Document:

exv10w1

EXHIBIT 10.1

EXECUTION COPY

 

$32,703,000

CREDIT AND GUARANTY AGREEMENT

among

ICELAND ACQUISITION SUBSIDIARY, INC.,

as the Borrower,

HAPC, INC.,

as Guarantor

and

I-FLOW CORPORATION,

as the Lender

Dated as of October 25, 2007

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	SECTION 1 DEFINITIONS
	 	 	1	 
	1.1 Defined Terms
	 	 	1	 
	1.2 Other Definitional Provisions
	 	 	20	 
	1.3 Cross References
	 	 	21	 
	 
	 	 	 	 
	SECTION 2 THE TERM LOAN COMMITMENT; DESIGNATION OF APPLICABLE INTEREST RATE
	 	 	21	 
	2.1 Term Loan Commitment
	 	 	21	 
	2.2. Designation of Applicable Interest Rate
	 	 	21	 
	 
	 	 	 	 
	SECTION 3 REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
	 	 	22	 
	3.1 Maturity of Term Loan; Repayments and Prepayments of Term Loan
	 	 	22	 
	3.2. Application of Prepayments
	 	 	24	 
	3.3. Interest Provisions
	 	 	25	 
	3.4. Fees
	 	 	25	 
	 
	 	 	 	 
	SECTION 4 CERTAIN LIBOR RATE AND OTHER PROVISIONS
	 	 	26	 
	4.1 Computation of Interest and Fees; Payments
	 	 	26	 
	4.2 Proceeds of Exercise of Remedies
	 	 	26	 
	4.3. Increased Costs
	 	 	26	 
	4.4. Taxes
	 	 	27	 
	 
	 	 	 	 
	SECTION 5 CONDITIONS PRECEDENT
	 	 	28	 
	5.1. Conditions to Initial Credit Extension
	 	 	28	 
	5.2 All Credit Extensions
	 	 	33	 
	 
	 	 	 	 
	SECTION 6 REPRESENTATIONS AND WARRANTIES
	 	 	33	 
	6.1 Financial Condition
	 	 	33	 
	6.2. No Material Adverse Change
	 	 	33	 
	6.3 Existence, Power and Qualification
	 	 	33	 
	6.4 Due Authorization
	 	 	34	 
	6.5 Government Approval
	 	 	34	 
	6.6. Due Execution and Delivery; Enforceable Obligations
	 	 	34	 
	6.7. Non-Contravention
	 	 	34	 
	6.8. Compliance with Law
	 	 	34	 
	6.9. Litigation
	 	 	34	 
	6.10. No Default
	 	 	35	 
	6.11. Ownership of Property; Liens
	 	 	35	 
	6.12. Intellectual Property
	 	 	35	 
	6.13. Taxes
	 	 	35	 
	6.14. Margin Stock
	 	 	35	 
	6.15. Labor Matters
	 	 	35	 
	6.16. ERISA
	 	 	36	 

i 

 

	 	 	 	 	 
	 	 	Page	 
	6.17. Investment Company Act; Other Regulations
	 	 	36	 
	6.18. Subsidiaries
	 	 	36	 
	6.19. Use of Proceeds
	 	 	36	 
	6.20. Environmental Matters
	 	 	36	 
	6.21. Accuracy of Information, etc
	 	 	37	 
	6.22. Security Documents
	 	 	38	 
	6.23. Solvency
	 	 	38	 
	6.24. Real Properties
	 	 	38	 
	6.25. Capitalization
	 	 	38	 
	6.26. Special Purpose Acquisition Company
	 	 	38	 
	6.27. Brokers
	 	 	38	 
	 
	 	 	 	 
	SECTION 7 AFFIRMATIVE COVENANTS
	 	 	39	 
	7.1 Financial Statements
	 	 	39	 
	7.2 Certificates; Other Information
	 	 	40	 
	7.3 Notice of Default, Litigation or Certain Other Matters
	 	 	41	 
	7.4 Maintenance of Existence; Compliance with Laws, etc
	 	 	42	 
	7.5 Insurance
	 	 	42	 
	7.6 Maintenance of Properties; Maintenance of HQ Lease
	 	 	43	 
	7.7 Inspection of Property; Books and Records; Discussions
	 	 	43	 
	7.8 Payment of Obligations
	 	 	43	 
	7.9 Environmental Laws
	 	 	43	 
	7.10 Use of Proceeds
	 	 	44	 
	7.11 Additional Collateral; Additional Subsidiaries, etc
	 	 	44	 
	7.12 Hedging Arrangements
	 	 	45	 
	7.13 Lockbox Arrangements; Cash Management
	 	 	45	 
	 
	 	 	 	 
	SECTION 8 NEGATIVE COVENANTS
	 	 	45	 
	8.1 Financial Condition Covenants
	 	 	45	 
	8.2 Indebtedness
	 	 	47	 
	8.3 Liens
	 	 	48	 
	8.4 Fundamental Changes
	 	 	49	 
	8.5 Disposition of Assets
	 	 	50	 
	8.6 Restricted Payments
	 	 	50	 
	8.7 Capital Expenditures
	 	 	50	 
	8.8 Investments
	 	 	51	 
	8.9 No Prepayment of Indebtedness; Designated Senior Indebtedness
	 	 	51	 
	8.10 Transactions with Affiliates
	 	 	52	 
	8.11 Sales and Leasebacks
	 	 	52	 
	8.12 Changes in Fiscal Periods
	 	 	52	 
	8.13 Modification of Certain Agreements
	 	 	52	 
	8.14 Agreements Restricting Liens
	 	 	53	 
	8.15 Agreements Restricting Subsidiary Distributions
	 	 	53	 
	8.16 Lines of Business; Suspension of Business
	 	 	53	 
	8.17 Issuance of Equity Interests
	 	 	53	 
	8.18 Hazardous Materials
	 	 	53	 

ii 

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 9 EVENTS OF DEFAULT
	 	 	54	 
	9.1 Listing of Events of Default
	 	 	54	 
	9.2 Action if Bankruptcy
	 	 	56	 
	9.3 Action if Other Event of Default
	 	 	57	 
	 
	 	 	 	 
	SECTION 10 GUARANTY
	 	 	57	 
	10.1 Guaranty of the Obligations
	 	 	57	 
	10.2 Contribution by Guarantors
	 	 	57	 
	10.3 Payment by Guarantors
	 	 	58	 
	10.4 Liability of Guarantors Absolute
	 	 	58	 
	10.5 Waivers by Guarantors
	 	 	60	 
	10.6 Guarantors’ Right of Subrogation, Contribution, etc
	 	 	60	 
	10.7 Subordination of Other Obligations
	 	 	61	 
	10.8 Continuing Guaranty
	 	 	61	 
	10.9 Authority of Guarantors or the Borrower
	 	 	61	 
	10.10 Financial Condition of the Borrower
	 	 	61	 
	10.11 Bankruptcy, etc
	 	 	61	 
	 
	 	 	 	 
	SECTION 11 LENDER REGISTRATION RIGHTS
	 	 	62	 
	11.1. Piggyback Registrations
	 	 	62	 
	11.2. Registration Covenants of Holdings
	 	 	63	 
	11.3 Registration Expenses
	 	 	64	 
	11.4. Other Registration Rights
	 	 	65	 
	11.5 Indemnification Relating to Registration
	 	 	65	 
	 
	 	 	 	 
	SECTION 12 MISCELLANEOUS
	 	 	67	 
	12.1 Amendments and Waivers
	 	 	67	 
	12.2
Notices, etc
	 	 	67	 
	12.3 No Waiver; Cumulative Remedies
	 	 	67	 
	12.4 Survival of Representations and Warranties
	 	 	67	 
	12.5 Payment of Expenses and Taxes
	 	 	68	 
	12.6 Indemnification
	 	 	68	 
	12.7 Successors and Assigns
	 	 	69	 
	12.8 Set-off
	 	 	70	 
	12.9 Counterparts
	 	 	70	 
	12.10 Severability
	 	 	70	 
	12.11 Other Transactions
	 	 	70	 
	12.12 Integration
	 	 	70	 
	12.13 GOVERNING LAW
	 	 	70	 
	12.14 Submission To Jurisdiction; Waivers
	 	 	70	 
	12.15. Acknowledgments
	 	 	71	 
	12.16 Releases of Guarantees and Liens
	 	 	71	 
	12.17 WAIVER OF JURY TRIAL
	 	 	71	 

iii 

 

	 	 	 	 	 	 	 
	SCHEDULES:
	 	 	 	 	 	 
	 
	Schedule I	 	Notice Information
	 
	 	 	 	 	 	 
	Schedule II	 	Wire Instructions
	 
	 	 	 	 	 	 
	Schedule III	 	Disclosure Schedule
	 

	 	 	 	Item 1.1
	 	Capitalization of Borrower
	 

	 	 	 	Item 6.5
	 	Consents, Authorizations, Filings and Notices
	 

	 	 	 	Item 6.12
	 	Intellectual Property
	 

	 	 	 	Item 6.18
	 	Subsidiaries
	 

	 	 	 	Item 6.22(a)
	 	UCC Filing Jurisdictions
	 

	 	 	 	Item 6.24A
	 	Real Properties Owned by Borrower or Subsidiaries
	 

	 	 	 	Item 6.24B
	 	Real Properties Leased by Borrower or Subsidiaries
	 

	 	 	 	Item 8.2(b)
	 	Indebtedness to be Repaid
	 

	 	 	 	Item 8.2(i)
	 	Continuing Indebtedness
	 

	 	 	 	Item 8.3(i)
	 	Continuing Liens
	 
	 	 	 	 	 	 
	 

	 	 	 	Item 8.8(i)
	 	Existing Investments
	 
	 	 	 	 	 	 
	Schedule IV	 	Certain Material Contracts
	 
	 	 	 	 	 	 
	EXHIBITS:
	 	 	 	 	 	 
	 
	EXHIBIT A	 	Borrower Closing Date Certificate
	 	 	 
	EXHIBIT B	 	Compliance Certificate
	 	 	 
	EXHIBIT C	 	[Intentionally Omitted]
	 	 	 
	EXHIBIT D	 	[Intentionally Omitted]
	 	 	 
	EXHIBIT E	 	Joinder Agreement
	 	 	 
	EXHIBIT F	 	Obligor Security Agreement
	 	 	 
	EXHIBIT G	 	Guaranty Supplement
	 	 	 
	EXHIBIT H	 	Officer’s Solvency Certificate
	 	 	 
	EXHIBIT I	 	Legal Opinion of Counsel to the Obligors

iv 

 

CREDIT AND GUARANTY AGREEMENT

     THIS CREDIT AND GUARANTY AGREEMENT, dated as of October 25, 2007 is among Iceland Acquisition
Subsidiary, Inc., a Delaware corporation (“Iceland”), HAPC, INC., a Delaware corporation
(“Holdings”), and I-Flow Corporation, a Delaware corporation (the “Lender”).
Capitalized terms used herein are defined in Section 1.1.

W I T N E S S E T H:

     WHEREAS, pursuant to a Stock Purchase Agreement dated as of September 29, 2006, as previously
amended by an Amendment No. 1 dated as of April 30, 2007, an Amendment No. 2 dated as of June 29,
2007, an Amendment No. 3 dated as of July 31, 2007 and an Amendment No. 4 dated as of September 18,
2007 (as the same may be further amended, supplemented, amended and restated or otherwise modified
from time to time in accordance with Section 8.17 hereof, the “Acquisition
Agreement”), among I-Flow Corporation, a Delaware corporation as “Seller” thereunder (in such
capacity, the “Seller”), InfuSystem, Inc., a California corporation (“InfuSystem”),
Holdings and Iceland, Iceland has agreed to acquire all outstanding Equity Interests of InfuSystem
for an aggregate purchase price of $100,000,000.00, subject to post-closing adjustments (the
“InfuSystem Acquisition”);

     WHEREAS, the Borrower has requested that the Lender make a loan to the Borrower in the
aggregate principal amount of up to $32,703,000.00, and the Lender has agreed, subject to the terms
and conditions of this Agreement, to make such loan;

     WHEREAS, substantially concurrently with the consummation of the InfuSystem Acquisition, (i)
Iceland will merge with and into InfuSystem, with InfuSystem continuing as the entity surviving
such merger (the “Merger” and, together with all related transactions, including the Term
Loan hereunder, collectively, the “Transaction”) and as a direct wholly-owned subsidiary of
Holdings, and (ii) InfuSystem will become a party to this Agreement by executing and delivering the
Joinder Agreement;

     WHEREAS, the Borrower has agreed to secure its Obligations by granting to the Lender a first
priority security interest in substantially all of its assets; and

     WHEREAS, Holdings has agreed to guarantee the obligations of the Borrower hereunder and to
secure its Obligations by granting to the Lender a first priority security interest in
substantially all of Holdings’ assets, including a pledge of all of the capital stock of the
Borrower.

     NOW, THEREFORE, the parties hereto agree as follows:

SECTION 1

DEFINITIONS

     1.1 Defined Terms. As used in this Agreement, the terms listed in this
Section 1.1 shall have the respective meanings set forth in this Section 1.1.

     “Acquisition” means, with respect to any Person (a) an Investment in, or a purchase of
a Controlling interest in, the Equity Interests of any other Person, (b) a purchase or other
acquisition of all or substantially all of the assets or properties of, another Person or of any
division, line of business or business unit of another Person, or (c) any merger or consolidation
of such Person with any other Person
or other transaction or series of transactions resulting in the acquisition of all or
substantially all of the assets, or a Controlling interest in the Equity Interests, of any Person.

1

 

     “Acquisition Agreement” is defined in the recitals hereto.

     “Acquisition Documentation” means, collectively, the Acquisition Agreement, the
Services Agreement (as defined in the Acquisition Agreement), the License Agreement (as defined in
the Acquisition Agreement) and those certain Letter Agreements dated April 30, 2007, June 29, 2007,
July 31, 2007 and September 12, 2007 among Holdings, Iceland and the Lender, that certain
Acknowledgement and Agreement Regarding Stock Purchase Agreement and Guaranty dated October 8, 2007
among the Lender, InfuSystem, Holdings, Iceland, Sean D. McDevitt and Philip B. Harris, that
certain Further Agreement Regarding Project Iceland dated October 17, 2007 among the Lender,
InfuSystem, Holdings and Iceland and all schedules, exhibits and annexes thereto and all side
letters and agreements (including without limitation, all non-competition agreements) affecting the
terms thereof or entered into in connection therewith, in each case as amended, supplemented or
otherwise modified from time to time.

     “Acquisition Payments” means, collectively, (a) any adjustment to the purchase price
for the InfuSystem Acquisition made after the closing date thereof in accordance with the
Acquisition Documentation , including any adjustments made pursuant to Section 2.5 of the
Acquisition Agreement and (b) any payments made or required to be made to Holdings, the Borrower or
any Subsidiary of the Borrower in respect of any Seller’s indemnification or reimbursement
obligations under any Acquisition Documentation.

     “Affiliate” means, as to any Person, any other Person that, directly or indirectly, is
in control of, is controlled by, or is under common control with, such Person. For purposes of
this definition, “control” of a Person means the power, directly or indirectly, either to (a) vote
10% or more of the Equity Interests having ordinary voting power for the election of directors (or
persons performing similar functions) of such Person or (b) direct or cause the direction of, or
veto, the management and policies of such Person, whether by Contractual Obligation of any Person,
Applicable Law or otherwise (including being, or directly or indirectly controlling, a general
partner, managing member or other Person or Persons having such power).

     “Agreement” means this Credit and Guaranty Agreement, together with all exhibits and
schedules hereto, as amended, supplemented, amended and restated or otherwise modified from time to
time.

     “Annual Budget” is defined in Section 7.2(e).

     “Applicable Law” means as to any Person, property, transaction or event, all present
and future laws, treaties, statutes, regulations, judgments and decrees (in each case, whether
international, foreign, federal, state or local) applicable to or binding upon such Person,
property, transaction or event (whether or not having the force of law with respect to regulatory
matters applicable to the Lender) and all applicable requirements, requests, official directives,
consents, approvals, authorizations, guidelines, rules, orders and policies of any Governmental
Authority having or purporting to have authority over such Person, property, transaction or event.

     “Applicable Margin” means (i) with respect to the Base Rate, 4.50%, and (ii) with
respect to the LIBOR Rate, 5.50%.

     “Asset Sale” means any Disposition of property or series of related Dispositions of
property (excluding any such Disposition permitted by Section 8.5(a), (b),
(c), (d) or (e)) that yields gross proceeds
to Holdings or any of its Subsidiaries (valued at the cash consideration received or, in the
case of non-cash consideration, the initial principal amount thereof in the case of non-cash
proceeds consisting of

2

 

notes or other debt securities or the fair market value thereof in the case
of other non-cash proceeds) in excess of $100,000.

     “Authorized Officer” means, relative to any Obligor, those of its officers, or the
officers of its general partners or managing members (as applicable), whose signatures and
incumbency shall have been certified to the Lender pursuant to Section 5.1(r) or
7.11(c).

     “Base Rate” means, for any day, a rate per annum equal to the greater of (i) four
percent (4%), and (ii) “The Wall Street Journal Prime Rate,” for such day as the rate may change
from time to time. The “Wall Street Journal Prime Rate” is and shall mean the variable rate of
interest, on a per annum basis, which is announced and/or published in the Money Rates section of
The Wall Street Journal from time to time as the “Prime Rate” for the U.S. The Base Rate
shall be redetermined whenever The Wall Street Journal Prime Rate changes. If The Wall Street
Journal Prime Rate becomes unavailable during the term of this Agreement, the Lender may designate
a substitute index after notice to the Borrower. Any change in the Base Rate due to a change in
the Wall Street Journal Prime Rate shall be effective as of the opening of business on the
effective day of such change in the Wall Street Journal Prime Rate.

     “Board” means the Board of Governors of the Federal Reserve System of the United
States (or any successor).

     “Borrower” means (i) prior to consummation of the Merger, Iceland, and (ii) at and
subsequent to consummation of the Merger, InfuSystem.

     “Borrower Closing Date Certificate” means the closing date certificate executed and
delivered by the Borrower pursuant to the terms of this Agreement, substantially in the form of
Exhibit A.

     “Business” means the business operated by the Borrower and its Subsidiaries on the
Closing Date and other businesses directly related thereto.

     “Business Day” means a day other than a Saturday, Sunday or other day on which
commercial banks in the State of California are authorized or required by law to close.

     “Business Entity” means a partnership, limited partnership, limited liability
partnership, corporation (including a business trust), limited liability company, unlimited
liability company, joint stock company, trust, unincorporated association, joint venture or other
entity.

     “Capital Expenditures” means, for any Person for any period, the sum of, without
duplication, all expenditures made, directly or indirectly, by such Person or any of its
Subsidiaries during such period for equipment, fixed assets, real property (other than undeveloped
real property, land under development, houses under construction and building lots) or
improvements, or for replacements or substitutions therefor or additions thereto (excluding normal
replacements and maintenance which are properly charged to current operations as operating expenses
in accordance with GAAP), that have been or should be, in accordance with GAAP, reflected as
additions to property, plant or equipment on a Consolidated balance sheet of such Person or have a
useful life of more than one year. For purposes of this definition, the purchase price of
equipment that is purchased simultaneously with the trade in of existing equipment or with
condemnation proceeds or insurance proceeds shall be included in Capital Expenditures only to the
extent of the gross amount of such purchase price less the credit granted by the seller of such
equipment for the equipment being traded in at such time or the amount of such condemnation
proceeds or insurance proceeds, as the case may be.

3

 

     “Capital Lease Obligations” means, as to any Person, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real
or personal property, or a combination thereof, to the extent such obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person under GAAP and,
for the purposes of this Agreement, the amount of such obligations at any time shall be the
capitalized amount thereof at such time determined in accordance with GAAP.

     “Cash Equivalents” means any of the following, to the extent owned by any Obligor or
any of its Subsidiaries free and clear of all Liens other than Liens created under the Security
Documents and having a maturity of not greater than 360 days (or such lesser period of time as is
specified in this definition) from the date of acquisition thereof:

     (a) readily marketable direct obligations issued by, or directly, unconditionally or
insured guaranteed and fully by, the United States government or, issued by any agency or
instrumentality thereof and backed by the full faith and credit of the United States;

     (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bank
deposits having maturities of six months or less from the date of acquisition issued by any
commercial bank that issues (or the parent of which issues) commercial paper rated as
described in clause (d) below, is organized under the laws of the United States or
any state thereof and has combined capital and surplus aggregating in excess of
$500,000,000;

     (c) repurchase obligations of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than 30 days, with respect
to securities issued or fully guaranteed or insured by the United States government;

     (d) commercial paper of an issuer rated at least A-1 by S&P or P-1 by Moody’s, or
carrying an equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers generally, and
maturing within six months from the date of acquisition;

     (e) investments in money market, mutual or similar funds substantially all of whose
assets are composed of securities of the type described in clauses (a) through
(d) of this definition; and

     (f) demand deposit accounts maintained in the ordinary course of business.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended.

“Change in Control” means any of the following events or occurrences:

     (a) the failure of Holdings at any time to directly own beneficially and of record on a
fully diluted basis 100% of the outstanding Equity Interests of the Borrower, such Equity
Interests to be held free and clear of all Liens other than Liens created under the Security
Documents; or

     (b) any “person” or “group” (within the meaning of Sections 13(d) and 14(d) under the
Exchange Act) shall become, or obtain rights (whether by means of warrants, options or
otherwise) to become, the ultimate “beneficial owner” (as defined in Rules 13d-3 and 13d-5

4

 

under the Exchange Act), directly or indirectly, of Equity Interests representing more
than 35% of the outstanding Equity Interests of Holdings on a fully diluted basis; or

     (c) during any period of 24 consecutive months, individuals who at the beginning of
such period constituted the board of directors of Holdings (together with any new directors
whose election to such board of directors or whose nomination for election by the
stockholders of Holdings was approved by a majority of the directors then still in office
who were either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a majority of
the board of directors of Holdings then in office.

     “Closing Date” means the date (which must be a Business Day) on which the Term Loan is
made in accordance with the Acquisition Agreement.

     “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     “Collateral” means, collectively, all property of the Obligors, now owned or hereafter
acquired, upon which a Lien is purported to be created by any Security Document.

     “Commitment Termination Date” means the earliest of (a) October 25, 2007 or such later
date as may be agreed by the Lender in its sole discretion (if the Term Loan has not been made on
or prior to such date); (b) the date the Term Loan is made (immediately after the making of the
Term Loan on such date); and (c) the date on which any Commitment Termination Event occurs. Upon
the occurrence of any event described above the Term Loan Commitment shall terminate automatically
and without any further action.

     “Commitment Termination Event” means any of the following: (a) the occurrence of any
Event of Default described in Section 9.1(f) with respect to the Borrower or any other
Obligor; or (b) the occurrence of any other Event of Default and the Lender shall have given notice
to the Borrower that the Term Loan Commitment has been terminated.

     “Commonly Controlled Entity” means an entity, whether or not incorporated, that is
under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a
group that includes the Borrower and that is treated as a single employer under Section 414 of the
Code.

     “Compliance Certificate” means a certificate duly completed and executed by an
Authorized Officer of the Borrower substantially in the form of Exhibit B or in such other
form as the Lender may from time to time request for the purpose of monitoring the Borrower’s
compliance with the financial covenants contained herein.

     “Consolidated” refers to the consolidation of financial reporting in accordance with
GAAP and, when used with respect to any financial covenant set forth in Section 8.1 or any
element thereof or defined term used therein, refers to the relevant Person and its Consolidated
Subsidiaries or affiliates determined on a consolidated basis.

     “Contractual Obligation” means, as to any Person, any provision of any security issued
by such Person or of any agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound.

5

 

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

     “Copyright Security Agreement” means any Copyright Security Agreement executed and
delivered by any Obligor in substantially the form of Exhibit A to the Obligor Security Agreement,
as amended, supplemented, amended and restated or otherwise modified from time to time.

     “Covered Taxes” is defined in Section 4.4(a).

     “Credit Extension” means the making of a Loan by the Lender.

     “Debt” means all Indebtedness of the type referred to in clause (a),
(b), (c), (d), (i) and (j) of the definition of
Indebtedness and all Guarantee Obligations in respect of any of the foregoing; provided,
however, that in the case of any such Indebtedness of the type referred to in
clause (c) or (d) of the definition of “Indebtedness,” such Indebtedness shall
constitute Debt only to the extent that such Indebtedness represents payments that (x) are
scheduled payments or payments required at the expiration of the lease term or at maturity and
(y) represent repayment of principal amounts advanced under the applicable lease.

     “Default” means any Event of Default or any condition, occurrence or event that, after
the giving of notice, the lapse of time, or both, would constitute an Event of Default.

     “Disclosure Schedule” means the Disclosure Schedule attached as Schedule III,
as such Schedule may be amended, supplemented, amended and restated or otherwise modified from time
to time by the Borrower with the written consent of the Lender.

     “Disposition” means, with respect to any property, any sale, lease, sale and
leaseback, assignment, conveyance, transfer or other disposition of all or any part of such
property. The terms “Dispose” and “Disposed of” shall have correlative meanings.

     “Dollars” and “$” mean dollars in lawful currency of the United States.

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

     “EBITDA” means, for any period of any Person, Net Income for such period plus,
without duplication and to the extent reflected as a charge in the statement of such Net Income for
such period, the sum of (a) income tax expense, (b) Interest Expense, and (c) depreciation and
amortization expense, all as determined on a Consolidated basis.

     “Effective Date” means, on and after the date that counterparts of this Agreement
executed on behalf of the Borrower and the Lender shall have been received by the Lender, the date
of this Agreement.

     “Environment” means, without limitation, any of the following media:

     (a) land, including surface land, sub-surface strata, sea bed and riverbed under water
(as defined in clause (b) hereof) and any natural or man-made structures;

6

 

     (b) water, including coastal and inland waters, navigable waters, surface waters,
ground waters, drinking water supplies and waters in drains and sewers, surface and
sub-surface strata; and

     (c) air, including indoor and outdoor air and air within buildings and other man-made
or natural structure above or below ground, and includes any living organism or systems
supported by any such media.

     “Environmental Laws” means all applicable federal, state, local and foreign laws,
statutes, ordinances, codes, rules, standards and regulations, now or hereafter in effect, and any
applicable judicial or administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, in each case above, to the extent imposing
liability or standards of conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface water, groundwater,
wetlands, land surface or subsurface strata, wildlife, aquatic species and vegetation).
Environmental Laws include the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (42 U.S.C. §§ 9601 et seq.) (“CERCLA”); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. §§ 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. §§ 136 et seq.); the Solid Waste
Disposal Act (42 U.S.C. §§ 6901 et seq.); the Toxic Substance Control Act (15 U.S.C.
§§ 2601 et seq.); the Clean Air Act (42 U.S.C. §§ 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. §§ 1251 et seq.); the Occupational Safety and Health Act
(29 U.S.C. §§ 651 et seq.); and the Safe Drinking Water Act (42 U.S.C. §§ 300(f) et
seq.), and any and all regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership notification or approval
statutes.

     “Environmental Liability” means, with respect to any Person, all liabilities,
obligations, responsibilities, response, remedial and removal costs, investigation and feasibility
study costs, capital costs, operation and maintenance costs, losses, damages, punitive damages,
property damages, natural resource damages, consequential damages, treble damages, costs and
expenses (including all fees, disbursements and expenses of counsel, experts and consultants),
fines, penalties, sanctions and interest, in each case above, incurred as a result of or related to
any claim, suit, action, investigation, proceeding or demand by any Person, whether based in
contract, tort, implied or express warranty, strict liability, criminal or civil statute or common
law, including any arising under or related to any Environmental Laws, Environmental Permits, or in
connection with any Release or threatened Release or presence of a Hazardous Material whether on,
at, in, under, from or about or in the vicinity of any real or personal property.

     “Environmental Permit” means, without limitation, any consent, license, permit,
permission, grant, waiver, order, registration, authorization, approval, exemption or similar right
or privilege issued by any Governmental Authority pursuant to any Environmental Law.

     “Equity Interests” means, with respect to any Person, (a) any and all shares,
interests, participations, rights or other equivalents (however designated, whether voting or
non-voting) of or interests in corporate or capital stock, including without limitation, shares of
preferred or preference stock of such Person, (b) all partnership interests (whether general or
limited) of such Person, (c) all membership interests or limited liability interests in such
Person, (d) all beneficial interests in a trust or similar entity, (e) all other equity or
ownership interests in such Person of any other type and (f) all warrants, rights or options to
purchase or otherwise acquire any of the foregoing.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time.

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     “Event of Default” means any of the events specified in Section 9.1.

     “Excess Cash Flow” means, for any Fiscal Year of the Borrower: (a) Net Cash Provided
by Operating Activities for such Fiscal Year, as set forth in the statement of cash flows included
in Holdings’ audited financial statements for such Fiscal Year, minus (b) the sum, without
duplication, of (i) Fixed Charges of Borrower of the type described in clause (c) of the definition
thereof (without regard to the proviso at the end thereof) for such Fiscal Year, plus
(ii) the aggregate amount actually paid by Borrower in cash during such Fiscal Year on account of
Capital Expenditures (excluding the principal amount of Indebtedness incurred in connection with
such expenditures and any such expenditures financed with the proceeds of any Reinvestment Deferred
Amount).

     “Excess Cash Flow Application Date” means the fifth Business Day after the earlier of
(i) the date on which the financial statements of the Borrower referred to in
Section 7.1(a), for the Fiscal Year with respect to which such prepayment is made, are
required to be delivered to the Lender, and (ii) the date such financial statements are actually
delivered.

     “Fair Market Value” means, with respect to any asset, the amount that would be
obtained for the sale of such asset, free and clear of all Liens, in an arm’s length transaction
between an informed and willing purchaser under no compulsion to buy and an informed and willing
seller under no compulsion to sell such asset.

     “Financing Statements” means Uniform Commercial Code financing statements or other
similar financing statements.

     “Fiscal Quarter” means a quarter ending on the last day of March, June, September or
December.

     “Fiscal Year” means any period of twelve consecutive calendar months ending on
December 31; references to a Fiscal Year with a number corresponding to any calendar year (e.g. the
“2004 Fiscal Year”) refers to the Fiscal Year ending on December 31 of such calendar year.

     “Fixed Charge Coverage Ratio” means, as at the last day of any Fiscal Quarter, the
ratio of (a) EBITDA of Holdings and its Subsidiaries for the period of four consecutive Fiscal
Quarters ending on such day less the aggregate amount actually paid by Holdings and its
Subsidiaries during such period on account of Capital Expenditures to (b) Fixed Charges for
the period of four consecutive Fiscal Quarters ending on such day.

     “Fixed Charges” means, for any period, the sum (without duplication) of (a) Interest
Expense for such period, (b) Lease Expense for such period, (c) scheduled principal payments made
during such period on account of Indebtedness of Holdings or any of its Subsidiaries (including
scheduled principal payments in respect of the Term Loan and scheduled payments of rent under
Capital Lease Obligations and synthetic leases, to the extent such rent payments represent
repayment of principal amounts advanced thereunder) and (d) all federal, state and foreign income
taxes actually paid in cash by Holdings and its Subsidiaries during such period; provided that
“Fixed Charges” shall exclude payments on financing leases for ambulatory infusion pumps.

     “Foreign Subsidiary” means (a) any Subsidiary of Holdings that is a “controlled
foreign corporation,” within the meaning of section 957 of the Code, or (b) any indirect Subsidiary
of Holdings held through a Subsidiary described in clause (a) to the extent that the pledge
of Equity Interests or assets of, or a guaranty by, such Subsidiary would result in adverse tax
consequences to Holdings.

8

 

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

     “GAAP” means generally accepted accounting principles in the United States as in
effect from time to time, except that for purposes of Section 8.1, GAAP shall be determined
on the basis of such principles in effect on the Closing Date and consistent with those used in the
preparation of the most recent audited financial statements of the Borrower delivered pursuant to
Section 5.1(i). 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 the Borrower and the Lender agree to enter into negotiations in
order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes
with the desired result that the criteria for evaluating the Borrower’s financial condition shall
be the same after such Accounting Changes as if such Accounting Changes had not been made. Until
such time as such an amendment shall have been executed and delivered by the Borrower and the
Lender, all financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Changes had not occurred. “Accounting
Changes” 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 SEC.

     “Governmental Authority” means any nation or government, any state or municipality,
any political subdivision of any of the foregoing, any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative functions of or pertaining to government, any securities
exchange and any self-regulatory organization (including the National Association of Insurance
Commissioners).

     “Governmental Authorization” means any authorization, approval, consent, franchise,
license, covenant, order, ruling, permit, certification, exemption, notice, declaration or similar
right, undertaking or other action of, to or by, or any filing, qualification or registration with,
any Governmental Authority.

     “Grantor” means the Borrower and each other Person that is required under the Loan
Documents to be a grantor under the Obligor Security Agreement.

     “Guarantee Obligation” means, as to any Person (the “guaranteeing person”),
any obligation of (a) the guaranteeing person or (b) another Person (including any bank under any
letter of credit) to induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect
guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including any obligation of the guaranteeing person, whether or not
contingent, (i) to purchase any such primary obligation or any property constituting direct or
indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase
property, securities or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of such primary obligation
or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall not
include endorsements of instruments for deposit or collection in the ordinary course of business.
The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower
of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing
person may be liable pursuant to the terms of the instrument embodying such

9

 

Guarantee Obligation, unless such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liability
in respect thereof as determined by the Borrower in good faith.

     “Guarantor” means Holdings and each Domestic Subsidiary of Holdings (other than the
Borrower).

     “Guaranty” means the guaranty of each Guarantor set forth in Section 10.

     “Hazardous Material” means, without limitation, any petroleum product, raw material,
physical agent, biologically derived airborne contaminant, biological agent, infectious agent,
assayable biological contaminant, chemical product or intermediate, chemical by-product, flammable
material, explosive, radioactive substances, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, polychlorinated biphenyls, chemicals defined under Environmental
Law as hazardous substances, hazardous wastes, extremely hazardous wastes, solid wastes, toxic
substances, pollutants, contaminants or words of similar meaning which is now or hereafter defined,
prohibited, limited or regulated in any way under any Environmental Law.

     “Hedge Agreements” means all interest rate swaps, caps or collar agreements, interest
rate future or option contracts, currency swap agreements, currency future or option contracts or
similar arrangements providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally or under specific
contingencies.

     “Hedging Obligations” means, with respect to any Person at any date, all liabilities
of such Person under Hedge Agreements.

     “Holdings” is defined in the preamble hereto.

     “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “HQ Lease” means, collectively, the two leases between Tueffs Limited Partnership and
InfuSystem, Inc., as amended, for office space and warehouse space in Madison Heights, Michigan
with a term from July 1, 2002 to June 30, 2007, in each case as extended to June 30, 2008 by
amendment executed by Tueffs Limited Partnership on July 2, 2007.

     “Indebtedness” means, with respect to any Person at any date, without duplication:

     (a) all indebtedness of such Person for borrowed money and all obligations of such
Person evidenced by notes, bonds, debentures or other similar instruments;

     (b) all obligations of such Person, contingent or otherwise, relative to the face
amount of all (i) letters of credit (whether or not drawn) or (ii) bankers’ acceptances or
similar facilities, in each case issued for the account of such Person;

     (c) all Capital Lease Obligations of such Person;

     (d) all Synthetic Obligations of such Person;

     (e) all obligations of such Person under Hedge Agreements;

10

 

     (f) all obligations of such Person to pay the deferred purchase price of property or
services (other than current trade payables that are incurred in the ordinary course of such
Person’s business and are not overdue for a period of more than 90 days);

     (g) all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even though the rights
and remedies of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property);

     (h) the liquidation value of all preferred Equity Interests of such Person redeemable
at the option of the holder thereof;

     (i) all obligations of the kind referred to in clauses (a) through (h)
above secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on property (including accounts and
contract rights) owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation; and

     (j) all Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (i) above.

     The Indebtedness of any Person shall include the Indebtedness of any other entity (including
any partnership in which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is not liable
therefor.

     “Indemnitee” is defined in Section 12.6.

     “InfuSystem” is defined in the recitals hereto.

     “InfuSystem Acquisition” is defined in the recitals hereto.

     “Initial Financial Statements” means, collectively, the following financial statements
of Holdings: (i) Condensed Consolidated Balance Sheets as of March 31, 2007 and December 31, 2006;
(ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2007, the
three months ended March 31, 2006 and for the period from August 15, 2005 (inception) to March 31,
2007; (iii) Condensed Consolidated Statements of Stockholders Equity (Deficit) for the period
August 15, 2005 (inception) to December 31, 2005, the year ended December 31, 2006 and for the
three months ended March 31, 2007; and (iv) Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2007, the three months ended March 31, 2006 and for the period from
August 15, 2005 (inception) to March 31, 2007.

     “Initial Projections” means, collectively, the following (in each case, for Holdings
and its Subsidiaries on a Consolidated basis giving effect to the Acquisition): (i) income
statement projection (assuming no share redemptions) by quarter from March 31, 2007 through
December 31, 2009 (with columns for full year totals and additional lines below net income showing
projected depreciation expense, amortization expense, EBITDA, capital expenditures, lease expense
(facility), equipment lease payments, principal payments on the Term Loan, and interest payments on
the Term Loan); (ii) balance sheet projection (assuming no share redemptions) by quarter from March
31, 2007 through December 31, 2009; (iii) itemized list of payments to be made at closing of the
Acquisition (e.g., FTN fees, loan facility fee, ticking fee (Acquisition Agreement Section
12.1(a)), audit fees and costs (Acquisition Agreement Section 6.23), preparation of proxy
(Acquisition Agreement Section 6.18), etc.); (iv) income statement

11

 

projection (assuming maximum share redemptions) by quarter from March 31, 2007 through
December 31, 2009 (with columns for full year totals and additional lines below net income showing
projected depreciation expense, amortization expense, EBITDA, capital expenditures, lease expense
(facility), equipment lease payments, principal payments on the Term Loan, and interest payments on
the Term Loan); and (v) balance sheet projection (assuming maximum share redemptions) by quarter
from March 31, 2007 through December 31, 2009.

     “Intellectual Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all rights to sue at law or
in equity for any infringement or other impairment thereof, including the right to receive all
proceeds and damages therefrom.

     “Intercompany Subordination Agreement” means a Subordination Agreement, in form and
substance reasonably satisfactory to the Lender, executed and delivered by two or more Obligors and
delivered to the Lender pursuant to the terms of this Agreement, as amended, supplemented, amended
and restated or otherwise modified from time to time.

     “Interest Expense” means, for any period, total interest payable in cash on, and
amortization of debt discount in respect of, all Debt (including that attributable to the Term
Loan, Capital Lease Obligations and Synthetic Obligations) of Holdings and its Subsidiaries
(including all commissions, discounts and other fees and charges owed with respect to letters of
credit and bankers’ acceptance financing and net costs under Hedge Agreements in respect of
interest rates to the extent such net costs are allocable to such period in accordance with GAAP).

     “Investments” means, relative to any Person, (a) any advance, loan or extension of
credit (by way of entry into of a Guarantee Obligation or otherwise) to any other Person, including
the purchase by such Person of any bonds, notes, debentures or other debt securities of any other
Person, (b) any Equity Interests held by such Person in any other Person, including any capital
contribution made by such Person to any other Person, and (c) any Acquisition.

     “Joinder Agreement” means the Joinder Agreement to be executed by InfuSystem in
substantially the form of Exhibit E.

     “Landlord Agreement” means a landlord agreement in form and substance reasonably
satisfactory to the Lender executed and delivered pursuant to the terms of this Agreement, which
shall grant the Lender access to the premises covered by any lease of Real Property under which any
Grantor is the lessee or sublessee.

     “Lease Expense” means, for any period, the aggregate amount of fixed and contingent
rentals (excluding Capital Lease Obligations and Synthetic Obligations) payable by Holdings and its
Subsidiaries for such period with respect to leases of real and personal property, determined on a
Consolidated basis.

     “Lender” is defined in the preamble hereto and, as used herein, shall include
any successors and assigns of the original Lender hereunder.

     “Lender’s Environmental Liability” means any and all losses, liabilities, obligations,
penalties, claims, litigation, demands, defenses, costs, judgments, suits, proceedings, damages
(including consequential damages), disbursements or expenses of any kind or nature whatsoever
(including actual attorneys’ fees at trial and appellate levels and experts’ fees and disbursements
and expenses incurred in

12

 

investigating, defending against or prosecuting any litigation, claim or proceeding) that may
at any time be imposed upon, incurred by or asserted or awarded against the Lender or any of its
Affiliates, shareholders, directors, officers, employees, representatives and agents in connection
with or arising from:

     (i) any Hazardous Material on, in, under or affecting all or any portion of any
property of the Borrower or any of its Subsidiaries, the groundwater thereunder, or any
surrounding areas thereof to the extent caused by Releases from the Borrower’s or any of its
Subsidiaries’ or any of their respective predecessors’ properties;

     (ii) any misrepresentation, inaccuracy or breach of any warranty, contained or referred
to in Section 6.20;

     (iii) any violation or claim of violation by Holdings or any of its Subsidiaries of any
Environmental Laws; or

     (iv) the imposition of any lien for damages caused by or the recovery of any costs for
the cleanup, release or threatened release of Hazardous Material by Holdings or any of its
Subsidiaries, or in connection with any property owned or formerly owned by Holdings or any
of its Subsidiaries.

     “Leverage Ratio” has the meaning set forth in Section 8.1(b).

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien or right of subrogation or analogous right (statutory or other), charge or other
security interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or other title
retention agreement and any capital lease having substantially the same economic effect as any of
the foregoing).

     “LIBOR Rate” means, at any time of determination, a rate per annum equal to the
greater of (i) three percent (3.0%), and (ii) the latest rate for one month Eurodollars published
in the “Money Rates” section of The Wall Street Journal (or if such rate ceases to be so published,
as quoted from such other generally available and recognizable source as the Lender may select).
The LIBOR Rate shall be determined (i) on the first Business Day immediately prior to the Closing
Date and (ii) thereafter, on the last Business Day of each calendar month for calculation of
interest for the following month.

     “Loan Documents” means this Agreement, the Guaranty, each Intercompany Subordination
Agreement, if any, the Security Documents, the Borrower Closing Date Certificate, each Compliance
Certificate and each other agreement, document or instrument delivered in connection with this
Agreement or any other Loan Document, whether or not specifically mentioned herein or therein.

     “Material Adverse Change” means a material adverse change in, or a material adverse
effect upon (i) the business, condition (financial or otherwise), assets, liabilities (actual or
contingent), operations, management, performance, properties or prospects of Holdings since
December 31, 2005, (ii) the ability of Holdings, Borrower or any of their respective Subsidiaries
to perform their respective obligations under the Loan Documents, or (iii) the ability of the
Lender to enforce the Loan Documents.

     “Material Adverse Effect” means (a) a material adverse effect on the Transaction,
(b) a material adverse change in, or a material adverse effect upon, the business, properties,
operations (including results of operation), condition (financial or otherwise), assets,
liabilities (actual or contingent), value, solvency or prospects of Holdings, the Borrower
(individually) or of the Borrower and its Subsidiaries taken as a

13

 

whole, (c) a material adverse effect upon the legality, validity, binding effect or
enforceability of this Agreement or any of the other Loan Documents against any Obligor party
thereto, or (d) a material impairment of the rights or remedies of the Lender under any Loan
Document to which it is a party, or of the ability of any Obligor to perform and satisfy its
obligations under any Loan Document to which it is a party.

     “Material Contract” means (i) each contract and agreement listed on Schedule IV hereto
and (ii) each other contract or agreement with Medicare, Blue Cross or any other contracted payor
(including without limitation any insurance company) covering more than 2,000,000 lives.

     “Material Environmental Amount” means an amount payable by the Borrower and/or its
Subsidiaries in excess of $100,000 for remedial costs, compliance costs, compensatory damages,
punitive damages, fines, penalties or any combination thereof.

     “Merger” is defined in the recitals hereto.

     “Monthly Payment Date” means the last day of each calendar month; provided,
that if any such day is not a Business Day, the Monthly Payment Date for such month shall be the
next succeeding Business Day.

     “Mortgaged Properties” means, collectively, any real properties that may, from time
to time pursuant to the terms hereof, become subject to a Mortgage in favor of the Lender.

     “Mortgage” means a mortgage and/or deed of trust made pursuant to the terms hereof by
any Obligor in favor of, or for the benefit of, the Lender, in form and substance satisfactory to
the Lender, as the same may be amended, supplemented or otherwise modified from time to time.

     “Multiemployer Plan” means a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.

     “Net Cash Proceeds” means (a) in connection with any Asset Sale or any Recovery Event,
the proceeds thereof in the form of cash and Cash Equivalents (including any such proceeds received
by way of deferred payment of principal pursuant to a note or installment receivable or purchase
price adjustment receivable or otherwise, but only as and when received), net of attorneys’ fees,
accountants’ fees, investment banking fees, amounts required to be applied to the repayment of
Indebtedness secured by a Lien expressly permitted hereunder on any asset that is the subject of
such Asset Sale or Recovery Event (other than any Lien pursuant to a Security Document) and other
reasonable and customary fees and expenses actually incurred in connection therewith and net of
income or transfer taxes paid or reasonably estimated to be payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing arrangements) and
(b) in connection with any issuance or sale of Equity Interests or securities or instruments
evidencing Indebtedness, or the incurrence of Indebtedness (whether or not a security or instrument
is issued in connection therewith), the cash proceeds and Cash Equivalents received from such
issuance or incurrence, net of reasonable attorneys’ fees, reasonable and customary investment
banking fees, accountants’ fees, underwriting discounts and commissions and other reasonable and
customary fees and expenses actually incurred in connection therewith.

     “Net Income” means, for any period, the consolidated net income (or loss) of Holdings
and its Subsidiaries, determined on a Consolidated basis; provided, however, that
there shall be excluded (a) the income (or deficit) of any Person accrued prior to the date it
becomes a Subsidiary of Holdings or is merged into or consolidated with Holdings or any of its
Subsidiaries, (b) the income (or deficit) of any Person (other than a Subsidiary of Holdings) in
which Holdings or any of its Subsidiaries has an

14

 

ownership interest, except to the extent that any such income is actually received by Holdings
or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed
earnings of any Subsidiary of Holdings to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary is restricted or prohibited at such time by Applicable
Law or the terms of any Contractual Obligation (other than under any Loan Document) applicable to
Holdings or such Subsidiary.

     “Obligations” means the unpaid principal of and interest on (including interest
accruing after the maturity of the Term Loan and interest accruing after the filing of any petition
in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating
to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) the Term Loan and all other obligations and liabilities of any Obligor to the
Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, that may arise under, out of, or in connection with, this Agreement, any
other Loan Document or any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including all fees, charges and disbursements of counsel to the Lender that are
required to be paid by the Borrower pursuant hereto) or otherwise.

     “Obligor Security Agreement” means the Security Agreement executed and delivered
pursuant to the terms of this Agreement by Holdings, the Borrower and each of the Borrower’s
Subsidiaries pursuant to the terms of this Agreement, substantially in the form of Exhibit
F, as amended, supplemented, amended and restated or otherwise modified from time to time, and
includes each Copyright Security Agreement, Patent Security Agreement and Trademark Security
Agreement executed and delivered in connection therewith.

     “Obligors” means, collectively, Holdings, the Borrower and each Subsidiary or
Affiliate of the Borrower that is a party to a Loan Document (including each Subsidiary Guarantor).

     “Organic Document” means, relative to any Obligor, as applicable, its certificate of
incorporation, by-laws, certificate of partnership, partnership agreement, certificate of
formation, limited liability company agreement or operating agreement and all shareholder
agreements, voting trusts and similar arrangements applicable to any of such Obligor’s partnership
interests, limited liability company interests or authorized shares of Equity Interests.

     “Other Taxes” is defined in Section 4.4(b).

     “Patent Security Agreement” means any Patent Security Agreement executed and delivered
by any Obligor in substantially the form of Exhibit B to the Obligor Security Agreement, as
amended, supplemented, amended and restated or otherwise modified from tune to time.

     “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle
A of Title IV of ERISA (or any successor).

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

     “Plan” means, at a particular time, any employee benefit plan that is covered by ERISA
and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as
defined in Section 3(5) of ERISA.

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     “Plan Insolvency” means, with respect to any Multiemployer Plan, that such Plan is
insolvent within the meaning of Section 4245 of ERISA.

     “Pledged Equity Interests” means, collectively, all Equity Interests upon which a Lien
is purported to be created by any Security Document, including all Pledged Stock and all Pledged
Interests (each as defined in the Obligor Security Agreement ).

     “Pledged Notes” is defined in the Obligor Security Agreement.

     “Pledged Subsidiary” means each Subsidiary of the Borrower in respect of which the
Lender has been granted a security interest in or a pledge of (i) any of the Equity Interests of
such Subsidiary or (ii) any intercompany notes of such Subsidiary owing to the Borrower or another
Subsidiary.

     “Projections” is defined in Section 7.2(e).

     “Property” means any property or asset, real or personal, tangible or intangible, of
whatever nature, including general intangibles. “Properties” is the collective reference to the
foregoing.

     “Quarterly Payment Date” means the last day of March, June, September and December;
provided, that if any such day is not a Business Day, the applicable Quarterly Payment Date
shall be the next succeeding Business Day.

     “Real Property” means any real property with respect to which the Borrower or any of
its Subsidiaries or any Obligor has fee simple title or a leasehold interest.

     “Recovery Event” means any settlement of or payment in respect of any property,
environmental or casualty insurance claim or any condemnation, expropriation or analogous
proceeding or event relating to any asset of Holdings or any of its Subsidiaries that yields gross
proceeds to Holdings or any of its Subsidiaries in excess of $100,000.

     “Regulation U” means Regulation U of the Board as in effect from time to time.

     “Reinvestment Deferred Amount” means, with respect to any Reinvestment Event, the
portion of the Net Cash Proceeds received by Holdings or any of its Subsidiaries in connection
therewith that, as a result of the delivery of a Reinvestment Notice, is not applied to prepay the
Term Loan pursuant to Section 3.1.4(c).

     “Reinvestment Event” means any Asset Sale or Recovery Event in respect of which the
Borrower has delivered a Reinvestment Notice.

     “Reinvestment Notice” means a written notice executed by a Responsible Officer stating
that no Default or Event of Default has occurred and is continuing and that Holdings (directly or
indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale or Recovery Event to acquire prior to the relevant Reinvestment
Prepayment Date tangible assets (other than inventory) useful in the Business.

     “Reinvestment Prepayment Amount” means, with respect to any Reinvestment Event, the
Reinvestment Deferred Amount relating thereto less any amount expended prior to the relevant
Reinvestment Prepayment Date to acquire tangible assets other than inventory useful in the
Business.

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     “Reinvestment Prepayment Date” means, with respect to any Reinvestment Event, the
earlier of (a) the date occurring 180 days after such Reinvestment Event and (b) the date on which
the Borrower shall have determined not to, or failed to, or shall have otherwise ceased to, acquire
tangible assets other than inventory useful in the Borrower’s business with all or any portion of
the relevant Reinvestment Deferred Amount.

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

     “Release” means, without limitation, any release, spilling, emission, leaking,
pumping, pouring, injecting, depositing, disposal, discharge, dispersal, leaching, dumping or
migration into the indoor or outdoor Environment, including, without limitation, the movement of
Hazardous Materials through ambient air, soil, surface water, groundwater, wetlands, land or
subsurface strata.

     “Reportable Event” means any of the events set forth in Section 4043(b) of ERISA,
other than those events as to which the thirty day notice period is
waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.

     “Responsible Officer” means the chief executive officer, president or chief financial
officer of the Borrower, but in any event, with respect to financial matters, the chief financial
officer of Holdings.

     “Restricted Payments” is defined in Section 8.6.

     “SEC” means the Securities and Exchange Commission, any successor thereto and any
analogous Governmental Authority.

     “Security Documents” means the collective reference to the Obligor Security Agreement,
each Trademark Security Agreement, each Copyright Security Agreement, each Patent Security
Agreement, each Mortgage, if any, and all other security documents hereafter delivered to the
Lender granting a Lien on any property of any Person to secure the obligations and liabilities of
any Obligor under any Loan Document.

     “Seller” is defined in the recitals hereto.

     “Single Employer Plan” means any Plan that is covered by Title IV of ERISA, but that
is not a Multiemployer Plan.

     “Solvent” means, when used with respect to any Person, that, as of any date of
determination, (a) the amount of the “present fair saleable value” of the assets of such Person
will, as of such date, exceed the amount of all “liabilities of such Person, contingent or
otherwise”, as of such date, as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date, be greater than the amount that
will be required to pay the liability of such Person on its debts as such debts become absolute and
matured, (c) such Person will not have, as of such date, an unreasonably small amount of capital
with which to conduct its business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) ”debt” means liability on a “claim”, and (ii) ”claim”
means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured.

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     “Specified Payment Premium” is defined in Section 3.1.5.

     “Specified Payments” is defined in Section 3.1.5.

     “Specified Revolver Collateral” means all Collateral consisting of the following:

          (a) all Accounts;

          (b) all Inventory;

          (c) any Deposit Accounts specifically established for purposes of collection of Accounts and
all cash, checks and other property held therein or credited thereto (other than identifiable cash
proceeds of Term Priority Collateral held therein);

          (d) to the extent evidencing, governing, securing or otherwise related to the items referred
to in the preceding clauses (a) through (c), all General Intangibles, Chattel
Paper, Instruments, and Documents, provided that to the extent any of the foregoing
also relates to Term Priority Collateral, only that portion related to the items referred to in the
preceding clauses (a) through (c) shall be included in the Specified Revolver Collateral;

          (e) to the extent evidencing, governing, securing or otherwise related to the items referred
to in the preceding clauses (a) through (d), all Supporting Obligations,
provided that to the extent any of the foregoing also relates to Term Priority
Collateral, only that portion related to the items referred to in the preceding clauses (a)
through (d) shall be included in the Specified Revolver Collateral;

          (f) all books and records relating to the foregoing; and

          (g) all Proceeds and products of each of the foregoing and all accessions to, substitutions
and replacements for, and rents, profits and products of, each of the foregoing, any and all
Proceeds of any insurance, indemnity, warranty or guaranty payable to such Grantor from time to
time with respect to any of the foregoing.

          All capitalized terms used in this definition and not defined elsewhere in this Agreement have
the meanings assigned to them in the U.C.C. For the avoidance of doubt, the Lender shall have a
first priority lien on all Specified Revolver Collateral unless and until a revolving credit
facility permitted by Section 8.2(h) is entered into and, thereafter, shall have a second priority
lien on such Specified Revolver Collateral pursuant to intercreditor arrangements reasonably
satisfactory to the Lender.

     “Stated Maturity Date” means October 24, 2011.

     “Subordinated Debt” means unsecured Indebtedness postponed and subordinated in right
of payment to the Obligations pursuant to documentation containing maturities, amortization
schedules, redemption and other prepayment events, covenants, defaults, remedies, acceleration
rights, subordination provisions and other material terms satisfactory to the Lender.

     “Subordinated Debt Documents” means, collectively, any loan agreements, indentures,
note purchase agreements, promissory notes, guarantees and other instruments and agreements
evidencing the terms of Subordinated Debt, as amended, supplemented, amended and restated or
otherwise modified in accordance with Section 8.13.

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     “Subsidiary” means, as to any Person, any Business Entity of which more than 50% of
the outstanding Equity Interests having ordinary voting power to elect or appoint the managing
member, or analogous Person, or the board of directors, managers or other voting members of the
governing body, of such Business Entity (irrespective of whether at the time securities (or other
Equity Interests) of any other class or classes of such Business Entity shall or might have voting
power upon the occurrence of any contingency) is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more other Subsidiaries of such Person, or by
one or more other Subsidiaries of such Person. Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Borrower.

     “Subsidiary Guarantor” means each Subsidiary of Holdings that is a party to the
Guaranty (including each such Subsidiary that shall have become a party to the Guaranty by
executing and delivering a Supplement thereto substantially in the form of Exhibit G).

     “Synthetic Obligations” means as to any Person, all (a) obligations of such Person to
pay rent or other amounts as a lessee under any lease that is treated as an operating lease for
financial accounting purposes and a financing lease for tax purposes (i.e., a “synthetic
lease”), (b) obligations of such Person in respect of transactions entered into by such Person, the
proceeds from which would be reflected on the financial statement of such Person in accordance with
GAAP as cash flows from financings at the time such transaction was entered into (other than as a
result of the issuance of Equity Interests) and (c) obligations of such Person in respect of other
transactions entered into by such Person that are not otherwise addressed in the definition of
“Debt” or in clause (a) or (b) above that are intended to function primarily as a
borrowing of funds.

     “Tax Refund” means any and all tax refunds, tax rebates and other payments of any
nature from any Governmental Authority in respect of Taxes.

     “Taxes” means any and all present and future taxes, levies, imposts, deductions,
assessments, fees, withholdings, duties and other charges, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, including all penalties, interest
and liabilities with respect thereto.

     “Tax Return” means all returns, reports, statements, filings, attachments and other
documents or certifications required to be prepared or filed in respect of Taxes.

     “Term Loan Commitment” means the Lender’s obligation (if any) to make the Term Loan
pursuant to Section 2.1.

     “Term Loan Commitment Amount” means $32,703,000.00.

     “Term Loan” is defined in Section 2.1.1.

     “Term Priority Collateral” means all Collateral except Specified Revolver Collateral.

     “Termination Date” means the earliest date on which both (a) the Term Loan Commitment
shall have been permanently terminated and (b) the Term Loan and all other Obligations shall have
been paid in full in cash.

     “Total Debt” means, at any date, the aggregate principal amount of all Debt of
Holdings and its Subsidiaries.

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     “Trademark Security Agreement” means any Trademark Security Agreement executed and
delivered by any Obligor substantially in the form of Exhibit C to the Obligor Security Agreement,
as amended, supplemented, amended and restated or otherwise modified from time to time.

     “Transaction” is defined in the recitals hereto.

     “Transaction Documents” means, collectively, the Loan Documents and the Acquisition
Documentation, and includes all schedules, exhibits and annexes thereto and all side letters and
agreements affecting the terms thereof or entered into in connection therewith.

     “Treasury Regulations” means the existing U.S. federal income tax regulations
promulgated or proposed under the Code.

     “U.C.C.” means the Uniform Commercial Code, as at any time adopted and in effect in
the State of New York.

     “United States” means the United States of America.

     “Voting Interests” means, with respect to any Person, Equity Interests of any class or
kind ordinarily having the power to vote for the election of, or to appoint, the managing member or
analogous Person, or directors, managers or other voting members of the governing or managing body
of, such Person.

     “Wholly Owned Subsidiary” means as to any Person, any other Person all of the Equity
Interests of which (other than directors’ qualifying shares required by law) are owned by such
Person directly and/or indirectly through one or more other Wholly Owned Subsidiaries.

     “Wholly Owned Subsidiary Guarantor” means any Subsidiary Guarantor that is a Wholly
Owned Subsidiary of the Borrower.

     1.2 Other Definitional Provisions.

     (a) Unless otherwise specified therein, all terms defined in this Agreement shall have
the defined meanings when used in the other Loan Documents or any certificate or other
document made or delivered pursuant hereto or thereto.

     (b) As used herein and in the other Loan Documents, and any certificate or other
document made or delivered pursuant hereto or thereto:

     (i) accounting terms relating to Holdings and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under GAAP;

     (ii) the words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”;

     (iii) the word “incur” shall be construed to mean incur, create, issue,
assume, become liable in respect of or suffer to exist (and the words
“incurred” and “incurrence” shall have correlative meanings);

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     (iv) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties (whether real or personal), including cash, Equity Interests,
securities, revenues, accounts, leasehold interests and contract rights; and

     (v) references to an agreement or other document (whether or not such agreement
or other document is a Loan Document or other Transaction Document) shall, unless
otherwise expressly stated in such reference or in the definition thereof, mean the
agreement or other document and all schedules, exhibits, annexes and other materials
that constitute part of such agreement or document pursuant to the terms thereof, as
amended, supplemented, restated or otherwise modified in accordance with its terms
and the provisions of the Loan Documents.

     (c) The words “hereof”, “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and Section, Article, Schedule, Annex, Exhibit and analogous
references are to this Agreement unless otherwise specified.

     (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

     1.3 Cross References. Unless otherwise specified, references in a Loan Document to
any Article, Section, Schedule, Exhibit or Annex are references to such Article or Section of, or
Schedule, Exhibit or Annex to, such Loan Document, and references in any Article, Section or
definition to any clause are references to such clause of such Article, Section or definition.

SECTION 2

THE TERM LOAN COMMITMENT;

DESIGNATION OF APPLICABLE INTEREST RATE

     2.1 Term Loan Commitment. On the terms and subject to the conditions of this
Agreement (including all applicable conditions set forth in SECTION 5), the Lender agrees
to make the Term Loan as set forth below.

     2.1.1 Term Loan Commitment.

     The Lender agrees to make a term loan (the “Term Loan”) to the Borrower in an amount
equal to the Term Loan Commitment Amount. No amounts paid or prepaid with respect to the Term Loan
may be reborrowed. The Term Loan may from time to time be designated to bear interest based on the
Base Rate or on the LIBOR Rate, as determined by the Borrower and notified to the Lender in
accordance with Section 2.2. Notwithstanding any contrary provision hereof, the Borrower
and the Lender agree that the borrowing by the Borrower of the full amount of the Term Loan
hereunder shall be deemed to occur automatically (and without any wire transfer of funds or any
other or further action of any party) concurrently with the receipt by the Lender of the Cash
Purchase Price (as defined in the Acquisition Agreement) and upon such receipt by the Lender of
such Cash Purchase Price the Term Loan shall be outstanding in the principal amount of
$32,703,000.00 and shall be payable by the Borrower to the Lender in accordance with the terms
hereof.

     2.2. Designation of Applicable Interest Rate. The Term Loan shall initially bear
interest at the LIBOR Rate plus the Applicable Margin. The Borrower may elect from time to
time after the Closing Date, on any Monthly Payment Date, to designate the Base Rate (or to
re-designate the

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LIBOR Rate), in each case plus the Applicable Margin, as the rate applicable to the
Term Loan by giving the Lender at least three Business Days’ prior irrevocable notice of such
election; provided, however, that the LIBOR Rate may not be selected at any time
during which a Default under Section 9.1(a) or 9.1(f) or an Event of Default shall
be continuing.

SECTION 3

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

     3.1 Maturity of Term Loan; Repayments and Prepayments of Term Loan. The Borrower
agrees that the Term Loan shall be repaid and prepaid as set forth in this Section 3.1.

     3.1.1. Maturity of Term Loan. The Borrower shall repay in full the unpaid principal
amount of the Term Loan upon the Stated Maturity Date.

     3.1.2. Optional Prepayments. The Borrower may at any time and from time to time
prepay the Term Loan, in whole or in part, subject to the provisions of Section 3.1.5),
upon irrevocable notice delivered to the Lender at least three Business Days prior thereto, which
notice shall specify the date and amount of prepayment; provided, however, that
each such voluntary partial prepayment shall be in an amount equal to $500,000 or a whole multiple
of $100,000 in excess thereof (or, if less, the aggregate outstanding principal amount of the Term
Loan). If any such notice is given, the amount specified in such notice shall be due and payable
on the date specified therein, together with accrued interest to such date on the amount prepaid.

     3.1.3. Scheduled Repayments of Term Loan.

     Term Loan. The Borrower shall, on each Quarterly Payment Date commencing with the
Quarterly Payment Date occurring on December 31, 2007, make a scheduled repayment of the aggregate
outstanding principal amount of the Term Loan in an amount equal to the amount set forth below
opposite the period in which such Quarterly Payment Date occurs:

	 	 	 	 	 
	 	 	Amount of Each Required 
	Period	 	Quarterly Principal Repayment
	12/31/07
through (and including) 9/30/08
	 	$	408,787.50	 
	12/31/08
through (and including) 9/30/10
	 	$	817,575.00	 
	12/31/10 and thereafter
	 	$	1,226,362.50	 

     3.1.4. Mandatory Prepayments. Prior to the Stated Maturity Date, the Borrower shall
make payments and prepayments of the Term Loan as set forth in this Section 3.1.4.

     (a) Issuance of Equity Interests. If any Equity Interests shall be issued by
Holdings or any of its Subsidiaries (other than shares issued to employees pursuant to any
management equity plan or stock option plan), an amount equal to 100% of the Net Cash
Proceeds thereof shall be applied on the date of such issuance or incurrence toward the
prepayment of the Term Loan as set forth in Section 3.2.

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(b) Incurrence of Indebtedness; Revolving Credit Facility.

     (1) If any Indebtedness (excluding any Indebtedness permitted to be issued or
incurred pursuant to Section 8.2 except as provided in the following clause
(2)) shall be issued or incurred by Holdings or any of its Subsidiaries after the
Closing Date, an amount equal to 100% of the Net Cash Proceeds thereof shall be
applied on the date of such issuance or incurrence toward the prepayment of the Term
Loan as set forth in Section 3.2;

     (2) If any Indebtedness shall be issued or incurred by Holdings or any of its
Subsidiaries after the Closing Date pursuant to a revolving credit facility of any
nature, an amount equal to 100% of the Net Cash Proceeds thereof in excess of
$5,000,000.00 outstanding at any one time shall be applied on the date of such
issuance or incurrence toward the prepayment of the Term Loan as set forth in
Section 3.2;

     (c) Asset Sales; Recovery Events. If on any date Holdings or any of its
Subsidiaries shall receive Net Cash Proceeds from any Asset Sale or Recovery Event then,
unless a Reinvestment Notice shall be delivered in respect thereof, such Net Cash Proceeds
shall be applied on such date toward the prepayment of the Term Loan as set forth in
Section 3.2; provided, however, that, notwithstanding the foregoing,
(i) the aggregate Net Cash Proceeds of Asset Sales and Recovery Events that may be excluded
from the foregoing requirement pursuant to a Reinvestment Notice shall not exceed $500,000
in any Fiscal Year of the Borrower and (ii) on each Reinvestment Prepayment Date, an amount
equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Event
shall be applied toward the prepayment of the Term Loan as set forth in Section 3.2.

     (d) Excess Cash Flow. If, for any Fiscal Year of the Borrower commencing with
the Fiscal Year ending December 31, 2008, there shall be Excess Cash Flow, the Borrower
shall, no later than the relevant Excess Cash Flow Application Date, apply Seventy-Five
Percent (75%) of such Excess Cash Flow toward the prepayment of the Term Loan as set forth
in Section 3.2.

     (e) Acquisition Payments. If on any date, Holdings, the Borrower, any
Subsidiary Guarantor or any of their respective Subsidiaries receives any Acquisition
Payment, an amount equal to (i) in the case of any Acquisition Payment of the type described
in clause (a) of the definition thereof, 100% of such amount, and (ii) in the case
of any Acquisition Payment of the type described in clause (b) of the definition
thereof, the excess of (x) 100% of such amount over (y) any third-party costs,
liabilities and expenses actually paid or payable in cash by an Obligor in respect of which
such indemnification or reimbursement payment is received, shall be applied toward the
prepayment of the Term Loan as set forth in Section 3.2 no later than three Business
Days following such receipt. In furtherance of the foregoing and notwithstanding any
provision to the contrary in the Acquisition Agreement or any other Acquisition
Documentation, in the event the Lender is required to pay any amounts to any Obligor that
would constitute an Acquisition Payment hereunder, then to the extent such Acquisition
Payment would be required to be paid to the Lender under this Section 8.5(e), the
Lender may make such payment by applying it as an offset against the Obligations.

     (f) Tax Refunds. If on any date Holdings or any of its Subsidiaries shall
receive any Tax Refund in an aggregate amount in any fiscal year in excess of $100,000, an
amount equal to 100% of such Tax Refund shall be applied within 10 Business Days after
receipt by Holdings or such Subsidiary toward the prepayment of the Term Loan as set forth
in Section 3.2.

     (g) Acceleration. Immediately upon any acceleration of the maturity of the
Term Loan pursuant to Section 9.2 or Section 9.3, the Borrower shall repay
the Term Loan unless,

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pursuant to Section 9.3, only a portion of the Term Loan is so accelerated (in
which case the portion so accelerated shall be so repaid).

Each prepayment of the Term Loan made pursuant to this Section shall be accompanied by payment of
any premium as may be required by Section 3.1.5.

     3.1.5. Specified Payment Premiums. All (w) optional principal prepayments of the Term
Loan, (x) mandatory principal prepayments of the Term Loan (other than pursuant to clause (d) of
Section 3.1.4), and (y) principal payments upon or following acceleration of the Term Loan
upon or following an Event of Default (collectively, “Specified Payments”) shall be
accompanied by a Specified Payment premium (the “Specified Payment Premium”) in an amount
equal to the following percentages of the principal amount of the Term Loan so paid:

     (a) in the case of any such prepayment, repayment or other payment made on or prior to
the first anniversary of the Closing Date, 2.0% of the amount of each such Specified
Payment; and

     (b) in the case of any such prepayment, repayment or other payment made after the first
anniversary of the Closing Date but on or prior to the third anniversary of the Closing
Date, 1.0% of the amount of each such Specified Payment;

plus, in each case above, any accrued and unpaid interest thereon to the date of such
Specified Payment. The Borrower agrees that the Specified Payment Premium is reasonable in the
circumstances and shall in all events be included in the Obligations. The Borrower agrees that the
Specified Payment Premium shall be payable upon the occurrence of any Event of Default described in
Section 9.1(f), even if the Lender does not exercise its rights under SECTION 9, but
elects, at its option, to provide financing to the Borrower or permit the use of cash collateral
under the United States Bankruptcy Code.

     3.2. Application of Prepayments. Amounts required to be applied to the repayment or
prepayment of the Term Loan pursuant to Section 3.1 shall be applied as follows:

     (a) All repayments required to be made under Section 3.1.1 or 3.1.3
shall be applied to repay amounts owing in respect of the Term Loan. All payments hereunder
(including any offsets) shall be applied in the following order: (i) first to due and
unpaid fees and expenses (for the avoidance of doubt, including without limitation any
unpaid fees or expenses under the Acquisition Documentation); (ii) second, to accrued
interest at the default rate specified in Section 3.3.2 (if applicable); (iii)
third, to accrued and unpaid interest not described in the foregoing clause (ii); (iv)
fourth, to any premium payable pursuant to Section 3.1.5 (if applicable); (v) fifth,
to the outstanding principal amount of the Term Loan (and to the remaining amortization
payments thereof as specified in Sections 3.2(b), (c) and (d) below); and (vi)
sixth, to any remaining amounts due to the Lender under the Loan Documents.

     (b) Subject to Section 3.2(a), voluntary prepayments made by the Borrower
pursuant to Section 3.1.2 shall be applied to the amortization payments of the Term
Loan, as specified by the Borrower in its notice delivered pursuant to
Section 3.1.2.

     (c) Subject to Section 3.2(a), amounts to be applied pursuant to
Section 3.1.4 shall be applied to the prepayment of the outstanding principal amount
of the Term Loan (with the amount of such prepayment being applied to reduce, in inverse
order, the remaining amortization payments required in respect thereof pursuant to
Section 3.1.3).

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     (d) All other payments and prepayments of the Term Loan by the Borrower for which the
application thereof is not specified herein shall be applied, subject to Section
3.2(a), to repay the Term Loan and to reduce, in inverse order of maturity, the
remaining amortization payments required in respect thereof pursuant to Section 3.1.3.

     3.3. Interest Provisions. Interest on the outstanding principal amount of the Term
Loan shall accrue and be payable in accordance with this Section 3.3.

     3.3.1. Rates.

     (a) If and for so long as the Borrower has selected the LIBOR Rate to be the applicable
rate (subject to Section 3.3.2), the Term Loan shall bear interest for each day
during such period at a rate per annum equal to the LIBOR Rate determined for such day plus
the Applicable Margin on such day.

     (b) If and for so long as the Borrower has selected the Base Rate to be the applicable
rate, the Term Loan shall bear interest for each day during such period at a rate per annum
equal to the Base Rate on such day plus the Applicable Margin on such day.

     3.3.2. Default Rate and Overdue Rate; No LIBOR Rate After Default. Notwithstanding
Section 3.3.1, (i) immediately upon the occurrence of a Default under
Section 9.1(a) or 9.1(f) or an Event of Default and for so long as such Default or
Event of Default shall be continuing, the Term Loan (whether or not overdue) shall bear interest at
a rate per annum equal to the rate that would otherwise be applicable thereto pursuant to
Section 3.3.1(b) plus an additional 2% per annum and (ii) all amounts (other than the
principal of the Term Loan) not paid when due hereunder (including, to the extent permitted by law,
all overdue interest) shall bear interest at a rate per annum equal to the Base Rate plus the
Applicable Margin for the Base Rate plus an additional 2% per annum.

     3.3.3. Payment Dates. Interest accrued on the Term Loan shall be payable in arrears,
without duplication:

     (a) on each Monthly Payment Date (provided that interest accruing pursuant to
Section 3.3.2 shall be payable from time to time on demand);

     (b) on the Stated Maturity Date;

     (c) on the date of any payment or prepayment, in whole or in part, of principal
outstanding on the Term Loan on the principal amount so paid or prepaid (including each
payment or prepayment made pursuant to Section 3.1); and

     (d) on that portion of the Term Loan the maturity of which is accelerated pursuant to
Section 9.2 or Section 9.3, immediately upon such acceleration.

     3.4. Fees. The Borrower agrees to pay the fees set forth below. All such fees shall
be non-refundable.

     3.4.1. Administration Fee. The Borrower agrees to pay to the Lender an annual
non-refundable administration fee in the amount of $75,000.00 per annum, payable annually in
advance on the Closing Date and on each annual anniversary thereof.

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     3.4.2. Facility Fee. The Borrower agrees to pay to the Lender on the Closing Date the
Facility Fee (as defined in the Acquisition Agreement) .

     3.4.3. Certain Other Fees. The Borrower agrees to pay to the Lender all other fees
payable by any Obligor to the Lender in the amounts and on the dates previously agreed to pursuant
to the Acquisition Documentation.

SECTION 4

CERTAIN LIBOR RATE AND OTHER PROVISIONS

     4.1 Computation of Interest and Fees; Payments. (a) All interest and fees payable
pursuant hereto shall be calculated on the basis of a 360-day year for the actual days elapsed.

     (b) Each determination of an interest rate by the Lender pursuant to any provision of this
Agreement shall be conclusive and binding on the Borrower in the absence of clear and manifest
error.

     (c) All payments (including prepayments) to be made by the Borrower hereunder, whether on
account of principal, interest, fees or otherwise, shall be made without setoff or counterclaim and
shall be made prior to 11:00 a.m. (Los Angeles, California time), on the due date thereof to the
Lender, at the Lender’s account set forth on Schedule II (or to such other account as the
Lender may notify the Borrower in writing from time to time), in Dollars and in immediately
available funds. If any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day. In the case of any
extension of any payment of principal pursuant to the preceding sentence, interest thereon shall be
payable at the then applicable rate during such extension.

     4.2 Proceeds of Exercise of Remedies. All monies received by the Lender from the
exercise of remedies hereunder, under the other Loan Documents or under any other documents
relating to this Agreement shall, unless otherwise required by the terms of the other Loan
Documents or by applicable law, be applied as follows:

first, to the payment of all expenses (to the extent not otherwise paid by
the Borrower or any of the other Obligors) incurred by the Lender in connection with
the exercise of such remedies, including, without limitation, all costs and expenses
of collection, actual attorneys’ fees and disbursements, court costs and any
foreclosure expenses;

next, in the order set forth for payments hereunder in Section
3.2(a), and if such proceeds are insufficient to pay such amounts in full, to
the payment of such amounts pro rata; and

thereafter, any surplus remaining after the indefeasible payment in full in
cash of all of the Obligations shall be distributed to the Borrower or to whomsoever
shall be lawfully entitled thereto.

     4.3. Increased Costs. (a) If the adoption of or any change in any Applicable Law or
in the interpretation or application thereof or compliance by the Lender with any request or
directive (whether or not having the force of law) from any Governmental Authority made subsequent
to the Closing Date:

     (i) shall subject the Lender to any Tax of any kind whatsoever with respect to this
Agreement or any payment hereunder, or change the basis of taxation of payments to the
Lender in respect thereof; or

26

 

     (ii) shall impose on the Lender any other condition;

and the result of any of the foregoing is to increase the cost to the Lender of making or
maintaining the Term Loan, or to reduce any amount receivable hereunder in respect thereof, then,
in any such case, the Borrower shall promptly pay the Lender, upon its demand *(which demand shall
be accompanied by a statement setting forth the basis for such demand and a calculation of the
amount thereof in reasonable detail), the Borrower shall pay to Lender such additional amount as
will compensate Lender for such increased cost or such reduction, so long as such amount have
accrued on or after the date which is 180 days prior to the date on which Lender first made demand
therefor. If the Lender becomes entitled to claim any additional amounts pursuant to this
clause (a), it shall promptly notify the Borrower of the event by reason of which it has
become so entitled.

     (b) A certificate as to any additional amounts payable pursuant to this Section submitted by
the Lender to the Borrower shall be conclusive absent clear and manifest error. In determining any
such additional amounts, the Lender may use any method of averaging and attribution that it (in its
reasonable discretion) shall deem applicable. The obligations of the Borrower pursuant to this
Section shall survive the termination of this Agreement and the payment of the Term Loan and all
other amounts payable hereunder.

     (c) This Section 4.3 shall apply only to a lender that is a bank or other financial
institution.

     4.4. Taxes.

     (a) Any and all payments by or on account of any obligation of the Borrower or any
other Obligor (including any payments pursuant to Sections 12.5 or 12.6),
under this Agreement, or any other Loan Document shall be made without setoff, counterclaim
or defense of and free and clear of and without deduction or withholding for any and all
Taxes, excluding taxes measured by overall net income and franchise taxes in lieu of overall
net income imposed on the Lender, by the jurisdiction (or political subdivision thereof) in
which it is organized or in which its principal office is located (all such non-excluded
Taxes being herein referred to as “Covered Taxes”). If the Borrower, Holdings or
Subsidiary Guarantor shall be required by any Applicable Law to deduct any Covered Taxes
from or in respect of any payment hereunder or otherwise under the Loan Documents to any
Person, then (i) the sum payable shall be increased as may be necessary so that after making
all required deductions and withholdings (including deductions and withholdings applicable
to any additional payments made under this Section 4.4) such Person receives an
amount equal to the sum it would have received had no such deductions or withholdings been
made, (ii) the Borrower, Holdings or Subsidiary Guarantor (or the Lender, as applicable)
shall make such deductions or withholdings at the applicable rate and (iii) the Borrower,
Holdings or the Subsidiary Guarantor (or the Lender, as applicable) shall pay the full
amount deducted to the relevant taxation authority or other authority in accordance with
Applicable Law.

     (b) In addition, the Borrower agrees to pay any present or future stamp or documentary
Taxes or any other excise, transfer, sales, use, recordation or property Taxes, charges or
similar levies that arise from any payment made under this Agreement or any other Loan
Document or from the execution, enforcement, delivery or registration of, performance under,
or otherwise with respect to, this Agreement or any other Loan Document, including all
penalties, interest, additions and liabilities in respect thereof (hereinafter referred to
as “Other Taxes”).

27

 

     (c) If any Obligor is required to deduct or pay any Covered Taxes, Other Taxes or other
amount under this Section 4.4 from or in respect of any amount payable under this
Agreement or any other Loan Document to any Indemnified Party, then such Obligor shall also
pay to such Indemnified Party at the time interest is paid, such additional amount that such
Indemnified Party specifies is necessary to preserve the after-Tax yield (after figuring in
all Taxes, including taxes imposed on or measured by net income) that such Indemnified Party
would have received if such Covered Taxes, Other Taxes or other amount had not been payable.

     (d) The Borrower will indemnify each Indemnitee (i) for the full amount of Covered
Taxes and Other Taxes, (including any Covered Taxes and Other Taxes imposed by any
jurisdiction (or any political subdivision thereof) on amounts payable under this
Section 4.4), payable by such Indemnitee and any liability (including penalties,
interest, additions and expenses) arising therefrom or with respect thereto, and (ii) for
any present or future claims, liabilities or losses with respect to or resulting from any
failure or delay by the Borrower to pay, or any failure or delay by the Borrower to file any
Tax Return with respect to, any Covered Taxes or Other Taxes (including interest, penalties,
additions and expenses, whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within ten days from the date such Indemnitee makes written
demand therefor.

     (e) Within ten days after the date of any payment of Covered Taxes, Other Taxes or any
interest, penalties, or any liability related thereto, the Borrower shall furnish to the
Lender, at its address referred to in Section 12.2, the original or certified copy
of a receipt evidencing payment thereof.

     (f) Without prejudice to the survival of any other agreement of the Borrower, Holdings
or the Subsidiary Guarantors hereunder, the agreements and obligations of the Borrower,
Holdings or the Subsidiary Guarantors contained in this Section 4.4 shall survive
the termination of this Agreement and the occurrence of the Termination Date.

SECTION 5

CONDITIONS PRECEDENT

     5.1. Conditions to Initial Credit Extension. The agreement of the Lender to make the
Term Loan is subject to the satisfaction, prior to or concurrently with the making of such Term
Loan on the Closing Date, of the following conditions precedent:

     (a) Credit Agreement. The Lender shall have received this Agreement, executed
and delivered by each Obligor.

     (b) Acquisition Agreement Conditions. All conditions to effectiveness set
forth in the Acquisition Agreement (including, without limitation, Section 12.3
thereof) shall have been satisfied (or waived by the Lender).

     (c) Consummation of Transaction, etc. The following transactions shall have
been consummated, in each case on terms and conditions reasonably satisfactory to the
Lender:

     (i) the InfuSystem Acquisition shall be consummated on the Closing Date; and

     (ii) the Lender shall have received satisfactory evidence that the fees and
expenses payable to third parties to be incurred in connection with the Transaction
and

28

 

the financing thereof (including the financing pursuant to this Agreement)
shall not exceed $4,700,000.00;

and the Lender shall be reasonably satisfied with all aspects of the Transaction, including
the capital and Business Entity structure of Holdings, the Borrower and each of their
respective Subsidiaries, the sources and uses of proceeds utilized to consummate the
Transaction, and the tax, legal, accounting and environmental due diligence investigations
of Holdings and its Subsidiaries.

     (d) Joinder Agreement. The Lender shall have received the Joinder Agreement
duly executed by InfuSystem.

     (e) Solvency Certificate. The Lender shall have received a Solvency
Certificate in the form of Exhibit H, duly executed and delivered by the Chief
Executive Officer or Chief Financial Officer of the Borrower, certifying that, after giving
effect to the transactions occurring on the Closing Date (including the borrowing of the
Term Loan), Holdings and its Subsidiaries, on a Consolidated basis, are Solvent.

     (f) Payment of Outstanding Indebtedness, etc. All Indebtedness identified in
Item 8.2(b) of the Disclosure Schedule, together with all interest, all payment
premiums and all other amounts due and payable with respect thereto, shall have been paid in
full from the proceeds of the initial Credit Extension and the commitments in respect of
such Indebtedness shall have been permanently terminated, and all Liens securing payment of
any such Indebtedness shall have been released and the Lender shall have received all payoff
and release letters, Uniform Commercial Code Form UCC-3 termination statements or other
instruments or agreements as may be suitable or appropriate in connection with the release
of any such Liens.

     (g) Representations and Warranties. Both before and immediately after giving
effect to the Transaction, (i) all representations and warranties of the Borrower set forth
in this Agreement and the other Loan Documents to which the Borrower is a party shall be
true and correct in all respects (except to the extent that such representations and
warranties relate to InfuSystem (without giving effect to the transactions contemplated by
the Acquisition Agreement) and would not have been true and correct if such representations
and warranties were made by InfuSystem immediately prior to Closing (as defined in the
Acquisition Agreement)); and (ii) all representations and warranties of Holdings and/or the
Borrower set forth in the Acquisition Agreement and the other Acquisition Documentation to
which Holdings and/or the Borrower or the Seller is a party shall be true and correct in all
respects.

     (h) Closing Date Certificate. The Lender shall have received the Borrower
Closing Date Certificate, dated the date of the initial Credit Extension and duly executed
and delivered by an Authorized Officer of the Borrower, in which certificate the Borrower
shall represent and warrant as of the Closing Date that, among other things, both before and
immediately after giving effect to the InfuSystem Acquisition, all representations and
warranties of each Obligor set forth in each Loan Document to which any Obligor is a party
are true and correct in all respects (except with respect to the extent that such
representations and warranties relate to InfuSystem (without giving effect to the
transactions contemplated by the Acquisition Agreement) and would not have been true and
correct if such representations and warranties were made by InfuSystem immediately prior to
Closing (as defined in the Acquisition Agreement)).

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     (i) Receipt. The Lender shall have received a Receipt, duly executed by
Iceland and Holdings, with respect to the occurrence of the deemed funding hereunder, in
form and substance satisfactory to the Lender.

     (j) [Intentionally Omitted.]

     (k) Obligor Security Agreement. The Lender shall have received the Obligor
Security Agreement, dated as of the date hereof, duly executed and delivered by Holdings and
each of its Subsidiaries, together with:

     (i) [intentionally omitted];

     (ii) certificates evidencing all of the issued and outstanding Equity Interests
owned by Holdings or any of its Subsidiaries, which certificates in each case shall
be accompanied by undated instruments of transfer duly executed in blank or, if any
Equity Interests are uncertificated Equity Interests, confirmation and evidence
satisfactory to the Lender that the security interest therein has been transferred
to and perfected by the Lender in accordance with Articles 8 and 9 of the U.C.C. and
all laws otherwise applicable to the perfection of the pledge of such Equity
Interests;

     (iii) all Pledged Notes (as defined in the Obligor Security Agreement), if any,
evidencing Indebtedness payable to Holdings by any of its Subsidiaries or payable to
any Subsidiary of Holdings by any other Subsidiary of Holdings, duly indorsed to the
order of the Lender;

     (iv) Financing Statements naming each of Holdings and each Subsidiary of
Holdings as a debtor and the Lender as the secured party, or other similar
instruments or documents to be filed under the Uniform Commercial Code of all
jurisdictions as may be necessary or, in the opinion of the Lender, desirable to
perfect the security interests of the Lender pursuant to the Obligor Security
Agreement (including all jurisdictions listed in Item 6.20(a) of the
Disclosure Schedule);

     (v) evidence reasonably satisfactory to the Lender that the Liens indicated by
the financing statements (or similar documents) disclosed by the search described in
clause (i) above are permitted by Section 8.3 or have been released
or, in the case of Liens referred to in Section 5.1(f) above, will be
released on the Closing Date, including (x) executed copies of proper Uniform
Commercial Code Form UCC-3 termination statements, if any, necessary to release such
Liens and other rights of any Person and (y) such other Uniform Commercial Code Form
UCC-3 termination statements as the Lender may reasonably request from any Obligor;
and

     (vi) lockbox agreements and such other agreements or instruments as may be
necessary or, in the opinion of the Lender, desirable to establish and maintain
lockbox arrangements with respect to cash received by Holdings and its Subsidiaries
from time to time;

and the Lender and its counsel shall be satisfied that (i) the Liens granted to the Lender
in the collateral described in this clause (k) constitute a first priority (or local
equivalent thereof) security interest; and (ii) no Lien exists on any of the collateral
described in this clause (k), other than (x) Liens created in favor of the Lender
pursuant to the Security Documents and (y) with

30

 

respect to Collateral other than Pledged Equity Interests and Pledged Notes, Liens expressly
permitted under Section 8.3.

     (l) [Intentionally Omitted].

     (m) [Intentionally Omitted.]

     (n) [Intentionally Omitted.]

     (o) [Intentionally Omitted.]

     (p) Due Diligence. The Lender shall have completed a due diligence
investigation of Holdings and its Subsidiaries in scope, and with results, satisfactory to
the Lender, including without limitation, as to general affairs, management, corporate
structure, capital structure, other debt instruments, material contracts, governing
documents, prospects, financial position, stockholders’ equity and results of operations,
and the tax, accounting, legal, regulatory, environmental and other issues relevant to
Holdings and its Subsidiaries, and shall have been given access to the external independent
auditors, management, records, books of account, contracts and properties of Holdings and
its Subsidiaries and shall have received such financial, business and other information
regarding Holdings and its Subsidiaries as the Lender shall have requested

     (q) Material Adverse Change. No Material Adverse Change shall have occurred.

     (r) Resolutions, etc. The Lender shall have received from each Obligor, as
applicable, (1) a copy of a good standing certificate, dated a date reasonably close to the
Effective Date, for each such Person and (2) a certificate, dated the Closing Date, duly
executed and delivered by such Person’s Secretary or Assistant Secretary, managing member or
general partner, as applicable, as to

     (i) resolutions of each such Person’s board of directors (or other managing
body, in the case of any entity other than a corporation) then in full force and
effect authorizing, to the extent relevant, all aspects of the Transaction
applicable to such Person and the execution, delivery and performance of each Loan
Document to be executed by such Person and the transactions contemplated hereby and
thereby;

     (ii) the incumbency and signatures of those of its officers, managing member or
general partner, as applicable, authorized to act with respect to each Loan Document
to be executed by such Person; and

     (iii) the full force and validity of each Organic Document of such Person and
copies thereof;

upon which certificates the Lender may conclusively rely until it shall have received a
further certificate of the Secretary, Assistant Secretary, managing member or general
partner, as applicable, of any such Person canceling or amending the prior certificate of
such Person.

     (s) Approvals; Absence of Suits. All governmental, regulatory, shareholder and
third party approvals and consent necessary or desirable in connection with the Transaction,
the Loan Documents and the consummation of the transactions contemplated hereby and thereby,
and the continuing operations of Holdings and its Subsidiaries to the transactions
contemplated

31

 

hereby shall have been obtained and be in full force and effect, and all applicable
waiting periods shall have expired without any action being taken or threatened by any
competent authority that could reasonably be expected to restrain, prevent or otherwise
impose adverse conditions on the Transaction or the financing contemplated hereby. No
action, suit, arbitration, litigation, investigation or proceeding shall be pending or, to
the knowledge of Holdings, threatened in any court or before any arbitrator or Governmental
Authority that could reasonably be expected to have a Closing Date Material Adverse Change
or that challenges the Loan Documents or the transactions contemplated hereby.

     (t) Lien Searches. The Lender shall have received the results of a recent lien
search in each of the jurisdictions where assets of the Obligors are located, and such
search shall reveal no Liens on any of the assets of Holdings or its Subsidiaries except for
Liens permitted by Section 8.3 or discharged on or prior to the Closing Date
pursuant to documentation satisfactory to the Lender.

     [(u) Intentionally Omitted.]

     (v) Certificates of Insurance. The Lender shall have received a certificate
of insurance, together with the endorsements thereto, and naming the Lender as loss payee
(in the case of property insurance) or additional insured (in the case of liability
insurance), as required by Section 7.5, the form and substance of which shall be
satisfactory to the Lender.

     (w) Fees, Expenses, etc. The Lender shall have received all fees due and
payable pursuant to the Acquisition Documentation (including, without limitation, Section 12
of the Acquisition Agreement) and pursuant to Section 3.4 hereof and all costs and
expenses due and payable pursuant to Section 12.5 hereof for which invoices have
been presented (including the actual fees and expenses of legal counsel).

     (x) Legal Opinion. The Lender shall have received the legal opinion of Morgan,
Lewis & Bockius LLP, counsel to the Obligors, substantially in the form of Exhibit
I.

Such legal opinion shall cover such other matters incident to the transactions contemplated
by this Agreement as the Lender may reasonably require, and shall be in form and substance
reasonably satisfactory to the Lender. The Borrower, on behalf of itself and each other
Obligor, hereby requests that each counsel described in this Section 5.1(x) deliver
the opinions and/or reliance letters described herein and acknowledges and agrees that the
Lender shall be entitled to rely thereon.

     (y) Filings, Registrations and Recordings. (i) Each document (including any
Uniform Commercial Code financing statement) required by the Security Documents or under law
or reasonably requested by the Lender to be filed, registered or recorded in order to create
in favor of the Lender a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens expressly permitted
by Section 8.3), shall be in proper form for filing, registration or recordation.

     (i) All Financing Statements and Uniform Commercial Code (Form UCC-3)
termination statements required pursuant to the Loan Documents shall have been
delivered to CT Corporation System or another similar filing service company
acceptable to the Lender (the “Filing Agent”). The Filing Agent shall have
acknowledged in a writing satisfactory to the Lender and its counsel (i) the Filing
Agent’s receipt of all such Financing Statements and termination statements,
(ii) that such Financing Statements and

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termination statements have either been submitted for filing in the appropriate
filing offices or will be submitted for filing in the appropriate offices within ten
days following the Effective Date and (iii) that the Filing Agent will notify the
Lender and its counsel of the results of such submissions within 30 days following
the Effective Date.

     5.2 All Credit Extensions. The obligation of the Lender to make the Term Loan is
further subject to the conditions precedent that all documents executed or submitted pursuant
hereto by or on behalf of the Borrower or any of its Subsidiaries or any other Obligors shall be
reasonably satisfactory in form and substance to the Lender and its counsel; and the Lender and its
counsel shall have received all information, approvals, opinions, documents or instruments as the
Lender or its counsel may reasonably request.

SECTION 6

REPRESENTATIONS AND WARRANTIES

     To induce the Lender to enter into this Agreement and to make the Term Loan, Holdings and the
Borrower hereby jointly and severally represent and warrant to the Lender as set forth in this
Section 6:

     6.1 Financial Condition. (a) The Initial Projections , copies of which have
heretofore been furnished to the Lender, have been prepared giving effect (as if such events had
occurred on such date) to (i) the consummation of the Transaction, (ii) the Term Loan to be made on
the Closing Date and the use of proceeds thereof and (iii) the payment of fees and expenses in
connection with the foregoing. The Initial Projections have been prepared based on the best
information available to Holdings as of the date of delivery thereof, and presents fairly on a
pro forma basis the estimated financial position of Holdings and its consolidated
Subsidiaries as at the dates set forth in the Initial Projections, assuming that the applicable
events specified in the preceding sentence had actually occurred at such dates and assuming the
accuracy of projections provided by InfuSystem to Holdings.

     (b) The Initial Financial Statements, including reports thereon by and accompanied by an
unqualified report from Deloitte and Touche LLP, present fairly the consolidated financial
condition of Holdings and its consolidated Subsidiaries as at the dates set forth therein, and the
consolidated results of its operations and its consolidated cash flows for the respective periods
then ended. All such financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the periods involved (except
as approved by the aforementioned firm of accountants and disclosed therein). Neither Holdings nor
any of its Subsidiaries has any material Guarantee Obligations, contingent liabilities or
liabilities for Taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or other obligation in
respect of derivatives, that is not reflected in the most recent financial statements referred to
in this clause (b). During the period from December 31, 2006 to and including the Closing
Date there has been no Disposition by Holdings or any of its Subsidiaries of any material part of
its business or property.

     6.2. No Material Adverse Change. Since December 31, 2005, there has been no material
adverse change in, or a material adverse effect upon the business, condition (financial or
otherwise), assets, liabilities (actual or contingent), operations, management, performance,
properties or prospects of Holdings.

     6.3 Existence, Power and Qualification. Each of Holdings and its Subsidiaries (a) is
duly organized, validly existing and in good standing under the laws of the jurisdiction of its
organization, (b) has full power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the business in which it is
currently engaged and (c) is duly qualified

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as a foreign entity and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business requires such
qualification.

     6.4 Due Authorization. Each Obligor has the power and authority, and the legal right,
to make, deliver and perform the Loan Documents and other Transaction Documents to which it is a
party, grant the Liens contemplated thereby, participate in the consummation of all aspects of the
Transaction and, in the case of the Borrower, to borrow hereunder. Each Obligor has taken all
necessary applicable Business Entity action to authorize the execution, delivery and performance of
the Loan Documents and other Transaction Documents to which it is a party, each agreement executed
and delivered in connection with the Transaction to which it is a party, the grant of the Liens
contemplated thereby and, in the case of the Borrower, to authorize the borrowings on the terms and
conditions of this Agreement.

     6.5 Government Approval. No consent or authorization of, filing with, notice to or
other act by or in respect of, any Governmental Authority or any other Person is required in
connection with the Transaction and the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement, any other Loan Document or Transaction
Document or any agreement executed and delivered in connection with the Transaction, or the grant
of any Lien pursuant to any of the foregoing, except (i) consents, authorizations, filings and
notices described in Item 6.5 of the Disclosure Schedule, which consents, authorizations,
filings and notices have been obtained or made and are in full force and effect, and (ii) the
filings and recordations referred to in Section 6.22.

     6.6. Due Execution and Delivery; Enforceable Obligations. Each Loan Document has been
duly executed and delivered by each Obligor party thereto. This Agreement constitutes, and each
other Loan Document and agreement or instrument executed and delivered in connection with the
Transaction will, upon execution by the applicable Obligor, constitute, a legal, valid and binding
obligation of each Obligor party thereto, enforceable against each such Obligor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally
or by general equitable principles (whether enforcement is sought by proceedings in equity or at
law).

     6.7. Non-Contravention. The execution, delivery and performance of this Agreement and
the other Loan Documents and Transaction Documents, the borrowings hereunder, the use of the
proceeds thereof and the grant of the Liens contemplated by the Loan Documents, do not and will not
(a) violate or contravene any Applicable Law or any Organic Documents of any Obligor, (b) conflict
with or result in a breach or contravention of, or require any payment to be made under, any
Contractual Obligation of any Obligor or (c) result in or require the creation or imposition of any
Lien on any of the properties or revenues of any Obligor pursuant to any Applicable Law or any such
Contractual Obligation (other than the Liens created by the Security Documents). No Applicable Law
or Contractual Obligation applicable to the Borrower or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.

     6.8. Compliance with Law. Each of Holdings and its Subsidiaries is in compliance with
all Applicable Law except to the extent that the failure to comply with any such Applicable Law, in
the aggregate with all other such noncompliance by Holdings and its Subsidiaries, could not
reasonably be expected to have a Material Adverse Effect.

     6.9. Litigation. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of Holdings or the Borrower,
threatened by or against Holdings or the Borrower or any of their respective Subsidiaries or
against any of their respective properties or revenues (a) with respect to the Acquisition, any of
the Loan Documents or any agreement

34

 

or instrument executed and delivered or to be executed and delivered in connection with the
Transaction, (b) with respect to the Transaction or the financing hereunder, or (c) that could
reasonably be expected to have a Material Adverse Effect.

     6.10. No Default. Neither Holdings nor the Borrower nor any of their respective
Subsidiaries is in default under or with respect to any of its Contractual Obligations in any
respect that could reasonably be expected to have a Material Adverse Effect. No Default or Event
of Default has occurred and is continuing.

     6.11. Ownership of Property; Liens. Each of Holdings and its Subsidiaries and each
other Obligor has title in fee simple to, or a valid leasehold interest in, all its Real Property,
and good title to, or a valid leasehold interest in, all its other property, and none of such
property is subject to any Lien except as permitted by Section 8.3.

     6.12. Intellectual Property. Each of Holdings and the Borrower and each of their
respective Subsidiaries owns, or is licensed to use, all Intellectual Property necessary for the
conduct of its business as currently conducted. No material claim has been asserted and is pending
by any Person challenging or questioning the use of any Intellectual Property or the validity or
effectiveness of any Intellectual Property, nor does Holdings or the Borrower know of any valid
basis for any such claim. The use of Intellectual Property by Holdings and its Subsidiaries does
not infringe on the rights of any Person in any material respect or in any manner that could
reasonably be expected to have a Material Adverse Effect. Neither Holdings nor the Borrower nor
any of their respective Subsidiaries owns any material registered Intellectual Property except as
set forth in Item 6.12 of the Disclosure Schedule.

     6.13. Taxes. Each of the Borrower, Holdings and each of their Subsidiaries has timely
(a) filed or caused to be filed all U.S. federal, state and local, non-U.S. and other Tax Returns
that it is required to file and (b) paid all Taxes, fees or other charges imposed on it or any of
its property by any Governmental Authority, other than any Tax, fee or other charge the amount or
validity of which is currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the books of the applicable
company. All Tax Returns referred to in clause (a) above are true, correct and complete in
all material respects. Each of the Borrower, Holdings and each of their Subsidiaries has made
adequate provision in accordance with GAAP for all Taxes not yet due and payable. Each of the
Borrower, Holdings and each of their Subsidiaries is unaware of any proposed or pending Tax
assessments, deficiencies or audits that could be reasonably expected to, individually or in the
aggregate, result in a Material Adverse Effect. No Lien for Taxes of Holdings, the Borrower or any
of their respective Subsidiaries has been filed.

     6.14. Margin Stock.

     No part of the proceeds of the Term Loan will be used for, and no Obligor is in the business
of, “buying” or “carrying” any “margin stock” within the respective meanings of each of the quoted
terms under Regulation U as now and from time to time hereafter in effect or for any purpose that
violates the provisions of the Regulations of the Board. If requested by the Lender, the Borrower
will furnish to the Lender a statement to the foregoing effect in conformity with the requirements
of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.

     6.15. Labor Matters. Except as, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect: (a) there are no strikes or other labor disputes against Holdings
or the Borrower or any of their respective Subsidiaries pending or, to the knowledge of Holdings or
the Borrower, threatened; (b) hours worked by and payment made to employees of Holdings and its
Subsidiaries have not been in violation of the Fair Labor Standards Act or any other Applicable Law

35

 

dealing with such matters; and (c) all payments due from Holdings or the Borrower or any of
their respective Subsidiaries on account of employee health and welfare insurance have been paid or
accrued as a liability on the books of Holdings or the Borrower or the relevant Subsidiary.

     6.16. ERISA. Neither a Reportable Event nor an “accumulated funding deficiency”
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or deemed made with respect
to any Plan, and each Plan has complied in all material respects with the applicable provisions of
ERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor of
the PBGC or a Plan has arisen, during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by a
material amount. Neither Holdings nor the Borrower nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan that has resulted or could reasonably be
expected to result in a liability under ERISA that could reasonably be expected to have a Material
Adverse Effect, and neither Holdings nor the Borrower nor any Commonly Controlled Entity would
become subject to any material liability under ERISA if Holdings or the Borrower or any such
Commonly Controlled Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this representation is made or deemed made.
No such Multiemployer Plan is in reorganization (within the meaning of Section 4241 of ERISA) or
insolvent (within the meaning of Section 4245 of ERISA).

     6.17. Investment Company Act; Other Regulations. No Obligor is an “investment
company”, or a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. No Obligor is subject to regulation under any
Applicable Law (other than Regulation X of the Board) that limits its ability to incur Indebtedness
or grant any Lien or that would or might adversely affect the legality or enforceability against
any Obligor of any of its obligations under any of the Loan Documents.

     6.18. Subsidiaries. (a) Item 6.18 of the Disclosure Schedule sets forth the name and
jurisdiction of organization of each Subsidiary of Holdings and, as to each such Subsidiary, the
percentage of each class of Equity Interests owned by any Obligor and (b) there are no outstanding
subscriptions, options, warrants, calls, rights or other agreements or commitments (other than
directors’ qualifying shares) of any nature relating to any Equity Interests of Holdings or the
Borrower or any of their respective Subsidiaries, except as created by the Loan Documents.

     6.19. Use of Proceeds. The proceeds of the Credit Extensions will be used solely as
set forth in Section 7.10.

     6.20. Environmental Matters. Except as (i) in the aggregate, would not reasonably be
expected to result in the payment by Holdings or the Borrower or any of their respective
Subsidiaries of a Material Environmental Amount or (ii) would not have a Material Adverse Effect in
the aggregate:

     (a) the Properties do not contain, and have not previously contained, any Hazardous
Material in amounts or concentrations or under circumstances that constitute or constituted
a violation of, or could give rise to an Environmental Liability under, any Environmental
Law;

     (b) neither Holdings nor the Borrower nor any of their respective Subsidiaries has
received or is aware of any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance with
Environmental Laws with

36

 

regard to any of the Properties or the Business, nor does Holdings or the Borrower have
knowledge or reason to believe that any such notice will be received or is being threatened;

     (c) no Hazardous Materials have been transported or disposed of from the Properties in
violation of, or in a manner or to a location that could give rise to an Environmental
Liability under, any Environmental Law, nor has any Hazardous Material been generated,
treated, stored or disposed of at, on or under any of the Properties in violation of, or in
a manner that could give rise to an Environmental Liability under, any applicable
Environmental Law;

     (d) no judicial proceeding or governmental or administrative action is pending or, to
the knowledge of Holdings or the Borrower, threatened, under any Environmental Law to which
Holdings or the Borrower or any of their respective Subsidiaries is or will be named as a
party with respect to the Properties or the Business, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any Environmental Law with respect
to the Properties or the Business;

     (e) there has been no Release or threat of Release of any Hazardous Material at or from
the Properties, or arising from or related to the operations of Holdings or the Borrower or
any of their respective Subsidiaries in connection with the Properties or otherwise in
connection with the Business, in violation of or in amounts or in a manner that could give
rise to liability under Environmental Laws;

     (f) the Properties and all operations at the Properties are in compliance, and have in
the last five years been in compliance, with all applicable Environmental Laws, and there is
no contamination at, under or about the Properties nor is there a violation of any
Environmental Law or Environmental Permit required by Environmental Law with respect to the
Properties or the Business that could give rise to an Environmental Liability; and

     (g) neither Holdings nor the Borrower nor any of their respective Subsidiaries has
assumed any liability of any other Person under Environmental Laws.

     6.21. Accuracy of Information, etc. No statement or information contained in this
Agreement, any other Loan Document or any other document, certificate or statement furnished by or
on behalf of any Obligor to the Lender, for use in connection with the transactions contemplated by
this Agreement or the other Loan Documents (including the Transaction), contained as of the date
such statement, information, document or certificate was so furnished, any untrue statement of a
material fact or omitted to state a material fact necessary to make the statements contained herein
or therein not misleading, and no other factual information furnished after the Effective Date in
connection with any Loan Document by or on behalf of any Obligor to the Lender will contain any
untrue statement of a material fact or omit to state a material fact necessary to make the
statements contained therein not misleading. The projections and pro forma
financial information contained in the materials referenced above (including, without limitation,
the Initial Projections) are based upon good faith estimates and assumptions believed by management
of Holdings and the Borrower to be reasonable at the time made, it being recognized by the Lender
that such financial information as it relates to future events is not to be viewed as fact and that
actual results during the period or periods covered by such financial information may differ from
the projected results set forth therein by a material amount. There is no fact known to any
Obligor that could reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Loan Documents or in any other documents, certificates and
statements furnished to the Lender for use in connection with the transactions contemplated hereby
and by the other Loan Documents.

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     6.22. Security Documents. The Security Documents are effective to create in favor of
the Lender a legal, valid and enforceable security interest in the Collateral described therein and
proceeds thereof. In the case of the Pledged Equity Interests, when certificates representing such
Pledged Equity Interests are delivered to the Lender, and in the case of the other Collateral
described in the Obligor Security Agreement, when financing statements and other filings specified
in Item 6.22(a) of the Disclosure Schedule in appropriate form are recorded in the offices
specified in Item 6.22(a) of the Disclosure Schedule, the Obligor Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title and interest of
the Obligors in such Collateral and the proceeds thereof, as security for the Secured Obligations
(as defined in the Obligor Security Agreement), in each case prior and superior in right to any
other Person (except, in the case of Collateral other than Pledged Equity Interests, Liens
permitted by Sections 8.3(c), (d), (h) and (j)).

     6.23. Solvency. Each Obligor is, and after giving effect to the Transaction and the
incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith
will be and will continue to be, Solvent.

     6.24. Real Properties. Item 6.24A of the Disclosure Schedule lists each of
the real properties in the United States owned in fee simple by Holdings or the Borrower or any of
their respective Subsidiaries and their respective fair market values (as determined by Holdings or
the Borrower in its reasonable judgment) on and as of the Closing Date. Item 6.24B of the
Disclosure Schedule lists the address and landlord of each real property leased by Holdings or the
Borrower or any of their respective Subsidiaries and the fair market values (as determined by the
Borrower in its reasonable judgment) of all tangible items of Collateral located at each such
leased real property. The HQ Lease is in full force and effect and the Borrower is in compliance
with all terms thereof.

     6.25. Capitalization. As of the Closing Date, Item 1.1 of the Disclosure
Schedule is a true, complete and accurate description of the equity capital structure of Holdings
and the Borrower and their respective Subsidiaries showing, for each such Person, accurate
ownership percentages of the equityholders of record and accompanied by a statement of authorized
and issued Equity Interests for each such Person. Except as set forth on Item 1.1 of the
Disclosure Schedule, as of the Closing Date (a) there are no preemptive rights, outstanding
subscriptions, warrants or options to purchase any Equity Interests of Holdings or the Borrower or
any of their respective Subsidiaries, (b) there are no obligations of Holdings or the Borrower or
any of their respective Subsidiaries to redeem or repurchase any of Equity Interests and (c) there
is no agreement, arrangement or plan to which Holdings or the Borrower or any of their respective
Subsidiaries is a party or of which Holdings or the Borrower has knowledge that could directly or
indirectly affect the capital structure of Holdings or the Borrower or their respective
Subsidiaries. The Equity Interests of Holdings and the Borrower and their respective Subsidiaries
described on Item 1.1 of the Disclosure Schedule (i) are validly issued and fully paid and
non-assessable and (ii) are owned of record and beneficially as set forth on Item 1.1 of
the Disclosure Schedule, free and clear of all Liens (other than Liens created under the Security
Documents).

     6.26. Special Purpose Acquisition Company. Holdings has received all necessary
approvals of its shareholders to consummate the Transaction. Holdings cannot be required to redeem
any additional shares of its capital stock in connection with, or as a result of, the consummation
of the Transaction.

     6.27. Brokers. Except for fees payable by the Lender to Banc of America Securities
LLC in connection with the Acquisition Agreement and except for fees payable by Holdings to FTN
Midwest Securities Corp. as previously disclosed to the Lender pursuant to the Acquisition
Agreement, there are no brokerage commissions, finder’s fees or investment banking fees payable in
connection with any transactions contemplated by the Loan Documents and the Obligors jointly and
severally hereby

38

 

agree to indemnify the Lender and hold the Lender harmless from and against any claim of any
other potential lender, broker or finder arising out any transaction or commitment issued to the
Borrower.
    

SECTION 7

AFFIRMATIVE COVENANTS

     The Obligors hereby covenant and agree with the Lender that, until the Termination Date has
occurred, Holdings and the Borrower shall, and shall cause each of their respective Subsidiaries to
perform or cause to be performed the obligations set forth in this SECTION 7.

     7.1 Financial Statements. Holdings and the Borrower shall furnish to the Lender:

     (a) Annual Financial Statements. As soon as available, but in any event within
90 days after the end of each Fiscal Year of Holdings, a copy of the audited consolidated
balance sheet of Holdings and its consolidated Subsidiaries as at the end of such year and
the related audited consolidated (and unaudited consolidating) statements of income and of
cash flows for such year, setting forth in each case in comparative form the figures for the
previous year, reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by Deloitte & Touche LLP or other
independent certified public accountants of nationally recognized standing, together with
(i) copies of any notes and auditor’s letters (to the extent available), and (ii) a
management comparison against the prior fiscal year and the annual fiscal budget.

     (b) Quarterly Financial Statements. As soon as available, but in any event not
later than 45 days after the end of each Fiscal Quarter of Holdings, the unaudited
consolidated and consolidating balance sheet of Holdings and its consolidated Subsidiaries
as at the end of such quarter and the related unaudited consolidated and consolidating
statements of income and of cash flows for such quarter and the portion of the Fiscal Year
through the end of such Fiscal Quarter, setting forth in each case in comparative form
(i) the figures for the previous Fiscal Year and (ii) the figures from the Annual Budget
covering the current Fiscal Year, certified by a Responsible Officer as being fairly stated
in all material respects (subject to normal year-end audit adjustments).

     (c) Monthly Financial Statements. As soon as available, but in any event not
later than 30 days after the end of each month occurring during each Fiscal Year (other than
the third, sixth, ninth and twelfth such month), the unaudited consolidated and
consolidating balance sheets of Holdings and its Subsidiaries as at the end of such month
and the related unaudited consolidated and consolidating statements of income and of cash
flows for such month and the portion of the Fiscal Year through the end of such month,
setting forth in each case in comparative form the figures for the previous year and the
figures from the Annual Budget covering the current Fiscal Year, certified by a Responsible
Officer as being fairly stated in all material respects (subject to normal year-end audit
adjustments).

All financial statements required to be delivered pursuant to this Section shall be complete and
correct in all material respects and shall be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and with prior periods (except
as approved by such accountants or officer, as the case may be, and disclosed therein).

39

 

     7.2 Certificates; Other Information. The Borrower shall furnish to the Lender:

     (a) Accounts Receivable/Payable Reports. As soon as practicable and in any
event within 30 days after the end of each Fiscal Quarter, (i) a written report, reasonably
satisfactory in form and scope to the Lender, as to the accounts receivable and accounts
payable of Holdings and its Subsidiaries as of the end of such Fiscal Quarter, setting forth
the type, amount, value and aging of Holdings’ and such Subsidiaries’ accounts receivable
and accounts payable as of the end of such Fiscal Quarter, all certified by a Responsible
Officer of the Borrower.

     (b) Annual Certificate of Certified Public Accountants. Concurrently with the
delivery of the financial statements referred to in Section 7.1(a), a certificate of
the independent certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained of any Default
or Event of Default, except as specified in such certificate.

     (c) Responsible Officer’s Certificate. Concurrently with the delivery of any
financial statements pursuant to Section 7.1, a certificate of a Responsible Officer
stating that, to the best of such Responsible Officer’s knowledge, each Obligor during such
period has observed or performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and the other Loan Documents to which it is a
party to be observed, performed or satisfied by it, and that such Responsible Officer has
obtained no knowledge of any Default or Event of Default except as specified in such
certificate.

     (d) Compliance Certificate; Location of Collateral. Concurrently with the
delivery of any quarterly or annual financial statements pursuant to Section 7.1,
(i) a Compliance Certificate containing all information and calculations necessary for
determining compliance by Holdings and its Subsidiaries with the provisions of this
Agreement (including Section 8.1) referred to therein as of the last day of the
applicable Fiscal Quarter or Fiscal Year, as the case may be, and (ii) to the extent not
previously expressly disclosed in writing to the Lender, a listing of (A) each county and
state within the United States where any Obligor owns any real property interest (fee, lease
or other), (B) any Intellectual Property acquired by any Obligor, and (C) each change of
Business Entity form or of legal name or of address or jurisdiction of organization of the
Borrower or any Subsidiary or Obligor, in each case above since the date of the most recent
list delivered pursuant to this clause (ii) (or, in the case of the first such list
so delivered, since the Closing Date).

     (e) Annual Budget; Projections. As soon as available, and in any event no
later than 30 days after the end of each Fiscal Year, (i) a detailed Consolidated and
consolidating budget for Holdings and its Subsidiaries for the following Fiscal Year (the
“Annual Budget”) and (ii) a projected Consolidated and consolidating balance sheet
of Holdings and its Subsidiaries as of the end of the following Fiscal Year and through the
Stated Maturity Date, the related Consolidated and consolidating statements of projected
cash flow, projected changes in financial position and projected income and a description of
the underlying assumptions applicable thereto (such information described in this
clause (ii), the “Projections”) and, as soon as available, significant
revisions, if any, of such Annual Budget and Projections with respect to such Fiscal Year,
which Projections shall in each case be accompanied by a certificate of a Responsible
Officer stating that such Annual Budget and Projections are based on reasonable estimates,
information and assumptions.

     (f) Discussion and Analysis of Financial Condition, etc. Within 30 days after
the end of each Fiscal Quarter, a narrative discussion and analysis of the financial
condition and

40

 

results of operations of Holdings and its Subsidiaries for such Fiscal Quarter and for
the period from the beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, as compared to the portion of the Projections covering such periods and to the
comparable periods of the previous year.

     (g) Proposed Amendments, etc. to Certain Agreements. No later than 10 Business
Days prior to the effectiveness thereof, copies of substantially final drafts of any
proposed amendment, supplement, waiver or other modification with respect to any
Subordinated Debt Document, any other agreement or instrument subject to the restrictions
contained in Section 8.13 or any Acquisition Documentation.

     (h) Financial Statements and Reports, etc. Within five days after the same are
sent, copies of all financial statements and reports that any Obligor sends to the holders
of any class of its debt securities or public equity securities and, within five days after
the same are filed, copies of all financial statements and reports that any Obligor may make
to, or file with, the SEC.

     (i) Collateral Report. Upon the request of the Lender from time to time after
the occurrence and during the continuation of an Event of Default, the Borrower will, at its
own cost and expense, obtain and deliver to the Lender a report of an independent collateral
auditor satisfactory to the Lender (which may be, or be affiliated with, the Lender) with
respect to the Collateral, which report shall indicate whether or not the information set
forth in the Accounts Receivable/Payable Report most recently delivered is accurate and
complete in all material respects based upon a review by such auditors of the accounts
(including verification with respect to the amount, aging, identity and credit of the
respective account debtors and the billing practices of the Borrower and its Subsidiaries).

     (j) Tax Returns. Within 15 days of filing Holdings’ federal income tax
returns, the Borrower will deliver copies of such Tax Returns to the Lender.

     (k) Other Information. Promptly, such additional financial, operating reports
and other information as the Lender may from time to time reasonably request.

     7.3 Notice of Default, Litigation or Certain Other Matters. The Borrower shall
furnish to the Lender the following notices within the time periods specified below:

     (a) notice of any Default or Event of Default as soon as possible after the occurrence
thereof and in any event within three days after the Borrower or any other Obligor obtains
knowledge of such occurrence;

     (b) notice of (i) the occurrence of any default or event of default under any
Contractual Obligation of Holdings or the Borrower or any of their respective Subsidiaries
or (ii) the commencement of, or any material adverse development with respect to, any
litigation, investigation or proceeding that may exist at any time between Holdings or the
Borrower or any of their respective Subsidiaries and any Governmental Authority, that, in
either clause (i) or (ii), if not cured or if adversely determined, as the
case may be, could reasonably be expected to have a Material Adverse Effect, as soon as
possible and in any event within three days after the Borrower or any other Obligor obtains
knowledge of such occurrence, commencement or development;

     (c) notice of the commencement of, or any material adverse development with respect to,
any litigation or proceeding affecting Holdings or the Borrower or any of their

41

 

respective Subsidiaries in which the amount involved is $100,000 or more and not fully
covered by insurance or in which injunctive or similar relief is sought, as soon as possible
and in any event within three days after the Borrower or any other Obligor obtains knowledge
of such commencement or development;

     (d) notice of (i) the occurrence of any Reportable Event with respect to any Plan, a
failure to make any required contribution to a Plan, the creation of any Lien in favor of
the PBGC or a Plan or any withdrawal from, or the termination, reorganization (within the
meaning of Section 4241 of ERISA) or Plan Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or Holdings or the
Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the
withdrawal from, or the termination, reorganization (within the meaning of Section 4241 of
ERISA) or Plan Insolvency of, any Plan, as soon as possible and in any event within three
days after the Borrower or any other Obligor obtains knowledge thereof;

     (e) notice of any significant adverse change in Holdings’ or the Borrower’s or any of
their respective Subsidiaries’ relationship with, or any significant event or circumstance
that is likely to adversely affect Holdings’ or the Borrower’s or any such Subsidiary’s
relationship with, (i) any customer (or related group of customers) representing more than
5% of the Borrower’s consolidated revenues during its most recent Fiscal Year or (ii) any
supplier that is material to the operations of Holdings or the Borrower and their respective
Subsidiaries, as soon as possible and in any event within 10 days after the Borrower or any
other Obligor obtains knowledge thereof; and

     (f) notice of any other development or event that has had or could reasonably be
expected to have a Material Adverse Effect, as soon as possible and in any event within 10
days after the Borrower or any other Obligor obtains knowledge thereof.

Each notice pursuant to this Section 7.3 shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein and stating what
action the Borrower or the relevant Subsidiary proposes to take with respect thereto. In addition,
each notice delivered pursuant to clause (b), (c) or (d) above shall also
include, to the extent requested by the Lender, copies of all documentation relating to the
applicable occurrence or event.

     7.4 Maintenance of Existence; Compliance with Laws, etc. Each Obligor and its
Subsidiaries shall: (a)(i) preserve, renew and keep in full force and effect its existence and
(ii) take all reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business, except, in each case, as otherwise permitted by
Section 8.4 and except, in the case of clause (ii) above, to the extent that
failure to do so could not reasonably be expected to have a Material Adverse Effect; and (b) comply
with all Contractual Obligations and Applicable Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

     7.5 Insurance. Each Obligor will, and will cause each of its Subsidiaries to:

     (a) maintain insurance on its property with financially sound and reputable insurance
companies against loss and damage in at least the amounts (and with only those deductibles)
customarily maintained, and against such risks (but including in any event coverage for
public liability, product liability and business interruptions) as are typically insured
against in the same general area, by Persons of comparable size engaged in the same or
similar business as Holdings and its Subsidiaries; and

42

 

     (b) all worker’s compensation, employer’s liability insurance or similar insurance as
may be required under the laws of any state or jurisdiction in which it may be engaged in
business.

Without limiting the foregoing, all insurance policies required pursuant to this Section shall
(i) name the Lender as loss payee (in the case of property insurance) or additional insured (in the
case of liability insurance), as applicable, and provide that no cancellation or modification of
the policies will be made without thirty days’ prior written notice to the Lender and (ii) be in
addition to any requirements to maintain specific types of insurance contained in the other Loan
Documents.

     7.6 Maintenance of Properties; Maintenance of HQ Lease. Each Obligor will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep all of its and their
respective Properties (other than Properties that Holdings or such Subsidiary determines in its
reasonable, good faith judgment are no longer necessary, useful or economically desirable for the
business of Holdings or such Subsidiary, as the case may be) in good repair, working order and
condition (ordinary wear and tear excepted), and make necessary repairs, renewals and replacements
so that the business carried on by Holdings and its Subsidiaries may be properly conducted at all
times. Borrower shall cause the HQ Lease to remain in full force and effect and shall comply with
all material terms thereof.

     7.7 Inspection of Property; Books and Records; Discussions. Each Obligor and its
Subsidiaries shall (a) keep proper books of records and account in which full, true and correct
entries in conformity with GAAP and all Applicable Law shall be made of all dealings and
transactions in relation to its business and activities and (b) permit representatives of the
Lender to visit and inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time and as often as may reasonably be desired and to discuss
the business, operations, properties and financial and other condition of Holdings and its
Subsidiaries with officers and employees of Holdings and its Subsidiaries and with its independent
certified public accountants. The Borrower shall pay all costs and expenses incurred by the Lender
in connection with any such visit, inspection or examination pursuant to this Section. Without in
any way limiting the foregoing, to the extent requested by the Lender, Holdings and the Borrower
will participate and will cause their respective key management personnel to participate in one
meeting per year with the Lender, which meeting shall be held at such time and such place as may be
reasonably acceptable to the Lender, Holdings and the Borrower.

     7.8 Payment of Obligations. Each Obligor and its Subsidiaries shall pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all
its material obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as
the case may be.

     7.9 Environmental Laws. Each Obligor and its Subsidiaries shall:

     (a) comply in all material respects with, and ensure compliance in all material
respects by all tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or Environmental Permits required by
applicable Environmental Laws; and

     (b) conduct and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and promptly comply in

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all material respects with all lawful orders and directives of all Governmental Authorities
regarding Environmental Laws.

     7.10 Use of Proceeds. The Borrower shall apply the proceeds of the Term Loan to
finance the InfuSystem Acquisition and to pay transaction costs incurred in connection with the
Transaction.

     7.11 Additional Collateral; Additional Subsidiaries, etc. (a) With respect to any
asset or other property acquired after the Closing Date by Holdings or any of its Subsidiaries
(other than any asset or property described in clause (b) or (c) below and
excluding any Equity Interests or assets of a Foreign Subsidiary that are not required to be
pledged pursuant to the last sentence of clause (c) below) as to which the Lender does not
have a perfected Lien, Holdings or such applicable Subsidiary shall promptly (i) execute and
deliver to the Lender such amendments to the Security Documents or such other documents as the
Lender deems necessary or advisable to grant to the Lender a legal, valid and enforceable
perfected, first priority security interest in such property, subject only to Liens permitted under
Section 8.3, (ii) take all actions necessary or advisable, or reasonably requested by the
Lender, to perfect the security interest of the Lender in such property and assets, including the
filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by
the Obligor Security Agreement or by law or as may be requested by the Lender and to cause such
security interest to be prior to all other Liens on such Property, and (iii) if requested by the
Lender, deliver to the Lender legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Lender.

     (b) With respect to any fee interest in any real property acquired after the Closing Date by
Holdings or any of its Subsidiaries or owned by a Subsidiary that is acquired after the Closing
Date by any Obligor, such Obligor or such applicable Subsidiary shall promptly (i) execute and
deliver a first priority Mortgage, in favor of the Lender covering such real property, (ii) if
requested by the Lender, provide the Lender with (x) title and extended coverage insurance covering
such real property in an amount at least equal to the purchase price of such real property (or such
other amount as shall be reasonably specified by the Lender) as well as a current ALTA survey
thereof, together with a surveyor’s certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Lender in connection with such mortgage or deed of trust, each of the
foregoing in form and substance reasonably satisfactory to the Lender and (iii) if requested by the
Lender, deliver to the Lender legal opinions relating to the matters described above, which
opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Lender.

     (c) With respect to any new Subsidiary created or acquired on or after the Closing Date by any
Obligor, the applicable Obligor or such applicable Subsidiary shall promptly:

     (i) execute and deliver to the Lender such amendments or supplements to the Obligor
Security Agreement as the Lender deems necessary or advisable to grant to the Lender a
perfected first priority security interest in all Equity Interests of such new Subsidiary
that are owned by any Obligor;

     (ii) deliver to the Lender the certificates representing such Equity Interests,
together with undated stock or other analogous powers, in blank, executed and delivered by a
duly authorized officer of the applicable Obligor or such Subsidiary, as the case may be;

     (iii) cause such new Subsidiary (A) to become a party to the Guaranty and the Obligor
Security Agreement, (B) to take such actions necessary or advisable to grant to the Lender a
perfected, first priority security interest in the Collateral described in the Security

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Documents with respect to such new Subsidiary, including (x) the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be required by the Obligor
Security Agreement or by law or as may be requested by the Lender, (y) the execution of any
Mortgages required to be delivered pursuant to clause (b) and (z) if requested by
the Lender, the delivery to the Lender of Landlord Agreements duly executed and delivered by
each lessor of any real property leased by such new Subsidiary and (C) to deliver to the
Lender a certificate of the Secretary or an Assistant Secretary of such Subsidiary as to the
matters set forth in Section 5.1(r) (together with appropriate attachments) and a
copy of a good standing certificate for such Subsidiary, dated a date reasonably acceptable
to the Lender; and

     (iv) if requested by the Lender, deliver to the Lender legal opinions relating to the
matters described above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Lender.

Notwithstanding the foregoing, (1) the Equity Interests required to be delivered to the Lender
pursuant to Section 7.11(c)(i) and the obligation to deliver certificates
representing Equity Interests pursuant to Section 7.11(c)(ii) shall exclude any Equity
Interests of a Foreign Subsidiary created or acquired after the Closing Date other than (a) Equity
Interests of each first-tier Foreign Subsidiary representing 66% of the total voting power of all
outstanding “stock entitled to vote” within the meaning of Treasury Regulations section
1.956-2(c)(2) and (b) 100% of the Equity Interests in each first-tier Foreign Subsidiary that does
not constitute “stock entitled to vote” within the meaning of Treasury Regulations section
1.956-2(c)(2) and (2) none of the actions specified in Section 7.11(c)(iii) will be
required to be taken in respect of any Foreign Subsidiary.

     7.12 Hedging Arrangements. Within 60 days following the Effective Date, the Borrower
shall enter into, and shall at all times thereafter maintain, interest rate protection agreements
in a form and upon terms acceptable to the Lender, issued by an institution acceptable to the
Lender, with a duration of a period of at least two years at a time, which ensure that the net
interest cost to the Borrower is fixed, capped, or hedged with respect to at least 50% of the total
Indebtedness of the Loan Parties outstanding as of the Closing Date (after giving effect to the
borrowing of the Term Loan) or any renewal date of such interest protection agreements.

     7.13 Lockbox Arrangements; Cash Management. The Obligors will establish and at all
times maintain lockbox deposit account control arrangements satisfactory to the Lender with respect
to all cash and other collections received by Holdings and its Subsidiaries. The cash management
systems of the Obligors shall at all times be structured and maintained in a manner satisfactory to
the Lender.

SECTION 8

NEGATIVE COVENANTS

     The Obligors hereby covenant and agree with the Lender that, until the Termination Date has
occurred, Holdings and the Borrower will, and will cause each of their respective Subsidiaries to,
perform or cause to be performed the obligations set forth in this SECTION 8.

     8.1 Financial Condition Covenants.

     (a) Fixed Charge Coverage Ratio. Holdings and the Borrower will not permit the Fixed
Charge Coverage Ratio as of the last day of any Fiscal Quarter to be less than 1.00 to 1;
provided, however, that, for purposes of determining the Fixed Charge Coverage
Ratio as of the last day of the Fiscal Quarters ending December 31, 2007, March 31, 2008 and June
30, 2008, “EBITDA” and “Fixed Charges” shall be deemed to equal the EBITDA and Fixed Charges, as
the case may be, for (x) in the case

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of the Fiscal Quarter ending December 31, 2007, such Fiscal Quarter, (y) in the case of the
Fiscal Quarter ending March 31, 2008, such Fiscal Quarter and the immediately preceding Fiscal
Quarter and (z) in the case of the Fiscal Quarter ending June 30, 2008, such Fiscal Quarter and the
two immediately preceding Fiscal Quarters.

     (b) Leverage Ratio. Holdings and the Borrower will not permit the Leverage Ratio as
of the last day of any Fiscal Quarter occurring during any period set forth below to be greater
than the ratio set forth below opposite such period:

	 	 	 	 	 
	Period	 	Leverage Ratio
	10/1/2007 through (and including) 9/30/2008
	 	 	4.00 to 1	 
	10/1/2008 through (and including) 9/30/2009
	 	 	3.50 to 1	 
	10/1/2009 and thereafter
	 	 	3.00 to 1	 

     For purposes hereof, the term “Leverage Ratio” means, as at the last day of any Fiscal
Quarter, the ratio of Total Debt outstanding on such day to EBITDA of Holdings and its Subsidiaries
on a Consolidated basis computed for the period of four consecutive Fiscal Quarters ending on such
day; provided that for purposes of determining EBITDA as of the last day of the Fiscal
Quarters ending December 31, 2007, March 31, 2008 and June 30, 2008, “EBITDA” shall be deemed to
equal (i) for the Fiscal Quarter ending December 31, 2007, the product of (A) EBITDA for such
Fiscal Quarter multiplied by (B) 4.0, (ii) for the Fiscal Quarter ending March 31, 2008,
the product of (A) the sum of EBITDA for such quarter plus EBITDA for the immediately
preceding Fiscal Quarter multiplied by (B) 2.0, and (iii) for the Fiscal Quarter ending
June 30, 2008, the product of (A) the sum of EBITDA for such Fiscal Quarter plus EBITDA for
the two preceding Fiscal Quarters multiplied by (B) 1.33333.

     (c) Minimum EBITDA. Holdings and the Borrower will not permit EBITDA of Holdings and
its Subsidiaries on a Consolidated basis for any period of four consecutive Fiscal Quarters (or, in
the case of the Fiscal Quarters ending December 31, 2007, March 31, 2008 and June 30, 2008, the
period of one, two and three (respectively) consecutive Fiscal Quarters then ended) to be less
than, as of the last day of any Fiscal Quarter (commencing with the Fiscal Quarter ending on
December 31, 2007), the amount set forth below opposite such Fiscal Quarter:

	 	 	 	 	 
	Fiscal Quarter Ending on:	 	Minimum EBITDA
	December 31, 2007
	 	$	2,000,000	 
	March 31, 2008
	 	$	4,400,000	 
	June 30, 2008
	 	$	6,700,000	 
	September 30, 2008
	 	$	9,000,000	 
	December 31, 2008
	 	$	10,000,000	 
	March 31, 2009
	 	$	10,250,000	 
	June 30, 2009
	 	$	10,500,000	 
	September 30, 2009
	 	$	10,750,000	 

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	Fiscal Quarter Ending on:	 	Minimum EBITDA
	December 31, 2009
	 	$	11,000,000	 
	March 31, 2010
	 	$	11,250,000	 
	June 30, 2010
	 	$	11,500,000	 
	September 30, 2010 and each Fiscal Quarter thereafter
	 	$	11,750,000	 

     8.2 Indebtedness. Each of Holdings and the Borrower will not, and will not permit any
of its Subsidiaries to, create, issue, incur, assume, become liable in respect of or permit to
exist any Indebtedness, except:

     (a) Indebtedness in respect of the Credit Extensions and other Obligations;

     (b) until the date of the initial Credit Extension, Indebtedness that is to be repaid
in full on or prior to such date as further identified in Item 8.2(b) of the
Disclosure Schedule;

     (c) unsecured Indebtedness of the Borrower and its Subsidiaries (i) incurred in the
ordinary course of business of the Borrower and its Subsidiaries (including open accounts
extended by suppliers on normal trade terms in connection with purchases of goods and
services that are not overdue for a period of more than 90 days or, if overdue for more than
90 days, as to which a dispute exists and adequate reserves in conformity with GAAP have
been established on the books of the Borrower or such Subsidiary) or (ii) in respect of
performance, surety or appeal bonds provided in the ordinary course of business, but
excluding (in each case described in this clause (c)), Indebtedness incurred through
the borrowing of money or the incurrence of Guarantee Obligations in respect thereof;

     (d) Indebtedness of the Borrower and its Subsidiaries (i) evidencing the deferred
purchase price of any newly acquired equipment of the Borrower and its Subsidiaries used in
the ordinary course of business of the Borrower and its Subsidiaries (provided, that such
Indebtedness is incurred within 60 days of the acquisition of such equipment), or (ii) in
respect of Capital Lease Obligations; provided, that the aggregate amount of all
Indebtedness outstanding pursuant to this clause (d) and pursuant to
clause (h) below shall not at any time exceed $5,000,000.00;

     (e) debt and liens of InfuSystem permitted to exist under the Acquisition Agreement;

     (f) Indebtedness of any Subsidiary Guarantor owing to the Borrower or any other
Subsidiary, provided, that (i) such Indebtedness is evidenced by one or more
promissory notes in form and substance reasonably satisfactory to the Lender duly executed
by the obligor thereunder and, indorsed to the order of the Lender (or indorsed in blank)
and delivered in pledge to the Lender pursuant to a Security Document, and shall not be
forgiven or otherwise discharged for any consideration other than payment in full or in part
in cash (provided, that only the amount repaid in part shall be discharged), and
(ii) such Subsidiary Guarantor and the Borrower have previously executed and delivered to
the Lender an Intercompany Subordination Agreement;

     (g) unsecured intercompany Indebtedness of the Borrower owing to a Subsidiary Guarantor
in an aggregate principal amount outstanding at any time not to exceed $25,000.00,
provided, that (i) such Indebtedness is evidenced by one or more promissory notes in
form and

47

 

substance reasonably satisfactory to the Lender duly executed by the Borrower and,
indorsed to the order of the Lender (or indorsed in blank) and delivered in pledge to the
Lender pursuant to a Security Document, and shall not be forgiven or otherwise discharged
for any consideration other than payment in full or in part in cash (provided, that
only the amount repaid in part shall be discharged), and (ii) such Subsidiary Guarantor and
the Borrower have previously executed and delivered to the Lender an Intercompany
Subordination Agreement;

     (h) Indebtedness of the Borrower under a revolving credit facility, on terms and
conditions satisfactory to the Lender, in an aggregate principal amount outstanding at any
time not to exceed $5,000,000.00 minus the aggregate amount of Indebtedness
outstanding at such time under clause (d) above;

     (i) Indebtedness existing as of the Effective Date that is identified in
Item 8.2(i) of the Disclosure Schedule and refinancings and replacements of such
Indebtedness, so long as any such refinancing or replacement does not increase the principal
amount of such Indebtedness or, with respect to Guarantee Obligations, the amount
guaranteed;

     (j) Hedging Obligations required pursuant to Section 7.12 and others assumed in
the ordinary course of business (and not for speculation) to protect against fluctuations in
interest rates, foreign exchange rates and commodities used in the Business;

     (k) Subordinated Debt in such amount as the Lender may approve in writing in advance;
and

     (k) other Indebtedness of the Borrower and its Subsidiaries in an aggregate amount at
any time outstanding at any time not to exceed $100,000;

provided, however, that no Indebtedness otherwise permitted by
Sections 8.2(e), 8.2(e), 8.2(h) or 8.2(k) shall be assumed or otherwise incurred if a
Default has occurred and is then continuing or would result therefrom.

     8.3 Liens. Each of Holdings and the Borrower will not, and will not permit any of its
Subsidiaries to, create, incur, assume or permit to exist any Lien upon any of its property
(including Capital Stock of any Person), revenues or assets, whether now owned or hereafter
acquired, except:

     (a) Liens securing payment of the Obligations;

     (b) [Intentionally Omitted];

     (c) Liens on assets of the Borrower and its Subsidiaries in favor of carriers,
warehousemen, mechanics, materialmen and landlords or construction Liens created by law,
arising in the ordinary course of business for amounts that are not overdue for a period of
more than 30 days or are being diligently contested in good faith by appropriate proceedings
for which adequate reserves in accordance with GAAP shall have been set aside on its books;
provided, that the aggregate Indebtedness secured by Liens described in this
clause (c) shall not exceed $100,000 at any one time outstanding;

     (d) Liens on assets of the Borrower and its Subsidiaries securing Indebtedness of the
type permitted under Section 8.2(d) incurred to finance the acquisition of
equipment; provided, that (i) such Lien is created substantially simultaneously with
(and in any event within 60 days of) the incurrence of such Indebtedness, (ii) such Lien
encumbers only the specific assets that are

48

 

financed by such Indebtedness and does not attach to assets of such Person generally
and (iii) the amount of Indebtedness secured thereby is not increased;

     (e) Any Lien on assets of the Borrower and its Subsidiaries created by, or arising
under any statute or regulation or common law (in contrast with Liens voluntarily granted)
in connection with, without limiting the foregoing, workers’ compensation, unemployment
insurance, employers’ health tax or other social security or statutory obligations that
secure amounts that are not yet overdue or which are being contested in good faith by proper
proceedings diligently pursued and as to which adequate reserves have been established on
the Person’s books and records and a stay of enforcement of the Lien is in effect;

     (f) Liens on assets of the Borrower and its Subsidiaries made or incurred in the
ordinary course of business to secure the performance of bids, tenders, contracts (other
than for the borrowing of money), leases, statutory obligations or surety and performance
bonds;

     (g) judgment Liens in existence for less than 45 days after the entry thereof or with
respect to which execution has been stayed or the payment of which is covered in full
(subject to a customary deductible) by insurance maintained with responsible insurance
companies and that do not otherwise result in an Event of Default under
Section 9.1(h);

     (h) easements, rights-of-way, zoning restrictions, minor defects or irregularities in
title and other similar encumbrances not interfering in any material respect with the value
or use of the property to which such Lien is attached;

     (i) Liens existing as of the Effective Date and disclosed in Item 8.3(i) of the
Disclosure Schedule securing Indebtedness described in Section 8.2(i) and
refinancings of such Indebtedness; provided, that no such Lien shall encumber any
additional property and the amount of Indebtedness secured by such Lien is not increased
from that existing on the Effective Date (as such Indebtedness may have been permanently
reduced subsequent to the Effective Date);

     (j) Liens on Specified Revolver Collateral securing Indebtedness permitted under
Section 8.2(h) but only if such Liens are subject to intercreditor arrangements
satisfactory to the Lender; and

     (k) Liens for Taxes, assessments or other governmental charges or levies not at the
time delinquent or thereafter payable without penalty or being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books.

     8.4 Fundamental Changes.

     (a) Each of Holdings and the Borrower will not, and will not permit any of its
Subsidiaries to, enter into any merger, consolidation or amalgamation, or liquidate, wind up
or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or
substantially all of its assets (including accounts receivable and Equity Interests in
Subsidiaries or other Persons) or business, except that:

     (i) any Subsidiary of the Borrower may be merged or consolidated with or into
the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or with or into any Wholly Owned Subsidiary Guarantor
(provided that the

49

 

Wholly Owned Subsidiary Guarantor shall be the continuing or surviving
corporation); and

     (ii) any Subsidiary of the Borrower may Dispose of any or all of its assets
(upon voluntary liquidation or otherwise) to the Borrower or any Wholly Owned
Subsidiary Guarantor.

     (b) Each of Holdings and the Borrower will not, and will not permit any of its
Subsidiaries to, amend its Certificate of Incorporation, Certificate of Formation or other
analogous Organic Document, as applicable; provided that Holdings may amend its
Certificate of Incorporation to change its name to InfuSystem Holdings, Inc.

     8.5 Disposition of Assets. Each of Holdings and the Borrower will not, and will not
permit any of its Subsidiaries to, Dispose of any of its assets (including accounts receivable and
Equity Interests in Subsidiaries or other Persons), whether now owned or hereafter acquired,
except:

     (a) the Disposition of obsolete or worn out property in the ordinary course of
business;

     (b) the sale of inventory in the ordinary course of business;

     (c) the sale of new infusion pumps at prices at least equal to their original cost;

     (d) Dispositions permitted by Section 8.4(a); and

     (e) the Disposition of other property having a fair market value not to exceed $25,000
in the aggregate for any Fiscal Year; provided that the cash consideration received
for any property Disposed of pursuant to this clause (d) shall not be less than the
fair market value of such property.

     8.6 Restricted Payments. Each of Holdings and the Borrower will not, and will not
permit any of its Subsidiaries to, declare or pay any dividend (other than dividends payable solely
in common stock of the Person making such dividend) on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Equity Interests of Holdings, the Borrower or any of their
respective Subsidiaries, whether now or hereafter outstanding, or make any other distribution in
respect thereof, either directly or indirectly, whether in cash or property or in obligations of
Holdings, the Borrower or any of their respective Subsidiaries (collectively, “Restricted
Payments”), except that any Subsidiary of the Borrower may pay cash dividends to the Borrower
or any Wholly Owned Subsidiary Guarantor.

     8.7 Capital Expenditures. Each of Holdings and the Borrower will not, and will not
permit any of its Subsidiaries to, make or commit to make any Capital Expenditure, except:

     (a) Capital Expenditures of the Borrower and its Subsidiaries in the ordinary course of
business not exceeding $4,500,000.00 in any Fiscal Year; provided, that (i) up to
$1,000,000.00 of any such amount referred to above, if not so expended in the Fiscal Year
for which it is permitted, may be carried over for expenditure in the next succeeding Fiscal
Year and (ii) Capital Expenditures made pursuant to this clause (a) during any
Fiscal Year shall be deemed made, first, in respect of amounts permitted for such
Fiscal Year as provided above and, second, in respect of amounts carried over from
the prior Fiscal Year pursuant to subclause (i) above; and

50

 

     (b) Capital Expenditures of the Borrower and its Subsidiaries with respect to assets
useful in the business of the Borrower and its Subsidiaries made with the proceeds of any
Reinvestment Deferred Amount.

     8.8 Investments. Each of Holdings and the Borrower will not, and will not permit any
of its Subsidiaries to (or to enter into any agreement to), purchase, make, incur, assume or permit
to exist any Investment in any other Person, except:

     (a) Investments of the Borrower and its Subsidiaries constituting accounts receivable
arising in the ordinary course of business, trade debt granted in the ordinary course of
business or deposits made in connection with the purchase price of goods or services in the
ordinary course of business;

     (b) Investments of the Borrower and its Subsidiaries in Cash Equivalents;

     (c) Guarantee Obligations permitted by Section 8.2;

     (d) Investments permitted as Capital Expenditures pursuant to Section 8.7;

     (e) loans and advances to employees of the Borrower or any Subsidiary of the Borrower
in the ordinary course of business (including for travel, entertainment and relocation
expenses) in an aggregate amount not to exceed $25,000 at any time outstanding;

     (f) Investments of the type described in clause (b) of the definition thereof
(i) by the Borrower or any of its Subsidiaries in any Subsidiary Guarantor or (ii) by any
Subsidiary in the Borrower;

     (g) the InfuSystem Acquisition;

     (h) Investments of the type described in clause (a) of the definition thereof
by the Borrower in any Subsidiary Guarantor, to the extent such Investment is permitted as
Indebtedness of such Subsidiary Guarantor pursuant to Section 8.2(f);

     (i) Investments existing on the Effective Date and identified in Item 8.8(i) of
the Disclosure Schedule; and

     (j) in addition to Investments otherwise expressly permitted by this Section,
Investments by the Borrower or any of its Subsidiaries in an aggregate amount (valued at
cost) not to exceed $50,000 over the term of this Agreement.

     8.9 No Prepayment of Indebtedness; Designated Senior Indebtedness. Each of Holdings
and the Borrower will not, and will not permit any of its Subsidiaries to, prepay, redeem,
purchase, defease, exchange, repurchase or otherwise satisfy prior to the scheduled maturity
thereof in any manner any Indebtedness, or make any payment in violation of any subordination terms
of any Subordinated Debt, except (a) as long as no Event of Default then exists, (i) regularly
scheduled or mandatory repayments or redemptions of Indebtedness (other than Subordinated Debt)
permitted under Section 8.2, and (ii) prepayments of Indebtedness permitted under
Sections 8.2(d) and 8.2(h), and (b) refinancings and refundings of such Indebtedness in
compliance with Section 8.2.

51

 

Furthermore, neither Holdings nor the Borrower nor any of their Subsidiaries shall designate any
Indebtedness other than the Obligations as “Designated Senior Indebtedness” (or any analogous term)
in any Subordinated Debt Document.

     8.10 Transactions with Affiliates. Each of Holdings and the Borrower will not, and
will not permit any of its Subsidiaries to, enter into any transaction, including any purchase,
sale, lease or exchange of property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than the Borrower or any Subsidiary Guarantor)
unless such transaction is (a) otherwise permitted under this Agreement, (b) in the ordinary course
of business of the Borrower or such Subsidiary, as the case may be, and (c) upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it
would obtain in a comparable arm’s length transaction with a Person that is not an Affiliate;
provided that the foregoing shall not prohibit reasonable and customary fees paid
to (including customary indemnities in respect of) members of the board of directors (or similar
governing body) of Holdings, the Borrower and their respective Subsidiaries.

     8.11 Sales and Leasebacks. Each of Holdings and the Borrower will not, and will not
permit any of its Subsidiaries to, enter into any arrangement with any Person providing for the
leasing by Holdings, the Borrower or any Subsidiary of real or personal property that has been or
is to be sold or transferred by Holdings, the Borrower or such Subsidiary to such Person or to any
other Person to whom funds have been or are to be advanced by such Person on the security of such
property or rental obligations of Holdings, the Borrower or such Subsidiary.

     8.12 Changes in Fiscal Periods. Each of Holdings and the Borrower will not, and will
not permit any of its Subsidiaries to, permit the fiscal year of Holdings, the Borrower or any of
their Subsidiaries to end on a day other than December 31 or change their method of determining
fiscal quarters.

     8.13 Modification of Certain Agreements. Without the prior written consent of the
Lender, each of Holdings and the Borrower will not, and will not permit any of their respective
Subsidiaries to, amend, modify, supplement, terminate, waive or otherwise change, or consent or
agree to any amendment, modification, supplement, waiver or other change to, or enter into any
forbearance from exercising any rights with respect to the terms or provisions contained in:

     (a) any Subordinated Debt Documents or any other documents, instruments or agreements
governing any other Indebtedness (other than any such amendment, modification, supplement,
waiver or other change for which no fee is payable to the holders of the Subordinated Debt
or such other Indebtedness, as applicable, and which (i) would extend the maturity or reduce
the amount of any repayment, prepayment or redemption of the principal of such Subordinated
Debt or other Indebtedness, (ii) would reduce the rate or extend any date for payment of
interest, premium (if any) or fees payable on such Subordinated Debt or other Indebtedness
or (iii) makes the covenants, events of default or remedies in such Subordinated Debt
Documents or other documents, instruments or agreements less restrictive on the Obligors);

     (b) any of the terms of any preferred stock of Holdings, the Borrower or any of their
respective Subsidiaries (other than any such amendment, modification, supplement, waiver or
other change for which no fee is payable to the holders of such preferred stock and which
(i) would extend the scheduled redemption date or reduce the amount of any scheduled
redemption payment or (ii) would reduce the rate or extend any date for payment of dividends
thereon); or

52

 

     (c) any other material contract to the extent such amendment, modification, supplement,
termination, waiver or other change would reasonably be expected to be materially adverse to
the Loan Parties taken as a whole.

     8.14 Agreements Restricting Liens. Each of Holdings and the Borrower will not, and
will not permit any of its Subsidiaries to, enter into or suffer to exist or become effective any
agreement that prohibits or limits the ability of Holdings, the Borrower or any of their
Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or
revenues, whether now owned or hereafter acquired, other than (a) this Agreement and the other Loan
Documents and (b) any agreements governing any purchase money Liens, Capital Lease Obligations or
Synthetic Obligations, provided, in the case of this clause (b), that (x) such
Indebtedness and Liens are permitted under Sections 8.2(d) and 8.3(d) and (y) such
prohibitions or limitations apply only against the assets financed thereby).

     8.15 Agreements Restricting Subsidiary Distributions. Each of Holdings and the
Borrower will not, and will not permit any of its Subsidiaries to, enter into or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of any Subsidiary of the
Borrower to (a) make Restricted Payments in respect of any Equity Interests of such Subsidiary held
by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the Borrower, (b) make
loans or advances to, or other Investments in, the Borrower or any other Subsidiary of the Borrower
or (c) transfer any of its assets to the Borrower or any other Subsidiary of the Borrower, except
for such encumbrances or restrictions existing under or by reason of any restrictions existing
under the Loan Documents.

     8.16 Lines of Business; Suspension of Business. Each of Holdings and the Borrower
will not, and will not permit any of its Subsidiaries to, (x) enter into any business, either
directly or through any Subsidiary, except for those businesses in which Holdings, the Borrower and
its Subsidiaries are engaged on the date of this Agreement or that are reasonably related thereto
or (y) except to the extent permitted under Section 8.4 or 8.5 with respect to a
Subsidiary of the Borrower, cease to carry on and conduct its business in substantially the same
manner as it is presently conducted. Holdings shall remain a holding company and shall engage in
no business other than holding the equity interests of the Borrower and activities reasonably
incidental thereto.

     8.17 Issuance of Equity Interests. The Borrower will not, and will not permit any of
its Subsidiaries to, (a) issue any Equity Interests (whether for value or otherwise) to any Person
(other than Equity Interests of Subsidiaries of the Borrower issued to the Borrower or any of its
Subsidiaries prior to the Closing Date) or (b) become liable in respect of any obligation
(contingent or otherwise) to purchase, redeem, retire, acquire or make any other payment in respect
of any Equity Interests of the Borrower or any Subsidiary of the Borrower or any option, warrant or
other right to acquire any such Equity Interests, except that Subsidiaries of the Borrower may
issue Equity Interests to the Borrower or to any Wholly Owned Subsidiary Guarantor.

     8.18 Hazardous Materials. None of Holdings, the Borrower or any of their Subsidiaries
shall cause or permit a Release of any Hazardous Material on, at, in, under, above, to, from or
about any of the Properties where such Release would (a) violate in any respect, or form the basis
for any Environmental Liabilities under, any Environmental Laws or Environmental Permits or
(b) otherwise adversely impact the value or marketability of any of the Properties, other than in
the case of clauses (a) and (b) such violations or Environmental Liabilities that
could not reasonably be expected to result in a Material Environmental Amount.

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SECTION 9

EVENTS OF DEFAULT

     9.1 Listing of Events of Default. Each of the following events or occurrences
described in this Section shall constitute an “Event of Default”.

     (a) Non-Payment of Obligations. The Borrower shall (i) fail to pay any
principal of the Term Loan when due in accordance with the terms hereof, (ii) fail to pay
any interest on the Term Loan or any fee due hereunder within three days after the date due
in accordance with the terms hereof, or (iii) fail to pay any other amount payable hereunder
or under any other Loan Document within three days after any such other amount becomes due
in accordance with the terms hereof.

     (b) Breach of Representation or Warranty. Any representation or warranty made
or deemed made by any Obligor herein or in any other Loan Document or that is contained in
any certificate, document or financial or other statement furnished by it at any time under
or in connection with this Agreement or any such other Loan Document shall prove to have
been inaccurate in any material respect on or as of the date made or deemed made (except to
the extent that such representations and warranties relate to InfuSystem (without giving
effect to the transactions contemplated by the Acquisition Agreement) and would not have
been true and correct if such representations and warranties were made by InfuSystem
immediately prior to Closing (as defined in the Acquisition Agreement)).

     (c) Non-Performance of Certain Covenants and Obligations. (i) Any Obligor
shall default in the observance or performance of any agreement contained in
Section 7.3(a), Section 7.3(e), Section 7.3(f),
Section 7.4(a)(i), Section 7.10 or SECTION 8 of this Agreement or
Section 4.1, 4.4, 5.1, 5.2, 5.3 or 5.7 of the Obligor Security Agreement or (ii) any
Subsidiary Guarantor or Holdings shall default in the performance of its payment obligations
under the Guaranty, or (ii) an “Event of Default” under and as defined in any Mortgage shall
have occurred and be continuing.

     (d) Non-Performance of Other Covenants and Agreements. Any Obligor shall
default in the observance or performance of any other agreement contained in this Agreement
or any other Loan Document (other than as provided in clauses (a) through
(c) of this Section), and such default shall continue unremedied for a period of 30
days after the earlier of (i) the date on which an officer of the Borrower obtains actual
knowledge of such default and (ii) the date on which the Borrower receives notice of such
default from the Lender.

     (e) Default Under Acquisition Documentation or on Other Indebtedness. (i) A
default shall occur in the payment when due (subject to any applicable grace period),
whether by acceleration or otherwise, of (A) any amount payable to the Lender under any
Acquisition Documentation or (B) any Indebtedness (other than Indebtedness described in
Section 9.1(a) above) of Holdings or any of its Subsidiaries or any other Obligor,
including any Guarantee Obligation; or (ii) a default shall occur in the performance or
observance of any obligation, agreement or condition with respect to any such Indebtedness
or contained in any instrument or agreement evidencing, securing or relating thereto or any
other event shall occur or condition exist and (x) the effect of such default, event or
condition is to accelerate the maturity of any such Indebtedness or (y) such default, event
or condition shall continue unremedied for any applicable period of time sufficient to
permit the holder or holders of such Indebtedness, or any trustee or agent for such holders,
to cause or declare such Indebtedness to become due and payable or to require such
Indebtedness to be prepaid, redeemed, purchased or defeased, or require an offer to

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purchase or defease such Indebtedness to be made, prior to its expressed maturity;
provided that a default, event or condition described in this clause (e)
with respect to other Indebtedness shall not at any time constitute an Event of Default
unless, at such time, one or more defaults, events or conditions of the type described in
this clause (e) shall have occurred and be continuing with respect to Indebtedness
having, in the aggregate, an outstanding principal amount equal to or in excess of $100,000.

     (f) Bankruptcy, Insolvency, etc. (i) Holdings, the Borrower, any of their
respective Subsidiaries or any other Obligor shall (A) commence any case, proceeding or
other action under any existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it or its debts, or (B) apply for,
consent to or acquiesce in the appointment of a receiver, trustee, custodian, conservator or
other similar official for it or for all or any substantial part of its assets, or (C) make
a general assignment for the benefit of its creditors; or (ii) there shall be commenced
against Holdings, the Borrower, any of their respective Subsidiaries or any other Obligor
any case, proceeding or other action of a nature referred to in clause (i) (A) above
or Holdings, the Borrower, any of their respective Subsidiaries or any other Obligor shall
permit or suffer to exist the appointment of a receiver, trustee, custodian, conservator or
other official described in clause (i)(B) above that, in either case, (A) results in
the entry of an order for relief or any such adjudication or appointment or (B) remains
undismissed or undischarged for a period of 60 days or (C) is consented to or acquiesced in
by Holdings, the Borrower, such Subsidiary or such other Obligor; or (iii) there shall be
commenced against Holdings, the Borrower or any of their respective Subsidiaries or any
other Obligor any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any substantial part of
its assets that results in the entry of an order for any such relief that shall not have
been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry
thereof; or (iv) Holdings, the Borrower, any of their respective Subsidiaries or any other
Obligor shall become insolvent or generally fail to pay, or shall admit in writing its
inability or unwillingness generally to pay, its debts as they become due; or (v) Holdings,
the Borrower, any of their respective Subsidiaries or any other Obligor shall take any
action authorizing or in furtherance of, any of the acts described in clause (i),
(ii), (iii) or (iv) above.

     (g) Pension Plans. (i) Any Person shall engage in any “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or
not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of Holdings, the Borrower or any Commonly Controlled Entity,
(iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have
a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of proceedings or appointment
of a trustee is, in the reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan
shall terminate for purposes of Title IV of ERISA, (v) Holdings, the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the Lender is likely to,
incur any liability in connection with a withdrawal from, or the Plan Insolvency or
reorganization (within the meaning of Section 4241 of ERISA) of, a Multiemployer Plan or
(vi) any other event or condition shall occur or exist with respect to a Plan; and in each
case in clauses (i) through (vi) above, such event or condition, together
with all other such events or conditions, if any, could, in the sole judgment of Lender,
reasonably be expected to result in liability in excess of $100,000.

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     (h) Judgments. (i) Any judgment, order or decree for the payment of money
individually or in the aggregate in excess of $100,000 (exclusive of any amounts fully
covered by insurance (less any applicable deductible) and as to which the insurer has
acknowledged its responsibility to cover such judgment or order) shall be rendered against
Holdings, the Borrower or any of their respective Subsidiaries or any other Obligor and such
judgment shall not have been vacated or discharged or stayed or bonded pending appeal within
30 days after the entry thereof or enforcement proceedings shall have been commenced by any
creditor upon such judgment or order or (ii) any judgment, order or decree shall be rendered
against Holdings, the Borrower or any of their respective Subsidiaries or any other Obligor
involving a required divestiture of any material properties, assets or business that are
(x) reasonably estimated to have a fair value in excess of $100,000 or (y) necessary for
Holdings, the Borrower and their respective Subsidiaries to continue in the lines of
business in which they are engaged immediately prior to such judgment, and, in each case,
such judgment shall not have been vacated or discharged or stayed or bonded pending appeal
within 30 days after the entry thereof or enforcement proceedings shall have been commenced
by any creditor upon such judgment or order.

     (i) Impairment of Security, etc. Any of the Security Documents shall cease for
any reason (other than termination in accordance with its terms) to be in full force and
effect, or any Obligor or any Affiliate of any Obligor shall so assert; or any Lien granted
under any of the Security Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or the Guaranty shall cease, for any reason, to be
in full force and effect or any Obligor or any Affiliate of any Obligor shall so assert.

     (j) Failure of Subordination. Unless otherwise waived or consented to by the
Lender in writing, the subordination provisions relating to any Subordinated Debt (the
“Subordination Provisions”) shall fail to be enforceable by the Lender in accordance
with the terms thereof, or the monetary Obligations shall fail to constitute “Senior
Indebtedness” (or similar term) referring to the Obligations; or Holdings, the Borrower or
any of their respective Subsidiaries shall, directly or indirectly, disavow or contest in
any manner (i) the effectiveness, validity or enforceability of any of the Subordination
Provisions, (ii) that the Subordination Provisions exist for the benefit of the Lender or
(iii) that all payments of principal of or premium and interest on the Subordinated Debt, or
realized from the liquidation of any property of any Obligor, shall be subject to any of
such Subordination Provisions.

     (k) Change in Control. Any Change in Control shall occur.

     (l) Termination of Material Contracts. (i) any Material Contract shall
terminate or fail to be renewed for any reason whatever, or (ii) Holdings, the Borrower or
any other Obligor party to any Material Contract shall default in the performance or
observance of any obligation or condition contained in the Material Contract or any
agreement relating thereto or any other event shall occur or condition exist, if the effect
of such default, event or condition is to permit any other Person party to such Material
Contract or agreement to terminate such Material Contract or agreement.

     (m) Material Adverse Change. A Material Adverse Change shall occur as
determined by the Lender.

     9.2 Action if Bankruptcy. If any Event of Default specified in any of
Section 9.1(f)(i) through (iv) occurs with respect to Holdings, the Borrower or any
of their respective Subsidiaries, the Term Loan Commitment (if not theretofore terminated) shall
automatically and

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immediately terminate (and the Term Loan Commitment Amount shall automatically be reduced to
zero) and the outstanding principal amount of the Term Loan (with accrued interest thereon) and all
other Obligations shall automatically be and become immediately due and payable, without notice or
demand to Holdings, the Borrower, any other Obligor or any other Person.

     9.3 Action if Other Event of Default. If any Event of Default (other than an Event of
Default specified in any of Section 9.1(f)(i) through (iv)) shall occur for any
reason, whether voluntary or involuntary, and be continuing, either or both of the following
actions may be taken: (i) the Lender may, by notice to the Borrower, declare the Term Loan
Commitment to be terminated forthwith, whereupon such Term Loan Commitment shall immediately
terminate and the Term Loan Commitment Amount shall reduce to zero; and (ii) the Lender may, by
notice to the Borrower, declare all or any portion of the outstanding principal amount of the Term
Loan and other Obligations (including all accrued interest on the Term Loan) and all other amounts
owing under this Agreement and the other Loan Documents to be due and payable forthwith, whereupon
the full unpaid amount (or such portion) of the Term Loan and other Obligations that shall be so
declared due and payable shall be and become immediately due and payable, without further notice,
demand or presentment. Except as expressly provided above in this SECTION 9, presentment,
demand, protest and all other notices of any kind are hereby expressly waived by the Borrower.

SECTION 10

GUARANTY

     10.1 Guaranty of the Obligations. Subject to the provisions of Section 10.2,
Guarantors jointly and severally hereby irrevocably and unconditionally guaranty to the Lender the
due and punctual payment in full of all Obligations when the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including
amounts that would become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”).

     10.2 Contribution by Guarantors. All Guarantors desire to allocate among themselves
(collectively, the “Contributing Guarantors”), in a fair and equitable manner, their
obligations arising under this Guaranty. Accordingly, in the event any payment or distribution is
made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its
Aggregate Payments exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled
to a contribution from each of the other Contributing Guarantors in an amount sufficient to cause
each Contributing Guarantor’s Aggregate Payments to equal its Fair Share as of such date.
“Fair Share” means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (a) the ratio of (i) the Fair Share Contribution Amount with
respect to such Contributing Guarantor to (ii) the aggregate of the Fair Share Contribution Amounts
with respect to all Contributing Guarantors multiplied by (b) the aggregate amount paid or
distributed on or before such date by all Funding Guarantors under this Guaranty in respect of the
obligations Guaranteed. “Fair Share Contribution Amount” means, with respect to a
Contributing Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Contributing Guarantor under this Guaranty that would not render its
obligations hereunder or thereunder subject to avoidance as a fraudulent transfer or conveyance
under Section 548 of Title 11 of the United States Code or any comparable applicable provisions of
state law; provided, solely for purposes of calculating the “Fair Share Contribution
Amount” with respect to any Contributing Guarantor for purposes of this Section 10.2,
any assets or liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of contribution
hereunder shall not be considered as assets or liabilities of such Contributing Guarantor.
“Aggregate Payments” means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (1) the aggregate amount of all payments and distributions made
on or before such date by such

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Contributing Guarantor in respect of this Guaranty (including, without limitation, in respect
of this Section 10.2), minus (2) the aggregate amount of all payments received on or before
such date by such Contributing Guarantor from the other Contributing Guarantors as contributions
under this Section 10.2. The amounts payable as contributions hereunder shall be
determined as of the date on which the related payment or distribution is made by the applicable
Funding Guarantor. The allocation among Contributing Guarantors of their obligations as set forth
in this Section 10.2 shall not be construed in any way to limit the liability of any
Contributing Guarantor hereunder. Each Guarantor is a third party beneficiary to the contribution
agreement set forth in this Section 10.2.

     10.3 Payment by Guarantors. Subject to Section 10.2, Guarantors hereby
jointly and severally agree, in furtherance of the foregoing and not in limitation of any other
right which the Lender may have at law or in equity against any Guarantor by virtue hereof, that
upon the failure of the Borrower to pay any of the Guaranteed Obligations when and as the same
shall become due, whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon demand
pay, or cause to be paid, in cash, to the Lender an amount equal to the sum of the unpaid principal
amount of all Guaranteed Obligations then due as aforesaid, accrued and unpaid interest on such
Guaranteed Obligations (including interest which, but for the Borrower’s becoming the subject of a
case under the Bankruptcy Code, would have accrued on such Guaranteed Obligations, whether or not a
claim is allowed against the Borrower for such interest in the related bankruptcy case) and all
other Guaranteed Obligations then owed to the Lender as aforesaid.

     10.4 Liability of Guarantors Absolute. Each Guarantor agrees that its obligations
hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without
limiting the generality thereof, each Guarantor agrees as follows:

          (a) the Lender may enforce this Guaranty upon the occurrence and during the continuance of an
Event of Default notwithstanding the existence of any dispute between the Borrower and the Lender
with respect to the existence and continuance of such Event of Default;

          (b) the Lender may enforce this Guaranty upon the occurrence and during the continuance of an
Event of Default notwithstanding the existence of any dispute between the Borrower and the Lender
with respect to the existence and continuance of such Event of Default;

          (c) the obligations of each Guarantor hereunder are independent of the obligations of the
Borrower and the obligations of any other guarantor (including any other Guarantor) of the
obligations of the Borrower, and a separate action or actions may be brought and prosecuted against
such Guarantor whether or not any action is brought against the Borrower or any of such other
guarantors and whether or not the Borrower is joined in any such action or actions;

          (d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in
no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed
Obligations which has not been paid. Without limiting the generality of the foregoing, if the
Lender is awarded a judgment in any suit brought to enforce any Guarantor’s covenant to pay a
portion of the Guaranteed Obligations, such judgment shall not be deemed to release such Guarantor
from its covenant to pay the portion of the Guaranteed Obligations that is not the subject of such
suit, and such judgment shall not, except to the extent satisfied by such Guarantor, limit, affect,
modify or abridge any other Guarantor’s liability hereunder in respect of the Guaranteed
Obligations;

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          (e) the Lender, upon such terms as it deems appropriate, without notice or demand and without
affecting the validity or enforceability hereof or giving rise to any reduction, limitation,
impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time may
(i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time,
place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise, release
or discharge, or accept or refuse any offer of performance with respect to, or substitutions for,
the Guaranteed Obligations or any agreement relating thereto and/or subordinate the payment of the
same to the payment of any other obligations; (iii) request and accept other guaranties of the
Guaranteed Obligations and take and hold security for the payment hereof or the Guaranteed
Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive,
alter, subordinate or modify, with or without consideration, any security for payment of the
Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation
of any Person (including any other Guarantor) with respect to the Guaranteed Obligations;
(v) enforce and apply any security now or hereafter held by or for the benefit of the Lender in
respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that the Lender may have against any such security, in each case
as the Lender in its discretion may determine consistent herewith and any applicable security
agreement, including foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially reasonable, and
even though such action operates to impair or extinguish any right of reimbursement or subrogation
or other right or remedy of any Guarantor against the Borrower or any security for the Guaranteed
Obligations; and (vi) exercise any other rights available to it under the Loan Documents; and

          (f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable
and shall not be subject to any reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any
of the following, whether or not any Guarantor shall have had notice or knowledge of any of them:
(i) any failure or omission to assert or enforce an agreement or election not to assert or enforce,
or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or
enforcement of, any claim or demand or any right, power or remedy (whether arising under the Loan
Documents, at law, in equity or otherwise) with respect to the Guaranteed Obligations or any
agreement relating thereto, or with respect to any other guaranty of or security for the payment of
the Guaranteed Obligations; (ii) any rescission, waiver, amendment or modification of, or any
consent to departure from, any of the terms or provisions (including provisions relating to events
of default) hereof, any of the other Loan Documents, or any agreement or instrument executed
pursuant thereto, or of any other guaranty or security for the Guaranteed Obligations, in each case
whether or not in accordance with the terms hereof or such Loan Document, or any agreement relating
to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement relating
thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the
application of payments received from any source (other than payments received pursuant to the
other Loan Documents or from the proceeds of any security for the Guaranteed Obligations, except to
the extent such security also serves as collateral for indebtedness other than the Guaranteed
Obligations) to the payment of indebtedness other than the Guaranteed Obligations, even though the
Lender might have elected to apply such payment to any part or all of the Guaranteed Obligations;
(v) the Lender’s consent to the change, reorganization or termination of the corporate structure or
existence of Holdings or any of its Subsidiaries and to any corresponding restructuring of the
Guaranteed Obligations; (vi) any failure to perfect or continue perfection of a security interest
in any collateral which secures any of the Guaranteed Obligations; (vii) any defenses, set-offs or
counterclaims which the Borrower may allege or assert against the Lender in respect of the
Guaranteed Obligations, including failure of consideration, breach of warranty, payment, statute of
frauds, statute of limitations, accord and satisfaction and usury; and (viii) any other act or
thing or omission, or delay to do any other act or thing, which may or might in any manner or to
any extent vary the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.

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     10.5 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of the
Lender: (a) any right to require the Lender, as a condition of payment or performance by such
Guarantor, to (i) proceed against the Borrower, any other guarantor (including any other Guarantor)
of the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security
held from the Borrower, any such other guarantor or any other Person, (iii) proceed against or have
resort to any balance of any deposit account or credit on the books of the Lender in favor of the
Borrower or any other Person, or (iv) pursue any other remedy in the power of the Lender
whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of the Borrower or any other Guarantor including any defense based on
or arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the liability of the
Borrower or any other Guarantor from any cause other than payment in full of the Guaranteed
Obligations; (c) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in other respects more burdensome than
that of the principal; (d) any defense based upon the Lender’s errors or omissions in the
administration of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i)
any principles or provisions of law, statutory or otherwise, which are or might be in conflict with
the terms hereof and any legal or equitable discharge of such Guarantor’s obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor’s liability hereunder or
the enforcement hereof, (iii) any rights to set-offs, recoupments and counterclaims, and
(iv) promptness, diligence and any requirement that the Lender protect, secure, perfect or insure
any security interest or lien or any property subject thereto; (f) notices, demands, presentments,
protests, notices of protest, notices of dishonor and notices of any action or inaction, including
acceptance hereof, notices of default hereunder, or any agreement or instrument related thereto,
notices of any renewal, extension or modification of the Guaranteed Obligations or any agreement
related thereto, notices of any extension of credit to the Borrower and notices of any of the
matters referred to in Section 7.4 and any right to consent to any thereof; and (g) any defenses or
benefits that may be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms hereof.

     10.6 Guarantors’ Right of Subrogation, Contribution, etc. Until the Guaranteed
Obligations shall have been indefeasibly paid in full and the Revolving Loan Commitments shall have
terminated and all Letters of Credit shall have expired or been cancelled, each Guarantor hereby
waives and agrees not to assert any claim, right or remedy, direct or indirect, that such Guarantor
now has or may hereafter have against the Borrower or any other Guarantor or any of its assets in
connection with this Guaranty or the performance by such Guarantor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise and including without limitation (a) any right of subrogation,
reimbursement or indemnification that such Guarantor now has or may hereafter have against the
Borrower with respect to the Guaranteed Obligations, (b) any right to enforce, or to participate
in, any claim, right or remedy that the Lender now has or may hereafter have against the Borrower,
and (c) any benefit of, and any right to participate in, any collateral or security now or
hereafter held by the Lender. In addition, until the Guaranteed Obligations shall have been
indefeasibly paid in full in cash, each Guarantor shall withhold exercise of any right of
contribution such Guarantor may have against any other guarantor (including any other Guarantor) of
the Guaranteed Obligations, including, without limitation, any such right of contribution as
contemplated by Section 7.2. Each Guarantor further agrees that, to the extent the waiver or
agreement to withhold the exercise of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent jurisdiction to be void or
voidable for any reason, any rights of subrogation, reimbursement or indemnification such Guarantor
may have against the Borrower or against any collateral or security, and any rights of contribution
such Guarantor may have against any such other guarantor, shall be junior and subordinate to any
rights the Lender may have against the Borrower, to all right, title and interest the Lender may
have in any such collateral or security, and to any right the Lender may have against such other
guarantor. If any amount shall be paid to any Guarantor on account of any

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such subrogation, reimbursement, indemnification or contribution rights at any time when all
Guaranteed Obligations shall not have been finally and indefeasibly paid in full, such amount shall
be held in trust for the Lender and shall forthwith be paid over to the Lender to be credited and
applied against the Guaranteed Obligations, whether matured or unmatured, in accordance with the
terms hereof.

     10.7 Subordination of Other Obligations. Any Indebtedness of the Borrower or any
Guarantor now or hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby
subordinated in right of payment to the Guaranteed Obligations, and any such indebtedness collected
or received by the Obligee Guarantor after an Event of Default has occurred and is continuing shall
be held in trust for the Lender and shall forthwith be paid over to the Lender to be credited and
applied against the Guaranteed Obligations but without affecting, impairing or limiting in any
manner the liability of the Obligee Guarantor under any other provision hereof.

     10.8 Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in
effect until all of the Guaranteed Obligations shall have been paid in full and the Revolving Loan
Commitments shall have terminated and all Letters of Credit shall have expired or been cancelled.
Each Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future
transactions giving rise to any Guaranteed Obligations.

     10.9 Authority of Guarantors or the Borrower. It is not necessary for the Lender to
inquire into the capacity or powers of any Guarantor or the Borrower or the officers, directors or
any agents acting or purporting to act on behalf of any of them.

     10.10 Financial Condition of the Borrower. Any Credit Extension may be made to the
Borrower or continued from time to time without notice to or authorization from any Guarantor
regardless of the financial or other condition of the Borrower at the time of any such grant or
continuation. The Lender shall have no obligation to disclose or discuss with any Guarantor its
assessment, or any Guarantor’s assessment, of the financial condition of the Borrower. Each
Guarantor has adequate means to obtain information from the Borrower on a continuing basis
concerning the financial condition of Holdings and its ability to perform its obligations under the
Loan Documents, and each Guarantor assumes the responsibility for being and keeping informed of the
financial condition of the Borrower and of all circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations. Each Guarantor hereby waives and relinquishes any duty on the part of
the Lender to disclose any matter, fact or thing relating to the business, operations or conditions
of the Borrower now known or hereafter known by the Lender.

     10.11 Bankruptcy, etc.

          (a) So long as any Guaranteed Obligations remain outstanding, no Guarantor shall, without the
prior written consent of the Lender, commence or join with any other Person in commencing any
bankruptcy, reorganization or insolvency case or proceeding of or against the Borrower or any other
Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of
the Borrower or any other Guarantor or by any defense which the Borrower or any other Guarantor may
have by reason of the order, decree or decision of any court or administrative body resulting from
any such proceeding.

          (b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed
Obligations which accrues after the commencement of any case or proceeding referred to in
clause (a) above (or, if interest on any portion of the Guaranteed Obligations ceases to accrue by
operation of law by reason of the commencement of such case or proceeding, such interest as would
have

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accrued on such portion of the Guaranteed Obligations if such case or proceeding had not been
commenced) shall be included in the Guaranteed Obligations because it is the intention of
Guarantors and the Lender that the Guaranteed Obligations which are guaranteed by Guarantors
pursuant hereto should be determined without regard to any rule of law or order which may relieve
the Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any trustee in
bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person
to pay the Lender, or allow the claim of the Lender in respect of, any such interest accruing after
the date on which such case or proceeding is commenced.

          (c) In the event that all or any portion of the Guaranteed Obligations are paid by the
Borrower, the obligations of Guarantors hereunder shall continue and remain in full force and
effect or be reinstated, as the case may be, in the event that all or any part of such payment(s)
are rescinded or recovered directly or indirectly from the Lender as a preference, fraudulent
transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute
Guaranteed Obligations for all purposes hereunder.

SECTION 11

LENDER REGISTRATION RIGHTS

     11.1. Piggyback Registrations.

          (a) Exercise of Rights. Should Holdings propose to register any of its securities
under the Securities Act for sale (other than in connection with the registration of securities
issuable pursuant to an employee stock option, stock purchase or similar plan), Holdings shall give
the Lender notice of such proposed registration (a “Piggyback Registration”) at least 30
days prior to the filing of a registration statement in connection therewith. At the written
request of the Lender delivered to Holdings within 15 days after the receipt of the notice from
Holdings, which request shall state the number of Registrable Securities that the Lender wishes to
sell or distribute publicly in the Piggyback Registration, Holdings shall effect the registration
under the Securities Act of the Registrable Securities requested by the Lender to be included in
the Piggyback Registration (the “Piggyback Securities”) as expeditiously as possible and
use its reasonable commercial efforts to have such registration become and remain effective as
provided in Section 11.2 hereof. The Lender shall be permitted to withdraw all or any part of the
Piggyback Securities from any Piggyback Registration at any time prior to the effective date of
such Piggyback Registration. “Registrable Securities” means (i) any common stock, par
value $0.0001 per share, of Holdings (the “Common Stock”), and (ii) any Common Stock or
other securities issued as (or issuable upon the conversion, exercise or exchange of any option,
warrant, right or other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the securities referred to in clause (i), in each case
held at any time by the Lender.

          (b) Additional Requirements. If a Piggyback Registration is to cover, in whole or in
part, any underwritten distribution, then Holdings shall use its reasonable commercial efforts to
cause all Piggyback Securities to be included in the underwriting on the same terms and conditions
as the securities (other than Piggyback Securities) being sold through the underwriters.

          (c) Cutbacks. If the managing underwriters of any Piggyback Registration advise
Holdings in writing that in their good faith judgment the number of securities to be included in
the Piggyback Registration exceeds the number that can be sold in the offering in light of
marketing factors or because the sale of a greater number would adversely affect the price of the
Registrable Securities to be sold in such Piggyback Registration, then the total number of
securities the underwriters advise can be

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included in such Piggyback Registration shall be allocated first to the securities that the
Lender proposes to issue and sell for its own account. Notwithstanding the foregoing, Lender’s
priority rights are subject and subordinate to rights granted to other security holders prior to
the Closing Date.

     11.2. Registration Covenants of Holdings. If any Piggyback Securities of the Lender
are to be registered pursuant to Section 11.1, Holdings covenants and agrees that it shall use its
reasonable commercial efforts to effect the registration and cooperate in the sale of the Piggyback
Securities to be registered and shall as expeditiously as possible:

          (a) (i) prepare and file with the SEC a registration statement with respect to the Piggyback
Securities (including all amendments and supplements thereto, a “Registration Statement”)
and (ii) use its reasonable commercial efforts to cause the Registration Statement to become
effective;

          (b) prior to the filing described above in paragraph (a), furnish to the Lender no less than 7
Business Days prior to filing such offering copies of the Registration Statement and any amendments
or supplements thereto and any prospectus forming a part thereof, which documents shall be subject
to the review of counsel representing the Lender and use its reasonable commercial efforts to
reflect in each such document when so filed with the SEC such comments as counsel representing the
Lender shall reasonably propose within three (3) Business Days of the delivery of such copies to
the Lender;

          (c) file any “free writing prospectus” (as defined in Rule 405 under the Securities Act) that
is required to be filed with the SEC in accordance with the Securities Act;

          (d) notify the Lender, promptly after receiving notice thereof, of the time when the
Registration Statement becomes effective or when any amendment or supplement or any prospectus
forming a part of the Registration Statement has been filed;

          (e) notify the Lender promptly of any request by the SEC for the amending or supplementing of
the Registration Statement or prospectus or for additional information;

          (f) (i) advise the Lender after Holdings shall receive notice or otherwise obtain knowledge of
the issuance of any order by the SEC suspending the effectiveness of the Registration Statement or
any amendment thereto or of the initiation or threatening of any proceeding for that purpose and
(ii) promptly use its reasonable commercial efforts to prevent the issuance of any stop order or to
obtain its withdrawal promptly if a stop order should be issued;

          (g) (i) prepare and file with the SEC such amendments and supplements to the Registration
Statement and the prospectus forming a part thereof as may be necessary to keep the Registration
Statement effective for a period of time necessary to permit the Lender to dispose of all its
Piggyback Securities and (ii) comply with the provisions of the Securities Act of 1933, as amended,
and the rules and regulations thereunder (the “Securities Act”), with respect to the
disposition of all Piggyback Securities covered by the Registration Statement during such period in
accordance with the intended methods of disposition by the Lender set forth in the Registration
Statement;

          (h) furnish to the Lender such number of copies of the Registration Statement, each amendment
and supplement thereto, the prospectus included in the Registration Statement (including such
preliminary prospectus) and such other documents the Lender may reasonably request in order to
facilitate the disposition of the Piggyback Securities;

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          (i) use its reasonable commercial efforts to register or qualify the Piggyback Securities
under such other securities or blue sky laws of such jurisdictions as determined by the
underwriters after consultation with Holdings and the Lender and do any and all other acts and
things which may be reasonably necessary or advisable to enable the Lender to consummate the
disposition in such jurisdictions of the Piggyback Securities;

          (j) notify the Lender at any time when a prospectus relating to the Piggyback Securities is
required to be delivered under the Securities Act, promptly upon Holdings’ becoming aware that the
prospectus included in such registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances then existing, and, as
promptly as possible (but in no event later than three days), prepare and furnish to the Lender a
reasonable number of copies of an amended or supplemental prospectus as may be necessary so that,
as thereafter delivered to the buyers of the Piggyback Securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the light of the
circumstances then existing;

          (k) cause senior representatives of Holdings to participate in any “road show” or “road shows”
reasonably requested by any underwriter of an underwritten or “best efforts” offering;

          (l) provide a transfer agent and registrar, which may be a single entity, for all the
Piggyback Securities not later than the effective date of the Registration Statement;

          (m) enter into such customary agreements (including an underwriting agreement in customary
form) and take all such other action, if any, as the Lender or the underwriters shall reasonably
request in order to expedite or facilitate the disposition of the Piggyback Securities;

          (n) (i) make available for inspection by the Lender, any underwriter participating in any
distribution pursuant to the Registration Statement and any attorney, accountant or other agent
retained by the Lender or any such underwriter all relevant financial and other records, pertinent
corporate documents and properties of Holdings and (ii) cause Holdings’ officers, directors and
employees to supply all relevant information reasonably requested by the Lender or any such
underwriter, attorney, accountant or agent in connection with the Registration Statement; and

          (o) furnish to the Lender a signed counterpart, addressed to the Lender (or to the
underwriters, in the case of any underwritten offering), of (i) an opinion of counsel for Holdings,
dated the effective date of the Registration Statement, and (ii) a “comfort” letter signed by the
independent public accountants who have certified Holdings’ financial statements included in the
Registration Statement, covering substantially the same matters with respect to the Registration
Statement (and the prospectus included therein) and (in the case of the “comfort” letter), as are
customarily covered (at the time of such registration) in opinions of issuer’s counsel and in
“comfort” letters, respectively, delivered to the underwriters in underwritten public offerings of
securities.

     11.3 Registration Expenses. All fees and expenses incident to the performance of or
compliance with this Sections 11.1 and 11.2 by Holdings shall be borne by Holdings whether or not
any Piggyback Securities are sold pursuant to a Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses of Holdings’ counsel and auditors)
(A) with respect to filings made with the SEC, (B) with respect to filings required to be made with
any trading market on which the Common Stock is then listed for trading, (C) in compliance with
applicable state securities or blue sky laws (including, without limitation, fees and disbursements
of counsel for Holdings in connection with

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blue sky qualifications or exemptions of the Piggyback Securities) and (D) fees and expenses
in connection with any review by the Financial Industry Regulatory Authority of the underwriting
arrangements or other terms of the offering, and all fees and expenses related to any “qualified
independent underwriter,” including any fees and expenses of counsel thereto, (ii) printing
expenses (including, without limitation, expenses of printing certificates for Piggyback
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for Holdings, and (v) fees and expenses of all other Persons retained by Holdings in
connection with the consummation of the transactions contemplated by Sections 11.1 and 11.2. In
addition, Holdings shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by Sections 11.1 and 11.2 (including,
without limitation, all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses incurred in
connection with the listing of the Piggyback Securities on any securities exchange as required
hereunder.

     11.4. Other Registration Rights. From and after the date of this Agreement, Holdings
shall not, without the prior written consent of the Lender, grant to any prospective holder of any
securities of Holdings the right to request Holdings to register any securities of Holdings on a
parity with or superior to the rights granted herein.

     11.5 Indemnification Relating to Registration

          (a) Indemnification by the Issuer. Solely in connection with this Section 11 and
without limiting the scope of Section 12.6, Holdings shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless the Lender, the officers, directors, members, partners,
agents, brokers (including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common Stock), investment
advisors and employees (and any other Persons with a functionally equivalent role of a Person
holding such titles, notwithstanding a lack of such title or any other title) of each of them, each
Person who controls the Lender (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) and the officers, directors, members, shareholders, partners, agents and
employees (and any other Persons with a functionally equivalent role of a Person holding such
titles, notwithstanding a lack of such title or any other title) of each such controlling Person,
to the fullest extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, actual attorneys’ fees) and expenses
(collectively, “Losses”), as incurred, arising out of or relating to (1) any untrue or
alleged untrue statement of a material fact contained in a Registration Statement, any prospectus
or any form of prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or any free writing prospectus or any “issuer information” filed or required to be
filed pursuant to Rule 433(d) under the Securities Act or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any prospectus or supplement thereto and any free writing
prospectus or “issuer information,” in light of the circumstances under which they were made) not
misleading or (2) any violation or alleged violation by Holdings of the Securities Act, the
Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, or any state
securities law, or any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent, that such untrue
statements or omissions are based solely upon information regarding Holdings furnished in writing
to Holdings by the Lender expressly for use therein, or to the extent that such information relates
to the Lender or the Lender’s proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by the Lender expressly for use in a Registration
Statement, such prospectus, in any amendment or supplement thereto or any free writing prospectus
or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the
Securities Act. Holdings shall

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notify the Lender promptly of the institution, threat or assertion of any proceeding
whatsoever arising from or in connection with the transactions contemplated by this Agreement of
which the Issuer is aware.

          (b) Conduct of Indemnification Proceedings. If any proceeding whatsoever shall be
brought or asserted against any Person entitled to indemnity under Section 11.5(a) (an
“Indemnified Party”), such Indemnified Party shall promptly notify Holdings (the
“Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume
the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall not relieve the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement.

          An Indemnified Party shall have the right to employ separate counsel in any such proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such proceeding; or (3) the named parties to any such proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in
writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and the actual fees and
expenses of separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying
Party shall not be liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or conditioned. The
Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from all liability on
claims that are the subject matter of such proceeding.

          All actual fees and expenses of the Indemnified Party (including actual fees and expenses to
the extent incurred in connection with investigating or preparing to defend such proceeding in a
manner not inconsistent with this Section 11.5) shall be paid to the Indemnified Party, as
incurred, within ten Business Days of written notice thereof to the Indemnifying Party.

          (c) Contribution. If the indemnification under Section 11.5(a) is unavailable to an
Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then the
Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in
such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative fault of the
Indemnifying Party and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, the Indemnifying Party or Indemnified Party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action,
statement or omission. The amount paid or payable by a party as a result of any Losses shall be
deemed to include any reasonable attorneys’ or other fees or expenses incurred by such party in
connection with any proceeding to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in this Section 11.5 was available to such party in
accordance with its terms.

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          The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 11.5(c) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in the immediately
preceding paragraph.

          The indemnity and contribution agreements contained in this Section 11.5 are in addition to
any liability that the Indemnifying Parties may have to the Indemnified Parties.

SECTION 12

MISCELLANEOUS

     12.1 Amendments and Waivers. Neither this Agreement, any other Loan Document, nor any
terms hereof or thereof may be amended, supplemented, waived or modified except in accordance with
the provisions of this Section 12.1. The Lender and each Obligor party to the relevant
Loan Document may, from time to time, (a) enter into written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of adding any provisions to
this Agreement or the other Loan Documents or changing in any manner the rights of the Lender or of
the Obligors hereunder or thereunder or (b) waive, on such terms and conditions as the Lender may
specify in such instrument, any of the requirements of this Agreement or the other Loan Documents
or any Default or Event of Default and its consequences.

     Any such waiver and any such amendment, supplement or modification shall be binding upon the
Obligors, the Lender and all future holders of the Term Loan. In the case of any waiver, the
Obligors and the Lender shall be restored to their former position and rights hereunder and under
the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured
and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of
Default, or impair any right consequent thereon.

     12.2 Notices, etc.

     (a) All notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile) and, except as otherwise expressly
provided herein, shall be deemed to have been duly given or made when delivered, or three
Business Days after being deposited in the mail, postage prepaid, or, in the case of
facsimile notice, when the confirmation of transmission thereof is received by the
transmitter, addressed as set forth on Schedule I, or to such other address as may
be hereafter notified by the respective parties hereto.

     (b) [Intentionally Omitted].

     12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, remedy, power or privilege hereunder or under the
other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

     12.4 Survival of Representations and Warranties. All representations and warranties
made hereunder, in the other Loan Documents and in any document, certificate or statement delivered
pursuant hereto or in connection herewith shall survive the execution and delivery of, and the
termination of, this Agreement and the making and repayment of the Term Loan and other extensions
of credit hereunder.

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     12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the
Lender for all the Lender’s out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or modification to, this
Agreement and the other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions contemplated hereby and
thereby, including the actual fees and disbursements of counsel to the Lender and filing and
recording fees and expenses, (b) to pay or reimburse the Lender for all its costs and expenses
incurred in connection with (x) the enforcement or preservation of any rights under this Agreement,
the other Loan Documents and any such other documents and (y) the negotiation of any restructuring
or “work-out”, whether or not consummated, of any Obligations, including, in each case, the fees
and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to the
Lender, (c) to pay, indemnify, and hold the Lender harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp,
excise and other Taxes, if any, that may be payable or determined to be payable in connection with
the execution and delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) pay
or reimburse the Lender for all amounts payable to the Lender pursuant to the indemnity and expense
provisions set forth in the Acquisition Agreement. All amounts due under this Section 12.5
shall be payable not later than 10 days after written demand therefor. Statements of amounts
payable by the Borrower pursuant to this Section 12.5 shall be submitted to the Borrower at
its address, and to the attention of the contact person, set forth below the Borrower’s name in
Schedule I, or to such other contact person or address as may be hereafter designated by
the Borrower in a written notice to the Lender.

     The agreements in this Section 12.5 shall survive the payment in full of all
Obligations and the termination of the Term Loan Commitment.

     12.6 Indemnification . In consideration of the execution and delivery of this
Agreement by the Lender, the Borrower hereby indemnifies, exonerates and holds the Lender and each
of its Affiliates, officers, directors, employees, representatives and agents (each, an
“Indemnitee”) free and harmless from and against any and all actions, causes of action,
suits, claims, losses, costs, liabilities and damages, and all expenses incurred in connection with
any of the foregoing (irrespective of whether any such Indemnified Party is a party to the action
for which indemnification hereunder is sought), including actual attorneys’ fees and disbursements,
whether incurred in connection with actions between or among the parties hereto or the parties
hereto and third parties, and agrees to reimburse each Indemnitee upon demand for all legal and
other expenses reasonably incurred by it in connection with investigating, preparing to defend or
defending, or providing evidence in or preparing to serve or serving as a witness with respect to,
any claim, litigation, investigation or proceeding relating to any of the foregoing (collectively,
the “Indemnified Liabilities”), incurred by the Indemnitees or any of them as a result of,
or arising out of, or relating to

     (i) any transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Credit Extension, including all Indemnified Liabilities
arising in connection with the Transaction;

     (ii) execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any agreements executed and delivered in connection
with the Transaction (including any action brought by or on behalf of the Borrower as the
result of any determination pursuant to SECTION 5 not to fund any Credit Extension,
provided that any such action is resolved in favor of such Indemnified Party);

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     (iii) any investigation, litigation or proceeding related to any acquisition or
proposed acquisition by any Obligor or any Subsidiary thereof of all or any portion of the
Equity Interests or assets of any Person, whether or not an Indemnified Party is party
thereto;

     (iv) any investigation, litigation or proceeding related to any environmental cleanup,
audit, noncompliance with or liability under any Environmental Law or other matter relating
to the protection of the environment applicable to the operations of Holdings, the Borrower
or any of their respective Subsidiaries or any of the Properties;

     (v) the presence on or under, or the Releases from, any real property owned or operated
by any Obligor or any Subsidiary thereof of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control of, such Obligor
or Subsidiary; or

     (vi) the Lender’s Environmental Liability (the indemnification herein shall survive
repayment of the Obligations and any transfer of the property of any Obligor or its
Subsidiaries by foreclosure or by a deed in lieu of foreclosure for the Lender’s
Environmental Liability, regardless of whether caused by, or within the control of, such
Obligor or such Subsidiary);

except to the extent that Indemnified Liabilities arising for the account of a particular
Indemnitee are found by a final, non-appealable judgment of a court of competent jurisdiction to
have resulted primarily by reason of such Indemnitee’s gross negligence or willful misconduct.
Without limiting the foregoing, and to the extent permitted by applicable law, each of Holdings and
the Borrower agrees not to assert and to cause its Subsidiaries not to assert, and hereby waives
and agrees to cause its Subsidiaries to so waive, all rights for contribution or any other rights
of recovery with respect to all claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature, under or related to Environmental Laws,
that any of them might have by statute or otherwise against any Indemnitee. It is expressly
understood and agreed that to the extent that any Indemnitee is strictly liable under any
Environmental Laws, each Obligor’s obligation to such Indemnified Party under this indemnity shall
likewise be without regard to fault on the part of any Obligor with respect to the violation or
condition that results in an Environmental Liability of an Indemnitee. If and to the extent that
the foregoing undertaking may be unenforceable for any reason, each Obligor agrees to make the
maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is
permissible under applicable law.

     The agreements in this Section 12.6 shall survive the payment in full of all
Obligations and the termination of the Term Loan Commitment.

     12.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the Borrower, the Guarantors, the Lender, all future holders of the Term Loan and their
respective successors and assigns; provided that neither the Borrower nor any other Obligor
may assign or transfer any of its rights or obligations under this Agreement without the prior
written consent of the Lender, in Lender’s sole discretion. Lender may, at any time, without the
consent of or notice to the Borrower or any other Obligor, sell, transfer, negotiate, or grant
participations in all or any part of, or any interest in, the Term Loan and all or any part of
Lender’s obligations, rights, and benefits under this Agreement and the other Loan Documents.
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person
(other than the parties hereto, their respective successors and assigns permitted hereby) any legal
or equitable right, remedy or claim under or by reason of this Agreement.

69

 

     12.8 Set-off. The Lender shall, upon the occurrence and during the continuance of any
Default described in Section 9.1(f) or upon the occurrence and during the continuance of
any other Event of Default, have the right to appropriate and apply to the payment of the
Obligations owing to it (whether or not then due), and the Borrower hereby grants to the Lender (as
security for such Obligations) a continuing security interest in, any and all balances, credits,
deposits, accounts or moneys of the Borrower from time to time maintained with, or any amount
otherwise owed to the Borrower by, the Lender or any of Lender’s Affiliates. The Lender agrees
promptly to notify the Borrower after any such setoff and application made by the Lender;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of the Lender under this Section are in
addition to other rights and remedies (including other rights of setoff under applicable law or
otherwise) that the Lender may have.

     12.9 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument. Delivery of an executed signature page
of this Agreement by facsimile or electronic transmission shall be effective as delivery of a
manually executed counterpart hereof.

     12.10 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     12.11 Other Transactions. Nothing contained herein shall preclude the Lender from
engaging in any transaction, in addition to those contemplated by the Loan Documents, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate is not restricted hereby
from engaging with any other Person.

     12.12 Integration. This Agreement and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof and thereof and
supersede any prior agreements, written or oral, with respect thereto.

     12.13 GOVERNING LAW. THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT EXCEPT AS OTHERWISE
EXPRESSLY SET FORTH IN A LOAN DOCUMENT) AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL, PURSUANT TO N.Y. GOL §5-1401, BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK.

     12.14 Submission To Jurisdiction; Waivers. (a) EACH OBLIGOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY CONSENTS AND SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT SITTING IN NEW YORK CITY, AND ANY
APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING BASED ON, OR ARISING OUT OF, UNDER,
OR IN CONNECTION WITH, ANY LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR ANY OBLIGOR IN CONNECTION HEREWITH OR
THEREWITH; PROVIDED, HOWEVER, THAT ANY ACTION OR PROCEEDING SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE LENDER’S OPTION, IN THE COURTS

70

 

OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND; PROVIDED,
FURTHER, THAT NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS
AGAINST ANY OBLIGOR IN THE COURTS OF ANY OTHER JURISDICTION.

     (b) EACH OBLIGOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED OR CERTIFIED
MAIL, OR IF THE FOREGOING ARE UNAVAILABLE, REGULAR MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF NEW YORK AT THE ADDRESS FOR NOTICES SPECIFIED IN SECTION
10.2. EACH OBLIGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION THAT IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT REFERRED TO IN CLAUSE (a) ABOVE AND ANY CLAIM THAT
ANY SUCH ACTION OR PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND IRREVOCABLY CONSENTS
TO THE LAYING OF VENUE IN ANY SUCH COURT. TO THE EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS WHETHER THROUGH
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, EACH OBLIGOR HEREBY IRREVOCABLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THE LOAN DOCUMENTS. EACH
OBLIGOR HEREBY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT THAT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS SECTION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.

     12.15. Acknowledgments. The Borrower hereby acknowledges that:

     (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;

     (b) the Lender has no fiduciary relationship with or duty to the Borrower arising out
of or in connection with this Agreement or any of the other Loan Documents, and the
relationship between the Lender, on one hand, and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and

     (c) no joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby between the Borrower and the
Lender.

     12.16 Releases of Guarantees and Liens. Upon the occurrence of the Termination Date,
the Collateral shall be released from the Liens created by the Security Documents, and the Security
Documents and all obligations (other than those expressly stated to survive such termination) of
the Lender and each Obligor under the Security Documents shall terminate, all without delivery of
any instrument or performance of any act by any Person.

     12.17 WAIVER OF JURY TRIAL. THE LENDER AND EACH OBLIGOR HEREBY KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHTS THEY MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
EACH LOAN DOCUMENT, OR ANY COURSE OF

71

 

CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER OR
ANY OBLIGOR IN CONNECTION THEREWITH. EACH OBLIGOR ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER
ENTERING INTO THE LOAN DOCUMENTS.

72

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	ICELAND ACQUISITION SUBSIDIARY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pat LaVecchia	 	 
	 
	 	 	 	 

	 	 
	 	 	Name: Pat LaVecchia	 	 
	 	 	Title: Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	HAPC, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pat LaVecchia	 	 
	 

	 	 	 	 

	 	 
	 	 	Name: Pat LaVecchia	 	 
	 	 	Title: Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	I-FLOW CORPORATION, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Donald M. Earhart	 	 
	 

	 	 	 	 

	 	 
	 	 	Name: Donald M. Earhart	 	 
	 	 	Title: Chairman, President & Chief Executive Officer	 	 

73exv10w2

EXHIBIT 10.2

EXECUTION COPY

      

SECURITY AGREEMENT

dated as of

October 25, 2007,

among

ICELAND ACQUISITION SUBSIDIARY, INC.,

and

HAPC, INC.,

as Grantors

and

I-FLOW CORPORATION,

as Secured Party

      

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	1.1 Credit Agreement Defined Terms; New York UCC Definitions
	 	 	1	 
	 
	 	 	 	 
	1.2 Other Defined Terms
	 	 	1	 
	 
	 	 	 	 
	1.3 Rules of Interpretation
	 	 	5	 
	 
	 	 	 	 
	ARTICLE II SECURITY INTEREST
	 	 	5	 
	 
	 	 	 	 
	2.1 Grant of Security Interest
	 	 	5	 
	 
	 	 	 	 
	2.2 Security for Secured Obligations
	 	 	6	 
	 
	 	 	 	 
	2.3 Transfer of Collateral
	 	 	7	 
	 
	 	 	 	 
	2.4 Bailees
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III Representations and Warranties
	 	 	7	 
	 
	 	 	 	 
	3.1 Annex IV and Representations In Other Loan Documents
	 	 	7	 
	 
	 	 	 	 
	3.2 Title; No Other Liens
	 	 	7	 
	 
	 	 	 	 
	3.3 Perfected First Priority Liens
	 	 	7	 
	 
	 	 	 	 
	3.4 Jurisdiction of Organization; Chief Executive Office
	 	 	8	 
	 
	 	 	 	 
	3.5 Inventory and Equipment
	 	 	8	 
	 
	 	 	 	 
	3.6 Farm Products
	 	 	8	 
	 
	 	 	 	 
	3.7 Investment Property
	 	 	8	 
	 
	 	 	 	 
	3.8 Receivables
	 	 	8	 
	 
	 	 	 	 
	3.9 Intellectual Property
	 	 	8	 
	 
	 	 	 	 
	3.10 Deposit Accounts and Securities Accounts
	 	 	9	 
	 
	 	 	 	 
	3.11 Benefit to each Subsidiary Grantor
	 	 	9	 
	 
	 	 	 	 
	3.12 Consents
	 	 	9	 
	 
	 	 	 	 
	ARTICLE IV COVENANTS
	 	 	10	 
	 
	 	 	 	 
	4.1 Covenants in Credit Agreement
	 	 	10	 

i

 

Table of Contents

(Continued)

	 	 	 	 	 
	 	 	Page
	4.2 Delivery of Instruments, Certificated Securities and Chattel Paper
	 	 	10	 
	 
	 	 	 	 
	4.3 Maintenance of Insurance
	 	 	10	 
	 
	 	 	 	 
	4.4 Payment of Obligations
	 	 	10	 
	 
	 	 	 	 
	4.5 Maintenance of Perfected Security Interest; Further Documentation
	 	 	11	 
	 
	 	 	 	 
	4.6 Changes in Locations, Name, etc
	 	 	11	 
	 
	 	 	 	 
	4.7 Notices
	 	 	11	 
	 
	 	 	 	 
	4.8 Investment Property
	 	 	12	 
	 
	 	 	 	 
	4.9 Receivables
	 	 	13	 
	 
	 	 	 	 
	4.10 Intellectual Property
	 	 	13	 
	 
	 	 	 	 
	4.11 Deposit Accounts
	 	 	14	 
	 
	 	 	 	 
	4.12 New Accounts
	 	 	14	 
	 
	 	 	 	 
	4.13 Commercial Tort Claims
	 	 	14	 
	 
	 	 	 	 
	ARTICLE V REMEDIAL PROVISIONS
	 	 	15	 
	 
	 	 	 	 
	5.1 Certain Matters Relating to Receivables
	 	 	15	 
	 
	 	 	 	 
	5.2 Communications with Obligors; Grantors Remain Liable
	 	 	15	 
	 
	 	 	 	 
	5.3 Investment Property
	 	 	16	 
	 
	 	 	 	 
	5.4 Proceeds To Be Turned Over to Secured Party
	 	 	17	 
	 
	 	 	 	 
	5.5 Application of Proceeds
	 	 	17	 
	 
	 	 	 	 
	5.6 Code and Other Remedies
	 	 	17	 
	 
	 	 	 	 
	5.7 Private Sale
	 	 	18	 
	 
	 	 	 	 
	5.8 Deficiency
	 	 	19	 
	 
	 	 	 	 
	5.9 Non-Judicial Enforcement
	 	 	19	 
	 
	 	 	 	 
	ARTICLE VI THE SECURED PARTY
	 	 	20	 
	 
	 	 	 	 
	6.1 Secured Party’s Appointment as Attorney-in-Fact, etc
	 	 	20	 

ii

 

Table of Contents

(Continued)

	 	 	 	 	 
	 	 	Page
	6.2 [Intentionally Omitted]
	 	 	21	 
	 
	 	 	 	 
	6.3 Duty of the Secured Party
	 	 	21	 
	 
	 	 	 	 
	6.4 Execution of Financing Statements
	 	 	22	 
	 
	 	 	 	 
	ARTICLE VII SUBORDINATION OF INDEBTEDNESS
	 	 	22	 
	 
	 	 	 	 
	7.1 Subordination of All Subsidiary Grantor Claims
	 	 	22	 
	 
	 	 	 	 
	7.2 Claims in Bankruptcy
	 	 	22	 
	 
	 	 	 	 
	7.3 Payments Held in Trust
	 	 	22	 
	 
	 	 	 	 
	7.4 Liens Subordinate
	 	 	23	 
	 
	 	 	 	 
	7.5 Notation of Records
	 	 	23	 
	 
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS
	 	 	23	 
	 
	 	 	 	 
	8.1 Amendments in Writing
	 	 	23	 
	 
	 	 	 	 
	8.2 Notices
	 	 	23	 
	 
	 	 	 	 
	8.3 No Waiver by Course of Conduct; Cumulative Remedies
	 	 	23	 
	 
	 	 	 	 
	8.4 Enforcement Expenses; Indemnification
	 	 	23	 
	 
	 	 	 	 
	8.5 Successors and Assigns
	 	 	24	 
	 
	 	 	 	 
	8.6 Set-Off
	 	 	24	 
	 
	 	 	 	 
	8.7 Counterparts
	 	 	24	 
	 
	 	 	 	 
	8.8 Severability
	 	 	24	 
	 
	 	 	 	 
	8.9 Section Headings
	 	 	24	 
	 
	 	 	 	 
	8.10 Integration
	 	 	24	 
	 
	 	 	 	 
	8.11 GOVERNING LAW
	 	 	25	 
	 
	 	 	 	 
	8.12 Submission To Jurisdiction; Waivers
	 	 	25	 
	 
	 	 	 	 
	8.13 Acknowledgements
	 	 	25	 
	 
	 	 	 	 
	8.14 WAIVER OF JURY TRIAL
	 	 	25	 

iii

 

Table of Contents

(Continued)

	 	 	 	 	 
	 	 	Page
	8.15 Additional Grantors
	 	 	26	 
	 
	 	 	 	 
	8.16 Releases
	 	 	26	 

iv

 

SCHEDULES

	 	 	 
	Schedule I

	 	Notice Addresses
	 
	 	 
	ANNEXES
	 	 
	 
	 	 
	Annex I

	 	Form of Assumption Agreement for Additional Grantors
	Annex II

	 	Form of Deposit Account Control Agreement
	Annex III

	 	Form of Securities Account Control Agreement
	Annex IV

	 	Certain Collateral Matters

 

 

SECURITY AGREEMENT

     THIS SECURITY AGREEMENT (this “Agreement”), dated as of October 25, 2007, is made by
ICELAND ACQUISITION SUBSIDIARY, INC., a Delaware corporation (the “Borrower”), HAPC, INC.,
a Delaware corporation (“Holdings”), and each other Person that may become an additional
Grantor hereunder as provided in Section 8.15 hereof (any such Person, a “Subsidiary
Grantor”; the Subsidiary Grantors, the Borrower and Holdings are collectively referred to
herein as the “Grantors”), in favor of I-FLOW CORPORATION, a Delaware corporation, as
secured party (together with its successors and assigns, the “Secured Party”) .

W I T N E S S E T H:

     WHEREAS, pursuant to the Credit and Guaranty Agreement dated as of October 25, 2007 (as such
Credit and Guaranty Agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”) among the Borrower, Holdings, the
Secured Party and the other parties thereto, the Secured Party has agreed to make Loan to the
Borrower;

     WHEREAS, the Borrower and the other Grantors are engaged in related businesses, and each
Grantor will derive substantial direct and indirect benefit from the making of the Loan to the
Borrower under the Credit Agreement;

     WHEREAS, it is a condition precedent to the obligations of the Secured Party to make the Loan
under the Credit Agreement that the Borrower and each other Grantor shall have executed and
delivered this Agreement to the Secured Party;

     NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, to
induce the Lender to enter into the Credit Agreement and make the Loan thereunder and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1.

DEFINITIONS

     1.1 Credit Agreement Defined Terms; New York UCC Definitions. All capitalized terms
used in this Agreement and not otherwise defined herein shall have the meanings assigned to them in
the Credit Agreement. The following terms are used herein as defined in the New York UCC:
Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Deposit Account, Documents,
Equipment, Farm Products, Goods, Instruments, Inventory, Letter of Credit Rights, Securities
Account, Securities Intermediary and Supporting Obligations.

     1.2 Other Defined Terms. For purposes of this Agreement, the following terms shall
have the respective meanings given to them below.

     “Account Collateral” each Grantor’s right, title and interest, whether now existing or
hereafter acquired or arising, in, to and under, each Deposit Account and Securities Account
(including any successor accounts to any such accounts) and all amounts, investments and any other
property (including,
but not limited to, Checks, securities, financial assets, investment property, security
entitlements and instruments) at any time deposited in or credited to any such account and all
security entitlements with respect thereto, including all income or gain earned thereon and any
Proceeds thereof.

 

 

     “Agreement” means this Security Agreement, as the same may be amended, supplemented or
otherwise modified from time to time.

     “Books and Records” means all books, records and other written, electronic or other
documentation in whatever form maintained now or hereafter by or for the Borrower in connection
with, and relating to, the ownership of, or evidencing or containing information relating to, the
Collateral.

     “Checks” means checks and other instruments and other payment instructions deposited
into any Deposit Account or Securities Account.

     “Collateral” has the meaning set forth in Section 2.1.

     “Collateral Account” means any collateral account established by the Secured Party as
provided in Section 5.1 or 5.4.

     “Computer Hardware and Software” means all rights (including rights as licensee and
lessee) with respect to (i) computer and other electronic data processing hardware, including all
integrated computer systems, central processing units, memory units, display terminals, printers,
computer elements, card readers, tape drives, hard and soft disc drives, cables, electrical supply
hardware, generators, power equalizers, accessories, peripheral devices and other related computer
hardware; (ii) all software and all software programs designed for use on the computers and
electronic data processing hardware described in clause (i) above, including all operating system
software, utilities and application programs in any form (service code and object code in magnetic
tape, disc or hard copy format or any other listings whatsoever); (iii) any firmware associated
with any of the foregoing; (iv) any documentation for hardware, software and firmware described in
clauses (i), (ii) and (iii) above, including flow charts, logic diagrams, manuals, specifications,
training materials, charts and pseudo codes; and all rights with respect thereto, including any and
all licenses, options, warrants, service contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal rights and indemnifications, and any
substitutions, replacements, additions or model conversions of any of the foregoing.

     “Contracts” means all contracts, agreements, instruments and credit agreements in any
form (including, without limitation, any interest rate protection agreements, Hedge Agreements,
licensing agreements and any partnership agreements, joint venture agreements and limited liability
company agreements), and portions thereof, to which any Grantor is a party or under which any
Grantor or any property of any Grantor is subject, as the same may from time to time be amended,
supplemented, waived or otherwise modified, including, without limitation, (i) all rights of any
Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii)
all rights of any Grantor to damages arising thereunder, (iii) all rights of any Grantor to perform
and to exercise all remedies thereunder, (iv) any and all rights to receive and compel performance
under any or all Contracts and (v) any and all other rights, interests and claims now existing or
in the future arising in connection with any or all Contracts.

     “Copyright Licenses” means any written agreement naming any Grantor as licensor or
licensee, granting any right under any Copyright, including, without limitation, the grant of
rights to manufacture, distribute, exploit and sell materials derived from any Copyright.

     “Copyrights” means (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or unregistered and whether
published or
unpublished, all registrations and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings and applications in the
United States Copyright Office, and (ii) the right to obtain all renewals thereof.

2

 

     “Credit Agreement” has the meaning set forth in the recitals hereto.

     “Deposit Account Control Agreement” means a Deposit Account Control Agreement, in
substantially the form set forth on Annex II attached hereto or otherwise reasonably
acceptable to the Secured Party, by and among a Grantor, the Secured Party and a depositary
institution.

     “Domain Names” means all Internet domain names and associated URL addresses in or to
which any Grantor now or hereafter has any right, title or interest.

     “Filings” means the filing or recording of (i) the financing statements in the filing
offices listed in Annex IV, and (ii) any filings after the date hereof in any other jurisdiction
as may be necessary under any requirement of law.

     “General Intangibles” means all “general intangibles” as such term is defined in
Section 9-102(a)(42) of the Uniform Commercial Code in effect in the State of New York on the date
hereof and, in any event, including, without limitation, with respect to any Grantor, all
contracts, agreements, instruments and Credit Agreements in any form, and portions thereof, to
which such Grantor is a party or under which such Grantor has any right, title or interest or to
which such Grantor or any property of such Grantor is subject, as the same may from time to time be
amended, supplemented or otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in connection therewith, (ii)
all rights of such Grantor to damages arising thereunder and (iii) all rights of such Grantor to
perform and to exercise all remedies thereunder.

     “Intellectual Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United States, multinational or
foreign laws or otherwise, including, without limitation, the Copyrights, the Copyright Licenses,
the Domain Names, the Patents, the Patent Licenses, the Trade Secrets, the Trade Secret Licenses,
the Trademarks and the Trademark Licenses and all rights to sue at law or equity or otherwise
recover for any and all past, present and future infringements, misappropriations, dilutions or
other impairments thereof and all income, royalties, damages and other payments now and hereafter
due and/or payable with respect thereto (including, without limitation, payments under all licenses
entered into in connection therewith, and damages and payments for past, present or future
infringements, misappropriations, dilutions or other impairments thereof).

     “Intercompany Note” means any promissory note evidencing loans made by any Grantor to
the Borrower or any of its Subsidiaries.

     “Investment Property” means the collective reference to (a) all “investment property”
as such term is defined in Section 9-102(a)(49) of the New York UCC and (b) whether or not
constituting “investment property” as so defined, all Pledged Notes and all Pledged Equity
Interests.

     “Issuers” means the collective reference to each issuer of any Investment Property.

     “New York UCC” means the Uniform Commercial Code as from time to time in effect in the
State of New York.

     “Patent License” means any agreements, whether written or oral, providing for the
grant by or to any Grantor of any right to manufacture, have manufactured, use or sell or import
any invention covered in whole or in part by a Patent.

3

 

     “Patents” means (i) all letters patent of the United States, any other country or any
political subdivision thereof, all reissues and extensions thereof and all goodwill associated
therewith, (ii) all applications for letters patent of the United States or any other country and
all provisionals, divisions, continuations and continuations-in-part thereof, and (iii) all rights
to obtain any reissues or extensions of the foregoing.

     “Permitted Liens” means Liens permitted under Section 8.3 of the Credit Agreement.

     “Pledged Equity Interests” means all Equity Interests of InfuSystem, Inc., a
California corporation, together with any other shares, stock certificates, options, interests or
rights of any nature whatsoever in respect of the Equity Interests of any Person that may be issued
or granted to, or held by, any Grantor while this Agreement is in effect.

     “Pledged Notes” means all Intercompany Notes at any time issued to any Grantor and all
other promissory notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course of business).

     “Pledged Securities” means the Pledged Notes and the Pledged Equity Interests.

     “Proceeds” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the
New York UCC and, in any event, shall include, without limitation, all dividends or other income
from the Investment Property, collections thereon or distributions or payments with respect
thereto.

     “Receivable” means any right to payment for goods sold or leased or for services
rendered, whether or not such right is evidenced by an Instrument or Chattel Paper and whether or
not it has been earned by performance (including, without limitation, any Account).

     “Release Date” means (a) with respect to the Borrower, the Termination Date, and (b)
with respect to any Subsidiary Grantor or other Grantor (other than the Borrower), the earlier to
occur of (i) the date upon which all Obligations and all other Secured Obligations shall have been
paid in full in cash and all Term Loan Commitments shall have been permanently terminated and (ii)
the date upon which all the capital stock or substantially all the assets of such Subsidiary
Grantor shall have been sold or otherwise disposed of in accordance with the terms of the Credit
Agreement.

     “Secured Obligations” means all Obligations and all other obligations and liabilities
of every nature of the Borrower, Holdings and the Subsidiary Grantors or any other Obligor
(including, without limitation, the obligations under the Guaranty) now or hereafter existing under
or arising out of or in connection with the Credit Agreement or the other Loan Documents, in each
case together with all extensions or renewals thereof, whether for principal, interest (including,
without limitation, interest that, but for the filing of a petition in bankruptcy with respect to
the Borrower or any other Grantor, would accrue at the applicable rate provided for in the Credit
Agreement on such obligations, whether or not a claim for post-filing or post-completion interest
is allowed against the Borrower or such Grantor in the related bankruptcy, insolvency or similar
proceeding), fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with
others, and whether or not from time to time decreased or extinguished and later increased, created
or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent
all or any part of such payment is avoided or recovered directly or indirectly from the Secured
Party as a preference, fraudulent transfer or otherwise, and all obligations of every nature
of the Grantors now or hereafter existing under this Agreement.

4

 

     “Securities Account Control Agreement” means a Securities Account Control Agreement,
in substantially the form set forth on Annex III attached hereto or otherwise reasonably
acceptable to the Secured Party, by and among a Grantor, the Secured Party and a Securities
Intermediary.

     “Securities Act” means the Securities Act of 1933, as amended.

     “Subsidiary Grantor Claims” means indebtedness owing to a Grantor by another Grantor.

     “Trade Secret Licenses” means any agreement, whether written or oral, providing for
the grant by or to any Grantor of any right to use any Trade Secret.

     “Trade Secrets” means all trade secrets, including, without limitation, know how,
processes, formulae, compositions, designs, and confidential business and technical information,
and all rights of any kind whatsoever accruing thereunder or pertaining thereto.

     “Trademark License” means any agreement, whether written or oral, providing for the
grant by or to any Grantor of any right to use any Trademark, including.

     “Trademarks” means (i) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, domain names, logos and
other source or business identifiers, and all goodwill associated therewith, now existing or
hereafter adopted or acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any State thereof or any other country or any political
subdivision thereof, or otherwise, and all common-law rights related thereto, and (ii) the right to
obtain all renewals thereof.

     1.3 Rules of Interpretation. The provisions of this Agreement shall be construed and
interpreted in accordance with the rules of construction set forth in Sections 1.2 and
1.3 of the Credit Agreement. As used herein, and any certificate or other document made or
delivered pursuant hereto:

     (a) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement, and clause, subsection, Section, Schedule, Annex, Exhibit and analogous references are
to this Agreement unless otherwise specified;

     (b) the expressions “payment in full”, “paid in full” and any other similar terms or phrases
when used herein with respect to the Secured Obligations shall mean the payment in full, in
immediately available funds, of all the Secured Obligations; and

     (c) where the context requires, terms relating to the Collateral or any part thereof, when
used in relation to a Grantor, shall refer to such Grantor’s Collateral or the relevant part
thereof.

SECTION 2.

SECURITY INTEREST

     2.1 Grant of Security Interest. Each Grantor hereby pledges, assigns and transfers to
the Secured Party, and hereby grants to the Secured Party a security interest in, all of the
following property now owned or at any time hereafter acquired by such Grantor or in which such
Grantor now has or at any time in the future may acquire any right, title or interest
(collectively, the “Collateral”):

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     (a) all Accounts;

     (b) all Account Collateral;

     (c) all Books and Records;

     (d) all Chattel Paper;

     (e) all Commercial Tort Claims;

     (f) all Computer Hardware and Software;

     (g) all Contracts;

     (h) all Documents;

     (i) all Equipment;

     (j) all General Intangibles;

     (k) all Goods;

     (l) all Instruments;

     (m) all Intellectual Property;

     (n) all Inventory;

     (o) all Investment Property;

     (p) all Letter of Credit Rights;

     (q) all plant fixtures, business fixtures and other fixtures and storage and office
facilities, and all accessions thereto and products thereof;

     (r) all other personal property to the extent not otherwise described above; and

     (s) to the extent not otherwise included, all Proceeds, Supporting Obligations and products of
any and all of the foregoing and all collateral security and guarantees given by any Person with
respect to any of the foregoing.

     Each item of Collateral listed in this Section 2.1 that is defined in Articles 8 or 9
of the New York UCC and that is not otherwise defined herein shall have the meaning set forth in
the New York UCC, it being the intention of the Grantors that the description of the Collateral set
forth above be construed to include the broadest possible range of assets.

     2.2 Security for Secured Obligations. This Agreement secures, and the Collateral
assigned by each Grantor is collateral security for, the prompt payment or performance in full when
due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including without limitation the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code), of all Secured
Obligations of such Grantor.

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     2.3 Transfer of Collateral. All certificates and instruments representing or
evidencing the Pledged Securities shall be delivered to and held pursuant hereto by the Secured
Party or a Person designated by the Secured Party and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or assignment in blank,
and accompanied by any required transfer tax stamps to effect the pledge of the Pledged Securities
to the Secured Party. Notwithstanding the preceding sentence, at the Secured Party’s discretion,
all such Pledged Securities must be delivered or transferred in such manner as to permit the
Secured Party to be a “protected purchaser” to the extent of its security interest as provided in
Section 8-303 of the New York UCC (if the Secured Party otherwise qualifies as a protected
purchaser). During the continuance of an Event of Default, the Secured Party shall have the right,
at any time in its discretion and without notice, to transfer to or to register in the name of the
Secured Party or any of its nominees any or all of the Pledged Securities. In addition, during the
continuance of an Event of Default, the Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Securities for certificates or
instruments of smaller or larger denominations.

     2.4 Bailees. Any Person (other than the Secured Party) at any time and from time to
time holding all or any portion of the Collateral shall be deemed to, and shall, hold the
Collateral as pledge holder and bailee and agent for perfection for, and for the benefit of, the
Secured Party. At any time and from time to time during the continuance of an Event of Default,
the Secured Party may give notice to any such Person holding all or any portion of the Collateral
that such Person is holding the Collateral as the bailee of and agent for perfection for, and as
pledge holder for, and for the benefit of, the Secured Party, and request such Person’s written
acknowledgment thereof. Without limiting the generality of the foregoing, during the continuance
of an Event of Default, each Grantor will join with the Secured Party upon the Secured Party’s
request in notifying any Person who has possession of any Collateral of the Secured Party’s
security interest therein and requesting an acknowledgment from such Person that it is holding the
Collateral for the benefit of the Secured Party.

SECTION 3.

Representations and Warranties.

     To induce the Secured Party to enter into the Credit Agreement and to make Loans thereunder,
each Grantor hereby represents and warrants to the Secured Party that:

     3.1 Annex IV and Representations in Other Loan Documents. The statements and
information set forth in Annex IV hereto and the representations and warranties of such Grantor set
forth in the Credit Agreement and the other Loan Documents to which such Grantor is a party, each
of which is hereby incorporated herein by reference, are true and correct, and the Secured Party
shall be entitled to rely on each of them as if they were fully set forth herein.

     3.2 Title; No Other Liens. Except for Permitted Liens, such Grantor owns each item of
the Collateral free and clear of any and all Liens or claims of others. No financing statement or
other public notice with respect to all or any part of the Collateral is on file or of record in
any public office, except (i) such as have been filed in favor of the Secured Party pursuant to
this Agreement and (ii) as are permitted by the Credit Agreement.

     3.3 Perfected First Priority Liens. Upon completion of the Filings (or, in the case
of (x) all Deposit Accounts, Securities Accounts and Collateral Accounts, the obtaining and
maintenance of “control” (as described in the Code), (y) in the case of Commercial Tort Claims, the
taking of the actions required by Section 4.13 herein and (z) in the case of
Letter-of-Credit Rights, the taking of the actions required by Section 4.5(c) hereof), the
security interests granted pursuant to this Agreement (1) will

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constitute valid perfected security
interests in all of the Collateral in which a security interest may be perfected by Filings, and in
all Collateral constituting Deposit Accounts, Securities Accounts and Collateral Accounts, all
commercial tort claims and Letter-of-Credit Rights, as applicable, in favor of the Secured Party as
collateral security for such Grantor’s Secured Obligations, enforceable in accordance with the
terms hereof against all creditors of such Grantor and any Persons purporting to purchase any
Collateral from such Grantor and (2) are prior to all other Liens on the Collateral in existence on
the date hereof, and the Collateral will be subject to no Liens other than Permitted Liens.

     3.4 Jurisdiction of Organization; Chief Executive Office. On the date hereof, such
Grantor’s jurisdiction of organization, identification number from the jurisdiction of organization
(if any), and the location of such Grantor’s chief executive office or sole place of business or
principal residence, as the case may be, are specified on Annex IV.

     3.5 Inventory and Equipment. On the date hereof, the Inventory and the Equipment
(other than mobile goods) are kept at the locations listed on Annex IV.

     3.6 Farm Products. None of the Collateral constitutes, or is the Proceeds of, Farm
Products.

     3.7 Investment Property.

     (a) The shares of Pledged Equity Interests pledged by such Grantor hereunder constitute all
the issued and outstanding Equity Interests of each Issuer owned by such Grantor.

     (b) All the shares of the Pledged Equity Interests have been duly and validly issued and are
fully paid and nonassessable.

     (c) Such Grantor is the record and beneficial owner of, and has good and marketable title to,
the Investment Property pledged by it hereunder, free of any and all Liens or options in favor of,
or claims of, any other Person, except the Liens created by this Agreement.

     3.8 Receivables.

     (a) No amount payable to such Grantor under or in connection with any Receivable is evidenced
by any Instrument or Chattel Paper which has not been delivered to the Secured Party.

     (b) [intentionally omitted].

     (c) The amounts represented by such Grantor to the Secured Party from time to time as owing to
such Grantor in respect of the Receivables will at such times be accurate in all material respects.

     3.9 Intellectual Property.

     (a) There are no material registrations and/or applications for Intellectual Property and
trade names (whether or not subject to an application or registration) that are owned by such
Grantor in its own name on the date hereof.

     (b) On the date hereof, all material Intellectual Property owned or used by such Grantor is
valid, subsisting, unexpired and enforceable, has not been abandoned and does not infringe the
intellectual property rights of any other Person.

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     (c) On the date hereof, none of the Intellectual Property owned or used by such Grantor is the
subject of any licensing or franchise agreement pursuant to which such Grantor is the licensor or
franchisor.

     (d) No holding, decision or judgment has been rendered by any Governmental Authority which
would limit, cancel or question the validity of, or such Grantor’s rights in, any Intellectual
Property in any respect that could reasonably be expected to have a Material Adverse Effect.

     (e) No action or proceeding is pending, or, to the knowledge of such Grantor, threatened, on
the date hereof (i) seeking to limit, cancel or question the validity of any Intellectual Property
or such Grantor’s ownership interest therein, or (ii) which, if adversely determined, would have a
material adverse effect on the value of any Intellectual Property.

     3.10 Deposit Accounts and Securities Accounts. Each Grantor is the record and
beneficial owner of, and has good title to, the Deposit Accounts and Securities Accounts pledged by
it hereunder, free of any and all Liens or options in favor or, or claims of, any other Person,
except the Security Interest created by this Agreement, and rights of setoff of any depository bank
or securities intermediary and other Permitted Liens. As of the date hereof, all Deposit Accounts
and Securities Accounts held by a Grantor (other than those maintained with the
Secured Party) are subject to a Deposit Account Control Agreement and a Securities Account
Control Agreement, as applicable.

     3.11 Benefit to each Subsidiary Grantor. The Borrower is a member of an affiliated
group of companies that includes Holdings and each Subsidiary Grantor, and the Borrower, Holdings
and the Subsidiary Grantors are engaged in related businesses. Holdings is the parent company of,
and each Subsidiary Grantor is a Subsidiary of, the Borrower and each such Grantor’s obligations
pursuant to this Agreement reasonably may be expected to benefit it, directly or indirectly, and it
has determined that this Agreement is necessary and convenient to the conduct, promotion and
attainment of the business of Holdings and such Subsidiary Grantor and the Borrower.

     3.12 Consents. No consent of any party (other than a Grantor) to any Copyright License, Patent License, Trade Secret License or Trademark License constituting Collateral or any obligor in respect of any material Account constituting Collateral or which owes in the aggregate a material portion of all the Accounts constituting Collateral is required,
or purports to be required, to be obtained by or on behalf of any Grantor in connection with the
execution, delivery and performance of this Agreement that has not been obtained. Each Copyright
License, Patent License, Trade Secret License, Trademark License and Account constituting
Collateral is in full force and effect and constitutes a valid and legally enforceable obligation
of the Grantor party thereto and (to the knowledge of such Grantor) each other party thereto except
as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditor’s rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at law) and except to the
extent the failure of any such Copyright License, Patent License, Trade Secret License, Trademark
Licenses, Accounts, Contracts and General Intangibles constituting Collateral to be in full force
and effect or valid or legally enforceable could not be reasonably expected, in the aggregate, to
have a material adverse effect on the value of the Collateral. No consent or authorization of,
filing with or other act by or in respect of any Governmental Authority is required in connection
with the execution, delivery, performance, validity or enforceability of this Agreement or any of
the Copyright Licenses, Patent Licenses, Trade Secret Licenses, Trademark Licenses and Accounts
constituting Collateral by any party thereto other than those which have been duly obtained, made
or performed and are in full force and effect and those the failure of which to make or obtain
could not be reasonably expected, in the aggregate, to have a material adverse effect on the
value of the Collateral. No Grantor nor (to the knowledge of any Grantor) any other party to any
Copyright License, Patent License, Trade Secret License, Trademark

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License or Account, Contract or other General Intangible constituting Collateral is in default
in the performance or observance of any of the terms thereof, except for such defaults as could not
reasonably be expected, in the aggregate, to have a material adverse effect on the value of the
Collateral.

SECTION 4.

COVENANTS

     Each Grantor covenants and agrees with the Secured Party that, from and after the date of this
Agreement until the Release Date with respect to such Grantor:

     4.1 Covenants in Credit Agreement. In the case of each Grantor, such Grantor shall
take, or shall refrain from taking, as the case may be, each action that is necessary to be taken
or not taken, as the case may be, so that no Default or Event of Default is caused by the failure
to take such action or to refrain from taking such action by such Grantor or any of its
Subsidiaries.

     4.2 Delivery of Instruments, Certificated Securities and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become evidenced by any
Instrument, Certificated Security or Chattel Paper, such Instrument, Certificated Security or
Chattel Paper shall be promptly delivered to the Secured Party, duly indorsed in a manner
satisfactory to the Secured Party, to be held as Collateral pursuant to this Agreement.

     4.3 Maintenance of Insurance.

     (a) Such Grantor will maintain, with financially sound and reputable companies, insurance
policies (i) insuring the Inventory, the Equipment and all real property subject to a Mortgage
against loss by fire, explosion, theft and such other casualties as may be reasonably satisfactory
to the Secured Party and (ii) insuring such Grantor and the Secured Party against liability for
personal injury and property damage relating to such Inventory and Equipment, such policies to be
in such form and amounts and having such coverage as may be reasonably satisfactory to the Secured
Party.

     (b) All such insurance shall (i) provide that no cancellation, material reduction in amount or
material change in coverage thereof shall be effective until at least 30 days after receipt by the
Secured Party of written notice thereof, (ii) name the Secured Party as insured party and loss
payee as its interests may appear, (iii) if reasonably requested by the Secured Party, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other respects to the Secured
Party.

     (c) The Borrower shall deliver to the Secured Party a report of a reputable insurance broker
with respect to such insurance substantially concurrently with each delivery of the Borrower’s
annual financial statements pursuant to Section 7.1(a) of the Credit Agreement and such
supplemental reports with respect thereto as the Secured Party may from time to time reasonably
request.

     4.4 Payment of Obligations. Such Grantor will pay and discharge or otherwise satisfy
at or before maturity or before they become delinquent, as the case may be, all taxes, assessments
and governmental charges or levies imposed upon the Collateral or in respect of income or profits
therefrom, as well as all claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except that no such charge need
be paid if the amount or validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been provided on the books
of such Grantor and such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any significant portion of the Collateral or any interest therein.

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     4.5 Maintenance of Perfected Security Interest; Further Documentation.

     (a) Other than as permitted by this Agreement or the Credit Agreement, such Grantor shall
maintain the security interest created by this Agreement as a perfected security interest having at
least the priority described in Section 3.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever including without limitation, completing the Filings
and filing any financing or continuation or analogous statements or filings under the Uniform
Commercial Code (or other applicable laws) in effect in any jurisdiction with respect to the
security interests created hereby.

     (b) Such Grantor will furnish to the Secured Party from time to time statements and schedules
further identifying and describing the Collateral of such Grantor and such other reports in
connection therewith as the Secured Party may reasonably request, all in reasonable detail.

     (c) At any time and from time to time, upon the written request of the Secured Party, and at
the sole expense of such Grantor, such Grantor will promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further actions as the Secured Party
may reasonably request for the purpose of obtaining or preserving the full benefits of this
Agreement and of the rights and powers herein granted, including, without limitation, (i) filing
any financing or continuation or analogous statements or filings under the Uniform Commercial Code
(or other Applicable Laws) in effect in any jurisdiction with respect to the security interests
created hereby, (ii) in the case of Investment Property, Account Collateral, Letter-of-Credit
Rights and any other relevant Collateral, taking any actions reasonably necessary to enable the
Secured Party to obtain “control” (within the meaning of the applicable Uniform Commercial Code (or
other Applicable Laws)) with respect thereto, and (iii) in the case of any item of Equipment that
is covered by a certificate of title under a statute of any jurisdiction under the law of which
indication of a security interest on such certificate is required as a condition of perfection
thereof, at the request of the Secured Party, execute and file with the registrar of motor vehicles
or other appropriate authority in such jurisdiction an application or other document requesting the
notation or other indication of the security interest created hereunder on such certificate of
title, and within 30 days after the end of each calendar quarter, deliver to the Secured Party
copies of all such certificates of title issued during such calendar quarter indicating the
security interest created hereunder in the items of Equipment covered thereby.

     4.6 Changes in Locations, Name, etc. Such Grantor will not, except upon 30 days’
prior written notice to the Secured Party and delivery to the Secured Party of copies of all filed
additional financing statements, and other documents (in each case, properly executed) reasonably
requested by the Secured Party, to maintain the validity, perfection and priority of the security
interests provided for herein:

     (a) change its jurisdiction of organization or the location of its chief executive office or
sole place of business from that referred to in Section 3.4; or

     (b) change its name or Business Entity type.

     4.7 Notices. Such Grantor will advise the Secured Party promptly, in reasonable
detail, of:

     (a) any Lien (other than Permitted Liens) on any of the Collateral; and

     (b) the occurrence of any other event that could reasonably be expected to have a material
adverse effect on the aggregate value of the Collateral or on the security interests created
hereby.

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     4.8 Investment Property.

     (a) If such Grantor shall become entitled to receive or shall receive any (i) certificate
(including, without limitation, any certificate representing a dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Equity Interests of any
Issuer, whether in addition to, in substitution of, as a conversion of, or in exchange for, any
shares of the Pledged Equity Interests, or otherwise in respect thereof, or (ii) note, bond or
other debt obligation or security, such Grantor shall accept the same as the agent of the Secured
Party, hold the same in trust for the Secured Party and deliver the same forthwith to the Secured
Party in the exact form received, duly indorsed by such Grantor to the Secured Party, together with
an undated stock power covering such certificate or bond or note power covering such promissory
note, in each case above duly executed in blank by such Grantor and with signature guaranteed, to
be held by the Secured Party, subject to the terms hereof, as additional collateral security for
the Secured Obligations. Any sums paid upon or in respect of the Investment Property upon the
liquidation or dissolution of any Issuer or obligor thereon shall be paid over to the Secured Party
to be held by it hereunder as additional collateral security for the Secured Obligations, and in if
any distribution of capital, or payment of principal, interest or other amounts, is made on or in
respect of the Investment Property or any property is distributed upon or with respect to the
Investment Property pursuant to the recapitalization or reclassification of the capital of any
Issuer or pursuant to the reorganization thereof, or otherwise, the property so distributed shall,
unless otherwise subject to a perfected security interest in favor of the Secured Party, be
delivered to the Secured Party to be held by it hereunder as additional collateral security for the
Secured Obligations. If any sums of money or other property so paid or distributed in respect of
the Investment Property are received by such Grantor, such Grantor shall, until such money or
property is paid or delivered to the Secured Party, hold such money or property in trust for the
Secured Party, segregated from other funds of such Grantor, as additional collateral security for
the Secured Obligations. For the avoidance of doubt, if for any reason the Merger is not
consummated on the date hereof, Holdings shall, on the date hereof, deliver and pledge to the
Secured Party hereunder and in accordance with the terms hereof all share certificates representing
any and all equity interests in Iceland Acquisition Subsidiary, Inc., a Delaware corporation.

     (b) Without the prior written consent of the Secured Party, such Grantor will not (i) vote to
enable, or take any other action to permit, any Issuer to issue any Equity Interests of any nature
or to issue any other securities convertible into or granting the right to purchase or exchange for
any Equity Interests of any nature of any Issuer, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Investment Property or Proceeds
thereof (except pursuant to a transaction expressly permitted by the Credit Agreement), (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of any Person with
respect to, any of the Investment Property or Proceeds thereof, or any interest therein, except for
the security interests created by this Agreement and Permitted Liens or (iv) enter into any
agreement or undertaking that restricts the right or ability of such Grantor or the Secured Party
to sell, assign or transfer, or requires or results in any change of rights relating to, or the
value of, any of the Investment Property or Proceeds thereof.

     (c) In the case of each Grantor that is an Issuer, such Issuer agrees that (i) it will be
bound by the terms of this Agreement relating to the Investment Property issued by it and will
comply with such terms insofar as such terms are applicable to it, (ii) it will notify the Secured
Party promptly in writing of the occurrence of any of the events described in Section 4.8(a) with
respect to the Investment Property issued by it and (iii) the terms of Sections 5.3(c) and 5.7
shall apply to it, mutatis mutandis, with respect to all actions that may be required of it
pursuant to Section 5.3(c) or 5.7 with respect to the Investment Property issued by it.

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     4.9 Receivables.

     (a) Other than in the ordinary course of business consistent with its past practice, such
Grantor will not, without prior written consent from the Secured Party (such consent to be provided
at the Secured Party’s sole discretion), (i) grant any extension of the time of payment of any
Receivable, (ii) compromise or settle any Receivable for less than the full amount thereof, (iii)
release, wholly or partially, any Person liable for the payment of any Receivable, (iv) allow any
credit or discount whatsoever on any Receivable or (v) amend, supplement or modify any Receivable
in any manner that could adversely affect the value thereof.

     (b) Such Grantor will deliver to the Secured Party a copy of all material demands, notices or
documents received by it that, in the aggregate, questions or calls into doubt the validity or
enforceability of more than 5% of the aggregate amount of the then outstanding Receivables.

     4.10 Intellectual Property.

     (a) Except as otherwise permitted under the Credit Agreement, such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii) maintain as in the
past the quality of products and services offered under such Trademark, (iii) use such Trademark
with the appropriate notice of registration and all other notices and legends required by
applicable law and (iv) not (and not permit any licensee or sublicensee thereof to) do any act or
knowingly omit to do any act whereby such Trademark may become invalidated or impaired in any way.

     (b) Except as otherwise permitted under the Credit Agreement, such Grantor (either itself or
through licensees) will not do any act, or omit to do any act, whereby any material Patent owned or
used by such Grantor may become forfeited, abandoned or dedicated to the public.

     (c) Except as otherwise permitted under the Credit Agreement, such Grantor (either itself or
through licensees) (i) will employ each material Copyright and (ii) will not (and will not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any
material portion of the Copyrights may become invalidated or otherwise impaired. Such Grantor will
not (either itself or through licensees) do any act whereby any material portion of the Copyrights
may fall into the public domain.

     (d) Such Grantor (either itself or through licensees) will not do any act that knowingly uses
any material Intellectual Property owned or used by such Grantor to infringe the intellectual
property rights of any other Person.

     (e) Such Grantor will notify the Secured Party immediately if it knows, or has reason to know,
that any application or registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination or development
(including, without limitation, the institution of, or any such determination or development in,
any proceeding in the United States Patent and Trademark Office, the United States Copyright Office
or any court or tribunal in any country) regarding such Grantor’s ownership of, or the validity of,
any material Intellectual Property or such Grantor’s right to register the same or to own and
maintain the same.

     (f) Whenever such Grantor, either by itself or through any agent, employee, licensee or
designee, shall file an application for the registration of any Intellectual Property with the
United States Patent and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, such Grantor shall report such
filing to the Secured

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Party within five Business Days after the last day of the fiscal quarter in which such filing
occurs and will notify the Secured Party of any acquisition by such Grantor of any exclusive rights
under a material Copyright License, Patent License, Trade Secret License or Trademark License
within five Business Days after the last day of the fiscal quarter in which such agreement shall
have become effective. Such Grantor shall execute and deliver, and have recorded, any and all
agreements, instruments, documents, and papers necessary to evidence the Secured Party’s security
interest in any Copyright, Patent or Trademark and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby; provided, if, in the reasonable judgment of such
Grantor, after due inquiry, so evidencing such interest would result in the grant of a Trademark
registration or Copyright registration in the name of the Secured Party, such Grantor shall give
written notice to the Secured Party as soon as reasonably practicable and the Filing shall instead
be undertaken as soon as practicable but in no case later than immediately following the grant of
the applicable Trademark registration or Copyright registration, as the case may be.

     (g) Except as otherwise permitted under the Credit Agreement, such Grantor will take all
reasonable and necessary steps, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or any similar office or
agency in any other country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each registration of the
material Intellectual Property, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.

     (h) In the event that any material Intellectual Property is infringed, misappropriated or
diluted by a third party, such Grantor shall (i) take such actions as such Grantor shall reasonably
deem appropriate under the circumstances to protect such Intellectual Property and (ii) if such
Intellectual Property is of material economic value, promptly notify the Secured Party after it
learns thereof and sue for infringement, misappropriation or dilution, to seek injunctive relief
where appropriate and to seek to recover any and all damages for such infringement,
misappropriation or dilution.

     (i) such Grantor will take all reasonable and necessary steps to preserve and protect the
secrecy of all material Trade Secrets of such Grantor.

     4.11 Deposit Accounts. No Grantor shall deposit or in any way transfer any money into
any account used exclusively for payroll purposes, except to the extent required to pay such
Grantor’s employees’ wages, or as otherwise required by law (and except accounts subject to an
effective deposit account control agreement in favor of Secured Party).

     4.12 New Accounts. No Grantor shall open any new Deposit Account or Securities
Account unless such account is subject to a Deposit Account Control Agreement or Securities Account
Control Agreement, as applicable, or such Deposit Account or Securities Account is maintained with
the Secured Party. All such Deposit Account Control Agreements and Securities Account Control
Agreements shall be in substantially the same form as Annex II and Annex III, as
applicable, or in such other form as the Secured Party shall reasonably approve, and the Grantors
shall deliver true, correct and complete and fully executed copies of the same to the Secured
Party. This Section 4.12 will not apply to one or more such new Deposit Accounts and
Securities Accounts containing cash in the amount of (or in the case of any Securities Accounts,
Investment Property having a fair market value of) no more than $25,000 in the aggregate with all
other such new Deposit Accounts and Securities Accounts.

     4.13 Commercial Tort Claims. If any Grantor shall at any time hold or acquire, or
otherwise become plaintiff or claimant in respect of, any Commercial Tort Claim, such Grantor will
(a) promptly notify the Secured Party thereof, including a reasonably detailed description of such
Commercial Tort Claim, and (b) if in excess of $50,000, grant to the Secured Party a security
interest therein and in the

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Proceeds thereof, all upon the terms of this Agreement, pursuant to one or more written
supplements in form and substance reasonably satisfactory to the Secured Party.

SECTION 5.

REMEDIAL PROVISIONS

     5.1 Certain Matters Relating to Receivables.

     (a) At any time and from time to time after the occurrence and during the continuance of an
Event of Default, the Secured Party shall have the right to make test verifications of the
Receivables in any manner and through any medium that it reasonably considers advisable, and each
Grantor shall furnish all such assistance and information as the Secured Party may require in
connection with such test verifications. At any time and from time to time after the occurrence
and during the continuance of an Event of Default, upon the Secured Party’s request, at the expense
of the relevant Grantor, such Grantor shall cause independent public accountants or others
satisfactory to the Secured Party to furnish to the Secured Party reports showing reconciliations,
aging and test verifications of, and trial balances for, the Receivables.

     (b) The Secured Party hereby authorizes each Grantor to collect such Grantor’s Receivables,
and the Secured Party may curtail or terminate said authority at any time after the occurrence and
during the continuance of an Event of Default. If required by the Secured Party at any time after
the occurrence and during the continuance of an Event of Default, any payments of Receivables, when
collected by any Grantor, (i) shall be forthwith (and, in any event, within two Business Days)
deposited by such Grantor in the exact form received, duly indorsed by such Grantor to the Secured
Party if required, in a Collateral Account maintained under the sole dominion and control of the
Secured Party, subject to withdrawal by the Secured Party only as provided in Section 5.5, and (ii)
until so turned over, shall be held by such Grantor in trust for the Secured Party, segregated from
other funds of such Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by
a report identifying in reasonable detail the nature and source of the payments included in the
deposit.

     (c) During the continuance of a Default, at the Secured Party’s request, each Grantor shall
deliver to the Secured Party all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Receivables, including, without limitation, all
orders, invoices and shipping receipts.

     5.2 Communications with Obligors; Grantors Remain Liable.

     (a) At any time and from time to time after the occurrence and during the continuance of an
Event of Default, the Secured Party in its own name or in the name of others may at any time
communicate with obligors under the Receivables to verify with them to the Secured Party’s
satisfaction the existence, amount and terms of any Receivables.

     (b) Upon the written request of the Secured Party at any time after the occurrence and during
the continuance of an Event of Default, each Grantor shall notify obligors on the Receivables that
the Receivables have been assigned to the Secured Party and that payments in respect thereof shall
be made directly to the Secured Party.

     (c) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Receivables to observe and perform all the conditions and obligations to be observed
and performed by it thereunder, all in accordance with the terms of any agreement giving rise
thereto. The

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Secured Party shall have no obligation or liability under any Receivable (or any agreement
giving rise thereto), whether by reason of or arising out of this Agreement or the receipt by the
Secured Party of any payment relating thereto or otherwise, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party thereunder, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have been assigned to it
or to which it may be entitled at any time or times, nor shall the Secured Party be obligated in
any manner to perform any of the obligations of any Grantor under or pursuant to any Receivable (or
any agreement giving rise thereto).

     5.3 Investment Property.

     (a) Unless an Event of Default shall have occurred and be continuing and (unless any of the
events described in clauses (i) through (v) of Section 9.1(f) of the Credit Agreement shall have
occurred with respect to such Grantor, in which case no notice shall be required) the Secured Party
shall have given written notice to the relevant Grantor of the Secured Party’s intent to exercise
its corresponding rights pursuant to Section 5.3(b), each Grantor shall be permitted to
receive all cash dividends paid in respect of the Pledged Equity Interests and all payments made in
respect of the Pledged Notes, in each case paid in the normal course of business of the relevant
Issuer and consistent with past practice, to the extent permitted in the Credit Agreement, and to
exercise all voting and corporate or other organizational rights with respect to the Investment
Property; provided, however, that no vote shall be cast or corporate or other organizational right
exercised or other action taken that, in the Secured Party’s reasonable judgment, would impair the
Collateral or which would be inconsistent with or result in any violation of any provision of the
Credit Agreement, this Agreement or any other Loan Document.

     (b) If an Event of Default shall occur and be continuing and the Secured Party elects to
exercise one of the following remedies and shall have give written notice of its intent to exercise
such rights to the relevant Grantor or Grantors (unless any of the events described in clauses (i)
through (v) of Section 9.1(f) of the Credit Agreement shall have occurred with respect to
such Grantor, in which case no notice shall be required): (i) the Secured Party shall have the
right to receive any and all cash dividends, distributions, payments or other Proceeds paid in
respect of the Investment Property and make application thereof to the Secured Obligations in such
order as the Secured Party may determine, and (ii) the Secured Party shall have the right to cause
any or all of the Investment Property to be registered or re-issued in the name of the Secured
Party or its nominee, and the Secured Party or its nominee may thereafter exercise (x) all voting,
corporate and other rights pertaining to such Investment Property at any meeting of shareholders
(or other equivalent body) of the relevant Issuer or Issuers or otherwise and (y) any and all
rights of conversion, exchange and subscription and any other rights, privileges or options
pertaining to such Investment Property as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Investment Property upon the
merger, consolidation, reorganization, recapitalization or other fundamental change in the
corporate or other organizational structure of any Issuer, or upon the exercise by any Grantor or
the Secured Party of any right, privilege or option pertaining to such Investment Property, and in
connection therewith, the right to deposit and deliver any and all of the Investment Property with
any committee, depositary, transfer agent, registrar or other designated agency upon such terms and
conditions as the Secured Party may determine), all without liability except to account for
property actually received by it, but the Secured Party shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.

     (c) Each Grantor hereby authorizes and instructs each Issuer of any Investment Property
pledged by such Grantor hereunder to (i) comply with any instruction received by it from the
Secured Party in writing that (x) states that an Event of Default has occurred and is continuing
and (y) is otherwise in accordance with the terms of this Agreement without any other or further
instructions from such

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Grantor, and each Grantor agrees that each Issuer shall be fully protected in so complying,
and (ii) unless otherwise expressly permitted hereby, pay any dividends or other payments with
respect to the Investment Property directly to the Secured Party.

     (d) After the occurrence and during the continuation of an Event of Default, if the Issuer of
any Pledged Equity Interests or Pledged Notes is the subject of bankruptcy, insolvency,
receivership, custodianship or other proceedings under the supervision of any Governmental
Authority, then all rights of the Grantor in respect thereof to exercise the voting and other
consensual rights which such Grantor would otherwise be entitled to exercise with respect to the
Pledged Equity Interests or Pledged Notes issued by such Issuer shall cease, and all such rights
shall thereupon become vested in the Secured Party who shall thereupon have the sole right to
exercise such voting and other consensual rights, but the Secured Party shall have no duty to
exercise any such voting or other consensual rights and shall not be responsible for any failure to
do so or delay in so doing.

     5.4 Proceeds To Be Turned Over to Secured Party. In addition to the rights of the
Secured Party specified in Section 5.1 with respect to payments of Receivables and
Section 5.3 with respect to payments in respect of Investment Property, if an Event of
Default shall occur and be continuing, all Proceeds received by any Grantor consisting of cash,
checks and cash equivalents shall be held by such Grantor in trust for the Secured Party,
segregated from other funds of such Grantor, and shall, forthwith upon receipt by such Grantor, be
turned over to the Secured Party in the exact form received by such Grantor (duly indorsed by such
Grantor to the Secured Party, if required). All Proceeds received by the Secured Party hereunder
shall be held by the Secured Party in a Collateral Account maintained under its sole dominion and
control. All Proceeds while held by the Secured Party in a Collateral Account (or by such Grantor
in trust for the Secured Party) shall continue to be held as collateral security for all the
Secured Obligations and shall not constitute payment thereof until applied as provided in
Section 5.5.

     5.5 Application of Proceeds. At any time that an Event of Default shall have occurred
and be continuing, the Secured Party may apply all or any part of the Proceeds of any collection or
sale of the Collateral, and any Collateral consisting of cash, whether or not held in any
Collateral Account, in payment of the Secured Obligations in the following order:

     (a) FIRST, to the payment of all reasonable costs and expenses incurred by the Secured Party
in connection with this Agreement, the Credit Agreement, any other Loan Document or any of the
Secured Obligations, including, without limitation, all court costs and the reasonable fees and
expenses of its agents and legal counsel, and any other reasonable costs or expenses incurred in
connection with the exercise or preservation by the Secured Party of any right or remedy under this
Agreement, the Credit Agreement or any other Loan Document;

     (b) SECOND, to the ratable satisfaction of all other Secured Obligations (with any amounts so
payable in respect of Secured Obligations under the Credit Agreement paid to the Secured Party for
application in accordance with the Credit Agreement); and

     (c) THIRD, to the relevant Grantor or its successors or assigns, or to whomsoever may be
lawfully entitled to receive the same.

     5.6 Code and Other Remedies.

     (a) If an Event of Default shall occur and be continuing, the Secured Party may exercise, in
addition to all other rights and remedies granted to them in this Agreement, the Credit Agreement
and the other Loan Documents and in any other instrument or agreement securing, evidencing or
relating to the

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Secured Obligations, all rights and remedies of a secured party under the New York UCC or any
other Applicable Law or otherwise available at law or in equity. Without limiting the generality
of the foregoing, the Secured Party, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required by law referred to below)
to or upon any Grantor or any other Person (all and each of which demands, defenses, advertisements
and notices are hereby waived), may in such circumstances, forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign,
give option or options to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at public or private sale
or sales, at any exchange, broker’s board or office of the Secured Party or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk. The Secured Party shall
have the right upon any such public sale or sales, and, to the extent permitted by law, upon any
such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of
any right or equity of redemption in any Grantor, which right or equity is hereby waived and
released. Each Grantor further agrees, at the Secured Party’s request, to assemble the Collateral
and make it available to the Secured Party at places which the Secured Party shall reasonably
select, whether at such Grantor’s premises or elsewhere. Upon any such sale or transfer, the
Secured Party shall have the right to deliver, assign and transfer to the purchaser or transferee
thereof the Collateral so sold or transferred. The Secured Party shall apply the net proceeds of
any action taken by it pursuant to this Section 5.6, after deducting all reasonable costs
and expenses of every kind incurred in connection therewith or incidental to the care or
safekeeping of any of the Collateral or in any way relating to the Collateral or the rights of the
Secured Party hereunder, including, without limitation, attorneys’ fees and disbursements, to the
payment in whole or in part of the Secured Obligations, in such order as the Secured Party may
elect, and only after such application and after the payment by the Secured Party of any other
amount required by any provision of law, including, without limitation, Section 9-615(a)(3) of the
New York UCC, need the Secured Party account for the surplus, if any, to any Grantor. To the
extent permitted by Applicable Law, each Grantor waives all claims, damages and demands it may
acquire against the Secured Party arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before such sale or other
disposition.

     (b) In the event that the Secured Party elects not to sell the Collateral, the Secured Party
retains its rights to dispose of or utilize the Collateral or any part or parts thereof in any
manner authorized or permitted by law or in equity, and to apply the proceeds of the same towards
payment of the Secured Obligations. Each and every method of disposition of the Collateral
described in this Agreement shall constitute disposition in a commercially reasonable manner.

     (c) The Secured Party will not submit a “Notice of Exclusive Control” under a Deposit Account
Control Agreement or a Securities Account Control Agreement, as applicable, unless an Event of
Default has occurred and is continuing.

     (d) The Secured Party may appoint any Person as agent to perform any act or acts necessary or
incident to any sale or transfer of the Collateral.

     5.7 Private Sale.

     (a) If the Secured Party shall determine to exercise its right to sell any or all of the
Pledged Equity Interests pursuant to Section 5.6, and if in the opinion of the Secured
Party it is necessary or advisable to have the Pledged Equity Interests, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the relevant Grantor will cause the
Issuer thereof to (i) execute and deliver, and use its best efforts to cause the directors and
officers of such Issuer to execute and deliver, all

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such instruments and documents, and do or cause to be done all such other acts as may be, in
the opinion of the Secured Party, necessary or advisable to register the Pledged Equity Interests,
or that portion thereof to be sold, under the provisions of the Securities Act, (ii) use its best
efforts to cause the registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering of the Pledged Equity
Interests, or that portion thereof to be sold, and (iii) make all amendments thereto and/or to the
related prospectus which, in the opinion of the Secured Party, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Each Grantor agrees to cause such Issuer to
comply with the provisions of the securities or “Blue Sky” laws of any and all jurisdictions which
the Secured Party shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act.

     (b) Each Grantor recognizes that the Secured Party may be unable to effect a public sale of
any or all the Pledged Equity Interests, by reason of certain prohibitions contained in the
Securities Act and applicable state or foreign securities laws or otherwise, and may be compelled
to resort to one or more private sales thereof to a restricted group of purchasers which will be
obliged to agree, among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges
and agrees that any such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner. The Secured Party
shall be under no obligation to delay a sale of any of the Pledged Equity Interests for the period
of time necessary to permit the Issuer thereof to register such securities for public sale under
the Securities Act, or under applicable state or foreign securities laws, even if such Issuer would
agree to do so.

     (c) Each Grantor agrees to use its best efforts to do or cause to be done all such other acts
as may be necessary to make such sale or sales of all or any portion of the Pledged Equity
Interests pursuant to this Section 5.7 valid and binding and in compliance with any and all
other Applicable Laws. Each Grantor further agrees that a breach of any of the covenants contained
in this Section 5.7 will cause irreparable injury to the Secured Party, that the Secured
Party has no adequate remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 5.7 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement.

     5.8 Deficiency. Each Grantor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay its Secured Obligations
and the fees and disbursements of any attorneys employed by the Secured Party to collect such
deficiency.

     5.9 Non-Judicial Enforcement. The Secured Party may enforce its rights hereunder
without prior judicial process or judicial hearing, and to the extent permitted by law, each
Grantor expressly waives any and all legal rights which might otherwise require the Secured Party
to enforce its rights by judicial process.

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SECTION 6.

THE SECURED PARTY

     6.1 Secured Party’s Appointment as Attorney-in-Fact, etc.

     (a) Each Grantor hereby irrevocably constitutes and appoints the Secured Party and any officer
or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of such Grantor and in the name of such
Grantor or in its own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives the Secured Party the power and right, on
behalf of such Grantor, without notice to or assent by such Grantor, to do any or all of the
following:

          (i) in the name of such Grantor or its own name, or otherwise, (x) require any Investment
Property to be registered or re-issued in the name of the Secured Party or its transferee or
assign, (y) take possession of and indorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Receivable or with respect to any other
Collateral and (z) file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Secured Party for the purpose of collecting any and
all such moneys due under any Receivable or with respect to any other Collateral whenever payable;

          (ii) in the case of any Intellectual Property, execute and deliver, and have recorded, any and
all agreements, instruments, documents and papers as the Secured Party may request to evidence the
Secured Party’s security interest in such Intellectual Property and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby;

          (iii) pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral, effect any repairs or any insurance called for by the terms of this Agreement and pay
all or any part of the premiums therefor and the costs thereof;

          (iv) execute, in connection with any sale provided for in Section 5.6 or 5.7,
any endorsements, assignments or other instruments of conveyance or transfer with respect to the
Collateral; and

          (v) direct any party liable for any payment under any of the Collateral to make payment of any
and all moneys due or to become due thereunder directly to the Secured Party or as the Secured
Party shall direct; ask or demand for, collect, and receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of or arising out of
any Collateral; sign and indorse any invoices, freight or express bills, bills of lading, storage
or warehouse receipts, drafts against debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or
any portion thereof and to enforce any other right in respect of any Collateral; defend any suit,
action or proceeding brought against such Grantor with respect to any Collateral; settle,
compromise or adjust any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Secured Party may deem appropriate; assign any Copyright, Patent,
Domain Name, Trade Secret or Trademark (along with the goodwill of the business to which any such
Copyright, Patent, Domain Name, Trade Secret or Trademark pertains), throughout the world for such
term or terms, on such conditions, and in such manner, as the Secured Party shall in its sole
discretion determine; and generally, sell, transfer, pledge and make any agreement with

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respect to or otherwise deal with any of the Collateral as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes, and do, at the Secured Party’s
option and such Grantor’s expense, at any time, or from time to time, all acts and things which the
Secured Party deems necessary to protect, preserve or realize upon the Collateral and the Secured
Party’s security interests therein and to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.

     (b) Anything in this Section 6.1 to the contrary notwithstanding, the Secured Party
agrees that it will not exercise any rights under the power of attorney provided for in this
Section 6.1 unless an Event of Default shall have occurred and be continuing.

     (c) If any Grantor fails to perform or comply with any of its agreements contained herein, the
Secured Party, at its option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement.

     (d) The expenses of the Secured Party incurred in connection with actions undertaken as
provided in this Section 6.1, together with interest thereon at a rate per annum equal to
the rate set forth in Section 3.3.2 of the Credit Agreement as applicable to amounts not paid when
due, from the date of payment by the Secured Party to the date reimbursed by the relevant Grantor,
shall be payable by such Grantor to the Secured Party on demand.

     (e) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the security interests
created hereby are released.

     6.2 [Intentionally Omitted].

     6.3 Duty of the Secured Party. The Secured Party’s sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its possession, under Section
9-207 of the New York UCC or otherwise, shall be to deal with it in the same manner as the Secured
Party deals with similar property for its own account. None of the Secured Party, or any of their
respective officers, directors, employees or agents shall be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of any Grantor or any other Person
or to take any other action whatsoever with regard to the Collateral or any part thereof. The
powers conferred on the Secured Party hereunder are solely to protect the Secured Party’s interests
in the Collateral and shall not impose any duty upon the Secured Party to exercise any such powers.
The Secured Party shall be accountable only for amounts that they actually receive as a result of
the exercise of such powers, and neither they nor any of their officers, directors, employees or
agents shall be responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct. To the fullest extent permitted by applicable
law, the Secured Party shall be under no duty whatsoever to make or give any presentment, notice of
dishonor, protest, demand for performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in connection with any Collateral or
the Secured Obligations, to take any steps necessary to preserve any rights against any Grantor or
other Person or to ascertain or take action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Collateral, whether or not it has or is deemed
to have knowledge of such matters. Each Grantor, to the extent permitted by applicable law, waives
any right of marshaling in respect of any and all Collateral, and waives any right to require the
Secured Party to proceed against any Grantor or other Person, exhaust any Collateral or enforce any
other remedy which the Secured Party now has or may hereafter have against each Grantor, any
Grantor or other Person.

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     6.4 Execution of Financing Statements. Pursuant to any Applicable Law, each Grantor
authorizes the Secured Party to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature of such Grantor in
such form and in such offices as the Secured Party reasonably determines appropriate to perfect the
security interests of the Secured Party under this Agreement. Each Grantor authorizes the Secured
Party to use the collateral description “all assets” or “all personal property” in any such
financing statements and other filing or recording documents or instruments with respect to the
Collateral. Each Grantor hereby ratifies and authorizes the filing by the Secured Party of any
financing statement and other filing or recording documents or instruments with respect to the
Collateral made prior to the date hereof. Nothing in this Section 6.4 shall relieve any
Grantor from its obligation to make the Filings or file any continuation or analogous statements or
filings.

SECTION 7.

SUBORDINATION OF INDEBTEDNESS

     7.1 Subordination of All Subsidiary Grantor Claims. As used herein, the term
“Subsidiary Grantor Claims” shall mean all debts and obligations of the Borrower or any
other Grantor to any Grantor, whether such debts and obligations now exist or are hereafter
incurred or arise, or whether the obligation of the debtor thereon be direct, contingent, primary,
secondary, several, joint and several, or otherwise, and irrespective of whether such debts or
obligations be evidenced by note, contract, open account, or otherwise, and irrespective of the
Person or Persons in whose favor such debts or obligations may, at their inception, have been, or
may hereafter be created, or the manner in which they have been or may hereafter be acquired. After
and during the continuation of an Event of Default, no Grantor shall receive or collect, directly
or indirectly, from any obligor in respect thereof any amount upon the Subsidiary Grantor Claims
unless otherwise consented to by the Secured Party and all such amounts shall be payable to the
Secured Party as security for the Secured Obligations.

     7.2 Claims in Bankruptcy. In the event of receivership, bankruptcy, reorganization,
arrangement, debtor’s relief or other insolvency proceedings involving any Grantor, the Secured
Party shall have the right to prove its claim in any proceeding, so as to establish its rights
hereunder and receive directly from the receiver, trustee or other court custodian, dividends and
payments that would otherwise be payable upon Subsidiary Grantor Claims. Each Grantor hereby
assigns such dividends and payments to the Secured Party for application against the Secured
Obligations in the manner determined by the Secured Party. Should the Secured Party receive, for
application upon the Secured Obligations, any such dividend or payment that is otherwise payable to
any Grantor, and that, as between such Grantor and the Secured Party, shall constitute a credit
upon the Subsidiary Grantor Claims, then upon payment in full of the Secured Obligations, the
intended recipient shall, following payment in full in cash of all other Secured Obligations,
become subrogated to the rights of the Secured Party to the extent that such payments to the
Secured Party on the Subsidiary Grantor Claims have contributed toward the liquidation of the
Secured Obligations, and such subrogation shall be with respect to that proportion of the Secured
Obligations that would have been unpaid if the Secured Party had not received dividends or payments
upon the Subsidiary Grantor Claims, but in no event shall exercise such subrogation rights prior to
payment in full in cash of all other Secured Obligations.

     7.3 Payments Held in Trust. In the event that notwithstanding Section 7.1 and
Section 7.2 any Grantor should receive any funds, payments, claims or distributions which
are prohibited by such Sections, then it agrees: (a) to hold in trust for the Secured Party an
amount equal to the amount of all funds, payments, claims or distributions so received, and (b)
that it shall have absolutely no dominion over the amount of such funds, payments, claims or
distributions except to pay them promptly to the Secured Party; and each Grantor covenants promptly
to pay the same to the Secured Party.

22

 

     7.4 Liens Subordinate. Each Grantor agrees that, until the Release Date with respect
to such Grantor, any Liens securing payment of the Subsidiary Grantor Claims shall be and remain
inferior and subordinate to any Liens securing payment of the Secured Obligations, regardless of
whether such encumbrances in favor of such Grantor or the Secured Party presently exist or are
hereafter created or attach. Without the prior written consent of the Secured Party, no Grantor,
during the period in which any of the Secured Obligations are outstanding shall (a) exercise or
enforce any creditor’s right it may have against any debtor in respect of the Subsidiary Grantor
Claims, or (b) foreclose, repossess, sequester or otherwise take steps or institute any action or
proceeding (judicial or otherwise, including without limitation the commencement of or joinder in
any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce
any Lien held by it.

     7.5 Notation of Records. All promissory notes and all accounts receivable ledgers or
other evidence of the Subsidiary Grantor Claims accepted by or held by any Grantor shall contain a
specific written notice thereon that the indebtedness evidenced thereby is subordinated under the
terms of this Agreement.

SECTION 8.

MISCELLANEOUS

     8.1 Amendments in Writing. None of the terms or provisions of this Agreement may be
waived, amended, supplemented or otherwise modified except in accordance with Section 11.1
of the Credit Agreement.

     8.2 Notices. All notices, requests and demands to or upon the Secured Party or any
Grantor hereunder shall be effected in the manner provided for in Section 11.2 of the Credit
Agreement; provided that any such notice, request or demand to or upon any Subsidiary Grantor shall
be addressed to such Subsidiary Grantor at its notice address set forth on Schedule I hereto.

     8.3 No Waiver by Course of Conduct; Cumulative Remedies. The Secured Party shall not
by any act (except by a written instrument pursuant to Section 8.1), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced
in any Default or Event of Default. No failure to exercise, nor any delay in exercising, on the
part of the Secured Party, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Secured Party of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Secured Party would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided by law.

     8.4 Enforcement Expenses; Indemnification. (a) Each Subsidiary Grantor agrees to pay
or reimburse the Secured Party for all its costs and expenses incurred in enforcing or preserving
any rights under this Agreement and the other Loan Documents to which such Subsidiary Grantor is a
party, including, without limitation, the reasonable fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to the Secured Party.

     (b) Each Subsidiary Grantor agrees to pay, and to save the Secured Party harmless from, any
and all liabilities with respect to, or resulting from any delay in paying, any and all stamp,
excise, sales or other taxes which may be payable or determined to be payable with respect to any
of the Collateral or in connection with any of the transactions contemplated by this Agreement.

23

 

     (c) Each Subsidiary Grantor agrees to pay, and to save the Secured Party harmless from, any
and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement to the extent the Borrower would be
required to do so pursuant to Section 11.6 of the Credit Agreement.

     (d) The agreements in this Section 8.4 shall survive repayment of the Secured
Obligations and all other amounts payable under the Credit Agreement and the other Loan Documents
and shall survive, as to the Secured Party, the resignation or removal of such Secured Party.

     8.5 Successors and Assigns. This Agreement shall be binding upon the successors and
assigns of each Grantor and shall inure to the benefit of the Secured Party and its successors and
permitted assigns; provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the Secured Party.

     8.6 Set-Off. Each Grantor hereby irrevocably authorizes the Secured Party at any time
and from time to time while an Event of Default shall have occurred and be continuing, without
notice to such Grantor or any other Grantor, any such notice being expressly waived by each
Grantor, to set-off and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by the Secured Party to or for the credit or the account of
such Grantor, or any part thereof in such amounts as the Secured Party may elect, against and on
account of the obligations and liabilities of such Grantor to the Secured Party hereunder and
claims of every nature and description of the Secured Party against such Grantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document or otherwise, as the
Secured Party may elect, whether or not the Secured Party has made any demand for payment and
although such obligations, liabilities and claims may be contingent or unmatured. The Secured
Party shall notify such Grantor promptly of any such set-off and the application made by the
Secured Party of the proceeds thereof, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Secured Party under this
Section 8.6 are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which the Secured Party may have.

     8.7 Counterparts. This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by facsimile), and all of said
counterparts taken together shall be deemed to constitute one and the same instrument.

     8.8 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     8.9 Section Headings. The Section headings used in this Agreement are for convenience
of reference only and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.

     8.10 Integration. This Agreement, the Credit Agreement and the other Loan Documents
represent the agreement of the Grantors and the Secured Party with respect to the subject matter
hereof and thereof, and there are no promises, undertakings, representations or warranties by the
Secured Party

24

 

relative to subject matter hereof and thereof not expressly set forth or referred to herein or
in the Credit Agreement or the other Loan Documents.

     8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK.

     8.12 Submission To Jurisdiction; Waivers.

     Each Grantor hereby irrevocably and unconditionally:

     (a) submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United States District Court
of the Southern District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court;

     (b) consents that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

     (c) agrees that service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar form of mail), postage
prepaid, to such Grantor at its address referred to in Section 8.2 or at such other address
of which the Secured Party shall have been notified pursuant thereto;

     (d) agrees that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other jurisdiction; and

     (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding any special, exemplary, punitive or consequential
damages.

     8.13 Acknowledgements. Each Grantor hereby acknowledges that:

     (a) it has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents to which it is a party;

     (b) the Secured Party has no fiduciary relationship with or duty to any Grantor arising out of
or in connection with this Agreement or any of the other Loan Documents, and the relationship
between the Grantors, on the one hand, and the Secured Party, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

     (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by
virtue of the transactions contemplated hereby among the Grantors and the Secured Party.

     8.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF

25

 

OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     8.15 Additional Grantors. Each Subsidiary of any Grantor that is required to become a
party to this Agreement pursuant to Section 7.11 of the Credit Agreement shall become a Grantor for
all purposes of this Agreement upon execution and delivery by such Subsidiary of an Assumption
Agreement in the form of Annex I hereto.

     8.16 Releases.

     (a) After the Termination Date, the Collateral shall be released from the Liens created hereby
and this Agreement and all obligations (other than those expressly stated to survive such
termination) of the Secured Party and each Grantor hereunder shall terminate, all without delivery
of any instrument or performance of any act by any party, and all rights to the Collateral shall
revert to the Grantors. At the request and sole expense of any Grantor following any such
termination, the Secured Party shall deliver to such Grantor any Collateral owned by such Grantor
and held by the Secured Party hereunder, and execute and deliver to such Grantor such documents as
such Grantor shall reasonably request to evidence such termination, at such Grantor’s sole cost and
expense.

     (b) If any of the Collateral or any Mortgaged Property (as defined in any Mortgage) shall be
sold, transferred or otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Secured Party, at the request and sole expense of such Grantor, shall execute
and deliver to such Grantor, without any representation or warranty by the Secured Party, all
releases or other documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral or Mortgaged Property. At the request and sole expense of the Borrower,
a Subsidiary Grantor shall be released from its obligations hereunder in the event that all the
Equity Interests of such Subsidiary Grantor shall be sold, transferred or otherwise disposed of in
a transaction permitted by the Credit Agreement; provided that the Borrower shall have
delivered to the Secured Party, at least ten Business Days prior to the date of the proposed
release, a written request for release identifying the relevant Subsidiary Grantor and the terms of
the sale or other disposition in reasonable detail, including the price thereof and any expenses in
connection therewith, together with a certification by the Borrower stating that such transaction
is in compliance with the Credit Agreement and the other Loan Documents.

26

 

     IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be duly executed and
delivered as of the date first above written.

	 	 	 	 	 	 	 
	 	 	I-FLOW CORPORATION, as Secured Party	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Donald M. Earhart
 

Donald M. Earhart
	 	 
	 

	 	Title:
	 	Chairman, President & Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	ICELAND ACQUISITION SUBSIDIARY, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Pat LaVecchia
 

Pat LaVecchia
	 	 
	 

	 	Title:
	 	Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	HAPC, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Pat LaVecchia
 

Pat LaVecchia
	 	 
	 

	 	Title:
	 	Secretary	 	 

S-1

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