Exhibit 10.2


 


EXECUTION COPY




 





 


 


KINETIC CONCEPTS,
INC.


 


 












 


CREDIT AGREEMENT


 


August 11, 2003


 












 


MORGAN STANLEY
SENIOR FUNDING, INC.,

AS ADMINISTRATIVE AGENT


 


 


MORGAN STANLEY
& CO. INCORPORATED,

AS COLLATERAL AGENT


 


 


CREDIT SUISSE
FIRST BOSTON,

AS SYNDICATION AGENT


 


 


MORGAN STANLEY
SENIOR FUNDING, INC,

AS JOINT LEAD ARRANGER AND JOINT BOOK MANAGER


 


 


CREDIT SUISSE
FIRST BOSTON,

AS JOINT LEAD ARRANGER AND JOINT BOOK MANAGER




 


WELLS FARGO BANK, NATIONAL ASSOCIATION,

AS ISSUING BANK


 


AND


 


JPMORGAN CHASE BANK, WELLS FARGO BANK,


NATIONAL ASSOCIATION AND THE BANK OF NOVA SCOTIA,


AS DOCUMENTATION AGENTS


 





 

















 


TABLE OF CONTENTS


 


	
  SECTION 1.  DEFINITIONS

  
	
  1.1

  	
  Defined Terms

  
	
  1.2

  	
  Other Definitional Provisions

  
	
   

  	
   

  
	
  SECTION 2.  AMOUNT
  AND TERMS OF REVOLVING CREDIT COMMITMENTS

  
	
  2.1

  	
  Revolving Credit Commitments

  
	
  2.2

  	
  Procedure for Revolving Credit Borrowing

  
	
  2.3

  	
  Commitment Fee

  
	
  2.4

  	
  Termination or Reduction of Commitments;
  Repayment of Revolving Loans

  
	
  2.5

  	
  L/C Commitment

  
	
  2.6

  	
  Procedure for Issuance of Letters of Credit

  
	
  2.7

  	
  Letter of Credit Fees, Commissions and
  Other Charges

  
	
  2.8

  	
  L/C Participations

  
	
  2.9

  	
  Reimbursement Obligation of the Company

  
	
  2.10

  	
  Obligations Absolute

  
	
  2.11

  	
  Letter of Credit Payments

  
	
  2.12

  	
  Application

  
	
  2.13

  	
  Swing Line Commitment

  
	
  2.14

  	
  Procedure for Swing Line Borrowing;
  Prepayment of Swing Line Loans

  
	
  2.15

  	
  Repayment of Swing Line Loans; Participations in Swing Line
  Borrowings

  
	
   

  	
   

  
	
  SECTION 3.  AMOUNT
  AND TERMS OF TERM LOAN COMMITMENTS

  
	
  3.1

  	
  Tranche B Term Loans

  
	
  3.2

  	
  Procedure for Tranche B Term Loan Borrowing

  
	
  3.3

  	
  Repayment of Tranche B Term Loans

  
	
   

  	
   

  
	
  SECTION 4.  GENERAL
  PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT

  
	
  4.1

  	
  Evidence of Debt

  
	
  4.2

  	
  Optional Prepayments

  
	
  4.3

  	
  Mandatory Prepayments of Loans and
  Reductions of Revolving Credit Commitments

  
	
  4.4

  	
  Conversion and Continuation Options

  
	
  4.5

  	
  Minimum Amounts and Maximum Number of Tranches

  
	
  4.6

  	
  Interest Rates and Payment Dates

  
	
  4.7

  	
  Computation of Interest and Fees

  
	
  4.8

  	
  Inability to Determine Interest Rate

  
	
  4.9

  	
  Pro Rata Treatment and Payments

  
	
  4.10

  	
  Illegality

  
	
  4.11

  	
  Requirements of Law

  
	
  4.12

  	
  Taxes

  
	
  4.13

  	
  Indemnity

  



 

















 


	
  4.14

  	
  Mitigation Obligations; Replacement of Lenders

  
	
   

  	
   

  
	
  SECTION 5.  REPRESENTATIONS
  AND WARRANTIES

  
	
  5.1

  	
  Financial Condition

  
	
  5.2

  	
  No Change; Solvency

  
	
  5.3

  	
  Existence; Compliance with Law

  
	
  5.4

  	
  Corporate Power; Authorization; Enforceable Obligations

  
	
  5.5

  	
  No Legal Bar

  
	
  5.6

  	
  No Material Litigation

  
	
  5.7

  	
  No Labor Controversy

  
	
  5.8

  	
  No Default

  
	
  5.9

  	
  Ownership of Property; Liens

  
	
  5.10

  	
  Intellectual Property

  
	
  5.11

  	
  No Burdensome Restrictions

  
	
  5.12

  	
  Taxes

  
	
  5.13

  	
  Federal Regulations

  
	
  5.14

  	
  ERISA

  
	
  5.15

  	
  Investment Company Act; Other Regulations

  
	
  5.16

  	
  Subsidiaries

  
	
  5.17

  	
  Purpose of Tranche B Term Loans and
  Revolving Loans

  
	
  5.18

  	
  Environmental Matters

  
	
  5.19

  	
  Regulation H

  
	
  5.20

  	
  No Material Misstatements

  
	
  5.21

  	
  Collateral

  
	
  5.22

  	
  Senior Debt; No Other Designated Senior Debt

  
	
  5.23

  	
  Chief Executive Office

  
	
   

  	
   

  
	
  SECTION 6.  CONDITIONS PRECEDENT

  
	
  6.1

  	
  Conditions to Effectiveness

  
	
  6.2

  	
  Conditions to Each Extension of Credit

  
	
   

  	
   

  
	
  SECTION 7.  AFFIRMATIVE COVENANTS

  
	
  7.1

  	
  Financial Statements

  
	
  7.2

  	
  Certificates; Other Information

  
	
  7.3

  	
  Payment of Obligations

  
	
  7.4

  	
  Conduct of Business and Maintenance of
  Existence

  
	
  7.5

  	
  Maintenance of Property; Insurance

  
	
  7.6

  	
  Inspection of Property; Books and Records;
  Discussions

  
	
  7.7

  	
  Notices

  
	
  7.8

  	
  Environmental Laws

  
	
  7.9

  	
  Further Assurances

  
	
  7.10

  	
  Additional Collateral

  
	
  7.11

  	
  Interest Rate Protection

  
	
   

  	
   

  
	
  SECTION 8.  NEGATIVE COVENANTS

  
	
  8.1

  	
  Financial Condition Covenants

  
	
  8.2

  	
  Limitation on Indebtedness

  



 


ii

















 


	
  8.3

  	
  Limitation on Liens

  
	
  8.4

  	
  Limitation on Guarantee Obligations

  
	
  8.5

  	
  Limitation on Fundamental Changes

  
	
  8.6

  	
  Limitation on Sale of Assets

  
	
  8.7

  	
  Limitation on Dividends and Stock Purchases

  
	
  8.8

  	
  Limitation on Capital Expenditures

  
	
  8.9

  	
  Limitation on Investments, Loans and Advances

  
	
  8.10

  	
  Limitation on Optional Payments and
  Modifications of Subordinated and Other Debt Instruments

  
	
  8.11

  	
  Limitation on Transactions with Affiliates

  
	
  8.12

  	
  Limitation on Sales and Leasebacks

  
	
  8.13

  	
  Limitation on Negative Pledge Clauses

  
	
  8.14

  	
  Limitation on Changes in Fiscal Year

  
	
  8.15

  	
  Limitation on Lines of Business

  
	
  8.16

  	
  Limitation on Subsidiary Distributions

  
	
  8.17

  	
  Limitation on Management Fees

  
	
  8.18

  	
  Designated Senior Debt

  
	
  8.19

  	
  Chief Executive Office

  
	
  8.20

  	
  Limitations on Activities of Special
  Purpose Subsidiaries

  
	
   

  	
   

  
	
  SECTION 9.  EVENTS OF DEFAULT

  
	
   

  
	
  SECTION 10.  THE AGENTS

  
	
  10.1

  	
  Appointment

  
	
  10.2

  	
  Delegation of Duties

  
	
  10.3

  	
  Exculpatory Provisions

  
	
  10.4

  	
  Reliance by Agents

  
	
  10.5

  	
  Notice of Default

  
	
  10.6

  	
  Non-Reliance on Agents and Other Lenders

  
	
  10.7

  	
  Indemnification

  
	
  10.8

  	
  Agent in Its Individual Capacity

  
	
  10.9

  	
  Successor Administrative Agent.

  
	
  10.10

  	
  Agents and Arrangers

  
	
   

  	
   

  
	
  SECTION 11.  MISCELLANEOUS

  
	
  11.1

  	
  Amendments and Waivers

  
	
  11.2

  	
  Notices

  
	
  11.3

  	
  No Waiver; Cumulative Remedies

  
	
  11.4

  	
  Survival of Representations and Warranties

  
	
  11.5

  	
  Payment of Expenses and Taxes

  
	
  11.6

  	
  Successors and Assigns; Participations and
  Assignments

  
	
  11.7

  	
  Adjustments; Set-off

  
	
  11.8

  	
  Counterparts

  
	
  11.9

  	
  Severability

  
	
  11.10

  	
  Integration

  
	
  11.11

  	
  GOVERNING
  LAW

  
	
  11.12

  	
  Submission To Jurisdiction; Waivers

  



 


iii

















 


	
  11.13

  	
  Acknowledgements

  
	
  11.14

  	
  WAIVERS
  OF JURY TRIAL

  
	
  11.15

  	
  Confidentiality

  
	
  11.16

  	
  Conversion of Currencies

  
	
  11.17

  	
  Usury Savings Clause

  
	
  11.18

  	
  Release of Mortgages and Other Security
  Documents

  



 


 


	
  SCHEDULES

  
	
   

  	
   

  	
   

  
	
  1.l(a)

  	
  -

  	
  Commitments

  
	
  1.l(b)

  	
  -

  	
  Terms of Convertible Preferred

  
	
  1.1(c)

  	
  -

  	
  Refinanced Existing
  Indebtedness

  
	
  2.1(c)

  	
  -

  	
  Existing Letters of
  Credit

  
	
  5.1

  	
  -

  	
  Sales, Transfers and
  Dispositions

  
	
  5.2

  	
  -

  	
  Dividends,
  Distributions and Redemptions

  
	
  5.9

  	
  -

  	
  Real Property

  
	
  5.10

  	
  -

  	
  Claims with respect to
  Intellectual Property

  
	
  5.16

  	
  -

  	
  Subsidiaries

  
	
  5.18

  	
  -

  	
  Environmental Matters

  
	
  8.2(e)

  	
  -

  	
  Existing Indebtedness

  
	
  8.3(f)

  	
  -

  	
  Existing Liens

  
	
  8.4(a)

  	
  -

  	
  Existing Guarantee
  Obligations

  
	
  8.6(f)

  	
  -

  	
  Scheduled Asset Sales

  
	
  8.9(k)

  	
  -

  	
  Existing Investments

  
	
  11.2

  	
  -

  	
  Addresses for Notices

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  
	
   

  	
   

  	
   

  
	
  A

  	
  -

  	
  Form of Assignment and
  Assumption

  
	
  B

  	
  -

  	
  Form of Guarantee and
  Collateral Agreement

  
	
  C-l

  	
  -

  	
  Form of Revolving
  Credit Note

  
	
  C-2

  	
  -

  	
  Form of Tranche B Term
  Note

  
	
  C-3

  	
  -

  	
  Form of Swing Line Note

  
	
  D

  	
  -

  	
  Form of Closing
  Certificate

  
	
  E-1

  	
  -

  	
  Form of Legal Opinion
  of Skadden, Arps, Slate, Meagher and Flom LLP

  
	
  E-2

  	
  -

  	
  Form of Legal Opinion
  of Cox & Smith Incorporated

  
	
  F

  	
  -

  	
  Form of Swing Line Loan
  Participation Certificate

  
	
  G

  	
  -

  	
  Form of Exemption
  Certificate

  
	
  H

  	
  -

  	
  Form of Notice of
  Borrowing

  



 


iv

















 


CREDIT AGREEMENT, dated as of August 11, 2003, among
KINETIC CONCEPTS, INC., a Texas corporation (the “Company”), the several
banks and other financial institutions from time to time parties to this
Agreement (the “Lenders”), Morgan Stanley Senior Funding, Inc. (“Morgan
Stanley”), as administrative agent for the Lenders hereunder, Morgan
Stanley & Co. Incorporated, as collateral agent for the Lenders hereunder,
Credit Suisse First Boston (“CSFB”), as syndication agent for the
Lenders hereunder, Wells Fargo Bank, National Association, as issuing bank for
the Lenders hereunder (the “Issuing Bank”) and JPMorgan Chase Bank,
Wells Fargo Bank, National Association and The Bank of Nova Scotia, as
documentation agents for the Lenders hereunder (the “Documentation Agents”).


 


W I T N E S S E T
H:


 


WHEREAS, concurrently with the execution hereof the
Company is undertaking the Transactions (except with respect to those
transactions which are contemplated herein to close after the date hereof), and
in connection therewith has requested that the Lenders provide the facilities
described herein, and the Lenders have agreed to provide the same on the terms
and conditions set forth herein.


 


NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein set forth, the parties hereto hereby agree as
follows:


 


SECTION
1.  DEFINITIONS


 


1.1               Defined Terms. 
As used in this Agreement, the following terms shall have the following
meanings:


 


“Acquired EBITDA”: with respect to any
Permitted Acquisition by the Company or any of its Subsidiaries during any
period, the portion of consolidated net income of the Prior Owner thereof for
such period attributable to the Capital Stock or assets acquired by the Company
or such Subsidiary pursuant to such Permitted Acquisition, as the case may be, plus,
to the extent deducted in computing such portion of consolidated net income for
such period, the sum of (a) income Tax expense, (b) interest expense, (c)
depreciation and amortization expense and (d) other non-cash charges and
expenses, all as determined with respect to such Capital Stock or assets while
under the ownership of the Prior Owner in accordance with GAAP.


 


“Acquired Interest Expense”: with respect to
any Permitted Acquisition by the Company or any of its Subsidiaries during any
period, the sum of (a) the portion of interest expense, both expensed and
capitalized, of the Prior Owner thereof for such period determined in
accordance with GAAP (including that portion of payments under Financing Leases
of the Prior Owner attributable to interest expense of the Prior Owner for such
period in accordance with GAAP) attributable to any Indebtedness of the Prior
Owner which is assumed by the Company or any of its Subsidiaries pursuant to
such Permitted Acquisition and (b) the Interest Expense (as defined in clause
(a) of the definition thereof) that would have been incurred by the Company
from the beginning of such period through the date of consummation of such
Permitted Acquisition had the


 

















 


Indebtedness incurred by the Company or any of its
Subsidiaries to finance such Permitted Acquisition been incurred on the first
day of such period (assuming the rate of interest applicable to such
Indebtedness during such period was equal to the rate of interest applicable to
such Indebtedness on the date of consummation of such Permitted Acquisition).


 


“Acquisition”: as to any Person, the acquisition
(in a single transaction or a series of related transactions) by such Person of
(a) at least 50% of the outstanding Capital Stock of any other Person, (b) all
or substantially all of the assets of any other Person or (c) assets
constituting one or more business units or divisions of any other Person.


 


“Administrative Agent”: Morgan Stanley,
together with its affiliates, as the administrative agent for the Lenders under
this Agreement and the other Loan Documents.


 


“Administrative Agent’s Payment Office”: the
address for payments set forth in subsection 11.2 or such other address as the
Administrative Agent may from time to time specify in accordance with
subsection 11.2.


 


“Affected Eurodollar Loans”: as defined in
subsection 4.3(g).


 


“Affiliate”: as to any Person, any other Person
(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person.  For purposes of this definition, “control”
of a Person means the power, directly or indirectly, either to (a) vote 20% or
more of the securities having ordinary voting power for the election of
directors of such Person or (b) direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.


 


“Agent-Related Persons”: the Agents and any
successor agent pursuant to subsection 10.9, together with their respective
Affiliates (including the Arrangers), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.


 


“Agents”: collectively, the Administrative
Agent, the Collateral Agent and the Syndication Agent.


 


“Aggregate Revolving Credit Outstandings”: as
to any Revolving Credit Lender at any time, an amount equal to the sum of (a)
the aggregate principal amount of all Revolving Loans made by such Revolving
Credit Lender then outstanding, (b) an amount equal to the product of such
Revolving Credit Lender’s Revolving Credit Commitment Percentage at such time
and the L/C Obligations then outstanding, and (c) an amount equal to the
product of such Revolving Credit Lender’s Revolving Credit Commitment
Percentage at such time and the aggregate principal amount of all Swing Line
Loans then outstanding.


 


“Agreement”: this Credit Agreement, as amended,
restated, supplemented or otherwise modified from time to time.


 


2

















 


“Agreement Currency”: as defined in subsection
11.16.


 


“Applicable Creditor”: as defined in subsection
11.16.


 


“Applicable Margin”: (a) in the case of the Revolving
Loans (i) 1.50% if such Loans are Base Rate Loans and (ii) 2.50% if such Loans
are Eurodollar Loans; and (b) in the case of the Tranche B Term Loans, (x) at
any time that the Leverage Ratio is greater than 3.00 to 1.00, (i) 1.75% if
such Loans are Base Rate Loans and (ii) 2.75% if such Loans are Eurodollar
Loans and (y) in all other cases, (i) 1.50% if such Loans are Base Rate Loans
and (ii) 2.50% if such Loans are Eurodollar Loans.


 


“Applicable Rate”: 0.50% per annum.


 


“Arrangers”: Morgan Stanley and CSFB, in their
capacity as joint lead arrangers and joint book managers under this Agreement.


 


“Assignee”: as defined in subsection 11.6(c).


 


“Available Cash”: at any time, (a) the sum of
(i) so long as no Default or Event of Default shall have then occurred and be
continuing, the aggregate Available Revolving Credit Commitments of the
Revolving Credit Lenders at such time and (ii) the aggregate amount of
unrestricted cash and Cash Equivalents of the Company and its Subsidiaries at
such time minus (b) the aggregate amount of Taxes that would then be
payable if the cash or Cash Equivalents of the Foreign Subsidiaries were paid
as a dividend to the Company or any of its Domestic Subsidiaries as a result of
the payment of such dividend.


 


“Available Revolving Credit Commitment”: as to
any Revolving Credit Lender at any time, an amount equal to the excess, if any,
of (a) the amount of such Revolving Credit Lender’s Revolving Credit Commitment
in effect at such time over (b) the Aggregate Revolving Credit Outstandings
of such Revolving Credit Lender at such time; collectively, as to all the
Revolving Credit Lenders, the “Available Revolving Credit Commitments”.


 


“Banking Day”: (a) with respect to any
borrowings, disbursements and payments in respect of and calculations and
interest rates pertaining to Base Rate Loans, any Business Day, and (b) with
respect to any borrowings, disbursements and payments in respect of and
calculations, interest rates and Interest Periods pertaining to Eurodollar
Loans, any Business Day which is also a day on which dealings are carried on in
the London Interbank market.


 


“Base Rate”: for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (i) the rate of interest publicly announced by Citibank, N.A. as its “prime
rate” and (ii) the Federal Funds Effective Rate in effect from time to time plus
0.5%; any change in the Base Rate due to a change in the Federal Funds
Effective Rate shall be effective as of the opening of business on the effective
day of such change in the Federal Funds Effective Rate.


 


3

















 


“Base Rate Loans”: Loans the rate of interest
applicable to which is based upon the Base Rate.


 


“Base Year”: as defined in subsection 4.3(b).


 


“Benefited Lender”: as defined in subsection
11.7(a).


 


“Borrowing Date”: any Banking Day specified in
a notice pursuant to subsection 2.2, 2.14 or 3.2 as a date on which the Company
requests the Lenders to make Loans hereunder.


 


“Business”: as defined in subsection 5.18(b).


 


“Business Day”: a day other than a Saturday,
Sunday or other day on which commercial banks in New York City are authorized
or required by law to close.


 


“Capital Expenditures”: as to any Person for
any period, gross expenditures (whether paid in cash or other consideration or
accrued by such Person and its Subsidiaries, but without duplication) for the
rental, lease, purchase (including by way of the acquisition of securities of a
Person), construction or use of any property during such period, the value or
cost of which, in accordance with GAAP, would appear on such Person’s
consolidated balance sheet in the category of property, plant or equipment at
the end of such period, provided that the foregoing shall not be reduced
for any sales or dispositions of any category of property, plant or equipment, provided,
further, that the foregoing shall exclude (i) any expenditures for
raw materials and work-in-process, (ii) any expenditures made with the Net
Cash Proceeds of an asset sale or other disposition or a Casualty Event that
are reinvested as permitted by subsection 4.3(d), (iii) any expenditures
made with the Net Cash Proceeds of capital contributions from, or the issuance
of Capital Stock to, the Sponsors and (iv) any expenditures for Permitted
Acquisitions.


 


“Capital Stock”: 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) and any and all warrants or options to purchase any of the
foregoing.


 


“Cash Collateral Account”: as defined in
subsection 4.3(a).


 


“Cash Equivalents”: (a) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed or insured by the United States Government or any agency thereof,
(b) certificates of deposit and eurodollar time deposits with maturities of one
year or less from the date of acquisition and overnight bank deposits of any
Lender or of any commercial bank having capital and surplus in excess of
$500,000,000, (c) repurchase obligations of any Lender or of any commercial
bank satisfying the requirements of clause (b) of this definition, having a
term of not more than 30 days with respect to securities issued or fully
guaranteed or insured by the United States Government, (d) commercial paper of
a domestic issuer rated at least A-2 by Standard and Poor’s Rating Group (“S&P”)
or at least P-2 by Moody’s Investors Service,


 


4

















 


Inc. (“Moody’s”), (e) securities with
maturities of one year or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or foreign
government (as the case may be) are rated at least A by S&P or at least A
by Moody’s, (f) securities with maturities of one year or less from the date of
acquisition backed by standby letters of credit issued by any Lender or any
commercial bank satisfying the requirements of clause (b) of this definition,
(g) shares of money market mutual or similar funds which invest exclusively in
assets satisfying the requirements of clauses (a) through (f) of this
definition or (h) investments made by Foreign Subsidiaries in local currencies
in instruments issued by or with entities of such jurisdiction having
correlative attributes to the foregoing.


 


“Cash Interest Expense”: of the Company for any
period, Consolidated Interest Expense of the Company for such period minus,
in each case to the extent included in determining such Consolidated Interest
Expense for such period, the sum of the following: (a) non-cash expenses for
interest payable in kind, (b) amortization of debt discount and fees and (c)
premiums paid in respect of the repayment of the Existing Subordinated Notes.


 


“Casualty Event”: with respect to any property
of any Person, the receipt by such Person of insurance proceeds, or proceeds of
a condemnation award or other compensation in connection with any loss of or
damage to, or any condemnation or other taking of, such property.


 


“Certificate of Designations”: that certain
Statement of Designations, Preferences and Rights of the Series A Convertible
Participating Preferred Stock of Kinetic Concepts, Inc. that governs the rights
and preferences of the Convertible Preferred.


 


“Closing Date”: the date of the initial funding
of Loans hereunder.


 


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


 


“Collateral”: all assets of the Loan Parties,
now owned or hereinafter acquired, upon which a Lien is purported to be created
by any Security Document.


 


“Collateral Agent”:  Morgan Stanley & Co. Incorporated.


 


“Commitments”: the collective reference to the
Revolving Credit Commitments and the Tranche B Term Loan Commitments;
individually, a “Commitment”.


 


“Commonly Controlled Entity”:  an entity, whether or not incorporated,
which is under common control with any Loan Party within the meaning of Section
4001 of ERISA or is part of a group which includes the Loan Parties and which
is treated as a single employer under Section 414 of the Code.


 


“Company”: as defined in the preamble to this
Agreement.


 


5

















 


“Consolidated”: means such term as it applies
to the Company and its Subsidiaries on a consolidated basis, after eliminating
all intercompany items.


 


“Continuing Directors”: as defined in
subsection 9(l).


 


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


 


“Convertible Preferred”: the Company’s 9%
convertible preferred securities on terms and conditions substantially similar
to the terms set forth in the Certificate of Designations attached hereto as Schedule
1.1(b) or otherwise on terms and conditions reasonably satisfactory to the
Arrangers.


 


“Convertible Preferred Documents”: the
Convertible Preferred Purchase Agreement, the Investor Rights Agreement, the
Certificate of Designations and any other agreements and documents executed and
delivered in connection with the foregoing.


 


“Convertible Preferred Purchase Agreement”:
that certain Series A Preferred Stock Purchase Agreement dated on or about
August 11, 2003 among the Company and the investors named therein.


 


“CSFB”: as defined in the preamble to this
Agreement.


 


“Default”: any of the events specified in
Section 9, whether or not any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.


 


“Dollars” and “$”: dollars in lawful
currency of the United States of America.


 


“Domestic Subsidiary”: any Subsidiary of the
Company organized under the laws of any jurisdiction within the United States.


 


“Documentation Agents”: as defined in the
preamble to this Agreement.


 


“EBITDA”: with respect to any period, the sum
of, without duplication, (a) Consolidated Net Income of the Company for such
period plus, in each case to the extent deducted in determining such
Consolidated Net Income for such period, the sum of the following (without
duplication): (i) Consolidated Interest Expense of the Company, (ii)
consolidated income Tax expense of the Company and its Consolidated
Subsidiaries, (iii) consolidated depreciation and amortization expense of the
Company and its Consolidated Subsidiaries, (iv) the unrealized foreign currency
losses of the Company and its Consolidated Subsidiaries, (v) all other non-cash
charges (including impairment charges with respect to goodwill) and expenses
(including option expenses) of the Company and its Consolidated Subsidiaries,
(vi) management fees paid to the Sponsors prior to August 31, 2003, (vii) cash
expenses for option and stock repurchases for the 12-month period ending on and
including the Closing Date, cash expenses related thereto incurred after the
Closing Date, and cash expenses in connection with the Redemptions with respect
to


 


6

















 


option repurchases, (viii) R&D expense write off
for the twelve month period prior to the Closing Date, and (ix) charges,
expenses or fees incurred in connection with the Transactions (including in
connection with the extinguishment of Indebtedness but excluding accrued
interest and bond tender premium) in an aggregate amount not to exceed $35
million, and minus, to the extent included in determining such
Consolidated Net Income for such period, any unrealized foreign currency gains
and any non-cash income or non-cash gains, all as determined on a consolidated
basis in accordance with GAAP, plus (b) with respect to any Permitted
Acquisitions made by the Company or any of its Subsidiaries during such period,
the Acquired EBITDA of the Capital Stock or assets acquired pursuant to such
Permitted Acquisitions while under the ownership of the Prior Owner thereof for
the portion of such period prior to the consummation of such Permitted
Acquisition, provided that EBITDA with respect to any period during
which any Permitted Acquisition is consummated shall not include any interest
income in respect of any cash (other than proceeds of Indebtedness incurred to
finance any such Permitted Acquisition) used to finance such Permitted
Acquisition.


 


“EMD CV”: European Medical Distributors, CV, a
Dutch limited partnership.


 


“Environmental Laws”: any and all foreign,
Federal, state, local or municipal laws, rules, orders, regulations, statutes,
guidelines, ordinances, codes, decrees, requirements of any Governmental
Authority or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning protection
of the environment, or of human health or employee health and safety as they
may be affected by the environment or by Materials of Environmental Concern, as
has been, is now, or may at any time hereafter be, in effect.


 


“ERISA”: the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the regulations
promulgated thereunder.


 


“Eurocurrency Reserve Requirements”: for any
day as applied to a Eurodollar Loan, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board of Governors of the
Federal Reserve System or other Governmental Authority having jurisdiction with
respect thereto) dealing with reserve requirements prescribed for eurocurrency
funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of
such Board) maintained by a member bank of such System.


 


“Eurodollar Base Rate”: with respect to each
day during each Interest Period pertaining to a Eurodollar Loan, the rate per
annum equal to the rate for deposits in Dollars for the period commencing on
the first day of such Interest Period and ending on the last day of such
Interest Period which appears on Telerate Page 3750 as of 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest Period.  If at least two rates appear on such Telerate
Page for such Interest Period, the “Eurodollar Base Rate” shall be the
arithmetic mean of such rates.  If the
“Eurodollar Base Rate” cannot be determined in accordance with the immediately
preceding sentences with respect to any Interest Period, the “Eurodollar Base
Rate” with respect to each day during


 


7

















 


such Interest Period shall be the rate per annum
appearing on Reuters Screen LIBOR Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M., London time, two Business Days
prior to the beginning of such Interest Period.  If at least two rates appear on Reuters Screen LIBOR Page, the
“Eurodollar Base Rate” shall be the arithmetic mean of such rates.


 


“Eurodollar Loans”: Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.


 


“Eurodollar Rate”: with respect to each day
during each Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula (rounded
upward to the nearest 1/100th of 1%):


 


	
   

  	
  Eurodollar Base
  Rate

  	
   

  
	
   

  	
  1.00 -
  Eurocurrency Reserve Requirements

  	
   

  



 


“Event of Default”: any of the events specified
in Section 9, provided that any requirement for the giving of notice,
the lapse of time, or both, or any other condition, has been satisfied.


 


“Excess Cash Flow”: for any fiscal year of the
Company:


 


(a)                               the
sum of (i) EBITDA for such fiscal year, plus (ii) any decreases in
Working Capital during such fiscal year,


 


minus


 


(b)                               the
sum of, without duplication, (i) to the extent deducted in determining
Consolidated Net Income of the Company for such fiscal year, the aggregate
amount of Cash Interest Expense for such fiscal year plus (ii) scheduled
principal amortization of Tranche B Term Loans during such fiscal year (whether
or not such payments are made, but after giving effect to any reduction in such
scheduled principal amortization as a result of voluntary prepayments), plus
(iii) any voluntary prepayments of Tranche B Term Loans made during such fiscal
year, plus (iv) any prepayments of Revolving Loans to the extent the
Revolving Credit Commitments were concurrently reduced at the option of the
Company by a like amount during such fiscal year, plus (v) the sum of,
without duplication, (A) the aggregate amount paid, or required to be paid, in
cash in respect of income Taxes during such fiscal year and (B) the aggregate
amount of Taxes that would be payable if the portion of Consolidated Net Income
of the Company for such fiscal year which was earned by Foreign Subsidiaries
was paid as a dividend to the Company or any of its Domestic Subsidiaries
during such fiscal year plus (vi) the aggregate amount of all Capital
Expenditures made during such fiscal year in accordance with the terms hereof plus
(vii) any increases in Working Capital during such fiscal year, plus
(viii) the Acquired EBITDA of all Capital Stock or assets acquired pursuant to
any Permitted Acquisitions made during such fiscal year while under the
ownership of the Prior Owner thereof for the portion of such fiscal year prior
to the consummation of each such


 


8

















 


Permitted
Acquisition plus (ix) the excess of (A) the aggregate amount of cash
used to consummate Permitted Acquisitions during such fiscal year over (B) the
increase in Working Capital during such fiscal year which is attributable to
such Permitted Acquisitions, plus (x) the aggregate amount of cash used
to make Investments under subsections 8.9(c), (f), (i), and (k), plus
(xi) the aggregate amount of cash used to repurchase Capital Stock of the
Company pursuant to subsection 8.7(i), plus (xii) charges, expenses or
fees incurred in connection with the Transactions (including in connection with
the extinguishment of Indebtedness), plus (xiii) management fees paid to
the Sponsors prior to August 31, 2003, plus (xiv) cash expenses for
option and stock repurchases for the 12-month period ending on and including
the Closing Date, and cash expenses related thereto incurred after the Closing
Date, and cash expenses in connection with the Redemptions with respect to
option repurchases, in each case to the extent deducted in determining Net
Income, plus (xv) the Net Cash Proceeds of asset sales and other
dispositions and Casualty Events that were reinvested as permitted by
subsection 4.3(d) during such fiscal year.


 


“Existing Subordinated Note Indenture”:  the Indenture, dated as of November 5, 1997,
between the Company, the guarantors listed therein, and Marine Midland Bank, as
trustee.


 


“Existing Subordinated Note Indenture Documents”:  the Existing Subordinated Note Indenture,
the Existing Subordinated Notes, and any other notes, agreements, guaranties
and documents executed and delivered in connection with the foregoing.


 


“Existing Subordinated Notes”:  the 9 5/8% Senior Subordinated Notes due
2007, Series A and the 9 5/8% Senior Subordinated Notes due 2007, Series B
issued by the Company pursuant to the Existing Subordinated Note Indenture.


 


“Federal Funds Effective Rate”: for any day,
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a Business
Day, the average of the quotations for the day of such transactions received by
the Administrative Agent from three federal funds brokers of recognized
standing selected by it.


 


“Fee Payment Date”: the last day of each March,
June, September and December (or if such day is not a Business Day, the next
succeeding Business Day).


 


“Financing Lease”: any lease of property, real
or personal, the obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the lessee.


 


“Foreign Currency Protection Agreements”: as to
any Person, all foreign exchange contracts, currency swap agreements or other
similar agreements or arrangements designed to protect such Person against
fluctuations in currency values.


 


9

















 


“Foreign Subsidiary”: any Subsidiary of the
Company organized under the laws of any jurisdiction outside the United States
of America.


 


“GAAP”: generally accepted accounting principles
in the United States of America in effect from time to time.


 


“Governmental Authority”: any nation or
government, any state or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.


 


“Guarantee”: (a) the Guarantee and Collateral
Agreement, or (b) any other guarantee delivered to the Administrative Agent
guaranteeing the Obligations.


 


“Guarantee and Collateral Agreement”: the
Guarantee and Collateral Agreement, to be executed and delivered by the Company
and each of the Domestic Subsidiaries, substantially in the form of Exhibit
B, as the same may be amended, restated, supplemented or otherwise modified
from time to time.


 


“Guarantee Obligation”: as to any Person (the “guaranteeing
person”), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or
other obligations (the “primary obligations”) of any other third Person
(the “primary obligor”) in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (1) for the purchase or payment of any such primary obligation or
(2) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (iii)
to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation or (iv) otherwise to assure
or hold harmless the owner of any such primary obligation against loss in
respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. 
The amount of any Guarantee Obligation of any guaranteeing person shall
be deemed to be the lower of (x) an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee Obligation
is made and (y) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for which
such guaranteeing person may be liable are not stated or determinable, in which
case the amount of such Guarantee Obligation shall be such guaranteeing
person’s maximum reasonably anticipated liability in respect thereof as
determined by the guaranteeing person in good faith.


 


10

















 


“Guarantor”: any Person (other than the
Company) which is now or hereafter becomes a party to the Guarantee and
Collateral Agreement.


 


“IMD CV”: International Medical Distributors,
CV, a Dutch limited partnership.


 


“Indebtedness”: of any Person at any date, (a)
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with customary
practices), (b) any other indebtedness of such Person which is evidenced by a
note, bond, debenture or similar instrument, (c) all obligations of such Person
under Financing Leases, (d) all obligations of such Person in respect of
acceptances issued or created for the account of such Person, (e) all
obligations of such Person in respect of Foreign Currency Protection
Agreements, Interest Rate Protection Agreements and any other commodity or
other hedging arrangement and (f) all liabilities secured by any Lien on any
property owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof (the amount of any Indebtedness
pursuant to this clause (f) shall be equal to the lesser of (i) the amount of
such liabilities and (ii) the fair market value of such property).  For purposes of this Agreement, the amount
of any Indebtedness referred to in clause (e) of the preceding sentence shall
be the net amounts (including by offset of amounts payable thereunder), including
any net termination payments, required to be paid to a counterparty rather than
any notional amount with regard to which payments may be calculated.  For the avoidance of doubt, all obligations
under the Convertible Preferred are deemed not to be Indebtedness for all
purposes hereunder.


 


“Insolvency”: with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.


 


“Insolvent”: pertaining to a condition of
Insolvency.


 


“Intellectual Property”:  as defined in subsection 5.10.


 


“Interest Expense”: of the Company for any
period, the sum of (a) the amount of interest expense, both expensed and
capitalized, of the Company and its Consolidated Subsidiaries determined on a
consolidated basis in accordance with GAAP for such period, plus,
without duplication, that portion of payments under Financing Leases of the
Company and its Consolidated Subsidiaries attributable to interest expense of
the Company and its Consolidated Subsidiaries for such period in accordance
with GAAP and (b) the Acquired Interest Expense of the Company and its
Subsidiaries for such period.  For the
avoidance of doubt, any dividends on the Convertible Preferred shall be deemed
not to be interest expense for all purposes hereunder.


 


“Interest Payment Date”: (a) as to any Base
Rate Loan or Swing Line Loan, the last day  of
each March, June, September and December (or if such day is not a Business Day,
the next succeeding Business Day), (b) as to any Eurodollar Loan having an
Interest Period of three months or less, the last day of such Interest Period,
and (c) as to any Eurodollar Loan having an Interest Period longer than three
months, each day which is


 


11

















 


three months, or a whole multiple thereof, after the
first day of such Interest Period and the last day of such Interest Period.


 


“Interest Period”: with respect to any
Eurodollar Loan:


 


(i)                                     initially,
the period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Company in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and


 


(ii)                                  thereafter,
each period commencing on the last day of the next preceding Interest Period
applicable to such Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Company by irrevocable written notice to the
Administrative Agent not less than three Banking Days prior to the last day of
the then current Interest Period with respect thereto;


 


provided
that, the foregoing provisions relating to Interest Periods are subject to the
following:


 


(1)                                  if
any Interest Period pertaining to a Eurodollar Loan would otherwise end on a
day that is not a Banking Day, such Interest Period shall be extended to the
next succeeding Banking Day unless the result of such extension would be to
carry such Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Banking Day;


 


(2)                                  any
Interest Period pertaining to a Eurodollar Loan that begins on the last Banking
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period) shall
end on the last Banking Day of a calendar month; and


 


(3)                                  the
Company shall select Interest Periods so as not to require a payment or
prepayment of any Eurodollar Loan during an Interest Period for such Loan.


 


“Interest Rate Protection Agreement”: any interest
rate protection agreement, interest rate future, interest rate option, interest
rate cap or collar or other interest rate hedge arrangement, to or under which
the Company or any of its Subsidiaries is a party or a beneficiary.


 


“Investment”: as defined in subsection 8.9.


 


“Investor Rights Agreement”: that certain
Investor Rights Agreement dated as of August 11, 2003, among the Company and
the investors named therein.


 


“ISP”: the International Standby Practices of
the International Chamber of Commerce (ISP 98).


 


12

















 


“Issuing Bank”: Wells Fargo Bank, National
Association, any of its affiliates or any other Lender which shall be appointed
in accordance with the provisions hereof to act as Issuing Bank.


 


“Judgment Currency”: as defined in subsection
11.16.


 


“KCI Holding”: KCI Holding Company, Inc., a
Delaware corporation.


 


“KCII Holdings LLC”: KCII Holdings, L.L.C., a
Delaware limited liability company.


 


“KCII”: KCI International, Inc., a Delaware
corporation.


 


“KCI International”: KCI International Holding
Company, a Delaware corporation.


 


“L/C Obligations”:  at any time, the sum of (a) the aggregate amount then available
to be drawn under all outstanding Letters of Credit and (b) the aggregate
amount of Reimbursement Obligations in respect of Letters of Credit which have
not then been reimbursed by the Company pursuant to subsection 2.9.


 


“L/C Participants”: the collective reference to
all the Revolving Credit Lenders other than the Issuing Bank.


 


“L/C Sublimit”: at any time, the lesser of (a)
$30,000,000 and (b) the Revolving Credit Commitments then in effect.


 


“Lenders”: as defined in the preamble to this
Agreement and including, without limitation, the Issuing Bank.


 


“Letter of Credit Application”: an application
in such form as the Issuing Bank may specify from time to time, requesting the
Issuing Bank to open a Letter of Credit.


 


“Letters of Credit”: as defined in subsection
2.5(a).


 


“Leverage Ratio”: at any time, the ratio of (a)
Total Funded Debt at such time to (b) EBITDA for the most recent period of four
consecutive fiscal quarters.


 


“Lien”: any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), charge
or other security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement and any Financing Lease having substantially the same economic effect
as any of the foregoing).  For the
avoidance of doubt, “Liens” shall not include any precautionary notice of an
ordinary course operating lease of personal property evidenced by a financing
statement filed under the Uniform Commercial Code of any jurisdiction.


 


“Loan”: any loan made by any Lender or Swing
Line Lender.


 


13

















 


“Loan Documents”: this Agreement, any Notes,
any Letter of Credit Applications, any Letters of Credit, any Swing Line Loan
Participation Certificates and the Security Documents.


 


“Loan Notices”: notices from the Company with
respect to borrowings, commitments, conversions and continuations, such as
notices of borrowings, notices of termination or reduction of Revolving Credit
Commitments, notices requesting the issuance of Letters of Credit, notices with
respect to whether a Loan is to be a Eurodollar Loan, notices regarding
continuing Eurodollar Loans, and notices regarding the conversion of Eurodollar
Loans to Base Rate Loans and the conversion of Base Rate Loans to Eurodollar
Loans.


 


“Loan Parties”: the Company and each Subsidiary
of the Company which is a party to a Loan Document; individually, a “Loan
Party”.


 


“Management Equity Plan”: the Company’s
Management Equity Plan in effect on the Closing Date, as the same may be
amended from time to time, or any successor stock option plan which governs the
terms of stock options which were initially granted under the Management Equity
Plan.


 


“Material Adverse Effect”:  a material adverse effect on (a) the
business, condition (financial or otherwise), operations, performance or
properties of the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company or any Guarantor to perform its obligations hereunder or
under any of the other Loan Documents or (c) the rights or remedies of the
Administrative Agent or the Lenders hereunder or under any of the other Loan
Documents.


 


“Materials of Environmental Concern”: any
gasoline or petroleum (including crude oil or any fraction thereof) or
petroleum products or by-products or any hazardous or toxic substances,
materials or wastes (including, without limitation, asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation), that is regulated pursuant to or
could give rise to liability under any applicable Environmental Law, whether or
not such substance, material, or waste is defined as hazardous or toxic under
any applicable Environmental Law.


 


“Minimum Tax Withholding”:  the amount which the Company or any of its
subsidiaries is required to withhold in connection with employee related taxes,
including, without limitation, federal and state withholding requirements, and
FICA and Medicare taxes.


 


“Moody’s”: as defined in the definition of
“Cash Equivalents.”


 


“Morgan Stanley”: as defined in the preamble to
this Agreement.


 


“Mortgages”: the collective reference to the
fee and ground leasehold mortgages, deeds of trust and other similar documents
executed and delivered from time to time in accordance with the terms hereof by
the Company and the Guarantors in favor of the Collateral Agent, in such form
as shall be reasonably satisfactory to the Company and the


 


14

















 


Administrative Agent, as each of the same may be
amended, restated, supplemented or otherwise modified from time to time.


 


“Multiemployer Plan”:  a Plan which is a multiemployer plan as defined in Section
4001(a)(3) of ERISA.


 


“Net Cash Proceeds”: (a) with respect to any
sale or other disposition of assets by the Company or any of its Subsidiaries,
the net amount equal to the aggregate amount received in cash (including Cash
Equivalents and any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or purchase price
adjustment receivable or the subsequent sale or disposition of any non-cash
consideration or Investments received in connection therewith or otherwise, but
only as and when received) minus the sum of (i) the fees, commissions
and other out-of-pocket expenses incurred by the Company or such Subsidiary in
connection with such sale or other disposition, (ii) federal, state and local
Taxes incurred in connection with such sale or other disposition, whether
payable at such time or thereafter, (iii) reserves for indemnification
obligations and purchase price adjustments reasonably expected to be payable by
such Loan Party in connection therewith (it being understood that if such
amount is not subsequently paid, such amount shall constitute “Net Cash
Proceeds” at the time such payment is no longer required) and (iv) in the case
of any such sale or other disposition of assets subject to a Lien securing any
Indebtedness (which Lien and Indebtedness are permitted by this Agreement), any
amounts required to be repaid by the Company or such Subsidiary in respect of
such Indebtedness (other than Indebtedness under this Agreement) in connection
with such sale or other disposition;


 


(b)                                 with
respect to any issuance of any Indebtedness or Capital Stock by any Loan Party
or any of its Subsidiaries or any capital contribution made to any Loan Party
or any of its Subsidiaries, the net amount equal to the aggregate amount
received in cash (including Cash Equivalents and any cash payments received by
way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or the subsequent sale or
disposition of any non-cash consideration or Investments received in connection
therewith or otherwise, but only as and when received) in connection with such
issuance or capital contribution minus the documented fees, commissions
and other out-of-pocket expenses incurred by such Loan Party and its
Subsidiaries in connection with such issuance or capital contribution; and


 


(c)                                  with
respect to proceeds received by any Loan Party or any of its Subsidiaries in
respect of a Casualty Event, the amount of such proceeds minus (i) the
documented out-of-pocket fees and expenses incurred by such Loan Party and its
Subsidiaries in connection with the collection of such proceeds (including
income taxes payable as a result of any gain recognized in connection
therewith), (ii) any such proceeds received in respect of insurance which are
required to be paid to any co-insured Persons or other loss payees with respect
to such insurance, and (iii) in the case of any Casualty Event relating to any
asset subject to a Lien securing any Indebtedness (which Lien and Indebtedness
are permitted by this Agreement), any amounts required to be repaid by the
Company or such Subsidiary in respect of such Indebtedness (other than
Indebtedness under this Agreement) in connection with such Casualty Event.


 


15

















 


“Net Income”: of the Company for any period,
the net income of the Company and its Consolidated Subsidiaries, determined on
a consolidated basis in accordance with GAAP for such period.


 


“Non-Excluded Taxes”: as defined in subsection
4.12(a).


 


“Notes”: the collective reference to the
Revolving Credit Notes, the Swing Line Note, and the Tranche B Term Notes.


 


“Notice of Borrowing”: as defined in subsection
2.2.


 


“Obligations”: the unpaid principal of and
interest on (including, without limitation, interest accruing after the
maturity of the Loans and Reimbursement Obligations and interest accruing after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding) the Loans and all other obligations and liabilities of the Company
to the Agents, or the Issuing Bank or to any Lender (or to any Affiliate of a
Lender which enters into any Foreign Currency Protection Agreement or Interest
Rate Protection Agreement with the Company), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this Agreement,
any other Loan Document, any Letters of Credit, any Foreign Currency Protection
Agreement or Interest Rate Protection Agreement entered into with any Lender or
any Affiliate of any Lender or any other document made, delivered or given in
connection herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of counsel to any Agent
or to any Lender that are required to be paid by the Company pursuant hereto)
or otherwise.


 


“Outstanding Swing Line Loans”: as defined in
subsection 2.15(a).


 


“Participant”: as defined in subsection
11.6(b).


 


“PBGC”: the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of ERISA.


 


“Permanent Disability”: with respect to any option
holder who is an employee of the Company or any of its Subsidiaries, the same
meaning as such term or similar term is defined in an employment agreement
applicable to the employee or, in the case of an option holder who does not
have an employment agreement that defines such term or a similar term, means
that the option holder is unable to perform substantially all his or her duties
as an employee of the Company or any of its Subsidiaries by reason of illness
or incapacity for a period of more than six consecutive months, or six months
in the aggregate during any 12-month period, established by medical evidence
reasonably satisfactory to the Company.


 


“Permitted Acquisition”: any Acquisition, provided
that (a) the Company satisfies, and is projected to continue to satisfy, after
giving effect (on a pro  forma basis)


 


16

















 


to such Acquisition and any Indebtedness incurred in
connection therewith, the financial covenants set forth in subsection 8.1
through the Tranche B Final Maturity Date as set forth in a certificate of the
Chief Financial Officer of the Company delivered to the Administrative Agent at
least five Business Days prior to the consummation of such Acquisition, (b)
such Acquisition is approved by the Board of Directors (or a majority of
holders of the Capital Stock of such Person) of the Person whose assets or
Capital Stock are being acquired pursuant to such Acquisition, (c) no Default
or Event of Default has then occurred and is continuing or would result
therefrom, (d) the purchase price (including assumed indebtedness and the fair
market value of the non-cash consideration in connection with such Acquisition)
of such Acquisition does not exceed $20,000,000 individually and the purchase
price of all such Acquisitions (i) in any given fiscal year does not exceed
$30,000,000 in the aggregate and (ii) since the Closing Date does not exceed
$100,000,000 in the aggregate (provided that, if the Company or any of
its Subsidiaries receives Net Cash Proceeds of capital contributions by, or
from the issuance of any Capital Stock (other than any such Net Cash Proceeds
received and applied to finance the consummation of the Transactions) to, the
Sponsors after the Closing Date, such aggregate limitation in this clause (d)
shall be increased by the aggregate amount of such Net Cash Proceeds), (e) the
Available Cash in effect at the time of such Acquisition (and after giving
effect thereto) is at least $10,000,000, (f) the Company and its Subsidiaries
shall be in compliance with the requirements of subsection 7.10 after giving
effect to such Acquisition and (g) the aggregate purchase price (including
assumed indebtedness and the fair market value of the non-cash consideration in
connection with such Acquisition) of all such Acquisitions that relate to joint
ventures shall not exceed $20,000,000.


 


“Permitted Post Closing Redemptions”: any
repurchases or redemptions of the Company’s Capital Stock with:  (i) the net after Tax proceeds received
pursuant to that certain Settlement Agreement, dated as of December 31, 2002,
by and between the Company, certain of its subsidiaries and shareholders, and
Hillenbrand Industries, Inc., certain of its subsidiaries and shareholders in
an aggregate amount not to exceed $47 million, (ii) cash strike payments from
the exercise of options and the estimated tax benefit to the Company from the
Transactions, including the exercise or repurchase of stock options in
connection therewith, or (iii) the cash proceeds from the issuance of the Convertible
Preferred, in the case of clauses (i) and (ii), completed prior to June 30,
2004, and in the case of clause (iii), completed prior to October 31, 2003.


 


“Person”: an individual, partnership,
corporation, limited liability company, business trust, joint stock company,
trust, unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.


 


“Placement Agreement”: that certain Placement
Agreement dated as of July 23, 2003, among the Company, the guarantors named therein
and the initial purchasers named therein.


 


“Plan”: at a particular time, any employee
benefit plan which is covered by ERISA and in respect of which any Loan Party
or a Commonly Controlled Entity is (or,


 


17

















 


if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5)
of ERISA.


 


“Prior Owner”: with respect to any Permitted
Acquisition by the Company or any of its Subsidiaries, the Person or Persons
which was or were the owner(s) of the Capital Stock or assets acquired by the
Company or such Subsidiary pursuant to such Permitted Acquisition.


 


“Projections”: as defined in subsection 5.20.


 


“Properties”: as defined in subsection 5.18(a).


 


“Redemption Documents”: all Offers to Purchase
and related letters of transmittal or similar documents used in connection with
the Redemptions.


 


“Redemptions” the initial repurchase or
redemption of Capital Stock in an aggregate amount not to exceed $300 million,
and any Permitted Post Closing Redemptions.


 


“Register”: as defined in subsection 11.6(d).


 


“Registration Rights Agreement”: that certain
Registration Rights Agreement dated as of August 11, 2003 among the Company,
the guarantors named therein and the initial purchasers named therein.


 


“Regulation S-X”: Regulation S-X under the
Securities Act as in effect from time to time.


 


“Regulation T”: Regulation T of the Board of
Governors of the Federal Reserve System as in effect from time to time.


 


“Regulation U”: Regulation U of the Board of
Governors of the Federal Reserve System as in effect from time to time.


 


“Regulation X”: Regulation X of the Board of
Governors of the Federal Reserve System as in effect from time to time.


 


“Reimbursement Obligations”: the obligation of
the Company to reimburse the Issuing Bank pursuant to subsection 2.9 for
amounts drawn under Letters of Credit.


 


“Related Fund”: with respect to any Lender that
is a fund, any other fund that invests in loans and is managed by a Lender, an
Affiliate of a Lender or the same investment adviser that manages such Lender
or by an affiliate of such investment adviser.


 


“Reorganization”: with respect to any
Multiemployer Plan, the condition that such plan is in reorganization within
the meaning of Section 4241 of ERISA.


 


18

















 


“Reportable Event”: any of the events set forth
in Section 4043(c) of ERISA, other than those events as to which the thirty-day
notice period has been waived by regulation.


 


“Required Lenders”: at any time, Lenders the
Voting Percentages of which aggregate more than 50%.


 


“Required Revolving Credit Lenders”: at any
time, Revolving Credit Lenders the Revolving Credit Commitment Percentages of
which aggregate more than 50%.


 


“Required Tranche B Lenders”: at any time,
Tranche B Lenders the Tranche B Commitment Percentages of which aggregate more
than 50%.


 


“Requirement of Law”: as to any Person, the
Certificate of Incorporation and By-Laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.


 


“Responsible Officer”: (a) with respect to the
Company, the chief executive officer, the president or any senior vice
president of the Company or, with respect to financial matters, the chief
financial officer, the vice president of accounting, the vice president of
finance or the treasurer of the Company and (b) with respect to any Subsidiary
of the Company, the chief executive officer, the president or manager or
comparable officer of such Subsidiary or, with respect to financial matters,
the chief financial officer of such Subsidiary.


 


“Revolving Credit Commitment”: as to any
Lender, the obligation of such Lender to (a) make Revolving Loans, (b) issue or
participate in Letters of Credit, and (c) participate in Swing Line Loans, in
an aggregate principal and/or face amount at any one time outstanding not to
exceed the amount set forth under such Lender’s name in Schedule 1.1(a)
opposite the heading “Revolving Credit Commitment” (in each case as such amount
may be adjusted from time to time as provided herein); collectively, as to all
such Lenders, the “Revolving Credit Commitments”.


 


“Revolving Credit Commitment Percentage”: as to
any Revolving Credit Lender:


 


(a)                                  at
any time prior to the termination of the Revolving Credit Commitments, the
percentage which (i) such Revolving Credit Lender’s Revolving Credit Commitment
then constitutes of (ii) the Revolving Credit Commitments of all the Lenders,
and


 


(b)                                 at
any time after the termination of the Revolving Credit Commitments, the percentage
which (i) (x) the aggregate principal amount of such Revolving Credit Lender’s
Revolving Loans then outstanding plus (y) the product of (A) such
Revolving Credit Lender’s Revolving Credit Commitment Percentage immediately
prior to the termination of the Revolving Credit


 


19

















 


Commitments
(giving effect to any permitted assignments after such termination) times (B)
the sum of (1) the L/C Obligations, and (2) the aggregate principal amount of
Swing Line Loans then outstanding then constitutes of (ii) the sum of (x) the
aggregate principal amount of Revolving Loans of all the Revolving Credit
Lenders then outstanding plus (y) the aggregate L/C Obligations of all
the Revolving Credit Lenders then outstanding plus (z) the aggregate
principal amount of Swing Line Loans then outstanding.


 


“Revolving Credit Commitment Period”: the
period from and including the Closing Date to but not including the Revolving
Credit Termination Date.


 


“Revolving Credit Lender”: any Lender having a
Revolving Credit Commitment or that holds outstanding Revolving Loans
hereunder.


 


“Revolving Credit Note”: as defined in
subsection 4.1(d).


 


“Revolving Credit Termination Date”: the
earlier of (a) the sixth anniversary of the Closing Date and (b) the date upon
which the Revolving Credit Commitments shall be terminated pursuant to this
Agreement.


 


“Revolving Loans”: as defined in subsection
2.1(a).


 


“Securities Act”: the Securities Act of 1933,
as amended from time to time.


 


“Security Documents”: the collective reference
to the Mortgages, the Guarantee and Collateral Agreement and all other security
documents hereafter delivered to the Collateral Agent granting a Lien on any
asset or assets of any Person to secure the obligations and liabilities of the
Company and its Subsidiaries hereunder and under any of the other Loan
Documents or to secure any guarantee of any such obligations and liabilities,
including, without limitation, any security document delivered pursuant to
subsection 7.10.


 


“Senior Subordinated Note Indenture”: the
Indenture, dated as of August 11, 2003, between the Company and U.S. Bank
National Association, as trustee, for the issuance of the Senior Subordinated
Notes.


 


“Senior Subordinated Note Indenture Documents”:
the Senior Subordinated Note Indenture, the Senior Subordinated Notes, the
Registration Rights Agreement, the Placement Agreement and any other notes,
agreements, guaranties and documents executed and delivered in connection with
the foregoing.


 


“Senior Subordinated Notes”: the 73/8%
senior subordinated unsecured notes issued by the Company pursuant to the
Senior Subordinated Note Indenture and any other notes issued in exchange
therefor and in accordance with any registration rights document entered into
in connection with the issuance of the Senior Subordinated Notes.


 


“Single Employer Plan”: any Plan which is
covered by Title IV of ERISA, but which is not a Multiemployer Plan.


 


20

















 


“Solvent”: with respect to any Person on a
particular date, the condition that on such date, (a) the fair value of the
property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small amount of capital.


 


“Special Purpose Subsidiaries”: KCI
International and KCII Holdings LLC.


 


“Sponsors”: (i) Dr. James R.  Leininger, his spouse, his immediate family
members, his heirs, any of his estate planning vehicles and any of their
Affiliates, (ii) Fremont Purchaser II, Corp. and its Affiliates and (iii) RCBA
Purchaser I, L.P. and its Affiliates.


 


“Subordinated Debt”: (a) any unsecured
Indebtedness of the Company with terms and conditions at least as favorable to
the Lenders as those applicable to the Senior Subordinated Notes and (b) any
other unsecured Indebtedness of the Company, no part of the principal of which
is required to be paid (whether by way of mandatory sinking fund, mandatory
redemption, mandatory prepayment or otherwise) prior to the earlier of (i) the
tenth anniversary of the Closing Date and (ii) one year after the date of the
final scheduled installment of Loans under this Agreement; the payment of the
principal of and interest on which and other obligations of the Company in
respect thereof are subordinated to the prior payment in full of the
Obligations on terms and conditions at least as favorable to the Lenders as
those applicable to the Senior Subordinated Notes; and all other terms and conditions
of which are reasonably satisfactory in form and substance to the Required
Lenders (as evidenced by their prior written approval thereof).


 


“Subordinated Debt Documentation”: the
agreements, indentures and other documentation pursuant to which any Subordinated
Debt is issued.


 


“Subsidiary”: as to any Person, a corporation,
partnership or other entity of which shares of stock or other ownership
interests having ordinary voting power (other than stock or such other
ownership interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other managers of
such corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person.  Unless otherwise qualified, all references to a “Subsidiary” or
to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries
of the Company.  For all purposes under
this Agreement, the term “Subsidiary” shall not include any grantor trust
beneficially owned by the Company or any of its Subsidiaries as of the Closing
Date, regardless of whether such grantor trust would be treated as a subsidiary
of the Company under GAAP.


 


21

















 


“Swing Line Commitment”: at any time, the
obligation of the Swing Line Lender to make Swing Line Loans pursuant to
subsection 2.13.


 


“Swing Line Lender”: Morgan Stanley, in its
capacity as provider of the Swing Line Loans.


 


“Swing Line Loans”: as defined in subsection
2.13.


 


“Swing Line Loan Participation Certificate”: a
certificate, substantially in the form of Exhibit F.


 


“Swing Line Note”: as defined in subsection
4.1(d).


 


“Syndication Agent”: CSFB, together with its
affiliates, as the syndication agent for the Lenders under this Agreement.


 


“S&P”: as defined in the definition of
“Cash Equivalents.”


 


“Taxes”: as defined in subsection 4.12.


 


“Total Funded Debt”: on any date, with respect
to the Company and its Subsidiaries on a Consolidated basis, all Indebtedness
of the Company and its Subsidiaries which by its terms or by the terms of any
instrument or agreement relating thereto matures more than one year after the
date of incurrence thereof, and any such Indebtedness maturing within one year
from the date of incurrence which is directly or indirectly renewable or
extendible at the option of such Person to a date more than one year from such
date of incurrence (including an option of such Person under a revolving credit
or similar agreement obligating the lender or lenders to extend credit over a
period of more than one year from such date of incurrence) and all Guarantee
Obligations of the Company and its Subsidiaries on such date in respect of any
such Indebtedness of Persons other than the Company and its Subsidiaries.


 


“Tranche”: the collective reference to
Eurodollar Loans the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not such
Loans shall originally have been made on the same day); Tranches may be
identified as “Eurodollar Tranches”.


 


“Tranche B Commitment”:  as to any Lender, the obligation of such
Lender to make a Tranche B Term Loan to the Company pursuant to subsection 3.1
in an aggregate amount equal to the amount set forth under such Lender’s name
in Schedule 1.1(a) opposite the heading Tranche B Commitment; collectively, as
to all such Lenders, the “Tranche B Commitments”.  The Tranche B Commitments shall be $480.0
million, and shall be fully drawn on the Closing Date.


 


“Tranche B Commitment Percentage”: as to any
Tranche B Lender, the percentage which the outstanding principal amount of such
Tranche B Lender’s Tranche B Term Loan then constitutes of the aggregate principal
amount of Tranche B Term Loans of all the Tranche B Lenders then outstanding.


 


22

















 


“Tranche B Final Maturity Date”: the seventh
anniversary of the Closing Date.


 


“Tranche B Lender”: any Lender that holds
outstanding Tranche B Term Loans.


 


“Tranche B Term Loan”: any Tranche B Term Loan
made on the Closing Date pursuant to subsection 3.1.


 


“Tranche B Term Note”: as defined in subsection
4.1(d).


 


“Transactions”: the borrowing of the Loans
hereunder on the Closing Date, the issuance of the Senior Subordinated Notes,
the issuance of the Convertible Preferred on or prior to October 31, 2003, the
Redemptions, the refinancing of the Company’s Indebtedness identified on Schedule
1.1(c), and the payment of fees and expenses related to the foregoing.


 


“Transaction Documents”: the Senior
Subordinated Note Indenture Documents, the Convertible Preferred Documents and
the Redemption Documents.


 


“Transferee”: as defined in subsection 11.6(f).


 


“Type”: as to any Loan, its nature as a Base
Rate Loan or a Eurodollar Loan.


 


“Uniform Customs”: the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, as the same may be amended from time to time.


 


“Voting Percentage”: as to any Lender:


 


(a)                                  at
any time prior to the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (x) such Lender’s Revolving Credit Commitment plus
(y) the outstanding principal amount of such Lender’s Tranche B Term Loans then
constitutes of (ii) the sum of (x) the Revolving Credit Commitments of all the
Lenders plus (y) the aggregate principal amount of Tranche B Term Loans
of all the Lenders then outstanding, and


 


(b)                                 at
any time after the termination of the Revolving Credit Commitments, the
percentage which (i) the sum of (x) the aggregate principal amount of such
Lender’s Loans (other than Swing Line Loans) then outstanding plus (y)
the product of (A) such Lender’s Revolving Credit Commitment Percentage
immediately prior to the termination of the Revolving Credit Commitments
(giving effect to any permitted assignments after such termination) times (B)
the sum of (1) the L/C Obligations, and (2) the aggregate principal amount of
Swing Line Loans then outstanding then constitutes of (ii) the sum of (x) the
aggregate principal amount of Loans of all the Lenders then outstanding plus
(y) the aggregate L/C Obligations of all the Lenders then outstanding.


 


“Working Capital”: at any date, the sum of (a)
all amounts which would, in conformity with GAAP, be included under current
assets (other than cash and Cash Equivalents) on a balance sheet of the Company
and its Subsidiaries on a Consolidated


 


23

















 


basis on such date minus (b) all amounts which
would, in conformity with GAAP, be included under current liabilities on a
balance sheet (other than Indebtedness) of the Company and its Subsidiaries on
a Consolidated basis on such date.


 


1.2               Other Definitional Provisions.


 


(a)                                  Unless
otherwise specified therein, all terms defined in this Agreement shall have the
defined meanings when used in any Notes, any other Loan Documents or any
certificate or other document made or delivered pursuant hereto.


 


(b)                                 As
used herein and in any other Loan Document, and any certificate or other
document made or delivered pursuant hereto, accounting terms relating to the
Company and its Subsidiaries not defined in subsection 1.1 and accounting terms
partly defined in subsection 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.


 


(c)                                  The
words “hereof”, “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, subsection, Schedule and
Exhibit references are to this Agreement unless otherwise specified.


 


(d)                                 The
meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.


 


SECTION 2.  AMOUNT AND TERMS OF REVOLVING CREDIT COMMITMENTS


 


2.1               Revolving Credit Commitments.


 


(a)                                  Subject
to the terms and conditions hereof, each Revolving Credit Lender severally
agrees to make revolving credit loans (each a “Revolving Loan”) to the
Company from time to time during the Revolving Credit Commitment Period in an
aggregate principal amount at any one time outstanding which, when added to
such Revolving Credit Lender’s Revolving Credit Commitment Percentage at such
time of the sum of (i) the then outstanding L/C Obligations, and (ii) the
aggregate principal amount of Swing Line Loans then outstanding, does not
exceed the amount of such Revolving Credit Lender’s Revolving Credit Commitment
at such time.  During the Revolving
Credit Commitment Period, the Company may use the Revolving Credit Commitments
by borrowing, prepaying and reborrowing the Revolving Loans in whole or in
part, all in accordance with the terms and conditions hereof.


 


(b)                                 The
Revolving Loans may from time to time be (i) Eurodollar Loans, (ii) Base Rate
Loans, or (iii) a combination thereof, as determined by the Company and
notified to the Administrative Agent in accordance with subsections 2.2 and
4.4, provided that no Revolving Loan shall be made as a Eurodollar Loan after
the day that is one month prior to the Revolving Credit Termination Date.


 


(c)                                  All
letters of credit under the Company’s existing credit agreement with Bank of
America, N.A. set forth on Schedule 2.1(c) hereto shall be replaced with
Letters of Credit issued hereunder on or within 10 days of the Closing
Date.  The existing letter of credit


 


24

















 


issued
by Wells Fargo Bank, National Association and set forth on Schedule 2.1(c)
hereto shall be deemed to be a Letter of Credit issued hereunder.


 


2.2               Procedure for Revolving Credit
Borrowing.  The Company may borrow
under the Revolving Credit Commitments during the Revolving Credit Commitment
Period on any Banking Day, provided that the Company shall give the Administrative
Agent irrevocable written notice in substantially the form of Exhibit H hereto
(a “Notice of Borrowing”) (which notice, except as provided in
subsection 2.9, must be received by the Administrative Agent prior to 12 Noon,
Central time, (a) three Banking Days prior to the requested Borrowing Date, if
all or any part of the requested Revolving Loans are to be initially Eurodollar
Loans, or (b) one Banking Day prior to the requested Borrowing Date,
otherwise), specifying (i) the amount to be borrowed, (ii) the requested
Borrowing Date, (iii) whether the borrowing is to be of Eurodollar Loans or
Base Rate Loans, or a combination thereof, and (iv) if the borrowing is to be
entirely or partly of Eurodollar Loans, the respective amounts of each such Type
of Loan and the respective lengths of the initial Interest Periods
therefor.  Each borrowing under the
Revolving Credit Commitments shall be in an amount equal to (x) in the case of
Base Rate Loans (except for Base Rate Loans made pursuant to subsection 2.9),
$1,000,000 or a whole multiple of $500,000 in excess thereof (or, if the then
Available Revolving Credit Commitments are less than $1,000,000, such lesser
amount) and (y) in the case of Eurodollar Loans, $1,000,000 or a whole multiple
of $1,000,000 in excess thereof.  Upon
receipt of any such notice from the Company, the Administrative Agent shall
promptly notify each Revolving Credit Lender thereof.  Each Revolving Credit Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for
the account of the Company, at the office of the Administrative Agent specified
in subsection 11.2 prior to 1 P.M., Central time, on the Borrowing Date
requested by the Company in funds immediately available to the Administrative
Agent in Dollars.  Except as provided in
subsection 2.9, such borrowing will then be made available to the Company by
the Administrative Agent crediting the account of the Company on the books of
such office (or such other account as may be designated by the Company and as
may be acceptable to the Administrative Agent) with the aggregate of the
amounts made available to the Administrative Agent by the Lenders and in like
funds as received by the Administrative Agent.


 


2.3               Commitment Fee.  The Company shall pay to the Administrative Agent for the account
of each Revolving Credit Lender a commitment fee for the period from and
including the first day of the Revolving Credit Commitment Period to the
Revolving Credit Termination Date, computed at a rate per annum equal to the
Applicable Rate on the average daily amount of such Revolving Credit Lender’s
Available Revolving Credit Commitment during the period for which payment is
made (calculated as if no Swing Line Loans were outstanding during such period),
payable quarterly in arrears on each Fee Payment Date and on the Revolving
Credit Termination Date (or such earlier date on which the Revolving Credit
Commitments terminate as provided herein).


 


2.4               Termination or Reduction of
Commitments; Repayment of Revolving Loans.


 


(a)                                  The
Company shall have the right, upon not less than three Business Days’ written
notice to the Administrative Agent (which will promptly notify the Revolving
Credit Lenders thereof), to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments,
provided that no such termination


 


25

















 


or
reduction shall be permitted if, after giving effect thereto and to any
prepayments of Loans made on the effective date thereof, the Aggregate
Revolving Credit Outstandings of all the Revolving Credit Lenders would exceed
the Revolving Credit Commitments then in effect.  Any such reduction shall be in an amount equal to $5,000,000 or a
whole multiple of $1,000,000 in excess thereof and shall reduce permanently the
Revolving Credit Commitments then in effect.


 


(b)                                 The
Revolving Credit Commitments shall also be automatically reduced as provided in
subsection 4.3.  Any such reduction
shall ratably and permanently reduce the Revolving Credit Commitments then in
effect.


 


(c)                                  The
Company hereby unconditionally promises to pay to the Administrative Agent on
the Revolving Credit Termination Date (or such earlier date on which the
Revolving Loans become due and payable pursuant to Section 9) for the account
of each Revolving Credit Lender the then unpaid principal amount of each
Revolving Loan of such Revolving Credit Lender made to the Company.  The Company hereby further agrees to pay
interest on the unpaid principal amount of the Revolving Loans made to it from
time to time outstanding from the date hereof until payment in full thereof at
the rates per annum, and on the dates, set forth in subsections 4.6 and 4.9.


 


2.5               L/C Commitment.


 


(a)                                  Subject
to the  terms and conditions hereof, the
Issuing Bank, in reliance on the agreements of the other Revolving Credit
Lenders set forth in subsection 2.8(a), agrees to issue letters of credit (“Letters
of Credit”) for the account of the Company on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by the Issuing Bank, provided that (i) the Issuing Bank shall have
no obligation to issue any Letter of Credit if, after giving effect to such
issuance, (A) the L/C Obligations would exceed the L/C Sublimit or (B) the
Aggregate Revolving Credit Outstandings of all the Revolving Credit Lenders at
such time would exceed the Revolving Credit Commitments at such time and (ii)
the Issuing Bank shall not issue any Letter of Credit unless it shall have
received notice from the Administrative Agent that the issuance of such Letter
of Credit will not violate clause (i) above.


 


(b)                                 Each
Letter of Credit shall (i) be denominated in Dollars, other than the existing
letter of credit issued by Wells Fargo Bank, National Association and set forth
on Schedule 2.1(c) hereto which shall be denominated in British pounds
sterling, (ii) be either (x) a standby letter of credit issued to support
obligations of the Company or any of its Subsidiaries, contingent or otherwise
or (y) a commercial letter of credit issued in respect of the purchase of goods
or services by the Company or any of its Subsidiaries and (iii) expire no later
than the earlier of (x) the date that is 12 months after the date of its
issuance and (y) the thirtieth Business Day prior to the Revolving Credit
Termination Date, provided that, subject to the immediately preceding
clause (y), any standby Letter of Credit may, at the request of the Company as
set forth in the applicable Letter of Credit Application, be automatically
extended on each anniversary of the issuance thereof for an additional period
of one year unless the Issuing Bank which issued such Letter of Credit shall
have given prior written notice to the Company and the beneficiary of such
Letter of Credit at least 30 Business Days prior to the date of termination of
such Letter of Credit that such Letter of Credit will not be extended and the
Issuing Bank shall


 


26

















 


permit
such beneficiary, upon receipt of such notice, to draw under such Letter of
Credit prior to the date such Letter of Credit otherwise would have been
automatically renewed.


 


(c)                                  Each
Letter of Credit shall be subject to the Uniform Customs, the ISP (to the
extent applicable) and, to the extent not inconsistent therewith, the laws of
the State of New York.


 


(d)                                 The
Issuing Bank shall not at any time be obligated to issue any Letter of Credit
hereunder if such issuance would conflict with, or cause the Issuing Bank or
any L/C Participant to exceed any limits imposed by, any applicable Requirement
of Law.


 


2.6               Procedure for Issuance of Letters
of Credit.  The Company or any
Subsidiary may from time to time request that the Issuing Bank issue a Letter of
Credit by (a) delivering to the Issuing Bank at its address for notices
specified herein in such manner as may be agreed by or be acceptable to the
Issuing Bank (including by electronic transmission) a Letter of Credit
Application, completed to the reasonable satisfaction of the Issuing Bank, and
such other certificates, documents and other papers and information as the
Issuing Bank may reasonably request and (b) concurrently delivering a written
notice to the Administrative Agent that such Letter of Credit has been
requested.  Upon receipt of any such
Letter of Credit Application, the Issuing Bank agrees to process such Letter of
Credit Application and the certificates, documents and other papers and
information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Bank be required to issue any Letter
of Credit earlier than three Business Days after its receipt of the Letter of Credit
Application therefor and all such other certificates, documents and other
papers and information relating thereto) by issuing the original of such Letter
of Credit to the beneficiary thereof or as otherwise may be agreed by the
Issuing Bank and the Company with respect thereto.  The Issuing Bank shall furnish a copy of each Letter of Credit
issued by the Issuing Bank to the Company and the Administrative Agent promptly
following the issuance thereof.


 


2.7               Letter of Credit Fees, Commissions and
Other Charges.


 


(a)                                  The
Company shall pay to the Issuing Bank with respect to each Letter of Credit
issued by it under this Agreement, for the account of the Issuing Bank, a
fronting fee with respect to the period from the date of issuance of such
Letter of Credit to the expiration or termination date of such Letter of
Credit, computed at a rate of 0.25% per annum on the average aggregate amount
available to be drawn under such Letter of Credit during the period for which
such fee is calculated.  Such fronting
fee shall be payable in arrears on each Fee Payment Date to occur after the
issuance of such Letter of Credit and on the Revolving Credit Termination Date
(or on such earlier date as the Revolving Credit Commitments shall terminate as
provided herein) and shall be nonrefundable.


 


(b)                                 The
Company shall pay to the Administrative Agent, for the account of the L/C
Participants, a letter of credit commission with respect to each Letter of
Credit issued under this Agreement with respect to the period from the date of
issuance of such Letter of Credit to the expiration or termination date of such
Letter of Credit, computed at a rate per annum equal to the Applicable Margin
in respect of Revolving Loans which are Eurodollar


 


27

















 


Loans
from time to time in effect on the average aggregate amount available to be
drawn under such Letter of Credit during the period for which such fee is
calculated.  Such commission shall be
shared ratably among the L/C Participants in accordance with their respective
Revolving Credit Commitment Percentages. 
Such commission shall be payable in arrears on each Fee Payment Date to
occur after the issuance of such Letter of Credit and on the Revolving Credit
Termination Date (or on such earlier date as the Revolving Credit Commitments
shall terminate as provided herein) and shall be nonrefundable.


 


(c)                                  In
addition to the foregoing fees and commissions, the Company shall pay or
reimburse the Issuing Bank for such normal and customary costs and expenses as
are incurred or charged by the Issuing Bank in issuing, effecting payment
under, amending or otherwise administering any Letter of Credit.


 


(d)                                 The
Administrative Agent shall, promptly following its receipt thereof, distribute
to the Issuing Bank and the L/C Participants all fees and commissions received
by the Administrative Agent for their respective accounts pursuant to this
subsection.


 


2.8               L/C Participations.


 


(a)                                  The
Issuing Bank irrevocably agrees to grant and hereby grants to each L/C Participant,
and, to induce the Issuing Bank to issue Letters of Credit hereunder, each L/C
Participant irrevocably agrees to accept and purchase and hereby accepts and
purchases from the Issuing Bank, on the terms and conditions hereinafter
stated, for such L/C Participant’s own account and risk, an undivided interest
equal to such L/C Participant’s Revolving Credit Commitment Percentage of the
Issuing Bank’s obligations and rights under each Letter of Credit issued
hereunder and the amount of each draft paid by the Issuing Bank
thereunder.  Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Bank that, if a draft
is paid under any Letter of Credit for which the Issuing Bank is not reimbursed
in full by the Company in accordance with the terms of this Agreement, such L/C
Participant shall pay to the Issuing Bank upon demand at the Issuing Bank’s
address for notices specified herein an amount equal to such L/C Participant’s
then Revolving Credit Commitment Percentage of the amount of such draft, or any
part thereof, which is not so reimbursed. 
Each L/C Participant’s obligation to make the payment referred to in the
immediately preceding sentence shall be absolute and unconditional and shall
not be affected by any circumstance, including, without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such L/C
Participant or the Company may have against the Issuing Bank or any other
Person for any reason whatsoever, (ii) the occurrence or continuance of a
Default or an Event of Default, (iii) any adverse change in the condition
(financial or otherwise) of the Company or any of its Subsidiaries, (iv) any
breach of this Agreement by any Loan Party or any other Lender or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.


 


(b)                                 If
any amount required to be paid by any L/C Participant to the Issuing Bank
pursuant to subsection 2.8(a) in respect of any unreimbursed portion of any
payment made by the Issuing Bank under any Letter of Credit is paid to the
Issuing Bank within three Business Days after the date such payment is due,
such L/C Participant shall pay to the Issuing Bank on demand an amount equal to
the product of (i) such amount, times (ii) the daily average Federal Funds
Effective Rate during the period from and including the date such payment is
required to


 


28

















 


the
date on which such payment is immediately available to the Issuing Bank, times
(iii) a fraction, the numerator of which is the number of days that elapse
during such period and the denominator of which is 360.  If any such amount required to be paid by
any L/C Participant pursuant to subsection 2.8(a) is not in fact made available
to the Issuing Bank by such L/C Participant within three Business Days after
the date such payment is due, the Issuing Bank shall be entitled to recover
from such L/C Participant, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Base Rate
Loans hereunder.  A certificate of the
Issuing Bank submitted to any L/C Participant with respect to any amounts owing
under this subsection shall be conclusive in the absence of manifest error.


 


(c)                                  Whenever,
at any time after the Issuing Bank has made payment under any Letter of Credit
and has received from any L/C Participant its pro rata share of such
payment in accordance with subsection 2.8(a), the Issuing Bank receives any
payment related to such Letter of Credit (whether directly from the Company or
otherwise, including proceeds of collateral applied thereto by the Issuing
Bank), or any payment of interest on account thereof, the Issuing Bank will
distribute to such L/C Participant its pro rata share thereof, provided,
however, that in the event that any such payment received by the Issuing
Bank shall be required to be returned by the Issuing Bank, such L/C Participant
shall return to the Issuing Bank the portion thereof previously distributed by
the Issuing Bank to it.


 


2.9               Reimbursement Obligation of the
Company.  The Company agrees to
reimburse the Issuing Bank on each date on which the Issuing Bank notifies the
Company of the date and amount of a draft presented under any Letter of Credit
and paid by the Issuing Bank for the amount of such draft so paid and any
Taxes, fees, charges or other costs or expenses incurred by the Issuing Bank in
connection with such payment.  Each such
payment shall be made to the Issuing Bank at its address for notices specified
herein in Dollars and in immediately available funds.  If any draft shall be presented for payment under any Letter of
Credit, the Issuing Bank shall promptly notify the Company and the
Administrative Agent of the date and amount thereof.  If the Issuing Bank notifies the Company prior to 10:00 A.M.,
Central time, on any Business Day, of any drawing under any Letter of Credit
issued by it, the Company shall reimburse the Issuing Bank pursuant to this
subsection with respect to such drawing on such Business Day.  If the Issuing Bank notifies the Company and
the Administrative Agent after 10:00 A.M., Central time, on any Business Day of
any drawing under any Letter of Credit, the Company shall reimburse the Issuing
Bank pursuant to this subsection with respect to such drawing on the next
succeeding Business Day and interest shall be payable on the amount of such
drawing for such period at the rate then applicable to Base Rate Loans
hereunder.  If any amount payable under
this subsection is not paid when due, the Company shall be deemed to have
requested a Base Rate Loan equal to such amount (without regard to the minimum
amounts and multiples specified in subsection 2.2), and interest shall be
payable on such amount from the date such amount becomes payable under this
subsection, which shall be deemed to be the requested Borrowing Date, until
payment in full thereof at the rate which would be payable on any outstanding
Base Rate Loans.


 


2.10                           Obligations Absolute.


 


(a)                                  The
Company’s obligations under subsections 2.7 and 2.9 shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,


 


29

















 


counterclaim
or defense to payment which the Company may have or have had against the
Issuing Bank, any L/C Participant or any beneficiary of a Letter of Credit.


 


(b)                                 Except
as provided in clause (c) below, the Company also agrees with the Issuing Bank
that the Issuing Bank shall not be responsible for, and the Company’s
Reimbursement Obligations under subsection 2.9 shall not be affected by, among
other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among any Loan
Party and any beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or (iii) any claims whatsoever of any
Loan Party against any beneficiary of such Letter of Credit or any such
transferee.


 


(c)                                  Neither
the Issuing Bank nor any L/C Participant shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Bank’s gross
negligence or willful misconduct.


 


(d)                                 The
Company agrees that any action taken or omitted by the Issuing Bank under or in
connection with any Letter of Credit or the related drafts or documents, if
done in the absence of gross negligence or willful misconduct and in accordance
with the standards of care specified in the Uniform Commercial Code of the
State of New York, shall be binding on the Company and shall not result in any
liability of the Issuing Bank or any L/C Participant to any Loan Party.


 


2.11                           Letter of Credit Payments.  If any draft shall be presented for payment
under any Letter of Credit, the responsibility of the Issuing Bank to the Loan
Parties in connection with such draft shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with
such Letter of Credit.


 


2.12                           Application. 
To the extent that any provision of any Letter of Credit Application
related to any Letter of Credit is inconsistent with the provisions of this
Section 2, the provisions of this Section 2 shall apply.


 


2.13                           Swing Line Commitment.  Subject to the terms and conditions hereof,
the Swing Line Lender agrees to make swing line loans in Dollars (“Swing
Line Loans”) to the Company from time to time during the Revolving Credit
Commitment Period in an aggregate principal amount at any one time outstanding
not to exceed $10,000,000, provided that, (a) after giving effect to any
such Swing Line Loans, the Aggregate Revolving Credit Outstandings of all the
Revolving Credit Lenders at such time do not exceed the Revolving Credit
Commitments at such time and (b) the Swing Line Lender shall not make any Swing
Line Loan unless it shall have received notice from the Administrative Agent
that the making of such Swing Line Loan will not violate clause (a) above.  During the Revolving Credit Commitment
Period, the Company may use the Swing Line Commitment by borrowing, prepaying
the Swing Line Loans in whole or in part, and reborrowing, all in accordance
with the terms and conditions hereof. 
All


 


30

















 


Swing Line Loans shall be
Base Rate Loans and may not be converted into Loans that bear interest at any
other rate.


 


2.14                           Procedure for Swing Line Borrowing;
Prepayment of Swing Line Loans.  The
Company may borrow under the Swing Line Commitment during the Revolving Credit
Commitment Period on any Business Day, provided that the Company shall
give the Swing Line Lender and the Administrative Agent irrevocable written
notice (which notice must be received by the Swing Line Lender prior to 12:00
Noon, Central time) on the requested Borrowing Date specifying the amount of
the requested Swing Line Loan which shall be in an aggregate minimum amount of
$500,000 or a whole multiple of $50,000 in excess thereof.  The proceeds of the Swing Line Loan will be
made available by the Swing Line Lender to the Company at the office of the
Swing Line Lender by 2:00 P.M. (Central time) on the Borrowing Date by
crediting the account of the Company at such office with such proceeds.  The Company may at any time and from time to
time, prepay the Swing Line Loans, in whole or in part, without premium or
penalty, by notifying the Swing Line Lender prior to 1:00 P.M. (Central time)
on any Business Day of the date and amount of prepayment.  If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein.  Partial prepayments shall be
in an aggregate principal amount of $500,000 or a whole multiple of $50,000 in
excess thereof.


 


2.15                           Repayment of Swing Line Loans;
Participations in Swing Line Borrowings.


 


(a)                                  The
Company hereby unconditionally promises to pay to the Administrative Agent for
the account of the Swing Line Lender the then unpaid principal amount of the
Swing Line Loans on the Revolving Credit Termination Date (or such earlier date
on which the Swing Line Loans become due and payable pursuant to Section
9).  The Company hereby further agrees
to pay interest on the unpaid principal amount of Swing Line Loans from time to
time outstanding from the date of borrowing thereof until payment in full
thereof at the rates per annum, and on the dates, set forth in subsections 4.6
and 4.9.  The Swing Line Lender, at any
time in its sole and absolute discretion may, on behalf of the Company (which
hereby irrevocably authorizes the Swing Line Lender to act on its behalf)
request each Revolving Credit Lender (including the Swing Line Lender) to make
a Revolving Loan (which shall be a Base Rate Loan) in an amount equal to such
Revolving Credit Lender’s Revolving Credit Commitment Percentage of the aggregate
principal amount of the Swing Line Loans outstanding on the date such notice is
given (the “Outstanding Swing Line Loans”).  Unless any of the events described in paragraph (f) of Section 9
shall have occurred with respect to the Company (in which event the procedures
of paragraph (c) of this subsection 2.15 shall apply) each Revolving Credit
Lender shall make the proceeds of its Revolving Loan available to the
Administrative Agent for the account of the Swing Line Lender at the
Administrative Agent’s Payment Office prior to 1:00 P.M. (Central time) in
funds immediately available in Dollars on the Business Day next succeeding the
date such notice is given.  The proceeds
of such Revolving Loans shall be immediately applied to repay the outstanding Swing
Line Loans.  Effective on the day such
Revolving Loans are made, the portion of the Swing Line Loans so paid shall no
longer be outstanding as Swing Line Loans and shall no longer be due under the
Swing Line Note.  The Company authorizes
the Swing Line Lender to charge the Company’s accounts with the Swing Line
Lender (up to the amount available in each such account) in order to
immediately pay the


 


31

















 


amount
of its outstanding Swing Line Loans to the extent amounts received from the
Revolving Credit Lenders are not sufficient to repay in full such outstanding
Swing Line Loans.


 


(b)                                 Notwithstanding
anything herein to the contrary, the Swing Line Lender shall not be obligated
to make any Swing Line Loans if the conditions set forth in subsection 6.2 have
not been satisfied.


 


(c)                                  If
prior to the making of a Revolving Loan pursuant to paragraph (a) of this
subsection 2.15 one of the events described in paragraph (f) of Section 9 shall
have occurred and be continuing with respect to the Company, each Revolving
Credit Lender will, on the date such Revolving Loan was to have been made
pursuant to the notice described in subsection 2.15(a), purchase an undivided
participating interest in the outstanding Swing Line Loans in an amount equal
to (i) its Revolving Credit Commitment Percentage times (ii) the
aggregate principal amount of Swing Line Loans then outstanding.  Each Revolving Credit Lender will
immediately transfer to the Swing Line Lender, in immediately available funds,
the amount of its participation, and upon receipt thereof the Swing Line Lender
will deliver to such Revolving Credit Lender a Swing Line Loan Participation
Certificate dated the date of receipt of such funds and in such amount.


 


(d)                                 Whenever,
at any time after any Revolving Credit Lender has purchased a participating
interest in a Swing Line Loan, the Swing Line Lender receives any payment on
account thereof, the Swing Line Lender will distribute to such Revolving Credit
Lender its participating interest in such amount (appropriately adjusted, in
the case of interest payments, to reflect the period of time during which such
Revolving Credit Lender’s participating interest was outstanding and funded), provided,
however, that in the event that such payment received by the Swing Line
Lender is required to be returned, such Revolving Credit Lender will return to
the Swing Line Lender any portion thereof previously distributed by the Swing
Line Lender to it.


 


(e)                                  Each
Revolving Credit Lender’s obligation to make the Revolving Loans referred to in
subsection 2.15(a) and to purchase participating interests pursuant to
subsection 2.15(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Company may have against the Swing Line Lender, the Company or
any other Person for any reason whatsoever, (ii) the occurrence or continuance
of a Default or an Event of Default, (iii) any adverse change in the condition
(financial or otherwise) of the Company, (iv) any breach of this Agreement or
any other Loan Document by the Company, any Subsidiary or any other Lender, or
(v) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.


 


SECTION 3.  AMOUNT AND TERMS OF TERM LOAN COMMITMENTS


 


3.1               Tranche B Term Loans.


 


(a)                                  Subject
to the terms and conditions hereof, each Tranche B Lender severally agrees to
make a term loan (a “Tranche B Term Loan”) to the Company on the Closing
Date in a principal amount equal to such Tranche B Lender’s Tranche B
Commitment.  Amounts borrowed under this
Section 3.1(a) and repaid or prepaid may not be reborrowed.


 


32

















 


(b)                                 The
Tranche B Term Loans may from time to time be (i) Eurodollar Loans, (ii) Base
Rate Loans or (iii) a combination thereof, as determined by the Company and
notified to the Administrative Agent in accordance with subsections 3.2 and
4.4.


 


3.2               Procedure for Tranche B Term Loan
Borrowing.  The Company shall give
the Administrative Agent an irrevocable written Notice of Borrowing in
substantially the form of Exhibit H hereto (which notice must be received by
the Administrative Agent prior to 12:00 Noon, Central time, (y) three Banking
Days prior to the Closing Date, if all or any part of the Tranche B Term Loans
are to be initially Eurodollar Loans or (z) one Banking Day prior to the
Closing Date, otherwise) requesting that the Tranche B Lenders make the Tranche
B Term Loans on the Closing Date and specifying (i) whether the Tranche B Term
Loans are to be initially Eurodollar Loans, Base Rate Loans or a combination
thereof and (ii) if the Tranche B Term Loans are to be entirely or partly
Eurodollar Loans the amount of such Type of Loan and the length of the initial
Interest Periods therefor.  Upon receipt
of such notice, the Administrative Agent shall promptly notify each Tranche B
Lender thereof.  On the Closing Date, each
Tranche B Lender shall make available to the Administrative Agent at its office
specified in subsection 11.2 the amount in immediately available funds equal to
the Tranche B Term Loans to be made by such Tranche B Lender.  The Administrative Agent shall on such date
credit the account of the Company on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by such Tranche B Lenders and in like funds as received by
the Administrative Agent.


 


3.3               Repayment of Tranche B Term Loans.  The Company hereby unconditionally promises
to pay to the Administrative Agent for the account of the Tranche B Lenders the
remaining outstanding principal amount of the Tranche B Term Loans in 28
consecutive quarterly installments payable at the end of March, June, September
and December of each year (or such earlier date on which Tranche B Term Loans
become due and payable pursuant to Section 9). 
Each of the first twenty-four installments shall be equal to $1,200,000
and each of the last four installments shall be equal to $112,800,000; provided,
that the final installment shall be repaid on the Tranche B Final Maturity Date
and in any event shall be in an amount equal to the aggregate principal amount
of the Tranche B Term Loans outstanding on such date).


 


The Company hereby further agrees to pay interest on
the unpaid principal amount of the Tranche B Term Loans from time to time
outstanding from the Closing Date until payment in full thereof at the rates
per annum, and on the dates, set forth in subsections 4.6 and 4.9.


 


SECTION 4.  GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT


 


4.1               Evidence of Debt.


 


(a)                                  Each
Lender shall maintain in accordance with its usual practice an account or accounts
evidencing indebtedness of the Company to such Lender resulting from each Loan
of such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this
Agreement.


 


33

















 


(b)                                 The
Administrative Agent shall maintain the Register pursuant to subsection
11.6(d), and a subaccount therein for each Lender, in which shall be recorded
(i) the amount of each Revolving Loan, Swing Line Loan and Tranche B Term Loan
made hereunder, the Type thereof and each Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become due
and payable to the Lenders hereunder, (iii) the amount of each Revolving Credit
Lender’s participation in outstanding Letters of Credit and Swing Line Loans,
and (iv) both the amount of any sum received by the Administrative Agent
hereunder from the Company and each Lender’s share thereof.


 


(c)                                  The
entries made in the Register and the accounts of each Lender maintained
pursuant hereto shall, absent manifest error, be conclusive evidence of the
existence and amounts of the obligations of the Company therein recorded, provided,
however, that the failure of any Lender or the Administrative Agent to
maintain the Register or any such account, or any error therein, shall not in
any manner affect the obligation of the Company to repay (with applicable
interest) the Loans made to the Company in accordance with the terms of this
Agreement.


 


(d)                                 The
Company agrees that, upon the request to the Administrative Agent by any
applicable Lender, the Company will execute and deliver to such Lender, as
appropriate, (i) a promissory note of the Company evidencing the Revolving
Loans of such Lender, substantially in the form of Exhibit C-l with
appropriate insertions as to date and principal amount (a “Revolving Credit
Note”), (ii) a promissory note of the Company evidencing the Tranche B Term
Loan of such Lender, substantially in the form of Exhibit C-2 with appropriate
insertions as to date and principal amount (a “Tranche B Term Note”),
and (iii) a promissory note of the Company evidencing the Swing Line Loans of
the Swing Line Lender, substantially in the form of Exhibit C-3 with
appropriate insertions as to date and principal amount (the “Swing Line Note”).  Each Lender is hereby authorized to record
the Borrowing Date, the amount of each relevant Loan and the date and amount of
each payment or prepayment of principal thereof, on the schedule annexed to and
constituting a part of the Note evidencing such Loan and any such recordation
shall constitute prima  facie evidence of the accuracy of the
information so recorded, provided that the failure by a Lender to make
any such recordation (or any error therein) shall not affect any of the
obligations of the Company under such Note or this Agreement.


 


4.2               Optional Prepayments.  The Company may prepay the Loans made to it
in whole or in part without premium or penalty, in the case of Eurodollar Loans
on the last day of any Interest Period with respect thereto (except that the
Company may make a prepayment of Eurodollar Loans on a day other than the last
day of the Interest Period with respect thereto as long as it complies with
subsection 4.13(c)) and, in the case of Base Rate Loans (other than Swing Line
Loans), on any Business Day, provided that (i) the Company shall have
given (x) at least three Business Days’ irrevocable written notice to the
Administrative Agent (in the case of Eurodollar Loans) and (y) one Business
Day’s irrevocable notice to the Administrative Agent (in the case of Base Rate
Loans), (ii) such notice specifies, in the case of any prepayment of Loans, the
date and amount of prepayment and whether the prepayment is (x) of Tranche B
Term Loans, Revolving Loans or a combination thereof, and in each case if a
combination thereof, the amount allocable to each, (y) of Eurodollar Loans,
Base Rate Loans or a combination thereof, and, in each case if a combination
thereof, the principal amount allocable to each (and in the case of a


 


34

















 


prepayment of Revolving
Loans which are Eurodollar Loans, the principal amount of such prepayment
allocable to each Eurodollar Tranche of Revolving Loans) and (iii) each prepayment
is in a minimum principal amount of $1,000,000 and a multiple of $1,000,000 in
excess thereof.  Upon the receipt of any
such notice, the Administrative Agent shall promptly notify each of the
relevant Lenders thereof.  If any such
notice is given, the amount specified in such notice shall be due and payable
on the date specified therein, together with any amounts payable pursuant to
subsection 4.13 and, in the case of prepayments of the Term Loans only, accrued
interest to such date on the amount prepaid. 
Any such prepayment of Tranche B Term Loans shall first be applied to
any installment thereof due within 90 days of the date of such prepayment and
second to the respective then remaining installments of principal thereof pro
rata.  Amounts prepaid pursuant
to this subsection 4.2 on account of the Tranche B Term Loans may not be
reborrowed.  Revolving Loans may not be
prepaid if any Swing Line Loans are outstanding at such time.


 


4.3               Mandatory Prepayments of Loans and
Reductions of Revolving Credit Commitments.


 


(a)                                  If,
on any day, the Aggregate Revolving Credit Outstandings of all the Revolving
Credit Lenders exceeds the Revolving Credit Commitments on such date, the
Company shall, without notice or demand, immediately repay such of the
outstanding Loans in an aggregate principal amount such that, after giving
effect thereto, the Aggregate Revolving Credit Outstandings of all the
Revolving Credit Lenders do not exceed the Revolving Credit Commitments,
together with interest accrued to the date of such payment or prepayment on the
principal so prepaid and any amounts payable under subsection 4.13 in
connection therewith.  Any prepayment of
Revolving Loans pursuant to the immediately preceding sentence shall first be
applied to prepay any outstanding Swing Line Loans.  To the extent that after giving effect to any prepayment of Loans
required by this paragraph, the Aggregate Revolving Credit Outstandings of all
the Revolving Credit Lenders at such time exceed the Revolving Credit
Commitments at such time, the Company shall, without notice or demand,
immediately deposit in a Cash Collateral Account upon terms reasonably
satisfactory to the Administrative Agent an amount equal to the lesser of (A)
the aggregate then outstanding L/C Obligations and (B) the amount of such
remaining excess.  The Administrative
Agent shall apply any cash deposited in the Cash Collateral Account (to the
extent thereof) to pay any Reimbursement Obligations which are or become due
thereafter, provided that, (x) the Administrative Agent shall release to
the Company from time to time such portion of the amount on deposit in the Cash
Collateral Account to the extent such amount is not required to be so deposited
in order for the Company to be in compliance with this paragraph and (y) the Administrative
Agent may so apply such cash at any time after the occurrence and during the
continuation of an Event of Default.  “Cash
Collateral Account” means an account established by the Company with the
Administrative Agent and over which the Administrative Agent shall have
exclusive dominion and control, including the right of withdrawal for
application in accordance with this subsection 4.3(a).


 


(b)                                 On
the earlier of (i) the date of receipt by the Lenders of the financial
statements required to be delivered pursuant to subsection 7.1(a) as to any
fiscal year of the Company commencing with the fiscal year ending December 31,
2004 (each such fiscal year being a “Base Year”) and (ii) the 90th day
of the fiscal year of the Company next succeeding the Base Year, the Loans
shall be prepaid and/or the Commitments shall be reduced in an amount equal to
50% of Excess Cash Flow for such Base Year in accordance with paragraph (e) of
this


 


35

















 


subsection,
provided that, (A) if the Leverage Ratio of the Company for the period
of four consecutive fiscal quarters ending on the last day of the period
covered by the financial statements relating to the applicable Base Year is
less than 3.00 to 1.00 (and clause (B) shall not apply), the foregoing
percentage shall be reduced to 25% and (B) if the Leverage Ratio of the Company
for the period of four consecutive fiscal quarters ending on the last day of
the period covered by the financial statements relating to the applicable Base
Year is  less than 2.25 to 1.00, no
prepayment of Loans and/or reduction of Commitments shall be required pursuant
to this paragraph.


 


(c)                                  On
the day upon which the Company or any of its Subsidiaries receives Net Cash
Proceeds from the issuance of any Indebtedness (other than any Indebtedness
permitted under subsection 8.2 (but including Indebtedness permitted under
subsection 8.2(k))) or Capital Stock (other than the Convertible Preferred
issued in connection with the Transactions) or from any capital contribution
(other than (x) any issuance of Capital Stock to, or any capital contribution
by, the Sponsors and/or their Affiliates or (y) the issuance of Capital Stock
in connection with the exercise of any stock options or warrants), the Loans
shall be prepaid and/or the Commitments shall be reduced in an amount equal to
50% (or 100% in the case of Indebtedness issued under the proviso to subsection
8.2(k)) of the Net Cash Proceeds of such issuance or capital contribution in
accordance with paragraph (e) of this subsection.


 


(d)                                 If
the Company or any of its Subsidiaries sells, assigns, transfers, leases or
otherwise disposes of any of its assets (other than any such sale, assignment,
transfer, lease or other disposition permitted by subsection 8.6 (but including
sales and dispositions permitted pursuant to subsection 8.6(g))), or any of its
assets becomes the subject of a Casualty Event, no later than three Business
Days after receipt of the Net Cash Proceeds therefrom, the Loans shall be
prepaid and/or the Commitments shall be reduced in an amount equal to 100% of
such Net Cash Proceeds in accordance with paragraph (e) of this subsection, provided
that, at the option of the Company and so long as no Default or Event of
Default shall have occurred and be continuing or would be caused thereby, (i)
the Company and its Subsidiaries may use up to $40,000,000 of the Net Cash
Proceeds realized in the aggregate subsequent to the Closing Date from any such
sales, assignments, transfers, leases or other dispositions to purchase assets
used in the Company’s business, in each case within twelve months (or if such
purchase is to be made pursuant to a binding commitment entered into within
such twelve-month period, eighteen months) after the consummation of the
relevant sale, assignment, lease, transfer or other disposition, subject to the
following conditions: (w) in the event the Company or any of its Subsidiaries
elects to exercise its rights pursuant to this clause (i), the Company or such
Subsidiary, as the case may be, shall promptly deliver a certificate of a
Responsible Officer to the Administrative Agent setting forth the amount of the
Net Cash Proceeds which the Company or such Subsidiary, as the case may be,
expects to so use during the subsequent twelve month period or eighteen-month
period, as the case may be, and (x) on the date which is twelve months or
eighteen months, as the case may be, after the relevant sale or other
disposition, the Company or such Subsidiary, as the case may be, shall (I)
deliver a certificate of a Responsible Officer to the Administrative Agent
certifying as to the amount and use of such Net Cash Proceeds actually so used
and (II) deliver to the Administrative Agent, for application in accordance
with (and to the extent required by) this subsection, an amount equal to the
remaining unused Net Cash Proceeds and (ii) the Company or any of its
Subsidiaries may use the Net Cash Proceeds of any Casualty Event to replace or
rebuild the property or assets which were the subject of the Casualty


 


36

















 


Event
or asset related or complementary thereto within twelve months (or if such
replacement or rebuilding is to be made pursuant to a binding commitment
entered into within such twelve-month period, eighteen months) after the
occurrence of such Casualty Event, subject to the following conditions: (y) in
the event the Company or any of its Subsidiaries elects to exercise its right
pursuant to this clause (ii), the Company or such Subsidiary, as the case may
be, shall promptly deliver a certificate of a Responsible Officer to the
Administrative Agent setting forth the amount of the Net Cash Proceeds which
the Company or such Subsidiary, as the case may be, expects to so use during
the subsequent twelve month period or eighteen month period, as the case may
be, and (z) on the date which is twelve months or eighteen months, as the case
may be, after the relevant Casualty Event, the Company or such Subsidiary, as
the case may be, shall (I) deliver a certificate of a Responsible Officer to
the Administrative Agent certifying as to the amount and use of such Net Cash
Proceeds actually used to replace or rebuild such property or assets and (II)
deliver to the Administrative Agent, for application in accordance with (and to
the extent required by) this subsection, an amount equal to the remaining
unused Net Cash Proceeds, provided, further that, notwithstanding
anything to the contrary in the immediately preceding proviso, the Loans shall
be prepaid and/or the Commitments shall be reduced in accordance with paragraph
(e) of this subsection to the extent the failure to do so would otherwise
result in a “Net Proceeds Offer” (as defined in the Senior Subordinated Note
Indenture).


 


(e)                                  Prepayments
of the Loans and permanent reductions of Commitments pursuant to
subsections 4.3(b), (c) and (d) shall be applied, first, to
the payment in full of the Tranche B Term Loans then outstanding, and second,
to the permanent reduction of the Revolving Credit Commitments then in effect.  Prepayments of the Tranche B Term Loans
pursuant to clause first of the immediately preceding sentence shall be
applied pro  rata to the respective then remaining installments of
principal thereof.


 


(f)                                    Amounts
prepaid on account of Tranche B Term Loans pursuant to this subsection may not
be reborrowed.


 


(g)                                 Notwithstanding
the foregoing provisions of subsection 4.3(e), if at any time the mandatory
prepayment of Loans pursuant to subsection 4.3(b), (c) or (d) would result,
after giving effect to the procedures set forth above, in the Company’s
incurring breakage costs under subsection 4.13 as a result of Eurodollar Loans
being prepaid other than on the last day of an Interest Period applicable
thereto (the “Affected Eurodollar Loans”), then the Company may in its
sole discretion, so long as no Default or Event of Default shall have then
occurred and be continuing, initially deposit a portion (up to 100%) of the
amounts that otherwise would have been paid in respect of the Affected
Eurodollar Loans with the Administrative Agent (which deposit must be equal in
amount to the amount of the Affected Eurodollar Loans not immediately prepaid)
in a Cash Collateral Account to be held as security for the Obligations, with
such cash collateral to be directly applied by the Administrative Agent to
prepay the relevant Affected Eurodollar Loans on the last day of the Interest
Periods applicable thereto (or such earlier date or dates as shall be requested
by the Company or as shall be determined by the Administrative Agent at any
time after the occurrence and during the continuation of a Default or Event of
Default).  Notwithstanding anything to
the contrary contained in the immediately preceding sentence, all amounts
deposited in such Cash Collateral Account pursuant to the immediately preceding
sentence shall be held for the sole benefit of the Lenders whose Loans would
otherwise have been immediately prepaid with the amounts deposited, and, upon
the


 


37

















 


taking
of any action by the Administrative Agent or the Lenders pursuant to the
remedial provisions of Section 9, any amounts held as cash collateral pursuant
to this subsection 4.3(g) shall, subject to the requirements of applicable law,
be immediately applied to prepay such Loans.


 


4.4               Conversion and Continuation
Options.


 


(a)                                  The
Company may elect from time to time to convert Eurodollar Loans to Base Rate
Loans by giving the Administrative Agent at least two Banking Days’ prior
irrevocable written notice of such election, provided that any such
conversion of Eurodollar Loans may only be made on the last day of an Interest
Period with respect thereto.  The
Company may elect from time to time to convert Base Rate Loans to Eurodollar
Loans by giving the Administrative Agent at least three Banking Days’ prior
irrevocable written notice of such election. 
Any such notice of conversion to Eurodollar Loans shall specify the
length of the initial Interest Period or Interest Periods therefor.  Upon receipt of any such notice, the Administrative
Agent shall promptly notify each Lender thereof.  All or any part of outstanding Eurodollar Loans and Base Rate
Loans may be converted as provided herein, provided that (i) no Loan may
be converted into a Eurodollar Loan when any Event of Default has occurred and
is continuing and the Administrative Agent has or the Required Lenders have
determined that such a conversion is not appropriate and (ii) no Loan may be
converted into a Eurodollar Loan after the date that is one month prior to (a)
the Revolving Credit Termination Date (in the case of conversions of Revolving
Loans) or (b) the date of the final installment of principal of the Tranche B
Term Loans (in the case of conversions of Tranche B Term Loans).


 


(b)                                 Any
Eurodollar Loans may be continued as such upon the expiration of the then
current Interest Period with respect thereto by giving written notice to the
Administrative Agent, in accordance with the applicable provisions of the term
“Interest Period” set forth in subsection 1.1, of the length of the next
Interest Period to be applicable to such Loans, provided that no
Eurodollar Loan may be continued as such (i) when any Event of Default has
occurred and is continuing and the Administrative Agent has or the Required
Lenders have determined that such a continuation is not appropriate or (ii)
after the date that is one month prior to (a) the Revolving Credit Termination
Date (in the case of continuations of Revolving Loans) or (b) the date of the
final installment of principal of the relevant Term Loans (in the case of
continuations of Term Loans), and provided, further, that if the
Company shall fail to give such notice or if such continuation is not permitted
such Eurodollar Loans shall be automatically converted to Base Rate Loans on
the last day of such then expiring Interest Period.


 


4.5               Minimum Amounts and Maximum Number
of Tranches.  All borrowings,
conversions and continuations of Loans hereunder and all selections of Interest
Periods hereunder shall be in such amounts and be made pursuant to such
elections so that, after giving effect thereto, the aggregate principal amount
of the Loans comprising each Eurodollar Tranche shall be at least
$10,000,000.  In no event shall there be
more than 15 Eurodollar Tranches outstanding at any time.


 


38

















 


4.6               Interest Rates and Payment Dates.


 


(a)                                  Each
Eurodollar Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to the Eurodollar Rate determined
for such day plus the Applicable Margin.


 


(b)                                 Each
Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate
plus the Applicable Margin.


 


(c)                                  Each
Swing Line Loan shall bear interest at a rate per annum equal to the Base Rate
plus the Applicable Margin for Revolving Loans which are Base Rate Loans.


 


(d)                                 If
all or a portion of (i) any principal of any Loan, (ii) any interest payable
thereon, (iii) any commitment fee or (iv) any other amount payable hereunder,
including any letter of credit fee, shall not be paid when due (whether at the
stated maturity, by acceleration or otherwise), any such overdue principal,
interest, commitment fee or other amount shall bear interest at a rate per
annum which is (except as provided in subsection 2.9) (x) in the case of
principal, the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this subsection plus 2% or (y) in the case of any such
overdue interest, commitment fee, letter of credit fee or other amount, the rate
described in paragraph (b) of this subsection plus 2%, from the date of such
non-payment until such overdue principal, interest, commitment fee, letter of
credit fee or other amount is paid in full (as well after as before judgment to
the extent permitted by law).


 


(e)                                  Interest
shall be payable in arrears on each Interest Payment Date and on the Revolving
Credit Termination Date (in the case of Revolving Loans and Swing Line Loans)
and the date of the final installment of principal (in the case of Term Loans),
provided that interest accruing pursuant to paragraph (d) of this
subsection shall be payable from time to time on demand.


 


4.7               Computation of Interest and Fees.


 


(a)                                  Whenever
it is calculated on the basis of the reference rate referred to in the definition
of “Base Rate,” interest shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed; and, otherwise,
interest, commitment fees and letter of credit fees and commissions shall be
calculated on the basis of a 360-day year for the actual days elapsed.  The Administrative Agent shall as soon as
practicable notify the Company and the Lenders of each determination of a
Eurodollar Rate.  Any change in the
interest rate on a Loan resulting from a change in the Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening of
business on the day on which such change becomes effective.  The Administrative Agent shall as soon as
practicable notify the Company and the Lenders of the effective date and the
amount of each such change in interest rate.


 


(b)                                 Each
determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Company and
the Lenders in the absence of manifest error. 
The Administrative Agent shall, at the request of the Company, deliver
to the Company a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to subsection 4.6(a).


 


39

















 


4.8               Inability to Determine Interest Rate.  If prior to the first day of any Interest
Period:


 


(a)                                  the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Company) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or


 


(b)                                 the
Administrative Agent shall have received notice from the Required Lenders that
the Eurodollar Rate determined or to be determined for such Interest Period in
respect of any Eurodollar Loan will not adequately and fairly reflect the cost
to such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,


 


then the Administrative Agent shall give telecopy or
telephonic notice thereof to the Company and the Lenders as soon as practicable
thereafter.  If such notice is given
pursuant to either clause (a) or (b) of this subsection 4.8 in respect of
Eurodollar Loans, then (i) any Eurodollar Loans requested to be made on the
first day of such Interest Period shall be made as Base Rate Loans, (ii) any
Loans that were to have been converted on the first day of such Interest Period
to Eurodollar Loans shall be continued as Base Rate Loans and (iii) any
outstanding Eurodollar Loans shall be converted, on the first day of such
Interest Period, to Base Rate Loans. 
Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Loans shall be made or continued as such, nor shall the
Company have the right to convert Base Rate Loans to Eurodollar Loans.


 


4.9               Pro Rata Treatment and Payments.


 


(a)                                  Each
borrowing of Revolving Loans by the Company from the Revolving Credit Lenders
hereunder shall be made, each payment by the Company on account of any
commitment fee in respect of the Revolving Credit Commitments hereunder shall
be allocated by the Administrative Agent, and any reduction of the Revolving Credit
Commitments shall be allocated by the Administrative Agent, pro rata according
to the Revolving Credit Commitment Percentages of the Revolving Credit
Lenders.  Each payment (including each
prepayment) by the Company on account of principal of and interest on any
Revolving Loan shall be allocated pro  rata according to the
Revolving Credit Commitment Percentages of the Revolving Credit Lenders.  Each payment (including each prepayment) by
the Company on account of principal of and interest on any Tranche B Term Loans
shall be allocated by the Administrative Agent pro  rata among the
Tranche B Lenders according to their respective Tranche B Commitment
Percentages.  All payments (including
prepayments) to be made by the Company hereunder and under any Notes, whether
on account of principal, interest, fees, Reimbursement Obligations or
otherwise, shall be made without set-off or counterclaim and shall be made
prior to 2:00 P.M., Central time, on the due date thereof to the Administrative
Agent, for the account of the relevant Lenders at the Administrative Agent’s
Payment Office, in Dollars, and in immediately available funds.  Payments received by the Administrative
Agent after such time shall be deemed to have been received on the next
Business Day.  The Administrative Agent
agrees to pay to the Lenders payments received on their behalf promptly after
receipt.  If any payment hereunder
(other than payments on Eurodollar Loans) becomes due and payable on a day
other than a Banking Day,


 


40

















 


the
maturity of such payment shall be extended to the next succeeding Banking Day,
and, with respect to payments of principal, interest thereon shall be payable
at the then applicable rate during such extension.  If any payment on a Eurodollar Loan becomes due and payable on a
day other than a Banking Day, the maturity of such payment shall be extended to
the next succeeding Banking Day (and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension) unless the result of such extension would be to extend such payment
into another calendar month, in which event such payment shall be made on the
immediately preceding Banking Day.


 


(b)                                 Unless
the Administrative Agent shall have been notified in writing by any Lender
prior to a borrowing that such Lender will not make the amount that would
constitute its portion of such borrowing available to the Administrative Agent,
the Administrative Agent may assume that such Lender is making such amount
available to the Administrative Agent and the Administrative Agent may, in
reliance upon such assumption, make available to the Company a corresponding
amount.  If such amount is not made
available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent on demand such
amount with interest thereon at a rate equal to the daily average Federal Funds
Effective Rate for the period until such Lender makes such amount immediately
available to the Administrative Agent, in each case with a customary
administrative fee with respect thereto. 
A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this subsection shall be conclusive in the
absence of manifest error.  If such
Lender’s portion of such borrowing is not made available to the Administrative
Agent by such Lender within three Banking Days of such Borrowing Date, the
Administrative Agent shall also be entitled to recover such amount with
interest thereon at the rate per annum equal to the higher of (i) the rate
specified in the second sentence of this paragraph and (ii) the rate applicable
to Base Rate Loans hereunder, on demand, from the Company.


 


4.10                           Illegality. 
Notwithstanding any other provision herein, if the adoption of or any
change in any Requirement of Law or in the interpretation or application
thereof shall make it unlawful for any Lender to make or maintain Eurodollar
Loans as contemplated by this Agreement, (a) the commitment of such Lender
hereunder to make such Type of Loans, continue such Type of Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled, and
(b) such Lender’s Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law.  If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day of
the then current Interest Period with respect thereto, the Company shall pay to
such Lender such amounts, if any, as may be required pursuant to subsection
4.13.  During any such period of
illegality, any Loans that, but for the application of the preceding sentence
would have been maintained as Eurodollar Loans, shall be made and maintained by
the affected Lender as Base Rate Loans.


 


4.11                           Requirements of Law.


 


(a)                                  If
the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any
request or directive


 


41

















 


(whether
or not having the force of law) from any central bank or other Governmental
Authority made subsequent to the date hereof:


 


(i)                                     shall
subject any Lender to any tax of any kind whatsoever with respect to this
Agreement, any Note, any Letter of Credit, any Letter of Credit Application or
any Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non Excluded Taxes covered by
subsection 4.12 and changes in the rate of tax on the overall net income of
such Lender);


 


(ii)                                  shall
impose, modify or hold applicable any reserve, special deposit, compulsory loan
or similar requirement against assets held by, deposits or other liabilities in
or for the account of, advances, loans or other extensions of credit by, or any
other acquisition of funds by, any office of such Lender (or any affiliate of
such Lender from which such Lender customarily obtains funds) which is not
otherwise included in the determination of the Eurodollar Rate hereunder; or


 


(iii)                               shall impose on such
Lender (or such affiliate) any other condition; and the result of any of the
foregoing is to increase the cost to such Lender, by an amount which such
Lender deems to be material, of making, converting into, continuing or
maintaining Eurodollar Loans or issuing or participating in Letters of Credit
or to reduce any amount receivable hereunder in respect thereof,


 


then, in any such case,
the Company shall promptly pay such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduced amount
receivable.


 


(b)                                 If
any Lender shall have determined that the adoption of or any change in any
Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether
or not having the force of law) from any Governmental Authority made subsequent
to the date hereof shall have the effect of reducing the rate of return on such
Lender’s or such corporation’s capital as a consequence of its obligations
hereunder or under any Letter of Credit to a level below that which such Lender
or such corporation could have achieved but for such adoption, change or
compliance (taking into consideration such Lender’s or such corporation’s
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, the Company shall promptly pay to such
Lender such additional amount or amounts as will compensate such Lender or such
corporation for such reduction.


 


(c)                                  If
any Lender becomes entitled to claim any additional amounts pursuant to this
subsection, such Lender shall promptly notify the Company (with a copy to the
Administrative Agent) of the event by reason of which it has become so
entitled.  A certificate as to any
additional amounts payable pursuant to this subsection submitted by such Lender
to the Company (with a copy to the Administrative Agent) shall be conclusive in
the absence of manifest error.  The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder.


 


42

















 


(d)                                 Failure
or delay on the part of any Lender to demand compensation pursuant to this
subsection shall not constitute a waiver of such Lender’s right to demand such
compensation; provided that the Company shall not be required to
compensate a Lender pursuant to this subsection 4.11 for any increased costs or
reductions incurred more than 180 days prior to the date that such Lender
notifies the Company of the event or occurrence giving rise to such increased
costs or reductions and of such Lender’s intention to claim compensation
therefor; provided  further that, if the event or occurrence
giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.


 


4.12                           Taxes.


 


(a)                                  All
payments made by the Company under this Agreement, any Notes, any Letters of
Credit or any Letter of Credit Applications shall be made free and clear of,
and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings (including interest, fines, penalties and additions
to tax) (“Taxes”), now or hereafter imposed, levied, collected, withheld
or assessed by any Governmental Authority, excluding (i) net income Taxes and
franchise Taxes (imposed in lieu of net income Taxes) imposed on the
Administrative Agent or any Lender as a result of a present or former
connection between the Administrative Agent or such Lender and the jurisdiction
of the Governmental Authority imposing such Tax or any political subdivision or
taxing authority thereof or therein (other than any such connection arising
solely from the Administrative Agent or such Lender having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement or any Note), and (ii) any Taxes imposed by a jurisdiction to which
the Administrative Agent or any Lender is subject as of the date it becomes an
Administrative Agent or Lender (but not excluding with respect to clause (ii)
any Taxes (including an increase in rate) imposed as a result of a change in
law, treaty, or regulation occurring after such date but only to the extent of
such change) (any such non-excluded Taxes, “Non-Excluded Taxes”).  If any Taxes are required to be withheld
from any amounts payable to the Administrative Agent or any Lender hereunder or
under any Note, any Letters of Credit or any Letter of Credit Applications, (A)
the Company shall withhold and deduct any such Taxes from such amounts, (B) the
Company shall pay or deposit with the appropriate taxing authority in a timely
manner the full amount of Taxes so withheld or deducted, (C) the Company shall
promptly send to the Administrative Agent a certified copy of an original
official receipt received by the Company (or other documentation reasonably
acceptable to the Administrative Agent) showing payment thereof, and (D) if
such Taxes are Non-Excluded Taxes, the amounts so payable to the Administrative
Agent or the relevant Lender shall be increased to the extent necessary to
yield to the Administrative Agent or such Lender (after payment of all
Non-Excluded Taxes) interest or any such other amounts payable hereunder at the
rates or in the amounts specified in this Agreement, provided, however,
that the Company shall not be required to increase any such amounts payable to
any Lender that is not organized under the laws of the United States of America
or a state thereof if such Lender fails to comply with the requirements of
paragraph (b) of this subsection.  If
the Company fails to pay any Non-Excluded Taxes when due to the appropriate
taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Company shall indemnify
the Administrative Agent and the relevant Lenders for any incremental Taxes
that may become payable by the Administrative Agent or any Lender as a result
of any


 


43

















 


such
failure.  The agreements in this
subsection shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.


 


(b)                                 Each
Lender that is not a “U.S.  Person” as
defined in Section 7701(a)(30) of the Code shall:


 


(i)                                     deliver
to the Company and the Administrative Agent two copies of either U.S.  Internal Revenue Service Form W-8BEN or Form
W-8ECI, or, in the case of such a Lender claiming exemption from U.S. federal
withholding Tax under Section 871(h) or 881(c) of the Code with respect to
payments of “portfolio interest”, a statement substantially in the form of Exhibit
G and a Form W-8BEN, or any subsequent versions thereof or successors
thereto, properly completed and duly executed by such Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding Tax on all
payments by the Company under this Agreement and the other Loan Documents;


 


(ii)                                  deliver
to the Company and the Administrative Agent two further copies of any such form
or certification on or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event requiring a
change in the most recent form previously delivered by it to the Company; and


 


(iii)                               obtain such extensions
of time for filing and complete such forms or certifications as may reasonably
be requested by the Company or the Administrative Agent;


 


unless in any such case an event (including, without
limitation, any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender so advises the
Company and the Administrative Agent. 
Each Person that shall become a Lender or a Participant pursuant to
subsection 11.6 shall, upon the effectiveness of the related transfer, be
required to provide all of the forms and statements required pursuant to this
subsection, provided that in the case of a Participant such Participant
shall furnish all such required forms and statements to the Lender from which
the related participation shall have been purchased.


 


(c)                                  Failure
or delay on the part of any Lender to demand additional amounts pursuant to
this subsection shall not constitute a waiver of such Lender’s right to demand
such additional amounts; provided that the Company shall not be required
to compensate a Lender pursuant to this subsection 4.12 for any Non-Excluded
Taxes incurred more than 180 days prior to the date that such Lender notifies
the Company thereof; provided  further that, if the Non-Excluded
Taxes are retroactive, then the 180-day period referred to above shall be
extended to include the period of retroactive effect thereof.


 


4.13                           Indemnity. 
The Company agrees to indemnify each Lender and to hold each Lender
harmless from any loss or expense which such Lender may sustain or incur as a
consequence of (a) default by the Company in making a borrowing of, conversion
into or continuation of Eurodollar Loans after the Company has given a notice
requesting the same in accordance with the provisions of this Agreement, (b)
default by the Company in making any prepayment after the Company has given a
notice thereof in accordance with the provisions of


 


44

















 


this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day which is not the last day
of an Interest Period with respect thereto. 
Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so
prepaid, or not so borrowed, converted or continued, for the period from the
date of such prepayment or of such failure to borrow, convert or continue to
the last day of such Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the date
of such failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by
such Lender) which would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market.  This
covenant shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.


 


4.14                           Mitigation Obligations; Replacement of Lenders.


 


(a)                                  If
any Lender or a Participant in such Lender’s Loans requests compensation under
subsection 4.11, if the adoption of or any change in any Requirement of Law or
in the interpretation or application thereof causes the occurrence of one of
the events described in clause (a) or (b) of subsection 4.11, or if the Company
is required to pay any additional amount to any Lender or a Participant in such
Lender’s Loans or any Governmental Authority for the account of any Lender or
Participant pursuant to subsection 4.12, then such Lender or Participant shall
use reasonable efforts to designate a different lending office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or Affiliates, if, in the reasonable
judgment of such Lender or Participant, such designation or assignment (i)
would eliminate or reduce amounts payable pursuant to subsection 4.11 or 4.12
or would render inapplicable the adoption, change, interpretation or
application of the Requirement of Law that necessitated the occurrence of one
of the events described in clause (a) or (b) of subsection 4.11, as the case
may be, in the future and (ii) would not subject such Lender or Participant to
any unreimbursed cost or expense and would not otherwise be disadvantageous to
such Lender or Participant.  The Company
hereby agrees to pay all reasonable costs and expenses incurred by any Lender
or Participant in connection with any such designation or assignment.


 


(b)                                 If
any Lender or a Participant in such Lender’s Loans requests compensation under
subsection 4.11, or if the adoption of or any change in any Requirement of Law
or in the interpretation or application thereof causes the occurrence of one of
the events described in clause (a) or (b) of subsection 4.11, or if the Company
is required to pay any additional amount to any Lender or a Participant in such
Lender’s Loans or any Governmental Authority for the account of any Lender or
Participant pursuant to subsection 4.12, then the Company shall have the right,
at its sole expense, upon written notice to such Lender and the Administrative
Agent, to require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in subsection 11.6),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (i) the Company shall
have received the prior written consent of the Administrative Agent (and, if a
Revolving Credit Commitment is being assigned, the Issuing Bank and the Swing
Line Lender)


 


45

















 


which
consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in outstanding Letters of Credit, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder, from the assignee
(to the extent of such outstanding principal and accrued interest and fees) or
the Company (in the case of all other amounts) and (iii) (x) in the case of any
such assignment resulting from a claim for compensation under subsection 4.11
or payments required to be made pursuant to subsection 4.12, such assignment
will result in a reduction in such compensation or payments and (y) in the case
of any such assignment resulting from the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof that causes
the occurrence of one of the events described in clause (a) or (b) of
subsection 4.11, such assignment will render inapplicable the adoption, change,
interpretation or application of the Requirement of Law that necessitated the
occurrence of one of the events described in clause (a) or (b) of subsection
4.11.  A Lender shall not be required to
make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Company to
require such assignment and delegation cease to apply.


 


SECTION 5.  REPRESENTATIONS AND WARRANTIES


 


To induce the Agents and the Lenders to enter into
this Agreement and to induce the Lenders to make their extensions of credit
hereunder, the Company hereby represents and warrants to the Administrative
Agent and each Lender that:


 


5.1               Financial Condition.  The Consolidated balance sheet of the Company and its
Consolidated Subsidiaries as at December 31, 2002 and the related Consolidated
statements of earnings and of cash flows for the fiscal year ended on such date,
reported on by Ernst & Young LLP, copies of which have heretofore been
furnished to each Lender, present fairly the Consolidated financial condition
of the Company and its Consolidated Subsidiaries as at such date, and the
Consolidated results of their operations and their Consolidated cash flows for
the fiscal year then ended.  All such
financial statements, including the related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved as required by GAAP (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein).  Neither the Company nor any of its
Consolidated Subsidiaries had, at the date of the most recent balance sheet
referred to above, any material Guarantee Obligation, contingent liability or
liability for Taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any Interest Rate Protection
Agreement or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto.  Except as set forth in Schedule 5.1,
during the period from December 31, 2002 to and including the date hereof there
has been no sale, transfer or other disposition by the Company or any of its
Consolidated Subsidiaries of any material part of its business or property and
no purchase or other acquisition of any business or property (including any
capital stock of any other Person) material in relation to the Consolidated
financial condition of the Company and its Consolidated Subsidiaries at
December 31, 2002.


 


5.2               No Change; Solvency.  Since December 31, 2002, there has been no development or event
which has had or could reasonably be expected to have a Material Adverse Effect
and during the period from December 31, 2002 to and including the date hereof,
except as set forth in Schedule 5.2, no dividends or other distributions
have been declared, paid or made


 


46

















 


upon the Capital Stock of
the Company or any of its Subsidiaries nor has any of the Capital Stock of the
Company or any of its Subsidiaries been redeemed, retired, purchased or
otherwise acquired for value by the Company or any of its Subsidiaries.  As of the Closing Date, after giving effect
to the transactions contemplated by the Loan Documents to occur on the Closing
Date, and as of each Borrowing Date, the Company and its Subsidiaries will be
Solvent on a Consolidated basis.


 


5.3               Existence; Compliance with Law.  The Company and each of its Subsidiaries (a)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (b) has the corporate or partnership (as the
case may be) power and authority, and the legal right, to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation or partnership (as the case may be) and in good standing (to the
extent applicable) under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification except to the extent its failure to be so qualified and/or in
good standing could not reasonably be expected to have a Material Adverse
Effect and (d) is in compliance with all Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.


 


5.4               Corporate Power; Authorization;
Enforceable Obligations.  Each Loan
Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and to borrow
hereunder and has taken all necessary corporate action to authorize the
borrowings on the terms and conditions of this Agreement and any Notes and to
authorize the execution, delivery and performance of the Loan Documents to
which it is a party.  No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of the Loan Documents other than filings and recordings to
perfect the Liens created by the Loan Documents.  This Agreement has been, and each other Loan Document to which it
is a party will be, duly executed and delivered on behalf of each Loan Party
party thereto.  This Agreement
constitutes, and each other Loan Document to which it is a party when executed
and delivered will constitute, a legal, valid and binding obligation of each
Loan Party party thereto enforceable against such Loan Party in accordance with
its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.


 


5.5               No Legal Bar. 
The execution, delivery and performance of the Loan Documents, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or Contractual Obligation of the Company or of any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien, except pursuant to the Security Documents, on any of its or their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.


 


5.6               No Material Litigation.  No litigation, investigation or proceeding
of or before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Company,


 


47

















 


threatened by or against
the Company or any of its Subsidiaries or against any of its or their
respective properties or revenues (a) with respect to any of the Loan Documents
or any of the transactions contemplated hereby or thereby or (b) which could
reasonably be expected to have a Material Adverse Effect.


 


5.7               No Labor Controversy.  There are no strikes or other labor disputes
against the Company or any of its Subsidiaries pending or, to the knowledge of
the Company, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect.  Hours worked by and payment made to
employees of the Company and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable Requirement of Law dealing with
such matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. 
All payments due from the Company or any of its Subsidiaries on account
of employee health and welfare insurance that (individually or in the
aggregate) could reasonably be expected to have a Material Adverse Effect if
not paid have been paid or accrued as a liability on the books of the Company
or the relevant Subsidiary.


 


5.8               No Default. 
Neither the Company nor any of its Subsidiaries is in default under or
with respect to any of its Contractual Obligations in any respect which could
reasonably be expected to have a Material Adverse Effect.  No Default or Event of Default has occurred
and is continuing.


 


5.9               Ownership of Property; Liens.  The Company and each of its Subsidiaries has
good record and indefeasible title in fee simple to, or a valid leasehold
interest in, all its real property, and good title to, or a valid leasehold
interest in, all its other property, and none of such property is subject to
any Lien except as permitted by subsection 8.3.  Schedule 5.9 sets forth a true and complete list of each
location of real property owned or leased by the Company and its Subsidiaries
as of the Closing Date that has a fair value as of the Closing Date of more
than $5 million.


 


5.10         Intellectual Property.  The Company and each of its Subsidiaries
owns, or is licensed to use, all trademarks, tradenames, patents, copyrights,
technology, know-how and processes necessary for the conduct of its business as
currently conducted except for those the failure to own or license which could
not reasonably be expected to have a Material Adverse Effect (the “Intellectual
Property”).  Except as set forth in Schedule
5.10, no claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity or
effectiveness of any such Intellectual Property, nor does the Company know of
any valid basis for any such claim.  The
use of such Intellectual Property by the Company and its Subsidiaries does not
infringe on the rights of any Person, except for such claims and infringements
that, in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.


 


5.11         No Burdensome Restrictions.  No Requirement of Law or Contractual
Obligation of the Company or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.


 


48

















 


5.12                           Taxes.  The
Company and each of its Subsidiaries has filed or caused to be filed all Tax
returns which, to the knowledge of the Company, are required to be filed and
has paid all material Taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other Taxes
imposed on it or any of its property by any Governmental Authority (other than
any such Taxes, the amount or validity of which are currently being contested
in good faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP have been provided on the books of the Company or its
Subsidiaries, as the case may be); no Tax Lien has been filed, and, to the
knowledge of the Company, no claim is being asserted, with respect to any such
Tax which could reasonably be expected to have a Material Adverse Effect.


 


5.13                           Federal Regulations.  No part of the proceeds of any Loans will be
used for “buying” or “carrying” any “margin stock” within the respective
meanings of each of the quoted terms under Regulation U in violation of
Regulation U.  If requested by any
Lender or the Administrative Agent, the Company will furnish to the
Administrative Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form G-3 or FR Form U-l, as applicable,
referred to in Regulation U.


 


5.14                           ERISA.  Except for
matters which could not reasonably be expected to have a Material Adverse
Effect, neither a Reportable Event nor an “accumulated funding deficiency”
(within the meaning of Section 412 of the Code or Section 302 of ERISA) has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan (other than any
Multiemployer Plan), and each Plan (other than any Multiemployer Plan) has
complied in all material respects with the applicable provisions of ERISA and
the Code.  No termination of a Single
Employer Plan under Section 4041(c) or 4042 of ERISA has occurred or is
reasonably expected to occur, and no Lien in favor of the PBGC or a Plan has
arisen or is reasonably expected to arise, during such five-year period.  The present value of all accrued benefits
under each Single Employer Plan (based on those assumptions used to fund such
Plans) did not, as of the last annual valuation date prior to the date on which
this representation is made or deemed made, exceed the value of the assets of
such Plan allocable to such accrued benefits. 
Neither any Loan Party nor any Commonly Controlled Entity has had a
complete or partial withdrawal from any Multiemployer Plan, and, to the best
knowledge of any Loan Party or any Commonly Controlled Entity, neither any Loan
Party nor any Commonly Controlled Entity would become subject to any material
liability under ERISA if any Loan Party or any such Commonly Controlled Entity
were to withdraw completely from all Multiemployer Plans as of the valuation
date most closely preceding the date on which this representation is made or
deemed made.  No such Multiemployer Plan
is in Reorganization or Insolvent.


 


5.15                           Investment Company Act; Other Regulations.  No Loan Party is an “investment company”, or
a company “controlled” by an “investment company”, within the meaning of the
Investment Company Act of 1940, as amended. 
No Loan Party is subject to regulation under any Federal or State
statute or regulation (other than Regulation X) that limits its ability to
incur Indebtedness.


 


5.16                           Subsidiaries. 
Schedule 5.16 (as such schedule may be amended or supplemented as
provided in subsection 7.2(b)) sets forth all of the Subsidiaries of the
Company,


 


49

















 


and all of the joint
ventures in which the Company or any of its Subsidiaries has an interest, at
the Closing Date and (with respect to the making of any Loan) as of each
Borrowing Date, the jurisdiction of their organization and the direct or
indirect ownership interest of the Company therein.


 


5.17                           Purpose of Tranche B Term Loans and
Revolving Loans.  The proceeds of
the Tranche B Term Loans shall be used by the Company (i) to pay fees and
expenses relating to this Agreement to be paid on the Closing Date in
accordance with subsection 6.1(o), (ii) to finance certain of the Transactions,
and (iii) to the extent there are any remaining proceeds after the payments referred
to in clauses (i) and (ii) above, to finance the working capital needs and
general corporate purposes of the Company and its Subsidiaries (including the
financing of Permitted Acquisitions). 
The proceeds of the Revolving Loans shall be used by the Company to
finance the working capital needs and general corporate purposes of the Company
and its Subsidiaries (including the financing of Permitted Acquisitions).


 


5.18                           Environmental Matters.  Except as set forth in Schedule 5.18:


 


(a)                                  The
facilities and properties owned, leased or operated by the Company or any of
its Subsidiaries (the “Properties”) do not contain, and have not
previously contained, any Materials of Environmental Concern in amounts or
concentrations which (i) constitute or constituted a violation of, or (ii)
would reasonably be expected to give rise to liability under, any applicable
Environmental Law, except in either case insofar as such violation or
liability, or any aggregation thereof, is not reasonably likely to result in a
Material Adverse Effect.


 


(b)                                 The
Properties and all operations at the Properties are in compliance in all
material respects, and have in the last five years been in compliance in all
material respects, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by
the Company or any of its Subsidiaries (the “Business”) which is
reasonably likely to result in a Material Adverse Effect.


 


(c)                                  Neither
the Company nor any of its Subsidiaries has received any notice of violation,
alleged violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws (including, without
limitation, the federal Comprehensive Environmental Response, Compensation, and
Liability Act) with regard to any of the Properties or the Business, nor does
the Company have knowledge or reason to believe that any such notice will be
received or is being threatened except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that
is or are reasonably likely to result in a Material Adverse Effect.


 


(d)                                 Materials
of Environmental Concern have not been transported or disposed of from the
Properties in violation of, or in a manner or to a location which would be
expected to give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could reasonably be expected to give rise to liability under, any applicable
Environmental Law except insofar as such transportation,


 


50

















 


disposal,
generation, treatment or storage, individually or in the aggregate, is not
reasonably likely to result in a Material Adverse Effect.


 


(e)                                  No
judicial proceeding or governmental or administrative action is pending or, to
the knowledge of the Company, threatened, under any Environmental Law or
otherwise relating to the protection of human health and safety, natural
resources or Material of Environmental Concern, to which the Company or any
Subsidiary is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Properties or the Business, nor has the Company or any of its Subsidiaries
assumed or retained, by contract or, to the best knowledge of the Company, by
operation of law, any liabilities of any kind, fixed or contingent, known or
unknown, under any Environmental Law or with respect to any Material of
Environmental Concern except insofar as such proceeding, action, decree, order,
requirement, assumption or retention, individually or in the aggregate, is not
reasonably likely to result in a Material Adverse Effect.


 


(f)                                    There
has been no release or threat of release of Materials of Environmental Concern
at or from the Properties, or arising from or related to the operations of the
Company or any of its Subsidiaries in connection with the Properties or otherwise
in connection with the Business, in violation of or in amounts or in a manner
that could give rise to liability under Environmental Laws except insofar as
such release or threat of release is not reasonably likely to result in a
Material Adverse Effect.


 


5.19                           Regulation H.  No Mortgage encumbers improved real property that is located in
an area that has been identified by the Secretary of Housing and Urban
Development as an area having special flood hazards and in which flood insurance
has been made available under the National Flood Insurance Act of 1968.


 


5.20                           No Material Misstatements.  The written information, reports, financial
statements, exhibits and schedules furnished by or on behalf of the Company and
each other Loan Party to the Administrative Agent and the Lenders in connection
with the negotiation of any Loan Document or any document related thereto or
included therein or delivered pursuant thereto do not contain any material
misstatement of fact and do not, taken as a whole, omit, and will not, taken as
a whole, omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
materially misleading.  It is understood
that no representation or warranty is made concerning the forecasts, estimates,
pro  forma information, projections and statements as to
anticipated future performance or conditions (the “Projections”), and
the assumptions on which they were based, contained in any such information,
reports, financial statements, exhibits or schedules, except that, as of the
date such Projections were generated, (a) such Projections were based on the
good faith assumptions of the management of the Company, and (b) the
assumptions on which the Projections were based were believed by such
management to be reasonable (it being understood that the Projections are
subject to significant uncertainties and contingencies, many of which are
beyond the control of the Company and that no assurance is given by the Company
that such Projections will be realized).


 


51

















 


5.21                           Collateral. 
The provisions of each of the Security Documents constitute in favor of
the Collateral Agent for the ratable benefit of the Lenders, a legal, valid and
enforceable security interest in all right, title, and interest of the Company
or any of the other Loan Parties which is a party to such Security Document, as
the case may be, in the Collateral described in such Security Document.  Except as otherwise provided in the Security
Documents, each of the Security Documents constitutes a perfected security
interest in all right, title and interest of the Company or such other Loan
Parties, as the case may be, in the Collateral described therein, and except
for (i) Liens permitted by subsection 8.3 which have priority over the Liens on
the Collateral by operation of law and (ii) Liens described in Schedule
8.3(f), a perfected first Lien on all right, title and interest of the
Company or such other Loan Parties, as the case may be, in the Collateral
described in each Security Document.


 


5.22                           Senior Debt; No Other Designated Senior Debt.  The Obligations constitute “Senior
Indebtedness”, “Designated Senior Debt” and “Designated Guarantor Senior Debt”
under and as defined in the Senior Subordinated Note Indenture and in any other
Subordinated Debt Documentation.  No
other Indebtedness of any Loan Party constitutes or has been designated as
“Designated Senior Debt” or “Designated Guarantor Senior Debt” under and as
defined in the Senior Subordinated Note Indenture or any other Subordinated
Debt Documentation.


 


5.23                           Chief Executive Office.  The chief executive office of the Company
and the office where it maintains its records is located at 8023 Vantage Drive,
San Antonio, Texas 78230.  The Company
is only organized in the State of Texas and “Kinetic Concepts, Inc.” is the
name of the Company as it appears in official filings in the State of Texas.


 


SECTION
6.  CONDITIONS PRECEDENT


 


6.1                                 Conditions to Effectiveness.  The effectiveness of this Agreement and the
obligations of the Lenders to make Loans hereunder shall be subject to the
satisfaction, immediately prior to or concurrently with the making of the Loans
on the Closing Date, of the following conditions precedent:


 


(a)                                  Loan
Documents.  The Administrative Agent
shall have received on or before the Closing Date the following, each dated
such day (unless otherwise specified), in form and substance reasonably
satisfactory to the Administrative Agent (unless otherwise specified) and
(except for the Notes) in sufficient copies for each Lender:


 


(i)                                     counterparts
of this Agreement executed by the Company and the Lenders;


 


(ii)                                  Notes
payable to the order of the Lenders, to the extent requested pursuant to
subsection 4.1(d); and


 


(iii)                               the
Guarantee and Collateral Agreement substantially in the form of Exhibit B
hereto, duly executed and delivered by a duly authorized officer of the Company
and each of the Domestic Subsidiaries.


 


52

















 


(b)                                 Solvency
Certificates.  The Administrative
Agent shall have received certificates from the Company and each Guarantor, in
form and substance satisfactory to the Lenders, attesting to the Solvency of
the Company and each Guarantor, as the case may be, in each case individually
and together with its Subsidiaries, taken as a whole (including rights of
contribution), immediately before and immediately after giving effect to the
Transactions, from their respective chief financial officers.


 


(c)                                  Environmental
Assessment Report.  If requested by
the Agents with sufficient prior notice, the Administrative Agent shall have
received an environmental assessment report, from an environmental consulting
firm reasonably acceptable to the Administrative Agent, as to any hazards,
costs or liabilities under Environmental Laws to which any Loan Party or any of
its Subsidiaries may be subject, the amount and nature of which and the
Company’s plans with respect to which shall be reasonably acceptable to the
Lenders, together with evidence, in form and substance reasonably satisfactory
to the Lenders, that all applicable Environmental Laws shall have been complied
with.  To the extent that either such
report or any other information that may become available to the Lenders shall
disclose any hazards, costs or liabilities under Environmental Laws or
otherwise that the Lenders deem material, the Lenders shall be reasonably
satisfied that such hazards, costs or liabilities were adequately reflected in
the Company’s financial reserves shown on the financial statements delivered to
the Lenders prior to the Closing Date or that, to the extent not so reflected,
the Company has made adequate provision for such hazards, costs or liabilities.


 


(d)                                 Legal
Opinions.  The Administrative Agent
shall have received, with a counterpart for each Lender, the following executed
legal opinions:


 


(i)                                     the
executed legal opinion of Skadden, Arps, Slate, Meagher and Flom LLP, counsel
to the Company and its Subsidiaries, substantially in the form of Exhibit E-1;
and


 


(ii)                                  the
executed legal opinion of Cox & Smith Incorporated, counsel to the Company
and its Subsidiaries, substantially in the form of Exhibit E-2.


 


Each
such legal opinion shall cover such other matters incident to the transactions
contemplated by this Agreement as the Administrative Agent may reasonably
require.


 


(e)                                  Closing
Certificates.  The Administrative
Agent shall have received a certificate from the Company, dated the Closing
Date, substantially in the form of Exhibit D, with appropriate insertions
and attachments, satisfactory in form and substance to the Administrative
Agent.


 


(f)                                    Incumbency
Certificates.  The Administrative
Agent shall have received, in form and substance reasonably satisfactory to the
Administrative Agent, a certificate of the Company and each Subsidiary of the
Company, dated the Closing Date, as to the incumbency and signature of the
officers of the Company and each such Subsidiary of the Company executing any
Loan Document.


 


(g)                                 Corporate
Documents.  The Administrative Agent
shall have received, with a counterpart for the Administrative Agent and a copy
for each Lender, true and complete


 


53

















 


copies
(i) with respect to each Loan Party which is a corporation, of the certificate
of incorporation and by-laws of each Loan Party, certified as of the Closing
Date as complete and correct copies thereof in a manner reasonably satisfactory
to the Administrative Agent; (ii) with respect to each Loan Party which is a
limited liability company, of the articles of organization and regulations and
other governing documents and agreements of each such Loan Party, certified as
of the Closing Date as complete and correct copies thereof in a manner
reasonably satisfactory to the Administrative Agent; and (iii) with respect to
each Loan Party which is a limited partnership, of the limited partnership
agreement, the certificate of limited partnership and other governing documents
and agreements of each such Loan Party, certified as of the Closing Date as
complete and correct copies thereof in a manner reasonably satisfactory to the
Administrative Agent.


 


(h)                                 Corporate
and Legal Structure.  The Lenders
shall be reasonably satisfied with the terms and conditions of the
Transactions, including, without limitation, all legal and Tax aspects
thereof.  The Lenders shall also be
reasonably satisfied with the legal structure and the terms and conditions of
the capitalization of the Company and each of the Guarantors.  The Lenders shall be reasonably satisfied
with the terms and conditions of the Senior Subordinated Notes.  The Lenders shall be reasonably satisfied
with the corporate and legal structure and capitalization of each Loan Party
and each of its Subsidiaries the Capital Stock of which Subsidiaries is being
pledged pursuant to the Loan Documents, including the terms and conditions of
the charter, bylaws and each class of Capital Stock of each Loan Party and each
such Subsidiary and of each agreement or instrument relating to such structure
or capitalization.


 


(i)                                     Governmental
and Third Party Consents and Approvals. 
All governmental and third party approvals and consents required in
connection with the transactions contemplated by the Loan Documents and the
Transaction Documents shall have been obtained (without the imposition of any
conditions that are not acceptable to the Lenders) (other than any governmental
and third party approvals and consents the absence of which could not
reasonably be expected to have a Material Adverse Effect) and shall remain in
effect; (ii) all applicable waiting periods in connection with the Transactions
shall have expired without any adverse action being taken by any Governmental
Authority; and (iii) no law or regulation shall be applicable, in the judgment
of the Lenders, that restrains, prevents or imposes materially adverse
conditions upon the transactions contemplated by the Loan Documents or the
Transaction Documents.  This subsection
6.1(i) shall not apply with respect to the issuance of the Convertible Preferred
to the extent such issuance has not been consummated on or prior to the Closing
Date.


 


(j)                                     Senior
Subordinated Notes.  The Company
shall have received at least $150,000,000 in Net Cash Proceeds from the sale of
the Senior Subordinated Notes and such proceeds shall have been deposited into
a secured proceeds account for the repayment of the Existing Subordinated Notes
or redemption of the Senior Subordinated Notes.


 


(k)                                  Insurance.  The Lenders shall (i) be reasonably
satisfied with the amount, types and terms and conditions of all insurance
maintained by the Company and its Subsidiaries, (ii) receive evidence of the
insurance required by the terms of the Security Documents, and (iii) receive
certificates naming the Collateral Agent as additional insured and loss payee,
as applicable, in each case with such responsible and reputable insurance
companies or


 


54

















 


associations,
and in such amounts and covering such risks, as is reasonably satisfactory to
the Lenders, including, without limitation, business interruption insurance.


 


(l)                                     EBITDA;
Loans.  The Lenders shall be
satisfied that (i) EBITDA for the 12-month period ending as of the most
recently ended fiscal quarter prior to the Closing Date, on a pro forma basis,
is not less than $165 million and (ii) the Leverage Ratio on a pro forma basis
after giving effect to the Transactions is no greater than 4.1:1.0.  No more than an aggregate of $5 million in
Revolving Loans shall be outstanding on the Closing Date.


 


(m)                               Corporate
Proceedings.  The Administrative
Agent shall have received a copy of the resolutions, in form and substance
reasonably satisfactory to the Administrative Agent, of the Board of Directors
of each Loan Party authorizing (i) the execution, delivery and performance of
the Transactions and each Loan Document to which it is or is to be a party and
(ii) the borrowings contemplated hereunder, certified by the Secretary or an
Assistant Secretary of each Loan Party as of the Closing Date, which certificate
shall state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded.


 


(n)                                 Actions
to Perfect Liens.  The Collateral
Agent shall have received evidence in form and substance reasonably
satisfactory to it that all filings, recordings, registrations and other
actions, including, without limitation, the filing of duly authorized financing
statements on form UCC-1, necessary or, in the opinion of the Collateral Agent,
desirable to perfect the Liens created by the Security Documents shall have
been completed (or arrangements satisfactory to the Collateral Agent for the
prompt completion thereof shall have been made).


 


(o)                                 Existing
Credit Agreement.  The Company’s
existing credit agreement with Bank of America, N.A., as administrative agent,
shall have been repaid in full, all fees due thereunder shall have been paid in
full and the commitments thereunder shall have been terminated.


 


(p)                                 Fees.  The Lenders, the Administrative Agent and
the Arrangers shall have received all fees required to be paid in connection
with this Agreement including the reasonable fees and expenses of counsel for
the Administrative Agent and the Arrangers for which invoices have been
presented on or before the Closing Date.


 


6.2               Conditions to Each Extension of
Credit.  The agreement of each
Lender to make any Loan or any other extension of credit requested to be made
by it on any date (including, without limitation, the extensions of credit
being made on the Closing Date), and of the Issuing Bank to issue any Letter of
Credit requested to be issued by it on any date, is subject to the satisfaction
of the following conditions precedent:


 


(a)                                  Representations
and Warranties.  Each of the
representations and warranties made by the Company, its Subsidiaries and any
other Loan Party in or pursuant to the Loan Documents shall be true and correct
in all material respects on and as of such date as if made on and as of such
date, except for representations and warranties stated to relate to a specific
earlier date, in which case such representations and warranties shall be true
and correct in all material respects on and as of such earlier date.


 


55

















 


(b)                                 No
Default.  No Default or Event of
Default shall have occurred and be continuing on such date or after giving
effect to the extensions of credit or the issuing of Letters of Credit
requested to be made on such date.


 


(c)                                  Additional
Matters.  All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be reasonably satisfactory in form and substance to the
Administrative Agent, and the Administrative Agent shall have received such
other documents and legal opinions in respect of any aspect or consequence of
the transactions contemplated hereby or thereby as it shall reasonably request.


 


Each borrowing by and Letter of Credit issued on
behalf of the Company hereunder shall constitute a representation and warranty
by the Company as of the date thereof that the conditions contained in this
subsection have been satisfied.


 


SECTION
7.  AFFIRMATIVE COVENANTS


 


The Company hereby agrees that, so long as the
Commitments remain in effect or any Letter of Credit remains outstanding and
unpaid (unless such Letter of Credit has been cash collateralized) or any
amount is owing to any Lender or the Administrative Agent hereunder or under
any other Loan Document, the Company shall and (except in the case of delivery
of financial information, reports and notices in respect of the Company) shall
cause each of its Subsidiaries to:


 


7.1               Financial Statements.  Furnish to the Administrative Agent, with an
electronic and a hard copy:


 


(a)                                  as
soon as available, but in any event within 90 days after the end of each fiscal
year of the Company, a copy of the Consolidated balance sheet of the Company
and its Consolidated Subsidiaries as at the end of such year and the related
Consolidated statements of earnings and of cash flows for such year, setting
forth in each case in comparative form the figures for the previous year,
reported on without a “going concern” or like qualification or exception, or
qualification arising out of the scope of the audit, by independent certified
public accountants of nationally recognized standing; and


 


(b)                                 as
soon as available, but in any event not later than 45 days after the end of
each of the first three quarterly periods of each fiscal year of the Company,
the unaudited Consolidated balance sheet of the Company and its Consolidated
Subsidiaries as at the end of such quarter and the related unaudited
Consolidated statements of earnings and of cash flows of the Company and its
Consolidated Subsidiaries for such quarter and the portion of the fiscal year
through the end of such quarter, setting forth in each case in comparative form
the figures for the previous year, certified by a Responsible Officer as being
fairly stated in all material respects (subject to normal year-end audit
adjustments and the absence of notes);


 


all such financial statements shall be complete and
correct in all material respects and shall be prepared in reasonable detail and
in accordance with GAAP (except, in the case of any such unaudited financial
statements, for the absence of footnotes and, except as approved by such
accountants or officer, as the case may be, and disclosed therein).


 


56

















 


7.2               Certificates; Other Information.  Furnish to the Administrative Agent, with an
electronic and a hard copy:


 


(a)                                  concurrently
with the delivery of the financial statements referred to in subsection 7.l(a),
a compliance certificate of the independent certified public accountants
reporting on such financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of
Default, except as specified in such certificate;


 


(b)                                 concurrently
with the delivery of the financial statements referred to in subsections 7.1(a)
and (b), a compliance certificate of a Responsible Officer (i) stating that, to
the best of such Responsible Officer’s knowledge, during such period (A) no
Subsidiary has been formed or acquired (or, if any such Subsidiary has been
formed or acquired, the Company has complied with the requirements of
subsection 7.10 with respect thereto and has, or concurrently herewith shall,
deliver a supplement to Schedule 5.16 detailing the addition of any such
Subsidiary), (B) neither the Company nor any of its Subsidiaries has changed
its name, its principal place of business, its chief executive office or the
location of any material item of tangible Collateral without complying with the
requirements of this Agreement and the Security Documents with respect thereto
and (C) the Company has observed or performed all of its covenants and other
agreements, and satisfied every condition, contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that
such Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) setting forth in reasonable
detail the calculations required to determine (A) compliance with subsection
8.1, (B) the Applicable Margin then in effect for each Type of Loan and (C) in
the case of the compliance certificate delivered in connection with the
financial statements delivered pursuant to subsection 7.1(a), the Excess Cash
Flow for the relevant fiscal year (commencing with the fiscal year ended
December 31, 2004);


 


(c)                                  promptly
after approval by the Board of Directors of the Company, but in any event not
later than the last Business Day of the second calendar month of each fiscal
year of the Company, a copy of the projections by the Company of the operating
budget and cash flow budget of the Company and its Subsidiaries for such fiscal
year, such projections to be accompanied by a certificate of a Responsible
Officer to the effect that such projections have been prepared on the basis of
sound financial planning practice and that such Responsible Officer has no
reason to believe they are incorrect or misleading in any material respect;


 


(d)                                 concurrently
with the delivery of the financial statements referred to in subsections 7.1(a)
and (b), a comparison (with a discussion of material differences) in reasonable
detail of the revenues and EBITDA (and, in the case of the financial statements
referred to in subsection 7.1(a), asset utilization) of the Company and its
Subsidiaries, on a divisional basis, for the period covered by the financial
statements to the budgeted results for such period delivered to the Lenders
pursuant to paragraph (c) above (it being understood that any such comparison
and discussion shall be prepared in a manner consistent with past practice as
disclosed to the Administrative Agent and any comparison so prepared shall
satisfy the requirements of this paragraph);


 


57

















 


(e)                                  within
fifteen days after the same are sent, copies of all financial statements and
reports which the Company sends to its stockholders, and within five days after
the same are filed, copies of all financial statements and reports which the
Company may make to, or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority; and


 


(f)                                    as
soon as practicable, such additional financial and other information as any
Lender may from time to time reasonably request.


 


7.3               Payment of Obligations.  Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature (other than Indebtedness), except where
the amount or validity thereof is currently being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP with respect
thereto have been provided on the books of the Company and its Subsidiaries.


 


7.4               Conduct of Business and Maintenance of
Existence.  Continue to (a) engage
in businesses which are in the same, similar or reasonably related or
complementary businesses as the businesses in which the Company and its
Subsidiaries are engaged on the date hereof and (b) preserve, renew and keep in
full force and effect its corporate or partnership (as the case may be)
existence and take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business except
as otherwise permitted pursuant to subsection 8.5; comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a
Material Adverse Effect.


 


7.5               Maintenance of Property; Insurance.  Keep all property useful and necessary in
its business in good working order and condition (ordinary wear and tear
excepted); maintain with financially sound and reputable insurance companies
(or, to the extent consistent with prudent business practice, a program of
self-insurance) insurance on all the Collateral in accordance with the
requirements of Section 5.2 of the Guarantee and Collateral Agreement and the
requirements of each of the Mortgages and on all its other property in at least
such amounts (including as to amounts of deductibles) and against at least such
risks (but including in any event commercial general liability, product
liability and business interruption) as are consistent with prudent business
practice; and furnish to each Lender, upon written request, full information as
to the insurance carried.


 


7.6               Inspection of Property; Books and
Records; Discussions.  Keep proper
books, records and accounts in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records at any reasonable
time and as often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Company and its
Subsidiaries with officers and employees of the Company and its Subsidiaries
and with its independent certified public accountants.


 


58

















 


7.7               Notices. 
Promptly give notice to the Administrative Agent of:


 


(a)                                  the
occurrence of any Default or Event of Default;


 


(b)                                 any
(i) default or event of default under any Contractual Obligation of the Company
or any of its Subsidiaries or (ii) litigation, investigation or proceeding
which may exist at any time between the Company or any of its Subsidiaries and
any Governmental Authority, which in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a Material
Adverse Effect;


 


(c)                                  any
litigation or proceeding affecting the Company or any of its Subsidiaries in
which the amount involved is $5,000,000 or more and not covered by insurance or
in which injunctive or similar relief is sought and, in either case, if
granted, could reasonably be expected to have a Material Adverse Effect;


 


(d)                                 any
of the following events where, individually or in the aggregate with any other
events, the liability that could reasonably be expected to result would exceed
$5,000,000, as soon as possible and in any event within 10 days after any Loan
Party or any Commonly Controlled Entity knows or has reason to know thereof:
(i) the occurrence or expected occurrence of any Reportable Event or
termination under Section 4041(c) or 4042 of ERISA with respect to any Single
Employer Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or
the termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by the
PBGC or any Loan Party or any Commonly Controlled Entity or any Multiemployer
Plan with respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan; and


 


(e)                                  any
development or event which could reasonably be expected to have a Material
Adverse Effect.


 


Each notice pursuant to this subsection shall be
accompanied by a statement of a Responsible Officer of the Company setting
forth details of the occurrence referred to therein and stating what action the
Company proposes to take with respect thereto. 
Notwithstanding the provisions of subsection 11.2, each notice pursuant
to this subsection may be given by facsimile or by means of electronic mail
over the Internet (containing attachments appropriate for posting to an
Intralinks or similar website reasonably accessible to the Lenders).


 


7.8               Environmental Laws.


 


(a)                                  Comply
with, and use its best efforts to ensure compliance by all tenants and
subtenants, if any, with, all applicable Environmental Laws and obtain and
comply with and maintain, and use its best efforts to ensure that all tenants
and subtenants obtain and comply with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
Environmental Laws except, in each case, to the extent that failure to do so
would not (either individually or together with all other such failures) be
reasonably expected to have a Material Adverse Effect.


 


59

















 


(b)                                 Conduct
and complete all investigations, studies, sampling and testing, and all
remedial, removal and other actions required under Environmental Laws and
promptly comply with all lawful orders and directives of all Governmental
Authorities regarding Environmental Laws except, in each case, to the extent
that the same are being contested in good faith by appropriate proceedings and
the pendency of such proceedings could not be reasonably expected to have a
Material Adverse Effect.


 


7.9               Further Assurances.  Upon the reasonable request of the Administrative Agent, promptly
perform or cause to be performed any and all acts and execute or cause to be
executed any and all documents (including, without limitation, financing
statements and continuation statements) for filing under the provisions of the
Uniform Commercial Code or any other Requirement of Law which are necessary or
advisable to maintain in favor of the Administrative Agent, for the benefit of
the Lenders, Liens on the Collateral that are duly perfected in accordance with
all applicable Requirements of Law.


 


7.10                           Additional Collateral.


 


(a)                                  With
respect to any assets, other than leasehold interests, acquired after the
Closing Date by the Company or any of its Domestic Subsidiaries (other than any
joint venture that was formed or acquired in accordance with Section 8.9(i))
that are intended to be subject to the Lien created by any of the Security
Documents but which are not so subject (other than any assets described in
paragraph (b) or (c) of this subsection, and subject to paragraph (d) of this
subsection), promptly (and in any event within 30 days after the acquisition
thereof): (i) execute and deliver to the Collateral Agent such amendments to
the relevant Security Documents or such other documents as the Collateral Agent
(including Mortgages) shall reasonably deem necessary or advisable to grant to
the Collateral Agent, for the benefit of the Lenders, a Lien on such assets,
(ii) take all actions reasonably necessary or advisable to cause such Lien to
be duly perfected in accordance with all applicable Requirements of Law as
contemplated by such Security Documents, including, without limitation, the
filing of financing statements in such jurisdictions as may be reasonably
requested by the Collateral Agent, (iii) in the case of a Mortgage, deliver to
the Collateral Agent such surveys, title insurance policies and other documents
that the Collateral Agent reasonably requests, all in form and substance
reasonably satisfactory to the Collateral Agent and (iv) if reasonably
requested by the Collateral Agent, deliver to the Collateral Agent legal
opinions relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Collateral Agent.


 


(b)                                 With
respect to any Person that, subsequent to the Closing Date, becomes a
Subsidiary (other than a joint venture that was formed or acquired in accordance
with Section 8.9(i) or a Foreign Subsidiary), promptly: (i) execute and deliver
to the Collateral Agent, for the benefit of the Lenders, a new pledge agreement
or such amendments to the Guarantee and Collateral Agreement as the Collateral
Agent shall deem necessary or advisable to grant to the Collateral Agent, for
the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary
which is owned by the Company or any of its Subsidiaries, (ii) deliver to the
Collateral Agent the certificates representing such Capital Stock, together
with undated stock powers executed and delivered in blank by a duly authorized
officer of the Company or such Subsidiary, as the case may be, (iii) cause such
new Subsidiary (A) to become a party to the Guarantee and Collateral


 


60

















 


Agreement
pursuant to an annex to the Guarantee and Collateral Agreement which is in form
and substance reasonably satisfactory to the Collateral Agent, (B) to execute
and deliver a Mortgage with respect to any parcel of real property owned by it,
(C) to take all actions necessary or advisable to cause the Lien created by the
Guarantee and Collateral Agreement or any such Mortgage to be duly perfected in
accordance with all applicable Requirements of Law as contemplated by such
Security Documents, including, without limitation, the filing of financing
statements in such jurisdictions as may be requested by the Collateral Agent
and (D) to execute and deliver such documents and certificates as the
Collateral Agent or its counsel may reasonably request relating to the
organization, existence and good standing of such Subsidiary, the authorization
of the transactions contemplated hereby and by the other Loan Documents
relating to such Subsidiary and any other legal matters relating to such
Subsidiary and the Loan Documents to which it is or is to become a party
(including, if requested by the Collateral Agent, satisfactory environmental
reports or assessments with respect to each parcel of real property covered by
a Mortgage), all in form and substance satisfactory to the Collateral Agent and
its counsel, (iv) in the case of a Mortgage, deliver to the Collateral Agent
such surveys, title insurance policies and other documents that the Collateral
Agent reasonably requests, all in form and substance reasonably satisfactory to
the Collateral Agent and (v) if requested by the Collateral Agent, deliver to
the Collateral Agent legal opinions relating to the matters described in
clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the Collateral
Agent.


 


(c)                                  With
respect to any Person that, subsequent to the Closing Date, becomes a Foreign
Subsidiary, promptly upon the request of the Collateral Agent: (i) to the
extent permitted by applicable law, execute and deliver to the Collateral Agent
a new pledge agreement or such amendments to the Guarantee and Collateral
Agreement as the Collateral Agent shall deem necessary or advisable to grant to
the Collateral Agent, for the benefit of the Lenders, a Lien on the Capital
Stock of such Subsidiary which is owned by the Company or any of its Domestic
Subsidiaries (provided that in no event shall more than 65% of the
Capital Stock of any such Subsidiary be required to be so pledged), (ii)
deliver to the Collateral Agent any certificates representing such Capital
Stock, together with undated stock powers executed and delivered in blank by a
duly authorized officer of the Company or such Domestic Subsidiary, as the case
may be, and take or cause to be taken all such other actions under the law of
the jurisdiction of organization of such Foreign Subsidiary as may be necessary
or advisable to perfect such Lien on such Capital Stock and (iii) if requested
by the Collateral Agent, deliver to the Collateral Agent legal opinions
relating to the matters described in clauses (i) and (ii) immediately
preceding, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Collateral Agent.


 


Notwithstanding
the foregoing provisions of this subsection 7.10, (i) none of KCII, KCI
International and KCII Holdings LLC shall be required to grant a Lien on the
Capital Stock of EMD CV and IMD CV owned by them, (ii) neither KCI
International nor KCII Holdings LLC shall be required to be Guarantors and
(iii) only 65% of the Capital Stock of each of KCI International and KCII
Holdings LLC shall be required to be pledged.


 


(d)                                 Notwithstanding
the foregoing provisions of this subsection 7.10 and at the reasonable request
of the Company, assets will be excluded from the Collateral in circumstances
where the Collateral Agent and the Company determine that the economic


 


61

















 


detriment
to the Company of entering into or maintaining such Guarantee or Security
Document or taking or maintaining a security interest in such assets would be
excessive in view of the related benefits therefrom to the Lenders (it being
understood that if any owned real property (together with any related property)
or the leasehold interest in and to any real property has a fair market value
of less than $5 million, the Administrative Agent will not require a security
interest in such real property).


 


7.11                           Interest Rate Protection.  No later than the 60th day after the Closing
Date, Borrower shall enter into, and for a minimum of two years thereafter
maintain, Interest Rate Protection Agreements that result in at least 50% of
the Tranche B Loans being effectively subject to a fixed or maximum interest
rate.


 


SECTION
8.  NEGATIVE COVENANTS


 


The Company hereby agrees that, so long as the
Commitments remain in effect or any Letter of Credit remains outstanding and
unpaid (unless such Letter of Credit has been cash collateralized) or any
amount is owing to any Lender or the Administrative Agent hereunder or under
any other Loan Document, except with respect to any actions necessary to
consummate the Transactions, the Company shall not, and (except with respect to
subsection 8.1) shall not permit any of its Subsidiaries to, directly or
indirectly:


 


8.1               Financial
Condition
Covenants.


 


(a)                                  Interest
Coverage.  Permit for any period of
four consecutive fiscal quarters ending at the end of any fiscal quarter set
forth below the ratio of (i) EBITDA of the Company for such period to (ii)
Consolidated Cash Interest Expense of the Company for such period to be less
than the ratio set forth opposite such period below:


 


	
  Fiscal Quarter Ending

  	
   

  	
  Interest Coverage Ratio

  
	
  December
  31, 2003

  	
   

  	
  4.30 to 1.00

  
	
  March
  31, 2004

  	
   

  	
  4.30 to 1.00

  
	
  June
  30, 2004

  	
   

  	
  4.30 to 1.00

  
	
  September
  30, 2004

  	
   

  	
  4.30 to 1.00

  
	
  December
  31, 2004

  	
   

  	
  4.60 to 1.00

  
	
  March
  31, 2005

  	
   

  	
  4.60 to 1.00

  
	
  June
  30, 2005

  	
   

  	
  4.60 to 1.00

  
	
  September
  30, 2005

  	
   

  	
  4.60 to 1.00

  
	
  December
  31, 2005

  	
   

  	
  5.25 to 1.00

  
	
  March
  31, 2006

  	
   

  	
  5.25 to 1.00

  
	
  June
  30, 2006

  	
   

  	
  5.25 to 1.00

  
	
  September
  30, 2006

  	
   

  	
  5.25 to 1.00

  
	
  December
  31, 2006 and each Fiscal Quarter ending thereafter

  	
   

  	
  5.50 to 1.00

  



 


62

















 


 


(b)                                 Leverage
Ratio.  Permit the Leverage Ratio as
of the last day of any fiscal quarter of the Company set forth below, to be
greater than the ratio set forth opposite such fiscal quarter below;


 


	
  Fiscal Quarter Ending

  	
   

  	
  Ratio

  
	
  December
  31, 2003

  	
   

  	
  4.30 to 1.00

  
	
  March
  31, 2004

  	
   

  	
  4.30 to 1.00

  
	
  June
  30, 2004

  	
   

  	
  4.30 to 1.00

  
	
  September
  30, 2004

  	
   

  	
  4.30 to 1.00

  
	
  December
  31, 2004

  	
   

  	
  3.75 to 1.00

  
	
  March
  31, 2005

  	
   

  	
  3.75 to 1.00

  
	
  June
  30, 2005

  	
   

  	
  3.75 to 1.00

  
	
  September
  30, 2005

  	
   

  	
  3.75 to 1.00

  
	
  December
  31, 2005

  	
   

  	
  3.00 to 1.00

  
	
  March
  31, 2006

  	
   

  	
  3.00 to 1.00

  
	
  June
  30, 2006

  	
   

  	
  3.00 to 1.00

  
	
  September
  30, 2006

  	
   

  	
  3.00 to 1.00

  
	
  December
  31, 2006 and each Fiscal Quarter ending thereafter

  	
   

  	
  2.50 to 1.00

  



 


(c)                                  Minimum
EBITDA.  Permit EBITDA of the
Company for any period of four consecutive fiscal quarters ending at the end of
any fiscal quarter set forth below to be less than the amount set forth
opposite such period:


 


	
  Fiscal Quarter Ending

  	
   

  	
  EBITDA

  	
   

  
	
  December
  31, 2003

  	
   

  	
  156,400,000

  	
   

  
	
  March
  31, 2004

  	
   

  	
  156,400,000

  	
   

  
	
  June
  30, 2004

  	
   

  	
  156,400,000

  	
   

  
	
  September
  30, 2004

  	
   

  	
  156,400,000

  	
   

  
	
  December
  31, 2004

  	
   

  	
  180,000,000

  	
   

  
	
  March
  31, 2005

  	
   

  	
  180,000,000

  	
   

  
	
  June
  30, 2005

  	
   

  	
  180,000,000

  	
   

  
	
  September
  30, 2005

  	
   

  	
  180,000,000

  	
   

  
	
  December
  31, 2005

  	
   

  	
  210,000,000

  	
   

  
	
  March
  31, 2006

  	
   

  	
  210,000,000

  	
   

  
	
  June
  30, 2006

  	
   

  	
  210,000,000

  	
   

  
	
  September
  30, 2006

  	
   

  	
  210,000,000

  	
   

  
	
  December
  31, 2006 and each Fiscal Quarter ending thereafter

  	
   

  	
  240,000,000

  	
   

  



 


8.2               Limitation on Indebtedness.  Create, incur, assume or suffer to exist any
Indebtedness, except:


 


(a)                                  Indebtedness
under this Agreement or any of the other Loan Documents;


 


63

















 


(b)                                 Indebtedness
of the Company to any Subsidiary of the Company and of any Subsidiary of the
Company to the Company or any other Subsidiary of the Company;


 


(c)                                  Indebtedness
of the Company and any of its Subsidiaries incurred to finance the acquisition
of fixed or capital assets (whether pursuant to a loan, a Financing Lease or
otherwise) in an aggregate principal amount not exceeding as to the Company and
its Subsidiaries $40,000,000 at any time outstanding;


 


(d)                                 Indebtedness
of any Foreign Subsidiary incurred to finance the working capital requirements
of such Foreign Subsidiary in an aggregate principal amount not exceeding, for
all Foreign Subsidiaries at any time outstanding $40,000,000;


 


(e)                                  Indebtedness
outstanding on the date hereof and listed in Schedule 8.2(e) and, so
long as the principal amount thereof is not increased, any refinancings,
refundings, renewals, exchanges or extensions of such Indebtedness;


 


(f)                                    Indebtedness
of a Person which becomes a Subsidiary after the date hereof (and, so long as
the principal amount thereof is not increased, any refinancings, refundings,
renewals or extensions thereof), provided that (i) such Indebtedness
existed at the time such Person became a Subsidiary and was not created in
anticipation thereof and (ii) immediately after giving effect to the
acquisition of such Person by the Company or any of its Subsidiaries no Default
or Event of Default shall have occurred and be continuing;


 


(g)                                 Indebtedness
of the Company and its Subsidiaries under Interest Rate Protection Agreements
contemplated by subsection 7.11 or otherwise entered into in the ordinary
course of business (and not for speculative purposes) and Foreign Currency
Protection Agreements entered into in the ordinary course of business (and not
for speculative purposes);


 


(h)                                 Indebtedness
arising from the honoring by a bank of a check or similar instrument drawn
against insufficient funds in the ordinary course, so long as such Indebtedness
is extinguished within five Business Days of its incurrence;


 


(i)                                     Indebtedness
represented by workers’ compensation claims, self-insurance obligations,
performance bonds, warranty or contractual service obligations or surety or
appeal bonds, in each case to the extent incurred in the ordinary course of
business in accordance with customary industry practices in amounts customary
in the Company’s industry and in the case of Indebtedness represented by
self-insurance obligations, in an aggregate amount not to exceed $40,000,000 at
any time outstanding;


 


(j)                                     Indebtedness
in respect of (i) the Senior Subordinated Notes in an aggregate initial
principal amount not to exceed $250,000,000 and (ii) any other Subordinated
Debt the Net Cash Proceeds of which are used to refinance the Senior
Subordinated Notes, provided that the aggregate initial principal amount
of such Subordinated Debt may not exceed $250,000,000, provided  further
that (A) the aggregate principal amount of Indebtedness outstanding under this
paragraph (j) may not exceed $250,000,000 and (B) no principal repaid in
respect of any Indebtedness outstanding under this paragraph (j) may be
reborrowed under the facility or agreement pursuant to which such Indebtedness
was issued or incurred;


 


64

















 


(k)                                  Indebtedness
in respect of the Senior Subordinated Notes (in addition to Indebtedness
permitted under paragraph (j)(i) above) or any other Subordinated Debt (in
addition to Indebtedness permitted under paragraph (j)(ii) above) in an
aggregate initial principal amount not to exceed $100,000,000; provided,
however, that the Company and its Subsidiaries may incur Indebtedness
described in this clause (k) in an aggregate initial principal amount in excess
of $100,000,000 so long as 100% of the Net Cash Proceeds from the issuance of
such Indebtedness shall be applied to prepay the Loans or permanently reduce
the commitments;


 


(l)                                     additional
Indebtedness of the Company and the Guarantors not exceeding in aggregate
principal amount, together with (but without double-counting) the aggregate
outstanding Guarantee Obligations incurred and permitted by subsection 8.4(b),
$60,000,000 at any one time outstanding;


 


(m)                               Indebtedness
existing on the Closing Date and evidenced by the Existing Subordinated Note
Indenture Documents (provided that, such Indebtedness shall be
extinguished within 90 days after the Closing Date);


 


(n)                                 any
Indebtedness resulting from any transaction permitted under subsection 8.12;
and


 


(o)                                 Indebtedness
in respect of any management agreement between the Company and the Sponsors in
an aggregate amount not to exceed $1,000,000.


 


8.3                                 Limitation
on Liens.  Create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except for:


 


(a)                                  Liens
for Taxes not yet due or which are being contested in good faith by appropriate
proceedings, provided that adequate reserves with respect thereto are
maintained on the books of the Company or its Subsidiaries, as the case may be,
in conformity with GAAP (or, in the case of Foreign Subsidiaries, generally
accepted accounting principles in effect from time to time in their respective
jurisdictions of organization);


 


(b)                                 carriers’,
warehousemen’s, landlord’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business which are not overdue for
a period of more than 60 days or which are being contested in good faith by
appropriate proceedings;


 


(c)                                  pledges
or deposits in connection with workers’ compensation, unemployment insurance
and other social security legislation and deposits securing liability to
insurance carriers under insurance or self-insurance arrangements;


 


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


 


(e)                                  easements,
rights-of-way, zoning ordinances, restrictions and other similar encumbrances
existing or incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the


 


65

















 


property
subject thereto or materially interfere with the ordinary conduct of the
business of the Company or such Subsidiary;


 


(f)                                    Liens
in existence on the date hereof listed in Schedule 8.3(f), securing
Indebtedness permitted by subsection 8.2(e), provided that no such Lien
is spread to cover any additional property after the Closing Date and that the
principal amount of Indebtedness secured thereby is not increased;


 


(g)                                 Liens
securing Indebtedness of the Company and its Subsidiaries permitted by
subsection 8.2(c) incurred to finance the acquisition of fixed or capital
assets, provided that (i) such Liens shall be created within 180 days of
the acquisition of such fixed or capital assets, (ii) such Liens do not at any
time encumber any property other than the property financed by such
Indebtedness and (iii) the principal amount of Indebtedness secured thereby is
not increased;


 


(h)                                 Liens
on assets of any Foreign Subsidiary securing Indebtedness of such Foreign
Subsidiary permitted by subsection 8.2(d);


 


(i)                                     Liens
on the property or assets (including proceeds thereof) of a Person which
becomes a Subsidiary after the date hereof securing Indebtedness permitted by
subsection 8.2(f), provided that (i) such Liens existed at the time such
Person became a Subsidiary and were not created in anticipation thereof, (ii)
any such Lien is not spread to cover any property or assets of such Person
after the time such Person becomes a Subsidiary, and (iii) the principal amount
of Indebtedness secured thereby is not increased;


 


(j)                                     Liens
(not otherwise permitted hereunder) which secure obligations not exceeding (as
to the Company and all Subsidiaries) $60,000,000 in aggregate amount at any
time outstanding, provided that no such Lien may cover Cash Equivalents,
the Capital Stock of any Subsidiary or any of the assets described in Schedule
8.6(f);


 


(k)                                  Liens
created pursuant to the Security Documents;


 


(l)                                     any
interest or title of a lessor under any Financing Lease, provided that
such Liens do not extend to any property or assets which are not leased
property subject to such Financing Lease;


 


(m)                               any
Lien resulting from any transaction permitted under subsection 8.12;


 


(n)                                 Liens
securing Indebtedness under Interest Rate Protection Agreements and Foreign
Currency Protection Agreements, in each case entered into with a Person that
was at the time of entering into such Interest Rate Protection Agreement or
Foreign Currency Protection Agreement, as applicable, a Lender, and such
Indebtedness is otherwise permitted hereunder;


 


(o)                                 Liens
on assets of a Subsidiary in favor of the Company or a Guarantor;


 


(p)                                 Liens
arising in the ordinary course of business by virtue of any contractual,
statutory or common law provision relating to banker’s Liens, rights of set-off
or similar rights and remedies covering deposit or securities accounts
(including funds or other


 


66

















 


assets
credited thereto) or other funds maintained with a depository institution or
securities intermediary;


 


(q)                                 Liens
arising out of judgments or awards not resulting in a Default, provided
that, the Company or such Subsidiary, as applicable, shall in good faith be
prosecuting an appeal or proceedings for review;


 


(r)                                    Liens
on any escrow account wherein funds or other assets have been deposited to (i)
repay the Existing Subordinated Notes and/or (ii) to redeem the Senior
Subordinated Notes;


 


(s)                                  exceptions
to title set forth in the title policy corresponding to any Mortgages; and


 


(t)                                    restrictions
on transfers of securities imposed by applicable securities laws.


 


8.4               Limitation on Guarantee Obligations.  Create, incur, assume or suffer to exist any
Guarantee Obligation except:


 


(a)                                  Guarantee
Obligations in existence on the date hereof and listed in Schedule 8.4(a);


 


(b)                                 Guarantee
Obligations incurred after the date hereof in an aggregate amount not to
exceed, together with (but without double-counting) the aggregate outstanding
principal amount of Indebtedness incurred and permitted by subsection 8.2(l),
$60,000,000 at any one time outstanding;


 


(c)                                  guarantees
made by the Company of obligations of any of its Subsidiaries, or by any
Subsidiary of the Company’s or another Subsidiary’s obligations, which
obligations are otherwise permitted under this Agreement;


 


(d)                                 Guarantee
Obligations of Domestic Subsidiaries in respect of the Senior Subordinated
Notes or other Subordinated Debt so long as (i) such Guarantee Obligations are
subordinated to such Domestic Subsidiary’s Guarantor Obligations (as defined in
the Guarantee and Collateral Agreement) on terms and conditions satisfactory to
the Required Lenders (it being agreed that the subordination provisions in the
Senior Subordinated Note Indenture are satisfactory to the Required Lenders)
and (ii) such Domestic Subsidiary is a Guarantor (as defined in the Guarantee
and Collateral Agreement);


 


(e)                                  Guarantee
Obligations arising pursuant to any Existing Subordinated Note Indenture
Documents;


 


(f)                                    guarantees
by Foreign Subsidiaries of Indebtedness of other Foreign Subsidiaries permitted
under subsection 8.2(d); and


 


(g)                                 the
Guarantees and any L/C Obligations.


 


67

















 


8.5               Limitation on Fundamental Changes.  Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:


 


(a)                                  any
Subsidiary of the Company may be merged or consolidated with or into the
Company (provided that the Company shall be the continuing or surviving
entity) or with or into any one or more Subsidiaries of the Company (provided
that (i) a Subsidiary shall be the continuing or surviving entity, (ii) the
surviving entity must be a Guarantor if any merged or consolidated Subsidiary
is a Guarantor and (iii) the percentage of the Capital Stock of the surviving
entity owned directly or indirectly by the Company is at least equal to the
higher of (A) the percentage of the Capital Stock of the merged or consolidated
Subsidiary owned directly or indirectly by the Company immediately prior to
such merger or consolidation and (B) the percentage of the Capital Stock of the
surviving entity owned directly or indirectly by the Company immediately prior
to such merger or consolidation);


 


(b)                                 any
Subsidiary may sell, lease, transfer or otherwise dispose of all or
substantially all of its assets (upon voluntary liquidation or otherwise) to
the Company or any other Subsidiary of the Company, provided that (i) if
the Subsidiary whose assets are so sold, leased, transferred or otherwise
disposed of is a Guarantor, any Subsidiary to which such assets are so sold,
leased, transferred or otherwise disposed of must also be a Guarantor, except
that any Domestic Subsidiary may transfer the Capital Stock of any Foreign
Subsidiary owned by it to a Foreign Subsidiary which is formed to be a holding
company with respect to the Capital Stock of Foreign Subsidiaries, and (ii) the
Company directly or indirectly owns at least the same percentage of the Capital
Stock of any Subsidiary to which such assets are so sold, leased, transferred
or otherwise disposed of as the Company owns of the Capital Stock of the
Subsidiary whose assets are so sold, leased, transferred or otherwise disposed
of;


 


(c)                                  any
Subsidiary may be merged with any other Person or sell or transfer all or
substantially all of its property, business or assets in a transaction
permitted by subsection 8.6(f) or 8.6(g); and


 


(d)                                 any
Subsidiary may be merged with any other Person to effect a Permitted
Acquisition permitted by subsection 8.9(i) so long as the surviving entity is a
Subsidiary.


 


8.6               Limitation on Sale of Assets.  Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including,
without limitation, receivables and leasehold interests), whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares
of such Subsidiary’s Capital Stock to any Person other than the Company or any
wholly owned Subsidiary, except:


 


(a)                                  the
sale or other disposition of obsolete or worn out property in the ordinary
course of business;


 


(b)                                 the
sale or lease of inventory in the ordinary course of business;


 


68

















 


(c)                                  the
sale or discount without recourse of accounts receivable arising in the
ordinary course of business in connection with the compromise or collection
thereof;


 


(d)                                 dispositions
resulting from any Casualty Event;


 


(e)                                  as
permitted by subsection 8.5(b) or in the nature of Investments permitted by
Section 8.9(i) in respect of joint ventures;


 


(f)                                    (i)
the asset sales and other dispositions described in Schedule 8.6(f) and
(ii) asset sales in connection with transactions permitted under subsection
8.12;


 


(g)                                 sales
of assets for fair market value by the Company and its Subsidiaries not
otherwise permitted under this subsection, provided that the aggregate consideration
(including assumed Indebtedness and the fair market value of non-cash
consideration) of all such asset sales shall not exceed $20,000,000 in any year
or $60,000,000 in the aggregate after the Closing Date; and


 


(h)                                 the
lease of real property in the ordinary course of business and consistent with
past practice.


 


8.7               Limitation on Dividends and Stock
Purchases.  Declare or pay any
dividend (other than dividends payable solely in common stock of the Company)
on, or make any payment on account of, or set apart assets for a sinking or
other analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of Capital Stock of the Company
or any warrants or options to purchase any such Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property or in obligations of the Company or
any Subsidiary, except that the Company may:


 


(a)                                  repurchase,
redeem or otherwise acquire or retire for value any Capital Stock of the
Company held by employees, officers, directors and consultants of the Company
or any of its Subsidiaries pursuant to any equity subscription agreement, stock
option agreement or stock ownership arrangement, provided that (A) the
aggregate amount paid in any fiscal year for all such repurchased, redeemed,
acquired or retired Capital Stock shall not exceed $10,000,000 (provided
that, if the Company repurchased, redeemed or otherwise acquired or retired less
than $10,000,000 of its Capital Stock in any fiscal year (or such increased
maximum amount allowed after giving effect to this proviso), the Company may
carry forward to the ensuing fiscal year the amount of such difference, and the
maximum aggregate amount of all such repurchased, redeemed, acquired or retired
Capital Stock for that ensuing fiscal year shall be increased by the amount of
such difference; provided  further that, taking into account the
accumulation of all such amounts carried forward, the maximum aggregate amount
shall not exceed $30,000,000 in any fiscal year), (B) no Event of Default shall
have then occurred and be continuing or would result therefrom, and (C) the
Company may not, nor will it permit any of its Subsidiaries to repurchase any
Capital Stock issued to any officer, employee, director or consultant pursuant
to the terms of the Management Equity Plan other than:


 


(i)                                     a
repurchase of any Capital Stock in connection with any Redemptions;


 


69

















 


(ii)                                  a
repurchase of any Capital Stock that is made after the death or Permanent
Disability of such officer, employee, director or consultant;


 


(iii)                               a repurchase of any
common stock of the Company which has been owned by such officer, employee,
director or consultant for a period of time greater than six months;


 


(iv)                              a
repurchase of any Capital Stock in connection with any event described in
subsection 9(1);


 


(v)                                 a
repurchase of any Capital Stock at any point in time in which all options issued
and outstanding under the Management Equity Plan are subject to variable plan
accounting pursuant to the accounting provisions of Accounting Principles Board
Opinion No. 25, “Accounting for Stock issued to Employees” (APB25);


 


(vi)                              a
repurchase of any Capital Stock to the extent necessary or advisable, pursuant
to Section 10 or 13 of the Management Equity Plan; however, for purposes
of clarity, the Company call right upon a participant’s termination of
employment, except in the event of death or Permanent Disability, described in
Section 10(a) of the Management Equity Plan shall not be considered necessary
or advisable;


 


(vii)                           a repurchase of any Capital
Stock to the extent used to satisfy Minimum Tax Withholding requirements
associated with the exercise of such Capital Stock; and


 


(viii)                        a repurchase of any Capital
Stock at any point subsequent to the Company’s adoption of the accounting
provisions of Financial Accounting Standards Board Issuance No. 123 —
“Accounting for Stock-Based Compensation” (FAS 123), or any other fair value
method of accounting generally accepted in the United States, such that the
repurchase of such Capital Stock would not trigger liability accounting for all
options under the Management Equity Plan;


 


(b)                                 exchange
Capital Stock of the Company held by any employee, officer, director or
consultant of the Company or any of its Subsidiaries for other Capital Stock of
the Company;


 


(c)                                  undertake
the Redemptions; and


 


(d)                                 pay
cash dividends on the Convertible Preferred during the first six years after
issuance so long as the Leverage Ratio, on a pro forma basis giving effect to
the payment of such dividends, is less than 2.25:1 and no Event of Default has
occurred and is continuing or would result therefrom.


 


8.8               Limitation on Capital Expenditures.  Make or commit to make a Capital
Expenditure, excluding (i) any such Capital Expenditure in connection with any
asset acquired in connection with normal replacement and maintenance programs
properly charged to current operations and (ii) Capital Expenditures not
exceeding, in the aggregate for the Company and its Subsidiaries during any of
the fiscal years of the Company set forth below, the amount set forth opposite
such fiscal year below:


 


70

















 




	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
  2003

  	
   

  	
  85,000,000

  	
   

  
	
  2004

  	
   

  	
  95,000,000

  	
   

  
	
  2005

  	
   

  	
  100,000,000

  	
   

  
	
  2006

  	
   

  	
  105,000,000

  	
   

  
	
  2007

  	
   

  	
  110,000,000

  	
   

  
	
  2008

  	
   

  	
  120,000,000

  	
   

  
	
  2009

  	
   

  	
  130,000,000

  	
   

  
	
  2010
  and each Fiscal Year thereafter

  	
   

  	
  150,000,000

  	
   

  






 


provided, that up to 100% of any
such amount if not so expended in the fiscal year for which it is permitted
above, may be carried over for expenditure in the three succeeding fiscal
years.


 


8.9               Limitation on Investments, Loans and
Advances.  Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person (an “Investment”),
except:


 


(a)                                  extensions
of trade credit in the ordinary course of business;


 


(b)                                 investments
in Cash Equivalents;


 


(c)                                  loans
and advances to employees of the Company or its Subsidiaries for travel,
entertainment and relocation expenses in an aggregate amount for the Company
and its Subsidiaries not to exceed $5,000,000 at any one time outstanding, provided
that such loans and advances are in compliance with applicable laws;


 


(d)                                 (i)
Investments by the Company in any Guarantor and Investments by Subsidiaries in
the Company and in any Guarantor, (ii) Investments by Subsidiaries that are not
Guarantors in Subsidiaries that are not Guarantors and (iii) Investments not
otherwise permitted hereunder by the Company or the Guarantors in Subsidiaries
that are not Guarantors, provided that the aggregate amount of all
Investments (including Investments in such Subsidiaries in the nature of sales
and transfers of assets (including, pursuant to a transaction permitted under
subsection 8.5) to the extent made for less than fair market value and
Guarantee Obligations pursuant to subsection 8.4) made in any fiscal year
pursuant to this clause (e)(iii) shall not exceed $20,000,000; provided,
further, that (x) up to 100% of any such amount if not so expended in
the fiscal year for which it is permitted, may be carried over for expenditure
in the three succeeding fiscal years, and (y) the conversion of any
Indebtedness owed to the Company or any Guarantor by any Subsidiary into equity
of such Subsidiary shall not constitute an additional Investment in such
Subsidiary by the Company or such Guarantor for purposes of the limitation
contained in the immediately preceding proviso;


 


(e)                                  Interest
Rate Protection Agreements contemplated by subsection 7.11 and Foreign Currency
Protection Agreements permitted hereunder;


 


71

















 


(f)                                    loans
by the Company or its Subsidiaries to their employees in connection with
management incentive plans in an aggregate amount not to exceed $4,000,000 at
any one time outstanding;


 


(g)                                 Investments
in securities of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors or customers;


 


(h)                                 Investments
made by the Company or any of its Subsidiaries as a result of consideration received
in connection with a sale of assets permitted under subsection 8.6;


 


(i)                                     Permitted
Acquisitions;


 


(j)                                     other
Investments in an aggregate amount not to exceed $40,000,000 at any one time
outstanding; and


 


(k)                                  the
Investments described in Schedule 8.9(k).


 


8.10                           Limitation on Optional Payments and
Modifications of Subordinated and Other Debt Instruments.  (a) 
Make any optional payment or prepayment on or redemption, purchase or
defeasance of any Senior Subordinated Notes (other than any refinancing thereof
with the Net Cash Proceeds of any Subordinated Debt permitted under subsection
8.2(j)(ii)) or any other Subordinated Debt (other than the Existing
Subordinated Notes); provided, that the Company may make any optional
payment or prepayment on, or redeem, purchase, defease or otherwise acquire any
Senior Subordinated Notes or other Subordinated Debt so long as the Leverage
Ratio, on a pro forma basis giving effect to such payment, prepayment,
redemption, purchase, defeasance or other acquisition, is less than 2.25:1,
such payment, prepayment, redemption, purchase, defeasance or other acquisition
is not in an amount greater than 105% of the principal amount of such Senior
Subordinated Notes or other Subordinated Debt being paid, prepaid, redeemed,
purchased, defeased or otherwise acquired and no Event of Default has occurred
and is continuing or would result therefrom, (b) amend, modify or change, or
consent or agree to any amendment, modification or change to any of the terms
relating to any Senior Subordinated Notes or any other Subordinated Debt (other
than in connection with the payoff and redemption of the Existing Subordinated
Notes and the termination of the Existing Subordinated Note Indenture
Documents, and other than any such amendment, modification or change which
would extend the maturity or reduce the amount of any payment of principal
thereof or which would reduce the rate or extend the date for payment of
interest thereon or otherwise would not be adverse to the Lenders), or (c)
amend the subordination provisions of the Senior Subordinated Notes, the Senior
Subordinated Note Indenture or any other Subordinated Debt Documentation (other
than in connection with the payoff and redemption of the Existing Subordinated
Notes and the termination of the Existing Subordinated Note Indenture
Documents).


 


8.11                           Limitation on Transactions with
Affiliates.  Except for (i)
transactions permitted under subsection 8.2, 8.4, 8.7, 8.9 and 8.17 and (ii)
the payment of customary directors’ fees, indemnification and reimbursement of
expenses to directors, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or


 


72

















 


the rendering of any
service, with any Affiliate unless such transaction is (a) otherwise permitted
under this Agreement, (b) in the ordinary course of the Company’s or such
Subsidiary’s business and (c) upon fair and reasonable terms no less favorable
to the Company or such Subsidiary, as the case may be, than it would obtain in
a comparable arm’s length transaction with a Person which is not an
Affiliate.  Notwithstanding the
foregoing, the Company and its Subsidiaries shall be permitted to undertake the
Transactions as contemplated herein.


 


8.12                           Limitation on Sales and Leasebacks.  Enter into any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of real or personal
property which has been or is to be sold or transferred by the Company or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Company or such Subsidiary, except for any sale and
leaseback as to which the sale is permitted pursuant to subsections 8.6(f) or
(g) and the proceeds are applied to the extent required pursuant to 4.3(d).


 


8.13                           Limitation on Negative Pledge Clauses.  Enter into with any Person any agreement,
other than (a) purchase money mortgages or Financing Leases permitted by this
Agreement (in which cases, any prohibition or limitation shall only be
effective against the assets financed thereby), and (b) agreements with respect
to the Indebtedness permitted under subsection 8.2(d) (which restrictions may
only limit the granting of Liens on the assets of a Foreign Subsidiary), which
prohibits or limits the ability of the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired to secure the
obligations of the Company and its Subsidiaries under the Loan Documents or the
obligations of the Company and its Subsidiaries under any other document
relating to any refinancing, refunding, renewal or extension of this Agreement
or any amendment, restatement or other modification of any of the Loan
Documents.


 


8.14                           Limitation on Changes in Fiscal Year.  Permit the fiscal year of the Company to end
on a day other than December 31 in any calendar year.


 


8.15                           Limitation on Lines of Business.  Enter into any business, either directly or
through any Subsidiary, except for those businesses which are in the same,
similar or reasonably related or complementary businesses as the businesses in
which the Company and its Subsidiaries are engaged on the date of this
Agreement or which are directly related thereto (including, without limitation,
ownership of interests in trusts which own certain aircraft).


 


8.16                           Limitation on Subsidiary
Distributions.  Enter into or suffer
to exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary to (a) pay dividends or make any other distributions
in respect of any Capital Stock of such Subsidiary held by, or pay any
Indebtedness owed to, the Company or any other Subsidiary of the Company, (b)
make loans or advances to the Company or any other Subsidiary of the Company or
(c) transfer any of its assets to the Company or any other Subsidiary of the
Company; except for (i) in the case of clause (a) above, Liens on the Capital
Stock of Subsidiaries permitted hereunder, (ii) such encumbrances or
restrictions existing under or by reason of any restrictions existing under the
Loan Documents, the Senior Subordinated Note Indenture Documents or the
Existing Subordinated Note Indenture Documents, (iii) restrictions


 


73

















 


in Indebtedness incurred
by Foreign Subsidiaries permitted to be incurred hereunder, which shall be
applicable only to such Foreign Subsidiary and its Subsidiaries, and (iv) in
the case of clause (c) above, customary provisions in leases, sales agreements,
joint venture agreements and other contracts restricting the assignment
thereof.


 


8.17                           Limitation on Management Fees.  Pay management or similar fees to the Sponsors;
provided that the Company may pay up to an aggregate amount not in excess of
$750,000 to the Sponsors and may pay or reimburse the Sponsors for reasonable
expenses actually incurred, provide customary indemnifications, and provide
director fees and compensation consistent with that provided to other
directors.


 


8.18                           Designated Senior Debt.  Designate any Indebtedness of any Loan Party
(other than Indebtedness under this Agreement) as “Designated Senior Debt” or
“Designated Guarantor Senior Debt” under and as defined in the Senior
Subordinated Note Indenture or any other Subordinated Debt Documentation, in
each case without the prior written consent of the Administrative Agent and the
Required Lenders.


 


8.19                           Chief Executive Office.  Move its chief executive office and the
office at which it maintains its records relating to the transactions
contemplated by this Agreement and the Security Documents or change its state
of organization unless (a) not less than 45 days’ prior written notice of its
intention to do so, clearly describing the new location or state, shall have
been given to the Administrative Agent and each Lender and (b) such action,
reasonably satisfactory to the Administrative Agent and each Lender to maintain
any security interest in the property subject to the Security Documents at all
times fully perfected and in full force and effect shall have been taken.


 


8.20                           Limitations on Activities of
Special Purpose Subsidiaries. 
Permit KCI International or KCII to amend the provisions of KCI International’s
certificate of incorporation or KCII’s operating agreement that restrict the
ability of KCI International and KCII to incur Indebtedness, Guarantee
Obligations or Liens, conduct any business other than holding Capital Stock of
Subsidiaries of the Company or merging or consolidating with any other Person
unless the governing documents of the survivor of such merger or consolidation
contain similar restrictions.


 


SECTION
9.  EVENTS OF DEFAULT


 


If any of the following events shall occur and be continuing:


 


(a)                                  The
Company shall fail to pay any principal of any Loan when due in accordance with
the terms thereof or hereof; or the Company shall fail to pay any interest on
any Loan, or any other amount payable hereunder (including, without limitation,
any fees), within three Business Days after any such interest or other amount
becomes due in accordance with the terms thereof or hereof; or


 


(b)                                 Any
representation or warranty made or deemed made by the Company or any other Loan
Party herein or in any other Loan Document or which is contained in any


 


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certificate,
document or financial or other statement furnished by it at any time under or
in connection with this Agreement or any such other Loan Document shall prove
to have been incorrect in any material respect on or as of the date made or
deemed made; or


 


(c)                                  Any
Loan Party shall default in the observance or performance of any agreement
contained in Section 8 hereof or subsection 7.7(a); or


 


(d)                                 The
Company or any other Loan Party shall default in the observance or performance
of any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days after the
earlier of (i) notice to the Company by any Lender or any Agent of such default
and (ii) any Responsible Officer of any Loan Party becoming aware of such
default; or


 


(e)                                  The
Company or any of its Subsidiaries shall (i) default in any payment of
principal of or interest of any Indebtedness (other than the Loans) or in the
payment of any Guarantee Obligation, beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness or
Guarantee Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or such Guarantee Obligation to become payable; provided,
however, that no Default or Event of Default shall exist under this
paragraph unless the aggregate amount of Indebtedness and/or Guarantee
Obligations in respect of which any default or other event or condition
referred to in this paragraph shall have occurred shall be equal to at least
$15,000,000; or


 


(f)                                    (i)
The Company or any of its Subsidiaries shall commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (B) seeking appointment of a
receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets, or the Company or any of its
Subsidiaries shall make a general assignment for the benefit of its creditors;
or (ii) there shall be commenced against the Company or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief of any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced against the
Company or any of its Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or (iv)
the Company or any of its Subsidiaries shall take any action in


 


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furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clause (i), (ii), or (iii) above; or (v) the Company or any
of its Subsidiaries shall generally not, or shall be unable to, or shall admit
in writing its inability to, pay its debts as they become due; or


 


(g)                                 (i)
Any Person shall engage in any “prohibited transaction” (as defined in Section
406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA), whether
or not waived, shall exist with respect to any Plan (other than a Multiemployer
Plan) or any Lien in favor of the PBGC or a Plan shall arise on the assets of
any Loan Party or any Commonly Controlled Entity, (iii) a Reportable Event
shall occur with respect to, or proceedings shall commence to terminate any
Single Employer Plan, or the PBGC shall have notified any Loan Party or any
Commonly Controlled Entity that it intends to seek such termination, or to have
a trustee appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, or a notice of intent to terminate any Single
Employer Plan shall have been filed by any Loan Party or any Commonly
Controlled Entity, (v) any Loan Party or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any Loan Party or Commonly
Controlled Entity shall file an application for a minimum funding waiver
pursuant to Section 412(d) of the Code with respect to any Plan; and in each
case in clauses (i) through (vi) above, such event or condition, together with
all other such events or conditions, if any, could reasonably be expected to
have a Material Adverse Effect; or


 


(h)                                 One
or more judgments or decrees shall be entered against the Company or any of its
Subsidiaries involving in the aggregate a liability (not paid or fully covered
by insurance) of $15,000,000 or more, and all such judgments or decrees shall
not have been vacated, paid, satisfied, discharged, stayed or bonded pending
appeal within 60 days from the entry thereof; or


 


(i)                                     (i)
Any of the Security Documents shall cease, for any reason, to be in full force
and effect, or the Company or any other Loan Party which is a party to any of
the Security Documents shall so assert or (ii) the Lien created by any of the
Security Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or


 


(j)                                     Any
Guarantee shall cease, for any reason, to be in full force and effect or any
Guarantor shall so assert; or


 


(k)                                  Any
subordination provision in the Senior Subordinated Note Indenture or any other
Subordinated Debt Documentation shall cease, for any reason, to be in full
force and effect or any Loan Party shall so assert (other than in connection
with the termination of the Existing Subordinated Note Indenture Documents); or


 


(l)                                     (i)
the Sponsors shall cease to beneficially own at least 35% or more of the
outstanding Capital Stock of the Company having ordinary voting power in the
election of directors of the Company, measured by voting power rather than
number of shares, (ii) (x) any Person or “group” (within the meaning of Section
13(d) of the Securities Exchange Act of 1934,


 


76

















 


as
amended) (other than the Sponsors, the other shareholders of the Company
existing on the Closing Date and the initial purchasers of the Convertible
Preferred within 10 Business Days of the Closing Date) shall have beneficial
ownership of 30% or more of the outstanding Capital Stock of the Company having
ordinary voting power in the election of directors of the Company, measured by
voting power rather than number of shares, and (y) the Sponsors, the other
shareholders of the Company existing on the Closing Date and the initial
purchasers of the Convertible Preferred within 10 Business Days of the Closing Date
shall have beneficial ownership of less than 50% of the outstanding Capital
Stock of the Company having ordinary voting power in the election of directors
of the Company, measured by voting power rather than number of shares, (iii)
the Board of Directors of the Company shall not consist of a majority of
Continuing Directors; “Continuing Directors” shall mean the directors of
the Company on the Closing Date and each other director, if such other
director’s nomination for election to the Board of Directors of the Company is
recommended by a majority of the then Continuing Directors or (iv) any “change
of control” shall occur under the Senior Subordinated Note Indenture or any
other Subordinated Debt Documentation representing Indebtedness in excess of $15,000,000;


 


then, and in any such event, (A) if such event is an
Event of Default specified in clause (i) or (ii) of paragraph (f) of this
Section with respect to the Company, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents required
thereunder) shall immediately become due and payable, and (B) if such event is
any other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative Agent
may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Company declare the Commitments to be terminated
forthwith, whereupon the Commitments shall immediately terminate; and (ii) with
the consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Company, declare the Loans hereunder (with accrued interest thereon) and
all other amounts owing under this Agreement (including, without limitation,
all amounts of L/C Obligations, whether or not the beneficiaries of the then
outstanding Letters of Credit shall have presented the documents required
thereunder) to be due and payable forthwith, whereupon the same shall
immediately become due and payable.


 


With respect to all Letters of Credit with respect to
which presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, the Company shall at such
time deposit in a cash collateral account opened by the Collateral Agent an
amount equal to the aggregate then undrawn and unexpired amount of such Letters
of Credit.  The Company hereby grants to
the Collateral Agent, for the benefit of the Issuing Bank and the L/C
Participants, a security interest in such cash collateral to secure all
Obligations under this Agreement and the other Loan Documents.  Amounts held in such cash collateral account
shall be applied by the Collateral Agent to the payment of drafts drawn under
such Letters of Credit, and the unused portion thereof after all such Letters
of Credit shall have expired or been fully drawn upon, if any, shall be applied
to repay other Obligations.  Within a
reasonable period after all such Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been satisfied and
all other Obligations shall have been paid in full, the


 


77

















 


balance, if any, in such cash collateral account shall
be returned to the Company.  The Company
shall execute and deliver to the Collateral Agent, for the account of the
Issuing Bank and the L/C Participants, such further documents and instruments
as the Collateral Agent may request to evidence the creation and perfection of
the within security interest in such cash collateral account.


 


Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.


 


SECTION
10.  THE AGENTS


 


10.1                           Appointment. 
Each Lender hereby irrevocably designates and appoints each Agent as the
agent of such Lender under this Agreement and the other Loan Documents, and
each such Lender irrevocably authorizes each Agent, in such capacity, to take
such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to such Agent by the terms of this Agreement and the other
Loan Documents, together with such other powers as are reasonably incidental
thereto.  Notwithstanding any provision
to the contrary elsewhere in this Agreement, neither Agent shall have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against either
Agent.  Without limiting the foregoing,
the use of the term “agent” with respect to either Agent is used as a matter of
market custom and is intended to create or reflect only an administrative
relationship between independent contracting parties.  The Agents and the Lenders hereby acknowledge and agree that the
Administrative Agent shall be the only Agent which shall be a “Representative”
of the Lenders under the Senior Subordinated Note Indenture (after execution
and delivery thereof) and any other Subordinated Debt Documentation (after
execution and delivery thereof).


 


The Issuing Bank shall act on behalf of the Lenders
with respect to Letters of Credit issued or made under this Agreement and the
documents associated therewith.  It is
understood and agreed that the Issuing Bank (a) shall have all of the benefits
and immunities (i) provided to the Agents in this Section 10 with respect to
acts taken or omissions suffered by the Issuing Bank in connection with Letters
of Credit issued under this Agreement and the documents associated therewith as
fully as if the term “Agents”, as used in this Section 10, included the Issuing
Bank with respect to such acts or omissions and (ii) as additionally provided
in this Agreement and (b) shall have all of the benefits of the provisions of
subsection 10.7 as fully as if the term “Agents”, as used in subsection 10.7,
included the Issuing Bank.


 


10.2                           Delegation of Duties.  Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties.  Neither Agent shall be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with reasonable
care.


 


10.3                           Exculpatory Provisions.  Neither Agent nor any of their respective
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall
be (i) liable for any


 


78

















 


action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except for its or such Person’s own gross
negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
the Company or any other Loan Party or any officer thereof contained in this
Agreement or any other Loan Document or in any certificate, report, statement
or other document referred to or provided for in, or received by the Agents
under or in connection with, this Agreement or any other Loan Document or for
the value, validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement or any other Loan Document or for any failure of the Company
or any other Loan Party to perform its obligations hereunder or
thereunder.  No Agent-Related Person
shall be under any obligation to any Lender to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any other Loan Party.


 


10.4                           Reliance by Agents.  Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Note, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Company or any other Loan Party),
independent accountants and other experts selected by such Agent.  The Administrative Agent may deem and treat
the payee of any Note as the owner thereof for all purposes unless a written
notice of assignment, negotiation or transfer thereof shall have been filed
with the Administrative Agent.  Each
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the relevant Lenders as it deems appropriate or it
shall first be indemnified to its satisfaction by the Lenders against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. 
Each Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the relevant Lenders entitled to so act, and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all the Lenders and all future holders of the Loans.


 


10.5                           Notice of Default.  Neither Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless such Agent has received notice from a Lender or the Company
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Lenders entitled to so act, provided that unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders (except
to the extent that this Agreement expressly requires that such actions be taken
or not be taken only with the consent or upon the authorization of the Required
Lenders).


 


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10.6                           Non-Reliance on Agents and Other Lenders.  Each Lender expressly acknowledges that
neither Agent nor any of their respective officers, directors, employees,
agents, attorneys-in-fact or Affiliates has made any representations or
warranties to it and that no act by such Agent or any such other Person
hereinafter taken, including any review of the affairs of the Company or any
other Loan Party, shall be deemed to constitute any representation or warranty
by such Agent or any such other Person to any Lender.  Each Lender represents to the Agents that it has, independently
and without reliance upon any Agent-Related Person or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Company and the other
Loan Parties and made its own decision to make its extensions of credit
hereunder and enter into this Agreement. 
Each Lender also represents that it will, independently and without
reliance upon any Agent-Related Person or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Company and the other Loan Parties. 
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agents hereunder, the Agents shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, condition (financial
or otherwise), prospects or creditworthiness of the Company or any other Loan
Party which may come into the possession of the Agents or any of their
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates.


 


10.7                           Indemnification.  Whether or not the transactions contemplated hereby are
consummated, the Lenders agree to indemnify each Agent-Related Person (to the
extent not reimbursed by the Company and without limiting the obligation of the
Company to do so), ratably according to their respective Voting Percentages in
effect on the date on which indemnification is sought, from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against such Agent-Related Person
in any way relating to or arising out of, the Commitments, this Agreement, any
of the other Loan Documents or any documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby or any
action taken or omitted by such Agent-Related Person under or in connection
with any of the foregoing; provided that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent resulting from the relevant Agent-Related Person’s gross negligence or
willful misconduct; provided, further, that the liability,
obligation, loss, damage, penalty, action, judgment, suit, cost, expense or
disbursement, as the case may be, was incurred by or asserted against the
Agent-Related Person in its capacity as such. 
The agreements in this subsection shall survive the payment of the Loans
and all other amounts payable hereunder.


 


10.8                           Agent in Its Individual Capacity.  Each Agent and its Affiliates may make loans
to, accept deposits from and generally engage in any kind of business with the
Company and the other Loan Parties as though such Agent were not an Agent
hereunder and under the


 


80

















 


other Loan Documents and
without notice to or consent of the Lenders. 
The Lenders acknowledge that, pursuant to such activities, each Agent
and its Affiliates may receive information regarding the Company or the other
Loan Parties or their respective Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or the other
Loan Parties or their respective Affiliates) and acknowledge that neither Agent
nor their respective Affiliates shall be under an obligation to provide such
information to them.  With respect to
the Loans made by it and with respect to any Letter of Credit issued or
participated in by it, each Agent shall have the same rights and powers under
this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Agent, and the terms “Lender” and “Lenders” shall
include each Agent in its individual capacity.


 


10.9                           Successor Administrative Agent.


 


(a)                                  The
Administrative Agent may resign as Administrative Agent upon 10 days’ notice to
the Lenders.  If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders
a successor agent for the Lenders, which successor agent (provided that it
shall have been approved by the Company (which approval shall not be
unreasonably withheld)), shall succeed to the rights, powers and duties of the
Administrative Agent hereunder.  If no
successor agent is appointed prior to the effective date of the resignation of
the Administrative Agent, the Administrative Agent may appoint, after consulting
with the Lenders and the Company, a successor agent from among the
Lenders.  Effective upon such
appointment by the Required Lenders or by the Administrative Agent, the term
“Administrative Agent” shall mean such successor agent, and the former Administrative
Agent’s rights, powers and duties as Administrative Agent shall be terminated,
without any other or further act or deed on the part of such former
Administrative Agent or any of the parties to this Agreement or any holders of
the Loans.  After any retiring
Administrative Agent’s resignation as Administrative Agent, the provisions of
this Section 10 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Administrative Agent under this Agreement and
the other Loan Documents.  If no
successor agent has accepted appointment as Administrative Agent by the date
which is 30 days following a retiring Administrative Agent’s notice of
resignation, the retiring Administrative Agent’s resignation shall nevertheless
thereupon become effective and the Lenders shall assume and perform all of the
duties of the Administrative Agent hereunder until such time, if any, as the
Required Lenders appoint a successor agent as provided for above.


 


(b)                                 The
Collateral Agent may resign as Collateral Agent upon 10 days’ notice to the
Lenders.  If the Collateral Agent shall
resign as Collateral Agent under this Agreement and the other Loan Documents,
then the Required Lenders shall appoint from among the Lenders a successor
agent for the Lenders, which successor agent (provided that it shall
have been approved by the Company (which approval shall not be unreasonably
withheld)), shall succeed to the rights, powers and duties of the Collateral
Agent hereunder.  If no successor agent
is appointed prior to the effective date of the resignation of the Collateral
Agent, the Collateral Agent may appoint, after consulting with the Lenders and
the Company, a successor agent from among the Lenders.  Effective upon such appointment by the
Required Lenders or by the Collateral Agent, the term “Collateral Agent” shall
mean such successor agent, and the former Collateral Agent’s rights, powers and
duties as Collateral Agent shall be terminated, without any other or further
act or deed on the part of such former Collateral Agent or any of the parties
to


 


81

















 


this Agreement or any holders of the Loans.  After any retiring Collateral Agent’s
resignation as Collateral Agent, the provisions of this Section 10 shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was Collateral Agent under this Agreement and the other Loan Documents.  If no successor agent has accepted
appointment as Collateral Agent by the date which is 30 days following a
retiring Collateral Agent’s notice of resignation, the retiring Collateral
Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall assume and perform all of the duties of the Collateral Agent
hereunder until such time, if any, as the Required Lenders appoint a successor
agent as provided for above.


 


10.10                     Agents and Arrangers.  Notwithstanding anything to the contrary
contained herein, none of the entities listed on the cover page of this
Agreement as a “Syndication Agent”, “Joint Lead Arranger and Joint Book
Manager” or “Documentation Agent”, in their capacities as such, shall have any
duties or obligations of any kind under this Agreement.


 


SECTION
11.  MISCELLANEOUS


 


11.1                           Amendments and Waivers.  Neither this Agreement nor any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this subsection (or,
solely with respect to Schedule 5.16, in accordance with subsection
7.2(b) and with respect to Schedules 2, 3 and 6 to the Guarantee and Collateral
Agreement, in accordance with that agreement). 
The Required Lenders may, or, with the written consent of the Required
Lenders, the Administrative Agent may, from time to time, (a) enter into with
the Company and the other Loan Parties written amendments, supplements or
modifications hereto and to the other Loan Documents for the purpose of,
amending, supplementing, modifying or adding any provisions of or to this
Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders, the Company hereunder or thereunder or (b) waive, on such terms
and conditions as the Required Lenders or the Administrative Agent, as the case
may be, may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default and
its consequences; provided, however, that no such waiver and no
such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan or any Reimbursement
Obligation, or reduce the stated rate of any interest or fee payable hereunder
or extend the scheduled date of any payment thereof or increase the amount or
extend the expiration date of any Lender’s Commitment, in each case without the
consent of each Lender directly affected thereby, or (ii) consent to the
assignment or transfer by the Company of any of its rights and obligations
under this Agreement and the other Loan Documents or release all or
substantially all of the Collateral or release any material Guarantor, in each
case without the written consent of all the Lenders (subject to the provisions
of subsection 7.10(d)), or (iii) amend, modify or waive any provision of this
subsection or reduce the percentage specified in the definition of Required
Lenders without the written consent of all the Lenders, or (iv) amend, modify
or waive any provision of Section 10 without the written consent of the then
Administrative Agent or (v) amend, modify or waive subsection 4.3(e) or 4.9
without the consent of the Required Tranche B Lenders, or reduce the
percentage specified in the definition of Required Tranche B Lenders without
the consent of all the Tranche B Lenders, or (vi) amend, modify or waive
subsection 3.3 without the consent of Lenders the Voting Percentages of which
aggregate at least 66-2/3% or (vii) amend, modify or waive Section 2 or


 


82

















 


subsection 4.3(e) or 4.9
without the consent of the Required Revolving Credit Lenders, or reduce the
percentage specified in the definition of Required Revolving Credit Lenders
without the consent of all the Revolving Credit Lenders or (viii) amend, modify
or waive subsection 2.5 through 2.12 or subsection 10.1 without the consent of
the Issuing Bank or (ix) amend, modify or waive any provision of subsection
2.13, 2.14 or 2.15 without the consent of the Swing Line Lender.  Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Company, the Lenders, the Agents and all future holders of
the Loans.  In the case of any waiver,
the Company, the Lenders and the Agents shall be restored to their former
positions and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon.


 


11.2                           Notices.  All
notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by facsimile transmission) and, unless
otherwise expressly provided herein, shall be deemed to have been duly given or
made (a) in the case of delivery by hand or by overnight courier, when
delivered, (b) in the case of delivery by mail, three Business Days after being
deposited in the mails, postage prepaid, or (c) in the case of delivery by
facsimile transmission, when sent and receipt has been confirmed, addressed as
follows in the case of the Company and the Administrative Agent, and as set
forth in Schedule 11.2 in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties
hereto:


 


The
Company:                                                                                                                                                                8023
Vantage Drive


San Antonio, Texas
78230-4726


Attention:  Chief Executive Officer


Telephone:  (210) 524-9000


Telecopy:  (210) 255-6998


 


with a copy to:


 


8023 Vantage Drive


San Antonio, Texas
78230-4726


Attention:  General Counsel


Telephone:  (210) 255-6331


Telecopy:  (210) 255-6993


 


The
Administrative Agent:                                                                                                 with respect
to all matters other than Loan Notices:


 


Alice Lee


750 Seventh Avenue, 11th Floor


New York, NY 
10020


Telephone: 212-762-2601


Telecopy: 212-762-0346


 


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with a copy to:


 


James Morgan


1633 Broadway, 25th Floor


New York, NY 10019


Telephone: 212-537-1470


Telecopy:
212-537-1867/1866


 


with respect to Loan Notices (other
than in connection with Letters of Credit):


 


James Morgan / Larry Benison


1633 Broadway, 25th Floor


New York, NY 10019


Telephone: 212-537-1470 / 1439


Telecopy: 212-537-1867 /
1866


 


with respect to Loan Notices in
connection with Letters of Credit:


 


James Morgan / Larry Benison


1633 Broadway, 25th Floor


New York, NY 10019


Telephone: 212-537-1470 / 1439


Telecopy: 212-537-1867 /
1866


 


provided that any notice, request or
demand to or upon the Administrative Agent or the Lenders pursuant to
subsection 2.2, 2.4, 2.6, 2.14, 3.2, 4.2 or 4.4 shall not be effective until
received.


 


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


 


11.4                           Survival of Representations and
Warranties.  All representations and
warranties made hereunder, in the other Loan Documents (or in any amendment, modification
or supplement hereto or thereto) and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the making of the Loans hereunder.


 


11.5                           Payment of Expenses and Taxes.  Subject to subsection 11.17, the Company
agrees (a) to pay or reimburse the Agents and Agent-Related Persons for all
their out-of-pocket costs and expenses incurred in connection with the
development, preparation, syndication and execution and delivery of, and any
amendment, supplement, waiver or


 


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modification to, this
Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of
the transactions contemplated hereby and thereby, including, without
limitation, the reasonable fees and disbursements of one outside counsel to the
Agents (including the reasonable allocated fees and expenses of in-house
counsel), (b) to pay or reimburse each Lender and the Agents for all their
respective costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel to each Lender and of counsel to the Administrative
Agent (including the allocated fees and expenses of in-house counsel), (c) to
pay, indemnify, and hold each Lender, the Issuing Bank, the Agents and each
Agent-Related Person harmless from, any and all recording and filing fees and
any and all liabilities with respect to, or resulting from any delay in paying,
stamp, excise and other Taxes, if any, which may be payable or determined to be
payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d) TO PAY,
INDEMNIFY, AND HOLD EACH LENDER, THE ISSUING BANK, THE AGENTS AND THE
AGENT-RELATED PERSONS AND THEIR RESPECTIVE DIRECTORS, TRUSTEES, OFFICERS,
EMPLOYEES AND AGENTS HARMLESS FROM AND AGAINST ANY AND ALL OTHER LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WITH RESPECT TO THE
EXECUTION, DELIVERY, ENFORCEMENT, PERFORMANCE AND ADMINISTRATION OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, THE TRANSACTION DOCUMENTS, OR THE USE OR
PROPOSED USE OF THE PROCEEDS OF THE LOANS IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY AND ANY SUCH OTHER DOCUMENTS, REGARDLESS OF
WHETHER ANY AGENT OR LENDER IS A PARTY TO THE LITIGATION OR OTHER PROCEEDING
GIVING RISE THERETO AND REGARDLESS OF WHETHER ANY SUCH LITIGATION OR OTHER
PROCEEDING IS BROUGHT BY THE COMPANY OR ANY OTHER PERSON, INCLUDING, WITHOUT
LIMITATION, ANY OF THE FOREGOING RELATING TO THE VIOLATION OF, NONCOMPLIANCE
WITH OR LIABILITY UNDER, ANY ENVIRONMENTAL LAW APPLICABLE TO THE OPERATIONS OF
THE COMPANY, ANY OF ITS SUBSIDIARIES OR ANY OF THE PROPERTIES (ALL THE
FOREGOING IN THIS CLAUSE (d), COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”),
PROVIDED THAT THE COMPANY SHALL HAVE NO OBLIGATION HEREUNDER TO THE
AGENTS, ANY LENDER OR THE ISSUING BANK OR ANY OF THEIR RESPECTIVE DIRECTORS,
TRUSTEES, OFFICERS, EMPLOYEES AND AGENTS WITH RESPECT TO INDEMNIFIED
LIABILITIES ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
PERSON.  WITHOUT LIMITING THE FOREGOING,
AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AGREES NOT TO
ASSERT, AND HEREBY WAIVES, AND SHALL CAUSE EACH OF ITS SUBSIDIARIES NOT TO
ASSERT AND TO WAIVE, ALL RIGHTS OF CONTRIBUTION OR ANY OTHER RIGHTS OF RECOVERY
WITH RESPECT TO ALL CLAIMS, DEMANDS,


 


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PENALTIES, FINES, LIABILITIES, SETTLEMENTS, DAMAGES, COSTS
AND EXPENSES OF WHATEVER KIND OR NATURE, UNDER OR RELATED TO ENVIRONMENTAL
LAWS, THAT ANY OF THEM MIGHT HAVE BY STATUTE OR OTHERWISE AGAINST ANY AGENT OR
LENDER.  The
agreements in this subsection shall survive repayment of the Loans and all
other amounts payable hereunder.


 


11.6                           Successors and Assigns; Participations
and Assignments.


 


(a)                                  This
Agreement shall be binding upon and inure to the benefit of the Company, the
Lenders, the Agents and their respective successors and assigns, except that
the Company may not assign or transfer any of its rights or obligations under
this Agreement without the prior written consent of each Lender.


 


(b)                                 Any
Lender may, in the ordinary course of its activities and in accordance with
applicable law, at any time sell to one or more banks or other entities (“Participants”)
participating interests in any Loan owing to such Lender, any Commitment of
such Lender or any other interest of such Lender hereunder and under the other
Loan Documents.  In the event of any
such sale by a Lender of a participating interest to a Participant, such
Lender’s obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and
the Company and the Administrative Agent shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement and the other Loan Documents.  No Lender shall be entitled to create in
favor of any Participant, in the participation agreement pursuant to which such
Participant’s participating interest shall be created or otherwise, any right
to vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document except for those specified in clauses (i) and (ii) of the
proviso to subsection 11.1.  The Company
agrees that if amounts outstanding under this Agreement are due or unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in
purchasing such participating interest, such Participant shall be deemed to
have agreed to share with the Lenders the proceeds thereof as provided in
subsection 11.7(a) as fully as if it were a Lender hereunder.  The Company also agrees that each
Participant shall be entitled to the benefits of subsections 4.11, 4.12 and
4.13 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender, provided that, in
the case of subsection 4.12, such Participant shall have complied with the
requirements of said subsection and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any
such subsection than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.


 


(c)                                  Any
Lender may, in the ordinary course of its activities and in accordance with
applicable law, at any time and from time to time assign to any Lender or any
branch or affiliate or a Related Fund thereof or, with the consent of the
Administrative Agent (and, with


 


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respect
to assignments of Revolving Loans or Revolving Credit Commitments, the Issuing
Bank and the Swing Line Lender) and (so long as no Event of Default is
continuing) the Company, (which consent in each case shall not be unreasonably
withheld or delayed), to an additional bank, financial institution or entity
which is regularly engaged in making, purchasing or investing in loans (an “Assignee”)
all or any part of its rights and obligations under this Agreement and the
other Loan Documents pursuant to an Assignment and Assumption, substantially in
the form of Exhibit A, executed by such Assignee, such assigning Lender
(and, in the case of an Assignee that is not then a Lender or an affiliate
thereof or a Related Fund, by the Company, the Issuing Bank and the Swing Line
Lender (in each case, if required) and the Administrative Agent) and delivered
to the Administrative Agent for its acceptance and recording in the Register, provided
that, (i) in the case of any such assignment to an additional bank or financial
institution of less than all of the rights and obligations of the assigning
Lender, (A) the sum of the aggregate principal amount of the Revolving Loans,
the aggregate amount of the L/C Obligations and the aggregate amount of the
Available Revolving Credit Commitments being assigned shall not be less than
$3,000,000 and (B) the sum of the aggregate principal amount of the Tranche B
Term Loans being assigned shall not be less than $1,000,000 except in the case
of an assignment which will result in a group of Related Funds holding a
Tranche B Commitment of not less than $1,000,000, (or, in each case, such
lesser amount as may be agreed to by the Company and the Administrative Agent)
(it being agreed, for the avoidance of doubt, that this minimum dollar
threshold shall apply to each Lender or Assignee individually whether or not
such Lender or Assignee is a branch or affiliate or Related Fund of any other
Lender), (ii) assignments shall not be required to be made on a ratable basis
between the Commitments and/or Loans held by any Lender.  Upon such execution, delivery, acceptance
and recording, from and after the effective date determined pursuant to such
Assignment and Assumption, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Assumption, have the rights
and obligations of a Lender hereunder with a Commitment as set forth therein,
and (y) the assigning Lender thereunder shall, to the extent provided in such
Assignment and Assumption, be released from its obligations under this
Agreement (and, in the case of an Assignment and Assumption covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto) and (iii) no
consent of the Company shall be required for any reason with respect to
assignments made during the primary syndication of the Tranche B Term Loan.


 


(d)                                 The
Administrative Agent, on behalf of the Company, shall maintain at the address
of the Administrative Agent referred to in subsection 11.2 a copy of each
Assignment and Assumption delivered to it and a register (the “Register”)
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amounts of the Loans owing to, and any Notes
evidencing the Loans owned by, each Lender from time to time.  Notes and the Loans evidenced thereby may be
assigned or otherwise transferred in whole or in part only by registration of
such assignment or transfer on the Register (and each Note shall expressly so
provide).  Any assignment or transfer of
all or part of such Loan(s) and the Note(s) evidencing the same shall be
registered on the Register only upon surrender for registration of assignment
or transfer of the Note(s) evidencing such Loan(s), accompanied by a duly
executed Assignment and Assumption, and thereupon one or more new Note(s) in
the same aggregate principal amount shall be issued, if requested, to the
designated Assignee(s) and the old Note(s) shall be returned by the Agent to
the Company, marked “cancelled”.  The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Company, the Administrative Agent and the


 


87

















 


Lenders
shall treat each Person whose name is recorded in the Register as the owner of
a Loan or other obligation hereunder (whether or not evidenced by a Note) as
the owner thereof for all purposes of this Agreement and the other Loan
Documents, notwithstanding any notice to the contrary.  Any assignment of any Loan or other
obligation hereunder (whether or not evidenced by a Note) shall be effective only
upon appropriate entries with respect thereto being made in the Register.


 


(e)                                  Upon
its receipt of an Assignment and Assumption executed by an assigning Lender and
an Assignee (and, in the case of an Assignee that is not then a Lender or an
affiliate thereof, by the Company, the Issuing Bank and the Swing Line Lender
(in each case, if required) and the Administrative Agent), the Administrative
Agent shall (i) promptly accept such Assignment and Assumption and (ii) on the
effective date determined pursuant thereto record the information contained
therein in the Register and give notice of such acceptance and recordation to
the Lenders and the Company.  The
Company and each Lender shall have access to the Register at all times during
normal business hours upon reasonable advance notice to the Administrative
Agent.


 


(f)                                    The
Company authorizes each Lender to disclose to any Participant or Assignee
(each, a “Transferee”) and any prospective Transferee, subject to such
Person’s agreeing to comply with the provisions of subsection 11.15, any and
all financial and other information in such Lender’s possession concerning the
Company and any of its Affiliates which has been delivered to such Lender by or
on behalf of the Company pursuant to this Agreement or which has been delivered
to such Lender by or on behalf of the Company in connection with such Lender’s
credit evaluation of the Company and any of its Affiliates prior to becoming a
party to this Agreement.


 


(g)                                 Notwithstanding
any other provision set forth in this Agreement, any Lender may, without the
consent of the Company or the Administrative Agent, at any time (i) assign and
pledge all or any portion of its Loans and its Notes to any Federal Reserve
Bank as collateral security pursuant to Regulation A and any Operating Circular
issued by such Federal Reserve Bank or (ii) pledge all or any portion of its
rights (but not its obligations to make Loans or participate in Letters of
Credit) hereunder to any trustee or holders of obligations owed, or securities
issued, by such Lender as security for such obligations or securities or to any
other representative of such holders. 
No such assignment shall release the assigning Lender from its
obligations hereunder.


 


11.7                           Adjustments; Set-off.


 


(a)                                  If
any Lender (a “Benefited Lender”) shall at any time receive any payment
of all or part of its Loans, its Reimbursement Obligations or other amounts
owing to it hereunder in respect of any participating interest in any Loan, or
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by set-off, pursuant to events or proceedings of
the nature referred to in subsection 9(f), or otherwise), in a greater
proportion than any such payment to or collateral received by any other
relevant Lender, if any, in respect of such other relevant Lender’s relevant
Loans, Reimbursement Obligations or other amounts owing to it hereunder in
respect of any participating interest in any Loan, or interest thereon, such
Benefited Lender shall purchase for cash from the other relevant Lenders a participating


 


88

















 


interest
in such portion of each such other relevant Lender’s relevant Loans,
Reimbursement Obligations or other amounts owing to it hereunder in respect of
any participating interest in any Loan, or shall provide such other relevant
Lenders with the benefits of any such collateral, or the proceeds thereof, as
shall be necessary to cause such Benefited Lender to share the excess payment
or benefits of such collateral or proceeds ratably with each of the relevant
Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefited Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.


 


(b)                                 In
addition to any rights and remedies of the Lenders provided by law, subject to
subsection 11.17, each Lender shall have the right, without prior notice to the
Company, any such notice being expressly waived by the Company to the extent
permitted by applicable law, upon any amount (including, without limitation,
any amount owing to such Lender in respect of an undivided interest purchased
by such Lender in any draft paid by the Issuing Bank under any Letter of Credit
pursuant to subsection 2.8(a) or any participating interest in any Swing Line
Loans or any participating interest purchased pursuant to subsection 11.6(b))
becoming due and payable by the Company hereunder (whether at the stated
maturity, by acceleration or otherwise), to set-off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any affiliate, branch or agency thereof to or for the credit or the account of
the Company.  Each Lender agrees
promptly to notify the Company and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure
to give such notice shall not affect the validity of such set-off and
application.


 


11.8                           Counterparts. 
This Agreement may be executed by one or more of the parties to this
Agreement on any number of separate counterparts (including by facsimile
transmission), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. 
A set of the copies of this Agreement signed by all the parties shall be
lodged with the Company and the Administrative Agent.


 


11.9                           Severability. 
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.


 


11.10                     Integration. 
This Agreement and the other Loan Documents represent the agreement of
the Company, the Administrative Agent and the Lenders with respect to the
subject matter hereof, and there are no promises, undertakings, representations
or warranties by the Administrative Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Loan Documents.


 


11.11                     GOVERNING LAW. 
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY,


 


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AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


11.12                     Submission To Jurisdiction; Waivers.  The Company hereby irrevocably and
unconditionally:


 


(a)                                  submits
for itself and its property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;


 


(b)                                 appoints
CT Corporation System its authorized agent to accept and acknowledge service of
any and all process which may be served in any suit, action or proceeding of
the nature referred to in this subsection 11.12;


 


(c)                                  consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;


 


(d)                                 agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to CT Corporation System at 111 Eighth
Avenue, New York, New York 10011 or at such other New York State address of
which the Administrative Agent shall have been notified pursuant thereto;


 


(e)                                  agrees
that nothing herein shall affect the right to effect service of process in any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction; and


 


(f)                                    waives,
to the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this subsection any
special, exemplary, punitive or consequential damages.


 


11.13                     Acknowledgements.  The Company hereby acknowledges that:


 


(a)                                  it
has been advised by counsel in the negotiation, execution and delivery of this
Agreement and the other Loan Documents;


 


(b)                                 neither
the Administrative Agent nor any Lender has any fiduciary relationship with or
duty to the Company arising out of or in connection with this Agreement or any
of the other Loan Documents, and the relationship between the Administrative
Agent and Lenders, on one hand, and the Loan Parties, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and


 


(c)                                  no
joint venture is created hereby or by the other Loan Documents or otherwise
exists by virtue of the transactions contemplated hereby among the Lenders or
among the Loan Parties and the Lenders.


 


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11.14                     WAIVERS OF JURY TRIAL. 
THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN.


 


11.15                     Confidentiality.  Each Lender agrees to keep confidential all non-public
information provided to it by the Company and any other Loan Party pursuant to
the Loan Documents, provided that nothing herein shall prevent any
Lender from disclosing any such information (i) to the Administrative Agent or
any other Lender, (ii) to any Transferee or prospective Transferee which agrees
to comply with the provisions of this subsection, (iii) to its employees,
directors, agents, attorneys, accountants and other professional advisors, (iv)
upon the request or demand of any Governmental Authority having jurisdiction
over such Lender, (v) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to any
Requirement of Law, (vi) in connection with any litigation or similar
proceeding to which each Lender is a party, (vii) which has been publicly
disclosed other than in breach of this Agreement, (viii) to the National
Association of Insurance Commissioners or any similar organization or any
nationally recognized rating agency that requires access to information about
such Lender’s investment portfolio, (ix) to any direct or indirect contractual
counterparty in swap agreements or to such contractual counterparty’s
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions
of this Section 11.15) or (x) in connection with the exercise of any remedy
hereunder.


 


Notwithstanding anything contained herein to the
contrary, each of the Company and each Lender (and each employee,
representative or other agent of each thereof) may disclose to any and all
persons, without limitation of any kind, the tax treatment and any facts that
may be relevant to the tax structure of the transactions contemplated by the
Loan Documents, provided, however, that neither the Company nor any Lender (and
no employee, representative or other agent thereof) shall disclose any other
information that is not relevant to understanding the tax treatment and tax
structure of such transactions (including the identity of any party and any
information that could lead another to determine the identity of any party) or
any other information to the extent that such disclosure could reasonably
result in a violation of any federal or state securities law.


 


11.16                     Conversion of Currencies.


 


(a)                                  If,
for the purpose of obtaining judgment in any court, it is necessary to convert
a sum owing hereunder in one currency into another currency, each party hereto
agrees, to the fullest extent that it may effectively do so, that the rate of
exchange used shall be that at which, in accordance with normal banking
procedures in the relevant jurisdiction, the first currency could be purchased
with such other currency on the Banking Day immediately preceding the day on
which final judgment is given.


 


(b)                                 The
obligations of the Company in respect of any sum due to any party hereto or any
holder of the obligations owing hereunder (the “Applicable Creditor”)
shall, notwithstanding any judgment in a currency (the “Judgment Currency”)
other than the currency


 


91

















 


in
which such sum is stated to be due hereunder (the “Agreement Currency”),
be discharged only to the extent that, on the Business Day following receipt by
the Applicable Creditor of any sum adjudged to be so due in the Judgment
Currency, the Applicable Creditor may in accordance with normal banking
procedures in the relevant jurisdiction purchase the Agreement Currency with
the Judgment Currency; subject to subsection 11.17, if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, the Company agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. 
The obligations of the Company contained in this subsection 11.16 shall
survive the termination of this Agreement and the payment of all other amounts
owing hereunder.


 


11.17                     Usury Savings Clause.  It is the intention of the parties hereto to
comply with applicable usury laws (now or hereafter enacted); accordingly,
notwithstanding any provision to the contrary in this Agreement, any Notes, any
of the other Loan Documents or any other document related hereto or thereto, in
no event shall this Agreement or any such other document require the payment or
permit the collection of interest in excess of the maximum amount permitted by
such laws.  If from any circumstances
whatsoever, fulfillment of any provision of this Agreement, any Notes, any of
the other Loan Documents or of any other document pertaining hereto or thereto,
shall involve transcending the limit of validity prescribed by applicable law
for the collection or charging of interest, then, ipso facto, the obligation to
be fulfilled shall be reduced to the limit of such validity, and if from any
such circumstances the Administrative Agent and the Lenders shall ever receive
anything of value as interest or deemed interest by applicable law under this
Agreement, any Notes, any of the other Loan Documents or any other document
pertaining hereto or otherwise an amount that would exceed the highest lawful
rate, such amount that would be excessive interest shall be applied to the
reduction of the principal amount owing under the Loans or on account of any
other indebtedness of the Company, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal of such
indebtedness, such excess shall be refunded to the Company.  In determining whether or not the interest
paid or payable with respect to any indebtedness of the Company to the
Administrative Agent and the Lenders, under any specified contingency, exceeds
the highest lawful rate, the Company, the Administrative Agent and the Lenders
shall, to the maximum extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, (c) amortize,
prorate, allocate and spread the total amount of interest throughout the full
term of such indebtedness so that interest thereon does not exceed the maximum
amount permitted by applicable law, and/or (d) allocate interest between
portions of such indebtedness, to the end that no such portion shall bear
interest at a rate greater than that permitted by applicable law.


 


11.18                     Release of Mortgages and Other Security
Documents.


 


(a)                                  At
such time as the Loans, the Reimbursement Obligations and the other Obligations
shall have been paid in full, the Commitments have been terminated and no
Letter of Credit shall be outstanding (or any outstanding Letters of Credit
have been cash collateralized), the Administrative Agent shall, at the request
and sole expense of any Loan Party, take such actions as are reasonably
necessary or desirable to release the relevant Collateral (other than the cash
collateralizing any outstanding Letters of Credit) from the Liens created by
the Mortgages


 


92

















 


and
other Security Documents, and cause the Mortgages and other Security Documents
and all obligations (other than those expressly stated to survive such
termination) of the Administrative Agent and each Loan Party thereunder to
terminate.


 


(b)                                 If
any of the Collateral subject to a Mortgage or other Security Document shall be
sold, transferred or otherwise disposed of by any Loan Party in a transaction
permitted by the Credit Agreement, then the Administrative Agent, at the
request and sole expense of such Loan Party, shall execute and deliver to such
Loan Party all releases or other documents reasonably necessary or desirable for
the release of the Lien created by such Mortgage or other Security Document on
such Collateral.


 


[Signature pages
to follow.]


 


93

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the day and year first above written.


 


 


	
   

  	
  KINETIC CONCEPTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN STANLEY SENIOR 

  FUNDING, INC., as Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MORGAN STANLEY &
  CO. 

  INCORPORATED, as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CREDIT SUISSE FIRST
  BOSTON, as 

  Syndication Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, as
  

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


94

















 


	
   

  	
  WELLS FARGO BANK,
  NATIONAL 

  ASSOCIATION, as Documentation Agent 

  and Issuing Bank

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NOVA
  SCOTIA, as 

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


95



















EXHIBIT A TO CREDIT AGREEMENT


FORM OF ASSIGNMENT AND ASSUMPTION


 


[FORM OF ASSIGNMENT AND ASSUMPTION]


 


ASSIGNMENT AND ASSUMPTION AGREEMENT


 


This
Assignment and Assumption Agreement (the “Assignment”) is dated as of
the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee]
(the “Assignee”).  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Credit Agreement identified below (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), receipt
of a copy of which is hereby acknowledged by the Assignee.  The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment as if set forth herein in full.


 


For
an agreed consideration, the Assignor hereby irrevocably sells and assigns to
the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, the interest in and to all of the
Assignor’s rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below
(including, to the extent included in any such facilities, Letters of Credit
and Swing Line Loans) (the “Assigned Interest”).  Such sale and assignment is without recourse
to the Assignor and, except as expressly provided in this Assignment, without
representation or warranty by the Assignor.


 


	
  1.

  	
   

  	
  Assignor:

  	
   

  	
                                                                

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
                                                                

  	
  [and
  is an Affiliate of a Lender]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower:

  	
   

  	
                                                                

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative
  Agent:

  	
   

  	
  Morgan
  Stanley Senior Funding, Inc.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit
  Agreement:

  	
   

  	
  The
  Credit Agreement dated as of August 11, 2003 (as amended, restated,
  supplemented or otherwise modified from time to time), among Kinetic
  Concepts, Inc., the Lenders parties thereto, Morgan Stanley Senior Funding,
  Inc., as Administrative Agent, Morgan Stanley & Co. Incorporated, as
  Collateral Agent, Credit Suisse First Boston, as Syndication Agent, Wells
  Fargo Bank, National Association, as Issuing Bank and JPMorgan Chase Bank,
  Wells Fargo Bank, National Association and The Bank of Nova Scotia, as
  Documentation Agents.

  
							



 

















 


SCHEDULE 1 TO

ASSIGNMENT AND ASSUMPTION


 




	
  ASSIGNOR:

  	
   

  	
   

  	
   

  
	
  Revolving Loan

  	
   

  	
   

  	
   

  
	
  Percentage interest assigned

  	
   

  	
   

  	
  %

  
	
  Revolving Loan Commitment assigned

  	
   

  	
  $

  	
   

  
	
  Aggregate outstanding principal amount of
  Revolving Loan Advances assigned

  	
   

  	
  $

  	
   

  
	
  Tranche B Term
  Loan

  	
   

  	
   

  	
   

  
	
  Percentage interest assigned

  	
   

  	
   

  	
   %

  
	
  Tranche B Commitment assigned

  	
   

  	
  $

  	
   

  
	
  Outstanding principal amount of Tranche B Term
  Loan assigned

  	
   

  	
  $

  	
   

  
	
  Letter of
  Credit Loan

  	
   

  	
   

  	
   

  
	
  Letter of Credit Commitment assigned

  	
   

  	
  $

  	
   

  






 




	
  ASSIGNEE:

  	
   

  	
   

  	
   

  
	
  Revolving Loan
  Facility

  	
   

  	
   

  	
   

  
	
  Percentage interest assumed

  	
   

  	
   

  	
  %

  
	
  Revolving Loan Commitment assumed

  	
   

  	
  $

  	
   

  
	
  Aggregate outstanding principal amount of
  Revolving Loan Advances assumed

  	
   

  	
  $

  	
   

  
	
  Tranche B Term
  Loan

  	
   

  	
   

  	
   

  
	
  Percentage interest assumed

  	
   

  	
   

  	
  % 

  
	
  Tranche B Commitment assumed

  	
   

  	
  $

  	
   

  
	
  Outstanding principal amount of Tranche B Term
  Loan assumed

  	
   

  	
  $

  	
   

  
	
  Letter of
  Credit Loan

  	
   

  	
   

  	
   

  
	
  Letter of Credit Commitment assumed

  	
   

  	
  $

  	
   

  






 












*If there are multiple assignors/assignees add additional columns as
necessary.


 


 

















 


The terms set forth in this
Assignment are hereby agreed to:


 


	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME
  OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					



 


	
  [Consented
  to and] Accepted:

  	
   

  
	
   

  	
   

  
	
  MORGAN
  STANLEY

  SENIOR FUNDING, INC.,

  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:]

  	
   

  	
   

  
	
   

  	
   

  
	
  [Consented
  to:

  	
   

  
	
   

  	
   

  
	
  [WELLS
  FARGO BANK, NATIONAL ASSOCIATION,]

  	
   

  
	
  as
  Issuing Bank

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:]

  	
   

  	
   

  
	
   

  	
   

  
	
  [Consented
  to:

  	
   

  
	
   

  	
   

  
	
  MORGAN
  STANLEY SENIOR FUNDING, INC.,

  	
   

  
	
  as
  Swing Line Lender

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:]

  	
   

  	
   

  
	
   

  	
   

  
	
  [Consented
  to:

  	
   

  
	
   

  	
   

  
	
  KINETIC
  CONCEPTS, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:]

  	
   

  	
   

  
					



 

















 


Annex 1


to Assignment and Assumption
Agreement


 


STANDARD TERMS AND CONDITIONS FOR


ASSIGNMENT AND ASSUMPTION AGREEMENT


 


1.                                       Representations and Warranties


 


1.1                                 Assignor.  The Assignor (a) represents
and warrants that (i) it is the legal and beneficial owner of the Assigned
Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance
or other adverse claims and (iii) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with any Credit Document (as defined
below), (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other instrument or
document delivered pursuant thereto, other than this Assignment (herein
collectively, the “Credit Documents”), or any collateral thereunder,
(iii) the financial condition of the Company, any of its Subsidiaries or
Affiliates or any other Person obligated in respect of any Credit Document or
(iv) the performance or observance by the Company, any of its Subsidiaries or Affiliates
or any other Person of any of their respective obligations under any Credit
Document.


 


1.2                                 Assignee.  The Assignee (a) represents
and warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all requirements of an Assignee set forth in
subsection 11.6(c) of the Credit Agreement, (iii) from and after the Effective
Date, it shall be bound by the provisions of the Credit Agreement and, to the
extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to
subsections 5.1 and 7.1 thereof, and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision, and (v) if it is a foreign
Lender, attached to the Assignment is any documentation required to be
delivered by it pursuant to the terms of the Credit Agreement, duly completed
and executed by the Assignee; and (b) agrees that (i) it will, independently
and without reliance on the Administrative Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Credit Documents are required to be performed by it as a Lender.


 


2.                                       Payments.  From and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to


 

















 


but
excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.


 


3.                                       General Provisions. 
This Assignment shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns.  This Assignment may be executed in any
number of counterparts, which together shall constitute one instrument.  Delivery of an executed counterpart of a
signature page of this Assignment by telecopy shall be effective as delivery of
a manually executed counterpart of this Assignment.  This Assignment shall be governed by, and construed and
interpreted in accordance with, the law of the State of New York.


 

















 


EXHIBIT B TO CREDIT AGREEMENT


FORM OF GUARANTEE AND COLLATERAL AGREEMENT


 


To
be delivered separately.


 

















 


EXHIBIT C-1 TO CREDIT AGREEMENT


FORM OF REVOLVING CREDIT NOTE


 


[FORM OF REVOLVING CREDIT NOTE]


 


REVOLVING CREDIT NOTE


 


 


	
  $                                  

  	
   

  	
  New
  York, New York

  
	
   

  	
   

  	
                                    ,
  2003

  



 


FOR
VALUE RECEIVED, the undersigned, KINETIC CONCEPTS, INC., a Texas corporation
(the “Company”), hereby unconditionally promises to pay to the order of
                                              (the
“Lender”), at the office of Morgan Stanley Senior Funding, Inc. located at 750
Seventh Avenue, 11th Floor, New York, New York 10020 (or such other
address as shall be specified from time to time by the Administrative Agent),
in lawful money of the United States of America and in immediately available
funds on the Revolving Credit Termination Date the principal amount of the
aggregate unpaid principal amount of all Revolving Loans of the Lender made to
the Company pursuant to subsection 2.1 of the Credit Agreement (as hereinafter
defined).  The Company further agrees to
pay interest in like money at such office on the unpaid principal amount hereof
from time to time outstanding at the rates and on the dates specified in
subsection 4.6 of the Credit Agreement.


 


The
holder of this Note is authorized to endorse on the schedules annexed hereto
and made a part hereof or on a continuation thereof which shall be attached
hereto and made a part hereof the date, Type and amount of each Revolving Loan
of the Lender and the date and amount of each payment or prepayment of
principal thereof, each continuation thereof as the same Type, each conversion
of all or a portion thereof to another Type and, in the case of Eurodollar
Loans, the length of each Interest Period with respect thereto.  Each such endorsement shall constitute prima facie evidence of the accuracy of
the information endorsed.  The failure
to make any such endorsement (or any error therein) shall not affect the
obligations of the Company in respect of any Revolving Loan.


 


This
Note (a) is one of the Revolving Credit Notes referred to in the Credit
Agreement, dated as of August 11, 2003 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Company, the Lender, the several other banks and financial institutions from time
to time parties thereto (together with the Lender, the “Lenders”), Morgan
Stanley Senior Funding, Inc., as Administrative Agent, Morgan Stanley & Co.
Incorporated, as Collateral Agent, Credit Suisse First Boston, as Syndication
Agent, Wells Fargo Bank, National Association, as Issuing Bank and JPMorgan
Chase Bank, Wells Fargo Bank, National Association and The Bank of Nova Scotia,
as Documentation Agents, (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or
in part as provided in the Credit Agreement. 
This Note is secured and guaranteed as provided in the Loan
Documents.  Reference is hereby made to
the Loan Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions


 

















 


upon
which the security interests and guarantees were granted and the rights of the
holder of this Note in respect thereof.


 


Upon
the occurrence of any one or more of the Events of Default, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.


 


Except
as otherwise provided in the Credit Agreement, all parties now and hereafter
liable with respect to this Note, whether maker, principal, surety, guarantor,
endorser or otherwise, hereby waive presentment, demand, protest and all other
notices of any kind.


 


Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.


 


THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


	
   

  	
  KINETIC
  CONCEPTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 

















 


Schedule A

to Revolving Credit Note


 


LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS


 


	
  Date

  	
   

  	
  Amount of
  Base

  Rate Loans

  	
   

  	
  Amount
  Converted to

  Base Rate Loans

  	
   

  	
  Amount of
  Principal of

  Base Rate Loans Repaid

  	
   

  	
  Amount of
  Base Rate

  Loans Converted to

  Eurodollar Loans

  	
   

  	
  Unpaid
  Principal Balance

  of Base Rate Loans

  	
   

  	
  Notation
  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


Schedule B


to Revolving Credit Note


 


LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS


 


	
  Date

  	
   

  	
  Amount of

  Eurodollar Loans

  	
   

  	
  Amount
  Converted

  to Eurodollar Loans

  	
   

  	
  Interest
  Period and

  Eurodollar Rate with

  Respect Thereto

  	
   

  	
  Amount of
  Principal of

  Eurodollar Loans

  Repaid

  	
   

  	
  Amount of
  Eurodollar

  Loans Converted to

  Base Rate Loans

  	
   

  	
  Unpaid
  Principal 

  Balance of Eurodollar

  Loans

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT C-2 TO CREDIT AGREEMENT


FORM OF TRANCHE B TERM NOTE


 


[FORM OF TRANCHE B TERM NOTE]


 


TRANCHE B TERM NOTE


 


	
  $                                   

  	
   

  	
  New York, New York

  	
   

  
	
   

  	
   

  	
                               ,
  2003

  	
   

  



 


FOR
VALUE RECEIVED, the undersigned, KINETIC CONCEPTS, INC., a Texas corporation (the
“Company”), hereby unconditionally promises to pay to the order of
                                       
(the “Lender”), at the office of Morgan Stanley Senior Funding, Inc.
located at 750 Seventh Avenue, 11th Floor, New York, New York 10020
(or such other address as shall be specified from time to time by the
Administrative Agent), in lawful money of the United States of America and in
immediately available funds, the principal amount of
                      
DOLLARS
($               ),
or, if less, the unpaid principal amount of the Tranche B Term Loan of the
Lender outstanding pursuant to subsection 3.1 of the Credit Agreement (as
hereinafter defined).  The principal
amount of this Note shall be payable in the amounts and on the dates specified
in subsection 3.3 of the Credit Agreement. 
The Company further agrees to pay interest in like money at such office
on the unpaid principal amount hereof from time to time outstanding at the
rates and on the dates specified in subsection 4.6 of the Credit Agreement.


 


The
holder of this Note is authorized to endorse on the schedules annexed hereto
and made a part hereof or on a continuation thereof which shall be attached
hereto and made a part hereof the date, Type and amount of the Tranche B Term
Loan of the Lender and the date and amount of each payment or prepayment of
principal with respect thereto, each conversion of all or a portion thereof to
another Type, each continuation of all or a portion thereof as the same Type
and, in the case of Eurodollar Loans, the length of each Interest Period with
respect thereto.  Each such endorsement
shall constitute prima facie
evidence of the accuracy of the information endorsed.  The failure to make any such endorsement (or any error therein)
shall not affect the obligations of the Company in respect of any Tranche B
Term Loan.


 


This
Note (a) is one of the Tranche B Term Notes referred to in the Credit
Agreement, dated as of August 11, 2003 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Company, the Lender, the several other banks and financial institutions from
time to time parties thereto (together with the Lender, the “Lenders”),
Morgan Stanley Senior Funding, Inc., as Administrative Agent, Morgan Stanley
& Co. Incorporated, as Collateral Agent, Credit Suisse First Boston, as
Syndication Agent, Wells Fargo Bank, National Association, as Issuing Bank and
JPMorgan Chase Bank, Wells Fargo Bank, National Association and The Bank of
Nova Scotia, as Documentation Agents, (b) is subject to the provisions of the
Credit Agreement and (c) is subject to optional and mandatory prepayment in
whole or in part as provided in the Credit Agreement.  This Note is secured and guaranteed as provided in the Loan
Documents.  Reference is hereby made to
the Loan Documents for a description of the properties and assets in which a
security interest has been granted, the nature and extent of the security and
the guarantees, the terms and conditions


 

















 


upon which the security interests
and guarantees were granted and the rights of the holder of this Note in
respect thereof.


 


Upon
the occurrence of any one or more of the Events of Default, all amounts then
remaining unpaid on this Note shall become, or may be declared to be, immediately
due and payable, all as provided in the Credit Agreement.


 


Except
as otherwise provided in the Credit Agreement, all parties now and hereafter
liable with respect to this Note, whether maker, principal, surety, guarantor,
endorser or otherwise, hereby waive presentment, demand, protest and all other
notices of any kind.


 


Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.


 


THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


	
   

  	
  KINETIC
  CONCEPTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 

















 


Schedule A

to Tranche B Term Note


 


LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS


 


	
  Date

  	
   

  	
  Amount of
  Base

  Rate Loans

  	
   

  	
  Amount
  Converted to

  Base Rate Loans

  	
   

  	
  Amount of
  Principal of

  Base Rate Loans

  Repaid

  	
   

  	
  Amount of
  Base Rate

  Loans Converted to

  Eurodollar Loans

  	
   

  	
  Unpaid
  Principal

  Balance of Base Rate

  Loans

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


Schedule B

to Tranche B Term Note


 


LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS


 


	
  Date

  	
   

  	
  Amount of

  Eurodollar Loans

  	
   

  	
  Amount

  Converted  to

  Eurodollar Loans

  	
   

  	
  Interest
  Period and

  Eurodollar Rate

  with Respect

  Thereto

  	
   

  	
  Amount of

  Principal of

  Eurodollar Loans

  Repaid

  	
   

  	
  Amount of

  Eurodollar Loans

  Converted to Base

  Rate Loans

  	
   

  	
  Unpaid
  Principal

  Balance of

  Eurodollar Loans

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT C-3 TO CREDIT AGREEMENT


FORM OF SWING LINE NOTE


 


[FORM OF SWING LINE NOTE]


 


SWING LINE NOTE


 


	
   

  	
   

  	
  New York, New York

  	
   

  
	
  [$10,000,000.00]

  	
   

  	
                             ,
  2003

  	
   

  



 


 


FOR
VALUE RECEIVED, the undersigned, KINETIC CONCEPTS, INC., a Texas corporation
(the “Company”), hereby unconditionally promises to pay to the order of
Morgan Stanley Senior Funding, Inc. (the “Swing Line Lender”), at the
office of Morgan Stanley Senior Funding, Inc. located at 750 Seventh Avenue, 11th
Floor, New York, New York 10020 (or such other address as shall be specified
from time to time by the Administrative Agent), in lawful money of the United
States of America and in immediately available funds on the Revolving Credit
Termination Date (or such earlier date on which the Swing Line Loans become due
and payable pursuant to Section 9 of the Credit Agreement (as hereinafter
defined)) the principal amount of [TEN] MILLION DOLLARS ([$10,000,000.00]) or,
if less, the aggregate unpaid principal amount of the Swing Line Loans of the
Swing Line Lender made to the Company pursuant to subsection 2.13 of the Credit
Agreement (as hereinafter defined).  The
Company further agrees to pay interest in like money at said office on the
unpaid principal amount of Swing Line Loans from time to time outstanding at
the rates and on the dates specified in subsection 4.6 of the Credit Agreement.


 


The
holder of this Note is authorized to endorse on the schedule annexed hereto and
made a part hereof or on a continuation thereof which shall be attached hereto
and made a part hereof the date and amount of each Swing Line Loan of the Swing
Line Lender and the date and amount of each payment or prepayment of principal
thereof.  Each such endorsement shall
constitute prima facie evidence
of the accuracy of the information endorsed. 
The failure to make any such endorsement (or any error therein) shall
not affect the obligations of the Company in respect of any Swing Line Loan.


 


This
Note (a) is the Swing Line Note referred to in the Credit Agreement, dated as
of August 11, 2003 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Company, the Swing Line Lender, the several other banks and financial
institutions from time to time parties thereto (together with the Swing Line
Lender, the “Lenders”), Morgan Stanley Senior Funding, Inc., as
Administrative Agent, Morgan Stanley & Co. Incorporated, as Collateral
Agent, Credit Suisse First Boston, as Syndication Agent, Wells Fargo Bank,
National Association, as Issuing Bank and JPMorgan Chase Bank, Wells Fargo
Bank, National Association and The Bank of Nova Scotia, as Documentation
Agents, (b) is subject to the provisions of the Credit Agreement and (c) is
subject to optional and mandatory prepayment in whole or in part as provided in
the Credit Agreement.  This Note is
secured and guaranteed as provided in the Loan Documents.  Reference is hereby made to the Loan
Documents for a description of the properties and assets in which a security


 

















 


interest has been granted, the
nature and extent of the security and the guarantees, the terms and conditions
upon which the security interests and guarantees were granted and the rights of
the holder of this Note in respect thereof.


 


Upon
the occurrence of any one or more of the Events of Default, all amounts then
remaining unpaid on this Note shall become, or may be declared to be,
immediately due and payable, all as provided in the Credit Agreement.


 


Except
as otherwise provided in the Credit Agreement, all parties now and hereafter
liable with respect to this Note, whether maker, principal, surety, guarantor,
endorser or otherwise, hereby waive presentment, demand, protest and all other
notices of any kind.


 


Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.


 


THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.


 


	
   

  	
  KINETIC
  CONCEPTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
				



 

















 


Schedule


to Swing Line Note


 


LOANS AND REPAYMENTS


 


	
  Date

  	
   

  	
  Amount of
  Swing Line

  Loans Made

  	
   

  	
  Amount of
  Swing Line

  Loans Repaid

  	
   

  	
  Unpaid
  Principal Balance

  of Swing Line Loans

  	
   

  	
  Notation
  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT D TO CREDIT AGREEMENT


FORM OF CLOSING CERTIFICATE


 


[FORM OF CLOSING CERTIFICATE OF THE COMPANY]


 


CLOSING CERTIFICATE OF THE COMPANY


 


Pursuant
to subsection 6.1 of the Credit Agreement, dated as of August 11, 2003 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”),
among Kinetic Concepts, Inc., a Texas corporation (“KCI”), the several banks and other financial institutions from
time to time parties thereto, Morgan Stanley Senior Funding, Inc., as
Administrative Agent, Morgan Stanley & Co. Incorporated, as Collateral
Agent, Credit Suisse First Boston, as Syndication Agent, Wells Fargo Bank,
National Association, as Issuing Bank, and JPMorgan Chase Bank, Wells Fargo
Bank, National Association and The Bank of Nova Scotia, as Documentation
Agents, the undersigned hereby certifies that he is the duly elected and acting
Chief Financial Officer of KCI, and that as such he is authorized to execute
and deliver this Closing Certificate on behalf of KCI.  Unless otherwise defined herein, capitalized
terms that are defined in the Credit Agreement and used herein are so used as
so defined.


 


The
undersigned further certifies, on behalf of KCI, to the best of his or her
knowledge as follows:


 


Closing Date Items:


 


1.                                       The representations and warranties of KCI set
forth in the Credit Agreement and each of the other Loan Documents to which it
is a party or that are contained in any certificate, document or financial or
other statement furnished pursuant to or in connection with the Credit
Agreement or any other Loan Document are true and correct in all material respects
on and as of the date hereof with the same effect as if made on the date
hereof, except for representations and warranties expressly stated to relate to
a specific earlier date, in which case such representations and warranties are
true and correct in all material respects as of each earlier date;


 


2.                                       No Default or Event of Default has occurred
and is continuing as of the date hereof or will occur after giving effect to
the making of the extensions of credit requested to be made on the date hereof
or the consummation on the date hereof of each of the transactions contemplated
by the Loan Documents;


 


3.                                       Since December 31, 2002, there has been no
development or event which has had or could reasonably be expected to have a
Material Adverse Effect;


 


4.                                       There are no liquidation or dissolution
proceedings pending or to my knowledge threatened against KCI, nor has any
other event occurred affecting or threatening the corporate existence of KCI;


 

















 


5.                                       No governmental or third party consents or
approvals are required that have not been obtained (other than any governmental
or third party consents or approvals the absence of which could not reasonably
be expected to have a Material Adverse Effect);


 


Senior Subordinated Notes:


 


6.                                       Attached hereto as Exhibit A is a true
and correct copy of each of the Purchase Agreement, the Registration Rights
Agreement, and the Senior Subordinated Note Indenture;


 


7.                                       KCI has received at least $150,000,000 in Net
Cash Proceeds from the sale of the Senior Subordinated Notes;


 


LTM EBITDA, Leverage:


 


8.                                       EBITDA for the 12-month period ending as of
June 30, 2003, on a pro forma basis, is not less than $165 million; and


 


9.                                       The Leverage Ratio, on a pro forma basis
after giving effect to the Transactions, is not greater than 4.1:1.0.


 


*  *  *


 


2

















 


IN
WITNESS WHEREOF, KCI has caused this Closing Certificate to be executed this
        day of August, 2003.


 


	
   

  	
  KINETIC
  CONCEPTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  



 

















 


EXHIBIT A


 


Senior Subordinated Note Indenture Documents


 


 


[attached]


 

















 


EXHIBIT E-1 TO CREDIT AGREEMENT


FORM OF LEGAL OPINION OF 

SKADDEN, ARPS, SLATE, MEAGHER AND FLOM LLP


 


To
be delivered separately.


 

















 


EXHIBIT E-2 TO CREDIT AGREEMENT


FORM OF LEGAL OPINION OF 

COX & SMITH INCORPORATED


 


To
be delivered separately.


 

















 


EXHIBIT F TO CREDIT AGREEMENT


FORM OF SWING LINE LOAN PARTICIPATION CERTIFICATE


 


[FORM OF SWING LINE LOAN PARTICIPATION CERTIFICATE]


 


SWING LINE LOAN PARTICIPATION CERTIFICATE


 


                             ,
200    


[Name
of Lender]


                                       


                                       


 


Dear
Sirs:


 


Pursuant
to subsection 2.15(c) of the Credit Agreement, dated as of August 11, 2003 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”; terms defined in the Credit Agreement and not otherwise
defined herein are used herein as defined in the Credit Agreement), among
Kinetic Concepts, Inc., the several banks and other financial institutions from
time to time parties thereto, Morgan Stanley Senior Funding, Inc., as
Administrative Agent, Morgan Stanley & Co. Incorporated, as Collateral
Agent, Credit Suisse First Boston, as Syndication Agent, Wells Fargo Bank,
National Association, as Issuing Bank and JPMorgan Chase Bank, Wells Fargo
Bank, National Association and The Bank of Nova Scotia, as Documentation
Agents, the undersigned hereby acknowledges receipt from you on the date hereof
of
                                  DOLLARS
($
                           )
as payment for a participating interest in the following Swing Line Loan:


 


 


	
  Date
  of Swing Line Loan:

  	
   

  
	
   

  
	
  Principal
  Amount of Swing Line Loan:

  	
   

  
			



 


	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  MORGAN
  STANLEY

  
	
   

  	
  SENIOR
  FUNDING INC.,

  
	
   

  	
  as
  Swing Line Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 

















 


EXHIBIT G TO CREDIT AGREEMENT


FORM OF EXEMPTION CERTIFICATE


 


[FORM OF EXEMPTION CERTIFICATE]


 


EXEMPTION CERTIFICATE


 


Reference
is made to the Credit Agreement, dated as of August 11, 2003 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among Kinetic Concepts, Inc., the several banks and other
financial institutions from time to time parties thereto, Morgan Stanley Senior
Funding, Inc., as Administrative Agent, Morgan Stanley & Co. Incorporated,
as Collateral Agent, Credit Suisse First Boston, as Syndication Agent, Wells
Fargo Bank, National Association, as Issuing Bank and JPMorgan Chase Bank,
Wells Fargo Bank, National Association and The Bank of Nova Scotia, as
Documentation Agents.  Unless otherwise
defined herein, terms defined in the Credit Agreement and used herein shall
have the meanings given to them in the Credit Agreement. 
                
(the “Non-U.S. Lender”) is providing this certificate pursuant to
subsection 4.12(b)(i) of the Credit Agreement. 
The Non-U.S. Lender hereby represents and warrants that:


 


1.                                       The Non-U.S. Lender is the sole record and
beneficial owner of the Loans in respect of which it is providing this
certificate.


 


2.                                       The Non-U.S. Lender is not a “bank” for
purposes of Section 881(c)(3)(A) of the Code. 
In this regard, the Non-U.S. Lender further represents and warrants
that:


 


(a)                                  The Non-U.S. Lender is not subject to
regulatory or other legal requirements as a bank in any jurisdiction; and


 


(b)                                 the Non-U.S. Lender has not been treated as a
bank for purposes of any tax, securities law, or other filing or submission
made to any Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other legal
requirements.


 


3.                                       The Non-U.S. Lender is not a 10% shareholder
of the Company within the meaning of Section 881(c)(3)(B) of the Code.


 


4.               The Non-U.S. Lender is not a controlled
foreign corporation receiving interest from a related person within the meaning
of Section 881(c)(3)(C) of the Code.


 


IN WITNESS WHEREOF, the
undersigned has duly executed this certificate.


 


	
   

  	
  [NAME
  OF NON-U.S. LENDER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
  Date:

  



 

















 


EXHIBIT H TO CREDIT AGREEMENT


FORM OF NOTICE OF BORROWING


 


[FORM OF NOTICE OF BORROWING]


 


NOTICE OF BORROWING


 


Morgan
Stanley Senior Funding, Inc.,

as Administrative Agent

under the Credit Agreement

referred to below


 


                                       


                                       


	
   

  	
   

  	
  [Date]

  



 


Attention:                          


 


Ladies
and Gentlemen:


 


The
undersigned, Kinetic Concepts Inc., refers to the Credit Agreement dated as of
August 11, 2003 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the “Credit Agreement”; the terms defined therein
being used herein as therein defined), among the undersigned, the Lenders party
thereto, Morgan Stanley Senior Funding, Inc., as Administrative Agent for the
Lenders, Morgan Stanley & Co. Incorporated, as Collateral Agent, Credit
Suisse First Boston, as Syndication Agent, Wells Fargo Bank, National
Association, as Issuing Bank and JPMorgan Chase Bank, Wells Fargo Bank,
National Association and The Bank of Nova Scotia, as Documentation Agents, and
hereby gives you notice, irrevocably, pursuant to Section [2.2 or 3.2] of the
Credit Agreement that the undersigned hereby requests a borrowing under the
Credit Agreement, and in that connection sets forth below the information
relating to such borrowing (the “Proposed Borrowing”) as required by Section
[2.2 or 3.2] of the Credit Agreement:


 


(i)                                     The Business Day of the Proposed Borrowing is
                     
    ,       .


 


(ii)                                  The Proposed Borrowing that is requested is a
[Tranche B Term Loan or a Revolving Loan].


 


(iii)                               The Type of Loan comprising the Proposed Borrowing is [Base Rate Loan]
[Eurodollar Rate Loan].


 


(iv)                              The aggregate amount of the Proposed Borrowing is
$                  .


 


(v)                                 [The initial Interest Period for each
Eurodollar Loan made as part of the Proposed Borrowing is
                   
month[s].]


 

















 


The
undersigned hereby certifies that the following statements are true on the date
hereof, and will be true on the date of the Proposed Borrowing:


 


(A)                              The representations and warranties contained in each Loan Document are
correct in all material respects on and as of the date of the Proposed
Borrowing, before and after giving effect to the Proposed Borrowing and to the
application of the proceeds therefrom, as though made on and as of such date [,
other than any such representations or warranties that, by their terms, refer
to a specific date other than the date of the Proposed Borrowing, in which
case, as of such specific date].


 


(B)                                No Default has occurred and is continuing, or would result from such
Proposed Borrowing or from the application of the proceeds therefrom.


 


Delivery
of an executed counterpart of this Notice of Borrowing by telecopier shall be
effective as delivery of an original executed counterpart of this Notice of
Borrowing.


 


 


	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME
  OF BORROWER]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
  Title: