Document:

Unassociated Document

     

    

    REVOLVING
      CREDIT AND SECURITY AGREEMENT

    

    THIS
      REVOLVING CREDIT AND SECURITY AGREEMENT
      (the
“Agreement”)
      dated
      as of February 1, 2008 is entered into between NeoGenomics,
      Inc.,
      a
      Florida corporation (“Borrower”),
      NeoGenomics,
      Inc.,
      a
      Nevada corporation (“Guarantor”,
      together with Borrower, individually a “Credit
      Party”
and
      collectively, the “Credit
      Parties”)
      and
CAPITALSOURCE
      FINANCE LLC,
      a
      Delaware limited liability company (the “Lender”).

     

    WHEREAS,
      the Credit Parties have 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 Three
      Million Dollars
      ($3,000,000) (the “Facility
      Cap”),
      the
      proceeds of which shall be used by Borrower as a provider of healthcare services
      and for the generation of receivables and
      for
      any other lawful purpose permitted under this Agreement 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, and
      intending to be legally bound, Credit Parties and Lender hereby agree as
      follows:

     

    
      	
              I.

            	
              DEFINITIONS

            

    

     

    1.1   General
      Terms

     

    In
      addition to the definitions above and elsewhere in this Agreement, the terms
      listed in Annex
      I
      hereto
      shall have the meanings given such terms in 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 to the extent the same are used or defined therein.
      Unless otherwise specified herein or in Annex
      I,
      any
      agreement, contract or instrument referred to herein or in 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 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. The terms
“herein”,
      “hereof”
and
      similar terms refer to this Agreement as a whole. In the computation of periods
      of time from a specified date to a later specified date in any Loan Document,
      the terms “from”
means
      “from and including” and the words “to”
and
      “until”
each
      mean “to but excluding” and the word “through”
means
      “to and including.” In any other case, the term “including”
when
      used in any Loan Document means “including without limitation.” The term
“documents”
means
      all writings, however evidenced and whether in physical or electronic form,
      including all documents, instruments, agreements, notices, demands,
      certificates, forms, financial statements, opinions and reports. The term
“incur”
means
      incur, create, make, issue, assume or otherwise become directly or indirectly
      liable in respect of or responsible for, in each case whether directly or
      indirectly, and the terms "incurrence" and "incurred" and similar derivatives
      shall have correlative meanings. Unless otherwise expressly indicated, the
      meaning of any term defined (including by reference) in any Loan Document shall
      be equally applicable to both the singular and plural forms of such
      term.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      the
      event that any Accounting Change (as defined below) shall occur and such change
      results in a change in the method of calculation of financial covenants,
      standards or terms in this Agreement, then Borrower and Lender agree to
      enter into good faith negotiations in order to amend such provisions of this
      Agreement so as to equitably reflect such Accounting Change with the
      desired result that the criteria for evaluating Borrower’s financial
      condition shall be the same after such Accounting Change
      as if
      such Accounting Change had not been made. Until such time as such an
      amendment shall have been executed and delivered by Borrower and Lender, all
      financial covenants, standards and terms in this Agreement shall continue to
      be
      calculated or construed as if such Accounting Change had not occurred.

     

    1.2   Definitions

     

    “Acceptance
      Notice”
shall
      have the meaning given such term in Section
      8.11.

     

    “Accounting Change”
refers
      to changes in accounting principles required by the promulgation of any rule,
      regulation, pronouncement or opinion by the Financial Accounting Standards
      Board
      of the American Institute of Certified Public Accountants or, if applicable,
      the
      U.S. Securities and Exchange Commission.

     

    “Accounts”
shall
      mean “accounts” as defined in Section 9-102 of the UCC (including Health Care
      Insurance Receivables).

     

    “Account
      Debtor”
shall
      mean “account debtor” as defined in Section 9-102 of the UCC.

     

    “Accumulated
      Distribution”
shall
      have the meaning given to it in the definition of “Permitted
      Distribution”.

     

    “Accumulated
      Distribution Fiscal Quarter”
shall
      have the meaning given to it in the definition of “Permitted
      Distribution”.

     

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

     

    “Affiliate”
shall
      mean, as to any Person (a) any other Person that, directly or indirectly through
      one or more intermediaries, controls, is controlled by, or is under common
      control with, such Person, (b) any other Person 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, (c) any other Person
      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 and (d) in the case such
      Person is an individual, any other Person who is an immediate family member,
      spouse or lineal descendant of individuals of such Person or any Affiliate
      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. Notwithstanding anything herein to the contrary, in no event shall
      Lender be considered as “Affiliate” of Borrower or Guarantor.

     

    “Applicable
      Rate”
shall
      mean the interest rate applicable from time to time to Loans under the
      Agreement.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “Availability”
shall
      mean the value, in U.S. Dollars of eighty-five percent (85%) of the Borrowing
      Base minus, if applicable amounts reserved pursuant to this
      Agreement.

     

    “Borrowing
      Base”
shall
      mean, as of any date of determination, the net collectible Dollar value of
      Eligible Accounts, as determined with reference to the most recent Borrowing
      Certificate and otherwise in accordance with the 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 shall be
      determined by Lender in its Permitted Discretion. For purposes hereof, the
      net
      collectible Dollar value of Eligible Accounts is the amount due to Borrower
      as a
      result of a contractual right of payment from third-party payors less deductible
      obligations and contractual allowances as determined and approved by Lender
      in
      its Permitted Discretion.

     

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

     

    “Borrowing
      Date”
shall
      the mean the date requested for an Advance by Borrower pursuant to Section
      2.3.

     

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

     

    “Capital
      Expenditures”
shall
      mean, for any Test Period, the sum (without duplication) of all expenditures
      (whether paid in cash or accrued as liabilities) during the Test Period that
      are
      or should be treated as capital expenditures under GAAP.

     

    “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.

     

    “Capital
      Stock”
shall
      mean any and all shares, interests, participations or other equivalents (however
      designated) of capital stock of a corporation, any and all equivalent ownership
      interests in a Person (other than a corporation) and any and all warrants,
      rights or options to purchase any of the foregoing.

     

    “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 Borrower or Guarantor, 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 fifty percent (50%) 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 fifty percent (50%) 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, (iii) the initial public offering of its
      securities, (iv) 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, or
      (v)
      the replacement of a majority of the board of directors of Borrower over a
      one-year period from the directors who constituted the board of directors of
      such Borrower at the beginning of such period and such replacement shall not
      have been approved by a vote of at least a majority of the board of directors
      of
      such Borrower then still in office who either are members of such board of
      directors at the beginning of such period or whose election as a member of
      such
      board of directors was previously so approved.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    “Chattel Paper”
shall
      mean “chattel paper” as defined in Section 9-102 of the UCC, whether
      tangible or electronic.

     

    “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 upon which the Closing occurs. 

     

    “Collateral”
shall
      mean all of the property described below in, to, or under which a Borrower
      now
      has or hereafter acquires any right, title or interest, whether present, future,
      or contingent, including any such property acquired by assignment:

     

    (a) All
      of
      Borrower’s now-owned and hereafter acquired or arising Accounts, accounts
      receivable and rights to payment of every kind and description related to
      Accounts, and all of Borrower’s contract rights, chattel paper, documents and
      instruments with respect to such Accounts and accounts receivable, and all
      of
      Borrower’s rights, remedies, security and liens, in, to and in respect of the
      Accounts, including, without limitation, rights of stoppage in transit,
      replevin, repossession and reclamation and other rights and remedies of an
      unpaid vendor, lienor or secured party, guaranties or other contracts of
      suretyship with respect to the Accounts, deposits, Letters of Credit, Supporting
      Obligations or other security for the obligation of any Account Debtor, and
      credit and other insurance relating to such Accounts and accounts
      receivable;

     

    (b) All
      of
      Borrower’s right, title and interest in, to and in respect of all goods relating
      to, or which by sale have resulted in, Accounts, including, without limitation,
      all goods described in invoices or other documents or instruments with respect
      to, or otherwise representing or evidencing, any Account, and all returned,
      reclaimed or repossessed goods; 

     

    (c) All
      of
      Borrower’s now owned or hereafter acquired (i) Lockbox Accounts (and the funds
      contained therein) and (ii) any deposit accounts (and the funds contained
      therein), other than the Lockbox Accounts, into which Accounts are deposited,
      to
      the extent Accounts are contained therein;

     

    (d) All
      of
      Borrower’s now owned and hereafter acquired or arising general intangibles and
      other property of every kind and description with respect to, evidencing or
      relating to its Accounts and other rights to payment, including, but not limited
      to, all existing books and records, as the same relate to the
      Accounts;

     

    (e) The
      proceeds of all of the foregoing (including, without limitation, insurance
      proceeds) related to losses with respect to Collateral such as business
      interruption insurance or other insurance proceeds related specifically to
      losses from the Collateral.

     

    
      
        
        

      

      
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    “Collateral
      Management Fee”
shall
      mean a monthly fee to be paid by Borrower to Lender in an amount equal to 0.025%
      per month calculated on the basis of the daily average amount of the balances
      under the Revolving Facility outstanding during the preceding month.

     

    “Commercial
      Tort Claims”
shall
      mean “Commercial Tort Claims” as defined in Section 9-102 of the
      UCC.

     

    “Compliance
      Certificate”
shall
      mean a compliance certificate substantially in the form of Exhibit
      B
      attached
      hereto.

     

    “Concentration
      Account”
shall
      mean a depository account maintained by Lender or an affiliate of Lender at
      such
      bank as Lender may communicate to Borrower from time to time.

     

    “Credit
      Party”
shall
      have the meaning set forth in the first paragraph of this
      Agreement.

     

    “Debtor
      Relief Law”
shall
      mean, collectively, the Bankruptcy Code of the United States of America and
      all
      other applicable federal and state 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 and in effect 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.

     

    “Default
      Rate”
shall
      mean at any time the Applicable Rate in effect at such time plus three percent
      (3%) per annum.

     

    “Denial
      Disclosure”
shall
      have the meaning given to it in Section 7.18.

     

    “Deposit
      Accounts”
shall
      mean “deposit accounts” as defined in Section 9-102 of the UCC.

     

    “Distribution”
shall
      mean any direct or indirect dividend, distribution or other payment of any
      kind
      or character (whether in cash, securities or other property) in respect of
      any
      equity interests. 

     

    “Dollars”
and
      the
      sign “$”
each
      mean the lawful money of the United States of America.

     

    “Documents”
shall
      mean “documents” as defined in Section 9-102 of the UCC.

     

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

     

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

     

    (b) such
      Account is not evidenced by an invoice, statement or other documentary evidence
      satisfactory to Lender;

     

    (c) such
      Account or any portion thereof (in which case only such portion shall not be
      an
      Eligible Account) is payable by a beneficiary, recipient or subscriber
      individually and not directly by a Medicaid/Medicare Account Debtor or
      commercial medical insurance carrier, or client acceptable to Lender in its
      Permitted Discretion;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

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

     

    (e) such
      Account remains unpaid for longer than (i) one hundred fifty (150) calendar days
      after the applicable Services were rendered with respect to Accounts payable
      by
      a Medicaid/Medicare Account Debtor or commercial medical insurance carrier
      acceptable to Lender and (ii) one hundred twenty (120) calendar days after
      the
      applicable Services were rendered with respect to all other Account
      Debtors;

     

    (f) with
      respect to all Accounts owed by any particular Account Debtor (other than
      Accounts from Medicaid/Medicare Account Debtors) or its Affiliates, if more
      than
      twenty five percent (25%) of the aggregate balance of all such Accounts owing
      from such Account Debtor and its Affiliates are ineligible due to the
      requirements of clause (e) of this Section or such higher threshold which may
      be
      agreed in writing by Lender for any specific Account Debtor;

     

    (g) with
      respect to all Accounts owed by any particular Account Debtor or its Affiliates,
      twenty-five percent (25%) or more of all such Accounts are deemed not to be
      Eligible Accounts for any reason hereunder (which percentage may, in Lender’s
      Permitted Discretion, be increased or decreased);

     

    (h) with
      respect to all Accounts owed by any particular Account Debtor or its Affiliates
      (other than Medicaid/Medicare Account Debtors) if such Accounts exceed twenty
      percent (20%) of the net collectible Dollar value of all Eligible Accounts
      at
      any one time (including Accounts from Medicaid/Medicare Account Debtors), then
      the amount by which such Accounts for that particular Account Debtor or its
      Affiliates exceed twenty percent (20%) of the net collectible Dollar value
      of
      all Eligible Accounts shall not be included as Eligible Accounts; 

     

    (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;

     

    (k) such
      Account arises from the sale or lease of property or Services rendered to one
      or
      more Account Debtors outside the United States (including any territory or
      possession of the United States that has adopted Article 9 of the UCC) or that
      have their principal place of business or chief executive offices outside the
      United States (including any territory or possession of the United States that
      has adopted Article 9 of the UCC);

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (l) such
      Account represents the sale or lease 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
      (excluding Medicaid/Medicare Account Debtors), 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 as determined by Lender in its Permitted Discretion;

     

    (n) such
      Account 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 (each an “Adjustment”),
      or is
      contingent in any respect or for any reason; provided,
      that,
      the
      discounted amount of such Account after giving effect to such Adjustment will
      be
      considered an Eligible Account;

     

    (o) there
      is
      any agreement with an Account Debtor for any deduction from such Account;
provided,
      that,
      the
      discounted amount of such Account after giving effect to such discounts and
      allowances shall be considered an Eligible Account; 

     

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

     

    (q) such
      Account is not payable to Borrower;

     

    (r) a
      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 Permitted Discretion.

     

    “EMTALA”
shall
      mean the Emergency Medical Treatment and Active Labor Act, as amended, and
      the
      regulations thereunder.

     

    “Environmental
      Laws”
shall
      mean any and all laws, rules, orders, regulations, statutes, ordinances,
      guidelines, codes, decrees, or other legally enforceable requirements
      (including, without limitation, common law) of any international authority,
      foreign government, the United States, or any state, local, municipal or other
      governmental authority, regulating, relating to or imposing liability or
      standards of conduct concerning protection of the environment, or protection
      of
      human health or employee health and safety (as affected by the environment
      or by
      any substance the exposure to which is reasonably suspected of causing harm
      to
      human health), as has been, is now, or may at any time hereafter be, in effect
      to which the Borrower is subject.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    “Equipment”
shall
      mean “equipment” as defined in Section 9-102 of the UCC.

     

    “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 X.

     

    “Excess
      Cash Flow”
shall
      mean, for any fiscal year (or for such other period as may be specifically
      provided for herein), as calculated for Borrowers and their Subsidiaries on
      a
      consolidated basis, without duplication, an amount equal to the sum of (a)
      Net
      Income (as defined in Annex I) for such period, plus (b) an amount equal to
      the
      amount of depreciation expenses, amortization expense (including the
      amortization of goodwill), accrued non-cash interest expense and all other
      non-cash charges deducted in arriving at such Net Income, plus (c) an amount
      equal to the aggregate Net Cash Proceeds of the sale, lease, transfer or other
      disposition of assets by Borrowers during such period to the extent not required
      to be applied to mandatory prepayments or payments on the Loans, plus (d) an
      amount equal to the net loss on the sale, lease, transfer or other disposition
      of assets by Borrowers during such period to the extent deducted in arriving
      at
      such Net Income, plus (e) an amount equal to any tax refunds or credits received
      by Borrowers during such period, plus (f) other extraordinary or non-recurring
      charges that would not have otherwise been incurred in the ordinary course
      of
      business, less (g) an amount equal to the unfinanced permitted Capital
      Expenditures of Borrowers for such period, less (h) an amount equal to the
      sum
      of all regularly scheduled payments (to the extent such payments have not
      already been deducted in arriving at Net Income) and optional and mandatory
      prepayments of principal on Indebtedness for money borrowed actually made during
      such period to the extent permitted hereunder, less (i) an amount equal to
      the
      net gain on the sale, lease, transfer or other disposition of assets by
      Borrowers during such period to the extent included in arriving at such Net
      Income, less (j) other extraordinary or non-recurring gains that would not
      have
      otherwise been incurred in the ordinary course of business.

     

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

     

    “Federal
      Reserve”
shall
      mean the Federal Reserve Bank of the United States.

     

    “Fixtures”
shall
      mean “fixtures” as defined in Section 9-102 of the UCC.

     

       “GAAP”
shall
      mean generally accepted accounting principles in the United States as in effect
      on the Closing Date. 

     

    “General
      Intangibles”
shall
      mean “general intangibles” as defined in Section 9-102 of the UCC.

     

    “Goods”
shall
      mean “goods” as defined in Section 9-102 of the UCC.

     

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

     

    “Government Contract”
shall
      mean all contracts with any Governmental Authority.

     

    “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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    “Guaranteed
      Obligations”
shall
      have the meaning given such term in Section
      14.1
      hereof.

     

    “Guarantor”
shall
      have the meaning set forth in the first paragraph of this
      Agreement.

     

    “Guaranty”
shall
      mean, collectively and each individually, all guaranties 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 Section 1128B(b) of the Social Security Act, as amended,
      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 the Social Security Act, as amended, Section 1877, 42 U.S.C.
      Section 1395nn (Prohibition Against Certain Referrals), commonly referred to
      as
“Stark Statute”), and 31 U.S.C. Section 3279 et seq.
      (the
      False Claims Act) to which Borrower is subject. 

     

    “HIPAA”
shall
      mean the Health Insurance Portability and Accountability Act of 1996 (Pub.
      L.
      No. 104-191) and the regulations promulgated thereunder.

     

    “HUD
      Application”
shall
      have the meaning given such term in Section
      8.11.

     

    “Indebtedness”
of
      any
      Person shall mean, without duplication, (a) all obligations for borrowed
      money, (b) all obligations evidenced by bonds, debentures, notes, or other
      similar instruments and all reimbursement or other obligations in respect of
      letters of credit or bankers acceptances, (c) all Capitalized Lease
      Obligations, (d) all obligations or liabilities of others secured by a Lien
      on any asset of such Person or its Subsidiaries, irrespective of whether such
      obligation or liability is assumed, (e) all obligations to pay the deferred
      purchase price of assets (other than trade payables incurred in the ordinary
      course of business and not outstanding more than one hundred twenty (120)
      calendar days after the date such payable was created) or such longer period
      as
      shall be agreed in writing by Lender and Borrower, (f) all net obligations
      owing to counterparties under Hedging Agreements, (g) all obligations with
      respect to redeemable Capital Stock or repurchase obligations under any Capital
      Stock issued by such Person, (h) the present value of future rental payments
      under all synthetic leases (excluding specifically any operating leases or
      real
      estate leases) and (i) any obligation guaranteeing or intended to guarantee
      (whether directly or indirectly guaranteed, endorsed, co-made, discounted,
      or
      sold with recourse) any obligation of any other Person that constitutes
      Indebtedness under any of clauses (a) through (h) above.

    

    “Indemnified
      Person”
shall
      have the meaning given such term in Section
      15.4.

    

    “Initial
      Advance”
shall
      mean the initial Advance.

    

    “Instrument”
shall
      mean “instrument” as defined in Section 9-102 of the UCC.

    

    “Insured
      Event”
shall
      have the meaning given such term in Section
      15.4.

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    “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.

    

    “Intellectual
      Property”
shall
      mean all patents, patent applications, trademarks, trademark applications,
      service marks, registered copyrights, copyright applications, copyrights, trade
      names, trade secrets and software and all rights in the foregoing.

    

    “Inventory”
shall
      mean “inventory” as defined in Section 9-102 of the UCC.

     

    “Investment
      Property”
shall
      mean “investment property” as defined in Section 9-102 of the UCC.

     

    “Landlord
      Waiver and Consent”
shall
      mean a waiver/consent from the owner/lessor/mortgagee of any premises either
      owned or occupied by Borrower 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.

     

    “Letter
      of Credit Rights”
shall
      mean “letter of credit rights” as defined in Section 9-102 of the UCC, whether
      or not the letter of credit is evidenced by a writing.

     

    “Liability
      Event”
shall
      mean any event, fact, condition or circumstance (i) in or for which Borrower
      becomes liable or otherwise responsible for any amount over $50,000 owed or
      owing to any Medicaid, Medicare or CHAMPUS/TRICARE program by a provider under
      common ownership with such Borrower or any provider owned by such Borrower
      pursuant to any applicable law, ordinance, rule, decree, order or regulation
      of
      any Governmental Authority after the failure of any such provider to pay any
      such amount when owed or owing, (ii) in which Medicaid, Medicare or
      CHAMPUS/TRICARE payments to Borrower are lawfully set-off against payments
      to
      such Borrower to satisfy any liability of or for any amounts over $50,000 owed
      or owing to any Medicaid, Medicare or CHAMPUS/TRICARE program by a provider
      under common ownership with such Borrower or any provider owned by such Borrower
      pursuant to any applicable law, ordinance, rule, decree, order or regulation
      of
      any Governmental Authority, or (iii) any of the foregoing under clauses
      (i) or (ii) in each case pursuant to statutory or regulatory provisions
      that are similar to any applicable law, ordinance, rule, decree, order or
      regulation of any Governmental Authority referenced in clauses (i) and (ii)
      above or successor provisions thereto. 

     

    “LIBOR”
shall
      mean a rate of interest equal to the rate per annum (rounded upwards to the
      nearest 1/100th of 1%) at which Dollar deposits for a period of one month are
      offered in the London interbank eurodollar market as displayed in the Bloomberg
      Financial Markets system (or as otherwise determined by Lender in its sole
      discretion) as of 11:00 A.M. (London time) on the applicable date of
      determination.

     

    “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.

     

    “Liquidity
      Factors”
shall
      mean percentages which Lender, in its credit judgment, may apply to Eligible
      Accounts by payor class based upon Borrower’s actual recent collection history
      for each such payor class (i.e. Medicare, Medicaid, commercial insurance, etc.)
      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, to adjust the Availability.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    “Loan”
or
      “Loans”
shall
      mean, individually and collectively, all Advances.

     

    “Loan
      Documents”
shall
      mean, collectively and each individually, this Agreement and all other
      agreements, documents, instruments and certificates heretofore or hereafter
      executed or delivered to, or on behalf of, Lender in connection with this
      Agreement or the Loans, as the same may be amended, modified or supplemented
      from time to time.

     

    Lockbox
      Accounts”
shall
      mean, collectively and each individually, the Deposit Accounts maintained by
      Borrower at the Lockbox Banks into which all collections or payments on
      Borrower’s Accounts and other Collateral are paid and which Accounts and other
      Collateral are subject to Lender’s security interest granted by a
      Borrower.

     

    “Lockbox
      Agreement”
shall
      mean an agreement among Lender, Borrower who has granted a security interest
      in
      a Deposit Account and any of the Lockbox Banks governing the Lockbox Accounts,
      in form and substance satisfactory to Lender.

     

    “Lockbox
      Banks”
shall
      mean, collectively and each individually, the federally insured banks acceptable
      to Lender where Borrower who have granted security interests in a Lockbox
      Account shall maintain the Lockbox Accounts.

     

    “Management
      or Service Fee”
shall
      mean any management, service or related or similar fee paid by Borrower to
      any
      Person with respect to any facility owned, operated or leased by
      Borrower.

     

    “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
      expected to be adverse to the value of any material portion of the Collateral,
      or to the priority of Lender’s security interest in any portion of the
      Collateral, (iii) has been or would reasonably be expected to be materially
      adverse to the business, operations, prospects, properties, assets, liabilities
      or financial condition of any Credit Party, either individually or taken as
      a
      whole, or (iv) has materially impaired or would reasonably be likely to
      materially impair the ability of any Borrower to pay any portion of the
      Obligations or otherwise perform the Obligations or to consummate the
      transactions under the Loan Documents executed by such Person. 

     

    “Materials
      of Environmental Concern”
shall
      mean any gasoline or petroleum (including crude oil or any fraction thereof)
      or
      petroleum products, polychlorinated biphenyls, urea-formaldehyde insulation,
      asbestos, pollutants, contaminants, radioactivity, and any other substances
      or
      forces of any kind, whether or not any such substance or force is defined as
      hazardous or toxic under any Environmental Law, that is regulated pursuant
      to or
      would reasonably be expected to give rise to liability under any Environmental
      Law.

     

    “Medicaid/Medicare
      Account Debtor”
shall
      mean any Account Debtor which is (i) the United States of America acting under
      the Medicaid or Medicare program established pursuant to the Social Security
      Act
      or any other federal healthcare program, including, without limitation, TRICARE
      (f/k/a CHAMPUS), (ii) any state or the District of Columbia acting pursuant
      to a
      health plan adopted pursuant to Title XIX of the Social Security Act or any
      other state health care program, or (iii) any agent, carrier, administrator
      or
      intermediary for any of the foregoing.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    “Minimum
      Termination Fee”
shall
      mean (for the time period indicated) the amount equal to (i) 7.5% of the
      Facility Cap, if the Revolver Termination is at any time before the first
      anniversary of the Closing Date; (ii) 1% of the Facility Cap, if the Revolver
      Termination is after the first anniversary of the Closing Date but before the
      second anniversary
      of the Closing Date; and (iii) 0.5% of the Facility Cap, if the Revolver
      Termination is on or after the second anniversary
      of the Closing Date but before the third anniversary of the Closing Date. There
      shall be no Minimum Termination Fee if the Revolver Termination occurs within
      five (5) days of the end of the Term.

    

    “Net
      Cash Proceeds”
shall
      mean, with respect to any sale, lease, transfer or other disposition of assets
      by any Person, the amount of cash received (directly or indirectly) from time
      to
      time (whether as initial consideration or through the payment or disposition
      of
      deferred consideration) by or on behalf of such Person in connection therewith
      after deducting therefrom (A) the amount of any Permitted Indebtedness secured
      by any Permitted Lien on such property which is required to be, and is, repaid
      in connection with such disposition, (B) reasonable expenses related thereto
      incurred by such Person in connection therewith, (C) transfer taxes paid to
      any
      taxing authorities by such Person in connection therewith, (D) net income taxes
      to be paid in connection with such disposition and (E) with respect to any
      lease, the cost of any tenant improvements paid by Borrower in connection
      therewith.

    

    “Note”
or
      “Notes”
shall
      mean any promissory note or notes issued pursuant to Section
      2.7.

     

    “Obligations”
shall
      mean all present and future obligations, Indebtedness and liabilities of
      Borrower or Guarantor 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, (whether or not evidenced by a Note), including, without
      limitation, all principal, interest, applicable fees, charges and expenses
      and
      all amounts paid or advanced by Lender on behalf of or for the benefit of
      Borrower or Guarantor 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.

     

    “OFAC”
shall
      mean the U.S. Department of Treasury’s Office of Foreign Asset
      Control.

     

    “Organizational
      and Good Standing Documents”
shall
      mean, for any Person (i) a copy of the certificate of incorporation or formation
      (or other like organizational 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 Person, (ii) a copy of
      the
      bylaws or similar organizational documents of certified as of a date
      satisfactory to Lender before the Closing Date by the corporate secretary or
      assistant secretary of such Person, (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 Person
      and of every other jurisdiction in which such Person has an office or conducts
      business or is otherwise required to be in good standing, 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 such Person is a party, certified by an authorized officer of such Person
      as of the Closing Date.

     

    “Paid
      in Full”
and
      “Payment
      in Full”
mean,
      with respect to the Obligations, all amounts owing with respect thereto
      (including any interest accruing thereon after the commencement of any
      proceeding under any Debtor Relief Law by or against Borrower, whether or not
      allowed as a claim against such Borrower in such proceeding, but excluding
      as
      yet unasserted contingent obligations), have been fully, finally and completely
      paid in cash.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    “Parent
      Indebtedness”
shall
      mean Indebtedness incurred by Borrower from Guarantor, provided,
      that,
      such
      Indebtedness shall be (i) up to $2,000,000 outstanding in the aggregate at
      any
      time, (ii) on an unsecured basis, (iii) subordinated in remedies to all of
      the
      Obligations and to all of Lender’s rights in form and substance satisfactory to
      Lender and (iv) be subordinate in right of payment to the Obligations and shall
      only be repaid pursuant to a Permitted Distribution until the Obligations are
      Paid in Full; provided, that,
      at the
      request of Lender, the terms of the provisions of (iii) and (iv) shall be
      contained in a written subordination agreement between Lender and Parent
      acknowledged and agreed by Borrower, in form and substance satisfactory to
      Lender.

     

    “Patriot
      Act”
shall
      mean the Uniting and Strengthening America by Providing Appropriate Tools
      Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, as
      amended.

    

    “Payment
      Intangible”
shall
      mean “payment intangible” as defined in Section 9-102 of the UCC.

     

    “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 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
      Acquisition”
shall
      mean any acquisition by Borrower, whether through a purchase of stock,
      membership interests or otherwise or the purchase of assets or through a merger,
      consolidation or amalgamation, of another Person, or the assets constituting
      an
      entire or any portion of any business or operating business unit or division
      of
      another Person or securities of such other Person that satisfies the
      requirements set forth in Sections
      8.14
      and
      9.4
      hereof.

     

    “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
      Distributions”
shall
      mean Distributions to Guarantor for the purpose of making principal payments
      on
      the Parent Indebtedness and/or as periodic cash distributions to Guarantor
      as a
      shareholder of Borrower, provided,
      that
      (i) such
      Permitted Distributions are made no more than once per fiscal quarter thereafter
      and (ii) all of the following conditions are satisfied with respect to each
      such
      Distribution: (a) no Default or Event of Default has occurred and is continuing
      or would arise as a result of such Distribution, (b) after giving effect to
      such
      Distribution, Borrower is in compliance on a pro forma basis with the financial
      covenants set forth in Annex 1 (recomputed for the most recent three month
      period for which monthly financial statements have been delivered in accordance
      with the terms hereof after giving effect thereto); provided, however, that
      in
      situations where there is an Accumulated Distribution (as defined below) being
      made with respect to any Accumulated Distribution Fiscal Quarters, only that
      portion of the Distribution that is not related to the Accumulated Distributions
      shall be included in Fixed Charges for the purpose of calculating the pro forma
      Fixed Charge Coverage Ratio in Annex I for the most recent three-month period),
      (c) the aggregate amount of such Distributions shall not exceed fifty percent
      (50%) of undistributed Excess Cash Flow for the three month period immediately
      preceding such distribution, as determined pursuant to the Distribution Notice,
      (d) Lender shall have received written notice (the “Distribution Notice”) from
      Borrower, of Borrower’s intention to make such Distribution at least five (5)
      Business Days prior to the date of such proposed Distribution, which such notice
      shall include a detailed calculation satisfactory to Lender in its Permitted
      Discretion evidencing Excess Cash Flow for such three month period (except
      that
      for any amounts included in such Distribution that are a result of Accumulated
      Distributions, in which case, the Excess Cash Flow so measured shall be
      applicable to the appropriate Accumulated Distribution Fiscal Quarters to which
      they relate), as applicable, (e) Lender shall have consented in writing to
      such
      Distribution Notice prior to the making of such proposed Distribution, such
      consent not to be unreasonably withheld, and (g) until such time as the Parent
      Indebtedness is paid in full in cash, any such Distribution payable to Guarantor
      shall be utilized by Guarantor solely to repay the Parent Indebtedness;
provided,
      that,
      if
      Borrower chooses not to make a Permitted Distribution (the “Accumulated
      Distribution”)
      in any
      fiscal quarter (the “Accumulated
      Distribution Fiscal Quarter”)
      Borrower may make such Accumulated Distribution in any of the subsequent three
      consecutive fiscal quarters following the Accumulated Distribution Fiscal
      Quarter; provided, that,
      Borrower
      provides Lender with Evidence of Compliance with the criteria set forth in
      the
      definition of Permitted Distribution for the Accumulated Distribution as of
      the
      end of the Accumulated Distribution Fiscal Quarter, except,
      that,
      the
      Distribution Notice shall not have been made in the Accumulated Distribution
      Fiscal Quarter but rather shall be made (5) Business Days prior to the date
      the
      Accumulated Distribution is to be distributed.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    “Permitted
      Indebtedness”
shall
      mean any of the following: (i) Indebtedness under the Loan Documents,
      (ii) any Indebtedness set forth on Schedule 9.2,
      (iii)
      Capitalized Lease Obligations incurred after the Closing Date and Indebtedness
      incurred to purchase Goods and secured by purchase money Liens constituting
      Permitted Liens: (A) in aggregate amount outstanding at any time not to exceed
      $2,000,000,
      provided, that, 
      (1) the
      debt service for such Indebtedness shall not exceed $600,000 for any twelve
      (12)
      month period and (2) upon the incurrence of such Indebtedness and after giving
      effect thereto no Default or Event of Default shall exist and be continuing
      and
      (B) in an aggregate amount in excess of $2,000,000, provided,
      that,
      (1) ten
      (10) Business Days prior to the incurrence of such Indebtedness Borrower shall
      have provided pro forma financial statements along with any other supporting
      documentation required by Lender evidencing that Borrower would have been in
      compliance with the financial covenants set forth on Annex 1 hereto for the
      immediately preceding Test Period (as defined on Annex 1 hereto), if such
      Indebtedness had been incurred on the first day of such Test Period, (2) prior
      to the incurrence of such Indebtedness Borrower shall have received Lender’s
      written confirmation of its agreement with such pro forma financial statements;
      and (3) upon the incurrence of such Indebtedness and after giving effect thereto
      no Default or Event of Default shall exist and be continuing, (iv) the
      accounts payable set forth on Schedule 1.2 and accounts payable to trade
      creditors and current operating expenses (other than for borrowed money) which
      are not aged more than one hundred twenty calendar days from the date such
      payable was created or such longer period as shall be agreed in writing by
      Lender, except, 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 shall have been reserved, (v) borrowings
      incurred in the ordinary course of business and not exceeding $1,000,000
      individually or in the aggregate outstanding at any one time; provided,
      however,
      that
      such Indebtedness (A) shall not be secured by Collateral, any cash, money,
      Investment Property or Deposit Accounts; (B) the debt service for such
      Indebtedness shall not exceed $200,000 for any twelve (12) month period; (C)
      ten
      (10) Calendar Days prior to the incurrence of such Indebtedness Borrower shall
      have provided pro forma financial statements along with any other supporting
      documentation required by Lender evidencing that Borrower would have been in
      compliance with the financial covenants set forth on Annex 1 hereto for the
      immediately preceding Test Period (as defined on Annex 1 hereto), if such
      Indebtedness had been incurred on the first day of such Test Period, (D) prior
      to the incurrence of such Indebtedness Borrower shall have received Lender’s
      written confirmation of its agreement with such pro forma financial statements
      (which confirmation or denial shall be promptly provided by Lender to Borrower
      within ten (10) calendar days of Lender’s receipt of such financial statements);
      (E) upon the incurrence of such Indebtedness and after giving effect thereto
      no
      Default or Event of Default shall exist and be continuing, (F) such Indebtedness
      shall be subordinated in right of repayment and remedies to all of the
      Obligations and to all of Lender’s rights pursuant to a written agreement among
      Lender, Borrower and the lender with respect to such Indebtedness, in form
      and
      substance satisfactory to Lender and (vi) Parent Indebtedness.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    “Permitted
      Liens”
shall
      mean with respect to the Borrower any of the following: (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,
      with
      respect to Required Locations any such landlord has executed a Landlord Waiver
      and Consent in form and substance satisfactory to Lender) and of carriers,
      warehousemen, mechanics, 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 the type of Permitted Indebtedness set forth under clause
      (iii) of the definition of “Permitted Indebtedness”, 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; (iv) liens securing the
      Indebtedness set forth in clause (v) of Permitted Indebtedness on assets other
      than: (A) the Collateral, (B) cash or other money of Borrower, (C) Deposit
      Accounts of Borrower and (D) Investment Property of Borrower; and (vii) Liens
      disclosed on Schedule
      7.4B
      and
Schedule
      9.3. 

     

    “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.

     

    “Pledge
      Agreement”
shall
      mean that certain negative Pledge Agreement by and between Guarantor and Lender
      executed in connection herewith, as such may be modified, amended, restated
      or
      supplemented from time to time.

     

    “Receipt”
shall
      have the meaning given such term in Section
      15.5.

     

    “Required
      Locations”
shall
      mean collectively: (a) the leased premises located at 12701 Commonwealth Drive,
      Suite 9, Fort Myers, Florida 33913, and (b) any location leased by Borrowers
      at
      which books and records relating to Accounts are kept of which duplicates are
      not kept at the location identified in (a) above.

     

    “Released
      Parties”
shall
      have the meaning given such term in Section
      15.11.

     

    “Releasing
      Parties”
shall
      have the meaning given such term in Section
      15.11.

     

    “Revolver
      Termination”
shall
      mean the termination of the Revolving Facility for any reason whatsoever.

     

    “Revolving
      Loan Obligations”
shall
      mean all of the Obligations related to the Revolving Facility.

     

    “Services”
shall
      mean medical and health care services provided to a Person, including, but
      not
      limited to, medical and health care services (including diagnostic testing
      and
      other testing services) which are covered by a policy of insurance issued by
      an
      Insurer, physician services, nurse and therapist services, dental services,
      hospital services, skilled nursing facility services, comprehensive outpatient
      rehabilitation services, home health care services, residential and out-patient
      behavioral healthcare services. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    “Software”
shall
      mean “software” as defined in Section 9-102 of the UCC.

     

    “Solvency
      Certificate”
shall
      mean a Solvency Certificate substantially in the form of Exhibit
      C
      attached
      hereto.

     

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

     

    “Supporting
      Obligations”
shall
      mean “supporting obligations” as defined in Section 9-102 of the
      UCC.

     

    “Term”
shall
      mean the period commencing on the Closing Date and ending on the third
      anniversary of the Closing Date.

     

    “Termination
      Date”
shall
      mean the date of termination of this Agreement set forth in any notice of
      termination delivered by Borrower in accordance with Section
      13.1(a).

     

    “Transaction”
shall
      have the meaning given such term in Section
      8.11.

     

    “Transferee”
shall
      have the meaning given such term in Section
      15.2.

     

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

     

    “Unused
      Line Fee”
shall
      mean a fee to be paid by Borrower to Lender on a monthly basis in an amount
      equal to 0.025% (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.

     

    “US
      Labs Award”
shall
      mean any award in connection with the litigation between Borrower and Accupath
      Diagnostic Laboratories, Inc. described on Schedule
      7.6.

     

    
      	
              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,
      unless
      this Agreement is terminated earlier,
      provided
      that,
      notwithstanding any other provision of this Agreement to the contrary, 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 Permitted 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 Dollars, of the Availability. Advances under the Revolving Facility shall
      automatically 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.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (b) Lender
      in
      its Permitted Discretion may further adjust the Availability and the advance
      rate by applying Liquidity Factors. The Liquidity Factors and the advance rate
      for Availability may be adjusted by Lender throughout the Term as warranted
      by
      Lender’s underwriting practices and procedures in its credit judgment. Also,
      Lender shall have the right to establish from time to time, in its Permitted
      Discretion, reserves against the Borrowing Base, which reserves shall have
      the
      effect of reducing the amounts otherwise eligible to be advanced to Borrower
      under the Revolving Facility pursuant to this Agreement. Borrower hereby
      acknowledges and agrees that as of the Closing Date, Lender shall establish
      a
      $250,000 reserve against the Borrowing Base, of Annex
      I,
      which
      reserve shall be eliminated upon the satisfaction by Borrower of the conditions
      set forth in Section 3 of Annex
      I
      for the
      elimination of the testing of the Minimum Liquidity Covenant set forth in
      Section 3 of Annex
      I.
      

     

    2.2   The
      Revolving Loans;
      Maturity

     

    All
      of
      the Revolving Loan 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.

     

    2.3   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 12:00 p.m.
      (Eastern Time) at least one but not more than four Business Days before the
      proposed Borrowing Date of such requested Advance, a completed Borrowing
      Certificate and relevant supporting documentation satisfactory to Lender. 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 Paid in Full and fully performed 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 such other
      supporting documentation as Lender shall reasonably request from time to time.
      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
      2.3,
      in all
      cases for credit to the appropriate Borrower (or to such other account as to
      which the appropriate Borrower shall instruct Lender in writing) via Federal
      funds wire transfer no later than 4:00 p.m. (Eastern Time).

     

    2.4   Promise
      to Pay; Manner of Payment

     

    The
      Borrower absolutely and unconditionally promises to pay principal, interest
      and
      all other Obligations payable hereunder, or under any other Loan Document,
      without any defense, 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 the Borrower (other than payments automatically paid through
      Advances under the Revolving Facility as provided herein), shall be made only
      by
      wire transfer on the date when due in Dollars, in immediately available funds
      to
      such account as may be indicated in writing by Lender to the Borrower from
      time
      to time. Any such payments received after 4:00 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
      fees, as the case may be.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    2.5   Repayment
      of Excess Advances

     

    Any
      balance of Advances under the Revolving Facility outstanding at any time in
      excess of either the Facility Cap or the Availability shall be immediately
      due
      and payable by Borrower without the necessity of any demand, at the Payment
      Office.

     

    2.6   Payments
      by Lender

     

    If
      the
      Borrower fails to make any payment required under any Loan Document as and
      when
      due and within any applicable grace period, Lender may make such payment, which
      payment shall be an Advance as of the date such payment is due notwithstanding
      the Availability, and the Borrower irrevocably authorizes disbursement of any
      such funds to Lender by way of direct payment of the relevant amount. 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 all of the Obligations have been fully performed Paid in Full and
      this
      Agreement has been terminated. Any sums expended by Lender in its Permitted
      Discretion 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. 

     

    2.7   Evidence
      of Loans

     

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

     

    (b) The
      entries made in the electronic or written records maintained pursuant to
      subsection (a) of this Section
      2.7
      (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 Lender to maintain such records or any error therein shall not
      in
      any manner affect 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 calendar days of Receipt
      of such accounting, which notice shall be deemed an objection only to items
      specifically objected to therein.

     

    (d) Borrower
      agrees that:

     

    (i) upon
      written notice by Lender to Borrower that a 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, Lender, Borrower shall promptly (and
      in
      any event within three (3) Business Days of any such request) execute and
      deliver to Lender an appropriate Note or Notes in form and substance reasonably
      acceptable to Lender and Borrower;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    (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 or restated from time
      to time; and

     

    (iii) upon
      Lender’s written request, and in any event within three (3) Business Days of any
      such request, Borrower shall execute and deliver to Lender new Notes and 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 Borrower within a
      reasonable period of time after Lender’s receipt of the replacement
      Notes.

     

    
      	
              III.

            	
              INTEREST
                AND FEES

            

    

     

    3.1   Interest
      on the Revolving Facility

     

    Commencing
      January 1, 2008, and continuing until the later of the expiration of the Term
      and the Payment in Full and full performance of all of the Obligations and
      termination of this Agreement, 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 LIBOR plus 3.25% in accordance with the
      procedures provided for in Section
      2.4
      and
Section
      5.1;
      provided,
      however,
      that,
      notwithstanding any provision of any Loan Document, for the purpose of
      calculating interest at any time hereunder, the LIBOR shall be not less than
      3.14%, 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.

     

    3.2   Commitment
      Fee

     

    On
      or
      before the Closing Date, Borrower shall pay to Lender $30,000 as a nonrefundable
      commitment fee which shall be fully earned on the date paid. Lender hereby
      acknowledges receipt of $15,000 of such commitment fee on November 19, 2007.
      

     

    3.3   Unused
      Line Fee

     

    Borrower
      shall pay Lender the Unused Line Fee monthly in arrears on the first day of
      each
      calendar month (starting with the calendar month immediately following the
      calendar month in which the Closing Date occurs). 

     

    3.4   Collateral
      Management Fee

     

    Borrower
      shall pay Lender as additional interest the Collateral Management Fee. The
      Collateral Management Fee shall be payable monthly in arrears on the first
      day
      of each calendar month (starting with the calendar month immediately following
      the calendar month in which the Closing Date occurs).   

     

    3.5   Computation
      of Fees; Lawful Limits

     

    All
      fees
      hereunder shall be computed on the basis of a year of three hundred and sixty
      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 Credit Parties
      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
      3.6
      shall
      control to the extent any other provision of any Loan Document is inconsistent
      herewith. All fees hereunder shall be non-refundable and deemed fully earned
      when due and payable.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    3.6   Default
      Rate of Interest

     

    Upon
      the
      occurrence and during the continuation of an Event of Default, Lender may
      increase the Applicable Rate of interest in effect at such time with respect
      to
      the Obligations, without notice, to the Default Rate which Default Rate shall
      continue post-judgment and subsequent to the date that the provisions of any
      applicable Debtor Relief Law are exercised by or against a Borrower unless
      the
      statutory post-judgment rate of interest is higher in which case such statutory
      rate shall apply.

     

    
      	
              IV.

            	
              GRANT
                OF SECURITY INTERESTS

            

    

     

    4.1   Security
      Interest; Collateral

     

    (a) To
      secure
      the payment and performance in full of the Obligations, Borrower (or if
      referring to another Person, such Person) hereby grants to Lender a continuing
      security interest in and Lien upon, and pledges and assigns to Lender, all
      of
      its right, title and interest in and to the Collateral, wherever located,
      whether now owned or hereafter acquired or arising;

     

    (b) Borrower
      hereby ratifies its authorization for Lender to have filed in any UCC
      jurisdiction any initial financing statements or amendments thereto indicating
      that those assets described in the definition of “Collateral”
      hereunder are pledged to the Lender.

     

    (c) If
      Borrower shall at any time hold or acquire a Commercial Tort Claim that arises
      out of Borrower’s Accounts or account receivable or would otherwise become part
      of the collateral under the definition of Collateral, Borrower shall immediately
      notify Lender in a writing signed by Borrower of the particulars thereof and
      grant to Lender in such a writing a security interest therein and in the
      proceeds thereof, all upon the terms of this Agreement, with such writing to
      be
      in form and substance satisfactory to Lender.

     

    4.2   Power
      of Attorney

     

    (a) Borrower
      hereby irrevocably constitutes and appoints Lender and any officer or agent
      thereof, with full power of substitution, as its true and lawful
      attorneys-in-fact with full irrevocable power and authority in the place and
      stead of such Borrower or in Lender’s own name, for the purpose of carrying out
      the terms of this Agreement and the grant of the security interests hereunder
      and under the other Loan Documents, and without limiting the generality of
      the
      foregoing, hereby gives said attorneys the power and right, on behalf of such
      Borrower (without requiring Lender to act as such, and without notice to or
      assent by such Borrower) to do the following: (i) upon the occurrence and during
      the continuance of an Event of Default, to receive, open and dispose of all
      mail
      addressed to any such Person and to 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 or 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 necessary or desirable 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.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (b) To
      the
      extent permitted by law, each Credit Party hereby ratifies all that said
      attorneys shall lawfully do or cause to be done by virtue hereof. This power
      of
      attorney is a power coupled with an interest and is irrevocable. 

     

    (c) The
      powers conferred on Lender pursuant to this Section
      4.2
      are
      solely to protect its interests in the Collateral and shall not impose any
      duty
      upon it to exercise any such powers. Lender shall be accountable only for the
      amounts that it actually receives as a result of the exercise of such powers,
      and neither it nor any of its officers, directors, employees or agents shall
      be
      responsible to Credit Party for any act or failure to act, except for Lender’s
      own gross negligence or willful misconduct.

     

    4.3   Further
      Assurances

     

    Borrower
      agrees, upon request of Lender, to take any and all other actions as Lender
      may
      determine to be necessary or appropriate for the attachment, perfection
      maintaining of the first priority security interest of, and for the ability
      of
      Lender to enforce, Lender’s security interest in any and all of the Collateral,
      including, without limitation, (i) executing, obtaining, delivering, filing,
      registering and recording any and all financing statements, continuation
      statements, stock powers, instruments and other documents, or causing the
      execution, filing, registration, recording or delivery of any and all of the
      foregoing, that are necessary or required under law or otherwise 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 (and Borrower 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 $25,000.00 that are part of the Collateral (individually
      or
      in the aggregate), (iii) defend the Collateral and Lender’s perfected first
      priority Lien thereon 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, allocable costs
      of
      staff counsel, and diligence fees and reasonable attorneys’ fees and expenses,
provided,
      that,
      the
      payment of staff counsel and reasonable attorneys’ fees shall be subject to the
      provisions of Section 15.7(b)) in connection with such defense, which may at
      Lender’s discretion be added to the Obligations, (iv) comply with any provision
      of any statute, regulation or treaty of any Governmental Authority as to any
      Collateral if compliance with such provision is a condition to attachment,
      perfection or priority of, or ability of Lender to enforce, Lender’s security
      interest in such Collateral and (v) obtain governmental and other third party
      waivers, consents and approvals in form and substance satisfactory to Lender,
      including any consent of any licensor, lessor or other Person obligated on
      Collateral and any party or parties whose consent is required for the security
      interest of Lender to attach under Section
      4.1. 

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    
      	
              V.

            	
              ADMINISTRATION
                AND MAINTENANCE OF
                COLLATERAL

            

    

     

    5.1   Revolving
      Facility Collections; Repayment; Borrowing
      Availability and Lockbox

     

    Borrower
      shall maintain one or more Lockbox Accounts with the Lockbox Banks, and shall
      execute with each of the Lockbox Banks a Lockbox Agreement, and such other
      agreements related thereto as Lender may require. Borrower shall ensure that
      all
      collections of their respective Accounts and all other cash payments received
      by
      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 the Concentration Account. Notwithstanding and without limiting
      any other provision of any Loan Document, Lender shall apply, on a daily basis,
      all funds transferred into the Concentration Account pursuant to the Lockbox
      Agreement and this Section 5.1
      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 but are received by Borrower
      or
      any of their Affiliates, such collections and proceeds shall be held in trust
      for the benefit of Lender and immediately remitted (and in any event within
      three (3) Business Days from receipt thereof), 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
      5.1
      is an
      essential term of this Agreement. 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 three Business
      Day clearance period. If as the result of collections of Accounts and any other
      cash payments received by Borrower pursuant to this Section
      5.1
      a credit
      balance exists with respect to the Concentration Account, such credit balance
      shall not accrue interest in favor of a Borrower. If at any time there is a
      credit balance in excess of $100,000, in the Concentration Account, Lender
      agrees to automatically wire transfer (without Borrower’s written request) all
      of such credit balance to the Borrower’s operating account specified on Schedule
      2.3 within one Business Day of such credit balance reaching $100,000,
provided,
      however,
      Lender
      shall not be required to make such “no-notice” transfer more frequently than
      once per week. Notwithstanding the foregoing, upon the written request of
      Borrower, Lender shall wire transfer any credit balance in the Concentration
      Account to Borrower’s operating account specified in Schedule 2.3., provided,
      that
      if
      Lender receives the written request of Borrower no later than 12:00 p.m.
      (Eastern Time), then Lender shall make such transfer the following Business
      Day
      and if Lender receives the written request of Borrower after 12:00 p.m. (Eastern
      time), then Lender shall make such transfer within two (2) Business Days from
      the date of receipt of such written notice. 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 their Affiliates shall direct all
      collections or proceeds it receives on Accounts or from other Collateral to
      the
      Concentration Account.

     

    5.2   Accounts

     

    In
      determining which Accounts are Eligible Accounts, Lender may rely on all
      statements and representations made by Borrower with respect to any Account.
      Unless otherwise indicated in writing to Lender, each Account of Borrower (i)
      is
      genuine and in all respects what it purports to be and is not evidenced by
      a
      judgment, (ii) arises out of a completed, bona fide sale and delivery of goods
      or rendering of Services by a Borrower in the ordinary course of business and
      in
      accordance with the terms and conditions of all purchase orders, contracts,
      certifications, participations, certificates of need and other documents
      relating thereto or forming a part of the contract between a Borrower and the
      Account Debtor, (iii) is for a liquidated amount (less any contractual
      allowances) 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, (iv) together with Lender’s security interest therein, is not and will
      not be in the future (by willful act or omission by Borrower), subject to any
      offset, lien, deduction, defense, dispute, counterclaim or other adverse
      condition, is absolutely owing to Borrower and is not contingent in any respect
      or for any reason (except Accounts owed or owing by Medicaid/Medicare Account
      Debtors that may be subject to offset or deduction under applicable law), and
      (v) 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, if due from a
      Medicaid/Medicare Account Debtor, is properly payable directly to a Borrower.
      

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    5.3   Healthcare

     

    (a) Borrower
      has obtained from (i) the Medicare program, approval to receive the provider
      numbers which will permit Borrower to bill the Medicare program with respect
      to
      covered services rendered to patients insured under the Medicare program, (ii)
      the applicable Medicaid programs, approval to receive the provider
      numbers/in-patient service contracts which will permit Borrower to bill the
      Medicaid program with respect to covered services rendered to patients insured
      under the Medicaid programs, and (iii) the CHAMPUS/TRICARE program, approval
      to
      receive the provider numbers which will permit Borrower to bill the
      CHAMPUS/TRICARE program with respect to covered services rendered to patients
      insured under the CHAMPUS/TRICARE program. Borrower is in compliance with the
      conditions of participation in the Medicare, Medicaid and CHAMPUS/TRICARE
      programs. 

     

    (b) There
      is
      no pending nor to the knowledge of Borrower, threatened, proceeding or
      investigation of Borrower relative to EMTALA nor are there any investigations
      or
      proceedings pending, or to the knowledge of Borrower, threatened by any
      Governmental Authority with respect to the Medicare, Medicaid or CHAMPUS/TRICARE
      programs with respect to the operations of Borrower, except as set forth on
      Schedule
      5.3A
      hereto.
      Without limiting or being limited by any other provision of any Loan Document,
      Borrower has timely filed or caused to be filed all cost and other reports
      of
      every kind required by law, agreement or otherwise. Subject to the last sentence
      of Section
      7.18,
      there
      are no claims, actions or appeals pending (and Borrower has not filed any claims
      or reports which could reasonably result in any such claims, actions or appeals)
      before any commission, board or agency or other Governmental Authority,
      including, without limitation, any intermediary or carrier, the Provider
      Reimbursement Review Board or the Administrator of the Centers of Medicare
      and
      Medicaid Services, with respect to any state or federal Medicare or Medicaid
      or
      CHAMPUS/TRICARE cost reports or claims filed by Borrower, or any disallowance
      by
      any commission, board or agency or other Governmental Authority in connection
      with any audit of such cost reports or claims. No validation review or program
      integrity review related to Borrower or the consummation of the transactions
      contemplated herein or to the Collateral have been conducted by any commission,
      board or agency or other Governmental Authority in connection with the Medicare
      or Medicaid programs, and to the knowledge of Borrower, no such reviews are
      scheduled, pending or threatened against or affecting any of the providers,
      any
      of the Collateral or the consummation of the transactions contemplated hereby.
      Neither Credit Parties nor any of their respective officers, directors, or
      managing employees, employees or agents are, or while this Agreement shall
      remain in effect shall be, excluded from participation in, or sanctioned or
      convicted of a crime under or with respect to the Medicare, Medicaid or
      CHAMPUS/TRICARE programs, nor to the best of Credit Parties’ knowledge, is any
      such exclusion threatened. Borrower has not received any notice from any of
      the
      Medicare, Medicaid or CHAMPUS/TRICARE programs, or any other third party payor
      programs, of any pending or threatened investigations, reviews or surveys of
      Borrower, its directors, officers or managing employees, and Borrower has no
      actual knowledge that any such investigation, reviews or surveys are pending
      or
      threatened.

     

    (c) As
      of the
      Closing Date, Borrower has third party contracts with each of the third-party
      payors listed on Schedule
      5.3B
      (unless
      noted otherwise), which constitutes (as indicated) each of the payors
      representing at least five percent (5%) of Borrower’s historic third-party payor
      cash receipts for the twelve month period ended December 31, 2007.

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    5.4   Medicare
      and Medicaid Account Debtors and Third-Party Payor
      Information

     

    Borrower
      (a) shall maintain applicable Medicare and Medicaid provider numbers, (b) shall
      maintain applicable CHAMPUS/TRICARE provider numbers, if applicable, and (d)
      to
      the extent Borrower shall enter into any other arrangements with
      non-governmental third-party payors, Borrower shall use commercially reasonable
      efforts to enter into agreements with such third-party payors in form and
      substance satisfactory to Lender.

     

    5.5   Collateral
      Administration

     

    (a) All
      Collateral (except proceeds of Accounts which shall be deposited with the
      Lockbox Banks) and records supporting the Collateral will at all times be kept
      by Borrower at the locations set forth on Schedule 7.18B
      hereto
      and shall not, without thirty calendar days prior written notice to Lender,
      be
      moved therefrom, and in any case shall not be moved outside the continental
      United States.

     

    (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 $25,000.00 become ineligible because they
      fall within one of the specified categories of ineligibility set forth in the
      definition of Eligible Accounts, Borrower shall notify Lender of such occurrence
      within two Business Days following the discovery of such occurrence or upon
      any
      submission to Lender of a Borrowing Certificate and the Borrowing Base shall
      thereupon be adjusted to reflect such occurrence. 

     

    (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 upon reasonable notice, in the name of Lender, any designee
      of
      Lender or Borrower, to verify the validity, amount or any other matter relating
      to any Collateral. Notwithstanding the foregoing, so long as no Default or
      Event
      of Default has occurred and is continuing, Lender agrees to give Borrower at
      least seven (7) business days’ written notice of such visit to Borrower’s
      offices. Borrower shall cooperate fully with Lender in an effort to facilitate
      and promptly conclude such verification process.

     

    (d) 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 (i) Account Debtors owing
      Accounts to Borrower other than Medicaid/Medicare Account Debtors 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, and (ii) Medicaid/Medicare Account Debtors
      that Borrower has waived any and all defenses and counterclaims they may have
      or
      could interpose in any such action or procedure brought by Lender to obtain
      a
      court order recognizing the collateral assignment or security interest and
      Lien
      of Lender in and to any Account or other Collateral and that Lender is seeking
      or may seek to obtain a court order recognizing the collateral assignment or
      security interest and Lien of Lender in and to all Accounts and other Collateral
      payable by Medicaid/Medicare Account Debtors.

     

    (e) As
      and
      when determined by Lender in its Permitted Discretion, Lender will perform
      the
      searches described in clauses (i), (ii) and (iii) below against Borrower and
      Guarantor (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 Guarantor and, if deemed necessary by Lender, the Secretary
      of
      State and local filing offices of each jurisdiction where Borrower or Guarantor
      maintain their respective executive offices, a place of business or assets;
      (ii) Lien searches with the United States Patent and Trademark Office and
      the United States Copyright Office; and (iii) judgment, federal, state and
      local
      tax lien searches, in each jurisdiction searched under clause (i)
      above.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

       (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
      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 calendar days after the Closing Date (or ten calendar
      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 Collateral for which
      Lender must receive possession to obtain a perfected security
      interest.

     

    
      	
              VI.

            	
              CONDITIONS
                PRECEDENT

            

    

     

    6.1   Conditions
      to Initial Advance and
      Closing

     

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

     

    (a) Lender
      shall have received information and responses to its due diligence requests,
      and
      completed examinations related to the Collateral, the financial statements
      and
      the books, records, business, obligations, financial condition and operational
      state of each Credit Party and any other information reasonably requested by
      Lender, and all such information and responses as well as the results of such
      examinations and each Credit Party shall demonstrate to Lender’s satisfaction
      that (i) its operations comply, in all respects deemed material by Lender,
      in its sole judgment, 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
      judgment, and (iii) it has no liability (whether contingent or otherwise)
      that is deemed material by Lender, in its sole judgment;

     

    (b) (i)
      Borrower shall have delivered to Lender (A) the Loan Documents to which Borrower
      is a party, each duly executed by an authorized officer of such Borrower and
      the
      other parties thereto, (B) a Borrowing Certificate for the Initial Advance
      under
      the Revolving Facility executed by an authorized officer of Borrower and (C)
      (1)
      audited annual consolidated and consolidating financial statements of Borrower
      for Borrower’s most recently ended fiscal year, including notes thereto,
      consisting of a balance sheet at the end of such completed fiscal year and
      the
      related statements of income, retained earnings, cash flows and owner's equity
      for such completed fiscal year, which financial statements shall be prepared
      and
      certified without qualification by an independent certified public accounting
      firm reasonably satisfactory to Lender/in accordance with GAAP consistently
      applied with prior periods (except for changes in accounting methodology
      specified in such financial statements); and (2) unaudited consolidated and
      consolidating financial statements of Borrower consisting of a balance sheet
      and statements of income, retained earnings, cash flows and owner's equity
      for the period from the beginning of the current fiscal year through the end
      of
      the most recently ended calendar month, which financial statements shall be
      prepared in accordance with GAAP consistently applied with prior periods (except
      for changes in accounting methodology which have been enacted since such prior
      periods), (ii) Borrower shall have established and maintained the Lockbox
      Accounts and have entered into Lockbox Agreements, all as contemplated in
Section
      5.1;
      and
      (iii) Guarantor shall have delivered to Lender the Loan Documents to which
      such
      Guarantor is a party, each duly executed and delivered by such Guarantor or
      an
      authorized officer of such Guarantor, as applicable, and the other parties
      thereto;

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (c) all
      in
      form and substance satisfactory to Lender in its Permitted Discretion, Lender
      shall have received (i) a report of Uniform Commercial Code financing statement,
      tax and judgment lien searches performed with respect to Borrower and Guarantor
      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, and
      (iii) evidence of each such filing, registration or recordation and of the
      payment by Borrower of any necessary fee, tax or expense relating
      thereto;

     

    (d) Lender
      shall have received (i) the Organizational and Good Standing Documents of each
      Credit Party, 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 Credit Parties, in form and substance
      satisfactory to Lender; 

     

    (e) Lender
      shall have received (i) a Solvency Certificate executed by the chief financial
      officer (or, in the absence of a chief financial officer, the chief executive
      officer) of Borrower and Guarantor, in form and substance satisfactory to Lender
      and (ii) an officer’s certificate in the form attached hereto as Exhibit
      D,
      executed by the chief executive officer or President of Borrower;

     

    (f) Lender
      shall have completed examinations, the results of which shall be 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 Borrower and Guarantor, and each such Person shall have demonstrated
      to
      Lender’s satisfaction that (i) its operations comply, in all respects
      deemed material by Lender, in its sole judgment, 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 judgment, and (iii) it has no liability
      (whether contingent or otherwise) that is deemed material by Lender, in its
      sole
      judgment;

     

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

     

    (h) all
      in
      form and substance satisfactory to Lender in its Permitted Discretion, Lender
      shall have received such consents, approvals and agreements, including, without
      limitation, any applicable Landlord Waivers and Consents with respect to any
      and
      all leases set forth on Schedule
      7.4A,
      from
      such third parties as Lender shall determine are necessary or desirable with
      respect to (i) the Loan Documents and the transactions contemplated thereby,
      and
      (ii) claims against Borrower or Guarantor or the Collateral;

     

    (i) Borrower
      shall be in compliance with Section
      8.5,
      and
      Lender shall have received copies of all insurance policies or binders, original
      certificates of all insurance policies of Borrower 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
      naming Lender as loss payee or additional insured on those policies specified
      in
Section
      8.5;

     

    (j) 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 Borrower) shall be satisfactory to Lender;

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

    (k) Lender
      shall have received, in form and substance satisfactory to Lender, release
      and
      termination of any and all Liens, security interest and Uniform Commercial
      Code
      financing statements in, on, against or with respect to any of the Collateral
      (other than Permitted Liens); 

     

    (l)
       Borrower
      shall have executed and delivered to Lender an IRS Form 8821;

     

    (m) Lender
      shall be satisfied that there are no material defaults in any of Borrower’s
      obligations under any contract required for the operation of its
      business;

     

    (n)
       Lender
      shall have received the Pledge Agreement, in form and substance satisfactory
      to
      Lender, as duly authorized, executed and delivered by the parties thereto;
      and

     

    (o) 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.

     

    6.2   Conditions
      to Each Advance

     

    The
      obligations of Lender to make any Advance, including, without limitation, the
      Initial Advance, (or otherwise extend credit hereunder) 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
      6.2
      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 Permitted Discretion;

     

    (b) each
      of
      the representation and warranties made by Credit Parties in or pursuant to
      this
      Agreement, or under the other Loan Documents or which are contained in any
      certificate, document or financial or other statement furnished in connection
      herewith, shall be true and correct, before and after giving effect to such
      Advance;

     

    (c) no
      Default or Event of Default shall have occurred or be continuing or would exist
      after giving effect to the Advance on such date;

     

    (d) immediately
      after giving effect to the requested Advance, the aggregate outstanding
      principal amount of Advances shall not exceed the lesser of the Availability
      and
      the Facility Cap;

     

    (e) at
      the
      time of making such requested Advance, no Material Adverse Change has occurred
      or is continuing; and 

     

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

     

    
      
        
        

      

      
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              VII.

            	
              REPRESENTATIONS
                AND WARRANTIES

            

    

     

    Credit
      Parties, jointly and severally, represent and warrant as of the date hereof,
      the
      Closing Date, each Borrowing Date: 

     

    7.1   Organization
      and Authority

     

    Each
      Credit Party is a corporation duly
      organized, validly existing and in good standing under the laws of its state
      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 conduct business in every jurisdiction in which
      failure so to qualify would reasonably be likely to result in a Material Adverse
      Change, and (iii) has all requisite power and authority (A) to execute,
      deliver and perform the Loan Documents to which it is a party, (B) 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 Loan Documents to which it is a party. 

     

    7.2   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 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 therein, 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
      7.2,
      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 Credit Party,
      enforceable against such Credit Party in accordance with its terms.

     

    7.3   Subsidiaries,
      Capitalization and Ownership Interests

     

    Except
      as
      listed on Schedule
      7.3,
      no
      Credit Party has any Subsidiaries. Schedule 7.3
      states
      the authorized and issued capitalization of each Credit Party, the number and
      class of equity securities and/or ownership, voting or partnership interests
      issued and outstanding of each 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 each 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 governed by Article 8 of the Uniform
      Commercial Code, and the interests are not held in a securities account.
Schedule 7.3
      sets
      forth a complete and accurate list of the directors, members, managers and/or
      partners of each Credit Party. Except as listed on Schedule
      7.3,
      no
      Credit Party owns an interest in, participates in or engages in any joint
      venture, partnership or similar arrangements with any Person.

     

    7.4   Properties

     

    Each
      Credit Party (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 7.4A
      lists
      all real properties (and their locations) owned or leased by or to, and all
      other material assets or property that are leased or licensed by, any Credit
      Party and all warehouses, fulfillment houses or other locations at which any
      of
      any Credit Party’s Inventory is located. Each Credit Party 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. Schedule
      7.4B
      lists
      all Deposit Accounts and investment accounts (and their locations) owned by
      any
      Credit Party, and all such Deposit Accounts and investment accounts are subject
      to no Liens of any kind except as expressly set forth on Schedule
      7.4B,
      all of
      which Liens constitute Permitted Liens.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

    7.5   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 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 obligation, covenant or condition contained in any 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 result in a Material Adverse Change, 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 result in a
      Material Adverse Change; (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 manager with respect to any such
      facility; or (iv) a party to any contract with any Affiliate other than as
      set
      forth on Schedule
      7.5.
      

     

    7.6   Litigation

     

    There
      is
      no action, suit, proceeding or investigation pending or, to the knowledge of
      any
      Credit Party, threatened against any Credit Party (i) that challenges the
      validity of any of the Loan Documents, or to enjoin the right of any Credit
      Party to enter into any Loan Document or to consummate the transactions
      contemplated thereby, (ii) that would reasonably be likely to be or have, either
      individually or in the aggregate, any Material Adverse Change, or
      (iii) that would reasonably be likely to result in any Change of Control.
      Except as set forth on Schedule 7.6, 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
      7.6,
      there
      is no action, suit, proceeding or investigation initiated by any Credit Party
      currently pending. 

     

    7.7   Environmental
      Matters

     

    Other
      than exceptions to any of the following that could not, individually or in
      the
      aggregate, reasonably be expected to result in a Material Adverse
      Change:

     

    (a) Each
      Credit
      Party
      and its
      Subsidiaries: (i) are, and within the period of all applicable statutes of
      limitation have been, in compliance with all applicable Environmental Laws;
      (ii)
      hold all environmental Permits (each of which is in full force and effect)
      required for any of their current or intended operations or for any property
      owned, leased, or otherwise operated by any of them; (iii) are, and within
      the
      period of all applicable statutes of limitation have been, in compliance with
      all of their environmental Permits; and (iv) reasonably believe that: each
      of
      their environmental Permits will be timely renewed and complied with, without
      material expense; any additional environmental Permits that may be required
      of
      any of them will be timely obtained and complied with, without material expense;
      and compliance with any Environmental Law that is or is expected to become
      applicable to any of them will be timely attained and maintained, without
      material expense.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (b) To
      the
      knowledge of each Credit
      Party
      and its
      Subsidiaries, no Materials of Environmental Concern (i) are present at, on,
      under, in, or about any real property now owned, leased or operated by such
      Credit
      Party
      or any
      of its Subsidiaries, or (ii) were present at any formerly owned, leased or
      operated property during the period of such ownership, lease or operation by
      such Credit
      Party
      or its
      Subsidiaries or (iii) are present at any other location (including, without
      limitation, any location to which Materials of Environmental Concern have been
      sent for re-use or recycling or for treatment, storage, or disposal) which,
      in
      the case of any of clauses (i), (ii) or (iii), would reasonably be expected
      to
      (A) give rise to liability of such Credit
      Party
      or any
      of its Subsidiaries under any applicable Environmental Law or otherwise result
      in costs to such Credit
      Party
      or any
      of its Subsidiaries, (B) interfere with the continued operations of such
Credit
      Party
      or any
      of its Subsidiaries, or (C) impair the fair saleable value of any real property
      owned or leased by such Credit
      Party
      or any
      of its Subsidiaries. 

     

    (c) There
      is
      no judicial, administrative, or arbitral proceeding (including any notice of
      violation or alleged violation) under or relating to any Environmental Law
      to
      which any Credit
      Party or
      any of
      such Credit
      Party’s
      Subsidiaries is, or to the knowledge of such Credit
      Party or
      any of
      its Subsidiaries will be, named as a party that is pending or, to the knowledge
      of such Credit
      Party or
      any of
      its Subsidiaries, threatened.

     

    (d) No
      Credit
      Party,
      nor any
      of Credit
      Parties’ Subsidiaries,
      has received any written request for information, or been notified that it
      is a
      potentially responsible party under or relating to the federal Comprehensive
      Environmental Response, Compensation, and Liability Act or any similar
      Environmental Law, or with respect to any Materials of Environmental
      Concern.

     

    (e) No
      Credit
      Party,
      nor any
      of Credit
      Parties’
      Subsidiaries, has entered into or agreed to any consent decree, order, or
      settlement or other agreement, or is subject to any judgment, decree, or order
      or other agreement, in any judicial, administrative, arbitral, or other forum
      for dispute resolution, relating to compliance with or liability under any
      Environmental Law.

     

    (f) No
      Credit
      Party,
      nor any
      of Credit
      Parties’
      Subsidiaries, has assumed or retained, by contract or operation of law, any
      liabilities of any kind, fixed or contingent, known or unknown, under any
      Environmental Law or with respect to any Material of Environmental
      Concern.

     

    7.8   Potential
      Tax Liability; Tax Returns; Governmental Reports

     

    (a) Except
      as
      disclosed in Schedule
      7.8,
      no
      Credit Party (i) has received any oral or written communication from any taxing
      authority 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) is aware of any year which remains
      open pending tax examination or audit by any taxing authority, and (iii) is
      aware of any information that could give rise to any tax liability or
      assessment.

     

    (b) 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 such Credit Party is currently contesting in good faith with adequate
      reserves under GAAP, which contested items are described on Schedule
      7.8.
      

     

    
      
        
        

      

      
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    7.9   Financial
      Statements
      and Reports

     

    All
      financial statements and financial information relating to Credit Parties that
      have been or may hereafter be delivered to Lender by Credit Parties are accurate
      and complete (as of the date they were prepared) and all financial statements
      have been prepared in accordance with GAAP consistently applied with prior
      periods except for any normal quarter and year-end adjustments which may be
      applied in future periods and for any changes in accounting methodology that
      may
      have been applied since any prior period. 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 or Liability Event or, to Credit Parties’ knowledge, any other event or
      condition that could reasonably be expected to have a Material Adverse Change
      or
      Liability Event.

     

    7.10   Compliance
      with Law

     

    (a) Each
      Credit Party has been and is currently in compliance, and is presently taking
      and will continue to take all actions necessary to assure that it shall, on
      or
      before each applicable compliance date and continuously thereafter, comply
      with
      HIPAA. Borrower has not received any notice from any Governmental Authority
      that
      such Governmental Authority has imposed or intends to impose any enforcement
      actions, fines or penalties for any failure or alleged failure to comply with
      HIPAA or its implementing regulations. 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 such Credit Party’s
      business, assets or operations, including, without limitation, ERISA and
      Healthcare Laws, and (ii) is not in violation of any order of any Governmental
      Authority or other board or tribunal, except where noncompliance or violation
      could not reasonably be expected to result in a Material Adverse Change. 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 result in a Material Adverse
      Change. No Credit Party has received any notice that such Credit Party is not
      in
      compliance in any respect with any of the requirements of any of the foregoing.
      No Credit Party has (a) 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)
      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) any knowledge 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) any 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) 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 each Credit Party, there exists
      no event described in Section 4043 of ERISA, excluding
      Subsections 4043(b)(2) and 4043(b)(3) thereof, for which the required
      thirty (30) day notice period has not been waived. Each Credit Party has
      maintained in all material respects all records required to be maintained by
      the
      Joint Commission on Accreditation of Healthcare Organizations, the Food and
      Drug
      Administration, Drug Enforcement Agency and State Boards of Pharmacy and the
      federal and state Medicare and Medicaid programs as required by the Healthcare
      Laws and, to the best knowledge of each Credit Party, there are no presently
      existing circumstances which likely would result in material violations of
      the
      Healthcare Laws. 

     

    (b) No
      Credit
      Party (i)  is
      a
      Person whose property or interest in property is blocked or subject to blocking
      pursuant to Section  1
      of
      Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
      Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
      (66 Fed. Reg. 49079 (2001)), (ii) engages in any dealings or transactions
      prohibited by Section 2 of such executive order, or is otherwise associated
      with
      any such Person in any manner violative of such Section 2, or (iii) is a Person
      on the list of Specially Designated Nationals and Blocked Persons or subject
      to
      the limitations or prohibitions under any other OFAC regulation or executive
      order.

     

    
      
        
        

      

      
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    (c) Each
      Credit Party is in compliance, in all material respects, with the Patriot Act.
      

     

    7.11   Intellectual
      Property

     

    Schedule
      7.11
      lists,
      as of the Closing Date, all (a) registered Intellectual Property (including
      applications for registration) owned by Borrower and (b) licenses of rights
      in
      Intellectual Property (other than non-customized mass market licenses of rights
      in Intellectual Property) pursuant to which Borrower licenses rights in
      Intellectual Property either from or to another Person, whether on an exclusive
      or non-exclusive basis.

     

    7.12  
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 as currently conducted. All of the foregoing is 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 could reasonably be expected to result in a
      Material Adverse Change, (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 Change, and/or (iii) and has not been, involved in any labor dispute,
      strike, walkout or union organization which could reasonably be expected to
      result in a Material Adverse Change. Borrower has obtained, and currently has,
      all Permits necessary in the generation of each Account.

     

    7.13   No
      Default

     

    There
      does not exist any Default or Event of Default.

     

    7.14   Disclosure

     

    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 any by 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 as of the date such statements
      were
      delivered. There is no fact known to any Credit Party which has not been
      disclosed to Lender in writing which could reasonably be expected to result
      in a
      Material Adverse Change. 

     

    7.15   Existing
      Indebtedness; Investments, Guarantees and Certain
      Contracts

     

    Except
      as
      contemplated by the Loan Documents or as otherwise set forth on Schedule 7.15A,
      no
      Credit Party (i) has any outstanding Indebtedness other than Permitted
      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) owns or holds any equity or long-term debt investments
      in, and has any outstanding advances to or any outstanding guarantees for the
      obligations of, or any outstanding borrowings from, any Person. Each Credit
      Party has performed all material obligations required to be performed by such
      Credit Party pursuant to or in connection with any items listed on Schedule 7.15A
      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 breach, default or event of default thereunder. Schedule
      7.15B
      sets
      forth all Indebtedness with a maturity date during the Term, and identifies
      such
      maturity date. No Credit Party has any existing accrued and unpaid Indebtedness
      owing to any Governmental Authority or any other governmental
      payor.

     

    
      
        
        

      

      
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    7.16   Other
      Agreements

     

    Except
      as
      set forth on Schedule
      7.16,
      (i)
      there are no existing or proposed agreements, arrangements, understandings
      or
      transactions between any Credit Party and any of such Credit Party’s officers,
      members, managers, directors, stockholders, partners, other interest holders,
      employees or Affiliates or any members of their respective immediate families,
      (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 such Credit Party (except that any such Persons may own
      stock
      in, but not exceeding two percent (2%) of the outstanding capital stock of,
      any
      publicly traded company that may compete with such Credit Party (iii) no
      director or officer of any Credit Party has received any compensation of any
      kind in consideration or otherwise of such Credit Party entering into this
      Agreement, and (iv) neither Lender nor any of its Affiliates has paid or offered
      to pay any compensation to any director or officer of any Credit Party in
      consideration of such Credit Party’s entering into the Loan
      Documents.

     

    7.17   Insurance

     

    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
      8.5
      hereof.
      All such insurance policies are listed and described on Schedule
      7.17.

     

    7.18   Names;
      Location of Offices, Records
      and Collateral

     

    During
      the preceding five years, Borrower has not conducted business under, filed
      any
      tax return under, or used any name (whether corporate, partnership or assumed)
      other than as shown on Schedule
      7.18A.
      Borrower is the sole owner of all of its names listed on Schedule
      7.18A,
      and any
      and all business done and invoices issued in such names are Borrower’s sales,
      business and invoices. Each trade name of Borrower represents a division or
      trading style of Borrower. Borrower maintains its places of business and chief
      executive offices only at the locations set forth on Schedule
      7.18B,
      and all
      Accounts of Borrower arise, originate and are located, and all of the Collateral
      and all books and records in connection therewith or in any way relating thereto
      or evidence the Collateral are located and shall be only, in and at such
      locations. All of the Collateral is located only in the continental United
      States. There are no facts, events or occurrences which in any way impair the
      validity or enforceability thereof or tend to reduce the amount payable
      thereunder from the face amount of the claim or invoice and statements delivered
      to Lender with respect thereto. To the best of Credit Parties’ knowledge, (A)
      the Account Debtor thereunder had the capacity to contract at the time any
      contract or other document giving rise thereto was executed, (B) such
      Account Debtor is solvent, and, (C) subject to the final sentence of this
Section
      7.18,
      there
      are no proceedings or actions which are threatened or pending against any
      Account Debtor thereunder which might result in any Material Adverse Change
      in
      such Account Debtor’s financial condition or the collectability thereof.
      Borrower has obtained and currently has all Permits necessary in the generation
      of each Account of Borrower and Borrower has disclosed to Lender on each
      Borrowing Certificate (a “Denial
      Disclosure”)
      the
      amount of all Accounts of Borrower for which Medicare is the Account Debtor
      and
      for which payment has been denied and subsequently appealed pursuant to the
      procedure described in the definition of Eligible Accounts hereof, and Borrower
      is pursuing all available appeals in respect of such Accounts, provided,
      that,
      Borrower shall not be required to make a Denial Disclosure for up to $50,000
      in
      the aggregate that remain uncorrected at any time for claims denied due to
      coding and clerical errors for the period covered by such Borrowing
      Certificate.

     

    
      
        
        

      

      
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    7.19   Lien
      Perfection and Priority

     

    Upon
      the
      execution and delivery of this Agreement, and upon the proper filing of the
      necessary financing statements 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 (ii) in connection with Permitted
      Liens.

     

    7.20   Investment
      Company Act

     

    No
      Credit
      Party is required to register as an “investment company” within the meaning of
      the Investment Company Act of 1940, as amended.

     

    7.21   Regulations
      T, U and X

     

    No
      Credit
      Party is engaged in the business of extending credit for the purpose of
      purchasing or carrying any “margin stock” or “margin security” (within the
      meaning of Regulations T, U or X issued by the Board of Governors of the Federal
      Reserve System), and no proceeds of the Loans will be used to purchase or carry
      any margin stock or margin security or to extend credit to others for the
      purpose of purchasing or carrying any margin stock or margin
      security.

     

    7.22   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.

     

    
      	
              VIII.

            	
              AFFIRMATIVE
                COVENANTS

            

    

     

    Each
      Credit Party, jointly and severally, covenants and agrees that, until all of
      the
      Obligations have been fully performed and Paid in Full, and this Agreement
      has
      terminated:

     

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

      

    

     

    (a) Financial
      Reports.
      Credit
      Parties shall furnish to Lender (i) as soon as available and in any event when
      submitted to the Securities and Exchange Commission but no later than one
      hundred and five (105) calendar days after the end of each fiscal year of Credit
      Parties, audited annual consolidated and consolidating financial statements
      of
      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 owners’ equity for such completed fiscal year, which financial
      statements shall be prepared by an independent certified public accounting
      firm
      satisfactory to Lender and accompanied by related management letters, if
      available; provided that beginning with the financial statements for the fiscal
      year ending December 31, 2008, no going concern opinion shall be issued in
      connection with such financial statements, (ii) as soon as available and in
      any
      event within thirty calendar days after the end of each calendar month (fifty
      calendar days after the end of any month which coincides with the end of a
      fiscal quarter and sixty days after the end of any month which coincides with
      the end of a fiscal year), unaudited financial statements of Credit Parties
      consisting of a balance sheet and statements of income and cash flows as of
      the
      end of the immediately preceding calendar month. Monthly financial statements
      provided to the Lender which have been internally prepared by Borrower for
      any
      month which corresponds with the end of a fiscal quarter or fiscal year will
      be
      subject to further adjustments by the Credit Parties’ outside auditors before
      being finalized. All such financial statements shall be prepared in accordance
      with GAAP consistently applied with prior periods except for any normal quarter
      and year-end adjustments which may be applied in future periods and for any
      changes in accounting methodology that may have been applied since any prior
      period. With each such financial statement, Credit Parties shall also deliver
      a
      certificate of its chief financial officer or principal accounting 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 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) 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 satisfactory
      to Lender and (iii) simultaneously with the delivery of monthly financial
      statements for any given month, an accounts payable aging schedule showing
      a
      reconciliation to the amounts reported in the monthly financial
      statements.

     

    
      
        
        

      

      
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    (b) Other
      Materials.
      Credit
      Parties shall furnish to Lender as soon as available, and in any event within
      ten 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 8.1(a))
      prepared by, for or on behalf of 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 any Credit Party shall send to its stockholders, members,
      partners or other equity owners at any time unless such materials are publicly
      available at www.sec.gov, (iii) all Medicare and Medicaid cost reports and
      other
      documents and materials filed by Borrower and any other reports, materials
      or
      other information regarding or otherwise relating to Medicaid or Medicare
      prepared by, for or on behalf of Borrower other than internal working analyses,
      (iv) simultaneously with the provision of any monthly financial statements
      provided pursuant to Section 8(a) above to the extent such information has
      not
      been already reflected in a Borrowing Certificate submitted to Lender: (A)
      a
      report of the status of all payments, denials and appeals of all Medicare and
      Medicaid Accounts (unless such denials were due to clerical errors in an amount
      which does not require a Denial Disclosure, and (B) a sales and collection
      report and accounts receivable 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)
      promptly upon receipt thereof, copies of any reports submitted to a Borrower
      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 thirty (30)
      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.
      Credit
      Parties shall promptly, and in any event within four calendar days after
      Borrower or any authorized officer of Borrower 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 Borrower or otherwise affecting or involving
      or relating to Borrower or any of its property or assets to the extent (A)
      the
      amount in controversy exceeds $50,000.00, or (B) to the extent any of the
      foregoing seeks injunctive 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 expected to result in a Material Adverse Change, in each
      case describing the nature and status thereof and the action proposed to be
      taken with respect thereto, (iv) any notice received by a Borrower from any
      payor of a claim, suit or other action such payor has, claims or has filed
      against such Borrower, (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 $50,000.00 or more, singly or in the aggregate,
      in
      existence at any one time, (vi) any notice given by Borrower to any other lender
      of such Borrower and shall furnish to Lender a copy of such notice, (vii)
      receipt of any notice or request from any Governmental Authority or governmental
      payor regarding any liability or claim of liability in excess of $50,000.00
      singly or in the aggregate, (viii) receipt of any notice by Borrower regarding
      termination of any manager of any facility owned, operated or leased by such
      Borrower, (ix) if any Account becomes evidenced or secured by an Instrument
      or
      Chattel Paper and (x) any pending, threatened or actual investigation or survey
      of Borrower, its directors, officers or managing employees by any of the
      Medicare, Medicaid or CHAMPUS/TRICARE programs, or any other third party payor
      programs, (xi) Borrower becoming a party to a Corporate Integrity Agreement
      with
      the Office of Inspector General of the Department of Health and Human Services,
      (xii) Borrower becoming subject to reporting obligations pursuant to any
      settlement agreement entered into with any Governmental Authority, (xiii)
      Borrower becoming the subject of any government payor program investigation
      conducted by any federal or state enforcement agency, (xiv) Borrower becoming
      a
      defendant in any qui tam/False Claims Act litigation, (xv) Borrower being served
      with or received any search warrant, subpoena, civil investigative demand or
      contact letter by or from any federal or state enforcement agency relating
      to an
      investigation or (xvi) Borrower becoming subject to any written complaint filed
      with or submitted to any Governmental Authority having jurisdiction over such
      Borrower or filed with or submitted to such Borrower pursuant to such Borrower’s
      policies relating to the filing or submissions of such types of complaints,
      from
      employees, independent contractors, vendors, physicians, or any other person
      that would indicate that such Borrower has violated any law, regulation or
      law.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

    

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

     

    (e) Operating
      Budget.
      Credit
      Parties shall furnish to Lender on or prior to the Closing Date and for each
      fiscal year of Credit Parties prior to the commencement of such fiscal year,
      a
      draft of consolidated and consolidating month by month projected operating
      budgets, annual projections, profit and loss statements, balance sheets and
      cash
      flow reports of and for Credit Parties 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
      consistently applied with prior periods, provided, that, (A) such Budget as
      submitted to the Board of Directors of Borrower for approval shall be provided
      to Lender by Borrower not less than sixty (60) days after commencement of such
      fiscal year and (B) a final version of the budget as approved by the Board
      of
      Directors of Borrower for each fiscal year shall be provided to Lender by
      Borrower not less than ten (10) calendar days after the approval of such budget
      or any revision thereof by the Board of Directors.

     

    (f) Ancillary
      Materials to be Furnished Upon Request.
      Upon
      written request by Lender, Credit Parties shall use its best efforts to furnish
      to Lender within ten (10) calendar days after the request therefore the
      following kinds of information: (1) any other reports, materials or other
      information regarding or otherwise relating to Medicaid or Medicare prepared
      by,
      for, or on behalf of, Borrower or any of its Subsidiaries, including, without
      limitation, (A) 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 (B) Medicare and
      Medicaid provider numbers and agreements, (C) state surveys pertaining to any
      healthcare facility operated or owned or leased by Borrower or any of its
      Affiliates or Subsidiaries, (D) participating agreements relating to medical
      plans (ii) copies of material licenses and permits required by applicable
      federal, state, foreign or local law, statute, ordinance or regulation or
      Governmental Authority for the Operation of Borrower’s business.

     

    
      
        
        

      

      
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    8.2   [Reserved]

     

    8.3   Conduct
      of Business and Maintenance of Existence and Assets

     

    Borrower
      shall (i) conduct its business in accordance with good business practices
      customary to the industry, (ii) engage principally in the same or similar lines
      of business substantially as heretofore conducted, (iii) 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 Borrower using commercially reasonable business
      judgment),
      (v)
      from time to time to make all necessary or desirable repairs, renewals and
      replacements thereof, as
      determined by such Borrower 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 expected to result in a Material
      Adverse Change; and (vii) remain in good standing and maintain operations in
      all
      jurisdictions in which currently located.

     

    8.4   Compliance
      with Legal and Other Obligations

     

    Each
      Credit Party shall (i) comply with all laws, statutes, rules, regulations,
      ordinances and tariffs of all Governmental Authorities applicable to it or
      its
      business, assets or operations, including applicable requirements which where
      promulgated pursuant to HIPAA (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, (iii) perform in
      accordance with its terms each 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 result
      in
      a Material Adverse Change, (iv) maintain and comply with all Permits necessary
      to conduct its business and comply with any new or additional requirements
      that
      may be imposed on it or its business, and (v) properly file all Medicaid,
      Medicare and CHAMPUS/TRICARE cost reports. Without limiting the foregoing,
      Borrower is, and while this Agreement shall remain in effect shall remain,
      qualified for participation in the Medicare, Medicaid and CHAMPUS/TRICARE
      programs; Borrower has, and while this Agreement shall remain in effect shall
      maintain, a current and valid provider contract with such programs; Borrower
      is,
      and while this Agreement shall remain in effect shall remain, in compliance
      with
      the conditions of participation in such programs; and Borrower has, and while
      this Agreement shall remain in effect shall maintain, all approvals or
      qualification necessary for capital reimbursement for any facility operated
      by
      Borrower. While this Agreement shall remain in effect, all billing practices
      of
      Borrower with respect to any facility operated by Borrower and all third party
      payors, including the Medicare, Medicaid and CHAMPUS/TRICARE programs and
      private insurance companies, shall remain in compliance with all applicable
      laws, regulations and policies of such third party payors and the Medicare,
      Medicaid and CHAMPUS/TRICARE programs. 

     

    
      
        
        

      

      
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    8.5   Insurance

     

    Borrower
      shall keep (i) all of its insurable properties and assets 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,
      including, without limitation, medical malpractice and professional liability
      insurance, as applicable; (ii) 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 Credit
      Parties; and (iii) maintain insurance under all applicable workers’ compensation
      laws; all of the foregoing insurance policies to (A) be satisfactory in
      form and substance to Lender, (B) expressly provide that they cannot be amended
      to reduce coverage or canceled without thirty (30) calendar 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 such Credit Party
      or any insured thereunder. With respect to property insurance covering business
      interruption, accounts receivable and the books and records in connection
      therewith, Lender shall be named as loss payee and additional insured and with
      respect to general liability insurance Lender shall be named as additional
      insured.

     

    8.6   Books
      and Records

     

    Each
      Credit Party shall (i) keep 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.

     

    8.7   Inspections;
      Periodic Audits and Reappraisals

     

    Each
      Credit Party shall permit the representatives of Lender, at the expense of
      Credit Parties, from time to time during normal business hours, but no more
      frequently than three times per year so long as no Default or Event of Default
      occurs and is continuing 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 with its officers and independent public
      accountants (and by this provision such officers and accountants are authorized
      to discuss the foregoing) upon seven (7) Business Days prior written notice;
      provided, however, that (A) Borrower shall not be obligated to reimburse Lender
      for more than three (3) visits, inspections, examinations and audits under
      the
      foregoing clause (i) conducted during any fiscal year while no Default or Event
      of Default exists at a cost of $850 per auditor per day plus all out-of-pocket
      expenses of Lender (it being agreed and understood that the Borrower shall
      be
      Obligated to reimburse Lender for all such visits, inspections, examinations
      and
      audits conducted while any Default or Event of Default exists); and (B) no
      notice shall be required to do any of the foregoing if any Event of Default
      has
      occurred and is continuing. 

     

    8.8   Further
      Assurances; Post-Closing 

     

    At
      Credit
      Parties’ cost and expense, each Credit Party shall (i) within five Business
      Days after Lender’s request, take such further actions, obtain such consents and
      approvals and duly execute and deliver such further agreements, assignments,
      instructions or documents as Lender may deem necessary in its Permitted
      Discretion with respect to furtherance of the purposes, terms and conditions
      of
      the Loan Documents and the consummation of the transactions contemplated
      thereby, whether before, at or after the performance or consummation of the
      transactions contemplated hereby or the occurrence of a Default or Event of
      Default, (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
      8.8, and
      (iii)
      upon the exercise by Lender or any of its Affiliates of any power, right,
      privilege or remedy pursuant to any Loan Document or under applicable law or
      at
      equity which requires any consent, approval, registration, qualification or
      authorization of any Governmental Authority, execute and deliver, or cause
      the
      execution and delivery of, all applications, certificates, instruments and
      other
      documents requested by Lender in its Permitted Discretion that may be so
      required for such consent, approval, registration, qualification or
      authorization. Without limiting the foregoing, upon the exercise by Lender
      or
      any of its Affiliates of any right or remedy under any Loan Document which
      requires any consent, approval or registration with, consent, qualification
      or
      authorization by, any Person, Credit Parties shall execute and deliver, or
      cause
      the execution and delivery of, all applications, certificates, instruments
      and
      other documents that Lender or its Affiliate may be required to obtain for
      such
      consent, approval, registration, qualification or authorization.

     

    
      
        
        

      

      
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    8.9   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. 

     

    8.10   [Reserved]

     

    8.11   [Reserved]

     

    8.12   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 any Credit Party 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 new request or new directive (whether
      or not having the force of law) from any Governmental Authority after the date
      of Closing: (A) subjects Lender to any tax, levy, impost, deduction, assessment,
      charge or withholding of any kind whatsoever directly arising from any Loan
      Document or from payments directly received by the Lender from any Credit Party
      pursuant to the Loan Documents (except for net income taxes, franchise taxes
      imposed in lieu of net income taxes, and any other taxes on the general affairs
      of the Lender which may be 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 directly in
      connection with the transactions contemplated thereby or participations therein
      (specifically excluding any general costs imposed on Lender by any government
      entity that are not directly related to the obligations hereunder); and the
      result of any of the foregoing is to directly increase the cost to Lender of
      making or continuing any Loan hereunder or to reduce any amount receivable
      hereunder, then, in any such case, Credit Parties shall promptly, and in any
      event within ten (10) Business days of Credit Party’s receipt of notice from
      Lender, pay to Lender any additional amounts necessary to compensate Lender,
      on
      an after-tax basis, for such additional cost or reduced amount as determined
      by
      Lender. If Lender becomes entitled to claim any additional amounts pursuant
      to
      this Section
      8.12
      it shall
      promptly notify Credit Parties of the event by reason of which Lender has become
      so entitled and contain a calculation of such additional amounts that are
      proposed to be due and payable and shall answer any questions and provide any
      explanation reasonably requested by Borrower in good faith to understand the
      nature and purported reason for such additional amounts. 

     

    
      
        
        

      

      
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    (b)
      Credit Parties shall promptly, and in any event within five Business Days after
      any Credit Party or any authorized officer of any Credit Party obtains knowledge
      thereof, notify Lender in writing of any oral or written communication from
      any
      taxing authority or otherwise with respect to any (i) tax investigations,
      relating to such Credit Party directly, or relating to any consolidated tax
      return which was filed on behalf of such 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
      any tax liability or assessment.

     

    8.13   Payroll
      Taxes

     

    Without
      limiting or being limited by any other provision of any Loan Document, each
      Credit Party at all times shall retain and use a Person acceptable to Lender
      to
      process, manage and pay its payroll taxes and shall cause to be delivered to
      Lender within ten 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. Notwithstanding the foregoing, being copied on Borrower’s
      payroll reports within the period specified in the preceding sentence shall
      satisfy this requirement; provided that such payroll report sets forth the
      status of payroll taxes.

     

    8.14   New
      Subsidiaries

     

    If
      at any
      time after the Closing Date Borrower shall form or acquire any new Subsidiary,
      Borrower shall promptly, and in any event not later than fifteen calendar days
      after the creation or acquisition of such Subsidiary or such longer period
      as
      Lender may determine in writing, execute, and cause such new Subsidiary to
      execute, and deliver to Lender such joinder agreements and amendments to this
      Agreement and the other Loan Documents, including executing and delivering
      allonges to any Notes to the extent issued hereunder in form and substance
      satisfactory to Lender and providing such other documentation as Lender may
      reasonably request, including, without limitation, UCC searches, as applicable,
      and filings, legal opinions and corporate authorization documentation, and
      to
      take such other actions in each case as Lender deems necessary or advisable
      to
      (a) join and make such new Subsidiary a co-Borrower hereunder and thereunder,
      subject to all the rights and benefits and obligations and burdens of a Borrower
      hereunder, (b) grant to Lender a perfected first priority security interest
      in
      the Collateral of such new Subsidiary subject to no Liens other than the
      Permitted Liens.

     

    
      
        8.15   [Reserved]

      

    

     

    
      	
              IX.

            	
              NEGATIVE
                COVENANTS

            

    

     

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

     

    9.1   Financial
      Covenants

     

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

     

    
      
        
        

      

      
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    9.2   Permitted
      Indebtedness

     

    Borrower
      shall not create, incur, assume or suffer to exist any Indebtedness, other
      than
      Permitted Indebtedness. Borrower 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
      Borrower and Lender. 

     

    9.3   Permitted
      Liens

     

    Borrower
      shall not create, incur, assume or suffer to exist any Lien upon, in or against,
      or pledge of, any of the Collateral or any of its other properties or assets
      of
      Borrower including but not limited to Deposit Accounts, cash or other money
      and
      Investment Property, whether now owned or hereafter acquired, except Permitted
      Liens.

     

    9.4   Investments;
      New Facilities or Collateral; Subsidiaries

     

    Except
      as
      set forth on Schedule 9.4, Borrower shall not, directly or indirectly, enter
      into any agreement to, (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 or any joint venture, 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, (C) investments in Cash Equivalents and (D) the endorsement of
      negotiable instruments for deposit or collection or similar transactions in
      the
      ordinary course of business). Borrower shall not, directly or indirectly,
      purchase, own, operate, hold, invest in or otherwise acquire any facility,
      property or assets or any Collateral that is not located at the locations set
      forth on Schedule
      7.18B
      unless
      Borrower shall provide to Lender at least ten (10) Business Days prior written
      notice. Borrower shall not have any Subsidiaries other than those Subsidiaries,
      if any, existing at Closing and set forth on Schedule
      7.3.,
      unless
      Borrower and new Subsidiary fully complies with Section
      8.14
      hereof.

     

    Notwithstanding
      the foregoing, Borrower shall be permitted to make Permitted Acquisitions with
      Lender’s prior written consent; provided,
      however,
      that
      the consent of Lender shall not be required if the cash consideration paid
      in
      respect of the Permitted Acquisition does not exceed $500,000 and Borrower
      fully
      complies with Section
      8.14
      hereof.

     

    9.5   Dividends;
      Redemptions

     

    Borrower
      shall not (i) declare, pay or make any Distribution, (ii) apply any of its
      funds, property or assets to the acquisition, redemption or other retirement
      of
      any Capital Stock, (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; provided however,
      that
      absent the occurrence and continuation of a Default or Event of Default, and
      if
      a Default or Event of Default would not arise therefrom, Borrower may: (x)
      make
      Permitted Distributions, (y) declare, pay or make Distributions payable in
      its
      stock, or split-ups or reclassifications of its stock; and (z) redeem its
      capital stock from terminated employees pursuant to, but only to the extent
      required under, the terms of the related employment agreements.

     

    
      
        
        

      

      
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    9.6   Transactions
      with Affiliates

     

    Except
      as
      set forth on Schedule 9.6, Borrower shall not enter into or consummate any
      transaction of any kind with any of its Affiliates or Guarantor or any of their
      respective Affiliates other than: (i) salary, bonus, severance, employee stock
      option and other compensation, consulting and employment arrangements with
      directors or officers in the ordinary course of business, provided, that,
      no
      payment of any cash bonus or severance 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, and no payment of any severance shall be made, individually
      or in the aggregate, in excess of $250,000 in any twelve (12) month period,
      (ii)
      Distributions permitted pursuant to Section
      9.5,
      and
      (iii) the making of payments permitted under and pursuant to a written agreement
      entered into by and between Borrower and one or more of its Affiliates that
      both
      (A) reflects and constitutes a transaction on overall terms at least as
      favorable to Borrower as would be the case in an arm’s-length transaction
      between unrelated parties of equal bargaining power; provided,
      that,
      notwithstanding the foregoing Borrower shall not (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 payments to any of its Affiliates in excess of $50,000 in the
      aggregate during any consecutive twelve calendar month period without the prior
      written consent of Lender (other than payments permitted pursuant to clause
      (i)
      or (ii) above). 

     

    9.7   Charter
      Documents; Fiscal Year; Dissolution; Use of Proceeds

     

    No
      Credit
      Party shall (i) amend, modify, restate or change its certificate of
      incorporation or formation or bylaws or similar charter documents without the
      prior written consent of the Lender, which consent shall not be unreasonably
      withheld, (ii) change
      its fiscal year unless such 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) amend, alter or suspend or terminate or make
      provisional in any material way, any material Permit without the prior written
      consent of Lender, which consent shall not be unreasonably withheld.
      Notwithstanding the foregoing, the Lender acknowledges that the following will
      not be deemed to be a violation of this covenant: (A) any suspension of any
      license or Permit in any state caused by the departure of any scientific or
      medical personnel, and (B) any amendment of a license or permit in the ordinary
      course of business to enable Borrower to pursue additional opportunities;
      provided that neither (A) nor (B) shall result in the impairment of Borrower’s
      ability to collect any Account or account receivable, (iv) wind up,
      liquidate or dissolve (voluntarily or involuntarily) or commence or suffer
      any
      proceedings seeking or that would result in any of the foregoing, (v) use any
      proceeds of any Advance for “purchasing” or “carrying” “margin stock” as defined
      in Regulations U, T or X of the Board of Governors of the Federal Reserve
      System, or (vi) without providing at least thirty calendar days prior written
      notice to Lender, change its name or organizational identification number,
      if it
      has one. 

     

    9.8   Truth
      of Statements

     

    No
      Credit
      Party shall (a) furnish to Lender any certificate or other document created
      or
      produced by Borrower 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 as of the date it was provided
      to Lender; and (b) furnish any document created or produced by a third party
      that Borrower knows (A) contains any untrue statement of a material fact or
      (B)
      omits to state a material fact necessary to make it not misleading in light
      of
      the circumstances under which it was furnished.

     

    
      
        
        

      

      
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    9.9   IRS
      Form 8821

     

    No
      Credit
      Party shall alter, amend, restate, or otherwise modify, or withdraw, terminate
      or re-file the IRS Form 8821 required to be delivered pursuant to the Conditions
      Precedent in Section
      6.1
      hereof.

     

    9.10    Transfer
      of Assets

     

    Notwithstanding
      any other provision of this Agreement or any other Loan Document, Borrower
      shall
      not, nor shall it permit any of its Subsidiaries to, sell, lease, transfer,
      assign or otherwise dispose of any interest in any properties or assets (other
      than obsolete fixed assets or excess fixed assets 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, except that:

     

    (a) Borrower
      may lease or sublease (as lessor or sub-lessor) real or personal property
      pursuant to a true lease not constituting Indebtedness and not entered into
      as
      part of a sale and leaseback transaction, in each case in the ordinary course
      of
      business and which could not reasonably be expected to result in a Material
      Adverse Effect.

     

    (b) Borrower
      may arrange for warehousing, fulfillment or storage of Inventory at locations
      not owned or leased by Borrower, in each case in the ordinary course of
      business;

     

    (c) Borrower
      may license or sublicense Intellectual Property to third parties in the ordinary
      course of business; provided, that,
      such
      licenses or sublicenses shall not interfere with the business or other
      operations of Borrower; and 

     

    (d) Borrower
      may consummate such other sales or dispositions of property or assets in excess
      of $50,000 (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.

     

    9.11   OFAC

     

    No Credit
      Party nor any Subsidiary of any Credit Party (i) will be or become a Person
      whose Property or interests in Property are blocked or subject to blocking
      pursuant to Section  1 of Executive Order 13224 of September 23, 2001
      Blocking property and Prohibiting Transactions With Persons Who Commit, Threaten
      to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) will engage
      in
      any dealings or transactions prohibited by Section 2 of such executive order,
      or
      otherwise be associated with any such Person in any manner violative of Section
      2 of such executive order, or (iii) otherwise will become a Person on the list
      of Specially Designated Nationals and Blocked Persons or subject to the
      limitations or prohibitions under any other OFAC regulation or executive
      order.

     

    9.12   Payroll
      Accounts

     

    Borrower
      shall not maintain a greater balance in any payroll account than is necessary
      to
      support Borrower’s current payroll and payroll for one additional payroll cycle
      (bi-monthly or weekly as applicable). 

     

    9.13   US
      Lab Litigation

     

    Borrower
      shall not pay more than $100,000 in the aggregate with respect to any award
      or
      settlement in connection with the litigation with US Labs described in
Schedule
      7.6.
      Notwithstanding the foregoing, Borrower may pay amounts in excess of the
      $100,000 set forth in the preceding sentence (the “Excess Award”); provided,
      that,
      Borrower shall, simultaneously with the payment of such Excess Award, have
      received proceeds at least in the amount of such Excess Award from: (a) a
      capital contribution, (b) Parent Indebtedness or (c) Indebtedness permitted
      under clause (v) of the definition of Permitted Indebtedness.

     

    
      
        
        

      

      
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              X.

            	
              EVENTS
                OF DEFAULT

            

    

     

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

     

    (a) any
      Credit Party shall fail to pay any amount on the Obligations 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 or report delivered
      in
      conjunction with any Loan Document, 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;

     

    (c) any
      Credit Party or other party thereto other than Lender shall be in 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
      VIII
      (other
      than Sections
      8.1(c), 8.3, 8.8, 8.9,
      for
      which
      there shall be no cure period and Section 8.5 for which there shall be a five
      (5) Business Day cure period), there shall be a thirty 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;

     

    (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
      pledged to Lender pursuant to the Loan Documents;
      provided, that,
      with
      respect to non-material breaches or violations that constitute Events of Default
      under clause (ii) of this Section
      10(d),
      there
      shall be a five (5) Business Day 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;

     

    (e) one
      or
      more tax judgments, decrees, arbitrations or other binding award is rendered
      against any Credit Party in an amount in excess of $25,000 individually or
      $75,000 in the aggregate in any consecutive 12-month period, which is/are not
      satisfied, stayed, vacated or discharged of record within thirty calendar days
      of being rendered but no Advances will be made before the judgment is stayed,
      vacated or discharged unless otherwise agreed to in writing by Lender except
      for
      the US Lab Award; 

     

    (f) (i) any
      default occurs, which is not cured or waived, (x) in the payment when due
      of any amount with respect to any Indebtedness (other than the Obligations)
      of
      any Credit Party having an aggregate principal balance of at least $50,000,
      (y) in the performance, observance or fulfillment of any provision
      contained in any agreement, contract, document or instrument to which any Credit
      Party is a party or to which any of their properties or assets are subject
      or
      bound under or pursuant to which any Indebtedness having an aggregate principal
      balance of at least $50,000 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 to accelerate the maturity thereof, or (ii)
      any
      Indebtedness of any Credit Party 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) is not paid when due or within any
      applicable grace period, or any such obligation 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; 

     

    
      
        
        

      

      
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    (g) any
      Credit Party shall (i) be unable to pay its debts generally as they become
      due,
      (ii) make a general assignment for the benefit of its creditors, (iii)
      commence, or consent to, 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 (iv) file a petition seeking reorganization or
      liquidation or similar relief under any Debtor Relief Law;

     

    (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 sixty
      calendar days, (B) shall approve a petition filed against any Credit Party
      seeking reorganization, liquidation or similar relief under the any Debtor
      Relief Law, which is not dismissed within sixty calendar days or, (C) under
      the provisions of any Debtor Relief Law, 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 sixty 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 and either (A) any such proceeding or petition is not unconditionally
      dismissed within sixty 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) (i)
      any
      Change of Control occurs or any binding agreement (that does not require
      Lender’s consent as a condition to closing) to cause or that may result in any
      such Change of Control is entered into, (ii) any Material Adverse Change occurs
      or is reasonably expected to occur, (iii) any Liability Event occurs or is
      reasonably expected to occur, or (iv) any Credit Party ceases any material
      portion of its business operations as currently conducted; 

     

    (j) Lender
      receives any indication or evidence that (i) any Credit Party may have directly
      or indirectly been engaged in any type of activity, which, in Lender’s Permitted
      Discretion, might result in forfeiture of any property with a value in excess
      of
      $25,000 to any Governmental Authority which shall have continued unremedied
      for
      a period of ten calendar days after written notice from Lender (but no Advances
      will be made before any such activity ceases) or (ii) 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;

     

    (k) uninsured
      damage to, or loss, theft or destruction of, any portion of the Collateral
      occurs that exceeds $10,000 in the aggregate; 

     

    (l) the
      issuance of any process for levy, attachment or garnishment or execution upon
      or
      prior to any judgment against any Credit Party or any of their property or
      assets in excess of $50,000.

     

    
      
        
        

      

      
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    Upon
      the
      occurrence of an Event of Default, 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 and (ii) all or any
      of
      the Loans and/or Notes, all interest thereon and all other Obligations shall
      automatically, without any further action by Lender, be due and payable
      immediately (except in the case of an Event of Default under Section
      10(d),
      (g),
      or
(h),
      in
      which event all of the foregoing shall automatically and without further act
      by
      Lender be due and payable), and (ii) prohibit any action permitted to be taken
      under Article IX hereof, in each case without presentment, demand, protest
      or
      further notice of any kind, all of which are hereby expressly waived by Credit
      Parties.

     

    
      	
              XI.

            	
              RIGHTS
                AND REMEDIES AFTER DEFAULT

            

    

     

    11.1   Rights
      and Remedies

     

    (a) In
      addition to the acceleration provisions set forth in Article
      X
      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
      any Loan Document, under the UCC or at law or in equity, including, without
      limitation, the right to (i) at 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, (ii) reduce or otherwise change the Facility Cap, and/or
      (iii) relinquish or abandon any Collateral or any Lien thereon. Notwithstanding
      any provision of any Loan Document, Lender, in its sole discretion, shall have
      the right, at any time that Credit Parties fail 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 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. 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. Credit Parties hereby waive any and all rights that they may have to
      a
      judicial hearing in advance of the enforcement of any of Lender’s rights and
      remedies hereunder, including, without limitation, its right following the
      occurrence of an Event of Default to take immediate possession of the Collateral
      and to exercise its rights and remedies with respect thereto.

     

    (b)
       Credit
      Parties agrees that notice received by it at least fifteen 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 Credit Parties. At any sale or disposition of Collateral, Lender
      may (to the extent permitted by applicable law) purchase all or any part thereof
      free from any right of redemption by any Credit Party which right is hereby
      waived and released. Credit Parties covenant and agree not to, and not to permit
      or cause any of their 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.

     

    11.2   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 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 other Obligations in such order or preference as Lender may
      determine; and (iii) third,
      to the
      payment of any surplus then remaining to Credit Parties, unless otherwise
      provided by law or directed by a court of competent jurisdiction; provided,
      that,
      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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    11.3   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 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. To the extent not prohibited by applicable law, each
      Credit Party hereby irrevocably consents to and waives any right to object
      to or
      otherwise contest the appointment of a receiver as provided above. Each Credit
      Party (i) grants such waiver and consent knowingly after having discussed the
      implications thereof with counsel, (ii) acknowledges that (A) the uncontested
      right to have a receiver appointed for the foregoing purposes is considered
      essential by Lender in connection with the enforcement of its rights and
      remedies hereunder and under the other Loan Documents and (B) the availability
      of such appointment as a remedy under the foregoing circumstances was a material
      factor in inducing Lender to make the Loans to such Credit Party and (iii)
      to
      the extent not prohibited by applicable law, agrees to enter into any and all
      stipulations in any legal actions, or agreements or other instruments required
      or reasonably appropriate in connection with the foregoing, and to cooperate
      fully with Lender in connection with the assumption and exercise of control
      by
      any receiver over all or any portion of the Collateral.

     

    11.4   Rights
      and Remedies not Exclusive

     

    Lender
      shall have the right in its sole discretion to determine which rights, Liens
      and
      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.

     

    
      
        
        

      

      
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    11.5   Standards
      for Exercising Remedies

     

    To
      the
      extent that applicable law imposes duties on Lender to exercise remedies in
      a
      commercially reasonably manner, Credit Parties hereby acknowledge and agree
      that
      it is not commercially unreasonable for Lender (a) to fail to incur expenses
      reasonably deemed significant by Lender to prepare Collateral for disposition
      or
      otherwise to complete raw material or work in process into finished goods or
      other finished products for disposition, (b) to fail to obtain third-party
      consents for access to Collateral to be disposed of, or to obtain or, if not
      required by other law, to fail to obtain governmental or third party consents
      for the collection or disposition of Collateral to be collected or disposed
      of,
      (c) to fail to exercise collection remedies against account debtors or other
      persons obligated on Collateral or to remove Liens against Collateral, (d)
      to
      exercise collection remedies against account debtors and other persons obligated
      on Collateral directly or through the use of collection agencies and other
      collection specialists, (e) to advertise dispositions of Collateral through
      publications or media of general circulation, whether or not the Collateral
      is
      of a specialized nature, (f) to contact other persons, whether or not in the
      same business as Credit Parties, for expressions of interest in acquiring all
      or
      any portion of the Collateral, (g) to hire one or more professional auctioneers
      to assist in the disposition of Collateral, whether or not the Collateral is
      of
      a specialized nature, (h) to dispose of Collateral by utilizing Internet sites
      that provide for the auction of assets of the types included in the Collateral
      or that have the reasonable capability of doing so, or that match buyers and
      sellers of assets, (i) to dispose of assets in wholesale rather than retail
      markets, (j) to disclaim disposition warranties, (k) to purchase insurance
      or
      credit enhancements to insure Lender against risks of loss, collection or
      disposition of Collateral or to provide to Lender a guaranteed return from
      the
      collection or disposition of Collateral or (l) to the extent deemed appropriate
      by Lender, to obtain the services of brokers, investment bankers, consultants
      or
      other professionals to assist Lender in the collection or disposition of any
      of
      the Collateral. Credit Parties further acknowledge that the purpose of this
      Section
      11.5
      is to
      provide non-exhaustive indications of what acts or omissions by Lender would
      not
      be commercially unreasonable in Lender’s exercise of remedies against the
      Collateral and that other acts or omissions by Lender shall not be deemed
      commercially unreasonable solely on account of not being indicated in this
      Section
      11.5.
      Without
      limitation upon the foregoing, nothing contained in this Section
      11.5
      shall be
      construed to grant any rights to Credit Parties or to impose any duties upon
      Lender that would not have been granted or imposed by this Agreement or by
      applicable law in the absence of this Section
      11.5.
      

     

    
      	
              XII.

            	
              WAIVERS
                AND JUDICIAL PROCEEDINGS

            

    

     

    12.1   Waivers

     

    Except
      as
      expressly provided for herein, Credit Parties hereby waive 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.
      Credit
      Parties hereby waive any and all defenses and counterclaims they 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, whether or not payable by a Medicaid/Medicare Account Debtor.
With
      respect to any action hereunder, Lender conclusively may rely upon, and shall
      incur no liability to Credit Parties in acting upon, any request or other
      communication that Lender reasonably believes to have been given or made by
      a
      person authorized on Credit Parties’ behalf, whether or not such person is
      listed on the incumbency certificate delivered pursuant to Section
      6.1
      hereof.  In each such case, Credit Parties hereby waive the right to
      dispute Lender's action based upon such request or other communication, absent
      manifest error. Without limiting the generality of the foregoing, Borrower
      expressly waives all rights, benefits and defenses, if any, applicable or
      available to Borrower under either California Code of Civil Procedure Sections
      580a or 726, which provide, among other things, that the amount of any
      deficiency judgment which may be recovered following either a judicial or
      nonjudicial foreclosure sale is limited to the difference between the amount
      of
      any indebtedness owed and the greater of the fair value of the security or
      the
      amount for which the security was actually sold. Without limiting the generality
      of the foregoing, Borrower further expressly waives all rights, benefits and
      defenses, if any, applicable or available to Borrower under either California
      Code of Civil Procedure Sections 580b, providing, generally, that no deficiency
      may be recovered on a real property purchase money obligation, or 580d,
      providing, generally, that no deficiency may be recovered on a note secured
      by a
      deed of trust on real property if the real property is sold under a power of
      sale contained in the deed of trust.

     

    
      
        
        

      

      
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    12.2   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.

     

    12.3   Jury
      Waiver

     

    EACH
      PARTY TO THIS AGREEMENT HEREBY KNOWINGLY AND VOLUNTARILY 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.

     

    12.4   Cooperation
      in Discovery and Litigation

     

    In
      any
      litigation, arbitration or other dispute resolution proceeding relating to
      any
      Loan Document, Borrower 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 Borrower 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 (iii) using commercially
      reasonable efforts to produce in any such dispute resolution proceeding, all
      Persons, documents (whether in tangible, electronic or other form) and other
      things under its control that properly relate to any matters in dispute.
      Notwithstanding the foregoing, Credit Parties (A) do not waive any rights of
      any
      directors, officers, employees or agents that such Persons may have
      individually, (B) do not agree that any alternative dispute resolution
      procedures other than a court trial will be automatically applicable to the
      situation at hand in the event of a dispute and will only agree to such
      alternative dispute resolution procedures at such time after the facts and
      circumstances are known, and (C) with respect to item (iii) do not agree to
      engage in any electronic discovery procedures unless agreed to at such time
      in
      the future and at the expense of someone other than the Borrower.

     

    
      
        
        

      

      
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              XIII.

            	
              EFFECTIVE
                DATE AND TERMINATION

            

    

     

    13.1   Termination
      and Effective Date Thereof

     

    (a) Subject
      to Lender’s right to cease making Advances pursuant to Section 2.1 or upon or
      after any Event of Default, this Agreement shall continue in full force and
      effect until the Obligations are Paid in Full, unless terminated sooner as
      provided in this Section 13.1(a). Borrower may terminate this Agreement at
      any time upon not less than thirty calendar days’ prior written notice to Lender
      and upon full performance and indefeasible Payment in Full of all Obligations
      after Receipt by Lender of such written notice. All of the Obligations shall
      be
      immediately due and payable upon any termination by Borrower pursuant to this
      Section 13.1(a) on the Termination Date which shall be the first Business Day
      after the thirty (30) day notice period has elapsed, on which the Obligations
      have fully performed and indefeasibly Paid in Full. Upon such full performance
      and Payment in full of the Obligations Lender shall not unreasonably delay
      the
      filing of a release of its liens. 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 Paid in Full. The Liens
      granted to Lender under the Loan 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.

     

    (b) Upon
      the occurrence of a Revolver Termination, Credit Parties shall immediately
      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), as yield maintenance for the loss
      of bargain and not as a penalty, an amount equal to the applicable Minimum
      Termination Fee. 

     

    13.2   Survival

     

    All
      obligations, covenants, agreements, representations, warranties, waivers and
      indemnities made by Credit Parties 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. The obligations and provisions
      of Sections
      3.6, 12.1, 12.3, 12.4, 13.1, 13.2, 15.4, 15.7 and 15.10
      shall
      survive termination of the Loan Documents and any payment, in full or in part,
      of the Obligations.

     

    
      	
              XIV.

            	
              GUARANTY

            

    

     

    14.1   Guaranty

     

    Guarantor
      hereby unconditionally and irrevocably guarantees the punctual payment when
      due,
      whether at stated maturity, by acceleration or otherwise, of all Obligations
      of
      each Credit Party, including, without limitation, Credit Parties, now or
      hereafter existing under any Loan Document, whether for principal, interest
      (including, without limitation, all interest that accrues after the commencement
      of any proceeding of Borrower or any other Credit Party under any Debtor Relief
      Laws), fees, commissions, expense reimbursements, indemnifications or otherwise
      (such obligations, to the extent not paid by Borrower, the “Guaranteed
      Obligations”),
      and
      agrees to pay any and all costs, fees and expenses (including reasonable counsel
      fees and expenses) incurred by Lender in enforcing any rights under the guaranty
      set forth in this Article XIV.
      Without
      limiting the generality of the foregoing, Guarantor’s liability shall extend to
      all amounts that constitute part of the Guaranteed Obligations and would be
      owed
      by Borrower or any other Credit Party to Lender under any Loan Document, but
      for
      the fact that they are unenforceable or not allowable due to the existence
      of
      any proceeding under any Debtor Relief Laws involving Borrower or any other
      Credit Party. 

     

    
      
        
        

      

      
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    14.2   Guaranty
      Absolute

     

    Guarantor
      guarantees that the Guaranteed Obligations will be paid strictly in accordance
      with the terms of the Loan Documents, regardless of any law regulation or order
      now or hereafter in effect in any jurisdiction affecting any such terms or
      the
      rights of Lender with respect thereto. The obligations of Guarantor under this
      Article XIV
      are
      independent of the Guaranteed Obligations, and a separate action or actions
      may
      be brought and prosecuted against any other guarantor to enforce such
      obligations, irrespective of whether any action is brought against any Credit
      Party or whether any Credit Party is joined in any such action or actions.
      The
      liability of Guarantor under this Article XIV
      shall be
      irrevocable, absolute and unconditional irrespective of, and, in consideration
      of the direct and indirect benefits from the financing arrangements contemplated
      herein enjoyed by such Guarantor. Guarantor hereby irrevocably waives any
      defenses it may now or hereafter have in any way relating to, any or all of
      the
      following: (a) any lack of validity or enforceability of any Loan Document
      or
      any agreement or instrument relating thereto; (b) any change in the time, manner
      or place of payment of, or in any other term of, all or any of the Guaranteed
      Obligations, or any other amendment or waiver of or any consent to departure
      from any Loan Document, including, without limitation, any increase in the
      Guaranteed Obligations resulting from the extension of additional credit to
      any
      Credit Party or otherwise; (c) any taking, exchange, release or non-perfection
      of any Collateral, or any taking, release or amendment or waiver of or consent
      to departure from any other guaranty, for all or any of the Guaranteed
      Obligations; (d) any change, restructuring or termination of the corporate,
      limited liability company or partnership structure or existence of any Credit
      Party; (e) promptness, diligence, notice of acceptance and any other notice
      with
      respect to any of the Guaranteed Obligations and this Article XIV
      and any
      requirement that Lender exhaust any right or take any action against any other
      Credit Party or any other Person or any Collateral; or (f) any other
      circumstance (including, without limitation, any statute of limitations) or
      any
      existence of or reliance on any representation by Lender that might otherwise
      constitute a defense available to, or a discharge of, any Credit Party or any
      other guarantor or surety, other than the defense of payment.

     

    This
      Article XIV
      is a
      continuing guaranty and shall (a) remain in full force and effect until the
      indefeasible cash payment in full of the Guaranteed Obligations and all other
      amounts payable under this Article XIV
      and
      irrevocable termination of the Loan Agreement in accordance with its terms,
      (b)
      be binding upon Guarantor, its successors and assigns and (c) inure to the
      benefit of, and be enforceable by, Lender and its successors, assigns, pledgees,
      transferees. This Article XIV
      shall
      continue to be effective or be reinstated, as the case may be, if at any time
      any payment of any of the Guaranteed Obligations is rescinded or must otherwise
      be returned to Lender or any other Person upon the insolvency, bankruptcy or
      reorganization of Borrower or any other Credit Party or otherwise, all as though
      such payment had not been made. Guarantor hereby waives any right to revoke
      this
Article XIV,
      and
      acknowledges that this Article XIV
      is
      continuing in nature and applies to all Guaranteed Obligations, whether existing
      now or in the future.

     

    14.3   Subrogation

     

    Guarantor
      will not exercise any rights that it may now or hereafter acquire against any
      other Credit Party or any other guarantor or that arise from the existence,
      payment, performance or enforcement of its respective obligations under this
      Article XIV,
      including, without limitation, any right of subrogation, reimbursement,
      exoneration, contribution or indemnification and any right to participate in
      any
      claim or remedy of Lender against any other Credit Party or any other guarantor
      or any Collateral, whether or not such claim, remedy or right arises in equity
      or under contract, statute or common law including, without limitation, the
      right to take or receive from any other Credit Party or any other guarantor,
      directly or indirectly, in cash or other property or by set-off or in any other
      manner, payment or security solely on account of such claim, remedy or right,
      unless and until all of the Guaranteed Obligations and all other amounts payable
      under this Article XIV
      shall
      have been indefeasibly paid in full in cash and all commitments to lend
      hereunder shall have terminated. Guarantor agrees that any payment of any
      Indebtedness of Borrower now or hereafter held by such Guarantor is hereby
      subordinated in right of payment to the irrevocable and indefeasible payment
      in
      full in cash of the Guaranteed Obligations unless otherwise agreed to in writing
      by Lender or provided for in this agreement. If
      any
      amount shall be paid to a Guarantor in violation of the immediately preceding
      sentences, such amount shall be held in trust for the benefit of Lender and
      shall forthwith be paid to Lender to be credited and applied to the Guaranteed
      Obligations and all other amounts payable under this Article XIV,
      whether
      matured or unmatured, in accordance with the terms of this Agreement, or to
      be
      held as Collateral for any Guaranteed Obligations or other amounts payable
      under
      this Article XIV
      thereafter arising. If (i) a Guarantor shall make payment to Lender of all
      or
      any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations
      and all other amounts payable under this Article XIV
      shall be
      indefeasibly paid in full in cash and (iii) Lender’s commitment to lend
      hereunder shall have been terminated, Lender will, at such Guarantor’s request
      and expense, execute and deliver to such Guarantor appropriate documents,
      without recourse and without representation or warranty, necessary to evidence
      the transfer by subrogation to such Guarantor of an interest in the Guaranteed
      Obligations resulting from such payment by such Guarantor

     

    
      
        
        

      

      
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              XV.

            	
              MISCELLANEOUS

            

    

     

    15.1   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 Credit Parties 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
      15.5
      hereof,
      (iv) waives any objection to personal 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 Loan Documents executed by such
      Credit Party 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
      such Credit Party in the courts of any other jurisdiction having jurisdiction,
      including any jurisdiction in which Collateral is located for purposes of
      exercising rights and remedies with respect to such Collateral. 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, that the parties
      were represented by counsel of their choice in connection with the negotiation
      and drafting of this Agreement, that the parties to this Agreement are
      sophisticated parties entering into a commercial transaction, 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.

     

    15.2   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 donee,
      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. CREDIT PARTIES ACKNOWLEDGE AND AGREE 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. 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. In the event of any transfer of any portion of Lender’s right and
      interest in the Obligations of this Agreement, Lender agrees to so notify the
      Borrower of such transfer and include such transferee’s name and contact
      information, except if such transfer is to an Affiliate of Lender or any of
      Lender’s financing sources.

     

    
      
        
        

      

      
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    15.3   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.

     

    15.4   Indemnity

     

    Each
      Credit Party 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, allocable costs of in-house counsel, and in-house
      diligence fees and expenses, subject to the provisions governing payment of
      in-house counsel and outside counsel fees set forth in Section 15.7(b)) 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 results directly from the gross negligence or willful
      misconduct of such Indemnified Person as determined by a final non-appealable
      judgment entered by a court of competent jurisdiction, in which case, any
      previously made reimbursements made pursuant to this indemnification clause
      for
      claims which were due to such gross negligence or willful misconduct shall
      be
      immediately recoverable from 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 reasonable charges for the costs allocable for such work
      of
      such in-house counsel, subject to the provisions governing payment of in-house
      counsel and outside counsel fees set forth in Section 15.7(b). Lender agrees
      to
      give Credit Parties reasonable notice of any event of which Lender becomes
      aware
      for which indemnification may be required under this Section 15.4, and Lender
      may elect (but is not obligated) to direct the defense thereof, provided that
      the selection of counsel shall be subject to 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 or defend 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 any Credit Party’s 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 15.4, then Lender shall promptly
      pay
      to such Credit Party the amount of such recovery. 

     

    
      
        
        

      

      
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    15.5   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, or at such other address as such party may
      hereafter specify in a notice given in the manner required under this
Section
      15.5.
      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 Business Day after deposit with
      such courier, or (iii) facsimile transmission upon
      sender’s receipt of confirmation of proper transmission,
      as
      applicable. 

     

    15.6   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. 

     

    15.7   Expenses

     

    (a) 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 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 Credit Parties’ account and shall be part of the
      Obligations, and each such amount so charged shall be deemed an Advance under
      the Revolving Facility and added to the Obligations, regardless of whether
      a
      Revolver Termination has occurred. Lender acknowledges that it has agreed to
      a
      cap of $15,000 solely with respect to fees and expenses associated with the
      business due diligence of originating and closing this Agreement which has
      been
      paid as a deposit to Lender. Lender agrees that, upon written request of
      Borrower, it will provide a summary description of any legal matters which
      were
      charged to the account of the Borrower.

     

    
      
        
        

      

      
        54

        
          

        

      

      
        
        

      

    

    (b)
       If
      Lender
      or any of its Affiliates uses in-house counsel for any purpose under any Loan
      Document for which Credit Parties are responsible to pay or indemnify, Credit
      Parties expressly agree that their Obligations include reasonable charges for
      such work commensurate with the allocable costs of such in-house counsel.
      Notwithstanding anything to the contrary contained in this Agreement, so long
      as
      no Default or Event of Default has occurred and is continuing, Borrower shall
      not be required to pay or indemnify Lender for the allocable cost of the work
      of
      staff counsel if Lender has engaged outside counsel for the same
      work.

     

    15.8   Entire
      Agreement

     

    This
      Agreement and the other Loan Documents to which Credit Parties are a party
      constitute the entire agreement between Credit Parties 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
      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 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.
      

     

    15.9   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.

     

    15.10   Confidentiality
      and Publicity

     

    (a) Lender
      understands and acknowledges that this Agreement is a material obligation of
      the
      Credit Parties, and as such, must be filed with the Securities and Exchange
      Commission (“SEC”)
      and
      through such action will become publicly available. Credit Parties agree to
      submit to Lender and Lender reserves the right to review and approve all
      materials that Credit Parties or any of their 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. Notwithstanding the
      foregoing, Lender acknowledges and agrees that that a description of the
      principle terms of this Agreement will be required to be stated in the
      Guarantor’s quarterly and annual reports filed with the SEC, and Guarantor and
      its counsel shall have the final authority in any wording so disclosed;
      provided, however, that Guarantor will attempt to clear such language with
      the
      Lender prior to any filing. Lender further acknowledges and agrees that once
      such language in any SEC filings has been finalized, it can continue to appear
      in subsequent SEC filings without any further review by Lender. Credit Parties
      shall not, and shall not permit any of their 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. Lender similarly agrees that it shall not, and shall not permit any
      of
      its Affiliates to, use Credit Parties names or logos (or the names of any Credit
      Parties’ Affiliates) in any advertising, marketing or press releases or such
      similar purposes, without Credit Parties prior written consent. Nothing
      contained in any Loan Document is intended to permit or authorize Credit Parties
      or any of their Affiliates to contract on behalf of Lender. 

     

    
      
        
        

      

      
        55

        
          

        

      

      
        
        

      

    

    (b) Credit
      Parties hereby agree that Lender or any Affiliate of Lender may disclose any
      and
      all information concerning the Loan Documents, as well as any information
      regarding Credit Party and its operations, received by Lender in connection
      with
      the Loan Documents to its lenders or funding or financing sources.

     

    15.11   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 such Credit Party the financial
      accommodations hereunder and has been relied upon by Lender in agreeing to
      make
      the Loans. 

     

    15.12   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.  Credit Parties
      shall within ten 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.

     

    
      
        
        

      

      
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    15.13   Reserved 

    

    15.14   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]

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

    

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

     

    
      	 	 	 
	 	BORROWER:
	 	 
	 	NEOGENOMICS,
              INC.,
              a
              Florida corporation
	 
 	 
 	 
 
	 	By:  	/s/ Steven
              C.
              Jones
	 	Name:	
              
Steven
              C. Jones
	 	Its:	Chief Financial
              Officer

    

     

    
      
        
          	 	 	 
	 	GUARANTOR:
	 	 
	 	NEOGENOMICS,
                  INC.,
                  a
                  Florida corporation
	 
 	 
 	 
 
	 	By:  	/s/ Steven
                  C.
                  Jones
	 	Name:	
                  
Steven
                  C. Jones
	 	Its:	Chief Financial
                  Officer
	 	 	 
	 	NeoGenomics,
                  Inc.
	 	12701
                  Commonwealth
                  Drive, Suite 9
	 	Fort
                  Myers, Florida
                  33913
	 	 	 
	 	Attention:	Steven C. Jones
	 	Telephone:	(239) 768-0600
	 	Facsimile:	(239) 768-1672
	 	E-Mail:	 
	 	 	 
	 	 	 
	 	CAPITALSOURCE
                  FINANCE LLC
	 	 	 
	 	By:	/s/
                  David Martin
	 	Name:	
                  
David
                  Martin
	 	Its:	General Counsel
                  - Commercial
                  Lending
	 	 	 
	 	CapitalSource
                  Finance
                  LLC
	 	4445
                  Willard Avenue,
                  12th
                  Floor
	 	Chevy
                  Chase, MD
                  20815
	 	 	 
	 	Attention:	Healthcare Finance
                  Group,
                  Portfolio Manager
	 	Telephone:	(301)
                  841-2700
	 	Facsimile:	(301)
                  841-2340
	 	E-Mail:	 

        

      

    

     

    
      
        
        

      

      
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    EXHIBITS

     

    
      	
              Exhibit
                A

            	
              Form
                of Borrowing Certificate

            
	
              Exhibit
                B

            	
              Form
                of Compliance Certificate

            
	
              Exhibit
                C

            	
              Form
                of Solvency Certificate

            
	
              Exhibit
                D

            	
              Form
                of Officer’s Certificate

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULES

     

    
      	
              Schedule
                2.3

            	
              Borrower’s
                Accounts

            
	
              Schedule
                5.3A

            	
              Proceedings
                or Investigations

            
	
              Schedule
                5.3B

            	
              Third-Party
                Contracts

            
	
              Schedule
                7.11

            	
              Intellectual
                Property

            
	
              Schedule
                7.15A

            	
              Existing
                Indebtedness, Investments, Guarantees and Certain
                Contracts

            
	
              Schedule
                7.15B

            	
              Indebtedness
                with a Maturity Date During the Term

            
	
              Schedule
                7.16

            	
              Other
                Agreements

            
	
              Schedule
                7.17

            	
              Insurance

            
	
              Schedule
                7.18A

            	
              Borrower’s
                Names

            
	
              Schedule
                7.18B

            	
              Places
                of Business and Chief Executive Offices

            
	
              Schedule
                7.18B

            	
              Borrower’s
                Locations

            
	
              Schedule
                7.2

            	
              Consents,
                Approvals or Authorizations

            
	
              Schedule
                7.3

            	
              Capitalization;
                List of Subsidiaries

            
	
              Schedule
                7.4A

            	
              Leases

            
	
              Schedule
                7.4B

            	
              Deposit
                Accounts and Investment Accounts

            
	
              Schedule
                7.5

            	
              Affiliate
                Contracts/Agreements

            
	
              Schedule
                7.6

            	
              Litigation

            
	
              Schedule
                7.8

            	
              Tax
                Matters

            
	
              Schedule
                8.8

            	
              Post-Closing
                Matters

            
	
              Schedule
                9.2

            	
              Indebtedness

            
	
              Schedule
                9.3

            	
              Liens

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      I

     

    FINANCIAL
      COVENANTS

     

    1.    Minimum
      Fixed Charge Coverage Ratio (Adjusted EBITDA/Fixed
      Charges)

     

    For
      the
      Test Period ending April 30, 2008, the Fixed Charge Coverage Ratio shall not
      be
      less than 0.0 to 1.0; for the Test Period ending May 31, 2008, the Fixed Charge
      Coverage Ratio shall not be less than 0.25 to 1.0; for the Test Period ending
      June 30, 2008, the Fixed Charge Coverage Ratio shall not be less than 0.75
      to
      1.0; and for the Test Period ending July 31, 2008, and each Test Period ending
      on the last day of each calendar month thereafter the Fixed Charge Coverage
      Ratio shall not be less than 1.25 to 1.0.

     

    2.    Minimum
      Cash Velocity

     

    For
      each
      calendar month, the collections of Accounts of Borrower collectively shall
      not
      be less than an amount equal to the product of (x) 0.80 multiplied by (y) the
      average revenues of Borrower for the immediately preceding three months;
      provided that, upon any violation of or failure to comply with this covenant,
      Lender shall have the right, in its sole discretion, to consider for all
      purposes under the Agreement as though Borrower actually collected Accounts
      equal to such minimum required amount. 

     

    3.    Minimum
      Liquidity

     

    As
      of
      Closing and at all times thereafter Minimum Liquidity shall not be less than
      $750,000; provided,
      however,
      (i)
      such Minimum Liquidity amount will be reduced to $500,000 after Borrower has
      demonstrated that Borrower has achieved a Fixed Charge Coverage Ratio of 1.0
      to
      1.0 for any Test Period and (ii) Lender agrees that it shall eliminate testing
      of this covenant in the event that Borrower is in compliance with this Agreement
      (including all financial covenants set forth herein) for six consecutive
      calendar months; provided,
      further,
      that,
      such
      consecutive six-month calendar period shall not begin before April 1,
      2008.

     

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

    

    “Adjusted
      EBITDA”
shall
      mean, for any period, the sum, without duplication, of the following for
      Borrower collectively on a consolidated basis: Net Income, plus,
      (a)
      Interest Expense, (b) taxes on income, whether paid, payable or accrued, (c)
      depreciation expense, (d) amortization expense, (e) all other non-cash,
      recurring charges and expenses, excluding accruals for cash expenses made in
      the
      ordinary course of business, (f) loss from any sale of assets, other than sales
      in the ordinary course of business, (g) non-cash stock option and warrant based
      compensation expense and (h) other extraordinary or non-recurring charges that
      would not have otherwise been incurred in ordinary course of business as
      determined in accordance to GAAP, including but not limited to, severance
      payments up to the amounts permitted in Section 9.6, minus
      (a)
      gains from any sale of assets, other than sales in the ordinary course of
      business and (b) other extraordinary or non-recurring gains, in each case
      determined in accordance with GAAP. 

     

    “Cash
      Equivalents”
shall
      mean, as of any date of determination, (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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Fixed
      Charge Coverage Ratio”
shall
      mean, as of any date of determination, for Borrower collectively on a
      consolidated basis, the ratio of (a) Adjusted EBITDA for the Test Period
      ended of as of such date, to (b) Fixed Charges for the Test Period ended as
      of
      such date.

     

    “Fixed
      Charges”
shall
      mean, for any period, the sum of the following for Borrower collectively on
      a
      consolidated basis for such period: (a) Total Debt Service, (b) un-financed
      Capital Expenditures paid in cash, (c) income taxes paid in cash or accrued,
      and
      (d) dividends and Distributions paid or accrued or declared (except for
      Accumulated Distributions from previous Accumulated Distribution Fiscal
      Quarters). 

     

    “Interest
      Expense”
shall
      mean, for any period, for Borrower collectively on a consolidated basis for
      such
      period: (a) total interest expense (including without limitation attributable
      to
      Capital Leases in accordance with GAAP), (b) financing fees with respect to
      all
      outstanding Indebtedness excluding amortization of capitalized financing fees
      associated with the initial closing of this Agreement to interest expense in
      accordance with GAAP, and commissions, discounts and other fees owed with
      respect to letters of credit and bankers’ acceptance financing and net costs
      under Interest Rate Agreements. Notwithstanding the foregoing Interest Expense
      shall not include any amortization of non-cash warrant compensation that may
      be
      a result of warrants attached to any debt instrument.

     

    “Interest
      Rate Agreement”
shall
      mean any interest rate swap, cap or collar agreement or other similar agreement
      or arrangement designed to hedge the position with respect to interest
      rates.

     

    “Minimum
      Liquidity”
shall
      mean, as of any date of determination, the sum of the following for Borrower
      collectively on a consolidated basis as of such date: (a) unrestricted cash
      on
      hand, plus
      (b)
      unrestricted Cash Equivalents, plus
      (c)
      unused Availability.

    

    “Net
      Income”
shall
      mean, for any period, the net income (or loss) of Borrower collectively on
      a
      consolidated basis determined in accordance with GAAP; provided,
      however,
      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, warrants, stock options or stock appreciation rights issued
      to
      former or current employees or consultants, 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.

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    “Test
      Period”
shall
      mean the three most recent calendar months then ended (taken as one accounting
      period), or such other period as specified in the Agreement or any Annex
      thereto, provided,
      that,
      for the
      Test Period ending April 30, 2008, Test Period shall mean the two most recent
      calendar months then ended (taken as one accounting period). 

     

    “Total
      Debt Service”
shall
      mean, for any period, the sum of the following for Borrower collectively on
      a
      consolidated basis: (i) payments of principal on Indebtedness for such period,
      plus
      (ii)
      Interest Expense for such period. 

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

     

    
      

      

    

    REVOLVING
      CREDIT AND SECURITY AGREEMENT

    

    

    

    between

    

    

    

    NeoGenomics,
      Inc., a Florida Corporation, as Borrower

     

    

     

    and
      

     

    

     

    NeoGenomics,
      Inc., a Nevada corporation, as Guarantor

    

     

    

    and

    

    

    

    CAPITALSOURCE
      FINANCE LLC

    

    

    

    

    

    

    Dated
      as of 

    February
      1, 2008

     

    
      

      

    

    
      
        
        

      

      
        
        

        
        

      

      
        
        

      

    

    REVOLVING
      CREDIT AND SECURITY AGREEMENT

    

    TABLE
      OF CONTENTS

     

    
      	 	 	 	 	
              Page

            
	I.	DEFINITIONS	 	
              1

            
	 	1.1	General Terms	 	
              1

            
	 	1.2	Definitions	 	
              2

            
	 	 	 	 	 
	II.	ADVANCES,
              PAYMENT AND INTEREST	 	
              16

            
	 	2.1	The Revolving Facility	 	
              16

            
	 	2.2	The Revolving Loans;
              Maturity	 	
              17

            
	 	2.3	Revolving Facility Disbursements;
              Requirement to Deliver Borrowing Certificate	 	
              17

            
	 	2.4	Promise to Pay; Manner of
              Payment	 	
              17

            
	 	2.5	Repayment of Excess
              Advances	 	
              18

            
	 	2.6	Payments by Lender	 	
              18

            
	 	2.7	Evidence of Loans	 	
              18

            
	 	 	 	 	 
	III.	INTEREST
              AND FEES	 	
              19

            
	 	3.1	Interest on the Revolving
              Facility	 	
              19

            
	 	3.2	Commitment Fee	 	
              19

            
	 	3.3	Unused Line Fee	 	
              19

            
	 	3.4	Collateral Management Fee	 	
              19

            
	 	3.5	Computation of Fees; Lawful
              Limits	 	
              19

            
	 	3.6	Default Rate of Interest	 	
              20

            
	 	 	 	 	 
	IV.	GRANT OF SECURITY
              INTERESTS	 	
              20

            
	 	4.1	Security Interest;
              Collateral	 	
              20

            
	 	4.2	Power of Attorney	 	
              20

            
	 	4.3	Further Assurances	 	
              21

            
	 	 	 	 	 
	V.	ADMINISTRATION AND MAINTENANCE
              OF
              COLLATERAL	 	
              21

            
	 	5.1	Revolving Facility Collections;
              Repayment; Borrowing Availability and Lockbox	 	
              22

            
	 	5.2	Accounts	 	
              22

            
	 	5.3	Healthcare	 	
              23

            
	 	5.4	Medicare and Medicaid Account
              Debtors and Third-Party Payor Information	 	
              24

            
	 	5.5	Collateral Administration	 	
              24

            
	 	 	 	 	 
	VI.	CONDITIONS PRECEDENT	 	
              25

            
	 	6.1	Conditions to Initial Advance
              and
              Closing	 	
              25

            
	 	6.2	Conditions to Each
              Advance	 	
              27

            
	 	 	 	 	 
	VII.	REPRESENTATIONS AND
              WARRANTIES	 	
              27

            
	 	7.1	Organization and
              Authority	 	
              27

            
	 	7.2	Loan Documents	 	
              28

            
	 	7.3	Subsidiaries, Capitalization
              and
              Ownership Interests	 	
              28

            
	 	7.4	Properties	 	
              28

            
	 	7.5	Other Agreements	 	
              29

            
	 	7.6	Litigation	 	
              29

            
	 	7.7	Environmental Matters	 	
              29

            
	 	7.8	Potential Tax Liability;
              Tax
              Returns; Governmental Reports	 	
              30

            
	 	7.9	Financial Statements and
              Reports	 	
              30

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	7.10	Compliance with Law	 	
              31

            
	 	7.11	Intellectual Property	 	
              32

            
	 	7.12	Licenses and Permits;
              Labor	 	
              32

            
	 	7.13	No Default	 	
              32

            
	 	7.14	Disclosure	 	
              32

            
	 	7.15	Existing Indebtedness; Investments,
              Guarantees and Certain Contracts	 	
              32

            
	 	7.16	Other Agreements	 	
              33

            
	 	7.17	Insurance	 	
              33

            
	 	7.18	Names; Location of Offices,
              Records
              and Collateral	 	
              33

            
	 	7.19	Lien Perfection and
              Priority	 	
              34

            
	 	7.20	Investment Company Act	 	
              34

            
	 	7.21	Regulations T, U and X	 	
              34

            
	 	7.22	Survival	 	
              34

            
	 	 	 	 	 
	VIII.	AFFIRMATIVE COVENANTS  	 	
              34

            
	 	8.1	Financial Statements, Borrowing
              Certificate, Financial Reports and Other Information	 	
              34

            
	 	8.2	[Reserved]	 	
              37

            
	 	8.3	Conduct of Business and
              Maintenance
              of Existence and Assets	 	
              37

            
	 	8.4	Compliance with Legal and
              Other
              Obligations	 	
              37

            
	 	8.5	Insurance	 	
              38

            
	 	8.6	Books and Records	 	
              38

            
	 	8.7	Inspections; Periodic Audits
              and
              Reappraisals	 	
              38

            
	 	8.8	Further Assurances;
              Post-Closing	 	
              38

            
	 	8.9	Use of Proceeds	 	
              39

            
	 	8.10	[Reserved]	 	
              39

            
	 	8.11	[Reserved]	 	
              39

            
	 	8.12	Taxes and Other Charges	 	
              39

            
	 	8.13	Payroll Taxes	 	
              40

            
	 	8.14	New Subsidiaries	 	
              40

            
	 	8.15	[Reserved]	 	
              40

            
	 	 	 	 	 
	IX.	NEGATIVE COVENANTS	 	
              40

            
	 	9.1	Financial Covenants	 	
              40

            
	 	9.2	Permitted Indebtedness	 	
              40

            
	 	9.3	Permitted Liens	 	
              41

            
	 	9.4	Investments; New Facilities
              or
              Collateral; Subsidiaries	 	
              41

            
	 	9.5	Dividends; Redemptions	 	
              41

            
	 	9.6	Transactions with
              Affiliates	 	
              41

            
	 	9.7	Charter Documents; Fiscal
              Year;
              Dissolution; Use of Proceeds	 	
              42

            
	 	9.8	Truth of Statements	 	
              42

            
	 	9.9	IRS Form 8821	 	
              42

            
	 	9.10	Transfer of Assets	 	
              43

            
	 	9.11	OFAC	 	
              43

            
	 	9.12	Payroll Accounts	 	
              43

            
	 	9.13	US Lab Litigation	 	
              43

            
	 	 	 	 	 
	X.	EVENTS OF DEFAULT	 	
              44

            
	 	 	 	 	 
	XI.	RIGHTS AND REMEDIES AFTER
              DEFAULT	 	
              46

            
	 	11.1	Rights and Remedies	 	
              46

            
	 	11.2	Application of Proceeds	 	
              46

            
	 	11.3	Rights of Lender to Appoint
              Receiver	 	
              47

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    
      	 	11.4	Rights and Remedies not
              Exclusive	 	
              47

            
	 	11.5	Standards for Exercising
              Remedies	 	
              47

            
	 	 	 	 	 
	XII.	WAIVERS AND JUDICIAL
              PROCEEDINGS	 	
              48

            
	 	12.1	Waivers	 	
              48

            
	 	12.2	Delay; No Waiver of
              Defaults	 	
              49

            
	 	12.3	Jury Waiver	 	
              49

            
	 	12.4	Cooperation in Discovery
              and
              Litigation	 	
              49

            
	 	 	 	 	 
	XIII.	EFFECTIVE DATE AND
              TERMINATION	 	
              50

            
	 	13.1	Termination and Effective
              Date
              Thereof	 	
              50

            
	 	13.2	Survival	 	
              50

            
	 	 	 	 	 
	XIV.	GUARANTY	 	
              50

            
	 	14.1	Guaranty	 	
              50

            
	 	14.2	Guaranty Absolute	 	
              51

            
	 	14.3	Subrogation	 	
              51

            
	 	 	 	 	 
	XV.	MISCELLANEOUS	 	
              52

            
	 	15.1	Governing Law; Jurisdiction;
              Service of Process; Venue	 	
              52

            
	 	15.2	Successors and Assigns;
              Participations; New Lenders	 	
              52

            
	 	15.3	Application of Payments	 	
              53

            
	 	15.4	Indemnity	 	
              53

            
	 	15.5	Notice 	 	
              54

            
	 	15.6	Severability; Captions;
              Counterparts; Facsimile Signatures	 	
              54

            
	 	15.7	Expenses	 	
              54

            
	 	15.8	Entire Agreement	 	
              55

            
	 	15.9	Lender Approvals	 	
              55

            
	 	15.10	Confidentiality and
              Publicity	 	
              55

            
	 	15.11	Release of Lender	 	
              56

            
	 	15.12	Agent	 	
              56

            
	 	15.13	Reserved	 	
              56

            
	 	15.14	Agreement Controls	 	
              57

            

    

    
       

      
        
          
          

        

        iiiTHE
      REGISTRY MANAGEMENT COMPANY, LLC

    

    110
      East
      Broward Blvd.

    Fort
      Lauderdale, Florida 33301

    

    

    February
      1, 2008

    

    theglobe.com,
      inc.

    110
      East
      Broward Blvd.

    14th
      Floor

    Ft.
      Lauderdale, FL 33302

    

    Re:
      Proposed Acquisition of Business and Assets of Tralliance Corporation
      (“Company”)

    

    Gentlemen:

    

    The
      purpose of this letter (this “Letter”) is to set out certain non-binding
      understandings and certain binding agreements among The Registry Management
      Company, LLC, a Delaware limited liability company, or one of its affiliates
      or
      related entities (“Buyer”), Tralliance Corporation, a New York corporation (the
“Company"), and theglobe.com, inc., a Delaware corporation and the sole
      shareholder of the Company (“Seller”), with respect to a potential acquisition
      (the “Proposed Acquisition”) of substantially all of the business and net assets
      of the Company (or a successor created to facilitate such Proposed Acquisition),
      together with the acquisition of approximately 269 million shares of the
      Seller’s common stock (the “Shares”), by the Buyer or certain of its affiliates
      and related parties.

    

    1. The
      parties hereto shall promptly proceed with the negotiation of a definitive
      purchase agreement with respect to the Proposed Acquisition (together with
      all
      related agreements, documents, and instruments, a “Definitive Agreement”),
      containing, among other things, the terms and conditions set forth in the
      outline of terms attached to this Letter as Exhibit A. 

    

    2. Following
      execution of this Letter by all of the parties, the Seller and the Company
      shall
      afford Buyer and its officers, employees, and agents (collectively,
“Representatives”) full and free access to the properties, books, and records
      (including, without limitation, financial, operating, and other data) of the
      Company, as well as to the Company’s independent accountants, at reasonable
      times in order to permit Buyer to make such investigation of the business,
      properties, and operations of the Company as Buyer may deem appropriate.
      Information disclosed to Buyer and its Representatives pursuant to this Letter
      shall be subject to, and handled, on a confidential basis.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
       
3. Each
      of
      the Seller and the Company represents and warrants to Buyer that (a) neither
      of
      them has entered into any agreement pursuant to which any person or entity
      has
      obtained the right to acquire any portion of the securities or assets of the
      Company; (b) the execution, delivery, and performance of this Letter by the
      Seller and the Company does not and will not breach, violate, conflict with,
      or
      permit the cancellation of, any agreement to which the Seller or the Company
      is
      a party or by which the Company or the Company’s properties are bound; and (c)
      that Seller is the sole stockholder and holder of any equity interest (including
      any rights to receive any equity interest) in the Company.

    

    4. Buyer
      shall be responsible for its fees, costs, and expenses incurred in connection
      with the Proposed Acquisition, and the Seller shall be responsible for the
      fees,
      costs, and expenses incurred by the Seller and the Company in connection with
      the Proposed Acquisition, in each case including, but not limited to,
      commissions or fees of any broker or finder referred by either of them and
      any
      attorneys’ or accountants’ fees incurred by either of them in connection with
      the Proposed Acquisition.

    

    5. This
      Letter may be terminated at any time by Buyer, on the one hand, or the Company
      or Seller, on the other hand, in the event that a Definitive Agreement has
      not
      been executed by all parties by February 20, 2008. The parties agree to use
      their respective good faith efforts to negotiate and enter into a Definitive
      Agreement by such date.

    

    6. This
      Letter may be executed in two or more counterparts, each of which shall be
      deemed to be an original, but all of which taken together shall constitute
      one
      and the same document. This Letter shall be effective upon the exchange by
      facsimile or email of executed signature pages. This Letter shall be governed
      by
      and construed in accordance with the laws of the State of Florida (regardless
      of
      the laws that might otherwise govern under applicable principles of conflicts
      of
      law).

    

    Please
      be
      advised that other than paragraphs 2 through 6 above (the “Binding Paragraphs”)
      which are intended to be binding and enforceable, this Letter is not intended
      to
      bind Buyer, the Company, or the Seller in any way. Rather, this Letter is
      written solely as a summary of terms upon which Buyer would consider the
      Proposed Acquisition and is intended to serve merely as a guide to the
      preparation of a Definitive Agreement satisfactory to the parties to this
      Letter. It is expressly understood and agreed that (a) Exhibit A to this Letter
      is not considered to be part of the Binding Paragraphs; (b) no liability or
      binding obligation is intended to be created between or among any of the parties
      to this Letter, except with respect to the Binding Paragraphs; and (c) other
      than with respect to the Binding Paragraphs, any legal rights and obligations
      between or among any of the parties to this Letter will come into existence
      only
      upon the parties’ execution and delivery of a written Definitive Agreement, and
      then only in accordance with the terms and conditions of such Definitive
      Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    The
      Binding Paragraphs shall survive termination of this Letter and shall be binding
      upon and inure to the benefit of the parties hereto and their respective
      successors and assigns. The rights and obligations of any party to this Letter
      under the Binding Paragraphs may not be assigned by any party without the prior
      written consent of the other parties, except that Buyer may make any such
      assignment to an affiliate of Buyer without the prior consent of the other
      parties.

    

    Please
      indicate your agreement to the terms of this Letter by executing the enclosed
      copy of this Letter. 

    

                            Very
      truly
      yours,

    

    
      	
               

            	
            	
              THE REGISTRY MANAGEMENT
                COMPANY,

              
                LLC

              

            
	 	 	 
	 	 	 
	
               

            	
              By:

            	 /s/
              Michael S. Egan
	 	
              Its:

            	
              Manager

            

    

    

    

    

    

    Acknowledged
      and agreed to 

    this
      first day of February, 2008

    

    “Company”:

    

    Tralliance
      Corporation

    

    

    By: /s/
      Edward A. Cespedes___

    Its:
       CEO

    

    

    “Seller”:

    

    theglobe.com,
      inc.

    

    

    By:
      /s/
      Edward A. Cespedes___

    Its:
      President

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      A

    

    Tralliance
      Corporation Term Sheet

    

    February
      1, 2008

    

    
      	Company:	
              Tralliance
                Corporation (referred to as the
“Company”).

            

    

    

    
      	Seller:	
              theglobe.com,
                inc.

            

    

    

    
      	Buyer:	
              The
                Registry Management Company, LLC, or one of its affiliates. The Buyer
                is
                controlled by Michael Egan and each of Edward Cespedes and Robin
                Segaul
                Lebowitz, each a director of the Seller, own a minority
                interest.

            

    

    

    
      	Structure:	
              The
                Proposed Acquisition of the Company by the Buyer, together with the
                purchase and sale of approximately 269 million shares of the Seller’s
                common stock, $.001 par value (the “Shares”), to the Buyer, shall be
                accomplished in a form to be determined in light of applicable tax,
                legal,
                and financial considerations. Most likely, the form will involve
                the
                acquisition of all of substantially all of the business and net assets
                of
                the company via an asset purchase transaction, together with the
                purchase
                of the Shares, pursuant to a Stock Purchase Agreement. After giving
                affect
                to the Shares issued in the Proposed Acquisition, the Buyer, Michael
                Egan
                and his affiliates or related parties will own approximately 76%
                of the
                Company on an outstanding common stock basis.

            

    

     

    
      	Consideration:	
              In
                consideration for the purchase of substantially all of the business
                and
                net assets of the company and the Shares, the Buyer shall, or shall
                cause
                its affiliates and other related parties to, (a) exchange and surrender
                to
                the Seller all of their right, title and interest to the convertible
                promissory notes described on Schedule A attached hereto, together
                with
                all accrued and unpaid interest thereon, as well as outstanding rent
                and
                miscellaneous fees due and unpaid to the Buyer or Mr. Egan and his
                affiliates through the date of closing of the Proposed Transaction
                (equal
                to approximately $6.0 million in the aggregate as of December 31,
                2007)
                and (b) pay an earn-out to the Seller equal to 10% of the Buyer’s net
                revenue derived from “.travel” names registered by the Company through May
                5, 2015, as more particularly described below. The net present value
                of
                the minimum guaranteed earn-out payments is estimated to be approximately
                $1.3 million, bringing the total consideration to approximately $7.3
                million.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      
        	Revenue
                Sharing:	
                As
                  indicated above, the Definitive Agreement will include a provision
                  whereby
                  the Buyer will pay 10% of its net revenue from the registration
                  of
                  “.travel names by the Company through May 5, 2015. Buyer shall further
                  guaranty that such payments will be no less that $300,000 in the
                  first
                  year following the closing of the transaction and increasing by
                  $25,000 in
                  each subsequent year.

              

      

    

    

    
      	Due
              Diligence:	
              Buyer
                intends to undertake full legal and financial due diligence review
                of the
                Company. This will include, without limitation, a review of recent
                financial results. The results of Buyer’s due diligence shall be
                satisfactory to Buyer in its sole
                discretion.

            

      	 	 

      	
              Shareholder
                Approval,

              Fairness
                Opinion

              and
                other:

            	 The Proposed Acquisition will be subject
              to approval by the Seller’s shareholders at a duly called meeting of the
              Seller’s shareholders. In addition, the parties obligations to conclude
              the Proposed Acquisition will be subject to receipt by the Seller of
              an
              opinion of an independent valuation expert, that the Proposed Acquisition
              is “fair” to the shareholders of the Seller from a financial point of
              view. The Proposed Acquisition will also be subject to the accuracy
              and/or
              satisfaction of the representations, warranties, covenants, and conditions
              included in a Definitive Agreement. The Definitive Agreement will include
              customary representations, warranties, covenants, indemnities and
              conditions, as well as a non-competition agreement, applicable to the
              Seller. 

      	 	 

    

    

    

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    Schedule
      A

    

    

    

    
      	
              Outstanding
                Principal E&C Capital Partners, LLP Convertible Notes

            	 	
              $

            	
              1,700,000

            	 
	
              Outstanding
                Principal E&C Capital Partners II, LLP Convertible
                Notes

            	 	 	
              1,700,000

            	 
	
              Outstanding
                Principal Dancing Bear, Inc Convertible Notes

            	 	 	
              1,250,000

            	 
	
              Accrued
                Interest E&C Capital Partners, LLP

            	 	 	
              448,082

            	 
	
              Accrued
                Interest E&C Capital Partners II, LLP

            	 	 	
              448,082

            	 
	
              Accrued
                Interest Dancing Bear, Inc.

            	 	 	
              
                58,630

              

            	 
	
              Outstanding
                Rent & Miscellaneous Fees

            	 	 	
              440,000

            	 
	 	 	 	 	 
	
              Total
                as of December 31, 2007

            	 	
              $

            	
              6,044,794

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