Document:

REVOLVING
      CREDIT AND SECURITY AGREEMENT

    

    

    

    between

    

    

    RITA
      MEDICAL SYSTEMS, INC. AND SUBSIDIARIES

    

    and

    

    

    CAPITALSOURCE
      FINANCE LLC

    

    

    

    

    

    Dated
      as of 

    January
      31, 2006

    

    

    
      

      

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    REVOLVING
      CREDIT AND SECURITY AGREEMENT

    

    TABLE
      OF CONTENTS

    

      

        
          	 	 	
                  Page

                
	
                  I.

                	
                  DEFINITIONS

                	
                  2

                
	 	
                  1.1

                	
                  General
                    Terms

                	
                  2

                
	 	 	 
	
                  II.

                	
                  ADVANCES,
                    PAYMENT AND INTEREST

                	
                  2

                
	 	
                  2.1

                	
                  The
                    Revolving Facility

                	
                  2

                
	 	
                  2.2

                	
                  The
                    Loans; Maturity

                	
                  3

                
	 	
                  2.3

                	
                  Interest
                    on the Facility

                	
                  4

                
	 	
                  2.4

                	
                  Revolving
                    Facility Disbursements; Requirement to Deliver Borrowing
                    Certificate

                	
                  4

                
	 	
                  2.5

                	
                  Revolving
                    Facility Collections; Repayment; Borrowing Availability and
                    Lockbox

                	
                  4

                
	 	
                  2.6

                	
                  Promise
                    to Pay; Manner of Payment

                	
                  5

                
	 	
                  2.7

                	
                  Repayment
                    of Excess Advances

                	
                  6

                
	 	
                  2.8

                	
                  Payments
                    by Lender

                	
                  6

                
	 	
                  2.9

                	
                  Grant
                    of Security Interest; Collateral

                	
                  6

                
	 	
                  2.10

                	
                  Collateral
                    Administration

                	
                  8

                
	 	
                  2.11

                	
                  Power
                    of Attorney

                	
                  9

                
	 	
                  2.12

                	
                  Evidence
                    of Loans

                	
                  9

                
	 	 	 
	
                  III.

                	
                  FEES
                    AND OTHER CHARGES

                	
                  11

                
	 	
                  3.1

                	
                  Commitment
                    Fee

                	
                  11

                
	 	
                  3.2

                	
                  Unused
                    Line Fee

                	
                  11

                
	 	
                  3.3

                	
                  Collateral
                    Management Fee

                	
                  11

                
	 	
                  3.4

                	
                  Computation
                    of Fees; Lawful Limits

                	
                  11

                
	 	
                  3.5

                	
                  Default
                    Rate of Interest

                	
                  12

                
	 	
                  3.6

                	
                  Acknowledgement
                    of Joint and Several Liability

                	
                  12

                
	 	 	 
	
                  IV.

                	
                  CONDITIONS
                    PRECEDENT

                	
                  12

                
	 	
                  4.1

                	
                  Conditions
                    to Closing

                	
                  12

                
	 	
                  4.2

                	
                  Conditions
                    to Initial Advance

                	
                  14

                
	 	
                  4.3

                	
                  Conditions
                    to Each Advance

                	
                  15

                
	 	 	 
	
                  V.

                	
                  REPRESENTATIONS
                    AND WARRANTIES

                	
                  16

                
	 	
                  5.1

                	
                  Organization
                    and Authority

                	
                  16

                
	 	
                  5.2

                	
                  Loan
                    Documents

                	
                  17

                
	 	
                  5.3

                	
                  Subsidiaries,
                    Capitalization and Ownership Interests

                	
                  17

                
	 	
                  5.4

                	
                  Properties

                	
                  18

                
	 	
                  5.5

                	
                  Other
                    Agreements

                	
                  18

                
	 	
                  5.6

                	
                  Litigation

                	
                  18

                
	 	
                  5.7

                	
                  Hazardous
                    Materials

                	
                  19

                
	 	
                  5.8

                	
                  Potential
                    Tax Liability; Tax Returns; Governmental Reports

                	
                  19

                
	 	
                  5.9

                	
                  Financial
                    Statements and Reports

                	
                  19

                
	 	
                  5.10

                	
                  Compliance
                    with Law

                	
                  20

                
	 	
                  5.11

                	
                  Intellectual
                    Property

                	
                  20

                
	 	
                  5.12

                	
                  Licenses
                    and Permits; Labor

                	
                  20

                
	 	
                  5.13

                	
                  No
                    Default

                	
                  21

                
	 	
                  5.14

                	
                  Disclosure

                	
                  21

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  5.15

                	
                  Existing
                    Indebtedness; Investments, Guarantees and Certain
                    Contracts

                	
                  21

                
	 	
                  5.16

                	
                  Other
                    Agreements

                	
                  22

                
	 	
                  5.17

                	
                  Insurance

                	
                  22

                
	 	
                  5.18

                	
                  Names;
                    Location of Offices, Records and Collateral

                	
                  22

                
	 	
                  5.19

                	
                  Non-Subordination

                	
                  22

                
	 	
                  5.20

                	
                  Accounts
                    and Inventory

                	
                  23

                
	 	
                  5.21

                	
                  Food
                    and Drug Administration Approvals

                	
                  24

                
	 	
                  5.22

                	
                  Product
                    Recalls

                	
                  24

                
	 	
                  5.23

                	
                  Foreign
                    Subsidiaries

                	
                  24

                
	 	
                  5.24

                	
                  Inactive
                    Subsidiaries

                	
                  25

                
	 	
                  5.25

                	
                  Survival

                	
                  25

                
	 	 	 
	
                  VI.

                	
                  AFFIRMATIVE
                    COVENANTS

                	
                  25

                
	 	
                  6.1

                	
                  Financial
                    Statements, Borrowing Certificate, Financial Reports and Other
                    Information

                	
                  25

                
	 	
                  6.2

                	
                  Payment
                    of Obligations

                	
                  27

                
	 	
                  6.3

                	
                  Conduct
                    of Business and Maintenance of Existence and Assets

                	
                  27

                
	 	
                  6.4

                	
                  Compliance
                    with Legal and Other Obligations

                	
                  27

                
	 	
                  6.5

                	
                  Insurance

                	
                  28

                
	 	
                  6.6

                	
                  True
                    Books

                	
                  28

                
	 	
                  6.7

                	
                  Inspections;
                    Periodic Audits and Reappraisals

                	
                  28

                
	 	
                  6.8

                	
                  Further
                    Assurances; Post Closing

                	
                  28

                
	 	
                  6.9

                	
                  Payment
                    of Indebtedness

                	
                  29

                
	 	
                  6.10

                	
                  Lien
                    Searches

                	
                  29

                
	 	
                  6.11

                	
                  Use
                    of Proceeds

                	
                  29

                
	 	
                  6.12

                	
                  Collateral
                    Documents; Security Interest in Collateral

                	
                  29

                
	 	
                  6.13

                	
                  Right
                    of First Refusal

                	
                  30

                
	 	
                  6.14

                	
                  Taxes
                    and Other Charges

                	
                  30

                
	 	
                  6.15

                	
                  Payroll
                    Taxes

                	
                  31

                
	 	
                  6.16

                	
                  Inventory
                    Covenants

                	
                  31

                
	 	
                  6.17

                	
                  Inactive
                    Subsidiaries

                	
                  32

                
	 	 	 
	
                  VII.

                	
                  NEGATIVE
                    COVENANTS

                	
                  32

                
	 	
                  7.1

                	
                  Financial
                    Covenants

                	
                  32

                
	 	
                  7.2

                	
                  Permitted
                    Indebtedness

                	
                  32

                
	 	
                  7.3

                	
                  Permitted
                    Liens

                	
                  33

                
	 	
                  7.4

                	
                  Investments;
                    New Facilities or Collateral; Subsidiaries

                	
                  33

                
	 	
                  7.5

                	
                  Dividends;
                    Redemptions

                	
                  34

                
	 	
                  7.6

                	
                  Transactions
                    with Affiliates

                	
                  34

                
	 	
                  7.7

                	
                  Charter
                    Documents; Fiscal Year; Name; Jurisdiction of Organization; Dissolution;
                    Use of Proceeds

                	
                  35

                
	 	
                  7.8

                	
                  Truth
                    of Statements

                	
                  35

                
	 	
                  7.9

                	
                  IRS
                    Form 8821

                	
                  35

                
	 	
                  7.10
                    

                	
                  Transfer
                    of Assets

                	
                  35

                
	 	
                  7.11

                	
                  Payment
                    on Permitted Subordinated Debt

                	
                  36

                
	 	
                  7.12

                	
                  Foreign
                    Subsidiaries

                	
                  36

                
	 	
                  7.13

                	
                  Inactive
                    Subsidiaries

                	
                  37

                
	 	 	 
	
                  VIII.

                	
                  EVENTS
                    OF DEFAULT

                	
                  37

                
	 	 	 
	
                  IX.

                	
                  RIGHTS
                    AND REMEDIES AFTER DEFAULT

                	
                  40

                
	 	
                  9.1

                	
                  Rights
                    and Remedies

                	
                  40

                

        

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          	 	
                  9.2

                	
                  Application
                    of Proceeds

                	
                  41

                
	 	
                  9.3

                	
                  Rights
                    of Lender to Appoint Receiver

                	
                  42

                
	 	
                  9.4

                	
                  Rights
                    and Remedies not Exclusive

                	
                  42

                
	 	 	 
	
                  X.

                	
                  WAIVERS
                    AND JUDICIAL PROCEEDINGS

                	
                  42

                
	 	
                  10.1

                	
                  Waivers

                	
                  42

                
	 	
                  10.2

                	
                  Delay;
                    No Waiver of Defaults

                	
                  43

                
	 	
                  10.3

                	
                  Jury
                    Waiver

                	
                  43

                
	 	
                  10.4

                	
                  Cooperation
                    in Discovery and Litigation

                	
                  43

                
	 	 	 
	
                  XI.

                	
                  EFFECTIVE
                    DATE AND TERMINATION

                	
                  44

                
	 	
                  11.1

                	
                  Termination
                    and Effective Date Thereof

                	
                  44

                
	 	
                  11.2

                	
                  Survival

                	
                  45

                
	 	 	 
	
                  XII.

                	
                  MISCELLANEOUS

                	
                  45

                
	 	
                  12.1

                	
                  Governing
                    Law; Jurisdiction; Service of Process; Venue

                	
                  46

                
	 	
                  12.2

                	
                  Successors
                    and Assigns; Participations; New Lenders

                	
                  46

                
	 	
                  12.3

                	
                  Application
                    of Payments

                	
                  46

                
	 	
                  12.4

                	
                  Indemnity

                	
                  46

                
	 	
                  12.5

                	
                  Notice

                	
                  47

                
	 	
                  12.6

                	
                  Severability;
                    Captions; Counterparts; Facsimile Signatures

                	
                  47

                
	 	
                  12.7

                	
                  Expenses

                	
                  48

                
	 	
                  12.8

                	
                  Entire
                    Agreement

                	
                  48

                
	 	
                  12.9

                	
                  Lender
                    Approvals

                	
                  49

                
	 	
                  12.10

                	
                  Confidentiality
                    and Publicity

                	
                  49

                
	 	
                  12.11

                	
                  Release
                    of Lender

                	
                  50

                
	 	
                  12.12

                	
                  Agent

                	
                  50

                
	 	
                  12.13

                	
                  Agreement
                    Controls

                	
                  50

                
	 	
                  ANNEX
                    I

                	
                  1

                
	 	
                  FINANCIAL
                    COVENANTS

                	
                  1

                
	 	
                  1)

                	
                  Minimum
                    EBITDA

                	
                  1

                
	 	
                  2)

                	
                  Minimum
                    Liquidity

                	
                  1

                
	 	
                  APPENDIX
                    A

                	
                  1

                
	 	
                  DEFINITIONS

                	
                  1

                

        
 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXECUTION
        DOCUMENT

      

      REVOLVING
        CREDIT AND SECURITY AGREEMENT

      

      THIS
        REVOLVING CREDIT AND SECURITY AGREEMENT
        (the
“Agreement”)
        dated
        as of January 31, 2006 is entered into among RITA
        MEDICAL SYSTEMS, INC.,
        a
        Delaware corporation
        (“RMS”),
        and
HORIZON
        MEDICAL PRODUCTS, INC.,
        a
        Georgia corporation (“HMP” and
        with
        RMS as the context may require, “Borrower”),
        RITA
        MEDICAL SYSTEMS NETHERLANDS, BV,
        a
        Netherlands corporation (“RITA
        Netherlands”)
        and
RITA
        MEDICAL
        SYSTEMS FRANCE, S.A.R.L.
        (“RITA
        France” and
        with
        Rita Netherlands as the context may require, the “Foreign
        Subsidiaries”)
        and
CAPITALSOURCE
        FINANCE LLC,
        a
        Delaware limited liability company (the “Lender”).

      

      WHEREAS,
        Borrower has requested that Lender make available to Borrower a revolving
        credit
        facility (the “Revolving
        Facility”)
        in a
        maximum principal amount at any time outstanding of up to SEVEN
        MILLION DOLLARS AND 00/100 CENTS
        ($7,000,000.00)
        (the
“Facility
        Cap”),
        the
        proceeds of which shall be used by Borrower as a manufacturer and distributor
        of
        medical products and devices and for payments to Lender hereunder; and

      

      WHEREAS,
        Lender is willing to make the Revolving Facility available to Borrower upon
        the
        terms and subject to the conditions set forth herein.

      

      NOW,
        THEREFORE, in consideration of the foregoing and for other good and valuable
        consideration, the receipt and adequacy of which hereby are acknowledged,
        Borrower and Lender hereby agree as follows:

       

      
        	
                I.

              	
                DEFINITIONS

              

      

       

      1.1 General
        Terms

      

      For
        purposes of this Agreement, in addition to the definitions above and elsewhere
        in this Agreement, the terms listed in Appendix
        A
        and
Annex
        I
        hereto
        shall have the meanings given such terms in Appendix
        A
        and
Annex
        I,
        which
        are incorporated herein and made a part hereof. All capitalized terms used
        which
        are not specifically defined herein shall have meanings provided in
        Article 9 of the UCC in effect on the date hereof to the extent the same
        are used or defined therein. Unless otherwise specified herein or in
Appendix
        A,
        Annex
        I,
        any
        agreement, contract or instrument referred to herein or in Appendix
        A
        or
Annex
        I
        shall
        mean such agreement, contract or instrument as modified, amended, restated
        or
        supplemented from time to time. Unless otherwise specified, as used in the
        Loan
        Documents or in any certificate, report, instrument or other document made
        or
        delivered pursuant to any of the Loan Documents, all accounting terms not
        defined in Appendix
        A,
        Annex
        I
        or
        elsewhere in this Agreement shall have the meanings given to such terms in
        and
        shall be interpreted in accordance with GAAP. References herein to “Eastern
        Time” shall mean eastern standard time or eastern daylight savings time as in
        effect on any date of determination in the eastern United States of
        America.

       

      
        	
                II.

              	
                ADVANCES,
                  PAYMENT AND INTEREST

              

      

       

      2.1 The
        Revolving Facility

      

      (a) Subject
        to the provisions of this Agreement, Lender shall make Advances to Borrower
        under the Revolving Facility from time to time during the Term,
        provided
        that,
        notwithstanding any other provision of this Agreement, the aggregate amount
        of
        all Advances at any one time outstanding under the Revolving Facility shall
        not
        exceed the lesser of (a) the Facility Cap, and (b) the Availability. The
        Revolving Facility is a revolving credit facility, which may be drawn, repaid
        and redrawn, from time to time as permitted under this Agreement. Any
        determination as to whether there is Availability for Advances shall be made
        by
        Lender in its sole discretion and is final and binding upon Borrower. Unless
        otherwise permitted by Lender, each Advance shall be in an amount of at least
        $1,000. Subject to the provisions of this Agreement, Borrower may request
        Advances under the Revolving Facility up to and including the value, in U.S.
        Dollars, of the sum of (i) the Applicable Advance Rate (as hereinafter defined)
        of the Borrowing Base for Eligible Receivables and (ii) the Applicable Advance
        Rate of the Borrowing Base for Eligible Inventory minus, if applicable, amounts
        adjusted or reserved pursuant to this Agreement (such calculated amount being
        referred to herein as the “Availability”). For
        purposes of this Agreement, the applicable advance rate for Eligible Accounts
        and Eligible Inventory (in each case, the “Applicable
        Advance Rate”)
        shall
        be determined by reference to the calculation of Borrower’s EBITDA for the most
        recently completed Test Period as provided in Annex 1 hereto as
        follows:

    

     

    
      	 	 	 
	
              EBITDA

            	
              Applicable
                Advance Rate for
Eligible Accounts

            	
              Applicable
                Advance Rate for
Eligible Inventory

            
	
              Greater
                than $250,000

            	
              85%

            	
              50%

            
	
              $1
                to $250,000

            	
              85%

            	
              35%

            
	
              ($149,999)
                to ($0)

            	
              75%

            	
              20%

            
	
              ($350,000)
                to ($150,000)

            	
              75%

            	
              0%

            

    

    
      Notwithstanding
        the foregoing, if the Inventory Turn for any Test Period shall be less than
        2.20
        times then the Applicable Advance Rate for Eligible Inventory shall be reduced
        to 0% until the end of the next Test Period in which the Inventory Turn exceeds
        2.20 times. As long as no Default or Event of Default shall have occurred
        and be
        continuing, any change in the Applicable Advance Rate shall be effective
        as of
        the fifth (5th)
        Business Day following the submission to the Lender of the Compliance
        Certificate for the applicable Test Period pursuant to Section
        6.1(a).
        Borrower acknowledges that the foregoing shall not limit the ability of the
        Lender to reduce or otherwise adjust any Applicable Advance Rate or the
        Availability upon the occurrence of a Default or Event of Default or as
        otherwise provided in this Agreement.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Advances
        under the Revolving Facility automatically shall be made for the payment
        of
        interest on the Loans and other Obligations on the date when due to the extent
        available and as provided for herein.  

      

      (b) Notwithstanding
        the establishment by Lender of the above-referenced advance rates for
        Availability, Lender, in its sole credit judgment, may further adjust the
        Availability and such advance rates by applying percentages (known as “liquidity
        factors”) to Eligible Receivables and Eligible Inventory based upon Borrower’s
        actual recent collection history in a manner consistent with Lender’s
        underwriting practices and procedures, including without limitation Lender’s
        review and analysis of, among other things, Borrower’s historical returns,
        rebates, discounts, credits and allowances. Such liquidity factors and the
        advance rates for Availability may be adjusted by Lender throughout the Term
        as
        warranted by Lender’s underwriting practices and procedures in its sole credit
        judgment. Also, Borrower acknowledges that Lender has established the Required
        Liquidity Reserve (as defined in Annex
        I)
        and
        that Lender shall have the right to establish from time to time, in its sole
        credit judgment, additional reserves against the Availability, which reserves
        shall have the effect of reducing the amounts otherwise eligible to be disbursed
        to Borrower under the Revolving Facility pursuant to this
        Agreement.

       

      2.2 The
        Loans; Maturity

      

      All
        amounts outstanding under the Loans and other Obligations shall be due and
        payable in full in cash, if not earlier in accordance with this Agreement,
        on
        the last day of the Term (such earlier date being the “Revolving
        Facility Maturity Date”).

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      
         

        2.3 Interest
          on the Facility

         

      

      Interest
        on outstanding Advances under the Revolving Facility shall be payable monthly
        in
        arrears on the first day of each calendar month at an annual rate of the
        Prime
        Rate plus 1.25% (the “Applicable
        Rate”),
        provided,
        however,
        that,
        notwithstanding any provision of any Loan Document, for the purpose of
        calculating interest hereunder, the Prime Rate shall be not less than
        7.25% in
        each
        case calculated on the basis of a 360-day year and for the actual number
        of
        calendar days elapsed in each interest calculation period. Interest accrued
        on
        each Advance under the Revolving Facility shall be due and payable on the
        first
        day of each calendar month, in accordance with the procedures provided for
        in
Section
        2.5
        and
Section 2.6,
        commencing on the first day of the first calendar month immediately following
        the earlier of (i) date of the Initial Advance or (ii) the date upon which
        any
        other Advances are deemed to be outstanding pursuant to Section
        2.8
        , and
        continuing until the later of the expiration of the Term and the full
        performance and irrevocable payment in full in cash of the Obligations and
        termination of this Agreement.

       

      2.4 Revolving
        Facility Disbursements; Requirement to Deliver Borrowing
        Certificate

      

      So
        long
        as no Default or Event of Default shall have occurred and be continuing,
        Borrower may give Lender irrevocable written notice requesting an Advance
        under
        the Revolving Facility by delivering to Lender not later than 11:00 a.m.
        (Eastern Time) at least two but not more than four Business Days (but at
        least
        seven Business Days in the case of the Initial Advance) before the proposed
        borrowing date of such requested Advance (the “Borrowing
        Date”),
        a
        completed Borrowing Certificate and relevant supporting documentation
        satisfactory to Lender, which shall (i) specify the proposed Borrowing Date
        of such Advance which shall be a Business Day, (ii) specify the principal
        amount of such requested Advance, (iii) certify the matters contained in
Section 4.2
        (in the
        case of the Initial Advance) and Section
        4.3,
        and
        (iv) specify the amount of any recoupments of any third party payor being
        sought, requested or claimed, or, to Borrower’s knowledge, threatened against
        Borrower or Borrower’s Affiliates. Each time a request for an Advance is made,
        and, in any event and regardless of whether an Advance is being requested,
        on
        Tuesday of each week during the Term
        (and
        more
        frequently if Lender shall so request)
        until the Obligations are indefeasibly paid in cash in full and this Agreement
        is terminated, Borrower
        shall deliver to Lender a Borrowing Certificate accompanied by a separate
        detailed aging and categorizing of Borrower’s accounts receivable and accounts
        payable and such other supporting documentation with respect to the figures
        and
        information in the Borrowing Certificate as Lender shall reasonably request
        from
        a credit or security perspective or otherwise. On
        each
        Borrowing Date, Borrower irrevocably authorizes Lender to disburse the proceeds
        of the requested Advance to the appropriate Borrower’s account(s) as set forth
        on Schedule
        2.4
        to the
        written disclosure statement delivered of even date herewith by the Credit
        Parties to Lender (the “Disclosure
        Schedule”),
        in
        all cases for credit to the appropriate Borrower (or to such other account
        as to
        which the appropriate Borrower shall instruct Lender) via Federal funds wire
        transfer no later than 4:00 p.m. (Eastern Time).

       

      2.5 Revolving
        Facility Collections; Repayment; Borrowing Availability and
        Lockbox

      

      Subject
        to the following paragraph, Borrower shall maintain one or more lockbox accounts
        (individually and collectively, the “Lockbox
        Account”)
        with
        one or more banks acceptable to Lender (each, a “Lockbox
        Bank”),
        and
        shall execute with each Lockbox Bank one or more agreements acceptable to
        Lender
        in its sole discretion (individually and collectively, the “Lockbox
        Agreement”),
        and
        such other agreements related thereto as Lender may reasonably require. Each
        Borrower shall ensure that all collections of Borrower’s Accounts and all other
        cash payments received by any Borrower are paid and delivered directly from
        Account Debtors and other Persons into the appropriate Lockbox Account. The
        Lockbox Agreements shall provide that the Lockbox Banks immediately will
        transfer all funds paid into the Lockbox Accounts into a depository account
        or
        accounts maintained by Lender or an Affiliate of Lender at such bank as Lender
        may communicate to Borrower from time to time (the “Concentration
        Account”).
        Notwithstanding and without limiting any other provision of any Loan Document
        (but subject to the second paragraph of this Section
        2.5),
        Lender
        shall apply, on a daily basis, all funds transferred into the Concentration
        Account pursuant to the Lockbox Agreement and this Section 2.5
        in such
        order and manner as determined by Lender. To the extent that any Accounts
        are
        collected by Borrower or any other cash payments received by Borrower are
        not
        sent directly to the appropriate Lockbox Account when required by this
        Agreement, but are received by Borrower or any of Borrower’s Affiliates, such
        collections and proceeds shall be held in trust for the benefit of Lender
        and
        immediately remitted (and in any event within two (2) Business Days), in
        the
        form received, to the appropriate Lockbox Account for immediate transfer
        to the
        Concentration Account. Borrower acknowledges and agrees that compliance with
        the
        terms of this Section
        2.5
        is an
        essential term of this Agreement, and that, in addition to and notwithstanding
        any other rights Lender may have hereunder, under any other Loan Document,
        under
        applicable law or at equity, upon each and every failure by Borrower or any
        of
        Borrower’s Affiliates to comply with any such terms with respect to Eligible
        Receivables in an amount during any 30-day period exceeding $25,000.
 Lender
        shall be entitled to assess the “Lockbox Non-Compliance Fee” which shall operate
        to increase the Applicable Rate by two percent (2.0%) per annum during any
        period of non-compliance, whether or not a Default or an Event of Default
        occurs
        or is declared, provided that nothing shall prevent Lender from considering
        any
        failure to comply with the terms of this Section 2.5
        to
        be a
        Default or an Event of Default. All funds transferred to the Concentration
        Account for application to the Obligations under the Revolving Facility shall
        be
        applied to reduce the Obligations under the Revolving Facility, but, for
        purposes of calculating interest hereunder, shall be subject to a seven (7)
        Business Day clearance period.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      Notwithstanding
        the foregoing paragraph, Borrower shall not be obligated to have funds
        transferred from the Lockbox Account into the Lender’s Concentration Account and
        to comply with the related provisions of such paragraph until such time as
        the
        Initial Advance is received. As a condition to receiving the Initial Advance
        and
        all subsequent Advances and at all times whenever there are any Advances
        outstanding, Borrower shall be required to have all funds transferred from
        the
        Lockbox Account into the Lender’s Concentration Account as provided by this
Section
        2.5
        (which
        shall be effected pursuant to the Lender’s delivery of an instruction to the
        Lockbox Bank directing that funds be transferred to the Concentration Account)
        and the Lender shall have received confirmation from the Lockbox Bank that
        it
        has implemented such instruction. The Lender acknowledges and agrees that
        it
        shall not deliver the foregoing instruction to the Lockbox Bank unless and
        until
        (i) Borrower shall have requested the Initial Advance or (ii) an Event of
        Default shall have occurred under subsection (a) of Article
        VIII
        as a
        result of the non-payment of any fees or other amounts payable under this
        Agreement prior to the date of the Initial Advance. 

      

      If
        as the
        result of collections of Accounts and/or any other cash payments received
        by any
        Borrower pursuant to this Section
        2.5
        a credit
        balance exists with respect to the Concentration Account, such credit balance
        shall not accrue interest in favor of a Borrower, but shall be available
        to
        Borrower upon Borrower’s written request. If applicable, at any time prior to
        the execution of all or any of the Lockbox Agreements and operation of all
        or
        any of the Lockbox Accounts, Borrower and Borrower’s Affiliates shall direct all
        collections or proceeds it receives on Accounts or from other Collateral
        to the
        accounts(s) and in the manner specified by Lender in its Permitted
        Discretion.

       

      2.6 Promise
        to Pay; Manner of Payment

      

      Borrower
        absolutely and unconditionally promises to pay principal, interest and all
        other
        amounts payable hereunder, or under any other Loan Document, without any
        right
        of rescission and without any deduction whatsoever, including any deduction
        for
        any setoff, counterclaim or recoupment, and notwithstanding any damage to,
        defects in or destruction of the Collateral or any other event, including
        obsolescence of any property or improvements. All payments made by Borrower
        (other than payments automatically paid through Advances or through the Lockbox
        Accounts under the Revolving Facility as provided herein), shall be made
        only by
        wire transfer on the date when due, without offset or counterclaim, in U.S.
        Dollars, in immediately available funds to such account as may be indicated
        in
        writing by Lender to Borrower from time to time. Any such payment received
        after
        2:00 p.m. (Eastern Time) on the date when due shall be deemed received on
        the
        following Business Day. Whenever any payment hereunder shall be stated to
        be due
        or shall become due and payable on a day other than a Business Day, the due
        date
        thereof shall be extended to, and such payment shall be made on, the next
        succeeding Business Day, and such extension of time in such case shall be
        included in the computation of payment of any interest (at the interest rate
        then in effect during such extension) and/or fees, as the case may
        be.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      2.7 Repayment
        of Excess Advances

      

      Any
        balance of Advances under the Revolving Facility outstanding at any time
        in
        excess of the lesser of the Facility Cap or the Availability shall be
        immediately due and payable by Borrower without the necessity of any demand,
        at
        the Payment Office by wire transfer, whether or not a Default or Event of
        Default has occurred or is continuing and shall be paid in the manner specified
        in Section
        2.6.

       

      2.8 Payments
        by Lender

      

      Should
        any amount required to be paid under any Loan Document be unpaid, such amount
        may be paid by Lender, which payment shall be deemed a request for an Advance
        under the Revolving Facility as of the date such payment is due, and Borrower
        irrevocably authorizes disbursement of any such funds to Lender by way of
        direct
        payment of the relevant amount, interest or Obligations. No payment or
        prepayment of any amount by Lender or any other Person shall entitle any
        Person
        to be subrogated to the rights of Lender under any Loan Document unless and
        until the Obligations have been fully performed and paid irrevocably in cash
        and
        this Agreement has been terminated. Any sums expended by Lender as a result
        of
        Borrower’s or Guarantor’s failure to pay, perform or comply with any Loan
        Document or any of the Obligations may be charged to Borrower’s account as an
        Advance under the Revolving Facility and added to the Obligations.

       

      2.9 Grant
        of Security Interest; Collateral

      

      (a) To
        secure
        the payment and performance of the Obligations, Borrower hereby grants to
        Lender
        a continuing security interest in and Lien upon, and pledges to Lender, all
        of
        its right, title and interest in and to the following (collectively and each
        individually, the “Collateral”),
        which
        security interest is intended to be a first priority security interest subject
        to Permitted Liens:

      

      (i) all
        of
        such Borrower's tangible personal property, including without limitation
        all
        present and future Goods, Inventory and Equipment (including items of equipment
        which are or become Fixtures), now owned or hereafter acquired;

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      

      (ii) all
        of
        such Borrower's intangible personal property, including without limitation
        all
        present and future Accounts, contract rights, Permits, General Intangibles,
        Chattel Paper, Documents, Instruments, Deposit Accounts, Investment Property,
        Letter-of-Credit Rights and Supporting Obligations, rights to the payment
        of
        money or other forms of consideration of any kind, tax refunds, insurance
        proceeds, now owned or hereafter acquired, and all intangible and tangible
        personal property relating to or arising out of any of the foregoing;

      

      (iii) all
        of
        such Borrower's present and future Government Contracts and rights thereunder
        and the related Government Accounts and proceeds thereof, now or hereafter
        owned
        or acquired by such Borrower; provided,
        however,
        that
        Lender shall not have a security interest in any rights under any Government
        Contract of such Borrower or in the related Government Account where the
        taking
        of such security interest is a violation of an express prohibition contained
        in
        the Government Contract (for purposes of this limitation, the fact that a
        Government Contract is subject to, or otherwise refers to, Title 31,
§ 203 or Title 41, § 15 of the United States Code shall not be
        deemed an express prohibition against assignment thereof) or is prohibited
        by
        applicable law, unless in any case consent is otherwise validly obtained;
        and

      

      (iv) any
        and
        all additions and accessions to any of the foregoing, and any and all
        replacements, products and proceeds (including insurance proceeds) of any
        of the
        foregoing.

      

      (b) Notwithstanding
        the foregoing provisions of this Section 2.9,
        such
        grant of a security interest shall not extend to, and the term “Collateral”
shall not include, any General Intangibles of Borrower to the extent that
        (i) such General Intangibles are not assignable or capable of being
        encumbered as a matter of law or under the terms of any license or other
        agreement applicable thereto (but solely to the extent that any such restriction
        shall be enforceable under applicable law) without the consent of the licensor
        thereof or other applicable party thereto, and (ii) such consent has not
        been obtained; provided,
        however,
        that
        the foregoing grant of a security interest shall extend to, and the term
        “Collateral” shall include, each of the following: (a) any General
        Intangible which is in the nature of an Account or a right to the payment
        of
        money or a proceed of, or otherwise related to the enforcement or collection
        of,
        any Account or right to the payment of money, or goods which are the subject
        of
        any Account or right to the payment of money, (b) any and all proceeds of
        any General Intangible that is otherwise excluded to the extent that the
        assignment, pledge or encumbrance of such proceeds is not so restricted,
        and
        (c) upon obtaining the consent of any such licensor or other applicable
        party with respect to any such otherwise excluded General Intangible, such
        General Intangible as well as any and all proceeds thereof that might
        theretofore have been excluded from such grant of a security interest and
        from
        the term “Collateral.”

      

      (c) In
        addition to the foregoing, to secure the payment and performance of the
        Obligations, RMS has pledged to Lender all of the securities owned by RMS
        in HMP
        and the Foreign Subsidiaries pursuant to a Stock Pledge Agreement.

      

      (d) Upon
        the
        execution and delivery of this Agreement, and upon the proper filing of the
        necessary financing statements and proper delivery of the necessary stock
        certificates, without any further action, Lender will have a good, valid
        and
        perfected first priority Lien and security interest in the Collateral, subject
        to no transfer or other restrictions or Liens of any kind in favor of any
        other
        Person except for Permitted Liens. No financing statement relating to any
        of the
        Collateral is on file in any public office except those (i) on behalf of
        Lender,
        and/or (ii) in connection with Permitted Liens.
        Borrower
        acknowledges that Lender shall have the right, in its sole and absolute
        discretion, to record the Collateral, Patent, Trademark and Copyright Assignment
        in the United States Patent and Trademark Office and/or the United States
        Copyright Office at any time during the Term.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      2.10 Collateral
        Administration

      

      (a) All
        Collateral (except Deposit Accounts) will at all times be kept by Borrower
        at
        the locations set forth on Schedule 5.18B
        hereto
        and shall not, without thirty (30) calendar days prior written notice to
        Lender,
        be moved therefrom, and in any case shall not be moved outside the continental
        United States except for shipments of Inventory in the ordinary course of
        business.

      

      (b) Borrower
        shall keep accurate and complete records of its Accounts and all payments
        and
        collections thereon and shall submit such records to Lender on such periodic
        bases as Lender may request. In addition, if Accounts of Borrower in an
        aggregate face amount in excess of $25,000 become ineligible because they
        fall
        within one of the specified categories of ineligibility set forth in the
        definition of Eligible Receivables, Borrower shall notify Lender of such
        occurrence on the first Business Day following such occurrence and the Borrowing
        Base shall thereupon be adjusted to reflect such occurrence. If requested
        by
        Lender, Borrower shall execute and deliver to Lender formal written assignments
        of all of its Accounts, including all Accounts created since the date of
        the
        last assignment, together with copies of claims, invoices and/or other
        information related thereto; provided, that as long as no Default or Event
        of
        Default shall have occurred Lender shall not request the assignment of Accounts
        more than once per calendar month. To the extent that collections from such
        assigned Accounts exceed the amount of the Obligations, such excess amount
        shall
        not accrue interest in favor of Borrower, but shall be available to Borrower
        upon Borrower’s written request. 

      

      (c) Whether
        or not an Event of Default has occurred, any of Lender’s officers, employees,
        representatives or agents shall have the right, at any time during normal
        business hours, in the name of Lender, any designee of Lender or Borrower,
        to
        verify the validity, amount or any other matter relating to any Accounts
        of
        Borrower. Borrower shall cooperate reasonably with Lender in an effort to
        facilitate and promptly conclude such verification process.

      

      (d) To
        expedite collection, Borrower shall endeavor in the first instance to make
        collection of its Accounts for Lender. Lender shall have the right at all
        times
        after the occurrence and during the continuance of an Event of Default to
        notify
        Account Debtors owing Accounts to Borrower that their Accounts have been
        assigned to Lender and to collect such Accounts directly in its own name
        and to
        charge collection costs and expenses, including reasonable attorney’s fees, to
        Borrower.

      

      (e) As
        and
        when determined by Lender in its sole discretion, Lender will perform the
        searches described in clauses (i) and (ii) below against Borrower (the results
        of which are to be consistent with Borrower’s representations and warranties
        under this Agreement), all at Borrower’s expense: (i) UCC searches with the
        Secretary of State of the jurisdiction of organization of Borrower and the
        Secretary of State and local filing offices of each jurisdiction where Borrower
        maintain their respective executive offices, a place of business or assets;
        (ii)
        lien searches with the United States Patent and Trademark Office;
        and
        (iii) judgment, federal tax lien and corporate and partnership tax lien
        searches, in each jurisdiction searched under clause (i) above.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

         (f) Borrower
        (i) shall provide prompt written notice to its current bank to transfer all
        items, collections and remittances to the Concentration Account, (ii) shall
        provide prompt written notice to each Account Debtor that Lender has been
        granted a lien and security interest in, upon and to all Accounts applicable
        to
        such Account Debtor and shall direct each Account Debtor to make payments
        to the
        appropriate Lockbox Account, and Borrower hereby authorizes Lender, upon
        any
        failure to send such notices and directions within ten (10) Business Days
        after
        the date of this Agreement or ten (10) Business Days after the Person becomes
        an
        Account Debtor), to send any and all similar notices and directions to such
        Account Debtors, and (iii) shall do anything further that may be lawfully
        required by Lender to create and perfect Lender’s lien on any collateral and
        effectuate the intentions of the Loan Documents. At Lender’s request, Borrower
        shall immediately deliver to Lender all items for which Lender must receive
        possession to obtain a perfected security interest and all notes, certificates,
        and documents of title, Chattel Paper, warehouse receipts, Instruments, and
        any
        other similar instruments constituting Collateral.

       

      2.11 Power
        of Attorney

      

      Lender
        is
        hereby irrevocably made, constituted and appointed the true and lawful attorney
        for Borrower (without requiring Lender to act as such) with full power of
        substitution to do the following: (i) endorse the name of any such Person
        upon
        any and all checks, drafts, money orders, and other instruments for the payment
        of money that are payable to such Person and constitute collections on its
        or
        their Accounts; (ii) execute in the name of such Person any financing
        statements, schedules, assignments, instruments, documents, and statements
        that
        it is or they are obligated to give Lender under any of the Loan Documents;
        and
        (iii) do such other and further acts and deeds in the name of such Person
        that
        Lender may deem reasonably necessary or desirable (subject to the second
        sentence of section 2.10(d)) to enforce any Account or other Collateral or
        to
        perfect Lender’s security interest or lien in any Collateral. In addition, if
        any such Person breaches its obligation hereunder to direct payments of Accounts
        or the proceeds of any other Collateral to the appropriate Lockbox Account,
        Lender, as the irrevocably made, constituted and appointed true and lawful
        attorney for such Person pursuant to this paragraph, may, by the signature
        or
        other act of any of Lender’s officers or authorized signatories (without
        requiring any of them to do so), direct any federal, state or private payor
        or
        fiscal intermediary to pay proceeds of Accounts or any other Collateral to
        the
        appropriate Lockbox Account.

       

      2.12 Evidence
        of Loans

      

      (a) Lender
        shall maintain, in accordance with its usual practice, electronic or written
        records evidencing the indebtedness and obligations to such Lender resulting
        from each Loan made by such Lender from time to time, including without
        limitation, the amounts of principal and interest payable and paid to such
        Lender from time to time under this Agreement.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      

      (b) The
        entries made in the electronic or written records maintained pursuant to
        this
Section
        2.12
        (the
“Register”)
        shall
        be prima facie evidence of the existence and amounts of the obligations and
        indebtedness therein recorded; provided,
        however,
        that
        the failure of the Lender to maintain such records or any error therein shall
        not in any manner affect the obligations of the Borrower to repay the Loans
        or
        Obligations in accordance with their terms.

      

      (c) Lender
        will account to Borrower monthly with a statement of Advances under the
        Revolving Facility, and any charges and payments made pursuant to this
        Agreement, and in the absence of manifest error, such accounting rendered
        by
        Lender shall be deemed final, binding and conclusive unless Lender is notified
        by Borrower in writing to the contrary within fifteen (15) calendar days
        of
        Receipt of each accounting, which notice shall be deemed an objection only
        to
        items specifically objected to therein.

      

      (d) The
        Borrower agrees that:

      

      (i) upon
        written notice by Lender to the Borrower that a promissory note or other
        evidence of indebtedness is requested by Lender to evidence the Loans and
        other
        Obligations owing or payable to, or to be made by, such Lender, the Borrower
        shall promptly (and in any event within three (3) Business Days of any such
        request) execute and deliver to Lender an appropriate promissory note or
        notes
        in form and substance reasonably acceptable to the Lender and Borrower, payable
        to the order of Lender or in a principal amount equal to the amount of the
        Loans
        owing or payable to Lender;

      

      (ii) all
        references to Notes in the Loan Documents shall mean Notes, if any, to the
        extent issued (and not returned to the Borrower for cancellation) hereunder,
        as
        the same may be amended, modified, divided, supplemented and/or restated
        from
        time to time; and

      

      (iii) upon
        Lender’s written request, and in any event within three (3) Business Days of
        Borrower’s Receipt of any such request, Borrower shall execute and deliver to
        Lender new notes and/or divide the notes in exchange for then existing notes
        in
        such smaller amounts or denominations as Lender shall specify in its sole
        and
        absolute discretion; provided,
        that
        the aggregate principal amount of such new Notes shall not exceed the aggregate
        principal amount of the Notes outstanding at the time such request is made;
        and
provided,
        further,
        that
        such notes that are to be replaced shall then be deemed no longer outstanding
        hereunder and replaced by such new notes and returned to the Borrower within
        a
        reasonable period of time after Lender’s receipt of the replacement
        notes.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	III.	
                FEES
                  AND OTHER CHARGES 

              

      

       

      3.1 Commitment
        Fee

      

      On
        or
        before the Closing Date, Borrower shall pay to Lender 2.0% of the Facility
        Cap
        as a nonrefundable commitment fee.

       

      3.2 Unused
        Line Fee

      

      Borrower
        shall pay to Lender monthly an unused line fee (the “Unused
        Line Fee”)
        in an
        amount equal to 0.04% per month of the difference derived by subtracting
        (i) the
        daily average amount of the balances under the Revolving Facility outstanding
        during the preceding month, from (ii) the Facility Cap. The Unused Line Fee
        shall be payable monthly in arrears on the first day of each successive calendar
        month (starting with the month in which the Closing Date occurs). 

       

      3.3 Collateral
        Management Fee

      

      Borrower
        shall pay Lender as additional interest a monthly collateral management fee
        (the
“Collateral
        Management Fee”)
        equal
        to 0.05% per month of the average outstanding principal amount of the Revolving
        Facility during such month. The Collateral Management Fee shall be payable
        monthly in arrears on the first day of each successive calendar month (starting
        with the month in which the Closing Date occurs). 

       

      3.4 Computation
        of Fees; Lawful Limits

      

      All
        fees
        hereunder shall be computed on the basis of a year of 360 days and for the
        actual number of days elapsed in each calculation period, as applicable.
        In no
        contingency or event whatsoever, whether by reason of acceleration or otherwise,
        shall the interest and other charges paid or agreed to be paid to Lender
        for the
        use, forbearance or detention of money hereunder exceed the maximum rate
        permissible under applicable law which a court of competent jurisdiction
        shall,
        in a final determination, deem applicable hereto. If, due to any circumstance
        whatsoever, fulfillment of any provision hereof, at the time performance
        of such
        provision shall be due, shall exceed any such limit, then, the obligation
        to be
        so fulfilled shall be reduced to such lawful limit, and, if Lender shall
        have
        received interest or any other charges of any kind which might be deemed
        to be
        interest under applicable law in excess of the maximum lawful rate, then
        such
        excess shall be applied first to any unpaid fees and charges hereunder, then
        to
        unpaid principal balance owed by Borrower hereunder, and if the then remaining
        excess interest is greater than the previously unpaid principal balance,
        Lender
        shall promptly refund such excess amount to Borrower and the provisions hereof
        shall be deemed amended to provide for such permissible rate. The terms and
        provisions of this Section
        3.4
        shall
        control to the extent any other provision of any Loan Document is inconsistent
        herewith.

      

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

      

      3.5 Default
        Rate of Interest

      

      Upon
        the
        occurrence and during the continuation of an Event of Default, the Applicable
        Rate of interest in effect at such time with respect to the Obligations shall
        be
        increased by 5.0% per annum (the “Default
        Rate”).

       

      3.6 Acknowledgement
        of Joint and Several Liability

      

      Each
        Credit Party acknowledges that it is jointly and severally liable for all
        of the
        Obligations under the Loan Documents. Each Credit Party expressly understands,
        agrees and acknowledges that (i) each Borrower is an Affiliated entity by
        common
        ownership of each other Borrower, (ii) each Borrower desires to have the
        availability of one common credit facility instead of separate credit
        facilities, (iii) each Borrower has requested that Lender extend such a common
        credit facility on the terms herein provided, (iv) Lender will be lending
        against, and relying on a lien upon, all of Borrowers’ assets even though the
        proceeds of any particular loan made hereunder may not be advanced directly
        to a
        particular Borrower, (v) Borrower will nonetheless benefit by the making
        of all
        such loans by Lender and the availability of a single credit facility of
        a size
        greater than each could independently warrant, and (vi) all of the
        representations, warranties, covenants, obligations, conditions, agreements
        and
        other terms contained in the Loan Documents shall be applicable to and shall
        be
        binding upon Borrower. Each
        Credit Party hereby appoints RMS (in such capacity, "Borrower
        Agent")
        to act
        as agent on behalf of each Credit Party and to deliver any statement, notice,
        authorization or other writing required or permitted hereunder or under any
        of
        the Loan Documents. Lender shall be entitled to rely upon any statement,
        notice,
        authorization or other writing received from Borrower Agent without
        investigation and each Credit Party agrees that any such statement, notice,
        authorization or other writing shall be binding on it.

       

      
        	
                IV.

              	
                CONDITIONS
                  PRECEDENT

              

      

       

      4.1 Conditions
        to Closing

      

      The
        obligations of Lender to consummate the transactions contemplated herein
        are
        subject to the satisfaction, in the sole judgment of Lender, of the
        following:

      

      (a) (i)
        Borrower shall have delivered to Lender the Loan Documents to which it is
        a
        party, each duly executed by an authorized officer of Borrower and the other
        parties thereto, and (ii) each Guarantor, if any, shall have delivered to
        Lender
        the Loan Documents to which such Guarantor is a party, each duly executed
        and
        delivered by Guarantor or an authorized officer of such Guarantor, as
        applicable, and the other parties thereto;

      

      (b) all
        in
        form and substance satisfactory to Lender in its sole discretion, Lender
        shall
        have received (i) a report of Uniform Commercial Code financing statement,
        tax
        and judgment lien searches performed with respect to each Credit Party in
        each
        jurisdiction determined by Lender in its sole discretion, and such report
        shall
        show no Liens on the Collateral (other than Permitted Liens), (ii) each document
        (including, without limitation, any Uniform Commercial Code financing statement)
        required by any Loan Document or under law or requested by Lender to be filed,
        registered or recorded to create in favor of Lender, a perfected first priority
        security interest upon the Collateral (other than Permitted Liens) and
        (iii) evidence of each such filing, registration or recordation and of the
        payment by the Credit Parties of any necessary fee, tax or expense relating
        thereto;

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      (c) Lender
        shall have received (i) the Charter and Good Standing Documents, all in form
        and
        substance acceptable to Lender, (ii) a certificate of the corporate secretary
        or
        assistant secretary of each Credit Party dated the Closing Date, as to the
        incumbency and signature of the Persons executing the Loan Documents, in
        form
        and substance acceptable to Lender, and (iii) the written legal opinion of
        counsel for the Credit Parties, in form and substance satisfactory to Lender
        and
        its counsel; 

      

      (d) Lender
        shall have received a certificate of the chief financial officer (or, in
        the
        absence of a chief financial officer, the chief executive officer) of Borrower,
        in form and substance satisfactory to Lender (each, a “Solvency
        Certificate”),
        certifying (i) the solvency of such Person after giving effect to the
        transactions and the Indebtedness contemplated by the Loan Documents, and
        (ii)
        as to such Person’s financial resources and ability to meet its obligations and
        liabilities as they become due, to the effect that as of the Closing Date
        and
        after giving effect to such transactions and Indebtedness: (A) the assets
        of
        such Person, at a Fair Valuation, exceed the total liabilities (including
        contingent, subordinated, unmatured and unliquidated liabilities) of such
        Person, and (B) no unreasonably small capital base with which to engage in
        its
        anticipated business exists with respect to such Person;

      

      (e) Lender
        shall have completed examinations, the results of which shall be reasonably
        satisfactory in form and substance to Lender, of the Collateral, the financial
        statements and the books, records, business, obligations, financial condition
        and operational state of each Credit Party, and each such Person shall have
        demonstrated to Lender’s reasonable satisfaction that (i) its operations
        comply in all material respects with all applicable federal, state, foreign
        and
        local laws, statutes and regulations, (ii) its operations are not the
        subject of any governmental investigation, evaluation or any remedial action
        which could result in any expenditure or liability deemed material by Lender,
        in
        its sole credit judgment, and (iii) it has no liability (whether contingent
        or otherwise) that is deemed material by Lender, in its sole credit
        judgment;

      

      (f) Lender
        shall have received all fees, charges and expenses payable to Lender on or
        prior
        to the Closing Date pursuant to the Loan Documents;

      

      (g) all
        corporate and other proceedings, documents, instruments and other legal matters
        in connection with the transactions contemplated by the Loan Documents
        (including, but not limited to, those relating to corporate and capital
        structures of the Credit Parties) shall be satisfactory to Lender;

      

      (h) Lender
        shall have received, in form and substance satisfactory to Lender,
        (i) evidence of the repayment in full and termination of the indebtedness
        due from Borrower to Steven Picheny and Howard Fuchs and
        all
        related documents, agreements and instruments and of all Liens, security
        interests and Uniform Commercial Code financing statements relating thereto,
        if
        any, and (ii) release and termination of any and all Liens, security interest
        and/or Uniform Commercial Code financing statements in, on, against or with
        respect to any of the Collateral (other than Permitted Liens); 

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

      

      (i) Borrower
        shall have executed and filed IRS Form 8821 with the appropriate office of
        the
        Internal Revenue Service; and 

      

      (j) Lender
        shall have received such other documents, certificates, information or legal
        opinions as Lender may reasonably request, all in form and substance reasonably
        satisfactory to Lender.

       

      4.2 Conditions
        to Initial Advance

      

      The
        obligations of Lender to make the initial Advance under the Revolving Facility
        (the “Initial
        Advance”)
        are
        subject to the satisfaction, in the sole judgment of Lender, of the
        following:

      

      (a) (i)
        Borrower shall have delivered to Lender (A) the Loan Documents to which it
        is a
        party, if any, not executed on the Closing Date, each duly executed by an
        authorized officer of Borrower and the other parties thereto, and (B) a
        Borrowing Certificate for the Initial Advance under the Revolving Facility
        executed by an authorized officer of Borrower, and (ii) each Guarantor, if
        any,
        shall have delivered to Lender the Loan Documents to which such Guarantor
        is a
        party, if any, not executed on the Closing Date, each duly executed and
        delivered by Guarantor or an authorized officer of such Guarantor, as
        applicable, and the other parties thereto;

      

      (b) Lender
        shall have received all fees, charges and expenses payable to Lender on or
        prior
        to the date of the Initial Advance pursuant to the Loan Documents;

      

      (c) all
        in
        form and substance reasonably satisfactory to Lender, Lender shall have received
        such consents, approvals and agreements, including, without limitation, any
        applicable Landlord Waivers and Consents and Warehouse Waivers and Consents
        with
        respect to any and all leases, warehouses and other locations set forth on
        Schedule
        5.4 of the Disclosure Schedule,
        from
        such third parties as Lender and its counsel shall determine are necessary
        or
        desirable with respect to (i) the Loan Documents and/or the transactions
        contemplated thereby, and/or (ii) claims against any Credit Party or the
        Collateral;

      

      (d) Lender
        shall have completed such bringdown examinations, the results of which shall
        be
        reasonably satisfactory in form and substance to Lender, of the Collateral,
        the
        financial statements and the books, records, business, obligations, financial
        condition and operational state of each Credit Party as Lender may determine
        are
        necessary, and each of the Credit Parties shall have demonstrated to Lender’s
        reasonable satisfaction that (i) its operations comply in all material
        respects with all applicable federal, state, foreign and local laws, statutes
        and regulations, (ii) its operations are not the subject of any
        governmental investigation, evaluation or any remedial action which could
        result
        in any expenditure or liability deemed material by Lender, in its sole credit
        judgment, and (iii) it has no liability (whether contingent or otherwise)
        that is deemed material by Lender, in its sole credit judgment;

       

      
        
          
          

        

        
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      (e) Lender
        shall have received the Lockbox Agreement executed by all parties thereto
        in
        form and substance satisfactory to Lender in its sole discretion;

      

      (f) Lender
        shall have delivered an instruction to the Lockbox Bank under the Lockbox
        Agreement directing that all funds be transferred from the Lockbox Account
        to
        the Lender’s Concentration Account and Lender shall have received confirmation
        from the Lockbox Bank that it has implemented such instruction as required
        by
Section
        2.5;

      

      (g) the
        Credit Parties shall be in compliance with Section
        6.5,
        and
        Lender shall have received copies of all insurance policies or binders, original
        certificates of all insurance policies of the Credit Parties confirming that
        they are in effect and that the premiums due and owing with respect thereto
        have
        been paid in full and endorsements of such policies issued by the applicable
        Insurers and in each case naming Lender as loss payee or additional insured,
        as
        appropriate; and

      

      (h) Lender
        shall have received such other documents, certificates, information or legal
        opinions as Lender may reasonably request, all in form and substance reasonably
        satisfactory to Lender.

       

      4.3 Conditions
        to Each Advance 

      

      The
        obligations of Lender to make any Advance (including, without limitation,
        the
        Initial Advance) are subject to the satisfaction, in the sole judgment of
        Lender, of the following additional conditions precedent:

      

      (a) Borrower
        shall have delivered to Lender a Borrowing Certificate for the Advance executed
        by an authorized officer of Borrower, which shall constitute a representation
        and warranty by Borrower as of the Borrowing Date of such Advance that the
        conditions contained in this Section
        4.3
        have
        been satisfied; provided,
        however,
        that
        any determination as to whether to fund Advances or extensions of credit
        shall
        be made by Lender in its sole discretion;

      

      (b) each
        of
        the representations and warranties made by Borrower in or pursuant to this
        Agreement shall be accurate in all material respects, before and after giving
        effect to such Advance, and no Default or Event of Default shall have occurred
        or be continuing or would exist after giving effect to the Advance under
        the
        Revolving Facility on such date;

      

      (c) immediately
        after giving effect to the requested Advance, the aggregate outstanding
        principal amount of Advances under the Revolving Facility shall not exceed
        either the Availability or the Facility Cap;

      

      (d) except
        as
        disclosed in the historical financial statements, there shall be no liabilities
        or obligations with respect to Borrower of any nature whatsoever which, either
        individually or in the aggregate, would reasonably be likely to have a Material
        Adverse Effect; 

       

      
        
          
          

        

        
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      (e) Lender
        shall have received all fees, charges and expenses payable to Lender on or
        prior
        to such date pursuant to the Loan Documents;

      

      (f) all
        in
        form and substance satisfactory to Lender in its sole discretion, Lender
        shall
        have received such consents, approvals and agreements, including, without
        limitation, any applicable Landlord Waivers and Consents and Warehouse Waivers
        and Consents with respect to any and all leases, warehouses and other locations
        set forth on Schedule
        5.4 of the Disclosure Schedule,
        from
        such third parties as Lender and its counsel shall reasonably determine are
        necessary or desirable with respect to (i) the Loan Documents and/or the
        transactions contemplated thereby, and/or (ii) claims against any Borrower
        or
        Guarantor or the Collateral; and

      

      (g)
         if
        the
        instruction to the Lockbox Bank to have all funds in the Lockbox Account
        transferred to Lender’s Concentration Account is not in effect, Borrower shall
        have instructed the Lockbox Bank to have all funds transferred from the Lockbox
        Account to the Lender’s Concentration Account and Lender shall have received
        confirmation from the Lockbox Bank that it has implemented such instruction
        as
        required by Section
        2.5.

       

      
        	
                V.

              	
                REPRESENTATIONS
                  AND WARRANTIES

              

      

      

      Each
        Credit Party, jointly and severally, represents and warrants as of the date
        hereof, the Closing Date, and each Borrowing Date as follows: 

       

      5.1 Organization
        and Authority

      

      RMS
        is a
        Delaware corporation duly
        organized, validly existing and in good standing under the laws of its state
        of
        formation. HMP is a Georgia corporation duly organized, validly existing
        and in
        good standing under the laws of its state of formation. Each of the Foreign
        Subsidiaries is a corporation duly organized, validly existing and in good
        standing under the laws of its jurisdiction of formation. Each Credit Party
        (i) has all requisite corporate or entity power and authority to own its
        properties and assets and to carry on its business as now being conducted
        and as
        contemplated in the Loan Documents, (ii) is duly qualified to do business
        in every jurisdiction in which failure so to qualify would reasonably be
        likely
        to have a Material Adverse Effect, and (iii) has all requisite power and
        authority (A) to execute, deliver and perform the Loan Documents to which
        it is a party, (B) if a Borrower, to borrow hereunder, (C) to consummate
        the
        transactions contemplated under the Loan Documents, and (D) to grant the
        Liens
        with regard to the Collateral pursuant to the Security Documents to which
        it is
        a party. No Credit Party is an “investment company” registered or required to be
        registered under the Investment Company Act of 1940, as amended, or is
        controlled by such an “investment company.”

      
         

        
          
            
            

          

          
            16

            
              

            

          

          
            
            

          

        

         

      

      5.2 Loan
        Documents

       

      The
        execution, delivery and performance by each Credit Party of the Loan Documents
        to which it is a party, and the consummation of the transactions contemplated
        thereby, (i) have been duly authorized by all requisite action of each such
        Person and have been duly executed and delivered by or on behalf of each
        such
        Person; (ii) do not violate any provisions of (A) applicable law, statute,
        rule, regulation, ordinance or tariff, (B) any order of any Governmental
        Authority binding on any such Person or any of their respective properties,
        or
        (C) the certificate of incorporation or bylaws (or any other equivalent
        governing agreement or document) of any such Person, or any agreement between
        any such Person and its respective stockholders, members, partners or equity
        owners or among any such stockholders, members, partners or equity owners;
        (iii)
        are not in conflict with, and do not result in a breach or default of or
        constitute an event of default, or an event, fact, condition or circumstance
        which, with notice or passage of time, or both, would constitute or result
        in a
        conflict, breach, default or event of default under, any material indenture,
        agreement or other instrument to which any such Person is a party, or by
        which
        the properties or assets of such Person are bound; (iv) except as set forth
        herein, will not result in the creation or imposition of any Lien of any
        nature
        upon any of the properties or assets of any such Person; and (v) except as
        set forth on Schedule
        5.2 to the Disclosure Schedule,
        do not
        require the consent, approval or authorization of, or filing, registration
        or
        qualification with, any Governmental Authority or any other Person. When
        executed and delivered, each of the Loan Documents to which any Credit Party
        is
        a party will constitute the legal, valid and binding obligation of such Credit
        Party, enforceable against it in accordance with its terms, subject to the
        effect of any applicable bankruptcy, moratorium, insolvency, reorganization
        or
        other similar law affecting the enforceability of creditors’ rights generally
        and to the effect of general principles of equity which may limit the
        availability of equitable remedies (whether in a proceeding at law or in
        equity).

       

      5.3 Subsidiaries,
        Capitalization and Ownership Interests

      

      Except,
        in the case of RMS for HMP and the Foreign Subsidiaries, and as listed on
        Schedule
        5.3A to the Disclosure Schedule,
        the
        Credit Parties have no Subsidiaries. Schedule 5.3B
        to the Disclosure Schedule
        states
        the authorized and issued capitalization of each Credit Party other than
        RMS,
        the number and class of equity securities and/or ownership, voting or
        partnership interests issued and outstanding of each such Credit Party and
        the
        record and beneficial owners thereof (including options, warrants and
        other
        rights to acquire any of the foregoing). The ownership or partnership interests
        of any Credit Party that is a limited partnership or a limited liability
        company
        are not certificated, the documents relating to such interests do not expressly
        state that the interests are gove`rned by Article 8 of the Uniform Commercial
        Code, and the interests are not held in a securities account. The outstanding
        equity securities and/or ownership, voting or partnership interests of each
        Credit Party other than RMS have been duly authorized and validly issued
        and are
        fully paid and nonassessable, and each Person listed on Schedule 5.3C
        to the Disclosure Schedule
        owns
        beneficially and of record all the equity securities and/or ownership, voting
        or
        partnership interests it is listed as owning free and clear of any Liens
        other
        than Liens created by the Security Documents. Schedule 5.3D
        to the Disclosure Schedule
        also
        lists the directors, members, managers and/or partners of each Credit Party.
        Except as listed on Schedule
        5.3E to the Disclosure Schedule,
        no
        Credit Party owns an interest in, participate in or engage in any joint venture,
        partnership or similar arrangements with any Person.

       

      
        
          
          

        

        
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      5.4 Properties

      

      Borrower
        (i) is the sole owner and has good, valid and marketable title to, or a valid
        leasehold interest in, all of its properties and assets, including the
        Collateral, whether personal or real, subject to no transfer restrictions
        or
        Liens of any kind except for Permitted Liens, and (ii) is in compliance in
        all
        material respects with each lease to which it is a party or otherwise bound.
        Schedule 5.4
        to the Disclosure Schedule
        lists
        all real properties (and their locations) owned or leased by or to, and all
        other assets or property that are leased or licensed by, Borrower and all
        leases
        (including leases of leased real property) covering or with respect to such
        properties and assets all warehouses, fulfillment houses or other locations
        at
        which any of Borrower’s Inventory is located. Borrower enjoys peaceful and
        undisturbed possession under all such leases and such leases are all the
        leases
        necessary for the operation of such properties and assets, are valid and
        subsisting and are in full force and effect. All warehouse, fulfillment and
        other agreements, if any, relating to Borrower’s Inventory are in full force and
        effect and no default or event of default exists thereunder or would exist
        with
        the giving of notice, the lapse of time or both. 

       

      5.5 Other
        Agreements

      

      No
        Credit
        Party is (i) a party to any judgment, order or decree or any agreement, document
        or instrument, or subject to any restriction, which would materially affect
        its
        ability to execute and deliver, or perform under, any Loan Document or to
        pay
        the Obligations; (ii) in default in the performance, observance or fulfillment
        of any material obligation, covenant or condition contained in any material
        agreement, document or instrument to which it is a party or to which any
        of its
        properties or assets are subject, which default, if not remedied within any
        applicable grace or cure period would reasonably be likely to have a Material
        Adverse Effect, nor to any such Credit Party’s knowledge,
        is there any event, fact, condition or circumstance which, with notice or
        passage of time or both, would constitute or result in a conflict, breach,
        default or event of default under, any of the foregoing which, if not remedied
        within any applicable grace or cure period would reasonably be likely to
        have a
        Material Adverse Effect; or (iii) a party or subject to any agreement, document
        or instrument with respect to, or obligation to pay any, management or service
        fee with respect to, the ownership, operation, leasing or performance of
        any of
        its business or any facility, nor is there any third-party manager with respect
        to any such facility.

       

      5.6 Litigation

      

      Except
        as
        set forth on Schedule
        5.6.A. to the Disclosure Schedule,
        there
        is no other action, suit, proceeding or investigation pending or, to their
        knowledge, threatened against any Credit Party arising out of any death or
        injury resulting from the use of any devices or products manufactured, marketed,
        imported, distributed or sold by any Credit Party. There is no other action,
        suit, proceeding or investigation pending or, to their knowledge, threatened
        against any Credit Party that (i) questions or could prevent the validity
        of any
        of the Loan Documents or the right of any Credit Party to enter into any
        Loan
        Document or to consummate the transactions contemplated thereby, (ii) would
        reasonably be likely to be or have, either individually or in the aggregate,
        any
        Material Adverse Change or Material Adverse Effect, or (iii) would
        reasonably be likely to result in any Change of Control or other material
        change
        in the current ownership, control or management of any Credit Party. No Credit
        Party has any knowledge that there is any basis for the foregoing. No Credit
        Party is a party or subject to any order, writ, injunction, judgment or decree
        of any Governmental Authority. Except as set forth on Schedule
        5.6.B. to the Disclosure Schedule,
        there
        is no action, suit, proceeding or investigation (known to such Credit Party)
        initiated by any Credit Party currently pending that would reasonably be
        likely
        to be or have, either individually or in the aggregate, any Material Adverse
        Change or Material Adverse Effect. No Credit Party has any existing accrued
        and/or unpaid Indebtedness to any Governmental Authority or any other
        governmental payor other than taxes, assessments, fees and other governmental
        charges not yet due and payable in the ordinary course of business.

       

      
        
          
          

        

        
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      5.7 Hazardous
        Materials

      

      Each
        Credit Party is in compliance in all material respects with all applicable
        Environmental Laws. No Credit Party has been notified of any material action,
        suit, proceeding or investigation (i) relating in any way to compliance by
        or
        liability of any Credit Party under any Environmental Laws, (ii) which otherwise
        deals with any Hazardous Substance or any Environmental Law, or (iii) which
        seeks to suspend, revoke or terminate any license, permit or approval necessary
        for the generation, handling, storage, treatment or disposal of any Hazardous
        Substance.

       

      5.8 Potential
        Tax Liability; Tax Returns; Governmental Reports

      

      (a)
        Except as disclosed in Schedule
        5.8 to the Disclosure Schedule,
        no
        Credit Party (i) has received any written communication from the Internal
        Revenue Service with respect to any investigation or assessment relating
        to such
        Credit Party directly, or relating to any consolidated tax return which was
        filed on behalf of such Credit Party, (ii) has no knowledge of any year which
        remains open pending tax examination or audit by the Internal Revenue Service,
        and (iii) has no knowledge of any information that could give rise to a tax
        liability or assessment to the Internal Revenue Service.

      

      (b)
        Except as disclosed in Schedule
        5.8 to the Disclosure Schedule,
        each
        Credit Party (i) has filed all federal, state, foreign (if applicable) and
        local
        tax returns and other reports which are required by law to be filed by such
        Credit Party, and (ii) has paid all taxes, assessments, fees and other
        governmental charges, including, without limitation, payroll and other
        employment related taxes, in each case that are due and payable, except only
        for
        items that any such Credit Party is currently contesting in good faith with
        adequate reserves under GAAP. 

       

      5.9 Financial
        Statements and Reports

      

      Except
        as
        described in Schedule
        5.9 to the Disclosure Schedule,
        financial statements and financial information relating to the Credit Parties
        that have been or may hereafter be delivered to Lender by Borrower are accurate
        and complete and have been prepared in accordance with GAAP consistently
        applied
        with prior periods. The Credit Parties have no material obligations or
        liabilities of any kind not disclosed in such financial information or
        statements, and since the date of the most recent financial statements submitted
        to Lender, there has not occurred any Material Adverse Change, Material Adverse
        Effect or any other event or condition that would reasonably be likely to
        have a
        Material Adverse Effect.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      5.10 Compliance
        with Law

      

      Each
        Credit Party (i) is in compliance with all laws, statutes, rules, regulations,
        ordinances and tariffs of any Governmental Authority applicable to such Credit
        Party and/or its business, assets or operations, including, without limitation,
        HIPAA, ERISA, FDA Laws and Healthcare Laws, and (ii) is not in violation
        of any
        order of any Governmental Authority or other board or tribunal, and with
        respect
        to both (i) and (ii) above except where noncompliance or violation could
        not
        reasonably be expected to have a Material Adverse Effect. There is no event,
        fact, condition or circumstance which, with notice or passage of time, or
        both,
        would constitute or result in any noncompliance with, or any violation of,
        any
        of the foregoing, in each case except where noncompliance or violation could
        not
        reasonably be expected to have a Material Adverse Effect. No Credit Party
        has
        received any notice that it is not in compliance in any respect with any
        of the
        requirements of any of the foregoing. Borrower has (a) not engaged in any
        Prohibited Transactions as defined in Section 406 of ERISA and
        Section 4975 of the Internal Revenue Code of 1986, as amended, and the
        rules and regulations promulgated thereunder, (b) not failed to meet any
        applicable minimum funding requirements under Section 302 of ERISA in
        respect of its plans and no funding requirements have been postponed or delayed,
        (c) no knowledge of any amounts due but unpaid to the Pension Benefit Guaranty
        Corporation, or of any event or occurrence which would cause the Pension
        Benefit
        Guaranty Corporation to institute proceedings under Title IV of ERISA to
        terminate any of the employee benefit plans, (d) no fiduciary responsibility
        under ERISA for investments with respect to any plan existing for the benefit
        of
        Persons other than its employees or former employees, or (e) not withdrawn,
        completely or partially, from any multi-employer pension plans so as to incur
        liability under the MultiEmployer Pension Plan Amendments of 1980. With respect
        to the Credit Parties, there exists no event described in Section 4043 of
        ERISA, excluding Subsections 4043(b)(2) and 4043(b)(3) thereof, for which
        the thirty (30) day notice period contained in 12 C.F.R. § 2615.3 has not
        been waived. Each Credit Party has maintained in all material respects all
        records required to be maintained by all applicable Governmental Authorities
        as
        required under HIPPA, FDA Laws and Healthcare Laws and, to the knowledge
        of
        Credit Parties, there are no existing circumstances which likely would result
        in
        material violations of HIPAA, FDA Laws or Healthcare Laws. 

       

      5.11 Intellectual
        Property

      

      Except
        as
        set forth on Schedule
        5.11 to the Disclosure Schedule,
        the
        Credit Parties do not own, license or utilize, and are not a party to, any
        patents, patent applications, trademarks, trademark applications, service
        marks,
        registered copyrights, copyright applications, trade names, software or licenses
        material to and currently or reasonably envisioned to be used in the Credit
        Parties’ business (collectively, the “Intellectual
        Property”).

       

      5.12 Licenses
        and Permits; Labor

      

      Each
        Credit Party is in compliance with and has all Permits and Intellectual Property
        necessary or required by applicable law or Governmental Authority for the
        operation of its businesses where the failure to have such permits and
        Intellectual Property is likely to result in a Material Adverse Effect. All
        of
        the foregoing are in full force and effect and not in known conflict with
        the
        rights of others. No Credit Party is (i) in breach of or default under the
        provisions of any of the foregoing, nor is there any event, fact, condition
        or
        circumstance which, with notice or passage of time or both, would constitute
        or
        result in a conflict, breach, default or event of default under, any of the
        foregoing which, if not remedied within any applicable grace or cure period
        would reasonably be likely to have a Material Adverse Effect, (ii) a party
        to or
        subject to any agreement, instrument or restriction that is so unusual or
        burdensome that it might have a Material Adverse Effect, and/or (iii) and
        has
        not been, involved in any labor dispute, strike, walkout or union organization
        which would reasonably be likely to have a Material Adverse Effect.

       

      
        
          
          

        

        
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      5.13 No
        Default

      

      There
        does not exist any Default or Event of Default or any event, fact, condition
        or
        circumstance which, with the giving of notice or passage of time or both,
        would
        constitute or result in a Default or Event of Default.

       

      5.14 Disclosure

      

      Except
        as
        set forth on Schedule
        5.14 to the Disclosure Schedule, no
        Loan
        Document nor any other agreement, document, certificate, or statement furnished
        to Lender by or on behalf of any Credit Party in connection with the
        transactions contemplated by the Loan Documents, nor any representation or
        warranty made by any Credit Party in any Loan Document, contains any untrue
        statement of material fact or omits to state any fact necessary to make the
        statements therein not materially misleading. There is no fact known to any
        Credit Party which has not been disclosed to Lender in writing which would
        reasonably be likely to have a Material Adverse Effect. 

       

      5.15 Existing
        Indebtedness; Investments, Guarantees and Certain
        Contracts

      

      Except
        as
        contemplated by the Loan Documents or as otherwise set forth on Schedule 5.15A
        to the Disclosure Schedule,
        Borrower (i) has no outstanding Indebtedness, (ii) is not subject or party
        to
        any mortgage, note, indenture, indemnity or guarantee of, with respect to
        or
        evidencing any Indebtedness of any other Person, or (iii) does not own or
        hold
        any equity or long-term debt investments in, and does not have any outstanding
        advances to or any outstanding guarantees for the obligations of, or any
        outstanding borrowings from, any Person. Borrower has performed all material
        obligations required to be performed by Borrower pursuant to or in connection
        with any items listed on Schedule 5.15A
        to the Disclosure Schedule
        and
        there has occurred no breach, default or event of default under any document
        evidencing any such items or any fact, circumstance, condition or event which,
        with the giving of notice or passage of time or both, would constitute or
        result
        in a material breach, default or event of default thereunder. Schedule
        5.15B to the Disclosure Schedule
        sets
        forth all Indebtedness with a maturity date during the Term of the Revolving
        Facility, and identifies such maturity date. 

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      5.16 Other
        Agreements

      

      Except
        as
        set forth on Schedule
        5.16 to the Disclosure Schedule,
        (i)
        there are no material existing or proposed agreements, arrangements,
        understandings or transactions between any Credit Party and any of its officers,
        managers, directors, five (5%) percent stockholders, employees or Affiliates
        or
        any members of their respective immediate families, and (ii) none of the
        foregoing Persons are directly or indirectly, indebted to or have any direct
        or
        indirect ownership, partnership or voting interest in, to such Credit Party’s
        knowledge, any Affiliate of such Credit Party or any Person that competes
        with
        the Credit Party (except that any such Persons may own stock in (but not
        exceeding two (2%) percent of the outstanding capital stock of) any publicly
        traded company that may compete with the Credit Parties.

       

      5.17 Insurance

      

      The
        Credit Parties have in full force and effect such insurance policies as are
        customary in its industry and as may be required pursuant to Section
        6.5
        hereof.
        All such material insurance policies are listed and described on Schedule
        5.17 to the Disclosure Schedule.

       

      5.18 Names;
        Location of Offices, Records and Collateral

      

      During
        the preceding five years, no Credit Party has conducted business under or
        used
        any name (whether corporate, partnership or assumed) other than as shown
        on
Schedule
        5.18A to the Disclosure Schedule.
        Each
        Credit Party is the sole owner of all of its names listed on Schedule
        5.18A to the Disclosure Schedule,
        and any
        and all business done and invoices issued in such names are such Credit Party’s
        sales, business and invoices. Each trade name of any Credit Party represents
        a
        division or trading style of such Credit Party. Each Credit Party maintains
        its
        places of business and chief executive offices only at the locations set
        forth
        on Schedule
        5.18B to the Disclosure Schedule,
        and all
        Accounts of Borrower arise, originate and are located, and all of the
        Collateral, including Inventory, and all books and records in connection
        therewith or in any way relating thereto or evidencing the Collateral are
        located and shall only be located, in and at such locations. Except as set
        forth
        on Schedule
        5.18C to the Disclosure Schedule,
        all of
        the Collateral is located only in the continental United States.

       

      5.19 Non-Subordination

      

      The
        Obligations are not subordinated in any way to any other obligations of any
        Credit Party or to the rights of any other Person except for Permitted
        Liens.

      
         

        
          
            
            

          

          
            22

            
              

            

          

          
            
            

          

        

         

      

      5.20 Accounts
        and Inventory 

       

      (a) In
        determining which Accounts are Eligible Receivables, Lender may rely on all
        statements and representations made by Borrower with respect to any Account.
        Unless otherwise indicated in writing to Lender, (i) each Account of Borrower
        is
        genuine and in all respects what it purports to be and is not evidenced by
        a
        judgment, (ii) each Account of Borrower arises out of a completed, bona fide
        sale and delivery of goods or rendering of services by Borrower in the ordinary
        course of business and in accordance with the terms and conditions of all
        purchase orders, contracts, certifications, participations and other documents
        relating thereto or forming a part of the contract between Borrower and the
        Account Debtor, (iii) each Account of Borrower is for a liquidated amount
        maturing as stated in a claim or invoice covering such sale of goods or
        rendering of services, a copy of which has been furnished or is available
        to
        Lender upon Lender’s request, (iv) each Account of Borrower together with
        Lender’s security interest therein, is not and will not be in the future (by
        voluntary act or omission by Borrower), subject to any offset, lien (other
        than
        Permitted Liens), deduction, defense, dispute, counterclaim or other adverse
        condition, is absolutely owing to Borrower and is not contingent in any respect
        or for any reason, (v) to the knowledge of Borrower, there are no facts,
        events
        or occurrences which in any way impair the validity or enforceability of
        any
        Account of Borrower or reduce the amount payable thereunder from the face
        amount
        of the claim or invoice and statements delivered to Lender with respect thereto,
        (vi) (A) the Account Debtor under each Account of Borrower had the capacity
        to
        contract at the time any contract or other document giving rise thereto was
        executed and (B) to the knowledge of Borrower each such Account Debtor is
        solvent, (vii) to the knowledge of Borrower there are no proceedings or
        actions which are pending or threatened against any Account Debtor under
        any
        Account of Borrower which might result in any Material Adverse Change in
        such
        Account Debtor’s financial condition or the collectability thereof, (viii) each
        Account of Borrower has been billed and forwarded to the Account Debtor for
        payment in accordance with applicable laws and is in compliance and conformance
        with any requisite procedures, requirements and regulations governing payment
        by
        such Account Debtor with respect to such Account, and, (ix) Borrower has
        obtained and currently has all material Permits necessary in the generation
        of
        each Account of Borrower.

      

      (b) In
        determining which Inventory is Eligible Inventory, Lender may rely on all
        statements and representations made by Borrower with respect to any Inventory.
        Unless otherwise indicated in writing to Lender (including, without limitation,
        any Borrowing Certificate), (i) Borrower has at all times maintained correct
        and
        accurate records itemizing and describing the kind, type, quality and quantity
        of Inventory in all material respects, Borrower’s cost therefore and daily
        withdrawals therefrom and additions thereto; (b) has not removed any Inventory
        from the locations set forth or permitted herein, except for sales of Inventory
        in the ordinary course of Borrower’s business and except to move Inventory
        directly from one location set forth or permitted herein to another such
        location; (c) except as set forth on Schedule
        5.22 to the Disclosure Schedule,
        has
        manufactured, produced, labeled, packaged, used, stored, shipped, distributed,
        marketed and maintained Inventory with all reasonable care and caution and
        in
        accordance with material applicable standards of any insurance and in material
        conformity with applicable laws (including the requirements of FDA Laws and
        the
        Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations
        and orders related thereto); (d) except as set forth on Schedule
        5.20 to the Disclosure Schedule,
        has not
        sold Inventory to any customer on approval, or any other basis which entitles
        the customer to return or may obligate Borrower to repurchase such Inventory;
        (e) has kept Inventory in good and marketable condition; (f) except as set
        forth
        on Schedule
        5.20 to the Disclosure Schedule,
        has not
        acquired or accepted any Inventory on consignment or approval; and (g) has
        not
        permitted Inventory to be subject to any Lien except Liens in favor of Lender
        and Permitted Liens.

       

      
        
          
          

        

        
          23

          
            

          

        

        
          
          

        

      

       

      
        	 	
                5.21

              	
                Food
                  and Drug Administration
                  Approvals

              

      

      

      With
        respect to all notifications, applications, registrations, listings and other
        filings made with the United States Food and Drug Administration (collectively,
        the “FDA Filings”) by or on behalf of Borrower, none of the FDA Filings contains
        any untrue statement of material fact or omits to state a material fact
        necessary to make the statements contained in the applicable filing, in light
        of
        the circumstances under which they were made, misleading. To Borrower’s
        knowledge, the FDA Filings contain all information required or necessary
        as a
        condition to approval by the United States Food and Drug Administration of
        products manufactured, marketed, sold or distributed by Borrower, and Borrower
        has no knowledge of any denial or reasonable basis for denial of approval
        of the
        FDA Filings and /or the medical device 510K filings with respect to products
        and
        devices manufactured, imported, marketed, sold or distributed by
        Borrower.

       

      
        	 	
                5.22

              	
                Product
                  Recalls

              

      

      

      Except
        as
        set forth on Schedule
        5.22 to the Disclosure Schedule,
        there
        are to Borrower’s knowledge, based upon reasonable investigation and inquiry, no
        existing or threatened complaints, adverse events, allegations or other facts
        or
        circumstances known to Borrower upon which a claim could be based, against
        Borrower alleging that any products or devices manufactured, imported, marketed,
        sold or distributed by Borrower caused or contributed to the death or injury
        of
        any person or malfunctioned or are otherwise defective, whether by reason
        of
        design, manufacture or otherwise, or fail to meet any product or service
        warranties or any applicable standard or specifications of any Governmental
        Authority (including, but not being limited to, the United States Food and
        Drug
        Administration). Except as set forth on Schedule
        5.22 to the Disclosure Schedule,
        Borrower has not issued nor been directed to issue any recalls or withdrawals
        of
        any products or devices manufactured, imported, marketed, sold or distributed
        by
        Borrower nor has Borrower received or otherwise have knowledge of any
        complaints, adverse events, allegations or other circumstances giving rise
        to or
        indicating a need for a recall or withdrawal of any such products and
        devices.

       

      
        	 	
                5.23

              	
                Foreign
                  Subsidiaries

              

      

      

      The
        Foreign Subsidiaries (i) do not engage in any business operations or activities
        other than the employment of individuals within their jurisdiction of
        organization for the benefit of Borrower, (ii) do not possess any properties
        or
        assets other than the minimum capitalization requirements of such jurisdictions,
        (iii) are not liable or obligated for any Indebtedness, liabilities or other
        obligations of any kind, direct or contingent, whether or not required to
        be
        reflected on a balance sheet, (iv) have not created, incurred, assumed or
        suffered to exist any Lien upon, in or against, or pledge of, any of their
        properties or assets or any of their shares, securities or other equity or
        ownership or partnership interests, whether now owned or hereafter acquired
        and
        (v) are not a party to any contract, agreement or undertaking with any Person
        other than this Agreement and any employment agreements with their
        employees.

       

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      
        	 	
                5.24

              	
                Inactive
                  Subsidiaries

              

      

      

      The
        Inactive Subsidiaries (i) do not engage in any business operations or
        activities, (ii) do not possess any properties or assets other than the minimum
        capitalization requirements of such jurisdictions, (iii) are not liable or
        obligated for any Indebtedness, liabilities or other obligations of any kind,
        direct or contingent, whether or not required to be reflected on a balance
        sheet, (iv) have not created, incurred, assumed or suffered to exist any
        Lien
        upon, in or against, or pledge of, any of their properties or assets or any
        of
        their shares, securities or other equity or ownership or partnership interests,
        whether now owned or hereafter acquired, (v) are not a party to any contract,
        agreement or undertaking with any Person other than this Agreement and any
        employment agreements with their employees and (vi) will be dissolved and
        liquidated by July 31, 2006.

      

      
        	 	
                5.25

              	
                Survival

              

      

      

      Each
        Credit Party makes the representations and warranties contained herein with
        the
        knowledge and intention that Lender is relying and will rely thereon. All
        such
        representations and warranties will survive the execution and delivery of
        this
        Agreement and the making of the Advances under the Revolving
        Facility.

       

      
        	
                VI.

              	
                AFFIRMATIVE
                  COVENANTS

              

      

      

      Each
        Credit Party, jointly and severally, covenants and agrees that, until full
        performance and satisfaction, and indefeasible payment in full in cash, of
        all
        the Obligations and termination of this Agreement:

       

      6.1 Financial
        Statements, Borrowing Certificate, Financial Reports and Other
        Information

      

      (a) Financial
        Reports.
        In
        addition to providing the Borrowing Certificate in accordance with Section
        2.4,
        the
        Credit Parties shall furnish to Lender (i) as soon as available and in any
        event
        within ninety (90) calendar days after the end of each fiscal year of Borrower
        (or such earlier date required by the laws, regulations and rules of the
        SEC),
        audited annual consolidated and consolidating financial statements of the
        Credit
        Parties, including the notes thereto, consisting of a consolidated and
        consolidating balance sheet at the end of such completed fiscal year and
        the
        related consolidated and consolidating statements of income, retained earnings,
        cash flows and stockholders’ equity for such completed fiscal year, which
        financial statements shall be audited and certified, without qualification
        in
        the Report of Independent Registered Public Accounting Firm on the Financial
        Statements included in its Form 10-K (Lender acknowledging that material
        weaknesses in internal control shall not be treated as such a qualification),
        by
        an independent certified public accounting firm reasonably acceptable to
        Lender
        (Lender acknowledging that Stonefield Josephson, LLP is an acceptable certified
        public accounting firm) and accompanied by related management letters, if
        any,
        and (ii) as soon as available and in any event within thirty (30) calendar
        days
        after the end of each calendar month, unaudited consolidated and consolidating
        financial statements of the Credit Parties consisting of a balance sheet
        and
        statements of income, retained earnings, cash flows and stockholders’ equity as
        of the end of the immediately preceding calendar month. All such financial
        statements shall be prepared in accordance with GAAP which shall be consistently
        applied with prior periods except as required by GAAP or the Borrower’s
        certified public accounting firm. With each such financial statement, the
        Credit
        Parties shall also deliver a certificate of their chief financial officer
        in
        substantially the form of Exhibit
        B
        hereto
        (a “Compliance Certificate”) stating that (A) such person has reviewed the
        relevant terms of the Loan Documents and the condition of the Credit Parties,
        (B) no Default or Event of Default has occurred or is continuing, or, if
        any of
        the foregoing has occurred or is continuing, specifying the nature and status
        and period of existence thereof and the steps taken or proposed to be taken
        with
        respect thereto, and (C) the Credit Parties are in compliance with all financial
        covenants attached as Annex I hereto. Such certificate shall be accompanied
        by
        the calculations necessary to show compliance with the financial covenants
        in a
        form reasonably satisfactory to Lender.

       

      
        
          
          

        

        
          25

          
            

          

        

        
          
          

        

      

      

      (b) Other
        Materials.
        The
        Credit Parties shall furnish to Lender as soon as available, and in any event
        within ten (10) calendar days after the preparation or issuance thereof or
        at
        such other time as set forth below: (i) copies of such financial statements
        (other than those required to be delivered pursuant to Section 6.1(a))
        prepared by, for or on behalf of the Credit Parties and any other notes,
        reports
        and other materials related thereto, including, without limitation, any pro
        forma financial statements, (ii) any reports, returns, information, notices
        and
        other materials that the Credit Parties are required to file with the SEC
        or
        shall otherwise send to their stockholders, partners or other equity owners
        at
        any time, (iii) if requested by Lender copies of licenses and permits required
        by any applicable federal, state, foreign or local law, statute ordinance
        or
        regulation or Governmental Authority for the operation of its business, (iv)
        within twenty (20) calendar days after the end of each calendar month for
        such
        month, a sales and collection report and accounts receivable and accounts
        payable aging schedule, including a report of sales, credits issued and
        collections received, all such reports showing a reconciliation to the amounts
        reported in the monthly financial statements, (v) within ten (10) Business
        Days
        of receipt thereof, copies of any final reports submitted to the Credit Parties
        by its independent accountants in connection with any interim audit of the
        books
        of such Person or any of its Affiliates and copies of each management control
        letter provided by such independent accountants, (vi) within fifteen (15)
        calendar days after the execution thereof, a copy of any contracts with the
        federal government or with a Governmental Authority in the State of New York,
        Vermont or Washington, and (vii) such additional information, documents,
        statements, reports and other materials as Lender may reasonably request
        from a
        credit or security perspective or otherwise from time to time. 

      

        (c) Notices.
        The
        Credit Parties shall promptly, and in any event within three (3) Business
        Days after any Credit Party or any authorized officer of any Credit Party
        obtains knowledge thereof, notify Lender in writing of (i) any pending or
        threatened litigation, suit, investigation, arbitration, dispute resolution
        proceeding or administrative proceeding brought or initiated by any Credit
        Party
        or otherwise affecting or involving or relating to any Credit Party or any
        of
        its property or assets to the extent (A) the amount in controversy exceeds
        $75,000, or (B) to the extent any of the foregoing seeks injunctive or
        declarative relief, (ii) any Default or Event of Default, which notice shall
        specify the nature and status thereof, the period of existence thereof and
        what
        action is proposed to be taken with respect thereto, (iii) any other
        development, event, fact, circumstance or condition that would reasonably
        be
        likely to have a Material Adverse Effect, in each case describing the nature
        and
        status thereof and the action proposed to be taken with respect thereto,
        (iv)
        any notice received by any Credit Party from any payor of a claim, suit or
        other
        action such payor has, claims or has filed against such Credit Party, (v)
        any
        matter(s) affecting the value, enforceability or collectability of any of
        the
        Collateral, including, without limitation, claims or disputes in the amount
        of
        $10,000 or more, singly or in the aggregate, in existence at any one time,
        (vi)
        any notice given by any Credit Party to any other lender of the Credit Parties,
        which notice to Lender shall be accompanied by a copy of the applicable notice
        given to the other lender, (vii) receipt of any notice or request from any
        Governmental Authority or governmental payor regarding any liability or claim
        of
        liability, (viii) receipt of any notice by Borrower regarding termination
        or
        threatened termination of any material lease of real property leased by any
        Credit Party, (ix) any Account becoming evidenced or secured by an Instrument
        or
        Chattel Paper, (x) receipt of any notice from any Account Debtor under a
        material contract notifying Borrower of a material breach under or termination
        of such contract, (xi) the recall or withdrawal of any products or devices
        manufactured, imported, marketed, distributed or sold by the Credit Parties
        (or
        the issuance of any order or directive by any Governmental Authority requiring
        such a recall or withdrawal), (xii) the withdrawal by the United States Food
        and
        Drug Administration or other applicable Governmental Authority of any required
        approval or clearance for any product or device manufactured, imported,
        marketed, distributed or sold by the Credit Parties, or (xiii) receipt of
        any
        notice by any Credit Party regarding the termination or threatened termination
        of any material license, technology transfer, distribution, supplier or other
        material agreement relating to the products and devices manufactured, imported,
        marketed, distributed or sold by such Credit Party.

      

      (d) Consents.
        The
        Credit Parties shall obtain and deliver from time to time all required consents,
        approvals and agreements from such third parties as Lender shall determine
        are
        necessary in its Permitted Discretion, each of which must be satisfactory
        to
        Lender in its Permitted Discretion, with respect to (i) the Loan Documents
        and
        the transactions contemplated thereby, (ii) claims against any Credit Party
        or
        the Collateral, and/or (iii) any agreements, consents, documents or instruments
        to which any Credit Party is a party or by which any properties or assets
        of any
        Credit Party or any of the Collateral is or are bound or subject, including,
        without limitation, Landlord Waivers and Consents with respect to leases
        and
        Warehouse Waivers and Consents with respect to warehouse, fulfillment and
        similar agreements. 

       

      
        
          
          

        

        
          26

          
            

          

        

        
          
          

        

      

       

      (e) Operating
        Budget.
        Borrower shall furnish to Lender on or prior to the Closing Date its original
        2005 budget, together with a preliminary financial forecast for 2006 and
        for
        each fiscal year of Borrower thereafter not more than thirty (30) calendar
        days
        subsequent to the commencement of such fiscal year or earlier if such a plan
        has
        been approved by its Board of Directors prior to such 30 day period,
        consolidated and consolidating month by month projected operating budgets,
        annual projections, profit and loss statements, balance sheets and cash flow
        reports of and for Borrower for such upcoming fiscal year (including an income
        statement for each month and a balance sheet as at the end of the last month
        in
        each fiscal quarter), in each case prepared in accordance with GAAP (except
        for
        the omission of footnotes and other disclosures required in its SEC filings)
        consistently applied with prior periods

      .

      6.2 Payment
        of Obligations

      

      Borrower
        shall make full and timely indefeasible payment in cash of the principal
        of and
        interest on the Loans, Advances and all other Obligations. 

       

      6.3 Conduct
        of Business and Maintenance of Existence and Assets

      

      Each
        Credit Party shall (i) conduct its business in accordance with good business
        practices customary to the industry, (ii) engage principally in the medical
        device or similar lines of business substantially as heretofore conducted,
        (iii)
        use its best efforts to collect its Accounts in the ordinary course of business,
        (iv) maintain all of its material properties, assets and equipment used or
        useful in its business in good repair, working order and condition (normal
        wear
        and tear excepted and except as may be disposed of in the ordinary course
        of
        business and in accordance with the terms of the Loan Documents and otherwise
        as
        determined by such Credit Party using commercially reasonable business
        judgment),
        (v)
        from time to time to make all necessary or desirable repairs, renewals and
        replacements of its material properties, assets and equipment, as
        determined by such Credit Party using commercially reasonable business judgment,
        (vi) maintain and keep in full force and effect its existence and all material
        Permits and qualifications to do business and good standing in each jurisdiction
        in which the ownership or lease of property or the nature of its business
        makes
        such Permits or qualification necessary and in which failure to maintain
        such
        Permits or qualification could reasonably be likely to have a Material Adverse
        Effect, and (vii) remain in good standing and maintain operations in all
        jurisdictions in which currently located unless the Borrower determines that
        it
        is not commercially reasonable to maintain operations in all such jurisdictions
        in its reasonable business judgment and such determination shall not result
        in a
        Material Adverse Effect.

       

      6.4 Compliance
        with Legal and Other Obligations

      

      The
        Credit Parties shall (i) comply with all material laws, statutes, rules,
        regulations, ordinances and tariffs of all Governmental Authorities applicable
        to it or its business, assets or operations, including HIPAA, FDA Laws and
        Healthcare Laws, (ii) pay all taxes, assessments, fees, governmental charges,
        claims for labor, supplies, rent and all other obligations or liabilities
        of any
        kind, except liabilities being contested in good faith and against which
        adequate reserves have been established in accordance with GAAP, (iii) perform
        in accordance with its terms each material contract, agreement or other
        arrangement to which it is a party or by which it or any of the Collateral
        is
        bound, except where the failure to comply, pay or perform could not reasonably
        be expected to have a Material Adverse Effect, and (iv) maintain and comply
        with
        all material Permits necessary to conduct its business and comply with any
        new
        or additional requirements that may be imposed on it or its business.

       

      
        
          
          

        

        
          27

          
            

          

        

        
          
          

        

      

       

      6.5 Insurance

      

      Each
        Credit Party shall (i) keep all of its insurable properties and assets including
        without limitation Inventory that is in transit (whether by vessel, air or
        land)
        adequately insured in all material respects against losses, damages and hazards
        as are customarily insured against by businesses engaging in similar activities
        or owning similar assets or properties and at least the minimum amount required
        by applicable law (and with respect to Inventory that is in transit, maintain
        insurance covering the same for its full replacement cost under all risk
        insurance policies endorsed to cover all risks required by Lender and with
        such
        amounts of coverage and deductibles as Lender determines, in its Permitted
        Discretion, issued by such insurance carriers as are reasonably acceptable
        to
        Lender), including, without limitation, products liability insurance; and
        maintain general public liability insurance at all times against liability
        on
        account of damage to persons and property having such limits, deductibles,
        exclusions and co-insurance and other provisions as are customary for a business
        engaged in activities similar to those of the Credit Parties; and (ii) maintain
        insurance under all applicable workers’ compensation laws; all of the foregoing
        insurance policies to (A) be reasonably satisfactory in form and substance
        to Lender, (B) name Lender as loss payee and additional insured thereunder,
        and
        (C) expressly provide that they cannot be altered, amended, modified or canceled
        without thirty (30) Business Days prior written notice to Lender and
        that they inure to the benefit of Lender notwithstanding any action or omission
        or negligence of or by the Credit Parties or any insured thereunder.

       

      6.6 True
        Books

      

      The
        Credit Parties shall (i) keep true, complete and accurate books of record
        and
        account in accordance with commercially reasonable business practices in
        which
        true and correct entries are made of all of its and their dealings and
        transactions in all material respects; and (ii) set up and maintain on its
        books
        such reserves as may be required by GAAP with respect to doubtful accounts
        and
        all taxes, assessments, charges, levies and claims and with respect to its
        business, and include such reserves in its quarterly as well as year end
        financial statements.

       

      6.7 Inspections;
        Periodic Audits and Reappraisals

      

      The
        Credit Parties shall permit the representatives of Lender, at the expense
        of the
        Credit Parties, from time to time during normal business hours upon reasonable
        notice, to (i) visit and inspect any of its offices or properties or any
        other
        place where Collateral is located to inspect the Collateral and/or to examine
        or
        audit all of its books of account, records, reports and other papers, (ii)
        make
        copies and extracts therefrom, and (iii) discuss its business, operations,
        prospects, properties, assets, liabilities, condition and/or Accounts and
        Inventory with its officers and independent public accountants (and by this
        provision such officers and accountants are authorized to discuss the
        foregoing). Lender is also authorized, from time to time to conduct or obtain
        at
        the Credit Parties’ expense, but not more frequently than quarterly, audits,
        except upon or after the occurrence of a Default or Event of Default, and
        obtain
        at the Credit Parties’ expense, but not more frequently than annually, updated
        appraisals and examinations of Inventory by appraisers and examiners acceptable
        to the Lender in its Permitted Discretion, except upon or after the occurrence
        of a Default or Event of Default.

       

      6.8 Further
        Assurances; Post Closing 

      

      At
        the
        Credit Parties’ cost and expense, each Credit Party shall (i) take such further
        actions, obtain such consents and approvals and duly execute and deliver
        such
        further agreements, assignments, instructions or documents as Lender may
        reasonably request with respect to the purposes, terms and conditions of
        the
        Loan Documents and the consummation of the transactions contemplated thereby,
        and (ii) without limiting and notwithstanding any other provision of any
        Loan Document, execute and deliver, or cause to be executed and delivered,
        such
        agreements and documents, and take or cause to be taken such actions, and
        otherwise perform, observe and comply with such obligations, as are set forth
        on
Schedule
        6.8
        hereto.

       

      
        
          
          

        

        
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      6.9 Payment
        of Indebtedness

      

      Except
        as
        otherwise prescribed in the Loan Documents, the Credit Parties shall pay,
        discharge or otherwise satisfy at or before maturity (subject to applicable
        grace periods and, in the case of trade payables, to ordinary course payment
        practices) all of its material obligations and liabilities, except when the
        amount or validity thereof is being contested in good faith by appropriate
        proceedings and such reserves as Lender may deem proper and necessary in
        its
        Permitted Discretion shall have been made. 

       

      6.10 Lien
        Searches

      

      If
        Liens
        other than Permitted Liens exist, the Credit Parties immediately shall take,
        execute and deliver all actions, documents and instruments necessary to release
        and terminate such Liens.

       

      6.11 Use
        of Proceeds

      

      Borrower
        shall use the proceeds from the Revolving Facility only for the purposes
        set
        forth in the first “WHEREAS” clause of this Agreement. 

       

      6.12 Collateral
        Documents; Security Interest in Collateral

      

      The
        Credit Parties shall (i) execute, obtain, deliver, file, register and/or
        record
        any and all financing statements, continuation statements, stock powers,
        instruments and other documents, or cause the execution, filing, registration,
        recording or delivery of any and all of the foregoing, that are necessary
        or
        required under law or reasonably requested by Lender to be executed, filed,
        registered, obtained, delivered or recorded to create, maintain, perfect,
        preserve, validate or otherwise protect the pledge of the Collateral to Lender
        and Lender’s perfected first priority Lien on the Collateral subject to
        Permitted Liens (and each Credit Party irrevocably grants Lender the right,
        at
        Lender's option, to file any or all of the foregoing), (ii) immediately upon
        learning thereof, report to Lender any reclamation, return or repossession
        of
        goods in excess of $10,000 (individually or in the aggregate), and (iii)
        defend
        the Collateral and Lender’s perfected first priority Lien thereon, except for
        Permitted Liens, against all claims and demands of all Persons at any time
        claiming the same or any interest therein adverse to Lender, and pay all
        reasonable costs and expenses (including, without limitation, in-house
        documentation and diligence fees and legal expenses and reasonable attorneys’
fees and expenses) in connection with such defense, which may at Lender’s
        discretion be added to the Obligations.

       

      
        
          
          

        

        
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      6.13 Right
        of First Refusal

      

      If
        at any
        time any Credit Party or any of their respective Affiliates receives from
        a
        third party an offer, term sheet or commitment or makes a proposal accepted
        by
        any Person (each, an “Offer”)
        which
        provides for any type of financing (other than an offering of common stock
        or
        other equity securities which do not contain or enjoy debt or debt like
        features, including preferred equity securities and warrants, which are not
        convertible or exchangeable into debt instruments or which may otherwise
        be
        characterized, whether for accounting or income tax purposes as debt) to
        or for
        a Credit Party or any of its Affiliates, such Credit Party, on behalf of
        itself
        or such Affiliate, shall immediately notify such third party making the offer
        of
        Lender’s rights under this Section
        6.13,
        and
        further shall immediately notify Lender of the Offer in writing (including
        all
        material terms of the Offer). Lender shall have thirty (30) calendar days
        after
        Receipt of such notice (the “Option
        Period”)
        to
        agree to provide similar financing in the place of such Person upon
        substantially the same terms and conditions (or terms more favorable to such
        Credit Party or Affiliate) as set forth in the Offer. Lender shall notify
        Credit
        Party or Affiliate in writing of Lender’s acceptance of the Offer pursuant
        hereto (the “Acceptance
        Notice”),
        in
        which case Credit Party or such Affiliate shall obtain, such financing from
        Lender and shall not accept the Offer from such other Person. If no Acceptance
        Notice has been Received from Lender within the Option Period, Credit Party
        or
        Affiliate may consummate the Offer with the other Person on the terms and
        conditions set forth in the Offer (the “Transaction”);
        provided,
        however,
        that
        none of foregoing or any failure by Lender to issue an Acceptance Notice
        shall
        be construed as a waiver of any of the terms, covenants or conditions of
        any of
        the Loan Documents. If the Transaction is not consummated on the terms set
        forth
        in the Offer or with the Person providing the Offer or during the ninety
        (90)
        calendar day period following the expiration of the Option Period, such Credit
        Party shall not be permitted, and shall not permit its Affiliate, to consummate
        the Transaction without again complying with this Section 6.13.
        The
        provisions of this Section
        6.13
        shall
        survive the payment in full of the Obligations and termination of this Agreement
        for a period of one month. For purposes of this Section
        6.13,
        “Lender” shall include CapitalSource Finance LLC and any of its parents,
        subsidiaries or Affiliates.

       

      6.14 Taxes
        and Other Charges

       

      (a)
         All
        payments and reimbursements to Lender made under any Loan Document shall
        be free
        and clear of and without deduction for all taxes, levies, imposts, deductions,
        assessments, charges or withholdings, and all liabilities with respect thereto
        of any nature whatsoever, excluding taxes to the extent imposed on Lender’s net
        income. If Borrower shall be required by law to deduct any such amounts from
        or
        in respect of any sum payable under any Loan Document to Lender, then the
        sum
        payable to Lender shall be increased as may be necessary so that, after making
        all required deductions, Lender receives an amount equal to the sum it would
        have received had no such deductions been made. Notwithstanding any other
        provision of any Loan Document, if at any time after the Closing (i) any
        change in any existing law, regulation, treaty or directive or in the
        interpretation or application thereof, (ii) any new law, regulation, treaty
        or
        directive enacted or any interpretation or application thereof, or
        (iii) compliance by Lender with any request or directive (whether or not
        having the force of law) from any Governmental Authority: (A) subjects Lender
        to
        any tax, levy, impost, deduction, assessment, charge or withholding of any
        kind
        whatsoever with respect to any Loan Document, or changes the basis of taxation
        of payments to Lender of any amount payable thereunder (except for net income
        taxes, or franchise taxes imposed in lieu of net income taxes, imposed generally
        by federal, state or local taxing authorities with respect to interest or
        commitment fees or other fees payable hereunder or changes in the rate of
        tax on
        the overall net income of Lender), or (B) imposes on Lender any other condition
        or increased cost in connection with the transactions contemplated thereby
        or
        participations therein; and the result of any of the foregoing is to increase
        the cost to Lender of making or continuing any Loan hereunder or to reduce
        any
        amount receivable hereunder, then, in any such case, Borrower shall promptly
        pay
        to Lender any additional amounts reasonably necessary to compensate Lender,
        on
        an after-tax basis, for such additional cost or reduced amount as reasonably
        determined by Lender. If Lender becomes entitled to claim any additional
        amounts
        pursuant to this Section
        6.14
        it shall
        promptly notify Borrower of the event by reason of which Lender has become
        so
        entitled, and each such notice of additional amounts payable pursuant to
        this
Section
        6.14
        submitted by Lender to Borrower shall, absent manifest error, be final,
        conclusive and binding for all purposes. 

       

      
        
          
          

        

        
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      (b) Each
        Credit Party shall promptly, and in any event within five (5) Business Days
        after such Credit Party or any authorized officer of such Credit Party obtains
        knowledge thereof, notify Lender in writing of any oral or written communication
        from the Internal Revenue Service or otherwise with respect to any (i) tax
        investigations, relating to the Credit Party directly, or relating to any
        consolidated tax return which was filed on behalf of any Credit Party, (ii)
        notices of tax assessment or possible tax assessment, (iii) years that are
        designated open pending tax examination or audit, and (iv) information that
        could give rise to a tax liability to or assessment by the Internal Revenue
        Service.

       

      6.15 Payroll
        Taxes

      

      Without
        limiting or being limited by any other provision of any Loan Document, the
        Credit Parties at all times shall retain and use a Person reasonably acceptable
        to Lender to process, manage and pay its payroll taxes and shall cause to
        be
        delivered to Lender within ten (10) calendar days after the end of each calendar
        month a report of its payroll taxes for the immediately preceding calendar
        month
        and evidence of payment thereof. 

       

      
        	 	
                6.16

              	
                Inventory
                  Covenants

              

      

      

      With
        respect to the Inventory, Borrower: (a) shall at all times maintain inventory
        records reasonably satisfactory to Lender, keeping correct and accurate records
        itemizing and describing the kind, type, quality and quantity of Inventory,
        Borrower’s cost therefore and daily withdrawals therefrom and additions thereto;
        (b) shall not remove any Inventory from the locations set forth or permitted
        herein, without the prior written consent of Lender, which consent shall
        not be
        unreasonably denied or delayed, except for sales of Inventory in the ordinary
        course of Borrower’s business and except to move Inventory directly from one
        location set forth or permitted herein to another such location; (c) shall
        produce, use, store, ship and maintain the Inventory with all reasonable
        care
        and caution and in accordance with applicable standards of any insurance
        and in
        conformity with applicable laws (including FDA Laws and the requirements
        of the
        Federal Fair Labor Standards Act of 1938, as amended and all rules, regulations
        and orders related thereto); (d) assumes all responsibility and liability
        arising from or relating to the production, use, sale or other disposition
        of
        the Inventory; (e) shall not sell Inventory to any customer on approval,
        or any
        other basis which entitles the customer to return or may obligate Borrower
        to
        repurchase such Inventory unless Borrower excludes such Account from the
        Borrowing Base for Eligible Accounts and separately states such exclusion
        on the
        Borrowing Certificate; (f) shall keep the Inventory in good and marketable
        condition; and (g) shall not, without prior written notice to Lender, acquire
        or
        accept any Inventory on consignment or approval.

       

      
        
          
          

        

        
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      6.17 Inactive
        Subsidiaries 

      

      The
        Inactive Subsidiaries shall be dissolved and liquidated in accordance with
        applicable law not later than July 31, 2006. The Credit Parties shall provide
        objective evidence of the dissolution of each of the Inactive Subsidiaries
        not
        later than ten (10) days following the effective date of its
        dissolution.

      

      
        	
                VII.

              	
                NEGATIVE
                  COVENANTS

              

      

      

      Each
        Credit Party, jointly and severally, covenants and agrees that, until full
        performance and satisfaction, and indefeasible payment in full in cash, of
        all
        of the Obligations and termination of this Agreement without the prior written
        consent of Lender:

       

      
        	 	
                7.1

              	
                Financial
                  Covenants

              

      

      

      The
        Credit Parties shall not violate the financial covenants set forth on
Annex
        I
        to this
        Agreement, which is incorporated herein and made a part hereof. 

      

      
        	 	
                7.2

              	
                Permitted
                  Indebtedness

              

      

      

      No
        Credit
        Party shall create, incur, assume or suffer to exist any Indebtedness, except
        the following (collectively, “Permitted
        Indebtedness”),
        each
        category of which is cumulative to all other categories: (i) Indebtedness
        under
        the Loan Documents, (ii) any Indebtedness set forth on Schedule 7.2
        to the Disclosure Schedule,
        (iii)
        Capitalized Lease Obligations incurred after the Closing Date and Indebtedness
        incurred pursuant to purchase money Liens permitted by Section 7.3(v),
        provided that the aggregate amount of such Capitalized Lease Obligations
        and
        purchase money indebtedness outstanding at any time shall not exceed $250,000,
        (iv) Indebtedness in connection with advances made by a stockholder in
        order to cure any default of the financial covenants set forth on Annex
        I;
        provided,
        however,
        that
        such Indebtedness shall be on an unsecured basis, subordinated in right of
        repayment and remedies to all of the Obligations and to all of Lender’s rights
        pursuant to a subordination agreement in form and substance reasonably
        satisfactory to Lender; (v) accounts payable to trade creditors and current
        operating expenses (other than for borrowed money) which are not aged more
        than
        120 calendar days from the billing date or more than 30 days from the due
        date,
        in each case incurred in the ordinary course of business and paid within
        such
        time period, unless the same are being contested in good faith and by
        appropriate and lawful proceedings and such reserves, if any, with respect
        thereto as are required by GAAP and deemed adequate by the Credit Parties’
independent accountants shall have been reserved; and (vi) borrowings incurred
        in the ordinary course of business and not exceeding $25,000 individually
        or in
        the aggregate outstanding at any one time, provided,
        however,
        that
        such Indebtedness shall be on an unsecured basis, subordinated in right of
        repayment and remedies to all of the Obligations and to all of Lender’s rights
        pursuant to a subordination agreement in form and substance reasonably
        satisfactory to Lender; and (vii) Permitted Subordinated Debt. The Credit
        Parties shall not make prepayments on any existing or future Indebtedness
        to any
        Person other than to Lender or to the extent specifically permitted by this
        Agreement or any subsequent agreement between the Credit Parties and
        Lender.

       

      
        
          
          

        

        
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      7.3 Permitted
        Liens

      

      No
        Credit
        Party shall create, incur, assume or suffer to exist any Lien upon, in or
        against, or pledge of, any of the Collateral or any of its properties or
        assets
        or any of its shares, securities or other equity or ownership or partnership
        interests, whether now owned or hereafter acquired, except the following
        (collectively, “Permitted
        Liens”):
        (i)
        Liens under the Loan Documents or otherwise arising in favor of Lender, (ii)
        Liens imposed by law for taxes (other than payroll taxes), assessments or
        charges of any Governmental Authority for claims not yet due or which are
        being
        contested in good faith by appropriate proceedings and with respect to which
        adequate reserves or other appropriate provisions are being maintained by
        such
        Person in accordance with GAAP to the satisfaction of Lender in its Permitted
        Discretion, (iii) (A) statutory Liens of landlords (provided that any such
        landlord has executed a Landlord Waiver and Consent in form and substance
        satisfactory to Lender) and of carriers, warehousemen, mechanics, and
        materialmen, and (B) other Liens imposed by law or that arise by operation
        of law in the ordinary course of business from the date of creation thereof,
        in
        each case only for amounts not yet due or which are being contested in good
        faith by appropriate proceedings and with respect to which adequate reserves
        or
        other appropriate provisions are being maintained by such Person in accordance
        with GAAP to the satisfaction of Lender in its Permitted Discretion, (iv)
        Liens
        (A) incurred or deposits made in the ordinary course of business (including,
        without limitation, surety bonds and appeal bonds) in connection with workers’
compensation, unemployment insurance and other types of social security benefits
        or to secure the performance of tenders, bids, leases, contracts (other than
        for
        the repayment of Indebtedness), statutory obligations and other similar
        obligations, or (B) arising as a result of progress payments under
        government contracts, (v) purchase money Liens (A) securing Indebtedness
        permitted under Section 7.2(iii),
        or
        (B) in connection with the purchase by such Person of equipment in the
        normal course of business, provided
        that
        such payables shall not exceed any limits on Indebtedness provided for herein
        and shall otherwise be Permitted Indebtedness hereunder, and (vi) Liens
        disclosed on Schedule
        7.3 to the Disclosure Schedule.

       

      7.4 Investments;
        New Facilities or Collateral; Subsidiaries

      

      No
        Credit
        Party, directly or indirectly, shall (i) purchase, own, hold, invest in or
        otherwise acquire obligations or stock or securities of, or any other interest
        in, or all or substantially all of the assets of, any Person (other than
        a
        Credit Party) or any joint venture (other than as part of its regular cash
        management activities), or (ii) make or permit to exist any loans, advances
        or guarantees to or for the benefit of any Person or assume, guarantee, endorse,
        contingently agree to purchase or otherwise become liable for or upon or
        incur
        any obligation of any Person (other than those created by the Loan Documents
        and
        Permitted Indebtedness and other than (A) trade credit extended in the
        ordinary course of business, (B) advances for business travel and similar
        temporary advances made in the ordinary course of business to officers,
        directors and employees, and (C) the endorsement of negotiable instruments
        for
        deposit or collection or similar transactions in the ordinary course of
        business). No Credit Party, directly or indirectly, shall purchase, own,
        operate, hold, warehouse, store, invest in or otherwise acquire any facility,
        property or assets or any Collateral that is not located at the locations
        set
        forth on Schedule
        5.18B to the Disclosure Schedule
        unless
        the Credit Party shall provide to Lender at least thirty (30) Business Days
        prior written notice. The Credit Parties shall have no Subsidiaries other
        than
        those Subsidiaries, if any, existing at Closing and those Subsidiaries set
        forth
        in Schedule
        5.3A to the Disclosure Schedule.

       

      
        
          
          

        

        
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      7.5 Dividends;
        Redemptions

      

      No
        Credit
        Party shall (i) declare, pay or make any dividend or Distribution on any
        shares
        of capital stock or other securities or interests other than dividends or
        Distributions payable in its stock, of split-ups or reclassifications of
        its
        stock (although HMP may pay dividends and Distributions to RMS), (ii) apply
        any
        of its funds, property or assets to the acquisition, redemption or other
        retirement of any capital stock or other securities or interests or of any
        options to purchase or acquire any of the foregoing (provided, however, that
        a
        Credit Party may redeem its capital stock from terminated employees pursuant
        to,
        but only to the extent required under the terms of the related employment
        agreements as long as no Default or Event of Default has occurred and is
        continuing or would be cause by or result therefrom), (iii) otherwise make
        any
        payments or Distributions to any stockholder, member, partner or other equity
        owner in such Person’s capacity as such, or (iv) make any payment of any
        management or service fee, and provided further, that no Credit Party shall
        not
        make or suffer to exist any such payment described in (i) through (iv) above
        if
        a Default or Event of Default has occurred and is continuing or would result
        therefrom.

      

      7.6 Transactions
        with Affiliates

      

      No
        Credit
        Party shall enter into or consummate any transaction of any kind with any
        of its
        Affiliates or any other Credit Party or any of their respective Affiliates
        other
        than: (i) salary, bonus, employee stock option and other compensation and
        employment or consulting arrangements with directors or officers in the ordinary
        course of business, provided,
        that no
        payment of any bonus shall be permitted if a Default or Event of Default
        has
        occurred and remains in effect or would be caused by or result from such
        payment, (ii) Distributions and dividends permitted pursuant to Section
        7.5,
        (iii)
        transactions with Lender or any Affiliate of Lender, and (iv) payments permitted
        under and pursuant to written agreements entered into by and between a Credit
        Party and one or more of its Affiliates that either (A) reflect and
        constitute transactions on overall terms at least as favorable to the Credit
        Party as would be the case in an arm’s-length transaction between unrelated
        parties of equal bargaining power, or (B) are subject to such terms and
        conditions as determined by Lender in its sole discretion; provided,
        that
        notwithstanding the foregoing no Credit Party shall (Y) enter into or consummate
        any transaction or agreement pursuant to which it becomes a party to any
        mortgage, note, indenture or guarantee evidencing any Indebtedness of any
        of its
        Affiliates or otherwise to become responsible or liable, as a guarantor,
        surety
        or otherwise, pursuant to agreement for any Indebtedness of any such Affiliate,
        or (Z) make any payment to any of its Affiliates in excess of $25,000 without
        the prior written consent of Lender. 

       

      
        
          
          

        

        
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      7.7 Charter
        Documents; Fiscal Year; Name; Jurisdiction of Organization; Dissolution;
        Use of
        Proceeds

       

      No
        Credit
        Party shall (i) amend, modify, restate or change its certificate of
        incorporation or bylaws or similar charter documents in a manner that would
        be
        adverse to Lender, (ii) change its fiscal year unless the Credit Party
        demonstrates to Lender’s satisfaction compliance with the covenants contained
        herein for both the fiscal year in effect prior to any change and the new
        fiscal
        year period by delivery to Lender of appropriate interim and annual pro forma,
        historical and current compliance certificates for such periods and such
        other
        information as Lender may reasonably request, (iii) without at least 20 days
        prior written notice to Lender, change its name or change its jurisdiction
        of
        organization, (iv) amend, alter or suspend or terminate or make provisional
        in
        any material way, any Permit without the prior written consent of Lender,
        which
        consent shall not be unreasonably withheld, (v) wind up, liquidate or
        dissolve (voluntarily or involuntarily) or commence or suffer any proceedings
        seeking or that would result in any of the foregoing, or (vi) use any proceeds
        of any Advance for “purchasing” or “carrying” “margin stock” as defined in
        Regulations U or X of the Board of Governors of the Federal Reserve System.
        

       

      7.8 Truth
        of Statements

      

      No
        Credit
        Party shall furnish to Lender any certificate or other document that contains
        any untrue statement of a material fact or that omits to state a material
        fact
        necessary to make it not misleading in light of the circumstances under which
        it
        was furnished.

       

      7.9 IRS
        Form 8821

      

      No
        Credit
        Party shall not alter, amend, restate, or otherwise modify, or withdraw,
        terminate or re-file the IRS Form 8821 required to be filed pursuant to the
        Conditions Precedent in Section
        4.1
        hereof.

       

      7.10
         Transfer
        of Assets

      

      Notwithstanding
        any other provision of this Agreement or any other Loan Document, no Credit
        Party shall sell, lease, transfer, assign or otherwise dispose of any interest
        in any properties or assets (other than obsolete equipment or excess equipment
        no longer needed in the conduct of the business in the ordinary course of
        business and sales of Inventory in the ordinary course of business), or agree
        to
        do any of the foregoing at any future time without written approval in advance
        from the Lender, except that:

       

      
        
          
          

        

        
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      (a) a
        Credit
        Party may lease (as lessee) real or personal property or surrender all or
        a
        portion of a lease of the same, in each case in the ordinary course of business
        (so long as such lease does not create or result in and is not otherwise
        a
        Capitalized Lease Obligation prohibited under this Agreement), provided
        that a
        Landlord Waiver and Consent and such other consents as are reasonably required
        by Lender are signed and delivered to Lender with respect to any lease of
        real
        or other property, as applicable;

      

      (b) a
        Credit
        Party may arrange for warehousing, fulfillment or storage of Inventory at
        locations not owned or leased by a Credit Party in each case in the ordinary
        course of business, provided that a Warehouse Waiver and Consent and such
        other
        consents as are reasonably required by Lender are signed and delivered to
        Lender
        with respect to any such location;

      

      (c) a
        Credit
        Party may license or sublicense Intellectual Property or customer lists from
        third parties in the ordinary course of business, provided,
        that
        such licenses or sublicenses shall not interfere with the business or other
        operations of any Credit Party and that such Credit Party’s rights, title and/or
        interest in or to such Intellectual Property and customer lists and interests
        therein are pledged to Lender as further security for the Obligations and
        included as part of the Collateral; and

      

      (d) a
        Credit
        Party may consummate such other sales or dispositions of property or assets
        (including any sale or transfer or disposition of all or any part of its
        assets
        and thereupon and within one year thereafter rent or lease the assets so
        sold or
        transferred) only to the extent prior written notice has been given to Lender
        and to the extent Lender has given its prior written consent thereto, subject
        in
        each case to such conditions as may be set forth in such consent.

      

      7.11 Payment
        on Permitted Subordinated Debt 

      

      No
        Credit
        Party shall (i) make any prepayment of any part or all of any Permitted
        Subordinated Debt, (ii) repurchase, redeem or retire any instrument evidencing
        any such Permitted Subordinated Debt prior to maturity, or (iii) enter into
        any
        agreement (oral or written) which could in any way be construed to amend,
        modify, alter or terminate any one or more instruments or agreements evidencing
        or relating to any Permitted Subordinated Debt except as permitted in the
        Master
        Subordination Agreement or such other Subordination Agreement relating to
        such
        Permitted Subordinated Debt.

      

      7.12 Foreign
        Subsidiaries

      

      The
        Foreign Subsidiaries shall not (i) engage in any business operations or
        activities other than the employment of individuals within their jurisdiction
        of
        organization for the benefit of Borrower, (ii) own or possess any properties
        or
        assets other than the minimum capitalization requirements of such jurisdictions,
        (iii) become liable or obligated for any Indebtedness, liabilities or other
        obligations of any kind, direct or contingent, whether or not required to
        be
        reflected on a balance sheet, (iv) create, incur, assume or suffer to exist
        any
        Lien upon, in or against, or pledge of, any of their properties or assets
        or any
        of their shares, securities or other equity or ownership or partnership
        interests, whether now owned or hereafter acquired, (v) become a party to
        any
        contract, agreement or undertaking with any Person other than this Agreement
        and
        any employment agreements with their employees or (vi) permit RMS to own
        less
        than 100% of the their issued and outstanding shares of capital
        stock.

       

      
        
          
          

        

        
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      7.13 Inactive
        Subsidiaries

      

      The
        Inactive Subsidiaries shall not (i) engage in any business operations or
        activities, (ii) own or possess any properties or assets other than the minimum
        capitalization requirements of such jurisdictions, (iii) become liable or
        obligated for any Indebtedness, liabilities or other obligations of any kind,
        direct or contingent, whether or not required to be reflected on a balance
        sheet, (iv) create, incur, assume or suffer to exist any Lien upon, in or
        against, or pledge of, any of their properties or assets or any of their
        shares,
        securities or other equity or ownership or partnership interests, whether
        now
        owned or hereafter acquired, (v) become a party to any contract, agreement
        or
        undertaking with any Person other than this Agreement and any employment
        agreements with their employees, (vi) permit RMS or HMP, as applicable, to
        own
        less than 100% of the their issued and outstanding shares of capital
        stock.

       

      
        	
                VIII.

              	
                EVENTS
                  OF DEFAULT

              

      

      

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

      

      (a) The
        Credit Parties shall fail to pay any amount on the Obligations or provided
        for
        in any Loan Document when due (whether on any payment date, at maturity,
        by
        reason of acceleration, by notice of intention to prepay, by required prepayment
        or otherwise);

      

      (b) any
        representation, statement or warranty made or deemed made by any Credit Party
        in
        any Loan Document or in any other certificate, document, report or opinion
        delivered in conjunction with any Loan Document to which it is a party, shall
        not be true and correct in all material respects or shall have been false
        or
        misleading in any material respect on the date when made or deemed to have
        been
        made (except to the extent already qualified by materiality, in which case
        it
        shall be true and correct in all respects and shall not be false or misleading
        in any respect);

      

      (c) any
        Credit Party or other party thereto other than Lender shall be in material
        violation, breach or default of, or shall fail to perform, observe or comply
        with any covenant, obligation or agreement set forth in, any Loan Document
        and
        such violation, breach, default or failure shall not be cured within the
        applicable period set forth in the applicable Loan Document; provided
        that,
        with respect to the affirmative covenants set forth in Article
        VI
        (other
        than Sections
        6.1(c), 6.2, 6.3, 6.5, 6.8, 6.9, 6.11, and 6.16
        for
        which there shall be no cure period), there shall be a fifteen (15) calendar
        day
        cure period commencing from the earlier of (i) Receipt by such Person of
        written notice of such breach, default, violation or failure, and (ii) the
        time at which such Person or any authorized officer thereof knew or became
        aware, or should have known or been aware, of such failure, violation, breach
        or
        default but no Advances will be made during the cure period;

       

      
        
          
          

        

        
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      (d) (i)
        any
        of the Loan Documents ceases to be in full force and effect, or (ii) any
        Lien
        created thereunder ceases to constitute a valid perfected first priority
        Lien on
        the Collateral in accordance with the terms thereof, or Lender ceases to
        have a
        valid perfected first priority security interest in any of the Collateral
        or any
        securities pledged to Lender pursuant to the Security Documents other than
        resulting from Lender’s failure to file a continuation statement under the
        Uniform Commercial Code;

      

      (e) one
        or
        more tax assessments, judgments or decrees is rendered against any Credit
        Party
        in an
        amount in excess of $25,000 individually or $50,000 in the aggregate at any
        one
        time, which is/are not satisfied, stayed, vacated or discharged of record
        within
        thirty (30) calendar days of being rendered but no Advances will be made
        before
        the judgment is stayed, vacated or discharged; 

      

      (f) (i) any
        default occurs, which is not cured or waived, (a) in the payment of any
        amount with respect to any Indebtedness (other than the Obligations) of any
        Credit Party in excess of $25,000, (b) in the performance, observance or
        fulfillment of any material provision contained in any material agreement,
        contract, document or instrument to which any of the Credit Parties is a
        party
        or to which any of their properties or assets are subject or bound under
        or
        pursuant to which any Indebtedness was issued, created, assumed, guaranteed
        or
        secured and such default continues for more than any applicable grace period
        or
        permits the holder of any Indebtedness in excess of $25,000 to accelerate
        the
        maturity thereof, or (c) in the performance, observance or fulfillment of
        any
        material provision contained in any agreement, contract, document or instrument
        between any Credit Party and Lender or any Affiliate of Lender (other than
        the
        Loan Documents), or (ii) any Indebtedness of any Credit Party in excess of
        $25,000 is declared to be due and payable or is required to be prepaid (other
        than by a regularly scheduled payment) prior to the stated maturity thereof,
        or
        any obligation of such Person for the payment of Indebtedness (other than
        the
        Obligations) in excess of $25,000 is not paid when due or within any applicable
        grace period, or any such obligation in excess of $25,000 becomes or is declared
        to be due and payable before the expressed maturity thereof, or there occurs
        an
        event which, with the giving of notice or lapse of time, or both, would cause
        any such obligation to become, or allow any such obligation to be declared
        to
        be, due and payable; 

      

      (g) any
        Credit Party shall (i) be unable to pay its debts generally as they become
        due,
        (ii) have total liabilities (including contingent, subordinated, unmatured
        and
        unliquidated liabilities) that exceed its assets, at a Fair Valuation, (iii)
        have an unreasonably small capital base with which to engage in its anticipated
        business, (iv) file a petition under any insolvency statute, (v) make a
        general assignment for the benefit of its creditors, (vi) commence a proceeding
        for the appointment of a receiver, trustee, liquidator or conservator of
        itself
        or of the whole or any substantial part of its property, or (vii) file a
        petition seeking reorganization or liquidation or similar relief under any
        Debtor Relief Law or any other applicable law or statute;

       

      
        
          
          

        

        
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      (h) a
        court
        of competent jurisdiction shall (A) enter an order, judgment or decree
        appointing a custodian, receiver, trustee, liquidator or conservator of any
        Credit Party or the whole or any substantial part of any such Person’s
        properties, which shall continue unstayed and in effect for a period of
        forty-five (45) calendar days, (B) shall approve a petition filed against
        any
        Credit Party seeking reorganization, liquidation or similar relief under
        the any
        Debtor Relief Law or any other applicable law or statute, which is not dismissed
        within forty-five (45) calendar days or, (C) under the provisions of any
        Debtor Relief Law or other applicable law or statute, assume custody or control
        of any Credit Party or of the whole or any substantial part of any such Person’s
        properties, which is not irrevocably relinquished within forty-five (45)
        calendar days, or (ii) there is commenced against any Credit Party any
        proceeding or petition seeking reorganization, liquidation or similar relief
        under any Debtor Relief Law or any other applicable law or statute and either
        (A) any such proceeding or petition is not unconditionally dismissed within
        forty-five (45) calendar days after the date of commencement, or (B) any
        Credit
        Party takes any action to indicate its approval of or consent to any such
        proceeding or petition, but no Advances will be made before any such order,
        judgment or decree described above is stayed, vacated or discharged, any
        such
        petition described above is dismissed, or any such custody or control described
        above is relinquished;

      

      (i) (a)
        any
        Change of Control occurs or any agreement or commitment to cause or that
        may
        result in any such Change of Control is entered into, (b) any Material Adverse
        Effect, or Material Adverse Change occurs or is reasonably expected to occur,
        or
        (c) any Credit Party ceases a material portion of its business operations
        as
        currently conducted; 

      

      (j) Lender
        receives any indication or evidence that any Credit Party may have directly
        or
        indirectly been engaged in any type of activity which, in Lender’s judgment,
        might result in forfeiture of any property to any Governmental Authority
        which
        shall have continued unremedied for a period of ten (10) Business Days after
        written notice from Lender (but no Advances will be made before any such
        activity ceases);

      

      (k) an
        Event
        of Default occurs under any other Loan Document; 

      

         (l) uninsured
        damage to, or loss, theft or destruction of, any portion of the Collateral
        occurs that exceeds $50,000 in the aggregate; 

      

      (m) any
        Credit Party or any of their respective directors or senior officers is
        criminally indicted or convicted under any law that could lead to a forfeiture
        of any Collateral; 

      

      (n) the
        issuance of any process for levy, attachment or garnishment or execution
        with
        respect to an amount owing of at least $25,000 upon or prior to any judgment
        against any Credit Party or any of its properties or assets which is not
        stayed
        or removed within ten (10) Business Days;

      

      (o) the
        approval or clearance of any product or device manufactured, imported, marketed,
        distributed or sold by any Credit Party is withdrawn by the United States
        Food
        and Drug Administration, which withdrawal is reasonably expected to result
        in a
        Material Adverse Effect or Material Adverse Change;

       

      
        
          
          

        

        
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      (p) any
        product or device manufactured, imported, marketed, distributed or sold by
        any
        Credit Party is recalled or withdrawn by such Credit Party or ordered or
        directed by any Governmental Authority, which recall or withdrawal is reasonably
        expected to result in a Material Adverse Effect or Material Adverse Change;
        or

      

      (q) any
        Credit Party does, or enters into or becomes a party to any agreement or
        commitment to do, or cause to be done, any of the things described in this
        Article
        VIII
        or
        otherwise prohibited by any Loan Document (subject to any cure periods set
        forth
        therein);

      

      then,
        and
        in any such event, notwithstanding any other provision of any Loan Document,
        Lender may, without notice or demand, do any of the following: (i) terminate
        its
        obligations to make Advances hereunder, whereupon the same shall immediately
        terminate and (ii) elect all or any of the Loans and/or Notes, all interest
        thereon and all other Obligations to be due and payable immediately (except
        in
        the case of an Event of Default under Section
        8(d), (g), (h) or (i)(iii),
        in
        which event all of the foregoing shall automatically and without further
        act by
        Lender be due and payable, provided
        that,
        with respect to non-material breaches or violations that constitute Events
        of
        Default under clause (ii) of Section
        8(d),
        there
        shall be a five (5) Business Day cure period but no Advances will be made
        during
        any such cure period) commencing from the earlier of (A) Receipt by the
        applicable Person of written notice of such breach or violation or of any
        event,
        fact or circumstance constituting or resulting in any of the foregoing, and
        (B)
        the time at which such Person or any authorized officer thereof knew or became
        aware, or should have known or been aware, of such breach or violation and
        resulting Event of Default or of any event, fact or circumstance constituting
        or
        resulting in any of the foregoing, in each case without presentment, demand,
        protest or further notice of any kind, all of which are hereby expressly
        waived
        by Borrower.

       

      
        	
                IX.

              	
                RIGHTS
                  AND REMEDIES AFTER DEFAULT

              

      

       

      9.1 Rights
        and Remedies

      

      (a) In
        addition to the acceleration provisions set forth in Article
        VIII
        above,
        upon the occurrence and continuation of an Event of Default, Lender shall
        have
        the right to exercise any and all rights, options and remedies provided for
        in
        the Loan Documents, under the UCC or at law or in equity, including, without
        limitation, the right to (i) apply any property of the Credit Parties held
        by
        Lender to reduce the Obligations, (ii) foreclose the Liens created under
        the
        Security Documents, (iii) realize upon, take possession of and/or sell any
        Collateral or securities pledged with or without judicial process,
        (iv) exercise all rights and powers with respect to the Collateral as any
        Credit Party, as applicable, might exercise, (v) collect and send notices
        regarding the Collateral, with or without judicial process, (vi) by its own
        means or with judicial assistance, enter any premises at which Collateral
        and/or
        pledged securities are located, or render any of the foregoing unusable or
        dispose of the Collateral and/or pledged securities on such premises without
        any
        liability for rent, storage, utilities, or other sums, and no Credit Party
        shall
        resist or interfere with such action, (vii) at the Credit Parties’ expense,
        require that all or any part of the Collateral be assembled and made available
        to Lender at any place designated by Lender, (viii) reduce or otherwise change
        the Facility Cap, (ix) assess the Non-Compliance Fee, and/or (x) relinquish
        or
        abandon any Collateral or securities pledged or any Lien thereon.
        Notwithstanding any provision of any Loan Document, Lender, in its sole
        discretion, shall have the right, at any time that any Credit Party fails
        to do
        so, and from time to time, without prior notice, to: (i) obtain insurance
        covering any of the Collateral to the extent required hereunder; (ii) pay
        for
        the performance of any of Obligations; (iii) discharge taxes or Liens on
        any of
        the Collateral that are in violation of any Loan Document unless the Credit
        Parties are in good faith with due diligence by appropriate proceedings
        contesting those items; and (iv) pay for the maintenance and preservation
        of the
        Collateral, including the payment of rent, warehouse fees, insurance or other
        charges under any Landlord Waiver and Consent or Warehouse Waiver and Consent.
        Such expenses and advances shall be added to the Obligations until reimbursed
        to
        Lender and shall be secured by the Collateral, and such payments by Lender
        shall
        not be construed as a waiver by Lender of any Event of Default or any other
        rights or remedies of Lender.

       

      
        
          
          

        

        
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      (b)
         Each
        Credit Party agrees that notice received by it at least ten (10) calendar
        days
        before the time of any intended public sale, or the time after which any
        private
        sale or other disposition of Collateral is to be made, shall be deemed to
        be
        reasonable notice of such sale or other disposition. If permitted by applicable
        law, any perishable Collateral which threatens to speedily decline in value
        or
        which is sold on a recognized market may be sold immediately by Lender without
        prior notice to any Credit Party. At any sale or disposition of Collateral
        or
        securities pledged, Lender may (to the extent permitted by applicable law)
        purchase all or any part thereof free from any right of redemption by the
        Credit
        Parties which right is hereby waived and released. Each Credit Party covenants
        and agrees not to, and not to permit or cause any of its Subsidiaries to,
        interfere with or impose any obstacle to Lender’s exercise of its rights and
        remedies with respect to the Collateral. Lender, in dealing with or disposing
        of
        the Collateral or any part thereof, shall not be required to give priority
        or
        preference to any item of Collateral or otherwise to marshal assets or to
        take
        possession or sell any Collateral with judicial process.

       

      9.2 Application
        of Proceeds

      

      In
        addition to any other rights, options and remedies Lender has under the Loan
        Documents, the UCC, at law or in equity, all dividends, interest, rents,
        issues,
        profits, fees, revenues, income and other proceeds collected or received
        from
        collecting, holding, managing, renting, selling, or otherwise disposing of
        all
        or any part of the Collateral or any proceeds thereof upon exercise of its
        remedies hereunder shall be applied in the following order of priority:
        (i) first,
        to the
        payment of all costs and expenses of such collection, storage, lease, holding,
        operation, management, sale, disposition or delivery and of conducting the
        Credit Parties’ business and of maintenance, repairs, replacements, alterations,
        additions and improvements of or to the Collateral, and to the payment of
        all
        sums which Lender may be required or may elect to pay, if any, for taxes,
        assessments, insurance and other charges upon the Collateral or any part
        thereof, and all other payments that Lender may be required or authorized
        to
        make under any provision of this Agreement (including, without limitation,
        in
        each such case, in-house documentation and diligence fees and legal expenses,
        search, audit, recording, professional and filing fees and expenses and
        reasonable attorneys' fees and all expenses, liabilities and advances made
        or
        incurred in connection therewith); (ii) second,
        to the
        payment of all Obligations as provided herein; (iii) third,
        to the
        satisfaction of Indebtedness secured by any subordinate security interest
        of
        record in the Collateral if written notification of demand therefore is received
        before distribution of the proceeds is completed, provided,
        that,
        if requested by Lender, the holder of a subordinate security interest shall
        furnish reasonable proof of its interest, and unless it does so, Lender need
        not
        address its claims; and (iv) fourth,
        to the
        payment of any surplus then remaining to the Credit Parties, unless otherwise
        provided by law or directed by a court of competent jurisdiction, provided
        that the
        Credit Parties shall be liable for any deficiency if such proceeds are
        insufficient to satisfy the Obligations or any of the other items referred
        to in
        this section.

       

      
        
          
          

        

        
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      9.3 Rights
        of Lender to Appoint Receiver

      

      Without
        limiting and in addition to any other rights, options and remedies Lender
        has
        under the Loan Documents, the UCC, at law or in equity, upon the occurrence
        and
        continuation of an Event of Default, Lender shall have the right to apply
        for
        and have a receiver appointed by a court of competent jurisdiction in any
        action
        taken by Lender to enforce its rights and remedies in order to manage, protect,
        preserve, sell or dispose the Collateral and continue the operation of the
        business of the Credit Parties and to collect all revenues and profits thereof
        and apply the same to the payment of all expenses and other charges of such
        receivership including the compensation of the receiver and to the payments
        as
        aforesaid until a sale or other disposition of such Collateral shall be finally
        made and consummated.

       

      9.4 Rights
        and Remedies not Exclusive

      

      Lender
        shall have the right in its sole discretion to determine which rights, Liens
        and/or remedies Lender may at any time pursue, relinquish, subordinate or
        modify, and such determination will not in any way modify or affect any of
        Lender’s rights, Liens or remedies under any Loan Document, applicable law or
        equity. The enumeration of any rights and remedies in any Loan Document is
        not
        intended to be exhaustive, and all rights and remedies of Lender described
        in
        any Loan Document are cumulative and are not alternative to or exclusive
        of any
        other rights or remedies which Lender otherwise may have. The partial or
        complete exercise of any right or remedy shall not preclude any other further
        exercise of such or any other right or remedy. 

       

      
        	
                X.

              	
                WAIVERS
                  AND JUDICIAL PROCEEDINGS

              

      

       

      10.1 Waivers

      

      Except
        as
        expressly provided for herein, each Credit Party hereby waives setoff,
        counterclaim, demand, presentment, protest, all defenses with respect to
        any and
        all instruments and all notices and demands of any description, and the pleading
        of any statute of limitations as a defense to any demand under any Loan
        Document. To the extent permitted by applicable law, each Credit Party hereby
        waives any and all defenses and counterclaims it may have or could interpose
        in
        any action or procedure brought by Lender to obtain an order of court
        recognizing the assignment of, or Lien of Lender in and to, any Collateral.
        With
        respect to any action hereunder, Lender conclusively may rely upon, and shall
        incur no liability to any Credit Party in acting upon, any request or other
        communication that Lender reasonably believes to have been given or made
        by a
        person authorized on any Credit Party's behalf, whether or not such person
        is
        listed on the incumbency certificate delivered pursuant to Section
        4.1
        hereof.  In each such case, each Credit Party hereby waives the right to
        dispute Lender's action based upon such request or other communication, absent
        manifest error.

       

      
        
          
          

        

        
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      10.2 Delay;
        No Waiver of Defaults

      

      No
        course
        of action or dealing, renewal, release or extension of any provision of any
        Loan
        Document, or single or partial exercise of any such provision, or delay,
        failure
        or omission on Lender’s part in enforcing any such provision shall affect the
        liability of any Credit Party or operate as a waiver of such provision or
        affect
        the liability of any Credit Party or preclude any other or further exercise
        of
        such provision. No waiver by any party to any Loan Document of any one or
        more
        defaults by any other party in the performance of any of the provisions of
        any
        Loan Document shall operate or be construed as a waiver of any future default,
        whether of a like or different nature, and each such waiver shall be limited
        solely to the express terms and provisions of such waiver. Notwithstanding
        any
        other provision of any Loan Document, by completing the Closing under this
        Agreement and/or by making Advances, Lender does not waive any breach of
        any
        representation or warranty under any Loan Document, and all of Lender’s claims
        and rights resulting from any such breach or misrepresentation are specifically
        reserved.

       

      10.3 Jury
        Waiver

      

      EACH
        PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
        OF
        ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS OR IN ANY WAY
        CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT
        TO THE
        LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING
        OR
        HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH
        PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL
        BE
        DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT
        MAY
        FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
        WRITTEN
        EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE
        RIGHTS
        TO TRIAL BY JURY.

       

      
        	 	
                10.4 
                  

              	
                Cooperation
                  in Discovery and
                  Litigation

              

      

      

      In
        any
        litigation, arbitration or other dispute resolution proceeding relating to
        any
        Loan Document, each Credit Party waives any and all defenses, objections
        and
        counterclaims it may have or could interpose with respect to (i) any of its
        directors, officers, employees or agents being deemed to be employees or
        managing agents of any Credit Party for purposes of all applicable law or
        court
        rules regarding the production of witnesses by notice for testimony (whether
        in
        a deposition, at trial or otherwise), (ii) Lender’s counsel examining any such
        individuals as if under cross-examination and using any discovery deposition
        of
        any of them as if it were an evidence deposition, and/or (iii) using all
        commercially reasonable efforts to produce in any such dispute resolution
        proceeding, at the time and in the manner requested by Lender, all Persons,
        documents (whether in tangible, electronic or other form) and/or other things
        under its control and relating to the dispute.

       

      
        
          
          

        

        
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                XI.

              	
                EFFECTIVE
                  DATE AND TERMINATION

              

      

       

      11.1 Termination
        and Effective Date Thereof

      

      (a) Subject
        to Lender’s right to terminate and cease making Advances upon or after any Event
        of Default, this Agreement shall continue in full force and effect until
        the
        full performance and indefeasible payment in full in cash of all Obligations,
        unless terminated sooner as provided in this Section 11.1.
        Borrower may terminate this Agreement at any time upon not less than sixty
        calendar days’ prior written notice to Lender and upon full performance and
        indefeasible payment in full in cash of all Obligations on or prior to such
        sixtieth calendar day after Receipt by Lender of such written notice. All
        of the
        Obligations shall be immediately due and payable upon any such termination
        on
        the termination date stated in any notice of termination (the “Termination
        Date”);
        provided
        that,
        notwithstanding any other provision of any Loan Document, the Termination
        Date
        shall be effective no earlier than the first Business Day of the month following
        the expiration of the sixty calendar days’ prior written notice period.
        Notwithstanding any other provision of any Loan Document, no termination
        of this
        Agreement shall affect Lender’s rights or any of the Obligations existing as of
        the effective date of such termination, and the provisions of the Loan Documents
        shall continue to be fully operative until the Obligations have been fully
        performed and indefeasibly paid in cash in full. The Liens granted to Lender
        under the Security Documents and the financing statements filed pursuant
        thereto
        and the rights and powers of Lender shall continue in full force and effect
        notwithstanding the fact that Borrower’s borrowings hereunder may from time to
        time be in a zero or credit position until all of the Obligations have been
        fully performed and indefeasibly paid in full in cash. Once all of the
        Obligations have been fully performed and indefeasibly paid in full in cash,
        Lender agrees to promptly terminate any and all effective financing statements
        or other filings made with any governmental agency to perfect Lender’s security
        interest in the Collateral.

       

      (b) If
        the
        Revolving Facility is terminated for any reason, including (without limitation)
        if (i) Borrower terminates the Revolving Facility under this Section
        11.1,
        (ii) Borrower
        voluntarily or involuntarily repays the Obligations (other than reductions
        to
        zero of the outstanding balance of the Revolving Facility resulting from
        the
        ordinary course operation of the provisions of Section
        2.5),
        whether by virtue of Lender’s exercising its right of set off or otherwise;
        (iii) the Obligations are accelerated by Lender (each of the events described
        in
        (i), (ii) and (iii) above being hereinafter referred to as, a “Revolver
        Termination”),
        then
        at the effective date of any such Revolver Termination, Borrower shall pay
        Lender (in addition to the then outstanding principal, accrued interest and
        other Obligations relating to the Revolving Facility pursuant to the terms
        of
        this Agreement and any other Loan Document), to compensate Lender for the
        loss
        of bargain and not as a penalty, an amount equal to the applicable Minimum
        Termination Fee. 

       

      
        
          
          

        

        
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      11.2 Survival

      

      All
        obligations, covenants, agreements, representations, warranties, waivers
        and
        indemnities made by any Credit
        Party
        in any
        Loan Document shall survive the execution and delivery of the Loan Documents,
        the Closing, the making of the Advances and any termination of this Agreement
        until all Obligations are fully performed and indefeasibly paid in full in
        cash
        and, except as provided in the following sentence, shall then terminate.
        The
        obligations and provisions of Sections
        3.4, 3.5, 6.13, 10.1, 10.3, 11.1, 11.2, 12.4, 12.7 and 12.10
        shall
        survive termination of the Loan Documents and any payment, in full or in
        part,
        of the Obligations.

       

      
        	
                XII.

              	
                MISCELLANEOUS

              

      

       

      12.1 Governing
        Law; Jurisdiction; Service of Process; Venue

      

      The
        Loan
        Documents shall be governed by and construed in accordance with the internal
        laws of the State of Maryland without giving effect to its choice of law
        provisions. Any judicial proceeding against any Credit Party with respect
        to the
        Obligations, any Loan Document or any related agreement may be brought in
        any
        federal or state court of competent jurisdiction located in the State of
        Maryland. By execution and delivery of each Loan Document to which it is
        a
        party, each Credit Party (i) accepts the non-exclusive jurisdiction of the
        aforesaid courts and irrevocably agrees to be bound by any judgment rendered
        thereby, (ii) waives personal service of process, (iii) agrees that service
        of
        process upon it may be made by certified or registered mail, return receipt
        requested, pursuant to Section
        12.5
        hereof,
        (iv) waives any objection to jurisdiction and venue of any action
        instituted hereunder and agrees not to assert any defense based on lack of
        jurisdiction, venue or convenience, and
        (v)
        agrees that this loan was made in Maryland, that Lender has accepted in Maryland
        the Loan Documents executed by the Credit Parties and has disbursed Advances
        under the Loan Documents in Maryland.
        Nothing
        shall affect the right of Lender to serve process in any manner permitted
        by law
        or shall limit the right of Lender to bring proceedings against any Credit
        Party
        in the courts of any other jurisdiction having jurisdiction. Any judicial
        proceedings against Lender involving, directly or indirectly, the Obligations,
        any Loan Document or any related agreement shall be brought only in a federal
        or
        state court located in the State of Maryland. All parties acknowledge that
        they
        participated in the negotiation and drafting of this Agreement and that,
        accordingly, no party shall move or petition a court construing this Agreement
        to construe it more stringently against one party than against any
        other.

      
         

        
          
            
            

          

          
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      12.2 Successors
        and Assigns; Participations; New Lenders

       

      The
        Loan
        Documents shall inure to the benefit of Lender, Transferees and all future
        holders of the Loan, any Note, the Obligations and/or any of the Collateral,
        and
        each of their respective successors and assigns. Each Loan Document shall
        be
        binding upon the Persons’ other than Lender that are parties thereto and their
        respective successors and assigns, and no such Person may assign, delegate
        or
        transfer any Loan Document or any of its rights or obligations thereunder
        without the prior written consent of Lender. No rights are intended to be
        created under any Loan Document for the benefit of any third party, creditor
        or
        incidental beneficiary of any Credit Party. Nothing contained in any Loan
        Document shall be construed as a delegation to Lender of any other Person’s duty
        of performance. EACH CREDIT PARTY ACKNOWLEDGES AND AGREES THAT LENDER
        AT
        ANY TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND RESTATE ANY NOTE, AND/OR
        (II)
        SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR ANY PART
        OF
        ITS RIGHTS OR OBLIGATIONS UNDER ANY LOAN DOCUMENT, LOANS, ANY NOTE, THE
        OBLIGATIONS AND/OR THE COLLATERAL TO OTHER PERSONS (EACH SUCH TRANSFEREE,
        ASSIGNEE OR PURCHASER, A “TRANSFEREE”).
        Each
        Transferee shall have all of the rights and benefits with respect to the
        Loans,
        Obligations, any Notes, Collateral and/or Loan Documents held by it as fully
        as
        if the original holder thereof, and either Lender or any Transferee may be
        designated as the sole agent to manage the transactions and obligations
        contemplated therein; provided
        that,
        notwithstanding anything to the contrary in any Loan Document, Borrower shall
        not be obligated to pay under this Agreement to any Transferee any sum in
        excess
        of the sum which Borrower would have been obligated to pay to Lender had
        such
        participation not been effected. Lender shall notify Borrower in writing
        of any
        such transfer before Lender or Transferee may declare an Event of Default
        or
        assess any late fees, default interest or other similar remedies for the
        failure
        to pay the appropriate party. Notwithstanding any other provision of any
        Loan
        Document, Lender may disclose to any Transferee all information, reports,
        financial statements, certificates and documents obtained under any provision
        of
        any Loan Document, provided,
        that,
        such
        Transferee agrees to be bound the confidentiality provisions set forth in
        Section 12.10 of this Agreement.

       

      12.3 Application
        of Payments

      

      To
        the
        extent that any payment made or received with respect to the Obligations
        is
        subsequently invalidated, determined to be fraudulent or preferential, set
        aside
        or required to be repaid to a trustee, debtor in possession, receiver, custodian
        or any other Person under any Debtor Relief Law, common law or equitable
        cause
        or any other law, then the Obligations intended to be satisfied by such payment
        shall be revived and shall continue as if such payment had not been received
        by
        Lender. Any payments with respect to the Obligations received shall be credited
        and applied in such manner and order as Lender shall decide in its sole
        discretion.

       

      12.4 Indemnity

      

      Each
        of
        the Credit Parties jointly and severally shall indemnify Lender, its Affiliates
        and its and their respective managers, members, officers, employees, Affiliates,
        agents, representatives, successors, assigns, accountants and attorneys
        (collectively, the “Indemnified
        Persons”)
        from
        and against any and all liabilities, obligations, losses, damages, penalties,
        actions, judgments, suits, costs, expenses and disbursements of any kind
        or
        nature whatsoever (including, without limitation, reasonable fees and
        disbursements of counsel and in-house documentation and diligence fees and
        legal
        expenses) which may be imposed on, incurred by or asserted against any
        Indemnified Person with respect to or arising out of, or in any litigation,
        proceeding or investigation instituted or conducted by any Person with respect
        to any aspect of, or any transaction contemplated by or referred to in, or
        any
        matter related to, any Loan Document or any agreement, document or transaction
        contemplated thereby, whether or not such Indemnified Person is a party thereto,
        except to the extent that any of the foregoing arises out of the gross
        negligence or willful misconduct of such Indemnified Person. If any Indemnified
        Person uses in-house counsel for any purpose for which any Credit Party is
        responsible to pay or indemnify, each Credit Party expressly agrees that
        its
        indemnification obligations include the allocable costs of such in-house
        counsel. Lender agrees to give the Credit Parties reasonable notice of any
        event
        of which Lender becomes aware for which indemnification may be required under
        this Section
        12.4,
        and
        Lender may elect (but is not obligated) to direct the defense thereof, provided
        that the selection of counsel shall be subject to the Credit Parties’ consent,
        which consent shall not be unreasonably withheld or delayed. Any Indemnified
        Person may, in its reasonable discretion, take such actions as it deems
        necessary and appropriate to investigate, defend or settle any event or take
        other remedial or corrective actions with respect thereto as may be necessary
        for the protection of such Indemnified Person or the Collateral. Notwithstanding
        the foregoing, if any Insurer agrees to undertake the defense of an event
        (an
“Insured
        Event”),
        Lender agrees not to exercise its right to select counsel to defend the event
        if
        that would cause the Credit Parties’ Insurer to deny coverage; provided,
        however,
        that
        Lender reserves the right to retain counsel to represent any Indemnified
        Person
        with respect to an Insured Event at its sole cost and expense. To the extent
        that Lender obtains recovery from a third party other than an Indemnified
        Person
        of any of the amounts that any Credit Party has paid to Lender pursuant to
        the
        indemnity set forth in this Section
        12.4,
        then
        Lender shall promptly pay to the Credit Parties the amount of such
        recovery. 

       

      
        
          
          

        

        
          46

          
            

          

        

        
          
          

        

      

       

      12.5 Notice

      

      Any
        notice or request under any Loan Document shall be given to any party to
        this
        Agreement at such party’s address set forth beneath its signature on the
        signature page to this Agreement (but, in the case of any Credit Party, to
        the
        Borrower Agent at the Borrower Agent’s address so set forth), or at such other
        address as such party may hereafter specify in a notice given in the manner
        required under this Section
        12.5.
        Any
        notice or request hereunder shall be given only by, and shall be deemed to
        have
        been received upon (each, a “Receipt”):
        (i) registered or certified mail, return receipt requested, on the date on
        which received as indicated in such return receipt, (ii) delivery by a
        nationally recognized overnight courier, one (1) Business Day after deposit
        with
        such courier, or (iii) facsimile transmission or e-mail via the internet,
        in
        each case upon telephone or further electronic communication from the recipient
        acknowledging receipt (whether automatic or manual from recipient), as
        applicable. 

       

      12.6 Severability;
        Captions; Counterparts; Facsimile Signatures

      

      If
        any
        provision of any Loan Document is adjudicated to be invalid under applicable
        laws or regulations, such provision shall be inapplicable to the extent of
        such
        invalidity without affecting the validity or enforceability of the remainder
        of
        the Loan Documents which shall be given effect so far as possible. The captions
        in the Loan Documents are intended for convenience and reference only and
        shall
        not affect the meaning or interpretation of the Loan Documents. The Loan
        Documents may be executed in one or more counterparts (which taken together,
        as
        applicable, shall constitute one and the same instrument) and by facsimile
        transmission, which facsimile signatures shall be considered original executed
        counterparts. Each party to this Agreement agrees that it will be bound by
        its
        own facsimile signature and that it accepts the facsimile signature of each
        other party. 

       

      
        
          
          

        

        
          47

          
            

          

        

        
          
          

        

      

       

      12.7 Expenses

      

      The
        Credit Parties shall pay, whether or not the Closing occurs, all costs and
        expenses incurred by Lender and/or its Affiliates, including, without
        limitation, documentation and diligence fees and expenses, all search, audit,
        appraisal, recording, professional and filing fees and expenses and all other
        out-of-pocket charges and expenses (including, without limitation, UCC and
        judgment and tax lien searches and UCC filings and fees for post-Closing
        UCC and
        judgment and tax lien searches and wire transfer fees and audit expenses),
        and
        reasonable attorneys’ fees and expenses, (i) in any effort to enforce, protect
        or collect payment of any Obligation or to enforce any Loan Document or any
        related agreement, document or instrument, (ii) in connection with entering
        into, negotiating, preparing, reviewing and executing the Loan Documents
        and/or
        any related agreements, documents or instruments, (iii) arising in any way
        out
        of administration of the Obligations, (iv) in connection with instituting,
        maintaining, preserving, enforcing and/or foreclosing on Lender’s Liens in any
        of the Collateral or securities pledged under the Loan Documents, whether
        through judicial proceedings or otherwise, (v) in defending or prosecuting
        any
        actions, claims or proceedings arising out of or relating to Lender’s
        transactions with the Credit Parties, (vi) in seeking, obtaining or receiving
        any advice with respect to its rights and obligations under any Loan Document
        and any related agreement, document or instrument, and/or (vii) in connection
        with any modification, restatement, supplement, amendment, waiver or extension
        of any Loan Document and/or any related agreement, document or instrument.
        All
        of the foregoing shall be charged to Borrower’s account and shall be part of the
        Obligations. If Lender or any of its Affiliates uses in-house counsel for
        any
        purpose under any Loan Document for which the Credit Parties are responsible
        to
        pay or indemnify, each Credit Party expressly agrees that its Obligations
        include the allocable costs of such in-house counsel Without limiting the
        foregoing, the Credit Parties shall pay all taxes (other than taxes based
        upon
        or measured by Lender’s income or revenues or any personal property tax), if
        any, in connection with the issuance of any Note and the filing and/or recording
        of any documents and/or financing statements.

       

      12.8 Entire
        Agreement

      

      This
        Agreement and the other Loan Documents to which any Credit Party is a party
        constitute the entire agreement between any such Credit Party and Lender
        with
        respect to the subject matter hereof and thereof, and supersede all prior
        agreements and understandings, if any, relating to the subject matter hereof
        or
        thereof. Any promises, representations, warranties or guarantees not herein
        contained and hereinafter made shall have no force and effect unless in writing
        signed by the Credit Parties and Lender. No provision of this Agreement may
        be
        changed, modified, amended, restated, waived, supplemented, discharged, canceled
        or terminated orally or by any course of dealing or in any other manner other
        than by an agreement in writing signed by Lender and the Credit Parties.
        Each
        party hereto acknowledges that it has been advised by counsel in connection
        with
        the negotiation and execution of this Agreement and is not relying upon oral
        representations or statements inconsistent with the terms and provisions
        hereof.

       

      
        
          
          

        

        
          48

          
            

          

        

        
          
          

        

      

       

      12.9 Lender
        Approvals

      

      Unless
        expressly provided herein to the contrary, any approval, consent, waiver
        or
        satisfaction of Lender with respect to any matter that is subject of any
        Loan
        Document may be granted or withheld by Lender in its sole and absolute
        discretion.

       

      12.10 Confidentiality
        and Publicity

      

      (a) 
        Except
        as required by law, Lender and Lender’s agents shall hold all non-public,
        proprietary or confidential information (which has been identified as such
        by
        the Credit Parties) obtained pursuant to the requirements of this Agreement
        in
        accordance with their customary procedures for handling confidential information
        of this nature for a public company and in accordance with safe and sound
        lending practices; however, Lender and Lender’s agents may disclose any such
        information to their Affiliates, outside auditors, counsel, consultants,
        operators, rating agencies, lenders and funding sources and other professional
        advisors in connection with this Agreement, or as required in connection
        with
        any contemplated sale, assignment or transfer of any Note, Obligations or
        the
        Collateral, or as required or requested by any governmental authority or
        representative thereof or in connection with the enforcement hereof or of
        any
        other Loan Document or pursuant to legal process; provided,
        however,
        that
        any proposed Transferee shall have agreed in writing to be bound by the terms
        of
        this Section 12.10.
        RMS has
        caused all such non-public, proprietary or confidential information to be
        delivered to Lender and its agents in reliance upon this subsection (a) and
        upon
        Rule 100(b)(2)(ii) of Regulation FD as promulgated by the Securities and
        Exchange Commission.

      Notwithstanding
        the foregoing, but subject to subsection (b) below, immediately upon the
        Closing
        Date, or upon any material change thereafter, the Borrower intends to disclose
        the terms of the Revolving Facility in a press release and intends to file
        the
        agreement, or subsequent amendments thereof with the SEC.

      

      (b) Each
        Credit Party agrees to submit to Lender and Lender reserves the right to
        review
        and approve upon all materials that such Credit Party or any of its Affiliates
        prepares that contain Lender’s name or describe or refer to any Loan Document,
        any of the terms thereof or any of the transactions contemplated thereby.
        However, Lender agrees that such approval shall not be unreasonably withheld
        and
        that the Borrower shall be permitted to make required public filings if in
        the
        opinion of Borrower’s Legal Counsel such disclosures are required by law. No
        Credit Party shall, and shall not permit any of its Affiliates to, use Lender’s
        name (or the name of any of Lender’s Affiliates) in connection with any of its
        business operations, including without limitation, advertising, marketing
        or
        press releases or such other similar purposes, without Lender’s prior written
        consent. Nothing contained in any Loan Document is intended to permit or
        authorize Borrower or any of its Affiliates to contract on behalf of Lender.
        

      

      (c) Each
        Credit Party hereby agrees that Lender or any Affiliate of Lender may (i)
        disclose a general description of transactions arising under the Loan Documents
        for advertising, marketing or other similar purposes and (ii) use such Credit
        Party’s name, logo or other indicia germane to such party in connection with
        such advertising, marketing or other similar purposes.

       

      
        
          
          

        

        
          49

          
            

          

        

        
          
          

        

      

       

      12.11 Release
        of Lender

      

      Notwithstanding
        any other provision of any Loan Document, each Credit Party voluntarily,
        knowingly, unconditionally and irrevocably, with specific and express intent,
        for and on behalf of itself, its managers, members, directors, officers,
        employees, stockholders, Affiliates, agents, representatives, accountants,
        attorneys, successors and assigns and their respective Affiliates (collectively,
        the “Releasing
        Parties”),
        hereby fully and completely releases and forever discharges the Indemnified
        Parties and any other Person or Insurer which may be responsible or liable
        for
        the acts or omissions of any of the Indemnified Parties, or who may be liable
        for the injury or damage resulting therefrom (collectively, with the Indemnified
        Parties, the “Released
        Parties”),
        of
        and from any and all actions, causes of action, damages, claims, obligations,
        liabilities, costs, expenses and demands of any kind whatsoever, at law or
        in
        equity, matured or unmatured, vested or contingent, that any of the Releasing
        Parties has against any of the Released Parties as of the date of the Closing.
        Each Credit Party acknowledges that the foregoing release is a material
        inducement to Lender’s decision to extend to Borrower the financial
        accommodations hereunder and has been relied upon by Lender in agreeing to
        make
        the Advances. 

       

      
        	 	
                12.12

              	
                Agent

              

      

      

      Lender
        and its successors and assigns hereby (i) designate and appoint CapitalSource
        Finance LLC, a Delaware limited liability company, and its successors and
        assigns ("CapitalSource"),
        to
        act as agent for Lender and its successors and assigns under this Agreement
        and
        all other Loan Documents, (ii) irrevocably authorize CapitalSource to take
        all
        actions on its behalf under the provision of this Loan Agreement and all
        other
        Loan Documents, and (iii) to exercise all such powers and rights, and to
        perform
        all such duties and obligations hereunder and thereunder.  CapitalSource,
        on behalf of Lender, shall hold all Collateral, payments of principal and
        interest, fees, charges and collections received pursuant to this Agreement
        and
        all other Loan Documents.  Each Credit Party acknowledges that Lender and
        its successors and assigns transfer and assign to CapitalSource the right
        to act
        as Lender's agent to enforce all rights and perform all obligations of Lender
        contained herein and in all of the other Loan Documents.  Each Credit Party
        shall within ten (10) Business Days after Lender's reasonable request, take
        such
        further actions, obtain such consents and approvals and duly execute and
        deliver
        such further agreements, amendments, assignments, instructions or documents
        as
        Lender may request to evidence the appointment and designation of CapitalSource
        as agent for Lender and other financial institutions from time to time party
        hereto and to the other Loan Documents.

       

      
        	 	
                12.13

              	
                Agreement
                  Controls

              

      

      

      In
        the
        event of any inconsistency between this Agreement and any other Loan Documents,
        the terms of this Agreement shall control.

       

      
        [SIGNATURES
          APPEAR ON THE FOLLOWING PAGE] 
           

        

      

      
        
          
          

        

        
          50

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, each of the parties has duly executed this Revolving Credit
        and
        Security Agreement as of the date first written above.

       

      
        	 	 	 
	 CREDIT
                PARTIES:	RITA
                MEDICAL SYSTEMS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                Angel
	 	
                
Name:
                Michael Angel
	 	Its:
                Chief Financial Officer

      

       

      
        
          	 	 	 
	 	
                  HORIZON
                    MEDICAL PRODUCTS, INC.

                
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                  Angel
	 	
                  
Name:
                  Michael Angel
	 	Its:
                  Treasurer

        

        
           

          
            	 	 	 
	 	RITA
                    MEDICAL SYSTEMS NETHERLANDS, BV
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                    Angel
	 	
                    
Name:
                    Michael Angel
	 	Its:
                    Treasurer

          

          
             

            
              	 	 	 
	
                    	RITA
                      MEDICAL SYSTEMS FRANCE, S.A.R.L.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                      Angel
	 	
                      
Name:
                      Michael Angel
	 	Its:
                      Treasurer

            

            
 

            
              
                
                

              

              
                51

                
                  

                

              

              
                
                

              

            

          

        

      

      
         

        
          	 	 	 
	BORROWER
                  AGENT:	RITA
                  MEDICAL SYSTEMS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                  Angel
	 	
                  
Name:
                  Michael Angel
	 	Its:
                  Chief Financial Officer
	 	 
	 	Address
                  for Notices:
	 	46421
                  Landing Parkway
	 	Fremont,
                  CA 94538
	 	Attention: Michael Angel
	 	Telephone:
                  (510) 771-0402
	 	Fax:
                  (510) 771-0461

        

        
           

          
            	 	 	 
	LENDER:	CAPITALSOURCE
                    FINANCE LLC
	 
 	 
 	 
 
	 	By:  	/s/ Keith
                    D.
                    Reuben
	 	
                    
Name:
                    Keith D. Reuben
	 	Its:
                    President
	 	 
	 	Address
                    for Notices:
	 	CapitalSource
                    Finance LLC
	 	4445
                    Willard Avenue, 12th
                    Floor
	 	Chevy
                    Chase, MD 20815
	 	Attention: HSB, Portfolio
                    Manager
	 	Telephone: 
                    (301) 841-2700
	 	Fax::
                    (301) 841-2340

          

           

          
            
              
              

            

            
              52

              
                

              

            

            
              
              

            

          

          
Schedule
            6.8

        

      

      

      Further
        Assurances/Post Closing

      

      
        	
                Evidence
                  of the release of the following security interests in intellectual
                  property within 45 days of the Closing Date:

                a. Transamerica
                  Business Credit Corporation

                b. Venture
                  Lending

              
	
                Evidence
                  of the assignment of rights as to US Patent No. 6,622,731 within
                  45 days
                  of the Closing Date

              
	
                Evidence
                  of the assignment of US Patent No. 5,935,123 to RMS within 45 days
                  of the
                  Closing Date

              

      

       

      
        
          
          

        

        
          53

          
            

          

        

        
          
          

        

      

      ANNEX
        I

       

      FINANCIAL
        COVENANTS

      

      

      

      1) Minimum
        EBITDA

      

      At
        no
        time shall Borrower permit its EBITDA for the Test Period ending on the date
        of
        such determination to be less than the following amounts for each Test Period
        ending during the following periods:

      

      January
        31, 2006 - December 31, 2006 ($325,000)

      

      January
        31, 2007 - December 31, 2007 ($150,000)

      

      January
        31, 2008 - December 31, 2008 $62,500

       

      2) Minimum
        Liquidity 

      

      Borrower
        shall have a minimum liquidity (“Minimum
        Liquidity”)
        of not
        less than (i) $2,500,000 at the Closing and at all times through the date
        Borrower is first required to deliver a Compliance Certificate under this
        Agreement and (ii) at all times thereafter the amount determined as set forth
        below by reference to Borrower’s EBITDA for the most recent Test Period as set
        forth on the Compliance Certificate required to be delivered for such Test
        Period:

       

      
        	
                 

                EBITDA

                   

              	
                 

                Required
                  Minimum Liquidity

              
	
                ($325,000)
                  to ($150,000)

              	
                $2,500,000

              
	
                ($149,999)
                  to $150,000

              	
                $2,000,000

              
	
                $150,001
                  to $500,000

              	
                $1,500,000

              
	
                Greater
                  than $500,000

              	
                $1,000,000

              

      

       

      Borrower’s
        compliance with this covenant shall be required to be satisfied as follows:
        (i)
        first pursuant to the application of the Required Liquidity Reserve against
        the
        required Minimum Liquidity amount and (ii) with any shortfall from (i) above
        being satisfied by Available Cash. Notwithstanding any provision of this
        covenant to the contrary, Minimum Liquidity shall be $2,500,000 for any Test
        Period (or portion thereof) for which Borrower shall fail to submit a Compliance
        Certificate on or before the date required by Section 6.1(a).

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      For
        purposes of the covenants set forth in this Annex I, the terms listed below
        shall have the following meanings:

      

      “Available
        Cash”
shall
        mean, for and on any date, the sum without duplication of the following for
        Borrower: (a) unrestricted cash on hand on such date, (b) Cash Equivalents
        held
        on such date, and (c) the unborrowed Availability (after taking into account
        the
        amount of the Required Liquidity Reserve and any other reserves established
        hereunder) on and as of such date).

      

      “Cash
        Equivalents”
shall
        mean (a) securities issued, or directly and fully guaranteed or insured,
        by the
        United States or any agency or instrumentality thereof (provided that the
        full
        faith and credit of the United States is pledged in support thereof) having
        maturities of not more than six months from the date of acquisition, (b)
        U.S.
        dollar denominated time deposits, certificates of deposit and bankers’
acceptances of (i) any domestic commercial bank of recognized standing having
        capital and surplus in excess of $500,000,000, or (ii) any bank (or the parent
        company of such bank) whose short-term commercial paper rating from Standard
        & Poor’s Ratings Services (“S&P”)
        is at
        least A-2 or the equivalent thereof or from Moody’s Investors Service, Inc.
        (“Moody’s”)
        is at
        least P-2 or the equivalent thereof in each case with maturities of not more
        than six months from the date of acquisition (any bank meeting the
        qualifications specified in clauses (b)(i) or (ii), an “Approved
        Bank”),
        (c) repurchase obligations with a term of not more than seven days for
        underlying securities of the types described in clause (a), above, entered
        into
        with any Approved Bank, (d) commercial paper issued by any Approved Bank
        or by
        the parent company of any Approved Bank and commercial paper issued by, or
        guaranteed by, any industrial or financial company with a short-term commercial
        paper rating of at least A-2 or the equivalent thereof by S&P or at least
        P-2 or the equivalent thereof by Moody’s, or guaranteed by any industrial
        company with a long term unsecured debt rating of at least A or A2, or the
        equivalent of each thereof, from S&P or Moody’s, as the case may be, and in
        each case maturing within six months after the date of acquisition and (e)
        investments in money market funds substantially all of whose assets are
        comprised of securities of the type described in clauses (a) through (d)
        above.

       

      “EBITDA”
shall
        mean, for any Test Period, without duplication and on a consolidated basis,
        Net
        Income or Loss of Borrower determined in accordance with GAAP, adjusted as
        stated in the following two sentences, all as determined in accordance with
        GAAP. There shall be positive adjustments to reverse the negative impact
        on Net
        Income (or Loss) for the following items: (a) Interest Expense, (b) taxes
        on income, whether paid, payable or accrued, (c) depreciation expense, (d)
        amortization expense, (e) non-cash stock compensation expenses including
        FASB
        123R and charges associated with stock warrants, (f) non-cash asset impairment
        charges including intangible assets, goodwill, and equipment, (g) loss from
        any
        sale of assets other than sales in the ordinary course of business, (h) non-cash
        income statement provision for excess and obsolete inventories (determined
        on a
        consistent basis with the amount reflected in the Statement of Cash Flows
        included in the Borrower’s SEC filings), (i) non-cash losses included for
        unconsolidated subsidiaries accounted for under the equity method, (j) one-time
        restructure charges approved by the Lender in writing (which approval shall
        not
        be unreasonably withheld) and (k) all other non-cash, non-recurring charges
        and
        expenses, but excluding adjustments for other accruals for cash expenses
        made in
        the ordinary course of business. There shall be minus adjustments to reverse
        the
        positive impact on Net Income or Loss for the following items: (a) gains
        from
        any sale of assets, other than sales in the ordinary course of business,
        (b)
        non-cash gains included for unconsolidated subsidiaries accounted for under
        the
        equity method, and (c) other extraordinary or non-recurring gains,.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Interest
        Expense”
shall
        mean, for any Test Period, total interest expense (including attributable
        to
        Capital Leases in accordance with GAAP) fees with respect to all outstanding
        Indebtedness including capitalized interest but excluding commissions, discounts
        and other fees owed with respect to letters of credit and bankers’ acceptance
        financing and net costs under Interest Rate Agreements. 

      

      “Net
        Income (or Loss)”
shall
        mean, the net income (or loss) determined in conformity with GAAP, provided
        that
        there shall be excluded (i) the income (or loss) of any Person in which any
        other Person (other than Borrower) has a joint interest, except to the extent
        of
        the amount of dividends or other distributions actually paid to a Borrower
        by
        such Person, (ii) the income (or loss) of any Person accrued prior to the
        date
        it becomes a Borrower or is merged into or consolidated with a Borrower or
        that
        Person’s assets are acquired by a Borrower, (iii) the income of any Subsidiary
        of Borrower to the extent that the declaration or payment of dividends or
        similar distributions of that income by that Subsidiary is not at the time
        permitted by operation of the terms of the charter or any agreement, instrument,
        judgment, decree, order, statute, rule or governmental regulation applicable
        to
        that Subsidiary, (iv) compensation expense resulting from the issuance of
        capital stock, stock options or stock appreciation rights issued to former
        or
        current employees, including officers, of a Borrower, or the exercise of
        such
        options or rights, in each case to the extent the obligation (if any) associated
        therewith is not expected to be settled by the payment of cash by a Borrower
        or
        any affiliate thereof, and (v) compensation expense resulting from the
        repurchase of capital stock, options and rights described in clause (iv) of
        this definition of Net Income.

      

      “Required
        Liquidity Reserve”
shall
        mean a reserve established against the Borrowing Base at all times during
        the
        Term in the amount of $1,500,000; provided, that such amount shall be reduced
        to
        $1,000,000 to the extent that EBITDA for the most recent Test Period is greater
        than $500,000.

      

      “Test
        Period”
shall
        mean the three most recent elapsed calendar months then ended (taken as one
        accounting period), or such other period as specified in the Agreement or
        any
        Annex thereto. 

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      APPENDIX
        A

       

      DEFINITIONS

      

      “Acceptance
        Notice”
shall
        have the meaning given such term in Section
        6.13.

      

      “Accounts”
shall
        mean all “accounts” (as defined in the UCC) of Borrower (or, if referring to
        another Person, of such other Person), including without limitation, accounts,
        accounts receivables, monies due or to become due and obligations in any
        form
        (whether arising in connection with contracts, contract rights, Instruments,
        General Intangibles or Chattel Paper), in each case whether arising out of
        goods
        sold or services rendered or from any other transaction and whether or not
        earned by performance, now or hereafter in existence, and all documents of
        title
        or other documents representing any of the foregoing, and all collateral
        security and guaranties of any kind, now or hereafter in existence, given
        by any
        Person with respect to any of the foregoing.

      

      “Account
        Debtor”
shall
        mean any Person who is obligated under an Account.

      

      “Advance”
shall
        mean a borrowing under the Revolving Facility. Any amounts paid by Lender
        on
        behalf of any Credit Party under any Loan Document shall be an Advance for
        purposes of the Agreement.

      

      “Affiliate”
shall
        mean, as to any Person, any other Person (a) that, directly or indirectly
        through one or more intermediaries, controls, is controlled by, or is under
        common control with, such Person, (b) who is a director or officer (i) of
        such
        Person, (ii) of any Subsidiary of such Person, or (iii) of any Person described
        in clause (a) above with respect to such Person, or (c) which, directly or
        indirectly through one or more intermediaries, is the beneficial or record
        owner
        (as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended,
        as
        the same is in effect on the date hereof) of five percent (5%) or more of
        any
        class of the outstanding voting stock, securities or other equity or ownership
        interests of such Person. For purposes of this definition, the term “control”
(and the correlative terms, “controlled by” and “under common control with”)
        shall mean the possession, directly or indirectly, of the power to direct
        or
        cause the direction of the management or policies, whether through ownership
        of
        securities or other interests, by contract or otherwise. “Affiliate”
        shall include any Subsidiary.

      

      “Applicable
        Rate”
shall
        mean the interest rates applicable from time to time to Advances under the
        Agreement.

      

      “Availability”
shall
        have the meaning given such term in Section
        2.1(a).

      

      “Average
        Inventory”
shall
        mean, for any Test Period, the amount determined by dividing the sum of (A)
        “Total Inventory” as of the first day of such Test Period and (B) “Total
        Inventory” as of the last day of such Test Period by 2. For purposes of this
        definition, “Total Inventory” shall mean, as of any date of determination, the
        amount of inventory, valued at the lower of cost or market, which would be
        reflected on a balance sheet of Borrower prepared as of such date in accordance
        with GAAP.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      "Borrower"
        shall
        have the meaning given such term in the Preamble hereof.

      

      "Borrower
        Agent"
        shall
        have the meaning given such term in Section
        3.6.

      

      “Borrowing
        Base” shall mean, as of any date of determination, the sum of the Borrowing Base
        for Eligible Inventory and the Borrowing Base for Eligible
        Receivables.

      

      “Borrowing
        Base for Eligible Inventory”
shall
        mean, as of any date of determination, the net value in U.S. Dollars of Eligible
        Inventory, valued at the lower of cost or market, as determined with reference
        to the most recent Borrowing Certificate and otherwise in accordance with
        this
        Agreement; provided,
        however,
        that if
        as of such date the most recent Borrowing Certificate is of a date more than
        four Business Days before or after such date, the Borrowing Base for Eligible
        Inventory shall be determined by Lender in its Permitted
        Discretion.

      

      “Borrowing
        Base for Eligible Receivables”
shall
        mean, as of any date of determination the net collectible U.S. Dollar value
        of
        Eligible Receivables, as determined with reference to the most recent Borrowing
        Certificate and otherwise in accordance with this Agreement; provided,
        however,
        that if
        as of such date the most recent Borrowing Certificate is of a date more than
        four Business Days before or after such date, the Borrowing Base for Eligible
        Receivables shall be determined by Lender in its Permitted Discretion.

      

      “Borrowing
        Certificate”
shall
        mean a Borrowing Certificate substantially in the form of Exhibit
        A.

      

      “Borrowing
        Date”
shall
        have the meaning given such term in Section
        2.4.

      

      “Business
        Day”
shall
        mean any day other than a Saturday, Sunday or other day on which the Federal
        Reserve or Lender is closed.

      

      “Capital
        Lease”
shall
        mean, as to any Person, a lease of any interest in any kind of property or
        asset
        by that Person as lessee that is, should be or should have been recorded
        as a
“capital lease” in accordance with GAAP.

      

      “Capitalized
        Lease Obligations”
shall
        mean all obligations of any Person under Capital Leases, in each case, taken
        at
        the amount thereof accounted for as a liability in accordance with
        GAAP.

      

      “Change
        of Control”
shall
        mean, with respect to any Credit Party, the occurrence of any of the following:
        (i) a merger, consolidation, reorganization, recapitalization or share or
        interest exchange, sale or transfer or any other transaction or series of
        transactions in which its stockholders, managers, partners or interest holders
        immediately prior to such transaction or series of transactions receive,
        in
        exchange for the stock or interests owned by them, cash, property or securities
        of the resulting or surviving entity or any Affiliate thereof, and, as a
        result
        thereof, Persons who, individually or in the aggregate, were holders of a
        majority or more of its voting stock, securities or equity, partnership or
        ownership interests immediately prior to such transaction or series of
        transactions hold less than a majority of the voting stock, securities or
        other
        equity, partnership or ownership interests of the resulting or surviving
        entity
        or such Affiliate thereof, calculated on a fully diluted basis, (ii) a direct
        or
        indirect sale, transfer or other conveyance or disposition, in any single
        transaction or series of transactions, of all or substantially all of its
        assets,
        or
        (iii) any
        “change in/of control” or “sale” or “disposition” or similar event as defined in
        any document governing indebtedness of such Person which gives the holder
        of
        such indebtedness the right to accelerate or otherwise require payment of
        such
        indebtedness prior to the maturity date thereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      “Charter
        and Good Standing Documents”
shall
        mean, for any Credit Party (i) a copy of the certificate of incorporation
        or
        formation (or other charter document) certified as of a date satisfactory
        to
        Lender before the Closing Date by the applicable Governmental Authority of
        the
        jurisdiction of incorporation or organization of such Credit Party, (ii)
        a copy
        of the bylaws or similar organizational documents certified as of a date
        satisfactory to Lender before the Closing Date by the corporate secretary
        or
        assistant secretary of such Credit Party, (iii) an original certificate of
        good standing as of a date acceptable to Lender issued by the applicable
        Governmental Authority of the jurisdiction of incorporation or organization
        of
        such Credit Party and of every other jurisdiction in which the failure of
        a
        Credit Party to qualify would reasonably be likely to have a Material Adverse
        Effect, and (iv) copies of the resolutions of the Board of Directors or
        managers (or other applicable governing body) and, if required, stockholders,
        members or other equity owners authorizing the execution, delivery and
        performance of the Loan Documents to which any Credit Party is a party,
        certified by an authorized officer of such Person as of the Closing
        Date.

      

      “Closing”
shall
        mean the satisfaction, or written waiver by Lender, of all of the conditions
        precedent set forth in the Agreement required to be satisfied prior to the
        consummation of the transactions contemplated hereby.

      

      “Closing
        Date”
shall
        mean the date of this Agreement. 

      

      “Collateral”
shall
        have the meaning given such term in Section
        2.9.

      

      “Collateral
        Management Fee”
shall
        have the meaning given such term in Section
        3.3.

      

      “Collateral
        Patent, Trademark and Copyright Assignment”
shall
        mean any patent, trademark, or copyright assignment or acknowledgement executed
        by and between Borrower and Lender, as such may be modified, amended or
        supplemented from time to time. 

      

      “Concentration
        Account”
shall
        have the meaning given such term in Section
        2.5.

      

      “Credit
        Parties”
shall
        mean Borrower, any Guarantor and each Foreign Subsidiary,
        collectively.

      

      “Credit
        Party”
shall
        mean Borrower, any Guarantor and any Foreign Subsidiary,
        individually.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      “Debtor
        Relief Law”
shall
        mean, collectively, the Bankruptcy Code of the United States of America and
        all
        other applicable liquidation, conservatorship, bankruptcy, moratorium,
        rearrangement, receivership, insolvency, reorganization or similar debtor
        relief
        laws from time to time in effect affecting the rights of creditors generally,
        as
        amended from time to time.

      

      “Default”
shall
        mean any event, fact, circumstance or condition that, with the giving of
        applicable notice or passage of time or both, would constitute or be or result
        in an Event of Default.

      

      “Disclosure
        Schedule”
shall
        have the meaning given such term in Section
        2.4.

      

      “Distribution”
shall
        mean any fee, payment, bonus or other remuneration of any kind, and any
        repayment of or debt service on loans or other indebtedness. 

      

      “Eligible
        Inventory”
shall
        mean the Borrower’s saleable Inventory consisting of finished goods, which
        Inventory of finished goods is currently in existence at Borrower’s places of
        business or at a third party warehouse for which Lender has received a Landlord
        Waiver and Consent and/or Warehouse Waiver and Consent in form satisfactory
        to
        it and is saleable in the ordinary course of Borrower’s business and which
        Lender, in its Permitted Discretion, deems Eligible Inventory unless one
        or more
        of the following applies which would eliminate such items or items of Inventory
        consisting of finished goods from being considered as Eligible
        Inventory:

      

      (a) such
        Inventory is not subject to a valid perfected first priority security interest
        in favor of the Lender;

      

      (b) any
        consent, license, approval or authorization required to be obtained by Borrower
        in connection with the granting of a security interest under the Security
        Documents or in connection with the manufacture or sale of such Inventory
        has
        not been or was not duly obtained, has been revoked or terminated and is
        otherwise not in full force and effect;

      

      (c) any
        covenant, representation or warranty contained in this Agreement or in any
        other
        Loan Document with respect to such Inventory has been breached and remains
        uncured;

      

      (d) such
        Inventory is not owned by Borrower;

      

      (e) such
        Inventory does not comply, or was not manufactured in compliance, in all
        material respects, with all applicable requirements of all statutes, laws,
        rules, regulations, ordinances, codes, policies, rules of common law, and
        the
        like, now or hereafter in effect, of any Governmental Authority, including
        any
        judicial or administrative interpretations thereof, and any judicial or
        administrative orders, consents, decrees or judgments; 

      

      (f) such
        Inventory does not, or at the time of its purchase from the vendor did not,
        constitute “inventory” under Article 9 of the UCC as then in effect in the
        jurisdiction whose law governs perfection of the security interest;

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (g) the
        Person for whose account such Inventory is being or was produced has commenced
        a
        voluntary case under any federal bankruptcy or state or federal insolvency
        laws
        or has made an assignment for the benefit of creditors, or if a decree or
        order
        for relief has been entered by a court having jurisdiction in respect of
        such
        Person in an involuntary case under any federal bankruptcy or state or federal
        insolvency laws, or if any other petition or application for relief under
        any
        federal bankruptcy or state or federal insolvency laws has been filed against
        such Person, or if such Person has failed, suspended business, ceased to
        be
        solvent, called a meeting of its creditors, or has consented to or suffered
        a
        receiver, trustee, liquidator or custodian to be appointed for it or for
        all or
        a significant portion of its assets or affairs; 

      

      (h) the
        transfer of Inventory to Borrower by vendor, supplier or other Person did
        not
        constitute a valid sale and transfer to Borrower of all right, title and
        interest of such Person in the inventory enforceable against all creditors
        of
        and purchasers from such person;

      

      (i) (A)
        Borrower is not the sole owner of all right, title and interest in and to
        such
        Inventory, (B) Borrower does not have a valid ownership interest therein
        free
        and clear of all Liens other than Liens granted under the Loan Documents,
        or
        (C) any offsets, defenses or counterclaims have been asserted or threatened
        in writing against such Inventory;

      

      (j) such
        Inventory is not in good working order or is damaged;

      

      (k) such
        Inventory is not located at a location which is owned by Borrower or is not
        located in a third party warehouse or subject to a Landlord Waiver and
        Consent;

      

      (l) such
        Inventory consists only of packing materials, displays, supplies, parts or
        other
        components or is returned, rejected, repossessed or discontinued product
        or
        Inventory;

      

      (m) such
        Inventory is subject to a bona fide dispute or is or has been classified
        as
        counterfeit or fraudulent; 

      

      (n) such
        Inventory has been sold, assigned, or otherwise encumbered by Borrower except
        pursuant to the Loan Documents; 

      

      
        	 	
                (o) 
                  

              	
                such
                  Inventory is not associated with a documented purchase
                  order;

              

      

      

      (p) such
        Inventory consists of equipment that Borrower offers for rental or that is
        being
        rented from the Borrower or equipment borrowed by Borrower or given to Borrower
        to serve as demonstration equipment;

      

      (q) such
        Inventory constitutes custom Inventory, private-label Inventory, raw materials
        in process, work-in-process, obsolete or unmerchantable Inventory, Inventory
        allocated to current warranty assignments, Inventory that consists of spare
        parts or Inventory subject to a quality assurance hold;

      

      
        	 	
                (r) 
                  

              	
                such
                  Inventory is in transit;

              

      

      

      (s) such
        Inventory is (i) not in Borrower’s possession and control or (ii) outside the
        continental United States;

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (t) such
        Inventory otherwise is not satisfactory to the Lender, as determined in the
        Permitted Discretion of the Lender; 

      

      
        	 	
                (u) 
                  

              	
                such
                  Inventory is or has been utilized as demonstration models or consists
                  of
                  “trunk” stock or inventory; or

              

      

      

      (v) such
        Inventory is subject to recall or withdrawal under applicable FDA Laws or
        otherwise; or

      

      (w) such
        Inventory has been manufactured, produced or distributed under a distribution,
        license or similar agreement that does not permit the Lender to sell or
        otherwise dispose of such Inventory, including, but not being limited to,
        Inventory distributed under an agreement with Medtronic, Inc.

      

      “Eligible
        Receivables”
shall
        mean each Account arising in the ordinary course of Borrower’s business from the
        sale of goods or rendering of services which Lender, in its Permitted
        Discretion, deems an Eligible Receivable unless:

      

      (a) it
        is not
        subject to a valid perfected first priority security interest in favor of
        Lender, subject to no other Lien;

      

      (b) it
        is not
        evidenced by an invoice, statement or other documentary evidence satisfactory
        to
        Lender; provided,
        that
        Lender in its sole discretion may from time to time include as Accounts that
        are
        not evidenced by an invoice, statement or other documentary evidence
        satisfactory to Lender as Eligible Receivables and determine the advance
        rate,
        liquidity factors and reserves applicable to Advances made on any such
        Accounts;

      

      (c) it
        or any
        portion thereof (in which case only such portion shall not be an Eligible
        Receivable) is payable by a beneficiary, recipient or subscriber individually
        and not directly by an Account Debtor;

      

      (d) it
        arises
        out of services rendered or a sale made to, or out of any other transaction
        between Borrower
        or any of its Subsidiaries and, one or more Affiliates of Borrower or any
        of its
        Subsidiaries;

      

      (e) it
        remains unpaid for longer than 120 calendar days
        after the first to occur of the claim date or invoice date;

      

      (f) with
        respect to all Accounts owed by any particular Account Debtor and/or its
        Affiliates, if more than 10% of the aggregate balance of all such Accounts
        owing
        from such Account Debtor and/or its Affiliates remain unpaid for longer than
        120 calendar days
        after the first to occur of the claim date or invoice date;

      

      (g) with
        respect to all Accounts owed by any particular Account Debtor and/or its
        Affiliates, 25% or more of all such Accounts are not deemed Eligible Receivables
        for any reason hereunder (which percentage may, in Lender’s sole discretion, be
        increased or decreased);

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (h) with
        respect to all Accounts owed by any particular Account Debtor and/or its
        Affiliates, if such Accounts exceed 20% of the net collectible dollar value
        of
        all Eligible Receivables at any one time (which percentage may, in Lender’s sole
        discretion, be increased or decreased); 

      

      (i) any
        covenant, agreement, representation or warranty contained in any Loan Document
        with respect to such Account has been breached and remains uncured;

      

      (j) the
        Account Debtor for such Account has commenced a voluntary case under any
        Debtor
        Relief Law or has made an assignment for the benefit of creditors, or a decree
        or order for relief has been entered by a court having jurisdiction in respect
        of such Account Debtor in an involuntary case under any Debtor Relief Law,
        or
        any other petition or application for relief under any Debtor Relief Law
        has
        been filed against such Account Debtor, or such Account Debtor has failed,
        suspended business, ceased to be solvent, called a meeting of its creditors,
        or
        has consented to or suffered a receiver, trustee, liquidator or custodian
        to be
        appointed for it or for all or a significant portion of its assets or affairs,
        or Borrower, in the ordinary course of business, should have known of any
        of the
        foregoing;

      

      (k) it
        arises
        from the sale of property or services rendered to one or more Account Debtors
        outside the continental United States or that have their principal place
        of
        business or chief executive offices outside the continental United
        States;

      

      (l) it
        represents the sale of goods or rendering of services to an Account Debtor
        on a
        bill-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment
        or any other repurchase or return basis or is evidenced by Chattel Paper
        or an
        Instrument of any kind or has been reduced to judgment;

      

      (m) the
        applicable Account Debtor for such Account is any Governmental Authority,
        unless
        rights to payment of such Account have been assigned to Lender pursuant to
        the
        Assignment of Claims Act of 1940, as amended (31 U.S.C. Section 3727, et
        seq. and 41 U.S.C. Section 15, et seq.), or otherwise only if all
        applicable statutes or regulations respecting the assignment of Government
        Accounts have been complied with;

      

      (n) it
        is
        subject to any offset, credit (including any resource or other income credit
        or
        offset) deduction, defense, discount, chargeback, freight claim, allowance,
        adjustment, dispute or counterclaim, or is contingent in any respect or for
        any
        reason;

      

      (o) there
        is
        any agreement with an Account Debtor for any deduction from such Account,
        except
        for discounts or allowances made in the ordinary course of business for prompt
        payment, all of which discounts or allowances are reflected in the calculation
        of the face value of each invoice related thereto, such that only the discounted
        amount of such Account after giving effect to such discounts and allowances
        shall be considered an Eligible Receivable; 

      

      (p) any
        return, rejection or repossession of goods or services related to it has
        occurred;

      

      (q) it
        is not
        payable to Borrower;

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      (r) Borrower
        has agreed to accept or has accepted any non-cash payment for such
        Account;

      

      (s) with
        respect to any Account arising from the sale of goods, the goods have not
        been
        shipped to the Account Debtor or its designee;

      

      (t) with
        respect to any Account arising from the performance of services, the services
        have not been actually performed or the services were undertaken in violation
        of
        any law; or

      

      (u) such
        Account fails to meet such other specifications and requirements which may
        from
        time to time be established by Lender or is not otherwise satisfactory to
        Lender, as determined in Lender’s sole discretion.

      

      “Environmental
        Laws”
shall
        mean, collectively and each individually, the Comprehensive Environmental
        Response, Compensation and Liability Act of 1980, the Superfund Amendment
        and
        Reauthorization Act of 1986, the Resource Conservation and Recovery Act,
        the
        Toxic Substances Control Act, the Clean Air Act, the Clean Water Act, any
        other
“Superfund” or “Superlien” law and all other federal, state and local and
        foreign environmental, land use, zoning, health, chemical use, safety and
        sanitation laws, statutes, ordinances and codes relating to the protection
        of
        the environment and/or governing the use, storage, treatment, generation,
        transportation, processing, handling, production or disposal of Hazardous
        Substances, in each case, as amended, and the rules, regulations, policies,
        guidelines, interpretations, decisions, orders and directives of Governmental
        Authorities with respect thereto.

      

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

      

      “Event
        of Default”
shall
        mean the occurrence of any event set forth in Article VIII.

      

      “Facility
        Cap”
shall
        have the meaning given the term in the Preamble of this Agreement.

      

      “Fair
        Valuation”
shall
        mean the determination of the value of the consolidated assets of a Person
        on
        the basis of the amount which may be realized by a willing seller within
        a
        reasonable time through collection or sale of such assets at market value
        on a
        going concern basis to an interested buyer who is willing to purchase under
        ordinary selling conditions in an arm’s length transaction.

      

      “FDA
        Laws”
shall
        mean all applicable statutes, laws, ordinances, rules and regulations of
        the
        United States Food and Drug Administration and other applicable Governmental
        Authorities with respect to the manufacture, sale, packaging, labeling,
        importation, distribution and marketing of medical devices, including, but
        not
        being limited to, requirements relating to clinical trial and study, premarket
        notification or approval, product and establishment labeling, registration
        and
        listing, product modification, postmarket performance monitoring, adverse
        event
        and complaint reporting, and product recall and withdrawal. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      “FDA
        Filings”
shall
        have the meaning given the term in Section
        5.21.

      

      “Foreign
        Subsidiaries”
shall
        mean RITA-Netherlands, RITA-France and any other subsidiary of RMS that is
        not
        organized under the laws of any state of the United States of America or
        the
        District of Columbia.

      

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

      

      “Goods”
shall
        mean all “goods” (as defined in the UCC) of Borrower (or, if referring to
        another Person, of such other Person), now owned or hereafter acquired, and
        all
        documents of title or other documents representing any of the foregoing,
        and all
        collateral security and guaranties of any kind, now or hereafter in existence,
        given by any Person with respect to any of the foregoing.

      

      “Government Account”
shall
        be defined to mean all Accounts arising out of or with respect to any Government
        Contract.

      

      “Government Contract”
shall
        be defined to mean all contracts with the United States Government or with
        any
        agency thereof, and all amendments thereto.

      

      “Governmental
        Authority”
shall
        mean any federal, state, municipal, national, local or other governmental
        department, court, commission, board, bureau, agency or instrumentality or
        political subdivision thereof, or any entity or officer exercising executive,
        legislative or judicial, regulatory or administrative functions of or pertaining
        to any government or any court, in each case, whether of the United States
        or a
        state, territory or possession thereof, a foreign sovereign entity or country
        or
        jurisdiction or the District of Columbia.

      

      “Guarantor”
shall
        mean, collectively and each individually, all guarantors, if any, of the
        Obligations or any part thereof. 

      

      “Guaranty”
shall
        mean, collectively and each individually, all guarantees executed by Guarantor.
        

      

      “Hazardous
        Substances”
shall
        mean, without limitation, any flammable explosives, radon, radioactive
        materials, asbestos, urea formaldehyde foam insulation, polychlorinated
        biphenyls, petroleum and petroleum products, methane, hazardous materials,
        hazardous wastes, hazardous or toxic substances or related materials as defined
        in or subject to any applicable Environmental Law.

      

      “Healthcare
        Laws”
shall
        mean all applicable statutes, laws, ordinances, rules and regulations of
        any
        Governmental Authority with respect to regulatory matters primarily relating
        to
        patient healthcare, healthcare providers and healthcare services (including
        without limitation (i) Section 1128B(b) of the Social Security Act, as amended,
        (ii) 42 U.S.C. Section 1320a-7(b) (Criminal Penalties Involving Medicare or
        State Health Care Programs), commonly referred to as the “Federal Anti-Kickback
        Statute,” and (iii) the Social Security Act, as amended, Section 1877, 42 U.S.C.
        Section 1395nn (Prohibition Against Certain Referrals), commonly referred
        to as
“Stark Statute”). 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “HIPAA”
shall
        mean the applicable requirements of the Standards for Privacy of Individually
        Identifiable Health Information which were promulgated pursuant to the Health
        Insurance Portability and Accountability Act of 1996.

      

      “HMP”
shall
        have the meaning given such term in the Preamble hereof.

      

      “Inactive
        Subsidiaries”
shall
        mean Horizon Acquisition Corp., a Georgia corporation, Strato/Infusaid, Inc.,
        a
        Massachusetts corporation, and HMP Distribution, Inc., a New York corporation.
        

      

      “Indebtedness”
of
        any
        Person shall mean, without duplication, (a) all items which, in accordance
        with
        GAAP, would be included in determining total liabilities as shown on the
        liability side of the balance sheet of such Person as of the date as of which
        Indebtedness is to be determined, including any capitalized lease which,
        in
        accordance with GAAP would constitute Indebtedness, (b) all indebtedness
        secured
        by any mortgage, pledge, security, Lien or conditional sale or other title
        retention agreement to which any property or asset owned or held by such
        Person
        is subject, whether or not the indebtedness secured thereby shall have been
        assumed, (c) all indebtedness of others which such Person has directly or
        indirectly guaranteed, endorsed (otherwise than for collection or deposit
        in the
        ordinary course of business), discounted or sold with recourse or agreed
        (contingently or otherwise) to purchase or repurchase or otherwise acquire,
        or
        in respect of which such Person has agreed to supply or advance funds (whether
        by way of loan, stock, equity or other ownership interest purchase, capital
        contribution or otherwise) or otherwise to become directly or indirectly
        liable.

      

      “Indemnified
        Person”
shall
        have the meaning given such term in Section
        12.4.

      

      “Initial
        Advance”
shall
        have the meaning given such term in Section
        4.2.

      

      “Insured
        Event”
shall
        have the meaning given such term in Section
        12.4.

      

      “Insurer”
shall
        mean a Person that insures another Person against any costs incurred in the
        receipt by such other Person of services, or that has an agreement with Borrower
        to compensate it for providing services to such Person.

      

      “Inventory”
shall
        mean all “inventory” (as defined in the UCC) of Borrower (or, if referring to
        another Person, of such other Person), now owned or hereafter acquired, and
        all
        documents of title or other documents representing any of the foregoing,
        and all
        collateral security and guaranties of any kind, now or hereafter in existence,
        given by any Person with respect to any of the foregoing.

      

      “Inventory
        Turn”
shall
        mean, for any Test Period, the product obtained when multiplying (i) the
        total
“Cost of Sales” reflected in the Borrower’s income statement during such Test
        Period, (ii) by four, and then dividing that amount by the Average Inventory
        for
        such Test Period.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      “Landlord
        Waiver and Consent”
shall
        mean a waiver/consent in form and substance satisfactory to Lender from the
        owner/lessor of any premises not owned by any Credit Party at which any of
        the
        Collateral is now or hereafter located for the purpose of providing Lender
        access to such Collateral, in each case as such may be modified, amended
        or
        supplemented from time to time.

      

      “Lien”
shall
        mean any mortgage, pledge, security interest, encumbrance, restriction, lien
        or
        charge of any kind (including any agreement to give any of the foregoing,
        any
        conditional sale or other title retention agreement or any lease in the nature
        thereof), or any other arrangement pursuant to which title to the property
        is
        retained by or vested in some other Person for security purposes.

      

      “Loan”
or
        “Loans”
shall
        mean, individually and collectively, all Advances under the Revolving
        Facility.

      

      “Loan
        Documents”
shall
        mean, collectively and each individually, the Agreement, the Notes, the Security
        Documents,
        the
        Stock
        Pledge Agreements, the Lockbox Agreements, the Uniform Commercial Code Financing
        Statements, the Subordination Agreements, the Landlord Waiver and Consents,
        the
        Borrowing Certificates and all other agreements, documents, instruments and
        certificates heretofore or hereafter executed or delivered to Lender in
        connection with any of the foregoing or the Loans, as the same may be amended,
        modified or supplemented from time to time.

      

      “Lockbox
        Accounts”
shall
        have the meaning given such term in Section
        2.5.

      

      “Lockbox
        Agreement”
shall
        have the meaning given such term in Section
        2.5.

      

      “Lockbox
        Bank”
shall
        have the meaning given such term in Section
        2.5.

      

      “Lockbox
        Non-Compliance Fee”
shall
        mean the fee payable to the Lender under the terms and conditions set forth
        in
Section
        2.5.

      

      “Master
        Subordination Agreement”
shall
        mean that certain agreement entered into between Borrower, Lender as Senior
        Lender and Atlas Master Fund, Ltd., as Subordinated Lender, dated as of the
        Closing Date, as such may be modified, amended or supplemented from time
        to
        time.

      

      “Material
        Adverse Effect”
or
        “Material
        Adverse Change”
shall
        mean any event, condition or circumstance or set of events, conditions or
        circumstances or any change(s) which (i) has, had or would reasonably be
        likely
        to have any material adverse effect upon or change in the validity or
        enforceability of any Loan Document, (ii) has been or would reasonably be
        likely
        to be material and adverse to the value of any of the Collateral, to the
        priority of the Lender’s security interest in the Collateral, or to the
        business, operations, properties, assets, liabilities or condition of any
        Credit
        Party, either individually or taken as a whole, or (iii) has materially impaired
        or would reasonably be likely to materially impair the ability of any Credit
        Party to pay any portion of the Obligations or to otherwise perform the
        Obligations or to consummate the transactions under the Loan Documents executed
        by such Person. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      “Minimum
        Termination Fee”
shall
        mean (for the time period indicated) the amount equal to (i) Three Percent
        (3%)
        of the Facility Cap, if the effective date of such termination is after the
        Closing Date but before the first (1st) anniversary of the Closing Date;
        (ii)
        Two Percent (2%) of the Facility Cap, if the effective date of such termination
        is on or after the first (1st) anniversary
        of the Closing Date but before the second (2nd) anniversary of the Closing
        Date
        and (iii) one (1%) of the Facility Cap, if the effective date of such
        termination is on or after the second (2nd) anniversary
        of the Closing Date.

      

      “Non-Compliance
        Fee”
shall
        mean a daily fee payable by Borrower equal to the greater of (i) $500, or
        (ii)
        five one-hundredths of one percent (0.05%) of the outstanding principal balance
        of the Obligations as of any date of determination. 

      

      “Note”
        or “Notes”
shall
        mean any promissory note or notes issued pursuant to Section
        2.12.
        

      

      “Obligations”
shall
        mean all present and future obligations, Indebtedness and liabilities of
        the
        Credit Parties to Lender at any time and from time to time of every kind,
        nature
        and description, direct or indirect, secured or unsecured, joint and several,
        absolute or contingent, due or to become due, matured or unmatured, now existing
        or hereafter arising, contractual or tortious, liquidated or unliquidated,
        including but not limited to under any of the Loan Documents or otherwise
        and,
        including, without limitation, all applicable fees, charges and expenses
        and/or
        all amounts paid or advanced by Lender on behalf of or for the benefit of
        any
        Credit Party for any reason at any time, including in each case obligations
        of
        performance as well as obligations of payment and interest that accrue after
        the
        commencement of any proceeding under any Debtor Relief Law by or against
        any
        such Person.

      

      “Offer”
shall
        have the meaning given such term in Section
        6.13.

      

      “Option
        Period”
shall
        have the meaning given such term in Section
        6.13.

      

      “Payment
        Office”
shall
        mean initially the address set forth beneath Lender’s name on the signature page
        of the Agreement, and thereafter, such other office of Lender, if any, which
        it
        may designate by notice to Borrower Agent to be the Payment Office.

      

      “Permit”
shall
        mean collectively all licenses, leases, powers, permits, franchises,
        certificates, authorizations, approvals, certificates of need, provider numbers
        and other rights.

      

      “Permitted
        Discretion”
shall
        mean a determination or judgment made by Lender in good faith in the exercise
        of
        reasonable (from the perspective of a secured lender) business
        judgment.

      

      “Permitted
        Indebtedness”
shall
        have the meaning given such term in Section
        7.2.

      

      “Permitted
        Liens”
shall
        have the meaning given such term in Section
        7.3.

       

      “Permitted
        Subordinated Debt”
shall
        mean indebtedness incurred by Borrower from Atlas Master Fund, Ltd. and subject
        to the Master Subordination Agreement and such other indebtedness approved
        by
        Lender in writing and which is subordinated to Borrower’s indebtedness owed to
        Lender pursuant to a Subordination Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      “Person”
shall
        mean an individual, a partnership, a corporation, a limited liability company,
        a
        business trust, a joint stock company, a trust, an unincorporated association,
        a
        joint venture, a Governmental Authority or any other entity of whatever
        nature.

      

      “Prime
        Rate”
shall
        mean a fluctuating interest rate per annum equal at all times to the rate
        of
        interest announced publicly from time to time by Citibank, N.A. as its base
        rate; provided,
        that
        such rate is not necessarily the best rate offered to its customers, and,
        should
        Lender be unable to determine such rate, such other indication of the prevailing
        prime rate of interest as may reasonably be chosen by Lender; provided,
        that
        each change in the fluctuating interest rate shall take effect simultaneously
        with the corresponding change in the Prime Rate.

      

      “Receipt”
shall
        have the meaning given such term in Section
        12.5.

      

      “Released
        Parties”
shall
        have the meaning given such term in Section
        12.11.

      

      “Releasing
        Parties”
shall
        have the meaning given such term in Section
        12.11.

      

      “Revolver
        Termination”
shall
        have the meaning given such term in Section
        11.1(b).

      

      “Revolving
        Facility Maturity Date”
shall
        have the meaning given such term in Section
        2.2.

      

      “RITA
        France”
shall
        have the meaning given such term in the Preamble hereof.

      

      “RITA
        Netherlands”
shall
        have the meaning given such term in the Preamble hereof.

      

      “RMS”
shall
        have the meaning given such term in the Preamble hereof.

      

      “SEC”
shall
        mean the United States Securities and Exchange Commission.

      

      “Security
        Documents”
shall
        mean the Notes, this Agreement, the Stock Pledge Agreements, Collateral Patent,
        Trademark, and Copyright Assignment, the Lockbox Agreements, Uniform Commercial
        Code Financing Statements and all other documents or instruments necessary
        to
        create or perfect the Liens in the Collateral, as such may be modified, amended
        or supplemented from time to time.

      

      “Solvency
        Certificate”
shall
        have the meaning given such term in Section
        4.1(d).

      

      “Stock
        Pledge Agreement”
shall
        mean, collectively and each individually, each Stock Pledge Agreement by
        and
        between any Credit Party and Lender executed in connection herewith, in each
        case as such may be modified, amended or supplemented from time to
        time.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      “Subordination
        Agreement”
shall
        mean, collectively and each individually, the Master Subordination Agreement,
        and any other subordination agreements to which Lender and other service
        providers or creditors of any Borrower are a party.

      

      “Subsidiary”
shall
        mean, (i) as to Borrower, any Person in which more than 50% of all equity,
        membership, partnership or other ownership interests is owned directly or
        indirectly by Borrower or one or more of its Subsidiaries, and (ii) as to
        any
        other Person, any Person in which more than 50% of all equity, membership,
        partnership or other ownership interests is owned directly or indirectly
        by such
        Person or by one or more of such Person’s Subsidiaries.

      

      “Term”
shall
        mean the period commencing on the date set forth on the first page hereof
        and
        ending on the date that is the earlier of (i) three (3) years after the Closing
        Date or (ii) thirty (30) days before the maturity date of the Indebtedness
        which
        is the subject of the Master Subordination Agreement.

      

      “Termination
        Date”
shall
        have the meaning given such term in Section
        11.1.

      

      “Transaction”
shall
        have the meaning given such term in Section
        6.13.

      

      “Transferee”
shall
        have the meaning given such term in Section
        12.2.

      

      “UCC”
shall
        mean the Uniform Commercial Code as in effect in the State of Maryland from
        time
        to time.

      

      “Unused
        Line Fee”
shall
        have the meaning given such term in Section
        3.2.

      

      “Warehouse
        Waiver and Consent”
shall
        mean a waiver/consent in form and substance satisfactory to Lender from any
        warehouseman, fulfillment house or other person owning a facility not owned
        by
        Borrower at which any Inventory is now or hereafter located for the purpose
        of
        providing Lender access to such Inventory, in each case as may be modified,
        amended or supplemented from time to time.EXECUTION
        DOCUMENT

    

     

    SENIOR
      SUBORDINATION AGREEMENT

     

    This
      SENIOR
      SUBORDINATION AGREEMENT,
      dated as
      of January
      31, 2006 (this “Agreement”), by and among ATLAS
      MASTER FUND, LTD.,
      a
      Cayman Island Company (the “Junior Lender”), CAPITALSOURCE
      FINANCE LLC,
      a
      Delaware limited liability company (the “Senior Lender”) and RITA
      MEDICAL SYSTEMS, INC.,
      a
      Delaware corporation (the “Borrower”).

     

    W
      I T N E S S E T H
      :

     

    WHEREAS,
      the
      Senior Lender and the Borrower are parties to a certain Revolving Credit and
      Security Agreement dated as of January 31, 2006 (as amended, restated,
      supplemented, replaced or otherwise modified from time to time, the “Senior Loan
      Agreement”) under which the Senior Lender make loans, advances and other
      financial accommodations to Borrower;

     

    WHEREAS,
      pursuant
      to the Senior Loan Agreement, Borrower has granted in favor of the Senior Lender
      a lien on and security interest in (collectively, the “Senior Lien”)
      substantially all of the assets and property of Borrower as security for their
      obligations to the Senior Lender under the Senior Loan Agreement; 

     

    WHEREAS,
      the
      Junior Lender and Borrower are parties to a certain Securities Purchase
      Agreement dated as of August 5, 2005 (as amended, supplemented or otherwise
      modified from time to time, the “Junior Agreement”) under which the Junior
      Lender has purchased certain senior convertible notes of Borrower which are
      convertible into shares of Borrower’s common stock, par value $0.001 per share
      (collectively, the “Junior Note”);

     

    WHEREAS, it
      is a
      condition precedent to the effectiveness of the Senior Loan Agreement that,
      among other things, the Junior Lender shall have executed and delivered this
      Agreement subordinating
      its rights with respect to the Junior Obligations (as defined below) to the
      rights of the Senior Lender with respect to the Senior Obligations
      (as
      defined below) and that Borrower
      shall
      have acknowledged this Agreement.

     

    NOW,
      THEREFORE,
      in
      consideration of the promises contained herein and to induce the Senior Lender
      to enter into the Senior Loan Agreement, the Junior Lender hereby agrees as
      follows:

     

    SECTION
      1.   Definitions.
      Capitalized terms used but not defined herein shall have the meanings given
      to
      them in the Senior Loan Agreement, and the rules of usage set forth therein
      shall apply hereto.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SECTION
      2.   Subordination.

     

    (a)
        All
      Junior Obligations, and all claims, demands rights and remedies of the Junior
      Lender with respect thereto, are and shall continue at all times to be subject,
      subordinate and junior in right of payment and priority to the Senior
      Obligations. The term “Junior Obligations,” as used in this Agreement, shall
      mean and include the principal amount of and the premium, if any, and interest
      on all indebtedness and other monetary obligations of Borrower to the Junior
      Lender under the Junior Agreement and the Junior Note, together with all fees,
      costs and expenses relating thereto, whether direct or contingent, now or
      hereafter existing, due or to become due to, or held or to be held by the Junior
      Lender, whether created directly or acquired by assignment or otherwise,
      including, without limitation, all principal of and premium, if any, and
      interest on the Junior Note (including extensions, modifications, refinancings,
      renewals and refundings thereof) and any damages payable upon a Conversion
      Failure (as such term is defined in the Junior Note). The term “Senior
      Obligations,” as used in this Agreement, shall mean and include the principal
      amount of and the premium, if any, and interest (including, without limitation,
      all interest on the Senior Obligations at the rate stated in the Senior Loan
      Agreement from the date of the filing by or against Borrower of a petition
      under
      any bankruptcy, insolvency or similar law to the date of the indefeasible
      payment in full of the Senior Obligations (“Postpetition Interest”) and all
      other amounts on all of the Obligations including, without limitation, all
      fees,
      costs and expenses relating thereto, whether direct or contingent, now or
      hereafter existing, due or to become due to, or held or to be held by, the
      Senior Lender, whether created directly or acquired by assignment or otherwise
      (including extensions, modifications, refinancings, renewals and refundings
      thereof).

     

    (b)
        Except
      for the payments specified in Section 2(c), Borrower shall not pay, and the
      Junior Lender shall not receive, demand or accept, either directly or
      indirectly, any payment on the Junior Obligations, whether as principal,
      premium, interest or otherwise, unless and until all the Senior Obligations
      including, without limitation, all Postpetition Interest, have been indefeasibly
      paid in full in cash, and the obligation (the “Commitment”) of the Senior Lender
      to make loans and advances under the Senior Loan Agreement has been
      terminated.

     

    (c)  Commencing
      on June 15, 2006 and continuing on each June 15 and December 15 thereafter,
      the
      Junior Lender may receive, accept and retain regularly
      scheduled semi-annual interest
      payments under the Junior Note at a rate per annum
      equal to
      6.5% commencing, unless:

     

    (A)(i)
      an
      Event of Default has occurred and is continuing under Section 8.1(a) of the
      Senior Loan Agreement (a “Senior Payment Default”) and (ii) the Junior Lender
      has not received a written notice from the Senior Lender informing the Junior
      Lender that such Senior Payment Default has been waived or cured;
      or

     

    (B)(i)
      a
      Default or an Event of Default has occurred and is continuing under the Senior
      Loan Agreement (other than under Section 8.1(a) thereof)(a “Senior Non-Payment
      Default”) with respect to which the Junior Lender has received from the Senior
      Lender a notice (a “Senior Non-Payment Default Notice”) prohibiting the Junior
      Lender from receiving, collecting or accepting any of the foregoing
      payments and
      from
      commencing any Enforcement Action (as defined below) and (ii) the Junior Lender
      has not received a written notice from the Senior Lender informing the Junior
      Lender that such Senior Non-Payment Default has been waived or cured.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    Nothing
      in this subsection (c) shall prohibit the accrual (but not the payment to the
      Junior Lender) of interest on the Junior Obligations at the default rate in
      accordance with the terms of the Junior Agreement or the Junior Note following
      the occurrence of an event of default under the Junior Agreement or the Junior
      Note.

     

    (d)
        If
      the
      Junior Lender shall receive any payment or prepayment (including from any
      account debtor under any accounts receivable of Borrower) on the Junior
      Obligations that it is not entitled to receive under this Agreement, the Junior
      Lender will hold any amount so received in trust for the Senior Lender and
      shall, as soon as possible, turn over such payment to the Senior Lender in
      the
      form received (together with any necessary endorsements) to be applied to the
      Senior Obligations.

     

    (e)
        Unless
      and until the Senior Obligations shall have been indefeasibly paid in full
      in
      cash and the Commitment has been terminated, the Junior Lender will not
take
      any
      Enforcement Action. For purposes hereof, “Enforcement Action” shall mean (a) any
      acceleration of the Junior Obligations (including
      the exercise of any right of redemption under Section 4(b) of the Junior
      Note),
      (b) the
      filing or initiating, or joining with any other person in filing or initiating,
      an Insolvency Event against, Borrower, or (c) any judicial proceeding or other
      action initiated or taken by Junior Lender, or by Junior Lender in concert
      with
      other persons against Borrower, or any other person to collect the Junior
      Obligations, to foreclose any lien or security interest securing the Junior
      Obligations, execute, levy upon or dispose of any of the Collateral, or
      otherwise enforce the rights or remedies of the Junior Lender under the Junior
      Agreement, the Junior Note or applicable law with respect to the Junior
      Obligations; provided, however, that the declaration of an event of default
      under the Junior Note shall not be deemed to be an Enforcement Action.
      Notwithstanding the foregoing, on or after July 31, 2006, the Junior Lender
      may
      commence or otherwise proceed with an Enforcement Action (i) brought with the
      written consent of the Senior Lender or (ii) an event of default has occurred
      and is continuing under Section 4(a) of the Junior Note (a “Junior Default”),
      written notice of which the Junior Lender has delivered to the Senior Lender
      (the “Junior Default Notice”), and thirty (30) days (or three hundred sixty
      (360) days from the date of delivery by the Senior Lender of a Senior
      Non-Payment Default Notice if delivered during such thirty-day period) have
      expired since the date of the Senior Lender’s receipt of the Junior Default
      Notice and such Junior Default has not been cured or waived during such time
      periods. Any proceeds of any Enforcement Action by the Junior Lender shall
      be
      paid or delivered directly to the Senior Lender for application to the Senior
      Obligations until the Senior Obligations shall have been indefeasibly paid
      in
      full in cash and the Commitment has been terminated. The Junior Lenders shall
      not take any action with respect to the Collateral if the Senior Lender shall
      have given prior written notice to the Junior Lender that such action would,
      in
      the reasonable credit judgment of the Senior Lender, impair the proceeds that
      could be obtained from such Collateral.
      For
      purposes of this Agreement, the term “Insolvency Event” shall mean, with respect
      to Borrower, the occurrence of any of the following: (i) Borrower shall be
      adjudicated insolvent or bankrupt or institutes proceedings to be adjudicated
      insolvent or bankrupt, or shall generally fail to pay or admit in writing its
      inability to pay its debts as they become due,
      (ii)
      Borrower shall seek dissolution or reorganization or the appointment of a
      receiver, trustee, custodian, or liquidator for it or a substantial portion
      of
      its property, assets or business or to effect a plan or other arrangement with
      its creditors, (iii) Borrower shall make a general assignment for the benefit
      of
      its creditors, or consent to or acquiesce in the appointment of a receiver,
      trustee, custodian, or liquidator for a substantial portion of its property,
      assets or business, (iv) Borrower shall file a voluntary petition under any
      bankruptcy, insolvency, or similar law, (v) Borrower shall take any corporate
      or
      similar act in furtherance of any of the foregoing, or (vi) Borrower, or a
      substantial portion of its property, assets or business, shall become the
      subject of an involuntary proceeding or petition for (A) its dissolution or
      reorganization or (B) the appointment of a receiver, trustee, custodian or
      liquidator , and (I) such proceeding shall not be dismissed or stayed within
      sixty (60) days, (II) such receiver, trustee, custodian or liquidator shall
      be
      appointed or (III) such Person fails to contest in a timely or appropriate
      manner any such proceeding or petition. 

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    (f)
        Upon
      the
      occurrence of any Insolvency Event of Borrower or in the event of a sale of
      all
      or substantially all of the assets, or any other marshaling of the assets and
      liabilities, or any recapitalization, refinancing or reorganization, of
      Borrower, the provisions of this Agreement shall continue to govern the relative
      rights and priorities of the Senior Obligations and Junior Obligations as
      provided herein and the Senior Obligations shall first be indefeasibly paid
      in
      full in cash and the Commitment terminated before the Junior Lender shall be
      entitled to receive any money, distributions or other assets in any such
      proceeding even if all or part of the Senior Obligations or the liens and
      security interests securing the Senior Obligations are subordinated, set aside,
      avoided or disallowed in connection with any Insolvency Event or other
      proceeding or situation noted above. In
      any
      such event, the Junior Lender shall demand, sue for, collect or receive every
      such payment or distribution of cash, property, stock or obligations, give
      acquittance therefor, file claims and proofs of claim in any statutory or
      nonstatutory proceeding, exercise the rights of the Junior Lender arising under
      or relating to the Junior Agreement or the Junior Note and vote the claim of
      the
      Junior Lender under the Junior Agreement or the Junior Note in its sole
      discretion in connection with any such event, including, without limitation,
      the
      right to participate in any composition of creditors and to vote at creditors’
meetings for the election of trustees, acceptances of plans of reorganization
      and any other matter upon which the Junior Lender would be otherwise entitled
      to
      vote; provided, that if the Junior Lender votes its claim, the Junior Lender
      shall not, without the prior written consent of the Senior Lender, vote to
      accept a plan of liquidation, reorganization, arrangement, composition or
      extension that does not provide for the payment, refinancing, restatement or
      recognition in full of all of the Senior Obligations. In the event that the
      Junior Lender shall fail to take any such action following the written request
      of the Senior Lender or fail to vote its claim in any proceedings prior to
      5
      days before the expiration of the time to vote, the Senior Lender may (but
      shall
      not be obligated) demand, sue for, collect or receive every such payment or
      distribution of cash, property, stock or obligations, give acquittance therefor,
      file claims and proofs of claim in any statutory or nonstatutory proceeding,
      exercise the rights of the Junior Lender arising under or relating to the Junior
      Agreement or the Junior Note and vote the claim of the Junior Lender under
      the
      Junior Agreement or the Junior Note in its sole discretion in connection with
      any such event, including, without limitation, the right to participate in
      any
      composition of creditors and to vote at creditors’ meetings for the election of
      trustees, acceptances of plans of reorganization and any other matter upon
      which
      the Junior Lender would be otherwise entitled to vote. In
      such
      an event, the Junior Lender hereby irrevocably authorizes the Senior Lender
      and
      grants to the Senior Lender an exclusive power of attorney (which power of
      attorney is coupled with an interest and is irrevocable), but without imposing
      any obligation upon the Senior Lender, to demand, sue for, collect or receive
      every such payment or distribution of cash, property, stock or obligations,
      to
      give acquittance therefor, to file claims and proofs of claim in any statutory
      or nonstatutory proceeding, to exercise the rights of the Junior Lender arising
      under or relating to the Junior Agreement or the Junior Note and to vote the
      claim of the Junior Lender under the Junior Agreement or the Junior Note in
      its
      sole discretion in connection with any such event, including, without
      limitation, the right to participate in any composition of creditors and to
      vote
      at creditors’ meetings for the election of trustees, acceptances of plans of
      reorganization and any other matter upon which the Junior Lender would be
      otherwise entitled to vote. In furtherance of the foregoing, at the request
      of
      the Senior Lender, the Junior Lender shall execute and deliver to the Senior
      Lender a separate power of attorney and such further powers and instruments
      as
      the Senior Lender may request to enable the Senior Lender to enforce its rights
      under this subsection. 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (g)
        The
      Senior Lender may, at any time and from time to time, without the consent of
      or
      notice to the Junior Lender, without incurring responsibility or liability
      to
      the Junior Lender and without impairing or releasing any right or remedy of
      the
      Senior Lender hereunder:

     

    
      	(i)
                	
              change
                the manner, place or terms of payment of, change or extend the time
                of
                payment of, or renew, increase or alter the Senior Obligations, or
                waive
                defaults under or amend, modify, alter or waive the provisions of
                the
                Senior Loan Agreement or any other Loan Document in any manner (except
                as
                otherwise provided by this Agreement) or enter into or amend in any
                manner
                or waive defaults under any other agreement relating to the Senior
                Obligations;

            

    

     

    
      	(ii)
                	
              sell,
                exchange, release or otherwise deal with any property by whomsoever
                at any
                time pledged to secure, or howsoever securing, the Senior
                Obligations;

            

    

     

    
      	(iii)
                	
              release
                any Person liable in any manner for the payment or collection of
                any of
                the Senior Obligations;

            

    

     

    
      	(iv)
                	
              exercise
                or refrain from exercising any rights against Borrower or any other
                Person; or

            

    

     

    
      	(v)
                	
              apply
                any sums by whomsoever paid or however realized to the Senior
                Obligations.

            

    

     

    Notwithstanding
      any provision of this Agreement to the contrary, the Senior Lender agrees not
      to
      increase the outstanding aggregate principal amount of the Senior Obligations
      to
      an aggregate amount greater than, or to refinance the Senior Obligations so
      that
      the outstanding aggregate principal amount thereof exceeds, an
      amount
      equal to (i) the amount of $10,000,000 plus
      (ii)
      any amount of post-petition financing approved by the court in a bankruptcy
      proceeding. The
      immediately preceding sentence shall not be construed to limit or otherwise
      affect the Senior Lender’s right to accrue and receive payment of interest
      (including at the default rate and
      including Postpetition Interest),
      fees
      or other charges comprising part of the Senior Obligations.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (h)
        The
      Junior Lender waives notice of acceptance of this Agreement.

     

    (i)
        The
      Junior Lender will cause each note or other instrument that evidences any Junior
      Obligations (including, without limitation, the Junior Agreement and the Junior
      Note) to bear upon its face a statement or legend to the effect that such note
      or other instrument is subordinated to the Senior Obligations in the manner
      and
      to the extent set forth in this Agreement. The Junior Lender shall mark its
      books and records, including any financial statements, to show that the Junior
      Obligations are so subordinated to the Senior Obligations.

     

    (j)
        The
      Junior Lender will not (i)
      increase
      the per annum rate of interest applicable to the Junior Obligations,
(ii)
      make any
      covenant, event of default or other provision under the Junior Agreement or
      the
      Junior Note more restrictive than such covenants, events of default and
      provisions thereunder as of the date hereof, (iii) accelerate the date of any
      regularly scheduled fees, interest or principal payments on the Junior
      Obligations, (iv) shorten the final maturity date of the Junior Obligations,
      or
      (v) increase or decrease the principal amount of the Junior Obligations. The
      Borrower and Junior Lender will give Senior Lender at least ten (10) business
      days prior notice before any material amendment, modification or supplement
      of
      or to the Junior Agreement or the Junior Note, which notice shall be accompanied
      by a copy of the proposed amendment, modification or supplement. The Borrower
      and Junior Lender agree that they will not amend, modify or supplement the
      Junior Agreement or the Junior Note, if Senior Lender notifies them that the
      proposed amendment, modification or supplement would result in a default under
      the Senior Loan Documents or this Section 2(j).

     

    (k)
        Subject
      to the indefeasible payment in full of the Senior Obligations in cash and the
      termination of the Commitment, the Junior Lender shall be subrogated to the
      Senior Lender’s rights to receive payments or distributions in cash or property
      applicable to the Senior Obligations, and no payment or distribution made to
      the
      Senior Lender by virtue of this Agreement that otherwise would have been made
      to
      the Junior Lender shall be deemed to be a payment by Borrower on account of
      the
      Junior Obligations.

     

    (l)
        The
      Junior Lender will not sell, assign, transfer or otherwise dispose of all or
      any
      part of, or any interest in, the Junior Obligations to any Person without having
      first obtained (i) such Person’s agreement in writing to be bound as the
      Junior Lender’s successor by the terms of this Agreement or, in the case of an
      interest in the Junior Obligations, an acknowledgment by such interest holder
      of
      the terms hereof, or (ii) the Senior Lender’s prior written consent (which
      consent shall not be unreasonably withheld by the Senior Lender).

     

    (m)
        The
      Junior Lender agrees that it will not exercise any right of setoff it may have
      against the Junior Obligations in respect of any obligation owed by the Junior
      Lender to Borrower.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (n)
        In
      the
      event Borrower shall become subject to a case under the Bankruptcy Code, the
      Junior Lender agrees that the Senior Lender may permit or consent to the use
      of
      cash collateral or provide (or permit another Person to provide) financing
      to
      Borrower under either Section 363 or Section 364 of the Bankruptcy Code in
      such
      amounts and on such terms and conditions as the Senior Lender may decide in
      its
      sole discretion and, in connection therewith, the Senior Lender may permit
      Borrower to enter into cash collateral or financing arrangements and to grant
      to
      the Senior Lender or any other Person providing post-petition financing liens
      and security interests upon the Collateral (and the Junior Lender shall not
      object to Borrower entering into such arrangements or granting such liens and
      security interests), which liens and security interests (i) shall secure payment
      of all Senior Obligations (whether such Senior Obligations arose prior to the
      commencement of the case under the Bankruptcy Code or at any time thereafter)
      if
      such financing is provided by the Senior Lender or all financing provided by
      such other lender during such case if provided by a lender other than the Senior
      Lender and (ii) shall be superior in priority to any liens and security
      interests securing the Junior Obligations. The Junior Lender agrees not to
      assert any right it may have to “adequate protection” of its interest, if any,
      in any of the Collateral in any case under the Bankruptcy Code and agrees that
      it will not seek to have the automatic stay lifted, modified or annulled with
      respect to any Collateral without the prior written consent of the Senior
      Lender, and agrees not to take any action during any such case that would
      reasonably be expected to adversely affect the Senior Lender’s rights or
      interests in any Collateral under this Agreement or otherwise. In connection
      with any of the foregoing, the Junior Lender agrees adequate notice to the
      Junior Lender shall be deemed to have been given to the Junior Lender if the
      Junior Lender receives notice at least five (5) Business Days prior to the
      hearing held by the applicable
      bankruptcy court
      to
      consider entry of an order approving such use or financing, provided
      that
      nothing in this subsection shall be deemed to entitle the Junior Lender to
      any
      notice not required by the Bankruptcy Code. For
      purposes of this subsection, notice of a proposed financing or use of cash
      collateral shall be deemed given when made in the manner prescribed by this
      Agreement, or as the applicable
      bankruptcy court
      may
      approve, or, actual notice is given to the Junior Lender or its counsel,
      whichever is soonest.

     

    (o)
        All
      liens, pledges, and security interests of any nature upon or in any Collateral
      held by the Junior Lender or any other Person for the benefit of the Junior
      Lender shall be and are hereby made inferior and junior to the liens, pledges
      and security interests of any nature upon or in any Collateral held by or in
      favor of the Senior Lender, regardless of the failure to perfect or the order
      or
      manner of perfection of any such liens, pledges and security interests. The
      priorities set forth in this Agreement are applicable irrespective of any
      priority available to the Senior Lender or the Junior Lender under contract
      or
      applicable law or any representation or warranty of Borrower to the contrary
      in
      any agreement, instrument, or other document to which the Junior Lender is
      a
      party.

     

    (p)
        The
      Senior Lender may take any judicial or nonjudicial action, including any action
      to enforce its liens on or security interests in any or all of the Collateral,
      including, without limitation, to foreclose, execute, levy upon, or collect
      or
      dispose of any or all of the Collateral as it shall determine in its sole and
      exclusive judgment.

     

    (q)
        The
      Senior Lender (to the exclusion of the Junior Lender) shall have (whether or
      not
      any default or event of default under the Senior Loan Agreement, the Junior
      Agreement, the Junior Note, or any agreement relating thereto shall have
      occurred and be continuing, and both before and after the occurrence of any
      Insolvency Event of Borrower) the sole and exclusive right to administer,
      enforce and consent to all matters in respect of the Collateral, including
      the
      right (A) to release, or direct or consent to the release of, with or
      without consideration, the Collateral from the lien of the Senior Loan Agreement
      or the Junior Note, and (B) to direct or consent to the sale, transfer,
      lease, or other disposition of the Collateral, the foreclosure or forbearance
      from foreclosure in respect of the Collateral (including, without limitation,
      seeking or not seeking relief from any stay against foreclosure in respect
      of
      the Collateral upon the occurrence of any Insolvency Event), and the acceptance
      of the Collateral in full or partial satisfaction of the Senior
      Obligations.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    (r)
        Upon
      the
      sale of any Collateral by or on behalf of the Senior Lender, the Junior Lender
      shall be deemed to have consented (and does hereby consent) to such sale and
      to
      have released (and does hereby release) any lien in the Collateral being sold
      in
      such sale and shall, at the request of the Senior Lender, take all action and,
      if required, execute and deliver all documents requested by the Senior Lender
      in
      connection therewith. The Junior Lender hereby appoints and constitutes the
      Senior Lender as its attorney-in-fact and authorizes the Senior Lender to make
      any payment on or take any act necessary or desirable to protect or preserve
      any
      of the Collateral. This power of attorney is coupled with an interest and is
      irrevocable.

     

    (s)
        The
      Junior Lender agrees not to seek to avoid, contest or bring (or join in) any
      action or proceeding to contest the validity of any rights of the Senior Lender
      with respect to the Collateral, or the validity or reasonableness of any actions
      taken or omitted to be taken by the Senior Lender hereunder or in connection
      herewith, under the Senior Loan Agreement or under any other Loan Document,
      or
      in respect of any of the Collateral including, without limitation, (i) the
      timing, method, or manner of collecting, disposing of or liquidating any of
      the
      Collateral, (ii) the terms, including the price and percentage of
      consideration received in cash, of any such disposition or liquidation, or
      (iii) the failure to dispose of or liquidate any of the Collateral. Without
      limitation of the foregoing, the Junior Lender hereby waives, to the fullest
      extent permitted by law, (A) any right under Section 9-615(a) of the Code
      with respect to the application of disposition proceeds to the Senior
      Obligations, (B) any right to notice and objection under Section 9-620 of
      the Code, promptness, diligence, notice of acceptance, and any other notice
      with
      respect to any of the obligations under the Junior Agreement or the Junior
      Note,
      and (C) any requirement that the Senior Lender exhaust any right or take
      any action against Borrower, any other Person, the Collateral, or any other
      collateral. In addition, the Junior Lender agrees that the Senior Lender shall
      have no obligation to marshal any Collateral or to seek recourse against or
      satisfaction of any of the Senior Obligations from one source before seeking
      recourse against or satisfaction from another source. The Junior Lender further
      agrees that the net cash proceeds resulting from the Senior Lender’s exercise of
      any right to liquidate all or substantially all of the Collateral, including
      any
      and all Collections (after deducting all of the Senior Lender’s expenses related
      thereto), may be applied by the Senior Lender to such of the Senior Obligations
      and in such order as the Senior Lender may elect in its sole and absolute
      discretion, whether due or to become due. The Junior Lender further agrees
      that
      all of the Senior Lender’s remedies under the Loan Documents shall be
      cumulative, may be exercised simultaneously against any Collateral and either
      Loan Party or in such order and with respect to such Collateral or such Loan
      Party as the Senior Lender may deem desirable, and are not intended to be
      exhaustive.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    (t)
        Notwithstanding
      the lack of perfection of any of the liens or security interests of the Senior
      Lender with respect to any or all of the Collateral or any priority in time
      of
      perfection of any of the liens or security interests of the Junior Lender over
      the liens or security interests of the Senior Lender with respect to any or
      all
      of the Collateral, the liens and security interests of the Senior Lender with
      respect to the Collateral shall be superior and prior in right of payment and
      enforcement to the liens and security interests of the Junior Lender, whether
      now existing or hereinafter arising, with respect to the
      Collateral.

     

    (u)
        Notwithstanding
      any provision of this Agreement to the contrary, this Agreement shall not limit
      the right of the Junior Lender to exercise any right of conversion set forth
      in
      Section 3 of the Junior Note and the exercise thereof shall not be considered
      an
      Enforcement Action; provided, that the payment of
      any
      damages payable upon a Conversion Failure (as such term is defined in the Junior
      Note) shall subject to the provisions of this Agreement.

     

    (v)
        
      Notwithstanding any provision of this Agreement to the contrary, this Agreement
      shall not limit the right of the Junior Lender to receive any Reorganized
      Securities. For purposes hereof, “Reorganized Securities” shall mean securities
      of Borrower or any other Person (including those of Borrower as reorganized)
      issued to the Junior Lender in respect of all or a part of the Junior
      Obligations and provided for by a plan of reorganization in a proceeding under
      the Bankruptcy Code or in connection with an Insolvency Event of Borrower,
      provided, that (i) such securities are (a) equity securities or (b) debt
      securities subordinated to the Senior Obligations (and any debt securities
      received by the holders of the Senior Obligations in such proceeding) at least
      to the same extent as the Junior Obligations are subordinated to the Senior
      Obligations pursuant to this Agreement and (ii) such securities are authorized
      by a court of competent jurisdiction in a final order or decree which, in the
      case of debt securities, gives effect to this proviso and the subordination
      of
      such debt securities to the Senior Obligations (and any debt securities received
      by the holders of the Senior Obligations in such proceeding) on the terms set
      forth in this Agreement.

     

    SECTION
      3.   Further
      Assurances.
      The
      Junior Lender shall, at any time and from time to time, at Borrower’s expense,
      promptly execute and deliver all further instruments and documents and take
      all
      further action that the Senior Lender may request to protect any right or
      interest granted or purported to be granted hereby or to enable the Senior
      Lender to exercise and enforce its rights and remedies hereunder.

     

    SECTION
      4.   Obligations
      Unimpaired.
      Nothing
      in this Agreement shall impair as between Borrower, on the one hand, and the
      Senior Lender or the Junior Lender, on the other hand, the obligations of
      Borrower to the Senior Lender or the Junior Lender, as the case may
      be.

     

    SECTION
      5.   Termination;
      Reinstatement. (a)
      This
      Agreement shall terminate and cease to be of any further force or effect ninety
      (90) days after the later of (i)
      the
      termination of the Commitment and (ii) the indefeasible payment in full in
      cash
      of the Senior Obligations.

     

    (b)
        If,
      at
      any time, all or part of any payment with respect to the Senior Obligations
      theretofore made by Borrower or any other Person is rescinded or must otherwise
      be returned by the Senior Lender for any reason whatsoever (including, without
      limitation, as a result of Borrower or any other Person becoming the subject
      of
      an Insolvency Event), this Agreement shall continue to be effective or be
      reinstated, as the case may be, all as though such payment had not been
      made.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    SECTION
      6.   Benefit
      of Agreement.
      Except
      as expressly provided in Section 4, nothing in this Agreement, express or
      implied, shall give or be construed to give to any Person including, without
      limitation, Borrower (but excluding the Senior Lender) any legal or equitable
      right, remedy or claim under this Agreement or under any covenant or provision
      contained herein, all such covenants and provisions being for the sole and
      exclusive benefit of the Senior Lender. 

     

    SECTION
      7.   Notices. (a)
      All
      notices and other communications hereunder shall be in writing and sent by
      certified or registered mail, return receipt requested, by overnight delivery
      service, with all charges prepaid, by hand delivery, or by telecopier followed
      by a hard copy sent by regular mail, if to the Senior Lender, then
      to
      CapitalSource Finance, LLC, 4445 Willard Avenue, 12th
      Floor,
      Chevy Chase, Maryland 20815 Attention: Healthcare Finance Group, Portfolio
      Manager (Telecopier: (301) 841-2340); if to Borrower, then to Rita Medical
      Systems, Inc., 46421 Landing Parkway, Fremont, California 94538 Attention:
      President and Chief Executive Officer (Telecopier: (510) 771-0460); and if
      to
      the Junior Lender, then to Atlas Master Fund, Ltd. in
      care of Balyasny
      Asset Management L.P., 650 Madison Avenue - 19th
      Floor,
      New York, New York 10022 Attention: Legal Department (Telecopier: (212)
      588-1130); and in each case, to such other address as a party may specify to
      the
      other parties in the manner required hereunder. All such notices and
      correspondence shall be deemed given (i) if sent by certified or registered
      mail, three (3) Business Days after being postmarked, (ii) if sent by
      overnight delivery service or by hand delivery, when received at the above
      stated addresses or when delivery is refused, and (iii) if sent by
      telecopier transmission, when such transmission is confirmed.

     

    (b)
        The
      Senior Lender shall provide the Junior Lender and the Junior Lender shall
      provide the Senior Lender with a copy of each notice of default (to the extent
      permitted hereunder) sent to Borrower concurrently with the sending thereof
      and
      promptly notify the Junior Lender or the Senior Lender, respectively, in the
      event that the default which is the subject of such default notice is cured
      or
      waived, provided
      that the
      failure to give any such notice shall not limit or otherwise affect any party’s
      rights under this Agreement. The Senior Lender and the Junior Lender, as
      applicable, shall use its best efforts to provide Borrower with a copy of any
      Senior Payment Default Notice, Senior Non-Payment Default Notice and Junior
      Default Notice, as applicable, concurrently with the sending thereof and
      promptly notify Borrower of any cure or waiver thereof, provided
      that the
      failure to give any such notice shall not limit or otherwise affect any party’s
      rights under this Agreement.

     

    SECTION
      8.   Amendments
      and Waivers.
      No
      amendment or waiver of any provision of this Agreement, or consent to any
      departure by the Junior Lender or Borrower therefrom, shall in any event be
      effective unless the same shall be in writing and signed by the Senior Lender,
      Borrower and the Junior Lender.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    SECTION
      9.   Delays;
      Partial Exercise of Remedies.
      No delay
      or omission of the Senior Lender to exercise any right or remedy hereunder
      shall
      impair any such right or operate as a waiver thereof. No single or partial
      exercise by the Senior Lender of any right or remedy shall preclude any other
      or
      further exercise thereof, or preclude any other right or remedy.

     

    SECTION
      10.   Counterparts;
      Telecopied Signatures.
      This
      Agreement and any waiver or amendment related hereto may be executed in
      counterparts and by the parties hereto in separate counterparts, each of which
      when so executed and delivered shall be an original, but all of which shall
      together constitute one and the same instrument. This Agreement may be executed
      and delivered by telecopier or other facsimile transmission all with the same
      force and effect as if the same were a fully executed and delivered original
      manual counterpart.

     

    SECTION
      11.   Severability.
      If any
      provision in or obligation under this Agreement shall be invalid, illegal or
      unenforceable in any jurisdiction, the validity, legality and enforceability
      of
      the remaining provisions or obligations, or of such provision or obligation
      in
      any other jurisdiction, shall not in any way be affected or impaired
      thereby.

     

    SECTION
      12.   Entire
      Agreement; Successors and Assigns.
      This
      Agreement constitutes the entire agreement among the parties with respect to
      the
      subject matter hereof, supersedes any prior written and verbal agreements among
      them with respect to the subject matter hereof, and shall bind and benefit
      the
      parties (including, without limitation, the Senior Lender) and their respective
      successors and permitted assigns. Borrower and Junior Lender each acknowledge
      and agree that Senior Lender at any time and from time to time may sell, assign
      or grant participating interests in or transfer all or any part of its rights
      or
      obligations under this Agreement, the Senior Obligations, the Collateral and/or
      the Loan Documents to one or more other persons, including, without limitation,
      financial institutions (each such transferee, assignee or purchaser, a
“Transferee”). In such case, the Transferee shall have all of the rights and
      benefits with respect to the portion of such Senior Obligations, the Collateral,
      this Agreement and/or the Loan Documents, as the case may be, held by it as
      fully as if such Transferee were the original holder thereof (including, without
      limitation, rights of set off and recoupment), and shall become vested with
      all
      of the powers and rights given to Lender hereunder with respect thereto, and
      shall be deemed to be the “Senior Lender” for all purposes hereunder, the
      predecessor Senior Lender shall thereafter be forever released and fully
      discharged from any liability or responsibility hereunder with respect to the
      rights and interests so assigned, and either the Senior Lender or any Transferee
      may be designated as the sole agent to manage the transactions and obligations
      contemplated herein.

     

    SECTION
      13.   Conflict.
      In the
      event of any express conflict between any term, covenant or condition of this
      Agreement and any term, covenant or condition of any of the Senior Loan
      Agreement, the other Loan Documents, the Junior Agreement or the Junior Note,
      the provisions of this Agreement shall control.

     

    SECTION
      14.   Statement
      of Indebtedness.
      Upon
      demand by the Senior Lender, the Junior Lender will furnish to the Senior Lender
      a statement of indebtedness owing from Borrower to the Junior Lender. The Senior
      Lender may rely without further investigation upon any such
      statement.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    SECTION
      15.   SPECIFIC
      PERFORMANCE.
      THE
      SENIOR LENDER IS HEREBY AUTHORIZED TO DEMAND SPECIFIC PERFORMANCE OF THIS
      AGREEMENT AT ANY TIME WHEN THE JUNIOR LENDER SHALL HAVE FAILED TO COMPLY WITH
      ANY OF THE PROVISIONS OF THIS AGREEMENT APPLICABLE TO IT. THE JUNIOR LENDER
      HEREBY IRREVOCABLY WAIVES ANY DEFENSE BASED ON THE ADEQUACY OF A REMEDY AT
      LAW
      THAT MIGHT BE ASSERTED AS A BAR TO SUCH REMEDY OF SPECIFIC
      PERFORMANCE.

     

    SECTION
      16.   GOVERNING
      LAW.
      THE
      VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT AND ANY DISPUTE
      ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, WHETHER SOUNDING IN
      CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE GOVERNED BY THE INTERNAL LAWS
      AND DECISIONS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) OF THE STATE
      OF
      MARYLAND.

     

    SECTION
      17.   SUBMISSION
      TO JURISDICTION.
      ALL
      DISPUTES BETWEEN OR AMONG ANY OF THE PARTIES HERETO, WHETHER SOUNDING IN
      CONTRACT, TORT OR EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND
      FEDERAL COURTS LOCATED IN THE STATE OF MARYLAND AND THE COURTS TO WHICH AN
      APPEAL THEREFROM MAY BE TAKEN; PROVIDED,
      HOWEVER, THAT THE SENIOR LENDER SHALL HAVE THE RIGHT, TO THE FULLEST EXTENT
      PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST THE JUNIOR LENDER TO ENFORCE
      THE
      PROVISIONS HEREOF IN ANY OTHER COURT OF COMPETENT JURISDICTION OR VENUE. EACH
      OF
      THE JUNIOR LENDER AND BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE
      LOCATION OF ANY SUCH COURT IN WHICH THE SENIOR LENDER HAS COMMENCED A
      PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE
      OR BASED ON FORUM NON CONVENIENS.

     

    SECTION
      18.   JURY
      TRIAL.
      EACH OF
      THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
      LAW, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON,
      ARISING OUT OF, OR IN ANY WAY RELATING TO (I) THIS AGREEMENT OR (II) ANY
      CONDUCT, ACT OR OMISSION OF THE JUNIOR LENDER, BORROWER, THE SENIOR LENDER
      OR
      ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
      OTHER AFFILIATE, IN EACH CASE WHETHER SOUNDING IN CONTRACT, TORT OR EQUITY
      OR
      OTHERWISE.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    SECTION
      19.   SERVICE
      OF PROCESS.
      THE
      JUNIOR LENDER HEREBY IRREVOCABLY DESIGNATES ATLAS MASTER FUND, LTD. AT 650
      MADISON AVENUE, NEW YORK, NEW YORK AS THE DESIGNEE AND AGENT OF THE JUNIOR
      LENDER TO RECEIVE, FOR AND ON BEHALF OF THE JUNIOR LENDER, SERVICE OF PROCESS
      IN
      ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT. IT IS UNDERSTOOD
      THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT AT ITS ADDRESS WILL BE PROMPTLY
      FORWARDED BY MAIL TO THE JUNIOR LENDER, BUT THE FAILURE OF THE JUNIOR LENDER
      TO
      RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE SERVICE OF SUCH PROCESS.
      NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE SENIOR LENDER TO SERVE LEGAL
      PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     

    

    [SIGNATURE
      PAGES NEXT FOLLOW]

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    

     

    IN
      WITNESS WHEREOF,
      the
      undersigned have caused this Agreement to be executed by its proper and duly
      authorized officer or general partner as of the date first set forth
      above.

     

    
      	 	 	 
	 	ATLAS
              MASTER FUND,
              LTD.
	 
 	 
 	 
 
	 	By:  	/s/ Scott
              Schroeder
	 	
              
Name:
              Scott Schroeder
	 	Title: Authorized
              Signatory

    

     

    
      
        	 	 	 
	 	CAPITALSOURCE
                FINANCE LLC
	 
 	 
 	 
 
	 	By:  	/s/ Keith
                D.
                Reuben
	 	
                
Name:
                Keith D. Reuben
	 	Title: President

      

       

      
        	 	 	 
	 	RITA
                MEDICAL
                SYSTEMS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
                Angel
	 	
                
Name:
                Michael Angel
	 	Title: Chief
                Financial Officer

      

       

    

     

    
      
         

      

      
        14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]