Exhibit 10.1

 

MERRILL LYNCH,

PIERCE, FENNER &

SMITH

INCORPORATED

BANK OF

AMERICA, N.A.

One Bryant Park

New York, New York

10036

 

SOCIÉTÉ

GÉNÉRALE

SG AMERICAS SECURITIES, LLC

1221 6th Avenue

New York, New York

10020

 

BANK OF

MONTREAL

3 Times Square

New York, NY 10036

   JPMORGAN CHASE
BANK, N.A.

383 Madison Avenue

New York, New York
10179

CONFIDENTIAL

August 23, 2012

Tornier, Inc.

7701 France Avenue

Suite 600

Edina, MN 55435

Attention: James Erickson

Project Oscar

Secured Credit Facilities

Commitment Letter

Ladies and Gentlemen:

You have advised Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any of
its affiliates designated to act in such capacity, “MLPFS”), Bank of America,
N.A. (“Bank of America”), Société Générale (“SG”), SG Americas Securities, LLC
(“SGAS”), Bank of Montreal (“BMO”), BMO, acting through its trade name BMO
Capital Markets, and JPMorgan Chase Bank, N.A. (“JPMCB” and, together with
MLPFS, Bank of America, SG, SGAS, BMO and any other initial lender or joint lead
arranger that becomes a party hereto with your consent in accordance with the
terms hereof after the date hereof and the respective affiliates of each of the
foregoing, “we”, “us” or the “Commitment Parties”) that you or a newly created
entity formed at your direction (“Merger Sub”) intend to acquire (the
“Acquisition”), directly or indirectly, an entity previously identified to us by
you as “Oscar” (the “Company”). You have further advised us that, in connection
with the foregoing, you intend to obtain up to $145.0 million in senior secured
revolving credit and term loan facilities on the terms described in the Term
Sheet (as defined below) (the “Credit Facilities”) in connection therewith
(collectively, together with the Acquisition, the “Transactions”). Capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Summary of Principal Terms and Conditions attached hereto as Exhibit A (the
“Term Sheet”; this commitment letter, the Term Sheet and the Summary of
Additional Conditions attached hereto as Exhibit B, collectively, the
“Commitment Letter”).

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1. Commitments.

In connection with the Transactions, each of Bank of America, SG, BMO and JPMCB
(together with any other initial lender that becomes a party hereto, each an
“Initial Lender” and, collectively, the “Initial Lenders”) is pleased to advise
you of its several, but not joint, commitment to provide (A) with respect to
Bank America, (i) 40% of each Term Facility and (ii) 40% of each Revolving
Facility, (B) with respect to SG, (i) 40% of each Term Facility and (ii) 40% of
each Revolving Facility, (C) with respect to BMO, (i) 10% of each Term Facility
and (ii) 10% of each Revolving Facility and (D) with respect to JPMCB, (i) 10%
of each Term Facility and (ii) 10% of each Revolving Facility, in each case
subject only to the satisfaction of the conditions set forth in Section 6
hereof, the section entitled “Conditions Precedent to Each Borrowing” in the
Term Sheet and in the Summary of Additional Conditions attached hereto as
Exhibit B.

2. Titles and Roles.

It is agreed that (a) each of MLPFS and SG Americas Securities will act as a
joint lead arranger and a joint bookrunner for the Credit Facilities (each, in
such capacities, a “Lead Arranger”), (b) Bank of America will act as
administrative agent and collateral agent (in each such capacity, the
“Administrative Agent”) for each of the Credit Facilities, (c) SGAS will act as
syndication agent and (d) each of BMO, acting through its trade name BMO Capital
Markets, and JPMCB will act as co-documentation agents, all upon the terms and
subject to the conditions set forth or referred to in this Commitment Letter.
You further agree that no other agents, co-agents, arrangers or bookrunners will
be appointed, no other titles will be awarded and no compensation (other than as
expressly contemplated by this Commitment Letter and the Fee Letter (as defined
below)) will be paid in connection with the Credit Facilities unless you and we
shall so agree.

3. Syndication.

The Lead Arrangers reserve the right, after your execution of this Commitment
Letter and prior to or after the Closing Date, to syndicate all or a portion of
each Initial Lender’s respective commitment hereunder to a group of banks,
financial institutions and other institutional lenders and investors (together
with the Initial Lenders, the “Lenders”) identified by the Lead Arrangers, in
consultation with you, to be approached in such syndication (such Lenders to be
approached to be reasonably acceptable to us and you, our and your consent not
to be unreasonably withheld, delayed or conditioned) (it being understood and
agreed that nothing in this Section 3 shall prevent or limit assignments or
participations of the Credit Facilities after the Closing Date in accordance
with, and as permitted by, the provisions contained in the Term Sheet); provided
that (a) we agree not to syndicate our commitments to certain banks, financial
institutions and other institutional lenders and any competitors of Tornier,
N.V. and its subsidiaries (including you) (collectively, the “Tornier Group”) or
the Company and its subsidiaries, in each case, that have been specified to us
by you in writing at any time prior to the date hereof (collectively,
“Disqualified Lenders”) and (b) notwithstanding each Lead Arranger’s right to
syndicate the Credit Facilities and receive commitments with respect thereto, in
each case unless you expressly agree in writing, (i) no Commitment Party shall
be relieved, released or novated from its obligations hereunder (including its
obligation to fund the Credit Facilities on the Closing Date subject to the
satisfaction of the conditions set forth in Section 6 hereof, the section
entitled “Conditions Precedent to Each Borrowing” in the Term Sheet and in
Exhibit B hereto) in

 

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connection with or as a result of any difficulties regarding any syndication,
assignment or participation of the Credit Facilities, including its commitments
in respect thereof, until after the Closing Date has occurred, (ii) no
assignment or novation shall become effective with respect to all or any portion
of either Initial Lender’s commitment in respect of the Credit Facilities until
the initial funding of the Credit Facilities and (iii) each Initial Lender shall
retain exclusive control over (and shall not directly or indirectly agree to
accept direction from, or accept direction from, any third party with respect
to) all rights and obligations with respect to its commitments in respect of the
Credit Facilities, this Commitment Letter and the Fee Letter, including all
rights with respect to consents, modifications, supplements, waivers and
amendments, until the Closing Date has occurred.

Without limiting your obligations to assist with syndication efforts as set
forth herein, it is understood that Initial Lenders commitments hereunder are
not conditioned upon the syndication of, or receipt of commitments in respect
of, all or any portion of the Credit Facilities and in no event shall the
commencement or successful completion of syndication of the Credit Facilities
constitute a condition to the availability of the Credit Facilities on the
Closing Date. The Lead Arrangers shall have the right to commence syndication
efforts promptly upon the execution of this Commitment Letter; it is our intent
to have lenders commit to the Credit Facilities (subject to the limitations set
forth in the preceding paragraph) as soon as practicable after your execution of
this Commitment Letter. Commencing on the date hereof and until the earlier of
(a) the date upon which a Successful Syndication (as defined in the Fee Letter
referred to below) of the Credit Facilities is achieved and (b) the 60th day
following the Closing Date (such earlier date, the “Syndication Date”), you
agree actively to assist us in seeking to complete a timely syndication that is
reasonably satisfactory to us and you. Such assistance shall include, without
limitation, (a) your using commercially reasonable efforts to ensure that any
syndication efforts benefit materially from your existing lending and investment
banking relationships and, to the extent practical and appropriate, the
Company’s existing lending and investment banking relationships, (b) direct
contact between senior management, certain of your representatives and certain
of your advisors, on the one hand, and the proposed Lenders, on the other hand
(and your using commercially reasonable efforts to ensure direct contact between
senior management of the Company, on the one hand, and the proposed Lenders, on
the other hand), in all such cases at times mutually and reasonably agreed upon,
(c) your assistance (including the use of commercially reasonable efforts to
cause the Company to assist) in the preparation of the Information Memorandum
(as defined below) to be used in connection with the syndication and in any
event, no later than 20 calendar days prior to the Closing Date, and the other
Information Materials (as defined below), (d) your hosting, with the Lead
Arrangers, of up to two, or such additional number as may be reasonably
requested by the Lead Arrangers and mutually and reasonably agreed upon,
meetings with prospective Lenders at times and locations to be mutually agreed
upon (and your using commercially reasonable efforts to cause certain officers
of the Company to be available for such meetings), (e) your providing or causing
to be provided a business plan or projections of the Tornier Group for the
fiscal years 2012 through 2018 and for the four quarters beginning with the
fourth quarter of 2012 (the “Projections”), (f) to promptly prepare and provide
(and to use commercially reasonable efforts to cause the Company to provide) to
us all customary information with respect to the Tornier Group, the Company and
each of its respective subsidiaries and the Transactions as the Lead Arrangers
may reasonably request in connection with the structuring, arrangement and
syndication of the Credit Facilities

 

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and (g) there being no competing issues, offerings, placements or arrangements
of debt securities or commercial bank or other credit facilities by or on behalf
of the Tornier Group, the Company or any of its subsidiaries being offered,
placed or arranged (other than the Credit Facilities or any indebtedness of the
Company and its subsidiaries permitted to be incurred pursuant to the Merger
Agreement (as defined in Exhibit B) without the consent of the Lead Arrangers
(such consent not to be unreasonably withheld, delayed or conditioned), if such
issuance, offering, placement or arrangement would have, in the reasonable
judgment of the Lead Arrangers, a detrimental effect upon the primary
syndication of the Credit Facilities.

The Lead Arrangers, in their capacity as such, will manage, in consultation with
you, all aspects of any syndication of the Credit Facilities, including
decisions as to the selection of Lenders reasonably acceptable to you to be
approached (the Lenders to be approached to be subject to our and your consent
rights set forth in the second preceding paragraph and excluding in any event
Disqualified Lenders) and when they will be approached, when their commitments
will be accepted, which institutions will participate, the allocation of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. For the avoidance of doubt, you will not be required to provide any
information to the extent that the provision thereof would violate any law, rule
or regulation, or any obligation of confidentiality binding upon you, the
Company or any of your respective affiliates; provided that you shall use
commercially reasonable efforts to provide such information without causing any
such a violation. Notwithstanding anything herein to the contrary, the only
financial statements that shall be required to be provided to the Commitment
Parties in connection with the syndication of the Credit Facilities shall be
those required to be delivered pursuant to Exhibit B hereto.

You hereby acknowledge that (a) the Lead Arrangers will make available
Information (as defined below), Projections and other offering and marketing
material and presentations, including confidential information memoranda to be
used in connection with the syndication of the Credit Facilities (the
“Information Memorandum”) (such Information, Projections, other offering and
marketing material and the Information Memorandum, collectively, with the Term
Sheet, the “Information Materials”) on a confidential basis to the proposed
syndicate of Lenders by posting the Information Materials on Intralinks, Debt X,
SyndTrak Online or by similar electronic means and (b) certain of the Lenders
may be “public side” Lenders (i.e., Lenders that do not wish to receive
information that is (i) not of a type that would be publicly available if you
and the Company were public reporting companies and (ii) material non-public
information with respect to you, the Company or its subsidiaries or any of your
or the Company’s respective securities for purposes of foreign, United States
Federal and state securities laws (such information, “MNPI”) and who may be
engaged in investment and other market related activities with respect to you or
the Company or your or the Company’s respective securities) (each, a “Public
Sider” and each Lender that is not a Public Sider, a “Private Sider”).

You agree to assist (and to use commercially reasonable efforts to cause the
Company to assist) us in preparing an additional version of the Information
Materials to be used in connection with the syndication of the Credit Facilities
that consists exclusively of information of a type that is publicly available
and/or does not include MNPI with respect to Holdings or the Company or any of
their respective subsidiaries for the purpose of United States federal and state
securities laws to be used by Public Siders. The information to be included in
the additional version of the

 

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Information Materials will be substantially consistent with information that
would be included in filings made by the Company with the Securities and
Exchange Commission were it a public reporting company. It is understood that in
connection with your assistance described above, the Borrower shall provide us
with customary authorization letters for inclusion in any Information Materials
that authorize the distribution thereof to prospective Lenders, represent that
the additional version of the Information Materials does not include any MNPI
and exculpate you, the Investors, the Company and us with respect to any
liability related to the use or misuse of the contents of the Information
Materials or related offering and marketing materials by the recipients thereof.
Before distribution of any Information Materials, you agree to use commercially
reasonable efforts to identify that portion of the Information Materials that
may be distributed to the Public Siders as “Public Information”, which, at a
minimum, shall mean that the word “PUBLIC” shall appear prominently on the first
page thereof. By marking Information Materials as “PUBLIC”, you shall be deemed
to have authorized the Commitment Parties and the proposed Lenders to treat such
Information Materials as not containing any MNPI (it being understood that you
shall not be under any obligation to mark the Information Materials “PUBLIC”).

You acknowledge and agree that the following documents, without limitation, may
be distributed to both Private Siders and Public Siders, unless you advise the
Lead Arrangers in writing (including by email) within a reasonable time prior to
its intended distribution that such materials should only be distributed to
Private Siders: (a) administrative materials prepared by the Lead Arrangers for
prospective Lenders (such as a lender meeting invitation, bank allocation, if
any, and funding and closing memoranda), (b) term sheets and notification of
changes in the Credit Facilities’ terms and conditions, (c) drafts and final
versions of the Facilities Documentation and (d) publicly filed financial
statements, if any, of the Company and its subsidiaries. If you advise us in
writing (including by email), within a reasonable period of time prior to
dissemination, that any of the foregoing should be distributed only to Private
Siders, then Public Siders will not receive such materials without your consent.

4. Information.

You hereby represent and warrant that, (a) all written information and written
data, other than the Projections and other than information of a general
economic or industry specific nature (the “Information”), that has been or will
be made available to any Commitment Party directly or indirectly by you, the
Company (to the extent such information has been made available at your
direction) or by any of your or their respective representatives on your behalf
in connection with the Transactions (which information shall be to the best of
your knowledge to the extent it relates to the Company or its subsidiaries and
businesses), when taken as a whole, is or will be, when furnished, correct in
all material respects and does not or will not, when furnished, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained therein not materially misleading in
light of the circumstances under which such statements are made (giving effect
to all supplements and updates provided thereto) and (b) the Projections that
have been or will be made available to any Commitment Party by you, the Company
(at your direction) or by any of your or their respective representatives on
your behalf in connection with the transactions contemplated hereby have been,
or will be, prepared in good faith based upon assumptions that are believed by
you to be reasonable at the time prepared and at the time the related
Projections are so furnished; it being understood that the

 

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Projections are as to future events and are not to be viewed as facts, that the
Projections are subject to significant uncertainties and contingencies, many of
which are beyond your control, that no assurance can be given that any
particular Projections will be realized and that actual results during the
period or periods covered by any such Projections may differ significantly from
the projected results and such differences may be material. You agree that, if
at any time prior to the Syndication Date, you become aware that any of the
representations and warranties in the preceding sentence would be incorrect in
any material respect if the Information and the Projections were being
furnished, and such representations were being made, at such time, then you will
(or, with respect to the Information and Projections relating to the Company,
will use commercially reasonable efforts to) promptly supplement the Information
and the Projections such that (with respect to the Information relating to the
Company and its subsidiaries, to the best of your knowledge) such
representations and warranties are correct in all material respects under those
circumstances. In arranging and syndicating the Credit Facilities, each of the
Commitment Parties (a) will be entitled to use and rely primarily on the
Information and the Projections without responsibility for independent
verification thereof and (b) does not assume responsibility for the accuracy or
completeness of the Information or the Projections.

5. Fees.

As consideration for the commitments of the Initial Lenders hereunder and for
the agreement of Lead Arrangers to perform the services described herein, you
agree to pay (or cause to be paid) the fees set forth in the Term Sheet and in
the Fee Letter dated the date hereof and delivered herewith with respect to the
Credit Facilities (the “Fee Letter”). Once paid, such fees shall not be
refundable under any circumstances.

6. Conditions.

The commitments of the Initial Lenders hereunder to fund the Credit Facilities
on the Closing Date and the agreements of the Lead Arrangers to perform the
services described herein are subject solely to (a) the conditions set forth in
this Section 6, (b) the conditions set forth in the section entitled “Conditions
to the Borrowings on the Closing Date” in Exhibit A hereto and (c) the
conditions set forth in Exhibit B hereto, and upon satisfaction (or waiver by
all Commitment Parties) of such conditions, the initial funding of the Credit
Facilities shall occur.

The commitments of the Initial Lenders hereunder and the agreements of the Lead
Arrangers to perform the services described herein are subject to the
negotiation, execution and delivery of definitive documentation for the Credit
Facilities (which you agree will be initially drafted by counsel to the
Commitment Parties), including the Credit Agreement, the Security Documents and
related ancillary agreements, certificates, schedules and other documents,
closing certificates (including a solvency certificate substantially in the form
of Annex I hereto, evidences of authority, charter documents and officers’
incumbency certificates) and customary legal opinions with respect to the Credit
Facilities (collectively, the “Facilities Documentation”), in each case
consistent with the Documentation Principles; provided that, notwithstanding
anything in this Commitment Letter (including each of the exhibits attached
hereto), the Fee Letter, the Facilities Documentation or any other letter
agreement or other undertaking concerning the financing of the Transactions to
the contrary, (i) the only representations relating to the Tornier Group or any
member thereof, the Borrower, the

 

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Guarantors, the Company, the Investors (as defined below), your and their
respective subsidiaries and your and their respective businesses the accuracy of
which shall be a condition to the availability of the Credit Facilities on the
Closing Date shall be (A) such of the representations made by the Company or any
of its affiliates with respect to the Company and its subsidiaries in the Merger
Agreement (as defined in Exhibit B) as are material to the interests of the
Lenders, but only to the extent that you have the right (determined without
regard to any notice requirements) to terminate your obligations under the
Merger Agreement as a result of a breach of such representations in the Merger
Agreement (to such extent, the “Specified Merger Agreement Representations”) and
(B) the Specified Representations (as defined below) made by the Borrower and
the Guarantors in the Facilities Documentation and (ii) the terms of the
Facilities Documentation shall be in a form such that they do not impair the
availability of the Credit Facilities on the Closing Date if the conditions set
forth in this Section 6, in the section entitled “Conditions to the Borrowings
on the Closing Date” in Exhibit A hereto and in Exhibit B hereto are satisfied
(it being understood that, to the extent any foreign guarantee or security
interest in any Collateral (as defined in Exhibit A) is not or cannot be
provided and/or perfected on the Closing Date (other than the pledge and
perfection of the security interests (1) in the equity securities of the
Borrower and any domestic subsidiaries of the Borrower (to the extent
(i) required by Exhibit A or (ii) if certificated and pledged to the Company’s
existing financing source, such certificates are obtained from such financing
source prior to the Closing Date) and (2) in other assets with respect to which
a lien may be perfected by the filing of a financing statement under the Uniform
Commercial Code) after your use of commercially reasonable efforts to do so or
without undue burden or expense, then the provision and/or perfection of such
guarantee or a security interest in such Collateral shall not constitute a
condition precedent to the availability of the Credit Facilities on the Closing
Date, but instead shall be required to be delivered after the Closing Date
pursuant to arrangements and timing to be mutually agreed by the Administrative
Agent and the Borrower acting reasonably but in any event no later than 90 days
following the Closing Date (or such later date as may be reasonably agreed
between the Administrative Agent and the Borrower)). For purposes hereof,
“Specified Representations” means the representations and warranties of the
Borrower and the Guarantors set forth in the Facilities Documentation relating
to corporate or other organizational existence, power and authority, due
authorization, execution and delivery and enforceability and no conflicts with
laws or charter documents, in each case, related to, the entering into and
performance of the Facilities Documentation; solvency as of the Closing Date
(after giving effect to the Transactions) of Holdings and its subsidiaries on a
consolidated basis; Federal Reserve margin regulations; the Investment Company
Act; and, subject to the parenthetical in the immediately preceding sentence,
creation, validity and perfection of security interests in the Collateral. This
paragraph, and the provisions herein, shall be referred to as the “Certain Funds
Provisions”.

7. Indemnity.

To induce the Commitment Parties to enter into this Commitment Letter and the
Fee Letter and to proceed with the documentation of the Credit Facilities, you
agree (a) to indemnify and hold harmless each Commitment Party, their respective
affiliates and the respective officers, directors, employees, agents,
controlling persons, advisors and other representatives and their successors and
permitted assigns of each of the foregoing (each, an “Indemnified Person”), from
and against any and all losses, claims, damages and liabilities of any kind or
nature and

 

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reasonable and documented and invoiced out-of-pocket fees and expenses
(including, without limitation, the reasonable fees, disbursements and other
charges of counsel), to which any such Indemnified Person may become subject to
the extent arising out of, resulting from or in connection with, this Commitment
Letter (including the Term Sheet), the Fee Letter, the Transactions or any
related transaction contemplated hereby, the Credit Facilities or any use of the
proceeds thereof or any claim, litigation, investigation or proceeding
(including any inquiry or investigation) relating to any of the foregoing (any
of the foregoing, a “Proceeding”), regardless of whether any such Indemnified
Person is a party thereto, whether or not such Proceedings are brought by you,
your equity holders, affiliates, creditors or any other third person, and to
reimburse each such Indemnified Person upon demand for any reasonable and
documented and invoiced out-of-pocket legal expenses of one firm of counsel for
all such Indemnified Persons, taken as a whole and, if necessary, of a single
local counsel in each appropriate jurisdiction (which may include a single
special counsel acting in multiple jurisdictions) for all such Indemnified
Persons, taken as a whole (and, in the case of an actual or perceived conflict
of interest where the Indemnified Person affected by such conflict informs you
of such conflict and thereafter retains its own counsel, of another firm of
counsel for such affected Indemnified Person) or other reasonable and documented
and invoiced out-of-pocket fees and expenses incurred in connection with
investigating or defending any of the foregoing; provided that the foregoing
indemnity will not, as to any Indemnified Person, apply to losses, claims,
damages, liabilities or related expenses to the extent that they have resulted
from (i) the willful misconduct, bad faith or gross negligence of such
Indemnified Person or any of such Indemnified Person’s affiliates or any of its
or their respective officers, directors, employees, agents, controlling persons,
advisors or other representatives (as determined by a court of competent
jurisdiction in a final and non-appealable decision), (ii) a material breach of
the obligations of such Indemnified Person or any of such Indemnified Person’s
affiliates under this Commitment Letter, the Term Sheet or the Fee Letter (as
determined by a court of competent jurisdiction in a final and non-appealable
decision) or (iii) any Proceeding that does not involve an act or omission by
you or any of your affiliates (as determined by a court of competent
jurisdiction in a final and non-appealable decision) and that is brought by an
Indemnified Person against any other Indemnified Person (other than claims
against the Lead Arrangers or the Administrative Agent in acting in such
capacity) and (b) to the extent the Closing Date occurs, to reimburse each
Commitment Party from time to time, upon presentation of a summary statement,
for all reasonable and documented and invoiced out-of-pocket expenses (including
but not limited to reasonable and documented and invoiced fees and expenses of
each Commitment Party’s consultants (to the extent any such consultant has been
retained with your prior written consent (such consent not to be unreasonably
withheld, conditioned or delayed)), syndication expenses, travel expenses and
reasonable fees, disbursements and other charges of counsel to the Commitment
Parties identified in the Term Sheet and of a single local counsel to the
Commitment Parties in each appropriate jurisdiction (which may include a single
special counsel acting in multiple jurisdictions) and of such other counsel
retained with your prior written consent (such consent not to be unreasonably
withheld, conditioned or delayed)), in each case incurred in connection with the
Credit Facilities and the preparation, negotiation and enforcement of this
Commitment Letter, the Fee Letter, the Facilities Documentation and any security
arrangements in connection therewith (collectively, the “Expenses”). The
foregoing provisions in this paragraph shall be superseded in each case, to the
extent covered thereby, by the applicable provisions contained in the Facilities
Documentation upon execution thereof and thereafter shall have no further force
and effect. You acknowledge that we may receive a benefit, including without
limitation, a discount, credit or other accommodation, from any of such counsel
based on the fees such counsel may receive on account of their relationship with
us including, without limitation, fees paid pursuant hereto.

 

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Notwithstanding any other provision of this Commitment Letter, (a) no
Indemnified Person shall be liable for any damages arising from the use by
others of information or other materials obtained through internet, electronic,
telecommunications or other information transmission systems, except to the
extent that such damages have resulted from the willful misconduct, bad faith or
gross negligence of such Indemnified Person or any of such Indemnified Person’s
affiliates or any of its or their respective officers, directors, employees,
agents, advisors or other representatives (as determined by a court of competent
jurisdiction in a final and non-appealable decision) and (b) none of we, you,
the Investors (as defined below), the Company or any affiliates of any of the
foregoing or any officer, director, employee, agent, controlling person, advisor
or other representative of the foregoing or any successor or permitted assign of
any of the foregoing shall be liable for any indirect, special, punitive or
consequential damages (including, without limitation, any loss of profits,
business or anticipated savings) (other than, in the case of you, in respect of
any such damages incurred or paid by an Indemnified Party to a third party) in
connection with this Commitment Letter, the Fee Letter, the Transactions
(including the Credit Facilities and the use of proceeds thereunder), or with
respect to any activities related to the Credit Facilities, including the
preparation of this Commitment Letter, the Fee Letter and the Facilities
Documentation; provided that nothing contained in this paragraph shall limit
your indemnity and reimbursement obligations to the extent set forth in the
immediately preceding paragraph.

You shall not be liable for any settlement of any Proceeding effected without
your consent (which consent shall not be unreasonably withheld, conditioned or
delayed), but if settled with your written consent or if there is a final and
non-appealable judgment by a court of competent jurisdiction for the plaintiff
in any such Proceeding, you agree to indemnify and hold harmless each
Indemnified Person from and against any and all losses, claims, damages,
liabilities and expenses by reason of such settlement or judgment in accordance
with the other provisions of this Section 7.

You shall not, without the prior written consent of any Indemnified Person
(which consent shall not be unreasonably withheld, conditioned or delayed),
effect any settlement of any pending or threatened Proceedings in respect of
which indemnity could have been sought hereunder by such Indemnified Person
unless such settlement (a) includes an unconditional release of such Indemnified
Person in form and substance reasonably satisfactory to such Indemnified Person
from all liability or claims that are the subject matter of such Proceedings and
(b) does not include any statement as to or any admission of fault, culpability,
wrong doing or a failure to act by or on behalf of any Indemnified Person. It is
further agreed that the Commitment Parties shall be severally liable in respect
of their respective commitments to the Credit Facilities, on a several, and not
joint, basis with any other Lender; provided that without your consent no
Commitment Party shall be relieved, released or novated from its obligations
hereunder (including its obligation to fund the Credit Facilities on the Closing
Date subject to the satisfaction of all conditions to such obligation set forth
in the section entitled “Conditions Precedent to Each Borrowing” in the Term
Sheet and in the Summary of Additional Conditions attached hereto as Exhibit B
in connection with any syndication, assignment or participation of all or any
portion of the Credit Facilities, including its commitments in respect thereof,
until after the Closing Date has occurred.

 

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8. Sharing of Information, Absence of Fiduciary Relationships, Affiliate
Activities.

You acknowledge that the Commitment Parties and their affiliates may be
providing debt financing, equity capital or other services (including, without
limitation, financial advisory services) to other persons in respect of which
you, the Company and your and their respective affiliates may have conflicting
interests regarding the transactions described herein and otherwise. None of the
Commitment Parties or their affiliates will use confidential information
obtained from you by virtue of the transactions contemplated by this Commitment
Letter or their other relationships with you in connection with the performance
by them or their affiliates of services for other persons, and none of the
Commitment Parties or their affiliates will furnish any such information to
other persons, except to the extent permitted below. You also acknowledge that
none of the Commitment Parties or their affiliates has any obligation to use in
connection with the transactions contemplated by this Commitment Letter, or to
furnish to you, confidential information obtained by them from other persons.

You also acknowledge that each of the Commitment Parties may be a full service
securities firm engaged, either directly or through their affiliates, in various
activities, including securities trading, commodities trading, investment
management, financing and brokerage activities and financial planning and
benefits counseling for both companies and individuals. In the ordinary course
of these activities, certain of the Commitment Parties and their respective
affiliates may actively engage in commodities trading or trade the debt and
equity securities (or related derivative securities) and financial instruments
(including bank loans and other obligations) of the Company and other companies
which may be the subject of the arrangements contemplated by this Commitment
Letter for their own account and for the accounts of their customers and may at
any time hold long and short positions in such securities. Certain of the
Commitment Parties or their respective affiliates may also co-invest with, make
direct investments in, and invest or co-invest client monies in or with funds or
other investment vehicles managed by other parties, and such funds or other
investment vehicles may trade or make investments in securities of you, the
Company or other companies which may be the subject of the arrangements
contemplated by this Commitment Letter or engage in commodities trading with any
thereof.

The Commitment Parties and their respective affiliates may have economic
interests that conflict with those of the Company and you. You agree that the
Commitment Parties will act under this letter as independent contractors and
that nothing in this Commitment Letter or the Fee Letter will be deemed to
create an advisory, fiduciary or agency relationship or fiduciary or other
implied duty between the Commitment Parties and you and the Company, your and
their respective equity holders or your and their respective affiliates. You
acknowledge and agree that (a) the transactions contemplated by this Commitment
Letter and the Fee Letter are arm’s-length commercial transactions between the
Commitment Parties and their affiliates, on the one hand, and you and the
Company, on the other, (b) in connection therewith and with the process leading
to such transaction each Commitment Party and its applicable affiliates (as the
case may be) is acting solely as a principal and not as agents or fiduciaries of
you, the Company, your and their management, stockholders, creditors, affiliates
or any other person, (c) the Commitment Parties and their applicable affiliates
(as the case may be) have not assumed an advisory or fiduciary

 

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responsibility or any other obligation in favor of you or your affiliates with
respect to the transactions contemplated hereby or the process leading thereto
(irrespective of whether the Commitment Parties or any of their respective
affiliates have advised or are currently advising you or the Company on other
matters) except the obligations expressly set forth in this Commitment Letter
and the Fee Letter, (d) you are capable of evaluating and understanding, and you
understand and accept, the terms, risks and conditions of the transactions
contemplated by this Commitment Letter and (e) you have consulted your own
legal, accounting, regulatory, tax and financial advisors to the extent you
deemed appropriate. You further acknowledge and agree that you are responsible
for making your own independent judgment with respect to such transactions and
the process leading thereto. You agree that you will not claim that the
Commitment Parties or their applicable affiliates, as the case may be, have
rendered advisory services of any nature or respect, or owe a fiduciary or
similar duty to you or your affiliates, in connection with such transaction or
the process leading thereto.

9. Confidentiality.

You agree that you will not disclose, directly or indirectly, the Fee Letter and
the contents thereof or, prior to your acceptance hereof, this Commitment
Letter, the Term Sheet, the other exhibits and attachments hereto and the
contents of each thereof, or the activities of any Commitment Party pursuant
hereto or thereto, to any person or entity without the prior written approval of
the Lead Arrangers (such approval not to be unreasonably withheld, conditioned
or delayed), except (a) to certain other investors arranged by and/or designated
by Warburg Pincus LLC and its affiliates (“Warburg Pincus”) (collectively with
Warburg Pincus, the “Investors”), and to your and any of the Investors’
officers, directors, agents, employees, attorneys, accountants, advisors,
controlling persons or equity holders on a confidential and need-to-know basis,
(b) if the Commitment Parties consent in writing to such proposed disclosure or
(c) pursuant to the order of any court or administrative agency in any pending
legal, judicial or administrative proceeding, or otherwise as required by
applicable law or compulsory legal process or to the extent requested or
required by governmental and/or regulatory authorities, in each case based on
the reasonable advice of your legal counsel (in which case you agree, to the
extent practicable and not prohibited by applicable law, to inform us promptly
thereof prior to disclosure); provided that (i) you may disclose this Commitment
Letter (but not the Fee Letter) and the contents hereof to the Company, their
respective subsidiaries and their respective officers, directors, agents,
employees, attorneys, accountants, advisors, controlling persons or equity
holders, on a confidential and need-to-know basis, (ii) you may disclose the
Commitment Letter and its contents (but not the Fee Letter) in any syndication
or other marketing materials in connection with the Credit Facilities or in
connection with any public filing relating to the Transactions, (iii) you may
disclose the Term Sheet and the contents thereof, to potential Lenders and to
rating agencies in connection with obtaining ratings for the Borrower and the
Credit Facilities, (iv) you may disclose the aggregate fee amounts contained in
the Fee Letter as part of Projections, pro forma information or a generic
disclosure of aggregate sources and uses related to fee amounts related to the
Transactions to the extent customary or required in marketing materials for the
Credit Facilities or in any public filing relating to the Transactions and
(v) to the extent portions thereof have been redacted in a manner to be
reasonably agreed by us (including the portions thereof addressing fees payable
to the Commitment Parties and/or the Lenders), you may disclose the Fee Letter
and the contents thereof to the Company, its subsidiaries and their respective
officers, directors, agents, employees, attorneys, accountants, advisors,
controlling persons or equity holders, on a confidential and need-to-know basis.

 

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The Commitment Parties and their affiliates will use all confidential
information provided to them or such affiliates by or on behalf of you hereunder
or in connection with the Acquisition and the related Transactions solely for
the purpose of providing the services which are the subject of this Commitment
Letter and shall treat confidentially all such information and shall not
publish, disclose or otherwise divulge, such information; provided that nothing
herein shall prevent the Commitment Parties and their affiliates from disclosing
any such information (a) pursuant to the order of any court or administrative
agency or in any pending legal, judicial or administrative proceeding, or
otherwise as required by applicable law or compulsory legal process based on the
advice of counsel (in which case the Commitment Parties agree (except with
respect to any audit or examination conducted by bank accountants or any
governmental bank regulatory authority exercising examination or regulatory
authority), to the extent practicable and not prohibited by applicable law, to
inform you promptly thereof prior to disclosure), (b) upon the request or demand
of any regulatory authority having jurisdiction over the Commitment Parties or
any of their respective affiliates (in which case the Commitment Parties agree,
to the extent practicable and not prohibited by applicable law, to inform you
promptly thereof prior to disclosure), (c) to the extent that such information
becomes publicly available other than by reason of improper disclosure by the
Commitment Parties or any of their affiliates or any related parties thereto in
violation of any confidentiality obligations owing to you, the Investors, the
Company or any of your or their respective affiliates (including those set forth
in this paragraph), (d) to the extent that such information is received by any
Commitment Party from a third party that is not, to such Commitment Party’s
knowledge, subject to or in breach of contractual or fiduciary confidentiality
obligations owing to you, the Investors, the Company or any of your or their
respective affiliates or related parties, (e) to the extent that such
information is independently developed by the Commitment Parties, (f) to the
Commitment Parties’ affiliates and to its and their respective employees, legal
counsel, independent auditors, professionals and other experts or agents who
need to know such information in connection with the Transactions or in the case
of such affiliates for reporting and other administrative purposes and who are
informed of the confidential nature of such information and are or have been
advised of their obligation to keep information of this type confidential,
(g) to potential or prospective Lenders, participants or assignees and to any
direct or indirect contractual counterparty to any swap or derivative
transaction relating to the Borrower or any of its subsidiaries, in each case
who agree to be bound by the terms of this paragraph (or language substantially
similar to this paragraph) including pursuant to standard “click through”
agreements) or (h) for purposes of establishing a “due diligence” defense;
provided that the disclosure of any such information to any Lenders or
prospective Lenders or participants or prospective participants referred to
above shall be made subject to the acknowledgment and acceptance by such Lender
or prospective Lender or participant or prospective participant that such
information is being disseminated on a confidential basis (on substantially the
terms set forth in this paragraph or as is otherwise reasonably acceptable to
you and each Commitment Party, including, without limitation, as agreed in any
marketing materials) in accordance with the standard syndication processes of
the Lead Arrangers or customary market standards for dissemination of such type
of information (which may include standard “click through” agreements. The
Commitment Parties’ and their affiliates’, if any, obligations under this
paragraph shall terminate automatically and be superseded by the confidentiality
provisions in the definitive documentation relating to the Credit Facilities
upon the initial funding thereunder; provided that if the Closing Date does not
occur, this paragraph shall automatically terminate on the second anniversary
hereof.

 

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10. Miscellaneous.

This Commitment Letter and the commitments hereunder shall not be assignable by
any party hereto (other than by you to the Company or another newly formed
entity created for the purpose of consummating the Acquisition, so long as the
Company or such other newly formed entity is, or substantially simultaneously
with such assignment will be, controlled by you and after giving effect to the
Transactions shall (directly or through a wholly-owned subsidiary) own the
Company or be the successor to the Company) without the prior written consent of
each other party hereto (such consent not to be unreasonably withheld,
conditioned or delayed) (and any attempted assignment without such consent shall
be null and void). This Commitment Letter and the commitments hereunder are
intended to be solely for the benefit of the parties hereto (and Indemnified
Persons) and are not intended to confer any benefits upon, or create any rights
in favor of, any person other than the parties hereto (and Indemnified Persons
to the extent expressly set forth herein). Subject to the limitations set forth
in Section 3 above, the Commitment Parties reserve the right to employ the
services of their affiliates or branches in providing services contemplated
hereby and to allocate, in whole or in part, to their affiliates or branches
certain fees payable to the Commitment Parties in such manner as the Commitment
Parties and their affiliates or branches may agree in their sole discretion and,
to the extent so employed, such affiliates and branches shall be entitled to the
benefits and protections afforded to, and subject to the provisions governing
the conduct of, the Commitment Parties hereunder. This Commitment Letter may not
be amended or any provision hereof waived or modified except by an instrument in
writing signed by the Commitment Parties, the Lead Arrangers and you. This
Commitment Letter may be executed in any number of counterparts, each of which
shall be deemed an original and all of which, when taken together, shall
constitute one agreement. Delivery of an executed counterpart of a signature
page of this Commitment Letter by facsimile transmission or other electronic
transmission (i.e., a “pdf” or “tif”) shall be effective as delivery of a
manually executed counterpart hereof. This Commitment Letter (including the
exhibits hereto), together with the Fee Letter dated the date hereof, (a) are
the only agreements that have been entered into among the parties hereto with
respect to the Credit Facilities and (b) supersede all prior understandings,
whether written or oral, among us with respect to the Credit Facilities and sets
forth the entire understanding of the parties hereto with respect thereto. THIS
COMMITMENT LETTER (INCLUDING, WITHOUT LIMITATION, ANY CLAIMS SOUNDING IN
CONTRACT LAW OR TORT LAW ARISING OUT OF THE SUBJECT MATTER HEREOF) SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION; provided, however, that (i) the
determination of the accuracy of any Specified Merger Agreement Representation,
(ii) the interpretation of whether a Material Adverse Effect (as defined in the
Merger Agreement) has occurred with respect to the Company and (iii) the
determination of whether the Acquisition has been consummated in accordance with
the terms of the Merger Agreement shall, in each case, be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.

 

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EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY
SUIT, ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY
PARTY RELATED TO OR ARISING OUT OF THIS COMMITMENT LETTER OR THE FEE LETTER OR
THE PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER.

Each of the parties hereto agrees that this Commitment Letter is a binding and
enforceable agreement with respect to the subject matter contained herein,
including an agreement to negotiate in good faith the Facilities Documentation
by the parties hereto in a manner consistent with this Commitment Letter, it
being acknowledged and agreed that the commitment provided hereunder is subject
to the conditions precedent expressly described in Section 1 of this Commitment
Letter (including, without limitation, the execution and delivery of the
Facilities Documentation, which shall, in each case, be consistent with the
Documentation Principles). Reasonably promptly after the execution of this
Commitment Letter, the parties hereto shall proceed with the negotiation of the
Facilities Documentation for the purpose of executing and delivering the
Facilities Documentation as soon as reasonably possible.

Each of the parties hereto hereby irrevocably and unconditionally (a) submits,
for itself and its property, to the exclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting, in each case, in
the Borough of Manhattan in the City of New York, and any appellate court from
any thereof, in any suit, action or proceeding arising out of or relating to
this Commitment Letter, the Fee Letter or the transactions contemplated hereby
or thereby, or for recognition or enforcement of any judgment, and agrees that
all claims in respect of any such suit, action or proceeding shall be heard and
determined in such New York State court or, to the extent permitted by law, in
such Federal court, (b) waives, to the fullest extent it may legally and
effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Commitment Letter, the Fee Letter or the transactions contemplated hereby
in any New York State or in any such Federal court, (c) waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such suit, action or proceeding in any such court and (d) agrees that a final
judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Each of the parties hereto agrees that service of process,
summons, notice or document by registered mail addressed to you or us at the
addresses set forth above shall be effective service of process for any suit,
action or proceeding brought in any such court.

We hereby notify you that pursuant to the requirements of the USA PATRIOT Act
(Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT
Act”)), each of us and each of the Lenders may be required to obtain, verify and
record information that identifies the Borrower and the Guarantors, which
information may include their names, addresses, tax identification numbers and
other information that will allow each of us and the Lenders to identify the
Borrower and the Guarantors in accordance with the PATRIOT Act. This notice is
given in accordance with the requirements of the PATRIOT Act and is effective
for each of us and the Lenders.

If the Closing Date occurs, you agree that the Commitment Parties shall have the
right to place advertisements in financial and other newspapers and journals at
their own expense describing their services to you and the Company; provided
that the Commitment Parties will submit a copy of any such advertisements to you
for your prior approval, which approval will not be unreasonably withheld.

 

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The indemnification, compensation (if applicable), reimbursement (if
applicable), jurisdiction, governing law, venue, waiver of jury trial,
syndication and confidentiality provisions contained herein and in the Fee
Letter and the provisions of Section 8 of this Commitment Letter shall remain in
full force and effect regardless of whether Facilities Documentation shall be
executed and delivered and notwithstanding the termination or expiration of this
Commitment Letter or the Initial Lender’s commitments hereunder; provided that
your obligations under this Commitment Letter (other than your obligations with
respect to (a) assistance to be provided in connection with the syndication
thereof (including supplementing and/or correcting Information and Projections)
prior to the Syndication Date and (b) confidentiality of the Fee Letter and the
contents thereof) shall automatically terminate and be superseded by the
provisions of the Facilities Documentation upon the initial funding thereunder,
and you shall automatically be released from all liability in connection
therewith at such time.

Section headings used herein are for convenience of reference only and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Commitment Letter.

If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms of this Commitment Letter and of the Fee Letter by
returning to MLPFS on behalf of the Commitment Parties, executed counterparts
hereof and of the Fee Letter not later than 11:59 p.m., New York City time, on
August 27, 2012. The Initial Lenders’ commitments and the obligations of the
Lead Arrangers hereunder will expire at such time in the event that MLPFS has
not received such executed counterparts in accordance with the immediately
preceding sentence. If you do so execute and deliver to us this Commitment
Letter and the Fee Letter, we agree to hold our commitment available for you
until the earliest of (a) after execution of the Merger Agreement and prior to
the consummation of the Acquisition, the termination of the Merger Agreement in
accordance with its terms, (b) the consummation of the Acquisition with or
without the funding of the Credit Facilities and (c) 11:59 p.m., New York City
time, on December 31, 2012. Upon the occurrence of any of the events referred to
in the preceding sentence, this Commitment Letter and the commitments of each of
the Commitment Parties hereunder and the agreements of the Lead Arrangers to
provide the services described herein shall automatically terminate unless the
Commitment Parties shall, in their discretion, agree to an extension in writing.

[Remainder of this page intentionally left blank]

 

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We are pleased to have been given the opportunity to assist you in connection
with the financing for the Transactions.

 

Very truly yours, BANK OF AMERICA, N.A. By   /s/ Alysa Trakas   Name: Alysa
Trakas   Title: Director MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By  
/s/ A. Britt Canady   Name: A. Britt Canady   Title: Managing Director

[Signature Page to Commitment Letter]

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SOCIÉTÉ GÉNÉRALE By   /s/ Richard O. Knowlton   Name: Richard O. Knowlton  
Title: Managing Director SG AMERICAS SECURITIES, LLC By   /s/ Richard O.
Knowlton   Name: Richard O. Knowlton   Title: Managing Director

[Signature Page to Commitment Letter]

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BANK OF MONTREAL By   /s/ Mark W. Piekos   Name: Mark W. Piekos   Title:
Managing Director

[Signature Page to Commitment Letter]

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JPMORGAN CHASE BANK, N.A. By   /s/ Robert B. Greene   Name: Robert B. Greene  
Title: Credit Executive

[Signature Page to Commitment Letter]

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Accepted and agreed to as of

the date first above written:

TORNIER, INC. By   /s/ Douglas W. Kohrs   Name: Douglas W. Kohrs   Title:
President and Chief Executive Officer

[Signature Page to Commitment Letter]

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EXHIBIT A

CONFIDENTIAL

August 23, 2012

Project Oscar

$15.0 million Senior Secured Multicurrency Revolving Facility

$15.0 million Senior Secured EUR Revolving Facility

$75.0 million Senior Secured USD Term Facility

$40.0 million Senior Secured EUR Term Facility

Summary of Principal Terms and Conditions

 

Borrower:    Tornier, Inc., a Delaware corporation (the “Borrower”) and the
wholly-owned subsidiary (whether directly or indirectly) of Tornier, N.V., a
Dutch naamloze vennootschap (“Holdings”). Administrative Agent and
Collateral Agent:    Bank of America, N.A. (“Bank of America”) or one of its
affiliates, will act as sole administrative agent and sole collateral agent (in
such capacities, the “Administrative Agent”) for a syndicate of banks, financial
institutions and other institutional lenders determined in consultation with the
Borrower (and in any event excluding any Disqualified Lender) (together with the
Initial Lenders, the “Lenders”), and will perform the duties customarily
associated with such roles. Joint Lead Arrangers and
Joint Bookrunners:    Merrill Lynch, Pierce, Fenner & Smith Incorporated (or any
of its affiliates designated to act in such capacity, “MLPFS”) and SG Americas
Securities, LLC (“SGAS”), will each act as a joint lead arranger and joint
bookrunner for the Credit Facilities (as defined below) (each, in such
capacities, a “Lead Arranger”) and will perform the duties customarily
associated with such roles. Syndication Agent:    SGAS (in such capacity, the
“Syndication Agent”). Documentation Agent:    Bank of Montreal (“BMO”), acting
through its trade name BMO Capital Markets, and JPMorgan Chase Bank, N.A.
(“JPMCB”), will each act as a co-documentation agent for the Credit Facilities
(as defined below) (each, in such capacities, a “Documentation Agent”) and will
perform the duties customarily associated with such roles.. Credit Facilities:
  

(A)   A senior secured term loan facility denominated in dollars in an aggregate
principal amount of up to $75.0 million (the “USD Term Facility”; the loans
thereunder, the “USD Term Loans”). The USD Term Loans will be offered with 100
bps of original issue discount or upfront fees on the amount thereof.

 

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(B)   A senior secured term loan facility denominated in euro in an aggregate
principal amount of up to the equivalent of $40.0 million (the “EUR Term
Facility” and together with the USD Term Facility, the “Term Facilities”; the
loans thereunder, the “EUR Term Loans” and together with the USD Term Loans, the
“Term Loans”). The EUR Term Loans will be offered with 150 bps of original issue
discount or upfront fees on the amount thereof.

  

(C)   A senior secured revolving credit facility denominated in, at the election
of the Borrower, dollars, euro, pound sterling and yen in an aggregate principal
amount of up to the equivalent of $15.0 million (the “Multicurrency Revolving
Facility”), of which up to an amount to be agreed will be available through a
subfacility in the form of letters of credit. The Multicurrency Revolving
Facility will be offered with 100 bps of upfront fees on the commitments
thereunder on the Closing Date.

 

(D)   A senior secured revolving credit facility denominated in euro in an
aggregate principal amount of up to the equivalent of $15.0 million (the “EUR
Revolving Facility” and, together with the Multicurrency Revolving Facility, the
“Revolving Facilities”), of which up to an amount to be agreed will be available
through a subfacility in the form of letters of credit. The EUR Revolving
Facility will be offered with 100 bps of upfront fees on the commitments
thereunder on the Closing Date.

  

The Term Facilities and the Revolving Facilities are referred to collectively
herein as the “Credit Facilities”.

 

In connection with the Multicurrency Revolving Facility, subject to customary
provisions in the event of defaulting Lenders, Bank of America (in such
capacity, the “Swingline Lender”) will make available to the Borrower a
swingline facility under which the Borrower may make short-term borrowings in
U.S. Dollars of up to an amount to be agreed. Except for purposes of calculating
the Commitment Fee described on Annex I hereto, any such swingline borrowings
will reduce availability under the Multicurrency Revolving Facility on a
dollar-for-dollar basis. Each Lender under the Multicurrency Revolving Facility
shall, promptly upon request by the Swingline Lender, fund to the Swingline
Lender its pro rata share of any swingline borrowings.

 

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(C)   The Borrower shall be entitled on one or more occasions and subject to
satisfaction of customary conditions to incur additional term loans (the
“Additional Term Loans”) under a Term Facility or under a new term loan facility
or to increase the aggregate commitments (“Additional Revolving Credit
Commitments”) under either or both of the Revolving Facilities in an aggregate
principal amount, with respect to all such Additional Term Loans and Additional
Revolving Credit Commitments, of up to $50.0 million and to have the same
guarantees as, and be secured on a pari passu basis by the same collateral
securing, the Credit Facilities; provided that (a) the Senior Secured Net
Leverage Ratio (as defined below) calculated on a pro forma basis and assuming
in the case of any Additional Revolving Credit Commitments that such commitments
are fully drawn, shall be no greater than the Senior Secured Net Leverage Ratio
on the Closing Date (after giving pro forma effect to the transactions
contemplated hereunder, including the initial borrowings made on the Closing
Date), (b) the Leverage Ratio (as defined below and assuming in the case of any
Additional Revolving Credit Commitments that such commitments are fully drawn),
calculated on a pro forma basis, shall be 0.25x less than the applicable maximum
Leverage Ratio under the financial covenants as of the last day of the most
recently ended fiscal quarter for which financial information has been delivered
to the Lenders, (c) no event of default or default exists or would exist after
giving effect thereto, (d) all financial covenants would be satisfied on a pro
forma basis on the date of incurrence as of the last day of the most recently
ended fiscal quarter for which financial information has been delivered to the
Lenders, after giving effect to such Additional Term Loans and Additional
Revolving Credit Commitments (and assuming in the case of any Additional
Revolving Credit Commitments that such commitments are fully drawn) and other
customary and appropriate pro forma adjustment events, including any other
acquisitions or dispositions after the beginning of the relevant determination
period but prior to or simultaneous with the borrowing of such Additional Term
Loans or establishment of such Additional Revolving Credit Commitments, (e) the
maturity date of the Additional Term Loans shall be no earlier than the maturity
date of the applicable Term Facility, (f) the average life to maturity of the
Additional Term Loans shall be no shorter than the remaining average life to
maturity of the applicable Term Facility, (g) the Additional Term Loans shall be
subject to a “most favored nation” pricing

 

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provision that ensures that the initial yield on the Additional Term Loans does
not exceed, by more than 50 basis points, the yield on the applicable Term
Facility (in each case taking into account any applicable original issue
discount, upfront fees, applicable margins and LIBOR “floor” , with upfront fees
and original issue discount equated to interest margins based on an assumed
three year life to maturity) and (h) the other terms and documentation in the
respect thereof, to the extent not consistent with the Credit Facilities, shall
otherwise be satisfactory to the Administrative Agent (such satisfaction not to
be unreasonably withheld, conditioned or delayed). The Borrower may (but is not
required to) seek commitments in respect of Additional Term Loans or Additional
Revolving Credit Commitments from existing Lenders (each of which shall be
entitled to agree or decline to participate in its sole discretion, to the
extent so requested) and additional banks, financial institutions and other
institutional lenders who will become Lenders in connection therewith (subject
to the consent of the Administrative Agent, Swingline Lender and Issuing Bank in
each case , if such consent would be required under the heading “Assignments and
Participations” for an assignment of loans or commitments with respect to such
Credit Facility). The terms and provisions of the Additional Revolving Credit
Commitments shall be identical to those of the commitments under the Revolving
Facilities.

Documentation:    The definitive documentation for the Credit Facilities,
including the credit agreement (the “Credit Agreement”), the Security Documents
(as defined below) and related ancillary agreements, certificates, schedules and
other documents (a) will be substantially identical to the credit agreement and
related documentation entered into by EIG Investors Corp. (the “Precedent Credit
Agreement”), as in effect on its closing date and (b) will contain only those
representations, warranties, covenants and events of default and other terms
expressly set forth in this Term Sheet (subject to changes permitted pursuant to
the “flex” provisions contained in the Fee Letter), together with other
customary loan document provisions to be mutually agreed upon (it being
understood and agreed that the definitive terms of which will be negotiated in
good faith to give due regard to the terms of the Transactions (including the
size of the Credit Facilities and the pro forma leverage profile of the
Borrower) and differences related to the Borrower, the Company and their
businesses (including the consolidated results of operations of the Borrower and
the Company at that time and the

 

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   industry in which they operate), and, in respect of the Security Documents,
any local law requirements and/or as is customary under foreign law for
transactions of this type and shall be consistent with this Term Sheet
(collectively, the “Documentation Principles”). Purpose:   

(A)   The proceeds of the Term Facilities will be used by the Borrower, on the
date of the initial borrowing thereunder (the “Closing Date”), solely to (i) to
pay the consideration payable to the Sellers under the Merger Agreement in
connection with the Acquisition, (ii) to pay the fees and expenses incurred in
connection with the Transactions and (iii) to repay existing indebtedness of the
Tornier Group and the Company and its subsidiaries.

  

(B)   The letters of credit and proceeds of loans under the Revolving Facilities
will be used by the Borrower and its subsidiaries from time to time for working
capital and other general corporate purposes (including, without limitation,
financing permitted acquisitions and for any other purpose not prohibited by the
Facilities Documentation).

Availability:   

(A)   Each Term Facility will be available in a single drawing on the Closing
Date. Amounts borrowed under the Term Facilities that are repaid or prepaid may
not be reborrowed.

  

(B)   The loans under each Revolving Facility will be available at any time
after the Closing Date and prior to the final maturity of such Revolving
Facility, in minimum principal amounts and upon notice to be agreed upon;
provided that loans under the Revolving Facilities may be borrowed on the
Closing Date to fund any upfront fees resulting from the exercise of the flex
provisions set forth in the Fee Letter and letters of credit in an amount to be
mutually agreed upon may be issued on the Closing Date in order to, among other
things, backstop or replace letters of credit outstanding on the Closing Date
under facilities no longer available to the Borrower or its subsidiaries as of
the Closing Date. Amounts repaid under the Revolving Facilities may be
reborrowed.

Interest Rates and Fees:    As set forth on Annex I hereto. Default Rate:   
Upon the occurrence and during the continuance of any payment or bankruptcy
Event of Default, with respect to all overdue principal owing under the Credit
Facilities, the applicable interest rate (including those obligations which are
determined by reference to the rate applicable to any other obligation) plus
2.00%, and with respect to any other overdue amount (including overdue
interest), the interest rate applicable to Base Rate loans plus 2.00% per annum.

 

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Letters of Credit:    Subject to customary provisions in the event of defaulting
Lenders, letters of credit under each Revolving Facility will be issued by Bank
of America or an affiliate thereof or another Lender acceptable to the Borrower
and the Administrative Agent (the “Issuing Bank”). Each letter of credit shall
expire not later than the earlier of (a) twelve months after its date of
issuance and (b) the fifth business day prior to the final maturity of such
Revolving Facility; provided, however, that any letter of credit may provide for
renewal thereof for additional periods of up to 12 months (which in no event
shall extend beyond the date referred to in clause (b) above except to the
extent cash collateralized or backstopped pursuant to arrangements reasonably
satisfactory to the relevant Issuing Bank). The face amount of any outstanding
letter of credit issued under the Revolving Facilities (and, without
duplication, any unpaid drawing in respect thereof) will reduce availability
under the applicable Revolving Facility on a dollar-for-dollar (or equivalent)
basis.    Drawings under any letter of credit shall be reimbursed by the
Borrower (whether with its own funds or with proceeds of loans under such
Revolving Facility) by the next business day. To the extent that the Borrower
does not reimburse the applicable Issuing Bank on such day, the Lenders under
such Revolving Facility shall be irrevocably obligated to reimburse the Issuing
Bank pro rata based upon their respective Revolving Facility commitments.    The
issuance of all letters of credit shall be subject to the customary procedures
of the Issuing Bank. Final Maturity and
Amortization:   

(A)   Term Facilities

 

Each Term Facility will mature on the date that is five years after the Closing
Date, and will amortize in quarterly installments (beginning March 31, 2013) in
an aggregate annual amount as set forth in the following table:

 

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Year 1

     2.5 % 

Year 2

     2.5 % 

Year 3

     5.0 % 

Year 4

     5.0 % 

Year 5

     7.5 % 

Maturity

     Remainder   

 

  

(B)   Revolving Facilities

 

Each Revolving Facility will mature and the commitments thereunder will
terminate on the date that is five years after the Closing Date.

Guarantees:    All obligations of the Borrower under the Credit Facilities and
all obligations of Holdings and its subsidiaries under any interest rate
protection or other hedging arrangements or cash management arrangements entered
into with the Administrative Agent, the Lead Arrangers, an entity that is a
Lender under the Credit Facilities at the time of such transaction or any
affiliate of any of the foregoing, whether or not it continues to be a Lender or
an affiliate (“Hedging and Cash Management Arrangements”), will be guaranteed to
the extent permitted by applicable law (the “Guarantees”) by Holdings, Tornier
US Holdings, Inc., Tornier SAS, Tornier Orthopedics, Ltd., Tornier UK Ltd. and
by each existing or subsequently acquired or organized direct or indirect wholly
owned restricted subsidiary of the Borrower (the “Subsidiary Guarantors” and,
collectively, with Holdings, Tornier US Holdings, Inc., Tornier SAS, Tornier
Orthopedics, Ltd., Tornier UK Ltd., the “Guarantors”; the Borrower and the
Guarantors are referred to collectively herein as the “Credit Parties”);
provided that the Guarantors shall not include: (a) unrestricted subsidiaries,
(b) immaterial subsidiaries (to be defined in a mutually acceptable manner as to
the revenues or assets of such immaterial subsidiaries), (c) any subsidiary
whose provision of a Guarantee would constitute an investment in “United States
property” by a controlled foreign corporation within the meaning of section 956
and 957 of the IRS Code (or any similar law or regulation in any applicable
jurisdiction) or otherwise result in a material adverse tax consequence, (d) any
subsidiary that is prohibited by applicable law, rule or regulation or (with
respect to the Company and its subsidiaries, by any contractual obligation
existing on the Closing Date from guaranteeing the Credit Facilities or which
would require governmental (including regulatory) or third party

 

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   consent, approval, license or authorization to provide a Guarantee unless
such consent, approval, license or authorization has been received after having
used commercially reasonable efforts to receive the same, (e) any subsidiary
whose provision of a Guarantee would conflict with the fiduciary duties of the
directors, contravene any legal prohibition on the directors or result in
personal or criminal liability or significant risk of legal liability and (f)
any subsidiary not required to grant security pursuant to the Agreed Security
Principles (as defined below).    Notwithstanding the foregoing, subsidiaries
may be excluded from the guarantee requirements in circumstances where the
Borrower and the Administrative Agent reasonably agree that the cost of
providing such a guarantee is excessive in relation to the value afforded
thereby. Security:    The Credit Facilities, the Guarantees and any Hedging and
Cash Management Arrangements (including those in existence on the Closing Date)
will be secured by a first priority (subject to permitted liens) security
interest in substantially all existing and after-acquired assets of the Credit
Parties (other than with respect to the Credit Parties located in France, as set
forth below) (collectively, subject to exclusions set forth below and, in the
case of security documents governed by English law, French law or Irish law,
subject to the Agreed Security Principles, the “Collateral”), including but not
limited to: (a) a perfected first-priority pledge of all the equity interests
held by the Credit Parties (which pledge, in the case of any foreign subsidiary
of a “United States Person” within the meaning of the IRS Code, shall be limited
to 100% of the non-voting equity interests (if any) and 65% of the voting equity
interests of such foreign subsidiary) and (b) (x) with respect to each Credit
Party located in Ireland, the United Kingdom and the United States, a perfected
first-priority (subject to permitted liens) security interests in, and mortgages
on, substantially all tangible and intangible assets of such Credit Parties and
(y) with respect to each Credit Party located in France, (i) deposit accounts,
(ii) intercompany loans and advances and (iii) intellectual property of such
Credit Parties, subject, in each case, in the case of security documents
governed by English law, French law or Irish law, to the Agreed Security
Principles (including but not limited to accounts receivable, inventory,
equipment, general intangibles, investment property, intellectual property,
certain real property, certain commercial tort claims, letter of credit rights,
intercompany notes and proceeds of the foregoing, but not including (i) trust
accounts, payroll accounts, zero balance

 

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   accounts and escrow accounts, in each case for so long as they remain such
type of account, (ii) any fee-owned real property with a book value of less than
an amount to be agreed (with any required mortgages being permitted to be
delivered post-closing) and real property leasehold interests, (iii) assets as
to which the costs of obtaining such security interest are excessive (as
reasonably determined by the Administrative Agent) in relation to the value of
the security to be afforded thereby, (iv) contracts that contain valid and
enforceable prohibitions on the assignment of such contract, but only so long as
and to the extent that such prohibition exists and is effective and valid
notwithstanding applicable Uniform Commercial Code anti-assignment provisions
(for the avoidance of doubt, the prohibitions described herein do not apply to
negative pledges or similar undertakings (outside the anti-assignment provisions
contained in and applicable to the contract sought to be assigned) in favor of a
lender or other contractual counterparty), (v) assets subject to capital leases
and purchase money financing permitted under the Credit Agreement to the extent
a pledge under the Security Documents would violate the terms of such lease or
financing, (vi) pledges of equity interests and assets of future
non-wholly-owned subsidiaries or joint ventures (which, for the avoidance of
doubt, may include wholly-owned subsidiaries) of the Borrower with respect to
assets or property acquired after the Closing Date to the extent the pledge
would violate the terms of shareholder or similar arrangements (including joint
venture agreements) relating to such subsidiary or joint venture, as the case
may be (so long as, with respect to any wholly-owned subsidiary, such
prohibition did not arise or was not contemplated in the acquisition or
formation thereof), (vii) assets sold in compliance with the Credit Agreement
(subject to exceptions to be agreed) to a person who is not a Credit Party,
(viii) assets owned by a Subsidiary Guarantor after release of the Subsidiary
Guarantor pursuant to the Credit Agreement, (ix) cash to secure letter of credit
reimbursement obligations to the extent such secured letters of credit are
issued or permitted under the Credit Agreement, (x) any application for
registration of a Trademark filed with the US Patent and Trademark Office
(“PTO”) on an intent-to-use basis until such time (if any) as a statement of use
or amendment to allege use is accepted by the PTO, at which time such Trademark
shall automatically become part of the Collateral and subject to the security
interest pledged, (xi) motor vehicles and other assets subject to certificates
of title and commercial tort claims with a value less than an amount to be
agreed, (xii) pledges and security interests prohibited by applicable law, rule
or regulation, (xiii) assets held in foreign jurisdictions (it being

 

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   understood that the Lenders shall not require the Borrower or any of its
subsidiaries to enter into any security agreements or pledge agreements governed
under foreign law) except (A) France as to the shares of TMG France SNC pledged
by Holdings and the assets pledged by Tornier SAS, (B) the United Kingdom as to
the stock and assets pledged by Tornier UK Ltd., and (C) Ireland as to the stock
and assets pledged by Tornier Orthopedics, Ltd., and any foreign law security
documents shall be subject to and agreed in accordance with a set of agreed
security principles to be mutually agreed between the parties (acting reasonably
and in good faith) (the “Agreed Security Principles”) (xiv) capital stock of
unrestricted subsidiaries and (xv) other exceptions to be agreed. Control
agreements will be required for certain deposit or other bank accounts and
certain securities and commodities accounts, subject to exclusions to be agreed
(including the exclusions set forth in clause (a) above and that there shall be
no requirement to put in place such control agreements in France, the United
Kingdom or Ireland), it being understood that the receipt of such control
agreements shall not be a condition to closing. No landlord lien waivers,
estoppels and collateral access letters will be required.    Neither Holdings,
the Borrower nor any Guarantor will be required to take any action with respect
to the creation of liens under foreign law with respect to any Collateral
(except (A) France as to the shares of TMG France SNC and the assets pledged by
Tornier SAS, (B) the United Kingdom as to the stock and assets pledged by
Tornier UK Ltd., and (C) Ireland as to the stock and assets pledged by Tornier
Orthopedics, Ltd.).    All the above-described pledges, security interests and
mortgages shall be created on terms and pursuant to documentation (the “Security
Documents”) consistent with the Documentation Principles. Mandatory Prepayments:
   Loans under the Term Facilities shall be prepaid (on a pro rata basis between
the Term Facilities) with (a) 50% of Excess Cash Flow (to be defined consistent
with the Documentation Principles) for each fiscal year beginning with the year
ending December 31, 2013 (which percentage shall be reduced to (i) 25% if the
Senior Secured Net Leverage Ratio (as defined below) at the end of such fiscal
year was less than a level to be agreed and (ii) 0% if the Senior Secured Net
Leverage Ratio at the end of such fiscal year was equal to or less than a level
to be agreed); provided that, in any fiscal year, any voluntary prepayments of
loans under the Term Facilities and loans under the Revolving Facilities (to the
extent commitments thereunder

 

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   are permanently reduced by the amount of such prepayments), other than
prepayments funded with the proceeds of the incurrence of indebtedness, shall be
credited against Excess Cash Flow prepayment obligations on a dollar-for-dollar
basis for such fiscal year, (b) 100% of the net cash proceeds (which will be
defined to exclude, among other things, an amount equal to any required tax
payments as a result of any such sale or other disposition) of all non-ordinary
course asset sales or other dispositions of property by Holdings and its
restricted subsidiaries (including proceeds from the sale of equity interests of
subsidiaries of the Borrower (to a person other than Holdings or another
subsidiary of Holdings) and insurance and condemnation proceeds) (subject to
thresholds, exceptions and reinvestment provisions to be agreed upon including
the right to reinvest 100% of such net cash proceeds within 360 days (or, if
commitments to reinvest are entered into within 360 days, within 180 days
following such 360-day period) and (c) 100% of the net cash proceeds of
issuances, offerings, placements, or incurrences of debt obligations of Holdings
and its restricted subsidiaries (other than any debt permitted to be incurred in
accordance with the Facilities Documentation and subject to other exceptions to
be agreed upon).    The above-described mandatory prepayments shall be applied
without premium or penalty in the direct order of maturity against the scheduled
amortization payments due within the 24 months following such payment and pro
rata to the remaining scheduled amortization payments under the Term Facilities.
Any Lender may elect to not retain its pro rata portion of any mandatory
prepayment, which declined amount may be retained by the Borrower.
Voluntary Prepayments and
Reductions in Commitments:    Voluntary reductions of the unutilized portion of
the commitments under the Revolving Facilities and prepayments of borrowings
under the Credit Facilities will be permitted at any time, in minimum principal
amounts to be mutually agreed upon, subject to reimbursement of the Lenders’
redeployment costs (excluding, in any event, loss of margin) in the case of a
prepayment of borrowings (other than Base Rate borrowings) on the last day of
the relevant interest period. All voluntary prepayments shall be applied pro
rata (with respect to the respective Lenders under each Term Facility) to each
Term Facility and any Additional Term Loans and in each case shall be applied as
directed by the Borrower to remaining amortization payments under each Term
Facility and any Additional Term Loans (and absent such direction, in direct
order of maturity thereof).

 

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Representations and
Warranties:    Subject in each case to the Documentation Principles, to be
applicable to Holdings and its restricted subsidiaries and limited to the
following: corporate status and good standing; power to execute; authorization;
organizational documents or agreements; legal, valid and binding documentation;
no consents; accuracy of financial statements and other information; no material
adverse change; absence of litigation; no violation of, or conflicts with,
applicable law, agreements or instruments, compliance with laws (including
ERISA, FDA and applicable comparable EU regulations, margin regulations,
environmental laws and laws applicable to sanctioned persons); payment of taxes;
ownership of properties; intellectual property; inapplicability of the
Investment Company Act; consolidated Closing Date solvency of the Credit
Parties; effectiveness of governmental approvals; labor matters; environmental
and other regulatory matters; use of proceeds; and validity, priority and
perfection of security interests in the Collateral; subject, in the case of each
of the foregoing representations and warranties, to customary qualifications and
limitations for materiality to be provided in the Facilities Documentation,
consistent with the Documentation Principles. Conditions Precedent to
Borrowing on the
Closing Date:    The availability of the initial borrowing or any other
extension of credit under the Credit Facilities on the Closing Date shall be
conditioned solely upon the satisfaction of the applicable conditions set forth
in Section 6 of the Commitment Letter and Exhibit B to the Commitment Letter,
delivery of notice of borrowing and the accuracy of the Specified Merger
Agreement Representations and the Specified Representations. Conditions
Precedent to
Each Credit Extension:    Delivery of borrowing notice or letter of credit
application, accuracy of representations and warranties, and absence of any
default. Affirmative
Covenants:    To be applicable to Holdings and its restricted subsidiaries and
limited to the following: maintenance of corporate existence and regulatory
approvals, licenses, permits, rights and privileges; delivery of annual and
quarterly consolidated financial statements, budgets and other information;
delivery of notices of default, litigation, ERISA events and material adverse
change; maintenance of properties (subject to casualty, condemnation and normal
wear and tear); maintenance of customary insurance; compliance with laws
(including ERISA, FDA and applicable comparable EU regulations, environmental
laws and PATRIOT Act); maintenance of books and records and inspection of books,

 

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   records and properties (subject to frequency and cost reimbursement
limitations); further assurances (including provision of additional collateral
and guaranties consistent with paragraph above entitled “Security”); payment of
taxes and other similar claims resulting in liens; and use of proceeds; subject,
in the case of each of the foregoing covenants, to exceptions and qualifications
to be provided in the Facilities Documentation consistent with the Documentation
Principles. Negative Covenants:    To be applicable to Holdings and its
restricted subsidiaries and limited to the following: limitations on dividends
on, and redemptions and repurchases of, equity interests and other restricted
payments; limitations on prepayments, redemptions and repurchases of
subordinated debt; limitations on liens and sale-leaseback transactions;
limitations on loans and investments; limitations on debt, guarantees and
hedging arrangements; limitations on capital expenditures (which shall exclude
certain capital expenditures set forth on a schedule and include carry-forward
and carry-back provisions and be increased in a customary manner in connection
with permitted acquisitions); limitations on fundamental corporate changes and
mergers, acquisitions and asset sales; limitations on transactions with
affiliates; limitations on changes in business conducted by Holdings and its
restricted subsidiaries; limitations on restrictive agreements; limitations on
changes to agreements with respect to subordinated debt in a manner material and
adverse to the Lenders; and limitations on changes in fiscal year; subject, in
the case of each of the foregoing covenants, to exceptions and qualifications to
be provided in the Facilities Documentation consistent with the Documentation
Principles.    The negative covenants will be subject, in the case of each of
the foregoing covenants, to exceptions, qualifications and “baskets” consistent
with the Documentation Principles (including an available amount basket (the
“Available Amount Basket”) that will be built by retained Excess Cash Flow and
new equity (which shall be common equity or other qualified equity on terms to
be reasonably mutually agreed and which shall not include any equity contributed
in connection with a Specified Equity Contribution) that may be used for
investments, subject to the absence of any continuing event of default and pro
forma compliance with all applicable financial maintenance covenants and for
restricted payments and the prepayment or redemption of subordinated and/or
junior lien indebtedness), subject to absence of any continuing event of default
and pro forma compliance with all applicable financial maintenance covenants and
pro forma satisfaction of the Senior Secured Net Leverage Ratio at a level to be
mutually agreed.

 

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   Holdings or any restricted subsidiary will be permitted to (a) make
acquisitions (each, a “Permitted Acquisition”) so long as (i) there is no
default or event of default after giving pro forma effect to such acquisition
and the incurrence of any indebtedness in connection therewith and such
acquisition is consummated in accordance with all material requirements of law,
(ii) (A) the Leverage Ratio on a pro forma basis after giving effect to the
consummation of such acquisition and the incurrence or assumption of any such
debt shall be less than 0.25x less than the then applicable Leverage Ratio for
the most recently ended fiscal quarter and (B) the Senior Secured Net Leverage
Ratio on a pro forma basis after giving effect to the consummation of such
acquisition and the incurrence or assumption of any such debt shall be no
greater than the Senior Secured Net Leverage Ratio on the Closing Date (after
giving pro forma effect to the transactions contemplated hereunder, including
the initial borrowings made on the Closing Date, (iii) the acquired company or
assets are in the same, similar, ancillary or a generally related or synergistic
line of business as the Borrower and its subsidiaries and (iv) subject to the
limitations set forth in “Guarantees” and “Security” above, the acquired company
and its subsidiaries will become Guarantors and pledge their Collateral to the
Administrative Agent and (b) assume existing indebtedness of the entity acquired
or incur unsecured subordinated indebtedness (that does not mature, and is not
subject to mandatory repurchase, redemption or amortization (other than pursuant
to customary asset sale or change of control provisions or mandatory refinancing
provisions customary in bridge financing facilities so long as such refinancing
indebtedness itself would be permitted to be so incurred), prior to the date
that is six months after the latest maturity date for any tranche under the
Credit Facilities) in connection with such Permitted Acquisition so long as (i)
the Borrower would be in compliance, on a pro forma basis after giving effect to
the consummation of such acquisition and the incurrence or assumption of such
indebtedness, with the test described in clause (a)(ii) above, (ii) such assumed
indebtedness was not created in anticipation or contemplation of such Permitted
Acquisition and (iii) with respect to such assumed indebtedness, except as
otherwise permitted under the Credit Agreement, (x) to the extent secured, the
liens with respect to such assumed indebtedness do not extend to any other
property of Holdings or any other Credit Party and (y) no person other than the
obligor or obligors thereon at the time of such acquisition shall become liable
for such indebtedness. Acquisitions of entities that do not become Guarantors
and pledge their Collateral to the Administrative Agent will be limited to an
aggregate amount to be reasonably mutually agreed upon in the Facilities
Documentation.

 

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Financial Covenants:   

Limited to the following (with financial definitions (other than financial
definitions defined herein) consistent with the Documentation Principles), at
levels to be agreed and with (a) a 30% cushion in Consolidated EBITDA to the
Consolidated EBITDA levels set forth in the model delivered to the Lead
Arrangers by or at the direction of Warburg Pincus LLC or its affiliates on
August 1, 2012 (the “Company Model”): (a) maximum Leverage Ratio and (b) minimum
interest coverage ratio.

 

“Leverage Ratio” shall mean Consolidated Total Net Debt (to be calculated net of
unrestricted cash and cash equivalents of Holdings and its restricted
subsidiaries up to an amount to be agreed, the Borrower and its restricted
subsidiaries to the extent the Administrative Agent or a Lender has a perfected
first priority (subject to customary exceptions) security interest in such cash
and defined in a manner consistent with the Documentation Principles) to
Consolidated EBITDA (to be defined in a manner consistent with the Documentation
Principles).

 

As used herein, “Senior Secured Net Leverage Ratio” shall mean Consolidated
Total Net Debt, other than any portion of Consolidated Total Net Debt that is
unsecured or secured by a lien on any assets of Holdings or any of its
restricted subsidiaries that is expressly subordinated to the lien granted under
the Security Documents.

   For purposes of determining compliance with the financial covenants at the
end of any fiscal quarter, any cash equity contribution made to Holdings by
Warburg Pincus or another permitted investor and contributed to the Borrower
(which contribution shall be in the form of common equity or other equity on
terms and conditions reasonably acceptable to the Administrative Agent) on or
after the last day of any fiscal quarter but prior to the day that is 10 days
after the earlier of (a) the day on which a compliance certificate is delivered
with respect to such fiscal quarter and (b) the day on which financial
statements are required to be delivered for such fiscal quarter will, at the
request of the Borrower, be included in the calculation of Consolidated EBITDA
solely for the purposes of determining compliance with financial covenants at
the end of

 

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   such fiscal quarter and applicable subsequent periods (any such equity
contribution so included in the calculation of Consolidated EBITDA, a “Specified
Equity Contribution”); provided that (i) in each four consecutive fiscal quarter
period, there shall be only two fiscal quarters in respect of which a Specified
Equity Contribution may be made, (ii) no more than four Specified Equity
Contributions may be made over the life of the Credit Facilities, (iii) the
amount of any Specified Equity Contribution may not be greater than the amount
required to cause the Borrower to be in compliance with the financial covenants
and (iv) all Specified Equity Contributions will be disregarded other than for
purposes of determining compliance with such financial covenants (it being
understood that there shall be no pro forma reduction of Consolidated Total Net
Debt with the proceeds of any Specified Equity Contribution). The rights set
forth under this paragraph are referred to herein as the “Equity Cure”.
Unrestricted Subsidiaries:    The Borrower will be permitted to designate any
subsequently acquired or organized subsidiary as an “unrestricted subsidiary”
unless such subsidiary or any of its subsidiaries owns any equity interests or
indebtedness of, or owns or holds any lien on, any property of, any Credit Party
(other than any subsidiary of the subsidiary to be so designated), and may
designate an unrestricted subsidiary as a restricted subsidiary; provided that
(a) any unrestricted subsidiary must be an entity of which equity interests
entitled to cast at least a majority of the votes that may be cast by all equity
interests having ordinary voting power for the election of directors or other
governing body are owned, directly or indirectly, by the Borrower, (b) such
designation complies with the investments covenant, (c) each of (i) the
subsidiary to be so designated and (ii) its subsidiaries has not at the time of
designation, and does not thereafter, become directly or indirectly liable with
respect to any indebtedness pursuant to which the lender has recourse to any of
the assets of the Borrower or any restricted subsidiary and (d) the Borrower
shall be in pro forma compliance with the financial maintenance covenants
recomputed as of the last day of the most recently ended fiscal quarter of the
Borrower for which financial statements are available and the fair market value
of such subsidiary at the time it is designated as an “unrestricted subsidiary”
shall be treated as an investment by the Borrower at such time. Unrestricted
subsidiaries will not be subject to the representations and warranties,
covenants, events of default or other provisions of the Credit Agreement, and
the results of operations and EBITDA (other than to the extent of any
distributions received by Holdings or any of its restricted subsidiaries) and
indebtedness of unrestricted subsidiaries will not be taken into account for
purposes of calculating any financial ratios contained in the Credit Agreement.

 

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Events of Default:    Relating to Holdings and its restricted subsidiaries
(subject to thresholds and grace periods consistent with the Documentation
Principles) and limited to the following: nonpayment of principal, interest or
other amounts; violation of covenants; incorrectness of representations and
warranties in any material respect; cross default and cross acceleration to debt
of Holdings and its restricted subsidiaries in excess of an amount to be
mutually agreed; bankruptcy or other insolvency event relating to Holdings and
its material restricted subsidiaries; final uninsured and unstayed judgments
against Holdings and its restricted subsidiaries in excess of an amount to be
mutually agreed; ERISA events that have resulted in or could reasonably be
expected to result in liability to the Borrower or any Guarantor, or failure to
pay any installment payment with respect to withdrawal liability when due, in
each case, in an aggregate amount which could reasonably be expected to result
in a material adverse effect; actual or asserted invalidity of the Facilities
Documentation, including guarantees or Security Documents (with respect to a
material portion of the Collateral); and Change of Control. Voting:   
Amendments and waivers of the Credit Agreement will require the approval of (so
long as there are two or more non-affiliated Lenders) at least two
non-affiliated Lenders holding more than 50% of the aggregate amount of the
loans and commitments thereunder (with amendments disproportionately affecting
only one class of loans’ right to receive payments requiring the consent of a
majority in interest of such class), except that the consent of each directly
affected Lender shall be required with respect to (a) increases in the
commitment of such Lender, (b) reductions of principal, interest or fees payable
to such Lender and (c) extensions of final maturity or scheduled amortization of
the loans or commitments of such Lender, and the consent of all Lenders shall be
required with respect to (a) releases of all or substantially all of the value
of the Guarantees or all or substantially all of the Collateral, (b)
modifications to any of the voting provisions and (c) certain pro rata payment
provisions, and customary protections for the Administrative Agent, the
Swingline Lender and the Issuing Banks will be provided.

 

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   The Credit Agreement will contain customary provisions for replacing (a)
non-consenting Lenders in connection with amendments, waivers or modifications
requiring the consent of all Lenders or of all Lenders directly affected thereby
so long as Lenders holding more than 50% of the aggregate amount of the loans
and commitments under the Credit Facilities shall have consented thereto and (b)
defaulting Lenders.    Notwithstanding anything to the contrary set forth
herein, the Credit Agreement will provide that the Borrower may at any time and
from time to time extend the scheduled maturity dates of all or a portion of any
loans of the Borrower (whether through the inclusion of a new tranche of loans
or otherwise) with the approval of each Lender participating in such extension.
Cost and Yield Protection:    Usual for facilities and transactions of this type
(and encompassing Basel III), including customary tax gross-up provisions, in
each case consistent with the Documentation Principles. Assignments and
Participations:    The Lenders (a) under the Term Facilities will be permitted
to assign loans thereunder (except to Disqualified Lenders) with the consent of
the Borrower, not to be unreasonably withheld, conditioned or delayed and (b)
under the Revolving Facilities will be permitted to assign loans and commitments
thereunder with the consent of the Borrower, the Swingline Lender (in the case
of the Multicurrency Revolving Facility) and the Issuing Bank (as applicable),
in each case not to be unreasonably withheld, conditioned or delayed; provided
that, in the case of each assignment under the Term Facilities or Revolving
Facilities, no consent of the Borrower shall be required (i) if such assignment
is made to another Lender or an affiliate or approved fund of a Lender, (ii)
during the primary syndication of the loans and commitments under the Credit
Facilities (other than Disqualified Lenders) or (iii) after the occurrence and
during the continuance of a payment or bankruptcy event of default; provided
further that approval of the Borrower shall be deemed to have been given if the
Borrower has not responded within ten days of request for such consent. All
assignments will also require the consent of the Administrative Agent, not to be
unreasonably withheld, conditioned or delayed. Each assignment will be in a
minimum amount of $1,000,000. Assignments will be by novation and will not be
required to be pro rata between the Credit Facilities.    The Lenders will be
permitted to sell participations in loans and commitments without restriction,
other than to any Disqualified Lender. Voting rights of participants shall be
limited to matters in respect of (a) increases in commitments of such
participant, (b) reductions of principal, interest or fees payable to such

 

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   participant, (c) extensions of final maturity or scheduled amortization of
the loans or commitments in which such participant participates and (d) releases
of all or substantially all of the value of the Guarantees, or all or
substantially all of the Collateral, other than in accordance with the
provisions of the Facilities Documentation.    In addition, subject to the
provisions below, distributions and commitment reductions in connection with
loan buy-back or similar programs and assignments to the Borrower and its
affiliates will be permitted (including on a non pro rata basis), without any
consent, including, in the case of Affiliated Lenders (as defined below),
through open-market purchases, in each case subject to terms and conditions to
be reasonably mutually agreed upon.    Assignments of Term Loans to Warburg
Pincus and its affiliates (other than the direct parent of the Borrower, the
Borrower and their subsidiaries) (each, an “Affiliated Lender”) shall be
permitted subject to the following limitations:   

(i) Affiliated Lenders will not receive information provided solely to Lenders
by the Administrative Agent or any Lender and will not be permitted to
attend/participate in meetings not attended by the Borrower;

  

(ii) for purposes of any amendment, waiver or modification of the Facilities
Documentation or any plan of reorganization that in either case does not require
the consent of each Lender or each affected Lender or does not adversely affect
such Affiliated Lender in any material respect as compared to other Lenders,
Affiliated Lenders will be deemed to have voted in the same proportion as
non-affiliated Lenders voting on such matter;

  

(iii) Affiliated Lenders may not purchase loans under the Revolving Facility;
and

  

(iv) the amount of Term Loans purchased by Affiliated Lenders may not exceed 20%
of the aggregate outstanding principal amount of such loans.

   Assignments of Term Loans under the Credit Facilities to the Borrower and its
subsidiaries shall be permitted so long as (i) any such assignment shall be made
in connection with a pro rata offer that is made to all applicable Lenders with
procedures satisfactory to the Administrative Agent (for purposes of
clarification, it being acknowledged that such assignments from

 

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   accepting lenders are not required to be pro rata), (ii) no default or event
of default has occurred and is continuing, (iii) the loans purchased are
immediately cancelled, (iv) no proceeds from any loan under the Revolving
Facilities shall be used to fund such assignments and (v) any amounts utilized
for purchasing Term Loans shall not be deducted in the determination of excess
cash flow for the year in which purchases were effected.
Expenses and Indemnification:    The Borrower will indemnify the Lead Arrangers,
the Administrative Agent, the Syndication Agent, the Documentation Agent, the
Lenders, the Swingline Lender, the Issuing Bank, their respective affiliates,
successors and assigns and the officers, directors, employees, agents, advisors,
attorneys, representatives, controlling persons and members of each of the
foregoing (each, an “Indemnified Person”) and hold them harmless from and
against all reasonable and documented and invoiced out-of-pocket costs, expenses
(limited in the case of attorneys’ fees to the reasonable and documented and
invoiced fees, disbursements and other charges of one counsel for all
Indemnified Persons and, if necessary, one firm of local counsel in each
appropriate jurisdiction (which may include a single special counsel acting in
multiple jurisdictions for all Indemnified Persons (and, in the case of an
actual or perceived conflict of interest, where the Indemnified Person affected
by such conflict informs the Borrower of such conflict and thereafter retains
its own counsel, of another firm of counsel for such affected Indemnified
Person)), claims, damages, losses and liabilities of such Indemnified Person
arising out of, relating to or in connection with the Credit Facilities and any
documentation related thereto, the actual or proposed use of the proceeds of the
Credit Facilities, the Transactions or any transaction contemplated in
connection with the foregoing (including any investigation, claim or any
litigation or other proceeding, or preparation of a defense in connection
therewith (regardless of whether such Indemnified Person is a party thereto and
regardless of whether such matter is initiated by a third party or by Holdings,
the Borrower or any of their respective affiliates or shareholders) that relates
to the Transactions, including the financing contemplated hereby or any
transactions in connection therewith), provided that no Indemnified Person or
its affiliates, or its or their successors and assigns or the officers,
directors, employees, agents, advisors, attorneys, representatives, controlling
persons or members of such Indemnified Person or any of its affiliates will be
indemnified for any cost, expense or liability to the extent determined in the
final, non-appealable judgment of a court of competent jurisdiction to have
resulted primarily from its gross negligence, bad faith, willful

 

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   misconduct or material breach of the Facilities Documentation or Commitment
Letter nor for any claims brought by an Indemnified Person against another
Indemnified Person (other than claims against the Lead Arrangers, the
Syndication Agent, the Documentation Agent or the Administrative Agent in acting
in such capacity) that do not involve an act or omission by the Borrower or any
of its affiliates determined in the final, non-appealable judgment of a court of
competent jurisdiction, and this provision shall not cover any expenses incurred
in connection with the preparation, negotiation or diligence in connection with
the Commitment Letter or the Facilities Documentation.    In addition, from and
after the Closing Date if the Closing Date occurs, all out-of-pocket expenses of
the Lead Arrangers, the Administrative Agent, the Syndication Agent, the
Documentation Agent, the Swingline Lender, the Issuing Bank and the Lenders
(limited, in the case of attorneys’ fees, to the reasonable fees, disbursements
and other charges of (1) counsel identified herein, (2) a single local counsel
to the Lenders in each appropriate jurisdiction (which may include a single
special counsel acting in multiple jurisdictions) and (3) such other counsel
retained with the Borrower’s consent (such consent not to be unreasonably
withheld, conditioned or delayed)) for enforcement costs and documentary taxes
associated with the Credit Facilities will be paid by the Borrower.
Miscellaneous:    The Facilities Documentation will include (a) a waiver of
consequential and punitive damages and right to a jury trial, (b) customary
agency, set-off and sharing language and (c) subject to the Documentation
Principles, other provisions as are usual and customary for facilities of this
kind (including with respect to defaulting lenders). Governing Law and Forum:   
New York. Counsel to the Lead
Arrangers and the
Administrative Agent:    Moore & Van Allen, PLLC.

 

A-21

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ANNEX I

 

Interest Rates:    The interest rates under the Credit Facilities will be as
follows:   

With respect to the Multicurrency Revolving Facility and the USD Term Loan
Facility: At the option of the Borrower, (i) if the Leverage Ratio is greater
than 2.50 to 1.00, Eurodollar plus 3.25% or Base Rate plus 2.25% and (ii) if the
Leverage Ratio is equal to or less than 2.50 to 1.00, Eurodollar plus 3.00% or
Base Rate plus 2.00%.

 

With respect to the EUR Revolving Facility and the EUR Term Loan Facility: At
the option of the Borrower, (i) if the Leverage Ratio is greater than 2.50 to
1.00, Eurodollar plus 4.25% or Base Rate plus 3.25% and (ii) if the Leverage
Ratio is equal to or less than 2.50 to 1.00, Eurodollar plus 4.00% or Base Rate
plus 3.00%.

   The Borrower may elect interest periods of 1, 2, 3 or 6 months or, to the
extent agreed to by all relevant Lenders, 9 or 12 months, for Eurodollar Rate
borrowings.   

Calculation of interest shall be on the basis of the actual days elapsed in a
year of 360 days (or 365 or 366 days, as the case may be, in the case of Base
Rate loans based on the “prime rate”) and interest shall be payable at the end
of each interest period and, in any event, at least every three months.

 

The Base Rate is the greatest of the Administrative Agent’s “prime rate”, the
Federal Funds Effective Rate plus 1/2 of 1.00% and the Eurodollar Rate for a
one-month interest period plus 1.00%.

 

Eurodollar Rate will at all times include statutory reserves consistent with the
Documentation Principles and, solely with respect to Term Loans issues having a
Eurodollar Rate, will be deemed to be not less than 1.00%.

Letter of Credit Fees:    A per annum fee equal to the spread over the
Eurodollar Rate under the applicable Revolving Facility will accrue on the daily
maximum amount then available to be drawn under outstanding letters of credit
under such Revolving Facility, payable in arrears at the end of each quarter and
upon the termination of the respective letter of credit, in each case for the
actual number of days elapsed over a 360-day year. Such fees shall be
distributed to the Lenders participating in the applicable Revolving Facility
pro rata in accordance with the amount of each such Lender’s applicable
Revolving Facility commitment. In addition, the Borrower shall pay to the
Issuing Bank, for its own account, customary fronting fees (as required by the
Issuing Bank), issuance fees and administration fees.

 

Annex I-1

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Commitment Fee:    0.50% per annum on the undrawn portion of the commitments in
respect of the Multicurrency Revolving Facility and 0.75% per annum on the
undrawn portion of the commitments in respect of the EUR Revolving Facility,
each payable quarterly in arrears after the Closing Date and upon the
termination of the applicable commitments, calculated based on the number of
days elapsed in a 360-day year.

 

Annex I-2

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EXHIBIT B

Project Oscar

Credit Facilities

Summary of Additional Conditions

The initial borrowings under the Credit Facilities shall be subject to the
following conditions:1

1. Since December 31, 2011, there has not been or occurred any Material Adverse
Effect (as such term is defined in the Merger Agreement) with respect to the
Company or any event, condition, change or effect that would reasonably be
likely to have, individually or in the aggregate, a Material Adverse Effect (as
such term is defined in the Merger Agreement) with respect to the Company.

2. All the existing third party indebtedness for borrowed money of the Tornier
Group and the Company and its subsidiaries (which shall exclude intercompany
indebtedness, existing capital leases and letters of credit, indebtedness
permitted to exist under the Merger Agreement and certain limited indebtedness
that the Lead Arrangers and you reasonably agree may remain outstanding after
the Closing Date) will be refinanced, defeased or repaid and the Administrative
Agent shall receive reasonably satisfactory evidence of the refinancing and the
discharge (or the making of arrangements for discharge) of all liens other than
liens permitted to remain outstanding under the Facilities Documentation
(including liens permitted to remain outstanding after the Closing Date pursuant
to the Merger Agreement); it being agreed that the delivery of payoff letters,
release letters (including intellectual property releases), mortgage releases
and UCC-3 financing statements to the Administrative Agent shall be satisfactory
evidence.

3. The Acquisition shall have been consummated, or substantially simultaneously
with the initial borrowing under the Credit Facilities, shall be consummated, in
all material respects in accordance with the terms of the Agreement and Plan of
Merger dated August 23, 2012 (together with all exhibits, schedules and
disclosure letters thereto, collectively, the “Merger Agreement”) entered into
by, among others, Holdings, Merger Sub and the Company and certain members of
the Company, without giving effect to any modifications, amendments, consents or
waivers by you thereto that are materially adverse to the Lenders, without the
prior consent of the Lead Arrangers (such consent not to be unreasonably
withheld, conditioned or delayed).

4. The Lead Arrangers shall have received (a) unaudited consolidated balance
sheets and related statements of income and cash flows of the Company for each
fiscal quarter after December 31, 2011 ended at least 45 days before the Closing
Date (in each case prepared in accordance with GAAP but without footnotes) and
(b) to the extent delivered to you, unaudited consolidated balance sheets and
related statements of income and cash flows of the Company for each month after
June, 2012 ended at least 30 days before the Closing Date that have been
provided to the Borrower by the Sellers (in each case prepared in accordance
with GAAP but without footnotes).

 

 

1 

Capitalized terms used in this Exhibit B shall have the meanings set forth in
the other Exhibits attached to the Commitment Letter to which this Exhibit B is
attached (the “Commitment Letter”). In the case of any such capitalized term
that is subject to multiple and differing definitions, the appropriate meaning
thereof in this Exhibit B shall be determined by reference to the context in
which it is used.

 

B-1

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5. The Lead Arrangers shall have received a pro forma consolidated balance sheet
and related pro forma consolidated statement of income of the Borrower as of and
for the twelve month period ending on December 31, 2011 (or, if later, the last
day of the most recently completed month for which financial statements have
been provided pursuant to paragraph 4 above, prepared after giving effect to the
Transactions as if the Transactions had occurred as of such date (in the case of
such balance sheet) or at the beginning of such period (in the case of such
other financial statements), in accordance with Regulation S-X but, in any event
to include all adjustments reflected in the Company Model (together with any
updates or modifications thereto reasonably agreed between the Borrower and the
Lead Arrangers or as necessary to reflect any exercise of “market flex” pursuant
to the Fee Letter) and such other adjustments and deviations from Regulation S-X
as may be reasonably mutually agreed.

6. Subject in all respects to the Certain Funds Provisions, all documents and
instruments required to create and perfect the Administrative Agent’s security
interest in the Collateral required to be delivered on the Closing Date shall
have been executed and delivered and, if applicable, be in proper form for
filing.

7. The Administrative Agent and the Lead Arrangers shall have received all
documentation and other information about the Borrower and the Guarantors at
least 5 Business Days prior to the Closing Date as has been reasonably requested
in writing at least 10 Business Days prior to the Closing Date by the
Administrative Agent or the Lead Arrangers that they reasonably determine is
required by regulatory authorities under applicable “know your customer” and
anti-money laundering rules and regulations, including without limitation the
PATRIOT Act.

8. All fees required to be paid on the Closing Date pursuant to the Fee Letter
and reasonable out-of-pocket expenses required to be paid on the Closing Date
pursuant to the Commitment Letter, to the extent documented and invoiced at
least three business days prior to the Closing Date, shall, upon the initial
borrowing under the Credit Facilities, have been paid (which amounts may be
offset against the proceeds of the Credit Facilities).

9. The Lead Arrangers shall have been afforded a marketing period of at least 20
consecutive calendar days prior to the Closing Date (provided that such 20
consecutive calendar day period shall commence no earlier than September 4,
2012) following delivery by the Borrower of the Information Memorandum to seek
to syndicate the Credit Facilities.

 

B-2