Exhibit 10.1

Execution Version

 

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[Published Deal CUSIP Number:                             ]

[Published Revolver CUSIP Number:                      ]

[Published Term CUSIP Number:                            ]

CREDIT AGREEMENT

Dated as of January 18, 2007

among

KYPHON INC.,

and

CERTAIN SUBSIDIARIES,

as Borrowers,

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and L/C Issuer

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

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TABLE OF CONTENTS

 

          Page ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS 1.01    Defined Terms
   1 1.02    Other Interpretive Provisions    36 1.03    Accounting Terms    36
1.04    Rounding    37 1.05    Exchange Rates; Currency Equivalents    37 1.06
   Accounting for Acquisitions    38 1.07    Change of Currency    38 1.08   
Times of Day    39 1.09    Letter of Credit Amounts    39 ARTICLE II. THE
COMMITMENTS AND CREDIT EXTENSIONS 2.01    Revolving Loans    39 2.02    Term
Loan    39 2.03    Borrowings, Conversions and Continuations.    40 2.04   
Letters of Credit    42 2.05    Swing Line Loans    51 2.06    Optional
Prepayments    54 2.07    Termination or Reduction of Revolving Credit
Commitments    57 2.08    Repayment of Loans    58 2.09    Interest    59 2.10
   Fees    60 2.11    Computation of Interest and Fees    61 2.12    Evidence of
Debt    61 2.13    Payments Generally; Administrative Agent’s Clawback    61
2.14    Sharing of Payments by Lenders    64 2.15    Designated Borrowers    64
2.16    Increase in Revolving Credit Facility    66 ARTICLE III. TAXES, YIELD
PROTECTION AND ILLEGALITY 3.01    Taxes    67 3.02    Illegality    70 3.03   
Inability to Determine Rates    71 3.04    Increased Costs    71 3.05   
Compensation for Losses    73 3.06    Mitigation Obligations; Replacement of
Lenders    74 3.07    Survival    74

 

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ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS 4.01    Conditions to
Effectiveness of the Agreement    74 4.02    Conditions to all Credit Extensions
   79 ARTICLE V. REPRESENTATIONS AND WARRANTIES 5.01    Existence, Qualification
and Power    80 5.02    Authorization; No Contravention    80 5.03   
Governmental Authorization; Other Consents    80 5.04    Binding Effect    81
5.05    Financial Statements; No Material Adverse Effect; No Internal Control
Event    81 5.06    Litigation    81 5.07    No Default    82 5.08    Ownership
of Property; Liens    82 5.09    Environmental Compliance    82 5.10   
Insurance    82 5.11    Taxes    82 5.12    ERISA Compliance    82 5.13   
Subsidiaries; Equity Interests    83 5.14    Margin Regulations; Investment
Company Act    83 5.15    Disclosure    84 5.16    Compliance with Laws    84
5.17    Taxpayer Identification Number; Other Identifying Information    84 5.18
   Intellectual Property; Licenses, Etc    84 5.19    Representations as to
Foreign Obligors    84 5.20    Security Interest    85 5.21    Issuer Status   
86 5.22    Solvency    86 ARTICLE VI. AFFIRMATIVE COVENANTS 6.01    Financial
Statements    86 6.02    Certificates; Other Information    87 6.03    Notices
   88 6.04    Payment of Obligations    89 6.05    Preservation of Existence,
Etc    89 6.06    Maintenance of Properties    89 6.07    Maintenance of
Insurance    89 6.08    Compliance with Laws    90 6.09    Books and Records   
90 6.10    Inspection Rights    90 6.11    Use of Proceeds    90 6.12   
Approvals and Authorizations    91 6.13    New Subsidiaries    91

 

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6.14    InnoSpine    92 6.15    SFMT UK    93 6.16    Additional Security    93
6.17    Conditions Subsequent    94 ARTICLE VII. NEGATIVE COVENANTS 7.01   
Liens    94 7.02    Investments    95 7.03    Indebtedness    96 7.04   
Fundamental Changes    97 7.05    Dispositions    98 7.06    Restricted Payments
   99 7.07    Change in Nature of Business    100 7.08    Transactions with
Affiliates    100 7.09    Burdensome Agreements; Negative Pledge    100 7.10   
Financial Covenants.    101 7.11    Capital Expenditures    101 7.12   
Acquisitions    101 7.13    Company Status    101 7.14    Earnout Amounts    102
7.15    Prepayment of Subordinated Inebtedness    103 ARTICLE VIII. EVENTS OF
DEFAULT AND REMEDIES 8.01    Events of Default    103 8.02    Remedies Upon
Event of Default    105 8.03    Application of Funds    106 ARTICLE IX.
ADMINISTRATIVE AGENT 9.01    Appointment and Authority    107 9.02    Rights as
a Lender    107 9.03    Exculpatory Provisions    107 9.04    Reliance by
Administrative Agent    108 9.05    Delegation of Duties    108 9.06   
Resignation of Administrative Agent    108 9.07    Non-Reliance on
Administrative Agent and Other Lenders    109 9.08    No Other Duties, Etc   
110 9.09    Administrative Agent May File Proofs of Claim    110 9.10   
Collateral and Guaranty Matters    110 ARTICLE X. MISCELLANEOUS 10.01   
Amendments, Etc    111

 

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10.02    Notices; Effectiveness; Electronic Communication    113 10.03    No
Waiver; Cumulative Remedies    115 10.04    Expenses; Indemnity; Damage Waiver
   115 10.05    Payments Set Aside    117 10.06    Successors and Assigns    117
10.07    Treatment of Certain Information; Confidentiality    121 10.08    Right
of Setoff    122 10.09    Interest Rate Limitation    123 10.10    Counterparts;
Integration; Effectiveness    123 10.11    Survival of Representations and
Warranties    123 10.12    Severability    123 10.13    Replacement of Lenders
   124 10.14    Governing Law; Jurisdiction; Etc    124 10.15    Waiver of Jury
Trial    125 10.16    No advisory or Fiduciary Responsibility    126 10.17   
USA PATRIOT Act Notice    127 10.18    Judgment Currency    127 10.19    Waiver
of Immunity    127 SIGNATURES    S-1

 

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SCHEDULES

1.01(a)

   Mandatory Cost Formulae

1.01(b)

   Mortgaged Properties

1.01(c)

   Stockholder Support Agreements

1.01(d)

   Consolidated EBITDA

2.01

   Commitments, and Applicable Revolving Credit Percentages and Pro Rata Term
Shares

2.15

   Designated Borrower Eligible Jurisdictions

5.06

   Litigation

5.13

   Subsidiaries; Other Equity Investments

5.17

   Identification Numbers for Designated Borrowers

6.17

   Conditions Subsequent

7.01

   Existing Liens

7.02

   Existing Investments

7.03

   Existing Indebtedness

10.02

   Administrative Agent’s Office; Certain Addresses for Notices EXHIBITS

Form of

  

A-1

   Revolving Loan Notice

A-2

   Term Loan Interest Rate Selection Notice

B

   Swing Line Loan Notice

C

   Note

D

   Compliance Certificate

E

   Assignment and Assumption

F

   Guaranty

G

   IP Security Agreement

H

   Mortgage

I

   Pledge Agreement

J

   Letter of Undertaking

K

   Security Agreement

L

   Designated Borrower Request and Assumption Agreement

M

   Designated Borrower Notice

N

   Opinion Matters

 

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CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of January 18, 2007,
among KYPHON INC., a Delaware corporation (the “Company”), certain Subsidiaries
of the Company party hereto pursuant to Section 2.15 (each a “Designated
Borrower”) and, together with the Company, the “Borrowers” and, each a
“Borrower”), each lender from time to time party hereto (collectively, the
“Lenders” and individually, a “Lender”), and BANK OF AMERICA, N.A., as
Administrative Agent, Swing Line Lender and L/C Issuer.

The Company intends, pursuant to a merger by its wholly-owned Subsidiary,
Neptune Acquisition Sub, Inc., a Delaware corporation (“Neptune”), with St.
Francis Medical Technologies, Inc., a Delaware corporation (“SFMT”), to acquire
(the “SFMT Acquisition”) SFMT and each of its wholly-owned Subsidiaries,
S.F.M.T. Europe B.V., private company with liability under Dutch law (“SFMT
Europe”), and St. Francis Medical Technologies UK Limited, a limited liability
company organized under the laws of the United Kingdom (“SFMT UK”) (each, an
“Acquired Subsidiary”, and collectively, the “Acquired Subsidiaries”).

In order to finance a portion of the total consideration to be paid by the
Company to effect the SFMT Acquisition and for other corporate purposes, the
Company has requested that the Lenders provide a term loan facility and a
revolving credit facility, and the Lenders are willing to do so on the terms and
conditions set forth herein.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 Defined Terms. As used in this Agreement, the following terms shall have
the meanings set forth below:

“Acquired Subsidiary” has the meaning specified in the second introductory
paragraph hereto.

“Acquisition” means the acquisition of (i) a controlling equity or other
ownership interest in another Person, whether by purchase of such equity or
other ownership interest or upon the exercise of an option or warrant for, or
conversion of securities into, such equity or other ownership interest, or
(ii) assets of another Person which constitute all or substantially all of the
assets of such Person or of a line or lines of business conducted by such
Person.

“Acquisition Earnouts” means the aggregate amount of all earnout payments made
in respect of Permitted Acquisitions other than the DOT Acquisition, the SFMT
Acquisition and the Acquisition of InnoSpine.

“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.

 

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“Administrative Agent’s Office” means, with respect to any currency, the
Administrative Agent’s address and, as appropriate, account as set forth on
Schedule 10.02 with respect to such currency, or such other address or account
with respect to such currency as the Administrative Agent may from time to time
notify to the Company and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is controlled by or
is under common Control with the Person specified.

“Aggregate Commitments” means, as of the date of determination thereof, the sum
of (a) the Aggregate Revolving Credit Commitments at such date plus (b) the
Outstanding Amount with respect to the Term Loan at such date.

“Aggregate Revolving Credit Commitments” means, as at the date of determination
thereof, the sum of all Revolving Credit Commitments of all Revolving Lenders at
such date.

“Agreement” means this Credit Agreement.

“Alternative Currency” means each of Euro, Sterling, Yen, Swiss Francs and
Canadian Dollars.

“Alternative Currency Equivalent” means, at any time, with respect to any amount
denominated in US Dollars, the equivalent amount thereof in the applicable
Alternative Currency as determined by the Administrative Agent or the L/C
Issuer, as the case may be, at such time on the basis of the Spot Rate
(determined in respect of the most recent Revaluation Date) for the purchase of
such Alternative Currency with US Dollars.

“Alternative Currency Sublimit” means an amount equal to the lesser of the
Aggregate Commitments and $100,000,000. The Alternative Currency Sublimit is
part of, and not in addition to, the Aggregate Revolving Credit Commitments.

“Applicable Percentage” means with respect to any Lender at any time, the
percentage (carried out to the ninth decimal place) of the Aggregate Commitments
represented by such Lender’s Revolving Credit Commitment and by such Lender’s
Outstanding Amount of the Term Loan, as applicable. If the Revolving Credit
Commitment of each Revolving Lender and the obligation of the L/C Issuer to make
L/C Credit Extensions have been terminated pursuant to Section 8.02 or if the
Aggregate Revolving Credit Commitments have expired, then the Applicable
Percentage of each Revolving Lender shall be determined based on the Outstanding
Amount of the Revolving Loans of such Revolving Lender at such time. The initial
Applicable Percentage of each Lender is set forth opposite the name of such
Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to which
such Lender becomes a party hereto, as applicable.

“Applicable Rate” means,

 

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(a) with respect to the Revolving Loans, Commitment fee, Letter of Credit Fee
and Swing Line Loan from time to time, the following percentages per annum,
based upon the Consolidated Leverage Ratio as set forth below:

Applicable Rate

 

Pricing

Level

  

Consolidated Leverage Ratio

   Commitment Fee   Eurocurrency Rate +
Letters of Credit   Base Rate

I

   Less than 1.75 to 1.00    0.250%   1.250%   0.250%

II

   Greater than or equal to 1.75 to 1.00 but less than 2.50 to 1.00    0.250%  
1.500%   0.500%

III

   Greater than or equal to 2.50 to 1.00 but less than 3.25 to 1.00    0.375%  
1.750%   0.750%

IV

   Greater than or equal to 3.25 to 1.00 but less than 4.00 to 1.00    0.375%  
2.000%   1.000%

V

   Greater than or equal to 4.00 to 1.00    0.500%   2.250%   1.250%

Pricing Level IV shall apply until the Company delivers a Compliance Certificate
and the financial statements for the fiscal quarter ended March 31, 2007, in
accordance with Sections 6.02(a) and 6.01(b) respectively. For purposes of the
foregoing, (i) the Consolidated Leverage Ratio shall be determined as of the end
of each fiscal quarter of the Company’s fiscal year based upon the Company’s
consolidated financial statements delivered pursuant to Section 6.01(a) or
(b) and the Compliance Certificate for the respective fiscal quarter delivered
pursuant to Section 6.02(a) and (ii) each change in the Applicable Rate
resulting from a change in the Consolidated Leverage Ratio shall be effective
during the period commencing on and including the date of delivery to the
Administrative Agent of such consolidated financial statements and Compliance
Certificate indicating such change and ending on the date immediately preceding
the effective date of the next such change; provided that the Applicable Rate
shall be deemed to be as provided in Pricing Level V of the table set forth
above if the Company fails to deliver the consolidated financial statements
required to be delivered by it pursuant to Section 6.01(a) or (b) and the
Compliance Certificate delivered in connection therewith, as of the first
Business Day after the date on which such financial statements and Compliance
Certificate were required to have been delivered until the Business Day after
delivery thereof. In the event the Consolidated Leverage Ratio in any Compliance
Certificate is later determined to have been inaccurate, the Applicable Rate
shall be adjusted retroactively to the date of delivery of such inaccurate
Compliance Certificate to the percentage corresponding to the correct
Consolidated Leverage Ratio for that date, and such adjusted Applicable Rate
shall be applicable for the same period as that period during which the
Applicable Rate was incorrectly determined based on the original inaccurate
Consolidated Leverage Ratio.

(b) with respect to the Term Loan, a percentage per annum, based upon the
Consolidated Leverage Ratio as set forth below:

 

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Applicable Rate

 

Pricing

Level

  

Consolidated Leverage

Ratio

   Eurocurrency Rate   Base Rate

I

   Less than 2.50 to 1.00    2.000%   1.000%

II

   Greater than or equal to 2.50 to 1.00    2.250%   1.250%

Pricing Level II shall apply until the Company delivers a Compliance Certificate
and the financial statements for the fiscal quarter ended March 31, 2007, in
accordance with Sections 6.02(a) and 6.01(b) respectively. For purposes of the
foregoing, (i) the Consolidated Leverage Ratio shall be determined as of the end
of each fiscal quarter of the Company’s fiscal year based upon the Company’s
consolidated financial statements delivered pursuant to Section 6.01(a) or
(b) and the Compliance Certificate for the respective fiscal quarter delivered
pursuant to Section 6.02(a) and (ii) each change in the Applicable Rate
resulting from a change in the Consolidated Leverage Ratio shall be effective
during the period commencing on and including the date of delivery to the
Administrative Agent of such consolidated financial statements and Compliance
Certificate indicating such change and ending on the date immediately preceding
the effective date of the next such change; provided that the Applicable Rate
shall be deemed to be as provided in Pricing Level II of the table set forth
above if the Company fails to deliver the consolidated financial statements
required to be delivered by it pursuant to Section 6.01(a) or (b) and the
Compliance Certificate delivered in connection therewith, as of the first
Business Day after the date on which such financial statements and Compliance
Certificate were required to have been delivered until the Business Day after
delivery thereof. In the event the Consolidated Leverage Ratio in any Compliance
Certificate is later determined to have been inaccurate, the Applicable Rate
shall be adjusted retroactively to the date of delivery of such inaccurate
Compliance Certificate to the percentage corresponding to the correct
Consolidated Leverage Ratio for that date, and such adjusted Applicable Rate
shall be applicable for the same period as that period during which the
Applicable Rate was incorrectly determined based on the original inaccurate
Consolidated Leverage Ratio.

“Applicable Revolving Credit Percentage” means, with respect to any Revolving
Lender at any time, the percentage (carried out to the ninth decimal place) of
the Aggregate Revolving Credit Commitments represented by such Revolving
Lender’s Revolving Credit Commitment at such time; provided, however, for the
purposes of Section 2.13, in the event that a Revolving Lender does not make a
Revolving Loan to a Designated Borrower as permitted under Section 2.15, then
the Applicable Revolving Credit Percentage for such Revolving Lender with
respect to such Revolving Loan it did not advance shall be zero, and for each
other Revolving Lender with respect to such Revolving Loan shall be determined
by subtracting from the Aggregate Revolving Credit Commitments such nonfunding
Revolving Lender’s Revolving Commitment. If the commitment of each Revolving
Lender to make Revolving Loans and the obligation of the L/C Issuer to make L/C
Credit Extensions have been terminated pursuant to Section 8.02 or if the
Aggregate Revolving Credit Commitments have expired, then the Applicable
Revolving Credit Percentage of each Revolving Lender shall be determined based
on the Applicable Revolving Credit Percentage of such Revolving Lender most
recently in effect, giving effect to any subsequent assignments. The initial
Applicable Revolving Credit Percentage

 

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of each Revolving Lender is set forth opposite the name of such Revolving Lender
on Schedule 2.01 or in the Assignment and Assumption pursuant to which such
Revolving Lender becomes a party hereto, as applicable.

“Applicable Time” means, with respect to any borrowings and payments in any
Alternative Currency, the local time in the place of settlement for such
Alternative Currency as may be determined by the Administrative Agent or the L/C
Issuer, as the case may be, to be necessary for timely settlement on the
relevant date in accordance with normal banking procedures in the place of
payment.

“Applicant Borrower” has the meaning specified in Section 2.15.

“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Arranger” means Banc of America Securities LLC, in its capacity as sole lead
arranger and sole book manager.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 10.06(b)), and accepted by the Administrative Agent, in substantially
the form of Exhibit E or any other form approved by the Administrative Agent.

“Assignment of Lease” means, collectively, the Collateral Assignment of Rights
in Leases now or hereafter assigning to the Administrative Agent for the benefit
of the Secured Parties all of the Company’s or any of its Subsidiaries’ interest
as lessee in any real property.

“Attributable Indebtedness” means, on any date, in respect of any capital lease
of any Person, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP.

“Audited Financial Statements” means the audited consolidated balance sheet of
the Company and its Subsidiaries for the fiscal year ended December 31, 2005,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of the Company and its Subsidiaries,
including the notes thereto.

“Availability Period” means the period from and including the Closing Date to
the earliest of (a) the Revolving Credit Maturity Date, (b) the date of
termination of the Aggregate Revolving Credit Commitments pursuant to
Section 2.07, and (c) the date of termination of the commitment of each
Revolving Lender to make Revolving Loans and of the obligation of the L/C Issuer
to make L/C Credit Extensions pursuant to Section 8.02.

“Bank of America” means Bank of America, N.A. and its successors.

 

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“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in
effect for such day as publicly announced from time to time by Bank of America
as its “prime rate.” The “prime rate” is a rate set by Bank of America based
upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in such rate announced by Bank of America shall take effect at
the opening of business on the day specified in the public announcement of such
change.

“Base Rate Loan” means a Loan that bears interest based on the Base Rate. All
Base Rate Loans shall be denominated in US Dollars.

“Base Rate Revolving Loan” means a Revolving Loan that is a Base Rate Loan.

“Base Rate Segment” means a Segment that bears interest based on the Base Rate.

“Borrower” and “Borrowers” each has the meaning specified in the introductory
paragraph hereto.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowing” means (a) a Revolving Borrowing, (b) the Term Loan Borrowing or
(c) a Swing Line Borrowing, as the context may require.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, the state where the Administrative Agent’s Office with respect to
Obligations denominated in US Dollars is located and:

(a) if such day relates to any interest rate settings as to a Eurocurrency Rate
Loan denominated in US Dollars, any fundings, disbursements, settlements and
payments in US Dollars in respect of any such Eurocurrency Rate Loan, or any
other dealings in US Dollars to be carried out pursuant to this Agreement in
respect of any such Eurocurrency Rate Loan, means any such day on which dealings
in deposits in US Dollars are conducted by and between banks in the London
interbank eurodollar market;

(b) if such day relates to any interest rate settings as to a Eurocurrency Rate
Loan denominated in Euro, any fundings, disbursements, settlements and payments
in Euro in respect of any such Eurocurrency Rate Loan, or any other dealings in
Euro to be carried out pursuant to this Agreement in respect of any such
Eurocurrency Rate Loan, means a TARGET Day;

(c) if such day relates to any interest rate settings as to a Eurocurrency Rate
Loan denominated in a currency other than US Dollars or Euro, means any such day
on which dealings in deposits in the relevant currency are conducted by and
between banks in the London or other applicable offshore interbank market for
such currency; and

 

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(d) if such day relates to any fundings, disbursements, settlements and payments
in a currency other than US Dollars or Euro in respect of a Eurocurrency Rate
Loan denominated in a currency other than US Dollars or Euro, or any other
dealings in any currency other than US Dollars or Euro to be carried out
pursuant to this Agreement in respect of any such Eurocurrency Rate Loan (other
than any interest rate settings), means any such day on which banks are open for
foreign exchange business in the principal financial center of the country of
such currency.

“Canadian Dollar” and “CAN$” mean the lawful currency of Canada.

“Cash Collateralize” has the meaning specified in Section 2.04(g).

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

“Change of Control” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time (such right, an “option right”)), directly or
indirectly, of 30% or more of the equity securities of the Company entitled to
vote for members of the board of directors or equivalent governing body of the
Company on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right);

(b) during any period of 12 consecutive months, a majority of the members of the
board of directors or other equivalent governing body of the Company cease to be
composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or
nomination to that board or equivalent governing body was approved by
individuals referred to in clause (i) above constituting at the time of such
election or nomination at least a majority of that board or equivalent governing
body or (iii) whose election or nomination to that board or other equivalent
governing body was approved by individuals referred to in clauses (i) and
(ii) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body (excluding, in the case of
both clause (ii) and clause (iii), any individual whose initial nomination for,
or assumption of office as, a member of that board or equivalent governing body
occurs as a result of an actual or threatened solicitation of proxies or
consents for the election or removal of one or more directors by any person or
group other than a solicitation for the election of one or more directors by or
on behalf of the board of directors); or

 

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(c) any Person or two or more Persons acting in concert shall have acquired by
contract or otherwise the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Company, or control
over the equity securities of the Company entitled to vote for members of the
board of directors or equivalent governing body of the Company on a
fully-diluted basis (and taking into account all such securities that such
Person or group has the right to acquire pursuant to any option right)
representing 30% or more of the combined voting power of such securities.

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

“Code” means the Internal Revenue Code of 1986.

“Collateral” means, collectively, the assets and rights and interest in or to
property of the Company or any of the other Loan Parties, whether real or
personal, tangible or intangible, in which a Lien is granted or purported to be
granted pursuant to the Security Instruments.

“Commitment” means, as to each Lender, the Term Loan Commitment or the Revolving
Credit Commitment of such Lender, as applicable.

“Company” has the meaning specified in the introductory paragraph hereto.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit D.

“Consolidated Current Assets” means all assets of the Company and its
Subsidiaries, determined on a consolidated basis, that would, in accordance with
GAAP, be classified as current assets of a company conducting a business the
same or similar to that of the Company and its Subsidiaries, after deducting
adequate reserves in case a reserve is proper in accordance with GAAP.

“Consolidated Current Liabilities” means (a) all Indebtedness of the Company and
its Subsidiaries that by its terms is payable on demand or matures within one
year after the date of determination (excluding Indebtedness renewable or
extendible, at the option of the Company or any of its Subsidiaries, to a date
more than one year from such date or arising under a revolving credit or similar
agreement that obligates the lender or lenders to extend credit during a period
of more than one year from such date) and (b) all other items (including taxes
accrued as estimated) that in accordance with GAAP would be classified as
current liabilities of the Company and its Subsidiaries, determined on a
consolidated basis.

“Consolidated EBITDA” means, for any period, for the Company and its
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income
for such period plus (a) the following to the extent deducted in calculating
such Consolidated Net Income: (i) Consolidated Interest Charges for such period,
(ii) the provision for Federal, state, local and foreign income taxes payable by
the Company and its Subsidiaries for such period, (iii) depreciation and

 

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amortization expense for such period, (iv) non-cash stock based compensation
expense for such period, (v) other extraordinary losses of the Company and its
Subsidiaries reducing such Consolidated Net Income which do not represent a cash
item in such period or any future period (including the amount of intellectual
property research and development write-offs from the SFMT Acquisition and the
DOT Acquisition), (vi) Transaction Costs not exceeding $20,000,000, and
(vii) the cash charges related to the SFMT Acquisition (and not part of
Transaction Costs) paid during such period so long as such cash charges are made
within twelve (12) months of the consummation of the SFMT Acquisition (including
the amount of severance payments made to departing SFMT employees and payout of
accelerated option proceeds) and do not exceed $30,000,000 in the aggregate, and
minus (b) the following to the extent included in calculating such Consolidated
Net Income: (i) Federal, state, local and foreign income tax credits of the
Company and its Subsidiaries for such period and (ii) all extraordinary non-cash
gains and non-cash items increasing Consolidated Net Income for such period;
provided, however, notwithstanding the foregoing, for purposes of determining
the portion of Consolidated EBITDA attributable to SFMT and the Acquired
Subsidiaries for the fiscal quarters ended June 30, 2006, September 30, 2006 and
December 31, 2006, such amounts shall be as set forth on Schedule 1.01(d).

“Consolidated Funded Indebtedness” means, as of any date of determination, for
the Company and its Subsidiaries on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments, (d) all
obligations in respect of the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business, other
than the Total Earnout Amount and the Deferred Purchase Obligations related to
the DOT Acquisition), (e) Attributable Indebtedness in respect of capital
leases, (f) without duplication, all Guarantees with respect to outstanding
Indebtedness of the types specified in clauses (a) through (e) above of Persons
other than the Company or any Subsidiary, and (g) all Indebtedness of the types
referred to in clauses (a) through (f) above of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which the Company or a Subsidiary is a general partner or joint
venturer, unless such Indebtedness is expressly made non-recourse to the Company
or such Subsidiary.

“Consolidated Interest Charges” means, for any period, for the Company and its
Subsidiaries on a consolidated basis, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses of the Company and
its Subsidiaries in connection with borrowed money or in connection with the
deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP, and (b) the portion of rent expense of the
Company and its Subsidiaries with respect to such period under capital leases
that is treated as interest in accordance with GAAP.

“Consolidated Interest Coverage Ratio” means, as of any date of determination,
the ratio of (a) Consolidated EBITDA for the period of the four prior fiscal
quarters ending on such date to (b) Consolidated Interest Charges for such
period.

 

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“Consolidated Leverage Ratio” means, as of any date of determination, the ratio
of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated
EBITDA for the period of the four fiscal quarters most recently ended.

“Consolidated Net Income” means, for any period, for the Company and its
Subsidiaries on a consolidated basis, the net income of the Company and its
Subsidiaries for that period.

“Consolidated Senior Secured Leverage Ratio” means, as of any date of
determination, the ratio of (a) Consolidated Funded Indebtedness as of such date
minus Subordinated Indebtedness minus Permitted Convertible Indebtedness as of
such date minus senior unsecured Indebtedness as of such date to
(b) Consolidated EBITDA for the period of the four fiscal quarters most recently
ended.

“Consolidated Tangible Assets” means, as of any date of determination,
Consolidated Total Assets on such date minus the book value of Intangible Assets
of the Company and its Subsidiaries on such date.

“Consolidated Total Assets” means, as of any date of determination, the net book
value of all assets of the Company and its Subsidiaries on such date determined
on a consolidated basis in accordance with GAAP.

“Consolidated Working Capital” means, as of any date of determination, the
Excess of Consolidated Current Assets over Consolidated Current Liabilities.

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

“Contingent Obligation GAAP Debt” means earnout and other contingent obligations
incurred in connection with (w) Acquisitions permitted hereunder,
(x) Acquisitions occurring prior to the Closing Date to the extent such
obligation described in this clause (x) remains outstanding, (y) the SFMT
Acquisition and (z) the DOT Acquisition, and are determined to be indebtedness
in accordance with GAAP.

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

“Cost of Acquisition” means, with respect to any Acquisition, as at the date of
entering into any agreement therefor, the sum of the following (without
duplication): (i) the amount of any cash and fair market value of other property
given as consideration, including without limitation cash and property to be
given in satisfaction of Deferred Purchase Obligations, (ii) the amount
(determined by using the face amount or the amount payable at maturity,
whichever is greater) of any Indebtedness incurred, assumed or acquired by the
Company or any Subsidiary in connection with such Acquisition, (iii) all amounts
paid (including cash and the fair market value of other property given as
consideration) in respect of covenants not to compete, and consulting agreements
that should be recorded as acquisition costs on financial statements of the
Company

 

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and its Subsidiaries in accordance with GAAP, and (iv) out-of-pocket transaction
costs for the services and expenses of attorneys, accountants and other
consultants incurred in effecting such transaction, and other similar
transaction costs so incurred and capitalized as acquisition costs in accordance
with GAAP.

“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per annum;
provided, however, that with respect to a Eurocurrency Rate Loan, the Default
Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate and any Mandatory Cost) otherwise applicable to such Loan plus
2% per annum, and (b) when used with respect to Letter of Credit Fees, a rate
equal to the Applicable Rate plus 2% per annum.

“Defaulting Lender” means any Lender that (a) has failed to fund any portion of
the Revolving Loans, participations in L/C Obligations or participations in
Swing Line Loans required to be funded by it hereunder within one Business Day
of the date required to be funded by it hereunder unless such failure has been
cured, (b) has otherwise failed to pay over to the Administrative Agent or any
other Lender any other amount required to be paid by it hereunder within one
Business Day of the date when due, unless the subject of a good faith dispute or
unless such failure has been cured, or (c) has been deemed insolvent or become
the subject of a bankruptcy or insolvency proceeding.

“Deferred Purchase Obligation” means, in connection with any Acquisition, the
obligation to pay any portion of the purchase price after the closing date with
respect to such Acquisition.

“Designated Borrower” has the meaning specified in the introductory paragraph
hereto.

“Designated Borrower Notice” has the meaning specified in Section 2.15.

“Designated Borrower Request and Assumption Agreement” has the meaning specified
in Section 2.15.

“Designated Borrower Sublimit” means an amount equal to the lesser of the
Aggregate Revolving Credit Commitments and $100,000,000. The Designated Borrower
Sublimit is part of, and not in addition to, the Aggregate Revolving Credit
Commitments.

 

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“Direct Foreign Subsidiary” means a Subsidiary other than a Domestic Subsidiary
a majority of whose Voting Securities, or a majority of whose Subsidiary
Securities, are owned by a Borrower or a Domestic Subsidiary.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“DOT Acquisition” means the acquisition of all of the spine-related product
assets and associated intellectual property rights of Disc-O-Tech Medical
Technologies, Ltd., a privately held Israeli company, and its U.S. subsidiary.

“Earnout Amount” shall have the meaning set forth in the Merger Agreement.

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 10.06(b)(iii), (v) and (vi) subject to such consents, if
any, as may be required under Section 10.06(b)(iii)).

“EMU” means the economic and monetary union in accordance with the Treaty of
Rome 1957, as amended by the Single European Act 1986, the Maastricht Treaty of
1992 and the Amsterdam Treaty of 1998.

“EMU Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership

 

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or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such Person (including
partnership, member or trust interests therein), whether voting or nonvoting,
and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and any successor statute thereto, as interpreted by the rules and regulations
thereunder, all as the same may be in effect from time to time. Reference to any
sections of ERISA shall also be construed to refer to any successor sections.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 4001(a) of
ERISA or which is treated as single employer with the Company under
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Company or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or, to the knowledge of the
Company, Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or, to the knowledge of the Company,
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.

“Euro” and “EUR” mean the lawful currency of the Participating Member States
introduced in accordance with the EMU Legislation.

“Eurocurrency Base Rate” has the meaning specified in the definition of
Eurocurrency Rate.

“Eurocurrency Rate” means for any Interest Period with respect to a Eurocurrency
Rate Loan, a rate per annum determined by the Administrative Agent pursuant to
the following formula:

 

           

Eurocurrency Base Rate

  Eurocurrency Rate   =  

1.00 – Eurocurrency Reserve

Percentage

 

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Where,

“Eurocurrency Base Rate” means, for such Interest Period:

(a) the rate per annum equal to the British Banker’s Association LIBOR Rate
(“BBA LIBOR”), as published by Reuters (or other commercially available source
providing quotations of BBA LIBOR as designated by the Administrative Agent from
time to time) as approximately 8:00 a.m., London time, two Business Days prior
to the commencement of such Interest Period, for deposits in the relevant
currency (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period.

(b) If such rate referenced in the preceding clause (a) is not available at such
time for any reason, then the “Eurocurrency Base Rate” for such Interest Period
shall be the rate per annum determined by the Administrative Agent to be the
rate at which deposits in the relevant currency for delivery on the first day of
such Interest Period in Same Day Funds in the approximate amount of the
Eurocurrency Rate Loan being made, continued or converted by Bank of America and
with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch (or other Bank of America branch or Affiliate) to major
banks in the London or other offshore interbank market for such currency at
their request at approximately 8:00 a.m. (London time) two Business Days prior
to the commencement of such Interest Period.

“Eurocurrency Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places) in effect on such day, whether or not applicable to any Lender, under
regulations issued from time to time by the FRB for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred to
as “Eurocurrency liabilities”). The Eurocurrency Rate for each outstanding
Eurocurrency Rate Loan shall be adjusted automatically as of the effective date
of any change in the Eurocurrency Reserve Percentage.

“Eurocurrency Rate Loan” means a Loan that bears interest at a rate based on the
Eurocurrency Rate. Eurocurrency Rate Loans may be denominated in US Dollars or,
as to Revolving Loans only, in an Alternative Currency. All Revolving Loans
denominated in an Alternative Currency must be Eurocurrency Rate Loans.

“Eurocurrency Rate Segment” means a Segment that bears interest at a rate based
on the Eurocurrency Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Excess Cash Flow” means, with respect to the Company and its Subsidiaries on a
consolidated basis for any fiscal year, the following:

(a) Consolidated EBITDA for such period (but adjusted to include the effect of
cash losses or gains added or deducted pursuant to the definition of
Consolidated EBITDA),

 

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minus

(b) the sum of (i) the change in Consolidated Working Capital as at the end of
such fiscal year compared to Consolidated Working Capital as at the end of the
immediately preceding fiscal year; plus (ii) capital expenditures to the extent
permitted by Section 7.11 paid in cash during such period; plus
(iii) Consolidated Interest Charges paid in cash for such period; plus
(iv) taxes paid in cash for such period and added in the calculation of
Consolidated EBITDA pursuant to the definition thereof; plus (v) the aggregate
amount of all scheduled payments of Consolidated Funded Indebtedness made during
such period; plus (vi) the aggregate amount of any optional prepayments of the
Term Loan and of Revolving Loans made by the Company pursuant to Section 2.06
hereof during such period; plus (vii) the aggregate amount of any mandatory
prepayments of the Term Loan and of Revolving Loans made by the Company pursuant
to Section 2.06A hereof during such period; plus (viii) Transaction Costs up to
$20,000,000, plus (ix) the cash charges related to the SFMT Acquisition (and not
part of Transaction Costs) paid during such period so long as such cash charges
are made within twelve (12) months of the consummation of the SFMT Acquisition
(including the amount of severance payments made to departing SFMT employees and
payout of accelerated option proceeds) and do not exceed $30,000,000 in the
aggregate; plus (x) Permitted Earnout Distributions paid in cash.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the L/C Issuer or any other recipient of any payment to be made by or on account
of any obligation of any Borrower hereunder, (a) taxes imposed on or measured by
its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
such Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Company under Section 10.13), any
withholding tax that is imposed on amounts payable to such Foreign Lender at the
time such Foreign Lender becomes a party hereto (or designates a new Lending
Office) or is attributable to such Foreign Lender’s failure or inability (other
than as a result of a Change in Law) to comply with Section 3.01(e), except to
the extent that such Foreign Lender (or its assignor, if any) was entitled, at
the time of designation of a new Lending Office (or assignment), to receive
additional amounts from the applicable Borrower with respect to such withholding
tax pursuant to Section 3.01(a).

“Existing Credit Agreement” means that certain Credit Agreement dated as of
October 20, 2006, by and among the Company, the Designated Borrowers, Bank of
America, as administrative agent, and the lenders party thereto (as from time to
time amended, restated, supplemented or otherwise modified prior to the date
hereof),

“Existing Letter of Credit” means that certain Standby Letter of Credit
No. 3083707 issued by Bank of America, N.A. on August 14, 2006 for the benefit
of Credit Suisse with an expiry date of August 15, 2007.

 

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“Extraordinary Receipts” means cash payments received by the Company or its
Subsidiaries in respect of any property or casualty insurance claim or any
condemnation proceeding.

“Facility” means the Term Loan Facility or the Revolving Credit Facility, as the
context may require.

“Facility Termination Date” means the date as of which all of the following
shall have occurred: (a) the Borrowers shall have permanently terminated the
credit facilities under the Loan Documents by final payment in full of all
Outstanding Amounts, together with all accrued and unpaid interest and fees
thereon, other than (i) the undrawn portion of Letters of Credit and (ii) all
letter of credit fees relating thereto accruing after such date (which fees
shall be payable solely for the account of the L/C Issuer and shall be computed
(based on interest rates and the Applicable Rate then in effect) on such undrawn
amounts to the respective expiry dates of the Letters of Credit), in each case
as have been fully Cash Collateralized or as to which other arrangements with
respect thereto satisfactory to the Administrative Agent and the L/C Issuer
shall have been made; (b) all Commitments shall have terminated or expired;
(c) the obligations and liabilities of the Borrowers and each other Loan Party
under all Related Credit Arrangements shall have been fully, finally and
irrevocably paid and satisfied in full and the Related Credit Arrangements shall
have expired or been terminated, or other arrangements satisfactory to the
applicable Related Credit Arrangement Providers shall have been made with
respect thereto; and (d) the Borrowers and each other Loan Party shall have
fully, finally and irrevocably paid and satisfied in full all of their
respective obligations and liabilities arising under the Loan Documents,
including with respect to the Borrowers and the Obligations (except for future
obligations consisting of continuing indemnities and other contingent
Obligations of any Borrower or any Loan Party that may be owing to any of its
Related Parties or any Lender pursuant to the Loan Documents and expressly
survive termination of the Credit Agreement or any other Loan Document).

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

“Fee Letter” means the letter agreement, dated August 31, 2006, among the
Company, the Administrative Agent and the Arranger.

“First Earnout Amount” shall have the meaning set forth in the Merger Agreement.

“Foreign Lender” means, with respect to any Borrower, any Lender that is
organized under the laws of a jurisdiction other than that in which such
Borrower is resident for tax purposes. For purposes of this definition, the
United States, each State thereof and the District of Columbia shall be deemed
to constitute a single jurisdiction.

 

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“Foreign Obligor” means a Loan Party that is a Foreign Subsidiary.

“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a
jurisdiction other than the United States, a State thereof or the District of
Columbia.

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

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

“GAAP” means generally accepted accounting principles in the United States set
forth 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 such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” means, as to any Person, (a) any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) any Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien). The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if

 

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not stated or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by the guaranteeing Person in good faith. The term
“Guarantee” as a verb has a corresponding meaning.

“Guarantors” means, (i) with respect to the Obligations of the Company
hereunder, collectively, each Domestic Subsidiary of the Company (other than
InnoSpine, unless it becomes a Guarantor pursuant to Section 6.14), and
(ii) with respect to the Obligations of each Designated Borrower hereunder, the
Company.

“Guaranty” means that certain Guaranty Agreement executed by the Guarantors in
favor of the Administrative Agent and the Lenders, substantially in the form of
Exhibit F, as supplemented from time to time by execution and delivery of
Guaranty Joinder Agreements pursuant to Section 6.12.

“Guaranty Joinder Agreement” means each Guaranty Joinder Agreement,
substantially in the form thereof attached to the Guaranty, executed and
delivered by a Domestic Subsidiary to the Administrative Agent pursuant to
Section 6.13.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to any Environmental Law.

“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

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

(b) all direct or contingent obligations of such Person arising under letters of
credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments;

(c) net obligations of such Person under any Swap Contract;

(d) all obligations of such Person to pay the deferred purchase price of
property or services (other than trade accounts payable in the ordinary course
of business);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on
property owned or being purchased by such Person (including indebtedness arising
under conditional sales or other title retention agreements), whether or not
such indebtedness shall have been assumed by such Person or is limited in
recourse;

(f) capital leases;

 

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(g) all obligations of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any Equity Interest in such Person or
any other Person, valued, in the case of a redeemable preferred interest, at the
greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. The amount of any capital lease as of any date shall be
deemed to be the amount of Attributable Indebtedness in respect thereof as of
such date.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitees” has the meaning specified in Section 10.04(b).

“Information” has the meaning specified in Section 10.07.

“InnoSpine” means InnoSpine, Inc., a Delaware corporation.

“Intangible Assets” means assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights,
trade names, trademarks, patents, franchises, licenses, unamortized deferred
charges, unamortized debt discount and capitalized research and development
costs.

“Interest Payment Date” means, (a) as to any Loan or Segment other than a Base
Rate Loan or Base Rate Segment, the last day of each Interest Period applicable
to such Loan and the Revolving Credit Maturity Date or the Term Loan Maturity
Date, as applicable; provided, however, that if any Interest Period for a
Eurocurrency Rate Loan exceeds three months, the respective dates that fall
every three months after the beginning of such Interest Period shall also be
Interest Payment Dates; and (b) as to any Base Rate Loan or any Base Rate
Segment (including a Swing Line Loan), the last Business Day of each March,
June, September and December and the Revolving Credit Maturity Date or the Term
Loan Maturity Date, as applicable.

“Interest Period” means, as to each Eurocurrency Rate Loan and each Eurocurrency
Rate Segment, the period commencing on the date such Eurocurrency Rate Loan or
such Eurocurrency Rate Segment is disbursed or converted to or continued as a
Eurocurrency Rate Loan or a Eurocurrency Rate Segment and ending on the date
one, two, three or six months thereafter, as selected by the Company in its
Revolving Loan Notice or Term Loan Interest Rate Selection Notice; provided
that:

(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

 

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(ii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the Revolving Credit Maturity Date
or the Term Loan Maturity Date, as applicable.

“Internal Control Event” means a material weakness in, or fraud that involves
management or other employees who have a significant role in, the Company’s
internal controls over financial reporting, in each case as described in the
Securities Laws.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person (other than any equity swaps or options on the capital
stock of the Company entered into in connection with any Permitted Convertible
Indebtedness), whether by means of (a) the purchase or other acquisition of
capital stock or other securities of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or equity participation or interest in,
another Person, including any partnership or joint venture interest in such
other Person and any arrangement pursuant to which the investor Guarantees
Indebtedness of such other Person, or (c) the purchase or other acquisition (in
one transaction or a series of transactions) of assets of another Person that
constitute a business unit. For purposes of covenant compliance, the amount of
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.

“IP Rights” has the meaning specified in Section 5.18.

“IP Security Agreement” means that certain Intellectual Property Security
Agreement dated as of the Closing Date made by the Company and each of its
Domestic Subsidiaries in favor of the Administrative Agent for the benefit of
the Secured Parties, substantially in the form of Exhibit G attached hereto, as
supplemented from time to by the execution and delivery of IP Security Joinder
Agreements pursuant to Section 6.13 or otherwise.

“IP Security Joinder Agreement” means each Intellectual Property Security
Joinder Agreement, substantially in the form thereof attached to the Security
Agreement, executed and delivered by the Company and each of its Domestic
Subsidiaries, as applicable, to the Administrative Agent pursuant to
Section 6.13 or otherwise.

“IRS” means the United States Internal Revenue Service.

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice (or such later version thereof as may be in effect at the time of
issuance).

 

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“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the L/C Issuer and the Company (or any Subsidiary) or in favor the L/C
Issuer and relating to such Letter of Credit.

“KYPH Swiss Shares” means the 34.9% ownership interest in Kyphon SARL to be
transferred by the Company and held by InnoSpine.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

“L/C Advance” means, with respect to each Revolving Lender, such Revolving
Lender’s funding of its participation in any L/C Borrowing in accordance with
its Applicable Revolving Credit Percentage. All L/C Advances shall be
denominated in US Dollars.

“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Revolving Borrowing. All L/C Borrowings shall be denominated in
US Dollars.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“L/C Issuer” means Bank of America in its capacity as issuer of Letters of
Credit hereunder, or any successor issuer of Letters of Credit hereunder.

“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Section 1.09. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.

“Leased Real Estate Support Documents” means, with respect to any real property
which is leased or sub-leased to the Company or any of its Subsidiaries, such
landlord and mortgagee waivers and nondisturbance agreements, third party
consents, mortgagee title insurance policies (in amounts and with endorsements
reasonably acceptable to the Administrative Agent), surveys, environmental
assessment reports, flood hazard certifications, evidence of flood insurance, if
required, and other mortgage-related documents as the Administrative Agent may
reasonably request.

 

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“Lender” has the meaning specified in the introductory paragraph hereto and, as
the context requires, includes the Swing Line Lender.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Company and the
Administrative Agent.

“Letter of Credit” means any letter of credit issued hereunder and shall include
the Existing Letter of Credit. Letters of Credit may only be issued in US
Dollars and may only be issued as standby letters of credit.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the L/C Issuer.

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Revolving Credit Maturity Date then in effect (or, if such day is not a Business
Day, the next preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.04(i).

“Letter of Credit Sublimit” means an amount equal to $50,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Aggregate Revolving
Credit Commitments.

“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or preference,
priority or other security interest or preferential arrangement in the nature of
a security interest of any kind or nature whatsoever (including any conditional
sale or other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).

“Loan” means an extension of credit by a Lender to a Borrower under Article II
in the form of a Revolving Loan, a Term Loan or a Swing Line Loan.

“Loan Documents” means this Agreement, each Designated Borrower Request and
Assumption Agreement, each Note, each Issuer Document, the Fee Letter, each
Revolving Loan Notice, each Term Loan Interest Rate Selection Notice, the
Guaranty (including each Guaranty Joinder Agreement) and the Security
Instruments.

“Loan Parties” means, collectively, the Company, each Guarantor and each
Designated Borrower.

“Mandatory Cost” means, with respect to any period, the percentage rate per
annum determined in accordance with Schedule 1.01(a).

“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual
or contingent) or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; (b) a material impairment of the ability of any
Loan Party to perform its obligations under any Loan Document to which it is a
party; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against any Loan Party of any Loan Document to which it
is a party.

 

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“Material Real Property Interest” means all owned or leased real property other
than office space or warehouse space having less than 3,000 square feet.

“Merger Agreement” means that certain Agreement and Plan of Merger dated as of
December 4, 2006, by and among Kyphon Inc., Neptune Acquisition Sub, Inc., and
St. Francis Medical Technologies, Inc., and, with respect to Article VII only,
Philip M. Young as Stockholders’ Representative, without alteration, amendment,
change, supplement or waiver of any material condition therein (in each case, in
a manner materially adverse to the interests of the Lenders), without the prior
written consent of the Lenders, which shall not be unreasonably withheld.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Mortgage” means, individually or collectively as the context may indicate,
those mortgages, deeds of trust, deeds to secure debt and comparable real estate
Lien documents delivered on or after the Closing Date to the Administrative
Agent with respect to any Mortgaged Property, substantially in the form attached
hereto as Exhibit H.

“Mortgaged Property” means collectively, (i) as at the Closing Date, the owned
or leased properties of the Loan Parties more particularly described in Schedule
1.01(b), and (ii) thereafter such other properties as are required by the terms
hereof to be added to the Mortgaged Property.

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

“Neptune” has the meaning specified in the second introductory paragraph hereto.

“Net Cash Proceeds” means the aggregate proceeds in cash or cash equivalents
received by the Company or any of its Subsidiaries (including cash received by
way of deferred payment pursuant to a note receivable or otherwise, but only
when and as so received) in respect of (i) the Disposition of any property or
assets, (ii) the issuance of any additional Equity Interests of the Company or
any Subsidiary, (iii) the issuance or incurrence of any Consolidated Funded
Indebtedness (including, without limitation, any cash received upon the sale or
other disposition of any noncash consideration received in connection with (i),
(ii) or (iii) above), net of the direct costs relating to (i), (ii) or
(iii) above (including taxes, legal, accounting and investment banking and other
customary fees and expenses, and sales commissions) and net of the direct costs
relating to (ii) and (iii) above incurred prior to or within seven (7) days of
the issuance of such Indebtedness or Equity Interests and paid or payable as a
result of any call spread or simultaneous purchase and sale of call options for
the same number of shares issued with respect to such Indebtedness or issuance
of Equity Interests in an aggregate amount up to fifteen percent (15%) of the
gross proceeds received by the Company and its Subsidiaries from such
Indebtedness or issuance of Equity Interests, or (iv) Extraordinary Receipts.

 

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“Note” means a promissory note made by a Borrower in favor of a Lender
evidencing Loans made by such Lender (in its capacity as a Revolving Lender or a
Term Loan Lender) to such Borrower, substantially in the form of Exhibit C.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, Letter of Credit or Related Credit
Arrangement, whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding.

“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

“Outstanding Amount” means (i) with respect to Revolving Loans on any date, the
US Dollar Equivalent amount of the aggregate outstanding principal amount
thereof after giving effect to any borrowings and prepayments or repayments of
such Revolving Loans occurring on such date; (ii) with respect to the Term Loan
on any date, the aggregate outstanding principal amount thereof after giving
effect to any prepayments or repayments of the Term Loan (or any Segment, as the
case may be) occurring on such date; (iii) with respect to Swing Line Loans on
any date, the aggregate outstanding principal amount thereof after giving effect
to any borrowings and prepayments or repayments of such Swing Line Loans
occurring on such date; and (iii) with respect to any L/C Obligations on any
date, the amount of the aggregate outstanding amount of such L/C Obligations on
such date after giving effect to any L/C Credit Extension occurring on such date
and any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements by the Company of Unreimbursed
Amounts.

“Overnight Rate” means, for any day, (a) with respect to any amount denominated
in US Dollars, the greater of (i) the Federal Funds Rate and (ii) an overnight
rate determined by the Administrative Agent, the L/C Issuer, or the Swing Line
Lender, as the case may be, in accordance with banking industry rules on
interbank compensation, and (b) with respect to any

 

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amount denominated in an Alternative Currency, the rate of interest per annum at
which overnight deposits in the applicable Alternative Currency, in an amount
approximately equal to the amount with respect to which such rate is being
determined, would be offered for such day by a branch or Affiliate of Bank of
America in the applicable offshore interbank market for such currency to major
banks in such interbank market.

“Owned Real Estate Support Documents” means, with respect to any real property
which is owned by the Company or any of its Subsidiaries in fee simple, such
mortgagee title insurance policies (in amounts and with endorsements reasonably
acceptable to the Administrative Agent), surveys, environmental assessment
reports, flood hazard certifications, evidence of flood insurance, if required,
and other mortgage-related documents as the Administrative Agent may reasonably
request.

“Parent Stock” has the meaning specified in each Stockholder Support Agreement.

“Participant” has the meaning specified in Section 10.06(d).

“Participating Member State” means each state so described in any EMU
Legislation.

“PBGC” means the Pension Benefit Guaranty Corporation.

“PCAOB” means the Public Company Accounting Oversight Board.

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Company or
any ERISA Affiliate or to which the Company or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

“Permitted Acquisition” means any Acquisition or any series of related
Acquisitions made after the date hereof by any Loan Party of a Person or any
division, line of business or other business unit of such Person (such Person or
such division, line of business or other business unit of such Person referred
to herein as the “Target”), in each case that is a type of business (or assets
used in a type of business) permitted to be engaged in by the Loan Parties
pursuant to this Agreement, so long as (a) no Default or Event of Default shall
then exist or would exist after giving effect thereto, (b) to the extent
required under this Agreement, the Administrative Agent, on behalf the Lenders,
shall have received (or shall receive in connection with the closing of such
Acquisition), a first priority perfected security interest in all domestic
property with such exceptions as are consistent with Permitted Liens or
otherwise reasonably approved by the Administrative Agent (including, without
limitation, Equity Interests) acquired with respect to the Target and the Target
and its Domestic Subsidiaries, if a Person, shall have executed a Guaranty
Joinder Agreement, Mortgage, Security Joinder Agreement, IP Security Joinder
Agreement, Pledge Joinder Agreement and other documents, as may be required by
Section 6.13 hereof, (c) such Acquisition is not a “hostile” Acquisition and, if
required by applicable law, has been approved by the board of directors and/or
shareholders (or comparable persons or groups) of the applicable Loan Party and
the Target, (d) the Costs of Acquisition (excluding the Equity Interest of the
applicable Loan Party and any transaction fee for service

 

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providers) paid for the Target acquired in such Acquisition or series of related
Acquisitions are paid 100% in Equity Interests or, if paid in cash, shall not
exceed (A) if the Consolidated Senior Secured Leverage Ratio after giving effect
to such Acquisition and any related transactions is equal to or greater than
2.50 to 1.00, $40,000,000 for any individual Acquisition (or series of related
Acquisitions) or, together with all Acquisition Earnouts, $100,000,000 (of which
only $25,000,000 in the aggregate may be Acquisition or portions of Acquisitions
involving assets situated outside the United States of America or the Equity
Interests of any Person organized outside the United States of America) in the
aggregate during the term of this Agreement or (B) if the Consolidated Senior
Secured Leverage Ratio after giving effect to such Acquisition and any related
transactions is less than 2.50 to 1.00, $75,000,000 for any individual
Acquisition (or series of related Acquisitions) or, together with all
Acquisition Earnouts, $150,000,000 (of which only $25,000,000 in the aggregate
may be Acquisition or portions of Acquisitions involving assets situated outside
the United States of America or the Equity Interests of any Person organized
outside the United States of America) in the aggregate during the term of this
Agreement, (e) to the extent the Costs of Acquisition of any Permitted
Acquisition is in excess of $15,000,000, the Target shall have earnings before
interest, taxes, depreciation and amortization in an amount greater than $0,
determined on a pro forma basis for the period of twelve months most recently
ended, (f) after giving effect to such Acquisition, there shall be at least
$25,000,000 of borrowing availability under the Revolving Credit Facility,
(g) the Administrative Agent shall have received a certificate from a
Responsible Officer of the Company certifying that, in the reasonable judgment
of the Loan Parties, the Loan Parties have conducted such financial, legal,
environmental and consulting due diligence with respect to the Target as a
substantially similarly situated prudent purchaser acquiring substantially
similar property and/or assets would customarily conduct, and (h) to the extent
the Costs of Acquisition of any Permitted Acquisition is in excess of
$15,000,000 or the Company requests a Revolving Borrowing to fund such Permitted
Acquisition, the Company shall use its best efforts to provide not less than
fifteen (15) days and in any event not less than ten (10) days prior to the
consummation of such Permitted Acquisition (i) a reasonably detailed description
of the material terms of such Permitted Acquisition (including, without
limitation, the purchase price and method and structure of payment) and of each
Target, (ii) to the extent available, financial statements of the Target for the
previous two years and year-to-date financial statements of the Target, and
(ii) a certificate, in form and substance reasonably satisfactory to the
Administrative Agent, executed by a Responsible Officer of the Company
(A) setting forth the best good faith estimate of the Costs of Acquisition to be
paid for each Target, (B) certifying that such Permitted Acquisition complies
with the requirements of this Agreement, and (C) certifying and demonstrating
that after giving effect to such Permitted Acquisition and any borrowings in
connection therewith on a pro forma basis, the Company and its Subsidiaries will
be in compliance with the financial covenants set forth in Section 7.10.

“Permitted Convertible Indebtedness” means Indebtedness of the Company in the
form of unsecured convertible notes with respect to which (a) no portion of the
principal of such Indebtedness shall have a stated maturity date prior to the
date that is five years after the Closing Date; and (b) such Indebtedness (i) in
the Company’s good faith business judgment, has no more restrictive terms in the
aggregate than the terms under this Agreement, and (ii) has no provisions
limiting amendments to, or consents, waivers or other modifications with respect
to, this Agreement or any other Loan Document.

 

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“Permitted Earnout Distributions” means, collectively, all cash payments of an
Earnout Amount, and all payments of an Earnout Amount in Parent Stock, to the
extent either or both are permitted under Section 7.14.

“Permitted Lien” means any Lien permitted by Section 7.01.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Company or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

“Platform” has the meaning specified in Section 6.02.

“Pledge Agreement” means that certain Pledge Agreement dated as of the Closing
Date made by the Company and each Subsidiary in favor of the Administrative
Agent for the benefit of the Secured Parties, substantially in the form of
Exhibit I attached hereto, as supplemented from time to by the execution and
delivery of Pledge Joinder Agreements pursuant to Section 6.13 or otherwise.

“Pledge Agreement Supplement” means, with respect to the Pledge Agreement, the
Pledge Agreement Supplement in the form affixed as an Exhibit to the Pledge
Agreement.

“Pledge Joinder Agreement” means each Pledge Joinder Agreement, substantially in
the form thereof attached to the Pledge Agreement, executed and delivered by the
Company or a Subsidiary, as applicable, to the Administrative Agent pursuant to
Section 6.13 hereof or otherwise.

“Pro Rata Term Share” means, with respect to each Term Loan Lender, the
percentage (carried out to the ninth decimal place) of the principal amount of
the Term Loan funded by such Term Loan Lender, after giving effect to any
subsequent assignments made pursuant to the terms hereof. The initial Pro Rata
Term Share of each Term Loan Lender is set forth opposite the name of such Term
Loan Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Term Loan Lender becomes a party hereto, as applicable.

“Rating Agency” means any of S&P and Moody’s.

“Register” has the meaning specified in Section 10.06(c).

“Registered Public Accounting Firm” has the meaning specified in the Securities
Laws and shall be independent of the Company as prescribed by the Securities
Laws.

“Related Credit Arrangement Provider” means any Person that, at the time it
enters into a Swap Contract or Treasury Management Arrangement, as the case may
be is (a) a Lender or (b) an Affiliate of a Lender that has executed and
delivered a letter of undertaking in the form of Exhibit J hereto to the
Administrative Agent.

 

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“Related Credit Arrangements” means, collectively, Related Swap Contracts and
Related Treasury Management Arrangements.

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

“Related Swap Contract” means a Swap Contract which is permitted under Articles
VI and VII of this Agreement and which is entered into or maintained by or for
the benefit of any Loan Party with a Related Credit Arrangement Provider.

“Related Treasury Management Arrangement” means a Treasury Management
Arrangement which is permitted under Articles VI and VII of this Agreement and
which is entered into or maintained by or for the benefit of any Loan Party with
a Related Credit Arrangement Provider.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Revolving Loans, a Revolving Loan Notice, (b) with respect to
a conversion or continuation of Segments, a Term Loan Interest Rate Selection
Notice, (c) with respect to an L/C Credit Extension, a Letter of Credit
Application, and (d) with respect to a Swing Line Loan, a Swing Line Loan
Notice.

“Required Lenders” means, as of any date of determination, Lenders having more
than 50% of the Aggregate Commitments or, if the commitment of each Revolving
Lender to make Loans and the obligation of the L/C Issuer to make L/C Credit
Extensions have been terminated pursuant to Section 8.02, Lenders holding in the
aggregate more than 50% of the Total Outstandings (with the aggregate amount of
each Lender’s risk participation and funded participation in L/C Obligations and
Swing Line Loans being deemed “held” by such Lender for purposes of this
definition); provided that the Commitment of, and the portion of the Total
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Lenders.

“Required Revolving Lenders” means, as of any date of determination, Revolving
Lenders having more than 50% of the Aggregate Revolving Credit Commitments or,
if the commitment of each Revolving Lender to make Revolving Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02, Revolving Lenders holding in the aggregate more than
50% of the Total Revolving Credit Outstandings (with the aggregate amount of
each Revolving Lender’s risk participation and funded participation in L/C
Obligations and Swing Line Loans being deemed “held” by such Revolving Lender
for purposes of this definition); provided that the Revolving Credit Commitment
of, and the portion of the Outstanding Amount (including risk participations in
Letters of Credit) under the Revolving Credit Facility held or deemed held by,
any Defaulting Lender shall be excluded for purposes of making a determination
of Required Revolving Lenders.

 

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“Required Term Loan Lenders” means, as of any date of determination, Term Loan
Lenders having more than 50% of the Outstanding Amount of the Term Loan.

“Responsible Officer” means any one of the President and Chief Executive
Officer; Vice President, Chief Operating Officer; and Vice President, Legal
Affairs & General Counsel together with any one of the Vice President, Chief
Financial Officer; Corporate Controller; and Director, Treasury & Tax, all of
the Company. Any document delivered hereunder that is signed by a Responsible
Officer of the Company shall be conclusively presumed to have been authorized by
all necessary corporate, partnership and/or other action on the part of any Loan
Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.

“Restricted Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of the Company or any Subsidiary, any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such capital stock or other Equity Interest, or on account of
any return of capital to the Company’s stockholders, partners or members (or the
equivalent Person thereof), or the issuance of any Equity Interest in any
Subsidiary to any Person other than the Company or a Subsidiary of the Company.

“Revaluation Date” means with respect to any Revolving Loan, each of the
following: (i) each date of a Borrowing of a Eurocurrency Rate Loan denominated
in an Alternative Currency, (ii) each date of a continuation of a Eurocurrency
Rate Loan denominated in an Alternative Currency pursuant to Section 2.02, and
(iii) such additional dates as the Administrative Agent shall determine or the
Required Revolving Lenders shall require.

“Revolving Borrowing” means a borrowing consisting of simultaneous Revolving
Loans of the same Type, in the same currency and, in the case of Eurocurrency
Rate Loans, having the same Interest Period made by each of the Lenders pursuant
to Section 2.01.

“Revolving Credit Commitment” means, as to each Revolving Lender, its obligation
to (a) make Revolving Loans to the Borrowers pursuant to Section 2.01, and
(b) purchase participations in L/C Obligations and in Swing Line Loans, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Revolving Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto,
as applicable, as such amount may be adjusted from time to time in accordance
with this Agreement.

“Revolving Credit Facility” means the facility described in Article II providing
for Revolving Loans, Swing Line Loans and Letters of Credit to or for the
benefit the Company and any other Borrower by the Revolving Lenders, Swing Line
Lender or L/C Issuer, as the case may be, in the maximum aggregate principal US
Dollar Equivalent amount at any time outstanding of $200,000,000, as adjusted
from time to time pursuant to the terms of this Agreement.

“Revolving Credit Maturity Date” means (a) October 20, 2011 or (b) such earlier
date upon which the Aggregate Revolving Credit Commitments shall be terminated
in accordance

 

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with the terms hereof and upon which the Outstanding Amount of Revolving Loans,
Swing Line Loans and L/C Obligations, including all accrued and unpaid interest,
are due and payable or are otherwise paid in full in accordance with the terms
hereof; provided, however, that if such date is not a Business Day, the
Revolving Credit Maturity Date shall be the next preceding Business Day.

“Revolving Lender” means each Lender that has a Revolving Credit Commitment or,
following termination of the Revolving Credit Commitments, has Revolving Loans
outstanding.

“Revolving Loan” has the meaning specified in Section 2.01.

“Revolving Loan Notice” means a notice of (a) a Revolving Borrowing, (b) a
conversion of Revolving Loans from one Type to the other, or (c) a continuation
of Eurocurrency Rate Loans, pursuant to Section 2.03(a), which, if in writing,
shall be substantially in the form of Exhibit A-1.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

“Same Day Funds” means (a) with respect to disbursements and payments in US
Dollars, immediately available funds, and (b) with respect to disbursements and
payments in an Alternative Currency, same day or other funds as may be
determined by the Administrative Agent or the L/C Issuer, as the case may be, to
be customary in the place of disbursement or payment for the settlement of
international banking transactions in the relevant Alternative Currency.

“Sarbanes-Oxley” means the Sarbanes-Oxley Act of 2002.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Second Earnout Amount” shall have the meaning set forth in the Merger
Agreement.

“Secured Parties” means, collectively, with respect to the Security Instruments,
the Administrative Agent, the Lenders, and each Person who is party to a Related
Credit Arrangement.

“Security Agreement” means that certain Security Agreement dated as of the
Closing Date made by the Company and each of its Domestic Subsidiaries in favor
of the Administrative Agent for the benefit of the Secured Parties,
substantially in the form of Exhibit K attached hereto, as supplemented from
time to by the execution and delivery of Security Joinder Agreements pursuant to
Section 6.13 or otherwise.

“Security Instruments” means, collectively or individually as the context may
indicate, the Security Agreement (and any Security Joinder Agreement), the IP
Security Agreement (and any IP Security Joinder Agreement), the Mortgages, the
Assignments of Lease, the Pledge Agreement (including each Pledge Joinder
Agreement and Pledge Agreement Supplement) and all other agreements (including
control agreements), instruments and other documents, whether

 

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now existing or hereafter in effect, pursuant to which the Company, any Domestic
Subsidiary or any other Person shall grant or convey to the Administrative Agent
or the Lenders a Lien in, or any other Person shall acknowledge any such Lien
in, property as security for all or any portion of the Obligations and any
obligation or liability arising under any Related Credit Arrangement.

“Security Joinder Agreement” means each Security Joinder Agreement,
substantially in the form thereof attached to the Security Agreement, executed
and delivered by the Company and each of its Subsidiaries, as applicable, to the
Administrative Agent pursuant to Section 6.13 or otherwise.

“Securities Laws” means the Securities Act of 1933, the Securities Exchange Act
of 1934, Sarbanes-Oxley and the applicable accounting and auditing principles,
rules, standards and practices promulgated, approved or incorporated by the SEC
or the PCAOB.

“Segment” means a portion of the Term Loan (or all of the Term Loan), in each
case with respect to which a particular interest rate is (or is proposed to be)
applicable.

“Senior Credit Facilities” means, collectively, the Term Loan Facility and the
Revolving Credit Facility.

“SFMT” has the meaning specified in the second introductory paragraph hereto.

“SFMT Acquisition” has the meaning specified in the second introductory
paragraph hereto.

“SFMT Europe” has the meaning specified in the second introductory paragraph
hereto.

“SFMT Initial Acquisition Price” means an amount not in excess of $525,000,000
in initial cash payments payable at the closing of the Transaction.

“SFMT UK” has the meaning specified in the second introductory paragraph hereto.

“Solvent” means, when used with respect to any Person, that at the time of
determination:

(a) the fair value of its assets (at fair valuation) is in excess of the total
amount of its liabilities, including contingent obligations; and

(b) the present fair saleable value of the assets of such Person will, as of
such date, be greater than the amount that will be required to pay the probable
liability of such Person on its debts as such debts become absolute and matured;
and

(c) it is then able and expects to be able to pay its debts as they mature; and

(d) it has capital sufficient to carry on its business as conducted and as
proposed to be conducted.

The amount of contingent liabilities at any time shall be computed as the amount
that can reasonably be expected to become an actual or matured liability.

 

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“Specified Credit Agreement Representations” means the representations and
warranties set forth in Sections 5.01, 5.02, 5.03, 5.04, 5.07, 5.14 and 5.20 of
this Agreement.

“Specified Transaction Document Representations” means the representations and
warranties made by SFMT, SFMT Europe and SFMT UK to the Company and Neptune in
the Merger Agreement, in each case without giving effect to any consent or
waiver by any party to the Merger Agreement to any exception thereto or
deviation therefrom.

“Spot Rate” for a currency means the rate determined by the Administrative Agent
to be the rate quoted by the Person acting in such capacity as the spot rate for
the purchase by such Person of such currency with another currency through its
principal foreign exchange trading office at approximately 8:00 a.m. on the date
two Business Days prior to the date as of which the foreign exchange computation
is made; provided that the Administrative Agent may obtain such spot rate from
another financial institution designated by the Administrative Agent if the
Person acting in such capacity does not have as of the date of determination a
spot buying rate for any such currency.

“Sterling” and “£” mean the lawful currency of the United Kingdom.

“Stockholder” has the meaning set forth in the Stockholder Support Agreements.

“Stockholder Support Agreement” means any of the Stockholder Support Agreements
set forth on Schedule 1.01(c), in the form delivered to and approved by the
Administrative Agent on December 4, 2006, without alteration, amendment, change,
supplement or waiver of any material condition therein (in each case, in a
manner materially adverse to the interests of the Lenders), without the prior
written consent of the Lenders, which shall not be unreasonably withheld

“Subordinated Indebtedness” means subordinated financing (other than any
Subordinated Indebtedness constituting Permitted Convertible Indebtedness)
provided to the Company or a Subsidiary by any Person for any purpose so long as
(a) there is no scheduled payment of principal, or optional or mandatory
payments of principal, at any time any Obligation hereunder shall remain unpaid
or unsatisfied, (b) the term thereof is longer than the term of this Agreement,
and (c) such financing (i) is made on an unsecured basis, (ii) in the Company’s
good faith business judgment, has no more restrictive terms in the aggregate
than the terms under this Agreement, (iii) has no provisions limiting amendments
to, or consents, waivers or other modifications with respect to, this Agreement
or any other Loan Document, and (iv) is expressly subordinate to rights of
enforcement and collection of the Lenders under this Agreement and any other
Loan Document.

“Subsidiary” as determined in accordance with GAAP. Unless otherwise specified,
all references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Company.

“Subsidiary Securities” means the Equity Interests issued by or equity
participations in any Subsidiary, whether or not constituting a “security” under
Article 8 of the Uniform Commercial Code as in effect in any jurisdiction.

 

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“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options (other than equity swaps or options on the capital stock of the Company,
including any such swaps or options entered into in connection with any
Permitted Convertible Indebtedness), bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether or
not any such transaction is governed by or subject to any master agreement, and
(b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a
“Master Agreement”), including any such obligations or liabilities under any
Master Agreement (other than equity swaps or options on the capital stock of the
Company, including any such swaps or options entered into in connection with any
Permitted Convertible Indebtedness).

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

“Swing Line” means the revolving credit facility made available by the Swing
Line Lender pursuant to Section 2.05.

“Swing Line Borrowing” means a borrowing of a Swing Line Loan pursuant to
Section 2.05.

“Swing Line Lender” means Bank of America in its capacity as provider of Swing
Line Loans, or any successor swing line lender hereunder.

“Swing Line Loan” has the meaning specified in Section 2.05(a). Swing Line Loans
may only be in US Dollars.

“Swing Line Loan Notice” means a notice of a Swing Line Borrowing pursuant to
Section 2.05(b), which, if in writing, shall be substantially in the form of
Exhibit B.

“Swing Line Sublimit” means an amount equal to the lesser of the Aggregate
Commitments and $25,000,000. The Swing Line Sublimit is part of, and not in
addition to, the Aggregate Commitments.

“Swiss Franc” and “F” mean the lawful currency of Switzerland.

 

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“TARGET Day” means any day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer (TARGET) payment system (or, if such payment system
ceases to be operative, such other payment system (if any) determined by the
Administrative Agent to be a suitable replacement) is open for the settlement of
payments in Euro.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

“Term Loan” means, individually or in the aggregate as the context may indicate,
the loans made by the Term Loan Lenders pursuant to the Term Loan Facility in
accordance with Section 2.02. The Term Loan shall be in US Dollars.

“Term Loan Borrowing” means the borrowing by the Company on the Closing Date
consisting of simultaneous Term Loans of the same Type and, as to Eurocurrency
Rate Loans, having the same Interest Period made by each of the Term Loan
Lenders pursuant to Section 2.02.

“Term Loan Commitment” means, as to each Term Loan Lender, its obligation to
fund on the Closing Date its portion of the Term Loan Borrowing pursuant to
Section 2.02 in a principal amount not to exceed the amount set forth opposite
such Term Loan Lender’s name on Schedule 2.01, and at all times after such
funding on the Closing Date there shall no longer be any Term Loan Commitment in
effect for any Term Loan Lender.

“Term Loan Facility” means the facility described in Section 2.01 providing for
a Term Loan to the Company by the Term Loan Lenders in the initial principal
amount of $425,000,000.

“Term Loan Interest Rate Selection Notice” means a notice of (a) the election of
a subsequent Interest Period for any Eurocurrency Segment, (b) the conversion of
any Eurocurrency Segment to a Base Rate Segment or (c) the conversion of any
Base Rate Segment to a Eurocurrency Rate Segment, pursuant to Section 2.03,
which, if in writing, shall be substantially in the form of Exhibit A-2.

“Term Loan Lender” means each Lender that has a Term Loan Commitment or a Term
Loan outstanding.

“Term Loan Maturity Date” means the earliest of (a) January 17, 2014; (b) the
date that is one month prior to the stated maturity date of any portion of any
Permitted Convertible Indebtedness then outstanding; or (c) such earlier date
upon which the Outstanding Amounts under the Term Loan, including all accrued
and unpaid interest, are due and payable or are otherwise paid in full in
accordance with the terms hereof; provided, however, that if such date is not a
Business Day, the Term Loan Maturity Date shall be the next preceding Business
Day.

“Threshold Amount” means $15,000,000.

“Total Earnout Amount” shall have the meaning set forth in the Merger Agreement.

 

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“Total Outstandings” means at any date of determination thereof, the aggregate
Outstanding Amount of (a) the Term Loan, (b) the Revolving Loans, (c) the L/C
Obligations and (d) the Swing Line Loans.

“Total Revolving Credit Outstandings” means, at any date of determination
thereof, the Outstanding Amount of Revolving Loans, L/C Obligations and Swing
Line Loans.

“Transaction” means the SFMT Acquisition pursuant to the terms of the
Transaction Documents, for an aggregate consideration not to exceed the SFMT
Initial Acquisition Price plus the Total Earnout Amount, and the entering into
the Senior Credit Facilities and financing thereunder of a portion of the SFMT
Initial Acquisition Price with the Term Loan and Revolving Loans on the Closing
Date.

“Transaction Costs” means non-recurring out-of-pocket costs, fees and expenses,
paid by any of the Loan Parties in connection with the closing of the
transactions evidenced by any of the Transaction Documents and the Loan
Documents, including, fees due under the Fee Letter, attorneys’ fees,
accountants’ fees and investment banking fees.

“Transaction Documents” means, collectively, the Merger Agreement, the
Stockholder Support Agreements, the Disclosure Letter, the Loan Documents and
all other agreements, instruments and documents relating to the SFMT
Acquisition.

“Treasury Management Arrangement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements.

“Type” means, with respect to a Revolving Loan, Term Loan or Segment, its
character as a Base Rate Loan or a Eurocurrency Rate Loan.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

“United States” and “U.S.” mean the United States of America.

“Unreimbursed Amount” has the meaning specified in Section 2.04(c)(i).

“US Dollar” and “US$” mean lawful money of the United States.

“US Dollar Equivalent” means, at any time, (a) with respect to any amount
denominated in US Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in US
Dollars as determined by the Administrative Agent or the L/C Issuer, as the case
may be, at such time on the basis of the Spot Rate (determined in respect of the
most recent Revaluation Date) for the purchase of US Dollars with such
Alternative Currency.

 

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“Voting Securities” means Equity Interests issued by any other Person, the
holders of which are ordinarily, in the absence of contingencies, entitled to
vote for the election of directors (or persons performing similar functions) of
such Person, even if the right so to vote has been suspended by the happening of
such a contingency.

“Yen” and “¥” mean the lawful currency of Japan.

1.02 Other Interpretive Provisions. With reference to this Agreement and each
other Loan Document, unless otherwise specified herein or in such other Loan
Document:

(a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to include
such Person’s successors and assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import when used in any Loan Document, shall
be construed to refer to such Loan Document in its entirety and not to any
particular provision thereof, (iv) all references in a Loan Document to
Articles, Sections, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Exhibits and Schedules to, the Loan Document in
which such references appear, (v) any reference to any law shall include all
statutory and regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation shall, unless
otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time, and (vi) the words “asset” and “property” shall
be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities,
accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

1.03 Accounting Terms. (a) Generally. All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to
time, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.

 

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(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Company or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Company 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);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Company shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP.

(c) Consolidation of Variable Interest Entities. All references herein to
consolidated financial statements of the Borrower and its Subsidiaries or to the
determination of any amount for the Borrower and its Subsidiaries on a
consolidated basis or any similar reference shall, in each case, be deemed to
include each variable interest entity that the Borrower is required to
consolidate pursuant to FASB Interpretation No. 46 – Consolidation of Variable
Interest Entities: an interpretation of ARB No. 51 (January 2003) as if such
variable interest entity were a Subsidiary as defined herein.

1.04 Rounding. Any financial ratios required to be maintained by the Borrower
pursuant to the Agreement shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than the
number of places by which such ratio is expressed herein and rounding the result
up or down to the nearest number (with a rounding-up if there is no nearest
number).

1.05 Exchange Rates; Currency Equivalents. (a) The Administrative Agent or the
L/C Issuer, as applicable, shall determine the Spot Rates as of each Revaluation
Date to be used for calculating US Dollar Equivalent amounts of Credit
Extensions and Outstanding Amounts denominated in Alternative Currencies. Such
Spot Rates shall become effective as of such Revaluation Date and shall be the
Spot Rates employed in converting any amounts between the applicable currencies
until the next Revaluation Date to occur. Except for purposes of financial
statements delivered by Loan Parties hereunder or calculating financial
covenants hereunder or except as otherwise provided herein, the applicable
amount of any currency (other than US Dollars) for purposes of the Loan
Documents shall be such US Dollar Equivalent amount as so determined by the
Administrative Agent or the L/C Issuer, as applicable.

(b) Wherever in this Agreement in connection with a Revolving Borrowing,
conversion, continuation or prepayment of a Eurocurrency Rate Loan such as a
required minimum or multiple amount, is expressed in US Dollars, but such
Revolving Borrowing, Eurocurrency Rate Loan or Letter of Credit is denominated
in an Alternative Currency, such amount shall be the relevant Alternative
Currency Equivalent of such US Dollar amount (rounded to the nearest unit of
such Alternative Currency, with 0.5 of a unit being rounded upward), as
determined by the Administrative Agent.

 

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1.06 Accounting for Acquisitions. With respect to any Acquisition consummated on
or after the Closing Date, the following shall apply:

(a) For each period of four fiscal quarters ending next following the date of
any Acquisition, Consolidated EBITDA shall include the results of operations of
the Person or assets so acquired on a historical pro forma basis to the extent
information in sufficient detail concerning such historical results of such
Person or assets is reasonably available, and which amounts shall include only
adjustments reasonably satisfactory to the Administrative Agent and shall not
include any increases to Consolidated EBITDA relative to synergies resulting
from such Acquisition other than those permitted pursuant to Regulation S-X of
the SEC; and

(b) For each period of four fiscal quarters ending next following the date of
each Acquisition, Consolidated Interest Charges shall include the results of
operations of the Person or assets so acquired determined on a historical pro
forma basis to the extent information in sufficient detail concerning such
historical results of such Person or assets is reasonably available; provided,
that, Consolidated Interest Charges shall be adjusted on a historical pro forma
basis to (i) eliminate interest expense accrued during such period on any
Indebtedness repaid in connection with such Acquisition and (ii) include
interest expense on any Indebtedness (including Indebtedness hereunder)
incurred, acquired or assumed in connection with such Acquisition (“Incremental
Debt”) calculated (x) as if all such Incremental Debt had been incurred as of
the first day of such four fiscal quarter period and (y) at the following
interest rates: (I) for all periods subsequent to the date of the Acquisition
and for Incremental Debt assumed or acquired in the Acquisition and in effect
prior to the date of Acquisition, at the actual rates of interest applicable
thereto, and (II) for all periods prior to the actual incurrence of such
Incremental Debt, equal to the average daily rate of interest actually
applicable to such Incremental Debt hereunder or under other financing documents
applicable thereto, as the case may be.

1.07 Change of Currency. (a) Each obligation of the Borrowers to make a payment
denominated in the national currency unit of any member state of the European
Union that adopts the Euro as its lawful currency after the date hereof shall be
redenominated into Euro at the time of such adoption (in accordance with the EMU
Legislation). If, in relation to the currency of any such member state, the
basis of accrual of interest expressed in this Agreement in respect of that
currency shall be inconsistent with any convention or practice in the London
interbank market for the basis of accrual of interest in respect of the Euro,
such expressed basis shall be replaced by such convention or practice with
effect from the date on which such member state adopts the Euro as its lawful
currency; provided that if any Revolving Borrowing in the currency of such
member state is outstanding immediately prior to such date, such replacement
shall take effect, with respect to such Revolving Borrowing, at the end of the
then current Interest Period.

(b) Each provision of this Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from time to time specify to be
appropriate to reflect the adoption of the Euro by any member state of the
European Union and any relevant market conventions or practices relating to the
Euro.

 

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(c) Each provision of this Agreement also shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify to be appropriate to reflect a change in currency of any other country
and any relevant market conventions or practices relating to the change in
currency.

1.08 Times of Day. Unless otherwise specified, all references herein to times of
day shall be references to Pacific time (daylight or standard, as applicable).

1.09 Letter of Credit Amounts. Unless otherwise specified herein, the amount of
a Letter of Credit at any time shall be deemed to be the US Dollar Equivalent of
the stated amount of such Letter of Credit in effect at such time; provided,
however, that with respect to any Letter of Credit that, by its terms or the
terms of any Issuer Document related thereto, provides for one or more automatic
increases in the stated amount thereof, the amount of such Letter of Credit
shall be deemed to be the US Dollar Equivalent of the maximum stated amount of
such Letter of Credit after giving effect to all such increases, whether or not
such maximum stated amount is in effect at such time.

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 Revolving Loans. Subject to the terms and conditions set forth herein, each
Revolving Lender severally agrees to make loans (each such loan, a “Revolving
Loan”) to the Borrowers in US Dollars or in one or more Alternative Currencies
from time to time, on any Business Day during the Availability Period, in an
aggregate amount not to exceed at any time outstanding the amount of such
Revolving Lender’s Revolving Credit Commitment; provided, however, that after
giving effect to any Revolving Borrowing, (i) the Total Outstandings shall not
exceed the Aggregate Commitments, (ii) the Total Revolving Credit Outstandings
shall not exceed the Aggregate Revolving Credit Commitments, (iii) the aggregate
Outstanding Amount of the Revolving Loans of any Lender, plus such Lender’s
Applicable Revolving Credit Percentage of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Applicable Revolving Credit Percentage of the
Outstanding Amount of all Swing Line Loans shall not exceed such Lender’s
Revolving Credit Commitment, (iv) the aggregate Outstanding Amount of all
Revolving Loans made to the Designated Borrowers shall not exceed the Designated
Borrower Sublimit; and (v) the aggregate Outstanding Amount of all Revolving
Loans denominated in Alternative Currencies shall not exceed the Alternative
Currency Sublimit. Within the limits of each Revolving Lender’s Revolving Credit
Commitment, and subject to the other terms and conditions hereof, the Borrowers
may borrow under this Section 2.01, prepay under Section 2.06, and reborrow
under this Section 2.01. Revolving Loans may be Base Rate Loans or Eurocurrency
Rate Loans, as further provided herein.

2.02 Term Loan. (a) Subject to the terms and conditions of this Agreement, each
Term Loan Lender severally agrees to make an advance in US Dollars of its Pro
Rata Term Share of the Term Loan to the Borrower on the Closing Date. The
principal amount of each Segment of the Term Loan outstanding hereunder from
time to time shall bear interest and the principal amount of the Term Loan shall
be repayable, each as herein provided. No amount of the Term Loan repaid or
prepaid by the Borrower may be reborrowed hereunder, and no subsequent advances
of Term Loan amounts shall be made by any Term Loan Lender after the initial
advance on the Closing Date.

 

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(b) Not later than 1:00 P.M. on the Closing Date, each Term Loan Lender shall,
pursuant to the terms and subject to the conditions of this Agreement, make the
amount of its Pro Rata Term Share of the Term Loan available by wire transfer to
the Administrative Agent. Such wire transfer shall be directed to the
Administrative Agent at the Administrative Agent’s Office and shall be in the
form of immediately available, freely transferable US Dollars. The amount so
received by the Administrative Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Borrower by delivery of the proceeds
thereof as shall be directed by a Responsible Officer and reasonably acceptable
to the Administrative Agent. The initial Borrowing of the Term Loan shall be a
single Base Rate Segment, subject to conversion after the Closing Date in
accordance with a Term Loan Interest Rate Selection Notice.

2.03 Borrowings, Conversions and Continuations.

(a) Each Revolving Borrowing, each conversion of Revolving Loans or Segments of
the Term Loan from one Type to the other, and each continuation of Eurocurrency
Rate Loans shall be made upon the Company’s irrevocable notice to the
Administrative Agent, which may be given by telephone. Each such notice must be
received by the Administrative Agent not later than 8:00 a.m. (i) three Business
Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurocurrency Rate Loans or Eurocurrency Rate Segments
denominated in US Dollars or of any conversion of Eurocurrency Rate Loans
denominated in US Dollars to Base Rate Revolving Loans or any conversion of
Eurocurrency Rate Segments to Base Rate Segments, (ii) four Business Days prior
to the requested date of any Revolving Borrowing or continuation of Eurocurrency
Rate Loans denominated in Alternative Currencies (other than Yen), (iii) five
Business Days prior to the requested date of any Revolving Borrowing or
continuation of Eurocurrency Rate Loans denominated in Yen, and (iv) on the
requested date of any Borrowing of Base Rate Revolving Loans. Each telephonic
notice by the Company pursuant to this Section 2.03(a) must be confirmed
promptly by delivery to the Administrative Agent of a written Revolving Loan
Notice or Term Loan Interest Rate Selection Notice, as applicable, appropriately
completed and signed by a Responsible Officer of the Company. Each Borrowing of,
conversion to or continuation of Eurocurrency Rate Loans and Eurocurrency Rate
Segments shall be in a principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof. Except as provided in Sections 2.03(c) and
2.04(c), each Revolving Borrowing of or conversion to Base Rate Revolving Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof. Each Revolving Loan Notice (whether telephonic or written) shall
specify (i) whether the Company is requesting a Revolving Borrowing, a
conversion of Revolving Loans from one Type to the other, or a continuation of
Eurocurrency Rate Loans, (ii) the requested date of the Borrowing, conversion or
continuation, as the case may be (which shall be a Business Day), (iii) the
principal amount of Revolving Loans to be borrowed, converted or continued,
(iv) the Type of Revolving Loans to be borrowed or to which existing Revolving
Loans are to be converted, (v) if applicable, the duration of the Interest
Period with respect thereto, (vi) the currency of the Revolving Loans to be
borrowed, (vii) if applicable, the Designated Borrower, and (viii) shall be
substantially in the form of Exhibit A-1 attached hereto. If the Company fails
to specify a currency in a Revolving Loan Notice requesting a Borrowing, then
the Revolving Loans so requested shall be made in US Dollars. Each Term Loan
Interest

 

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Rate Selection Notice (whether telephonic or written) shall specify (i) whether
the Company is requesting a conversion of Segments from one Type to the other,
or a continuation of Eurocurrency Rate Segment, (ii) the requested date of the
conversion or continuation, as the case may be (which shall be a Business Day),
(iii) the principal amount of Segments to be converted or continued, (iv) the
Type of Segment to which existing Segments are to be converted, (v) if
applicable, the duration of the Interest Period with respect thereto, and
(vi) shall be substantially in the form of Exhibit A-2 attached hereto. If the
Company fails to specify a Type of Loan in a Loan Notice with respect to a
Revolving Loan or a Type of Segment in a Loan Notice with respect to a Segment,
or if the Company fails to give a timely notice requesting a conversion or
continuation, then the applicable Revolving Loans and Segments shall be made as,
or converted to, Base Rate Loans or Base Rate Segments, respectively; provided,
however, that in the case of a failure to timely request a continuation of
Revolving Loans denominated in an Alternative Currency, such Loans shall be
continued as Eurocurrency Rate Loans in their original currency with an Interest
Period of one month. Any automatic conversion to Base Rate Loans or Base Rate
Segments shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurocurrency Rate Loans or Eurocurrency
Rate Segments, respectively. If the Company requests a Borrowing of, conversion
to, or continuation of Eurocurrency Rate Loans or Eurocurrency Rate Segments,
respectively, in any such Revolving Loan Notice or Term Loan Interest Rate
Selection Notice, but fails to specify an Interest Period, it will be deemed to
have specified an Interest Period of one month. No Revolving Loan may be
converted into or continued as a Revolving Loan denominated in a different
currency, but instead must be prepaid in the original currency of such Revolving
Loan and reborrowed in the other currency. No Segment may be in a currency other
than US Dollars.

(b) Following receipt of a Revolving Loan Notice, the Administrative Agent shall
promptly notify each Revolving Lender of the amount (and currency) of its
Applicable Revolving Credit Percentage of the applicable Revolving Loans, and if
no timely notice of a conversion or continuation is provided by the Company, the
Administrative Agent shall notify each Revolving Lender of the details of any
automatic conversion to Base Rate Loans or continuation of Revolving Loans
denominated in a currency other than US Dollars, in each case as described in
the preceding subsection. In the case of a Revolving Borrowing, each Revolving
Lender (unless provided otherwise in Section 2.15) shall make the amount of its
Revolving Loan available to the Administrative Agent in Same Day Funds at the
Administrative Agent’s Office for the applicable currency not later than 10:00
a.m., in the case of any Revolving Loan denominated in US Dollars, and not later
than the Applicable Time specified by the Administrative Agent in the case of
any Revolving Loan in an Alternative Currency, in each case on the Business Day
specified in the applicable Revolving Loan Notice. Upon satisfaction of the
applicable conditions set forth in Section 4.02 (and, if such Revolving
Borrowing is the initial Credit Extension, Section 4.01), the Administrative
Agent shall make all funds so received available to the Company or the other
applicable Borrower in like funds as received by the Administrative Agent either
by (i) crediting the account of such Borrower on the books of Bank of America
with the amount of such funds or (ii) wire transfer of such funds, in each case
in accordance with instructions provided to (and reasonably acceptable to) the
Administrative Agent by the Company; provided, however, that if, on the date the
Revolving Loan Notice with respect to such Revolving Borrowing denominated in US
Dollars is given by the Company, there are L/C Borrowings outstanding, then the
proceeds of such Revolving Borrowing, first, shall be applied to the payment in
full of any such L/C Borrowings, and, second, shall be made available to the
applicable Borrower as provided above.

 

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(c) Following receipt of a Term Loan Interest Rate Selection Notice with respect
to a Segment of the Term Loan, the Administrative Agent shall promptly notify
each Term Loan Lender of the amount of its Pro Rate Term Share of the applicable
Segment, and if no timely notice of a conversion or continuation is provided by
the Company, the Administrative Agent shall notify each Term Loan Lender of the
details of any automatic conversion to Base Rate Segments described in
subsection (a).

(d) Except as otherwise provided herein, a Eurocurrency Rate Loan and a
Eurocurrency Rate Segment may be continued or converted only on the last day of
an Interest Period for such Eurocurrency Rate Loan. During the existence of a
Default, no Segments may be converted to or continued as Eurocurrency Rate
Segments without the consent of the Required Term Loan Lenders. During the
existence of a Default, no Revolving Loans may be requested as, converted to or
continued as Eurocurrency Rate Loans (whether in US Dollars or any Alternative
Currency) without the consent of the Required Revolving Lenders, and the
Required Revolving Lenders may demand that any or all of the then outstanding
Eurocurrency Rate Loans denominated in an Alternative Currency be prepaid, or
redenominated into US Dollars in the amount of the US Dollar Equivalent thereof,
on the last day of the then current Interest Period with respect thereto.

(e) The Administrative Agent shall promptly notify the Company and the Lenders
of the interest rate applicable to any Interest Period for Eurocurrency Rate
Loans or Eurocurrency Rate Segments upon determination of such interest rate. At
any time that Base Rate Loans or Base Rate Segments are outstanding, the
Administrative Agent shall notify the Company and the applicable Lenders of any
change in Bank of America’s prime rate used in determining the Base Rate
promptly following the public announcement of such change.

(f) After giving effect to all Revolving Borrowings and Segments, all
conversions of Revolving Loans and Segments from one Type to the other, and all
continuations of Revolving Loans and Segments as the same Type, there shall not
be more than ten Interest Periods in effect with respect to Revolving Loans and
the Segments.

2.04 Letters of Credit.

(a) The Letter of Credit Commitment.

(i) Subject to the terms and conditions set forth herein, (A) the L/C Issuer
agrees, in reliance upon the agreements of the Revolving Lenders set forth in
this Section 2.04, (1) from time to time on any Business Day during the period
from the Closing Date until the Letter of Credit Expiration Date, to issue
Letters of Credit denominated in US Dollars for the account of the Company or
its Subsidiaries, and to amend or extend Letters of Credit previously issued by
it, in accordance with subsection (b) below, and (2) to honor drawings under the
Letters of Credit; and (B) the Revolving Lenders severally agree to participate
in Letters of Credit issued for the account of the Company or its Subsidiaries
and any drawings thereunder; provided that after giving effect to any L/C

 

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Credit Extension with respect to any Letter of Credit, (w) the Total
Outstandings shall not exceed the Aggregate Commitments, (x) the Total Revolving
Credit Outstandings shall not exceed the Aggregate Revolving Credit Commitments,
(y) the aggregate Outstanding Amount of the Revolving Loans of any Revolving
Lender, plus such Revolving Lender’s Applicable Revolving Credit Percentage of
the Outstanding Amount of all L/C Obligations, plus such Revolving Lender’s
Applicable Revolving Credit Percentage of the Outstanding Amount of all Swing
Line Loans shall not exceed such Lender’s Commitment, and (z) the Outstanding
Amount of the L/C Obligations shall not exceed the Letter of Credit Sublimit.
Each request by the Company for the issuance or amendment of a Letter of Credit
shall be deemed to be a representation by the Company that the L/C Credit
Extension so requested complies with the conditions set forth in the proviso to
the preceding sentence. Within the foregoing limits, and subject to the terms
and conditions hereof, the Company’s ability to obtain Letters of Credit shall
be fully revolving, and accordingly the Company may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit that have expired
or that have been drawn upon and reimbursed. The Existing Letter of Credit shall
be deemed to have been issued pursuant hereto, and from and after the Closing
Date shall be subject to and governed by the terms and conditions hereof.

(ii) The L/C Issuer shall not issue any Letter of Credit, if:

(A) subject to Section 2.04(b)(iii), the expiry date of such requested Letter of
Credit would occur more than twelve months after the date of issuance or last
extension, unless the Required Revolving Lenders have approved such expiry date;
or

(B) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Revolving Lenders have approved
such expiry date.

(iii) The L/C Issuer shall not be under any obligation to issue any Letter of
Credit if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain the L/C Issuer from issuing
such Letter of Credit, or any Law applicable to the L/C Issuer or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the L/C Issuer shall prohibit, or request that
the L/C Issuer refrain from, the issuance of letters of credit generally or such
Letter of Credit in particular or shall impose upon the L/C Issuer with respect
to such Letter of Credit any restriction, reserve or capital requirement (for
which the L/C Issuer is not otherwise compensated hereunder) not in effect on
the Closing Date, or shall impose upon the L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which the L/C
Issuer in good faith deems material to it;

 

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(B) the issuance of such Letter of Credit would violate one or more policies of
the L/C Issuer applicable to letters of credit generally;

(C) except as otherwise agreed by the Administrative Agent and the L/C Issuer,
such Letter of Credit is in an initial stated amount less than $500,000;

(D) except as otherwise agreed by the Administrative Agent and the L/C Issuer,
such Letter of Credit is to be denominated in a currency other than US Dollars;
or

(E) a default of any Revolving Lender’s obligations to fund under
Section 2.04(c) exists or any Revolving Lender is at such time a Defaulting
Lender hereunder, unless the L/C Issuer has entered into satisfactory
arrangements with the Company or such Lender to eliminate the L/C Issuer’s risk
with respect to such Revolving Lender.

(iv) The L/C Issuer shall not amend any Letter of Credit if the L/C Issuer would
not be permitted at such time to issue such Letter of Credit in its amended form
under the terms hereof.

(v) The L/C Issuer shall be under no obligation to amend any Letter of Credit if
(A) the L/C Issuer would have no obligation at such time to issue such Letter of
Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

(vi) The L/C Issuer shall act on behalf of the Revolving Lenders with respect to
any Letters of Credit issued by it and the documents associated therewith, and
the L/C Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken or omissions
suffered by the L/C Issuer in connection with Letters of Credit issued by it or
proposed to be issued by it and Issuer Documents pertaining to such Letters of
Credit as fully as if the term “Administrative Agent” as used in Article IX
included the L/C Issuer with respect to such acts or omissions, and (B) as
additionally provided herein with respect to the L/C Issuer.

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Company delivered to the L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Company. Such
Letter of Credit Application must be received by the L/C Issuer and the
Administrative Agent not later than 8:00 a.m. at least two Business Days (or
such later date and time as the Administrative Agent and the L/C Issuer may
agree in a particular instance in their sole discretion) prior to the proposed
issuance date or date of amendment, as the case may be. In the case of a request
for an initial issuance of a Letter of Credit, such Letter of Credit Application
shall specify in form and detail satisfactory to the L/C Issuer: (A) the
proposed issuance date of the requested Letter of Credit (which shall be a
Business Day); (B) the amount thereof;

 

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(C) the expiry date thereof; (D) the name and address of the beneficiary
thereof; (E) the documents to be presented by such beneficiary in case of any
drawing thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; and (G) such other matters as the
L/C Issuer may require. In the case of a request for an amendment of any
outstanding Letter of Credit, such Letter of Credit Application shall specify in
form and detail satisfactory to the L/C Issuer (A) the Letter of Credit to be
amended; (B) the proposed date of amendment thereof (which shall be a Business
Day); (C) the nature of the proposed amendment; and (D) such other matters as
the L/C Issuer may require. Additionally, the Company shall furnish to the L/C
Issuer and the Administrative Agent such other documents and information
pertaining to such requested Letter of Credit issuance or amendment, including
any Issuer Documents, as the L/C Issuer or the Administrative Agent may require.

(ii) Promptly after receipt of any Letter of Credit Application, the L/C Issuer
will confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Company and, if not, the L/C Issuer will provide the Administrative
Agent with a copy thereof. Unless the L/C Issuer has received written notice
from any Revolving Lender, the Administrative Agent or any Loan Party, at least
one Business Day prior to the requested date of issuance or amendment of the
applicable Letter of Credit, that one or more applicable conditions contained in
Article IV shall not then be satisfied, then, subject to the terms and
conditions hereof, the L/C Issuer shall, on the requested date, issue a Letter
of Credit for the account of the Company (or the applicable Subsidiary) or enter
into the applicable amendment, as the case may be, in each case in accordance
with the L/C Issuer’s usual and customary business practices. Immediately upon
the issuance of each Letter of Credit, each Revolving Lender shall be deemed to,
and hereby irrevocably and unconditionally agrees to, purchase from the L/C
Issuer a risk participation in such Letter of Credit in an amount equal to the
product of such Revolving Lender’s Applicable Revolving Credit Percentage times
the amount of such Letter of Credit.

(iii) If the Company so requests in any applicable Letter of Credit Application,
the L/C Issuer may, in its sole and absolute discretion, agree to issue a Letter
of Credit that has automatic extension provisions (each, an “Auto-Extension
Letter of Credit”); provided that any such Auto-Extension Letter of Credit must
permit the L/C Issuer to prevent any such extension at least once in each
twelve-month period (commencing with the date of issuance of such Letter of
Credit) by giving prior notice to the beneficiary thereof not later than a day
(the “Non-Extension Notice Date”) in each such twelve-month period to be agreed
upon at the time such Letter of Credit is issued. Unless otherwise directed by
the L/C Issuer, the Company shall not be required to make a specific request to
the L/C Issuer for any such extension. Once an Auto-Extension Letter of Credit
has been issued, the Revolving Lenders shall be deemed to have authorized (but
may not require) the L/C Issuer to permit the extension of such Letter of Credit
at any time to an expiry date not later than the Letter of Credit Expiration
Date; provided, however, that the L/C Issuer shall not permit any such extension
if (A) the L/C Issuer has determined that it would not be permitted, or would
have no obligation, at such time to issue such Letter of Credit in its revised
form (as extended) under the terms hereof (by

 

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reason of the provisions of clause (ii) or (iii) of Section 2.04(a) or
otherwise), or (B) it has received notice (which may be by telephone or in
writing) on or before the day that is five Business Days before the
Non-Extension Notice Date (1) from the Administrative Agent that the Required
Revolving Lenders have elected not to permit such extension or (2) from the
Administrative Agent, any Revolving Lender or the Company that one or more of
the applicable conditions specified in Section 4.02 is not then satisfied, and
in each such case directing the L/C Issuer not to permit such extension.

(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the Company and the Administrative
Agent a true and complete copy of such Letter of Credit or amendment.

(c) Drawings and Reimbursements; Funding of Participations.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the L/C Issuer shall notify the Company and
the Administrative Agent thereof. Not later than 8:00 a.m. on the date of any
payment by the L/C Issuer under a Letter of Credit (each such date, an “Honor
Date”), the Company shall reimburse the L/C Issuer through the Administrative
Agent in an amount equal to the amount of such drawing. If the Company fails to
so reimburse the L/C Issuer by such time, the Administrative Agent shall
promptly notify each Revolving Lender of the Honor Date, the amount of the
unreimbursed drawing (the “Unreimbursed Amount”), and the amount of such
Revolving Lender’s Applicable Revolving Credit Percentage thereof. In such
event, the Company shall be deemed to have requested a Revolving Borrowing of
Base Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in
Section 2.03 for the principal amount of Base Rate Loans, but subject to the
amount of the unutilized portion of the Aggregate Revolving Credit Commitments
and the conditions set forth in Section 4.02 (other than the delivery of a
Revolving Loan Notice). Any notice given by the L/C Issuer or the Administrative
Agent pursuant to this Section 2.04(c)(i) may be given by telephone if
immediately confirmed in writing; provided that the lack of such an immediate
confirmation shall not affect the conclusiveness or binding effect of such
notice.

(ii) Each Revolving Lender shall upon any notice pursuant to Section 2.04(c)(i)
make funds available to the Administrative Agent for the account of the L/C
Issuer at the Administrative Agent’s Office for US Dollar-denominated payments
in an amount equal to its Applicable Revolving Credit Percentage of the
Unreimbursed Amount not later than 10:00 a.m. on the Business Day specified in
such notice by the Administrative Agent, whereupon, subject to the provisions of
Section 2.04(c)(iii), each Revolving Lender that so makes funds available shall
be deemed to have made a Base Rate Revolving Loan to the Company in such amount.
The Administrative Agent shall remit the funds so received to the L/C Issuer.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Revolving Borrowing of Base Rate Loans because the conditions set forth in
Section

 

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4.02 cannot be satisfied or for any other reason, the Company shall be deemed to
have incurred from the L/C Issuer an L/C Borrowing in the amount of the
Unreimbursed Amount that is not so refinanced, which L/C Borrowing shall be due
and payable on demand (together with interest) and shall bear interest at the
Default Rate. In such event, each Revolving Lender’s payment to the
Administrative Agent for the account of the L/C Issuer pursuant to
Section 2.04(c)(ii) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Revolving
Lender in satisfaction of its participation obligation under this Section 2.04.

(iv) Until each Revolving Lender funds its Revolving Loan or L/C Advance
pursuant to this Section 2.04(c) to reimburse the L/C Issuer for any amount
drawn under any Letter of Credit, interest in respect of such Lender’s
Applicable Revolving Credit Percentage of such amount shall be solely for the
account of the L/C Issuer.

(v) Each Revolving Lender’s obligation to make Revolving Loans or L/C Advances
to reimburse the L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.04(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Lender may
have against the L/C Issuer, the Company, any Subsidiary or any other Person for
any reason whatsoever; (B) the occurrence or continuance of a Default, or
(C) any other occurrence, event or condition, whether or not similar to any of
the foregoing; provided, however, that each Revolving Lender’s obligation to
make Revolving Loans pursuant to this Section 2.04(c) is subject to the
conditions set forth in Section 4.02 (other than delivery by the Company of a
Revolving Loan Notice). No such making of an L/C Advance shall relieve or
otherwise impair the obligation of the Company to reimburse the L/C Issuer for
the amount of any payment made by the L/C Issuer under any Letter of Credit,
together with interest as provided herein.

(vi) If any Revolving Lender fails to make available to the Administrative Agent
for the account of the L/C Issuer any amount required to be paid by such
Revolving Lender pursuant to the foregoing provisions of this Section 2.04(c) by
the time specified in Section 2.04(c)(ii), the L/C Issuer shall be entitled to
recover from such Revolving Lender (acting through the Administrative Agent), on
demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the L/C Issuer at a rate per annum equal to the applicable Overnight Rate
from time to time in effect, plus any administrative, processing or similar fees
customarily charged by the L/C Issuer in connection with the foregoing. If such
Revolving Lender pays such amount (with interest and fees as aforesaid), the
amount so paid shall constitute such Revolving Lender’s Revolving Loan included
in the relevant Revolving Borrowing or L/C Advance in respect of the relevant
L/C Borrowing, as the case may be. A certificate of the L/C Issuer submitted to
any Lender (through the Administrative Agent) with respect to any amounts owing
under this clause (vi) shall be conclusive absent manifest error.

 

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(d) Repayment of Participations.

(i) At any time after the L/C Issuer has made a payment under any Letter of
Credit and has received from any Revolving Lender such Revolving Lender’s L/C
Advance in respect of such payment in accordance with Section 2.04(c), if the
Administrative Agent receives for the account of the L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether directly
from the Company or otherwise, including proceeds of Cash Collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Revolving Lender its Applicable Revolving Credit Percentage thereof and
in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of the
L/C Issuer pursuant to Section 2.04(c)(i) is required to be returned under any
of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by the L/C Issuer in its discretion), each Revolving
Lender shall pay to the Administrative Agent for the account of the L/C Issuer
its Applicable Revolving Credit Percentage thereof on demand of the
Administrative Agent, plus interest thereon from the date of such demand to the
date such amount is returned by such Revolving Lender, at a rate per annum equal
to the applicable Overnight Rate from time to time in effect. The obligations of
the Revolving Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.

(e) Obligations Absolute. The obligation of the Company to reimburse the L/C
Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Company or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;

(iii) any draft, demand, certificate or other document presented under such
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;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

(iv) any payment by the L/C Issuer under such Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of such Letter of Credit; or any payment made by the L/C Issuer under such
Letter of Credit to

 

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any Person purporting to be a trustee in bankruptcy, debtor-in-possession,
assignee for the benefit of creditors, liquidator, receiver or other
representative of or successor to any beneficiary or any transferee of such
Letter of Credit, including any arising in connection with any proceeding under
any Debtor Relief Law; or

(v) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Company or any
Subsidiary.

The Company shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Company’s instructions or other irregularity, the Company
will immediately notify the L/C Issuer. The Company shall be conclusively deemed
to have waived any such claim against the L/C Issuer and its correspondents
unless such notice is given as aforesaid.

(f) Role of L/C Issuer. Each Revolving Lender and the Company agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuer,
the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of the L/C Issuer shall be liable to any
Revolving Lender for (i) any action taken or omitted in connection herewith at
the request or with the approval of the Revolving Lenders or the Required
Revolving Lenders, as applicable; (ii) any action taken or omitted in the
absence of gross negligence or willful misconduct; or (iii) the due execution,
effectiveness, validity or enforceability of any document or instrument related
to any Letter of Credit or Issuer Document. The Company hereby assumes all risks
of the acts or omissions of any beneficiary or transferee with respect to its
use of any Letter of Credit; provided, however, that this assumption is not
intended to, and shall not, preclude the Company’s pursuing such rights and
remedies as it may have against the beneficiary or transferee at law or under
any other agreement. None of the L/C Issuer, the Administrative Agent, any of
their respective Related Parties nor any correspondent, participant or assignee
of the L/C Issuer shall be liable or responsible for any of the matters
described in clauses (i) through (v) of Section 2.04(e); provided, however, that
anything in such clauses to the contrary notwithstanding, the Company may have a
claim against the L/C Issuer, and the L/C Issuer may be liable to the Company,
to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Company which the Company
proves were caused by the L/C Issuer’s willful misconduct or gross negligence or
the L/C Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, the L/C Issuer may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary,
and the L/C Issuer shall not be responsible for the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.

 

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(g) Cash Collateral. (i) Upon the request of the Administrative Agent, (A) if
the L/C Issuer has honored any full or partial drawing request under any Letter
of Credit and such drawing has resulted in an L/C Borrowing, or (B) if, as of
the Letter of Credit Expiration Date, any L/C Obligation for any reason remains
outstanding, the Company shall, in each case, immediately Cash Collateralize the
then Outstanding Amount of all L/C Obligations.

(ii) The Administrative Agent may, at any time and from time to time after the
initial deposit of Cash Collateral, request that additional Cash Collateral be
provided in order to protect against the results of exchange rate fluctuations.

(iii) Sections 2.05 and 8.02(c) set forth certain additional requirements to
deliver Cash Collateral hereunder. For purposes of this Section 2.04,
Section 2.06 and Section 8.02(c), “Cash Collateralize” means to pledge and
deposit with or deliver to the Administrative Agent, for the benefit of the L/C
Issuer and the Revolving Lenders, as collateral for the L/C Obligations, cash or
deposit account balances pursuant to documentation in form and substance
satisfactory to the Administrative Agent and the L/C Issuer (which documents are
hereby consented to by the Lenders). Derivatives of such term have corresponding
meanings. The Company hereby grants to the Administrative Agent, for the benefit
of the L/C Issuer and the Revolving Lenders, a security interest in all such
cash, deposit accounts and all balances therein and all proceeds of the
foregoing. Cash Collateral shall be maintained in blocked, non-interest bearing
deposit accounts at Bank of America.

(h) Applicability of ISP. Unless otherwise expressly agreed by the L/C Issuer
and the Company when a Letter of Credit is issued (including any such agreement
applicable to the Existing Letter of Credit), the rules of the ISP shall apply
to each Letter of Credit.

(i) Letter of Credit Fees. The Company shall pay to the Administrative Agent for
the account of each Revolving Lender in accordance with its Applicable Revolving
Credit Percentage, in US Dollars, a Letter of Credit fee (the “Letter of Credit
Fee”) for each Letter of Credit equal to the Applicable Rate times the US Dollar
Equivalent of the daily amount available to be drawn under such Letter of
Credit. For purposes of computing the daily amount available to be drawn under
any Letter of Credit, the amount of such Letter of Credit shall be determined in
accordance with Section 1.09. Letter of Credit Fees shall be (i) due and payable
on the first Business Day after the end of each March, June, September and
December, commencing with the first such date to occur after the issuance of
such Letter of Credit, on the Letter of Credit Expiration Date and thereafter on
demand and (ii) computed on a quarterly basis in arrears. If there is any change
in the Applicable Rate during any quarter, the daily amount available to be
drawn under each Letter of Credit shall be computed and multiplied by the
Applicable Rate separately for each period during such quarter that such
Applicable Rate was in effect. Notwithstanding anything to the contrary
contained herein while any Event of Default exists, all Letter of Credit Fees
shall accrue at the Default Rate, unless waived by the Required Revolving
Lenders.

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Company shall pay directly to the L/C Issuer for its own account a fronting
fee with respect to each Letter of Credit, of 0.125% per annum, computed on the
daily amount available to be

 

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drawn under such Letter of Credit on a quarterly basis in arrears. Such fronting
fee shall be due and payable on the tenth Business Day after the end of each
March, June, September and December in respect of the most recently-ended
quarterly period (or portion thereof, in the case of the first payment),
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For
purposes of computing the daily amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.09. In addition, the Company shall pay directly to the L/C Issuer
for its own account the customary issuance, presentation, amendment and other
processing fees, and other standard costs and charges, of the L/C Issuer
relating to letters of credit as from time to time in effect. Such customary
fees and standard costs and charges are due and payable on demand and are
nonrefundable.

(k) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

(l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or
is for the account of, a Subsidiary, the Company shall be obligated to reimburse
the L/C Issuer hereunder for any and all drawings under such Letter of Credit.
The Company hereby acknowledges that the issuance of Letters of Credit for the
account of Subsidiaries inures to the benefit of the Company, and that the
Company’s business derives substantial benefits from the businesses of such
Subsidiaries.

2.05 Swing Line Loans.

(a) The Swing Line. Subject to the terms and conditions set forth herein, the
Swing Line Lender agrees, in reliance upon the agreements of the other Lenders
set forth in this Section 2.05, to make loans in US Dollars (each such loan, a
“Swing Line Loan”) to the Company from time to time on any Business Day during
the Availability Period in an aggregate amount not to exceed at any time
outstanding the amount of the Swing Line Sublimit, notwithstanding the fact that
such Swing Line Loans, when aggregated with the Applicable Revolving Credit
Percentage of the Outstanding Amount of Revolving Loans and L/C Obligations of
the Lender acting as Swing Line Lender, may exceed the amount of such Lender’s
Revolving Credit Commitment; provided, however, that after giving effect to any
Swing Line Loan, (i) the Total Outstandings shall not exceed the Aggregate
Commitments, (ii) the Total Revolving Credit Outstandings shall not exceed the
Aggregate Revolving Credit Commitments, and (iii) the aggregate Outstanding
Amount of the Revolving Loans of any Revolving Lender, plus such Revolving
Lender’s Applicable Revolving Credit Percentage of the Outstanding Amount of all
L/C Obligations, plus such Revolving Lender’s Applicable Revolving Credit
Percentage of the Outstanding Amount of all Swing Line Loans shall not exceed
such Lender’s Commitment, and provided, further, that the Company shall not use
the proceeds of any Swing Line Loan to refinance any outstanding Swing Line
Loan. Within the foregoing limits, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.05, prepay under
Section 2.06, and reborrow under this Section 2.05. Each Swing Line Loan shall
be a Base Rate Loan. Immediately upon the making of a Swing Line Loan, each
Revolving Lender shall be deemed to, and hereby irrevocably and unconditionally
agrees to, purchase from the Swing Line Lender a risk participation in such
Swing Line Loan in an amount equal to the product of such Revolving Lender’s
Applicable Revolving Credit Percentage times the amount of such Swing Line Loan.

 

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(b) Borrowing Procedures. Each Swing Line Borrowing shall be made upon the
Company’s irrevocable notice to the Swing Line Lender and the Administrative
Agent, which may be given by telephone. Each such notice must be received by the
Swing Line Lender and the Administrative Agent not later than 10:00 a.m. on the
requested borrowing date, and shall specify (i) the amount to be borrowed, which
shall be a minimum of $500,000, and (ii) the requested borrowing date, which
shall be a Business Day. Each such telephonic notice must be confirmed promptly
by delivery to the Swing Line Lender and the Administrative Agent of a written
Swing Line Loan Notice, appropriately completed and signed by a Responsible
Officer of the Company. Promptly after receipt by the Swing Line Lender of any
telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the
Administrative Agent (by telephone or in writing) that the Administrative Agent
has also received such Swing Line Loan Notice and, if not, the Swing Line Lender
will notify the Administrative Agent (by telephone or in writing) of the
contents thereof. Unless the Swing Line Lender has received notice (by telephone
or in writing) from the Administrative Agent (including at the request of any
Revolving Lender) prior to 11:00 a.m. on the date of the proposed Swing Line
Borrowing (A) directing the Swing Line Lender not to make such Swing Line Loan
as a result of the limitations set forth in the proviso to the first sentence of
Section 2.05(a), or (B) that one or more of the applicable conditions specified
in Article IV is not then satisfied, then, subject to the terms and conditions
hereof, the Swing Line Lender will, not later than 12:00 noon on the borrowing
date specified in such Swing Line Loan Notice, make the amount of its Swing Line
Loan available to the Company.

(c) Refinancing of Swing Line Loans.

(i) The Swing Line Lender at any time in its sole and absolute discretion may
request, on behalf of the Company (which hereby irrevocably authorizes the Swing
Line Lender to so request on its behalf), that each Revolving Lender make a Base
Rate Revolving Loan in an amount equal to such Revolving Lender’s Applicable
Revolving Credit Percentage of the amount of Swing Line Loans then outstanding.
Such request shall be made in writing (which written request shall be deemed to
be a Revolving Loan Notice for purposes hereof) and in accordance with the
requirements of Section 2.03, without regard to the minimum and multiples
specified therein for the principal amount of Base Rate Loans, but subject to
the unutilized portion of the Aggregate Revolving Credit Commitments and the
conditions set forth in Section 4.02. The Swing Line Lender shall furnish the
Company with a copy of the applicable Revolving Loan Notice promptly after
delivering such notice to the Administrative Agent. Each Revolving Lender shall
make an amount equal to its Applicable Revolving Credit Percentage of the amount
specified in such Revolving Loan Notice available to the Administrative Agent in
Same Day Funds for the account of the Swing Line Lender at the Administrative
Agent’s Office for US Dollar-denominated payments not later than 10:00 a.m. on
the day specified in such Revolving Loan Notice, whereupon, subject to
Section 2.05(c)(ii), each Revolving Lender that so makes funds available shall
be deemed to have made a Base Rate Revolving Loan to the Company in such amount.
The Administrative Agent shall remit the funds so received to the Swing Line
Lender.

(ii) If for any reason any Swing Line Loan cannot be refinanced by such a
Revolving Borrowing in accordance with Section 2.05(c)(i), the request for Base
Rate Revolving Loans submitted by the Swing Line Lender as set forth herein
shall be deemed

 

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to be a request by the Swing Line Lender that each of the Revolving Lenders fund
its risk participation in the relevant Swing Line Loan and each Revolving
Lender’s payment to the Administrative Agent for the account of the Swing Line
Lender pursuant to Section 2.05(c)(i) shall be deemed payment in respect of such
participation.

(iii) If any Revolving Lender fails to make available to the Administrative
Agent for the account of the Swing Line Lender any amount required to be paid by
such Revolving Lender pursuant to the foregoing provisions of this
Section 2.05(c) by the time specified in Section 2.05(c)(i), the Swing Line
Lender shall be entitled to recover from such Revolving Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the Swing Line Lender at a rate per annum equal to
the applicable Overnight Rate from time to time in effect, plus any
administrative processing or similar fees customarily charged by the Swing Line
Lender in connection with the foregoing. If such Revolving Lender pays such
amount (with interest and fees as aforesaid), the amount so paid shall
constitute such Revolving Lender’s Revolving Loan included in the relevant
Revolving Borrowing or funded participation in the relevant Swing Line Loan, as
the case may be. A certificate of the Swing Line Lender submitted to any
Revolving Lender (through the Administrative Agent) with respect to any amounts
owing under this clause (iii) shall be conclusive absent manifest error.

(iv) Each Revolving Lender’s obligation to make Revolving Loans or to purchase
and fund risk participations in Swing Line Loans pursuant to this
Section 2.05(c) shall be absolute and unconditional and shall not be affected by
any circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Revolving Lender may have against the Swing Line Lender,
the Company or any other Person for any reason whatsoever, (B) the occurrence or
continuance of a Default, or (C) any other occurrence, event or condition,
whether or not similar to any of the foregoing; provided, however, that each
Revolving Lender’s obligation to make Revolving Loans pursuant to this
Section 2.05(c) is subject to the conditions set forth in Section 4.02. No such
funding of risk participations shall relieve or otherwise impair the obligation
of the Company to repay Swing Line Loans, together with interest as provided
herein.

(d) Repayment of Participations.

(i) At any time after any Revolving Lender has purchased and funded a risk
participation in a Swing Line Loan, if the Swing Line Lender receives any
payment on account of such Swing Line Loan, the Swing Line Lender will
distribute to such Revolving Lender its Applicable Revolving Credit Percentage
thereof in the same funds as those received by the Swing Line Lender.

(ii) If any payment received by the Swing Line Lender in respect of principal or
interest on any Swing Line Loan is required to be returned by the Swing Line
Lender under any of the circumstances described in Section 10.05 (including
pursuant to any settlement entered into by the Swing Line Lender in its
discretion), each Revolving Lender shall pay to the Swing Line Lender its
Applicable Revolving Credit Percentage

 

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thereof on demand of the Administrative Agent, plus interest thereon from the
date of such demand to the date such amount is returned, at a rate per annum
equal to the applicable Overnight Rate. The Administrative Agent will make such
demand upon the request of the Swing Line Lender. The obligations of the
Revolving Lenders under this clause shall survive the payment in full of the
Obligations and the termination of this Agreement.

(e) Interest for Account of Swing Line Lender. The Swing Line Lender shall be
responsible for invoicing the Company for interest on the Swing Line Loans.
Until each Revolving Lender funds its Base Rate Revolving Loan or risk
participation pursuant to this Section 2.05 to refinance such Revolving Lender’s
Applicable Revolving Credit Percentage of any Swing Line Loan, interest in
respect of such Applicable Revolving Credit Percentage of such Swing Line Loan
shall be solely for the account of the Swing Line Lender.

(f) Payments Directly to Swing Line Lender. The Company shall make all payments
of principal and interest in respect of the Swing Line Loans directly to the
Swing Line Lender.

2.06 Optional Prepayments. (a) In addition to any mandatory payments of the
Revolving Credit Facility effected under Section 2.06A below, each Borrower may,
upon notice from the Company to the Administrative Agent, at any time or from
time to time voluntarily prepay Revolving Loans in whole or in part without
premium or penalty; provided that (i) such notice must be received by the
Administrative Agent not later than 8:00 a.m. (A) four Business Days prior to
any date of prepayment of Eurocurrency Rate Loans denominated in US Dollars or
in Alternative Currencies (other than Yen), (B) five Business Days prior to any
date of prepayment of Eurocurrency Rate Loans denominated in Yen, and (C) on the
date of prepayment of Base Rate Revolving Loans; (ii) any prepayment of
Eurocurrency Rate Loans denominated in US Dollars shall be in a principal amount
of $5,000,000 or a whole multiple of $1,000,000 in excess thereof; (iii) any
prepayment of Eurocurrency Rate Loans denominated in Alternative Currencies
shall be in a minimum principal US Dollar Equivalent amount of $5,000,000 or a
whole multiple of $1,000,000 in excess thereof; and (iv) any prepayment of Base
Rate Revolving Loans shall be in a principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof or, in each case, if less, the entire
principal amount thereof then outstanding. Each such notice shall specify the
date and amount of such prepayment and the Type(s) of Revolving Loans to be
prepaid and, if Eurocurrency Rate Loans are to be prepaid, the Interest
Period(s) of such Loans. The Administrative Agent will promptly notify each
Revolving Lender of its receipt of each such notice, and of the amount of such
Revolving Lender’s Applicable Revolving Credit Percentage of such prepayment. If
such notice is given by the Company, the applicable Borrower shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein. Any prepayment of a Eurocurrency Rate
Loan shall be accompanied by all accrued interest on the amount prepaid,
together with any additional amounts required pursuant to Section 3.05. Each
such prepayment shall be applied to the Revolving Loans of the Revolving Credit
Lenders in accordance with their respective Applicable Revolving Credit
Percentages.

(b) In addition to the required payments of principal of the Term Loan set forth
in Section 2.09 and any mandatory prepayments of principal of the Term Loan
effected under Section 2.06A below, the Company may, upon irrevocable notice to
the Administrative Agent,

 

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voluntarily prepay the Term Loan in whole or in part from time to time on any
Business Day, without penalty or premium; provided that such notice must be
received by the Administrative Agent not later than 8:00 a.m., (A) not less than
four Business Days prior to any date of prepayment of Eurocurrency Rate Segments
and (B) on or prior to the date of prepayment of Base Rate Segments. Each such
notice shall specify the date and amount of such prepayment and the Type(s) of
Segment to be prepaid. The Administrative Agent will promptly notify each
applicable Term Loan Lender of its receipt of each such notice, and such
Lender’s Pro Rata Term Share of such prepayment. The Company shall make such
prepayment and the payment amount specified in such notice shall be due and
payable on the date specified therein. Any prepayment of a Eurocurrency Rate
Loan shall be accompanied by all accrued interest thereon, together with any
additional amounts required pursuant to Section 3.05. All prepayments of
principal under this Section 2.06(b) shall be applied to remaining installments
of principal of the Term Loan on a pro rata basis.

(c) The Company may, upon notice to the Swing Line Lender (with a copy to the
Administrative Agent), at any time or from time to time, voluntarily prepay
Swing Line Loans in whole or in part without premium or penalty; provided that
(i) such notice must be received by the Swing Line Lender and the Administrative
Agent not later than 10:00 a.m. on the date of the prepayment, and (ii) any such
prepayment shall be in a minimum principal amount of $500,000. Each such notice
shall specify the date and amount of such prepayment. If such notice is given by
the Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.

2.06A Mandatory Prepayments of Loans; Termination or Reduction of Revolving
Credit Commitments.

(a) If the Administrative Agent notifies the Company at any time that the Total
Revolving Credit Outstandings at such time exceed an amount equal to the
Aggregate Revolving Credit Commitments then in effect, then, within two Business
Days after receipt of such notice, the Borrowers shall prepay Revolving Loans
and/or the Company shall Cash Collateralize the L/C Obligations in an aggregate
amount sufficient to reduce such Total Revolving Credit Outstandings as of such
date of payment to an amount not to exceed 100% of the Aggregate Revolving
Credit Commitments then in effect; provided, however, that, subject to the
provisions of Section 2.04(g)(ii), the Company shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.06A(a) unless after
the prepayment in full of the Revolving Loans the L/C Outstandings exceed the
Aggregate Revolving Credit Commitments then in effect. The Administrative Agent
may, at any time and from time to time after the initial deposit of such Cash
Collateral, request that additional Cash Collateral be provided in order to
protect against the results of further exchange rate fluctuations.

(b) If the Administrative Agent notifies the Company at any time that the
Outstanding Amount of all Revolving Loans denominated in Alternative Currencies
at such time exceeds an amount equal to 105% of the Alternative Currency
Sublimit then in effect, then, within two Business Days after receipt of such
notice, the Borrowers shall prepay Revolving Loans in an aggregate amount
sufficient to reduce such Outstanding Amount as of such date of payment to an
amount not to exceed 100% of the Alternative Currency Sublimit then in effect.

 

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(c) In addition to the required payments of principal of the Term Loan set forth
in Section 2.08(b) and any optional or mandatory payments of principal of the
Term Loan and the Revolving Loans effected under Sections 2.06, 2.06A(a) and
2.06A(b) above, the Company shall make the following required prepayments of the
Term Loan and the Revolving Loans, each such payment to be made to the
Administrative Agent for the benefit of the applicable Lenders within the time
period specified below. Notwithstanding the application of this Section 2.06A(c)
to any Disposition, issuance of Equity Interests or issuance of Indebtedness
that is not otherwise permitted under this Agreement, nothing in this
Section 2.06A(c) shall be deemed to permit any Disposition, issuance of Equity
Interests or issuance of Indebtedness not expressly permitted under this
Agreement or to constitute a waiver or cure of any Default or Event of Default
that arises as a result of a Disposition, issuance of Equity Interests or
issuance of Indebtedness that is not permitted under this Agreement.

(i) Excess Cash Flow Recapture. Within five (5) Business Days after financial
statements have been delivered pursuant to Section 6.01(a) commencing with the
financial statements for fiscal year ending December 31, 2007, and the related
Compliance Certificate has been delivered pursuant to Section 6.02(b), if the
Consolidated Leverage Ratio for the fiscal year reflected in such financial
statements exceeds 3.00 to 1.00, the Company shall prepay an aggregate principal
amount of the Term Loan equal to 75% of Excess Cash Flow for the fiscal year
covered by such financial statements.

(ii) Dispositions of Assets. If the Company or any of its Subsidiaries Disposes
of any properties or assets (other than any Disposition of any properties or
assets permitted by Sections 7.05(a) through (j)) in a single or series of
related transactions which results in the realization by such Person of Net Cash
Proceeds in excess of $2,000,000 that has not been previously applied to
mandatory prepayment, the Company shall prepay an aggregate principal amount of
Loans equal to 100% of the amount of all such Net Proceeds promptly (but in any
case within ten (10) Business Days) after receipt thereof by the Company or such
Subsidiary and the expiration of any reinvestment period applicable thereto as
specified in the proviso to the following sentence. The Company shall provide
the Administrative Agent upon not less than five (5) Business Days’ prior
written notice of each such prepayment, which notice shall include a certificate
of a Responsible Officer of the Company setting forth in reasonable detail the
calculations utilized in computing the Net Cash Proceeds of such Disposition or
Dispositions; provided that the amount of Net Cash Proceeds otherwise resulting
from any Disposition shall be computed net of cash amounts utilized by the
Person making such Disposition within 360 days of such Disposition to purchase
replacement or other assets useful to the operation of the business of such
Person.

(iii) Equity Issuance. Within ten (10) Business Days after receipt of proceeds
from each private or public issuance of Equity Interests of the Company or any
of its Subsidiaries (other than (i) the Permitted Earnout Distributions paid in
Parent Stock, (ii) the sale of Equity Interests to finance Permitted Earnout
Distributions paid in cash within 90 days after the date of such sale, and
(iii) the issuance, repurchase or conversion of any Permitted Convertible
Indebtedness with respect to equity swaps or options on the capital stock of the
Company entered into in connection with any Permitted Convertible

 

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Indebtedness), the Company shall prepay an aggregate principal amount of Loans
equal to 50% of all Net Cash Proceeds received therefrom. The Company shall have
provided the Administrative Agent upon not less than five (5) Business Days’
prior written notice of each such prepayment, which notice shall include a
certificate of a Responsible Officer of the Borrower setting forth in reasonable
detail the calculations utilized in computing the Net Cash Proceeds of such
issuance.

(iv) Indebtedness. Within ten (10) Business Days after receipt of proceeds from
each private or public issuance or incurrence of the Company or any of its
Subsidiaries of any Indebtedness (other than Indebtedness permitted by Sections
7.03(a), (b), (c), (d), (e), (g), (h) or (i)), the Company shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom; provided that no such prepayment shall be required with the
Net Cash Proceeds of any issuance of Subordinated Indebtedness or Permitted
Convertible Indebtedness permitted hereunder to the extent utilized to prepay
any outstanding Subordinated Indebtedness or Permitted Convertible Indebtedness.
The Company shall provide the Administrative Agent upon not less than five
(5) Business Days’ prior written notice of each such prepayment, which notice
shall include a certificate of a Responsible Officer of the Company setting
forth in reasonable detail the calculations utilized in computing the Net Cash
Proceeds of such issuance or incurrence.

(v) Extraordinary Receipts. Within ten (10) Business Days of any Extraordinary
Receipt received by or paid to or for the account of the Company or any of its
Subsidiaries and the expiration of any reinvestment period applicable thereto as
specified in the proviso to the following sentence, the Company shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by the Company or such
Subsidiary. The Company shall provide the Administrative Agent upon not less
than five (5) Business Days’ prior written notice of each such prepayment, which
notice shall include a certificate of a Responsible Officer of the Company
setting forth in reasonable detail the calculations utilized in computing the
Net Cash Proceeds of such Extraordinary Receipt; provided that the amount of Net
Cash Proceeds otherwise resulting from any Extraordinary Receipts shall be
computed net of cash amounts utilized by the Person receiving such Extraordinary
Receipts within 360 days of receipt of such Extraordinary Receipts to acquire
replacement assets for, or make repairs to, the affected assets giving rise to
such Extraordinary Receipts.

Each prepayment of Loans pursuant to this Section 2.06A(c) shall be applied,
first, to the Term Loan Facility and in each case to the principal installments
thereof (including the scheduled repayment of all remaining Outstanding Amounts
under the Term Loan on the Term Loan Maturity Date) on a pro rata basis, and
second, to the repayment of the principal amount of Revolving Loans then
outstanding.

2.07 Termination or Reduction of Revolving Credit Commitments. (a) The Company
may, upon notice to the Administrative Agent, terminate the Aggregate Revolving
Credit Commitments, or from time to time permanently reduce the Aggregate
Revolving Credit Commitments; provided that (i) any such notice shall be
received by the Administrative Agent

 

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not later than 8:00 a.m. five Business Days prior to the date of termination or
reduction, (ii) any such partial reduction shall be in an aggregate amount of
$10,000,000 or any whole multiple of $1,000,000 in excess thereof, (iii) the
Company shall not terminate or reduce the Aggregate Revolving Credit Commitments
if, after giving effect thereto and to any concurrent prepayments hereunder, the
Total Revolving Credit Outstandings would exceed the Aggregate Revolving Credit
Commitments, and (iv) if, after giving effect to any reduction of the Aggregate
Revolving Credit Commitments, the Alternative Currency Sublimit, the Letter of
Credit Sublimit, the Designated Borrower Sublimit or the Swing Line Sublimit
exceeds the amount of the Aggregate Revolving Credit Commitments, such Sublimit
shall be automatically reduced by the amount of such excess.

(b) If, after giving pro forma effect to any repayment of the Revolving Loans
required under Section 2.06A(c), the Consolidated Senior Secured Leverage Ratio
exceeds 2.00 to 1.00, the Aggregate Revolving Credit Commitments shall be
automatically and permanently reduced by an amount equal to the funds available,
pursuant to the last paragraph of Section 2.06A, to be applied for such
repayment of Revolving Loans regardless of the then Outstanding Amount of such
Revolving Loans; provided however, that in no event shall the Revolving Credit
Commitments be reduced to less than $100,000,000.

(c) The Administrative Agent will promptly notify the Lenders of any notice of
termination or reduction of the Aggregate Revolving Credit Commitments or any
automatic reduction pursuant to clause (b) above. Except as otherwise expressly
provided above, the amount of any such Aggregate Revolving Credit Commitment
reduction shall not be applied to the Alternative Currency Sublimit or the
Letter of Credit Sublimit or the Swing Line Sublimit unless otherwise specified
by the Company. Any reduction of the Aggregate Revolving Credit Commitments
shall be applied to the Revolving Credit Commitment of each Revolving Credit
Lender according to its Applicable Revolving Credit Percentage. All fees accrued
until the effective date of any termination of the Aggregate Revolving Credit
Commitments shall be paid on the effective date of such termination.

2.08 Repayment of Loans. (a) Each Borrower shall repay to the Revolving Lenders
on the Revolving Credit Maturity Date the aggregate principal amount of
Revolving Loans made to such Borrower outstanding on such date.

(b) The Company shall repay the Term Loan on each date set forth below in the
aggregate principal amount set forth opposite such date:

 

Date

  

Principal

Payment

March 31, 2007

   $ 1,062,500

June 30, 2007

   $ 1,062,500

September 30, 2007

   $ 1,062,500

December 31, 2007

   $ 1,062,500

March 31, 2008

   $ 1,062,500

June 30, 2008

   $ 1,062,500

September 30, 2008

   $ 1,062,500

 

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December 31, 2008

   $ 1,062,500

March 31, 2009

   $ 1,062,500

June 30, 2009

   $ 1,062,500

September 30, 2009

   $ 1,062,500

December 31, 2009

   $ 1,062,500

March 31, 2010

   $ 1,062,500

June 30, 2010

   $ 1,062,500

September 30, 2010

   $ 1,062,500

December 31, 2010

   $ 1,062,500

March 31, 2011

   $ 1,062,500

June 30, 2011

   $ 1,062,500

September 30, 2011

   $ 1,062,500

December 31, 2011

   $ 1,062,500

March 31, 2012

   $ 1,062,500

June 30, 2012

   $ 1,062,500

September 30, 2012

   $ 1,062,500

December 31, 2012

   $ 1,062,500

March 31, 2013

   $ 1,062,500

June 30, 2013

   $ 1,062,500

September 30, 2013

   $ 1,062,500

Term Loan Maturity Date

    
 
  Outstanding
Amount of the
Term Loan

(c) The Company shall repay each Swing Line Loan on the earlier to occur of
(i) the date ten Business Days after such Loan is made and (ii) the Revolving
Credit Maturity Date.

2.09 Interest. (a) Subject to the provisions of subsection (b) below, (i) each
Eurocurrency Rate Loan and Eurocurrency Rate Segment shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurocurrency Rate for such Interest Period plus the
Applicable Rate plus (in the case of a Eurocurrency Rate Loan of any Lender
which is lent from a Lending Office in the United Kingdom or a Participating
Member State) the Mandatory Cost; (ii) each Base Rate Loan and Base Rate Segment
shall bear interest on the outstanding principal amount thereof from the
applicable borrowing date at a rate per annum equal to the Base Rate plus the
Applicable Rate; and (iii) each Swing Line Loan shall bear interest on the
outstanding principal amount thereof from the applicable borrowing date at a
rate per annum equal to the Base Rate plus the Applicable Rate.

(b) (i) If any amount of principal of any Loan is not paid when due (without
regard to any applicable grace periods), whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws, unless waived by the Required
Lenders.

(ii) If any amount (other than principal of any Loan) payable by any Borrower
under any Loan Document is not paid when due (without regard to any applicable
grace periods), whether at stated maturity, by acceleration or otherwise such
amount shall

 

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thereafter bear interest at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws,
unless waived by the Required Lenders.

(iii) While any Event of Default exists, the Borrowers shall pay interest on the
principal amount of all outstanding Obligations under the Revolving Credit
Facility hereunder at a fluctuating interest rate per annum at all times equal
to the Default Rate to the fullest extent permitted by applicable Laws, unless
waived by the Required Revolving Lenders.

(iv) While any Event of Default exists, the Borrowers shall pay interest on the
principal amount of all outstanding Obligations under the Term Loan Facility
hereunder at a fluctuating interest rate per annum at all times equal to the
Default Rate to the fullest extent permitted by applicable Laws, unless waived
by the Required Term Loan Lenders.

(v) Accrued and unpaid interest on past due amounts (including interest on past
due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

2.10 Fees. In addition to certain fees described in subsections (i) and (j) of
Section 2.04:

(a) Commitment Fee. The Company shall pay to the Administrative Agent for the
account of each Revolving Lender in accordance with its Applicable Revolving
Credit Percentage, a commitment fee in US Dollars equal to the Applicable Rate
times the actual daily amount by which the Aggregate Revolving Credit
Commitments exceed the sum of (i) the Outstanding Amount of Revolving Loans and
(ii) the Outstanding Amount of L/C Obligations. The commitment fee shall accrue
at all times during the Availability Period, including at any time during which
one or more of the conditions in Article IV is not met, and shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the
Closing Date, and on the last day of the Availability Period. The commitment fee
shall be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.

(b) Other Fees. (i) The Company shall pay to the Arranger and the Administrative
Agent for their own respective accounts, in US Dollars, fees in the amounts and
at the times specified in the Fee Letter.

(ii) The Company shall pay to the Lenders, in US Dollars, such fees as shall
have been separately agreed upon in writing in the amounts and at the times so
specified.

 

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2.11 Computation of Interest and Fees. All computations of interest for Base
Rate Loans and Base Rate Segments when the Base Rate is determined by Bank of
America’s “prime rate” shall be made on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed. All other computations of fees and
interest shall be made on the basis of a 360-day year and actual days elapsed
(which results in more fees or interest, as applicable, being paid than if
computed on the basis of a 365-day year), or, in the case of interest in respect
of Revolving Loans denominated in Alternative Currencies as to which market
practice differs from the foregoing, in accordance with such market practice.
Interest shall accrue on each Loan for the day on which the Loan is made, and
shall not accrue on a Loan, or any portion thereof, for the day on which the
Loan or such portion is paid, provided that any Loan that is repaid on the same
day on which it is made shall, subject to Section 2.13(a), bear interest for one
day. Each determination by the Administrative Agent of an interest rate or fee
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

2.12 Evidence of Debt. (a) The Credit Extensions made by each Lender shall be
evidenced by one or more accounts or records maintained by such Lender and by
the Administrative Agent in the ordinary course of business. The accounts or
records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrowers and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrowers hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender to a Borrower made through the Administrative Agent, such
Borrower shall execute and deliver to such Lender (through the Administrative
Agent) a Note, which shall evidence such Lender’s Loans to such Borrower in
addition to such accounts or records. Each Lender may attach schedules to a Note
and endorse thereon the date, Type (if applicable), amount, currency and
maturity of its Loans and payments with respect thereto.

(b) In addition to the accounts and records referred to in subsection (a), each
Revolving Lender and the Administrative Agent shall maintain in accordance with
its usual practice accounts or records evidencing the purchases and sales by
such Revolving Lender of participations in Letters of Credit and Swing Line
Loans. In the event of any conflict between the accounts and records maintained
by the Administrative Agent and the accounts and records of any Revolving Lender
in respect of such matters, the accounts and records of the Administrative Agent
shall control in the absence of manifest error.

2.13 Payments Generally; Administrative Agent’s Clawback. (a) General. All
payments to be made by the Borrowers shall be made without condition or
deduction for any counterclaim, defense, recoupment or setoff. Except as
otherwise expressly provided herein and except with respect to principal of and
interest on Revolving Loans denominated in an Alternative Currency, all payments
by the Borrowers hereunder shall be made to the Administrative Agent, for the
account of the respective Lenders to which such payment is owed, at the
applicable Administrative Agent’s Office in US Dollars and in Same Day Funds not
later than 11:00 a.m. on the date specified herein. Except as otherwise
expressly provided herein, all payments by the Borrowers hereunder with respect
to principal and interest on Revolving Loans

 

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denominated in an Alternative Currency shall be made to the Administrative
Agent, for the account of the respective Lenders to which such payment is owed,
at the applicable Administrative Agent’s Office in such Alternative Currency and
in Same Day Funds not later than the Applicable Time specified by the
Administrative Agent on the dates specified herein. Without limiting the
generality of the foregoing, the Administrative Agent may require that any
payments due under this Agreement be made in the United States. If, for any
reason, any Borrower is prohibited by any Law from making any required payment
hereunder in an Alternative Currency, such Borrower shall make such payment in
US Dollars in the US Dollar Equivalent of the Alternative Currency payment
amount. The Administrative Agent will promptly distribute to each Lender its
Applicable Revolving Credit Percentage or Pro Rata Term Share (or other
applicable share as provided herein) of such payment in like funds as received
by wire transfer to such Lender’s Lending Office. All payments received by the
Administrative Agent (i) after 11:00 a.m., in the case of payments in Dollars,
or (ii) after the Applicable Time specified by the Administrative Agent in the
case of payments in an Alternative Currency, shall in each case be deemed
received on the next succeeding Business Day and any applicable interest or fee
shall continue to accrue. If any payment to be made by any Borrower shall come
due on a day other than a Business Day, payment shall be made on the next
following Business Day, and such extension of time shall be reflected in
computing interest or fees, as the case may be.

(b) (i) Funding by Revolving Lenders; Presumption by Administrative Agent.
Unless the Administrative Agent shall have received notice from a Revolving
Lender prior to the proposed date of any Revolving Borrowing of Eurocurrency
Rate Loans (or, in the case of any Revolving Borrowing of Base Rate Loans, prior
to 9:00 a.m. on the date of such Revolving Borrowing) that such Revolving Lender
will not make available to the Administrative Agent such Revolving Lender’s
share of such Revolving Borrowing, the Administrative Agent may assume that such
Revolving Lender has made such share available on such date in accordance with
Section 2.03 (or, in the case of a Revolving Borrowing of Base Rate Loans, that
such Revolving Lender has made such share available in accordance with and at
the time required by Section 2.03) and may, in reliance upon such assumption,
make available to the applicable Borrower a corresponding amount. In such event,
if a Revolving Lender has not in fact made its share of the applicable Revolving
Borrowing available to the Administrative Agent, then the applicable Revolving
Lender and the applicable Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount in Same Day Funds with
interest thereon, for each day from and including the date such amount is made
available to such Borrower to but excluding the date of payment to the
Administrative Agent, at (A) in the case of a payment to be made by such
Revolving Lender, the Overnight Rate, plus any administrative, processing or
similar fees customarily charged by the Administrative Agent in connection with
the foregoing, and (B) in the case of a payment to be made by such Borrower, the
interest rate applicable to Base Rate Loans. If such Borrower and such Revolving
Lender shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to such
Borrower the amount of such interest paid by such Borrower for such period. If
such Revolving Lender pays its share of the applicable Revolving Borrowing to
the Administrative Agent, then the amount so paid shall constitute such Lender’s
Revolving Loan included in such Revolving Borrowing. Any payment by such
Borrower shall be without prejudice to any claim such Borrower may have against
a Lender that shall have failed to make such payment to the Administrative
Agent.

 

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(ii) Payments by Borrowers; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Borrower prior to the
date on which any payment is due to the Administrative Agent for the account of
the Lenders or the L/C Issuer hereunder that such Borrower will not make such
payment, the Administrative Agent may assume that such Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders or the L/C Issuer, as the case may be, the
amount due. In such event, if such Borrower has not in fact made such payment,
then each of the Lenders or the L/C Issuer, as the case may be, severally agrees
to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender or the L/C Issuer, in Same Day Funds with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Administrative Agent, at the
Overnight Rate.

A notice of the Administrative Agent to any Lender or Borrower with respect to
any amount owing under this subsection (b) shall be conclusive, absent manifest
error.

(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender to any
Borrower as provided in the foregoing provisions of this Article II, and such
funds are not made available to such Borrower by the Administrative Agent
because the conditions to the applicable Credit Extension set forth in Article
IV are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

(d) Obligations of Revolving Lenders Several. The obligations of the Revolving
Lenders hereunder (subject to the limitations set forth in this Agreement and
subject to each Lender’s Revolving Credit Commitment) to make Revolving Loans
and to fund participations in Letters of Credit are several and not joint. The
failure of any Revolving Lender to make any Revolving Loan or to fund any such
participation on any date required hereunder shall not relieve any other
Revolving Lender of its corresponding obligation to do so on such date, and no
Revolving Lender shall be responsible for the failure of any other Revolving
Lender to so make its Revolving Loan or purchase its participation.

(e) Obligations of Term Loan Lenders Several. The obligations of the Term Loan
Lenders to fund each of their respective Pro Rata Term Shares of the Term Loan
(subject to the limitations set forth in this Agreement and subject to each
Lender’s Term Loan Commitment) are several and not joint. The failure of any
Term Loan Lender to fund its Pro Rata Term Share of the Term Loan shall not
relieve any other Term Loan Lender of its corresponding obligation to do so on
such date, and no Term Loan Lender shall be responsible for the failure of any
other Term Loan Lender so to fund its Pro Rata Term Share of the Term Loan.

(f) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

 

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2.14 Sharing of Payments by Lenders. If any Lender shall, by exercising any
right of setoff or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of the Revolving Loans or the Term Loan made by
it, or the participations in L/C Obligations or in Swing Line Loans held by it
resulting in such Lender’s receiving payment of a proportion of the aggregate
amount of such Revolving Loans or the Term Loan or participations and accrued
interest thereon greater than its pro rata share thereof as provided herein,
then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Revolving Loans and the Term Loan and subparticipations in
L/C Obligations and Swing Line Loans of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Loans and other amounts
owing them, provided that:

(i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

(ii) the provisions of this Section shall not be construed to apply to (x) any
payment made by a Borrower pursuant to and in accordance with the express terms
of this Agreement or (y) any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
subparticipations in L/C Obligations or Swing Line Loans to any assignee or
participant, other than to the Company or any Subsidiary thereof (as to which
the provisions of this Section shall apply).

Each Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against such
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of such Borrower in the amount of
such participation.

2.15 Designated Borrowers. (a) The Company may at any time, with the approval of
the Administrative Agent and the Required Revolving Lenders, following not less
than 15 Business Days’ notice from the Company to the Administrative Agent (or
such shorter period as may be agreed by the Administrative Agent in its sole
discretion), designate any Foreign Subsidiary of the Company organized in a
jurisdiction set forth on Schedule 2.15 (an “Applicant Borrower”) as a
Designated Borrower to receive Revolving Loans hereunder by delivering to the
Administrative Agent (which shall promptly deliver counterparts thereof to each
Revolving Lender) a duly executed notice and agreement in substantially the form
of Exhibit L (a “Designated Borrower Request and Assumption Agreement”);
provided, however, that the Company may not have more than three Designated
Borrowers at any time. The parties hereto acknowledge and agree that prior to
any Applicant Borrower becoming entitled to utilize the revolving credit
facilities provided for herein the Administrative Agent and the Revolving
Lenders shall have received such supporting resolutions, incumbency
certificates, opinions of counsel (including, without limitation, opinions
regarding the enforceability of the Credit Agreement against such Designated
Borrower and the enforceability of the guaranty of the

 

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Company upon the designation of the first Designated Borrower) and other
documents or information (including, without limitation, receipt by the
Revolving Lenders at least five Business Days prior to such effective date of
all documentation and other information required by regulatory authorities under
applicable “know your customer” and anti-money laundering rules and regulations,
including, without limitation, the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001))), in form, content and scope reasonably
satisfactory to the Administrative Agent, as may be reasonably required by the
Administrative Agent or the Required Revolving Lenders, and Notes signed by such
new Borrowers to the extent any Revolving Lenders so require. In connection with
any such approval consideration, the Administrative Agent and the Required
Revolving Lenders may request of the Company amendment of the Credit Agreement
terms applicable to the Revolving Credit Facility to the extent necessary or
advisable in their determination to comply with, qualify under or avoid
registration pursuant to jurisdictional laws and regulations applicable to such
Applicant Borrower (as an example, for the avoidance of doubt, amending the
Credit Agreement to impose greater borrowing minimums for a specific Designated
Borrower). If the Administrative Agent and the Required Revolving Lenders agree
that an Applicant Borrower shall be entitled to receive Revolving Loans
hereunder, then promptly following receipt of all such requested resolutions,
incumbency certificates, opinions of counsel and other documents or information,
the Administrative Agent shall send a notice in substantially the form of
Exhibit M (a “Designated Borrower Notice”) to the Company and the Revolving
Lenders specifying the effective date upon which the Applicant Borrower shall
constitute a Designated Borrower for purposes hereof, whereupon each of the
Revolving Lenders agrees to permit such Designated Borrower to receive
Eurocurrency Rate Loans under the Revolving Credit Facility, on the terms and
conditions set forth herein, except to the extent it is unlawful for any such
Revolving Lender to do so or to the extent any Revolving Lender cannot or has
not determined that it is lawful to do so (in which case, it shall not be
obligated to do so), and each of the parties agrees that such Designated
Borrower otherwise shall be a Borrower for all purposes of this Agreement (but
in no event shall a Designated Borrower be a guarantor of the Obligations);
provided that no Revolving Loan Notice or Letter of Credit Application may be
submitted by or on behalf of such Designated Borrower until the date five
Business Days after such effective date; provided further that Base Rate Loans
may not be made to any Designated Borrower.

(b) The Obligations of all Designated Borrowers shall be several in nature.

(c) Each Foreign Subsidiary of the Company that becomes a “Designated Borrower”
pursuant to this Section 2.15 hereby irrevocably appoints the Company as its
agent for all purposes relevant to this Agreement and each of the other Loan
Documents, including (i) the giving and receipt of notices, (ii) the execution
and delivery of all documents, instruments and certificates contemplated herein
and all modifications hereto, and (iii) the receipt of the proceeds of any
Revolving Loans made by the Revolving Lenders, to any such Designated Borrower
hereunder. Any acknowledgment, consent, direction, certification or other action
which might otherwise be valid or effective only if given or taken by all
Borrowers, or by each Borrower acting singly, shall be valid and effective if
given or taken only by the Company, whether or not any such other Borrower joins
therein. Any notice, demand, consent, acknowledgement, direction, certification
or other communication delivered to the Company in accordance with the terms of
this Agreement shall be deemed to have been delivered to each Designated
Borrower.

 

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(d) The Company may from time to time, upon not less than 15 Business Days’
notice from the Company to the Administrative Agent (or such shorter period as
may be agreed by the Administrative Agent in its sole discretion), terminate a
Designated Borrower’s status as such, provided that there are no outstanding
Revolving Loans payable by such Designated Borrower, or other amounts payable by
such Designated Borrower on account of any Revolving Loans made to it, as of the
effective date of such termination. The Administrative Agent will promptly
notify the Revolving Lenders of any such termination of a Designated Borrower’s
status.

2.16 Increase in Revolving Credit Facility. (a) Request for Increase. Provided
there exists no Default, upon notice to the Administrative Agent (which shall
promptly notify the Revolving Lenders), the Company may from time to time,
request an increase in the Revolving Credit Facility by an amount (for all such
requests) not exceeding $100,000,000; provided that (i) any such request for an
increase shall be in a minimum amount of $5,000,000, and (ii) the Company may
make a maximum of three such requests. At the time of sending such notice, the
Company (in consultation with the Administrative Agent) shall specify the time
period within which each Revolving Lender is requested to respond (which shall
in no event be less than ten Business Days from the date of delivery of such
notice to the Revolving Lenders).

(b) Existing Revolving Lenders. At the time of sending such notice for a
requested increase in the Aggregate Revolving Credit Commitments from the
existing Revolving Lenders, the Company (in consultation with the Administrative
Agent) shall specify the time period within which each Revolving Lender is
requested to respond (which shall in no event be less than ten Business Days
from the date of delivery of such notice to the Revolving Lenders). Each
Revolving Lender shall notify the Administrative Agent within such time period
whether or not it agrees to increase its Revolving Credit Commitment and, if so,
whether by an amount equal to, greater than, or less than its Applicable
Revolving Credit Percentage of such requested increase. Any Revolving Lender not
responding within such time period shall be deemed to have declined to increase
its Revolving Credit Commitment. The Administrative Agent shall notify the
Company and each Revolving Lender of the Revolving Lenders’ responses to each
request made hereunder. To achieve the full amount of a requested increase after
receipt of the Revolving Lenders’ responses, and subject to the approval of the
Administrative Agent, L/C Issuer and the Swing Line Lender (which approvals
shall not be unreasonably withheld or delayed), the Company may also invite
additional Eligible Assignees to become Revolving Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent and its
counsel.

(c) New Revolving Lenders. In the event the Company desires to achieve the full
amount of a requested increase in the Aggregate Revolving Credit Commitments
from one or more financial institutions not then Revolving Lenders without first
offering such increase to existing Revolving Lenders, the Company may, following
such notice to the Administrative Agent as required in Section 2.16(a), invite
additional Eligible Assignees to become Revolving Lenders, subject to the
approval of the Administrative Agent, the L/C Issuer and the Swing Line Lender
(which approvals shall not be unreasonably withheld or delayed), and pursuant to
a joinder agreement in form and substance satisfactory to the Administrative
Agent and its counsel.

 

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(d) Effective Date and Allocations. If the Revolving Credit Facility is
increased in accordance with this Section, the Administrative Agent and the
Company shall determine the effective date (the “Revolving Credit Increase
Effective Date”) and the final allocation of such increase. The Administrative
Agent shall promptly notify the Company and the Revolving Lenders of the final
allocation of such increase and the Revolving Credit Increase Effective Date.

(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Company shall deliver to the Administrative Agent a certificate of
each Loan Party dated as of the Revolving Credit Increase Effective Date (in
sufficient copies for each Revolving Lender) signed by a Responsible Officer of
such Loan Party (i) certifying and attaching the resolutions adopted by such
Loan Party approving or consenting to such increase, and (ii) in the case of the
Company, certifying that, before and after giving effect to such increase,
(A) the representations and warranties contained in Article V and the other Loan
Documents are true and correct on and as of the Revolving Credit Increase
Effective Date, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Section 2.16, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01, and (B) no
Default exists. The Company shall prepay any Revolving Loans outstanding on the
Revolving Credit Increase Effective Date (and pay any additional amounts
required pursuant to Section 3.05) to the extent necessary to keep the
outstanding Revolving Loans ratable with any revised Applicable Revolving Credit
Percentages arising from any nonratable increase in the Revolving Credit
Commitments under this Section.

(f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.14 or 10.01 to the contrary.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 Taxes.

(a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of the respective Borrowers hereunder or under any other Loan
Document shall be made free and clear of and without reduction or withholding
for any Indemnified Taxes or Other Taxes, provided that if the applicable
Borrower shall be required by applicable law to deduct any Indemnified Taxes
(including any Other Taxes) from such payments, then (i) the sum payable shall
be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or L/C Issuer, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) such Borrower shall make such deductions and (iii) such Borrower shall
timely pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law. For the avoidance of doubt, the Borrower shall
indemnify the Lenders, including Foreign Lenders, for any withholding tax
imposed on or payable by the Lenders, including the Foreign Lenders, then
existing or any assignee of such Lenders (to the extent the Company requests
such assignment pursuant to Section 10.13) solely as a result of the addition of
any Designated Borrower as a party to this Agreement. For purposes of the

 

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foregoing sentence, withholding taxes shall not include any taxes imposed on or
measured by the overall net income of any Lender, including any Foreign Lender
(however denominated), or any franchise taxes (in lieu of net income taxes) or
branch profit taxes imposed on such Lender.

(b) Payment of Other Taxes by the Borrowers. Without limiting the provisions of
subsection (a) above, each Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

(c) Indemnification by the Borrowers. Each Borrower shall indemnify the
Administrative Agent, each Lender and the L/C Issuer, within 10 days after
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or the L/C Issuer, as the case may be, and any penalties,
interest and reasonable expenses arising therefrom or with respect thereto,
whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to
the amount of such payment or liability delivered to a Borrower by a Lender or
the L/C Issuer (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or the L/C
Issuer, shall be conclusive absent manifest error.

(d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by any Borrower to a Governmental Authority,
such Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which a
Borrower is resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under any other Loan Document
shall deliver to the Company (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law or reasonably requested by the
Company or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding.

Without limiting the generality of the foregoing, in the event that a Borrower
is resident for tax purposes in the United States, any Foreign Lender shall
deliver to Company and the Administrative Agent (in such number of copies as
shall be requested by the recipient) on or prior to the date on which such
Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the request of the Company or the Administrative Agent, but only
if such Foreign Lender is legally entitled to do so), whichever of the following
is applicable:

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

 

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(iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the
applicable Borrower within the meaning of section 881(c)(3)(B) of the Code, or
(C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the
Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

(iv) any other form prescribed by applicable law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
applicable law to permit the Company to determine the withholding or deduction
required to be made.

Without limiting the obligations of the Lenders set forth above regarding
delivery of certain forms and documents to establish each Lender’s status for
U.S. withholding tax purposes, each Lender agrees promptly to deliver to the
Administrative Agent or the Company, as the Administrative Agent or the Company
shall reasonably request, on or prior to the Closing Date, and in a timely
fashion thereafter, such other documents and forms required by any relevant
taxing authorities under the Laws of any other jurisdiction, duly executed and
completed by such Lender, as are required under such Laws to confirm such
Lender’s entitlement to any available exemption from, or reduction of,
applicable withholding taxes in respect of all payments to be made to such
Lender outside of the U.S. by the Borrowers pursuant to this Agreement or
otherwise to establish such Lender’s status for withholding tax purposes in such
other jurisdiction. Each Lender shall promptly (i) notify the Administrative
Agent of any change in circumstances which would modify or render invalid any
such claimed exemption or reduction, and (ii) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws of any such jurisdiction
that any Borrower make any deduction or withholding for taxes from amounts
payable to such Lender or reduce the amount of any additional amounts payable by
the Borrowers pursuant to this Section 3.01. Additionally, each of the Borrowers
shall promptly deliver to the Administrative Agent or any Lender, as the
Administrative Agent or such Lender shall reasonably request, on or prior to the
Closing Date, and in a timely fashion thereafter, such documents and forms
required by any relevant taxing authorities under the Laws of any jurisdiction,
duly executed and completed by such Borrower, as are required to be furnished by
such Lender or the Administrative Agent under such Laws in connection with any
payment by the Administrative Agent or any Lender of Taxes or Other Taxes, or
otherwise in connection with the Loan Documents, with respect to such
jurisdiction.

(f) Additional Documentation. Any Lender, if requested by the Company or the
Administrative Agent, shall deliver such other documentation prescribed by
applicable law or reasonably requested by the Company or the Administrative
Agent as will enable the Company or the Administrative Agent to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements. Without limiting the generality of the foregoing, any
Lender that is not a Foreign Lender and has not otherwise established to the
reasonable satisfaction of the Company that it is an exempt recipient (as
defined in section 6049(b)(4) of the Code and the Treasury regulations
thereunder) shall deliver to the Company

 

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(with copies to the Administrative Agent) on or prior to the date on which such
Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Company or the Administrative Agent), duly executed and
properly completed copies of U.S. Internal Revenue Service Form W-9.

(g) Treatment of Certain Refunds. If the Administrative Agent, any Lender or the
L/C Issuer determines, in good faith, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by any Borrower or with
respect to which any Borrower has paid additional amounts pursuant to this
Section, it shall pay to such Borrower an amount equal to such refund (but only
to the extent of indemnity payments made, or additional amounts paid, by such
Borrower under this Section with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Administrative Agent,
such Lender or the L/C Issuer, as the case may be, and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund), provided that each Borrower, upon the request of the
Administrative Agent, such Lender or the L/C Issuer, agrees to repay the amount
paid over to such Borrower (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent,
such Lender or the L/C Issuer in the event the Administrative Agent, such Lender
or the L/C Issuer is required to repay such refund to such Governmental
Authority. This subsection shall not be construed to require the Administrative
Agent, any Lender or the L/C Issuer to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to any
Borrower or any other Person.

3.02 Illegality. If any Lender determines that any Law has made it unlawful, or
that any Governmental Authority has asserted that it is unlawful, for any Lender
or its applicable Lending Office to make, maintain or fund Eurocurrency Rate
Loans (whether denominated in US Dollars or an Alternative Currency) or
Eurocurrency Rate Segments, or to determine or charge interest rates based upon
the Eurocurrency Rate, or any Governmental Authority has imposed material
restrictions on the authority of such Lender to purchase or sell, or to take
deposits of, US Dollars or any Alternative Currency in the applicable interbank
market, then, on notice thereof by such Lender to the Company through the
Administrative Agent, any obligation of such Lender to make or continue
Eurocurrency Rate Loans or Eurocurrency Rate Segments in the affected currency
or currencies or, in the case of Eurocurrency Rate Loans or Eurocurrency Rate
Segments in US Dollars, to convert Base Rate Revolving Loans to Eurocurrency
Rate Loans, and to convert Base Rate Segments to Eurocurrency Rate Segments,
respectively, shall be suspended until such Lender notifies the Administrative
Agent and the Company that the circumstances giving rise to such determination
no longer exist. Upon receipt of such notice, the Borrowers shall, upon demand
from such Lender (with a copy to the Administrative Agent), prepay or, if
applicable and such Loans are denominated in US Dollars, convert all such
Eurocurrency Rate Loans or Eurocurrency Rate Segments of such Lender to Base
Rate Loans or Eurocurrency Rate Segments, respectively, either on the last day
of the Interest Period therefor, if such Lender may lawfully continue to
maintain such Eurocurrency Rate Loans or Eurocurrency Rate Segments to such day,
or immediately, if such Lender may not lawfully continue to maintain such
Eurocurrency Rate Loans or Eurocurrency Rate Segments. Upon any such prepayment
or conversion, the Borrowers shall also pay accrued interest on the amount so
prepaid or converted.

 

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3.03 Inability to Determine Rates. If the Required Lenders determine that for
any reason in connection with any request for a Eurocurrency Rate Loan or a
conversion to or continuation thereof or a conversion to or continuation of a
Eurocurrency Rate Segment that (a) deposits (whether in US Dollars or an
Alternative Currency) are not being offered to banks in the applicable offshore
interbank market for such currency for the applicable amount and Interest Period
of such Eurocurrency Rate Loan or Eurocurrency Rate Segments, (b) adequate and
reasonable means do not exist for determining the Eurocurrency Rate for any
requested Interest Period with respect to a proposed Eurocurrency Rate Loan
(whether denominated in US Dollars or an Alternative Currency) or a proposed
Eurocurrency Rate Segment, or (c) the Eurocurrency Rate for any requested
Interest Period with respect to a proposed Eurocurrency Rate Loan or a proposed
Eurocurrency Rate Segment does not adequately and fairly reflect the cost to
such Lenders of funding such Eurocurrency Rate Loan or such Eurocurrency Rate
Segment, the Administrative Agent will promptly so notify the Company and each
Lender. Thereafter, the obligation of the Lenders to make or maintain
Eurocurrency Rate Loans or Eurocurrency Rate Segments in the affected currency
or currencies shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice. Upon receipt of such
notice, the Company may revoke any pending request for a Borrowing of,
conversion to or continuation of Eurocurrency Rate Loans or Eurocurrency Rate
Segments, respectively, in the affected currency or currencies or, failing that,
will be deemed to have converted such request into a request for a Revolving
Borrowing of Base Rate Loans or a Base Rate Segment, respectively, in the amount
specified therein.

3.04 Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except (A) any reserve requirement reflected in the Eurocurrency Rate and
(B) the requirements of the Bank of England and the Financial Services Authority
or the European Central Bank reflected in the Mandatory Cost, other than as set
forth below) or the L/C Issuer;

(ii) subject any Lender or the L/C Issuer to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter
of Credit or any Eurocurrency Rate Loan made or any Eurocurrency Rate Segment
maintained by it, or change the basis of taxation of payments to such Lender or
the L/C Issuer in respect thereof (except, in each case, for Indemnified Taxes
or Other Taxes covered by Section 3.01 and the imposition of, or any change in
the rate of, any Excluded Tax payable by such Lender or the L/C Issuer);

(iii) result in the failure of the Mandatory Cost, as calculated hereunder, to
represent the cost to any Lender of complying with the requirements of the Bank
of England and/or the Financial Services Authority or the European Central Bank
in relation to its making, funding or maintaining Eurocurrency Rate Loans; or

 

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(iv) impose on any Lender or the L/C Issuer or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurocurrency Rate
Loans made or Eurocurrency Rate Segments maintained by such Lender or any Letter
of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurocurrency Rate Loan or any Eurocurrency
Rate Segment (or of maintaining its obligation to make any such Loan), or to
increase the cost to such Lender or the L/C Issuer of participating in, issuing
or maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of any
sum received or receivable by such Lender or the L/C Issuer hereunder (whether
of principal, interest or any other amount) then, upon request of such Lender or
the L/C Issuer, the Company will pay (or cause the applicable Designated
Borrower to pay) to such Lender or the L/C Issuer, as the case may be, such
additional amount or amounts as will compensate such Lender or the L/C Issuer,
as the case may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or the L/C Issuer determines that any
Change in Law affecting such Lender or the L/C Issuer or any Lending Office of
such Lender or such Lender’s or the L/C Issuer’s holding company, if any,
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender’s or the L/C Issuer’s capital or on the capital of such
Lender’s or the L/C Issuer’s holding company, if any, as a consequence of this
Agreement, the Commitment of such Lender or the Loans made by, or participations
in Letters of Credit held by, such Lender, or the Letters of Credit issued by
the L/C Issuer, to a level below that which such Lender or the L/C Issuer or
such Lender’s or the L/C Issuer’s holding company could have achieved but for
such Change in Law (taking into consideration such Lender’s or the L/C Issuer’s
policies and the policies of such Lender’s or the L/C Issuer’s holding company
with respect to capital adequacy), then from time to time the Company will pay
(or cause the applicable Designated Borrower to pay) to such Lender or the L/C
Issuer, as the case may be, such additional amount or amounts as will compensate
such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s holding
company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the
L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to the Company shall be
conclusive absent manifest error. The Company shall pay (or cause the applicable
Designated Borrower to pay) such Lender or the L/C Issuer, as the case may be,
the amount shown as due on any such certificate within 10 days after receipt
thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or the L/C
Issuer to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender’s or the L/C Issuer’s right
to demand such compensation, provided that no Borrower shall be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more than
six months prior to the date that such Lender or the L/C Issuer, as the case may
be, notifies the Company of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the six-month period referred
to above shall be extended to include the period of retroactive effect thereof).

 

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(e) Additional Reserve Requirements. The Company shall pay (or cause the
applicable Designated Borrower to pay) to each Lender, as long as such Lender
shall be required to comply with any reserve ratio requirement or analogous
requirement of any central banking or financial regulatory authority imposed in
respect of the maintenance of its Commitment or the funding of the Eurocurrency
Rate Loans or the maintenance of Eurocurrency Rate Segments, such additional
costs (expressed as a percentage per annum and rounded upwards, if necessary, to
the nearest five decimal places) equal to the actual costs allocated to such
Commitment or Loan by such Lender (as determined by such Lender in good faith,
which determination shall be conclusive, which shall be due and payable on each
date on which interest is payable on such Loan, provided the Company shall have
received at least 10 days’ prior notice (with a copy to the Administrative
Agent) of such additional costs from such Lender. If a Lender fails to give
notice 10 days prior to the relevant Interest Payment Date, such additional
costs shall be due and payable 10 days from receipt of such notice.

3.05 Compensation for Losses. Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Company shall promptly compensate
(or cause the applicable Designated Borrower to compensate) such Lender for and
hold such Lender harmless from any loss, cost or expense incurred by it as a
result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan, or Segment other than a Base Rate Segment, on a day other than
the last day of the Interest Period for such Loan or such Segment (whether
voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b) any failure by any Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan, or Segment other than a Base Rate Segment, on the date or
in the amount notified by the Company or the applicable Designated Borrower;

(c) any failure by any Borrower to make payment of any Revolving Loan or drawing
under any Letter of Credit (or interest due thereon) denominated in an
Alternative Currency on its scheduled due date or any payment thereof in a
different currency; or

(d) any assignment of a Eurocurrency Rate Loan or a Eurocurrency Rate Segment on
a day other than the last day of the Interest Period therefor as a result of a
request by the Company pursuant to Section 10.13;

including any loss of anticipated profits, any foreign exchange losses and any
loss or expense arising from the liquidation or reemployment of funds obtained
by it to maintain such Loan, from fees payable to terminate the deposits from
which such funds were obtained or from the performance of any foreign exchange
contract. The Company shall also pay (or cause the applicable Designated
Borrower to pay) any customary administrative fees charged by such Lender in
connection with the foregoing.

 

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For purposes of calculating amounts payable by the Company (or the applicable
Designated Borrower) to the Lenders under this Section 3.05, each Lender shall
be deemed to have funded each Eurocurrency Rate Loan made by it and each
Eurocurrency Rate Segment maintained by it at the Eurocurrency Base Rate used in
determining the Eurocurrency Rate for such Loan or such Segment by a matching
deposit or other borrowing in the offshore interbank market for such currency
for a comparable amount and for a comparable period, whether or not such
Eurocurrency Rate Loan or such Eurocurrency Rate Segment was in fact so funded.

3.06 Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or any Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 3.01, or if any Lender gives a notice pursuant to
Section 3.02, then such Lender shall use reasonable efforts to designate a
different Lending Office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,
as the case may be, in the future, or eliminate the need for the notice pursuant
to Section 3.02, as applicable, and (ii) in each case, would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Company hereby agrees to pay (or cause the
applicable Designated Borrower to pay) all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if any Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, the Company may replace such Lender in accordance with
Section 10.13.

3.07 Survival. All of the Borrowers’ obligations under this Article III shall
survive termination of the Aggregate Commitments and repayment of all other
Obligations hereunder.

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 Conditions to Effectiveness of the Agreement. The effectiveness of the
Agreement is subject to satisfaction of the following conditions precedent:

(a) The Administrative Agent’s receipt of the following (unless otherwise set
forth on Schedule 6.17 and subject to Section 6.17), each of which shall be
originals or telecopies (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent (unless otherwise noted
below):

 

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(i) executed counterparts of this Agreement, the Guaranty, and each Security
Instrument, sufficient in number for distribution to the Administrative Agent,
each Lender and the Company;

(ii) Notes executed by the Borrowers in favor of each Lender requesting Notes;

(iii) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may reasonably require evidencing the identity, authority
and capacity of each Responsible Officer thereof authorized to act as a
Responsible Officer in connection with this Agreement and the other Loan
Documents to which such Loan Party is a party;

(iv) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or formed
and in good standing in the jurisdiction of its organization or formation, and
that the Company is validly existing, in good standing and qualified to engage
in business in each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification, except to
the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect;

(v) a favorable opinion of Latham & Watkins LLP, counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, as to the matters set
forth in Exhibit N and such other matters concerning the Loan Parties and the
Loan Documents as the Required Lenders may reasonably request, and the favorable
opinions of Davies Ward Phillips & Vineberg LLP, counsel to Kyphon Canada Inc.,
Loyens & Loeff N.V., counsel to SFMT Europe, and Baker & McKenzie, counsel to
Kyphon Sárl;

(vi) a certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Party and
the validity against such Loan Party of the Loan Documents to which it is a
party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;

(vii) a certificate signed by a Responsible Officer of the Company certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, (B) that there has been no event or circumstance since the date of
the Audited Financial Statements that has had or could be reasonably expected to
have, either individually or in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries, taken as a whole, and (C) a calculation of the
Consolidated Leverage Ratio giving pro forma effect to the Transaction
(including the Indebtedness incurred in connection therewith under the Term Loan
Facility and the Revolving Credit Facility), which shall not exceed 4.20 to
1.00;

(viii) a certificate signed by a Responsible Officer of the Company certifying
that there has been no event, change or development since December 4, 2006, that
has

 

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had or could be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect (as defined in the Merger Agreement) on
SFMT and its Subsidiaries, taken as a whole;

(ix) a certificate signed by a Responsible Officer of the Company certifying as
to the absence of any action, suit, investigation or proceeding pending or, to
the knowledge of the Company, threatened in any court or before any arbitrator
or governmental authority that could reasonably be expected to have a Material
Adverse Effect and that was not specifically disclosed in Schedule 5.06, except
as otherwise specifically disclosed in Schedule 5.06;

(x) a certificate signed by the chief financial officer of the Company
certifying that the Company and its Subsidiaries, on a consolidated basis, are
Solvent, after giving effect to the Transaction (including all Indebtedness
incurred in connection with the Transaction);

(xi) a copy certified by a Responsible Officer of the Company of the Merger
Agreement, each Stockholder Support Agreement, and every other Transaction
Document, which documents constitute all material documents executed in
connection with the Transaction, each of which, if not already reviewed by the
Administrative Agent, shall be in form and substance reasonably satisfactory to
the Administrative Agent and which collectively provide for the SFMT Initial
Acquisition Price and the Total Earnout Amount and other contingency payments
not in excess of $200,000,000 to be payable in either cash or, with regards to
those Persons party to Stockholder Support Agreements, Parent Stock (at the
Company’s election) not earlier than one year after the closing of the
Transaction;

(xii) evidence satisfactory to the Administrative Agent that that certain Loan
and Security Agreement dated as of April 24, 2006, between Silicon Valley Bank
and SFMT has been or concurrently with the Closing Date is being terminated, all
indebtedness and other obligations owed thereunder by SFMT have been or are
being repaid in full and all Liens securing obligations under such Loan and
Security Agreement have been or concurrently with the Closing Date are being
released;

(xiii) a certificate signed by a Responsible Officer of the Company certifying:
(A) that none of the Transaction Documents (including any condition to the
consummation of the Transaction) have been altered, amended, waived or otherwise
changed or supplemented since their execution on December 4, 2006, in any
respect materially adverse to the Lenders, except to the extent agreed to by
prior written consent of the Administrative Agent, which consent shall not be
unreasonably withheld; and (B) that the Transaction has been consummated prior
to, or is being consummated substantially simultaneously with, the Closing Date,
in accordance with the terms of the Transaction Documents (only as amended,
altered, waived or otherwise changed in compliance with subpart (A) above);

 

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(xiv) evidence reasonably satisfactory to the Administrative Agent that the
Transaction has been consummated (or is being consummated simultaneously with
the effectiveness of this Agreement);

(xv) evidence reasonably satisfactory to the Administrative Agent of (A) the pro
forma capital and ownership structure and the shareholder arrangements of each
Loan Party, including the Stockholder Support Agreements and the charter and
bylaws of each Loan Party and each agreement or instrument relating thereto, and
(B) the amount, tenor, ranking and other terms and conditions of all other
equity and debt financings comprising part of the Transaction;

(xvi) evidence reasonably satisfactory to the Administrative Agent that there
shall be no less than $80,000,000 of availability under the Revolving Credit
Facility as of the Closing Date, after giving effect to the Transaction and all
Borrowings under the Revolving Credit Facility on such date;

(xvii) evidence reasonably satisfactory to the Administrative Agent of receipt
of all governmental, shareholder and third party consents (including
Hart-Scott-Rodino clearance) and approvals necessary in connection with the
Transaction and the related financings and other transactions contemplated
hereby and expiration of all applicable waiting periods without any action being
taken by any authority that could reasonably be expected to restrain, prevent or
impose any material adverse conditions on the Company and its Subsidiaries or
SFMT and its Subsidiaries or such other transactions or that could reasonably be
expected to seek or threaten any of the foregoing, and no law or regulation
shall be applicable which could have such effect;

(xviii) a pro forma projection model of the Company and its Subsidiaries giving
effect to the Transaction as of the twelve month period ended December 31, 2006,
and forecasts prepared by management of the Company, each in form reasonably
satisfactory to the Administrative Agent, of consolidated balance sheets, income
statements and cash flow statements on a quarterly basis for the fiscal year
ending December 31, 2007 and on an annual basis for each year thereafter through
ending December 31, 2011;

(xix) with respect to each Material Real Property Interest that is leased by any
Loan Party: (i) a Mortgage and a memorandum of lease for such real property, and
evidence of the proper recordation of each such Mortgage and memorandum of lease
(or the delivery of any such Mortgage or memorandum of lease to the applicable
title insurance company for recordation, on or immediately after the Closing
Date) in the appropriate filing office, or, at the option of the Administrative
Agent, an Assignment of Lease, and (ii) the Leased Real Estate Support Documents
with respect to such Mortgaged Property;

(xx) Uniform Commercial Code search results showing only those Liens as are
acceptable to the Administrative Agent;

(xxi) Uniform Commercial Code financing statements suitable in form and
substance for filing in all places required by applicable Law to perfect the
Liens of the

 

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Administrative Agent under the Security Instruments as a first priority Lien
(subject only to Permitted Liens) as to items of Collateral in which a security
interest may be perfected by the filing of financing statements, and such other
documents and/or evidence of other actions as may be necessary under applicable
Law (including, without limitation, all filings and registrations necessary with
the U.S. Patent and Trademark Office) to perfect the Liens of the Administrative
Agent under the Security Instruments as a first priority Lien (subject only to
Permitted Liens) in and to such other Collateral as the Administrative Agent may
require;

(xxii) delivery by the Company and each Subsidiary owning any Equity Interests
required to be pledged pursuant to this Agreement or the Pledge Agreement of all
stock certificates evidencing such pledged Equity Interests, accompanied in each
case by duly executed stock powers (or other appropriate transfer documents) in
blank affixed thereto;

(xxiii) with respect to all Equity Interests of each Foreign Subsidiary owned by
the Company or a Domestic Subsidiary, a duly executed agreement under the laws
of organization of such Foreign Subsidiary effective and enforceable under such
laws for the pledge and collateral assignment of such Equity Interests to the
Administrative Agent for the benefit of the Secured Parties, evidence
satisfactory to the Administrative Agent of the execution and delivery of each
document, completion of each registration and undertaking and satisfactory
completion of each other action necessary under such laws to perfect the
Administrative Agent’s security interest in such Equity Interests and to effect
and provide for the transfer of such Equity Interests following the occurrence
of any Event of Default, and an opinion of counsel from such jurisdiction
satisfactory in form and substance to the Administrative Agent as to all the
foregoing;

(xxiv) evidence that all insurance required to be maintained pursuant to the
Loan Documents has been obtained and is in effect and showing the Administrative
Agent (on behalf of the Lenders and the other Secured Parties) as additional
insured and loss payee, as applicable;

(xxv) evidence that the Senior Credit Facilities shall have received debt
ratings from Moody’s and S& P;

(xxvi) an initial Revolving Loan Notice;

(xxvii) an initial Term Loan Interest Rate Selection Notice;

(xxviii) evidence that the Existing Credit Agreement has been or concurrently
with the Closing Date is being terminated and all amounts outstanding or
otherwise due and payable thereunder have been paid in full; and

(xxix) such other assurances, certificates, documents, consents, reports,
audits, certificates or opinions as the Administrative Agent, the L/C Issuer,
the Swing Line Lender or the Required Lenders reasonably may require.

(b) Any fees required to be paid on or before the Closing Date shall have been
paid.

 

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(c) Unless waived by the Administrative Agent, the Company shall have paid all
fees, charges and disbursements of counsel to the Administrative Agent (directly
to such counsel if requested by the Administrative Agent) to the extent invoiced
prior to or on the Closing Date, plus such additional amounts of such fees,
charges and disbursements as shall constitute its reasonable estimate of such
fees, charges and disbursements incurred or to be incurred by it through the
closing proceedings (provided that such estimate shall not thereafter preclude a
final settling of accounts between the Company and the Administrative Agent).

Without limiting the generality of the provisions of Section 9.04, for purposes
of determining compliance with the conditions specified in this Section 4.01,
each Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

4.02 Conditions to all Credit Extensions. The obligation of each Lender to honor
any Request for Credit Extension (other than a Revolving Loan Notice or Term
Loan Interest Rate Selection Notice requesting only a conversion of Revolving
Loans or Segments, as applicable, to the other Type or a continuation of
Eurocurrency Rate Loans or Eurocurrency Rate Segments, as applicable) or make
the initial Credit Extension hereunder is subject to the following conditions
precedent:

(a) The representations and warranties of (i) the Borrowers contained in Article
V (subject, in the case of the representations and warranties made on the
Closing Date, to the limitation set forth in the last sentence of this
Section 4.02(a)) and (ii) each Loan Party contained in each other Loan Document,
or which are contained in any document furnished at any time under or in
connection herewith or therewith, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes of
this Section 4.02(a), the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01. Notwithstanding anything in this Agreement to the contrary, the
representations and warranties made on the Closing Date by the Company with
respect to SFMT and its subsidiaries prior to the consummation of the
Transaction shall be deemed to be limited to the Specified Credit Agreement
Representations and the Specified Transaction Document Representations.

(b) No Default shall exist, or would result from such proposed Credit Extension
or the application of the proceeds thereof.

(c) The Administrative Agent and, if applicable, the L/C Issuer or the Swing
Line Lender shall have received a Request for Credit Extension in accordance
with the requirements hereof.

(d) If the applicable Borrower is a Designated Borrower, then the conditions of
Section 2.15 to the designation of such Borrower as a Designated Borrower shall
have been met to the satisfaction of the Administrative Agent.

 

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(e) In the case of a Credit Extension to be denominated in an Alternative
Currency, there shall not have occurred any change in national or international
financial, political or economic conditions or currency exchange rates or
exchange controls which in the reasonable opinion of the Administrative Agent or
the Required Revolving Lenders would make it impracticable for such Credit
Extension to be denominated in the relevant Alternative Currency.

Each Request for Credit Extension (other than a Revolving Loan Notice or Term
Loan Interest Rate Selection Notice requesting only a conversion of Revolving
Loans or Segments, as applicable, to the other Type or a continuation of
Eurocurrency Rate Loans or Eurocurrency Rate Segments, as applicable) submitted
by the Company shall be deemed to be a representation and warranty that the
conditions specified in Sections 4.02(a) and (b) have been satisfied on and as
of the date of the applicable Credit Extension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Except as otherwise provided in Section 5.19, each Borrower represents and
warrants to the Administrative Agent and the Lenders that:

5.01 Existence, Qualification and Power. Each Loan Party and each Subsidiary
thereof (a) is duly organized or formed, validly existing and, as applicable, in
good standing under the Laws of the jurisdiction of its incorporation or
organization, (b) has all requisite power and authority and all requisite
governmental licenses, authorizations, consents and approvals to (i) own or
lease its assets and carry on its business and (ii) execute, deliver and perform
its obligations under the Transaction Documents to which it is a party, and
(c) is duly qualified and is licensed and, as applicable, in good standing under
the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license; except in each case referred to in clause (b)(i) or (c), to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect.

5.02 Authorization; No Contravention. The execution, delivery and performance by
each Loan Party of each Transaction Document to which such Person is party, have
been duly authorized by all necessary corporate or other organizational action,
and do not and will not (a) contravene the terms of any of such Person’s
Organization Documents; (b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, or require any payment to
be made under (i) any Contractual Obligation to which such Person is a party or
affecting such Person or the properties of such Person or any of its
Subsidiaries; unless such Person has received consent pursuant to the contract
containing such Contractual Obligation, or (ii) any order, injunction, writ or
decree of any Governmental Authority or any arbitral award to which such Person
or its property is subject; or (c) violate any Law.

5.03 Governmental Authorization; Other Consents. No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Transaction Document,
except as have been obtained, made or given, as the case may be.

 

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5.04 Binding Effect. This Agreement has been, and each other Loan Document, when
delivered hereunder, will have been, duly executed and delivered by each Loan
Party that is party thereto. This Agreement constitutes, and each other Loan
Document when so delivered will constitute, a legal, valid and binding
obligation of such Loan Party, enforceable against each Loan Party that is party
thereto in accordance with its terms.

5.05 Financial Statements; No Material Adverse Effect; No Internal Control
Event.

(a) The Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present the financial condition of the
Company and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Company and its Subsidiaries as of the date
thereof, including liabilities for Taxes, material commitments and Indebtedness.

(b) The unaudited consolidated balance sheet of the Company and its Subsidiaries
dated September 30, 2006, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for the fiscal quarter ended on
that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present the financial condition of the Company and its
Subsidiaries as of the date thereof and their results of operations for the
period covered thereby, subject, in the case of clauses (i) and (ii), to the
absence of footnotes and to normal year-end audit adjustments.

(c) Since the date of the Audited Financial Statements, there has been no event
or circumstance, including without limitation any reduction in Medicare
reimbursement rates, either individually or in the aggregate, that has had or
could reasonably be expected to have a Material Adverse Effect, except as
specifically disclosed in Schedule 5.06.

(d) To the best knowledge of the Company, no Internal Control Event exists or
has occurred since the date of the Audited Financial Statements that has
resulted in or could reasonably be expected to result in a misstatement in any
material respect, in any financial information delivered or to be delivered to
the Administrative Agent or the Lenders, of (i) covenant compliance calculations
provided hereunder or (ii) the assets, liabilities, financial condition or
results of operations of the Company and its Subsidiaries on a consolidated
basis.

5.06 Litigation. There are no actions, suits, proceedings, claims or disputes
pending or, to the knowledge of the Company after due and diligent
investigation, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, by or against the Company or any of its
Subsidiaries or against any of their properties or revenues that (a) purport to
affect or pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby, or (b) except as specifically disclosed in
Schedule 5.06, either individually or in the aggregate, if determined adversely,
could reasonably be expected to have a Material Adverse Effect, and there has
been no material adverse change (net of also taking into account positive
developments) in the status, or financial condition of the Loan Parties and
Subsidiaries, taken as a whole, as a result thereof, of the matters described on
Schedule 5.06.

 

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5.07 No Default. Neither any Loan Party nor any Subsidiary thereof is in default
under or with respect to any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. No Default has occurred and is continuing or would result from
the consummation of the transactions contemplated by this Agreement or any other
Loan Document.

5.08 Ownership of Property; Liens. Each of the Company and each Subsidiary has
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of its business,
except for such defects in title as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The property of the
Company and its Subsidiaries is subject to no Liens, other than Permitted Liens.

5.09 Environmental Compliance. The Company and its Subsidiaries conduct in the
ordinary course of business a review of the effect of existing Environmental
Laws and claims alleging potential liability or responsibility for violation of
any Environmental Law on their respective businesses, operations and properties,
and as a result thereof the Company has reasonably concluded that such
Environmental Laws and claims could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

5.10 Insurance. The properties of the Company and its Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of the
Company, in such amounts (after giving effect to any self-insurance compatible
with the following standards), with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Company or the applicable Subsidiary
operates.

5.11 Taxes. The Company and its Subsidiaries have filed all Federal, state and
other material tax returns and reports required to be filed, and have paid all
Federal, state and other material Taxes, due and payable, except those which are
being contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed Tax assessment against the Company or any Subsidiary that
would, if made, have a Material Adverse Effect.

5.12 ERISA Compliance.

(a) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state Laws. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the knowledge
of the Company, nothing has occurred which would prevent, or cause the loss of,
such qualification. The Company and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.

 

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(b) There are no pending or, to the knowledge of the Company, threatened claims,
actions or lawsuits, or action by any Governmental Authority, with respect to
any Plan that could reasonably be expected to have a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c) (i) No ERISA Event has occurred or is reasonably expected to occur that
would reasonably be expected to have a Material Adverse Effect; (ii) no Pension
Plan has any Unfunded Pension Liability that would reasonably be expected to
have a Material Adverse Effect; (iii) neither the Company nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA) that would reasonably be expected to
have a Material Adverse Effect; (iv) neither the Company nor any ERISA Affiliate
has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA that would reasonably be expected to have a Material Adverse Effect.

5.13 Subsidiaries; Equity Interests. As of the Closing Date and after giving
effect to the Transaction, the Company has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13. All of the outstanding
Equity Interests in Subsidiaries of the Company have been validly issued, are
fully paid and nonassessable and are owned by a Loan Party or by a Foreign
Subsidiary, except for shares required by statute to be owned by a second
shareholder and are in fact owned by an officer of the Company or such
Subsidiary, free and clear of all Liens. The Company has no equity investments
in any other corporation or entity other than those specifically disclosed in
Part (b) of Schedule 5.13. All of the outstanding Equity Interests in the
Company have been validly issued and are fully paid and nonassessable.

5.14 Margin Regulations; Investment Company Act.

(a) No Borrower is engaged or will engage, principally or as one of its
important activities, in the business of purchasing or carrying margin stock
(within the meaning of Regulation U issued by the FRB), or extending credit for
the purpose of purchasing or carrying margin stock. Following the application of
the proceeds of each Borrowing or drawing under each Letter of Credit, not more
than 25% of the value of the assets (either of the applicable Borrower only or
of the Company and its Subsidiaries on a consolidated basis) subject to the
provisions of Section 7.01 or Section 7.05 or subject to any restriction
contained in any agreement or instrument between any Borrower and any Lender or
any Affiliate of any Lender relating to Indebtedness and within the scope of
Section 8.01(e) will be margin stock.

(b) None of the Company, any Person Controlling the Company, or any Subsidiary
is or is required to be registered as an “investment company” under the
Investment Company Act of 1940.

 

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5.15 Disclosure. The Company has disclosed to the Administrative Agent and the
Lenders all agreements, instruments and corporate or other restrictions to which
it or any of its Subsidiaries is subject, and all other matters known to it,
that could reasonably be expected to result in a Material Adverse Effect. Taken
as a whole, the reports, financial statement, certificates and other information
furnished (whether in writing or orally) by or on behalf of any Loan Party to
the Administrative Agent or any Lender in connection with the Transaction, the
other transactions contemplated hereby and with the negotiation of this
Agreement or delivered hereunder or under any other Loan Document (in each case,
as modified or supplemented by other information so furnished) do not contain
any material misstatement of fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that, with respect to projected
financial information, the Company represents only that such information was
prepared in good faith based upon assumptions believed by it to be reasonable at
the time.

5.16 Compliance with Laws. Each Loan Party and each Subsidiary thereof is in
compliance in all material respects with the requirements of all Laws and all
orders, writs, injunctions and decrees applicable to it or to its properties,
except in such instances in which (a) such requirement of Law or order, writ,
injunction or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect, except as specifically disclosed in Schedule 5.06.

5.17 Taxpayer Identification Number; Other Identifying Information. The true and
correct U.S. taxpayer identification number of the Company is set forth on
Schedule 10.02. The true and correct unique identification number of each
Designated Borrower that is a Foreign Subsidiary and a party hereto on the
Closing Date that has been issued by its jurisdiction of organization and the
name of such jurisdiction are set forth on Schedule 5.17.

5.18 Intellectual Property; Licenses, Etc. The Company and its Subsidiaries own,
or possess the right to use, all of the trademarks, service marks, trade names,
copyrights, patents, patent rights, franchises, licenses and other intellectual
property rights (collectively, “IP Rights”) that are reasonably necessary for
the operation of their respective businesses, without material conflict with the
material rights of any other Person, except as disclosed in Schedule 5.06. To
the knowledge of the Company, no slogan or other advertising device, product,
process, method, substance, part or other material now employed, or now
contemplated to be employed, by the Company or any Subsidiary materially
infringes upon any rights held by any other Person, except as specifically
disclosed in Schedule 5.06. No claim or litigation regarding any of the
foregoing is pending or, to the knowledge of the Company, threatened, which,
either individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect except as specifically disclosed in Schedule 5.06.

5.19 Representations as to Foreign Obligors. Each of the Company and each
Foreign Obligor represents and warrants to the Administrative Agent and the
Lenders that:

(a) Such Foreign Obligor is subject to civil and commercial Laws with respect to
its obligations under this Agreement and the other Loan Documents to which it is
a party (collectively as to such Foreign Obligor, the “Applicable Foreign
Obligor Documents”), and the

 

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execution, delivery and performance by such Foreign Obligor of the Applicable
Foreign Obligor Documents constitute and will constitute private and commercial
acts and not public or governmental acts. Neither such Foreign Obligor nor any
of its property has any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to judgment,
attachment in aid of execution, execution or otherwise) under the laws of the
jurisdiction in which such Foreign Obligor is organized and existing in respect
of its obligations under the Applicable Foreign Obligor Documents.

(b) The Applicable Foreign Obligor Documents are in proper legal form under the
Laws of the jurisdiction in which such Foreign Obligor is organized and existing
for the enforcement thereof against such Foreign Obligor under the Laws of such
jurisdiction, and to ensure the legality, validity, enforceability, priority or
admissibility in evidence of the Applicable Foreign Obligor Documents. It is not
necessary to ensure the legality, validity, enforceability, priority or
admissibility in evidence of the Applicable Foreign Obligor Documents that the
Applicable Foreign Obligor Documents be filed, registered or recorded with, or
executed or notarized before, any court or other authority in the jurisdiction
in which such Foreign Obligor is organized and existing or that any registration
charge or stamp or similar tax be paid on or in respect of the Applicable
Foreign Obligor Documents or any other document, except for (i) any such filing,
registration, recording, execution or notarization as has been made or is not
required to be made until the Applicable Foreign Obligor Document or any other
document is sought to be enforced and (ii) any charge or tax as has been timely
paid.

(c) There is no tax, levy, impost, duty, fee, assessment or other governmental
charge, or any deduction or withholding, imposed by any Governmental Authority
in or of the jurisdiction in which such Foreign Obligor is organized and
existing either (i) on or by virtue of the execution or delivery of the
Applicable Foreign Obligor Documents or (ii) on any payment to be made by such
Foreign Obligor pursuant to the Applicable Foreign Obligor Documents, except as
has been disclosed to the Administrative Agent.

(d) The execution, delivery and performance of the Applicable Foreign Obligor
Documents executed by such Foreign Obligor are, under applicable foreign
exchange control regulations of the jurisdiction in which such Foreign Obligor
is organized and existing, not subject to any notification or authorization
except (i) such as have been made or obtained or (ii) such as cannot be made or
obtained until a later date (provided that any notification or authorization
described in clause (ii) shall be made or obtained as soon as is reasonably
practicable).

5.20 Security Interest. The Liens and security interests granted in the
Collateral to the Administrative Agent (for the benefit of the Secured Parties)
are valid first priority Liens (subject only to Permitted Liens) and security
interests in the Collateral, and each has been perfected in accordance with the
requirements of all applicable Laws. The equity interests at any time issued and
outstanding by a Subsidiary, which is a corporation, shall at all times be
evidenced by certificated securities, each of which with respect to any Domestic
Subsidiary, and 65% of which as to Voting Securities (and 100% of which as to
any other Equity Interests) of any first-tier Foreign Subsidiary, has been
delivered to the Administrative Agent (for the benefit of the Secured Parties)
on the Closing Date for purposes of perfecting such Liens.

 

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5.21 Issuer Status. The Company is a “well-known seasoned issuer” and is
eligible under the Securities Laws to file a registration statement on Form S-3.

5.22 Solvency. Each of the Loan Parties is Solvent.

ARTICLE VI.

AFFIRMATIVE COVENANTS

Until the occurrence of the Facility Termination Date, the Company shall, and
shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and
6.03) cause each Subsidiary to:

6.01 Financial Statements. Deliver to the Administrative Agent and each Lender,
in form and detail satisfactory to the Administrative Agent and the Required
Lenders:

(a) as soon as available, but in any event within five (5) Business Days after
the date on which consolidated financial statements for such period are required
to be delivered to the SEC under the Securities Laws, plus any extension
obtained under Rule 12b-25 thereunder, a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP, audited and accompanied by (i) a report and opinion of a
Registered Public Accounting Firm of nationally recognized standing reasonably
acceptable to the Required Lenders, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and applicable
Securities Laws and shall not be subject to any “going concern” or like
qualification or exception or any qualification or exception as to the scope of
such audit or with respect to the absence of any material misstatement and
(ii) an opinion of such Registered Public Accounting Firm independently
assessing the Company’s internal controls over financial reporting in accordance
with Item 308 of SEC Regulation S-K, PCAOB Auditing Standard No. 2, and
Section 404 of Sarbanes-Oxley expressing a conclusion that contains no statement
that there is a material weakness in such internal controls, except for such
material weaknesses as to which the Required Lenders do not object; and

(b) as soon as available, but in any event within five (5) Business Days after
the date on which consolidated financial statements for such period are required
to be delivered to the SEC under the Securities Laws, plus any extension
obtained under Rule 12b-25 thereunder, a consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income or operations, shareholders’ equity
and cash flows for such fiscal quarter and for the portion of the Company’s
fiscal year then ended, setting forth in each case in comparative form the
figures for the corresponding fiscal quarter of the previous fiscal year and the
corresponding portion of the previous fiscal year, all in reasonable detail,
certified by the chief executive officer, chief financial officer, treasurer or
controller of the Company as fairly presenting the financial condition, results
of operations, shareholders’ equity and cash flows of the Company and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit
adjustments and the absence of footnotes.

 

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As to any information contained in materials furnished pursuant to
Section 6.02(d), the Company shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Company to furnish the information and
materials described in clauses (a) and (b) above at the times specified therein.

6.02 Certificates; Other Information. Deliver to the Administrative Agent and
each Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

(a) concurrently with the delivery of the financial statements referred to in
Sections 6.01(a) and (b) (commencing with the delivery of the financial
statements for the fiscal quarter ended March 31, 2007), a duly completed
Compliance Certificate signed by the chief executive officer or chief financial
officer of the Company;

(b) promptly after any request by the Administrative Agent or any Lender, copies
of any detailed audit reports, management letters or recommendations submitted
to the board of directors (or the audit committee of the board of directors) of
the Company by independent accountants in connection with the accounts or books
of the Company or any Subsidiary, or any audit of any of them;

(c) promptly after the same are available, copies of each annual report, proxy
or financial statement or other report or communication sent to the stockholders
of the Company, and copies of all annual, regular, periodic and special reports
and registration statements which the Company may file or be required to file
with the SEC under Section 13 or 15(d) of the Securities Exchange Act of 1934,
and not otherwise required to be delivered to the Administrative Agent pursuant
hereto;

(d) promptly after the furnishing thereof, copies of any statement or report
furnished to any holder of debt securities of any Loan Party or any Subsidiary
thereof pursuant to the terms of any indenture, loan or credit or similar
agreement and not otherwise required to be furnished to the Lenders pursuant to
Section 6.01 or any other clause of this Section 6.02;

(e) promptly, and in any event within five Business Days after receipt thereof
by any Loan Party or any Subsidiary thereof, copies of each notice or other
correspondence received from the SEC (or comparable agency in any applicable
non-U.S. jurisdiction) concerning any investigation or possible investigation or
other inquiry by such agency regarding financial or other operational results of
any Loan Party or any Subsidiary thereof; and

(f) promptly, such additional information regarding the business, financial or
corporate affairs of the Company or any Subsidiary, or compliance with the terms
of the Loan Documents, as the Administrative Agent or any Lender may from time
to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(d) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Company posts such documents, or provides a link thereto on the Company’s
website on the Internet at the website address listed on Schedule 10.02; or
(ii) on which such documents are posted on the Company’s behalf on an Internet
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any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); provided that: (i) the Company shall deliver paper copies of such
documents to the Administrative Agent or any Lender that requests the Company to
deliver such paper copies until a written request to cease delivering paper
copies is given by the Administrative Agent or such Lender and (ii) the Company
shall notify the Administrative Agent (by telecopier or electronic mail) of the
posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents.
Notwithstanding anything contained herein, in every instance the Company shall
be required to provide paper copies of the Compliance Certificates required by
Section 6.02(b) to the Administrative Agent. Except for such Compliance
Certificates, the Administrative Agent shall have no obligation to request the
delivery or to maintain copies of the documents referred to above, and in any
event shall have no responsibility to monitor compliance by the Company with any
such request for delivery, and each Lender shall be solely responsible for
requesting delivery to it or maintaining its copies of such documents.

The Borrowers hereby acknowledge that (a) the Administrative Agent and/or the
Arranger will make available to the Lenders and the L/C Issuer materials and/or
information provided by or on behalf of any Borrower hereunder (collectively,
“Borrower Materials”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”) and (b) certain of the Lenders may be
“public-side” Lenders (i.e., Lenders that do not wish to receive material
non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”). The Borrowers hereby agree that (w) all Borrower Materials
that are to be made available to Public Lenders shall be clearly and
conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC”, the Borrowers shall be deemed to have authorized
the Administrative Agent, the Arranger, the L/C Issuer and the Lenders to treat
such Borrower Materials as not containing any material non-public information
with respect to the Borrower or its securities for purposes of United States
Federal and state securities laws (provided, however, that to the extent such
Borrower Materials constitute Information, they shall be treated as set forth in
Section 10.07); (y) all Borrower Materials marked “PUBLIC” are permitted to be
made available through a portion of the Platform designated “Public Investor”;
and (z) the Administrative Agent and the Arranger shall be entitled to treat any
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Investor”.

Notwithstanding the foregoing, no Borrower shall be under any obligation to mark
any Borrower Materials “PUBLIC.”

6.03 Notices. Promptly notify the Administrative Agent:

(a) of the occurrence of any Default;

(b) of any matter that has resulted or could reasonably be expected to result in
a Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Company or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
the Company or any Subsidiary and any

 

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Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Company or any
Subsidiary, including pursuant to any applicable Environmental Laws;

(c) of the occurrence of any ERISA Event; and

(d) of any material change in accounting policies or financial reporting
practices by the Company or any Subsidiary.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Company setting forth details of the occurrence
referred to therein and stating what action the Company has taken and proposes
to take with respect thereto. Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

6.04 Payment of Obligations. Pay and discharge as the same shall become due and
payable, all its material obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Company or such Subsidiary; (b) all lawful
claims which, if unpaid, would by law become a Lien upon its property; and
(c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.

6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization except in a transaction permitted by
Section 7.04 or 7.05; (b) take all reasonable action to maintain all rights,
privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect; and (c) preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non-preservation of which could reasonably be expected to have a
Material Adverse Effect.

6.06 Maintenance of Properties. (a) Maintain, preserve and protect all of its
material properties and equipment necessary in the operation of its business in
good working order and condition, ordinary wear and tear excepted; and (b) make
all necessary repairs thereto and renewals and replacements thereof except w
here the failure to do so could not reasonably be expected to have a Material
Adverse Effect.

6.07 Maintenance of Insurance. Maintain with financially sound and reputable
insurance companies not Affiliates of the Company, insurance with respect to its
properties and business against loss or damage of the kinds customarily insured
against by Persons engaged in the same or similar business, of such types,
including, without limitation, general liability insurance and product liability
insurance, and in such amounts (after giving effect to any self-insurance
compatible with the following standards) as are customarily carried under
similar circumstances by such other Persons and providing for not less than 30
days’ prior notice to the Administrative Agent of termination, lapse or
cancellation of such insurance.

 

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6.08 Compliance with Laws. Comply in all material respects with the requirements
of all Laws and all orders, writs, injunctions and decrees applicable to it or
to its business or property, except in such instances in which (a) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (b) the failure
to comply therewith could not reasonably be expected to have a Material Adverse
Effect.

6.09 Books and Records. (a) Maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP consistently
applied shall be made of all financial transactions and matters involving the
assets and business of the Company or such Subsidiary, as the case may be; and
(b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Company or such Subsidiary, as the case may be.

6.10 Inspection Rights. Permit representatives and independent contractors of
the Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants
(collectively, such actions are referred to as an “Inspection”) as often as may
be reasonably desired; provided, however, that subject to the next succeeding
proviso (i) each such Inspection shall occur at reasonable times during normal
business hours and upon reasonable advance notice to the Company, and (ii) each
Lender shall bear its own expenses for any such Inspection, except that the
Company shall bear all expenses for all Inspections arranged and coordinated by
the Administrative Agent; provided further, however, that notwithstanding the
foregoing proviso, when an Event of Default exists the Administrative Agent or
any Lender (or any of their respective representatives or independent
contractors) may do any of the foregoing at the expense of the Company at any
time during normal business hours and without advance notice.

6.11 Use of Proceeds. Use the proceeds of

(a) the Term Loan to finance in part the Transaction and to pay Transaction
Costs,

(b) any Credit Extension under the Revolving Credit Facility to finance in part
the Transaction (subject to the restrictions set forth in Section 7.14) and to
pay Transaction Costs, for working capital, capital expenditures, Permitted
Acquisitions, and general corporate purposes not in contravention of any Law or
of any Loan Document, and subject to compliance with Section 7.14 to pay any
Earnout Amount;

provided, however, that the proceeds of any Credit Extension may not be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry margin stock (within the meaning of Regulation
U of the FRB) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund indebtedness originally incurred for such
purpose, except as otherwise permitted under Section 7.06 if after giving effect
thereto Section 5.14(a) is true and correct.

 

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6.12 Approvals and Authorizations. Maintain all authorizations, consents,
approvals and licenses from, exemptions of, and filings and registrations with,
each Governmental Authority of the jurisdiction in which each Foreign Obligor is
organized and existing, and all approvals and consents of each other Person in
such jurisdiction, in each case that are required in connection with the Loan
Documents.

6.13 New Subsidiaries. Notify the Administrative Agent at the time that any
Person becomes a Subsidiary, and promptly thereafter (and in any event within 30
days), cause to be delivered to the Administrative Agent for the benefit of the
Secured Parties each of the following:

(a) with respect to any Domestic Subsidiary:

(i) a Guaranty Joinder Agreement, Security Joinder Agreement, IP Security
Joinder Agreement and Pledge Joinder Agreement duly executed by such Domestic
Subsidiary;

(ii) a Pledge Agreement Supplement or Pledge Joinder Agreement, as applicable,
executed by all owners of such Subsidiary;

(iii) with respect to any Material Real Property Interest owned in fee simple by
such Subsidiary: (A) the Mortgage and evidence of the proper recordation of each
such Mortgage (or the delivery of any such Mortgage to the applicable title
insurance company for recordation, on or immediately after the date of such
delivery to such company) in the appropriate filing office, and (B) the Owned
Real Estate Support Documents with respect to such real property;

(iv) with respect to any Material Real Property Interest that is leased by such
Subsidiary: (i) the Mortgage and (if such real property or any portion thereof
or land thereunder is leased by any Loan Party) a memorandum of lease for such
real property, and evidence of the proper recordation of each such Mortgage and
memorandum of lease (or the delivery of any such Mortgage or memorandum of lease
to the applicable title insurance company for recordation, on or immediately
after the date of delivery thereof) in the appropriate filing office, and
(ii) the Leased Real Estate Support Documents with respect to such real
property;

(b) with respect to a Foreign Subsidiary owned by a Domestic Subsidiary:

(i) a Pledge Agreement Supplement or Pledge Joinder Agreement, as applicable,
executed by all owners of such Subsidiary;

(ii) with respect to Equity Interests of each such Foreign Subsidiary owned by
the Company or a Domestic Subsidiary, a duly executed agreement under the laws
of organization of such Foreign Subsidiary effective and enforceable under such
laws for the pledge and collateral assignment of 65% of such Equity Interests to
the Administrative Agent for the benefit of the Secured Parties, evidence
satisfactory to the Administrative Agent of the execution and delivery of each
document, completion of each registration and undertaking and satisfactory
completion of each other action necessary under such

 

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laws to perfect the Administrative Agent’s security interest in such Equity
Interests and to effect and provide for the transfer of such Equity Interests
following the occurrence of any Event of Default, and an opinion of counsel from
such jurisdiction satisfactory in form and substance to the Administrative Agent
as to all the foregoing;

(c) delivery of all stock certificates evidencing Equity Interests in such new
Subsidiary required to be pledged pursuant to this Agreement or the Pledge
Agreement, accompanied in each case by duly executed stock powers (or other
appropriate transfer documents) in blank affixed thereto;

(d) such Uniform Commercial Code financing statements, control agreements or
other documents as are required to perfect, or to confer first priority status
upon, the security interest of the Secured Parties in the Collateral;

(e) opinions of counsel to the Subsidiary (and, as applicable, owners of Equity
Interests of such Subsidiary) dated as of the date of delivery of the Guaranty
Joinder Agreement, Security Joinder Agreement, IP Security Agreement, Pledge
Agreement Supplement or Pledge Joinder Agreement, as applicable, and addressed
to the Administrative Agent and the Lenders, in form and substance reasonably
acceptable to the Administrative Agent; and

(f) documents of the types identified in Section 4.01(a)(iii) and (iv) as
appropriate to such Subsidiary.

6.14 InnoSpine. In the event InnoSpine (a) obtains assets (other than the KYPH
Swiss Shares), (b) commences business operations, or (c) receives any Investment
from Kyphon or any other Subsidiary, cause InnoSpine to deliver to the
Administrative Agent for the benefit of the Secured Parties each of the
following:

(a) a Guaranty Joinder Agreement and a Pledge Joinder Agreement duly executed by
InnoSpine;

(b) a Pledge Agreement Supplement or Pledge Joinder Agreement, as applicable,
executed by all owners of InnoSpine;

(c) all stock certificates evidencing Equity Interests in InnoSpine required to
be pledged pursuant to this Agreement or the Pledge Agreement, accompanied in
each case by duly executed stock powers (or other appropriate transfer
documents) in blank affixed thereto;

(d) such Uniform Commercial Code financing statements, control agreements or
other documents as are required to perfect, or to confer first priority status
upon, the security interest of the Secured Parties in the Collateral;

(e) opinions of counsel to InnoSpine (and, as applicable, owners of Equity
Interests of InnoSpine) dated as of the date of delivery of the Guaranty Joinder
Agreement, Pledge Agreement Supplement or Pledge Joinder Agreement, as
applicable, and addressed to the Administrative Agent and the Lenders, in form
and substance reasonably acceptable to the Administrative Agent; and

 

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(f) documents of the types identified in Section 4.01(a)(iii) and (iv) as
appropriate to InnoSpine.

6.15 SFMT UK. In the event SFMT UK (a) obtains assets, (b) commences business
operations, or (c) receives any Investment from Kyphon or any other Subsidiary,
cause SFMT UK to deliver to the Administrative Agent for the benefit of the
Secured Parties each of the following:

(a) a Pledge Agreement Supplement or Pledge Joinder Agreement, as applicable,
executed by all owners of SFMT UK;

(b) with respect to Equity Interests of SFMT UK owned by the Company or a
Domestic Subsidiary, a duly executed agreement under the laws of organization of
SFMT UK effective and enforceable under such laws for the pledge and collateral
assignment of 65% of such Equity Interests to the Administrative Agent for the
benefit of the Secured Parties, evidence satisfactory to the Administrative
Agent of the execution and delivery of each document, completion of each
registration and undertaking and satisfactory completion of each other action
necessary under such laws to perfect the Administrative Agent’s security
interest in such Equity Interests and to effect and provide for the transfer of
such Equity Interests following the occurrence of any Event of Default, and an
opinion of counsel from such jurisdiction satisfactory in form and substance to
the Administrative Agent as to all the foregoing;

(c) all stock certificates evidencing Equity Interests in SFMT UK required to be
pledged pursuant to this Agreement or the Pledge Agreement, accompanied in each
case by duly executed stock powers (or other appropriate transfer documents) in
blank affixed thereto;

(d) such Uniform Commercial Code financing statements, control agreements or
other documents as are required to perfect, or to confer first priority status
upon, the security interest of the Secured Parties in the Collateral;

(e) opinions of counsel to SFMT UK (and, as applicable, owners of Equity
Interests of SFMT UK) dated as of the date of delivery of the Pledge Agreement
Supplement or Pledge Joinder Agreement, as applicable, and addressed to the
Administrative Agent and the Lenders, in form and substance reasonably
acceptable to the Administrative Agent; and

(f) documents of the types identified in Section 4.01(a)(iii) and (iv) as
appropriate to SFMT UK.

6.16 Additional Security. Shall, and shall cause each of its Domestic
Subsidiaries to, grant to the Administrative Agent from time to time security
interests, mortgages and other Liens in and upon such assets and properties of
the Company or such Domestic Subsidiary as are not covered by the Security
Instruments executed and delivered before or on the Closing Date or pursuant to
Section 6.13 (including Liens on assets acquired by the Company or a Subsidiary
in connection with any Permitted Acquisition) within 30 days of the acquisition
of any thereof; provided, however, that in the event any such real property
owned by the Borrower or such Subsidiary does not qualify as a Material Real
Property Interest, a Mortgage or Assignment of Lease shall only be required upon
the request of the Administrative Agent or the Required Lenders. Such security
interests, mortgages and Liens shall be granted pursuant to Security

 

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Instruments in form and substance reasonably satisfactory to the Administrative
Agent and shall constitute valid and perfected security interests and Liens
subject to no Liens other than Permitted Liens. Without limitation of the
foregoing, in connection with the grant of any mortgage or deed of trust with
respect to any interest in real property, the Company shall, and shall cause
each applicable Domestic Subsidiary to, at the Company’s expense, prepare,
obtain and deliver to the Administrative Agent all Owned Real Estate Support
Documents or Leased Real Estate Support Documents, as applicable.

6.17 Conditions Subsequent. Shall diligently pursue and cause to be delivered to
the Administrative Agent those items listed on Schedule 6.17 within the
respective time periods set forth therein.

ARTICLE VII.

NEGATIVE COVENANTS

Until the occurrence of the Facility Termination Date, the Company shall not,
nor shall it permit any Subsidiary to, directly or indirectly:

7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, other
than the following:

(a) Liens pursuant to any Loan Document;

(b) Liens existing on the date hereof and listed on Schedule 7.01 and any
renewals or extensions thereof, provided that (i) the property covered thereby
is not changed, (ii) the amount secured or benefited thereby is not increased,
(iii) the direct or any contingent obligor with respect thereto is not changed,
and (iv) any renewal or extension of the obligations secured or benefited
thereby is permitted by Section 7.03(b);

(c) Liens for Taxes not yet due or which are being contested in good faith and
by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

(d) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 60 days, or which are being contested in good faith and by
appropriate proceedings diligently conducted, if adequate reserves with respect
thereto are maintained on the books of the applicable Person;

(e) pledges or deposits in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other social security
legislation, other than any Lien imposed by ERISA;

(f) deposits to secure the performance of bids, trade contracts and leases
(other than Indebtedness), statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

 

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(g) easements, rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the
business of the applicable Person;

(h) Liens securing judgments for the payment of money not constituting an Event
of Default under Section 8.01(h);

(i) Liens securing Indebtedness permitted under Sections 7.03(e); provided that,
with respect to Indebtedness permitted under Section 7.03(e), (i) such Liens do
not at any time encumber any property other than the property financed by such
Indebtedness and (ii) the Indebtedness secured thereby does not exceed the cost
or fair market value, whichever is lower, of the property being acquired on the
date of acquisition, plus installation costs; and

(j) Liens not otherwise permitted by Sections 7.01(a) through (i) which secure
Indebtedness permitted under Section 7.03(i); provided that no such Lien shall
attach to any Collateral.

7.02 Investments. Make any Investments, except:

(a) Investments held by the Company or such Subsidiary in the form of cash
equivalents or short-term marketable securities or in compliance with the
Company’s then-current investment policy as approved by the Audit Committee of
the Company’s Board of Directors;

(b) Investments (including loans and advances) by the Company in any Subsidiary
that is a Guarantor and Investments (including loans and advances) by any
Subsidiary that is a Guarantor in the Company or in another Subsidiary that is a
Guarantor;

(c) Investments (including loans and advances) by any direct or indirect Foreign
Subsidiary of the Company in any other direct or indirect Foreign Subsidiary of
the Company;

(d) Investments (including loans and advances) by the Company in any direct or
indirect Foreign Subsidiary in amounts consistent with the Company’s
international tax strategy in effect from time to time, provided that any
modification of such international tax strategy by the Company after the Closing
Date shall not result in a material aggregate additional amount of such
Investments from the amount thereof immediately prior to such change in
strategy;

(e) Investments existing on the date hereof as set forth on Schedule 7.02;

(f) Acquisitions as permitted under Section 7.12;

(g) Investments consisting of extensions of credit in the nature of accounts
receivable or notes receivable arising from the grant of trade credit in the
ordinary course of business, and Investments received in satisfaction or partial
satisfaction thereof from financially troubled account debtors to the extent
reasonably necessary in order to prevent or limit loss;

(h) Guarantees permitted by Section 7.03; and

 

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(i) other Investments in an aggregate amount not to exceed the greater of
whichever of the following is then applicable:

(i) $5,000,000, to the extent that at the time such Investment is made the
Consolidated Leverage Ratio, after giving effect to such Investment and any
transactions related thereto, would be equal to or greater than 2.50 to 1.00, or

(ii) $25,000,000, to the extent that at the time such Investment is made the
Consolidated Leverage Ratio, after giving effect to such Investment and any
transactions related thereto, would be less than 2.50 to 1.00, or

(iii) five percent (5%) of Consolidated Tangible Assets, determined as of the
most recent fiscal quarter ended, to the extent that at the time such Investment
is made the Consolidated Senior Secured Leverage Ratio, after giving effect to
such Investment and any transactions related thereto, would be less than 2.00 to
1.00;

provided that, in the case of (i), (ii) and (iii), at the time of such
Investment, no Default shall exist or would result from such Investment.

7.03 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness,
except:

(a) Indebtedness under the Loan Documents;

(b) Indebtedness outstanding on the date hereof and listed on Schedule 7.03 and
any refinancings, refundings, renewals or extensions thereof; provided that
(i) the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to any
existing commitments unutilized thereunder and (ii) the terms relating to
principal amount, amortization, maturity, collateral (if any) and subordination
(if any), and other material terms taken as a whole, of any such refinancing,
refunding, renewing or extending Indebtedness, and of any agreement entered into
and of any instrument issued in connection therewith, are no less favorable in
any material respect to the Loan Parties or the Lenders than the terms of any
agreement or instrument governing the Indebtedness being refinanced, refunded,
renewed or extended and the interest rate applicable to any such refinancing,
refunding, renewing or extending Indebtedness does not exceed the then
applicable market interest rate;

(c) Guarantees of the Company or any Subsidiary in respect of Indebtedness
otherwise permitted hereunder of the Company or any other Guarantor;

(d) obligations (contingent or otherwise) of the Company or any Subsidiary
existing or arising under any Swap Contract, provided that (i) such obligations
are (or were) entered into by such Person in the ordinary course of business for
the purpose of directly mitigating risks associated with liabilities,
commitments, investments, assets, or property held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person, and
not for purposes of speculation or taking a “market view;” and (ii) such Swap
Contract does not contain any provision exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to the
defaulting party;

 

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(e) Indebtedness in respect of capital leases and purchase money obligations for
fixed or capital assets within the limitations set forth in Section 7.01(i);
provided, however, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed the greater of (i) $25,000,000, or (ii) five
percent (5%)of Consolidated Tangible Assets, determined as of the most recent
fiscal quarter ended, if at the time such Indebtedness is incurred the
Consolidated Senior Secured Leverage Ratio, after giving effect to such
Indebtedness, would be less than 2.00 to 1.00;

(f) Subordinated Indebtedness;

(g) intercompany Indebtedness permitted under Section 7.02, subordinated on
terms acceptable to the Administrative Agent;

(h) all Contingent Obligation GAAP Debt and all Deferred Purchase Obligations to
the extent permitted by Section 7.12;

(i) other secured (to the extent permitted by Section 7.01) and unsecured
Indebtedness in an aggregate principal amount not to exceed the greater of
whichever of the following is then applicable:

(i) $5,000,000, if at the time such Indebtedness is incurred the Consolidated
Leverage Ratio, after giving effect to such Indebtedness, would be 2.50 to 1.00
or greater, or

(ii) $25,000,000, if at the time such Indebtedness is incurred the Consolidated
Leverage Ratio, after giving effect to such Indebtedness would be less than 2.50
to 1.00, or

(iii) five percent (5%)of Consolidated Tangible Assets, determined as of the
most recent fiscal quarter ended, if at the time such Indebtedness is incurred
the Consolidated Senior Secured Leverage Ratio, after giving effect to such
Indebtedness, would be less than 2.00 to 1.00;

and

(j) Permitted Convertible Indebtedness and any equity swaps or options on the
capital stock of the Company in connection therewith, so long as (a) both before
and after giving effect thereto no Default exists, (b) the Company and its
Subsidiaries are in pro forma compliance with the financial covenants set forth
in Section 7.10 both before and after giving effect thereto, and (c) the Company
makes a prepayment with the Net Cash Proceeds thereof to the extent required by
Section 2.06A(c)(iv) hereof.

7.04 Fundamental Changes. Merge, dissolve, liquidate, consolidate with or into
another Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that, so long as no
Default exists or would result therefrom:

(a) SFMT may merge with and into Neptune to consummate the Transaction;

 

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(b) any Subsidiary may merge with (i) the Company, provided that the Company
shall be the continuing or surviving Person, (ii) any one or more other
Subsidiaries or (iii) with any Person that is not a Subsidiary in connection
with a Permitted Acquisition provided that the ultimate surviving entity becomes
a Subsidiary within 30 days of such merger or consolidation, provided further
that when any Guarantor is merging with another Subsidiary, the Guarantor shall
be the continuing or surviving Person; and

(c) any Subsidiary may Dispose of all or substantially all of its assets (upon
voluntary liquidation or otherwise) to the Company or to another Subsidiary;
provided that if the transferor in such a transaction is a Guarantor, then the
transferee must either be the Company or a Guarantor.

7.05 Dispositions. Make any Disposition or enter into any agreement to make any
Disposition, except:

(a) Dispositions of obsolete or worn out property, whether now owned or
hereafter acquired, in the ordinary course of business;

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

(c) Dispositions of equipment or real property to the extent that (i) such
property is exchanged for credit against the purchase price of similar
replacement property or (ii) the proceeds of such Disposition are reasonably
promptly applied to the purchase price of such replacement property;

(d) Dispositions of property by any Subsidiary to the Company or to a
wholly-owned Subsidiary; provided that if the transferor of such property is a
Guarantor, the transferee thereof must either be the Company or a Guarantor;

(e) Dispositions permitted by Section 7.04;

(f) Dispositions necessary for the consummation of a Permitted Acquisition in
connection with obtaining antitrust clearance;

(g) any sale, transfer or other disposition by a Foreign Subsidiary of its
accounts receivable pursuant to a factoring program entered into by such Foreign
Subsidiary in an aggregate principal amount not to exceed $5,000,000 in any
fiscal year;

(h) any license, sublicense, lease or sublease granted to others, not
interfering in any material respect with the business of the Loan Parties and
their Subsidiaries and which are assignable to and by the Administrative Agent
as part of the Collateral;

(i) non-exclusive licenses of IP Rights in the ordinary course of business or
substantially consistent with past practice or in connection with any litigation
identified on Schedule 5.06;

(j) the sale/leaseback by the Company of one or more facilities as disclosed to
the Administrative Agent prior to the Closing Date;

 

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(k) Dispositions by the Company and its Subsidiaries not otherwise permitted
under this Section 7.05; provided that the aggregate book value of all property
Disposed of in reliance on this clause (k) does not exceed:

(i) in the event that at the time of any such Disposition the Consolidated
Senior Secured Leverage Ratio exceeds 2.00 to 1.00, (A) $5,000,000 in any fiscal
year, and (B) $25,000,000 in the aggregate during this Agreement; and

(ii) in the event that at the time of any such Disposition the Consolidated
Senior Secured Leverage Ratio does not exceed 2.00 to 1.00, five percent (5%) of
Consolidated Total Assets, determined as of the last day of the immediately
prior fiscal year;

provided that (x) at least 75% of the proceeds received by the Company and its
Subsidiaries in respect of any Disposition made in reliance on this clause
(k) shall be in the form of cash, and (y) at the time of any Disposition made in
reliance on this clause (k), no Default shall exist or would result from such
Disposition; provided, however, that any Disposition made pursuant to
Section 7.05(a) through (k) shall be for fair market value.

7.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so,
except that, so long as no Default shall have occurred and be continuing at the
time of any action described below or would result therefrom:

(a) each Subsidiary may make Restricted Payments to the Company, the Guarantors
and any other Person that owns an Equity Interest in such Subsidiary, ratably
according to their respective holdings of the type of Equity Interest in respect
of which such Restricted Payment is being made; provided, however, in no event
shall a Restricted Payment consisting of an Equity Interest in any Subsidiary be
distributed to any Person other than the Company or a Guarantor;

(b) the Company and each Subsidiary may declare and make dividend payments or
other distributions payable solely in the common stock or other common Equity
Interests of such Person; provided, however, in no event shall a Restricted
Payment consisting of an Equity Interest in any Subsidiary be distributed to any
Person other than the Company or a Guarantor;

(c) the Company and each Subsidiary may purchase, redeem or otherwise acquire
Equity Interests with the proceeds received from the substantially concurrent
issue of new shares of its common stock or other Equity Interests;

(d) the Company may pay cash dividends to its stockholders and purchase shares
of capital stock from its stockholders in aggregate amount not to exceed
seventy-five percent (75%) of Excess Cash Flow for the period commencing with
the Closing Date through and including the most recent fiscal year end to occur
prior to such payment for which financial statements under Section 6.01(a) have
been delivered; provided that at the time of making any such Restricted Payment
and after giving effect thereto and to any related transactions, the
Consolidated Leverage Ratio is less than 2.50 to 1.00;

 

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(e) the Company may repurchase or refinance any Subordinated Indebtedness which
included an Equity Interest with the proceeds from the simultaneous issuance by
the Company of other Subordinated Indebtedness of the Company having
subordination terms no less favorable to the Lenders than those terms in the
repurchased or refinanced Subordinated Indebtedness; and

(f) the Company may (i) issue any Permitted Convertible Indebtedness in
accordance with Section 7.03(j) and enter into any equity swaps or options on
the capital stock of the Company in connection therewith, (ii) satisfy its
conversion or required repurchase obligations related to any Permitted
Convertible Indebtedness issued by the Company in accordance with
Section 7.03(j), in cash or Equity Interests of the Company or a combination
thereof, (iii) exercise or settle any equity swaps or options on the capital
stock of the Company entered into in connection with any Permitted Convertible
Indebtedness, in each case in cash or Equity Interests of the Company or a
combination thereof, and (iv) purchase Equity Interests of the Company for an
aggregate price up to $50 million in connection with the issuance of any
Permitted Convertible Indebtedness;

provided that, prior to making any Restricted Payment (other than a Restricted
Payment pursuant to Section 7.06(f)) in cash in an amount, individually or
together with any related Restricted Payments, in excess of $5,000,000, the
Company shall have delivered to the Administrative Agent a Compliance
Certificate prepared on a historical pro forma basis as of the most recent date
for which financial statements have been furnished pursuant to Section 4.01(a)
or Section 6.01(a) or (b) giving effect to such Restricted Payment and any
related transactions and evidencing compliance with the financial covenants in
Section 7.10.

7.07 Change in Nature of Business. Engage in any material line of business
substantially different from the medical device and products business and any
business reasonably related, incidental or complementary thereto.

7.08 Transactions with Affiliates. Enter into any transaction of any kind with
any Affiliate of the Company, whether or not in the ordinary course of business,
other than on fair and reasonable terms substantially as favorable to the
Company or such Subsidiary as would be obtainable by the Company or such
Subsidiary at the time in a comparable arm’s length transaction with a Person
other than an Affiliate, provided that the foregoing restriction shall not apply
to transactions between or among the Company and any Guarantor or between and
among any Guarantors and shall not apply to the transactions contemplated in the
Stockholder Support Agreements.

7.09 Burdensome Agreements; Negative Pledge. Enter into any Contractual
Obligation (other than this Agreement or any other Loan Document) that
(a) limits the ability (i) of any Subsidiary to make Restricted Payments to the
Company or any Subsidiary Guarantor or to otherwise transfer property to the
Company or any Subsidiary Guarantor, (ii) of any Subsidiary to Guarantee the
Indebtedness of the Company or (iii) of the Company or any Subsidiary to create,
incur, assume or suffer to exist Liens on property of such Person; provided,
however, that this clause (iii) shall not prohibit any negative pledge incurred
or provided in favor of any holder of Indebtedness permitted under
Section 7.03(e) solely to the extent any such negative pledge relates to the
property financed by or the subject of such Indebtedness; or (b) requires the
grant of a Lien to secure an obligation of such Person if a Lien is granted to
secure another obligation of such Person.

 

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7.10 Financial Covenants.

(a) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio as of the end of any fiscal quarter of the Company ending during
the periods set forth below at any time to be less than the ratio set forth
below opposite each such period:

 

Date of Determination

  

Consolidated

Interest Coverage Ratio

Closing Date through March 31, 2007

   3.00 to 1.00

June 30, 2007 through September 30, 2007

   3.50 to 1.00

December 31, 2007 and at all times thereafter

   4.00 to 1.00

(b) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio at any
time during any period set forth below to be greater than the ratio set forth
below opposite such period:

 

Date of Determination

  

Consolidated

Leverage Ratio

Closing Date through March 31, 2007

   4.50 to 1.00

April 1, 2007 through June 30, 2007

   4.00 to 1.00

July 1, 2007 through September 30, 2007

   3.75 to 1.00

October 1, 2007 through September 30, 2008

   3.50 to 1.00

October 1, 2008 through September 30, 2009

   3.25 to 1.00

October 1, 2009 and at all times thereafter

   3.00 to 1.00

(c) Consolidated Senior Secured Leverage Ratio. At any time during which any
Permitted Convertible Indebtedness is outstanding, permit the Consolidated
Senior Secured Leverage Ratio to be greater than 3.00 to 1.00.

7.11 Capital Expenditures. Make or become legally obligated to make any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations), except for capital expenditures in the ordinary
course of business not exceeding, in the aggregate for the Company and it
Subsidiaries, (i) $20,000,000 during the fiscal year ending December 31, 2007
and the fiscal year ending December 31, 2008, and (ii) $25,000,000 during each
fiscal year thereafter; provided, however, that so long as no Default has
occurred or is continuing or would result from such expenditure, 50% of the
amount permitted for a fiscal year, if not expended in the fiscal year for which
it is permitted, may be carried over for expenditure in the next following
fiscal year.

7.12 Acquisitions. Effect any Acquisition, other than (a) Permitted Acquisitions
and (b) the DOT Acquisition (whether in whole or in part).

 

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7.13 Company Status. Cause, suffer or permit any of the conditions set forth in
Section 2(c) of the Stockholder Support Agreements for the Company to issue and
sell Parent Stock, and for each Stockholder to be obligated to purchase Parent
Stock under Section 2 of each Stockholder Support Agreement, to fail to be
satisfied at any time that, but for such failure, the Company would be eligible
to issue stock pursuant to Section 2 of the Stockholder Support Agreements.

7.14 Earnout Amounts.

(a) Pay, or cause any of its Subsidiaries to pay, the entire Earnout Amount in
cash, unless (i) the Consolidated Leverage Ratio as of the most recently ended
fiscal quarter of the Company for which financial statements under Section 6.01
have been delivered, pro forma for the cash payment of the Earnout Amount and
the sources of cash therefor, shall not be greater than the Consolidated
Leverage Ratio equal to the then applicable maximum Consolidated Leverage Ratio
permitted pursuant to Section 7.11 less 0.20 to 1.00 (for the avoidance of
doubt, for example, if the maximum permitted Consolidated Leverage Ratio is 4.50
to 1.00, then the pro forma Consolidated Leverage Ratio must not be greater than
4.30 to 1.00 in order to pay the entire Earnout Amount in cash) and
(ii) availability under the Revolving Credit Facility immediately after any
advances made to finance such cash payment of the entire Earnout Amount shall
not be less than $25,000,000;

(b) Pay, or cause any of its Subsidiaries to pay, in cash the Earnout Amount
owing to any Person who is not party to a Stockholder Support Agreement, or the
Earnout Amount owing to any Stockholder in the event the conditions set forth in
Section 2(c) of such applicable Stockholder Support Agreement are not satisfied,
unless at all times on and after January 1, 2008, availability under the
Revolving Credit Facility shall not be less than an amount equal to the sum of
(i) $25,000,000 plus (ii) the product of (A) the Earnout Amount at such time
payable (either the First Earnout Amount or the Second Earnout Amount, as
applicable) times (B) a percentage equal to that portion of such Earnout Amount
that is to be payable in cash to Persons who are not party to a Stockholder
Support Agreement, and that is to be payable in cash to Stockholders in the
event the conditions set forth in Section 2(c) of such Stockholder Support
Agreement are not satisfied;

(c) Pay, or cause any of its Subsidiaries to pay, in cash the Earnout Amount
owing to any Person who is not party to a Stockholder Support Agreement, and to
issue Parent Stock in payment of the Earnout Amount to any Stockholder, unless
Latham & Watkins, as counsel for the Company, shall have delivered an opinion to
the Company and to the Administrative Agent and the Lenders, satisfactory
thereto in form and substance, dated as of the date of payment of the Earnout
Amount, to the effect that the execution, delivery and performance of the
Stockholder Support Agreements by the Company at such date has been duly
authorized and does not conflict with the Company’s charter documents, and
performance of the Stockholder Support Agreements by the Company does not
conflict with federal and state Laws customarily applicable to transactions of
this kind, including federal Securities Laws and Delaware corporation Law; and

(d) In connection with payment of any Earnout Amount in Parent Stock to any
Stockholder, pay, or cause any of its Subsidiaries to pay, in any event at any
time, cash to such

 

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Stockholder in remittance of such Earnout Amount, including without limitation
during any period of time which the Sale Date (as defined in the applicable
Stockholder Support Agreement) pursuant to Section 2(b) or 2(d) of such
Stockholder Support Agreement is delayed from the date the Earnout Amount is
required to be paid pursuant to the Merger Agreement (it being understood and
agreed that the obligation of the Company under the Merger Agreement to pay any
Earnout Amount, and the obligation of each Stockholder to purchase shares of
Parent Stock with the proceeds of such payment of such Earnout Amount, shall be
satisfied simultaneously without any exchange or delivery of cash by either
Person).

7.15 Prepayment of Subordinated Inebtedness. Prepay, redeem, purchase,
repurchase, defease or otherwise satisfy prior to the scheduled maturity thereof
in any manner, or make any payment in violation of any subordination terms of,
any Subordinated Indebtedness, except those prepayments that are made in
connection with a refinancing thereof with Subordinated Indebtedness or
Permitted Convertible Indebtedness to the extent permitted to be incurred
pursuant to Section 7.03 hereof (including any requirement that the Net Cash
Proceeds thereof be utilized to make a prepayment pursuant to
Section 2.06A(c)(iv) hereof), or (ii) after giving effect to which (and any
incurrence of Indebtedness other than as provided in subsection (a) above in
connection therewith), no Default exists or will have occurred and the
Consolidated Senior Secured Leverage Ratio is not greater than 2.50 to 1.00.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

8.01 Events of Default. Any of the following shall constitute an Event of
Default:

(a) Non-Payment. Any Borrower or any other Loan Party fails to pay (i) when and
as required to be paid herein, and in the currency required hereunder, any
amount of principal of any Loan or any L/C Obligation, or (ii) within three days
after the same becomes due, any interest on any Loan or on any L/C Obligation,
or any fee due hereunder, or (iii) within five days after the same becomes due,
any other amount payable hereunder or under any other Loan Document; or

(b) Specific Covenants. The Company fails to perform or observe any term,
covenant or agreement contained in any of Section 6.01, 6.02, 6.03, 6.05, 6.10,
6.11, 6.13, 6.15 or 6.17 or Article VII, or any Guarantor fails to perform or
observe any term, covenant or agreement contained in the Guaranty; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in subsection (a) or (b) above) contained
in any Loan Document on its part to be performed or observed and such failure
continues for 30 days; or

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Company or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
in any material respect (unless such representation or warranty is already
qualified by a standard of materiality) when made or deemed made; or

 

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(e) Cross-Default. (i) The Company or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to be demanded or to become
due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or
(ii) there occurs under any Swap Contract an Early Termination Date (as defined
in such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Company or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined)
under such Swap Contract as to which the Company or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination Value
owed by the Company or such Subsidiary as a result thereof is greater than the
Threshold Amount; or

(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator or similar officer is appointed without the
application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor Relief Law
relating to any such Person or to all or any material part of its property is
instituted without the consent of such Person and continues undismissed or
unstayed for 60 calendar days, or an order for relief is entered in any such
proceeding; or

(g) Inability to Pay Debts; Attachment. (i) The Company or any Subsidiary
becomes unable or admits in writing its inability or fails generally to pay its
debts as they become due, or (ii) any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of any such Person and is not released, vacated or fully bonded within
30 days after its issue or levy; or

(h) Judgments. There is entered against the Company or any Subsidiary (i) one or
more final judgments or orders for the payment of money in an aggregate amount
(as to all such judgments or orders) exceeding the Threshold Amount (to the
extent not covered by independent third-party insurance as to which the insurer
does not dispute coverage), or (ii) any one or more non-monetary final judgments
that have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and, in either case, (A) enforcement
proceedings are commenced by any creditor upon such judgment or order or, in the
case of a judgment under clause (i), unless such judgment is discharged, or
(B) there is a period of 10 consecutive days during which a stay of enforcement
of such judgment, by reason of a pending appeal or otherwise, is not in effect;
or

 

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(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Company under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the Threshold
Amount, or (ii) the Company or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of the Threshold Amount; or

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases
to be in full force and effect; or any Loan Party or any other Person contests
in any manner the validity or enforceability of any Loan Document; or any Loan
Party denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document;

(k) Change of Control. There occurs any Change of Control; or

(l) Earnout Payment Acceleration. The occurrence of any event set forth in
Section 1.7(f) of the Merger Agreement.

8.02 Remedies Upon Event of Default. If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

(a) declare the commitment of each Revolving Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions to be terminated,
whereupon such commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers;

(c) require that the Company Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof); and

(d) exercise on behalf of itself, the Lenders and the L/C Issuer all rights and
remedies available to it, the Lenders and the L/C Issuer under the Loan
Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to any Borrower under the Bankruptcy Code of the
United States or any other similar Debtor Relief Law of an applicable
jurisdiction, the obligation of each Revolving Lender to make Loans and any
obligation of the L/C Issuer to make L/C Credit Extensions shall automatically
terminate, the unpaid principal amount of all outstanding Loans and all interest
and

 

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other amounts as aforesaid shall automatically become due and payable, and the
obligation of the Company to Cash Collateralize the L/C Obligations as aforesaid
shall automatically become effective, in each case without further act of the
Administrative Agent or any Lender.

8.03 Application of Funds. After the exercise of remedies provided for in
Section 8.02 (or after the Loans have automatically become immediately due and
payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III) payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of
Credit Fees and amounts payable in respect of Related Credit Arrangements)
payable to the Lenders and the L/C Issuer (including fees, charges and
disbursements of counsel to the respective Lenders and the L/C Issuer and
amounts payable under Article III), ratably among them in proportion to the
respective amounts described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other
Obligations, ratably among the Lenders and the L/C Issuer in proportion to the
respective amounts described in this clause Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans and L/C Borrowings and amounts due under Related Credit
Arrangements as to which the Administrative Agent has received notice of the
amounts owed thereunder from the applicable Related Credit Arrangement Provider,
ratably among the Lenders, the L/C Issuer and Related Credit Arrangement
Providers in proportion to the respective amounts described in this clause
Fourth held by them;

Fifth, to the Administrative Agent for the account of the L/C Issuer, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit; and

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Company or as otherwise required by Law.

Subject to Section 2.04(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

 

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ARTICLE IX.

ADMINISTRATIVE AGENT

9.01 Appointment and Authority. Each of the Lenders (for the purposes of this
Article IX, each, in its capacity as a Lender, Swing Line Lender (if applicable)
and potential Related Credit Arrangement Provider) and the L/C Issuer hereby
irrevocably appoints Bank of America to act on its behalf as the Administrative
Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article are solely for the benefit of the
Administrative Agent, the Lenders and the L/C Issuer, and neither any Borrower
nor any other Loan Party shall have rights as a third party beneficiary of any
of such provisions.

9.02 Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise
expressly indicated or unless the context otherwise requires, include the Person
serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the
financial advisor or in any other advisory capacity for and generally engage in
any kind of business with the Borrowers or any Subsidiary or other Affiliate
thereof as if such Person were not the Administrative Agent hereunder and
without any duty to account therefor to the Lenders.

9.03 Exculpatory Provisions. The Administrative Agent shall not have any duties
or obligations except those expressly set forth herein and in the other Loan
Documents. Without limiting the generality of the foregoing, the Administrative
Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to any of the Borrowers or any of their
respective Affiliates that is communicated to or obtained by the Person serving
as the Administrative Agent or any of its Affiliates in any capacity.

 

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The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Company, a
Lender or the L/C Issuer.

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Article IV or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to the
Administrative Agent.

9.04 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person, and shall not incur any liability
for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan, or the issuance of a Letter of Credit, that by its terms
must be fulfilled to the satisfaction of a Lender or the L/C Issuer, the
Administrative Agent may presume that such condition is satisfactory to such
Lender or the L/C Issuer unless the Administrative Agent shall have received
notice to the contrary from such Lender or the L/C Issuer prior to the making of
such Loan or the issuance of such Letter of Credit. The Administrative Agent may
consult with legal counsel (who may be counsel for the Company), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.

9.05 Delegation of Duties. The Administrative Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other Loan
Document by or through any one or more sub agents appointed by the
Administrative Agent. The Administrative Agent and any such sub agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub agent and to the Related Parties of the
Administrative Agent and any such sub agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

9.06 Resignation of Administrative Agent. The Administrative Agent may at any
time give notice of its resignation to the Lenders, the L/C Issuer and the
Company. Upon receipt

 

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of any such notice of resignation, the Required Lenders shall have the right, in
consultation with the Company, to appoint a successor, which shall be a bank
with an office in the United States, or an Affiliate of any such bank with an
office in the United States. If no such successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may on behalf of the Lenders and the L/C
Issuer, appoint a successor Administrative Agent meeting the qualifications set
forth above; provided that if the Administrative Agent shall notify the Company
and the Lenders that no qualifying Person has accepted such appointment, then
such resignation shall nonetheless become effective in accordance with such
notice and (1) the retiring Administrative Agent shall be discharged from its
duties and obligations hereunder and under the other Loan Documents (except that
in the case of any collateral security held by the Administrative Agent on
behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the
retiring Administrative Agent shall continue to hold such collateral security
until such time as a successor Administrative Agent is appointed) and (2) all
payments, communications and determinations provided to be made by, to or
through the Administrative Agent shall instead be made by or to each Lender and
the L/C Issuer directly, until such time as the Required Lenders appoint a
successor Administrative Agent as provided for above in this Section. Upon the
acceptance of a successor’s appointment as Administrative Agent hereunder, such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring (or retired) Administrative Agent, and the
retiring Administrative Agent shall be discharged from all of its duties and
obligations hereunder or under the other Loan Documents (if not already
discharged therefrom as provided above in this Section). The fees payable by the
Company to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Company and such
successor. After the retiring Administrative Agent’s resignation hereunder and
under the other Loan Documents, the provisions of this Article and Section 10.04
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative
Agent was acting as Administrative Agent.

Any resignation by Bank of America as Administrative Agent pursuant to this
Section shall also constitute its resignation as L/C Issuer and Swing Line
Lender. Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring L/C Issuer and Swing Line
Lender, (b) the retiring L/C Issuer and Swing Line Lender shall be discharged
from all of their respective duties and obligations hereunder or under the other
Loan Documents, and (c) the successor L/C Issuer shall issue letters of credit
in substitution for the Letters of Credit, if any, outstanding at the time of
such succession or make other arrangements satisfactory to the retiring L/C
Issuer to effectively assume the obligations of the retiring L/C Issuer with
respect to such Letters of Credit.

9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the
L/C Issuer acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Lender and
the L/C Issuer also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender or

 

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any of their Related Parties and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or
thereunder.

9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none
of the Book Managers, Arrangers, Syndication Agents or Documentation Agent
listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents, except
in its capacity, as applicable, as the Administrative Agent, a Lender or the L/C
Issuer hereunder.

9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of
any proceeding under any Debtor Relief Law or any other judicial proceeding
relative to any Loan Party, the Administrative Agent (irrespective of whether
the principal of any Loan or L/C Obligation shall then be due and payable as
herein expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on any Borrower) shall be
entitled and empowered, by intervention in such proceeding or otherwise

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders, the L/C
Issuer and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuer and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuer and the Administrative Agent
under Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial
proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and the L/C Issuer to make such payments to the Administrative Agent
and, in the event that the Administrative Agent shall consent to the making of
such payments directly to the Lenders and the L/C Issuer, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.09
and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or the L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or the L/C Issuer to
authorize the Administrative Agent to vote in respect of the claim of any Lender
or the L/C Issuer in any such proceeding.

9.10 Collateral and Guaranty Matters. The Lenders and the L/C Issuer irrevocably
authorize the Administrative Agent, at its option and in its discretion,

 

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(a) to release any Lien on any property granted to or held by the Administrative
Agent under any Loan Document (i) upon termination of the Aggregate Commitments
and payment in full of all Obligations (other than contingent indemnification
obligations) and the expiration or termination of all Letters of Credit,
(ii) that is sold or to be sold as part of or in connection with any sale
permitted hereunder or under any other Loan Document, or (iii) subject to
Section 10.01, if approved, authorized or ratified in writing by the Required
Lenders;

(b) to subordinate any Lien on any property granted to or held by the
Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Section 7.01(i); and

(c) to release any Guarantor from its obligations under the Guaranty if such
Person ceases to be a Subsidiary as a result of a transaction permitted
hereunder.

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Subsidiary Guarantor from its obligations under the Guaranty pursuant to
this Section 9.10.

ARTICLE X.

MISCELLANEOUS

10.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent to any departure by the Company or
any other Loan Party therefrom, shall be effective unless in writing signed by
the Required Lenders and the Company or the applicable Loan Party, as the case
may be, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:

(a) waive any condition set forth in Section 4.01(a) without the written consent
of each Lender;

(b) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender;

(c) postpone any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees or other amounts due to the Revolving
Lenders (or any of them) hereunder or under any other Loan Document without the
written consent of each Revolving Lender directly affected thereby;

(d) postpone any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees or other amounts due to the Term Loan
Lenders (or any of them) hereunder or under any other Loan Document without the
written consent of each Term Loan Lender directly affected thereby;

 

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(e) reduce the principal of, or the rate of interest specified herein on, any
Loan or L/C Borrowing, or (subject to clause (iv) of the second proviso to this
Section 10.01) any fees or other amounts payable hereunder or under any other
Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of (i) the Required Lenders
shall be necessary to amend the definition of “Default Rate”, (ii) the Required
Revolving Lenders shall be necessary to waive any obligation of any Borrower to
pay interest or Letter of Credit Fees at the Default Rate under the Revolving
Credit Facility, (iii) the Required Term Loan Lenders shall be necessary to
waive any obligation of any Borrower to pay interest at the Default Rate under
the Term Loan Facility, or (iv) the Required Lenders to amend any financial
covenant hereunder (or any defined term used therein) even if the effect of such
amendment would be to reduce the rate of interest on any Loan or L/C Borrowing
or to reduce any fee payable hereunder;

(f) change (i) Section 2.14 or Section 8.03 in a manner that would alter the pro
rata sharing of payments required thereby without the written consent of each
Lender or (ii) the order of application of any reduction in the Commitments or
any prepayment of Loans among the Facilities from the application thereof set
forth in the applicable provisions of Section 2.06A(c), 2.07(b) or 2.07(c),
respectively, in any manner that materially and adversely affects the Lenders
under a Facility without the written consent of (i) if such Facility is the Term
Loan Facility, the Required Term Loan Lenders, and (ii) if such Facility is the
Revolving Credit Facility, the Required Revolving Lenders;

(g) amend Section 1.07 or the definition of “Alternative Currency” without the
written consent of each Revolving Lender;

(h) change any provision of this Section or the definition of “Required
Lenders”, “Required Revolving Lender” or “Required Term Loan Lender” or any
other provision hereof specifying the number or percentage of Lenders required
to amend, waive or otherwise modify any rights hereunder or make any
determination or grant any consent hereunder without the written consent of each
Lender;

(i) be effected that would enable any Borrower to satisfy any condition to a
Revolving Borrowing contained in Section 4.02 hereof which, but for such
amendment, waiver or consent would not otherwise be satisfied, shall be
effective to require the Revolving Lenders or the L/C Issuer to make any
additional Revolving Loan or to issue any additional or renew any existing
Letter of Credit, unless and until the Required Revolving Lenders shall consent
thereto;

(j) release the Company from the Guaranty, or release all or substantially all
of the Subsidiaries from the Guaranty, without the written consent of each
Lender;

(k) release all or substantially all of the Collateral in any transaction or
series of related transactions; or

(l) impose any greater restriction on the ability of any Lender under a Facility
to assign any of its rights or obligations hereunder without the written consent
of (i) if such Facility is the Term Loan Facility, the Required Term Loan
Lenders, and (ii) if such Facility is the Revolving Credit Facility, the
Required Revolving Lenders;

 

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and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuer under this Agreement or any Issuer
Document relating to any Letter of Credit issued or to be issued by it; (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Swing
Line Lender in addition to the Lenders required above, affect the rights or
duties of the Swing Line Lender under this Agreement; (iii) no amendment, waiver
or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; and
(iv) the Fee Letter may be amended, or rights or privileges thereunder waived,
in a writing executed only by the parties thereto. Notwithstanding anything to
the contrary herein, no Defaulting Lender shall have any right to approve or
disapprove any amendment, waiver or consent hereunder, except that the
Commitment of such Lender may not be increased or extended without the consent
of such Lender.

10.02 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopier as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:

(i) if to the Company, a Guarantor, the Administrative Agent, the L/C Issuer or
the Swing Line Lender, to the address, telecopier number, electronic mail
address or telephone number specified for such Person on Schedule 10.02; and

(ii) if to any other Lender, to the address, telecopier number, electronic mail
address or telephone number specified in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in subsection (b) below, shall be effective as provided in such
subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders
and the L/C Issuer hereunder may be delivered or furnished by electronic
communication (including e mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender or the L/C Issuer pursuant to Article
II if such Lender or the L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Company
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.

 

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Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to any Borrower, any Lender, the L/C Issuer
or any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of any Borrower’s or
the Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities or
expenses are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no event shall any
Agent Party have any liability to any Borrower, any Lender, the L/C Issuer or
any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).

(d) Change of Address, Etc. Each of the Borrowers, the Administrative Agent, the
L/C Issuer and the Swing Line Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
other parties hereto. Each other Lender may change its address, telecopier or
telephone number for notices and other communications hereunder by notice to the
Company, the Administrative Agent, the L/C Issuer and the Swing Line Lender. In
addition, each Lender agrees to notify the Administrative Agent from time to
time to ensure that the Administrative Agent has on record (i) an effective
address, contact name, telephone number, telecopier number and electronic mail
address to which notices and other communications may be sent and (ii) accurate
wire instructions for such Lender.

(e) Reliance by Administrative Agent, L/C Issuer and Lenders. The Administrative
Agent, the L/C Issuer and the Lenders shall be entitled to rely and act upon any
notices (including telephonic Revolving Loan Notices, Term Loan Interest Rate
Selection Notices and Swing Line Loan Notices) purportedly given by or on behalf
of any Borrower even if (i) such notices were not made in a manner specified
herein, were incomplete or were not preceded or

 

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followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
The Company shall indemnify the Administrative Agent, the L/C Issuer, each
Lender and the Related Parties of each of them from all losses, costs, expenses
and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of any Borrower. All telephonic notices to and
other telephonic communications with the Administrative Agent may be recorded by
the Administrative Agent, and each of the parties hereto hereby consents to such
recording.

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

10.04 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Company shall pay (i) all reasonable out of pocket
expenses incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel, including local counsel,
for the Administrative Agent), in connection with the syndication of the credit
facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out of pocket expenses incurred by the L/C
Issuer in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all out of
pocket expenses incurred by the Administrative Agent, any Lender or the L/C
Issuer (including the fees, charges and disbursements of any counsel for the
Administrative Agent, any Lender or the L/C Issuer), in connection with the
enforcement or protection of its rights (A) in connection with this Agreement
and the other Loan Documents, including its rights under this Section, or (B) in
connection with the Loans made or Letters of Credit issued hereunder, including
all such out of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

(b) Indemnification by the Company. The Company shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and the L/C
Issuer, and each Related Party of any of the foregoing Persons (each such Person
being called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses (including
the fees, charges and disbursements of any counsel for any Indemnitee), incurred
by any Indemnitee or asserted against any Indemnitee by any third party or by
any Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder, the consummation of the Transaction and all other transactions
contemplated hereby or thereby, or, in the case of the Administrative Agent (and
any sub-agent thereof) and its Related Parties only, the administration of this
Agreement

 

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and the other Loan Documents, (ii) any Loan or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C Issuer
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by any Borrower or
any of its Subsidiaries, or any Environmental Liability related in any way to
any Borrower or any of its Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Company or any other Loan Party, and regardless of whether any
Indemnitee is a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or willful misconduct of such Indemnitee or (y) result from a claim
brought by the Company or any other Loan Party against an Indemnitee for breach
in bad faith of such Indemnitee’s obligations hereunder or under any other Loan
Document, if the Company or such other Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.

(c) Reimbursement by Lenders. To the extent that the Company for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof), the L/C Issuer or any Related Party of any of the foregoing, each
Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount,
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent (or any such sub-agent) or the L/C Issuer in
its capacity as such, or against any Related Party of any of the foregoing
acting for the Administrative Agent (or any such sub-agent) or L/C Issuer in
connection with such capacity. The obligations of the Lenders under this
subsection (c) are subject to the provisions of Section 2.13(d).

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, no Borrower shall assert, and hereby waives, any claim against
any Indemnitee, on any theory of liability, for special, indirect, consequential
or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement, any other Loan Document or
any agreement or instrument contemplated hereby, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof. No Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission systems
in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

 

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(e) Payments. All amounts due under this Section shall be payable not later than
ten Business Days after demand therefor.

(f) Survival. The agreements in this Section shall survive the resignation of
the Administrative Agent, the L/C Issuer and the Swing Line Lender, the
replacement of any Lender, the termination of the Aggregate Commitments and the
repayment, satisfaction or discharge of all the other Obligations.

10.05 Payments Set Aside. To the extent that any payment by or on behalf of any
Borrower is made to the Administrative Agent, the L/C Issuer or any Lender, or
the Administrative Agent, the L/C Issuer or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by the
Administrative Agent, the L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
and the L/C Issuer severally agrees to pay to the Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
applicable Overnight Rate from time to time in effect, in the applicable
currency of such recovery or payment. The obligations of the Lenders and the L/C
Issuer under clause (b) of the preceding sentence shall survive the payment in
full of the Obligations and the termination of this Agreement.

10.06 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither any Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in
accordance with the provisions of subsection (d) of this Section, or (iii) by
way of pledge or assignment of a security interest subject to the restrictions
of subsection (f) of this Section (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby,
Participants to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

(b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Revolving Credit Commitment and the Revolving
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this subsection (b), participations in L/C Obligations and in Swing Line Loans)
at the time owing to it or its Pro Rata Term Share of the Term Loan at the time
owing to it); provided that any such assignment shall be subject to the
following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum
amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $5,000,000, in the case of any assignment in
respect of the Revolving Credit Facility, or $1,000,000, in the case of any
assignment in respect of the Term Loan Facility, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Company otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single assignee (or to an assignee and members
of its Assignee Group) will be treated as a single assignment for purposes of
determining whether such minimum amount has been met.

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not apply to the Swing Line
Lender’s rights and obligations in respect of Swing Line Loans.

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Company (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender,
an Affiliate of a Lender or an Approved Fund;

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required if such assignment is to a Person that is
not a Lender, an Affiliate of such Lender or an Approved Fund with respect to
such Lender;

 

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(C) the consent of the L/C Issuer (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment that increases the obligation
of the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding); and

(D) the consent of the Swing Line Lender (such consent not to be unreasonably
withheld or delayed) shall be required for any assignment.

(iv) Assignment and Assumption. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee in the amount of $3,500; provided, however,
that the Administrative agent may, in its sole discretion, elect to waive such
proceeding and recordation fee in the case of any assignment. The assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire

(v) No Assignment to Company. No such assignment shall be made to the Company or
any of the Company’s Affiliates or Subsidiaries.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, each Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

(c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at the Administrative Agent’s Office a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitments of,
and principal amounts of the Loans and L/C Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrowers, the Administrative Agent
and the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by each of the Borrowers and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

 

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(d) Participations. Any Lender may at any time, without the consent of, or
notice to, any Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Company or any of the Company’s
Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such
Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations and/or Swing Line Loans) owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrowers, the
Administrative Agent, the Lenders and the L/C Issuer shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.

Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, each Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.14 as though it were a
Lender.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Company’s prior written consent. A Participant
shall not be entitled to the benefits of Section 3.01 unless the Company is
notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrowers, to comply with Sections 3.01(e) and
(f) as though it were a Lender.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note(s), if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank; provided
that no such pledge or assignment shall release such Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.

(g) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be
deemed to include electronic signatures or the keeping of records in electronic
form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in
any applicable law, including the Federal Electronic Signatures in Global and
National Commerce Act, the New York State Electronic Signatures and Records Act,
or any other similar state laws based on the Uniform Electronic Transactions
Act.

 

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(h) Resignation as L/C Issuer or Swing Line Lender after Assignment.
Notwithstanding anything to the contrary contained herein, if at any time Bank
of America assigns all of its Commitment and Loans pursuant to subsection
(b) above, Bank of America may, (i) upon 30 days’ notice to the Company and the
Lenders, resign as L/C Issuer and/or (ii) upon 30 days’ notice to the Company,
resign as Swing Line Lender. In the event of any such resignation as L/C Issuer
or Swing Line Lender, the Company shall be entitled to appoint from among the
Revolving Lenders a successor L/C Issuer or Swing Line Lender hereunder;
provided, however, that no failure by the Company to appoint any such successor
shall affect the resignation of Bank of America as L/C Issuer or Swing Line
Lender, as the case may be. If Bank of America resigns as L/C Issuer, it shall
retain all the rights, powers, privileges and duties of the L/C Issuer hereunder
with respect to all Letters of Credit outstanding as of the effective date of
its resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Revolving Lenders to make Base Rate
Revolving Loans or fund risk participations in Unreimbursed Amounts pursuant to
Section 2.04(c)). If Bank of America resigns as Swing Line Lender, it shall
retain all the rights of the Swing Line Lender provided for hereunder with
respect to Swing Line Loans made by it and outstanding as of the effective date
of such resignation, including the right to require the Revolving Lenders to
make Base Rate Revolving Loans or fund risk participations in outstanding Swing
Line Loans pursuant to Section 2.05(c). Upon the appointment of a successor L/C
Issuer and/or Swing Line Lender, (a) such successor shall succeed to and become
vested with all of the rights, powers, privileges and duties of the retiring L/C
Issuer or Swing Line Lender, as the case may be, and (b) the successor L/C
Issuer shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America to effectively assume the obligations of Bank of
America with respect to such Letters of Credit.

10.07 Treatment of Certain Information; Confidentiality. Each of the
Administrative Agent, the Lenders and the L/C Issuer agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and representatives
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to a Borrower and its obligations, (g) with the
consent of the Company or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or
(y) becomes available to the Administrative Agent, any Lender, the L/C Issuer or
any of their respective Affiliates on a nonconfidential basis from a source
other than the Company.

 

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For purposes of this Section, “Information” means all information received from
the Company or any Subsidiary relating to the Company or any Subsidiary or any
of their respective businesses, other than any such information that is
available to the Administrative Agent, any Lender or the L/C Issuer on a
nonconfidential basis prior to disclosure by the Company or any Subsidiary,
provided that, in the case of information received from the Company or any
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.

Each of the Administrative Agent, the Lenders and the L/C Issuer acknowledges
that (a) the Information may include material non-public information concerning
the Borrower or a Subsidiary, as the case may be, (b) it has developed
compliance procedures regarding the use of material non-public information and
(c) it will handle such material non-public information in accordance with
applicable Law, including Federal and state securities Laws.

10.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, the L/C Issuer and each of their respective Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender, the L/C Issuer or any such Affiliate to or for the credit or the account
of any Borrower or any other Loan Party against any and all of the obligations
of such Borrower or such Loan Party now or hereafter existing under this
Agreement or any other Loan Document to such Lender or the L/C Issuer,
irrespective of whether or not such Lender or the L/C Issuer shall have made any
demand under this Agreement or any other Loan Document and although such
obligations of such Borrower or such Loan Party may be contingent or unmatured
or are owed to a branch or office of such Lender or the L/C Issuer different
from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender, the L/C Issuer and their respective
Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender, the L/C Issuer or their
respective Affiliates may have. Each Lender and the L/C Issuer agrees to notify
the Company and the Administrative Agent promptly after any such setoff and
application, provided that the failure to give such notice shall not affect the
validity of such setoff and application; and provided further, however, that
each Lender hereby unconditionally and irrevocably agrees that, without first
obtaining prior written consent of the Administrative Agent, it shall not, and
shall not authorize, cause or permit any of its Affiliates to, (i) exercise or
attempt to exercise any such right of set-off or other recourse against any bank
account or other monies of the Company which may be in the possession of or
under the control of any Lender, or any such Affiliate, on account of, in
connection with, in anticipation of, or following any Event of Default, or
(ii) commence any other action or proceeding of any nature, including any
judicial proceeding, for or in respect of the enforcement against the Borrower
of any of the Obligations. The provisions of this Section shall be and remain in
effect for so long as any security held for any of the Obligations consists of
real property situated in the State of California or interests in such real
property.

 

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10.09 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Company. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

10.10 Counterparts; Integration; Effectiveness. This Agreement and the other
Loan Documents may be executed in counterparts (and by different parties hereto
in different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. This Agreement
and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement and the other Loan
Documents shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto. Delivery of an executed counterpart of a signature
page of this Agreement and any other Loan Document by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement and
the other Loan Documents.

10.11 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

10.12 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

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10.13 Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if any Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender is a Defaulting Lender or if any Lender is a
Restricted Lender (as defined below), then the Company may, at its sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:

(a) the Company shall have paid to the Administrative Agent the assignment fee
specified in Section 10.06(b);

(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Company or applicable Designated Subsidiary (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation
under Section 3.04 or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter;

(d) in the case of any such assignment by a Restricted Lender, the assignee must
have approved in writing the substance of the amendment, waiver or consent which
caused the assignor to be a Restricted Lender; and

(e) such assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Company to require such assignment and delegation
cease to apply.

For the purposes of this Section 10.13, a “Restricted Lender” means a Lender
that fails to approve an amendment, waiver or consent requested by the Loan
Parties pursuant to Section 10.01 that has received the written approval of not
less than the Required Lenders but also requires the approval of such Lender.

10.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION. EACH BORROWER AND EACH OTHER LOAN PARTY
IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE
NONEXCLUSIVE JURISDICTION OF THE

 

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COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED
STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE
COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT
OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY
AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD
AND DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR THE L/C ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR ANY OTHER LOAN PARTY OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c) WAIVER OF VENUE. EACH BORROWER AND OTHER LOAN PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH
ACTION OR PROCEEDING IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW. Each of the Designated Borrowers
hereby irrevocably appoints the Company, and the Company accepts the
appointment, to act as its agent for the purpose of receiving, accepting and
acknowledging service on its behalf in any legal process issued in connection
with this Agreement or any other Loan Document. Each of the Designated Borrowers
hereby gives the Company an irrevocable power of attorney to receive, accept and
acknowledge, on its behalf, any service of process, writ, summons or notice sent
in connection with this Agreement or any other Loan Document to any Designated
Borrower.

10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR

 

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

10.16 No advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby, each Borrower and each other Loan Party
acknowledges and agrees, and acknowledges its Affiliates’ understanding, that:
(i) the credit facilities provided for hereunder and any related arranging or
other services in connection therewith (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document)
are an arm’s-length commercial transaction between the Borrowers, the Loan
Parties and their respective Affiliates, on the one hand, and the Administrative
Agent and the Arranger, on the other hand, the Borrowers and the Loan Parties
are capable of evaluating and understanding and understands and accept the
terms, risks and conditions of the transactions contemplated hereby and by the
other Loan Documents (including any amendment, waiver or other modification
thereof or thereof); (ii) in connection with the process leading to such
transaction, the Administrative Agent and the Arranger each is and has been
acting solely as a principal and is not the financial advisor, agent or
fiduciary, for any Borrower, any Loan Party or any of their respective
Affiliates, stockholders, creditors or employees or any other Person;
(iii) neither the Administrative Agent nor the Arranger has assumed or will
assume an advisory, agency or fiduciary responsibility in favor of any Borrower
or any Loan Party with respect to any of the transactions contemplated hereby or
the process leading thereto, including with respect to any amendment, waiver or
other modification hereof or of any other Loan Document (irrespective of whether
the Administrative Agent or the Arranger has advised or is currently advising
any of the Borrowers, the other Loan Parties or their respective Affiliates on
other matters) and neither the Administrative Agent nor the Arranger has any
obligation to any of the Borrowers, the other Loan Parties or their respective
Affiliates with respect to the transactions contemplated hereby except those
obligations expressly set forth herein and in the other Loan Documents; (iv) the
Administrative Agent and the Arranger and their respective Affiliates may be
engaged in a board range of transactions that involve interests that differ from
those of the Borrowers and their respective Affiliates, and neither the
Administrative Agent nor the Arranger has any obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and
(v) the Administrative Agent and the Arranger have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to any of
the transactions contemplated hereby (including any amendment, waiver or other
modification hereof or of any other Loan Document) and each Borrower and each
other Loan Party has consulted its own legal, accounting, regulatory and tax
advisors to the extent it has deemed appropriate. Each Borrower and each Loan
Party hereby waive and release, to the fullest extent permitted by law, any
claims that they may have against the Administrative Agent and the Arranger with
respect to any breach or alleged breach of agency or fiduciary duty.

 

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10.17 USA PATRIOT Act Notice. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrowers that pursuant to the requirements
of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record information that
identifies the Borrowers, which information includes the name and address of
each Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify such Borrower in accordance
with the Act.

10.18 Judgment Currency. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due hereunder or any other Loan Document
in one currency into another currency, the rate of exchange used shall be that
at which in accordance with normal banking procedures the Administrative Agent
could purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of each Borrower
in respect of any such sum due from it to the Administrative Agent or the
Lenders hereunder or under the other Loan Documents shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than that in which such
sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent of any sum
adjudged to be so due in the Judgment Currency, the Administrative Agent may in
accordance with normal banking procedures purchase the Agreement Currency with
the Judgment Currency. If the amount of the Agreement Currency so purchased is
less than the sum originally due to the Administrative Agent from any Borrower
in the Agreement Currency, such Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or the
Person to whom such obligation was owing against such loss. If the amount of the
Agreement Currency so purchased is greater than the sum originally due to the
Administrative Agent in such currency, the Administrative Agent agrees to return
the amount of any excess to such Borrower (or to any other Person who may be
entitled thereto under applicable law).

10.19 Waiver of Immunity. TO THE EXTENT THAT ANY BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER FROM SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
OF EXECUTION OF A JUDGMENT, EXECUTION OR OTHERWISE), SUCH BORROWER HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS CREDIT
AGREEMENT.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

KYPHON INC. By:  

/s/ Arthur T. Taylor

Name:   Arthur T. Taylor Title:   Vice President, Chief Operating Officer By:  

/s/ Maureen L. Lamb

Name:   Maureen L. Lamb Title:   Vice President, Chief Financial Officer

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BANK OF AMERICA, N.A., as

Administrative Agent

By:

 

/s/ Tiffany Shin

Name:

  Tiffany Shin

Title:

  Assistant Vice President

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BANK OF AMERICA, N.A., as a Lender, L/C

Issuer and Swing Line Lender

By:

 

/s/ John Plecque

Name:

  John Plecque

Title:

  Senior Vice President