CREDIT AND SECURITY AGREEMENT

Exhibit 10.1

CREDIT AND SECURITY AGREEMENT

      THIS CREDIT AND SECURITY AGREEMENT (as the same may be amended, supplemented, restated or otherwise modified from time to time, the “ Agreement ”) is dated as of May 29, 2007 by and among (a) ISOTIS, INC. , a Delaware corporation, ISOTIS ORTHOBIOLOGICS, INC. , a Washington corporation, and any additional Borrower that may hereafter be added to this Agreement (each individually as a “Borrower” and collectively as “Borrowers”), (b) MERRILL LYNCH CAPITAL, a division of Merrill Lynch Business Financial Services Inc. , individually as a Lender, and as Administrative Agent, Sole Lead Arranger and Sole Bookrunner and (c) Silicon Valley Bank and the other financial institutions or other entities from time to time parties hereto, each as a Lender.

RECITALS

Borrowers have requested that Lenders make available to Borrowers the financing facilities as described herein. Lenders are willing to extend such credit to Borrowers under the terms and conditions herein set forth.

AGREEMENT

NOW, THEREFORE , in consideration of the premises and the agreements, provisions and covenants herein contained, Borrowers, Lenders and Administrative Agent agree as follows:

ARTICLE 1 — DEFINITIONS

      Section 1.1 Certain Defined Terms.

     The following terms have the following meanings:

     “ Account Debtor ” means “account debtor”, as defined in Article 9 of the UCC, and any other obligor in respect of an Account.

     “ Accounts ” means collectively any “account” (as defined in Article 9 of the UCC), any accounts receivable (whether in the form of payments for services rendered or goods sold, rents, license fees or otherwise), any “payment intangibles” (as defined in Article 9 of the UCC), and IP Proceeds and all other rights to payment and/or reimbursement of every kind and description, whether or not earned by performance, and all proceeds of any of the foregoing.

     “ Administrative Agent ” means Merrill Lynch, in its capacity as administrative agent for the Lenders hereunder, as such capacity is established in, and subject to the provisions of, Article 11, and the successors of Merrill Lynch in such capacity.

     “ Affiliate ” means with respect to any Person (a) any Person that directly or indirectly controls such Person, (b) any Person which is controlled by or is under common control with such controlling Person, and (c) each of such Person’s (other than, with respect to any Lender, any Lender’s) officers or directors (or Persons functioning in substantially similar roles) and the spouses, parents, descendants and siblings of such officers, directors or other Persons. As used in this definition, the term “control” of a Person means the possession, directly or indirectly, of the power to vote ten percent (10%) or more of any class of voting securities of such Person or to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

     “ Anti-Terrorism Laws ” means any Laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by OFAC.

     “ Approved Fund ” means any (i) investment company, fund, trust, securitization vehicle or conduit that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar

© 2006 Merrill Lynch Capital

extensions of credit in the ordinary course of its business or (ii) any Person (other than a natural person) which temporarily warehouses loans for any Lender or any entity described in the preceding clause (i) and that, with respect to each of the preceding clauses (i) and (ii), is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) a Person (other than a natural person) or an Affiliate of a Person (other than a natural person) that administers or manages a Lender.

     “ Asset Disposition ” means any sale, lease, license, transfer, assignment or other consensual disposition by any Credit Party of any asset. For the avoidance of doubt, the continued existence of any license agreement pursuant to which any Credit Party or any Subsidiary of any Credit Party licenses as the licensor any of its Intellectual Property, which such license agreement is either (x) in existence on the Closing Date or (y) entered into by the applicable Credit Party after the Closing Date in accordance with Section 5.4, shall not be deemed to be an “Asset Disposition” for any purpose under this Agreement.

     “ Assignment Agreement” means an agreement substantially in the form of Exhibit A hereto .

     “ Bankruptcy Code ” means Title 11 of the United States Code entitled “Bankruptcy”, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto.

     “ Base Rate ” means the LIBOR Rate.

     “ Base Rate Margin ” means (a) 3.00% per annum with respect to the Revolving Loans and other Obligations (other than the Term Loan), and (b) 4.50% per annum with respect to the Term Loan.

     “ Blocked Person ” means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list or is named as a “listed person” or “listed entity” on other lists made under any Anti-Terrorism Law.

     “ Borrower ” and “ Borrowers ” mean the entity(ies) described in the first paragraph of this Agreement and each of their successors and permitted assigns.

     “ Borrower Representative ” means Principal Borrower, in its capacity as Borrower Representative pursuant to the provisions of Section 2.9, or any successor Borrower Representative selected by Borrowers and approved by Administrative Agent.

     “ Borrowing Base ” means:

          (a) the product of (i) eighty-five percent (85.0%) multiplied by (ii) the aggregate net amount at such time of the Eligible Accounts; minus

          (b) the amount of any reserves and/or adjustments provided for in this Agreement.

     “ Borrowing Base Certificate ” means a certificate, duly executed by a Responsible Officer of Borrower Representative, appropriately completed and substantially in the form of Exhibit C hereto.

     “ Business Day ” means any day except a Saturday, Sunday or other day on which either the New York Stock Exchange is closed, or on which commercial banks in Chicago and New York City are authorized by law to close.

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

     “ Change in Control ” means any of the following events: (a) any Person or two or more Persons acting in

© 2006 Merrill Lynch Capital

concert shall have acquired beneficial ownership, directly or indirectly, of, or shall have acquired by contract or otherwise, or shall have entered into a contract or arrangement that, upon consummation, will result in its or their acquisition of or control over, voting stock of Principal Borrower (or other securities convertible into such voting stock) representing 20% or more of the combined voting power of all voting stock of Principal Borrower; (b) Principal Borrower ceases to own, as applicable, (x) prior to the completion of the Swiss Squeeze-Out Transactions, at least 90.5% of the issued and outstanding capital stock of the Swiss Subsidiary or (y) from and after the completion of the Swiss Squeeze-Out Transactions, 100% of the issued and outstanding capital stock of the Swiss Subsidiary; (c) OrthoBiologics ceases to be a wholly-owned direct Subsidiary of either the Swiss Subsidiary or Principal Borrower (it being understood that at any one time, only one of the Swiss Subsidiary or Principal Borrower may own the stock of OrthoBiologics), (d) the Swiss Subsidiary ceases to own 100% of the issued and outstanding capital stock of any of its Subsidiaries other than OrthoBiologics or (e) Principal Borrower ceases to own, directly or indirectly, 100% of the capital stock of any of its Subsidiaries other than the Swiss Subsidiary, OrthoBiologics or any wholly-owned Subsidiary of the Swiss Subsidiary. As used herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 of the Securities and Exchange Commission under the Securities Exchange Act of 1934; or (c) any “Change of Control”, “Change in Control”, or terms of similar import under any Subordinated Debt Document..

     “ Closing Date ” means the date of this Agreement.

     “ Closing Date Accell Products” means Borrower’s “Accell” orthobiologics Products marketed as of the Closing Date as “Accell TBM” and “Accell Putty”..

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

     “ Collateral ” means all property, now existing or hereafter acquired, that is mortgaged or pledged to, or purported to be subjected to a Lien in favor of, Administrative Agent, for the benefit of Administrative Agent and Lenders, pursuant to this Agreement and the Security Documents, including, without limitation, all of the property described in Schedule 9.1 hereto.

     “ Commitment Annex ” means Annex A to this Agreement.

     “ Commitment Expiry Date ” means June 1, 2010.

     “ Compliance Certificate ” means a certificate, duly executed by a Responsible Officer of Borrower Representative, appropriately completed and substantially in the form of Exhibit B hereto.

     “ Contingent Obligation ” means, with respect to any Person, any direct or indirect liability of such Person: (a) with respect to any Debt of another Person (a “ Third Party Obligation ”) if the purpose or intent of such Person incurring such liability, or the effect thereof, is to provide assurance to the obligee of such Third Party Obligation that such Third Party Obligation will be paid or discharged, or that any agreement relating thereto will be complied with, or that any holder of such Third Party Obligation will be protected, in whole or in part, against loss with respect thereto; (b) with respect to any undrawn portion of any letter of credit issued for the account of such Person or as to which such Person is otherwise liable for the reimbursement of any drawing; (c) under any swap agreement or other derivative instrument, to the extent not yet due and payable; (d) to make take-or-pay or similar payments if required regardless of nonperformance by any other party or parties to an agreement; or (e) for any obligations of another Person pursuant to any guaranty or pursuant to any agreement to purchase, repurchase or otherwise acquire any obligation or any property constituting security therefor, to provide funds for the payment or discharge of such obligation or to preserve the solvency, financial condition or level of income of another Person. The amount of any Contingent Obligation shall be equal to the amount of the obligation so guarantied or otherwise supported or, if not a fixed and determinable amount, the Borrower Representative’s reasonable estimation of the maximum amount so guarantied or otherwise supported.

      Contracts ” means (a) employment agreements covering the management of any Credit Party, (b) collective bargaining agreements or other similar labor agreements covering any employees of any Credit Party, (c) agreements for managerial, consulting or similar services to which any Credit Party is a party or by which it is

© 2006 Merrill Lynch Capital

bound, (d) agreements regarding any Credit Party, its assets or operations or any investment therein to which any of its equityholders is a party or by which it is bound, (e) real estate leases, Intellectual Property licenses, agreements providing for the sale or transfer of rights to Intellectual Property providing for ongoing royalty or similar payment to the seller or transferor, or other lease or license agreements to which any Credit Party is a party, either as lessor or lessee, or as licensor or licensee (other than licenses arising from the purchase of “off the shelf” products), or seller/transferor or buyer/transferee, or (f) customer, distribution, marketing or supply agreements to which any Credit Party is a party, (g) partnership agreements to which any Credit Party is a general partner or joint venture agreements to which any Credit Party is a party, (h) [RESERVED], or (i) any other agreements or instruments to which any Credit Party is a party, and the breach, nonperformance or cancellation of which, or the failure of which to renew, could reasonably be expected to have a Material Adverse Effect.

     “ Credit Exposure ” means any period of time during which the Revolving Loan Commitment or Term Loan Commitment is outstanding or any Loan, Reimbursement Obligation or other Obligation remains unpaid or any Letter of Credit or Support Agreement remains outstanding; provided, however, that no Credit Exposure shall be deemed to exist solely due to the existence of contingent indemnification liability, absent the assertion of a claim, or the known existence of a claim reasonably likely to be asserted, with respect thereto.

     “ Credit Party ” means any guarantor under a guaranty of the Obligations or any part thereof, any Borrower and any other Person (other than Administrative Agent, a Lender or a participant of a Lender), whether now existing or hereafter acquired or formed, that becomes obligated as a borrower, guarantor, surety, indemnitor, pledgor, assignor or other obligor under any Financing Document; and “ Credit Parties ” means all such Persons, collectively.

     “ Debt ” of a Person means at any date, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services, except trade accounts payable arising and paid on a timely basis and in the Ordinary Course of Business, (d) all capital leases of such Person, (e) all non-contingent obligations of such Person to reimburse any bank or other Person in respect of amounts paid under a letter of credit, banker’s acceptance or similar instrument, (f) all equity securities of such Person subject to repurchase or redemption otherwise than at the sole option of such Person, (g) all Debt or other obligations secured by a Lien on any asset of such Person, whether or not such obligation is otherwise an obligation of such Person, (h) “earnouts”, purchase price adjustments, profit sharing arrangements, deferred purchase money amounts and similar payment obligations or continuing obligations of any nature of such Person arising out of purchase and sale contracts; (i) all Debt of others guarantied by such Person; and (j) off-balance sheet liabilities and/or Pension Plan liabilities or Multiemployer Plan liabilities of such Persons. Without duplication of any of the foregoing, Debt of Borrowers shall include any and all Loans and Letter of Credit Liabilities.

     “ Default ” means any condition or event which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

     “ Defaulted Lender ” means, so long as such failure shall remain in existence and uncured, any Lender which shall have failed to make any Loan or other credit accommodation, disbursement, settlement or reimbursement required pursuant to the terms of any Financing Document.

     “ Deposit Account ” means a “deposit account” (as defined in Article 9 of the UCC).

     “ Deposit Account Control Agreement ” means an agreement, in form and substance satisfactory to Administrative Agent, among Administrative Agent, any applicable Borrower and each bank or financial institution in which such Borrower maintains a Deposit Account pursuant to which Administrative Agent shall obtain “control” (as defined in Article 9 of the UCC) over such Deposit Account..

     “ Dollars ” or “ $ ” means the lawful currency of the United States of America.

     “ Eligible Accounts ” means, subject to the criteria below, an account receivable of a Borrower, which was generated in the Ordinary Course of Business, which was generated originally in the name of such Borrower and not acquired via assignment or otherwise. The net amount of Eligible Accounts at any time shall be (a) the face amount

© 2006 Merrill Lynch Capital

of such Eligible Accounts as originally billed minus all cash collections and other proceeds of such Account received from or on behalf of the Account Debtor thereunder as of such date and any and all returns, rebates, discounts (which may, at Administrative Agent’s option, be calculated on shortest terms), credits, allowances or excise taxes of any nature at any time issued, owing, claimed by Account Debtors, granted, outstanding or payable in connection with such Accounts at such time, and (b) adjusted by applying percentages (known as “liquidity factors”) by payor and/or payor class based upon the applicable Borrower’s actual recent collection history for each such payor and/or payor class in a manner consistent with Administrative Agent’s underwriting practices and procedures. Such liquidity factors may be adjusted by Administrative Agent from time to time as warranted by Administrative Agent’s underwriting practices and procedures and using Administrative Agent’s good faith credit judgment. Without limiting the generality of the foregoing, no Account shall be an Eligible Account if:

     (a) the Account remains unpaid more than ninety (90) days past the claim or invoice date (but in no event more than one hundred fifteen (115) days after the applicable goods or services have been rendered or delivered);

     (b) the Account is subject to any defense, set-off, recoupment, counterclaim, deduction, discount, credit, chargeback, freight claim, allowance, or adjustment of any kind (but only to the extent of such defense, set-off, recoupment, counterclaim, deduction, discount, credit, chargeback, freight claim, allowance, or adjustment), or the applicable Borrower is not able to bring suit or otherwise enforce its remedies against the Account Debtor through judicial process;

     (c) if the Account arises from the sale of goods, any part of any goods the sale of which has given rise to the Account has been returned, rejected, lost, or damaged (but only to the extent that such goods have been so returned, rejected, lost or damaged);

     (d) if the Account arises from the sale of goods, the sale was not an absolute, bona fide sale, or the sale was made on consignment or on approval or on a sale-or-return or bill-and-hold or progress billing basis, or the sale was made subject to any other repurchase or return agreement, or the goods have not been shipped to the Account Debtor or its designee or the sale was not made in compliance with applicable Laws;

     (e) if the Account arises from the performance of services, the services have not actually been performed or the services were undertaken in violation of any law or the Account represents a progress billing for which services have not been fully and completely rendered;

     (f) the Account is subject to a Lien other than a Permitted Lien, or Administrative Agent does not have a Lien on such Account;

     (g) the Account is evidenced by Chattel Paper or an Instrument of any kind, or has been reduced to judgment, unless Administrative Agent has “control” (as defined in Article 9 of the UCC) over and/or possession of (as applicable depending on whether such asset is tangible or electronic) such Chattel Paper or Instrument;

     (h) the Account Debtor is an Affiliate or Subsidiary of a Credit Party, or if the Account Debtor holds any Debt of a Credit Party;

     (i) more than fifty percent (50%) of the aggregate balance of all Accounts owing from the Account Debtor obligated on the Account are ineligible under subclause (a) above (in which case, all Accounts from such Account Debtor shall be ineligible);

     (j) without limiting the provisions of subclause (i) above, fifty percent (50%) or more of the aggregate unpaid Accounts from the Account Debtor obligated on the Account are not deemed Eligible Accounts under this Agreement for any reason;

     (k) the total unpaid Accounts of the Account Debtor obligated on the Account exceed twenty percent (20%) of the net amount of all Eligible Accounts owing from all Account Debtors (but only the amount of the Accounts of such Account Debtor exceeding such 20% limitation shall be considered ineligible);

© 2006 Merrill Lynch Capital

     (l) any covenant, representation or warranty contained in the Financing Documents with respect to such Account has been breached in any respect;

     (m) the Account is unbilled or has not been invoiced to the Account Debtor;

     (n) the Account is an obligation of an Account Debtor that is the federal (or local) government or a political subdivision thereof, unless Administrative Agent has agreed to the contrary in writing and Administrative Agent has received from the Account Debtor the acknowledgement of Administrative Agent’s notice of assignment of such obligation pursuant to this Agreement;

     (o) the Account is an obligation of an Account Debtor that has suspended business, made a general assignment for the benefit of creditors, is unable to pay its debts as they become due or as to which a petition has been filed (voluntary or involuntary) under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or the Account is an Account as to which any facts, events or occurrences exist which could reasonably be expected to impair the validity, enforceability or collectibility of such Account or reduce the amount payable or delay payment thereunder;

     (p) the Account Debtor has its principal place of business or executive office outside the United States

     (q) the Account is payable in a currency other than United States dollars;

     (r) the Account Debtor is an individual;

     (s) the Borrower owning such Account has not signed and delivered to Administrative Agent notices, in the form requested by Administrative Agent, directing the Account Debtors to make payment to the applicable Lockbox Account;

     (t) the Account includes late charges or finance charges (but only such portion of the Account shall be ineligible);

     (u) the Account arises out of the sale of any Inventory upon which any other Person holds, claims or asserts a Lien; or

     (v) the Account or Account Debtor fails to meet such other specifications and requirements which may from time to time be established by Administrative Agent in its good faith credit judgment and discretion exercised in good faith.

     “ Eligible Assignee ” means (i) a Lender, (ii) an Affiliate of a Lender, (iii) an Approved Fund, and (iv) any other Person (other than a natural person) approved by (a) Administrative Agent, and (b) unless an Event of Default has occurred and is continuing, Borrower Representative (such approval of Borrower Representative not to be unreasonably withheld or delayed, and shall be deemed provided unless expressly withheld by Borrower Representative within five (5) Business Days of request therefor); provided that notwithstanding the foregoing, (x) “Eligible Assignee” shall not include Borrowers or any of Borrowers’ Affiliates or Subsidiaries and (y) no proposed assignee intending to assume all or any portion of the Revolving Loan Commitment or any unfunded portion of the Term Loan Commitment shall be an Eligible Assignee unless such proposed assignee either already holds a portion of such Revolving Loan Commitment or Term Loan Commitment, or has been approved as an Eligible Assignee by Administrative Agent.

      Environmental Laws ” means any and all Laws relating to the environment or the effect of the environment on human health or to emissions, discharges or releases of pollutants, contaminants, medical wastes, Hazardous Materials or wastes into the environment, including ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, medical wastes, Hazardous Materials or wastes or the clean-up or other remediation thereof.

© 2006 Merrill Lynch Capital

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as the same may be amended, modified or supplemented from time to time, and any successor statute thereto, and any and all rules or regulations promulgated from time to time thereunder.

     “ ERISA Affiliate ” shall mean any person required to be aggregated with any Borrower or any of its Subsidiaries under Section 414(b), 414(c), 414(m) or 414(o) of the Code.

     “ ERISA Employee Benefit Plan ” means any employee benefit plan within the meaning of Section 3(3) (other than a Pension Plan or a Multiemployer Plan) which is maintained or otherwise contributed to by any Borrower or any Subsidiary of any Borrower or any other ERISA Affiliate.

     “ Event of Default ” has the meaning set forth in Section 10.1.

     “ Excluded Property ” has the meaning set forth in Schedule 9.1 .

     “ Financing Documents ” means this Agreement, any Notes, the Security Documents, any fee letter among Merrill Lynch and any of the Borrowers relating to the transactions contemplated hereby, any subordination or intercreditor agreement pursuant to which any Debt and/or any Liens securing such Debt is subordinated to all or any portion of the Obligations and all other documents, instruments and agreements related to the Obligations and heretofore executed, executed concurrently herewith or executed at any time and from time to time hereafter, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.

     “ Foreign Subsidiary ” means any Subsidiary of any Borrower that is not organized under the laws of any state of the United States or the District of Columbia.

     “ GAAP ” means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the United States accounting profession), which are applicable to the circumstances as of the date of determination.

     “ Governmental Authority ” means any nation or government, any state or other political subdivision thereof, and any agency, department or Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other Person owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing, whether domestic or foreign.

     “ Hazardous Materials ” means (a) any “hazardous substance” as defined in CERCLA, (b) any “hazardous waste” as defined by the Resource Conservation and Recovery Act, (c) asbestos, (d) polychlorinated biphenyls, (e) petroleum, its derivatives, by-products and other hydrocarbons, (f) mold, and (g) any other pollutant, medical waste, toxic, radioactive, caustic or otherwise hazardous substance regulated under Environmental Laws.

     “ Indemnitees ” has the meaning set forth in Section 12.15.

     “ Intellectual Property ” means, with respect to any Person, all patents, patent applications and like protections, including improvements, divisions, continuation, renewals, reissues, extensions and continuations in part of the same, trademarks, trade names, trade styles, trade dress, service marks, logos and other business identifiers and, to the extent permitted under applicable law, any applications therefore, whether registered or not, and the goodwill of the business of such Person connected with and symbolized thereby, copyright rights, copyright applications, copyright registrations and like protections in each work of authorship and derivative works, whether published or unpublished, technology, know-how and processes, operating manuals, trade secrets, computer hardware and software, rights to unpatented inventions and all applications and licenses therefor, used in or necessary for the conduct of business by such Person and all claims for damages by way of any past, present or future infringement of any of the foregoing.

     “ Investment ” means any investment in any Person, whether by means of acquiring (whether for cash,

© 2006 Merrill Lynch Capital

property, services, securities or otherwise) or holding securities, capital contributions, loans, time deposits, advances, guaranties or otherwise. The amount of any Investment shall be the original cost of such Investment plus the cost of all additions thereto, without any adjustments for increases or decreases in value, or write-ups, write-downs or write-offs with respect thereto.

      “IP Proceeds” has the meaning set forth in Schedule 9.1 .

     “ Laws ” means any and all federal, state, provincial, territorial, local and foreign statutes, laws, judicial decisions, regulations, guidances, guidelines, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, governmental agreements and governmental restrictions, whether now or hereafter in effect, which are applicable to any Credit Party in any particular circumstance. “ Laws ” includes, without limitation, Specific Laws, Healthcare Laws and Environmental Laws.

     “ LC Issuer ” means one or more banks, trust companies or other Persons in each case expressly identified by Administrative Agent from time to time, in its sole discretion, as an LC Issuer for purposes of issuing one or more Letters of Credit hereunder. Without limitation of Administrative Agent’s discretion to identify any Person as an LC Issuer, no Person shall be designated as an LC Issuer unless such Person maintains reporting systems acceptable to Administrative Agent with respect to letter of credit exposure and agrees to provide regular reporting to Administrative Agent satisfactory to it with respect to such exposure.

     “ Lender ” means each of (a) Merrill Lynch and Silicon Valley Bank, each in its capacity as a lender hereunder, (b) each other Person party hereto in its capacity as a lender hereunder, (c) each other Person that becomes a party hereto as Lender pursuant to Section 12.6, and (d) the respective successors of all of the foregoing, and “Lenders” means all of the foregoing.

     “ Lender Letter of Credit ” means a Letter of Credit issued by an LC Issuer that is also, at the time of issuance of such Letter of Credit, a Lender.

     “ Letter of Credit ” means a standby letter of credit issued for the account of any Borrower by an LC Issuer which expires by its terms within one year after the date of issuance and in any event at least thirty (30) days prior to the Commitment Expiry Date. Notwithstanding the foregoing, a Letter of Credit may provide for automatic extensions of its expiry date for one or more successive one (1) year periods provided that the LC Issuer that issued such Letter of Credit has the right to terminate such Letter of Credit on each such annual expiration date and no renewal term may extend the term of the Letter of Credit to a date that is later than the thirtieth (30th) day prior to the Commitment Expiry Date.

     “ Letter of Credit Liabilities ” means, at any time of calculation, the sum of (a) without duplication, the amount then available for drawing under all outstanding Lender Letters of Credit and all Supported Letters of Credit, in each case without regard to whether any conditions to drawing thereunder can then be met, plus (b) without duplication, the aggregate unpaid amount of all reimbursement obligations in respect of previous drawings made under all such Lender Letters of Credit and Supported Letters of Credit.

     “ LIBOR Rate ” means a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to (a) the rate of interest which is identified and normally published by Bloomberg Professional Service Page BBAM 1 as the offered rate for loans in United States dollars for the period of one (1) month under the caption British Bankers Association LIBOR Rates as of 11:00 a.m. (London time) as adjusted on a daily basis and effective on the second full Business Day after each such day (unless such date is not a Business Day, in which event the next succeeding Business Day will be used); divided by (b) the sum of one minus the daily average during the preceding month of the aggregate maximum reserve requirement (expressed as a decimal) then imposed under Regulation D of the Board of Governors of the Federal Reserve System (or any successor thereto) for “Eurocurrency Liabilities” (as defined therein). If Bloomberg Professional Service (or another nationally-recognized rate reporting source acceptable to Administrative Agent) no longer reports the LIBOR or Administrative Agent determines in good faith that the rate so reported no longer accurately reflects the rate available to Administrative Agent in the London Interbank Market or if such index no longer exists or if Page BBAM 1 no longer exists or accurately reflects the rate available to Administrative Agent in the London Interbank Market, Administrative Agent may select a comparable

© 2006 Merrill Lynch Capital

replacement index or replacement page, as the case may be.

     “ Lien ” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind, or any other type of preferential arrangement that has the practical effect of creating a security interest, in respect of such asset. For the purposes of this Agreement and the other Financing Documents, any Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

     “ Litigation ” means any action, suit or proceeding before any court, mediator, arbitrator or Governmental Authority.

     “ Loan(s) ” means the Term Loan, the Revolving Loans and each and every advance under the Term Loan, the Revolving Loans or any combination of the foregoing, as the context may require. All references herein to the “making” of a Loan or words of similar import shall mean, with respect to the Term Loan, the making of any advance in respect of a Term Loan.

     “ Lockbox ” has the meaning set forth in Section 2.11.

     “ Lockbox Account ” means an account or accounts maintained at the Lockbox Bank into which collections of Accounts are paid.

     “ Lockbox Bank ” has the meaning set forth in Section 2.11.

     “ Material Adverse Effect ” means with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences, whether or not related, a material adverse change in, or a material adverse effect upon, any of (i) the condition (financial or otherwise), operations, business or properties of the Credit Parties taken as a whole, (ii) the rights and remedies of Administrative Agent or Lenders under any Financing Document, or the ability of any Credit Party to perform any of its obligations under any Financing Document to which it is a party, (iii) the legality, validity or enforceability of any Financing Document, (iv) the existence, perfection or priority of any security interest granted in any Financing Document, or (v) the value of any material Collateral.

     “ Material Contracts ” means (i) those Contracts set forth in clauses (b), (g) and (i) of the definition of “Contracts” herein and (ii) those Contracts set forth in clauses (a), (c), (d), (e) and (f) of the definition of “Contracts” herein that require payment of more than $250,000 in any year.

     “ Maximum Lawful Rate ” has the meaning set forth in Section 2.7.

     “ Merrill Lynch ” means Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., and its successors.

     “ Multiemployer Plan ” means a multiemployer plan within the meaning of Section 4001(a)(3) of ERISA which is covered by Title IV of ERISA.

     “ Non-Funding Lender ” means a Lender that has delivered a notice to the Administrative Agent stating that such Lender shall cease making Revolving Loans and/or advances in respect of the Term Loan (if any portion of the Term Loan Commitment remains unfunded and available at the applicable time) due to the non-satisfaction of one or more conditions set forth in Article 7, and specifying any such non-satisfied conditions; provided, however , that any Lender delivering any such notice shall be a Non-Funding Lender solely over the period commencing on the Business Day following receipt by Administrative Agent of such notice, and terminating on such date that such Lender has either revoked the effectiveness of such notice or acknowledged to Administrative Agent the satisfaction of the condition specified in such notice.

© 2006 Merrill Lynch Capital

     “ Notes ” shall have the meaning set forth in Section 2.3.

     “ Notice of Borrowing ” means a notice of a Responsible Officer of Borrower Representative, appropriately completed and substantially in the form of Exhibit D hereto.

     “ Notice of LC Credit Event ” means a notice from a Responsible Officer of Borrower Representative to Administrative Agent with respect to any issuance, increase or extension of a Letter of Credit specifying: (a) the date of issuance or increase of a Letter of Credit; (b) the identity of the LC Issuer with respect to such Letter of Credit, (c) the expiry date of such Letter of Credit; (d) the proposed terms of such Letter of Credit, including the face amount; and (e) the transactions that are to be supported or financed with such Letter of Credit or increase thereof.

     “ Obligations ” means all obligations, liabilities and indebtedness (monetary (including post-petition interest, whether or not allowed) or otherwise) of each Credit Party under this Agreement or any other Financing Document, in each case howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due. In addition to, but without duplication of, the foregoing, the Obligations shall include, without limitation, all obligations, liabilities and indebtedness arising from or in connection with all Support Agreements and all Lender Letters of Credit.

     “ OFAC ” means the U.S. Department of Treasury Office of Foreign Assets Control.

     “ OFAC Lists ” means, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.

     “ Ordinary Course of Business ” means, in respect of any transaction involving any Credit Party, the ordinary course of business of such Credit Party, as conducted by such Credit Party materially in accordance with past practices.

     “ Organizational Documents ” means, with respect to any Person other than a natural person, the documents by which such Person was organized (such as a certificate of incorporation, certificate of limited partnership or articles of organization, and including, without limitation, any certificates of designation for preferred stock or other forms of preferred equity) and which relate to the internal governance of such Person (such as by-laws, a partnership agreement or an operating, limited liability or members agreement).

     “ OrthoBiologics ” means IsoTis OrthoBiologics, Inc., a Washington corporation.

     “ OrthoBiologics/Swiss Indebtedness ” means the Debt owing from OrthoBiologics to the Swiss Subsidiary pursuant to (i) that certain Promissory Note, dated March 27, 2007 by OrthoBiologics in favor of IsoTis, S.A. in an original aggregate principal amount of $3,000,000 and (ii) that certain Promissory Note, dated February 12, 2007 by OrthoBiologics in favor of IsoTis, S.A. in an original aggregate principal amount of $1,000,000.

     “ Osteotech Indebtedness ” means the Debt of OrthoBiologics owing to Osteotech, Inc. pursuant to that certain Promissory Note, dated October, 2003, assumed by OrthoBiologics as part of the acquisition of GenSci OrthoBiologics, Inc. in favor of Osteotech, Inc. as more fully described on Schedule 5.1 .

     “ Osteotech LC Cash Collateral ” means the cash collateral maintained by OrthoBiologics and/or the Swiss Subsidiary in a restricted cash account at City National Bank to secure that certain Irrevocable Standby Letter of Credit issued by City National Bank in a declining amount securing the Osteotech Indebtedness as more fully described on Schedule 5.1 .

     “ Payment Account ” means the account specified on the signature pages hereof into which all payments by or on behalf of each Borrower to Administrative Agent under the Financing Documents shall be made, or such other account as Administrative Agent shall from time to time specify by notice to Borrower Representative.

© 2006 Merrill Lynch Capital

     “ Pension Plan ” means an employee pension benefit plan (other than a Multiemployer Plan) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code.

     “ Permits ” means all governmental licenses, authorizations, provider numbers, supplier numbers, registrations, permits, drug or device authorizations and approvals, certificates, franchises, qualifications, accreditations, consents and approvals required under all applicable Laws and required in order to carry on its business as now conducted.

     “ Permitted Acquisitions ” means the acquisition of all or substantially all of the assets of another Person, or of a business line or a unit or division of another Person, provided that after giving effect to such acquisition, no Event of Default has occurred and is continuing or would exist after giving effect to such acquisition, there shall be no decrease in the Borrowers’ tangible net worth after giving effect to such acquisition (as confirmed to Administrative Agent pursuant to a written certificate from a Responsible Officer of Borrowers) and the aggregate amount of such acquisitions during the term of this Agreement (together with, but without duplication of, (i) the aggregate amount of all acquisitions permitted under clause (h) of the definition of Permitted Investments during the term of this Agreement plus (ii) the aggregate amount of all Permitted Foreign Investments (without duplication for any Permitted Foreign Investment that is also a Permitted Acquisition or a Permitted Investment under clause (h) of the definition thereof) during the term of this Agreement) shall not exceed $500,000.

      “Permitted Affiliate” means with respect to any Person (a) any Person that directly or indirectly controls such Person, and (b) any Person which is controlled by or is under common control with such controlling Person. As used in this definition, the term “control” of a Person means the possession, directly or indirectly, of the power to vote eighty percent (80%) or more of any class of voting securities of such Person or to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

     “ Permitted Asset Dispositions ” means the following Asset Dispositions provided that, except in the case of any Asset Disposition described in clause (i) below, at the time of such Asset Disposition, no Default or Event of Default exists or would result from such Asset Disposition: (i) dispositions of Inventory in the Ordinary Course of Business and not pursuant to any bulk sale, (ii) dispositions of furniture, fixtures and equipment in the Ordinary Course of Business that the applicable Borrower or Subsidiary determines in good faith is no longer used or useful in the business of such Borrower and its Subsidiaries, (iii) the granting of non-exclusive licenses (or exclusive licenses limited to a particular geographic range outside of the United States or field of use outside of the United States), (iv) dispositions approved by Administrative Agent and, if the disposition pertains to Intellectual Property, by Required Lenders and (v) dispositions of cash equivalents for fair market value.

     “ Permitted Contest ” means, with respect to any tax obligation or other obligation allegedly or potentially owing from any Borrower to any governmental tax authority or other third party, a contest maintained in good faith by appropriate proceedings promptly instituted and diligently conducted and with respect to which such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made on the books and records and financial statements of the applicable Borrower(s); provided, however , that (a) compliance with the obligation that is the subject of such contest is effectively stayed during such challenge; (b) Borrowers’ title to, and its right to use, the Collateral is not adversely affected thereby and Administrative Agent’s Lien and priority on the Collateral are not adversely affected, altered or impaired thereby; (c) neither any Accounts or Intellectual Property or IP Proceeds nor any material amount of other Collateral, or any interest in any such foregoing described Collateral, shall not be in any danger of being sold, forfeited or lost by reason of such contest by Borrowers, provided that the existence of any inchoate Liens for which no levy has been made with respect to any such forgoing described Collateral shall not be deemed to violate the provisions of this clause (c); (d) Borrowers have given Administrative Agent notice of the intent to so contest the obligation and the commencement of such contest and upon request by Administrative Agent, from time to time, notice of the status of such contest by Borrowers and/or confirmation of the continuing satisfaction of this definition; and (e) upon a final determination of such contest, Borrowers shall promptly comply with the requirements thereof.

     “ Permitted Contingent Obligations ” means: (a) Contingent Obligations arising in respect of the Debt under the Financing Documents and Letter of Credit Liabilities; (b) Contingent Obligations outstanding on the date

© 2006 Merrill Lynch Capital

of this Agreement and set forth on Schedule 5.1 (but not including any refinancings, extensions, increases or amendments to the indebtedness underlying such Contingent Obligations other than extensions of the maturity thereof without any other change in terms); (c) Contingent Obligations incurred in the Ordinary Course of Business with respect to surety and appeal bonds, performance bonds and other similar obligations not to exceed $25,000 in the aggregate at any time outstanding and with respect to bonds provided to utilities with respect to utility services provided to Borrowers in the Ordinary Course of Business; (d) Contingent Obligations arising from endorsements of negotiable instruments for collection or deposit in the Ordinary Court of Business; (e) Contingent Obligations arising under interest rate or foreign currency or foreign exchange rate swap agreements or other derivative instruments concerning interest rates or foreign currency or foreign exchange rates entered into in the Ordinary Course of Business and not entered to for speculative purposes; (f) customary seller’s indemnification obligations and liabilities arising in connection with any Permitted Asset Dispositions or any other Asset Dispositions made in compliance with this Agreement in favor of the purchasers in such Asset Disposition transactions; (g) guarantees by any Borrower(s) of any Debt of any Subsidiary organized in the United States if such Debt is Permitted Indebtedness or otherwise incurred in compliance with this Agreement, (h) Permitted Foreign Investments pursuant to clause (c) of the definition thereof; and (i) other Contingent Obligations not permitted by the preceding clauses, not to exceed $25,000 in the aggregate at any time outstanding.

      “Permitted Distributions” means the following Restricted Distributions: (a) dividends or distributions that are (1) made by any direct Subsidiary of any Borrower to such parent Borrower, (2) made by any second-tier Foreign Subsidiary to a Foreign Subsidiary that is a wholly-owned Subsidiary of a Borrower or (3) made pursuant to and permitted by Section 5.14(b) below; (b) dividends solely in common stock; (c) repurchases of stock of former employees, directors or consultants pursuant to stock repurchase agreements so long as an Event of Default does not exist at the time of such repurchase and would not exist after giving effect to such repurchase, provided that such repurchase does not exceed $50,000 in the aggregate per fiscal year; (d) payments made by any Borrower to any other Borrower in respect of any intercompany Debt constituting Permitted Indebtedness under clause (l) of the definition of Permitted Indebtedness and (e) payments made by any Foreign Subsidiary to any Borrower in respect of any intercompany Debt constituting Permitted Indebtedness under clause (m) of the definition of Permitted Indebtedness.

     “ Permitted Foreign Investment ” means any of the following, so long as the aggregate amount of all moneys, funds or other assets transferred, expended or otherwise paid as consideration by any Borrower in any and all such transactions during the term of this Agreement, together with, but without duplication of, (i) the aggregate amount of all Permitted Acquisitions that are not also Permitted Foreign Investments during the term of this Agreement plus (ii) the aggregate amount of all acquisitions permitted under clause (h) of the definition of Permitted Investments that are not also Permitted Foreign Investments during the term of this Agreement, shall not exceed $500,000: (a) Permitted Acquisitions consisting of transactions whereby any one or more Borrowers shall make payments on behalf of or provide moneys or funds to any Foreign Subsidiary for the purpose of allowing such Foreign Subsidiary to acquire all or substantially all of the assets of another Person, or of a business line or a unit or division of another Person, (b) Permitted Investments under clause (h) of the definitions thereof consisting of transactions whereby any one or more Borrowers shall make payments on behalf of or provide moneys or funds to any Foreign Subsidiary for the purpose of allowing such Foreign Subsidiary to acquire all or substantially all of the capital stock of another Person or form and capitalize a new Subsidiary, (c) the making of any intercompany Loans by and from any one or more Borrowers to and payable by any Foreign Subsidiary and/or the guaranty by any one or more Borrowers of any Debt of any Foreign Subsidiary that is Permitted Indebtedness, (d) the making of any capital contribution by any one or more Borrowers to any Foreign Subsidiary or (d) any other transfer of money, funds or other assets by and from any one or more Borrowers to any Foreign Subsidiary.

      “Permitted Indebtedness” means: (a) Borrower’s Debt to Administrative Agent and each Lender under this Agreement and the other Financing Documents; (b) Debt incurred as a result of endorsing negotiable instruments received in the Ordinary Course of Business; (c) purchase money Debt not to exceed $100,000 at any time (whether in the form of a loan or a lease) used solely to acquire equipment (including though capital leases) used in the Ordinary Course of Business and secured only by such equipment (including any refinancing or, extensions to such Debt so long as (i) none of the payments scheduled on, the principal amortization of or ultimate maturity of the applicable Debt is shortened or advanced, (ii) the principal amount outstanding at the time of such refinance or extension on the applicable Debt is not increased and (iii) no additional Liens in any assets or property

© 2006 Merrill Lynch Capital

of any Borrower or any Subsidiary of any Borrower in excess of any Liens granted in connection with the original incurrence of such Debt in accordance with clause (h) of the definition of Permitted Liens are granted or created); (d) Debt existing on the date of this Agreement and described on Schedule 5.1 (but not including any refinancings, extensions, increases or amendments to such Debt other than extensions of the maturity thereof without any other change in terms); (e) Debt, if any, arising under interest rate or foreign currency or foreign exchange rate swap agreements or other derivative instruments concerning interest rates or foreign currency or foreign exchange rates entered into in the Ordinary Course of Business and not for speculative purposes; (f) trade accounts payable arising in the Ordinary Course of Business; (g) Subordinated Debt, (h) any Debt incurred as a Required Securities Financing (h) Debt consisting of promissory notes issued by any Credit Party to current or former officers, directors or employees to purchase or redeem stock of Principal Borrower upon the termination or separation of any such officer, director or employer pursuant to any employment agreement or contract between such Credit Party and such person, or pursuant to the terms of any official stock repurchase plan of Principal Borrower; (i) Debt in respect of netting services and overdraft protections in connection with any Credit Party’s Deposit Accounts between the applicable Credit Party and the applicable financial institutions at which any such Deposit Accounts are maintained; (j) customary seller’s indemnification obligations and liabilities arising in connection with any Permitted Asset Dispositions or any other Asset Dispositions made in compliance with this Agreement in favor of the purchasers in such Asset Disposition transactions; (k) Debt consisting of equity securities of Principal Borrower pursuant to which Principal Borrower has any obligations to repurchase or redeem such equity securities (other than obligations arising upon exercise by Principal Borrower of any rights of repurchase or redemption held by and exercisable at the sole option of Principal Borrower), whether pursuant to mandatory repurchase or redemption on date(s) certain, upon the happening of any contingency, upon demand of holders of such equity securities under any applicable circumstances or otherwise, but only if and so long as no such rights of repurchase or redemption held by the holders of such equity securities and no such obligations of Principal Borrower to make payment in respect of any such rights of repurchase or redemption will or could mature and become exercisable by such holders and due and payable by Principal Borrower under any circumstances prior to the date that is six (6) months later than the Commitment Expiry Date as in effect at the time such equity securities are issued, (l) intercompany Debt made by any Borrower to any other Borrower, (m) intercompany Debt made by any Borrower to any Foreign Subsidiary but only if and so long as any such intercompany Debt shall constitute a Permitted Foreign Investment hereunder and (n) other unsecured Debt not otherwise permitted hereunder in an aggregate principal amount outstanding at any one time of $500,000 or less; provided that, except pursuant to clause (d) above, no intercompany Debt by and from any Foreign Subsidiary or any other Subsidiary that is not a Borrower hereunder to and payable by any one or more Borrowers shall be Permitted Indebtedness under this Agreement for any purpose whatsoever.

      “Permitted Investments” means: (a) Investments shown on Schedule 5.5 and existing on the Closing Date; (b) (i) cash equivalents, and (ii) any similar short term Investments permitted by Borrowers’ investment policy, as amended from time to time, provided that such investment policy (and any such amendment thereto) has been approved in writing by Administrative Agent; (c) Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the Ordinary Course of Business; (d) Investments consisting of loans to employees, officers or directors relating to the purchase of equity securities of Borrowers or their Subsidiaries pursuant to employee stock purchase plans or agreements approved by Borrowers’ Board of Directors (or other governing body), but the aggregate of all such loans outstanding may not exceed $100,000 at any time; (e) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the Ordinary Course of Business; (f) Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the Ordinary Course of Business; provided that this subpart (f) shall not apply to Investments of Borrowers in any Subsidiary; (g) Investments consisting of Deposit Accounts or Securities Accounts subject to a Deposit Account Control Agreement or Securities Account Control Agreement in favor of Administrative Agent or which are otherwise permitted under Section 5.9; (h) Investments consisting of the acquisition of all or substantially all of the capital stock of another Person or the formation and capitalization of a new Subsidiary provided that after giving effect to such acquisition, no Event of Default has occurred and is continuing or would exist after giving effect to such acquisition, there shall be no decrease in the Borrowers’ tangible net worth after giving effect to such acquisition (as confirmed to Administrative Agent pursuant to a written certificate from a Responsible Officer of Borrowers), the aggregate amount of such acquisitions during the term of this Agreement (together with, but without duplication of, (i) the aggregate amount of all Permitted Acquisitions during the term of this Agreement plus (ii) the aggregate amount of

© 2006 Merrill Lynch Capital

all Permitted Foreign Investments (without duplication for any Permitted Foreign Investment that is also a Permitted Investment under this clause (h) or a Permitted Acquisition) during the term of this Agreement) shall not exceed $500,000 and the Borrowers shall have complied with Section 5.5(b) with respect to any such new Subsidiary that is not a Foreign Subsidiary; (j) interest rate or foreign currency or foreign exchange rate swap agreements or other derivative instruments concerning interest rates or foreign currency or foreign exchange entered into in the Ordinary Course of Business and not for speculative purposes; (k) loans to officers and employees in the Ordinary Course of Business in an aggregate principal amount outstanding at any time of $100,000 or less; (l) Investments constituting Permitted Acquisitions; (m) intercompany Loans permitted under clauses (k) and (l) of the definition of Permitted Indebtedness and the OrthoBiologics/Swiss Indebtedness, (n) other Permitted Foreign Investments not covered under the preceding clauses (h) and (m), and (o) other Investments in an amount not exceeding $50,000 in the aggregate.

     “ Permitted Liens ” means: (a) deposits or pledges of cash to secure obligations under workmen’s compensation, social security or similar laws, or under unemployment insurance (but excluding Liens arising under ERISA) pertaining to a Borrower’s employees, if any; (b) deposits or pledges of cash to secure bids, tenders, contracts (other than contracts for the payment of money or the deferred purchase price of property or services), leases, statutory obligations, surety and appeal bonds and other obligations of like nature arising in the Ordinary Course of Business; (c) carrier’s, warehousemen’s, mechanic’s, workmen’s, materialmen’s or other like Liens on Collateral, other than Accounts and Intellectual Property, arising in the Ordinary Course of Business with respect to obligations which are not due, or which are being contested pursuant to a Permitted Contest; (d) Liens on Collateral, other than Accounts, for taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or the subject of a Permitted Contest; (e) attachments, appeal bonds, judgments and other similar Liens on Collateral other than Accounts, for sums not exceeding $25,000 in the aggregate arising in connection with court proceedings; provided, however , that the execution or other enforcement of such Liens is effectively stayed and the claims secured thereby are the subject of a Permitted Contest; (f) Liens and encumbrances in favor of Administrative Agent under the Financing Documents; (g) Liens on assets other than Accounts, Inventory, Intellectual Property and IP Proceeds, and the proceeds and products thereof, to the extent existing on the date hereof and set forth on Schedule 5.2; (h) any Lien on any equipment securing Debt permitted under subpart (c) of the definition of Permitted Indebtedness provided, however , that such Lien attaches concurrently with or within twenty (20) days after the acquisition thereof; (i) zoning restrictions, easements, licenses, or other restrictions on the use of any real property owned by any Credit Party or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value, or marketability of such real property owned by any Credit Party; (j) rights of setoff and banker’s liens arising by operation of law in favor of financial institutions at which any Credit Party maintains any Deposit Accounts or Securities Accounts; (k) rights of third-party licensees under any licenses by any Credit Party of Intellectual Property owned by such Credit Party either existing on and disclosed to Administrative Agent prior to the Closing Date or entered into after the Closing Date in compliance with the terms of this Agreement; and (l) rights and interests retained by lessors and licensors in property and assets leased (other than pursuant to capital leases) or licensed to any Credit Party.

      “Permitted Mergers” means a merger, consolidation or amalgamation, made while no Default or Event of Default is outstanding and which will not result in the occurrence of a Default or Event of Default after giving effect to such transaction, of (a) Principal Borrower with or into any other Person who is not a Blocked Person provided that (i) the Principal Borrower is the surviving entity, (ii) the holders of the equity interests in the Principal Borrower immediately prior to such consolidation or merger or amalgamation represent more than fifty percent (50%) of the aggregate outstanding equity interests of the Principal Borrower immediately following such consolidation or merger or amalgamation, and (iii) such consolidation or merger or amalgamation would not result in a decrease of more than ten percent (10%) of the tangible net worth of the Borrowers prior to such transaction, (b) any Borrower (other than Principal Borrower) with or into any other Borrower provided that in any such merger involving Principal Borrower, Principal Borrower shall be the surviving entity; (c) any wholly-owned Subsidiary of any Borrower into any Borrower provided that such Borrower is the surviving entity; (d) any Subsidiary of any Borrower that is not also a Borrower hereunder into any other Subsidiary of such Borrower that is not also a Borrower hereunder (or into any Borrower if such Borrower is the surviving entity) and (e) any Person that is the target and subject of a Permitted Acquisition (including any Permitted Acquisition that is a Permitted Foreign Investment) with or into a Borrower or any Subsidiary of any Borrower to effectuate such Permitted Acquisition provided that such Borrower or Subsidiary is the surviving entity.

© 2006 Merrill Lynch Capital

      “Permitted Modifications” means such amendments or modifications to a Borrower’s or any Subsidiary’s Organizational Documents (other than those involving a change in the name of a Borrower or a Subsidiary or involving a reorganization of the Borrower or a Subsidiary under the laws of a different jurisdiction) that would not adversely affect the rights and interests of the Administrative Agent or Lenders and fully disclosed to Administrative Agent within thirty (30) days after such amendments or modifications have become effective; provided, however, that such amendments or modifications shall not, without Administrative Agent’s prior written consent, authorize and/or issue any capital stock or other equity securities which (a) are subject to any mandatory repurchase or redemption provisions or put rights in favor of any holder thereof (not including any repurchase or redemption provisions exercisable solely at the option of such Borrower or Subsidiary), (b) constitute Debt under the definition set forth herein, except for any Debt constituting a Required Securities Financing, or (c) are subject to any provisions requiring the mandatory payment of any dividends at any time (not including any specified dividends which accrue at specified times but which are payable only as, when and if declared by the board of directors or other similar governance body or manager or partner of such Borrower or Subsidiary and/or upon liquidation of such Borrower or Subsidiary); provided that none of the foregoing shall be construed to prevent (or to prevent any necessary amendment or modification to the Organizational Document of Principal Borrower to provide for) the payment of regularly scheduled interest payments on or the payment of the principal balance upon scheduled maturity of any Debt constituting a Required Securities Financing; and provided further that such “Permitted Modifications” shall include, for the avoidance of doubt, the amendment to the bylaws of IsoTis S.A. setting the number of directors effective as of the date hereof.

      “Permitted Transfers” means the collective reference to one or more transfers, via a sale and not by pledge or hypothecation, which, in the aggregate during the term of this Agreement, result in a transfer of legal or beneficial ownership or control of up to twenty percent (20%) of the direct or indirect ownership or voting interests in the Borrowers or any guarantor to a Person or Persons, (a) purchasing such ownership interest in a public offering registered with the SEC or (b) other than a Blocked Person, that is (i) an investor so long as Borrowers have given Administrative Agent at least fifteen (15) days prior written notice of the identity of the investor, together with such information as Administrative Agent shall deem necessary to confirm that such investor is not a Blocked Person or (ii) at the time of such transfer, already a holder of direct or indirect ownership or voting interests in the Borrowers. Notwithstanding the limitations set forth in the foregoing sentence (a) any holder of direct or indirect ownership or voting interests in the Borrowers which is a partnership may transfer such holder’s rights to such holder’s constituent partners, retired partners (including spouses, ancestors, lineal descendants and siblings of such partners or spouses who acquire such interests by gift, will or intestate succession) or their respective Affiliates, (b) any holder of direct or indirect ownership or voting interests in the Borrowers which is a limited liability company may transfer such holder’s right to such holder’s members, (c) any holder of direct or indirect ownership or voting interests in the Borrowers which is a natural person may transfer such holder’s rights to any immediate family member or to any trust created for the benefit of such holder or his or her immediate family members, and (d) any holder of direct or indirect ownership or voting interests in the Borrowers may transfer such holder’s rights to a Permitted Affiliate of such holder (provided that no transfer of any given interest pursuant to this subpart may be made more often than once per twelve (12) month period), subject in each case to such transferee’s agreeing in writing to be bound by the rights and restrictions of this Agreement; and any such transfer described in the foregoing clauses (a) through (d) shall be deemed a “Permitted Transfer” and shall not count toward the twenty percent (20%) limitation described above.

     “ Person ” means any natural person, corporation, limited liability company, professional association, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any Governmental Authority.

     “ Pharma Rider ” means the Pharma Rider among Borrowers, Lenders and Administrative Agent dated as of the date and made part hereof.

     “ Principal Borrower ” means IsoTis, Inc., a Delaware corporation.

      “Pro Rata Share ” means (a) with respect to a Lender’s obligation to make advances in respect of a Term Loan and such Lender’s right to receive payments of principal and interest with respect to the Term Loans, the Term

© 2006 Merrill Lynch Capital

Loan Commitment Percentage of such Lender, (b) with respect to a Lender’s obligation to make Revolving Loans, such Lender’s right to receive payments of principal and interest with respect thereto, such Lender’s right to receive the unused line fee described in Section 2.2(b), and such Lender’s obligation to share in Letter of Credit Liabilities and to receive the related Letter of Credit fee described in Section 2.5(b), the Revolving Loan Commitment Percentage of such Lender, and (c) for all other purposes with respect to any Lender, the percentage obtained by dividing (i) the sum of the Revolving Loan Commitment Amount and Term Loan Commitment Amount of such Lender (or, in the event the Revolving Loan Commitment or Term Loan Commitment shall have been terminated, such Lender’s then existing Revolving Loan Outstandings and then outstanding principal advances of such Lender under the Term Loan, as applicable), by (ii) the sum of the Revolving Loan Commitment and Term Loan Commitment Amount (or, in the event the Revolving Loan Commitment or Term Loan Commitment shall have been terminated, the then existing Revolving Loan Outstandings and then outstanding principal advances of such Lenders under the Term Loan, as applicable) of all Lenders.

     “ Reimbursement Obligations ” means, at any date, the obligations of each Borrower then outstanding to reimburse (a) Administrative Agent for payments made by Administrative Agent under a Support Agreement, and/or (b) any LC Issuer, for payments made by such LC Issuer under a Lender Letter of Credit.

     “ Required Lenders ” means at any time Lenders holding (a) seventy-one percent (71.0%) or more of the sum of the Revolving Loan Commitment and the Term Loan Commitment (taken as a whole), or (b) if the Revolving Loan Commitment or Term Loan Commitment has been terminated, seventy-one percent (71.0%) or more of the sum of (x) the then aggregate outstanding principal balance of the Loans plus (y) the then aggregate amount of Letter of Credit Liabilities.

     “ Required Securities Financing ” means a securities issuance and sale transaction pursuant to which (x) Principal Borrower shall have completed the authorization, issuance and sale of either (I) shares of additional capital stock of Principal Borrower pursuant to a private placement or public offering, which such capital stock shall not be subject to any mandatory repurchase or redemption provisions or put rights in favor of any holder thereof (not including any repurchase or redemption provisions exercisable solely at the option of Principal Borrower) or otherwise constitute Debt under the definition set forth herein or be subject to any provisions requiring the mandatory payment of any dividends at any time (not including any specified dividends which accrue at specified times but which are payable only as, when and if declared by the board of directors of Principal Borrower and/or upon liquidation of Principal Borrower), or (II) convertible debt of Principal Borrower pursuant to a private placement or public offering, which such convertible debt must meet the requirements and definition of Subordinated Debt under this Agreement, shall have a maturity date of no earlier than and shall not provide for any scheduled principal payment to come due prior to six (6) months later than the Commitment Expiry Date in effect at the time of such private placement and shall otherwise be upon terms and conditions acceptable to Administrative Agent in its reasonable discretion, and (y) in either such case (I) or (II), Principal Borrower shall have received net proceeds of such issuance and sale in an amount of not less than $18,6000,000 and have deposited such net proceeds into a Deposit Account or Securities Account subject to Deposit Account Control Agreement or Securities Account Control Agreement (as applicable) in favor of Administrative Agent.

     “ Required Term Loan Paydown ” shall have the meaning set forth in Section 2.1(a)(ii)(B).

     “ Responsible Officer ” means any of the Chief Executive Officer or Chief Financial Officer of the applicable Borrower.

     “ Restricted Distribution ” means as to any Person (a) any dividend or other distribution (whether in cash, securities or other property) on any equity interest in such Person (except those payable solely in its equity interests of the same class), (b) any payment on account of (i) the purchase, redemption, retirement, defeasance, surrender, cancellation, termination or acquisition of any equity interests in such Person or any claim respecting the purchase or sale of any equity interest in such Person or (ii) any option, warrant or other right to acquire any equity interests in such Person, (c) any management fees, salaries or other fees or compensation to any Person holding an equity interest in a Borrower or a Subsidiary of a Borrower (other than (A) payments of salaries to individuals, (B) directors fees or payment of director indemnification obligations, (C) the issuance of stock options or restricted stock to employees and board members, and (D) advances and reimbursements to employees or directors, all in the

© 2006 Merrill Lynch Capital

Ordinary Course of Business and consistent with past practices), an Affiliate of a Borrower or an Affiliate of any Subsidiary of a Borrower, (d) any lease or rental payments to an Affiliate or Subsidiary of a Borrower unless such lease or rental payments are on terms substantially as favorable to the Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time in a comparable arm’s length transaction with a Person other than an Affiliate or a Subsidiary, (e) repayments of or debt service on loans or other indebtedness held by any Person holding an equity interest in a Borrower or a Subsidiary of a Borrower, an Affiliate of a Borrower or an Affiliate of any Subsidiary of a Borrower unless permitted under and made pursuant to a subordination agreement applicable to such loans or other indebtedness .

     “ Revolving Lender ” means each Lender having a Revolving Loan Commitment Amount in excess of zero (or, in the event the Revolving Loan Commitment shall have been terminated at any time, each Lender at such time having Revolving Loan Outstandings in excess of zero).

      “Revolving Loan Availability” means, at any time, the Revolving Loan Limit less the Revolving Loan Outstandings.

     “ Revolving Loan Borrowing ” means a borrowing of a Revolving Loan.

     “ Revolving Loan Commitment ” means the sum of each Lender’s Revolving Loan Commitment Amount, which is equal to $10,000,000.00.

     “ Revolving Loan Commitment Amount ” means, at any time, (i) as to any Lender that is a Lender on the Closing Date, the dollar amount set forth opposite such Lender’s name on the Commitment Annex under the column “Revolving Loan Commitment Amount”, as such amount may be adjusted from time to time by any amounts assigned (with respect to such other Lender’s portion of Revolving Loans outstanding and its commitment to make Revolving Loans) pursuant to the terms of any and all effective Assignment Agreements to which such Lender is a party and (ii) as to any Lender that becomes a Lender after the Closing Date, the amount of the “Revolving Loan Commitment Amount(s)” of other Lender(s) assigned to such new Lender pursuant to the terms of the effective Assignment Agreement(s) pursuant to which such new Lender shall become a Lender, as such amount may be adjusted from time to time by any amounts assigned (with respect to such other Lender’s portion of Revolving Loans outstanding and its commitment to make Revolving Loans) pursuant to the terms of any and all effective Assignment Agreements to which such Lender is a party.

     “ Revolving Loan Commitment Percentage ” means, at any time, (i) as to any Lender that is a Lender on the Closing Date, the percentage set forth opposite such Lender’s name on the Commitment Annex under the column “Revolving Loan Commitment Percentage”, as such percentage may be adjusted from time to time by any portions thereof assigned (with respect to such other Lender’s portion of Revolving Loans outstanding and its commitment to make Revolving Loans) pursuant to the terms of any and all effective Assignment Agreement to which such Lender is a party, and (ii) as to any Lender that becomes a Lender after the Closing Date, the portion of the “Revolving Loan Commitment Percentage(s)”of other Lender(s) assigned to such new Lender pursuant to the terms of the effective Assignment Agreement(s) pursuant to which such new Lender shall become a Lender, as such percentage may be adjusted from time to time by any portions thereof assigned (with respect to such other Lender’s portion of Revolving Loans outstanding and its commitment to make Revolving Loans) pursuant to the terms of any and all effective Assignment Agreements to which such Lender is a party.

     “ Revolving Loan Limit ” means, at any time, the lesser of (a) the Revolving Loan Commitment and (b) the Borrowing Base.

     “ Revolving Loan Note ” means any Note evidencing any portion of any Revolving Loan.

     “ Revolving Loan Outstandings ” means at any time of calculation the sum of the then existing aggregate outstanding principal amount of Revolving Loans and the then existing Letter of Credit Liabilities.

     “ Revolving Loans ” has the meaning set forth in Section 2.1(b)(i).

© 2006 Merrill Lynch Capital

     “ SEC ” means the United States Securities and Exchange Commission.

     “ Securities Account ” means a “securities account” (as defined in Article 9 of the UCC), an investment account, or other account in which Investment Property or Securities are held or invested for credit to or for the benefit of any Borrower.

     “ Securities Account Control Agreement ” means an agreement, in form and substance satisfactory to Administrative Agent, among Administrative Agent, any applicable Borrower and each securities intermediary in which such Borrower maintains a Securities Account pursuant to which Administrative Agent shall obtain “control” (as defined in Article 9 of the UCC) over such Securities Account.

     “ Security Document ” means this Agreement and any other agreement, document or instrument executed concurrently herewith or at any time hereafter pursuant to which one or more Credit Parties or any other Person either (a) guaranties payment or performance of all or any portion of the Obligations, and/or (b) provides, as security for all or any portion of the Obligations, a Lien on any of its assets in favor of Administrative Agent for its own benefit and the benefit of the Lenders, as any or all of the same may be amended, supplemented, restated or otherwise modified from time to time.

     “ Solvent ” means, with respect to any Person, that such Person (a) owns and will own assets the fair saleable value of which are (i) greater than the total amount of its liabilities (including Contingent Obligations) required to be classified upon a balance sheet as liabilities in accordance with GAAP, and (ii) greater than the amount that will be required to pay the probable liabilities of its then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to it; (b) has capital that is not unreasonably small in relation to its business as presently conducted or after giving effect to any contemplated transaction; and (c) does not intend to incur and does not believe that it will incur debts beyond its ability to pay such debts as they become due.

     “ Subordinated Debt ” means any Debt of Borrowers subject to a Subordination Agreement and incurred with the prior written consent of Administrative Agent pursuant to the applicable Subordinated Debt Documents related thereto and provided in advance to Administrative Agent, all of which documents must be in form and substance acceptable to Administrative Agent in its sole discretion. As of the Closing Date, there is no Subordinated Debt.

     “ Subordinated Debt Documents ” means, with respect to any Debt subject to a Subordination Agreement, any and all documents evidencing and/or securing such Debt. As of the Closing Date, there are no Subordinated Debt Documents.

     “ Subordination Agreement ” means any agreement between Administrative Agent and another creditor of Borrowers, as the same may be amended, supplemented, restated or otherwise modified from time to time in accordance with the terms thereof, pursuant to which the Debt owing from any Borrower(s) and/or the Liens securing such Debt granted by any Borrower(s) to such creditor are subordinated in any way to the Obligations and the Liens created under the Security Documents, the terms and provisions of which such Subordination Agreement has been agreed to by and are acceptable to Administrative Agent in the exercise of its sole discretion.

     “ Subsidiary ” means, with respect to any Person, (a) any corporation of which an aggregate of more than fifty percent (50%) of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, capital stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by such Person or one or more Subsidiaries of such Person, or with respect to which any such Person has the right to vote or designate the vote of more than fifty percent (50%) of such capital stock whether by proxy, agreement, operation of law or otherwise, and (b) any partnership or limited liability company in which such Person and/or one or more Subsidiaries of such Person shall have an interest (whether in the form of voting or participation in profits or capital contribution) of more than fifty percent (50%) or of which any such Person is a general partner or may exercise the powers of a general partner. Unless the context otherwise requires, each reference to a Subsidiary shall be a reference to a Subsidiary of a Borrower.

© 2006 Merrill Lynch Capital

     “ Support Agreement ” has the meaning set forth in Section 2.5(a).

     “ Supported Letter of Credit ” means a Letter of Credit issued by an LC Issuer in reliance on one or more Support Agreements.

     “ Swiss Merger Subsidiary ” has the meaning set forth in Section 5.14(b).

     “ Swiss Squeeze-Out Transactions ” has the meaning set forth in Section 5.14(b).

     “ Swiss Subsidiary ” means: (i) at any time prior to the completion of the Swiss Squeeze-Out Transactions, IsoTis S.A. and (ii) at any time from and after the completion of the Swiss Squeeze-Out Transactions, IsoTis S.A., or, if applicable, any Swiss Merger Subsidiary into which and/or with which IsoTis S.A. shall have merged if such Swiss Merger Subsidiary and not IsoTis S.A. is the surviving entity of such merger.

     “ Taxes ” has the meaning set forth in Section 2.8.

     “ Term Loan ” has the meaning set forth in Section 2.1(a).

     “ Term Loan Commitment ” means the sum of each Lender’s Term Loan Commitment Amount, which is equal to $10,000,000.00.

     “ Term Loan Commitment Amount ” means, at any time, (i) as to any Lender that is a Lender on the Closing Date, the dollar amount equal to the dollar amount set forth opposite such Lender’s name on the Commitment Annex under the column “Term Loan Commitment Amount”, as such amount and such Lender’s Term Loan Commitment Percentage may be adjusted from time to time by any amounts assigned (with respect to such other Lender’s portion of Term Loans outstanding) pursuant to the terms of any and all effective Assignment Agreement to which such Lender is a party and (ii) as to any Lender that becomes a Lender after the Closing Date, the amount of the “Term Loan Commitment Amount(s)” of other Lender(s) assigned to such new Lender pursuant to the terms of the effective Assignment Agreement(s) pursuant to which such new Lender shall become a Lender, as such amount may be adjusted from time to time by any amounts assigned pursuant to the terms of any and all effective Assignment Agreement to which such Lender is a party.

     “ Term Loan Commitment Percentage ” means, at any time, (i) as to any Lender that is a Lender on the Closing Date, the percentage set forth opposite such Lender’s name on the Commitment Annex under the column “Term Loan Commitment Percentage”, as such percentage may be adjusted from time to time by any portions thereof assigned (with respect to such other Lender’s portion of Term Loans outstanding and its commitment to make Term Loans) pursuant to the terms of any and all effective assignment agreements to which such Lender is a party, and (ii) as to any Lender that becomes a Lender after the Closing Date, the portion of the “Term Loan Commitment Percentage(s)”of other Lender(s) assigned to such new Lender pursuant to the terms of the effective assignment agreement(s) pursuant to which such new Lender shall become a Lender, as such percentage may be adjusted from time to time by any portions thereof assigned (with respect to any such other Lender’s portion of Term Loans outstanding and its commitment to make Term Loans) pursuant to the terms of any and all effective assignment agreements to which such Lender is a party.

     “ Term Note ” means any Note evidencing any portion of the Term Loan.

     “ Termination Date ” means the earlier to occur of (a) the Commitment Expiry Date, or (b) any date on which Administrative Agent or Required Lenders elect to accelerate the maturity of the Loans or terminate either of the Revolving Loan Commitment or Term Loan Commitment pursuant to Section 10.2.

     “ UCC ” means the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any Collateral.

     “ United States ” means the United States of America.

© 2006 Merrill Lynch Capital

      Section 1.2 Accounting Terms and Determinations. Accounting terms not defined in this Agreement shall be construed following GAAP, and calculations and determinations must be made following GAAP, in each case, applied on a basis consistent with the most recent audited financial statements of Principal Borrower delivered to Administrative Agent prior to the Closing Date; provided, however, that if at any time any change in GAAP would affect the computation of any financial ratio or financial requirement set forth in any Financing Document, and either Borrowers, the Administrative Agent or the Required Lenders shall so request, the Administrative Agent and Borrowers shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders).

      Section 1.3 Other Definitional Provisions. Capitalized terms not defined above but defined in the Pharma Rider shall have the respective meanings given thereto in the Pharma Rider. References in this Agreement to “Articles”, “Sections”, “Annexes”, “Exhibits” or “Schedules” shall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this Agreement unless otherwise specifically provided. Any term defined herein may be used in the singular or plural. “Include”, “includes” and “including” shall be deemed to be followed by “without limitation”. Except as otherwise specified or limited herein, references to any Person include the successors and assigns of such Person. References “from” or “through” any date mean, unless otherwise specified, “from and including” or “through and including”, respectively. References to any statute or act shall include all related current regulations and all amendments and any successor statutes, acts and regulations. References to any statute or act, without additional reference, shall be deemed to refer to federal statutes and acts of the United States. References to any agreement, instrument or document shall include all schedules, exhibits, annexes and other attachments thereto. As used in this Agreement, the meaning of the term “material” or the phrase “in all material respects” is intended to refer to an act, omission, violation or condition which reflects or could reasonably be expected to result in a Material Adverse Effect. References to capitalized terms that are not defined herein, but are defined in the UCC, shall have the meanings given them in the UCC. All Riders attached hereto are hereby incorporated herein by this reference and made a part hereof. Headings and captions used in the Financing Documents (including the Exhibits, Schedules and Annexes hereto and thereto) are included for convenience of reference only and shall not be given any substantive effect.

ARTICLE 2 — LOANS AND LETTERS OF CREDIT

      Section 2.1 Loans.

      (a) Term Loans.

          (i) Term Loan Amounts . On the terms and subject to the conditions set forth herein, the Lenders hereby agree to make to Borrowers a term loan in a maximum principal amount equal to the Term Loan Commitment (“Term Loan”). Each Lender’s obligation to fund the Term Loan shall be limited to such Lender’s Term Loan Commitment Percentage, and no Lender shall have any obligation to fund any portion of any Term Loan required to be funded by any other Lender, but not so funded. No Borrower shall have any right to reborrow any portion of the Term Loan that is repaid or prepaid from time to time. The Term Loan shall be funded in one advance on the Closing Date and shall be in the amount of $10,000,000.

           (ii) Scheduled Repayments; Mandatory Prepayments; Optional Prepayments .

               (A) There shall become due and payable, and Borrowers shall repay the Term Loan through, scheduled payments as set forth on Schedule 2.1 attached hereto. Notwithstanding the payment schedule set forth above, on the Termination Date, there shall become due, and Borrowers shall pay, the entire outstanding principal amount of the Term Loan, together with accrued and unpaid interest thereon. The Term Loan Commitment shall terminate on the Termination Date.

               (B) There shall become due and payable and Borrowers shall prepay the Term Loan in the following amounts and at the following times: (i) no later than the third Business Day after the date on which any Credit Party (or Administrative Agent as loss payee or assignee) receives any casualty proceeds in excess of $100,000 of assets upon which Administrative Agent maintained a Lien, an amount equal to one hundred percent (100%) of such proceeds (net of out-of-pocket expenses and repayment of secured debt permitted under clause (c) of

© 2006 Merrill Lynch Capital

the definition of Permitted Indebtedness and encumbering the property that suffered such casualty), or such lesser portion of such proceeds as Administrative Agent shall elect to apply to the Obligations, subject to the provisions of Section 4.3(c) regarding reinvestment of insurance proceeds; and (ii) an amount equal to any interest that is deemed to be in excess of the Maximum Lawful Rate (as defined below) and is required to be applied to the reduction of the principal balance of the Loans by any Lender as provided for in Section 2.7. In addition, unless a Required Securities Financing by Principal Borrower has been completed and Principal Borrower shall have received the proceeds of thereof no later than August 31, 2007, Borrowers shall be required to prepay an amount of $7,500,000 to be applied to the principal balance of the Term Loan, and any such payment shall be due and payable on September 1, 2007 (any such payment that may become due under the provisions of this sentence, if any, the “Required Term Loan Paydown”).

               (C) Borrowers shall have no right to prepay all or any portion of the Term Loan other than prepayments that are required under Section 2.1(a)(ii)(B).

           (iii) All Prepayments . Except as this Agreement may specifically provide otherwise, all prepayments of the Term Loan shall be applied by Administrative Agent to the Obligations in inverse order of maturity. The payments required under Schedule 2.1 shall continue in the same amount (for so long as the Term Loan and/or (if applicable) any advance thereunder shall remain outstanding) notwithstanding any partial prepayment, whether mandatory or optional, of the Term Loan.

     (b) Revolving Loans.

           (i) Revolving Loans and Borrowings . On the terms and subject to the conditions set forth herein, each Lender severally agrees to make Loans to Borrowers from time to time as set forth herein (each a “Revolving Loan”, and collectively, “Revolving Loans”) equal to such Lender’s Revolving Loan Commitment Percentage of Revolving Loans requested by Borrowers hereunder, provided, however , that after giving effect thereto, the Revolving Loan Outstandings shall not exceed the Revolving Loan Limit. Borrowers may prepay or repay Revolving Loans (but without any reduction in the Revolving Loan Commitment) from time to time and may reborrow Revolving Loans pursuant to this Section 2.1(b). Borrowers shall deliver to Administrative Agent a Notice of Borrowing with respect to each proposed Revolving Loan Borrowing, such Notice of Borrowing to be delivered no later than noon (Chicago time) two (2) Business Days prior to such proposed borrowing (other than with respect to a Revolving Loan Borrowing to be made on the Closing Date, which Notice of Borrowing shall be delivered no later than noon (Chicago time) on the Closing Date). Each Borrower and each Revolving Lender hereby authorizes Administrative Agent to make Revolving Loans on behalf of Revolving Lenders, at any time in its sole discretion, (A) as provided in Section 2.5(c), with respect to obligations arising under Support Agreements and/or Lender Letters of Credit, and (B) to pay principal owing in respect of the Loans and interest, fees, expenses and other charges of any Credit Party from time to time arising under this Agreement or any other Financing Document. The Borrowing Base shall be determined by Administrative Agent based on the most recent Borrowing Base Certificate delivered to Administrative Agent in accordance with this Agreement and such other information as may be available to Administrative Agent. Without limiting any other rights and remedies of Administrative Agent hereunder or under the other Financing Documents, the Revolving Loans shall be subject to Administrative Agent’s continuing right to withhold from the Borrowing Base reserves, and to increase and decrease such reserves from time to time, if and to the extent that in Administrative Agent’s good faith credit judgment and discretion, such reserves are necessary.

           (ii) Mandatory Revolving Loan Repayments and Prepayments .

               (A) The Revolving Loan Commitment shall terminate on the Termination Date. On such Termination Date, there shall become due, and Borrowers shall pay, the entire outstanding principal amount of each Revolving Loan, together with accrued and unpaid interest thereon.

               (B) If at any time the Revolving Loan Outstandings exceed the Revolving Loan Limit, then, on the next succeeding Business Day, Borrowers shall repay the Revolving Loans or cash collateralize Letter of Credit Liabilities in the manner specified in Section 2.5(e) or cancel outstanding Letters of Credit, or any combination of the foregoing, in an aggregate amount equal to such excess.

© 2006 Merrill Lynch Capital

               (C) Principal payable on account of Revolving Loans shall be payable by Borrowers to Administrative Agent (A) immediately upon the receipt by any Borrower or Administrative Agent of any payments on or proceeds from any of the Accounts, to the extent of such payments or proceeds, and (B) in full on the Termination Date.

           (iii) Optional Prepayments . Borrowers may from time to time prepay the Revolving Loans in whole or in part; provided, however , that any such partial prepayment shall be in an amount equal to $100,000 or a higher integral multiple of $25,000.

      Section 2.2 Interest, Interest Calculations and Certain Fees.

      (a) Interest . From and following the Closing Date, the Loans and the other Obligations shall bear interest at the sum of the Base Rate plus the applicable Base Rate Margin (provided that, in the case of any Obligations other than the Loans, such Obligations shall bear interest as of any date at the highest rate applicable to any of the advances under the Loans outstanding on such date), subject to the provisions of Section 10.4 below regarding default rates of interest. Interest on the Loans shall be paid in arrears on the first (1st) day of each month and on the Termination Date. Interest on all other Obligations shall be payable on demand and on the Termination Date. All interest accruing on and after the Termination Date shall be immediately due and payable as it accrues. For purposes of calculating interest, all funds transferred from the Payment Account for application to any Revolving Loans shall be subject to a two (2) Business Day clearance period.

      (b) Unused Line Fee . From and following the Closing Date, Borrowers shall pay Administrative Agent, for the benefit of all Lenders committed to make Revolving Loans, in accordance with their respective Pro Rata Shares, a fee in an amount equal to (i) (A) the Revolving Loan Commitment minus (B) the average daily balance of the sum of the Revolving Loan Outstandings during the preceding month, multiplied by (ii) 500/1,000 percent (0.50%) per annum. Such fee is to be paid monthly in arrears on the first day of each month.

      (c) Collateral Fee . From and following the Closing Date, Borrowers shall pay Administrative Agent, for its own account and not for the benefit of any other Lenders, a collateral management fee in an amount equal to two thousand and no/100 dollars ($2,000.00) per month. Such fee is to be paid monthly in arrears on the first day of each month.

      (d) Commitment Fee . Contemporaneous with Borrowers’ execution of this Agreement, Borrowers shall pay Administrative Agent, for the benefit of all Lenders committed to make Revolving Loans on the Closing Date, in accordance with their respective Pro Rata Shares, a fee in an amount equal to the Revolving Loan Commitment multiplied by 50/100 percent (0.50%). Contemporaneous with Borrowers execution of this Agreement, Borrowers shall pay Administrative Agent, for the benefit of all Lenders committed to make Term Loan advances on the Closing Date, in accordance with their respective Pro Rata Shares, a fee in an amount equal to the Term Loan Commitment multiplied by 50/100 percent (0.50%). All fees payable pursuant to this paragraph shall be deemed fully earned and non-refundable as of the Closing Date.

      (e) [intentionally blank]

      (f)  Exit Fee . Borrowers shall pay to Administrative Agent, for the benefit of all Lenders committed to make Term Loan advances on the Closing Date, in accordance with their respective Pro Rata Shares, as compensation for the costs of making funds available to Borrowers under this Agreement, an exit fee (the “ Exit Fee ”) calculated in accordance with this subsection and upon the date or dates required under this subsection. The Exit Fee shall be equal to three percent (3.00%) of the aggregate amount of Term Loan advances made by Lenders under this Agreement. The Exit Fee shall become due and payable on the Termination Date. All fees payable pursuant to this paragraph shall be deemed fully accrued and earned as of the Closing Date.

      (g)  Prepayment Fee . If any advance under the Term Loan is prepaid at any time, in whole or in part, for any reason (other than a prepayment required under Section 2.1(a)(ii)(B) (excluding any Required Term Loan Paydown)), whether by voluntary prepayment by Borrowers, by reason of the occurrence of an Event of Default or the acceleration of the Term Loan, or otherwise), or if the Term Loan shall become accelerated and due and payable

© 2006 Merrill Lynch Capital

in full, or if the Lenders’ funding obligations in respect of any unfunded portion of the Term Loan shall terminate prior to the Commitment Expiry Date, Borrowers shall pay to Administrative Agent, for the benefit of all Lenders holding any portion of the Term Loan (to share pro rata in respect of their respective Term Loan Commitment Percentages), as compensation for the costs of such Lenders making funds available to Borrowers under this Agreement, a prepayment fee (the “ Term Loan Prepayment Fee ”) equal to the amount so prepaid multiplied by (i) if such prepayment occurs prior to the first anniversary of the Closing Date, five percent (5.00%), (ii) if such prepayment occurs on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, three percent (3.00%) and (iii) if such prepayment occurs on or after the second anniversary of the Closing Date but prior to the third anniversary of the Closing Date, one percent (1.00%). If the Lenders’ funding commitments and obligations with respect to Revolving Loans under this Agreement terminate for any reason whatsoever (whether by voluntary termination by Borrowers, by reason of the occurrence of an Event of Default or otherwise) prior to the Commitment Expiry Date, Borrowers shall pay to Administrative Agent, for the benefit of all Lenders committed to make Revolving Loan advances (to share pro rata in respect of their respective Revolving Loan Commitment Percentages), as compensation for the costs of such Lenders making funds available to Borrowers under this Agreement, a prepayment fee (the “ Revolving Loan Prepayment Fee ”) equal to the amount of the Revolving Loan Commitment in effect at such time (without giving effect to any reduction thereto by reason of the Event of Default or other event(s) giving rise to the Revolving Loan Prepayment Fee) multiplied by (i) if such termination of the Revolving Loan Commitment occurs prior to the first anniversary of the Closing Date, five percent (5.00%), (ii) if such termination of the Revolving Loan Commitment occurs on or after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, three percent (3.00%) and (iii) if such termination of the Revolving Loan Commitment occurs on or after the second anniversary of the Closing Date but prior to the third anniversary of the Closing Date, one percent (1.00%).

      (h) Audit Fees . Borrowers shall pay to Administrative Agent, for its own account and not for the benefit of any other Lenders, all reasonable fees and expenses in connection with audits and inspections of Borrowers’ books and records, audits, valuations or appraisals of the Collateral, audits of Borrowers’ compliance with applicable Laws and such other matters as Administrative Agent shall deem appropriate, which shall be due and payable on the later of (i) the first Business Day of the month following the date of issuance by Administrative Agent of a written request for payment thereof to Borrowers, or (ii) the tenth (10 ^th ) day following the issuance of such notice; provided, that so long as no Event of Default or Default has occurred, Borrowers shall be liable for such fees and expenses for no more than four (4) such audits in any given calendar year.

      (i) Wire Fees . Borrowers shall pay to Administrative Agent, for its own account and not for the account of any other Lenders, on written demand, any and all fees, costs or expenses which Administrative Agent pays to a bank or other similar institution (including, without limitation, any fees paid by Administrative Agent to any other Lender) arising out of or in connection with (i) the forwarding to Borrowers or any other Person on behalf of Borrowers, by Administrative Agent, of proceeds of the Loans made by any Lender to Borrowers pursuant to this Agreement, and (ii) the depositing for collection, by Administrative Agent, of any check or item of payment received or delivered to Administrative Agent on account of Obligations.

      (j) Late Charges . If payments of principal (other than a final installment of principal upon the Termination Date), interest due on the Obligations, or any other amounts due hereunder or under the other Financing Documents are not timely made and remain overdue for a period of five (5) days, Borrowers, without notice or demand by Administrative Agent, promptly shall pay to Administrative Agent, for the benefit of the Lenders according to their Pro Rata Shares, as additional compensation to Administrative Agent in administering the Obligations, an amount equal to five percent (5.0%) of each delinquent payment.

      (k) Computation of Interest and Related Fees . All interest and fees under each Financing Document shall be calculated on the basis of a 360-day year for the actual number of days elapsed. The date of funding of a Loan shall be included in the calculation of interest. The date of payment of a Loan shall be excluded from the calculation of interest. If a Loan is repaid on the same day that it is made, one (1) day’s interest shall be charged.

     (l)  Automated Clearing House Payments . If Administrative Agent so elects, monthly payments of interest and amortization shall be paid to Administrative Agent by Automated Clearing House debit of immediately available funds from the financial institution account designated by Borrower Representative in the Automated

© 2006 Merrill Lynch Capital

Clearing House debit authorization executed by Borrowers or Borrower Representative in connection with this Agreement, and shall be effective upon receipt. Borrowers shall execute any and all forms and documentation necessary from time to time to effectuate such automatic debiting. In no event shall any such payments be refunded to Borrowers.

      Section 2.3 Notes. The portion of the Loans made by each Lender shall be evidenced, if so requested by such Lender, by one or more promissory notes executed by Borrowers on a joint and several basis (each, a “ Note ”) in an original principal amount equal to such Lender’s Revolving Loan Commitment or Term Loan Commitment.

      Section 2.4 Reserved.

      Section 2.5 Letters of Credit and Letter of Credit Fees.

      (a) Letter of Credit . On the terms and subject to the conditions set forth herein, the Revolving Loan Commitment may be used by Borrowers, in addition to the making of Revolving Loans hereunder, for the issuance, prior to that date which is thirty (30) days prior to the Termination Date, by (i) Administrative Agent, of letters of credit, guaranties or other agreements or arrangements (each, a “Support Agreement”) to induce an LC Issuer to issue or increase the amount of, or extend the expiry date of, one or more Letters of Credit and (ii) a Lender, identified by Administrative Agent, as an LC Issuer, of one or more Lender Letters of Credit, so long as, in each case:

          (i) Administrative Agent shall have received a Notice of LC Credit Event at least five (5) Business Days before the relevant date of issuance, increase or extension; and

          (ii) after giving effect to such issuance, increase or extension, (A) the aggregate Letter of Credit Liabilities under all Letters of Credit do not exceed $2,000,000.00, and (B) the Revolving Loan Outstandings do not exceed the Revolving Loan Limit.

Nothing in this Agreement shall be construed to obligate any Lender to issue, increase the amount of or extend the expiry date of any letter of credit, which act or acts, if any, shall be subject to agreements to be entered into from time to time between Borrowers and such Lender. Each Lender that is an LC Issuer hereby agrees to give Administrative Agent prompt written notice of each issuance of a Lender Letter of Credit by such Lender and each payment made by such Lender in respect of Lender Letters of Credit issued by such Lender.

      (b) Letter of Credit Fee . Borrowers shall pay to Administrative Agent, for the benefit of the Revolving Lenders in accordance with their respective Pro Rata Shares, a letter of credit fee with respect to the Letter of Credit Liabilities for each Letter of Credit, computed for each day from the date of issuance of such Letter of Credit to the date that is the last day a drawing is available under such Letter of Credit, at a rate per annum equal to the Base Rate Margin then applicable to Revolving Loans. Such fee shall be payable in arrears on the last day of each calendar month prior to the Termination Date and on such date. In addition, Borrowers agree to pay promptly to the LC Issuer any fronting or other fees that it may charge in connection with any Letter of Credit.

      (c) Reimbursement Obligations of Borrowers . If either (i) Administrative Agent shall make a payment to an LC Issuer pursuant to a Support Agreement, or (ii) any Lender shall honor any draw request under, and make payment in respect of, a Lender Letter of Credit, (A) the applicable Borrower shall reimburse Administrative Agent or such Lender, as applicable, for the amount of such payment by the end of the day on which Administrative Agent or such Lender shall make such payment and (B) Borrowers shall be deemed to have immediately requested that Revolving Lenders make a Revolving Loan, in a principal amount equal to the amount of such payment (but solely to the extent such Borrower shall have failed to directly reimburse Administrative Agent or, with respect to Lender Letters of Credit, the applicable LC Issuer, for the amount of such payment). Administrative Agent shall promptly notify Revolving Lenders of any such deemed request and each Revolving Lender (other than any such Revolving Lender that was a Non-Funding Lender at the time the applicable Supported Letter of Credit or Lender Letter of Credit was issued) hereby agrees to make available to Administrative Agent not later than noon (Chicago time) on the Business Day following such notification from Administrative Agent such

© 2006 Merrill Lynch Capital

Revolving Lender’s Pro Rata Share of such Revolving Loan. Each Revolving Lender (other than any applicable Non-Funding Lender specified above) hereby absolutely and unconditionally agrees to fund such Revolving Lender’s Pro Rata Share of the Loan described in the immediately preceding sentence, unaffected by any circumstance whatsoever, including, without limitation, (x) the occurrence and continuance of a Default or Event of Default, (y) the fact that, whether before or after giving effect to the making of any such Revolving Loan, the Revolving Loan Outstandings exceed or will exceed the Revolving Loan Limit, and/or (z) the non-satisfaction of any conditions set forth in Section 7.2. Administrative Agent hereby agrees to apply the gross proceeds of each Revolving Loan deemed made pursuant to this Section 2.5(c) in satisfaction of Borrowers’ reimbursement obligations arising pursuant to this Section 2.5(c). Borrowers shall pay interest, on demand, on all amounts so paid by Administrative Agent pursuant to any Support Agreement or to any applicable Lender in honoring a draw request under any Lender Letter of Credit for each day from the date of such payment until Borrowers reimburse Administrative Agent or the applicable Lender therefore (whether pursuant to clause (A) or (B) of the first sentence of this subsection (c)) at a rate per annum equal to the sum of two percent (2%) plus the interest rate applicable to Revolving Loans for such day.

      (d) Reimbursement and Other Payments by Borrowers . The obligations of each Borrower to reimburse Administrative Agent and/or the applicable LC Issuer pursuant to Section 2.5(c) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including the following:

          (i) any lack of validity or enforceability of, or any amendment or waiver of or any consent to departure from, any Letter of Credit or any related document;

          (ii) the existence of any claim, set-off, defense or other right which any Borrower may have at any time against the beneficiary of any Letter of Credit, the LC Issuer (including any claim for improper payment), Administrative Agent, any Lender or any other Person, whether in connection with any Financing Document or any unrelated transaction, provided, however , that nothing herein shall prevent the assertion of any such claim by separate suit or compulsory counterclaim;

          (iii) any statement or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever;

          (iv) any affiliation between the LC Issuer and Administrative Agent; or

          (v) to the extent permitted under applicable law, any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

      (e) Deposit Obligations of Borrowers . In the event any Letters of Credit are outstanding at the time that Borrowers prepay or are required to repay the Obligations or the Revolving Loan Commitment is terminated, Borrowers shall (i) deposit with Administrative Agent for the benefit of all Revolving Lenders cash in an amount equal to one hundred and five percent (105%) of the aggregate outstanding Letter of Credit Liabilities to be available to Administrative Agent, for its benefit and the benefit of issuers of Letters of Credit, to reimburse payments of drafts drawn under such Letters of Credit and pay any fees and expenses related thereto, and (ii) prepay the fee payable under Section 2.5(b) with respect to such Letters of Credit for the full remaining terms of such Letters of Credit assuming that the full amount of such Letters of Credit as of the date of such repayment or termination remain outstanding until the end of such remaining terms. Upon termination of any such Letter of Credit and provided no Event of Default has occurred and is continuing, the unearned portion of such prepaid fee attributable to such Letter of Credit shall be refunded to Borrowers, together with the deposit described in the preceding clause (i) to the extent not previously applied by Administrative Agent in the manner described herein.

      (f) Participations in Support Agreements and Lender Letters of Credit.

          (i) Concurrently with the issuance of each Supported Letter of Credit, Administrative Agent shall be deemed to have sold and transferred to each Revolving Lender (other than any Non-Funding Lenders at the

© 2006 Merrill Lynch Capital

time of such issuance), and each such Revolving Lender shall be deemed irrevocably and immediately to have purchased and received from Administrative Agent, without recourse or warranty, an undivided interest and participation in, to the extent of such Lender’s Pro Rata Share of the Revolving Loan Commitment, Administrative Agent’s Support Agreement liabilities and obligations in respect of such Supported Letter of Credit and Borrowers’ Reimbursement Obligations with respect thereto. Concurrently with the issuance of each Lender Letter of Credit, the LC Issuer in respect thereof shall be deemed to have sold and transferred to each Revolving Lender (other than any Non-Funding Lenders at the time of such issuance), and each such Revolving Lender shall be deemed irrevocably and immediately to have purchased and received from such LC Issuer, without recourse or warranty, an undivided interest and participation in, to the extent of such Lender’s Pro Rata Share of the Revolving Loan Commitment, such Lender Letter of Credit and Borrowers’ Reimbursement Obligations with respect thereto. Any purchase obligation arising pursuant to the immediately two preceding sentences shall be absolute and unconditional and shall not be affected by any circumstances whatsoever.

          (ii) If either (x) Administrative Agent makes any payment or disbursement under any Support Agreement and/or (y) an LC Issuer makes any payment or disbursement under any Lender Letter of Credit, and (A) Borrowers have not reimbursed Administrative Agent or the applicable LC Issuer, as applicable, in full for such payment or disbursement in accordance with Section 2.5(c), or (B) any reimbursement under any Support Agreement or Lender Letter of Credit received by Administrative Agent or any LC Issuer, as applicable, from Borrowers is or must be returned or rescinded upon or during any bankruptcy or reorganization of any Credit Party or otherwise, each Revolving Lender (other than any Revolving Lender that was a Non-Funding Lender at the time of the issuance of such Supported Letter of Credit or Lender Letter of Credit) shall be irrevocably and unconditionally obligated to pay to Administrative Agent or the applicable LC Issuer, as applicable, its Pro Rata Share of such payment or disbursement (but no such payment shall diminish the Obligations of Borrowers under Section 2.5(c)). To the extent any such Revolving Lender shall not have made such amount available to Administrative Agent or the applicable LC Issuer, as applicable, by noon (Chicago time) on the Business Day on which such Lender receives notice from Administrative Agent or the applicable LC Issuer, as applicable, of such payment or disbursement, or return or rescission, as applicable, such Lender agrees to pay interest on such amount to Administrative Agent or the applicable LC Issuer, as applicable, forthwith on demand accruing daily at the Federal Funds Rate, for the first three (3) days following such Lender’s receipt of such notice, and thereafter at the Base Rate plus the Base Rate Margin in respect of Revolving Loans. Any Revolving Lender’s failure to make available to Administrative Agent or the applicable LC Issuer, as applicable, its Pro Rata Share of any such payment or disbursement, or return or rescission, as applicable, shall not relieve any other Lender of its obligation hereunder to make available such other Revolving Lender’s Pro Rata Share of such payment, but no Revolving Lender shall be responsible for the failure of any other Lender to make available such other Lender’s Pro Rata Share of any such payment or disbursement, or return or rescission.

      Section 2.6 General Provisions Regarding Payment.

     (a) All payments to be made by each Borrower under any Financing Document, including payments of principal and interest made hereunder and pursuant to any other Financing Document, and all fees, expenses, indemnities and reimbursements, shall be made without set-off, recoupment or counterclaim, in lawful money of the United States 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 and, with respect to payments of principal, interest thereon shall be payable at the then applicable rate during such extension (it being understood and agreed that, solely for purposes of calculating financial covenants and computations contained herein and determining compliance therewith, if payment is made, in full, on any such extended due date, such payment shall be deemed to have been paid on the original due date without giving effect to any extension thereto). Any payments received in the Payment Account before noon (Chicago time) on any date shall be deemed received by Administrative Agent on such date, and any payments received in the Payment Account after noon (Chicago time) on any date shall be deemed received by Administrative Agent on the next succeeding Business Day. Unless otherwise specified herein, the settlement of all payments and fundings hereunder between or among the parties hereto shall be made in lawful money of the United States and in immediately available funds.

     (b) Administrative Agent shall endeavor to provide Borrowers with a monthly statement regarding the Loans hereunder (but neither Administrative Agent nor any Lender shall have any liability if Administrative Agent

© 2006 Merrill Lynch Capital

shall fail to provide any such statement). Unless any Borrower notifies Administrative Agent of any objection to any such statement (specifically describing the basis for such objection) within ninety (90) days after the date of receipt thereof, it shall be deemed final, binding and conclusive upon Borrowers in all respects as to all matters reflected therein, absent manifest error.

      Section 2.7 Maximum Interest. In no event shall the interest charged with respect to the Loans or any other Obligations of any Borrower under any Financing Document exceed the maximum amount permitted under the laws of the State of New York or of any other applicable jurisdiction. Notwithstanding anything to the contrary herein or elsewhere, if at any time the rate of interest payable hereunder or under any Note or other Financing Document (the “Stated Rate”) would exceed the highest rate of interest permitted under any applicable law to be charged (the “Maximum Lawful Rate”), then for so long as the Maximum Lawful Rate would be so exceeded, the rate of interest payable shall be equal to the Maximum Lawful Rate; provided, however , that if at any time thereafter the Stated Rate is less than the Maximum Lawful Rate, each Borrower shall, to the extent permitted by law, continue to pay interest at the Maximum Lawful Rate until such time as the total interest received is equal to the total interest which would have been received had the Stated Rate been (but for the operation of this provision) the interest rate payable. Thereafter, the interest rate payable shall be the Stated Rate unless and until the Stated Rate again would exceed the Maximum Lawful Rate, in which event this provision shall again apply. In no event shall the total interest received by any Lender exceed the amount which it could lawfully have received had the interest been calculated for the full term hereof at the Maximum Lawful Rate. If, notwithstanding the prior sentence, any Lender has received interest hereunder in excess of the Maximum Lawful Rate, such excess amount shall be applied to the reduction of the principal balance of the Loans or to other amounts (other than interest) payable hereunder, and if no such principal or other amounts are then outstanding, such excess or part thereof remaining shall be paid to Borrowers. Any such reduction in the principal balance shall be applied to the Obligations owing to Lenders in accordance with the Pro Rate Share of each Lender. In computing interest payable with reference to the Maximum Lawful Rate applicable to any Lender, such interest shall be calculated at a daily rate equal to the Maximum Lawful Rate divided by the number of days in the year in which such calculation is made.

      Section 2.8 Taxes; Capital Adequacy.

     (a) All payments of principal and interest on the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp, documentary, payroll, employment, property or franchise taxes and other taxes, fees, duties, levies, assessments, withholdings or other charges of any nature whatsoever (including interest and penalties thereon) imposed by any taxing authority, excluding taxes imposed on or measured by Administrative Agent’s or any Lender’s net income, franchise taxes imposed on Administrative Agent or any Lender (in lieu of net income taxes) and taxes imposed on the gross receipts or assets of Administrative Agent or any Lender (other than gross receipts from the transactions evidenced by the Financing Documents) by the jurisdictions under which Administrative Agent or such Lender is organized or conducts business and (ii) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction (other than solely as the result of entering into any of the Financing Documents or taking any action thereunder) (all non-excluded items being called “Taxes”). For purposes of determining the amounts of the exclusions referred to in clauses (i) and (ii) of the immediately preceding sentence, the term “taxes” shall be deemed to include interest and penalties thereon. If any withholding or deduction from any payment to be made by any Borrower hereunder is required in respect of any Taxes pursuant to any applicable Law, then Borrowers will: (i) pay directly to the relevant authority the full amount required to be so withheld or deducted; (ii) promptly forward to Administrative Agent an official receipt or other documentation satisfactory to Administrative Agent evidencing such payment to such authority; and (iii) pay to Administrative Agent for the account of Administrative Agent and Lenders such additional amount or amounts as is necessary to ensure that the net amount actually received by Administrative Agent and each Lender will equal the full amount Administrative Agent and such Lender would have received had no such withholding or deduction been required. If any Taxes are directly asserted against Administrative Agent or any Lender with respect to any payment received by Administrative Agent or such Lender hereunder, Administrative Agent or such Lender may pay such Taxes and Borrowers will promptly pay such additional amounts (including any penalty, interest or expense) as is necessary in order that the net amount received by such Person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such Person would have received had such Taxes not been asserted so long as such amounts have accrued on or after the day which is two hundred seventy (270) days prior to the date on which Administrative Agent or such

© 2006 Merrill Lynch Capital

Lender first made written demand therefore, provided however that a Borrower shall not be required to make such payment with respect to such Administrative Agent or Lender to the extent such liability resulted from the gross negligence or willful misconduct of such Administrative Agent or Lender. If Administrative Agent or any Lender receives a refund of Taxes as to which it has received from a Borrower a payment of additional amounts under this Section 2.8, such Administrative Agent or Lender shall pay to such Borrower an amount equal to such refund (but only to the extent of such additional amounts paid by such Borrower with respect to the Taxes giving rise to such refund), net of reasonable out-of-pocket expenses incurred by such Administrative Agent or Lender with respect to such refund.

     (b) If any Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to Administrative Agent, for the account of Administrative Agent and the respective Lenders, the required receipts or other required documentary evidence, Borrowers shall indemnify Administrative Agent and Lenders for any incremental Taxes, interest or penalties that may become payable by Administrative Agent or any Lender as a result of any such failure.

     (c) Each Lender that (i) is organized under the laws of a jurisdiction other than the United States, and (ii)(A) is a party hereto on the Closing Date or (B) purports to become an assignee of an interest as a Lender under this Agreement after the Closing Date (unless such Lender was already a Lender hereunder immediately prior to such assignment) (each such Lender a “Foreign Lender”) shall execute and deliver to each of Borrowers and Administrative Agent one or more (as Borrowers or Administrative Agent may reasonably request) United States Internal Revenue Service Forms W-8ECI, W-8BEN, W-8IMY (as applicable) and other applicable forms, certificates or documents prescribed by the United States Internal Revenue Service or reasonably requested by Administrative Agent certifying as to such Lender’s entitlement to a complete exemption from withholding or deduction of Taxes. Borrowers shall not be required to pay additional amounts to any Lender pursuant to this Section 2.8 with respect to United States withholding and income Taxes to the extent that the obligation to pay such additional amounts would not have arisen but for the failure of such Lender to comply with this paragraph other than as a result of a change in law.

     (d) If any Lender shall determine in its commercially reasonable judgment that the adoption or taking effect of, or any change in, any applicable Law regarding capital adequacy, in each instance, after the Closing Date, or any change after the Closing Date in the interpretation, administration or application thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation, administration or application thereof, or the compliance by any Lender or any Person controlling such Lender with any request, guideline or directive regarding capital adequacy (whether or not having the force of law) of any such Governmental Authority, central bank or comparable agency adopted or otherwise taking effect after the Closing Date, has or would hav