exv10w1



 







Execution Version




CREDIT AND GUARANTY AGREEMENT




dated as of July 20, 2006




among




AMERICAN MEDICAL SYSTEMS, INC.,

as Borrower,




AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.

AND CERTAIN OF ITS SUBSIDIARIES,

as Guarantors,




VARIOUS LENDERS,




CIT CAPITAL SECURITIES LLC,

as Co-Lead Arranger and Sole Bookrunner,




KEYBANK NATIONAL ASSOCIATION,




as Co-Lead Arranger and Syndication Agent




CIT HEALTHCARE LLC,

as Administrative Agent and Collateral Agent,




and




GENERAL ELECTRIC CAPITAL CORPORATION,

as Documentation Agent




 






$430,000,000 Senior Secured Credit Facilities




 






 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. DEFINITIONS AND INTERPRETATION
	 	 	2	 
	1.1. Definitions
	 	 	2	 
	1.2. Accounting Terms
	 	 	35	 
	1.3. Interpretation, etc
	 	 	35	 
	SECTION 2. LOANS AND LETTERS OF CREDIT
	 	 	36	 
	2.1. Term Loans
	 	 	36	 
	2.2. Revolving Loans
	 	 	37	 
	2.3. Swing Line Loans
	 	 	39	 
	2.4. Issuance of Letters of Credit and Purchase of Participations Therein
	 	 	41	 
	2.5. Pro Rata Shares; Availability of Funds
	 	 	45	 
	2.6. Use of Proceeds
	 	 	45	 
	2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes
	 	 	46	 
	2.8. Interest on Loans
	 	 	47	 
	2.9. Conversion/Continuation
	 	 	49	 
	2.10. Default Interest
	 	 	49	 
	2.11. Fees
	 	 	49	 
	2.12. Scheduled Payments/Commitment Reductions
	 	 	50	 
	2.13. Voluntary Prepayments/Commitment Reductions
	 	 	52	 
	2.14. Mandatory Prepayments/Commitment Reductions
	 	 	53	 
	2.15. Application of Prepayments/Reductions
	 	 	55	 
	2.16. General Provisions Regarding Payments
	 	 	56	 
	2.17. Ratable Sharing
	 	 	57	 
	2.18. Making or Maintaining Eurodollar Rate Loans
	 	 	58	 
	2.19. Increased Costs; Capital Adequacy
	 	 	60	 
	2.20. Taxes; Withholding, etc
	 	 	61	 
	2.21. Obligation to Mitigate
	 	 	63	 
	2.22. Defaulting Lenders
	 	 	64	 
	2.23. Removal or Replacement of a Lender
	 	 	64	 
	SECTION 3. CONDITIONS PRECEDENT
	 	 	65	 
	3.1. Initial Closing Date
	 	 	65	 
	3.2. Second Closing Date
	 	 	73	 
	 
	 	 	 	 
	-i-







 









 






	 	 	 	 	 
	 	 	Page	 
	3.3. Conditions to All Other Credit Extensions
	 	 	75	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES
	 	 	77	 
	4.1. Organization; Requisite Power and Authority; Qualification
	 	 	77	 
	4.2. Capital Stock and Ownership
	 	 	77	 
	4.3. Due Authorization
	 	 	78	 
	4.4. No Conflict
	 	 	78	 
	4.5. Governmental Consents
	 	 	78	 
	4.6. Binding Obligation
	 	 	78	 
	4.7. Historical Financial Statements
	 	 	78	 
	4.8. Projections
	 	 	79	 
	4.9. No Material Adverse Change
	 	 	79	 
	4.10. No Restricted Payments
	 	 	79	 
	4.11. Adverse Proceedings, etc
	 	 	79	 
	4.12. Payment of Taxes
	 	 	79	 
	4.13. Properties
	 	 	80	 
	4.14. Environmental Matters
	 	 	80	 
	4.15. No Defaults
	 	 	81	 
	4.16. Material Contracts
	 	 	81	 
	4.17. Governmental Regulation
	 	 	81	 
	4.18. Margin Stock
	 	 	81	 
	4.19. Employee Matters
	 	 	81	 
	4.20. Employee Benefit Plans
	 	 	82	 
	4.21. Certain Fees
	 	 	82	 
	4.22. Solvency
	 	 	83	 
	4.23. Compliance with Statutes, etc
	 	 	83	 
	4.24. Permits
	 	 	83	 
	4.25. Disclosure
	 	 	84	 
	4.26. Patriot Act
	 	 	84	 
	4.27. Insurance
	 	 	84	 
	4.28. Security Interests
	 	 	84	 
	4.29. Intellectual Property
	 	 	84	 
	SECTION 5. AFFIRMATIVE COVENANTS
	 	 	85	 
	5.1. Financial Statements and Other Reports
	 	 	85	 
	 
	 	 	 	 
	-ii-







 









 






	 	 	 	 	 
	 	 	Page	 
	5.2. Existence
	 	 	89	 
	5.3. Payment of Taxes and Claims
	 	 	89	 
	5.4. Maintenance of Properties
	 	 	89	 
	5.5. Insurance
	 	 	89	 
	5.6. Inspections
	 	 	90	 
	5.7. Lenders Meetings
	 	 	90	 
	5.8. Compliance with Laws
	 	 	90	 
	5.9. Environmental
	 	 	90	 
	5.10. Subsidiaries
	 	 	92	 
	5.11. Additional Material Real Estate Assets
	 	 	94	 
	5.12. Further Assurances
	 	 	94	 
	5.13. Miscellaneous Business Covenants
	 	 	94	 
	5.14. Syndication
	 	 	95	 
	5.15. Ratings
	 	 	95	 
	5.16. Post Closing Covenants
	 	 	95	 
	5.17. Completion of Merger
	 	 	95	 
	5.18. Delisting of Laserscope
	 	 	96	 
	SECTION 6. NEGATIVE COVENANTS
	 	 	96	 
	6.1. Indebtedness
	 	 	96	 
	6.2. Liens
	 	 	98	 
	6.3. Equitable Lien
	 	 	99	 
	6.4. No Further Negative Pledges
	 	 	99	 
	6.5. Restricted Payments
	 	 	100	 
	6.6. Restrictions on Subsidiary Distributions
	 	 	101	 
	6.7. Investments
	 	 	101	 
	6.8. Financial Covenants
	 	 	103	 
	6.9. Fundamental Changes; Disposition of Assets; Acquisitions
	 	 	108	 
	6.10. Disposal of Subsidiary Interests
	 	 	110	 
	6.11. Sales and Lease-Backs
	 	 	111	 
	6.12. Transactions with Shareholders and Affiliates
	 	 	111	 
	6.13. Conduct of Business
	 	 	111	 
	6.14. Permitted Activities of Merger Sub and Foreign Holding Company
	 	 	111	 
	6.15. Amendments or Waivers of Certain Related Agreements
	 	 	112	 
	 
	 	 	 	 
	-iii-







 









 






	 	 	 	 	 
	 	 	Page	 
	6.16. Fiscal Year
	 	 	112	 
	6.17. No other Designated Senior Indebtedness; No Payments of Indebtedness
	 	 	112	 
	6.18. Limitation on Creation of Subsidiaries
	 	 	113	 
	SECTION 7. GUARANTY
	 	 	113	 
	7.1. Guaranty of the Obligations
	 	 	113	 
	7.2. Contribution by Guarantors
	 	 	113	 
	7.3. Payment by Guarantors
	 	 	114	 
	7.4. Liability of Guarantors Absolute
	 	 	114	 
	7.5. Waivers by Guarantors
	 	 	116	 
	7.6. Guarantors’ Rights of Subrogation, Contribution, etc
	 	 	117	 
	7.7. Subordination of Other Obligations
	 	 	118	 
	7.8. Continuing Guaranty
	 	 	118	 
	7.9. Authority of Guarantors or Borrower
	 	 	118	 
	7.10. Financial Condition of Borrower
	 	 	118	 
	7.11. Bankruptcy, etc
	 	 	118	 
	7.12. Discharge of Guaranty Upon Sale of Guarantor
	 	 	119	 
	SECTION 8. EVENTS OF DEFAULT
	 	 	119	 
	8.1. Events of Default
	 	 	119	 
	SECTION 9. AGENTS
	 	 	122	 
	9.1. Appointment of Agents
	 	 	122	 
	9.2. Powers and Duties
	 	 	123	 
	9.3. General Immunity
	 	 	123	 
	9.4. Agents Entitled to Act as Lender
	 	 	125	 
	9.5. Lenders’ Representations, Warranties and Acknowledgment
	 	 	125	 
	9.6. Right to Indemnity
	 	 	125	 
	9.7. Successor Administrative Agent, Collateral Agent and Swing Line Lender
	 	 	126	 
	9.8. Collateral Documents and Guaranty
	 	 	127	 
	SECTION 10. MISCELLANEOUS
	 	 	127	 
	10.1. Notices
	 	 	127	 
	10.2. Expenses
	 	 	128	 
	10.3. Indemnity
	 	 	129	 
	10.4. Set-Off
	 	 	129	 
	10.5. Amendments and Waivers
	 	 	130	 
	 
	 	 	 	 
	-iv-







 









 






	 	 	 	 	 
	 	 	Page	 
	10.6. Successors and Assigns; Participations
	 	 	132	 
	10.7. Independence of Covenants
	 	 	136	 
	10.8. Survival of Representations, Warranties and Agreements
	 	 	136	 
	10.9. No Waiver; Remedies Cumulative
	 	 	136	 
	10.10. Marshalling; Payments Set Aside
	 	 	136	 
	10.11. Severability
	 	 	136	 
	10.12. Obligations Several; Independent Nature of Lenders’ Rights
	 	 	136	 
	10.13. Headings
	 	 	137	 
	10.14. APPLICABLE LAW
	 	 	137	 
	10.15. CONSENT TO JURISDICTION
	 	 	137	 
	10.16. WAIVER OF JURY TRIAL
	 	 	137	 
	10.17. Confidentiality
	 	 	138	 
	10.18. Usury Savings Clause
	 	 	139	 
	10.19. Counterparts
	 	 	139	 
	10.20. Effectiveness
	 	 	139	 
	10.21. Patriot Act
	 	 	139	 
	10.22. Electronic Execution of Assignments
	 	 	139	 
	 
	 	 	 	 
	-v-







 









 





	 	 	 	 	 
	APPENDICES:

	 	A
	 	Notice Addresses
	 
	 	 	 	 
	SCHEDULES:

	 	1.1
	 	Foreign Subsidiaries
	 

	 	3.1(f)
	 	Mortgaged Properties
	 

	 	3.1(r)
	 	Organizational and Capital Structure
	 

	 	4.1
	 	Jurisdictions of Organization and Qualification
	 

	 	4.2(a)
	 	Capital Stock and Ownership as of the Initial Closing Date
	 

	 	4.2(b)
	 	Capital Stock and Ownership as of the Second Closing Date
	 

	 	4.5
	 	Governmental Consents
	 

	 	4.13
	 	Real Estate Assets
	 

	 	4.17
	 	Material Contracts
	 

	 	4.20
	 	Employee Benefit Plans
	 

	 	4.27
	 	Insurance
	 

	 	5.16
	 	Post Closing Covenants
	 

	 	6.1(a)
	 	Certain Indebtedness
	 

	 	6.1(b)
	 	Foreign Subsidiary Intercompany Indebtedness
	 

	 	6.2
	 	Certain Liens
	 

	 	6.6
	 	Certain Restrictions on Subsidiary Distributions
	 

	 	6.7
	 	Certain Investments
	 

	 	6.12
	 	Certain Affiliate Transactions
	 
	 	 	 	 
	EXHIBITS:

	 	A-1
	 	Funding Notice
	 

	 	A-2
	 	Conversion/Continuation Notice
	 

	 	A-3
	 	Issuance Notice
	 

	 	B-1
	 	Term Loan Note
	 

	 	B-2
	 	Revolving Loan Note
	 

	 	B-3
	 	Swing Line Note
	 

	 	C
	 	Compliance Certificate
	 

	 	D-1
	 	Opinion of Borrower Counsel
	 

	 	D-2
	 	Opinion of California Counsel
	 

	 	D-3
	 	Opinion of Arizona Counsel
	 

	 	E
	 	Assignment Agreement
	 

	 	F
	 	Certificate Regarding Non-Bank Status
	 

	 	G-1
	 	Officer’s Certificate
	 

	 	G-2
	 	Solvency Certificate
	 

	 	H
	 	Counterpart Agreement
	 

	 	I
	 	Pledge and Security Agreement
	 

	 	J
	 	Mortgage
	 

	 	K
	 	Landlord Waiver and Consent Agreement
	 

	 	L
	 	Non-U.S. Intercompany Note
	 
	 	 	 	 
	-vi-







 









 





CREDIT AND GUARANTY AGREEMENT




          This CREDIT AND GUARANTY AGREEMENT, dated as of July 20, 2006, is entered into by and among
AMERICAN MEDICAL SYSTEMS, INC., a Delaware corporation, together with its permitted successors and
assigns (“Borrower”), AMERICAN MEDICAL SYSTEMS HOLDINGS, INC., a Delaware corporation, together
with its permitted successors and assigns (“Holdings”), as a Guarantor, CERTAIN DIRECT AND INDIRECT
SUBSIDIARIES OF HOLDINGS, as Guarantors, the Lenders from time to time party hereto, CIT CAPITAL
SECURITIES LLC (“CIT Capital”), as Co-Lead Arranger and as Sole Bookrunner, KEYBANK NATIONAL
ASSOCIATION (“KeyBank”), as Co-Lead Arranger and as Syndication Agent (“Syndication Agent”), CIT
HEALTHCARE LLC (“CIT Healthcare”), as Administrative Agent (in such capacity, together with its
permitted successors in such capacity, “Administrative Agent”) and as Collateral Agent (in such
capacity, together with its permitted successor in such capacity, “Collateral Agent”) and GENERAL
ELECTRIC CAPITAL CORPORATION, as Documentation Agent (“Documentation Agent”).




RECITALS:




     WHEREAS, capitalized terms used in these Recitals shall have the respective meanings set forth
for such terms in Section 1.1 hereof;



     WHEREAS, Lenders have agreed to extend certain credit facilities to Borrower in an aggregate
amount not to exceed $430,000,000 consisting of (a) the Term Loans in an aggregate principal amount
of $365,000,000 and (b) up to $65,000,000 aggregate principal amount of Revolving Commitments, the
proceeds of which shall be used as follows:




     (y) if either (A) the Top-Up Stock Option is exercised with the effect that the Option
Exercise Minimum Condition will be met or (B) the Minimum Condition will be met, in each
case prior to expiration of the Tender Offer (the occurrence of either event being referred
to as the “90% Closing Condition”), the Term Loans shall be used on the Initial Closing Date
solely to fund the difference of (I) the sum of (aa) the cash component of the purchase
price payable by Merger Sub for the shares of Capital Stock of Laserscope tendered pursuant
to the Tender Offer and to be acquired as of the Initial Closing Date plus (bb) the cash
component of the exercise price payable by Merger Sub in respect of the Top-Up Stock Option,
if any, plus (cc) the amount necessary to refinance or retire all the Existing Indebtedness
of Holdings and its Subsidiaries, if any, as of the Initial Closing Date plus (dd) the
aggregate amount of all fees, commissions and expenses due and payable as of the Initial
Closing Date in connection therewith less (II) the Convertible Proceeds Amount, and the
Revolving Commitments may be used on the Initial Closing Date in part to fund up to
$20,100,000 of the acquisition of Laserscope, to provide for ongoing working capital
requirements of the Borrower and its Subsidiaries after the Initial Closing Date and for
general corporate purposes; and




     (z) if the 90% Closing Condition is not met and the Tender Offer is amended so that the
Revised Minimum Condition is applicable, the Term Loans shall be used on the Second Closing
Date solely (1) to fund the Merger Consideration (as defined in the Acquisition Agreement)
and the Option Consideration (as defined in the Acquisition



 









 







Agreement), (2) to pay merger consideration in respect of shares which are not acquired
by Merger Sub pursuant to the Tender Offer (or pursuant to the Top-Up Stock Option, if that
option shall have been exercised in accordance with the terms and conditions of the
Acquisition Agreement) and (3) to pay the aggregate amount of all fees, commissions and
expenses not paid as of the Initial Closing Date in connection with the Acquisition; and



     WHEREAS, Borrower has agreed to secure all of its Obligations by granting (or causing Holdings
to grant) to Collateral Agent, for the benefit of Secured Parties, a First Priority Lien on all of
its assets, including a pledge of all of the Capital Stock of the Borrower and of each other
Domestic Subsidiary of Borrower and 65% of all the Capital Stock of each of its first-tier Foreign
Subsidiaries; and



     WHEREAS, Guarantors have agreed to guarantee the obligations of Borrower hereunder and to
secure their respective Obligations by granting to Collateral Agent, for the benefit of Secured
Parties, a First Priority Lien on all of their respective assets, including a pledge of all of the
Capital Stock of their Domestic Subsidiaries and 65% of all the Capital Stock of each of their
first-tier Foreign Subsidiaries.



     NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:



SECTION 1. DEFINITIONS AND INTERPRETATION




     1.1. Definitions. The following terms used herein, including in the preamble, recitals,
exhibits and schedules hereto, shall have the following meanings:



          “90% Closing Condition” as defined in the second “Whereas” clause hereof.




          “Acquisition” means the Acquisition by Merger Sub of the Shares of Laserscope by means of the
Tender Offer and subsequent Merger.




          “Acquisition Agreement” means that certain Agreement and Plan of Merger dated as of June 3,
2006, by and among Holdings, Merger Sub and Laserscope.




          “Acquisition Documents” means the Acquisition Agreement and all other documents, agreements,
certificates and instruments executed and delivered in connection therewith, including without
limitation, any voting agreements with existing shareholders of Laserscope.




          “Adjusted Eurodollar Rate” means, for any Interest Rate Determination Date with respect to an
Interest Period for a Eurodollar Rate Loan, the rate per annum obtained by dividing (and rounding
upward to the next whole multiple of 1/16 of 1%) (i) (a) the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the rate determined by Administrative Agent to be the offered rate
which appears on the page of the Telerate Screen which displays an average British Bankers
Association Interest Settlement Rate (such page currently being page number 3740 or 3750, as
applicable) for deposits (for delivery on the first day of such period) with a term equivalent to
such period in Dollars, determined as of approximately 11:00 a.m.




-2-









 







(London, England time) on such Interest Rate Determination Date, or (b) in the event the rate
referenced in the preceding clause (a) does not appear on such page or service or if such page or
service shall cease to be available, the rate per annum (rounded to the nearest 1/100 of 1%) equal
to the rate determined by Administrative Agent to be the offered rate on such other page or other
service which displays an average British Bankers Association Interest Settlement Rate for deposits
(for delivery on the first day of such period) with a term equivalent to such period in Dollars,
determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate
Determination Date, or (c) in the event the rates referenced in the preceding clauses (a) and (b)
are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the offered
quotation rate to first class banks in the London interbank market by a banking institution
selected by the Administrative Agent or any Lender selected by Administrative Agent for deposits
(for delivery on the first day of the relevant period) in Dollars of amounts in same day funds
comparable to the principal amount of the applicable Loan of a banking institution selected by the
Administrative Agent or any Lender selected by Administrative Agent, for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to such period as of
approximately 11:00 a.m. (London, England time) on such Interest Rate Determination Date, by (ii)
an amount equal to (a) one minus (b) the Applicable Reserve Requirement.




          “Administrative Agent” as defined in the preamble hereto.




          “Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of
Holdings or any of its Subsidiaries) at law or in equity, or before or by any Governmental
Authority, domestic or foreign (including any Environmental Claims), whether pending or, to the
knowledge of Holdings or any of its Subsidiaries, threatened against or affecting Holdings or any
of its Subsidiaries or any property of Holdings or any of its Subsidiaries.




          “Affected Lender” as defined in Section 2.18(b).




          “Affected Loans” as defined in Section 2.18(b).




          “Affiliate” means, as applied to any Person, any other Person directly or indirectly
controlling, controlled by, or under common control with, that Person. For the purposes of this
definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled
by” and “under common control with”), as applied to any Person, means the possession, directly or
indirectly, of the power (i) to vote 10% or more of the Securities having ordinary voting power for
the election of directors of such Person or (ii) to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities or by contract or
otherwise.




          “Agent” means each of Administrative Agent, Syndication Agent, Collateral Agent and
Documentation Agent.




          “Aggregate Amounts Due” as defined in Section 2.17.




          “Aggregate Payments” as defined in Section 7.2.




-3-









 








          “Agreement” means this Credit and Guaranty Agreement, dated as of July 20, 2006, as it may be
amended, supplemented or otherwise modified from time to time.




          “Applicable Margin’’ means (i) with respect to Term Loans made hereunder which are Eurodollar
Rate Loans, 2.25% per annum, (ii) with respect to Term Loans made hereunder which are Base Rate
Loans, 1.25% per annum, and (iii) with respect to Revolving Loans, Swing Line Loans and Letters of
Credit outstanding hereunder, from and after the date of delivery of an initial Compliance
Certificate, a percentage, per annum, determined by reference to the Total Leverage Ratio in effect
from time to time as set forth below:




	 	 	 	 	 	 	 	 	 
	 	 	Applicable Margin for	 	Applicable Margin for
	Total Leverage Ratio	 	Eurodollar Loans	 	Base Rate Loans
	3 5.50:1.00

	 	 	2.25	%	 	 	1.25	%
	 
	 	 	 	 	 	 	 	 
	< 5.50:1.00

3 4.50:1.00

	 	 	2.00	%	 	 	1.00	%
	 
	 	 	 	 	 	 	 	 
	< 4.50:1.00

33.50:1.00

	 	 	1.75	%	 	 	0.75	%
	 
	 	 	 	 	 	 	 	 
	< 3.50:1.00

	 	 	1.50	%	 	 	0.50	%






     No change in the Applicable Margin for Revolving Loans, Swing Line Loans and outstanding
Letters of Credit shall be effective until three Business Days after the date on which
Administrative Agent shall have received the applicable financial statements and a Compliance
Certificate pursuant to Section 5.1(c) calculating the Leverage Ratio. At any time Company has not
submitted to Administrative Agent the applicable information as and when required under Section
5.1(c), the Applicable Margin for Revolving Loans, Swing Line Loans and outstanding Letters of
Credit shall be determined as if the Leverage Ratio were in excess of 5.50:1.00. Within one
Business Day of receipt of the applicable information under Section 5.1(c), Administrative Agent
shall give each Lender telefacsimile or telephonic notice (confirmed in writing) of the Applicable
Margin for Revolving Loans, Swing Line Loans and outstanding Letters of Credit in effect from such
date.



          “Applicable Reserve Requirement” means, at any time, for any Eurodollar Rate Loan, the maximum
rate, expressed as a decimal, at which reserves (including, without limitation, any basic marginal,
special, supplemental, emergency or other reserves) are required to be maintained with respect
thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under
regulations issued from time to time by the Board of Governors of the Federal Reserve System or
other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable
Reserve Requirement shall reflect any other reserves required to be


-4-









 







maintained by such member banks with respect to (i) any category of liabilities which includes
deposits by reference to which the applicable Adjusted Eurodollar Rate or any other interest rate
of a Loan is to be determined, or (ii) any category of extensions of credit or other assets which
include Eurodollar Rate Loans. A Eurodollar Rate Loan shall be deemed to constitute Eurocurrency
liabilities and as such shall be deemed subject to reserve requirements without benefits of credit
for proration, exceptions or offsets that may be available from time to time to the applicable
Lender. The rate of interest on Eurodollar Rate Loans shall be adjusted automatically on and as of
the effective date of any change in the Applicable Reserve Requirement.




          “Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback,
assignment, conveyance, transfer or other disposition to, or any exchange of property with, any
Person (other than Borrower, Holdings or any other Guarantor), in one transaction or a series of
transactions, of all or any part of Holdings’ or any of its Subsidiaries’ businesses, assets or
properties of any kind, whether real, personal, or mixed and whether tangible or intangible,
whether now owned or hereafter acquired, including, without limitation, the Capital Stock of any of
Holdings’ Subsidiaries, other than (i) inventory (or other assets) sold or leased in the ordinary
course of business (excluding any such sales by operations or divisions discontinued or to be
discontinued), and (ii) sales of other assets for aggregate consideration of less than $1,000,000
in the aggregate for all such sales of assets during any Fiscal Year.




          “Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form
of Exhibit E, with such amendments or modifications as may be approved by Administrative Agent.




          “Assignment Effective Date” as defined in Section 10.6(b).




          “Authorized Officer” means, as applied to any Person, any individual holding the position of
chief executive officer, president or one of its executive vice presidents or senior vice
presidents, and such Person’s chief financial officer, controller or treasurer.




          “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.




          “Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in
effect on such day and (ii) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.




          “Base Rate Loan” means a Loan bearing interest at a rate determined by reference to the Base
Rate.




          “Beneficiary” means each Agent, Issuing Bank, Lender and Lender Counterparty.




          “Board of Governors” means the Board of Governors of the United States Federal Reserve System,
or any successor thereto.




-5-









 








          “Borrower” as defined in the preamble hereto.




          “Business Day” means (i) any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or is a day on which banking institutions located
in such state are authorized or required by law or other governmental action to close and (ii) with
respect to all notices, determinations, fundings and payments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, the term “Business Day” shall mean any day which is a
Business Day described in clause (i) and which is also a day for trading by and between banks in
Dollar deposits in the London interbank market.




          “Capital Lease” means, as applied to any Person, any lease of any property (whether real,
personal or mixed) by that Person as lessee that, in conformity with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that Person.




          “Capital Stock” means any and all shares, interests, participations or other equivalents
(however designated) of capital stock of a corporation, any and all equivalent ownership interests
in a Person (other than a corporation), including, without limitation, partnership interests and
membership interests, and any and all warrants, rights or options to purchase or other arrangements
or rights to acquire any of the foregoing.




          “Cash” means money, currency or a credit balance in any demand or Deposit Account.




          “Cash Equivalents” means, as at any date of determination, (i) marketable securities (a)
issued or directly and unconditionally guaranteed as to interest and principal by the United States
Government or (b) issued by any agency of the United States the obligations of which are backed by
the full faith and credit of the United States, in each case maturing within one year after such
date; (ii) marketable direct obligations issued by any State of the United States of America or any
political subdivision of any such State or any public instrumentality thereof maturing within one
year from the date of acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either S&P or Moody’s; (iii) commercial paper maturing no more than
one year from the date of creation thereof and having, at the time of the acquisition thereof, a
rating of at least A-1 from S&P or at least P-1 from Moody’s; (iv) certificates of deposit or
bankers’ acceptances maturing within one year after such date and issued or accepted by any Lender
or by any commercial bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least “adequately capitalized” (as defined in
the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in
such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund
that (a) has substantially all of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and
(c) has the highest rating obtainable from either S&P or Moody’s.




          “Certificate Regarding Non-Bank Status” means a certificate substantially in the form of
Exhibit F.




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          “Change of Control” means, at any time, (i) any Person or “group” (within the meaning of Rules
13d-3 and 13d-5 under the Exchange Act) (a) shall have acquired beneficial ownership of 35% or more
on a fully diluted basis of the voting and/or economic interest in the Capital Stock of Holdings or
(b) shall have obtained the power (whether or not exercised) to elect a majority of the members of
the board of directors (or similar governing body) of Holdings; (ii) the majority of the seats
(other than vacant seats) on the board of directors (or similar governing body) of Holdings cease
to be occupied by Persons who either (a) were members of the board of directors of Holdings on the
Initial Closing Date or (b) were nominated for election by the board of directors of Holdings, a
majority of whom were directors on the Initial Closing Date or whose election or nomination for
election was previously approved by a majority of such directors; (iv) any “change of control” or
similar event under the Subordinated Debt Documents shall occur; or (v) Holdings shall cease to
beneficially own and control one hundred percent (100%), on a fully diluted basis, of the economic
and voting interests in the Capital Stock of Borrower or any Guarantor (other than with respect to
a disposition of a Guarantor permitted hereunder).




          “Class” means (i) with respect to Lenders, each of the following classes of Lenders: (a)
Lenders having Term Loan Exposure, and (b) Lenders having Revolving Exposure (including Swing Line
Lender); and (ii) with respect to Loans, each of the following classes of Loans: (a) Term Loans and
(b) Revolving Loans (including Swing Line Loans).




          “Closing Date Material Adverse Effect” means any change or effect that (i) is materially
adverse to the business, operations, assets, properties, results of operations or financial
condition of the Credit Parties taken as whole, or (ii) prevents a Credit Party’s ability from
consummating the transactions contemplated hereby on a timely basis; provided,
however, in determining whether a Closing Date Material Adverse Effect has occurred, there
shall be excluded any effect on the Credit Parties relating to or arising in connection with (A)
the negotiation (including activities relating to due diligence), execution, delivery or public
announcement or the pendency of the Acquisition Agreement or the transactions contemplated thereby
or any actions required to be taken in compliance therewith (exclusive, however, of the actions
required to be taken by Section 7.1 of the Acquisition Agreement) or otherwise with the consent of
Borrower, including the impact thereof on the relationships of the Credit Parties (or any one or
more of them) with customers, suppliers, distributors, consultants, employees or independent
contractors or other third parties with whom the Credit Parties (or any one or more of them) has
any relationship and including any litigation brought by any shareholder of any of the Credit
Parties solely as a result of the transactions contemplated thereby, (B) any fact, circumstance or
condition disclosed in the “Company Disclosure Schedule” delivered by Holdings to the Lead Arranger
sent via e-mail by Holdings to the Agent on June 3, 2006 (as used in this definition, the
“Disclosure Schedule”) to the extent such change, effect or circumstance is specifically set forth
in the Disclosure Schedule or is reasonably apparent from the face of the Disclosure Schedule
without additional information, (C) any change in the market price or trading volume of the
Laserscope’s securities, in and of itself, (D) any failure, in and of itself (i.e., which does not
otherwise trigger an actual or pro forma failure of Holdings and its Subsidiaries to reasonably be
expected to meet its financial covenants in the Credit Documents), by Holdings and its Subsidiaries
or Laserscope and its Subsidiaries to meet any projections or forecasts for any period ending (or
for which revenues or earnings are released) on or after the date hereof, (E) any change in
federal, state, non-U.S. or local law, regulations, policies or

-7-









 








procedures, or interpretations thereof, generally accepted accounting principles or regulatory
accounting requirements applicable or potentially applicable to the industries in which the Credit
Parties operate, (F) changes generally affecting the industries in which the Credit Parties
operate, (G) changes in economic conditions (including changes in the prevailing interest rates) in
the United States, in any region thereof, or in any non-U.S. or global economy or (H) any attack
on, or by, outbreak or escalation of hostilities or acts of terrorism involving, the United States,
or any declaration of war by the United States Congress or any hurricane or other natural disaster;
provided, further, that the changes referred to in clauses (E) through (G) do not
have a materially disproportionate effect (relative to other industry participants) on the Credit
Parties, taken as a whole, and that for purposes of this definition, the term “Credit Parties”
includes the Laserscope and its Subsidiaries, whether or not the Acquisition has been consummated.




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




          “Collateral” means, collectively, all of the real, personal and mixed property (including
Capital Stock) in which Liens are granted pursuant to the Collateral Documents as security for the
Obligations.




          “Collateral Agent” as defined in the preamble hereto.




          “Collateral Documents” means the Pledge and Security Agreement, the intellectual property
security agreements executed in connection therewith, the Mortgages, Leasehold Mortgages, the
Landlord Waiver and Consent Agreements, if any, warehouse agreements and collateral access
agreements, if any, deposit account control agreements, securities account control agreements, if
any, trademark, patent and copyright security agreements, the Non-U.S. Intercompany Notes, and all
other instruments, documents and agreements delivered by any Credit Party pursuant to this
Agreement or any of the other Credit Documents in order to grant to Collateral Agent, for the
benefit of Secured Parties, a Lien on any real, personal or mixed property of that Credit Party as
security for the Obligations.




          “Collateral Questionnaire” means a certificate in form satisfactory to Collateral Agent that
provides information with respect to the personal or mixed property of each Credit Party.




          “Commitment” means any Revolving Commitment or Term Loan Commitment.




          “Companies” shall mean Holdings and its Subsidiaries; and “Company” shall mean any one of
them.




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




          “Consolidated Adjusted EBITDA” means, for any period, an amount determined for Holdings and
its Subsidiaries on a consolidated basis equal to the difference of (i) the sum, without
duplication, of the amounts for such period of (a) Consolidated Net Income, (b) Consolidated
Interest Expense, (c) provisions for taxes based on income, (d) total depreciation expense, (e)
total amortization expense, (f) other non-Cash items reducing

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Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an
accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash
item that was paid in a prior period), (g) one-time non-recurring non-Cash fees and expenses
arising in connection with the Acquisition and the Loans advanced by Lenders to Borrower on the
Initial Closing Date and on the Second Closing Date, and (h) one-time non-recurring Cash fees and
expenses related to severance, retention and integration arising in connection with the Acquisition
in an amount not to exceed $20,000,000; provided that such fees and expenses are accrued in
the Fiscal Quarter ending September 30, 2006 and shall not be measured and added back for any
period ending after June 30, 2007, minus (ii) other non-Cash items increasing Consolidated
Net Income for such period (excluding any such non-Cash item to the extent it represents the
reversal of an accrual or reserve for potential Cash item in any prior period).




          “Consolidated Capital Expenditures” means, for any period, the aggregate of all expenditures
of Holdings and its Subsidiaries during such period determined on a consolidated basis that, in
accordance with GAAP, are or should be included in “purchase of property and equipment or which
should otherwise be capitalized” or similar items reflected in the consolidated statement of cash
flows of Holdings and its Subsidiaries.




          “Consolidated Cash Interest Expense” means, for any period, Consolidated Interest Expense for
such period, excluding any amount not payable in Cash.




          “Consolidated Current Assets” means, as at any date of determination, the total assets of
Holdings and its Subsidiaries on a consolidated basis that may properly be classified as current
assets in conformity with GAAP, excluding Cash and Cash Equivalents.




          “Consolidated Current Liabilities” means, as at any date of determination, the total
liabilities of Holdings and its Subsidiaries on a consolidated basis that may properly be
classified as current liabilities in conformity with GAAP, excluding the current portion of long
term debt.




          “Consolidated Excess Cash Flow” means, for any period, an amount (if positive) equal to: (i)
the sum, without duplication, of the amounts for such period of (a) Consolidated Adjusted EBITDA,
plus (b) the Consolidated Working Capital Adjustment, minus (ii) the sum, without
duplication, of the amounts for such period of (a) Consolidated Capital Expenditures (net of any
proceeds of (y) any related financings with respect to such expenditures and (z) any sales of
assets used to finance such expenditures), (b) Consolidated Cash Interest Expense, (c) Indebtedness
of the type described in clause (iv) of the definition thereof to the extent payable in Cash with
respect to such Period, and (d) provisions for current taxes based on income of Holdings and its
Subsidiaries and payable in Cash with respect to such period.




          “Consolidated Fixed Charges” means, for any period, the sum, without duplication, of the
amounts determined for Holdings and its Subsidiaries on a consolidated basis equal to (a)
Consolidated Cash Interest Expense, (b) scheduled payments of principal on Consolidated Total Debt,
(c) Consolidated Capital Expenditures (other than the purchase price of any Permitted Acquisition),
(d) the current portion of income taxes actually paid by Holdings or any of its Subsidiaries with
respect to such period and (e) to the extent not duplicative of

-9-









 








amounts reflected in the preceding clauses (a) through (d), payment in respect of any
Indebtedness of the type described in clause (iv) of the definition thereof.




          “Consolidated Interest Expense” means, for any period, total interest expense (including that
portion attributable to Capital Leases in accordance with GAAP and capitalized interest) of
Holdings and its Subsidiaries on a consolidated basis with respect to Consolidated Total Debt,
including all commissions, discounts and other fees and charges owed with respect to letters of
credit and net costs under Interest Rate Agreements.




          “Consolidated Net Income” means, for any period, (i) the net income (or loss) of Holdings and
its Subsidiaries on a consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP, minus (ii) (a) the income (or loss) of any Person
(other than a Subsidiary of Holdings) in which any other Person (other than Holdings or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to Holdings or any of its Subsidiaries by such Person during such
period, (b) the income (or loss) of any Person accrued prior to the date it becomes a Subsidiary of
Holdings or is merged into or consolidated with Holdings or any of its Subsidiaries or that
Person’s assets are acquired by Holdings or any of its Subsidiaries, (c) the income of any
Subsidiary of Holdings to the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Subsidiary, (d) any after-tax gains or losses
attributable to Asset Sales or returned surplus assets of any Pension Plan, and (e) (to the extent
not included in clauses (a) through (d) above) any net extraordinary gains or net extraordinary
losses.




          “Consolidated Senior Debt” means, as at any date of determination, the aggregate stated
balance sheet amount of all Indebtedness of Holdings and its Subsidiaries other than any
Indebtedness subordinated in right of payment of all Indebtedness (including the Senior
Subordinated Notes) and, to the extent otherwise included, the face amount of any letter of credit
issued for the account of Borrower or any Subsidiary or as to which Borrower or any Subsidiary is
otherwise liable for any reimbursement of drawings, determined on a consolidated basis in
accordance with GAAP.




          “Consolidated Total Debt” means, as at any date of determination, the aggregate stated balance
sheet amount of all Indebtedness of Holdings and its Subsidiaries determined on a consolidated
basis in accordance with GAAP.




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




          “Consolidated Working Capital Adjustment” means, for any period on a consolidated basis, the
amount (which may be a negative number) by which Consolidated Working Capital as of the beginning
of such period exceeds (or is less than) Consolidated Working Capital as of the end of such period.




-10-









 








          “Contractual Obligation” means, as applied to any Person, any provision of any Security issued
by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of its properties is bound
or to which it or any of its properties is subject.




          “Contributing Guarantors” as defined in Section 7.2.




          “Conversion/Continuation Date” means the effective date of a continuation or conversion, as
the case may be, as set forth in the applicable Conversion/Continuation Notice.




          “Conversion/Continuation Notice” means a Conversion/Continuation Notice substantially in the
form of Exhibit A-2.




          “Convertible Proceeds Amount” means $362,537,500.




          “Counterpart Agreement” means a Counterpart Agreement substantially in the form of Exhibit H
delivered by a Credit Party pursuant to Section 5.10.




          “Credit Date” means the date of a Credit Extension.




          “Credit Document” means any of this Agreement, the Notes, if any, the Collateral Documents,
the Environmental Indemnity Agreement, the Fee Letter, any documents or certificates executed by
Borrower or Holdings in favor of Issuing Bank relating to Letters of Credit, and all other
documents, instruments or agreements executed and delivered by a Credit Party for the benefit of
any Agent, Issuing Bank or any Lender in connection herewith.




          “Credit Extension” means the making of a Loan or the issuing of a Letter of Credit.




          “Credit Party” means the Borrower, each Guarantor, and each other Affiliate of the Borrower
from time to time party to a Credit Document.




          “Currency Agreement” means any foreign exchange contract, currency swap agreement, futures
contract, option contract, synthetic cap or other similar agreement or arrangement, each of which
is for the purpose of hedging the foreign currency risk associated with Holdings’ and its
Subsidiaries’ operations and not for speculative purposes.




          “Default” means a condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.




          “Default Excess” means, with respect to any Defaulting Lender, the excess, if any, of such
Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of Loans of all
Lenders (calculated as if all Defaulting Lenders (other than such Defaulting Lender) had funded all
of their respective Defaulted Loans) over the aggregate outstanding principal amount of all Loans
of such Defaulting Lender.




          “Default Period” means, with respect to any Defaulting Lender, the period commencing on the
date of the applicable Funding Default and ending on the earliest of the

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following dates: (i) the date on which all Commitments are cancelled or terminated and/or the
Obligations are declared or become immediately due and payable, (ii) the date on which (a) the
Default Excess with respect to such Defaulting Lender shall have been reduced to zero (whether by
the funding by such Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the
non-pro rata application of any voluntary or mandatory prepayments of the Loans in accordance with
the terms of Section 2.13 or Section 2.14 or by a combination thereof) and (b) such Defaulting
Lender shall have delivered to Borrower and Administrative Agent a written reaffirmation of its
intention to honor its obligations hereunder with respect to its Commitments, and (iii) the date on
which Borrower, Administrative Agent and Requisite Lenders waive all Funding Defaults of such
Defaulting Lender in writing.




          “Defaulted Loan” as defined in Section 2.22.




          “Defaulting Lender” as defined in Section 2.22.




          “Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings
and loan association, credit union or like organization, other than an account evidenced by a
negotiable certificate of deposit.




          “Documentation Agent” as defined in the preamble, and any successor agent.




          “Dollars” and the sign “$” mean the lawful money of the United States of America.




          “Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of
America, any State thereof or the District of Columbia.




          “Eligible Assignee” means (i) any Lender, any Affiliate of any Lender and any Related Fund
(any two or more Related Funds being treated as a single Eligible Assignee for all purposes
hereof), and (ii) any commercial bank, insurance company, investment or mutual fund or other entity
that is an “accredited investor” (as defined in Regulation D under the Securities Act) and which
extends credit or buys loans as one of its businesses; provided, no Affiliate of Borrower
shall be an Eligible Assignee.




          “Employee Benefit Plan” means (i) any “employee benefit plan” as defined in Section 3(3) of
ERISA which is or was sponsored, maintained or contributed to by, or required to be contributed by,
Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates; and (ii) all other
employee benefit plans, programs, policies, agreements or arrangements, including any deferred
compensation plan, incentive plan, bonus plan or arrangement, stock option plan, stock purchase
plan, stock award plan or other equity-based plan, change in control agreement, retention,
severance pay plan, dependent care plan, sick leave, disability, death benefit, group insurance,
hospitalization, dental, life, any fund, trust or arrangement providing health benefits including
multiemployer welfare arrangements, a multiple employer welfare fund or arrangement, cafeteria
plan, employee assistance program, scholarship program, employment contract, retention incentive
agreement, termination agreement, severance agreement, non-competition agreement, consulting
agreement, confidentiality agreement, vacation policy, employee loan, or other similar plan,
agreement or arrangement, whether written or oral, funded or unfunded, or actual or contingent
which is or was sponsored, maintained or contributed to by,
or required to be contributed by, Holdings, any of its Subsidiaries to or any of their
respective ERISA Affiliates.




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          “Environmental Claim” means any investigation, notice, notice of violation, claim, action,
suit, proceeding, demand, abatement order or other order or directive (conditional or otherwise),
by any Governmental Authority or any other Person, arising (i) pursuant to or in connection with
any actual or alleged violation of any Environmental Law; (ii) in connection with any Hazardous
Material or any actual or alleged Hazardous Materials Activity; or (iii) in connection with any
actual or alleged damage, injury, threat or harm to health, safety, natural resources or the
environment.




          “Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement dated
as of the date hereof by each of the Credit Parties for the benefit of the Collateral Agent.




          “Environmental Laws” means any and all current or future foreign or domestic, federal or state
(or any subdivision of either of them), statutes, ordinances, orders, rules, regulations,
judgments, common law, Governmental Authorizations, or any other requirements of Governmental
Authorities relating to (i) environmental matters, including those relating to any Hazardous
Materials Activity; (ii) the generation, use, storage, transportation or disposal of Hazardous
Materials; or (iii) environmental protection, occupational safety and health, industrial hygiene,
natural resources, land use or the protection of human, plant or animal health or welfare, in any
manner applicable to Holdings or any of its Subsidiaries or any Real Property.




          “Equity Rights” means all securities convertible or exchangeable for Capital Stock and all
warrants, options or other rights to purchase or subscribe for any Capital Stock, whether or not
presently convertible, exchangeable or exercisable.




          “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, and any successor thereto.




          “ERISA Affiliate” means, as applied to any Person, (i) any corporation which is a member of a
controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is a member; (ii) any trade or business (whether or not incorporated) which is
a member of a group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member. Any former ERISA Affiliate of Holdings or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Holdings or any such Subsidiary
within the meaning of this definition with respect to the period such entity was an ERISA Affiliate
of Holdings or such Subsidiary and with respect to liabilities arising after such period for which
Holdings or such Subsidiary could be liable under the Internal Revenue Code or ERISA.




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          “ERISA Event” means (i) a “reportable event” within the meaning of Section 4043 of ERISA and
the regulations issued thereunder with respect to any Pension Plan
(excluding those for which the provision for 30-day notice to the PBGC has been waived by
regulation); (ii) the failure to meet the minimum funding standard of Section 412 of the Internal
Revenue Code with respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a required installment
under Section 412(m) of the Internal Revenue Code with respect to any Pension Plan or the failure
to make any required contribution to a Multiemployer Plan; (iii) the provision by the administrator
of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal by
Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from any Pension Plan
with two or more contributing sponsors or the termination of any such Pension Plan resulting in
liability to Holdings, any of its Subsidiaries or any of their respective Affiliates pursuant to
Section 4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to terminate any
Pension Plan, or the occurrence of any event or condition which might constitute grounds under
ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; (vi)
the imposition of liability on Holdings, any of its Subsidiaries or any of their respective ERISA
Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of Section
4212(c) of ERISA; (vii) the withdrawal of Holdings, any of its Subsidiaries or any of their
respective ERISA Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential liability therefore,
or the receipt by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates of
notice from any Multiemployer Plan that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA, or that it intends to terminate or has terminated under Section 4041A or
4042 of ERISA; (viii) the occurrence of an act or omission which could give rise to the imposition
on Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates of fines,
penalties, taxes or related charges under Chapter 43 of the Internal Revenue Code or under Section
409, Section 502(c), (i) or (l), or Section 4071 of ERISA in respect of any Employee Benefit Plan;
(ix) the assertion of a material claim (other than routine claims for benefits) against any
Employee Benefit Plan other than a Multiemployer Plan or the assets thereof, or against Holdings,
any of its Subsidiaries or any of their respective ERISA Affiliates in connection with any Employee
Benefit Plan; (x) receipt from the Internal Revenue Service of notice of the failure of any Pension
Plan (or any other Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue Code, or the failure
of any trust forming part of any Pension Plan to qualify for exemption from taxation under Section
501(a) of the Internal Revenue Code; (xi) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan; (xii)
the commencement of any administrative investigation, audit or other administrative proceeding by
the Department of Labor, Internal Revenue Service or other Governmental Authority, including any
voluntary compliance submission through the IRS’s Employee Plans Compliance Resolution System or
the DOL’s Voluntary Fiduciary Correction Program; or (xiii) the occurrence of a non-exempt
“prohibited transaction” within the meaning of Section 406 of ERISA or Section 4975 of the Internal
Revenue Code.




          “Eurodollar Rate Loan” means a Loan bearing interest at a rate determined by reference to the
Adjusted Eurodollar Rate.




-14-









 








          “Event of Default” means each of the conditions or events set forth in Section 8.1.




          “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.




          “Excluded Debt Incurrence” means any issuance of Indebtedness permitted by Section 6.1 (other
than Permitted Convertible Debt to the extent specified in Section 6.1).




          “Excluded Equity Issuance” means any issuance of Capital Stock or Equity Rights issued in
connection with (a) a Permitted Acquisition, (b) any conversion, redemption or refinancing of the
Senior Subordinated Notes or any other Permitted Convertible Debt, (c) the exercise by a present or
former employee, officer or director under a stock incentive plan, stock option plan or other
equity-based compensation plan or arrangement, (d) any employee stock option plan or any other
employee benefit plan, or (e) any dividend reinvestment plan or direct stock purchase plan.




          “Existing Indebtedness” means Indebtedness and other obligations outstanding, if any, which
are to be refinanced on the Initial Closing Date.




          “Existing Laserscope Credit Agreement” means that certain Loan and Security Agreement dated as
of October 1, 1999 by and between Laserscope, as borrower thereunder, and Silicon Valley Bank, as
lender thereunder, as amended, supplemented and modified prior to the date of this Agreement.




          “Facility” means any real property (including all buildings, fixtures or other improvements
located thereon) now, hereafter or heretofore owned, leased, operated or used by Holdings or any of
its Subsidiaries or any of their respective predecessors or Affiliates.




          “Fair Share Contribution Amount” as defined in Section 7.2.




          “Fair Share” as defined in Section 7.2.




          “Fee Letter” means the fee letter agreement dated May 25, 2006, by and among Borrower,
Administrative Agent and CIT Capital, as amended and modified prior to the date hereof and as may
hereafter be amended, restated, modified and supplemented from time to time.




          “Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal,
rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided, (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (ii) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to Administrative Agent, in its capacity as a Lender, on such day on such
transactions as determined by Administrative Agent.




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          “Finance Subsidiary” means a Subsidiary, the primary purpose of which is to finance the
business operations of Holdings or any of its Subsidiaries and which has no material assets or
operations other than those permitted by Rule 3a-5 under the Investment Company Act, as amended
from time to time.




          “Financial Officer Certification” means, with respect to the financial statements for which
such certification is required, the certification of the chief financial officer of Holdings and
Borrower that such financial statements fairly present, in all material respects, the financial
condition of Holdings and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes resulting from audit
and normal year-end adjustments.




          “Financial Plan” as defined in Section 5.1(h).




          “First Priority” means, with respect to any Lien purported to be created in any Collateral
pursuant to any Collateral Document, that such Lien ranks first in priority to all other Liens,
other than any Permitted Lien that is permitted to have higher priority.




          “Fiscal Quarter” means a fiscal quarter of any Fiscal Year.




          “Fiscal Year” means the fiscal year of Holdings and its Subsidiaries ending on the Saturday
closest to December 31 of each calendar year.




          “Fixed Charge Coverage Ratio” means, the ratio as of the last day of any Fiscal Quarter or
other date of determination of (i) Consolidated Adjusted EBITDA for the four (4) Fiscal Quarter
period ending on such date to (ii) Consolidated Fixed Charges for such four-Fiscal Quarter period
ending on such date.




          “Flood Hazard Property” means any Real Estate Asset subject to a mortgage in favor of
Collateral Agent, for the benefit of the Secured Parties, and located in an area designated by the
Federal Emergency Management Agency as having special flood or mud slide hazards.




          “Foreign Holding Company” as defined in Section 6.18.




          “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.




          “Funding Default” as defined in Section 2.22.




          “Funding Guarantors” as defined in Section 7.2.




          “Funding Notice” means a notice substantially in the form of Exhibit A-1.




          “GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2,
United States generally accepted accounting principles in effect as of the date of determination
thereof.




          “Governmental Acts” means any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority.




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          “Governmental Authority” means any federal, state, municipal, national or other government,
governmental department, commission, board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government or any court, in each
case whether associated with a state of the United States, the United States, or a foreign entity
or government.




          “Governmental Authorization” means any permit, license, authorization, plan, directive,
consent order or consent decree of or from any Governmental Authority.




          “Grantor” as defined in the Pledge and Security Agreement.




          “Guaranteed Obligations” as defined in Section 7.1.




          “Guarantor” means each of Holdings and each Domestic Subsidiary of Holdings (other than the
Borrower), and to the extent no material adverse tax consequences to the Borrower would result
therefrom, each Foreign Subsidiary.




          “Guaranty” means the guaranty of each Guarantor set forth in Section 7.




          “Hazardous Materials” means any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any Governmental Authority or which may or could pose a hazard
to the health and safety of the owners, occupants or any Persons in the vicinity of any Real
Property or to the indoor or outdoor environment or natural resources.




          “Hazardous Materials Activity” means any past, current, proposed or threatened activity, event
or occurrence involving any Hazardous Materials, including the use, manufacture, possession,
storage, holding, presence, existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement, removal, remediation,
disposal, disposition or handling of any Hazardous Materials, and any investigation, corrective
action or response action with respect to any of the foregoing.




          “Health Care Law” means any Federal, state or local statute, ordinance, rule or regulation,
relating to the provision of health care services, including all laws, ordinances, rules and
regulations (a) relating to any State or Federal Health Care Program; or (b) setting forth, in the
health care context: (1) definitions of kickbacks, fraud and abuse, and self-referral, (2)
standards and procedures for billing and coding, (3) limitations on transactions with, and payments
to, affiliated parties under any State or Federal Health Care Program and other applicable laws,
(4) limitations on patient transfers, (5) limitations on reassigning payments received under State
and Federal Health Care Programs, (6) limitations on fee splitting, and (7) limitations on the
ability of a health care provider to refuse or limit health care services.




          “Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement entered into with a
Lender Counterparty.




          “Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from
time to time may be contracted for, charged, or received under the laws applicable to any Lender
which are presently in effect or, to the extent allowed by law, under

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such applicable laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow.




          “Historical Financial Statements” means, as of the Initial Closing Date and as of the Second
Closing Date, (i) the audited consolidated financial statements of each of Holdings and its
Subsidiaries and Laserscope and its Subsidiaries, for the immediately preceding three Fiscal Years,
consisting of balance sheets and the related consolidated statements of income, stockholders’
equity and cash flows for such Fiscal Years, and (ii) the unaudited consolidated financial
statements of each of Holdings and its Subsidiaries and Laserscope and its Subsidiaries as at the
most recently ended Fiscal Quarter for which a form 10-Q has been required to be filed in the
ordinary course pursuant to the reporting requirements of the rules and regulations of the SEC,
consisting of a balance sheet and the related consolidated statements of income, stockholders’
equity and cash flows for the three-, six-or nine-month period, as applicable, ending on such date,
and, in the case of clauses (i) and (ii), certified by the chief financial officer of Holdings that
they fairly present, in all material respects, the financial condition of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations and their cash flows for
the periods indicated, subject to changes resulting from audit and normal year-end adjustments.




          “Increased-Cost Lenders” as defined in Section 2.23.




          “Indebtedness”, as applied to any Person, means, without duplication, (i) all indebtedness for
borrowed money; (ii) that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP; (iii) notes payable and
drafts accepted representing extensions of credit whether or not representing obligations for
borrowed money; (iv) any obligation owed for all or any part of the deferred purchase price of
property or services (excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in respect thereof or
(b) evidenced by a note or similar written instrument (including, without limitation, any earn-out
payments, milestone payments or similar payments (other than royalty payments currently expensed));
(v) all indebtedness secured by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person; (vi) the face amount of any letter of credit issued for
the account of that Person or as to which that Person is otherwise liable for reimbursement of
drawings; (vii) the direct or indirect guaranty, endorsement (otherwise than for collection or
deposit in the ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another; (viii) any obligation of such Person the
primary purpose or intent of which is to provide assurance to an obligee that the obligation of the
obligor thereof will be paid or discharged, or any agreement relating thereto will be complied
with, or the holders thereof will be protected (in whole or in part) against loss in respect
thereof; (ix) any liability of such Person for an obligation of another through any agreement
(contingent or otherwise), including any earnout or milestone payments under any merger agreement
or acquisition agreement or (a) to purchase, repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or discharge of such obligation (whether in
the form of loans, advances, stock purchases, capital contributions or otherwise) or (b) to
maintain the solvency or any balance sheet item, level of income or financial condition of another
if, in the case of any agreement described under

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subclauses (a) or (b) of this clause (ix), the primary purpose or intent thereof is as
described in clause (viii) above; and (x) all obligations of such Person in respect of any exchange
traded or over the counter derivative transaction, including, without limitation, any Interest Rate
Agreement and Currency Agreement, whether entered into for hedging or speculative purposes.




          “Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses,
damages (including natural resource damages), penalties, claims (including Environmental Claims),
costs (including the costs of any investigation, study, sampling, testing, abatement, cleanup,
removal, remediation or other response action necessary to remove, remediate, clean up or abate any
Hazardous Materials Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by any Person, whether
or not any such Indemnitee shall be designated as a party or a potential party thereto, and any
fees or expenses incurred by Indemnitees in enforcing this indemnity), whether direct, indirect or
consequential and whether based on any federal, state or foreign laws, statutes, rules or
regulations (including securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or otherwise, that may be
imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Credit Documents or the transactions contemplated
hereby or thereby (including the Lenders’ agreement to make Credit Extensions or the use or
intended use of the proceeds thereof, or any enforcement of any of the Credit Documents (including
any sale of, collection from, or other realization upon any of the Collateral or the enforcement of
the Guaranty)); (ii) the statements contained in the commitment letter delivered by CIT Healthcare
to Borrower with respect to the transactions contemplated by this Agreement; or (iii) any
Environmental Claim or any Hazardous Materials Activity relating to or arising from, directly or
indirectly, any past or present activity, operation, land ownership, or practice of Holdings or any
of its Subsidiaries.




          “Indemnitee” as defined in Section 10.3(a).




          “Indenture” means the Indenture dated as of June 27, 2006 among Holdings, the Notes Guarantors
(as such term is defined in the Indenture) party thereto and U.S. Bank National Association, as
Trustee.




          “Initial Closing Date” means the date on which each of the conditions specified in Section
2.1, Section 2.2 and Section 3.1 shall have been satisfied, or waived in accordance with Section
10.5.




          “Installment” as defined in Section 2.12(a).




          “Interest Coverage Ratio” means the ratio as of the last day of any Fiscal Quarter of (i)
Consolidated Adjusted EBITDA for the four-Fiscal Quarter period then ended to (ii) Consolidated
Cash Interest Expense for such four-Fiscal Quarter period.




          “Interest Payment Date” means with respect to (i) any Revolving Loan or Term Loan that is a
Base Rate Loan, each March 31, June 30, September 30 and December 31 of each year, commencing on
the first such date to occur after the Initial Closing Date and the final

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maturity date of such Loan; (ii) any Revolving Loan or Term Loan that is a Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan; provided, in the case
of each Interest Period of longer than three months “Interest Payment Date” shall also include each
date that is three months, or an integral multiple thereof, after the commencement of such Interest
Period.




          “Interest Period” means, in connection with a Eurodollar Rate Loan, an interest period of
one-, two-, three- or six-months, as selected by Borrower in the applicable Funding Notice or
Conversion/Continuation Notice, (i) initially, commencing on the Credit Date or
Conversion/Continuation Date thereof, as the case may be; and (ii) thereafter, commencing on the
day on which the immediately preceding Interest Period expires; provided, (a) if an
Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period
shall expire on the next succeeding Business Day unless no further Business Day occurs in such
month, in which case such Interest Period shall expire on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clauses (c) and (d), of this definition, end on the last Business Day of
a calendar month; (c) no Interest Period with respect to any portion of the Term Loans shall extend
beyond the Term Loan Maturity Date; and (d) no Interest Period with respect to any portion of the
Revolving Loans shall extend beyond the Revolving Commitment Termination Date.




          “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedging agreement or other similar agreement or
arrangement, each of which is for the purpose of hedging the interest rate exposure associated with
Holdings’ and its Subsidiaries’ operations and not for speculative purposes.




          “Interest Rate Determination Date” means, with respect to any Interest Period, the date that
is two Business Days prior to the first day of such Interest Period.




          “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof
and from time to time hereafter, and any successor statute.




          “Investment” means (i) any direct or indirect purchase or other acquisition by Holdings or any
of its Subsidiaries of, or of a beneficial interest in, any of the Securities of any other Person
(other than a Guarantor); (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Holdings from any Person (other than Borrower or any
Guarantor), of any Capital Stock of such Person; and (iii) any direct or indirect loan, advance
(other than advances to employees for moving, entertainment and travel expenses, drawing accounts
and similar expenditures in the ordinary course of business) or capital contributions by Holdings
or any of its Subsidiaries to any other Person (other than Borrower or any Guarantor), including
all indebtedness and accounts receivable from that other Person that are not current assets or did
not arise from sales to that other Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.




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          “Issuance Notice” means an Issuance Notice substantially in the form of Exhibit A-3.




          “Issuing Bank” means any Lender party hereto that is appointed by the Borrower and acceptable
to Administrative Agent that agrees to act as “Issuing Bank” hereunder (which such Issuing Bank
shall become a party hereto pursuant to appropriate documentation (including by way of any
Assignment Agreement executed by such Issuing Bank (or any affiliate thereof) in its capacity as a
Lender hereunder), in its capacity as issuer of Letters of Credit hereunder, or any of its
permitted successors and assigns in such capacity.




          “Joint Venture” means a joint venture, partnership or other similar arrangement, whether in
corporate, partnership or other legal form; provided, in no event shall any corporate
Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party.




          “Landlord Consent and Estoppel” means, with respect to any Leasehold Property, a letter,
certificate or other instrument in writing from the lessor under the related lease, pursuant to
which, among other things, the landlord consents to the granting of a Mortgage on such Leasehold
Property by the Credit Party tenant, such Landlord Consent and Estoppel to be in form and substance
acceptable to Collateral Agent in its reasonable discretion, but in any event sufficient for
Collateral Agent to obtain a Title Policy with respect to such Mortgage.




          “Landlord Waiver and Consent Agreement” means a Landlord Waiver and Consent Agreement
substantially in the form of Exhibit K with such amendments or modifications as may be approved by
Collateral Agent.




          “Laserscope” means Laserscope, a California corporation, together with its Subsidiaries.




          “Laserscope Cash” means $20,100,000.




          “Lead Arranger” means collectively, CIT Capital and KeyBank, each as Co-Lead Arranger
hereunder.




          “Leasehold Property” means any leasehold interest of any Credit Party as lessee under any
lease of real property, other than any such leasehold interest designated from time to time by
Collateral Agent in its sole discretion as not being required to be included in the Collateral.




          “Lender” means each financial institution listed on the signature pages hereto as a Lender,
and any other Person that becomes a party hereto pursuant to an Assignment Agreement.




          “Lender Counterparty” means each Lender or any Affiliate of a Lender counterparty to a Hedge
Agreement (including any Person who is a Lender (and any Affiliate thereof) as of the Initial
Closing Date but subsequently, whether before or after entering into a Hedge Agreement, ceases to
be a Lender) including, without limitation, each such Affiliate that enters into a joinder
agreement with Collateral Agent.




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          “Letter of Credit” means a commercial or standby letter of credit issued or to be issued by
Issuing Bank pursuant to this Agreement.




          “Letter of Credit Sublimit” means the lesser of (i) $5,000,000 and (ii) the aggregate unused
amount of the Revolving Commitments then in effect.




          “Letter of Credit Usage” means, as at any date of determination, the sum of (i) the maximum
aggregate amount which is, or at any time thereafter may become, available for drawing under all
Letters of Credit then outstanding, and (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Bank and not theretofore reimbursed by or on behalf of Borrower.




          “Lien” means (i) any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement, and any lease in the nature thereof) and any option, trust or
other preferential arrangement having the practical effect of any of the foregoing and (ii) in the
case of Securities, any purchase option, call or similar right of a third party with respect to
such Securities.




          “Loan” means a Term Loan, a Revolving Loan, and/or a Swing Line Loan.




          “Margin Stock” as defined in Regulation U of the Board of Governors as in effect from time to
time.




          “Material Adverse Effect” means, whether singly or in conjunction with any other event, act,
condition, or occurrence of any nature, whether or not related, a material adverse effect on and/or
material adverse developments with respect to (i) the Collateral, business operations, properties,
assets or condition (financial or otherwise) of the Credit Parties taken as a whole; (ii) a
significant portion of the industry or business segment in which the Credit Parties operate or rely
upon if such effect or development is reasonably likely to have a material adverse effect on the
Credit Parties taken as a whole; (iii) the ability of any Credit Party to fully and timely perform
its Obligations; (iv) the legality, validity, binding effect, or enforceability against a Credit
Party of a Credit Document to which it is a party; (v) the rights, remedies and benefits available
to, or conferred upon, any Agent and any Lender or any Secured Party under any Credit Document or
(vi) the value of the Collateral, taken as a whole, or the validity, enforceability, perfection, or
priority of the Liens granted to the Collateral Agent for its benefit and for the benefit of the
other Secured Parties; provided that (a) the term “Credit Parties” includes Laserscope and
its Subsidiaries, whether or not the Acquisition has been consummated, (b) for purposes of any
determination, made prior to completion hereunder of the full disbursement of the Term Loans, under
the representations or warranties or covenants contained herein in or in the other Credit Documents
whether a “Material Adverse Effect” has occurred, there shall be excluded any effect on the Credit
Parties relating to or arising in connection with (A) the negotiation (including activities
relating to due diligence), execution, delivery or public announcement or the pendency of the
Acquisition Agreement or the transactions contemplated thereby or any actions required to be taken
in compliance therewith (exclusive, however, of the actions required to be taken by Section 7.1 of
the Acquisition Agreement) or otherwise with the consent of the Borrower, including the impact
thereof on the relationships of the Credit Parties




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(or any one or more of them) with customers, suppliers, distributors, consultants, employees
or independent contractors or other third parties with whom the Credit Parties (or any one or more
of them) has any relationship and including any litigation brought by any shareholder of any of the
Credit Parties solely as a result of the transactions contemplated thereby, (B) any fact,
circumstance or condition disclosed in the “Company Disclosure Schedule” delivered by Holdings to
the Lead Arranger sent via e-mail by Holdings to the Agent on June 3, 2006 (as used in this
definition, the “Disclosure Schedule”) to the extent such change, effect or circumstance is
specifically set forth in the Disclosure Schedule or is reasonably apparent from the face of the
Disclosure Schedule without additional information, (C) any change in the market price or trading
volume of the Laserscope’s securities, in and of itself, (D) any failure, in and of itself (i.e.,
which does not otherwise trigger an actual or pro forma failure of Holdings and its Subsidiaries to
reasonably be expected to meet its financial covenants in the Credit Documents), by Holdings and
its Subsidiaries or Laserscope and its Subsidiaries to meet any projections or forecasts for any
period ending (or for which revenues or earnings are released) on or after the date hereof, (E) any
change in federal, state, non-U.S. or local law, regulations, policies or procedures, or
interpretations thereof, generally accepted accounting principles or regulatory accounting
requirements applicable or potentially applicable to the industries in which the Credit Parties
operate, (F) changes generally affecting the industries in which the Credit Parties operate, (G)
changes in economic conditions (including changes in the prevailing interest rates) in the United
States, in any region thereof, or in any non-U.S. or global economy or (H) any attack on, or by,
outbreak or escalation of hostilities or acts of terrorism involving, the United States, or any
declaration of war by the United States Congress or any hurricane or other natural disaster and (c)
the changes referred to in clauses (b)(E) through (b)(G) do not have a materially disproportionate
effect (relative to other industry participants) on the Credit Parties, taken as a whole.




          “Material Contract” means any contract or other arrangement to which Holdings or any of its
Subsidiaries is a party (other than the Credit Documents), (i) which is a material definitive
document or agreement subject to 8-K reporting requirements of the rules and regulations of the
SEC, or (ii) for which breach, nonperformance, cancellation or failure to renew could reasonably be
expected to have a Material Adverse Effect (determined without regard to clauses (b) and (c) of the
proviso to the definition of “Material Adverse Effect”).




          “Material Real Estate Asset’’ means (i) (a) any fee-owned Real Estate Asset having a fair
market value in excess of $2,500,000 as of the date of the acquisition thereof and (b) all
Leasehold Properties other than those with respect to which the aggregate payments under the term
of the lease are less than $300,000 per annum or (ii) any Real Estate Asset that the Requisite
Lenders have determined is material to the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Holdings or any Subsidiary thereof, including the
Borrower.




          “Merger” means the merger of Merger Sub with and into Laserscope with the result that
Laserscope shall be a wholly-owned subsidiary of the Borrower.




          “Merger Sub” means Kermit Merger Corp., a California corporation, and a wholly-owned
subsidiary of the Borrower.




-23-









 








          “Minimum Condition” has the meaning given to such term in the Acquisition Agreement (without
regard to any amendments, supplements or other modifications thereto occurring after the initial
date thereof).




          “Moody’s” means Moody’s Investors Service, Inc.




          “Mortgage” means a Mortgage substantially in the form of Exhibit J, as it may be amended,
supplemented or otherwise modified from time to time.




          “Mortgaged Property” as defined in Section 3.1(f).




          “Multiemployer Plan” means any Employee Benefit Plan which is a “multiemployer plan” as
defined in Section 3(37) of ERISA.




          “NAIC” means The National Association of Insurance Commissioners, and any successor thereto.




          “Net Asset Sale Proceeds” means, with respect to any Asset Sale, an amount equal to: (i) Cash
payments (including any Cash received by way of deferred payment pursuant to, or by monetization
of, a note receivable or otherwise, but only as and when so received) received by Holdings or any
of its Subsidiaries from such Asset Sale, minus (ii) any bona fide direct costs incurred in
connection with such Asset Sale, including (a) income or gains taxes payable by the seller as a
result of any gain recognized in connection with such Asset Sale, (b) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale and (c) a reasonable reserve for any
indemnification payments (fixed or contingent) attributable to seller’s indemnities and
representations and warranties to purchaser in respect of such Asset Sale undertaken by Holdings or
any of its Subsidiaries in connection with such Asset Sale.




          “Net Debt/Equity Issuance Proceeds” means, with respect to any issuance of debt or equity
securities, an amount equal to: (i) Cash payments (including any Cash received by way of deferred
payment pursuant to, or by monetization of, a note receivable or otherwise, but only as and when so
received) received by Holdings or any of its Subsidiaries from such debt or equity issuance,
minus (a) any actual and reasonable costs incurred by Holdings or any of its Subsidiaries
in connection with the debt or equity, including underwriting discounts, reasonable legal fees and
expenses and commissions and other reasonable costs and expenses associated therewith, and (b) any
bona fide direct costs incurred in connection with such debt or equity issuance, including income
taxes payable as a result of any gain recognized in connection therewith.




          “Net Insurance/Condemnation Proceeds” means an amount equal to: (i) any Cash payments or
proceeds received by Holdings or any of its Subsidiaries (a) under any casualty, business
interruption or “key man” insurance policies in respect of a covered loss thereunder or (b) as a
result of the taking of any assets of Holdings or any of its Subsidiaries by any Person pursuant to
the power of eminent domain, condemnation or otherwise, or pursuant to a sale of any such assets to
a purchaser with such power under threat of such a taking, minus (ii) (a) any actual and
reasonable costs incurred by Holdings or any of its Subsidiaries in

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connection with the adjustment or settlement of any claims of Holdings or such Subsidiary in
respect thereof, and (b) any bona fide direct costs incurred in connection with any sale of such
assets as referred to in clause (i)(b) of this definition, including income taxes payable as a
result of any gain recognized in connection therewith.




          “Nonpublic Information” means information which has not been disseminated in a manner making
it available to investors generally, within the meaning of Regulation FD.




          “Non-U.S. Intercompany Note” shall mean a promissory note substantially in the form of Exhibit
L, with any modifications reasonably requested by the Administrative Agreement.




          “Non-U.S. Intercompany Note Collateral” shall mean all property pledged or granted as
collateral pursuant to any Non-U.S. Intercompany Note Security Document delivered on the Initial
Closing Date or thereafter pursuant to Section 5.10.




          “Non-U.S. Intercompany Note Party” means each of the Foreign Subsidiaries listed on Schedule
1.1 hereto and each Foreign Subsidiary created or acquired after the Initial Closing Date that
enters into any Non-U.S. Intercompany Note Security Document pursuant to Section 5.10.




          “Non-U.S. Intercompany Note Security Documents” shall mean each document securing any Non-U.S.
Intercompany Note delivered in connection with Section 5.10, including, without limitation, each
document delivered on the Initial Closing Date.




          “Non-US Lender” as defined in Section 2.20(c).




          “Note” means a Term Loan Note, a Revolving Loan Note or a Swing Line Note.




          “Notice” means a Funding Notice, an Issuance Notice, or a Conversion/ Continuation Notice.




          “Obligations” means all obligations of every nature of each Credit Party under the Credit
Documents, including obligations from time to time owed to the Agents (including former Agents),
the Lenders or any of them and Lender Counterparties, or any other Person required to be
indemnified by any Credit Party, that arises under any Credit Document or Hedge Agreement
(including, without limitation, with respect to a Hedge Agreement, obligations owed thereunder to
any person who was a Lender or an Affiliate of a Lender at the time such Hedge Agreement was
entered into), whether for principal, interest (including interest which, but for the filing of a
petition in bankruptcy with respect to such Credit Party, would have accrued on any Obligation,
whether or not a claim is allowed against such Credit Party for such interest in the related
bankruptcy proceeding), reimbursement of amounts drawn under Letters of Credit, payments for early
termination of Hedge Agreements, fees, expenses, indemnification or otherwise.




          “Obligee Guarantor” as defined in Section 7.7.




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          “Offer Conditions” has the meaning given to such term in the Acquisition Agreement (without
regard to any amendments, supplements or other modifications thereto, or waivers by Holdings or
Merger Sub, occurring or given after the initial date thereof).




          “Officer’s Certificate” means an Officer’s Certificate substantially in the form of Exhibit
G-1.




          “Option Exercise Minimum Condition” has the meaning given to such term in the Acquisition
Agreement (without regard to any amendments, supplements or other modifications thereto occurring
after the initial date thereof).




          “Organizational Documents” means (i) with respect to any corporation, its certificate or
articles of incorporation or organization, as amended, and its by-laws, as amended, (ii) with
respect to any limited partnership, its certificate of limited partnership, as amended, and its
partnership agreement, as amended, (iii) with respect to any general partnership, its partnership
agreement, as amended, and (iv) with respect to any limited liability company, its articles of
organization, as amended, and its operating agreement, as amended. In the event any term or
condition of this Agreement or any other Credit Document requires any Organizational Document to be
certified by a secretary of state or similar governmental official, the reference to any such
“Organizational Document” shall only be to a document of a type customarily certified by such
governmental official.




          “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.




          “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is
subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.




          “Permitted Acquisition” means




          (a) any acquisition by the Borrower or any of its Domestic Subsidiaries, whether by purchase,
merger or otherwise, of all or substantially all of the assets of, all of the Capital Stock of, or
a business line or unit or a division of, any Person; provided,





          (i) immediately prior to, and after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing or would result therefrom;




          (ii) all transactions in connection therewith shall be consummated, in all material
respects, in accordance with all applicable laws and in conformity with all applicable
Governmental Authorizations;




          (iii) in the case of the acquisition of Capital Stock all of the Capital Stock (except
for any such Securities in the nature of directors’ qualifying shares required pursuant to
applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary
of the Borrower in connection with such acquisition shall be owned 100% by Borrower or any
Domestic Subsidiary of the Borrower, and Borrower shall have taken, or caused to be taken,
as of the date such Person becomes a direct or indirect



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Subsidiary of the Borrower, each of the actions set forth in Sections 5.10 and/or 5.11,
as applicable;




          (iv) the acquisition shall have been approved by the board of directors or other
governing body or controlling Person of the Person acquired or the Person from whom such
assets or division is acquired;




          (v) Borrower shall be in compliance with the financial covenants set forth in Section
6.8 on a pro forma basis after giving effect to such acquisition as of the last day of the
Fiscal Quarter most recently ended;




          (vi) Borrower shall have delivered to Administrative Agent (A) at least thirty (30)
days (or such lesser number of days as may be agreed to by the Administrative Agent, but in
any event not less than fifteen (15) days) prior to such proposed acquisition, a Compliance
Certificate evidencing compliance with Section 6.8 as required under clause (v) above,
together with all relevant financial information with respect to such acquired assets,
including, without limitation, the aggregate consideration for such acquisition and any
other information required to demonstrate compliance with Section 6.8;




          (vii) any Person or assets or division as acquired in accordance herewith shall be in
same business or lines of business in which Holdings and/or its Subsidiaries are engaged as
of the Initial Closing Date; and




          (viii) any consideration consisting of Cash or Cash Equivalents shall satisfy the
limits in Section 6.7(g).



          (b) the Acquisition;




          (c) the acquisition of additional Laserscope Shares in accordance with applicable law;
provided that the cash component of the consideration paid for the acquisition of such Laserscope
Shares does not exceed the cash component of the consideration paid for any Laserscope Shares
pursuant to the Tender Offer; and




          (d) the merger of Laserscope with and into Merger Sub, with Laserscope being the surviving
entity, as required pursuant to Section 6.9 of this Agreement.




          “Permitted Convertible Debt” means the Senior Subordinated Notes and any other unsecured
senior subordinated or subordinated Indebtedness of Holdings or Borrower that provides for
conversion into, or exchange or exercise for, Capital Stock or Equity Rights under certain
circumstances and the terms of which provide that




          (a) no non-Credit Party (other than any Finance Subsidiary) shall be an obligor thereunder and
any guarantee by a Credit Party shall be subordinated to the extent set forth in clause (f) below;




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          (b) any payment of cash upon or in lieu of any conversion, exchange or exercise or redemption
is subject to the limitations set forth in this Agreement and the other Credit Documents;




          (c) no payment of cash upon or in lieu of any conversion or exchange or exercise (other than
in lieu of the issuance of a fractional share on a customary basis) may be made so long as any
Default or Event of Default shall have occurred and be continuing or shall result therefrom;




          (d) the first date on which the holders thereof may require a repurchase or redemption thereof
in cash by Holdings or Borrower shall be no earlier than July 1, 2013; provided that such
Indebtedness may include a provision permitting a holder thereof to effect a repurchase or
redemption upon a “fundamental change” (as such term is customarily used in a convertible debt
security issued in a public or Rule 144A offering) so long as such repurchase or redemption is not
effected until the consummation of the fundamental change and is subject to the limitations set
forth in this Agreement and the other Credit Documents;




          (e) the “events of default” and covenants thereunder shall be reasonably satisfactory to the
Administrative Agent as being customary for similar issues of convertible debt securities;




          (f) the subordination provisions thereof shall be reasonably satisfactory to the
Administrative Agent as being customary for similar issues of convertible debt securities; and




          (g) such Indebtedness shall be unsecured.




          “Permitted Liens” means each of the Liens permitted pursuant to Section 6.2.




          “Person” means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships, joint stock companies,
Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and Governmental Authorities.




          “Phase I Report’’ means, with respect to any Real Property, a report that (i) conforms to the
ASTM Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment
Process, E 1527, and (ii) was conducted no more than six months prior to the date such report is
required to be delivered hereunder, by one or more environmental consulting firms reasonably
satisfactory to Administrative Agent.




          “Platform” as defined in Section 5.1(o).




          “Pledge and Security Agreement” means the Pledge and Security Agreement to be executed by the
Borrower and each Guarantor substantially in the form of Exhibit I, as it may be amended,
supplemented or otherwise modified from time to time.




          “Prime Rate” means the rate of interest quoted in The Wall Street Journal, Money Rates Section
as the Prime Rate (currently defined as the base rate on corporate loans

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posted by at least 75% of the nation’s thirty (30) largest banks), as in effect from time to
time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged to any customer. Agent or any other Lender may make commercial loans or
other loans at rates of interest at, above or below the Prime Rate.




          “Principal Office” means, for each of Administrative Agent, Swing Line Lender and Issuing
Bank, such Person’s “Principal Office” as set forth on Appendix A, or such other office or office
of a third party or sub-agent, as appropriate, as such Person may from time to time designate in
writing to Borrower, Administrative Agent and each Lender.




          “Projections” as defined in Section 4.8.




          “Pro Rata Share” means (i) with respect to all payments, computations and other matters
relating to the Term Loan of any Lender, the (a) percentage obtained by dividing the Term Loan
Exposure of that Lender by (b) the aggregate Term Loan Exposure of all Lenders, and (ii) with
respect to all payments, computations and other matters relating to the Revolving Commitment or
Revolving Loans of any Lender or any Letters of Credit issued or participations purchased therein
by any Lender or any participations in any Swing Line Loans purchased by any Lender, the percentage
obtained by dividing (a) the Revolving Exposure of that Lender by (b) the aggregate Revolving
Exposure of all Lenders.




          “Real Estate Asset” means, at any time of determination, any interest (fee, leasehold or
otherwise) then owned by any Credit Party in any real property.




          “Real Property” means any real property (including all buildings, fixtures or other
improvements located thereon) now, hereafter or heretofore owned, leased and operated or used by
Holdings or any of its Subsidiaries or any of their respective predecessors or Affiliates.




          “Record Document” means, with respect to any Leasehold Property, (i) the lease evidencing such
Leasehold Property or a memorandum thereof, executed and acknowledged by the owner of the affected
real property, as lessor, or (ii) if such Leasehold Property was acquired or subleased from the
holder of a Recorded Leasehold Interest, the applicable assignment or sublease document, executed
and acknowledged by such holder, in each case in form sufficient to give such constructive notice
upon recordation and otherwise in form reasonably satisfactory to Collateral Agent.




          “Recorded Leasehold Interest” means a Leasehold Property with respect to which a Record
Document has been recorded in all places necessary or desirable, in Administrative Agent’s
reasonable judgment, to give constructive notice of such Leasehold Property to third-party
purchasers and encumbrances of the affected real property.




          “Refunded Swing Line Loans” as defined in Section 2.3(b)(iv).




          “Register” as defined in Section 2.7(b).




          “Regulation D” means Regulation D of the Board of Governors, as in effect from time to time.




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          “Regulation FD” means Regulation FD as promulgated by the US Securities and Exchange
Commission under the Securities Act and Exchange Act as in effect from time to time.




          “Reimbursement Date” as defined in Section 2.4(d).




          “Related Agreements” means, collectively, the Acquisition Documents and the Subordinated Debt
Documents.




          “Related Fund” means, with respect to any Lender that is an investment fund, any other
investment fund that invests in commercial loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.




          “Release” means any release, spill, emission, leaking, pumping, pouring, injection, escaping,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of any Hazardous Material
into the indoor or outdoor environment (including the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Material), including the movement
of any Hazardous Material through the air, soil, surface water or groundwater.




          “Replacement Lender” as defined in Section 2.23.




          “Requisite Class Lenders” means, at any time of determination, (i) for the Class of Lenders
having Term Loan Exposure, Lenders holding more than 50% of the aggregate Term Loan Exposure of all
Lenders and (ii) for the Class of Lenders having Revolving Exposure, Lenders holding more than 50%
of the aggregate Revolving Exposure of all Lenders.




          “Requisite Lenders” means one or more Lenders having or holding Term Loan Exposure and/or
Revolving Exposure and representing more than 50% of the sum of (i) the aggregate Term Loan
Exposure of all Lenders and (ii) the aggregate Revolving Exposure of all Lenders.




          “Restricted Payment” means (i) any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock of any Credit Party now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock to the holders of that class;
(ii) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of any Credit Party (other than
Holdings) now or hereafter outstanding; (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire shares of any class of
stock of any Credit Party (other than Holdings) now or hereafter outstanding and (iv) any payment
or prepayment of principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking fund or similar
payment with respect to (A) Indebtedness of the type described in clause (iv) of the definition
thereof or (B) Indebtedness under the Subordinated Debt Documents.




          “Retained Term Loan Proceeds” has the meaning given to such term in Section 2.1(a)(ii).




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          “Retained Term Loan Proceeds Deposit Account” has the meaning given to such term in Section
2.1(a)(ii).




          “Revised Minimum Condition” has the meaning given to such term in the Acquisition Agreement
(without regard to any amendments, supplements or other modifications thereto occurring after the
initial date thereof).




          “Revolving Commitment” means the commitment of a Lender to make or otherwise fund any
Revolving Loan and to acquire participations in Letters of Credit and Swing Line Loans hereunder
and “Revolving Commitments” means such commitments of all Lenders in the aggregate. The amount of
each Lender’s Revolving Commitment, if any, is set forth on an addendum to such Lender’s signature
page hereto (if an original signatory to this Agreement) or in the applicable Assignment Agreement,
subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate
amount of the Revolving Commitments as of the Initial Closing Date is $65,000,000.




          “Revolving Commitment Period” means the period from the Initial Closing Date to but excluding
the Revolving Commitment Termination Date.




          “Revolving Commitment Termination Date” means the earliest to occur of (i) the sixth
anniversary of the Initial Closing Date, (ii) the date the Revolving Commitments are permanently
reduced to zero pursuant to Section 2.13(b) or 2.14, and (iii) the date of the termination of the
Revolving Commitments pursuant to Section 8.1.




          “Revolving Exposure” means, with respect to any Lender as of any date of determination, (i)
prior to the termination of the Revolving Commitments, that Lender’s Revolving Commitment; and (ii)
after the termination of the Revolving Commitments, the sum of (a) the aggregate outstanding
principal amount of the Revolving Loans of that Lender, (b) in the case of Issuing Bank, the
aggregate Letter of Credit Usage in respect of all Letters of Credit issued by that Lender (net of
any participations by Lenders in such Letters of Credit), (c) the aggregate amount of all
participations by that Lender in any outstanding Letters of Credit or any unreimbursed drawing
under any Letter of Credit, (d) in the case of Swing Line Lender, the aggregate outstanding
principal amount of all Swing Line Loans (net of any participations therein by other Lenders), and
(e) the aggregate amount of all participations therein by that Lender in any outstanding Swing Line
Loans.




          “Revolving Loan” means a Loan made by a Lender to Borrower pursuant to Section 2.2(a).




          “Revolving Loan Note” means a promissory note in the form of Exhibit B-2, as it may be
amended, supplemented or otherwise modified from time to time.




          “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation.




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




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          “Second Closing Date” means the effective date of the consummation of the Merger, with the
effect that the Borrower owns 100% of the issued and outstanding stock of Laserscope, on a fully
diluted basis.




          “Secured Parties” has the meaning assigned to that term in the Pledge and Security Agreement.




          “Securities” means any stock, shares, partnership interests, voting trust certificates,
certificates of interest or participation in any profit-sharing agreement or arrangement, options,
warrants, bonds, debentures, notes, or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any instruments commonly known as
“securities” or any certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire,
any of the foregoing.




          “Securities Act” means the Securities Act of 1933, as amended from time to time, and any
successor statute.




          “Senior Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter or other date
of determination of (i) Consolidated Senior Debt as of such day to (ii) Consolidated Adjusted
EBITDA for the four Fiscal Quarter period ending on such date or if such date of determination is
not the last day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of the most
recently concluded Fiscal Quarter.




          “Senior Subordinated Notes” means the 3.25% Convertible Senior Subordinated Notes due 2036 in
the aggregate principal amount of $373,750,000 issued under the Indenture on June 27, 2006.




          “Settlement Confirmation” as defined in Section 10.6(b).




          “Settlement Service” as defined in Section 10.6(d).




          “Shares” shall have the meaning assigned to such term in the Acquisition Agreement.




          “Solvency Certificate” means a Solvency Certificate of the chief financial officer of Holdings
substantially in the form of Exhibit G-2.




          “Solvent” means, with respect to any Credit Party, that as of the date of determination, both
(i)(a) the total amount of such Credit Party’s debt (including contingent, disputed, and
unliquidated liabilities) does not exceed the present fair saleable value of such Credit Party’s
present assets, as such value is established and liabilities evaluated for purposes of Section
101(3)(A) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent
Transfer Act; (b) such Credit Party’s capital is not unreasonably small in relation to its business
as contemplated on the Initial Closing Date or the Second Closing Date and reflected in the
Projections or with respect to any transaction contemplated or undertaken after the Initial Closing
Date; (c) such Credit Party is able to realize upon its property and pay its debts and other
liabilities (including contingent, disputed, and unliquidated liabilities) as they mature in the

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normal course of business; and (d) such Person has not incurred and does not intend to incur,
or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay
such debts as they become due (whether at maturity or otherwise); and (ii) such Person is “solvent”
within the meaning given that term under similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or
matured liability (irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).




          “State or Federal Health Care Program” means Medicare, Tri-care, all other Federal health care
programs as set forth in 42 U.S.C. § 1320a-7b(f), all state Medicaid programs, and all other
programs which relate to the provision of health care and which are created or administered by a
state or its instrumentality.




          “Subject Transaction” as defined in Section 6.8(f).




          “Subordinated Debt Documents” means collectively, the Indenture, the Senior Subordinated
Notes, and each other document, agreement, certificate and instrument executed and delivered in
connection therewith.




          “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, association, joint venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership interests entitled (without regard to
the occurrence of any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof; provided, in determining the percentage of ownership
interests of any Person controlled by another Person, no ownership interest in the nature of a
“qualifying share” of the former Person shall be deemed to be outstanding.




          “Swing Line Lender” means CIT Healthcare in its capacity as Swing Line Lender hereunder,
together with its permitted successors and assigns in such capacity.




          “Swing Line Loan” means a Loan made by Swing Line Lender to Borrower pursuant to Section 2.3.




          “Swing Line Note” means a promissory note in the form of Exhibit B-3, as it may be amended,
supplemented or otherwise modified from time to time.




          “Swing Line Sublimit” means the lesser of (i) $5,000,000, and (ii) the aggregate unused amount
of Revolving Commitments then in effect.




          “Syndication Agent” as defined in the preamble hereto.




          “Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee, deduction
or withholding of any nature and whatever called, by whomsoever, on

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whomsoever and wherever imposed, levied, collected, withheld or assessed; provided,
“Tax on the overall net income” of a Person shall be construed as a reference to a tax imposed by
the jurisdiction in which that Person is organized or in which that Person’s applicable principal
office (and/or, in the case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing business, which tax is
imposed on or measured by all or part of the net income, profits or gains (whether worldwide, or
only insofar as such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its
applicable lending office).




          “Tax Benefit” as defined in Section 2.20(d).




          “Tender Offer” means the offer by Holdings to acquire the Laserscope Shares substantially on
the terms and conditions referred to in the documents, agreements, prospectuses, and filings
related to such offer.




          “Term Loan” means the Term Loans made by a Lender to Borrower pursuant to Section 2.1(a).




          “Term Loan Commitment” means the commitment of a Lender to make or otherwise fund a Term Loan
and “Term Loan Commitments” means such commitments of all Lenders in the aggregate. The amount of
each Lender’s Term Commitment, if any, is set forth on an addendum to such Lender’s signature page
hereto (if an original signatory to this Agreement) or in the applicable Assignment Agreement,
subject to any adjustment or reduction pursuant to the terms and conditions hereof. The aggregate
amount of the Term Loan Commitments as of the Initial Closing Date is $365,000,000.




          “Term Loan Exposure” means, with respect to any Lender, as of any date of determination, the
outstanding principal amount of the Term Loans of such Lender; provided, on any date when a
Term Loan is to be funded by the Lenders, the Term Loan Exposure of any Lender shall, with respect
to such funding obligation, be equal to the theretofore unfunded portion, if any, of such Lender’s
Term Loan Commitment.




          “Term Loan Maturity Date” means the earlier of (i) the sixth anniversary of the Initial
Closing Date, and (ii) the date that all Term Loans shall become due and payable in full hereunder,
whether by acceleration or otherwise.




          “Term Loan Note” means a promissory note in the form of Exhibit B-1, as it may be amended,
supplemented or otherwise modified from time to time.




          “Terminated Lender” as defined in Section 2.23.




          “Thin Capitalization Requirement of Law” as defined in Section 6.7.




          “Title Policy” as defined in Section 3.1(f).




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          “Top-Up Stock Option” has the meaning given to such term in the Acquisition Agreement (without
regard to any amendments, supplements or other modifications thereto occurring after the initial
date thereof).




          “Total Leverage Ratio” means the ratio as of the last day of any Fiscal Quarter or other date
of determination of (i) Consolidated Total Debt as of such day to (ii) Consolidated Adjusted EBITDA
for the four Fiscal Quarter period ending on such date or if such date of determination is not the
last day of a Fiscal Quarter, for the four Fiscal Quarter period ending as of the most recently
concluded Fiscal Quarter.




          “Total Utilization of Revolving Commitments” means, as at any date of determination, the sum
of (i) the aggregate principal amount of all outstanding Revolving Loans (other than Revolving
Loans made for the purpose of repaying any Refunded Swing Line Loans or reimbursing Issuing Bank
for any amount drawn under any Letter of Credit, but not yet so applied), (ii) the aggregate
principal amount of all outstanding Swing Line Loans, and (iii) the Letter of Credit Usage.




          “Transaction Costs” means the fees, costs and expenses payable by Holdings or any of Holdings’
Subsidiaries in connection with the transactions contemplated by the Credit Documents and the
Related Agreements.




          “Type of Loan” means (i) with respect to either Term Loans or Revolving Loans, a Base Rate
Loan or a Eurodollar Rate Loan, and (ii) with respect to Swing Line Loans, a Base Rate Loan.




          “Voting Stock” shall mean, with respect to any Person, any class or classes or Capital Stock
pursuant to which the holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors of such Person.




          “UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in
effect in any applicable jurisdiction.




     1.2. Accounting Terms. Except as otherwise expressly provided herein, all accounting terms
not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be delivered by Borrower to Lenders pursuant
to Section 5.1(a) and 5.1(b) shall be prepared in accordance with GAAP as in effect at the time of
such preparation (and delivered together with the reconciliation statements provided for in Section
5.1(d), if applicable). Subject to the foregoing, calculations in connection with the definitions,
covenants and other provisions hereof shall utilize accounting principles and policies in
conformity with those used to prepare the Historical Financial Statements.



     1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference. References herein to
any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an
Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the
word “include” or “including”, when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or



-35-









 




matters set forth immediately following such word or to similar items or matters, whether or
not no limiting language (such as “without limitation” or “but not limited to” or words of similar
import) is used with reference thereto, but rather shall be deemed to refer to all other items or
matters that fall within the broadest possible scope of such general statement, term or matter.




SECTION 2. LOANS AND LETTERS OF CREDIT




     2.1. Term Loans.



          (a) Term Loan Commitments.





          (i) Subject to the terms and conditions hereof, each Lender severally agrees to make,
on the Initial Closing Date (subject to satisfaction of the 90% Closing Condition or on the
Second Closing Date (if the 90% Closing Condition is not met as of the Initial Closing
Date), a Term Loan to the Borrower in an amount equal to such Lender’s Pro Rata Share of
such Lender’s Term Loan Commitment. The Borrower may make only one borrowing pursuant to
this Section 2.1(a)(i), which borrowing shall be on the Initial Closing Date or the Second
Closing Date, as the case may be. Any amount borrowed under this Section 2.1(a) and
subsequently repaid or prepaid may not be reborrowed. Subject to Sections 2.13(a) and 2.14,
all amounts owed hereunder with respect to the Term Loans shall be paid in full no later
than the Term Loan Maturity Date. Each Lender’s Term Loan Commitment shall terminate
immediately and without further action on the Initial Closing Date or the Second Closing
Date, as the case may be, after giving effect to the funding of such Term Loan Commitment on
such date.




          (ii) Notwithstanding anything to the contrary above, if and to the extent the Term
Loans are funded on the Initial Closing Date, the Term Loans funded to the Borrower shall be
net of the difference of (i) the sum of the Term Loan proceeds funded on the Initial Closing
Date plus the Convertible Proceeds Amount, and (ii) the product of the Offer Price (as
defined in the Acquisition Agreement) and shares of Capital Stock of Laserscope tendered but
not validly withdrawn upon the expiration of the Tender Offer, plus the Top Up Stock Option
consideration, if any (such difference under clauses (i) and (ii) above being referred to as
“Retained Term Loan Proceeds”). The Borrower shall deposit, or cause to be deposited, the
Retained Term Loan Proceeds in a Deposit Account of the Borrower, which shall be maintained
at Key Bank (the “Retained Term Loan Proceeds Deposit Account”) and shall at all times be
subject to the “control” (as such term is defined in the UCC) of the Collateral Agent
pursuant to a deposit account control agreement, blocked account agreement or other similar
agreement in form and substance reasonably satisfactory to the Collateral Agent. The
Retained Term Loan Proceeds shall be disbursed from such Deposit Account upon the Second
Closing Date to pay for fees due and owing under the Fee Letter, Merger consideration (as
defined in the Acquisition Agreement, Option Consideration (as defined in the Acquisition
Agreement), and other fees and expenses due and owing in connection with the consummation of
the Merger.



          (b) Borrowing Mechanics for Term Loans.




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          (i) The Borrower shall deliver to Administrative Agent a fully executed Funding
Notice no later than one Business Day prior to the Initial Closing Date (if the 90% Closing
Condition is satisfied on or prior to such date) or the Second Closing Date (if the 90%
Closing Condition is not satisfied on or prior to the Initial Closing Date), as the case may
be. Promptly upon receipt by Administrative Agent of such Funding Notice, Administrative
Agent shall notify each Lender of the proposed borrowing.




          (ii) Each Lender shall make its Term Loan available to Administrative Agent not later
than 12:00 p.m. (New York City time) on the Initial Closing Date or the Second Closing Date,
as the case may be, by wire transfer of same day funds in Dollars, at the Principal Office
designated by Administrative Agent. Upon satisfaction or waiver of the conditions precedent
specified herein, Administrative Agent shall make the proceeds of the Term Loan available to
the Borrower by causing an amount of same day funds in Dollars equal to the proceeds of all
such Term Loans received by Administrative Agent from Lenders to be credited to the account
of the Borrower at the Principal Office designated by Administrative Agent or to such other
account as may be designated in writing to Administrative Agent by the Borrower.



     2.2. Revolving Loans



          (a) Revolving Commitments. During the Revolving Commitment Period, subject to the
terms and conditions hereof, each Lender severally agrees to make Revolving Loans to the Borrower
in an aggregate amount up to but not exceeding such Lender’s Revolving Commitment;
provided, that after giving effect to the making of any Revolving Loans in no event shall
the Total Utilization of Revolving Commitments exceed the Revolving Commitments then in effect.
Amounts borrowed pursuant to this Section 2.2(a) may, subject to the terms and conditions of this
Agreement and the other Credit Documents, be repaid and be reborrowed during the Revolving
Commitment Period. Each Lender’s Revolving Commitment shall expire on the Revolving Commitment
Termination Date and all Revolving Loans and all other amounts owed hereunder with respect to the
Revolving Loans and the Revolving Commitments shall be paid in full no later than such date.




          (b) Increase in Revolving Commitments. The Borrower may, at its option any time
prior to the second anniversary of the Initial Closing Date, seek to increase the Revolving
Commitments by up to an aggregate amount not to exceed $50,000,000 (resulting in maximum Revolving
Commitments of $115,000,000) upon written notice to the Administrative Agent, which notice shall
specify the amount of any such incremental increase (which shall not be less than $5,000,000 and in
integral multiples of $1,000,000 in excess of such amount) sought by the Borrower and shall be
delivered at a time when no Default or Event of Default has occurred and is continuing. The
Administrative Agent, may allocate the incremental increase (which may be declined by any Lender in
its sole discretion) in the Revolving Commitments on either a ratable basis to the Lenders or on a
non pro-rata basis to one or more Lenders and/or to other banks or entities acceptable to the
Administrative Agent that have expressed a desire to accept the increase in Revolving Commitments.
The Administrative Agent will then notify each existing and potential new Lender of such revised
allocations of the Revolving Commitments, including the desired increase. No increase in the
Revolving Commitments shall become effective until each of the existing or new Lenders extending
such incremental Revolving Commitments and

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the Borrower shall have delivered to the Administrative Agent a document in form and substance
satisfactory to the Administrative Agent pursuant to which any such existing Lender states the
amount of its Revolving Commitment increase, any such new Lender states its Revolving Commitment
amount and agrees to assume and accept the obligations and rights of a Lender hereunder, and the
Borrower accepts such new Revolving Commitments. After giving effect to such increase in Revolving
Commitments, all Loans and all such other credit exposure shall be held ratably by the Lenders in
proportion to their respective Revolving Commitments, as revised to reflect the increase in the
Revolving Commitment. Upon any increase in Revolving Commitment pursuant to this Section, the
Borrower shall pay Administrative Agent for the ratable benefit of only the Lenders (including any
new Lender) whose Revolving Commitments are increased an upfront fee in an amount equal to what is
mutually agreed to among the Borrower, the Lenders whose Revolving Commitments are increased and
the Administrative Agent. Administrative Agent will use its commercially reasonable efforts to
arrange the increase in Revolving Commitment sought by Borrower but is under no obligation to
consummate any such increase.




          (c) Borrowing Mechanics for Revolving Loans.





          (i) Except pursuant to Section 2.3, Revolving Loans that are Base Rate Loans shall be
made in an aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount, and Revolving Loans that are Eurodollar Rate Loans shall be in an
aggregate minimum amount of $2,500,000 and integral multiples of $500,000 in excess of that
amount.




          (ii) Whenever Borrower desires that Lenders make Revolving Loans, Borrower shall
deliver to Administrative Agent a fully executed and delivered Funding Notice no later than
12:00 p.m. (New York City time) at least three Business Days in advance of the proposed
Credit Date in the case of a Eurodollar Rate Loan, and at least one Business Day in advance
of the proposed Credit Date in the case of a Revolving Loan that is a Base Rate Loan.
Except as otherwise provided herein, a Funding Notice for a Revolving Loan that is a
Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate
Determination Date, and Borrower shall be bound to make a borrowing in accordance therewith.




          (iii) Notice of receipt of each Funding Notice in respect of Revolving Loans,
together with the amount of each Lender’s Pro Rata Share thereof, if any, together with the
applicable interest rate, shall be provided by Administrative Agent to each applicable
Lender by telefacsimile with reasonable promptness, but (provided Administrative Agent shall
have received such notice by 11:00 a.m. (New York City time)) not later than 3:00 p.m. (New
York City time) on the same day as Administrative Agent’s receipt of such Notice from
Borrower.




          (iv) Each Lender shall make the amount of its Revolving Loan available to
Administrative Agent not later than 2:00 p.m. (New York City time) on the applicable Credit
Date by wire transfer of same day funds in Dollars, at the Principal Office designated by
Administrative Agent. Except as provided herein, upon satisfaction or waiver of the
conditions precedent specified herein, Administrative Agent shall make the



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proceeds of such Revolving Loans available to Borrower on the applicable Credit Date by
causing an amount of same day funds in Dollars equal to the proceeds of all such Revolving
Loans received by Administrative Agent from Lenders to be credited to the account of
Borrower at the Principal Office designated by Administrative Agent or such other account as
may be designated in writing to Administrative Agent by Borrower.



     2.3. Swing Line Loans.



          (a) Swing Line Loans Commitments. During the Revolving Commitment Period, subject
to the terms and conditions hereof, Swing Line Lender hereby agrees to make Swing Line Loans to
Borrower in the aggregate amount up to but not exceeding the Swing Line Sublimit; provided,
that after giving effect to the making of any Swing Line Loan, in no event shall the Total
Utilization of Revolving Commitments exceed the Revolving Commitments then in effect. Amounts
borrowed pursuant to this Section 2.3 may, subject to the terms and conditions of the Credit
Documents, be repaid and reborrowed during the Revolving Commitment Period. Swing Line Lender’s
Revolving Commitment shall expire on the Revolving Commitment Termination Date and all Swing Line
Loans and all other amounts owed hereunder with respect to the Swing Line Loans and the Revolving
Commitments shall be paid in full no later than such date.




          (b) Borrowing Mechanics for Swing Line Loans.





          (i) Swing Line Loans shall be made in an aggregate minimum amount of $1,000,000 and
integral multiples of $500,000 in excess of that amount.




          (ii) Whenever Borrower desires that Swing Line Lender make a Swing Line Loan,
Borrower shall deliver to Administrative Agent a Funding Notice no later than 12:00 p.m.
(New York City time) on the proposed Credit Date.




          (iii) Swing Line Lender shall make the amount of its Swing Line Loan available to
Administrative Agent not later than 2:00 p.m. (New York City time) on the applicable Credit
Date by wire transfer of same day funds in Dollars, at Administrative Agent’s Principal
Office. Except as provided herein, upon satisfaction or waiver of the conditions precedent
specified herein, Administrative Agent shall make the proceeds of such Swing Line Loans
available to Borrower on the applicable Credit Date by causing an amount of same day funds
in Dollars equal to the proceeds of all such Swing Line Loans received by Administrative
Agent from Swing Line Lender to be credited to the account of Borrower at Administrative
Agent’s Principal Office, or to such other account as may be designated in writing to
Administrative Agent by Borrower.




          (iv) With respect to any Swing Line Loans which have not been voluntarily prepaid by
Borrower pursuant to Section 2.13, Swing Line Lender may at any time in its sole and
absolute discretion, deliver to Administrative Agent (with a copy to Borrower), no later
than 11:00 a.m. (New York City time) at least one Business Day in advance of the proposed
Credit Date, a notice (which shall be deemed to be a Funding Notice given by Borrower)
requesting that each Lender holding a Revolving Commitment make Revolving Loans that are
Base Rate Loans to Borrower on such



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Credit Date in an amount equal to the amount of such Swing Line Loans (the “Refunded
Swing Line Loans”) outstanding on the date such notice is given which Swing Line Lender
requests Lenders to prepay. Anything contained in this Agreement to the contrary
notwithstanding, (1) the proceeds of such Revolving Loans made by the Lenders other than
Swing Line Lender shall be immediately delivered by Administrative Agent to Swing Line
Lender (and not to Borrower) and applied to repay a corresponding portion of the Refunded
Swing Line Loans and (2) on the day such Revolving Loans are made, Swing Line Lender’s Pro
Rata Share of the Refunded Swing Line Loans shall be deemed to be paid with the proceeds of
a Revolving Loan made by Swing Line Lender to Borrower, and such portion of the Swing Line
Loans deemed to be so paid shall no longer be outstanding as Swing Line Loans and shall no
longer be due under the Swing Line Note of Swing Line Lender but shall instead constitute
part of Swing Line Lender’s outstanding Revolving Loans to Borrower and shall be due under
the Revolving Loan Note issued by Borrower to Swing Line Lender. Borrower hereby authorizes
Administrative Agent and Swing Line Lender to charge Borrower’s accounts with Administrative
Agent and Swing Line Lender (up to the amount available in each such account) in order to
immediately pay Swing Line Lender the amount of the Refunded Swing Line Loans to the extent
of the proceeds of such Revolving Loans made by Lenders, including the Revolving Loans
deemed to be made by Swing Line Lender, are not sufficient to repay in full the Refunded
Swing Line Loans. If any portion of any such amount paid (or deemed to be paid) to Swing
Line Lender should be recovered by or on behalf of Borrower from Swing Line Lender in
bankruptcy, by assignment for the benefit of creditors or otherwise, the loss of the amount
so recovered shall be ratably shared among all Lenders in the manner contemplated by Section
2.17.




          (v) If for any reason Revolving Loans are not made pursuant to Section 2.3(b)(iv) in
an amount sufficient to repay any amounts owed to Swing Line Lender in respect of any
outstanding Swing Line Loans on or before the third Business Day after demand for payment
thereof by Swing Line Lender, each Lender holding a Revolving Commitment shall be deemed to,
and hereby agrees to, have purchased a participation in such outstanding Swing Line Loans,
and in an amount equal to its Pro Rata Share of the applicable unpaid amount together with
accrued interest thereon. Upon one Business Day’s notice from Swing Line Lender, each
Lender holding a Revolving Commitment shall deliver to Swing Line Lender an amount equal to
its respective participation in the applicable unpaid amount in same day funds at the
Principal Office of Swing Line Lender. In order to evidence such participation each Lender
holding a Revolving Commitment agrees to enter into a participation agreement at the request
of Swing Line Lender in form and substance reasonably satisfactory to Swing Line Lender. In
the event any Lender holding a Revolving Commitment fails to make available to Swing Line
Lender the amount of such Lender’s participation as provided in this paragraph, Swing Line
Lender shall be entitled to recover such amount on demand from such Lender together with
interest thereon for three Business Days at the rate customarily used by Swing Line Lender
for the correction of errors among banks and thereafter at the Base Rate, as applicable.



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          (vi) Notwithstanding anything contained herein to the contrary, (1) each Lender’s
obligation to make Revolving Loans for the purpose of repaying any Refunded
Swing Line Loans pursuant to the second preceding paragraph and each Lender’s
obligation to purchase a participation in any unpaid Swing Line Loans pursuant to the
immediately preceding paragraph shall be absolute and unconditional and shall not be
affected by any circumstance, including without limitation (A) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against Swing Line Lender, any
Credit Party or any other Person for any reason whatsoever; (B) the occurrence or
continuation of a Default or Event of Default; (C) any adverse change in the business,
operations, properties, assets, condition (financial or otherwise) or prospects of any
Credit Party; (D) any breach of this Agreement or any other Credit Document by any party
thereto; or (E) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing; provided that such obligations of each Lender are
subject to the condition that Swing Line Lender believed in good faith that all conditions
under Section 3.3 to the making of the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, were satisfied at the time such Refunded Swing Line Loans or unpaid Swing
Line Loans were made, or the satisfaction of any such condition not satisfied had been
waived by the Requisite Lenders prior to or at the time such Refunded Swing Line Loans or
other unpaid Swing Line Loans were made; and (2) Swing Line Lender shall not be obligated to
make any Swing Line Loans (A) if it has elected not to do so after the occurrence and during
the continuation of a Default or Event of Default or (B) at a time when a Funding Default
exists unless Swing Line Lender has entered into arrangements satisfactory to it and
Borrower to eliminate Swing Line Lender’s risk with respect to the Defaulting Lender’s
participation in such Swing Line Loan, including by cash collateralizing such Defaulting
Lender’s Pro Rata Share of the outstanding Swing Line Loans.



     2.4. Issuance of Letters of Credit and Purchase of Participations Therein.



          (a) Letters of Credit. During the Revolving Commitment Period, and otherwise
subject to the terms and conditions hereof, Issuing Bank agrees to issue Letters of Credit for the
account of Borrower in the aggregate amount up to but not exceeding the Letter of Credit Sublimit;
provided, (i) each Letter of Credit shall be denominated in Dollars; (ii) the stated amount
of each Letter of Credit shall not be less than $50,000 or such lesser amount as is acceptable to
Issuing Bank; (iii) after giving effect to such issuance, in no event shall the Total Utilization
of Revolving Commitments exceed the Revolving Commitments then in effect; (iv) after giving effect
to such issuance, in no event shall the Letter of Credit Usage exceed the Letter of Credit Sublimit
then in effect; (v) in no event shall any standby Letter of Credit have an expiration date later
than the earlier of (1) the Revolving Commitment Termination Date and (2) the date which is one
year from the date of issuance of such standby Letter of Credit; and (vi) in no event shall any
commercial Letter of Credit (x) have an expiration date later than the earlier of (1) the Revolving
Loan Commitment Termination Date and (2) the date which is 180 days from the date of issuance of
such commercial Letter of Credit or (b) be issued if such commercial Letter of Credit is otherwise
unacceptable to Issuing Bank in its reasonable discretion. Subject to the foregoing, Issuing Bank
may agree that a standby Letter of Credit will automatically be extended for one or more successive
periods not to exceed one year each, unless Issuing Bank elects not to extend for any such
additional period; provided, Issuing Bank shall not extend any such Letter of Credit if it
has received written notice that an Event of Default has occurred and is continuing at the time
Issuing Bank must elect to allow such extension; provided,




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further, in the event a Funding Default exists, Issuing Bank shall not be required to
issue any Letter of Credit unless Issuing Bank has entered into arrangements satisfactory to it and
Borrower to eliminate Issuing Bank’s risk with respect to the participation in Letters of Credit of
the Defaulting Lender, including by cash collateralizing such Defaulting Lender’s Pro Rata Share of
the Letter of Credit Usage.




          (b) Notice of Issuance. Whenever Borrower desires the issuance of a Letter of
Credit, it shall deliver to Administrative Agent an Issuance Notice no later than 12:00 p.m. (New
York City time) at least three Business Days, or such shorter period as may be agreed to by Issuing
Bank in any particular instance, in advance of the proposed date of issuance. Upon satisfaction or
waiver of the conditions set forth in Section 3.3, Issuing Bank shall issue the requested Letter of
Credit only in accordance with Issuing Bank’s standard operating procedures. Upon the issuance of
any Letter of Credit or amendment or modification to a Letter of Credit, Issuing Bank shall
promptly notify each Lender of such issuance, which notice shall be accompanied by a copy of such
Letter of Credit or amendment or modification to a Letter of Credit and the amount of such Lender’s
respective participation in such Letter of Credit pursuant to Section 2.4(e).




          (c) Responsibility of Issuing Bank With Respect to Requests for Drawings and
Payments. In determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, Issuing Bank shall be responsible only to examine the documents delivered
under such Letter of Credit with reasonable care so as to ascertain whether they appear on their
face to be in accordance with the terms and conditions of such Letter of Credit. As between
Borrower and Issuing Bank, Borrower assumes all risks of the acts and omissions of, or misuse of
the Letters of Credit issued by Issuing Bank, by the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, Issuing Bank shall not be
responsible for: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and issuance of any such
Letter of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any such Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) failure of the beneficiary of any such Letter of
Credit to comply fully with any conditions required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph or otherwise, whether or not they be in cipher; (v) errors in interpretation
of technical terms; (vi) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the proceeds thereof;
(vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any
drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of Issuing Bank, including any Governmental Acts; none of the above shall affect or impair,
or prevent the vesting of, any of Issuing Bank’s rights or powers hereunder. Without limiting the
foregoing and in furtherance thereof, any action taken or omitted by Issuing Bank under or in
connection with the Letters of Credit or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not give rise to any liability on the part of Issuing Bank to
Borrower. Notwithstanding anything to the contrary contained in this Section 2.4(c), Borrower
shall retain
any and all rights it may have against Issuing Bank for any liability arising solely out of
the gross negligence or willful misconduct of Issuing Bank.




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          (d) Reimbursement by Borrower of Amounts Drawn or Paid Under Letters of Credit. In
the event Issuing Bank has determined to honor a drawing under a Letter of Credit, it shall
immediately notify Borrower and Administrative Agent, and Borrower shall reimburse Issuing Bank on
or before the Business Day immediately following the date on which such drawing is honored (the
“Reimbursement Date”) in an amount in Dollars and in same day funds equal to the amount of such
honored drawing; provided, anything contained herein to the contrary notwithstanding, (i)
unless Borrower shall have notified Administrative Agent and Issuing Bank prior to 12:00 p.m. (New
York City time) on the date such drawing is honored that Borrower intends to reimburse Issuing Bank
for the amount of such honored drawing with funds other than the proceeds of Revolving Loans,
Borrower shall be deemed to have given a timely Funding Notice to Administrative Agent requesting
Lenders to make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an amount in
Dollars equal to the amount of such honored drawing, and (ii) subject to satisfaction or waiver of
the conditions specified in Section 3.3, Lenders shall, on the Reimbursement Date, make Revolving
Loans that are Base Rate Loans in the amount of such honored drawing, the proceeds of which shall
be applied directly by Administrative Agent to reimburse Issuing Bank for the amount of such
honored drawing; and provided further, if for any reason proceeds of Revolving
Loans are not received by Issuing Bank on the Reimbursement Date in an amount equal to the amount
of such honored drawing, Borrower shall reimburse Issuing Bank, on demand, in an amount in same day
funds equal to the excess of the amount of such honored drawing over the aggregate amount of such
Revolving Loans, if any, which are so received. Nothing in this Section 2.4(d) shall be deemed to
relieve any Lender from its obligation to make Revolving Loans on the terms and conditions set
forth herein, and Borrower shall retain any and all rights it may have against any Lender resulting
from the failure of such Lender to make such Revolving Loans under this Section 2.4(d).




          (e) Lenders’ Purchase of Participations in Letters of Credit. Immediately upon the
issuance of each Letter of Credit, each Lender having a Revolving Commitment shall be deemed to
have purchased, and hereby agrees to irrevocably purchase, from Issuing Bank a participation in
such Letter of Credit and any drawings honored thereunder in an amount equal to such Lender’s Pro
Rata Share (with respect to the Revolving Commitments) of the maximum amount which is or at any
time may become available to be drawn thereunder. In the event that Borrower shall fail for any
reason to reimburse Issuing Bank as provided in Section 2.4(d), Issuing Bank shall promptly notify
each Lender of the unreimbursed amount of such honored drawing and of such Lender’s respective
participation therein based on such Lender’s Pro Rata Share of the Revolving Commitments. Each
Lender shall make available to Issuing Bank an amount equal to its respective participation, in
Dollars and in same day funds, at the office of Issuing Bank specified in such notice, not later
than 2:00 p.m. (New York City time) on the first business day (under the laws of the jurisdiction
in which such office of Issuing Bank is located) after the date notified by Issuing Bank. In the
event that any Lender fails to make available to Issuing Bank on such business day the amount of
such Lender’s participation in such Letter of Credit as provided in this Section 2.4(e), Issuing
Bank shall be entitled to recover such amount on demand from such Lender together with interest
thereon for three Business Days at the rate customarily used by Issuing Bank for the correction of
errors among banks and thereafter at the

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Base Rate. Nothing in this Section 2.4(e) shall be deemed to prejudice the right of any
Lender to recover from Issuing Bank any amounts made available by such Lender to Issuing Bank
pursuant to this Section in the event that it is determined that the payment with respect to a
Letter of Credit in respect of which payment was made by such Lender constituted gross negligence
or willful misconduct on the part of Issuing Bank. In the event Issuing Bank shall have been
reimbursed by other Lenders pursuant to this Section 2.4(e) for all or any portion of any drawing
honored by Issuing Bank under a Letter of Credit, such Issuing Bank shall distribute to each Lender
which has paid all amounts payable by it under this Section 2.4(e) with respect to such honored
drawing such Lender’s Pro Rata Share of all payments subsequently received by Issuing Bank from
Borrower in reimbursement of such honored drawing when such payments are received. Any such
distribution shall be made to a Lender at its primary address set forth below its name on Appendix
A or at such other address as such Lender may request.




          (f) Obligations Absolute. The obligation of Borrower to reimburse Issuing Bank for
drawings honored under the Letters of Credit issued by it and to repay any Revolving Loans made by
Lenders pursuant to Section 2.4(d) and the obligations of Lenders under Section 2.4(e) shall be
unconditional and irrevocable and shall be paid strictly in accordance with the terms hereof under
all circumstances including any of the following circumstances: (i) any lack of validity or
enforceability of any Letter of Credit; (ii) the existence of any claim, set-off, defense or other
right which Borrower or any Lender may have at any time against a beneficiary or any transferee of
any Letter of Credit (or any Persons for whom any such transferee may be acting), Issuing Bank,
Lender or any other Person or, in the case of a Lender, against Borrower, whether in connection
herewith, the transactions contemplated herein or any unrelated transaction (including any
underlying transaction between Borrower or one of its Subsidiaries and the beneficiary for which
any Letter of Credit was procured); (iii) any draft or other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; (iv) payment by Issuing Bank under any Letter of
Credit against presentation of a draft or other document which does not substantially comply with
the terms of such Letter of Credit; (v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Borrower or any of its Subsidiaries;
(vi) any breach hereof or any other Credit Document by any party thereto; (vii) any other
circumstance or happening whatsoever, whether or not similar to any of the foregoing; or (viii) the
fact that an Event of Default or a Default shall have occurred and be continuing; provided,
in each case, that payment by Issuing Bank under the applicable Letter of Credit shall not have
constituted gross negligence or willful misconduct of Issuing Bank under the circumstances in
question.




          (g) Indemnification. Without duplication of any obligation of Borrower under
Section 10.2 or 10.3, in addition to amounts payable as provided herein, Borrower hereby agrees to
protect, indemnify, pay and save harmless Issuing Bank from and against any and all claims,
demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of internal counsel) which Issuing Bank
may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter
of Credit by Issuing Bank, other than as a result of (1) the gross negligence or willful misconduct
of Issuing Bank or (2) the wrongful dishonor by Issuing Bank of a proper demand for payment made
under any Letter of Credit issued by it, or (ii) the failure of Issuing Bank to honor a drawing
under any such Letter of Credit as a result of any Governmental Act.




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     2.5. Pro Rata Shares; Availability of Funds.



          (a) Pro Rata Shares. All Loans shall be made, and all participations purchased, by
Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any default by any other Lender in such other Lender’s
obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall
any Term Loan Commitment or any Revolving Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in such other Lender’s obligation to make a Loan requested
hereunder or purchase a participation required hereby.




          (b) Availability of Funds. Unless Administrative Agent shall have been notified by
any Lender prior to the applicable Credit Date that such Lender does not intend to make available
to Administrative Agent the amount of such Lender’s Loan requested on such Credit Date,
Administrative Agent may assume that such Lender has made such amount available to Administrative
Agent on such Credit Date and Administrative Agent may, in its sole discretion, but shall not be
obligated to, make available to Borrower a corresponding amount on such Credit Date. If such
corresponding amount is not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Credit Date until the date such
amount is paid to Administrative Agent, at the customary rate set by Administrative Agent for the
correction of errors among banks for three Business Days and thereafter at the Base Rate. If such
Lender does not pay such corresponding amount forthwith upon Administrative Agent’s demand
therefor, Administrative Agent shall promptly notify Borrower which shall immediately pay such
corresponding amount to Administrative Agent together with interest thereon, for each day from such
Credit Date until the date such amount is paid to Administrative Agent, at the rate payable
hereunder for Base Rate Loans for such Class of Loans. Nothing in this Section 2.5(b) shall be
deemed to relieve any Lender from its obligation to fulfill its Term Loan Commitments and Revolving
Commitments hereunder or to prejudice any rights that Borrower may have against any Lender as a
result of any default by such Lender hereunder.




     2.6. Use of Proceeds. The proceeds of the Term Loans and any Revolving Loans advanced on
the Initial Closing Date and on the Second Closing Date shall be used solely as follows:



          (y) if either (A) the Top-Up Stock Option is exercised with the effect that the Option
Exercise Minimum Condition will be met or (B) the Minimum Condition will be met, in each case prior
to expiration of the Tender Offer (the occurrence of either event being referred to as the “90%
Closing Condition”), the Term Loans shall be used on the Initial Closing Date solely to fund the
difference of (I) the sum of (aa) the cash component of the purchase price payable by Merger Sub
for the shares of Capital Stock of Laserscope tendered pursuant to the Tender Offer and to be
acquired as of the Initial Closing Date plus (bb) the cash component of the exercise price payable
by Merger Sub in respect of the Top-Up Stock Option, if any, plus (cc) the amount necessary to
refinance or retire all the Existing Indebtedness of Holdings and its Subsidiaries, if any, as of
the Initial Closing Date plus (dd) the aggregate amount of all fees, commissions and expenses due
and payable as of the Initial Closing Date in connection therewith less (II) the Convertible
Proceeds Amount, and the Revolving Commitments may be used on the

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Initial Closing Date in part to fund up to $20,100,000 of the acquisition of Laserscope, to
provide for ongoing working capital requirements of the Borrower and its Subsidiaries after the
Initial Closing Date and for general corporate purposes; and




               (z) if the 90% Closing Condition is not met and the Tender Offer is amended so that the
Revised Minimum Condition is applicable, the Term Loans shall be used on the Second Closing Date
solely (1) to fund the Merger Consideration (as defined in the Acquisition Agreement) and the
Option Consideration (as defined in the Acquisition Agreement), (2) to pay merger consideration in
respect of shares which are not acquired by Merger Sub pursuant to the Tender Offer (or pursuant to
the Top-Up Stock Option, if that option shall have been exercised in accordance with the terms and
conditions of the Acquisition Agreement) and (3) to pay the aggregate amount of all fees,
commissions and expenses not paid as of the Initial Closing Date in connection with the
Acquisition.



          No portion of the proceeds of any Credit Extension shall be used in any manner that causes or
might cause such Credit Extension or the application of such proceeds to violate Regulation T,
Regulation U or Regulation X of the Board of Governors or any other regulation thereof or to
violate the Exchange Act.




     2.7. Evidence of Debt; Register; Lenders’ Books and Records; Notes.



          (a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records
an account or accounts evidencing the Obligations of Borrower to such Lender, including the amounts
of the Loans made by it and each repayment and prepayment in respect thereof. Any such recordation
shall be conclusive and binding on Borrower, absent manifest error; provided, that the
failure to make any such recordation, or any error in such recordation, shall not affect any
Lender’s Revolving Commitments or Borrower’s Obligations in respect of any applicable Loans; and
provided further, in the event of any inconsistency between the Register and any
Lender’s records, the recordations in the Register shall govern.




          (b) Register. Administrative Agent (or its agent or sub-agent appointed by it)
shall maintain at the Principal Office a register for the recordation of the names and addresses of
Lenders and the Revolving Commitments and Loans of each Lender from time to time (the “Register”).
The Register, as in effect at the close of business on the preceding Business Day, shall be
available for inspection by Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice. Administrative Agent shall record, or shall cause to be recorded, in
the Register the Revolving Commitments and the Loans in accordance with the provisions of Section
10.6, and each repayment or prepayment in respect of the principal amount of the Loans, and any
such recordation shall be conclusive and binding on Borrower and each Lender, absent manifest
error; provided, failure to make any such recordation, or any error in such recordation,
shall not affect any Lender’s Revolving Commitments or Borrower’s Obligations in respect of any
Loan. Borrower hereby designates CIT Healthcare to serve as Borrower’s agent solely for purposes
of maintaining the Register as provided in this Section 2.7, and Borrower hereby agrees that, to
the extent CIT Healthcare serves in such capacity, CIT Healthcare and its officers, directors,
employees, agents, sub-agents and affiliates shall constitute “Indemnitees.”




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          (c) Notes. If so requested by any Lender by written notice to Borrower (with a copy
to Administrative Agent) at least two Business Days prior to the Initial Closing Date, or at any
time thereafter, Borrower shall execute and deliver to such Lender (and/or, if applicable and if so
specified in such notice, to any Person who is an assignee of such Lender pursuant to Section 10.6)
on the Initial Closing Date (or, if such notice is delivered after the Initial Closing Date,
promptly after Borrower’s receipt of such notice) a Note or Notes to evidence such Lender’s Term
Loan or Revolving Loan or Swing Line Loan, as the case may be.




     2.8. Interest on Loans.



          (a) Except as otherwise set forth herein, each Loan shall bear interest on the unpaid
principal amount thereof from the date made through repayment (whether by acceleration or
otherwise) thereof as follows:





          (i) in the case of a Base Rate Loan, at the Base Rate plus the Applicable Margin; or




          (ii) in the case of a Eurodollar Rate Loan, at the Adjusted Eurodollar Rate plus the
Applicable Margin; and




          (iii) in the case of Swing Line Loans, at the Base Rate plus the Applicable Margin.



          (b) The basis for determining the rate of interest with respect to any Loan (except a Swing
Line Loan, which must be made and maintained only as Base Rate Loans and except that the Term Loans
must be maintained as Base Rate Loans for the first (5) Business Days following the Initial Closing
Date or the Second Closing Date, as applicable), and the Interest Period with respect to any
Eurodollar Rate Loan, shall be selected by Borrower and notified to Administrative Agent and
Lenders pursuant to the applicable Funding Notice or Conversion/Continuation Notice, as the case
may be. The Term Loans shall be maintained as either Eurodollar Rate Loans or Base Rate Loans. If
on any day a Loan is outstanding with respect to which a Funding Notice or Conversion/Continuation
Notice has not been delivered to Administrative Agent in accordance with the terms hereof
specifying the applicable basis for determining the rate of interest, then for that day such Loan
shall be a Base Rate Loan.




          (c) In connection with Eurodollar Rate Loans there shall be no more than five (5) Interest
Periods outstanding at any time. In the event Borrower fails to specify between a Base Rate Loan
or a Eurodollar Rate Loan in the applicable Funding Notice or Conversion/Continuation Notice, such
Loan (if outstanding as a Eurodollar Rate Loan) will be automatically converted into a Base Rate
Loan on the last day of the then-current Interest Period for such Loan (or if outstanding as a Base
Rate Loan will remain as, or (if not then outstanding) will be made as, a Base Rate Loan). In the
event Borrower fails to specify an Interest Period for any Eurodollar Rate Loan in the applicable
Funding Notice or Conversion/Continuation Notice, Borrower shall be deemed to have selected an
Interest Period of one month. As soon as practicable after 10:00 a.m. (New York City time) on each
Interest Rate Determination Date, Administrative Agent shall determine (which determination shall,
absent manifest error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the Eurodollar Rate

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Loans for which an interest rate is then being determined for the applicable Interest Period
and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to
Borrower and each Lender.




          (d) Interest payable pursuant to Section 2.8(a) shall be computed in the case of Base Rate
Loans and Eurodollar Rate Loans on the basis of a 360 day year for the actual number of days
elapsed in the period during which such Type of Loan accrues. In computing interest on any Loan,
the date of the making of such Loan or the first day of an Interest Period applicable to such Loan
or, with respect to a Term Loan, the last Interest Payment Date with respect to such Term Loan or,
with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of
conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate
Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may
be, shall be excluded; provided, if a Loan is repaid on the same day on which it is made,
one day’s interest shall be paid on that Loan.




          (e) Except as otherwise set forth herein, interest on each Loan shall be payable in arrears
on and to (i) each Interest Payment Date applicable to that Loan; (ii) upon any prepayment of that
Loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid; and (iii)
at maturity, including final maturity.




          (f) Borrower agrees to pay to Issuing Bank, with respect to drawings honored under any
Letter of Credit, interest on the amount paid by Issuing Bank in respect of each such honored
drawing from the date such drawing is honored to but excluding the date such amount is reimbursed
by or on behalf of Borrower at a rate equal to (i) for the period from the date such drawing is
honored to but excluding the applicable Reimbursement Date, the rate of interest otherwise payable
hereunder with respect to Revolving Loans that are Base Rate Loans, and (ii) thereafter, a rate
which is 2% per annum in excess of the rate of interest otherwise payable hereunder with respect to
Revolving Loans that are Base Rate Loans.




          (g) Interest payable pursuant to Section 2.8(f) shall be computed on the basis of a 360 day
year for the actual number of days elapsed in the period during which it accrues, and shall be
payable on demand or, if no demand is made, on the date on which the related drawing under a Letter
of Credit is reimbursed in full. Promptly upon receipt by Issuing Bank of any payment of interest
pursuant to Section 2.8(f), Issuing Bank shall distribute to each Lender, out of the interest
received by Issuing Bank in respect of the period from the date such drawing is honored to but
excluding the date on which Issuing Bank is reimbursed for the amount of such drawing (including
any such reimbursement out of the proceeds of any Revolving Loans), the amount that such Lender
would have been entitled to receive in respect of the letter of credit fee that would have been
payable in respect of such Letter of Credit for such period if no drawing had been honored under
such Letter of Credit. In the event Issuing Bank shall have been reimbursed by Lenders for all or
any portion of such honored drawing, Issuing Bank shall distribute to each Lender which has paid
all amounts payable by it under Section 2.4(e) with respect to such honored drawing such Lender’s
Pro Rata Share of any interest received by Issuing Bank in respect of that portion of such honored
drawing so reimbursed by Lenders for

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the period from the date on which Issuing Bank was so reimbursed by Lenders to but excluding
the date on which such portion of such honored drawing is reimbursed by Borrower.




     2.9. Conversion/Continuation.



          (a) Subject to Section 2.18 and so long as no Default or Event of Default shall have
occurred and then be continuing, Borrower shall have the option:





          (i) to convert at any time all or any part of any Term Loan or Revolving Loan equal
to $1,000,000 and integral multiples of $500,000 in excess of that amount from one Type of
Loan to another Type of Loan; provided, a Eurodollar Rate Loan may only be converted
on the expiration of the Interest Period applicable to such Eurodollar Rate Loan unless
Borrower shall pay all amounts due under Section 2.18 in connection with any such
conversion; or




          (ii) upon the expiration of any Interest Period applicable to any Eurodollar Rate
Loan, to continue all or any portion of such Loan equal to $2,500,000 and integral multiples
of $500,000 in excess of that amount as a Eurodollar Rate Loan.



          (b) Borrower shall deliver a Conversion/Continuation Notice to Administrative Agent no later
than 12:00 p.m. (New York City time) at least one Business Day in advance of the proposed
conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days
in advance of the proposed conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). Except as otherwise provided herein, a
Conversion/Continuation Notice for conversion to, or continuation of, any Eurodollar Rate Loans (or
telephonic notice in lieu thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Borrower shall be bound to effect a conversion or continuation in
accordance therewith.




     2.10. Default Interest. Upon the occurrence and during the continuance of an Event of
Default, the principal amount of all Loans outstanding and, to the extent permitted by applicable
law, any interest payments on the Loans or any fees or other amounts owed hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy
Code or other applicable bankruptcy laws) payable on demand at a rate that is 2% per annum in
excess of the interest rate otherwise payable hereunder with respect to the applicable Loans (or,
in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the
interest rate otherwise payable hereunder for Base Rate Loans); provided, in the case of
Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such
increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate
Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in
excess of the interest rate otherwise payable hereunder for Base Rate Loans. Payment or acceptance
of the increased rates of interest provided for in this Section 2.10 is not a permitted alternative
to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice
or limit any rights or remedies of Administrative Agent or any Lender.



     2.11. Fees.



          (a) Borrower agrees to pay to Lenders:




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          (i) having Revolving Exposure, commitment fees equal to (1) the average of the daily
difference between (a) the Revolving Commitments and (b) the aggregate principal amount of
all outstanding Revolving Loans, times (2) 0.50% per annum; and




          (ii) having Revolving Exposure, letter of credit fees equal to (1) the Applicable
Margin (for Revolving Loans that are Eurodollar Rate Loans), times (2) the average aggregate
daily maximum amount available to be drawn under all such Letters of Credit (regardless of
whether any conditions for drawing could then be met and determined as of the close of
business on any date of determination).




          (iii) if the 90% Closing Condition has not been met on or prior to the Initial
Closing Date, (y) from and after the forty-fifth (45th) day after the Initial Closing Date
through and including the ninetieth (90th) day after the Initial Closing Date, commitment
fees equal to (1) the portion of the Term Loan Commitments not funded on the Initial Closing
Date, times (2) 0.50% per annum, and (z) from and after the ninety-first (91st) day after
the Initial Closing Date through and including the Second Closing Date, commitment fees
equal to (1) the portion of the Term Loan Commitments not funded on the Initial Closing
Date, times (2) 1.00% per annum.


All fees referred to in this Section 2.11(a) shall be paid to Administrative Agent at its Principal
Office and upon receipt, Administrative Agent shall promptly distribute to each Lender its Pro Rata
Share thereof and shall be calculated on the basis of a 360-day year and the actual number of days
elapsed and shall be payable quarterly in arrears on April 1, July 1, October 1 and January 1 of
each year during the Revolving Commitment Period, commencing on the first such date to occur after
the Closing Date, and on the Revolving Commitment Termination Date; provided that any fees owing
under clause (a)(iii) above shall be due and payable on the Second Closing Date.




          (b) Borrower agrees to pay the Administrative Agent, for the account of the Issuing Bank,
the following fees:





          (i) a fronting fee equal to 0.25%, per annum, times the average aggregate daily
maximum amount available to be drawn under all Letters of Credit (determined as of the close
of business on any date of determination); and




          (ii) such documentary and processing charges for any issuance, amendment, transfer or
payment of a Letter of Credit as are in accordance with Issuing Bank’s standard schedule for
such charges and as in effect at the time of such issuance, amendment, transfer or payment,
as the case may be.



          (c) In addition to any of the foregoing fees, Borrower agrees to pay to Agents such other
fees in the amounts and at the times separately agreed upon, including, without limitation, any
fees addressed in the Fee Letter.




     2.12. Scheduled Payments/Commitment Reductions.



          (a) Term Loan. The principal amount of the Term Loans shall be repaid in
consecutive quarterly installments (each, an “Installment”) in the aggregate amounts set forth





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below,commencing December 31, 2006 (unless the Second Closing Date occurs on or after October 16, 2006,
in which case the first Installment shall be March 31, 2007) (with the remaining balance of the
Term Loans due and payable in full in cash on the Term Loan Maturity Date):




	 	 	 	 	 
	 	 	Term Loan
	Date	 	Installment
	December 31, 2006

	 	 	0.25	%
	March 31, 2007

	 	 	0.25	%
	June 30, 2007

	 	 	0.25	%
	September 30, 2007

	 	 	0.25	%
	December 31, 2007

	 	 	0.25	%
	March 31, 2008

	 	 	0.25	%
	June 30, 2008

	 	 	0.25	%
	September 30, 2008

	 	 	0.25	%
	December 31, 2008

	 	 	0.25	%
	March 31, 2009

	 	 	0.25	%
	June 30, 2009

	 	 	0.25	%
	September 30, 2009

	 	 	0.25	%
	December 31, 2009

	 	 	0.25	%
	March 31, 2010

	 	 	0.25	%
	June 30, 2010

	 	 	0.25	%
	September 30, 2010

	 	 	0.25	%
	December 31, 2010

	 	 	0.25	%
	March 31, 2011

	 	 	0.25	%
	June 30, 2011

	 	 	0.25	%
	September 30, 2011

	 	 	0.25	%
	December 31, 2011

	 	 	23.75	%
	March 31, 2012

	 	 	23.75	%
	June 30, 2012

	 	 	23.75	%
	Term Loan Maturity Date

	 	23.75%, together with all other
amounts due and payable in
accordance with Section 2.1(a)






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Notwithstanding the foregoing, such Installments shall be reduced on a pro rata basis in connection
with any voluntary or mandatory prepayments of the Term Loans, in accordance with Sections 2.13,
2.14 and 2.15, as applicable.




          (b) Revolving Loans. The Revolving Commitments shall be reduced in connection with
any voluntary or mandatory prepayments of the Revolving Loans, in accordance with Sections 2.13 and
2.14, as applicable. The Revolving Loans, together with all other amounts owed hereunder with
respect thereto, shall, in any event, be paid in full no later than the Revolving Loan Maturity
Date.




     2.13. Voluntary Prepayments/Commitment Reductions.



          (a) Voluntary Prepayments.





     (i) Any time and from time to time:




          (1) with respect to Base Rate Loans, Borrower may prepay any
such Loans on any Business Day in whole or in part, in an
aggregate minimum amount of $1,000,000 and integral multiples of
$500,000 in excess of that amount;




          (2) with respect to Eurodollar Rate Loans, Borrower may
prepay any such Loans on any Business Day in whole or in part in
an aggregate minimum amount of $2,500,000 and integral multiples
of $500,000 in excess of that amount; and




          (3) with respect to Swing Line Loans, Borrower may prepay any
such Loans on any Business Day in whole or in part in an aggregate
minimum amount of $1,000,000, and in integral multiples of
$500,000 in excess of that amount.




     (ii) All such prepayments shall be made:




          (1) upon not less than one Business Day’s prior written or
telephonic notice in the case of Base Rate Loans;




          (2) upon not less than three Business Days’ prior written or
telephonic notice in the case of Eurodollar Rate Loans; and



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          (3) upon written or telephonic notice on the date of
prepayment, in the case of Swing Line Loans;


in each case given to Administrative Agent or Swing Line Lender, as the case may be, by 12:00 p.m.
(New York City time) on the date required and, if given by telephone, promptly confirmed in writing
to Administrative Agent (and Administrative Agent will promptly transmit such telephonic or
original notice for Term Loans or Revolving Loans, as the case may be, by telefacsimile or
telephone to each Lender) or Swing Line Lender, as the case may be. Upon the giving of any such
notice, the principal amount of the Loans specified in such notice shall become due and payable on
the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified
in Section 2.15(a).




          (b) Voluntary Commitment Reductions.





          (i) Borrower may, upon not less than three Business Days’ prior written or telephonic
notice confirmed in writing to Administrative Agent (which original written or telephonic
notice Administrative Agent will promptly transmit by telefacsimile or telephone to each
applicable Lender), at any time and from time to time terminate in whole or permanently
reduce in part, without premium or penalty, the Revolving Commitments in an amount up to the
amount by which the Revolving Commitments exceed the Total Utilization of Revolving
Commitments at the time of such proposed termination or reduction; provided, any
such partial reduction of the Revolving Commitments shall be in an aggregate minimum amount
of $1,000,000 and integral multiples of $500,000 in excess of that amount.




          (ii) Borrower’s notice to Administrative Agent shall designate the date (which shall be
a Business Day) of such termination or reduction and the amount of any partial reduction,
and such termination or reduction of the Revolving Commitments shall be effective on the
date specified in Borrower’s notice and shall reduce the Revolving Commitment of each Lender
proportionately to its Pro Rata Share thereof.



     2.14. Mandatory Prepayments/Commitment Reductions.



          (a) Asset Sales. No later than the third Business Day following the date of receipt
by Holdings or any of its Subsidiaries of any Net Asset Sale Proceeds, Borrower shall prepay the
Loans and/or the Revolving Commitments shall be permanently reduced as set forth in Section 2.15(b)
in an aggregate amount equal to such Net Asset Sale Proceeds; provided, (i) so long as no
Default or Event of Default shall have occurred and be continuing, and (ii) to the extent that
aggregate Net Asset Sale Proceeds from the Initial Closing Date through the applicable date of
determination do not exceed $2,500,000, Borrower shall have the option, directly or through one or
more of its Subsidiaries, to invest Net Asset Sale Proceeds within one hundred eighty (180) days of
receipt thereof in long-term productive assets of the general type used in the business of Borrower
and its Subsidiaries; provided further, pending any such investment all such Net
Asset Sale Proceeds shall be applied to prepay Revolving Loans to the extent outstanding (without a
reduction in Revolving Commitments).




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          (b) Insurance/Condemnation Proceeds. No later than the first Business Day following
the date of receipt by Holdings or any of its Subsidiaries, or Administrative Agent as loss payee,
of any Net Insurance/Condemnation Proceeds, Borrower shall prepay the Loans as set forth in Section
2.15(b) in an aggregate amount equal to such Net Insurance/Condemnation Proceeds; provided,
so long as no Default or Event of Default shall have occurred and be continuing, Borrower shall
have the option, directly or through one or more of its Subsidiaries to invest such Net
Insurance/Condemnation Proceeds within one hundred eighty (180) days of receipt thereof in long
term productive assets of the general type used in the business of Borrower and its Subsidiaries,
which investment may include the repair, restoration or replacement of the applicable assets
thereof; provided further, pending any such investment all such Net
Insurance/Condemnation Proceeds, as the case may be, shall be applied to prepay Revolving Loans to
the extent outstanding (without a reduction in Revolving Commitments).




          (c) Issuance of Equity. If Holdings or any of its Subsidiaries shall issue any
Capital Stock or Equity Rights (it being understood that the issuance of debt securities
convertible into, or exchangeable or exercisable for, any Capital Stock or Equity Right shall be
governed by Section 2.14(d)) (other than Excluded Equity Issuances) (each, an “Equity Issuance”),
50% of the Net Debt/Equity Proceeds thereof shall be applied immediately after receipt thereof to
prepay the Obligations outstanding under the Loans as set forth in Section 2.15(b);
provided however, that notwithstanding the foregoing, the issuance of any preferred
Capital Stock or Equity Rights shall require the prepayment of 100% of the Net Debt/Equity Proceeds
thereof to the Obligations outstanding under the Loans as set forth in Section 2.15(b).




          (d) Issuance of Debt. If Holdings or any of its Subsidiaries shall, incur or permit
the incurrence of any Indebtedness (including pursuant to debt securities which are convertible
into, or exchangeable or exercisable for, any Capital Stock or Equity Rights) (other than Excluded
Debt Incurrences) (each, a “Debt Incurrence”), 100% of the Net Debt/Equity Proceeds thereof shall
be applied immediately after receipt thereof to prepay the Obligations outstanding under the Loans
as set forth in Section 2.15(b).




          (e) Consolidated Excess Cash Flow. In the event that there shall be Consolidated
Excess Cash Flow for any Fiscal Year (commencing with Fiscal Year ending on or about December 31,
2006), Borrower shall, no later than ninety days after the end of such Fiscal Year, prepay the
Loans as set forth in Section 2.15(b) in an aggregate amount equal to (i) 75% of such Consolidated
Excess Cash Flow minus (ii) voluntary repayments of Consolidated Total Debt (excluding
repayments of Revolving Loans or Swing Line Loans); provided, for any Fiscal Year in which
the Total Leverage Ratio (determined by reference to the Compliance Certificate delivered pursuant
to Section 5.1(c) calculating the Total Leverage Ratio as of the last day of such Fiscal Year)
shall be 4.00:1.00 or less, Borrower shall only be required to make the prepayments otherwise
required hereby in an amount equal to 50% of such Consolidated Excess Cash Flow; provided
further that for the Fiscal Year ending on or about December 31, 2006, Consolidated Excess
Cash Flow shall be determined on a pro forma basis from the Second Closing Date through and
including the end of such Fiscal Year.




          (f) Revolving Loans Advanced on the Second Closing Date. If Borrower shall incur any
Indebtedness on or prior to the Second Closing Date consisting of Revolving Loans, Borrower shall
prepay the entire amount of such Revolving Loans within two (2) Business Days

-54-









 








following the Second
Closing Date, which shall be applied immediately after receipt thereof to prepay the obligations
then-outstanding under the Revolving Loans pursuant to Section 2.15(b) in an amount equal to the
lesser amount of such outstanding amount and the Laserscope Cash.




          (g) Revolving Loans and Swing Loans. Borrower shall from time to time prepay first,
the Swing Line Loans, and second, the Revolving Loans to the extent necessary so that the Total
Utilization of Revolving Commitments shall not at any time exceed the Revolving Commitments then in
effect.




          (h) Prepayment Certificate. Concurrently with any prepayment of the Loans and/or
reduction of the Revolving Commitments pursuant to Sections 2.14(a) through 2.14(e), Borrower shall
deliver to Administrative Agent a certificate of an Authorized Officer demonstrating the
calculation of the amount of the applicable net proceeds or Consolidated Excess Cash Flow, as the
case may be. In the event that Borrower shall subsequently determine that the actual amount
received exceeded the amount set forth in such certificate, Borrower shall promptly make an
additional prepayment of the Loans and/or the Revolving Commitments shall be permanently reduced in
an amount equal to such excess, and Borrower shall concurrently therewith deliver to Administrative
Agent a certificate of an Authorized Officer demonstrating the derivation of such excess.




     2.15. Application of Prepayments/Reductions.



          (a) Application of Voluntary Prepayments by Type of Loans. Prior to the occurrence
and continuance of an Event of Default, any prepayment of any Loan pursuant to Section 2.13(a)
shall be applied as specified by Borrower in the applicable notice of prepayment. If either (i)
Borrower fails to specify the Loans to which any such prepayment shall be applied, or (ii) an Event
of Default shall have occurred and be continuing at the time of such prepayment, such prepayment of
the Loans pursuant to Section 2.13(a) shall be applied first to repay outstanding Swing Line Loans
to the full extent thereof, and second, to repay outstanding Revolving Loans and Term Loans on a
pro rata basis, and further with respect to the Term Loans, on a pro rata basis to reduce the
scheduled remaining Installments of principal of the Term Loans.




          (b) Application of Mandatory Prepayments by Type of Loans. Any amount required to be
paid pursuant to Sections 2.14(a) through 2.14(e) shall be applied as follows:




          first, to prepay Term Loans; and further applied on a pro rata basis to the remaining
scheduled Installments of principal of the Term Loans;




          second, to prepay the Swing Line Loans to the full extent thereof;




          third, to prepay the Revolving Loans to the full extent thereof;




          fourth, to prepay outstanding reimbursement obligations with respect to Letters of Credit and
to further permanently reduce the Revolving Loan Commitments by the amount of such prepayment;





-55-









 








          fifth, to cash collateralize Letters of Credit and to further permanently reduce the Revolving
Loan Commitments by the amount of such cash collateralization; and




          sixth, to further permanently reduce the Revolving Commitments to the full extent thereof;
provided that in the case of clauses fourth through and including sixth of Section 2.15(b),
the Revolving Commitments shall be permanently reduced only if and to the extent that both (y) such
prepayment arises as a result of an Asset Sale under this Section 2.14 and (z) there has been a
notice in writing by the Administrative Agent to the Borrower that the Required Lenders have
determined (after the Administrative Agent having received at least five (5) Business Day’s prior
written notice of such Asset Sale from the Borrower) that the Collateral securing the Obligations
after giving effect to the most recent or then contemplated Asset Sale is insufficient to
adequately collateralize such Obligations (taking into account any remaining undrawn Commitments
and any commitment increases which might result as a result of Section 2.2(b)) (it being understood
that the Lenders shall, if requested by the Borrower, consider in good faith whether the Collateral
securing the Obligations after giving effect to the most recent or then contemplated Asset Sale is
sufficient to adequately collateralize such Obligations (taking into account any remaining undrawn
Commitments and any commitment increases which might result as a result of Section 2.2(b))).




          (c) Application of Prepayments of Loans to Base Rate Loans and Eurodollar Rate Loans.
Considering each Class of Loans being prepaid separately, any prepayment thereof shall be applied
first to Base Rate Loans to the full extent thereof before application to Eurodollar Rate Loans, in
each case in a manner which minimizes the amount of any payments required to be made by Borrower
pursuant to Section 2.18(c).




     2.16. General Provisions Regarding Payments.



          (a) All payments by Borrower of principal, interest, fees and other Obligations shall be made
in Dollars in same day funds, without defense, setoff or counterclaim, free of any restriction or
condition, and delivered to Administrative Agent not later than 12:00 p.m. (New York City time) on
the date due at the Principal Office designated by Administrative Agent for the account of Lenders;
for purposes of computing interest and fees, funds received by Administrative Agent after that time
on such due date shall be deemed to have been paid by Borrower on the next succeeding Business Day.




          (b) All payments in respect of the principal amount of any Loan (other than voluntary
prepayments of Revolving Loans) shall be accompanied by payment of accrued interest on the
principal amount being repaid or prepaid.




          (c) Administrative Agent (or its agent or sub-agent appointed by it) shall promptly distribute
to each Lender at such address as such Lender shall indicate in writing, such Lender’s applicable
Pro Rata Share of all payments and prepayments of principal and interest due hereunder, together
with all other amounts due thereto, including, without limitation, all fees payable with respect
thereto, to the extent received by Administrative Agent.




          (d) Notwithstanding the foregoing provisions hereof, if any Conversion/ Continuation Notice is
withdrawn as to any Affected Lender or if any Affected Lender makes

-56-









 








Base Rate Loans in lieu of its
Pro Rata Share of any Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.




          (e) Subject to the provisos set forth in the definition of “Interest Period”, whenever any
payment to be made hereunder with respect to any Loan shall be stated to be due on a day that is
not a Business Day, such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of interest hereunder or of
the Revolving Commitment fees hereunder.




          (f) Borrower hereby authorizes Administrative Agent to charge Borrower’s accounts with
Administrative Agent in order to cause timely payment to be made to Administrative Agent of all
principal, interest, fees and expenses due hereunder (subject to sufficient funds being available
in its accounts for that purpose).




          (g) Administrative Agent shall deem any payment by or on behalf of Borrower hereunder that is
not made in same day funds prior to 12:00 p.m. (New York City time) to be a non-conforming payment.
Any such payment shall not be deemed to have been received by Administrative Agent until the later
of (i) the time such funds become available funds, and (ii) the applicable next Business Day.
Administrative Agent shall give prompt telephonic notice to Borrower and each applicable Lender
(confirmed in writing) if any payment is non-conforming. Any non-conforming payment may constitute
or become a Default or Event of Default in accordance with the terms of Section 8.1(a). Interest
shall continue to accrue on any principal as to which a non-conforming payment is made until such
funds become available funds (but in no event less than the period from the date of such payment to
the next succeeding applicable Business Day) at the rate determined pursuant to Section 2.10 from
the date such amount was due and payable until the date such amount is paid in full.




          (h) If an Event of Default shall have occurred and not otherwise been waived, and the maturity
of the Obligations shall have been accelerated pursuant to Section 8.1, all payments or proceeds
received by Agents and/or Lenders hereunder in respect of any of the Obligations, shall be applied
in accordance with the application arrangements described in Section 7.2 of the Pledge and Security
Agreement.




     2.17. Ratable Sharing. Lenders hereby agree among themselves that, except as otherwise
provided in the Collateral Documents with respect to amounts realized from the exercise of rights
with respect to Liens on the Collateral, if any of them shall, whether by voluntary payment (other
than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through
the exercise of any right of set-off or banker’s lien, by counterclaim or cross action or by the
enforcement of any right under the Credit Documents or otherwise, or as adequate protection of a
deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in respect of Letters of
Credit, fees and other amounts then due and owing to such Lender hereunder or under the other
Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than
the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other
Lender, then the Lender receiving such proportionately greater payment shall (a) notify
Administrative Agent and each other Lender of the receipt of such payment and (b) apply a portion
of such payment to



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purchase participations (which it shall be deemed to have purchased from each
seller of a participation simultaneously upon the receipt by such seller of its portion of such
payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them;
provided, if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of
Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent of such recovery,
but without interest. Borrower expressly consents to the foregoing arrangement and agrees that any
holder of a participation so purchased may exercise any and all rights of banker’s lien, set-off or
counterclaim with respect to any and all monies owing by Borrower to that holder with respect
thereto as fully as if that holder were owed the amount of the participation held by that holder.



     2.18. Making or Maintaining Eurodollar Rate Loans.



          (a) Inability to Determine Applicable Interest Rate. In the event that Administrative
Agent shall have determined (which determination shall be final and conclusive and binding upon all
parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans,
that by reason of circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in
the definition of Adjusted Eurodollar Rate, Administrative Agent shall on such date give notice (by
telefacsimile or by telephone confirmed in writing) to Borrower and each Lender of such
determination, whereupon (i) no Loans may be made as, or converted to, Eurodollar Rate Loans until
such time as Administrative Agent notifies Borrower and Lenders that the circumstances giving rise
to such notice no longer exist, and (ii) any Funding Notice or Conversion/Continuation Notice given
by Borrower with respect to the Loans in respect of which such determination was made shall be
deemed to be rescinded by Borrower or at Borrower’s option be deemed to be converted to a Funding
Notice for a Base Rate Loan.




          (b) Illegality or Impracticability of Eurodollar Rate Loans. In the event that on any
date any Lender shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto but shall be made only after consultation with Borrower and
Administrative Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law even though the
failure to comply therewith would not be unlawful), or (ii) has become impracticable, as a result
of contingencies occurring after the date hereof which materially and adversely affect the London
interbank market or the position of such Lender in that market, then, and in any such event, such
Lender shall be an “Affected Lender” and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to Borrower and Administrative Agent of such determination (which
notice Administrative Agent shall promptly transmit to each other Lender). Thereafter (1) the
obligation of the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate Loans
shall be suspended until such notice shall be withdrawn by the Affected Lender, (2) to the extent
such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by
Borrower pursuant to a Funding Notice or a

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Conversion/Continuation Notice, the Affected Lender
shall make such Loan as (or continue such Loan as or convert such Loan to, as the case may be) a
Base Rate Loan, (3) the Affected Lender’s obligation to maintain its outstanding Eurodollar Rate
Loans (the “Affected Loans”) shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when required by law, and (4)
the Affected Loans shall automatically convert into Base Rate Loans on the date of such
termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as
described above relates to a Eurodollar Rate Loan then being requested by Borrower pursuant to a
Funding Notice or a Conversion/Continuation Notice, Borrower shall have the option, subject to the
provisions of Section 2.18(c), to rescind such Funding Notice or Conversion/Continuation Notice as
to all Lenders by giving notice (by telefacsimile or by telephone confirmed in writing) to
Administrative Agent of such rescission on the date on which the Affected Lender gives notice of
its determination as described above (which notice of rescission Administrative Agent shall
promptly transmit to each other Lender). Except as provided in the immediately preceding sentence,
nothing in this Section 2.18(b) shall affect the obligation of any Lender other than an Affected
Lender to make or maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance
with the terms hereof.




          (c) Compensation for Breakage or Non-Commencement of Interest Periods. Borrower shall
compensate each Lender, upon written request by such Lender (which request shall set forth the
basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including
any interest paid by such Lender to Lenders of funds borrowed by it to make or carry its Eurodollar
Rate Loans and any loss, expense or liability sustained by such Lender in connection with the
liquidation or re-employment of such funds but excluding loss of anticipated profits) which such
Lender may sustain: (i) if for any reason (other than a default by such Lender) a borrowing of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Funding Notice or a
telephonic request for borrowing, or a conversion to or continuation of any Eurodollar Rate Loan
does not occur on a date specified therefor in a Conversion/Continuation Notice or a telephonic
request for conversion or continuation; (ii) if any prepayment or other principal payment of, or
any conversion of, any of its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to that Loan; or (iii) if any prepayment of any of its Eurodollar Rate
Loans is not made on any date specified in a notice of prepayment given by Borrower.




          (d) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an
Affiliate of such Lender.




          (e) Assumptions Concerning Funding of Eurodollar Rate Loans. Calculation of all
amounts payable to a Lender under this Section 2.18 and under Section 2.19 shall be made as though
such Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of
a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and
having a maturity comparable to the relevant Interest Period and through the transfer of such
Eurodollar deposit from an offshore office of such Lender to a domestic office of such Lender in
the United States of America; provided, however, each Lender may fund each of its
Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized
only for the purposes of calculating amounts payable under this Section 2.18 and under Section
2.19.





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     2.19. Increased Costs; Capital Adequacy.



          (a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section
2.20 (which shall be controlling with respect to the matters covered thereby), in the event that
any Lender (which term shall include Issuing Bank for purposes of this Section 2.19(a)) shall
determine (which determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order), or any
determination of a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or directive issued or made
after the date hereof by any central bank or other governmental or quasi-governmental authority
(whether or not having the force of law): (i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any Tax on the overall net income of such Lender) with
respect to this Agreement or any of the other Credit Documents or any of its obligations hereunder
or thereunder or any payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable
any reserve (including any marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits
or other liabilities in or for the account of, or advances or loans by, or other credit extended
by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or
other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of
Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder
or the London interbank market; and the result of any of the foregoing is to increase the cost to
such Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with respect thereto;
then, in any such case, Borrower shall promptly pay to such Lender, upon receipt of the statement
referred to in the next sentence, such additional amount or amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such Lender in its sole
discretion shall determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to
Borrower (with a copy to Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Lender under this Section
2.19(a), which statement shall be conclusive and binding upon all parties hereto absent manifest
error.




          (b) Capital Adequacy Adjustment. In the event that any Lender (which term shall
include Issuing Bank for purposes of this Section 2.19(b)) shall have determined that the adoption,
effectiveness, phase-in or applicability after the Initial Closing Date of any law, rule or
regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the
interpretation or administration thereof by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance by any Lender (or
its applicable lending office) with any guideline, request or directive regarding

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capital adequacy
(whether or not having the force of law) of any such Governmental Authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return on the capital of
such Lender or any corporation controlling such Lender as a consequence of, or with reference to,
such Lender’s Loans or Revolving Commitments or Letters of Credit, or participations therein or
other obligations hereunder with respect to the Loans or the Letters of Credit to a level below
that which such Lender or such controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into consideration the
policies of such Lender or such controlling corporation with regard to capital adequacy), then from
time to time, within five Business Days after receipt by Borrower from such Lender of the statement
referred to in the next sentence, Borrower shall pay to such Lender such additional amount or
amounts as will compensate such Lender or such controlling corporation on an after-tax basis for
such reduction. Such Lender shall deliver to Borrower (with a copy to Administrative Agent) a
written statement, setting forth in reasonable detail the basis for calculating the additional
amounts owed to Lender under this Section 2.19(b), which statement shall be conclusive and binding
upon all parties hereto absent manifest error.




     2.20. Taxes; Withholding, etc.



          (a) Payments to Be Free and Clear. All sums payable by any Credit Party hereunder and
under the other Credit Documents shall (except to the extent required by law) be paid free and
clear of, and without any deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the United States of America or any
other jurisdiction from or to which a payment is made by or on behalf of any Credit Party or by any
federation or organization of which the United States of America or any such jurisdiction is a
member at the time of payment.




          (b) Withholding of Taxes. If any Credit Party or any other Person is required by law
to make any deduction or withholding on account of any such Tax from any sum paid or payable by any
Credit Party to Administrative Agent or any Lender (which term shall include Issuing Bank for
purposes of this Section 2.20(b)) under any of the Credit Documents: (i) Borrower shall notify
Administrative Agent of any such requirement or any change in any such requirement as soon as
Borrower becomes aware of it; (ii) Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to pay is imposed on any Credit
Party) for its own account or (if that liability is imposed on Administrative Agent or such Lender,
as the case may be) on behalf of and in the name of Administrative Agent or such Lender; (iii) the
sum payable by such Credit Party in respect of which the relevant deduction, withholding or payment
is required shall be increased to the extent necessary to ensure that, after the making of that
deduction, withholding or payment (taking into account taxes with respect to sums payable pursuant
to this Section), Administrative Agent or such Lender, as the case may be, receives on the due date
a net sum equal to what it would have received had no such deduction, withholding or payment been
required or made; and (iv) within thirty days after paying any sum from which it is required by law
to make any deduction or withholding, and within thirty days after the due date of payment of any
Tax which it is required by clause (ii) above to pay, Borrower shall deliver to Administrative
Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment
and of the remittance thereof to the relevant taxing or other authority; provided, no such
additional amount shall be

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required to be paid to any Lender under clause (iii) above except to the
extent that any change after the date hereof (in the case of each Lender listed on the signature
pages hereof on the Initial Closing Date) or after the effective date of the Assignment Agreement
pursuant to which such Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that in effect at the date
hereof or at the date of such Assignment Agreement, as the case may be, in respect of payments to
such Lender.




          (c) Evidence of Exemption From U.S. Withholding Tax. Each Lender that is not a United
States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for
U.S. federal income tax purposes (a “Non-US Lender”) shall deliver to Administrative Agent for
transmission to Borrower, on or prior to the Initial Closing Date (in the case of each Lender
listed on the signature pages hereof on the Initial Closing Date) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and
at such other times as may be necessary in the determination of Borrower or Administrative Agent
(each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue
Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by
such Lender, and such other documentation required under the Internal Revenue Code and reasonably
requested by Borrower to establish that such Lender is not subject to deduction or withholding of
United States federal income tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender
is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code and
cannot deliver either Internal Revenue Service Form W-8BEN or W-8ECI pursuant to clause (i) above,
a Certificate Regarding Non-Bank Status together with two original copies of Internal Revenue
Service Form W-8BEN (or any successor form), properly completed and duly executed by such Lender,
and such other documentation required under the Internal Revenue Code and reasonably requested by
Borrower to establish that such Lender is not subject to deduction or withholding of United States
federal income tax with respect to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Credit Documents. Each Lender required to deliver any
forms, certificates or other evidence with respect to United States federal income tax withholding
matters pursuant to this Section 2.20(c) hereby agrees, from time to time after the initial
delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate
in any material respect, that such Lender shall promptly deliver to Administrative Agent for
transmission to Borrower two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI,
or a Certificate Regarding Non-Bank Status and two original copies of Internal Revenue Service Form
W-8BEN (or any successor form), as the case may be, properly completed and duly executed by such
Lender, and such other documentation required under the Internal Revenue Code and reasonably
requested by Borrower to confirm or establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to payments to such Lender under the
Credit Documents, or notify Administrative Agent and Borrower of its inability to deliver any such
forms, certificates or other evidence. Borrower shall not be required to pay any additional amount
to any Non-US Lender under Section 2.20(b)(iii) if such Lender shall have failed (1) to deliver the
forms, certificates or other evidence referred to in the second sentence of this Section 2.20(c),
or (2) to notify Administrative Agent and Borrower of its inability to deliver any such forms,
certificates or other evidence, as the case

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may be; provided, if such Lender shall have
satisfied the requirements of the first sentence of this Section 2.20(c) on the Initial Closing
Date or on the date of the Assignment Agreement pursuant to which it became a Lender, as
applicable, nothing in this last sentence of Section 2.20(c) shall relieve Borrower of its
obligation to pay any additional amounts pursuant this Section 2.20 in the event that, as a result
of any change in any applicable law, treaty or governmental rule, regulation or order, or any
change in the interpretation, administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as described herein.




          (d) Tax Benefit. If any Lender, Issuing Bank or any Agent determines in its sole
discretion that it has received a refund of, reduction of, or the benefit of a credit against its
tax or otherwise recovers an amount in connection with any payment by Borrower pursuant to this
Section 2.20 (a “Tax Benefit”), such Person shall reimburse Borrower for the amount determined by
such Person to be the Tax Benefit (but only to the extent of indemnity payments made, or additional
amounts paid, by any Credit Party under this Section 2.20 with respect to the Taxes giving rise to
such Tax Benefit), after reduction for any out-of-pocket expenses and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such Tax Benefit),
obtained by such Person as a consequence of such Tax Benefit; provided, however,
that the Credit Party, upon the request of the Administrative Agent or such Lender, agrees to repay
the amount paid over to such Credit Party (plus any penalties (to the extent not imposed as a
result of the any Agent’s, Issuing Bank’s or Lender’s, as the case may be, gross negligence or
willful misconduct), interest or other charges imposed by the relevant Governmental Authority) to
the Administrative Agent or such Lender within a reasonable time (which shall not to exceed 20
days) after receipt of written notice that any Agent or such Lender is required to repay such Tax
Benefit to such Governmental Authority. Notwithstanding anything to the contrary, in no event will
any Lender be required to pay any amount to any Credit Party the payment of which would place such
Lender in a less favorable net after-tax position than such Lender would have been in if the
additional amounts or indemnification payments giving rise to such Tax Benefit had never been paid.




     2.21. Obligation to Mitigate. Each Lender (which term shall include Issuing Bank for purposes
of this Section 2.21) agrees that, as promptly as practicable after the officer of such Lender
responsible for administering its Loans or Letters of Credit, as the case may be, becomes aware of
the occurrence of an event or the existence of a condition that would cause such Lender to become
an Affected Lender or that would entitle such Lender to receive payments under Section 2.18, 2.19
or 2.20, it will, to the extent not inconsistent with the internal policies of such Lender and any
applicable legal or regulatory restrictions, use reasonable efforts to (a) make, issue, fund or
maintain its Credit Extensions, including any Affected Loans, through another office of such
Lender, or (b) take such other measures as such Lender may deem reasonable, if as a result thereof
the circumstances which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such Lender pursuant to
Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in its
sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments, Loans
or Letters of Credit through such other office or in accordance with such other measures, as the
case may be, would not otherwise adversely affect such Revolving Commitments, Loans or Letters of
Credit or the interests of such Lender;



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provided, such Lender will not be obligated to
utilize such other office pursuant to this Section 2.21 unless Borrower agrees to pay all
incremental expenses incurred by such Lender as a result of utilizing such other office as
described above. A certificate as to the amount of any such expenses payable by Borrower pursuant
to this Section 2.21 (setting forth in reasonable detail the basis for requesting such amount)
submitted by such Lender to Borrower (with a copy to Administrative Agent) shall be conclusive
absent manifest error.



     2.22. Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the
event that any Lender, other than at the direction or request of any regulatory agency or
authority, defaults (a “Defaulting Lender”) in its obligation to fund (a “Funding Default”) any
Revolving Loan or its portion of any unreimbursed payment under Section 2.3(b)(iv) or 2.4(e) (in
each case, a “Defaulted Loan”), then (a) during any Default Period with respect to such Defaulting
Lender, such Defaulting Lender shall be deemed not to be a “Lender” for purposes of voting on any
matters (including the granting of any consents or waivers) with respect to any of the Credit
Documents; (b) to the extent permitted by applicable law, until such time as the Default Excess
with respect to such Defaulting Lender shall have been reduced to zero, (i) any voluntary
prepayment of the Revolving Loans shall, if Borrower so directs at the time of making such
voluntary prepayment, be applied to the Revolving Loans of other Lenders as if such Defaulting
Lender had no Revolving Loans outstanding and the Revolving Exposure of such Defaulting Lender were
zero, and (ii) any mandatory prepayment of the Revolving Loans shall, if Borrower so directs at the
time of making such mandatory prepayment, be applied to the Revolving Loans of other Lenders (but
not to the Revolving Loans of such Defaulting Lender) as if such Defaulting Lender had funded all
Defaulted Loans of such Defaulting Lender, it being understood and agreed that Borrower shall be
entitled to retain any portion of any mandatory prepayment of the Revolving Loans that is not paid
to such Defaulting Lender solely as a result of the operation of the provisions of this clause (b);
(c) such Defaulting Lender’s Revolving Commitment and outstanding Revolving Loans and such
Defaulting Lender’s Pro Rata Share of the Letter of Credit Usage shall be excluded for purposes of
calculating the Revolving Commitment fee payable to Lenders in respect of any day during any
Default Period with respect to such Defaulting Lender, and such Defaulting Lender shall not be
entitled to receive any Revolving Commitment fee pursuant to Section 2.11 with respect to such
Defaulting Lender’s Revolving Commitment in respect of any Default Period with respect to such
Defaulting Lender; and (d) the Total Utilization of Revolving Commitments as at any date of
determination shall be calculated as if such Defaulting Lender had funded all Defaulted Loans of
such Defaulting Lender. No Revolving Commitment of any Lender shall be increased or otherwise
affected, and, except as otherwise expressly provided in this Section 2.22, performance by Borrower
of its obligations hereunder and the other Credit Documents shall not be excused or otherwise
modified as a result of any Funding Default or the operation of this Section 2.22. The rights and
remedies against a Defaulting Lender under this Section 2.22 are in addition to other rights and
remedies which Borrower may have against such Defaulting Lender with respect to any Funding Default
and which Administrative Agent or any Lender may have against such Defaulting Lender with respect
to any Funding Default.



     2.23. Removal or Replacement of a Lender. Anything contained herein to the contrary
notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give
notice to Borrower that such Lender is an Affected Lender or that such Lender is entitled to
receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which have



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caused such
Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain
in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after
Borrower’s request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender,
(ii) the Default Period for such Defaulting Lender shall remain in effect, and (iii) such
Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting
Lender within five Business Days after Borrower’s request that it cure such default; or (c) in
connection with any proposed amendment, modification, termination, waiver or consent with respect
to any of the provisions hereof as contemplated by Section 10.5(b), the consent of Requisite
Lenders shall have been obtained but the consent of one or more of such other Lenders (each a
“Non-Consenting Lender”) whose consent is required shall not have been obtained; then, with respect
to each such Increased-Cost Lender, Defaulting Lender or Non-Consenting Lender (the “Terminated
Lender”), Borrower may, by giving written notice to Administrative Agent and any Terminated Lender
of its election to do so, elect to cause such Terminated Lender (and such Terminated Lender hereby
irrevocably agrees) to assign its outstanding Loans and its Revolving Commitments, if any, in full
to one or more Eligible Assignees (each a “Replacement Lender”) in accordance with the provisions
of Section 10.6 and Terminated Lender shall pay any fees payable thereunder in connection with such
assignment; provided, (1) on the date of such assignment, the Replacement Lender shall pay
to Terminated Lender an amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Loans of the Terminated Lender, (B) an amount equal to all
unreimbursed drawings that have been funded by such Terminated Lender, together with all then
unpaid interest with respect thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid fees owing to such Terminated Lender pursuant to Section 2.11; (2) on the date
of such assignment, Borrower shall pay any amounts payable to such Terminated Lender pursuant to
Section 2.18(c), 2.19 or 2.20; or otherwise as if it were a prepayment and (3) in the event such
Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting
Lender; provided, Borrower may not make such election with respect to any Terminated Lender
that is also an Issuing Bank unless, prior to the effectiveness of such election, Borrower shall
have caused each outstanding Letter of Credit issued thereby to be cancelled. Upon the prepayment
of all amounts owing to any Terminated Lender and the termination of such Terminated Lender’s
Revolving Commitments, if any, such Terminated Lender shall no longer constitute a “Lender” for
purposes hereof; provided, any rights of such Terminated Lender to indemnification
hereunder shall survive as to such Terminated Lender.



SECTION 3. CONDITIONS PRECEDENT




     3.1. Initial Closing Date. The effectiveness of this Agreement and the funding of the
Revolving Loans, and the Term Loans (but only to the extent that the 90% Closing Condition has been
satisfied), on the Initial Closing Date shall be subject, in addition to the terms and conditions
set forth in Sections 2.1 and 2.2, to the satisfaction, or waiver in accordance with Section 10.5,
of each of the following conditions:



          (a) Credit Documents. To the extent any Credit Document is not otherwise specifically
identified below, the Administrative Agent shall have received sufficient copies of each Credit
Document originally executed and delivered by each applicable Credit Party.





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          (b) Organizational Documents; Incumbency. Administrative Agent shall have received
(i) sufficient copies of each Organizational Document executed and delivered by each Credit Party,
as applicable, and, to the extent applicable, certified as of a recent date by the appropriate
governmental official, each dated the Initial Closing Date or a recent date prior thereto; (ii)
signature and incumbency certificates of the officers of such Person executing the Credit Documents
to which it is a party; (iii) resolutions of the Board of Directors or similar governing body of
each Credit Party approving and authorizing the execution, delivery and performance of this
Agreement and the other Credit Documents and the Related Agreements to which it is a party or by
which it or its assets may be bound as of the Initial Closing Date, certified as of the Initial
Closing Date by its secretary or an assistant secretary as being in full force and effect without
modification or amendment; (iv) a good standing certificate from the applicable Governmental
Authority of each Credit Party’s jurisdiction of incorporation, organization or formation and in
each jurisdiction in which it is qualified as a foreign corporation or other entity to do business,
each dated a recent date prior to the Initial Closing Date; and (v) such other documents related to
the foregoing as Administrative Agent may reasonably request.




          (c) Representations and Warranties. The representations and warranties of the Credit
Parties, Laserscope and each of their respective Subsidiaries under the Credit Documents and the
Related Agreements shall be true and correct and no Default or Event of Default under the Credit
Documents shall have occurred and be continuing and no default or event of default under the
Related Agreements shall have occurred and be continuing (it being understood that the
representations and warranties contained in Section 4 hereof shall, for purposes of this Section
3.1(c), be deemed to be being made after giving effect to the consummation of the Acquisition).




          (d) Satisfactory Acquisition Documentation and Structure. The structure utilized to
consummate the Acquisition, the terms thereof (including the terms and conditions of the Tender
Offer and the Acquisition Documents), the costs and expenses incurred in connection therewith, the
pro forma capitalization of the Holdings and its Subsidiaries after giving effect to the
Acquisition, the Tender Offer and the definitive documentation relating thereto shall be in form
and substance reasonably satisfactory to the Administrative Agent; it being understood that the
structure and terms of (i) the Acquisition (as reflected in the Acquisition Agreement as in effect
on June 3, 2006), (ii) the Tender Offer (as of June 30, 2006) including an extension of the Tender
Offer under Section 1.1(d) of the Acquisition Agreement and modification of the Tender Offer to the
Minimum Condition (as defined in Section 1.1(e) of the Acquisition Agreement) and (iii) the pro
forma capitalization of the Holdings and its Subsidiaries after giving effect to the Acquisition,
the Tender Offer and the definitive documentation relating thereto (as previously disclosed in
writing to the Administrative Agent) are reasonably satisfactory.




          (e) Governmental Authorizations and Consents. Each Credit Party shall have obtained
all Governmental Authorizations and all consents of other Persons including shareholders, in each
case that are necessary or advisable in connection with the transactions contemplated by the Credit
Documents and the Related Agreements and each of the foregoing shall be in full force and effect
and in form and substance reasonably satisfactory to Administrative Agent and Syndication Agent.
All applicable waiting periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated by the Credit

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Documents or the Related Agreements, and no action, request
for stay, petition for review or rehearing, reconsideration, or appeal with respect to any of the
foregoing shall be pending, and the time for any applicable agency to take action to set aside its
consent on its own motion shall have expired.




          (f) Real Estate Assets. In order to create in favor of Collateral Agent, for the
benefit of Secured Parties, a valid and, subject to any filing and/or recording referred to herein,
perfected First Priority security interest in certain Real Estate Assets, Collateral Agent shall
have received from Borrower and each applicable Guarantor:





          (i) fully executed and notarized Mortgages, in proper form for recording in all
appropriate places in all applicable jurisdictions, encumbering each Real Estate Asset
listed in Schedule 3.1(f) (each, a “Mortgaged Property’’);




          (ii) an opinion of counsel (which counsel shall be reasonably satisfactory to
Collateral Agent) in each state in which a Mortgaged Property is located with respect to the
enforceability of the form(s) of Mortgages to be recorded in such state and such other
matters as Collateral Agent may reasonably request, in each case in form and substance
reasonably satisfactory to Collateral Agent;




          (iii) in the case of each Leasehold Property that is a Mortgaged Property, (1) a
Landlord Consent and Estoppel and (2) evidence that such Leasehold Property is a Recorded
Leasehold Interest;




          (iv) (a) ALTA mortgagee title insurance policies or unconditional commitments therefor
issued by one or more title companies reasonably satisfactory to Collateral Agent with
respect to each Mortgaged Property (each, a “Title Policy”), in amounts not less than the
fair market value of each Mortgaged Property, together with a title report issued by a title
company with respect thereto, dated not more than thirty days prior to the Initial Closing
Date and copies of all recorded documents listed as exceptions to title or otherwise
referred to therein, each in form and substance reasonably satisfactory to Collateral Agent
and (B) evidence satisfactory to Collateral Agent that such Credit Party has paid to the
title company or to the appropriate governmental authorities all expenses and premiums of
the title company and all other sums required in connection with the issuance of each Title
Policy and all recording and stamp taxes (including mortgage recording and intangible taxes)
payable in connection with recording the Mortgages for each Mortgaged Property in the
appropriate real estate records;




          (v) evidence of flood insurance with respect to each Flood Hazard Property that is
located in a community that participates in the National Flood Insurance Program, in each
case in compliance with any applicable regulations of the Board of Governors, in form and
substance reasonably satisfactory to Collateral Agent; and




          (vi) ALTA surveys of all Mortgaged Properties which are not Leasehold Properties,
certified to Collateral Agent and dated not more than thirty days prior to the Initial
Closing Date.



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          (g) Environmental Reports. Phase I Environmental Site Assessment Reports, consistent
with American Society of Testing and Materials (ASTM) standards and applicable state requirements,
on any fee-owned Real Estate Asset or any Real Estate Asset that is a Leasehold Property, prepared
by environmental engineers satisfactory to Administrative Agent, all in form and substance
satisfactory to Administrative Agent, and the Administrative Agent shall have further received such
environmental review and audit reports, including Phase II reports and compliance audits, with
respect to any fee-owned Real Estate Asset or any Real Estate Asset that is a Leasehold Property or
operations of any Credit Party as the Administrative Agent shall have requested, and the
Administrative Agent shall be satisfied, with the contents of all such environmental reports; the
Administrative Agent shall have received letters executed by the environmental firms preparing such
environmental reports, in form and substance satisfactory to the Administrative Agent, authorizing
the Administrative Agent and Lenders to rely on such reports.




          (h) The Administrative Agent (or its counsel) shall have received the following:





          (i) a duly executed counterpart of this Agreement signed by or on behalf of each party
hereto (which may include telecopy transmission of a signed signature page of this
Agreement);




          (ii) duly executed Revolving Credit and Term Notes payable to each Lender requesting
the same and the Swingline Note payable to the Swingline Lender;




          (iii) a certificate of the Secretary or Assistant Secretary of each Credit Party,
attaching and certifying copies of its charter documents, bylaws and of the resolutions of
its boards of directors, or partnership agreement or limited liability company agreement, or
comparable organizational documents and authorizations, authorizing the execution, delivery
and performance of the Credit Documents to which it is a party and certifying the name,
title and true signature of each officer of such Credit Party executing the Credit Documents
to which it is a party;




          (iv) a duly executed Pledge and Security Agreement, together with (A) UCC financing
statements and other applicable documents under the laws of the jurisdictions with respect
to the perfection of the Liens granted under the Pledge and Security Agreement, as requested
by the Administrative Agent in order to perfect such Liens, duly executed by the Credit
Parties, (B) copies of favorable UCC, tax, judgment and fixture lien search reports in all
necessary or appropriate jurisdictions and under all legal and trade names of the Credit
Parties requested by the Lenders or any Agent, indicating that there are no prior Liens on
any of the Collateral other than Permitted Liens, (C) duly executed waivers of warehousemen
and/or bailees with respect to all Inventory (as defined in the Pledge and Security
Agreement) of any Credit Party located locations not owned or leased by a Credit Party, (D)
duly executed copyright security agreements, patent security agreements and trademark
security agreements, if applicable and, (F) a Landlord Waiver and Consent Agreement executed
by the landlord of any Leasehold Property and by the applicable Credit Party, together with
a copy of all leases of any Real Estate Asset (certified by an Authorized Officer of the
Borrower) to which any Credit Party is a party;



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          (v) duly executed control account agreements with each bank or other financial
institution that maintains Deposit Accounts and blocked accounts and each securities
intermediary that maintains investment accounts, on behalf of any Credit Party on the
Initial Closing Date;




          (vi) duly executed collateral assignment of the rights of the Credit Parties under the
Acquisition Agreement;




          (vii) (A) original notes (including intercompany notes) payable to the order of any of
the Credit Parties, and (B) note endorsements, allonges or other appropriate instruments of
transfer executed in blank; and




          (viii) (A) original stock certificates evidencing the issued and outstanding shares of
capital stock pledged to the Collateral Agent to the Pledge and Security Agreement, and (B)
stock powers or other appropriate instruments of transfer executed in blank.



          (i) Personal Property Collateral. In order to create in favor of Collateral Agent,
for the benefit of Secured Parties, a valid, perfected First Priority security interest in the
personal property Collateral, Collateral Agent shall have received:





          (i) evidence satisfactory to Collateral Agent of the compliance by each Credit Party of
their obligations under the Pledge and Security Agreement and the other Collateral Documents
(including, without limitation, their obligations to execute and deliver UCC financing
statements, originals of securities, instruments and chattel paper and any agreements
governing deposit and/or securities accounts as provided therein);




          (ii) a completed Collateral Questionnaire dated the Initial Closing Date and duly
executed by an Authorized Officer of each Credit Party, together with all attachments
contemplated thereby, including (A) the results of a recent search, by a Person satisfactory
to Collateral Agent, of all effective UCC financing statements (or equivalent filings) made
with respect to any personal or mixed property of any Credit Party in the jurisdictions
specified in the Collateral Questionnaire, together with copies of all such filings
disclosed by such search, and (B) UCC termination statements (or similar documents) duly
executed by all applicable Persons for filing in all applicable jurisdictions as may be
necessary to terminate any effective UCC financing statements (or equivalent filings)
disclosed in such search (other than any such financing statements in respect of Permitted
Liens);




          (iii) opinions of counsel (which counsel shall be reasonably satisfactory to Collateral
Agent) with respect to the creation and perfection of the security interests in favor of
Collateral Agent in such Collateral and such other matters governed by the laws of each
jurisdiction in which any Credit Party or any personal property Collateral is located as
Collateral Agent may reasonably request, in each case in form and substance reasonably
satisfactory to Collateral Agent; and



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          (iv) evidence that each Credit Party shall have taken or caused to be taken any other
action, executed and delivered or caused to be executed and delivered any other agreement,
document and instrument reasonably required by Collateral Agent.



          (j) Financial Statements; Projections. Lenders shall have received from Borrower (i)
the Historical Financial Statements, (ii) pro forma consolidating balance sheet and income
statement of each of Holdings and its Subsidiaries and Laserscope and its Subsidiaries, in each
case as of the Fiscal Quarter ended March 31, 2006, (iii) pro forma consolidated balance sheets of
Holdings and its Subsidiaries as at the Initial Closing Date, and reflecting the consummation of
the Acquisition, the issuance of the Senior Subordinated Notes, the related financings and the
other transactions contemplated by the Credit Documents to occur on or prior to the Initial Closing
Date, which pro forma financial statements shall be in form and substance satisfactory to
Administrative Agent, and (iv) the Projections. The Administrative Agent shall have received for
each of Holdings and its Subsidiaries and Laserscope and its Subsidiaries monthly financial
statements for each fiscal month after the most recent fiscal period for which financial statements
were received by the Administrative Agent and ended at least thirty (30) days before the Initial
Closing Date. All such financial statements shall be satisfactory in form and substance to the
Administrative Agent.




          (k) Opinions of Counsel to Credit Parties. Lenders and their respective counsel shall
have received originally executed copies of the favorable written opinions of (i) Oppenheimer Wolff
& Donnelly, LLP, counsel for Credit Parties, with respect to Minnesota, New York and Delaware law
and satisfaction of the Tender Offer conditions in the form of Exhibit D-1, (ii) Preston, Gates &
Ellis LLP, California counsel for the Credit Parties with respect to California law in the form of
Exhibit D-2, (iii) Ryley, Carlock & Applewhite, P.A., Arizona counsel for the Credit Parties with
respect to Arizona law in the form of Exhibit D-3 (unless the 90% Closing Condition is not met on
the Initial Closing Date in which case such opinion shall be delivered on the Second Closing Date),
in each case such opinion shall be dated as of the Initial Closing Date and otherwise in form and
substance reasonably satisfactory to Administrative Agent and Syndication Agent (and each Credit
Party hereby instructs such counsel to deliver such opinions to Agents and Lenders).




          (l) Solvency. The Administrative Agent shall have received a Solvency Certificate
from the chief financial officer of Holdings and Borrower in form and substance satisfactory to the
Administrative Agent, supporting the conclusions that after giving effect to the transactions
contemplated by the Credit Documents and the Related Agreements, Holdings and each of its
Subsidiaries are Solvent.




          (m) Tender Offer Documents. The Administrative Agent shall have received a copy of
each of the agreements, announcements, certificates and other documents, certified as being true,
complete and correct by an Authorized Officer of Borrower and Holdings, executed and/or delivered
in connection with the Tender Offer.




          (n) Officer’s Certificate. Borrower shall have delivered to Administrative Agent and
Syndication Agent an originally executed Officer’s Certificate, together with all attachments
thereto.




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          (o) Required Regulatory Documentation. The Administrative Agent shall have received
(i) all documentation and other information required by bank regulatory authorities under
applicable “know-your-customer” and anti-money laundering rules and regulations, including all
information required to be delivered in connection with Section 4.25, and (ii) all documentation
and other information required by the Administrative Agent to be delivered in connection with
compliance with regulation U of the Board of Governors, including without limitation the delivery
of a fully executed Statement of Purpose of an Extension of Credit Secured by Margin Stock by a
Person Subject to Registration Under Regulation U (Federal Reserve Form G-3).




          (p) Consummation of the Acquisition.





          (i) (1) All conditions to the consummation of the transactions contemplated by the
Acquisition Agreement (including, without limitation, the Offer Conditions) shall have been
satisfied or the fulfillment of any such conditions shall have been waived with the consent
of Administrative Agent, (2) either the 90% Closing Condition or the Revised Minimum
Condition has been met, (3) the aggregate cash consideration payable to the shareholders
(including the holders of options, warrants, convertible instruments and other share
equivalents) of Laserscope in connection with the Acquisition shall not exceed $720,000,000
and (4) if the 90% Closing Condition has not been met and the Revised Minimum Condition has
been met, the Administrative Agent shall have been delivered binding voting agreements or
shareholders agreements which ensure, to the Required Lenders’ sole satisfaction, that the
merger of Merger Sub with and into Laserscope will be approved by the holders of more than
50% of the Capital Stock of Laserscope entitled under applicable law and the constituent
documents (including, if applicable, Merger Sub after the acquisition of shares by it under
the Tender Offer) to approve such merger; and




          (ii) Administrative Agent shall have received a fully executed copy of each Acquisition
Document and any documents executed in connection therewith, (certified by an Authorized
Officer as being true, correct and complete copies) together with copies of each of the
opinions of counsel delivered to the parties under the Acquisition Documents, accompanied by
a letter from each such counsel authorizing the Administrative Agent and Lenders to rely
upon such opinion to the same extent as though it were addressed to the Administrative Agent
and Lenders. Each Acquisition Document shall be in full force and effect. No provision of
the Acquisition Agreement shall have been modified or waived in any respect determined by
Administrative Agent to be material, in each case without the consent of Administrative
Agent.



          (q) No Litigation. There shall not exist any action, suit, investigation, litigation
or proceeding or other legal or regulatory developments, pending or threatened in any court or
before any arbitrator or Governmental Authority that singly or in the aggregate, materially impairs
the Acquisition, or any of the other transactions contemplated by the Credit Documents or the
Related Agreements, or that could reasonably be expected to have a Closing Date Material Adverse
Effect.




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          (r) Organizational and Capital Structure. The organizational structure and capital
structure of Holdings and its Subsidiaries, both before and after giving effect to the Acquisition,
shall be as set forth on Schedule 4.1(r), in form and substance satisfactory to Administrative
Agent.




          (s) Issuance of Subordinated Indebtedness.





          (i) The aggregate amount of the Senior Subordinated Notes issued by Borrower shall not
be less than $373,750,000 and the net proceeds from the issuance thereof retained by
Holdings and contributed by Holdings to the Borrower and by the Borrower to Merger Sub shall
be no less than $362,537,500.




          (ii) Administrative Agent shall have received a certified fully executed copy of each
Subordinated Debt Document and any documents executed in connection therewith. Each
Subordinated Debt Document shall be in full force and effect, and no provision thereof shall
have been modified or waived in any respect determined by Administrative Agent to be
material, in each case without the consent of Administrative Agent.



          (t) Existing Indebtedness. On the Initial Closing Date, Holdings and its Subsidiaries
shall have (i) repaid in full all Existing Indebtedness, (ii) terminated any commitments to lend or
make other extensions of credit thereunder, (iii) delivered to Administrative Agent all documents
or instruments necessary to release all Liens securing Existing Indebtedness or other obligations
of Holdings and its Subsidiaries thereunder being repaid on the Initial Closing Date, and (iv) made
arrangements satisfactory to Administrative Agent with respect to the cancellation of any letters
of credit outstanding thereunder.




          (u) Evidence of Insurance. Collateral Agent shall have received certificates from
Borrower’s insurance broker or other evidence satisfactory to it that all insurance required to be
maintained pursuant to Section 5.5 is in full force and effect, together with endorsements naming
the Collateral Agent, for the benefit of Secured Parties, as additional insured and loss payee
thereunder to the extent required under Section 5.5.




          (v) Fees and Expenses. If the 90% Closing Condition has been met, Borrower shall have
paid to Syndication Agent, Administrative Agent and Documentation Agent, the fees and expenses
payable on the Initial Closing Date, including, without limitation those fees required to be paid
on or prior to the Initial Closing Date under the Fee Letter (including the entirety of any
commitment, facility and underwriting fees whether or not expressly required under the Fee Letter);
the fees referred to in Section 2.11 and Section 10.2 and reimbursement or payment of all
out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to the
Administrative Agent) required to be reimbursed or paid by the Borrower hereunder, under any other
Credit Document and under any other agreement with any Agent. If the 90% Closing Condition has not
been met, the foregoing fees and expenses shall be paid to the Syndication Agent, Administrative
Agent and Documentation Agent herein on or prior to the Second Closing Date. Notwithstanding the
deferral of payment set forth above, all fees and expenses shall be deemed earned and due and
payable as of the Initial Closing Date, regardless of the deferral of payment thereof to the Second
Closing Date.




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          (w) Maximum Senior Debt Leverage Ratio. The pro forma financial statements delivered
pursuant to Section 3.1(j) shall demonstrate in form and substance reasonably satisfactory to
Administrative Agent that on the Initial Closing Date and immediately after giving effect to the
transactions contemplated by the Related Agreements and any Credit Extensions to be made on the
Initial Closing Date and on the Second Closing Date, the ratio of (i) Consolidated Senior Debt to
(ii) pro forma Consolidated Adjusted EBITDA for the twelve-month period ending March 31, 2006 shall
not be greater than 3.20 to 1.00.




          (x) Maximum Total Debt Leverage Ratio. The pro forma financial statements delivered
pursuant to Section 3.1(j) shall demonstrate in form and substance reasonably satisfactory to
Administrative Agent that on the Initial Closing Date and immediately after giving effect to the
transactions contemplated by the Related Agreements and any Credit Extensions to be made on the
Initial Closing Date and on the Second Closing Date, the ratio of (i) Consolidated Total
Indebtedness as of the Initial Closing Date to (ii) pro forma Consolidated Adjusted EBITDA for the
twelve-month period ending March 31, 2006 shall not be greater than 6.40 to 1.00.




          (y) No Material Adverse Change. Since March 31, 2006, no event, circumstance or
change shall have occurred that has caused or evidences, either in any case or in the aggregate, a
Closing Date Material Adverse Effect.




          (z) Completion of Proceedings. All partnership, corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all documents incidental
thereto not previously found acceptable by Administrative Agent and its counsel shall be
satisfactory in form and substance to Administrative Agent and such counsel, and Administrative
Agent, and such counsel shall have received all such counterpart originals or certified copies of
such documents as Administrative Agent may reasonably request.




          (aa) No Adverse Proceedings. There shall be no litigation or proceeding pending
against any Credit Party (including any injunctive, declaratory or other equitable actions), that
if adversely determined could reasonably be expected to prevent or prohibit the effectiveness of
the Merger.




          (bb) Retained Term Loan Proceeds. To the extent that the Term Loan is funded on the
Initial Closing Date, the Retained Term Loan Proceeds shall be deposited in the Retained Term Loan
Proceeds Deposit Account.



Notwithstanding the foregoing, subsections (a), (b), (f), (g), (h), (i), (k), (o), (t) and (u) of
this Section 3.1 shall not apply in respect of Laserscope and its Subsidiaries, if the Initial
Closing Date is occurring on the basis of the Revised Minimum Condition.




     3.2. Second Closing Date.



          (a) To the extent that the 90% Closing Condition was not satisfied on or prior to the Initial
Closing Date and the Lenders have not previously funded the Term Loans hereunder, the obligation of
each Lender to make the Term Loans on the Second Closing Date is subject, in addition to the terms
and conditions set forth in Sections 2.1 and 2.2, to satisfaction, or waiver in accordance with
Section 10.5, of each of the following conditions:





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          (i) Administrative Agent shall have received a fully executed and delivered Funding
Notice;




          (ii) the Merger shall have become or been declared wholly unconditional in all respects
on or prior to December 31, 2006 and 100% of the Capital Stock of Laserscope (including any
Capital Stock issuable under warrants, options, convertible instruments or other share
equivalents), not theretofore acquired by Merger Sub on the Initial Closing Date, shall have
been or shall contemporaneously be purchased and shall have been or shall be paid for
contemporaneously with the making of such Loans;




          (iii) as of such Credit Date, the representations and warranties contained herein and
in the other Credit Documents shall be true and correct on and as of that Credit Date to the
same extent as though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects on and as of such
earlier date;




          (iv) as of such Credit Date, no event shall have occurred and be continuing or would
result from the consummation of the applicable Credit Extension that would constitute an
Event of Default or a Default;




          (v) as of such Credit Date, since March 31, 2006, there shall have been no change which
has had or could reasonably be expected to have a Closing Date Material Adverse Effect;




          (vi) the Chief Financial Officer of Borrower shall have delivered an Officer’s
Certificate representing and warranting and otherwise demonstrating to the satisfaction of
Agent that, as of such Credit Date, Borrower expects, after giving effect to the proposed
borrowing and based upon good faith determinations and Projections consistent with the
Financial Plan, to be in compliance with all operating and financial covenants set forth in
this Agreement as of the last day of the current Fiscal Quarter;




          (vii) immediately prior to giving effect to the Merger, the aggregate Cash and Cash
Equivalents of Laserscope and its Subsidiaries will not be less than the Laserscope Cash,
plus the sum of (a) the cash component of the exercise price payable Merger Sub in respect
of the Top-Up Stock Option, if any, and (b) any obligations outstanding under the Existing
Laserscope Credit Agreement, less checks in transit, if any; 




          (viii) (1) all conditions to the consummation of the transactions contemplated by the
Acquisition Agreement (including, without limitation, the Offer Conditions) shall have been
satisfied or the fulfillment of any such conditions shall have been waived with the consent
of Administrative Agent and (2) the aggregate cash consideration payable to the shareholders
(including the holders of options, warrants, convertible instruments and other share
equivalents) of Laserscope in connection with the Acquisition shall not exceed $720,000,000;



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          (ix) (i) there shall be no Indebtedness or any other obligations outstanding under the
Existing Laserscope Credit Agreement, (ii) any commitments to lend or make other extensions
of credit thereunder shall have been, or contemporaneous therewith shall be, terminated,
(iii) there shall have been, or contemporaneously therewith shall be, delivered to
Administrative Agent all documents or instruments necessary to release all Liens securing
Indebtedness or other obligations of Laserscope and its Subsidiaries thereunder (including
the delivery of a payoff, termination, release or other similar letter), and (iv) Holdings
and its Subsidiaries shall have made arrangements satisfactory to Administrative Agent with
respect to the cancellation of any letters of credit outstanding thereunder;




          (x) Borrower shall have paid to Syndication Agent, Administrative Agent and
Documentation Agent, the fees and expenses payable, including, without limitation those fees
required to be paid under the Fee Letter (including the entirety of any commitment, facility
and underwriting fees whether or not expressly required under the Fee Letter); the fees
referred to in Section 2.11 and Section 10.2 and reimbursement or payment of all
out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel to
the Administrative Agent) required to be reimbursed or paid by the Borrower hereunder, under
any other Credit Document and under any other agreement with any Agent;




          (xi) Lenders and their respective counsel shall have received originally executed
copies of the favorable written opinions of (i) Oppenheimer Wolff & Donnelly, LLP, counsel
for Credit Parties with respect to Delaware, New York and Minnesota law, (ii) Preston, Gates
& Ellis LLP, California counsel for the Credit Parties with respect to California law,
including the effectiveness of the Merger, and (iii) Ryley, Carolock & Applewhite, P.A.,
Arizona counsel for the Credit Parties with respect to Arizona law (but only to the extent
the 90% Closing Condition is not met on the Initial Closing Date), in each case such opinion
shall be dated as of the Second Closing Date and otherwise in form and substance reasonably
satisfactory to Administrative Agent and Syndication Agent (and each Credit Party hereby
instructs such counsel to deliver such opinions to Agents and Lenders); and




          (xii) as of such Credit Date, there shall be no litigation or proceeding pending
against any Credit Party (including any injunctive, declaratory or other equitable actions),
that if adversely determined could reasonably be expected to prevent or prohibit the
effectiveness of the Merger.



     3.3. Conditions to All Other Credit Extensions.



          (a) The obligation of each Lender to make any Loan (other than the Loans on the Initial
Closing Date and the Second Closing Date) or Issuing Bank to issue any Letter of Credit is subject
to satisfaction of the following conditions:





          (i) Administrative Agent shall have received a fully executed and delivered Funding
Notice or Issuance Notice, as the case may be;



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          (ii) Both before and after giving effect to the Credit Extensions requested on such
Credit Date, the Total Utilization of Revolving Commitments shall not exceed the Revolving
Commitments then in effect;




          (iii) as of such Credit Date, the representations and warranties contained herein and
in the other Credit Documents shall be true and correct on and as of that Credit Date to the
same extent as though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects on and as of such
earlier date;




          (iv) as of such Credit Date, no event shall have occurred and be continuing or would
result from the consummation of the applicable Credit Extension that would constitute an
Event of Default or a Default;




          (v) in the case of each Credit Date occurring after the Second Closing Date, as of such
Credit Date, since March 31, 2006, there shall have been no change which has had or could
reasonably be expected to have a Material Adverse Effect;




          (vi) the Chief Financial Officer of Borrower shall have delivered an Officer’s
Certificate representing and warranting and otherwise demonstrating to the satisfaction of
Agent that, as of such Credit Date, Borrower expects, after giving effect to the proposed
borrowing and based upon good faith determinations and projections consistent with the
Financial Plan, to be in compliance with all operating and financial covenants set forth in
this Agreement as of the last day of the current Fiscal Quarter;




          (vii) to the extent the Credit Extension is to be used for a Permitted Acquisition,
evidence satisfactory to the Administrative Agent that the conditions to such Permitted
Acquisition have been satisfied;




          (viii) unless the Collateral Agent shall have obtained a perfected security interest in
an to all Deposit Accounts of the Holdings and its Subsidiaries, after giving effect to such
Credit Extension the aggregate Cash and Cash Equivalents of Holdings and its Subsidiaries
will not exceed $5,000,000; and




          (ix) on or before the date of issuance of any Letter of Credit, Administrative Agent
shall have received all other information required by the applicable Issuance Notice, and
such other documents or information as Issuing Bank may reasonably require in connection
with the issuance of such Letter of Credit.



     Any Agent or Requisite Lenders shall be entitled, but not obligated to, request and receive,
prior to the making of any Credit Extension, additional information reasonably satisfactory to the
requesting party confirming the satisfaction of any of the foregoing if, in the good faith judgment
of such Agent or Requisite Lender such request is warranted under the circumstances.



          (b) Notices. Any Notice shall be executed by an Authorized Officer in a writing
delivered to Administrative Agent. In lieu of delivering a Notice, Borrower may give

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Administrative Agent telephonic notice by the required time of any proposed borrowing,
conversion/continuation or issuance of a Letter of Credit, as the case may be; provided
each such notice shall be promptly confirmed in writing by delivery of the applicable Notice to
Administrative Agent on or before the applicable date of borrowing, continuation/conversion or
issuance. Neither Administrative Agent nor any Lender shall incur any liability to Borrower in
acting upon any telephonic notice referred to above that Administrative Agent believes in good
faith to have been given by a duly authorized officer or other person authorized on behalf of
Borrower or for otherwise acting in good faith.




SECTION 4. REPRESENTATIONS AND WARRANTIES




     In order to induce each Agent, Lenders and Issuing Bank to enter into this Agreement and to
make each Credit Extension to be made thereby, each Credit Party represents and warrants to each
Agent, Lenders and Issuing Bank, on the date hereof, on the Initial Closing Date, on the Second
Closing Date and on each other Credit Date, that the following statements are true and correct (it
being understood and agreed that (i) the representations and warranties made on the Initial Closing
Date and on the Second Closing Date are deemed to be made concurrently with the consummation of the
Acquisition and the other transactions contemplated by the Credit Documents and the Related
Agreements, whether or not the same shall have been consummated (with the effect that for purposes
of this Section 4 the terms “Credit Party” and “Subsidiaries” shall be deemed to include Laserscope
and its Subsidiaries) and (ii) any representation and warranty which is qualified by reference to
“Material Adverse Effect” shall, for each Credit Date after the Second Closing Date be a reference
to such term without regard to clauses (b) and (c) of the proviso to the definition thereof):



     4.1. Organization; Requisite Power and Authority; Qualification. Each of Holdings and its
Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization as identified in Schedule 4.1, (b) has all requisite power and
authority to own and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Credit Documents to which it is a party and to carry
out the transactions contemplated thereby, and (c) is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to carry out its business
and operations, except in jurisdictions where the failure to be so qualified or in good standing
has not had, and could not be reasonably expected to have, a Material Adverse Effect.



     4.2. Capital Stock and Ownership. The Capital Stock of each of Borrower and its Subsidiaries
has been duly authorized and validly issued and is fully paid and non-assessable. Except as set
forth on Schedule 4.2, as of the date hereof and as of the Initial Closing Date and as of the
Second Closing Date, there is no existing option, warrant, call, right, commitment or other
agreement to which Borrower or any of its Subsidiaries is a party requiring, and there is no
membership interest or other Capital Stock of Borrower or any of its Subsidiaries outstanding which
upon conversion or exchange would require, the issuance by Borrower or any of its Subsidiaries of
any additional membership interests or other Capital Stock of Borrower or any of its Subsidiaries
or other Securities convertible into, exchangeable for or evidencing the right to subscribe for or
purchase, a membership interest or other Capital Stock of Borrower or any of its Subsidiaries.
Schedule 4.2(a) correctly sets forth the ownership interest of Borrower and each of



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its
Subsidiaries in their respective Subsidiaries as of the Initial Closing Date and Schedule 4.2(b)
correctly sets forth the ownership interest of Borrower and each of its Subsidiaries in their
respective Subsidiaries as of the Second Closing Date. Holdings owns no assets other than the
Capital Stock of the Borrower and Holdings owns 100% of the Capital Stock of the Borrower.



     4.3. Due Authorization. The execution, delivery and performance of the Credit Documents have
been duly authorized by all necessary action on the part of each Credit Party that is a party
thereto.



     4.4. No Conflict. The execution, delivery and performance by the Credit Parties of the Credit
Documents to which they are parties and the consummation of the transactions contemplated by the
Credit Documents do not and will not (a) violate any provision of any law or any governmental rule
or regulation applicable to Holdings or any of its Subsidiaries, any of the Organizational
Documents of Holdings or any of its Subsidiaries, or any order, judgment or decree of any court or
other agency of government binding on Holdings or any of its Subsidiaries, except to the extent
such violation could not be reasonably expected to have a Material Adverse Effect; (b) conflict
with, result in a breach of or constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Holdings or any of its Subsidiaries except to the extent such
conflict, breach or default could not reasonably be expected to have a Material Adverse Effect; (c)
result in or require the creation or imposition of any Lien upon any of the properties or assets of
Holdings or any of its Subsidiaries (other than any Liens created under any of the Credit Documents
in favor of Collateral Agent, on behalf of Secured Parties); or (d) require any approval of
stockholders, members or partners of Holdings or any approval or consent of any Person under any
Contractual Obligation of Holdings or any of its Subsidiaries, except for such approvals or
consents that will be obtained on or before the Initial Closing Date (to the extent required to be
so obtained by such date), and disclosed in writing to Lenders and except for any such approvals or
consents the failure of which to obtain will not have a Material Adverse Effect.



     4.5. Governmental Consents. The execution, delivery and performance by the Credit Parties of
the Credit Documents to which they are parties and the consummation of the transactions
contemplated by the Credit Documents do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any Governmental Authority, except as
otherwise set forth on Schedule 4.5 hereto, and except for filings and recordings with respect to
the Collateral to be made, or otherwise delivered to Collateral Agent for filing and/or
recordation, as of the Initial Closing Date.



     4.6. Binding Obligation. Each Credit Document has been duly executed and delivered by each
Credit Party that is a party thereto and is the legally valid and binding obligation of such Credit
Party, enforceable against such Credit Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or
limiting creditors’ rights generally or by equitable principles relating to enforceability.



     4.7. Historical Financial Statements. The Historical Financial Statements were prepared in
conformity with GAAP and fairly present, the financial position, on a consolidated basis, of the
Persons described in such financial statements as at the respective dates thereof and



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the results
of operations and cash flows, on a consolidated basis, of the entities described therein for each
of the periods then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments. Neither Holdings nor any of its
Subsidiaries has any contingent liability or liability for taxes, long-term lease or unusual
forward or long-term commitment that is not reflected in the Historical Financial Statements or the
notes thereto and which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Holdings and any of its
Subsidiaries taken as a whole.



     4.8. Projections. The financial projections of Holdings and its Subsidiaries for the period
of Fiscal Year 2006 through and including Fiscal Year 2013 (the “Projections”) are based on good
faith estimates and assumptions made by the management of Holdings; provided, the
Projections are not to be viewed as facts and that actual results during the period or periods
covered by the Projections may differ from such Projections and that the differences may be
material; provided further, as of the Initial Closing Date and as of the Second
Closing Date, management of Holdings believed that the Projections were reasonable and attainable.



     4.9. No Material Adverse Change. Since March 31, 2006, no event, circumstance or change has
occurred that has caused or evidences, either in any case or in the aggregate, (i) in the case of
Credit Dates on or before the Second Closing Date, a Closing Date Material Adverse Effect and (ii)
in the case of all other Credit Dates, a Material Adverse Effect.



     4.10. No Restricted Payments. Since March 31, 2006, other than as provided for in the
Indenture (as in effect on June 27, 2006), neither Holdings nor any of its Subsidiaries has
directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Payment or agreed to do so except as would be permitted pursuant to Section 6.5.



     4.11. Adverse Proceedings, etc. There are no Adverse Proceedings, individually or in the
aggregate, that could reasonably be expected to have a Material Adverse Effect. Neither Holdings
nor any of its Subsidiaries (a) is in violation of any applicable laws (including Environmental
Laws) that, individually or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, or (b) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign,
that, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.



     4.12. Payment of Taxes. Except as otherwise permitted under Section 5.3, all tax returns and
reports of Holdings and its Subsidiaries required to be filed by any of them have been timely filed
or valid extensions have been taken, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Holdings and its Subsidiaries and
upon their respective properties, assets, income, businesses and franchises which are due and
payable have been paid when due and payable. Borrower knows of no proposed tax assessment against
Holdings or any of its Subsidiaries which is not being actively contested by Holdings or such
Subsidiary in good faith and by appropriate proceedings; provided, such reserves or other
appropriate provisions, if any, as shall be required in conformity with GAAP shall have been made
or provided therefor.



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     4.13. Properties.



          (a) Title. Each of Holdings and its Subsidiaries has (i) good, sufficient and legal
title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), and (iii) good title to (in the case of
all other personal property), all of their respective properties and assets reflected in their
respective Historical Financial Statements referred to in Section 4.7 and in the most recent
financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of
since the date of such financial statements in the ordinary course of business or as otherwise
permitted under Section 6.9. Except as permitted by this Agreement, all such properties and assets
are free and clear of Liens.




          (b) Real Estate. As of the Initial Closing Date, Schedule 4.13 contains a true,
accurate and complete list of (i) all Real Estate Assets, and (ii) all leases, subleases or
assignments of leases (together with all amendments, modifications, supplements, renewals or
extensions of any thereof) affecting each Real Estate Asset of any Credit Party, regardless of
whether such Credit Party is the landlord or tenant (whether directly or as an assignee or
successor in interest) under such lease, sublease or assignment. Each agreement listed on Schedule
4.13 in response to clause (ii) of the immediately preceding sentence is in full force and effect
and Borrower does not have knowledge of any default that has occurred and is continuing thereunder,
and each such agreement constitutes the legally valid and binding obligation of each applicable
Credit Party, enforceable against such Credit Party in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors’ rights generally or by equitable principles.




     4.14. Environmental Matters. Neither Holdings nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding written order, consent decree or
settlement agreement with any Person relating to any Environmental Law, any Environmental Claim, or
any Hazardous Materials Activity that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect. Neither Holdings nor any of its Subsidiaries has
received any letter or request for information under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. § 9604) or any comparable state law. There
are and, to each of Holdings’ and its Subsidiaries’ knowledge, have been, no conditions,
occurrences, or Hazardous Materials Activities which could reasonably be expected to form the basis
of an Environmental Claim against Holdings or any of its Subsidiaries that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. Neither Holdings nor
any of its Subsidiaries nor, to any Credit Party’s knowledge, any predecessor of Holdings or any of
its Subsidiaries has filed any notice under any Environmental Law indicating past or present
treatment of Hazardous Materials at any Real Property, and none of Holdings’ or any of its
Subsidiaries’ operations involves the generation, transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270 or any state equivalent, except for
Permissible Substances (as defined in the Environmental Indemnity Agreement), which are generated,
transported, treated, stored and disposed of in compliance with Environmental Laws. Compliance
with all requirements pursuant to or under Environmental Laws could not be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. No event or condition has
occurred or is occurring with respect to Holdings or any of its Subsidiaries relating to any
Environmental Law,



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any Release of Hazardous Materials, or any Hazardous Materials Activity which
individually or in the aggregate has had, or could reasonably be expected to have, a Material
Adverse Effect.



     4.15. No Defaults. Neither Holdings nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or conditions contained
in any of its Contractual Obligations, and no condition exists which, with the giving of notice or
the lapse of time or both, could constitute such a default, except where the consequences, direct
or indirect, of such default or defaults, if any, could not reasonably be expected to have a
Material Adverse Effect.



     4.16. Material Contracts. Schedule 4.16 contains a true, correct and complete list of all the
Material Contracts in effect on the Initial Closing Date and on the Second Closing Date, and except
as described thereon, all such Material Contracts are in full force and effect and no defaults
currently exist thereunder.



     4.17. Governmental Regulation. Neither Holdings nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 2005, the Federal Power Act or the
Investment Company Act of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any portion of the
Obligations unenforceable. Neither Holdings nor any of its Subsidiaries is a “registered
investment company” or a company “controlled” by a “registered investment company” or a “principal
underwriter” of a “registered investment company” as such terms are defined in the Investment
Company Act of 1940.



     4.18. Margin Stock. Neither Holdings nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock. No part of the proceeds of the Loans made to such Credit
Party will be used to purchase or carry any such Margin Stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulation T, U or X of the Board of Governors.



     4.19. Employee Matters. Neither Holdings nor any of its Subsidiaries is engaged in any unfair
labor practice that could reasonably be expected to have a Material Adverse Effect. There is (a)
no unfair labor practice complaint pending against Holdings or any of its Subsidiaries, or to the
best knowledge of Borrower, threatened against any of them before the National Labor Relations
Board and no grievance or arbitration proceeding arising out of or under any collective bargaining
agreement that is so pending against Holdings or any of its Subsidiaries or to the best knowledge
of Borrower, threatened against any of them, (b) no strike or work stoppage in existence or
threatened involving Holdings or any of its Subsidiaries that could reasonably be expected to have
a Material Adverse Effect, and (c) to the best knowledge of Borrower, no union representation
question existing with respect to the employees of Holdings or any of its Subsidiaries and, to the
best knowledge of Borrower, no union organization activity that is taking place, except (with
respect to any matter specified in clause (a), (b) or (c) above, either individually or in the
aggregate) such as is not reasonably likely to have a Material Adverse Effect.



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     4.20. Employee Benefit Plans. Holdings, each of its Subsidiaries and each of their respective
ERISA Affiliates are substantially in compliance with all applicable provisions and requirements of
ERISA, the Internal Revenue Code, the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”) and the Health Insurance Portability and Accountability Act of 1996 (“HIPPA”), and the
regulations and published interpretations thereunder with respect to each Employee Benefit Plan,
and have performed all their obligations under each Employee Benefit Plan according to their terms,
including filing or furnishing to the IRS, DOL or other Governmental Authority, or to participants
or beneficiaries of each Employee Benefit Plan, any reports, returns, notices and other
documentation required to be filed or furnished. Each Employee Benefit Plan which is intended to
qualify under Section 401(a) of the Internal Revenue Code has received a favorable determination
letter from the Internal Revenue Service indicating that such Employee Benefit Plan is so
qualified, taking into account the changes in qualification requirements under Section 401(a) of
the Internal Revenue Code made by the Uruguay Round Agreements Act, the Small Business Job
Protection Act of 1996, the Uniformed Services Employment and Reemployment Rights Act of 1994, the
Taxpayer Relief Act of 1997, the Internal Revenue Service Restructuring and Reform Act of 1998, and
the Community Renewal Tax Relief Act of 2000 (and each Employee Benefit Plan has been timely
amended to reflect changes in the qualification requirements under section 401(a) of the Code made
by the Economic Growth and Tax Relief Reconciliation Act of 2001 and any applicable IRS guidance
issued thereunder) and nothing has occurred subsequent to the issuance of such determination letter
which would cause such Employee Benefit Plan to lose its qualified status. No liability, penalty
or tax to the PBGC (other than required premium payments), the Internal Revenue Service, any
Employee Benefit Plan or any trust established under Title IV of ERISA has been or is expected to
be incurred by Holdings, any of its Subsidiaries or any of their ERISA Affiliates. No ERISA Event
has occurred or is reasonably expected to occur. Except as set forth on Schedule 4.20 or to the
extent required under Section 4980B of the Internal Revenue Code or similar state laws, no Employee
Benefit Plan provides health or welfare benefits (through the purchase of insurance or otherwise)
for any retired or former employee of Holdings, any of its Subsidiaries or any of their respective
ERISA Affiliates. The present value of the aggregate benefit liabilities under each Pension Plan
sponsored, maintained or contributed to by Holdings, any of its Subsidiaries or any of their ERISA
Affiliates (determined as of the end of the most recent plan year on the basis of the actuarial
assumptions specified for funding purposes in the most recent actuarial valuation for such Pension
Plan), does not exceed the aggregate current value of the assets of such Pension Plan. As of the
most recent valuation date for each Multiemployer Plan for which the actuarial report is available,
the potential liability of Holdings, its Subsidiaries and their respective ERISA Affiliates for a
complete withdrawal from such Multiemployer Plan (within the meaning of Section 4203 of ERISA),
when aggregated with such potential liability for a complete withdrawal from all Multiemployer
Plans, based on information available pursuant to Section 4221(e) of ERISA is zero. Holdings, each
of its Subsidiaries and each of their ERISA Affiliates have complied with the requirements of
Section 515 of ERISA with respect to each Multiemployer Plan and are not in material “default” (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a Multiemployer Plan.



     4.21. Certain Fees. No broker’s or finder’s fee or commission will be payable with respect
hereto or any of the transactions contemplated under the Credit Documents or Related Agreements,
other than those fees disclosed to the Administrative Agent in writing.



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     4.22. Solvency. Each Credit Party is and, upon the incurrence of any Obligation by such
Credit Party on any date on which this representation and warranty is made, will be, Solvent.



     4.23. Compliance with Statutes, etc. Each of Holdings and its Subsidiaries is in compliance
with all applicable statutes, regulations and orders of, and all applicable restrictions imposed
by, all Governmental Authorities, in respect of the conduct of its business and the ownership of
its property (including, without limitation, (x) the rules and regulations of the Securities and
Exchange Commission, the Department of Health and Human Services, the Food and Drug Administration
and the Department of Justice, which apply to the conduct of its business compliance, (y) all
applicable Environmental Laws with respect to any Real Estate Asset or governing its business and
the requirements of any permits issued under such Environmental Laws with respect to any such Real
Estate Asset or the operations of Holdings or any of its Subsidiaries, and (z) any State of Federal
Care Program and Health Care Law), except such non-compliance that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect. All billing
practices of Holdings and its Subsidiaries, and of any agent acting on behalf of or for the benefit
of Holdings or any of its Subsidiaries, have been and are in compliance in all material respects
with all applicable laws and regulations of all State or Federal Health Care Programs. Without
limiting the generality of the foregoing statement, none of Holdings or any of its Subsidiaries has
billed or received payment or reimbursement for, or advised its clients to bill or receive
reimbursement for, amounts in excess of those allowed by law. Neither the Holdings nor and of its
Subsidiaries, nor any shareholder, director, officer or employee thereof, or any agent acting on
their behalf or for their benefit, has directly or indirectly offered or paid any remuneration, in
cash or in kind, directly or indirectly, overtly or covertly, in return for (i) referring an
individual to a health care provider for the furnishing or arranging for the furnishing of any item
or service for which payment may be made in whole or in part under a State or Federal Health Care
Program, or (ii) purchasing, leasing, ordering, or arranging for or recommending purchasing,
leasing, or ordering any good, facility, service, or item for which payment may be made in whole or
in part under a State or Federal Health Care Program. Neither Holdings nor any of its
Subsidiaries, nor any shareholder, director, officer or employee thereof, or any agent acting on
their behalf or for their benefit, has been excluded from participating in any State or Federal
Health Care Program, and (2) none of the officers, directors, agents or managing employees (as such
term is defined in 42 U.S.C. §1320a-5(b)) of Holdings or any of its Subsidiaries has been excluded
from any State or Federal Health Care Program or been subject to sanction or been convicted of a
crime in connection with any State or Federal Health Care Program or under any Health Care Law, nor
has any such action been proposed or threatened, nor, to the best knowledge of each of Holdings and
its Subsidiaries, is there a basis for any such action.



     4.24. Permits. Each of Holdings and its Subsidiaries holds all governmental and third-party
permits which are necessary for it to own its property and to lawfully conduct its business and
operations in the manner in which they currently are, and historically have been, conducted. All
such permits are valid and in full force and effect, except where the failure to obtain such a
Permit or its invalidity, in whole or in part, would not have a Material Adverse Effect. No
governmental authority has revoked, terminated, suspended or limited any permit, nor has any such
action been proposed or threatened, nor is there a basis for any such action. Each of Holdings and
its Subsidiaries believes it can obtain, without undue burden or expense, all



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additional permits as
may be necessary for it to expand its business and operations into new markets and jurisdictions.
No permit is subject to termination as a result of the execution of this Agreement or consummation
of the transactions contemplated hereby.



     4.25. Disclosure. No representation or warranty of Holdings, Laserscope or any of their
respective Subsidiaries contained in any Credit Document, any Related Agreement, or in any other
documents, certificates or written statements furnished to Lenders by or on behalf of Holdings,
Laserscope or any of their respective Subsidiaries for use in connection with the transactions
contemplated hereby contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not misleading in light
of the circumstances in which the same were made. Any projections and pro forma financial
information contained in such materials are based upon good faith estimates and assumptions
believed by Borrower to be reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual results during the
period or periods covered by any such projections may differ from the projected results. There are
no facts known (or which should upon the reasonable exercise of diligence be known) to Borrower
(other than matters of a general economic nature) that, individually or in the aggregate, could
reasonably be expected to result in a Material Adverse Effect and that have not been disclosed
herein or in such other documents, certificates and statements furnished to Lenders for use in
connection with the transactions contemplated hereby.



     4.26. Patriot Act. To the extent applicable, each Credit Party is in compliance, in all
material respects, with the (i) Trading with the Enemy Act, as amended, and each of the foreign
assets control regulations of the Untied States Treasury Department (31 CFR, Subtitle B, Chapter V,
as amended) and any other enabling legislation or executive order relating thereto, and (ii)
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loans will be used, directly
or indirectly, for any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as amended.



     4.27. Insurance. Set forth on Schedule 4.27 is a summary of all policies of insurance and
programs of self insurance maintained by the Credit Parties as of the Initial Closing Date. Such
policies of insurance and/or programs of self-insurance satisfy the requirements of Section 5.05.



     4.28. Security Interests. The Pledge and Security Agreement is effective to create in favor
of the Collateral Agent for its benefit and the benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral and, when stock certificates representing
Collateral are delivered to the Collateral Agent, the Pledge and Security Agreement shall
constitute a fully perfected security interest in all right, title and interest of such pledgor in
such Collateral.



     4.29. Intellectual Property. Each Credit Party has obtained all patents, trademarks, service
marks, trade names, copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the operation of its respective business as currently conducted



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and as proposed
to be conducted, except where the failure to obtain any such rights could not reasonably be
expected to have a Material Adverse Effect.



SECTION 5. AFFIRMATIVE COVENANTS




     Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until
payment in full of all Obligations and cancellation or expiration of all Letters of Credit, each
Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 5 (it being understood and agreed that any covenant which is qualified by reference to
“Material Adverse Effect” shall for all times after the Initial Closing Date (if the 90% Closing
Condition has been met) or the Second Closing Date (if the 90% Closing Condition is not met on or
prior to the Initial Closing Date) be a reference to such term without regard to clauses (b) and
(c) of the proviso to the definition thereof).



     5.1. Financial Statements and Other Reports. Borrower will deliver to Administrative Agent,
Lead Arranger and Lenders:



          (a) Quarterly Financial Statements. Within the earlier of (i) five Business Days
following the date such information is required to be filed with the SEC and (ii) 45 days after the
end of each of the first three Fiscal Quarters of each Fiscal Year of Holdings and its
Subsidiaries, a consolidated balance sheet of Holdings and its Subsidiaries as of the end of such
Fiscal Quarter and consolidated statements of earnings and cash flow of Holdings and its
Subsidiaries for such Fiscal Quarter and for the same period in the prior Fiscal Year and for the
period commencing at the end of the prior Fiscal Year and ending with the end of such Fiscal
Quarter, certified by a the chief financial officer pursuant to a Financial Officer Certification
of Holdings or Borrower, together with a Compliance Certificate containing a computation in
reasonable detail of, and showing compliance with, each of the financial covenants contained herein
and to the effect that, in making the examination necessary for the signing of such certificate or
otherwise, such officer has not become aware of any Default or Event of Default that has occurred
and is continuing, or, if such officer has become aware of such Default or Event of Default,
describing in reasonable detail such Default or Event of Default and the steps, if any, being taken
to cure it (it being understood and agreed that the delivery of Holdings’ Form 10-Q for such Fiscal
Quarter as filed with the SEC, if certified as required in this Section 5.1(a), shall satisfy such
requirements);



          (b) Annual Financial Statements. Within the earlier of (i) five Business Days
following the date such information is required to be filed with the SEC and (ii) 90 days after the
end of each Fiscal Year of Holdings and its Subsidiaries, a copy of the annual audit report for
such Fiscal Year for Holdings and its Subsidiaries, including therein a consolidated balance sheet
of Holdings and its Subsidiaries as of the end of such Fiscal Year and consolidated statements of
earnings and cash flow of Holdings and its Subsidiaries for such Fiscal Year, in each case
certified (without any impermissible qualification) in a manner acceptable to the Administrative
Agent by one of the “big four” independent accounting firms or any other independent public
accountants reasonably acceptable to the Administrative Agent (which report shall be unqualified as
to going concern and scope of audit, and shall state that such consolidated financial statements
fairly present, in all material respects, the consolidated financial position of Holdings and its
Subsidiaries as at the dates indicated and the results of their operations and their



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cash flows for
the periods indicated in conformity with GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has been made in accordance
with generally accepted auditing standards) together with a written statement by such independent
certified public accountants stating (1) that their audit examination has included a review of the
terms of the Credit Documents, (2) whether, in connection therewith, any condition or event that
constitutes a Default or an Event of Default has come to their attention and, if such a condition
or event has come to their attention, specifying the nature and period of existence thereof, and
(3) that nothing has come to their attention that causes them to believe that the information
contained in any Compliance Certificate is not correct or that the matters set forth in such
Compliance Certificate are not stated in accordance with the terms hereof (it being understood and
agreed that the delivery of Holdings’ Form 10-K for such Fiscal Year as filed with the SEC, if
certified as required in this Section 5.1(b), shall satisfy such requirements);



          (c) Compliance Certificate. Together with each delivery of financial statements of
Holdings and its Subsidiaries pursuant to Sections 5.1(a) and 5.1(b), a duly executed and completed
Compliance Certificate;



          (d) Statements of Reconciliation after Change in Accounting Principles. If, as a
result of any change in accounting principles and policies from those used in the preparation of
the Historical Financial Statements, the consolidated financial statements of Holdings and its
Subsidiaries delivered pursuant to Section 5.1(a) or 5.1(b) will differ in any material respect
from the consolidated financial statements that would have been delivered pursuant to such
subdivisions had no such change in accounting principles and policies been made, then, together
with the first delivery of such financial statements after such change, one or more statements of
reconciliation for all such prior financial statements in form and substance satisfactory to
Administrative Agent;



          (e) Notice of Default. Promptly upon any Authorized Officer of Borrower obtaining
knowledge (i) of any condition or event that constitutes a Default or an Event of Default or that
notice has been given to Borrower with respect thereto; (ii) that any Person has given any notice
to Holdings or any of its Subsidiaries or taken any other action with respect to any event or
condition set forth in Section 8.1(b); or (iii) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material Adverse Effect, a
certificate of its Authorized Officer specifying the nature and period of existence of such
condition, event or change, or specifying the notice given and action taken by any such Person and
the nature of such claimed Event of Default, Default, default, event or condition, and what action
Borrower has taken, is taking and proposes to take with respect thereto;



          (f) Notice of Litigation. Promptly upon any Authorized Officer of Borrower obtaining
knowledge of (i) the institution of, or non-frivolous threat of, any Adverse Proceeding not
previously disclosed in writing by Borrower to Lenders, or (ii) any material development in any
Adverse Proceeding that, in the case of either clause (i) or (ii), if adversely determined could be
reasonably expected to have a Material Adverse Effect, or seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of, the transactions
contemplated hereby, written notice thereof together with such other information as may be
reasonably available to Borrower to enable Lenders and their counsel to evaluate such matters;



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          (g) ERISA. (i) Promptly upon becoming aware of the occurrence of or forthcoming
occurrence of any ERISA Event, a written notice specifying the nature thereof, what action
Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates has taken, is taking
or proposes to take with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect thereto; and (ii) with
reasonable promptness, copies of (1) each Schedule B (Actuarial Information) to the annual report
(Form 5500 Series) filed by Holdings, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each Pension Plan; (2) all notices
received by Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as Administrative Agent shall
request;



          (h) Financial Plan. Immediately after board approval thereof, and in any event no
later than thirty (30) days following the first Business Day of each Fiscal Year, a consolidated
plan and financial forecast for such Fiscal Year and each Fiscal Year (or portion thereof) through
the final maturity date of the Loans (a “Financial Plan”), including (i) a forecasted consolidated
balance sheet and forecasted consolidated statements of income and cash flows of Holdings and its
Subsidiaries for each such Fiscal Year, together with pro forma Compliance Certificates for each
such Fiscal Year and an explanation of the assumptions on which such forecasts are based, and (ii)
forecasted consolidated statements of income and cash flows of Holdings and its Subsidiaries for
each month of each such Fiscal Year and (iii) forecasts demonstrating projected compliance with the
requirements of Section 6.8 through the final maturity date of the Loans;



          (i) Insurance Report. As soon as practicable and in any event by the last day of each
Fiscal Year, a report in form and substance satisfactory to Administrative Agent outlining all
material insurance coverage maintained as of the date of such report by Holdings and its
Subsidiaries and all material insurance coverage planned to be maintained by Holdings and its
Subsidiaries in the immediately succeeding Fiscal Year;



          (j) Notice of Change in Board of Directors. With reasonable promptness, written
notice of any change in the board of directors (or similar governing body) of Holdings or any of
its Subsidiaries;



          (k) Notice Regarding Material Contracts. Promptly, and in any event within ten
Business Days (i) after any Material Contract of Holdings or any of its Subsidiaries is terminated
or amended in a manner that is materially adverse to Holdings or such Subsidiary, as the case may
be, or (ii) any new Material Contract is entered into, a written statement describing such event,
with copies of such material amendments or new contracts, delivered to Administrative Agent (to the
extent such delivery is permitted by the terms of any such Material Contract, provided, no such
prohibition on delivery shall be effective if it were bargained for by Holdings or its applicable
Subsidiary with the intent of avoiding compliance with this Section 5.1(k)), and an explanation of
any actions being taken with respect thereto;



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          (l) Information Regarding Collateral. Borrower will furnish to Collateral Agent prior
written notice of any change (i) in any Credit Party’s corporate name, (ii) in any Credit Party’s
identity or corporate structure or (iii) in any Credit Party’s Federal Taxpayer Identification
Number. Borrower agrees not to effect or permit any change referred to in the preceding sentence
unless all filings have been made under the Uniform Commercial Code or otherwise that are required
in order for Collateral Agent to continue at all times following such change to have a valid, legal
and perfected security interest in all the Collateral and for the Collateral at all times following
such change to have a valid, legal and perfected security interest as contemplated in the
Collateral Documents. Borrower also agrees promptly to notify Collateral Agent if any material
portion of the Collateral is damaged or destroyed;



          (m) Annual Collateral Verification. Each year, at the time of delivery of annual
financial statements with respect to the preceding Fiscal Year pursuant to Section 5.1(b), Borrower
shall deliver to Collateral Agent a certificate of its Authorized Officer (i) either confirming
that there has been no change in such information since the date of the Collateral Questionnaire
delivered on the date hereof or the date of the most recent certificate delivered pursuant to this
Section and/or identifying such changes (ii) certifying that all Uniform Commercial Code financing
statements (including fixtures filings, as applicable) or other appropriate filings, recordings or
registrations, have been filed of record in each governmental, municipal or other appropriate
office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Collateral Documents for a period of not less
than 18 months after the date of such certificate (except as noted therein with respect to any
continuation statements to be filed within such period);



          (n) Other Information. (A) Promptly upon their becoming available, copies of (i) all
financial statements, reports, notices and proxy statements sent or made available generally by
Holdings to its security holders acting in such capacity (ii) all regular and periodic reports and
all registration statements and prospectuses, if any, filed by Holdings or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission or any governmental or
private regulatory authority, (iii) all press releases and other statements made available
generally by Holdings or any of its Subsidiaries to the public concerning material developments in
the business of Holdings or any of its Subsidiaries, and (B) such other information and data with
respect to Holdings or any of its Subsidiaries as from time to time may be reasonably requested by
Administrative Agent or any Lender; and



          (o) Certification of Public Information. Concurrently with the delivery of any
document or notice required to be delivered pursuant to this Section 5.1, Borrower shall indicate
in writing whether such document or notice contains Nonpublic Information. Any document or notice
required to be delivered pursuant to this Section 5.1 shall be deemed to contain Nonpublic
Information unless Borrower specifies otherwise. Borrower and each Lender acknowledges that
certain of the Lenders may be “public-side” Lenders (Lenders that do not wish to receive material
non-public information with respect to Holdings, its Subsidiaries or their securities) and, if
documents or notices required to be delivered pursuant to this Section 5.1 or otherwise are being
distributed through IntraLinks/IntraAgency or another relevant website (the “Platform”), any
document or notice which contains Nonpublic Information (or is deemed to contain Nonpublic
Information) shall not be posted on that portion of the Platform designated for such public side
Lenders.



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     5.2. Existence. Except as otherwise permitted under Section 6.9, each Credit Party will, and
will cause each of its Subsidiaries to, at all times preserve and keep in full force and effect its
existence and all rights and franchises, licenses and permits material to its business;
provided, no Credit Party or any of its Subsidiaries shall be required to preserve any such
existence, right or franchise, licenses and permits if such Person’s board of directors (or similar
governing body) shall determine that the preservation thereof is no longer desirable in the conduct
of the business of such Person, and that the loss thereof is not disadvantageous in any material
respect to such Person or to Lenders.



     5.3. Payment of Taxes and Claims. Each Credit Party will, and will cause each of its
Subsidiaries to, pay all Taxes imposed upon it or any of its properties or assets or in respect of
any of its income, businesses or franchises before any penalty or fine accrues thereon, and all
claims (including claims for labor, services, materials and supplies) for sums that have become due
and payable and that by law have or may become a Lien upon any of its properties or assets, prior
to the time when any penalty or fine shall be incurred with respect thereto; provided, no
such Tax or claim need be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as (a) adequate reserve or other appropriate
provision, as shall be required in conformity with GAAP shall have been made therefor, and (b) in
the case of a Tax or claim which has or may become a Lien against any of the Collateral, such
contest proceedings conclusively operate to stay the sale of any portion of the Collateral to
satisfy such Tax or claim. No Credit Party will, nor will it permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any Person (other than
with respect to Holdings and any of its Subsidiaries).



     5.4. Maintenance of Properties. Each Credit Party will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working order and condition,
ordinary wear and tear excepted, all material properties used or useful in the business of Holdings
and its Subsidiaries and from time to time will make or cause to be made all appropriate repairs,
renewals and replacements thereof.



     5.5. Insurance. Borrower will maintain or cause to be maintained, with financially sound and
reputable insurers, such public liability insurance, third party property damage insurance,
business interruption insurance and casualty insurance with respect to liabilities, losses or
damage in respect of the assets, properties and businesses of each Credit Party as may customarily
be carried or maintained under similar circumstances by Persons of established reputation engaged
in similar businesses, in each case in such amounts (giving effect to self-insurance), with such
deductibles, covering such risks and otherwise on such terms and conditions as shall be customary
for such Persons. Without limiting the generality of the foregoing, Borrower will maintain or
cause to be maintained (a) flood insurance with respect to each Flood Hazard Property that is
located in a community that participates in the National Flood Insurance Program, in each case in
compliance with any applicable regulations of the Board of Governors of the Federal Reserve System,
and (b) replacement value casualty insurance on the Collateral under such policies of insurance,
with such insurance companies, in such amounts, with such deductibles, and covering such risks as
are at all times carried or maintained under similar circumstances by Persons of established
reputation engaged in similar businesses. Each such policy of insurance shall (i) name Collateral
Agent, on behalf of Secured Parties as an additional insured thereunder as its interests may appear
and (ii) in the case of each casualty



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insurance policy, contain a loss payable clause or
endorsement, satisfactory in form and substance to Collateral Agent, that names Collateral Agent,
on behalf of Lenders as the loss payee thereunder and provides for at least thirty days’ prior
written notice to Collateral Agent of any modification or cancellation of such policy.



     5.6. Inspections. Each Credit Party will, and will cause each of its Subsidiaries to, permit
any authorized representatives designated by any Lender to visit and inspect any of the properties
of any Credit Party and any of its respective Subsidiaries, to inspect, copy and take extracts from
its and their financial and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants, all upon reasonable notice
and at such reasonable times during normal business hours and as often as may reasonably be
requested.



     5.7. Lenders Meetings. Borrower will, upon the request of Administrative Agent, participate
in a meeting of Administrative Agent and Lenders once during each Fiscal Year to be held at
Borrower’s corporate offices (or at such other location as may be agreed to by Borrower and
Administrative Agent) at such time as may be agreed to by Borrower and Administrative Agent.



     5.8. Compliance with Laws. Each Credit Party will comply, and shall cause each of its
Subsidiaries and all other Persons, if any, on or occupying any Facilities to comply, with the
requirements of all applicable laws, rules, regulations and orders of any Governmental Authority
(including all Environmental Laws), noncompliance with which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.



     5.9. Environmental.



          (a) Environmental Disclosure. Borrower will deliver to Administrative Agent and
Lenders:





          (i) as soon as practicable following receipt thereof, copies of all environmental
audits, investigations, analyses and reports of any kind or character, whether prepared by
personnel of Holdings or any of its Subsidiaries or by independent consultants, governmental
authorities or any other Persons, with respect to environmental matters at any Real Property
or with respect to any Environmental Claims; which, in any such case, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;




          (ii) promptly upon the occurrence thereof, written notice describing in reasonable
detail (1) any Release required to be reported to any federal, state or local governmental
or regulatory agency under any applicable Environmental Laws, (2) any remedial action taken
by Borrower or any other Person in response to (A) any Hazardous Materials Activities the
existence of which has a reasonable possibility of resulting in one or more Environmental
Claims having, individually or in the aggregate, a Material Adverse Effect, or (B) any
Environmental Claims that, individually or in the aggregate, have a reasonable possibility
of resulting in a Material Adverse Effect, and (3) Borrower’s discovery of any occurrence or
condition on any real property adjoining or in



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the vicinity of any Real Property that could
cause such Real Property or any part thereof to be subject to any material restrictions on
the ownership, occupancy, transferability or use thereof under any Environmental Laws;




          (iii) as soon as practicable following the sending or receipt thereof by Holdings or
any of its Subsidiaries, a copy of any and all written communications with respect to (1)
any Environmental Claims that, individually or in the aggregate, have a reasonable
possibility of giving rise to a Material Adverse Effect, (2) any request for information
from any governmental agency that suggests such agency is investigating whether Holdings or
any of its Subsidiaries may be potentially responsible for any Hazardous Materials Activity;




          (iv) prompt written notice describing in reasonable detail (1) any proposed acquisition
of stock, assets, or property by Holdings or any of its Subsidiaries that could reasonably
be expected to (A) expose Holdings or any of its Subsidiaries to, or result in,
Environmental Claims that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or (B) affect the ability of Holdings or any of its
Subsidiaries to maintain in full force and effect all material Governmental Authorizations
required under any Environmental Laws for their respective operations and (2) any proposed
action to be taken by Holdings or any of its Subsidiaries to modify current operations in a
manner that could reasonably be expected to subject Holdings or any of its Subsidiaries to
any additional material obligations or requirements under any Environmental Laws; and




          (v) with reasonable promptness, such other documents and information as from time to
time may be reasonably requested by Administrative Agent in relation to any matters
disclosed pursuant to this Section 5.9(a).



          (b) Hazardous Materials Activities, Etc. Each Credit Party shall promptly take, and
shall cause each of its Subsidiaries promptly to take, any and all actions necessary to (i) cure
any violation of applicable Environmental Laws by such Credit Party or its Subsidiaries that could
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and
(ii) make an appropriate response to any Environmental Claim against such Credit Party or any of
its Subsidiaries and discharge any obligations it may have to any Person thereunder where failure
to do so could reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.




          (c) Promptly upon the reasonable written request of Administrative Agent following receipt by
Borrower of an Environmental Claim which could reasonably be expected to have a Material Adverse
Effect, Borrower shall provide Administrative Agent, at Borrower’s expense, with an environmental
site assessment or environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable degree of certainty the
existence of a release or threatened release of Hazardous Materials or non-compliance with
Environmental Laws and the potential costs in connection with abatement, cleanup and removal of any
Hazardous Materials found on, under, at or within the Real Property or to come into compliance with
Environmental Law. Any report or investigation of such Hazardous Materials proposed and acceptable
to an appropriate authority

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that is charged to oversee the clean-up of such Hazardous Materials
shall be acceptable to Administrative Agent. If such estimates, individually or in the aggregate,
exceed $100,000, Administrative Agent shall have the right to require Borrower to post a bond,
letter of credit or other security reasonably satisfactory to Administrative Agent to secure
payment of these costs and expenses.




     5.10. Subsidiaries.



          (a) In the event that any Person becomes a Domestic Subsidiary of Borrower, Borrower shall (i)
promptly cause such Domestic Subsidiary to become a Guarantor hereunder and a Grantor under the
Pledge and Security Agreement by executing and delivering (or causing to be executed and delivered)
to Administrative Agent and Collateral Agent a Counterpart Agreement, and (ii) take all such
actions and execute and deliver, or cause to be executed and delivered, all such documents,
instruments, agreements, and certificates as are similar to those described in Sections 3.1(b),
3.1(f), 3.1(h) and 3.1(i). With respect to each such Subsidiary, Borrower shall promptly send to
Administrative Agent written notice setting forth with respect to such Person (i) the date on which
such Person became a Subsidiary of the Borrower, and (ii) all of the data required to be set forth
in Schedules 4.1 and 4.2 with respect to all Subsidiaries of the Borrower; provided, such
written notice shall be deemed to supplement Schedule 4.1 and 4.2 for all purposes hereof.




          (b) In the event that any Person is or becomes a Foreign Subsidiary of the Borrower or
Holdings, the Borrower or Holdings, as applicable, shall (i) promptly cause such Foreign Subsidiary
to become a Guarantor hereunder and a Grantor under the Pledge and Security Agreement by executing
and delivering (or causing to be executed and delivered) to Administrative Agent and Collateral
Agent a Counterpart Agreement, and (ii) take all such actions and execute and deliver, or cause to
be executed and delivered, all such documents, instruments, agreements, and certificates as are
similar to those described in Sections 3.1(b), 3.1(f), 3.1(h) and 3.1(i); provided,





	 	(A)	 	subject to clauses (B) and (C) of this proviso, the actions specified in this
Section 5.10(b) shall not be required with respect to any Foreign Subsidiary for so
long as Section 956 (or an equivalent successor provision) of the Code shall remain a
requirement of law applicable to Holdings and its Subsidiaries,
	 
	 	(B)	 	the exception in clause (A) of this proviso shall not apply to (1) Voting Stock
of any Subsidiary which is a first-tier controlled foreign corporation (as defined in
Section 957(a) of the Code) representing 65% of the total voting power of all
outstanding Voting Stock of such Subsidiary and (2) 100% of the Capital Stock not
constituting Voting Stock of any such Subsidiary, except that any such Capital Stock
constituting “stock entitled to vote” within the meaning of Treasury Regulation Section
1.956-2(c)(2) shall be treated as Voting Stock for purposes of this Section 5.10(b)
(i.e., a pledge in favor of the Collateral Agent for the benefit of the Secured Parties
shall be required in respect of such Capital Stock),
	 
	 	(C)	 	the exception in clause (A) of this proviso shall only apply in respect of
Subsidiaries formed or acquired after the Initial Closing Date if either




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	 	(x)	 	the aggregate amount of the Investments made since the Initial
Closing Date by the Credit Parties in or to acquire Foreign Subsidiaries by
means other than as advances under Non-U.S. Intercompany Notes which are
pledged under Non-U.S. Intercompany Security Documents, inclusive of any such
Investments in such Foreign Subsidiary, is less than $25,000,000 (but excluding
advances after the Initial Closing Date) under unsecured Non-U.S. Intercompany
Notes to the extent principal amounts of the same have been repaid) or
	 
	 	(y)	 	both






	 	(I)	 	the Credit Party that holds, directly or
indirectly, 100% of the Voting Stock of such Foreign Subsidiary has
entered into one or more Non-U.S. Intercompany Notes with such Foreign
Subsidiary and
	 
	 	(II)	 	each such Non-U.S. Intercompany Note shall have
been secured in favor of the Credit Party which is the lender to such
Foreign Subsidiary under the Non-U.S Intercompany Note pursuant to one
or more Non-U.S. Intercompany Note Security Documents by






	 	(aa)	 	to the extent that the immediate
parent company of such Foreign Subsidiary is not the Credit
Party and is itself a Foreign Subsidiary, perfected first
priority pledges of Voting Stock of the borrowing Foreign
Subsidiary under such Non-U.S. Intercompany Note representing
100% of the Capital Stock not constituting Voting Stock of any
such Foreign Subsidiary (provided that greater than 65%
of the Voting Stock of each such Foreign Subsidiary will be so
pledged only to the extent such pledge or security interest
would not be prohibited by applicable law or could not be
expected to result in materially adverse tax consequences) and
	 
	 	(bb)	 	except to the extent such pledges
or security interests would be prohibited by applicable law,
perfected first priority security interests in and mortgages on
all other tangible and intangible assets (including without
limitation accounts receivable, inventory, equipment, general
intangibles, intercompany loans and notes, insurance policies,
investment property, intellectual property, real property, cash
and proceeds of the foregoing) of such Foreign Subsidiary,
wherever located, then or thereafter owned. All such security
agreements or similar instruments shall be in form and substance
reasonably satisfactory to Collateral Agent.




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With respect to each such Subsidiary, Borrower shall promptly send to Administrative Agent written
notice setting forth with respect to such Person (i) the date on which such Person became a
Subsidiary of the Borrower, and (ii) all of the data required to be set forth in Schedules 4.1 and
4.2 with respect to all Subsidiaries of the Borrower; provided, such written notice shall
be deemed to supplement Schedule 4.1 and 4.2 for all purposes hereof. The provisions of this
clause (b) notwithstanding, no Credit Party shall acquire or make any Investment in any Foreign
Subsidiary in violation of Sections 6.7 and 6.9 or other applicable provisions of this Agreement.




     5.11. Additional Material Real Estate Assets. In the event that any Credit Party acquires a
Material Real Estate Asset or a Real Estate Asset owned or leased on the Initial Closing Date
becomes a Material Real Estate Asset and such interest has not otherwise been made subject to the
Lien of the Collateral Documents in favor of Collateral Agent, for the benefit of Secured Parties,
then such Credit Party shall promptly take all such actions and execute and deliver, or cause to be
executed and delivered, all such mortgages, documents, instruments, agreements, opinions and
certificates similar to those described in Sections 3.1(f) and 3.1(g) with respect to each such
Material Real Estate Asset that Collateral Agent shall reasonably request to create in favor of
Collateral Agent, for the benefit of Secured Parties, a valid and, subject to any filing and/or
recording referred to herein, perfected First Priority security interest in such Material Real
Estate Assets. In addition to the foregoing, Borrower shall, at the request of Requisite Lenders,
deliver, from time to time, to Administrative Agent such appraisals as are required by law or
regulation of Real Estate Assets with respect to which Collateral Agent has been granted a Lien.



     5.12. Further Assurances. At any time or from time to time upon the request of Administrative
Agent, each Credit Party will, at its expense, promptly execute, acknowledge and deliver such
further documents and do such other acts and things as Administrative Agent or Collateral Agent may
reasonably request in order to effect fully the purposes of the Credit Documents. In furtherance
and not in limitation of the foregoing, each Credit Party shall take such actions as Administrative
Agent or Collateral Agent may reasonably request from time to time to ensure that the Obligations
are guarantied by the Guarantors and are secured by substantially all of the assets of Holdings and
its Subsidiaries and all of the outstanding Capital Stock of each Credit Party (other than Holdings
and otherwise subject to limitations contained in the Credit Documents with respect to Foreign
Subsidiaries).



     5.13. Miscellaneous Business Covenants. Unless otherwise consented to by Agents or Requisite
Lenders:



          (a) Non-Consolidation. Borrower will and will cause each of Holdings and its
Subsidiaries to: (i) maintain entity records and books of account separate from those of any
other entity which is an Affiliate of such entity; (ii) not commingle its funds or assets with
those of any other entity which is not an Affiliate of such entity; and (iii) provide that its
board of directors or other analogous governing body will hold all appropriate meetings to
authorize and approve such entity’s actions, which meetings will be separate from those of other
entities.





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          (b) Filing of Agreement. Holdings or such Subsidiaries shall file a copy of this
Agreement and the schedules and exhibits hereto as material contracts with the SEC as and to the
extent required by applicable laws and regulations.




     5.14. Syndication. The Borrower agrees to cooperate with CIT Capital and KeyBank, and agrees
to cause Laserscope to cooperate with CIT Capital and KeyBank, in connection with (i) the
preparation of an information package regarding the business, operations, financial projections and
prospects of Holdings and Laserscope and their respective Subsidiaries including, without
limitation, the delivery of all information relating to the transactions contemplated hereunder
prepared by or on behalf of Holdings or Laserscope or their respective Subsidiaries deemed
reasonably necessary by CIT Capital and KeyBank to complete the syndication of the credit
facilities under this Agreement (including, without limitation, obtaining the credit ratings for
credit facilities provided for under this agreement and the Subordinated Debt Documents from
Moody’s and S&P as and when necessary and (ii) the presentation of an information package
reasonably acceptable in format and content to CIT Capital and KeyBank in meetings and other
communications with prospective Lenders in connection with the syndication of the Facilities
(including, without limitation, direct contact between senior management and representatives of
Holdings and Laserscope and their respective Subsidiaries with prospective Lenders and
participation of such persons in meetings). Without limiting the foregoing, the Borrower
authorizes and will obtain contractual undertakings from Laserscope to authorize, the use of their
respective logos in connection with any such dissemination. At the request of the Administrative
Agent, the Borrower agrees to prepare a version of the information package and presentation that
does not contain material non-public information concerning Holdings or Laserscope, their
respective affiliates or their securities. In addition, the Borrower agrees that unless
specifically labeled “Private — Contains Non-Public Information,” no information, documentation or
other data disseminated to prospective Lenders in connection with the syndication of the
Commitments, whether through an internet site (including, without limitation, an IntraLinks
workspace), electronically, in presentations at meetings or otherwise, will contain any material
non-public information concerning Holdings or Laserscope, their respective affiliates or their
securities.



     5.15. Ratings. The Borrower shall use, and shall cause Holdings and its Subsidiaries to use,
their commercially reasonable efforts to provide that the Indebtedness under the Agreement remains
rated by each of S&P and Moody’s at all times and to promptly deliver to the Administrative Agent
written notice of any change in the rating thereof by S&P or Moody’s.



     5.16. Post Closing Covenants. The Borrower shall, and shall cause each of the Credit Parties
to, satisfy the requirements set forth on Schedule 5.16 on or before the date specified for such
requirement or such later date to be determined by the Administrative Agent.



     5.17. Completion of Merger. From and after the Initial Closing Date, as soon as is reasonably
practicable using best efforts, Merger Sub (together with Laserscope if the 90% Closing Condition
has been met) will utilize (and the Borrower will cause Merger Sub (and Laserscope if the 90%
Closing Condition has been met) to utilize) all legal means to cause the acquisition to occur and
acquire the remaining outstanding shares of Capital Stock of Laserscope that Merger Sub does not
then own, including, at the option of the Company, by merging Merger Sub with and into Laserscope,
with Laserscope being the surviving entity, subject to terms and



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conditions reasonably satisfactory
to the Administrative Agent, provided that unless otherwise consented to by the
Administrative Agent, the cash component of the consideration paid for the acquisition of such
shares of Capital Stock of Laserscope does not exceed the cash component of the consideration paid
for any such shares of Capital Stock of Laserscope pursuant to the Tender Offer.



     5.18. Delisting of Laserscope. From and after the Initial Closing Date, as soon as is
reasonably practicable, Borrower shall use all legal means to delist, or to cause Laserscope to
delist, the trading of the shares of Capital Stock of Laserscope on the NASDAQ securities exchange.



SECTION 6. NEGATIVE COVENANTS




     Each Credit Party covenants and agrees that, so long as any Commitment is in effect and until
payment in full of all Obligations and cancellation or expiration of all Letters of Credit, such
Credit Party shall perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.



     6.1. Indebtedness. No Credit Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become or remain directly
or indirectly liable with respect to any Indebtedness, except:



          (a) the Obligations;




          (b) Indebtedness of any Guarantor to Borrower or to any other Guarantor, or of Borrower to any
Guarantor; provided, (i) all such Indebtedness shall be evidenced by promissory notes and
all such notes shall be subject to a First Priority Lien pursuant to the Pledge and Security
Agreement, (ii) all such Indebtedness shall be unsecured and subordinated in right of payment to
the payment in full of the Obligations pursuant to the terms of any applicable promissory notes or
an intercompany subordination agreement that in any such case, is reasonably satisfactory to
Administrative Agent, and (iii) any payment by any such Guarantor under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any Indebtedness owed by such
Subsidiary to Borrower or to any of its Subsidiaries for whose benefit such payment is made;




          (c) on and before the Initial Closing Date, the Existing Indebtedness;




          (d) Indebtedness incurred by Holdings or any of its Subsidiaries arising from agreements
providing for indemnification, adjustment of purchase price or similar obligations, or from
guaranties or letters of credit, surety bonds or performance bonds securing the performance of
Holdings or any such Subsidiary pursuant to such agreements, in connection with (i) acquisitions or
dispositions by Holdings or any of its Subsidiaries which have occurred prior to the Initial
Closing Date and are described in Schedule 6.1(a), (ii) Permitted Acquisitions of Holdings or any
of its Subsidiaries, or (iii) permitted dispositions after the date hereof of any business, assets
or Subsidiary of Holdings or any of its Subsidiaries;




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          (e) Indebtedness which may be deemed to exist pursuant to any guaranties, performance, surety,
statutory, appeal or similar obligations incurred in the ordinary course of business;




          (f) Indebtedness in respect of netting services, overdraft protections and otherwise in
connection with Deposit Accounts;




          (g) guaranties in the ordinary course of business of the obligations of suppliers, customers,
franchisees and licensees of Holdings and its Subsidiaries;




          (h) guaranties by Borrower of Indebtedness of a Guarantor or guaranties by a Subsidiary of
Borrower of Indebtedness of Borrower or a Guarantor with respect, in each case, to Indebtedness
otherwise permitted to be incurred pursuant to this Section 6.1;




          (i) (i) Indebtedness described in Schedule 6.1(a), but not any extensions, renewals or
replacements of such Indebtedness except (A) renewals and extensions expressly provided for in the
agreements evidencing any such Indebtedness as the same are in effect on the date of this Agreement
and (B) refinancings and extensions of any such Indebtedness if the terms and conditions thereof
are not less favorable to the obligor thereon or to the Lenders than the Indebtedness being
refinanced or extended, and the average life to maturity thereof is greater than or equal to that
of the Indebtedness being refinanced or extended; provided, such Indebtedness permitted
under the immediately preceding clause (A) or (B) above shall not (1) include Indebtedness of an
obligor that was not an obligor with respect to the Indebtedness being extended, renewed or
refinanced, (2) exceed in a principal amount the Indebtedness being renewed, extended or refinanced
or (3) be incurred, created or assumed if any Default or Event of Default has occurred and is
continuing or would result therefrom and (ii) unsecured intercompany Indebtedness owing by a
Foreign Subsidiary to Holdings or a Domestic Subsidiary in an aggregate principal amount not to
exceed, after the date hereof, the aggregate amount of Indebtedness described Schedule 6.1(b);




          (j) Indebtedness with respect to Capital Leases and purchase money Indebtedness in an
aggregate amount not to exceed at any time $10,000,000 (including any purchase money Indebtedness
acquired in connection with a Permitted Acquisition); provided, any such purchase money
Indebtedness shall be secured only to the asset acquired in connection with the incurrence of such
Indebtedness;




          (k) other unsecured Indebtedness of Holdings and its Subsidiaries, in an aggregate amount not
to exceed at any time $10,000,000;




          (l) subject to the limitations and requirements in Section 6.7(d)(iii), Indebtedness incurred
by any Foreign Subsidiary of Holdings from Holdings or any of its Domestic Subsidiaries, in an
aggregate outstanding amount not to exceed at any time $50,000,000;




          (m) Permitted Convertible Debt; provided that (x) no Default shall have occurred or be
continuing or would result therefrom, (y) after giving effect to the incurrence of such
Indebtedness, on a pro forma basis Holdings and its Subsidiaries would be in compliance with all of
the terms and conditions of the Credit Documents (including any financial covenants and tests), and
(z) to the extent that the aggregate principal amount of such Permitted Convertible

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Debt exceeds
$373,750,000, since the Initial Closing Date, the proceeds of such Permitted Convertible Debt shall
be applied in accordance with Section 2.14(d) and Section 2.15(b); and




          (n) on and before the Second Closing Date, if the 90% Closing Condition has not been met, the
Existing Laserscope Credit Agreement.




     The Credit Parties shall not, and shall not permit any of their Subsidiaries to issue any
preferred stock or other preferred Capital Stock which (i) matures or is mandatorily redeemable
pursuant to a sinking fund obligation or otherwise, (ii) is or may become redeemable or
repurchaseable at the option of the holder thereof, in whole or in part, or (iii) is convertible or
exchangeable at the option of the holder thereof for Indebtedness or preferred stock or any other
preferred Capital Stock described in this paragraph.



     6.2. Liens. No Credit Party shall, nor shall it permit any of its Subsidiaries to, directly
or indirectly, create, incur, assume or permit to exist any Lien on or with respect to any property
or asset of any kind (including any document or instrument in respect of goods or accounts
receivable) of Holdings or any of its Subsidiaries, whether now owned or hereafter acquired, or any
income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such property, asset,
income or profits under the UCC of any State or under any similar recording or notice statute,
except:



          (a) Liens in favor of Collateral Agent for the benefit of Secured Parties granted pursuant to
any Credit Document;




          (b) Liens for Taxes if obligations with respect to such Taxes are being contested in good
faith by appropriate proceedings promptly instituted and diligently conducted;




          (c) statutory Liens of landlords, banks (and rights of set-off), of carriers, warehousemen,
mechanics, repairmen, workmen and materialmen, and other Liens imposed by law (other than any such
Lien imposed pursuant to Section 401 (a)(29) or 412(n) of the Internal Revenue Code or by ERISA),
in each case incurred in the ordinary course of business (i) for amounts not yet overdue or (ii)
for amounts that are overdue and that (in the case of any such amounts overdue for a period in
excess of five days) are being contested in good faith by appropriate proceedings, so long as such
reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made
for any such contested amounts;




          (d) Liens incurred in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money or other Indebtedness), so long as no
foreclosure, sale or similar proceedings have been commenced with respect to any portion of the
Collateral on account thereof;




          (e) easements, rights-of-way, restrictions, encroachments, and other minor defects or
irregularities in title, in each case which do not and will not interfere in any material respect
with the ordinary conduct of the business of Holdings or any of its Subsidiaries;




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          (f) any interest or title of a lessor or sublessor under any lease of real estate permitted
hereunder;




          (g) Liens solely on any cash earnest money deposits made by Holdings or any of its
Subsidiaries in connection with any letter of intent or purchase agreement with respect to
transactions permitted hereunder;




          (h) purported Liens evidenced by the filing of precautionary UCC financing statements relating
solely to operating leases of personal property entered into in the ordinary course of business;




          (i) Liens in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;




          (j) any zoning or similar law or right reserved to or vested in any governmental office or
agency to control or regulate the use of any real property;




          (k) licenses of patents, trademarks and other intellectual property rights granted by Holdings
or any of its Subsidiaries in the ordinary course of business and not interfering in any respect
with the ordinary conduct of the business of Holdings or such Subsidiary;




          (l) Liens described in Schedule 6.2 or on a title report delivered pursuant to Section
3.1(f)(iv);




          (m) Liens securing Indebtedness permitted pursuant to Section 6.1(j); provided, any
such Lien shall encumber only the asset acquired with the proceeds of such Indebtedness;




          (n) Liens on property of a Person existing at the time such Person is acquired by a Credit
Party or merged with or into or consolidated with any Credit Party to the extent permitted
hereunder (and not created in anticipation or contemplation thereof); provided that such Liens do
not extend to property not subject to such Liens at the time of acquisition (other than
improvements thereon) and are no more favorable to the lienholders than such existing Lien; and




          (o) other Liens outstanding at any time in an aggregate amount not to exceed $1,000,000;
provided that such Liens shall at all times be subordinate to the Liens of the Collateral Agent.




     6.3. Equitable Lien. If any Credit Party shall create or assume any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Permitted Liens, Borrower
shall make or cause to be made effective provisions whereby the Obligations will be secured by such
Lien equally and ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided, notwithstanding the foregoing, this covenant
shall not be construed as a consent by Requisite Lenders to the creation or assumption of any such
Lien not otherwise permitted hereby.



     6.4. No Further Negative Pledges. Except with respect to (a) specific property encumbered to
secure payment of particular Indebtedness or to be sold pursuant to an executed



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agreement with
respect to a permitted Asset Sale, and (b) restrictions by reason of customary provisions
restricting assignments, subletting or other transfers contained in leases, licenses and similar
agreements entered into in the ordinary course of business (provided that such restrictions are
limited to the property or assets secured by such Liens or the property or assets subject to such
leases, licenses or similar agreements, as the case may be), no Credit Party nor any of its
Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon
any of its properties or assets, whether now owned or hereafter acquired.



     6.5. Restricted Payments. The Credit Parties shall not, and shall not permit any Subsidiary
to, declare of make, or agree to pay or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, except:



          (a) Domestic Subsidiaries may declare and pay (x) dividends ratably with respect to their
Capital Stock or, if not ratably, then in accordance with the priorities set forth in the
respective organizational documents for, or agreements among holders of the Capital Stock in, such
Subsidiaries or (y) additional shares of the same class of shares as the dividend being paid to the
extent such payment complies with last sentence of Section 6.1, in each case to (i) any other
Domestic Subsidiary, (ii) the Borrower, or (iii) any Guarantor that is a wholly owned subsidiary of
the Borrower or Holdings;




          (b) Holdings may pay dividends consisting solely of shares of its common stock or additional
shares of the same class of shares as the dividend being paid;




          (c) so long as no Event of Default shall have occurred and be continuing, Borrower and
Holdings may purchase, redeem or acquire any of its Capital Stock or Equity Rights from any of its
or its Subsidiaries’ present or former officers or employees upon the death, disability or
termination of employment of such officer or employee, so long as the aggregate amount of payments
under this 6.5(c) shall not exceed $2,000,000 in any Fiscal Year and $10,000,000 in the aggregate
since the Initial Closing Date;




          (d) Borrower or Holdings may net shares under employee benefit plans to settle option price
payments owed by employees and directors with respect thereto and to settle employers’ and
directors’ federal, state and income tax liabilities (if any) related thereto;




          (e) Restricted Payments consisting of Indebtedness permitted (1) under clause (i) of Section
6.1(d) so long as Holdings and its Subsidiaries are in pro forma compliance with Section 6.8 both
before and immediately after giving effect to such payment, and (2) under clauses (ii) and (iii) of
Section 6.1(d) so long as (in the case of this clause (e)(ii)) both (A) Holding and its
Subsidiaries are in pro forma compliance with Section 6.8 both before and immediately after giving
effect to such payment and (B) after giving effect thereto, there are no outstanding Revolving
Loans during the 5 days subsequent to such payment exclusive of any outstanding Letters of Credit);




          (f) Restricted Payments to the extent permitted pursuant to Section 6.15(b);




          (g) Subject to Section 4.01 of the Indenture, Restricted Payments or repurchases, redemptions,
conversions or repayments of Senior Subordinated Notes not to exceed $15,000,000 in the aggregate
in any Fiscal Year; provided, any unused portion of such amount

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for any Fiscal Year may be
carried forward to only the immediately succeeding Fiscal Year at 100% of the unutilized portion
thereof (but excluding any amount thereof carried forward from any preceding Fiscal Year);




          (h) the redemption, repurchase, acquisition or retirement of Capital Stock of any Subsidiary
to the extent permitted pursuant to Section 6.7;




          (i) Holdings or Merger Sub may make any Restricted Payment required by the exercise of
appraisal rights by Laserscope’s shareholders under Chapter 13 of the California General
Corporation Law in connection with the Acquisition;




          (j) repayment to the holder of a Non-U.S. Intercompany Note by any obligor thereof; and




          (k) Foreign Subsidiaries may declare and pay (x) dividends ratably with respect to their
Capital Stock or, if not ratably, then in accordance with the priorities set forth in the
respective organizational documents for, or agreements among holders of the Capital Stock in, such
Subsidiaries or (y) additional shares of the same class of shares as the dividend being paid to the
extent such payment complies with last sentence of Section 6.1, in each case to (i) any other
Foreign Subsidiary, (ii) the Borrower, or (iii) any Guarantor that is a wholly owned subsidiary of
the Borrower or Holdings.




     6.6. Restrictions on Subsidiary Distributions. Except as provided herein no Credit Party
shall, nor shall it permit any of its Subsidiaries to, create or otherwise cause or suffer to exist
or become effective any consensual encumbrance or restriction of any kind on the ability of any
Subsidiary of Borrower to (a) pay dividends or make any other distributions on any of such
Subsidiary’s Capital Stock owned by Borrower or any other Subsidiary of Borrower, (b) repay or
prepay any Indebtedness owed by such Subsidiary to Borrower or any other Subsidiary of Borrower,
(c) make loans or advances to Borrower or any other Subsidiary of Borrower, or (d) transfer any of
its property or assets to Borrower or any other Subsidiary of Borrower other than restrictions (i)
in agreements evidencing Indebtedness permitted by Section 6.1(j) that impose restrictions on the
property so acquired, (ii) by reason of customary provisions restricting assignments, subletting or
other transfers contained in leases, licenses, joint venture agreements and similar agreements
entered into in the ordinary course of business, (iii) that are or were created by virtue of any
transfer of, agreement to transfer or option or right with respect to any property, assets or
Capital Stock not otherwise prohibited under this Agreement or (iv) described on Schedule 6.6.



     6.7. Investments. No Credit Party shall, nor shall it permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including without limitation any
Joint Venture, except:



          (a) Investments in Cash and Cash Equivalents;




          (b) equity Investments owned as of the date hereof in any Subsidiary and Investments made
after the date hereof in the Borrower and any wholly-owned Domestic Subsidiaries of Borrower;





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          (c) Investments (i) in any Securities received in satisfaction or partial satisfaction thereof
from financially troubled account debtors and (ii) deposits, prepayments and other credits to
suppliers made in the ordinary course of business consistent with the past practices of Holdings
and its Subsidiaries;




          (d) (i) intercompany loans to the extent permitted under Section 6.1(b), (ii) intercompany
loans to the extent permitted under Section 6.1(i)(ii) and (iii) intercompany loans made after the
Initial Closing Date from Holdings or a Domestic Subsidiary to a Foreign Subsidiary; provided, in
the case of clause (iii), (A) the sum of the outstanding principal amount of unsecured intercompany
loans made after the Initial Closing Date plus the aggregate amount of all Investments made after
the Initial Closing Date by Holdings or a Domestic Subsidiary in a Foreign Subsidiary (other than
in the form of Indebtedness under a Non-U.S. Intercompany Note secured by Non-U.S. Intercompany
Security Documents (excluding any principal amounts advanced after the Initial Closing Date under
an unsecured Non-U.S. Intercompany Note which have been repaid)) cannot exceed $25,000,000, (B)
all intercompany loans made after the Initial Closing Date under such clause (iii) which are not
unsecured loans, shall be evidenced by a Non-U.S. Intercompany Note and shall be secured by
Non-U.S. Intercompany Security Documents (which shall have been accompanied by opinions of counsel
and other deliveries reasonably requested by the Administrative Agent demonstrating the perfected
security interests securing such Indebtedness), (C) the outstanding principal amount of
intercompany loans made after the Initial Closing Date which are, at the time of determination, not
unsecured loans, shall not exceed $50,000,000 less the sum of the outstanding principal amount of
unsecured intercompany loans maintained pursuant to such clause (iii) plus the aggregate amount of
all Investments made after the Initial Closing Date by Holdings or a Domestic Subsidiary which is
not in the form of Indebtedness;




          (e) Consolidated Capital Expenditures permitted by Section 6.8(e);




          (f) loans and advances to employees of Holdings and its Subsidiaries made in the ordinary
course of business in an aggregate principal amount not to exceed $1,000,000 in the aggregate;




          (g) Investments constituting Permitted Acquisitions which are permitted pursuant to Section
6.9; provided to the extent any such Investment constitutes an Investment in a Foreign Subsidiary,
the amount of such Investment shall be included within, and subject to the maximum limits set forth
in (i) the proviso to clause (i) below and (ii) the proviso to Section 6.9(e);




          (h) Investments described in Schedule 6.7;




          (i) Investments in Foreign Subsidiaries (not constituting Indebtedness and including equity
Investments, conversion of debt to equity and contributions to capital (valued at fair market value
at the time of such contribution) not to exceed $4,166,000 for each year since the Initial Closing
Date can be made by Holdings or its Domestic Subsidiaries (e.g., in September 2008, assuming that
no non-debt Investments had been made in Foreign Subsidiaries in reliance on this clause (i) prior
to such time, up to $8,332,000 in non-debt Investments made be made by Holdings or a Domestic
Subsidiary in a Foreign Subsidiary); provided that the

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combination of such non-debt Investments
(without regard for any distributions, liquidation payments or other return in respect of such
non-debt Investments) together with the then outstanding principal amount of unsecured intercompany
Indebtedness incurred under clause (d)(iii) above, shall not at any time exceed $25,000,000;




          (j) Investments consisting of the contribution of the Capital Stock of the first-tier Foreign
Subsidiaries of the Borrower to a Foreign Holding Company as permitted under Sections 6.14 and
6.18; and




          (k) other Investments (excluding Investments in Foreign Subsidiaries) in an aggregate amount
not to exceed at any time $10,000,000.



Notwithstanding the foregoing or any of the other provisions of this Agreement, (i) in no event
shall any Credit Party make any Investment which results in or facilitates in any manner any
Restricted Payment not otherwise permitted under the terms of Section 6.5; and (ii) neither
Holdings nor any Domestic Subsidiary, including without limitation the Borrower, shall either (a)
make any Investment in any Foreign Subsidiary or (b) make any payment in respect of any Investment
made in Holdings or such Domestic Subsidiary by any Foreign Subsidiary, in either case unless
immediately prior to and immediately after giving effect to each such Investment or payment no
Default or Event of Default shall exist under Section 8.1(a), (b), (c), (f), (g), (j), (m) or (o)
and no Default or Event of Default shall exist in respect of the failure to comply with Article VI
hereof.




6.8. Financial Covenants.




          (a) Interest Coverage Ratio. Borrower shall not permit the Interest Coverage Ratio as
of the day nearest to the period ending in the table below, beginning with the period ending
September 30, 2006, to be less than the correlative ratio indicated:




	 	 	 
	Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Interest Coverage
	Ending Below	 	Ratio
	September 30, 2006

	 	2.50 to 1.00
	December 31, 2006

	 	2.50 to 1.00
	March 31, 2007

	 	2.75 to 1.00
	June 30, 2007

	 	3.00 to 1.00
	September 30, 2007

	 	3.25 to 1.00
	December 31, 2007

	 	3.50 to 1.00
	March 31, 2008

	 	3.50 to 1.00
	June 30, 2008

	 	3.50 to 1.00
	September 30, 2008

	 	3.75 to 1.00







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	 Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Interest Coverage
	Ending Below	 	Ratio
	December 31, 2008

	 	3.75 to 1.00
	March 31, 2009

	 	3.75 to 1.00
	June 30, 2009

	 	3.75 to 1.00
	September 30, 2009

	 	4.00 to 1.00
	December 31, 2009

	 	4.00 to 1.00
	March 31, 2010

	 	4.00 to 1.00
	June 30, 2010

	 	4.00 to 1.00
	September 30, 2010

	 	4.00 to 1.00
	December 31, 2010

	 	4.00 to 1.00
	March 31, 2011

	 	4.00 to 1.00
	June 30, 2011

	 	4.00 to 1.00
	September 30, 2011

	 	4.00 to 1.00
	December 31, 2011

	 	4.00 to 1.00
	March 31, 2012

	 	4.00 to 1.00
	June 30, 2012

	 	4.00 to 1.00






          (b) Total Leverage Ratio. Borrower shall not permit the Total Leverage Ratio as of
the day nearest to the period ending in the table below and at all times during such period,
beginning with the period ending September 30, 2006, to exceed the correlative ratio indicated:




	 	 	 
	Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Total Leverage
	Ending Below	 	Ratio
	September 30, 2006

	 	7.25 to 1.00
	December 31, 2006

	 	6.95 to 1.00
	March 31, 2007

	 	6.50 to 1.00
	June 30, 2007

	 	6.00 to 1.00
	September 30, 2007

	 	5.50 to 1.00
	December 31, 2007

	 	5.00 to 1.00
	March 31, 2008

	 	4.75 to 1.00






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	Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Total Leverage
	Ending Below	 	Ratio
	June 30, 2008

	 	4.50 to 1.00
	September 30, 2008

	 	4.25 to 1.00
	December 31, 2008

	 	4.00 to 1.00
	March 31, 2009

	 	4.00 to 1.00
	June 30, 2009

	 	3.75 to 1.00
	September 30, 2009

	 	3.75 to 1.00
	December 31, 2009

	 	3.50 to 1.00
	March 31, 2010

	 	3.25 to 1.00
	June 30, 2010

	 	3.00 to 1.00
	September 30, 2010

	 	3.00 to 1.00
	December 31, 2010

	 	3.00 to 1.00
	March 31, 2011

	 	3.00 to 1.00
	June 30, 2011

	 	3.00 to 1.00
	September 30, 2011

	 	3.00 to 1.00
	December 31, 2011

	 	3.00 to 1.00
	March 31, 2012

	 	3.00 to 1.00
	June 30, 2012

	 	3.00 to 1.00






          (c) Senior Leverage Ratio. Borrower shall not permit the Senior Leverage Ratio as of
the day nearest to the period ending in the table below and at all times during such period,
beginning with the period ending September 30, 2006, to exceed the correlative ratio indicated:




	 	 	 
	Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Senior Leverage
	Ending Below	 	Ratio
	September 30, 2006

	 	3.75 to 1.00
	December 31, 2006

	 	3.50 to 1.00
	March 31, 2007

	 	3.25 to 1.00
	June 30, 2007

	 	3.00 to 1.00
	September 30, 2007

	 	2.75 to 1.00
	December 31, 2007

	 	2.50 to 1.00






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	Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Senior Leverage
	Ending Below	 	Ratio
	March 31, 2008

	 	2.50 to 1.00
	June 30, 2008

	 	2.50 to 1.00
	September 30, 2008

	 	2.50 to 1.00
	December 31, 2008

	 	2.25 to 1.00
	March 31, 2009

	 	2.00 to 1.00
	June 30, 2009

	 	2.00 to 1.00
	September 30, 2009

	 	2.00 to 1.00
	December 31, 2009

	 	2.00 to 1.00
	March 31, 2010

	 	2.00 to 1.00
	June 30, 2010

	 	2.00 to 1.00
	September 30, 2010

	 	2.00 to 1.00
	December 31, 2010

	 	2.00 to 1.00
	March 31, 2011

	 	2.00 to 1.00
	June 30, 2011

	 	2.00 to 1.00
	September 30, 2011

	 	2.00 to 1.00
	December 31, 2011

	 	2.00 to 1.00
	March 31, 2012

	 	2.00 to 1.00
	June 30, 2012

	 	2.00 to 1.00






          (d) Fixed Charge Coverage Ratio. Borrower shall not permit the Fixed Charge Coverage
Ratio as of the day nearest to the period ending in the table below, beginning with the period
ending September 30, 2006, to be less than the correlative ratio indicated:




	 	 	 
	Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Fixed Charge
	Ending Below	 	Coverage Ratio
	September 30, 2006

	 	1.05 to 1.00
	December 31, 2006

	 	1.05 to 1.00
	March 31, 2007

	 	1.05 to 1.00
	June 30, 2007

	 	1.15 to 1.00






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	Fiscal Quarter Ended	 	 
	Nearest to the Period	 	Fixed Charge
	Ending Below	 	Coverage Ratio
	September 30, 2007

	 	1.15 to 1.00
	December 31, 2007

	 	1.25 to 1.00
	March 31, 2008

	 	1.25 to 1.00
	June 30, 2008

	 	1.25 to 1.00
	September 30, 2008

	 	1.50 to 1.00
	December 31, 2008

	 	1.50 to 1.00
	March 31, 2009

	 	1.50 to 1.00
	June 30, 2009

	 	1.50 to 1.00
	September 30, 2009

	 	1.50 to 1.00
	December 31, 2009

	 	1.50 to 1.00
	March 31, 2010

	 	1.50 to 1.00
	June 30, 2010

	 	1.50 to 1.00
	September 30, 2010

	 	1.50 to 1.00
	December 31, 2010

	 	1.50 to 1.00
	March 31, 2011

	 	1.50 to 1.00
	June 30, 2011

	 	1.50 to 1.00
	September 30, 2011

	 	1.50 to 1.00
	December 31, 2011

	 	1.50 to 1.00
	March 31, 2012

	 	1.50 to 1.00
	June 30, 2012

	 	1.50 to 1.00






          (e) Maximum Consolidated Capital Expenditures. Borrower shall not, and shall not
permit Holdings or any of its Subsidiaries to, make or incur Consolidated Capital Expenditures, in
any Fiscal Year indicated below, in excess of the corresponding amount set forth below opposite
such Fiscal Year:




	 	 	 
	Fiscal	 	Consolidated Capital
	 Year	 	Expenditures
	2006
	 	$35,000,000
	2007
	 	$15,000,000






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	Fiscal	 	Consolidated Capital
	 Year	 	Expenditures
	2008
	 	$15,000,000
	2009
	 	$17,500,000
	2010
	 	$20,000,000
	2011
	 	$22,500,000
	2012
	 	$30,000,000






          (f) Certain Calculations. With respect to any period during which a Permitted
Acquisition or an Asset Sale has occurred (each, a “Subject Transaction”), for purposes of
determining compliance with the financial covenants set forth in this Section 6.8 (but not for
purposes of determining the Applicable Margin Percentage), Consolidated Adjusted EBITDA and the
components of Consolidated Fixed Charges shall be calculated with respect to such period on a pro
forma basis (including pro forma adjustments arising out of events which are directly attributable
to a specific transaction, are factually supportable and are expected to have a continuing impact,
in each case determined on a basis consistent with Article 11 of Regulation S-X promulgated under
the Securities Act and as interpreted by the staff of the Securities and Exchange Commission, which
would include cost savings resulting from head count reduction, closure of facilities and similar
restructuring charges, which pro forma adjustments shall be certified by the chief financial
officer of Holdings) using the historical audited financial statements of any business so acquired
or to be acquired or sold or to be sold and the consolidated financial statements of Holdings and
its Subsidiaries which shall be reformulated as if such Subject Transaction, and any Indebtedness
incurred or repaid in connection therewith, had been consummated or incurred or repaid at the
beginning of such period (and assuming that such Indebtedness bears interest during any portion of
the applicable measurement period prior to the relevant acquisition at the weighted average of the
interest rates applicable to outstanding Loans incurred during such period).




     6.9. Fundamental Changes; Disposition of Assets; Acquisitions. No Credit Party shall, nor
shall it permit any of its Subsidiaries to, enter into any transaction of merger or consolidation,
or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey,
sell, lease or sub-lease (as lessor or sublessor), exchange, transfer or otherwise dispose of, in
one transaction or a series of transactions, all or any part of its business, assets or property of
any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether
now owned or hereafter acquired, or acquire by purchase or otherwise (other than purchases or other
acquisitions of inventory, materials and equipment and Capital Expenditures in the ordinary course
of business) the business, property or fixed assets of, or stock or other evidence of beneficial
ownership of, any Person or any division or line of business or other business unit of any Person,
except:



          (a) any Subsidiary of Borrower may be merged with or into Borrower or any Subsidiary that is a
Guarantor, or be liquidated, wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a
series of transactions, to Borrower or any Subsidiary that is a Guarantor;




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provided, in the case of such a merger, Borrower or such Subsidiary which is a
Guarantor, as applicable, shall be the continuing or surviving Person;




          (b) sales or other dispositions of assets that do not constitute Asset Sales;




          (c) Asset Sales, the proceeds of which (valued at the principal amount thereof in the case of
non-Cash proceeds consisting of notes or other debt Securities and valued at fair market value in
the case of other non-Cash proceeds) when aggregated with the proceeds of all other Asset Sales
made within the same Fiscal Year, are less than $2,000,000; provided, licensing
transactions with respect to intellectual property and technology assets shall not, if consented to
by the Administrative Agent, in its sole discretion, be subject to or count against the $2,000,000
limitation expressed above or to the cash requirement in item (2) of the further proviso below;
further provided (1) the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof (determined in good faith by the board of
directors of Borrower (or similar governing body)), (2) 100% of the value thereof shall be paid in
Cash, and (3) the Net Asset Sale Proceeds thereof shall be applied as required by Section 2.14(a);




          (d) disposals of obsolete, worn out or surplus property;




          (e) Permitted Acquisitions (which for this purpose may include interests in or acquisitions by
or through the Foreign Holding Company or any of its wholly-owned first-tier Foreign Subsidiaries)
occurring during each period indicated below, the consideration for which consists of Cash or Cash
Equivalents in an aggregate amount for such acquisitions during such period which does not exceed
the amounts opposite such period:




	 	 	 	 	 
	 	 	Aggregate Cash and Cash Equivalent
	 	 	consideration payable for all Permitted
	 	 	Acquisitions occurring since the
	 	 	Second Closing Date prior to such end
	Period	 	date
	From and after the Second Closing
Date through the day immediately
preceding the first anniversary of
the Initial Closing Date
	 	$	10,000,000	 
	From and after the first anniversary
of the Initial Closing Date through
the day immediately preceding the
second anniversary of the Initial
Closing Date
	 	$	15,000,000	 
	From and after the second
anniversary of the Initial Closing
Date through the day immediately
preceding the third anniversary of
the Initial Closing Date
	 	$	20,000,000	 
	From and after the third anniversary
of the Initial Closing Date through
the day immediately preceding the
fourth anniversary of the Initial
Closing Date
	 	$	20,000,000	 
	From and after the fourth
anniversary of the Initial Closing
Date through the day immediately
preceding the fifth anniversary of
the Initial Closing Date
	 	$	20,000,000	 
	From and after the fifth anniversary
of the Initial Closing Date through
the day immediately preceding the
sixth anniversary of the Initial
Closing Date
	 	$	20,000,000	 






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     Provided, with respect to the permitted amounts in any period, that any amounts not utilized
during any prior periods can be carried forward and utilized in the then current period; provided
further, that in no case shall more than 50% of the amount permitted to be used in any period may
be used in connection with any acquisitions by, of or through Foreign Subsidiaries.



          (f) Permitted Acquisitions (which for this purpose may include interests in or acquisitions by
or through the Foreign Holding Company or any of its wholly-owned first-tier Foreign Subsidiaries),
the consideration for which consists of Capital Stock of Holdings or any of its Subsidiaries;




          (g) Investments made in accordance with Section 6.7; and




          (h) sales, transfers and dispositions of equity interests of Borrower or Holdings in
connection with the exercise or conversion of the Senior Subordinated Notes; and




          (i) the merger of Merger Sub with or into Laserscope, with Laserscope as the surviving entity,
in accordance with the Acquisition Agreement;




          (j) Asset Sales set forth on Schedule 6.9 hereto; provided that the Net Asset Sale Proceeds
from such Asset Sales are applied in accordance with the terms and conditions of Section 2.14(a)
hereof without giving effect to the proviso in such Section; and




          (k) the contribution to the Foreign Holding Company of the Capital Stock of each of the
first-tier Foreign Subsidiaries of the Borrower.



provided that in the case of (a), (e), (f), (g) and (i) above, the Lien on and security
interest in such property granted or to be granted in favor of the Collateral Agent under the
Collateral Documents, if any, or any Non-U.S. Intercompany Note Party under the Non-U.S.
Intercompany Note Documents, if any, shall be maintained or created in accordance with the
provisions of Section 5.10, Section 5.11, or Section 5.12 as applicable.




     To the extent the Requisite Lenders waive the provisions of this Section 6.9 with respect to
the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.9, such
Collateral (unless sold to a Credit Party) shall be sold free and clear of the Liens created by the
Collateral Documents, and the Agents shall take all actions they deem appropriate in order to
effect the foregoing. To the extent the Requisite Lenders waive the provisions of this Section 6.9
with respect to the sale of any Non-U.S. Intercompany Note Collateral, or any Non-U.S. Intercompany
Note Collateral is sold as permitted by this Section 6.9, such Non-U.S. Intercompany Note
Collateral (unless sold to a Credit Party) shall be sold free and clear of the Liens created by the
Non-U.S. Intercompany Note documents, and the Company that is the beneficiary under the applicable
Non-U.S. Intercompany Note Security Documents may take all actions deemed appropriate in order to
effect the foregoing.



     6.10. Disposal of Subsidiary Interests. Except for any sale of all of its interests in the
Capital Stock of any of its Subsidiaries in compliance with the provisions of Section 6.9, no
Credit Party shall, nor shall it permit any of its Subsidiaries to, (a) directly or indirectly
sell,



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assign, pledge or otherwise encumber or dispose of any Capital Stock of any of its
Subsidiaries, except to qualify directors if required by applicable law; or (b) permit any of its
Subsidiaries directly or indirectly to sell, assign, pledge or otherwise encumber or dispose of any
Capital Stock of any of its Subsidiaries, except to another Credit Party (subject to the
restrictions on such disposition otherwise imposed hereunder), or to qualify directors if required
by applicable law.



     6.11. Sales and Lease-Backs. No Credit Party shall, nor shall it permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease of any property (whether real, personal or mixed), whether
now owned or hereafter acquired, which such Credit Party (a) has sold or transferred or is to sell
or to transfer to any other Person (other than Holdings or any of its Subsidiaries), or (b) intends
to use for substantially the same purpose as any other property which has been or is to be sold or
transferred by such Credit Party to any Person (other than Holdings or any of its Subsidiaries) in
connection with such lease.



     6.12. Transactions with Shareholders and Affiliates. No Credit Party shall, nor shall it
permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including the purchase, sale, lease or exchange of any property or the rendering of
any service) with any Affiliate of Holdings or any of its Subsidiaries on terms that are less
favorable to Holdings or that Subsidiary, as the case may be, than those that might be obtained at
the time from a Person who is not such a holder or Affiliate; provided, the foregoing
restriction shall not apply to (a) any transaction between Borrower and any Guarantor; (b)
reasonable and customary fees paid to members of the board of directors (or similar governing body)
of Holdings and its Subsidiaries; (c) compensation arrangements for officers and other employees of
Holdings and its Subsidiaries entered into in the ordinary course of business; and (d) transactions
described in Schedule 6.12.



     6.13. Conduct of Business. From and after the date hereof, no Credit Party shall, nor shall
it permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged
in by such Credit Party on the date hereof and similar or related businesses and (ii) such other
lines of business as may be consented to by Requisite Lenders. In addition to the foregoing,
Holdings shall not engage in any business or activity other than (i) the ownership of all of the
outstanding shares of Capital Stock of Borrower, (ii) participating in the tax, accounting and
other administrative matters as a member of the consolidated group of Holdings, Borrower and their
Subsidiaries, and (iii) the performance of the Credit Documents to which it is a party.



     6.14. Permitted Activities of Merger Sub and Foreign Holding Company. (a) Merger Sub shall
not (i) incur, directly or indirectly, any Indebtedness or any other obligation or liability
whatsoever other than the Indebtedness and obligations under the Related Agreements; (ii) create or
suffer to exist any Lien upon any property or assets now owned or hereafter acquired by it other
than the Liens created under the Collateral Documents to which it is a party or permitted pursuant
to Section 6.2; (iii) engage in any business or activity or own any assets other than (x) holding
Capital Stock of Laserscope, (y) performing its obligations and activities incidental thereto under
the Credit Documents, and to the extent not inconsistent therewith, the Related Agreements; and (z)
making Restricted Payments and Investments to the extent permitted by this Agreement; (iv) except
as permitted under Section 6.9(a), consolidate with or



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merge with or into, or convey, transfer or lease all or substantially all its assets to, any
Person, except for consummation of the Acquisition; (v) sell or otherwise dispose of any Capital
Stock of any of its Subsidiaries; (vi) create or acquire any Subsidiary or make or own any
Investment in any Person other than Laserscope; or (vi) fail to hold itself out to the public as a
legal entity separate and distinct from all other Persons.



          (b) To the extent that the Credit Parties create the Foreign Holding Company pursuant to
Section 6.18, the Foreign Holding Company shall not (i) incur, directly or indirectly, any
Indebtedness other than Indebtedness under a Non-U.S. Intercompany Note pledged as collateral
security to the Collateral Agent; (ii) create or suffer to exist any Lien upon any property or
assets now owned or hereafter acquired by it other than Liens created under Non-U.S. Intercompany
Security Documents; (iii) engage in any business or activity or own any assets other than (x)
holding Capital Stock of each first-tier Foreign Subsidiary, (y) performing its obligations and
activities incidental thereto under the Credit Documents; and (z) making Restricted Payments to the
Credit Parties and Investments, in each case to the extent permitted by this Agreement; (iv) except
as permitted under Section 6.9(a), consolidate with or merge with or into, or convey, transfer or
lease all or substantially all its assets to, any Person; (v) sell or otherwise dispose of any
Capital Stock of any of its Subsidiaries; or (vi) fail to hold itself out to the public as a legal
entity separate and distinct from all other Persons.




     6.15. Amendments or Waivers of Certain Related Agreements. (a) The Credit Parties shall not,
and shall not permit any Subsidiary to amend or otherwise change or waive (i) any subordination
provision (or any definition related to any subordination provision) of any Subordinated Debt
Document in any manner, or (ii) the terms of any Organizational Document, any Acquisition Document,
any document governing any Indebtedness outstanding as of the Initial Closing Date or any
Subordinated Debt Document in a manner adverse to the Lenders.



          (b) The Credit Parties shall not, and shall not permit any Subsidiary to, make (or give any
notice or offer in respect of) any voluntary or optional payment or mandatory prepayment or
redemption or acquisition for value of (including, without limitation, by way of depositing with
any trustee with respect thereto money or securities before such Indebtedness is due for the
purpose of paying such Indebtedness when due) or exchange of principal of any Subordinated Notes,
in each case other than pursuant to any customary registered exchange offer therefor after a
private placement thereof or any exchange of Capital Stock of Borrower for any such Indebtedness.




     6.16. Fiscal Year. No Credit Party shall, nor shall it permit any of its Subsidiaries to
change its Fiscal Year-end from the Saturday closest to December 31 of each calendar year.



     6.17. No other Designated Senior Indebtedness; No Payments of Indebtedness. The Credit
Parties shall not designate, or permit the designation of, any Indebtedness (other than under this
Agreement or the other Credit Documents) as “Senior Debt,” “Designated Senior Debt,” or any other
equivalent term under any subordinated debt documents. The Credit Parties shall not be permitted
to make any payments on any outstanding Indebtedness (other than with respect to the Obligations
outstanding under the Credit Documents) at any time during the occurrence and continuance of an
Event of Default.



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     6.18. Limitation on Creation of Subsidiaries. The Credit Parties shall not establish, create or
acquire any additional Subsidiaries without the prior written consent of the Requisite Lenders;
provided that, without such consent, Borrower may (i) establish or create one or more
wholly owned Domestic Subsidiaries of Borrower, (ii) establish, create or acquire one or more
Subsidiaries in connection with an Investment made pursuant to Section 6.7(i), (iii) acquire one or
more Subsidiaries in connection with a Permitted Acquisition, so long as, in each case, Sections
5.10 and 5.11 shall be complied with, or (iv) within 180 days of the Initial Closing Date,
establish or create a foreign holding company (“Foreign Holding Company”), which shall (a) be
organized in a tax advantageous jurisdiction, and (b) not subject any Agents or Lender to any
adverse economic effects or increased costs or result in an inability, in the Administrative
Agent’s sole discretion, (1) for the Agents to obtain for the benefit of the Lenders, a perfected
security interest in the Capital Stock of the Foreign Holding Company, or (2) for the Borrower to
obtain perfected security interest to secure any advances made under a Non-U.S. Intercompany Note
secured by Non-U.S. Collateral Security Documents, to the extent it may be required hereby.



SECTION 7. GUARANTY




     7.1. Guaranty of the Obligations. Subject to the provisions of Section 7.2, Guarantors
jointly and severally hereby irrevocably and unconditionally guaranty to Administrative Agent for
the ratable benefit of the Beneficiaries the due and punctual payment in full of all Obligations
when the same shall become due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)) (collectively,
the “Guaranteed Obligations”). Should any provision in or obligation under this Section 7 be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in any other
jurisdiction, all with respect to any Guarantor, shall not in any way be affected or impaired
thereby.



     7.2. Contribution by Guarantors. All Guarantors desire to allocate among themselves
(collectively, the “Contributing Guarantors”), in a fair and equitable manner, their obligations
arising under this Guaranty. Accordingly, in the event any payment or distribution is made on any
date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its Aggregate Payments
exceeds its Fair Share as of such date, such Funding Guarantor shall be entitled to a contribution
from each of the other Contributing Guarantors in an amount sufficient to cause each Contributing
Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with
respect to a Contributing Guarantor as of any date of determination, an amount equal to (a) the
ratio of (i) the Fair Share Contribution Amount with respect to such Contributing Guarantor to (ii)
the aggregate of the Fair Share Contribution Amounts with respect to all Contributing Guarantors
multiplied by (b) the aggregate amount paid or distributed on or before such date by all Funding
Guarantors under this Guaranty in respect of the obligations Guaranteed. “Fair Share Contribution
Amount” means, with respect to a Contributing Guarantor as of any date of determination, the
maximum aggregate amount of the obligations of such Contributing Guarantor under this Guaranty that
would not render its obligations hereunder
or thereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of



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Title 11 of the United States Code or any comparable applicable provisions of state law;
provided, solely for purposes of calculating the “Fair Share Contribution Amount” with
respect to any Contributing Guarantor for purposes of this Section 7.2, any assets or liabilities
of such Contributing Guarantor arising by virtue of any rights to subrogation, reimbursement or
indemnification or any rights to or obligations of contribution hereunder shall not be considered
as assets or liabilities of such Contributing Guarantor. “Aggregate Payments” means, with respect
to a Contributing Guarantor as of any date of determination, an amount equal to (1) the aggregate
amount of all payments and distributions made on or before such date by such Contributing Guarantor
in respect of this Guaranty (including, without limitation, in respect of this Section 7.2), minus
(2) the aggregate amount of all payments received on or before such date by such Contributing
Guarantor from the other Contributing Guarantors as contributions under this Section 7.2. The
amounts payable as contributions hereunder shall be determined as of the date on which the related
payment or distribution is made by the applicable Funding Guarantor. The allocation among
Contributing Guarantors of their obligations as set forth in this Section 7.2 shall not be
construed in any way to limit the liability of any Contributing Guarantor hereunder. Each
Guarantor is a third party beneficiary to the contribution agreement set forth in this Section 7.2.



     7.3. Payment by Guarantors. Subject to Section 7.2, Guarantors hereby jointly and severally
agree, in furtherance of the foregoing and not in limitation of any other right which any
Beneficiary may have at law or in equity against any Guarantor by virtue hereof, that upon the
failure of any Guarantor to pay any of the Guaranteed Obligations when and as the same shall become
due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the automatic stay
under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), Guarantors will upon demand pay,
or cause to be paid, in Cash, to Administrative Agent for the ratable benefit of Beneficiaries, an
amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as
aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which,
but for Borrower’s becoming the subject of a case under the Bankruptcy Code, would have accrued on
such Guaranteed Obligations, whether or not a claim is allowed against Borrower for such interest
in the related bankruptcy case) and all other Guaranteed Obligations then owed to Beneficiaries as
aforesaid.



     7.4. Liability of Guarantors Absolute. Each Guarantor agrees that its obligations hereunder
are irrevocable, absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guaranteed Obligations. In furtherance of the foregoing and without
limiting the generality thereof, each Guarantor agrees as follows:



          (a) this Guaranty is a guaranty of payment when due and not of collectability. This Guaranty
is a primary obligation of each Guarantor and not merely a contract of surety;




          (b) Administrative Agent may enforce this Guaranty upon the occurrence of an Event of Default
notwithstanding the existence of any dispute between Borrower and any Beneficiary with respect to
the existence of such Event of Default;




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          (c) the obligations of each Guarantor hereunder are independent of the obligations of Borrower
and the obligations of any other guarantor (including any other Guarantor) of the obligations of
Borrower, and a separate action or actions may be brought and prosecuted against such Guarantor
whether or not any action is brought against Borrower or any of such other guarantors and whether
or not Borrower is joined in any such action or actions;




          (d) payment by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall in
no way limit, affect, modify or abridge any Guarantor’s liability for any portion of the Guaranteed
Obligations which has not been paid. Without limiting the generality of the foregoing, if
Administrative Agent is awarded a judgment in any suit brought to enforce any Guarantor’s covenant
to pay a portion of the Guaranteed Obligations, such judgment shall not be deemed to release such
Guarantor from its covenant to pay the portion of the Guaranteed Obligations that is not the
subject of such suit, and such judgment shall not, except to the extent satisfied by such
Guarantor, limit, affect, modify or abridge any other Guarantor’s liability hereunder in respect of
the Guaranteed Obligations;




          (e) any Beneficiary, upon such terms as it deems appropriate, without notice or demand and
without affecting the validity or enforceability hereof or giving rise to any reduction,
limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time
to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change
the time, place, manner or terms of payment of the Guaranteed Obligations; (ii) settle, compromise,
release or discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guaranteed Obligations or any agreement relating thereto and/or subordinate
the payment of the same to the payment of any other obligations; (iii) request and accept other
guaranties of the Guaranteed Obligations and take and hold security for the payment hereof or the
Guaranteed Obligations; (iv) release, surrender, exchange, substitute, compromise, settle, rescind,
waive, alter, subordinate or modify, with or without consideration, any security for payment of the
Guaranteed Obligations, any other guaranties of the Guaranteed Obligations, or any other obligation
of any Person (including any other Guarantor) with respect to the Guaranteed Obligations; (v)
enforce and apply any security now or hereafter held by or for the benefit of such Beneficiary in
respect hereof or the Guaranteed Obligations and direct the order or manner of sale thereof, or
exercise any other right or remedy that such Beneficiary may have against any such security, in
each case as such Beneficiary in its discretion may determine consistent herewith or the applicable
Hedge Agreement and any applicable security agreement, including foreclosure on any such security
pursuant to one or more judicial or nonjudicial sales, whether or not every aspect of any such sale
is commercially reasonable, and even though such action operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of any Guarantor against Borrower or any
security for the Guaranteed Obligations; and (vi) exercise any other rights available to it under
the Credit Documents or any Hedge Agreements; and




          (f) this Guaranty and the obligations of Guarantors hereunder shall be valid and enforceable
and shall not be subject to any reduction, limitation, impairment, discharge or termination for any
reason (other than payment in full of the Guaranteed Obligations), including the occurrence of any
of the following, whether or not any Guarantor shall have had notice or knowledge of any of them:
(i) any failure or omission to assert or enforce or agreement or election not to assert or enforce,
or the stay or enjoining, by order of court, by operation of law or




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otherwise, of the exercise or enforcement of, any claim or demand or any right, power or
remedy (whether arising under the Credit Documents or any Hedge Agreements, at law, in equity or
otherwise) with respect to the Guaranteed Obligations or any agreement relating thereto, or with
respect to any other guaranty of or security for the payment of the Guaranteed Obligations; (ii)
any rescission, waiver, amendment or modification of, or any consent to departure from, any of the
terms or provisions (including provisions relating to events of default) hereof, any of the other
Credit Documents, any Hedge Agreements or any agreement or instrument executed pursuant thereto, or
of any other guaranty or security for the Guaranteed Obligations, in each case whether or not in
accordance with the terms hereof or such Credit Document, such Hedge Agreement or any agreement
relating to such other guaranty or security; (iii) the Guaranteed Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect;
(iv) the application of payments received from any source (other than payments received pursuant to
the other Credit Documents or any Hedge Agreements or from the proceeds of any security for the
Guaranteed Obligations, except to the extent such security also serves as collateral for
indebtedness other than the Guaranteed Obligations) to the payment of indebtedness other than the
Guaranteed Obligations, even though any Beneficiary might have elected to apply such payment to any
part or all of the Guaranteed Obligations; (v) any Beneficiary’s consent to the change,
reorganization or termination of the corporate structure or existence of Borrower or any of its
Subsidiaries and to any corresponding restructuring of the Guaranteed Obligations; (vi) any failure
to perfect or continue perfection of a security interest in any collateral which secures any of the
Guaranteed Obligations; (vii) any defenses, set-offs or counterclaims which Borrower may allege or
assert against any Beneficiary in respect of the Guaranteed Obligations, including failure of
consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and
satisfaction and usury; and (viii) any other act or thing or omission, or delay to do any other act
or thing, which may or might in any manner or to any extent vary the risk of any Guarantor as an
obligor in respect of the Guaranteed Obligations.




     7.5. Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of Beneficiaries:
(a) any right to require any Beneficiary, as a condition of payment or performance by such
Guarantor, to (i) proceed against Borrower, any other guarantor (including any other Guarantor) of
the Guaranteed Obligations or any other Person, (ii) proceed against or exhaust any security held
from Borrower, any such other guarantor or any other Person, (iii) proceed against or have resort
to any balance of any Deposit Account or credit on the books of any Beneficiary in favor of
Borrower or any other Person, or (iv) pursue any other remedy in the power of any Beneficiary
whatsoever; (b) any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Borrower or any other Guarantor including any defense based on or
arising out of the lack of validity or the unenforceability of the Guaranteed Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the liability of Borrower
or any other Guarantor from any cause other than payment in full of the Guaranteed Obligations; (c)
any defense based upon any statute or rule of law which provides that the obligation of a surety
must be neither larger in amount nor in other respects more burdensome than that of the principal
or any law, rule, regulation, or order of any jurisdiction affecting any term of the Guaranteed
Obligations; (d) any defense based upon any Beneficiary’s errors or omissions in the administration
of the Guaranteed Obligations, except behavior which amounts to bad faith; (e) (i) any principles
or provisions of law, statutory or otherwise, which are or might be in conflict with the terms
hereof and any legal or equitable discharge of such



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Guarantor’s obligations hereunder, (ii) the benefit of any statute of limitations affecting
such Guarantor’s liability hereunder or the enforcement hereof, (iii) any rights to set-offs,
recoupments and counterclaims, and (iv) promptness, diligence and any requirement that any
Beneficiary protect, secure, perfect or insure any security interest or lien or any property
subject thereto; (f) notices, demands, presentments, protests, notices of protest, notices of
dishonor and notices of any action or inaction, including acceptance hereof, notices of default
hereunder, any Hedge Agreements or any agreement or instrument related thereto, notices of any
renewal, extension or modification of the Guaranteed Obligations or any agreement related thereto,
notices of any extension of credit to Borrower and notices of any of the matters referred to in
Section 7.4 and any right to consent to any thereof; and (g) any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate guarantors or sureties,
or which may conflict with the terms hereof.



     7.6. Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed Obligations
shall have been indefeasibly paid in full and the Revolving Commitments shall have terminated and
all Letters of Credit shall have expired or been cancelled, each Guarantor hereby waives any claim,
right or remedy, direct or indirect, that such Guarantor now has or may hereafter have against
Borrower or any other Guarantor or any of its assets in connection with this Guaranty or the
performance by such Guarantor of its obligations hereunder, in each case whether such claim, right
or remedy arises in equity, under contract, by statute, under common law or otherwise and including
without limitation (a) any right of subrogation, reimbursement or indemnification that such
Guarantor now has or may hereafter have against Borrower with respect to the Guaranteed
Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that any
Beneficiary now has or may hereafter have against Borrower, and (c) any benefit of, and any right
to participate in, any collateral or security now or hereafter held by any Beneficiary. In
addition, until the Guaranteed Obligations shall have been indefeasibly paid in full and the
Revolving Commitments shall have terminated and all Letters of Credit shall have expired or been
cancelled, each Guarantor shall withhold exercise of any right of contribution such Guarantor may
have against any other guarantor (including any other Guarantor) of the Guaranteed Obligations,
including, without limitation, any such right of contribution as contemplated by Section 7.2. Each
Guarantor further agrees that, to the extent the waiver or agreement to withhold the exercise of
its rights of subrogation, reimbursement, indemnification and contribution as set forth herein is
found by a court of competent jurisdiction to be void or voidable for any reason, any rights of
subrogation, reimbursement or indemnification such Guarantor may have against Borrower or against
any collateral or security, and any rights of contribution such Guarantor may have against any such
other guarantor, shall be junior and subordinate to any rights any Beneficiary may have against
Borrower, to all right, title and interest any Beneficiary may have in any such collateral or
security, and to any right any Beneficiary may have against such other guarantor. If any amount
shall be paid to any Guarantor on account of any such subrogation, reimbursement, indemnification
or contribution rights at any time when all Guaranteed Obligations shall not have been finally and
indefeasibly paid in full, such amount shall be held in trust for Administrative Agent on behalf of
Beneficiaries and shall forthwith be paid over to Administrative Agent for the benefit of
Beneficiaries to be credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms hereof.



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     7.7. Subordination of Other Obligations. Any Indebtedness of Borrower or any Guarantor now or
hereafter held by any Guarantor (the “Obligee Guarantor”) is hereby subordinated in right of
payment to the Guaranteed Obligations, and any such indebtedness collected or received by the
Obligee Guarantor after an Event of Default has occurred and is continuing shall be held in trust
for Administrative Agent on behalf of Beneficiaries and shall forthwith be paid over to
Administrative Agent for the benefit of Beneficiaries to be credited and applied against the
Guaranteed Obligations but without affecting, impairing or limiting in any manner the liability of
the Obligee Guarantor under any other provision hereof.



     7.8. Continuing Guaranty. This Guaranty is a continuing guaranty and shall remain in effect
until all of the Guaranteed Obligations shall have been paid in full and the Revolving Commitments
shall have terminated and all Letters of Credit shall have expired or been cancelled. Each
Guarantor hereby irrevocably waives any right to revoke this Guaranty as to future transactions
giving rise to any Guaranteed Obligations.



     7.9. Authority of Guarantors or Borrower. It is not necessary for any Beneficiary to inquire
into the capacity or powers of any Guarantor or Borrower or the officers, directors or any agents
acting or purporting to act on behalf of any of them.



     7.10. Financial Condition of Borrower. Any Credit Extension may be made to Borrower or
continued from time to time, and any Hedge Agreements may be entered into from time to time, in
each case without notice to or authorization from any Guarantor regardless of the financial or
other condition of Borrower at the time of any such grant or continuation or at the time such Hedge
Agreement is entered into, as the case may be. No Beneficiary shall have any obligation to
disclose or discuss with any Guarantor its assessment, or any Guarantor’s assessment, of the
financial condition of Borrower. Each Guarantor has adequate means to obtain information from
Borrower on a continuing basis concerning the financial condition of Borrower and its ability to
perform its obligations under the Credit Documents and any Hedge Agreement, and each Guarantor
assumes the responsibility for being and keeping informed of the financial condition of Borrower
and of all circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations. Each
Guarantor hereby waives and relinquishes any duty on the part of any Beneficiary to disclose any
matter, fact or thing relating to the business, operations or conditions of Borrower now known or
hereafter known by any Beneficiary.



     7.11. Bankruptcy, etc. (a) So long as any Guaranteed Obligations remain outstanding, no
Guarantor shall, without the prior written consent of Administrative Agent acting pursuant to the
instructions of Requisite Lenders, commence or join with any other Person in commencing any
bankruptcy, reorganization or insolvency case or proceeding of or against Borrower or any other
Guarantor. The obligations of Guarantors hereunder shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any case or proceeding, voluntary or involuntary,
involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of
Borrower or any other Guarantor or by any defense which Borrower or any other Guarantor may have by
reason of the order, decree or decision of any court or administrative body resulting from any such
proceeding.



          (b) Each Guarantor acknowledges and agrees that any interest on any portion of the Guaranteed
Obligations which accrues after the commencement of any case or proceeding




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referred to in clause (a) above (or, if interest on any portion of the Guaranteed Obligations
ceases to accrue by operation of law by reason of the commencement of such case or proceeding, such
interest as would have accrued on such portion of the Guaranteed Obligations if such case or
proceeding had not been commenced) shall be included in the Guaranteed Obligations because it is
the intention of Guarantors and Beneficiaries that the Guaranteed Obligations which are guaranteed
by Guarantors pursuant hereto should be determined without regard to any rule of law or order which
may relieve Borrower of any portion of such Guaranteed Obligations. Guarantors will permit any
trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or
similar Person to pay Administrative Agent, or allow the claim of Administrative Agent in respect
of, any such interest accruing after the date on which such case or proceeding is commenced.




          (c) In the event that all or any portion of the Guaranteed Obligations are paid by Borrower,
the obligations of Guarantors hereunder shall continue and remain in full force and effect or be
reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded
or recovered directly or indirectly from any Beneficiary as a preference, fraudulent transfer or
otherwise, and any such payments which are so rescinded or recovered shall constitute Guaranteed
Obligations for all purposes hereunder.




     7.12. Discharge of Guaranty Upon Sale of Guarantor. If all of the Capital Stock of any
Guarantor or any of its successors in interest hereunder shall be sold or otherwise disposed of
(including by merger or consolidation) in accordance with the terms and conditions hereof, the
Guaranty of such Guarantor or such successor in interest, as the case may be, hereunder shall
automatically be discharged and released without any further action by any Beneficiary or any other
Person effective as of the time of such Asset Sale.



SECTION 8. EVENTS OF DEFAULT




     8.1. Events of Default. If any one or more of the following conditions or events shall occur:



          (a) Failure to Make Payments When Due. Failure by Borrower to pay (i) when due any
installment of principal of any Loan, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; (ii) when due any amount payable to
Issuing Bank in reimbursement of any drawing under a Letter of Credit; or (iii) when due any
interest on any Loan or any fee, expense reimbursement or any other amount due hereunder within
three (3) days after the date due; or




          (b) Default in Other Agreements. (i) Failure of any Credit Party or any of their
respective Subsidiaries to pay when due any principal of or interest on or any other amount payable
in respect of one or more items of Indebtedness (other than Indebtedness referred to in Section
8.1(a)) in an individual principal amount of $5,000,000 or more or with an aggregate principal
amount of $10,000,000 or more, in each case beyond the grace period, if any, provided therefor; or
(ii) breach or default by any Credit Party with respect to any other material term of (1) one or
more items of Indebtedness in the individual or aggregate principal amounts referred to in clause
(i) above or (2) any loan agreement, mortgage, indenture or other agreement relating




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to such item(s) of Indebtedness, in each case beyond the grace period, if any, provided
therefor, if the effect of such breach or default is to cause, or to permit the holder or holders
of that Indebtedness (or a trustee on behalf of such holder or holders), to cause, that
Indebtedness to become or be declared due and payable (or redeemable) prior to its stated maturity
or the stated maturity of any underlying obligation, as the case may be; or




          (c) Breach of Certain Covenants. Failure of any Credit Party to perform or comply
with any term or condition contained in Section 2.6, Section 2.14, Section 5.1, Section 5.2,
Section 5.5, Section 5.10, Section 5.11, Section 5.12, Section 5.14, Section 5.16, Section 5.17,
Section 6, or Section 7; or




          (d) Breach of Representations, etc. Any representation, warranty, certification or
other statement made or deemed made by any Credit Party in any Credit Document or in any statement
or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false in any material respect as
of the date made or deemed made; or




          (e) Other Defaults Under Credit Documents. Any Credit Party shall default in the
performance of or compliance with any term contained herein or any of the other Credit Documents,
other than any such term referred to in any other Section of this Section 8.1, and such default
shall not have been remedied or waived within thirty (30) days after the earlier of (i) an
Authorized Officer of such Credit Party becoming aware of such default or (ii) receipt by Borrower
of notice from Administrative Agent or any Lender of such default; or




          (f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent
jurisdiction shall enter a decree or order for relief in respect of Holdings or any of its
Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not
stayed; or any other similar relief shall be granted under any applicable federal or state law; or
(ii) an involuntary case shall be commenced against Holdings or any of its Subsidiaries under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Holdings or any of its Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of Holdings or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of Holdings or any of its
Subsidiaries, and any such event described in this clause (ii) shall continue for sixty (60) days
without having been dismissed, bonded or discharged; or




          (g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Holdings or any of its
Subsidiaries shall have an order for relief entered with respect to it or shall commence a
voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking possession by a receiver, trustee or other




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custodian for all or a substantial part of its property; or Holdings or any of its
Subsidiaries shall make any assignment for the benefit of creditors; or (ii) Holdings or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due; or the board of directors (or similar governing body) of
Holdings or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or
otherwise authorize any action to approve any of the actions referred to herein or in Section
8.1(f); or




          (h) Judgments and Attachments. Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount in excess of $5,000,000 or (ii) in
the aggregate at any time an amount in excess of $10,000,000 (in either case to the extent not
adequately covered by insurance as to which a solvent and unaffiliated insurance company has
acknowledged coverage) shall be entered or filed against Holdings or any of its Subsidiaries or any
of their respective assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of sixty (60) days (or in any event later than five days prior to the date of any proposed
sale thereunder); or




          (i) Dissolution. Any order, judgment or decree shall be entered against any Credit
Party decreeing the dissolution or split up of such Credit Party and such order shall remain
undischarged or unstayed for a period in excess of thirty (30) days; or




          (j) Employee Benefit Plans. (i) There shall occur one or more ERISA Events which
individually or in the aggregate results in or might reasonably be expected to result in liability
of Holdings, any of its Subsidiaries or any of their respective ERISA Affiliates in excess of
$500,000 during the term hereof; or (ii) there exists any fact or circumstance that reasonably
could be expected to result in the imposition of a Lien or security interest under Section 412(n)
of the Internal Revenue Code or under ERISA; or




          (k) Change of Control. A Change of Control shall occur;




          (l) Guaranties, Collateral Documents and other Credit Documents. At any time after
the execution and delivery thereof, (i) the Guaranty for any reason, other than the satisfaction in
full of all Obligations, shall cease to be in full force and effect (other than in accordance with
its terms) or shall be declared to be null and void or any Guarantor shall repudiate its
obligations thereunder, (ii) this Agreement or any Collateral Document ceases to be in full force
and effect (other than by reason of a release of Collateral in accordance with the terms hereof or
thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or
shall be declared null and void, or Collateral Agent shall not have or shall cease to have a valid
and perfected Lien in any Collateral purported to be covered by the Collateral Documents with the
priority required by the relevant Collateral Document, (y) where the value of such Collateral has
an aggregate value in excess of $500,000 and (z) for any reason other than the failure of
Collateral Agent or any Secured Party to take any action within its control, or (iii) any Credit
Party shall contest the validity or enforceability of any Credit Document in writing or deny in
writing that it has any further liability, including with respect to future advances by Lenders,
under any Credit Document to which it is a party;




          (m) Subordinated Debt Documents. A default or event of default under any of the
Subordinated Debt Documents shall occur; or




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          (n) Material Litigation. Any action, suit, investigation, litigation or proceeding
pending or threatened in any court or before any arbitrator or governmental agency shall exist that
at any time could reasonably be expected to have a Material Adverse Effect (it being understood and
agreed that the reference to “Material Adverse Effect” shall, for all times after the Second
Closing Date be a reference to such term without regard to clauses (b) and (c) of the proviso to
the definition thereof); or




          (o) Failure of Merger. The conditions specified in Section 3.2 shall not have been
satisfied or waived in accordance with the terms of this Agreement on or before December 31, 2006,
the Acquisition Agreement shall have been terminated prior to consummation of the Merger in
accordance with the terms thereof, or any proceeding or any litigation pending against any Credit
Party with respect to the effectiveness of the Merger (including any injunctive, declaratory or
other equitable actions) shall have been adversely determined against such Credit Party by a court
of competent jurisdiction prior to consummation of the Merger.



THEN, (1) upon the occurrence of any Event of Default described in Section 8.1(f) or 8.1(g),
automatically, and (2) upon the occurrence of any other Event of Default, at the request of (or
with the consent of) Requisite Lenders, upon notice to Borrower by Administrative Agent, (A) the
Revolving Commitments, if any, of each Lender having such Revolving Commitments and the obligation
of Issuing Bank to issue any Letter of Credit shall immediately terminate; (B) each of the
following shall immediately become due and payable, in each case without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly waived by each Credit
Party: (I) the unpaid principal amount of and accrued interest on the Loans, (II) an amount equal
to the maximum amount that may at any time be drawn under all Letters of Credit then outstanding
(regardless of whether any beneficiary under any such Letter of Credit shall have presented, or
shall be entitled at such time to present, the drafts or other documents or certificates required
to draw under such Letters of Credit), and (III) all other Obligations; provided, the
foregoing shall not affect in any way the obligations of Lenders under Section 2.3(b)(iv) or
Section 2.4(e); (C) Administrative Agent may cause Collateral Agent to enforce any and all Liens
and security interests created pursuant to Collateral Documents; and (D) Administrative Agent shall
direct Borrower to pay (and Borrower hereby agrees upon receipt of such notice, or upon the
occurrence of any Event of Default specified in Sections 8.1(f) and (g) to pay) to Administrative
Agent such additional amounts of cash as reasonable requested by Issuing Bank, to be held as
security for Borrower’s reimbursement Obligations in respect of Letters of Credit then outstanding.




SECTION 9. AGENTS




     9.1. Appointment of Agents.



          (a) KeyBank is hereby appointed Syndication Agent hereunder, and each Lender hereby authorizes
KeyBank to act as Syndication Agent in accordance with the terms hereof and the other Credit
Documents. CIT Healthcare is hereby appointed Administrative Agent and Collateral Agent hereunder
and under the other Credit Documents and each Lender hereby authorizes CIT Healthcare to act as
Administrative Agent and Collateral Agent in accordance with the terms hereof and the other Credit
Documents. Each Agent hereby agrees to act in its




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capacity as such upon the express conditions contained herein and the other Credit Documents,
as applicable. The provisions of this Section 9 are solely for the benefit of Agents and Lenders
and no Credit Party shall have any rights as a third party beneficiary of any of the provisions
thereof. In performing its functions and duties hereunder, each Agent shall act solely as an agent
of Lenders and does not assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Holdings or any of its Subsidiaries. Each of
Syndication Agent and Documentation Agent, without consent of or notice to any party hereto, may
assign any and all of its rights or obligations hereunder to any of its Affiliates. Neither
KeyBank, in its capacity as Syndication Agent, nor General Electric Capital Corporation, in its
capacity as Documentation Agent, shall have any obligations but shall be entitled to all benefits
of this Section 9.




          (b) Upon consultation with Borrower, the Administrative Agent shall have the right to appoint,
assign and grant titles to additional “Agents” and “Co-Agents” (other than, for the avoidance of
doubt, any Administrative Agent or Collateral Agents under this Credit Agreement or other agents
with similar responsibilities or functions under this Credit Agreement), which such additional
Agents or Co-Agents shall become a party hereto pursuant to appropriate documentation (including by
way of any Assignment Agreement executed by such Agent or Co-Agents (or any affiliate thereof) in
its capacity as a Lender hereunder) and, in accordance there, such additional Agents and Co-Agents
shall be deemed appointed in accordance with Section 9.1(a) hereof. Following such appointment,
the provisions set forth in this Section 9 shall apply to such Agent or Co-Agent as if such Agent
or Co-Agent were an “Agent” as referred to in this Section 9.




     9.2. Powers and Duties. Each Lender irrevocably authorizes each Agent to take such action on
such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under the other
Credit Documents as are specifically delegated or granted to such Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably incidental thereto. Each
Agent shall have only those duties and responsibilities that are expressly specified herein and the
other Credit Documents. Each Agent may exercise such powers, rights and remedies and perform such
duties by or through its agents or employees. No Agent shall have, by reason hereof or any of the
other Credit Documents, a fiduciary relationship in respect of any Lender; and nothing herein or
any of the other Credit Documents, expressed or implied, is intended to or shall be so construed as
to impose upon any Agent any obligations in respect hereof or any of the other Credit Documents
except as expressly set forth herein or therein.



9.3. General Immunity.




          (a) No Responsibility for Certain Matters. No Agent shall be responsible to any
Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or
sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or in any financial or
other statements, instruments, reports or certificates or any other documents furnished or made by
any Agent to Lenders or by or on behalf of any Credit Party, and Lender or any person providing the
Settlement Service to any Agent or any Lender in connection with the Credit Documents and the
transactions contemplated thereby or for the financial condition or business affairs of any Credit
Party or any other Person liable for the payment of any Obligations, nor




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shall any Agent be required to ascertain or inquire as to the performance or observance of any
of the terms, conditions, provisions, covenants or agreements contained in any of the Credit
Documents or as to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Default or to make any disclosures with respect to the
foregoing. Anything contained herein to the contrary notwithstanding, Administrative Agent shall
not have any liability arising from confirmations of the amount of outstanding Loans or the Letter
of Credit Usage or the component amounts thereof.




          (b) Exculpatory Provisions. No Agent nor any of its officers, partners, directors,
employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under
or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from any act or the
taking of any action (including the failure to take an action) in connection herewith or any of the
other Credit Documents or from the exercise of any power, discretion or authority vested in it
hereunder or thereunder unless and until such Agent shall have received instructions in respect
thereof from Requisite Lenders (or such other Lenders as may be required to give such instructions
under Section 10.5) and, upon receipt of such instructions from Requisite Lenders (or such other
Lenders, as the case may be), such Agent shall be entitled to act or (where so instructed) refrain
from acting, or to exercise such power, discretion or authority, in accordance with such
instructions. Without prejudice to the generality of the foregoing, (i) each Agent shall be
entitled to rely, and shall be fully protected in relying, upon any communication, instrument or
document believed by it to be genuine and correct and to have been signed or sent by the proper
Person or Persons, including any Settlement Confirmation or other communication issues by any
Settlement Service, and shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for the Credit Parties), accountants, experts and
other professional advisors selected by it; and (ii) no Lender shall have any right of action
whatsoever against any Agent as a result of such Agent acting or (where so instructed) refraining
from acting hereunder or any of the other Credit Documents in accordance with the instructions of
Requisite Lenders (or such other Lenders as may be required to give such instructions under Section
10.5).




          (c) Delegation of Duties. Administrative Agent may perform any and all of its duties
and exercise its rights and powers under this Agreement or under any other Credit Document by or
through any one or more sub-agents appointed by Administrative Agent. Administrative Agent and any
such sub-agent may perform any and all of its duties and exercise its rights and powers by or
through their respective Affiliates. The exculpatory, indemnification and other provisions of this
Section 9.3 and of Section 9.6 shall apply to any the Affiliates of Administrative Agent and shall
apply to their respective activities in connection with the syndication of the credit facilities
provided for herein as well as activities as Administrative Agent. All of the rights, benefits,
and privileges (including the exculpatory and indemnification provisions) of this Section 9.3 and
of Section 9.6 shall apply to any such sub-agent and to the Affiliates of any such sub-agent, and
shall apply to their respective activities as sub-agent as if such sub-agent and Affiliates were
named herein. Notwithstanding anything herein to the contrary, with respect to each sub-agent
appointed by the Administrative Agent, (i) such sub-agent shall be a third party beneficiary under
this Agreement with respect to all such rights, benefits and privileges (including exculpatory
rights and rights to indemnification) and shall have all of the rights and benefits of a third
party beneficiary, including an independent right of




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action to enforce such rights, benefits and privileges (including exculpatory rights and
rights to indemnification) directly, without the consent or joinder of any other Person, against
any or all of the Credit Parties and the Lenders, (ii) such rights, benefits and privileges
(including exculpatory rights and rights to indemnification) shall not be modified or amended
without the consent of such sub-agent, and (iii) such sub-agent shall only have obligations to
Administrative Agent and not to any Credit Party, Lender or any other Person and no Credit Party,
Lender or any other Person shall have any rights, directly or indirectly, as a third party
beneficiary or otherwise, against such sub-agent.




     9.4. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or
affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its
individual capacity as a Lender hereunder. With respect to its participation in the Loans and the
Letters of Credit, each Agent shall have the same rights and powers hereunder as any other Lender
and may exercise the same as if it were not performing the duties and functions delegated to it
hereunder, and the term “Lender” shall, unless the context clearly otherwise indicates, include
each Agent in its individual capacity. Any Agent and its Affiliates may accept deposits from, lend
money to, own securities of, and generally engage in any kind of banking, trust, financial advisory
or other business with Borrower or any of its Affiliates as if it were not performing the duties
specified herein, and may accept fees and other consideration from Borrower for services in
connection herewith and otherwise without having to account for the same to Lenders.



     9.5. Lenders’ Representations, Warranties and Acknowledgment.



          (a) Each Lender represents and warrants that it has made its own independent investigation of
the financial condition and affairs of Holdings and its Subsidiaries in connection with Credit
Extensions hereunder and that it has made and shall continue to make its own appraisal of the
creditworthiness of Holdings and its Subsidiaries. No Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such investigation or any such appraisal on
behalf of Lenders or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the accuracy of or the
completeness of any information provided to Lenders.




          (b) Each Lender, by delivering its signature page to this Agreement or an Assignment and
funding its Term Loan on the Initial Closing Date, shall be deemed to have acknowledged receipt of,
and consented to and approved, each Credit Document and each other document required to be approved
by any Agent, Requisite Lenders or Lenders, as applicable, on the Initial Closing Date.




     9.6. Right to Indemnity. Each Lender, in proportion to its Pro Rata Share, severally agrees
to indemnify each Agent, to the extent that such Agent shall not have been reimbursed by any Credit
Party, for and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or disbursements of
any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Agent
in exercising its powers, rights and remedies or performing its duties hereunder or under the other
Credit Documents or otherwise in its capacity as such Agent in any



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way relating to or arising out of this Agreement or the other Credit Documents;
provided, no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting
from such Agent’s gross negligence or willful misconduct. If any indemnity furnished to any Agent
for any purpose shall, in the opinion of such Agent, be insufficient or become impaired, such Agent
may call for additional indemnity and cease, or not commence, to do the acts indemnified against
until such additional indemnity is furnished; provided, in no event shall this sentence
require any Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty,
action, judgment, suit, cost, expense or disbursement in excess of such Lender’s Pro Rata Share
thereof; and provided further, this sentence shall not be deemed to require any
Lender to indemnify any Agent against any liability, obligation, loss, damage, penalty, action,
judgment, suit, cost, expense or disbursement described in the proviso in the immediately preceding
sentence.



     9.7. Successor Administrative Agent, Collateral Agent and Swing Line Lender. Administrative
Agent and Collateral Agent may resign at any time by giving thirty days’ prior written notice
thereof to Lenders and Borrower. Upon any such notice of resignation, Requisite Lenders shall have
the right, upon five Business Days’ notice to Borrower, to appoint a successor Administrative Agent
and Collateral Agent. Upon the acceptance of any appointment as Administrative Agent and
Collateral Agent hereunder by a successor Administrative Agent and Collateral Agent, that successor
Administrative Agent and Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent and Collateral Agent and
the retiring Administrative Agent and Collateral Agent shall promptly (i) transfer to such
successor Administrative Agent and Collateral Agent all sums, Securities and other items of
Collateral held under the Collateral Documents, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the successor
Administrative Agent and Collateral Agent under the Credit Documents, and (ii) execute and deliver
to such successor Administrative Agent and Collateral Agent such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in connection with the
assignment to such successor Administrative Agent and Collateral Agent of the security interests
created under the Collateral Documents, whereupon such retiring Administrative Agent and Collateral
Agent shall be discharged from its duties and obligations hereunder. After any retiring
Administrative Agent’s and Collateral Agent’s resignation hereunder as Administrative Agent and
Collateral Agent, the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent hereunder. Any resignation or
removal of CIT Healthcare as Administrative Agent pursuant to this Section shall also constitute
the resignation or removal of CIT Healthcare or its successor as Collateral Agent, and any
successor Administrative Agent appointed pursuant to this Section shall, upon its acceptance of
such appointment, become the successor Collateral Agent for all purposes hereunder. Any
resignation or removal of CIT Healthcare or its successor as Administrative Agent pursuant to this
Section shall also constitute the resignation or removal of CIT Healthcare or its successor as
Swing Line Lender, and any successor Administrative Agent appointed pursuant to this Section shall,
upon its acceptance of such appointment, become the successor Swing Line Lender for all purposes
hereunder. In such event (a) Borrower shall prepay any outstanding Swing Line Loans made by the
retiring or removed Administrative Agent in its capacity as Swing Line Lender, (b) upon such
prepayment, the retiring or removed Administrative Agent and Swing Line Lender shall surrender any
Swing Line Note held by it to Borrower for cancellation, and (c) Borrower shall issue, if so
requested



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by successor Administrative Agent and Swing Line Loan Lender, a new Swing Line Note to the
successor Administrative Agent and Swing Line Lender, in the principal amount of the Swing Line
Loan Sublimit then in effect and with other appropriate insertions.



     9.8. Collateral Documents and Guaranty.



          (a) Agents under Collateral Documents and Guaranty. Each Lender hereby further
authorizes Administrative Agent or Collateral Agent, as applicable, on behalf of and for the
benefit of Secured Parties, to be the agent for and representative of Lenders with respect to the
Guaranty, the Collateral and the Collateral Documents. Subject to Section 10.5, without further
written consent or authorization from Lenders, Administrative Agent or Collateral Agent, as
applicable may execute any documents or instruments necessary to (i) release any Lien encumbering
any item of Collateral that is the subject of a sale or other disposition of assets permitted
hereby or to which Requisite Lenders (or such other Lenders as may be required to give such consent
under Section 10.5) have otherwise consented or (ii) release any Guarantor from the Guaranty
pursuant to Section 7.12 or with respect to which Requisite Lenders (or such other Lenders as may
be required to give such consent under Section 10.5) have otherwise consented.




          (b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of
the Credit Documents to the contrary notwithstanding, Borrower, Administrative Agent, Collateral
Agent and each Lender hereby agree that (i) no Lender shall have any right individually to realize
upon any of the Collateral or to enforce the Guaranty, it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by Administrative Agent, on behalf of
Lenders in accordance with the terms hereof and all powers, rights and remedies under the
Collateral Documents may be exercised solely by Collateral Agent, and (ii) in the event of a
foreclosure by Collateral Agent on any of the Collateral pursuant to a public or private sale,
Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any such
sale and Collateral Agent, as agent for and representative of Secured Parties (but not any Lender
or Lenders in its or their respective individual capacities unless Requisite Lenders shall
otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or
payment of the purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Obligations as a credit on account of the purchase price for any
collateral payable by Collateral Agent at such sale.




SECTION 10. MISCELLANEOUS




     10.1. Notices.



          (a) Notices Generally. Any notice or other communication herein required or permitted
to be given to a Credit Party, Syndication Agent, Collateral Agent, Administrative Agent, Swing
Line Lender, Issuing Bank or Documentation Agent, shall be sent to such Person’s address as set
forth on Appendix A or in the other relevant Credit Document, and in the case of any Lender, the
address as indicated on Appendix A or otherwise indicated to Administrative Agent in writing.
Except as otherwise set forth in paragraph (b) below, each notice hereunder shall be in writing and
may be personally served, or sent by telefacsimile or United States mail or




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courier service and shall be deemed to have been given when delivered in person or by courier
service and signed for against receipt thereof, upon receipt of telefacsimile or three Business
Days after depositing it in the United States mail with postage prepaid and properly addressed;
provided, no notice to any Agent shall be effective until received by such Agent;
provided further, any such notice or other communication shall at the request of
the Administrative Agent be provided to any sub-agent appointed pursuant to Section 9.3(c) hereto
as designated by the Administrative Agent from time to time.




          (b) Electronic Communications. Notices and other communications to the Lenders and
the Issuing Bank hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by Administrative Agent,
provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank
pursuant to Section 2 if such Lender or the Issuing Bank, as applicable, has notified
Administrative Agent that it is incapable of receiving notices under such Section by electronic
communication. Administrative Agent or Borrower may, in its discretion, agree to accept notices
and other communications to it hereunder by electronic communications pursuant to procedures
approved by it, provided that approval of such procedures may be limited to particular
notices or communications. Unless Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an
acknowledgement from the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided that if such notice or
other communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.




     10.2. Expenses. Whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to pay promptly (a) all the actual and reasonable costs and expenses of preparation
of the Credit Documents and any consents, amendments, waivers or other modifications thereto; (b)
all the costs of furnishing all opinions by counsel for Borrower and the other Credit Parties; (c)
the reasonable fees, expenses and disbursements of counsel to Agents (in each case including
allocated costs of internal counsel) in connection with the negotiation, preparation, execution and
administration of the Credit Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by Borrower; (d) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Collateral Agent, for the benefit
of Lenders pursuant hereto, including filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums and reasonable fees, expenses and
disbursements of counsel to each Agent and of counsel providing any opinions that any Agent or
Requisite Lenders may request in respect of the Collateral or the Liens created pursuant to the
Collateral Documents; (e) all the actual costs and reasonable fees, expenses and disbursements of
any auditors, accountants, consultants or appraisers; (f) all the actual costs and reasonable
expenses (including the reasonable fees, expenses and disbursements of any appraisers, consultants,
advisors and agents employed or retained by Collateral Agent and its counsel) in connection with
the custody or preservation of any of the Collateral; (g) all other actual and reasonable costs and
expenses



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incurred by each Agent in connection with the syndication of the Loans and Commitments and the
negotiation, preparation and execution of the Credit Documents and any consents, amendments,
waivers or other modifications thereto and the transactions contemplated thereby; and (h) after the
occurrence of a Default or an Event of Default, all costs and expenses, including reasonable
attorneys’ fees (including allocated costs of internal counsel) and costs of settlement, incurred
by any Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any
Credit Party hereunder or under the other Credit Documents by reason of such Default or Event of
Default (including in connection with the sale of, collection from, or other realization upon any
of the Collateral or the enforcement of the Guaranty) or in connection with any refinancing or
restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or
pursuant to any insolvency or bankruptcy cases or proceedings.



     10.3. Indemnity.



          (a) In addition to the payment of expenses pursuant to Section 10.2, whether or not the
transactions contemplated hereby shall be consummated, each Credit Party agrees to defend (subject
to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, each Agent and Lender and
the officers, partners, directors, trustees, employees, agents, sub-agents and Affiliates of each
Agent and each Lender (each, an “Indemnitee”), from and against any and all Indemnified
Liabilities; provided, no Credit Party shall have any obligation to any Indemnitee
hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities
arise from the gross negligence or willful misconduct of that Indemnitee. To the extent that the
undertakings to defend, indemnify, pay and hold harmless set forth in this Section 10.3 may be
unenforceable in whole or in part because they are violative of any law or public policy, the
applicable Credit Party shall contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.




          (b) To the extent permitted by applicable law, no Credit Party shall assert, and each Credit
Party hereby waives, any claim against Lenders, Agents and their respective Affiliates, directors,
employees, attorneys, agents or sub-agents, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) (whether or not the
claim therefor is based on contract, tort or duty imposed by any applicable legal requirement)
arising out of, in connection with, arising out of, as a result of, or in any way related to, this
Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or
referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use
of the proceeds thereof or any act or omission or event occurring in connection therewith, and
Borrower hereby waives, releases and agrees not to sue upon any such claim or any such damages,
whether or not accrued and whether or not known or suspected to exist in its favor.




     10.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of Default each
Lender is hereby authorized by each Credit Party at any time or from time to time subject to the
consent of Administrative Agent (such consent not to be unreasonably withheld or delayed), without
notice to any Credit Party or to any other Person (other than Administrative Agent), any such
notice being hereby expressly waived, to set off and to appropriate and to apply any and all



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deposits (general or special, including Indebtedness evidenced by certificates of deposit,
whether matured or unmatured, but not including trust accounts) and any other Indebtedness at any
time held or owing by such Lender to or for the credit or the account of any Credit Party against
and on account of the obligations and liabilities of any Credit Party to such Lender hereunder, the
Letters of Credit and participations therein and under the other Credit Documents, including all
claims of any nature or description arising out of or connected hereto, the Letters of Credit and
participations therein or with any other Credit Document, irrespective of whether or not (a) such
Lender shall have made any demand hereunder or (b) the principal of or the interest on the Loans or
any amounts in respect of the Letters of Credit or any other amounts due hereunder shall have
become due and payable pursuant to Section 2 and although such obligations and liabilities, or any
of them, may be contingent or unmatured. Each Lender agrees to notify the Administrative Agent
after any such setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.



     10.5. Amendments and Waivers.



          (a) Requisite Lenders’ Consent. Subject to Sections 10.5(b) and 10.5(c), no
amendment, modification, termination or waiver of any provision of the Credit Documents, or consent
to any departure by any Credit Party therefrom, shall in any event be effective without the written
concurrence of the Administrative Agent and the Requisite Lenders.




          (b) Affected Lenders’ Consent. Without the written consent of each Lender (other than
a Defaulting Lender) that would be affected thereby, no amendment, modification, termination, or
consent shall be effective if the effect thereof would:





          (i) extend the scheduled final maturity of any Loan or Note;




          (ii) waive, reduce or postpone any scheduled repayment (but not prepayment);




          (iii) extend the stated expiration date of (x) any Letter of Credit beyond the
Revolving Commitment Termination Date, or (y) the commitment of each Lender to make Term
Loans beyond December 31, 2006;




          (iv) reduce the rate of interest on any Loan (other than any waiver of any increase in
the interest rate applicable to any Loan pursuant to Section 2.10) or any fee or any premium
payable hereunder;




          (v) extend the time for payment of any such interest or fees;




          (vi) reduce the principal amount of any Loan or any reimbursement obligation in respect
of any Letter of Credit;




          (vii) amend, modify, terminate or waive any provision of this Section 10.5(b) or
Section 10.5(c);




          (viii) amend the definition of “Requisite Lenders” or “Pro Rata Share”;
provided, with the consent of Requisite Lenders, additional extensions of credit



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pursuant hereto may be included in the determination of “Requisite Lenders” or “Pro
Rata Share” on substantially the same basis as the Term Loan Commitments, the Term Loans,
the Revolving Commitments and the Revolving Loans are included on the Initial Closing Date;




          (ix) release (w) all or substantially all of the Collateral, (x) Borrower from its
obligations under this Agreement and the other Credit Documents, (y) all or substantially
all of the Guarantors from the Guaranty, or (z) any individual Guarantor from the Guaranty
to the extent that such release could reasonably be expected to have a Material Adverse
Effect, except as expressly provided in the Credit Documents;




          (x) consent to the assignment or transfer by any Credit Party of any of its rights and
obligations under any Credit Document; or




          (xi) amend the definition of “Interest Period” to require any Lender to provide an
Interest Period with a duration longer than six months.



          (c) Other Consents. No amendment, modification, termination or waiver of any
provision of the Credit Documents, or consent to any departure by any Credit Party therefrom,
shall:





          (i) increase any Revolving Commitment or Term Loan Commitment of any Lender over the
amount thereof then in effect without the consent of such Lender; provided, no
amendment, modification or waiver of any condition precedent, covenant, Default or Event of
Default shall constitute an increase in any Revolving Commitment or Term Loan Commitment of
any Lender;




          (ii) amend, modify, terminate or waive any provision hereof relating to the Swing Line
Sublimit or the Swing Line Loans without the consent of Swing Line Lender;




          (iii) amend the definition of “Requisite Class Lenders” without the consent of
Requisite Class Lenders of each Class; provided, with the consent of the Requisite
Lenders, additional extensions of credit pursuant hereto may be included in the
determination of such “Requisite Class Lenders” on substantially the same basis as the Term
Loan Commitments, the Term Loans, the Revolving Commitments and the Revolving Loans are
included on the Initial Closing Date;




          (iv) amend, waive or modify any provision of Section 2.13 or 2.14 without the prior
written consent of the Requisite Lenders, or alter the required application of any
repayments or prepayments as between Classes pursuant to Section 2.15 without the consent of
Requisite Class Lenders of each Class which is being allocated a lesser repayment or
prepayment as a result thereof; provided, Requisite Lenders may waive, in whole or
in part, any prepayment so long as the application, as between Classes, of any portion of
such prepayment which is still required to be made is not altered;



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          (v) amend, modify, terminate or waive any obligation of Lenders relating to the
purchase of participations in Letters of Credit as provided in Section 2.4(e) without the
written consent of Administrative Agent and of Issuing Bank;




          (vi) amend, modify, terminate or waive any provision of Section 9 as the same applies
to any Agent, or any other provision hereof as the same applies to the rights or obligations
of any Agent, in each case without the consent of such Agent.



          (d) Execution of Amendments, etc. Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or demand on any Credit
Party in any case shall entitle any Credit Party to any other or further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 10.5 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by a Credit Party, on such Credit Party.




     10.6. Successors and Assigns; Participations.



          (a) Generally. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of Lenders. No Credit Party’s rights or obligations hereunder nor any
interest therein may be assigned or delegated by any Credit Party without the prior written consent
of all Lenders. Nothing in this Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective successors and assigns permitted hereby
and, to the extent expressly contemplated hereby, Affiliates of each of the Agents and Lenders) any
legal or equitable right, remedy or claim under or by reason of this Agreement.




          (b) Register. Borrower, Administrative Agent and Lenders shall deem and treat the
Persons listed as Lenders in the Register as the holders and owners of the corresponding
Commitments and Loans listed therein for all purposes hereof, and no assignment or transfer of any
such Commitment or Loan shall be effective, in each case, unless and until recorded in the Register
following receipt of (x) a written or electronic confirmation of an assignment issued by a
Settlement Service pursuant to Section 10.6(d) (a “Settlement Confirmation”) or (y) an Assignment
Agreement effecting the assignment or transfer thereof, in each case, as provided in Section
10.6(d). Each assignment shall be recorded in the Register on the Business Day the Settlement
Confirmation or Assignment Agreement is received by the Administrative Agent, if received by 12:00
p.m. (New York City time), and on the following Business Day if received after such time, prompt
notice thereof shall be provided to Borrower and a copy of such Assignment Agreement or Settlement
Confirmation shall be maintained, as applicable. The date of such recordation of a transfer shall
be referred to herein as the “Assignment Effective Date.” Any request, authority or consent of any
Person who, at the time of making such request or giving such authority or consent, is listed in
the Register as a Lender shall be conclusive and binding on any subsequent holder, assignee or
transferee of the corresponding Commitments or Loans.




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          (c) Right to Assign. Each Lender shall have the right at any time to sell, assign or
transfer all or a portion of its rights and obligations under this Agreement, including, without
limitation, all or a portion of its Commitment or Loans owing to it or other Obligations
(provided, however, that each such assignment shall be of a uniform, and not
varying, percentage of all rights and obligations under and in respect of any Loan and any related
Commitments):





          (i) to any Person meeting the criteria of clause (i) of the definition of the term of
“Eligible Assignee” upon the giving of notice to Borrower and Administrative Agent; and




          (ii) to any Person meeting the criteria of clause (ii) of the definition of the term of
“Eligible Assignee” upon giving of notice to Borrower and Administrative Agent and, in the
case of assignments of Term Loans, Revolving Loans or Revolving Commitments to any such
Person (except in the case of assignments made by or to CIT Capital), consented to by each
of Borrower and Administrative Agent (such consent not to be (x) unreasonably withheld or
delayed or, (y) in the case of Borrower, required at any time an Event of Default shall have
occurred and then be continuing); provided, further each such assignment pursuant to
this Section 10.6(c)(ii) shall (A) be accompanied by a processing and recordation fee of
$3,000 payable to the Administrative Agent, (B) shall be in an aggregate amount of not less
than (A) $1,000,000 (or such lesser amount as may be agreed to by Borrower and
Administrative Agent or as shall constitute the aggregate amount of the Revolving
Commitments and Revolving Loans of the assigning Lender) with respect to the assignment of
the Revolving Commitments and Revolving Loans, and shall be in an aggregate amount of not
less than $1,000,000 (or such lesser amount as may be agreed to by Borrower and
Administrative Agent or as shall constitute the aggregate amount of the Term Loans of the
assigning Lender) with respect to the assignment of Term Loans.



          (d) Mechanics. Assignments of Term Loans by Lenders may be made via an electronic
settlement system acceptable to Administrative Agent as designated in writing from time to time to
the Lenders by Administrative Agent (the “Settlement Service”). Each such assignment shall be
effected by the assigning Lender and proposed assignee pursuant to the procedures then in effect
under the Settlement Service, which procedures shall be consistent with the other provisions of
this Section 10.6. Each assignor Lender and proposed assignee shall comply with the requirements
of the Settlement Service in connection with effecting any transfer of Loans pursuant to the
Settlement Service. Administrative Agent’s and Borrower’s consent shall be deemed to have been
granted pursuant to Section 10.6(c)(ii) with respect to any transfer effected through the
Settlement Service. Subject to the other requirements of this Section 10.6, assignments and
assumptions of Term Loans may also be effected by manual execution delivery to the Administrative
Agent of an Assignment Agreement with the prior written consent of each of Borrower and
Administrative Agent (such consent not to be (x) unreasonably withheld or delayed or (y) in the
case of Borrower, required at any time an Event of Default shall have occurred and then be
continuing). Initially, assignments and assumptions of Term Loans shall be effected by such manual
execution until Administrative Agent notifies Lenders to the contrary. Assignments and assumptions
of Revolving Loans and Revolving Commitments shall only be effected by manual execution and
delivery to the Administrative Agent of an Assignment Agreement. Assignments made pursuant to the
foregoing provision shall be effective as of the




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Assignment Effective Date. In connection with all assignments there shall be delivered to
Administrative Agent such forms, certificates or other evidence, if any, with respect to United
States federal income tax withholding matters as the assignee under such Assignment Agreement may
be required to deliver pursuant to Section 2.20(c). Notwithstanding anything herein or in any
Assignment Agreement to the contrary and (i) unless notice to the contrary is delivered to the
Lenders from the Administrative Agent or (ii) so long as no Default or Event of Default has
occurred and is continuing, payment to the assignor by the assignee in respect of the settlement of
an assignment of any Term Loan (but not any Revolving Loan or Revolving Commitment) shall include
such compensation to the assignor as may be agreed upon by the assignor and the assignee with
respect to all unpaid interest which has accrued on such Term Loan to but excluding the Assignment
Effective Date. On and after the applicable Assignment Effective Date, the applicable assignee
shall be entitled to receive all interest paid or payable with respect to the assigned Term Loan,
whether such interest accrued before or after the applicable Assignment Effective Date.




          (e) Representations and Warranties of Assignee. Each Lender, upon execution and
delivery hereof or upon succeeding to an interest in the Commitments and Loans, as the case may be,
represents and warrants as of the Initial Closing Date or as of the Assignment Effective Date that
(i) it is an Eligible Assignee; (ii) it has experience and expertise in the making of or investing
in commitments or loans such as the applicable Commitments or Loans, as the case may be; and (iii)
it will make or invest in, as the case may be, its Commitments or Loans for its own account in the
ordinary course of its business and without a view to distribution of such Commitments or Loans
within the meaning of the Securities Act or the Exchange Act or other federal securities laws (it
being understood that, subject to the provisions of this Section 10.6, the disposition of such
Commitments or Loans or any interests therein shall at all times remain within its exclusive
control).




          (f) Effect of Assignment. Subject to the terms and conditions of this Section 10.6,
as of the “Assignment Effective Date” (i) the assignee thereunder shall have the rights and
obligations of a “Lender” hereunder to the extent of its interest in the Loans and Commitments as
reflected in the Register and shall thereafter be a party hereto and a “Lender” for all purposes
hereof; (ii) the assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned to the assignee, relinquish its rights (other than any rights which
survive the termination hereof under Section 10.8) and be released from its obligations hereunder
(and, in the case of an assignment covering all or the remaining portion of an assigning Lender’s
rights and obligations hereunder, such Lender shall cease to be a party hereto on the Assignment
Effective Date; provided, anything contained in any of the Credit Documents to the contrary
notwithstanding, (y) Issuing Bank shall continue to have all rights and obligations thereof with
respect to such Letters of Credit until the cancellation or expiration of such Letters of Credit
and the reimbursement of any amounts drawn thereunder and (z) such assigning Lender shall continue
to be entitled to the benefit of all indemnities hereunder as specified herein with respect to
matters arising out of the prior involvement of such assigning Lender as a Lender hereunder); (iii)
the Commitments shall be modified to reflect any Commitment of such assignee and any Revolving
Commitment of such assigning Lender, if any; and (iv) if any such assignment occurs after the
issuance of any Note hereunder, the assigning Lender shall, upon the effectiveness of such
assignment or as promptly thereafter as practicable, surrender its applicable Notes to
Administrative Agent for cancellation, and thereupon Borrower shall issue and deliver new




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Notes, if so requested by the assignee and/or assigning Lender, to such assignee and/or to
such assigning Lender, with appropriate insertions, to reflect the outstanding Loans of the
assignee and/or the assigning Lender.




          (g) Participations. Each Lender shall have the right at any time to sell one or more
participations to any Person (other than Holdings, any of its Subsidiaries or any of its
Affiliates) in all or any part of its Commitments, Loans or in any other Obligation. The holder of
any such participation, other than an Affiliate of the Lender granting such participation, shall
not be entitled to require such Lender to take or omit to take any action hereunder except with
respect to any amendment, modification or waiver that would (i) extend the final scheduled maturity
of any Loan, Note or Letter of Credit (unless such Letter of Credit is not extended beyond the
Revolving Commitment Termination Date) in which such participant is participating, or reduce the
rate or extend the time of payment of interest or fees thereon (except in connection with a waiver
of applicability of any post-default increase in interest rates) or reduce the principal amount
thereof, or increase the amount of the participant’s participation over the amount thereof then in
effect (it being understood that a waiver of any Default or Event of Default or of a mandatory
reduction in the Commitment shall not constitute a change in the terms of such participation, and
that an increase in any Commitment or Loan shall be permitted without the consent of any
participant if the participant’s participation is not increased as a result thereof), (ii) consent
to the assignment or transfer by any Credit Party of any of its rights and obligations under this
Agreement or (iii) release all or substantially all of the Collateral under the Collateral
Documents (except as expressly provided in the Credit Documents) supporting the Loans hereunder in
which such participant is participating. Borrower agrees that each participant shall be entitled
to the benefits of Sections 2.18(c), 2.19 and 2.20 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to paragraph (c) of this Section;
provided, (i) a participant shall not be entitled to receive any greater payment under
Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive with respect to
the participation sold to such participant, unless the sale of the participation to such
participant is made with Borrower’s prior written consent and (ii) a participant that would be a
Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless
Borrower is notified of the participation sold to such participant and such participant agrees, for
the benefit of Borrower, to comply with Section 2.20 as though it were a Lender. To the extent
permitted by law, each participant also shall be entitled to the benefits of Section 10.4 as though
it were a Lender, provided such Participant agrees to be subject to Section 2.17 as though it were
a Lender.




          (h) Certain Other Assignments. In addition to any other assignment permitted pursuant
to this Section 10.6, any Lender may assign and/or pledge all or any portion of its Loans, the
other Obligations owed by or to such Lender, and its Notes, if any, to secure obligations of such
Lender including, without limitation, any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any operating circular
issued by such Federal Reserve Bank; provided, no Lender, as between Borrower and such
Lender, shall be relieved of any of its obligations hereunder as a result of any such assignment
and pledge, and provided further, in no event shall the applicable Federal Reserve
Bank, pledgee or trustee be considered to be a “Lender” or be entitled to require the assigning
Lender to take or omit to take any action hereunder.




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     10.7. Independence of Covenants. All covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by any of such covenants, the fact that
it would be permitted by an exception to, or would otherwise be within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default if such action is taken
or condition exists.



     10.8. Survival of Representations, Warranties and Agreements. All representations, warranties
and agreements made herein shall survive the execution and delivery hereof and the making of any
Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the
agreements of each Credit Party set forth in Sections 2.18(c), 2.19, 2.20, 10.2, 10.3 and 10.4 and
the agreements of Lenders set forth in Sections 2.17, 2.20(d), 9.3(b) and 9.6 shall survive the
payment of the Loans, the cancellation or expiration of the Letters of Credit and the reimbursement
of any amounts drawn thereunder, and the termination hereof.



     10.9. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any
Lender in the exercise of any power, right or privilege hereunder or under any other Credit
Document shall impair such power, right or privilege or be construed to be a waiver of any default
or acquiescence therein, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other power, right or privilege.
The rights, powers and remedies given to each Agent and each Lender hereby are cumulative and shall
be in addition to and independent of all rights, powers and remedies existing by virtue of any
statute or rule of law or in any of the other Credit Documents or any of the Hedge Agreements. Any
forbearance or failure to exercise, and any delay in exercising, any right, power or remedy
hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof,
nor shall it preclude the further exercise of any such right, power or remedy.



     10.10. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any
obligation to marshal any assets in favor of any Credit Party or any other Person or against or in
payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or
payments to Administrative Agent or Lenders (or to Administrative Agent, on behalf of Lenders), or
any Agent or Lenders enforce any security interests or exercise their rights of setoff, and such
payment or payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to
be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or
federal law, common law or any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and effect as if such
payment or payments had not been made or such enforcement or setoff had not occurred.



     10.11. Severability. In case any provision in or obligation hereunder or under any other
Credit Document shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.



     10.12. Obligations Several; Independent Nature of Lenders’ Rights. The obligations of Lenders
hereunder are several and no Lender shall be responsible for the



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obligations or Commitment of any other Lender hereunder. Nothing contained herein or in any
other Credit Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed
to constitute Lenders as a partnership, an association, a joint venture or any other kind of
entity. The amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its rights arising out
hereof and it shall not be necessary for any other Lender to be joined as an additional party in
any proceeding for such purpose.



     10.13. Headings. Section headings herein are included herein for convenience of reference
only and shall not constitute a part hereof for any other purpose or be given any substantive
effect.



     10.14. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.



     10.15. CONSENT TO JURISDICTION. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY
ARISING OUT OF OR RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF
NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH CREDIT PARTY, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS; (B) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (C) AGREES
THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 10.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT PARTY IN ANY SUCH PROCEEDING IN ANY SUCH
COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES
THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER JURISDICTION.



     10.16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY
OF THE OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE



-137-









 







ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS
AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS
A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS
RELATED FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY
REFERRING TO THIS SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE
OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE
HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.



     10.17. Confidentiality. Each Lender shall hold all non-public information regarding Holdings
and its Subsidiaries and their businesses identified as such by Borrower and obtained by such
Lender pursuant to the requirements hereof in accordance with such Lender’s customary procedures
for handling confidential information of such nature, it being understood and agreed by Borrower
that, in any event, a Lender may make (i) disclosures of such information to Affiliates of such
Lender and to their agents and advisors (and to other persons authorized by a Lender or Agent to
organize, present or disseminate such information in connection with disclosures otherwise made in
accordance with this Section 10.17), (ii) disclosures of such information reasonably required by
any bona fide or potential assignee, transferee or participant in connection with the contemplated
assignment, transfer or participation by such Lender of any Loans or any participations therein or
by any direct or indirect contractual counterparties (or the professional advisors thereto) in
Hedge Agreements (provided, such counterparties and advisors are advised of and agree to be bound
by the provisions of this Section 10.17), (iii) disclosure to any rating agency when required by
it, provided that, prior to any disclosure, such rating agency shall undertake in writing
to preserve the confidentiality of any confidential information relating to the Credit Parties
received by it from any of the Agents or any Lender, and (iv) disclosures required or requested by
any governmental agency or representative thereof or by the NAIC or pursuant to legal or judicial
process; provided, unless specifically prohibited by applicable law or court order, each
Lender shall make reasonable efforts to notify Borrower of any request by any governmental agency
or representative thereof (other than any such request in connection with any examination of the
financial condition or other routine examination of such Lender by such governmental agency) for
disclosure of any such non-public information prior to disclosure of such information.



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     10.18. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate
interest rate charged with respect to any of the Obligations, including all charges or fees in
connection therewith deemed in the nature of interest under applicable law shall not exceed the
Highest Lawful Rate. If the rate of interest (determined without regard to the preceding sentence)
under this Agreement at any time exceeds the Highest Lawful Rate, the outstanding amount of the
Loans made hereunder shall bear interest at the Highest Lawful Rate until the total amount of
interest due hereunder equals the amount of interest which would have been due hereunder if the
stated rates of interest set forth in this Agreement had at all times been in effect. In addition,
if when the Loans made hereunder are repaid in full the total interest due hereunder (taking into
account the increase provided for above) is less than the total amount of interest which would have
been due hereunder if the stated rates of interest set forth in this Agreement had at all times
been in effect, then to the extent permitted by law, Borrower shall pay to Administrative Agent an
amount equal to the difference between the amount of interest paid and the amount of interest which
would have been paid if the Highest Lawful Rate had at all times been in effect. Notwithstanding
the foregoing, it is the intention of Lenders and Borrower to conform strictly to any applicable
usury laws. Accordingly, if any Lender contracts for, charges, or receives any consideration which
constitutes interest in excess of the Highest Lawful Rate, then any such excess shall be cancelled
automatically and, if previously paid, shall at such Lender’s option be applied to the outstanding
amount of the Loans made hereunder or be refunded to Borrower.



     10.19. Counterparts. This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.



     10.20. Effectiveness. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Borrower and Administrative Agent
of written or telephonic notification of such execution and authorization of delivery thereof.



     10.21. Patriot Act. Each Lender and Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies Borrower that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies Borrower, which information includes the name
and address of Borrower and other information that will allow such Lender or Administrative Agent,
as applicable, to identify Borrower in accordance with the Act.



     10.22. Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and
words of like import in any Assignment Agreement shall be deemed to include electronic signatures
or the keeping of records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.



[Remainder of page intentionally left blank]




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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective officers thereunto duly authorized as of the date first written
above.



	 	 	 	 	 
	 	BORROWER:



AMERICAN MEDICAL SYSTEMS, INC.

 	 
	 	By:  	/s/ Carmen L. Diersen
 	 
	 	 	Name:  	Carmen L. Diersen 	 
	 	 	Title:  	Executive Vice President, Chief

Financial Officer and Secretary 	 
	 
	 	GUARANTORS:





AMERICAN MEDICAL SYSTEMS HOLDINGS, INC.

AMS SALES CORPORATION

AMS RESEARCH CORPORATION

AMERICAN MEDICAL SYSTEMS

GYNECOLOGY INC.

THERMATRX, INC.

OVION, INC.

SOLARANT MEDICAL, INC.

KERMIT MERGER CORP.

 	 
	 	By:  	/s/ Carmen L. Diersen
 	 
	 	 	Name:  	Carmen L. Diersen 	 
	 	 	Title:  	Executive Vice President, Chief
Financial Officer and Secretary 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	LASERSCOPE

LASERSCOPE INTERNATIONAL, INC.

INNOVAQUARTZ INCORPORATED

 	 
	 	By:  	/s/ Carmen L. Diersen
 	 
	 	 	Name:  	Carmen L. Diersen 	 
	 	 	Title:  	Executive Vice President, Chief
Financial Officer and Secretary 	 



 









 






	 	 	 	 	 



	 	 	 	 	 	 	 
	 	 	CIT CAPITAL SECURITIES LLC,

as Co-Lead Arranger and Sole Book Runner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Gregory K. Park
 

Gregory K. Park
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	CIT HEALTHCARE LLC,

as Administrative Agent, Collateral Agent and a

Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Robert M. O’Mara
 

Robert M. O’Mara
	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 	 	KEYBANK NATIONAL ASSOCIATION,

as Co-Lead Arranger and Syndication Agent and a

Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ J.T. Taylor
 

J.T. Taylor
	 	 
	 

	 	Its:
	 	Senior Vice President- Debt Capital Markets	 	 
	 
	 	 	 	 	 	 
	 	 	GENERAL ELECTRIC CAPITAL
CORPORATION,

as Documentation Agent and a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David R. Campbell	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	David R. Campbell	 	 
	 

	 	Its:
	 	Duly Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	CITICORP USA, INC.

as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Chis Conway	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Chis Conway	 	 
	 

	 	Title:
	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	NATIONAL CITY BANK,

as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Pamela K. Maloney	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Pamela K. Maloney	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	THE GOVERNOR & COMPANY OF THE
BANK OF IRELAND,

as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard Cameron	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Richard Cameron	 	 
	 

	 	Title:
	 	Senior Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	THE GOVERNOR & COMPANY OF THE
BANK OF IRELAND,

as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jordan Gerhard	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jordan Gerhard	 	 
	 

	 	Title:
	 	Vice President	 	 






 









 





APPENDIX A

TO CREDIT AND GUARANTY AGREEMENT




Notice Addresses



If to Borrower or to any Guarantor:



c/o American Medical Systems, Inc.

10700 Bren Road West

Minnetonka, Minnesota 55343

Attention: John Armbruster

Telecopier: (952) 930-6157




in each case, with a copy to:



Oppenheimer, Wolff & Donnelly LLP

Plaza VII, Suite 3300

45 S. Seventh Street

Minneapolis, Minnesota 55402

Attention: Thomas A. Letscher

Telecopier: (612) 607-7100




APPENDIX A 









 








CIT CAPITAL SECURITIES LLC,

as Co-Lead Arranger and Sole Book Runner



505 Fifth Avenue, 11th Floor

New York, New York 10017

Attention: Terrence Moore

Telecopier: (212) 771-9317




CIT HEALTHCARE LLC,

as Administrative Agent, Collateral Agent, Swing Line Lender, and a Lender



505 Fifth Avenue, 6th Floor

New York, New York 10017

Attention: Chief Counsel - CIT Healthcare

Telecopier: (212) 771-9520




KEYBANK NATIONAL ASSOCIATION,

as Co-Lead Arranger, Syndication Agent, and a Lender



127 Public Square

Cleveland, Ohio 44114

Attention: J.T. Taylor

Telecopier: (216) 689-8329




GENERAL ELECTRIC CAPITAL CORPORATION,

as Documentation Agent, and a Lender



500 W. Monroe Street, 11th Floor

Chicago, Illinois 60661

Attention: Elizabeth Smith

Telecopier: (866) 762-5119



APPENDIX A