SENIOR SECURED NOTE AND WARRANT PURCHASE AGREEMENT

Exhibit 10.6

EXECUTION COPY

O RTHOVITA , I NC .

$45,000,000

10% Senior Secured Notes due July 30, 2012

G UARANTEED BY THE D OMESTIC S UBSIDIARIES OF , AND A CCOMPANIED WITH W ARRANTS ISSUED

BY ,

O RTHOVITA , INC .

S ENIOR S ECURED N OTE A ND W ARRANT P URCHASE A GREEMENT

Dated as of July 30, 2007

Table of Contents

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Dated as of July 30, 2007

T O E ACH P URCHASER L ISTED ON THE A TTACHED S CHEDULE  A WHO IS A SIGNATORY HERETO ( COLLECTIVELY WITH THEIR RESPECTIVE SUCCESSORS AND ASSIGNS , THE “ P URCHASERS ”):

Ladies and Gentlemen:

T HIS S ENIOR S ECURED N OTE AND W ARRANT P URCHASE A GREEMENT (this “ Agreement ”) is hereby entered into by and among the Purchasers, O RTHOVITA , I NC ., a Pennsylvania corporation (the “ Company ”), and LB I Group Inc., a Delaware corporation, as Collateral Agent, with reference to the following (and with the definitions of terms set forth in Schedule B being applicable hereto):

N OW T HEREFORE , the Purchasers, the Company, and the Collateral Agent hereby agree as follows:

SECTION 1. A UTHORIZATION , S ALE A ND I SSUANCE O F N OTES A ND W ARRANTS .

Section 1.1 Authorization.

(a) The Company has authorized the issue and sale of $45,000,000 aggregate principal amount of its 10% Senior Secured Notes (the “ Notes ”, such term to include any such notes issued in substitution therefor pursuant to Section 11 of this Agreement) due July 30, 2012. The Notes shall be substantially in the form set forth on Exhibit A .

(b) The Company has further authorized the issuance and sale to each Purchaser of Warrants (the “ Warrants ”, such term to include any such warrants issued in substitution therefor pursuant to the terms thereof) to purchase Common Stock, par value $0.01 per share, of the Company (“ Common Stock ”), each substantially in the form set forth in Exhibit B .

Section 1.2 Sale and Purchase of the Notes and Warrants; Additional Advances . Subject to the terms and conditions of this Agreement:

(a) The Company hereby agrees to issue and sell to each Purchaser, and each Purchaser agrees, severally, to purchase from the Company (such transaction, the “ Initial Issuance ”), a Note, containing the same terms and conditions as set forth in the form of

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note attached hereto as Exhibit A, in the aggregate principal amount equal to the Commitment of such Purchaser at a purchase price of 25/45 ^ths of the aggregate principal amount of such Note (the “ Purchase Price ”). The aggregate amount of the Commitments on the Agreement Date is $45,000,000.

(b) As further consideration for the purchase of the Notes by the Purchasers pursuant to Section 1.2(a) , the Company agrees to issue and deliver to each Purchaser a Warrant to purchase up to that number of shares of Common Stock set forth opposite such Purchaser’s name on Schedule A .

(c) On each Additional Advance Date occurring during the period from and including the Closing to but excluding January 27, 2010, each Purchaser agrees, at the request of the Company, to make additional advances under the Note held by such Purchaser (each such advance, an “ Additional Advance ”), in an aggregate principal amount that, together with all other Loans of such Purchaser, will not exceed the Commitment of such Purchaser at such time.

(d) Each Purchaser’s obligation hereunder is several and not joint with the other Purchasers’ obligations such that no Purchaser shall have any obligation or liability to any Person for the performance or nonperformance by any other Purchaser hereunder.

(e) The Company and each Purchaser hereby acknowledge and agree that the Notes and Warrants issued in accordance with this Agreement constitute an “investment unit” for the purposes of Section 1273(c)(2)(A) of the Code. In accordance with Sections 1273(c)(2)(A) and 1273(b)(2) of the Code, the issue price of the investment unit is 100% of the aggregate principal amount of the Notes set forth opposite each such Purchaser’s name on Schedule A . Allocating that issue price between the Note and Warrant based on their relative fair market values, as required by Section 1273(c)(2)(B) of the Code and Treasury Regulation Section 1.1273-2(h)(1), results in (i) the Notes having an issue price of 90.9% of the aggregate principal amount of such Note and (ii) the Warrant having a Purchase Price of 9.1% of the aggregate principal amount of such Notes. Additional Advances evidenced by such Notes and Warrants exercisable in connection therewith shall be allocated in the same manner. The Company and each Purchaser agrees to prepare their respective federal income tax returns in a manner consistent with the foregoing agreement.

Section 1.3 Closing of the Initial Issuance. The Initial Issuance and the issuance of the Warrants shall occur at a closing (the “ Closing ”) at the offices of Pillsbury Winthrop Shaw Pittman LLP, at 10:00 a.m. local time on July 30, 2007, or on such other Business Day thereafter as may be agreed upon by the Company and all of the Purchasers. At the Closing:

(a) The Company will deliver to, or at the direction of, each Purchaser the Note to be purchased thereby, which shall be dated the date of the Closing and registered in such Purchaser’s name, against delivery by such Purchaser to the Company of the amount of the Purchase Price therefor.

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(b) The Company will deliver to, or at the direction of, each Purchaser a Warrant, which shall be dated the date of the Closing and registered in the name of such Purchaser, evidencing the right of such Purchaser to purchase up to that number of shares of Common Stock set forth opposite such Purchaser’s name on Schedule A .

Section 1.4 Additional Advances . The Company shall give each Purchaser notice (which shall be irrevocable) no later than ten (10) Business Days before the requested date of each Additional Advance (each such date, an “ Additional Advance Date ”). Each such notice shall be in the form of Exhibit 1.4 and shall specify: (i) the requested Additional Advance Date, which shall be a Business Day; (ii) the aggregate amount of the Additional Advances to be made on such Additional Advance Date, which amount shall be not less than the lesser of $5,000,000 and the aggregate amount of the unused Commitments; and (iii) the Purchaser’s ratable share of such aggregate amount, based upon the relationship that such Purchaser’s Commitment bears to the total amount of the Commitments, in each case on such Additional Advance Date. Not later than 12:00 a.m. (New York time) on each Additional Advance Date, each Purchaser shall disburse to the Company, in immediately available funds, such Purchaser’s ratable share of the total amount of the Additional Advances to be made on such date in accordance with such notice.

Section 1.5 Evidence of Loans . Each Purchaser’s Loans and the Company’s obligation to repay such Loans, with interest in accordance with the terms of this Agreement, shall be evidenced by this Agreement, the records of, and the Notes held by, such Purchaser. The records of each Purchaser and any notations by such Purchaser on any Note regarding payments made on account of the principal thereof, in absence of manifest error, shall be conclusive and binding; provided that in no event shall (i) the failure by a Purchaser to make any such notation, or (ii) any manifest error therein obligate the Company to pay any amounts in excess of amounts otherwise payable hereunder or under such Note.

Section 1.6 Payment Terms of the Notes . The Notes shall bear interest, in the amounts and payable at the times set forth therein, and shall be due and payable in full on the Maturity Date or as otherwise provided for under this Agreement without defense, set off or counterclaim of any sort. All payments required to be made under the Notes shall be made in the manner and to the account of each Purchaser as set forth in the Notes.

Section 1.7 Reduction of Commitments. The Company shall give prompt notice to the Purchasers if, at any time during the period from and including the Closing to but excluding January 27, 2010, the Company determines that it does not intend to request any Additional Advances, whereupon the Commitments shall be reduced to the outstanding principal amount of the Loans. The Commitments shall automatically be reduced to the outstanding principal amount of the Loans on the date of, and after giving effect to, any prepayment of the Loans pursuant to Section 6.2 .

Section 1.8 Pro Rata Treatment . Except to the extent otherwise provided herein, (a) Loans shall be made by the Purchasers pro rata in accordance with their respective Commitments, (b) each reduction in the Commitments shall be made pro rata in accordance with the respective amounts thereof, and (c) each payment of the principal of, or interest on, the Notes shall be made for the account of the Purchasers pro rata in accordance with their respective amounts thereof then due and payable.

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SECTION 2. C ONDITIONS T O C LOSING .

Section 2.1 Conditions to the Commitments and the Initial Issuance. Each Purchaser’s Commitment to purchase and pay for the Notes to be sold thereto at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:

(a) Closing Deliverables. The Purchasers shall have received, in form and substance satisfactory to the Purchasers, all documents, instruments, agreements, opinions and certificates identified on Exhibit 2.2 , duly executed by each party thereto.

(b) Consummation of the RST I Royalty Repurchase. All conditions necessary to consummate the RST I Royalty Repurchase under the RST I Royalty Repurchase Documents shall have been satisfied (other than the payment of the cash consideration to RST I), or, with the consent of the Purchasers, waived, the parties to the RST I Royalty Repurchase Documents shall be prepared to consummate the RST I Royalty Repurchase on the date of the Closing simultaneously with the Initial Issuance, and each Purchaser shall have received evidence of the foregoing satisfactory to it.

(c) Satisfactory Completion of Due Diligence by the Purchasers. The Purchasers shall have completed to their satisfaction their due diligence investigation of the Company and its Subsidiaries and their respective products.

(d) Receipt of Internal Approvals. The Purchasers shall have received such internal approvals as may be required thereby, including, in the case of LB I Group Inc., approval by the Lehman Brothers Investment Committee.

(e) Corporate and Capital Structure. The Purchasers shall be satisfied with the corporate and capital structure of the Credit Parties (including, without limitation, the tax implications associated with such structure), and all agreements relating thereto and all organizational documents of the Credit Parties.

(f) Minimum Cash Balance. The Company shall have in cash at least $6,250,000 immediately after giving effect to the Closing Date Transactions.

(g) Security Interests; Indebtedness; Waivers and Consents.

(i) The Purchasers shall have received the results of recent lien, tax lien, judgment and litigation searches in each relevant jurisdiction with respect to the Credit Parties, and such searches shall reveal no Liens other than Permitted Liens or Liens that are being discharged prior to, or simultaneously with, the Initial Issuance pursuant to documentation reasonably satisfactory to the Purchasers.

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(ii) No Credit Party shall have any outstanding Indebtedness, other than Permitted Indebtedness and the Indebtedness to be paid off with the proceeds of the Initial Issuance, and each Purchaser shall have received evidence of the foregoing reasonably satisfactory to it, including payoff letters from each creditor of any such Indebtedness other than Permitted Indebtedness.

(iii) All waivers, approvals or consents of Governmental Authorities or other third parties as may be required by law or under contract to consummate the Closing Date Transactions (including any necessary stockholder agreements, consents or waivers required in connection with the issuance of the Warrants) shall have been obtained and each Purchaser shall have received evidence of the foregoing satisfactory to it.

(h) Fees and Expenses. The Company shall have paid the fees, expenses and other amounts payable to LB I Group Inc., or on its behalf, upon the Initial Issuance, as provided in the Term Sheet, including reimbursement of legal counsel to LB I Group Inc., as provided therein.

(i) Representations and Warranties. At the time of the Closing, both before and after giving effect to the Closing Date Transactions, the representations and warranties of the Credit Parties in this Agreement and the other Related Documents shall be true and correct.

(j) Performance; No Default. Each Credit Party shall have performed and complied with all agreements and conditions contained in this Agreement and the other Related Documents required to be performed or complied with by it prior to or at the Closing and, immediately before, and after taking into account the effect of, the Closing Date Transactions, no Default shall have occurred and be continuing.

(k) No Materially Adverse Effect. Nothing has occurred since December 31, 2006, which had, or could reasonably be expected to have, a Materially Adverse Effect, both before and after giving effect to the Closing Date Transactions.

(l) Additional Materials. Each Purchaser shall have received such materials as it may have requested pursuant to Section 5.1(g) .

(m) No Violation. The funding of the Loans at the Closing will not contravene any Applicable Law applicable to such Purchaser.

Section 2.2 Conditions to Additional Advances.

Each Purchaser’s Commitment to make Additional Advances on each Additional Advance Date is subject to the fulfillment to such Purchaser’s reasonable satisfaction of the following conditions:

(a) Initial Issuance. The Initial Issuance shall have occurred.

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(b) Notice of Borrowing. The Purchasers shall have received a duly completed Notice of Borrowing with respect thereto.

(c) Net Revenues. The net revenues of the Company and its consolidated Subsidiaries for the most recently ended four consecutive quarterly accounting periods as shown in the Form 10-Ks or Form 10-Qs filed from time to time by the Company with the SEC shall be at least $45,000,000; provided that, during any period in which any such form is delinquent or delayed (or the Company ceases to report its results of operations to the SEC), this condition shall be deemed to not be satisfied.

(d) No Optional Prepayment. The Company shall not have prepaid any amount of the outstanding Notes pursuant to Section 6.2 .

(e) Representations and Warranties. Each representation and warranty made by a Credit Party in this Agreement and the other Related Documents shall be true and correct at and as of the time of such Additional Advance, both with and without giving effect thereto and to the application of the proceeds thereof.

(f) Absence of Default. No Default shall have occurred and be continuing at the time such Additional Advance is to be made or would result from the making of such Additional Advance or from the application of the proceeds thereof.

(g) Additional Materials. Each Purchaser shall have received such materials as it may have requested pursuant to Section 5.1(g) .

(h) No Violation. The funding of such Additional Advance will not contravene any Applicable Law applicable to such Purchaser.

Section 2.3 Representation as to Satisfaction of Conditions. The Company shall be deemed to have made a representation and warranty as of the Closing that the conditions specified in Section 2.1 have been fulfilled as of the Closing and, as of each Additional Advance Date, that the conditions specified in Section 2.2 have been fulfilled as of such Additional Advance Date. Each Purchaser shall have the right to refuse to fund any Loan requested to be made at the Closing or any Additional Advance Date if the Company makes any disclosure that a condition specified in Section 2.1(i) , Section 2.1(j) , Section 2.2(e) , or Section 2.2(f) will not be fulfilled as of the Closing or such Additional Advance Date, as the case may be.

SECTION 3. R EPRESENTATIONS A ND W ARRANTIES O F T HE C OMPANY .

The Company represents to the Purchasers that, as of the Agreement Date, at the Closing, both before and after giving effect to the Closing Date Transactions, and on each Additional Advance Date, both before and after giving effect to the Additional Advance to be made on such date and the application of the proceeds thereof:

Section 3.1 Organization; Power and Authority. Each Credit Party is a corporation duly organized, validly subsisting or existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified to do business in the jurisdictions listed in Schedule 3.1 , which are all jurisdictions in which the nature of its business or the ownership of

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its properties requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, reasonably be expected to have a Materially Adverse Effect. Each Credit Party has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts, to execute and deliver this Agreement and/or the other Related Documents to which it is a party, and to perform the provisions hereof and thereof.

Section 3.2 Authorization, Etc . This Agreement and the other Related Documents, and in the case of the Company, the Loans under the Notes, have been duly authorized by all necessary corporate action on the part of each Credit Party signatory thereto, and each of this Agreement and such other Related Documents constitutes, and upon execution and delivery thereof, will constitute, a legal, valid and binding obligation of the each such Credit Party, as applicable, enforceable against such Credit Party, respectively, in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 3.3 Disclosure. This Agreement, the documents, certificates, and other writings delivered to the Purchasers by or on behalf of the Company and the other Credit Parities in connection with the transactions contemplated hereby and the financial statements listed in Schedule 3.5 , taken as a whole (for the avoidance of doubt, together with all such documents, certificates, and other writings so delivered on or prior to the time this representation is made or deemed made) do not contain any untrue statement of a material fact or omit to state any fact necessary to make the statements therein not materially misleading in light of the circumstances under which they were made or deemed made. Since December 31, 2006, there has been no change in the financial condition, operations, business or properties of the Company and its Subsidiaries, taken as a whole, except changes that individually or in the aggregate did not, or would not reasonably be expected to, have a Materially Adverse Effect. There is no fact known to any Credit Party that has had, or could reasonably be expected to have, such a Materially Adverse Effect that has not been set forth herein or in the other documents, certificates, and other writings delivered to the Purchasers by or on behalf of the Credit Parties specifically for use in connection with the transactions contemplated hereby.

Section 3.4 Capitalization; Subsidiaries.

(a) The authorized capital stock of the Company consists of:

(i) 100,000,000 shares of Common Stock and 19,998,100, shares of of preferred stock (the “ Preferred Stock ”). All issued and outstanding shares of Common Stock have been duly and validly issued and are fully paid and nonassessable. There are no shares of Preferred Stock issued and outstanding.

(ii) The Company has reserved: (A) 3,357,696 shares of Common Stock for issuance in connection with grants of equity awards under its e2quity compensation plans, (B) 115,006 shares of Common Stock for issuance in connection with the Company’s Employee Stock Purchase Plan, (C) 1,100,787

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shares of Common Stock for issuance upon the exercise of outstanding warrants, (D) 1,466,276 shares of Common Stock issuable upon the exercise of the Warrants, (E) 7,136,743 shares of Common Stock issuable upon the exercise of outstanding options, and (F) 272,249 shares of Common Stock issuable under outstanding restricted stock units. Except for the Warrants, outstanding options to purchase 7,136,743 shares of Common Stock, outstanding warrants to purchase 1,100,787 shares of Common Stock, outstanding restricted stock units entitling the holders thereof to purchase 272,249 shares of Common Stock, the potential obligation to issue on an annual basis up to an aggregate of 60,000 shares of Common Stock (to be issued directly or upon exercise of options to purchase Common Stock) as consideration for services rendered under consulting agreements, the potential issuance of options to purchase Common Stock to the Company’s sales representatives for meeting quarterly sales quotas and equity grants issuable to members of the Company’s board of directors in consideration for serving as directors, (i) no person has the right to cause the Company to issue or sell to it any shares of Common Stock or shares of any other capital stock of the Company or other equity interests of the Company, and (ii) there are no outstanding rights of first refusal, preemptive rights, phantom stock, stock appreciation rights or other rights, warrants, options, conversion privileges, subscriptions, or other rights or agreements, either directly or indirectly, to purchase or otherwise acquire or issue any equity securities of the Company.

(b) Schedule 3.4 includes a complete and correct list of the authorized and issued and outstanding capital stock of the Company and each direct and indirect Subsidiary of the Company on the Agreement Date. All of the outstanding shares of capital stock of the Company and each such Subsidiary are validly issued and outstanding and fully paid and nonassessable, other than the common stock of Vita Special Purpose Corp., which has been pledged by Vita Licensing, Inc (“ Vita Licensing ”) to Paul Capital Royalty Acquisition Fund, L.P. (“ PCRAF ”) pursuant to the terms of hat certain Pledge Agreement, dated as of October 2001, made by Vita Licensing in favor of PCRAF, and which pledge is being terminated on the Closing date in connection with the RST I Royalty Repurchase. All such shares are owned by the Company or Subsidiary set forth on said Schedule free and clear of all Liens other than Permitted Liens. Except as set forth on Schedule 3.4 or disclosed in Section 3.4(a) , there are no outstanding commitments or other obligations of the Company or any such Subsidiary to issue, and no options, warrants or other rights of any Person to acquire, any shares of any class of capital stock or other equity interests of the Company or any such Subsidiary.

Section 3.5 Financial Statements. The Company has delivered to each Purchaser copies of the financial statements of the Company and its Subsidiaries listed on Schedule 3.5 . All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates specified in such financial statements and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments).

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Section 3.6 Compliance with Laws, Other Instruments, Etc . The execution, delivery and performance by each Credit Party of the Related Documents to which each such Credit Party is a party, including the Notes and the Warrants, will not violate, contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien (other than Permitted Liens) in respect of any property of such Credit Party under, (a) any indenture, mortgage, deed of trust, loan, purchase agreement, credit agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which any Credit Party is bound or by which any Credit Party or any of their respective properties may be bound or affected, (b) any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to any Credit Party or (c) any statute or other rule or regulation of any Governmental Authority applicable to any Credit Party, in each case except to the extent as would not, individually or in the aggregate, reasonably be expected to have a Materially Adverse Effect.

Section 3.7 Governmental Authorizations, Etc. Except as disclosed in Schedule 3.7 , no consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by each Credit Party of the Related Documents to which each such Credit Party is a party, including, without limitation, in the case of the Company, the Notes and the Warrants.

Section 3.8 Litigation; Observance of Agreements, Statutes and Orders .

(a) Except as disclosed in Schedule 3.8 , there are no investigations, actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting any Credit Party or the property of any Credit Party in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Materially Adverse Effect.

(b) No Credit Party is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any Applicable Law (including, without limitation, Environmental Laws), which default or violation, individually or in the aggregate, could reasonably be expected to have a Materially Adverse Effect.

Section 3.9 Taxes . Each Credit Party has filed all tax returns that are required to have been filed by it in any jurisdiction or has filed for extensions of time for the filing thereof, and has paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon it or its properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable, are not subject to any allowed extension and before they have become delinquent, except for any taxes and assessments the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which such Credit Party has established adequate reserves in accordance with GAAP. The charges, accruals and reserves on the books of each Credit Party in respect of its respective Federal, state or other taxes for all fiscal periods are adequate for the amount of such Credit Party’s reasonably contemplated tax liability. Except as disclosed in Schedule 3.9 , the Federal income tax liabilities of each Credit Party have been determined and paid for all fiscal years up to and including the fiscal year ended December 31, 2005.

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Section 3.10 Title to Property; Leases . The Credit Parties have good and sufficient title to their respective properties, including all such properties reflected in the most recent audited balance sheets referred to in Section 3.5 or purported to have been acquired by the Credit Parties after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of all Liens other than Permitted Liens. All Material leases entered into by a Credit Party are valid and subsisting and are in full force and effect.

Section 3.11 Intellectual Property, Licenses, Permits, Etc .

(a) Schedule 3.11 sets forth all of the Credit Parties’ patents and patent applications, in-bound patent licenses, trademarks and trademark applications, in-bound trademark licenses, copyrights and copyright applications and in-bound copyright licenses, including the description thereof, the name of the registered owner, the jurisdiction of such registration and the registration number (collectively, the “ IP Rights ”).

(b) Except as disclosed in Schedule 3.11 :

(i) the Company and its Subsidiaries own or possess the IP Rights, without conflict with the rights of others;

(ii) to the best knowledge of the Company, no Product of the Company or its Subsidiaries infringes on any license, patent, copyright, service mark, trademark, trade name or other intellectual property right owned by any other Person; and

(iii) to the best knowledge of the Company, there is no known violation by any Person of any right of the Company or any of its Subsidiaries with respect to any IP Rights.

Section 3.12 Compliance with ERISA.

(a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all Applicable Laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Materially Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that could reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as could not reasonably be expected to be, individually or in the aggregate, Material.

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(b) Neither the Company nor any ERISA Affiliate (or any predecessor of the Company or any ERISA Affiliate) has ever maintained, contributed to, or had any obligation under any employee benefit plan subject to Title IV of ERISA or Section 412 of the Code, including, without limitation, any multiemployer pension benefit plan (as defined in section 3(37) of ERISA).

(c) Neither the Company nor any ERISA Affiliate (or any predecessor of the Company or any ERISA Affiliate) has ever maintained, contributed to, or had any obligation under any post-retirement benefit plan.

(d) Assuming that the representations and warranties of the Purchasers set forth in Section 4.1(e) are true and correct, the execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c)(l)(A)-(D) of the Code.

Section 3.13 Private Offering by the Company . Assuming that the representations and warranties of the Purchasers set forth in Section 4 are true and correct, the offering, issuance and delivery of the Notes, the Warrants and the shares of Common Stock issuable upon the exercise of the Warrants (collectively, the “ Securities ”) are exempt from the registration requirements of the Securities Act and the rules and regulations thereunder, and, except for the federal and state filings set forth in Schedule 3.7 , it is not necessary to make or obtain any filings, registrations, qualifications, notifications or consents or approvals of or with any Governmental Authority in connection therewith.

Section 3.14 Use of Proceeds . The Company will use the proceeds of the Initial Issuance to effect the RST I Royalty Repurchase, to repay all amounts owed to the Purchasers under the GECC Financing and other Indebtedness of the Credit Parties. The Company will also use the proceeds of the Initial Issuance, and will use the proceeds of the Additional Advances, to expand the Company’s sales force, to develop and from time to time acquire new products, and for other general business purposes of the Company, including capital expenditures. No Credit Party is engaged principally or as one of its activities, in the business of extending credit for the purpose of “purchasing” or “carrying” any “margin stock” as such terms are defined in Regulation U of the Federal Reserve Board as now and from time to time hereafter in effect. None of the proceeds of the Notes will be used, directly or indirectly, for the purpose of purchasing or carrying any margin stock or for any other purpose which might cause any of the Notes under this Agreement to be considered a “Purpose Credit” within the meaning of Regulations T, U, or X of the Board of Governors of the Federal Reserve Board.

Section 3.15 Existing Indebtedness; Future Liens.

(a) Except as described therein, Schedule 3.15(a) sets forth a complete and correct list of all outstanding Indebtedness of each Credit Party as of the date of Closing, after giving effect to the Closing Date Transactions. No Credit Party is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of such Credit Party and no event or condition exists with respect to any Indebtedness of such Credit Party that would permit (or that with notice or the lapse of

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time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b) Except as disclosed in Schedule 3.15(b) , no Credit Party has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien other than Permitted Liens.

Section 3.16 Foreign Assets Control Regulations, Etc. Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. Without limiting the foregoing, neither the Company nor any of its Subsidiaries (a) is or will become a blocked person described in Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49049 (2001)) or (b) engages or will engage in any dealings or transactions, or be otherwise associated, with any such person.

Section 3.17 Status under Certain Statutes . No Credit Party is an “investment company” registered or required to be registered subject to regulation under the Investment Company Act of 1940, as amended, or is subject to regulation under the Public Utility Holding Company Act of 1935, as amended, or the Federal Power Act, as amended.

Section 3.18 Environmental Matters . Except as otherwise disclosed in Schedule 3.18 :

(a) the Company has no knowledge of any claim, has received no notice of any claim, and no proceeding has been instituted raising any claim against any Credit Party or any real properties now or formerly owned, leased or operated thereby, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Materially Adverse Effect;

(b) the Company has no knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any Credit Party or to other assets of the Credit Parties or their use, except, in each case, such as would not reasonably be expected to result in a Materially Adverse Effect;

(c) no Credit Party has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Materially Adverse Effect; and

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(d) all buildings on all real properties now owned, leased or operated by any Credit Party are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Materially Adverse Effect.

Section 3.19 Solvency. As of the date of this Agreement, at the Closing, both before and after giving effect to the Closing Date Transactions, and at the time of each Additional Advance, each Credit Party: (a) owns assets the fair saleable value of which are (i) greater than the total amount of its liabilities (including contingent liabilities) and (ii) greater than the amount that will be required to pay its probable liabilities as they mature; (b) has capital that is not unreasonably small in relation to its businesses as presently conducted or any undertaken 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. For purposes of this Section 3.19, in computing the amount of contingent liabilities of any Credit Party at any time, it is intended that such liabilities will be computed at the amount which, in light of all facts and circumstances existing at such time, represents the amount that reasonably can be expected to become an actual matured liability of such Credit Party.

Section 3.20 Status of Security Interest. The Collateral Documents create in favor of the Collateral Agent a legal, valid and enforceable security interest in the Collateral. When financing statements describing the Collateral that is the subject of a particular Collateral Document, in each case naming the Collateral Agent as the secured party and each Credit Party that is a party to such Collateral Document, as the debtor, have been filed in the places set forth in such Collateral Document, the Collateral Agent will have a fully perfected first priority Lien on, and security interest in, the such Collateral in which a security interest may be perfected by such filing, subject only to Permitted Liens.

SECTION 4. R EPRESENTATIONS O F T HE P URCHASERS .

Section 4.1 Representations to the Company. Each Purchaser represents and warrants to the Company, severally and not jointly, with respect to its purchase of its Note and Warrant as follows:

(a) Such Purchaser is purchasing the Note and Warrant for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act. Such Purchaser is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and, in any case, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of purchasing such Note and Warrant. Such Purchaser has not been formed for the purpose of investing such Note and Warrant.

(b) Such Purchaser understands that the Note and Warrant that such Purchaser is purchasing have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of such Purchaser’s investment intent as expressed herein.

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(c) Such Purchaser further acknowledges and understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available and the Securities may be imprinted with a legend indicating such restrictions on the transferability thereof.

(d) Such Purchaser understands that the Securities are presently characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In this connection, such Purchaser represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

(e) Such Purchaser represents that at least one of the following statements is an accurate representation as to each source of funds (a “ Source ”) to be used by such Purchaser to pay the Purchase Price of the Notes to be purchased by such Purchaser hereunder:

(i) if such Purchaser is an insurance company, the Source does not include assets allocated to any separate account maintained by such company in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with such company’s fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; or

(ii) the Source is either (i) an insurance company pooled separate account, within the meaning of Prohibited Transaction Exemption (“ PTE ”) 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has disclosed to the Company in writing pursuant to this paragraph (b), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(iii) the Source constitutes assets of an “investment fund” (within the meaning of Part V of the QPAM Exemption) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or

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controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 10% or more interest in the Company and (x) the identity of such QPAM and (y) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this paragraph (iii); or

(iv) the Source is a governmental plan; or

(v) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this paragraph (v); or

(vi) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 4.1 , the terms “ employee benefit plan, ” “ governmental plan, ” “ party in interest ” and “ separate account ” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

Section 4.2 Exculpation of the Purchasers. Each Purchaser acknowledges that it is not relying upon any Person (including the Collateral Agent or any other Purchaser), other than the Credit Parties and their respective officers (acting in their respective capacities as representatives of the Credit Parties), in deciding to invest and in making its investment in the purchase of the Notes and Warrants. Each Purchaser agrees that none of the Collateral Agent, any other Purchaser, or any of their respective controlling Persons, officers, directors, partners, agents or employees shall be liable to such Purchaser for any losses incurred by such Purchaser in connection with its purchase of the Notes and Warrants.

SECTION 5. I NFORMATION A S T O T HE C OMPANY .

Section 5.1 Financial and Business Information. The Company agrees to deliver to each Purchaser:

(a) Monthly Statements . If requested by any Purchaser, prior to the end of any calendar month, or within 15 days of such request, whichever is longer, copies of:

(i) a consolidated and consolidating balance sheet of the Company and its Subsidiaries as at the end of the immediately preceding calendar month, and

(ii) consolidated and consolidating statements of operations, changes in stockholders’ equity and cash flows of the Company and its Subsidiaries for the immediately preceding month and for the portion of the fiscal year ending with such month,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP

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applicable to monthly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments.

(b) Quarterly Statements . If requested by any Purchaser, within 45 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), copies of:

(i) a consolidated and consolidating balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

(ii) consolidated and consolidating statements of operations, changes in stockholders’ equity and cash flows of the Company and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the financial position of the companies being reported on and their results of operations and cash flows, subject to changes resulting from year-end adjustments.

(c) Annual Statements. If requested by any Purchaser, within 90 days after the end of each fiscal year of the Company, copies of,

(i) a consolidated and consolidating balance sheet of the Company and its Subsidiaries, as at the end of such year, and

(ii) consolidated and consolidating statements of operations, changes in stockholders’ equity and cash flows of the Company and its Subsidiaries, for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent certified public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the financial position of the companies being reported upon and their results of operations and cash flows and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances. The reports in this clause (c)  shall be accompanied by any management letter prepared by the above-referenced accountants.

(d) Notice of Default . Promptly, and in any event within five Business Days after the chief financial officer or controller of the Company becomes aware of the

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existence of any Default or that any Person has given any notice or taken any action with respect to a claimed Default hereunder or that any Person has given any notice or taken any action with respect to a claimed Default of the type referred to in Section 9(f) , a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;

(e) Notices of Certain Adverse Events . Promptly, and in any event within five Business Days after a Responsible Officer becomes aware of any of the following, a written notice regarding: (i) the occurrence of any event or circumstance which has had or could reasonably be expected to have a Materially Adverse Effect, (ii) the occurrence of any event or circumstance which is a matured and un-waived material default under any third party agreement entered into by the Company or any of its Subsidiaries that is Material, (iii) the institution of any action, suit, proceeding, governmental investigation or arbitration which exposes the Company or any of its Subsidiaries to a liability that is Material, and (iv) the receipt by the Company or any Subsidiary of any communications regarding potential or actual Material defaults (whether waived or not) on any Indebtedness that is Material; and

(f) Requested Information . With reasonable promptness, such other materials, data and information relating to the business, operations, affairs, financial condition, properties or prospects of the Company or any of its Subsidiaries as from time to time may be reasonably requested by any Purchaser in order to enable such Purchaser to monitor the Company and the Collateral.

(g) Operating Plan and Budget . As soon as available, and in any event within 30 days after the later to occur of (i) the end of each fiscal year of the Company, and (ii) the date on which the Company’s board of directors approves the Company’s consolidated and consolidating budget for the next fiscal year, a copy of such budget, which shall show the Company’s projected consolidated and consolidating revenues, expenses, and balance sheet on a quarterly basis, in a form consistent with the budgets of the Company delivered to the Purchasers prior to the Agreement Date.

Section 5.2 Officer’s Certificate. Each set of financial statements delivered to a Purchaser pursuant to Section 5.1(a) , 5.1(b) , or 5.1(c) hereof shall be accompanied by a certificate of a Senior Financial Officer setting forth a statement that such officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the monthly, quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence of a Default or, if any such condition or event exists, specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

Section 5.3 Inspection. The Company shall, and shall cause each Subsidiary to, permit the representatives of each Purchaser to visit and inspect any of the properties, corporate books and financial records of the Company and each Subsidiary, to examine and make copies (in reasonable quantities), at the expense of such Purchaser, of the

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books of accounts and other financial records of the Company and each Subsidiary thereof, and to discuss the affairs, finances and accounts of the Company and each Subsidiary with, and to be advised as to the same by the Company’s employees and independent public accountants (and by this provision the Company authorizes such accountants to discuss with the Purchasers the finances and affairs of the Company and its Subsidiaries so long as consent has been given thereby when required by this Section 5.3 ), in each case, at such reasonable times and reasonable intervals during normal business hours upon reasonable prior notice; provided , however, that if no Default exists under this Agreement or any other Related Document, such inspections shall be limited to no more than two (2) per fiscal year of the Company.

Section 5.4 Executive Management Access . The Company shall cause the Chief Executive Officer and the Chief Financial Officer of the Company to meet with the Purchasers promptly upon the Purchasers’ request therefor once during each fiscal quarter of the Company, and more frequently, if reasonably requested by the Purchasers.

SECTION 6. P REPAYMENT O F T HE N OTES .

Section 6.1 Required Prepayments . In addition to paying the remaining outstanding principal amount and the interest due on the Notes on the Maturity Date or upon acceleration of the Notes pursuant to Section 10 , if a Mandatory Prepayment Event occurs, the Company agrees as follows: Promptly upon the consummation of such Mandatory Prepayment Event, the Company shall give the Purchasers written notice of such Mandatory Prepayment Event with a description in reasonable detail of such Mandatory Prepayment Event including, the calculation of the Net Proceeds received in connection therewith and, for each Purchaser, the amount of such Purchaser’s Pro Rata Portion of such Net Proceeds and the Make-Whole Amount. The Net Proceeds and the Make-Whole Amount received by the Company or any of its Subsidiaries in connection with such Mandatory Prepayment Event shall be forthwith applied to the outstanding principal balance of the Notes.

Section 6.2 Optional Prepayments with Make-Whole Amount . The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of the Notes, in a minimum amount not less than $2,000,000 and in increments of at least $1,000,000 in excess of such minimum, in the case of a partial prepayment, at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, plus the Make-Whole Amount, if any, determined for the prepayment date with respect to such principal amount. The Company will give each Purchaser written notice of each optional prepayment under this Section 6.2 not less than five (5) days prior to the date fixed for such prepayment. Each such notice shall specify such date, the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such Purchaser to be prepaid, and the interest and Make-Whole Amount, if any, to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of the Senior Financial Officer specifying the computation of the Make-Whole Amount due in connection with such prepayment and setting forth the details of such computation. In the case of each partial prepayment of the Notes made pursuant to this Section 6.2 , the principal amount of the Notes to be prepaid shall be allocated among all of the Notes at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment.

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Section 6.3 Maturity, Surrender, Etc . In the case of each prepayment of Notes pursuant to this Section 6 , the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment, together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount, if any. From and after such prepayment date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

SECTION 7. A FFIRMATIVE C OVENANTS .

The Company covenants, jointly and severally, that so long as any of the Notes are outstanding and the Commitments have not been terminated:

Section 7.1 Compliance with Law. The Company will, and will cause each of its Subsidiaries to, comply with all Applicable Laws to which each of them is subject, including, without limitation, Environmental Laws, and to obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a Materially Adverse Effect.

Section 7.2 Insurance. The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of similarly situated entities of established reputations engaged in the same or a similar business and similarly situated. The Collateral Agent shall be named as “Purchaser’s loss payee” on all insurance policies relating to any Collateral and as “additional insured” under all liability policies (except Directors’ and Officers’ Insurance, automobile insurance, workers’ compensation, fiduciary liability and employment practices), in each case pursuant to appropriate endorsements in form and substance reasonably satisfactory to the Collateral Agent.

Section 7.3 Maintenance of Properties. The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times, except where the failure to maintain or keep, or the discontinuance of the operation of, such properties could not reasonably be expected to have a Materially Adverse Effect.

Section 7.4 Payment of Taxes and Claims. The Company will, and will cause each of its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes,

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assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien (other than Liens permitted by Section 8.3 ) on properties or assets of the Company or any Subsidiary; provided that neither the Company nor any Subsidiary need pay any such tax or assessment or charge or claim if the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary.

Section 7.5 Corporate Existence, Etc. Subject to Section 8.2 , the Company will, and will cause each of its Subsidiaries to, and the Company will, and will cause each Subsidiary to, at all times preserve and keep in full force and effect its corporate existence and the corporate existence of each of such Subsidiary and all rights and franchises of the Company and such Subsidiaries, and engage only in businesses in substantially the same fields as the businesses conducted on the Agreement Date.

Section 7.6 Minimum Cash Balance. The Company will at all times maintain a minimum cash balance at least equal to 25% of the then outstanding principal amount on the Notes (such amount, the “ Minimum Required Amount ”) in a separate interest-bearing deposit or other similar demand investment account that is pledged to the Collateral Agent for the benefit of the Purchasers as collateral security for the prompt and full payment of the Notes and which such account is subject to a control account agreement, in form and substance reasonably satisfactory to the Collateral Agent, between the applicable financial intermediary where such account is held and the Collateral Agent (such account, the “ Cash Maintenance Account ”). Until exercise by the Collateral Agent of its control rights as hereinafter provided, the Company shall have the right to withdraw amounts from the Cash Maintenance Account without the consent of the Collateral Agent. If at any time the cash balance in the Cash Maintenance Account falls below an amount equal to 40% of the outstanding principal amount on the Notes at such time, then, within five Business Days thereafter, the Company shall provide to, and maintain in favor of, the Collateral Agent for the benefit of the Purchasers, one or more direct pay letters of credit (such letters of credit, “ Collateral L/Cs ”) having at all times an aggregate stated amount at least equal to the Minimum Required Amount. The Collateral L/Cs shall be in form and substance, and issued by commercial banks located in the United States, satisfactory to the Collateral Agent. Without limiting the foregoing, each Collateral L/C shall (i) have a tenor of at least 364 days and (ii) shall provide that it may not be terminated without the consent of the Collateral Agent and that it may been drawn by the Collateral Agent upon certification that such drawing is permitted under this Section 7.6 or if such Collateral L/C has not been extended within thirty days of its expiry date. In the event that the Purchaser fails to provide or maintain Collateral L/Cs as required hereunder, or during the occurrence of a Default, the Collateral Agent may exercise its control rights over the Cash Maintenance Account and/or draw under any Collateral L/Cs and apply the proceeds thereof in accordance with the applicable provisions of the Collateral Documents. Delivery and maintenance of Collateral L/Cs complying with the terms of this Section 7.6 shall be in lieu of, and deemed to satisfy the requirements of the first sentence hereof. If, after delivery and maintenance by the Company of Collateral L/Cs at all times in compliance with this Section 7.6 , (y) the cash balance in the Cash Maintenance Account is restored to an amount greater than or equal to the Minimum Required Amount and

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such amount is maintained for a period of 30 consecutive days, and (z) no Default shall have occurred or been continuing during such 30 day period, then the Collateral Agent shall consent to the termination of the Collateral L/Cs, and the rights and obligations of the Company and the Collateral Agent under this Section 7.6 shall be restored as if cash in the Minimum Required Amount were at all times maintained in the Cash Maintenance Account.

Section 7.7 Subsidiary Documentation. Except for the transaction described in and permitted under Section 8.5(c) , in connection with and within five Business Days of the creation, acquisition and/or capitalization by the Company or any Subsidiary of the Company of a new Subsidiary (a “ New Subsidiary ”) on or after the Agreement Date, the Company will, and will cause each of its Subsidiaries to, and the Company will, and will cause each Subsidiary to, satisfy the following requirements:

(a) In the case of a New Subsidiary which is a Domestic Subsidiary, deliver to the Collateral Agent the following documentation, instruments and agreements, in each case, evidencing a first priority perfected security interest and in form and substance reasonably satisfactory to the Collateral Agent:

(i) a Company Pledge Agreement or a Subsidiary Pledge Agreement, as applicable, executed by the Company or the Subsidiary that is the parent of such New Subsidiary, together with the related stock certificates, if any, stock powers and similar documentation reasonably required by the Collateral Agent to attach and perfect a security interest in 100% of the capital stock or similar ownership interests of the New Subsidiary as collateral security for the prompt and full payment and performance of the Obligations;

(ii) a Subsidiary Guaranty Agreement executed by the New Subsidiary guaranteeing the prompt and full payment of the Obligations;

(iii) a Security Agreement Joinder, substantially in the form attached as Exhibit B to the Security Agreement, mortgage, deed of trust and/or intellectual property security agreement executed by the New Subsidiary as reasonably required by the Collateral Agent in order to properly attach and perfect (as applicable) a security interest in all of the property of the New Subsidiary (other than property constituting ownership interests of a Foreign Subsidiary, which shall be subject to the provisions of Section 7.7(b) below) as collateral security for the prompt and full payment of the Obligations; and

(iv) authorization from the New Subsidiary to file any necessary UCC financing statements and other similar documents or instruments required to perfect any security interests granted pursuant to clause (iii) above.

(b) In the case of a New Subsidiary which is a Foreign Subsidiary, deliver to the Collateral Agent a Company Pledge Agreement or a Subsidiary Pledge Agreement executed by the parent of such New Subsidiary, together with the related stock certificates, if any, stock powers and similar documentation reasonably required by the Collateral Agent to attach and perfect a security interest in 65% of the capital stock or similar ownership interests of the New Subsidiary as collateral security for the prompt and full payment and performance of the Obligations.

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Section 7.8 Perfection and Maintenance of Security Interests. The Company will, and will cause each of its Subsidiaries to, perform any and all steps requested by the Collateral Agent to perfect, maintain and protect the Collateral Agent’s security interests in and against all Collateral granted under any Collateral Document other than the European Collateral, including, without limitation, (a) authorizing the Collateral Agent to file financing or continuation statements, or amendments thereof, (b) delivering to the Collateral Agent all certificates, notes and other instruments representing or evidencing Collateral, which certificates, notes and other instruments have been duly endorsed or are accompanied by duly executed instruments of transfer or assignment, all in form and substance satisfactory to the Collateral Agent, (c) at the direction of the Collateral Agent, delivering to the Collateral Agent warehouse receipts covering that portion of the Collateral, if any, located in warehouses and for which warehouse receipts are issued, (d) after the occurrence and during the continuance of an Event of Default, and only to the extent permitted by Applicable Law, transferring inventory and equipment (as defined in the UCC) constituting part of the Collateral to warehouses designated by the Collateral Agent or taking such other steps as are deemed necessary by the Collateral Agent to maintain its control of the inventory and equipment, and (e) executing and delivering all further instruments and documents, and taking all further action as the Collateral Agent may reasonably request.

SECTION 8. N EGATIVE C OVENANTS .

The Company covenants that so long as any of the Notes are outstanding and the Commitments have not been terminated:

Section 8.1 Limitations on Indebtedness. The Company will not, and will not permit its Subsidiaries to, create, issue, assume, guarantee or otherwise incur or in any manner be or become liable in respect of any Indebtedness, other than Permitted Indebtedness.

Section 8.2 Mergers, Consolidations and Dispositions. The Company will not, and will not permit its Subsidiaries to, be a party to any merger or consolidation, or sell, transfer, lease or otherwise dispose of any part of its property, including a disposition of property as part of a sale and leaseback transaction; provided , however , that this Section 8.2 shall not apply (in the case of clauses (h) and (i), if no Default shall have occurred and be continuing both immediately before and after the transactions described therein) to or prevent the Company or any of its Subsidiaries from:

(a) selling Inventory in the ordinary course of its business;

(b) selling, transferring or otherwise disposing of worn-out, obsolete or surplus property or property no longer useful or necessary to the operation of the business of the Company or its Subsidiaries;

(c) entering into Permitted Licensing Agreements;

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(d) selling, transferring or otherwise disposing of any property from the Company or any Subsidiary of the Company (other than the Company) to the Company or any Wholly-owned Subsidiary of the Company (other than the Company) that is a Domestic Subsidiary;

(e) selling, transferring or otherwise disposing of Excluded Assets;

(f) selling, transferring or otherwise disposing of property not otherwise permitted hereunder having an aggregate fair market value of $2,000,000; or

(g) consummating the Reverse Stock Split;

(h) following the consummation of the Closing Date Transactions, taking such action as may be necessary under Applicable Law to merge or consolidate some or all of the Domestic Subsidiaries into the Company (each a “ Merged Subsidiary ”), in the unfettered exercise of the Company’s and the applicable Subsidiary’s business judgment, whereupon (a) all property of any such Merged Subsidiary (the “ Liquidation Distribution ”) shall become the property of Borrower, and (b) the Liquidation Distribution shall become part of the Collateral subject to the Lien of the Collateral Agent; and

(i) the transaction described in and permitted under Section 8.5(c).

Section 8.3 Limitation on Liens. The Company will not, and will not permit its Subsidiaries to, create or incur, or suffer to be incurred or to exist, any Lien on its or their property, whether now owned or hereafter acquired, or upon any income or profits therefrom, other than Permitted Liens.

Section 8.4 Restricted Payments. The Company will not, and will not permit its Subsidiaries to, except as hereinafter provided: declare or pay any dividends (other than dividends payable solely in capital stock of the Company), either in cash or property, on any shares of its capital stock of any class; directly or indirectly, or through any Subsidiary or through any Affiliate of the Company, purchase, redeem or retire any shares of its capital stock of any class or any warrants, rights or options to purchase or acquire any shares of its capital stock; voluntarily prepay any unsecured Permitted Indebtedness; or make any other payment or distribution, either directly or indirectly or through any Subsidiary, in respect of its capital stock; provided , however , that the foregoing shall neither apply to nor operate to prevent any Subsidiary of the Company from making a dividend or similar distribution to the Company or any Domestic Subsidiary thereof; and, provided further that the foregoing shall not prohibit the Company from consummating the Reverse Stock Split.

Section 8.5 Subsidiaries, Acquisiti