CREDIT AND GUARANTY AGREEMENT

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

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.

     “ 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

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.

     “ 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

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.

     “ 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;

     (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.

     “ 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.

     “ 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

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;

     (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

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

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

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

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.

     “ 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.

     “ 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.

     “ 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 .

     “ 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.

     “ 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);

     (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

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:

     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 .

(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,

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 ).

     (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.

     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

     (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 ”).

     (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

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)).

     (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 Securi