly
existing, in good standing and qualified to engage in business in each
jurisdiction where its ownership, lease or operation of properties or the
conduct of its business requires such qualification, and (e) a favorable
opinion of counsel to the Loan Parties, addressed to the Agent and the Lenders
as to the matters addressed in Exhibit F attached hereto.

 

4.01.2.         Fees.  Any fees required to be paid on or before
the Closing Date shall have been paid.

 

4.01.3.         Closing Date.  The Closing Date shall have
occurred on or before February 28, 2010.

 

4.01.4.         Existing Revolver.  The
termination of the Existing Revolver.

 

4.01.5.         Purchase Agreement.  The receipt
and satisfactory review by the Lenders of the Purchase Agreement.

 

4.01.6.          Acquisition Information.  Satisfactory
review by the Agent and Lenders of the final form, substance and terms and
conditions of the Acquisition, including the Borrower’s proposed organizational
and legal structure, final projections, purchase allocation and accounting and
all other matters related to the Acquisition.

 

Section 4.02.         Condition To Funding Date. 
The obligations of each Lender to make any advances of proceeds of the
Loans and the obligations of the Issuing Lender to issue any Letters of Credit 

 

44

 

hereunder are subject to the reasonable satisfaction
on or before the Funding Date of the following conditions precedent:

 

4.02.1.         Funding
Submissions.   The
Agent’s receipt of the following each properly executed by an Authorized
Officer of the signing Loan Party, each dated on the Funding Date and each in
form and substance reasonably satisfactory to the Agent and its counsel, (a) a
certificate signed by an Authorized Officer of the Borrower certifying the
absence of any continuing Defaults or Events of Default, (b) a duly
completed closing certificate, signed by a Authorized Officer of the Borrower
certifying compliance with Sections 4.02.3, 4.02.4 and 4.02.5 of this
Agreement, (c) evidence that all insurance required to be maintained by
the terms of the Credit Documents is in effect, and (d) such other
assurances, certificates, documents, consents or opinions as the Agent, the
Issuing Lender, or the Required Lenders reasonably may require.

 

4.02.2.         Credit Party Expenses.  The Borrower shall have paid in full all
Credit Party Expenses to the extent invoiced prior to or on the Funding Date.

 

4.02.3.         Senior Leverage Ratio.  As of the
Funding Date the Senior Leverage Ratio of the Loan Parties shall not exceed 1.5
to 1.0.

 

4.02.4.         Debt Capitalization Ratio.  On the Funding
Date the Borrower’s Debt Capitalization Ratio shall not exceed 0.5 to 1.0.

 

4.02.5.         Minimum Equity.  The Borrower shall have
contributed not less than One Hundred Million Dollars ($100,000,000.00) in cash
to finance the Acquisition.

 

4.02.6.         Acquisition Date.  The Funding Date shall not
occur prior to the date of closing and consummation of the Acquisition.

 

4.02.7.         Subsidiaries.  Any Person to become a
Subsidiary of the Borrower as a result of the Acquisition shall have executed
counterparts to the Guaranty Agreement and Security Agreement in order to
become a Guarantor and Obligor (as defined in the Security Agreement)
thereunder and the Equity Interest in such Person shall have been pledged to
the Agent, all in accordance with the terms of Section 5.14 hereof.

 

4.02.8.         Funding Date.  The Funding Date shall occur no
later than of March 31, 2010.

 

4.02.9.         Landlord Warehouseman Agreements.  The Borrower
shall have delivered to the Agent landlord agreements and warehouse agreements,
in forms reasonably acceptable to the Agent, for each location any Collateral
is located which is not owned by a Loan Party unless:  (i) the Collateral is held by a
processor or bailee for which the Borrower has complied with the last sentence
of Section 5.06 of this Agreement; (ii) the Borrower delivers to the
Agent a certification that the Borrower, after using commercially reasonable efforts,
has been unable to obtain such agreement, or (iii) the location is a
warehouse for which the value of the Collateral held in such warehouse is less
than One Million Dollars ($1,000,000.00).

 

4.02.10.       Additional Documents.   The Borrower
shall have executed and delivered to the Agent an appropriate Lender Addendum,
Revolving Credit Note and Term Note for each Lender based on each Lender’s
Commitments

 

4.02.11.       Lien Release.   The Borrower shall have provided evidence
reasonably acceptable to the Agent that all security interests and liens (other
than liens which are Permitted 

 

45

 

Encumbrances) on the assets of all Persons to become a Subsidiary of
the Borrower as a result of the Acquisition have been terminated or will be
terminated as of the Funding Date.

 

Section 4.03.          Conditions To Advances Of
Proceeds Of Loans And Issuances Of Letters Of Credit After Closing Date.   The obligations of each Lender and of the
Issuing Lender to honor any request for the advance of any proceeds of the
Loans or the issuance or reissuance of any Letters of Credit after the Closing
Date or request to renew or amend any Letter of Credit after the Closing Date,
shall be subject to the satisfaction of the following conditions precedent:

 

4.03.1.         Representations And Warranties.  The representations and warranties of the Loan Parties
contained in Article 3 of this Agreement or in any other Credit Document,
or which are contained in any document furnished at any time under or in connection
herewith or therewith, shall be true and correct in all material respects on
and as of the date of any such advance of proceeds of the Loans or issuance of
Letters of  Credit, except to the extent
that such representations and warranties specifically refer to an earlier date,
in which case they shall be true and correct in all material respects as of
such earlier date.

 

4.03.2.         Absence Of Defaults And Events Of Default.  No continuing Default or Event of Default shall exist,
or would result from such requested advance or issuance.

 

4.03.3.         No Material Adverse Changes.   No Material
Adverse Changes shall have occurred since the Closing Date.

 

ARTICLE 5

AFFIRMATIVE COVENANTS

 

The Borrower agrees that until the payment and satisfaction in full of
all of the Obligations (other than contingent indemnity Obligations that
survive termination of the Credit Documents), it will comply with and cause the
other Loan Parties to comply with the covenants set forth in this Article 5.

 

Section 5.01.          Payment and Performance.  
All Obligations shall be paid and performed in full when and as due.

 

Section 5.02.          Insurance.  The Borrower
and each Loan Party shall obtain and maintain and shall cause its Subsidiaries
to obtain and maintain such insurance coverages as are reasonable, customary
and prudent for businesses engaged in activities similar to the business
activities in which it is engaged. 
Without limitation to the foregoing, (a) the Borrower and the other
Loan Parties shall each maintain fire and extended coverage casualty insurance
covering the Collateral and their respective assets in amounts reasonably
satisfactory to the Agent consistent with prudent practices and sufficient to
prevent any co-insurance liability (which amount shall be the full insurable
value of the assets and properties insured unless the Agent in writing agrees
to a lesser amount), naming the Agent for the benefit of the Credit Parties as
sole loss payee and/or additional insured with respect to the Collateral, with
insurance companies and upon policy forms which are acceptable to and approved
by the Agent; and (b) the Loan Parties shall maintain commercial umbrella
insurance policy with not less than Thirty Million Dollars ($30,000,000.00) of
coverage and product/human clinical trial coverage of not less than Thirty
Million Dollars ($30,000,000.00).  The
Loan Parties shall submit to the Agent copies of the insurance policies and
paid receipts evidencing payment of the premiums due on the same.  The casualty insurance policies shall be
endorsed so as to make them noncancellable unless thirty (30) days prior notice
of cancellation is provided to the Agent.

 

46

 

Section 5.03.                             Collection Of Accounts; Sale Of
Inventory.  The Loan Parties shall collect their
respective Accounts and sell their respective inventory only in the ordinary
course of their respective businesses, subject to customary credit and
collection policies.

 

Section 5.04.                             Notice Of Litigation And
Proceedings.  The Borrower and each other Loan Party shall
give prompt notice to the Agent of any action, suit, citation, violation,
direction, notice or proceeding before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting such Loan Party, or the assets or properties thereof, which, if
determined adversely to such Loan Party (a) could require it to pay over
more than the Threshold Amount or deliver assets the value of which exceeds
that sum, or (b) could reasonably be expected to cause a Material Adverse
Change.

 

Section 5.05.                             Payment Of Liabilities To Third
Persons.  The Borrower and each other Loan Party shall
pay when and as due, or within applicable grace periods, all liabilities due to
third persons, which individually or in the aggregate have an unpaid amount
exceeding the Threshold Amount, except when the amount thereof is being
contested in good faith by appropriate proceedings and with adequate reserves
therefor being set aside by it.

 

Section 5.06.                             Notice Of Change Of Business
Location Or Of Jurisdiction of Organization; Notice of Name Change. 
Each of the Borrower and the other Loan Parties shall notify the Agent
thirty (30) days in advance (or such shorter period as may be agreed to by the
Agent) of,  (a) any change in the
location of its chief executive office, and (b) any change to its name or
jurisdiction of organization.  Prior to
moving any Collateral (or other property securing the Obligations) to any
location not owned by a Loan Party (other than deliveries to Account Debtors of
sold or leased goods, deliveries to bailees, agents and processors and the
delivery of Collateral having a value of less than One Million Dollars ($1,000,000.00)
to a warehouse), each Loan Party shall use its commercially reasonable efforts
to obtain and deliver to the Agent an agreement, in form and substance
acceptable to the Agent, pursuant to which the owner of such location shall:  (i) subordinate any rights which it may
have, or thereafter may obtain, in any of the Collateral or other property to
the rights and security interests of the Credit Parties; and (ii) allow
the Agent access to the Collateral or other property in order to remove the
Collateral or other property from such location.  In addition, if any Collateral having a value
in excess of One Million Dollars ($1,000,000.00) is at any time in the
possession or control of a bailee or any agent or processor the Borrower shall (a) notify
the Agent of such possession, (b) notify such Person of the Agent’s
security interest for the benefit of the Lenders in such Collateral, (c) instruct
such Person to hold all such Collateral for the Agent’s account subject to the
Agent’s instructions and (d) use its commercially reasonable efforts to
obtain an acknowledgment from such Person that it is holding such Collateral
for the benefit of the Agent.

 

Section 5.07.                             Payment of Taxes. 
Each of the Borrower and the other Loan Parties shall pay or cause to be
paid when and as due all Taxes imposed upon it or on any of its property or
which it is required to withhold and pay over to the taxing authority or which
it must pay on its income, except where contested in good faith, by appropriate
proceedings and at its own cost and expense; provided, however, that no Loan
Party shall be deemed to be contesting in good faith by appropriate proceedings
unless,  (a)  such proceedings
operate to prevent the taxing authority from attempting to collect the Taxes, (b) the
Collateral is not subject to sale, forfeiture or loss during such proceedings, (c) the
applicable Loan Party’s contest does not subject the Credit Parties to any
liabilities owed to or claims from the taxing authority or any other person, (d) the
applicable Loan Party establishes appropriate reserves for the payment of all
Taxes, court costs and other expenses for which such Loan Party would be liable
if unsuccessful in the contest, (e) the applicable Loan Party prosecutes
the contest continuously to its final conclusion, and (f) at the
conclusion of the proceedings, the applicable Loan Party promptly pays all
amounts determined to be payable, including but not limited to all Taxes, legal
fees and court costs.

 

47

 

Section 5.08.                             Reporting Requirements. 
The Borrower shall submit the following items to Agent:

 

5.08.1.                           Inventory Reports.  As
periodically requested by the Agent, reports of the inventory of the Borrower
on such reporting forms as are required by the Agent from time to time,
certified to be accurate and correct by an Authorized Officer of the Borrower.

 

5.08.2.                           Receivables And Accounts Payable Reports. 
As periodically requested by the Agent: 
(a) a report and aging of the Accounts of the Borrower; and (b) an
accounts payable report and aging for the Borrower.  Such reports shall be accompanied by such
reports, copies of sales journals, remittance reports, and other documentation
as the Agent may reasonably request from time to time.

 

5.08.3.                           Quarterly Financial Statements.  As soon as available and in
any event within fifty (50) calendar days after the end of each Fiscal Quarter,
the Borrower shall submit to the Credit Parties a consolidated balance sheet of
the Borrower and its
Subsidiaries as of the end of such
quarter and a consolidated statement of income and retained earnings of the Borrower
and its Subsidiaries for such quarter,
and a consolidated statement of cash flow of the Borrower and its
Subsidiaries for such quarter, all in
reasonable detail and stating in comparative form the respective consolidated
figures for the corresponding date and period in the previous Fiscal Year and
all prepared in accordance with GAAP and certified by an Authorized Officer of
the Borrower (subject to year-end adjustments and the lack of footnotes).

 

5.08.4.                           Annual Financial Statements. 
As soon as available and in any event within ninety (90) calendar days
after the end of each Fiscal Year, the Borrower shall submit to the Agent, a
consolidated balance sheet of the Borrower
and its Subsidiaries as of the end of such Fiscal Year and a consolidated
statement of income and retained earnings of the Borrower and its Subsidiaries
for such Fiscal Year, and a consolidated statement of cash flow of the Borrower
and its Subsidiaries for such Fiscal Year, all in reasonable detail and stating
in comparative form the respective consolidated figures for the corresponding
date and period in the prior Fiscal Year and all prepared in accordance with
GAAP and accompanied by an audited opinion thereon issued by independent
certified public accountants selected by the Borrower and reasonably acceptable
to the Required Lenders.

 

5.08.5.                           Management Letters.  Promptly upon
receipt thereof, the Borrower shall submit to the Agent copies of any reports
submitted to the Borrower or to its Subsidiaries by independent certified
public accountants in connection with the examination of the financial
statements of the Borrower and its Subsidiaries made by such accountants.

 

5.08.6.                           Compliance Certificate. 
The Borrower shall submit a Compliance Certificate to the Agent, within
fifty (50) calendar days after the end of each Fiscal Quarter.

 

5.08.7.                           Reports To Other Creditors. 
Promptly after the furnishing thereof, the Borrower shall submit to the
Agent copies of any statement or report furnished to any other Person pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to the Agent pursuant to any other
provisions of this Agreement.

 

5.08.8.                           Management Changes.  The Borrower
shall notify the Agent promptly of any changes in the personnel holding the
positions of Chief Executive Officer, Chief Financial Officer or Chief
Operating Officer of the Borrower.

 

5.08.9.                           Notice of Defaults and Events of Default. 
The Borrower shall promptly give written notice to the Agent of the
occurrence of any Default or Event of Default, setting forth in such notice the
details thereof, and the action which the Borrower is taking or proposes to
take with respect thereto.

 

48

 

5.08.10.                     SEC Filings.  Within five (5) days
after the sending, filing, or receipt thereof, and to the extent not readily
available to the public through the internet, copies of:  (a) all financial statements, reports,
notices and proxy statements that the Borrower sends to its shareholders; and (b) all
regular, periodic and special reports, registration statements and prospectuses
that the Borrower renders to or files with the Securities And Exchange
Commission or any national securities exchange, including without limitation
each of the Forms 10-K and 10-Q filed by the Borrower with the Securities And
Exchange Commission.

 

5.08.11.                     General Information. In addition to the items set forth in subparagraphs
5.08.1 through 5.08.10 above, the Borrower agrees to submit, and cause the
other Loan Parties to submit, to the Agent such other information respecting
the condition or operations, financial or otherwise, of the Loan Parties as the
Agent may reasonably request from time to time.

 

Section 5.09.                             Preservation of Existence, Etc. 
The Borrower and the other Loan Parties shall each (a) preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization, (b) take
all reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to cause a
Material Adverse Change, and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of
which could reasonably be expected to cause a Material Adverse Change.

 

Section 5.10.                             Maintenance of Assets and
Properties.  Each of the Borrower and the other Loan
Parties shall maintain, preserve and protect all of its material assets and
properties necessary in the operation of its business in good working order and
condition, ordinary wear and tear excepted and except as otherwise permitted to
be disposed of in accordance with the terms of this Agreement.

 

Section 5.11.                             Compliance with Laws. 
Each of the Borrower and the other Loan Parties shall comply in all
material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its business or property, except
in such instances in which such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings
diligently conducted and except where the noncompliance with which would not or
could not reasonably be expected to cause a Material Adverse Change.

 

Section 5.12.                             Inspection Rights. Each of the Borrower and the other Loan
Parties shall permit representatives and independent contractors of the Agent
to visit and inspect any of its properties, to examine its corporate, financial
and operating records, and make copies thereof or abstracts therefrom, and to
discuss its affairs, finances and accounts with its officers and independent
public accountants, all at such reasonable times during normal business hours
and as often as may be reasonably desired, upon reasonable advance notice to
the Loan Parties; provided, however, that when a continuing Default or Event of
Default exists any Credit Party (or any of their respective representatives or
independent contractors) may do any of the foregoing at the expense of the Loan
Parties at any time during normal business hours and without advance notice.

 

Section 5.13.                             Environmental Matters and
Indemnification. Each
of the Borrower and the other Loan Parties shall comply, and shall cause its
Subsidiaries to comply with all applicable Environmental Laws, the
non-compliance with which could reasonably be expected to cause a Material
Adverse Change.  The Loan Parties shall
investigate any circumstances which give the Loan Parties reason to believe or
suspect the Contamination of any of the Properties, which Contamination could
reasonably be expected to cause a Material Adverse Change.  The Loan Parties shall promptly perform any
remediation of such Contamination required under applicable Environmental Laws.

 

Section 5.14.                             Additional Guarantors. 
The Borrower shall notify the Agent at the time that any Person becomes
a Subsidiary of the Borrower, and promptly thereafter (and in any event within
thirty

 

49

 

(30) days) if such Subsidiary is a Domestic
Subsidiary, cause such Person to (a) become a Guarantor by executing and
delivering to the Agent a counterpart of the Guaranty Agreement or such other
document as the Agent shall deem appropriate for such purpose, (b) become
an Obligor under the Security Agreement by executing and delivering to the
Agent a counterpart of the Security Agreement or such other document as the
Agent shall deem appropriate for such purpose, and (c) deliver to the
Agent documents of the types referred to in clauses (c) and (d) of Section 4.01.1
and favorable opinions of counsel to such Person (which shall cover, among
other things, the legality, validity, binding effect and enforceability of the
documentation referred to in clause (a)), all in form, content and scope
reasonably satisfactory to the Agent. 
The Borrower shall also exercise and deliver, or cause to be delivered,
to the Agent such documents as the Agent may require in order to have the
equity interest in such Person pledged to the Agent, for the benefit of the
Loan Parties, as security for the Obligations, provided that if such Person is
a Foreign Subsidiary only sixty-five percent (65%) (or if less, the full amount
owned by the Borrower or any of its Subsidiaries) of the voting equity interest
and one hundred percent (100%) (or if less, the full amount owned by the
Borrower or any of its Subsidiaries) of the non-voting equity interest shall be
pledged to the Agent for the benefit of the Lenders as security for the
Obligations.

 

ARTICLE 6

NEGATIVE
COVENANTS

 

The
Borrower agrees that until the payment and performance in full of all of the
Obligations (other than contingent indemnity Obligations that survive
termination of the Credit Documents), it will not do, and it will not permit
any of the other Loan Parties to do, any of the following:

 

Section 6.01.                             Liens.  Neither the Borrower nor any
other Loan Party shall create, incur, assume or suffer to exist any Lien upon
any of its properties (real or personal), assets or revenues, whether now owned
or hereafter acquired, other than Liens securing the Obligations and Permitted
Encumbrances.

 

Section 6.02.                             Investments And Loans.  Neither the Borrower nor any
other Loan Party shall make any Investments or extend any loans or credit
facilities to any Persons, except (a) Investments in Cash Equivalents, (b) advances
to its employees in the ordinary course of business for travel, entertainment,
relocation and general ordinary course of business purposes and loans to
employees to purchase Capital Stock of Parent, (c) extensions of credit in
the nature of accounts receivable or notes receivable arising from the grant of
trade credit in the ordinary course of business, (d) acquisitions of fixed
assets, equipment and Inventory in the ordinary course of business to the
extent not otherwise prohibited by the terms of this Agreement, (e) Investments
and credit accommodations provided by any Loan Party to another Loan Party, (f) the Acquisition and Permitted
Acquisitions, (g) loans and advances provided by any Loan Party to any of
its Subsidiaries which are subordinated to the repayment of the Obligations and
which have been assigned as collateral security to the Agent for the ratable
benefit of the Lenders, and (h) Investments or extensions of loans or
credit facilities permitted pursuant to Section 6.03, (i) Investments
or loans or credit facilities to one or more Foreign Subsidiary in an aggregate
amount not exceeding One Million Dollars ($1,000,000.00) in any Fiscal Year,
and (j) Investments not otherwise permitted hereunder in an aggregate
amount not exceeding Two Million Dollars ($2,000,000.00) in any Fiscal Year;
provided, however, if the unpaid balance of the Term Loans and the Revolving
Credit Loans are zero, the Borrower may make Short Term Investments provided (i) such
Investments are made with cash and Cash Equivalents; (ii) the Borrower
maintains cash and Cash Equivalents of not less than Forty Million Dollars
($40,000,000.00) following the making of such Short-Term Investments; and (iii) no
Revolving Credit Loans shall be made pursuant to this Agreement while any
Investments not otherwise permitted hereunder are owned by the Borrower or any
other Loan Party.

 

Section 6.03.                             Indebtedness.  No Loan Party shall create,
incur, assume or suffer to exist any Indebtedness, except (a) the
Obligations, (b) Indebtedness outstanding on the Closing Date and listed
on Schedule 6.03 attached hereto and any refinancings, refundings, renewals or
extensions thereof; provided

 

50

 

that
the amount of any such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder, (c) obligations
(contingent or otherwise) of any Loan Party existing or arising under any
Interest Rate Hedge Agreements, provided that (i) such obligations
are (or were) entered into either in connection with the Obligations or in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments, investments, assets, or property held
or reasonably anticipated by such Loan Party, or changes in the value of
securities issued by such Loan Party, and not for purposes of speculation or
taking a “market view,” and (ii) such Interest Rate Hedge Agreement does
not contain any provision exonerating the non-defaulting party from its
obligation to make payments on outstanding transactions to the defaulting
party, (d) foreign exchange hedging transactions entered into in the
ordinary course of business to manage the foreign currency risks of the Loan
Parties and their Subsidiaries, (e) Indebtedness in respect of capital
leases and purchase money obligations for capital assets; provided that the
aggregate amount of all of such Indebtedness at anytime outstanding shall not
exceed the Threshold Amount, (f) Indebtedness owed to other Loan Parties, (g) Indebtedness
secured by Permitted Encumbrances, (h) unsecured Indebtedness in an
aggregate amount not to exceed the Threshold Amount at any time outstanding,
and (i) Indebtedness permitted pursuant to Section 6.02(g).

 

Section 6.04.                             Fundamental Changes.  No Loan Party or Subsidiary
of a Loan Party shall merge, dissolve, liquidate, consolidate with or into
another Person (whether in one transaction or in a series of transactions),
except that, so long as no continuing Default or Event of Default exists and no
Material Adverse Change has occurred and no Default, Event of Default or
Material Adverse Change would be likely to result therefrom after giving effect
thereto (a) any Subsidiary of the Borrower may merge with the Borrower
provided that the Borrower is the continuing or surviving Person of such
merger, (b) any Subsidiary of the Borrower may merge with or liquidate
into any other Subsidiary of the Borrower, provided that the continuing
surviving Person from such merger shall be a Guarantor, (c) any Restricted
Subsidiary of the Borrower may merge with or liquidate into any other
Restricted Subsidiary of the Borrower, or (d) a Subsidiary of the Borrower
may merge into an Acquisition Target or Amerifit.

 

Section 6.05.                             Dispositions.  No Loan Party or Subsidiary
of a Loan Party shall make any Disposition or enter into any agreement to make
any Disposition without the consent of the Required Lenders, except (a) Dispositions
of equipment to the extent that (i) such property is exchanged for credit
against the purchase price of similar replacement property or (ii) the proceeds
of such Disposition are applied to the purchase price of similar replacement
property, (b) the sale of residual ownership rights in vehicles and
equipment upon the termination of operating leases, (c) Dispositions the
Net Available Proceeds of which are applied pursuant to Section 2.03.03,
and (d) Dispositions not otherwise permitted hereunder in an aggregate
amount not exceeding Ten Million Dollars ($10,000,000.00) which are intended to
be used to purchase Qualified Assets pursuant to Section 2.03.3.(a) of
this Agreement, provided that the Borrower complies with the terms of Section 2.03.3.(a) of
this Agreement.

 

Section 6.06.                             Restricted Payments.  No Loan Party may declare or make, directly
or indirectly, any Restricted Payments, or incur any obligation (contingent or
otherwise) to do so, except that each Subsidiary of the Borrower may make
Restricted Payments to the Borrower.

 

Section 6.07.                             Change in Nature Of Business.  No Loan Party and no
Subsidiary of a Loan Party shall engage in any material line of business
substantially different from (a) those lines of business conducted by it
on the Closing Date (taking into account the Acquisition), or (b) any
business substantially related or incidental to the lines of business conducted
by it on the Closing Date.

 

Section 6.08.                             Transactions With Affiliates.  No Loan Party and no
Subsidiary of any Loan Party shall enter into any transaction of any kind with
any Affiliate (other than with its wholly-owned Subsidiaries), whether or not
in the ordinary course of business, other than on fair and reasonable terms

 

51

 

substantially
as favorable as would be obtainable at the time in a comparable arm’s length
transaction with a Person other than an Affiliate.

 

Section 6.09.                             Burdensome Agreements; Negative
Pledges.  No Loan Party shall enter
into or grant any negative pledges or agreements restricting its ability to
pledge its assets or to grant Liens against its assets, except as otherwise
expressly provided for in the Credit Documents and except to the extent that
any capital lease or purchase money facility of any of the Loan Parties
prohibits the granting of Liens against the equipment that is being leased or
financed, as applicable, pursuant to such capital lease or purchase money
facility.  No Subsidiary of the Borrower
shall enter into any contractual obligation that limits the ability of such
Subsidiary (a) to make Restricted Payments to the Borrower or to otherwise
transfer property to the Borrower, or (b) with respect to any Domestic
Subsidiary, to guarantee the Obligations.

 

Section 6.10.                             Use Of Proceeds.  The Loan Parties shall not
use the proceeds of any Loan, whether directly or indirectly, and whether
immediately, incidentally or ultimately, to purchase or carry “margin stock”
(within the meaning of the Margin Regulations) or to extend credit to others
for the purpose of purchasing or carrying margin stock or to refund
Indebtedness originally incurred for such purpose.

 

Section 6.11.                             Consolidated Leverage Ratio.   The Borrower shall not permit the Consolidated
Leverage Ratio to exceed 2.50 to 1.0.

 

Section 6.12.                             Consolidated Fixed Charge
Coverage Ratio.  The Borrower
shall not permit the Consolidated Fixed Charge Coverage Ratio to be less than
1.40 to 1.0.

 

Section 6.13.                             Minimum Consolidated EBITDA.  The Borrower shall not
permit the Consolidated EBITDA of the Borrower and its Subsidiaries for the
four (4) consecutive Fiscal Quarters most recently ended prior to the date
of determination to be less than Ninety Million Dollars ($90,000,000.00) as of
the end of any Fiscal Quarter; provided, however, for any period after October 31,
2010 in which the Borrower’s Consolidated Leverage Ratio does not exceed 1.0 to
1.0 this covenant of minimum Consolidated EBITDA shall not be applicable and
shall not be tested.

 

ARTICLE 7

EVENTS OF DEFAULT

 

The
occurrence of any of the following events or conditions shall constitute an
Event of Default.

 

Section 7.01.                             Failure To Pay.  The failure or refusal of
the Borrower to pay (a) all or any amount or installment of principal due
upon the Loans or upon any LC Borrowing (whether scheduled, by acceleration, or
as otherwise required by the terms of the Credit Documents), or (b)  any
interest, fees or any other payment Obligation within one (1) Business Day
after demand thereof by the Agent.

 

Section 7.02.                             Violation Of Covenants.  The failure or refusal of
the Borrower to (a) perform, observe, and comply with any covenant,
agreement, or condition contained in Article 6 of this Agreement, or (b) the
failure of the Borrower to provide any of the reports or items required by Section 5.09
of this Agreement and such failure continues for a period of ten (10) Business
Days after notice thereof by the Agent, or (c) timely perform, observe and
comply with any other covenant, agreement, or condition contained in this
Agreement (not specified above in Section 7.01, 7.02(a), 7.02(b) or
any other Section of this Article 7), and such failure or refusal
continues for a period of thirty (30) calendar days after notice thereof by the
Agent.

 

52

 

Section 7.03.                             Representation Or Warranty.  Any representation or
warranty made by the Borrower or by any other Loan Party herein or in any
Credit Document or in any Compliance Certificate or other document or
instrument delivered from time to time to any of the Credit Parties shall be
false, incorrect, or misleading in any material respect when made or deemed
made.

 

Section 7.04.                             Cross-Default.  The Borrower or any other Loan
Party (a) fails to make any payment when due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise) in respect
of any Indebtedness or guarantee (other than Indebtedness hereunder and
Indebtedness under Interest Rate Hedge Agreements) having an aggregate
principal amount of more than the Threshold Amount, or (b) fails to
observe or perform any other agreement or condition relating to any such
Indebtedness or guarantee or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event occurs, the effect of which
default or other event is to cause, or to permit the holder or holders of such
Indebtedness or the beneficiary or beneficiaries of such guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause (without regard to any existing intercreditor
arrangements), with the giving of notice if required, such Indebtedness to be
demanded or to become due or to be repurchased, prepaid, defeased or redeemed
(automatically or otherwise), or an offer to repurchase, prepay, defease or
redeem such Indebtedness to be made, prior to its stated maturity, or such
guarantee to become payable or cash collateral in respect thereof to be
demanded; or (c) there occurs under any Interest Rate Hedge Agreement an
“Early Termination Date” (as defined in such Interest Rate Hedge Agreement)
resulting from (i) any event of default under such Interest Rate Hedge
Agreement as to which the Borrower or any Loan Party is the “Defaulting Party”
(as defined in such Interest Rate Hedge Agreement), or (ii) any
“Termination Event” (as so defined under such Interest Rate Hedge Agreement) as
to which the Borrower or any Loan Party is an “Affected Party” (as so defined
under such Interest Rate Hedge Agreement) and, in either event, the Swap
Termination Value owed by the Borrower or such Loan Party as a result thereof
is greater than the Threshold Amount.

 

Section 7.05.                             Judgments.  The Borrower or any of the other Loan Parties
shall suffer final judgments for the payment of money aggregating for all Loan
Parties in excess of the Threshold Amount in excess of available insurance
proceeds and shall not discharge the same within a period of thirty (30) days
unless, pending further proceedings, execution has not been commenced or if
commenced has been effectively stayed.

 

Section 7.06.                             Levy By Judgment Creditor.  A judgment creditor of any
Loan Party shall obtain possession of any of the Collateral by any means,
including but not limited to levy, distraint, replevin or self-help, and the
Loan Parties shall not remedy same within thirty (30) days thereof; or a writ
of garnishment is served on the Agent or any other Credit Party relating to any
of the accounts of the Borrower maintained with the Agent or any other Credit
Party.

 

Section 7.07.                             Involuntary Insolvency
Proceedings.  The institution
of involuntary Insolvency Proceedings against the Borrower or any Loan Party
and the failure of any such Insolvency Proceedings to be dismissed before the
earliest to occur of (a) the date which is ninety (90) days after the
institution of such Insolvency Proceedings, (b) the entry of any order for
relief in the Insolvency Proceeding or any order adjudicating the Borrower or
any other Loan Party insolvent, or (c) the impairment (as to validity,
priority or otherwise) of any Lien of the Credit Parties in any of the
Collateral.

 

Section 7.08.                             Voluntary Insolvency Proceedings.  The commencement by the
Borrower or by any other Loan Party of Insolvency Proceedings.

 

Section 7.09.                             Attempt To Terminate Or Limit
Guaranties.  The receipt by
a Credit Party of notice from a Guarantor that such Guarantor is attempting to
terminate or limit any portion of its obligations under a Guaranty Agreement.

 

53

 

 

Section 7.10.          ERISA. 
An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan which has resulted or could reasonably be expected to result in liability
of any Loan Party under Title IV of ERISA to the Pension Plan, Multiemployer
Plan or the PBGC in an aggregate amount in excess of the Threshold Amount, or
any Loan Party or any ERISA Affiliate fails to pay when due, after the
expiration of any applicable grace period, any installment payment with respect
to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount.

 

Section 7.11.          Injunction. 
The issuance of any injunction against the Borrower or any other Loan
Party which enjoins or restrains the Borrower or any other Loan Party from
continuing to conduct any material part of its business affairs which continues
for more than ten (10) days.

 

Section 7.12.          Change Of Control.  The occurrence of any Change
of Control of the Borrower.

 

Section 7.13.          Material Adverse Change.  The occurrence of a Material Adverse Change.

 

ARTICLE 8

RIGHTS AND REMEDIES OF CREDIT PARTIES

ON THE OCCURRENCE OF AN EVENT OF DEFAULT

 

Upon the occurrence of an
Event of Default and during the continuance thereof:

 

Section 8.01.          Credit Parties’ Specific Rights And Remedies.  In addition to all other
rights and remedies provided by applicable Laws and the terms of the Credit
Documents, upon the occurrence and during the continuance of any Event of
Default, the Agent may, on behalf of the Lenders and shall, at the direction of
the Required Lenders (a) declare the commitment of each Lender to advance
proceeds of the Loans and any obligation of the Issuing Lender to issue any
Letters of Credit to be terminated, (b) accelerate and call immediately
due and payable all or any part of the Obligations, (c) require the Loan
Parties to Cash Collateralize the LC Obligations, (d) seek specific
performance or injunctive relief to enforce performance of the undertakings,
duties, and agreements provided in the Credit Documents, whether or not a
remedy at law exists or is adequate, (e) exercise any rights of a secured
creditor under applicable Laws against the Collateral, including (i) the
right to take possession of the Collateral without the use of judicial process
or hearing of any kind, (ii) the right to require the Loan Parties to
assemble the Collateral at such place as the Agent may specify, and (iii) the
right to sell the Collateral, in whole or in part, at either private or public
sale, and (f) seek the appointment of a receiver for any or all of the
Loan Parties and/or the assets of any or all of the Loan Parties.

 

Section 8.02.          Automatic Acceleration.  Upon the occurrence and
during the continuance of an Event of Default as described in Sections 7.07 or
7.08 of this Agreement, Commitments shall automatically terminate, the
Obligations shall be automatically accelerated and due and payable without any
notice, demand or action of any type on the part of the Credit Parties, the
obligations of the Issuing Lender to issue Letters of Credit shall be
automatically terminated, and the Loan Parties shall be automatically required
to Cash Collateralize the LC Obligations.

 

Section 8.03.          Consent To Appointment Of Receiver.  The Borrower
irrevocably consents to the appointment of a receiver upon the request of the
Agent during any continuing Event of Default for it and for any or all of its
business affairs and its assets, which receiver shall be authorized to have and
exercise the broadest powers permitted or available under applicable Laws to
operate, manage, conserve, liquidate and sell any or all of the Borrower’s
assets.

 

Section 8.04.          Remedies Cumulative.  The rights and remedies
provided in this Agreement and in the other Credit Documents or otherwise under
applicable Laws shall be cumulative and the exercise of 

 

54

 

any particular right or
remedy shall not preclude the exercise of any other rights or remedies in
addition to, or as an alternative of, such right or remedy.

 

Section 8.05.          Application Of Funds.  After the exercise of
remedies (or after the Loans have automatically become immediately due and
payable and the LC Obligations have automatically been required to be Cash
Collateralized), any amounts received on account of the Obligations shall be
applied by the Agent in the following order:

 

8.05.1.         First, to the payment of that portion of the Obligations
constituting fees, indemnities, expenses, reimbursements, and other amounts
(including Credit Party Expenses) payable to the Agent and to that part of the
Obligations owed to any of the Credit Parties or to Affiliates of any of the
Credit Parties for Bank Products, as described in item (d) in the
definition of Obligations.

 

8.05.2.         Second, to the payment of that portion of the
Obligations constituting fees, indemnities and other amounts (other than
principal, interest and Letter of Credit Fees) payable to the Lenders and the
Issuing Lender (including Credit Party Expenses), ratably among the Lenders.

 

8.05.3.         Third, to the payment of that portion of the
Obligations constituting Letter of Credit Fees, accrued and unpaid interest on
the Loans, the LC Borrowings, and other Obligations, ratably among the Lenders
and the Issuing Lender in proportion to the respective amounts described in
this clause Third payable to them.

 

8.05.4.         Fourth, on a pari passu
basis (a) to the payment of that portion of the Obligations constituting
unpaid principal of the Loans and the LC Borrowings ratably among the Lenders
and the Issuing Lender in proportion to the respective amounts described in
this clause Fourth held by them, and (b) to pay or cash
collateralize any Obligations of the Borrower to any Interest Rate Hedge
Provider arising from any Interest Rate Hedge Agreement (including Swap
Termination Values).

 

8.05.5.         Fifth, to the Agent for the account of the Issuing
Lender, to Cash Collateralize that portion of the LC Obligations comprised of
the aggregate undrawn amount of Letters of Credit.

 

8.05.6.         Last, the balance, if any, after all of the
Obligations have been indefeasibly paid in full, to the Borrower or as
otherwise required by applicable Laws.

 

Amounts used to Cash Collateralize either the
aggregate undrawn amount of Letters of Credit pursuant to clause Fifth
above or the Interest Rate Hedge Agreements pursuant to clause Fourth
above shall be applied to satisfy drawings under such Letters of Credit and
payment obligations under the Interest Rate Hedge Agreements as they
occur.  If any amounts remain on deposit
as Cash Collateral after all Letters of Credit have been fully drawn or have
expired and all Interest Rate Hedge Agreements have been terminated, such
remaining amount shall be applied to other Obligations, if any, in the order
set forth above.

 

ARTICLE 9

THE
AGENT

 

Section 9.01.          Appointment.  Each of the
Lenders and the Issuing Lender hereby irrevocably designates and appoints
M&T Bank as administrative agent under this Agreement and the other Credit
Documents and each Lender and the Issuing Lender authorizes M&T Bank as their
respective administrative agent to take such action on their behalf under the
provisions of this Agreement and the other Credit Documents and to exercise
such powers and perform such duties as are expressly delegated to the Agent by
the terms of this Agreement and such other Credit Documents, together with such
other 

 

55

 

powers as are reasonably incidental thereto.  The provisions of this Article 9 are
solely for the benefit of the Credit Parties and no Loan Party shall have any
rights as a third party beneficiary of any of such provisions, provided the
Borrower shall have the benefit of the provision in Section 9.05 requiring
the Borrower’s consent to the appointment of a 
successor Agent if there are no continuing Defaults or Events of
Default.

 

Section 9.02.          Exculpatory Provisions.

 

9.02.1.         No Fiduciary, Discretionary or
Implied Duties.  The Agent shall not have any duties or
obligations except those expressly set forth herein and in the other Credit Documents.  Without limiting the generality of the
foregoing, the Agent:

 

(a)           Shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default or Event of Default has occurred and is
continuing;

 

(b)           Shall not have any duty to take any discretionary
action or exercise any discretionary powers, except discretionary rights and
powers expressly contemplated hereby or by the other Credit Documents that the
Agent is required to exercise as directed in writing by the Required Lenders
(or such other number or percentage of the Lenders as shall be expressly
provided for herein or in the other Credit Documents), provided that the
Agent shall not be required to take any action that, in its opinion or the
opinion of its counsel, may expose the Agent to liability or that is contrary
to any Credit Document or applicable Law; and

 

(c)           Shall not, except as
expressly set forth herein and in the other Credit Documents, have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to any Loan Party or any of their Affiliates that is communicated to
or obtained by the Person serving as the Agent or any of its Affiliates in any
capacity.

 

9.02.2.         No Liability for Certain Actions. 
The Agent shall not be liable for any action taken or not taken by it (a) with
the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Agent shall believe
in good faith shall be necessary, under the circumstances as provided in
Sections 8.01 and 10.03) or (b) in the absence of its own gross negligence
or willful misconduct.

 

9.02.3.         Knowledge. 
The Agent shall be deemed not to have knowledge of any Default or Event
of Default or Material Adverse Change unless and until written notice
describing such Default, Event of Default or Material Adverse Change is given
to the Agent by a Credit Party or by a Loan Party.

 

9.02.4.         No Duty to Inquire. 
The Agent shall not be responsible for or have any duty to ascertain or
inquire into (a) any statement, warranty or representation made in or in
connection with this Agreement or any other Credit Document, (b) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (c) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default or Event of Default, (d) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Credit Document or any other agreement, instrument or document or (e) the
satisfaction of any condition set forth in Article 4 or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to
the Agent.

 

Section 9.03.          Reliance by Agent.  The Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper 

 

56

 

Person.  The Agent also may rely
upon any statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not incur any liability for relying
thereon.  In determining compliance with
any condition hereunder to the making of a Loan, or the issuance of a Letter of
Credit, that by its terms must be fulfilled to the satisfaction of a Lender or
the Issuing Lender, the Agent may presume that such condition is satisfactory
to such Lender or the Issuing Lender unless the Agent shall have received
notice to the contrary from such Lender or the Issuing Lender prior to the
making of such Loan or the issuance of such Letter of Credit.  The Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

 

Section 9.04.          Delegation of Duties.  The Agent may
perform any and all of its duties and exercise its rights and powers hereunder
or under any other Credit Document by or through any one or more sub-agents
appointed by the Agent.  The Agent and
any such sub-agent may perform any and all of its duties and exercise its
rights and powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Agent and any
such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as Agent.

 

Section 9.05.          Resignation of Agent. 
The Agent may at any time give notice of its resignation to the Credit
Parties and the Borrower.  Upon receipt
of any such notice of resignation, the Required Lenders shall have the right,
with the prior written approval of the Borrower (which approval shall not be
unreasonably withheld or delayed, and shall not be required if a Default or
Event of Default shall have occurred and be continuing), to appoint a
successor, which shall be a bank with an office in the State of Maryland.  If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within
thirty (30) days after the retiring Agent gives notice of its resignation, then
the retiring Agent may on behalf of the Lenders and the Issuing Lender, appoint
a successor Agent meeting the qualifications set forth above provided that if
the Agent shall notify the Borrower and the Lenders and Issuing Lender that no
qualifying Person has accepted such appointment, then such resignation shall
nonetheless become effective in accordance with such notice and (a) the
retiring Agent shall be discharged from its duties and obligations hereunder
and under the other Credit Documents (except that in the case of any collateral
security held by the Agent on behalf of the Lenders or the Issuing Lender under
any of the Credit Documents, the retiring Agent shall continue to hold such
collateral security until such time as a successor Agent is appointed) and (b) all
payments, communications and determinations provided to be made by, to or
through the Agent shall instead be made by or to each Lender and the Issuing
Lender directly, until such time as the Required Lenders appoint a successor
Agent as provided for above in this paragraph. 
Upon the acceptance of a successor’s appointment as Agent hereunder,
such successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring (or retired) Agent, and the
retiring Agent shall be discharged therefrom as provided above in this
paragraph.  The fees payable by the
Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the retiring Agent’s
resignation hereunder and under the other Credit Documents, the provisions of
this Article and Section shall continue in effect for the benefit of
such retiring Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while the
retiring Agent was acting as Agent.

 

Section 9.06.          Non-Reliance
on Agent and Other Lenders.  Each
Lender and the Issuing Lender acknowledges that it has, independently and
without reliance upon the Agent or any other Lender or any of their Related
Parties and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.  Each Lender and the Issuing
Lender acknowledges that it will, independently and without reliance upon the
Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or
based upon this 

 

57

 

Agreement, any other Credit
Document or any related agreement or any document furnished hereunder or
thereunder.

 

Section 9.07.          Agent May Hold Collateral For Lenders and
Others.  The Lenders, Issuing Lender and the Loan Parties
acknowledge that any Security Documents relating to the Loans, the Letters of
Credit, the Obligations, or the Collateral, including all of such documents
filed in the public records in order to evidence or perfect the Liens and
security interests granted in the Credit Documents, may name only the Agent, as
agent for the Lenders (including, but not limited to, the Issuing Lender) as
the secured party, mortgagee, beneficiary, or as lienholder.  The Lenders (including, but not limited to,
the Issuing Lender) and the Loan Parties authorize the Agent to hold any or all
of the above-described security interests and Liens in and to the Collateral as
the agent for the ratable benefit of the Lenders.

 

Section 9.08.          The Agent In Its Individual Capacity.  The Person serving as the Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Agent and the term “Lender” or
“Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, including the Person serving as the Agent hereunder in its
individual capacity.  Such Person and its
Affiliates may accept deposits from, lend money to, act as the financial
advisor or in any other advisory capacity for and generally engage in any kind
of business with any Loan Party or any Subsidiary or other Affiliate thereof as
if such Person were not the Agent hereunder and without any duty to account
therefor to the Lenders.

 

ARTICLE 10

MISCELLANEOUS

 

Section 10.01.        Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile, as follows:

 

If to the Loan Parties:

 

Manufacturers
And Traders Trust Company

25
S. Charles Street, 12th Floor

Baltimore,
Maryland 21201

Attn:       Hugh E. Giorgio, Vice
President

Facsimile:
(410) 244-4447

 

           -and-

 

Manufacturers
And Traders Trust Company

10025
Governor Warfield Parkway, Suite 300

Columbia,
Maryland 21044

Attn:       Robert F. Topper, Vice
President

Facsimile:
(410) 964-6849

 

If to the BORROWER:

 

Martek
Biosciences Corporation

6480
Dobbin Road

Columbia,
Maryland 21045

Attn:     David
M. Feitel, Esquire

Facsimile:
(410) 740-2985

 

58

 

With A Courtesy Copy To:

 

HOGAN &
HARTSON L.L.P.

100
International Drive, Suite 2000

Baltimore,
Maryland 21202

Attn.:
Kevin G. Gralley, Esquire

Facsimile:  (410) 659-2701

 

If to any Lender,
to it at its address (or facsimile number) set forth on the signature pages of this
Agreement, on the respective Lender Addendum, or in any Assignment And
Assumption.

 

Any party hereto may change its address or
facsimile number for notices and other communications hereunder by notice to
the other parties hereto.  All notices
and other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of
receipt.

 

Notices and other
communications to the Lenders and the Issuing Lender hereunder may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved by the Agent, provided
that the foregoing shall not apply to notices to any Lender or the Issuing
Lender pursuant to any funding or issuance mechanics if such Lender or the
Issuing Lender, as applicable, has notified the Agent that it is incapable of
receiving notices under such Article by electronic communication.  The Agent or the Borrower may, in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it, provided
that approval of such procedures may be limited to particular notices or
communications.  Unless the Agent otherwise
prescribes, (a) notices and other communications sent to an e-mail address
shall be deemed received upon the sender’s receipt of an acknowledgement from
the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided
that if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed
to have been sent at the opening of business on the next Business Day for the
recipient, and (b) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing
clause (a) of notification that such notice or communication is
available and identifying the website address therefor.

 

Section 10.02.        Course of Conduct.  No failure or
delay by any Credit Party in exercising any right or power under any Credit
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power.  The rights and remedies of the Credit Parties
under the Credit Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. 
No waiver of any provision of any Credit Document or consent to any
departure by any Loan Party therefrom shall in any event be effective unless
such waiver is made in accordance with Section 10.03 of this Agreement,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. 
No waiver or indulgence by any of the Credit Parties shall constitute a
future waiver of performance or exact performance by any of the Loan
Parties.  No amendment or waiver shall be
effective unless in writing.  Without
limiting the generality of the foregoing, the advance of proceeds of a Loan or
the issuance of a Letter of Credit shall not be construed as a waiver of any
Default or an Event of Default, regardless of whether any Credit Party may have
had notice or knowledge of such Default or Event of Default at the time of such
advance or issuance.

 

Section 10.03.        Waivers and Amendments. Except as expressly set forth herein, any
term, covenant, agreement or condition of this Agreement or of any of the other
Credit Documents may be 

 

59

 

amended or waived by the Required Lenders on behalf of the Lenders, and
any consent may be given by the Required Lenders on behalf of the Lenders;
provided, however, that no amendment, waiver or consent shall (a) without
the prior written consent of each Lender directly affected thereby, (i) increase
or decrease the principal amount of any Loans or of any Commitments of any
Lender, (ii) extend the Revolving Credit Termination Date, the Term Loan
Maturity Date or the LC Expiration Date, (iii) change any Commitment
Percentage of any such Lender, (iv) change Sections 2.07 or 8.05 in a
manner that would alter the pro rata sharing of payments required thereby, (v) postpone
the originally scheduled time or times of payment of the principal of any of
the Loans, the time or times of payment of interest or of any fees on account
of any of the Loans or Letters of Credit or LC Obligations, or the time or
times of payment of any of the reimbursement obligations in respect of the
Letters of Credit or of any other LC Obligations, or (vi) reduce the rates
of interest or fees payable on any of the Loans or other Obligations, or (b) without
the prior written consent of all of the Lenders, (i) release all or
substantially all of the Collateral (other than as specifically authorized by
the terms of this Agreement or any of the other Credit Documents), (ii) release
any Guarantor; (iii) amend the definition of Required Lenders or modify in
any other manner the number or percentage of Lenders required to make any
determinations; (iv) amend the provisions of this Section 10.03; and provided,
further, that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Agent or the Issuing Lender hereunder without the prior
written consent of the Agent and Issuing Lender, respectively.  Except as expressly provided to the contrary
in this Agreement and with the exception of amendments to any provision of Article 9
of this Agreement, this Agreement may not be amended without the prior written
consent of the Borrower.  The Agent and
all of the Lenders may amend or modify any provision of Article 9 of this
Agreement without the need for any consent or approval from the Borrower or any
Loan Party (provided the Borrower’s approval shall be required to revise the
requirement in Section 9.05 to obtain the consent of Borrower to the
appointment of a new Agent if there are no continuing Defaults or Events of
Default).  Notwithstanding anything to
the contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
principal amounts of any Loans held by such Defaulting Lender may not be
increased or decreased and the Commitments and Commitment Percentages of such
Defaulting Lender may not be increased or decreased without the consent of such
Defaulting Lender.

 

Section 10.04.        Expenses. The Borrower shall pay all Credit Party Expenses,
including, without limitation (a) all reasonable out-of-pocket expenses
incurred by the Agent and its Affiliates (including the reasonable fees,
charges and disbursements of counsel for the Agent) in connection with the
syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Credit Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated) and the recordation of any Credit
Documents (including all recording costs and taxes, transfer taxes, documentary
stamps, and the like), (b) all reasonable out-of-pocket expenses incurred
by the Issuing Lender in connection with the issuance, amendment, renewal or
extension of any Letter of Credit or any demand for payment thereunder, and (c) all
reasonable out-of-pocket expenses incurred by 
the Agent, any Lender or the Issuing Lender in connection with the
enforcement or protection of their respective rights under this Agreement and
the other Credit Documents.

 

Section 10.05.        Indemnity.  The Borrower shall indemnify, and shall
cause the other Loan Parties to indemnify, each of the Credit Parties and each
Related Party of any of the Credit Parties (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee)
incurred by any Indemnitee or asserted against any Indemnitee by any third
party or by any Loan Party arising out of, in connection with, or as a result
of (a) the execution or delivery of this Agreement, any other Credit
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (b) any Loan or Letter of Credit or the use or proposed use of
the proceeds therefrom (including any refusal by 

 

60

 

the Issuing Lender to honor a demand for payment under a Letter of
Credit if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (c) any actual
or alleged presence or release of Hazardous Materials on or from any property
owned or operated by any Loan Party, any contamination of a Property or of any
other Collateral, or any Environmental Liability of the Borrower or any of its
Subsidiaries, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing whether based on
contract, tort or any other theory, whether brought by a third party or by any
Loan Party, and regardless of whether any Indemnitee is a party thereto, provided
that such indemnity shall not as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses (i) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
any Indemnitee, or (ii) result from a claim brought by a Loan Party
against any Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Credit Document, if the Borrower or any other Loan
Party has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction. To the extent that
the Borrower and the other Loan Parties for any reason fail to indefeasibly pay
any amount required by this Section 10.05 to be paid to the Agent (or any
sub-agent thereof), the Issuing Lender or any Related Party of any of the
foregoing, (but without limiting the obligation of the Borrower or such other
Loan Parties to do so) each Lender severally agrees to pay to the Agent (or any
sub-agent), the Issuing Lender or such Related Party, as the case may be, such
Lender’s applicable pro rata share
(determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought) of such unpaid amount, provided that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against the Agent (or
any such sub-agent) or the Issuing Lender in its capacity as such, or against
any Related Party of any of the foregoing acting for the Agent (or any such
sub-agent) or the Issuing Lender in connection with such capacity.

 

Section 10.06.        Waiver of Claims. 
To the
fullest extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability,
for special, indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Credit Document or any agreement or instrument
contemplated hereby, the administration thereof, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof.  No Indemnitee shall be liable
for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Credit Documents or the transactions contemplated hereby
or thereby.  Without limitation to the
foregoing, the Borrower acknowledges that the Agent will make available to the
Lenders materials and information, including the Information, provided by or on
behalf of the Loan Parties by posting such materials and information on
IntraLinks, or another similar electronic system.

 

Section 10.07.        Successors and Assigns Generally. 
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that neither the Borrower nor any other Loan Party may
assign or otherwise transfer any of its rights or obligations without the prior
written consent of the Agent and each other Credit Party and no Lender may
assign or otherwise transfer any of its rights or obligations hereunder except (a) to
an Eligible Assignee in accordance with the provisions of Section 10.08, (b) by
way of participation in accordance with the provisions of Section 10.11,
or (c) by way of pledge or assignment of a security interest subject to
the restrictions of Section 10.12 (and any other attempted assignment or
transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in Section 10.11) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

 

61

 

Section 10.08.        Assignments By Lenders. 
Each Lender may assign to one or more Eligible Assignees all or any portion
of such Lender’s interests, rights and obligations set forth in this Agreement
or the other Credit Documents, including all or a portion of its Commitments
and the Loans (including for purposes hereof, its participations in LC
Obligations) provided that (a) an administrative fee in the amount of
Three Thousand Five Hundred Dollars ($3,500.00) is paid to the Agent by either
the assigning Lender or the Eligible Assignee in connection with the
assignment, (b) if less than all of the assigning Lender’s Commitments and
Loans is to be assigned, the amount of the Commitments and Loans so assigned
shall be for an aggregate principal amount of not less than Five Million
Dollars ($5,000,000.00), (c) each partial assignment shall be made as an
assignment of a proportionate amount of all of the assigning Lender’s rights
and obligations under this Agreement with respect to the Loans and Commitments
assigned, (d) the parties to each such assignment shall execute and
deliver an Assignment And Assumption to the Agent (with copies to be sent
contemporaneously to each Lender), for its acceptance, and (e) such
Assignment And Assumption does not require the filing of a registration
statement with the Securities And Exchange Commission or require the Loans or
the Notes to be qualified in conformance with the requirements imposed by any
blue sky laws or other laws of any state. 
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment And Assumption, which effective
date is at least five (5) Business Days after the execution thereof, (a) the
Eligible Assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment And Assumption, have the rights, duties, and
obligations of a Lender hereunder, and (b) the assigning Lender thereunder
shall, to the extent provided in such Assignment And Assumption, be released
from its duties and obligations under this Agreement but shall continue to be
entitled to all indemnification and reimbursement rights provided to the
Lenders by the Borrower pursuant to any of the Credit Documents with respect to
facts, events, and circumstances occurring prior to the effective date of such
assignment.  By executing and delivering
an Assignment And Assumption, the assigning Lender thereunder and the Eligible
Assignee thereunder confirm to and agree with each other and the other parties
to this Agreement the facts and matters as set forth in such Assignment and
Assumption.  Lenders may only assign
their interests in the Commitments, the Loans, and Credit Documents to Eligible
Assignees. Any assignment or transfer by a Lender of rights or obligations
under the Credit Documents that does not comply with this paragraph shall be
treated for purposes of the Credit Documents as a sale by such Lender of a
participation in such rights and obligations in accordance with Section 10.11
of this Agreement.  Any consent of the
Borrower that is required for a proposed assignee to be eligible to be an
Eligible Assignee shall be deemed to have been given by the Borrower unless the
Borrower objects to such proposed assignee by written notice to the Agent
within five (5) Business Days after having received notice of the proposed
assignment to such assignee.

 

Section 10.09.        Register.  The Agent shall
maintain a copy of each Assignment And Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders and the
amount of the Loans with respect to each Lender from time to time (the
“Register”).  The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, the
Agent and the Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes of this Agreement.  The Register shall be available for
inspection by the Borrower or the Lenders at any reasonable time and from time
to time upon reasonable prior notice.

 

Section 10.10.        Procedures for Implementing Lender Assignments. 
Upon the Agent’s receipt of an Assignment And Assumption executed by an
assigning Lender and an Eligible Assignee together with any Note or Notes
subject to such Assignment and Assumption and any necessary consents to such
Assignment and Assumption, the Agent shall, if such Assignment and Assumption
has been completed and is substantially in the form of Exhibit A attached
hereto (a) accept such Assignment And Assumption, (b) record the
information contained therein in the Register, (c) give prompt notice
thereof to the Borrower, and (d) promptly deliver a copy of such Assignment
And Assumption to the Borrower.  Within
three (3) Business Days after receipt of notice, the Borrower shall
execute and deliver to the Agent, in exchange for the surrendered Notes, new
Notes to the order of such Eligible Assignee in amounts equal to the
Commitments and Commitment Percentages assumed by it pursuant to such
Assignment And 

 

62

 

Assumption and new Notes to the order of the assigning Lender in an
amount equal to the Commitments and Commitment Percentages retained by the
assigning Lender.  Such Notes shall be in
the aggregate stated principal amount equal to the aggregate principal amount
of such surrendered Notes, shall be dated the effective date of such Assignment
And Assumption and shall otherwise be in substantially the form of the assigned
Notes delivered to the assigning Lender. 
The surrendered Notes shall be canceled and returned to the Borrower.
The Borrower expressly acknowledges that the cancellation of any Note or Notes
and the replacement of any Note or Notes in accordance with this provision
shall not constitute or be deemed to be a refinancing or a novation of any of
the Obligations.

 

Section 10.11.        Participations.  Any Lender may
at any time, without the consent of, or notice to, the Borrower, the Agent, or
any other Lender, sell participations to any Person (other than to natural
persons, the Borrower or any of the Borrower’s Affiliates or Subsidiaries, who
would not qualify as an Eligible Assignee) (each, a “Participant”) in
all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitments and Loans owing to
it); provided that (a) such Lender’s obligations under this
Agreement shall remain unchanged, (b) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (c) the Loan Parties and the other Credit Parties shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement and the other Credit Documents. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or wavier of any provision
of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver that affects such Participant
which (a) increases or decreases the principal amounts of the Commitments
or Loans of such Lender, (b) extends the Revolving Credit Termination
Date, the Term Loan Maturity Date or the LC Expiration Date, (c) postpones
the time of payment of principal, interest or fees on account of the Loans or
LC Obligations, (d) reduces the rates of interest payable on the Loans or
reduces any fees payable under the Credit Documents, or (e) releases
substantially all of the Collateral that affects such Participant.  Each Participant shall be entitled to the
benefits of Sections 2.08 and 2.09.2 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to Section 10.08.  To the extent permitted by Law, each
Participant also shall be entitled to the benefits of Section 10.18 as
though it were a Lender, provided such Participant agrees to be subject to Section 2.06.4
as though it were a Lender.  A
Participant shall not be entitled to receive any greater payment under Sections
2.08 or 2.09.3 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.09.3
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.09.5
as though it were a Lender.

 

Section 10.12.        Pledges.  Any Lender may
at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

Section 10.13.        Resignation By M&T Bank As Issuing Lender.  Notwithstanding anything to the contrary contained herein,
if at any time M&T Bank assigns all of its Commitments and Loans, M&T
Bank may upon thirty (30) days’ notice to the Borrower and the Lenders, resign
as Issuing Lender.  In the event of any
such resignation as Issuing Lender, the Borrower shall be entitled to appoint
from among the Lenders a successor Issuing Lender hereunder; provided, however,
that no failure by the Borrower to appoint any such successor shall affect the
resignation of M&T Bank as Issuing Lender. 
If M&T Bank resigns, it shall retain all the rights, powers,
privileges and duties of the Issuing Lender hereunder with respect to all
Letters of Credit outstanding as of the effective date of its resignation as
Issuing Lender and all LC Obligations with respect thereto.  Upon the appointment of a successor Issuing
Lender, (x) such 

 

63

 

successor shall succeed to and become vested with all of the rights,
powers, privileges and duties of the retiring Issuing Lender, and (y) the
successor Issuing Lender shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to M&T Bank to effectively assume the
obligations of M&T Bank with respect to such Letters of Credit.

 

Section 10.14.        Survival.  All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Credit Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of any Credit Document and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that any Credit Party may have had notice or knowledge of
any Default or incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any fee or any other amount
payable under the Credit Documents is outstanding and unpaid and so long as the
Revolving Credit Commitments have not expired or terminated.  The provisions of Sections 2.09, 2.10.3, Article 9
and Sections 10.05 and 10.06 shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans and the termination of the Commitments or the
termination of this Agreement or any provision hereof.

 

Section 10.15.        Counterparts And Integration.  This Agreement may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract.  This Agreement and the
other Credit Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements
and understandings, oral or written, relating to the subject matter
hereof.  Except as provided in Article 4,
this Agreement shall become effective when it shall have been executed by the
Agent and when the Agent shall have received counterparts hereof that, when
taken together, bear the signatures of each of the other parties hereto.  Delivery of an executed counterpart of a
signature page of this Agreement or a Lender Addendum electronically shall
be just as effective as the delivery of a manually executed counterpart of this
Agreement.

 

Section 10.16.        Electronic Execution.  The words “execution”, “signed,” “signature,” and
words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.

 

Section 10.17.        Severability. 
In the
event any one or more of the provisions contained in this Agreement should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby (it being understood that the
invalidity of a particular provision in a particular jurisdiction shall not in
and of itself affect the validity of such provision in any other
jurisdiction).  The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

 

Section 10.18.        Right of Setoff. 
If an
Event of Default shall have occurred and be continuing, each of the Credit
Parties and their respective Affiliates and Participants is hereby authorized
at any time and from time to time, to the fullest extent permitted by
applicable law, to setoff and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at
any time owing by it to or for the credit or the account of any Loan Party
against any of and all the 

 

64

 

obligations of any Loan Party now or hereafter existing under this
Agreement held by it, irrespective of whether or not it shall have made any
demand under this Agreement and although such obligations may be
unmatured.  The rights of each of the
Credit Parties and their respective Affiliates and Participants under this Section are
in addition to other rights and remedies (including other rights of setoff)
that it may have.

 

Section 10.19.        Governing Law. 
This
Agreement shall be governed by, and construed in accordance with, the laws of
the Governing State.

 

Section 10.20.        Jurisdiction. 
The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any state or federal court
located in the Governing State for any action or proceeding arising out of or
relating to this Agreement or the other Credit Documents.

 

Section 10.21.        Venue.  The Borrower
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or the other Credit Documents in any court referred
to in Section 10.20.  Each of the
parties hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.

 

Section 10.22.        Service Of Process. 
Each party
to this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 10.01. 
Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

 

Section 10.23.        WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE OBLIGATIONS.  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

Section 10.24.        Time.  Time is of the
essence to this Agreement.

 

Section 10.25.        Treatment of Certain Information; Confidentiality. 
Each Credit Party agrees to maintain the confidentiality of the
Information, except that Information may be disclosed (a) to its
Affiliates and to its and its Affiliates’ respective partners, directors,
officers, employees, agents, advisors and representatives (it being understood
that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by an regulatory authority
purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in
connection with the exercise of any remedies hereunder or under any other
Credit Document or any action or proceeding relating to this Agreement or any
other Credit Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those in this
Section, to any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement or (g) to
the extent such Information (x) becomes publicly available other than as a
result of a breach of this Section or 

 

65

 

(y) becomes available to any of the Credit Parties or any of their
respective Affiliates on a nonconfidential basis from a source other than the
Borrower.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential
information.  Each of the Credit Parties
acknowledges that (i) the Information may include material non-public information
concerning the Loan Parties, (ii) it has developed compliance procedures
regarding the use of material non-public information, and (iii) it will
handle such material non-public information in accordance with all applicable
Laws, including Federal and state securities Laws.

 

Section 10.26.          Advertisement.  The Borrower authorizes the Agent to publish
the name of the Borrower and the amount of the financing provided in accordance
with this Agreement in any “tombstone” or comparable advertisement which the
Agent elects to publish.  The Borrower
further agrees that the Agent may provide lending industry trade organizations
with information necessary and customary (including, without limitation, the
amount and type of facilities, the rates and counsel’s name) for inclusion in
league table measurements after the Closing Date.  Without limiting the generality of the
foregoing, the Borrower consents to the disclosure by the Agent after the
Closing Date of information relating to the Loans to Gold Sheets and
other similar bank trade publications, with such information to consist of deal
terms consisting of (a) the Borrower’s name, (b) principal loan
amounts, (c) interest rates, (d) term lengths, (e) commitment
fees and other fees to the Lenders in the syndicate, and (f) the identity
of their attorneys and other information customarily found in such
publications.

 

Section 10.27.        Acknowledgments.  The Borrower hereby acknowledges that (a) 
it and each of the other Loan Parties has been advised and represented by
counsel in the negotiation, execution and delivery of each Credit Document, (b) no
Credit Party has any fiduciary relationship with or duty to it or to the
Borrower or any other Loan Party arising out of or in connection with this
Agreement and the relationship between the Credit Parties, on one hand, and the
Borrower and the other Loan Parties, on the other hand, in connection herewith
is solely that of creditor and debtors, and (c) no joint venture exists
among the Credit Parties and the Borrower or any of the other Loan Parties.

 

Section 10.28.        USA Patriot Act Notice. Each Credit Party that is subject to the
Act hereby notifies the Borrower that pursuant to the requirements of the Act
it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and
other information that will allow such Credit Party to identify the Borrower in
accordance with the Act.

 

[Signatures
begin on following page]

 

66

 

IN WITNESS WHEREOF, the parties hereto, intending to
be legally bound hereby, have caused this Credit Agreement to be executed by
their respective duly Authorized Officers as of the date first written above.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  MARTEK
  BIOSCIENCES CORPORATION,

  
	
   

  	
  a
  Delaware Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Peter L. Buzy

  	
  (SEAL)

  
	
   

  	
   

  	
  Name:
  Peter L. Buzy

  	
   

  
	
   

  	
   

  	
  Title:
  Chief Financial Officer, Treasurer and Executive Vice President for Finance
  and Administration

  

 

 

NOTARY ACKNOWLEDGMENT

 

STATE
OF MARYLAND, CITY/COUNTY OF HOWARD, TO WIT:

 

I
HEREBY CERTIFY that on this 20th day of
January, 2010, before me, the undersigned Notary Public of the State of
Maryland, personally appeared Peter L. Buzy, and acknowledged himself to be the
Chief Financial Officer of MARTEK BIOSCIENCES CORPORATION, a Delaware
corporation, and that he, as such officer, being authorized so to do, executed
the foregoing instrument for the purposes therein contained by signing the name
of MARTEK BIOSCIENCES CORPORATION by himself as its Chief Financial Officer.

 

IN
WITNESS MY Hand and Notarial Seal.

 

	
   

  	
  /s/ Sarah E. Chandler

  	
  (SEAL)

  
	
   

  	
  NOTARY PUBLIC

  	
   

  

 

My
Commission Expires:

3-22-2011

 

[Signatures continue on following page]

 

67

 

	
   

  	
  AGENT:

  	
   

  
	
   

  	
  MANUFACTURERS
  AND TRADERS TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Hugh E. Giorgio

  	
  (SEAL)

  
	
   

  	
   

  	
  Name:
  Hugh E. Giorgio

  	
   

  
	
   

  	
   

  	
  Title:
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MANUFACTURERS
  AND TRADERS TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:
  

  	
  /s/
  Robert F. Topper

  	
  (SEAL)

  
	
   

  	
   

  	
  Name:
  Robert F. Topper

  	
   

  
	
   

  	
   

  	
  Title:
  Vice President

  	
   

  

 

68

 

Schedule 3.02

(Capital Stock of Guarantors)

 

	
  Name
  of Guarantor

  	
   

  	
  Par

  Value

  	
   

  	
  Number of

  Authorized Shares

  	
   

  	
  Number of Issued and

  Outstanding Shares

  	
   

  
	
  Martek Biosciences Boulder Corporation

  	
   

  	
  $

  	
  0.001

  	
   

  	
  100

  	
   

  	
  100

  	
   

  
	
  Martek Biosciences Kingstree Corporation

  	
   

  	
  $

  	
  0.001

  	
   

  	
  100

  	
   

  	
  100

  	
   

  

 

 

Schedule 3.03

(Subsidiaries)

 

	
  Name
  Of Loan Party

  	
   

  	
  Subsidiaries Of Loan Party

  
	
   

  	
   

  	
   

  
	
  Martek
  Biosciences Corporation

  	
   

  	
  Martek
  Biosciences Boulder Corporation

  
	
   

  	
   

  	
  Martek
  Biosciences Kingstree Corporation

  
	
   

  	
   

  	
   

  
	
  Martek
  Biosciences Boulder Corporation

  	
   

  	
  None

  
	
   

  	
   

  	
   

  
	
  Martek
  Biosciences Kingstree Corporation

  	
   

  	
  None

  

 

 

Schedule 3.20

(Material Contracts)

 

NONE

 

 

Schedule 6.03

(Indebtedness)

 

NONECONFIDENTIAL

    January
4th,
2010

    To:

    Zach
Sivan - CEO

    M-Wise
Inc.

    

    
      Dear
Zach,

    

    

    
      Re: M&A Consulting
Services

    

    

    We hereby
provide you with an assignment proposal relating to M&A Consulting
Services.

    

    The
M&A Consulting services shall include advisory services regarding M&A
(as defined below) of the Company, or any of its Affiliates (defined below)
(hereinafter, "Transaction").

    

    “M&A”
shall mean any transaction or series or combination of related transactions,
whereby directly or indirectly, all of, or a substantial part of Company’s
capital stock or assets are transferred from the Company and/or its shareholders
and/or any of its Affiliates to a purchaser, including, without limitation, a
sale or exchange of capital stock or assets, a merger, plan of exchange or
consolidation, or any similar transaction.

    

    “Affiliate”
shall mean any entity or person that owns or controls, is owned or controlled by
or is under joint control with, the applicable entity.

    

    Our
proposal for this assignment is as follows:

    

    
      	
              1.

            	
              Company
      would appoint Euronet Securities Ltd. (“EURONET”) as its non exclusive
      consultant relating to a possible Transaction. EURONET shall approach
      potential acquirers which shall be specified in Schedule A
      hereto (the “Acquirers”), as updated from time to time. Any changes to
      Schedule
      A will be approved in writing by the Company in
      advance.

            

    

    

    
      	
              2.

            	
              EURONET
      will provide Company with the necessary range of its M&A Consulting
      services as may be reasonably required by the Company, which will include,
      inter alia, the following services:

            

    

    

    
      	
               
      

            	
              (a)

            	
              Identification
      and approach of potential
Acquirers.

            

    

    

    
      	
               
      

            	
              (b)

            	
              Expediting
      the presentation of the Company proposition to the appropriate persons at
      the Acquirers, and obtaining their reaction in a timely
      fashion.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      

        

      
        	
                 
      

              	
                (c)

              	
                Assisting
      the Company in conducting, coordinating, and supervising all subsequent
      negotiations with Acquirers including the development, together with the
      Company, of a negotiating strategy and assistance in the preparation of
      the underlying valuation
model.

              

      

    

    

    
      	
               
      

            	
              (d)

            	
              Consulting
      and supervision of the professionals involved in the preparation of the
      documentation for a proposed
Transaction.

            

    

    

    
      	
              3.

            	
              As
      consideration for the services provided to Company hereunder, EURONET
      shall be entitled to success fees, subject to the closing of a Transaction
      with an Acquirer, or any of its Affiliates(collectively, "EURONET
      Contact"), which will be based on the consideration paid by such EURONET
      Contact to the Company, or any of its Affiliates, or any of its
      shareholders or debt holders, in such Transaction, as follows (the
      "Fees"):

            

    

    

    
      	
               
      

            	
              (a)

            	
              5%
      (five percent) of any consideration up to
  $10,000,000.

            

    

    
      	
               
      

            	
              (b)

            	
              4%
      (four percent) of any consideration above $10,000,000 and up to
      $20,000,000.

            

    

    
      	
               
      

            	
              (c)

            	
              3%
      (three percent) of any consideration above
  $20,000,000.

            

    

    

    The
foregoing Fees shall be paid to EURONET for any such Transaction with EURONET
Contact, which shall be closed within 12 months from the termination or
expiration of this agreement according to its terms.

    

    For the
purpose of calculating the Fees, the value of the consideration will include all
cash and non-cash elements, as well as consideration that may be contingent or
deferred, as well as distribution of cash and cash equivalent of the Company
prior or at the date of closing of such Transaction.

    

    In case
of non-cash consideration, the fee payable to EURONET will be paid in the same
manner, in the same terms and in the same method of payments in which the
consideration is paid by EURONET Contact.

    In the
event of a contingent or a deferred payment as part of the Consideration,
EURONET will be paid within 21 days from the day of actual payment of such
deferred or contingent payment.

    

    Euronet
will have no authority under this agreement to bind the Company in any way to
any parties or one specific party.  In addition, nothing contained in
this agreement will require the Company to accept the terms of any
proposal.  The Company has the right in its sole and absolute
discretion to reject any transaction regardless of the terms proposed.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      

       

    

    EURONET
has no right or authority to create, in writing or otherwise, any obligation of
any kind, to sign any agreement, on behalf of Company. Company reserves the
right to determine in its sole discretion all prices and business terms and the
acceptability of any transaction. Company shall have the sole and absolute right
to decide whether or not to negotiate with a potential buyer, to make any offer
or to accept any offer from any potential buyer, without any liability to
EURONET and shall have no liability to EURONET in respect of its failure to
enter into and/or comply with the terms of any agreement, except as may be
provided in the indemnification provisions hereof.  No party shall
have the authority to bind any other party except as set forth herein and no
party shall be responsible for oversight or supervision of any other party.
EURONET acknowledges this agreement is non-exclusive and that Company has the
right to work with other financial advisors to pursue transactions that have the
same nature of Transactions defined in this agreement and will not have any
claim or demand against Company with respect to such operation by Company.
Notwithstanding the above (i) EURONET shall have exclusivity regarding the
Acquirers listed in Schedule A, as updated from time to time, during the term of
this Agreement, and (ii) EURONET shall be entitled to the consideration from any
Transaction with Euronet Contacts according to the terms of this
Agreement.

    

    EURONET
hereby agrees that it will not disclose confidential information received from
the Company (or its affiliates) to others (other than our employees, agents,
accountants, attorneys, and other advisors) except as contemplated by this
engagement, or as permitted in writing by the Company or as such disclosure may
be required by law.  At the conclusion of our engagement hereunder,
EURONET will return to Company or destroy all copies of any documentary
confidential information that you Company duly marked "confidential" and that
are at the time in our possession.  For purposes of this agreement,
"confidential information" shall mean information provided by Company to EURONET
that is not otherwise available to EURONET from sources outside of the Company
(or its affiliates), and any such information shall cease to be confidential
information when it becomes generally available, or comes to our attention,
through other sources that do not, to EURONET's awareness at the time, involve a
violation of this or any similar agreement.

    

    
      	
              4.

            	
              Commencing
      on the date hereof and for the first six months of engagement hereunder,
      EURONET would
      be entitled to a monthly fee valued at USD $5,000, payable by issuance to
      EURONET of 750,000 Common Stock of the Company (equal to the aggregate
      monthly fee of the first 6 months), which shall be issued to EURONET and
      registered to trade on the OTCBB by the Company within the earliest of the
      following: (a) 12 months from the date hereof, and (b) immediately prior
      to the closing of an M&A transaction. The Company shall effect the
      registration of the shares as aforesaid and shall bear all related costs
      and expenses (including legal expenses). The shares shall be issued to
      Euronet within 7 days from the end of each month and the number of shares
      shall be calculated on the basis of the average share price in the OTCBB
      in the 30 days period prior to their
issuance.

            

    

    

    
      	
              5.

            	
              EURONET
      would be entitled to reimbursement of its direct out of pocket expenses
      incurred in connection with this engagement, subject to Company’s prior
      written consent.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      

       

    

    
      	
              6.

            	
              All
      cash Fees paid to EURONET hereunder shall be paid in US dollars or in any
      other currency of receipt by the Company, or its Affiliates, or its
      shareholders.

            

    

    

    
      	
              7.

            	
              Euronet
      shall invoice M-wise Inc. Any payments to EURONET shall be made against
      EURONET’s invoices. The Fees shall be paid within 14 days from actual
      receipt of the consideration by the Company, or any of its Affiliates.
      Reimbursement of approved out of pocket expenses shall be paid within 14
      days of issuance of invoice.

            

    

    

    
      	
              8.

            	
              EURONET's
      assignment shall commence on the date of the Company's approval of this
      Agreement and shall continue until the lapse of the period of 6 months
      from its commencement. Both parties would be entitled to terminate the
      engagement under this letter at any point in time and for any reason upon
      giving a 10 days prior written notice to the other party. Company’s
      obligations to pay EURONET the Fees and other fees accrued until
      termination / expiration shall survive termination or expiration of this
      Agreement.

            

    

    

    
      	
              9.

            	
              EURONET
      undertakes to reasonably co-ordinate with Company in advance any contacts
      with an Acquirer and to maintain all aspects of this assignment and all
      confidential information transferred to it by Company in total
      confidence.

            

    

    

    
      	
              10.

            	
              In
      order to remove doubt, it is hereby clarified that EURONET will have no
      liability regarding any engagement and/or agreement between the Company
      and any EURONET contact. EURONET shall bear no responsibility regarding
      the representations and/or obligations given to the Company by EURONET
      contact.

            

    

    

    
      	
              11.

            	
              Company
      hereby agrees to indemnify EURONET and hold it harmless against any claims
      related to the assignment under this letter, excluding any claims and
      damages resulting from the gross negligence or willful misconduct of
      EURONET.

            

    

    

    
      	
              12.

            	
              The
      Company shall notify EURONET immediately on any Transaction or other
      events that makes EURONET eligible to any compensation hereunder. EURONET
      shall receive a copy of any agreement between the Company and EURONET
      Contact, except if such agreement is confidential and in that case EURONET
      shall receive a document signed by a CPA or legal counsel of the Company
      certifying the consideration of the company under such agreement. The
      Company shall keep adequate records to accurately determine the payments
      due under this Agreement and shall provide EURONET a copy of such records
      on a semi annual basis until such date when the Company meets all its
      payment obligations under this Agreement. EURONET shall have the right to
      use one of the top four accounting firms to which the Company shall agree
      (or other accountant firm, if acceptable both to the Company and EURONET)
      to audit the relevant records of the Company and verify the reports and
      payments required to be made hereunder. A reasonable notice of at least
      seven (7) business days shall be provided to the Company prior to such
      audit.  If the Company does not agree to any accounting firm as
      aforesaid, EURONET shall have the rights to appoint any one of the top
      four accounting firms for such
audit.

            

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      

    

     

    We very
much look forward to working with you and Company on this matter.

    

    Yours
Sincerely,

    

    /s/
Baruch Halpert

     

    
      
        

      

    

    Euronet
Securities Ltd.

    Name:
Baruch Halpert, Partner

    Date: Jan
4 2010

    

    The above
proposal is agreed and accepted:

    

    /s/ Zach
Sivan

      

    
      

    

    M-Wise
Inc.

    Name:
Zach Sivan, CEO

    Date: Jan
4 2010

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
       

      

       

      SCHEDULE
A

    

    

    
      	
              1)

            	
              Smith
      Micro Software, Inc.

            

    

    
      	
              2)

            	
              PC
      TEL Inc.

            

    

    
      	
              3)

            	
              Mind
      CTI Ltd.

            

    

    
      	
              4)

            	
              Airvana
      Inc

            

    

    

    The above
names are agreed and accepted:

    

    /s/ Zach
Sivan

     

    
      

    

    M-Wise
Inc.

    Name:
Zach Sivan, CEO

    Date: Jan
4 2010

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00167-of-00352.parquet"}]]