Document:

Exhibit 10.5

 

THIRD LEASE EXTENSION AGREEMENT

 

Building #6

1360 O’Brien Drive

Menlo Park, California 94025

 

THIS THIRD LEASE EXTENSION AGREEMENT (this “Agreement”) is made and
entered into on March 18, 2008 by and between MENLO BUSINESS PARK, LLC, a
California limited liability company (“Lessor”), and DEPOMED, INC., a
California corporation (“Lessee”).

 

RECITALS

 

A.            Lessor and
Lessee entered into a Lease dated February 4, 2000, the Lease Extension
Agreement dated April 30, 2003 and the Second Lease Extension Agreement
dated July 28, 2006 (the “Lease”) of the premises referred to as Building
#6 located at 1360 O’Brien Drive, Menlo Park, California 94025, more
particularly described on Exhibit “A” attached to the Lease and
incorporated by reference herein (the “Premises”).  The Premises contain approximately 20,624
rentable square feet of space.

 

B.            The expiration
date of the Second Extension Term of the Lease is June 30, 2009.
Lessor and Lessee wish to extend the expiration date of the Second Extension
Term of the Lease, subject to the terms and conditions set forth herein.

 

AGREEMENT

 

NOW
THEREFORE, in consideration of the mutual covenants contained herein, the
parties agree as follows:

 

1.             Defined Terms.  Terms defined in the Lease and used in this
Agreement shall have the meaning ascribed to them in the Lease.

 

2.             Extension of
Term.

 

(a)           The term of the Lease is
hereby extended for a period of thirty-one (31) calendar months commencing on July 1,
2009 and ending on January 31, 2012 (the “Third Extension Term”).  The Third Extension Term shall be upon all of
the same terms and conditions of the Lease, except that the Monthly Base Rent
payable by Lessee to Lessor during the Third Extension Term shall be as set
forth in Paragraph 3 hereof.

 

 

(b)           The option to extend
provided for in Paragraph 3 of the Lease shall be for one (1`) period of sixty
(60) calendar months immediately following the expiration of the Third
Extension Term and shall otherwise be upon the same terms and conditions as set
forth in Paragraph 3 of the Lease.

 

3.             Monthly Base
Rent.  Lessee shall pay to Lessor
Monthly Base Rent during the Third Extension Term, in monthly installments in
advance on a triple net basis in lawful money of the United States, as follows:

 

(a)           Under the terms of the Second
Lease Extension Agreement, the next Rental Adjustment Date is scheduled to
occur on May 1, 2008, resulting in a new Monthly Base Rent of
Fifty-Four Thousand Six Hundred Fifty-Three and Sixty Hundredths Dollars
($54,653.60) per month ($2.65/square foot/NNN).

 

(b)           Commencing on May 1, 2009,  (the “Rental Adjustment Date”), and on each
anniversary date of this commencement, the Monthly Base Rent shall be adjusted to reflect any increase in the cost of living.  The adjustment shall be calculated upon the
basis of the United States Department of Labor, Bureau of Labor Statistics
Consumer Price Index, all items, for all Urban Consumers - San
Francisco-Oakland-San Jose (1982-84=100), hereafter referred to as the “Index.”  The Index for said subgroup published most
recently as of the end of the calendar month immediately preceding the month in
which the commencement date of the Third Extension Term occurs shall be
considered the “Base Index.”

 

(b)   The Monthly Base Rent
shall be adjusted as of the Rental Adjustment Date to an amount equal to the
product obtained by multiplying the Monthly Base Rent for the Premises
commencing on May 1, 2009 referred to in Paragraph 3(a) above),
by a fraction, the numerator of which is the Index most recently published as
of the end of the calendar month immediately preceding the Rental Adjustment
Date and the denominator of which is the base Index; provided that in no event
shall the Monthly Base Rent be increased on the Rental Adjustment Date to an
amount less than three percent (3%) per annum or more than six percent (6%) per
annum of the Monthly Base Rent payable immediately before the Rental Adjustment
Date.  The Monthly Base Rent as so
adjusted shall continue through January 31, 2012, the expiration
date of the Third Extension Term.

 

(d)           When the new Monthly Base Rent is determined for the Rental Adjustment
Date, Lessor shall give Lessee written notice of the amount of the new Monthly
Base Rent and how the new Monthly Base Rent figure was computed in accordance
with subparagraphs 3(b) and 3(c) above.  Lessee shall pay to Lessor retroactively any
unpaid increase in Monthly Base Rent due from and after the Rental Adjustment
Date.  If the Index does not exist on the
Rental Adjustment Date in the same 

 

2

 

format as referred to in subparagraph 3(b) above, Lessor shall
substitute in lieu thereof an index reasonably comparable to the Index referred
to above which is acceptable to Lessee and which is then published by the
Bureau of Labor Statistics, or successor or similar governmental agency, or if
no governmental agency then publishes an index, Lessor shall substitute
therefor any index commonly accepted which is published by a reputable private
organization.

 

(e)           Monthly Base Rent for any partial month shall be prorated on the basis of
the number of calendar days in such month.

 

4.             Additional
Rent; Operating Expenses and Taxes.  In addition to the Monthly Base Rent payable
by Lessee pursuant to Paragraph 3 above, Lessee shall pay to Lessor during the
Third Extension Term, as Additional Rent, Operating Expenses and Taxes pursuant
to Paragraph 5 of the Lease.

 

5.             Condition of the Premises.  Lessee is currently in possession of the
Premises and is conducting business thereon pursuant to the Lease.  Lessee agrees to accept the Premises in its “as
is” condition at the commencement of the Second Extension Term, subject to the
performance by Lessor of Lessor’s obligations under Paragraph 14(a) of the
Lease.  Lessee acknowledges that Lessor
has not inspected the Premises as a condition to entering into this Agreement.
Accordingly, Lessee agrees that the execution and delivery of this Agreement by
Lessor shall not constitute the approval by Lessor of any alternations to the
Premises of which Lessor lacks actual knowledge, or the waiver by Lessor of any
provisions of the Lease relating to alternations.

 

6.             Security
Deposit.  Lessor acknowledges that
Lessor has received from Lessee and is currently holding the
sum of One Hundred Forty-five Thousand Four Hundred and Forty Hundredths Dollars ($145,400.40) in cash (the “Security Deposit”), as security for Lessee’s faithful
performance of Lessee’s obligations under the Lease.  Lessor shall continue to hold the Security
Deposit during the remainder of the initial term and during the Third Extension
Term pursuant to Paragraph 7 of the Lease.

 

7.             Real Estate
Brokers.  Lessor
shall pay a leasing commission to Tarlton Properties, Inc., who has acted
as exclusive leasing agent for Lessor in connection with this Agreement,
pursuant to a separate agreement between Lessor and said broker.  Lessor shall also pay leasing commissions to
GVA Kidder Mathews, who have acted as leasing agents for Lessee in connection
with this Agreement, pursuant to an agreement between Lessor and said
brokers.  Each party represents and
warrants to the other party that it has not had any dealings with any real
estate broker, finder, or other person with respect to this Agreement other
than the above named brokers.  Each party
shall hold harmless the other party from all damages, expenses, and liabilities
resulting from any claims that may be asserted against the other party by any
broker, finder, or other person with whom the other party has or purportedly
has dealt, other than the above named brokers.

 

3

 

8.             Notices.  Paragraph 24, Notices, of the Lease is
amended to read as follows:

 

“24.         Notices.  All notices, statements, demands, requests,
or consents given hereunder by either party to the other shall be in writing
and shall be personally delivered or sent by United States mail, registered or
certified, return receipt requested, postage prepaid, and addressed to the
parties as follows:

 

	
  Lessor:

  	
  Menlo Business Park, LLC

  
	
   

  	
  c/o Tarlton Properties, Inc.

  
	
   

  	
  955
  Alma Street

  
	
   

  	
  Palo Alto, California 94301

  
	
   

  	
   

  
	
   

  	
  Attention: John C. Tarlton

  
	
   

  	
  Telephone: (650) 330-3600

  
	
   

  	
   

  
	
  Lessee:

  	
  Depomed, Inc.

  
	
   

  	
  1330 O’Brien Drive

  
	
   

  	
  Menlo Park, California 94025

  
	
   

  	
   

  
	
   

  	
  Attention:

  	
  Carl
  Pelzel

  
	
   

  	
  Telephone:

  	
  650-462-5900

  

 

All such notices or other communications
given hereunder shall be addressed to the parties to such other address as
either party may have furnished to the other as a place for the service of
notice.  Notices shall be deemed given
upon receipt or attempted delivery where delivery is not accepted.”

 

9.             Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

10.           Continuing
Effect.  The parties acknowledge that
the Lease remains in full force and effect as amended hereby, and with the
initial term further extended as provided herein.

 

4

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.

 

	
   

  	
  “Lessor”

  
	
   

  	
  MENLO BUSINESS PARK, LLC

  
	
   

  	
  a California limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J.O. Oltmans, II

  
	
   

  	
   

  	
  J. O. Oltmans, II, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ James R. Swartz

  
	
   

  	
   

  	
  James R. Swartz, Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  “Lessee”

  
	
   

  	
  DEPOMED, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Carl A. Pelzel

  
	
   

  	
   

  	
    Carl Pelzel,
  President and CEO

  

 

5Exhibit 10.6

 

CERTAIN CONFIDENTIAL PORTIONS
OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “***”. A COMPLETE VERSION OF
THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND
EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL
TREATMENT UNDER RULE 24B-2 OF THE EXCHANGE ACT OF 1934.

 

LOAN AND SECURITY AGREEMENT

 

THIS LOAN
AND SECURITY AGREEMENT,
dated as of June 27, 2008 (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”) is among GENERAL ELECTRIC
CAPITAL CORPORATION (“GECC”), in its capacity as agent for
Lenders (as defined below) (together with its successors and assigns in such
capacity, “Agent”), OXFORD FINANCE CORPORATION (“Oxford”),
the other financial institutions who are or hereafter become parties to this
Agreement as lenders (together with GECC and Oxford, collectively the “Lenders”, and each individually, a
“Lender”), DEPOMED, INC.,
a California corporation (“Borrower”),
and the other entities or persons, if any, who are or hereafter become parties
to this Agreement as guarantors (each a “Guarantor” and collectively,
the “Guarantors”, and together with Borrower, each a “Loan Party”
and collectively, “Loan Parties”).

 

RECITALS

 

Borrower wishes to borrow funds from time to time from Lenders, and
Lenders desire to make loans, advances and other extensions of credit,
severally and not jointly, to Borrower from time to time pursuant to the terms
and conditions of this Agreement.

 

AGREEMENT

 

Loan Parties, Agent and Lenders agree as follows:

 

1.              DEFINITIONS.

 

As used in this Agreement,
all capitalized terms shall have the definitions as provided herein.  Any accounting term used but not defined
herein shall be construed in accordance with generally accepted accounting principles
in the United States of America, as in effect from time to time (“GAAP”) and all calculations shall be
made in accordance with GAAP.  The term “financial
statements” shall include the accompanying notes and schedules.  All other terms used but not defined herein
shall have the meaning given to such terms in the Uniform Commercial Code as
adopted in the State of New York, as amended and supplemented from time to time
(the “UCC”).

 

2.              LOANS AND TERMS OF PAYMENT.

 

2.1.     Promise to
Pay.  Borrower promises to pay Agent,
for the ratable accounts of Lenders, when due pursuant to the terms hereof, the
aggregate unpaid principal amount of all loans, advances and other extensions
of credit made severally by the Lenders to Borrower under this Agreement,
together with interest on the unpaid principal amount of such loans, advances
and other extensions of credit at the interest rates set forth herein.

 

2.2.     Term Loans.

 

(a)         Commitment.  Subject to the terms and conditions hereof,
each Lender, severally, but not jointly, agrees to make the Term Loan A, Term
Loan B and Term Loan C (each as 

 

1

 

Confidential Information, indicated by [***]
has been omitted from this filing and filed separately with the Securities
Exchange Commission

 

defined below and each sometimes individually
referred to as a “Term Loan” and collectively referred to as the “Term
Loans”) to Borrower from time to time on any Business Day (as defined
below) during the periods set forth below in an aggregate principal amount not
to exceed such Lender’s “Term Loan A Commitment”, “Term Loan B Commitment” and “Term
Loan C Commitment” as identified on Schedule A hereto (such commitment
of each Lender as it may be amended to reflect assignments made in accordance with
this Agreement or terminated or reduced in accordance with this Agreement, its “Term
Loan A Commitment”, “Term Loan B Commitment” and “Term Loan C
Commitment”, as applicable, and the aggregate of all such commitments, the “Aggregate
Term Loan A Commitment”, “Aggregate Term Loan B Commitment” and “Aggregate
Term Loan C Commitment”, as applicable, and each Term Loan A Commitment,
Term Loan B Commitment and Term Loan C Commitment is sometimes individually
referred to herein as a “Commitment” and collectively as the “Commitments”).  Notwithstanding the foregoing, the aggregate
principal amount of the Term Loans made hereunder shall not exceed $15,000,000
(the “Total Commitment”).  Each
Lender’s obligation to fund a Term Loan shall be limited to such Lender’s Pro
Rata Share (as defined below) of such Term Loan.  Subject to the terms and conditions hereof,
the initial Term Loan (the “Term Loan A”) shall be made on the Closing
Date in an aggregate principal amount equal to $3,800,000.   After the Term Loan A, Borrower may request (i) a
second Term Loan (the “Term Loan B”) to be funded, subject to the terms
and conditions hereof, on or prior to August 11, 2008 (the “Term Loan B
Commitment Termination Date”) in the aggregate principal amount of
$5,600,000 and (ii) a third Term Loan (the “Term Loan C”) to be
funded, subject to the terms and conditions hereof, on or prior to September 30,
2008 (the “Term Loan C Commitment Termination Date”) in the aggregate
principal amount of $5,600,000.

 

(b)         Method of Borrowing.  When Borrower desires a Term Loan, Borrower
will notify Agent (which notice shall be irrevocable) by facsimile (or by
telephone, provided that such telephonic notice shall be promptly confirmed in
writing, but in any event on or before the following Business Day) on a date
that is ten (10) or more Business Days prior to the day the Term Loan is
to be made (or such shorter period of time as Agent may agree). Agent and
Lenders may act without liability upon the basis of such written or telephonic
notice reasonably believed by Agent to be from any authorized officer of
Borrower.  Agent and Lenders shall have
no duty to verify the authenticity of the signature appearing on any such
written notice.

 

(c)         Funding
of Term Loans.  Promptly after receiving a request for a Term
Loan, Agent shall notify each Lender of the contents of such request and such
Lender’s Pro Rata Share of the requested Term Loan.  Upon the terms and subject to the conditions
set forth herein, each Lender, severally and not jointly, shall make available
to Agent its Pro Rata Share of the requested Term Loan, in lawful money of the
United States of America in immediately available funds, to the Collection
Account (as defined below) prior to 11:00 a.m. (New York time) on the
specified date.  Agent shall, unless it
shall have determined that one of the conditions set forth in Section 4.1,
4.2 or 4.3, as applicable, has not been satisfied, by 4:00 p.m. (New York
time) on such day, credit the amounts received by it in like funds to Borrower by wire transfer
to, unless otherwise specified in a Disbursement Letter (as defined below), the
following deposit account of Borrower (or such other deposit account as
specified in writing by an authorized officer of Borrower and acceptable to
Agent) (the “Designated Deposit Account”):

 

[***]

 

2

 

(d)         Notes.  The Term Loans of each Lender shall be
evidenced by a promissory note substantially in the form of Exhibit A
hereto (each a “Note” and, collectively, the “Notes”), and
Borrower shall execute and deliver a Note to each Lender.  Each Note shall represent the obligation of
Borrower to pay to such Lender the lesser of (a) the aggregate unpaid
principal amount of all Term Loans made by such Lender to Borrower under this
Agreement or (b) the amount of such Lender’s Commitment, in each case
together with interest thereon as prescribed in Section 2.3(a).

 

(e)         Agent May Assume Funding.  Unless Agent shall have received notice from
a Lender prior to the date of any particular Term Loan that such Lender will
not make available to Agent such Lender’s Pro Rata Share of such Term Loan,
Agent may assume that such Lender has made such amount available to it on the
date of such Term Loan in accordance with subsection (c) of this Section 2.2,
and may (but shall not be obligated to), in reliance upon such assumption, make
available a corresponding amount for the account of Borrower on such date.  If and to the extent that such Lender shall
not have so made such amount available to Agent, such Lender and Borrower
severally agree to repay to Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the day such amount is made
available to Borrower until the day such amount is repaid to Agent, at (i) in
the case of Borrower, a rate per annum equal to the interest rate applicable
thereto pursuant to Section 2.3(a), and (ii) in the case of such
Lender, a floating rate per annum equal to, for each day from the day such
amount is made available to Borrower until such amount is reimbursed to Agent,
the weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion (the “Federal Funds Rate”) for the first Business Day and
thereafter, at the interest rate applicable to such Term Loan.  If such Lender shall repay such corresponding
amount to Agent, the amount so repaid shall constitute such Lender’s loan
included in such Term Loan for purposes of this Agreement.

 

2.3.     Interest
and Repayment.

 

(a)         Interest.  Each Term Loan shall accrue
interest from the date made until such Term Loan is fully repaid at a fixed per
annum rate of interest equal to the sum of (i) the greater
of (A) the Treasury Rate (as defined below) in effect on the day that is
three (3) Business Days prior to the making of such Term Loan as
determined by Agent and (B) 3.22% plus (ii) 8.37%.   All computations of interest and fees
calculated on a per annum basis shall be made by Agent on the basis of a 360-day
year, in each case for the actual number of days occurring in the period for
which such interest and fees are payable. 
Each determination of an interest rate or the amount of a fee hereunder
shall be made by Agent and shall be conclusive, binding and final for all
purposes, absent manifest error.  As used herein,
the term “Treasury Rate” means a per annum rate of interest equal to the rate
published by the Board of Governors of the Federal Reserve System in Federal
Reserve Statistical Release H.15 entitled “Selected Interest Rates” under the
heading “U.S. Government Securities/Treasury Constant Maturities” as the three
year treasuries constant maturities rate. 
In the event Release H.15 is no longer published, Agent shall select a
comparable publication to determine the U.S. Treasury note yield to maturity.

 

(b)         Payments of Principal and
Interest.  Borrower
shall pay to the Agent, for the ratable benefit of the Lenders, (i) with
respect to each Term Loan, one payment of interest only (payable in arrears)
for the period from the date of funding of such Term Loan to and including the
last day of the month in which such Term Loan was funded at the rate of
interest determined in accordance with Section 2.3(a), to be paid on the
first day of the calendar month occurring after 

 

3

 

the month in which such Term Loan was funded, (ii) with
respect to the Term Loan A, (A) six (6) consecutive payments of
interest only (payable in arrears) at the rate of interest determined in
accordance with Section 2.3(a) on the first day of each calendar
month (a “Scheduled Payment Date”) commencing on the first day
of the second calendar month occurring after the month during which the Term
Loan A was funded and (B) thirty (30) equal consecutive payments of principal
and interest (payable in arrears) at the rate of interest determined in
accordance with Section 2.3(a) on each Scheduled Payment Date commencing on
the first day of the eighth calendar month occurring after the month during
which the Term Loan A was funded, (iii) with respect to
the Term Loan B, (A) monthly payments of interest only (payable
in arrears) at the rate of interest determined in accordance with Section 2.3(a) on
each Scheduled Payment Date commencing on the first day of the second
calendar month occurring after the month during which the Term Loan B was funded and (B) commencing
on the earlier of (x) the first day of the eighth calendar month occurring
after the month during which the Term Loan B was funded and (b) January 1,
2009, thirty (30) equal consecutive payments of principal and interest (payable
in arrears) at the rate of interest determined in accordance with Section 2.3(a) on
each Scheduled Payment Date and (iv) with respect to the Term Loan
C, (A) three (3) consecutive payments of interest only (payable
in arrears) at the rate of interest determined in accordance with Section 2.3(a) on
each Scheduled Payment Date commencing on the first day of the second
calendar month occurring after the month during which the Term Loan C was funded and (B) thirty-three
(33) equal consecutive payments of principal and interest (payable in arrears)
at the rate of interest determined in accordance with Section 2.3(a) on
each Scheduled Payment Date commencing on the first day of the fifth
calendar month occurring after the month during which the Term Loan C was funded.  The amount of each payment of principal and
interest under this Section 2.3(b) shall be calculated by the Agent
and shall be sufficient to fully amortize the principal and interest due with
respect to the applicable Term Loan over such repayment period.  Each scheduled payment of interest only or
interest and principal hereunder is referred to herein as a “Scheduled
Payment.”  Notwithstanding
the foregoing, all unpaid principal and accrued interest with respect to a Term
Loan is due and payable in full to Agent, for the ratable benefit of Lenders,
on the earlier of (A) the first day of the thirty-seventh  month following the date such Term Loan
was made or (B) the date that such Term Loan otherwise becomes due and
payable hereunder, whether by acceleration of the Obligations pursuant to Section 8.2
or otherwise (the earlier of (A) or (B), the “Applicable Term Loan
Maturity Date”). Each Scheduled Payment, when paid, shall be applied first
to the payment of accrued and unpaid interest on the applicable Term Loan and
then to unpaid principal balance of such Term Loan.  Without limiting the foregoing, all
Obligations shall be due and payable on the Applicable Term Loan Maturity Date
for the last Term Loan made.

 

(c)         No Reborrowing.  Once a Term Loan is repaid or prepaid, it
cannot be reborrowed.

 

(d)         Payments.  All payments (including prepayments) to be
made by any Loan Party under any Debt Document shall be made in immediately
available funds in U.S. dollars, without setoff or counterclaim to the
Collection Account (as defined below) before 11:00 a.m. (New York time) on
the date when due.  All payments
received by Agent after 11:00 a.m. (New York time) on any Business Day or
at any time on a day that is not a Business Day shall be deemed to be received
on the next Business Day.  Whenever any
payment required under this Agreement would otherwise be due on a date that is
not a Business Day, such payment shall instead be due on the next Business Day,
and additional fees or interest, as the case may be, shall accrue and be
payable for the period of such extension. 
The payment of any Scheduled Payment prior to its due date shall be
deemed to have been received on such due date for purposes of calculating
interest hereunder.  All Scheduled
Payments due to Agent and Lenders under Section 2.3(b) shall be
effected by automatic debit of the appropriate funds from Borrower’s operating
account specified 

 

4

 

Confidential Information, indicated by [***]
has been omitted from this filing and filed separately with the Securities
Exchange Commission

 

on the EPS Setup Form (as defined
below).  As used herein, the term “Collection Account”
means the following account of Agent (or such other account as Agent shall
identify to Borrower in writing):

 

[***]

 

(e)         Withholdings and Increased
Costs.  All payments shall be made
free and clear of any taxes, withholdings, duties, impositions or other charges
(other than taxes on the overall net income of any Lender and comparable
taxes), such that Agent and Lenders will receive the entire amount of any
Obligations (as defined below), regardless of source of payment.  If Agent or any Lender shall
have reasonably determined that the introduction of or any change in, after the
date hereof, any law, treaty, governmental (or quasi-governmental) rule,
regulation, guideline or order reduces the rate of return on Agent or such
Lender’s capital as a consequence of its obligations hereunder or increases the
cost to Agent or such Lender of agreeing to make or making, funding or
maintaining any Term Loan, then Borrower shall from time to time upon demand by
Agent or such Lender (with a copy of such demand to Agent) promptly pay to
Agent for its own account or for the account of such Lender, as the case may
be, additional amounts sufficient to compensate Agent or such Lender for such
reduction or for such increased cost.  A
certificate as to the amount of such reduction or such increased cost
determined and submitted by Agent or such Lender (with a copy to Agent) in good
faith to Borrower shall be conclusive and binding on Borrower, absent manifest
error, provided that, neither Agent nor any Lender shall be entitled to payment
of any amounts under this Section 2.3(e) unless it has delivered such
certificate to Borrower within 180 days after the occurrence of the changes or
events giving rise to the increased costs to, or reduction in the amounts
received by, Agent or such Lender.  This
provision shall survive the termination of this Agreement.

 

(f)          Loan Records.  Each Lender shall maintain
in accordance with its usual practice accounts evidencing the Obligations of
Borrower to such Lender resulting from such Lender’s Pro Rata Share of each
Term Loan, including the amounts of principal and interest payable and paid to
such Lender from time to time under this Agreement.  Agent shall maintain in accordance with its
usual practice a loan account (the “Loan Account”) on its books to
record the Term Loans and any other extensions of credit made by Lenders
hereunder, and all payments thereon made by Borrower.  The entries made in such accounts shall, to
the extent permitted by applicable law, be prima facie evidence of the existence
and amounts of the Obligations recorded therein; provided, however,
that no error in such account and no failure of any Lender or Agent to maintain
any such account shall affect the obligations of Borrower to repay the
Obligations in accordance with their terms.

 

(g)         Payment of Expenses.  Agent is authorized to, and at its sole
election may, debit funds from Borrower’s operating account specified on the
EPS Setup Form (as defined below) to pay all fees, expenses, costs and
interest owing by Borrower under this Agreement or any of the other Debt
Documents if and to the extent Borrower fails to promptly pay any such amounts
as

 

5

 

Confidential Information,
indicated by [***], has been omitted from this filing and filed separately with
the Securities Exchange Commission

 

and when due; provided, however, that unless
a Default or Event of Default has occurred and is continuing, Agent may only
exercise its rights under this Section 2.3(g) with respect to fees,
expenses and costs (1) five days after Agent has delivered notice of such
fees, expenses and costs to Borrower and (2) [***].

 

(h)         Application of Payments.  All payments and prepayments applied to a
particular Term Loan in accordance with this Agreement shall be applied ratably
to the portion thereof held by each Lender as determined by its Pro Rata Share
of such Term Loan.  As to all payments
made when an Event of Default has occurred and is continuing, Borrower hereby
irrevocably waives the right to direct the application of any and all payments
received from or on behalf of Borrower, and Borrower hereby irrevocably agrees
that Agent shall have the continuing exclusive right (in accordance with Section 8.4)
to apply any and all such payments against the Obligations as Agent may deem
advisable notwithstanding any previous entry by Agent in the Loan Account or
any other books and records.

 

2.4.     Prepayments.  Borrower can voluntarily
prepay, upon five (5) Business Days’ prior written notice to Agent, any
Term Loan in full, but not in part.  Upon the date of (a) any
voluntary prepayment of a Term Loan in accordance with the immediately
preceding sentence or (b) any mandatory prepayment of a Term Loan required
under this Agreement (whether by acceleration of the Obligations pursuant to Section 8.2
or otherwise), Borrower shall pay to Agent, for the ratable benefit of the
Lenders based on their respective Pro Rata Shares, a sum equal to (i) all
outstanding principal plus accrued interest with respect to such Term Loan, and
(ii) a prepayment premium (as yield maintenance for the
loss of a bargain and not as a penalty) equal to: (A) 5% on such
prepayment amount, if such prepayment is made before the first day of the 15th calendar month occurring after the month
during which such Term Loan was funded, (B) 4%
on such prepayment amount, if such prepayment is made on or after the first day
of the 15th calendar month occurring after the month
during which such Term Loan was funded, but before
the first day of the 30th calendar month occurring after the month
during which such Term Loan was funded, and (C) 3%
on such prepayment amount, if such prepayment is made on or after the first day
of the 30th calendar month occurring after the month
during which such Term Loan was funded.

 

2.5.     Late Fees.  If Agent does not receive any Scheduled
Payment or other payment under any Debt Document from any Loan Party within 3
days after its due date, then, at Agent’s election, such Loan Party agrees to
pay to Agent for the ratable benefit of all Lenders, a late fee equal to (a) [***]%
of the amount of such unpaid payment or (b) such lesser amount that, if
paid, would not cause the interest and fees paid by such Loan Party under this
Agreement to exceed the Maximum Lawful Rate (as defined below) (the “Late
Fee”).

 

2.6.     Default
Rate.  All Term Loans and other
Obligations shall bear interest, at the option of Agent or upon the request of
the Requisite Lenders (as defined below), from and after the occurrence and
during the continuation of an Event of Default (as defined below), at a rate
equal to the lesser of (a) [***]% above the
rate of interest applicable to such Obligations as set forth in Section 2.3(a)
immediately prior to the occurrence of the Event of Default and (b) the
Maximum Lawful Rate (the “Default Rate”).  The application of the Default Rate shall not
be interpreted or deemed to extend any cure period or waive any Default or
Event of Default or otherwise limit the Agent’s or any Lender’s right or
remedies hereunder.  All interest payable
at the Default Rate shall be payable on demand.

 

6

 

Confidential Information, indicated by [***], has been omitted from
this filing and filed separately with the Securities Exchange Commission

 

2.7.     Lender
Fees.

 

(a)         Closing Fee.  Prior to the advance of the Term Loan A,
Borrower has (i) paid to GECC, and GECC hereby acknowledges receipt of, a
payment in the amount of $[***], (A) $[***] of which
payment shall be retained by GECC in its capacity as Lender as a closing fee
that shall be non-refundable and fully earned by GECC on the Closing Date
(regardless of whether the Term Loan B or Term Loan C is requested by Borrower
or authorized by Borrower’s board of directors after the Closing Date) and (B) $[***] of which
payment shall be applied to any fees, costs and expenses (including reasonable
counsel fees) incurred by GECC in its capacity as Agent on or prior to the
Closing Date in connection with the transactions contemplated hereunder (and to
the extent that such fees, costs and expenses are less than $[***], such excess
shall be returned to Borrower within five Business Days after the Closing
Date), and (ii) paid to Oxford, and Oxford hereby acknowledges receipt of,
a payment in the amount of $[***] which payment shall be
retained by Oxford in its capacity as Lender as a closing fee that shall be
non-refundable and fully earned by Oxford on the Closing Date (regardless of
whether the Term Loan B or Term Loan C is requested by Borrower or authorized
by Borrower’s board of directors after the Closing Date).

 

(b)         Unused Line Fee.   On the Term Loan C
Commitment Termination Date, Borrower shall pay to Agent, for the ratable
benefit of Lenders holding a Commitment in accordance with their Pro Rata
Shares of the Total Commitment, a non-refundable unused line fee (the “Unused
Line Fee”) equal to 2% of the undrawn amount of the Total Commitment
as of such date, which fee shall be fully earned on the Term Loan C
Commitment Termination Date (regardless of whether the Borrower’s board of
directors elects to authorize the borrowing of the Term Loan B or Term Loan C
by Borrower). 
Notwithstanding the foregoing, a Lender shall not be entitled to receive
(and Borrower shall not be obligated to pay) such Lender’s Pro Rata Share of
the Unused Line Fee to the extent (i) Borrower satisfied all conditions
set forth in Section 4.2 and Section 4.3, as applicable, with respect
to a requested Term Loan and (ii) such Lender failed to advance its Pro
Rata Share of such Term Loan.

 

2.8.     Maximum
Lawful Rate.  Anything
herein, any Note or any other Debt Document (as defined below) to the contrary
notwithstanding, the obligations of Loan Parties hereunder and thereunder shall
be subject to the limitation that payments of interest shall not be required,
for any period for which interest is computed hereunder, to the extent (but
only to the extent) that contracting for or receiving such payment by Agent and
Lenders would be contrary to the provisions of any law applicable to Agent and Lenders
limiting the highest rate of interest which may be lawfully contracted for,
charged or received by Agent and Lenders, and in such event Loan Parties shall
pay Agent and Lenders interest at the highest rate permitted by applicable law
(“Maximum Lawful Rate”); provided, however, that if at any
time thereafter the rate of interest payable hereunder or thereunder is less
than the Maximum Lawful Rate, Loan Parties shall continue to pay interest
hereunder at the Maximum Lawful Rate until such time as the total interest
received by Agent and Lenders is equal to the total interest that would have
been received had the interest payable hereunder been (but for the operation of
this paragraph) the interest rate payable since the making of the applicable
Term Loan as otherwise provided in this Agreement, any Note or any other Debt
Document.

 

3.              CREATION OF SECURITY INTEREST.

 

3.1.     Grant of
Security Interest.  As security
for the prompt payment and performance, whether at the stated maturity, by
acceleration or otherwise, of all Term Loans and other debt, obligations and
liabilities of any kind whatsoever of Borrower to Agent and Lenders under the
Debt Documents (whether 

 

7

 

for principal, interest, fees, expenses, prepayment premiums,
indemnities, reimbursements or other sums, and whether or not such amounts
accrue after the filing of any petition in bankruptcy or after the commencement
of any insolvency, reorganization or similar proceeding, and whether or not
allowed in such case or proceeding), absolute or contingent, now existing or
arising in the future, including but not limited to the payment and performance
of any outstanding Notes, and any renewals, extensions and modifications of
such Term Loans (such indebtedness under the Notes, Term Loans and other debt,
obligations and liabilities in connection with the Debt Documents are
collectively called the “Obligations”), and as security for the prompt
payment and performance by each Guarantor of its obligations under any guaranty
delivered in connection with this Agreement, each Loan Party does hereby grant
to Agent, for the benefit of Agent and Lenders, a security interest in the
property listed below (all hereinafter collectively called the “Collateral”):

 

All of such Loan Party’s personal property of every kind and nature (except for Intellectual Property, as
defined in, and to the extent excluded pursuant to, Section 3.3) whether
now owned or hereafter acquired by, or arising in favor of, such Loan Party,
and regardless of where located, including, without limitation, all accounts,
chattel paper (whether tangible or electronic), commercial tort claims, deposit
accounts, documents, equipment, financial assets, fixtures, goods, instruments,
investment property (including, without limitation, all securities accounts),
inventory, letter-of-credit or similar rights, letters of credit, securities,
supporting obligations, cash, cash equivalents, any other contractual rights
(including, without limitation, rights under any license agreements), or rights
to the payment of money, and general intangibles, and all books and records of
such Loan Party relating thereto, and in and against all additions,
attachments, accessories and accessions to such property, all substitutions,
replacements or exchanges therefor, all proceeds, insurance claims, products,
profits and other rights to payments not otherwise included in the foregoing
(with each of the foregoing terms that are defined in the UCC having the
meaning set forth in the UCC).

 

Each Loan Party hereby represents and covenants that
such security interest constitutes a valid, first priority security interest in
the presently existing Collateral, and will constitute a valid, first priority
security interest in Collateral acquired after the date hereof.  Each Loan Party hereby covenants that it
shall give written notice to Agent promptly upon the acquisition by such Loan
Party or creation in favor of such Loan Party of any commercial tort claim
after the Closing Date.

 

3.2.     Financing
Statements.  Each Loan
Party hereby authorizes Agent to file UCC financing statements with all
appropriate jurisdictions to perfect Agent’s security interest (for the benefit
of itself and the Lenders) granted hereby.

 

3.3.     Grant of
Security Interest in Proceeds of Intellectual Property.  Except as expressly provided
in this Section 3.3,  the
Collateral shall not include any Intellectual Property (as defined below) of
any Loan Party or any claims for
damages by way of any past, present or future infringement of any Intellectual
Property; provided  however,
that the Collateral shall include all cash, royalty fees, other proceeds,
accounts and general intangibles (including, without limitation, contract
rights) that consist of rights of payment to or on behalf of a Loan Party or
proceeds from the sale, licensing or other disposition of all or any part of,
or rights in, the Intellectual Property by or on behalf of a Loan Party (“Rights
to Payment”).  Notwithstanding the
foregoing, to the extent it is necessary under applicable law in any bankruptcy
or insolvency proceeding involving a Loan Party for Agent (on behalf of itself
and Lenders) to have a security interest in the underlying Intellectual
Property in order for Agent to have (i) a security interest in the Rights
to Payment and (ii) a security interest in any payments with respect to
Rights to Payment that are received after the commencement of such bankruptcy
or insolvency proceeding, then the Collateral shall automatically, and
effective as of the date hereof, include the Intellectual Property to the
extent necessary to permit attachment and perfection of Agent’s security
interest (on behalf of itself and 

 

8

 

Lenders) in the Rights to Payment and any payments in respect thereof
that are received after the commencement of any bankruptcy or insolvency
proceeding.  Agent hereby agrees on
behalf of itself and the Lenders that, if Agent obtains a security interest in
the Intellectual Property pursuant to the immediately preceding sentence, Agent
will not exercise any remedies (under the UCC or otherwise) with respect to the
Intellectual Property (other than remedies with respect to Rights to Payment or
any other proceeds of the Intellectual Property).  For purposes of this Agreement, “Intellectual
Property” shall mean (I) any and all copyrights, trademarks, servicemarks,
patents, design rights, software, trade secrets, know-how, operating manuals, rights to unpatented inventions and
intangible rights of a Loan Party, and the goodwill of the business of a Loan
Party connected with and symbolized by any of the foregoing, (II) any
license by a Loan Party of any and all copyrights, trademarks, servicemarks,
patents, design rights, software, trade secrets  and intangible rights of a third party, (III) any clinical and clinical trial data or records,
correspondence or similar documentation directly related thereto,  and (IV) any applications,
registrations, claims, products, awards, judgments, amendments, renewals,
extensions, reissues, continuations-in-part of the same, improvements and
insurance claims related thereto now owned, licensed or hereafter acquired.

 

3.4.     Termination
of Security Interest. 
Subject to Section 10.9, Agent’s lien on and security interests in
the Collateral (on behalf of itself and Lenders) shall continue until all of
the Obligations are indefeasibly repaid in full in cash, all of the Commitments
hereunder are terminated, and this Agreement shall have been terminated (the “Termination
Date”).  Upon the Termination Date,
Agent shall, at Loan Parties’ sole cost and expense and without any recourse,
representation or warranty, release its liens in the Collateral and promptly
file all documentation necessary to terminate any financing statements related
thereto or otherwise evidence such release of liens (including, without
limitation, the termination of any Account Control Agreements, as defined
below), and all rights remaining therein, if any, shall revert to Loan Parties.

 

4.              CONDITIONS OF CREDIT EXTENSIONS

 

4.1.     Conditions
Precedent to Term Loan A.  No
Lender shall be obligated to make the Term Loan A, or to take, fulfill, or
perform any other action hereunder, until the following have been delivered to
the Agent (the date on which the Lenders make the Term Loan A after all such
conditions shall have been satisfied in a manner satisfactory to Agent and
Lenders or waived in accordance with this Agreement, the “Closing Date”):

 

(a)         a counterpart of this
Agreement duly executed by each Loan Party;

 

(b)         a certificate executed by
the Secretary of each Loan Party, the form of which is attached hereto as Exhibit B
(the “Secretary’s Certificate”), providing verification of incumbency
and attaching (i) such Loan Party’s board resolutions approving the
transactions contemplated by this Agreement and the other Debt Documents and (ii) such
Loan Party’s governing documents;

 

(c)         Notes duly executed by
Borrower in favor of each applicable Lender in the appropriate amounts pursuant
to this Agreement;

 

(d)         filed copies of UCC financing
statements, collateral assignments, and terminations statements, with respect
to the Collateral, as Agent shall request;

 

(e)         certificates of insurance
evidencing the insurance coverage, and satisfactory additional insured and
lender loss payable endorsements, in each case as required pursuant to Section 6.4
herein;

 

9

 

(f)          current UCC lien, judgment,
bankruptcy and tax lien search results demonstrating that there are no other
security interests or liens on the Collateral, other than Permitted Liens (as
defined below);

 

(g)         a certificate of good
standing of each Loan Party from the jurisdiction of such Loan Party’s
organization and a certificate of foreign qualification from each jurisdiction
where such Loan Party’s failure to be so qualified could reasonably be expected
to have a Material Adverse Effect (as defined below), in each case as of a
recent date acceptable to Agent;

 

(h)         a landlord consent and/or
bailee letter in favor of Agent executed by the landlord or bailee, as
applicable, for any third party location where (a) any Loan Party’s
principal place of business, (b) any Loan Party’s books or records or (c) Collateral
with an aggregate value in excess of $50,000 is located, a form of which is
attached hereto as Exhibit C-1 and Exhibit C-2, as
applicable (each an “Access Agreement”);

 

(i)          a legal opinion of Loan
Parties’ counsel, in form and substance satisfactory to Agent;

 

(j)          a completed EPS set-up form,
a form of which is attached hereto as Exhibit E (the “EPS Setup
Form”);

 

(k)         a completed perfection
certificate, duly executed by each Loan Party (the “Perfection Certificate”),
a form of which Agent previously delivered to Borrower;

 

(l)          one or more Account Control
Agreements (as defined below), in form and substance reasonably acceptable to
Agent, duly executed by the applicable Loan Parties and the applicable
depository or financial institution, for each deposit and securities account
listed on the Perfection Certificate;

 

(m)        a disbursement instruction
letter, in form and substance satisfactory to Agent, executed by each Loan
Party, Agent and each Lender (the “Disbursement Letter”);

 

(n)         all other
documents and instruments as Agent and Lenders may reasonably deem necessary to
effectuate the intent and purpose of this Agreement (together with the
Agreement, Note, the Perfection Certificate, the Secretary’s Certificate and
the Disbursement Letter, any guaranty agreement from time to time delivered in
connection with this Agreement, and all other agreements, instruments,
documents and certificates executed and/or delivered by a Loan Party to or in
favor of Agent from time to time in connection with this Agreement or the
transactions contemplated hereby, the “Debt Documents”); and

 

(o)         Agent and Lenders shall have received the fees required to be paid by
Borrower, if any, in the respective amounts specified in Section 2.7, and
Borrower shall have reimbursed Agent and Lenders for all fees, costs and
expenses of closing presented as of the date of this Agreement.

 

10

 

Confidential
Information, indicated by [***], has been omitted from this filing and filed
separately with the Securities Exchange Commission

 

4.2.     Conditions
Precedent to All Term Loans.  No Lender shall be obligated to make any Term
Loan, including the Term Loan A, unless the following additional conditions
have been satisfied:

 

(a)         (i) all representations
and warranties in Section 5 below shall be true as of the date of such
Term Loan, except to the extent such representations and warranties expressly
relate to an earlier date, in which case such representations and warranties
were true and correct on and as of such earlier date; (ii) no Event of
Default or any other event, which with the giving of notice or the passage of
time, or both, would constitute an Event of Default (such event, a “Default”)
has occurred and is continuing or will result from the making of any Term Loan,
and (iii) Agent shall have received a certificate from an authorized
officer of each Loan Party confirming each of the foregoing;

 

(b)         Agent shall have received
the redelivery or supplemental delivery of the items set forth in the following
sections only to the extent circumstances have changed since the funding of the
Term Loan A:  Sections 4.1(b), (e), (f),
(g), (h), (i), (k) and (m); and

 

(c)         with respect to all Term Loans, Agent shall have received copies of
such other documents, agreements, instruments or information as Agent or any
Lender shall reasonably request.

 

4.3.     Additional
Conditions Precedent to Term Loan B and Term Loan C.  No Lender shall be obligated to make the Term
Loan B or the Term Loan C, respectively, unless the following additional
conditions have been satisfied:

 

(a)         with respect to each of the
Term Loan B and the Term Loan C, (i) Agent shall have received, in form
and substance satisfactory to Agent and Lenders, a legal opinion of Loan
Parties’ counsel, (ii) Agent shall have received, in form and substance
satisfactory to Agent and Lenders, a Secretary’s Certificate executed by the
Secretary of Borrower providing verification of incumbency and attaching
Borrower’s board resolutions authorizing the borrowing of the Term Loan B or
the Term Loan C, as applicable, and (iii) Lenders shall have received
Notes duly executed by Borrower in favor of each applicable Lender in the
appropriate Term Loan B amounts or Term Loan C amounts, as applicable;

 

(b)         with respect to the Term
Loan B, (i) Lenders shall have received evidence in form and
substance reasonably satisfactory to Lenders that [***], and (ii) Borrower
shall have, immediately before and immediately after [***], and
Lenders shall have received a certificate signed by the president, chief
executive officer or chief financial officer of Borrower certifying that [***],
and attaching a [***], together with such other evidence as Lenders shall
reasonably request; and

 

(c)         with respect to the Term
Loan C, in addition to the satisfaction of the conditions set forth in
[***], (i) Lenders shall have received evidence in form and
substance reasonably satisfactory to Lenders that [***], (ii) Lenders
shall have received evidence in form and substance
reasonably satisfactory to Lenders that [***], (iii) Borrower shall
have, immediately before and immediately after [***], and Lenders
shall have received a certificate signed by the president, chief executive
officer or chief financial officer of Borrower certifying that  [***], and attaching a [***], together
with such other evidence as Lenders shall reasonably request, and (iv) Lenders

 

11

 

Confidential Information,
indicated by [***], has been omitted from this filing and filed separately with
the Securities Exchange Commission

 

shall have received evidence in form and
substance reasonably satisfactory to Lenders that [***] under materially
similar terms and conditions as in effect on the Closing Date.

 

As used herein, the term “[***]” means, with respect to [***] most recently delivered to Agent and the
Lenders in accordance with this Agreement:

 

(a)                      (i) [***]

 

[***]

 

(b)                     [***].

 

As used herein, the term “[***]” means, with respect to [***] delivered to and approved by Agent and the
Lenders on or prior to the Closing Date:

 

(a)                      (i) [***]

 

[***]

 

(b)                     [***].

 

5.        REPRESENTATIONS AND WARRANTIES OF LOAN PARTIES.

 

Each Loan Party, jointly and
severally, represents, warrants and covenants to Agent and each Lender that:

 

5.1.     Due
Organization and Authorization.  Each Loan Party’s exact legal name is as set
forth in the Perfection Certificate and each Loan Party is, and will remain,
duly organized, existing and in good standing under the laws of the State of
its organization as specified in the Perfection Certificate, has its chief
executive office at the location specified in the Perfection Certificate, and
is, and will remain, duly qualified and licensed in every jurisdiction wherever
necessary to carry on its business and operations, except where the failure to
be so qualified and licensed could not reasonably be expected to have a
Material Adverse Effect.  This Agreement
and the other Debt Documents have been duly authorized, executed and delivered
by each Loan Party and constitute legal, valid and binding agreements
enforceable in accordance with their terms; provided, however,
that the resolutions of Borrower’s board of directors adopted on or about May 31,
2008 require Borrower to obtain further authorization of the board of directors
to borrow any additional Term Loan after the Closing Date.  The execution, delivery and performance by
each Loan Party of each Debt Document executed or to be executed by it is in
each case within such Loan Party’s powers.

 

5.2.     Required
Consents.  No filing,
registration, qualification with, or approval, consent or withholding of
objections from, any governmental authority or instrumentality or any other entity
or person is required with respect to the entry into, or performance by any
Loan Party of, any of the Debt Documents, except any already obtained.

 

5.3.     No
Conflicts.  The entry
into, and performance by each Loan Party of, the Debt Documents will not (a) violate
any of the organizational documents of such Loan Party, (b) violate any
law, rule, regulation, order, award or judgment applicable to such Loan Party,
or (c) result in any breach of or 

 

12

 

constitute a default under, or result in the creation of any lien,
claim or encumbrance on any of such Loan Party’s property (except for liens in
favor of Agent, on behalf of itself and Lenders) pursuant to, any indenture,
mortgage, deed of trust, bank loan, credit agreement, or other Material
Agreement (as defined below) to which such Loan Party is a party.  As used herein, “Material Agreement”
means (i) any agreement or contract to which such Loan Party is a party
and involving the receipt or payment of amounts in the aggregate exceeding $250,000 per year, (ii) any agreement or contract to
which such Loan Party is a party the termination of which could reasonably be
expected to have a Material Adverse Effect, (iii) the Azimuth Agreement
and (iv) that certain Sublicense Agreement dated as of October 13,
2006 (as amended, the “PharmaNova Agreement”) by and between PharmaNova
Inc. and Borrower.  A list of all
Material Agreements as of the Closing Date is set forth on Schedule B
hereto.

 

5.4.     Litigation.  There are no actions, suits, proceedings or
investigations pending against or affecting any Loan Party before any court,
federal, state, provincial, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
any basis thereof, which involves the possibility of any judgment or liability
that could reasonably be expected to have a Material Adverse Effect, or which
questions the validity of the Debt Documents, or the other documents required
thereby or any action to be taken pursuant to any of the foregoing, nor does
any Loan Party have reason to believe that any such actions, suits, proceedings
or investigations are threatened.  As
used in this Agreement, the term “Material Adverse Effect” means a
material adverse effect on any of (a) the operations, business, assets,
properties, or condition (financial or otherwise) of Borrower, individually, or
the Loan Parties, collectively, (b) the ability of a Loan Party to perform
any of its obligations under any Debt Document to which it is a party, (c) the
legality, validity or enforceability of any Debt Document, (d) the rights
and remedies of Agent or Lenders under any Debt Document or (e) the
validity, perfection or priority of any lien in favor of Agent, on behalf of
itself and Lenders, on any of the Collateral.

 

5.5.     Financial
Statements.  All
financial statements delivered to Agent and Lenders pursuant to Section 6.3
have been prepared in accordance with GAAP (subject, in the case of unaudited
financial statements, to the absence of footnotes and normal year end audit
adjustments), and since the date of the most recent audited financial
statement, no event has occurred which has had or could reasonably be expected
to have a Material Adverse Effect.  There
has been no material adverse deviation from the most recent proposed annual
operating budget of Borrower delivered to Agent and Lenders in accordance with Section 6.3.

 

5.6.     Use of
Proceeds.  The proceeds
of the Term Loans shall be used for working capital and general corporate
purposes.

 

5.7.     Collateral.  Each Loan Party is, and will remain, the sole
and lawful owner, and in possession of, the Collateral, and has the sole right
and lawful authority to grant the security interest described in this
Agreement.  The Collateral is, and will
remain, free and clear of all liens, claims and encumbrances of any kind
whatsoever, except for (a) liens in favor of Agent, on behalf of itself
and Lenders, to secure the Obligations, (b) liens (i) with respect to
the payment of taxes, assessments or other governmental charges or (ii) of
suppliers, carriers, materialmen, warehousemen, workmen or mechanics and other
similar liens, in each case imposed by law and arising in the ordinary course
of business, and securing amounts that are not yet due or that are being
contested in good faith by appropriate proceedings diligently conducted and
with respect to which adequate reserves or other appropriate provisions are
maintained on the books of the applicable Loan Party in accordance with GAAP
and which do not involve, in the judgment of Agent, any risk of the sale,
forfeiture or loss of any of the Collateral (a “Permitted Contest”), (c) liens
existing on the date hereof and set forth on Schedule B hereto, (d) liens
securing Indebtedness (as defined in Section 7.2 below) permitted under Section 7.2(c) below,
provided that (i) such liens exist prior to the acquisition of, or attach
substantially simultaneous with, or within 20 

 

13

 

days after the, acquisition, repair, improvement or construction of,
such property financed by such Indebtedness and (ii) such liens do not
extend to any property of a Loan Party other than the property (and proceeds
thereof) acquired or built, or the improvements or repairs, financed by such
Indebtedness, and (e) licenses described in Section 7.3(c) and (d) below
(all of such liens described in the foregoing clauses (a) through (e) are
called “Permitted Liens”).

 

5.8.     Compliance
with Laws.

 

(a)         Each Loan Party is and will
remain in compliance in all material respects with all laws, statutes,
ordinances, rules and regulations applicable to it.

 

(b)         Without limiting the
generality of the immediately preceding clause (a), each Loan Party further
agrees that it is and will remain in compliance in all material respects with
all U.S. economic sanctions laws, Executive Orders and implementing regulations
as promulgated by the U.S. Treasury Department’s Office of Foreign Assets
Control (“OFAC”), and all applicable anti-money laundering and
counter-terrorism financing provisions of the Bank Secrecy Act and the USA
Patriot Act and all regulations issued pursuant to it.  No Loan Party nor any of its subsidiaries,
affiliates or joint ventures (A) is a person or entity designated by the
U.S. Government on the list of the Specially Designated Nationals and Blocked
Persons (the “SDN List”) with which a U.S. person or entity cannot deal
with or otherwise engage in business transactions, (B) is a person or
entity who is otherwise the target of U.S. economic sanctions laws such that a
U.S. person or entity cannot deal or otherwise engage in business transactions
with such person or entity; or (C) is controlled by (including without
limitation by virtue of such person being a director or owning voting shares or
interests), or acts, directly or indirectly, for or on behalf of, any person or
entity on the SDN List or a foreign government that is the target of U.S.
economic sanctions prohibitions such that the entry into, or performance under,
this Agreement or any other Debt Document would be prohibited under U.S.
law.  The SDN List is maintained by OFAC
and is available at: http://www.ustreas.gov/offices/enforcement/ofac/sdn/.

 

(c)         Each Loan Party has met the
minimum funding requirements of the United States Employee Retirement Income
Security Act of 1974 (as amended, “ERISA”) with respect to any employee
benefit plans subject to ERISA.  No Loan
Party is an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act of 1940.  No Loan Party is engaged principally, or as
one of the important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the meaning of
Regulations T, U and X of the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”).

 

5.9.     Intellectual
Property.  The Intellectual Property is free and clear of
all liens, claims and encumbrances of any kind whatsoever, except for Permitted
Liens described in clauses (b)(i) and (e) of Section 5.7.  No Loan Party has entered into any other
agreement or financing arrangement in which a negative pledge in such Loan
Party’s Intellectual Property is granted to any other party. As of the Closing
Date and each date a Term Loan is advanced to Borrower, no Loan Party has any
interest in, or title to any Intellectual Property except as disclosed in the
Perfection Certificate.  Each Loan Party
owns or has rights to use all Intellectual Property material to the conduct of
its business as now or heretofore conducted by it or proposed to be conducted
by it, without any actual or claimed infringement upon the rights of third
parties.

 

5.10.   Solvency.  Both before and after giving effect to each
Term Loan, the transactions contemplated herein, and the payment and accrual of
all transaction costs in connection with the foregoing, each Loan Party is and
will be Solvent.  As used herein, “Solvent”
means, with respect to a 

 

14

 

Loan Party on a particular date, that on such date (a) the fair
value of the property of such Loan Party is greater than the total amount of
liabilities, including contingent liabilities, of such Loan Party; (b) the
present fair salable value of the assets of such Loan Party is not less than
the amount that will be required to pay the probable liability of such Loan
Party on its debts as they become absolute and matured; (c) such Loan
Party does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Loan Party’s ability to pay as such debts and
liabilities mature; (d) such Loan Party is not engaged in a business or
transaction, and is not about to engage in a business or transaction, for which
such Loan Party’s property would constitute an unreasonably small capital; and (e) such
Loan Party is not “insolvent” within the meaning of Section 101(32) of the
United States Bankruptcy Code (11 U.S.C. § 101, et. seq), as amended from time
to time.  The amount of contingent
liabilities (such as litigation, guaranties and pension plan liabilities) at
any time shall be computed as the amount that, in light of all the facts and
circumstances existing at the time, represents the amount that can be
reasonably be expected to become an actual or matured liability.

 

5.11.   Taxes;
Pension.  All tax
returns, reports and statements, including information returns, required by any
governmental authority to be filed by each Loan Party and its Subsidiaries have
been filed with the appropriate governmental authority and all taxes, levies,
assessments and similar charges have been paid prior to the date on which any
fine, penalty, interest or late charge may be added thereto for nonpayment
thereof (or any such fine, penalty, interest, late charge or loss has been
paid), excluding taxes, levies, assessments and similar charges or other
amounts which are the subject of a Permitted Contest.  Proper and accurate amounts have been
withheld by each Loan Party from its respective employees for all periods in
compliance with applicable laws and such withholdings have been timely paid to
the respective governmental authorities. 
Each Loan Party has paid all amounts necessary to fund all present
pension, profit sharing and deferred compensation plans in accordance with
their terms, and no Loan Party has withdrawn from
participation in, or has permitted partial or complete termination of, or
permitted the occurrence of any other event with respect to, any such plan
which could reasonably be expected to result in any liability of a Loan Party, including any
liability to the Pension Benefit Guaranty Corporation or its successors or any
other governmental authority.

 

5.12.   Full
Disclosure.  Loan Parties
hereby confirm that all of the information disclosed on the Perfection Certificate
is true, correct and complete as of the date of this Agreement and as of the
date of each Term Loan (as updated from time to time to reflect changes thereto
(a) as a result of matters expressly permitted under this Agreement or (b) consented
to by the Lenders pursuant to Section 10.8).  No representation, warranty or other written
statement made by or on behalf of a Loan Party pursuant to the terms of this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained therein not
misleading, it being recognized by Agent and Lenders that the projections and
forecasts provided by Loan Parties in good faith and based upon reasonable and
stated assumptions are not to be viewed as facts and that actual results during
the period or periods covered by any such projections and forecasts may differ
from the projected or forecasted results.

 

6.        AFFIRMATIVE COVENANTS.

 

6.1.     Good
Standing.  Each Loan
Party shall maintain its and each of its Subsidiaries’ existence and good
standing in its jurisdiction of organization and maintain qualification in each
jurisdiction in which the failure to so qualify could reasonably be expected to
have a Material Adverse Effect.  Each
Loan Party shall maintain, and shall cause each of its Subsidiaries to
maintain, in full force all licenses, approvals and agreements, the loss of
which could reasonably be expected to have a Material Adverse Effect.  “Subsidiary” means, with respect to a
Loan Party, any entity the management of which is, directly or indirectly
controlled by, or of which an aggregate of more than 50% of the outstanding
voting capital stock (or other voting equity interest) is, at the time, owned
or controlled, directly or indirectly by, such 

 

15

 

Loan Party or one or more Subsidiaries of such Loan Party, and, unless
the contest otherwise requires each reference to a Subsidiary herein shall be a
reference to a Subsidiary of Borrower.

 

6.2.     Notice to
Agent.  Loan Parties shall provide
Agent with (a) notice of any change in the accuracy of the Perfection
Certificate or any of the representations and warranties provided in Section 5
above, immediately upon the occurrence of any such change, (b) notice of
the occurrence of any Default or Event of Default, promptly (but in any event
within 5 days) after the date on which any officer of a Loan Party obtains
knowledge of the occurrence of any such event, (c) copies of all
statements, reports and notices made available generally by Borrower to its
securityholders and all documents filed with the Securities and Exchange
Commission (“SEC”) or any securities exchange or governmental authority
exercising a similar function, promptly, but in any event within 3 days of
delivering or receiving such information to or from such persons (provided that
to the extent the same are posted by Borrower on the internet, Borrower shall
only be obligated to give notice to Agent of such internet posting via
electronic mail to an electronic mail address provided by Agent from time to
time), (d) a report of any legal actions pending or threatened against
Borrower or any Subsidiary that could result in damages or costs to Borrower or
any Subsidiary of $250,000 or more promptly, but in any event within 5 days,
upon receipt of notice thereof, (e) at the time that Borrower delivers
each quarterly compliance certificate pursuant to Section 6.3, a summary
of any new applications or registrations that Borrower has made or filed in
respect of any Intellectual Property or any material adverse change in status
of any outstanding application or registration within 5 days of such
application, filing or adverse change in status, (f) notice of, and upon
request, copies of all material statements, reports and notices delivered to or
by a Loan Party in connection with any Material Agreement promptly (but in any
event within 5 days) upon receipt thereof, (g) notice of the occurrence of
any default or event of default under any Lease Agreement (as defined below),
promptly (but in any event within 3 Business Days) after the date on which any
officer of a Loan Party obtains knowledge of the occurrence of any such event
and (h) upon Agent’s reasonable request, Borrower shall deliver to Agent
within 5 days after such request a certification from an authorized officer of
the applicable Loan Party that no default or event default exists under any
Lease Agreement of such Loan Party.

 

6.3.     Financial
Statements.  If Borrower
is a private company, it shall deliver to Agent and Lenders (a) unaudited
consolidated and, if available, consolidating balance sheets, statements of
operations and cash flow statements within 30 days of each month end, in a form
acceptable to Agent and certified by Borrower’s president, chief executive
officer or chief financial officer, and (b) its complete annual audited
consolidated and, if available, consolidating financial statements prepared
under GAAP and certified without qualification by an independent certified
public accountant selected by Borrower and satisfactory to Agent within 120
days of the fiscal year end or, if sooner, at such time as Borrower’s Board of
Directors receives the certified audit. 
If Borrower is a publicly held company, Borrower shall (i) deliver
to Agent and Lenders via electronic mail to electronic mail addresses provided
by Agent and the Lenders from time to time notifying Agent and Lenders of the
posting by Borrower on the internet of the Borrower’s quarterly unaudited
consolidated and, if available, consolidating balance sheets, statements of
operations and cash flow statements and (ii) deliver to Agent and Lenders
copies of annual audited consolidated and, if available, consolidating balance
sheets, statements of operations and cash flow statements, certified without
qualification by a recognized firm of certified public accountants, within 5
days after the statements are required to be provided to the SEC and Borrower
shall deliver to Agent and Lenders within 30 days after the end of each month
reports of cash balances of the Loan Parties and monthly prescription numbers
for Glumetza  and  Proquin as compared to the current
budget.  All such statements (other than
the prescription numbers referenced in the immediately preceding sentence) are
to be prepared using GAAP (subject, in the case of unaudited financial
statements, to the absence of footnotes and normal year end audit adjustments)
and, if Borrower is a publicly held company, are to be in compliance with
applicable SEC requirements.  All annual
and quarterly financial statements delivered pursuant to this Section 6.3
shall be accompanied by a compliance certificate, signed by the chief 

 

16

 

financial officer or principal accounting officer of Borrower, in the
form attached hereto as Exhibit D, and a management discussion and
analysis that includes a comparison to budget for the respective fiscal period
and a comparison of performance for such fiscal period to the corresponding
period in the prior year.  Borrower shall
deliver to Agent and Lenders (i) as soon as available and in any event not
later than 60 days after the end of
each fiscal year of Borrower, a proposed annual operating budget for Borrower,
on a consolidated and, if available, consolidating basis, approved by the Board
of Directors of Borrower, for the current fiscal year,
in form satisfactory to Agent and (ii) such budgets, sales projections, or
other financial information as Agent or any Lender may reasonably request from
time to time generally prepared by Borrower in the ordinary course of business.

 

6.4.     Insurance.  Borrower, at its expense, shall maintain, and
shall cause each Subsidiary to maintain, insurance (including, without
limitation, comprehensive general liability, hazard, and business interruption
insurance) with respect to all of its properties and businesses (including, the
Collateral), in such amounts and covering such risks as is carried generally in
accordance with sound business practice by companies in similar businesses
similarly situated and in any event with deductible amounts, insurers and
policies that shall be reasonably acceptable to Agent.  Borrower shall deliver to Agent certificates
of insurance evidencing such coverage, together with endorsements to such
policies naming Agent as a lender loss payee or additional insured, as
appropriate, in form and substance reasonably satisfactory to Agent.  Each policy shall provide that coverage may
not be canceled or altered by the insurer except upon 30 days prior written
notice to Agent and shall not be subject to co-insurance.  Borrower appoints Agent as its
attorney-in-fact to make, settle and adjust all claims under and decisions with
respect to Borrower’s policies of insurance, and to receive payment of and
execute or endorse all documents, checks or drafts in connection with insurance
payments. Agent shall not act as Borrower’s attorney-in-fact unless an Event of
Default has occurred and is continuing. 
The appointment of Agent as Borrower’s attorney in fact is a power
coupled with an interest and is irrevocable until all of the Obligations are
indefeasibly paid in full. Proceeds of insurance shall be applied, at the
option of Agent, to repair or replace the Collateral or to reduce any of the
Obligations.

 

6.5.     Taxes.  Borrower shall, and shall cause each
Subsidiary to, timely file all tax reports and pay and discharge all taxes,
assessments and governmental charges or levies imposed upon it, or its income
or profits or upon its properties or any part thereof, before the same shall be
in default and before the date on which penalties attach thereto, except to the
extent such taxes, assessments and governmental charges or levies are the
subject of a Permitted Contest.

 

6.6.     Agreement
with Landlord/Bailee. 
Unless otherwise agreed to by the Agent in writing, each Loan Party
shall obtain and maintain such Access Agreement(s) with respect to any
real property on which (a) a Loan Party’s principal place of business, (b) a
Loan Party’s books or records or (c) Collateral with an aggregate value in
excess of $50,000 is located (other than real property owned by such Loan
Party) as Agent may require.  Within ten
Business Days after the due date for any rental payments set forth in any lease
agreement with respect to any real property described in the immediately
preceding sentence (each, a “Lease Agreement”), the Borrower shall
deliver to Agent evidence in form reasonably satisfactory to Agent that such
rental payment was made.

 

6.7.     Protection
of Intellectual Property.  Each
Loan Party shall take all necessary actions to: (a) protect, defend and
maintain the validity and enforceability of its Intellectual Property to the
extent material to the conduct of its business now or heretofore conducted by
it or proposed to be conducted by it, (b) promptly advise Agent in writing
of material infringements of its Intellectual Property that is material to such
Loan Party’s business (c) not allow any Intellectual Property material to
such Loan Party’s business to be abandoned, forfeited or dedicated to the
public without Agent’s written consent, and (d) notify Agent promptly, but
in any event within 3 days, if it knows or has reason to know that any
application or registration relating to any patent, trademark or copyright (now
or hereafter existing) 

 

17

 

material to its business may become abandoned or dedicated, or if any
adverse determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding
such Loan Party’s ownership of any Intellectual Property material to its
business, its right to register the same, or to keep and maintain the
same.  Each Loan Party shall remain
liable under each of its Intellectual Property licenses pursuant to which it is
a licensee (“Licenses”) to observe and perform all of the conditions and
obligations to be observed and performed by it thereunder, to the extent that
any such Licenses are material to the conduct of its business.  None of Agent or any Lender shall have any
obligation or liability under any such License by reason of or arising out of
this Agreement, the granting of a lien, if any, in such License or the receipt
by Agent (on behalf of itself and Lenders) of any payment relating to any such
License.  None of Agent or any Lender
shall be required or obligated in any manner to perform or fulfill any of the
obligations of any Loan Party under or pursuant to any License, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any License, or to present or file any claims, or to take any action to collect
or enforce any performance or the payment of any amounts which may have been
assigned to it or which it may be entitled at any time or times.

 

6.8.     Special
Collateral Covenants.

 

(a)         Each Loan Party shall remain
in possession of its respective Collateral solely at the location(s) specified
on the Perfection Certificate; except that Agent, on behalf of itself and
Lenders, shall have the right to possess (i) any chattel paper or
instrument that constitutes a part of the Collateral, (ii) any other
Collateral in which Agent’s security interest (on behalf of itself and Lenders)
may be perfected only by possession and (iii) any Collateral after the
occurrence of an Event of Default in accordance with this Agreement and the
other Debt Documents.

 

(b)         Each Loan Party shall (i) use
the Collateral only in its trade or business, (ii) maintain all of the
Collateral in good operating order and repair, normal wear and tear excepted,
and (iii) use and maintain the Collateral only in material compliance with
manufacturers’ recommendations and all applicable laws.

 

(c)         Agent and Lenders do not
authorize and each Loan Party agrees it shall not (i) part with possession
of any of the Collateral (except to Agent (on behalf of itself and Lenders),
for maintenance and repair or for a Permitted Disposition), or (ii) remove
any of the Collateral from the continental United States.

 

(d)         Each Loan Party shall pay
promptly when due all taxes, license fees, assessments and public and private
charges levied or assessed on any of the Collateral, on its use, or on this
Agreement or any of the other Debt Documents. 
In the event any Loan Party fails to pay any taxes, license fees,
assessments and public and private charges levied or assessed on any of the
Collateral when due, at its option, Agent may discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on the Collateral
and may pay for the maintenance, insurance and preservation of the Collateral
and effect compliance with the terms of this Agreement or any of the other Debt
Documents.  Each Loan Party agrees to
reimburse Agent, on demand, all costs and expenses incurred by Agent in
connection with such payment or performance and agrees that such reimbursement
obligation shall constitute Obligations.

 

(e)         Each Loan Party shall, at
all times, keep substantially accurate and complete records of the Collateral.

 

18

 

(f)          Each Loan Party
agrees and acknowledges that any third person who may at any time possess all
or any portion of the Collateral shall be deemed to hold, and shall hold, the
Collateral as the agent of, and as pledge holder for, Agent (on behalf of itself
and Lenders).  Upon the occurrence and
during the continuation of any Default, Agent may at any time give notice to
any third person described in the preceding sentence that such third person is
holding the Collateral as the agent of, and as pledge holder for, Agent (on
behalf of itself and Lenders).

 

(g)         Each Loan Party
shall, during normal business hours, and in the absence of a Default or an
Event of Default, upon one Business Day’s prior notice, as frequently as Agent
determines to be appropriate: (i) provide Agent (who may be accompanied by
representatives of any Lender) and any of its officers, employees and agents
access to the properties, facilities, advisors and employees (including
officers) of each Loan Party and to the Collateral, (ii) permit Agent (who
may be accompanied by representatives of any Lender), and any of its officers,
employees and agents, to inspect, audit and make extracts from any Loan Party’s
books and records (or at the request of Agent, deliver true and correct copies
of such books and records to Agent), and (iii) permit Agent (who may be
accompanied by representatives of any Lender), and its officers, employees and
agents, to inspect, review, evaluate and make test verifications and counts of
the Collateral of any Loan Party.  If
Agent asks, each Loan Party will promptly notify Agent in writing of the
location of any Collateral.  If a Default
or Event of Default has occurred and is continuing or if access is necessary to
preserve or protect the Collateral as determined by Agent or any Lender, each
such Loan Party shall provide such access to Agent and to each Lender at all
times and without advance notice.  Each
Loan Party shall make available to Agent and any Lender and their respective auditors
or counsel, as quickly as is possible under the circumstances, originals or
copies of all books and records that Agent or any Lender may reasonably
request.

 

6.9.     Further
Assurances.  Each Loan
Party shall, upon request of Agent, furnish to Agent such further information,
execute and deliver to Agent such documents and instruments (including, without
limitation, UCC financing statements) and shall do such other acts and things
as Agent may at any time reasonably request relating to the perfection or
protection of the security interest created by this Agreement or for the
purpose of carrying out the intent of this Agreement and the other Debt
Documents.

 

7.   NEGATIVE COVENANTS

 

7.1.     Liens.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, create, incur, assume or permit to exist any
lien, security interest, claim or encumbrance or grant any negative pledges on
any Collateral or Intellectual Property, except Permitted Liens.

 

7.2.     Indebtedness.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, directly or indirectly create, incur,
assume, permit to exist, guarantee or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness (as hereinafter defined),
except for (a) the Obligations, (b) Indebtedness existing on the date
hereof and set forth on Schedule B to this Agreement, and (c) Indebtedness
arising after the Closing Date and consisting of capitalized lease obligations
and purchase money Indebtedness, in each case incurred by Borrower or any of
its Subsidiaries to finance the acquisition, repair, improvement or
construction of fixed or capital assets of such person, provided that (i) the
aggregate outstanding principal amount of all such Indebtedness does not exceed
$250,000 at any time and (ii) the principal amount of such Indebtedness
does not exceed the lower of the cost or fair market value of the property so
acquired or built or of such repairs or improvements financed with such
Indebtedness (each measured at the time of such acquisition, repair, improvement
or construction is made).  The term “Indebtedness”
means, with respect to any person, at any date, without duplication, (i) all
obligations of such person for borrowed money, (ii) all obligations of
such person evidenced by bonds, 

 

19

 

debentures, notes or other similar instruments, or upon which interest
payments are customarily made, (iii) all obligations of such person to pay
the deferred purchase price of property or services, but excluding obligations
to trade creditors incurred in the ordinary course of business and not past due
by more than 90 days,  (iv) all
capital lease obligations of such person, (v) the principal balance
outstanding under any synthetic lease, tax retention operating lease,
off-balance sheet loan or similar off-balance sheet financing product, (vi) all
obligations of such person to purchase securities (or other property) which
arise out of or in connection with the issuance or sale of the same or
substantially similar securities (or property), (vii) all contingent or
non-contingent obligations of such person to reimburse any bank or other person
in respect of amounts paid under a letter of credit or similar instrument, (viii) all
equity securities of such person subject to repurchase or redemption otherwise
than at the sole option of such person, (ix) all “earnouts” and similar
payment obligations of such person, (x) all indebtedness secured by a lien
on any asset of such person, whether or not such indebtedness is otherwise an
obligation of such person, (xi) all obligations of such person under any
foreign exchange contract, currency swap agreement, interest rate swap, cap or
collar agreement or other similar agreement or arrangement designed to alter
the risks of that person arising from fluctuations in currency values or
interest rates, in each case whether contingent or matured, and (xii) all
obligations or liabilities of others guaranteed by such person.

 

7.3.     Dispositions.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, convey, sell, rent, lease, sublease,
mortgage, license, transfer or otherwise dispose of (collectively, “Transfer”)
any of the Collateral or any Intellectual Property, except for the following
(collectively, “Permitted Dispositions”): (a) sales of inventory in
the ordinary course of business, (b) dispositions by a Loan Party or any
of its Subsidiaries of tangible assets for cash and fair value that are no
longer used or useful in the business of such Loan Party or such Subsidiary so
long as (i) no Default or Event of Default exists at the time of such
disposition or would be caused after giving effect thereto and (ii) the
fair market value of all such assets disposed of does not exceed $100,000 in
the aggregate in any calendar year, (c) non-exclusive licenses for the use
of Borrower’s Intellectual Property in the ordinary course of business, and (d) exclusive
licenses for the use of Borrower’s Intellectual Property in the ordinary course
of business, so long as, with respect to each such exclusive license, (i) no
Default or Event of Default exists at the time of such Transfer, (ii) the
license constitutes an arms-length transaction made in connection with a bona
fide corporate collaboration in the ordinary course of business and the terms
of which, on their face, do not provide for a sale or assignment of any
Intellectual Property, (iii) Borrower delivers 10 days’ prior written
notice and a brief summary of the terms of the license to Agent, (iv) Borrower
delivers to Agent copies of the final executed licensing documents in
connection with the license promptly upon consummation of the license, and (v) all
royalties, milestone payments or other proceeds arising from the licensing
agreement are paid to a deposit account that is governed by an Account Control
Agreement.

 

7.4.     Change in
Name, Location or Executive Office; Change in Business; Change in Fiscal Year.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, (a) change its name or its state of organization,  (b) relocate its chief executive office
without 30 days prior written notification to Agent, (c) engage in any
business other than or reasonably related or incidental to the businesses
currently engaged in by such Loan Party or Subsidiary, (d) cease to
conduct business substantially in the manner conducted by such Loan Party or
Subsidiary as of the date of this Agreement or (e) change its fiscal year
end.

 

7.5.     Mergers or
Acquisitions.  No Loan
Party shall merge or consolidate, and no Loan Party shall permit any of its
Subsidiaries to merge or consolidate, with or into any other person or entity
(other than mergers of a Subsidiary into Borrower in which Borrower is the
surviving entity) or acquire, or permit any of its Subsidiaries to acquire, all
or substantially all of the capital stock or property of another person or
entity.  Notwithstanding the immediately
preceding sentence, the Borrower may merge with or be acquired by another
entity who assumes the Obligations under this Agreement and becomes a party
hereto if the Agent and each Lender consent in writing to such merger or
acquisition in their sole 

 

20

 

discretion and pursuant to documentation acceptable to Agent and
Lenders in their sole discretion (it being understood that Agent and Lenders
shall have no obligation to consent to such merger or acquisition).

 

7.6.     Restricted
Payments.  No Loan
Party shall, and no Loan Party shall permit any of its Subsidiaries to, (a) declare
or pay any dividends or make any other distribution or payment on account of or
redeem, retire, defease or purchase any capital stock, including, without
limitation, any preferred stock (other than the payment of dividends to
Borrower), (b) purchase, redeem, defease or prepay any principal of,
premium, if any, interest or other amount payable in respect of any
Indebtedness prior to its scheduled maturity, (c) make any payment in
respect of management fees or consulting fees (or similar fees) to any
equityholder or other affiliate of Borrower that owns more than 1% of the stock
of Borrower, or (d) be a party to or bound by an agreement that restricts
a Subsidiary from paying dividends or otherwise distributing property to
Borrower.

 

7.7.     Investments.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, directly or indirectly (a) acquire or
own, or make any loan, advance or capital contribution (an “Investment”)
in or to any person or entity, (b) acquire or create any Subsidiary, or (c) engage
in any joint venture or partnership with any other person or entity, other
than: (i) Investments existing on the date hereof and set forth on
Schedule B to this Agreement, (ii) Investments in cash and Cash
Equivalents (as defined below), and (iii) loans or advances to employees
of Borrower or any of its Subsidiaries to finance travel, entertainment and
relocation expenses and other ordinary business purposes in the ordinary course
of business as presently conducted, provided that the aggregate outstanding principal
amount of all loans and advances permitted pursuant to this clause (iii) shall
not exceed $100,000 at any time (collectively, the “Permitted Investments”).  The term “Cash Equivalents” means (v) any
readily-marketable securities (i) issued by, or directly, unconditionally
and fully guaranteed or insured by the United States federal government or (ii) issued
by any agency of the United States federal government the obligations of which
are fully backed by the full faith and credit of the United States federal
government, (w) any readily-marketable direct obligations issued by any
other agency of the United States federal government, any state of the United
States or any political subdivision of any such state or any public
instrumentality thereof, in each case having a rating of at least “A-1” from
S&P or at least “P-1” from Moody’s, (x) any commercial paper rated at
least “A-1” by S&P or “P-1” by Moody’s and issued by any
entity organized under the laws of any state of the United States, (y) any
U.S. dollar-denominated time deposit, insured certificate of deposit, overnight
bank deposit or bankers’ acceptance issued or accepted by (i) Agent or (ii) any
commercial bank that is (A) organized under the laws of the United States,
any state thereof or the District of Columbia, (B) “adequately capitalized”
(as defined in the regulations of its primary federal banking regulators) and (C) has
Tier 1 capital (as defined in such regulations) in excess of $250,000,000 or (z) shares
of any United States money market fund that (i) has substantially all of
its assets invested continuously in the types of investments referred to in clause
(v), (w), (x) or (y) above with maturities as set
forth in the proviso below, (ii) has net assets in excess of $500,000,000
and (iii) has obtained from either S&P or Moody’s the highest rating
obtainable for money market funds in the United States; provided, however,
that the maturities of all obligations specified in any of clauses (v), (w),
(x) and (y) above shall not exceed 365 days.  For the avoidance of doubt, “Cash Equivalents”
does not include (and each Loan Party is prohibited from purchasing or
purchasing participations in) any auction rate securities or other corporate or
municipal bonds with a long-term nominal maturity for which the interest rate
is reset through a Dutch auction.

 

7.8.     Transactions
with Affiliates.  No Loan
Party shall, and no Loan Party shall permit any of its Subsidiaries to,
directly or indirectly enter into or permit to exist any transaction with any
Affiliate (as defined below) of a Loan Party or any Subsidiary of a Loan Party
except for transactions that are in the ordinary course of such Loan Party’s or
such Subsidiary’s business, upon fair and reasonable terms that are no more
favorable to such Affiliate than would be obtained in an arm’s length
transaction.  As used 

 

21

 

herein, “Affiliate” means, with respect to a Loan Party or any
Subsidiary of a Loan Party, (a) each person that, directly or indirectly,
owns or controls 10% or more of the stock or membership interests having
ordinary voting power in the election of directors or managers of such Loan
Party or such Subsidiary, and (b) each person that controls, is controlled
by or is under common control with such Loan Party or such Subsidiary.

 

7.9.     Compliance.  No Loan Party shall, and no Loan Party shall
permit any of its Subsidiaries to, (a) fail to comply with the laws and
regulations described in clauses (b) or (c) of Section 5.8
herein, (b) use any portion of the Term Loans to purchase or carry margin
stock (within the meaning of Regulation U of the Federal Reserve Board) or (c) fail
to comply in any material respect with, or violate in any material respect any
other law or regulation applicable to it.

 

7.10.   Deposit
Accounts and Securities Accounts.  No Loan Party shall directly or indirectly
maintain or establish any deposit account or securities account, unless Agent,
the applicable Loan Party or Loan Parties and the depository institution or
securities intermediary at which the account is or will be maintained enter
into a deposit account control agreement or securities account control
agreement, as the case may be, in form and substance satisfactory to Agent (an “Account
Control Agreement”) (which agreement shall provide, among other things,
that (i) such depository institution or securities intermediary has no
rights of setoff or recoupment or any other claim against such deposit or
securities account (except as agreed to by Agent), other than for payment of
its service fees and other charges directly related to the administration of
such account and for returned checks or other items of payment, and (ii) such
depository institution or securities intermediary shall comply with all
instructions of Agent without further consent of such Loan Party or Loan
Parties, as applicable, including, without limitation, an instruction by Agent
to comply exclusively with instructions of the Agent with respect to such
account (such notice, a “Notice of Exclusive Control”)), prior to or
concurrently with the establishment of such deposit account or securities
account (or in the case of any such deposit account or securities account
maintained as of the date hereof, on or before the Closing Date.  Agent may only give a Notice of Exclusive
Control with respect to any deposit account or securities account at any time
at which an Event of Default has occurred and is continuing.  At the request of Agent, Borrower shall
create or designate a dedicated deposit account or accounts to be used
exclusively for payroll or withholding tax purposes.

 

7.11.   Amendments
to Other Agreements.  No Loan
Party shall amend, modify or waive any provision of (a) any Material
Agreement (unless the net effect of such amendment, modification of waiver is
not adverse to any Loan Party, Agent or Lenders), or  (b) any of such Loan Party’s organizational documents,
in each case, without the prior written consent of Agent and the Requisite
Lenders.

 

8.   DEFAULT AND REMEDIES.

 

8.1.     Events of
Default.  Loan Parties
shall be in default under this Agreement and each of the other Debt Documents
if (each of the following, an “Event of Default”):

 

(a)         Borrower shall
fail to pay (i) any principal when due, or (ii) any interest, fees or
other Obligations (other than as specified in clause (i)) within a period of 3
Business Days after the due date thereof (other than on any Applicable Term
Loan Maturity Date);

 

(b)         any Loan Party
breaches any of its obligations under Section 6.1 (solely as it relates to
maintaining its existence), Section 6.2, Section 6.3, Section 6.4
or Article 7;

 

(c)         any Loan Party
breaches any of its other obligations under any of the Debt Documents and fails
to cure such breach within 30 days after the earlier of (i) the date on
which an officer of such Loan Party becomes aware, or through the exercise of
reasonable diligence 

 

22

 

should
have become aware, of such failure and (ii) the date on which notice shall
have been given to Borrower from Agent;

 

(d)         any warranty,
representation or statement made or deemed made by or on behalf of any Loan
Party in any of the Debt Documents or otherwise in connection with any of the
Obligations shall be false or misleading in any material respect at the time
such warranty, representations or statement was made or deemed to be made;

 

(e)         any of the
Collateral with a value of more than $50,000 in the
aggregate is subjected to attachment, execution, levy, seizure or confiscation
in any legal proceeding or otherwise, or if any legal or administrative
proceeding is commenced against any Loan Party or any of the Collateral, which in the good faith judgment of
Agent subjects any of the Collateral with a value of more than $50,000 in the aggregate to a material risk of attachment,
execution, levy, seizure or confiscation and no bond is posted or protective
order obtained to negate such risk;

 

(f)          one or more
judgments, orders or decrees shall be rendered against any Loan Party or any
Subsidiary of a Loan Party that exceeds by more than $100,000 any insurance
coverage applicable thereto (to the extent the relevant insurer has been
notified of such claim and has not denied coverage therefor) and either (i) enforcement
proceedings shall have been commenced by any creditor upon any such judgment,
order or decree or (ii) such judgment, order or decree shall not have been
vacated or discharged for a period of 10 consecutive days and there shall not
be in effect (by reason of a pending appeal or otherwise) any stay of
enforcement thereof;

 

(g)         (i) any
Loan Party or any Subsidiary of a Loan Party shall generally not pay its debts
as such debts become due, shall admit in writing its inability to pay its debts
generally, shall make a general assignment for the benefit of creditors, or shall
cease doing business as a going concern, (ii) any proceeding shall be
instituted by or against any Loan Party or any Subsidiary of a Loan Party
seeking to adjudicate it a bankrupt or insolvent or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief,
composition of it or its debts or any similar order, in each case under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors or
seeking the entry of an order for relief or the appointment of a custodian,
receiver, trustee, conservator, liquidating agent, liquidator, other similar
official or other official with similar powers, in each case for it or for any
substantial part of its property and, in the case of any such proceedings
instituted against (but not by or with the consent of) such Loan Party or such
Subsidiary, either such proceedings shall remain undismissed or unstayed for a
period of 45 days or more or any action sought in such proceedings shall
occur or (iii) any Loan Party or any Subsidiary of a Loan Party shall take
any corporate or similar action or any other action to authorize any action
described in clause (i) or (ii) above;

 

(h)         an event or
development occurs which has had a Material Adverse Effect;

 

(i)          (i) any
provision of any Debt Document shall fail to be valid and binding on, or
enforceable against, a Loan Party party thereto, or (ii) any Debt Document
purporting to grant a security interest to secure any Obligation shall fail to
create a valid and enforceable security interest on any Collateral purported to
be covered thereby or such security interest shall fail or cease to be a
perfected lien with the priority required in the relevant Debt Document, or any
Loan Party shall state in writing that any of the events described in clause
(i) or (ii) above shall have occurred;

 

(j)          (i) any
Loan Party or any Subsidiary of a Loan Party defaults under any Material
Agreement (after any applicable grace period contained therein) and the effect
of such default is 

 

23

 

Confidential Information, indicated by [***],
has been omitted from this filing and filed separately with the Securities
Exchange Commission

 

to
permit the counterparty thereto to terminate such Material Agreement, (ii) (A) any
Loan Party or any Subsidiary of a Loan Party fails to make (after any
applicable grace period) any payment when due (whether due because of
scheduled maturity, required prepayment provisions, acceleration, demand or
otherwise) on any Indebtedness (other than the Obligations) of such Loan Party
or such Subsidiary having an aggregate principal amount (including
undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated credit arrangement) of more than
$250,000 (“Material Indebtedness”), (B) any other event shall occur
or condition shall exist under any contractual obligation relating to any such
Material Indebtedness, if the effect of such event or condition is to
accelerate, or to permit the acceleration of (without regard to any
subordination terms with respect thereto), the maturity of such
Material Indebtedness or (C) any such Material Indebtedness shall become
or be declared to be due and payable, or be required to be prepaid, redeemed,
defeased or repurchased (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof, or (iii) Borrower or
any Subsidiary defaults (beyond any applicable grace period) under any
obligation for payments due or otherwise under any lease agreement that meets
the criteria for the requirement of an Access Agreement under Section 6.6
and the effect of such default is to permit the landlord to terminate such
lease; or

 

(k)          (i) the
acquisition, directly or indirectly, by any person or group (as such term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) of [***]
of the voting power of the voting stock of Borrower by way of merger or
consolidation or otherwise, or (ii) Borrower ceases to own and control,
directly or indirectly, all of the economic and voting rights associated with
the outstanding voting capital stock (or other voting equity interest) of each
of its Subsidiaries.

 

8.2.     Lender
Remedies.  Upon the
occurrence of any Event of Default, Agent shall, at the written request of the
Requisite Lenders, terminate the Commitments with respect to further Term Loans
and declare any or all of the Obligations to be immediately due and payable,
without demand or notice to any Loan Party and the accelerated Obligations
shall bear interest at the Default Rate pursuant to Section 2.6, provided
that, upon the occurrence of any Event of Default specified in Section 8.1(g) above,
the Commitments shall be automatically terminated and the Obligations shall be
automatically accelerated.  Upon the
occurrence of an Event of Default, Agent shall have (on behalf of itself and
Lenders) all of the rights and remedies of a secured party under the UCC, and
under any other applicable law; provided, however, that Agent shall not
commence the exercise of such rights and remedies without the prior written
request of Requisite Lenders.  Without
limiting the foregoing, Agent shall have the right to, and at the written
request of the Required Lenders shall,  (a) notify
any account debtor of any Loan Party or any obligor on any instrument which
constitutes part of the Collateral to make payments to Agent (for the benefit
of itself and Lenders), (b) with or without legal process, enter any
premises where the Collateral may be and take possession of and remove the
Collateral from the premises or store it on the premises, (c) sell the
Collateral at public or private sale, in whole or in part, and have the right
to bid and purchase at such sale, or (d) lease or otherwise dispose of all
or part of the Collateral, applying proceeds from such disposition to the
Obligations in accordance with Section 8.4.  If requested by Agent, Loan Parties shall
promptly assemble the Collateral and make it available to Agent at a place to
be designated by Agent.  Agent may also render
any or all of the Collateral unusable at a Loan Party’s premises and may
dispose of such Collateral on such premises without liability for rent or
costs.  Any notice that Agent is required
to give to a Loan Party under the UCC of the time and place of any public sale
or the time after which any private sale or other intended disposition of the
Collateral is to be made shall be deemed to constitute reasonable notice if
such notice is given in accordance with this Agreement at least 5 days prior to
such action.  Effective only upon the
occurrence and during the continuance of an Event of Default, each Loan Party
hereby irrevocably appoints Agent (and any of Agent’s designated officers or
employees) as such Loan Party’s true and lawful attorney to: (i) take any
of the actions specified above in this paragraph; 

 

24

 

(ii) endorse such Loan Party’s name on any checks or other forms
of payment or security that may come into Agent’s possession; (iii) settle
and adjust disputes and claims respecting the accounts directly with account
debtors, for amounts and upon terms which Agent determines to be reasonable;
and (iv) do such other and further acts and deeds in the name of such Loan
Party that Agent may deem necessary or desirable to enforce its rights in or to
any of the Collateral or to perfect or better perfect Agent’s security interest
(on behalf of itself and Lenders) in any of the Collateral.  The appointment of Agent as each Loan Party’s
attorney in fact is a power coupled with an interest and is irrevocable until
the Termination Date. Notwithstanding any provision of this Section 8.2
to the contrary, upon the occurrence of any Event of Default, Agent shall have
the right to exercise any and all remedies referenced in this Section 8.2
without the written consent of Requisite Lenders following the occurrence of an
Exigent Circumstance.  As used in the
immediately preceding sentence, “Exigent Circumstance” means
any event or circumstance that, in the reasonable judgment of Agent, imminently
threatens the ability of Agent to realize upon all or any material portion of
the Collateral, such as, without limitation, fraudulent removal, concealment,
or abscondment thereof, destruction or material waste thereof, or failure of
any Loan Party after reasonable demand to maintain or reinstate adequate
casualty insurance coverage, or which, in the judgment of Agent, could result
in a material diminution in value of the Collateral.

 

8.3.     Additional
Remedies. In addition to the remedies provided in Section 8.2
above, each Loan Party hereby grants to Agent (on behalf of itself and Lenders)
and any transferee of Collateral, for the sole purpose of exercising its
remedies as provided herein, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to any Loan Party) to use,
license or sublicense any Intellectual Property now owned or hereafter acquired
by such Loan Party, and wherever the same may be located, and including in such
license access to all media in which any of the licensed items may be recorded
or stored and to all computer software and programs used for the compilation or
printout thereof.

 

8.4.     Application
of Proceeds.  Proceeds
from any Transfer of the Collateral or the Intellectual Property (other than
Permitted Dispositions) and all payments made to or proceeds of Collateral
received by Agent during the continuance of an Event of Default shall be
applied as follows: (a) first, to pay all fees, costs, indemnities,
reimbursements and expenses then due to Agent under the Debt Documents in its
capacity as Agent under the Debt Documents, (b) second, to pay all fees,
costs, indemnities, reimbursements and expenses then due to Lenders under the
Debt Documents in accordance with their respective Pro Rata Shares of the Total
Commitment, until paid in full, (c) third, to pay all interest on the Term
Loans then due to Lenders in accordance with their respective Pro Rata Shares
of the Term Loans, until paid in full (other than interest accrued after the
commencement of any proceeding referred to in Section 8.1(g) if a
claim for such interest is not allowable in such proceeding), (d) fourth,
to pay all principal on the Term Loans then due to Lenders in accordance with
their respective Pro Rata Shares of the Term Loans, until paid in full, (e) fifth,
to pay all other Obligations then due to Lenders in accordance with their
respective Pro Rata Shares of the Total Commitment, until paid in full
(including, without limitation, all interest accrued after the commencement of
any proceeding referred to in Section 8.1(g) whether or not a claim
for such interest is allowable in such proceeding), and (f) sixth, to
Borrower or as otherwise required by law. 
Borrower shall remain fully liable for any deficiency.

 

9.   THE AGENT.

 

9.1.     Appointment
of Agent.

 

(a)          Each Lender
hereby appoints GECC (together with any successor Agent pursuant to Section 9.9)
as Agent under the Debt Documents and authorizes the Agent to (a) execute
and deliver the Debt Documents and accept delivery thereof on its behalf from
Loan Parties, (b) take such action on its behalf and to exercise all
rights, powers and remedies and perform the duties as are expressly delegated
to the Agent under such Debt Documents and (c) exercise such powers as 

 

25

 

are
reasonably incidental thereto.  The
provisions of this Article 9 are solely for the benefit of Agent and
Lenders and none of Loan Parties nor any other person shall have any rights as
a third party beneficiary of any of the provisions hereof.  In performing its functions and duties under
this Agreement and the other Debt Documents, Agent shall act solely as an agent
of Lenders and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any Loan Party or any
other person.  Agent shall have no duties
or responsibilities except for those expressly set forth in this Agreement and
the other Debt Documents.  The duties of
Agent shall be mechanical and administrative in nature and Agent shall not
have, or be deemed to have, by reason of this Agreement, any other Debt
Document or otherwise a fiduciary or trustee relationship in respect of any
Lender.  Except as expressly set forth in
this Agreement and the other Debt Documents, Agent shall not have any duty to
disclose, and shall not be liable for failure to disclose, any information
relating to Borrower or any of its Subsidiaries that is communicated to or
obtained by GECC or any of its affiliates in any capacity.

 

(b)         Without
limiting the generality of clause (a) above, Agent shall have the sole and
exclusive right and authority (to the exclusion of the Lenders), and is hereby
authorized, to (i) act as the disbursing and collecting agent for the
Lenders with respect to all payments and collections arising in connection with
the Debt Documents (including in any other bankruptcy, insolvency or similar
proceeding), and each person making any payment in connection with any Debt
Document to any Lender is hereby authorized to make such payment to Agent, (ii) subject
to Section 8.2 hereof, file and prove claims and file other documents
necessary or desirable to allow the claims of Agent and Lenders with respect to
any Obligation in any proceeding described in any bankruptcy, insolvency or
similar proceeding (but not to vote, consent or otherwise act on behalf of such
Lender), (iii) act as collateral agent for Agent and each Lender for
purposes of the perfection of all liens created by the Debt Documents and all
other purposes stated therein, (iv) subject to Section 8.2 hereof,
manage, supervise and otherwise deal with the Collateral, other than any release of a security interest in the
Collateral requiring the consent of Requisite Lenders or all Lenders under
Sections 10.8(b) or 10.8(c) (provided that Agent may so release such
security interest if such consent is obtained), (v) take such other
action as is necessary or desirable to maintain the perfection and priority of
the liens created or purported to be created by the Debt Documents, (vi) except
as may be otherwise specified in any Debt Document (including where the consent
or approval of all Lenders or the Requisite Lenders is required by the terms
thereof) and subject to Sections 8.2 and 10.8 hereof, exercise all remedies
given to Agent and the other Lenders with respect to the Collateral, whether
under the Debt Documents, applicable law or otherwise and (vii) execute
any amendment, consent or waiver under the Debt Documents on behalf of any Lender
that has consented in writing to such amendment, consent or waiver; provided,
however, that Agent hereby appoints, authorizes and directs each Lender
to act as collateral sub-agent for Agent and the Lenders for purposes of the
perfection of all liens with respect to the Collateral, including any deposit
account maintained by a Loan Party with, and cash and cash equivalents held by,
such Lender, and may further authorize and direct the Lenders to take further
actions as collateral sub-agents for purposes of enforcing such liens or
otherwise to transfer the Collateral subject thereto to Agent, and each Lender
hereby agrees to take such further actions to the extent, and only to the
extent, so authorized and directed. 
Agent may, upon any term or condition it specifies, delegate or exercise
any of its rights, powers and remedies under, and delegate or perform any of
its duties or any other action with respect to, any Debt Document by or through
any trustee, co-agent, employee, attorney-in-fact and any other person
(including any Lender).  Any such person
shall benefit from this Article 9 to the extent provided by Agent.

 

(c)          If Agent shall
request instructions from Requisite Lenders or all affected Lenders with
respect to any act or action (including failure to act) in connection with this
Agreement or 

 

26

 

any
other Debt Document, then Agent shall be entitled to refrain from such act or
taking such action unless and until Agent shall have received instructions from
Requisite Lenders or all affected Lenders, as the case may be, and Agent shall
not incur liability to any person by reason of so refraining.  Agent shall be fully justified in failing or
refusing to take any action hereunder or under any other Debt Document (a) if
such action would, in the opinion of Agent, be contrary to law or any Debt
Document, (b) if such action would, in the opinion of Agent, expose Agent
to any potential liability under any law, statute or regulation or (c) if
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. 
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Debt Document in accordance with the instructions
of Requisite Lenders or all affected Lenders, as applicable.

 

9.2.     Agent’s
Reliance, Etc.  Neither
Agent nor any of its affiliates nor any of their respective directors,
officers, agents, employees or representatives shall be liable for any action
taken or omitted to be taken by it or them hereunder or under any other Debt
Documents, or in connection herewith or therewith, except for damages caused by
its or their own gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction. 
Without limiting the generality of the foregoing, Agent:  (a) may treat the payee of any Note as
the holder thereof until such Note has been assigned in accordance with Section 10.1;
(b) may consult with legal counsel, independent public accountants and
other experts, whether or not selected by it, and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) shall not be
responsible or otherwise incur liability for any action or omission taken in
reliance upon the instructions of the Requisite Lenders, (d) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Debt Documents; (e) shall not have
any duty to inspect the Collateral (including the books and records) or to
ascertain or to inquire as to the performance or observance of any provision of
any Debt Document, whether any condition set forth in any Debt Document is
satisfied or waived, as to the financial condition of any Loan Party or as to
the existence or continuation or possible occurrence or continuation of any
Default or Event of Default and shall not be deemed to have notice or knowledge
of such occurrence or continuation unless it has received a notice from
Borrower or any Lender describing such Default or Event of Default clearly
labeled “notice of default”; (f) shall not be responsible to any
Lender for the due execution, legality, validity, enforceability,
effectiveness, genuineness, sufficiency or value of, or the attachment,
perfection or priority of any lien created or purported to be created under or
in connection with, any Debt Document or any other instrument or document
furnished pursuant hereto or thereto; and (g) shall incur no liability
under or in respect of this Agreement or the other Debt Documents by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telecopy, telegram, cable or telex) believed by it to be genuine and
signed or sent or otherwise authenticated by the proper party or parties.

 

9.3.     GECC and
Affiliates.  GECC shall
have the same rights and powers under this Agreement and the other Debt
Documents as any other Lender and may exercise the same as though it were not
Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly
indicated, include GECC in its individual capacity.  GECC and its affiliates may lend money to,
invest in, and generally engage in any kind of business with, Borrower, any of
Borrower’s Subsidiaries, any of their Affiliates and any person who may do
business with or own securities of Borrower, any of Borrower’s Subsidiaries or
any such Affiliate, all as if GECC were not Agent and without any duty to
account therefor to Lenders.  GECC and
its affiliates may accept fees and other consideration from Borrower for
services in connection with this Agreement or otherwise without having to
account for the same to Lenders.  Each
Lender acknowledges the potential conflict of interest between GECC as a Lender
holding disproportionate interests in the Term 

 

27

 

Loans and GECC as Agent, and expressly consents to, and waives, any
claim based upon, such conflict of interest.

 

9.4.     Lender
Credit Decision.  Each Lender
acknowledges that it has, independently and without reliance upon Agent or any
other Lender and based on the financial statements referred to in Section 6.3
and such other documents and information as it has deemed appropriate, made its
own credit and financial analysis of each Loan Party and its own decision to
enter into this Agreement.  Each Lender
also acknowledges that it will, independently and without reliance upon Agent
or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.  Each Lender acknowledges the potential
conflict of interest of each other Lender as a result of Lenders holding
disproportionate interests in the Term Loans, and expressly consents to, and
waives, any claim based upon, such conflict of interest.

 

9.5.     Indemnification.  Lenders shall and do hereby indemnify Agent
(to the extent not reimbursed by Loan Parties and without limiting the
obligations of Loan Parties hereunder), ratably according to their respective
Pro Rata Shares of the Total Commitment from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever that
may be imposed on, incurred by, or asserted against Agent in any way relating
to or arising out of this Agreement or any other Debt Document or any action
taken or omitted to be taken by Agent in connection therewith; provided
that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction. Without
limiting the foregoing, each Lender agrees to reimburse Agent promptly upon
demand for its Pro Rata Share of the Total Commitment of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Debt Document, to the extent that Agent is not
reimbursed for such expenses by Loan Parties. 
The provisions of this Section 9.5 shall survive the termination of
this Agreement.

 

9.6.     Successor
Agent.  Agent may resign at any time
by giving not less than 30 days’ prior written notice thereof to Lenders and
Borrower.  Upon any such resignation, the
Requisite Lenders shall have the right to appoint a successor Agent.  If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within 30 days after the resigning Agent’s giving notice of resignation, then
the resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary
of a commercial bank or financial institution if such commercial bank or
financial institution is organized under the laws of the United States of
America or of any State thereof and has a combined capital and surplus of at
least $300,000,000.  If no successor
Agent has been appointed pursuant to the foregoing, within 30 days after the
date such notice of resignation was given by the resigning Agent, such resignation
shall become effective and the Requisite Lenders shall thereafter perform all
the duties of Agent hereunder until such time, if any, as the Requisite Lenders
appoint a successor Agent as provided above. 
Upon the acceptance of any appointment as Agent hereunder by a successor
Agent, such successor Agent shall succeed to and become vested with all the
rights, powers, privileges and duties of the resigning Agent.  Upon the earlier of the acceptance of any
appointment as Agent hereunder by a successor Agent or the effective date of
the resigning Agent’s resignation, the resigning Agent shall be discharged from
its duties and obligations under this Agreement and the other Debt Documents,
except that any indemnity rights or other rights in favor of such resigning
Agent shall continue.  After any
resigning Agent’s resignation hereunder, the provisions of this Section 9 

 

28

 

shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was acting as Agent under this Agreement and the other
Debt Documents.

 

9.7.     Setoff and
Sharing of Payments.  In addition
to any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default and subject to Section 9.8(e), each Lender is
hereby authorized at any time or from time to time upon the direction of Agent,
without notice to Borrower or any other person, any such notice being hereby
expressly waived, to offset and to appropriate and to apply any and all
balances held by it at any of its offices for the account of Borrower
(regardless of whether such balances are then due to Borrower) and any other
properties or assets at any time held or owing by that Lender or that holder to
or for the credit or for the account of Borrower against and on account of any
of the Obligations that are not paid when due. 
Any Lender exercising a right of setoff or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participations in each such other Lender’s or holder’s Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
offset or otherwise received with each other Lender or holder in accordance
with their respective Pro Rata Shares of the Obligations.  Borrower agrees, to the fullest extent
permitted by law, that (a) any Lender may exercise its right to offset
with respect to amounts in excess of its Pro Rata Share of the Obligations and
may sell participations in such amounts so offset to other Lenders and holders
and (b) any Lender so purchasing a participation in the Term Loans made or
other Obligations held by other Lenders or holders may exercise all rights of
offset, bankers’ lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender or holder were a direct holder of the
Term Loans and the other Obligations in the amount of such participation.  Notwithstanding the foregoing, if all or any
portion of the offset amount or payment otherwise received is thereafter
recovered from the Lender that has exercised the right of offset, the purchase
of participations by that Lender shall be rescinded and the purchase price
restored without interest.  The term “Pro
Rata Share” means, (i) with respect to the Term Loan A
Commitment, Term Loan B Commitment or Term Loan C Commitment of any Lender at
any time, the percentage obtained by dividing (x) the Term Loan A
Commitment, Term Loan B Commitment or Term Loan C Commitment, as applicable, of
such Lender then in effect (or, if Term Loan A Commitment, Term Loan B
Commitment or Term Loan C Commitment is terminated, the aggregate outstanding
principal amount of the applicable Term Loan A, Term Loan B or Term Loan C, as
applicable, owing to such Lender) by (y) the Aggregate Term Loan A
Commitment, Aggregate Term Loan B Commitment or Aggregate Term Loan C
Commitment, as applicable, then in effect (or, if the Aggregate Term Loan A
Commitment, Aggregate Term Loan B Commitment or Aggregate Term Loan C
Commitment is terminated, the outstanding principal amount of the Term Loan A,
Term Loan B or Term Loan C, as applicable, owing to all Lenders) and (ii) with
respect to all Commitments of the Lenders, the percentage obtained by dividing (x) all
Commitments of such Lender then in effect (or, if a Commitment is terminated,
the aggregate outstanding principal amount of the Term Loan advanced under such
Commitment owing to such Lender) by (y) the Total Commitment then in
effect (or, if a Commitment is terminated, the outstanding principal amount of
the applicable Term Loan advanced under such Commitment owing to all Lenders).

 

9.8.     Advances;
Payments; Non-Funding Lenders; Information; Actions in Concert.

 

(a)          Advances;
Payments.  If Agent
receives any payment for the account of Lenders on or prior to 11:00 a.m.
(New York time) on any Business Day, Agent shall pay to each applicable Lender
such Lender’s Pro Rata Share of such payment on such Business Day. If Agent
receives any payment for the account of Lenders after 11:00 a.m. (New
York time) on any Business Day, Agent shall pay to each applicable Lender such
Lender’s Pro Rata Share of such payment on the next Business Day. To the extent
that any Lender has failed to fund any such payments and Term 

 

29

 

Loans
(a “Non-Funding Lender”), Agent shall be entitled to set off the funding
short-fall against that Non-Funding Lender’s Pro Rata Share of all
payments received from Borrower.

 

(b)         Return of
Payments.

 

(i)                    If Agent pays
an amount to a Lender under this Agreement in the belief or expectation that a
related payment has been or will be received by Agent from a Loan Party and
such related payment is not received by Agent, then Agent will be entitled to
recover such amount (including interest accruing on such amount at the Federal
Funds Rate for the first Business Day and thereafter, at the rate otherwise
applicable to such Obligation) from such Lender on demand without setoff,
counterclaim or deduction of any kind.

 

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

 

(c)          Non-Funding
Lenders.  The failure of any Non-Funding
Lender to make any Term Loan or any payment required by it hereunder shall not
relieve any other Lender (each such other Lender, an “Other Lender”) of
its obligations to make such Term Loan, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make a Term
Loan or make any other payment required hereunder.  Notwithstanding anything set forth herein to
the contrary, a Non-Funding Lender shall not have any voting or consent rights
under or with respect to any Debt Document or constitute a “Lender” (or be
included in the calculation of “Requisite Lender” hereunder) for any voting or
consent rights under or with respect to any Debt Document.  At Borrower’s request, Agent or a person
reasonably acceptable to Agent shall have the right with Agent’s consent and in
Agent’s sole discretion (but shall have no obligation) to purchase from any
Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent’s
request, sell and assign to Agent or such person, all of the Commitments and
all of the outstanding Term Loans of that Non-Funding Lender for an amount
equal to the principal balance of all Term Loans held by such Non-Funding Lender
and all accrued interest and fees with respect thereto through the date of
sale, such purchase and sale to be consummated pursuant to an executed
Assignment Agreement (as defined below).

 

(d)         Dissemination
of Information.  Agent shall
use reasonable efforts to provide Lenders with any notice of Default or Event
of Default received by Agent from, or delivered by Agent to Borrower, with
notice of any Event of Default of which Agent has actually become aware and
with notice of any action taken by Agent following any Event of Default; provided
that Agent shall not be liable to any Lender for any failure to do so, except
to the extent that such failure is attributable to Agent’s gross negligence or
willful misconduct as finally determined by a court of competent
jurisdiction.  Lenders acknowledge that
Borrower is required to provide financial statements to Lenders in accordance
with Section 6.3  hereto and
agree that Agent shall have no duty to provide the same to Lenders.

 

(e)          Actions in
Concert.  Anything in this Agreement to
the contrary notwithstanding, each Lender hereby agrees with each other Lender
that no Lender shall take any action to protect 

 

30

 

or
enforce its rights arising out of this Agreement, the Notes or any other Debt
Documents (including exercising any rights of setoff) without first obtaining
the prior written consent of Agent and Requisite Lenders, it being the intent
of Lenders that any such action to protect or enforce rights under this Agreement
and the Notes shall be taken in concert and at the direction or with the
consent of Agent and Requisite Lenders.

 

10.        MISCELLANEOUS.

 

10.1.   Assignment.  Subject to the terms of this Section 10.1,
any Lender may make an assignment to an assignee of, or sell participations in,
at any time or times, the Debt Documents, its Commitment, Term Loans or any
portion thereof or interest therein, including any Lender’s rights, title,
interests, remedies, powers or duties thereunder.  Any assignment by a Lender shall: (i) except
in the case of an assignment to a Qualified Assignee (as defined below),
require the consent of each Lender (which consent shall not be unreasonably
withheld, conditioned or delayed), (ii) require the execution of an
assignment agreement in form and substance reasonably satisfactory to, and
acknowledged by, Agent (an “Assignment Agreement”); (iii) be
conditioned on such assignee Lender representing to the assigning Lender and
Agent that it is purchasing the applicable Commitment and/or Term Loans to be
assigned to it for its own account, for investment purposes and not with a view
to the distribution thereof; (iv) be in an aggregate amount of not less
than $1,000,000, unless such assignment is made to an existing Lender or an
affiliate of an existing Lender or is of the assignor’s (together with its
affiliates’) entire interest of the Term Loans or is made with the prior
written consent of Agent; and (v) include a payment to Agent of an
assignment fee of $3,500.  In the case of
an assignment by a Lender under this Section 10.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits and
obligations as all other Lenders hereunder. 
The assigning Lender shall be relieved of its obligations hereunder with
respect to its Commitment and Term Loans, as applicable, or assigned portion
thereof from and after the date of such assignment.  Borrower hereby acknowledges and agrees that
any assignment shall give rise to a direct obligation of Borrower to the
assignee and that the assignee shall be considered to be a “Lender”.  In the event any Lender assigns or otherwise
transfers all or any part of the Commitments and Obligations, Agent shall so
notify Borrower and Borrower shall, upon the request of Agent, execute new
Notes in exchange for the Notes, if any, being assigned.  Agent may amend Schedule A to this Agreement
to reflect assignments made in accordance with this Section.

 

As
used herein, “Qualified Assignee” means (a) any Lender and any
affiliate of any Lender and (b) any commercial bank, savings and loan
association or savings bank or any other entity which is an “accredited
investor” (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which has a rating of BBB or higher from S&P and a rating of
Baa2 or higher from Moody’s at the date that it becomes a Lender and in each
case of clauses (a) and (b), which, through its applicable lending office,
is capable of lending to Borrower without the imposition of any withholding or
similar taxes; provided that no person proposed to become a Lender after
the Closing Date and determined by Agent to be acting in the capacity of a
vulture fund or distressed debt purchaser shall be a Qualified Assignee, and no
person or Affiliate of such person proposed to become a Lender after the
Closing Date and that holds any subordinated debt or stock issued by Borrower shall be a Qualified Assignee.

 

10.2.   Notices.  All notices, requests or other communications
given in connection with this Agreement shall be in writing, shall be addressed
to the parties at their respective addresses set forth on the signature pages hereto
below such parties’ name or in the most recent Assignment Agreement executed by
any Lender (unless and until a different address may be specified in a written
notice to the other party delivered in accordance with this Section), and shall
be deemed given (a) on the date of receipt if delivered by hand, (b) on
the date of sender’s receipt of confirmation of proper transmission if 

 

31

 

sent by facsimile transmission, (c) on the next Business Day after
being sent by a nationally-recognized overnight courier, and (d) on the
fourth Business Day after being sent by registered or certified mail, postage
prepaid.  As used herein, the term “Business
Day” means and includes any day other than Saturdays, Sundays, or other
days on which commercial banks in New York, New York are required or authorized
to be closed.

 

10.3.   Correction
of Debt Documents.  Agent may
correct patent errors and fill in all blanks in this Agreement or the Debt
Documents consistent with the agreement of the parties.

 

10.4.   Performance.  Time is of the essence of this
Agreement.  This Agreement shall be
binding, jointly and severally, upon all parties described as the “Borrower”
and their respective successors and assigns, and shall inure to the benefit of
Agent, Lenders, and their respective successors and assigns.

 

10.5.   Payment of
Fees and Expenses.  Loan Parties
agree, jointly and severally, to pay or reimburse upon demand for all
reasonable fees, costs and expenses incurred by Agent and Lenders in connection
with (a) the investigation, preparation, negotiation, execution,
administration of, or any amendment, modification, waiver or termination of,
this Agreement or any other Debt Document, (b) the administration of the
Loans and the facilities hereunder and any other transaction contemplated
hereby or under the Debt Documents and (c) the enforcement, assertion,
defense or preservation of Agent’s and Lenders’ rights and remedies under this
Agreement or any other Debt Document, in each case of clauses (a) through
(c), including, without limitation, reasonable attorney’s fees and expenses,
the allocated cost of in-house legal counsel, reasonable fees and expenses of
consultants, auditors and appraisers and UCC and other corporate search and
filing fees and wire transfer fees. 
Borrower further agrees that such fees, costs and expenses shall
constitute Obligations.  This provision
shall survive the termination of this Agreement.  Notwithstanding the foregoing, the first
$50,000 of the fees, costs and expenses described in this Section shall be
paid from the $50,000 payment described in Section 2.7(a)(i)(B).

 

10.6.   Indemnity. Each Loan
Party shall and does hereby jointly and severally indemnify and defend Agent,
Lenders, and their respective successors and assigns, and their respective
directors, officers, employees, consultants, attorneys, agents and affiliates
(each an “Indemnitee”) from and against all liabilities, losses,
damages, expenses, penalties, claims, actions and suits (including, without
limitation, related reasonable attorneys’ fees and the allocated costs of
in-house legal counsel) of any kind whatsoever arising, directly or indirectly,
which may be imposed on, incurred by or asserted against such Indemnitee as a
result of or in connection with this Agreement, the other Debt Documents or any
of the transactions contemplated hereby or thereby (the “Indemnified
Liabilities”); provided that, no Loan Party shall have any obligation to
any Indemnitiee with respect to any Indemnified Liabilities to the extent such
Indemnified Liabilities arise from the gross negligence or willful misconduct
of such Indemnitee as determined by a final non-appealable judgment of a court
of competent jurisdiction.  This
provision shall survive the termination of this Agreement.

 

10.7.   Rights
Cumulative.  Agent’s and
Lenders’ rights and remedies under this Agreement or otherwise arising are
cumulative and may be exercised singularly or concurrently.  Neither the failure nor any delay on the part
of Agent or any Lender to exercise any right, power or privilege under this
Agreement shall operate as a waiver, nor shall any single or partial exercise
of any right, power or privilege preclude any other or further exercise of that
or any other right, power or privilege. 
NONE OF AGENT OR ANY LENDER SHALL BE DEEMED TO HAVE WAIVED ANY OF ITS
RESPECTIVE RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT
OR PAPER SIGNED BY BORROWER UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED
BY AGENT, REQUISITE LENDERS OR ALL LENDERS, AS APPLICABLE.  A waiver on any one occasion shall not be
construed as a bar to or waiver of any right or remedy on any future occasion.

 

32

 

10.8.        Entire
Agreement; Amendments, Waivers.

 

(a)         This Agreement
and the other Debt Documents constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof and supersede all
prior understandings (whether written, verbal or implied) with respect to such
subject matter.  Section headings
contained in this Agreement have been included for convenience only, and shall
not affect the construction or interpretation of this Agreement.

 

(b)         No amendment,
modification, termination or waiver of any provision of this Agreement or any
other Debt Document, or any consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by Agent, Borrower and Lenders having more than (x) 60% of the aggregate
Commitments of all Lenders or (y) if such Commitments have expired or been
terminated, 60% of the aggregate outstanding principal amount of the Term Loans
(the “Requisite Lenders”);
provided, however, that so long as a party that is a Lender hereunder on the
Closing Date does not assign any portion of its Commitment or Term Loan, the “Requisite
Lenders” shall include such Lender.  Except as set forth in clause (c) below,
all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.

 

(c)         No amendment,
modification, termination or waiver of any provision of this Agreement or any
other Debt Document shall, unless in writing and signed by Agent and each
Lender directly affected thereby: (i) increase or decrease any Commitment
of any Lender or increase or decrease the Total Commitment (which shall be
deemed to affect all Lenders), (ii) reduce the principal of or rate of
interest on any Obligation or the amount of any fees payable hereunder (other than
waiving the imposition of the Default Rate), (iii) postpone the
date fixed for or waive any payment of principal of or interest on any Term
Loan, or any fees hereunder, (iv) release all or substantially all of the
Collateral, or consent to a transfer of all or substantially all of the
Intellectual Property, in each case, except as otherwise expressly permitted in
the Debt Documents (which shall be deemed to affect all Lenders), (v) subordinate
the lien granted in favor of the Agent securing the Obligations (which shall be
deemed to affect all Lenders), (vi) release a Loan Party  from, or consent to a Loan Party’s
assignment or delegation of, such Loan Party’s obligations hereunder and under
the other Debt Documents  or any
Guarantor from its guaranty of the Obligations
(which shall be deemed to affect all Lenders) or (vii) amend,
modify, terminate or waive Section 8.4, 9.7 or 10.8(b) or (c).

 

(d)         Notwithstanding
any provision in this Section 10.8 to the contrary, no amendment,
modification, termination or waiver affecting or modifying the rights or
obligations of Agent hereunder shall be effective unless signed by Borrower,
Agent and Requisite Lenders.

 

10.9.   Binding
Effect.  This Agreement shall continue
in full force and effect until the  Termination Date; provided,
however, that the provisions of Sections 2.3(e), 9.5, 10.5 and 10.6 and the
other indemnities contained in the Debt Documents shall survive the Termination
Date.  The surrender, upon payment or
otherwise, of any Note or any of the other Debt Documents evidencing any of the
Obligations shall not affect the right of Agent to retain the Collateral for
such other Obligations as may then exist or as it may be reasonably
contemplated will exist in the future. 
This Agreement and the grant of the security interest in the Collateral
pursuant to Section 3.1 shall automatically be reinstated if Agent or any
Lender is ever required to return or restore the payment of all or any portion
of the Obligations (all as though such payment had never been made).

 

10.10.      Use of Logo.  Each Loan Party authorizes Agent to use its
name, logo and/or trademark without notice to or consent by such Loan Party, in
connection with certain promotional materials that 

 

33

 

Agent
may disseminate to the public.  The
promotional materials may include, but are not limited to, brochures, video
tape, internet website, press releases, advertising in newspaper and/or other
periodicals, lucites, and any other materials relating the fact that Agent has
a financing relationship with Borrower and such materials may be developed,
disseminated and used without Loan Parties’ review.  Nothing herein obligates Agent to use a Loan
Party’s name, logo and/or trademark, in any promotional materials of
Agent.  Loan Parties shall not, and shall
not permit any of its respective Affiliates to, issue any press release or
other public disclosure (other than any document filed with any governmental
authority relating to a public offering of the securities of Borrower) using
the name, logo or otherwise referring to General Electric Capital Corporation,
GE Healthcare Financial Services, Inc. or of any of their affiliates, the
Debt Documents or any transaction contemplated herein or therein without at
least two (2) Business Days prior written notice to and the prior written
consent of Agent unless, and only to the extent that, Loan Parties or such
Affiliate is required to do so under applicable law and then, only after
consulting with Agent prior thereto.

 

10.11.      Waiver of Jury Trial.  EACH OF LOAN PARTIES, AGENT AND LENDERS
UNCONDITIONALLY WAIVE ANY AND ALL RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT
DOCUMENTS, ANY OF THE INDEBTEDNESS SECURED HEREBY, ANY DEALINGS AMONG LOAN
PARTIES, AGENT AND/OR LENDERS RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING
ESTABLISHED AMONG LOAN PARTIES, AGENT AND/OR LENDERS.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT.
THIS WAIVER IS IRREVOCABLE.  THIS WAIVER MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING. 
THE WAIVER ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION.  THIS AGREEMENT MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

10.12.      Governing Law.  THIS AGREEMENT, THE OTHER DEBT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL IN ALL
RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF
SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
REGARDLESS OF THE LOCATION OF THE COLLATERAL. 
IF ANY ACTION ARISING OUT OF THIS AGREEMENT OR ANY OTHER DEBT DOCUMENT
IS COMMENCED BY AGENT IN THE STATE COURTS OF THE STATE OF NEW YORK IN THE
COUNTY OF NEW YORK OR IN THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK, EACH LOAN PARTY HEREBY CONSENTS TO THE JURISDICTION OF ANY SUCH COURT
IN ANY SUCH ACTION AND TO THE LAYING OF VENUE IN THE STATE OF NEW YORK.  ANY PROCESS IN ANY SUCH ACTION SHALL BE DULY
SERVED IF MAILED BY REGISTERED MAIL, POSTAGE PREPAID, TO LOAN PARTIES AT THEIR
ADDRESS DESCRIBED IN SECTION 10.2, OR IF SERVED BY ANY OTHER MEANS
PERMITTED BY APPLICABLE LAW.

 

10.13.      Confidentiality.  Agent and each Lender
agrees, as to itself, to use commercially reasonable efforts (equivalent to the
efforts Agent or such Lender, as the case may be, applies to maintaining the confidentiality
of its own confidential information) to maintain as confidential all
confidential information provided to it by Borrower and designated as
confidential, except that Agent and Lenders may disclose such information (a) to
persons employed or engaged by Agent or a Lender; (b) to 

 

34

 

any
bona fide assignee or participant or potential assignee or participant that has
agreed to comply with the covenant contained in this Section 10.13 (and
any such bona fide assignee or participant or potential assignee or participant
may disclose such information to persons employed or engaged by them as
described in clause (a) above); (c) as required or requested
by any governmental authority or reasonably believed by Agent or any Lender to
be compelled by any court decree, subpoena or legal or administrative order or
process; (d) as, on the advice of Agent’s or such Lender’s counsel,
required by law; (e) in connection with the exercise of any right or
remedy under the Debt Documents or in connection with any litigation to which
Agent or such Lender is a party or bound; or (f) that ceases to be
confidential through no fault of Agent or such Lender.

 

10.14.      Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which when
taken together shall constitute one and the same agreement.  Delivery of an executed signature page of
this Agreement by facsimile transmission or electronic transmission shall be as
effective as delivery of a manually executed counterpart hereof.

 

[Signature
Page Follows]

 

35

 

IN WITNESS
WHEREOF, each Loan
Party, Agent and Lenders, intending to be legally bound hereby, have duly
executed this Agreement in one or more counterparts, each of which shall be
deemed to be an original, as of the day and year first aforesaid.

 

BORROWER:

 

DEPOMED,
INC.

 

	
  By:

  	
    /s/ Carl A. Pelzel

  	
   

  
	
   

  	
    Name:
  Carl A. Pelzel

  	
   

  
	
   

  	
    Title:
  President and Chief Executive Officer

  	
   

  

 

 

Address
For Notices For All Loan Parties:

 

Depomed, Inc.

1360
O’Brien Drive

Menlo
Park, CA 94025

Attention:
President

Phone:
(650) 462-5900

Facsimile:  (650) 462-9993

 

LOAN AND SECURITY AGREEMENT

SIGNATURE PAGE

 

1

 

AGENT AND LENDER:

 

GENERAL ELECTRIC CAPITAL CORPORATION

 

	
  By:

  	
    /s/ Scott
  Towers

  	
   

  
	
   

  	
  Name:
  Scott Towers

  	
   

  
	
   

  	
  Title:
  Duly Authorized Signatory

  	
   

  

 

Address
For Notices:

 

General
Electric Capital Corporation

c/o
GE Healthcare Financial Services, Inc., LSF

83
Wooster Heights Road, Fifth Floor

Danbury,
Connecticut 06810

Attention:
Senior Vice President of Risk

Phone: (203) 205-5200

Facsimile:
(203) 205-2192

 

With
a copy to:

 

General
Electric Capital Corporation

c/o
GE Healthcare Financial Services, Inc.

Two
Bethesda Metro Center, Suite 600

Bethesda,  Maryland 
20814

Attention:
General Counsel

Phone: (301) 961-1640

Facsimile: 
(301) 664-9866

 

2

 

LENDER:

 

OXFORD FINANCE CORPORATION

 

 

	
  By:

  	
    /s/
  T.A. Lex

  	
   

  
	
   

  	
  Name:
  T.A. Lex

  	
   

  
	
   

  	
  Title:
  COO

  	
   

  

 

Address
For Notices:

 

Oxford Finance Corporation

133 North Fairfax Street

Alexandria, VA  22314

Attention:  Timothy A. Lex

Executive
Vice President & Chief Operating Officer

Phone:  (703)
519-4900

Facsimile: 
(703) 519-6010

 

3

 

SCHEDULE
A

COMMITMENTS

 

	
  Name of Lender

  	
   

  	
  Commitment of such Lender

  	
   

  	
  Pro Rata Share

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  General
  Electric Capital Corporation

  	
   

  	
  Term
  Loan A Commitment: 

  	
  $1,266,666

  	
   

  	
  33.333333

  	
  %

  
	
   

  	
   

  	
  Term
  Loan B Commitment: 

  	
  $1,866,667

  	
   

  	
  33.333333

  	
  %

  
	
   

  	
   

  	
  Term
  Loan C Commitment: 

  	
  $1,866,667

  	
   

  	
  33.333333

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUBTOTAL:

  	
  $5,000,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Oxford Finance Corporation

  	
   

  	
  Term
  Loan A Commitment: 

  	
  $2,533,334

  	
   

  	
  66.666667

  	
  %

  
	
   

  	
   

  	
  Term
  Loan B Commitment: 

  	
  $3,733,333

  	
   

  	
  66.666667

  	
  %

  
	
   

  	
   

  	
  Term
  Loan C Commitment: 

  	
  $3,733,333

  	
   

  	
  66.666667

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SUBTOTAL:

  	
  $10,000,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TOTAL:

  	
  $15,000,000

  	
   

  	
  100

  	
  %

  

 

 

SCHEDULE
B

DISCLOSURES

 

[To
be completed by Borrower]

 

Existing Liens

 

	
  Debtor

  	
   

  	
  Secured Party

  	
   

  	
  Collateral

  	
   

  	
  State and

  Jurisdiction

  	
   

  	
  Filing Date and

  Number (include

  original file date and

  continuations,

  amendments, etc.)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Existing Indebtedness

 

	
  Debtor

  	
   

  	
  Creditor

  	
   

  	
  Amount of Indebtedness

  outstanding as of               ,

            

  	
   

  	
  Maturity Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Existing Investments

 

	
  Debtor

  	
   

  	
  Type of Investment

  	
   

  	
  Date

  	
   

  	
  Amount Outstanding as

  of           

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Material Agreements

 

1.

 

2.

 

3.

 

 

EXHIBIT A

 

FORM OF PROMISSORY NOTE

 

 [                   , 2008]

 

FOR VALUE RECEIVED, DEPOMED,
INC., a California corporation located at the address stated below (“Borrower”), promises to pay to
the order of [Lender]
or any subsequent holder hereof (each, a “Lender”), the principal sum of
                      
and       /100 Dollars ($                       )
or, if less, the aggregate unpaid principal amount of all Term Loans made by
Lender to or on behalf of Borrower pursuant to the Agreement (as hereinafter
defined).  All capitalized terms, unless
otherwise defined herein, shall have the respective meanings assigned to such
terms in the Agreement.

 

This Promissory Note is
issued pursuant to that certain Loan and Security Agreement, dated as of June 27,
2008, among Borrower, the guarantors from time to time party thereto, General
Electric Capital Corporation, as agent, [the other
lenders signatory thereto], and Lender
(as amended, restated, supplemented or otherwise modified from time to time,
the “Agreement”), is one of the Notes referred to therein, and is
entitled to the benefit and security of the Debt Documents referred to therein,
to which Agreement reference is hereby made for a statement of all of the terms
and conditions under which the loans evidenced hereby were made.

 

The principal amount of the
indebtedness evidenced hereby shall be payable in the amounts and on the dates
specified in the Agreement.  Interest
thereon shall be paid until such principal amount is paid in full at such
interest rates and at such times as are specified in the Agreement.  The terms of the Agreement are hereby
incorporated herein by reference.

 

All payments shall be
applied in accordance with the Agreement. 
The acceptance by Lender of any payment which is less than payment in
full of all amounts due and owing at such time shall not constitute a waiver of
Lender’s right to receive payment in full at such time or at any prior or
subsequent time.

 

All amounts due hereunder
and under the other Debt Documents are payable in the lawful currency of the
United States of America.  Borrower
hereby expressly authorizes Lender to insert the date value as is actually
given in the blank space on the face hereof and on all related documents
pertaining hereto.

 

This Note is secured as
provided in the Agreement and the other Debt Documents.  Reference is hereby made to the Agreement and
the other Debt Documents for a description of the properties and assets in
which a security interest has been granted, the nature and extent of the
security interest, the terms and conditions upon which the security interest
was granted and the rights of the holder of the Note in respect thereof.

 

Time is of the essence
hereof.  If Lender does not receive from
Borrower payment in full of any Scheduled Payment or any other sum due under
this Note or any other Debt Document within 3 days after its due date, Borrower
agrees to pay the Late Fee in accordance with the Agreement.  Such Late Fee will be immediately due and
payable, and is in addition to any other costs, fees and expenses that Borrower
may owe as a result of such late payment.

 

This Note may be voluntarily
prepaid only as permitted under Section 2.4 of the Agreement.  After an Event of Default, this Note shall
bear interest at a rate per annum equal to the Default Rate pursuant to Section 2.6
of the Agreement.

 

 

Borrower and all parties now
or hereafter liable with respect to this Note, hereby waive presentment, demand
for payment, notice of nonpayment, protest, notice of protest, notice of
dishonor, and all other notices in connection herewith, as well as filing of
suit (if permitted by law) and diligence in collecting this Note or enforcing
any of the security hereof, and agree to pay (if permitted by law) all expenses
incurred in collection, including reasonable attorneys’ fees and expenses,
including without limitation, the allocated costs of in-house counsel.

 

THIS NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.

 

No variation or modification
of this Note, or any waiver of any of its provisions or conditions, shall be
valid unless such variation or modification is made in accordance with Section 10.8
of the Agreement.   Any such waiver,
consent, modification or change shall be effective only in the specific
instance and for the specific purpose given.

 

IN WITNESS
WHEREOF, Borrower has duly
executed this Note as of the date first above written.

 

	
   

  	
  DEPOMED,
  INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Title: 

  	
   

  
	
   

  	
  Federal Tax ID#:

  	
   

  
	
   

  	
  Address:
  1360 O’Brien Drive

  
	
   

  	
  Menlo
  Park, CA 94025

  
						

 

 

EXHIBIT B

 

SECRETARY’S CERTIFICATE OF AUTHORITY

 

[DATE]

 

Reference is made to the
Loan and Security Agreement, dated as of June 27, 2008 (as amended, restated, supplemented or
otherwise modified from time to time, the “Agreement”), among Depomed, Inc., a California
corporation] (the “Borrower”),
the guarantors from time to time party thereto, General Electric Capital
Corporation, a Delaware corporation (“GECC”), as a lender and as agent
(in such capacity, together with its successors and assigns in such capacity, “Agent”),
and the other lenders signatory thereto from time to time (GECC and such other
lenders, the “Lenders”). 
Capitalized terms used but not defined herein are used with the meanings
assigned to such terms in the Agreement.

 

I, [                                          ],
do hereby certify that:

 

(i)            I am the duly elected, qualified and acting [Assistant]
Secretary of [INSERT NAME OF LOAN PARTY] (the “Company”);

 

(ii)           attached hereto as Exhibit A is a true, complete and
correct copies of the Company’s [Certificate/Articles
of Incorporation or Articles of Organization/Certificate of Formation] and the [Bylaws/LLC
Agreement/Partnership Agreement],
each of which is in full force and effect on and as of the date hereof;

 

(iii)          each of the following named individuals is a duly elected or appointed,
qualified and acting officer of the Company who holds the offices set opposite
such individual’s name, and such individual is authorized to sign the Debt
Documents to which the Company is a party and all other notices, documents,
instruments and certificates to be delivered pursuant thereto, and the
signature written opposite the name and title of such officer is such officer’s
genuine signature:

 

	
  Name

  	
   

  	
  Title

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

(iv)          attached hereto as Exhibit B are true, complete and correct
copies of resolutions adopted by the Board of Directors/Members of the Company
(the “Board”) authorizing the execution, delivery and performance of the
Debt Documents to which the Company is a party, which resolutions were duly
adopted by the Board on [DATE] and all such resolutions are in full
force and effect on the date hereof in the form in which adopted without
amendment, modification, rescission or revocation;

 

(v)           the foregoing authority shall remain in full force and effect, and
Agent and each Lender shall be entitled to rely upon same, until written notice
of the modification, rescission or revocation of same, in whole or in part, has
been delivered to Agent and each Lender, but no such modification, rescission
or revocation shall, in any event, be effective with respect to any documents
executed or actions taken in 

 

 

reliance upon the foregoing
authority before said written notice is delivered to Agent and each Lender; and

 

(vi)          no Default or Event of Default exists under the Agreement, and all
representations and warranties of the Company in the Debt Documents are true
and correct in all respects on and as of the date hereof, except to the extent
such representations and warranties expressly relate to an earlier date, in
which case such representations and warranties were true and correct in all
respects on and as of such earlier date. 
[Note: this paragraph (vi) may be set forth
in a separate officer’s certificate at the option of Borrower]

 

[Signature Page Follows]

 

 

IN WITNESS
WHEREOF, I have
hereunto set my hand as of the first date written above

 

	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
  [Assistant]
  Secretary

  

 

The undersigned does hereby
certify on behalf of the Company that he/she is the duly elected or appointed,
qualified and acting [TITLE] of the Company and that [NAME FROM ABOVE] is the duly elected or appointed, qualified and acting [Assistant]
Secretary of the Company, and that the signature set forth immediately above is
his/her genuine signature.

 

	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT B TO SECRETARY’S CERTIFICATE OF
AUTHORITY

 

FORM OF RESOLUTIONS

 

BOARD RESOLUTIONS

                
     , 200  

 

WHEREAS, Depomed, Inc.,  a  California corporation(“Borrower”)
has requested that General Electric Capital Corporation, a Delaware corporation
(“GECC”), as agent (in such capacity, the “Agent”) and lender,
and certain other lenders (GECC and such other lenders, collectively, the “Lenders”)
provide a credit facility in an original principal amount not to exceed
$15,000,000 (the “Credit Facility”); and

 

WHEREAS, the terms of the Credit Facility are set
forth in a loan and security agreement by and among Borrower, the guarantors
from time to time party thereto, Agent, and the Lenders and certain related
agreements, documents and instruments described in detail below; and

 

[WHEREAS, as a subsidiary of
Borrower,               ,
the “Company”) will benefit from the making of the loan(s) to Borrower
under the Credit Facility; and]

 

WHEREAS, the Board of Directors of [Borrower]  [Company] (the “Directors”)
deems it advisable and in the best interests of [Borrower]
[Company] to execute, deliver and
perform its obligations under those transaction documents described and
referred to below.

 

NOW,
THEREFORE, be it

 

RESOLVED, that the Credit Facility be, and it hereby
is, approved; and further

 

RESOLVED, that the form of Loan and Security
Agreement (the “Loan and Security Agreement”), by and among [Borrower], [Company,] the [other] guarantors
from time to time party thereto, Agent and the Lenders, as presented to the
Directors, be and it hereby is, approved and the [President,
the Chief Executive Officer, Chief Financial Officer, the Vice President or
Treasurer] of [Borrower]  [Company] (collectively, the “Proper Officers”) be, and each
of them hereby is, authorized and directed on behalf of [Borrower]  [Company] to execute and deliver to Agent the Loan and Security
Agreement, in substantially the form as presented to the Directors, with such
changes as the Proper Officers may approve, such approval to be conclusively
evidenced by execution and delivery thereof; and further

 

[RESOLVED, that the form of Promissory Note (the “Note”),
as presented to the Directors, be, and it hereby is, approved and the Proper
Officers be, and each of them hereby is, authorized and directed on behalf of
Borrower to execute and deliver to Lender one or more promissory Notes, in
substantially the form as presented to the Directors, with such changes as the
Proper Officers may approve, such approval to be conclusively evidenced by execution
and delivery thereof; and further]

 

[RESOLVED, that the form(s) of Account Control
Agreement [(the “Security
Document”)]  [Disbursement
Letter,]  [INCLUDE OTHER DOCUMENTS AS APPROPRIATE] (together
with the Security Document, the “Ancillary Documents”), each as
presented to the Directors, be, and each of them hereby is, approved and the
Proper Officers be, and each of them hereby is, authorized and directed on
behalf of Borrower to execute and deliver to Agent each of the Ancillary
Documents, in substantially the form as presented to the Directors, with such
changes as the Proper Officers may approve, such approval to be conclusively
evidenced by execution and delivery thereof; and further]

 

RESOLVED, that the Proper Officers be, and each of
them hereby is, authorized and directed to execute and deliver any and all
other agreements, certificates, security agreements, financing statements, 

 

 

indemnification
agreements, instruments and documents (together with the Loan and Security
Agreement, [and] the Notes [, and the
Ancillary Documents], the “Debt
Documents”) and take any and all other further action, in each case, as may
be required or which they may deem appropriate, on behalf of [Borrower] [Company], in connection with the Credit Facility and carrying into
effect the foregoing resolutions, transactions and matters contemplated
thereby; and further

 

RESOLVED, that
[Borrower] [Company] is hereby
authorized to perform its obligations under the Debt Documents, [including, without limitation, the
borrowing of any advances made under the Credit Facility and] the granting of any security interest in [Borrower’s] [Company’s] assets
contemplated thereby to secure [Borrower’s] [Company’s] obligations in connection therewith; and
further

 

RESOLVED, that in addition to executing any documents
approved in the preceding resolutions, the Secretary or any Assistant Secretary
of [Borrower] [Company] may attest to such Debt Documents, the signature thereon
or the corporate seal of [Borrower] [Company] thereon; and
further

 

RESOLVED, that any actions taken by the Proper
Officers prior to the date of these resolutions in connection with the
transactions contemplated by these resolutions are hereby ratified and
approved; and further

 

RESOLVED, that these resolutions shall be valid and
binding upon [Borrower] [Company].

 

 

EXHIBIT C-1

 

FORM OF LANDLORD CONSENT

 

[Landlord]

[Address]

 

[                 ,
         ]

 

Ladies and Gentlemen:

 

General Electric Capital
Corporation (together
with its successors and assigns, if any, “Agent”) and certain other lenders (the “Lenders”)
have entered into, or is about to enter into, a Loan and Security Agreement,
dated as of June 27, 2008
(as amended, restated, supplemented or otherwise modified from time to time,
the “Agreement”) with Depomed, Inc., (“Borrower”) [and                     
(“Company”)], pursuant to
which [Borrower] [Company] has granted, or will grant, to Agent, on behalf of itself
and the Lenders, a security interest in certain assets of [Borrower] [Company], including,
without limitation, all of [Borrower’s] [Company’s] cash, cash
equivalents, accounts, books and records, goods, inventory, machinery,
equipment, furniture and trade fixtures (such as equipment bolted to floors),
together with all addition, substitutions, replacements and improvements to,
and proceeds, including, insurance proceeds, of the foregoing, but excluding
building fixtures (such as plumbing, lighting and HVAC systems (collectively,
the “Collateral”).  Some or all of the Collateral is, or will be,
located at certain premises known as [                                    ] in the City or Town of [                          ,
County of                                                   
and State of               ] (“Premises”), and [Borrower] [Company] occupies the
Premises pursuant to a lease, dated as of [DATE], between [Borrower] [Company], as tenant,
and you, [NAME], as [owner/landlord/mortgagee/realty
manager] (as amended, restated,
supplemented or otherwise modified from time to time, the “Lease”).

 

By your signature below, you hereby agree (and we
shall rely on your agreement) that: (i) the Lease is in full force and
effect and you are not aware of any existing defaults thereunder, (ii) the
Collateral is, and shall remain, personal property regardless of the method by
which it may be, or become, affixed to the Premises; (iii) you agree to
use your best efforts to provide Agent with written notice of any default by [Borrower] [Company] under the Lease resulting in a termination of the Lease (“Default
Notice”) and Agent shall have the right, but not the obligation to cure
such default within 15 days following Agent’s receipt of such Default Notice, (iv) your
interest in the Collateral and any proceeds thereof (including, without
limitation, proceeds of any insurance therefor) shall be, and remain, subject
and subordinate to the interests of Agent and you agree not to levy upon any
Collateral or to assert any landlord lien, right of distraint or other claim
against the Collateral for any reason; (v) Agent, and its employees and
agents, shall have the right, from time to time, to enter into the Premises for
the purpose of inspecting the Collateral; and (vi) Agent, and its
employees and agents, shall have the right, upon any default by [Borrower] [Company] under the Agreement, to enter into the Premises and to
remove or otherwise deal with the Collateral, including, without limitation, by
way of public auction or private sale (provided that, if Agent conducts a
public auction or private sale of the Collateral at the Premises, Agent shall
use reasonable efforts to notify Landlord first and to hold such auction or
sale in a manner that would not unduly disrupt Landlord’s or any other tenant’s
use of the Premises).  Agent agrees to
repair or reimburse you for any physical damage actually caused to the Premises
by Agent, or its employees or agents, during any such removal or inspection
(other than ordinary wear and tear), provided that it is understood by the
parties hereto that Agent shall not be liable for any diminution in value of
the Premises caused by the removal or absence of the Collateral therefrom.  You hereby acknowledge that Agent shall have
no obligation to remove or dispose of the Collateral from the Premises and no
action by Agent pursuant to this Consent shall be deemed to be an assumption by
Agent of any obligation under the Lease and, except as provided in the
immediately preceding sentence, Agent shall not have any obligation to you.

 

 

You hereby acknowledge and agree that [Borrower’s] [Company’s] granting of a security interest in the Collateral in favor
of Agent, on behalf of itself and the Lenders, shall not constitute a default
under the Lease nor permit you to terminate the Lease or re-enter or repossess
the Premises or otherwise be the basis for the exercise of any remedy available
to you.

 

This Consent and the agreements contained herein
shall be binding upon, and shall inure to the benefit of, any successors and
assigns of the parties hereto (including any transferees of the Premises).  This Consent shall terminate upon the
indefeasible payment of Borrower’s indebtedness in full in immediately
available funds and the satisfaction in full of Borrower’s [and
Company’s] performance of its obligations under
the Agreement and the related documents.

 

This Consent and any amendments, waivers, consents
or supplements hereto or in connection herewith may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are
physically attached to the same document. 
Delivery of an executed signature page of this Consent or any
delivery contemplated hereby by facsimile or electronic transmission shall be
as effective as delivery of a manually executed counterpart thereof.

 

 

We appreciate your cooperation in this matter of
mutual interest.

 

	
   

  	
  GENERAL
  ELECTRIC CAPITAL CORPORATION,

  
	
   

  	
  as
  Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
  c/o
  GE Healthcare Financial Services, Inc., LSF

  
	
   

  	
  83
  Wooster Heights Road, Fifth Floor

  
	
   

  	
  Danbury,
  Connecticut 06810

  
	
   

  	
  Attention:
  Senior Vice President of Risk

  
	
   

  	
  Phone:
  (203) 205-5200

  
	
   

  	
  Facsimile:
  (203) 205-2192

  
	
   

  	
   

  
	
   

  	
  With
  a copy to:

  
	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
  c/o
  GE Healthcare Financial Services, Inc.

  
	
   

  	
  Two
  Bethesda Metro Center, Suite 600

  
	
   

  	
  Bethesda,
  Maryland 20814

  
	
   

  	
  Attention:
  General Counsel

  
	
   

  	
  Phone:
  (301) 961-1640

  
	
   

  	
  Facsimile: (301) 664-9866

  

 

	
  AGREED TO AND ACCEPTED BY:

  	
   

  
	
   

  	
   

  
	
  [NAME], as [owner/landlord/mortgagee/realty
  manager]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
  AGREED TO AND ACCEPTED BY:

  	
   

  
	
   

  	
   

  
	
  [NAME OF LOAN
  PARTY]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Interest in the Premises
  (check applicable box)

  	
   

  
	
   

  	
   

  
	
  ·

  	
  Owner

  
	
  ·

  	
  Mortgagee

  
	
  ·

  	
  Landlord

  
	
  ·

  	
  Realty
  Manager

  
							

 

Address:

 

 

EXHIBIT C-2

 

FORM OF BAILEE CONSENT

 

[Letterhead of GE Capital]

 

                 ,
200    

 

[NAME OF
BAILEE]

                                

                                

Dear Sirs:

 

Re:  [Name of the Loan Party] (the “Company”)

 

Please accept this letter as
notice that we have entered into or may enter into financing arrangements with
the Company under which the Company has granted to us continuing security
interests in substantially all personal property and assets of the Company and
the proceeds thereof, including, without limitation, certain equipment owned by
the Company held by you at the manufacturing facility (the “Premises”)
owned by you and located at [                            ](the
“Personal Property”).

 

Please acknowledge that as a
result of such arrangements, you are holding all of the Personal Property
solely for our benefit and subject only to the terms of this letter and our
instructions; provided, however, that until further written notice from
us, you are authorized to use and/or release any and all of the Personal
Property in your possession as directed by the Company in the ordinary course
of business. The foregoing instructions shall continue in effect until we modify
them in writing, which we may unilaterally do without any consent or approval
from the Company.  Upon receipt of our
instructions, you agree that (a) you will release the Personal Property
only to us or our designee; (b) you will cooperate with us in our efforts
to assemble, sell (whether by public or private sale), take possession of, and
remove all of the Personal Property located at the Premises; (c) you will
permit the Personal Property to remain on the Premises for forty-five (45) days
after your receipt of our instructions or at our option, to have the Personal
Property removed from the Premises within a reasonable time, not to exceed
forty-five (45) days after your receipt of our instructions; (d) you will
not hinder our actions in enforcing our liens on the Personal Property; and (e) after
receipt of our instructions, you will abide solely by our instructions with
respect to the Personal Property, and not those of the Company.

 

You hereby waive and release in our favor: (a) any
contractual lien, security interest, charge or interest and any other lien
which you may be entitled to whether by contract, or arising at law or in
equity against any Personal Property; (b) any and all rights granted under
any present or future laws to levy or distrain for rent or any other charges
which may be due to you against the Personal Property; and (c) any and all
other claims, liens, rights of offset, deduction, counterclaim and demands of
every kind which you have or may hereafter have against the Personal Property.

 

 You agree that (i) you have not and will
not commingle the Personal Property with any other property of a similar kind
owned or held by you in any manner such that the Personal Property is not
readily identifiable, (ii) you have not and will not issue any negotiable
or non-negotiable documents or instruments relating to the Personal Property,
and (iii) the Personal Property is not and will not be deemed to be
fixtures.

 

 

Notwithstanding the foregoing,
all of your charges of any nature whatsoever shall continue to be charged to
and paid by the Company and we shall not be liable for such charges.

 

You hereby
authorize us to file at any time such financing statements naming you as the
debtor/bailee, Company as the secured party/bailor, and us as the Company’s
assignee, indicating as the collateral goods of the Company now or hereafter in
your custody, control or possession and proceeds thereof, and including any
other information with respect to the Company required under the Uniform
Commercial Code for the sufficiency of such financing statement or for it to be
accepted by the filing office of any applicable jurisdiction (and any
amendments or continuations with respect thereto).

 

The arrangement as outlined
herein is to continue without modification, until we have given you written
notice to the contrary.

 

EACH OF THE PARTIES HERETO
HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS LETTER.

 

Any notice(s) required
or desired to be given hereunder shall be directed to the party to be notified
at the address stated herein.

 

The terms and conditions contained herein are to be construed and
enforced in accordance with the laws of the State of New York.

 

This terms and conditions
contained herein shall inure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.

 

 

The Company has signed below to indicate its consent to and agreement
with the foregoing arrangements, terms and conditions.  By your signature below, you hereby agree to
be bound by the terms and conditions of this letter.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
  GENERAL
  ELECTRIC CAPITAL CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title: Duly
  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
  c/o
  GE Healthcare Financial Services, Inc., LSF

  
	
   

  	
  83
  Wooster Heights Road, Fifth Floor

  
	
   

  	
  Danbury,
  Connecticut 06810

  
	
   

  	
  Attention:
  Senior Vice President of Risk

  
	
   

  	
  Phone:
  (203) 205-5200

  
	
   

  	
  Facsimile:
  (203) 205-2192

  
	
   

  	
   

  
	
   

  	
  With
  a copy to:

  
	
   

  	
   

  
	
   

  	
  General
  Electric Capital Corporation

  
	
   

  	
  c/o
  GE Healthcare Financial Services, Inc.

  
	
   

  	
  Two
  Bethesda Metro Center, Suite 600

  
	
   

  	
  Bethesda,
  Maryland 20814

  
	
   

  	
  Attention:
  General Counsel

  
	
   

  	
  Phone:
  (301) 961-1640

  
	
   

  	
  Facsimile: (301) 664-9866

  
	
   

  	
   

  
	
  Agreed to:

  	
   

  
	
   

  	
   

  
	
  [NAME OF
  LOAN PARTY]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [NAME OF
  BAILEE]

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
									

 

 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

[DATE]

 

Reference is made to the
Loan and Security Agreement, dated as of June 27, 2008 (as amended, restated, supplemented or
otherwise modified from time to time, the “Agreement”), among, a California  corporation
(the “Borrower”), the guarantors from time to time party thereto,
General Electric Capital Corporation, a Delaware corporation (“GECC”),
in its capacity as agent (in such capacity, together with its successors and
assigns, in such capacity, the “Agent”) and lender, and the other
lenders signatory thereto (GECC and such other lenders, the “Lenders”).  Capitalized terms used but not defined herein
are used with the meanings assigned to such terms in the Agreement.

 

I, [                                                  ], do hereby certify that:

 

(i)                                     I am the duly elected, qualified and acting [TITLE]
of Borrower;

 

(ii)                                  attached hereto as Exhibit A are [annual audited financial statements]/[quarterly
financial statements] as required
under Section 6.3 of the Agreement and that such financial statements are
prepared in accordance with GAAP and are consistently applied from one period
to the next except as explained in an accompanying letter or footnotes;

 

(iii)                               no Default or Event of Default has occurred
under the Agreement which has not been previously disclosed, in writing, to
Lender;

 

(iv)                              all representations and warranties of the
Loan Parties stated in the Debt Documents are true and correct in all respects
on and as of the date hereof, except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties were true and correct in all respects on and as
of such earlier date; and

 

(v)                                 no default or event of default exists under
any Lease Agreement.

 

IN WITNESS
WHEREOF, I have
hereunto set my hand as of the first date written above

 

	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT E

 

o

 

	
  EPS Setup
  Form

  	
  Submit Via Fax:

  ATTN: EPS Facilitator

  (203)
  205-2193

  	
  GE Healthcare Financial
  Services

  Phone: (800) 426-6346

  Fax: Fax: (203) 205-2193

  

 

1.
 Sender Information:                                                                                                                                                                                                                                           Instructions To Enroll In EPS
Plan:

 

	
   Sender Name:

  	
  A.

  	
  Complete sections 1 - 7 

  (signature and all other information is required)

  
	
   Sender Phone Number:

  	
  B.

  	
  Include a copy of a voided
  check, on which is noted your bank, branch and account number

  
	
   

  	
  C.

  	
  Please
  submit via Fax to: (203) 205-2193

  

 

2.  Authorization Agreement for Pre-Arranged
Payment Plan:

 

(a)                      Depomed, Inc., (“Borrower”)
authorizes General Electric Capital Corporation (“Agent”) to initiate debit entries for payment becoming due
pursuant to the terms and conditions set forth in the Loan and Security
Agreement, dated as of June 27,
2008 (as amended, restated, supplemented or otherwise modified from time
to time, the “Agreement”),
among Borrower, the guarantors form time to time party thereto, Agent and the
lenders signatory thereto.

 

(b)                     Borrower understands that the basic term loan
payment and all applicable taxes are solely its responsibility.  If payment is not satisfied due to account
closure, insufficient funds, or cancellation of any required automated payment
services, Borrower agrees to remit payment plus any applicable late charges, as
set forth in the Agreement.

 

(c)                      It is incumbent upon Borrower to give written
notice to Agent of any changes to this authorization or the below referenced
bank account information 10 days prior to payment date; Borrower may revoke
this authorization by giving 10 days written notice to Agent unless otherwise
stipulated in the Agreement.

 

(d)                     If a deduction is made in error, Borrower has the right to be paid
within five business days by Agent the amount of the erroneous deduction,
provided Agent is notified in writing of such error.

 

(e)                      Cosigner must also sign if the account is a
joint account.

 

 

3.  Agent Account Number(s): (Invoice Billing
ID, 10-digit number formatted: 1234567-001)

 

	
  Account:

  	
  Account:

  	
  Account:

  	
  Account:

  
	
  Account:

  	
  Account:

  	
  Account:

  	
  Account:

  
	
   

  	
   

  	
   

  	
   

  
	
  4.  First Payment Debit Date (mm/dd/yy)

  	
  First
  Payment:

  
					

 

5.  Complete ALL Bank and Borrower Information:

 

	
  BANK

  	
  Name of
  Bank or Financial Institution:

  	
   

  	
  Bank
  Account Number:

  	
   

  	
  ABA
  Routing Number

  (9-digit number)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INFO

  	
  Address
  of Bank or Financial Institution:

  	
   

  	
  City:

  	
   

  	
  State:                  Zip Code:

  	
   

  

 

	
   

  	
  Signatures

  	
   

  	
  Company

  	
   

  	
  Contact

  	
   

  
	
   

  	
  Signature
  of Authorized Signer: Date:

  	
   

  	
  Company
  Name:

  	
   

  	
  Contact
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER

  	
  Name of
  Joint Account Holder:

  (Please
  Print)

  	
   

  	
  Company
  Address:

  	
   

  	
  Contact
  Phone Number:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INFO

  	
  Signature
  of Joint Account Holder:

  Date:

  	
   

  	
  City:

  	
   

  	
  Contact
  Fax Number:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name of
  Authorized Signer: (Please

  Print)

  	
   

  	
  State: Zip
  Code:

  	
   

  	
  Contact
  email address:

  	
   

  

 

6.  Would you like to have property taxes paid
via EPS on above accounts?

Check x:  YES: o                                     NO: o

 

7.  Would you like to receive a complimentary
invoice?

Check x:  YES: o                                    NO: o

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00146-of-00352.parquet"}]]