Exhibit 10.1

Execution Version

 

 

 

CREDIT, SECURITY AND GUARANTY AGREEMENT

dated as of December 23, 2016

by and among

WRIGHT MEDICAL GROUP N.V.,

as Guarantor

WRIGHT MEDICAL GROUP, INC.

and

certain other direct and indirect subsidiaries of Wright Medical Group N.V.
listed on the signature

pages hereto,

each as a Borrower, and collectively as the Borrowers,

and

MIDCAP FINANCIAL TRUST,

as Agent and as a Lender,

and

THE ADDITIONAL LENDERS

FROM TIME TO TIME PARTY HERETO

 

LOGO [g322920g1229081135586.jpg]

 

 

 

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

         Page  

Article 1 - DEFINITIONS

     1   

Section 1.1

 

Certain Defined Terms

     1   

Section 1.2

 

Accounting Terms and Determinations

     43   

Section 1.3

 

Other Definitional and Interpretive Provisions

     44   

Section 1.4

 

Time is of the Essence

     44   

Article 2 - LOANS

     44   

Section 2.1

 

Loans

     44   

Section 2.2

 

Interest, Interest Calculations and Certain Fees

     47   

Section 2.3

 

Notes

     49   

Section 2.4

 

Reserved

     49   

Section 2.5

 

Reserved

     49   

Section 2.6

 

General Provisions Regarding Payment; Loan Account

     49   

Section 2.7

 

Maximum Interest

     49   

Section 2.8

 

Taxes; Capital Adequacy

     50   

Section 2.9

 

Appointment of Borrower Representative

     54   

Section 2.10

 

Joint and Several Liability; Rights of Contribution; Subordination and
Subrogation

     54   

Section 2.11

 

Collections and Lockbox Account

     56   

Section 2.12

 

Termination; Restriction on Termination

     58   

Article 3 - REPRESENTATIONS AND WARRANTIES

     59   

Section 3.1

 

Existence and Power

     59   

Section 3.2

 

Organization and Governmental Authorization; No Contravention

     59   

Section 3.3

 

Binding Effect

     60   

Section 3.4

 

Capitalization

     60   

Section 3.5

 

Financial Information

     60   

Section 3.6

 

Litigation

     60   

Section 3.7

 

Ownership of Property

     60   

Section 3.8

 

No Default

     61   

Section 3.9

 

Labor Matters

     61   

Section 3.10

 

Regulated Entities

     61   

Section 3.11

 

Margin Regulations

     61   

Section 3.12

 

Compliance With Laws; Anti-Terrorism Laws

     61   

Section 3.13

 

Taxes

     61   

Section 3.14

 

Compliance with ERISA

     62   

Section 3.15

 

Consummation of Operative Documents; Brokers

     62   

Section 3.16

 

Reserved

     63   

Section 3.17

 

Material Contracts

     63   

Section 3.18

 

Compliance with Environmental Requirements; No Hazardous Materials

     63   

Section 3.19

 

Intellectual Property and License Agreements

     63   

Section 3.20

 

Solvency

     64   

Section 3.21

 

Full Disclosure

     64   

Section 3.22

 

[Reserved]

     64   

Section 3.23

 

Subsidiaries

     64   

Section 3.24

 

Reserved

     64   

Section 3.25

  Accuracy of Schedules      64   

Section 3.26

  FCPA and Anti-Corruption Law      64   

 

i

--------------------------------------------------------------------------------

Article 4 - AFFIRMATIVE COVENANTS

     65   

Section 4.1

  Financial Statements and Other Reports      65   

Section 4.2

  Payment and Performance of Obligations      66   

Section 4.3

  Maintenance of Existence      66   

Section 4.4

  Maintenance of Property; Insurance      66   

Section 4.5

  Compliance with Laws and Material Contracts      67   

Section 4.6

  Inspection of Property, Books and Records      68   

Section 4.7

  Use of Proceeds      68   

Section 4.8

  Estoppel Certificates      68   

Section 4.9

  Notices of Material Contracts, Litigation and Defaults      68   

Section 4.10

  Hazardous Materials; Remediation      70   

Section 4.11

  Further Assurances      70   

Section 4.12

  Reserved      72   

Section 4.13

  Power of Attorney      72   

Section 4.14

  Borrowing Base Collateral Administration      72   

Section 4.15

  Schedule Updates      73   

Section 4.16

  Intellectual Property and Licensing      73   

Section 4.17

  Regulatory Reporting and Covenants      73   

Section 4.18

  Anti-Corruption Laws      74   

Article 5 - NEGATIVE COVENANTS

     74   

Section 5.1

  Debt; Contingent Obligations      74   

Section 5.2

  Liens      74   

Section 5.3

  Distributions      75   

Section 5.4

  Restrictive Agreements      75   

Section 5.5

  Payments and Modifications of Debt      75   

Section 5.6

  Consolidations, Mergers and Sales of Assets; Change in Control      76   

Section 5.7

  Purchase of Assets, Investments      77   

Section 5.8

  Transactions with Affiliates      77   

Section 5.9

  Modification of Organizational Documents      77   

Section 5.10

  Modification of Certain Agreements      77   

Section 5.11

  Conduct of Business      77   

Section 5.12

  Excluded Subsidiaries; Joint Ventures      78   

Section 5.13

  Limitation on Sale and Leaseback Transactions      78   

Section 5.14

  Deposit Accounts and Securities Accounts; Payroll and Benefits Accounts     
78   

Section 5.15

  Compliance with Anti-Terrorism Laws      79   

Section 5.16

  Change in Accounting      79   

Section 5.17

  Parent      79   

Article 6 - FINANCIAL COVENANTS

     79   

Section 6.1

  Additional Defined Terms      79   

Section 6.2

  Minimum Net Revenue      80   

Section 6.3

  Cash Requirements      81   

Section 6.4

  Evidence of Compliance      81   

 

ii

--------------------------------------------------------------------------------

Article 7 - CONDITIONS

     81   

Section 7.1

  Conditions to Closing      81   

Section 7.2

  Conditions to Each Loan      82   

Section 7.3

  Searches      82   

Section 7.4

  Post Closing Requirements      82   

Article 8 – REGULATORY MATTERS

     82   

Section 8.1

  Representations and Warranties, Covenants      82   

Article 9 - SECURITY AGREEMENT

     84   

Section 9.1

  Generally      84   

Section 9.2

  Representations and Warranties and Covenants Relating to Collateral      84   

Article 10 - EVENTS OF DEFAULT

     88   

Section 10.1

  Events of Default      88   

Section 10.2

  Acceleration and Suspension or Termination of Revolving Loan Commitment     
91   

Section 10.3

  UCC Remedies      91   

Section 10.4

  Reserved      93   

Section 10.5

  Default Rate of Interest      93   

Section 10.6

  Setoff Rights      93   

Section 10.7

  Application of Proceeds      93   

Section 10.8

  Waivers      94   

Section 10.9

  Injunctive Relief      96   

Section 10.10

  Marshalling; Payments Set Aside      96   

Article 11 - AGENT

     96   

Section 11.1

  Appointment and Authorization      96   

Section 11.2

  Agent and Affiliates      97   

Section 11.3

  Action by Agent      97   

Section 11.4

  Consultation with Experts      97   

Section 11.5

  Liability of Agent      97   

Section 11.6

  Indemnification      97   

Section 11.7

  Right to Request and Act on Instructions      98   

Section 11.8

  Credit Decision      98   

Section 11.9

  Collateral Matters      98   

Section 11.10

  Agency for Perfection      98   

Section 11.11

  Notice of Default      98   

Section 11.12

  Assignment by Agent; Resignation of Agent; Successor Agent      99   

Section 11.13

  Payment and Sharing of Payment      99   

Section 11.14

  Right to Perform, Preserve and Protect      102   

Section 11.15

  Reserved      102   

Section 11.16

  Amendments and Waivers      102   

Section 11.17

  Assignments and Participations      103   

Section 11.18

  Funding and Settlement Provisions Applicable When Non-Funding Lenders Exist   
  106   

Section 11.19

  Reserved      107   

Section 11.20

  Definitions      107   

 

iii

--------------------------------------------------------------------------------

Article 12 – Guaranty

     107   

Section 12.1

  Guaranty      107   

Section 12.2

 

Payment of Amounts Owed

     108   

Section 12.3

 

Certain Waivers by Guarantor

     108   

Section 12.4

 

Guarantor’s Obligations Not Affected by Modifications of Financing Documents

     110   

Section 12.5

 

Reinstatement; Deficiency

     110   

Section 12.6

 

Subordination of Borrowers’ Obligations to Guarantors; Claims in Bankruptcy

     110   

Section 12.7

 

Maximum Liability

     111   

Section 12.8

 

Limitation on Dutch Guarantors

     111   

Section 12.9

 

Guarantor’s Investigation

     111   

Section 12.10

 

Termination

     112   

Section 12.11

 

Representative

     112   

Article 13 MISCELLANEOUS

     112   

Section 13.1

 

Survival

     112   

Section 13.2

 

No Waivers

     112   

Section 13.3

 

Notices

     112   

Section 13.4

 

Severability

     113   

Section 13.5

 

Headings

     113   

Section 13.6

 

Confidentiality

     113   

Section 13.7

 

Waiver of Consequential and Other Damages

     114   

Section 13.8

 

GOVERNING LAW; SUBMISSION TO JURISDICTION

     114   

Section 13.9

 

WAIVER OF JURY TRIAL

     115   

Section 13.10

 

Publication; Advertisement

     115   

Section 13.11

 

Counterparts; Integration

     116   

Section 13.12

 

No Strict Construction

     116   

Section 13.13

 

Lender Approvals

     116   

Section 13.14

 

Expenses; Indemnity

     116   

Section 13.15

 

Reserved

     118   

Section 13.16

 

Reinstatement

     118   

Section 13.17

 

Successors and Assigns

     118   

Section 13.18

 

USA PATRIOT Act Notification

     118   

Section 13.19

 

Process Agent

     118   

Section 13.20

 

Other Currency

     119   

 

 

iv

--------------------------------------------------------------------------------

CREDIT, SECURITY AND GUARANTY AGREEMENT

THIS CREDIT, SECURITY AND GUARANTY AGREEMENT (as the same may be amended,
supplemented, restated or otherwise modified from time to time, the “Agreement”)
is dated as of December 23, 2016 by and among WRIGHT MEDICAL GROUP N.V., a
public limited liability company organized and existing under the laws of the
Netherlands with its corporate seat (statutaire zetel) in Amsterdam and
registered with the Dutch trade register under number 34250781, as a Guarantor
(“Parent”), WRIGHT MEDICAL GROUP, INC., a Delaware corporation (“Wright”), each
of the direct and indirect Subsidiaries of Parent set forth on the signature
pages hereto and certain other Subsidiaries of Parent that may hereafter be
added to this Agreement (individually as a “Borrower”, and collectively Wright
and any entities that become party hereto as Borrower and each of their
successors and permitted assigns, the “Borrowers”), MIDCAP FINANCIAL TRUST, a
Delaware statutory trust, individually as a Lender, and as Agent, and the
financial institutions or other entities from time to time parties hereto, each
as a Lender.

RECITALS

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

AGREEMENT

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

ARTICLE 1 - DEFINITIONS

Section 1.1    Certain Defined Terms. The following terms have the following
meanings:

“2017 Cash Convertible Note Documents” means the 2017 Cash Convertible Notes,
the 2017 Senior Note Indenture and each other document or agreement from time to
entered into in connection with the foregoing, including, for the avoidance of
doubt, the Cash Convertible Note Hedging Arrangements, in each case, as the same
may be amended, restated, refinanced, supplemented or otherwise modified in
connection with a Permitted 2017 Cash Convertible Note Refinancing.

“2017 Cash Convertible Notes” means those certain 2.0% cash convertible senior
unsecured notes, governed by the terms of a base indenture (the “2017 Senior
Notes Indenture”), between Wright Medical Group, Inc. and The Bank of New York
Mellon Trust Company, N.A., as trustee, entered into as of August 31, 2012, as
the same may be amended, restated, refinanced, supplemented or otherwise
modified in connection with a Permitted 2017 Cash Convertible Note Refinancing.

“2020 Cash Convertible Note Documents” means the 2020 Cash Convertible Notes,
the 2020 Senior Note Indenture and each other document or agreement from time to
entered into in connection with the foregoing, including, for the avoidance of
doubt, the Cash Convertible Note Hedging Arrangements, as the same may be
amended, restated, refinanced, supplemented or otherwise modified in connection
with a Permitted 2020 Cash Convertible Note Refinancing.

“2020 Cash Convertible Notes” means those certain 2.0% cash convertible senior
unsecured notes, governed by the terms of a base indenture, as supplemented by
the supplemental indenture relating to the 2.0% cash convertible senior
unsecured notes (together, the “2020 Senior Notes Indenture”), among Wright
Medical Group, Inc., a Delaware corporation, as issuer, with respect to the
supplemental

 

1

--------------------------------------------------------------------------------

indenture only, Wright Medical Group N.V., a Dutch public limited company
(naamloze vennootschap), as guarantor, and The Bank of New York Mellon Trust
Company, N.A., as trustee, entered into as of February 13, 2015 and November 24,
2015, respectively, as the same may be amended, restated, refinanced,
supplemented or otherwise modified in connection with a Permitted 2020 Cash
Convertible Note Refinancing.

“2021 Cash Convertible Note Documents” means the 2021 Cash Convertible Notes,
the 2021 Senior Note Indenture and each other document or agreement from time to
entered into in connection with the foregoing, including, for the avoidance of
doubt, the Cash Convertible Note Hedging Arrangements, in each case, as the same
may be amended, restated, refinanced, supplemented or otherwise modified in
connection with a Permitted 2021 Cash Convertible Note Refinancing.

“2021 Cash Convertible Notes” means those certain 2.25% cash convertible senior
unsecured notes, governed by the terms of a base indenture (the “2021 Senior
Notes Indenture”), between Wright Medical Group, N.V., as issuer and The Bank of
New York Mellon Trust Company, N.A., as trustee, entered into as of May 20,
2016, as the same may be amended, restated, refinanced, supplemented or
otherwise modified in connection with a Permitted 2021 Cash Convertible Note
Refinancing.

“Acceleration Event” means the occurrence of an Event of Default (a) in respect
of which Agent has declared all or any portion of the Obligations to be
immediately due and payable pursuant to Section 10.2, (b) pursuant to
Section 10.1(a), and in respect of which Agent has suspended or terminated the
Revolving Loan Commitment pursuant to Section 10.2, and/or (c) pursuant to
either Section 10.1(e) and/or Section 10.1(f).

“Access Agreement Location” has the meaning set forth in Section 4.11(c).

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

“Accounts” means, collectively, (a) any right to payment of a monetary
obligation, whether or not earned by performance, (b) without duplication, any
“account” (as defined in the UCC), any accounts receivable (whether in the form
of payments for services rendered or goods sold, rents, license fees or
otherwise), any “health-care-insurance receivables” (as defined in the UCC), any
“payment intangibles” (as defined in the UCC) and all other rights to payment
and/or reimbursement of every kind and description, whether or not earned by
performance, (c) all information and data compiled or derived by any Borrower or
to which any Borrower is entitled in respect of or related to the foregoing, and
(d) all proceeds of any of the foregoing.

“Acquisition” means any transaction or series of related transactions for the
purpose of or resulting, directly or indirectly, in (a) the acquisition of all
or substantially all of the assets of a Person, or of any business or division
of a Person, (b) the acquisition of in excess of fifty percent (50%) of the
equity interests of any Person or otherwise causing any Person to become a
Subsidiary of a Credit Party, or (c) a merger or consolidation or any other
combination with another Person.

“Additional Tranche” means an additional amount of Revolving Loan Commitment
equal to $100,000,000 (it being acknowledged that multiple Additional Tranches
are permitted pursuant to Section 2.1(c) in minimum amounts of $1,000,000 each
for a total of up to $100,000,000).

“Affiliate” means, with respect to any Person, (a) any Person that directly or
indirectly controls such Person, (b) any Person which is controlled by or is
under common control with such controlling

 

2

--------------------------------------------------------------------------------

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

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

“Agreed Currency” has the meaning set forth in Section 13.20.

“Anti-Terrorism Laws” means any Laws relating to terrorism or money laundering,
including, without limitation, Executive Order No. 13224 (effective
September 24, 2001), the USA PATRIOT Act, the Laws comprising or implementing
the Bank Secrecy Act, and the Laws administered by OFAC.

“Applicable Margin” means, (a) with respect to any Revolving Loans and all other
Obligations accruing interest at the Base Rate, three and one quarter percent
(3.25%) and (b) with respect to any Revolving Loan and all other Obligations
accruing interest at the LIBOR Rate, four and one quarter percent (4.25%).

“Arlington Personal Property Leases” means (a) that certain Personal Property
Lease Agreement, dated as of December 31, 2014 by and between Wright Medical
Technology, Inc., a Delaware corporation and IDB with respect to certain
personal property set forth therein and (b) that certain Personal Property Lease
Agreement, dated as of December 31, 2015 by and between Wright Medical
Technology, Inc., a Delaware corporation and IDB with respect to certain
personal property set forth therein.

“Arlington Real Property Lease” means that certain Real Property Lease
Agreement, dated as of December 31, 2014 by and between Wright Medical
Technology, Inc., a Delaware corporation and IDB with respect to certain real
property set forth therein.

“Arlington Road Premises” means the real property owned by Wright Medical
Technology, Inc. and located at 11576 Memphis Arlington Road, Arlington, TN
38002.

“Asset Disposition” means any sale, lease, license, transfer, assignment or
other consensual disposition by any Credit Party of any asset.

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

“Base LIBOR Rate” means, for each Interest Period, the rate per annum,
determined by Agent in accordance with its customary procedures, and utilizing
such electronic or other quotation sources as it considers appropriate (rounded
upwards, if necessary, to the next 1/100%), to be the rate at which Dollar
deposits (for delivery on the first day of such Interest Period or, if such day
is not a Business Day on the preceding Business Day) in the amount of $1,000,000
are offered to major banks in the London interbank market on or about 11:00 a.m.
(Eastern time) two (2) Business Days prior to the commencement of such Interest
Period, for a term comparable to such Interest Period, which determination shall
be conclusive in the absence of manifest error.

 

3

--------------------------------------------------------------------------------

“Base Rate” means a per annum rate of interest equal to the rate of interest
announced, from time to time, within Wells Fargo Bank, National Association
(“Wells Fargo”) at its principal office in San Francisco as its “prime rate,”
with the understanding that the “prime rate” is one of Wells Fargo’s base rates
(not necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publications as Wells Fargo may designate; provided, however, that
Agent may, upon prior written notice to Borrower, choose a reasonably comparable
index or source to use as the basis for the Base Rate.

“Blocked Person” means any Person: (a) with which any Lender is prohibited from
dealing or otherwise engaging in any transaction by any Anti-Terrorism Law,
(b) that is named a “specially designated national” or “blocked person” on the
most current list published by OFAC or other similar list or is named as a
“listed person” or “listed entity” on other lists made under any Anti-Terrorism
Law, or (c) is majority-owned or otherwise controlled by any such Person.

“Borrower” and “Borrowers” has the meaning set forth in the introductory
paragraph hereto.

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

“Borrowing Base” means:

(a)    the product of (A) eighty-five percent (85%) multiplied by (B) the
aggregate net amount at such time of the Eligible Domestic Accounts; plus

(b)    the lesser of (i) $10,000,000 and (ii) the product of (x) eighty-five
percent (85%) multiplied by (y) the aggregate net amount at such time of the
Eligible Foreign Accounts; plus

(c)    the lesser of (i) $10,000,000 and (ii) the product of (x) eighty-five
percent (85%) multiplied by (y) the aggregate net amount at such time of the
Eligible Unbilled Domestic Accounts; plus

(d)    the lesser of (i) $5,000,000 and (ii) sixty-five percent (65%) of the Net
Book Value of Eligible Equipment; plus

(e)    sixty-five percent (65%) multiplied by the value of the Eligible
Inventory, valued at the fully-absorbed standard cost, as adjusted by
manufacturing variances determined by GAAP and reserves; provided, that the
Borrowing Base will be automatically adjusted down, if necessary, such that the
aggregate availability from Eligible Inventory constituting Work-In-Process
shall never exceed $15,000,000; plus

(f)    the lesser of (i) $25,000,000 and (ii) sixty-five percent (65%) of the
Net Book Value of Surgical Instrumentation; minus

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

Notwithstanding the foregoing, on the Closing Date, the Borrowing Base shall not
be less than $150,000,000.    

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

 

4

--------------------------------------------------------------------------------

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

“Capital Lease” means, as to any Person, any leasing or similar arrangement
which, in accordance with GAAP, is or should be classified as a capital lease on
the balance sheet of such Person.

“Cash Convertible Note Documents” means, collectively, the 2017 Cash Convertible
Note Documents, the 2020 Cash Convertible Note Documents and the 2021 Cash
Convertible Note Documents.

“Cash Convertible Note Hedging Arrangement” means any hedging arrangements
(including the issuance and exercise of warrants in connection therewith) and
other agreements and obligations in connection with the Cash Convertible Notes,
including, but not limited to, (a) the Base Call Option Transaction under that
certain letter agreement, dated as of February 9, 2015 (as amended by the
Amendment to the Base Warrant Confirmation under that certain letter agreement,
dated as of November 24, 2015, among Deutsche Bank AG, London Branch, Deutsche
Bank Securities Inc., Wright and Parent and as further amended, restated,
amended and restated or otherwise modified from time to time), between Deutsche
Bank AG, London Branch, Deutsche Bank Securities Inc. and Wright, (b) the
Additional Call Option Transaction under that certain letter agreement, dated as
of February 10, 2015 (as amended by the Amendment to the Additional Warrant
Confirmation under that certain letter agreement, dated as of November 24, 2015,
among Deutsche Bank AG, London Branch, Deutsche Bank Securities Inc., Wright and
Parent and as further amended, restated, amended and restated or otherwise
modified from time to time), between Deutsche Bank AG, Deutsche Bank Securities
Inc., London Branch and Wright, (c) the Base Warrants and Additional Warrants,
each under a letter agreement, dated as of February 9, 2015 and February 10,
2015, respectively (each as further amended, restated, amended and restated or
otherwise modified from time to time), each between Deutsche Bank AG, London
Branch, Deutsche Bank Securities Inc. and Wright, (d) the Base Call Option
Transaction under that certain letter agreement, dated as of February 9, 2015
(as amended by the Amendment to the Base Warrant Confirmation under that certain
letter agreement, dated as of November 24, 2015, among JPMorgan Chase Bank,
National Association, Wright and Parent and as further amended, restated,
amended and restated or otherwise modified from time to time), between JPMorgan
Chase Bank, National Association and Wright, (e) the Additional Call Option
Transaction under that certain letter agreement, dated as of February 10, 2015
(as amended by the Amendment to the Additional Warrant Confirmation under that
certain letter agreement, dated as of November 24, 2015, among JPMorgan Chase
Bank, National Association, Wright and Parent and as further amended, restated,
amended and restated or otherwise modified from time to time), between JPMorgan
Chase Bank, National Association and Wright, (f) the Base Warrants and
Additional Warrants, each under a letter agreement, dated as of February 9, 2015
and February 10, 2015, respectively (each as further amended, restated, amended
and restated or otherwise modified from time to time), each between JPMorgan
Chase Bank, National Association and Wright, (g) the Base Call Option
Transaction under that certain letter agreement, dated as of February 9, 2015
(as amended by the Amendment to the Base Warrant Confirmation under that certain
letter agreement, dated as of November 24, 2015, among Wells Fargo Bank,
National Association, Wright and Parent and as further amended, restated,
amended and restated or otherwise modified from time to time), between Wells
Fargo Bank, National Association and Wright, (h) the Additional Call Option
Transaction under that certain letter agreement, dated as of February 10, 2015
(as amended by the Amendment to the Additional Warrant Confirmation under that
certain letter agreement, dated as of November 24, 2015, among Wells Fargo Bank,
National Association, Wright and Parent and as further amended, restated,
amended and restated or otherwise modified from time to time), between Wells
Fargo Bank, National Association and Wright, (i) the Base Warrants and
Additional Warrants, each under a letter agreement, dated as of

 

5

--------------------------------------------------------------------------------

February 9, 2015 and February 10, 2015, respectively (each as further amended,
restated, amended and restated or otherwise modified from time to time), each
between Wells Fargo Bank, National Association and Wright, (j) the Call Option
Transaction under that certain letter agreement, dated as of May 12, 2016 (as
further amended, restated, amended and restated or otherwise modified from time
to time), between Bank of America, N.A. and Parent and (k) the Call Option
Transaction under that certain letter agreement, dated as of May 12, 2016 (as
further amended, restated, amended and restated or otherwise modified from time
to time), between JPMorgan Chase Bank, National Association, London Branch and
Parent.

“Cash Convertible Note Indentures” means, collectively, the 2017 Senior Notes
Indenture, the 2020 Senior Notes Indenture and the 2021 Senior Notes Indenture.

“Cash Convertible Note-Related Transactions” means any or all of (a) the
conversion of the Cash Convertible Notes pursuant to Article 14 of the
respective Cash Convertible Note Indentures, (b) the repurchase of the Cash
Convertible Notes pursuant to Article 15 of the respective Cash Convertible Note
Indentures, (c) any transactions undertaken pursuant to the Cash Convertible
Note Hedging Arrangements (including adjustments to any Cash Convertible Note
Hedging Arrangement pursuant to the terms thereof, so long as such adjustment is
not otherwise prohibited pursuant to Section 5.10), and any other agreements and
obligations pursuant to the terms thereof (including the termination thereof,
except to the extent such termination results from the occurrence of any default
or event of default under the applicable Cash Convertible Note Documents) and
(d) any transactions contemplated under the warrants issued in connection with
the Cash Convertible Notes as contemplated under the documentation for such
warrants (including the mandatory repurchase or other termination thereof,
except to the extent such termination or repurchase results from the occurrence
of any default or event of default under the applicable Cash Convertible Note
Documents).

“Cash Convertible Notes” means, collectively, the 2017 Cash Convertible Notes,
the 2020 Cash Convertible Notes and the 2021 Cash Convertible Notes.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C.A. § 9601 et seq., as the same may be amended
from time to time.

“Change in Control” means any of the following events: (a) any Person or group
(within the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934 (the “Exchange Act”) as is effect on the date hereof) acting in
concert shall have acquired beneficial ownership, directly or indirectly, of, or
shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or their
acquisition of or control over, voting stock of Parent (or other securities
convertible into such voting stock) representing more than 50% of the combined
voting power of all voting stock of Parent; (b)(i) Parent ceases to own,
directly or indirectly, at least 100% of the outstanding voting stock of
Holdings, Wright and the other Borrowers on a fully diluted basis (with the
exception of any Subsidiaries of Parent permitted to be dissolved or merged to
the extent otherwise permitted by this Agreement) or (ii) Holdings ceases to
own, directly or indirectly, at least 100% of the outstanding voting stock of
Wright and the other Borrowers on a fully diluted basis (with the exception of
any Subsidiaries of Parent permitted to be dissolved or merged to the extent
otherwise permitted by this Agreement); or (c) the occurrence of a “Change of
Control”, “Change in Control”, “Fundamental Change” or terms of similar import
under the 2017 Cash Convertible Note Documents, the 2020 Cash Convertible Note
Documents and the 2021 Cash Convertible Note Documents or any other document or
instrument governing or relating to Debt of such Person having a principal
amount in excess of $25,000,000. As used herein, “beneficial ownership” shall
have the meaning provided in Rule 13d-3 of the Securities and Exchange
Commission under the Exchange Act.

 

6

--------------------------------------------------------------------------------

“Chattel Paper” means “chattel paper” as defined in Article 9 of the UCC.

“Closing Date” means the date of this Agreement.

“CMS” means the federal Centers for Medicare and Medicaid Services (formerly the
federal Health Care Financing Administration), and any successor Governmental
Authority.

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

“Collateral” means all property, now existing or hereafter acquired, mortgaged
or pledged to, or purported to be subjected to a Lien in favor of, Agent, for
the benefit of Agent and Lenders, pursuant to this Agreement and the Security
Documents, including, without limitation, all of the property described in
Schedule 9.1 hereto; provided, that the Collateral shall not include any
Excluded Property.

“Collections Account Post-Closing Period” means the period beginning on the
Closing Date and ending on the earlier of (a) the date that is ninety (90) days
after the Closing Date (or such later date as Agent may agree in writing) and
(b) the date on which Borrowers satisfied the requirements of clause 1 Schedule
7.4.

“Commitment Annex” means Annex A to this Agreement.

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

“Consolidated Subsidiary” means, at any date, any Subsidiary the accounts of
which would be consolidated with those of Parent in accordance with GAAP (or any
other Person, as the context may require hereunder) in its consolidated
financial statements if such statements were prepared as of such date.

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

“Controlled Group” means all members of any group of corporations and all
members of a group of trades or businesses (whether or not incorporated) under
common control which, together with any Credit Party, are treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code or Section 4001(b) of
ERISA.

 

7

--------------------------------------------------------------------------------

“Correction” means repair, modification, adjustment, relabeling, destruction or
inspection (including patient monitoring) of a product without its physical
removal to some other location.

“Credit Exposure” means, at any time, any portion of the Revolving Loan
Commitment and of any other Obligations that remains outstanding; provided,
however, that no Credit Exposure shall be deemed to exist solely due to the
existence of contingent indemnification liability, absent the assertion of a
claim, or the known existence of a claim reasonably likely to be asserted, with
respect thereto.

“Credit Party” means (a) each Borrower, (b) each Guarantor, and (c) each other
Person, whether now existing or hereafter acquired or formed that grants a Lien
on all or substantially all of its assets to secure payment of the Obligations;
provided, however, that in no event shall any Excluded Subsidiary be a “Credit
Party” for purposes of this Agreement or the other Financing Documents.

“CVR Earn-Out” means the obligation to make cash payments due to holders of
Contingent Value Rights in the amounts and subject to the terms and conditions
set forth in that certain Contingent Value Rights Agreement, dated as of
March 1, 2013, between Wright Medical Group, Inc. and American Stock Transfer &
Trust Company, LLC (the “CVR Agreement”).

“Debt” of a Person means at any date, without duplication, (a) all obligations
of such Person for borrowed money, (b) all obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments, (c) all obligations of
such Person to pay the deferred purchase price of property or services,
including any “earnouts”, purchase price adjustments, profit sharing
arrangements, deferred purchase money amounts and similar payment obligations or
continuing obligations of any nature of such Person arising out of purchase and
sale contracts (in each case, except (1) trade accounts payable arising and paid
within 120 days of when due, (2) current accounts payable incurred in the
Ordinary Course of Business (including on an intercompany basis), (3) any
earn-out obligation or purchase price adjustment until such obligation becomes a
liability on the balance sheet of such Person in accordance with GAAP, and
(4) liabilities associated with customary prepayments and deposits), (d) all
Capital Leases of such Person, (e) all non-contingent obligations of such Person
to reimburse any bank or other Person in respect of amounts paid under a letter
of credit, banker’s acceptance or similar instrument, (f) all Disqualified
Equity Interests, (g) all obligations secured by a Lien on any asset of such
Person, whether or not such obligation is otherwise an obligation of such
Person, (h) [Reserved], (i) all Debt of others Guaranteed by such Person,
(j) off-balance sheet liabilities and/or ERISA Plan or Multiemployer Plan
liabilities of such Person, and (k) obligations arising under non-compete
agreements, bonus, deferred compensation, incentive compensation or similar
arrangements, other than those arising in the Ordinary Course of Business.
Without duplication of any of the foregoing, Debt of Borrowers shall include any
and all Loans.

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

“Defined Period” has the meaning set forth in Section 6.1.

“Deposit Account” means a “deposit account” as defined in Article 9 of the UCC,
an investment account, or other account in which funds are held or invested for
credit to or for the benefit of any Credit Party.

“Deposit Account Control Agreement” means an agreement, in form and substance
reasonably satisfactory to Agent, among Agent, any Credit Party and each
financial institution in which such Credit Party maintains a Deposit Account,
which agreement provides that (a) such financial institution shall

 

8

--------------------------------------------------------------------------------

comply with instructions originated by Agent directing disposition of the funds
in such Deposit Account without further consent by the applicable Credit Party,
and (b) such financial institution shall agree that it shall have no Lien on, or
right of setoff or recoupment against, such Deposit Account or the contents
thereof, other than in respect of usual and customary service fees and returned
items for which Agent has been given value, in each such case expressly
consented to by Agent (acting reasonably), and containing such other terms and
conditions as Agent may reasonably require, including as to any such agreement
pertaining to any Lockbox Account after the Collections Account Post-Closing
Period, providing that such financial institution shall wire, or otherwise
transfer, in immediately available funds, on a daily basis to the Payment
Account (or, prior to the time of the initial borrowing of the Revolving Loans,
such Deposit Account of Borrower, as Agent may direct in its sole discretion)
all funds received or deposited into such Lockbox or Lockbox Account.

“Disqualified Equity Interest” means, with respect to any Person, any equity
interest in such Person that by its terms (or by the terms of any security or
other equity interest into which it is convertible or for which it is
exchangeable, either mandatorily or at the option of anyone other than such
Person), or upon the happening of any date certain, event or other condition
(except, in the case of the following clauses (a), (b) and (c), as a result of a
change of control or asset sale so long as any rights of the holders thereof
upon the occurrence of a change of control or asset sale shall be subject to the
prior payment in full of all Loans and all other Obligations (other than with
respect to contingent indemnification obligations for which no claim has been
made), and the termination of the Revolving Loan Commitment):

(a)    matures or is mandatorily redeemable (other than solely for equity
interests in such Person that do not constitute Disqualified Equity Interests
and cash in lieu of fractional shares of such equity interests), whether
pursuant to a sinking fund obligation or otherwise;

(b)    is convertible or exchangeable at the option of the holder thereof for
Debt or equity interests (other than solely for equity interests in such Person
that do not constitute Disqualified Equity Interests and cash in lieu of
fractional shares of such equity interests);

(c)    is or may be redeemable (other than solely for equity interests in such
Person that do not constitute Disqualified Equity Interests and cash in lieu of
fractional shares of such equity interests) or is or may be required to be
repurchased by such Person or any of its Affiliates, in whole or in part, at the
option of the holder thereof;

(d)    requires the payment of any cash dividend or any other scheduled cash
payment constituting a return of capital; or

(e)    is or becomes convertible into or exchangeable for Debt or any other
equity interests that would constitute Disqualified Equity Interests;

in each case, on or prior to the date that occurs 91 days after the Maturity
Date; provided that if such equity interests are issued pursuant to a plan to,
or for the benefit of, future, current or former employees, directors, officers,
members of management or consultants of Parent or any Subsidiary, such equity
interests shall not constitute “Disqualified Equity Interests” solely because
they may be permitted to be repurchased by Parent or such Subsidiary in order to
satisfy applicable statutory or regulatory obligations or as a result of any
employee’s, director’s, officer’s, management member’s or consultant’s
termination of employment or service (as applicable), death or disability.

“Distribution” means as to any Person (a) any dividend or other distribution
(whether in cash, securities or other property) with respect to any equity
interest in such Person (except those payable solely

 

9

--------------------------------------------------------------------------------

in its equity interests of the same class), (b) any payment by such Person on
account of (i) the purchase, redemption, retirement, defeasance, surrender,
cancellation, termination or acquisition of any equity interests in such Person
or any claim respecting the purchase or sale of any equity interest in such
Person, or (ii) any option, warrant or other right to acquire any equity
interests in such Person, (c) any payment in respect of management fees,
salaries or other fees or compensation to any Person holding an equity interest
in a Parent or a Subsidiary of Parent (other than reasonable and customary
(i) payments of salaries to individuals, (ii) directors fees, and (iii) advances
and reimbursements to employees or directors, in each case, made in the Ordinary
Course of Business), or (d) repayments of or debt service on loans or other
indebtedness held by any Person holding an equity interest in Parent or a
Subsidiary of Parent unless permitted under and made pursuant to a Subordination
Agreement applicable to such loans or other indebtedness.

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

“Eligible Accounts” means, collectively, the Eligible Domestic Accounts,
Eligible Unbilled Domestic Accounts and Eligible Foreign Accounts.

“Eligible Domestic Account” means, subject to the criteria below, an account
receivable of a Borrower, which (i) was generated in the Ordinary Course of
Business, (ii) was generated originally in the name of a Borrower and not
acquired via assignment or otherwise, (iii) is not an Eligible Foreign Account,
and (iv) Agent, in its good faith credit judgment and discretion, deems to be an
Eligible Domestic Account. The net amount of an Eligible Domestic Account at any
time shall be (a) the face amount of such Eligible Domestic Account as
originally billed minus all cash collections and other proceeds of such Account
received from or on behalf of the Account Debtor thereunder as of such date and
any and all returns, rebates, discounts (which may, at Agent’s option, be
calculated on shortest terms) or credits at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in connection with such
Accounts at such time, and (b) adjusted by applying percentages (known as
“Domestic Account liquidity factors”) by payor and/or payor class based upon the
applicable Borrower’s actual recent collection history for each such payor
and/or payor class in a manner consistent with Agent’s underwriting practices
and procedures. Such Domestic Account liquidity factors may be adjusted by Agent
from time to time as warranted by Agent’s underwriting practices and procedures
and using Agent’s good faith credit judgment. Without limiting the generality of
the foregoing, no Account shall be an Eligible Domestic Account if:

(a)    the Account remains unpaid more than one hundred twenty (120) days past
the claim or invoice date;

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

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

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

 

10

--------------------------------------------------------------------------------

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

(f)    the Account is subject to a Lien (other than Liens in favor of Agent or
Liens that have been expressly subordinated to the Liens of Agent), or Agent
does not have a first priority, perfected Lien on such Account;

(g)    the Account is evidenced by Chattel Paper or an Instrument (other than
checks and other ordinary course payment instruments) of any kind, or has been
reduced to judgment, unless such Chattel Paper or Instrument has been delivered
to Agent;

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

(i)    [Reserved];

(j)    fifty percent (50%) or more of the aggregate unpaid Accounts from the
Account Debtor obligated on the Account are not deemed Eligible Domestic
Accounts under this Agreement for any reason other than with respect to the
provisions of clauses (a) and (k) of this definition;

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

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

(m)    the Account is unbilled or has not been invoiced to the Account Debtor in
accordance with the procedures and requirements of the applicable Account
Debtor;

(n)    the Account is an obligation of an Account Debtor that is the federal,
state or local government or any political subdivision thereof, unless (i) such
Account Debtor has been disclosed to the Agent prior to or as of the Closing
Date or (ii) following the Closing Date, Agent has agreed to the contrary in
writing and Agent has received from the Account Debtor the acknowledgement of
Agent’s notice of assignment of such obligation pursuant to this Agreement;

(o)    the Account is an obligation of an Account Debtor that has suspended
business, made a general assignment for the benefit of creditors, is unable to
pay its debts as they become due or as to which a petition has been filed
(voluntary or involuntary) under any law relating to bankruptcy, insolvency or
relief of debtors;

(p)    the Account Debtor has its principal place of business or executive
office outside the United States, including any territories thereof;

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

 

11

--------------------------------------------------------------------------------

(r)    the Account Debtor is an individual;

(s)    at all times following the applicable Collections Account Post-Closing
Period, the Borrower owning such Account has not signed and delivered to Agent
notices, in the form requested by Agent, directing the Account Debtors to make
payment to the applicable Lockbox Account;

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

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

(v)    the Account or Account Debtor fails to meet such other commercially
reasonable specifications and requirements that may from time to time be
established by Agent in its reasonable credit judgment and discretion and based,
in each case, on the results of borrowing base audits and customary related due
diligence conducted by Agent from time to time after the Closing Date.

“Eligible Equipment” means, subject to the criteria below, all Equipment
constituting manufacturing machinery that is located on the Arlington Road
Premises and is: (a)(i) during the term of the applicable Arlington Personal
Property Lease, leased by a Borrower pursuant to the applicable Arlington
Personal Property Lease and subject to the Landlord Estoppel Agreement or
(ii) following the termination of the applicable Arlington Personal Property
Lease, owned by a Borrower, in each case, free and clear of all Liens other than
Liens in favor of Agent securing the Obligations, (b) in good operating
condition (ordinary wear and tear excepted), and (c) not obsolete or surplus
Equipment. In addition, Agent reserves the right, at any time and from time to
time after the Closing Date (including on the basis of any appraisal conducted
after the Closing Date), to adjust any of the applicable criteria, to establish
new criteria and to adjust advance rates with respect to Eligible Equipment in
its reasonable and good faith credit judgment and discretion, subject to the
approval of Required Lenders in the case of adjustments or new criteria or
changes in advance rates which have the effect of making more credit available.

“Eligible Foreign Account” means, subject to the criteria below, an account
receivable of a Borrower, which (i) was generated in the Ordinary Course of
Business, (ii) was generated originally in the name of a Borrower and not
acquired via assignment or otherwise, (iii) is not an Eligible Domestic Account,
and (iv) Agent, in its good faith credit judgment and discretion, deems to be an
Eligible Foreign Account. Accounts denominated in foreign currencies shall be
converted to US Dollars upon delivery by Borrowers of the current Borrowing Base
Certificate at the then-current market rate approved by Agent in its reasonable
discretion. The net amount of an Eligible Foreign Account at any time shall be
(a) the face amount of such Eligible Foreign Account as originally billed minus
all cash collections and other proceeds of such Account received from or on
behalf of the Account Debtor thereunder as of such date and any and all returns,
rebates, discounts (which may, at Agent’s option, be calculated on shortest
terms) or credits of any nature at any time issued, owing, claimed by Account
Debtors, granted, outstanding or payable in connection with such Accounts at
such time, and (b) adjusted by applying percentages (known as “Foreign Account
liquidity factors”) by payor and/or payor class based upon the applicable
Borrower’s actual recent collection history for each such payor and/or payor
class in a manner consistent with Agent’s underwriting practices and procedures.
Such Foreign Account liquidity factors may be adjusted by Agent from time to
time as warranted by Agent’s underwriting practices and procedures and using
Agent’s good faith credit judgment. Without limiting the generality of the
foregoing, no Account shall be an Eligible Foreign Account if:

(a)    the Account remains unpaid more than one hundred and twenty (120) days
past the claim or invoice date;

 

12

--------------------------------------------------------------------------------

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

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

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

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

(f)    the Account is subject to a Lien (other than Liens in favor of Agent or
Liens that have been expressly subordinated to the Liens of Agent), or Agent
does not have a first priority, perfected Lien on such Account;

(g)    the Account is evidenced by Chattel Paper or an Instrument (other than
checks and other ordinary course payment instruments) of any kind, or has been
reduced to judgment, unless such Chattel Paper or Instrument has been delivered
to Agent;

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

(i)    [Reserved];

(j)    fifty percent (50%) or more of the aggregate unpaid Accounts from the
Account Debtor obligated on the Account are not deemed Eligible Foreign Accounts
under this Agreement for any reason other than with respect to the provisions of
clauses (a) and (k) of this definition;

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

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

(m)    the Account is unbilled or has not been invoiced to the Account Debtor in
accordance with the procedures and requirements of the applicable Account
Debtor;

 

13

--------------------------------------------------------------------------------

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

(o)    the Account is an obligation of an Account Debtor that has suspended
business, made a general assignment for the benefit of creditors, is unable to
pay its debts as they become due or as to which a petition has been filed
(voluntary or involuntary) under any law relating to bankruptcy, insolvency or
relief of debtors;

(p)    [Reserved];

(q)    [Reserved];

(r)    the Account Debtor is an individual;

(s)    at all times following the applicable Collections Account Post-Closing
Period, the Borrower owning such Account has not signed and delivered to Agent
notices, in the form requested by Agent, directing the Account Debtors to make
payment to the applicable Lockbox Account;

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

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

(v)    the Account or Account Debtor fails to meet such other commercially
reasonable specifications and requirements that may from time to time be
established by Agent in its reasonable credit judgment and discretion and based,
in each case, on the results of borrowing base audits conducted and customary
related due diligence by Agent from time to time after the Closing Date.

“Eligible Inventory” means Inventory owned by a Borrower and acquired and
dispensed by such Borrower in the Ordinary Course of Business that Agent, in its
good faith credit judgment and discretion, deems to be Eligible Inventory.
Without limiting the generality of the foregoing, no Inventory shall be Eligible
Inventory if:

(a)    such Inventory is not owned by a Borrower free and clear of all Liens and
rights of any other Person (other than Agent and other than Permitted Liens)
(including the rights of a purchaser that has made progress payments and the
rights of a surety that has issued a bond to assure such Borrower’s performance
with respect to that Inventory);

(b)    such Inventory is placed on consignment or is in transit, in each case,
as reasonably determined by the Borrowers;

(c)    such Inventory is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary endorsements, free and
clear of all Liens except those in favor of Agent;

(d)    such Inventory is excess, obsolete, unsalable, shopworn, seconds,
damaged, unfit for sale, unfit for further processing, is of substandard quality
or is not of good and merchantable quality, free from any defects, in each case,
as reasonably determined in accordance with GAAP (to the extent applicable);

 

14

--------------------------------------------------------------------------------

(e)    such Inventory consists of marketing materials, display items or packing
or shipping materials, or manufacturing supplies (other than in the case of Raw
Materials Inventory)

(f)    [Reserved];

(g)    [Reserved];

(h)    such Inventory is not subject to a first priority Lien in favor of Agent
(subject to Permitted Liens);

(i)    such Inventory consists of goods that can be transported or sold only
with licenses that are not readily available or of any substances defined or
designated as hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or similar term, by any environmental law or any
Governmental Authority applicable to Borrowers or their business, operations or
assets;

(j)    such Inventory is not covered by property damage insurance reasonably
acceptable to Agent;

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

(l)    such Inventory is (i) located outside of the continental United States or
(ii) on premises where the aggregate amount of all Inventory (valued at cost)
and Surgical Instrumentation of Borrowers located thereon is less than $500,000;

(m)    such Inventory is located on premises containing an excess of $500,000 of
Inventory (valued at cost) and Surgical Instrumentation with respect to which
Agent has not received a landlord, warehouseman, bailee or mortgagee letter
reasonably acceptable in form and substance to Agent unless (i) at all times
following the date that is ninety (90) days after the Closing Date, such
location is listed on Schedule 9.2 and (ii) Agent has instituted a reserve for
six (6) months’ rent or third party charges, as applicable (a “Rent Reserve”);

(n)    to the extent that the average end-of-day principal balance of Revolving
Loans outstanding during the thirty (30) day period immediately proceeding the
relevant calculation date exceeded $85,000,000, such Inventory is located at an
Access Agreement Location with respect to which Agent has not received a
landlord, warehouseman, bailee or mortgagee letter reasonably acceptable in form
and substance to Agent within the time period set forth in Section 4.11(c);

(o)    such Inventory consists of (A) discontinued items, (B) slow-moving or
excess items held in inventory, or (C) used items held for resale, in each case,
as reasonably determined in accordance with GAAP (to the extent applicable);

(p)    other than in case of Raw Materials Inventory and Work-in-Process, such
Inventory does not consist of finished goods;

(q)    such Inventory does not meet all standards imposed by any Governmental
Authority in all material respects, including with respect to its production,
acquisition or importation (as the case may be);

 

15

--------------------------------------------------------------------------------

(r)    such Inventory is held for rental or lease by or on behalf of Borrowers;

(s)    such Inventory is subject to any licensing, patent, royalty, trademark,
trade name or copyright agreement with any third parties, which agreement
restricts the ability of Agent or any Lender to sell or otherwise dispose of
such Inventory; or

(t)    such Inventory fails to meet such other commercially reasonable
specifications and requirements which may from time to time be established by
Agent in its good faith credit judgment and discretion and based, in each case,
on the results of borrowing base audits and customary related due diligence
conducted by Agent from time to time after the Closing Date. Agent and Borrowers
agree that Inventory shall be subject to periodic appraisal by Agent and that
valuation of Inventory shall be subject to adjustment pursuant to the results of
such appraisal. Notwithstanding the foregoing, the valuation of Inventory shall
be subject to any legal limitations on sale and transfer of such Inventory.

“Eligible Surgical Instrumentation” means any Surgical Instrumentation owned by
a Borrower and acquired and dispensed by such Borrower in the Ordinary Course of
Business that Agent, in its good faith credit judgment and discretion, deems to
be Surgical Instrumentation. Without limiting the generality of the foregoing,
no Surgical Instrumentation shall be Eligible Surgical Instrumentation if:

(a)    such Surgical Instrumentation is not owned by a Borrower free and clear
of all Liens and rights of any other Person (other than in favor of Agent and
other than Permitted Liens) (including the rights of a purchaser that has made
progress payments and the rights of a surety that has issued a bond to assure
such Borrower’s performance with respect to that Surgical Instrumentation);

(b)    such Surgical Instrumentation is placed on consignment or is in transit,
in each case, as reasonably determined by the Borrowers;

(c)    such Surgical Instrumentation is covered by a negotiable document of
title, unless such document has been delivered to Agent with all necessary
endorsements, free and clear of all Liens except those in favor of Agent;

(d)    such Surgical Instrumentation is obsolete, unsalable, damaged, are of
substandard quality or are not free from any defects, in each case, as
reasonably determined in accordance with GAAP (to the extent applicable);

(e)    such Surgical Instrumentation consists of marketing materials, display
items or packing or shipping materials, or manufacturing supplies;

(f)    such Surgical Instrumentation is not subject to a first priority Lien in
favor of Agent (subject to Permitted Liens);

(g)    such Surgical Instrumentation consists of goods that can be transported
or sold only with licenses that are not readily available or of any substances
defined or designated as hazardous or toxic waste, hazardous or toxic material,
hazardous or toxic substance, or similar term, by any environmental law or any
Governmental Authority applicable to Borrowers or their business, operations or
assets;

(h)    such Surgical Instrumentation is not covered by property damage insurance
reasonably acceptable to Agent;

 

16

--------------------------------------------------------------------------------

(i)    any covenant, representation or warranty contained in the Financing
Documents with respect to such Surgical Instrumentation has been breached in any
material respect;

(j)    such Surgical Instrumentation is (i) located outside of the continental
United States, or (ii) on premises where the aggregate amount of all Surgical
Instrumentation and all Inventory (valued at cost) of Borrowers located thereon
is less than $500,000;

(k)    such Surgical Instrumentation is located on premises containing an
aggregate amount in excess of $500,000 of Surgical Instrumentation and Inventory
(valued at cost) with respect to which Agent has not received a landlord,
warehouseman, bailee or mortgagee letter reasonably acceptable in form and
substance to Agent unless, (i) at all times following the date that is ninety
(90) days after the Closing Date, such location is listed on Schedule 9.2 and
(ii) Agent has instituted a Rent Reserve has been established with respect to
such premises, as and if applicable;

(l)    to the extent that the average end-of-day principal balance of Revolving
Loans outstanding during the thirty (30) day period immediately proceeding the
relevant calculation date exceeded $85,000,000, such Surgical Instrumentation is
located at an Access Agreement Location with respect to which Agent has not
received a landlord, warehouseman, bailee or mortgagee letter reasonably
acceptable in form and substance to Agent within the time period set forth in
Section 4.11(c);

(m)    such Surgical Instrumentation does not meet all standards imposed by any
Governmental Authority in all material respects, including with respect to its
production, acquisition or importation (as the case may be);

(n)    such Surgical Instrumentation is subject to any licensing, patent,
royalty, trademark, trade name or copyright agreement with any third parties,
which agreement restricts the ability of Agent or any Lender to sell or
otherwise dispose of such Surgical Instrumentation; or

(o)    such Surgical Instrumentation fails to meet such other commercially
reasonable specifications and requirements which may from time to time be
established by Agent in its good faith credit judgment and discretion and
discretion and based, in each case, on the results of borrowing base audits and
customary related due diligence conducted by Agent from time to time after the
Closing Date. Agent and Borrowers agree that Surgical Instrumentation shall be
subject to periodic appraisal by Agent and that valuation of Surgical
Instrumentation shall be subject to adjustment pursuant to the results of such
appraisal. Notwithstanding the foregoing, the valuation of Surgical
Instrumentation shall be subject to any legal limitations on sale and transfer
of such Surgical Instrumentation.

“Eligible Unbilled Domestic Account” means any Account of a Borrower that
(i) has not been invoiced or billed that would constitute an Eligible Domestic
Account but for the requirements of clause (a) and clause (m) of the definition
“Eligible Domestic Account” and (ii) no more than sixty (60) days has elapsed
since the day on which such Borrower completed performance of the services or
delivered the goods, as applicable, giving rise to such Account.

“Environmental Laws” means any Laws, pertaining to the protection of the
environment, pollution, natural resources, or human health (in relation to
exposure to Hazardous Materials) including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act of 1976 (42
U.S.C. § 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C. §
1251 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et
seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Federal Insecticide,
Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.), the Emergency Planning
and Community Right-to-Know Act (42 U.S.C. § 11001 et seq.), the Occupational
Safety and Health Act (29

 

17

--------------------------------------------------------------------------------

U.S.C. § 651 et seq.), the Residential Lead-Based Paint Hazard Reduction Act (42
U.S.C. § 4851 et seq.), any analogous state or local laws, any amendments
thereto, and the regulations promulgated pursuant to said laws, together with
all amendments from time to time to any of the foregoing and judicial
interpretations thereof.

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

“ERISA Plan” means any “employee benefit plan”, as such term is defined in
Section 3(3) of ERISA (other than a Multiemployer Plan), which is subject to
Section 412 of the Code and Title IV of ERISA and which any Credit Party or
member of the Controlled Group maintains, sponsors or contributes to, or to
which any Credit Party or any member of the Controlled Group may have any
liability, including any liability by reason of having been a substantial
employer within the meaning of Section 4063 of ERISA at any time during the
preceding five (5) years, or by reason of being deemed to be a contributing
sponsor under Section 4069 of ERISA.

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

“Excluded Accounts” has the meaning set forth in Section 5.14.

“Excluded Domestic Holdco” means a wholly-owned Subsidiary of Parent
substantially all the assets of which consist of capital stock or other equity
interests in Foreign Subsidiaries held directly or indirectly by such Subsidiary
and who does not engage in any business, operations or activity other than that
of a holding company.

“Excluded Perfection Assets” means, collectively:

(a)    any fee-owned real property (other than Material Real Property), and any
leasehold interests in real property;

(b)    motor vehicles, aircraft and other assets subject to certificates of
title with an aggregate net book value (as reasonably determined by the
Borrowers) of less than $10,000,000 (other than to the extent (x) a security
interest thereon can be perfected by the filing of a financing statement under
the UCC and (y) an Event of Default has occurred and Agent has elected to
require, by written notice to the Credit Parties, that the Credit Parties take
all such steps necessary to perfect a lien in favor of Agent, for the benefit of
the Lenders, in such motor vehicles and other assets subject to certificates of
title);

(c)    commercial tort claims where the amount of damages claimed by the
applicable Credit Party is less than $2,000,000 in the aggregate for all such
commercial tort claims;

(d)    Letter-of-Credit Rights with an aggregate value of less than $2,000,000
(other than to the extent a security interest therein can be perfected by the
filing of a financing statement under the UCC);

(e)    electronic chattel paper with an aggregate value in excess of $2,000,000;

(f)    Excluded Accounts; and

 

18

--------------------------------------------------------------------------------

(g)    assets of the Credit Parties located outside of the United States to the
extent the granting or perfection of a security interest in such assets would
require action outside of the United States, including, for the avoidance of
doubt, the delivery of certificates evidencing equity interests in any direct
Foreign Subsidiary of Parent to Agent.

“Excluded Property” means:

(a)    any lease, license, contract, permit, letter of credit, instrument, or
agreement to which a Credit Party is a party or any of its rights or interests
thereunder if and to the extent that the grant of such security interest shall
constitute or result in (i) the abandonment, invalidation or unenforceability of
any right, title or interest of any Credit Party therein or (ii) result in a
breach or termination pursuant to the terms of, or a default under, any such
lease, license, contract, permit, agreement or other property right (other than
to the extent that any such term would be rendered ineffective pursuant to
Sections 9-406, 9-407, 9-408 or 9-409 of the UCC of any relevant jurisdiction or
any other applicable law); provided, however, that such security interest or
lien (x) shall attach immediately at such time as the condition causing such
abandonment, invalidation or unenforceability shall be remedied, (y) to the
extent severable, shall attach immediately to each term of such lease, license,
contract, property rights or agreement that does not result in any of the
consequences specified in (i) or (ii) above and (z) shall attach immediately to
each such lease, license, contract, property rights or agreement to which the
account debtor or the Credit Party’s counterparty has consented to such
attachment;

(b)    more than 65% of the voting stock of each Excluded Subsidiary that is a
Foreign Subsidiary or an Excluded Domestic HoldCo directly held by any Credit
Party, if the grant of a security interest in excess of such percentage to
secure the Obligations would cause material adverse tax consequences for such
Credit Party under the Code;

(c)    equity interest of TMW Insurance, Inc., so long as TMW Insurance, Inc.
maintains its status as an insurance captive in accordance with all applicable
laws and at no time has assets with a value in excess of $500,000 in the
aggregate;

(d)    margin stock;

(e)    equity interests in any Person (other than wholly owned Subsidiaries or
any entity wholly owned by the Credit Parties collectively) to the extent a
pledge of such interests is not permitted by the terms of such Person’s
organizational (including special purpose entities) or joint venture documents
(so long as such joint venture was not entered into (or such Subsidiary was not
formed) in contravention of the terms of the Financing Documents and such
prohibition did not arise as part of the acquisition or formation thereof or in
anticipation of the restrictions under the Financing Documents);

(f)    any equity interests of Wright Medical Europe C.V. or Felding Finance
B.V.; and

(g)    any “intent-to-use” trademark or service mark application for which an
amendment to allege use or statement of use has not been filed under 15 U.S.C. §
1051(c) or 15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed
in conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively
by the United States Patent and Trademark Office;

 

19

--------------------------------------------------------------------------------

provided, that Excluded Property shall not, in any case, include any proceeds,
substitutions or replacements of Excluded Property (unless such proceeds,
substitutions or replacement would itself constitute Excluded Property).

“Excluded Subsidiary” means (a)(i) any Foreign Subsidiary of Parent, (ii) any
Excluded Domestic Holdco, (iii) any direct or indirect Subsidiary of any other
Excluded Subsidiary under this clause (a), (b) any Subsidiary that is prohibited
by any applicable Laws from providing a Guarantee of all or part of the
Obligations (but only for so long as such Guarantee is so prohibited, (c) TMW
Insurance, Inc., so long as TMW Insurance, Inc. maintains its status as an
insurance captive in accordance with all applicable laws and at no time has
assets with a value in excess of $500,000 in the aggregate, and (e) any other
Subsidiary of Parent with respect to which, in the reasonable judgments of the
Agent and the Borrowers, the cost or other consequences of becoming a Guarantor
shall be excessive in view of the benefits to be obtained by the Lenders
therefrom. All Subsidiaries constituting “Excluded Subsidiaries” on the Closing
Date are set forth on Schedule 1.1.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantially comparable
and not materially more onerous to comply with), any current or future
regulations thereunder or official interpretations thereof and any agreement
entered into pursuant thereto, including any intergovernmental agreements and
any rules or guidance implementing such intergovernmental agreements.

“FCPA” has the meaning set forth in Section 3.26.

“FDA” means the Food and Drug Administration of the United States of America,
any comparable state or local Governmental Authority, any comparable
Governmental Authority in any non-United States jurisdiction, and any successor
agency of any of the foregoing.

“FDCA” means the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C.
Section 301 et seq., and all regulations promulgated thereunder.

“Fee Letter” means each agreement between Agent and any Credit Party relating to
fees payable to Agent, for its own account, in connection with the execution of
this Agreement.

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

“Fiscal Quarter” means each three month period corresponding to Parent’s fiscal
year accounting calendar.

“Fiscal Year” means the twelve-month accounting period of Parent beginning from
the Monday nearest to December 31 of each calendar year and ending on the Sunday
nearest to December 31 of each calendar year.

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

 

20

--------------------------------------------------------------------------------

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

“General Intangible” means any “general intangible” as defined in Article 9 of
the UCC, and any personal property, including things in action, other than
accounts, chattel paper, commercial tort claims, deposit accounts, documents,
goods, instruments, investment property, letter-of-credit rights, letters of
credit, money, and oil, gas or other minerals before extraction, but including
payment intangibles and software.

“Good Manufacturing Practices” means current good manufacturing practices, as
set forth in 21 C.F.R. Parts 210 and 211.

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

“Guarantee” by any Person means any obligation, contingent or otherwise, of such
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise), or
(b) entered into for the purpose of assuring in any other manner the obligee of
such Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part), provided, however, that
the term Guarantee shall not include endorsements for collection or deposit in
the Ordinary Course of Business. The term “Guarantee” used as a verb has a
corresponding meaning.

“Guarantor” means Parent and each other Credit Party that has executed or
delivered, or shall in the future execute or deliver, any Guarantee of any
portion of the Obligations, in each case, other than an Excluded Subsidiary.

“Hazardous Materials” means petroleum and petroleum products (and any fraction
thereof) and compounds containing them, including gasoline, diesel fuel and oil;
explosives, flammable materials; radioactive materials; polychlorinated
biphenyls and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials; and any other material or substance defined as a
“hazardous substance,” “hazardous material,” “hazardous chemical,” “hazardous
waste,” “solid waste,” “chemical substance,” “toxic pollutant,” “contaminant,”
“pollutant” or other words of similar import within the meaning of any
Environmental Law.

“Healthcare Laws” means all applicable Laws relating to the procurement,
development, provision, clinical and non-clinical evaluation or investigation,
product approval or clearance, manufacture, production, analysis, distribution,
dispensing, importation, exportation, use, handling, quality, reimbursement,
sale, labeling, advertising, promotion, or postmarket requirements of any
medical device or other product (including, without limitation, any ingredient
or component of, or accessory to,

 

21

--------------------------------------------------------------------------------

the foregoing products) subject to regulation under the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. et seq.), and similar state or foreign laws, controlled
substances laws, pharmacy laws, consumer product safety laws, Medicare,
Medicaid, and all laws, policies, procedures, requirements and regulations
pursuant to which Regulatory Required Permits are issued, in each case, as the
same may be amended from time to time.

“Holdings” means Trooper Holdings Inc., a Delaware corporation.

“IDB” means The Industrial Development Board of the Town of Arlington,
Tennessee, a public not-for-profit corporation of the State of Tennessee.

“Instrument” means “instrument”, as defined in Article 9 of the UCC.

“Intellectual Property” means all copyright rights, copyright applications,
copyright registrations and like protections in each work of authorship and
derivative work, whether published or unpublished, any patents, patent
applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, trade names, service marks, mask works, rights of use of any
name, domain names, or any other similar rights, and, to the extent permitted
under applicable law, any applications therefor, whether registered or not, and
the goodwill of the business of such Person connected with and symbolized
thereby, know-how and processes, operating manuals, trade secret rights,
clinical and non-clinical data, rights to unpatented inventions, and all
applications and licenses therefor, used in or necessary for the conduct of the
business of such Person, and any claims for damage by way of any past, present,
or future infringement of any of the foregoing.

“Interest Period” means any period commencing on the first day of a calendar
month and ending on the last day of such calendar month.

“Inventory” means “inventory” as defined in Article 9 of the UCC.

“Investment” means, with respect to any Person, directly or indirectly, (a) to
purchase or acquire any stock or stock equivalents, or any obligations or other
securities of, or any interest in, any Person, including the establishment or
creation of a Subsidiary, (b) to make any acquisition (including through
licensing) of (i) of all or substantially all of the assets of another Person,
or (ii) any business, Product, business line or product line, division or other
unit operation of any Person or (c) make or purchase any advance, loan,
extension of credit or capital contribution to, or any other investment in, any
Person. The amount of any Investment shall be (x) for any Investment (other than
Investments consisting of loans, advances and other Debt that is purchased or
acquired by such Person (any such Investments being referred to herein as a
“Loan”)), the actual amount of such Investment plus the cost of all additions
thereto, without adjustment for subsequent increases or decreases in the value
of such Investment, and (y) in the case of any Loan, on any date of
determination, the then outstanding principal balance of such Loan (giving
effect to any repayments in principal in the case of any Loan but not giving
effect to any write-offs or other forgiveness by the lender in respect of such
Loan).

“Joinder Requirements” has the meaning set forth in Section 4.11(d).

“L/C Cash Collateral Accounts” means, collectively, each segregated Deposit
Account of Borrowers from time to time established and maintained with the
issuers of letters of credit for the sole purpose of securing Borrower’s
obligations under such letters of credit to the extent such obligations
constitute “Permitted Contingent Obligations” for purposes of clause (h) of the
definition of thereof;

 

22

--------------------------------------------------------------------------------

provided, that (a) no such Deposit Account shall hold an aggregate of cash and
cash equivalents in excess of 110% of the aggregate value of the letters of
credit it is securing and (b) with respect to all such Deposit Accounts, the
aggregate amount deposited there in at any time does not exceed $5,000,000.

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

“Landlord Estoppel Agreement” means that certain Landlord Waiver, Estoppel &
Subordination Agreement, dated as of the Closing Date, in respect of the
personal property of Credit Parties located at the Arlington Road Premises, as
the same may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms of this Agreement.

“Lender” means each of (a) MCF, in its capacity as a lender hereunder, (b) each
other Person party hereto in its capacity as a lender hereunder, (c) each other
Person that becomes a party hereto as Lender pursuant to Section 11.17, and
(d) the respective successors and permitted assigns of all of the foregoing, and
“Lenders” means all of the foregoing.

“Letter-of-Credit Rights” means “letter-of-credit rights” as defined in Article
9 of the UCC.

“LIBOR Rate” means, for each Loan, a per annum rate of interest equal to the
greater of (a) three quarters of one percent (0.75%) and (b) the rate determined
by Agent (rounded upwards, if necessary, to the next 1/100th%) by dividing
(i) the Base LIBOR Rate for the Interest Period, by (ii) the sum of one minus
the daily average during such Interest Period of the aggregate maximum reserve
requirement (expressed as a decimal) then imposed under Regulation D of the
Board of Governors of the Federal Reserve System (or any successor thereto) for
“Eurocurrency Liabilities” (as defined therein).

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind, in respect of such asset. For the
purposes of this Agreement and the other Financing Documents, any Credit Party
or any Subsidiary thereof shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capital Lease or other title retention
agreement relating to such asset.

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

“Loan Account” has the meaning set forth in Section 2.6(b).

“Loan(s)” means the Revolving Loan(s).

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

“Lockbox Account” means an account or accounts maintained at the Lockbox Bank
into which collections of Accounts are paid, which account or accounts shall be,
if requested by Agent, opened in the name of Agent (or a nominee of Agent).

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

 

23

--------------------------------------------------------------------------------

“Market Withdrawal” means a Person’s Removal or Correction of a distributed
product which involves a minor violation that would not be subject to legal
action by the FDA or which involves no violation, e.g., normal stock rotation
practices, routine equipment adjustments and repairs, etc.

“Material Adverse Effect” means with respect to any event, act, condition or
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), whether
singly or in conjunction with any other event or events, act or acts, condition
or conditions, occurrence or occurrences, whether or not related, a material
adverse change in, or a material adverse effect upon, any of (a) the condition
(financial or otherwise), operations, business, or properties of the Borrowers
(taken as a whole) or the Credit Parties (taken as a whole), (b) the rights and
remedies of Agent or Lenders under the Financing Document, or the ability of the
Borrowers (taken as a whole) or the Credit Parties (taken as a whole), to
perform their material obligations under any Financing Document, (c) the
legality, validity or enforceability of any Financing Document or (d) the
existence, perfection or priority of any security interest granted in any
Financing Document, (e) the value of any material Collateral, or (f) a material
impairment of the prospect of repayment of any portion of the Obligations.

“Material Contracts” means (a) the Operative Documents, (b) the Cash Convertible
Note Documents, (c) the agreements listed on Schedule 3.17, and (d) each other
agreement or contract to which such Credit Party or its Subsidiaries is a party
the termination of which could reasonably be expected to result in a Material
Adverse Effect.

“Material Intangible Assets” means all of (i) each Credit Party’s Intellectual
Property and (ii) license or sublicense agreements or other agreements with
respect to rights in Intellectual Property, in each case that are material to
the condition (financial or other), business or operations of the Credit
Parties, as reasonably determined by the Agent.

“Material Permits and Rights” has the meaning set forth Section 8.1(b).

“Material Real Property” means any real property located in the United States
that is owned by any Credit Party with a fair market value (as reasonably
determined by the Credit Parties) in excess of $5,000,000 individually or
$15,000,000 in the aggregate in fee together with all other real property that
is owned by the Credit Parties and located in the United States.

“Maturity Date” means the date that is the earliest to occur of the following:

(a)    sixty (60) calendar months following the Closing Date;

(b)    the date that is ninety-one (91) days prior to the maturity date of the
2020 Cash Convertible Notes (as such maturity date may be extended from time to
time in accordance with the terms of this Agreement);

(c)    the date that is ninety-one (91) days prior to the maturity date of the
2021 Cash Convertible Notes (as such maturity date may be extended from time to
time in accordance with the terms of this Agreement); and

(d)    any earlier date on which the Revolving Loan Commitments are reduced to
zero or otherwise terminated pursuant to the terms hereof.

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

 

24

--------------------------------------------------------------------------------

“MCF” means MidCap Financial Trust, a Delaware statutory trust, and its
successors and assigns.

“Medicaid” means the medical assistance programs administered by state agencies
and approved by CMS pursuant to the terms of Title XIX of the Social Security
Act, codified at 42 U.S.C. 1396 et seq.

“Medicare” means the program of health benefits for the aged and disabled
administered by CMS pursuant to the terms of Title XVIII of the Social Security
Act, codified at 42 U.S.C. 1395 et seq.

“Minimum Balance” means, at any time, an amount that equals the product of:
(i) the average Borrowing Base (or, if less on any given day, the Revolving Loan
Commitment) during the immediately preceding month multiplied by (ii) the
Minimum Balance Percentage for such month.

“Minimum Balance Fee” shall mean a fee equal to (a) the positive difference, if
any, remaining after subtracting (i) the average end-of-day principal balance of
Revolving Loans outstanding during the immediately preceding month (without
giving effect to the clearance day calculations referenced in Section 2.2(a))
from (ii) the Minimum Balance multiplied by (b) the highest interest rate
applicable to the Revolving Loans during such month (or, during the existence of
an Event of Default, the default rate of interest set forth in Section 10.5(a)).

“Minimum Balance Percentage” means twenty percent (20%).

“Monthly Cash Burn Amount” means, with respect to Credit Parties, an amount
equal to Credit Parties’ change in cash and cash equivalents, without giving
effect to any increase resulting from contributions or proceeds of financings,
for either (a) the immediately preceding six (6) month period as determined as
of the last day of the month immediately preceding the proposed consummation of
the Permitted Acquisition and based upon the financial statements delivered to
Agent in accordance with this Agreement for such period or (b) the immediately
succeeding six (6) month period based upon the Transaction Projections, using
whichever calculation as between clause (a) and clause (b) demonstrates a higher
burn rate (or, in other words, more cash used), in either case, divided by six
(6).

“Multiemployer Plan” means a multiemployer plan within the meaning of Section
4001(a)(3) of ERISA to which (i) any Credit Party or any other member of the
Controlled Group is making or accruing an obligation to make contributions or
has within the preceding five (5) plan years (as determined on the applicable
date of determination) made contributions, or (ii) any Person who in the last
five (5) years was a member of the Controlled Group has within the preceding
five (5) years (as determined on the applicable date of determination) made
contributions.

“Net Book Value of Eligible Equipment” means, at any time, the then-current book
value of all Eligible Equipment (giving effect to any adjustments to such book
value on or prior to the date of measurement thereof) less all accumulated
depreciation and amortization of such Equipment through the date of measurement,
all as determined in accordance with GAAP.

“Net Book Value of Surgical Instrumentation” means, at any time, the
then-current book value of all Eligible Surgical Instrumentation (as adjusted in
accordance with this Agreement) less all accumulated depreciation and
amortization of such Surgical Instrumentation through the date of measurement,
all as determined in accordance with GAAP.

“Notes” has the meaning set forth in Section 2.3.

 

25

--------------------------------------------------------------------------------

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

“Obligations” means all obligations, liabilities and indebtedness (monetary
(including, without limitation, the payment of interest and other amounts
arising after the commencement of any case with respect to any Credit Party
under the Bankruptcy Code or any similar statute which would accrue and become
due but for the commencement of such case, whether or not such amounts are
allowed or allowable in whole or in part in such case) or otherwise) of each
Credit Party under this Agreement or any other Financing Document, in each case
howsoever created, arising or evidenced, whether direct or indirect, absolute or
contingent, now or hereafter existing, or due or to become due.

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

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

“Operative Documents” means the Financing Documents and Subordinated Debt
Documents.

“Ordinary Course of Business” means, in respect of any transaction involving any
Credit Party, the ordinary course of business of the Credit Parties (taken as a
whole), as conducted by the Credit Parties in accordance with past practices, as
applicable.

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

“Other Currency” has the meaning set forth in Section 13.20.

“Participant Register” has the meaning set for in Section 11.17(a)(iii).

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

“PBGC” means the Pension Benefit Guaranty Corporation and any Person succeeding
to any or all of its functions under ERISA.

“Pension Funding Rules” means the rules of the Code and ERISA regarding minimum
required contributions (including any installment payment thereof) to ERISA
Plans and set forth in, with respect to plan years ending prior to the effective
date of the Pension Act, Section 412 of the Code and Section 302 of ERISA, each
as in effect prior to the Pension Act and, thereafter, Section 412, 430, 431,
432 and 436 of the Code and Sections 302, 303, 304 and 305 of ERISA.

“Perfection Certificate” means the Perfection Certificate delivered to Agent as
of the Closing Date, together with any amendments thereto required under this
Agreement.

 

26

--------------------------------------------------------------------------------

“Permit” means all licenses, certificates, accreditations, product clearances or
approvals, provider numbers or provider authorizations, supplier numbers,
marketing authorizations, drug or device authorizations and approvals, other
authorizations, franchises, qualifications, accreditations, registrations,
permits, consents and approvals of a Credit Party issued or required under Laws
applicable to the business of a Credit Party or any of its Subsidiaries or
necessary in the manufacturing, importing, exporting, possession, ownership,
warehousing, marketing, promoting, sale, labeling, furnishing, distribution or
delivery of goods or services under Laws applicable to the business of a Credit
Party or any of its Subsidiaries.    Without limiting the generality of the
foregoing, “Permit” includes any Regulatory Required Permit.

“Permitted Acquisition” means any Acquisition by a Borrower, in each case, to
the extent that each of the following conditions shall have been satisfied:

(a)    the Borrower Representative shall have delivered to Agent (i) for any
Acquisition or series of related Acquisitions with an aggregate purchase price
(including any deferred compensation) greater than or equal to $10,000,000, (A)
at least ten (10) Business Days (or such shorter period as approved by the Agent
in its sole discretion) prior to the closing of the proposed Acquisition: (x) a
description of the proposed Acquisition and (y) to the extent available, a due
diligence package (including, to the extent available, a quality of earnings
report); and (B) not less than five (5) Business Days following the consummation
of such Acquisition, executed counterparts of the material agreements, documents
or instruments pursuant to which such Acquisition is to be consummated and any
schedules to such agreements, documents or instruments or (ii) for any
Acquisition or series of related Acquisitions with an aggregate purchase price
(including any deferred compensation) less than $10,000,000, not less than five
(5) Business Days following such Acquisition (or such shorter period as approved
by the Agent in its sole discretion), executed counterparts of the material
agreements, documents or instruments pursuant to which such Acquisition is to be
consummated and any schedules to such agreements, documents or instruments;

(b)    the Credit Parties (including any new Subsidiary to the extent required
by Section 4.11) shall execute and deliver the agreements, instruments and other
documents to the extent required by Section 4.11;

(c)    no Event of Default has occurred and is continuing, or would exist after
giving pro forma effect to, the proposed Acquisition;

(d)    all transactions in connection with such Acquisition shall be
consummated, in all material respects, in accordance with applicable laws;

(e)    the assets acquired in such Acquisition are for use in the same line of
business as the Credit Parties are currently engaged or a line of business
reasonably related thereto;

(f)    such Acquisition shall not be hostile and, if applicable, shall have been
approved by the board of directors (or other similar body) and/or the
stockholders or other equity holders of any Person being acquired in such
Acquisition;

(g)    no Debt or Liens are assumed or created (other than Permitted Liens and
Permitted Debt) in connection with such Acquisition;

(h)    Agent shall have received a certificate of a Responsible Officer of the
Borrower Representative demonstrating, on a pro forma basis after giving effect
to the consummation of such Acquisition, that the Credit Parties are in
compliance with the financial covenants set forth in Article 6;

 

27

--------------------------------------------------------------------------------

(i)    Except as otherwise agreed by Agent, the total consideration paid or
payable (including without limitation, costs and expenses, deferred purchase
price, seller notes and other liabilities incurred, assumed or to be reflected
on a consolidated balance sheet of the Credit Parties and their Subsidiaries
after giving effect to such Acquisition but excluding any equity interests
issued as consideration for such Acquisition) (“Acquisition Consideration”)
shall be in an amount not to exceed (A) (i) $15,000,000 in the aggregate for all
such Acquisitions in the twelve (12) month period following the Closing Date,
(ii) $30,000,000 in the aggregate for all such Acquisitions in any succeeding
twelve (12) month period occurring thereafter and (B) $75,000,000 in the
aggregate for all such Acquisitions during the term of this Agreement; and

(j)    Agent has received, prior to the consummation of such Acquisition,
updated financial projections, in form and substance reasonably satisfactory to
Agent, for the immediately succeeding twelve (12) months following the proposed
consummation of the Acquisition beginning with the month during which the
Acquisition is to be consummated (the “Transaction Projections”) and such other
evidence as Agent may reasonably request demonstrating that, immediately before
and immediately after giving effect to the consummation of such Acquisition, the
sum of (x) the aggregate amount of unrestricted cash held by Credit Parties in
one or more Deposit Accounts, that in each case are subject to a first priority
perfected security interest in favor Agent plus (y) the average daily Revolving
Loan Availability during the sixty (60) day period immediately preceding such
Acquisition is equal to or greater than the positive value of the product of
(A) twelve (12) multiplied by (B) the Monthly Cash Burn Amount, as determined as
of the last day of the month immediately preceding such Acquisition.

Notwithstanding the foregoing, no Accounts or Inventory acquired by a Credit
Party in a Permitted Acquisition shall be included as Eligible Accounts,
Eligible Equipment or Eligible Inventory until a field examination (and, if
required by Agent, an Inventory appraisal) with respect thereto has been
completed to the reasonable satisfaction of Agent, including the establishment
of reserves required in Agent’s reasonable discretion; provided that field
examinations and appraisals in connection with Permitted Acquisitions shall not
count against the limited number of field examinations or appraisals for which
expense reimbursement may be sought.

“Permitted Asset Dispositions” means the following Asset Dispositions:
(a) dispositions of Inventory in the Ordinary Course of Business and not
pursuant to any bulk sale, (b) dispositions of furniture, fixtures and equipment
in the Ordinary Course of Business that the applicable Credit Party or
Subsidiary determines in good faith is no longer used or useful in the business
of such Credit Party or Subsidiary, (c) to the extent constituting an Asset
Disposition, Permitted Investments, Permitted Liens Permitted Licenses, and any
mergers, consolidations, dispositions, dissolutions and liquidations expressly
permitted pursuant to Section 5.6 (d) disposals of obsolete, worn out or surplus
tangible personal property, (e) dispositions by any Credit Party to any Borrower
so long as each Credit Party will remain Solvent after giving effect to the
transfer, (f) the lapse, abandonment or disposition of Intellectual Property
that is not material to the Credit Parties’ business and the cost of maintaining
such Intellectual Property would outweigh the benefit to Credit Parties of so
maintaining it, (g) sales, transfers and dispositions of Accounts in connection
with the compromise, settlement or collection thereof in the Ordinary Course of
Business, (h) dispositions of Investments in joint ventures to the extent
required by, or made pursuant to, customary buy/sell arrangements between any
joint venture parties set forth in joint venture arrangements and similar
binding arrangements, (i) sales, transfers and other dispositions pursuant to
any Cash Convertible Note-Related Transactions, (j) (i) voluntary cancellations,
terminations or surrender by any Credit Party or Subsidiary of a Credit Party of
any immaterial lease or license, (ii) the expiration of any option agreement in
respect of real or personal property and (iii) the settlement of any litigation
claims (to the extent such claims constitutes an asset), in each case, in the
Ordinary Course of Business, (k) Asset Dispositions by (i) any Borrower to any
other Borrower, (ii) any Guarantor to any

 

28

--------------------------------------------------------------------------------

other Guarantor, and (iii) any Subsidiary that is not a Credit Party to another
Subsidiary that is not a Credit Party, (l) to the extent constituting an Asset
Disposition, transactions between Credit Parties and Excluded Subsidiaries
permitted pursuant to Section 5.8(b), (m) Asset Dispositions necessary to effect
the Permitted Internal Reorganization and approved in writing by Agent (such
approval not to be unreasonably withheld, conditioned or delayed), (n) sales,
transfers and other dispositions of assets that are not permitted by any other
subpart of this definition of “Permitted Asset Dispositions”; provided that the
aggregate fair market value of all assets sold, transferred or otherwise
disposed of in reliance upon this clause (n) shall not exceed 10% of Total
Assets during any Fiscal Year, and (o) other dispositions approved by Agent.

“Permitted Cash Convertible Note Refinancing” means each Permitted 2017 Cash
Convertible Note Refinancing, each Permitted 2020 Cash Convertible Note
Refinancing, and each Permitted 2021 Cash Convertible Note Refinancing.

“Permitted Contest” means, with respect to any tax obligation or other
obligation allegedly or potentially owing from any Credit Party or its
Subsidiaries to any governmental tax authority or other third party, a contest
maintained in good faith by appropriate proceedings promptly instituted and
diligently conducted and with respect to which such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made on the books and records and financial statements of the applicable Credit
Party(ies); provided, however, that (a) compliance with the obligation that is
the subject of such contest is effectively stayed during such challenge;
(b) Credit Parties’ and their Subsidiaries’ title to, and its right to use, the
Collateral is not adversely affected thereby and Agent’s Lien and priority on
the Collateral are not adversely affected, altered or impaired thereby; (c) the
Collateral or any part thereof or any interest therein shall not be in any
danger of being sold, forfeited or lost by reason of such contest by Credit
Parties or their Subsidiaries; (d) Credit Parties have given Agent notice of the
commencement of any contest of a material obligation and upon request by Agent,
from time to time, notice of the status of such contest by Credit Parties and/or
confirmation of the continuing satisfaction of this definition; and (e) upon a
final determination of such contest, Credit Parties and their Subsidiaries shall
promptly comply with the requirements thereof.

“Permitted Contingent Obligations” means

(a)    Contingent Obligations arising in respect of the Debt under the Financing
Documents;

(b)    Contingent Obligations resulting from endorsements for collection or
deposit in the Ordinary Course of Business;

(c)    Contingent Obligations outstanding on the date of this Agreement and set
forth on Schedule 5.1 (but not including any refinancings, extensions, increases
or amendments to the indebtedness underlying such Contingent Obligations other
than extensions of the maturity thereof without any other material change in
terms adverse to the Lenders);

(d)    Contingent Obligations incurred in the Ordinary Course of Business with
respect to surety and appeal bonds, performance bonds and other similar
obligations;

(e)    Contingent Obligations arising under indemnity agreements with title
insurers to cause such title insurers to issue to Agent mortgagee title
insurance policies;

 

29

--------------------------------------------------------------------------------

(f)    Contingent Obligations arising with respect to customary indemnification
obligations in favor of purchasers in connection with dispositions of personal
property assets permitted under Section 5.6;

(g)    so long as there exists no Event of Default both immediately before and
immediately after giving effect to any such transaction, Contingent Obligations
existing or arising under any Swap Contract, provided, however, that such
obligations are (or were) entered into by a Credit Party or an Affiliate 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 and not for purposes of speculation;

(h)    Contingent Obligations arising in connection with the issuance of letters
of credit in an aggregate face amount not to exceed $5,000,000 at any one time
outstanding secured solely by Liens permitted pursuant to clause (n) of the
definition of Permitted Liens;

(i)    Contingent Obligations incurred with respect to Permitted Debt provided
that (x) any such Contingent Obligation is subordinated to the Obligations to
the same extent as the Debt to which it relates is subordinated to the
Obligations and (y) no Credit Party may incur Contingent Obligations under this
clause (i) in respect of Debt incurred by any Person that is not a Borrower or
Guarantor, other than to extent consisting of a Permitted Investment;

(j)    Contingent Obligations in respect of any customary indemnification
obligations, purchase price adjustments, non-compete obligations (other than
contingent earn-out obligations) of any Credit Party incurred in connection with
the consummation of any Permitted Acquisition;

(k)    Contingent Obligations in respect of obligations to suppliers, customers,
franchisees and licensees incurred in the Ordinary Course of Business;

(l)    a statement as referred to in Article 2:403 of the Dutch Civil Code (and
any residual liability (overblijvende aansprakelijkheid) under such statement
arising pursuant to Article 2:404(2) of the Dutch Civil Code, provided that once
the condition under Article 2:404(3)(a) of the Dutch Civil Code has been
fulfilled the relevant debtor shall ensure that any such residual liability will
be terminated); provided that such statement is issued by the Parent in respect
of a wholly-owned Subsidiary;

(m)    any joint and several liability and any netting or set-off, arising in
each case by operation of law as a result of the existence of a fiscal unity
(fiscale eenheid) for Dutch tax purposes of which a Credit Party is or has been
a member; and

(n)    other Contingent Obligations not permitted by clauses (a) through
(m) above, not to exceed $25,000,000 in the aggregate at any time outstanding.

“Permitted Debt” means:

(a)    Credit Parties’ and their Subsidiaries’ Debt to Agent and each Lender
under this Agreement and the other Financing Documents;

(b)    Debt incurred as a result of endorsing negotiable instruments received in
the Ordinary Course of Business;

 

30

--------------------------------------------------------------------------------

(c)    capital leases and purchase money Debt not to exceed $60,000,000 at any
time (whether in the form of a loan or a lease) used solely to acquire fixed
assets used in the Ordinary Course of Business and secured only by such fixed
assets;

(d)    Debt existing on the Closing Date and described on Schedule 5.1 (but not
including any refinancings, extensions, increases or amendments to such Debt
other than permitted Refinance Debt);

(e)    so long as there exists no Event of Default both immediately before and
immediately after giving effect to any such transaction, Debt existing or
arising under any Swap Contract, provided, however, that such obligations are
(or were) entered into by a Credit Party or an Affiliate 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 and not for purposes of speculation;

(f)    Debt in the form of insurance premiums financed through the applicable
insurance company;

(g)    Debt owed to any Person providing worker’s compensation, health,
disability or other employee benefits (other than ERISA) pursuant to
reimbursement or indemnification obligations to such Person, in each case in the
Ordinary Course of Business;

(h)    trade accounts payable arising and paid within 120 days of the date when
due and in the Ordinary Course of Business;

(i)    Debt under the CVR Earn-Out pursuant to the terms thereof as in effect on
the Closing Date; provided that no payments in respect of the CVR Earn-Out shall
be made after the occurrence and during the continuance of any Event of Default
(other than any Event of Default occurring solely pursuant to Section 10.1(b));

(j)    Subordinated Debt;

(k)    Debt of the Credit Parties incurred under (i) the 2020 Cash Convertible
Notes, (ii) any associated Cash Convertible Note Hedging Arrangement and
(iii) so long as no Event of Default has occurred and is continuing, any
extension, renewal, or refinancing of the 2020 Cash Convertible Notes; provided,
that such extension, renewal, refinance or replacement Debt (a) does not
increase the interest rate of the 2020 Cash Convertible Notes by an amount in
excess of 5.0% and does not provide for any amortization payments or other
regularly scheduled principal payments in advance of maturity, (b) has a
weighted average maturity (measured as of the date of such refinancing or
extension) and maturity no shorter than the maturity date set forth in the 2020
Cash Convertible Note Documents on the Closing Date (it being understood that,
in each case, any provision requiring an offer to purchase such Debt as a result
of a change of control, fundamental change, delisting, asset sale or similar
provision or any exercise or conversion of equity interests shall not violate
the foregoing restriction), (c) is unsecured, (d) does not have one or more
obligors that are not obligors under this Agreement, and (e) contains terms that
are prevailing market terms at the time of issuing or initial borrowing for the
type of financing and for the quality of issuer or borrower, as determined by
Borrower and its advisors in their reasonable business judgment (collectively, a
“Permitted 2020 Cash Convertible Note Refinancing”);

(l)    Debt of the Credit Parties incurred under (i) the 2017 Cash Convertible
Notes, (ii) any associated Cash Convertible Note Hedging Arrangement and
(iii) so long as no Event of Default

 

31

--------------------------------------------------------------------------------

has occurred and is continuing, any extension, renewal, or refinancing of the
2017 Cash Convertible Notes; provided, that such extension, renewal, refinance
or replacement Debt (a) does not increase the interest rate of the 2017 Cash
Convertible Notes by an amount in excess of 5.0% and does not provide for any
amortization payments or other regularly scheduled principal payments in advance
of maturity, (b) has a weighted average maturity (measured as of the date of
such refinancing or extension) and maturity no shorter than the maturity date
set forth in the 2017 Cash Convertible Note Documents on the Closing Date (it
being understood that, in each case, any provision requiring an offer to
purchase such Debt as a result of a change of control, fundamental change,
delisting, asset sale or similar provision or any exercise or conversion of
equity interests shall not violate the foregoing restriction), (c) is unsecured,
(d) does not have one or more obligors that are not obligors under this
Agreement, and (e) contains terms that are prevailing market terms at the time
of issuing or initial borrowing for the type of financing and for the quality of
issuer or borrower, as determined by Borrower and its advisors in their
reasonable business judgment (collectively, a “Permitted 2017 Cash Convertible
Note Refinancing”);

(m)    without limiting the provisions of Section 5.7 with respect to any
Investment by a Credit Party, Debt consisting of unsecured intercompany loans
and advances (i) incurred by any Borrower owing to one or more other Borrowers,
(ii) incurred by any Guarantor owing to one or more other Guarantors,
(iii) incurred by any Excluded Subsidiary owing to any Credit Party solely to
the extent constituting a Permitted Investment made by such Credit Party, or
(iv) incurred by a Credit Party owing to a non-Credit Party to the extent that
such Debt (A) does not have scheduled amortization prior to the latest Maturity
Date of the Loans and (B) is subordinated to the Obligations on terms and
conditions reasonably satisfactory to the Agent;

(n)    Debt of the Credit Parties related to commercial credit cards so long as
such Debt is incurred in the Ordinary Course of Business and is unsecured;

(o)    Debt in respect of treasury services agreements, netting services,
overdraft protections, automated clearing-house arrangements, employee credit
card programs and similar arrangements, in each case so long as such Debt is
incurred in the Ordinary course of Business and is unsecured;

(p)    to the extent constituting Debt, any Permitted Contingent Obligations;

(q)    unsecured earn-out obligations and other similar contingent purchase
price obligations incurred in connection with a Permitted Acquisition to the
extent earned and payable and permitted pursuant to the definition of Permitted
Acquisition and the other terms of this Agreement;

(r)    to the extent constituting Debt, take-or-pay obligations contained in
supply arrangements incurred in the Ordinary Course of Business;

(s)    Debt of the Credit Parties incurred under (i) the 2021 Cash Convertible
Notes, (ii) any associated Cash Convertible Note Hedging Arrangement and
(iii) so long as no Event of Default has occurred and is continuing, any
extension, renewal, or refinancing thereof; provided, that such extension,
renewal, refinance or replacement Debt (a) does not increase the interest rate
of the 2021 Cash Convertible Notes by an amount in excess of 5.0% and does not
provide for any amortization payments or other regularly scheduled principal
payments in advance of maturity, (b) has a weighted average maturity (measured
as of the date of such refinancing or extension) and maturity no shorter than
the maturity date set forth in the 2021 Cash Convertible Note Documents on the
Closing Date (it being understood that, in each case, any provision requiring an
offer to purchase such Debt as a result of a change of control, fundamental
change, delisting, asset sale or similar provision or any exercise or conversion
of equity

 

32

--------------------------------------------------------------------------------

interests shall not violate the foregoing restriction), (c) is unsecured,
(d) does not have one or more obligors that are not obligors under this
Agreement, and (e) contains terms that are prevailing market terms at the time
of issuing or initial borrowing for the type of financing and for the quality of
issuer or borrower, as determined by Borrower and its advisors in their
reasonable business judgment (collectively, a “Permitted 2021 Cash Convertible
Note Refinancing”);

(t)    Debt which represents extensions, renewals, refinancings or replacements
(such Debt being so extended, renewed, refinanced or replaced being referred to
herein as the “Refinance Debt”) of any of the Debt described in subparts (c),
(d), (u), (w) and (aa) of this definition (such Debt being referred to herein as
the “Original Debt”); provided that (i) such Refinance Debt does not increase
the principal amount or interest rate of the Original Debt, except (A) by an
amount equal to unpaid accrued interest and premiums thereon plus other
reasonable and customary fees and expenses reasonably incurred in connection
with such Refinance Debt, (B) by an amount equal to any existing commitments
unutilized thereunder and (C) by any additional amounts permitted to be incurred
pursuant to other subparts under this definition of Permitted Debt (so long as
such additional Debt meets the applicable requirements of such other subparts);
(ii) any Liens securing such Refinance Debt are not extended to any additional
property of any Credit Party or any Subsidiary; (iii) no Credit Party or
Subsidiary that is not originally obligated with respect to repayment of such
Original Debt is required to become obligated with respect to such Refinance
Debt; (iv) such Refinance Debt does not have a weighted average life to maturity
greater than the weighted average life to maturity of such Original Debt;
(v) the terms of such Refinance Debt (A) are on prevailing market terms at the
time of issuing or borrowing for the type of financing and for the quality of
the issuer or borrower, or (B) are not (excluding pricing, fees, premiums, rate
floors, optional prepayment or redemption terms (and, if applicable,
subordination terms) and security), taken as a whole, materially less favorable
to the obligor thereunder than the terms of the Original Debt (other than
covenant or any other provisions applicable only to periods after the Maturity
Date) in each case, as determined by the Borrowers and their advisors in their
reasonable business judgment; and (vi) if such Original Debt was subordinated in
right of payment to the Obligations, then the terms and conditions of such
Refinance Debt must include subordination terms and conditions that are at least
as favorable to the Agent and the Lenders, taken as a whole as those that were
applicable to such Original Debt;

(u)    Debt of any Person that becomes a Subsidiary after the date hereof in
connection with a Permitted Acquisition; provided that (i) such Debt exists at
the time such Person becomes a Subsidiary and is not created in contemplation of
or in connection with such Person becoming a Subsidiary and (ii) the aggregate
principal amount of Debt permitted by this subpart (u), together with any
Refinance Debt in respect thereof, shall not exceed $10,000,000 at any time
outstanding;

(v)    Debt of Excluded Subsidiaries owed to other Excluded Subsidiaries;

(w)    Debt of Subsidiaries of Parent that are not Credit Parties not otherwise
permitted hereunder in an aggregate principal amount not to exceed $25,000,000
at any time outstanding, together with any Refinance Debt in respect thereof;

(x)    to the extent constituting Debt, the transactions permitted pursuant to
Section 5.8(b);

(y)    any joint and several liability arising as a result of (the
establishment) of a fiscal unity (fiscale eenheid) for Dutch tax purposes of
which a Credit Party is or has been a member;

 

33

--------------------------------------------------------------------------------

(z)    to the extent constituting Debt, deferred purchase price, seller notes
and other liabilities incurred or assumed in connection with any Permitted
Acquisition to the extent the same constitutes Acquisition Consideration and is
permitted to be incurred pursuant to clause (i) of the definition of “Permitted
Acquisition”); and

(aa)    other Debt not to exceed $50,000,000 outstanding at any one time;
provided that such Debt may be secured only by Liens permitted pursuant to
clause (q) of the definition of Permitted Liens and the aggregate outstanding
principal amount of such Debt that is so secured shall not exceed $25,000,000 at
any time outstanding, in each case, together with any Refinance Debt in respect
thereof.

“Permitted Discretion” means a determination made in the exercise of reasonable
(from the perspective of a secured asset-based lender) business judgment.

“Permitted Distributions” means the following Distributions: (a) dividends by
any Subsidiary of any Borrower to such parent Borrower; (b) dividends of any
Excluded Subsidiary to the direct corporate parent of such Excluded Subsidiary,
(c) dividends payable solely in common stock; (d) dividends in the Ordinary
Course of Business to Parent to the extent necessary to permit Parent: (i) to
pay (x) general administrative costs and expenses (including corporate overhead,
legal or similar expenses) and franchise fees and taxes and similar fees, taxes
and expenses required to maintain the organizational existence of Parent, in
each case, which are reasonable and customary and incurred in the Ordinary
Course of Business, plus any reasonable and customary indemnification claims
made by directors, officers, members of management or employees of Parent, in
each case, to the extent attributable to the ownership or operations of Parent
or any of its Subsidiaries and (y) without duplication of the preceding clause
(x), any Public Company Costs, (ii) to pay audit and other accounting and
reporting expenses at Parent to the extent relating to the ownership or
operations of its Subsidiaries, (iii) to pay insurance premiums to the extent
relating to the ownership or operations of its Subsidiaries, (iv) to pay fees
and expenses related to debt and equity offerings and Permitted Acquisitions and
other Permitted Investments (whether or not consummated), (v) to pay the
consideration to finance any Permitted Investment of Parent, and (vi) without
duplication of clause (i)(y) above, to pay customary salary, bonus and other
benefits payable to directors, officers, members of management and employees of
Parent to the extent such salary, bonuses and other benefits are directly
attributable and reasonably allocated to the operations of the Borrowers and
their Subsidiaries, in each case, so long as Parent applies the amount of any
such Distribution for such purpose; (e) dividends not exceeding $500,000 in the
aggregate during any Fiscal Year, pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of Parent and
its Subsidiaries; (f) repurchases of stock of former or present employees,
directors or consultants pursuant to stock purchase agreements so long as an
Event of Default does not exist at the time of such repurchase and would not
exist after giving effect to such repurchase, provided, however, that such
repurchase does not exceed (x) $1,000,000 in the aggregate per Fiscal Year and
(y) $5,000,000 in aggregate during the term of this Agreement; (g) any dividends
or other Distributions required to be made in connection with a Cash Convertible
Notes-Related Transaction; (h) to the extent constituting Distributions,
transactions in the Ordinary Course of Business to the extent permitted by
Section 5.8(b) (excluding, for the avoidance of doubt, any Distributions made by
Parent); (i) Distributions of cash and cash equivalents to Parent in an
aggregate amount not to exceed the fair market value of cash, cash equivalents
or marketable securities contributed to the capital of the Borrowers (i) prior
to the Closing Date, to the extent contributed pursuant to agreements or other
arrangements set forth on Schedule 5.3 and (ii) following the Closing Date, in
each case inclusive of any returns, profits, distributions and similar amounts
received on account of such capital contribution; and (j) to the extent
constituting Distributions, the Permitted Internal Reorganization transactions.

 

34

--------------------------------------------------------------------------------

“Permitted Internal Reorganization” means a corporate reorganization that has
been approved in writing by Agent (such approval not to be unreasonably
withheld, conditioned or delayed), following the Closing Date; provided, that in
no event shall such corporate reorganization result in any reduction in the
Collateral (or the value thereof) pledged to Agent hereunder or under the
Security Documents or the perfection of Agent’s security interests therein,
other than, in each case, the pledge of equity interests of certain Excluded
Subsidiaries.

“Permitted Investments” means:

(a)    Investments (i) shown on Schedule 5.7 and existing on the Closing Date
and (ii) in Subsidiaries made prior to the Closing Date and any modification,
replacement, renewal or extension thereof so long as any such modification,
replacement, renewal or extension thereof does not increase the amount of such
Investment except as otherwise permitted by Section 5.7;

(b)    cash and cash equivalents;

(c)    Investments consisting of the endorsement of negotiable instruments for
deposit or collection or similar transactions in the Ordinary Course of
Business;

(d)    Investments consisting of (i) travel advances and employee relocation
loans and other employee loans and advances in the Ordinary Course of Business,
and (ii) loans to employees, officers or directors relating to the purchase of
equity securities of Credit Parties or their Subsidiaries pursuant to employee
stock purchase plans or agreements approved by Credit Parties’ Board of
Directors (or other governing body), but the aggregate principal amount of all
such loans outstanding may not exceed $250,000 at any time;

(e)    Investments (including Debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the Ordinary Course of Business;

(f)    Investments consisting of notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the Ordinary Course of Business, provided, however, that this subpart (f) shall
not apply to Investments of Credit Parties in any Subsidiary;

(g)    Investments consisting of (i) Deposit Accounts in which Agent has
received a Deposit Account Control Agreement and (ii) Deposit Accounts that are
Excluded Accounts (subject to any caps and applicable restrictions set forth in
such definition);

(h)    Investments by any Credit Party in any Subsidiary now owned or hereafter
created by such Credit Party, which Subsidiary is a Borrower or has provided a
Guarantee of the Obligations of the Borrowers which Guarantee is secured by a
Lien granted by such Subsidiary to Agent in all or substantially all of its
property of the type described in Schedule 9.1 hereto and otherwise made in
compliance with Section 4.11(d);

(i)    Investments (including in the form of loans and advances) consisting of
cash and cash equivalents made by Credit Parties in Excluded Subsidiaries in an
aggregate amount not to exceed to $15,000,000 at any time (with any amounts
being repaid in cash to the maker not counting against such basket);

(j)    to the extent constituting Investments, the settlement of intercompany
accounts in the Ordinary Course of Business to the extent permitted by Section
5.8(b);

 

35

--------------------------------------------------------------------------------

(k)    Investments by any Excluded Subsidiary in any other Excluded Subsidiary;

(l)    to the extent constituting an Investment, Permitted Debt, Permitted
Liens, Permitted Distributions, Permitted Asset Dispositions and other
transactions expressly permitted by Section 5.3;

(m)    Investments consisting of (i) deposits, prepayments and other credits to
suppliers and (ii) advances made in connection with the purchase of goods and
services, in each case, in the Ordinary Course of Business and consistent with
customary credit practices and policies;

(n)    Investments of any Person existing at the time such Person becomes a
Subsidiary of Parent or consolidates or mergers with a Credit Party or
Subsidiary (including in connection with a Permitted Acquisition) so long as
such Investments were not made in contemplation thereof and any modification,
replacement, renewal or extension thereof so long as any such modification,
replacement, renewal or extension does not increase the amount of such
Investment except as otherwise permitted hereunder;

(o)    so long as no Default or Event of Default shall have occurred and be
continuing at the time thereof or would result therefrom, Investments consisting
solely of cash and cash equivalents in joint ventures in an amount not to exceed
$15,000,000 in the aggregate during the term of this Agreement;

(p)    Permitted Acquisitions;

(q)    Investments necessary to effect Permitted Internal Reorganization and
approved in writing by Agent (such approval not to be unreasonably withheld,
conditioned or delayed);

(r)    Investments required to be made pursuant to any Cash Convertible
Notes-Related Transaction; and

(s)    other Investments consisting solely of cash and cash equivalents in an
amount not exceeding $10,000,000 in the aggregate.

“Permitted License” means any non-exclusive license of Intellectual Property
rights of Credit Parties or their Subsidiaries so long as all such Permitted
Licenses are granted to third parties in the Ordinary Course of Business, do not
result in a legal transfer of title to the licensed property, and have been
granted in exchange for fair consideration.

“Permitted Liens” means:

(a)    deposits or pledges of cash to secure obligations under workmen’s
compensation, social security or similar laws, or under unemployment insurance
(but excluding Liens arising under ERISA or, with respect to any ERISA Plan or
Multiemployer Plan, the Code) pertaining to a Credit Party or its Subsidiary’s
employees;

(b)    deposits or pledges of cash to secure bids, tenders, contracts (other
than contracts for the payment of money or the deferred purchase price of
property or services), leases, statutory obligations, surety and appeal bonds
and other obligations of like nature arising in the Ordinary Course of Business;

 

36

--------------------------------------------------------------------------------

(c)    carrier’s, warehousemen’s, mechanic’s, workmen’s, materialmen’s or other
like Liens on Collateral arising in the Ordinary Course of Business with respect
to obligations which are not overdue for a period of more than sixty (60) days,
or which are being contested pursuant to a Permitted Contest;

(d)    Liens for taxes or other governmental charges not at the time delinquent
or thereafter payable without penalty or the subject of a Permitted Contest;

(e)    attachments, appeal bonds, judgments and other similar Liens on
Collateral that do not constitute an Event of Default under Section 10.1(h);
provided, however, that the execution or other enforcement of such Liens is
effectively stayed and the claims secured thereby are the subject of a Permitted
Contest;

(f)    with respect to real estate, easements, rights of way, restrictions,
minor defects or irregularities of title and other similar restrictions,
including environmental and land use restrictions, none of which, individually
or in the aggregate, materially interfere with the benefits of the security
intended to be provided by the Security Documents, materially affect the value
or marketability of the Collateral, materially impair the use or operation of
the Collateral for the use currently being made thereof or materially impair
Credit Parties’ ability to pay the Obligations in a timely manner or materially
impair the use of the Collateral or the ordinary conduct of the business of any
Credit Party or any Subsidiary and, in the case of any real estate that is part
of the Collateral, matters set forth as exceptions to or subordinate matters in
the title insurance policy accepted by Agent insuring the lien of the Security
Documents;

(g)    Liens and encumbrances in favor of Agent under the Financing Documents;

(h)    Liens, other than on Collateral that is part of the Borrowing Base
existing on the date hereof and set forth on Schedule 5.2, provided that such
Liens shall secure only those obligations existing on the Closing Date, and any
Refinance Debt in respect thereof;

(i)    Liens on insurance policies and the proceeds thereof securing the
financing of the premiums with respect thereto;

(j)    Liens (i) arising from operating leases with respect to assets not owned
by any Credit Party or any Subsidiary and the precautionary UCC filings in
respect thereof and (ii) on equipment or other materials which are not owned by
the Credit Party or any Subsidiary located on the premises of any Credit Party
or Subsidiary (but not in connection with, or as part of, the financing thereof)
from time to time in the Ordinary Course of Business and consistent with
customary practices of the Credit Party or Subsidiary and the precautionary UCC
filings in respect thereof;

(k)    any Lien on any equipment securing Debt permitted under subpart (c) of
the definition of Permitted Debt, provided, however, that such Lien attaches
concurrently with or within twenty (20) days after the acquisition thereof, and
Liens on such equipment securing any Refinance Debt;

(l)    the interests of lessors or sublessors under operating leases and
licensors or sublicensors under license agreements to the extent such license,
lease, sublease or sublicense its otherwise permitted under this Agreement;

(m)    Liens on assets of Subsidiaries that are not Credit Parties securing Debt
of such Subsidiaries permitted pursuant to subpart (w) of the definition of
“Permitted Debt”;

 

37

--------------------------------------------------------------------------------

(n)    Liens in favor of letter of credit issuers on the L/C Cash Collateral
Account to the extent securing obligations of Borrowers permitted pursuant to
clause (h) of the definition of Permitted Contingent Obligations;

(o)    to the extent constituting a Lien any security interest or right to
set-off arising under article 24 or 25 respectively of the general terms and
conditions (algemene voorwaarden) of any member of the Dutch Bankers’
Association (Nederlandse Vereniging van Banken);

(p)    Liens of an Affiliate of any Person organized under Dutch law resulting
from any joint and several liability arising as a result of (the establishment)
of a fiscal unity (fiscale eenheid) for Dutch tax purposes of which a Credit
Party is or has been a member; and

(q)    Other Liens attaching to assets of Credit Parties with an aggregate fair
market value not to exceed $25,000,000 at any time outstanding; provided that,
in the case of this clause (q), such Liens are subordinated to the Liens granted
by the Credit Parties pursuant to the terms of the Financing Documents and, in
all cases, subject to a Subordination Agreement or other intercreditor
agreement, as applicable, that is in form and substance reasonably satisfactory
to Agent and Required Lenders.

Notwithstanding the foregoing, no Permitted Lien may at any time attach to any
Credit Party’s Accounts, Inventory or other Collateral upon which the Borrowing
Base is calculated other than those Liens permitted under clauses (a) – (f) of
this definition.

“Permitted Modifications” means (a) such amendments or other modifications to a
Credit Party’s or Subsidiary’s Organizational Documents as are required under
this Agreement or by applicable Law and fully disclosed to Agent within thirty
(30) days after such amendments or modifications have become effective, (b) such
amendments or modifications to a Credit Party’s or Subsidiary’s Organizational
Documents (including, subject to compliance with Section 9.2(e), those involving
a change in name of a Credit Party or Subsidiary or involving the reorganization
of a Credit Party or Subsidiary under the laws of a different jurisdiction;
provided that no Credit Party organized under the laws of the United States or
any state thereof shall be reorganized under the laws of a jurisdictions other
than the United States or any state thereof) that would not adversely affect the
rights and interests of Agent or Lenders and fully disclosed to Agent within
thirty (30) days after such amendments or modifications have become effective
and (c) such amendments or modifications to a Credit Party’s or Subsidiary’s
Organizational Documents as are required in connection with the Permitted
Internal Reorganization.

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

“Pro Rata Share” means (a) with respect to a Lender’s obligation to make
Revolving Loans, the Revolving Loan Commitment Percentage of such Lender,
(b) with respect to a Lender’s right to receive payments of principal and
interest with respect to Revolving Loans, such Lender’s Revolving Loan Exposure
with respect thereto; and (c) for all other purposes (including, without
limitation, the indemnification obligations arising under Section 11.6) with
respect to any Lender, the percentage obtained by dividing (i) the Revolving
Loan Commitment Amount of such Lender (or, in the event the Revolving Loan
Commitment shall have been terminated, such Lender’s then existing Revolving
Loan Outstandings), by (ii) the sum of the Revolving Loan Commitment (or, in the
event the Revolving Loan Commitment shall have been terminated, the then
existing Revolving Loan Outstanding) of all Lenders.

 

38

--------------------------------------------------------------------------------

“Process Agent” has the meaning set forth in Section 13.19.

“Products” means, from time to time, any products currently manufactured, sold,
developed, tested or marketed by any Borrower or any of its Subsidiaries.

“Public Company Costs” means costs relating to compliance with the provisions of
the Securities Act and the Exchange Act, in each case, as applicable to
companies with registered equity or debt securities held by the public, the
rules of national securities exchange companies with listed equity or debt
securities, directors’ compensation, fees and expense reimbursement, costs
relating to investor relations, shareholder meetings and reports to shareholders
and debtholders, directors’ and officers’ insurance, listing fees and all
executive, legal and professional fees related to the foregoing, in each case,
which are incurred in the Ordinary Course of Business.

“Raw Materials Inventory” means all Inventory of the Borrower consisting of raw
materials.

“Recall” means a Person’s Removal or Correction of a marketed product that the
FDA considers to be in violation of the laws it administers and against which
the FDA would initiate legal action, e.g., seizure.

“Registered Intellectual Property” means any patent, registered trademark or
servicemark, registered copyright, registered mask work, or any pending
application for any of the foregoing.

“Regulatory Reporting Event” has the meaning set forth in Section 4.17.

“Regulatory Required Permit” means any and all licenses, approvals and permits
issued by the FDA or any other applicable Governmental Authority, necessary for
the testing, manufacture, marketing or sale of any Product by any applicable
Credit Party and its Subsidiaries as such activities are being conducted by such
Credit Party and its Subsidiaries with respect to such Product at such time or
that are otherwise necessary for the conduct of Credit Party’s or any
Subsidiary’s business.

“Removal” means the physical removal of a product from its point of use to some
other location for repair, modification, adjustment, relabeling, destruction, or
inspection.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA.

“Required Lenders” means at any time Lenders holding (a) sixty percent (60%) or
more of the sum of the Revolving Loan Commitment (taken as a whole), or (b) if
the Revolving Loan Commitment has been terminated, sixty percent (60%) or more
of the then aggregate outstanding principal balance of the Loans.

“Responsible Officer” means (a) with respect to the delivery of any Borrowing
Base Certificate or Compliance Certificate, any of the Chief Executive Officer,
Chief Financial Officer or any other officer of the applicable Credit Party
acceptable to Agent or (b) for all other purposes under the Financing Documents,
the chief executive officer, president, vice president, chief financial officer,
chief operating officer, secretary, treasurer or other similar officer or Person
performing similar functions of a Credit Party.

“Revolving Lender” means each Lender having a Revolving Loan Commitment Amount
in excess of Zero Dollars ($0) (or, in the event the Revolving Loan Commitment
shall have been terminated at any time, each Lender at such time having
Revolving Loan Outstandings in excess of Zero Dollars ($0)).

 

39

--------------------------------------------------------------------------------

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

“Revolving Loan Commitment” means, as of any date of determination, the
aggregate Revolving Loan Commitment Amounts of all Lenders as of such date.

“Revolving Loan Commitment Amount” means, as to any Lender, the dollar amount
set forth opposite such Lender’s name on the Commitment Annex under the column
“Revolving Loan Commitment Amount” (if such Lender’s name is not so set forth
thereon, then the dollar amount on the Commitment Annex for the Revolving Loan
Commitment Amount for such Lender shall be deemed to be Zero Dollars ($0)), as
such amount may be adjusted from time to time by any amounts assigned (with
respect to such Lender’s portion of Revolving Loans outstanding and its
commitment to make Revolving Loans) pursuant to the terms of any and all
effective assignment agreements to which such Lender is a party and (b) any
Additional Tranche(s) activated by Borrowers. For the avoidance of doubt, the
aggregate Revolving Loan Commitment Amount of all Lenders on the Closing Date
shall be $150,000,000 and if the Additional Tranche is fully activated by
Borrowers pursuant to the terms of the Agreement such amount shall increase to
$250,000,000.

“Revolving Loan Commitment Percentage” means, as to any Lender, (a) on the
Closing Date, the percentage set forth opposite such Lender’s name on the
Commitment Annex under the column “Revolving Loan Commitment Percentage” (if
such Lender’s name is not so set forth thereon, then, on the Closing Date, such
percentage for such Lender shall be deemed to be zero), and (b) on any date
following the Closing Date, the percentage equal to the Revolving Loan
Commitment Amount of such Lender on such date divided by the Revolving Loan
Commitment on such date.

“Revolving Loan Exposure” means, with respect to any Lender on any date of
determination, the percentage equal to the amount of such Lender’s Revolving
Loan Outstandings on such date divided by the aggregate Revolving Loan
Outstandings of all Lenders on such date.

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

“Revolving Loan Outstandings” means, at any time of calculation, (a) the then
existing aggregate outstanding principal amount of Revolving Loans, and (b) when
used with reference to any single Lender, the then existing outstanding
principal amount of Revolving Loans advanced by such Lender.

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

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

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

“Securities Account Control Agreement” means an agreement, in form and substance
satisfactory to Agent, among Agent, any applicable Credit Party and each
securities intermediary in which such Credit Party maintains a Securities
Account pursuant to which Agent shall obtain “control” (as defined in Article 8
of the UCC) over such Securities Account.

 

40

--------------------------------------------------------------------------------

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

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

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

“Subordinated Debt” means any Debt of Borrowers incurred pursuant to the terms
of the Subordinated Debt Documents and with the prior written consent of Agent
(acting reasonably), all of which documents must be in form and substance
reasonably acceptable to Agent. As of the Closing Date, there is no Subordinated
Debt.

“Subordinated Debt Documents” means any documents evidencing and/or securing
Debt governed by a Subordination Agreement, all of which documents must be in
form and substance reasonably acceptable to Agent. As of the Closing Date, there
are no Subordinated Debt Documents.

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

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

“Surgical Instrumentation” means medical instruments, kits and equipment to be
used in medical procedures.

 

41

--------------------------------------------------------------------------------

“Swap Contract” means any “swap agreement” as defined in Section 101 of the
Bankruptcy Code, that is obtained by a Credit Party to provide protection
against fluctuations in interest or currency exchange rates, but only if Agent
provides its prior written consent to the entry into such “swap agreement”.

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

“Tennessee Property PILOT Program” means the payment-in-lieu-of-taxes (“PILOT”)
program entered into by Wright Medical Technology, Inc., Shelby County,
Tennessee and IDB on or around December 31, 2014 in furtherance of which certain
real property and personal property of Wright Medical Technology, Inc. located
in Shelby County, Tennessee was transferred to IDB and was then leased by IDB,
as lessor, to Wright Medical Technology, Inc., as lessee, in the case of such
real property, pursuant to the Arlington Real Property Lease, and in the case of
such personal property, pursuant to the terms and conditions of the Arlington
Personal Property Leases, as such PILOT program may be amended and in effect
from time to time in accordance with the terms of this Agreement, and including,
without limitation, the right of Wright Medical Technology, Inc. to add
additional personal property (other than any Collateral upon which the Borrowing
Base is calculated) to the Project (as defined in the Arlington Personal
Property Lease) from time to time on the terms and conditions set forth in the
Arlington Personal Property Leases and to the extent otherwise permitted
pursuant to the terms of this Agreement) and to enter into amendments and
modifications of the Arlington Real Property Lease, the Arlington Personal
Property Leases, any new lease agreements and related agreements from time to
time in its discretion but solely to the extent such amendments or modifications
are not materially adverse to Agent or Lenders and, in the case of any personal
property lease, so long as it is subject to the terms of the Landlord Estoppel
Agreement.

“Termination Date” means the earlier to occur of (a) the Maturity Date, (b) any
date on which Agent accelerates the maturity of the Loans pursuant to
Section 10.2, or (c) the termination date stated in any notice of termination of
this Agreement provided by Borrowers in accordance with Section 2.12.

“Termination Event” means, with respect to any ERISA Plan, (i) a Reportable
Event, (ii) the institution of proceedings to terminate a ERISA Plan under
Section 4042 of ERISA, (iii) the appointment of a trustee to administer any
ERISA Plan under Section 4042 of ERISA, or (iv) any withdrawal or partial
withdrawal from a Multiemployer Plan if the withdrawal liability (without
unaccrued interest) to Multiemployer Plans as a result of such withdrawal
(including any outstanding withdrawal liability that any Credit Party or any
member of the Controlled Group have incurred on the date of such withdrawal)
exceeds $2,500,000.

“Third Party Accounts” means Accounts owed by Third Party Account Debtors to
Credit Parties.

“Third Party Account Debtor” means each Account Debtor that is not a Credit
Party or an Excluded Subsidiary.

“Third Party Payor” means Medicare, Medicaid, TRICARE, and other state or
federal health care program, Blue Cross and/or Blue Shield, private insurers,
managed care plans and any other Person or entity which presently or in the
future maintains Third Party Payor Programs.

“Third Party Payor Programs” means all payment and reimbursement programs,
sponsored by a Third Party Payor, in which a Borrower participates.

 

42

--------------------------------------------------------------------------------

“Total Assets” means the total amount of all assets of Borrowers and their
consolidated subsidiaries, determined on a consolidated basis in accordance with
GAAP as shown on the most recent balance sheet of Parent.

“TRICARE” means the program administered pursuant to 10 U.S.C. Section 1071 et.
seq, Sections 1320a-7 and 1320a-7a of Title 42 of the United States Code and the
regulations promulgated pursuant to such statutes.

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

“United States” means the United States of America.

“VAT” means (a) any tax imposed in compliance with the Council Directive of
28 November 2006 on the common system of value added tax (EC Directive
2006/112); and (b) any other tax of a similar nature, whether imposed in a
member state of the European Union in substitution for, or levied in addition
to, such tax referred to in paragraph (a), or imposed elsewhere.

“Work-In-Process” means Inventory that is not a product that is finished and
approved by a Borrower in accordance with applicable Laws and such Borrower’s
normal business practices for release and delivery to customers.

“Wright” has the meaning set forth in the introductory paragraph hereto.

“Wright Settlement Escrow Account” means that certain Deposit Account of Wright
Medical Technology, Inc. maintained pursuant to the Master Settlement Agreement,
dated as of November 1, 2016 (the “Master Settlement Agreement”) in connection
with the settlement of the litigation known as In Re: Wright Medical Technology,
Inc., CONSERVE® Hip Implant Products Liability Litigation, MDL No. 2329 No. 2329
(MDL) and the consolidated proceeding pending in state court in California known
as In re: Wright Hip System Cases, Judicial Council Coordination Proceeding
No. 4710 (JCCP); provided, that at no time shall such Deposit Account contain
funds in excess of those required to be contributed therein in accordance with
the Master Settlement Agreement.

Section 1.2    Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder (including, without limitation, determinations made
pursuant to the exhibits hereto) shall be made, and all financial statements
required to be delivered hereunder shall be prepared on a consolidated basis in
accordance with GAAP applied on a basis consistent with the most recent audited
consolidated financial statements of each Credit Party and its Consolidated
Subsidiaries delivered to Agent and each of the Lenders on or prior to the
Closing Date. If at any time any change in GAAP would affect the computation of
any financial ratio or financial requirement set forth in any Financing
Document, and either Borrowers or the Required Lenders shall so request, Agent
and the Borrowers shall negotiate in good faith to amend such ratio or
requirement to preserve the original intent thereof in light of such change in
GAAP (subject to the approval of the Required Lenders); provided, however, that
until so amended, (a) such ratio or requirement shall continue to be computed in
accordance with GAAP prior to such change therein and (b) Borrowers shall
provide to Agent and the Lenders financial statements and other documents
required under this Agreement which include a reconciliation between
calculations of such ratio or requirement made before and after giving effect to
such change in GAAP. Notwithstanding any other provision contained herein,
(i) all terms of an accounting or financial nature used herein shall be
construed, and all

 

43

--------------------------------------------------------------------------------

computations of amounts and ratios referred to herein shall be made, without
giving effect to any election under Statement of Financial Accounting Standards
159 (or any other Financial Accounting Standard having a similar result or
effect) to value any Debt or other liabilities of any Credit Party or any
Subsidiary of any Credit Party at “fair value”, as defined therein and (ii) to
the extent that any change in GAAP after the Closing Date results in leases
which are, or would have been, classified as operating leases under GAAP as it
exists on the Closing Date being classified as a Capital Lease under as revised
GAAP (whether such lease is entered into before or after the date hereof), such
change in classification of leases from operating leases to Capital Leases shall
be ignored for purposes of this Agreement, unless the parties hereto shall enter
into a mutually acceptable amendment addressing such changes, as provided for
above.

Section 1.3    Other Definitional and Interpretive Provisions. References in
this Agreement to “Articles”, “Sections”, “Annexes”, “Exhibits”, or “Schedules”
shall be to Articles, Sections, Annexes, Exhibits or Schedules of or to this
Agreement unless otherwise specifically provided. Any term defined herein may be
used in the singular or plural. “Include”, “includes” and “including” shall be
deemed to be followed by “without limitation”. Except as otherwise specified or
limited herein, references to any Person include the successors and assigns of
such Person. References “from” or “through” any date mean, unless otherwise
specified, “from and including” or “through and including”, respectively. Unless
otherwise specified herein, the settlement of all payments and fundings
hereunder between or among the parties hereto shall be made in lawful money of
the United States and in immediately available funds. References to any statute
or act shall include all related current regulations and all amendments and any
successor statutes, acts and regulations. All amounts used for purposes of
financial calculations required to be made herein shall be without duplication.
References to any statute or act, without additional reference, shall be deemed
to refer to federal statutes and acts of the United States. References to any
agreement, instrument or document shall include all schedules, exhibits, annexes
and other attachments thereto. As used in this Agreement, the meaning of the
term “material” or the phrase “in all material respects” is intended to refer to
an act, omission, violation or condition which reflects or could reasonably be
expected to result in a Material Adverse Effect. References to capitalized terms
that are not defined herein, but are defined in the UCC, shall have the meanings
given them in the UCC. All references herein to times of day shall be references
to Eastern Time (daylight or standard time, as applicable).

Section 1.4    Time is of the Essence. Time is of the essence in Borrower’s and
each other Credit Party’s performance under this Agreement and all other
Financing Documents.

ARTICLE 2 - LOANS

Section 2.1    Loans.

(a)    Reserved.

(b)    Revolving Loans.

(i)    Revolving Loans and Borrowings. On the terms and subject to the
conditions set forth herein, each Lender severally agrees to make loans to
Borrowers from time to time as set forth herein (each a “Revolving Loan”, and
collectively, “Revolving Loans”) equal to such Lender’s Revolving Loan
Commitment Percentage of Revolving Loans requested by Borrowers hereunder,
provided, however, that after giving effect thereto, the Revolving Loan
Outstandings shall not exceed the Revolving Loan Limit. Borrowers shall deliver
to Agent a Notice of Borrowing with respect to each proposed borrowing of a
Revolving Loan, such Notice of Borrowing to be delivered before 1:00 p.m.
(Eastern time) two (2) Business Days prior to the

 

44

--------------------------------------------------------------------------------

date of such proposed borrowing; provided that for the borrowing of Revolving
Loans on the Closing Date, Borrower may delivery the Notice of Borrowing prior
to such borrowing on the Closing Date. Each Borrower and each Revolving Lender
hereby authorizes Agent to make Revolving Loans on behalf of Revolving Lenders,
at any time in its sole discretion, to pay principal owing in respect of the
Loans and interest, fees, expenses and other charges payable by any Credit Party
from time to time arising under this Agreement or any other Financing Document.
The Borrowing Base shall be determined by Agent based on the most recent
Borrowing Base Certificate delivered to Agent in accordance with this Agreement
and such other information as may be available to Agent. Without limiting any
other rights and remedies of Agent hereunder or under the other Financing
Documents, the Revolving Loans shall be subject to Agent’s continuing right to
withhold from the Borrowing Base reserves, and to increase and decrease such
reserves from time to time, if and to the extent that in Agent’s Permitted
Discretion, such reserves are necessary.

(ii)    Mandatory Revolving Loan Repayments and Prepayments.

(A)    The Revolving Loan Commitment shall terminate on the Termination Date. On
such Termination Date, there shall become due, and Borrowers shall pay, the
entire outstanding principal amount of each Revolving Loan, together with
accrued and unpaid Obligations pertaining thereto incurred to, but excluding the
Termination Date; provided, however, that such payment is made not later than
12:00 Noon (Eastern time) on the Termination Date.

(B)    If at any time the Revolving Loan Outstandings exceed the Revolving Loan
Limit (an “Overadvance”), then, on the next succeeding Business Day, Borrowers
shall repay the Revolving Loans, in an aggregate amount equal to such excess;
provided, that, if such Overadvance is the sole and direct result of the
establishment of a reserve against the Borrowing Base by Agent in accordance
with Section 2.1(b)(i) or otherwise in accordance with the definition of
Borrowing Base, Eligible Domestic Accounts, Eligible Foreign Accounts, Eligible
Equipment, Eligible Inventory or Eligible Surgical Instrumentation, and is not
related to any other event, condition or other matter other than the
establishment of such reserve, then such Overadvance shall be payable by
Borrowers within five (5) Business Days from the date on which such Overadvance
first arises.

(C)    Principal payable on account of Revolving Loans shall be payable by
Borrowers to Agent (I) immediately upon the receipt by any Borrower or Agent of
any payments on or proceeds from any of the Third Party Accounts or other
Collateral that is part of the Borrowing Base, to the extent of such payments or
proceeds, as further described in Section 2.11 below, and (II) in full on the
Termination Date.

(iii)    Optional Prepayments. Borrowers may from time to time prepay the
Revolving Loans in whole or in part without any corresponding reduction in the
Revolving Loan Commitment; provided, however, that any such partial prepayment
shall be in an amount equal to $100,000 or a higher integral multiple of
$25,000. For the avoidance of doubt, nothing in this clause shall permit
termination of the Revolving Loan Commitment by Borrower other than in
accordance with Section 2.12(b).

(iv)    LIBOR Rate.

 

45

--------------------------------------------------------------------------------

(A)     Except as provided in subsection (C) below, Revolving Loans shall accrue
interest at the LIBOR Rate plus the Applicable Margin.

(B)    The LIBOR Rate may be adjusted by Agent by notice to the Borrower
Representative with respect to any Lender on a prospective basis to take into
account any additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs, in each case, due to
changes in applicable Law occurring subsequent to the commencement of the then
applicable Interest Period, including changes in tax laws (except changes of
general applicability in corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal Reserve System (or
any successor), which additional or increased costs would increase the cost of
funding loans bearing interest based upon the LIBOR Rate; provided, however,
that notwithstanding anything in this Agreement to the contrary, (i) the
Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests,
rules, guidelines or directives thereunder or issued in connection therewith and
(ii) all requests, rules, guidelines or directives promulgated by the Bank for
International Settlements, the Basel Committee on Banking Supervision (or any
successor or similar authority) or the United States or foreign regulatory
authorities, in each case pursuant to Basel III, shall in each case be deemed to
be a “change in applicable Law”, regardless of the date enacted, adopted or
issued. In any such event, the affected Lender shall give Borrowers and Agent
notice of such a determination and adjustment and Agent promptly shall transmit
the notice to each other Lender and, along with a certificate from such Lender
setting forth the basis for adjusting such LIBOR Rate and the method for
determining the amount of such adjustment. Upon receipt of such notice, the
applicable Borrower may, by notice to such affected Lender, repay the Loans
bearing interest based upon the LIBOR Rate with respect to which such adjustment
is made.

(C)    In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation of
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain Loans bearing interest based upon the LIBOR Rate or to continue such
funding or maintaining, or to determine or charge interest rates at the LIBOR
Rate, such Lender shall give notice of such changed circumstances to Agent and
Borrowers and Agent promptly shall transmit the notice to each other Lender and
(I) in the case of any outstanding Loans of such Lender bearing interest based
upon the LIBOR Rate, the date specified in such Lender’s notice shall be deemed
to be the last day of the Interest Period of such Loans, and interest upon such
Lender’s Loans thereafter shall accrue interest at Base Rate plus the Applicable
Margin, and (II) such Loans shall continue to accrue interest at Base Rate plus
the Applicable Margin until such Lender determines that it would no longer be
unlawful or impractical to maintain such Loans at the LIBOR Rate.

(D)    Anything to the contrary contained herein notwithstanding, neither Agent
nor any Lender is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues based on the
LIBOR Rate.

(c)    Additional Tranches. After the Closing Date, so long as no Default or
Event of Default exists and subject to the terms of this Agreement, with the
prior written consent of Agent and all Lenders in their sole discretion, the
Revolving Loan Commitment may be increased upon the written

 

46

--------------------------------------------------------------------------------

request of Borrower Representative (which such request shall state the aggregate
amount of the Additional Tranche requested and shall be made at least forty-five
(45) days prior to the proposed effective date of such Additional Tranche) to
Agent to activate an Additional Tranche; provided, however, that Agent and
Lenders shall have no obligation to consent to any requested activation of an
Additional Tranche and the written consent of Agent and all Lenders shall be
required in order to activate an Additional Tranche. Upon activating an
Additional Tranche, each Lender’s Commitment shall increase by a proportionate
amount so as to maintain the same Pro Rata Share of the Revolving Loan
Commitment and the Revolving Loans as such Lender held immediately prior to such
activation. In the event Agent and all Lenders do not consent to the activation
of a requested Additional Tranche within forty-five (45) days after receiving a
written request from Borrower Representative, then the Revolving Loan Commitment
shall not be increased and, within the next ninety (90) days, Borrowers may
terminate this Agreement upon written notice to Agent and, if the Borrowing Base
on the date of such request would have supported such increased Revolving Loan
Commitment, upon repayment in full of all Obligations, no fee shall be due
pursuant to Section 2.2(g) in connection with such termination.

Section 2.2    Interest, Interest Calculations and Certain Fees.

(a)    Interest. From and following the Closing Date, except as expressly set
forth in this Agreement, Loans and the other Obligations shall bear interest at
the sum of the LIBOR Rate plus the Applicable Margin. Interest on the Loans
shall be paid in arrears on the first (1st) day of each month and on the
maturity of such Loans, whether by acceleration or otherwise. Interest on all
other Obligations shall be payable upon demand. For purposes of calculating
interest, all funds transferred to the Payment Account for application to any
Revolving Loans shall be subject to a five (5) Business Day clearance period and
all interest accruing on such funds during such clearance period shall accrue
for the benefit of Agent, and not for the benefit of the Lenders.

(b)    Unused Line Fee. From and following the Closing Date, Borrowers shall pay
Agent, for the benefit of all Lenders committed to make Revolving Loans, in
accordance with their respective Pro Rata Shares, a fee in an amount equal to
(i) (A) Revolving Loan Commitment minus (B) the average daily balance of the sum
of the Revolving Loan Outstandings during the preceding month, multiplied by
(ii) 0.50% per annum. The unused line fee shall be paid monthly in arrears on
the first day of each month and shall be deemed fully earned when due and
payable and, once paid, shall be non-refundable.

(c)    Fee Letter. In addition to the other fees set forth herein, the Borrowers
agree to pay Agent the fees set forth in any Fee Letter.

(d)    Minimum Balance Fee. On the first day of each month, commencing on
January 1, 2017, the Borrowers agree to pay to Agent, for the ratable benefit of
all Lenders, the sum of the Minimum Balance Fees due for the prior month. The
Minimum Balance Fee shall be deemed fully earned when due and payable and, once
paid, shall be non-refundable.

(e)    Collateral Management Fee. From and following the Closing Date, Borrowers
shall pay Agent, for its own account and not for the benefit of any other
Lenders, a fee in an amount equal to the product obtained by multiplying (i) the
average end-of-day principal balance of Revolving Loans outstanding during the
immediately preceding month by (ii) one tenth of one percent (0.10%) per month.
For purposes of calculating the average end-of-day principal balance of
Revolving Loans, all funds paid into the Payment Account (or which were required
to be paid into the Payment Account hereunder) or otherwise received by Agent
for the account of Borrowers shall be subject to a five (5) Business Day
clearance period. The collateral management fee shall be payable monthly in
arrears on the first day of each calendar month and shall be deemed fully earned
when due and payable and, once paid, shall be non-refundable.

 

47

--------------------------------------------------------------------------------

(f)    Origination Fee. Contemporaneous with Borrowers’ execution of this
Agreement, Borrowers shall pay Agent, for the benefit of all Lenders committed
to make Revolving Loans on the Closing Date, in accordance with their respective
Pro Rata Shares, a fee in an amount equal to (i) the Revolving Loan Commitment,
multiplied by (ii) one percent (1.00%). All fees payable pursuant to this
paragraph shall be due and payable and non-refundable as of the Closing Date.

(g)    Deferred Revolving Loan Origination Fee. If Lenders’ funding obligations
in respect of the Revolving Loan Commitment under this Agreement terminate or
are permanently reduced for any reason (whether by voluntary termination by
Borrowers, by reason of the occurrence of an Event of Default or otherwise)
prior to the Maturity Date, Borrowers shall pay to Agent on the date of such
reduction, for the benefit of all Lenders committed to make Revolving Loans on
the Closing Date, a fee as compensation for the costs of such Lenders being
prepared to make funds available to Borrowers under this Agreement, equal to an
amount determined by multiplying the Revolving Loan Commitment by the following
applicable percentage amount: three percent (3%) for the first year following
the Closing Date, two percent (2%) for the second year following the Closing
Date, and three quarters of one percent (0.75%) thereafter. All fees payable
pursuant to this paragraph shall be deemed fully earned and non-refundable as of
the Closing Date.

(h)    Reserved.

(i)    Reserved.

(j)    Reserved.

(k)    Audit Fees. Subject to Section 4.6, Borrowers shall pay to Agent, for its
own account and not for the benefit of any other Lenders, all reasonable fees
and expenses in connection with audits and inspections of Borrowers’ books and
records, audits, valuations or appraisals of the Collateral, audits of
Borrowers’ compliance with applicable Laws and such other matters as Agent shall
deem appropriate, which shall be due and payable on the first Business Day of
the month following the date of issuance by Agent of a written request for
payment thereof to Borrowers.

(l)    Wire Fees. Borrowers shall pay to Agent, for its own account and not for
the account of any other Lenders, on written demand, fees for incoming and
outgoing wires made for the account of Borrowers, such fees to be based on
Agent’s then current wire fee schedule (available upon written request of the
Borrowers).

(m)    [Reserved].

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

(o)    Automated Clearing House Payments. If Agent (or its designated servicer)
so elects, monthly payments of principal, interest, fees, expenses or any other
amounts due and owing from Borrower to Agent hereunder shall be paid to Agent by
Automated Clearing House debit of immediately available funds from the financial
institution account designated by Borrower Representative in the

 

48

--------------------------------------------------------------------------------

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

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

Section 2.4    Reserved.

Section 2.5    Reserved.

Section 2.6    General Provisions Regarding Payment; Loan Account.

(a)    All payments to be made by each Credit Party under any Financing
Document, including payments of principal and interest made hereunder and
pursuant to any other Financing Document, and all fees, expenses, indemnities
and reimbursements, shall be made without set-off, recoupment or counterclaim.
If any payment hereunder becomes due and payable on a day other than a Business
Day, such payment shall be extended to the next succeeding Business Day and,
with respect to payments of principal, interest thereon shall be payable at the
then applicable rate during such extension (it being understood and agreed that,
solely for purposes of calculating financial covenants and computations
contained herein and determining compliance therewith, if payment is made, in
full, on any such extended due date, such payment shall be deemed to have been
paid on the original due date without giving effect to any extension thereto).
Any payments received in the Payment Account before 12:00 Noon (Eastern time) on
any date shall be deemed received by Agent on such date, and any payments
received in the Payment Account at or after 12:00 Noon (Eastern time) on any
date shall be deemed received by Agent on the next succeeding Business Day.

(b)    Agent shall maintain a loan account (the “Loan Account”) on its books to
record Loans and other extensions of credit made by the Lenders hereunder or
under any other Financing Document, and all payments thereon made by each
Borrower. All entries in the Loan Account shall be made in accordance with
Agent’s customary accounting practices as in effect from time to time. The
balance in the Loan Account, as recorded in Agent’s books and records at any
time shall be conclusive and binding evidence of the amounts due and owing to
Agent by each Borrower absent manifest error; provided, however, that any
failure to so record or any error in so recording shall not limit or otherwise
affect any Borrower’s duty to pay all amounts owing hereunder or under any other
Financing Document. Agent shall endeavor to provide Borrowers with a monthly
statement regarding the Loan Account (but neither Agent nor any Lender shall
have any liability if Agent shall fail to provide any such statement). Unless
any Borrower notifies Agent of any objection to any such statement (specifically
describing the basis for such objection) within ninety (90) days after the date
of receipt thereof, it shall be deemed final, binding and conclusive upon
Borrowers in all respects as to all matters reflected therein.

Section 2.7    Maximum Interest. In no event shall the interest charged with
respect to the Loans or any other Obligations of any Borrower under any
Financing Document exceed the maximum amount permitted under the laws of the
State of New York or of any other applicable jurisdiction. Notwithstanding
anything to the contrary herein or elsewhere, if at any time the rate of
interest payable hereunder or under any Note or other Financing Document (the
“Stated Rate”) would exceed the highest rate of interest permitted under any
applicable law to be charged (the “Maximum Lawful Rate”), then

 

49

--------------------------------------------------------------------------------

for so long as the Maximum Lawful Rate would be so exceeded, the rate of
interest payable shall be equal to the Maximum Lawful Rate; provided, however,
that if at any time thereafter the Stated Rate is less than the Maximum Lawful
Rate, each Borrower shall, to the extent permitted by law, continue to pay
interest at the Maximum Lawful Rate until such time as the total interest
received is equal to the total interest which would have been received had the
Stated Rate been (but for the operation of this provision) the interest rate
payable. Thereafter, the interest rate payable shall be the Stated Rate unless
and until the Stated Rate again would exceed the Maximum Lawful Rate, in which
event this provision shall again apply. In no event shall the total interest
received by any Lender exceed the amount which it could lawfully have received
had the interest been calculated for the full term hereof at the Maximum Lawful
Rate. If, notwithstanding the prior sentence, any Lender has received interest
hereunder in excess of the Maximum Lawful Rate, such excess amount shall be
applied to the reduction of the principal balance of the Loans or to other
amounts (other than interest) payable hereunder, and if no such principal or
other amounts are then outstanding, such excess or part thereof remaining shall
be paid to Borrowers. In computing interest payable with reference to the
Maximum Lawful Rate applicable to any Lender, such interest shall be calculated
at a daily rate equal to the Maximum Lawful Rate divided by the number of days
in the year in which such calculation is made.

Section 2.8    Taxes; Capital Adequacy.

(a)    All payments of principal and interest on the Loans and all other amounts
payable hereunder shall be made free and clear of and without deduction for any
present or future income, excise, stamp, documentary, payroll, employment,
property or franchise taxes and other taxes, fees, duties, levies, assessments,
withholdings or other charges of any nature whatsoever (including interest and
penalties thereon) imposed by any taxing authority, excluding (1) taxes imposed
on or measured by Agent’s or any Lender’s net income (however denominated),
branch profits taxes, and franchise taxes, in each case (i) imposed as a result
of such Agent or Lender being organized under the laws of, or having its
principal office or, in the case of any Lender, its applicable lending office
located in, the jurisdiction imposing such tax (or any political subdivision
thereof) or (ii) imposed as a result of a present or former connection between
such Agent or Lender and the jurisdiction imposing such tax (other than
connections arising from such Agent or Lender having executed, delivered, become
a party to, performed its obligations under, received payments under, received
or perfected a security interest under, engaged in any other transaction
pursuant to or enforced any of the Financing Documents) (2) in the case of any
Lender, any U.S. federal withholding tax that is (or would be) required to be
withheld from amounts payable to or for the account of such Lender with respect
to any Financing Documents pursuant to the law in effect on the date that such
Lender becomes a party to this Agreement or designates a new lending office
(except to the extent that, pursuant to this Section 2.8, amounts with respect
to such taxes were payable to such Lender immediately before it changed its
lending office), (3) any taxes attributable to a Lender’s failure to comply with
Section 2.8(c), (4) in the case of any Lender that is not a Foreign Lender, any
United States federal backup withholding tax, (5) taxes imposed under FATCA,
(6) taxes resulting from the gross negligence, bad faith or willful misconduct
of Agent or any such Lender, and (7) any penalties, interest and additions to
tax relating to any of the foregoing (all such excluded items, “Excluded Taxes”;
all non-excluded items being called “Taxes”). If any withholding or deduction
from any payment to be made by any Credit Party hereunder is required in respect
of any Taxes pursuant to any applicable Law (as determined in the good faith
discretion of an applicable withholding agent), then Credit Parties will:
(i) pay directly to the relevant authority the full amount required to be so
withheld or deducted; (ii) promptly forward to Agent an official receipt or
other documentation satisfactory to Agent evidencing such payment to such
authority; and (iii) pay to Agent for the account of Agent and Lenders such
additional amount or amounts as is necessary to ensure that the net amount
actually received by Agent and each Lender will equal the full amount Agent and
such Lender would have received had no such withholding or deduction been
required. If any Taxes are

 

50

--------------------------------------------------------------------------------

directly asserted against Agent or any Lender with respect to any payment
received by Agent or such Lender hereunder, Agent or such Lender may pay such
Taxes and Credit Parties will promptly pay such additional amounts (including
any penalty, interest or expense) as is necessary in order that the net amount
received by such Person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such Person would have received
had such Taxes not been asserted so long as such amounts have accrued on or
after the day which is two hundred seventy (270) days prior to the date on which
Agent or such Lender first made written demand therefor.

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

(c)    Each Lender that is not a U.S. person as defined in Section 7701(a)(30)
of the Code and (A) is a party hereto on the Closing Date or (B) purports to
become an assignee of an interest as a Lender under this Agreement after the
Closing Date (unless such Lender was already a Lender hereunder immediately
prior to such assignment) (each such Lender a “Foreign Lender”) shall execute
and deliver to each of Borrowers and Agent one or more (as Borrowers or Agent
may reasonably request) United States Internal Revenue Service Forms W-8ECI,
W-8BEN, W-8BEN-E, W-8IMY (as applicable) and other applicable forms,
certificates or documents prescribed by the United States Internal Revenue
Service or reasonably requested by Agent certifying as to such Lender’s
entitlement to a complete exemption from withholding or deduction of Taxes. Each
Lender that is not a Foreign Lender shall deliver to Agent and Borrower on or
prior to the date on which such Lender becomes a party to this Agreement (and
from time to time thereafter upon the request of Borrower or Agent) properly
completed and executed originals of United States Internal Revenue Service Form
W-9 certifying that such Lender is exempt from backup withholding. Each Lender
shall (to the extent legally entitled to do so) provide updated forms to
Borrower and Agent on or prior to the date any prior form previously provided
under this Section 2.8(c) becomes obsolete or expires, after the occurrence of
an event requiring a change in the most recent form or certification previously
delivered by it pursuant to this Section 2.8(c) or from time to time if
requested by Borrower or Agent. Borrowers shall not be required to pay
additional amounts to any Lender pursuant to this Section 2.8 with respect to
United States deductions or withholding (or any additions to Tax, penalties or
interest with respect thereto) and income Taxes to the extent that the
obligation to pay such additional amounts would not have arisen but for the
failure of such Lender to comply with this paragraph. Without limiting the
foregoing, each Lender shall timely provide any documentation reasonably
requested by Borrower or Agent sufficient for Borrower and Agent to comply with
their obligations under FATCA and to determine whether such Lender has complied
with applicable reporting requirements under FATCA.

(d)    If any Lender shall determine in its commercially reasonable judgment
that the adoption or taking effect of, or any change in, any applicable Law
regarding capital adequacy, in each instance, after the Closing Date, or any
change after the Closing Date in the interpretation, administration or
application thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation, administration or application thereof,
or the compliance by any Lender or any Person controlling such Lender with any
request, guideline or directive regarding capital adequacy (whether or not
having the force of law) of any such Governmental Authority, central bank or
comparable agency adopted or otherwise taking effect after the Closing Date, has
or would have the effect of reducing the rate of return on such Lender’s or such
controlling Person’s capital as a consequence of such Lender’s obligations
hereunder to a level below that which such Lender or such controlling Person
could have achieved but for such adoption, taking effect, change,
interpretation,

 

51

--------------------------------------------------------------------------------

administration, application or compliance (taking into consideration such
Lender’s or such controlling Person’s policies with respect to capital adequacy)
then from time to time, upon written demand by such Lender (which demand shall
be accompanied by a statement setting forth the basis for such demand and a
calculation of the amount thereof in reasonable detail, a copy of which shall be
furnished to Agent), Credit Parties shall promptly pay to such Lender such
additional amount as will compensate such Lender or such controlling Person for
such reduction, so long as such amounts have accrued on or after the day which
is two hundred seventy (270) days prior to the date on which such Lender first
made demand therefor; provided, however, that notwithstanding anything in this
Agreement to the contrary, (i) the Dodd-Frank Wall Street Reform and Consumer
Protection Act and all requests, rules, guidelines or directives thereunder or
issued in connection therewith and (ii) all requests, rules, guidelines or
directives promulgated by the Bank for International Settlements, the Basel
Committee on Banking Supervision (or any successor or similar authority) or the
United States or foreign regulatory authorities, in each case pursuant to Basel
III, shall in each case be deemed to be a “change in applicable Law”, regardless
of the date enacted, adopted or issued.

(e)    If any Lender requires compensation under Section 2.8(d), or requires any
Credit Party to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.8(a), then, upon
the written request of Borrower Representative, 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 (subject to the
terms of this Agreement) to another of its offices, branches or affiliates, if,
in the judgment of such Lender, such designation or assignment (i) would
eliminate or materially reduce amounts payable pursuant to any such subsection,
as the case may be, in the future, and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender (as determined in its sole discretion). Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.

(f)    If Agent or a Lender determines in its sole discretion exercised in good
faith that it has received a refund of any Taxes for which it has been
indemnified or with respect to which Borrower has paid additional amounts
pursuant to Section 2.8(a), it shall pay over such refund to Borrower (but only
to the extent of indemnity payments made, or additional amounts paid, under
Section 2.8(a) with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Agent or such Lender and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund); provided that Borrower, upon the request of Agent or such Lender,
agrees to repay to Agent or such Lender the amount paid over to Borrower in the
event Agent or such Lender is required to repay such refund to such Governmental
Authority. Notwithstanding anything to the contrary in this paragraph (f), in no
event will the Agent or Lender be required to pay any amount to the Borrower
pursuant to this paragraph (f) the payment of which would place the Agent or
Lender in a less favorable net after-tax position than the Agent or Lender would
have been in if the tax subject to indemnification and giving rise to such
refund had not been deducted, withheld or otherwise imposed and the
indemnification payments or additional amounts with respect to such tax had
never been paid. This paragraph shall not be construed to require the Agent or
Lender to make available its tax returns (or any other information relating to
its taxes that it deems confidential) to the Borrower or any other Person.

(g)    VAT.

(i)    All amounts expressed to be payable under any Financing Document by any
party to Agent or any Lender which (in whole or in part) constitute the
consideration for any supply for VAT purposes are deemed to be exclusive of any
VAT which is chargeable on that

 

52

--------------------------------------------------------------------------------

supply and, accordingly, subject to clause (ii) below, if VAT is or becomes
chargeable on any supply made by any Lender to any party under any Financing
Document and Agent or Lender is required to account to the relevant tax
authority for the VAT, that party must pay to Agent or such Lender (in addition
to and at the same time as paying any other consideration for such supply) an
amount equal to the amount of the VAT (and such Lender must promptly provide an
appropriate VAT invoice to that party).

(ii)    If VAT is or becomes chargeable on any supply made by Agent or any
Lender (the “Supplier”) to any other Lender or Agent (as applicable) (the
“Recipient”) under any Financing Document, and any party other than the
Recipient (the “Relevant Party”) is required by the terms of any Financing
Document to pay an amount equal to the consideration for that supply to the
Supplier (rather than being required to reimburse or indemnify the Recipient in
respect of that consideration):

(A)     (where the Supplier is the person required to account to the relevant
tax authority for the VAT) the Relevant Party must also pay to the Supplier (at
the same time as paying that amount) an additional amount equal to the amount of
the VAT. The Recipient must (where this clause (A) applies) promptly pay to the
Relevant Party an amount equal to any credit or repayment the Recipient receives
from the relevant tax authority which the Recipient reasonably determines
relates to the VAT chargeable on that supply; and

(B)    (where the Recipient is the person required to account to the relevant
tax authority for the VAT) the Relevant Party must promptly, following demand
from the Recipient, pay to the Recipient an amount equal to the VAT chargeable
on that supply but only to the extent that the Recipient reasonably determines
that it is not entitled to credit or repayment from the relevant tax authority
in respect of that VAT.

(iii)    Where any Financing Document requires any party to reimburse or
indemnify Agent, any Lender or any Indemnitee for any cost or expense, that
party shall reimburse or indemnify (as the case may be) such Lender for the full
amount of such cost or expense, including such part thereof as represents VAT,
save to the extent that Agent, such Lender or such Indemnitee reasonably
determines that it is entitled to credit or repayment in respect of such VAT
from the relevant tax authority.

(iv)    Any reference in this Section 2.8(g) to any party shall, at any time
when such party is treated as a member of a group for VAT purposes, include
(where appropriate and unless the context otherwise requires) a reference to the
representative member of such group at such time or a reference to a comparable
concept in the relevant legislation of any other jurisdiction having implemented
Council Directive 2006/112/EC on the common system of value added tax).

(v)    In relation to any supply made by Agent or any Lender to any party under
any Financing Document, if reasonably requested by Agent or such Lender, that
party must promptly provide Agent or such Lender (as applicable) with details of
that party’s VAT registration and such other information as is reasonably
requested in connection with Agent’s or such Lender’s VAT reporting requirements
in relation to such supply.

 

53

--------------------------------------------------------------------------------

Section 2.9    Appointment of Borrower Representative.

(a)    Each Borrower hereby irrevocably appoints and constitutes Borrower
Representative as its agent and attorney-in-fact to request and receive Loans in
the name or on behalf of such Borrower and any other Borrowers, deliver Notices
of Borrowing, and Borrowing Base Certificates, give instructions with respect to
the disbursement of the proceeds of the Loans , giving and receiving all other
notices and consents hereunder or under any of the other Financing Documents and
taking all other actions (including in respect of compliance with covenants) in
the name or on behalf of any Borrower or Borrowers pursuant to this Agreement
and the other Financing Documents. Agent and Lenders may disburse the Loans to
such bank account of Borrower Representative or a Borrower or otherwise make
such Loans to a Borrower, in each case as Borrower Representative may designate
or direct, without notice to any other Borrower. Notwithstanding anything to the
contrary contained herein, Agent may at any time and from time to time require
that Loans to or for the account of any Borrower be disbursed directly to an
operating account of such Borrower.

(b)    Borrower Representative hereby accepts the appointment by Borrowers to
act as the agent and attorney-in-fact of Borrowers pursuant to this Section 2.9.
Borrower Representative shall ensure that the disbursement of any Loans that are
at any time requested by or to be remitted to or for the account of a Borrower,
shall be remitted or issued to or for the account of such Borrower.

(c)    Each Borrower hereby irrevocably appoints and constitutes Borrower
Representative as its agent to receive statements on account and all other
notices from Agent, Lenders with respect to the Obligations or otherwise under
or in connection with this Agreement and the other Financing Documents.

(d)    Any notice, election, representation, warranty, agreement or undertaking
made or delivered by or on behalf of any Borrower by Borrower Representative
shall be deemed for all purposes to have been made or delivered by such
Borrower, as the case may be, and shall be binding upon and enforceable against
such Borrower to the same extent as if made or delivered directly by such
Borrower.

(e)    No resignation by or termination of the appointment of Borrower
Representative as agent and attorney-in-fact as aforesaid shall be effective,
except after ten (10) Business Days’ prior written notice to Agent. If the
Borrower Representative resigns under this Agreement, Borrowers shall be
entitled to appoint a successor Borrower Representative (which shall be a
Borrower and shall be reasonably acceptable to Agent as such successor). Upon
the acceptance of its appointment as successor Borrower Representative
hereunder, such successor Borrower Representative shall succeed to all the
rights, powers and duties of the retiring Borrower Representative and the term
“Borrower Representative” shall mean such successor Borrower Representative for
all purposes of this Agreement and the other Financing Documents, and the
retiring or terminated Borrower Representative’s appointment, powers and duties
as Borrower Representative shall be thereupon terminated.

Section 2.10    Joint and Several Liability; Rights of Contribution;
Subordination and Subrogation.

(a)    Borrowers are defined collectively to include all Persons named as one of
the Borrowers herein; provided, however, that any references herein to “any
Borrower”, “each Borrower” or similar references, shall be construed as a
reference to each individual Person named as one of the Borrowers herein. Each
Person so named shall be jointly and severally liable for all of the obligations
of Borrowers under this Agreement. Each Borrower, individually, expressly
understands, agrees and acknowledges, that the credit facilities would not be
made available on the terms herein in the absence of the collective credit of
all of the Persons named as the Borrowers herein, the joint and several
liability of all such Persons, and the cross-collateralization of the collateral
of all such Persons. Accordingly, each

 

54

--------------------------------------------------------------------------------

Borrower individually acknowledges that the benefit to each of the Persons named
as one of the Borrowers as a whole constitutes reasonably equivalent value,
regardless of the amount of the credit facilities actually borrowed by, advanced
to, or the amount of collateral provided by, any individual Borrower. In
addition, each entity named as one of the Borrowers herein hereby acknowledges
and agrees that all of the representations, warranties, covenants, obligations,
conditions, agreements and other terms contained in this Agreement shall be
applicable to and shall be binding upon and measured and enforceable
individually against each Person named as one of the Borrowers herein as well as
all such Persons when taken together. By way of illustration, but without
limiting the generality of the foregoing, the terms of Section 10.1 of this
Agreement are to be applied to each individual Person named as one of the
Borrowers herein (as well as to all such Persons taken as a whole), such that
the occurrence of any of the events described in Section 10.1 of this Agreement
as to any Person named as one of the Borrowers herein shall constitute an Event
of Default even if such event has not occurred as to any other Persons named as
the Borrowers or as to all such Persons taken as a whole.

(b)    Notwithstanding any provisions of this Agreement to the contrary, it is
intended that the joint and several nature of the liability of each Borrower for
the Obligations and the Liens granted by Borrowers to secure the Obligations,
not constitute a Fraudulent Conveyance (as defined below). Consequently, Agent,
Lenders and each Borrower agree that if the liability of a Borrower for the
Obligations, or any Liens granted by such Borrower securing the Obligations
would, but for the application of this sentence, constitute a Fraudulent
Conveyance, the liability of such Borrower and the Liens securing such liability
shall be valid and enforceable only to the maximum extent that would not cause
such liability or such Lien to constitute a Fraudulent Conveyance, and the
liability of such Borrower and this Agreement shall automatically be deemed to
have been amended accordingly. For purposes hereof, the term “Fraudulent
Conveyance” means a fraudulent conveyance under Section 548 of Chapter 11 of
Title II of the Bankruptcy Code or a fraudulent conveyance or fraudulent
transfer under the applicable provisions of any fraudulent conveyance or
fraudulent transfer law or similar law of any state, nation or other
governmental unit, as in effect from time to time.

(c)    Agent is hereby authorized, without notice or demand (except as otherwise
specifically required under this Agreement) and without affecting the liability
of any Borrower hereunder, at any time and from time to time, to (i) renew,
extend or otherwise increase the time for payment of the Obligations; (ii) with
the written agreement of any Borrower, change the terms relating to the
Obligations or otherwise modify, amend or change the terms of any Note or other
agreement, document or instrument now or hereafter executed by any Borrower and
delivered to Agent for any Lender; (iii) accept partial payments of the
Obligations; (iv) take and hold any Collateral for the payment of the
Obligations or for the payment of any guaranties of the Obligations and
exchange, enforce, waive and release any such Collateral; (v) apply any such
Collateral and direct the order or manner of sale thereof as Agent, in its sole
discretion, may determine; and (vi) settle, release, compromise, collect or
otherwise liquidate the Obligations and any Collateral therefor in any manner,
all guarantor and surety defenses being hereby waived by each Borrower. Without
limitations of the foregoing, with respect to the Obligations, each Borrower
hereby makes and adopts each of the agreements and waivers set forth in each
Guarantee, the same being incorporated hereby by reference. Except as
specifically provided in this Agreement or any of the other Financing Documents,
Agent shall have the exclusive right to determine the time and manner of
application of any payments or credits, whether received from any Borrower or
any other source, and such determination shall be binding on all Borrowers. All
such payments and credits may be applied, reversed and reapplied, in whole or in
part, to any of the Obligations that Agent shall determine, in its sole
discretion, without affecting the validity or enforceability of the Obligations
of the other Borrower.

 

55

--------------------------------------------------------------------------------

(d)    Each Borrower hereby agrees that, except as hereinafter provided, its
obligations hereunder shall be unconditional, irrespective of (i) the absence of
any attempt to collect the Obligations from any obligor or other action to
enforce the same; (ii) the waiver or consent by Agent with respect to any
provision of any instrument evidencing the Obligations, or any part thereof, or
any other agreement heretofore, now or hereafter executed by a Borrower and
delivered to Agent; (iii) failure by Agent to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security or
collateral for the Obligations; (iv) the institution of any proceeding under the
Bankruptcy Code, or any similar proceeding, by or against a Borrower or Agent’s
election in any such proceeding of the application of Section 1111(b)(2) of the
Bankruptcy Code; (v) any borrowing or grant of a security interest by a Borrower
as debtor-in-possession, under Section 364 of the Bankruptcy Code; (vi) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of
Agent’s claim(s) for repayment of any of the Obligations; or (vii) any other
circumstance other than payment in full of the Obligations which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or surety.

(e)    Borrowers hereby agree, as between themselves, that to the extent that
Agent, on behalf of Lenders, shall have received from any Borrower any Recovery
Amount (as defined below), then the paying Borrower shall have a right of
contribution against each other Borrower in an amount equal to such other
Borrower’s contributive share of such Recovery Amount; provided, however, that
in the event any Borrower suffers a Deficiency Amount (as defined below), then
the Borrower suffering the Deficiency Amount shall be entitled to seek and
receive contribution from and against the other Borrowers in an amount equal to
the Deficiency Amount; and provided, further, that in no event shall the
aggregate amounts so reimbursed by reason of the contribution of any Borrower
equal or exceed an amount that would, if paid, constitute or result in
Fraudulent Conveyance. Until all Obligations have been paid and satisfied in
full, no payment made by or for the account of a Borrower including, without
limitation, (i) a payment made by such Borrower on behalf of the liabilities of
any other Borrower, or (ii) a payment made by any other Guarantor under any
Guarantee, shall entitle such Borrower, by subrogation or otherwise, to any
payment from such other Borrower or from or out of such other Borrower’s
property. The right of each Borrower to receive any contribution under this
Section 2.10(e) or by subrogation or otherwise from any other Borrower shall be
subordinate in right of payment to the Obligations and such Borrower shall not
exercise any right or remedy against such other Borrower or any property of such
other Borrower by reason of any performance of such Borrower of its joint and
several obligations hereunder, until the Obligations have been indefeasibly paid
and satisfied in full, and no Borrower shall exercise any right or remedy with
respect to this Section 2.10(e) until the Obligations have been indefeasibly
paid and satisfied in full. As used in this Section 2.10(e), the term “Recovery
Amount” means the amount of proceeds received by or credited to Agent from the
exercise of any remedy of the Lenders under this Agreement or the other
Financing Documents, including, without limitation, the sale of any Collateral.
As used in this Section 2.10(e), the term “Deficiency Amount” means any amount
that is less than the entire amount a Borrower is entitled to receive by way of
contribution or subrogation from, but that has not been paid by, the other
Borrowers in respect of any Recovery Amount attributable to the Borrower
entitled to contribution, until the Deficiency Amount has been reduced to Zero
Dollars ($0) through contributions and reimbursements made under the terms of
this Section 2.10(e) or otherwise.

Section 2.11    Collections and Lockbox Account.

(a)    Borrowers shall maintain a lockbox (the “Lockbox”) with a United States
depository institution designated from time to time by Agent (the “Lockbox
Bank”), and, subject to the provisions of this Agreement, shall execute with the
Lockbox Bank a Deposit Account Control Agreement and such other agreements
related to such Lockbox as Agent may reasonably require. At all

 

56

--------------------------------------------------------------------------------

times following the Collections Account Post-Closing Period, Borrowers shall
ensure that all collections of Third Party Accounts are paid directly by the
applicable Third Party Account Debtor (i) into the Lockbox for deposit into the
Lockbox Account and/or (ii) directly into the Lockbox Account. At all times
during the Collections Account Post-Closing Period, Borrowers shall ensure that
(x) by the close of business on Wednesday of each calendar week, all collections
received from any Third Party Account Debtor prior to such Wednesday are
transferred into the Payment Account and (y) by the close of business on Friday
of each calendar week, all collections received from any Third Party Account
Debtor prior to such Friday are transferred into the Payment Account. At all
times following the Collections Account Post-Closing Period, all funds deposited
into a Lockbox Account shall be transferred into the Payment Account (or, prior
to the time of the initial borrowing of the Revolving Loans, such Deposit
Account of Borrower, as Agent may direct in its sole discretion) by the close of
each Business Day.

(b)    Reserved.

(c)    Notwithstanding anything in any lockbox agreement or Deposit Account
Control Agreement to the contrary, Borrowers agree that they shall be liable for
any fees and charges in effect from time to time and charged by the Lockbox Bank
in connection with the Lockbox, the Lockbox Account, and that Agent shall have
no liability therefor. Borrowers hereby indemnify and agree to hold Agent
harmless from any and all liabilities, claims, losses and demands whatsoever,
including reasonable and documented attorneys’ fees and expenses, arising from
or relating to actions of Agent or the Lockbox Bank pursuant to this Section or
any lockbox agreement or Deposit Account Control Agreement or similar agreement,
except to the extent of such losses arising solely from Agent’s gross
negligence, bad faith or willful misconduct.

(d)    Agent shall apply, on a daily basis, all funds transferred into the
Payment Account pursuant to this Section 2.11 to reduce the outstanding
Revolving Loans in such order of application as Agent shall elect. If as the
result of collections of Third Party Accounts pursuant to the terms and
conditions of this Section, a credit balance exists with respect to the Loan
Account, such credit balance shall not accrue interest in favor of Borrowers,
but Agent shall transfer such funds into an account designated by Borrower
Representative for so long as no Event of Default exists.

(e)    To the extent that any collections of Third Party Accounts or proceeds of
other Collateral included in the Borrowing Base are not sent directly to the
Lockbox or Lockbox Account but are received by any Borrower, such collections
shall be held in trust for the benefit of Agent pursuant to an express trust
created hereby and immediately remitted, in the form received, to applicable
Lockbox or Lockbox Account. At all times following the Collections Account
Post-Closing Period, no such funds received by any Borrower shall be commingled
with other funds of the Borrowers. If any funds received by any Borrower are
commingled with other funds of the Borrowers, or are required to be deposited to
a Lockbox or Lockbox Account and are not so deposited within five (5) Business
Days, then Borrowers shall pay to Agent, for its own account and not for the
account of any other Lenders, a compliance fee equal to $500 for each day that
any such conditions exist.

(f)    Borrowers acknowledge and agree that compliance with the terms of this
Section is essential, and that Agent and Lenders will suffer immediate and
irreparable injury and have no adequate remedy at law, if any Borrower, through
acts or omissions, causes or permits Third Party Account Debtors to send
payments other than to the Lockbox or Lockbox Accounts or if any Borrower fails
to promptly deposit collections of Third Party Accounts or proceeds of other
Collateral included in the Borrowing Base in the Lockbox Account as herein
required. Accordingly, in addition to all other rights and remedies of Agent and
Lenders hereunder, Agent shall have the right to seek specific performance of
the Borrowers’ obligations under this Section, and any other equitable relief as
Agent may deem necessary or appropriate, and Borrowers waive any requirement for
the posting of a bond in connection with such equitable relief.

 

57

--------------------------------------------------------------------------------

(g)    Borrowers shall not, and Borrowers shall not suffer or permit any Credit
Party to, (i) withdraw any amounts from any Lockbox Account, (ii) change the
procedures or sweep instructions under the agreements governing any Lockbox
Accounts, or (iii) send to or deposit in any Lockbox Account any funds other
than payments made with respect to and proceeds of Third Party Accounts or other
Collateral included in the Borrowing Base. Borrowers shall, and shall cause each
Credit Party to, cooperate with Agent in the identification and reconciliation
on a daily basis of all amounts received in or required to be deposited into the
Lockbox Accounts. If more than fifteen percent (15%) of the collections of Third
Party Accounts received by Borrowers during any given fifteen (15) day period is
not applied in conformance with the requirements of this Section 2.11 within ten
(10) Business Days of receipt, Agent shall not be obligated to make further
advances under this Agreement until such amounts are so applied, as the case may
be. In addition, if any such amount cannot be applied in conformance with the
requirements of this Section 2.11, Agent may utilize its own staff or, if it
deems necessary, engage an outside auditor, in either case at Borrowers’ expense
(which in the case of Agent’s own staff shall be in accordance with Agent’s then
prevailing customary charges (plus expenses)), to effect such requirements.

(h)    If any Borrower breaches its obligation to direct payments of the
proceeds of the Collateral included in the Borrowing Base to the Lockbox
Account, Agent, as the irrevocably made, constituted and appointed true and
lawful attorney for Borrowers, may, by the signature or other act of any of
Agent’s authorized representatives (without requiring any of them to do so),
direct any Third Party Account Debtor to pay proceeds of the Collateral that is
included in the Borrowing Base to Borrowers by directing payment to the Lockbox
Account.

Section 2.12    Termination; Restriction on Termination.

(a)    Termination by Lenders. In addition to the rights set forth in
Section 10.2, Agent may, and at the direction of Required Lenders shall,
terminate this Agreement without notice upon or after the occurrence and during
the continuance of an Event of Default.

(b)    Termination by Borrowers. Upon at least thirty (30) days’ (or such
shorter period as the Agent, in its reasonable discretion, shall agree) prior
written notice and pursuant to payoff documentation in form and substance
reasonably satisfactory to Agent and Lenders, Borrowers may, at their option,
terminate this Agreement; provided, however, that no such termination shall be
effective until Borrowers have complied with Section 2.2 and the terms of the
Fee Letter. Any notice of termination given by Borrowers shall be irrevocable
unless all Lenders otherwise agree in writing and no Lender shall have any
obligation to make any Loans on or after the termination date stated in such
notice. Borrowers may elect to terminate this Agreement in its entirety only. No
section of this Agreement or type of Loan available hereunder may be terminated
singly.

(c)    Effectiveness of Termination. All of the Obligations shall be immediately
due and payable upon the Termination Date. All undertakings, agreements,
covenants, warranties and representations of the Credit Parties contained in the
Financing Documents shall survive any such termination and Agent shall retain
its Liens in the Collateral and Agent and each Lender shall retain all of its
rights and remedies under the Financing Documents notwithstanding such
termination until all Obligations (other than with respect to contingent
indemnification obligations for which no claim has been made) have been
discharged or paid, in full, in immediately available funds, including, without
limitation, all Obligations under Section 2.2(g) and the terms of the Fee Letter
resulting from such

 

58

--------------------------------------------------------------------------------

termination. Notwithstanding the foregoing or the payment in full of the
Obligations, Agent shall not be required to terminate its Liens in the
Collateral unless, with respect to any loss or damage Agent may incur as a
result of dishonored checks or other items of payment received by Agent from the
Credit Parties or any Account Debtor and applied to the Obligations, Agent
shall, at its option, (i) have received a written agreement reasonably
satisfactory to Agent, executed by the Credit Parties and by any Person whose
loans or other advances to the Credit Parties are used in whole or in part to
satisfy the Obligations, indemnifying Agent and each Lender from any such loss
or damage or (ii) have retained cash Collateral or other Collateral for such
period of time as Agent, in its discretion, may deem necessary to protect Agent
and each Lender from any such loss or damage.

(d)    Partial Collateral Release. In respect of Collateral that is disposed of
in a manner permitted hereunder, the security interest in such Collateral (but
not in respect of Collateral not so disposed of) shall be automatically
terminated upon such disposition without any further action by any party.

(e)    Actions by Agent. Without limiting the foregoing clauses (a)-(d), Agent
will, at the sole expense of Borrower, take such actions as may be reasonably
requested by Borrower to evidence any of the foregoing releases set forth in
clauses (c) and (d) above (including duly assigning, transferring and delivering
to or at the direction of Borrower (without recourse and without any
representation or warranty) such of the Collateral as may then be in the
possession of Agent, together with any monies at the time held by Agent
hereunder, and executing and delivering to Borrower a proper instrument or
instruments, as reasonably requested, acknowledging the satisfaction and
termination of this Agreement (in the case of clause (c) above) and the release
of Liens hereunder and under the other Financing Documents).

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

To induce Agent and Lenders to enter into this Agreement and to make the Loans
and other credit accommodations contemplated hereby, each Credit Party hereby
represents and warrants to Agent and each Lender that:

Section 3.1    Existence and Power. Each Credit Party (a) is an entity as
specified on Schedule 3.1, (b) is duly organized, validly existing and in good
standing under the laws of the jurisdiction specified on Schedule 3.1 and no
other jurisdiction, (c) has the same legal name as it appears in such Credit
Party’s Organizational Documents and an organizational identification number (if
any), in each case as specified on Schedule 3.1, (d) has all powers and all
Permits necessary or desirable in the operation of its business as presently
conducted or as proposed to be conducted, except where the failure to have such
Permits could not reasonably be expected to have a Material Adverse Effect, and
(e) is qualified to do business as a foreign entity in each jurisdiction in
which it is required to be so qualified, which jurisdictions as of the Closing
Date are specified on Schedule 3.1, except where the failure to be so qualified
could not reasonably be expected to have a Material Adverse Effect. As of the
Closing Date, except as set forth on Schedule 3.1, no Credit Party (x) has had,
over the five (5) year period preceding the Closing Date, any name other than
its current name, or (y) was incorporated or organized under the laws of any
jurisdiction other than its current jurisdiction of incorporation or
organization.

Section 3.2    Organization and Governmental Authorization; No Contravention.
The execution, delivery and performance by each Credit Party of the Operative
Documents to which it is a party (a) are within its powers, (b) have been duly
authorized by all necessary action pursuant to its Organizational Documents,
(c) require no further action by or in respect of, or filing with, any
Governmental Authority, except for the filings necessary to perfect the Liens
created by the Financing

 

59

--------------------------------------------------------------------------------

Documents and any necessary filings with the SEC, and (d) do not violate,
conflict with or cause a breach or a default under (i) any of the Organizational
Documents of any Credit Party, or (ii) any Law applicable to any Credit Party or
any agreement or instrument binding upon it, except for such violations,
conflicts, breaches or defaults as could not, with respect to this clause (ii),
reasonably be expected to have a Material Adverse Effect.

Section 3.3    Binding Effect. Each of the Operative Documents to which any
Credit Party is a party constitutes a valid and binding agreement or instrument
of such Credit Party, enforceable against such Credit Party in accordance with
its respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws relating to the enforcement of
creditors’ rights generally and by general equitable principles.

Section 3.4    Capitalization. The authorized equity securities of each of the
Credit Parties (other than Parent) as of the Closing Date are as set forth on
Schedule 3.4. All issued and outstanding equity securities of each of the Credit
Parties (other than Parent) are duly authorized and validly issued, fully paid,
nonassessable, free and clear of all Liens other than those in favor of Agent
for the benefit of Agent and Lenders, and such equity securities were issued in
compliance with all applicable Laws. The identity of the holders of the equity
securities of each of the Credit Parties (other than Parent) and the percentage
of their fully-diluted ownership of the equity securities of each of the Credit
Parties (other than Parent) as of the Closing Date is set forth on Schedule 3.4.
No shares of the capital stock or other equity securities of any Credit Party
(other than Parent), other than those described above, are issued and
outstanding as of the Closing Date. Except as set forth on Schedule 3.4, as of
the Closing Date there are no preemptive or other outstanding rights, options,
warrants, conversion rights or similar agreements or understandings for the
purchase or acquisition from any Credit Party (other than Parent) of any equity
securities of any such entity.

Section 3.5    Financial Information.

(a)    Parent has heretofore furnished to the Agent the consolidated balance
sheet and statements of income and cash flows of Parent as of and for the Fiscal
Year ended December 27, 2015, reported on by KPMG LLP, independent public
accountants. Such financial statements present fairly, in all material respects,
the financial position and results of operations and cash flows of Parent and
its consolidated Subsidiaries as of such dates and for such periods in
accordance with GAAP.

(b)    Since December 27, 2015, a Material Adverse Effect has not occurred.

Section 3.6    Litigation. Except as set forth on Schedule 3.6 as of the Closing
Date, and except as hereafter disclosed to Agent in writing, there is no
Litigation, material actions, suits or proceedings by or before any arbitrator
or Governmental Authority pending against or, to the knowledge of any Credit
Party, threatened in writing against or affecting any Credit Party, except with
respect to any matters that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

Section 3.7    Ownership of Property. Each Credit Party and each of its
Subsidiaries is the lawful owner of, has good and marketable title to, subject
to Permitted Liens, and is in lawful possession of, or has valid leasehold
interests in, all properties, accounts and other assets (real or personal,
tangible, intangible or mixed) purported or reported to be owned or leased (as
the case may be) by such Person, except for minor defects in title that do not
materially interfere with its ability to conduct its business or to utilize such
assets for their intended purposes.

 

60

--------------------------------------------------------------------------------

Section 3.8    No Default. No Event of Default, or to such Credit Party’s
knowledge, Default, has occurred and is continuing. No Credit Party is in breach
or default under or with respect to any contract, agreement, lease or other
instrument to which it is a party or by which its property is bound or affected,
which breach or default could reasonably be expected to have a Material Adverse
Effect.

Section 3.9    Labor Matters. As of the Closing Date, there are no strikes or
other labor disputes pending or, to any Credit Party’s knowledge, threatened in
writing against any Credit Party. Hours worked and payments made to the
employees of the Credit Parties have not been in material violation of the Fair
Labor Standards Act or any other applicable Law dealing with such matters. All
payments due from the Credit Parties, or for which any claim may be made against
any of them, on account of wages and employee and retiree health and welfare
insurance and other benefits have been paid or accrued as a liability on their
books, as the case may be. The consummation of the transactions contemplated by
the Financing Documents will not give rise to a right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which it is a party or by which it is bound.

Section 3.10    Regulated Entities. No Credit Party is an “investment company”
or a company “controlled” by an “investment company” or a “subsidiary” of an
“investment company,” all within the meaning of the Investment Company Act of
1940.

Section 3.11    Margin Regulations. None of the proceeds from the Loans have
been or will be used, directly or indirectly, for the purpose of purchasing or
carrying any “margin stock” (as defined in Regulation U of the Federal Reserve
Board), for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any “margin stock” or for any other
purpose which might cause any of the Loans to be considered a “purpose credit”
within the meaning of Regulation T, U or X of the Federal Reserve Board.

Section 3.12    Compliance With Laws; Anti-Terrorism Laws.

(a)    Each Credit Party is in compliance with the requirements of all
applicable Laws, except for such Laws the noncompliance with which could not
reasonably be expected to have a Material Adverse Effect.

(b)    None of the Credit Parties and, to the knowledge of the Credit Parties,
none of their Affiliates nor any direct or indirect parent of a joint venture
(i) is in violation of any Anti-Terrorism Law applicable to such Credit Party,
(ii) engages in or conspires to engage in any transaction that evades or avoids,
or has the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in any Anti-Terrorism Law applicable to such Credit
Party, (iii) is a Blocked Person, (iv) is acting or will act for or on behalf of
a Blocked Person, (v) is associated with, or will become associated with, a
Blocked Person or (vi) is providing, or will provide, material, financial or
technical support or other services to or in support of acts of terrorism of a
Blocked Person. No Credit Party nor, to the knowledge of any Credit Party, any
of its Affiliates or agents acting or benefiting in any capacity in connection
with the transactions contemplated by this Agreement or any direct or indirect
parent of a joint venture, (A) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (B) deals in, or otherwise engages in any transaction
relating to, any property or interest in property blocked pursuant to Executive
Order No. 13224, any similar applicable executive order or other applicable
Anti-Terrorism Law.

Section 3.13    Taxes. All material federal, state, foreign and local tax
returns, reports and statements required to be filed by or on behalf of each
Credit Party have been filed with the appropriate

 

61

--------------------------------------------------------------------------------

Governmental Authorities in all jurisdictions in which such returns, reports and
statements are required to be filed and, except to the extent subject to a
Permitted Contest, all material Taxes (including real property Taxes) and other
charges shown to be due and payable in respect thereof have been timely paid.
Except to the extent subject to a Permitted Contest, all material state and
local sales and use Taxes required to be paid by each Credit Party have been
paid. All material federal and state Tax returns have been filed by each Credit
Party for all periods for which returns were due with respect to employee income
tax withholding, social security and unemployment taxes, and, except to the
extent subject to a Permitted Contest, the material amounts shown thereon to be
due and payable have been paid in full or adequate provisions therefor have been
made. For purposes of this Section 3.13, any federal, state, local or foreign
tax, assessment, deposit or contribution, and any return with respect thereto,
shall not be considered “material” if it is equal to or less than $2,000,000 in
the aggregate for all taxes.

Section 3.14    Compliance with ERISA.

(a)    Each ERISA Plan which is intended to be qualified under Section 401(a) of
the Code is so qualified, and the United States Internal Revenue Service has
issued a favorable determination letter with respect to each such ERISA Plan
which may be relied on currently. Except as could not reasonably be expected to
have a Material Adverse Effect, no Credit Party has incurred liability for any
material excise tax under any of Sections 4971 through 5000 of the Code.

(b)    Except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, each Credit Party and each
Subsidiary is in compliance with the applicable provisions of ERISA and the
provision of the Code relating to ERISA Plans and the regulations and published
interpretations therein. During the thirty-six (36) month period prior to the
Closing Date or the making of any Loan (i) no steps have been taken to terminate
any ERISA Plan, and (ii) no contribution failure has occurred with respect to
any ERISA Plan sufficient to give rise to a Lien under Section 303(k) of ERISA
or Section 430(k) of the Code and no event has occurred that would give rise to
a Lien under Section 4068 of ERISA. No condition exists or event or transaction
has occurred with respect to any ERISA Plan which could reasonably be expected
to result in the incurrence by any Credit Party of any material liability, fine
or penalty. No Credit Party has incurred liability to the PBGC (other than for
current premiums) with respect to any ERISA Plan. All contributions (if any)
have been made on a timely basis to any Multiemployer Plan that are required to
be made by any Credit Party or any other member of the Controlled Group under
the terms of the Multiemployer Plan or of any collective bargaining agreement or
by applicable Law; no Credit Party nor any member of the Controlled Group has
withdrawn or partially withdrawn from any Multiemployer Plan, incurred any
withdrawal liability with respect to any such Multiemployer Plan or received
notice of any claim or demand for withdrawal liability or partial withdrawal
liability from any such Multiemployer Plan, and to any Credit Party’s knowledge
no condition has occurred which, if continued, could result in a withdrawal or
partial withdrawal from any such Multiemployer Plan, and no Credit Party nor any
member of the Controlled Group has received any notice that any Multiemployer
Plan is in reorganization, that increased contributions may be required to avoid
a reduction in plan benefits or the imposition of any excise tax, that any such
Multiemployer Plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such Multiemployer Plan is or may be
terminated, or that any such Multiemployer Plan is or may become insolvent.

Section 3.15    Consummation of Operative Documents; Brokers. Except for fees
payable to Agent and/or Lenders or as set forth on Schedule 3.15, as of the
Closing Date, no broker, finder or other intermediary has brought about the
obtaining, making or closing of the transactions contemplated by the Financing
Documents, and no Credit Party has or will have any obligation to any Person in
respect of any finder’s or brokerage fees, commissions or other expenses in
connection herewith or therewith.

 

62

--------------------------------------------------------------------------------

Section 3.16    Reserved.

Section 3.17    Material Contracts. Except for the Operative Documents, the Cash
Convertible Note Documents, and the agreements set forth on Schedule 3.17, as of
the Closing Date there are no Material Contracts. The consummation of the
transactions contemplated by the Financing Documents will not give rise to a
right of termination in favor of any party to any Material Contract (other than
any Credit Party), except for such Material Contracts the noncompliance with
which would not reasonably be expected to have a Material Adverse Effect.

Section 3.18    Compliance with Environmental Requirements; No Hazardous
Materials.

(a)    Except in each case as set forth on Schedule 3.18(a), no Credit Party has
received any notice, notification, demand, request for information, citation,
summons, complaint or order, no complaint has been filed and served on any
Credit Party, no penalty has been assessed and no investigation or review is
pending, or to such Credit Party’s knowledge, threatened by any Governmental
Authority or other Person with respect to any (i) alleged violation by any
Credit Party of any Environmental Law, (ii) alleged failure by any Credit Party
to have any Permits required under Environmental Law in connection with the
conduct of its business or to comply with the terms and conditions thereof,
(iii) any generation, treatment, storage, recycling, transportation or disposal
of any Hazardous Materials, or (iv) release of Hazardous Materials, in any case
that could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect; and

(b)    Except in each case as set forth on Schedule 3.18(b), (i) no property now
owned or leased by any Credit Party is listed or, to such Credit Party’s
knowledge, proposed for listing, on the National Priorities List promulgated
pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any similar state list
and (ii) except as could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, (A) no property currently or
previously owned or leased by any Credit Party or any predecessor to any Credit
Party and (B) no property to which any Credit Party has, directly or indirectly,
transported or arranged for the transportation of any Hazardous Materials, is
listed or, to such Credit Party’s knowledge, proposed for listing, on the
National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined
in CERCLA) or any similar state list or is the subject of federal, state or
local enforcement actions or, to the knowledge of such Credit Party, other
investigations which may lead to claims against any Credit Party for clean-up
costs, remedial work, damage to natural resources or personal injury claims,
including, without limitation, claims under CERCLA.

(c)    For purposes of this Section 3.18, each Credit Party shall be deemed to
include any business or business entity (including a corporation) that is, in
whole or in part, a predecessor of such Credit Party.

Section 3.19    Intellectual Property and License Agreements. A list of all
Registered Intellectual Property of each Credit Party and all material in-bound
license or sublicense agreements, exclusive out-bound license or sublicense
agreements, or other rights of any Credit Party to use any Material Intangible
Asset (but excluding in-bound licenses of over-the-counter software that is
commercially available to the public), as of the Closing Date and, as updated
pursuant to Section 4.15, is set forth on Schedule 3.19. Schedule 3.19 shall be
prepared by Credit Parties in the form provided by Agent and contain all
information required in such form. Except for Permitted Licenses, each Credit
Party owns, is licensed to use or otherwise has the right to use, all
Intellectual Property that is material to the condition (financial or other),
business or operations of such Credit Party. Except as indicated on Schedule
3.19, the applicable Credit Party is the sole and exclusive owner of the entire
and unencumbered right, title and interest in and to each such registered
Intellectual Property (or application therefor) purported to be owned by such
Credit Party, free and clear of any Liens other than Permitted Liens and
Permitted Licenses.

 

63

--------------------------------------------------------------------------------

Section 3.20    Solvency. After giving effect to the Loan advances and the
liabilities and obligations of each Borrower under the Operative Documents, each
Borrower (after giving effect to all rights of such Borrower arising by virtue
of Section 2.10(b) and any other rights of contribution or similar rights of
such Borrower) is Solvent and the Credit Parties (taken as a whole) are Solvent.

Section 3.21    Full Disclosure. None of the written information (financial or
otherwise) (other than projections, other forward-looking information and
industry information) furnished by or on behalf of any Credit Party to Agent or
any Lender in connection with the consummation of the transactions contemplated
by the Financing Documents, taken as a whole, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not materially misleading in light of the
circumstances under which such statements were made. All financial projections
delivered to Agent and the Lenders by Credit Parties (or their agents) have been
prepared on the basis of the assumptions stated therein. Such projections
represent each Credit Party’s reasonable best estimate of such Credit Party’s
future financial performance and such assumptions are believed by such Credit
Party to be fair and reasonable in light of the business conditions at the time
such projections were made; provided, however, that (i) projections as to future
events are not to be viewed as facts, (ii) Credit Parties can give no assurance
that such projections will be attained and (iii) the Agent and Lenders are
hereby notified that the differences between projected results and actual
results may be material.

Section 3.22    [Reserved].

Section 3.23    Subsidiaries. Credit Parties do not own any stock, partnership
interests, limited liability company interests or other equity securities or
Subsidiaries except for Permitted Investments. All Subsidiaries constituting
“Excluded Subsidiaries” on the Closing Date are set forth on Schedule 1.1.

Section 3.24    Reserved.

Section 3.25    Accuracy of Schedules. All information set forth in the
Schedules to this Agreement (including Schedule 3.19) is true, accurate and
complete in all material respects as of the Closing Date, the date of delivery
of the last Compliance Certificate delivered following the end of a Fiscal
Quarter and any other subsequent date in which any Credit Party is required to
update such Schedules in accordance with the terms of the Financing Documents.
All information set forth in the Perfection Certificate is true, accurate and
complete in all material respects as of the Closing Date and any other
subsequent date in which any Credit Party is requested to update such
certificate.

Section 3.26    FCPA and Anti-Corruption Law. For the immediately preceding
three (3) year period, neither the Credit Parties nor any of their respective
Subsidiaries nor, to the knowledge of any Responsible Officer of any Credit
Party, any director, officer, agent, employee or other Person acting in such
capacity on behalf of any Credit Party or any of their respective Subsidiaries,
has taken any action, directly or knowingly indirectly, that would result in a
violation by such Persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the “FCPA”) or the Bribery
Act 2010 (together with the FCPA, the “Anti-Corruption Laws”), in each case, in
any material respect. No part of the proceeds of the Loans shall be used,
directly or knowingly indirectly, for any payments to any governmental official
or employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the Anti-Corruption Laws. Each Credit Party has otherwise conducted its
businesses in compliance with applicable anti-corruption laws, in all material
respects, and has instituted and maintained policies and procedures designed to
promote and achieve compliance with such laws.

 

64

--------------------------------------------------------------------------------

ARTICLE 4 - AFFIRMATIVE COVENANTS

Each Credit Party agrees that, so long as any Credit Exposure exists:

Section 4.1    Financial Statements and Other Reports. Each Credit Party will
deliver to Agent: (a) no later than thirty (30) days after the last day of each
of the first two fiscal months of each Fiscal Quarter, a company-prepared
consolidated balance sheet and related statements of operations and cash flows
as of the end of and for such fiscal month, covering Parent’s and its
Consolidated Subsidiaries’ consolidated operations during the period, prepared
under GAAP (other than for absence of footnotes and year-end adjustments),
consistently applied, certified by a Responsible Officer; (b) no later than
forty-five (45) days after the last day of each of the first three Fiscal
Quarters of each Fiscal Year (or any later date by which under applicable SEC
rules Parent is required to file its Quarterly Report on Form 10-Q), a company
prepared consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of such Fiscal Quarter
covering Parent’s and its Consolidated Subsidiaries’ consolidated operations
during the period, prepared under GAAP (other than for absence of footnotes and
year-end adjustments), consistently applied, certified by a Responsible Officer,
(c) no later than ninety (90) days after the last day of any Fiscal Year (or any
later date by which under applicable SEC rules Parent is required to file its
Annual Report on form 10-K), audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified opinion to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and operations of Parent and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied (other than in the final year of maturity hereof, with
respect to the pending maturity of this facility) from Credit Parties’
independent certified public accounting firm as of the Closing Date or another
independent certified public accounting firm acceptable to Agent in its
reasonable discretion; (d) within five (5) days of delivery or filing thereof,
copies of all statements, reports and notices made available to Parent’s
security holders or to any holders of Subordinated Debt and copies of all
reports and other filings made by Credit Parties with any stock exchange on
which any securities of any Credit Party are traded and/or the SEC; (e) within
ninety (90) days after the start of each Fiscal Year, a copy of the plan and
forecast (including a projected consolidated balance sheet and related operating
metrics and cash adjustments) of Parent for each Fiscal Quarter of the upcoming
Fiscal Year, and (f) within ten (10) Business Days of any reasonable request
therefor, such readily available other budgets, sales projections, operating
plans and other financial information and information, reports or statements
regarding the Credit Parties, their business and the Collateral as Agent may
from time to time reasonably request (unless the disclosure of such information
would require the forfeiture by such Credit Party or Subsidiary of attorney
client privilege with respect to such document; provided, however, that such
Credit Party or Subsidiary shall take all actions reasonably requested by Agent
to allow access to such document without otherwise forfeiting such privilege);
provided, however, that reporting related to Regulatory Required Permits and/or
Regulatory Reporting Events shall be governed by Section 4.17. If Parent
publicly files with the SEC reports on Form 10-K or Form 10-Q for the applicable
periods or any other periodic reports containing the information required by
clause (b), (c) and (d) above, Credit Parties may satisfy such requirements by
such filing. Concurrently with any delivery of financial statements under
clauses (a), (b) and (c) above, Parent shall deliver, in accordance with
Section 6.4, a duly completed Compliance Certificate signed by a Responsible
Officer. Credit Parties will, (1) following the Closing Date and until the first
anniversary thereof, within 25 days after the last day of each month and
(2) following the first anniversary of the Closing Date and thereafter until the
Maturity date, 20 days after the last day of each month, deliver to Agent a duly
completed Borrowing Base Certificate, together with such other information as
required pursuant to Section 6.4, signed by a Responsible Officer, with aged
listings of

 

65

--------------------------------------------------------------------------------

accounts receivable and accounts payable (by invoice date) and a summary of
Inventory by location and type with a supporting perpetual Inventory report, in
each case, accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion.

Section 4.2    Payment and Performance of Obligations. Each Credit Party
(a) will pay and discharge, and cause each Subsidiary to pay and discharge, on a
timely basis as and when due (after giving effect to any applicable grace
periods), all of their respective obligations and liabilities, except for such
obligations and/or liabilities (i) that may be the subject of a Permitted
Contest, and (ii) the nonpayment or nondischarge of which could not reasonably
be expected to have a Material Adverse Effect or result in a Lien against any
material portion of the Collateral, except for Permitted Liens, (b) without
limiting anything contained in the foregoing clause (a) and unless subject to a
Permitted Contest, will pay all amounts due and owing in respect of material
Taxes (including without limitation, payroll and withholdings tax liabilities)
on a timely basis as and when due and payable, and (c) will maintain, and cause
each Subsidiary to maintain, in accordance with GAAP, appropriate reserves for
the accrual of all of their respective obligations and liabilities, and (d) will
not breach or permit any Subsidiary to breach, or permit to exist any default
under, the terms of any lease, commitment, contract, instrument or obligation to
which it is a party, or by which its properties or assets are bound, except for
such breaches or defaults which could not reasonably be expected to have a
Material Adverse Effect. For purposes of clause 4.2(b) above, Taxes shall not be
considered “material” if they are equal to or less than $2,000,000 in the
aggregate for all such Taxes.

Section 4.3    Maintenance of Existence. Unless otherwise permitted under
Section 5.6(a), each Credit Party will preserve, renew and keep in full force
and effect, and will cause each Subsidiary to preserve, renew and keep in full
force and effect, (a) their respective existence and (b) their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business, except, in the case of this clause (b), where a failure to do so
could not reasonably be expected to result in a Material Adverse Effect. Unless
otherwise permitted under Section 5.6(a), each Credit Party will, and will cause
each Subsidiary to (x) remain in good standing in its jurisdiction of
incorporation and (y) remain qualified to do business, and in good standing in
every jurisdiction where such qualification is required (unless inapplicable in
such jurisdiction), except in the case of this clause (y) where failure to do so
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.

Section 4.4    Maintenance of Property; Insurance.

(a)    Unless otherwise permitted pursuant to Section 5.6(a), each Credit Party
will keep, and will cause each Subsidiary to keep, all material tangible
property useful and necessary in its business in good working order and
condition, ordinary wear and tear and casualty events excepted; and make all
necessary repairs and/or restore the affected property in a good and workmanlike
manner, regardless of whether Agent agrees to disburse insurance proceeds or
other sums to pay costs of the work of repair or reconstruction, except where
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.

(b)    Each Credit Party will maintain (i) property insurance on all real and
personal property on an all risks basis (including the perils of flood (if
applicable), windstorm and quake), covering the repair and replacement cost of
all such property and coverage, business interruption and rent loss coverages
with 180 day extended period of indemnity and indemnity for extra expense, in
each case without application of coinsurance, (ii) general liability insurance
(including products/completed operations liability coverage), and (iii) such
other insurance coverage, in each case against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons (in the reasonable judgment of the Credit
Parties). All such insurance shall be provided by insurers having an A.M. Best
rating of A-, VII or better.

 

66

--------------------------------------------------------------------------------

(c)    On or prior to the Closing Date (except as otherwise provided pursuant to
Section 7.4), and at all times thereafter, each Credit Party will cause Agent to
be included as (x) an additional insured in the case of each liability policy
and (y) lender loss payee (which shall include, as applicable, identification as
mortgagee) in the case of each casualty or property insurance policy (except for
Workers’ Compensation and Employer’s Liability insurance policies), in each
case, required to be maintained pursuant to this Section 4.4 pursuant to
endorsements or policy form in form and substance reasonably acceptable to
Agent. Credit Parties shall deliver to Agent and the Lenders (i) within thirty
(30) days after the Closing Date, a certificate from Credit Parties’ insurance
broker and/or insurance carrier dated such date showing the amount of coverage
as of a recent date, and that such policies will include effective waivers
(whether under the terms of any such policy or otherwise) by the insurer of all
claims for insurance premiums against all loss payees and/or additional insureds
(as applicable) and all rights of subrogation against all loss payees and/or
additional insureds (as applicable), and that if all or any part of such policy
is canceled, terminated or expires, the insurer will forthwith give notice
thereof to each additional insured, assignee and loss payee (as applicable) and
that no cancellation in coverage thereof shall be effective until at least
thirty (30) days after receipt by each additional insured, assignee and loss
payee of written notice thereof, (ii) upon the reasonable request of any Lender
through Agent from time to time full information as to the insurance carried,
(iii) within five (5) days of receipt of notice from any insurer (or such longer
period as Agent may agree in its reasonable discretion), a copy of any notice of
cancellation or nonrenewal in coverage from that existing on the date of this
Agreement, (iv) forthwith, notice of any cancellation or nonrenewal of coverage
by any Credit Party, and (v) at least five (5) days (or such shorter period as
Agent may agree in its reasonable discretion) prior to expiration of any policy
of insurance, evidence of renewal of such insurance upon the terms and
conditions herein required. Without limiting the foregoing, Credit Parties agree
to provide notice to Agent of any material reduction in amount or material
change in coverage under their respective insurance policies required to be
maintained pursuant to the terms of this Agreement.

(d)    In the event any Credit Party fails to provide Agent with evidence of the
insurance coverage required by this Agreement within five (5) Business Days of
Agent’s written request therefor (unless an Event of Default has occurred and is
continuing, in which case no such waiting period shall apply), Agent may
purchase insurance at Credit Parties’ expense to protect Agent’s interests in
the Collateral. This insurance may, but need not, protect such Credit Party’s
interests. The coverage purchased by Agent may not pay any claim made by such
Credit Party or any claim that is made against such Credit Party in connection
with the Collateral. Such Credit Party may later cancel any insurance purchased
by Agent, but only after providing Agent with evidence that such Credit Party
has obtained insurance as required by this Agreement. If Agent purchases
insurance for the Collateral, Credit Parties will be responsible for the costs
of that insurance to the fullest extent provided by law, including interest and
other charges imposed by Agent in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Obligations. The costs
of the insurance may be more than the cost of insurance such Credit Party is
able to obtain on its own.

Section 4.5    Compliance with Laws and Material Contracts. Each Credit Party
will comply, and cause each Subsidiary to comply, with the requirements of all
applicable Laws and Material Contracts, except to the extent that failure to so
comply could not reasonably be expected to (a) have a Material Adverse Effect,
or (b) result in any Lien upon either (i) a material portion of the assets of
any such Person in favor of any Governmental Authority, or (ii) any Collateral
which is part of the Borrowing Base

 

67

--------------------------------------------------------------------------------

Section 4.6    Inspection of Property, Books and Records. Each Credit Party will
keep, and will cause each Subsidiary to keep, proper books of record
substantially in accordance with GAAP in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit, at the
sole cost of the applicable Credit Party or any applicable Subsidiary,
representatives of Agent to visit and inspect any of their respective properties
(subject to the terms of the applicable lease), to examine and make abstracts or
copies from any of their respective books and records, to conduct a collateral
audit and analysis of their respective operations and the Collateral, to verify
the amount and age of the Accounts, the identity and credit of the respective
Account Debtors, to review the billing practices of Borrowers and to discuss
their respective affairs, finances and accounts with their respective officers,
employees and independent public accountants; provided that, such rights
pursuant to this Section 4.6 may only be exercised during reasonable business
hours and, in the absence of a Default or an Event of Default (a) on at least
two (2) Business Days advance written notice and (b) not more than twice per
calendar year at the Credit Parties’ expense and the aggregate amount Credit
Parties shall be required to pay in respect of such audits and inspections in
any calendar year shall not exceed $75,000 in aggregate; provided, further that
the restrictions set forth in clause (a) and (b) shall not apply during the
existence and continuance of any Event of Default. Unless an Event of Default
has occurred and is continuing, the Agent shall give the Borrowers the
opportunity to participate in any discussions with the Borrowers’ independent
public accountants.

Section 4.7    Use of Proceeds. Borrowers shall use the proceeds of Revolving
Loans solely (a) to pay transaction fees incurred in connection with the
Financing Documents and (b) for general corporate purposes and for the working
capital needs of Borrowers and their Subsidiaries. No portion of the proceeds of
the Loans will be used for family, personal, agricultural or household use.

Section 4.8    Estoppel Certificates. After written request by Agent which, so
long as no Event of Default has occurred and is continuing, shall be limited to
one (1) such request per Fiscal Year, Credit Parties, within fifteen
(15) Business Days and at their expense, will furnish Agent with a statement,
duly acknowledged and certified, setting forth (a) the amount of the original
principal amount of the Notes, and the unpaid principal amount of the Notes,
(b) the rate of interest of the Notes, (c) the date payments of interest and/or
principal were last paid, (d) any offsets or defenses to the payment of the
Obligations, and if any are alleged, the nature thereof, (e) that the Notes and
this Agreement have not been modified or if modified, giving particulars of such
modification, and (f) that there has occurred and is then continuing no Default
or if such Default exists, the nature thereof, the period of time it has
existed, and the action being taken to remedy such Default; provided that Agent
shall have provided the Register to Borrower, upon Borrower’s request, prior to
Borrower being required to furnish such statement to Agent. After written
request by Agent, which, so long as no Event of Default has occurred and is
continuing, shall be limited to one (1) such request per Fiscal Year, Credit
Parties, within fifteen (15) Business Days and at their expense, will furnish
Agent with a certificate, signed by a Responsible Officer of Credit Parties,
updating all of the representations and warranties contained in this Agreement
and the other Financing Documents and certifying that all of the representations
and warranties contained in this Agreement and the other Financing Documents, as
updated pursuant to such certificate, are true, accurate and complete in all
material respects as of the date of such certificate.

Section 4.9    Notices of Material Contracts, Litigation and Defaults.

(a)    Credit Parties shall provide five (5) Business Days (or such shorter
period as reasonably agreed to by Agent) (i) written notice to Agent of a Credit
Party (1) executing and delivering any amendment, consent, waiver or other
modification to any Material Contract which is materially adverse to the
interests of the Agent or the Lenders to such Material Contract or which could
reasonably

 

68

--------------------------------------------------------------------------------

be expected to have a Material Adverse Effect or (2) receiving or delivering any
notice of termination or default or similar notice in connection with any
Material Contract and (ii) together with delivery of the Compliance Certificate
(included as an update to the such any schedule delivered therewith) in respect
of the last month of the following Fiscal Quarter, the execution of any new
Material Contract and/or any new material amendment, consent, waiver or other
modification to any Material Contract not previously disclosed.

(b)    Credit Parties will give prompt written notice to Agent (i) of any
litigation or governmental proceedings pending or threatened (in writing)
against Borrowers or other Credit Party which would reasonably be expected to
have a Material Adverse Effect with respect to Borrowers or any other Credit
Party or which in any manner calls into question the validity or enforceability
of any Financing Document, (ii) upon any Credit Party becoming aware of the
existence of any Default or Event of Default, (iii) of any strikes or other
labor disputes pending or, to any Credit Party’s knowledge, threatened against
any Credit Party, that could reasonably be expected to result in a Material
Adverse Effect, (iv) if there is any infringement or written claim of
infringement by any other Person with respect to any Material Intangible Asset
of any Credit Party that could reasonably be expected to have a Material Adverse
Effect and (v) if there is any written claim by any other Person that any Credit
Party in the conduct of its business is infringing on the Intellectual Property
rights of others and an adverse resolution of such claim could reasonably be
expected to have a Material Adverse Effect. Credit Parties represent and warrant
that Schedule 4.9 sets forth a complete list of all matters existing as of the
Closing Date for which notice could be required under this Section and all
material litigation or governmental proceedings pending or threatened (in
writing) against Borrowers or other Credit Party as of the Closing Date.

(c)    Credit Parties shall provide such further information (including copies
of such documentation) as Agent or any Lender shall reasonably request with
respect to any of the events or notices described in clauses (a) and (b) above.
From the date hereof and continuing through the termination of this Agreement,
Credit Parties shall use their best efforts to make available to Agent and each
Lender, without expense to Agent or any Lender, in a commercially reasonable
manner and in light of other obligations of such persons, each Credit Party’s
officers, employees and agents and books, to the extent that Agent or any Lender
may deem them reasonably necessary to prosecute or defend any third-party suit
or proceeding instituted by or against Agent or any Lender with respect to any
Collateral or relating to a Credit Party.

 

69

--------------------------------------------------------------------------------

Section 4.10    Hazardous Materials; Remediation. If any release or disposal of
Hazardous Materials which could reasonably be expected to have a Material
Adverse Effect shall occur or shall have occurred on any real property owned or
leased by Borrower or any other assets of any Borrower or any other Credit
Party, such Borrower will cause, or direct the applicable Credit Party to cause,
the prompt containment and removal of such Hazardous Materials and the
remediation of such real property or other assets to the extent such actions are
required of Borrower or any Credit Party under applicable Environmental Laws or
necessary to preserve the value of such real property other assets. Without
limiting the generality of the foregoing, each Borrower shall, and shall cause
each other Credit Party to, comply, in all material respects, with each
Environmental Law to the extent such Environmental Law requires Borrower or any
Credit Party to perform actions at any real property in response to the release
or threatened release of a Hazardous Material except as could not reasonably be
expected to have a Material Adverse Effect.

Section 4.11    Further Assurances.

(a)    Each Credit Party will, and will cause each Subsidiary (other than any
such Subsidiary that is an Excluded Subsidiary), at its own cost and expense,
promptly and duly take, execute, acknowledge and deliver all such further acts,
documents and assurances as may from time to time be necessary or as Agent or
the Required Lenders may from time to time reasonably request in order to carry
out the intent and purposes of the Financing Documents and the transactions
contemplated thereby, including all such actions to (i) establish, create,
preserve, protect and perfect a first priority Lien (other than in respect of
Excluded Perfection Assets and subject only to Permitted Liens) in favor of
Agent for itself and for the benefit of the Lenders on the Collateral (including
Collateral acquired after the date hereof), and (ii) unless Agent shall agree
otherwise in writing, cause all Subsidiaries of Parent (other than Excluded
Subsidiaries) to be jointly and severally obligated with the other Credit
Parties under all covenants and obligations under this Agreement, including the
obligation to repay the Obligations.

(b)    Upon receipt of an affidavit of an authorized representative of Agent or
a Lender as to the loss, theft, destruction or mutilation of any Note or any
other Financing Document which is not of public record and which contains
customary indemnifications in favor of Borrowers, and, in the case of any such
mutilation, upon surrender and cancellation of such Note or other applicable
Financing Document, Borrowers will issue, in lieu thereof, a replacement Note or
other applicable Financing Document, dated the date of such lost, stolen,
destroyed or mutilated Note or other Financing Document in the same principal
amount thereof and otherwise of like tenor.

(c)    Without limiting (i) clauses (l), (m) or (n) in the definition of
“Eligible Inventory”, (ii) clauses (j), (k) or (l) in the definition of Eligible
Surgical Instrumentation or (iii) clause (a)(i) in the definition of “Eligible
Equipment”:

(i)    at all times when the average end-of-day principal balance of Revolving
Loans exceeds $85,000,000 for any thirty (30) day period, Credit Parties shall
obtain a landlord’s agreement or mortgagee agreement, as applicable, from the
lessor of each leased property or mortgagee of owned property with respect to
any business location where any portion of the Collateral included in or
proposed to be included in the Borrowing Base to the extent that the aggregate
daily average value of all Collateral held at such location exceeds $15,000,000
during any thirty (30) day period (an “Access Agreement Location”); provided,
that if Borrowers are unable to obtain such an agreement for any Access
Agreement Location within sixty (60) days following the end of the applicable
30-day period, it shall not result in an Event of Default hereunder, rather,
such Collateral shall not constitute Eligible Inventory or Eligible Surgical
Instrumentation, as applicable, for purposes of calculating the Borrowing Base
to the extent provided for in clause (n) of the definition of Eligible Inventory
or clause (l) of the definition of Eligible Surgical Instrumentation;

 

70

--------------------------------------------------------------------------------

(ii)    Credit Parties shall obtain a landlord’s agreement or mortgagee
agreement, as applicable, from the lessor of each leased property or mortgagee
of owned property with respect to any business location where the books and
records relating to such Collateral and/or software and equipment relating to
such records or Collateral, is stored or located (unless such books and records
are also located at another business location that is subject to landlord’s or
mortgagee agreement in favor of Agent), which agreement or letter, in each case
of clauses (i) and (ii), shall be reasonably satisfactory in form and substance
to Agent; and

(iii)    Credit Parties shall timely and fully pay and perform its obligations
under the Arlington Real Property Lease, the Arlington Personal Property Leases
and all other leases and other agreements with respect to each leased location
where any Collateral with an aggregate value in excess of $5,000,000, or any
records related thereto, is or may be located unless a failure to perform would
not give a third party who is a party to such lease a right to terminate such
lease or agreement prior to the expiration thereof.

(d)    Credit Parties shall provide Agent with at least five (5) Business Days
(or such shorter period as Agent may accept in its sole discretion) prior
written notice of its intention to create (or to the extent permitted under this
Agreement, acquire) a new Subsidiary organized under the laws of the United
States of America, any state thereof or the District of Columbia. Promptly upon
the formation (or to the extent permitted under this Agreement, acquisition) of
a new Subsidiary (but in any event within ten (10) Business Days), Credit
Parties shall (i) pledge, have pledged or cause or have caused to be pledged to
Agent pursuant to a pledge agreement in form and substance satisfactory to
Agent, all (with respect to a domestic Subsidiary that is not an Excluded
Domestic Holdco) or 65% (with respect to a Foreign Subsidiary of a United States
or an Excluded Domestic Holdco) of the outstanding shares of equity interests or
other equity interests of such new Subsidiary owned directly or indirectly by
any Credit Party, along with undated stock or equivalent powers for such
certificates, if any, executed in blank; (ii) unless Agent shall agree otherwise
in writing, cause the new Subsidiary (other than an Excluded Subsidiary) to take
such other actions (including entering into or joining any Security Documents)
as are necessary or advisable in the reasonable opinion of Agent in order to
grant Agent, acting on behalf of the Lenders, a first priority Lien (subject to
Permitted Liens) on all Material Real Property and personal property (in the
case of the perfection of the Liens granted, subject to the Excluded Perfection
Assets) of such Subsidiary in existence as of such date and in all after
acquired property, which first priority Liens (subject to Permitted Liens) are
required to be granted pursuant to this Agreement; (iii) unless Agent shall
agree otherwise in writing, cause such new Subsidiary (other than an Excluded
Subsidiary) to either (at the election of Agent) become a Borrower hereunder
with joint and several liability for all obligations of Borrowers hereunder and
under the other Financing Documents pursuant to a joinder agreement or other
similar agreement in form and substance reasonably satisfactory to Agent or to
become a Guarantor of the obligations of Borrowers hereunder and under the other
Financing Documents pursuant to a guaranty and suretyship agreement in form and
substance reasonably satisfactory to Agent; and (iv) cause the new Subsidiary
(other than an Excluded Subsidiary) to deliver certified copies of such
Subsidiary’s certificate or articles of incorporation, together with good
standing certificates, by-laws (or other operating agreement or governing
documents), resolutions of the Board of Directors or other governing body,
approving and authorizing the execution and delivery of the Security Documents,
incumbency certificates and to execute and/or deliver such other documents and
legal opinions or to take such other actions as may be reasonably requested by
Agent, in each case, in form and substance reasonably satisfactory to Agent
(clauses (i) through (iv), collectively, the “Joinder Requirements”).

 

71

--------------------------------------------------------------------------------

Section 4.12    Reserved.

Section 4.13    Power of Attorney. Each of the authorized representatives of
Agent is hereby irrevocably made, constituted and appointed the true and lawful
attorney for each Credit Party (without requiring any of them to act as such)
with full power of substitution to do the following during the continuance of an
Event of Default: (a) endorse the name of such Credit Party upon any and all
checks, drafts, money orders, and other instruments for the payment of money
that are payable to such Credit Party and constitute collections on such Credit
Party’s Accounts; (b) perform the same and such Credit Party has failed to take
such action, execute in the name of such Credit Party any schedules,
assignments, instruments, documents, and statements that the Credit Parties are
obligated to give Agent under this Agreement; (c) take any action the Credit
Parties are required to take under this Agreement; (d) do such other and further
acts and deeds in the name of such Credit Party that Agent may deem necessary or
desirable to enforce any Account or other Collateral or perfect Agent’s security
interest or Lien in any Collateral; and (e) do such other and further acts and
deeds in the name of the Credit Parties that Agent may deem necessary or
desirable to enforce its rights with regard to any Account or other Collateral.
This power of attorney shall be irrevocable and coupled with an interest.

Section 4.14    Borrowing Base Collateral Administration.

(a)    All data and other information relating to Accounts and other intangible
Collateral shall at all times be kept by Borrowers, at their respective
principal offices and shall not be moved from such locations without
(i) providing prior written notice to Agent, and (ii) obtaining the prior
written consent of Agent, which consent shall not be unreasonably withheld.

(b)    Borrowers shall provide prompt written notice to each Person who either
is currently an Account Debtor or becomes an Account Debtor at any time
following the date of this Agreement that directs each Third Party Account
Debtor to make payments in respect of Third Party Accounts into the Lockbox, and
hereby authorizes Agent, upon Borrowers’ failure to send such notices at any
time following the Collections Account Post-Closing Period (or sixty (60) days
after the Person becomes an Account Debtor in respect of any Eligible Account),
to send any and all similar notices to such Person. Agent reserves the right to
notify Account Debtors during the continuance of an Event of Default that Agent
has been granted a Lien upon all Accounts.

(c)    Borrowers will conduct a physical count of the Inventory at least once
per year (or more frequently as Agent may reasonably request during the
continuance of any Event of Default), and Borrowers shall provide to Agent a
written accounting of such physical count in form and substance reasonably
satisfactory to Agent. Each Borrower will use commercially reasonable efforts to
at all times keep its Inventory in good and marketable condition; provided, that
with respect to Inventory located at the Arlington Road Premises and at the
premises located at 10801 Nesbitt Avenue South, Bloomington, MN, Borrowers may
conduct a cycle count of Inventory, consistent with Borrowers’ past practices
with respect to Inventory located at such premises.

(d)    In addition to the foregoing, from time to time, Agent may require
Borrowers to obtain and deliver to Agent appraisal reports in form and substance
and from appraisers reasonably satisfactory to Agent stating the then current
fair market values of all or any portion of the Collateral; provided, however,
that, so long as no Event of Default has occurred and is continuing, Borrowers
shall not be required deliver more than one (1) appraisal report to Agent per
Fiscal Year and, so long as the Revolving Loan Outstandings have not exceeded
$50,000,000 at any time during such Fiscal Year, the aggregate amount Credit
Parties shall be required to pay in respect of such appraisal in any Fiscal Year
shall not exceed $50,000 in the aggregate.

 

72

--------------------------------------------------------------------------------

Section 4.15    Schedule Updates. Credit Parties shall, in the event of any
information in the Schedules becoming outdated, inaccurate, incomplete or
misleading, deliver to Agent, together with the next Compliance Certificate
required to be delivered after the end of a Fiscal Quarter under this Agreement
after such event a proposed update to such Schedule correcting all outdated,
inaccurate, incomplete or misleading information; provided, however, with
respect to any proposed updates to the Schedules involving Permitted Liens,
Permitted Debt or Permitted Investments, Agent will replace the respective
Schedule attached hereto with such proposed update only if such updated
information is consistent with the definitions of and limitations herein
pertaining to Permitted Liens, Permitted Debt or Permitted Investments.

Section 4.16    Intellectual Property and Licensing.

(a)    Together with each Compliance Certificate required to be delivered
pursuant to Section 4.1 after the end of a Fiscal Quarter to the extent (A) any
Credit Party acquires and/or develops any new Registered Intellectual Property,
or (B) any Credit Party enters into or becomes bound by any additional in-bound
license or sublicense agreement, any additional exclusive out-bound license or
sublicense agreement or other agreement with respect to rights in Intellectual
Property constituting a Material Intangible Asset (other than over-the-counter
software that is commercially available to the public), or (C) there occurs any
other change in Borrower’s Registered Intellectual Property, in-bound licenses
or sublicenses or exclusive out-bound licenses or sublicenses from that listed
on Schedule 3.19 that could reasonably be expected to result in a Material
Adverse Effect, deliver to Agent an updated Schedule 3.19 reflecting such
updated information.

(b)    Credit Parties shall own, or be licensed to use or otherwise have the
right to use, all Material Intangible Assets. Credit Parties shall cause all
Registered Intellectual Property to be duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such registrations,
filings or issuances, except where the failure to do so would not reasonably be
expected to result in a Material Adverse Effect. Credit Parties shall at all
times conduct their business without infringement of any Intellectual Property
rights of others, except where the failure to do so would not reasonably be
expected to result in a Material Adverse Effect. Credit Parties shall
(i) protect, defend and maintain the validity and enforceability of its Material
Intangible Assets (ii) promptly advise Agent in writing of material
infringements of its Material Intangible Assets, or of a claim of infringement
by a Credit Party on the Intellectual Property rights of others which could
reasonably be expected to result in a Material Adverse Effect; and (iii) not
allow any of Credit Parties’ Material Intangible Assets to be abandoned,
invalidated, forfeited or dedicated to the public or to become unenforceable
except to the extent constituting a Permitted Asset Disposition.

Section 4.17    Regulatory Reporting and Covenants.

(a)    Credit Parties shall notify Agent and each Lender promptly (and in any
event within five (5) Business Days) of receiving, becoming aware of or
determining that (each, a “Regulatory Reporting Event” and collectively, the
“Regulatory Reporting Events”): (i) any Governmental Authority, specifically
including the FDA, is conducting or has conducted (A) if applicable, any
investigation of Credit Party’s or its Subsidiaries’ manufacturing facilities
and processes for any Product, which investigation has resulted in allegations
by the Governmental Authority of material deficiencies or material violations of
Laws and/or the Regulatory Required Permits or (B) an investigation or review of
any Regulatory Required Permit (other than routine reviews in the Ordinary
Course of Business associated with the renewal of a Regulatory Required Permit
and which could not reasonably be expected to result in a Material Adverse
Effect), (ii) development, testing, and/or manufacturing of any Product or
provision of any service that is material to the business of Credit Parties or
their Subsidiaries (taken as a

 

73

--------------------------------------------------------------------------------

whole) should cease, (iii) if a Product that is material to the business of the
Credit Parties or their Subsidiaries (taken as a whole) has been approved for
marketing and sale, any marketing or sales of such Product should cease or such
Product should be withdrawn from the marketplace, (iv) any Regulatory Required
Permit that is material to the business of Credit Parties or their Subsidiaries
has been revoked or withdrawn, (v) adverse clinical test results with respect to
any Product which have or could reasonably be expected to result in a Material
Adverse Effect, (vi) any Recalls of Products from any market (other than
discrete batches or lots that are not material in quantity or amount and are not
made in conjunction with a recall initiated by another Person), which have or
could reasonably be expected to result in a Material Adverse Effect or (vii) any
significant failures in the manufacturing of any Product such that the amount of
such Product successfully manufactured in accordance with all specifications
thereof and the required payments to be made to Credit Parties therefor in any
month shall decrease significantly with respect to the quantities of such
Product and payments produced in the prior month, in each case, which could
reasonably be expected to result in a Material Adverse Effect. Credit Parties
shall provide to Agent or any Lender such further information (including copies
of such documentation) as Agent or any Lender may reasonably request with
respect to any such Regulatory Reporting Event.

(b)    Each Credit Party shall obtain all Regulatory Required Permits necessary
for compliance in all material respects with Laws with respect to testing,
manufacturing, developing, selling or marketing of Products and shall maintain
and comply materially with all such Regulatory Required Permits, the
noncompliance with which could have a Material Adverse Effect.

Section 4.18    Anti-Corruption Laws.

(a)    No Credit Party shall (and each Credit Party shall ensure that no
Subsidiary of such Credit Party will) directly or knowingly indirectly use the
proceeds of the Loans for any purpose which would breach the Anti-Corruption
Laws.

(b)    Each Credit Party shall (and each Credit Party shall ensure that each
Subsidiary of such Credit Party will):

(i)    conduct its businesses in compliance, in all material respects, with the
Anti-Corruption Laws; and

(ii)    maintain policies and procedures reasonably designed to promote and
achieve compliance with such laws.

ARTICLE 5 - NEGATIVE COVENANTS

Each Credit Party agrees that, so long as any Credit Exposure exists:

Section 5.1    Debt; Contingent Obligations. No Credit Party will, or will
permit any Subsidiary to, directly or indirectly, create, incur, assume,
guarantee or otherwise become or remain directly or indirectly liable with
respect to, any Debt, except for Permitted Debt. No Credit Party will, or will
permit any Subsidiary to, directly or indirectly, create, assume, incur or
suffer to exist any Contingent Obligations, except for Permitted Contingent
Obligations.

Section 5.2    Liens. No Credit Party will, or will permit any Subsidiary to,
directly or indirectly, create, assume or suffer to exist any Lien on any asset
now owned or hereafter acquired by it, except for Permitted Liens.

 

74

--------------------------------------------------------------------------------

Section 5.3    Distributions. No Credit Party will, or will permit any
Subsidiary to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Distribution, except for Permitted Distributions.

Section 5.4    Restrictive Agreements. No Credit Party will, or will permit any
Subsidiary to, directly or indirectly (a) enter into or assume any agreement
(other than (i) the Financing Documents or (ii) any agreement in respect of
purchase money Debt permitted under clause (c) of the definition of Permitted
Debt) prohibiting the creation or assumption of any Lien upon its properties or
assets, whether now owned or hereafter acquired, or (b) create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary to: (i) pay or make
Distributions to any Credit Party or any Subsidiary; (ii) pay any Debt owed to
any Credit Party or any Subsidiary; (iii) make loans or advances to any Credit
Party or any Subsidiary; or (iv) transfer any of its property or assets to any
Credit Party or any Subsidiary, other than (1) the Financing Documents, (2) an
encumbrance or restriction consisting of customary non-assignment provisions in
leases or licenses entered into in the Ordinary Course of Business,
(3) customary provisions in joint venture agreement and other similar agreements
that restrict the transfer of ownership interests in such joint ventures or
provisions limiting the disposition or distribution of assets or property (other
than dividends on a pro rata basis based on ownership percentage) of the
applicable joint venture, which limitation is applicable only to the assets that
are the subject of such agreements; provided that such agreement was not entered
into in contravention of the terms of the Financing Documents, or
(4) limitations set forth in Subordinated Debt (if acceptable to the Agent in
its sole discretion).

Section 5.5    Payments and Modifications of Debt. No Credit Party will, or will
permit any Subsidiary to, directly or indirectly:

(a)    declare, pay, make or set aside any amount for payment in respect of
Subordinated Debt, except for payments made in full compliance with and
expressly permitted under the Subordination Agreement,

(b)    amend or otherwise modify the terms of any Subordinated Debt, except for
amendments or modifications made in full compliance with the Subordination
Agreement;

(c)    declare, pay, make or set aside any amount for payment in respect of any
Debt hereinafter incurred that, by its terms, or by separate agreement, is
subordinated to the Obligations, except for payments made in full compliance
with and expressly permitted under the subordination provisions applicable
thereto; provided that payments made in respect of the CVR Earn-Out pursuant to
the terms of the CVR Agreement (as in effect on the date hereof) shall be
permitted (irrespective of the subordination language set forth in Article X
thereof) so long as no Event of Default exists (other than any Event of Default
existing solely as a result of Section 10.1(b)) exists and is continuing at the
time such payment is made or would result from the making thereof;

(d)    make any optional repurchase or redemption of the 2021 Cash Convertible
Notes, the 2020 Cash Convertible Notes or the 2017 Cash Convertible Notes,
including pursuant to Section 2.10 of each Cash Convertible Note Indenture; or

(e)    amend or otherwise modify the terms of any such Debt referred to in
clauses (a)-(d) above if the effect of such amendment or modification is to
(i) increase the interest rate or fees on, or change the manner or timing of
payment of, such Debt if in any way adverse to the Agent or the Lenders,
(ii) accelerate or shorten the dates upon which payments of principal or
interest are due on, or the principal amount of, such Debt, (iii) change in a
manner adverse to any Credit Party or Agent any

 

75

--------------------------------------------------------------------------------

event of default or add or make more restrictive any covenant with respect to
such Debt, (iv) change the prepayment provisions of such Debt or any of the
defined terms related thereto in a manner adverse to Agent or the Lenders,
(v) solely with respect to Subordinated Debt, change the subordination
provisions thereof (or the subordination terms of any guaranty thereof), or
(vi) change or amend any other term if such change or amendment would materially
increase the obligations of the obligor or confer additional material rights on
the holder of such Debt in a manner adverse to Credit Parties, any Subsidiaries,
Agent or Lenders. Credit Parties shall, prior to entering into any such
amendment or modification, deliver to Agent reasonably in advance of the
execution thereof, any final or execution form copy thereof.

Except as otherwise provided in clause (d) above and without limiting any other
provision in this Agreement, nothing in this Section 5.5 shall prohibit any
payment in respect of the Cash Convertible Notes or modification of any Cash
Convertible Note Documents made in connection with a Cash Convertible
Note-Related Transaction.

Section 5.6    Consolidations, Mergers and Sales of Assets; Change in Control.

(a)    No Credit Party will, or will permit any Subsidiary to, directly or
indirectly consolidate or merge or amalgamate with or into any other Person
other than (a) consolidations or mergers among Borrowers where a Borrower is the
surviving entity (provided that in the case of any consolidation or merger
involving Holdings, Holdings shall be the surviving entity), (b) consolidations
or mergers among a Guarantor and a Borrower so long as the Borrower is the
surviving entity (provided that Parent may not merge into any Borrower), (c)
consolidations or mergers among Guarantors where the Guarantor is the surviving
entity (provided that in the case of any consolidation or merger involving
Parent, Parent shall be the surviving entity), (d) consolidations or mergers
among Excluded Subsidiaries, (e) dissolutions or liquidations of Credit Parties
(other than Borrowers) or their Subsidiaries so long as any assets of such
dissolved or liquidated Person are transferred to a Borrower or another Credit
Party and (f) consolidations and mergers necessary to effect the Permitted
Internal Reorganization.

(b)    No Credit Party will, or will permit any Subsidiary to, directly or
indirectly consummate any Asset Dispositions other than Permitted Asset
Dispositions; provided that no Credit Party shall consummate any Permitted Asset
Disposition unless (i) no Default or Event of Default exists or would result
from such Asset Disposition and (ii) such Permitted Asset Dispositions shall be
made for fair value and for at least 75% cash consideration; it being understood
that the following shall be deemed to be cash consideration: (A) any liabilities
(as shown on Parent’s most recent balance sheet provided hereunder or in the
footnotes thereto) of the applicable Credit Party or Subsidiary, other than
liabilities that are by their terms subordinated to the payment in full of the
Obligations, that are assumed by the transferee with respect to the applicable
disposition and for which Parent and its Subsidiaries shall have been validly
released by all applicable creditors in writing and (B) aggregate non-cash
consideration received by the applicable Credit Party or Subsidiary having an
aggregate fair market value (determined as of the closing of the applicable
disposition for which such non-cash consideration is received) not to exceed
$5,000,000; provided, further that any Permitted Asset Disposition resulting in
the sale, transfer or disposition of Collateral that is part of the Borrowing
Base shall result in a corresponding reduction of the Borrowing Base equal to
the fair market value of such Collateral and Credit Parties shall submit an
updated Borrowing Base Certificate evidencing the removal of such Collateral
from the Borrowing Base.

 

76

--------------------------------------------------------------------------------

Section 5.7    Purchase of Assets, Investments. No Credit Party will, or will
permit any Subsidiary to, directly or indirectly:

(a)    except as otherwise permitted pursuant to clause (o) of the definition of
Permitted Investments, engage or enter into any agreement to engage in any joint
venture or partnership with any other Person;

(b)    make or enter into any agreement to make an Acquisition other than
Permitted Acquisitions; or

(c)    acquire or own or enter into any agreement to acquire or own any
Investment in any Person other than Permitted Investments.

Section 5.8    Transactions with Affiliates. Except (a) as otherwise disclosed
on Schedule 5.8, (b) intercompany Accounts established in the Ordinary Course of
Business in respect of the purchase and sale of goods, the rendering of
corporate or commercial services, royalty payments, distribution agreements and
other transactions incidental and/or reasonably related thereto, in each case in
the Ordinary Course of Business between Credit Parties or between Credit Parties
and Excluded Subsidiaries and settlement of such Accounts, (c) for transactions
that contain terms that are no less favorable to the applicable Credit Party or
any Subsidiary, as the case may be, than those which might be obtained from a
third party not an Affiliate of any Credit Party and (d) for the Permitted
Internal Reorganization, no Credit Party will, or will permit any Subsidiary to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of any Credit Party that is not itself a Borrower or
a Guarantor.

Section 5.9    Modification of Organizational Documents. No Credit Party will,
or will permit any Subsidiary to, directly or indirectly, amend or otherwise
modify any Organizational Documents of such Person, except for Permitted
Modifications.

Section 5.10    Modification of Certain Agreements. No Credit Party will, or
will permit any Subsidiary to, directly or indirectly, amend or otherwise modify
any Material Contract, which amendment or modification in any case: (a) is
contrary to the terms of this Agreement or any other Financing Document;
(b) could reasonably be expected to be materially adverse to the rights,
interests or privileges of Agent or the Lenders or their ability to enforce the
same; (c) results in the imposition or expansion in any material respect of any
obligation of or restriction or burden on any Credit Party or any Subsidiary; or
(d) reduces in any material respect any rights or benefits of any Credit Party
or any Subsidiaries (it being understood and agreed that any such determination
shall be in the discretion of Agent, acting reasonably). Each Credit Party
shall, prior to entering into any amendment or other modification of any of the
foregoing documents, deliver to Agent reasonably in advance of the execution
thereof, any final or execution form copy of amendments or other modifications
to such documents, and such Credit Party agrees not to take, nor permit any of
its Subsidiaries to take, any such action with respect to any such documents
without obtaining such approval from Agent.

Section 5.11    Conduct of Business. No Credit Party will, or will permit any
Subsidiary to, directly or indirectly, engage in any line of business other than
those businesses engaged in on the Closing Date and described on Schedule 5.11
and businesses incidental or reasonably related thereto. No Credit Party will,
or will permit any Subsidiary to, other than in the Ordinary Course of Business,
change its normal billing payment and reimbursement policies and procedures with
respect to its Accounts (including, without limitation, the amount and timing of
finance charges, fees and write-offs).

 

77

--------------------------------------------------------------------------------

Section 5.12    Excluded Subsidiaries; Joint Ventures.

(a)    No Borrower will, or will permit any Subsidiary (other than an Excluded
Subsidiary) to commingle any of its assets (including any bank accounts, cash or
cash equivalents) with the assets of any Person other than a Borrower.

(b)    No Credit Party will, or will permit any Subsidiary thereof to enter into
or own any interest in a joint venture that is not itself a corporation or
limited liability company or other legal entity in respect of which the equity
holders are not liable for the obligations of such entity as a matter of law.

Section 5.13    Limitation on Sale and Leaseback Transactions. Other than the
Tennessee Property PILOT Program, no Credit Party will, or will permit any
Subsidiary to, directly or indirectly, enter into any arrangement with any
Person whereby, in a substantially contemporaneous transaction, any Credit Party
or any Subsidiaries sells or transfers all or substantially all of its right,
title and interest in an asset and, in connection therewith, acquires or leases
back the right to use such asset.

Section 5.14    Deposit Accounts and Securities Accounts; Payroll and Benefits
Accounts.

(a)    Except for Excluded Accounts, no Credit Party will directly or
indirectly, establish any new Deposit Account or Securities Account without
prior written notice to Agent, and unless Agent, such Credit Party and the bank,
financial institution or securities intermediary at which the account is to be
opened enter into a Deposit Account Control Agreement or Securities Account
Control Agreement prior to or concurrently with the establishment of such
Deposit Account or Securities Account. Without limiting the foregoing, no
Borrower shall maintain any Deposit Account or Securities Account outside of the
United States without the prior written consent of Agent.

(b)    Credit Parties represent and warrant that Schedule 5.14 lists all of the
Deposit Accounts and Securities Accounts of each Credit Party as of the Closing
Date (as supplemented from time to time pursuant to Section 4.15).

(c)    The provisions of Section 5.14(a) shall not apply to (i) Deposit Accounts
exclusively used for payroll, payroll taxes and other employee wage and benefit
payments to or for the benefit of Credit Parties’ employees and identified to
Agent by Credit Parties as such; provided that, in each case, the aggregate
balance in such Deposit Account does not materially exceed the amount necessary
to make the immediately succeeding payroll, payroll tax or benefit payment (or
such minimum amount as may be required by any requirement of Law with respect to
such Deposit Accounts), (ii) zero balance accounts; provided that such accounts
have been identified to Agent by Borrowers as such, (iii) such other Deposit
Accounts (excluding, for the avoidance of doubt, any Lockbox Account), amounts
on deposit in which do not exceed $2,000,000 individually and $7,500,000 in the
aggregate with respect to all such accounts at any one time, (iv) escrow (which,
for the avoidance of doubt shall include the Wright Settlement Escrow Account),
trust and fiduciary accounts, (v) each account of each Excluded Subsidiaries,
(vi) Deposit Accounts and Securities Accounts of Parent located outside of the
United States, and (vii) the L/C Cash Collateral Accounts (the Deposit Accounts
referred in clauses (i)-(vi), “Excluded Accounts”).

(d)    At all times that any Obligations remain outstanding, Borrower shall
maintain one or more separate Deposit Accounts to hold any and all amounts to be
used for payroll, payroll taxes and other employee wage and benefit payments,
and shall not commingle any monies allocated for such purposes with funds in any
other Deposit Account.

 

78

--------------------------------------------------------------------------------

Section 5.15    Compliance with Anti-Terrorism Laws. Agent hereby notifies
Credit Parties that pursuant to the requirements of Anti-Terrorism Laws, and
Agent’s policies and practices, Agent is required to obtain, verify and record
certain information and documentation that identifies Credit Parties and their
principals, which information includes the name and address of each Credit Party
and its principals and such other information that will allow Agent to identify
such party in accordance with Anti-Terrorism Laws. No Credit Party will, or will
permit any Subsidiary to, directly or indirectly, knowingly enter into any
Material Contracts with any Blocked Person or any Person listed on the OFAC
Lists. Each Credit Party shall immediately notify Agent if such Credit Party has
knowledge that any Credit Party, any additional Credit Party or any of their
respective Affiliates or agents acting or benefiting in any capacity in
connection with the transactions contemplated by this Agreement is or becomes a
Blocked Person or (a) is convicted on, (b) pleads nolo contendere to, (c) is
indicted on, or (d) is arraigned and held over on charges involving money
laundering or predicate crimes to money laundering. No Credit Party will, or
will permit any Subsidiary to, directly or knowingly indirectly, (i) conduct any
business or engage in any transaction or dealing with any Blocked Person,
including, without limitation, the making or receiving of any contribution of
funds, goods or services to or for the benefit of any Blocked Person, (ii) deal
in, or otherwise engage in any transaction relating to, any property or
interests in property blocked pursuant to any applicable executive order or
other Anti-Terrorism Law applicable to such Credit Party, or (iii) engage in or
conspire to engage in any transaction that evades or avoids, or has the purpose
of evading or avoiding, or attempts to violate, any of the prohibitions set
forth in any Anti-Terrorism Law applicable to such Credit Party.

Section 5.16    Change in Accounting. No Credit Party shall, and no Credit Party
shall suffer or permit any of its Subsidiaries to, (i) make any significant
change in accounting treatment or reporting practices, except as required by
GAAP or (ii) change the fiscal year or method for determining fiscal quarters of
any Credit Party or of any Consolidated Subsidiary of any Credit Party.

Section 5.17    Parent. Parent will not incur or permit to exist any Debt
(except for Permitted Debt) nor grant or permit to exist any Liens (other than
Permitted Liens) upon any of its properties or assets nor engage in any
operations, business or activity other than (i) owning 100% of the equity
interests of the Borrowers and its other Subsidiaries and all operations
incidental thereto, (ii) executing and performing its obligations under the
Operative Documents to which it is a party, (iii) fulfilling its obligations
under the Operative Documents to which it is a party, (iv) performing
administrative, governance and supervisory functions in connection with the
operation of the business of its Subsidiaries, (v) issuing equity interests,
including without limitation pursuant to stock option plans, (vi) the
maintenance of its corporate existence and corporate governance and other
activities reasonably incidental thereto, (vii) guarantees of obligations of
Subsidiaries to the extent permitted by this Agreement and (viii) such
operations as are being carried on by Parent as of the Closing Date and
operations incidental or reasonably related thereto.

ARTICLE 6 - FINANCIAL COVENANTS

Section 6.1    Additional Defined Terms. The following additional definitions
are hereby appended to Section 1.1 of this Agreement:

“Consolidated Liquidity” means, as of any date of determination, the sum of the
Revolving Loan Availability plus the aggregate cash and cash equivalents held by
the Parent and its Consolidated Subsidiaries (taken as a whole) minus any cash
and cash equivalents held in Deposit Accounts of the Credit Parties described in
clauses (i) or (iv) of the definition of Excluded Accounts.

 

79

--------------------------------------------------------------------------------

“Credit Party Liquidity” means, as of any date of determination, the sum of the
Revolving Loan Availability plus the aggregate cash and cash equivalents held by
the Credit Parties (taken as a whole) in one or more Deposit Accounts or
Securities Accounts, each of which shall be held in the name of a Borrower or
Parent in a bank or financial institution located in the United States and
subject to a Deposit Account Control Agreement or Securities Account Control
Agreement, as applicable, in favor of Agent.

“Defined Period” means, for purposes of calculating the minimum Net Revenue for
(a) the Fiscal Quarter ending on December 25, 2016, the preceding three
(3) month period ending on the last day of such Fiscal Quarter, (b) for the
Fiscal Quarter ending on March 26, 2017, the preceding six (6) month period
ending on the last day of such Fiscal Quarter, (c) for the Fiscal Quarter ending
on June 25, 2017, the preceding nine (9) month period ending on the last day of
such Fiscal Quarter, and (d) for each other Fiscal Quarter, the preceding twelve
(12) month period ending on the last day of such Fiscal Quarter.

“Net Revenue” means, for any period, (a) the consolidated gross revenues of
Parent and its Consolidated Subsidiaries generated solely through the commercial
sale of Products by Parent and its Subsidiaries during such period, less (b)(i)
trade, quantity and cash discounts allowed by Parent or its Subsidiaries,
(ii) discounts, refunds, rebates, charge backs, retroactive price adjustments
and any other allowances which effectively reduce net selling price,
(iii) product returns and allowances, (iv) allowances for shipping or other
distribution expenses, (iv) set-offs and counterclaims, and (v) any other
similar and customary deductions used by Parent in determining net revenues,
all, in respect of (a) and (b), as determined in accordance with GAAP and in the
Ordinary Course of Business.

Section 6.2    Minimum Net Revenue. Credit Parties shall not permit Net Revenue
for any applicable Defined Period (as tested on the last day of such Defined
Period):

(a)    ending on or prior December 31, 2017 to be less than the minimum amount
set forth on Schedule 6.2 for such Defined Period;

(b)    ending after December 31, 2017 and on or prior to December 30, 2018 to be
less than the greater of (i) an amount equal to eighty percent (80%) of
Borrowers’ projected Net Revenue for the applicable Defined Period as set forth
in the board-approved projections most recently delivered to Agent in accordance
with Section 4.1 and (ii) $640,001,000;

(c)    ending after December 30, 2018 and on or prior to December 29, 2019, to
be less than the greater of (i) an amount equal to eighty percent (80%) of
Borrowers’ projected Net Revenue for the applicable Defined Period as set forth
in the board-approved projections most recently delivered to Agent in accordance
with Section 4.1 and (ii) the Net Revenue required pursuant to clause (b) above
for the Defined Period ending December 30, 2018;

(d)    ending after December 29, 2019 and on or prior to December 27, 2020, to
be less than the greater of (i) an amount equal to eighty percent (80%) of
Borrowers’ projected Net Revenue for the applicable Defined Period as set forth
in the board-approved projections most recently delivered to Agent in accordance
with Section 4.1 and (ii) the Net Revenue required pursuant to clause (c) above
for the Defined Period ending December 29, 2019; and

(e)    ending after December 27, 2020 to be less than the greater of (i) an
amount equal to eighty percent (80%) of Borrowers’ projected Net Revenue for the
applicable Defined Period as set forth in the board-approved projections most
recently delivered to Agent in accordance with Section 4.1 and (ii) the Net
Revenue required pursuant to clause (d) above for the Defined Period ending
December 27, 2020.

 

80

--------------------------------------------------------------------------------

Section 6.3    Cash Requirements. Credit Parties shall not permit, at any time
following the Closing Date, Credit Party Liquidity to be less than fifty percent
(50%) of Consolidated Liquidity.

Section 6.4    Evidence of Compliance. Credit Parties shall furnish to Agent,
together with the financial reporting required of Credit Parties in this
Agreement, a Compliance Certificate as evidence of Credit Parties’ compliance
with the covenants in this Article and evidence that no Event of Default
specified in this Article has occurred. Upon the reasonable request of the
Agent, such Compliance Certificate shall include, without limitation, (a) a
statement and report, on a form approved by Agent, detailing Credit Parties’
calculations, (b) bank statements, and (c) back-up documentation (including,
without limitation, invoices, receipts and other evidence of costs incurred
during such quarter as Agent shall reasonably require) evidencing the propriety
of the calculations.

ARTICLE 7 - CONDITIONS

Section 7.1    Conditions to Closing. The obligation of each Lender to make the
initial Loans on the Closing Date shall be subject to the receipt by Agent of
each agreement, document and instrument set forth on the closing checklist
prepared by Agent or its counsel, each in form and substance satisfactory to
Agent, and such other closing deliverables reasonably requested by Agent and
Lenders, and to the satisfaction of the following conditions precedent, each to
the satisfaction of Agent and Lenders and their respective counsel in their sole
discretion:

(a)    the payment of all fees, expenses and other amounts due and payable under
each Financing Document;

(b)    since December 31, 2015, the absence of any Material Adverse Effect;

(c)    the fact that the representations and warranties of each Credit Party
contained in the Financing Documents shall be true, correct and complete in all
material respects on and as of the Closing Date, except to the extent that any
such representation or warranty relates to a specific date in which case such
representation or warranty shall be true and correct as of such earlier date;
provided, however in each case, such materiality qualifier shall not be
applicable to any representations and warranties that are already qualified or
modified by materiality in the text thereof; and

(d)    the receipt of the initial Borrowing Base Certificate, prepared as of the
Closing Date.

Each Lender, by delivering its signature page to this Agreement, shall be deemed
to have acknowledged receipt of, and consented to and approved, each Financing
Document, each additional Operative Document and each other document, agreement
and/or instrument required to be approved by Agent, Required Lenders or Lenders,
as applicable, on the Closing Date.

Section 7.2    Conditions to Each Loan. The obligation of the Lenders to make a
Loan or an advance in respect of any Loan is subject to the satisfaction of the
following additional conditions:

(a)    receipt by Agent of a Notice of Borrowing (or telephonic notice if
permitted by this Agreement) and an updated Borrowing Base Certificate;

(b)    the fact that, immediately after such borrowing and after application of
the proceeds thereof or after such issuance, the Revolving Loan Outstandings
will not exceed the Revolving Loan Limit;

 

81

--------------------------------------------------------------------------------

(c)    the fact that, immediately before and after such advance or issuance, no
Default or Event of Default shall have occurred and be continuing; and

(d)    for Loans made after the Closing Date, the fact that the representations
and warranties of each Credit Party contained in the Financing Documents shall
be true, correct and complete in all material respects on and as of the date of
such borrowing or issuance, except to the extent that any such representation or
warranty relates to a specific date in which case such representation or
warranty shall be true and correct in all material respects as of such earlier
date; provided, however, in each case, such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof.

Each giving of a Notice of Borrowing hereunder and each acceptance by any
Borrower of the proceeds of any Loan made hereunder shall be deemed to be a
representation and warranty by each Credit Party on the date of such notice or
acceptance as to the facts specified in this Section.

Section 7.3    Searches. Before the Closing Date, and thereafter (as and when
determined by Agent in its reasonable discretion), Agent shall have the right to
perform, all at Credit Parties’ expense, the searches described in clauses (a),
(b), and (c) below against Borrowers and any other Credit Party, the results of
which are to be consistent with Credit Parties’ representations and warranties
under this Agreement and the satisfactory results of which shall be a condition
precedent to all advances of Loan proceeds: (a) UCC searches with the Secretary
of State of the jurisdiction in which the applicable Credit Party is organized;
(b) judgment, pending litigation, federal tax lien, personal property tax lien,
and corporate and partnership tax lien searches, in each jurisdiction searched
under clause (a) above; and (c) searches of applicable corporate, limited
liability company, partnership and related records to confirm the continued
existence, organization and good standing of the applicable Person and the exact
legal name under which such Credit Party is organized.

Section 7.4    Post Closing Requirements. Credit Parties shall complete each of
the post-closing obligations and/or provide to Agent each of the documents,
instruments, agreements and information listed on Schedule 7.4 attached hereto
on or before the date set forth for each such item thereon, each of which shall
be completed or provided in form and substance reasonably satisfactory to Agent,
and may be extended by Agent (acting reasonably) in writing in its sole
discretion.

ARTICLE 8 – REGULATORY MATTERS

Section 8.1    Representations and Warranties, Covenants. To induce Agent and
Lenders to enter into this Agreement and to make credit accommodations
contemplated hereby, Credit Parties hereby represent and warrant that, except as
disclosed in Schedule 8.1, the following statements are true, complete and
correct in all material respects as of the date hereof, and Credit Parties
hereby covenant and agree to notify Agent each quarter in connection with the
Compliance Certificate required to be delivered pursuant to Section 4.1 and upon
each submittal of a Notice of Borrowing of the occurrence of any facts, events
or circumstances known to a Credit Party, whether threatened in writing,
existing or pending, that would make any of the following representations and
warranties untrue, incomplete or incorrect in any material respect (together
with such supporting data and information as shall be necessary to fully explain
to Agent the scope and nature of the fact, event or circumstance), and shall
provide to Agent within five (5) Business Days of Agent’s request, such
additional information as Agent shall request regarding such disclosure:

(a)    Reserved.

 

82

--------------------------------------------------------------------------------

(b)    Permits. Credit Parties have (i) each Permit and other rights from, and
have made all declarations and filings with, all applicable Governmental
Authorities, all self-regulatory authorities and all courts and other tribunals
necessary to engage in the management and operation of the business or the
ownership of material assets of any Credit Party, except where the failure to do
so could not reasonably be expected to result in a Material Adverse Effect
(“Material Permits and Rights”) and (ii) no notice that any Governmental
Authority is limiting, suspending or revoking any such Material Permit and
Right. Credit Parties have delivered to Agent a copy of all Permits requested by
Agent as of the date hereof or to the extent requested by Agent pursuant to
Section 4.17. All such Material Permits and Rights are valid and in full force
and effect and Credit Parties are in compliance with the terms and conditions of
all such Material Permits and Rights, except where failure to be in such
compliance or for a Material Permit and Right to be valid and in full force and
effect could not be reasonably expected to have a Material Adverse Effect.

(c)    Regulatory Required Permits. With respect to any Product, (i) Credit
Parties and their Subsidiaries have received, and such Product is the subject
of, all Regulatory Required Permits needed in connection with the testing,
manufacture, marketing or sale of such Product as currently being conducted by
or on behalf of Credit Parties, except where the failure to have such Regulatory
Required Permits would not have a Material Adverse Effect, and have provided
Agent and each Lender with all notices and other information required by
Section 4.17, and (ii) such Product is being tested, manufactured, marketed or
sold, as the case may be, in compliance in all material respects with all
applicable Laws and Material Permits and Rights.

(d)    Healthcare and Regulatory Events.

(i)    None of the Credit Parties are in violation of any Healthcare Laws,
except where any such violation would not have a Material Adverse Effect.

(ii)    As of the Closing Date, there have been no Regulatory Reporting Events
which could reasonably be expected to result in a Material Adverse Effect.

(iii)    No Credit Party is participating in any Third Party Payor Program.

(iv)    To the knowledge of any of Credit Party’s Responsible Officers, none of
the Credit Party’s officers, directors, employees, shareholders, their agents or
affiliates has made an untrue statement of material fact or fraudulent statement
to the FDA or failed to disclose a material fact required to be disclosed to the
FDA, committed an act, made a statement, or failed to make a statement that
could reasonably be expected to provide a basis for the FDA to invoke its policy
respecting “Fraud, Untrue Statements of Material Facts, Bribery, and Illegal
Gratuities,” set forth in 56 Fed. Regulation 46191 (September 10, 1991).

(v)    Within the last two years, Credit Parties have not received any written
notice that any Governmental Authority, including without limitation the FDA,
the Office of the Inspector General of HHS or the United States Department of
Justice has commenced or threatened to initiate any action against a Credit
Party, any action to enjoin a Credit Party, their officers, directors,
employees, shareholders or their agents and Affiliates, from conducting their
businesses at any facility owned or used by them or for any civil penalty,
injunction, seizure or criminal action, in each case, which could reasonably be
expected to result in a Material Adverse Effect.

 

83

--------------------------------------------------------------------------------

(vi)    Within the last two years, Credit Parties have not received from the
FDA, a Warning Letter, Form FDA-483, “Untitled Letter,” other correspondence or
notice setting forth allegedly objectionable observations or alleged violations
of laws and regulations enforced by the FDA, or any comparable correspondence
from any state or local authority responsible for regulating drug products and
establishments, or any comparable correspondence from any foreign counterpart of
the FDA, or any comparable correspondence from any foreign counterpart of any
state or local authority with regard to any Product or the manufacture,
processing, packing, or holding thereof, in each case, which could reasonably be
expected to result in a Material Adverse Effect.

(vii)    Within the last two years, Credit Parties have not engaged in any
Recalls, Market Withdrawals, or other forms of product retrieval from the
marketplace of any Products which could reasonably be expected to result in a
Material Adverse Effect.

(viii)    Each Product (a) is not adulterated or misbranded within the meaning
of the FDCA; (b) each Product has been and/or shall be manufactured, imported,
possessed, owned, warehoused, marketed, promoted, sold, labeled, furnished,
distributed and marketed and each service has been conducted in accordance in
all material respects with all applicable Permits and Laws; and (c) each Product
has been and/or shall be manufactured in material compliance with Good
Manufacturing Practices, in each case, except where the failure to do so would
not have a Material Adverse Effect.

(e)    Proceedings. No Credit Party is subject to any proceeding, suit or, to
Credit Parties’ knowledge, investigation by any federal, state or local
government or quasi-governmental body, agency, board or authority or any other
administrative or investigative body (including the Office of the Inspector
General of the United States Department of Health and Human Services) which
would have a Material Adverse Effect on any Credit Party.

ARTICLE 9 - SECURITY AGREEMENT

Section 9.1    Generally. As security for the payment and performance of the
Obligations, and without limiting any other grant of a Lien and security
interest in any Security Document, Credit Parties hereby collaterally assign and
grant to Agent, for the benefit of itself and Lenders, and, subject only to the
Permitted Liens, a continuing first priority Lien on and security interest in,
upon, and to the personal property set forth on Schedule 9.1 attached hereto and
made a part hereof.

Section 9.2    Representations and Warranties and Covenants Relating to
Collateral.

(a)    The security interest granted pursuant to this Agreement constitutes a
valid and, to the extent such security interest is required to be perfected
(except in respect of Excluded Perfection Assets) by this Agreement and any
other Financing Document, continuing perfected security interest in favor of
Agent in all Collateral subject, for the following Collateral, to the occurrence
of the following: (i) in the case of all Collateral in which a security interest
may be perfected by filing a financing statement under the UCC, the filing of
such a financing statement in the jurisdiction of organization of the applicable
Credit Party, (ii) with respect to any Deposit Account, the execution of Deposit
Account Control Agreements by all parties required to be party thereto, (iii) in
the case of letter-of-credit rights that are not supporting obligations of
Collateral, the execution of a contractual obligation granting control to Agent
over such letter-of-credit rights, (iv) in the case of electronic chattel paper,
the completion of all steps necessary to grant control to Agent over such
electronic chattel paper, (v) in the case of all certificated stock, debt
instruments and investment property, the actions taken under clause (i)

 

84

--------------------------------------------------------------------------------

above and/or the delivery thereof to Agent of such certificated stock, debt
instruments and investment property consisting of instruments and certificates,
in each case properly endorsed for transfer to Agent or in blank, (vi) in the
case of all investment property not in certificated form, the actions taken
under clause (i) above and/or the execution of control agreements with respect
to such investment property and (vii) in the case of all other instruments and
tangible chattel paper that are not certificated stock, debt instructions or
investment property, the delivery thereof to Agent of such instruments and
tangible chattel paper. Such security interest shall be prior to all other Liens
on the Collateral except for Permitted Liens. Except to the extent not required
pursuant to the terms of this Agreement, all actions by each Credit Party
reasonably requested by Agent to protect and perfect the Lien granted hereunder
on the Collateral have been duly taken.

(b)    Schedule 9.2(b) sets forth (i) each chief executive office and principal
place of business of each Credit Party, and (ii) all of the addresses (including
all warehouses) at which Collateral with an aggregate value in excess of
$10,000,000 is located (it being understood and agreed that from time to time
Credit Parties may (1) sell assets in accordance with the terms of this
Agreement, (2) maintain de minimis amounts of Inventory with its sales personnel
and at medical facilities, and (3) send items of Collateral out for repair and
that from time to time certain items of Collateral will be in transit and that
no such locations need be disclosed on Schedule 9.2(b)) and/or books and records
of Credit Parties regarding any Collateral or any of Credit Party’s assets,
liabilities, business operations or financial condition are kept, which such
Schedule 9.2(b) indicates in each case which Credit Parties have Collateral
and/or books located at such address, and, in the case of any such address not
owned by one or more of Credit Parties, indicates the nature of such location
(e.g., leased business location operated by Credit Parties, third party
warehouse, consignment location, processor location, etc.) and the name and
address of the third party owning and/or operating such location.

(c)    Without limiting the generality of Section 3.2, except as indicated on
Schedule 3.19 with respect to any rights of any Credit Party as a licensee under
any license of Intellectual Property owned by another Person, and except for the
filing of financing statements under the UCC and filings with the United States
Patent and Trademark Office or the United States Copyright Office, as
applicable, no authorization, approval or other action by, and no notice to or
filing with, any Governmental Authority or consent of any other Person is
required for (i) the grant by each Credit Party to Agent of the security
interests and Liens in the Collateral provided for under this Agreement and the
other Security Documents (if any), or (ii) the exercise by Agent of its rights
and remedies with respect to the Collateral provided for under this Agreement
and the other Security Documents or under any applicable Law, including the UCC,
and neither any such grant of Liens in favor of Agent nor exercise of rights by
Agent shall violate or cause a default under any agreement between any Credit
Party and any other Person relating to any such Collateral, including any
license to which a Credit Party is a party, whether as licensor or licensee,
with respect to any Intellectual Property, whether owned by such Credit Party or
any other Person.

(d)    As of the Closing Date, except as discussed on Schedule 9.2(d), no Credit
Party has any ownership interest in any Chattel Paper (as defined in Article 9
of the UCC), Letter-of-Credit Rights, commercial tort claims, Instruments (other
than (i) checks and other ordinary course payment instruments, in each case in
the ordinary course of business and (ii) Excluded Perfection Assets), documents
or investment property (other than equity interests in any Subsidiaries of such
Credit Party disclosed on Schedule 3.4 or subsequently created hereunder and
advised to Agent) and Credit Parties shall give notice to Agent concurrently
with the delivery by Credit Parties of the next Compliance Certificate required
pursuant to Section 4.1 above following the end of a Fiscal Quarter of the
acquisition by any Credit Party of any such Chattel Paper, Letter-of-Credit
Rights, commercial tort claims, Instruments (subject to the exceptions noted
above), documents and investment property (other than

 

85

--------------------------------------------------------------------------------

equity interests in any Subsidiaries of such Credit Party disclosed on
Schedule 3.4 or subsequently created hereunder and advised to Agent) . No Person
other than Agent or (if applicable) any Lender has “control” (as defined in
Article 9 of the UCC) over any Deposit Account, investment property (including
Securities Accounts and commodities account), Letter-of-Credit Rights or
electronic chattel paper in which any Credit Party has any interest (except for
such control arising by operation of law in favor of any bank or securities
intermediary or commodities intermediary with whom any Deposit Account,
Securities Account or commodities account of a Credit Party is maintained).

(e)    Credit Parties shall not take any of the following actions or make any of
the following changes unless Credit Parties have given at least fifteen
(15) Business Days’ prior written notice (or such later period to which Agent
may in its reasonable discretion agree) to Agent of Credit Parties’ intention to
take any such action (which such written notice shall include an updated version
of any Schedule impacted by such change) and have executed any and all
documents, instruments and agreements and taken any other actions which Agent
may reasonably request after receiving such written notice in order to protect
and preserve the Liens, rights and remedies of Agent with respect to the
Collateral; provided that nothing in this clause (e) shall require Credit
Parties to obtain any landlord’s agreement or mortgagee agreement not otherwise
required by Section 4.11(c) hereof: (i) change the legal name or organizational
identification number of any Credit Party as it appears in official filings in
the jurisdiction of its organization, (ii) change the jurisdiction of
incorporation or formation of any Borrower or Credit Party or allow any Borrower
or Credit Party to designate any jurisdiction as an additional jurisdiction of
incorporation for such Borrower or Credit Party, or change the type of entity
that it is; provided that in no event shall a Credit Party organized under the
laws of the United States or any state thereof be reorganized under the laws of
a jurisdictions other than the United States or any state thereof, or
(iii) change its chief executive office, principal place of business, or the
location of its books and records or move all or a material portion of the
Collateral (in each case, with an aggregate value in excess of $10,000,000) to
or place any Collateral on any location that is not then listed on the Schedules
(it being understood and agreed that from time to time Credit Parties may
(1) sell assets in accordance with the terms of this Agreement, (2) maintain de
minimis amounts of Inventory with its sales personnel and at medical facilities,
and (3) send items of Collateral out for repair and that from time to time
certain items of Collateral will be in transit and that no such locations need
be disclosed on Schedule 9.2 or any notification need be made to Agent in
respect of the foregoing) and/or establish any business location at any location
that is not then listed on the Schedules; provided that after changing the
location of its books and records or all or a material portion of the Collateral
or establishing any new business location, Credit Parties shall be in compliance
with Section 4.11(c) hereof.

(f)    Credit Parties shall not adjust, settle or compromise the amount or
payment of any Account, or release wholly or partly any Account Debtor, or allow
any credit or discount thereon (other than adjustments, settlements,
compromises, credits and discounts in the Ordinary Course of Business and in
amounts which are not material with respect to the Account and that, after
giving effect thereto, do not cause the Borrowing Base to be less than the
Revolving Loan Outstandings) without the prior written consent of Agent. Without
limiting the generality of this Agreement or any other provisions of any of the
Financing Documents relating to the rights of Agent after the occurrence and
during the continuance of an Event of Default, Agent shall have the right at any
time after the occurrence and during the continuance of an Event of Default to:
(i) exercise the rights of Credit Parties with respect to the obligation of any
Account Debtor to make payment or otherwise render performance to Credit Parties
and with respect to any property that secures the obligations of any Account
Debtor or any other Person obligated on the Collateral, and (ii) adjust, settle
or compromise the amount or payment of such Accounts.

 

86

--------------------------------------------------------------------------------

(g)    Without limiting the generality of Sections 9.2(c) and 9.2(e):

(i)    Credit Parties shall deliver to Agent all tangible Chattel Paper and all
Instruments (other than any Excluded Perfection Assets) and documents owned by
any Credit Party and constituting part of the Collateral duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance reasonably satisfactory to Agent. Credit Parties shall provide
Agent with “control” (as defined in Article 9 of the UCC) of all electronic
Chattel Paper (other than any Excluded Perfection Assets), if any, owned by any
Credit Party and constituting part of the Collateral by having Agent identified
as the assignee on the records pertaining to the single authoritative copy
thereof and otherwise complying with the applicable elements of control set
forth in the UCC. Credit Parties also shall deliver to Agent all security
agreements securing any such Chattel Paper, if any, and securing any such
Instruments. Credit Parties will mark conspicuously all such Chattel Paper and
all such Instruments and documents with a legend, in form and substance
satisfactory to Agent, indicating that such Chattel Paper and such instruments
and documents are subject to the security interests and Liens in favor of Agent
created pursuant to this Agreement and the Security Documents. Credit Parties
shall comply with all the provisions of Section 5.14 with respect to the Deposit
Accounts and Securities Accounts of Credit Parties.

(ii)    Credit Parties shall deliver to Agent all letters of credit (other than
any Excluded Perfection Assets) on which any Credit Party is the beneficiary and
which give rise to Letter-of-Credit Rights owned by such Credit Party which
constitute part of the Collateral in each case duly endorsed and accompanied by
duly executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to Agent. Except with respect to any Excluded Perfection
Assets, Credit Parties shall take any and all actions as may be necessary or
desirable, or that Agent may request, from time to time, to cause Agent to
obtain exclusive “control” (as defined in Article 9 of the UCC) of any such
letter of credit rights in a manner reasonably acceptable to Agent.

(iii)    Credit Parties shall promptly advise Agent upon any Credit Party
becoming aware that it has any interests in any commercial tort claim (other
than Excluded Perfection Assets) that constitutes part of the Collateral, which
such notice shall include descriptions of the events and circumstances giving
rise to such commercial tort claim and the dates such events and circumstances
occurred, the potential defendants with respect such commercial tort claim and
any court proceedings that have been instituted with respect to such commercial
tort claims, and Credit Parties shall, with respect to any such commercial tort
claim, execute and deliver to Agent such documents as Agent shall reasonably
request to perfect, preserve or protect the Liens, rights and remedies of Agent
with respect to any such commercial tort claim.

(iv)    Without limiting Section 4.11(c), following the Closing Date, except for
Accounts, Inventory and other Collateral in an aggregate amount of less than
$10,000,000 for any single location, no Accounts or Inventory or other
Collateral and no books and records and/or software and equipment of the Credit
Parties regarding any of the Collateral or any of the Credit Party’s assets,
liabilities, business operations or financial condition shall at any time be
located at any leased location or in the possession or control of any warehouse,
consignee, bailee or any of Credit Parties’ agents or processors, without prior
written notice to Agent. Credit Parties have notified Agent that Collateral and
books and records are currently located at the locations set forth on
Schedule 9.2. Credit Parties shall, prior to the commencement of such lease or
such possession or control, notify any such landlord, warehouse, consignee,
bailee, agent or processor of the security interests and Liens in favor of Agent
created pursuant to this Agreement and the Security Documents, instruct such
Person to hold all such Collateral for Agent’s account subject to Agent’s
instructions and shall use commercially reasonable efforts to obtain an
acknowledgement from such Person that such Person holds the Collateral for
Agent’s benefit.

 

87

--------------------------------------------------------------------------------

(v)    Credit Parties shall cause all equipment and other tangible personal
property other than Inventory to be maintained and preserved in the same
condition, repair and in working order as when new, ordinary wear and tear
excepted, and shall promptly make or cause to be made all repairs, replacements
and other improvements in connection therewith that are necessary or desirable
to such end. Upon request of Agent, Credit Parties shall promptly deliver to
Agent any and all certificates of title, applications for title or similar
evidence of ownership of all such tangible personal property (other than
Excluded Perfection Assets) and shall cause Agent to be named as lienholder on
any such certificate of title or other evidence of ownership. Credit Parties
shall not permit any such tangible personal property to become fixtures to real
estate unless such real estate is subject to a Lien in favor of Agent.

(vi)    Each Credit Party hereby authorizes Agent to file without the signature
of such Credit Party one or more UCC financing statements relating to liens on
personal property relating to all or any part of the Collateral, which financing
statements may list Agent as the “secured party” and such Credit Party as the
“debtor” and which describe and indicate the Collateral covered thereby as all
or any part of the Collateral under the Financing Documents (including an
indication of the Collateral covered by any such financing statement as “all
assets” of such Credit Party now owned or hereafter acquired), in such
jurisdictions as Agent from time to time reasonably determines are appropriate,
and to file without the signature of such Credit Party any continuations of or
corrective amendments to any such financing statements, in any such case in
order for Agent to perfect, preserve or protect the Liens, rights and remedies
of Agent with respect to the Collateral. Each Credit Party also ratifies its
authorization for Agent to have filed in any jurisdiction any initial financing
statements or amendments thereto if filed prior to the date hereof.

(vii)    As of the Closing Date, no Credit Party holds, and after the Closing
Date Credit Parties shall promptly notify Agent in writing upon creation or
acquisition by any Credit Party of, any Collateral which constitutes a claim
against any Governmental Authority, including, without limitation, the federal
government of the United States or any instrumentality or agency thereof, the
assignment of which claim is restricted by any applicable Law, including,
without limitation, the federal Assignment of Claims Act and any other
comparable Law. Upon the reasonable request of Agent, the Credit Parties shall
take such steps as may be necessary or that Agent may reasonably request, to
comply with any such applicable Law.

(viii)    Credit Parties shall furnish to Agent from time to time any statements
and schedules further identifying or describing the Collateral and any other
information, reports or evidence concerning the Collateral as Agent may
reasonably request from time to time.

ARTICLE 10 - EVENTS OF DEFAULT

Section 10.1    Events of Default. For purposes of the Financing Documents, the
occurrence of any of the following conditions and/or events, whether voluntary
or involuntary, by operation of law or otherwise, shall constitute an “Event of
Default”:

(a) (i) any Credit Party shall fail to pay (x) any scheduled principal,
interest, premium or fee under any Financing Document when due; or (y) other
amount payable under any Financing Document within three (3) Business Days after
such amount is due or declared due in

 

88

--------------------------------------------------------------------------------

accordance with the terms of this Agreement or under any Financing Document, or
(ii) there shall occur any default in the performance of or compliance with any
of the following sections of this Agreement: Section 2.11, Section 4.1,
Section 4.4(c), Section 4.6, Section 4.7, Section 4.15, Section 4.16,
Section 4.17, Article 5, Article 6 or Article 8;

(b)    any Credit Party defaults in the performance of or compliance with any
term contained in this Agreement or in any other Financing Document (other than
occurrences described in other provisions of this Section 10.1 for which a
different grace or cure period is specified or for which no grace or cure period
is specified and thereby constitute immediate Events of Default) and such
default is not remedied by the Credit Party or waived by Agent within thirty
(30) days after the earlier of (i) receipt by Borrower Representative of notice
from Agent or Required Lenders of such default, or (ii) actual knowledge of any
Borrower or any other Credit Party of such default;

(c)    any representation, warranty, certification or statement made by any
Credit Party or any other Person in any Financing Document or in any
certificate, financial statement or other document delivered pursuant to any
Financing Document is incorrect in any material respect (or shall be incorrect
in any respect if such representation, warranty, certification or statement is
by its terms already qualified as to materiality) when made (or deemed made)
(subject in the case of projections, other forward-looking information and
industry information to the limitations set forth in Section 3.21 hereof);

(d)    failure of any Credit Party to pay when due or within any applicable
grace period any principal, interest or other amount on Debt (other than the
Loans), or the occurrence of any breach, default, condition or event (other
than, for the avoidance of doubt, termination events or equivalent events
pursuant to the terms of any Swap Contract which are not the result of any
default or event of default thereunder by any Credit Party) with respect to any
Debt (other than the Loans), if the effect of such failure or occurrence is to
cause or to permit the holder or holders of any such Debt, or to cause, Debt or
other liabilities having an individual principal amount in excess of $25,000,000
or having an aggregate principal amount in excess of $25,000,000 to become or be
declared due prior to its stated maturity; provided, that, this clause (d) shall
not apply to any repurchase or redemption of the Cash Convertible Notes required
to be made under the Cash Convertible Note Documents, to the extent the same are
(i) expressly permitted under this Agreement and (ii) not required as a result
of the occurrence of a breach or default thereunder;

(e)    any Credit Party or any Subsidiary shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;

(f)    an involuntary case or other proceeding shall be commenced against any
Credit Party or any Subsidiary seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days; or an
order for relief shall be entered against any Credit Party or any Subsidiary
under applicable federal bankruptcy, insolvency or other similar law in respect
of (i) bankruptcy, liquidation, winding-up, dissolution or suspension of general
operations, (ii) composition,

 

89

--------------------------------------------------------------------------------

rescheduling, reorganization, arrangement or readjustment of, or other relief
from, or stay of proceedings to enforce, some or all of the debts or
obligations, or (iii) possession, foreclosure, seizure or retention, sale or
other disposition of, or other proceedings to enforce security over, all or any
substantial part of the assets of such Credit Party or Subsidiary;

(g)    Any Termination Event shall occur or (ii) any failure to comply with the
Pension Funding Rules shall occur, which failure has not been corrected within
sixty (60) days following the final due dates for all required contributions or
payment for the applicable plan year which, in each case, would, individually or
in the aggregate, have a Material Adverse Effect;

(h)    Excluding the matter set forth on Schedule 10.1(h) as of the Closing
Date, one or more unsatisfied final judgments or final orders (provided,
however, that any such judgments or orders shall be considered “final” for
purposes of this clause (h) only upon the earliest to occur of (x) the
adjudication of all outstanding post-trial motions with respect to the
litigation giving rise to such judgment or order, (y) six (6) months after the
date the first post-trial motion with respect to the litigation giving rise to
such judgment or order is filed, provided that such motion is filed within sixty
(60) days of the date of such judgment or order and (z) the date a judgment
creditor takes legal action to attach or levy upon any assets of a Credit Party
to enforce any such judgment or order) for the payment of money aggregating in
excess of $25,000,000 (above (i) any amounts covered by insurance to the extent
the relevant independent third-party insurer has not denied coverage therefor,
or (ii) the amount of a bond or other security from or on behalf of Parent or
any of its Subsidiaries as security against such judgment) shall be rendered
against any or all Credit Parties and any of the following shall occur:
(a) enforcement proceedings shall have been commenced by any creditor upon any
such judgments or orders, (b) there shall be any period of thirty
(30) consecutive days during which a stay of enforcement of any such judgments
or orders, by reason of a pending appeal, bond or otherwise, shall not be in
effect, or (c) in the case of any such order issued in connection with a
settlement agreement, any Credit Party or any Subsidiary thereof shall fail to
perform its obligations thereunder in accordance with the terms thereof;

(i)    any Lien created by any of the Security Documents shall at any time fail
to constitute a valid and (other than in respect of Excluded Perfection Assets)
perfected Lien on all of the Collateral purported to be encumbered thereby,
subject to no prior or equal Lien except Permitted Liens, or any Credit Party
shall so assert;

(j)    the institution by any Governmental Authority of criminal proceedings
against any Credit Party that could reasonably be expected to have a Material
Adverse Effect;

(k)    without limiting Section 10.1(b), any Guarantee of the Obligations shall
fail to remain in full force or effect (other than to the extent expressly
permitted by this Agreement) or any action shall be taken by any Guarantor to
discontinue or to assert the invalidity or unenforceability of it Guarantee, or
any Guarantor shall fail to comply with any of the terms or provisions of its
Guarantee, or any Guarantor shall deny that it has any further liability under
its Guarantee, or shall give notice to such effect (other than as a result of
the discharge of such Guarantor to the extent expressly permitted by this
Agreement), including, but not limited to, any notice of termination delivered
pursuant to the terms of any Guaranty;

(l)    Parent’s equity fails to remain registered with the SEC in good standing,
and/or such equity fails to remain publicly traded on and registered with a
public securities exchange;

(m)    the occurrence of any Change in Control; or

 

90

--------------------------------------------------------------------------------

(n) (i) the voluntary withdrawal or institution of any action or proceeding by
the FDA or similar Governmental Authority to order the withdrawal of any Product
or Product category from the market or to enjoin any Credit Party, its
Subsidiaries or any representative of a Credit Party or its Subsidiaries from
manufacturing, marketing, selling or distributing any Product or Product
category that has or could reasonably be expected to have a Material Adverse
Effect, (ii) the institution of any action or proceeding by the FDA or any other
Governmental Authority to revoke, suspend, reject, withdraw, limit, or restrict
any Regulatory Required Permit held by any Credit Party, its Subsidiaries or any
representative of any Credit Party or its Subsidiaries, which, in each case, has
or could reasonably be expected to result in Material Adverse Effect, (iii) the
commencement of any enforcement action against a Credit Party, its Subsidiaries
or any representative of a Credit Party or its Subsidiaries (with respect to the
business of a Credit Party or its Subsidiaries) by the FDA or any other
Governmental Authority which has or could reasonably be expected to result in a
Material Adverse Effect, or (iv) the occurrence of adverse test results in
connection with a Product which could result in a Material Adverse Effect.

All cure periods provided for in this Section 10.1 shall run concurrently with
any cure period provided for in any applicable Financing Documents under which
the default occurred.

Section 10.2    Acceleration and Suspension or Termination of Revolving Loan
Commitment. Upon the occurrence and during the continuance of an Event of
Default, Agent may, and shall if requested by Required Lenders, (a) by notice to
Borrower Representative suspend or terminate the Revolving Loan Commitment and
the obligations of Agent and the Lenders with respect thereto, in whole or in
part (and, if in part, each Lender’s Revolving Loan Commitment shall be reduced
in accordance with its Pro Rata Share), and/or (b) by notice to Borrower
Representative declare all or any portion of the Obligations to be, and the
Obligations shall thereupon become, immediately due and payable, with accrued
interest thereon, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Credit Party and Credit Parties
will pay the same; provided, however, that in the case of any of the Events of
Default specified in Section 10.1(e) or 10.1(f) above, without any notice to any
Credit Party or any other act by Agent or the Lenders, the Revolving Loan
Commitment and the obligations of Agent and the Lenders with respect thereto
shall thereupon immediately and automatically terminate and all of the
Obligations shall become immediately and automatically due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by each Credit Party and Credit Parties will pay the same.

Section 10.3    UCC Remedies.

(a)    Upon the occurrence of and during the continuance of an Event of Default
under this Agreement or the other Financing Documents, Agent, in addition to all
other rights, options, and remedies granted to Agent under this Agreement or at
law or in equity, may exercise, either directly or through one or more assignees
or designees, all rights and remedies granted to it under all Financing
Documents and under the UCC in effect in the applicable jurisdiction(s) and
under any other applicable law; including, without limitation:

(i)    the right to take possession of, send notices regarding, and collect
directly the Collateral, with or without judicial process;

(ii)    the right to (by its own means or with judicial assistance) enter any of
Credit Parties’ premises and take possession of the Collateral, or render it
unusable, or to render it usable or saleable, or dispose of the Collateral on
such premises in compliance with subsection (iii) below and to take possession
of Credit Parties’ original books and records, to obtain access to Credit
Parties’ data processing equipment, computer hardware and software relating to
the Collateral and to use all of the foregoing and the information contained
therein in any manner

 

91

--------------------------------------------------------------------------------

Agent deems appropriate, without any liability for rent, storage, utilities, or
other sums, and Credit Parties shall not resist or interfere with such action
(if Credit Parties’ books and records are prepared or maintained by an
accounting service, contractor or other third party agent, Credit Parties hereby
irrevocably authorize such service, contractor or other agent, upon notice by
Agent to such Person that an Event of Default has occurred and is continuing, to
deliver to Agent or its designees such books and records, and to follow Agent’s
instructions with respect to further services to be rendered);

(iii)    the right to require Credit Parties at Credit Parties’ expense to
assemble all or any part of the Collateral and make it available to Agent at any
place designated by Agent (acting at the direction of the Lenders);

(iv)    the right to notify postal authorities to change the address for
delivery of Credit Parties’ mail to an address designated by Agent and to
receive, open and dispose of all mail addressed to any Credit Party; and/or

(v)    the right to enforce Credit Parties’ rights against Account Debtors and
other obligors, including, without limitation, (i) the right to collect Accounts
directly in Agent’s own name (as agent for Lenders) and to charge the collection
costs and expenses, including attorneys’ fees, to Credit Parties, and (ii) the
right, in the name of Agent or any designee of Agent or Credit Parties, to
verify the validity, amount or any other matter relating to any Accounts by
mail, telephone, telegraph or otherwise, including, without limitation,
verification of Credit Parties’ compliance with applicable Laws. Credit Parties
shall cooperate fully with Agent in an effort to facilitate and promptly
conclude such verification process. Such verification may include contacts
between Agent and applicable federal, state and local regulatory authorities
having jurisdiction over the Credit Parties’ affairs, all of which contacts
Credit Parties hereby irrevocably authorize.

(b)    Each Credit Party agrees that a notice received by it at least ten
(10) days before the time of any intended public sale, or the time after which
any private sale or other disposition of the Collateral is to be made, shall be
deemed to be reasonable notice of such sale or other disposition. If permitted
by applicable law, any perishable Collateral which threatens to speedily decline
in value or which is sold on a recognized market may be sold immediately by
Agent without prior notice to the Credit Parties. At any sale or disposition of
Collateral, Agent may (to the extent permitted by applicable law) purchase all
or any part of the Collateral, free from any right of redemption by the Credit
Parties, which right is hereby waived and released. Each Credit Party covenants
and agrees not to interfere with or impose any obstacle to Agent’s exercise of
its rights and remedies with respect to the Collateral. Agent shall have no
obligation to clean-up or otherwise prepare the Collateral for sale. Agent may
comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral and compliance will not be considered to
adversely affect the commercial reasonableness of any sale of the Collateral.
Agent may sell the Collateral without giving any warranties as to the
Collateral. Agent may specifically disclaim any warranties of title or the like.
This procedure will not be considered to adversely affect the commercial
reasonableness of any sale of the Collateral. If Agent sells any of the
Collateral upon credit, the Credit Parties will be credited only with payments
actually made by the purchaser, received by Agent and applied to the
indebtedness of the purchaser. In the event the purchaser fails to pay for the
Collateral, Agent may resell the Collateral and the Credit Parties shall be
credited with the proceeds of the sale. The Credit Parties shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all Obligations.

 

92

--------------------------------------------------------------------------------

(c)    Without restricting the generality of the foregoing and for the purposes
aforesaid, each Credit Party hereby appoints and constitutes Agent its lawful
attorney-in-fact with full power of substitution in the Collateral, upon the
occurrence and during the continuance of an Event of Default, to (i) use
unadvanced funds remaining under this Agreement or which may be reserved,
escrowed or set aside for any purposes hereunder at any time, or to advance
funds in excess of the face amount of the Notes, (ii) pay, settle or compromise
all existing bills and claims, which may be Liens or security interests, or to
avoid such bills and claims becoming Liens against the Collateral, (iii) execute
all applications and certificates in the name of such Credit Party and to
prosecute and defend all actions or proceedings in connection with the
Collateral, and (iv) do any and every act which such Credit Party might do in
its own behalf; it being understood and agreed that this power of attorney in
this subsection (c) shall be a power coupled with an interest and cannot be
revoked.

(d)    Agent and each Lender is hereby granted a non-exclusive, royalty-free
license or other right to use, without charge, the Credit Parties’ labels, mask
works, rights of use of any name, any other Intellectual Property and
advertising matter, and any similar property as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral
after the occurrence and during the continuance of an Event of Default and, in
connection with Agent’s exercise of its rights under this Article after the
occurrence and during the continuance of an Event of Default, the Credit
Parties’ rights under all licenses (whether as licensor or licensee) and all
franchise agreements inure to Agent’s and each Lender’s benefit.

Section 10.4    Reserved.

Section 10.5    Default Rate of Interest. At the election of Agent or Required
Lenders, after the occurrence of an Event of Default and for so long as it
continues, the Loans and other Obligations shall bear interest at rates that are
two percent (2.0%) per annum in excess of the rates otherwise payable under this
Agreement; provided, however, that in the case of any Event of Default specified
in Section 10.1(e) or 10.1(f) above, such default rates shall apply immediately
and automatically without the need for any election or action of any kind on the
part of Agent or any Lender.

Section 10.6    Setoff Rights. During the continuance of any Event of Default,
each Lender is hereby authorized by each Credit Party at any time or from time
to time, with reasonably prompt subsequent notice to such Credit Party (any
prior or contemporaneous notice being hereby expressly waived) to set off and to
appropriate and to apply any and all (a) balances held by such Lender or any of
such Lender’s Affiliates at any of its offices for the account of such Credit
Party or any of its Subsidiaries (regardless of whether such balances are then
due to such Credit Party or its Subsidiaries), and (b) other property at any
time held or owing by such Lender to or for the credit or for the account of
such Credit Party or any of its Subsidiaries, against and on account of any of
the Obligations; except that no Lender shall exercise any such right without the
prior written consent of Agent. Any Lender exercising a right to set off shall
purchase for cash (and the other Lenders shall sell) interests in each of such
other Lender’s Pro Rata Share of the Obligations as would be necessary to cause
all Lenders to share the amount so set off with each other Lender in accordance
with their respective Pro Rata Share of the Obligations. Each Credit Party
agrees, to the fullest extent permitted by law, that any Lender and any of such
Lender’s Affiliates may exercise its right to set off with respect to the
Obligations as provided in this Section 10.6.

Section 10.7    Application of Proceeds.

(a)    Notwithstanding anything to the contrary contained in this Agreement,
upon the occurrence and during the continuance of an Event of Default, each
Credit Party irrevocably waives the right to direct the application of any and
all payments at any time or times thereafter received by Agent

 

93

--------------------------------------------------------------------------------

from or on behalf of such Credit Party of all or any part of the Obligations,
and, as between Credit Parties on the one hand and Agent and Lenders on the
other, Agent shall have the continuing and exclusive right to apply and to
reapply any and all payments received against the Obligations in such manner as
Agent may deem advisable notwithstanding any previous application by Agent.

(b)    Following the occurrence and continuance of an Event of Default, but
absent the occurrence and continuance of an Acceleration Event, Agent shall
apply any and all payments received by Agent in respect of the Obligations, and
any and all proceeds of Collateral received by Agent, in such order as Agent may
from time to time elect.

(c)    Notwithstanding anything to the contrary contained in this Agreement, if
an Acceleration Event shall have occurred, and so long as it continues, Agent
shall apply any and all payments received by Agent in respect of the
Obligations, and any and all proceeds of Collateral received by Agent, in the
following order: first, to all fees, costs, indemnities, liabilities,
obligations and expenses incurred by or owing to Agent with respect to this
Agreement, the other Financing Documents or the Collateral; second, to all fees,
costs, indemnities, liabilities, obligations and expenses incurred by or owing
to any Lender with respect to this Agreement, the other Financing Documents or
the Collateral; third, to accrued and unpaid interest on the Obligations
(including any interest which, but for the provisions of the Bankruptcy Code,
would have accrued on such amounts); fourth, to the principal amount of the
Obligations outstanding; and fifth to any other indebtedness or obligations of
Borrowers owing to Agent or any Lender under the Financing Documents. Any
balance remaining shall be delivered to Borrowers or to whomever may be lawfully
entitled to receive such balance or as a court of competent jurisdiction may
direct. In carrying out the foregoing, (y) amounts received shall be applied in
the numerical order provided until exhausted prior to the application to the
next succeeding category, and (z) each of the Persons entitled to receive a
payment in any particular category shall receive an amount equal to its Pro Rata
Share of amounts available to be applied pursuant thereto for such category.

Section 10.8    Waivers.

(a)    Except as otherwise provided for in this Agreement and to the fullest
extent permitted by applicable law, each Credit Party waives: (i) presentment,
demand and protest, and notice of presentment, dishonor, intent to accelerate,
acceleration, protest, default, nonpayment, maturity, release, compromise,
settlement, extension or renewal of any or all Financing Documents, the Notes or
any other notes, commercial paper, accounts, contracts, documents, Instruments,
Chattel Paper and Guarantees at any time held by Lenders on which any Credit
Party may in any way be liable, and hereby ratifies and confirms whatever
Lenders may do in this regard; (ii) all rights to notice and a hearing prior to
Agent’s or any Lender’s taking possession or control of, or to Agent’s or any
Lender’s replevy, attachment or levy upon, any Collateral or any bond or
security which might be required by any court prior to allowing Agent or any
Lender to exercise any of its remedies; and (iii) the benefit of all valuation,
appraisal and exemption Laws. Each Credit Party acknowledges that it has been
advised by counsel of its choices and decisions with respect to this Agreement,
the other Financing Documents and the transactions evidenced hereby and thereby.

(b)    Each Credit Party for itself and all its successors and assigns,
(i) agrees that its liability shall not be in any manner affected by any
indulgence, extension of time, renewal, waiver, or modification granted or
consented to by Lender; (ii) consents to any indulgences and all extensions of
time, renewals, waivers, or modifications that may be granted by Agent or any
Lender with respect to the payment or other provisions of the Financing
Documents, and to any substitution, exchange or release of the Collateral, or
any part thereof, with or without substitution, and agrees to the addition or
release of any Credit Party, endorsers, guarantors, or sureties, or whether
primarily or secondarily liable, without

 

94

--------------------------------------------------------------------------------

notice to any other Credit Party and without affecting its liability hereunder;
(iii) agrees that its liability shall be unconditional and without regard to the
liability of any other Credit Party, Agent or any Lender for any tax on the
indebtedness (except to the extent otherwise expressly provided in Section 2.8);
and (iv) to the fullest extent permitted by law, expressly waives the benefit of
any statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.

(c)    To the extent that Agent or any Lender may have acquiesced in any
noncompliance with any requirements or conditions precedent to the closing of
the Loans or to any subsequent disbursement of Loan proceeds, such acquiescence
shall not be deemed to constitute a waiver by Agent or any Lender of such
requirements with respect to any future disbursements of Loan proceeds and Agent
may at any time after such acquiescence require Credit Parties to comply with
all such requirements. Any forbearance by Agent or Lender in exercising any
right or remedy under any of the Financing Documents, or otherwise afforded by
applicable law, including any failure to accelerate the maturity date of the
Loans, shall not be a waiver of or preclude the exercise of any right or remedy
nor shall it serve as a novation of the Notes or as a reinstatement of the Loans
or a waiver of such right of acceleration or the right to insist upon strict
compliance of the terms of the Financing Documents. Agent’s or any Lender’s
acceptance of payment of any sum secured by any of the Financing Documents after
the due date of such payment shall not be a waiver of Agent’s and such Lender’s
right to either require prompt payment when due of all other sums so secured or
to declare a default for failure to make prompt payment. The procurement of
insurance or the payment of taxes or other Liens or charges by Agent as the
result of an Event of Default shall not be a waiver of Agent’s right to
accelerate the maturity of the Loans, nor shall Agent’s receipt of any
condemnation awards, insurance proceeds, or damages under this Agreement operate
to cure or waive any Credit Party’s default in payment of sums secured by any of
the Financing Documents.

(d)    Without limiting the generality of anything contained in this Agreement
or the other Financing Documents, each Credit Party agrees that if an Event of
Default is continuing (i) Agent and Lenders shall not be subject to any “one
action” or “election of remedies” law or rule, and (ii) all Liens and other
rights, remedies or privileges provided to Agent or Lenders shall remain in full
force and effect until Agent or Lenders have exhausted all remedies against the
Collateral and any other properties owned by Credit Parties and the Financing
Documents and other security instruments or agreements securing the Loans have
been foreclosed, sold and/or otherwise realized upon in satisfaction of Credit
Parties’ obligations under the Financing Documents.

(e)    Nothing contained herein or in any other Financing Document shall be
construed as requiring Agent or any Lender to resort to any part of the
Collateral for the satisfaction of any of Credit Parties’ obligations under the
Financing Documents in preference or priority to any other Collateral, and Agent
may seek satisfaction out of all of the Collateral or any part thereof, in its
absolute discretion in respect of Credit Parties’ obligations under the
Financing Documents. In addition, Agent shall have the right, after the
occurrence and during the continuance of an Event of Default, to partially
foreclose upon any Collateral in any manner and for any amounts secured by the
Financing Documents then due and payable as determined by Agent in its sole
discretion, including, without limitation, the following circumstances: (i) in
the event any Credit Party defaults beyond any applicable grace period in the
payment of one or more scheduled payments of principal and/or interest, Agent
may foreclose upon all or any part of the Collateral to recover such delinquent
payments, or (ii) in the event Agent or a Lender elects (in accordance with the
terms of this Agreement) to accelerate less than the entire outstanding
principal balance of the Loans, Agent may foreclose all or any part of the
Collateral to recover so much of the principal balance of the Loans as Lender
may accelerate and such other sums secured by one or more of the Financing
Documents as Agent may elect. Notwithstanding one or more

 

95

--------------------------------------------------------------------------------

partial foreclosures, any unforeclosed Collateral shall remain subject to the
Financing Documents (and the applicable Liens granted therein) to secure payment
of sums secured by the Financing Documents and not previously recovered.

(f)    To the fullest extent permitted by law, each Credit Party, for itself and
its successors and assigns, waives in the event of foreclosure of any or all of
the Collateral any equitable right otherwise available to any Credit Party which
would require the separate sale of any of the Collateral or require Agent or
Lenders to exhaust their remedies against any part of the Collateral before
proceeding against any other part of the Collateral; and further in the event of
such foreclosure each Credit Party does hereby expressly consent to and
authorize, at the option of Agent, the foreclosure and sale either separately or
together of each part of the Collateral.

Section 10.9    Injunctive Relief. The parties acknowledge and agree that, in
the event of a breach or threatened breach of any Credit Party’s obligations
under any Financing Documents, Agent and Lenders may have no adequate remedy in
money damages and, accordingly, shall be entitled to an injunction (including,
without limitation, a temporary restraining order, preliminary injunction, writ
of attachment, or order compelling an audit) against such breach or threatened
breach, including, without limitation, maintaining any cash management and
collection procedure described herein. However, no specification in this
Agreement of a specific legal or equitable remedy shall be construed as a waiver
or prohibition against any other legal or equitable remedies in the event of a
breach or threatened breach of any provision of this Agreement. Each Credit
Party waives, to the fullest extent permitted by law, the requirement of the
posting of any bond in connection with such injunctive relief. By joining in the
Financing Documents as a Credit Party, each Credit Party specifically joins in
this Section as if this Section were a part of each Financing Document executed
by such Credit Party.

Section 10.10    Marshalling; Payments Set Aside. Neither Agent nor any Lender
shall be under any obligation to marshal any assets in payment of any or all of
the Obligations. To the extent that any Credit Party makes any payment or Agent
enforces its Liens or Agent or any Lender exercises its right of set-off, and
such payment or the proceeds of such enforcement or set-off is subsequently
invalidated, declared to be fraudulent or preferential, set aside, or required
to be repaid by anyone, then to the extent of such recovery, the Obligations or
part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.

ARTICLE 11 - AGENT

Section 11.1    Appointment and Authorization. Each Lender hereby irrevocably
appoints and authorizes Agent to enter into each of the Financing Documents to
which it is a party (other than this Agreement) on its behalf and to take such
actions as Agent on its behalf and to exercise such powers under the Financing
Documents as are delegated to Agent by the terms thereof, together with all such
powers as are reasonably incidental thereto. Subject to the terms of
Section 11.16 and to the terms of the other Financing Documents, Agent is
authorized and empowered to amend, modify, or waive any provisions of this
Agreement or the other Financing Documents on behalf of Lenders. The provisions
of this Article 11 are solely for the benefit of Agent and Lenders and neither
any Borrower nor any other Credit Party shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions and
duties under this Agreement, Agent shall act solely as agent of Lenders and does
not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Borrower or any other Credit
Party. Agent may perform any of its duties hereunder, or under the Financing
Documents, by or through its agents, servicers, trustees, investment managers or
employees.

 

96

--------------------------------------------------------------------------------

Section 11.2    Agent and Affiliates. Agent shall have the same rights and
powers under the Financing Documents as any other Lender and may exercise or
refrain from exercising the same as though it were not Agent, and Agent and its
Affiliates may lend money to, invest in and generally engage in any kind of
business with each Credit Party or Affiliate of any Credit Party as if it were
not Agent hereunder.

Section 11.3    Action by Agent. The duties of Agent shall be mechanical and
administrative in nature. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Financing Documents is intended to or shall be construed to impose
upon Agent any obligations in respect of this Agreement or any of the Financing
Documents except as expressly set forth herein or therein.

Section 11.4    Consultation with Experts. Agent may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.

Section 11.5    Liability of Agent. Neither Agent nor any of its directors,
officers, agents, trustees, investment managers, servicers or employees shall be
liable to any Lender for any action taken or not taken by it in connection with
the Financing Documents, except that Agent shall be liable with respect to its
specific duties set forth hereunder but only to the extent of its own gross
negligence, bad faith or willful misconduct in the discharge thereof as
determined by a final non-appealable judgment of a court of competent
jurisdiction. Neither Agent nor any of its directors, officers, agents,
trustees, investment managers, servicers or employees shall be responsible for
or have any duty to ascertain, inquire into or verify (a) any statement,
warranty or representation made in connection with any Financing Document or any
borrowing hereunder; (b) the performance or observance of any of the covenants
or agreements specified in any Financing Document; (c) the satisfaction of any
condition specified in any Financing Document; (d) the validity, effectiveness,
sufficiency or genuineness of any Financing Document, any Lien purported to be
created or perfected thereby or any other instrument or writing furnished in
connection therewith; (e) the existence or non-existence of any Default or Event
of Default; or (f) the financial condition of any Credit Party. Agent shall not
incur any liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, facsimile or electronic
transmission or similar writing) believed by it to be genuine or to be signed by
the proper party or parties. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith and if any such apportionment
or distribution is subsequently determined to have been made in error the sole
recourse of any Lender to whom payment was due but not made, shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them).

Section 11.6    Indemnification. Each Lender shall, in accordance with its Pro
Rata Share, indemnify Agent (to the extent not reimbursed by Credit Parties)
upon demand against any cost, expense (including counsel fees and
disbursements), claim, demand, action, loss or liability (except such as result
from Agent’s gross negligence, bad faith or willful misconduct as determined by
a final non-appealable judgment of a court of competent jurisdiction) that Agent
may suffer or incur in connection with the Financing Documents or any action
taken or omitted by Agent hereunder or thereunder. If any indemnity furnished to
Agent for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence, to
do the acts indemnified against even if so directed by Required Lenders until
such additional indemnity is furnished.

 

97

--------------------------------------------------------------------------------

Section 11.7    Right to Request and Act on Instructions. Agent may at any time
request instructions from Lenders with respect to any actions or approvals which
by the terms of this Agreement or of any of the Financing Documents Agent is
permitted or desires to take or to grant, and if such instructions are promptly
requested, Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from any action or withholding any approval under any
of the Financing Documents until it shall have received such instructions from
Required Lenders or all or such other portion of the Lenders as shall be
prescribed by this Agreement. Without limiting the foregoing, no Lender shall
have any right of action whatsoever against Agent as a result of Agent acting or
refraining from acting under this Agreement or any of the other Financing
Documents in accordance with the instructions of Required Lenders (or all or
such other portion of the Lenders as shall be prescribed by this Agreement) and,
notwithstanding the instructions of Required Lenders (or such other applicable
portion of the Lenders), Agent shall have no obligation to take any action if it
believes, in good faith, that such action would violate applicable Law or
exposes Agent to any liability for which it has not received satisfactory
indemnification in accordance with the provisions of Section 11.6.

Section 11.8    Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender, 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 also
acknowledges that it will, independently and without reliance upon Agent or any
other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking any action under the Financing Documents.

Section 11.9    Collateral Matters. Lenders irrevocably authorize Agent, at its
option and in its discretion, to (a) release any Lien granted to or held by
Agent under any Security Document (i) upon termination of the Revolving Loan
Commitment and payment in full of all Obligations; or (ii) constituting property
sold or disposed of as part of or in connection with any disposition permitted
under any Financing Document (it being understood and agreed that Agent may
conclusively rely without further inquiry on a certificate of a Responsible
Officer as to the sale or other disposition of property being made in full
compliance with the provisions of the Financing Documents); and (b) subordinate
any Lien granted to or held by Agent under any Security Document to a Permitted
Lien that is allowed to have priority over the Liens granted to or held by Agent
pursuant to the definition of “Permitted Liens”. Upon request by Agent at any
time, Lenders will confirm Agent’s authority to release and/or subordinate
particular types or items of Collateral pursuant to this Section 11.9.

Section 11.10    Agency for Perfection. Agent and each Lender hereby appoint
each other Lender as agent for the purpose of perfecting Agent’s security
interest in assets which, in accordance with the Uniform Commercial Code in any
applicable jurisdiction, can be perfected by possession or control. Should any
Lender (other than Agent) obtain possession or control of any such assets, such
Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor,
shall deliver such assets to Agent or in accordance with Agent’s instructions or
transfer control to Agent in accordance with Agent’s instructions. Each Lender
agrees that it will not have any right individually to enforce or seek to
enforce any Security Document or to realize upon any Collateral for the Loan
unless instructed to do so by Agent (or consented to by Agent), it being
understood and agreed that such rights and remedies may be exercised only by
Agent.

Section 11.11    Notice of Default. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default except with
respect to defaults in the payment of principal, interest and fees required to
be paid to Agent for the account of Lenders, unless Agent shall have received
written notice from a Lender or a Credit Party referring to this Agreement,
describing such Default or

 

98

--------------------------------------------------------------------------------

Event of Default and stating that such notice is a “notice of default”. Agent
will notify each Lender of its receipt of any such notice. Agent shall take such
action with respect to such Default or Event of Default as may be requested by
Required Lenders (or all or such other portion of the Lenders as shall be
prescribed by this Agreement) in accordance with the terms hereof. Unless and
until Agent has received any such request, Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interests
of Lenders.

Section 11.12    Assignment by Agent; Resignation of Agent; Successor Agent.

(a)    Agent may at any time assign its rights, powers, privileges and duties
hereunder to (i) another Lender or an Affiliate of Agent or any Lender or any
Approved Fund, or (ii) any Person to whom Agent, in its capacity as a Lender,
has assigned (or will assign, in conjunction with such assignment of agency
rights hereunder) 50% or more of its Loan, in each case without the consent of
the Lenders or Credit Parties. Following any such assignment, Agent shall
endeavor to give notice to the Lenders and Borrowers. Failure to give such
notice shall not affect such assignment in any way or cause the assignment to be
ineffective. An assignment by Agent pursuant to this subsection (a) shall not be
deemed a resignation by Agent for purposes of subsection (b) below.

(b)    Without limiting the rights of Agent to designate an assignee pursuant to
subsection (a) above, Agent may at any time give notice of its resignation to
the Lenders and Borrowers. Upon receipt of any such notice of resignation,
Required Lenders shall have the right to appoint a successor Agent. If no such
successor shall have been so appointed by Required Lenders and shall have
accepted such appointment within ten (10) Business Days after the retiring Agent
gives notice of its resignation, then the retiring Agent may on behalf of the
Lenders, appoint a successor Agent; provided, however, that if Agent shall
notify Borrowers and the Lenders that no Person has accepted such appointment,
then such resignation shall nonetheless become effective in accordance with such
notice from Agent that no Person has accepted such appointment and, from and
following delivery of such notice, (i) the retiring Agent shall be discharged
from its duties and obligations hereunder and under the other Financing
Documents, and (ii) all payments, communications and determinations provided to
be made by, to or through Agent shall instead be made by or to each Lender
directly, until such time as Required Lenders appoint a successor Agent as
provided for above in this paragraph.

(c)    Upon (i) an assignment permitted by subsection (a) above, or (ii) the
acceptance of a successor’s appointment as Agent pursuant to subsection
(b) above, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired) Agent, and
the retiring Agent shall be discharged from all of its duties and obligations
hereunder and under the other Financing Documents (if not already discharged
therefrom as provided above in this paragraph). The fees payable by Borrowers to
a successor Agent shall be the same as those payable to its predecessor unless
otherwise agreed between Borrowers and such successor. After the retiring
Agent’s resignation hereunder and under the other Financing Documents, the
provisions of this Article and Section 11.12 shall continue in effect for the
benefit of such retiring Agent and its sub-agents in respect of any actions
taken or omitted to be taken by any of them while the retiring Agent was acting
or was continuing to act as Agent.

Section 11.13    Payment and Sharing of Payment.

(a)    Revolving Loan Advances, Payments and Settlements; Interest and Fee
Payments.

 

99

--------------------------------------------------------------------------------

(i)    Agent shall have the right, on behalf of Revolving Lenders to disburse
funds to Borrowers for all Revolving Loans requested or deemed requested by
Borrowers pursuant to the terms of this Agreement. Agent shall be conclusively
entitled to assume, for purposes of the preceding sentence, that each Revolving
Lender, other than any Non-Funding Lenders, will fund its Pro Rata Share of all
Revolving Loans requested by Borrowers. Each Revolving Lender shall reimburse
Agent on demand, in accordance with the provisions of the immediately following
paragraph, for all funds disbursed on its behalf by Agent pursuant to the first
sentence of this clause (i), or if Agent so requests, each Revolving Lender will
remit to Agent its Pro Rata Share of any Revolving Loan before Agent disburses
the same to a Borrower. If Agent elects to require that each Revolving Lender
make funds available to Agent, prior to a disbursement by Agent to a Borrower,
Agent shall advise each Revolving Lender by telephone, facsimile or e-mail of
the amount of such Revolving Lender’s Pro Rata Share of the Revolving Loan
requested by such Borrower no later than noon (Eastern time) on the date of
funding of such Revolving Loan, and each such Revolving Lender shall pay Agent
on such date such Revolving Lender’s Pro Rata Share of such requested Revolving
Loan, in same day funds, by wire transfer to the Payment Account, or such other
account as may be identified by Agent to Revolving Lenders from time to time. If
any Lender fails to pay the amount of its Pro Rata Share of any funds advanced
by Agent pursuant to the first sentence of this clause (i) within one
(1) Business Day after Agent’s demand, Agent shall promptly notify Borrower
Representative, and Borrowers shall immediately repay such amount to Agent. Any
repayment required by Borrowers pursuant to this Section 11.13 shall be
accompanied by accrued interest thereon from and including the date such amount
is made available to a Borrower to but excluding the date of payment at the rate
of interest then applicable to Revolving Loans. Nothing in this Section 11.13 or
elsewhere in this Agreement or the other Financing Documents shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its commitments hereunder or to prejudice any
rights that Agent or any Borrower may have against any Lender as a result of any
default by such Lender hereunder.

(ii)    On a Business Day of each week as selected from time to time by Agent,
or more frequently (including daily), if Agent so elects (each such day being a
“Settlement Date”), Agent will advise each Revolving Lender by telephone,
facsimile or e-mail of the amount of each such Revolving Lender’s percentage
interest of the Revolving Loan balance as of the close of business of the
Business Day immediately preceding the Settlement Date. In the event that
payments are necessary to adjust the amount of such Revolving Lender’s actual
percentage interest of the Revolving Loans to such Lender’s required percentage
interest of the Revolving Loan balance as of any Settlement Date, the Revolving
Lender from which such payment is due shall pay Agent, without setoff or
discount, to the Payment Account before 1:00 p.m. (Eastern time) on the Business
Day following the Settlement Date the full amount necessary to make such
adjustment. Any obligation arising pursuant to the immediately preceding
sentence shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever. In the event settlement shall not have occurred by the
date and time specified in the second preceding sentence, interest shall accrue
on the unsettled amount at the rate of interest then applicable to Revolving
Loans.

(iii)    On each Settlement Date, Agent shall advise each Revolving Lender by
telephone, facsimile or e-mail of the amount of such Revolving Lender’s
percentage interest of principal, interest and fees paid for the benefit of
Revolving Lenders with respect to each applicable Revolving Loan, to the extent
of such Revolving Lender’s Revolving Loan Exposure with respect thereto, and
shall make payment to such Revolving Lender before 1:00 p.m. (Eastern time) on
the Business Day following the Settlement Date of such amounts in accordance
with

 

100

--------------------------------------------------------------------------------

wire instructions delivered by such Revolving Lender to Agent, as the same may
be modified from time to time by written notice to Agent; provided, however,
that, in the case such Revolving Lender is a Defaulted Lender, Agent shall be
entitled to set off the funding short-fall against that Defaulted Lender’s
respective share of all payments received from any Borrower.

(iv)    On the Closing Date, Agent, on behalf of Lenders, may elect to advance
to Borrowers the full amount of the initial Loans to be made on the Closing Date
prior to receiving funds from Lenders, in reliance upon each Lender’s commitment
to make its Pro Rata Share of such Loans to Borrowers in a timely manner on such
date. If Agent elects to advance the initial Loans to Borrower in such manner,
Agent shall be entitled to receive all interest that accrues on the Closing Date
on each Lender’s Pro Rata Share of such Loans unless Agent receives such
Lender’s Pro Rata Share of such Loans before 3:00 p.m. (Eastern Time) on the
Closing Date.

(v)    It is understood that for purposes of advances to Borrowers made pursuant
to this Section 11.13, Agent will be using the funds of Agent, and pending
settlement, (A) all funds transferred from the Payment Account to the
outstanding Revolving Loans shall be applied first to advances made by Agent to
Borrowers pursuant to this Section 11.13, and (B) all interest accruing on such
advances shall be payable to Agent.

(vi)    The provisions of this Section 11.13(a) shall be deemed to be binding
upon Agent and Lenders notwithstanding the occurrence of any Default or Event of
Default, or any insolvency or bankruptcy proceeding pertaining to any Borrower
or any other Credit Party.

(b)    Reserved.

(c)    Return of Payments.

(i)    If Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from a
Credit Party and such related payment is not received by Agent, then Agent will
be entitled to recover such amount from such Lender on demand without setoff,
counterclaim or deduction of any kind, together with interest accruing on a
daily basis at the Federal Funds Rate.

(ii)    If Agent determines at any time that any amount received by Agent under
this Agreement must be returned to any Credit Parties or paid to any other
Person pursuant to any insolvency law or otherwise, then, notwithstanding any
other term or condition of this Agreement or any other Financing Document, Agent
will not be required to distribute any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with interest at such rate,
if any, as Agent is required to pay to any Credit Party or such other Person,
without setoff, counterclaim or deduction of any kind.

(d)    Defaulted Lenders. The failure of any Defaulted Lender to make any
payment required by it hereunder shall not relieve any other Lender of its
obligations to make payment, but neither any other Lender nor Agent shall be
responsible for the failure of any Defaulted Lender to make any payment required
hereunder. Notwithstanding anything set forth herein to the contrary, a
Defaulted Lender shall not have any voting or consent rights under or with
respect to any Financing Document or constitute a “Lender” (or be included in
the calculation of “Required Lenders” hereunder) for any voting or consent
rights under or with respect to any Financing Document.

 

101

--------------------------------------------------------------------------------

(e)    Sharing of Payments. If any Lender shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of setoff or otherwise)
on account of any Loan (other than pursuant to the terms of Section 2.8(d)) in
excess of its Pro Rata Share of payments entitled pursuant to the other
provisions of this Section 11.13, such Lender shall purchase from the other
Lenders such participations in extensions of credit made by such other Lenders
(without recourse, representation or warranty) as shall be necessary to cause
such purchasing Lender to share the excess payment or other recovery ratably
with each of them; provided, however, that if all or any portion of the excess
payment or other recovery is thereafter required to be returned or otherwise
recovered from such purchasing Lender, such portion of such purchase shall be
rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such return or recovery, without interest. Each Credit Party agrees
that any Lender so purchasing a participation from another Lender pursuant to
this clause (e) may, to the fullest extent permitted by law, exercise all its
rights of payment (including pursuant to Section 10.6) with respect to such
participation as fully as if such Lender were the direct creditor of Credit
Parties in the amount of such participation. If under any applicable bankruptcy,
insolvency or other similar law, any Lender receives a secured claim in lieu of
a setoff to which this clause (e) applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this clause (e) to
share in the benefits of any recovery on such secured claim.

Section 11.14    Right to Perform, Preserve and Protect. If any Credit Party
fails to perform any obligation hereunder or under any other Financing Document,
Agent itself may, but shall not be obligated to, cause such obligation to be
performed at the Credit Parties’ expense. Agent is further authorized by the
Credit Parties and the Lenders to make expenditures from time to time which
Agent, in its reasonable business judgment, deems necessary or desirable to
(a) preserve or protect the business conducted by the Credit Parties, the
Collateral, or any portion thereof, and/or (b) enhance the likelihood of, or
maximize the amount of, repayment of the Loan and other Obligations. Each Credit
Party hereby agrees to reimburse Agent on demand for any and all costs,
liabilities and obligations incurred by Agent pursuant to this Section 11.14.
Each Lender hereby agrees to indemnify Agent upon demand for any and all costs,
liabilities and obligations incurred by Agent pursuant to this Section 11.14, in
accordance with the provisions of Section 11.6.

Section 11.15    Reserved.

Section 11.16    Amendments and Waivers.

(a)    No provision of this Agreement or any other Financing Document may be
amended, waived or otherwise modified unless such amendment, waiver or other
modification is in writing and is signed or otherwise approved by Borrowers, the
Required Lenders and any other Lender to the extent required under
Section 11.16(b); provided, however, (i) the Fee Letter may be amended, or
rights or privileges thereunder waived, in a writing executed only by the
parties thereto and (ii) if Agent and the Borrower Representative shall have
jointly identified an obvious error (including, but not limited to, an incorrect
cross-reference) or any error or omission of a technical or immaterial nature,
in each case, in any provision of this Agreement or any other Financing Document
(including, for the avoidance of doubt, any exhibit, schedule or other
attachment to Financing Document), then the Agent (acting in its sole
discretion) and the Borrower Representative or any other relevant Credit Party
shall be permitted to amend such provision and such amendment shall be deemed
approved by the Lenders if the Lenders shall have received five (5) Business
Days’ prior written notice of such change and the Agent shall not have received,
within five (5) Business Days of the date of such notice to the Lenders, a
written notice from the Required Lenders stating that the Required Lenders
object to such amendment.

 

102

--------------------------------------------------------------------------------

(b)    In addition to the required signatures under Section 11.16(a), no
provision of this Agreement or any other Financing Document may be amended,
waived or otherwise modified unless such amendment, waiver or other modification
is in writing and is signed or otherwise approved by the following Persons:

(i)    if any amendment, waiver or other modification would increase a Lender’s
funding obligations in respect of any Loan, by such Lender; and/or

(ii)    if the rights or duties of Agent are affected thereby, by Agent;

provided, however, that, in each of (i) and (ii) above, no such amendment,
waiver or other modification shall, unless signed or otherwise approved in
writing by all the Lenders directly affected thereby, (A) reduce the principal
of, rate of interest on or any fees with respect to any Loan or forgive any
principal, interest (other than default interest) or fees (other than late
charges) with respect to any Loan; (B) postpone the date fixed for, or waive,
any payment (other than any mandatory prepayment pursuant to Section 2.1(b)(ii))
of principal of any Loan, or of interest on any Loan (other than default
interest) or any fees provided for hereunder (other than late charges) or
postpone the date of termination of any commitment of any Lender hereunder;
(C) change the definition of the term Required Lenders or the percentage of
Lenders which shall be required for Lenders to take any action hereunder;
(D) release all or substantially all of the Collateral, authorize any Credit
Party to sell or otherwise dispose of all or substantially all of the
Collateral, release any Guarantor of all or any portion of the Obligations or
its Guarantee obligations with respect thereto, except, in each case with
respect to this clause (D), as otherwise may be provided in this Agreement or
the other Financing Documents (including in connection with any disposition
permitted hereunder); (E) amend, waive or otherwise modify this Section 11.16(b)
or the definitions of the terms used in this Section 11.16(b) insofar as the
definitions affect the substance of this Section 11.16(b); (F) consent to the
assignment, delegation or other transfer by any Credit Party of any of its
rights and obligations under any Financing Document or release any Credit Party
of its payment obligations under any Financing Document, except, in each case
with respect to this clause (F), pursuant to a merger or consolidation permitted
pursuant to this Agreement; or (G) amend any of the provisions of Section 10.7
or amend any of the definitions Pro Rata Share, Revolving Loan Commitment,
Revolving Loan Commitment Amount, or Revolving Loan Commitment Percentage or
that provide for the Lenders to receive their Pro Rata Shares of any fees,
payments, setoffs or proceeds of Collateral hereunder. It is hereby understood
and agreed that all Lenders shall be deemed directly affected by an amendment,
waiver or other modification of the type described in the preceding clauses (C),
(D), (E), (F) and (G) of the preceding sentence.

Section 11.17    Assignments and Participations.

(a)    Assignments.

(i)    Any Lender may at any time assign to one or more Eligible Assignees all
or any portion of such Lender’s Loan together with all related obligations of
such Lender hereunder. Except as Agent may otherwise agree, the amount of any
such assignment (determined as of the date of the applicable Assignment
Agreement or, if a “Trade Date” is specified in such Assignment Agreement, as of
such Trade Date) shall be in a minimum aggregate amount equal to $1,000,000 or,
if less, the assignor’s entire interests in the outstanding Loan; provided,
however, that, in connection with simultaneous assignments to two or more
related Approved Funds, such Approved Funds shall be treated as one assignee for
purposes of determining compliance with the minimum assignment size referred to
above. Credit Parties and Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with

 

103

--------------------------------------------------------------------------------

the interests so assigned to an Eligible Assignee until Agent shall have
received and accepted an effective Assignment Agreement executed, delivered and
fully completed by the applicable parties thereto and a processing fee of $3,500
to be paid by the assigning Lender; provided, however, that only one processing
fee shall be payable in connection with simultaneous assignments to two or more
related Approved Funds.

(ii)    From and after the date on which the conditions described above have
been met, (A) such Eligible Assignee shall be deemed automatically to have
become a party hereto and, to the extent of the interests assigned to such
Eligible Assignee pursuant to such Assignment Agreement, shall have the rights
and obligations of a Lender hereunder, and (B) the assigning Lender, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment Agreement, shall be released from its rights and obligations
hereunder (other than those that survive termination pursuant to Section 13.1).
Upon the request of the Eligible Assignee (and, as applicable, the assigning
Lender) pursuant to an effective Assignment Agreement, each Credit Party shall
execute and deliver to Agent for delivery to the Eligible Assignee (and, as
applicable, the assigning Lender) Notes in the aggregate principal amount of the
Eligible Assignee’s Loan (and, as applicable, Notes in the principal amount of
that portion of the principal amount of the Loan retained by the assigning
Lender). Upon receipt by the assigning Lender of such Note, the assigning Lender
shall return to Borrower Representative any prior Note held by it.

(iii)    Agent, acting solely for this purpose as an agent of Borrower, shall
maintain at the office of its servicer located in Bethesda, Maryland a copy of
each Assignment Agreement delivered to it and a register for the recordation of
the names and addresses of each Lender, and the commitments of, and principal
amount of the Loan owing to, such Lender pursuant to the terms hereof (the
“Register”). The entries in such Register shall be conclusive, absent manifest
effort, and Borrower, Agent and Lenders may treat each Person whose name is
recorded therein pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement, notwithstanding notice to the contrary. Such
Register shall be available for inspection by Borrower and any Lender, at any
reasonable time upon reasonable prior notice to Agent. Each Lender that sells a
participation shall, acting solely for this purpose as an agent of Borrower
maintain a register on which it enters the name and address of each participant
and the principal amounts (and stated interest) of each participant’s interest
in the Obligations (each, a “Participant Register”). The entries in the
Participant Registers shall be conclusive, absent manifest error. Each
Participant Register shall be available for inspection by Borrower and Agent at
any reasonable time upon reasonable prior notice to the applicable Lender;
provided, that no Lender shall have any obligation to disclose all or any
portion of the Participant Register (including the identity of any Participant
or any information relating to a Participant’s interest in any commitments,
loans, letters of credit or its other obligations under any Financing Document)
to any Person (including any Borrower) except to the extent that such disclosure
is necessary to establish that such commitment, loan, letter of credit or other
obligation is in registered form under Section 5f.103-1(c) of the United States
Treasury Regulations, or is otherwise required thereunder. For the avoidance of
doubt, Agent (in its capacity as Agent) shall have no responsibility for
maintaining a participant register.

(iv)    Notwithstanding the foregoing provisions of this Section 11.17(a) or any
other provision of this Agreement, any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this Agreement to
secure obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank; provided, however, 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.

 

104

--------------------------------------------------------------------------------

(v)    Notwithstanding the foregoing provisions of this Section 11.17(a) or any
other provision of this Agreement, Agent has the right, but not the obligation,
to effectuate assignments of Loans via an electronic settlement system
acceptable to Agent as designated in writing from time to time to the Lenders by
Agent (the “Settlement Service”). At any time when Agent elects, in its sole
discretion, to implement such Settlement Service, each such assignment shall be
effected by the assigning Lender and proposed assignee pursuant to the
procedures then in effect under the Settlement Service, which procedures shall
be consistent with the other provisions of this Section 11.17(a). Each assigning
Lender and proposed Eligible Assignee shall comply with the requirements of the
Settlement Service in connection with effecting any assignment of Loans pursuant
to the Settlement Service. With the prior written approval of Agent, Agent’s
approval of such Eligible Assignee shall be deemed to have been automatically
granted with respect to any transfer effected through the Settlement Service.
Assignments and assumptions of the Loan shall be effected by the provisions
otherwise set forth herein until Agent notifies Lenders of the Settlement
Service as set forth herein.

(b)    Participations. Any Lender may at any time, without the consent of, or
notice to, any Credit Party or Agent, sell to one or more Persons (other than
any Credit Party or any Credit Party’s Affiliates) participating interests in
its Loan, commitments or other interests hereunder (any such Person, a
“Participant”). In the event of a sale by a Lender of a participating interest
to a Participant, (i) such Lender’s obligations hereunder shall remain unchanged
for all purposes, (ii) Credit Parties and Agent shall continue to deal solely
and directly with such Lender in connection with such Lender’s rights and
obligations hereunder, and (iii) all amounts payable by each Credit Party shall
be determined as if such Lender had not sold such participation and shall be
paid directly to such Lender. Each Credit Party agrees that if amounts
outstanding under this Agreement are due and payable (as a result of
acceleration or otherwise), each Participant shall be deemed to have the right
of set-off in respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement; provided, however, that
such right of set-off shall be subject to the obligation of each Participant to
share with Lenders, and Lenders agree to share with each Participant, as
provided in Section 11.5.

(c)    Replacement of Lenders. Within thirty (30) days after: (i) receipt by
Agent of notice and demand from any Lender for payment of additional costs
provided in Section 2.1(b)(iv)(B), Section 2.1(b)(iv)(C), or Section 2.8(d),
which demand shall not have been revoked, (ii) any Credit Party is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 2.8(a), (iii) any Lender is a
Defaulted Lender, and the circumstances causing such status shall not have been
cured or waived; or (iv) any failure by any Lender to consent to a requested
amendment, waiver or modification to any Financing Document in which Required
Lenders have already consented to such amendment, waiver or modification but the
consent of each Lender, or each Lender affected thereby, is required with
respect thereto (each relevant Lender in the foregoing clauses (i) through
(iv) being an “Affected Lender”) each of Borrower Representative and Agent may,
at its option, notify such Affected Lender and, in the case of Credit Parties’
election, Agent, of such Person’s intention to obtain, at Credit Parties’
expense, a replacement Lender (“Replacement Lender”) for such Lender, which
Replacement Lender shall be an Eligible Assignee and, in the event the
Replacement Lender is to replace an Affected Lender described in the preceding
clause (iv), such Replacement Lender consents to the requested amendment, waiver
or modification making the replaced Lender an Affected Lender. In the event
Credit Parties or Agent, as applicable, obtains a Replacement Lender within
ninety (90) days following notice of its intention to do so, the Affected Lender
shall sell,

 

105

--------------------------------------------------------------------------------

at par, and assign all of its Loan and funding commitments hereunder to such
Replacement Lender in accordance with the procedures set forth in
Section 11.17(a); provided, however, that (A) Credit Parties shall have
reimbursed such Lender for its increased costs and additional payments for which
it is entitled to reimbursement under Section 2.8(a) or Section 2.8(d), as
applicable, of this Agreement through the date of such sale and assignment, and
(B) Credit Parties shall pay to Agent the $3,500 processing fee in respect of
such assignment (unless waived by the Agent, which it may do in its sole
discretion). In the event that a replaced Lender does not execute an Assignment
Agreement pursuant to Section 11.17(a) within five (5) Business Days after
receipt by such replaced Lender of notice of replacement pursuant to this
Section 11.17(c) and presentation to such replaced Lender of an Assignment
Agreement evidencing an assignment pursuant to this Section 11.17(c), such
replaced Lender shall be deemed to have consented to the terms of such
Assignment Agreement, and any such Assignment Agreement executed by Agent, the
Replacement Lender and, to the extent required pursuant to Section 11.17(a),
Credit Parties, shall be effective for purposes of this Section 11.17(c) and
Section 11.17(a). Upon any such assignment and payment, such replaced Lender
shall no longer constitute a “Lender” for purposes hereof, other than with
respect to such rights and obligations that survive termination as set forth in
Section 13.1.

(d)    Credit Party Assignments. No Credit Party may assign, delegate or
otherwise transfer any of its rights or other obligations hereunder or under any
other Financing Document without the prior written consent of Agent and each
Lender.

Section 11.18    Funding and Settlement Provisions Applicable When Non-Funding
Lenders Exist. So long as Agent has not waived the conditions to the funding of
Loans set forth in Section 7.2 or Section 2.1, any Lender may deliver a notice
to Agent stating that such Lender shall cease making Revolving Loans due to the
non-satisfaction of one or more conditions to funding Loans set forth in
Section 7.2 or Section 2.1, and specifying any such non-satisfied conditions.
Any Lender delivering any such notice shall become a non-funding Lender (a
“Non-Funding Lender”) for purposes of this Agreement commencing on the Business
Day following receipt by Agent of such notice, and shall cease to be a
Non-Funding Lender on the date on which such Lender has either revoked the
effectiveness of such notice or acknowledged in writing to each of Agent the
satisfaction of the condition(s) specified in such notice, or Required Lenders
waive the conditions to the funding of such Loans giving rise to such notice by
Non-Funding Lender. Each Non-Funding Lender shall remain a Lender for purposes
of this Agreement to the extent that such Non-Funding Lender has Revolving Loan
Outstanding in excess of Zero Dollars ($0); provided, however, that during any
period of time that any Non-Funding Lender exists, and notwithstanding any
provision to the contrary set forth herein, the following provisions shall
apply:

(a)    For purposes of determining the Pro Rata Share of each Revolving Lender
under clause (c) of the definition of such term, each Non-Funding Lender shall
be deemed to have a Revolving Loan Commitment Amount as in effect immediately
before such Lender became a Non-Funding Lender.

(b)    Except as provided in clause (a) above, the Revolving Loan Commitment
Amount of each Non-Funding Lender shall be deemed to be Zero Dollars ($0).

(c)    The Revolving Loan Commitment at any date of determination during such
period shall be deemed to be equal to the sum of (i) the aggregate Revolving
Loan Commitment Amounts of all Lenders, other than the Non-Funding Lenders as of
such date plus (ii) the aggregate Revolving Loan Outstandings of all Non-Funding
Lenders as of such date.

(d)    Agent shall have no right to make or disburse Revolving Loans for the
account of any Non-Funding Lender pursuant to Section 2.1(b)(i) to pay interest,
fees, expenses and other charges of any Credit Party.

 

106

--------------------------------------------------------------------------------

(e)    To the extent that Agent applies proceeds of Collateral or other payments
received by Agent to repayment of Revolving Loans pursuant to Section 10.7, such
payments and proceeds shall be applied first in respect of Revolving Loans made
at the time any Non-Funding Lenders exist, and second in respect of all other
outstanding Revolving Loans.

Section 11.19    Reserved.

Section 11.20    Definitions. As used in this Article 11, the following terms
have the following meanings:

“Approved Fund” means any (a) investment company, fund, trust, securitization
vehicle or conduit that is (or will be) engaged in making, purchasing, holding
or otherwise investing in commercial loans and similar extensions of credit in
the Ordinary Course of Business, or (b) any Person (other than a natural person)
which temporarily warehouses loans for any Lender or any entity described in the
preceding clause (a) and that, with respect to each of the preceding clauses (a)
and (b), is administered or managed by (i) a Lender, (ii) an Affiliate of a
Lender, or (iii) a Person (other than a natural person) or an Affiliate of a
Person (other than a natural person) that administers or manages a Lender.

“Assignment Agreement” means an assignment agreement in form and substance
acceptable to Agent.

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

“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved
by Agent; provided, however, that notwithstanding the foregoing, (x) “Eligible
Assignee” shall not include (i) any Credit Party or any of a Credit Party’s
Affiliates or (ii) unless an Event of Default has occurred and is continuing,
any direct competitor of Credit Parties, in each case, as determined by Agent in
its reasonable discretion, and (y) no proposed assignee intending to assume all
or any portion of the Revolving Loan Commitment shall be an Eligible Assignee
unless such proposed assignee either already holds a portion of such Revolving
Loan Commitment, or has been approved as an Eligible Assignee by Agent.

“Federal Funds Rate” means, for any day, the rate of interest per annum (rounded
upwards, if necessary, to the nearest whole multiple of 1/100 of 1%) 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, however, 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, and (b) if no such rate is so
published on such next preceding Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Agent on such day on such transactions
as determined by Agent.

ARTICLE 12 – GUARANTY

Section 12.1    Guaranty. Each Guarantor hereby unconditionally guarantees, as a
primary obligor and not merely as a surety, jointly and severally with each
other Guarantor when and as due, whether at maturity, by acceleration, by notice
of prepayment or otherwise, the due and punctual performance of all of the
Obligations, including payment in full of the principal, accrued but unpaid
interest and all other amounts due and owing to the Agent and Lenders under the
Loans. Each payment made by any Guarantor pursuant to this Article 12 shall be
made in lawful money of the United States in immediately available funds.

 

107

--------------------------------------------------------------------------------

Section 12.2    Payment of Amounts Owed. The Guarantee hereunder is an absolute,
unconditional and continuing guarantee of the full and punctual payment and
performance of all of the Obligations and not of their collectability only and
is in no way conditioned upon any requirement that the Agent or any Lender first
attempt to collect any of the Obligations from any Borrower or resort to any
collateral security or other means of obtaining payment. In the event of any
default by Borrowers in the payment of the Obligations, after the expiration of
any applicable cure or grace period, each Guarantor agrees, on demand by Agent
(which demand may be made concurrently with notice to Borrowers that the
Borrowers are in default of their obligations), to pay the Obligations,
regardless of any defense, right of set-off or recoupment or claims which any
Borrower or Guarantor may have against Agent or Lenders or the holder of the
Notes. All of the remedies set forth in this Agreement, in any other Financing
Document or at law or equity shall be equally available to Agent and Lenders,
and the choice by Agent or Lenders of one such alternative over another shall
not be subject to question or challenge by any Guarantor or any other person,
nor shall any such choice be asserted as a defense, setoff, recoupment or
failure to mitigate damages in any action, proceeding, or counteraction by Agent
or Lenders to recover or seeking any other remedy under this Guarantee, nor
shall such choice preclude Agent or Lenders from subsequently electing to
exercise a different remedy.

Section 12.3    Certain Waivers by Guarantor. To the fullest extent permitted by
law, each Guarantor does hereby:

(a)    waive notice of acceptance of this Agreement by Agent and Lenders and any
and all notices and demands of every kind which may be required to be given by
any statute, rule or law;

(b)    agree to refrain from asserting, until after repayment in full of the
Obligations, any defense, right of set-off, right of recoupment or other claim
which such Guarantor may have against any Borrower;

(c)    waive any defense, right of set-off, right of recoupment or other claim
which such Guarantor may have against Agent, Lenders or the holder of the Notes;

(d)    waive any and all rights such Guarantor may have under any
anti-deficiency statute or other similar protections;

(e)    waive all rights at law or in equity to seek subrogation, contribution,
indemnification or any other form of reimbursement or repayment from any
Borrower, any other Guarantor or any other person or entity now or hereafter
primarily or secondarily liable for any of the Obligations until the Obligations
have been paid in full;

(f)    waive presentment for payment, demand for payment, notice of nonpayment
or dishonor, protest and notice of protest, diligence in collection and any and
all formalities which otherwise might be legally required to charge such
Guarantor with liability;

(g)    waive the benefit of all appraisement, valuation, marshalling,
forbearance, stay, extension, redemption, homestead, exemption and moratorium
laws now or hereafter in effect;

(h)    waive any defense based on the incapacity, lack of authority, death or
disability of any other person or entity or the failure of Agent or Lenders to
file or enforce a claim against the estate of any other person or entity in any
administrative, bankruptcy or other proceeding;

 

108

--------------------------------------------------------------------------------

(i)    waive any defense based on an election of remedies by Agent or Lenders,
whether or not such election may affect in any way the recourse, subrogation or
other rights of such Guarantor against any Borrower, any other Guarantor or any
other person in connection with the Obligations;

(j)    waive any defense based on the failure of the Agent or Lenders to
(i) provide notice to such Guarantor of a sale or other disposition of any of
the security for any of the Obligations, or (ii) conduct such a sale or
disposition in a commercially reasonable manner;

(k)    waive any defense based on the negligence of Agent or Lenders in
administering this Agreement or the other Financing Documents (including, but
not limited to, the failure to perfect any security interest in any Collateral),
or taking or failing to take any action in connection therewith, provided,
however, that such waiver shall not apply to the gross negligence, bad faith or
willful misconduct of the Agent or Lenders, as determined by the final,
non-appealable decision of a court having proper jurisdiction;

(l)    waive the defense of expiration of any statute of limitations affecting
the liability of such Guarantor hereunder or the enforcement hereof;

(m)    waive any right to file any Claim (as defined below) as part of, and any
right to request consolidation of any action or proceeding relating to a Claim
with, any action or proceeding filed or maintained by Agent or Lenders to
collect any Obligations of such Guarantor to Agent or Lenders hereunder or to
exercise any rights or remedies available to Agent or Lenders under the
Financing Documents, at law, in equity or otherwise;

(n)    agree that neither Agent nor Lenders shall have any obligation to obtain,
perfect or retain a security interest in any property to secure any of the
Obligations (including any mortgage or security interest contemplated by the
Financing Documents), or to protect or insure any such property;

(o)    waive any obligation Agent or Lenders may have to disclose to such
Guarantor any facts the Agent or Lenders now or hereafter may know or have
reasonably available to it regarding the Borrowers or Borrowers’ financial
condition, whether or not the Agent or Lenders have a reasonable opportunity to
communicate such facts or have reason to believe that any such facts are unknown
to such Guarantor or materially increase the risk to such Guarantor beyond the
risk such Guarantor intends to assume hereunder;

(p)    agree that neither Agent nor Lenders shall be liable in any way for any
decrease in the value or marketability of any property securing any of the
Obligations which may result from any action or omission of the Agent or Lenders
in enforcing any part of this Agreement;

(q)    waive any defense based on any invalidity, irregularity or
unenforceability, in whole or in part, of any one or more of the Financing
Documents;

(r)    waive any defense based on any change in the composition of Borrowers,
and

(s)    waive any defense based on any representations and warranties made by
such Guarantor herein or by any Borrower herein or in any of the Financing
Documents.

For purposes of this section, the term “Claim” shall mean any claim, action or
cause of action, defense, counterclaim, set-off or right of recoupment of any
kind or nature against the Agent or Lenders, its

 

109

--------------------------------------------------------------------------------

officers, directors, employees, agents, members, actuaries, accountants,
trustees or attorneys, or any affiliate of the Agent or Lenders in connection
with the making, closing, administration, collection or enforcement by the Agent
or Lenders of the Obligations.

Section 12.4    Guarantor’s Obligations Not Affected by Modifications of
Financing Documents. Each Guarantor further agrees that such Guarantor’s
liability as guarantor shall not be impaired or affected by any renewals or
extensions which may be made from time to time, with or without the knowledge or
consent of Guarantor for the time for payment of interest or principal or by any
forbearance or delay in collecting interest or principal hereunder, or by any
waiver by Agent or Lenders under this Agreement or any other Financing
Documents, or by Agent’s or Lenders’ failure or election not to pursue any other
remedies it may have against any Borrower or Guarantor, or by any change or
modification in the Notes, this Agreement or any other Financing Document, or by
the acceptance by Agent or Lenders of any additional security or any increase,
substitution or change therein, or by the release by Agent or Lenders of any
security or any withdrawal thereof or decrease therein, or by the application of
payments received from any source to the payment of any obligation other than
the Obligations even though Agent or Lenders might lawfully have elected to
apply such payments to any part or all of the Obligations, it being the intent
hereof that, subject to Agent’s or Lenders’ compliance with the terms of this
Section 12 and the Financing Documents, each Guarantor shall remain liable for
the payment of the Obligations, until the Obligations have been paid in full,
notwithstanding any act or thing which might otherwise operate as a legal or
equitable discharge of a surety. Each Guarantor further understands and agrees
that Agent or Lenders may at any time enter into agreements with Borrowers to
amend, modify and/or increase the principal amount of, interest rate applicable
to or other economic and non-economic terms of this Agreement or the other
Financing Documents, and may waive or release any provision or provisions of
this Agreement or the other Financing Documents, and, with reference to such
instruments, may make and enter into any such agreement or agreements as Agent,
Lenders and Borrowers may deem proper and desirable, without in any manner
impairing this Guarantee or any of Agent’s or Lenders’ rights hereunder or each
Guarantor’s obligations hereunder, and each Guarantor’s obligations hereunder
shall apply to the this Agreement and other Financing Documents as so amended,
modified, extended, renewed or increased.

Section 12.5    Reinstatement; Deficiency. This guaranty shall continue to be
effective or be reinstated (as the case may be) if at any time payment of all or
any part of any sum payable pursuant to this Agreement or any other Financing
Document is rescinded or otherwise required to be returned by Agent or Lenders
upon the insolvency, bankruptcy, dissolution, liquidation, or reorganization of
any Borrower, or upon or as a result of the appointment of a receiver,
intervenor, custodian or conservator of or trustee or similar officer for, any
Borrower or any substantial part of its property, or otherwise, all as though
such payment to Agent or Lenders had not been made, regardless of whether Agent
or Lenders contested the order requiring the return of such payment. In the
event of the foreclosure of the Financing Documents and of a deficiency, each
Guarantor hereby promises and agrees forthwith to pay the amount of such
deficiency notwithstanding the fact that recovery of said deficiency against
Borrowers would not be allowed by applicable law; however, the foregoing shall
not be deemed to require that Agent or Lenders institute foreclosure proceedings
or otherwise resort to or exhaust any other collateral or security prior to or
concurrently with enforcing this guaranty.

Section 12.6    Subordination of Borrowers’ Obligations to Guarantors; Claims in
Bankruptcy.

(a)    Any indebtedness of any Borrower to any Guarantor (including, but not
limited to, any right of such Guarantor to a return of any capital contributed
to a Borrower), whether now or hereafter existing, is hereby subordinated to the
payment of the Obligations. Each Guarantor agrees that, until the Obligations
have been paid in full, such Guarantor will not seek, accept, or retain for its
own

 

110

--------------------------------------------------------------------------------

account, any payment from any Borrower on account of such subordinated debt. Any
payments to any Guarantor on account of such subordinated debt shall be
collected and received by such Guarantor in trust for Agent and Lenders and
shall be immediately paid over to Agent, for the benefit of Agent and Lenders,
on account of the Obligations without impairing or releasing the obligations of
such Guarantor hereunder.

(b)    Each Guarantor shall promptly file in any bankruptcy or other proceeding
in which the filing of claims is required by law, all claims and proofs of
claims that such Guarantor may have against any Borrower or any other Guarantor
and does hereby assign to Agent or its nominee (and will, upon request of Agent,
reconfirm in writing the assignment to Agent or its nominee of) all rights of
such Guarantor under such claims. If such Guarantor does not file any such
claim, Agent, as attorney-in-fact for such Guarantor, is hereby irrevocably
authorized to do so in the name of such Guarantor, or in Agent’s discretion, to
assign the claim to a designee and cause proof of claim to be filed in the name
of Agent’s designee. In all such cases, whether in administration, bankruptcy or
otherwise, the person or persons authorized to pay such claim shall pay to
Agent, for the benefit of Agent and Lenders, the full amount thereof and, to the
full extent necessary for that purpose, each Guarantor hereby assigns to the
Lenders all of such Guarantor’s rights to any such payments or distributions to
which such Guarantor would otherwise be entitled, such assignment being a
present and irrevocable assignment of all such rights.

Section 12.7    Maximum Liability. The provisions of this Section 12 are
severable, and in any action or proceeding involving any state corporate law, or
any state, federal or foreign bankruptcy, insolvency, reorganization or other
law affecting the rights of creditors generally, if the obligations of any
Guarantor under this Article 12 would otherwise be held or determined to be
avoidable, invalid or unenforceable on account of the amount of such Guarantor’s
liability under this Article 12, then, notwithstanding any other provision of
this Article 12 to the contrary, the amount of such liability shall, without any
further action by the Guarantors or the Agent or any Lender, be automatically
limited and reduced to the highest amount that is valid and enforceable as
determined in such action or proceeding (such highest amount determined
hereunder being the relevant Guarantor’s “Maximum Liability”). This Section 12.7
with respect to the Maximum Liability of each Guarantor is intended solely to
preserve the rights of the Agent and the Lenders to the maximum extent not
subject to avoidance under applicable law, and no Guarantor nor any other Person
shall have any right or claim under this Section 12.7 with respect to such
Maximum Liability, except to the extent necessary so that the obligations of any
Guarantor hereunder shall not be rendered voidable under applicable law. Each
Guarantor agrees that the Obligations may at any time and from time to time
exceed the Maximum Liability of each Guarantor without impairing this guaranty
or affecting the rights and remedies of the Agent or the Lenders hereunder,
provided that, nothing in this sentence shall be construed to increase any
Guarantor’s obligations hereunder beyond its Maximum Liability.

Section 12.8    Limitation on Dutch Guarantors. Notwithstanding anything in this
Agreement to the contrary, any guarantee provided by a Guarantor incorporated in
the Netherlands under this Article 12 does not apply to any liability to the
extent that it would result in this guarantee constituting “unlawful financial
assistance” within the meaning of section 2:98(c) of the Dutch Civil Code.

Section 12.9    Guarantor’s Investigation. Each Guarantor acknowledges receipt
of a copy of each of this Agreement and the other Financing Documents. Each
Guarantor has made an independent investigation of the other Credit Parties and
of the financial condition of the other Credit Parties. Neither Agent nor any
Lender has made and neither Agent nor any Lender does make any representations
or warranties as to the income, expense, operation, finances or any other matter
or thing affecting any Credit Party nor has Agent or any Lender made any
representations or warranties as to the amount or nature of the Obligations of
any Credit Party to which this Article 12 applies as specifically herein set
forth, nor has

 

111

--------------------------------------------------------------------------------

Agent or any Lender or any officer, agent or employee of Agent or any Lender or
any representative thereof, made any other oral representations, agreements or
commitments of any kind or nature, and each Guarantor hereby expressly
acknowledges that no such representations or warranties have been made and such
Guarantor expressly disclaims reliance on any such representations or
warranties.

Section 12.10    Termination. The provisions of this Article 12 shall remain in
effect until this Agreement has terminated pursuant to its terms and all
Obligations (other than inchoate indemnity obligations and any other obligations
which, by their terms, are to survive the termination of this Agreement) have
been paid and satisfied in full.

Section 12.11    Representative. Each Guarantor hereby designates Borrower
Representative and its representatives and agents on its behalf for the purpose
of giving and receiving all notices and other consents hereunder or under any
other Financing Document and taking all other actions on behalf of such
Guarantor under the Financing Documents. Borrower Representative hereby accepts
such appointment.

ARTICLE 13 MISCELLANEOUS

Section 13.1    Survival. All agreements, representations and warranties made
herein and in every other Financing Document shall survive the execution and
delivery of this Agreement and the other Financing Documents and the other
Operative Documents. The provisions of Section 2.10 and Articles 11 and 12 shall
survive the payment of the Obligations (both with respect to any Lender and all
Lenders collectively) and any termination of this Agreement and any judgment
with respect to any Obligations, including any final foreclosure judgment with
respect to any Security Document, and no unpaid or unperformed, current or
future, Obligations will merge into any such judgment.

Section 13.2    No Waivers. No failure or delay by Agent or any Lender in
exercising any right, power or privilege under any Financing Document shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein and therein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
Any reference in any Financing Document to the “continuing” nature of any Event
of Default shall not be construed as establishing or otherwise indicating that
any Borrower or any other Credit Party has the independent right to cure any
such Event of Default, but is rather presented merely for convenience should
such Event of Default be waived in accordance with the terms of the applicable
Financing Documents.

Section 13.3    Notices.

(a)    All notices, requests and other communications to any party hereunder
shall be in writing (including prepaid overnight courier, facsimile transmission
or similar writing) and shall be given to such party at its address, facsimile
number or e-mail address set forth on the signature pages hereof (or, in the
case of any such Lender who becomes a Lender after the date hereof, in an
assignment agreement or in a notice delivered to Borrower Representative and
Agent by the assignee Lender forthwith upon such assignment) or at such other
address, facsimile number or e-mail address as such party may hereafter specify
for the purpose by notice to Agent and Borrower Representative; provided,
however, that notices, requests or other communications shall be permitted by
electronic means only in accordance with the provisions of Section 13.3(b) and
(c). Each such notice, request or other communication shall be effective (i) if
given by facsimile, when such notice is transmitted to the facsimile number
specified by this Section and the sender receives a confirmation of transmission
from the sending facsimile machine, or (ii) if given by mail, prepaid overnight
courier or any other means, when received or when receipt is refused at the
applicable address specified by this Section 13.3(a).

 

112

--------------------------------------------------------------------------------

(b)    Notices and other communications to the parties hereto may be delivered
or furnished by electronic communication (including e-mail and Internet or
intranet websites) pursuant to procedures approved from time to time by Agent,
provided, however, that the foregoing shall not apply to notices sent directly
to any Lender if such Lender has notified Agent that it is incapable of
receiving notices by electronic communication. Agent or Borrower Representative
may, in their discretion, agree to accept notices and other communications to
them hereunder by electronic communications pursuant to procedures approved by
it, provided, however, that approval of such procedures may be limited to
particular notices or communications.

(c)    Unless 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 acknowledgment from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgment), 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, provided, however, that if any such
notice or other communication is not sent or posted during normal business
hours, such notice or communication shall be deemed to have been sent at the
opening of business on the next Business Day.

Section 13.4    Severability. In case any provision of or obligation under this
Agreement or any other Financing Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

Section 13.5    Headings. Headings and captions used in the Financing Documents
(including the Exhibits, Schedules and Annexes hereto and thereto) are included
for convenience of reference only and shall not be given any substantive effect.

Section 13.6    Confidentiality.

(a)    Each Credit Party agrees (i) not to transmit or disclose provisions of
any Financing Document to any Person (other than to Credit Parties’ advisors and
officers on a need-to-know basis or as otherwise may be required by Law) without
Agent’s prior written consent, (ii) to inform all Persons of the confidential
nature of the Financing Documents and to direct them not to disclose the same to
any other Person and to require each of them to be bound by these provisions.

(b)    Agent and each Lender shall hold all non-public information regarding the
Credit Parties and their respective businesses identified as such by Credit
Parties and obtained by Agent or any Lender pursuant to the requirements hereof
in accordance with such Person’s customary procedures for handling information
of such nature, except that disclosure of such information may be made (i) on a
confidential basis, to their respective agents, employees, Subsidiaries,
Affiliates, attorneys, auditors, professional consultants, rating agencies,
insurance industry associations and portfolio management services (it being
understood that such Persons to whom such disclosure is made will be informed of
the confidential nature of such information and be instructed to keep such
information confidential), (ii) to prospective transferees or purchasers of any
interest in the Loans, Agent or a Lender, provided, however, that any such
Persons are bound by obligations of confidentiality substantially the same as
set forth in this section, (iii) as required by Law, subpoena, judicial order or
similar order and in connection with

 

113

--------------------------------------------------------------------------------

any litigation (in which case Agent or the applicable Lender agrees to inform
the Credit Parties promptly thereof prior to such disclosure, to the extent not
prohibited by law, rule or regulation), (iv) as may be required in connection
with the examination, audit or similar investigation of such Person, and (v) on
a confidential basis, to a Person that is a trustee, investment advisor or
investment manager, collateral manager, servicer, noteholder or secured party in
a Securitization (as hereinafter defined) in connection with the administration,
servicing and reporting on the assets serving as collateral for such
Securitization (it being understood that such Persons to whom such disclosure is
made will be informed of the confidential nature of such information and be
instructed to keep such information confidential). For the purposes of this
Section, “Securitization” shall mean (A) the pledge of the Loans as collateral
security for loans to a Lender, or (B) a public or private offering by a Lender
or any of its Affiliates or their respective successors and assigns, of
securities which represent an interest in, or which are collateralized, in whole
or in part, by the Loans. After the Closing Date, confidential information shall
include only such information identified as such at the time provided to Agent
and shall not include information that either: (y) is in the public domain, or
becomes part of the public domain after disclosure to such Person through no
fault of such Person, or (z) is disclosed to such Person by a Person other than
a Credit Party, provided, however, Agent does not have actual knowledge that
such Person is prohibited from disclosing such information. The obligations of
Agent and Lenders under this Section 13.6 shall supersede and replace the
obligations of Agent and Lenders under any confidentiality agreement in respect
of this financing executed and delivered by Agent or any Lender prior to the
date hereof.

Section 13.7    Waiver of Consequential and Other Damages. To the fullest extent
permitted by applicable law, no party hereto shall assert, and each party hereto
hereby waives, any claim against any other party hereto, 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 Financing Document or any agreement or instrument
contemplated hereby or thereby, the transactions contemplated hereby or thereby,
any Loan or the use of the proceeds thereof; provided, that nothing in this
subsection (d) shall relieve the Borrowers of any obligation they may have to
indemnify an Indemnitee against special, indirect, consequential or punitive
damages asserted against such Indemnitee by a third party. No Indemnitee shall
be liable for any damages arising from the use by unintended recipients of any
information or other materials distributed by it through telecommunications,
electronic or other information transmission systems in connection with this
Agreement or the other Financing Documents or the transactions contemplated
hereby or thereby.

Section 13.8    GOVERNING LAW; SUBMISSION TO JURISDICTION.

(a)    THIS AGREEMENT, EACH NOTE AND EACH OTHER FINANCING DOCUMENT, AND ALL
DISPUTES AND OTHER MATTERS RELATING HERETO OR THERETO OR ARISING THEREFROM
(WHETHER SOUNDING IN CONTRACT LAW, TORT LAW OR OTHERWISE), SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.

(b)    EACH PARTY HERETO HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN THE STATE OF NEW YORK IN THE CITY OF NEW YORK, BOROUGH
OF MANHATTAN, AND IRREVOCABLY AGREES THAT, SUBJECT TO AGENT’S ELECTION, ALL
ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER
FINANCING DOCUMENTS SHALL BE LITIGATED IN SUCH COURTS. EACH PARTY HERETO
EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. EACH PARTY HERETO HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON

 

114

--------------------------------------------------------------------------------

SUCH PARTY BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED
TO SUCH PARTY AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND SERVICE SO MADE
SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS BEEN POSTED.

(c)    Each Credit Party, Agent and each Lender agree that each Loan (including
those made on the Closing Date) shall be deemed to be made in, and the
transactions contemplated hereunder and in any other Financing Document shall be
deemed to have been performed in, the State of Maryland.    Nothing in this
Section 13.8(c) shall amend or modify Sections 13.8(a) or (b) in any respect.

Section 13.9    WAIVER OF JURY TRIAL.    (a) EACH CREDIT PARTY, AGENT AND THE
LENDERS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE FINANCING DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED THEREBY AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH CREDIT
PARTY, AGENT AND EACH LENDER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED ON THE
WAIVER IN ENTERING INTO THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS, AND
THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH CREDIT PARTY, AGENT AND EACH LENDER WARRANTS AND REPRESENTS THAT IT HAS HAD
THE OPPORTUNITY OF REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.

(b)    In the event any such action or proceeding is brought or filed in any
United States federal court sitting in the State of California or in any state
court of the State of California, and the waiver of jury trial set forth in
Section 13.9(a) hereof is determined or held to be ineffective or unenforceable,
the parties agree that all actions or proceedings shall be resolved by reference
to a private judge sitting without a jury, pursuant to California Code of Civil
Procedure Section 638, before a mutually acceptable referee or, if the parties
cannot agree, a referee selected by the Presiding Judge of the Los Angeles
County, California. Such proceeding shall be conducted in Los Angeles County,
California, with California rules of evidence and discovery applicable to such
proceeding.    In the event any actions or proceedings are to be resolved by
judicial reference, any party may seek from any court having jurisdiction
thereover any prejudgment order, writ or other relief and have such prejudgment
order, writ or other relief enforced to the fullest extent permitted by Law
notwithstanding that all actions or proceedings are otherwise subject to
resolution by judicial reference.

Section 13.10    Publication; Advertisement.

(a)    Publication. No Credit Party will directly or indirectly publish,
disclose or otherwise use in any public disclosure, advertising material,
promotional material, press release or interview, any reference to the name,
logo or any trademark of MCF or any of its Affiliates or any reference to this
Agreement or the financing evidenced hereby, in any case except (i) as required
by Law, subpoena or judicial or similar order, in which case the applicable
Credit Party shall give Agent prior written notice of such publication or other
disclosure (other than filings made with the SEC, which a Credit Party may make
without such notice) or (ii) with MCF’s prior written consent.

(b)    Advertisement. Each Lender and each Credit Party hereby authorizes MCF to
publish the name of such Lender and Credit Party, the existence of the financing
arrangements

 

115

--------------------------------------------------------------------------------

referenced under this Agreement, the primary purpose and/or structure of those
arrangements, the amount of credit extended under each facility, the title and
role of each party to this Agreement, and the total amount of the financing
evidenced hereby in any “tombstone”, comparable advertisement or press release
which MCF elects to submit for publication. In addition, each Lender and each
Credit Party agrees that MCF may provide lending industry trade organizations
with information necessary and customary for inclusion in league table
measurements after the Closing Date. With respect to any of the foregoing, MCF
shall provide Credit Parties with an opportunity to review and confer with MCF
regarding the contents of any such tombstone, advertisement or information, as
applicable, prior to its submission for publication and, following such review
period, MCF may, from time to time, publish such information in any media form
desired by MCF, until such time that Credit Parties shall have requested MCF
cease any such further publication.

Section 13.11    Counterparts; Integration. This Agreement and the other
Financing Documents may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. Signatures by facsimile or by electronic
mail delivery of an electronic version of any executed signature page shall bind
the parties hereto. This Agreement and the other Financing Documents constitute
the entire agreement and understanding among the parties hereto and supersede
any and all prior agreements and understandings, oral or written, relating to
the subject matter hereof.

Section 13.12    No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.

Section 13.13    Lender Approvals. Unless expressly provided herein to the
contrary, any approval, consent, waiver or satisfaction of Agent or Lenders with
respect to any matter that is the subject of this Agreement, the other Financing
Documents may be granted or withheld by Agent and Lenders in their sole and
absolute discretion and credit judgment.

Section 13.14    Expenses; Indemnity.

(a)    Credit Parties hereby agree to promptly pay (i) all reasonable and
documented out-of-pocket costs and expenses of Agent (including, without
limitation, the reasonable and documented out-of-pocket fees, costs and expenses
of counsel to, and independent appraisers and consultants retained by Agent) in
connection with the examination, review, due diligence investigation,
documentation, negotiation, closing and syndication of the transactions
contemplated by the Financing Documents, in connection with the performance by
Agent of its rights and remedies under the Financing Documents and in connection
with the continued administration of the Financing Documents including (A) any
amendments, modifications, consents and waivers to and/or under any and all
Financing Documents, and (B) any periodic public record searches conducted by or
at the request of Agent (including, without limitation, title investigations,
UCC searches, fixture filing searches, judgment, pending litigation and tax lien
searches and searches of applicable corporate, limited liability, partnership
and related records concerning the continued existence, organization and good
standing of certain Persons); (ii) without limitation of the preceding clause
(i), all reasonable and documented out-of-pocket costs and expenses of Agent in
connection with the creation, perfection and maintenance of Liens pursuant to
the Financing Documents; (iii) without limitation of the preceding clause (i),
(A) all reasonable and documented out-of-pocket costs and expenses of Agent in
connection with protecting, storing, insuring, handling, maintaining or selling
any Collateral, and (B) all costs and expenses of Agent

 

116

--------------------------------------------------------------------------------

in connection with (I) any litigation, dispute, suit or proceeding relating to
any Financing Document, and (II) any workout, collection, bankruptcy, insolvency
and other enforcement proceedings under any and all of the Financing Documents;
(iv) without limitation of the preceding clause (i), all reasonable and
documented out-of-pocket costs and expenses of Agent in connection with Agent’s
reservation of funds in anticipation of the funding of the initial Loans to be
made hereunder; and (v) all costs and expenses incurred by Lenders in connection
with any litigation, dispute, suit or proceeding relating to any Financing
Document and in connection with any workout, collection, bankruptcy, insolvency
and other enforcement proceedings under any and all Financing Documents, whether
or not Agent or Lenders are a party thereto.

(b)    Each Credit Party hereby agrees to indemnify, pay and hold harmless Agent
and Lenders and the officers, directors, employees, trustees, agents, investment
advisors and investment managers, collateral managers, servicers, and counsel of
Agent and Lenders (collectively called the “Indemnitees”) from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the fees and disbursements of counsel for such
Indemnitee) in connection with any investigative, response, remedial,
administrative or judicial matter or proceeding, whether or not such Indemnitee
shall be designated a party thereto and including any such proceeding initiated
by or on behalf of a Credit Party, and the reasonable expenses of investigation
by engineers, environmental consultants and similar technical personnel and any
commission, fee or compensation claimed by any broker (other than any broker
retained by Agent or Lenders) asserting any right to payment for the
transactions contemplated hereby, which may be imposed on, incurred by or
asserted against such Indemnitee as a result of or in connection with the
transactions contemplated hereby or by the other Operative Documents (including
(i)(A) as a direct or indirect result of the presence on or under, or escape,
seepage, leakage, spillage, discharge, emission or release from, any property
now or previously owned, leased or operated by a Credit Party, any Subsidiary or
any other Person of any Hazardous Materials, (B) arising out of or relating to
the offsite disposal of any materials generated or present on any such property,
or (C) arising out of or resulting from the environmental condition of any such
property or the applicability of any governmental requirements relating to
Hazardous Materials, whether or not occasioned wholly or in part by any
condition, accident or event caused by any act or omission of a Credit Party or
any Subsidiary, and (ii) proposed and actual extensions of credit under this
Agreement) and the use or intended use of the proceeds of the Loans, except that
Credit Parties shall have no obligation hereunder to an Indemnitee with respect
to any liability resulting from the gross negligence, bad faith or willful
misconduct of such Indemnitee, as determined by a final non-appealable judgment
of a court of competent jurisdiction. To the extent that the undertaking set
forth in the immediately preceding sentence may be unenforceable, Credit Parties
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable Law to the payment and satisfaction of all such indemnified
liabilities incurred by the Indemnitees or any of them.

(c)    Notwithstanding any contrary provision in this Agreement, the obligations
of Credit Parties under this Section 13.14 shall survive the payment in full of
the Obligations and the termination of this Agreement. NO INDEMNITEE SHALL BE
RESPONSIBLE OR LIABLE TO THE CREDIT PARTYS OR TO ANY OTHER PARTY TO ANY
FINANCING DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OR ANY
OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT,
PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF
CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS AGREEMENT OR ANY
OTHER FINANCING DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.

 

117

--------------------------------------------------------------------------------

(d)    Each Credit Party for itself and all endorsers, guarantors and sureties
and their heirs, legal representatives, successors and assigns, hereby further
specifically waives any rights that it may have under Section 1542 of the
California Civil Code (to the extent applicable), which provides as follows: “A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR,” and further waives any similar rights under applicable Laws.

Section 13.15    Reserved.

Section 13.16    Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition or other proceeding be
filed by or against any Credit Party for liquidation or reorganization, should
any Credit Party become insolvent or make an assignment for the benefit of any
creditor or creditors or should an interim receiver, receiver, receiver and
manager or trustee be appointed for all or any significant part of any Credit
Party’s assets, and shall continue to be effective or to be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a fraudulent preference reviewable transaction or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.

Section 13.17    Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of Credit Parties and Agent and each Lender and their
respective successors and permitted assigns.

Section 13.18    USA PATRIOT Act Notification. Agent (for itself and not on
behalf of any Lender) and each Lender hereby notifies Credit Parties that
pursuant to the requirements of the USA PATRIOT Act, it is required to obtain,
verify and record certain information and documentation that identifies Credit
Parties, which information includes the name and address of the applicable
Credit Parties and such other information that will allow Agent or such Lender,
as applicable, to identify Credit Parties in accordance with the USA PATRIOT
Act.

Section 13.19    Process Agent. Each Credit Party that is incorporated under the
laws of a jurisdiction other than the United States (or any state thereof)
hereby irrevocably designates, appoints, authorizes and empowers Corporation
Service Company, on the date hereof (the “Process Agent”), as its agent to
receive on behalf of itself, service of copies of the summons and complaint and
any other process which may be served in any suit, action or proceeding brought
in connection with this Agreement or any other Financing Document in the circuit
court of any county of the state of New York, and any appellate court thereof.
To the fullest extent permitted by applicable laws, such service may be made by
mailing or delivering a copy of such process to such Credit Party in care of the
Process Agent at its address specified above, and each such Credit Party hereby
authorizes and directs the Process Agent to receive such service on its behalf.
The appointment of the Process Agent shall be irrevocable by each such Credit
Party until the appointment of a successor Process Agent. Each such Credit Party
further agrees promptly to appoint a successor Process Agent in New York (which
shall accept such appointment in form and substance satisfactory to Agent) prior
to the termination for any reason of the appointment of the initial Process
Agent. Nothing in this Section 13.19 shall affect the right of any party hereto
to serve process in any manner permitted by applicable law or to enforce in any
lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

118

--------------------------------------------------------------------------------

Section 13.20    Other Currency. Without limiting Section 2.6 or any other
provision of this Agreement, to the extent permitted by applicable Law, the
obligations of any of the Credit Parties in respect of any amount due under this
Agreement shall, notwithstanding any payment in any other currency (the “Other
Currency”) (whether pursuant to a judgment or otherwise), be discharged only to
the extent of the amount in the currency in which it is due (the “Agreed
Currency”) that Agent or Lenders may, in accordance with normal banking
procedures, purchase with the sum paid in the Other Currency (after any premium
and costs of exchange) on the Business Day immediately after the day on which
Agent or Lender receives the payment. If the amount of the Agreed Currency that
may be so purchased for any reason falls short of the amount originally due,
such Credit Party shall pay all additions amounts, in the Agreed Currency, as
may be necessary to compensate for the shortfall. Any obligation of a Credit
Party not discharged by that payment shall, to the extent permitted by
applicable law, be due as a separate and independent obligation and, until
discharged as provided in this Section 10.9, continue in full force and effect.

[SIGNATURES APPEAR ON FOLLOWING PAGE(S)]

 

119

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, intending to be legally bound each of the parties have
caused this Agreement to be executed the day and year first above mentioned.

 

BORROWER AND BORROWER REPRESENTATIVE:     WRIGHT MEDICAL GROUP, INC.     By:  

/s/ Lance A. Berry

    Name:   Lance A. Berry     Title:   Senior Vice President, Chief Financial
Officer    

Address:

 

1023 Cherry Road

Memphis, TN 38117

Attn: James A. Lightman

Facsimile: 901.867.4398

E-Mail: james.lightman@wright.com

 

With a copy to:

 

1023 Cherry Road

Memphis, TN 38117

Attn: Lance A. Berry

E-Mail: lance.berry@wright.com

--------------------------------------------------------------------------------

BORROWERS:     BIOMIMETIC THERAPEUTICS CANADA, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Vice President     BIOMIMETIC
THERAPEUTICS LLC     By:  

/s/ Lance A. Berry

    Name:   Lance A. Berry     Title:   Treasurer     BIOMIMETIC THERAPEUTICS
USA, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Vice President     INBONE TECHNOLOGIES,
INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Vice President, Tax and Treasury    
ORTHOHELIX SURGICAL DESIGNS, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Treasurer     ORTHOPRO, L.L.C.     By:  

/s/ Lance A. Berry

    Name:   Lance A. Berry     Title:   President and Chief Financial Officer

--------------------------------------------------------------------------------

    SOLANA SURGICAL, LLC     By:   Wright Medical Group, Inc., its sole member  
  By:  

/s/ Lance A. Berry

    Name:   Lance A. Berry     Title:   Senior Vice President, Chief Financial
Officer     TORNIER US HOLDINGS, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Treasurer     TORNIER, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Treasurer     TROOPER HOLDINGS INC.    
By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Treasurer     WHITE BOX ORTHOPEDICS, LLC
    By:  

/s/ Lance A. Berry

    Name:   Lance A. Berry     Title:   Senior Vice President and Chief
Financial Officer     WRIGHT MEDICAL CAPITAL, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Vice President, Tax and Treasury

--------------------------------------------------------------------------------

    WRIGHT MEDICAL TECHNOLOGY, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Vice President, Tax and Treasury    
WRIGHT MEDICAL GROUP INTELLECTUAL PROPERTY, INC.     By:  

/s/ W. Dean Morgan

    Name:   W. Dean Morgan     Title:   Vice President, Tax and Treasury

--------------------------------------------------------------------------------

GUARANTOR AND PARENT:     WRIGHT MEDICAL GROUP N.V.     By:  

/s/ Lance A. Berry

    Name:   Lance A. Berry     Title:   Senior Vice President and Chief
Financial Officer

--------------------------------------------------------------------------------

AGENT:   MIDCAP FINANCIAL TRUST   By:  

Apollo Capital Management, L.P.,

its investment manager

  By:  

Apollo Capital Management GP, LLC,

its general partner

    By:  

/s/ Maurice Amsellem

    Name:   Maurice Amsellem     Title:   Authorized Signatory

  Address:  

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attn: Account Manager for Wright transaction

Facsimile: 301-941-1450

E-mail: notices@midcapfinancial.com

  with a copy to:  

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attn: General Counsel

Facsimile: 301-941-1450

E-mail: legalnotices@midcapfinancial.com

  Payment Account Designation:  

Wells Fargo Bank, N.A. (McLean, VA)

ABA #: XXX-XXX-XXX

Account Name: MidCap Funding IV Trust – Collections

Account #: XXXXXXXXXXXXX

Attention: Wright Facility

--------------------------------------------------------------------------------

LENDER:   MIDCAP FINANCIAL TRUST   By:  

Apollo Capital Management, L.P.,

its investment manager

  By:  

Apollo Capital Management GP, LLC,

its general partner

    By:  

/s/ Maurice Amsellem

    Name:   Maurice Amsellem     Title:   Authorized Signatory   Address:  

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attn: Account Manager for Wright transaction

Facsimile: 301-941-1450

E-mail: notices@midcapfinancial.com

  with a copy to:  

c/o MidCap Financial Services, LLC, as servicer

7255 Woodmont Avenue, Suite 200

Bethesda, Maryland 20814

Attn: General Counsel

Facsimile: 301-941-1450

E-mail: legalnotices@midcapfinancial.com

--------------------------------------------------------------------------------

LENDER:   APOLLO INVESTMENT CORPORATION   By: Apollo Investment Management,
L.P., as Advisor   By: ACC Management, LLC, as its General Partner   By:  

/s/ Tanner Powell

  Name:   Tanner Powell   Title:   Authorized Signatory   Address:   Apollo
Investment Corporation   9 West 57th Street, 37th Floor   New York, New York
10019   Attn: Howard Widra   E-mail: hwidra@apolloLP.com   with a copy to:  
Apollo Investment Corporation   730 Fifth Avenue, 11th Floor  

New York, New York 10019

Attn: Sheriff Ibrahim, Jonathan Krain

Facsimile: 602-680-4108

E-mail: RealEstateOps@apolloLP.com,

16026804108@tls.ldsprod.com

       

--------------------------------------------------------------------------------

ANNEXES, EXHIBITS AND SCHEDULES

 

ANNEXES

  

Annex A

  

Commitment Annex

EXHIBITS

  

Exhibit A

  

[Reserved]

Exhibit B

  

Form of Compliance Certificate

Exhibit C

  

Borrowing Base Certificate

Exhibit D

  

Form of Notice of Borrowing

SCHEDULES

  

Schedule 1.1

  

Excluded Subsidiaries

Schedule 3.1

  

Existence, Organizational ID Numbers, Foreign Qualification, Prior Names

Schedule 3.4

  

Capitalization

Schedule 3.6

  

Litigation

Schedule 3.15

  

Broker’s Fees

Schedule 3.17

  

Material Contracts

Schedule 3.18

  

Environmental Compliance

Schedule 3.19

  

Intellectual Property

Schedule 4.9

  

Litigation, Governmental Proceedings and Other Notice Events

Schedule 5.1

  

Debt; Contingent Obligations

Schedule 5.2

  

Liens

Schedule 5.3

  

Distributions

Schedule 5.7

  

Permitted Investments

Schedule 5.8

  

Affiliate Transactions

Schedule 5.11

  

Business Description

Schedule 5.14

  

Deposit Accounts and Securities Accounts

Schedule 6.2

  

Minimum Net Revenue

Schedule 7.4

  

Post-Closing Obligations

Schedule 8.1

  

Exceptions to Healthcare Representations and Warranties

Schedule 9.1

  

Collateral

Schedule 9.2(b)

  

Location of Collateral

Schedule 9.2(d)

  

Chattel Paper, Letter of Credit Rights, Commercial Tort Claims and other
Instruments

--------------------------------------------------------------------------------

Annex A to Credit Agreement (Commitment Annex)

 

Lender

  Revolving Loan Commitment
Amount     Revolving Loan Commitment
Percentage  

MidCap Financial Trust

  $ 100,000,000        66.6667 % 

Apollo Investment Corporation

  $ 50,000,000        33.3333 % 

TOTALS

  $ 150,000,000        100 % 

--------------------------------------------------------------------------------

Exhibit A to Credit Agreement

[Reserved]

--------------------------------------------------------------------------------

Exhibit B to Credit Agreement (Form of Compliance Certificate)

COMPLIANCE CERTIFICATE

This Compliance Certificate is given by                     , a Responsible
Officer of Wright Medical Group, Inc., a Delaware corporation (the “Borrower
Representative”), pursuant to that certain Credit, Security and Guaranty
Agreement dated as of December 23, 2016 among the Borrower Representative, the
other Borrowers signatory thereto and any additional Borrower that may hereafter
be added thereto (collectively, “Borrowers”), Wright Medical Group N.V., a
public limited liability company organized and existing under the laws of the
Netherlands with its corporate seat (statutaire zetel) in Amsterdam and
registered with the Dutch trade register under the number 34250781 (“Parent”),
as a Guarantor, MidCap Financial Trust, individually as a Lender and as Agent,
and the financial institutions or other entities from time to time parties
hereto, each as a Lender (as such agreement may have been amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”).
Capitalized terms used herein without definition shall have the meanings set
forth in the Credit Agreement.

The undersigned Responsible Officer hereby certifies to Agent and Lenders that:

(a)    the financial statements delivered with this certificate in accordance
with Section 4.1 of the Credit Agreement fairly present in all material respects
the results of operations and financial condition of Credit Parties and their
Consolidated Subsidiaries as of the dates and the accounting period covered by
such financial statements;

(b)    I have reviewed the terms of the Credit Agreement and have made, or
caused to be made under my supervision, a review in reasonable detail of the
transactions and conditions of the Credit Parties and their Consolidated
Subsidiaries during the accounting period covered by such financial statements,
and such review has not disclosed the existence during or at the end of such
accounting period, and I have no knowledge of the existence as of the date
hereof, of any condition or event that constitutes a Default or an Event of
Default[, except as set forth in Schedule 1 hereto, which includes a description
of the nature and period of existence of such Default or an Event of Default and
what action Credit Parties have taken, are undertaking and propose to take with
respect thereto];

(c)    except as noted on Schedule 2 attached hereto, Schedule 9.2(b) to the
Credit Agreement contains a complete and accurate list of all business locations
of Borrowers and Guarantors and all names under which Borrowers and Guarantors
currently conduct business; Schedule 2 specifically notes any changes in the
names under which any Borrower or Guarantors conduct business;

(d)    [except as noted on Schedule 3 attached hereto,] the undersigned has no
knowledge of (i) any federal or state tax liens having been filed against any
Borrower, Guarantor or any Collateral, or (ii) any failure of any Borrower or
any Guarantors to make required payments of withholding or other tax obligations
of any Borrower or any Guarantors during the accounting period to which the
attached statements pertain or any subsequent period;

(e)    Schedule 5.14 to the Credit Agreement contains a complete and accurate
statement of all deposit accounts or investment accounts maintained by Borrowers
and Guarantors;

(f)    except as noted on Schedule 4 attached hereto, Schedule 3.6 to the Credit
Agreement is true and correct in all material respects;

(g)    except as noted on Schedule 5 attached hereto, Schedule 3.19 to the
Credit Agreement is true and correct in all material respects;

--------------------------------------------------------------------------------

(i)    [except as noted on Schedule 6 attached hereto,] no Borrower or Guarantor
is aware of any commercial tort claim that has not previously been reported to
Agent on any Schedule 6 to any previous Compliance Certificate delivered by
Borrower Representative to Agent; and

(j)    Borrowers and Guarantor are in compliance with the covenants contained in
Article 6 of the Credit Agreement, and in any Guarantee constituting a part of
the Financing Documents, as demonstrated by the calculation of such covenants
below, except as set forth below; in determining such compliance, the following
calculations have been made:

[insert calculations, as applicable]

Such calculations and the certifications contained therein are true, correct and
complete in all material respects.

The foregoing certifications and computations are made as of             , 201  
(end of month) and as of             , 201  .

 

Sincerely, WRIGHT MEDICAL GROUP, INC. By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

Exhibit C to Credit Agreement (Borrowing Base Certificate)

--------------------------------------------------------------------------------

Exhibit D to Credit Agreement (Form of Notice of Borrowing)

NOTICE OF BORROWING

This Notice of Borrowing is given by                     , a Responsible Officer
of Wright Medical Group, Inc. (the “Borrower Representative”), pursuant to that
certain Credit, Security and Guaranty Agreement dated as of December 23, 2016
among the Borrower Representative, the other Borrowers signatory thereto and any
additional Borrower that may hereafter be added thereto (collectively,
“Borrowers”), Parent, as a Guarantor, MidCap Financial Trust, individually as a
Lender and as Agent, and the financial institutions or other entities from time
to time parties hereto, each as a Lender (as such agreement may have been
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”). Capitalized terms used herein without definition shall have
the meanings set forth in the Credit Agreement.

The undersigned Responsible Officer hereby gives notice to Agent of Borrower
Representative’s request to borrow $         of Revolving Loans on             ,
201   (the “Borrowing Date”). Attached is a Borrowing Base Certificate complying
in all respects with the Credit Agreement and confirming that, after giving
effect to the requested advance, the Revolving Loan Outstandings will not exceed
the Revolving Loan Limit.

The undersigned officer hereby certifies that, both before and after giving
effect to the request above (a) each of the conditions precedent set forth in
Section 7.2 have been satisfied, (b) all of the representations and warranties
contained in the Financing Documents are true, correct and complete in all
material respects as of the Borrowing Date, except to the extent such
representation or warranty relates to a specific date, in which case such
representation or warranty is true, correct and complete as of such earlier
date; provided, however, in each case, such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof, and (c) no Default or Event of
Default has occurred and is continuing on the date hereof.

IN WITNESS WHEREOF, the undersigned officer has executed and delivered this
Notice of Borrowing this      day of             , 201  .

 

Sincerely, WRIGHT MEDICAL GROUP, INC. By:  

 

Name:  

 

Title: