Document:

exv10w4

 

Exhibit 10.4

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”) is made and entered into as of
June 19, 2007, between Micromet, Inc., a Delaware corporation (the “Company”) and each of
the several purchasers signatory hereto (each such purchaser, a “Purchaser” and,
collectively, the “Purchasers”).

          This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date
hereof, between the Company and each Purchaser (the “Purchase Agreement”).

          The Company and each Purchaser hereby agrees as follows:

     1. Definitions

          Capitalized terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

     “Advice” shall have the meaning set forth in Section 6(d).

     “Effectiveness Date” means, with respect to the Initial Registration Statement
required to be filed hereunder, the 90th calendar day following the date hereof
(or, in the event of a “full review” by the Commission, the 150th calendar day
following the date hereof); provided, however, that in the event the Company
is notified by the Commission that one or more of the above Registration Statements will not
be reviewed or is no longer subject to further review and comments, the Effectiveness Date
as to such Registration Statement shall be the fifth Trading Day following the date on which
the Company is so notified if such date precedes the dates otherwise required above.

     “Effectiveness Period” shall have the meaning set forth in Section 2(a).

     “Event” shall have the meaning set forth in Section 2(b).

     “Event Date” shall have the meaning set forth in Section 2(b).

     “Filing Date” means, with respect to the Initial Registration Statement
required hereunder, the 30th calendar day following the date hereof and, with
respect to any additional Registration Statements which may be required pursuant to Section
3(c), 10 days after the earliest practical date on which the Company is permitted by SEC
Guidance to file such additional Registration Statement related to the Registrable
Securities.

     “Holder” or “Holders” means the holder or holders, as the case may be,
from time to time of Registrable Securities.

1

 

     “Indemnified Party” shall have the meaning set forth in Section 5(c).

     “Indemnifying Party” shall have the meaning set forth in Section 5(c).

     “Initial Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement.

     “Initial Shares” means a number of Registrable Securities equal to the lesser
of (i) the total number of Registrable Securities and (ii) one-third of the number of issued
and outstanding shares of Common Stock that are held by non-affiliates of the Company on the
day immediately prior to the Closing.

     “Losses” shall have the meaning set forth in Section 5(a).

     “Plan of Distribution” shall have the meaning set forth in Section 2(a).

     “Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by a Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.

     “Registrable Securities” means (i) all Shares (ii) all Warrant Shares (assuming
on the date of determination the Warrants are exercised in full without regard to any
exercise limitations therein), and (iii) any securities issued or issuable upon any stock
split, dividend or other distribution, recapitalization or similar event with respect to
the foregoing.

     “Registration Statement” means the registration statement required to be filed
hereunder and any additional registration statements contemplated by Section 3(c), including
(in each case) the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in such
registration statement.

     “Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

2

 

     “Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the same purpose
and effect as such Rule.

     “Selling Shareholder Questionnaire” shall have the meaning set forth in Section
3(a).

     “SEC Guidance” means (i) any publicly-available written guidance, comments,
requirements or requests of the Commission staff, (ii) any guidance, comments, requirements
or requests of the Commission staff provided orally to the Company, and (iii) the Securities
Act.

     2. Shelf Registration

     (a) On or prior to each Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all or such maximum portion of
the Registrable Securities as permitted by SEC Guidance (provided that the Company shall use
diligent efforts to advocate with the Commission for the registration of all of the
Registrable Securities in accordance with the SEC Guidance, including without limitation,
the Manual of Publicly Available Telephone Interpretations D.29) that are not then
registered on an effective Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be on another appropriate form in accordance herewith)
and shall contain (unless otherwise directed by at least an 85% majority in interest of the
Holders) substantially the “Plan of Distribution” attached hereto as Annex
A. Subject to the terms of this Agreement, the Company shall use its best efforts to
cause a Registration Statement to be declared effective under the Securities Act as promptly
as possible after the filing thereof, but in any event prior to the applicable Effectiveness
Date, and shall use its best efforts to keep such Registration Statement continuously
effective under the Securities Act until all Registrable Securities covered by such
Registration Statement have been sold, or may be sold without volume restrictions pursuant
to Rule 144(k), as determined by the counsel to the Company pursuant to a written opinion
letter to such effect, addressed and acceptable to the Company’s transfer agent and the
affected Holders (the “Effectiveness Period”). The Company shall telephonically
request effectiveness of a Registration Statement as of 5:00 p.m. New York City time on a
Trading Day. The Company shall immediately notify the Holders via facsimile or by e-mail
of the effectiveness of a Registration Statement on the same Trading Day that the Company
telephonically confirms effectiveness with the Commission, which shall be the date requested
for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. New York
City time on the second Trading Day after the effective date of such Registration Statement,
file a final Prospectus with the Commission as required by Rule 424. Failure to so notify
the Holder within 2 Trading Days of such notification of effectiveness or failure to file a
final Prospectus as foresaid shall be deemed an Event under Section 2(b). Notwithstanding
any other

3

 

provision of this Agreement, if any SEC Guidance sets forth a limitation on the number
of Registrable Securities permitted to be registered on a particular Registration Statement
(and notwithstanding that the Company used diligent efforts to advocate with the Commission
for the registration of all or a greater portion of Registrable Securities), unless
otherwise directed in writing by a Holder as to its Registrable Securities, the number of
Registrable Securities to be registered on such Registration Statement will first be reduced
by Registrable Securities represented by Warrant Shares (applied, in the case that some
Warrant Shares may be registered, to the Holders on a pro rata basis based on the total
number of unregistered Warrant Shares held by such Holders), and second by Registrable
Securities represented by Shares.

     (b) If: (i) the Initial Registration Statement is not filed on or prior to its Filing
Date (if the Company files the Initial Registration Statement without affording the Holders
the opportunity to review and comment on the same as required by Section 3(a) herein, the
Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to
file with the Commission a request for acceleration of a Registration Statement in
accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act,
within five Trading Days of the date that the Company is notified (orally or in writing,
whichever is earlier) by the Commission that such Registration Statement will not be
“reviewed” or will not be subject to further review, or (iii) as to, in the aggregate among
all Holders on a pro-rata basis based on their purchase of the Securities pursuant to the
Purchase Agreement, a Registration Statement registering for resale all of the Initial
Shares is not declared effective by the Commission by the Effectiveness Date of the Initial
Registration Statement, or (iv) after the effective date of a Registration Statement, such
Registration Statement ceases for any reason to remain continuously effective as to all
Registrable Securities included in such Registration Statement, or the Holders are otherwise
not permitted to utilize the Prospectus therein to resell such Registrable Securities, for
more than 10 consecutive calendar days or more than an aggregate of 15 calendar days (which
need not be consecutive calendar days) during any 12-month period (any such failure or
breach being referred to as an “Event”, and for purposes of clause (i) and (iii) the
date on which such Event occurs, and for purpose of clause (ii) the date on which such five
Trading Day period is exceeded, and for purpose of clause (iv) the date on which such 10 or
15 calendar day period, as applicable, is exceeded being referred to as “Event
Date”), then, in addition to any other rights the Holders may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of each such Event
Date (if the applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as partial
liquidated damages and not as a penalty, equal to 1.5% of the aggregate purchase price paid
by such Holder pursuant to the Purchase Agreement for any unregistered Initial Shares then
held by such Holder. The parties agree that the Company shall not be liable for liquidated
damages under this Agreement with respect to any Warrants or Warrant Shares.
Notwithstanding the foregoing, the maximum amount of liquidated damages payable to a Holder
pursuant to this Agreement shall be 12% of the Subscription Amount paid by such Holder under
the Purchase Agreement. If the Company fails to pay any partial liquidated damages pursuant
to this Section in full within seven days after the date payable, the Company will pay
interest

4

 

thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to
be paid by applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon, are paid in
full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro
rata basis for any portion of a month prior to the cure of an Event.

     3. Registration Procedures.

          In connection with the Company’s registration obligations hereunder, the Company shall:

     (a) Not less than 3 Trading Days prior to the filing of each Registration Statement and
not less than one Trading Day prior to the filing of any related Prospectus or any amendment
or supplement thereto, the Company shall (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated or deemed to
be incorporated by reference) will be subject to the review of such Holders and (ii) cause
its officers and directors, counsel and independent certified public accountants to respond
to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to
each Holder, to conduct a reasonable investigation within the meaning of the Securities Act.
The Company shall not file a Registration Statement or any such Prospectus or any amendments
or supplements thereto to which the Holders of a majority of the Registrable Securities
shall reasonably object in good faith, provided that the Company is notified of such
objection in writing no later than 3 Trading Days after the Holders have been so furnished
copies of a Registration Statement or 1 Trading Day after the Holders have been so furnished
copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to
furnish to the Company a completed questionnaire in the form attached to this Agreement as
Annex B (a “Selling Shareholder Questionnaire”) not less than two Trading
Days prior to the Filing Date or by the end of the second Trading Day following the date on
which such Holder receives draft materials in accordance with this Section.

     (b) (i) Prepare and file with the Commission such amendments, including post-effective
amendments, to a Registration Statement and the Prospectus used in connection therewith as
may be necessary to keep a Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and file with the
Commission such additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424; (iii)
respond as promptly as reasonably possible to any comments received from the Commission with
respect to a Registration Statement or any amendment thereto and provide as promptly as
reasonably possible to the Holders true and complete copies of all correspondence from and
to the Commission relating to a Registration Statement (provided that the Company may excise
any information contained therein which would constitute material non-public information as
to any Holder which has not executed a confidentiality agreement with the Company);

5

 

and (iv) comply in all material respects with the provisions of the Securities Act and
the Exchange Act with respect to the disposition of all Registrable Securities covered by a
Registration Statement during the applicable period in accordance (subject to the terms of
this Agreement) with the intended methods of disposition by the Holders thereof set forth in
such Registration Statement as so amended or in such Prospectus as so supplemented.

     (c) If during the Effectiveness Period, the number of Registrable Securities at any
time exceeds 100% of the number of shares of Common Stock then registered in a Registration
Statement, then the Company shall file as soon as reasonably practicable an additional
Registration Statement covering the resale by the Holders of not less than the number of
such Registrable Securities.

     (d) Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as promptly as
reasonably possible (and, in the case of (i)(A) below, not less than one Trading Day prior
to such filing) and (if requested by any such Person) confirm such notice in writing no
later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to a Registration Statement is proposed to be filed;
(B) when the Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such Registration
Statement; and (C) with respect to a Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any other
federal or state governmental authority for amendments or supplements to a Registration
Statement or Prospectus or for additional information; (iii) of the issuance by the
Commission or any other federal or state governmental authority of any stop order suspending
the effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any
event or passage of time that makes the financial statements included in a Registration
Statement ineligible for inclusion therein or any statement made in a Registration Statement
or Prospectus or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to a Registration Statement,
Prospectus or other documents so that, in the case of a Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made, not
misleading; and (vi) of the occurrence or existence of any pending corporate development
with respect to the Company that the Company believes may be material and that, in the
determination of the Company, makes it not in the best interest of the Company to allow
continued availability of a Registration Statement or Prospectus, provided that any and all
of such information shall remain confidential to each Holder until such information
otherwise becomes public, unless disclosure by a Holder is required by law;
provided, further, that notwithstanding each Holder’s
agreement to keep such information confidential, each such Holder makes no
acknowledgement that any such information is material, non-public information.

6

 

     (e) Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order stopping or suspending the effectiveness of a Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

     (f) Furnish to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by reference to
the extent requested by such Person, and all exhibits to the extent requested by such Person
(including those previously furnished or incorporated by reference) promptly after the
filing of such documents with the Commission; provided, that any such item which is
available on the EDGAR system need not be furnished in physical form.

     (g) Subject to the terms of this Agreement, the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto, except after the giving of any notice
pursuant to Section 3(d).

     (h) The Company shall effect a filing with respect to the public offering contemplated
by each Registration Statement (an “Issuer Filing”) with the National Association of
Securities Dealers, Inc. (“NASD”) Corporate Financing Department pursuant to NASD
Rule 2710 as described in proposed NASD Rule 2710(b)(10)(A)(i) within one Trading Day of the
date that the Registration Statement is first filed with the Commission and pay the filing
fee required by such Issuer Filing. The Company shall use commercially reasonable efforts
to pursue the Issuer Filing until the NASD issues a letter confirming that it does not
object to the terms of the offering contemplated by the Registration Statement as described
in the Plan of Distribution attached hereto as Annex A. A copy of the Issuer Filing
and all related correspondence to or from the NASD with respect thereto shall be provided to
FWS.

     (i) Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders in
connection with the registration or qualification (or exemption from the Registration or
qualification) of such Registrable Securities for the resale by the Holder under the
securities or Blue Sky laws of such jurisdictions within the United States as any Holder
reasonably requests in writing, to keep each registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of the
Registrable Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in any such
jurisdiction where it is not then so subject or file a general consent to service of process
in any such jurisdiction.

7

 

     (j) If requested by a Holder, cooperate with such Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to a Registration Statement, which certificates shall be free, to
the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such names as any
such Holder may request.

     (k) Upon the occurrence of any event contemplated by Section 3(d), as promptly as
reasonably possible under the circumstances taking into account the Company’s good faith
assessment of any adverse consequences to the Company and its stockholders of the premature
disclosure of such event, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither a Registration Statement nor
such Prospectus will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. If the Company
notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus have been
made, then the Holders shall suspend use of such Prospectus. The Company will use its
diligent commercially reasonable efforts to ensure that the use of the Prospectus may be
resumed as promptly as is practicable. The Company shall be entitled to exercise its right
under this Section 3(k) to suspend the availability of a Registration Statement and
Prospectus, subject to the payment of any partial liquidated damages otherwise required
pursuant to Section 2(b), for a period not to exceed 60 calendar days (which need not be
consecutive days) in any 12 month period.

     (l) Comply with all applicable rules and regulations of the Commission.

     (m) The Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such Holder and,
if required by the Commission, the natural persons thereof that have voting and dispositive
control over the shares. During any periods that the Company is unable to meet its
obligations hereunder with respect to the registration of the Registrable Securities solely
because any Holder fails to furnish such information within three Trading Days of the
Company’s request, any liquidated damages that are accruing at such time as to such Holder
only shall be tolled and any Event that may otherwise occur solely because of such delay
shall be suspended as to such Holder only, until such information is delivered to the
Company.

8

 

     4. Registration Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company whether or not any
Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses of the Company’s counsel and
auditors) (A) with respect to filings made with the Commission, (B) with respect to filings
required to be made with any Trading Market on which the Common Stock is then listed for trading,
(C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the
Company in writing (including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and
(D) if not previously paid by the Company in connection with an Issuer Filing, with respect to any
filing that may be required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with the NASD pursuant to NASD Rule 2710, so long as the broker is
receiving no more than a customary brokerage commission in connection with such sale, (ii) printing
expenses (including, without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection with the consummation
of the transactions contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties), the expense of any
annual audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except to the extent provided
for in the Transaction Documents, any legal fees or other costs of the Holders.

     5. Indemnification.

     (a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the officers,
directors, members, partners, agents, investment advisors and employees (and any other
Persons with a functionally equivalent role of a Person holding such titles, notwithstanding
a lack of such title or any other title) of each of them, each Person who controls any such
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the officers, directors, members, shareholders, partners, agents and employees (and
any other Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each such controlling Person, to
the fullest extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and
expenses (collectively, “Losses”), as incurred, arising out of or relating to (1)
any untrue or alleged untrue statement of a material fact contained in a Registration
Statement, any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any omission or
alleged omission of a material fact required to be stated

9

 

therein or necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made) not misleading
or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange
Act or any state securities law, or any rule or regulation thereunder, in connection with
the performance of its obligations under this Agreement, except to the extent, but only to
the extent, that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such Holder’s
proposed method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in a Registration Statement, such
Prospectus or in any amendment or supplement thereto (it being understood that the Holder
has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an
event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated
or defective Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d). The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection with the
transactions contemplated by this Agreement of which the Company is aware.

     (b) Indemnification by Holders. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and against all
Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s
failure to comply with the prospectus delivery requirements of the Securities Act or (y) any
untrue or alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein not
misleading (i) to the extent, but only to the extent, that such untrue statement or omission
is contained in any information so furnished in writing by such Holder to the Company
specifically for inclusion in such Registration Statement or such Prospectus or (ii) to the
extent that such information relates to such Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement (it being understood that the Holder has
approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement
thereto or (ii) in the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by such Holder of an outdated or defective Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in Section 6(d). In no event
shall the liability of any selling Holder hereunder be greater in amount than the dollar
amount of the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.

10

 

     (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity hereunder (an “Indemnified
Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have
the right to assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have materially prejudiced the
Indemnifying Party.

     An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the
Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying
Party shall have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the
named parties to any such Proceeding (including any impleaded parties) include both such
Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall
reasonably believe that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party
shall not have the right to assume the defense thereof and the reasonable fees and expenses
of no more than one separate counsel shall be at the expense of the Indemnifying Party).
The Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably withheld or
delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of such
Proceeding.

     Subject to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within
ten Trading Days of written notice thereof to the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such
fees and expenses applicable to such actions for which such Indemnified Party is judicially
determined to be not entitled to indemnification hereunder.

11

 

     (d) Contribution. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless
for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable
by such Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the actions,
statements or omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or omission or alleged omission of
a material fact, has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other
fees or expenses incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its terms.

     The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable considerations referred to in
the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d),
no Holder shall be required to contribute, in the aggregate, any amount in excess of the
amount by which the net proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any damages that such
Holder has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.

     The indemnity and contribution agreements contained in this Section are in addition to
any liability that the Indemnifying Parties may have to the Indemnified Parties.

     6. Miscellaneous.

     (a) Remedies. In the event of a breach by the Company or by a Holder of any of their
respective obligations under this Agreement, each Holder or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law and under this Agreement,
including recovery of damages, shall be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for specific performance in
respect of such breach, it shall not assert or shall waive the defense that a remedy at law would
be adequate.

12

 

     (b) No Piggyback on Registrations; Prohibition on Filing Other Registration
Statements. Neither the Company nor any of its security holders (other than the Holders in such
capacity pursuant hereto) may include securities of the Company in any Registration Statements
other than the Registrable Securities. The Company shall not file any other registration
statements (other than Registration Statements on Forms S-8 or S-4) until all Registrable
Securities are registered pursuant to a Registration Statement that is declared effective by the
Commission, provided that this Section 6(b) shall not prohibit the Company from filing amendments
to registration statements filed prior to the date of this Agreement.

     (c) Compliance. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement.

     (d) Discontinued Disposition. By its acquisition of Registrable Securities, each
Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the
kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue
disposition of such Registrable Securities under a Registration Statement until it is advised in
writing (the “Advice”) by the Company that the use of the applicable Prospectus (as it may
have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure
that the use of the Prospectus may be resumed as promptly as it practicable. The Company agrees
and acknowledges that any periods during which the Holder is required to discontinue the
disposition of the Registrable Securities hereunder shall be subject to the provisions of Section
2(b).

     (e) Piggy-Back Registrations. If, at any time during the Effectiveness Period, there
is not an effective Registration Statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the Commission a registration statement relating
to an offering for its own account or the account of others under the Securities Act of any of its
equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities
Act) or their then equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in connection with the
Company’s stock option or other employee benefit plans, then the Company shall deliver to each
Holder a written notice of such determination and, if within seven days after the date of the
delivery of such notice, any such Holder shall so request in writing, the Company shall include in
such registration statement all or any part of such Registrable Securities such Holder requests to
be registered; provided, however, that the Company shall not be required to
register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale
pursuant to Rule 144(k) promulgated by the Commission pursuant to the Securities Act or that are
the subject of a then effective Registration Statement.

     (f) Amendments and Waivers. The provisions of this Agreement, including the provisions
of this sentence, may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and the Holders of a majority of the then outstanding Registrable Securities
(including, for this purpose any Registrable Securities issuable upon exercise or conversion of any
Security). If a Registration Statement does not register all of the

13

 

Registrable Securities pursuant to a waiver or amendment done in compliance with the previous
sentence, then the number of Registrable Securities to be registered for each Holder shall be
reduced pro rata among all Holders and each Holder shall have the right to designate which of its
Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of a Holder or some Holders and that does not directly or
indirectly affect the rights of other Holders may be given by such Holder or Holders of all of the
Registrable Securities to which such waiver or consent relates; provided, however,
that the provisions of this sentence may not be amended, modified, or supplemented except in
accordance with the provisions of the first sentence of this Section 6(f).

     (g) Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.

     (h) Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and shall inure to the
benefit of each Holder. The Company may not assign (except by merger) its rights or obligations
hereunder without the prior written consent of all of the Holders of the then outstanding
Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and
to the Persons as permitted under the Purchase Agreement.

     (i) No Inconsistent Agreements. Neither the Company nor any of its Subsidiaries has
entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the
date of this Agreement, enter into any agreement with respect to its securities, that would have
the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. Except as set forth on Schedule 6(i), neither the Company nor
any of its Subsidiaries has previously entered into any agreement granting any registration rights
with respect to any of its securities to any Person that have not been satisfied in full.

     (j) Execution and Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart. In the event that
any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data
file, such signature shall create a valid and binding obligation of the party executing (or on
whose behalf such signature is executed) with the same force and effect as if such facsimile or
”.pdf” signature page were an original thereof.

     (k) Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be determined in accordance with the provisions of the
Purchase Agreement.

     (l) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive
of any other remedies provided by law.

14

 

     (m) Severability. If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in
full force and effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the intention of the parties
that they would have executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

     (n) Headings. The headings in this Agreement are for convenience only, do not
constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     (o) Independent Nature of Holders’ Obligations and Rights. The obligations of each
Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and
no Holder shall be responsible in any way for the performance of the obligations of any other
Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any
closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Holders are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitled
to protect and enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an additional party
in any proceeding for such purpose.

********************

15

 

          IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the
date first written above.

	 	 	 	 	 
	 	MICROMET, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Christian Itin Ph.D. 	 
	 	 	Title:  	President & CEO 	 
	 

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

16

 

[SIGNATURE PAGE OF HOLDERS TO MITI RRA]

Name of Holder: __________________________

Signature of Authorized Signatory of Holder: __________________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________

[SIGNATURE PAGES CONTINUE]

17

 

Annex A

Plan of Distribution

     Each Selling Stockholder (the “Selling Stockholders”) of the common stock and any of
their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of
their shares of common stock on the NASDAQ Global Market or any other stock exchange, market or
trading facility on which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods
when selling shares:

	 	•	 	ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
	 
	 	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate the
transaction;
	 
	 	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
	 
	 	•	 	an exchange distribution in accordance with the rules of the applicable
exchange;
	 
	 	•	 	privately negotiated transactions;
	 
	 	•	 	settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;
	 
	 	•	 	broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
	 
	 	•	 	through the writing or settlement of options or other hedging transactions,
whether through an options exchange or otherwise;
	 
	 	•	 	a combination of any such methods of sale; or
	 
	 	•	 	any other method permitted pursuant to applicable law.

     The Selling Stockholders may also sell shares under Rule 144 under the Securities Act of 1933,
as amended (the “Securities Act”), if available, rather than under this prospectus.

     Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from the Selling
Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the
purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with NASDR Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with NASDR IM-2440.

18

 

     In connection with the sale of the common stock or interests therein, the Selling Stockholders
may enter into hedging transactions with broker-dealers or other financial institutions, which may
in turn engage in short sales of the common stock in the course of hedging the positions they
assume. The Selling Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common stock to broker-dealers
that in turn may sell these securities. The Selling Stockholders may also enter into option or
other transactions with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction).

     The Selling Stockholders and any broker-dealers or agents that are involved in selling the
shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection
with such sales. In such event, any commissions received by such broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it
does not have any written or oral agreement or understanding, directly or indirectly, with any
person to distribute the Common Stock. In no event shall any broker-dealer receive fees,
commissions and markups which, in the aggregate, would exceed eight percent (8%).

     The Company is required to pay certain fees and expenses incurred by the Company incident to
the registration of the shares. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities under the Securities
Act.

     Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the
Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act
including Rule 172 thereunder. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than under this prospectus. There is no underwriter or coordinating broker acting in connection
with the proposed sale of the resale shares by the Selling Stockholders.

     We agreed to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholders without registration and without regard to any
volume limitations by reason of Rule 144(k) under the Securities Act or any other rule of similar
effect or (ii) all of the shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be sold only through
registered or licensed brokers or dealers if required under applicable state securities laws. In
addition, in certain states, the resale shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

19

 

     Under applicable rules and regulations under the Exchange Act, any person engaged in the
distribution of the resale shares may not simultaneously engage in market making activities with
respect to the common stock for the applicable restricted period, as defined in Regulation M, prior
to the commencement of the distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations thereunder, including
Regulation M, which may limit the timing of purchases and sales of shares of the common stock by
the Selling Stockholders or any other person. We will make copies of this prospectus available to
the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to
each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the
Securities Act).

20

 

Annex B

MICROMET, INC.

Selling Securityholder Notice and Questionnaire

     The undersigned beneficial owner of common stock (the “Registrable Securities”) of
Micromet, Inc., a Delaware corporation (the “Company”), understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the “Commission”) a
registration statement (the “Registration Statement”) for the registration and resale under
Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the
“Registration Rights Agreement”) to which this document is annexed. A copy of the
Registration Rights Agreement is available from the Company upon request at the address set forth
below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto
in the Registration Rights Agreement.

     Certain legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of
Registrable Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

NOTICE

     The undersigned beneficial owner (the “Selling Securityholder”) of Registrable
Securities hereby elects to include the Registrable Securities owned by it in the Registration
Statement.

21

 

The undersigned hereby provides the following information to the Company and represents and
warrants that such information is accurate:

QUESTIONNAIRE

1. Name.

	 	(a)	 	Full Legal Name of Selling Securityholder
	 
	 	 	 	                 
                 
                  
                  
          
                  
                  
                  
                  
        
                   
                   

	 
	 	(b)	 	Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities are held:
	 
	 	 	 	                 
                 
                  
                  
          
                  
                  
                  
                  
        
                   
                   

	 
	 	(c)	 	Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by this Questionnaire):
	 
	 	 	 	                 
                 
                  
                  
          
                  
                  
                  
                  
        
                   
                   

2. Address for Notices to Selling Securityholder:

 

 

 

 

	 	 	 
	Telephone:
	 	 
	 

	 	 

	Fax:
	 	 
	 

	 	 

	Contact Person:
	 	 
	 

	 	 

3. Broker-Dealer Status:

	 	(a)	 	Are you a broker-dealer?

Yes o   No o

	 	(b)	 	If “yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?

Yes o   No o

	 	Note:	 	 If “no” to Section 3(b), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.

22

 

	 	(c)	 	Are you an affiliate of a broker-dealer?

Yes o   No o

	 	(d)	 	If you are an affiliate of a broker-dealer, do you certify that you purchased
the Registrable Securities in the ordinary course of business, and at the time of the
purchase of the Registrable Securities to be resold, you had no agreements or
understandings, directly or indirectly, with any person to distribute the Registrable
Securities?

Yes o   No o

	 	Note:	 	If “no” to Section 3(d), the Commission’s staff has indicated that
you should be identified as an underwriter in the Registration
Statement.

4. Beneficial Ownership of Securities of the Company Owned by the Selling Securityholder.

Except as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities issuable
pursuant to the Purchase Agreement.

	 	(a)	 	Type and Amount of other securities beneficially owned by the Selling
Securityholder:
	 
	 	 	 	                 
                 
                  
                  
          
                  
                  
                  
                  
        
                   
                   

	 
	 	 	 	                 
                 
                  
                  
          
                  
                  
                  
                  
        
                   
                   

23

 

5. Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material relationship with
the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

                     
                 
                  
                  
          
                  
                  
                  
                  
        
                   
                   

                     
                 
                  
                  
          
                  
                  
                  
                  
        
                   
                   

     The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the
information provided herein that may occur subsequent to the date hereof at any time while the
Registration Statement remains effective.

     By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 5 and the inclusion of such information in the
Registration Statement and the related prospectus and any amendments or supplements
thereto. The undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement and the related
prospectus.

     IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and
Questionnaire to be executed and delivered either in person or by its duly authorized agent.

	 	 	 	 	 
	Date:                                          	Beneficial Owner:      
                                                                    

    	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL
BY OVERNIGHT MAIL, TO:

24exv10w1

 

Exhibit 10.1

LOAN AND SECURITY AGREEMENT

     THIS LOAN AND SECURITY AGREEMENT (“Agreement”) is made this 15th day of JUNE,
2007, by and between CUISINE SOLUTIONS, INC., a Delaware corporation (the “Borrower”), and
BRANCH BANKING AND TRUST COMPANY (the “Bank”).

RECITALS:

     WHEREAS, Bank has agreed to make a revolving line of credit loan in the maximum principal
amount permitted to be outstanding at any one time of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00) to Borrower; and

     WHEREAS, Bank is willing to make such loan upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein, Borrower and Bank do hereby agree as follows:

1. CONSTRUCTION AND DEFINITION OF TERMS.

     All terms used herein without definition which are defined by the Virginia Uniform Commercial
Code shall have the meanings assigned to them by the Virginia Uniform Commercial Code, as in effect
on the date hereof, unless and to the extent varied by this Agreement. All accounting terms used
herein without definition shall have the meanings assigned to them as determined by generally
accepted accounting principles. Whenever the phrase “satisfactory to Bank” is used in this
Agreement such phrase shall mean “satisfactory to Bank in its sole discretion.” The use of any
gender or the neuter herein shall also refer to the other gender or the neuter and the use of the
plural shall also refer to the singular, and vice versa. In addition to the terms defined elsewhere
in this Agreement, unless the context otherwise requires, when used herein, the following terms
shall have the following meanings:

     1.01 “Accounts” shall have the meaning set forth in SCHEDULE “DD” attached hereto
and made a part hereof.

     1.02 “Account Debtor” shall have the meaning set forth in SCHEDULE “DD” attached hereto and
made a part hereof.

     1.03 “Advance” shall mean each disbursement of Loan proceeds made by Bank.

9530034477-00003

 

 

     1.04 “Bankruptcy Code” means the United States Bankruptcy Code, as amended from time to time.

     1.05 “Borrowing Base” (sometimes, the “Advance Rate”), shall have the meaning set forth in
Section DD.02 of SCHEDULE “DD” attached hereto and made a part hereof.

     1.06 “Banking Day” shall mean any day that banks in the District of Columbia are not required or permitted to be closed.

     1.07 “Certified” shall mean that the information, statement, schedule, report or other
document required to be “certified” shall contain a representation of a duly authorized officer of
Borrower that such information, statement, schedule, report or other document is true and correct and complete.

     1.08 “Closing” shall mean the date on which funds are first advanced to Borrower hereunder.

     1.09 “Collateral” shall mean all of Borrower’s personal property, both now owned and hereafter acquired, including, but not limited to:

     (a) Accounts;

     (b) Chattel paper;

     (c) Deposit accounts;

     (d) Documents;

     (e) Equipment;

     (f) Fixtures;

     (g) General intangibles;

     (h) Goods;

     (i) Instruments;

     (j) Inventory;

     (k) Investment property;

     (l) Letter-of-credit rights; and

     (m) Proceeds and products of all of the foregoing.

-2-

 

     1.10 “Eligible Accounts” shall have the meaning set forth in SCHEDULE “DD” attached hereto and
made a part hereof.

     1.11 “Eligible Inventory” shall have the meaning set forth in SCHEDULE “DD” attached hereto
and made a part hereof.

     1.12 “Event of Default” shall mean any of the events described in Section 8 hereof.

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

     1.14 “Governmental Authority” means any nation or government, any state or other political
subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

     1.15 “Hazardous Materials” means (a) any “hazardous waste” as defined by the Resource
Conservation and Recovery Act of 1976, as amended from time to time, and regulations promulgated
thereunder; (b) any “hazardous substance” as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time, and regulations promulgated
thereunder; (c) any substance the presence of which on any property now or hereafter owned,
operated or acquired by Borrower is prohibited by any Law similar to those set forth in this
definition; and (d) any other substance which by Law requires special handling in its collection,
storage, treatment or disposal.

     1.16 “Hazardous Materials Contamination” means the contamination (whether presently existing
or occurring after the date of this Agreement) by Hazardous Materials on any property owned,
operated or controlled by Borrower or for which Borrower has responsibility, including, without
limitation, improvements, facilities, soil, ground water, air or other elements on, or of, any
property now or hereafter owned, operated or acquired by Borrower, and any other contamination by
Hazardous Materials for which Borrower is, or is claimed to be, responsible.

     1.17 “Indebtedness” shall include all items which would properly be included in the liability
section of a balance sheet or in a footnote to a financial statement, in accordance with generally
accepted accounting principles, including, without limitation, contingent liabilities.

-3-

 

     1.18 “Laws” shall mean all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Governmental Authority or political subdivision or
agency thereof, or any court or similar entity established by any thereof.

     1.19 “Lien” shall mean any statutory or common law consensual or non-consensual mortgage,
pledge, security interest, encumbrance, lien, right of setoff, claim or charge of any kind,
including, without limitation, any conditional sale or other title retention transaction, any lease
transaction in the nature thereof and any secured transaction under the Uniform Commercial Code of any jurisdiction.

     1.20 “Loan” shall mean the Revolving Loan.

     1.21 “Loan Base Report” shall have the meaning set forth in SCHEDULE “DD” attached hereto and made a part hereof.

     1.22 “Loan Documents” shall mean this Agreement, the Note any other instrument, document, and
agreement relating thereto, and any and all other agreements, contracts, promissory notes, security
agreements, assignments, subordination agreements, pledge or hypothecation agreements, mortgages,
deeds of trust, leases, guaranties, instruments, letters of credit, letter-of-credit agreements
and documents now and hereafter existing between Bank and Borrower, executed and/or delivered in
connection with the Loan or otherwise or guaranteeing, securing or in any other manner relating to
any of the Obligations, together with any other instrument or document executed by Borrower, Bank
or any other person in connection with the Loan. Additional terms, conditions and covenants of this
Agreement are described in Schedule “DD”, the terms of which are hereby incorporated herein by reference.

     1.23 “Note” shall mean the Promissory Note (Revolving Line of Credit) in the maximum principal
amount permitted to be outstanding at any one time of SEVEN MILLION FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($7,500,000.00), to be executed and delivered by Borrower at or prior to Closing
pursuant to 5.03(a) hereof, and all renewals, replacements and extensions thereof.

     1.24 “Obligations” shall include the full and punctual observance and performance of all
present and future duties, covenants and responsibilities due to Bank by Borrower under this
Agreement, the Note, the Loan Documents and otherwise, all present and future obligations and
liabilities of Borrower to

-4-

 

Bank for the payment of money under this Agreement, the Note, the Loan Documents and
otherwise (extending to all principal amounts, interest, late charges, fees and all other
charges and sums, as well as all costs and expenses payable by Borrower under this
Agreement, the Note, the Loan Documents and otherwise), whether direct or indirect,
contingent or non-contingent, matured or unmatured, accrued or not accrued, related or
unrelated to this Agreement, whether or not now contemplated, whether or not any
instrument or agreement relating thereto specifically refers to this Agreement, including,
without limitation, overdrafts in any checking or other account of Borrower at Bank and
claims against Borrower acquired by assignment to Bank, whether or not secured under any
other document, or agreement or statutory or common law provision, as well as all
renewals, refinancings, consolidations, re-castings and extensions of any of the
foregoing, the parties acknowledging that the nature of the relationship created hereby
contemplates the making of future advances by Bank to Borrower.

     1.25 “On-Site Asset-Based Lending Collateral Reviews/ Examinations” shall have the
meaning set forth in SCHEDULE “DD” attached hereto and made a part hereof.

     1.26 “Permitted Liens” shall mean (a) Liens of Bank, (b) Liens for taxes not
delinquent or for taxes being diligently contested in good faith by Borrower by
appropriate proceedings, subject to the conditions set forth in Subsection 4.07 hereof,
(c) mechanic’s, workman’s, materialman’s, landlord’s, carrier’s and other like Liens
arising in the ordinary course of business with respect to obligations which are not due
or which are being diligently contested in good faith by Borrower by appropriate
proceedings, provided such Liens did not arise in connection with the borrowing of money
or the obtaining of advances or credit and do not, in Bank’s discretion, in the aggregate
materially detract from the value of Borrower’s assets or materially impair the use
thereof, and (d) Liens specifically consented to by Bank in writing.

     1.27 “Person” shall have the meaning set forth in SCHEDULE “DD” attached hereto and
made a part hereof.

     1.28 “Revolving Loan” shall mean the revolving line of credit loan in the maximum
principal amount permitted to be outstanding at any one time of SEVEN MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00) evidenced by the Note.

     1.29 “Revolving Loan Committed Amount” shall mean SEVEN MILLION FIVE HUNDRED THOUSAND
AND NO/100 DOLLARS ($7,500,000.00).

-5-

 

     1.30 “Subsidiary” shall include any corporation at least a majority of the outstanding Voting
Stock of which is owned, now or in the future, by Borrower, or by one of the stockholders of the
Borrower, or by Borrower, and one or more of its Subsidiaries.

     1.31 “Tangible Net Worth” shall mean at any date, the shareholders’ equity (or total partners’
or members’ capital accounts if Borrower is a partnership or limited liability company, as
applicable), determined in accordance with GAAP, less (i) all accounts receivable due from
shareholders, directors, officers, affiliates, Subsidiaries, partners, members or managers, and
(ii) the value of all intangible assets, plus all Indebtedness which is fully and expressly
subordinated in writing to Bank and Bank’s right to receive payment in full of all the Indebtedness
owed to Bank, fees and costs, if any, on terms and conditions acceptable to Bank.

     1.32 “Voting Stock” shall mean the shares of any class of capital stock of a corporation
having ordinary voting power to elect the directors, officers or trustees thereof, including such
shares that shall or might have voting power by reason of the occurrence of one or more conditions or contingencies.

2. LOAN.

     2.01 Loan Commitment. Subject to, and in accordance with the terms, conditions and
provisions of this Agreement, the Bank agrees to make the Loan to the Borrower. The principal
amount of the Revolving Loan shall be advanced by Bank to Borrower on a revolving credit basis
pursuant to the terms hereof until the earlier to occur of (a) twenty four (24) months following
the date hereof, or (b) the date the Bank terminates the Loan pursuant to the provisions of Section
9 hereof; provided, that, the aggregate principal amount of the Revolving Loan advanced by Bank to
Borrower and outstanding at any one time shall at no time exceed the lesser of (i) the Revolving
Loan Committed Amount or (ii) the Borrowing Base.

     2.02 Manner of Borrowing and Disbursement of Revolving Credit Loan. Each Advance on
account of the Revolving Loan shall be made by the Bank to the Borrower no more than on the fifth
(5th) Banking Day on which Bank actually receives written notice from the Borrower setting forth
the amount of such Advance, provided, that, such written notice is actually received by Bank before
12:00 Noon Eastern Time (Standard or Daylight as then applicable) on such Banking Day, or on such
later date set forth

-6-

 

in Borrower’s notice. Prior to making any Advances hereunder, the Bank will require the
Borrower to submit to the Bank, for its approval, a written statement of the purpose of such
Advance, together with a statement of the contemplated source of repayment of the same. Each
Advance on account of the Revolving Loan shall be credited to a banking account of the Borrower
with the Bank or disbursed as otherwise instructed by Borrower in its notice requesting such
Advance. With respect to all matters and transactions in connection therewith, the Borrower hereby
irrevocably authorizes the Bank to accept, rely upon, act upon, and comply with any written
instructions, requests, confirmations, and orders from Borrower. The Borrower acknowledges that the
transmission between the Borrower and the Bank of any such instructions, requests, confirmations,
and orders involves the possibility of errors, omissions, mistakes, and discrepancies and agrees to
adopt such internal measures and operational procedures to protect its interests. By reason
thereof, the Borrower hereby assumes all risk of loss and responsibility for, and releases and
discharges the Bank from any and all responsibility or liability for and agrees to indemnify,
reimburse on demand, and hold the Bank harmless from, any and all claims, actions, damages, losses,
liability, and expenses by reason of, arising out of or in any way connected with or related to (a)
the Bank’s accepting, relying and acting upon, complying with, or observing any such instructions,
requests, confirmations, or orders, and (b) any such errors, omissions, mistakes, and
discrepancies; provided, that, the foregoing release and indemnification shall not apply to matters
attributable to Bank’s gross negligence or intentional willful misconduct.

     2.03 The Account. The Bank shall establish and maintain an account on the books of the Bank
evidencing the indebtedness of the Borrower to the Bank under the provisions of this Agreement with
respect to the Revolving Loan to which (a) the amount of each Revolving Loan Advance made by the
Bank shall be debited by recording therein on the date of each Advance a debit entry in the amount
of the Advance, (b) each payment on the Revolving Loan made by the Borrower shall be credited by
recording therein on the date received a credit entry in the amount of such payment, (c) all
interest on the Revolving Loan not paid as and when due and payable shall be debited by recording
therein on the date such interest becomes past due a debit entry in the amount of such interest,
(d) all Expense Payments (hereinafter defined) not paid as and when due and payable shall be
debited by recording therein on the date such Expense Payment becomes due a debit entry in the
amount of such Expense Payment, (e) all Liquidation Costs (hereinafter defined) shall be debited by
recording therein

-7-

 

on the date incurred the amount of such Liquidation Costs, and (f) all other charges, interest, and
expenses chargeable by the Bank to the Borrower under this Agreement not paid as and when due and
payable shall be debited by recording therein on the date such charges, interest, and expenses
become past due a debit entry in the amount of such charges, interest, and expenses. All credit
entries to such account are conditional and shall be readjusted as of the date made if final
payment is not received by the Bank in cash or solvent credits. The entries made by the Bank to
such account shall constitute prima facie evidence of the existence and amounts of the Borrower’s
indebtedness to the Bank under the provisions of this Agreement.

     2.04 Note. The Loan shall be evidenced by and repaid in accordance with the Note.

3. SECURITY.

     3.01 Security Interest. As security for the payment and performance of all of the
Obligations and performance under the Loan Documents, Borrower hereby irrevocably and
unconditionally assigns, pledges and grants to Bank a continuing security interest in the
Collateral. Bank’s assignment, pledge and grant is coupled with an interest and shall continually
exist until all Obligations have been paid in full. If required by Bank at any time, Borrower shall
make notations, satisfactory to Bank, on its books and records disclosing the existence of Bank’s
security interest in the Collateral. Borrower agrees that, with respect to the Collateral, Bank
shall have all the rights and remedies of a secured party under the Virginia Uniform Commercial
Code, Bank shall have no liability or duty, either before or after the occurrence of an Event of
Default hereunder, on account of loss or damage to, or to collect or enforce any of its rights
against, the Collateral, or to preserve any rights against account debtors or other parties with
prior interests in the Collateral.

     3.02 Covenants and Representations Concerning Collateral. With respect to all of
the Collateral, Borrower covenants, warrants and represents that:

          (a) No financing statement covering any of the
Collateral is on file in any public office or land or financing records except for financing
statements in favor of Bank and financing statements with respect to any Permitted Liens.

          (b) Borrower is the legal and beneficial owner of all of the Collateral, free and clear of all
Liens, except for Permitted Liens.

-8-

 

          (c) The security interest granted Bank hereunder shall constitute a first Lien upon the
Collateral, except for Permitted Liens, and Borrower will not, except in the ordinary course of
business, transfer, discount, sell or assign any interest in the Collateral nor permit any other
Lien to be created or remain thereon except for Permitted Liens.

          (d) Borrower will maintain the Collateral in good order and condition, ordinary wear and tear
excepted, and will use, operate and maintain the Collateral in compliance with all laws,
regulations and ordinances and in compliance with all applicable insurance requirements and
regulations. Borrower will pay promptly all taxes, judgments and charges of any kind levied or
assessed thereon, unless disputed in good faith and, if requested by the Bank, bonded off to the
Bank’s satisfaction. Borrower shall promptly notify Bank in writing of any such dispute, and any
pending or threatened litigation involving the Collateral. Borrower shall promptly pay when due all
transportation, storage, warehousing and other such charges and fees affecting or arising out of or
relating to the Collateral and shall defend the Collateral, at Borrower’s expense, against all
claims and demands of any persons claiming any interest in the Collateral adverse to Borrower or Bank.

          (e) At all reasonable times Bank and its agents and designees may enter Borrower’s premises
and inspect the Collateral and all books and records of Borrower (in whatever form) relating to the
Collateral or to the finances and operations of Borrower’s business.

          (f) Borrower will maintain comprehensive casualty insurance on the Collateral against such risks,
in such amounts, with such loss deductible amounts and with such companies as may be satisfactory
to Bank, and each such policy shall contain a clause or endorsement satisfactory to Bank naming
Bank as loss payee and a clause or endorsement satisfactory to Bank that such policy may not be
cancelled or altered and Bank may not be removed as loss payee without at least thirty (30) days
prior written notice to Bank. In all events, the amounts of such insurance coverages shall conform
to prudent business practices and shall be in such minimum amounts that Borrower will not be deemed
a co-insurer under applicable insurance laws, regulations, policies or practices. Borrower hereby
assigns to Bank and grants to Bank a security interest in any and all proceeds of such policies and
authorizes and empowers Bank to adjust or compromise any loss under such policies and to collect
and receive all such proceeds. Borrower hereby authorizes and directs each insurance

-9-

 

company to pay all such proceeds directly and solely to Bank and not to Borrower and Bank jointly.
Borrower authorizes and empowers Bank to execute and endorse in Borrower’s name all proofs of loss,
drafts, checks and any other documents or instruments necessary to accomplish such collection, and
any persons making payments to Bank under the terms of this paragraph are hereby relieved
absolutely from any obligation or responsibility to see to the application of any sums so paid.
After deduction from any such proceeds of all costs and expenses (including attorney’s fees)
incurred by Bank in the collection and handling of such proceeds, the net proceeds shall be applied
as follows. If no Event of Default shall have occurred and be continuing, such net proceeds may be
applied, at Borrower’s option, either toward replacing or restoring the Collateral, in a manner and
on terms satisfactory to Bank, or as a credit against such of the Obligations, whether matured or
unmatured, as Bank shall determine in Bank’s sole discretion. In the event that Borrower may and
does elect to replace or restore as aforesaid, then such net proceeds shall be deposited in a
segregated account of Borrower at Bank subject to the sole order of Bank and shall be disbursed
therefrom by Bank in such manner and at such times as Bank deems appropriate to complete such
replacement or restoration; provided, however, that if an Event of Default shall occur at any time
before or after replacement or restoration has commenced, then thereupon Bank shall have the option
to apply all remaining net proceeds either toward replacing or restoring the Collateral, in a
manner and on terms satisfactory to Bank, or as a credit against such of the Obligations, whether
matured or unmatured, as Bank shall determine in Bank’s sole discretion. If an Event of Default
shall have occurred prior to such deposit of the net proceeds, then Bank may, in its sole
discretion, apply such net proceeds either toward replacing or restoring the Collateral, in a
manner and on terms satisfactory to Bank, or as a credit against such of the Obligations, whether
matured or unmatured, as Bank shall determine in Bank’s sole discretion.

          (g) All information, schedules, certificates, records and data furnished to the Bank are true
and correct in all material respects and complete insofar as completeness may be necessary to give
the Bank accurate knowledge of the subject matter.

          (h) All books and records of Borrower pertaining to the Collateral are located at 85 South
Bragg Street, Suite 600, Alexandria, Virginia 22312, and Borrower will not change the location of
such books and records without the prior written consent of Bank.

-10-

 

          (i) Borrower shall do, make, execute and deliver all such additional and further acts, things,
deeds, assurances, instruments and documents as Bank may request to vest in and assure to Bank its
rights hereunder or in any of the Collateral, including, without limitation, placing legends on
Collateral or on books and records pertaining to Collateral stating that Bank has a security
interest therein.

          (j) Borrower shall cooperate with Bank to obtain and keep in effect one or more control
agreements in deposit account, electronic chattel paper, investment property and letter of credit
rights Collateral.

          (k) Borrower authorizes Bank to file financing statements covering the Collateral and all
personal property of Borrower and containing such legends as Bank shall deem necessary or desirable
to protect Bank’s interest in the Collateral. Borrower agrees to pay all taxes, fees and costs
(including attorneys’ fees) paid or incurred by Bank in connection with the preparation, filing or
recordation thereof.

          (l) Whenever required by Bank, Borrower shall promptly deliver to Bank, with all endorsements
and/or assignments required by Bank, all instruments, chattel paper, guaranties and the like
received by Borrower constituting, evidencing or relating to any of the Collateral or proceeds of
any of the Collateral.

          (m) Borrower shall not file any amendments, correction statements or termination statements
concerning the Collateral without the prior written consent of Bank.

          (n) If any Collateral arises out of a contract with the United States Government or
any department, agency or instrumentality thereof, Borrower shall immediately notify Bank
thereof and shall execute and deliver to Bank specific assignments of those contracts and the
related United States Government accounts of Borrower and shall do such other things as may be
satisfactory to Bank in order that all sums due and to become due to Borrower under such contract
shall be duly assigned to Bank in accordance with the Federal Assignment of Claims Act (31 United
States Code ‘3727; 41 United States Code’ 15) as in effect on the date hereof and as hereafter
amended and/or any other applicable laws and regulations relating to the assignment of governmental
obligations. Payments on United States Government contracts or United States Government accounts
which have been specifically assigned to Bank by means of a direct assignment, as provided herein,
shall be made directly to Bank, for payment to

-11-

 

the Obligations. The separate assignment of specific United States Government contracts to Bank, as
contemplated herein, shall not be deemed to limit Bank’s security interest to the payments under
those particular United States Government contracts and the related United States Government
accounts, but rather Bank’s security interest shall extend to any and all United States Government
contracts and the related United States Government accounts and proceeds thereof, now or hereafter
owned or acquired by Borrower. During the term of this Agreement, Borrower agrees and covenants not
to make any assignment of any of the United States Government contracts to any party other than
Bank without Banks prior written consent.

4. REPRESENTATIONS AND WARRANTIES.

     To induce Bank to enter into this Agreement, Borrower represents and warrants to
Bank that as of the Closing:

     4.01 State of Organization, Legal Name and Good Standing. Borrower’s state of
organization and exact legal name are set forth in the first paragraph of this Agreement. Borrower
is an entity, duly organized, legally existing and in good standing under the laws of the
jurisdiction of its organization, has the power to own its property and to carry on its business
and is duly qualified to do business and is in good standing in each jurisdiction in which the
character of the properties owned by it therein or in which the transaction of its business makes
such qualification necessary.

     4.02 Authority. Borrower has full power and authority to enter into this Agreement, to
make the borrowing hereunder, to execute and deliver all documents and instruments required
hereunder and to incur and perform the Obligations provided for herein and in the Note, all of
which have been duly authorized by all necessary and proper corporate and/or other action, and no
consent or approval of any person, including, without limitation, equity owners of Borrower and any
public authority or regulatory body, which has not been obtained, is required as a condition to the
validity or enforceability hereof or thereof.

     4.03 Binding Agreements. This Agreement has been duly and properly executed by
Borrower, constitutes the valid and legally binding obligation of Borrower and is fully enforceable
against Borrower in accordance with its terms.

     4.04 No Conflicting Agreements. The execution and performance by Borrower of this
Agreement, the borrowing hereunder, and Borrower’s execution and delivery of and

-12-

 

performance under the Note will not (a) violate (i) any provision of law, any order, rule or
regulation of any court or other agency of government, (ii) any award of any arbitrator, (iii) the
organizational documents of Borrower, or (iv) any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which Borrower is a party or by which it or any of its property is
bound, or (b) be in conflict with, result in a breach of or constitute (with due notice and/or
lapse of time) a default under, any such award, indenture, contract, agreement, mortgage, deed of
trust or other instrument, or result in the creation or imposition of any Lien upon any of the
property or assets of Borrower.

     4.05 Litigation. There are no undisclosed judgments, claims, actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or
its properties, at law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, which may result in
any material adverse change in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of Borrower, and Borrower is not, to its knowledge, in default
with respect to any judgment, order, writ, injunction, decree, rule or regulation of any court or
federal, state, municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would have a material adverse effect on Borrower.

     4.06 Financial Condition. The financial statements of Borrower heretofore delivered to
Bank are true and complete, fairly present the financial condition of Borrower as at such dates and
the results of its operations for the period then ended and were prepared in accordance with GAAP
applied on a consistent basis for prior periods. There is no Indebtedness of Borrower as of the
date of such statements which is not reflected therein, and no material adverse change in
Borrower’s financial condition has occurred since the date of such statements.

     4.07 Taxes. Except as otherwise disclosed to the Bank, Borrower has paid or caused to
be paid all federal, state and local taxes to the extent that such taxes have become due. Borrower
has filed or caused to be filed all federal, state and local tax returns which are required to be
filed by Borrower.

     4.08 Title to Properties. Borrower has good and marketable title to all of its properties
and assets (including the Collateral) and all of the properties and assets of Borrower are

-13-

 

free and clear of Liens, except for Permitted Liens, and has made no assignments thereof except to
Bank.

     4.09 Subsidiaries. Borrower has no Subsidiaries other than Subsidiaries previously
disclosed to the Bank.

     4.10 Licenses and Permits. Borrower has duly obtained and now holds all licenses,
permits, certifications, approvals and the like required by federal, state and local laws of the
jurisdiction in which Borrower conducts its business and each remains valid and in full force and
effect and Borrower has paid all fees, taxes, assessments and other charges necessary to maintain
same.

     4.11 Certain Indebtedness. There is no Indebtedness of Borrower owing to any employee,
officer, stockholder or director of Borrower other than accrued salaries, commissions and the like
and any Indebtedness subordinated to the Obligations pursuant hereto.

     4.12 Broker’s or Finder’s Commissions. No broker’s or finder’s fee or commission is or
will be payable in connection with the issuance of the Note or otherwise in connection with this
Agreement or the transactions contemplated hereby, and Borrower agrees to save harmless and
indemnify Bank from and against any claim, demand, action, suit, proceeding or liability for any
such fee or commission.

     4.13 Outstanding Indebtedness. Borrower has no outstanding Indebtedness except as
permitted by Subsection 7.01 hereof and there exists no default under the provisions of any
instrument evidencing such Indebtedness or of any agreement relating thereto.

     4.14 No Adverse Change. There has been no material adverse change in the business,
properties or condition (financial or otherwise) of the Borrower since the date of the latest
financial statements referred to in Section 6.01, below.

     4.15 Use of Loan Proceeds. The proceeds of the Loan shall be used solely for carrying
on a business or commercial enterprise.

     4.16 No Default. No Event of Default (hereinafter defined), and no event which, with notice
or passage of time or both would constitute an Event of Default, has occurred hereunder.

-14-

 

5. CONDITIONS OF LENDING.

     Bank shall have no obligation to make any Advance of the proceeds of the Loan unless each
of the following conditions precedent shall be satisfied as of the time of such Advance:

     5.01 Representation and Warranties. Bank shall be fully satisfied that all covenants,
representations and warranties set forth in this Agreement are true and correct on and as of such
time with the same effect as though such covenants, representations and warranties had been made on
and as of such time.

     5.02 Event of Default. No Event of Default or event which, with notice or passage of
time or both, would constitute an Event of Default shall have occurred hereunder.

     5.03 Documents. There shall have been delivered to Bank, fully completed and duly
executed (when applicable), the following documents, the terms of which are hereby specifically
incorporated herein by reference as though fully set forth:

	 	(a)	 	The Note.
	 
	 	(b)	 	This Agreement.
	 
	 	(c)	 	The Financing Statement(s).
	 
	 	(d)	 	The Landlord Waiver(s).
	 
	 	(e)	 	The Collateral Assignment.
	 
	 	(f)	 	Evidence fully satisfactory to Bank and Bank’s counsel that all loss payee
clauses or endorsements in favor of Bank required pursuant to the Loan Documents
are in effect, together with copies of all insurance policies and endorsements.

     5.04 Borrowing Base Certificate; Advance Rate; Monthly Reporting. At the time of each
Advance of the Revolving Loan, and on a monthly basis by the 15th of each month, Borrower shall
submit to the Bank a completed Loan Base Report. On a monthly basis, by the 15th of each month,
Borrower shall also submit to the Bank (i) an aged analysis of all outstanding accounts receivable
and payable, and (ii) an Inventory report, in form and substance satisfactory to the Bank. Advances
hereunder shall not be permitted to exceed the lesser of the Revolving Loan Committed

-15-

 

Amount or the Borrowing Base as calculated in connection with such completed Loan Base  Report.

     5.05 On-Site Reviews; Fees. Borrower shall pay to the Bank the sum of $250.00 per
month as a fee for the use of Bank’s Asset-Based Lending Service, as well as any other fees set
forth in set forth in SCHEDULE “DD” attached hereto. Borrower shall pay to Bank as reimbursement
for expense(s) incurred in the proper monitoring and management of the Accounts and Inventory by
the Bank any unusual expense(s) such as, but not limited to, travel expense(s), specialized
equipment needed to count and/or value goods pledged as collateral to Bank, the use of outside
firms to perform On-Site Asset-Based Lending Collateral Reviews/Examinations as deemed necessary by
Bank to properly manage/monitor collateral, with said reimbursement being represented by receipts
and/or listing of expense(s) submitted to the Borrower by Bank along with the Bank’s invoice for
payment/reimbursement.

6. AFFIRMATIVE COVENANTS.

     Borrower covenants and agrees with Bank that, until all of the Obligations have been paid in
full, Borrower and its Subsidiaries, if any, will:

     6.01 Financial Reporting Requirements.

          Furnish to Bank:

          (a) As soon as available, but in no event more than thirty (30) days after the end of each
quarterly accounting period of Borrower, a statement of consolidating and consolidated income and
retained earnings and changes in consolidated financial position of Borrower for such period
and for the period from the beginning of the current year of Borrower to the end of such period,
and a consolidating and consolidated balance sheet of Borrower and its Subsidiaries, if any, as at
the end of such period, setting forth in each case in comparative form figures for the
corresponding periods in the preceding fiscal year of Borrower, all in form and detail satisfactory
to Bank, which fairly represents the financial condition of the Borrower, certified by the
principal financial officer of Borrower and accompanied by a certificate of that officer stating
whether any event has occurred which constitutes an Event of Default or which could constitute an
Event of Default with the giving of notice and/or the lapse of time and, if so, stating the facts
with respect thereto.

-16-

 

          (b) As soon as available and in any event within one hundred twenty (120) days after the end
of each fiscal year of Borrower, a statement of consolidating and consolidated income and retained
earnings and changes in consolidated financial position of Borrower and its Subsidiaries, if any,
for such year, and a consolidating and consolidated balance sheet of Borrower and its Subsidiaries,
if any, as at the end of such year, setting forth in each case in comparative form corresponding
figures for the preceding fiscal year of Borrower, all in form and detail satisfactory to Bank,
audited in accordance with generally accepted accounting principles consistently applied by
independent certified public accountants satisfactory to Bank and accompanied by a Certificate of
the Chief Financial Officer of Borrower stating whether any event has occurred which constitutes an
Event of Default or which could constitute an Event of Default with the giving of notice and/or the
lapse of time and, if so, stating the facts with respect thereto; and

          (c) On a bi-monthly basis, the Borrower shall deliver to the Bank evidence satisfactory to the
bank that the payments owed to Merchants Terminal Corporation are current; and

          (d) Such other information, tax returns, reports or statements concerning the operations,
business affairs and/or financial condition of Borrower and its Subsidiaries, if any, as Bank may
reasonably request from time to time.

     6.02 Taxes. Pay and discharge all taxes, assessments and governmental charges upon
Borrower, its income and properties prior to the date on which penalties are attached thereto.

     6.03 Continuation of Business and Compliance With Laws. Continue its and its
Subsidiaries’, if any, business operations as now being conducted and comply with all applicable
federal, state and local laws, rules, ordinances, regulations and orders.

     6.04 Litigation. Promptly notify Bank in writing of any action, suit or proceeding at
law or in equity by or before any court, governmental agency or instrumentality which could result
in any material change in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of Borrower and its Subsidiaries, if any.

     6.05 Extraordinary Loss. Promptly notify Bank in writing of any event causing
extraordinary loss or depreciation of the value of any of Borrower’s or its Subsidiaries’, if any,
assets and the facts with respect thereto.

-17-

 

     6.06 Books and Records/Depository Accounts. Keep and maintain proper and current books
and records which fairly represent the financial condition of the Borrower and permit access by
Bank to, reproduction by Bank of and copying (all at the Borrowers expense) by Bank from, such
books and records during normal business hours. Borrower will maintain its primary deposit
relationship with Bank until the Obligations are repaid in full.

     6.07 Maintenance of Properties. Maintain all properties and improvements necessary to
the conduct of Borrower’s or its Subsidiaries’, if any, business in good working order and
condition, ordinary wear and tear excepted, and cause replacements and repairs to be made when
necessary for the proper conduct of its business.

     6.08 Patents, Franchises, etc. Maintain, preserve and protect all licenses, patents,
franchises, trademarks and trade names of Borrower and its Subsidiaries, if any, or licenses by
Borrower or any Subsidiary, which are necessary to the conduct of the business of Borrower or its
Subsidiaries, if any, as now conducted, free of any conflict with the rights of any other person.

     6.09 Insurance. Maintain with insurers and in amounts satisfactory to Bank such
insurance against such risks and with such loss deductible amounts as may be reasonably required by
or reasonably acceptable to Bank.

     6.10 Evidence of Insurance. Deliver to Bank from time to time as requested, and
periodically if Bank shall so require, evidence reasonably satisfactory to Bank that all insurance
and endorsements required by the Bank pursuant to section 6.09 hereof, are in effect.

     6.11 Financial Information. Deliver to Bank, promptly upon request, and periodically
if Bank shall so require, any reasonable information, statements or reports concerning Borrower’s
and its Subsidiaries’, if any, business, financial affairs or any other matter or matters as may be
requested by Bank, including, without limitation, copies of federal and state tax returns of
Borrower and its Subsidiaries, if any.

     6.12 Further Assurances. The Borrower shall promptly, upon request, execute,
acknowledge and deliver any financing statement, endorsement, renewal, affidavit, deed, assignment,
continuation statement, security agreement, certificate or other document as the Bank may
reasonably require in order to perfect,

-18-

 

preserve, maintain, protect, continue or extend the lien or security interest of the Bank under
this Agreement and its priority. The Borrower shall pay to the Bank on demand all taxes, costs and
expenses (including, but not limited to, reasonable attorney’s fees) incurred by the Bank in
connection with the preparation, execution, recording and filing of any such document or instrument
mentioned aforesaid.

     6.13 Financial Covenants.

     (a) Borrower will maintain a ratio of total Indebtedness to Tangible Net Worth not to exceed 2
to 1 as of June 30, 2007, and as of the end of each fiscal year thereafter. For purposes of this
Section 6.13, all Indebtedness which is fully and expressly subordinated in writing to Bank and
Bank’s right to payment in full of all of the Obligations and Other Obligations, on terms and
conditions acceptable to Bank (“Subordinated Debt”), shall be deemed excluded from the term
“Indebtedness.”

     (b) Borrower will maintain Tangible Net Worth plus Subordinated Debt of not less than
$9,000,000.00, to be tested by the Bank on a quarterly basis.

     6.14 Loan Base Report. The Borrower shall submit completed Loan Base Reports to Bank
each month (together with an aged analysis of all outstanding accounts receivable and payable, and
an inventory report) by the fifteenth (15th) day of each calendar month, which submissions shall be
in addition to, and not in lieu of, the Loan Base Reports submitted with each Advance.

     6.15 Borrowing Base. In the event that the principal amount of the Revolving Loan ever
exceeds the Borrowing Base, as determined by Bank, Borrower will immediately curtail the principal
amount of the Revolving Loan on Bank’s demand so that it does not exceed the Borrowing Base.

7.  NEGATIVE COVENANTS.

     Borrower covenants and agrees with Bank that, until all Obligations have been paid in full,
Borrower will not, directly or indirectly, without Bank’s prior written consent:

     7.01 Indebtedness. Create, incur, assume or permit to exist any Indebtedness except
(a) Indebtedness to Bank, (b) current trade Indebtedness, and trade Indebtedness incurred in the
normal course of business, (c) any Indebtedness specifically permitted hereunder, and (d)
Indebtedness which shall be approved in advance by Bank in writing, in Bank’s sole discretion, and if

-19-

 

required by Bank, subordinated to all Obligations by a written agreement
satisfactory in form and substance to Bank and Bank’s counsel.

     7.02 Liens. Create, incur, assume or permit to exist, directly
or indirectly, any Lien upon any of Borrower’s properties or assets, now
owned or hereafter acquired by Borrower, other than Permitted Liens.

     7.03 Merger, Sale of Assets, Etc. Enter into or be a party to any
merger or consolidation; sell, assign, transfer, convey or lease all or any part of its property or any interest therein
except in the ordinary course of Borrower’s business as now being conducted;
purchase or otherwise acquire all or substantially all of the assets of any other
person, or any shares of stock of, or similar interest in, any other person.

     7.04 Guarantees. Guarantee or otherwise in any way become or be
responsible for Obligations or Indebtedness of any other person, whether by
agreement to purchase the Indebtedness of any other person, or by agreement for the
furnishing of funds to any other person for the purchase of goods, supplies or
services, or by way of stock purchase, capital contribution, advance or loan for
the purpose of paying or discharging Indebtedness of any other person, or
otherwise, except that Borrower may endorse negotiable instruments for collection
in the ordinary course of business.

     7.05 Fiscal Year. Change Borrower’s fiscal year.

     7.06 Loans. Make or permit to exist any loan to any person.

     7.07 Subsidiaries. Form or acquire any Subsidiaries, without the prior written consent of the Bank.

     7.08 Change of Name. Change the name of Borrower or any Subsidiary of Borrower.

     7.09 Change of Management. Change the person(s) controlling the management and/or day to day activities of the Borrower.

     7.10 Trade Names. Permit any Accounts to be in the any trade name other than Borrower’s true corporate name.

     7.11 Other Agreements. Borrower will not enter into any agreement or undertaking containing any provision which would be violated or breached by performance of its obligations hereunder.

-20-

 

     7.12 Borrowing Base. At no time shall the outstanding principal balance of the
Revolving Loan exceed the Borrowing Base, as determined by Bank.

8. EVENTS OF DEFAULT.

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

          (a) Any representation of warranty made herein in any of the Loan Documents or in any
statement, report, certificate, opinion, financial statement or other document furnished or to be
furnished in connection with this Agreement or the Loan Documents shall be false or misleading in
any material respect.

          (b) Failure of Borrower to pay any of the Obligations, including, without limitation, any sum
due Bank under this Agreement or any of the Loan Documents, when and as the same shall become due,
whether at the due date thereof, by demand, by acceleration or otherwise, and such default shall
continue for a period of ten (10) business days after written notice thereof from the Bank to the
Borrower.

          (c) Default by Borrower beyond any applicable grace period, with respect to any Indebtedness
of Borrower to any person or with respect to any Lien or document securing any Indebtedness of
Borrower.

          (d) Failure of Borrower or any other person to observe or perform any warranty, covenant,
condition or agreement to be observed or performed by Borrower or such other person under this
Agreement or any of the Loan Documents, and such default shall continue for a period of thirty (30)
days after written notice thereof from the Bank to the Borrower.

          (e) If Borrower, any Subsidiary or any guarantor of any of the Obligations shall (i) admit in
writing its insolvency or its inability to pay generally its debts as they mature, (ii) make a
general assignment for the benefit of creditors, (iii) commence a case under or otherwise seek to
take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or
liquidation law, statute or proceeding, or (iv) by any act indicate its consent to, approval of or
acquiescence in any such proceeding or the appointment of any receiver of or trustee for Borrower,
any Subsidiary or any such guarantor or a substantial part of its property, or suffer any such
receivership, trusteeship or proceeding to continue undismissed for a period of sixty (60) days.

          
-21-

 

          (f) If Borrower, any Subsidiary or any guarantor of any of the Obligations becomes a debtor in
any case under any chapter of the United States Bankruptcy Code, and if the petition in Bankruptcy
shall not be discharged or dismissed within sixty (60) days after the date on which such petition
was filed.

          (g) Entry of any order, judgment or decree for the dissolution of Borrower, any Subsidiary or
any guarantor of any of the Obligations that is not a natural person.

          (h) Entry of any judgment against Borrower, any Subsidiary or any guarantor of any of the
Obligations, which judgment shall not have been discharged or execution thereof stayed within
thirty (30) days after entry thereof or discharged within thirty (30) days after the expiration of
any such stay, if such judgment is not fully covered by applicable insurance (which shall not
include any bonding or other arrangement with which Borrower, a Subsidiary or such guarantor may be
liable for indemnification to any extent).

          (i) If Borrower, any Subsidiary or any guarantor of any of the Obligations shall be enjoined
or restrained in any manner from conducting its business in whole or in part and Bank shall
determine, in its reasonable discretion, that the same materially impairs any of the Collateral or
the prospect for full and punctual payment of all of the Obligations.

          (j) If any assets of Borrower, any Subsidiary or any guarantor of any of the Obligations shall
be attached, levied upon, seized or repossessed or come into the possession of a trustee, receiver
or other custodian which is not discharged within thirty (30) days.

          (k) If Borrower, any Subsidiary or any guarantor of any of the Obligations shall be or become
insolvent or unable to pay its debts generally as they mature.

          (l) If there is a change in ownership of twenty-five percent (25%) or more of the common stock
of Borrower.

9. RIGHTS AND REMEDIES.

     9.01 Rights and Remedies of Bank. Upon the occurrence of an Event of Default, Bank
may, without notice or demand, exercise in any jurisdiction in which enforcement hereof is sought,
the following rights and remedies, in addition to the rights and remedies of a secured party under
the Uniform Commercial Code and

-22-

 

all other rights and remedies available to Bank under applicable law, all such rights and remedies
being cumulative and enforceable alternatively, successively or concurrently:

          (a) Declare the Note, all interest accrued and unpaid thereon, and all other Obligations to
be immediately due and payable and the same shall thereupon become immediately due and payable
without presentment, demand or protest, all of which are hereby expressly waived.

          (b) Institute any proceeding or proceedings to enforce the Obligations and any Lien of Bank.

          (c) Take possession of the Collateral, and for that purpose, so far as Borrower may give
authority therefor, enter upon the premises on which the Collateral or any part thereof may be
situated and remove the same therefrom without any liability for suit, action or other proceeding
by Borrower, BORROWER and its SUBSIDIARIES, if any, HEREBY WAIVING ANY AND ALL RIGHTS TO PRIOR
NOTICE AND TO JUDICIAL HEARING WITH RESPECT TO REPOSSESSION OF COLLATERAL, and require Borrower, at
Borrower’s expense, to assemble and deliver the Collateral to such place or places as Bank may
designate.

          (d) Operate, manage and control the Collateral, or permit the Collateral or any portion
thereof to remain idle, or store the same, and collect all rents and revenues therefrom and sell or
otherwise dispose of any or all of the Collateral (including, without limitation, sell, transfer or
reassign any license) upon such terms and under such conditions as Bank, in its reasonable
discretion, may determine, all without any notice or demand, and purchase or acquire any of the
Collateral at any such sale or other disposition, all to the extent permitted by applicable law.
Borrower shall have all risk of loss of the Collateral. Bank shall have no liability or duty,
either before or after the occurrence of an Event of Default, on account of loss of or damage to,
to collect or enforce any of its rights against, the Collateral, to collect any income accruing on
the Collateral, or to preserve rights against account Borrowers or other parties with prior
interests in the Collateral. If Bank actually receives any notices requiring action with respect to
Collateral in Bank’s possession, Bank shall take reasonable steps to forward such notices to
Borrower. Borrower is responsible for responding to notices concerning the Collateral, voting the
Collateral, and exercising rights and options, calls and conversions of the Collateral. Bank’s sole
responsibility is to take such action as is reasonably requested by Borrower in writing, however,
Bank is not responsible to take any action

-23-

 

that, in Bank’s sole judgment, would affect the value of the Collateral as security for the
Obligations adversely. While Bank is not required to take certain actions, if action is needed, in
Bank’s sole discretion, to preserve and maintain the Collateral, Borrower authorizes Bank to take
such actions, but Bank is not obligated to do so.

          (e) Enforce Borrower’s rights against account debtors and other parties obligated on
Collateral, including, but not limited to, the right to: (a) notify and/or require Borrower to
notify any or all account debtors and other parties obligated on Collateral to make payments
directly to Bank or in care of a post office lock box under the sole control of Bank established at
Borrower’s expense subject to Bank’s customary arrangements and charges therefor, and to take any
or all action with respect to Collateral as Bank shall determine in its sole discretion, including,
without limitation, the right to demand, collect, sue for and receive any money or property at any
time due, payable or receivable on account thereof, compromise and settle with any person liable
thereon, and extend the time of payment or otherwise change the terms thereof, without incurring
liability or responsibility to Borrower; (b) require Borrower to segregate and hold in trust for
Bank and, on the day of Borrower’s receipt thereof, transmit to Bank in the exact form received by
Borrower (except for such assignments and endorsements as may be required by Bank), all cash,
checks, drafts, money orders and other items of payment constituting Collateral or proceeds of
Collateral; and/or (c) establish and maintain at Bank a “Repayment Account,” which shall be under
the exclusive control of and subject to the sole order of Bank and which shall be subject to the
imposition of such customary charges as are imposed by Bank from time to time upon such accounts,
for the deposit of cash, checks, drafts, money orders and other items of payments constituting
Collateral or proceeds of Collateral from which Bank may, in its sole discretion, at any time and
from time to time, withdraw all or any part. Bank’s collection and enforcement of Collateral
against account debtors and other persons obligated thereon shall be deemed to be commercially
reasonable if Bank exercises the care and follows the procedures that Bank generally applies to the
collection of obligations owed to Bank. All cash and non-cash proceeds of the Collateral may be
applied by Bank upon Bank’s actual receipt of cash proceeds against such of the Obligations,
matured or unmatured, as Bank shall determine in Bank’s sole discretion.

     9.02 Power of Attorney. Effective upon the occurrence of an Event of Default, Borrower
and its Subsidiaries, if any, hereby designate and appoint Bank and its designees as
attorney-in-fact

-24-

 

of Borrower and its Subsidiaries, if any, irrevocably and with power of substitution, with
authority to receive, open and dispose of all mail addressed to Borrower, to notify the postal
authorities to change the address for delivery of mail addressed to Borrower and its Subsidiaries,
if any, to such other address as Bank designates; to endorse Borrower’s and its Subsidiaries, if
any, name on any notes, acceptances, checks, drafts, money orders, instruments or other evidences
of payment or proceeds of the Collateral that may come into Bank’s possession; to sign Borrower’s
and its Subsidiaries, if any, name on any invoices, documents, drafts against and notices to
account debtors or other obligors of Borrower, assignments and requests for verification of
accounts; to execute proofs of claim and loss; to execute any endorsements, assignments, or other
instruments of conveyance or transfer; to adjust and compromise any claims under insurance
policies; to execute releases; and to perform all other acts necessary and advisable, in Bank’s
sole discretion, to carry out and enforce this Agreement and the Loan Documents. All acts of said
attorney or designee are hereby ratified and approved by Borrower and its Subsidiaries, if any, and
said attorney or designee shall not be liable for any acts of commission or omission nor for any
error of judgment or mistake of fact or law, except for gross negligence, willful misconduct or bad
faith. This Power of Attorney is coupled with an interest and is irrevocable so long as any of the
Obligations remain unpaid or unperformed or there exists any commitment of Bank to Borrower which
could give rise to any Obligations.

     9.03 Cumulative Nature of Remedies. Each right, power and remedy of Bank shall be
cumulative and concurrent, and recourse to one or more rights or remedies shall not constitute a
waiver of any other right, power or remedy. It is mutually agreed that commercial reasonableness
and good faith require Bank to give Borrower no more than five (5) days prior written notice of the
time and place of any public disposition of the Collateral or of the time after which any private
disposition or any other intended disposition is to be made.

     9.04 Liquidation Costs. The Borrower shall reimburse and pay to the Bank upon demand
all costs and expenses (the “Liquidation Costs”), including, without limitation, attorneys’ fees
and expenses, advanced, incurred by, or on behalf of the Bank in collecting and enforcing the its
rights and remedies hereunder. All Liquidation Costs shall bear interest payable by the Borrower to
the Bank upon demand from the date advanced or incurred until paid in full at a per annum rate of
interest equal at all times to the then highest rate of interest charged on the principal of the
Note, plus two percent (2%) per annum.

-25-

 

     9.05 Expense Payments. If the Borrower shall fail to make any payment or otherwise
fail to perform, observe, or comply with any of the conditions, covenants, terms, stipulations, or
agreements contained herein, or in any of the documents evidencing the Obligations, the Bank
without notice to or demand upon the Borrower and without waiving or releasing any obligation or
Event of Default may (but shall be under no obligation to) at any time thereafter make such payment
or perform such act for the account and at the expense of the Borrower, and may enter upon any
premises of the Borrower for that purpose and take all such action thereon as the Bank may consider
necessary or appropriate for such purpose. All sums so paid or advanced by the Bank (the “Expense
Payments”), together with interest thereon from the date paid, advanced, or incurred until repaid
in full at a per annum rate of interest equal at all times to the then highest rate of interest
charged on the Note plus two percent (2%) per annum, shall be paid by the Borrower to the Bank upon
demand by the Bank.

10. MISCELLANEOUS.

     10.01 Performance for Borrower. Borrower agrees and hereby authorizes that Bank may,
in Bank’s sole discretion, but Bank shall not be obligated to, advance funds on behalf of Borrower
without prior notice to Borrower, in order to insure Borrower’s compliance with any covenant,
warranty, representation or agreement of Borrower made in or pursuant to this Agreement or any of
the Loan Documents, to cover overdrafts in any checking or other accounts of Borrower at Bank or to
preserve or protect any right or interest of Bank in the Collateral or under or pursuant to this
Agreement or any of the Loan Documents, including without limitation, the payment of any insurance
premiums or taxes and the satisfaction or discharge of any judgment or any Lien upon the Collateral
or other property or assets of Borrower; provided, however, that the making of any such advance by
Bank shall not constitute a waiver by Bank of any Event of Default with respect to which such
advance is made nor relieve Borrower of any such Event of Default. Borrower shall pay to Bank upon
demand all such advances made by Bank with interest thereon at the rate and determined in the
manner provided in the Note. All such advances shall be deemed to be included in the Obligations
and secured by the security interest granted Bank hereunder.

     10.02 Expenses. Whether or not any of the transactions contemplated hereby shall be
consummated, Borrower agrees to pay to Bank at Closing or 30 days after the execution and delivery
hereof, whichever is earlier, all expenses of Bank (including the

-26-

 

reasonable fees and reasonable expenses of its counsel) in connection with the preparation of this
Agreement and all documents and instruments referred to herein and all expenses of Bank in
connection with the filing or recordation of all financing statements and instruments as may be
required by Bank at the time of, or subsequent to, the execution of this Agreement, including,
without limitation, all documentary stamps, recordation of any document or instrument in connection
herewith. Borrower agrees to save harmless and indemnify Bank from and against any liability resulting
from the failure to pay any required documentary stamps, recordation and transfer taxes, recording
costs, or any other expenses incurred by Bank in connection with this Agreement. The provisions of
this Subsection 10.02 shall survive the execution and delivery of this Agreement and the payment of
all other Obligations.

     10.03 Applications of Collateral. Except as may be otherwise specifically provided in
this Agreement, all Collateral and proceeds of Collateral coming into Bank’s possession may be
applied by Bank to any of the Obligations, whether matured or unmatured, as Bank shall determine in
its sole discretion.

     10.04 Indemnification by Borrower. The Borrower hereby agrees to indemnify and hold
harmless the Bank from and against all liabilities, claims, demands, and costs, including without
limitation, reasonable attorney’s fees, arising out of or in connection with the Collateral, except
arising from the Banks gross negligence, willful misconduct or bad faith.

     10.05 Receipt Sufficient Discharge to Purchaser. Upon any sale or other disposition of
the Collateral or any part thereof, the receipt of the Bank or any other person making the sale or
disposition shall be a sufficient discharge to the purchaser for the purchase money, and such
purchaser shall not be obligated to see to the application thereof.

     10.06 Waivers by Borrower. Borrower hereby waives, to the extent the same may be
waived under applicable law:

          (a) All claims, causes of action and rights of Borrower against Bank on account of actions taken or
not taken by Bank in the exercise of Bank’s rights or remedies hereunder or under the Loan
Documents, except arising from the Banks gross negligence, willful misconduct, bad faith, or in
violation of any of the provisions hereof, or in the Loan Documents.

          (b) All claims of Borrower for failure of Bank to comply with any requirement of
applicable law relating to

-27-

 

enforcement of Bank’s rights or remedies hereunder or under the Loan Documents;

          (c) All rights of redemption of Borrower with respect to the Collateral;

          (d) In the event Bank seeks to repossess any or all of the Collateral by judicial proceedings,
any bond(s) or demand(s) for possession which otherwise may be necessary or required;

          (e) Presentment, demand for payment, protest and all exemptions;

          (f) Trial by jury in any action or proceeding of any kind or nature in connection with any of
Obligations, this Agreement or any of the Loan Documents;

          (g) Settlement, compromise or release of the
Obligations of any person primarily or secondarily liable upon any of the Obligations;

          (h) Substitution, impairment, exchange or release of any collateral security for any of the
Obligations.

     Borrower agrees that Bank may exercise any or all of its rights and/or remedies hereunder
and under the Loan Documents without resorting to and without regard to any collateral
security or sources of liability with respect to any of the Obligations.

     10.07 Waivers by Bank. Neither any failure nor any delay on the part of Bank in
exercising any right, power or remedy hereunder or under any of the Loan Documents shall operate
as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other rights, power or remedy.

     10.08 Bank’s Records. Every statement of account or reconciliation rendered by Bank to
Borrower with respect to any of the Obligations shall be presumed conclusively to be correct and
shall constitute an account stated between Bank and Borrower unless, within thirty (30) days after
any such statement or reconciliation shall have been mailed, postage prepaid, to Borrower, Bank
shall receive written notice of specific objection thereto.

-28-

 

     10.09 Modifications. No modification or waiver of any provision of this Agreement, the
Note or any of the Loan Documents, and no consent to any departure by Borrower therefrom, shall in
any event be effective unless the same shall be in writing, and then such waiver or consent shall
be effective only in the specific instance and for the purpose for which given. No notice to or
demand upon Borrower in any case shall entitle Borrower to any other or further notice or demand in
the same, similar or other circumstances.

     10.10 Bank’s Setoff. Bank shall have the right, in addition to all other rights and
remedies available to it, to setoff against any or all of the Obligations any debt owing to
Borrower by Bank, including, without limitation, any funds in any checking or other account now or
hereafter maintained by Borrower at Bank. Borrower hereby confirms Bank’s right to banker’s lien
and setoff, and nothing in this Agreement or any of the Loan Documents shall be deemed a waiver or
prohibition of Bank’s rights of banker’s lien or setoff.

     10.11 Notices. Any notice or other communication in connection with this Agreement, if
by registered or certified mail, shall be deemed to have been given when received by the party to
whom directed, or, if by mail but not registered or certified, when deposited in the mail, postage
prepaid, provided that any such notice or communication shall be addressed to a party hereto as
provided below (or at such other address as such party shall specify in writing to the other
parties hereto):

          (a) If to Borrower, at 85 South Bragg Street, Suite 600, Alexandria, Virginia 22312.

          (b) If to Bank, at 1717 King Street, Alexandria, Virginia 22314.

     10.12 Applicable Law. The performance and construction of this Agreement, the Note and
the Loan Documents shall be governed by the internal laws of the Commonwealth of Virginia.

     10.13 Survival; Successors and Assigns. All covenants, agreements, representations and
warranties made herein and in the Loan Documents shall survive Closing and the execution and
delivery to Bank of the Note, and shall continue in full force and effect until all of the
Obligations have been paid in full. Whenever any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party. All covenants,
agreements, representations and warranties by or on behalf of Borrower which are contained in this
Agreement

-29-

 

and the Loan Documents shall inure to the benefit of the successors and
assigns of Bank. This Agreement may not be assigned by Borrower without the prior
written consent of Bank.

     10.14 Use of Terms. The use of any gender or the neuter herein shall also refer
to the other gender or the neuter and the use of the plural shall also refer to the singular,
and vice versa.

     10.15 Severability. If any term, provision or condition, or any part thereof, of
this Agreement or any of the Loan Documents shall for any reason be bound or held invalid or
unenforceable by any court or governmental agency of competent jurisdiction, such invalidity
or unenforceability shall not affect the remainder of such term, provision or condition nor
any other term, provision or condition, and this Agreement, the Note, and the Loan Documents
shall survive and be construed as if such invalid or unenforceable term, provision or
condition had not been contained therein.

     10.16 Merger and Integration. This Agreement and the attached Exhibits,
if any, contain the entire agreement of the parties hereto with respect to the matters
covered and the transactions contemplated hereby, and no other agreement, statement or
promise made by any party hereto, or by any employee, officer, agent or attorney of any
party hereto, which is not contained herein, shall be valid or binding.

     10.17 Counterparts. This Agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be an original, but all such counterparts shall together constitute the same
instrument.

     10.18 Headings. The headings and subheadings contained in the titling of this
Agreement are intended to be used for convenience only and do not constitute part of this
Agreement.

     10.19 Consent to Jurisdiction; Service of Process. The Borrower hereby agrees and
consents that any action or proceeding arising out of or brought to enforce the provisions of this
Agreement may be brought in any appropriate court in the Commonwealth of Virginia or in any other
court having jurisdiction over the subject matter, all at the sole election of the Bank, and by the
execution of this Agreement the Borrower irrevocably consents to the jurisdiction of each such
court. The Borrower hereby irrevocably appoints Ronald R. Zilkowski as its agent to
accept service of process for it and on its behalf in any

-30-

 

section and to receive any notices required pursuant to or by the terms of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed or caused to be executed this Agreement,
under seal as of the date first above written.

	 	 	 	 	 
	 	BORROWER:

CUISINE SOLUTIONS, INC., a Delaware corporation

 	 
	 	By:  	/s/ Stanislas Vilgrain
 	 [SEAL] 
	 	 	Stanislas Vilgrain, 	 
	 	 	President 	 
	 
	 	 	 
	 	By:  	/s/ Ronald Zilkowski
 	 [SEAL] 
	 	 	Ronald Zilkowski, 	 
	 	 	Treasurer 	 
	 
	 	BANK:

BRANCH BANKING AND TRUST COMPANY

 	 
	 	By:  	/s/ Henry Abott
 	 [SEAL]
	 	 	Name:  	Henry Abott 	 
	 	 	Title:  	AVP 	 

-31-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]