Document:

Exhibit
10.1

 

CUSIP Number: Deal
# 23325UAD5

Revolving Loans
CUSIP # 23325UAE3

Tranche B Term
Loans CUSIP # 23325UAF0

 

 

 

 

CREDIT AGREEMENT

 

among

 

DJ ORTHOPEDICS,
LLC

and

CERTAIN OF ITS
FOREIGN SUBSIDIARIES PARTY HERETO FROM TIME TO TIME,

as Borrowers,

 

DJ ORTHOPEDICS,
INC.,

 

THE LENDERS NAMED
HEREIN,

 

WACHOVIA BANK,
NATIONAL ASSOCIATION,

as Administrative
Agent,

 

BANK OF THE WEST

and

WELLS FARGO BANK,
NATIONAL ASSOCIATION,

as Syndication
Agents,

 

and

 

UNION BANK OF
CALIFORNIA, N.A.,

as Documentation
Agent

 

 

$400,000,000
Senior Secured Credit Facilities

 

 

WACHOVIA CAPITAL
MARKETS, LLC

Sole Book Runner
and Sole Lead Arranger

 

 

Dated as of April 7,
2006

 

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE
  I

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Defined Terms

  	
  1

  
	
  1.2

  	
  Accounting Terms

  	
  34

  
	
  1.3

  	
  Types of Borrowings

  	
  34

  
	
  1.4

  	
  Other Terms; Construction

  	
  35

  
	
  1.5

  	
  Exchange Rates; Currency Equivalents

  	
  35

  
	
  1.6

  	
  Redenomination of Certain Foreign Currencies and
  Computation of Dollar Amounts

  	
  35

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE II

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AMOUNT AND TERMS OF THE LOANS

  	
   

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Commitments

  	
  36

  
	
  2.2

  	
  Borrowings

  	
  37

  
	
  2.3

  	
  Disbursements; Funding Reliance; Domicile of Loans

  	
  41

  
	
  2.4

  	
  Evidence of Debt; Notes

  	
  42

  
	
  2.5

  	
  Termination and Reduction of Commitments and
  Swingline Commitment

  	
  43

  
	
  2.6

  	
  Mandatory Payments and Prepayments

  	
  44

  
	
  2.7

  	
  Voluntary Prepayments

  	
  48

  
	
  2.8

  	
  Interest

  	
  49

  
	
  2.9

  	
  Fees

  	
  50

  
	
  2.10

  	
  Interest Periods

  	
  51

  
	
  2.11

  	
  Conversions and Continuations

  	
  52

  
	
  2.12

  	
  Method of Payments; Computations

  	
  54

  
	
  2.13

  	
  Recovery of Payments

  	
  55

  
	
  2.14

  	
  Use of Proceeds

  	
  56

  
	
  2.15

  	
  Pro Rata Treatment

  	
  56

  
	
  2.16

  	
  Increased Costs; Change in Circumstances;
  Illegality; etc.

  	
  57

  
	
  2.17

  	
  Taxes

  	
  59

  
	
  2.18

  	
  Compensation

  	
  61

  
	
  2.19

  	
  Replacement of Lenders; Mitigation of Costs

  	
  62

  
	
  2.20

  	
  Increase in Revolving Credit Commitments

  	
  63

  
	
  2.21

  	
  Incremental Term Loans

  	
  66

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Issuance

  	
  69

  
	
  3.2

  	
  Notices

  	
  70

  
	
  3.3

  	
  Participations

  	
  70

  

 

i

 

	
  3.4

  	
  Reimbursement

  	
  71

  
	
  3.5

  	
  Payment by Revolving Loans

  	
  72

  
	
  3.6

  	
  Payment to Revolving Credit Lenders

  	
  72

  
	
  3.7

  	
  Obligations Absolute

  	
  73

  
	
  3.8

  	
  Cash Collateral Account

  	
  74

  
	
  3.9

  	
  Effectiveness

  	
  75

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IV

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CONDITIONS OF BORROWING

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Conditions of Initial Borrowing

  	
  75

  
	
  4.2

  	
  Conditions of All Borrowings

  	
  80

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE V

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Corporate Organization and Power

  	
  81

  
	
  5.2

  	
  Authorization; Enforceability

  	
  81

  
	
  5.3

  	
  No Violation

  	
  81

  
	
  5.4

  	
  Governmental and Third-Party Authorization; Permits

  	
  82

  
	
  5.5

  	
  Litigation

  	
  82

  
	
  5.6

  	
  Taxes

  	
  82

  
	
  5.7

  	
  Subsidiaries

  	
  83

  
	
  5.8

  	
  Full Disclosure

  	
  83

  
	
  5.9

  	
  Margin Regulations

  	
  83

  
	
  5.10

  	
  No Material Adverse Effect

  	
  84

  
	
  5.11

  	
  Financial Matters

  	
  84

  
	
  5.12

  	
  Ownership of Properties

  	
  86

  
	
  5.13

  	
  ERISA; Foreign Plans

  	
  86

  
	
  5.14

  	
  Environmental Matters

  	
  87

  
	
  5.15

  	
  Compliance with Laws

  	
  88

  
	
  5.16

  	
  Intellectual Property

  	
  88

  
	
  5.17

  	
  Regulated Industries

  	
  88

  
	
  5.18

  	
  Insurance

  	
  88

  
	
  5.19

  	
  Material Contracts

  	
  88

  
	
  5.20

  	
  Deposit Accounts

  	
  89

  
	
  5.21

  	
  Security Documents

  	
  89

  
	
  5.22

  	
  Labor Relations

  	
  89

  
	
  5.23

  	
  No Burdensome Restrictions

  	
  90

  
	
  5.24

  	
  OFAC; Anti-Terrorism Laws

  	
  90

  
	
  5.25

  	
  Aircast Acquisition

  	
  90

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VI

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Financial Statements

  	
  91

  
	
  6.2

  	
  Other Business and Financial Information

  	
  91

  

 

ii

 

	
  6.3

  	
  Existence; Franchises; Maintenance of Properties

  	
  94

  
	
  6.4

  	
  Compliance with Laws

  	
  94

  
	
  6.5

  	
  Payment of Obligations

  	
  94

  
	
  6.6

  	
  Insurance

  	
  94

  
	
  6.7

  	
  Maintenance of Books and Records; Inspection

  	
  95

  
	
  6.8

  	
  [Reserved.]

  	
  95

  
	
  6.9

  	
  Permitted Acquisitions

  	
  95

  
	
  6.10

  	
  Creation or Acquisition of Subsidiaries

  	
  96

  
	
  6.11

  	
  Additional Security

  	
  98

  
	
  6.12

  	
  Environmental Laws

  	
  98

  
	
  6.13

  	
  OFAC, PATRIOT Act Compliance

  	
  99

  
	
  6.14

  	
  Further Assurances

  	
  99

  
	
  6.15

  	
  Post-Closing Matters

  	
  99

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FINANCIAL COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Total Leverage Ratio

  	
  100

  
	
  7.2

  	
  Fixed Charge Ratio

  	
  100

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Merger; Consolidation

  	
  101

  
	
  8.2

  	
  Indebtedness

  	
  102

  
	
  8.3

  	
  Liens

  	
  104

  
	
  8.4

  	
  Asset Dispositions

  	
  106

  
	
  8.5

  	
  Investments

  	
  107

  
	
  8.6

  	
  Restricted Payments

  	
  109

  
	
  8.7

  	
  Transactions with Affiliates

  	
  110

  
	
  8.8

  	
  Lines of Business

  	
  111

  
	
  8.9

  	
  Sale-Leaseback Transactions

  	
  111

  
	
  8.10

  	
  Certain Amendments

  	
  111

  
	
  8.11

  	
  Limitation on Certain Restrictions

  	
  112

  
	
  8.12

  	
  No Other Negative Pledges

  	
  112

  
	
  8.13

  	
  Fiscal Year

  	
  113

  
	
  8.14

  	
  Accounting Changes

  	
  113

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Events of Default

  	
  113

  
	
  9.2

  	
  Remedies: Termination of Commitments, Acceleration,
  etc

  	
  115

  
	
  9.3

  	
  Remedies: Set-Off

  	
  116

  

 

iii

 

	
   

  	
  ARTICLE X

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Appointment

  	
  117

  
	
  10.2

  	
  Nature of Duties

  	
  117

  
	
  10.3

  	
  Exculpatory Provisions

  	
  117

  
	
  10.4

  	
  Reliance by Administrative Agent

  	
  118

  
	
  10.5

  	
  Non-Reliance on Administrative Agent and Other
  Lenders

  	
  118

  
	
  10.6

  	
  Notice of Default

  	
  119

  
	
  10.7

  	
  Indemnification

  	
  119

  
	
  10.8

  	
  The Administrative Agent in its Individual Capacity

  	
  120

  
	
  10.9

  	
  Successor Administrative Agent

  	
  120

  
	
  10.10

  	
  Collateral Matters

  	
  121

  
	
  10.11

  	
  Issuing Lender and Swingline Lender

  	
  121

  
	
  10.12

  	
  Other Agents, Managers

  	
  121

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE XI

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Fees and Expenses

  	
  122

  
	
  11.2

  	
  Indemnification

  	
  122

  
	
  11.3

  	
  Governing Law; Consent to Jurisdiction

  	
  123

  
	
  11.4

  	
  Waiver of Jury Trial

  	
  124

  
	
  11.5

  	
  Notices

  	
  124

  
	
  11.6

  	
  Amendments, Waivers, etc

  	
  125

  
	
  11.7

  	
  Assignments, Participations

  	
  127

  
	
  11.8

  	
  No Waiver

  	
  130

  
	
  11.9

  	
  Successors and Assigns

  	
  130

  
	
  11.10

  	
  Survival

  	
  130

  
	
  11.11

  	
  Severability

  	
  130

  
	
  11.12

  	
  Construction

  	
  131

  
	
  11.13

  	
  Confidentiality

  	
  131

  
	
  11.14

  	
  Judgment Currency

  	
  131

  
	
  11.15

  	
  Counterparts; Effectiveness

  	
  132

  
	
  11.16

  	
  Disclosure of Information

  	
  132

  
	
  11.17

  	
  Entire Agreement

  	
  132

  
	
  11.18

  	
  Nature of Liability of Foreign Borrowers

  	
  132

  
	
  11.19

  	
  Addition of Borrowers

  	
  133

  
	
  11.20

  	
  USA Patriot Act Notice

  	
  133

  
	
  11.21

  	
  Acknowledgments

  	
  133

  
	
  11.22

  	
  No Third Party Beneficiaries

  	
  134

  

 

iv

 

	
   

  	
  EXHIBITS

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1

  	
  Form of Term
  Note

  	
   

  
	
  Exhibit A-2

  	
  Form of
  Revolving Note

  	
   

  
	
  Exhibit A-3

  	
  Form of
  Swingline Note

  	
   

  
	
  Exhibit B-1

  	
  Form of Notice
  of Borrowing

  	
   

  
	
  Exhibit B-2

  	
  Form of Notice
  of Swingline Borrowing

  	
   

  
	
  Exhibit B-3

  	
  Form of Notice
  of Conversion/Continuation

  	
   

  
	
  Exhibit B-4

  	
  Form of Letter
  of Credit Notice

  	
   

  
	
  Exhibit C

  	
  Form of
  Compliance Certificate

  	
   

  
	
  Exhibit D

  	
  Form of
  Assignment and Acceptance

  	
   

  
	
  Exhibit E

  	
  Form of Security
  Agreement

  	
   

  
	
  Exhibit F

  	
  Form of Pledge
  Agreement

  	
   

  
	
  Exhibit G

  	
  Form of Guaranty
  Agreement

  	
   

  
	
  Exhibit H

  	
  Form of
  Financial Condition Certificate

  	
   

  
	
  Exhibit I

  	
  Form of Joinder
  Agreement

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SCHEDULES

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1.1

  	
  Revolving Credit
  Commitments and Notice Addresses

  	
   

  
	
  Schedule 3.1

  	
  Existing Letters
  of Credit

  	
   

  
	
  Schedule 5.1

  	
  Jurisdictions of
  Organization

  	
   

  
	
  Schedule 5.4

  	
  Consents and
  Approvals

  	
   

  
	
  Schedule 5.5

  	
  Litigation

  	
   

  
	
  Schedule 5.7

  	
  Subsidiaries

  	
   

  
	
  Schedule 5.11(b)

  	
  Aircast
  Financials Reconciliation

  	
   

  
	
  Schedule 5.12

  	
  Real Property
  Interests

  	
   

  
	
  Schedule 5.14

  	
  Environmental
  Matters

  	
   

  
	
  Schedule 5.16

  	
  Intellectual
  Property

  	
   

  
	
  Schedule 5.18

  	
  Insurance
  Coverage

  	
   

  
	
  Schedule 5.19

  	
  Material
  Contracts

  	
   

  
	
  Schedule 5.20

  	
  Deposit Accounts

  	
   

  
	
  Schedule 8.2

  	
  Indebtedness

  	
   

  
	
  Schedule 8.3

  	
  Liens

  	
   

  
	
  Schedule 8.5

  	
  Investments

  	
   

  
	
  Schedule 8.7

  	
  Transactions
  with Affiliates

  	
   

  
				

 

v

 

CREDIT AGREEMENT

 

THIS
CREDIT AGREEMENT, dated as of the 7th day of April,
2006, is made among DJ ORTHOPEDICS, LLC,
a Delaware limited liability company (the “Company”), each Foreign
Subsidiary that, pursuant to a Joinder Agreement (as hereinafter defined),
becomes a party hereto as a borrower (each, a “Foreign Borrower,” and
together with the Company, the “Borrowers”), DJ
ORTHOPEDICS, INC., a Delaware corporation (the “Parent”), the
Lenders (as hereinafter defined), WACHOVIA BANK, NATIONAL
ASSOCIATION, as Administrative Agent for the Lenders, BANK OF THE WEST and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Syndication Agents for the Lenders, and UNION BANK OF CALIFORNIA, N.A., as Documentation Agent for
the Lenders.

 

BACKGROUND
STATEMENT

 

The Company has requested that the Lenders make
available (i) to the Company, term loan facilities in the aggregate
principal amount of $350,000,000, and (ii) to the Borrowers, a revolving
credit facility in the aggregate principal amount of $50,000,000. The proceeds
of these facilities will be used as provided in Section 2.14.
The Lenders are willing to make available the credit facilities described
herein subject to and on the terms and conditions set forth in this Agreement.

 

AGREEMENT

 

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

 

ARTICLE I

 

DEFINITIONS

 

1.1           Defined
Terms. For purposes of this Agreement, in addition to the terms defined
elsewhere herein, the following terms shall have the meanings set forth below
(such meanings to be equally applicable to the singular and plural forms
thereof):

 

“Account
Designation Letter” shall mean a letter from one or more Borrowers to the
Administrative Agent, duly completed and signed by an Authorized Officer of
each such Borrower and in form and substance reasonably satisfactory to the
Administrative Agent, listing any one or more accounts to which such Borrower
may from time to time request the Administrative Agent to forward the proceeds
of any Loans made hereunder.

 

“Acquisition”
shall mean any transaction or series of related transactions by which the
Company directly, or indirectly through one or more Subsidiaries,
(i) acquires any going business, division thereof or line of business, or
all or substantially all of the assets, of any Person, whether through
purchase of assets, merger or otherwise, or (ii) acquires securities or
other ownership interests of any Person having at least a majority of combined
voting power of the then outstanding securities or other ownership interests of
such Person.

 

 

“Acquisition
Amount” shall mean, with respect to any Acquisition, the sum (without
duplication) of (i) the amount of cash paid as part of the purchase price
thereof by the Company and its Subsidiaries in connection with such
Acquisition, (ii) the value of all Capital Stock of the Parent issued or given
in connection with such Acquisition (as determined by the parties thereto under
the definitive acquisition agreement), (iii) the amount (determined by
using the face amount or the amount payable at maturity, whichever is greater)
of all Indebtedness incurred, assumed or acquired by the Company and its
Subsidiaries in connection with such Acquisition, (iv) all Contingent
Purchase Price GAAP Amounts with respect to such Acquisition, (v) all
amounts paid in respect of covenants not to compete, consulting agreements and
similar arrangements entered into in connection with such Acquisition, and
(vi) the aggregate fair market value of all other real, mixed or personal
property paid as purchase price by the Company and its Subsidiaries in
connection with such Acquisition.

 

“Additional
Revolving Credit Lender” shall have the meaning given to such term in Section 2.20(a).

 

“Additional
Term Lender” shall have the meaning given to such term in Section 2.21(a).

 

“Adjusted
Base Rate” shall mean, at any time with respect to any Base Rate Loan of
any Class, a rate per annum equal to the Base Rate as in effect at such time
plus the Applicable Percentage for Base Rate Loans of such Class as in effect
at such time.

 

“Adjusted
LIBOR Rate” shall mean, at any time with respect to any LIBOR Loan of any
Class, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Percentage for LIBOR Loans of such Class as in effect at such
time.

 

“Administrative
Agent” shall mean Wachovia, in its capacity as Administrative Agent
appointed under Section 10.1, and its
successors and permitted assigns in such capacity.

 

“Affiliate”
shall mean, as to any Person, each other Person that directly, or indirectly
through one or more intermediaries, owns or Controls, is Controlled by or under
common Control with, such Person or is a director or officer of such Person. Notwithstanding
the foregoing, neither the Administrative Agent nor any Lender shall be deemed
an “Affiliate” of any Credit Party.

 

“Aggregate
Revolving Credit Exposure” shall mean, at any time, the sum of (i) the
aggregate principal Dollar Amount (determined as of the most recent Revaluation
Date) of Revolving Loans outstanding at such time, (ii) the aggregate
Letter of Credit Exposure of all Revolving Credit Lenders at such time and
(iii) the aggregate principal amount of Swingline Loans outstanding at
such time.

 

“Agreement”
shall mean this Credit Agreement, as amended, modified, restated or
supplemented from time to time in accordance with its terms.

 

“Aircast”
shall mean Aircast Incorporated, a Delaware corporation.

 

“Aircast
Acquisition” shall mean the acquisition of all of the issued and
outstanding Capital Stock of Aircast by the Company pursuant to the Aircast
Stock Purchase Agreement.

 

2

 

“Aircast
Asset Purchase Agreement” shall mean the Asset Purchase Agreement, dated as
of October 31, 2004, among Old Aircast Inc., Old Aircast LLC and Aircast LLC.

 

“Aircast
Credit Agreements” shall mean, collectively, (i) the First Lien Credit
Agreement, dated as of December 7, 2004, among Aircast Holding, Aircast LLC, the
lenders named therein, and Credit Suisse First Boston, as administrative agent
and collateral agent, and all agreements, instruments and other documents
delivered thereunder or in connection therewith, and (ii) the Second Lien
Credit Agreement, dated as of December 7, 2004, among Aircast Holding, Aircast
LLC, the lenders named therein, and Credit Suisse First Boston, as
administrative agent and collateral agent, and all agreements, instruments and
other documents delivered thereunder or in connection therewith.

 

“Aircast
Holding” shall mean Aircast Holding Company LLC, a Delaware limited
liability company and a direct Wholly Owned Subsidiary of Aircast.

 

“Aircast
LLC” shall mean Aircast LLC, a Delaware limited liability company and a direct
Wholly Owned Subsidiary of Aircast Holding.

 

“Aircast
Material Adverse Effect” shall mean, at any time prior to the consummation
of the Aircast Acquisition on the Closing Date, a material adverse effect on
the business, operations, properties, liabilities or results of operations of
Aircast and its Subsidiaries, taken as a whole; provided, however,
that in no event shall any change or effect resulting from the occurrence,
after the date of the Aircast Stock Purchase Agreement, of any of the following
be considered an Aircast Material Adverse Effect: (a) any change in
general economic or political conditions or changes affecting the industry
generally in which Aircast or any of its Subsidiaries operates; (b) any
natural disaster, any act of terrorism, sabotage, military action or war
(whether or not declared) or any other social or political disruption, in each
case including any escalation or worsening thereof, which does not have a
disproportionate impact on Aircast and its Subsidiaries, taken as a whole, as
compared to the industry generally in which Aircast or any of its Subsidiaries
operates; (c) any adverse change arising from or relating to any change in
accounting requirements applicable to Aircast or any of its Subsidiaries;
(d) any adverse change arising from or relating to any change in laws
described in Section 9.1(b) of the Seller Disclosure Schedule attached to
the Aircast Stock Purchase Agreement; or (e) the announcement of the
Aircast Stock Purchase Agreement or the transactions contemplated by the
Aircast Stock Purchase Agreement, not made in breach of the terms of the
Aircast Stock Purchase Agreement, or other communication by the Company of its
plans or intentions with respect to Aircast or any of its Subsidiaries.

 

“Aircast
Owned Properties” shall mean the real property, together with all
improvements thereon, owned by Aircast LLC and located at 691 Central Avenue,
New Providence, New Jersey and 92 River Road, Summit, New Jersey.

 

“Aircast
Seller Subordinated Notes” shall mean, collectively, (i) the Seller Subordinated
Note, dated as of December 7, 2004, in the original principal amount of
$13,950,128.76, issued by Aircast Holding to Old Aircast Inc., and (ii) the
Seller Subordinated Note, dated as of December 7, 2004, in the original
principal amount of $1,799,871.24, issued by Aircast Holding to Old Aircast
LLC, in each case pursuant to the Aircast Asset Purchase Agreement.

 

3

 

“Aircast
Stock Purchase Agreement” shall mean the Stock Purchase Agreement, dated as
of February 27, 2006, by and among the Company, Tailwind Management LP, as
stockholder representative, and the stockholders of Aircast, as amended, modified,
restated or supplemented from time to time in accordance with the terms of this
Agreement.

 

“Applicable
Currency” shall mean (i) in the case of Term Loans, Dollars,
(ii) in the case of Dollar Revolving Loans, Dollars, (iii) in the
case of any Foreign Currency Revolving Loans, the Foreign Currency in which
such Loans are to be made or maintained, and (iv) in the case of any
Letter of Credit to be denominated in a Foreign Currency, the Foreign Currency
in which such Letter of Credit is to be denominated, as selected pursuant to
the relevant Notice of Borrowing, Notice of Conversion/Continuation or Letter
of Credit Notice.

 

“Applicable
Number of Business Days” shall mean (i) with respect to all notices
and determinations in connection with Foreign Currency Revolving Loans or any
Letter of Credit to be denominated in a Foreign Currency, four (4) Business
Days, and (ii) with respect to all notices and determinations in
connection with Dollar Revolving Loans that are LIBOR Loans or any Letter of
Credit denominated in Dollars, three (3) Business Days.

 

“Applicable
Percentage” shall mean, at any time from and after the Closing Date, the
applicable percentage (i) to be added to the Base Rate for purposes of
determining the Adjusted Base Rate, (ii) to be added to the LIBOR Rate for
purposes of determining the Adjusted LIBOR Rate and (iii) to be used in
calculating the commitment fee payable pursuant to Section 2.9(b),
in each case as determined under the following matrix with reference to the Total
Leverage Ratio in effect at such time (provided that the Applicable
Percentage for Swingline Loans at any time shall be equal to (i) the
Applicable Percentage at such time for Revolving Loans that are Base Rate Loans
minus (ii) the Applicable Percentage at such time for the commitment fee
payable pursuant to Section 2.9(b)
(but in no event shall the Applicable Percentage for Swingline Loans at any
time be less than 0.0%)):

 

	
   

  	
   

  	
   

  	
   

  	
  Revolving Loans and

  Swingline Loans

  	
   

  	
   

  	
   

  
	
  Level

  	
   

  	
  Total Leverage Ratio

  	
   

  	
  Applicable

   LIBOR 

  Margin

  	
   

  	
  Applicable

   Base Rate

  Margin

  	
   

  	
  Applicable

  Commitment

  Fee Percentage

  	
   

  
	
  I

  	
   

  	
  Less than 2.00 to 1.0

  	
   

  	
  1.25

  	
  %

  	
  0.25

  	
  %

  	
  0.25

  	
  %

  
	
  II

  	
   

  	
  Less than 2.75 to 1.0 but greater than or equal to 2.00 to 1.0

  	
   

  	
  1.375

  	
  %

  	
  0.375

  	
  %

  	
  0.25

  	
  %

  
	
  III

  	
   

  	
  Less than 3.50 to 1.0 but greater than or equal to 2.75 to 1.0

  	
   

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  	
  0.375

  	
  %

  
	
  IV

  	
   

  	
  Less than 4.25 to 1.0 but greater than or equal to 3.50 to 1.0

  	
   

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  	
  0.375

  	
  %

  
	
  V

  	
   

  	
  Greater than or equal to 4.25 to 1.0

  	
   

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  	
  0.50

  	
  %

  

 

On
each Adjustment Date (as hereinafter defined), the Applicable Percentage for Revolving
Loans and Swingline Loans and the commitment fee payable pursuant to 

 

4

 

Section 2.9(b)
shall be adjusted effective as of such Adjustment Date (based upon the
calculation of the Total Leverage Ratio as of the last day of the Reference
Period to which such Adjustment Date relates) in accordance with the above
matrix; provided, however, that, notwithstanding the foregoing or
anything else herein to the contrary, if at any time the Company shall have
failed to deliver any of the financial statements as required by Sections 6.1(a) or 6.1(b), as the
case may be, or the Compliance Certificate as required by Section 6.2(a),
then at all times from and including the fifth (5th) Business Day following the
date on which such statements and Compliance Certificate are required to have
been delivered until the date on which the same shall have been delivered, each
Applicable Percentage shall be determined based on Level V above (notwithstanding
the actual Total Leverage Ratio). For purposes of this definition, “Adjustment
Date” shall mean, with respect to any Reference Period of the Company
beginning with the Reference Period ending as of the last day of the first full
fiscal quarter ending after the Closing Date, the day of (or, if such day is
not a Business Day, the next succeeding Business Day) delivery by the Company
in accordance with Section 6.1(a)
or Section 6.1(b), as the case may
be, of (i) financial statements as of the end of and for such Reference
Period and (ii) a duly completed Compliance Certificate with respect to
such Reference Period. From the Closing Date until the first Adjustment Date
requiring a change in any Applicable Percentage as provided herein, each
Applicable Percentage shall be based on Level IV above. The Applicable
Percentages for the Tranche B Term Loans shall be set at all times at 1.50% for
LIBOR Loans and 0.50% for Base Rate Loans and shall not be subject to
adjustment after the Closing Date.

 

“Approved
Fund” shall mean any Fund that is administered or managed by (i) a
Lender, (ii) an Affiliate of a Lender, or (iii) a Person that
administers or manages a Lender or an Affiliate of such Person, or any finance
company, insurance company, investment bank or other financial institution that
temporarily warehouses loans for any of the foregoing.

 

“Arranger”
shall mean Wachovia Capital Markets, LLC and its successors.

 

“Asset
Disposition” shall mean any sale, assignment, lease, conveyance, transfer
or other disposition by the Parent or any of its Subsidiaries (whether in one
or a series of transactions) of all or any of its assets, business or other
properties (including Capital Stock of Subsidiaries), other than pursuant to a
Casualty Event.

 

“Assignee”
shall have the meaning given to such term in Section 11.7(a).

 

“Assignment
and Acceptance” shall mean an Assignment and Acceptance in substantially
the form of Exhibit D.

 

“Authorized
Officer” shall mean, with respect to any action specified herein to be
taken by or on behalf of a Credit Party, any officer of such Credit Party duly
authorized by resolution of its board of directors or other governing body to
take such action on its behalf, and whose signature and incumbency shall have
been certified to the Administrative Agent by the secretary or an assistant
secretary of such Credit Party.

 

“Bankruptcy
Code” shall mean 11 U.S.C. §§ 101 et seq., as amended from time
to time, and any successor statute.

 

5

 

“Base
Rate” shall mean the higher of (i) the per annum interest rate
publicly announced from time to time by Wachovia in Charlotte, North Carolina,
to be its prime rate (which may not necessarily be its lowest or best lending
rate), as adjusted to conform to changes as of the opening of business on the
date of any such change in such prime rate, and (ii) the Federal Funds
Rate plus 0.5% per annum, as adjusted to conform to changes as of the opening
of business on the date of any such change in the Federal Funds Rate.

 

“Base
Rate Loan” shall mean, at any time, any Loan that bears interest at such
time at the applicable Adjusted Base Rate.

 

“Borrowers”
shall have the meaning given to such term in the introductory paragraph hereof.

 

“Borrowing”
shall mean the incurrence by any Borrower (including as a result of conversions
and continuations of outstanding Loans pursuant to Section 2.11)
on a single date of a group of Loans of a single Class and Type and in a single
Applicable Currency (or a Swingline Loan made by the Swingline Lender) and, in
the case of LIBOR Loans, as to which a single Interest Period is in effect.

 

“Borrowing
Date” shall mean, with respect to any Borrowing, the date upon which such
Borrowing is made.

 

“Business
Day” shall mean (i) for all purposes other than as covered by
clause (ii) or (iii) below, any day other than a Saturday or Sunday, a
legal holiday or a day on which commercial banks in Charlotte, North Carolina, New
York, New York or San Diego, California are authorized or required by law to be
closed, (ii) with respect to all notices and determinations in connection
with, and payments in respect of, LIBOR Loans, any day described in
clause (i) above that is also a day on which trading in deposits in the
relevant Applicable Currency is conducted by banks in London, England in the
London interbank market, and (iii) with respect to all notices and
determinations in connection with, and payments in respect of, any Foreign
Currency Revolving Loans and all notices and determinations in respect of any
Letter of Credit denominated in a Foreign Currency, any day described in
clauses (i) and (ii) above that is also (A) in relation to any date
for payment or purchase of a Foreign Currency other than Euro, a day on which
banks are open for general business in the country of issuance of the
Applicable Currency where the relevant disbursement or payment office of the
Administrative Agent or its applicable Correspondent is located or (B) in
relation to any date for payment or purchase of Euro, any day described in clause (A)
above that is also a TARGET Day.

 

“Capital
Expenditures” shall mean, for any period, the aggregate amount (whether
paid in cash or accrued as a liability) that would, in accordance with GAAP, be
included on the consolidated statement of cash flows of the Parent and its
Subsidiaries for such period as additions to equipment, fixed assets, real
property or improvements or other capital assets (including, without
limitation, Capital Lease Obligations); provided, however, that
Capital Expenditures shall not include any such expenditures (i) for
replacements and substitutions for capital assets, to the extent made with the
proceeds of insurance in accordance with Section 2.6(e),
(ii) for replacements and substitutions for capital assets, to the extent
made with proceeds from the sale, exchange or other disposition of assets as
permitted under 

 

6

 

Sections 8.4(ii)
or 8.4(iii), or (iii) included within
the Acquisition Amount of any Permitted Acquisition.

 

“Capital
Lease” shall mean, with respect to any Person, any lease of property
(whether real, personal or mixed) by such Person as lessee that is or is
required to be, in accordance with GAAP, recorded as a capital lease on such
Person’s balance sheet.

 

“Capital
Lease Obligations” shall mean, with respect to any Person, the obligations
of such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as Capital Leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.

 

“Capital
Stock” shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of such
corporation, and (ii) with respect to any Person that is not a corporation,
any and all partnership, membership, limited liability company or other equity
interests of such Person; and in each case, any and all warrants, rights or
options to purchase any of the foregoing.

 

“Cash
Collateral Account” shall have the meaning given to such term in Section 3.8.

 

“Cash
Equivalents” shall mean (i) securities issued or unconditionally
guaranteed or insured by the United States of America or any agency or
instrumentality thereof, backed by the full faith and credit of the United
States of America and maturing within one year from the date of acquisition,
(ii) commercial paper issued by any Person organized under the laws of the
United States of America, maturing within 180 days from the date of acquisition
and, at the time of acquisition, having a rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody’s, (iii) time deposits and certificates of deposit maturing within
180 days from the date of issuance and issued by a bank or trust company organized
under the laws of the United States of America or any state thereof
(y) that has combined capital and surplus of at least $500,000,000 or
(z) that has (or is a subsidiary of a bank holding company that has) a
long-term unsecured debt rating of at least A or the equivalent thereof by
S&P or at least A2 or the equivalent thereof by Moody’s,
(iv) repurchase obligations with a term not exceeding thirty (30) days
with respect to underlying securities of the types described in clause (i)
above entered into with any bank or trust company meeting the qualifications
specified in clause (iii) above, and (v) money market funds at least
ninety-five percent (95%) of the assets of which are continuously invested in
securities of the foregoing types.

 

“Casualty
Event” shall mean, with respect to any property (including any interest in
property) of any Credit Party, any loss of, damage to, or condemnation or other
taking of, such property for which such Credit Party receives insurance
proceeds, proceeds of a condemnation award or other compensation.

 

“Class”
shall have the meaning given to such term in Section 1.3.

 

7

 

“Closing
Date” shall mean the date upon which the initial extensions of credit are
made pursuant to this Agreement, which shall be the date upon which each of the
conditions set forth in Sections 4.1
and 4.2 shall have been satisfied or waived
in accordance with the terms of this Agreement.

 

“Collateral”
shall mean all the assets, property and interests in property that shall from
time to time be pledged or be purported to be pledged as direct or indirect
security for the Obligations pursuant to any one or more of the Security
Documents.

 

“Commitment”
shall mean, with respect to any Lender, such Lender’s Tranche B Term Loan
Commitment, Incremental Term Loan Commitment and/or Revolving Credit
Commitment, as applicable.

 

“Company”
shall have the meaning given to such term in the introductory paragraph hereof.

 

“Compliance
Certificate” shall mean a fully completed and duly executed certificate in
the form of Exhibit C, together with a
Covenant Compliance Worksheet.

 

“Consolidated
Cash Interest Expense” shall mean, for any Reference Period, Consolidated
Interest Expense for such Reference Period to the extent paid (or required to
be paid) in cash, but excluding amounts paid in connection with the closing of
this Agreement or the Terminating Indebtedness and treated as deferred
financing charges (including any amounts recognized by reason of the
acceleration of any accrued deferred financing charges by virtue of the
prepayment of any Indebtedness) under GAAP.

 

“Consolidated
Current Assets” shall mean, as of any date of determination, all assets of
the Parent and its Subsidiaries (other than cash and Cash Equivalents) that
would, in accordance with GAAP, be classified on a consolidated balance sheet
of the Parent and its Subsidiaries as current assets as of such date.

 

“Consolidated
Current Liabilities” shall mean, as of any date of determination, all
liabilities (without duplication) of the Parent and its Subsidiaries that
would, in accordance with GAAP, be classified on a consolidated balance sheet
of the Parent and its Subsidiaries as current liabilities as of such date; provided,
however, that Consolidated Current Liabilities shall not include current
maturities of any long-term Indebtedness.

 

“Consolidated
EBITDA” shall mean, for any Reference Period, the aggregate of
(i) Consolidated Net Income for such Reference Period, plus (ii) the
sum (without duplication) of (A) Consolidated Interest Expense,
(B) federal, state, local and other taxes on or determined by reference to
income, (C) depreciation and amortization, (D) noncash charges
related to Hedge Agreements, (E) noncash expenses resulting from the grant
of stock options to any director, officer or employee of any Credit Party
pursuant to a written plan or agreement, (F) nonrecurring losses, charges
and expenses incurred in connection with (I) the Aircast Acquisition and
the other Transactions (including transaction-related fees and expenses paid in
connection with the Aircast Acquisition, this Agreement and the other Transactions
not to exceed $13,000,000) and (II) Permitted Acquisitions to the extent
such losses, charges and expenses do not exceed $10,000,000 during the term of
this Agreement, (G) with respect solely to the portion of 

 

8

 

Consolidated
EBITDA attributable to Aircast and its Subsidiaries for the fiscal quarter
ended March 31, 2006, up to $2,000,000 in nonrecurring losses, charges,
expenses and other adjustments as reasonably approved by the Administrative
Agent, and (H) other noncash charges (excluding noncash charges relating
to accounts receivable or inventories) in an aggregate amount not to exceed $10,000,000
for any fiscal year, in each case under clauses (A) through (H) above to
the extent taken into account in the calculation of Consolidated Net Income for
such Reference Period and all calculated in accordance with GAAP, minus
(iii) noncash gains related to Hedge Agreements, to the extent taken into
account in the calculation of Consolidated Net Income for such Reference Period
and calculated in accordance with GAAP; provided that if the Company or
any Subsidiary has made any Permitted Acquisition or any Asset Disposition
outside the ordinary course of business permitted by Section 8.4
during the relevant Reference Period for determining Consolidated EBITDA,
Consolidated EBITDA for the relevant Reference Period (1) shall be
calculated after giving pro forma effect thereto, as if such Permitted
Acquisition or Asset Disposition (and any related incurrence, repayment or
assumption of Indebtedness, with any new Indebtedness being deemed to be
amortized over the relevant period in accordance with its terms, and assuming
that any Revolving Loans borrowed in connection with such Permitted Acquisition
are repaid with excess cash balances when available) had occurred on the first
day of such Reference Period, but in the case of a Permitted Acquisition, only so
long as the results of the business being acquired are supported by financial
statements or other financial data reasonably acceptable to the Administrative
Agent, and (2) may include operating expense reductions for such Reference
Period resulting from any Permitted Acquisition that is being given pro forma
effect to the extent that such operating expense reductions (y) would be
permitted pursuant to Article XI of Regulation S-X under the Securities Act or
(z) have been approved by the Required Lenders; and provided further that, notwithstanding
the foregoing provisions of this definition, the portion of Consolidated EBITDA
attributable to Aircast and its Subsidiaries shall be (a) for the fiscal
quarter ended March 31, 2005, $6,100,000; (b) for the fiscal quarter ended
June 30, 2005, $6,100,000; (c) for the fiscal quarter ended September 30,
2005, $6,100,000; and (d) for the fiscal quarter ended December 31, 2005,
$6,100,000.

 

“Consolidated
Fixed Charges” shall mean, for any Reference Period, the aggregate (without
duplication) of the following, all determined on a consolidated basis for the
Parent and its Subsidiaries in accordance with GAAP for such Reference Period:
(a) Consolidated Cash Interest Expense, (b) aggregate cash tax
expense for such Reference Period, (c) cash Capital Expenditures for such
Reference Period, (d) the aggregate (without duplication) of all scheduled
payments of principal on Funded Debt (with respect to the Tranche B Term Loans,
as set forth in Section 2.6(a)) required to
have been made by the Parent and its Subsidiaries during such Reference Period
(whether or not such payments are actually made), including scheduled principal
payments with respect to any Seller Subordinated Indebtedness, (e) the
aggregate of all cash payments made by the Parent and its Subsidiaries during
such period in respect of Contingent Purchase Price Obligations, and
(f) the aggregate of all Restricted Payments made by the Parent or any of
its Subsidiaries (other than Restricted Payments made under Sections 8.6(a)(i), 8.6(a)(ii)
and 8.6(a)(iii)) during such Reference
Period.

 

“Consolidated
Interest Expense” shall mean, for any Reference Period, the sum
(without duplication, and net of interest income) of (i) total interest
expense of the Parent and its Subsidiaries for such Reference Period in respect
of Consolidated Total Funded Debt (including, 

 

9

 

without
limitation, (A) all such interest expense accrued or capitalized during such
Reference Period, whether or not actually paid during such Reference Period),
determined on a consolidated basis in accordance with GAAP and (B) any amounts
recognized during such Reference Period by reason of the acceleration of any
accrued deferred financing charges by virtue of the prepayment of any
Indebtedness), (ii) all net amounts payable under or in respect of Hedge
Agreements, to the extent paid or accrued by the Parent and its Subsidiaries
during such Reference Period, and (iii) all recurring unused commitment
fees and other ongoing fees in respect of Funded Debt (including the unused
fees and letter of credit fees provided for under Section 2.9)
paid, accrued or capitalized by the Parent and its Subsidiaries during such
Reference Period.

 

“Consolidated
Net Income” shall mean, for any Reference Period, net income (or loss) for
the Parent and its Subsidiaries for such Reference Period, determined on a
consolidated basis in accordance with GAAP (excluding extraordinary items and
after deduction for minority interests); provided that, in making such
determination, there shall be excluded (i) the net income of any other
Person that is not a Subsidiary of the Parent (or is accounted for by the
Parent by the equity method of accounting) except to the extent of actual
payment of cash dividends or distributions by such Person to the Parent or any
Subsidiary of the Parent during such period, (ii) the net income (or loss)
of any other Person acquired by, or merged with, the Parent or any of its
Subsidiaries for any period prior to the date of such acquisition, and
(iii) the net income of any Subsidiary of the Parent to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary of such net income is not at the time permitted by operation of the terms
of its charter, certificate of incorporation or formation or other constituent
document or any agreement or instrument (other than a Credit Document) or
Requirement of Law applicable to such Subsidiary.

 

“Consolidated
Total Funded Debt” shall mean, as of any date of determination, the
aggregate (without duplication) of all Funded Debt of the Parent and its
Subsidiaries as of such date, determined on a consolidated basis in accordance
with GAAP.

 

“Consolidated
Working Capital” shall mean, as of any date of determination, Consolidated
Current Assets as of such date minus Consolidated Current Liabilities as of
such date.

 

“Contingent
Purchase Price GAAP Amount” shall mean, at any time, the Contingent
Purchase Price Obligation liability that, in accordance with GAAP, should be
recorded as a liability on the balance sheet, or (without duplication) an
expense on the income statement, of the Parent and its Subsidiaries (excluding
any earnout obligations under the Aircast Asset Purchase Agreement to the
extent that any such earnout obligations, if due and payable at such time, (i) would
be paid through release of Indemnity and Earnout Escrow Funds in accordance
with the Aircast Stock Purchase Agreement or (ii) would be paid by, or recoverable
by the Company from, the Selling Stockholders (as defined in the Aircast Stock
Purchase Agreement); provided that in the case of this clause (ii),
such exclusion shall cease to apply five (5) Business Days after the date upon
which the Selling Stockholders are required to make such payment to the Company
under the terms of the Aircast Stock Purchase Agreement).

 

10

 

“Contingent
Purchase Price Obligations” shall mean any earnout obligations or similar
deferred or contingent purchase price obligations of the Company or any of its
Subsidiaries incurred or created in connection with an Acquisition (excluding any
earnout obligations under the Aircast Asset Purchase Agreement to the extent
paid through release of Indemnity and Earnout Escrow Funds in accordance with
the Aircast Stock Purchase Agreement or recovered by the Company from the
Selling Stockholders (as defined in the Aircast Stock Purchase Agreement)).

 

“Contingent
Purchase Price Reserve Amount” shall mean, with respect to any Contingent
Purchase Price Obligation, as of any date of determination, the maximum amount
payable with respect to such Contingent Purchase Price Obligation on such date
of determination (on a pro forma basis, assuming the consummation of any
Acquisition to be consummated on such date of determination) pursuant to the
acquisition agreement and other documentation evidencing such Contingent
Purchase Price Obligation, assuming the remaining maximum performance standards
related thereto are satisfied; provided that, to the extent that any
portion of a Contingent Purchase Price Obligation becomes a fixed, matured or
earned amount (through satisfaction of performance goals or targets or
otherwise), the Contingent Purchase Price Reserve Amount for such fixed amount
shall be the Contingent Purchase Price GAAP Amount therefor; and provided
further that, to the extent the calculation of the maximum amount
payable with respect to a Contingent Purchase Price Obligation cannot be
determined on the date of such determination, such amount shall be determined
in good faith by the Administrative Agent after consultation with the Company.

 

“Control”
shall mean, with respect to any Person, (i) the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise, or (ii) the beneficial ownership of securities or
other ownership interests of such Person having 15% or more of the combined
voting power of the then outstanding securities or other ownership interests of
such Person ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of directors or other
governing body of such Person; and the terms “Controlled” and “Controlling”
have correlative meanings.

 

“Correspondent”
shall mean Wachovia Bank, National Association, London branch, or any other
financial institution designated by the Administrative Agent to act as its
correspondent hereunder in respect of the disbursement and payment of Foreign
Currency Revolving Loans.

 

“Covenant
Compliance Worksheet” shall mean a fully completed worksheet in the form of
Attachment A to Exhibit C.

 

“Credit
Documents” shall mean this Agreement, the Notes, the Letters of Credit, the
Fee Letter, the Security Agreement, the Pledge Agreement, the Guaranty
Agreement, any Mortgages, any other Security Documents, and all other
agreements, instruments, documents and certificates now or hereafter executed
and delivered to the Administrative Agent or any Lender by or on behalf of an
Borrower or any other Credit Party with respect to this Agreement, in each case
as amended, modified, supplemented or restated from time to time, but
specifically excluding any Hedge Agreement to which any Credit Party and any Hedge
Party are parties.

 

11

 

“Credit
Parties” shall mean the Parent, the Company, the Company’s Subsidiaries,
and their respective successors.

 

“Debt
Issuance” shall mean the issuance or sale by the Parent or any of its
Subsidiaries of any debt securities or other Indebtedness, whether in a public
offering or otherwise, except for any Indebtedness permitted under Section 8.2.

 

“Default”
shall mean any event or condition that, with the passage of time or giving of
notice, or both, would constitute an Event of Default.

 

“Defaulting
Lender” shall mean any Lender that (i) has refused to fund, or
otherwise defaulted in the funding of, its ratable share of any Borrowing
requested and permitted to be made hereunder, including the funding of a
participation interest in Letters of Credit or Swingline Loans in accordance
with the terms hereof, (ii) has failed to pay to the Administrative Agent
or any Lender when due an amount owed by such Lender pursuant to the terms of
this Credit Agreement, unless such amount is subject to a good faith dispute,
or (iii) has been deemed insolvent or has become subject to a bankruptcy
or insolvency proceeding or to a receiver, trustee or similar official, and
such refusal has not been withdrawn or such default has not been cured within
three (3) Business Days.

 

“Disqualified
Capital Stock” shall mean, with respect to any Person, any Capital Stock of
such Person that, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event or otherwise, (i) matures or is mandatorily redeemable or subject to
any mandatory repurchase requirement, pursuant to a sinking fund obligation or
otherwise (other than any required offer to repay or repurchase (x) with
asset sale proceeds pursuant to customary arrangements providing that such
Person may (in lieu of making such offer) repay Indebtedness under this
Agreement or (y) pursuant to “change of control” provisions that are no
more restrictive than the analogous provisions contained in this Agreement), or
(ii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (y) debt securities or (z) any Capital
Stock referred to in (i) or (ii) above, in each case under (i) or (ii) above at
any time on or prior to the 180th day after the Tranche B Term Loan Maturity
Date (or, if later, any Incremental Loan Maturity Date); provided, however,
that only the portion of Capital Stock that so matures or is mandatorily
redeemable or is so convertible or exchangeable on or prior to such date shall
be deemed to be Disqualified Capital Stock.

 

“Documentation
Agent” shall mean Union Bank of California, N.A., in its capacity as such
under Section 10.12, and its successors
and permitted assigns in such capacity.

 

“Dollar
Amount” shall mean (i) with respect to Dollars or an amount
denominated in Dollars, such amount, and (ii) with respect to an amount of
Foreign Currency or an amount denominated in a Foreign Currency, the equivalent
of such amount in Dollars as determined by the Administrative Agent at such
time on the basis of the Spot Rate (determined with respect to the most recent
Revaluation Date) for the purchase of Dollars with such Foreign Currency.

 

“Dollar
LIBOR Loans” shall mean, at any time, each of the LIBOR Loans made in, or
then denominated in, Dollars.

 

12

 

“Dollar
Loans” shall mean, at any time, each of the Loans made in, or then
denominated in, Dollars.

 

“Dollar
Revolving Loans” shall have the meaning given to such term in Section 2.1(b).

 

“Dollars”
or “$” shall mean dollars of the United States of America.

 

“Domestic
Obligations” shall mean all Obligations other than Foreign Obligations.

 

“Domestic
Subsidiary” shall mean any Subsidiary that is not a Foreign Subsidiary.

 

“Eligible
Assignee” shall mean (i) a Lender, (ii) an Affiliate of a Lender,
(iii) an Approved Fund with respect to a Lender, and (iv) any other
Person (other than a natural person) approved by (x) the Administrative
Agent, (y) in the case of any assignment of a Revolving Credit Commitment,
the Issuing Lender, and (z) unless a Default or Event of Default has
occurred and is continuing, the Company (each such approval to be evidenced by
the approving party’s counterexecution of the relevant Assignment and
Acceptance and not to be unreasonably withheld or delayed); provided, however,
that in no event shall the Company or any of its Subsidiaries or Affiliates qualify
as an Eligible Assignee.

 

“EMU”
shall mean Economic and Monetary Union as contemplated in the Treaty on
European Union.

 

“EMU
Legislation” shall mean legislative measures of the European Council
(including without limitation European Council regulations) for the
introduction of, changeover to or operation of a single or unified European
currency (whether known as the Euro or otherwise), being in part the
implementation of the third stage of EMU.

 

“Environmental
Claims” shall mean any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, allegations, notices of
noncompliance or violation, investigations by a Governmental Authority, or
proceedings (including, without limitation, administrative, regulatory and
judicial proceedings) relating in any way to any Hazardous Substance, any
actual or alleged violation of or liability under any Environmental Law or any
permit issued, or any approval given, under any Environmental Law
(collectively, “Claims”), including, without limitation, (i) any
and all Claims by Governmental Authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (ii) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from any Hazardous Substance or arising from
alleged injury or threat of injury to human health or the environment.

 

“Environmental
Laws” shall mean any and all federal, state and local laws, statutes,
ordinances, rules, regulations, permits, licenses, approvals, rules of common
law and orders of courts or Governmental Authorities, relating to the
protection of human health, occupational safety with respect to exposure to
Hazardous Substances, or the environment, now or hereafter in effect, and in
each case as amended from time to time, including, without limitation,
requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, 

 

13

 

disposal,
transportation, handling, reporting, licensing, permitting, investigation or
remediation of Hazardous Substances.

 

“Equity
Issuance” shall mean the issuance, sale or other disposition by any Credit
Party of its Capital Stock, any rights, warrants or options to purchase or
acquire any shares of its Capital Stock or any other security or instrument
representing, convertible into or exchangeable for an equity interest in any
Credit Party; provided, however, that the term Equity Issuance
shall not include (i) the issuance or sale of Capital Stock by any of the
Subsidiaries of the Company to the Company or any other Subsidiary of the
Company, or by the Company to the Parent, if such Capital Stock (excluding the
portion of any Foreign Subsidiary’s Capital Stock not required to be pledged
hereunder) is pledged to the Administrative Agent pursuant to the Pledge
Agreement, (ii) any Capital Stock of the Parent issued or sold in
connection with any Permitted Acquisition and constituting all or a portion of
the applicable purchase price, (iii) the issuance of any Capital Stock of
the Parent, the Net Cash Proceeds of which are used in whole to fund Permitted
Acquisitions or Capital Expenditures, or (iv) the issuance of any Capital
Stock of the Parent, any rights or options for the Parent’s Capital Stock, and
the underlying shares issued upon the exercise thereof, in each case issued,
sold or granted to directors and employees of the Credit Parties pursuant to
employee benefit plans, employment agreements or other employment arrangements
approved by the Board of Directors of the Parent.

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as amended from
time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.

 

“ERISA
Affiliate” shall mean any Person (including any trade or business, whether
or not incorporated) deemed to be under “common control” with, or a
member of the same “controlled group” as, the Company or any of its
Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o) of
the Internal Revenue Code or Section 4001 of ERISA.

 

“ERISA
Event” shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: 
(i) a Reportable Event, (ii) a complete or partial withdrawal
by the Company or any ERISA Affiliate from a Multiemployer Plan that results in
liability under Section 4201 or 4204 of ERISA, or the receipt by the
Company or any ERISA Affiliate of notice from a Multiemployer Plan that it is
in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under Section 4041A of
ERISA, (iii) the distribution by the Company or any ERISA Affiliate under
Section 4041 of ERISA of a notice of intent to terminate any Plan or the
taking of any action to terminate any Plan, (iv) the commencement of
proceedings by the PBGC under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan, or the receipt by
the Company or any ERISA Affiliate of a notice from any Multiemployer Plan that
such action has been taken by the PBGC with respect to such Multiemployer Plan,
(v) the institution of a proceeding by any fiduciary of any Multiemployer
Plan against the Company or any ERISA Affiliate to enforce Section 515 of
ERISA, which is not dismissed within thirty (30) days, (vi) the imposition
upon the Company or any ERISA Affiliate of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of
ERISA, or the imposition or threatened imposition of any Lien upon any assets
of the Company or any ERISA Affiliate as a result of any alleged failure to
comply with the Internal Revenue Code or ERISA in respect of 

 

14

 

any
Plan, (vii) the engaging in or otherwise becoming liable for a nonexempt
Prohibited Transaction by the Company or any ERISA Affiliate, or a violation of
the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Internal Revenue Code
by any fiduciary of any Plan for which the Company or any of its ERISA
Affiliates may be directly or indirectly liable, in each case under this
clause (vii) which has resulted or could reasonably be expected to result
in liability of the Company and its ERISA Affiliates in excess of $500,000,
(viii) the occurrence with respect to any Plan of any “accumulated funding
deficiency” (within the meaning of Section 302 of ERISA and
Section 412 of the Internal Revenue Code), whether or not waived,
(ix) the adoption of an amendment to any Plan that, pursuant to
Section 401(a)(29) of the Internal Revenue Code or Section 307 of
ERISA, would result in the loss of tax-exempt status of the trust of which such
Plan is a part if the Company or an ERISA Affiliate fails to timely provide
security to such Plan in accordance with the provisions of such sections, or
(x) any Foreign Benefit Event.

 

“Euro”
shall mean the single currency of the European Union as constituted by the
Treaty on European Union and as referred to in the legislative measures of the
European Union for the introduction of, changeover to or operation of the Euro
in one or more member states.

 

“Euro
Unit” shall mean the currency unit of the Euro.

 

“Event
of Default” shall have the meaning given to such term in Section 9.1.

 

“Excess
Cash Flow” shall mean, for any fiscal year of the Parent, (a) the sum
of (i) Consolidated EBITDA for such fiscal year (determined by adding back
thereto, but without duplication, any amounts deducted in the calculation of
Consolidated EBITDA for such fiscal year that were paid, incurred or accrued in
violation of any of the provisions of this Agreement), (ii) an amount
equal to any decrease in Consolidated Working Capital from the first day to the
last day of such fiscal year and (iii) to the extent included in the
calculation of Consolidated EBITDA, the amount of any cash or noncash loss
recognized and included in the Net Cash Proceeds of an Asset Disposition which
has been applied as a prepayment of the Loans pursuant to Section 2.6(f),
minus (b) the sum (without duplication) of
(i) Consolidated Interest Expense in respect of Indebtedness permitted
hereunder to the extent paid in cash during such fiscal year,
(ii) aggregate taxes of the Parent and its Subsidiaries to the extent paid
in cash during such fiscal year, (iii) except to the extent financed with
proceeds from the issuance of Indebtedness or equity securities, Capital
Expenditures to the extent permitted hereunder and to the extent paid in cash
during such fiscal year, (iv) scheduled payments of principal on the Term
Loans made during such fiscal year, (v) optional prepayments on the Term
Loans made during such fiscal year, (vi) optional prepayments on the
Revolving Loans made during such fiscal year that are accompanied by a
corresponding permanent reduction in the Revolving Credit Commitments,
(vii) scheduled or mandatory principal payments on Funded Debt (other than
the Loans and Reimbursement Obligations) made during such fiscal year to the
extent permitted under this Agreement (other than in respect of any revolving
credit facility to the extent not accompanied by a corresponding permanent reduction
in the commitments thereunder), (viii) except to the extent financed with
proceeds from the issuance of Indebtedness or equity securities, the amount of
any cash consideration paid during such fiscal year pursuant to Permitted
Acquisitions, (ix) to the extent included in the calculation of
Consolidated EBITDA, the amount of any cash or noncash gain recognized and
included in the Net Cash Proceeds of an Asset Disposition which 

 

15

 

has
been applied as a prepayment of the Loans pursuant to Section 2.6(f),
(x) an amount equal to any increase in Consolidated Working Capital from
the first day to the last day of such fiscal year and (xi) all
nonrecurring cash losses, charges and expenses covered by clause (ii)(F) of the
definition of “Consolidated EBITDA.”  For
purposes of the Excess Cash Flow prepayment (if any) required under Section 2.6(g) with respect to fiscal
year 2006, Excess Cash Flow shall be calculated only for the portion of such
fiscal year beginning on the first day of the first fiscal month commencing
after the Closing Date, and for purposes of all further prepayments under Section 2.6(g), shall be calculated on
a fiscal year basis.

 

“Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended from time
to time, and any successor statute, and all rules and regulations from time to
time promulgated thereunder.

 

“Excluded
Asset Disposition” shall mean (i) any Asset Disposition permitted
under Sections 8.4(i), 8.4(ii), 8.4(iii), 8.4(iv) and 8.4(v) and
(ii) any other Asset Disposition the Net Cash Proceeds from which do not
exceed $250,000 in any single fiscal year.

 

“Existing
Credit Agreement” shall mean the Amended and Restated Credit Agreement,
dated as of May 5, 2005, among the Company, the Parent, the lenders party
thereto, Wachovia, as
administrative agent, the syndication agents named therein and the
documentation agents named therein, as amended.

 

“Existing
Letters of Credit” means, collectively, the letters of credit identified on
Schedule 3.1 and outstanding on
the Closing Date.

 

“Federal
Funds Rate” shall mean, for any period, a fluctuating per annum interest
rate (rounded upwards, if necessary, to the nearest 1/100 of one percentage
point) equal for each day during such period to 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 for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or if such rate is not so published for
any day that is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by the Administrative Agent.

 

“Federal
Reserve Board” shall mean the Board of Governors of the Federal Reserve
System or any successor thereto.

 

“Fee
Letter” shall mean the letter from the Administrative Agent and the
Arranger to the Company, dated February 24, 2006, relating to certain fees
payable by the Company in respect of the transactions contemplated by this
Agreement, as amended, modified, restated or supplemented from time to time.

 

“Financial
Condition Certificate” shall mean a fully completed and duly executed
certificate, in substantially the form of Exhibit H,
together with the attachments thereto.

 

“Financial
Officer” shall mean, with respect to the Parent, the chief financial
officer, vice president - finance, principal accounting officer or treasurer of
the Parent.

 

16

 

“First-Tier
Foreign Subsidiary” shall mean any Foreign Subsidiary that is not a direct
Subsidiary of a Foreign Subsidiary.

 

“fiscal
quarter” or “FQ” shall mean a fiscal quarter of the Parent and its
Subsidiaries.

 

“fiscal
year” or “FY” shall mean a fiscal year of the Parent and its
Subsidiaries.

 

“Fixed
Charge Coverage Ratio” shall mean, as of the last day of any Reference
Period ending on the last day of a fiscal quarter, the ratio of
(i) Consolidated EBITDA for such Reference Period to
(ii) Consolidated Fixed Charges for such Reference Period; provided
that, solely for purposes of calculating the Fixed Charge Coverage Ratio as of
the last day of each of the first four fiscal quarters ending after the Closing
Date, Consolidated Cash Interest Expense shall be determined by multiplying
Consolidated Cash Interest Expense (calculated for the period commencing on the
Closing Date and ending on the last day of the relevant fiscal quarter) by a
fraction, the numerator of which is 365 and the denominator of which is the
actual number of days elapsed from (but not including) the Closing Date to (and
including) the last day of the relevant fiscal quarter.

 

“Foreign
Benefit Event” shall mean, with respect to any Foreign Pension Plan,
(a) the existence of unfunded liabilities that exceed by more than
$1,000,000 in the aggregate the amount permitted under any applicable Requirements
of Law, or in excess of the amount that would be permitted absent a waiver from
a Governmental Authority, (b) the failure to make the required
contributions or payments in an amount in excess of $1,000,000 under any
applicable Requirements of Law, on or before the due date for such
contributions or payments, (c) the receipt of a notice by a Governmental
Authority relating to the intention to terminate any such Foreign Pension Plan
or to appoint a trustee or similar official to administer any such Foreign
Pension Plan, or alleging the insolvency of any such Foreign Pension Plan,
which, in any such event, could reasonably be expected to result in
(i) the incurrence by the Parent or any of its Subsidiaries of a liability
in excess of $1,000,000 or (ii) a Lien, securing a liability in excess of
$1,000,000, on any assets of the Parent or a Subsidiary, (d) the
incurrence of any liability in excess of $1,000,000 by the Parent or any of its
Subsidiaries under applicable Requirements of Law on account of the complete or
partial termination of such Foreign Pension Plan or the complete or partial
withdrawal of any participating employer therein, or (e) the occurrence of
any transaction that is prohibited under any applicable Requirements of Law and
that could reasonably be expected to result in the incurrence of any liability
by the Parent or any of its Subsidiaries, or the imposition on the Parent or
any of its Subsidiaries of any fine, excise tax or penalty resulting from any
noncompliance with any applicable law, in each case in excess of $1,000,000.

 

“Foreign
Borrower” shall have the meaning given to such term in the introductory
paragraph hereof.

 

“Foreign
Currency” shall mean each of Pounds Sterling and Euros.

 

“Foreign
Currency Equivalent” shall mean, with respect to any amount denominated in
Dollars, the equivalent amount thereof in the applicable Foreign Currency as
determined by the 

 

17

 

Administrative
Agent at such time on the basis of the Spot Rate (determined in respect of the
most recent Revaluation Date) for the purchase of such Foreign Currency with
Dollars.

 

“Foreign
Currency Revolving Loan” shall have the meaning given to such term in Section 2.1(c).

 

“Foreign
Currency Subcommitment” shall mean $25,000,000 or, if less, the aggregate
Revolving Credit Commitments at the time of determination, as such amount may
be reduced at or prior to such time pursuant to the terms hereof.

 

“Foreign
Obligations” shall mean all principal of and interest (including, to the
greatest extent permitted by law, post-petition interest) on the Foreign
Currency Revolving Loans and all fees, expenses, indemnities and other
obligations applicable to the Foreign Currency Revolving Loans and owing, due
or payable at any time by any Foreign Borrower to the Administrative Agent, any
Lender or any other Person entitled thereto under this Agreement or any of the
other Credit Documents.

 

“Foreign
Pension Plan” shall mean shall mean any benefit plan maintained under the
laws of any jurisdiction other than the United States of America, any State
thereof or the District of Columbia that under such laws is required to be
funded through a trust or other funding vehicle other than a trust or funding
vehicle maintained exclusively by a Governmental Authority.

 

“Foreign
Subsidiary” shall mean a Subsidiary of the Company that is a “controlled
foreign corporation,” as such term is defined in Section 957 of the
Internal Revenue Code.

 

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

 

“Funded
Debt” shall mean, with respect to any Person, all Indebtedness of such
Person (other than Indebtedness of the types referred to in clauses (iii)
(but only to the extent letters of credit and bankers’ acceptances are not
drawn upon, provided that the portion of aggregate undrawn letters of
credit and bankers’ acceptances in excess of $15,000,000 shall be considered
Funded Debt), (ix) and (x) of the definition of “Indebtedness”) and all
Guaranty Obligations with respect to Funded Debt of other Persons.

 

“GAAP”
shall mean generally accepted accounting principles in the United States of
America, as set forth in the statements, opinions and pronouncements of the
Accounting Principles Board, the American Institute of Certified Public
Accountants and the Financial Accounting Standards Board, consistently applied
and maintained, as in effect from time to time (subject to the provisions of Section 1.2).

 

“Governmental
Authority” shall mean any nation or government, any state or other
political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or Controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

 

18

 

“Guarantors”
shall mean, collectively, the Parent, the Company and the Subsidiary
Guarantors.

 

“Guaranty
Agreement” shall mean a guaranty agreement made by the Guarantors in favor
of the Administrative Agent and the Lenders, in substantially the form of Exhibit G, as amended, modified, restated or
supplemented from time to time.

 

“Guaranty
Obligation” shall mean, with respect to any Person, any direct or indirect
liability of such Person with respect to any Indebtedness, liability or other
obligation (the “primary obligation”) of another Person (the “primary
obligor”), whether or not contingent, (i) to purchase, repurchase or
otherwise acquire such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or provide funds
(x) for the payment or discharge of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor
or otherwise to maintain the net worth or solvency or any balance sheet item,
level of income or financial condition of the primary obligor (including,
without limitation,, keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements), (iii) to lease or 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 in
respect thereof to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such primary
obligation against loss or failure or inability to perform in respect thereof; provided,
however, that, with respect to the Parent and its Subsidiaries, the term
Guaranty Obligation shall not include endorsements for collection or deposit in
the ordinary course of business. The amount of any Guaranty Obligation of any
guaranteeing Person hereunder shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guaranty Obligation is made and (b) the maximum amount
for which such guaranteeing Person may be liable pursuant to the terms of the
instrument embodying such Guaranty 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 Guaranty Obligation
shall be such guaranteeing Person’s maximum reasonably anticipated liability in
respect thereof as determined by such guaranteeing Person in good faith.

 

“Hazardous
Substance” shall mean any substance or material meeting any one or more of
the following criteria:  (i) it is
or contains a substance designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance under any
Environmental Law, (ii) it is toxic, explosive, corrosive, ignitable,
infectious, radioactive, mutagenic or otherwise hazardous to human health or
the environment and are or become regulated by any Governmental Authority,
(iii) its presence may require investigation or response under any
Environmental Law, or (iv) it is or contains, without limiting the
foregoing, asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, petroleum hydrocarbons, petroleum derived substances or wastes,
crude oil, nuclear fuel, natural gas or synthetic gas.

 

“Hedge
Agreement” shall mean any interest or foreign currency rate swap, cap,
collar, option, hedge, forward rate or other similar agreement or arrangement
designed to protect against fluctuations in interest rates or currency exchange
rates.

 

19

 

“Hedge
Party” means any Lender or any Affiliate of any Lender in its capacity as a
counterparty to any Hedge Agreement with any Credit Party, which Hedge
Agreement is required or permitted under this Agreement to be entered into by
any Credit Party, or any former Lender or any Affiliate of any former Lender in
its capacity as a counterparty to any such Hedge Agreement entered into prior
to the date such Person or its Affiliate ceased to be a Lender.

 

“Incremental
Term Lender” shall mean any Lender having an Incremental Term Loan
Commitment with respect to any Series of Incremental Term Loans (or, after the
Incremental Term Loan Commitments with respect to such Series have terminated,
any Lender holding outstanding Incremental Term Loans of such Series).

 

“Incremental
Term Loan” shall have the meaning given to such term in Section 2.21(a).

 

“Incremental
Term Loan Amendment” shall have the meaning given to such term in Section 2.21(c).

 

“Incremental
Term Loan Commitment” shall mean, with respect to any Lender at any time,
the commitment of such Lender to make Incremental Term Loans of a particular
Series in an aggregate principal amount at any time outstanding up to the
amount set forth in the applicable Incremental Term Loan Amendment or, if such
Lender has entered into one or more Assignment and Acceptances, the amount set
forth for such Lender at such time in the Register maintained by the
Administrative Agent pursuant to Section 11.7(b)
as such Lender’s “Incremental Term Loan Commitment” with respect to such
Series, in either case, as such amount may be reduced at or prior to such time
pursuant to the terms hereof.

 

“Incremental
Term Loan Effective Date” shall have the meaning given to such term in Section 2.21(c).

 

“Incremental
Term Loan Maturity Date” shall mean, with respect to any Series of
Incremental Term Loans, the final maturity date thereof as set forth in the
applicable Incremental Term Loan Amendment.

 

“Indebtedness”
shall mean, with respect to any Person (without duplication), (i) all
obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, or
upon which interest payments are customarily made, (iii) the maximum
stated or face amount of all letters of credit and bankers’ acceptances issued
or created for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed), (iv) all obligations of
such Person to pay the deferred purchase price of property or services
(excluding trade payables incurred in the ordinary course of business and not
more than 90 days past due except to the extent the same are being disputed in
good faith, provided that up to $1,000,000 of trade payables of the
Company and its Subsidiaries that are more than 90 days past due may be
excluded from “Indebtedness” hereunder), including any Contingent
Purchase Price GAAP Amounts, (v) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person, (vi) all Capital Lease Obligations of
such Person, (vii) all Disqualified Capital Stock issued by such Person,
with the amount of Indebtedness represented by such Disqualified Capital Stock
being equal to the greater of its voluntary or involuntary 

 

20

 

liquidation
preference and its maximum fixed repurchase price, but excluding accrued
dividends, if any (for purposes hereof, the “maximum fixed repurchase price”
of any Disqualified Capital Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Agreement, and
if such price is based upon, or measured by, the fair market value of such
Disqualified Capital Stock, such fair market value shall be determined
reasonably and in good faith by the board of directors or other governing body
of the issuer of such Disqualified Capital Stock), (viii) the principal
balance outstanding and owing by such Person under any synthetic lease, tax
retention operating lease or similar off-balance sheet financing product,
(ix) all Guaranty Obligations of such Person with respect to Indebtedness
of another Person, (x) the net termination obligations of such Person
under any Hedge Agreements, calculated as of any date as if such agreement or arrangement
were terminated as of such date, and (xi) all indebtedness of the types
referred to in clauses (i) through (x) above (A) of any partnership
or unincorporated joint venture in which such Person is a general partner or
joint venturer to the extent such Person is liable therefor or (B) secured
by any Lien on any property or asset owned or held by such Person regardless of
whether or not the indebtedness secured thereby shall have been incurred or
assumed by such Person or is nonrecourse to the credit of such Person, the
amount thereof being equal to the value of the property or assets subject to
such Lien.

 

“Indemnity
and Earnout Escrow Funds” shall have the meaning given to such term in the
Aircast Stock Purchase Agreement.

 

“Intellectual
Property” shall mean (i) all inventions (whether or not patentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissues,
continuations, continuations-in-part, divisions, revisions, extensions, and
reexaminations thereof, (ii) all trademarks, service marks, trade dress,
logos, trade names, and corporate names, together with all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (iii) all copyrightable works and all copyrights (registered
and unregistered), (iv) all trade secrets and confidential information
(including, without limitation, financial, business and marketing plans and
customer and supplier lists and related information), (v) all computer
software and software systems (including, without limitation, data, databases
and related documentation), (vi) all Internet web sites and domain names,
(vii) all technology, know-how, processes and other proprietary rights,
and (viii) all licenses or other agreements to or from third parties
regarding any of the foregoing.

 

“Interest
Period” shall have the meaning given to such term in Section 2.10.

 

“Internal
Revenue Code” shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, and all rules and regulations from
time to time promulgated thereunder.

 

“Investments”
shall have the meaning given to such term in Section 8.5.

 

“Issuing
Lender” shall mean Wachovia in its capacity as issuer of the Letters of
Credit, and its successors in such capacity.

 

21

 

“Joinder
Agreement” shall mean a Joinder Agreement in substantially the form of Exhibit I and delivered by a Foreign Borrower in accordance
with the provisions of Section 11.19.

 

“Lender”
shall mean each Person signatory hereto as a “Lender” and each other bank or
other institution that becomes a “Lender” hereunder pursuant to Section 11.7, and their respective successors and
assigns.

 

“Lending
Office” shall mean, with respect to any Lender, the office of such Lender
designated as its “Lending Office” on Schedule 1.1
or in connection with an Assignment and Acceptance, or such other office as may
be otherwise designated in writing from time to time by such Lender to the
Company and the Administrative Agent. A Lender may designate separate Lending
Offices as provided in the foregoing sentence for the purposes of making or
maintaining different Types of Loans, and, with respect to LIBOR Loans, such
office may be a domestic or foreign branch or Affiliate of such Lender.

 

“Letter
of Credit Exposure” shall mean, with respect to any Revolving Credit Lender
at any time, such Lender’s ratable share (based on the proportion that its
Revolving Credit Commitment bears to the aggregate Revolving Credit Commitments
at such time) of the sum of (i) the aggregate Stated Amount of all Letters
of Credit outstanding at such time and (ii) the aggregate amount of all
Reimbursement Obligations outstanding at such time.

 

“Letter
of Credit Maturity Date” shall mean the seventh (7th) day prior
to the Revolving Credit Maturity Date.

 

“Letter
of Credit Notice” shall have the meaning given to such term in Section 3.2.

 

“Letter
of Credit Subcommitment” shall mean $10,000,000 or, if less, the aggregate
Revolving Credit Commitments at the time of determination, as such amount may
be reduced at or prior to such time pursuant to the terms hereof.

 

“Letters
of Credit” shall have the meaning given to such term in Section 3.1.

 

“LIBOR
Loan” shall mean, at any time, any Loan that bears interest at such time at
the applicable Adjusted LIBOR Rate.

 

“LIBOR
Rate” shall mean, with respect to each LIBOR Loan comprising part of the
same Borrowing for any Interest Period, an interest rate per annum obtained by
dividing (i) (y) the rate of interest (rounded upward, if necessary,
to the nearest 1/16 of one percentage point) appearing on, in the case of
Dollars, Telerate Page 3750 (or any successor page) and, in the case of a Foreign
Currency, the appropriate Telerate page displaying British Bankers Association
Settlement Rates for deposits in such Foreign Currency (or, in each case, any
successor page or service displaying such rates), or (z) if no such rate
is available, the rate of interest determined by the Administrative Agent to be
the rate or the arithmetic mean of rates (rounded upward, if necessary, to the
nearest 1/16 of one percentage point) at which deposits in Dollars or the
applicable Foreign Currency, as the case may be, in immediately available funds
are offered to first-tier banks in the interbank market where its Eurodollar
and foreign currency and exchange operations in respect of its LIBOR Loans are
then being conducted, in each case under (y) and 

 

22

 

(z)
above at approximately 11:00 a.m., London time, two (2) Business Days prior to
the first day of such Interest Period for a period substantially equal to such
Interest Period and in an amount substantially equal to the amount of Wachovia’s
LIBOR Loan comprising part of such Borrowing, by (ii) the amount equal to
1.00 minus the Reserve Requirement (expressed as a decimal) for such Interest
Period.

 

“Lien”
shall mean any mortgage, pledge, hypothecation, assignment, security interest,
lien (statutory or otherwise), charge or other encumbrance of any nature,
whether voluntary or involuntary, including, without limitation, the interest
of any vendor or lessor under any conditional sale agreement, title retention
agreement, Capital Lease or any other lease or arrangement having substantially
the same effect as any of the foregoing.

 

“Loans”
shall mean any or all of the Term Loans, the Revolving Loans and the Swingline
Loans.

 

“Local
Time” shall mean the local time in effect at the applicable Payment Office.

 

“Margin
Stock” shall have the meaning given to such term in Regulation U.

 

“Material
Adverse Effect” shall mean (i) with reference to any time or period
prior to the consummation of the Aircast Acquisition on the Closing Date, (A) an
Aircast Material Adverse Effect or (B) a Parent Pre-Closing Material
Adverse Effect, and (ii) with reference to any time or period from the
consummation of the Aircast Acquisition on the Closing Date and at all times
thereafter, a material adverse effect upon (A) the condition (financial or
otherwise), operations, business, properties or prospects of the Parent and its
Subsidiaries, taken as a whole, (B) the ability of any Material Credit
Party to perform its obligations under this Agreement or any of the other
Credit Documents to which it is a party or (C) the legality, validity or
enforceability of this Agreement or any of the other Credit Documents or the
rights and remedies of the Administrative Agent and the Lenders hereunder and
thereunder.

 

“Material
Contract” shall have the meaning given to such term in Section 5.19.

 

“Material
Credit Party” shall mean the Parent, the Company, and any Subsidiary which
constitutes at least 5% (10% for any Foreign Subsidiary) of the consolidated
revenues or net income, or the total assets, of the Parent and its Subsidiaries
taken as a whole, as of the end of and for the period of four consecutive
fiscal quarters most recently ended prior to the date of determination.

 

“Material
Foreign Subsidiary” shall mean any Foreign Subsidiary which (together with
its direct and indirect Subsidiaries) constitutes at least 10% of the
consolidated revenues or net income, or the total assets, of the Parent and its
Subsidiaries taken as a whole, as of the end of and for the period of four
consecutive fiscal quarters most recently ended prior to the date of
determination.

 

“Moody’s”
shall mean Moody’s Investors Service, Inc.

 

“Mortgage”
shall mean any mortgage, deed of trust, deed to secure debt, collateral
assignment of lease or similar agreement or instrument pursuant to which any
Credit Party grants 

 

23

 

in
favor of the Administrative Agent, for its benefit and the benefit of the
Lenders, a security interest in and Lien upon any fee or leasehold interest in
real property owned by it, as amended, modified, restated or supplemented from
time to time.

 

“Multiemployer
Plan” shall mean any “multiemployer plan” within the meaning of
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate
makes, is making or is obligated to make contributions.

 

“National
Currency Unit” shall mean a fraction or multiple of one Euro Unit expressed
in units of the former national currency of a Participating Member State.

 

“Net
Cash Proceeds” shall mean, in the case of any Equity Issuance, Debt
Issuance, Casualty Event or Asset Disposition, the aggregate cash proceeds
received by any Credit Party in respect thereof (including, in the case of a
Casualty Event, insurance proceeds and condemnation awards), less
(A) reasonable fees and out-of-pocket expenses payable by the Parent or
any of its Subsidiaries in connection therewith, (B) taxes paid or payable
as a result thereof, (C) in the case of a Casualty Event or an Asset
Disposition, the amount required to retire Indebtedness to the extent such
Indebtedness is secured by Liens on the subject property or is otherwise
subject to mandatory prepayment, (D) in the case of an Asset Disposition,
the amount of any reserves reasonably established in accordance with GAAP in
respect of warranty or indemnification obligations relating to the assets sold,
and (E) in the case of an Asset Disposition, the amount of any liabilities
directly relating to the assets sold that are not assumed by the purchaser
thereof; it being understood that the term “Net Cash Proceeds” shall
include, as and when received, any cash received upon the sale or other
disposition of any non-cash consideration received by any Credit Party in
respect of any of the foregoing events.

 

“Non-U.S.
Lender” shall have the meaning given to such term in Section 2.17(d).

 

“Notes”
shall mean any or all of the Term Notes, the Revolving Notes and the Swingline
Note.

 

“Notice
of Borrowing” shall have the meaning given to such term in Section 2.2(b).

 

“Notice
of Conversion/Continuation” shall have the meaning given to such term in Section 2.11(b).

 

“Notice
of Swingline Borrowing” shall have the meaning given to such term in Section 2.2(d).

 

“Obligations”
shall mean all principal of and interest (including, to the greatest extent
permitted by law, post-petition interest) on the Loans and Reimbursement
Obligations and all fees, expenses, indemnities and other obligations owing,
due or payable at any time by the Parent, the Company, any other Borrower or
any Subsidiary Guarantor to the Administrative Agent, any Lender, the Swingline
Lender, the Issuing Lender or any other Person entitled thereto, under this
Agreement or any of the other Credit Documents, and all payment and other
obligations owing or payable at any time by any Credit Party to any Hedge Party
under or in connection with any Hedge Agreement (which Hedge Agreement is
required or permitted by this Agreement), in each case whether direct or
indirect, joint or several, absolute or contingent, 

 

24

 

matured
or unmatured, liquidated or unliquidated, secured or unsecured, and whether
existing by contract, operation of law or otherwise.

 

“OFAC”
means the U.S. Department of the Treasury’s Office of Foreign Assets Control,
and any successor thereto.

 

“Old
Aircast Inc.” shall mean ANKL, Inc. (formerly Aircast Incorporated), a New
Jersey corporation.

 

“Old
Aircast LLC” shall mean ANKL International Sales, L.L.C. (formerly Aircast
International Sales, L.L.C.), a New Jersey limited liability company.

 

“Parent”
shall have the meaning given to such term in the introductory paragraph hereof.

 

“Parent
Pre-Closing Material Adverse Effect” shall mean, at any time prior to the
consummation of the Aircast Acquisition on the Closing Date, a material adverse
effect on the business, operations, properties, liabilities or results of
operations of the Parent and its Subsidiaries, taken as a whole.

 

“Participant”
shall have the meaning given to such term in Section 11.7(d).

 

“Participating
Member State” shall mean each country so described in any EMU Legislation.

 

“PATRIOT
Act” shall mean the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT Act
of 2001), as amended from time to time, and any successor statute, and all
rules and regulations from time to time promulgated thereunder.

 

“Payment
Office” shall mean, with respect to the Administrative Agent, (i) for
all purposes other than as specified in clause (ii) below, the office of
the Administrative Agent designated as its “Payment Office for Dollar Loans”
on Schedule 1.1, and (ii) in the
case of Foreign Currency Revolving Loans, the office of the Correspondent; or
in each case, such other office as the Administrative Agent may designate to
the Lenders and the Borrowers for such purpose from time to time.

 

“PBGC”
shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA, and any successor thereto.

 

“Permitted
Acquisition” shall mean (A) any Acquisition consummated after the
Closing Date to which the Required Lenders (or the Administrative Agent on
their behalf) shall have given their prior written consent (which consent may
be in their sole discretion and may be given subject to such additional terms
and conditions as the Required Lenders shall establish) and with respect to
which all of the conditions and requirements set forth in this definition and
in Sections 6.9 and 6.10, and in or pursuant to any such consent, have been
satisfied or waived in writing by the Required Lenders (or the Administrative
Agent on their behalf), or (B) any other Acquisition consummated after the
Closing Date with respect to which all of the following conditions are
satisfied:

 

25

 

(i)            each
business acquired shall be within the permitted lines of business described in Section 8.8;

 

(ii)           any
Capital Stock given as consideration in connection therewith shall be Capital
Stock of the Parent;

 

(iii)          in
the case of an Acquisition involving the acquisition of control of Capital
Stock of any Person, immediately after giving effect to such Acquisition, such
Person (or the surviving Person, if the Acquisition is effected through a
merger or consolidation) shall be a Subsidiary of the Company;

 

(iv)          the
Person to be acquired (or its board of directors or equivalent governing body)
has not (y) announced it will oppose such Acquisition or
(z) commenced any action which alleges that such Acquisition violates, or
will violate, any Requirement of Law;

 

(v)           no
Default or Event of Default shall have occurred and be continuing at the time
of the consummation of such Permitted Acquisition or would exist immediately
after giving effect thereto;

 

(vi)          so
long as the Acquisition Amount with respect thereto is greater than $15,000,000,
the Person or business acquired shall have a positive EBITDA, determined on a
pro forma basis for the period of twelve fiscal months most recently ended as
if such Permitted Acquisition had been consummated on the first day of such
period and calculated in the same manner as Consolidated EBITDA is calculated
for the Company and its Subsidiaries (which determination by the Company,
together with supporting financial statements of the acquired Person or
business and a schedule of adjustments, shall be delivered to the Lenders);

 

(vii)         after
giving effect to such Permitted Acquisition, the Company shall be in compliance
with the financial covenants contained in Article VII,
such compliance determined with regard to calculations made on a pro forma
basis for the Reference Period most recently ended, calculated in accordance
with GAAP as if each acquired Person or business had been consolidated with the
Company for those periods applicable to such covenants;

 

(viii)        the
Acquisition Amount with respect thereto (y) shall not exceed $75,000,000,
and (z) together with the aggregate of the Acquisition Amounts for all
other Permitted Acquisitions consummated during the term of this Agreement,
shall not exceed $200,000,000 (including for this purpose, without duplication,
all Contingent Purchase Price Obligations incurred by the Company or its
Subsidiaries in connection with previous Permitted Acquisitions which have been
paid during such fiscal year and any Contingent Purchase Price Reserve Amounts
then outstanding); provided that Capital Stock of the Parent shall not
be included in the calculation of the Acquisition Amount for purposes of this
clause (viii);

 

(ix)           the
Acquisition Amount for any Permitted Acquisition involving assets situated outside
of the United States of America or the Capital Stock of Persons 

 

26

 

organized outside the United States of America,
together with the aggregate of the Acquisition Amounts for all such other
Permitted Acquisitions consummated during the term of this Agreement, shall not
exceed $40,000,000; provided that Capital Stock of the Parent shall not
be included in the calculation of the Acquisition Amount for purposes of this
clause (ix); and

 

(x)            all
of the conditions and requirements of Sections 6.9 and
6.10 applicable to such Acquisition are
satisfied.

 

“Permitted
Liens” shall have the meaning given to such term in Section 8.3.

 

“Person”
shall mean any corporation, association, joint venture, partnership, limited
liability company, organization, business, individual, trust, government or
agency or political subdivision thereof or any other legal entity.

 

“Plan”
shall mean any “employee pension benefit plan” within the meaning of
Section 3(2) of ERISA that is subject to the provisions of Title IV of
ERISA (other than a Multiemployer Plan) and to which the Company or any ERISA
Affiliate may have any liability.

 

“Pledge
Agreement” shall mean a pledge agreement made by the Parent, the Company
and the Subsidiaries of the Company party thereto in favor of the
Administrative Agent, in substantially the form of Exhibit F,
as amended, modified, restated or supplemented from time to time.

 

“Pounds
Sterling” or “£” shall mean the lawful currency of the United
Kingdom of Great Britain and Northern Ireland.

 

“Prohibited
Transaction” shall mean any transaction described in
(i) Section 406 of ERISA that is not exempt by reason of
Section 408 of ERISA or by reason of a Department of Labor prohibited
transaction individual or class exemption or (ii) Section 4975(c) of
the Internal Revenue Code that is not exempt by reason of
Section 4975(c)(2) or 4975(d) of the Internal Revenue Code.

 

“Pro
Forma Balance Sheet” shall have the meaning given to such term in Section 5.11(c).

 

“Projections”
shall have the meaning given to such term in Section 5.11(d).

 

“Realty”
shall mean all real property and interests in real property now or hereafter
acquired or leased by any Credit Party.

 

“Reference
Period” with respect to any date of determination, shall mean (except as
may be otherwise expressly provided herein) the period of twelve consecutive
fiscal months of the Parent immediately preceding such date or, if such date is
the last day of a fiscal quarter, the period of four consecutive fiscal quarters
ending on such date.

 

“Refunded
Swingline Loans” shall have the meaning given to such term in Section 2.2(e).

 

27

 

“Register”
shall have the meaning given to such term in Section 11.7(b).

 

“Regulations
D, T, U and X” shall mean Regulations D, T, U and X, respectively, of the
Federal Reserve Board, and any successor regulations.

 

“Reimbursement
Obligation” shall have the meaning given to such term in Section 3.4.

 

“Relevant
Type” shall have the meaning given to such term in Section 2.16(c).

 

“Reportable
Event” shall mean, with respect to any Plan, (i) any “reportable
event” within the meaning of Section 4043(c) of ERISA for which the
30-day notice under Section 4043(a) of ERISA has not been waived by the
PBGC (including, without limitation, any failure to meet the minimum funding
standard of, or timely make any required installment under, Section 412 of
the Internal Revenue Code or Section 302 of ERISA, regardless of the
issuance of any waivers in accordance with Section 412(d) of the Internal
Revenue Code), (ii) any such “reportable event” subject to advance
notice to the PBGC under Section 4043(b)(3) of ERISA, (iii) any
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Internal Revenue Code, and (iv) a
cessation of operations described in Section 4062(e) of ERISA.

 

“Required
Lenders” shall mean, at any time, the Lenders holding outstanding Loans
(excluding Swingline Loans) and unutilized Commitments (or, after the
termination of the Revolving Credit Commitments, outstanding Loans, Letter of
Credit Exposure and participations in outstanding Swingline Loans) representing
at least a majority of the aggregate, at such time, of all outstanding Loans (excluding
Swingline Loans) and unutilized Commitments (or, after the termination of the
Revolving Credit Commitments, the aggregate at such time of all outstanding
Loans, Letter of Credit Exposure and participations in outstanding Swingline
Loans). For purposes of this definition, the aggregate amount of outstanding
Foreign Currency Revolving Loans and the aggregate Stated Amount of outstanding
Letters of Credit denominated in Foreign Currencies shall be the Dollar Amount
thereof determined as of the most recent Revaluation Date.

 

“Required
Revolving Credit Lenders” shall mean, at any time, the Revolving Credit
Lenders holding outstanding Revolving Loans and Unutilized Revolving Credit
Commitments (or, after the termination of the Revolving Credit Commitments, outstanding
Revolving Loans, Letter of Credit Exposure and participations in outstanding
Swingline Loans) representing at least a majority of the aggregate, at such
time, of all outstanding Revolving Loans and Unutilized Revolving Credit
Commitments (or, after the termination of the Revolving Credit Commitments, the
aggregate at such time of all outstanding Revolving Loans, Letter of Credit
Exposure and participations in outstanding Swingline Loans). For purposes of
this definition, the aggregate amount of outstanding Foreign Currency Revolving
Loans and the aggregate Stated Amount of outstanding Letters of Credit
denominated in Foreign Currencies shall be the Dollar Amount thereof determined
as of the most recent Revaluation Date.

 

“Requirement
of Law” shall mean, with respect to any Person, the charter, articles or
certificate of organization or incorporation and bylaws or other organizational
or governing documents of such Person, and any statute, law, treaty, rule,
regulation, order, decree, writ, 

 

28

 

injunction
or determination of any arbitrator or 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 or otherwise pertaining
to any or all of the transactions contemplated by this Agreement and the other
Credit Documents.

 

“Reserve
Requirement” shall mean, with respect to any Interest Period, the reserve
percentage (expressed as a decimal and rounded upwards, if necessary, to the
next higher 1/100th of 1%) in effect from time to time during such Interest
Period, as provided by the Federal Reserve Board, applied for determining the
maximum reserve requirements (including, without limitation, basic,
supplemental, marginal and emergency reserves) applicable to Wachovia under
Regulation D with respect to “Eurocurrency liabilities” within the
meaning of Regulation D, or under any similar or successor regulation with
respect to Eurocurrency liabilities or Eurocurrency funding.

 

“Responsible
Officer” shall mean, with respect to any Credit Party, the president, the
chief executive officer, the chief financial officer, any executive officer, or
any other Financial Officer of such Credit Party, and any other officer or
similar official thereof responsible for the administration of the obligations
of such Credit Party in respect of this Agreement or any other Credit Document.

 

“Restricted
Payment” shall have the meaning given to such term in Section 8.6(a).

 

“Revaluation
Date” shall mean each of the following: (i) each date on which a
Foreign Currency Revolving Loan is initially made or a Letter of Credit
denominated in a Foreign Currency is issued, (ii) each date on which a
Foreign Currency Revolving Loan is continued for an additional Interest Period
pursuant to Section 2.11, (iii) the
last Business Day of each calendar month, (iv) the Revolving Credit
Termination Date, and (v) such additional dates as the Administrative
Agent shall specify.

 

“Revolving
Credit Commitment” shall mean, with respect to any Lender at any time, the
commitment of such Lender to make Revolving Loans in an aggregate principal
amount at any time outstanding up to the amount set forth opposite such Lender’s
name on Schedule 1.1 under the caption “Revolving
Credit Commitment” or, if such Lender has entered into one or more
Assignment and Acceptances, the amount set forth for such Lender at such time
in the Register maintained by the Administrative Agent pursuant to Section 11.7(b) as such Lender’s “Revolving Credit
Commitment,” in either case, as such amount may be increased or reduced at
or prior to such time pursuant to the terms hereof. The aggregate principal
amount of the Revolving Credit Commitments as of the date hereof is $50,000,000.

 

“Revolving
Credit Commitment Increase” shall have the meaning given to such term in Section 2.20(a).

 

“Revolving
Credit Exposure” shall mean, with respect to any Revolving Credit Lender at
any time, the sum of (i) the aggregate principal Dollar Amount (determined
as of the most recent Revaluation Date) of all Revolving Loans made by such
Lender that are outstanding at such time, (ii) such Lender’s Letter of
Credit Exposure at such time and (iii) such Lender’s Swingline Exposure at
such time.

 

29

 

“Revolving
Credit Lender” shall mean any Lender having a Revolving Credit Commitment
(or, after the Revolving Credit Commitments have terminated, any Lender holding
outstanding Revolving Loans).

 

“Revolving
Credit Maturity Date” shall mean the sixth anniversary of the Closing Date.

 

“Revolving
Credit Termination Date” shall mean the Revolving Credit Maturity Date or
such earlier date of termination of the Revolving Credit Commitments pursuant
to Section 2.5 or Section 9.2.

 

“Revolving
Loans” shall mean any or all of the Dollar Revolving Loans and the Foreign
Currency Revolving Loans, as the context may require.

 

“Revolving
Note” shall mean, with respect to any Revolving Credit Lender requesting
the same, the promissory note of the Company or other applicable Borrower in
favor of such Revolving Credit Lender evidencing the Revolving Loans made by
such Lender pursuant to Section 2.1(b)
or Section 2.1(c), in substantially
the form of Exhibit A-2, together with
any amendments, modifications and supplements thereto, substitutions therefor
and restatements thereof.

 

“Sanctioned
Country” shall mean a country subject to a sanctions program identified on
the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/-sanctions/index.html,
or as otherwise published from time to time.

 

“Sanctioned
Person” means (i) a Person named on the list of Specially Designated
Nationals or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/-enforcement/ofac/sdn/index.html, or as otherwise
published from time to time, or (ii) (A) an agency of the government
of a Sanctioned Country, (B) an organization controlled by a Sanctioned
Country, or (C) a Person resident in a Sanctioned Country, to the extent
subject to a sanctions program administered by OFAC.

 

“S&P”
shall mean Standard & Poor’s Ratings Services, a division of the
McGraw-Hill Companies, Inc.

 

“Secured
Party” shall have the meaning given to such term in the Security Agreement.

 

“Securities
Act” shall mean the Securities Act of 1933, as amended from time to time,
and any successor statute, and all rules and regulations from time to time
promulgated thereunder.

 

“Security
Agreement” shall mean a security agreement made by the Parent, the Company
and the Subsidiaries of the Company party thereto in favor of the
Administrative Agent, in substantially the form of Exhibit E,
as amended, modified, restated or supplemented from time to time.

 

“Security
Documents” shall mean the Security Agreement, the Pledge Agreement and all
other pledge or security agreements, Mortgages, assignments or other similar
agreements or instruments executed and delivered by any Credit Party pursuant
to Section 6.10 or 6.11 or 

 

30

 

otherwise
in connection with the transactions contemplated hereby, in each case as
amended, modified, restated or supplemented from time to time.

 

“Seller
Subordinated Indebtedness” shall have the meaning given to such term in Section 8.2(viii).

 

“Series”
shall have the meaning given to such term in Section 2.21(a).

 

“Spot
Rate” shall mean, with respect to any Foreign Currency, the rate quoted by
Wachovia as the spot rate for the purchase by Wachovia of such Foreign Currency
with Dollars through its principal foreign exchange trading office at
approximately 11:00 a.m. on the date two (2) Business Days prior to the date as
of which the foreign exchange computation is made.

 

“Stated
Amount” shall mean, with respect to any Letter of Credit at any time, the
aggregate Dollar Amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).

 

“Subordinated
Indebtedness” shall mean, collectively, (i) any Seller Subordinated
Indebtedness issued pursuant to Section 8.2(viii)
and (ii) any other unsecured Indebtedness of the Parent and its
Subsidiaries that is expressly subordinated in right of payment and performance
to the Obligations and that is evidenced by a written instrument in form and
substance (including subordination provisions) acceptable to and approved in
writing by the Administrative Agent.

 

“Subsidiary”
shall mean, with respect to any Person, any corporation or other Person of
which more than fifty percent (50%) of the outstanding Capital Stock having
ordinary voting power to elect a majority of the board of directors, board of
managers or other governing body of such Person, is at the time, directly or
indirectly, owned or controlled by such Person and one or more of its other
Subsidiaries or a combination thereof (irrespective of whether, at the time,
securities of any other class or classes of any such corporation or other
Person shall or might have voting power by reason of the happening of any
contingency). When used without reference to a parent entity, the term “Subsidiary”
shall be deemed to refer to a Subsidiary of the Company.

 

“Subsidiary
Guarantor” shall mean any Subsidiary of the Company that is a guarantor of
the Obligations under the Guaranty Agreement (or under another guaranty
agreement in form and substance satisfactory to the Administrative Agent) and
has granted to the Administrative Agent a Lien upon and security interest in
its personal property assets pursuant to the Security Agreement.

 

“Swingline
Commitment” shall mean $5,000,000 or, if less, the aggregate Revolving
Credit Commitments at the time of determination, as such amount may be reduced
at or prior to such time pursuant to the terms hereof.

 

“Swingline
Exposure” shall mean, with respect to any Revolving Credit Lender at any
time, its maximum aggregate liability to make Refunded Swingline Loans pursuant
to Section 2.2(e) to refund, or to
purchase participations pursuant to Section 2.2(f)
in, Swingline Loans that are outstanding at such time.

 

31

 

“Swingline
Lender” shall mean Wachovia in its capacity as maker of Swingline Loans,
and its successors in such capacity.

 

“Swingline
Loans” shall have the meaning given to such term in Section 2.1(d).

 

“Swingline
Maturity Date” shall mean the fifth (5th) Business Day prior to
the Revolving Credit Maturity Date.

 

“Swingline
Note” shall mean, if requested by the Swingline Lender, the promissory note
of the Company in favor of the Swingline Lender evidencing the Swingline Loans
made by the Swingline Lender pursuant to Section 2.1(d),
in substantially the form of Exhibit A-3,
together with any amendments, modifications and supplements thereto,
substitutions therefor and restatements thereof.

 

“Syndication
Agents” shall mean Bank of the West and Wells Fargo Bank, National
Association, in their capacity as such under Section 10.12,
and their respective successors and permitted assigns in such capacity.

 

“TARGET”
shall mean the Trans-European Automated Real-Time Gross Settlement Express
Transfer payment system.

 

“TARGET
Day” shall mean any day on which TARGET is open for the settlement of
payments in Euro.

 

“Taxes”
shall have the meaning given to such term in Section 2.17(a).

 

“Term
Lender” shall mean any Tranche B Term Lender or Incremental Term Lender.

 

“Term
Loans” shall mean any or all of the Tranche B Term Loans and the
Incremental Term Loans, as the context may require.

 

“Term
Note” shall mean, with respect to any Term Lender requesting the same, the
promissory note of the Company in favor of such Term Lender evidencing the Tranche
B Term Loan or Incremental Term Loan of a particular Series made by such Lender
pursuant to this Agreement, in substantially the form of Exhibit A-1,
together with any amendments, modifications and supplements thereto,
substitutions therefor and restatements thereof.

 

“Terminating
Indebtedness” shall have the meaning given to such term in Section 4.1(h).

 

“Total
Leverage Ratio” shall mean, as of the last day of any Reference Period
ending on the last day of a fiscal quarter, the ratio of (i) Consolidated
Total Funded Debt as of such date to (ii) Consolidated EBITDA for such
Reference Period.

 

“Total
Voting Power” shall mean, with respect to any Person, the total number of
votes which may be cast in the election of directors of such Person at any
meeting of stockholders of such Person if all securities entitled to vote in
the election of directors of such Person (on a fully diluted basis, assuming
the exercise, conversion or exchange of all rights, warrants, options and
securities exercisable for, exchangeable for or convertible into, such voting
securities) were 

 

32

 

present
and voted at such meeting (other than votes that may be cast only upon the
happening of a contingency).

 

“Tranche
B Term Lender” shall mean any Lender having a Tranche B Term Loan
Commitment (or, after the Tranche B Term Loan Commitments have terminated, any
Lender holding outstanding Tranche B Term Loans).

 

“Tranche
B Term Loan Commitment” shall mean, with respect to any Lender at any time,
the commitment of such Lender to make Tranche B Term Loans in an aggregate
principal amount up to the amount separately confirmed as such by the
Administrative Agent to such Lender in writing or electronically or, if such
Lender has entered into one or more Assignment and Acceptances, the amount set
forth for such Lender at such time in the Register maintained by the
Administrative Agent pursuant to Section 11.7(b)
as such Lender’s “Tranche B Term Loan Commitment,” as such amount may be
reduced at or prior to such time pursuant to the terms hereof. The aggregate
principal amount of the Tranche B Term Loan Commitments as of the date hereof
is $350,000,000.

 

“Tranche
B Term Loan Maturity Date” shall mean the seventh anniversary of the
Closing Date.

 

“Tranche
B Term Loans” shall have the meaning given to such term in Section 2.1(a).

 

“Transaction
Documents” means, collectively, this Agreement and the other Credit
Documents, the Aircast Stock Purchase Agreement and all other agreements,
instruments, certificates and documents executed and delivered in connection
with the Transactions, in each case as amended, modified, restated or
supplemented from time to time in accordance with the terms of this Agreement.

 

“Transactions”
means, collectively, the transactions contemplated by the Transaction
Documents, including (i) the initial extensions of credit hereunder on the
Closing Date, (ii) the Aircast Acquisition, (iii) the repayment of
the Terminating Indebtedness, and (iv) the payment of fees and expenses in
connection with the foregoing.

 

“Treaty
on European Union” means the Treaty of Rome of March 25, 1957, as amended
by the Single European Act 1986 and the Maastricht Treaty (which was signed at
Maastricht on February 1, 1992 and came into force on November 1, 1993), as
amended from time to time.

 

“Type”
shall have the meaning given to such term in Section 1.3.

 

“Unfunded
Pension Liability” shall mean, with respect to any Plan, the excess of its
benefit liabilities under Section 4001(a)(16) of ERISA over the current
value of its assets, determined in accordance with the applicable assumptions
used for funding under Section 412 of the Internal Revenue Code for the
applicable plan year.

 

“Unutilized
Revolving Credit Commitment” shall mean, with respect to any Revolving
Credit Lender at any time, such Lender’s Revolving Credit Commitment at such
time less the sum of (i) the aggregate principal Dollar Amount (determined
as of the most recent Revaluation Date) of all Revolving Loans made by such
Lender that are outstanding at such time, (ii) such 

 

33

 

Lender’s
Letter of Credit Exposure at such time and (iii) such Lender’s Swingline
Exposure at such time.

 

“Unutilized
Swingline Commitment” shall mean, with respect to the Swingline Lender at
any time, the Swingline Commitment at such time less the aggregate
principal amount of all Swingline Loans that are outstanding at such time.

 

“Wachovia”
shall mean Wachovia Bank, National Association, and its successors and assigns.

 

“Wholly
Owned” shall mean, with respect to any Subsidiary of any Person, that 100%
of the outstanding Capital Stock of such Subsidiary (excluding any directors’
qualifying shares and shares required to be held by foreign nationals, in the
case of a Foreign Subsidiary) is owned, directly or indirectly, by such Person.

 

1.2           Accounting
Terms. Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made,
and all financial statements required to be delivered hereunder shall be
prepared in accordance with, GAAP applied on a basis consistent with the most
recent audited consolidated financial statements of the Company delivered to
the Lenders prior to the Closing Date; provided that if the Company
notifies the Administrative Agent that it wishes to amend any financial
covenant in Article VII to eliminate the
effect of any change in GAAP on the operation of such covenant (or if the
Administrative Agent notifies the Company that the Required Lenders wish to
amend Article VII for such purpose),
then the Company’s compliance with such covenant shall be determined on the
basis of GAAP as in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Company and the Required Lenders. Except
as expressly otherwise set forth herein, all calculations of the financial covenants contained in Article VII that include any period prior to the
Closing Date shall be determined in each case on a pro forma basis after giving
effect to the Aircast Acquisition as if the Aircast Acquisition (but not the
initial borrowing of the Loans or the repayment of the Terminating
Indebtedness) had occurred as of the first day of the relevant Reference
Period.

 

1.3           Types
of Borrowings. Borrowings and Loans hereunder are distinguished by “Class,”
“Type” and Applicable Currency. The “Class” of a Loan or of a
Commitment to make such a Loan or of a Borrowing comprising such Loans refers
to whether such Loan is a Tranche B Term Loan, Incremental Term Loan of a
particular Series, or Revolving Loan, each of which constitutes a Class. The “Type”
of a Loan refers to whether such Loan is a Base Rate Loan, Dollar LIBOR Loan,
or Foreign Currency Revolving Loan. The term “Borrowing” refers to the
portion of the aggregate principal amount of Loans of any Class outstanding
hereunder that bears interest of a specific Type and for a common Interest
Period and that consists of Loans denominated in a common currency. Borrowings
and Loans may (but need not) be identified both by Class, Type and/or
Applicable Currency (e.g., a “Base Rate Dollar Revolving Loan” is
a loan that bears interest at the Base Rate, that is a Revolving Loan and that
is denominated in Dollars).

 

34

 

1.4           Other
Terms; Construction.

 

(a)           Unless
otherwise specified or unless the context otherwise requires, all references herein
to sections, annexes, schedules and exhibits are references to sections,
annexes, schedules and exhibits in and to this Agreement, and all terms defined
in this Agreement shall have the defined meanings when used in any other Credit
Document or any certificate or other document made or delivered pursuant
hereto.

 

(b)           All
references herein to the Lenders or any of them shall be deemed to include the
Issuing Lender and the Swingline Lender unless specifically provided otherwise
or unless the context otherwise requires.

 

(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.

 

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

 

1.5           Exchange
Rates; Currency Equivalents.

 

(a)           The
Administrative Agent shall determine the Spot Rates as of each Revaluation Date
to be used for calculating the Dollar Amounts of Foreign Currency Revolving
Loans and other amounts outstanding under this Agreement denominated in Foreign
Currencies. Such Spot Rates shall become effective as of such Revaluation Date
and shall be the Spot Rates employed in converting any amounts between the
applicable currencies until the next Revaluation Date to occur. Except for
purposes of financial statements delivered by the Company hereunder or
calculating financial covenants in Article VII
or except as otherwise provided herein, the applicable amount of any currency
for purposes of this Agreement and the other Credit Documents shall be such
Dollar Amount as so determined by the Administrative Agent.

 

(b)           Wherever
in this Agreement, in connection with any Foreign Currency Revolving Loan (or
Letter of Credit denominated in a Foreign Currency) or any conversion,
continuation or prepayment thereof, an amount, such as a required minimum or
multiple amount, is expressed in Dollars, such amount shall be the relevant
Foreign Currency Equivalent of such Dollar amount (rounded as nearly as
practicable to the nearest number of whole units of such Foreign Currency), as
determined by the Administrative Agent.

 

(c)           Determinations
by the Administrative Agent pursuant to this Section shall be conclusive
absent manifest error.

 

1.6           Redenomination
of Certain Foreign Currencies and Computation of Dollar Amounts.

 

(a)           Each
obligation of a Borrower to make a payment denominated in the National Currency
Unit of any member state of the European Union that adopts the Euro as its
lawful currency after the date hereof shall be redenominated into Euros at the
time of such adoption (in accordance with the EMU Legislation). If, in relation
to the currency of any such member state, 

 

35

 

the basis of accrual of
interest expressed in this Agreement in respect of that currency shall be
inconsistent with any convention or practice in the London interbank market for
the basis of accrual of interest in respect of the Euro, such expressed basis
shall be replaced by such convention or practice with effect from the date on
which such member state adopts the Euro as its lawful currency; provided
that if any Foreign Currency Revolving Loan in the currency of such member
state is outstanding immediately prior to such date, such replacement shall
take effect, with respect to such Foreign Currency Revolving Loan, at the end
of the then current Interest Period.

 

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

 

(c)           References
herein to minimum Dollar amounts and integral multiples stated in Dollars,
where they shall also be applicable to Foreign Currency, shall be deemed to
refer to approximate Foreign Currency Equivalents. Wherever in this Agreement
an amount, such as a minimum or maximum limitation on Indebtedness permitted to
be incurred or Investments permitted to be made hereunder, is expressed in
Dollars, it shall be deemed to refer to the Dollar Amount thereof.

 

ARTICLE II

 

AMOUNT
AND TERMS OF THE LOANS

 

2.1           Commitments.

 

(a)           Each
Tranche B Term Lender severally agrees, subject to and on the terms and
conditions of this Agreement, to make a loan in Dollars (each, a “Tranche B
Term Loan,” and collectively, the “Tranche B Term Loans”) to the
Company on the Closing Date in a principal amount not to exceed its Tranche B
Term Loan Commitment. No Tranche B Term Loans shall be made at any time after
the Closing Date. To the extent repaid, Tranche B Term Loans may not be
reborrowed.

 

(b)           Each
Revolving Credit Lender severally agrees, subject to and on the terms and
conditions of this Agreement, to make loans in Dollars (each, a “Dollar
Revolving Loan,” and collectively, the “Dollar Revolving Loans”) to
the Company, from time to time on any Business Day during the period from and
including the Closing Date to but not including the Revolving Credit
Termination Date, provided that no Borrowing of Dollar Revolving Loans
shall be made if, immediately after giving effect thereto (and to any
concurrent repayment of Swingline Loans with proceeds of Dollar Revolving Loans
made pursuant to such Borrowing), (y) the Revolving Credit Exposure of any
Revolving Credit Lender would exceed its Revolving Credit Commitment at such
time or (z) the Aggregate Revolving Credit Exposure would exceed the
aggregate Revolving Credit Commitments at such time. Subject to and on the
terms and conditions of this Agreement, the Company may borrow, repay and
reborrow Dollar Revolving Loans.

 

36

 

(c)           Each
Revolving Credit Lender severally agrees, subject to and on the terms and
conditions of this Agreement, to make loans in any Foreign Currency (each, a “Foreign
Currency Revolving Loan,” and collectively, the “Foreign Currency
Revolving Loans”) to any Borrower, from time to time on any Business Day
during the period from and including the Closing Date to but not including the
Revolving Credit Termination Date, provided that no Borrowing of Foreign
Currency Revolving Loans shall be made if, immediately after giving effect
thereto, (x) the aggregate principal outstanding Dollar Amount (determined
as of the most recent Revaluation Date) of Foreign Currency Revolving Loans
outstanding at such time would exceed the Foreign Currency Subcommitment at
such time, (y) the Revolving Credit Exposure of any Revolving Credit
Lender would exceed its Revolving Credit Commitment at such time or
(z) the Aggregate Revolving Credit Exposure would exceed the aggregate
Revolving Credit Commitments at such time. Subject to and on the terms and
conditions of this Agreement, the Borrowers may borrow, repay and reborrow
Foreign Currency Revolving Loans.

 

(d)           The
Swingline Lender agrees, subject to and on the terms and conditions of this
Agreement, to make loans (each, a “Swingline Loan,” and collectively,
the “Swingline Loans”) to the Company, from time to time on any Business
Day during the period from the Closing Date to but not including the Swingline
Maturity Date (or, if earlier, the Revolving Credit Termination Date), in an
aggregate principal amount at any time outstanding not exceeding the Swingline
Commitment. Swingline Loans may be made even if the aggregate principal amount
of Swingline Loans outstanding at any time, when added to the aggregate
principal Dollar Amount (determined as of the most recent Revaluation Date) of
the Revolving Loans made by the Swingline Lender in its capacity as a Revolving
Credit Lender outstanding at such time and its Letter of Credit Exposure at
such time, would exceed the Swingline Lender’s own Revolving Credit Commitment
at such time, but provided that no Borrowing of Swingline Loans shall be
made if, immediately after giving effect thereto, (y) the Revolving Credit
Exposure of any Revolving Credit Lender would exceed its Revolving Credit
Commitment at such time or (z) the Aggregate Revolving Credit Exposure
would exceed the aggregate Revolving Credit Commitments at such time. Subject
to and on the terms and conditions of this Agreement, the Company may borrow,
repay (including by means of a Borrowing of Dollar Revolving Loans pursuant to Section 2.2(e)) and reborrow Swingline Loans.

 

(e)           Each
Incremental Term Lender with respect to a particular Series of Incremental Term
Loans severally agrees, subject to and on the terms and conditions of this
Agreement and the applicable Incremental Term Loan Amendment, to make an
Incremental Term Loan of such Series to the Company on the applicable
Incremental Term Loan Effective Date in a principal amount not to exceed its
Incremental Term Loan Commitment with respect to such Series. To the extent
repaid, Incremental Term Loans may not be reborrowed.

 

2.2           Borrowings.

 

(a)           The
Tranche B Term Loans, Revolving Loans and each Series of Incremental Term Loans
shall, at the option of the applicable Borrower and subject to the terms and
conditions of this Agreement, be either Base Rate Loans or LIBOR Loans, provided
that (i) all Loans comprising the same Borrowing shall, unless otherwise
specifically provided herein, be of the same Type and Applicable Currency,
(ii) Foreign Currency Revolving Loans shall be made and maintained as
LIBOR Loans at all times, and (iii) no LIBOR Loans may be borrowed at any 

 

37

 

time prior to the third
(3rd) Business Day after the Closing Date (or, with respect to any
Incremental Term Loans, the third (3rd) Business Day after the
applicable Incremental Term Loan Effective Date). The Swingline Loans shall be
made and maintained as Base Rate Loans at all times.

 

(b)           In
order to make a Borrowing (other than (w) Borrowings of Swingline Loans,
which shall be made pursuant to Section 2.2(d),
(x) Borrowings for the purpose of repaying Refunded Swingline Loans, which
shall be made pursuant to Section 2.2(e),
(y) Borrowings for the purpose of paying unpaid Reimbursement Obligations,
which shall be made pursuant to Section 3.5,
and (z) Borrowings involving continuations or conversions of outstanding
Loans, which shall be made pursuant to Section 2.11),
the applicable Borrower will give the Administrative Agent written notice not
later than 11:00 a.m., Charlotte time, the Applicable Number of Business Days
prior to each Borrowing to be comprised of LIBOR Loans and one (1) Business Day
prior to each Borrowing to be comprised of Base Rate Loans; provided, however,
that requests for the Borrowing of the Tranche B Term Loans and any Revolving
Loans to be made on the Closing Date may, at the discretion of the
Administrative Agent, be given with less advance notice than as specified
hereinabove. Each such notice (each, a “Notice of Borrowing”) shall be
irrevocable, shall be given in the form of Exhibit B-1
and shall specify (1) the applicable Borrower, (2) the aggregate
principal amount, Class and initial Type of the Loans to be made pursuant to
such Borrowing, (3) in the case of a Borrowing of LIBOR Loans, the initial
Interest Period to be applicable thereto, (4) in the case of a Borrowing
of Revolving Loans, the Applicable Currency, and (5) the requested
Borrowing Date, which shall be a Business Day. Upon its receipt of a Notice of
Borrowing, the Administrative Agent will promptly notify each applicable Lender
of the proposed Borrowing. Notwithstanding anything to the contrary contained
herein:

 

(i)            the
aggregate principal amount of the Borrowing of Tranche B Term Loans shall be in
the amount of the aggregate Tranche B Term Loan Commitments, and the aggregate
principal amount of any Borrowing of any Series of Incremental Term Loans shall
be in the amount of the aggregate Incremental Term Loan Commitments applicable
to such Series of Incremental Term Loans;

 

(ii)           the
aggregate principal amount of each Borrowing comprised of Base Rate Loans shall
not be less than $500,000 or, if greater, an integral multiple of $100,000 in
excess thereof (or, in the case of a Borrowing of Revolving Loans, if less, in
the amount of the aggregate Revolving Credit Commitments less the Aggregate
Revolving Credit Exposure), and the aggregate principal amount of each
Borrowing comprised of LIBOR Loans shall not be less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof;

 

(iii)          if
the applicable Borrower shall have failed to designate the Type of Loans
comprising a Borrowing, such Borrower shall be deemed to have requested a
Borrowing comprised of Base Rate Loans (unless such notice indicates that the
Borrowing is to be comprised of Foreign Currency Revolving Loans, in which case
such Borrower shall be deemed to have requested a Borrowing comprised of LIBOR
Loans);

 

38

 

(iv)          if
the applicable Borrower shall have failed to designate the Applicable Currency
with respect to a Borrowing of Revolving Loans, such Borrower shall be deemed
to have requested (A) in the case of the Company, a Borrowing of Dollar
Revolving Loans, and (B) in the case of any Foreign Borrower, a Borrowing
of Foreign Currency Revolving Loans denominated in Euro; and

 

(v)           if
the applicable Borrower shall have failed to select the duration of the
Interest Period to be applicable to any Borrowing of LIBOR Loans, then such
Borrower shall be deemed to have selected an Interest Period with a duration of
one month.

 

(c)           In
the case of each Borrowing of Dollar Loans, not later than 1:00 p.m., Charlotte
time, on the requested Borrowing Date (which shall be the Closing Date, in the
case of the Tranche B Term Loans), each applicable Lender will make available
to the Administrative Agent at the applicable Payment Office an amount, in
Dollars and in immediately available funds, equal to the amount of the Dollar
Loan or Loans to be made by such Lender. To the extent such Lenders have made
such amounts available to the Administrative Agent as provided hereinabove, the
Administrative Agent will make the aggregate of such amounts available to the
Company in accordance with Section 2.3(a)
and in like funds as received by the Administrative Agent. In the case of each
Borrowing of Foreign Currency Revolving Loans, not later than 1:00 p.m., Local
Time, on the requested Borrowing Date, each Revolving Credit Lender will make
available to the Administrative Agent at the applicable Payment Office an
amount, in the Applicable Currency and in immediately available funds, equal to
the amount of the Foreign Currency Revolving Loan or Loans to be made by such
Lender. To the extent such Lenders have made such amounts available to the
Administrative Agent as provided hereinabove, the Administrative Agent will
make the aggregate of such amounts available to the applicable Borrower in
accordance with Section 2.3(a) and in like
funds as received by the Administrative Agent.

 

(d)           In
order to make a Borrowing of a Swingline Loan (other than borrowings pursuant
to any loan sweep product or other cash management arrangement in effect
between the Company and the Swingline Lender, which shall be effected as provided
thereunder), the Company will give the Administrative Agent (and the Swingline
Lender, if the Swingline Lender is not also the Administrative Agent) written
notice not later than 11:00 a.m., Charlotte time, on the date of such Borrowing.
Each such notice (each, a “Notice of Swingline Borrowing”) shall be
given in the form of Exhibit B-2,
shall be irrevocable and shall specify (i) the principal amount of the
Swingline Loan to be made pursuant to such Borrowing (which shall not be less
than $200,000 and, if greater, shall be in an integral multiple of $100,000 in
excess thereof (or, if less, in the amount of the Unutilized Swingline
Commitment)) and (ii) the requested Borrowing Date, which shall be a
Business Day. Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, the Swingline Lender will make available to the Administrative
Agent at the Payment Office an amount, in Dollars and in immediately available
funds, equal to the amount of the requested Swingline Loan. To the extent the Swingline
Lender has made such amount available to the Administrative Agent as provided
hereinabove, the Administrative Agent will make such amount available to the
Company in accordance with Section 2.3(a)
and in like funds as received by the Administrative Agent.

 

39

 

(e)           With
respect to any outstanding Swingline Loans, the Swingline Lender may at any
time (whether or not an Event of Default has occurred and is continuing) in its
sole and absolute discretion, and is hereby authorized and empowered by the
Company to, cause a Borrowing of Dollar Revolving Loans to be made for the
purpose of repaying such Swingline Loans by delivering to the Administrative
Agent (if the Administrative Agent is not also the Swingline Lender) and each
other Revolving Credit Lender (on behalf of, and with a copy to, the Company),
not later than 11:00 a.m., Charlotte time, one (1) Business Day prior to the
proposed Borrowing Date therefor, a notice (which shall be deemed to be a Notice
of Borrowing given by the Company) requesting the Revolving Credit Lenders to
make Dollar Revolving Loans (which shall be made initially as Base Rate Loans)
on such Borrowing Date in an aggregate amount equal to the amount of such
Swingline Loans (the “Refunded Swingline Loans”) outstanding on the date
such notice is given that the Swingline Lender requests to be repaid. Not later
than 1:00 p.m., Charlotte time, on the requested Borrowing Date, each Revolving
Credit Lender (other than the Swingline Lender) will make available to the
Administrative Agent at the Payment Office an amount, in Dollars and in
immediately available funds, equal to the amount of the Dollar Revolving Loan
to be made by such Lender. To the extent the Revolving Credit Lenders have made
such amounts available to the Administrative Agent as provided hereinabove, the
Administrative Agent will make the aggregate of such amounts available to the
Swingline Lender in like funds as received by the Administrative Agent, which
shall apply such amounts in repayment of the Refunded Swingline Loans. Notwithstanding
any provision of this Agreement to the contrary, on the relevant Borrowing
Date, the Refunded Swingline Loans (including the Swingline Lender’s ratable
share thereof, in its capacity as a Revolving Credit Lender) shall be deemed to
be repaid with the proceeds of the Dollar Revolving Loans made as provided
above (including a Dollar Revolving Loan deemed to have been made by the
Swingline Lender), and such Refunded Swingline Loans deemed to be so repaid
shall no longer be outstanding as Swingline Loans but shall be outstanding as
Dollar Revolving Loans. If any portion of any such amount repaid (or deemed to
be repaid) to the Swingline Lender shall be recovered by or on behalf of the
Company from the Swingline Lender in any bankruptcy, insolvency or similar
proceeding or otherwise, the loss of the amount so recovered shall be shared
ratably among all the Revolving Credit Lenders in the manner contemplated by Section 2.15(b).

 

(f)            If,
as a result of any bankruptcy, insolvency or similar proceeding with respect to
the Company, Dollar Revolving Loans are not made pursuant to Section 2.2(e) in an amount sufficient to repay any
amounts owed to the Swingline Lender in respect of any outstanding Swingline
Loans, or if the Swingline Lender is otherwise precluded for any reason from
giving a notice on behalf of the Company as provided for hereinabove, the
Swingline Lender shall be deemed to have sold without recourse, representation
or warranty (except for the absence of Liens thereon created, incurred or
suffered to exist by, through or under the Swingline Lender), and each
Revolving Credit Lender shall be deemed to have purchased and hereby agrees to
purchase, a participation in such outstanding Swingline Loans in an amount
equal to its ratable share (based on the proportion that its Revolving Credit
Commitment bears to the aggregate Revolving Credit Commitments at such time) of
the unpaid amount thereof together with accrued interest thereon. Upon one (1)
Business Day’s prior notice from the Swingline Lender, each Revolving Credit
Lender (other than the Swingline Lender) will make available to the
Administrative Agent at the Payment Office an amount, in Dollars and in
immediately available funds, equal to its respective participation. To the
extent the Revolving Credit Lenders have made such amounts available to the
Administrative Agent as provided hereinabove, the 

 

40

 

Administrative Agent will
make the aggregate of such amounts available to the Swingline Lender in like
funds as received by the Administrative Agent. In the event any such Revolving
Credit Lender fails to make available to the Administrative Agent the amount of
such Lender’s participation as provided in this Section 2.2(f),
the Swingline Lender shall be entitled to recover such amount on demand from
such Lender, together with interest thereon for each day from the date such
amount is required to be made available for the account of the Swingline Lender
until the date such amount is made available to the Swingline Lender at the
Federal Funds Rate for the first three (3) Business Days and thereafter at the
Adjusted Base Rate applicable to Revolving Loans. Promptly following its
receipt of any payment by or on behalf of the Company in respect of a Swingline
Loan, the Swingline Lender will pay to each Revolving Credit Lender that has
acquired a participation therein such Lender’s ratable share of such payment.

 

(g)           Notwithstanding
any provision of this Agreement to the contrary, the obligation of each
Revolving Credit Lender (other than the Swingline Lender) to make Dollar
Revolving Loans for the purpose of repaying any Refunded Swingline Loans
pursuant to Section 2.2(e) and each such
Lender’s obligation to purchase a participation in any unpaid Swingline Loans
pursuant to Section 2.2(f) shall be
absolute and unconditional and shall not be affected by any circumstance or
event whatsoever, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right that such Lender may have
against the Swingline Lender, the Administrative Agent, the Company, any other
Borrower or any other Person for any reason whatsoever, (ii) the
occurrence or continuance of any Default or Event of Default, (iii) the
failure of the amount of such Borrowing of Dollar Revolving Loans to meet the
minimum Borrowing amount specified in Section 2.2(b),
or (iv) the failure of any conditions set forth in Section 4.2
or elsewhere herein to be satisfied.

 

2.3           Disbursements;
Funding Reliance; Domicile of Loans.

 

(a)           Each
Borrower hereby authorizes the Administrative Agent and each Correspondent to
disburse the proceeds of each Borrowing in accordance with the terms of any
written instructions from any Authorized Officer of any Borrower, provided
that neither the Administrative Agent nor any Correspondent shall be obligated
under any circumstances to forward amounts to any account not listed in an
Account Designation Letter. Any Borrower may at any time deliver to the
Administrative Agent an Account Designation Letter listing any additional
accounts or deleting any accounts listed in a previous Account Designation
Letter.

 

(b)           Unless
the Administrative Agent has received, prior to 1:00 p.m., Local Time, on the
relevant Borrowing Date, written notice from a Lender that such Lender will not
make available to the Administrative Agent such Lender’s ratable portion, if
any, of the relevant Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent in
immediately available funds on such Borrowing Date in accordance with the
applicable provisions of Section 2.2,
and the Administrative Agent may, in reliance upon such assumption, but shall
not be obligated to, make a corresponding amount available to the applicable
Borrower on such Borrowing Date. If and to the extent that such Lender shall
not have made such portion available to the Administrative Agent, and the
Administrative Agent shall have made such corresponding amount available to the
applicable Borrower, such Lender, on the one hand, and the applicable Borrower,
on the other, severally agree to pay to the Administrative Agent forthwith on
demand such corresponding amount, 

 

41

 

together with interest
thereon for each day from the date such amount is made available to the
applicable Borrower until the date such amount is repaid to the Administrative
Agent, (i) in the case of such Lender, at the Federal Funds Rate, and
(ii) in the case of the applicable Borrower, at the rate of interest
applicable at such time to the Type and Class of Loans comprising such
Borrowing, as determined under the provisions of Section 2.8.
If such Lender shall repay to the Administrative Agent such corresponding
amount, such amount shall constitute such Lender’s Loan as part of such
Borrowing for purposes of this Agreement. The failure of any Lender to make any
Loan required to be made by it as part of any Borrowing shall not relieve any
other Lender of its obligation, if any, hereunder to make its Loan as part of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender as part of any
Borrowing.

 

(c)           Each
Lender may, at its option, make and maintain any Loan at, to or for the account
of any of its Lending Offices, provided that any exercise of such option
shall not affect the obligation of the applicable Borrower to repay such Loan
to or for the account of such Lender in accordance with the terms of this
Agreement.

 

2.4           Evidence
of Debt; Notes.

 

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

 

(b)           The
Administrative Agent shall maintain the Register pursuant to Section 11.7(b), and a subaccount for each Lender, in
which Register and subaccounts (taken together) shall be recorded (i) the
amount of each such Loan, the Class, Type and Applicable Currency of each such
Loan, the applicable Borrower and the Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable or to become
due and payable from the applicable Borrower to each Lender hereunder in
respect of each such Loan and (iii) the amount of any sum received by the
Administrative Agent hereunder from the applicable Borrower in respect of each
such Loan and each Lender’s share thereof.

 

(c)           The
entries made in the accounts, Register and subaccounts maintained pursuant to Section 2.4(b) (and, if consistent with the entries of
the Administrative Agent, Section 2.4(a))
shall, to the extent permitted by applicable law, be prima facie evidence of
the existence and amounts of the obligations of the Borrowers therein recorded;
provided, however, that the failure of any Lender or the
Administrative Agent to maintain such account, such Register or such
subaccount, as applicable, or any error therein, shall not in any manner affect
the obligation of each Borrower to repay (with applicable interest) the Loans
made to such Borrower by such Lender in accordance with the terms of this
Agreement.

 

(d)           The
Loans of each Class made by each Lender shall, if requested by the applicable
Lender (which request shall be made to the Administrative Agent), be evidenced
(i) in the case of Term Loans, by a Term Note appropriately completed in
substantially the form of Exhibit A-1,
(ii) in the case of Revolving Loans, by a Revolving Note appropriately
completed

 

42

 

in substantially the form
of Exhibit A-2, and (iii) in the
case of the Swingline Loans, by a Swingline Note appropriately completed in
substantially the form of Exhibit A-3,
in each case executed by the applicable Borrower and payable to the order of
such Lender. Each Note shall be entitled to all of the benefits of this
Agreement and the other Credit Documents and shall be subject to the provisions
hereof and thereof.

 

2.5           Termination
and Reduction of Commitments and Swingline Commitment.

 

(a)           The
Tranche B Term Loan Commitments shall be automatically and permanently
terminated concurrently with the making of the Tranche B Term Loans on the
Closing Date (or on November 15, 2006, if the Closing Date shall not have
occurred on or prior to such date). The Revolving Credit Commitments shall be
automatically and permanently terminated on the Revolving Credit Termination
Date (or on November 15, 2006, if the Closing Date shall not have occurred on
or prior to such date), unless sooner terminated pursuant to any other
provision of this Section 2.5
or Section 9.2. The Swingline
Commitment shall be automatically and permanently terminated on the Swingline
Maturity Date (or on November 15, 2006, if the Closing Date shall not have
occurred on or prior to such date), unless sooner terminated pursuant to any
other provision of this Section 2.5
or Section 9.2. The Incremental Term
Loan Commitments relating to any Series of Incremental Term Loans shall be
automatically and permanently terminated on the Incremental Term Loan Effective
Date relating to such Series of Incremental Term Loans, unless the Incremental
Term Loans of such Series have been made in full on or prior to such date.

 

(b)           At
any time and from time to time after the date hereof, upon not less than three
(3) Business Days’ prior written notice to the Administrative Agent (and in the
case of a termination or reduction of the Unutilized Swingline Commitment, the
Swingline Lender), the Company may terminate in whole or reduce in part the
aggregate Unutilized Revolving Credit Commitments or the Unutilized Swingline
Commitment, provided that any such partial reduction shall be in an
aggregate amount of not less than $1,000,000 ($200,000 in the case of the
Unutilized Swingline Commitment) or, if greater, an integral multiple of
$500,000 in excess thereof ($100,000 in the case of the Unutilized Swingline
Commitment), and provided  further that a notice of termination of
the Revolving Credit Commitments delivered by the Company may state that such
notice is conditioned upon the effectiveness of other credit facilities, a
public offering of Capital Stock of the Parent or a sale of all or
substantially all the assets or Capital Stock of the Company or the Parent
(whether by merger or otherwise), in which case such notice may be revoked by
the Company (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. The amount of any
termination or reduction made under this Section 2.5(b)
may not thereafter be reinstated.

 

(c)           Each
reduction of the Revolving Credit Commitments pursuant to this Section 2.5 shall be applied ratably among the
Revolving Credit Lenders according to their respective Revolving Credit
Commitments. Notwithstanding any provision of this Agreement to the contrary,
any reduction of the Revolving Credit Commitments pursuant to this Section 2.5 that has the effect of reducing the
aggregate Revolving Credit Commitments to an amount less than the amount of the
Swingline Commitment, the Letter of Credit Subcommitment or the Foreign
Currency Subcommitment at such time shall result in an automatic corresponding
reduction of the Swingline Commitment, the Letter of Credit Subcommitment or
the Foreign Currency

 

43

 

Subcommitment, as the
case may be, to the amount of the aggregate Revolving Credit Commitments (as so
reduced), without any further action on the part of the Company or the
Swingline Lender.

 

2.6           Mandatory
Payments and Prepayments.

 

(a)           Except
to the extent due or paid sooner pursuant to the provisions of this Agreement,
the Company will repay the aggregate outstanding principal of the Tranche B
Term Loans on the dates and in the amounts set forth below:

 

	
  Date

  	
   

  	
  Payment Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  June 30, 2006

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  September 30, 2006

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  December 31, 2006

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  March 31, 2007

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  June 30, 2007

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  September 30, 2007

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  March 31, 2008

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  March 31, 2009

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  June 30, 2009

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  September 30, 2009

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  December 31, 2009

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  March 31, 2010

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  June 30, 2010

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  September 30, 2010

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  December 31, 2010

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  March 31, 2011

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  June 30, 2011

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  September 30, 2011

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  December 31, 2011

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  March 31, 2012

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  June 30, 2012

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  September 30, 2012

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  December 31, 2012

  	
   

  	
  $

  	
  875,000

  	
   

  
	
  Tranche B Term Loan Maturity Date

  	
   

  	
  $

  	
  326,375,000

  	
   

  

 

(b)           Except
to the extent due or paid sooner pursuant to the provisions of this Agreement,
(i) the aggregate outstanding principal of the Tranche B Term Loans shall
be due and payable in full by the Company on the Tranche B Term Loan Maturity
Date, (ii) the aggregate outstanding principal of the Dollar Revolving
Loans shall be due and payable in full

 

44

 

by the Company on the
Revolving Credit Maturity Date, (iii) the aggregate outstanding principal
of the Foreign Currency Revolving Loans shall be due and payable in full by the
applicable Borrowers thereof on the Revolving Credit Maturity Date, and (iv) the
aggregate outstanding principal of the Swingline Loans shall be due and payable
in full by the Company on the Swingline Maturity Date. The Company will repay
the aggregate outstanding principal of each Series of Incremental Term Loans on
the dates and in the amounts set forth in the applicable Incremental Term Loan
Amendment.

 

(c)           In
the event that, at any time, the Aggregate Revolving Credit Exposure (excluding
the aggregate amount of any Swingline Loans to be repaid with proceeds of
Dollar Revolving Loans made on the date of determination) shall exceed the
aggregate Revolving Credit Commitments at such time (after giving effect to any
concurrent termination or reduction thereof), (i) the Company will
immediately prepay the outstanding principal amount of the Swingline Loans and
(ii) to the extent of any excess remaining after prepayment in full of
outstanding Swingline Loans, the Borrowers will (subject to Section 11.18) immediately prepay the outstanding
principal amount of the Revolving Loans in the Dollar Amount of such excess; provided
that, to the extent such excess amount is greater than the aggregate principal
Dollar Amount (determined as of the most recent Revaluation Date) of Swingline
Loans and Revolving Loans outstanding immediately prior to the application of
such prepayment, the amount so prepaid shall be retained by the Administrative
Agent and held in the Cash Collateral Account as cover for Letter of Credit
Exposure, as more particularly described in Section 3.8,
and thereupon such cash shall be deemed to reduce the aggregate Letter of
Credit Exposure by an equivalent amount. In the event that, at any time, the
aggregate principal Dollar Amount (determined as of the most recent Revaluation
Date) of Foreign Currency Revolving Loans outstanding at such time shall exceed
105% of the Foreign Currency Subcommitment at such time (after giving effect to
any concurrent termination or reduction thereof), the Borrowers will (subject
to Section 11.18) prepay the
outstanding principal amount of the Foreign Currency Revolving Loans in the
Dollar Amount of such excess on the last day of the first Interest Period
ending thereafter or, if sooner, within thirty (30) days (or immediately, if an
Event of Default shall then have occurred and be continuing).

 

(d)           Promptly
upon (and in any event not later than one (1) Business Day after) receipt
thereof by any Credit Party, the Borrowers will (subject to Section 11.18) prepay the outstanding principal amount
of the Loans in an amount equal to 100% of the Net Cash Proceeds from any Debt
Issuance and 50% of the Net Cash Proceeds from any Equity Issuance, and will
deliver to the Administrative Agent, concurrently with such prepayment, a
certificate signed by a Financial Officer of the Company in form and substance
satisfactory to the Administrative Agent and setting forth the calculation of
such Net Cash Proceeds; provided, however, that in the event the
Total Leverage Ratio (as set forth in the Compliance Certificate then most
recently delivered to the Administrative Agent and the Lenders) is equal to or
less than 2.5 to 1.0, no prepayment shall be required under this Section 2.6(d) in respect of any Equity Issuance.

 

(e)           Not
later than 180 days after receipt by any Credit Party of any proceeds of
insurance, condemnation award or other compensation in respect of any Casualty
Event (or, if earlier, upon its determination not to repair or replace any
property subject to such Casualty Event or to acquire assets used or useable in
the business of the Company and its Subsidiaries), the Borrowers will (subject
to Section 11.18) prepay the
outstanding principal amount of the 

 

45

 

Loans in an amount equal
to 100% of the Net Cash Proceeds from such Casualty Event (less any amounts
theretofore applied (or contractually committed to be applied) to the repair or
replacement of property subject to such Casualty Event or to acquire assets
used or useable in the business of the Company and its Subsidiaries) and will
deliver to the Administrative Agent, concurrently with such prepayment, a
certificate signed by a Financial Officer of the Company in form and substance
satisfactory to the Administrative Agent and setting forth the calculation of
such Net Cash Proceeds; provided, however, that, notwithstanding
the foregoing, (i) except as otherwise provided in this Agreement
(including in clause (ii) below) or in any other Credit Document, the
Administrative Agent shall turn over to the Company any such proceeds received
during such 180-day period (unless the Company has, prior to the Administrative
Agent’s receipt of such proceeds, notified the Administrative Agent of its
determination not to repair or replace the property subject to the applicable
Casualty Event or to acquire assets used or useable in the business of the
Company and its Subsidiaries), but nothing in this Section 2.6(e)
shall be deemed to limit or otherwise affect any right of the Administrative
Agent herein or in any of the other Credit Documents to receive and hold such
proceeds as loss payee and to disburse the same to the Company upon the terms
hereof or thereof, or any obligation of the Company or any of its Subsidiaries
herein or in any of the other Credit Documents to remit any such proceeds to
the Administrative Agent upon its receipt thereof, and (ii) any and all
such proceeds received or held by the Administrative Agent or any Credit Party
during the continuance of an Event of Default (regardless of any proposed or
actual use thereof for repair, replacement or reinvestment) shall be applied to
prepay the outstanding principal amount of the Loans.

 

(f)            Not
later than 180 days after receipt by any Credit Party of proceeds in respect of
any Asset Disposition other than an Excluded Asset Disposition (or, if earlier,
upon its determination not to apply such proceeds to the acquisition of assets
used or useable in the business of the Company and its Subsidiaries), the
Borrowers will (subject to Section 11.18)
prepay the outstanding principal amount of the Loans in an amount equal to 100%
of the Net Cash Proceeds from such Asset Disposition (less any amounts
theretofore applied (or contractually committed to be applied) to acquire
assets used or useable in the business of the Company and its Subsidiaries) and
will deliver to the Administrative Agent, concurrently with such prepayment, a
certificate signed by a Financial Officer of the Company in form and substance
satisfactory to the Administrative Agent and setting forth the calculation of
such Net Cash Proceeds; provided, however, that any such Net Cash
Proceeds not applied (or contractually committed to be applied) within 180 days
to the acquisition of other assets as provided herein shall be applied by the
Borrowers as a prepayment of the outstanding principal amount of the Loans no
later than the first (1st) Business Day immediately following such 180-day
period; and provided  further that the requirements of this Section 2.6(f) shall not apply to the first $10,000,000
of Net Cash Proceeds from Asset Dispositions (other than Excluded Asset
Dispositions) from and after the Closing Date. Notwithstanding the foregoing,
nothing in this Section 2.6(f) shall be
deemed to permit any Asset Disposition not expressly permitted under Section 8.4.

 

(g)           Concurrently
with the delivery of its annual financial statements after the end of each
fiscal year, beginning with delivery of the annual financial statements for
fiscal year 2006, and in any event not later than ninety (90) days after the
last day of each such fiscal year, the Borrowers will (subject to Section 11.18) prepay the outstanding principal amount
of the Loans in an amount equal to 50% of Excess Cash Flow, if any, for such
fiscal year (provided that, with 

 

46

 

respect to fiscal year
2006, Excess Cash Flow shall be calculated only for the portion of such fiscal
year beginning on the first day of the first fiscal month commencing after the
Closing Date, as set forth in the definition of “Excess Cash Flow”) and will
deliver to the Administrative Agent, concurrently with such prepayment, a
certificate signed by a Financial Officer of the Company in form and substance
satisfactory to the Administrative Agent and setting forth the calculation of
such Excess Cash Flow; provided, however, that in the event the
Total Leverage Ratio is equal to or less than 2.5 to 1.0 as of the last day of
any such fiscal year, no prepayment shall be required under this Section 2.6(g) in respect of Excess Cash Flow, if any,
for such fiscal year.

 

(h)           Each
prepayment of the Loans made pursuant to Sections 2.6(d) through
Section 2.6(g) shall be applied
(i) first, by the Company to reduce the outstanding principal amount of
the Tranche B Term Loans and the Incremental Term Loans (if any) on a pro rata
basis, with such reduction to be applied in direct order of maturity to the
principal payments scheduled to come due within the next twelve months and
thereafter to the remaining scheduled principal payments on a pro rata basis,
(ii) second, to the extent of any excess remaining after application as
provided in clause (i) above, by the Company to reduce the outstanding
principal amount of the Swingline Loans (with a corresponding permanent
reduction of the Revolving Credit Commitments), (iii) third, to the extent
of any excess remaining after application as provided in clauses (i) and
(ii) above, by the Borrowers to reduce the outstanding principal amount of the
Revolving Loans (with a corresponding permanent reduction of the Revolving
Credit Commitments), and (iv) fourth, to the extent of any excess
remaining after application as provided in clauses (i), (ii) and (iii)
above, by the Company to pay any outstanding Reimbursement Obligations and, to
the extent of any excess remaining, to cash collateralize Letter of Credit
Exposure. Within each Class of Loans, such prepayments shall be applied first
to prepay all Base Rate Loans, and then to prepay LIBOR Loans in direct order
of Interest Period maturities. Each payment or prepayment pursuant to the
provisions of this Section 2.6
shall be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each. Each payment or prepayment of
a LIBOR Loan made pursuant to the provisions of this Section on a day
other than the last day of the Interest Period applicable thereto shall be made
together with all amounts required under Section 2.18
to be paid as a consequence thereof.

 

(i)            If
any Borrower is required to make a mandatory prepayment of LIBOR Loans under
this Section 2.6, such Borrower shall have
the right, in lieu of making such prepayment in full, to deposit an amount
equal to such mandatory prepayment with the Administrative Agent in a cash
collateral account maintained (pursuant to documentation reasonably
satisfactory to the Administrative Agent) by and in the sole dominion and
control of the Administrative Agent. Any amounts so deposited shall be held by
the Administrative Agent as collateral for the prepayment of such LIBOR Loans
and shall be applied to the prepayment of the applicable LIBOR Loans at the end
of the current Interest Periods applicable thereto. At the request of such
Borrower, amounts so deposited shall be invested by the Administrative Agent in
Cash Equivalents maturing prior to the date or dates on which it is anticipated
that such amounts will be applied to prepay such LIBOR Loans; any interest
earned on such Cash Equivalents will be for the account of such Borrower and
such Borrower will deposit with the Administrative Agent the amount of any loss
on any such Cash Equivalents to the extent necessary in order that the amount
of the prepayment to be made with the deposited amounts may not be reduced.

 

47

 

(j)            In
the event the Administrative Agent receives a notice of prepayment with respect
to Sections 2.6(d) through 2.6(g), the Administrative Agent will give prompt notice
thereof to the Lenders; provided that if such notice has also been
furnished to the Lenders, the Administrative Agent shall have no obligation to
notify the Lenders with respect thereto.

 

2.7           Voluntary
Prepayments.

 

(a)           At
any time and from time to time, each Borrower shall have the right to prepay
the Loans, in whole or in part, without premium or penalty (except as provided
in clause (iii) below), upon written notice given to the Administrative
Agent not later than 11:00 a.m., Charlotte time, the Applicable Number of
Business Days prior to each intended prepayment of LIBOR Loans and one (1)
Business Day prior to each intended prepayment of Base Rate Loans (other than
Swingline Loans, which may be prepaid on a same-day basis), provided
that (i) each partial prepayment of LIBOR Loans shall be in an aggregate
principal amount of not less than $1,000,000 or, if greater, an integral
multiple of $500,000 in excess thereof, and each partial prepayment of Base
Rate Loans shall be in an aggregate principal amount of not less than $500,000
or, if greater, an integral multiple of $100,000 in excess thereof ($200,000
and $100,000, respectively, in the case of Swingline Loans), (ii) no
partial prepayment of LIBOR Loans made pursuant to any single Borrowing shall
reduce the aggregate outstanding principal amount of the remaining LIBOR Loans
under such Borrowing to less than $1,000,000 or to any greater amount not an integral
multiple of $500,000 in excess thereof, and (iii) unless made together
with all amounts required under Section 2.18
to be paid as a consequence of such prepayment, a prepayment of a LIBOR Loan
may be made only on the last day of the Interest Period applicable thereto. Each
such notice shall specify the proposed date of such prepayment and the
aggregate principal amount, Class and Type of the Loans to be prepaid (and, in
the case of LIBOR Loans, the Interest Period of the Borrowing pursuant to which
made), and shall be irrevocable and shall bind such Borrower to make such
prepayment on the terms specified therein, provided that a notice of
prepayment in full of the Revolving Loans delivered by any Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, a public offering of Capital Stock of the Parent or a sale of all
or substantially all the assets or Capital Stock of the Company or the Parent
(whether by merger or otherwise), in which case such notice may be revoked by
such Borrower (by notice to the Administrative Agent on or prior to the
specified effective date) if such condition is not satisfied (provided
that such Borrower shall be obligated to pay all amounts required under Section 2.18 to be paid as a consequence of the failure
to make such prepayment). Revolving Loans and Swingline Loans (but not Term
Loans) prepaid pursuant to this Section 2.7(a)
may be reborrowed, subject to the terms and conditions of this Agreement. In
the event the Administrative Agent receives a notice of prepayment under this
Section, the Administrative Agent will give prompt notice thereof to the
Lenders; provided that if such notice has also been furnished to the
Lenders, the Administrative Agent shall have no obligation to notify the
Lenders with respect thereto.

 

(b)           Each
prepayment of the Tranche B Term Loans or Incremental Term Loans (if any) made
pursuant to Section 2.7(a) shall be
applied to reduce the outstanding principal amount of the Tranche B Term Loans
and the Incremental Term Loans (if any) on a pro rata basis, with such
reduction to be applied in direct order of maturity to the principal payments
scheduled to come due within the next twelve months and thereafter to the
remaining scheduled principal payments on a pro rata basis. Each prepayment of
the Loans made pursuant to Section 2.7(a)

 

48

 

shall be applied ratably
among the Lenders holding the Loans being prepaid, in proportion to the
principal amount held by each.

 

2.8           Interest.

 

(a)           The
Borrowers will pay interest in respect of the unpaid principal amount of each
Loan, from the date of Borrowing thereof until such principal amount shall be
paid in full, (i) at the Adjusted Base Rate, as in effect from time to
time during such periods as such Loan is a Base Rate Loan, and (ii) at the
Adjusted LIBOR Rate, as in effect from time to time during such periods as such
Loan is a LIBOR Loan. The Company will pay interest in respect of the unpaid
principal amount of each Incremental Term Loan, from the date of Borrowing
thereof until such principal amount shall be paid in full, at the rate or rates
specified in the applicable Incremental Term Loan Amendments.

 

(b)           Upon
the occurrence and during the continuance of any Event of Default involving
failure by any Borrower to pay any principal of or interest on any Loan or
Reimbursement Obligation or any fees under Sections 2.9(b)
or 2.9(c) (whether at maturity, pursuant
to acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum equal to (i) in the case of principal of any Loan, the
interest rate applicable from time to time thereafter to such Loan (whether the
Adjusted Base Rate or the Adjusted LIBOR Rate) plus 2%, and (ii) in the
case of any Reimbursement Obligation or any interest or fee referred to above
for which no rate is provided hereunder, at the Adjusted Base Rate applicable
to Revolving Loans from time to time plus 2%. Additionally, at the election of
the Required Lenders, upon the occurrence and during the continuance of any
other Event of Default, all outstanding principal amounts of the Loans and, to
the greatest extent permitted by law, all interest accrued on the Loans,
together with all other accrued and outstanding fees and other amounts hereunder,
shall bear interest at a rate per annum equal to (i) in the case of
principal of any Loan, the interest rate applicable from time to time
thereafter to such Loan (whether the Adjusted Base Rate or the Adjusted LIBOR
Rate) plus 2%, or (ii) in the case of any Reimbursement Obligation or any
interest, fee or other amounts for which no rate is provided hereunder, at the
Adjusted Base Rate applicable to Revolving Loans from time to time plus 2%. All
such default interest accrued hereunder shall be payable on demand. To the
greatest extent permitted by law, interest shall continue to accrue after the
filing by or against any Borrower of any petition seeking any relief in
bankruptcy or under any law pertaining to insolvency or debtor relief.

 

(c)           Accrued
(and theretofore unpaid) interest shall be payable as follows:

 

(i)            in
respect of each Base Rate Loan (including any Base Rate Loan or portion thereof
paid or prepaid pursuant to the provisions of Section 2.6,
except as provided hereinbelow), in arrears on the last Business Day of each
calendar quarter, beginning with the first such day to occur after the Closing
Date; provided, that in the event the Loans are repaid or prepaid in
full and the Commitments have been terminated, then accrued interest in respect
of all Base Rate Loans shall be payable together with such repayment or
prepayment on the date thereof;

 

(ii)           in
respect of each LIBOR Loan (including any LIBOR Loan or portion thereof paid or
prepaid pursuant to the provisions of Section 2.6,
except as provided 

 

49

 

hereinbelow), in arrears (y) on the last Business
Day of the Interest Period applicable thereto (subject to the provisions of Section 2.10(iv)) and (z) in addition, in the case
of a LIBOR Loan with an Interest Period having a duration of six months or
longer, on each date on which interest would have been payable under
clause (y) above had successive Interest Periods of three months’ duration
been applicable to such LIBOR Loan; provided, that in the event all
LIBOR Loans made pursuant to a single Borrowing are repaid or prepaid in full,
then accrued interest in respect of such LIBOR Loans shall be payable together
with such repayment or prepayment on the date thereof; and

 

(iii)          in
respect of any Loan, at maturity (whether pursuant to acceleration or
otherwise) and, after maturity, on demand.

 

(d)           Nothing
contained in this Agreement or in any other Credit Document shall be deemed to
establish or require the payment of interest to any Lender at a rate in excess
of the maximum rate permitted by applicable law. If the amount of interest
payable for the account of any Lender on any interest payment date would exceed
the maximum amount permitted by applicable law to be charged by such Lender,
the amount of interest payable for its account on such interest payment date
shall be automatically reduced to such maximum permissible amount. In the event
of any such reduction affecting any Lender, if from time to time thereafter the
amount of interest payable for the account of such Lender on any interest
payment date would be less than the maximum amount permitted by applicable law
to be charged by such Lender, then the amount of interest payable for its
account on such subsequent interest payment date shall be automatically
increased to such maximum permissible amount, provided that at no time
shall the aggregate amount by which interest paid for the account of any Lender
has been increased pursuant to this sentence exceed the aggregate amount by
which interest paid for its account has theretofore been reduced pursuant to
the previous sentence.

 

(e)           The
Administrative Agent shall promptly notify the Company and the Lenders upon
determining the interest rate for each Borrowing of LIBOR Loans after its
receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Administrative Agent to provide the
Company or the Lenders with any such notice shall neither affect any obligations
of any Borrower or the Lenders hereunder nor result in any liability on the
part of the Administrative Agent to any Borrower or any Lender. Each such
determination (including each determination of the Reserve Requirement) shall,
absent manifest error, be conclusive and binding on all parties hereto.

 

2.9           Fees.
The Company agrees to pay:

 

(a)           To
the Arranger and Wachovia, for their own respective accounts and/or the account
of the Lenders, as applicable, on the Closing Date, the fees required under the
Fee Letter to be paid to them on the Closing Date, in the amounts due and
payable on the Closing Date as required by the terms thereof;

 

(b)           To
the Administrative Agent, for the account of each Revolving Credit Lender, a
commitment fee for each calendar quarter (or portion thereof) for the period
from the date of this Agreement to the Revolving Credit Termination Date, at a
per annum rate equal to the 

 

50

 

Applicable Percentage in
effect for such fee from time to time during such quarter on such Lender’s
ratable share (based on the proportion that its Revolving Credit Commitment
bears to the aggregate Revolving Credit Commitments) of the average daily
aggregate Unutilized Revolving Credit Commitments (excluding clause (iii)
of the definition thereof for purposes of this Section 2.9(b)
only), payable in arrears (i) on the last Business Day of each calendar
quarter, beginning with the first such day to occur after the Closing Date, and
(ii) on the Revolving Credit Termination Date;

 

(c)           To
the Administrative Agent, for the account of each Revolving Credit Lender, a
letter of credit fee for each calendar quarter (or portion thereof) in respect
of all Letters of Credit outstanding during such quarter, at a per annum rate
equal to the Applicable Percentage in effect from time to time during such
quarter for Revolving Loans that are maintained as LIBOR Loans, on such Lender’s
ratable share (based on the proportion that its Revolving Credit Commitment
bears to the aggregate Revolving Credit Commitments) of the daily average
aggregate Stated Amount of such Letters of Credit, payable in arrears
(i) on the last Business Day of each calendar quarter, beginning with the
first such day to occur after the Closing Date, and (ii) on the later of
the Revolving Credit Termination Date and the date of termination of the last
outstanding Letter of Credit;

 

(d)           To
the Issuing Lender, for its own account, a facing fee for each calendar quarter
(or portion thereof) in respect of all Letters of Credit outstanding during
such quarter, at a per annum rate of 0.125% on the daily average aggregate
Stated Amount of such Letters of Credit, payable in arrears (i) on the
last Business Day of each calendar quarter, beginning with the first such day
to occur after the Closing Date, and (ii) on the later of the Revolving
Credit Termination Date and the date of termination of the last outstanding
Letter of Credit;

 

(e)           To
the Issuing Lender, for its own account, such commissions, transfer fees and
other fees and charges incurred in connection with the issuance and
administration of each Letter of Credit as are customarily charged from time to
time by the Issuing Lender for the performance of such services in connection
with similar letters of credit, or as may be otherwise agreed to by the Issuing
Lender, but without duplication of amounts payable under Section 2.9(d);
and

 

(f)            To
the Administrative Agent, for its own account, the annual administrative fee
described in the Fee Letter, on the terms, in the amount and at the times set
forth therein.

 

2.10         Interest
Periods. Concurrently with the giving of a Notice of Borrowing or Notice of
Conversion/Continuation in respect of any Borrowing (whether in respect of Term
Loans or Revolving Loans) comprised of Base Rate Loans to be converted into, or
LIBOR Loans to be continued as, LIBOR Loans, the applicable Borrower shall have
the right to elect, pursuant to such notice, the interest period (each, an “Interest
Period”) to be applicable to such LIBOR Loans, which Interest Period shall,
at the option of such Borrower, be a one, two, three, six or (if acceptable to
all the applicable Lenders) nine or twelve-month period; provided, however,
that:

 

(i)            all
LIBOR Loans comprising a single Borrowing shall at all times have the same
Interest Period;

 

51

 

(ii)           the
initial Interest Period for any LIBOR Loan shall commence on the date of the
Borrowing of such LIBOR Loan (including the date of any continuation of, or
conversion into, such LIBOR Loan), and each successive Interest Period
applicable to such LIBOR Loan shall commence on the day on which the next
preceding Interest Period applicable thereto expires;

 

(iii)          LIBOR
Loans may not be outstanding under more than eight (8) separate Interest
Periods at any one time (for which purpose Interest Periods shall be deemed to
be separate even if they are coterminous);

 

(iv)          if
any Interest Period otherwise would expire on a day that is not a Business Day,
such Interest Period shall expire on the next succeeding Business Day unless
such next succeeding Business Day falls in another calendar month, in which
case such Interest Period shall expire on the next preceding Business Day;

 

(v)           no
Interest Period may be selected with respect to Term Loans of any particular
Class that would end after a scheduled date for repayment of principal of such
Term Loans occurring on or after the first day of such Interest Period unless,
immediately after giving effect to such selection, the aggregate principal
amount of such Term Loans that are Base Rate Loans or that have Interest
Periods expiring on or before such principal repayment date equals or exceeds
the principal amount required to be paid on such principal repayment date;

 

(vi)          the
applicable Borrower may not select any Interest Period that expires
(x) after the Tranche B Term Loan Maturity Date, with respect to Tranche B
Term Loans that are to be maintained as LIBOR Loans, (y) after the
applicable Incremental Term Loan Maturity Date for any Series of Incremental
Term Loans, with respect to Incremental Term Loans of such Series that are to
be maintained as LIBOR Loans, or (z) after the Revolving Credit Maturity
Date, with respect to Revolving Loans that are to be maintained as LIBOR Loans;

 

(vii)         if
any Interest Period begins on a day for which there is no numerically
corresponding day in the calendar month during which such Interest Period would
otherwise expire, such Interest Period shall expire on the last Business Day of
such calendar month; and

 

(viii)        the
applicable Borrower may not select any Interest Period (and consequently, no
LIBOR Loans shall be made) if a Default or Event of Default shall have occurred
and be continuing at the time of such Notice of Borrowing or Notice of Conversion/Continuation
with respect to any Borrowing.

 

2.11         Conversions
and Continuations.

 

(a)           The
Borrowers shall have the right, on any Business Day occurring on or after the
Closing Date, to elect (i) to convert all or a portion of the outstanding
principal amount of any Base Rate Loans of any Class into LIBOR Loans of the
same Class, or to convert any Dollar LIBOR Loans of any Class the Interest
Periods for which end on the same day into Base Rate Loans of the same Class,
or (ii) upon the expiration of any Interest Period, to continue all or a 

 

52

 

portion of the
outstanding principal amount of any LIBOR Loans of any Class the Interest
Periods for which end on the same day for an additional Interest Period, provided
that (v) any such continuation of LIBOR Loans that are Foreign Currency
Revolving Loans for an additional Interest Period shall be in the same Foreign
Currency, (w) any such conversion of LIBOR Loans into Base Rate Loans
shall involve an aggregate principal amount of not less than $500,000 or, if
greater, an integral multiple of $100,000 in excess thereof; any such
conversion of Base Rate Loans into, or continuation of, LIBOR Loans shall
involve an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof; and no partial
conversion of LIBOR Loans made pursuant to a single Borrowing shall reduce the
outstanding principal amount of such LIBOR Loans to less than $1,000,000 or to
any greater amount not an integral multiple of $500,000 in excess thereof,
(x) if any LIBOR Loans are converted into Base Rate Loans other than on
the last day of the Interest Period applicable thereto, the applicable Borrower
will pay, upon such conversion, all amounts required under Section 2.18
to be paid as a consequence thereof, (y) no such conversion or
continuation shall be permitted with regard to any Base Rate Loans that are
Swingline Loans, and (z) no conversion of Base Rate Loans into LIBOR Loans
or continuation of LIBOR Loans shall be permitted during the continuance of a
Default or Event of Default.

 

(b)           The
applicable Borrower shall make each such election by giving the Administrative
Agent written notice not later than 11:00 a.m., Charlotte time, the Applicable
Number of Business Days prior to the intended effective date of any conversion
of Base Rate Loans into, or continuation of, LIBOR Loans and one (1) Business
Day prior to the intended effective date of any conversion of LIBOR Loans into
Base Rate Loans. Each such notice (each, a “Notice of
Conversion/Continuation”) shall be irrevocable, shall be given in the form
of Exhibit B-3 and shall specify
(w) the date of such conversion or continuation (which shall be a Business
Day), (x) in the case of a conversion into, or a continuation of, LIBOR
Loans, the Interest Period to be applicable thereto, (y) in the case of a
continuation of Foreign Currency Revolving Loans, the applicable Foreign
Currency, and (z) the aggregate amount, Class and Type of the Loans being
converted or continued. Upon the receipt of a Notice of
Conversion/Continuation, the Administrative Agent will promptly notify each
applicable Lender of the proposed conversion or continuation. In the event that
the applicable Borrower shall fail to deliver a Notice of
Conversion/Continuation as provided herein with respect to any outstanding
LIBOR Loans, such LIBOR Loans shall automatically be converted to Base Rate
Loans upon the expiration of the then current Interest Period applicable
thereto (unless repaid pursuant to the terms hereof). In the event the
applicable Borrower shall have failed to select in a Notice of
Conversion/Continuation the duration of the Interest Period to be applicable to
any conversion into, or continuation of, LIBOR Loans, then such Borrower shall
be deemed to have selected an Interest Period with a duration of one month.

 

(c)           At
the election of the Required Revolving Credit Lenders, upon the occurrence and
during the continuance of any Event of Default, all Foreign Currency Loans then
outstanding shall be redenominated into Dollars (based on the Dollar Amount of
such Foreign Currency Loans on the date of redenomination) on the last day of
the then current Interest Periods therefor, provided that in each case
the Borrowers shall be liable for any currency exchange loss related to such
payments and shall promptly pay to each Lender, upon receipt of notice thereof
from such Lender to the Company, the amount of any such loss incurred by such
Lender.

 

53

 

2.12         Method
of Payments; Computations.

 

(a)           All
payments by the Borrowers hereunder shall be made without setoff, counterclaim
or other defense and in immediately available funds to the Administrative
Agent, for the account of the Lenders entitled to such payment or the Swingline
Lender, as the case may be (except as otherwise expressly provided herein as to
payments required to be made directly to the Issuing Lender or the Lenders),
(i) in the case of payments of principal and interest with respect to any
Dollar Loan and all payments of fees, expenses and any other amounts due
hereunder or under any other Credit Document (except as set forth in
clause (ii) below with respect to amounts denominated in a Foreign
Currency), in Dollars to the Administrative Agent at the applicable Payment
Office, prior to 12:00 noon, Charlotte time, on the date payment is due, and
(ii) in the case of payments of principal and interest with respect to any
Foreign Currency Revolving Loan and any other amounts denominated in a Foreign
Currency, in the Foreign Currency in which such Foreign Currency Revolving Loan
was made or in which such other amount is denominated, to the Administrative
Agent at the applicable Payment Office, prior to 12:00 noon, Local Time, on the
date payment is due. Any payment made as required hereinabove, but after 12:00
noon, Charlotte time (or Local Time, as the case may be), shall be deemed to
have been made on the next succeeding Business Day. If any payment falls due on
a day that is not a Business Day, then such due date shall be extended to the
next succeeding Business Day (except that in the case of LIBOR Loans to which
the provisions of Section 2.10(iv)
are applicable, such due date shall be the next preceding Business Day), and
such extension of time shall then be included in the computation of payment of
interest, fees or other applicable amounts.

 

(b)           The
Administrative Agent will distribute to the Lenders like amounts relating to
payments made to the Administrative Agent for the account of the Lenders as
follows:  (i) if the payment is
received by 12:00 noon, Charlotte time (in the case of payments denominated in
Dollars) or Local Time (in the case of payments denominated in a Foreign Currency),
in immediately available funds, the Administrative Agent will make available to
each relevant Lender on the same date, by wire transfer of immediately
available funds, such Lender’s ratable share of such payment (based on the
percentage that the amount of the relevant payment owing to such Lender bears
to the total amount of such payment owing to all of the relevant Lenders), and
(ii) if such payment is received after 12:00 noon, Charlotte time (in the
case of payments denominated in Dollars) or Local Time (in the case of payments
denominated in a Foreign Currency), or in other than immediately available
funds, the Administrative Agent will make available to each such Lender its
ratable share of such payment by wire transfer of immediately available funds
on the next succeeding Business Day (or in the case of uncollected funds, as
soon as practicable after collected). If the Administrative Agent shall not
have made a required distribution to the appropriate Lenders as required
hereinabove after receiving a payment for the account of such Lenders, the
Administrative Agent will pay to each such Lender, on demand, its ratable share
of such payment with interest thereon at the Federal Funds Rate for each day
from the date such amount was required to be disbursed by the Administrative
Agent until the date repaid to such Lender. The Administrative Agent will
distribute to the Issuing Lender like amounts relating to payments made to the
Administrative Agent for the account of the Issuing Lender in the same manner,
and subject to the same terms and conditions, as set forth hereinabove with
respect to distributions of amounts to the Lenders.

 

54

 

(c)           Unless
the Administrative Agent shall have received written notice from the applicable
Borrower prior to the date on which any payment is due to any Lender hereunder
that such payment will not be made in full, the Administrative Agent may assume
that such Borrower has made such payment in full to the Administrative Agent on
such date, and the Administrative Agent may, in reliance on such assumption,
but shall not be obligated to, cause to be distributed to such Lender on such
due date an amount equal to the amount then due to such Lender. If and to the
extent such Borrower shall not have so made such payment in full to the
Administrative Agent, and without limiting the obligation of such Borrower to
make such payment in accordance with the terms hereof, such Lender shall repay
to the Administrative Agent forthwith on demand such amount so distributed to
such Lender, together with interest thereon for each day from the date such
amount is so distributed to such Lender until the date repaid to the
Administrative Agent, at the Federal Funds Rate.

 

(d)           All
computations of interest and fees hereunder (including computations of the
Reserve Requirement) shall be made on the basis of a year consisting of
(i) in the case of interest on Base Rate Loans, 365/366 days, as the case
may be, (ii) in the case of interest on Foreign Currency Revolving Loans
denominated in Pounds Sterling, 365 days, or (iii) in all other instances,
360 days; and in each case under (i), (ii) and (iii) above, with regard to the
actual number of days (including the first day, but excluding the last day)
elapsed.

 

(e)           Each
payment on account of an amount due from a Borrower under this Agreement or any
other Credit Document shall be made in the Applicable Currency in which such
amount is denominated and in such funds as are customary at the place and time
of payment for the settlement of international payments in such currency. Without
limitation of the foregoing, accrued interest on any Foreign Currency Revolving
Loans shall be payable in the same Foreign Currency as such Loan.

 

2.13         Recovery
of Payments.

 

(a)           Each
Borrower agrees that to the extent such Borrower makes a payment or payments to
or for the account of the Administrative Agent, the Swingline Lender, any
Lender or the Issuing Lender, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or similar state or federal law, common law or equitable
cause (whether as a result of any demand, settlement, litigation or otherwise),
then, to the extent of such payment or repayment, the Obligation intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been received.

 

(b)           If
any amounts distributed by the Administrative Agent to any Lender are
subsequently returned or repaid by the Administrative Agent to any Borrower or
its representative or successor in interest, whether by court order or by
settlement approved by the Lender in question, such Lender will, promptly upon
receipt of notice thereof from the Administrative Agent, pay the Administrative
Agent such amount. If any such amounts are recovered by the Administrative
Agent from any Borrower or its representative or successor in interest, the
Administrative Agent will redistribute such amounts to the Lenders on the same
basis as such amounts were originally distributed.

 

55

 

2.14         Use of
Proceeds. The proceeds of the Loans shall be used (i) to finance the
purchase price for the Aircast Acquisition (including, for this purpose, up to
$2,500,000 in payments related to the Company’s share of any “Earnout
Obligations” and “Earnout-Related Costs” (each as defined in the Aircast Stock
Purchase Agreement) and up to $12,000,000 (plus additional amounts as may be
approved by the Administrative Agent) in integration costs relating to the
Aircast Acquisition at and after the Closing Date), (ii) to repay the
indebtedness under the Existing Credit Agreement in full (other than Existing
Letters of Credit, which shall be deemed Letters of Credit hereunder),
(iii) to pay or reimburse fees and expenses in connection with the
Transactions, and (iv) to provide for working capital and general
corporate purposes and in accordance with the terms and provisions of this
Agreement (including, without limitation, to finance Permitted Acquisitions in
accordance with the terms and provisions of this Agreement).

 

2.15         Pro
Rata Treatment.

 

(a)           Except
in the case of Swingline Loans, all fundings, continuations and conversions of
Loans of any Class shall be made by the Lenders pro rata on the basis of their
respective Commitments to provide Loans of such Class (in the case of the
funding of Loans of such Class pursuant to Section 2.2)
or on the basis of their respective outstanding Loans of such Class (in the
case of continuations and conversions of Loans of such Class pursuant to Section 2.11, and additionally in all cases in the
event the Commitments have expired or have been terminated), as the case may be
from time to time. All payments on account of principal of or interest on any
Loans, fees or any other Obligations owing to or for the account of any one or more
Lenders shall be apportioned ratably among such Lenders in proportion to the
amounts of such principal, interest, fees or other Obligations owed to them
respectively.

 

(b)           Each
Lender agrees that if it shall receive any amount hereunder (whether by voluntary
payment, realization upon security, exercise of the right of setoff or banker’s
lien, counterclaim or cross action, or otherwise, other than pursuant to Section 2.16(a), 2.16(b), 2.16(d), 2.17, 2.18, 2.20(e) or 11.7) applicable to the payment of any of the Obligations
that exceeds its ratable share (according to the proportion of (i) the
amount of such Obligations due and payable to such Lender at such time to
(ii) the aggregate amount of such Obligations due and payable to all
Lenders at such time) of payments on account of such Obligations then or
therewith obtained by all the Lenders to which such payments are required to
have been made, such Lender shall forthwith purchase from the other Lenders
such participations in such Obligations as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender
(whether as a result of any demand, settlement, litigation or otherwise), such
purchase from each such other Lender shall be rescinded and each such other
Lender shall repay to the purchasing Lender the purchase price to the extent of
such recovery, together with an amount equal to such other Lender’s ratable
share (according to the proportion of (i) the amount of such other Lender’s
required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. Each Borrower agrees that
any Lender so purchasing a participation from another Lender pursuant to the
provisions of this Section 2.15(b)
may, to the fullest extent permitted by law, exercise any and all rights of
payment (including, without limitation, setoff, banker’s lien or counterclaim)
with respect to such participation as fully as if such participant were a
direct creditor of such

 

56

 

Borrower in the amount of
such participation. If under any applicable bankruptcy, insolvency or similar
law, any Lender receives a secured claim in lieu of a setoff to which this Section 2.15(b) applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section 2.15(b) to share in the benefits of any
recovery on such secured claim.

 

2.16         Increased
Costs; Change in Circumstances; Illegality; etc.

 

(a)           If
the introduction of or any change in any applicable law, rule or regulation or
in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, in each case after
the date hereof, or compliance by any Lender (including the Issuing Lender in
its capacity as such) with any guideline or request from any such Governmental
Authority (whether or not having the force of law) given or made after the date
hereof, shall (i) subject such Lender to any tax or other charge, or
change the basis of taxation of payments to such Lender, in respect of any of
its LIBOR Loans or any other amounts payable hereunder or its obligation to
make, fund or maintain any LIBOR Loans (other than any change in the rate or
basis of tax on or determined by reference to the overall net income or profits
of such Lender or its applicable Lending Office or franchise taxes imposed in
lieu thereof), (ii) impose, modify or deem applicable any reserve, special
deposit or similar requirement (but excluding any reserves to the extent
actually included within the Reserve Requirement in the calculation of the
LIBOR Rate) against assets of, deposits with or for the account of, or credit
extended by, such Lender or its applicable Lending Office, or (iii) impose
on such Lender or its applicable Lending Office any other condition, and the
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any LIBOR Loans or issuing, maintaining or participating
in Letters of Credit or to reduce the amount of any sum received or receivable
by such Lender hereunder (including in respect of Letters of Credit), the
Borrowers will, promptly upon demand therefor by such Lender, pay to such
Lender such additional amounts as shall compensate such Lender for such
increase in costs or reduction in return.

 

(b)           If
any Lender (including the Issuing Lender in its capacity as such) shall have
reasonably determined that the introduction of or any change in any applicable
law, rule or regulation regarding capital adequacy or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, in each case after the date hereof,
or compliance by such Lender with any guideline or request from any such
Governmental Authority (whether or not having the force of law) given or made
after the date hereof, has or would have the effect, as a consequence of such
Lender’s Commitment, Loans or issuance of or participations in Letters of
Credit hereunder, of reducing the rate of return on the capital of such Lender
or any Person Controlling such Lender to a level below that which such Lender
or Controlling Person could have achieved but for such introduction, change or
compliance (taking into account such Lender’s or Controlling Person’s policies
with respect to capital adequacy), the Borrowers will, promptly upon demand
therefor by such Lender, pay to such Lender such additional amounts as will
compensate such Lender or Controlling Person for such reduction in return.

 

(c)           If,
on or prior to the first day of any Interest Period, (x) the
Administrative Agent or the Required Lenders shall have determined that by
reason of circumstances affecting the

 

57

 

foreign exchange and
interbank markets generally, deposits in any Foreign Currency in the applicable
amounts are not being quoted or offered to the Administrative Agent or the
Lenders for such Interest Period, or that a fundamental change has occurred in
the foreign exchange or interbank markets with respect to any Foreign Currency
(including, without limitation, changes in national or international financial,
political or economic conditions or currency exchange rates or exchange
controls), (y) the Administrative Agent shall have determined that
adequate and reasonable means do not exist for ascertaining the applicable
LIBOR Rate for such Interest Period or (z) the Administrative Agent shall
have received written notice from the Required Lenders of their determination
that the rate of interest referred to in the definition of “LIBOR Rate”
upon the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such
Interest Period is to be determined will not adequately and fairly reflect the
cost to such Lenders of making or maintaining the relevant Type of LIBOR Loans
during such Interest Period, the Administrative Agent will forthwith so notify
the Company and the Lenders. Upon such notice, (i) all then outstanding
LIBOR Loans of each affected currency and/or Interest Period type specified in
such notice (each, a “Relevant Type”) shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans (provided that
any affected outstanding Foreign Currency Revolving Loan shall be repaid in
full on the last day of the Interest Period therefor), (ii) the obligation
of the Lenders to make, to convert Base Rate Loans into, or to continue, LIBOR
Loans of each Relevant Type shall be suspended (including pursuant to the
Borrowing to which such Interest Period applies), and (iii) any Notice of
Borrowing or Notice of Conversion/Continuation given at any time thereafter
with respect to each Relevant Type of LIBOR Loans shall be deemed to be a
request for Base Rate Loans (provided that any such notice with respect
to any Foreign Currency Revolving Loans constituting a Relevant Type shall be
disregarded), in each case until the Administrative Agent or the Required
Lenders, as the case may be, shall have determined that the circumstances
giving rise to such suspension no longer exist (and the Required Lenders, if
making such determination, shall have so notified the Administrative Agent),
and the Administrative Agent shall have so notified the Company and the
Lenders.

 

(d)           Notwithstanding
any other provision in this Agreement, if, at any time after the date hereof
and from time to time, any Lender shall have determined in good faith that the
introduction of or any change in any applicable law, rule or regulation or in
the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance with
any guideline or request from any such Governmental Authority (whether or not
having the force of law), has or would have the effect of making it unlawful
for such Lender to make or to continue to make or maintain LIBOR Loans of any
Type, such Lender will forthwith so notify the Administrative Agent and the
Company. Upon such notice, (i) each of such Lender’s then outstanding
LIBOR Loans of each Relevant Type shall automatically, on the expiration date
of the respective Interest Period applicable thereto (or, to the extent any
such LIBOR Loan may not lawfully be maintained as a LIBOR Loan until such
expiration date, upon such notice) and to the extent not sooner prepaid, be
converted into a Base Rate Loan (provided that any outstanding Foreign
Currency Revolving Loan shall be repaid in full on the last day of the Interest
Period therefor or, if required as provided above, upon such notice),
(ii) the obligation of such Lender to make, to convert Base Rate Loans
into, or to continue, LIBOR Loans of each Relevant Type shall be suspended (including
pursuant to any Borrowing for which the Administrative Agent has received a
Notice of Borrowing but for which the Borrowing Date has not arrived), and
(iii) any Notice of Borrowing or Notice of 

 

58

 

Conversion/Continuation
given at any time thereafter with respect to LIBOR Loans of each Relevant Type
shall, as to such Lender, be deemed to be a request for a Base Rate Loan (provided
that any such notice with respect to any Foreign Currency Revolving Loans constituting
a Relevant Type shall be disregarded), in each case until such Lender shall
have determined that the circumstances giving rise to such suspension no longer
exist and shall have so notified the Administrative Agent, and the
Administrative Agent shall have so notified the Company.

 

(e)           A
certificate (which shall be in reasonable detail) showing the bases for, and
method of allocation or apportionment of, the determinations set forth in this Section 2.16 by any Lender as to any additional amounts
payable pursuant to this Section 2.16 shall
be submitted by such Lender to the Company either directly or through the
Administrative Agent. The determinations set forth in any such certificate for
purposes of this Section 2.16 of any increased
costs, reduction in return, market contingencies, illegality or any other
matter shall, absent manifest error, be conclusive, provided that such
determinations are made in good faith. Nothing in this Section 2.16
shall require or be construed to require the Borrowers to pay any
interest, fees, costs or other amounts in excess of that permitted by
applicable law.

 

2.17         Taxes.

 

(a)           Any
and all payments by the Borrowers hereunder or under any other Credit Document
shall be made, in accordance with the terms hereof and thereof, free and clear
of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding branch profits taxes imposed on, and taxes imposed on or
determined by reference to the overall net income of (or franchise taxes
imposed on), the Administrative Agent or any Lender, in either case by reason
of any 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 thereof, other than such a 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 other Credit Document (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as “Taxes”). If any Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
other Credit Document to the Administrative Agent or any Lender, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.17), the
Administrative Agent or such Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) such Borrower will make such deductions, (iii) such Borrower
will pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law and (iv) such Borrower will
deliver to the Administrative Agent or such Lender, as the case may be, evidence
of such payment.

 

(b)           The
Borrowers will indemnify the Administrative Agent and each Lender for the full
amount of Taxes (including, without limitation, any Taxes imposed by any
jurisdiction on amounts payable under this Section 2.17)
paid by the Administrative Agent or such Lender, as the case may be, and any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were correctly or legally
asserted. This

 

59

 

indemnification shall be
made within 30 days from the date the Administrative Agent or such Lender, as
the case may be, makes written demand therefor. Such written demand shall set
forth in reasonable detail the amount of Taxes payable and the calculation
thereof and shall be conclusive and binding absent manifest error, provided
such determination is made in good faith.

 

(c)           Each
of the Administrative Agent and the Lenders agrees that if it subsequently
recovers, or receives a permanent net tax benefit with respect to, any amount
of Taxes (i) previously paid by it and as to which it has been indemnified
by or on behalf of the Borrowers or (ii) previously deducted by any
Borrower (including, without limitation, any Taxes deducted from any additional
sums payable under Section 2.17(a)(i)),
the Administrative Agent or such Lender, as the case may be, shall reimburse
the Borrowers to the extent of the amount of any such recovery or permanent net
tax benefit (but only to the extent of indemnity payments made, or additional
amounts paid, by or on behalf of the Borrowers under this Section 2.17
with respect to the Taxes giving rise to such recovery or tax benefit); provided,
however, that the Borrowers, upon the request of the Administrative
Agent or such Lender, agree to repay to the Administrative Agent or such
Lender, as the case may be, the amount paid over to the Borrowers (together
with any penalties, interest or other charges), in the event the Administrative
Agent or such Lender is required to repay such amount to the relevant taxing
authority or other Governmental Authority. The Administrative Agent or such
Lender shall provide the Borrowers with a certificate in reasonable detail
showing the calculations of the distributions to the Borrowers pursuant to this
Section 2.17(c), which
calculations shall be conclusive and binding absent manifest error, provided
such determination is made in good faith. Nothing in this Section 2.17
shall obligate any Lender to disclose to the Borrowers any tax returns or other
information regarding its tax affairs that it deems in good faith to be
confidential or interfere with the right of any Lender to arrange its tax
affairs as it deems appropriate.

 

(d)           If
any Lender is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for federal income tax purposes (a “Non-U.S.
Lender”) and is entitled to an exemption from or a reduction of United
States withholding tax pursuant to the Internal Revenue Code, such Non-U.S.
Lender will deliver to each of the Administrative Agent and the Company, on or
prior to the Closing Date (or, in the case of a Non-U.S. Lender that becomes a
party to this Agreement as a result of an assignment after the Closing Date, on
the effective date of such assignment), (i) in the case of a Non-U.S.
Lender that is a “bank” for purposes of Section 881(c)(3)(A) of the
Internal Revenue Code, two accurate and properly completed original signed
copies of Internal Revenue Service Form W-8BEN or W-8ECI, as applicable (or
successor forms), certifying that such Non-U.S. Lender is entitled to an
exemption from or a reduction of withholding or deduction for or on account of
United States federal income taxes in connection with payments under this
Agreement or any of the other Credit Documents, or (ii) in the case of a
Non-U.S. Lender that is not a “bank” for purposes of
Section 881(c)(3)(A) of the Internal Revenue Code, a certificate in form
and substance reasonably satisfactory to the Administrative Agent and the
Company and to the effect that (x) such Non-U.S. Lender is not a “bank”
for purposes of Section 881(c)(3)(A) of the Internal Revenue Code, is not
subject to regulatory or other legal requirements as a bank in any
jurisdiction, and 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 any tax, securities law or other legal requirements, (y) is
not a 10-percent shareholder for purposes of Section 881(c)(3)(B) of the

 

60

 

Internal Revenue Code and
(z) is not a controlled foreign corporation receiving interest from a
related person for purposes of Section 881(c)(3)(C) of the Internal
Revenue Code, together with two accurate and properly completed original signed
copies of Internal Revenue Service Form W-8BEN (or successor form). Each such
Non-U.S. Lender further agrees to deliver to each of the Administrative Agent
and the Company additional copies of each such relevant form on or before the
date that such form expires or becomes obsolete or after the occurrence of any
event (including a change in its applicable Lending Office) requiring a change
in the most recent forms so delivered by it, in each case certifying that such
Non-U.S. Lender is entitled to an exemption from or a reduction of withholding
or deduction for or on account of United States federal income taxes in
connection with payments under this Agreement or any of the other Credit
Documents, unless 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 event renders all such forms
inapplicable or the exemption or reduction to which such forms relate
unavailable and such Non-U.S. Lender notifies the Administrative Agent and the
Company that it is not entitled to receive payments without or at a reduced
rate of deduction or withholding of United States federal income taxes. Each
such Non-U.S. Lender will promptly notify the Administrative Agent and the
Company of any changes in circumstances that would modify or render invalid any
claimed exemption or reduction.

 

(e)           The
Borrowers shall not be required to indemnify any Non-U.S. Lender, or to pay any
additional amounts to any Non-U.S. Lender, in respect of United States federal
withholding tax to the extent that (i) the obligation to withhold amounts
with respect to United States federal withholding tax existed on the date such
Non-U.S. Lender became a party to this Agreement; provided, however,
that this clause (i) shall not apply to the extent that (y) the
indemnity payments or additional amounts any Lender would be entitled to
receive (without regard to this clause (i)) do not exceed the indemnity
payment or additional amounts that the person making the assignment,
participation or transfer to such Lender would have been entitled to receive in
the absence of such assignment, participation or transfer, or (z) such
assignment, participation or transfer was requested by any Borrower,
(ii) the obligation to pay such additional amounts would not have arisen
but for a failure by such Non-U.S. Lender to comply with the provisions of Section 2.17(d), or (iii) any of the
representations or certifications made by a Non-U.S. Lender pursuant to Section 2.17(d) are incorrect at the time a payment
hereunder is made, other than by reason of any change in treaty, law or
regulation having effect after the date such representations or certifications
were made.

 

2.18         Compensation.
Each Borrower will compensate each Lender upon demand for all losses, expenses
and liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other
funds required by such Lender to fund or maintain LIBOR Loans) that such Lender
may incur or sustain (i) if for any reason (other than a default by such
Lender) a Borrowing or continuation of, or conversion into, a LIBOR Loan by or
to such Borrower does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation, (ii) if any repayment,
prepayment or conversion of any LIBOR Loan by or to such Borrower occurs on a
date other than the last day of an Interest Period applicable thereto
(including as a consequence of acceleration of the maturity of the Loans
pursuant to Section 2.9), (iii) if
any prepayment of any LIBOR Loan by such Borrower is not made on any date
specified in a notice of prepayment given by such Borrower, (iv) as a
consequence of any other failure by such Borrower to make any payments

 

61

 

with respect to any LIBOR Loan when due hereunder, or (v) as a
consequence of any failure by such Borrower to pay a Foreign Currency Revolving
Loan in the applicable Foreign Currency. Calculation of all amounts payable to
a Lender under this Section 2.18
shall be made as though such Lender had actually funded its relevant LIBOR Loan
through the purchase of a Eurodollar (or other applicable Foreign Currency)
deposit bearing interest at the relevant LIBOR Rate in an amount equal to the
amount of such LIBOR Loan, having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund its
LIBOR Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this Section 2.18. A certificate (which shall be in
reasonable detail) showing the bases for the determinations set forth in this Section 2.18 by any Lender as to any additional amounts
payable pursuant to this Section 2.18
shall be submitted by such Lender to such Borrower either directly or through
the Administrative Agent. Determinations set forth in any such certificate made
in good faith for purposes of this Section 2.18
of any such losses, expenses or liabilities shall be conclusive absent manifest
error, provided such determination was made in good faith.

 

2.19         Replacement
of Lenders; Mitigation of Costs.

 

(a)           The
Company may, at any time and so long as no Default or Event of Default has then
occurred and is continuing, replace any Lender (i) that has requested
compensation from any Borrower under Section 2.16(a),
2.16(b) or 2.17,
(ii) the obligation of which to make or maintain LIBOR Loans has been
suspended under Section 2.16(d) or
(iii) that is a Defaulting Lender, in any case under clauses (i)
through (iii) above by written notice to such Lender and the Administrative
Agent given not more than sixty (60) days after any such event and identifying
one or more Persons each of which shall be an Eligible Assignee and reasonably
acceptable to the Administrative Agent (each, a “Replacement Lender,”
and collectively, the “Replacement Lenders”) to replace such Lender (the
“Replaced Lender”), provided that (i) the notice from the
Company to the Replaced Lender and the Administrative Agent provided for
hereinabove shall specify an effective date for such replacement (the “Replacement
Effective Date”), which shall be at least five (5) Business Days after such
notice is given, (ii) as of the relevant Replacement Effective Date, each
Replacement Lender shall enter into an Assignment and Acceptance with the
Replaced Lender pursuant to Section 11.7(a)
(but shall not be required to pay the processing fee otherwise payable to the
Administrative Agent pursuant to Section 11.7(a),
which fee, for purposes hereof, shall be waived), pursuant to which such
Replacement Lenders collectively shall acquire, in such proportion among them
as they may agree with the Company and the Administrative Agent, all (but not
less than all) of the Commitments and outstanding Loans of the Replaced Lender,
and, in connection therewith, shall pay (x) to the Replaced Lender, as the
purchase price in respect thereof, an amount equal to the sum as of the
Replacement Effective Date (without duplication) of (1) the unpaid
principal amount of, and all accrued but unpaid interest on, all outstanding
Loans of the Replaced Lender and (2) the Replaced Lender’s ratable share
of all accrued but unpaid fees owing to the Replaced Lender hereunder,
(y) to the Administrative Agent, for its own account, any amounts owing to
the Administrative Agent by the Replaced Lender under Section 2.3(b),
and (z) to the Administrative Agent, for the account of the Swingline
Lender, any amounts owing to the Swingline Lender under Section 2.2(e),
and (iii) all other obligations of the Borrowers owing to the Replaced
Lender (other than those specifically described in clause (ii) above in
respect of which the assignment purchase price has been, or is concurrently
being, paid), including, without limitation, amounts payable under

 

62

 

Sections 2.16(a),
2.16(b) and 2.17
which give rise to the replacement of such Replaced Lender and amounts payable
under Section 2.18 as a result of the
actions required to be taken under this Section 2.19,
shall be paid in full by the Borrowers to the Replaced Lender on or prior to
the Replacement Effective Date.

 

(b)           Any
Lender (including the Issuing Lender in such capacity) claiming any amounts
pursuant to Section 2.16(a), 2.16(b) or 2.17 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to avoid
any costs, reductions or Taxes in respect of which such amounts are claimed,
including the filing of any certificate or document reasonably requested by the
Borrowers or the changing of the jurisdiction of its Lending Office, if such
efforts would avoid the need for or reduce the amount of any such amounts which
would thereafter accrue and would not, in the sole determination of such
Lender, result in any additional risks or unreimbursed costs or expenses to
such Lender or be otherwise disadvantageous to such Lender.

 

(c)           No
failure by the Administrative Agent or any Lender at any time to demand payment
of any amounts payable under Sections 2.16(a),
2.16(b), 2.17
or 2.18 shall constitute a waiver of its
right to demand payment of such amounts at any later time or to demand payment
of any additional amounts arising at any later time; provided that the
Borrowers shall not be required to compensate any Lender pursuant to Sections 2.16(a), 2.16(b), 2.17 or 2.18 for any
increased costs, reductions in return, Taxes or other amounts incurred more
than 180 days prior to the date that such Lender or the Administrative Agent
notifies any Borrower of the circumstances or event giving rise thereto and of
its intention to claim compensation in respect thereof; but provided  further
that if any change in law (or change in interpretation or administration
thereof) or any other such event giving rise to any claim for compensation
pursuant to Sections 2.16(a), 2.16(b), 2.17 or 2.18 is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof.

 

2.20         Increase
in Revolving Credit Commitments.

 

(a)           The
Company shall have the right, at any time and from time to time after the
Closing Date by written notice to and in consultation with the Administrative
Agent, to request an increase in the aggregate Revolving Credit Commitments
(each such requested increase, a “Revolving Credit Commitment Increase”),
by having one or more existing Revolving Credit Lenders increase their
respective Revolving Credit Commitments then in effect (each, an “Increasing
Lender”), by adding as a Lender with a new Revolving Credit Commitment
hereunder one or more Persons that are not already Lenders (each, an “Additional
Revolving Credit Lender”), or a combination thereof; provided that
(i) any such request for a Revolving Credit Commitment Increase shall be
in a minimum amount of $25,000,000, (ii) immediately after giving effect
to any Revolving Credit Commitment Increase, (y) the aggregate Revolving
Credit Commitments shall not exceed $125,000,000 and (z) the aggregate of
all Revolving Credit Commitment Increases effected and Incremental Term Loans
made after the Closing Date shall not exceed $75,000,000 (without regard to any
repayment of Incremental Term Loans), (iii) no Default or Event of Default
shall have occurred and be continuing on the applicable Revolving Credit
Commitment Increase Date (as hereinafter defined) or shall result from any
Revolving Credit Commitment Increase, and (iv) immediately after giving effect
to any Revolving Credit Commitment Increase (including any Borrowings in
connection therewith and the application of the proceeds thereof), the Company
shall be in compliance with the financial

 

63

 

covenants contained in Article VII, such compliance determined with regard to
calculations made on a pro forma basis for the most recently ended Reference
Period for which the Administrative Agent and the Lenders have received
financial statements and a Compliance Certificate, as if such Revolving Credit
Commitment Increase (and any Borrowings in connection therewith) had been
effected on the first day of such period. Such notice from the Company shall
specify the requested amount of the Revolving Credit Commitment Increase.

 

(b)           Each
Additional Revolving Credit Lender must qualify as an Eligible Assignee (the
approval of which by the Administrative Agent shall not be unreasonably
withheld or delayed) and the Borrowers and each Additional Revolving Credit
Lender shall execute a joinder agreement together with all such other
documentation as the Administrative Agent and the Company may reasonably
require, all in form and substance reasonably satisfactory to the
Administrative Agent and the Company, to evidence the Revolving Credit
Commitment of such Additional Revolving Credit Lender and its status as a
Revolving Credit Lender hereunder.

 

(c)           If
the aggregate Revolving Credit Commitments are increased in accordance with
this Section, the Administrative Agent and the Company shall determine the
effective date (the “Revolving Credit Commitment Increase Date,” which
shall be a Business Day not less than thirty (30) days prior to the Revolving
Credit Termination Date) and the final allocation of such increase. The Administrative
Agent shall promptly notify the Company and the Revolving Credit Lenders of the
final allocation of such increase and the Revolving Credit Commitment Increase
Date. The Administrative Agent is hereby authorized, on behalf of the Lenders,
to enter into any amendments to this Agreement and the other Credit Documents
as the Administrative Agent shall reasonably deem necessary to effect such
Revolving Credit Commitment Increase.

 

(d)           Notwithstanding
anything set forth in this Section 2.20
to the contrary, the Company shall not incur any Revolving Loans pursuant to
any Revolving Credit Commitment Increase (and no Revolving Credit Commitment
Increase shall be effective) unless the conditions set forth in Section 2.20(a) as well as the following conditions
precedent are satisfied on the applicable Revolving Credit Commitment Increase
Date:

 

(i)            The
Administrative Agent shall have received the following, each dated the
Revolving Credit Commitment Increase Date and in form and substance reasonably
satisfactory to the Administrative Agent:

 

(A)          as
to each Increasing Lender, evidence of its agreement to provide a portion of
the Revolving Credit Commitment Increase, and as to each Additional Revolving
Credit Lender, a duly executed joinder agreement together with all other
documentation required by the Administrative Agent pursuant to Section 2.20(b);

 

(B)           an
instrument, duly executed by the Company and each other Guarantor,
acknowledging and reaffirming its obligations under the Guaranty Agreement, the
Security Documents and the other Credit Documents to which it is a party and
the validity and continued effect of the Liens granted in favor of the
Administrative Agent thereunder;

 

64

 

(C)           a
certificate of the secretary or an assistant secretary of the Company, each
other Borrower and each Guarantor, certifying to and attaching the resolutions
adopted by the board of directors (or similar governing body) of such Credit
Party approving or consenting to such Revolving Credit Commitment Increase;

 

(D)          a
certificate of a Financial Officer of the Parent, certifying that (x) as
of the Revolving Credit Commitment Increase Date, all representations and
warranties of the Credit Parties contained in this Agreement and the other
Credit Documents qualified as to materiality are true and correct and those not
so qualified are true and correct in all material respects, both immediately
before and after giving effect to the Revolving Credit Commitment Increase and
any Borrowings in connection therewith (except to the extent any such
representation or warranty is expressly stated to have been made as of a
specific date, in which case such representation or warranty is true and
correct (if qualified as to materiality) or true and correct in all material
respects (if not so qualified), in each case as of such date),
(y) immediately after giving effect to such Revolving Credit Commitment
Increase (including any Borrowings in connection therewith and the application
of the proceeds thereof), the Company is in compliance with the financial
covenants contained in Article VII,
such compliance determined with regard to calculations made on a pro forma
basis for the most recently ended Reference Period for which the Administrative
Agent and the Lenders have received financial statements and a Compliance
Certificate, as if such Revolving Credit Commitment Increase (and any
Borrowings in connection therewith) had been effected on the first day of such
period (such calculations to be attached to the certificate), and (z) no
Default or Event of Default has occurred and is continuing, both immediately
before and after giving effect to such Revolving Credit Commitment Increase
(including any Borrowings in connection therewith and the application of the proceeds
thereof); and

 

(E)           an
opinion or opinions of counsel for the Credit Parties, addressed to the
Administrative Agent and the Lenders, together with such other documents,
instruments and certificates as the Administrative Agent shall have reasonably
requested;

 

(ii)           In
the case of any Borrowing of Revolving Loans in connection with such Revolving
Credit Commitment Increase, the conditions precedent to the making of such
Revolving Loans as set forth in Section 4.2
shall have been satisfied; and

 

(iii)          In
the case of any Borrowing of Revolving Loans in connection with such Revolving
Credit Commitment Increase for the purpose of funding a Permitted Acquisition,
the applicable conditions set forth in this Agreement with respect to Permitted
Acquisitions shall have been satisfied.

 

(e)           On
the Revolving Credit Commitment Increase Date, (i) all then outstanding
Revolving Loans (the “Initial Loans”) shall automatically be converted
into Base Rate Loans, (ii) immediately after the effectiveness of the
Revolving Credit Commitment Increase, the

 

65

 

Borrowers shall, if they
so request, convert such Base Rate Loans into LIBOR Loans (the “Subsequent
Borrowings”) in an aggregate principal amount equal to the aggregate principal
amount of the Initial Loans and of the Types and for the Interest Periods
specified in a Notice of Conversion/Continuation delivered to the
Administrative Agent in accordance with Section 2.11(b),
(iii) each Revolving Credit Lender shall pay to the Administrative Agent
in immediately available funds an amount equal to the difference, if positive,
between (y) such Lender’s pro rata percentage (calculated after giving
effect to the Revolving Credit Commitment Increase) of the Subsequent
Borrowings and (z) such Lender’s pro rata percentage (calculated without
giving effect to the Revolving Credit Commitment Increase) of the Initial
Loans, (iv) after the Administrative Agent receives the funds specified in
clause (iii) above, the Administrative Agent shall pay to each Revolving
Credit Lender the portion of such funds equal to the difference, if positive,
between (y) such Lender’s pro rata percentage (calculated without giving
effect to the Revolving Credit Commitment Increase) of the Initial Loans and
(z) such Lender’s pro rata percentage (calculated after giving effect to
the Revolving Credit Commitment Increase) of the amount of the Subsequent
Borrowings, (v) the Revolving Credit Lenders shall be deemed to hold the
Subsequent Borrowings ratably in accordance with their respective Revolving
Credit Commitments (calculated after giving effect to the Revolving Credit
Commitment Increase), (vi) each applicable Borrower shall pay all accrued
but unpaid interest on the Initial Loans to the Revolving Credit Lenders
entitled thereto, and (vii) Schedule 1.1
shall automatically be amended to reflect the Revolving Credit Commitments of
all Revolving Credit Lenders after giving effect to the Revolving Credit
Commitment Increase. The conversion of the Initial Loans pursuant to
clause (i) above shall be subject to indemnification by the applicable
Borrowers pursuant to the provisions of Section 2.18
if the Revolving Credit Commitment Increase Date occurs other than on the last
day of the Interest Period relating thereto.

 

2.21         Incremental
Term Loans.

 

(a)           The
Company shall have the right, at any time and from time to time after the
Closing Date by written notice to and in consultation with the Administrative
Agent, to request commitments (“Incremental Term Loan Commitments”) for
additional term loans (each, an “Incremental Term Loan,” and
collectively, the “Incremental Term Loans”) from existing Lenders, one
or more Persons that are not already Lenders (each, an “Additional Term
Lender”), or a combination thereof; provided that (i) any such
request for Incremental Term Loans shall be in a minimum amount of $25,000,000,
(ii) immediately after giving effect to the making of any Incremental Term
Loans, the aggregate of all Revolving Credit Commitment Increases effected and
Incremental Term Loans made after the Closing Date shall not exceed $75,000,000
(without regard to any repayment of Incremental Term Loans), (iii) no
Default or Event of Default shall have occurred and be continuing on the
applicable Incremental Term Loan Effective Date (as hereinafter defined) or
shall result from the making of any Incremental Term Loans, and
(iv) immediately after giving effect to the making of any Incremental Term
Loans and the application of the proceeds thereof, the Company shall be in compliance
with the financial covenants contained in Article VII,
such compliance determined with regard to calculations made on a pro forma
basis for the most recently ended Reference Period for which the Administrative
Agent and the Lenders have received financial statements and a Compliance
Certificate, as if such Incremental Term Loans had been made on the first day
of such period. Such notice from the Company shall specify the requested amount
of Incremental Term Loans.

 

66

 

All Incremental Term
Loans made on the same day shall be deemed to be a separate “Series” of
Incremental Term Loans.

 

(b)           Each
Additional Term Lender must qualify as an Eligible Assignee (the approval of
which by the Administrative Agent shall not be unreasonably withheld or
delayed) and the Company and each Additional Term Lender shall execute all such
documentation as the Administrative Agent and the Company may reasonably
require to evidence the Incremental Term Loan Commitment of such Additional
Term Lender and its status as an Incremental Term Lender hereunder.

 

(c)           If
Incremental Term Loan Commitments are provided in accordance with this Section,
the Administrative Agent and the Company shall determine the effective date
(each, an “Incremental Term Loan Effective Date,” which shall be a
Business Day) and the final allocation of such increase. The Administrative
Agent shall promptly notify the Company and the Term Lenders (and Additional
Term Lenders, if any) providing the Incremental Term Loan Commitments of the
final allocation of such increase and the Incremental Term Loan Effective Date.
Incremental Term Loan Commitments shall become Commitments under this Agreement
pursuant to (i) an amendment (each, an “Incremental Term Loan Amendment”)
to this Agreement executed by the Company, each Lender or Additional Term
Lender agreeing to provide such Incremental Term Loan Commitment (and no other
Lender shall be required to execute any such amendment), and the Administrative
Agent, and (ii) any amendments to the other Credit Documents (executed by
the Credit Parties party thereto and the Administrative Agent only) as the
Administrative Agent shall reasonably deem necessary to effect such purpose
(and the Administrative Agent is hereby authorized, on behalf of the Lenders,
to enter into any Incremental Term Loan Amendment or other such amendment), in
each case under (i) and (ii) above in form and substance reasonably
satisfactory to the Administrative Agent. The Incremental Term Loan Commitments
shall become effective on the Incremental Term Loan Effective Date referenced
in the applicable Incremental Term Loan Amendment, and the Incremental Term
Loans provided for thereunder shall be made in accordance with the terms and
subject to the conditions set forth therein and in this Section 2.21.

 

(d)           The
Incremental Term Loans of any Series shall:

 

(i)            constitute
Obligations and Term Loans for all purposes under this Agreement and the other
Credit Documents;

 

(ii)           unless
otherwise specifically provided in this Agreement or in the applicable
Incremental Term Loan Amendment, be secured by the Collateral under the
Security Documents and guaranteed under the Guaranty Agreement on a pari passu
basis with all other Obligations (but in no event shall any Incremental Term
Loans rank senior in right of payment or security to any other Obligations);

 

(iii)          have
(A) a maturity date no earlier than the Tranche B Term Loan Maturity Date,
and (B) a weighted average life to maturity (calculated as of the date
such Incremental Term Loans are made) no shorter than the Tranche B Term Loans;

 

67

 

(iv)          have
such pricing (including interest rate margins and fees) and amortization terms
as may be agreed by the Company and the Incremental Term Lenders providing such
Series of Incremental Term Loans; and

 

(v)           except
as specifically provided in clauses (ii) through (iv) above, otherwise
have terms and conditions substantially the same as (and in no event more
restrictive than the terms and conditions applicable to) Tranche B Term Loans
(and without limitation of the foregoing, such Incremental Term Loans shall be
entitled to the same voting rights as, and shall be entitled to receive
proceeds of voluntary and mandatory prepayments on the same basis as, the
Tranche B Term Loans). The proceeds of any Incremental Term Loans shall be used
in accordance with Section 2.14.

 

(e)           Notwithstanding
anything set forth in this Section 2.21
to the contrary, the Company shall not incur any Series of Incremental Term
Loans (and no Incremental Term Loan Commitments shall be effective) unless the
conditions set forth in Section 2.21(a)
as well as the following conditions precedent are satisfied on the applicable
Incremental Term Loan Effective Date:

 

(i)            The
Administrative Agent shall have received the following, each dated the
Incremental Term Loan Effective Date and in form and substance reasonably
satisfactory to the Administrative Agent:

 

(A)          an
Incremental Term Loan Amendment, duly executed by the Company and each
Incremental Term Lender providing such Incremental Term Loans;

 

(B)           an
instrument, duly executed by the Company and each other Guarantor,
acknowledging and reaffirming its obligations under the Guaranty Agreement, the
Security Documents and the other Credit Documents to which it is a party and
the validity and continued effect of the Liens granted in favor of the
Administrative Agent thereunder;

 

(C)           a
certificate of the secretary or an assistant secretary of the Company and each
Guarantor, certifying to and attaching the resolutions adopted by the board of
directors (or similar governing body) of such Credit Party approving or
consenting to such Incremental Term Loans;

 

(D)          a
certificate of a Financial Officer of the Parent, certifying that (x) as
of the Incremental Term Loan Effective Date, all representations and warranties
of the Credit Parties contained in this Agreement and the other Credit
Documents qualified as to materiality are true and correct and those not so
qualified are true and correct in all material respects, both immediately
before and after giving effect to the consummation of the transactions
contemplated hereby (except to the extent any such representation or warranty
is expressly stated to have been made as of a specific date, in which case such
representation or warranty is true and correct (if qualified as to materiality)
or true and correct in all material respects (if not so qualified), in each
case as of such date),

 

68

 

(y) immediately after giving effect to the making
of such Incremental Term Loans and the application of the proceeds thereof, the
Company is in compliance with the financial covenants contained in Article VII, such compliance determined with regard to
calculations made on a pro forma basis for the most recently ended Reference
Period for which the Administrative Agent and the Lenders have received
financial statements and a Compliance Certificate, as if such Incremental Term
Loans had been made on the first day of such period (such calculations to be
attached to the certificate), and (z) no Default or Event of Default has
occurred and is continuing, both immediately before and after giving effect to
the making of such Incremental Term Loans and the application of the proceeds
thereof; and

 

(E)           an
opinion or opinions of counsel for the Credit Parties, addressed to the
Administrative Agent and the Lenders, together with such other documents,
instruments and certificates as the Administrative Agent shall have reasonably
requested;

 

(ii)           The
conditions precedent to the making of such Incremental Term Loans set forth in Section 4.2 shall have been satisfied;

 

(iii)          In
the case of any Borrowing of Incremental Term Loans for the purpose of funding
a Permitted Acquisition, the applicable conditions set forth in this Agreement
with respect to Permitted Acquisitions shall have been satisfied; and

 

(iv)          Any
other conditions that may be contained in the applicable Incremental Term Loan
Amendment shall have been satisfied.

 

ARTICLE III

 

LETTERS
OF CREDIT

 

3.1           Issuance.
Subject to and upon the terms and conditions herein set forth, so long as no
Default or Event of Default has occurred and is continuing, the Issuing Lender
will, at any time and from time to time on and after the Closing Date and prior
to the earlier of (i) the Letter of Credit Maturity Date and (ii) the
Revolving Credit Termination Date, and upon request by the Company in
accordance with the provisions of Section 3.2,
issue for the account of the Company one or more irrevocable standby letters of
credit denominated in Dollars or any Foreign Currency and in a form customarily
used or otherwise approved by the Issuing Lender (together with all amendments,
modifications and supplements thereto, substitutions therefor and renewals and
restatements thereof, collectively, the “Letters of Credit”). From and
after the Closing Date, the Existing Letters of Credit shall be Letters of
Credit hereunder and the fees set forth in Sections 2.9(c),
2.9(d) and 2.9(e)
shall commence with respect to such Letters of Credit on the Closing Date. The
Stated Amount of each Letter of Credit shall not be less than such amount as
may be acceptable to the Issuing Lender. Notwithstanding the foregoing:

 

(a)           No
Letter of Credit shall be issued if the Stated Amount upon issuance
(i) when added to the aggregate Letter of Credit Exposure of the Revolving
Credit Lenders at such time, would exceed the Letter of Credit Subcommitment,
(ii) when added to the aggregate Letter of

 

69

 

Credit Exposure of the
Revolving Credit Lenders at such time with respect to Letters of Credit then
outstanding and denominated in a Foreign Currency, would exceed $5,000,000, or
(iii) when added to the Aggregate Revolving Credit Exposure, would exceed
the aggregate Revolving Credit Commitments at such time;

 

(b)           No
Letter of Credit shall be issued that by its terms expires later than the
Letter of Credit Maturity Date or, in any event, more than one (1) year after
its date of issuance; provided, however, that a Letter of Credit
may, if requested by the Company, provide by its terms, and on terms acceptable
to the Issuing Lender, for renewal for successive periods of one year or less
(but not beyond the Letter of Credit Maturity Date), unless and until the
Issuing Lender shall have delivered a notice of nonrenewal at least 30 days
prior to the then expiry thereof to the beneficiary of such Letter of Credit;
and

 

(c)           The
Issuing Lender shall be under no obligation to issue any Letter of Credit if,
at the time of such proposed issuance, (i) any order, judgment or decree
of any Governmental Authority or arbitrator shall purport by its terms to
enjoin or restrain the Issuing Lender from issuing such Letter of Credit, or
any Requirement of Law applicable to the Issuing Lender or any request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Issuing Lender shall prohibit, or request
that the Issuing Lender refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the
Issuing Lender with respect to such Letter of Credit any restriction or reserve
or capital requirement (for which the Issuing Lender is not otherwise compensated)
not in effect on the Closing Date, or any unreimbursed loss, cost or expense
that was not applicable, in effect or known to the Issuing Lender as of the
Closing Date and that the Issuing Lender in good faith deems material to it, or
(ii) the Issuing Lender shall have actual knowledge, or shall have
received notice from any Lender, prior to the issuance of such Letter of Credit
that one or more of the conditions specified in Section 4.1
(if applicable) or Section 4.2
are not then satisfied (or have not been waived in writing as required herein)
or that the issuance of such Letter of Credit would violate the provisions of Section 3.1(a).

 

3.2           Notices.
Whenever the Company desires the issuance of a Letter of Credit, the Company
will give the Issuing Lender written notice with a copy to the Administrative
Agent not later than 11:00 a.m., Charlotte time, the Applicable Number of
Business Days (or such shorter period as is acceptable to the Issuing Lender in
any given case) prior to the requested date of issuance thereof. Each such
notice (each, a “Letter of Credit Notice”) shall be irrevocable, shall
be given in the form of Exhibit B-4
and shall specify (i) the requested date of issuance, which shall be a
Business Day, (ii) the requested Stated Amount and expiry date of the
Letter of Credit, (iii) the Applicable Currency, and (iv) the name
and address of the requested beneficiary or beneficiaries of the Letter of
Credit. The Company will also complete any application procedures and documents
reasonably required by the Issuing Lender in connection with the issuance of
any Letter of Credit. Upon its issuance of any Letter of Credit, the Issuing
Lender will promptly notify the Administrative Agent of such issuance, and the
Administrative Agent will give prompt notice thereof to each Revolving Credit
Lender. The renewal or extension of any outstanding Letter of Credit shall, for
purposes of this Article III, be treated in
all respects as the issuance of a new Letter of Credit.

 

70

 

3.3           Participations.
Immediately upon the issuance of any Letter of Credit (and upon the Closing
Date, with respect to each Existing Letter of Credit, and without any further
action by any party to this Agreement), the Issuing Lender shall be deemed to
have sold and transferred to each Revolving Credit Lender, and each Revolving
Credit Lender shall be deemed irrevocably and unconditionally to have purchased
and received from the Issuing Lender, without recourse or warranty (except for
the absence of Liens thereon created, incurred or suffered to exist by, through
or under the Issuing Lender), an undivided interest and participation, pro rata
(based on the percentage of the aggregate Revolving Credit Commitments
represented by such Revolving Credit Lender’s Revolving Credit Commitment), in
such Letter of Credit, each drawing made thereunder and the obligations of the
Company under this Agreement with respect thereto and any Collateral or other
security therefor or guaranty pertaining thereto; provided, however,
that the fee relating to Letters of Credit described in Section 2.9(d)
shall be payable directly to the Issuing Lender as provided therein, and the
other Revolving Credit Lenders shall have no right to receive any portion
thereof. In consideration and in furtherance of the foregoing, each Revolving
Credit Lender hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the Issuing Lender, such Lender’s pro
rata share (determined as provided above) of each Reimbursement Obligation not
reimbursed by the Company on the date due as provided in Section 3.4
or through the Borrowing of Revolving Loans as provided in Section 3.5,
or of any reimbursement payment required to be refunded to the Company for any reason.
Upon any change in the Revolving Credit Commitments of any of the Revolving
Credit Lenders pursuant to Section 11.7(a),
with respect to all outstanding Letters of Credit and Reimbursement Obligations
there shall be an automatic adjustment to the participations pursuant to this Section 3.3 to reflect the new pro rata shares of the
assigning Lender and the Assignee. Each Revolving Lender’s obligation to make
payment to the Issuing Lender pursuant to this Section 3.4
shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the termination of the Revolving Credit
Commitments or the existence of any Default or Event of Default, and each such
payment shall be made without any offset, abatement, reduction or withholding
whatsoever.

 

3.4           Reimbursement.
The Company hereby agrees to reimburse the Issuing Lender by making payment to
the Administrative Agent, for the account of the Issuing Lender, in immediately
available funds, for any payment made by the Issuing Lender under any Letter of
Credit (each such amount so paid until reimbursed, together with interest
thereon payable as provided hereinbelow, a “Reimbursement Obligation”)
immediately after, and in any event within one (1) Business Day after its
receipt of notice of, such payment (provided that any such Reimbursement
Obligation shall be deemed timely satisfied (but nevertheless subject to the
payment of interest thereon as provided hereinbelow) if satisfied pursuant to a
Borrowing of Revolving Loans made on or prior to the next Business Day
following the date of the Company’s receipt of notice of such payment, as set
forth more completely in Section 3.5),
together with interest on the amount so paid by the Issuing Lender, to the
extent not reimbursed prior to 2:00 p.m., Charlotte time, on the date of such
payment or disbursement, for the period from the date of the respective payment
to the date the Reimbursement Obligation created thereby is satisfied, at the
Adjusted Base Rate applicable to Revolving Loans as in effect from time to time
during such period, such interest also to be payable on demand. Such payment by
the Company shall be made in the Applicable Currency of the Letter of Credit
with respect to which such payment or disbursement was made by the Issuing
Lender. The Issuing Lender will provide the Administrative Agent and the
Company with prompt notice of any payment or disbursement

 

71

 

made under any Letter of Credit, although the failure to give, or any
delay in giving, any such notice shall not release, diminish or otherwise
affect the Company’s obligations under this Section 3.4
or any other provision of this Agreement. The Administrative Agent will
promptly pay to the Issuing Lender any such amounts received by it under this Section 3.4.

 

3.5           Payment
by Revolving Loans. In the event that the Issuing Lender makes any payment
under any Letter of Credit and the Company shall not have timely satisfied in
full its Reimbursement Obligation to the Issuing Lender pursuant to Section 3.4, and to the extent that any amounts then
held in the Cash Collateral Account established pursuant to Section 3.8 shall be insufficient to satisfy such
Reimbursement Obligation in full, the Issuing Lender will promptly notify the
Administrative Agent, and the Administrative Agent will promptly notify each
Revolving Credit Lender, of such failure. If the Administrative Agent gives
such notice prior to 12:00 noon, Charlotte time, on any Business Day, each
Revolving Credit Lender will make available to the Administrative Agent, for
the account of the Issuing Lender, its pro rata share (based on the percentage
of the aggregate Revolving Credit Commitments represented by such Lender’s
Revolving Credit Commitment) of the amount of such payment on such Business
Day, in the Applicable Currency of the Letter of Credit with respect to which
such payment or disbursement was made by the Issuing Lender and in immediately
available funds. If the Administrative Agent gives such notice after 12:00
noon, Charlotte time, on any Business Day, each such Revolving Credit Lender
shall make its pro rata share of such amount available to the Administrative
Agent on the next succeeding Business Day. If and to the extent any Revolving
Credit Lender shall not have so made its pro rata share of the amount of such
payment available to the Administrative Agent, such Lender agrees to pay to the
Administrative Agent, for the account of the Issuing Lender, forthwith on
demand such amount, together with interest thereon at the Federal Funds Rate
for each day from such date until the date such amount is paid to the
Administrative Agent. The failure of any Revolving Credit Lender to make
available to the Administrative Agent its pro rata share of any payment under
any Letter of Credit shall not relieve any other Revolving Credit Lender of its
obligation hereunder to make available to the Administrative Agent its pro rata
share of any payment under any Letter of Credit on the date required, as
specified above, but no Revolving Credit Lender shall be responsible for the
failure of any other Revolving Credit Lender to make available to the
Administrative Agent such other Revolving Credit Lender’s pro rata share of any
such payment. Each such payment by a Revolving Credit Lender under this Section 3.5 of its pro rata share of an amount paid by
the Issuing Lender shall constitute a Revolving Loan by such Revolving Credit
Lender (the Company being deemed to have given a timely Notice of Borrowing
therefor) and shall be treated as such for all purposes of this Agreement; provided
that for purposes of determining the aggregate Unutilized Revolving Credit
Commitments immediately prior to giving effect to the application of the
proceeds of such Revolving Loans, the Reimbursement Obligation being satisfied
thereby shall be deemed not to be outstanding at such time. Each Revolving
Lender’s obligation to make Revolving Loans pursuant to this Section 3.5 shall be absolute and unconditional and
shall not be affected by any circumstance whatsoever, including, without
limitation, (i) the existence of any Default or Event of Default,
(ii) the failure of the amount of such Borrowing of Revolving Loans to
meet the minimum Borrowing amount specified in Section 2.2(b),
or (iii) the failure of any conditions set forth in Section 4.2
or elsewhere herein to be satisfied.

 

72

 

3.6           Payment
to Revolving Credit Lenders. Whenever the Issuing Lender receives a payment
in respect of a Reimbursement Obligation as to which the Administrative Agent
has received, for the account of the Issuing Lender, any payments from the
Revolving Credit Lenders pursuant to Section 3.5,
the Issuing Lender will promptly pay to the Administrative Agent, and the
Administrative Agent will promptly pay to each Revolving Credit Lender that has
paid its pro rata share thereof, in immediately available funds, an amount
equal to such Revolving Credit Lender’s ratable share (based on the
proportionate amount funded by such Revolving Credit Lender to the aggregate
amount funded by all Revolving Credit Lenders) of such Reimbursement
Obligation.

 

3.7           Obligations
Absolute. The Reimbursement Obligations of the Company shall be
irrevocable, shall remain in effect until the Issuing Lender shall have no
further obligations to make any payments or disbursements under any
circumstances with respect to any Letter of Credit, and shall be absolute and
unconditional, shall not be subject to counterclaim, setoff or other defense or
any other qualification or exception whatsoever and shall be made in accordance
with the terms and conditions of this Agreement under all circumstances,
including, without limitation, any of the following circumstances:

 

(a)           Any
lack of validity or enforceability of this Agreement, any of the other Credit
Documents or any documents or instruments relating to any Letter of Credit;

 

(b)           Any
change in the time, manner or place of payment of, or in any other term of, all
or any of the Obligations in respect of any Letter of Credit or any other
amendment, modification or waiver of or any consent to departure from any
Letter of Credit or any documents or instruments relating thereto, in each case
whether or not the Company has notice or knowledge thereof;

 

(c)           The
existence of any claim, setoff, defense or other right that the Company may
have at any time against a beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for whom any such transferee
may be acting), the Administrative Agent, the Issuing Lender, any Lender or
other Person, whether in connection with this Agreement, any Letter of Credit,
the transactions contemplated hereby or any unrelated transactions (including
any underlying transaction between the Company and the beneficiary named in any
such Letter of Credit);

 

(d)           Any
draft, certificate or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect (provided
that such draft, certificate or other document appears on its face to comply
with the terms of such Letter of Credit), any errors, omissions, interruptions
or delays in transmission or delivery of any messages, by mail, telecopier or
otherwise, or any errors in translation or in interpretation of technical
terms;

 

(e)           Any
defense based upon the failure of any drawing under a Letter of Credit to
conform to the terms of the Letter of Credit (provided that any draft,
certificate or other document presented pursuant to such Letter of Credit
appears on its face to comply with the terms thereof), any nonapplication or
misapplication by the beneficiary or any transferee of the

 

73

 

proceeds of such drawing
or any other act or omission of such beneficiary or transferee in connection
with such Letter of Credit;

 

(f)            The
exchange, release, surrender or impairment of any Collateral or other security
for the Obligations;

 

(g)           The
occurrence of any Default or Event of Default; or

 

(h)           Any
other circumstance or event whatsoever, including, without limitation, any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, the Company or a guarantor; provided that nothing in the
foregoing shall be deemed to excuse the Issuing Lender from liability to the
Company to the extent of any damages suffered by the Company that are caused by
the Issuing Lender’s gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.

 

Any
action taken or omitted to be taken by the Issuing Lender under or in
connection with any Letter of Credit, if taken or omitted in the absence of
gross negligence or willful misconduct, shall be binding upon the Company and
each Lender and shall not create or result in any liability of the Issuing
Lender to the Company or any Lender. It is expressly understood and agreed
that, for purposes of determining whether a wrongful payment under a Letter of
Credit resulted from the Issuing Lender’s gross negligence or willful
misconduct, (i) the Issuing Lender’s acceptance of documents that appear
on their face to comply with the terms of such Letter of Credit, without
responsibility for further investigation, regardless of any notice or information
to the contrary, (ii) the Issuing Lender’s exclusive reliance on the
documents presented to it under such Letter of Credit as to any and all matters
set forth therein, including the amount of any draft presented under such
Letter of Credit, whether or not the amount due to the beneficiary thereunder
equals the amount of such draft and whether or not any document presented
pursuant to such Letter of Credit proves to be insufficient in any respect (so
long as such document appears on its face to comply with the terms of such
Letter of Credit), and whether or not any other statement or any other document
presented pursuant to such Letter of Credit proves to be forged or invalid or
any statement therein proves to be inaccurate or untrue in any respect whatsoever,
and (iii) any noncompliance in any immaterial respect of the documents
presented under such Letter of Credit with the terms thereof shall, in each
case, be deemed not to constitute gross negligence or willful misconduct of the
Issuing Lender.

 

3.8           Cash
Collateral Account. At any time and from time to time (i) after the
occurrence and during the continuance of an Event of Default, the
Administrative Agent may, and at the direction or with the consent of the
Required Revolving Lenders shall, require the Company to deliver to the
Administrative Agent such additional amount of cash as is equal to 105% of the
aggregate Letters of Credit then outstanding (whether or not any beneficiary
under any Letter of Credit shall have drawn or be entitled at such time to draw
thereunder) plus all accrued and unpaid interest and fees thereon and
(ii) in the event of a prepayment under Section 2.6(c)
or Section 2.6(h), the
Administrative Agent will retain such amount as may then be required to be
retained, such amounts in each case under clauses (i) and (ii) above to be
held by the Administrative Agent in a cash collateral account (the “Cash
Collateral Account”). The Company hereby grants to the Administrative
Agent, for the benefit of the Issuing Lender and the Lenders, a Lien upon and
security interest in the Cash Collateral Account and all amounts

 

74

 

held therein from time to time as security for Letter of Credit
Exposure, and for application to the Company’s Reimbursement Obligations as and
when the same shall arise. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest on the investment of such amounts in Cash
Equivalents, which investments shall be made at the direction of the Company
(unless a Default or Event of Default shall have occurred and be continuing, in
which case the determination as to investments shall be made at the option and
in the discretion of the Administrative Agent), amounts in the Cash Collateral
Account shall not bear interest. Interest and profits, if any, on such
investments shall accumulate in such account. In the event of a drawing, and
subsequent payment by the Issuing Lender, under any Letter of Credit at any
time during which any amounts are held in the Cash Collateral Account, the
Administrative Agent will deliver to the Issuing Lender an amount equal to the
Reimbursement Obligation created as a result of such payment (or, if the
amounts so held are less than such Reimbursement Obligation, all of such
amounts) to reimburse the Issuing Lender therefor. Any amounts remaining in the
Cash Collateral Account (including interest) after the expiration of all
Letters of Credit and reimbursement in full of the Issuing Lender for all of
its obligations thereunder shall be held by the Administrative Agent, for the
benefit of the Company, to be applied against the Obligations in such order and
manner as the Administrative Agent may direct. If the Company is required to
provide cash collateral pursuant to Section 2.6(c),
such amount (including interest), to the extent not applied as aforesaid, shall
be returned to the Company on demand, provided that after giving effect
to such return (i) the Aggregate Revolving Credit Exposure would not
exceed the aggregate Revolving Credit Commitments at such time and (ii) no
Default or Event of Default shall have occurred and be continuing at such time.
If the Company is required to provide cash collateral as a result of an Event
of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Company within three (3) Business Days after all Events of
Default have been cured or waived.

 

3.9           Effectiveness.
Notwithstanding any termination of the Revolving Credit Commitments or
repayment of the Loans, or both, the obligations of the Company under this Article III shall remain in full force and effect until
the Issuing Lender and the Revolving Credit Lenders shall have no further
obligations to make any payments or disbursements under any circumstances with
respect to any Letter of Credit.

 

ARTICLE IV

 

CONDITIONS
OF BORROWING

 

4.1           Conditions
of Initial Borrowing. The obligation of each Lender to make Loans in
connection with the initial Borrowing hereunder, and the obligation of the
Issuing Lender to issue Letters of Credit hereunder on the Closing Date, is
subject to the satisfaction of the following conditions precedent:

 

(a)           The
Administrative Agent shall have received the following, each dated as of the Closing
Date (unless otherwise specified) and in such number of copies as the
Administrative Agent shall have requested:

 

75

 

(i)            to
the extent requested by any Lender in accordance with Section 2.4(d),
a Note or Notes for such Lender, in each case duly completed in accordance with
the provisions of Section 2.4(a)
and executed by each applicable Borrower;

 

(ii)           the
Guaranty Agreement, duly completed and executed by the Parent, the Company and
each Subsidiary (other than any Foreign Subsidiary);

 

(iii)          the
Security Agreement, duly completed and executed by the Parent, the Company and
each Subsidiary (other than any Foreign Subsidiary);

 

(iv)          the
Pledge Agreement, duly completed and executed by the Parent, the Company and
each Subsidiary (other than any Foreign Subsidiary) that owns Capital Stock of
another Subsidiary, together with any certificates evidencing the Capital Stock
being pledged thereunder as of the Closing Date and undated assignments
separate from certificate for any such certificate, duly executed in blank;

 

(v)           a
certificate of the Parent as to information relevant to the perfection of the
Administrative Agent’s security interests in the Collateral, duly completed and
executed by the Parent and in form and substance reasonably satisfactory to the
Administrative Agent;

 

(vi)          short-form
security agreements for the federally registered Intellectual Property referred
to in Annexes C, D and E of the Security Agreement, in substantially the form
of Exhibits B and C (as applicable) to the Security Agreement; and

 

(vii)         the
favorable opinions of (A) Bingham McCutchen LLP, special counsel to the
Parent and its Subsidiaries, and (B) general counsel to the Parent and its
Subsidiaries, each in form and substance reasonably satisfactory to the
Administrative Agent, and (to the extent reasonably available) copies of the
opinion required to be delivered by counsel to Aircast and the selling
stockholders pursuant to the Aircast Stock Purchase Agreement, accompanied by a
reliance letter (unless such opinion is addressed to the Administrative Agent
and the Lenders or expressly includes a reliance provision) from the counsel
rendering such opinion, to the effect that the Administrative Agent and the
Lenders are entitled to rely on such opinion as if it were addressed to the
Administrative Agent and the Lenders.

 

(b)           The
Administrative Agent shall have received a certificate, signed by the
president, the chief executive officer or the chief financial officer of the
Parent, in form and substance reasonably satisfactory to the Administrative
Agent, certifying that (i) as of the Closing Date, all representations and
warranties of the Credit Parties contained in this Agreement and the other
Credit Documents qualified as to materiality are true and correct and those not
so qualified are true and correct in all material respects, both immediately
before and after giving effect to the consummation of the Aircast Acquisition
and the other Transactions (except to the extent any such representation or
warranty is expressly stated to have been made as of a specific date, in which
case such representation or warranty is true and correct (if qualified as to
materiality) or true and correct in all material respects (if not so
qualified), in each case as of such date), (ii) no Default or Event of
Default has occurred and is continuing, both immediately

 

76

 

before and after giving
effect to the consummation of the Aircast Acquisition and the other
Transactions, (iii) immediately before the consummation of the Aircast
Acquisition and the other Transactions, there has not occurred (A) since
September 30, 2005, any change, development, condition, event or circumstance
that, individually or in the aggregate, has had, or would reasonably be
expected to have, an Aircast Material Adverse Effect or (B) since December
31, 2005, any change, development, condition, event or circumstance that,
individually or in the aggregate, has had, or would reasonably be expected to
have, a Parent Pre-Closing Material Adverse Effect, and (iv) all
conditions to the initial extensions of credit hereunder set forth in this Section 4.1 and in Section 4.2
have been satisfied or waived as required hereunder.

 

(c)           The
Administrative Agent shall have received a certificate of the secretary or an
assistant secretary of each Credit Party executing any Credit Documents as of
the Closing Date, in form and substance reasonably satisfactory to the
Administrative Agent, certifying (i) that attached thereto is a true and
complete copy of the articles or certificate of incorporation, certificate of
formation or other organizational document and all amendments thereto of such
Credit Party, certified as of a recent date by the Secretary of State (or
comparable Governmental Authority) of its jurisdiction of organization, and
that the same has not been amended since the date of such certification,
(ii) that attached thereto is a true and complete copy of the bylaws,
operating agreement or similar governing document of such Credit Party, as then
in effect and as in effect at all times from the date on which the resolutions
referred to in clause (iii) below were adopted to and including the date
of such certificate, and (iii) that attached thereto is a true and
complete copy of resolutions adopted by the board of directors (or similar
governing body) of such Credit Party, authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents to which it is a
party, and as to the incumbency and genuineness of the signature of each
officer of such Credit Party executing this Agreement or any of such other
Credit Documents, and attaching all such copies of the documents described
above.

 

(d)           The
Administrative Agent shall have received (i) a certificate as of a recent
date of the good standing of each Credit Party executing any Credit Documents
as of the Closing Date, under the laws of its jurisdiction of organization,
from the Secretary of State (or comparable Governmental Authority) of such
jurisdiction, and (ii) a certificate as of a recent date of the
qualification of each Credit Party to conduct business as a foreign corporation
in such jurisdictions as the Administrative Agent shall have reasonably
requested, from the Secretary of State (or comparable Governmental Authority)
of such jurisdiction.

 

(e)           The
corporate and capital structure of the Parent and its Subsidiaries after giving
effect to the Aircast Acquisition and the other Transactions shall be
consistent in all material respects with the written information previously
furnished to the Administrative Agent, and the Administrative Agent shall be
reasonably satisfied with all documentation relating to the Aircast Acquisition
and the other Transactions (in the case of the Aircast Stock Purchase Agreement
and all schedules and exhibits thereto, this provision shall apply only to any
amendments or supplements thereto, or any waiver of any provision thereof,
occurring after February 27, 2006), and the Administrative Agent shall have
received such copies of the final documents relating to the Aircast Acquisition
as it shall have reasonably requested; and the Administrative Agent shall be
reasonably satisfied that (i) the aggregate purchase price paid by the
Company for the Aircast Acquisition (inclusive of the repayment of the Aircast
Credit Agreements and the Aircast Seller Subordinated Notes, but excluding up
to $2,500,000 in payments related to the Company’s share

 

77

 

of any “Earnout
Obligations” and “Earnout-Related Costs” (each as defined in the Aircast Stock
Purchase Agreement) and up to $12,000,000 in integration costs relating to the
Aircast Acquisition at and after the Closing Date except as may be otherwise
approved by the Administrative Agent) will not exceed $292,000,000, and
(ii) aggregate fees and expenses payable by or on behalf of the Company in
connection with the Aircast Acquisition and the other Transactions will not
exceed $13,000,000.

 

(f)            All
material approvals, permits and consents of any Governmental Authorities or
other Persons required in connection with the execution and delivery of this
Agreement, the other Credit Documents and the other Transaction Documents and
the consummation of the Transactions (including the expiration of or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and any determinations,
waivers, exemptions, agreements, approvals or consents required under the New Jersey
Industrial Site Recovery Act, NJSA §§ 13:1 K-6, et  seq. (or a “no-further-action”
letter or comparable actions issued in lieu thereof)) shall have been obtained,
without the imposition of conditions upon the Company or Aircast that are not
reasonably acceptable to the Administrative Agent, and all related filings, if
any, shall have been made, and all such approvals, permits, consents and
filings shall be in full force and effect and the Administrative Agent shall
have received such copies thereof as it shall have reasonably requested; all
applicable waiting periods shall have expired without any adverse action being
taken or threatened by any Governmental Authority having jurisdiction; and
there shall not be in effect any litigation, whether pending or threatened in
writing, that seeks to enjoin, delay, restrain, prohibit or impair the
consummation of the Aircast Acquisition or any of the other Transactions, or
any injunction or other order or decree issued by a court of competent
jurisdiction or Governmental Authority restraining or prohibiting, or imposing
materially burdensome conditions upon, the consummation of the Aircast
Acquisition or any of the other Transactions;

 

(g)           The
Administrative Agent shall be satisfied that, substantially concurrently with
the making of the initial Loans hereunder, (i) the Aircast Acquisition
shall have been consummated substantially in accordance with the terms of the
Aircast Stock Purchase Agreement and all other applicable documentation and in
compliance in all material respects with all applicable law and regulatory
approvals, without any amendment or waiver of any material condition or other
provision thereof except as reasonably approved by the Administrative Agent,
and (ii) aggregate Indebtedness of the Parent and its Subsidiaries after
giving effect to the consummation of the Aircast Acquisition, the initial Loans
hereunder and the other Transactions shall not exceed $375,000,000.

 

(h)           Concurrently
with the making of the initial Loans hereunder, (i) all principal,
interest and other amounts (excluding the Existing Letters of Credit)
outstanding under the Existing Credit Agreement, the Aircast Credit Agreements
and the Aircast Seller Subordinated Notes (collectively, the “Terminating
Indebtedness”) shall be repaid and satisfied in full and all guarantees by
the Credit Parties relating thereto extinguished, (ii) all commitments to
extend credit under the agreements and instruments relating to the Terminating
Indebtedness shall be terminated, (iii) any Liens securing the Terminating
Indebtedness shall be released and any related filings (including UCC filings,
mortgages, and intellectual property filings) terminated of record (or
arrangements satisfactory to the Administrative Agent made therefor), and
(iv) any letters of credit outstanding under the Terminating Indebtedness
for which any Credit Party is

 

78

 

obligated shall have been
terminated, canceled or replaced (or, in the case of the Existing Letters of
Credit, deemed issued hereunder as of the Closing Date); and the Administrative
Agent shall have received evidence of the foregoing reasonably satisfactory to
it, including payoff letters executed by the lenders (or any agent on their
behalf) under the Terminating Indebtedness.

 

(i)            The
Administrative Agent shall have received certified reports from an independent
search service satisfactory to it listing any judgment or tax lien filing or
Uniform Commercial Code financing statement that names any Credit Party as
debtor in any of the jurisdictions listed beneath its name on Annex B to the
Security Agreement, as well as lien search results with respect to Foreign
Subsidiaries in their jurisdiction of organization (to the extent requested by
the Administrative Agent), and the results thereof shall be satisfactory to the
Administrative Agent.

 

(j)            The
Administrative Agent shall have received evidence in form and substance
satisfactory to it that all filings, recordings, registrations and other
actions (including, without limitation, the filing of duly completed UCC-1
financing statements in each jurisdiction listed on Annex A to the Security
Agreement) necessary to perfect the Liens created by the Security Documents
shall have been completed, or arrangements satisfactory to the Administrative
Agent for the completion thereof shall have been made.

 

(k)           There
shall not have occurred (i) since September 30, 2005, any change,
development, condition, event or circumstance that, individually or in the
aggregate, has had, or would reasonably be expected to have, an Aircast
Material Adverse Effect or (ii) since December 31, 2005, any change,
development, condition, event or circumstance that, individually or in the
aggregate, has had, or would reasonably be expected to have, a Parent Pre-Closing
Material Adverse Effect.

 

(l)            The
Company shall have paid (i) to the Arranger and Wachovia, the fees
required under the Fee Letter to be paid to them on the Closing Date, in the
amounts due and payable on the Closing Date as required by the terms thereof,
(ii) to the Administrative Agent, the initial payment of the annual
administrative fee described in the Fee Letter, and (iii) all other fees
and reasonable expenses of the Arranger, the Administrative Agent and the
Lenders required hereunder or under any other Credit Document to be paid on or
prior to the Closing Date (including reasonable fees and expenses of counsel)
in connection with this Agreement and the other Credit Documents.

 

(m)          The
Administrative Agent shall have received (i) copies of the audited
financial statements referred to in Sections 5.11(a)
and 5.11(b) and a Financial Condition
Certificate, (ii) the Projections, (iii) unaudited consolidated
balance sheets of the Parent and its Subsidiaries and Aircast and its
Subsidiaries as of the last day of the fiscal month most recently ended prior
to the Closing Date for which such financial statements are available (which
shall not be more than forty-five (45) days prior to the Closing Date), and the
related respective statements of income and cash flows for the year-to-date
period then ended, and (iv) the Pro Forma Balance Sheet, all of which
shall be in form and substance reasonably satisfactory to the Administrative
Agent.

 

(n)           The
Administrative Agent shall be satisfied that, on a pro forma basis after giving
effect to the consummation of the Aircast Acquisition, the repayment of the
Terminating

 

79

 

Indebtedness, the initial
extensions of credit made under this Agreement, the other Transactions and the
payment of transaction fees and expenses related to the foregoing, all as if
such transactions had occurred on the date of the Pro Forma Balance Sheet,
(i) the Company is in compliance with the financial covenants set forth in
Article VII as of the date of the
Pro Forma Balance Sheet (assuming such covenants were applicable to the Company
at such date at the required levels of such covenants at their respective first
measurement dates), and (ii) availability under the Revolving Credit Commitments
is not less than $40,000,000; and the Administrative Agent shall have received
a certificate of a Financial Officer of the Company as to the foregoing,
together with supporting documentation, all in form and substance satisfactory
to the Administrative Agent.

 

(o)           The
Administrative Agent shall have received evidence in form and substance
satisfactory to it that all of the requirements of Section 6.6
and those provisions of the Security Agreement relating to the maintenance of
insurance with respect to the Collateral have been satisfied, including receipt
of certificates of insurance evidencing the insurance coverages described on Schedule 5.18 and all other or additional coverages
required under the Security Agreement and naming the Administrative Agent as
loss payee or additional insured, as its interests may appear.

 

(p)           The
Administrative Agent shall have received an Account Designation Letter,
together with written instructions from an Authorized Officer of the Company,
including wire transfer information, directing the payment of the proceeds of
the initial Loans to be made hereunder.

 

(q)           The
Administrative Agent shall have received such other documents, certificates,
opinions and instruments in connection with the transactions contemplated
hereby as it shall have reasonably requested.

 

4.2           Conditions
of All Borrowings. The obligation of each Lender to make any Loans
hereunder, including the initial Loans and any Incremental Term Loans (but
excluding Revolving Loans made for the purpose of repaying Refunded Swingline
Loans pursuant to Section 2.2(e)),
and the obligation of the Issuing Lender to issue any Letters of Credit
hereunder, is subject to the satisfaction of the following conditions precedent
on the relevant Borrowing Date or date of issuance:

 

(a)           The
Administrative Agent shall have received a Notice of Borrowing in accordance
with Section 2.2(b), or (together with
the Swingline Lender) a Notice of Swingline Borrowing in accordance with Section 2.2(d), or (together with the Issuing Lender) a
Letter of Credit Notice in accordance with Section 3.2,
as applicable;

 

(b)           Each
of the representations and warranties contained in Article V
and in the other Credit Documents qualified as to materiality shall be true and
correct and those not so qualified shall be true and correct in all material
respects, in each case on and as of such Borrowing Date (including the Closing
Date, in the case of the initial Loans made hereunder) or date of issuance of a
Letter of Credit with the same effect as if made on and as of such date, both
immediately before and after giving effect to the Loans to be made or Letter of
Credit to be issued on such date (except to the extent any such representation
or warranty is expressly stated to have been 

 

80

 

made as of a specific
date, in which case such representation or warranty shall be true and correct
(if qualified as to materiality) or true and correct in all material respects
(if not so qualified), in each case as of such date); and

 

(c)           No
Default or Event of Default shall have occurred and be continuing on such date,
both immediately before and after giving effect to the Loans to be made or
Letter of Credit to be issued on such date.

 

Each
giving of a Notice of Borrowing, a Notice of Swingline Borrowing or a Letter of
Credit Notice, and the consummation of each Borrowing or issuance of a Letter
of Credit, shall be deemed to constitute a representation by the applicable
Borrower that the statements contained in Sections 4.2(b) and
4.2(c) are true, both as of the date of
such notice or request and as of the relevant Borrowing Date or date of
issuance.

 

ARTICLE V

 

REPRESENTATIONS
AND WARRANTIES

 

To
induce the Administrative Agent, the Issuing Lender and the Lenders to enter
into this Agreement and to induce the Lenders to extend the credit contemplated
hereby and the Issuing Lender to issue Letters of Credit, each of the Parent
and the Borrowers represents and warrants to the Administrative Agent, the
Issuing Lender and the Lenders as follows:

 

5.1           Corporate
Organization and Power. Each Credit Party (i) is a corporation or a
limited liability company duly organized or formed, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
formation, as the case may be (which jurisdictions, as of the Closing Date, are
set forth on Schedule 5.1), (ii) has
the full corporate or limited liability company power and authority to execute,
deliver and perform the Credit Documents to which it is or will be a party, to
own and hold its property and to engage in its business as presently conducted,
and (iii) is duly qualified to do business as a foreign corporation or
limited liability company and is in good standing in each jurisdiction where
the nature of its business or the ownership of its properties requires it to be
so qualified, except where the failure to be so qualified, individually or in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.

 

5.2           Authorization;
Enforceability. Each Credit Party has taken, or on the Closing Date will
have taken, all necessary corporate or limited liability action, as applicable,
to execute, deliver and perform each of the Credit Documents to which it is or
will be a party, and has, or on the Closing Date (or any later date of
execution and delivery) will have, validly executed and delivered each of the
Credit Documents to which it is or will be a party. This Agreement constitutes,
and each of the other Credit Documents upon execution and delivery will
constitute, the legal, valid and binding obligation of each Credit Party that
is a party hereto or thereto, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights
generally, by general equitable principles or by principles of good faith and
fair dealing (regardless of whether enforcement is sought in equity or at law).

 

81

 

5.3           No
Violation. The execution, delivery and performance by each Credit Party of
each of the Credit Documents to which it is or will be a party, and compliance
by it with the terms hereof and thereof, do not and will not (i) violate
any provision of its articles or certificate of incorporation or formation, its
bylaws or operating agreement, or other applicable formation or organizational
documents, (ii) contravene any other Requirement of Law applicable to it,
(iii) conflict with, result in a breach of or constitute (with notice,
lapse of time or both) a default under any indenture, agreement or other
instrument to which it is a party, by which it or any of its properties is
bound or to which it is subject, or (iv) except for the Liens granted in favor
of the Administrative Agent pursuant to the Security Documents, result in or
require the creation or imposition of any Lien upon any of its properties,
revenues or assets; except, in the case of clauses (ii) and (iii) above,
where such violations or conflicts, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

 

5.4           Governmental
and Third-Party Authorization; Permits. No consent, approval, authorization
or other action by, notice to, or registration or filing with, any Governmental
Authority or other Person is or will be required as a condition to or otherwise
in connection with the due execution, delivery and performance by each Credit
Party of this Agreement or any of the other Credit Documents to which it is or
will be a party or the legality, validity or enforceability hereof or thereof,
other than (i) filings of Uniform Commercial Code financing statements and
other instruments and actions necessary to perfect the Liens created by the
Security Documents, and (ii) consents and filings the failure to obtain or
make which, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. Each Credit Party has, and is in good
standing with respect to, all governmental approvals, licenses, permits and
authorizations necessary to conduct its business as presently conducted and to
own or lease and operate its properties, except for those the failure to obtain
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

 

5.5           Litigation.
Except as specified in Schedule 5.5,
there are no actions, investigations, suits or proceedings pending or, to the
knowledge of any Borrower, threatened, at law, in equity or in arbitration, before
any court, other Governmental Authority, arbitrator or other Person,
(i) against or affecting any Credit Party or any of their respective
properties that, if adversely determined, could reasonably be expected to have
a Material Adverse Effect, or (ii) with respect to this Agreement, any of
the other Credit Documents, the Aircast Stock Purchase Agreement or any of the
transactions contemplated hereby or thereby.

 

5.6           Taxes.
Each Credit Party has timely filed all federal, state, local and foreign tax
returns and reports required to be filed by it and has paid, prior to the date
on which penalties would attach thereto or a Lien would attach to any of the
properties of a Credit Party if unpaid, all taxes, assessments, fees and other
charges levied upon it or upon its properties that are shown thereon as due and
payable, other than those that are not yet delinquent or that are being
contested in good faith and by proper proceedings and for which adequate
reserves have been established in accordance with GAAP. Such returns accurately
reflect in all material respects all liability for taxes of the Credit Parties
for the periods covered thereby. As of the Closing Date, there is no ongoing
audit or examination or, to the knowledge of any Borrower, other investigation
by any Governmental Authority of the tax liability

 

82

 

of any of the Credit Parties, and there is no material unresolved claim
by any Governmental Authority concerning the tax liability of any Credit Party
for any period for which tax returns have been or were required to have been
filed, other than unsecured claims for which adequate reserves have been
established in accordance with GAAP. As of the Closing Date, no Credit Party
has waived or extended or has been requested to waive or extend the statute of
limitations relating to the payment of any taxes. Notwithstanding the
foregoing, with respect to any state, local, or foreign sales tax returns or
reports, the payment or transfer to the applicable authority of any sales
taxes, or any audits, or examinations, or waivers or extensions of statutes of
limitations with respect thereto, the representations in this Section 5.6 are true except to the extent that the
failure of any such representations to be true could not reasonably be expected
to have a Material Adverse Effect.

 

5.7           Subsidiaries.
Schedule 5.7 sets forth a list, as
of the Closing Date and after giving effect to the Aircast Acquisition, of all
of the Subsidiaries of the Parent (including the Company) and (i) as to
each such Subsidiary, the percentage ownership (direct and indirect) of the
Parent in each class of its Capital Stock and each direct owner thereof, and
(ii) as to each Credit Party (other than the Parent), the number of shares
of each class of Capital Stock outstanding, and the number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and similar rights. All outstanding shares of Capital Stock of the
Company and each of its Subsidiaries are duly and validly issued, fully paid
and nonassessable. Except for the shares of Capital Stock and the other equity
arrangements expressly indicated on Schedule 5.7,
as of the Closing Date there are no shares of Capital Stock, warrants, rights,
options or other equity securities, or other Capital Stock of any Credit Party
(other than the Parent) outstanding or reserved for any purpose.

 

5.8           Full
Disclosure. All factual information heretofore, contemporaneously or
hereafter furnished in writing to the Administrative Agent, the Arranger or any
Lender by or on behalf of any Credit Party for purposes of or in connection
with this Agreement and the Transactions is or will be true and accurate in all
material respects on the date as of which such information is dated or
certified (or, if such information has been updated, amended or supplemented,
on the date as of which any such update, amendment or supplement is dated or
certified) and not made incomplete by omitting to state a material fact
necessary to make the statements contained herein and therein, in light of the
circumstances under which such information was provided, not misleading; provided
that, with respect to projections, budgets and other estimates, except as
specifically represented in Sections 5.11(c)
and 5.11(d), the Parent and the Borrowers
represent only that such information was prepared in good faith based upon
assumptions believed to be reasonable at the time. As of the Closing Date,
there is no fact known to the Parent or the Company that has, or could
reasonably be expected to have, a Material Adverse Effect, which fact has not
been set forth herein, in the financial statements of the Parent and its
Subsidiaries or Aircast and its Subsidiaries furnished to the Administrative
Agent and/or the Lenders, or in any certificate, opinion or other written
statement made or furnished by any Borrower to the Administrative Agent and/or
the Lenders.

 

5.9           Margin
Regulations. No Credit Party is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock. No proceeds of the Loans will be used,
directly or indirectly, to purchase or carry any Margin Stock, to extend credit
for such purpose or for any other purpose, in each case that would violate or
be inconsistent with Regulations T, U or X or any provision of the Exchange
Act.

 

83

 

5.10         No
Material Adverse Effect.

 

(a)           As
of the date of this Agreement and as of the Closing Date immediately before
giving effect to the Aircast Acquisition, there has not occurred (i) since
September 30, 2005, any change, development, condition, event or circumstance
that, individually or in the aggregate, has had, or would reasonably be expected
to have, an Aircast Material Adverse Effect or (ii) since December 31,
2005, any change, development, condition, event or circumstance that,
individually or in the aggregate, has had, or would reasonably be expected to
have, a Parent Pre-Closing Material Adverse Effect.

 

(b)           From
and after the consummation of the Aircast Acquisition on the Closing Date,
there has not occurred, since December 31, 2005, any change, development,
condition, event or circumstance that, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material Adverse Effect.

 

5.11         Financial
Matters.

 

(a)           The
Company has heretofore furnished to the Administrative Agent copies of
(i) the audited consolidated balance sheets of the Parent and its
Subsidiaries as of December 31, 2005, 2004 and 2003, in each case with the
related statements of income, cash flows and stockholders’ equity for the
fiscal years then ended, together with the opinions of Ernst & Young LLP
thereon, and (ii) the unaudited consolidated balance sheet of the Parent
and its Subsidiaries as of the last day of the fiscal month most recently ended
prior to the Closing Date for which such financial statements are available
(which shall not be more than forty-five (45) days prior to the Closing Date), and
the related statements of income and cash flows for the year-to-date period
then ended. Such financial statements have been prepared in accordance with
GAAP (subject, with respect to the unaudited financial statements, to the
absence of notes required by GAAP and to normal year-end adjustments) and
present fairly in all material respects the financial condition of the Parent
and its Subsidiaries (on a consolidated basis) as of the respective dates
thereof and the results of operations of the Parent and its Subsidiaries (on a
consolidated basis) for the respective periods then ended. Except as fully
reflected in the most recent financial statements referred to above and the
notes thereto, there are no material liabilities or obligations with respect to
the Parent and its Subsidiaries of any nature whatsoever (whether absolute,
contingent or otherwise and whether or not due) that are required in accordance
with GAAP to be reflected in such financial statements and that are not so
reflected.

 

(b)           The
Company has heretofore furnished to the Administrative Agent copies of
(i) the audited consolidated balance sheets of Aircast Holding and its
Subsidiaries as of September 30, 2005 and December 31, 2004 and 2003, in each
case with the related statements of income, cash flows and stockholders’ equity
for the fiscal years (or, in the case of the September 30, 2005 statements,
nine-month period) then ended, together with the opinions of Ernst & Young
LLP thereon, (ii) the unaudited consolidated balance sheet of Aircast Holding
and its Subsidiaries as of December 31, 2005, and the related statements of
income and cash flows for the fiscal year then ended, and (iii) the
unaudited consolidated balance sheet of Aircast Holding and its Subsidiaries as
of the last day of the fiscal month most recently ended prior to the Closing
Date for which such financial statements are available (which shall not be more
than forty-five (45) days prior to the Closing Date), and the related
statements of income and cash

 

84

 

flows for the
year-to-date period then ended. Such financial statements have been prepared in
accordance with GAAP (subject, with respect to the unaudited financial
statements, to the absence of notes required by GAAP and to normal year-end
adjustments) and present fairly in all material respects the financial
condition of Aircast Holding and its Subsidiaries (on a consolidated basis) as
of the respective dates thereof and the results of operations of Aircast
Holding and its Subsidiaries (on a consolidated basis) for the respective
periods then ended. Except as fully reflected in the most recent financial
statements referred to above and the notes thereto, there are no material
liabilities or obligations with respect to Aircast Holding and its Subsidiaries
of any nature whatsoever (whether absolute, contingent or otherwise and whether
or not due) that are required in accordance with GAAP to be reflected in such
financial statements and that are not so reflected. To the knowledge of the
Company, except as set forth on Schedule 5.11(b),
the consolidated balance sheets of Aircast as of December 31, 2005 and December
31, 2004 and the consolidated statements of income of Aircast for the twelve
(12) month period ended December 31, 2005 and from inception to December 31,
2004 will be consistent, in all material respects, with the financial
statements referred to in clause (ii) above and the historical financial
statements of Aircast Holding and its Subsidiaries, as the case may be.

 

(c)           As
of the Closing Date, the Parent will have prepared, and furnished to the
Administrative Agent a copy of, a good faith estimated (subject only to
completion of purchase price accounting and related adjustments) unaudited
consolidated opening balance sheet of the Parent and its Subsidiaries as of the
last day of the fiscal month most recently ended prior to the Closing Date for
which such financial statements are available (which shall not be more than
forty-five (45) days prior to the Closing Date), giving pro forma effect to the
consummation of the Aircast Acquisition, the repayment of the Terminating
Indebtedness, the initial extensions of credit made under this Agreement and
the other Transactions and the payment of transaction fees and expenses related
to the foregoing, all as if such events had occurred on such date (the “Pro
Forma Balance Sheet”). Subject to the adjustments noted above, the Pro
Forma Balance Sheet will be prepared in accordance with the requirements of
Regulation S-X under the Exchange Act, will be based on stated assumptions made
in good faith and believed by the Parent to have a reasonable basis set forth
therein, and will present fairly in all material respects the consolidated
financial condition of the Parent and its Subsidiaries on an unaudited pro
forma basis as of the date set forth therein after giving effect to the
consummation of the transactions described above.

 

(d)           The
Parent has prepared, and has heretofore furnished to the Administrative Agent a
copy of, projected consolidated balance sheets and statements of income and
cash flows of the Parent and its Subsidiaries (consisting of balance sheets and
statements of income and cash flows prepared by the Parent on a quarterly basis
through fiscal year 2006 and on an annual basis thereafter covering a total
period of not less than seven years), giving effect to the consummation of the
Aircast Acquisition, the repayment of the Terminating Indebtedness, the initial
extensions of credit made under this Agreement, the other Transactions and the
payment of transaction fees and expenses related to the foregoing (the “Projections”).
In the good faith opinion of management of the Parent, the assumptions used in
the preparation of the Projections were fair, complete and reasonable when made
and continue to be fair, complete and reasonable as of the date hereof. The
Projections have been prepared in good faith by the executive and financial
personnel of the Parent, are complete and are believed by the Parent to
represent a

 

85

 

reasonable estimate of
the future performance and financial condition of the Parent and its
Subsidiaries, subject to the uncertainties and approximations inherent in any
projections.

 

(e)           After
giving effect to the consummation of the Aircast Acquisition and the other
Transactions, the Company and the Credit Parties taken as a whole (i) have
capital sufficient to carry on their businesses as conducted and as proposed to
be conducted, (ii) have assets with a fair saleable value, determined on a
going concern basis, which, together with anticipated cash flows, are
(y) not less than the amount required to pay the probable liability on
their existing debts as they become absolute and matured and (z) greater
than the total amount of their liabilities (including identified contingent
liabilities, valued at the amount that can reasonably be expected to become
absolute and matured in their ordinary course), and (iii) do not intend
to, and do not believe that they will, incur debts or liabilities beyond their
ability to pay such debts and liabilities as they mature in their ordinary
course.

 

5.12         Ownership
of Properties. Each Credit Party (i) has good and marketable title to
all real property owned by it, (ii) holds interests as lessee under valid
leases in full force and effect with respect to all material leased real and
personal property used in connection with its business, and (iii) has good
title to all of its other material properties and assets reflected in the most
recent financial statements of the Parent and its Subsidiaries referred to in Section 5.11(a) (and, after giving effect to the
Aircast Acquisition, the most recent financial statements of Aircast and its
Subsidiaries referred to in Section 5.11(b))
(except, in each case, as sold or otherwise disposed of since the date thereof
in the ordinary course of business), in each case free and clear of all Liens
other than Permitted Liens. Schedule 5.12
lists, as of the Closing Date and after giving effect to the Aircast Acquisition,
all Realty of the Parent and its Domestic Subsidiaries, indicating in each case
the identity of the owner, the address of the property, the nature of use of
the premises, and whether such interest is a leasehold or fee ownership
interest.

 

5.13         ERISA;
Foreign Plans.

 

(a)           Each Credit Party that
has Plans subject to ERISA and its ERISA Affiliates is in compliance with the
applicable provisions of ERISA, and each Plan is and has been administered in
compliance with all applicable Requirements of Law, including, without
limitation, the applicable provisions of ERISA and the Internal Revenue Code,
in each case except where the failure so to comply, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect. No
ERISA Event (i) has occurred within the five (5) year period prior to the
Closing Date, (ii) has occurred and is continuing, or (iii) to the
knowledge of any Borrower, is reasonably expected to occur with respect to any
Plan. No Plan has any Unfunded Pension Liability as of the most recent annual
valuation date applicable thereto that, when added to the aggregate amount of
Unfunded Pension Liabilities with respect to all other Plans, exceeds $250,000,
and no Credit Party or any of its ERISA Affiliates has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.

 

(b)           No
Credit Party or any of its ERISA Affiliates has any outstanding liability on
account of a complete or partial withdrawal from any Multiemployer Plan.  No Multiemployer Plan is in “reorganization”
or is “insolvent” within the meaning of such terms under ERISA.

 

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(c)           Each
Foreign Pension Plan is in compliance in all material respects with all
Requirements of Law applicable thereto and the respective requirements of the
governing documents for such plan except where the failure so to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.  With respect to
each Foreign Pension Plan, none of the Parent, its Affiliates or any of their
respective directors, officers, employees or agents has engaged in a
transaction which would subject the Parent or any of its Subsidiaries, directly
or indirectly, to a tax or civil penalty that could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.  The aggregate unfunded liabilities with
respect to such Foreign Pension Plans could not reasonably be expected to
result in a Material Adverse Effect.

 

5.14         Environmental
Matters.  Except as set forth on Schedule 5.14 and except as, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect:

 

(a)           No
Hazardous Substances are or have been generated, used, located, released,
treated, transported, disposed of or stored, currently or in the past,
(i) by any Credit Party or (ii) to the knowledge of any Borrower, by
any other Person (including any predecessor in interest) or otherwise, in
either case in, on, about or to or from any portion of any real property,
leased, owned or operated by any Credit Party, except in compliance with all
applicable Environmental Laws; no portion of any such real property or, to the
knowledge of any Borrower, any other real property at any time leased, owned or
operated by any Credit Party is contaminated by any Hazardous Substance; and no
portion of any real property leased, owned or operated by any Credit Party is
presently or, to the knowledge of any Borrower, has ever been, the subject of
an environmental audit, assessment or remedial action performed or required by
any Governmental Authority.

 

(b)           No
portion of any real property leased, owned or operated by any Credit Party has
been used by any Credit Party or, to the knowledge of any Borrower, by any
other Person, as or for a mine, landfill, dump or other disposal facility,
gasoline service station or bulk petroleum products storage facility; and, to
the knowledge of any Borrower, no portion of such real property or any other
real property currently or at any time in the past leased, owned or operated by
any Credit Party has, pursuant to any Environmental Law, been placed on the “National
Priorities List” or “CERCLIS List” (or any similar United States
federal, state or local list) of sites subject to possible Hazardous Substance
contamination.

 

(c)           All
activities and operations of the Credit Parties are in compliance with the requirements
of all applicable Environmental Laws; each Credit Party has obtained all
licenses and permits required under applicable Environmental Laws for its
respective operations, all such licenses and permits are being maintained in
good standing, and each Credit Party is in compliance with all terms and
conditions of such licenses and permits; and no Credit Party is involved in any
suit, action or proceeding, or has received any written notice, complaint or
other request for information from any Governmental Authority or other Person,
with respect to any actual or alleged Environmental Claims against any Credit
Party or for which any Credit Party may have any liability, and to the
knowledge of any Borrower, there are no such Environmental Claims threatened,
nor any basis therefor.

 

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5.15         Compliance
with Laws.  Each Credit Party has
timely filed all material reports, documents and other materials required to be
filed by it under all applicable Requirements of Law with any Governmental
Authority, has retained all material records and documents required to be
retained by it under all applicable Requirements of Law, and is otherwise in
compliance with all applicable Requirements of Law in respect of the conduct of
its business and the ownership and operation of its properties, except in each
case to the extent that the failure to comply therewith, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.

 

5.16         Intellectual
Property.  Except as set forth in Schedule 5.16, each Credit Party owns, or has the legal
right to use, all Intellectual Property necessary for it to conduct its
business as currently conducted.  Schedule 5.16 lists, as of the Closing Date and after
giving effect to the Aircast Acquisition, all registered Intellectual Property
owned by any Credit Party.  No claim has
been asserted or 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 any Borrower know of any such claim, and to the
knowledge of any Borrower, the use of such Intellectual Property by any Credit
Party does not infringe on the known rights of any Person, except for such
claims and infringements that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. 

 

5.17         Regulated
Industries.  No Credit Party is
(i) an “investment company,” a company “controlled” by an “investment company,”
or an “investment advisor,” within the meaning of the Investment Company Act of
1940, as amended, or (ii) a “holding company,” a “subsidiary company” of a
“holding company,” or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company,” within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

 

5.18         Insurance.  Schedule 5.18
sets forth, as of the Closing Date and after giving effect to the Aircast
Acquisition, an accurate and complete list and a brief description (including
the insurer, policy number, type of insurance, coverage limits, deductibles,
expiration dates and any special cancellation conditions) of all policies of
property and casualty, liability (including, but not limited to, product
liability), business interruption, workers’ compensation, and other forms of
insurance owned or held by the Parent and its Subsidiaries or pursuant to which
any of their respective assets are insured. 
The assets, properties and business of the Parent and its Subsidiaries
are insured against such hazards and liabilities, under such coverages and in
such amounts, as are customarily maintained by prudent companies similarly
situated and under policies issued by insurers of recognized responsibility.

 

5.19         Material
Contracts.  Schedule 5.19
lists, as of the Closing Date and after giving effect to the Aircast
Acquisition, each contract or other agreement to which any Credit Party is a
party, by which any Credit Party or its properties is bound or to which any Credit
Party is subject, in each case the termination or cancellation of which, or
default thereunder or breach thereof by any Credit Party, could reasonably be
expected to have a Material Adverse Effect (collectively, “Material
Contracts”), and also indicates the parties thereto.  As of the Closing Date, (i) each
Material Contract is in full force and effect and is enforceable by each Credit
Party that is a party thereto in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors’

 

88

 

rights generally, by
general or equitable principles or by principles of good faith and fair
dealing, and (ii) no Credit Party or, to the knowledge of any Borrower,
any other party thereto is in breach of or default under any Material Contract
in any material respect or has given notice of termination or cancellation of
any Material Contract. 

 

5.20         Deposit
Accounts.  Schedule 5.20
lists, as of the Closing Date and after giving effect to the Aircast
Acquisition, all deposit accounts maintained by any Credit Party at any bank or
other financial institution located in the United States, and lists in each
case the name in which the account is held, the name of the depository
institution, the type of account and the account number.

 

5.21         Security
Documents.

 

(a)           The
provisions of each of the Security Documents other than the Mortgages (whether
executed and delivered prior to or on the Closing Date or thereafter) are and
will be effective to create in favor of the Administrative Agent, for its
benefit and the benefit of the Lenders, a valid and enforceable (subject, in
the case of direct enforceability against governmental payors of Accounts (as
defined in the Security Agreement) owing to the Credit Parties under the
federal Medicare and Medicaid Programs, to the restrictions imposed by the
federal Social Security Act and other applicable federal and state laws)
security interest in and Lien upon all right, title and interest of each Credit
Party that is a party thereto in and to the Collateral purported to be pledged
by it thereunder and described therein, and upon (i) the initial extension
of credit hereunder, (ii) the filing of appropriately completed Uniform
Commercial Code financing statements and continuations thereof in the
jurisdictions specified therein, (iii) the filing of appropriately
completed short-form assignments in the U.S. Patent and Trademark Office and
the U.S. Copyright Office, as applicable, and (iv) the possession by the
Administrative Agent of any certificates evidencing the securities pledged
thereby, duly endorsed or accompanied by duly executed stock powers, such
security interest and Lien shall constitute a fully perfected and first
priority security interest in and Lien upon such right, title and interest of
the applicable Credit Party in and to such Collateral, to the extent that such
security interest and Lien can be perfected by such filings, actions and possession,
subject only to Permitted Liens.

 

(b)           The
provisions of each Mortgage (whether executed and delivered prior to or on the
Closing Date or thereafter) are and will be effective to create in favor of the
Administrative Agent, for its benefit and the benefit of the Lenders, a valid
and enforceable security interest in and Lien upon all right, title and
interest of each Credit Party that is a party thereto in and to the mortgaged
premises described therein, and upon (i) the initial extension of credit hereunder
and (ii) the filing of such Mortgage in the applicable real property
recording office, such security interest and Lien shall constitute a fully
perfected and first priority security interest in and Lien upon such right,
title and interest of such Credit Party in and to such mortgaged premises, in
each case prior and superior to the rights of any other Person and subject only
to Permitted Liens.

 

5.22         Labor
Relations.  No Credit Party is
engaged in any unfair labor practice within the meaning of the National Labor
Relations Act of 1947, as amended, to the extent applicable to such Credit
Party.  As of the Closing Date and after
giving effect to the Aircast Acquisition, there is (i) no unfair labor
practice complaint before the National Labor Relations Board, or

 

89

 

grievance or arbitration
proceeding arising out of or under any collective bargaining agreement, pending
or, to the knowledge of any Borrower, threatened, against any Credit Party,
(ii) no strike, lock-out, slowdown, stoppage, walkout or other labor
dispute pending or, to the knowledge of any Borrower, threatened, against any
Credit Party, and (iii) to the knowledge of any Borrower, no petition for
certification or union election or union organizing activities taking place
with respect to any Credit Party.  As of
the Closing Date and after giving effect to the Aircast Acquisition, there are
no collective bargaining agreements or Multiemployer Plans covering the
employees of the Credit Parties.

 

5.23         No
Burdensome Restrictions.  No Credit
Party is a party to any written agreement or instrument or subject to any other
obligations or any charter or corporate restriction or any provision of any
applicable Requirement of Law that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

 

5.24         OFAC;
Anti-Terrorism Laws.

 

(a)           No
Credit Party or any Affiliate of any Credit Party (i) is a Sanctioned
Person, (ii) has more than 15% of its assets in Sanctioned Countries, or
(iii) derives more than 15% of its operating income from investments in,
or transactions with, Sanctioned Persons or Sanctioned Countries.  No part of the proceeds of any Loan hereunder
will be used directly or indirectly to fund any operations in, finance any
investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Country. 

 

(b)           Neither
the making of the Loans hereunder nor the use of the proceeds thereof will
violate the PATRIOT Act, the Trading with the Enemy Act, as amended, or any of
the foreign assets control regulations of the United States Treasury Department
(31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or
executive order relating thereto.  The
Credit Parties are in compliance in all material respects with the PATRIOT Act.

 

5.25         Aircast
Acquisition.  The Company has
heretofore furnished to the Administrative Agent a true and complete copy of
the Aircast Stock Purchase Agreement, together with all schedules and exhibits
thereto and all agreements required to be executed and delivered pursuant
thereto, and in each case all amendments, modifications and waivers relating
thereto.  As of the Closing Date and
immediately prior to giving effect to the consummation of the Aircast
Acquisition, (i) none of such agreements has been amended, modified or
supplemented, nor any condition or provision thereof waived, in any material
respect other than as approved by the Administrative Agent, and each such
agreement is in full force and effect and no Credit Party (or, to the knowledge
of the Company, any other party thereto) is in default thereunder or in breach
thereof, and (ii) all representations and warranties of the Company and,
to the knowledge of the Company, all representations and warranties of the
selling stockholders contained in the Aircast Stock Purchase Agreement are true
and correct with the same effect as if made on and as of the Closing Date
except for representations and warranties that speak as of an earlier date
(which are true and correct as of such date) except, in each case, for any
failure that, individually or in the aggregate, has not resulted in or would
not result in a Material Adverse Effect. 
As of the Closing Date and after giving effect to the Aircast
Acquisition, all principal, interest and other amounts outstanding under the
Terminating Indebtedness has been indefeasibly satisfied in full.

 

90

 

ARTICLE VI

 

AFFIRMATIVE
COVENANTS

 

Each
of the Parent and the Borrowers covenants and agrees that, until the
termination of the Commitments, the termination or expiration of all Letters of
Credit and the payment in full of all principal and interest with respect to
the Loans together with all other amounts (including any Reimbursement Obligations)
then due and owing hereunder:

 

6.1           Financial
Statements.  The Borrowers will
deliver to the Administrative Agent and to each Lender:

 

(a)           As
soon as available and in any event within fifty (50) days after the end of each
of the first three fiscal quarters of each fiscal year, beginning with the
first fiscal quarter ending after the Closing Date, an unaudited consolidated
balance sheet of the Parent and its Subsidiaries as of the end of such fiscal
quarter and unaudited consolidated statements of income and cash flows for the
Parent and its Subsidiaries for the fiscal quarter then ended and for that
portion of the fiscal year then ended, in each case setting forth comparative
consolidated figures as of the end of and for the corresponding period in the
preceding fiscal year together with comparative budgeted figures for the fiscal
year then ended, all in reasonable detail and prepared in accordance with GAAP
(subject to the absence of notes required by GAAP and subject to normal
year-end adjustments) applied on a basis consistent with that of the preceding
quarter or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such quarter; and

 

(b)           As
soon as available and in any event within 100 days after the end of each fiscal
year, beginning with fiscal year 2006, an audited consolidated balance sheet of
the Parent and its Subsidiaries as of the end of such fiscal year and the
related audited consolidated statements of income, cash flows and stockholders’
equity for the Parent and its Subsidiaries for the fiscal year then ended,
including the notes thereto, in each case setting forth comparative figures as
of the end of and for the preceding fiscal year together with comparative
budgeted figures for the fiscal year then ended, all in reasonable detail and
(with respect to the audited statements) certified by Ernst & Young LLP or
another independent certified public accounting firm of recognized national
standing reasonably acceptable to the Administrative Agent, together with a
report thereon by such accountants that is not qualified as to going concern or
scope of audit or otherwise qualified in any material respect and to the effect
that such financial statements present fairly in all material respects the
consolidated financial condition and results of operations of the Parent and
its Subsidiaries as of the dates and for the periods indicated in accordance
with GAAP applied on a basis consistent with that of the preceding year or
containing disclosure of the effect on the financial condition or results of
operations of any change in the application of accounting principles and
practices during such year. 

 

6.2           Other
Business and Financial Information. 
The Borrowers will deliver to the Administrative Agent and each Lender:

 

(a)           Concurrently
with each delivery of the financial statements described in Sections 6.1(a) and 6.1(b),
a Compliance Certificate with respect to the period covered by the

 

91

 

financial statements
being delivered thereunder, executed by a Financial Officer of the Parent,
together with a Covenant Compliance Worksheet reflecting the computation of the
financial covenants set forth in Article VII
as of the last day of the period covered by such financial statements;

 

(b)           Concurrently
with each delivery of the financial statements described in Section 6.1(b), a certificate executed by a Financial
Officer of the Parent in form and substance reasonably satisfactory to the
Administrative Agent and setting forth the calculation of Excess Cash Flow for
such fiscal year (provided that such certificate shall not be required
if no Excess Cash Flow payment with respect to such fiscal year is required
under Section 2.6(g));

 

(c)           As
soon as available and in any event within thirty (30) days after the
commencement of each fiscal year, beginning with the 2007 fiscal year, a
consolidated operating budget for the Parent and its Subsidiaries for such fiscal
year (prepared on a quarterly basis), consisting of a consolidated balance
sheet and consolidated statements of income and cash flows, together with a
certificate of a Financial Officer of the Parent to the effect that such budget
has been prepared in good faith based on estimates and assumptions believed to
be reasonable; and as soon as available from time to time thereafter, any
modifications or revisions to or restatements of such budget;

 

(d)           Promptly
upon receipt thereof, copies of any “management letter” submitted to the Parent
or any of its Subsidiaries by its certified public accountants in connection
with each annual, interim or special audit, and promptly upon completion
thereof, any response reports from the Parent or any such Subsidiary in respect
thereof;

 

(e)           Except to the extent the Company has notified
the Administrative Agent and Lenders that such information is electronically
available on the internet at a website specified in such notice and to which
each of the Administrative Agent and the Lenders has access without charge, promptly
upon the sending, filing or receipt thereof, copies of (i) all financial
statements, reports, notices and proxy statements that the Parent shall send or
make available generally to its shareholders, (ii) all regular, periodic
and special reports, registration statements and prospectuses (other than on
Form S-8) that any Credit Party shall render to or file with the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. or any
national securities exchange, and (iii) all press releases and other
statements made available generally by the Parent to the public concerning
material developments in the business of the Parent and its Subsidiaries;

 

(f)            Promptly
upon (and in any event within five (5) Business Days after) any Responsible
Officer of any Credit Party obtaining knowledge thereof, written notice of any
of the following:

 

(i)            the
occurrence of any Default or Event of Default, together with a written
statement of a Responsible Officer of the Parent specifying the nature of such
Default or Event of Default, the period of existence thereof and the action
that the Parent has taken and proposes to take with respect thereto;

 

92

 

(ii)           the
institution or threatened institution of any action, suit, investigation or
proceeding against or affecting any Credit Party, including any such
investigation or proceeding by any Governmental Authority (other than routine
periodic inquiries, investigations or reviews), that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, and any material development in any litigation or
other proceeding previously reported pursuant to Section 5.5
or this Section 6.2(f)(ii);

 

(iii)          the
receipt by any Credit Party from any Governmental Authority of (A) any
notice asserting any failure by any Credit Party to be in compliance with
applicable Requirements of Law or that threatens the taking of any action
against any Credit Party or sets forth circumstances that, if taken or
adversely determined, could reasonably be expected to have a Material Adverse
Effect, or (B) any notice of any actual or threatened suspension,
limitation or revocation of, failure to renew, or imposition of any restraining
order, escrow or impoundment of funds in connection with, any license, permit,
accreditation or authorization of any Credit Party, where such action could
reasonably be expected to have a Material Adverse Effect;

 

(iv)          the
occurrence of any ERISA Event, together with (x) a written statement of a
Responsible Officer of the Parent specifying the details of such ERISA Event
and the action that the applicable Credit Party has taken and proposes to take
with respect thereto, (y) a copy of any notice with respect to such ERISA
Event that may be required to be filed with the PBGC and (z) a copy of any
notice delivered by the PBGC to any Credit Party or an ERISA Affiliate with
respect to such ERISA Event;

 

(v)           the
occurrence of any material default under, or any proposed or threatened
termination or cancellation of, any Material Contract or other material
contract or agreement to which any Credit Party is a party, the default under
or termination or cancellation of which could reasonably be expected to have a
Material Adverse Effect;

 

(vi)          the
occurrence of any of the following: (x) the assertion of any Environmental
Claim against or affecting any Credit Party or any real property leased,
operated or owned by any Credit Party, or any Credit Party’s discovery of a
basis for any such Environmental Claim; (y) the receipt by any Credit
Party of written notice of any alleged violation of or noncompliance with any
Environmental Laws by any Credit Party or for which any Credit Party may have
any liability or any release of any Hazardous Substance allegedly by any Credit
Party or for which any Credit Party may have any liability; or (z) the
taking of any investigation, remediation or other response action by any Credit
Party or any other Person in response to the actual or alleged violation of any
Environmental Law by any Credit Party or generation, storage, transport,
release, disposal or discharge of any Hazardous Substances on, to, upon or from
any real property leased, operated or owned by any Credit Party; but in each
case under clauses (x), (y) and (z) above, only to the extent the same
could reasonably be expected to have a Material Adverse Effect; and

 

(vii)         any
other matter or event that has, or could reasonably be expected to have, a
Material Adverse Effect, together with a written statement of a Responsible

 

93

 

Officer of the Parent setting forth the nature and
period of existence thereof and the action that the affected Credit Parties
have taken and propose to take with respect thereto; and

 

(g)           As
promptly as reasonably possible, such other information about the business,
condition (financial or otherwise), operations or properties of any Credit
Party as the Administrative Agent or any Lender may from time to time
reasonably request.

 

6.3           Existence;
Franchises; Maintenance of Properties. 
Each of the Parent and the Borrowers will, and will cause each of its
Subsidiaries to, (i) maintain and preserve in full force and effect its
legal existence, except as expressly permitted otherwise by Section 8.1, (ii) obtain, maintain and preserve in
full force and effect all other rights, franchises, licenses, permits,
certifications, approvals and authorizations required by Governmental Authorities
and necessary to the ownership, occupation or use of its properties or the
conduct of its business, except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect, and (iii) keep
all material properties in good working order and condition (normal wear and
tear and damage by casualty excepted) and from time to time make all necessary
repairs to and renewals and replacements of such properties, except to the
extent that any of such properties are obsolete or are being replaced or, in
the good faith judgment of the Company, are no longer useful or desirable in
the conduct of the business of the Credit Parties.

 

6.4           Compliance
with Laws.  Each of the Parent and
the Borrowers will, and will cause each of its Subsidiaries to, comply in all
respects with all Requirements of Law applicable in respect of the conduct of
its business and the ownership and operation of its properties, except to the
extent the failure so to comply could not reasonably be expected to have a
Material Adverse Effect.

 

6.5           Payment
of Obligations.  Each of the Parent
and the Borrowers will, and will cause each of its Subsidiaries to,
(i) pay, discharge or otherwise satisfy at or before maturity all
liabilities and obligations as and when due (subject to any applicable
subordination, grace and notice provisions), except to the extent failure to do
so could not reasonably be expected to have a Material Adverse Effect, and
(ii) pay and discharge all taxes, assessments and governmental charges or
levies imposed upon it, upon its income or profits or upon any of its
properties, prior to the date on which penalties would attach thereto, and all
lawful claims that, if unpaid, would become a Lien (other than a Permitted
Lien) upon any of the properties of any Credit Party; provided, however,
that no Credit Party shall be required to pay any such liability, obligation,
tax, assessment, charge, levy or claim that is being contested in good faith
(and by appropriate proceedings, except with respect to non-governmental claims
not exceeding $250,000 in the aggregate at any time) and as to which such
Credit Party is maintaining adequate reserves with respect thereto in
accordance with GAAP.

 

6.6           Insurance.  Each of the Parent and the Borrowers will,
and will cause each of its Subsidiaries to, maintain with financially sound and
reputable insurance companies insurance with respect to its assets, properties
and business, against such hazards and liabilities, of such types and in such
amounts, as is customarily maintained by companies in the same or similar
businesses similarly situated, and maintain such other or additional insurance
on such terms and subject to such conditions as may be required under any
Security Document.

 

94

 

6.7           Maintenance
of Books and Records; Inspection. 
Each of the Parent and the Borrowers will, and will cause each of its
Subsidiaries to, (i) maintain adequate books, accounts and records, in
which full, true and correct entries shall be made of all financial
transactions in relation to its business and properties in accordance with
sound business practices sufficient to permit the preparation of financial
statements required under this Agreement in accordance with GAAP, and in
compliance with the requirements of any Governmental Authority having
jurisdiction over it, and prepare all financial statements required under this
Agreement, in accordance with GAAP, and (ii) permit employees or agents of
the Administrative Agent or any Lender to visit and inspect its properties and
examine or audit its books, records, working papers and accounts and make
copies and memoranda of them, and to discuss its affairs, finances and accounts
with its officers and employees and, upon notice to the Parent, the independent
public accountants of the Parent and its Subsidiaries (and by this provision
the Parent authorizes such accountants to discuss the finances and affairs of
the Parent and its Subsidiaries, provided that the Parent shall be
entitled to be present at any such discussions), all at such times and from
time to time, upon reasonable notice and during business hours, as may be
reasonably requested.

 

6.8           [Reserved.]

 

6.9           Permitted
Acquisitions.  In addition to the
requirements contained in the definition of Permitted Acquisition and in the
other applicable terms and conditions of this Agreement, the Borrowers shall,
with respect to any Permitted Acquisition, comply with, and cause each other
applicable Credit Party to comply with, the following covenants:

 

(a)           Not
less than ten (10) Business Days prior to the consummation of any
Permitted Acquisition having an Acquisition Amount of $25,000,000 or more, the
Borrowers shall have delivered to the Administrative Agent and each Lender the
following: 

 

(i)            a
reasonably detailed description of the material terms of such Permitted
Acquisition (including, without limitation, the purchase price and method and
structure of payment) and of each Person or business that is the subject of
such Permitted Acquisition (each, a “Target”);

 

(ii)           historical
financial statements of the Target (or, if there are two or more Targets that
are the subject of such Permitted Acquisition and that are part of the same
consolidated group, consolidated historical financial statements for all such
Targets) for the two (2) most recent fiscal years available and, if
available, for any interim periods since the most recent fiscal year-end;

 

(iii)          consolidated
projected income statements of the Parent and its Subsidiaries (giving effect
to such Permitted Acquisition and the consolidation of each relevant Target)
for the three-year period following the consummation of such Permitted
Acquisition, in reasonable detail, together with any appropriate statement of
assumptions and pro forma adjustments; 

 

(iv)          with
respect to any such Permitted Acquisition in which any Contingent Purchase
Price Obligations or Seller Subordinated Indebtedness shall be incurred by any
Borrower or any other Credit Party, a copy of the most recent draft of the
acquisition

 

95

 

agreement (including schedules and exhibits thereto,
to the extent available) and other material documents (including the
documentation evidencing such Contingent Purchase Price Obligations or Seller
Subordinated Indebtedness); and

 

(v)           a
certificate, in form and substance reasonably satisfactory to the
Administrative Agent, executed by a Financial Officer of the Company setting
forth the Acquisition Amount (including the calculation of any Contingent Purchase
Price GAAP Amount constituting part of such Acquisition Amount and any
Contingent Purchase Price Reserve Amount associated with such Permitted
Acquisition) and further to the effect that, to the best of such Financial
Officer’s knowledge the consummation of such Permitted Acquisition will not
result in a violation of any provision of this Section 6.9
or any other provision of this Agreement, and after giving effect to such
Permitted Acquisition and any Borrowings made in connection therewith, the Company
will be in compliance with the financial covenants contained in Article VII, such compliance determined with regard to
calculations made on a pro forma basis for the Reference Period most recently
ended, calculated in accordance with GAAP as if each such Target had been
consolidated with the Company for those periods applicable to such covenants
(such calculations to be attached to the certificate using the Covenant
Compliance Worksheet).

 

(b)           As
soon as reasonably practicable after the consummation of any Permitted
Acquisition having an Acquisition Amount of $5,000,000 or more, the Borrowers
will notify the Administrative Agent and the Lenders of such Permitted
Acquisition and will deliver (i) to the Administrative Agent and each
Lender, in the case of any Permitted Acquisition having an Acquisition Amount
of $10,000,000 or more but less than $25,000,000, the certificate and
calculations described in clause (v) of Section 6.9(a),
and (ii) to the Administrative Agent or any Lender, upon its request
therefor, true and correct copies of the fully executed acquisition agreement
(including schedules and exhibits thereto) and other material documents and
closing papers delivered in connection therewith. 

 

(c)           The
consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by the Company that (except as shall have been
approved in writing by the Required Lenders) all conditions thereto set forth
in this Section 6.9 and in the description
furnished under Section 6.9(a)(i) have been
satisfied, that the same is permitted in accordance with the terms of this
Agreement, and that the matters certified to by the Financial Officer of the
Company in the certificate referred to in Section 6.9(a)(v)
are, to the best of such Financial Officer’s knowledge, true and correct in all
material respects as of the date such certificate is given, which
representation and warranty shall be deemed to be a representation and warranty
as of the date thereof for all purposes hereunder, including, without limitation,
for purposes of Sections 4.2 and 9.1.

 

6.10         Creation
or Acquisition of Subsidiaries. 
Subject to the provisions of Section 8.5,
the Company may from time to time create or acquire new Wholly Owned
Subsidiaries in connection with Permitted Acquisitions or otherwise, and the
Wholly Owned Subsidiaries of the Company may create or acquire new Wholly Owned
Subsidiaries, provided that:

 

96

 

(a)           Concurrently
with (and in any event within ten (10) Business Days after) the creation or
direct or indirect acquisition by the Company thereof, each such new Subsidiary
will execute and deliver to the Administrative Agent (i) a joinder to the
Guaranty Agreement, pursuant to which such new Subsidiary shall become a guarantor
thereunder and shall guarantee the payment in full of the Obligations of the
Borrowers under this Agreement and the other Credit Documents, and (ii) a
joinder to the Security Agreement, pursuant to which such new Subsidiary shall
become a party thereto and shall grant to the Administrative Agent a first
priority Lien upon and security interest in its accounts receivable, inventory,
equipment, general intangibles and other personal property as Collateral for
its obligations under the Guaranty Agreement, subject only to Permitted Liens;

 

(b)           Concurrently
with (and in any event within ten (10) Business Days after) the creation or
acquisition of any new Subsidiary all or a portion of the Capital Stock of
which is directly owned by the Company, the Company will execute and deliver to
the Administrative Agent an amendment or supplement to the Pledge Agreement
pursuant to which all of the Capital Stock of such new Subsidiary owned by the
Company shall be pledged to the Administrative Agent, together with the
certificates evidencing such Capital Stock and undated stock powers duly
executed in blank; and concurrently with (and in any event within ten (10)
Business Days after) the creation or acquisition of any new Subsidiary all or a
portion of the Capital Stock of which is directly owned by another Subsidiary,
the parent Subsidiary will execute and deliver to the Administrative Agent an
appropriate joinder, amendment or supplement to the Pledge Agreement, pursuant
to which all of the Capital Stock of such new Subsidiary owned by such parent
Subsidiary shall be pledged to the Administrative Agent, together with the
certificates evidencing such Capital Stock and undated stock powers duly
executed in blank; 

 

(c)           As
promptly as reasonably possible, the Company and its Subsidiaries will deliver
any such other documents, certificates and opinions (including opinions of
counsel, certified copies of its organizational documents, resolutions, lien
searches and other customary items), in form and substance reasonably satisfactory
to the Administrative Agent, as the Administrative Agent or the Required
Lenders may reasonably request in connection therewith and will take such other
action as the Administrative Agent may reasonably request to create in favor of
the Administrative Agent a perfected security interest in the Collateral being
pledged pursuant to the documents described above; and

 

(d)           Notwithstanding
the foregoing, with respect to any Foreign Subsidiary, (i) the Capital
Stock of such Foreign Subsidiary shall be required to be pledged only if such
Foreign Subsidiary is both a First-Tier Foreign Subsidiary and a Material
Foreign Subsidiary, and in any event such pledge shall not exceed sixty-five
percent (65%) of the voting Capital Stock of such Foreign Subsidiary, unless
and to the extent that the pledge of greater than sixty-five percent (65%) of
the voting Capital Stock of such Foreign Subsidiary would not cause any adverse
tax consequences to the Company (other than that which would be de minimis),
and (ii) such Foreign Subsidiary shall not be required to become a
Subsidiary Guarantor or become a party to the Security Agreement (and the
documents, certificates, opinions and other items required under Section 6.10(c) shall not be required with respect to
such Foreign Subsidiary) if (y) such Foreign Subsidiary is not a Material
Foreign Subsidiary or (z) doing so would cause adverse tax consequences to
the Company (other than that which would be de minimis); provided that
in the

 

97

 

event any Foreign
Subsidiary that is not initially a Material Foreign Subsidiary subsequently
becomes a Material Foreign Subsidiary, such Foreign Subsidiary shall be subject
to the requirements of this Section 6.10
(subject to the limitations set forth in this Section 6.10(d));
and provided  further that if at any time all First-Tier Foreign
Subsidiaries whose Capital Stock is not pledged to the Administrative Agent
represent at such time (together with their respective direct and indirect Subsidiaries,
on a consolidated basis) 15% or more of the consolidated revenues or the total
assets of the Parent and its Subsidiaries taken as a whole, then the Company
shall pledge or cause to be pledged to the Administrative Agent the Capital
Stock of one or more such First-Tier Foreign Subsidiaries (irrespective of
whether any such First-Tier Foreign Subsidiary is a Material Foreign
Subsidiary, but subject to the 65% limitation set forth in this Section 6.10(d), unless and to the extent that the
pledge of greater than sixty-five percent (65%) of the voting Capital Stock of
such Foreign Subsidiary would not cause any adverse tax consequences to the
Company (other than that which would be de minimis)) to the extent necessary to
reduce such percentage below 15%. 

 

6.11         Additional
Security.  Each of the Parent and the
Borrowers will, and will cause each of its Subsidiaries to, grant to the
Administrative Agent, for the benefit of the Lenders, from time to time
security interests, mortgages and other Liens in and upon such of its assets
and properties as are not covered by the Security Documents executed and
delivered on the Closing Date or pursuant to Section 6.10
and as may be reasonably requested from time to time by the Required Lenders
(including, without limitation, a Mortgage with respect to owned interests in
real property but excluding leased real property), but subject to the proviso
at the end of Section 6.10, and provided
that no Mortgages shall be required with respect to the Aircast Owned
Properties during the first year following the Closing Date, it being
understood and agreed that the Administrative Agent may require such Mortgages
at any time on or after the first anniversary of the Closing Date.  Such security interests, mortgages and Liens
shall be granted pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent and shall constitute valid and
perfected security interests and Liens, subject to no Liens other than
Permitted Liens.  Without limitation of
the foregoing, in connection with the grant of any Mortgage, the Company will,
and will cause each applicable Subsidiary to, at the Company’s expense,
prepare, obtain and deliver to the Administrative Agent any environmental
assessments, appraisals, surveys, title insurance and other matters or
documents as the Administrative Agent may reasonably request or as may be
required under applicable banking laws and regulations.

 

6.12         Environmental
Laws.  Each of the Parent and the
Borrowers will, and will cause each of its Subsidiaries to, (i) comply in
all material respects with, and use commercially reasonable efforts to ensure
compliance in all material respects by all tenants and subtenants, if any,
with, all applicable Environmental Laws and obtain and comply in all material
respects with and maintain, and use commercially reasonable efforts to ensure
that all tenants and subtenants obtain and comply in all material respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, except to the extent that
the failure to do so could not reasonably be expected to have a Material
Adverse Effect, and (ii) conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions, required to
be conducted by any Credit Party under applicable Environmental Laws and
promptly comply in all material respects with all lawful orders and directives
of all Governmental Authorities applicable to any Credit Party regarding

 

98

 

Environmental Laws,
except to the extent that the same are being contested in good faith by
appropriate proceedings or to the extent the failure to conduct or complete any
of the foregoing could not reasonably be expected to have a Material Adverse
Effect.

 

6.13         OFAC,
PATRIOT Act Compliance.  Each of the
Parent and the Borrowers will, and will cause each of its Subsidiaries to,
(i) refrain from doing business in a Sanctioned Country or with a Sanctioned
Person in violation of the economic sanctions of the United States administered
by OFAC, and (ii) provide, to the extent commercially reasonable, such
information and take such actions as are reasonably requested by the
Administrative Agent or any Lender in order to assist the Administrative Agent
and the Lenders in maintaining compliance with the PATRIOT Act.

 

6.14         Further
Assurances.  Each of the Parent and
Borrowers will, and will cause each of its Subsidiaries to, make, execute,
endorse, acknowledge and deliver any amendments, modifications or supplements
hereto and restatements hereof and any other agreements, instruments or
documents, and take any and all such other actions, as may from time to time be
reasonably requested by the Administrative Agent or the Required Lenders to
perfect and maintain the validity and priority of the Liens granted pursuant to
the Security Documents and to effect, confirm or further assure or protect and
preserve the interests, rights and remedies of the Administrative Agent and the
Lenders under this Agreement and the other Credit Documents.

 

6.15         Post-Closing
Matters.

 

(a)           Unless
otherwise agreed by the Administrative Agent in writing, upon the Company’s
relocation of its corporate headquarters to a new leased facility in Vista,
California, the Company will use commercially reasonable efforts to obtain a
landlord agreement from the landlord of such facility within sixty (60) days
after the Company takes occupancy.

 

(b)           Unless
otherwise agreed by the Administrative Agent in writing, within ninety (90)
days after the Closing Date, the Company shall have executed and delivered to
the Administrative Agent a pledge agreement effective under Swedish law to
pledge to the Administrative Agent 65% of the voting Capital Stock of Aircast
Scandinavia, AB, together with an opinion of Swedish counsel in form and
substance satisfactory to the Administrative Agent. 

 

(c)           Unless
otherwise agreed by the Administrative Agent in writing, within ninety (90)
days after the Closing Date, the Company shall have executed and delivered to
the Administrative Agent a Pledge Agreement Without Transmission of Possession
(Contrato de Prenda sin Transmision de Posesión)
(or an amendment to the existing pledge agreement) with respect to the
equipment and inventory of the Company located in Mexico, together with an
opinion of Mexican counsel and such other documents and certificates as the
Administrative Agent shall reasonably request, all in form and substance
satisfactory to the Administrative Agent. 

 

(d)           Unless
otherwise agreed by the Administrative Agent in writing, within ninety (90)
days after the Closing Date (unless the Company has, on or before such date,
transferred 100% direct ownership of dj Orthopedics Deutschland GmbH to another
Foreign Subsidiary), the Company shall have begun the preparation of, and shall
have executed and delivered to the

 

99

 

Administrative
Agent within 180 days after the Closing Date, a pledge agreement effective
under German law to pledge to the Administrative Agent 65% of the voting
Capital Stock of dj Orthopedics Deutschland GmbH, together with an opinion of
German counsel in form and substance satisfactory to the Administrative Agent.

 

ARTICLE VII

 

FINANCIAL
COVENANTS

 

The
Company covenants and agrees that, until the termination of the Commitments,
the termination or expiration of all Letters of Credit and the payment in full
of all principal and interest with respect to the Loans together with all other
amounts (including any Reimbursement Obligations) then due and owing hereunder:

 

7.1           Total
Leverage Ratio.  The Company will not
permit the Total Leverage Ratio as of the last day of any fiscal quarter,
beginning with the first fiscal quarter of fiscal year 2006, to be greater than
the ratio set forth below opposite such fiscal quarter (or opposite the period
that includes such fiscal quarter):

 

	
  Period

  	
   

  	
  Maximum
  Total

  Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1st
  FQ of 2006 through and including 3rd FQ of 2006

  	
   

  	
  4.5:1.0

  	
   

  
	
  4th
  FQ of 2006

  	
   

  	
  4.25:1.0

  	
   

  
	
  1st
  FQ of 2007

  	
   

  	
  4.00:1.0

  	
   

  
	
  2nd
  FQ of 2007

  	
   

  	
  3.75:1.0

  	
   

  
	
  3rd
  FQ of 2007 through and including 4th FQ of 2007

  	
   

  	
  3.50:1.0

  	
   

  
	
  1st
  FQ of 2008 through and including 2nd FQ of 2008

  	
   

  	
  3.25:1.0

  	
   

  
	
  3rd
  FQ of 2008 through and including 4th FQ of 2008

  	
   

  	
  3.00:1.0

  	
   

  
	
  1st
  FQ of 2009 through and including 4th FQ of 2009

  	
   

  	
  2.75:1.0

  	
   

  
	
  Thereafter

  	
   

  	
  2.50:1.0

  	
   

  

 

7.2           Fixed
Charge Ratio.  The Company will not
permit the Fixed Charge Coverage Ratio as of the last day of any fiscal
quarter, beginning with the first fiscal quarter of fiscal year 2006, to be
less than 1.5 to 1.0.

 

100

 

ARTICLE VIII

 

NEGATIVE
COVENANTS

 

Each
of the Parent and the Borrowers covenants and agrees that, until the
termination of the Commitments, the termination or expiration of all Letters of
Credit and the payment in full of all principal and interest with respect to
the Loans together with all other amounts (including any Reimbursement
Obligations) then due and owing hereunder: 

 

8.1           Merger;
Consolidation.  Each of the Parent
and the Borrowers will not, and will not permit or cause any of its
Subsidiaries to, liquidate, wind up or dissolve, or enter into any
consolidation, merger or other combination, or agree to do any of the
foregoing; provided, however, that: 

 

(i)            any
Wholly Owned Subsidiary of the Company that is a Domestic Subsidiary may merge
or consolidate with, or be liquidated into, (x) the Company (so long as
the Company is the surviving or continuing entity), (y) any other Wholly
Owned Subsidiary that is a Domestic Subsidiary (so long as the surviving or
continuing entity is a Subsidiary Guarantor), or (z) another Person (other
than another Credit Party), so long as (A) the surviving or continuing
entity is a Subsidiary Guarantor and (B) such merger or consolidation
constitutes a Permitted Acquisition and the applicable conditions and
requirements of Sections 6.9 and 6.10 are satisfied, and in each case so long as no Default
or Event of Default has occurred and is continuing or would result therefrom;

 

(ii)           any
Wholly Owned Subsidiary of the Company that is a Foreign Subsidiary may merge
or consolidate with, or be liquidated into, (x) the Company (so long as
the Company is the surviving or continuing entity), (y) any other Wholly
Owned Subsidiary that is a Foreign Subsidiary (so long as, if either
constituent entity is a Foreign Borrower, the surviving or continuing entity is
a Foreign Borrower), or (z) another Person (other than another Credit
Party), so long as (A) if either constituent entity is a Foreign Borrower,
the surviving or continuing entity is a Foreign Borrower and (B) such
merger or consolidation constitutes a Permitted Acquisition and the applicable
conditions and requirements of Sections 6.9
and 6.10 are satisfied, and in each case so
long as no Default or Event of Default has occurred and is continuing or would
result therefrom;

 

(iii)          the
Company may merge or consolidate with (y) a Wholly Owned Subsidiary of the
Company as permitted under Sections 8.1(i)
and 8.1(ii) or (z) another Person (other
than another Credit Party), so long as (A) the Company is the surviving or
continuing entity and (B) such merger or consolidation constitutes a
Permitted Acquisition and the applicable conditions and requirements of Sections 6.9 and 6.10 are
satisfied, and in each case so long as no Default or Event of Default has
occurred and is continuing or would result therefrom; and

 

(iv)          any
Subsidiary that is not a Subsidiary Guarantor or a Borrower may merge into or
consolidate with, or be liquidated into, any other Subsidiary that is not a
Subsidiary Guarantor or a Borrower.

 

101

 

8.2           Indebtedness.  Each of the Parent and the Borrowers will
not, and will not permit or cause any of its Subsidiaries to, create, incur,
assume or suffer to exist any Indebtedness other than (without duplication):

 

(i)            Indebtedness
of the Credit Parties in favor of the Administrative Agent and the Lenders
incurred under this Agreement and the other Credit Documents;

 

(ii)           accrued
expenses (including salaries, accrued vacation and other compensation), current
trade or other accounts payable and other current liabilities arising in the
ordinary course of business and not incurred through the borrowing of money, in
each case above to the extent constituting Indebtedness;

 

(iii)          Indebtedness
of the Company and its Subsidiaries incurred solely to finance the acquisition,
construction or improvement of any equipment, real property or other fixed
assets in the ordinary course of business (or assumed or acquired by the
Company and its Subsidiaries in connection with a Permitted Acquisition or
other transaction permitted under this Agreement), including Indebtedness in
respect of Capital Lease Obligations, and any renewals, replacements, refinancings
or extensions thereof, provided that all such Indebtedness shall not
exceed $25,000,000 in aggregate principal amount outstanding at any one time;

 

(iv)          unsecured
loans and advances (A) by the Company or any Subsidiary to any Subsidiary
Guarantor, (B) by any Subsidiary to the Company, or (C) by the
Company or any Subsidiary to any Subsidiary that is not a Subsidiary Guarantor,
provided in each case that any such loan or advance is subordinated in
right and time of payment to the Obligations and is evidenced by a promissory
note, in form and substance reasonably satisfactory to the Administrative Agent
and pledged to the Administrative Agent pursuant to the Security Documents, and
provided  further that all such loans and advances made pursuant
to clause (C) above to Subsidiaries (including Foreign Subsidiaries) that
are not Subsidiary Guarantors shall be subject to the limitations on
Investments set forth in Section 8.5;

 

(v)           Indebtedness
of the Credit Parties under Hedge Agreements entered into in the ordinary
course of business to manage existing or anticipated interest rate or foreign
currency risks and not for speculative purposes;

 

(vi)          Indebtedness
existing on the Closing Date and described in Schedule 8.2
and any renewals, replacements, refinancings or extensions of any such
Indebtedness that do not increase the outstanding principal amount thereof or
result in an earlier final maturity date or decreased weighted average life
thereof;

 

(vii)         Indebtedness
consisting of Guaranty Obligations of any Credit Party incurred in the ordinary
course of business for the benefit of another Credit Party, provided
that the primary obligation being guaranteed is permitted by this Agreement,
and provided  further that any Guaranty Obligations of the Parent,
any Borrower or any Subsidiary Guarantor of obligations of a Subsidiary that is
not a Subsidiary Guarantor shall be subject to the limitations on Investments
set forth in Section 8.5;

 

102

 

(viii)        unsecured
Indebtedness issued after the Closing Date by the Company or any of its
Subsidiaries to sellers in connection with Permitted Acquisitions (including
Indebtedness consisting of Contingent Purchase Price Obligations), in an
aggregate principal amount not exceeding $30,000,000 outstanding at any time, provided
that such Indebtedness (A) is fully subordinated in right and time of
payment to the Obligations on terms and conditions reasonably acceptable to the
Administrative Agent, and (B) shall have covenants and undertakings that
are no more restrictive than those contained herein and shall not be
cross-defaulted to this Agreement (but may be cross-accelerated) (the
Indebtedness described in this paragraph, “Seller Subordinated Indebtedness”);
and Guaranty Obligations of the Parent in respect of Seller Subordinated
Indebtedness permitted hereunder, provided that such Guaranty
Obligations comply with clauses (A) and (B) above; 

 

(ix)           Indebtedness
that may be deemed to exist pursuant to any performance bond, surety, statutory
appeal or similar obligation entered into or incurred by the Company or any of
its Subsidiaries in the ordinary course of business;

 

(x)            Indebtedness
of the Parent and its Subsidiaries arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business, provided that such Indebtedness is
extinguished within five Business Days of its incurrence; 

 

(xi)           Indebtedness
of Foreign Subsidiaries of the Company under working capital and other local
credit arrangements in an aggregate principal amount outstanding at any time
not exceeding $5,000,000 for any such Foreign Subsidiary and $20,000,000 in the
aggregate for all Foreign Subsidiaries, and any Guaranty Obligations of the
Parent or the Company in respect thereof; 

 

(xii)          Indebtedness of the Parent or any of its
Subsidiaries incurred to finance a Permitted Acquisition or the proceeds of
which are used to prepay the Term Loans in accordance with Section 2.6;
provided, in each case
that (A) such Indebtedness is (and all Guaranty Obligations with respect
to such Indebtedness are) unsecured and subordinated in right and time of
payment to the Obligations pursuant to subordination provisions that are either
(1) reasonably satisfactory to the Administrative Agent or
(2) confirmed by a nationally recognized investment bank (that is not the
Administrative Agent or an Affiliate thereof) as market terms and conditions at
such time for similar debt securities issued by Persons whose debt securities
have credit ratings not greater than that of the Parent, (B) the covenants
and events of default of such Indebtedness are, taken as a whole, materially
less restrictive than those contained in this Agreement (and shall not include
any covenant or event of default more restrictive than those contained in this
Agreement), (C) both immediately prior and after giving effect thereto,
(1) no Default or Event of Default shall exist or result therefrom and
(2) the Company shall be in compliance with the financial covenants set
forth in Article VII, such
compliance immediately after giving effect thereto determined with regard to
calculations made on a pro forma basis for the Reference Period most recently
ended, calculated in accordance with GAAP as if such Indebtedness had been
incurred on the first day of such Reference

 

103

 

Period, and the Administrative Agent shall have
received a certificate of a Financial Officer of the Company to such effect, and (D) such Indebtedness matures, and
does not require any scheduled amortization or other scheduled or mandatory
payments of principal prior to, at least six (6) months after the Tranche B
Term Loan Maturity Date, other than (1) redemptions made at the option of
the holders of such Indebtedness upon a change in control of the issuer in
circumstances that would also constitute a Change of Control under this
Agreement (provided that any such redemption cannot be made fewer than
30 days after such change in control and that any such redemption is fully
subordinated to the indefeasible payment in full of all principal, interest and
other amounts under the Credit Documents) and (2) mandatory prepayments
required as a result of asset dispositions if such Indebtedness allows the
issuer to satisfy such mandatory prepayment requirement by prepayment of Loans
under this Agreement or other senior obligations of the issuer or reinvestment
of the asset disposition proceeds within a specified period of time; and

 

(xiii)         other
unsecured Indebtedness of the Company and its Domestic Subsidiaries not
exceeding $20,000,000 in aggregate principal amount outstanding at any time.

 

8.3           Liens.  Each of the Parent and the Borrowers will
not, and will not permit or cause any of its Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist, any Lien upon or
with respect to any part of its property or assets, whether now owned or
hereafter acquired, or file or permit the filing of, or permit to remain in
effect, any financing statement or other similar notice of any Lien with
respect to any such property, asset, income or profits under the Uniform
Commercial Code of any state or under any similar recording or notice statute,
or agree to do any of the foregoing, other than the following (collectively, “Permitted
Liens”):

 

(i)            Liens
in favor of the Administrative Agent and the Lenders created by or otherwise
existing under or in connection with this Agreement and the other Credit
Documents;

 

(ii)           Liens
in existence on the Closing Date and set forth on Schedule 8.3,
and any extensions, renewals or replacements thereof; provided that any
such extension, renewal or replacement Lien shall be limited to all or a part
of the property that secured the Lien so extended, renewed or replaced (plus
any improvements on such property) and shall secure only those obligations that
it secures on the date hereof (and any renewals, replacements, refinancings or
extensions of such obligations that do not increase the outstanding principal
amount thereof);

 

(iii)          Liens
imposed by law, such as Liens of carriers, warehousemen, mechanics, materialmen
and landlords, incurred in the ordinary course of business for sums not constituting
borrowed money that are not overdue for a period of more than sixty (60) days
or that are being contested in good faith (and by appropriate proceedings,
except with respect to claims not exceeding $500,000 in the aggregate at any
time) and for which adequate reserves have been established in accordance with
GAAP (if so required);

 

104

 

(iv)          Liens
(other than any Lien imposed by ERISA, the creation or incurrence of which
would result in an Event of Default under Section 9.1(j))
incurred in the ordinary course of business in connection with worker’s
compensation, unemployment insurance or other forms of governmental insurance
or benefits, or to secure the performance of letters of credit, customs bonds,
bids, tenders, statutory obligations, indemnity, surety and appeal bonds,
leases, public or statutory obligations, contracts and other similar
obligations (other than obligations for borrowed money) entered into in the
ordinary course of business;

 

(v)           Liens
for taxes, assessments or other governmental charges or statutory obligations
that are not delinquent or remain payable without any penalty or that are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP (if so required);

 

(vi)          any
attachment or judgment Lien not constituting an Event of Default under Section 9.1(h); 

 

(vii)         Liens
securing the Indebtedness permitted under Section 8.2(iii),
provided that (x) any such Lien shall attach to the property being
acquired, constructed or improved with such Indebtedness concurrently with or
within one hundred eighty (180) days after the acquisition (or completion of
construction or improvement) or the refinancing thereof by the Company or such
Subsidiary, (y) the amount of the Indebtedness secured by such Lien shall
not exceed 100% of the cost to the Company or such Subsidiary of acquiring,
constructing or improving the property and any other assets then being financed
solely by the same financing source, and (z) any such Lien shall not
encumber any other property of the Company or any of its Subsidiaries except
assets then being financed solely by the same financing source and proceeds
thereof; 

 

(viii)        customary
rights of set-off, revocation, refund or chargeback under deposit agreements or
under the Uniform Commercial Code of banks or other financial institutions
where the Parent or any of its Subsidiaries maintains deposits (other than
deposits intended as cash collateral) in the ordinary course of business; 

 

(ix)           Liens
that arise in favor of banks under Article 4 of the Uniform Commercial Code on
items in collection and the documents relating thereto and proceeds thereof;

 

(x)            Liens
arising from the filing (for notice purposes only) of UCC-1 financing
statements (or equivalent filings, registrations or agreements in foreign
jurisdictions) in respect of true leases otherwise permitted hereunder; 

 

(xi)           with
respect to any Realty occupied by the Parent or any of its Subsidiaries,
(a) all easements, rights of way, reservations, licenses, encroachments,
variations and similar restrictions, charges and encumbrances on title that do
not secure monetary obligations and do not materially impair the use of such
property for its intended purposes or the value thereof, and (b) any other
Lien or exception to coverage

 

105

 

described in mortgagee policies of title insurance
issued in favor of and accepted by the Administrative Agent;

 

(xii)          any
leases, subleases, licenses or sublicenses granted by the Company or any of its
Subsidiaries to third parties in the ordinary course of business and not
interfering in any material respect with the business of the Company and its
Subsidiaries, and any interest or title of a lessor, sublessor, licensor or
sublicensor under any lease or license permitted under this Agreement; 

 

(xiii)         Liens
on the assets of Foreign Subsidiaries, securing Indebtedness of such Foreign
Subsidiaries permitted under Section 8.2(xi);
and

 

(xiv)        other
Liens securing obligations not exceeding $1,000,000 in aggregate principal
amount outstanding at any time.

 

8.4           Asset
Dispositions.  Each of the Parent and
the Borrowers will not, and will not permit or cause any of its Subsidiaries
to, directly or indirectly, make or agree to make any Asset Disposition except
for:

 

(i)            the
sale or other disposition of inventory and Cash Equivalents in the ordinary
course of business, and the termination or unwinding of Hedge Agreements
permitted hereunder;

 

(ii)           the
sale, exchange or other disposition in the ordinary course of business of
equipment or other capital assets no longer used or useful in the business of
the Company and its Subsidiaries;

 

(iii)          the
sale or other disposition of assets pursuant to any Casualty Event, provided
any Net Cash Proceeds therefrom are be reinvested or applied to the prepayment
of the Loans in accordance with the provisions of Section 2.6(e);

 

(iv)          the
sale, lease, transfer or other disposition of assets by the Company or any
Subsidiary of the Company to the Company or to a Subsidiary Guarantor (or by
any Subsidiary that is not a Subsidiary Guarantor to another Subsidiary that is
not a Subsidiary Guarantor), in each case so long as no Event of Default shall
have occurred and be continuing or would result therefrom;

 

(v)           the
sale or other disposition of the Aircast Owned Properties; and

 

(vi)          the
sale or other disposition of assets (other than the Capital Stock of
Subsidiaries) outside the ordinary course of business for fair value and for
consideration at least 66-2/3% of which consists of cash or Cash Equivalents, provided
that (x) the aggregate amount of Net Cash Proceeds from all such sales or
dispositions that are consummated during any fiscal year shall not exceed $5,000,000,
(y) such Net Cash Proceeds shall, to the extent required hereunder, be
reinvested or applied to the prepayment of the Loans in accordance with the
provisions of Section 2.6(f), and
(z) no Default or Event of Default shall have occurred and be continuing
or would result therefrom.  For purposes
of this Section 8.4, the following shall
be deemed to be cash:

 

106

 

(a) the assumption of any liabilities of the
Company or any Subsidiary Guarantor with respect to, and the release of the
Company or such Subsidiary Guarantor from all liability in respect of, any
Indebtedness of the Company or the Subsidiaries permitted hereunder (in the
amount of such Indebtedness) that is due and payable within one year of the consummation
of such disposition and (b) securities received by the Company or any
Subsidiary Guarantor from the transferee that are immediately convertible into
cash without breach of their terms or the agreement pursuant to which they were
purchased and that are promptly converted by the Company or such Subsidiary
Guarantor into cash.

 

8.5           Investments.  Each of the Parent and the Borrowers will
not, and will not permit or cause any of its Subsidiaries to, directly or
indirectly, purchase, own, invest in or otherwise acquire any Capital Stock,
evidence of indebtedness or other obligation or security or any interest
whatsoever in any other Person, or make or permit to exist any loans, advances
or extensions of credit to, or any investment in cash or by delivery of
property in, any other Person, or purchase or otherwise acquire (whether in one
or a series of related transactions) any portion of the assets, business or
properties of another Person (including pursuant to an Acquisition), or create
or acquire any Subsidiary, or become a partner or joint venturer in any
partnership or joint venture (collectively, “Investments”), or make a
commitment or otherwise agree to do any of the foregoing, other than:

 

(i)            Investments
consisting of Cash Equivalents;

 

(ii)           Investments
consisting of the extension of trade credit, the creation of prepaid expenses,
and the purchase of inventory, supplies, equipment and other assets, in each
case in the ordinary course of business;

 

(iii)          Investments
consisting of loans and advances to employees, officers or directors of the
Parent and its Subsidiaries in the ordinary course of business not exceeding
$1,500,000 at any time outstanding, provided that loans for the purpose
of acquiring Capital Stock of the Parent the Net Cash Proceeds of which Equity
Issuance are contributed to the capital of the Company or used to acquire
Capital Stock of the Company shall not be subject to such limit;

 

(iv)          Investments
(including equity securities and debt obligations) of the Company and its
Subsidiaries (a) received in connection with the bankruptcy or
reorganization of suppliers and customers and in good faith settlement of
delinquent obligations of, and other disputes with, customers and suppliers
arising in the ordinary course of business or (b) constituting non-cash
proceeds of any sale, transfer or other disposition permitted by Sections 8.4(ii) or 8.4(vi);

 

(v)           without
duplication, Investments consisting of intercompany Indebtedness permitted
under Section 8.2(iv);

 

(vi)          Investments
existing as of the Closing Date and described in Schedule 8.5;

 

107

 

(vii)         Investments
of the Credit Parties under Hedge Agreements entered into in the ordinary
course of business to manage existing or anticipated interest rate or foreign
currency risks and not for speculative purposes;

 

(viii)        Investments
(y) of the Parent in the Company and (z) of the Company in its
Subsidiaries, in each case to the extent made prior to the Closing Date;

 

(ix)           Investments
consisting of the making of capital contributions or the purchase of Capital
Stock (x) by the Parent in the Company, (y) by the Company or any
Subsidiary in (i) any Subsidiary Guarantor or (ii) in any newly created Wholly
Owned Subsidiary that is (or immediately after giving effect to such Investment
will be) a Subsidiary Guarantor, provided that the Company complies with
the provisions of Section 6.10,
and provided  further that in no event shall any Foreign
Subsidiary create or acquire any Domestic Subsidiary, and (z) by any
Subsidiary in the Company;

 

(x)            Investments
(other than Acquisitions) consisting of the making of capital contributions or
the purchase of Capital Stock by the Company in a Foreign Subsidiary, the
proceeds of which will be used to fund all or a portion of the Acquisition
Amount for a Permitted Acquisition;

 

(xi)           Investments
(other than Acquisitions) by the Company in Foreign Subsidiaries (including,
without limitation, capital contributions made to any Foreign Subsidiary, loans
made to any Foreign Subsidiary, and Guarantee Obligations with respect to
obligations of any such Foreign Subsidiary (other than Guarantee Obligations
under Section 8.2(xi)) made after the
Closing Date in an aggregate amount not exceeding $15,000,000 at any time
outstanding for all such Investments; provided that (y) the
aggregate permitted outstanding amount for all such Investments shall increase
to $25,000,000 upon delivery pursuant to Section 6.2(a)
of a Compliance Certificate indicating a Total Leverage Ratio of equal to or less
than 2.5 to 1.0 as of the last day of the Reference Period covered thereby (but
provided  further that in the event the Total Leverage Ratio
should equal or exceed 3.0 to 1.0 as of the last day of any Reference Period at
any time thereafter, the aggregate permitted outstanding amount for all such
Investments pursuant to this Section 8.5(xi)
shall automatically be reduced to $15,000,000 (plus any such Investments
pursuant to this Section 8.5(xi) outstanding
at the time of reduction to the extent in excess of $15,000,000, but only to
the extent of such excess)), and (z) notwithstanding the foregoing, no
Investments may be made under this Section 8.5(xi)
if a Default or Event of Default has occurred and is continuing or would result
therefrom; 

 

(xii)          the
Aircast Acquisition;

 

(xiii)         Permitted
Acquisitions; and

 

(xiv)        other
Investments of the Company and its Subsidiaries not otherwise permitted under
this Section 8.5 (including joint
ventures, but excluding Investments in Foreign Subsidiaries) in an aggregate
amount not exceeding $10,000,000 at any time outstanding for all such
Investments. 

 

108

 

8.6           Restricted
Payments.

 

(a)           Each
of the Parent and the Borrowers will not, and will not permit or cause any of
its Subsidiaries to, directly or indirectly, declare or make any dividend
payment, or make any other distribution of cash, property or assets, in respect
of any of its Capital Stock or any warrants, rights or options to acquire its
Capital Stock, or purchase, redeem, retire or otherwise acquire for value any
shares of its Capital Stock or any warrants, rights or options to acquire its
Capital Stock, or set aside funds for any of the foregoing (any of the
foregoing, a “Restricted Payment”), except that: 

 

(i)            the
Parent and any of its Subsidiaries may declare and make dividend payments or
other distributions payable solely in its Common Stock; 

 

(ii)           the
Company may make dividend payments or other distributions to the Parent in
amounts equal to amounts required for the Parent to pay (y) United States
federal, state and local income taxes to the extent such taxes are attributable
to the income of the Company and its Subsidiaries and (z) ordinary and
reasonable holding company operating expenses;

 

(iii)          each
Wholly Owned Subsidiary of the Company may declare and make dividend payments
or other distributions to the Company or to another Subsidiary of the Company,
in each case to the extent not prohibited under applicable Requirements of Law;

 

(iv)          so
long as no Default or Event of Default shall have occurred and be continuing or
would result therefrom, the Company may declare and make dividend payments and
other distributions to the Parent to enable the Parent to purchase, redeem,
retire or otherwise acquire shares of its Capital Stock (or options or rights
to acquire its Capital Stock) held by former officers, directors or employees
following termination of service or employment, in an aggregate cash amount not
exceeding $2,000,000 during any fiscal year or $5,000,000 for all such
purchases, redemptions, retirements and acquisitions from and after the Closing
Date, in each case net of any proceeds received by the Parent as a result of
resales of any such Capital Stock; and

 

(v)           the
Company may make dividend payments or other distributions to the Parent to
enable the Parent to make any Restricted Payment in an amount that, taken
together with the aggregate of all other Restricted Payments made by the Parent
and its Subsidiaries (other than Restricted Payments permitted under Sections 8.6(a)(i), 8.6(a)(ii)
and 8.6(a)(iii), but including Restricted
Payments permitted under Section 8.6(a)(iv))
from and after the Closing Date, does not exceed the sum of (A) 25% of
Excess Cash Flow for the period (taken as one accounting period) from the
Closing Date to the end of the most recently ended fiscal quarter for which the
Company has delivered financial statements as required by Sections 6.1(a)
or 6.1(b), as the case may be, and the
Compliance Certificate as required by Section 6.2(a),
and (B) $20,000,000, so long as (y) no Default or Event of Default
shall have occurred and be continuing or would result therefrom and
(z) the Company shall be in compliance with the financial covenants
contained in Article VII and the Total
Leverage Ratio shall not exceed 2.5 to

 

109

 

1.0, such compliance determined with regard to
calculations made on a pro forma basis for the Reference Period most recently
ended, calculated in accordance with GAAP as if such Restricted Payment had
been made on the first day of such period (and in the case of any Restricted
Payment or series of related Restricted Payments in an amount exceeding
$5,000,000, the Company shall have furnished to the Administrative Agent a certificate
of a Financial Officer of the Company as to such compliance, together with
supporting calculations). 

 

(b)           Each
of the Parent and the Borrowers will not, and will not permit or cause any of
its Subsidiaries to, make (or give any notice in respect of) any payment or
prepayment of principal on, or interest, fees or premium (if any) with respect
to, any Subordinated Indebtedness, or directly or indirectly make any
redemption (including pursuant to any change of control or asset disposition
provision), retirement, defeasance or other acquisition for value of any
Subordinated Indebtedness, or make any deposit or otherwise set aside funds for
any of the foregoing purposes; provided, however, that the
Company and its Subsidiaries may make scheduled principal and interest payments
on any Seller Subordinated Indebtedness incurred or issued pursuant to (and in
accordance with the terms of) Section 8.2(viii)
and any Subordinated Indebtedness existing on the Closing Date and described in
Schedule 8.2, in each case in
accordance with the terms of such Indebtedness (including any subordination
provisions thereof).

 

8.7           Transactions
with Affiliates.  Each of the Parent
and the Borrowers will not, and will not permit or cause any of its
Subsidiaries to, enter into any transaction (including, without limitation, any
purchase, sale, lease or exchange of property or the rendering of any service)
with any officer, director, stockholder or other Affiliate of the Parent or any
of its Subsidiaries, except in the ordinary course of its business and upon
fair and reasonable terms that are no less favorable to it than it would be
obtained in a comparable arm’s length transaction with a Person other than an
Affiliate of the Parent or any of its Subsidiaries; provided, however,
that nothing contained in this Section 8.7
shall prohibit:

 

(i)            transactions
described on Schedule 8.7 (and any
renewals or replacements thereof on terms not materially more disadvantageous
to the applicable Credit Party) or otherwise expressly permitted under this
Agreement; 

 

(ii)           transactions
among the Company and the Subsidiary Guarantors (provided that such
transactions shall remain subject to any other applicable limitations and
restrictions set forth in this Agreement);

 

(iii)          the
payment and provision by the Parent and its Subsidiaries of reasonable
compensation, benefits, indemnification and loans and advances permitted by Section 8.5(iii) to their directors, officers and
employees;

 

(iv)          Equity
Issuances with respect to the Parent’s Capital Stock to directors, officers and
employees of the Credit Parties pursuant to employee benefit plans, employment
agreements or other employment arrangements approved by the Board of Directors
of the Parent; and

 

110

 

(v)           any
contribution to the capital of the Company by the Parent or any purchase of
Capital Stock of the Company by the Parent.

 

8.8           Lines
of Business.

 

(a)           Each
of the Parent and the Borrowers will not, and will not permit or cause any of
its Subsidiaries to, engage in any lines of business other than the businesses
engaged in by it on the Closing Date and businesses and activities
complementary or reasonably related thereto.

 

(b)           Notwithstanding
the provisions of Section 8.8(a)
or any other provision of this Agreement, the Parent shall not (i) hold
any assets other than the Capital Stock of the Company, cash and Cash
Equivalents and rights under employment agreements and written employment
arrangements, (ii) have any liabilities other than (A) liabilities
under and as permitted by the Credit Documents, (B) tax liabilities in the
ordinary course of business, (C) liabilities under employment agreements
and written employment arrangements and (D) corporate, administrative and
operating expenses in the ordinary course of business, or (iii) engage in
any business other than (A) owning the Capital Stock of the Company and
activities incidental to such ownership and to its public company status, and
(B) acting as a guarantor of the Obligations hereunder and granting to the
Administrative Agent, for the benefit of the Lenders, a security interest in
and Lien upon its assets pursuant to the Security Documents to which it is a
party. 

 

8.9           Sale-Leaseback
Transactions.  Each of the Parent and
the Borrowers will not, and will not permit or cause any of its Subsidiaries
to, directly or indirectly, become or remain liable as lessee or as guarantor
or other surety with respect to any lease, whether an operating lease or a
Capital Lease, of any property (whether real, personal or mixed, and whether
now owned or hereafter acquired) (i) that any Credit Party has sold or
transferred (or is to sell or transfer) to a Person that is not a Credit Party
or (ii) that any Credit Party intends to use for substantially the same purpose
as any other property that, in connection with such lease, has been sold or
transferred (or is to be sold or transferred) by a Credit Party to another
Person that is not a Credit Party, in each case except for transactions
otherwise expressly permitted under this Agreement and except for any such sale
or transfer (made in connection with the corresponding leaseback of the
relevant asset) by the Company or any Subsidiary of any fixed or capital assets
acquired (or the construction of which is completed) after the Closing Date
that is made for cash consideration in an amount not less than the cost of such
fixed or capital asset and is consummated within 180 days after the Company or
such Subsidiary acquires or completes the construction of such fixed or capital
asset.

 

8.10         Certain
Amendments.  Each of the Parent and
the Borrowers will not, and will not permit or cause any of its Subsidiaries
to, (i) amend, modify or waive, or permit the amendment, modification or
waiver of, any provision of any Subordinated Indebtedness, the effect of which
would be (a) to increase the principal amount due thereunder or provide
for any mandatory prepayments not already provided for by the terms thereof,
(b) to shorten or accelerate the time of payment of any amount due thereunder,
(c) to increase the applicable interest rate or amount of any fees or
costs due thereunder, (d) to amend any of the subordination provisions
thereunder (including any of the definitions relating thereto), (e) to
make any covenant or event of default therein more restrictive or add any new
covenant or event of default, (f) to grant any security or collateral to
secure payment thereof, or (g) to effect any change in the rights or
obligations of the

 

111

 

Credit Parties thereunder or of the holders thereof
that, in the reasonable determination of the Administrative Agent, would be
adverse in any material respect to the rights or interests of the Lenders,
(ii) breach or otherwise violate any of the subordination provisions
applicable to any Subordinated Indebtedness, including, without limitation,
restrictions against payment of principal and interest thereon, or
(iii) amend, modify or change any provision of its articles or certificate
of incorporation or formation, bylaws, operating agreement or other applicable
formation or organizational documents, as applicable, the terms of any class or
series of its Capital Stock, the Aircast Asset Purchase Agreement or the
Aircast Stock Purchase Agreement, other than in a manner that could not
reasonably be expected to materially increase the obligations of any Credit
Party thereunder or to adversely affect the Lenders in any material respect (provided
that the Company shall give the Administrative Agent and the Lenders notice of
any such amendment, modification or change, together with certified copies
thereof).

 

8.11         Limitation
on Certain Restrictions.  Each of the
Parent and the Borrowers will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any restriction or encumbrance on (a) the
ability of the Parent, the Company and its Subsidiaries to perform and comply
with their respective obligations under the Credit Documents or (b) the
ability of any Subsidiary of the Company to make any dividend payment or other
distribution in respect of its Capital Stock, to repay Indebtedness owed to the
Company or any other Subsidiary, to make loans or advances to the Company or
any other Subsidiary, or to transfer any of its assets or properties to the
Company or any other Subsidiary, except (in the case of clause (b) above
only) for such restrictions or encumbrances existing under or by reason of
(i) this Agreement and the other Credit Documents, (ii) applicable
Requirements of Law, (iii) customary non-assignment provisions in leases
and licenses of real or personal property or other agreements entered into by
the Company or any Subsidiary in the ordinary course of business, restricting
the assignment or transfer thereof or of property that is the subject thereof,
(iv) customary restrictions and conditions contained in any agreement
relating to the sale of assets (including Capital Stock of a Subsidiary)
pending such sale, provided that such restrictions and conditions apply
only to the assets being sold and such sale is permitted under this Agreement,
(v) customary provisions in joint venture agreements entered into by the
Company or any Subsidiary in the ordinary course of business, and (vi) the
credit arrangements permitted under Section 8.2(xi)
(but only with respect to the Foreign Subsidiary obligors thereunder).

 

8.12         No
Other Negative Pledges.  Each of the
Parent and the Borrowers will not, and will not permit or cause any of its
Subsidiaries to, enter into or suffer to exist any agreement or restriction
that, directly or indirectly, prohibits or conditions the creation, incurrence
or assumption of any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or agree to do any of the
foregoing, except for such agreements or restrictions existing under or by
reason of (i) this Agreement and the other Credit Documents,
(ii) applicable Requirements of Law, (iii) any agreement or instrument
creating a Permitted Lien, including the credit arrangements permitted under Section 8.2(xi) (but only to the extent such agreement
or restriction applies to the assets subject to such Permitted Lien),
(iv) customary provisions in leases and licenses of real or personal
property entered into by the Company or any Subsidiary as lessee or licensee in
the ordinary course of business, restricting the granting of Liens therein or
in property that is the subject thereof, (v) customary restrictions and
conditions contained in any agreement relating to the sale of assets (including
Capital Stock of a Subsidiary)

 

112

 

pending such sale,
provided that such restrictions and conditions apply only to the assets
being sold and such sale is permitted under this Agreement, and
(vi) customary provisions in joint venture agreements entered into by the
Company or any Subsidiary in the ordinary course of business.

 

8.13         Fiscal
Year.  Each of the Parent and the
Borrowers will not, and will not permit or cause any of its Subsidiaries to,
change its fiscal year or its method of determining fiscal quarters.

 

8.14         Accounting
Changes.  Other than as permitted
pursuant to Section 1.2, each of the
Parent and the Borrowers will not, and will not permit or cause any of its
Subsidiaries to, make or permit any material change in its accounting policies
or reporting practices, except as may be required by GAAP.

 

ARTICLE IX

 

EVENTS
OF DEFAULT

 

9.1           Events
of Default.  The occurrence of any
one or more of the following events shall constitute an “Event of Default”:

 

(a)           Any
Borrower shall fail to pay when due (i) any principal of any Loan or any
Reimbursement Obligation, or (ii) any interest on any Loan or
Reimbursement Obligation, any fee payable under this Agreement or any other
Credit Document, or (except as provided in clause (i) above) any other
Obligation (other than any Obligation under a Hedge Agreement), and (in the
case of this clause (ii) only) such failure shall continue for a period of
three (3) Business Days;

 

(b)           Any
Borrower or any other Credit Party shall (i) fail to observe, perform or
comply with any condition, covenant or agreement contained in any of Sections 2.14, 6.2(f)(i), 6.3(i), 6.9 or 6.10 or in Articles VII
or VIII or (ii) fail to observe,
perform or comply with any condition, covenant or agreement contained in any of
Sections 6.1 or 6.2 (other than Section 6.2(f)(i))
and (in the case of this clause (ii) only) such failure shall continue
unremedied for a period of five (5) days after the earlier of (y) the date
on which a Responsible Officer of the Company acquires knowledge thereof and
(z) the date on which written notice thereof is delivered by the
Administrative Agent or any Lender to the Company; 

 

(c)           Any
Borrower or any other Credit Party shall fail to observe, perform or comply
with any condition, covenant or agreement contained in this Agreement or any of
the other Credit Documents other than those enumerated in Sections 9.1(a)
and 9.1(b), and such failure (i) by
the express terms of such Credit Document, constitutes an Event of Default, or
(ii) shall continue unremedied for any grace period specifically
applicable thereto or, if no such grace period is applicable, for a period of
thirty (30) days after the earlier of (y) the date on which a Responsible
Officer of the Company acquires knowledge thereof and (z) the date on
which written notice thereof is delivered by the Administrative Agent or any
Lender to the Company; or any default or event of default shall occur under any
Hedge Agreement to which any Credit Party and any Hedge Party are parties;

 

113

 

(d)           Any
representation or warranty made or deemed made by or on behalf of any Borrower
or any other Credit Party in this Agreement, any of the other Credit Documents
or in any certificate, instrument, report or other document furnished at any
time in connection herewith or therewith shall prove to have been incorrect,
false or misleading in any material respect as of the time made, deemed made or
furnished;

 

(e)           Any
Borrower or any other Credit Party shall (i) fail to pay when due (whether
by scheduled maturity, acceleration or otherwise and after giving effect to any
applicable grace period) (y) any principal of or interest on any Indebtedness
(other than the Indebtedness incurred pursuant to this Agreement or a Hedge
Agreement) having an aggregate principal amount of at least $5,000,000 or
(z) any termination or other payment under any Hedge Agreement covering a
notional amount of Indebtedness of at least $5,000,000 or (ii) fail to
observe, perform or comply with any condition, covenant or agreement contained
in any agreement or instrument evidencing or relating to any such Indebtedness,
or any other event shall occur or condition exist in respect thereof, and the
effect of such failure, event or condition is to cause, or permit the holder or
holders of such Indebtedness (or a trustee or agent on its or their behalf) to
cause (with or without the giving of notice, lapse of time, or both), without
regard to any subordination terms with respect thereto, such Indebtedness to
become due, or to be prepaid, redeemed, purchased or defeased, prior to its
stated maturity;

 

(f)            Any
Borrower or any other Material Credit Party shall (i) file a voluntary
petition or commence a voluntary case seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts or any other
relief under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to controvert in a timely and appropriate manner, any
petition or case of the type described in Section 9.1(g),
(iii) apply for or consent to the appointment of or taking possession by a
custodian, trustee, receiver or similar official for or of itself or all or a
substantial part of its properties or assets, (iv) fail generally, or
admit in writing its inability, to pay its debts generally as they become due,
(v) make a general assignment for the benefit of creditors or
(vi) take any corporate action to authorize or approve any of the
foregoing;

 

(g)           Any
involuntary petition or case shall be filed or commenced against any Borrower
or any other Material Credit Party seeking liquidation, winding-up,
reorganization, dissolution, arrangement, readjustment of debts, the
appointment of a custodian, trustee, receiver or similar official for it or all
or a substantial part of its properties or any other relief under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, and such petition or case shall continue
undismissed and unstayed for a period of sixty (60) days; or an order, judgment
or decree approving or ordering any of the foregoing shall be entered in any
such proceeding;

 

(h)           Any
one or more money judgments, writs or warrants of attachment, executions or
similar processes involving an aggregate amount in excess of $2,500,000 shall
be entered or filed against any Borrower or any other Credit Party or any of
their respective properties and the same shall not be paid, dismissed, bonded,
vacated, stayed or discharged within a period of thirty (30) days or in any
event later than five (5) days prior to the date of any proposed sale of such
property thereunder;

 

114

 

(i)            Any
Security Document to which any Borrower or any other Credit Party is now or
hereafter a party shall for any reason cease to be in full force and effect or
cease to be effective to give the Administrative Agent a valid and perfected
security interest in and Lien upon Collateral purported to be covered thereby
with an aggregate value of $1,000,000 or more, subject to no Liens other than
Permitted Liens, in each case unless any such cessation occurs in accordance
with the terms thereof or is due to any act or failure to act on the part of
the Administrative Agent or any Lender, or any Borrower or any other Credit
Party shall assert any of the foregoing; or the Guaranty Agreement shall for
any reason cease to be in full force and effect as to any Guarantor, or any
Guarantor or any Person acting on its behalf shall deny or disaffirm such
Guarantor’s obligations thereunder;

 

(j)            Any
ERISA Event shall occur or exist with respect to any Plan, Multiemployer Plan
or Foreign Pension Plan and, as a result thereof, together with all other ERISA
Events then existing, any Credit Party and its ERISA Affiliates have incurred,
or could reasonably be expected to incur, liability (including liability to any
one or more Plans, Multiemployer Plans or Foreign Pension Plans or to the PBGC
(or to any combination thereof)) in excess of $1,000,000;

 

(k)           Any
one or more licenses, permits, accreditations or authorizations of any Borrower
or any other Credit Party shall be suspended, limited or terminated or shall
not be renewed, or any other action shall be taken, by any Governmental
Authority in response to any alleged failure by any Borrower or any other
Credit Party to be in compliance with applicable Requirements of Law, and such
action, individually or in the aggregate, has or could reasonably be expected
to have a Material Adverse Effect; or

 

(l)            Any
of the following shall occur:

 

(i)            The
Company shall cease to be a direct Wholly Owned Subsidiary of the Parent;

 

(ii)           Any
Borrower (other than the Company) shall cease to be a Wholly Owned Subsidiary
of the Company;

 

(iii)          Any
Person or group of Persons acting in concert as a partnership or other group
shall have become, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, the beneficial owner
(within the meaning given to such term in Rule 13d-3 under the Exchange Act),
directly or indirectly, of Capital Stock of the Parent having 25% or more of
the Total Voting Power of the Parent; or 

 

(iv)          During
any period of up to twelve (12) consecutive months, individuals on the Board of
Directors of the Parent (together with any new directors whose election by such
Board of Directors was approved by a vote of a majority of the directors then
still in office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved) shall
cease to consist of a majority of the individuals who constituted the Board of
Directors at the beginning of such period. 

 

9.2           Remedies:
Termination of Commitments, Acceleration, etc.  Upon and at any time after the occurrence and
during the continuance of any Event of Default, the Administrative

 

115

 

Agent shall at the
direction, or may with the consent, of the Required Lenders, take any or all of
the following actions at the same or different times:

 

(a)           Declare
the Commitments, the Swingline Commitment, and the Issuing Lender’s obligation
to issue Letters of Credit, to be terminated, whereupon the same shall
terminate; provided that, upon the occurrence of an Event of Default
pursuant to Section 9.1(f) or Section 9.1(g), the Commitments, the Swingline
Commitment and the Issuing Lender’s obligation to issue Letters of Credit shall
automatically be terminated;

 

(b)           Declare
all or any part of the outstanding principal amount of the Loans to be
immediately due and payable, whereupon the principal amount so declared to be
immediately due and payable, together with all interest accrued thereon and all
other amounts payable under this Agreement and the other Credit Documents (but
excluding any amounts owing under any Hedge Agreement), shall become
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate or other notice or legal process of any kind, all of which
are hereby knowingly and expressly waived by the Borrowers; provided
that, upon the occurrence of an Event of Default pursuant to Section 9.1(f) or Section 9.1(g),
all of the outstanding principal amount of the Loans and all other amounts
described in this Section 9.2(b)
shall automatically become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal
process of any kind, all of which are hereby knowingly and expressly waived by
the Borrowers;

 

(c)           Direct
the Company to deposit (and the Company hereby agrees, forthwith upon receipt
of notice of such direction from the Administrative Agent, to deposit) with the
Administrative Agent from time to time such additional amount of cash as is
equal to 105% of the aggregate Letter of Credit Exposure then outstanding
(whether or not any beneficiary under any Letter of Credit shall have drawn or
be entitled at such time to draw thereunder) plus all accrued and unpaid
interest and fees thereon, such amount to be held by the Administrative Agent
in the Cash Collateral Account as security for the Letter of Credit Exposure as
described in Section 3.8;

 

(d)           Appoint
or direct the appointment of a receiver for the properties and assets of the
Credit Parties, both to operate and to sell such properties and assets, and
each Borrower, for itself and on behalf of its Subsidiaries, hereby consents to
such right and such appointment and hereby waives any objection such Borrower
or any Subsidiary may have thereto or the right to have a bond or other
security posted by the Administrative Agent on behalf of the Lenders, in
connection therewith; and

 

(e)           Exercise
all rights and remedies available to it under this Agreement, the other Credit
Documents and applicable law.

 

9.3           Remedies:
Set-Off.  In addition to all other
rights and remedies available under the Credit Documents or applicable law or
otherwise, upon and at any time after the occurrence and during the continuance
of any Event of Default, each Lender or any of its Affiliates may, and each is
hereby authorized by each Borrower, at any such time and from time to time, to
the fullest extent permitted by applicable law, without presentment, demand,
protest or other notice of any kind, all of which are hereby knowingly and
expressly waived by each Borrower (on

 

116

 

behalf of itself and the
other Credit Parties) to set off and to apply any and all deposits (general or
special, time or demand, provisional or final) and any other property at any
time held (including at any branches or agencies, wherever located), and any
other indebtedness at any time owing, by such Lender or Affiliate to or for the
credit or the account of such Borrower or any other Credit Party against any or
all of the Obligations to such Lender or Affiliate now or hereafter existing,
whether or not such Obligations may be contingent or unmatured, each Borrower
(on behalf of itself and the other Credit Parties) hereby granting to each
Lender a continuing security interest in and Lien upon all such deposits and
other property as security for such Obligations.  Each Lender agrees promptly to notify the
Company and the Administrative Agent after any such set-off and application; provided,
however, that the failure to give such notice shall not affect the
validity of such set-off and application.

 

ARTICLE X

 

THE
ADMINISTRATIVE AGENT

 

10.1         Appointment.  Each Lender hereby irrevocably appoints and
authorizes Wachovia to act as Administrative Agent hereunder and under the
other Credit Documents and to take such actions as agent on its behalf
hereunder and under the other Credit Documents, and to exercise such powers and
to perform such duties, as are specifically delegated to the Administrative
Agent by the terms hereof or thereof, together with such other powers and
duties as are reasonably incidental thereto. 
The provisions of this Article are solely for the benefit of the
Administrative Agent and the Lenders, and no Credit Party shall have any rights
as a third party beneficiary of any of such provisions.

 

10.2         Nature
of Duties.  The Administrative Agent
shall have no duties or responsibilities other than those expressly set forth
in this Agreement and the other Credit Documents.  The Administrative Agent shall not have, by
reason of this Agreement or any other Credit Document, a fiduciary relationship
in respect of any Lender or any other Person; and nothing in this Agreement or
any other Credit Document, express or implied, is intended to or shall be so
construed as to impose upon the Administrative Agent any obligations or
liabilities in respect of this Agreement or any other Credit Document except as
expressly set forth herein or therein. 
The Administrative Agent may execute any of its duties under this
Agreement or any other Credit Document by or through agents or
attorneys-in-fact and shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact that it selects with reasonable care.  The Administrative Agent shall be entitled to
consult with legal counsel, independent public accountants and other experts
selected by it with respect to all matters pertaining to this Agreement and the
other Credit Documents and its duties hereunder and thereunder and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts.  The Lenders hereby acknowledge that the
Administrative Agent shall not be under any duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Credit Document unless it shall be requested in writing to do so
by the Required Lenders (or, where a higher percentage of the Lenders is
expressly required hereunder, such Lenders).

 

117

 

10.3         Exculpatory
Provisions. Neither the Administrative Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates shall be
(i) liable for any action taken or omitted to be taken by it or such
Person under or in connection with the Credit Documents, except for its or such
Person’s own gross negligence or willful misconduct, (ii) responsible in
any manner to any Lender or any other Person for any recitals, statements,
information, representations or warranties herein or in any other Credit
Document or in any document, instrument, certificate, report or other writing
delivered in connection herewith or therewith, for the execution,
effectiveness, genuineness, validity, enforceability or sufficiency of this
Agreement or any other Credit Document, or for the financial condition of the
Company, any other Credit Party or any other Person, or (iii) required to
ascertain or make any inquiry concerning the performance or observance of any
of the terms, provisions or conditions of this Agreement or any other Credit
Document or the existence or possible existence of any Default or Event of
Default, or to inspect the properties, books or records of the Company or any
other Credit Party.

 

10.4         Reliance
by Administrative Agent. The Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any notice, statement,
consent or other communication (including, without limitation, any thereof by
telephone, telecopy, telex, telegram or cable) believed by it in good faith to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons. The Administrative Agent may deem and treat each Lender as
the owner of its interest hereunder for all purposes hereof unless and until a
written notice of the assignment, negotiation or transfer thereof shall have
been given to the Administrative Agent in accordance with the provisions of
this Agreement. The Administrative Agent shall be entitled to refrain from
taking or omitting to take any action in connection with this Agreement or any
other Credit Document (i) if such action or omission would, in the
reasonable opinion of the Administrative Agent, violate any applicable law or
any provision of this Agreement or any other Credit Document or (ii) unless
and until it shall have received such advice or concurrence of the Required
Lenders (or, where a higher percentage of the Lenders is expressly required
hereunder, such Lenders) as it deems appropriate or it shall first have been
indemnified to its satisfaction by the Lenders against any and all liability
and expense (other than liability and expense arising from its own gross
negligence or willful misconduct) that may be incurred by it by reason of
taking, continuing to take or omitting to take any such action. Without
limiting the foregoing, no Lender shall have any right of action whatsoever
against the Administrative Agent as a result of the Administrative Agent’s
acting or refraining from acting hereunder or under any other Credit Document
in accordance with the instructions of the Required Lenders (or, where a higher
percentage of the Lenders is expressly required hereunder, such Lenders), and
such instructions and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders (including all subsequent Lenders).

 

10.5         Non-Reliance
on Administrative Agent and Other Lenders. Each Lender expressly
acknowledges that neither the Administrative Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representation or warranty to it and that no act by the Administrative Agent or
any such Person hereinafter taken, including any review of the affairs of the
Company and the other Credit Parties, shall be deemed to constitute any representation
or warranty by the Administrative Agent to any Lender. Each Lender represents
to the Administrative Agent that (i) it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as

 

118

 

it has deemed appropriate, made its own appraisal of
and investigation into the business, prospects, operations, properties,
financial and other condition and creditworthiness of the Company and the other
Credit Parties and made its own decision to enter into this Agreement and
extend credit to the Borrowers hereunder, and (ii) it will, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action hereunder and under the other Credit Documents and
to make such investigation as it deems necessary to inform itself as to the
business, prospects, operations, properties, financial and other condition and
creditworthiness of the Company and the other Credit Parties. Except as
expressly provided in this Agreement and the other Credit Documents, the
Administrative Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information concerning the business, prospects, operations, properties,
financial or other condition or creditworthiness of the Company, the other
Credit Parties or any other Person that may at any time come into the
possession of the Administrative Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.

 

10.6         Notice of
Default. The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the
Administrative Agent shall have received written notice from the Company or a
Lender 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 will give notice thereof to
the Lenders as soon as reasonably practicable; provided, however,
that if any such notice has also been furnished to the Lenders, the
Administrative Agent shall have no obligation to notify the Lenders with
respect thereto. The Administrative Agent shall (subject to Sections 10.4 and 11.6) take such
action with respect to such Default or Event of Default as shall reasonably be
directed by the Required Lenders; 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 action be taken, or not be
taken, only with the consent or upon the authorization of the Required Lenders
or all of the Lenders.

 

10.7         Indemnification.
To the extent the Administrative Agent is not reimbursed by or on behalf of the
Borrowers, and without limiting the obligation of the Borrowers to do so, the
Lenders agree (i) to indemnify the Administrative Agent and its officers,
directors, employees, agents, attorneys-in-fact and Affiliates, ratably in
proportion to their respective percentages as used in determining the Required
Lenders as of the date of determination, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including, without limitation, reasonable attorneys’
fees and expenses) or disbursements of any kind or nature whatsoever that may
at any time (including, without limitation, at any time following the repayment
in full of the Loans and the termination of the Letters of Credit and the
Commitments) be imposed on, incurred by or asserted against the Administrative
Agent in any way relating to or arising out of this Agreement or any other
Credit Document or any documents contemplated by or referred to herein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent

 

119

 

under or in connection with any of the foregoing, and
(ii) to reimburse the Administrative Agent upon demand, ratably in
proportion to their respective percentages as used in determining the Required
Lenders as of the date of determination, for any reasonable expenses incurred
by the Administrative Agent in connection with the preparation, negotiation,
execution, delivery, administration, amendment, modification, waiver or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any of the other Credit Documents (including, without limitation, reasonable
attorneys’ fees and expenses and compensation of agents and employees paid for
services rendered on behalf of the Administrative Agent hereunder and/or the
Lenders); provided, however, that no Lender shall be liable for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of
the party to be indemnified.

 

10.8         The
Administrative Agent in its Individual Capacity. With respect to its
Commitments, the Loans made by it and the Letters of Credit issued or
participated in by it, the Administrative Agent in its individual capacity and
not as Administrative Agent shall have the same rights and powers under the
Credit Documents as any other Lender and may exercise the same as though it
were not performing the agency duties specified herein; and the terms “Lenders,”
“Required Lenders” and any similar terms shall, unless the context clearly
otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent and its Affiliates may accept deposits from,
lend money to, make investments in, and generally engage in any kind of
banking, trust, financial advisory or other business with the Company, any of
its Subsidiaries or any of their respective Affiliates as if the Administrative
Agent were not performing the agency duties specified herein, and may accept
fees and other consideration from any of them for services in connection with
this Agreement and otherwise without having to account for the same to the
Lenders.

 

10.9         Successor
Administrative Agent. The Administrative Agent may resign at any time upon
written notice to the Company and the Lenders. Upon any such notice of
resignation, the Required Lenders shall, with the prior written consent of the
Company (which consent shall not be unreasonably withheld), have the right to
appoint a successor to the Administrative Agent (provided that the
Company’s consent shall not be required in the event a Default or Event of
Default shall have occurred and be continuing). If no successor to the
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within thirty (30) days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders and after consulting with
the Lenders and the Company, appoint a successor Administrative Agent, which
shall be a financial institution having a rating of not less than “A” or
its equivalent by Standard & Poor’s Ratings Services or any of the Lenders.
Upon the acceptance of any appointment as Administrative Agent by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder and under the
other Credit Documents. After any retiring Administrative Agent’s resignation
as Administrative Agent, the provisions of this Article shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent. If no successor to the Administrative Agent has accepted
appointment as

 

120

 

Administrative Agent by the thirtieth (30th) day following
a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become
effective, and the Lenders shall thereafter perform all of the duties of the
Administrative Agent hereunder and under the other Credit Documents until such
time, if any, as the Required Lenders appoint a successor Administrative Agent
as provided for hereinabove.

 

10.10       Collateral
Matters.

 

(a)           The
Administrative Agent is hereby authorized on behalf of the Lenders, without the
necessity of any notice to or further consent from the Lenders, from time to
time (but without any obligation) to take any action with respect to the
Collateral and the Security Documents that may be deemed by the Administrative
Agent in its discretion to be necessary or advisable to perfect and maintain
perfected the Liens upon the Collateral granted pursuant to the Security
Documents.

 

(b)           The
Lenders hereby authorize the Administrative Agent, at its option and in its
discretion, to release or, in the case of clause (iii) below, subordinate
any Lien granted to or held by the Administrative Agent upon any Collateral
(i) upon termination of the Commitments, termination, expiration or cash
collateralization of all outstanding Letters of Credit and payment in full of
all of the Obligations then due and payable, (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any
disposition expressly permitted hereunder or under any other Credit Document or
to which the Required Lenders have consented, (iii) constituting property
to be subject to Liens permitted by Section 8.3(vii),
or (iv) otherwise pursuant to and in accordance with the provisions of any
applicable Credit Document. Upon request by the Administrative Agent at any
time, the Lenders will confirm in writing the Administrative Agent’s authority
to release or subordinate its Liens upon Collateral pursuant to this Section 10.10(b).

 

10.11       Issuing
Lender and Swingline Lender. The provisions of this Article X
(other than Sections 10.9 and 10.10) shall apply to the Issuing Lender and the Swingline
Lender mutatis mutandis to the same extent as such provisions apply to the
Administrative Agent; provided that for purposes of this Section 10.11, the references to “Lenders” in Section 10.7 shall be deemed to refer only to the
Revolving Credit Lenders.

 

10.12       Other
Agents, Managers. Notwithstanding any other provision of this Agreement or
any of the other Credit Documents, any Lenders identified on the cover page of this
Agreement or elsewhere herein as a “Syndication Agent,” “Documentation Agent,” “Co-Agent,”
“Lead Manager” or in any similar capacity are named as such for recognition
purposes only, and in their respective capacities as such shall have no powers,
rights, duties, responsibilities or liabilities with respect to this Agreement
and the other Credit Documents and the transactions contemplated hereby and
thereby. Without limitation of the foregoing, none of the Lenders so identified
shall have, by reason of this Agreement or any other Credit Document, a
fiduciary relationship in respect of any Lender or any other Person. Each
Lender hereby makes the same acknowledgments with respect to any Lenders so
identified as it makes in Section 10.5
with respect to the Administrative Agent.

 

121

 

ARTICLE XI

 

MISCELLANEOUS

 

11.1         Fees and
Expenses. The Borrowers agree (subject to Section 11.18)
(i) whether or not the transactions contemplated by this Agreement shall
be consummated, to pay upon demand all reasonable out-of-pocket costs and
expenses of the Administrative Agent and the Arranger (including, without
limitation, the reasonable fees and expenses of counsel to the Administrative
Agent and the Arranger) in connection with the preparation, negotiation,
execution, delivery and syndication of this Agreement and the other Credit
Documents and any amendment, modification or waiver hereof or thereof or
consent with respect hereto or thereto, (ii) after the occurrence and during
the continuance of an Event of Default, to pay upon demand all reasonable
out-of-pocket costs and expenses of the Administrative Agent and each Lender
(including, without limitation, reasonable attorneys’ fees and expenses) in
connection with (y) any refinancing or restructuring of the credit
arrangements provided under this Agreement, whether in the nature of a “work-out,”
in any insolvency or bankruptcy proceeding or otherwise and whether or not
consummated, and (z) the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or any of the other
Credit Documents, whether in any action, suit or proceeding (including any
bankruptcy or insolvency proceeding) or otherwise, and (iii) to pay and
hold the Administrative Agent, the Arranger and each Lender harmless from and
against all liability for any intangibles, documentary, stamp or other similar
taxes, fees and excises, if any, including any interest and penalties, and any
finder’s or brokerage fees, commissions and expenses (other than any fees,
commissions or expenses of finders or brokers engaged by the Administrative
Agent or any Lender), that may be payable in connection with the transactions
contemplated by this Agreement and the other Credit Documents.

 

11.2         Indemnification.
The Borrowers agree (subject to Section 11.18),
whether or not the transactions contemplated by this Agreement shall be
consummated, to indemnify and hold the Administrative Agent, the Arranger and
each Lender and each of their respective directors, trustees, officers,
employees, agents, advisors and Affiliates (each, an “Indemnified Person”)
harmless from and against any and all claims, losses, damages, obligations,
liabilities, penalties, costs and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) of any kind or nature whatsoever, whether direct,
indirect or consequential (collectively, “Indemnified Costs”), that may
at any time be imposed on, incurred by or asserted against any such Indemnified
Person as a result of, arising from or in any way relating to the preparation,
execution, performance, enforcement of or preservation of rights under this
Agreement or any of the other Credit Documents, any of the transactions
contemplated herein or therein or any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of any Loans or
Letters of Credit (including, without limitation, in connection (i) with
the actual or alleged generation, presence, storage, treatment, disposal,
transport, discharge or release of any Hazardous Substances on, in, to or from
any real property at any time owned, operated or leased by any Credit Party,
(ii) any other Environmental Claims and (iii) any violation of or
liability under any Environmental Law), or any action, suit or proceeding
(including any inquiry or investigation) by any Person, whether threatened or
initiated, related to any of the foregoing, and in any case whether or not such
Indemnified Person is a party to any such action, proceeding or suit or a
subject of any such inquiry or investigation; provided, however,
that no Indemnified

 

122

 

Person shall have the right to be indemnified
hereunder for any Indemnified Costs to the extent determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted
from the gross negligence or willful misconduct of such Indemnified Person. All
of the foregoing Indemnified Costs of any Indemnified Person shall be paid or
reimbursed by the Borrowers, as and when incurred and upon demand; but shall be
repaid to the Borrowers by any Indemnified Person who is finally determined to
be not entitled to indemnification hereby as provided in the proviso to the
preceding sentence. To the extent permitted by applicable law, the Borrowers
shall not assert, and each Borrower hereby waives, any claim against any
Indemnified Person, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any of
the other Credit Documents, any of the transactions contemplated herein or
therein or any transaction financed or to be financed in whole or in part, directly
or indirectly, with the proceeds of any Loans or Letters of Credit. Additionally, no Indemnified Person shall be
liable for any damages arising from the use by others of information or other
materials obtained through internet, Intralinks, SyndTrak or other similar
transmission systems in connection with this Agreement or any of the other
Credit Documents.

 

11.3         Governing
Law; Consent to Jurisdiction. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS
SHALL (EXCEPT AS MAY BE EXPRESSLY OTHERWISE PROVIDED IN ANY CREDIT DOCUMENT) BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF LAW RULES);
PROVIDED THAT EACH LETTER OF CREDIT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT OR, IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE INTERNATIONAL STANDBY
PRACTICES OF THE INTERNATIONAL CHAMBER OF COMMERCE, AS IN EFFECT FROM TIME TO
TIME (THE “ISP”), AND, AS TO MATTERS NOT GOVERNED BY THE ISP, THE LAWS
OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND CONFLICTS OF
LAW RULES). EACH OF THE PARENT AND THE BORROWERS HEREBY CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH
CAROLINA, OR ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE
OF NORTH CAROLINA FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE
OTHER CREDIT DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
OR ANY OF THE OTHER CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH THE
ADMINISTRATIVE AGENT, THE ARRANGER OR ANY LENDER, THE PARENT OR ANY BORROWER IS
A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION
WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR
WRITTEN) OR ACTIONS OF THE ADMINISTRATIVE AGENT, THE ARRANGER OR ANY LENDER,
THE PARENT OR ANY BORROWER. EACH OF THE PARENT AND THE BORROWERS IRREVOCABLY
AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF APPEAL) BY ANY JUDGMENT
RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES ANY OBJECTION THAT IT

 

123

 

MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER
VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING. EACH
OF THE PARENT AND THE BORROWERS CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO IT AT THE ADDRESS SET FORTH IN SECTION 11.5, AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER
DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY
ADDRESSED. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT, THE ARRANGER OR ANY LENDER TO BRING ANY ACTION OR
PROCEEDING AGAINST THE PARENT OR ANY BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.

 

11.4         Waiver of
Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY.

 

11.5         Notices.

 

(a)           Except
in the cases of notices and other communications expressly permitted to be
given by telephone, and except as provided in Section 11.5(b),
all notices and other communications provided for hereunder shall be in writing
(including facsimile transmission) and mailed by certified or registered mail,
sent by overnight delivery, telecopied or delivered by hand to the party to be
notified at the following addresses:

 

(i)            if
to the Parent, the Company or any other Borrower, to dj Orthopedics, LLC, 2985
Scott Street, Vista, California 92081, Attention: Chief Financial Officer,
Telecopy No. (760) 734-3536;

 

(ii)           if
to the Administrative Agent, to Wachovia Bank, National Association, Charlotte
Plaza Building, 201 South College Street, 8th Floor NC 0680,
Charlotte, North Carolina 28288, Attention: Syndication Agency Services,
Telephone No. (704) 383-3721, Telecopy No. (704) 383-0288; and

 

(iii)          if
to any Lender, to it at the address set forth on Schedule 1.1
(or if to any Lender not a party hereto as of the date hereof, at the address
designated in or in connection with its Assignment and Acceptance);

 

or in each case, to such other address as any party
may designate for itself by like notice to all other parties hereto. Except as
provided in Section 11.5(b), all such
notices and communications shall be deemed to have been given (i) if
mailed by certified or registered mail, on the third (3rd) Business
Day after deposit in the mails, (ii) if sent by overnight delivery service
or telecopied, when delivered to the courier for overnight delivery or
transmitted by telecopier, respectively, or (iii) if delivered by hand,
upon delivery; provided that notices and communications to the
Administrative Agent shall not be effective until received by the
Administrative Agent.

 

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(b)           Notices
and communications to the Lenders hereunder may be delivered or furnished by
electronic communication (including e-mail and internet or intranet websites)
pursuant to procedures approved by the Administrative Agent; provided
that the foregoing shall not apply to notices to any Lender pursuant to Article II if such Lender has notified the
Administrative Agent that it is incapable of receiving notices thereunder by
electronic communication. The Administrative Agent or any Credit Party may, in
its discretion, agree to accept notices and other communications to it
hereunder by electronic communication pursuant to procedures approved by it; provided
that approval of such procedures may be limited to particular notices or
communications. Unless the Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be
deemed to have been given upon the sender’s receipt of an acknowledgement from
the intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), and
(ii) notices or other communications posted to an internet or intranet
website shall be deemed to have been given upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available
and identifying the website address therefor.

 

11.6         Amendments,
Waivers, etc. No amendment, modification, waiver or discharge or
termination of, or consent to any departure by any Credit Party from, any provision
of this Agreement or any other Credit Document shall be effective unless in a
writing signed by the Required Lenders (or by the Administrative Agent at the
direction or with the consent of the Required Lenders), and then the same shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that no such amendment,
modification, waiver, discharge, termination or consent shall:

 

(a)           unless
agreed to by each Lender directly affected thereby, (i) reduce or forgive
the principal amount of any Loan or Reimbursement Obligation, reduce the rate
of or forgive any interest thereon, or reduce or forgive any fees hereunder
(other than fees payable to the Administrative Agent, the Arranger or the
Issuing Lender for its own account), (ii) extend the final scheduled
maturity date or any other scheduled date for the payment of any principal of
or interest on any Loan (including any scheduled date for the mandatory
reduction or termination of any Commitments, but excluding any mandatory
prepayment of the Loans pursuant to Sections 2.6(d)
through 2.6(g) or reduction or termination of
the Revolving Credit Commitments in connection therewith), extend the time of
payment of any Reimbursement Obligation or any interest thereon, extend the
expiry date of any Letter of Credit beyond the Letter of Credit Maturity Date,
or extend the time of payment of any fees hereunder (other than fees payable to
the Administrative Agent, the Arranger or the Issuing Lender for its own account),
or (iii) modify the amortization schedule set forth in Section 2.6(a) or the amortization of any Incremental
Term Loans;

 

(b)           unless
agreed to by all of the Lenders, (i) except as may be otherwise
specifically provided in this Agreement or in any other Credit Document,
release all or substantially all of the Collateral or release any Guarantor
from its obligations under the Guaranty Agreement, (ii) change the
percentage of the aggregate Commitments or of the aggregate unpaid principal
amount of the Loans, or the number or percentage of Lenders, that shall be
required for the Lenders or any of them to take or approve, or direct the
Administrative Agent to take, any action hereunder (including as set forth in
the definition of “Required Lenders”), (iii) change any other

 

125

 

provision of this
Agreement or any of the other Credit Documents requiring, by its terms, the
consent or approval of all the Lenders for such amendment, modification,
waiver, discharge, termination or consent, (iv) change or waive any
provision of Section 2.15, any other
provision of this Agreement or any other Credit Document requiring pro rata
treatment of any Lenders, any other provision of this Agreement or any other
Credit Document providing for the application of payments or proceeds of
Collateral after an Event of Default, or this Section 11.6,
or (v) except as set forth in Sections 2.20
and 2.21, increase or extend any Commitment
of any Lender (it being understood that a waiver of any condition precedent set
forth in Section 4.2 or of any Default or
Event of Default or mandatory reduction in the Commitments, if agreed to by the
Required Lenders, Required Revolving Credit Lenders or all Lenders (as may be
required hereunder with respect to such waiver), shall not constitute such an
increase);

 

(c)           unless
agreed to by all of the Revolving Credit Lenders, change the percentage set
forth in the definition of “Required Revolving Credit Lenders” (it being
understood that no consent of any other Lender or the Administrative Agent is
required);

 

(d)           unless
agreed to by the Required Revolving Credit Lenders, (i) except for any
such changes to which Section 11.6(a)
applies, change any provision of Article III
or any terms or provisions of any Letter of Credit or any supporting
documentation relating thereto (it being understood that no consent of any
other Lender or the Administrative Agent is required), or (ii) amend,
modify or waive any condition precedent to any Borrowing of Revolving Loans or
issuance of a Letter of Credit set forth in Section 4.2
(including in connection with any waiver of an existing Default or Event of
Default) (it being understood that no consent of any other Lender or the Administrative
Agent is required);

 

(e)           unless
agreed to by the Issuing Lender, the Swingline Lender or the Administrative
Agent in addition to the Lenders required as provided hereinabove to take such
action, affect the respective rights or obligations of the Issuing Lender, the
Swingline Lender or the Administrative Agent, as applicable, hereunder or under
any of the other Credit Documents;

 

(f)            unless
agreed to by each Hedge Party that would be adversely affected thereby in its
capacity as such relative to the Lenders, (i) amend the definition of “Secured
Obligations” in any Security Document or the definition of “Guaranteed
Obligations” in the Guaranty (or any similar defined term in any other Credit
Document benefiting such Hedge Party), (ii) amend the definition of “Secured
Parties” in any Security Document or “Guaranteed Parties” in the Guaranty (or
any similar defined term in any other Credit Document benefiting such Hedge
Party), (iii) amend any provision regarding priority of payments in this
Agreement or any other Credit Document, or (iv) except as may be otherwise
specifically provided in this Agreement or in any other Credit Document,
release all or substantially all of the Collateral or release any Guarantor
from its obligations under the Guaranty Agreement);

 

and provided
further that (i) if any amendment, modification, waiver or consent
would adversely affect the holders of Loans of a particular Class (the “affected
Class”) relative to holders of Loans of another Class (including, without
limitation, by way of reducing the relative proportion of any payments,
prepayments or Commitment reductions to be applied for the benefit of holders
of Loans of the affected Class under Sections 2.6(d)
through 2.6(g)), then such amendment,
modification, waiver or consent shall require the consent of Lenders holding at
least a majority

 

126

 

of the aggregate
outstanding principal amount of all Loans (and unutilized Commitments, if any)
of the affected Class, (ii) the Fee Letter may only be amended or
modified, and any rights thereunder waived, in a writing signed by the parties
thereto, and (iii) this Agreement and the other Credit Documents may be
amended or modified with the consent of the Company and the Administrative
Agent to give effect to any Revolving Credit Commitment Increase or Incremental
Term Loans as set forth in Sections 2.20
and 2.21.

 

11.7         Assignments,
Participations.

 

(a)           Each
Lender may assign to one or more other Eligible Assignees (each, an “Assignee”)
all or a portion of its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitments, the outstanding Loans
made by it and its participations in Letters of Credit); provided, however,
that:

 

(i)            each
such assignment by a Lender of any of its interests relating to Loans of a
particular Class shall be made in such manner so that the same portion of its
Commitment, Loans and other interests under and with respect to such Class is
assigned to the relevant Assignee, including with respect to Dollar Revolving
Loans and Foreign Currency Revolving Loans (but assignments need not be pro
rata as among Classes of Loans);

 

(ii)           except
in the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund with respect to a Lender, without the written consent (to be
evidenced by its counterexecution of the relevant Assignment and Acceptance and
not to be unreasonably withheld or delayed) of each of the Administrative Agent
and, so long as no Default or Event of Default has occurred and is continuing,
the Company, no such assignment shall be in an aggregate principal amount
(determined as of the date of the Assignment and Acceptance with respect to
such assignment) less than (x) in the case of Term Loans, $1,000,000 (or,
if less, the full amount of the assigning Lender’s outstanding Term Loans of a
particular Class), (y) in the case of Revolving Credit Commitments,
$2,500,000 (or, if less, the entire Revolving Credit Commitment of the
assigning Lender), or (z) in the case of Swingline Loans, the entire Swingline
Commitment and the full amount of the outstanding Swingline Loans; and

 

(iii)          the
parties to each such assignment will execute and deliver to the Administrative
Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance and will pay a nonrefundable processing fee of $3,500 to the
Administrative Agent for its own account.

 

Upon such
execution, delivery, acceptance and recording of the Assignment and Acceptance,
from and after the effective date specified therein, (A) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender hereunder with
respect thereto and (B) the assigning Lender shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (other than rights under the
provisions of this Agreement and the other Credit Documents relating to
indemnification or payment of fees, costs and expenses, to the extent such
rights relate

 

127

 

to the time prior
to the effective date of such Assignment and Acceptance) and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto, except that such assigning Lender shall continue to be entitled
to the protections of Sections 2.16(a),
2.16(b), 2.17,
11.1 and 11.2
for matters arising during the periods while it was a Lender hereunder). The
terms and provisions of each Assignment and Acceptance shall, upon the
effectiveness thereof, be incorporated into and made a part of this Agreement,
and the covenants, agreements and obligations of each Lender set forth therein
shall be deemed made to and for the benefit of the Administrative Agent and the
other parties hereto as if set forth at length herein.

 

(b)           The
Administrative Agent, acting solely for this purpose as an agent of the
Borrowers, will maintain at its address for notices referred to in Section 11.5(a)(ii) a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of the Lenders and the Commitments of, and principal
amount of the Loans owing to, each Lender from time to time (the “Register”).
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrowers, the Administrative Agent and the
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrowers
and each Lender at any reasonable time and from time to time upon reasonable
prior notice.

 

(c)           Upon
its receipt of a duly completed Assignment and Acceptance executed by an
assigning Lender and an Assignee and, if required, counterexecuted by the
Company and the Issuing Lender, together with the processing fee referred to in
Section 11.7(a), the
Administrative Agent will (i) accept such Assignment and Acceptance,
(ii) on or as of the effective date thereof, record the information
contained therein in the Register and (iii) give notice thereof to the
Company and the Lenders. If requested by or on behalf of the Assignee, each
applicable Borrower, at its own expense, will execute and deliver to the
Administrative Agent a new Note or Notes to the order of the Assignee (and, if
the assigning Lender has retained any portion of its rights and obligations
hereunder, to the order of the assigning Lender), prepared in accordance with
the applicable provisions of Section 2.4
as necessary to reflect, after giving effect to the assignment, the Commitments
and/or outstanding Loans, as the case may be, of the Assignee and (to the
extent of any retained interests) the assigning Lender, in substantially the
form of Exhibits A-1, A-2
and/or A-3, as applicable. The Administrative
Agent will return canceled Notes to each applicable Borrower. At the time of
each assignment pursuant to this Section 11.7
to a Person that is a Non-U.S. Lender and is not already a Lender hereunder,
the assignee Lender shall provide to the Company and the Administrative Agent
the appropriate Internal Revenue Service forms described in Section 2.17.

 

(d)           Each
Lender may, without the consent of any Borrower, the Administrative Agent or
any other Lender, sell to one or more other Persons (each, a “Participant”)
participations in all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments,
the outstanding Loans made by it and its participations in Letters of Credit); provided,
however, that (i) such Lender’s obligations under this Agreement
shall remain unchanged and such Lender shall remain solely responsible for the
performance of

 

128

 

such obligations,
(ii) the Borrowers, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement, and no Lender shall
permit any Participant to have any voting rights or any right to control the
vote of such Lender with respect to any amendment, modification, waiver,
consent or other action hereunder or under any other Credit Document (except as
to actions described in Section 11.6(a)
and clauses (i) and (ii) of Section 11.6(b)
that affect such Participant or the Lender selling the participation), and
(iii) no Participant shall have any rights under this Agreement or any of
the other Credit Documents, each Participant’s rights against the granting
Lender in respect of any participation to be those set forth in the
participation agreement, and all amounts payable by the Borrowers hereunder
shall be determined as if such Lender had not granted such participation. Notwithstanding
the foregoing, each Participant shall have the rights of a Lender for purposes
of Sections 2.16(a), 2.16(b), 2.17, 2.18 and 9.3, and shall
be entitled to the benefits thereto, to the extent that the Lender granting
such participation would be entitled to such benefits if the participation had
not been made, provided that no Participant shall be entitled to receive
any greater amount pursuant to any of such Sections than the Lender granting
such participation would have been entitled to receive in respect of the amount
of the participation made by such Lender to such Participant had such
participation not been made.

 

(e)           Nothing
in this Agreement shall be construed to prohibit any Lender from pledging or
assigning all or any portion of its rights and interest hereunder as security
for borrowings or other obligations, including any pledge or assignment to
secure obligations to a Federal Reserve Bank or, in the case of any Lender that
is an Fund, to the trustee under any indenture to which such Fund is a party in
support of its obligations to the trustee for the benefit of the applicable
trust beneficiaries; provided, however, that no such pledge or
assignment shall release a Lender from any of its obligations hereunder; and provided
further that any foreclosure or similar action by any such trustee shall
be subject to the provisions of this Section 11.7
concerning assignments and no such trustee shall have any voting rights
hereunder solely on account of such pledge.

 

(f)            Any
Lender or participant may, in connection with any assignment, participation,
pledge or proposed assignment, participation or pledge pursuant to this Section 11.7, disclose to the Assignee, Participant or
pledgee or proposed Assignee, Participant or pledgee any information relating
to the Company and its Subsidiaries furnished to it by or on behalf of any
other party hereto, provided that such Assignee, Participant or pledgee
or proposed Assignee, Participant or pledgee agrees in writing to keep such information
confidential to the same extent required of the Lenders under Section 11.13.

 

(g)           Notwithstanding
anything to the contrary contained herein, if Wachovia assigns all of its
Commitments and Loans in accordance with this Section 11.7,
Wachovia may resign as Issuing Lender upon written notice to the Company and
the Lenders. Upon any such notice of resignation, the Company shall have the
right to appoint from among the Lenders a successor Issuing Lender; provided
that no failure by the Company to make such appointment shall affect the
resignation of Wachovia as Issuing Lender. Wachovia shall retain all of the
rights and obligations of the Issuing Lender hereunder with respect to all
Letters of Credit issued by it and outstanding as of the effective date of its
resignation and all obligations of the Company and the

 

129

 

Revolving Credit
Lenders with respect thereto (including the right to require the Revolving
Credit Lenders to make Revolving Loans or fund participation interests pursuant
to Article III).

 

11.8         No Waiver.
The rights and remedies of the Administrative Agent and the Lenders expressly
set forth in this Agreement and the other Credit Documents are cumulative and
in addition to, and not exclusive of, all other rights and remedies available
at law, in equity or otherwise. No failure or delay on the part of the
Administrative Agent or any Lender in exercising any right, power or privilege
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude other or further exercise thereof
or the exercise of any other right, power or privilege or be construed to be a
waiver of any Default or Event of Default. No course of dealing between any
Credit Party, the Administrative Agent or the Lenders or their agents or
employees shall be effective to amend, modify or discharge any provision of
this Agreement or any other Credit Document or to constitute a waiver of any
Default or Event of Default. No notice to or demand upon any Credit Party in
any case shall entitle any Credit Party to any other or further notice or
demand in similar or other circumstances or constitute a waiver of the right of
the Administrative Agent or any Lender to exercise any right or remedy or take
any other or further action in any circumstances without notice or demand.

 

11.9         Successors
and Assigns. This Agreement shall be binding upon, inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto, and all references herein to any party shall be deemed to include its
successors and assigns; provided, however, that (i) neither
the Parent, the Company nor any other Borrower shall sell, assign or transfer
any of its rights, interests, duties or obligations under this Agreement
without the prior written consent of all of the Lenders and (ii) Assignees
and Participants shall have such rights and obligations with respect to this
Agreement and the other Credit Documents as are provided for under and pursuant
to the provisions of Section 11.7.

 

11.10       Survival.
All representations, warranties and agreements made by or on behalf of the
Borrowers or any other Credit Party in this Agreement and in the other Credit
Documents shall survive the execution and delivery hereof or thereof, the
making and repayment of the Loans and the issuance and repayment of the Letters
of Credit. In addition, notwithstanding anything herein or under applicable law
to the contrary, the provisions of this Agreement and the other Credit
Documents relating to indemnification or payment of costs and expenses,
including, without limitation, the provisions of Sections 2.16(a),
2.16(b), 2.17,
2.18, 10.7,
11.1 and 11.2,
shall survive the payment in full of all Loans and Letters of Credit, the
termination of the Commitments and all Letters of Credit, and any termination
of this Agreement or any of the other Credit Documents. Without limiting the
foregoing, no payment by any Borrower under this Agreement, including without
limitation any voluntary or mandatory prepayment of the Loans, shall affect the
obligation of any applicable Credit Party to continue making payments under any
Hedge Agreement with any Hedge Party, which shall remain in full force and
effect notwithstanding such prepayment, subject to the terms of such Hedge
Agreement.

 

11.11       Severability.
To the extent any provision of this Agreement is prohibited by or invalid under
the applicable law of any jurisdiction, such provision shall be ineffective
only to the extent of such prohibition or invalidity and only in such
jurisdiction, without prohibiting or

 

130

 

invalidating such provision in any other jurisdiction
or the remaining provisions of this Agreement in any jurisdiction.

 

11.12       Construction.
The headings of the various articles, sections and subsections of this
Agreement and the table of contents have been inserted for convenience only and
shall not in any way affect the meaning or construction of any of the
provisions hereof. Except as otherwise expressly provided herein and in the
other Credit Documents, in the event of any inconsistency or conflict between
any provision of this Agreement and any provision of any of the other Credit
Documents, the provision of this Agreement shall control.

 

11.13       Confidentiality.
Each of the Administrative Agent and each Lender agrees to keep confidential,
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance with safe and sound commercial practices, all
nonpublic information provided to it by or on behalf of the Company or any
other Credit Party in connection with this Agreement or any other Credit
Document; provided, however, that each of the Administrative
Agent and each Lender may disclose such information (i) to its Affiliates,
and to its and its Affiliates’ respective directors, trustees, officers,
partners, employees, agents, auditors, counsel and other advisors so long such
parties are informed of the confidential nature of such information and
instructed to keep such information confidential, (ii) at the demand or
request of any bank regulatory authority, court or other Governmental Authority
having or asserting jurisdiction over the Administrative Agent or such Lender
or any of their respective Affiliates, as may be required pursuant to subpoena
or other legal process, or otherwise in order to comply with any applicable
Requirement of Law, (iii) in connection with the exercise of any remedies
hereunder or under any other Credit Document or any Hedge Agreement or any
action or proceeding relating to this Agreement, any other Credit Document or
any Hedge Agreement or the enforcement of rights hereunder or thereunder,
(iv) to the Administrative Agent, the Arranger or any other Lender,
(v) to the extent the same has become available to the Administrative
Agent or any Lender on a nonconfidential basis from a source other than the
Company or has become publicly available other than as a result of a breach of
this Agreement, (vi) subject to an agreement containing provisions
substantially the same as those in this Section, to any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating
to the Company and its obligations hereunder, (vii) with the consent of
the Company, and (viii) pursuant to and in accordance with the provisions
of Section 11.7(f).

 

11.14       Judgment
Currency. If, for the purposes of obtaining judgment in any court, it is
necessary to convert a sum due hereunder or under any other Credit Document in
one currency into another currency, the rate of exchange used shall be that at
which in accordance with normal banking procedures the Administrative Agent
could purchase the first currency with such other currency on the Business Day
preceding that on which final judgment is given. The obligation of any Credit
Party in respect of any such sum due from it to the Administrative Agent or any
Lender hereunder or under the other Credit Documents shall, notwithstanding any
judgment in a currency (the “Judgment Currency”) other than that in
which such sum is denominated in accordance with the applicable provisions of
this Agreement (the “Agreement Currency”), be discharged only to the
extent that on the Business Day following receipt by the Administrative Agent
or such Lender of any sum adjudged to be so due in the Judgment Currency, the
Administrative Agent or such Lender may in accordance with normal banking
procedures purchase the Agreement Currency with the Judgment Currency. If the
amount of the Agreement

 

131

 

Currency so purchased is less than the sum originally
due to the Administrative Agent or such Lender in the Agreement Currency, each
Credit Party agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Administrative Agent or such Lender or the Person to
whom such obligation was owing against such loss. If the amount of the
Agreement Currency so purchased is greater than the sum originally due to the
Administrative Agent or such Lender in such currency, the Administrative Agent
or such Lender agrees to return the amount of any excess to the applicable
Credit Party (or to any other Person who may be entitled thereto under
applicable law).

 

11.15       Counterparts;
Effectiveness. This Agreement may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. This Agreement shall become effective
upon the execution of a counterpart hereof by each of the parties hereto and
receipt by the Administrative Agent and the Company of written or telephonic
notification of such execution and authorization of delivery thereof. Delivery
of an executed counterpart of this Agreement by facsimile transmission or
electronic transmission shall be as effective as delivery of a manually
executed counterpart hereof.

 

11.16       Disclosure
of Information. The Company agrees and consents to the Administrative Agent’s
and the Arranger’s disclosure of information relating to this transaction to
Gold Sheets and other similar bank trade publications. Such information will
consist of deal terms and other information customarily found in such
publications.

 

11.17       Entire
Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND INSTRUMENTS EXECUTED
AND DELIVERED IN CONNECTION HEREWITH (A) EMBODY THE ENTIRE AGREEMENT AND
UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF, (B) SUPERSEDE ANY AND ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF (BUT SPECIFICALLY EXCLUDING THE FEE LETTER), AND
(C) MAY NOT BE AMENDED, SUPPLEMENTED, CONTRADICTED OR OTHERWISE MODIFIED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

 

11.18       Nature
of Liability of Foreign Borrowers.

 

(a)           None
of the Foreign Borrowers nor any Foreign Subsidiaries shall be liable (either
as obligor, indemnitor or otherwise) for any Domestic Obligations. The
Obligations of the Borrowers are independent of each other, and a separate
action or actions may be brought and prosecuted against any Borrower to enforce
this Agreement, irrespective of whether any action is brought against any other
Borrower or whether any other Borrower is joined in any such action or actions.

 

(b)           With
respect to the Foreign Obligations, the liability of each Borrower hereunder is
exclusive and independent of any security for or other guaranty of the
indebtedness of the Borrowers and such Borrower’s liability hereunder shall not
be affected or impaired by (i) any direction as to application of payment
by any other Borrower or by any other party, (ii) any other

 

132

 

continuing or
other guaranty, undertaking or maximum liability of a guarantor or of any other
party as to the indebtedness of any other Borrower, (iii) any payment on
or in reduction of any such other guaranty or undertaking, (iv) any
dissolution, termination or increase, decrease or change in personnel by any
other Borrower, or (v) any payment made to the Administrative Agent or the
Lenders on the Foreign Obligations that the Administrative Agent or such
Lenders repay to any other Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
such Borrower waives any right to the deferral or modification of its
obligations hereunder by reason of any such proceeding.

 

11.19       Addition
of Borrowers. Any Foreign Subsidiary of the Company may join this Agreement
as a Foreign Borrower hereunder upon (i) execution and delivery by the
Company, such Foreign Subsidiary and the Administrative Agent of a Joinder
Agreement providing for such Foreign Subsidiary to become a Foreign Borrower
hereunder, (ii) to the extent requested by any Revolving Credit Lender,
execution and delivery by such Foreign Subsidiary to the Administrative Agent
of a Revolving Note, appropriately completed in favor of such Revolving Credit
Lender, (iii) to the extent required under (and as described more
completely in) Section 6.10, execution and
delivery by the Company and any applicable Subsidiaries to the Administrative
Agent of an amendment or supplement to the Pledge Agreement, together with the
certificates evidencing the Capital Stock of such Foreign Subsidiary being
pledged thereby and undated stock powers duly executed in blank, and
(iv) to the extent not previously delivered pursuant to Section 6.10, delivery to the Administrative Agent of
documents and certificates with respect to such Foreign Subsidiary of the type
described in Sections 4.1(c) and 4.1(d) and such other documents, certificates and opinions
(including opinions of local counsel in the jurisdiction of organization of
such Foreign Subsidiary) as the Administrative Agent may reasonably request,
all in form and substance reasonably satisfactory to the Administrative Agent. Any
such Foreign Subsidiary may be removed and released as a Foreign Borrower upon
(y) written notice from the Company to the Administrative Agent to such
effect and (z) repayment in full of all outstanding Loans of such Foreign
Borrower, together with all accrued and unpaid interest thereon and all other
fees, expenses and other Obligations owing by such Foreign Borrower in
connection therewith.

 

11.20       USA
Patriot Act Notice. Each Lender that is subject to the Act (as defined
below) and the Administrative Agent (for itself and not on behalf of any
Lender) hereby notifies the Borrowers that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Act”), it is required to obtain, verify and record
information that identifies the Borrowers, which information includes the name
and address of the Borrowers and other information that will allow such Lender
or the Administrative Agent, as applicable, to identify the Borrowers in
accordance with the Act.

 

11.21       Acknowledgments.
The Company and each other Borrower hereby acknowledges that neither the
Administrative Agent nor any Lender has any fiduciary relationship with or
fiduciary duty to any Borrower arising out of or in connection with this
Agreement or any of the other Credit Documents, and the relationship between
Administrative Agent and Lenders, on one hand, and the Borrowers, on the other
hand, in connection herewith or therewith is solely that of debtor and
creditor.

 

133

 

11.22       No
Third Party Beneficiaries. None of the provisions contained in this
Agreement are intended by the parties hereto, nor shall they be deemed, to
confer any benefit on any Person not a party to this Agreement other than (i) to
the extent provided herein, any Indemnified Person, Participant or Hedge Party
and (ii) as set forth in Section 9.3
and Article X. The representations and
warranties of the Credit Parties contained herein are provided for the benefit
of the Administrative Agent, the Issuing Lender and each of the Lenders and
their respective successors and permitted assigns in accordance with the
provisions of this Agreement, and are not being provided for the benefit of any
other Person (which other Person shall include, for this purpose, without
limitation, any shareholder of any Credit Party).

 

134

 

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

 

	
   

  	
  DJ ORTHOPEDICS,
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vickie L.
  Capps

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  SVP, CFO

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DJ ORTHOPEDICS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vickie L.
  Capps

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  SVP, CFO

  	
   

  
						

 

 

Signature Page to Credit
Agreement

 

 

	
   

  	
  WACHOVIA BANK,
  NATIONAL

  ASSOCIATION, as Administrative Agent, Issuing

  Lender and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tye Nordberg

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  

 

 

	
   

  	
  BANK OF THE
  WEST, as Syndication Agent and

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kristian T.
  Ilkov

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

 

	
   

  	
  WELLS FARGO
  BANK, NATIONAL

  ASSOCIATION, as Syndication Agent and as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Martin
  Roblee

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

 

	
   

  	
  UNION BANK OF
  CALIFORNIA, N.A., as

  Documentation Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas S.
  Lambell

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President/SCM

  	
   

  

 

 

	
   

  	
  GENERAL ELECTRIC
  CAPITAL

  CORPORATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David R.
  Campbell

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Its Duly authorized
  Signatory

  	
   

  
						

 

 

	
   

  	
  HSBC BANK USA,
  NATIONAL ASSOCIATION,

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ S. Brennan

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  First Vice
  President

  	
   

  
						

 

 

	
   

  	
  NATIONAL CITY
  BANK OF KENTUCKY, as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chuck Denny

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  President and
  CEO

  	
   

  

 

 

	
   

  	
  PNC BANK,
  NATIONAL ASSOCIATION, as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Luke
  McElhinny

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
						

 

 

Schedule 1.1

 

Revolving Credit Commitments
and

Notice Addresses

 

	
  Lender

  	
   

  	
  Revolving Credit

  Commitment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wachovia Bank, National Association

  	
   

  	
  $

  	
  8,150,000

  	
   

  
	
  Bank of the West

  	
   

  	
  $

  	
  7,950,000

  	
   

  
	
  Wells Fargo Bank, National Association

  	
   

  	
  $

  	
  7,950,000

  	
   

  
	
  Union Bank of California, N.A.

  	
   

  	
  $

  	
  7,950,000

  	
   

  
	
  General Electric Capital Corporation

  	
   

  	
  $

  	
  6,000,000

  	
   

  
	
  HSBC Bank USA, National Association

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  National City Bank of Kentucky

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  PNC Bank, National Association

  	
   

  	
  $

  	
  4,000,000

  	
   

  
	
  Total

  	
   

  	
  $

  	
  50,000,000.00

  	
   

  

 

 

Notice Addresses

 

	
  Lender

  	
   

  	
  Address

  
	
   

  	
   

  	
   

  
	
  Wachovia Bank,
  National Association

  	
   

  	
  Instructions for
  wire transfers to the

  Administrative Agent:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wachovia Bank,
  National Association

  ABA Routing No. xxxxxx

  Charlotte, North Carolina

  Account Number: xxxxxx

  Account Name: dj Orthopedics, LLC

  Attention: Syndication Agency Services

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address for
  notices as a Lender:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wachovia Bank,
  National Association

  One Wachovia Center, 15th Floor

  301 South College Street

  Charlotte, North Carolina 28288-0760

  Attention: Glenn Edwards

  Telephone: (704) 383-3810

  Telecopy: (704) 374-4793

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office
  and Payment Office for Dollar

  Loans:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wachovia Bank,
  National Association

  Charlotte Plaza Building

  201 South College Street, 8th Floor NC0680

  Charlotte, North Carolina 28288

  Attention: Syndication Agency Services

  Telephone: (704) 383-3721

  Telecopy: (704) 383-0288

  

 

 

	
  Bank of the West

  	
   

  	
  Address for notices as a Lender:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank of the West

  1280 Fourth Avenue

  San Diego, CA 92101

  Attention: Kristian Ilkov

  Telephone: (619) 235-2563

  Telecopy: (619) 595-1918

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bank of the West

  1280 Fourth Avenue

  San Diego, CA 92101

  Attention: Kristian Ilkov

  Telephone: (619) 235-2563

  Telecopy: (619) 595-1918

  

 

 

	
  Wells Fargo Bank, National Association

  	
   

  	
  Address for notices as a Lender: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wells Fargo Bank, National
  Association

  111 W. Ocean Blvd., Suite 530
Long Beach, CA 90802
Attention: Martin Roblee
Telephone: (562) 628-2113
Telecopy: (562) 437-6698 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wells Fargo Bank, National
  Association

  201 Third St. 8th
  Floor
San Francisco, CA 94163
Attention: Judy Chan
Telephone: (415) 477-5433
Telecopy: (415) 979-0675

  

 

 

	
  Union Bank of California, N.A.

  	
   

  	
  Address for notices as a Lender: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Union Bank of California, N.A

  530 ‘B’ Street, 4th Floor

  San Diego, California 92101

  Attention: Douglas S. Lambell

  Telephone: (619) 230-3029

  Telecopy: (619) 230-3766

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Union Bank of California, N.A

  530 ‘B’ Street, 4th Floor

  San Diego, California 92101

  Attention: Douglas S. Lambell

  Telephone: (619) 230-3029

  Telecopy: (619) 230-3766

  

 

 

	
  General Electric Capital Corporation

  	
   

  	
  Address for notices as a Lender: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General Electric Capital Corporation

  500 W. Monroe Street

  Chicago, IL 60661

  Attention: Erica Wallace

  Telephone: (312) 441-6964

  Telecopy: (866) 209-9540 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  General Electric Capital Corporation

  500 W. Monroe Street

  Chicago, IL 60661

  Attention: Erica Wallace

  Telephone: (312) 441-6964

  Telecopy: (866) 209-9540

  

 

 

	
  HSBC Bank USA, National Association

  	
   

  	
  Address for notices as a Lender: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  660 S. Figueroa St #800

  Los Angeles, California 90017
Attention: Steven Brennan
Telephone: (213) 553-8003
Telecopy: (213) 553-8056 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  660 S. Figueroa St #800

  Los Angeles, California 90017
Attention: Steven Brennan
Telephone: (213) 553-8003
Telecopy: (213) 553-8056

  

 

 

	
  PNC Bank, National Association

  	
   

  	
  Address for notices as a Lender:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  249 Fifth Avenue

  Pittsburgh, Pennsylvania 15222
Attention: Luke McElhinny
Telephone: (412) 768-9756
Telecopy: (412) 768-9259 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  249 Fifth Avenue

  Pittsburgh, Pennsylvania 15222
Attention: Luke McElhinny
Telephone: (412) 768-9756
Telecopy: (412) 768-9259

  

 

 

	
  National City Bank of Kentucky

  	
   

  	
  Address for notices as a Lender:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  National City Bank of
  Kentucky

  101 South Fifth Street (37th
  Floor)
Louisville, Kentucky 40202
Attention: Nick Comerford
Telephone: (502) 581-7907
Telecopy: (502) 581-7904 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lending Office: 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  National City Bank of
  Kentucky

  101 South Fifth Street (37th
  Floor)
Louisville, Kentucky 40202
Attention: Nick Comerford
Telephone: (502) 581-7907
Telecopy: (502) 581-7904Exhibit 10.2

 

STOCK
PURCHASE AGREEMENT

 

 

by
and among

 

DJ
ORTHOPEDICS, LLC,

 

the
TAILWIND STOCKHOLDERS,

 

the
DLJ STOCKHOLDERS,

 

the
CREDIT OPPORTUNITIES STOCKHOLDER

 

and

 

TAILWIND
MANAGEMENT LP

 

(as
Stockholder Representative)

 

 

Dated
as of February 27, 2006

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  PURCHASE AND SALE OF THE SHARES

  	
  1

  
	
  1.1

  	
  The Stock Purchase

  	
  1

  
	
  1.2

  	
  Closing

  	
  1

  
	
  1.3

  	
  Cash and Debt at
  Closing

  	
  4

  
	
  1.4

  	
  Indemnity and Earnout
  Escrow

  	
  5

  
	
  1.5

  	
  Retention Program
  Escrow

  	
  5

  
	
  1.6

  	
  Treatment of Earnout
  Obligations

  	
  6

  
	
  1.7

  	
  Stockholder
  Representative

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  REPRESENTATIONS AND WARRANTIES CONCERNING THE
  COMPANY AND THE COMPANY SUBSIDIARIES

  	
  10

  
	
  2.1

  	
  Existence; Good
  Standing

  	
  10

  
	
  2.2

  	
  No Conflict; Consents

  	
  10

  
	
  2.3

  	
  Capitalization

  	
  11

  
	
  2.4

  	
  Subsidiaries

  	
  12

  
	
  2.5

  	
  Financial Statements

  	
  12

  
	
  2.6

  	
  Absence of Certain
  Changes

  	
  13

  
	
  2.7

  	
  Undisclosed Liabilities

  	
  15

  
	
  2.8

  	
  Customers and Suppliers

  	
  15

  
	
  2.9

  	
  Title to Assets

  	
  15

  
	
  2.10

  	
  Significant Contracts

  	
  16

  
	
  2.11

  	
  Intellectual Property

  	
  18

  
	
  2.12

  	
  Real Property

  	
  18

  
	
  2.13

  	
  Litigation

  	
  19

  
	
  2.14

  	
  Employee Benefit Plans

  	
  19

  
	
  2.15

  	
  Compliance with Law

  	
  22

  
	
  2.16

  	
  Environmental Matters

  	
  23

  
	
  2.17

  	
  Taxes

  	
  25

  
	
  2.18

  	
  Permits

  	
  27

  
	
  2.19

  	
  Insurance

  	
  27

  
	
  2.20

  	
  Labor Matters

  	
  27

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  2.21

  	
  Healthcare Matters

  	
  28

  
	
  2.22

  	
  Powers of Attorney

  	
  29

  
	
  2.23

  	
  Payments

  	
  29

  
	
  2.24

  	
  Controls and Procedures

  	
  30

  
	
  2.25

  	
  Affiliate Transactions

  	
  30

  
	
  2.26

  	
  Books and Records

  	
  30

  
	
  2.27

  	
  Bank Accounts

  	
  31

  
	
  2.28

  	
  Accounts Receivable;
  Inventory

  	
  31

  
	
  2.29

  	
  Brokers

  	
  31

  
	
  2.30

  	
  Disclosure

  	
  31

  
	
  2.31

  	
  Reliance

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  REPRESENTATIONS AND WARRANTIES OF EACH SELLER

  	
  32

  
	
  3.1

  	
  Existence; Good
  Standing; Authority; Enforceability

  	
  32

  
	
  3.2

  	
  No Conflicts; Consents

  	
  32

  
	
  3.3

  	
  Litigation

  	
  33

  
	
  3.4

  	
  Title to Shares

  	
  33

  
	
  3.5

  	
  Brokers

  	
  34

  
	
  3.6

  	
  Reliance

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

  	
  34

  
	
  4.1

  	
  Existence; Good
  Standing; Authority; Enforceability

  	
  34

  
	
  4.2

  	
  No Conflicts; Consents

  	
  34

  
	
  4.3

  	
  Litigation

  	
  35

  
	
  4.4

  	
  Financial Ability to
  Perform

  	
  35

  
	
  4.5

  	
  Investment
  Representations

  	
  35

  
	
  4.6

  	
  Projections

  	
  35

  
	
  4.7

  	
  Brokers

  	
  36

  
	
  4.8

  	
  Reliance

  	
  36

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  COVENANTS

  	
  36

  
	
  5.1

  	
  Conduct of the Sellers
  and the Purchaser

  	
  36

  
	
  5.2

  	
  Conduct of the Company
  and the Company Subsidiaries

  	
  36

  

 

ii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  5.3

  	
  Control of Operations

  	
  39

  
	
  5.4

  	
  Regulatory and Other
  Approvals; 280G Consent

  	
  39

  
	
  5.5

  	
  Access and Information

  	
  41

  
	
  5.6

  	
  Exclusivity

  	
  43

  
	
  5.7

  	
  Notification During the
  Pre-Closing Period of Breaches

  	
  43

  
	
  5.8

  	
  Publicity

  	
  43

  
	
  5.9

  	
  Employee Matters; Sale
  Bonus Program; Retention Program

  	
  44

  
	
  5.10

  	
  Transfer Taxes

  	
  45

  
	
  5.11

  	
  Indemnification of
  Directors and Officers

  	
  46

  
	
  5.12

  	
  Certain Investments by
  the Tailwind Stockholders

  	
  47

  
	
  5.13

  	
  Environmental Matters

  	
  47

  
	
  5.14

  	
  No Amendment of the
  Aircast Asset Purchase Agreement and Related Documents Pre- and Post-Closing

  	
  47

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  CONDITIONS TO CLOSING

  	
  48

  
	
  6.1

  	
  Conditions to the
  Obligation of the Purchaser

  	
  48

  
	
  6.2

  	
  Conditions to the
  Obligation of the Sellers

  	
  50

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  INDEMNIFICATION

  	
  51

  
	
  7.1

  	
  Survival of
  Representations and Warranties and Covenants and Agreements

  	
  51

  
	
  7.2

  	
  Indemnification
  Obligations

  	
  51

  
	
  7.3

  	
  Limitations on
  Indemnification Amounts

  	
  52

  
	
  7.4

  	
  Indemnification Claim
  Procedure

  	
  52

  
	
  7.5

  	
  Third Party Claims

  	
  53

  
	
  7.6

  	
  Requirement to First
  Pursue Remedies from Certain Parties

  	
  55

  
	
  7.7

  	
  Insurance Proceeds

  	
  59

  
	
  7.8

  	
  Mitigation of Damages

  	
  59

  
	
  7.9

  	
  Subrogation

  	
  60

  
	
  7.10

  	
  Limitations

  	
  60

  
	
  7.11

  	
  Tax Treatment of Seller
  Indemnification Payments

  	
  60

  
	
  7.12

  	
  Exclusive Remedy

  	
  60

  
	
  7.13

  	
  Conflict of Interest

  	
  61

  

 

iii

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  TERMINATION

  	
  61

  
	
  8.1

  	
  Termination

  	
  61

  
	
  8.2

  	
  Effect of Termination

  	
  62

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  DEFINITIONS

  	
  63

  
	
  9.1

  	
  Definition of Certain
  Terms

  	
  63

  
	
  9.2

  	
  Disclosure Schedules

  	
  74

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  GENERAL PROVISIONS

  	
  75

  
	
  10.1

  	
  Expenses

  	
  75

  
	
  10.2

  	
  Further Actions

  	
  76

  
	
  10.3

  	
  Notices

  	
  76

  
	
  10.4

  	
  Assignment; Successors

  	
  77

  
	
  10.5

  	
  Amendment

  	
  77

  
	
  10.6

  	
  Waiver

  	
  77

  
	
  10.7

  	
  Entire Agreement

  	
  78

  
	
  10.8

  	
  Severability

  	
  78

  
	
  10.9

  	
  Headings

  	
  78

  
	
  10.10

  	
  Counterparts

  	
  78

  
	
  10.11

  	
  Governing Law

  	
  78

  
	
  10.12

  	
  Consent to
  Jurisdiction, etc.

  	
  79

  
	
  10.13

  	
  Waiver of Punitive and
  Other Damages and Jury Trial

  	
  79

  
	
  10.14

  	
  Remedies

  	
  80

  
	
  10.15

  	
  Third Party
  Beneficiaries

  	
  80

  
	
  10.16

  	
  Interpretation

  	
  81

  

 

iv

 

STOCK
PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT (this “Agreement”),
dated as of February 27, 2006, by and among dj Orthopedics, LLC, a
Delaware limited liability company (the “Purchaser”); Tailwind
Management LP, a Delaware limited partnership (the “Stockholder
Representative”); TWCP, L.P., a Delaware limited partnership (“TWCP”),
and its Affiliates listed on Schedule A hereto (TWCP and such
Affiliates, the “Tailwind Stockholders”); DLJ Growth Capital Partners,
L.P., a Delaware limited partnership (“DLJ”), GCP Plan Investors, L.P.,
a Delaware limited partnership (“GCP” and, together with DLJ, the “DLJ
Stockholders”); and GSO Credit Opportunities Fund (Helios), L.P., a Cayman
Islands limited partnership (the “Credit Opportunities Stockholder”).  The Tailwind Stockholders, the DLJ
Stockholders and the Credit Opportunities Stockholder are sometimes referred
to herein individually as a “Seller” and, collectively, as the “Sellers”.  Capitalized terms used herein are defined in Article IX.

 

R E C I T A L S:

 

A.    The
Sellers collectively own beneficially and of record all of the issued and
outstanding shares of (i) the Common Stock, par value $0.01 per share (“Common
Stock”), of Aircast Incorporated, a Delaware corporation (the “Company”)
and (ii) the Series A Preferred Stock, par value $0.01 per share (“Preferred
Stock”), of the Company (collectively, the “Shares”).

 

B.    The
Purchaser would like to purchase the Shares from the Sellers, and the Sellers
would like to sell the Shares to the Purchaser (the “Stock Purchase”),
upon the terms and subject to the conditions set forth in this Agreement.

 

A G R E E M E N T:

 

NOW, THEREFORE, in consideration of the
mutual agreements and covenants contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

ARTICLE I

PURCHASE AND SALE OF THE SHARES

 

1.1           The
Stock Purchase.  Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, the
Purchaser hereby agrees to purchase from each Seller all of the Shares owned by
such Seller, and each Seller hereby agrees to sell to the Purchaser all of such
Shares, in each case free and clear of all Liens.

 

1.2           Closing.

 

(a)           The
closing of the Stock Purchase (the “Closing”) will take place: (i) at
the offices of Kelley Drye & Warren LLP, located at 101 Park Avenue, New
York, New York 10178, (ii) at 10:00 a.m. (New York time) on the later to
occur of (A) March 30, 2006, or (B) the fifth (5th) Business
Day after the date on which the last to be satisfied or waived of the
conditions set forth in Article VI (other than conditions which, by
their nature, are to be satisfied at the Closing, but subject to the waiver or
satisfaction of those conditions) has been satisfied or waived in accordance
with this Agreement, except that if the satisfaction or waiver of the applicable
conditions occurs

 

 

after June 30, 2006, as soon as practicable,
but no later than the tenth (10th) Business Day following such
satisfaction or waiver; or (iii) at such other place, time and date as the
Purchaser and the Stockholder Representative shall mutually agree in
writing.  The “Closing Date” shall
be the date upon which the Closing occurs.

 

(b)           Subject
to the terms and conditions of this Agreement, at the Closing the Purchaser
shall pay an aggregate of $291,000,000 in cash (the “Transaction
Consideration”), by wire transfer of immediately available funds, as
follows:

 

(i)            to the creditors of
the Company and the Company Subsidiaries, the amount necessary to pay off the
Funded Debt, after application of the available cash and cash equivalents from
the Company and the Company Subsidiaries in accordance with Section 1.3;

 

(ii)           if and to
the extent that the Earnout Obligations are due for the 2005 fiscal year or are
accelerated as a result of the Stock Purchase and are known on the Closing Date
(in accordance with the terms of the Aircast Asset Purchase Agreement), an
amount necessary to extinguish such Earnout Obligations to the extent so due or
accelerated and to pay any related costs, expenses or interest with respect to
such Earnout Obligations to the extent such costs, expenses or interest may be
payable under the Aircast Asset Purchase Agreement (the “Earnout-Related
Costs”);

 

(iii)          to the advisors of (A)
the Company, (B) the Company Subsidiaries and (C) the Sellers, an amount
necessary to satisfy in full all transaction and other fees incurred by the
Company, the Company Subsidiaries and the Sellers, respectively, in connection
with the transactions contemplated by this Agreement;

 

(iv)          to the legal counsel,
accountants and other professionals of (A) the Company, (B) the Company
Subsidiaries and (C)  the Sellers, an amount necessary to satisfy in full
all outstanding fees and expenses incurred by the Company, the Company
Subsidiaries and the Sellers, respectively, in connection with the transactions
contemplated by this Agreement, other than the Stub Period Audit Expenses;

 

(v)           to the Company, for
distribution to: (A) the members of management of the Company and the Company
Subsidiaries, all amounts necessary to acquire any outstanding capital stock of
the Company or to settle or otherwise terminate in full any outstanding options
or other rights to acquire any capital stock of the Company that may be granted
by the Company to such members of management, consistent with Section 5.6,
prior to the Closing, net of the amounts required to be deducted and withheld
from such payments by the Company and the Company Subsidiaries as income Taxes
and as the management members’ shares of Employment Taxes (such amounts, the “Management
Members’ Withholding Taxes”); (B) the employees of the Company and the
Company Subsidiaries, all amounts necessary to satisfy any obligations under
the Sale Bonus Program, if any, net of the amounts required to be deducted and
withheld from such payments by the Company and the Company Subsidiaries as
income Taxes and as the employees’ shares of Employment Taxes

 

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(such amounts,
the “Employees’ Withholding Taxes”); (C) the applicable Tax
Authorities, of the Management Members’ Withholding Taxes and the Employees’
Withholding Taxes; (D) the applicable Tax Authorities, of all amounts required
to be paid by the Company and the Company Subsidiaries as the employer share of
Employment Taxes with respect to the payments described in the preceding clauses
(A) and (B); provided, however,
that the Employment Taxes in clauses  (C) and (D) shall not
include any Capped Employment Taxes with respect to any employees of the
Company and the Company Subsidiaries whose annual compensation exceeds the compensation
subject to Capped Employment Taxes, which the Company and the Company
Subsidiaries, as applicable, shall pay after the Closing using funds from
sources other than the Transaction Consideration;

 

(vi)          $25 million (the “Indemnity
and Earnout Escrow Deposit”) to Wells Fargo, N.A. (the “Escrow
Agent”), in accordance with Section 1.4;

 

(vii)         the Retention
Program Escrow Deposit to the Company
for deposit with the Escrow Agent in accordance with Section 1.5;
and

 

(viii)        the balance to the Sellers
to be shared among them as specified in the Closing Memorandum (such balance
together with the payments contemplated by Sections 1.2(b)(iii)(C),
(iv)(C) and (vi), but subject to adjustment pursuant to Section
1.3(b), Section 1.5, Section
1.6(i), Section 7.11 and Section 10.1(b) being the “Purchase
Price”).

 

In order to facilitate the payments
contemplated by this Section 1.2(b), the Stockholder Representative will
deliver the Closing Memorandum to the Purchaser as soon as reasonably
practicable prior to the Closing.  The
Purchaser and the Sellers intend that for Tax purposes the payment of the
Transaction Consideration shall be characterized as follows and treated as
occurring in the following order: first,
the Purchaser shall be deemed to pay the Purchase Price to the Sellers as
consideration for the Shares; and then,
immediately thereafter, the Purchaser shall be deemed to make a capital
contribution to the Company of the balance of the Transaction Consideration by
paying such balance to the recipients specified above.

 

(c)           Subject
to the terms and conditions of this Agreement, in addition to the other
deliveries contemplated under this Agreement to be made at the Closing, at and
in connection with the Closing:

 

(i)            the Sellers will
assign and transfer to the Purchaser all of their right, title and interest in
and to the Shares by delivering to the Purchaser the certificates representing
the Shares, duly endorsed in blank or accompanied by duly executed stock powers
endorsed in blank;

 

(ii)           the Sellers will cause
the Company to deliver to the Purchaser the resignation of each director of the
Company and, to the extent requested by the Purchaser in writing at least
twenty (20) Business Days prior to the Closing Date, of each Company
Subsidiary, in each case effective as of the Closing;

 

(iii)          the Sellers will, or
will cause the Company to, deliver to the Purchaser the seal, minute book and
stock transfer records of the Company, and

 

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deliver all
original corporate records and documents of the Company not then in possession
of the Company but in the possession of the Sellers;

 

(iv)          the Sellers, the
Company, the Stockholder Representative and the Purchaser will execute and
deliver to each other and to the Escrow Agent the Indemnity and Earnout Escrow
Agreement; and

 

(v)           the Sellers, the
Company, the Stockholder Representative and the Purchaser will execute and
deliver to each other and to the Escrow Agent the Retention Program Escrow
Agreement.

 

1.3           Cash
and Debt at Closing.

 

(a)           Immediately
prior to the Closing, except as provided in Section 1.3(b), the Sellers
will cause the Company or the Company Subsidiaries to use cash and cash
equivalents then held by the Company and the Company Subsidiaries to repay the
outstanding principal, interest and other amounts due under the Funded Debt
(the remainder of such amounts due under the Funded Debt will be repaid at the
Closing as described in Section 1.2(b)(i)).  Accordingly, the Sellers and the Purchaser
acknowledge that it is their intent that at and as of the Closing, the Company
and the Company Subsidiaries will have only the cash and cash equivalents
contemplated by Section 1.3(b), and, after the payments
contemplated by Section 1.2(b)(i), there will be no outstanding principal,
interest or other amounts due under the Funded Debt and all Liens associated
with the Funded Debt will be released.

 

(b)           The
Sellers shall cause the Company and the Company Subsidiaries to have, as of the
close of business on the last Business Day preceding the Closing Date, cash
balances in the bank accounts of the Company Subsidiaries referred to in Section 1.3(b)
of the Seller Disclosure Schedule aggregating not less than $1,000,000, using
the conversion ratios of local currencies into U.S. dollars as of the close of
business on the last Business Day preceding the
Closing Date.  Within five (5) Business
Days after the Closing, the Purchaser shall cause the Company or the Company
Subsidiaries to deliver to the Stockholder Representative a bank statement for
each bank account specified in Section 1.3(b) of the Seller Disclosure
Schedule as of the close of business on the last day preceding the Closing Date
on which the applicable bank was open for business and the conversion ratios of
local currencies into U.S. dollars for the relevant local currencies as of the
close of business on the day preceding the date such bank statements are
deposited for delivery to the Stockholder Representative (the “Adjustment
Date Conversion Ratios”).  In the
event that the aggregate cash balance set forth on such bank statements (net of
any overdrafts after application of Section 1.2(b)(i)) (the “Aggregate
Balance Amount”) exceeds $1,000,000 using the Adjustment Date Conversion
Ratios (the amount by which the Aggregate Balance Amount exceeds such amount,
the “Positive Bank Cash Difference Amount”), the Purchaser shall
concurrently with the delivery of such bank statements pay to the Sellers the
amount, in U.S. dollars, of the Positive Bank Cash Difference Amount, up to a
maximum of $1,000,000.  In the event that
the Aggregate Balance Amount is less than $1,000,000 using the Adjustment Date
Conversion Ratios (the amount by which the Aggregate Balance Amount is less
than such amount, the “Negative Bank Cash Difference Amount”), the
Sellers shall within two (2) Business Days after the Stockholder Representative’s
receipt of such bank statements and conversion ratios pay to the Purchaser the
amount, in U.S. dollars, of the Negative Bank Cash Difference Amount.  The amounts, if any, to be paid by or to the
Sellers pursuant to this Section 1.3(b) shall be paid by or to each
Seller in the

 

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proportion that the number of Shares owned by
such Seller immediately prior to the Closing bears to the number of Shares
outstanding immediately prior to the Closing and shall be treated for Tax
purposes as an adjustment to the Purchase Price.

 

1.4           Indemnity
and Earnout Escrow.  At the Closing,
in accordance with Section 1.2(b)(vi), the Purchaser will pay the
Indemnity and Earnout Escrow Deposit to the Escrow Agent, under an escrow
agreement to be entered into on the Closing Date by the Sellers, the Company,
the Stockholder Representative, the Purchaser and the Escrow Agent in
substantially the form attached as Exhibit A hereto (the “Indemnity
and Earnout Escrow Agreement”).  The
Indemnity and Earnout Escrow Deposit, together with any interest and income
earned thereon (collectively, the “Indemnity and Earnout Escrow Funds”),
will be held until the last to occur of June 30, 2007 or the first anniversary
of the Closing Date (the “Indemnity and Earnout Escrow Period”) to
serve as an escrow fund for: (i) any indemnifiable losses resulting from
breaches of the Sellers’ representations and warranties and covenants and
agreements set forth in this Agreement, pursuant to Article VII;
and (ii) satisfaction of the Sellers’ obligations, if any, with respect to
the Earnout Obligations (as described in Section 1.6).  Interest and income earned on the Indemnity
and Earnout Escrow Funds shall be applied first to satisfy any fees and
expenses of the Escrow Agent under the Indemnity and Earnout Escrow Agreement,
and the amount of any fees and expenses of the Escrow Agent under the Indemnity
and Earnout Escrow Agreement that exceed the amount of such interest and income
earned on the Indemnity and Earnout Escrow Funds will be paid directly by the
Purchaser.  At the end of the Indemnity
and Earnout Escrow Period, the remaining amount of the Indemnity and Earnout
Escrow Funds, less: (i) any amounts subject to a pending Purchaser
indemnification claim (including claims with respect to a Multiple Source of
Recovery Matter under Section 7.6(b)); and (ii) any then outstanding
fees and expenses of the Escrow Agent (but not in excess of the interest and
income earned on the Indemnity and Earnout Escrow Funds which are then held as
part of the Indemnity and Earnout Escrow Funds), shall be disbursed by the
Escrow Agent to the Sellers in accordance with the terms and conditions of the Indemnity
and Earnout Escrow Agreement.

 

1.5           Retention
Program Escrow.  Immediately upon the
Company’s receipt of the payment contemplated by Section 1.2(b)(vii),
the Purchaser will cause the Company to pay the Retention Program Escrow
Deposit to the Escrow Agent, under an escrow agreement to be entered into on
the Closing Date by and among the Sellers, the Company, the Stockholder
Representative, the Purchaser and the Escrow Agent in substantially the form
attached as Exhibit B hereto (the “Retention Program Escrow
Agreement”).  The Retention Program
Escrow Deposit, together with any interest and income earned thereon
(collectively, the “Retention Program Escrow Funds”), will be held
from the Closing until the fifth (5th) Business Day after the one
(1) year anniversary of the Closing Date (the “Retention Program Escrow
Period”) to serve as an escrow fund for the satisfaction of the Company’s
and the Company Subsidiaries’ obligations, if any, with respect to the
Retention Program (as described in Section 5.9(c)).  The Retention Program Escrow Agreement shall
provide for the Company or its designee to have authority to draw funds to make
payments on the Retention Program upon delivery of an officer’s certificate of
Purchaser confirming funds are being used in compliance with the Retention
Program.  Interest and income earned on
the Retention Program Escrow Funds shall be applied first to satisfy any fees
and expenses of the Escrow Agent under the Retention Program Escrow Agreement,
and the amount of any fees and expenses of the Escrow Agent under the Retention
Program Escrow Agreement that exceed the amount of such interest and income
earned on the Retention Program Escrow Funds will be paid directly by the
Purchaser.  At the end of the Retention
Program Escrow Period, the remaining amount of the

 

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Retention Program Escrow Funds, if any, less any then outstanding fees
and expenses of the Escrow Agent (but not in excess of the interest and income
earned on the Retention Program Escrow Funds which are then held as part of the
Retention Program Escrow Funds), shall be disbursed by the Escrow Agent (on
behalf of the Company) to the Sellers in accordance with the terms and
conditions of the Retention Program Escrow Agreement.  Any such amount paid to the Sellers shall be
treated for all Tax purposes as an increase to the Purchase Price.

 

1.6           Treatment
of Earnout Obligations.

 

(a)           The
parties agree and acknowledge that, pursuant to Section 1.8 of the Aircast
Asset Purchase Agreement, Aircast Intermediate Holdco and Aircast US Opco
(collectively, with the successors and assigns of either or both of them, the “Earnout
Obligors”) have the obligation to make certain payments to Old Aircast Inc.
and Old Aircast LLC or their respective assigns (collectively, the “Old
Aircast Sellers”) upon the satisfaction of conditions specified therein
relating to the financial performance of Aircast Intermediate Holdco and its
Subsidiaries during the time periods specified therein, in each case on the
terms and conditions set forth therein (any such obligations, the “Earnout
Obligations”).  The Purchaser and the
Sellers agree that, except to the extent due or owing (at any time) for the
2005 fiscal year or accelerated as described in Section 1.2(b)(ii)
or Section 1.6(f), the Earnout Obligors will remain responsible for the
Earnout Obligations and all Earnout-Related Costs; provided, however, that the Sellers will pay to Aircast
Intermediate Holdco or its designee(s) on behalf of the Earnout Obligors: (i)
eighty percent (80%) of the aggregate amount paid to the Old Aircast Sellers in
complete and final settlement and release of the Earnout Obligations (the “Settlement
Payment”) and any Earnout-Related Costs related thereto if such settlement
occurs within ninety (90) days after the Closing Date; or (ii) ninety percent
(90%) of the aggregate of any payout to the Old Aircast Sellers under the
Earnout Obligations and any Settlement Payment (if the settlement occurs after
the ninetieth (90th) day after the Closing Date) and any related
Earnout-Related Costs (such eighty percent (80%) or ninety percent (90%) share
of the Settlement Payment and Earnout-Related Costs, each the “Sellers’
Share”) and provided further, however
that any Earnout-Related Costs arising from or related to any failure by the
Earnout Obligors to comply with any provision of Section 1.8 of the
Aircast Asset Purchase Agreement after the Closing, as more fully set forth in Section
1.6(b), will not be included in the calculation of the Sellers’ Share for
purposes of this Section 1.6(a).

 

(b)           Unless
and until the Earnout Obligations are settled or accelerated and paid as set
forth in this Section 1.6, from and after the Closing, the Purchaser
will use its commercially reasonable best efforts to cause the Earnout Obligors
and the Purchaser’s other Subsidiaries to comply with all of the obligations
set forth in Section 1.8 of the Aircast Asset Purchase Agreement relating to
the Earnout Obligations, including: (i) the obligation set forth in Section
1.8(c) of the Aircast Asset Purchase Agreement to determine the “Net Sales” for
each subsequent “Earnout Year” on a pro
forma basis to remove the effects upon the calculation of the actual
“Net Sales” for each such “Earnout Year” of the “Change of Control” resulting
from the Closing hereunder (the quoted terms in this sentence have the
respective meanings set forth in the Aircast Asset Purchase Agreement); and
(ii) the obligation to pay to the Old Aircast Sellers any amounts that are
required to be paid by the Earnout Obligors to the Old Aircast Sellers from
time to time with respect to the Earnout Obligations, in accordance with the
applicable terms and conditions of the Aircast Asset Purchase Agreement or
pursuant to a Settlement Agreement.

 

6

 

(c)           After
the Closing, the Purchaser will use commercially reasonable best efforts to
deliver to the Stockholder Representative approximately thirty (30) days prior
to the “Earnout Audit Completion Date” (as defined in the Aircast Asset
Purchase Agreement) (or, in the case of a “Change of Control”, prior to the
date that is thirty (30) days following the closing thereof) a draft
calculation of the “Net Sales” for the preceding fiscal year ended December 31
(or, in the case of a “Change of Control,” for the twelve (12) month period
ended on the prior month end).  The
Stockholder Representative shall have fifteen (15) days to review and update
the draft calculation and shall, at or before the end of such fifteen (15) day
period, provide the Purchaser with any written objections to the Purchaser’s
draft calculation and, if applicable, with the Stockholder Representative’s own
calculation of “Net Sales” for the appropriate period.  If the Stockholder Representative fails to
provide any written objection by the end of such fifteen (15) day period, then
the Stockholder Representative shall be deemed to have irrevocably agreed that
the Purchaser and its Subsidiaries complied with Section 1.6(b) with
respect to such calculation.

 

(d)           As
between the Sellers, on the one hand, and the Purchaser and, after the Closing,
the Earnout Obligors, on the other, both prior to and after the Closing, the
Sellers will control the negotiation and consummation of any settlement of the
Earnout Obligations (with the Sellers being represented for this purpose by the
Stockholder Representative); provided,
however, that (i) the Purchaser
shall be afforded a reasonable period of time, and in any event not less than
five (5) Business Days, to review the terms and conditions of any such
settlement; and (ii) the consummation of any such settlement shall be subject
to the prior written consent of the Purchaser unless such settlement includes a
complete release with respect to the Earnout Obligations of the Earnout
Obligors by the Old Aircast Sellers.  The
Purchaser acknowledges that, notwithstanding anything to the contrary in this Section
1.6, the Sellers shall only be obligated to negotiate in good faith to
pursue a settlement of the Earnout Obligations, but there can be no assurance
that such a settlement will be reached, and except for their payment
obligations under this Section 1.6, the Sellers will have no liability
to the Purchaser or any other Person for the failure to reach such a
settlement.  During such settlement
negotiation process, the Stockholder Representative will keep the Purchaser
informed, on a reasonably prompt basis and in reasonable detail, concerning the
progress of such negotiations, including: (x) providing the Purchaser with copies
of any draft term sheets, settlement agreements and other documents being
circulated among the Stockholder Representative and its representatives, on the
one hand, and the Old Aircast Sellers and their representatives, on the other
hand; (y) providing reasonable advance notice to the Purchaser (to the extent
that reasonable advance notice has been provided to the Stockholder
Representative) of any teleconferences and meetings between the Stockholder
Representative and its representatives, on the one hand, and the Old Aircast
Sellers and their representatives, on the other hand, that are part of the
settlement negotiation process; and (z) requesting release of the Purchaser
from the Earnout Obligations.  The
Purchaser will be permitted by the Sellers and the Stockholder Representative
to attend and participate in any such teleconferences and meetings, assuming
that the Old Aircast Sellers do not object directly to the Purchaser to such
attendance and participation.

 

(e)           The
consummation of any settlement of the Earnout Obligations pursuant to Section
1.6(d) (the “Settlement Closing”) will occur after the Closing Date
at such date and time during normal business hours on a Business Day as are
determined by the Stockholder Representative and the Old Aircast Sellers.  As soon as reasonably practicable after the
Stockholder Representative has reached an agreement in principle to settle the
Earnout Obligations with the Old Aircast Sellers, but in any event not less
than five (5) Business Days prior to the anticipated date of consummation of
the Settlement Closing, the Stockholder Representative shall provide to the

 

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Purchaser written notice of such anticipated
Settlement Closing, which shall include the date, time and place of the
Settlement Closing and a copy of the settlement agreement evidencing such
settlement (the form of which shall have been previously agreed to by the Old
Aircast Sellers) (the “Settlement Agreement”).  At the Settlement Closing; (i) the Purchaser
shall cause the Earnout Obligors to execute and deliver the Settlement
Agreement (if not previously executed); (ii) the Sellers shall pay to Aircast
Intermediate Holdco or its designee(s) the Sellers’ Share and (iii) the
Purchaser shall cause the Settlement Payment and any Earnout-Related Costs to
be paid to the Old Aircast Sellers.  The
Sellers’ Share shall be paid: (x) by release from the Indemnity and Earnout
Escrow Funds (if the Settlement Closing occurs on or prior to the end of the
Indemnity and Earnout Escrow Period and to the extent there are sufficient
Indemnity and Earnout Escrow Funds, as of the Settlement Closing, to satisfy
each Seller’s portion of the Sellers’ Share); and (y) solely to the extent that
the Settlement Closing occurs after the end of the Indemnity and Earnout Escrow
Period or to the extent that the Sellers’ Share exceeds the then-available
Indemnity and Earnout Escrow Funds, by payment by the Sellers of such remaining
part of the Sellers’ Share, by inter-bank transfer or wire transfer of
immediately available funds, or in such other form as the Purchaser may agree,
to Aircast Intermediate Holdco or its designee(s).

 

(f)            If the Earnout
Obligors are unable to determine, prior to a time reasonably in advance of the
Closing, whether the Earnout Obligations would be accelerated as a result of
the consummation of the Stock Purchase, then after the Closing the Purchaser
will use its commercially reasonable best efforts to deliver to the Stockholder
Representative a draft calculation of the “Net Sales” for the twelve (12) month
period ended on the calendar month-end next preceding the Closing Date (the “Twelve
Month Calculation”).  The Purchaser
will use its commercially reasonable best efforts to deliver the draft Twelve
Month Calculation prior to the date that is thirty (30) days after the Closing
Date.  The Stockholder Representative
shall have fifteen (15) days to review and update the draft Twelve Month
Calculation and shall, at or before the end of the applicable review period,
provide the Purchaser with any written objections to the Purchaser’s draft
Twelve Month Calculation, and, if applicable, with the Stockholder
Representative’s own calculations of “Net Sales” for such period.  If the Stockholder Representative fails to
provide any written objection by the end of such fifteen (15) day period, then
the Stockholder Representative shall be deemed to have irrevocably agreed that
the Purchaser and its Subsidiaries complied with Section 1.6(b) with
respect to the Twelve Month Calculation. 
If the Earnout Obligations
accelerate as a result of the consummation of the Stock Purchase, the Sellers
shall pay to Aircast Intermediate Holdco or its designee(s) (on behalf of the
Purchaser) the amount of the Earnout Obligations so accelerated at the time
that payment is required to made by the Earnout Obligors to the Old Aircast
Sellers.

 

(g)           To
the extent reasonably necessary for any settlement negotiations related to the
Earnout Obligations continuing after the Closing or for purposes related to the
payments or calculations contemplated by Section 1.6(c) and Section
1.6(f), the Purchaser shall (and shall cause the Company and the Company
Subsidiaries to) provide to the Stockholder Representative and its
representatives reasonable access to the books and records of the Company and
the Company Subsidiaries reasonably related to the calculation of “Net Sales”
as described in Section 1.6(b), and make available the personnel,
accountants and other advisors of the Company and the Company Subsidiaries (and
their respective books and records reasonably related to the calculation of “Net
Sales” as described in Section 1.6(b), except to the extent subject to
attorney-client privilege that would be waived by such provision), in each case
(I) as is reasonably requested by the Stockholder Representative in connection
with the settlement negotiation process, (II) at the location of the

 

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Earnout Obligors, as applicable, (III) during
normal business hours, (IV) upon reasonable advance notice and (V) subject to
any reasonable confidentiality and securities trading restrictions imposed by
the Purchaser and delivered to the Stockholder Representative in writing a
reasonable amount of time prior to the provision of such access.

 

(h)           All
references in this Section 1.6 to the Company and the Company
Subsidiaries shall also apply to any successor to, or assignee of, the Company
or any Company Subsidiary.

 

(i)            Any
amount paid by the Sellers pursuant to this Section 1.6 shall be treated
for all Tax purposes as a reduction to the Purchase Price.

 

(j)            Except
as set forth in Section 1.2(b)(ii) and this Section 1.6, and
except for breaches of Section 1.8 of the Aircast Asset Purchase Agreement
occurring prior to the Closing, the Sellers will have no responsibility,
financial or otherwise, for any Earnout Obligations or any costs or expenses
incurred in connection therewith.

 

(k)           Except
as expressly provided in this Agreement, nothing in this Section 1.6 is
intended to or shall limit or restrict the right of the Purchaser to operate
its, the Company’s or the Company Subsidiaries’ business in such a manner as it
may determine in the Purchaser’s sole discretion after the Closing (including
the disposition of assets or properties as it may elect).

 

1.7           Stockholder
Representative.

 

(a)           Each
Seller has designated and appointed the Stockholder Representative as the
representative and attorney in fact of such Seller for the sole purpose of
acting on its behalf with respect to this Agreement, the Indemnity and Earnout
Escrow Agreement, the Retention Program Escrow Agreement and any other document
entered into in connection herewith or therewith, including full power and
authority on behalf of such Seller: (i) to take all actions the Stockholder
Representative deems necessary or appropriate in connection with the
pre-closing covenants of the Sellers set forth in this Agreement and the
satisfaction or waiver of closing conditions under this Agreement, including
exercise of the powers, authority and discretion conferred on the Sellers
hereunder to waive any terms and conditions of this Agreement and to give and
receive notices; (ii) to take all actions the Stockholder Representative
deems necessary or appropriate in connection with negotiating, settling,
compromising and otherwise handling the Earnout Obligations; (iii) to take all
actions the Stockholder Representative deems necessary or appropriate in
connection with the Retention Program and the Retention Program Escrow
Agreement; (iv) to take all actions the Stockholder Representative deems
necessary or appropriate in connection with the Sale Bonus Program; (v) to take
all actions the Stockholder Representative deems necessary or appropriate in
connection with the post-closing implementation of this Agreement and the
Indemnity and Earnout Escrow Agreement, including negotiating, settling,
compromising and otherwise handling any claims for indemnification made by a
Purchaser Indemnified Party with respect to the Sellers’ representations and
warranties set forth in Article II and covenants and agreements set
forth in this Agreement (including authorizing the delivery to the Purchaser of
all or any portion of the Indemnity and Earnout Escrow Funds in satisfaction of
any such indemnification claim), pursuing or responding to litigation and
complying with orders of courts with respect to any such indemnification
claims; and (vi) to take all other actions the Stockholder Representative deems
necessary or appropriate for the accomplishment of the foregoing.

 

9

 

(b)           The
Purchaser shall be entitled to conclusively rely on all statements,
representations and decisions of the Stockholder Representative as those of the
Sellers, without any independent investigation or verification.

 

(c)           If
the Stockholder Representative is dissolved, resigns from such position, files
for bankruptcy or is the subject of an involuntary bankruptcy petition that is
not dismissed within thirty (30) days after filing, it shall designate a replacement
Stockholder Representative prior to such dissolution, resignation or bankruptcy
or, if the Stockholder Representative shall fail to do so, a replacement
Stockholder Representative shall be appointed by TWCP.  If the Stockholder Representative fails to so
appoint a successor Stockholder Representative in the manner described above
and TWCP also fails to appoint a successor Stockholder Representative within
thirty (30) days after the dissolution, resignation or bankruptcy of the
Stockholder Representative, the provisions set forth in this Agreement, the
Indemnity and Earnout Escrow Agreement and the Retention Program Escrow
Agreement requiring the consent or action of the Stockholder Representative
shall be deemed to be require the consent or action of all of the Sellers.  Any change in the Stockholder Representative
shall be effective only upon delivery to the Purchaser of written notice
thereof either from the Stockholder Representative or TWCP, as applicable.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

CONCERNING THE COMPANY AND THE COMPANY SUBSIDIARIES

 

The Sellers represent and warrant to the
Purchaser, jointly but not severally, as follows, except as disclosed in the
Seller Disclosure Schedule (which shall be prepared in accordance with Section
9.2):

 

2.1           Existence;
Good Standing.  The Company is a
corporation duly incorporated and organized, validly existing and in good
standing under the laws of the State of Delaware and has all required corporate
power and authority to own or lease its properties and assets and to conduct
its business as presently conducted.  The
Company is duly qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the failure to be so qualified would
be reasonably likely to have a Material Adverse Effect.  Section 2.1 of the Seller Disclosure
Schedule sets forth a complete and accurate list of each jurisdiction in which
the Company is qualified to do business as a foreign corporation.

 

2.2           No
Conflict; Consents.

 

(a)           The execution and
delivery by the Stockholder Representative and the Sellers of this Agreement,
the Indemnity and Earnout Escrow Agreement, the Retention Program Escrow
Agreement and any other documents required to be executed and delivered by the
Stockholder Representative and the Sellers under this Agreement (collectively,
the “Seller Documents”) do not, and the consummation of the transactions
contemplated hereunder and thereunder (assuming the Required Consents are
obtained on or prior to Closing) will not: (i) violate the Organizational
Documents of the Company or any Company Subsidiary; (ii) constitute a material
breach of or result in a material default under (with or without the giving of
notice or the lapse of time), or result in the other party having a right of
termination, cancellation or acceleration under, any Significant Contract;
(iii) result, in any material respect, in a violation of any Applicable Law;
(iv) result in the creation or imposition of any Liens upon any of the assets
or properties of the Company or any of

 

10

 

the Company Subsidiaries or upon the Shares
(other than any Liens arising due to actions of the Purchaser); (v) except as
contemplated by the Retention Program or Sale Bonus Program, result in the
payment of, or the creation of any obligation, absolute or contingent, to pay,
on behalf of the Company or any Company Subsidiary, any severance, termination,
“golden parachute” or other similar payment, whether pursuant to a Contract or
under Applicable Law with respect to any U.S. employee of the Company or any
Company Subsidiary, any amount; (vi) except as contemplated by the Retention
Program or Sale Bonus Program, result in the payment of, or the creation of any
obligation, absolute or contingent, to pay, on behalf of the Company or any
Company Subsidiary, any severance, termination, “golden parachute” or other
similar payment, which is material in amount, whether pursuant to a Contract or
under Applicable Law with respect to any non-U.S. employee of the Company or
any Company Subsidiary; or (vii) give any Governmental Authority the right to
revoke, suspend, modify or terminate any material Company Permit.

 

(b)           Except
as set forth in Section 2.2(b) of the Seller Disclosure Schedule
(collectively, the “Required Consents”) and except as would not result
in any material respect in a violation of Applicable Law, no notice to, or
consent of or with, any Governmental Authority or any Judicial Authority or,
with respect to any Significant Contract, any third Person, is required to be
obtained by the Company or any Company Subsidiary in connection with the
execution and delivery by the Stockholder Representative and the Sellers of
this Agreement and the other Seller Documents or the consummation of the transactions
contemplated hereunder and thereunder.

 

2.3           Capitalization.  The authorized capital stock of the Company
consists of: (i) 25,000,000 shares of Common Stock, of which an aggregate of
8,325,000 shares are issued and outstanding on the date of this Agreement; and
(ii) 12,492,500 shares of Preferred Stock, of which an aggregate of
7,492,500 shares are issued and outstanding on the date of this Agreement.  All of the issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable and none of them are subject to or were issued
in violation of any pre-emptive rights, rights of first offer or first refusal
or similar rights, or in violation of the Securities Act or any other applicable
securities law.  On the date of this
Agreement there are no, and, except as issued under the terms of Section 5.6
and as terminated pursuant to Section 1.2(b)(v), as of the Closing Date
there will be no, outstanding subscriptions, options, warrants or other
agreements or commitments or other rights of any kind to acquire (including
securities exercisable or exchangeable for or convertible into), or obligating
the Company to issue, any shares of capital stock of the Company, or giving any
Person the right to receive any benefits or rights similar to any rights
enjoyed by or accruing to the benefit of the holders of any shares of the
capital stock of the Company (solely in their capacity as a holder).  The Company is not subject to any obligation
(contingent or otherwise) to repurchase, redeem, call or otherwise retire, or
to register, any shares of its capital stock. 
On the date of this Agreement the Shares collectively constitute, and,
except as issued under the terms of Section 5.6 and as terminated
pursuant to Section 1.2(b)(v), on the Closing Date the Shares will
constitute, all of the issued and outstanding shares of capital stock of the
Company, and as of the date of this Agreement the Shares are owned of record
and beneficially as set forth on Schedule A hereto.  Except for Contracts among the Sellers that
will be terminated at or prior to the Closing, there are no Contracts with
respect to the: (i) voting of any shares of capital stock of the Company
(including any proxy or director nomination rights); or (ii) transfer of, or
transfer restrictions on, any shares of capital stock of the Company.

 

11

 

2.4           Subsidiaries.

 

(a)           Section
2.4(a) of the Seller Disclosure Schedule lists the legal name and jurisdiction
of incorporation or formation, as applicable, of all Company Subsidiaries.  Each of the Company Subsidiaries is a
corporation or other entity duly incorporated or formed, duly organized,
validly existing and in good standing (to the extent each such concept is
applicable to such type of entity) under the laws of the jurisdiction of its
organization, and has all required corporate or other entity power and
authority under the laws of the jurisdiction of its organization to own or
lease its properties and other assets and to carry on its business as presently
conducted.  Each Company Subsidiary is
duly licensed or qualified and in good standing (to the extent each such
concept is recognized in such jurisdiction and applicable to such type of
entity) in all jurisdictions in which the failure to be so qualified would be
reasonably likely to have a Material Adverse Effect.  Section 2.4(a) of the Seller
Disclosure Schedule sets forth a complete and accurate list of each
jurisdiction in which each Company Subsidiary is qualified to do business as a
foreign corporation or other entity.

 

(b)           All
of the issued and outstanding shares of capital stock (including for purposes
of this Section 2.4(b) any equity equivalent to capital stock) of each
of the Company Subsidiaries have been duly authorized and validly issued and
are fully paid (and not repaid, including in violation of any applicable
provisions on the preservation of stated capital), and nonassessable (to the
extent each such concept is recognized in such jurisdiction and applicable to
such type of entity) and none of them are subject to or were issued in
violation of any pre-emptive rights, rights of first offer or first refusal or
similar rights, or in violation of the Securities Act or any other applicable
securities law.  There are no outstanding
subscriptions, options, warrants or other agreements or commitments or other
rights of any kind to acquire (including securities exercisable or exchangeable
for or convertible into), or obligating any of the Company Subsidiaries to
issue, any shares of capital stock or other equity interests of such Company
Subsidiary, or giving any Person the right to receive any benefits or rights
similar to any rights enjoyed by or accruing to the benefit of the holders of any
shares of the capital stock or other equity interests of such Company
Subsidiary (solely in their capacity as a holder).  None of the Company Subsidiaries is subject
to any obligation (contingent or otherwise) to repurchase, redeem, call or
otherwise retire, or to register, any shares of its capital stock.  Except for Contracts among the Sellers that
will be terminated at or prior to the Closing, there are no Contracts with
respect to: (i) voting any shares of capital stock of any Company Subsidiary
(including any proxy or director nomination rights); or (ii) transfer of, or
transfer restrictions on, any shares of capital stock or other equity interests
of any Company Subsidiary.  All of the
outstanding capital stock or other equity interests of each Company Subsidiary
are owned by the Company, directly or indirectly, and are free and clear of any
Liens.  Except for the Company
Subsidiaries, the Company does not own, and none of the Company Subsidiaries
own, any capital stock of, or other equity interests in, any other Person.

 

2.5           Financial
Statements.

 

(a)           Attached
as Section 2.5(a) of the Seller Disclosure Schedule are: (a) the audited
consolidated balance sheet of Aircast Intermediate Holdco and its Subsidiaries
(collectively, the “Financial Statement Parties”) as at September 30,
2005, together with the related audited consolidated statements of income,
stockholder’s equity and cash flows of the Financial Statement Parties for the
nine (9) month period then ended (the “Audited Financial Statements”);
and (b) the unaudited consolidated balance sheet of the Financial Statement
Parties as of December 31, 2005,

 

12

 

together with the related unaudited
consolidated statement of income of the Financial Statement Parties for the
twelve (12) month period then ended (the “Unaudited Financial
Statements” and, together with the Audited Financial Statements, the “Financial
Statements”).  The Financial
Statements have been prepared in accordance with GAAP (other than, in the case
of the Unaudited Financial Statements, audit adjustments that will not,
individually or in the aggregate, be material and the omission of footnotes)
and, in all material respects, the books and records, consistent with past
practices of the Financial Statement Parties, and present fairly, in all
material respects, the consolidated financial condition of the Financial
Statement Parties as of such dates and the consolidated results of operations
of the Financial Statement Parties for the periods then ended.  None of the Company or any of the Company
Subsidiaries is a party to, or has a commitment to become a party to, any
off-balance sheet arrangements.

 

(b)           The
consolidated balance sheets of the Company as of December 31, 2004 and December
31, 2005 and the consolidated statements of income of the Company for the
twelve (12) month period ended December 31, 2005 and from inception to
December 31, 2004 will be consistent, in all material respects, with the
Unaudited Financial Statements and the historical financial statements of the
Financial Statement Parties, as the case may be, except as set forth on Section
2.5(b) of the Seller Disclosure Schedule.

 

2.6           Absence
of Certain Changes.  Between
September 30, 2005 and the date of this Agreement, there has been no:

 

(a)           transaction
entered into by the Company or any Company Subsidiary other than in the
ordinary course of business, except as a result of the preparation for or
otherwise arising out of the transactions contemplated by this Agreement;

 

(b)           amendment,
rescission or termination of (or receipt of written notice of termination of)
any Significant Contract or Company Permit, except as disclosed on Section
2.6(b) of the Seller Disclosure Schedule and except for amendments made in
the ordinary course of business;

 

(c)           sale,
lease or other disposition of, or mortgage, pledge or other encumbrance (other
than Permitted Liens) of, any material asset of the Company or any of the
Company Subsidiaries, except sales of inventory in the ordinary course of
business;

 

(d)           between
September 30, 2005 and December 31, 2005, capital expenditure by the Company or
any of the Company Subsidiaries (or series of related capital expenditures) not
reflected on the Unaudited Financial Statements, and between January 1, 2006
and the date of this Agreement, there has been no capital expenditure by the
Company or any of the Company Subsidiaries (or series of related capital
expenditures) involving more than $1,000,000 (or its applicable local currency
equivalent), individually or in the aggregate;

 

(e)           creation,
incurrence, assumption, or guarantee by the Company or any of the Company
Subsidiaries of any Indebtedness;

 

(f)            except
for the benefit of any newly hired non-U.S. employees or as required by
applicable Law or any Employee Plan, increase, or incurrence of an obligation
to increase, by the Company or any of the Company Subsidiaries of any bonuses,
salaries or other compensation (i) payable to any employee, except for
increases made or obligations incurred in the ordinary

 

13

 

course of business or (ii) in excess of five
percent (5%), individually or in the aggregate (as compared to such
compensation in effect at September 30, 2005), to any director, officer,
limited liability company manager or managing director (or functional
equivalents of the foregoing or other management-level employees);

 

(g)           except
as required by applicable Law, adoption of, or amendment to, or announcement of
a pending adoption or amendment to, or change in the calculation of payments to
or benefits under, any Employee Plan;

 

(h)           acquisition
of or agreement to acquire by merging with, or by purchasing a substantial
equity interest in or a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, limited liability
company, association or other business entity, in a transaction or series of
related transactions by the Company or any Company Subsidiary;

 

(i)            except
as required by a change in GAAP (or in the case of non-U.S. Company
Subsidiaries, the applicable accounting rules in their respective jurisdictions
of operation) or applicable Law: (i) change in the Company’s or any Company
Subsidiary’s tax or accounting principles, (ii) material change in the Company’s
or any Company Subsidiary’s accounting practices or methods or any method of
calculating any bad debt, contingency or other reserve for accounting,
financial reporting or tax purposes, (iii) material tax election or settlement;
or (iv) compromise of any material income tax liability with any Governmental
Authority;

 

(j)            adoption,
amendment, rescission, termination of (or receipt of written notice of
termination of) or lapse of, or material claims made or existing claims denied
(in whole or in part, but excluding general reservations of rights with respect
to claims (that, to the Knowledge of the Sellers, are covered claims)) under,
any policies of insurance of the Company or any of the Company Subsidiaries;

 

(k)           hiring
or appointment or entering into of a commitment to hire or appoint any
director, officer, manager, limited liability company manager or managing
director of or to the Company or any of the Company Subsidiaries, or
termination or resignation, or, notice or termination or resignation delivered
in writing to the Company or any of the Company Subsidiaries, regarding any
such Persons;

 

(l)            default
on or other failure to satisfy any material obligation or material liability of
the Company or any Company Subsidiary;

 

(m)          declaration,
setting aside, or payment of any dividend or distribution in respect of any
capital stock of the Company, or any redemption, purchase or other acquisition
of any securities of the Company;

 

(n)           loan
or advance to, guarantee for the benefit of, or investments in, any Person (other
than: (i) intercompany Indebtedness as described in Section 2.6(n) of
the Seller Disclosure Schedule; (ii) advances of payroll or tuition made in the
ordinary course of business to employees who are not directors, officers,
managers, limited liability company managers or managing directors; and (iii)
advances of reimbursable expenses in the ordinary course of business) by the
Company or any of the Company Subsidiaries;

 

14

 

(o)           destruction
of, damage to, or loss (whether or not covered by insurance) of any of the
material assets or material properties owned or used by the Company or any of
the Company Subsidiaries, or termination, amendment, modification, waiver or
release of any material right or other asset of material value to the Company
or any of the Company Subsidiaries;

 

(p)           to
the extent not included in the foregoing subsections (a) – (o) of this Section
2.6, change, development, condition, event or circumstance occurring
between September 30, 2005 and December 31, 2005 in the Business which has had
or would reasonably be expected to have a Material Adverse Effect or a material
adverse effect on the ability of the Sellers to consummate the transactions
contemplated by this Agreement and the other Seller Documents; or

 

(q)           entry
by the Company or any Company Subsidiary into a Contract to do any of the
matters listed in the foregoing subsections (a) – (p) of this Section 2.6.

 

2.7           Undisclosed
Liabilities.  There are no
liabilities (whether absolute, accrued, contingent or otherwise) of the Company
or any Company Subsidiary that would be required to be reflected on an audited
consolidated balance sheet of the Company and the Company Subsidiaries, or in
the notes thereto, prepared in accordance with GAAP, other than (a) those
recorded in the Audited Financial Statements and (b) those incurred in the
ordinary course of business since September 30, 2005.  Notwithstanding anything to the contrary in
this Agreement, the representations and warranties provided in this Section
2.7 do not include any liabilities for matters with respect to which other
representations and warranties are provided in this Article II
(excluding the representations and warranties set forth in Sections 2.2,
2.3, 2.4, 2.5, 2.22, 2.26, 2.27, 2.29
and 2.31). 

 

2.8           Customers
and Suppliers.  Section 2.8 of
the Seller Disclosure Schedule lists the twenty (20) largest customers
(collectively, the “Significant Customers”), and the twenty (20) largest
suppliers (other than professional advisors such as attorneys and accountants)
(collectively, the “Significant Suppliers”), of the Company and the
Company Subsidiaries (measured by consolidated revenues and consolidated
expenses, respectively, of the Company and the Company Subsidiaries for the
period from December 31, 2004 to December 31, 2005).  As of the date of this Agreement, from
December 31, 2005 to the date of this Agreement, no Significant Customer or
Significant Supplier has canceled or otherwise terminated, or made a material
adverse change in, or made any written threat to the Company or any of the
Company Subsidiaries that such Significant Customer plans to cancel or
otherwise terminate or make a material adverse change in, its relationship with
the Company or any of the Company Subsidiaries.

 

2.9           Title
to Assets.  Except with respect to
the Owned Real Property and Leased Real Property (as to which the sole
representations and warranties of the Sellers are made in Section 2.12)
and the Business Intellectual Property (as to which the sole representations
and warranties of the Sellers are made in Section 2.11), the Company,
directly or indirectly, owns and has good title to or, in the case of leased
property and assets, has valid leasehold interests in, all property and assets
necessary for the conduct of the Business as presently conducted.  All of such property and assets are either
reflected on the Audited Financial Statements or were acquired since September
30, 2005, except for properties and assets sold since September 30, 2005 in the
ordinary course of business.  None of
such properties and assets is subject to any Lien other than any: (a) Permitted
Liens; (b) in the case of leased properties and assets, Liens and other matters
affecting the lessors’ interests in such properties and assets; or (c) Liens
set forth on Section 2.9 of the Seller Disclosure

 

15

 

Schedule.  The plant, machinery,
equipment and leasehold improvements of the Company and the Company
Subsidiaries are in all material respects in good operating condition,
reasonable wear and tear excepted and are adequate for the purposes for which
they are being used.

 

2.10         Significant
Contracts.

 

(a)           Section
2.10(a) of the Seller Disclosure Schedule contains a list of all of the
following to which the Company or any Company Subsidiary is a party
(collectively, the “Significant Contracts”):

 

(i)            each Contract, and to
the Knowledge of the Sellers, each Oral Contract, providing for the performance
of services or delivery of goods or materials by or to customers of or
suppliers to the Company or any Company Subsidiary which (A) provides for
consideration to be furnished to or by the Company or any Company Subsidiary of
value in excess of $250,000 during calendar year 2005 or (B) requires consideration
to be furnished to or by the Company or any Company Subsidiary of value in
excess of $250,000 during calendar year 2006 (after giving effect to automatic,
customary or routine renewals to any such Contract or Oral Contract), in each
case identifying each such Contract or Oral Contract that, to the Knowledge of
the Sellers, is with a sole source supplier;

 

(ii)           each lease or sublease
or other rental or occupancy Contract involving aggregate payments in excess of
$100,000 during calendar year 2005 or requiring aggregate payments in excess of
$100,000 during calendar year 2006;

 

(iii)          each licensing or other
Contract, and to the Knowledge of the Sellers each Oral Contract, granting the
Company or any Company Subsidiary, or pursuant to which the Company or any of
the Company Subsidiaries has granted to any Person, the right to use
Intellectual Property that is material to the operation of the Business;

 

(iv)          all broker, dealer,
manufacturer’s representative, franchise, agency, sales promotion, market research,
marketing, independent sales representative and advertising Contracts, and to
the Knowledge of the Sellers all such Oral Contracts, which (A) involved
consideration of more than $100,000 in the aggregate (for any such Contract or
Oral Contract) during calendar year 2005, (B) requires consideration of more
than $100,000 in the aggregate (for any such Contract or Oral Contract) during
calendar year 2006 (after giving effect to any automatic, customary or routine
renewals) or (C) which by their terms are not terminable by the Company or any
Company Subsidiary party thereto on ninety (90) days’ notice or less;

 

(v)           each Contract, and to
the Knowledge of the Sellers, each Oral Contract, to make capital expenditures
in excess of $100,000 with respect to the Business;

 

(vi)          each Contract, or to the
Knowledge of the Sellers, each Oral Contract, to sell, lease or otherwise
dispose of any assets or properties of the Company or any Company Subsidiary in
excess of $100,000 in the aggregate, other than sales of inventory in the
ordinary course of business;

 

16

 

(vii)         each collective
bargaining agreement with any labor union or other employee representative of a
group of employees relating to wages, hours and other conditions of employment;

 

(viii)        each joint venture
agreement, partnership agreement or limited liability company agreement
(including to the Knowledge of the Sellers any such Oral Contract) to which the
Company or any Company Subsidiary is party;

 

(ix)           each Contract, and to
the Knowledge of the Sellers each Oral Contract, that limits the right of the
Company or any Company Subsidiary to compete in any industry or geographic
area;

 

(x)            each Contract, or to
the Knowledge of the Sellers, each Oral Contract, that obligates the Company or
any Company Subsidiary to clean up or remediate any Hazardous Substances (but
excluding indemnification and contribution rights under Contracts not primarily
pertaining to environmental obligations);

 

(xi)           each Contract, and to
the Knowledge of the Sellers each Oral Contract, relating to the acquisition or
disposition of any business, or any operating division, business unit or
product line thereof (whether by merger, consolidation, reorganization,
acquisition of assets or otherwise), relating to the Business as currently
conducted;

 

(xii)          all Contracts, and to
the Knowledge of the Sellers all Oral Contracts, relating to Indebtedness of
the Business, or pursuant to which the Company or any Company Subsidiary
guarantees, indemnifies or otherwise agrees to support the obligations of, any
Person (other than the Company or the Company Subsidiaries), in excess of
$100,000 in the aggregate (other than in the ordinary course of business in
connection with sales of inventory);

 

(xiii)         all Contracts, and to the
Knowledge of the Sellers all Oral Contracts with employees (other than offer
letters delivered in the ordinary course of business), independent contractors
or consultants of the Company and Company Subsidiaries, in each case requiring
total payments during calendar year 2005 or 2006, respectively (excluding any
automatic, customary or routine renewals) of more than $100,000; and

 

(xiv)        each other Contract, and
to the Knowledge of the Sellers each Oral Contract, not otherwise listed pursuant
to the preceding clauses (i) through (xiii), that creates
future payment or performance obligations by the Company or any Company
Subsidiary that requires consideration to be furnished to or by the Company or
any Company Subsidiary of value in excess of $100,000 during calendar year 2006
or any calendar year thereafter, respectively and which by its terms is not
terminable by the Company or the Company Subsidiary party thereto without
penalty to the Company or the Company Subsidiary party thereto on ninety (90)
days’ notice or less (provided that no Contract or Oral Contract need be listed
pursuant to this clause (xiv) if such Contract or Oral Contract is
listed pursuant to clause (i) or would

 

17

 

be listed
pursuant to clause (i) if the disclosure threshold in such clause (i)
were $100,000 instead of $250,000).

 

(b)           Except
with respect to Real Estate Leases (as to which the sole representations and
warranties of the Sellers are made in Section 2.12):  (i) each of the Significant Contracts is a
valid and binding obligation of the Company or the Company Subsidiary party
thereto, enforceable against the Company or such Company Subsidiary and, to the
Knowledge of the Sellers, the other parties thereto, subject to the Equitable
Exceptions; and (ii) neither the Company nor the applicable Company Subsidiary
is in material breach of any Significant Contract nor, to the Knowledge of the
Sellers, is any other party thereto in material breach thereof.  The Sellers have made available to the
Purchaser complete and accurate (in all material respects) copies of each of
the Significant Contracts.

 

2.11         Intellectual
Property.  Section 2.11 of the
Seller Disclosure Schedule lists each patent, utility model, industrial design,
registered trademark, design mark, service mark and trade name, registered
copyright and domain name, and each published application for any of the
foregoing, domestic and foreign, that is necessary for the operation of the
Business (collectively, the “Business Intellectual Property”).  Except as set forth on Section 2.11 of
the Seller Disclosure Schedule: (a) the Company has, directly or indirectly,
the entire right, title and interest in and to the Business Intellectual
Property, free and clear of all Liens, except for Permitted Liens; (b) there is
no claim or notice of infringement of the Intellectual Property rights of any
other Person pending or, to the Knowledge of the Sellers, threatened against
the Company or any Company Subsidiary; (c) each material item of Business
Intellectual Property of the Company or any U.S. Company Subsidiary is valid,
subsisting, in full force and effect and has not been abandoned or passed into
the public domain, and all necessary registration, maintenance and renewal documentation
and fees in connection with such item of Business Intellectual Property have
been timely filed with appropriate authorities and paid; (d) to the Knowledge
of the Sellers, each material item of Business Intellectual Property of any
non-U.S. Company Subsidiary is valid, subsisting, in full force and effect and
has not been abandoned or passed into the public domain, and all necessary
registration, maintenance and renewal documentation and fees in connection with
such item of Business Intellectual Property have been timely filed with
appropriate authorities and paid; (e) to the Knowledge of the Sellers, no
Person is infringing on or misappropriating any Business Intellectual Property;
(f) to the Knowledge of the Sellers, neither the operation of the Business nor
the sale of Products infringes or misappropriates the Intellectual Property
rights of any other Person; (g) no present or former employee of the Company or
any Company Subsidiary has any proprietary, financial or other interest, direct
or indirect, in any Business Intellectual Property; and (h) the Company and the
Company Subsidiaries have taken commercially reasonable precautions to protect
inventions, trade secrets and know how constituting material Business
Intellectual Property, including the execution of appropriate agreements.

 

2.12         Real
Property.  Section 2.12 of the
Seller Disclosure Schedule lists: (a) all real property owned by the Company or
any Company Subsidiary (and in Germany, any quasi-real property rights in rem (grundstucksgleiche rechle))
(collectively, the “Owned Real Property”); and (b) all real property
that is leased or subleased to the Company or any Company Subsidiary
(collectively, the “Leased Real Property”).  The Company, directly or indirectly, has good
and marketable fee simple title to each item of Owned Real Property, in each
case free and clear of all Liens, other than Permitted Liens.  The use of the Owned Real Property for the
purposes to which it is presently being used is permitted as of right under all
applicable zoning Laws and is not subject

 

18

 

to “permitted nonconforming” use or structure classifications.  To the Knowledge of the Sellers, neither the
Company nor any Company Subsidiary has received any notice that any
improvements situated in whole or in part at any Owned Real Property are not in
material compliance with all applicable Laws, and all such improvements are in
all material respects in good repair and condition, ordinary wear and tear
excepted, and are adequate for the purposes for which they are being used.  Except as set forth in Section 2.12 of
the Seller Disclosure Schedule: (i) each of the Real Estate Leases is a valid
and binding obligation of the Company or the Company Subsidiary party thereto, enforceable
against the Company or such Company Subsidiary and, to the Knowledge of the
Sellers, the other parties thereto, subject to the Equitable Exceptions; (ii)
to the Knowledge of the Sellers, the use of each Leased Real Property for the
purpose to which it is presently being used is permitted as of right under the
applicable Real Estate Lease and all applicable zoning Laws, and is not subject
to “permitted nonconforming” use or structure classifications; (iii) to the
Knowledge of the Sellers, neither the Company nor any Company Subsidiary has
received written notice that any improvements situated in whole or in part on
any Leased Real Property are not in compliance with all applicable Laws, and
all such improvements are in all material respects in good repair and
condition, ordinary wear and tear excepted, and are adequate for the purposes
for which they are being used; and (iv) neither the Company nor the applicable
Company Subsidiary is in material breach of any Real Estate Lease nor, to the
Knowledge of the Sellers, is any other party thereto in material breach
thereof.  To the Knowledge of the
Sellers, no Person is in possession or occupancy of the Owned Real Property or
the Leased Real Property other than the Company or the applicable Company Subsidiary.  The Owned Real Property and Leased Real
Property constitute all of the real property interests owned, leased or
occupied in whole or in part by the Company or any Company Subsidiary.

 

2.13         Litigation.  There is no Proceeding pending or, to the
Knowledge of the Sellers, threatened in writing against the Company or any
Company Subsidiary.  There is no
Proceeding pending in which the Company or any of the Company Subsidiaries is
the plaintiff or complainant.  None of
the Company or Company Subsidiaries is subject to any Order (other than cash
settlements under which all financial obligations have been discharged).  To the Knowledge of the Sellers, no
investigation by a Governmental Authority exists with respect to the Company or
any Company Subsidiary.

 

2.14         Employee
Benefit Plans.

 

(a)           Section
2.14(a) of the Seller Disclosure Schedule sets forth a complete and
accurate list of each: (i) “employee pension benefit plan,” as defined in
Section 3(2) of ERISA (other than any plan exempt from ERISA by reason of
Section 4(b)(4) of ERISA); (ii) “employee welfare benefit plan,” as defined in
Section 3(1) of ERISA (other than any plan exempt from ERISA by reason of
Section 4(b)(4) of ERISA) (each, a “Welfare Plan”); and (iii)
employment, consulting, severance or other similar agreement, contract, plan or
program providing for payment in lieu of cash compensation, deferred
compensation (that is material in amount), profit-sharing bonuses, stock
options, stock appreciation rights, stock purchases or other forms of incentive
compensation or for post-retirement insurance, compensation or benefits,
whether written or oral (except that any representation and warranty under this
Section 2.14(a) as to any of the foregoing that is oral shall be solely
to the Knowledge of the Sellers), which is maintained or contributed to by the
Company or any of the Company Subsidiaries or to or in respect of which the
Company or any of the Company Subsidiaries has any outstanding liability or
obligation under, and which, in each case, covers any current or former
employee, director, officer or consultant of the Company or any

 

19

 

Company Subsidiary or their respective
dependents (each such agreement, contract, plan or program listed in Section
2.14(a) of the Seller Disclosure Schedule, an “Employee Plan”).  The Sellers have made available to the
Purchaser complete and accurate (in all material respects) copies of each
Employee Plan and, with respect to each Employee Plan, complete and accurate (in
all material respects) copies of (I) any associated trust, custodial, insurance
or service agreements, (II) any annual report, actuarial report or disclosure
materials (including specifically any summary plan descriptions) submitted to
any governmental agency or distributed to participants or beneficiaries
thereunder and (III) the most recently received IRS determination letters and
any Governmental Authority opinions, rulings, compliance statements, closing
agreements or similar materials specific to such Employee Plan.  Each Employee Plan is and has been maintained
and operated in compliance in all material respects with its terms and all
provisions of ERISA, the Code and any other Laws applicable thereto.

 

(b)           Each
Employee Plan which is intended to be “qualified” within the meaning of Section
401(a) of the Code has been determined by the IRS to be so qualified and has
received a favorable determination letter from the IRS as to such qualification
(or is otherwise able to rely on a prototype plan sponsor’s IRS opinion letter)
and the trust, if any, forming a part of such plan is exempt from U.S. federal
income tax under Section 501(a) of the Code. 
To the Knowledge of the Sellers, no event has occurred which would be
reasonably expected to cause the loss, revocation or denial of any such
favorable determination letter or which requires, or would be reasonably be
expected to require, action under the compliance resolution programs of the IRS
to preserve such qualification.  No
Employee Plan is currently subject to any Proceeding by the IRS, the Department
of Labor, the Pension Benefit Guaranty Corporation (the “PBGC”) or any
other Governmental Authority or subject to any Proceeding for which, to the
Knowledge of the Sellers, the Company or any of the Company Subsidiaries have
received notice.  Neither the Company nor
any Company Subsidiary or any ERISA Affiliate has since the formation of the
Company or any Company Subsidiary contributed, or been obligated to contribute,
to an Employee Plan which is a “multiemployer plan” (within the meaning of
Sections 3(37) and 4001(a)(3) of ERISA) or has since the formation or the
Company or the Company Subsidiaries maintained a “multiple employer plan”
(within the meaning of Section 4063 or 4064 of ERISA).  No Employee Plan that is subject to Title IV
of ERISA has been sponsored or contributed to by the Company, any Company
Subsidiary or any ERISA Affiliate since the formation of the Company and the
Company Subsidiaries.  Neither the
Company nor any Company Subsidiary has incurred any liability to the PBGC other
than for premiums not yet due and no event or condition exists which could
reasonably be expected to result in liability to the Purchaser under Title IV
of ERISA including by virtue of the Company or any Company Subsidiary being
considered a “single employer” with any other entity (within the meaning of
Section 4001 of ERISA or Section 414 of the Code).  No reportable event, or event or condition
which presents a material risk of termination by the PBGC, has occurred with
respect to any Employee Plan or any retirement plan of an ERISA Affiliate
applicable to current or former employees of the Company or any of the Company
Subsidiaries, which, in each case, is subject to Title IV of ERISA.

 

(c)           All
contributions and premiums required to be made under the terms of any Employee
Plan or by a plan maintained by an ERISA Affiliate or as required by applicable
Law have been timely made or have been properly recorded on the books and
records of the Company and the Company Subsidiaries, and no accumulated funding
deficiency (as defined in Section 302 of ERISA and Section 412 of the Code),
whether or not waived, exists with respect to any such plan.  The current value of the assets of each such
Employee Plan, as of the end of the most recently

 

20

 

ended plan year of that Employee Plan, equals
or exceeded the current value of all benefits liabilities under that Employee
Plan.  No Employee Plan nor any party in
interest with respect to such Employee Plan has engaged in a transaction that
would reasonably be expected to subject the Company directly or indirectly to
liability under Section 4975 of the Code or Section 409 or 502(i) of
ERISA.  No Employee Plan provides for
continuing welfare benefits or coverage for any participant or beneficiary or
covered dependent of a participant after the applicable participant’s
termination of employment, except to the extent required by applicable state
insurance laws and Title I, Part 6 of ERISA. 
No Welfare Plan is (i) a “multiple employer welfare arrangement”(within
the meaning of Section 3(40) of ERISA) or (ii) a “voluntary employees’
beneficiary association” (within the meaning of Section 501(c)(9) of the Code)
or other funding arrangement for the provision of welfare benefits (to the
extent any Welfare Plan is listed in Section 2.14(c) of the Seller
Disclosure Schedule with respect to this sentence, such disclosure shall
include the amount of any such funding). 
Neither the Company nor any Company Subsidiary or ERISA Affiliate is
bound by any collective bargaining agreement or similar agreement to maintain
or contribute to any Employee Plan.

 

(d)           Except
as would not, individually or in the aggregate, result in any material respect
in a violation of applicable Law, each pension, retirement, health, life,
disability, severance and other welfare plan which is maintained by the Company
or any of the Company Subsidiaries and which is exempt from ERISA by reason of
Section 4(b)(4) thereof (each, a “Foreign Plan”) is, and has been,
established, registered for tax purposes (where required) with the applicable
Governmental Authority, qualified, administered and funded (where required) in
compliance with the terms thereof and all applicable Laws.  With respect to each Foreign Plan, all
required filings and reports have been made, in all material respects, in a
timely and complete manner with all Governmental Authorities.  All obligations of the Company or any Company
Subsidiary to or under the Foreign Plans (whether pursuant to the terms thereof
or any applicable Laws) have been, to the extent required under applicable Law
or the terms of such Foreign Plans, satisfied in all material respects, and
there are no outstanding material defaults or material violations thereunder by
the Company or any Company Subsidiary. 
Full payment has been made, in all material respects, in a timely manner
of all amounts which are required to be made as contributions, payments or
premiums to or in respect of any Foreign Plan under applicable Law or under the
applicable Foreign Plan or any agreement relating to a Foreign Plan, and no
material excise taxes, penalties or punitive fees are owing or assessable under
any such Foreign Plan.  To the Knowledge
of the Sellers, no event has occurred with respect to any Foreign Plan
registered with an applicable Tax Authority which would reasonably be expected
to result in the revocation of such registration of such Foreign Plan, or which
would entitle any Governmental Authority (without the consent of the sponsor of
such Foreign Plan) to wind up or terminate any such Foreign Plan, in whole or
in part, or could otherwise reasonably be expected to have an adverse effect on
the tax status of any such Foreign Plan.  No contribution holidays have been
taken under any of the Foreign Plans, and there have been no withdrawals of
assets or transfers of assets from any Foreign Plan, except in accordance with
applicable Laws.

 

(e)           Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will reasonably be expected to: (i) entitle
any employee, consultant, director, officer, limited liability company manager
or managing director (or functional equivalents of the foregoing) of the
Company or any Company Subsidiary to severance pay, unemployment compensation
or any other payment; or (ii) accelerate the time of payment or vesting other
than as required by Law or increase the amount of compensation due any such
employee,

 

21

 

consultant, director, officer, limited
liability company manager or managing director (or functional equivalents of
the foregoing).  Within the twelve (12)
month period preceding the date hereof, neither the Company nor any Company
Subsidiary has taken any action to entitle, and the Company and the Company
Subsidiaries do not owe, any employee, director, officer, limited liability
company manager or managing director (or functional equivalents of the
foregoing) of the Company or any of the Company Subsidiaries any severance pay
or other compensation that has not been paid, will not be paid on or prior to
the Closing Date, or will not have been properly recorded on the books and
records of the Company and the Company Subsidiaries.

 

(f)            There
is no Proceeding pending, or to the Knowledge of the Sellers, threatened in
writing, other than routine claims for benefits, concerning any Employee Plan
or Foreign Plan, or to the Knowledge of Sellers, any fiduciary or service
provider thereof.

 

(g)           No
written communication from an officer of the Company or any Company Subsidiary
has been made with respect to any Employee Plan or Foreign Plan which, at the
time made, did not accurately reflect the terms and operations of such Employee
Plan or Foreign Plan in all material respects.

 

(h)           The
Company has no Contract with any employee to maintain any Welfare Plan or
Foreign Plan for any period of time.

 

(i)            Each
Employee Plan and Foreign Plan is terminable, at the sole discretion of the
sponsor thereof, subject only to such constraints imposed by applicable Laws.

 

2.15         Compliance
with Law.  Except with respect to:
(a) healthcare law matters (as to which the Sellers’ sole representations and
warranties are in Section 2.21); (b) Environmental Law matters (as to which
the Sellers’ sole representations and warranties are in Section 2.16);
(c) Tax matters (as to which the Sellers’ sole representations and warranties
are in Section 2.17) and (d) violations that would not reasonably be
expected to have, individually or in the aggregate, a material impact on the
Business: neither the Company nor any Company Subsidiary is in violation of any
Laws of Governmental Authorities having jurisdiction over the Company, the
Company Subsidiaries or any of their respective properties or assets
(collectively, “Applicable Laws”); and, to the Knowledge of the Sellers,
neither the Company nor any Company Subsidiary has received any notice from any
Governmental Authority regarding any violation by the Company or any Company
Subsidiary of any Applicable Law. 
Neither the Company nor any of the Company Subsidiaries has Contracted
with, made sales of inventory to, or otherwise had business dealings with, any
Person (i) currently identified on the “Specially Designated Nationals and
Blocked Persons List” maintained by the Office of Foreign Assets Control,
Department of the Treasury (“OFAC”), or on any other similar list
maintained by OFAC pursuant to any authorizing statute, executive order or
regulation, or (ii) with whom it is prohibited to engage in transactions by any
trade embargo, economic sanction, or other prohibition of United States law,
regulation, or executive order of the President of the United States, in each
case except for such Contracts, sales and business dealings which would not
reasonably be expected to have, individually or in the aggregate, a material
impact on the Business.

 

22

 

2.16         Environmental
Matters.

 

(a)           The
Company, each Company Subsidiary, the Owned Real Property and, to the Knowledge
of the Sellers, the Leased Real Property and any real property formerly owned,
leased or operated by the Company or any Company Subsidiary (the “Former
Real Property”) are not in violation of, and neither the Company nor any
Company Subsidiary has any liability under, any applicable Environmental Law,
except for violations and liabilities that would not be reasonably likely to
have, individually or in the aggregate, a material impact on the Business.  The
NJDEP has never, in writing, ordered or requested that the Company, any of the
Company Subsidiaries or, to the Knowledge of the Sellers, any of the Old
Aircast Sellers perform (or cause the performance of) any investigation,
remediation or other response actions (other than providing access to the Owned
Real Property at 691 Central Avenue to Philips, NJDEP and their respective
contractors and agents) relating to the matters described in Section 2.16(a)
of the Seller Disclosure Schedule.

 

(b)           The
Company and the Company Subsidiaries have obtained, and maintain in full force
and effect, all material Permits required under any applicable Environmental
Laws to operate the Business (collectively, the “Environmental Permits”),
and are not in material violation of any of the terms, conditions or requirements
of the Environmental Permits.  There are
no Proceedings pending or, to the Knowledge of the Sellers, threatened in
writing that (i) seek to revoke, cancel, modify, non-renew or suspend any of
the Environmental Permits, (ii) question or contest the validity of any
Environmental Permit or (iii) seek to impose any condition, administrative
sanction, modification or amendment with respect to any Environmental Permit.

 

(c)           Except
as would not be reasonably likely to have, individually or in the aggregate, a
material impact on the Business: (i) none of the Owned Real Property, Leased
Real Property or, to the Knowledge of the Sellers, Former Real Property has
been affected by any presence of any Hazardous Substance, Release or threat of
Release; (ii) no portion of any of the Owned Real Property or, to the Knowledge
of the Sellers, Leased Real Property or Former Real Property has been used for
(A) the generation, manufacturing, refining, handling, processing, treatment,
transportation, sale, storage or disposal of Hazardous Substances, (B) cleaning
or degreasing of any equipment or (C) services which utilize Hazardous
Substances, except as is customary for the operation of the Business and not in
violation of applicable Environmental Laws; (iii) the Owned Real Property and
the Leased Real Property do not contain and have not contained any (A)
underground tank, (B) asbestos containing building material, (C) landfills or
dumps, (D) “hazardous waste management facility” as defined pursuant to RCRA,
(E) site designated for any removal or cleanup activity pursuant to CERCLA or
any comparable foreign, state or local Law or (F) any other underground storage
receptacle for Hazardous Substances; (iv) the Owned Real Property and the
Leased Real Property (and the buildings and equipment thereon) do not contain
any Hazardous Substances, whether in barrels, tanks, equipment (movable or
fixed) or other containers, deposited or located in land, waters, sumps or in
any other part of the site, incorporated into any structure on the site or
otherwise existing thereon, other than Hazardous Substances the presence and
condition of which do not violate applicable Environmental Laws and would not
be reasonably expected to result in the imposition of liability against the
Company or the Company Subsidiaries under applicable Environmental Laws; (v) to
the Knowledge of the Sellers, neither the Company nor any of the Company
Subsidiaries has received any written notice that there has been any Releases
on, upon, from or into any real property immediately adjacent to any of the
Owned Real Property or the Leased Real Property which would reasonably be
expected to have come to be

 

23

 

located on such Owned Real Property or Leased
Real Property in concentrations or quantities that require remediation under
applicable Environmental Laws; and (vi) any “hazardous waste” (as defined under
RCRA) that has been generated by the Company or any Company Subsidiary on any
of the Owned Real Property or the Leased Real Property or, to the Knowledge of
the Sellers, the Former Real Property has been transported offsite only by
carriers having identification numbers issued by the United States
Environmental Protection Agency (the “EPA”) and has been treated or disposed
of only by treatment or disposal facilities maintaining valid permits as
required under applicable Environmental Laws or as otherwise permitted under
applicable Environmental Laws.

 

(d)           To
the Knowledge of the Sellers, neither the Company nor any Company Subsidiary
has received any notice from any Governmental Authority or any written notice
from any other Person that (i) the Company, any Company Subsidiary, the Old
Aircast Sellers or any of the respective subsidiaries of the Old Aircast
Sellers (collectively, the “Old Aircast Parties”) has been identified by
the EPA as a “potentially responsible party” under the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. §9601 et
seq.) (“CERCLA”), with
respect to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B (1986); (ii) relates to any Environmental Claim, or that identifies
a condition or occurrence which would reasonably be expected to form the basis
for an Environmental Claim, against the Company or any Company Subsidiary;
(iii) alleges any past or present violations of any Environmental Laws by the
Company or any of the Company Subsidiaries; or (iv) alleges any event,
condition, circumstance, activity, practice, incident, action or plan which
would reasonably be expected to result in a violation of applicable
Environmental Law or to give rise to any common law or statutory liability, or
otherwise form the basis for any Proceeding, against the Company or any of
Company Subsidiary, in each case (with respect to this clause (iv))
based on or resulting from the generation, use, treatment, storage, disposal,
transport or handling, or Release of any Hazardous Substance and, for purposes
of the preceding clauses (i) - (iv), if such notice is from a
Person other than a Governmental Authority only if the Environmental Claim,
violation of Environmental Law or liability threatened therein would be
reasonably likely to have, individually or in the aggregate, a material impact
on the Business.

 

(e)           All statements contained in the
Sellers’ General Information Notices, Preliminary Assessment Reports and
applications for ISRA approval for the Owned Real Property or Leased Real
Property submitted by or on behalf of the Sellers to the NJDEP for purposes of
complying with ISRA will be accurate and complete in all material respects, and
Sellers have, or prior to the Closing shall have, made available to the
Purchaser complete and accurate (in all material respects) copies of all such
documents.

 

(f)            To the Knowledge of the Sellers,
there is no material restriction imposed by a Governmental Authority on the
ownership, occupancy, use or transferability of the Owned Real Property or
Leased Real Property in connection with (i) any Environmental Law or (ii)
Release, threatened Release or disposal of Hazardous Substances, in each case
other than restrictions that are shown on, or evident on, public records.

 

(g)           There
are no Environmental Claims against any Person whose liability for
environmental remediation or any violation of Environmental Laws, the Company
or the Company Subsidiaries have retained or assumed contractually or by
operation of law (but excluding indemnification and contribution rights under
Contracts not primarily pertaining to environmental obligations).

 

24

 

(h)           The
Sellers have made available to the Purchaser complete and accurate (in all
material respects) copies of all non-attorney-client privileged environmental
audits and assessments within their possession relating to the environmental
condition or liability of the Company, the Company Subsidiaries, the Owned Real
Property and the Leased Real Property.

 

(i)            None
of the matters set forth in Section 2.16 of the Seller Disclosure
Schedule would reasonably be expected to result, individually or in the
aggregate, in a Material Adverse Effect.

 

(j)            Notwithstanding
anything to the contrary in this Agreement, the representations and warranties
set forth in this Section 2.16 are the sole representations and
warranties of the Sellers relating to any liability or obligation under
Environmental Law.

 

2.17         Taxes.

 

(a)           All
Tax Returns required to be filed with any Governmental Authority by the Company
or any of the Company Subsidiaries have been timely filed and were accurate and
complete in all material respects.  All
Taxes (except those which are de minimus) due
and payable by the Company or any of the Company Subsidiaries (whether or not
shown on any Tax Return) have been timely paid in full.  Neither the Company nor any Company
Subsidiary is currently the beneficiary of or has applied for any extension of
time within which to file any Tax Return with respect to Taxes.  There are no Liens with respect to Taxes on
any of the assets of the Company or any of the Company Subsidiaries, other than
Liens for Taxes not yet due and payable. 
No claim has ever been made in writing by any Governmental Authority in
a jurisdiction in which the Company or any Company Subsidiary does not file Tax
Returns that the Company or any Company Subsidiary is or may be subject to Tax
in that jurisdiction.

 

(b)           The
Company and the Company Subsidiaries have each withheld and paid all Taxes
required to have been withheld and paid in connection with any amounts paid or
owing to any employee, independent contractor, creditor, stockholder, member or
other third party.

 

(c)           No
dispute concerning any Tax liability of the Company or a Company Subsidiary is
pending or, to the Knowledge of the Sellers, threatened.  No Proceedings with respect to Taxes by a
Governmental Authority are pending or, to the Knowledge of the Sellers, are
being conducted with respect to the Company or any Company Subsidiary.  With respect to Taxes for which the statute
of limitations remains open, neither the Company nor any Company Subsidiary has
received from any Governmental Authority (i) any written notice indicating an
intent to open a Tax audit or other review, (ii) any written request for
information related to Tax matters, or (iii) any written notice of deficiency
or proposed adjustment for any amount of Tax proposed, asserted or assessed
against the Company or any Company Subsidiary or with respect to the assets of
the Company or any Company Subsidiary, in each case other than with respect to
an audit, review or examination that has been completed and closed and with
respect to which the Company and the Company Subsidiaries have paid all Taxes
asserted or assessed by the Governmental Authority.  Neither the Company nor any Company
Subsidiary has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or deficiency of a
Tax.

 

25

 

(d)                                 Neither
the Company nor any Company Subsidiary is party to any Tax sharing
agreement.  Neither the Company nor any
Company Subsidiary has been a member of an affiliated group filing a
consolidated Tax Return for United States federal income Tax purposes.

 

(e)                                  The
Sellers have made available to the Purchaser complete and accurate (in all
material respects) copies of all income Tax Returns of the Company and the
Company Subsidiaries, and of all examination reports and statements of
deficiencies payable by, assessed against or agreed to by any of the Company or
the Company Subsidiaries with respect to such income Tax Returns, for all Tax
periods as to which the statute of limitations remains open.

 

(f)                                    Neither
the Company nor any Company Subsidiary has ever obtained from a Governmental
Authority a ruling with respect to Taxes. 
There is no pending request by the Company or any Company Subsidiary for
a ruling by a Governmental Authority with respect to Taxes.

 

(g)                                 Neither
the Company nor any Company Subsidiary will be required to include any item of
income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result
of any (i) change in method of accounting for a taxable period ending on or
prior to the Closing Date under Section 481(c) of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law);
(ii) “closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign income Tax law);
(iii) deferred intercompany gain or any excess loss account described in
Treasury Regulations under Section 1502 of the Code (or any corresponding or
similar provision of state, local or foreign income Tax law); (iv) installment
sale made prior to the Closing Date; or (v) prepaid amount received on or prior
to the Closing Date.

 

(h)                                 Neither
the Company nor any Company Subsidiary is liable for any unpaid Taxes of the
Business for any taxable period beginning before the transfer of assets to the
Company and the Company Subsidiaries pursuant to the Aircast Asset Purchase
Agreement or the Subsidiary Asset Purchase Agreement (as defined in the Aircast
Asset Purchase Agreement) and no notice or claim as to Taxes of the Business
being payable or reimbursable by the Company or a Company Subsidiary has been
made by a seller thereunder or by any Governmental Authority.

 

(i)                                     The
aggregate purchase price paid by the Company and the Company Subsidiaries to
the Old Aircast Sellers pursuant to the Aircast Asset Purchase Agreement and
the Subsidiary Asset Purchase Agreements was allocated to the assets purchased
pursuant to such agreements by Aircast US Opco and the non-United States
Company Subsidiaries in the manner set forth on Schedule 2.17(i), and as
of the closing of such purchases, the Company’s aggregate tax basis, for
federal and applicable state income Tax purposes, and each non-United States
Company Subsidiary’s tax basis, for applicable foreign income Tax purposes, in
each category of assets set forth on Schedule 2.17(i) was the aggregate
amount allocated to the assets in each such category as set forth on Schedule
2.17(i).  Schedule 2.17(i) is
consistent with IRS Form 8594 and any similar forms under applicable state or
foreign Tax Law to be filed by the Company and the Company Subsidiaries with
the appropriate Governmental Authorities before the Closing Date.

 

(j)                                     Neither
the Company nor any Company Subsidiary has been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

 

26

 

(k)                                  Neither the Company nor any
Company Subsidiary is party to any Contract that has resulted or would result
in any “excess parachute payment” within the meaning of Section 280G(b)(2) of
the Code.

 

2.18                           Permits.  Section 2.18 of the Seller Disclosure
Schedule sets forth an accurate and complete list of all material Permits
reasonably necessary for the operation of the Business (other than any such
Permits that are Environmental Permits) (collectively, the “Company Permits”).  Each of the Company Permits is in full force
and effect in all material respects, and the Company and the Company
Subsidiaries are not in violation of any of the terms, conditions and
requirements of the Company Permits, except for such violations that would not
reasonably be expected to, individually or in the aggregate, have a material impact
on the Business.  Copies of all of the
Company Permits have been made available to the Purchaser, which copies are
complete and accurate (in all material respects).  There is no Proceeding pending or, to the
Knowledge of the Sellers, threatened that: (a) questions or contests the
validity of, or seeks the revocation, nonrenewal or suspension of, any Company
Permit or (b) seeks the imposition of any material condition, administrative
sanction, modification or amendment with respect to any Company Permit.  No consents under any Company Permit are
required to be obtained in connection with the Closing.

 

2.19                           Insurance.  Section 2.19 of the Seller Disclosure
Schedule sets forth an accurate and complete list of all insurance policies
maintained by the Company and the Company Subsidiaries (indicating in each case
which entity holds such policy). 
Complete and accurate (in all material respects) copies of such
insurance policies have been made available to the Purchaser.  Such insurance policies are currently effective,
and are of such types and amounts as are consistent with customary practices
and standards of companies engaged in businesses similar to that of the Company
and the Company Subsidiaries, and the Company and the Company Subsidiaries do
not rely on self-insurance (other than customary deductibles, co-insurance and
retentions).  All premiums with respect
to such insurance policies are currently paid in accordance with the terms of
such policies.  The Company and the
Company Subsidiaries are in compliance in all material respects with all other
terms and conditions of such insurance policies and (a) no material dispute
with any insurance carrier exists with respect to the scope of any insurance
coverage, (b) neither the Sellers, the Company or any Company Subsidiary has
received any written notice of cancellation, termination or reduction in
coverage or any other written indication that any insurance policy is no longer
in full force and effect or will not be renewed, and (c) neither the Company
nor any Company Subsidiary has received any written refusal of coverage or any
written notice that a defense will be afforded with reservation of rights
(other than a general reservation of rights with respect to a claim (that, to
the Knowledge of the Sellers, is a covered claim)).  A list of material insurance claims covering
the period since December 7, 2004 is attached to Section 2.19 of the
Seller Disclosure Schedule.

 

2.20                           Labor
Matters.

 

(a)                                  Neither
the Company nor any Company Subsidiary is a party to any collective bargaining
agreement.  There are no strikes, work
stoppages, slowdowns or lockouts pending or, to the Knowledge of the Sellers,
threatened, which involve the employees of the Company or any Company
Subsidiary.  There are no Proceedings,
grievances, claims, complaints or charges pending, or to the Knowledge of the
Sellers, threatened, before any Judicial Authority or brought by or before any
Governmental Authority against the Company or any Company Subsidiary with
respect to any employment or labor matters. 
There is no organizing activity involving the

 

27

 

employees of the Company or any Company
Subsidiary pending or, to the Knowledge of the Sellers, threatened in writing
by any labor union or group of employees. 
There are no representation proceedings pending or, to the Knowledge of
the Sellers, threatened before the National Labor Relations Board or its
equivalent in any foreign jurisdiction which relate to the employees of the
Company or any Company Subsidiary, and no labor organization or group of
employees of the Company or any Company Subsidiary has made a pending demand
for recognition by the Company or any Company Subsidiary.

 

(b)                                 Neither
the Company nor any Company Subsidiary has implemented any layoff of employees
that would implicate the WARN Act or any similar foreign, state or local Law
(considered independently from any layoffs that may occur after the Closing).  Section 2.20 of the Seller Disclosure
Schedule sets forth a complete and accurate (in all material respects) list of
the employees of the Company and the Company Subsidiaries at February 16, 2006,
including the current job titles and salary or wage rates of each of such
employees as of the date of this Agreement, showing separately for each such
person who received an annual salary in excess of $25,000 the amounts paid as
salary and bonus payments for the year ended December 31, 2005.

 

2.21                           Healthcare
Matters.

 

(a)                                  The
operations of the Company and the Company Subsidiaries are in compliance with
all applicable Laws (including, for the avoidance of doubt, good manufacturing
practices and good clinical practices) of the United States Food and Drug
Administration (the “FDA”) and comparable Laws of other Governmental
Authorities having jurisdiction over the Products or the operations of the
Company and the Company Subsidiaries, except for such failures to comply that
would not reasonably be expected to, individually or in the aggregate, have a
material impact on the Business.  There
is no pending or, to the Knowledge of the Sellers, threatened, Enforcement
Action concerning the Products or the operations of the Company or any Company
Subsidiary by the FDA or any other Governmental Authority with jurisdiction
over the Products under any such Law, including any comparable state or foreign
laws.  There are no, and there have been
in the last four (4) years no, recalls involving the Products.  To the Knowledge of the Sellers, there are no
pending or outstanding (i) warning letters or other regulatory letters or
sanctions, (ii) inspectional observations or establishment inspection reports,
(iii) field notifications or alerts, (iv) import alerts, holds or detentions or
(v) any other documents received by the Company or Company Subsidiaries from the
FDA or any other Governmental Authority relating to the Products or arising out
of the conduct of the Company or Company Subsidiaries that assert ongoing
material lack of compliance with any such Laws by the Company or Company
Subsidiaries.

 

(b)                                 Neither
the Company nor any of the Company Subsidiaries have received any notice that
any Governmental Authority (including the FDA) has commenced, or to the
Knowledge of the Sellers, threatened to initiate any action to withdraw its
approval for, or request a recall of any Product, or commenced or threatened in
writing to initiate any action to enjoin the production of the Products at any
facility.  To the Knowledge of the
Sellers, there are no facts which are reasonably likely to cause (i) market
withdrawal, recall or suspension of any of the Products under Applicable Law as
in effect on the date of this Agreement, (ii) a change in the marketing
classification of any of the Products under Applicable Law as in effect on the
date of this Agreement, (iii) a material change in the labeling of any of the
Products required by applicable Law as in effect on the date of this Agreement
or (iv) a termination or suspension of marketing of any of

 

28

 

the Products required by applicable Law as in
effect on the date of this Agreement.  To the Knowledge of the Sellers,
neither the Company nor any Company Subsidiary has received any notice from a
Governmental Authority that the Products cannot be marketed pursuant to their
respective marketing clearances or approvals or otherwise in substantially the
manner currently marketed by the Company or Company Subsidiaries and with the
same marketing claims and materials currently used by the Company or Company
Subsidiaries.  The Company and the
Company Subsidiaries have taken commercially reasonable steps to ensure that
each Product may continue to be marketed under the marketing clearance or
approval relating to such Product.

 

(c)                                  The
Company and the Company Subsidiaries have made available to the Purchaser
complete and accurate (in all material respects) copies of all: (i) adverse
event reports, (ii) written customer complaints and (iii) written medical
incident reports, in each case solely since January 1, 2003 and to the extent
relating to the Products.

 

(d)                                 All
material reports, documents, licenses, registrations, claims and notices
relating to the Products required to be filed, maintained or furnished to any
applicable Governmental Authority by the Company and the Company Subsidiaries
have been so filed, maintained or furnished, and all such reports, documents,
licenses, registrations, claims and notices were complete and correct in all
material respects on the date filed (or were corrected in or supplemented by a
subsequent filing).

 

(e)                                  Neither
the Company nor any Company Subsidiary is in violation of and, to the Knowledge
of the Sellers, neither the Company nor any Company Subsidiary is the subject
of, any pending investigation by a Governmental Authority regarding activities
prohibited under, the U.S. Anti-Kickback Act (42 U.S.C. §1320a-7b(b), et seq.),
the U.S. Stark law (42 U.S.C. §1395nn), the U.S. False Claims Act (31 U.S.C.
3729, et seq.) and any related Laws governing participation in United States
health care programs, or any comparable state or foreign Laws.  There is no Proceeding pending or, to the
Knowledge of the Sellers, threatened against the Company or any of the Company
Subsidiaries which would reasonably be expected to result in the exclusion of
the Company or any of the Company Subsidiaries from any third party payment
program in which they participate.

 

(f)                                    In Germany, the Company or a
Company Subsidiary has applied to the national insurance program (Medizinische Dienst Krankenkassen) for product specific codes for each Product, to the
extent such code is required in order to participate in such national insurance
program.

 

(g)                                 Notwithstanding
anything to the contrary in this Agreement, the representations and warranties
set forth in this Section 2.21 are the sole representations and
warranties of the Sellers relating to the matters referred to in this Section 2.21.

 

2.22                           Powers
of Attorney.  Section 2.22 of
the Seller Disclosure Schedule sets forth a true and complete list of the names
of all Persons holding general or special powers of attorney from the Company
or any of the Company Subsidiaries and a summary of the terms thereof.

 

2.23                           Payments.  To the Knowledge of the Sellers, neither the
Company nor any Company Subsidiary, nor any director, officer, limited
liability company manager, managing director (or functional equivalents of the
foregoing), equityholder, employee, agent or other Person associated

 

29

 

with or acting on behalf of the Company or any of the Company Subsidiaries,
has used any funds of the Company or any Company Subsidiary for any unlawful
contribution, gift, entertainment or expense relating to political activity, or
made any direct or indirect unlawful payment to any foreign or domestic
official or employee of a Governmental Authority from funds of the Company or
any Company Subsidiary, or made any unlawful rebate or kickback or other
unlawful payment.

 

2.24                           Controls
and Procedures.  The Financial
Statement Parties maintain accurate and complete books and records reflecting
their assets and liabilities and maintain proper and adequate internal
accounting controls sufficient to provide reasonable assurance that: (i)
transactions are executed only in accordance with management’s authorization;
(ii) transactions are recorded as necessary to permit preparation of the
financial statements of the Financial Statement Parties in accordance with GAAP
(or, in the case of non-U.S. Company Subsidiaries, the applicable accounting
rules in their respective jurisdiction of operation) and to maintain
accountability for the assets and liabilities of the Financial Statement
Parties; (iii) receipts and expenditures of the Financial Statement Parties are
executed only in accordance with management’s authorization; (iv) unauthorized
acquisition, disposition or use of assets is prevented or timely detected; and
(v) accounts, notes and other receivables are recorded accurately, and proper
and adequate procedures are implemented to effect the collection thereof on a
current and timely basis.  To the
Knowledge of the Sellers, such internal accounting controls are appropriate for
a private company with operations of the size and international scope of the
operations of the Financial Statement Parties. 
There are no material weaknesses in the design or operation of such
internal accounting controls that could adversely affect the Financial
Statement Parties’ ability to initiate, record, process and report financial
data.

 

2.25                           Affiliate
Transactions.  Neither the Company
nor any Company Subsidiary is party to any direct or indirect Contract,
business arrangement or relationship with any Tailwind Stockholder, any
Affiliate of any Tailwind Stockholder (in each case, excluding the Company and
the Company Subsidiaries), director, officer, management-level employee,
limited liability company manager or managing director (or functional
equivalents of the foregoing) of the Company or any Company Subsidiary, or any
of the immediate family members of any of the foregoing.  Except for business relationships that would
be excluded from disclosure as a related party transaction under Instruction 7
to Item 404(a) of Regulation S-K promulgated under the Securities Act, neither
the Company nor any Company Subsidiary is party to any direct or indirect business
arrangement or relationship with any DLJ Stockholder, any Affiliate of any DLJ
Stockholder, the Credit Opportunities Stockholder, any Affiliate of the Credit
Opportunities Stockholder, or any member of the immediate family of any of the
foregoing (in each case, excluding the Company and the Company Subsidiaries)
that are on terms less favorable to the Company or the applicable Company
Subsidiary than would be available to the Company or a Company Subsidiary from
an unaffiliated third party on an arms’ length basis.  Except for payroll advances, tuition advances
and advances of reimbursable expenses, there are no outstanding loans made by
the Company or any of the Company Subsidiaries to any director, officer, limited
liability company manager, management-level employee or managing director (or
functional equivalents of the foregoing) of the Company or any of the Company
Subsidiaries.

 

2.26                           Books
and Records.  The minute books of the
Company and each Company Subsidiary contain complete and accurate records of
all meetings and other corporate or entity (as applicable) actions of its board
of directors (or equivalent) and any committees thereof and of its
stockholders, members or other equityholders. 
The stock (or equivalent) ledger of the Company

 

30

 

and each of the Company Subsidiaries is complete and reflects all
issuances, transfers, repurchases and cancellations of shares of capital stock
(or equivalent) of the Company or such Company Subsidiary.

 

2.27                           Bank
Accounts.  Section 2.27 of the
Seller Disclosure Schedule sets forth the names and locations of all banks,
trust companies, savings and loan associations and other financial institutions
at which the Company or any Company Subsidiary maintains any deposit or
checking account, the account numbers of all such accounts and the names of all
persons authorized to draw thereon or make withdrawals therefrom.

 

2.28                           Accounts
Receivable; Inventory.

 

(a)                                  Since
September 30, 2005, the Company and the Company Subsidiaries have not
materially modified their respective accounts receivable collection policies or
practices and have not offered discounts or credits inconsistent with the past
practices of the Company.  The accounts receivable of the Company and the
Company Subsidiaries at September 30, 2005, as of the last calendar month end
preceding the date hereof, or as of the last calendar month end preceding the
Closing Date, as applicable, were, are or will be, as the case may be,
collectible in the aggregate in the ordinary course of business, subject to
reserves for uncollectible accounts on the Audited Financial Statements, as
adjusted through the last calendar month end preceding the date hereof or as
adjusted through the last calendar month end preceding the Closing Date, as the
case may be, in the ordinary course of business consistent with past
practices.  Each such account receivable
represents bona fide account receivable that arose in the ordinary course of
business for goods delivered or services rendered or to be rendered and are
not, except as otherwise reserved for, subject to any set-offs or
counterclaims.

 

(b)                                 The
inventories of the Company and the Company Subsidiaries are of a quality and
quantity usable and, with respect to finished goods, saleable in the ordinary
course of business consistent with past practice, subject to reserves for
obsolete and slow moving items established in accordance with the Company’s
practices.  The aggregate value of the inventory as reflected in the
balance sheet included in the Audited Financial Statements, as adjusted through
the last calendar month end preceding the date hereof or the last calendar
month end preceding the Closing Date, as applicable, had been written down on
the books of account of the Company to realizable market value or adequate
reserves were provided in accordance with GAAP.

 

2.29                           Brokers.  Neither the Company nor any of the Company
Subsidiaries is obligated to pay any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement.

 

2.30                           Disclosure.  To the Knowledge of the Sellers, none of the
representations or warranties made by the Sellers in this Article II
contains or will contain at the Closing any untrue statement of material fact,
or omits or will omit at the Closing to state any material fact necessary in
order to make the statements contained herein, in light of the circumstances
under which they were made, not misleading.

 

2.31                           Reliance.  The representations and warranties in this Article II
are made by the Sellers with the knowledge and expectation that the Purchaser
is placing complete reliance thereon in entering into, and performing its
obligations under, this Agreement, and the same shall not be

 

31

 

affected in any respect whatsoever by any investigation conducted by or
on behalf of the Purchaser, whether in contemplation of or pursuant to this
Agreement or otherwise.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF

EACH SELLER

 

Each Seller hereby represents and warrants to
the Purchaser, severally and not jointly, as follows:

 

3.1                                 Existence;
Good Standing; Authority; Enforceability.

 

(a)                                  The
Seller is a limited partnership or limited liability company (as applicable)
duly organized, validly existing and in good standing (to the extent such
concept is applicable to such type of entity) under the laws of the
jurisdiction of its formation and has all required limited partnership or
limited liability company power and authority, as applicable, to own or lease
its properties and assets and to conduct its business as presently
conducted.  The Seller is duly licensed
or qualified to do business as a foreign entity and is in good standing under
the laws of each other jurisdiction in which such licensing or qualification is
necessary, except where the failure to be so licensed or qualified or to be in
good standing would not reasonably be expected to have a material adverse
effect on the ability of the Seller to perform its obligations under this
Agreement and the other Seller Documents to which it will be a party or to
consummate the transactions contemplated by this Agreement and such Seller
Documents.

 

(b)                                 The
Seller has all required power and authority to execute and deliver this
Agreement and the other Seller Documents to which it will be a party, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. 
The execution, delivery and performance by the Seller of this Agreement
and the other Seller Documents to which it will be a party, and the
consummation of the transactions contemplated hereby and thereby, have been
duly authorized and approved by all required action on the part of the Seller.

 

(c)                                  This
Agreement has been duly and validly executed and delivered by the Seller and
each Seller Document to be executed and delivered by such Seller at the Closing
will be, at and as of the Closing, duly and validly executed and delivered by
the Seller and (assuming due authorization, execution and delivery by the
Purchaser and each other party thereto) this Agreement constitutes, and each
such Seller Document will constitute, a legal, valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms, except
for the Equitable Exceptions.

 

3.2                                 No
Conflicts; Consents.

 

(a)                                  Assuming
the Required Consents are obtained on or prior to the Closing, the execution
and delivery of this Agreement by the Seller does not, the execution and
delivery of the Seller Documents to be executed and delivered by the Seller at
the Closing will not, and the consummation of the transactions contemplated by
this Agreement and the other Seller Documents to which the Seller will be a
party will not: (i) violate its Organizational Documents; (ii) constitute
a material breach of or result in a material default under (with or without the
giving of notice or the lapse of time), or result in the other party having a
right of termination, cancellation or acceleration

 

32

 

under, any Contract to which the Seller is a
party or by which it or its properties or assets are bound, (iii) result in the
creation or imposition of any Liens; or (iv) violate any Law applicable to the
Seller.

 

(b)                                 Except
as required under the HSR Act or foreign antitrust or competition Laws or as
set forth in Section 2.2(b) of the Seller Disclosure Schedule, no notice
to or consent of or with any Governmental Authority, Judicial Authority or
third Person is required to be obtained by the Seller in connection with the
Seller’s execution and delivery of this Agreement and the other Seller
Documents to which it will be a party or the performance of its obligations
hereunder or thereunder.

 

3.3                                 Litigation.  There is no Proceeding pending or, to such
Individual Seller’s Knowledge, threatened against the Seller, that (i)
questions the validity of this Agreement or any Seller Document to which it
will be a party or any action taken or to be taken by the Seller in connection
herewith or therewith, (ii) seeks to enjoin the consummation of the
transactions contemplated by this Agreement and the Seller Documents; or (iii)
which would reasonably be expected to have, individually or together with any
other such Proceedings, a material adverse effect on the ability of the Seller
to consummate the transactions contemplated by this Agreement and the other
Seller Documents to which it will be a party.

 

3.4                                 Title
to Shares.

 

(a)                                  The
Seller is the beneficial and lawful record owner of its Shares and has good,
valid and marketable title to its Shares, free and clear of any and all
Liens.  On the date of this Agreement:
(i) the Shares are owned of record as set forth on Schedule A
hereto; and (ii) the Shares collectively constitute, and, except as issued
under the terms of Section 5.6 and as terminated pursuant to Section
1.2(b)(v), on the Closing Date the Shares will constitute, all of the
issued and outstanding shares of capital stock of the Company.  Except for Contracts among the Sellers that
will be terminated at or prior to the Closing and except for the Seller’s
Organizational Documents, there are no Contracts between the Seller and any
other Person with respect to the acquisition, disposition or voting of, or any
other matters pertaining to, any of its Shares or any other equity interests of
the Company or any Company Subsidiary. 
The Seller has the power and authority to sell, transfer, assign,
exchange and deliver its Shares, as provided in this Agreement, and such sale,
transfer, assignment, exchange and delivery will convey to the Purchaser good
and marketable title to such Shares, free and clear of any and all Liens and
restrictions other than restrictions of general applicability imposed by
federal or state securities Laws and those imposed on the Shares by the
Purchaser.

 

(b)                                 To
the Individual Seller’s Knowledge, on the date of this Agreement there are no,
and, except as issued under the terms of Section 5.6 and as terminated
pursuant to Section 1.2(b)(v), as of the Closing Date there will be no,
outstanding subscriptions, options, warrants or other agreements or commitments
or other rights of any kind to acquire (including securities exercisable or
exchangeable for or convertible into), or obligating the Company to issue, any
shares of capital stock of the Company, or giving any Person the right to
receive any benefits or rights similar to any rights enjoyed by or accruing to
the benefit of the holders of any shares of the capital stock of the Company
(solely in their capacity as a holder).

 

33

 

3.5                                 Brokers.  The Seller is not obligated to pay any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement.

 

3.6                                 Reliance.  The representations and warranties in this Article III
are made by each of the Sellers with the knowledge and expectation that the
Purchaser is placing complete reliance thereon in entering into, and performing
its obligations under, this Agreement, and the same shall not be affected in
any respect whatsoever by any investigation conducted by or on behalf of the
Purchaser, whether in contemplation of or pursuant to this Agreement or
otherwise.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

The Purchaser represents and warrants to the Sellers as follows:

 

4.1                                 Existence;
Good Standing; Authority; Enforceability.

 

(a)                                  The
Purchaser is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware and has all required limited
liability company power and authority to own and lease its properties and
assets and to conduct its business as now conducted.  The Purchaser is duly licensed or qualified
to do business as a foreign entity and is in good standing under the laws of
each other jurisdiction in which such licensing or qualification is necessary,
except where the failure to be so licensed or qualified or to be in good
standing would not reasonably be expected to have a material adverse effect on
the ability of the Purchaser to perform its obligations under this Agreement
and any other documents required to be executed and delivered by the Purchaser
under this Agreement (collectively, the “Purchaser Documents”) and to
consummate the transactions contemplated hereby and thereby.

 

(b)                                 The
Purchaser has all required limited liability company power and authority to
execute and deliver this Agreement and the Purchaser Documents and to
consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance of
this Agreement and the Purchaser Documents, and the consummation of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all required action on the part of the Purchaser.

 

(c)                                  This
Agreement has been duly and validly executed and delivered by the Purchaser and
each Purchaser Document to be executed and delivered at the Closing will be, at
and as of the Closing, duly and validly and executed and delivered by the
Purchaser and (assuming due authorization, execution and delivery by the
Sellers and each other party thereto) this Agreement constitutes, and each
Purchaser Document will constitute, a legal, valid and binding obligation of
the Purchaser, enforceable against the Purchaser in accordance with its terms,
except for the Equitable Exceptions.

 

4.2                                 No
Conflicts; Consents.

 

(a)                                  Assuming
the Required Consents are obtained on or prior to the Closing, the execution
and delivery of this Agreement by the Purchaser does not, the execution and
delivery of the Purchaser Documents to be executed and delivered by the
Purchaser at the Closing will not, and the consummation of the transactions
contemplated by this Agreement and the other Purchaser Documents to which the
Purchaser will be a party will not: (i) violate its Organizational Documents;

 

34

 

(ii) except as set forth in Section
4.2 of the Purchaser Disclosure Schedule, constitute a material breach of
or result in a material default under (with or without the giving of notice or
the lapse of time), or result in the other party having a right of termination,
cancellation or acceleration under, any Contract to which the Purchaser is a
party or by which it or its properties or assets are bound, (iii) result in the
creation or imposition of any Liens or (iv) violate any Law applicable to the
Purchaser.

 

(b)                                 Except
as required under the HSR Act or foreign antitrust or competition Laws or as
set forth in Section 4.2(b) of the Purchaser Disclosure Schedule, no
notice to or consent of or with any Governmental Authority, Judicial Authority
or third Person is required to be obtained by the Purchaser in connection with
the Purchaser’s execution and delivery of this Agreement and the Purchaser
Documents or the performance of its obligations hereunder or thereunder.

 

4.3                                 Litigation.  There is no Proceeding pending or, to the
Knowledge of the Purchaser, threatened against the Purchaser, that (i)
questions the validity of this Agreement or any Purchaser Document to which it
will be a party or any action taken or to be taken by the Purchaser in
connection herewith or therewith; (ii) seeks to enjoin the consummation of the
transactions contemplated by this Agreement and the Purchaser Documents; or
(iii) which would reasonably be expected to have, individually or together with
any other such Proceedings, a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by this Agreement and the
other Purchaser Documents.

 

4.4                                 Financial
Ability to Perform.  At the Closing,
the Purchaser will have cash, available lines of credit or other resources of
immediately available funds to be able to consummate the transactions
contemplated by this Agreement and the Purchaser Documents, upon the terms
contemplated by this Agreement and the Purchaser Documents, and to pay its
transaction fees and expenses.

 

4.5                                 Investment
Representations.  The Purchaser is purchasing the Shares for investment purposes and not
with a present view to, or for sale in connection with, any distribution
thereof, within the meaning of the Securities Act.  The Purchaser acknowledges that the Shares
have not been registered under the Securities Act or qualified under applicable
state securities laws and understands the restrictions on resale of the Shares
imposed by the Securities Act and such applicable state securities laws.  The Purchaser also acknowledges that the
Sellers have no obligation to register the Shares, that there is presently no
public market for the Shares, that there may never be a public market for the
Shares, and that, even if such a market develops, the Purchaser may never be
able to sell or dispose of such Shares and, accordingly, the Purchaser must
bear the economic risk of this investment potentially indefinitely.  The Purchaser is an “accredited investor,” as
that term is defined in Rule 501 under Regulation D promulgated under the
Securities Act.

 

4.6                                 Projections.  The Purchaser agrees and acknowledges that
none of the Sellers, the Company or any Company Subsidiary have made or are
making any representations and warranties with respect to: (a) any projections,
estimates or budgets delivered or made available to the Purchaser of future
revenues, future results of operations (or any component thereof), future cash
flows or future financial condition (or any component thereof) of the Company
and the Company Subsidiaries; (b) any due diligence reports supplied to the
Purchaser in connection with the transactions contemplated by this Agreement;
or (c) any other information or documents made available to the Purchaser or
its counsel, accountants or other advisors and representatives with

 

35

 

respect to the Company and the Company Subsidiaries or their respective
businesses or operations, in each case except as expressly set forth in Article II.

 

4.7                                 Brokers.  The Purchaser is not obligated to pay any
brokerage, finder’s or other fee or commission in connection with the
transactions contemplated by this Agreement. 
The Purchaser has not entered into any Contract obligating the Company
or any Company Subsidiary to pay any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement.

 

4.8                                 Reliance.  The representations and warranties in this Article IV
are made by the Purchaser with the knowledge and expectation that the Sellers
are placing complete reliance thereon in entering into, and performing their
obligations under, this Agreement, and the same shall not be affected in any
respect whatsoever by any investigation conducted by or on behalf of the
Sellers, whether in contemplation of or pursuant to this Agreement or
otherwise.

 

ARTICLE V

COVENANTS

 

5.1                                 Conduct
of the Sellers and the Purchaser.

 

(a)                                  Except
as set forth in Section 5.1 of the Seller Disclosure Schedule or as
otherwise consented to by the Purchaser in writing (such consent not to be
unreasonably withheld, conditioned or delayed), from the date of this Agreement
until the Closing (the “Pre-Closing Period”), each of the Sellers shall,
subject to the terms and conditions of this Agreement, (i) not permit any Lien
to encumber such Seller’s Shares, (ii) not waive or relinquish any material
right or claim arising out of, or related to, such Seller’s Shares that would
adversely impact the Purchaser and (iii) not take any action or fail to take
any action that would result in any of the representations and warranties of
such Seller set forth in Article III becoming not true and correct
in all material respects (in the case of representations and warranties not
qualified as to materiality or Material Adverse Effect) or true and correct in
all respects (in the case of representations and warranties not qualified as to
materiality or Material Adverse Effect).

 

(b)                                 Except
as set forth in Section 5.1 of the Purchaser Disclosure Schedule or
as otherwise consented to by the Stockholder Representative in writing (such
consent not to be unreasonably withheld, conditioned or delayed), during
the Pre-Closing Period the Purchaser shall, subject to the terms and
conditions of this Agreement, not take any action or fail to take any action
that would result in any of the representations and warranties of the Purchaser
set forth in Article IV becoming not true and correct in all
material respects (in the case of representations and warranties not qualified
as to materiality) or true and correct in all respects (in the case of
representations and warranties not qualified as to materiality).

 

5.2                                 Conduct
of the Company and the Company Subsidiaries.  Except: (i) as set forth in Section 5.2
of the Seller Disclosure Schedule; (ii) to the extent required under this
Agreement; (iii) to the extent required by applicable Law; or (iv) as
otherwise consented to by the Purchaser in writing (such consent to not be
unreasonably withheld, conditioned or delayed), during the Pre-Closing Period
the Sellers shall cause the Company and the Company Subsidiaries to (1) conduct
the Business in the ordinary course (except that any action contemplated by the
following clauses (b)(II), (c), (d)(II) and (s) may
be taken or, if applicable, refrained from being taken, even if

 

36

 

outside of the conduct of the Business in the ordinary course), (2) use
commercially reasonable efforts to preserve substantially intact their present
business organization and their relationships with customers, suppliers and
others having business dealings with them, and to keep available the services
of the Company’s present officers and significant employees, and (3):

 

(a)                                  not
amend or terminate any Significant Contract, except in the ordinary course of
business;

 

(b)                                 not
sell, assign, transfer, convey, lease or otherwise dispose of any of its
assets, except for (I) sales of inventory in the ordinary course of business
and (II) the sale, assignment, transfer, conveyance, lease or other
disposal of assets having a value, individually and in the aggregate, not in
excess of $100,000;

 

(c)                                  not
declare, set aside or pay any dividend or distribution in respect of any capital
of the Company (except dividends and distributions paid in cash prior to the
Closing from funds legally available for distribution), or redeem, purchase or
otherwise acquire any securities of the Company (except for redemptions,
purchases and acquisitions for cash consummated prior to the Closing and
disclosed to the Purchaser in writing prior to the consummation thereof);

 

(d)                                 not
incur any Indebtedness other than (I) capital lease obligations, synthetic
lease obligations, sale leaseback obligations and other similar indebtedness
obligations incurred in the ordinary course of business which, individually or
in the aggregate, do not exceed $250,000 and (II) Funded Debt under the
Credit Agreements;

 

(e)                                  not
permit any Lien to encumber any of its assets, or otherwise subject any such
assets to any Lien, other than (i) Permitted Liens or (ii) any Lien to be
removed at or prior to Closing;

 

(f)                                    not
waive or relinquish any material right or claim, other than in the ordinary
course of business;

 

(g)                                 maintain
all of its plant, machinery, equipment and leasehold improvements in good
operating condition and repair in all material respects, ordinary wear and tear
excepted;

 

(h)                                 not
amend any of its Organizational Documents;

 

(i)                                     pay
accounts payable and other obligations and liabilities in the ordinary course
of business consistent with the practices of the Company and the Company
Subsidiaries since inception;

 

(j)                                     maintain
in all material respects inventory levels appropriate for the Business.

 

(k)                                  not
modify the terms of, discount, setoff or accelerate the collection of any
accounts receivable, except in a manner consistent with the practices of the
Company and the Company Subsidiaries since inception;

 

(l)                                     not
take any action or fail to take any action that would result in any of the
representations and warranties of the Sellers set forth in Article II
becoming not true and correct in all material respects (in the case of
representations and warranties not qualified as to materiality or

 

37

 

Material Adverse Effect) or true and correct
in all respects (in the case of representations and warranties qualified as to
materiality or Material Adverse Effect);

 

(m)                               not
issue, grant, sell or encumber any equity interest, or any right relating
thereto, in the Company or any Company Subsidiary which would result in a
breach of Section 5.6 or make any other changes in the equity
capital structure of the Company or any Company Subsidiary;

 

(n)                                 not
acquire or agree to acquire by merging or consolidating with, or by purchasing
any material portion of the capital stock or assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof;

 

(o)                                 not
make or commit to make any capital expenditures except in the ordinary course
of business in amounts not to exceed $4,000,000 in the aggregate, or fail to
make or materially delay any necessary capital expenditures;

 

(p)                                 not
hire any new management-level employees (other than to fill vacancies created
by the termination of employment of current management-level employees), enter
into any employment Contract or collective bargaining agreement with any
management-level employees, modify the terms of any existing such Contract or
agreement or enter into any employment Contract with any current employee who
does not have an employment Contract as of the date of this Agreement;

 

(q)                                 except
in the ordinary course of business consistent with past practice or as required
by applicable Law or any Employee Plan, not grant any increase in the base
compensation of any employee;

 

(r)                                    except
as required by applicable Law, not adopt, amend, modify or terminate any bonus,
profit-sharing, incentive, severance or other Welfare Plan, deferred
compensation, post-retirement benefits or pension plan or the Aircast LLC
401(k) Plan other than amendments made in connection with the extension of, or
the adoption of, any Welfare Plans upon the expiration thereof in the ordinary
course of business which Welfare Plan, as so adopted or amended, provides
benefits comparable to those provided on September 30, 2005 under such expired
Welfare Plan;

 

(s)                                  not
enter into any new Contract, business arrangement or relationship that would be
required to be set forth in Section 2.25 of the Seller Disclosure
Schedule (unless the same will be terminated on or before the Closing without
liability, after the Closing, to the Company or any of the Company
Subsidiaries);

 

(t)                                    except
for a replacement lease or lease renewal for the premises located at 705
Central Avenue, New Providence, New Jersey, not enter into
any material lease, sublease, license or easement of real property or
terminate, renew, extend or amend any lease or sublease for Leased Real
Property;

 

(u)                                 not
make any change in any method of accounting or accounting principles, practices
or policies, other than those required by GAAP (or, in the case of non-U.S.
Company Subsidiaries, the applicable accounting rules in their respective
jurisdictions of operation);

 

38

 

(v)                                 not
cancel any debts owed to or claims held by it, other than in the ordinary
course of business;

 

(w)                               prepare
and file on or before the due date therefor (after giving effect to any
applicable filing extensions) all Tax Returns required to be filed by the
Company and the Company Subsidiaries on or before the Closing Date, and pay all
Taxes due on such Tax Return or which are otherwise required to be paid by the
Company and the Company Subsidiaries during the Pre-Closing Period;

 

(x)                                   not
prepare or file, or amend, any Tax Return relating to Taxes, other than income
Taxes, for the Company and the Company Subsidiaries inconsistent in any
material respect with past practice or, on any such Tax Return, take any
position that is inconsistent in any material respect with positions taken on
prior Tax Returns unless required by Law, and not consent to the waiver or
extension of any statute of limitation period with respect to a claim for Taxes
(other than income Taxes) or settle any audit or other Proceeding relating to
Taxes (other than income Taxes) payable by the Company and the Company
Subsidiaries;

 

(y)                                 not
breach any provision of the Aircast Asset Purchase Agreement (including the
obligation under Section 1.8 of the Aircast Asset Purchase Agreement to pay
Earnout Obligations when due) or any material provision of any other
Significant Contract; or

 

(z)                                   not
enter into any Contract or otherwise become obligated to do any action
prohibited under the foregoing subsections (a) – (y).

 

5.3                                 Control
of Operations.  Nothing contained in
this Article V shall give the Purchaser, directly or indirectly,
the right to control or direct the operations of the Company and the Company
Subsidiaries prior to the Closing.  Prior
to the Closing, the Company and the Company Subsidiaries shall exercise,
consistent with the terms and conditions of this Agreement, complete control
and supervision over their respective operations.

 

5.4                                 Regulatory
and Other Approvals; 280G Consent.

 

(a)                                  During
the Pre-Closing Period, the Purchaser shall, each Seller shall, and the Sellers
shall cause the Company and the Company Subsidiaries to, in good faith and in a
timely manner, use their respective commercially reasonable efforts to take or
cause to be taken all actions, do or cause to be done all things necessary,
proper or advisable, and execute and deliver such documents, as may be required
to carry out the provisions of this Agreement, consummate the Closing hereunder
and make effective the transactions contemplated by this Agreement, making all
filings with any Governmental Authority (including the HSR Act filings
discussed in Section 5.4(c) and filings under any applicable foreign
antitrust or competition Laws) and obtaining all necessary waivers, consents
and approvals from, and taking all actions reasonably necessary to avoid any
action or proceeding by, any Governmental Authority.  To the extent Purchaser elects to initiate or
defend any action or proceeding that seeks to modify, prohibit or enjoin the
purchase of the Shares or the terms thereof, Sellers shall, and shall cause the
Company to, take all actions reasonably requested by the Purchaser to contest
such action or proceeding.

 

(b)                                 During
the Pre-Closing Period, the Purchaser shall, each Seller shall, and the Sellers
shall cause the Company and the Company Subsidiaries to, use their respective
commercially reasonable efforts to cause the Closing conditions contained in Article VI
applicable

 

39

 

to such party to be satisfied, and refrain
from taking any actions that would have the effect of delaying, impeding or
preventing satisfaction of any of the Closing conditions contained in Article VI
applicable to such party.

 

(c)                                  Each
of the Purchaser and the Sellers shall file or cause to be filed as promptly as
reasonably practicable with the United States Federal Trade Commission (the “FTC”)
and the United States Department of Justice (the “DOJ”), in each case
pursuant to the HSR Act: (i) the notification and report form, if any,
required for the transactions contemplated hereby, which form shall be filed
not later than five (5) Business Days following the date of this Agreement; and
(ii) any supplemental information requested in connection therewith, which
information shall be filed as soon as reasonably practicable after the request
therefor.  Any such notification and
report form and supplemental information shall be in substantial compliance
with the requirements of the HSR Act.

 

(d)                                 The
Purchaser agrees that, during the Pre-Closing Period, the Purchaser will not,
and it will cause its Affiliates and Subsidiaries to not, enter into any letter
of intent or agreement to acquire, directly or indirectly: (i) any assets
constituting a line of business; (ii) a controlling equity interest; or (iii)
any assets or equity interests, in each case (x) related to a business that
would reasonably be expected to generate annual revenues (or increase the
Purchaser’s annual consolidated revenues) from products competitive with the
Products by an amount equal to or in excess of $10 million or (y) that would
require a filing under the HSR Act or any foreign antitrust or competition Laws
or affect any then existing filing made by the parties hereunder under the HSR Act
or any foreign antitrust or competition Laws or any regulatory approval
obtained in connection therewith.

 

(e)                                  Subject
to applicable Laws relating to the exchange of information, the Sellers, on the
one hand, and the Purchaser, on the other hand, shall each furnish to the other
such necessary information and reasonable assistance as the other may
reasonably request in connection with its preparation of the notices and
requests referred to in this Section 5.4 and any filing or approval
process that is necessary under the HSR Act, foreign antitrust and competition
Law and any other applicable Law.  Except
to the extent limited by applicable Law, the Sellers, on the one hand, and the
Purchaser, on the other hand, shall (i) each keep each other apprised of the
status of any communications with, and any inquiries or requests for additional
information from, any Governmental Authority in connection with this process,
(ii) provide each other the right to review in advance, and to the extent
applicable will consult with each other on, all the information that appears in
any filing made with, or written materials submitted to, any third party or
Governmental Authority in connection with the Stock Purchase and the other
transactions contemplated by this Agreement (in exercising the foregoing right,
each of the parties shall act reasonably and as promptly as practicable) and
(iii) comply as promptly as reasonably practicable and in any event in
accordance with applicable Law with any such inquiry or request.

 

(f)                                    At
least ten (10) Business Days prior to the Closing, the Sellers shall cause the
Company to submit to all Persons entitled to vote (within the meaning of the
Treasury Regulations under Section 280G of the Code), including to the Tailwind
Stockholders, the DLJ Stockholders and the Credit Opportunities Stockholder,
the material facts concerning all potential payments contemplated under the
Retention Program under Section 5.9(b) and the Sale Bonus Program under Section
5.9(c), which shall satisfy all requirements of the Delaware General
Corporation Law and Section 280G(b)(5)(B) of the Code and the Treasury
Regulations thereunder,

 

40

 

and the Sellers shall cause the Company to
solicit the consent of such stockholders (the “280G Consent”) to any
payments contemplated thereby which would constitute “parachute payments” as
defined in Section 280G(b)(2) of the Code (“Parachute Payments”).  The Company’s board of directors shall
recommend approval of the Parachute Payments, the Retention Program and the
Sale Bonus Program, unless it believes in good faith, based on the written
opinion of the Company’s counsel, that such recommendation would be
inconsistent with the fiduciary duties of the Company’s board of directors
under the Delaware General Corporation Law or Applicable Law.

 

5.5                                 Access
and Information.

 

(a)                                  During
the Pre-Closing Period, subject to the restrictions set forth in Sections 1-4,
7 and 8 of the Confidentiality Agreement dated December 2, 2005, between
the Purchaser and Tailwind Management LP (the “Confidentiality Agreement”),
the Sellers shall cause the Company and each of the Company Subsidiaries to
permit the Purchaser and its representatives to have full access, during normal
business hours and after reasonable prior notice to the Stockholder
Representative, to the properties, books and records of the Company and the
Company Subsidiaries, other than any personnel information protected by
applicable privacy Laws, and shall make available such information and documents
in the Company’s possession relating to the Company and the Company
Subsidiaries as the Purchaser may reasonably request after a determination by
Purchaser that such information or access is reasonably necessary for Purchaser
to complete this transaction; provided,
however, that any such access by the Purchaser or its
representatives shall not unreasonably interfere with the conduct of the
Business of the Company or any Company Subsidiary.  All information provided or obtained pursuant
to the foregoing shall be held by the Purchaser in accordance with and subject
to the terms of the Confidentiality Agreement. 
Prior to making any physical inspection of the Owned Real Property or
the Leased Real Property, the Purchaser shall provide to the Stockholder
Representative: (i) reasonable advance notice of the date and approximate time
that the applicable inspection will be conducted; and (ii) the name of each
individual who will be conducting such inspection.

 

(b)                                 Notwithstanding
anything to the contrary in this Agreement or otherwise, during the Pre-Closing
Period, the Purchaser (and all of the representatives and Affiliates thereof
and any employees, directors and officers thereof) shall contact and
communicate with employees, customers, suppliers and others having a business
relationship with the Company and the Company Subsidiaries in connection with
the transactions contemplated hereby only in accordance with the procedures set
forth in the Confidentiality Agreement.

 

(c)                                  For
a period of seven (7) years after the Closing Date, the Purchaser shall, and
shall cause the Company and each Company Subsidiary to, maintain the books and
records in existence as of the Closing Date relating to the Company, the
Company Subsidiaries and the Business. 
Following the Closing, the Purchaser shall, and shall cause the Company
and each Company Subsidiary to, afford promptly to the Sellers and their
representatives, at the premises of the Company or the Company’s Subsidiaries,
as applicable, after reasonable prior notice, reasonable access to the
properties, books, records, employees and auditors of the Company and the
Company Subsidiaries to the extent necessary to permit the Sellers to determine
any matter relating to their rights and obligations hereunder or to any period
ending on or before the Closing Date, provided,
however, that any such access by the Sellers and their
representatives may not unreasonably interfere with the conduct of the business
of the Company, any Company Subsidiary or the Purchaser.  Following the Closing and until the
expiration of the representations and warranties set

 

41

 

forth in Section 2.17 or any claim for
indemnification made with respect to Section 2.17, the Purchaser
shall cause the Company and the Company Subsidiaries, prior to filing any
amended income Tax Return relating to Taxes of the Company or any Company
Subsidiary for any Tax period ending on or prior to the Closing Date, to
submit such Tax Return to the Stockholder Representative for the
Sellers’ approval, which shall not be unreasonably, withheld, delayed or
conditioned.  Any access pursuant to this
Section 5.5(c) or Section 1.6, any information retained after the
Closing by any Seller related to the Company or any Company Subsidiary and any
Tax Return submitted to the Sellers or the Stockholder Representative pursuant
to this Section 5(c) shall be subject to the following terms:

 

(i)                                     The
information learned by the Sellers and their representatives from such access
(the “Purchaser Information”) shall be treated by the Sellers and their
representatives as confidential information unless and until (i) such Purchaser
Information becomes generally available to the public through no act or failure
to act by the Sellers or their representatives; (ii) such Purchaser Information
is disclosed to the Sellers or their representatives after the date of this
Agreement on a non-confidential basis by a third party not bound by obligations
of confidentiality with respect to such Purchaser Information; or (iii) such
Purchaser Information is independently acquired or developed by the Sellers or
their representatives without reliance on, or the use of, any of the Purchaser
Information; provided, however, that the
foregoing shall not restrict any Seller’s ability to make disclosures of
Purchaser Information to its limited partners, co-investors, potential
investors, financing sources, placement agents and debtholders, each of whom
shall be subject to customary confidentiality obligations (collectively, the “Permitted
Disclosure Recipients”).

 

(ii)                                  The
Sellers recognize and acknowledge the competitive value and confidential
and proprietary nature of the Purchaser Information and that damage could
result to the Purchaser, the Company and the Company Subsidiaries if any of the
Purchaser Information is disclosed to any third party other than a Permitted
Disclosure Recipient.

 

(iii)                               Except
as provided above with respect to the Permitted Disclosure Recipients, the
Sellers and their representatives will use the Purchaser Information solely for
purposes related to exercising their rights and performing their obligations
under this Agreement and for matters related to them in their capacities as the
former owners and stockholders of the Company and the Company Subsidiaries.

 

(iv)                              The
Sellers shall, and shall cause their representatives to, exercise reasonable
care to prevent disclosure to any third party of Purchaser Information received
by them pursuant to this Section 5.5(c), except as may be necessary or
appropriate for the purposes described in Section 5.5(c)(iii), and the
Sellers will take precautions to protect such Purchaser Information at least as
great as they take to protect their own confidential information.

 

(d)                                 The
Sellers, on the one hand, and the Purchaser, on the other hand, agree to
cooperate fully, as and to the extent reasonably requested by the other, in
connection with the preparation and filing of any Tax Return, claim for refund
or audit and the prosecution or defense of

 

42

 

any claim, suit or proceeding relating to any
proposed adjustment that relates to the Company, any Company Subsidiary, the
Business or the assets of the Company or any Company Subsidiary, including the
prosecution of any claim against the sellers under the Aircast Asset Purchase
Agreement or a Subsidiary Asset Purchase Agreement.

 

5.6                                 Exclusivity.  During the Pre-Closing Period, the Sellers
shall not, and shall cause the Company, the Company Subsidiaries and each of
their respective directors, officers, agents, brokers or representatives
(collectively, the “Seller Representatives”) not to, initiate or
participate in any negotiation of, enter into any agreement concerning or allow
the consummation of, furnish any information to any third Person with respect
to, or respond (except by reference to prior public announcements) to any
inquiries regarding:  (i) any transfer of
any material portion of the assets of the Company and the Company Subsidiaries;
(ii) any issuance of capital stock of the Company or any transfer of
outstanding capital of the Company resulting in a change of control of the
Company (provided that: (A) no issuance of capital stock of the Company or
transfer of outstanding capital stock of the Company not resulting in a change
of control (including the issuance of any stock options or other rights to
acquire capital stock of the Company to any members of management of the
Company or any of the Company Subsidiaries) shall result in the Purchaser
acquiring less than one hundred percent (100%) of the Company’s outstanding
shares of capital stock (and any outstanding options or other rights to acquire
capital stock of the Company) at the Closing; and (B) no transfer of
outstanding capital stock of the Company shall be made by any of the Tailwind
Stockholders); or (iii) any merger or other business combination transaction,
in each case with any party other than the Purchaser (each, an “Alternative
Transaction”).  If any Seller, the
Company, any Company Subsidiary or any of the Seller Representatives receives
an unsolicited inquiry, offer or proposal relating to an Alternative
Transaction, the Sellers shall as soon as reasonably practicable thereafter
notify the Purchaser thereof, including information as to the contents and terms
of such inquiry, offer or proposal and the identity of the Person making such
inquiry, offer or proposal.

 

5.7                                 Notification
During the Pre-Closing Period of Breaches. 
During the Pre-Closing Period, the Purchaser, on the one hand, and each
Seller, on the other hand, will each notify the other as soon as reasonably
practicable after it becomes aware of any material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement or of any fact or condition that would cause a condition to the other
party’s obligation to consummate the Closing set forth in Article VI
to not be satisfied.   No such notice
shall be deemed to supplement or amend the Seller Disclosure Schedule or the
Purchaser Disclosure Schedule for the purpose of determining whether any of the
conditions set forth in Article VI have been satisfied.  If a party receives a notice pursuant to this
Section 5.7 but nonetheless proceeds with the Closing, then from and
after the Closing such party shall be deemed to have waived any and all rights
it may have arising from or relating to a breach of representation, warranty,
covenant or agreement described in such notice (including any right to
indemnification pursuant to Article VII); provided,
however, no such waiver shall apply if and to the extent the breach
described in such notice related to the failure of a representation or warranty
of the party who delivered such notice to be true and correct on and as of the
date of this Agreement.

 

5.8                                 Publicity.  The Purchaser and the Stockholder
Representative shall mutually agree on a joint initial press release announcing
the execution and delivery of this Agreement and the transactions contemplated
hereby.  After such initial press release,
each party may issue further press releases, tombstones and similar
announcements without the consent of the other parties, provided that each such
press release, tombstone or similar announcement contains solely

 

43

 

information that is consistent with the information contained in such
initial press release.  Except as
provided above in this Section 5.8 or solely to the extent required by
applicable Law, no Seller shall make or cause to be made (or permit the Company
or any of the Company Subsidiaries to make prior to the Closing) any public
announcement or issue any public notice in respect of this Agreement or the
transactions contemplated hereby without the prior written consent of the
Purchaser and the Stockholder Representative. 
Except as provided above in this Section 5.8 or solely to the
extent required by applicable Law, the Purchaser shall consult with the
Stockholder Representative prior to issuing any press release or otherwise
making any public statements with respect to this Agreement, the transactions
contemplated hereby or any of the Sellers or the Stockholder Representative,
and prior to making any filings with any Governmental Authority (other than the
filings contemplated by Section 5.4) or with any national securities
exchange with respect thereto (and prior to permitting the Company or any
Company Subsidiary to do any of the foregoing after the Closing).

 

5.9                                 Employee
Matters; Sale Bonus Program; Retention Program.

 

(a)                                  Promptly
after the Closing the Purchaser shall use commercially reasonable efforts to
cause its Affiliates (including the Company and the Company Subsidiaries) to
include each employee of the Company or any of the Company Subsidiaries as of
the Closing (each an “Employee” and, collectively, the “Employees”)
in the employee benefit plans and programs then in effect of the Purchaser and
its Affiliates or to conform the employee benefit plans and programs of the
Company and the Company Subsidiaries to be comparable to the benefit plans and
programs of the Purchaser and its Affiliates. 
From and after the Closing, the Purchaser shall, and shall use its
commercially reasonable efforts to cause its Affiliates (including the Company
and the Company Subsidiaries) to, honor, pay, perform and satisfy any and all
obligations and responsibilities to or in respect of each Employee, former
Employee or director of the Company or any Company Subsidiary (as of the
Closing) under the terms of each Employee Plan and each employment agreement or
other written arrangement between the Company or any Company Subsidiary and any
such Employee, former Employee or director, in each case, as in effect
immediately prior to the Closing and disclosed in Section 5.9(a) of the
Seller Disclosure Schedule.  From and
after the Closing, the Purchaser shall use commercially reasonable efforts to
cause each employee benefit plan maintained or contributed to by the Purchaser
or any of its Affiliates (including the Company and the Company Subsidiaries)
in which an Employee participates or will participate to recognize all service
of such Employee with the Company or any of the Company Subsidiaries, including
any service recognized by the Company or any of the Company Subsidiaries under
any Employee Plan prior to the Closing, and, if applicable, to waive any
exclusions for preexisting conditions, in each such case, unless prohibited by
Applicable Law or, with respect to any welfare benefit plan, prohibited by the
terms of such plan.  Nothing in this Section
5.9(a) shall modify the “at will” employee relationship between any
Employee and the Purchaser or any of its Affiliates (including, after the
Closing, the Company and the Company Subsidiaries) or otherwise limit the
ability of the Purchaser or any of its Affiliates (including, after the
Closing, the Company and the Company Subsidiaries) to terminate the employment
of any Employee at any time subject to compliance with the applicable terms of
the employee benefit plans and programs referred to above in this Section
5.9(a) that are then in effect. 
Notwithstanding the foregoing, nothing in this Section 5.9(a)
shall be deemed in any way to restrict the Purchaser and its Affiliates
(including the Company and the Company Subsidiaries after the Closing) from
adopting, amending, rescinding, terminating or replacing any employee benefit
plan, arrangement or agreement in accordance with its terms,

 

44

 

whether existing before or after the Closing
provided that the Employees, as a whole, are not treated in a manner that would
breach the first sentence of this Section 5.9(a).

 

(b)                                 As
soon as reasonably practicable after the date of this Agreement, the Sellers
shall cause the Company and the Company Subsidiaries to establish a sale bonus
program on the terms and
conditions described on Section
5.9(b) of the Seller Disclosure Schedule (the “Sale Bonus Program”).  During the Pre-Closing Period, the Sellers
will cause the Company and the Company Subsidiaries to not amend, repeal or
waive any term or condition of the Sale Bonus Program without the prior written
consent of the Purchaser (such consent not to be unreasonably withheld,
conditioned or delayed); provided, however,
(i) the Company and the Company Subsidiaries will have the discretion to make
and to modify awards under the Sale Bonus Program in their sole discretion and
(ii) if the Sale Bonus Program expires in accordance with its terms prior to
the Closing, the Company and the Company Subsidiaries may adopt a substantially
similar successor plan.

 

(c)                                  As
soon as reasonably practicable after the date of this Agreement, the Sellers
shall cause the Company and the Company Subsidiaries to establish an employee
retention program on the terms and
conditions described on Section
5.9(c) of the Seller Disclosure Schedule (the “Retention Program”).  During the Pre-Closing Period, the Sellers
will cause the Company and the Company Subsidiaries to not amend, repeal or
waive any term or condition of the Retention Program without the prior written
consent of the Purchaser (such consent not to be unreasonably withheld,
conditioned or delayed); provided, however,
(i) no later than three (3) Business Days prior to Closing, the Company and the
Company Subsidiaries may modify awards under the Retention Program (but not
reduce the aggregate program) if notice is provided to the Purchaser and the
Purchaser consents in writing, such consent not to be unreasonably withheld,
conditioned or delayed, and (ii) if the Retention Program expires in accordance
with its terms prior to the Closing, the Company and the Company Subsidiaries
may adopt a substantially similar successor plan.  From and after the Closing, the Purchaser
will cause the Company and the Company Subsidiaries not to amend, repeal or
waive any term or condition of the Retention Program without the prior written
consent of the Stockholder Representative and if the Stockholder Representative
provides a written notice to the Purchaser that it reasonably believes an
Employee has breached his or her ‘Confidentiality Obligations’ (as such term is
defined in the Retention Program), then the Purchaser will cause the Company to
give written notice to such Employee that he or she has breached the
Confidentiality Obligations.

 

(d)                                 For
the avoidance of doubt, in connection with the transactions contemplated by
this Agreement, the Company and the Company Subsidiaries will remain
responsible for all severance and other obligations under the existing
agreements with employees, and the Sellers will have no responsibility
whatsoever, financial or otherwise, for such obligations, except for their
obligations with respect to the Sale Bonus Program and the Retention Program.

 

5.10                           Transfer
Taxes.  The Purchaser, on the one
hand, and the Sellers, on the other hand, shall each be liable for one-half
(1/2) of all sales, use, transfer, stamp, duties, documentary, registration,
recording and other similar Taxes and fees (collectively, “Transfer Taxes”)
incurred as a result of the change of control of the Company and the Company
Subsidiaries contemplated by this Agreement. 
The Purchaser shall file or shall cause the Company and the Company
Subsidiaries to file all required Tax Returns relating to Transfer Taxes.  To the extent practicable, the amount of such
Transfer Taxes shall be calculated prior to the Closing Date, and payment will
be made by the

 

45

 

Purchaser or the Sellers, as applicable, to settle the obligations
provided in this Section 5.10.  To
the extent any such party pays or becomes obligated to pay any such Transfer
Taxes after the Closing that was not identified and paid at the Closing in
accordance with the preceding sentence, during the six (6) month period from
and after the Closing such party may (and the Purchaser with respect to the
Company or any Company Subsidiary may), from time to time or at any time,
notify the other parties of such unpaid Transfer Taxes, which notice will be
accompanied by evidence of such party’s payment or obligation to pay such
Transfer Taxes and the amount of such Transfer Taxes.  (For purposes of this Section 5.10,
notice properly given to the Stockholder Representative will be deemed to also
be notice to each Seller.)  Promptly, and
in any event within five (5) Business Days after receipt of such notice, each
other party shall pay to the party that delivered such notice its proportionate
share of such Transfer Taxes.  From and
after the six (6) month anniversary of the Closing, no party shall be entitled
to any further payment from any other party pursuant to this Section 5.10
with respect to any such Transfer Taxes.

 

5.11                           Indemnification
of Directors and Officers.

 

(a)                                  For
at least six (6) years after the Closing Date, the Purchaser shall (and shall
cause the Company and the Company Subsidiaries to), to the fullest extent permitted
under applicable Law and the Organizational Documents of the Company and the
Company Subsidiaries as in effect on the date hereof, maintain the Company and
Company Subsidiaries’ existing indemnification provisions with respect to each
director or officer of the Company or any Company Subsidiary as of the Closing
(collectively, the “Indemnified Directors or Officers”), including
provisions relating to advancement of expenses therein; provided
that if any claim or claims are asserted or made within such six (6) year
period by any Indemnified Director or Officer, all rights to indemnification in
respect of any such claim or claims shall continue until final disposition of
any and all such claim or claims.  None
of the Purchaser, the Company or any Company Subsidiary shall have any
obligation hereunder to any Indemnified Director or Officer with respect to a
Proceeding when and if it shall be determined by a court of competent
jurisdiction in a final non-appealable order or decree that the indemnification
of such Indemnified Director or Officer in the manner contemplated hereby is
prohibited by applicable Law or the terms of existing Organizational
Documents.  In the event the Company or
any Company Subsidiary fails to make any payment when due under this Section
5.11(a), the Purchaser shall make, or cause to be made, such payment.

 

(b)                                 For
at least six (6) years after the Closing Date, the Purchaser shall, and shall
cause the Company and the Company Subsidiaries to, maintain in effect the
current policies of directors’ and officers’ liability insurance maintained by
the Company and the Company Subsidiaries with respect to claims arising from or
related to facts or events that occurred at or before the Closing Date for the
benefit of the Indemnified Directors or Officers; provided,
however, that the Purchaser, the Company or any Company Subsidiary
may purchase six (6) year “tail” coverage covering acts or omissions of the
Indemnified Directors or Officers at or before the Closing Date on
substantially similar terms to the directors’ and officers’ liability insurance
policy or policies maintained by the Company or the applicable Company
Subsidiary or Company Subsidiaries at the date of this Agreement (including
coverage amounts and limitations).  The
Purchaser agrees to, and following the Closing will cause the Company and the
Company Subsidiaries to, not take any action that would have the effect of
limiting the aggregate amount of directors’ and officers’ insurance coverage
required to be maintained for the Indemnified Director or Officer referred to
in this Section 5.11.

 

46

 

(c)                                  The
covenants set forth in this Section 5.11 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Directors or
Officers and their respective heirs and legal representatives.  The indemnification provided for herein shall
not be deemed exclusive of any other rights to which an Indemnified Director or
Officer is entitled, whether pursuant to Law, contract or otherwise.

 

(d)                                 If,
after the Closing, the Purchaser, the Company, any Company Subsidiary or any of
their respective successors or assigns shall: (i) merge or consolidate with or
merge into any other Person and shall not be the surviving or continuing Person
of such consolidation or merger; or (ii) transfer all or substantially all of
their respective properties and assets to any Person, then in each such case,
the Purchaser shall take all necessary actions to ensure that the successors or
assigns of the Purchaser, the Company or the applicable Company Subsidiary (as
applicable) shall assume all of the obligations set forth in this Section 5.11.

 

5.12                           Certain
Investments by the Tailwind Stockholders. 
During the period from the date of this Agreement until the second
anniversary of the Closing Date, none of the Tailwind Stockholders (or any fund
formed by Douglas Karp, Lawrence Sorrel, Geoffrey Raker or Jeffrey Calhoun)
shall invest in any Person who is engaged in a business that competes, directly
or indirectly, with the Business if such Person includes any individual: (a)
who is (or has been since December 7, 2004) a member of Senior Management; or
(b) who is a member of the family of Glenn W. Johnson and who was engaged in
the Business prior to the date of this Agreement.  For purposes of this Section 5.12, a
Person will be deemed to include an individual if such individual: (i) is an
officer, director or management-level employee of such Person, or a subsidiary
or division thereof; (ii) is a five percent (5%) or greater stockholder (or
equivalent) of such Person, or a subsidiary or division thereof, if such Person
is not a Person whose securities are listed on a national securities exchange;
(iii) is a one percent (1%) or greater stockholder (or equivalent) of such
Person if such Person is a Person whose securities are listed on a national
securities exchange (for purposes of clauses (ii) and (iii) deeming any option,
warrant or other right to acquire shares (or the equivalent) in such Person as
ownership of the underlying shares (or equivalent)); or (iv) provides
consulting services to such Person for which such individual is entitled to
aggregate consideration in excess of $25,000 per annum or such consulting
services include services that would be deemed management-equivalent services
to such Person if they were performed directly by an employee of such Person.

 

5.13                           Environmental
Matters. With respect to each Leased Real Property and Owned Real Property
located in New Jersey, the Sellers shall (or shall cause the Company and the
Company Subsidiaries to) assemble, prepare and file any information and take
such other commercially reasonable actions as may be required to obtain from
the NJDEP for the transactions contemplated by this Agreement: (i) one or more
ISRA non-applicability determinations through either (A) written confirmation
from the NJDEP that the Owned Real Property or the Leased Real Property located
in the State of New Jersey is not an industrial establishment pursuant to ISRA
or (B) written confirmation that the transactions contemplated herein are not
subject to ISRA; (ii) written approval of the Sellers’ negative
declaration; (iii) a de minimis
quantity exception; (iv) a “No-Further Action” letter or (v) a remediation in
progress letter as each such term is defined under ISRA.

 

5.14                           No
Amendment of the Aircast Asset Purchase Agreement and Related Documents Pre-
and Post-Closing.  Except as
contemplated by Section 1.6, prior to the Closing the Sellers will not,
and will cause the Company or Company Subsidiaries not to, without the prior
written consent

 

47

 

of the Purchaser, amend, modify or terminate, or waive any right under,
in each case in a manner that would be adverse to the Purchaser, the Aircast
Asset Purchase Agreement or any of the other agreements, documents or
instruments delivered under the Asset Purchase Agreement or in connection with
the transactions contemplated thereby. 
For as long after the Closing as the Purchaser has any indemnification
rights, direct or indirect, against the Old Aircast Sellers (as described in Section
7.6(b)), the Purchaser will not, and will cause its Affiliates (including
the Company and the Company Subsidiaries) to not, without the prior written
consent of the Stockholder Representative, amend, modify or terminate, or waive
any right under, in each case in a manner that would be adverse to the Sellers,
the Aircast Asset Purchase Agreement or any of the other agreements, documents
or instruments delivered under the Aircast Asset Purchase Agreement or in
connection with the transactions contemplated thereby.

 

ARTICLE VI

CONDITIONS TO CLOSING

 

6.1                                 Conditions
to the Obligation of the Purchaser. 
The obligation of the Purchaser to consummate the transactions contemplated
by this Agreement in connection with the Closing shall be subject to the
satisfaction or waiver by the Purchaser on or prior to the Closing Date of each
of the following conditions:

 

(a)                                  The
representations and warranties of the Sellers contained in Article II
shall be true and correct in all respects (if qualified by materiality or
Material Adverse Effect) and shall be true and correct in all material respects
(if not qualified by materiality or Material Adverse Effect), on the date made
and as if made at and as of the Closing (except with respect to those
representations and warranties that are made as of a specific date, only as of
such date), with only such exceptions as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect.

 

(b)                                 No
disclosure made by the Sellers pursuant to Section 5.7 with respect to
changes, developments, conditions, events or circumstances occurring after the
date of this Agreement shall have caused the representations and warranties of
the Sellers set forth in Article II to which such disclosure
pertains to not be true and correct in all respects (if qualified by
materiality or Material Adverse Effect) or true and correct in all material
respects (if not qualified by materiality or Material Adverse Effect) as if
made at and as of the Closing (except with respect to those representations and
warranties that are made as of a specific date, only as of such date).

 

(c)                                  The
representations and warranties of each Seller contained in Article III
shall be true and correct in all respects (if qualified by materiality or
Material Adverse Effect) and shall be true and correct in all material respects
(if not qualified by materiality or Material Adverse Effect), as if made at and
as of the Closing (except with respect to those representations and warranties
that are made as of a specific date, only as of such date).

 

(d)                                 The
Sellers shall have each duly performed and complied in all material respects
with all covenants and agreements contained herein required to be performed or
complied with by such Seller at or before the Closing.

 

48

 

(e)                                  The
Stockholder Representative shall have delivered to the Purchaser a certificate,
dated as of the Closing Date and executed by a duly authorized representative
of the Stockholder Representative, as to the fulfillment of the conditions set
forth in Section 6.1(a) and (b).

 

(f)                                    Each
Seller shall have delivered to the Purchaser a certificate, dated as of the Closing
Date and executed by a duly authorized representative of such Seller, as to the
fulfillment of the conditions set forth in Sections 6.1(c) and (d),
with respect to such Seller.

 

(g)                                 The
waiting period applicable to the consummation of the Stock Purchase under the
HSR Act and under any similar applicable foreign antitrust or competition Laws
shall have expired or been terminated and each of the Required Consents set
forth on Schedule B hereto shall have been received or, with respect to
any such Required Consent from a Governmental Authority, reasonably
satisfactory written or oral notification shall have been received from the
applicable Governmental Authority that its approval of, consent to or
authorization of the Closing is not required.

 

(h)                                 There
shall not be in effect any litigation by or among the Sellers, whether pending
or threatened in writing, that seeks to enjoin, delay, restrain, prohibit or
impair the consummation of the transactions contemplated by this Agreement, or
any injunction or other Order issued by a court of competent jurisdiction
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement, and there shall be no litigation pending in which any
Governmental Entity is seeking to enjoin, restrain or prohibit the consummation
of the transactions contemplated by this Agreement or impose any penalty which
would have a Purchaser Material Adverse Effect.

 

(i)                                     The
Company shall have delivered to the Purchaser a certification (in such form as
may be reasonably requested by counsel to the Purchaser) conforming to the
requirements of Treasury Regulations §1.1445-2(c)(3) and §1.897-2(h) and
certifying that stock in the Company does not constitute a U.S. real property
interest within the meaning of Code Section 897(c).

 

(j)                                     The
Sellers shall have delivered to the Purchaser, with respect to each Leased Real
Property and Owned Real Property located in New Jersey, one of the ISRA non-applicability
determination, letter, approval or exception contemplated by clauses (i)
through (v) of Section 5.13.

 

(k)                                  The
Sellers shall have delivered to Purchaser an opinion, dated the Closing Date,
of Kelley Drye & Warren LLP substantially in the form of Exhibit C
hereto.

 

(l)                                     The
Sellers shall have delivered to the Purchaser evidence reasonably satisfactory
to the Purchaser of the release of any Liens on the assets and properties of
the Company and the Company Subsidiaries, other than Permitted Liens, of the
release of any Liens securing the Funded Debt and of the release of any Liens
on the Shares.

 

(m)                               There
shall not have occurred since December 31, 2005, any change, development,
condition, event or circumstance that, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material Adverse Effect; provided, however, that for purposes of this Section
6.1(m), no matter disclosed on the Seller Disclosure Schedule shall be
deemed to have had, or reasonably be expected to have, a Material Adverse
Effect except to the extent that any change, development, condition, event or
circumstance occurring or arising after the date of this Agreement, with
respect to such matter, considered separately from the facts or

 

49

 

circumstances existing on the date hereof,
has had, or would reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(n)                                 All
obligations of the Company and the Company Subsidiaries to pay any
consideration, reimbursement or fee to the Sellers, the general partners of the
respective Sellers or the Affiliates of the Tailwind Stockholders (other than
the Company and the Company Subsidiaries) shall have been terminated, and any
and all such consideration, reimbursements and fees to the Sellers, the general
partners of the respective Sellers or the Affiliates of the Tailwind
Stockholders (other than the Company and the Company Subsidiaries) from the
Company and the Company Subsidiaries which are due and payable or accrued
through the Closing shall have been paid, except for obligations to pay
consideration, reimbursement or fees expressly provided in this Agreement, the
Indemnity and Earnout Escrow Agreement, the Retention Program Escrow Agreement
or any other document entered into by the Sellers, on the one hand, and the Purchaser,
the Company or any of the Company Subsidiaries, on the other hand, after the
execution and delivery of this Agreement.

 

6.2                                 Conditions
to the Obligation of the Sellers. 
The respective obligations of the Sellers to consummate the transactions
contemplated by this Agreement in connection with the Closing shall be subject
to the satisfaction or waiver by the Stockholder Representative on or prior to
the Closing Date of each of the following conditions:

 

(a)                                  The
representations and warranties of the Purchaser contained in Article IV
shall be true and correct in all respects (if qualified by materiality or
material adverse effect) and shall be true and correct in all material respects
(if not qualified by materiality or material adverse effect), as if made at and
as of the Closing (except with respect to those representations and warranties
that are made as of a specific date, only as of such date).

 

(b)                                 The
Purchaser shall have duly performed and complied in all material respects with
all covenants and agreements contained herein required to be performed or
complied with by the Purchaser at or before the Closing.

 

(c)                                  The
Purchaser shall have delivered to the Sellers a certificate, dated as of the
Closing Date and signed by an officer of the Purchaser, as to the fulfillment
of the conditions set forth in Sections 6.2(a) and (b).

 

(d)                                 The
waiting period applicable to the consummation of the Stock Purchase under the
HSR Act and under any similar applicable foreign antitrust or competition Laws
shall have expired or been terminated and each of the Required Consents set
forth on Schedule C hereto shall have been received or, with
respect to any such Required Consent from a Governmental Authority, reasonably
satisfactory written or oral notification shall have been received from the
applicable Governmental Authority that its approval of, consent to or
authorization of the Closing is not required.

 

(e)                                  There
shall not be in effect any injunction or other order issued by a court of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement.

 

50

 

ARTICLE VII

INDEMNIFICATION

 

7.1                                 Survival
of Representations and Warranties and Covenants and Agreements.

 

(a)                                  Each
of the representations and warranties of the Purchaser and the Sellers
contained in this Agreement shall survive until the later of (A) June 30, 2007
or (B) if the closing occurs after June 30, 2006, the first anniversary of the
Closing, and shall thereafter expire, except that: (i) each Seller’s respective
representations and warranties set forth in Section 3.1(b) and (c)
(Authority; Enforceability) and Section 3.4 (Title to Shares)
(collectively, the “Special Representations and Warranties”) shall survive
the Closing indefinitely; and (ii) the Purchaser’s representations and
warranties set forth in Section 4.1(b) and (c) (Authority;
Enforceability) shall survive the Closing indefinitely.  Each of the covenants and agreements
contained in this Agreement: (i) to be performed on or prior to the Closing
shall expire upon the Closing; (ii) to be performed after the Closing that
specifies a time period for survival shall survive for such time period; and
(iii) to be performed after the Closing that does not specify a time period for
survival shall survive indefinitely.

 

(b)                                 Notwithstanding
anything to the contrary in Section 7.1(a), if a Notice of Claim has
been provided by an Indemnified Party to an Indemnifying Party concerning the
breach of a representation and warranty or covenant and agreement set forth in
this Agreement prior to the end of the survival period that would otherwise
apply to such representation and warranty or covenant and agreement, the right
to indemnification with respect to the breach of the representation and
warranty or covenant and agreement set forth in such Notice of Claim shall
survive until such later date as such claim has been fully and finally resolved
in accordance with this Article VII.

 

7.2                                 Indemnification
Obligations.

 

(a)                                  Subject
to the other provisions of this Article VII, from and after the
Closing, the Sellers shall jointly and severally indemnify the Purchaser and
each of its Affiliates (which, following the Closing, shall include the Company
and the Company Subsidiaries) and its and their respective directors, officers,
employees, stockholders, partners, members, managers, agents and
representatives (each, a “Purchaser Indemnified Party”) for any Losses
actually incurred by such Purchaser Indemnified Party as a result of the breach
of:  (i) any representation and warranty
of the Sellers set forth in Article II which is surviving (as set
forth in Section 7.1) on the date on which a Notice of Claim is
delivered to the Stockholder Representative relating thereto; or (ii) any covenant
or agreement contained in this Agreement in which the Sellers agree to cause
the Company or any of the Company Subsidiaries to take or not take some action,
to the extent a Notice of Claim is delivered to the Stockholder Representative
relating thereto prior to the expiration of the Indemnity and Earnout Escrow
Period.

 

(b)                                 Subject
to the other provisions of this Article VII, from and after the
Closing, each Seller shall, severally and not jointly, indemnify each of the
Purchaser Indemnified Parties for any Losses actually incurred by such
Purchaser Indemnified Party as a result of the breach of:  (i) any representation and warranty of such
Seller set forth in Article III which is surviving (as set forth in
Section 7.1) on the date on which a Notice of Claim is delivered to the
Stockholder Representative relating thereto; or (ii) any covenant or agreement
contained in this Agreement in which an individual Seller (or Sellers) has
agreed to take or not take some action, to the extent a

 

51

 

Notice of Claim is delivered to the Stockholder Representative relating
thereto on or before (x) the expiration of the Indemnity and Escrow
Earnout Period, with respect to any covenant or agreement that by its terms is
to be performed in full on or prior to the Closing Date and (y) the
expiration of the statute of limitations applicable thereto, for each other
covenant or agreement.

 

(c)                                  Subject
to the other provisions of this Article VII, from and after the
Closing, the Purchaser shall indemnify the Sellers and each of their respective
Affiliates, directors, officers, employees, stockholders, partners, members,
managers, agents and representatives (each, a “Seller Indemnified Party”)
for any Losses actually incurred by such Seller Indemnified Party as a result
of the breach of:  (i) any representation
and warranty of the Purchaser set forth in Article IV which is
surviving (as set forth in Section 7.1) on the date on which a Notice of
Claim is delivered to the Purchaser relating thereto; or (ii) any covenant or
agreement of the Purchaser contained in this Agreement to the extent a Notice
of Claim is delivered to the Purchaser relating thereto on or before the
expiration of the statute of limitations applicable thereto, or if to be
performed on or prior to the Closing Date, by the end of the Indemnity and
Earnout Escrow Period.

 

7.3                                 Limitations
on Indemnification Amounts. 
Notwithstanding anything to the contrary in this Article VII:
(a) in no event shall the Sellers be required to provide indemnification under
this Article VII unless and until the Purchaser Indemnified Parties
shall have incurred aggregate Losses of at least $1,000,000 (the “Indemnification
Deductible”) resulting from otherwise indemnifiable breaches of representations
and warranties and covenants and agreements by the Sellers, after which point
the Sellers shall only be required to provide indemnification with respect to
indemnifiable Losses in excess of the Indemnification Deductible; and (b) in no
event other than as expressly contemplated by Section 7.12(b) shall any
Seller be required to provide indemnification under this Article VII
for aggregate indemnifiable Losses under this Article VII in excess
of the amount of such Seller’s allocable portion of the then-available
Indemnity and Earnout Escrow Funds (the “Indemnification Cap”);
notwithstanding the foregoing, with respect to Losses resulting from (A) any
willful breach of this Agreement by a Seller (or Sellers), (B) any fraud of
such Seller (or Sellers) related to the transactions contemplated hereby, (C)
any breach by such Seller (or Sellers) of its Special Representations and
Warranties, (D) any breach by such Seller (or Sellers) of its covenants and
agreements under Section 1.6(e) or Section 1.6(f) or (E) any
breach by the Sellers of the representations and warranties set forth in Section
2.3, the Indemnification Deductible shall not apply and, with respect to
preceding clauses (A) through (E), as to such Seller (or Sellers)
the Indemnification Cap shall not apply; provided,
however, that in no event shall any Seller be required to provide
indemnification under this Article VII (I) for aggregate indemnifiable
Losses under this Article VII in excess of such Seller’s pro rata portion of the Purchase Price and (II) with respect
to any indemnifiable Losses under this Article VII resulting from
the matters referred to in the preceding clause (E) that exceed the then
available Indemnity and Earnout Escrow Funds, in excess of such Seller’s pro rata portion of such excess indemnifiable Losses
(measured by reference to the number of Shares owned by such Seller immediately
prior to the Closing in relation to the Shares held by all the Sellers
immediately prior to the Closing).

 

7.4                                 Indemnification
Claim Procedure.

 

(a)                                  Promptly
after obtaining actual knowledge of any matter that a Purchaser Indemnified
Party or Seller Indemnified Party, as applicable (the “Indemnified Party”),
acting in good faith, reasonably believes will entitle the Indemnified Party to
indemnification from any other party (the “Indemnifying Party”)
under this Article VII, the Indemnified Party shall promptly

 

52

 

provide to the Indemnifying Party notice
describing the matter in reasonable detail, including the nature of the claim,
the basis for the indemnification obligation and the Losses resulting therefrom
(a “Notice of Claim”); provided,
however, that the failure to timely provide a Notice of Claim
hereunder shall not relieve an Indemnifying Party of its obligation to
indemnify an Indemnified Party except to the extent that the Indemnified Party’s
failure to provide or delay in providing a Notice of Claim prejudices the
Indemnifying Party’s ability to defend against or contest such matter.  (If the Indemnifying Party is a Seller or the
Sellers, delivery by an Indemnified Party of a Notice of Claim to the
Stockholder Representative shall be deemed to be effective delivery of notice
to the Indemnifying Party.)

 

(b)                                 For
claims for indemnification under this Article VII other than those
relating to Third Party Claims and as otherwise provided in Section 7.6,
the Indemnifying Party shall have thirty (30) Business Days after its receipt
of the Notice of Claim to respond to the claim(s) described therein.  Such response shall set forth, in reasonable
detail, the Indemnifying Party’s objection(s) to the claim(s) and its bases for
such objection(s).  If the Indemnifying
Party fails to provide such a response with such time period, the Indemnifying
Party will be deemed to have conceded the claim(s) set forth in the Notice of
Claim.  If the Indemnifying Party
provides its response within such time period, the Indemnified Party and the
Indemnifying Party shall negotiate the resolution of the claim(s) for a period of
not less than thirty (30) Business Days after such response is provided.  If the Indemnifying Party and the Indemnified
Party are unable to resolve any such claim(s) within such time period, the
Indemnifying Party or the Indemnified Party may thereafter pursue any legal
remedies available to it with respect solely to the unresolved claim(s),
subject, to the extent applicable, to the Indemnification Deductible, the
Indemnification Cap and the other provisions of this Article VII or
Article X.

 

7.5                                 Third
Party Claims.

 

(a)                                  Without
limiting the provisions of Section 7.4(a), the Indemnifying Party shall
not be required to provide indemnification under this Article VII
with respect to a claim or Proceeding by a third party (a “Third Party Claim”)
to the extent that the Indemnified Party’s failure to provide or delay in
providing a Notice of Claim prejudices the Indemnifying Party’s ability to
contest or resolve the matters underlying such Third Party Claim.  Any Third Party Claim that is also a Multiple
Source of Recovery Matter shall be treated as a Third Party Claim, except to
the extent expressly provided in Section 7.5(b).

 

(b)                                 The
Indemnifying Party shall have the right to assume and pursue the defense of any
Third Party Claim, at its sole cost and expense and with counsel reasonably
selected by it, upon notification thereof to the Indemnified Party within ten
(10) Business Days after the Notice of Claim has been delivered to the
Indemnifying Party or, with respect to any Multiple Source of Recovery Matter that
is a Third Party Claim, within ten (10) Business Days after a Purchaser
Indemnified Party notifies the Sellers that the Old Aircast Sellers have
declined to defend or failed to defend such claim as a “Third Party Claim”
under Article IX of the Aircast Asset Purchase Agreement, it being agreed
and understood that the Indemnifying Party’s election to assume the defense of
any Third Party Claim shall not constitute an admission that any Losses
resulting therefrom are indemnifiable Losses under this Article VII
or in any way prejudice or limit the Indemnifying Party’s ability to dispute
any determination of whether or not any such Losses are indemnifiable Losses
under this Article VII.  If
the Indemnified Party does not receive such notification from the Indemnifying
Party within such time period that it will assume the defense of a

 

53

 

Third Party Claim or, at any time after the
Indemnifying Party has assumed the defense of a Third Party Claim if the
Indemnifying Party is determined by a court to have failed to adequately
perform or unreasonably delayed in performing its obligations to assume or
pursue the defense of any such Third Party Claim, the Indemnified Party shall
fully assume, commence and pursue its defense of such Third Party Claim on a
timely and prudent basis and thereafter promptly inform the Indemnifying Party
of all material developments related thereto. 
If the Indemnifying Party disputes that it is responsible for a Third
Party Claim, it shall give notice to that effect to the Indemnified Party,
which response shall set forth, in reasonable detail, the Indemnifying Party’s
objection(s) to the claim(s) and its bases for such objection(s), and
thereafter the Indemnified Party and the Indemnifying Party shall negotiate the
resolution of the claim(s) for a period of not less than thirty (30) Business
Days after such response is provided.  If
the Indemnifying Party and the Indemnified Party are unable to resolve any such
claim(s) within such time period, either the Indemnified Party or the
Indemnifying Party may thereafter pursue any legal remedies available to it
with respect solely to the unresolved claim(s), subject, to the extent
applicable, to the Indemnification Deductible, the Indemnification Cap and the
other provisions of this Article VII or Article X.

 

(c)                                  If
the Indemnifying Party assumes the defense of a Third Party Claim, it shall
thereafter promptly inform the Indemnified Party of all material developments
related thereto.  With respect to any
Third Party Claim for which the Indemnifying Party has assumed the defense, the
Indemnified Party shall have the right, but not the obligation, to participate,
at its own cost and expense, in the defense of such Third Party Claim through
legal counsel reasonably selected by it, but shall not assert or pursue,
directly or through its counsel, any contrary or inconsistent defenses without
the prior consent of the Indemnifying Party, and provided,
that if in the written opinion of counsel to the Indemnified Party an
irreconcilable conflict of interest arises out of the representation of the
interests of the Indemnified Party by counsel selected by the Indemnifying
Party, then the Indemnified Party shall be indemnified for the reasonable fees
and expenses of its counsel (limited to one firm and, if applicable, local
counsel).  As long as the Indemnifying
Party is performing its obligations under this Section 7.5, the
Indemnified Party shall, and shall cause its Affiliates to, during normal
business hours, upon reasonable notice, cooperate in all reasonable ways with,
make its and their relevant files and records reasonably available for
inspection and copying by, make its and their employees reasonably available
to, and otherwise render reasonable assistance to, the Indemnifying Party.

 

(d)                                 If
the Indemnifying Party (having assumed the defense of a Third Party Claim) or
the Indemnified Party (having proceeded with its own defense of a Third Party
Claim in accordance with this Section 7.5) proposes to settle or
compromise such Third Party Claim, the Indemnifying Party or the Indemnified
Party (as applicable) shall provide notice to that effect (together with a
statement in reasonable detail of the terms and conditions of such settlement
or compromise) to the Indemnified Party or the Indemnifying Party (as
applicable), which shall be provided a reasonable time prior to the proposed
time for effecting such settlement or compromise, and may not effect any such
settlement or compromise without the prior consent of the Indemnified Party or
the Indemnifying Party (as applicable), which consent shall not be unreasonably
withheld, delayed or conditioned.  If:
(i) the Indemnifying Party provides any such notice; (ii) the related settlement
or compromise offer provides for the full release of the Indemnified Party and
its Affiliates from any and all liability in respect of such Third Party Claim
and does not purport to limit or restrict the business or operations of the
Indemnified Party in any material manner or require future payments by the
Indemnified Party arising from the conduct of the Indemnified Party’s business;
and (iii) the Indemnified Party fails to provide, in a reasonably timely
manner, its

 

54

 

consent to such settlement or compromise,
then notwithstanding anything to the contrary in this Article VII,
the Indemnifying Party’s indemnification obligation under this Article VII
with respect to such Third Party Claim will not exceed the amount of such
settlement or compromise offer and the Indemnified Party will be required to
pay the excess of the amount necessary to settle or compromise the Third Party
Claim over the amount of such settlement or compromise offer.

 

(e)                                  With
respect to any Third Party Claim which is also a Multiple Source of Recovery
Matter, the Purchaser Indemnified Parties will take such actions in their
capacities as indemnified Persons with respect to indemnification for “Third
Party Claims” under Article IX of the Aircast Asset Purchase Agreement as
the Sellers may reasonably request.

 

7.6                                 Requirement
to First Pursue Remedies from Certain Parties.

 

(a)                                  The
Purchaser agrees and acknowledges that the Purchaser Indemnified Parties are
only entitled to receive indemnification from the Sellers under this Article VII
for Losses incurred by the Purchaser Indemnified Parties resulting from any
breach of the Sellers’ representations and warranties set forth in Article II
after the Purchaser Indemnified Parties have diligently and in good faith
pursued and exhausted all available remedies under applicable Law, under the
Aircast Asset Purchase Agreement and under any Contract executed in connection
with the Aircast Asset Purchase Agreement against the Old Aircast Sellers for
all Losses incurred by the Purchaser Indemnified Parties resulting from the
matter(s) constituting such breach of the Sellers’ representations and
warranties set forth in Article II. 
Without limiting the generality of the foregoing sentence, the Purchaser
agrees and acknowledges that by indirectly acquiring Aircast US Opco (one of
the Company Subsidiaries), the Purchaser will obtain indirectly the right to
receive indemnification from the Old Aircast Sellers under the Aircast Asset
Purchase Agreement, and the Purchaser Indemnified Parties shall be required to
diligently and in good faith pursue and exhaust any available remedies under
the Aircast Asset Purchase Agreement against the Old Aircast Sellers for any
and all Losses incurred by the Purchaser Indemnified Parties resulting from the
matter(s) constituting such breach of the Sellers’ representations and
warranties set forth in Article II before being entitled to receive
any indemnification payment from the Sellers under this Article VII
with respect to such breach of the Sellers’ representations and warranties set
forth in Article II.

 

(b)                                 For
any matter that constitutes both: (i) a matter for which any of the Purchaser
Indemnified Parties have available remedies under applicable Law, under the
Aircast Asset Purchase Agreement or under any Contract executed in connection
with the Aircast Asset Purchase Agreement; and (ii) a breach of any of the
Sellers’ representations and warranties set forth in Article II for
which any of the Purchaser Indemnified Parties is, but for the exhaustion of
remedies under Section 7.6(a), entitled to be indemnified by the Sellers
under the terms and conditions of this Article VII (each, a “Multiple
Source of Recovery Matter”), the Purchaser Indemnified Parties will be
required to seek recovery for their Losses related to such Multiple Source of
Recovery Matter from the Old Aircast Sellers prior to seeking recovery for such
Losses from the Sellers under this Article VII; provided, however, that, with respect to any Losses related to a Multiple Source
of Recovery Matter which are reasonably attributable to the operation of the
Business on or after December 7, 2004 (i.e., the
“Closing Date” under the Aircast Asset Purchase Agreement) (“Post-December 7th
Losses”), the Purchaser Indemnified Parties may seek indemnification for
such Post-December 7th Losses from the Sellers under this Article VII
prior to or concurrently with seeking recovery from the Old Aircast Sellers for
any such Losses related to such Multiple Source of Recovery Matter reasonably
attributable to the operation of the Business 

 

55

 

prior to December 7, 2004 (“Pre-December
7th Losses”).  To the
extent the Pre-December 7th Losses are not recoverable at the time
the claim is made against the Old Aircast Sellers due to the application of the
threshold in Section 9.4(a) of the Aircast Asset Purchase Agreement, the
Purchaser Indemnified Parties shall be deemed to have fully exhausted its
remedies and the Sellers shall indemnify the Purchaser Indemnified Parties for
such Pre-December 7th Loss (or the Indemnification Deductible shall
be deemed satisfied in part by such Pre-December 7th Loss), subject
to any defenses the Sellers may have as to the appropriateness of the Purchaser
Indemnified Parties’ claim for indemnification under this Agreement.  With respect to any Multiple Source of Recovery
Matter, the Sellers may, but shall not be obligated to, assume control over any
claim or Proceeding which the Purchaser Indemnified Parties have commenced or
have the right to commence for Losses against the Old Aircast Sellers, and if
the Sellers assume control over such claim or Proceeding then the Purchaser
Indemnified Parties shall be deemed to have satisfied their obligation to
pursue recovery from the Old Aircast Sellers pursuant to Section 7.6(a)
(but, except as contemplated by Section 7.6(d), such remedy shall
not be deemed to have been exhausted until the final resolution of the claim or
Proceeding controlled by the Sellers).

 

(c)           With
respect to any Multiple Source of Recovery Matter for which a Purchaser
Indemnified Party has incurred Pre-December 7th Losses, the Notice
of Claim pursuant to Section 7.4(a) with respect to such Multiple
Source of Recovery Matter shall identify the estimated amount attributable to
the Pre-December 7th Losses (each, an “Initial MSRM Notice of
Claim”) and the Purchaser’s legal and expense budget for pursuing such
claim.  Receipt by the Sellers of an
Initial MSRM Notice of Claim shall solely have the effect of: (i) preserving
such Purchaser Indemnified Party’s right to pursue indemnification from the
Sellers under this Agreement with respect to the Pre-December 7th
Losses referred to therein until such time as such Purchaser Indemnified Party
has fully exhausted its rights against the Old Aircast Sellers with respect to
the underlying Multiple Source of Recovery Matter in accordance with this Section
7.6; and (ii) causing there to be reserved from any available Indemnity and
Earnout Escrow Funds (as of the date of the Initial MSRM Notice of Claim), in
accordance with the terms and conditions of this Agreement and the Indemnity
and Earnout Escrow Agreement, an amount equal to the amount of Losses with
respect to the underlying Multiple Source of Recovery Matter that are claimed
by such Purchaser Indemnified Party (including the Purchaser’s legal and
expense budget for pursuing its remedies), in each case subject to Section
7.6(d).

 

(d)           At
any time after receipt by the Stockholder Representative of an Initial MSRM
Notice of Claim and before its receipt of the corresponding Second MSRM Notice
of Claim pursuant to Section 7.6(f), the Stockholder Representative may
object to the reservation of some or all of the Indemnity and Earnout Escrow
Funds in response to such Initial MSRM Notice of Claim by providing notice
thereof to the Purchaser Indemnified Party who delivered such Initial MSRM
Notice of Claim, which notice shall set forth, in reasonable detail, the
Stockholder Representative’s objection(s) to the reservation of Indemnity and
Earnout Escrow Funds and its bases for such objection(s) (each, a “Reservation
Objection Notice”).  Such Purchaser
Indemnified Party shall have ten (10) Business Days to respond to such
Reservation Objection Notice.  If such
Purchaser Indemnified Party fails to provide such a response within such ten
(10) Business Day period, such Purchaser Indemnified Party shall be deemed to
have conceded the release from reservation of the applicable Indemnity and
Earnout Escrow Funds as provided in the Reservation Objection Notice, and such
Indemnity and Earnout Escrow Funds shall then be released (i) from reservation
under the Indemnity and Earnout Escrow Agreement, if such instructions are
delivered during the Indemnity and Earnout Escrow Period, or (ii) to the
Sellers, if such instructions are delivered after the end of

 

56

 

the Indemnity and Earnout Escrow Period.  If such Purchaser Indemnified Party provides
its response within such time period and disputes the matters described in the
Reservation Objection Notice, such Purchaser Indemnified Party and the Stockholder
Representative shall negotiate the resolution of such dispute for a period of
not less than twenty (20) Business Days after such response is provided.  If such Purchaser Indemnified Party and the
Stockholder Representative are unable to resolve any such claim(s) within such
time period, the Stockholder Representative may thereafter pursue any legal
remedies available to it (on behalf of the Sellers) against such Purchaser
Indemnified Party, subject to the other provisions of this Article VII
or Article X, with respect to the Sellers’ obligations or
liabilities to such Purchaser Indemnified Party with respect to the matters
underlying the Initial MSRM Notice of Claim (and if the Stockholder
Representative commences any litigation with respect to such obligations or
liabilities, such Purchaser Indemnified Party may seek resolution in such
Proceeding of the Sellers’ obligations and liabilities without regard to the
provisions of Section 7.6(a) and receive payment of any Losses to
which it is determined to be entitled in such Proceeding).  If and to the extent that upon resolution of
such dispute it is determined that such Purchaser Indemnified Party is entitled
to indemnification under this Article VII, then (A) such Purchaser
Indemnified Party shall be paid for its indemnifiable Losses under this Article VII
without having exhausted its remedies against the Old Aircast Sellers, and (B)
the Sellers shall be subrogated to the rights of the Purchaser Indemnified
Parties against the Old Aircast Sellers with respect to such Losses.  If and to the extent that upon resolution of
such dispute it is determined that the Purchaser Indemnified Parties are not
entitled to indemnification under this Article VII, then (I) the
Purchaser Indemnified Parties shall have no further rights against the Sellers
with respect to such Multiple Source of Recovery Matter and (II) any Indemnity
and Earnout Escrow Funds reserved with respect to such Multiple Source of
Recovery Matter shall be released (x) from reservation under the Indemnity and
Earnout Escrow Agreement, if such instructions are delivered during the
Indemnity and Earnout Escrow Period, or (y) to the Sellers, if such
instructions are delivered after the end of the Indemnity and Earnout Escrow
Period.

 

(e)           With
respect to any claim or Proceeding after the Closing against the Old Aircast
Sellers related to a Multiple Source of Recovery Claim (other than with respect
to a claim or Proceeding for which the Sellers have assumed the defense
pursuant to Section 7.5 or the right to control against the Old Aircast
Sellers pursuant to Section 7.6(b)): (i) the Purchaser Indemnified
Parties shall promptly inform the Stockholder Representative of all material
developments related thereto (including any refusal or failure by the Old Aircast
Sellers to assume, pursuant the terms of the Aircast Asset Purchase Agreement
or otherwise, the defense of any Third Party Claim which is also a Multiple
Source of Recovery Matter); (ii) the Stockholder Representative shall have the
right, but not the obligation, to participate, at the cost and expense of the
Sellers, in the indemnification proceedings with respect to such Pre-December 7th
Losses, including through legal counsel reasonably selected by it; and (iii)
the Purchaser Indemnified Parties shall not settle or compromise a claim
against the Old Aircast Sellers or consent to a settlement claim with a third
party proposed by the Old Aircast Sellers (as indemnifying parties under the
Aircast Asset Purchase Agreement) or by the Company, a Company Subsidiary or a
Purchaser Indemnified Party in their capacities as indemnified parties under
the Aircast Asset Purchase Agreement without the prior written consent of the
Stockholder Representative, which consent will not be unreasonably withheld,
conditioned or delayed.  If the Sellers
have assumed the defense of a Multiple Source of Recovery Claim pursuant to Section
7.5, are controlling a claim or Proceeding against the Old Aircast Sellers
pursuant to Section 7.6(b) or are prosecuting such a claim or Proceeding
pursuant to the subrogation rights provided by Section 7.9:  (i) the Purchaser Indemnified Parties shall
take such actions as the Sellers may reasonably request in connection
therewith; (ii) the Purchaser Indemnified Parties shall, during

 

57

 

normal business hours, upon reasonable
notice, cooperate in all reasonable ways with, make its and their relevant
files and records reasonably available for inspection and copying by, make its
and their employees reasonably available to, and otherwise render reasonable
assistance to, the Stockholder Representative related to the evaluation and
prosecution of the Pre-December 7th Losses; (iii) the Purchaser
Indemnified Parties shall not settle or compromise a claim against the Old
Aircast Sellers or consent to a settlement claim with a third party proposed by
the Old Aircast Sellers (as indemnifying parties under the Aircast Asset
Purchase Agreement) or by the Company, a Company Subsidiary or a Purchaser
Indemnified Party in their capacities as indemnified parties under the Aircast
Asset Purchase Agreement without the prior written consent of the Stockholder
Representative, which consent shall not be unreasonably withheld, delayed or
conditioned; and (iv) the Sellers shall not settle or compromise such
claim against the Old Aircast Sellers or consent to a settlement claim with a
third party proposed by the Old Aircast Sellers (as indemnifying parties under
the Aircast Asset Purchase Agreement) without the prior written consent of the
Purchaser, which consent shall not be unreasonably withheld, delayed or
conditioned, provided that the consent of the Purchaser shall not be required
for any settlement that does not purport to limit or restrict the business or
operations of the Purchaser Indemnified Parties in any material manner or
require future payments by any Purchaser Indemnified Party arising from the
conduct of the Purchaser Indemnified Parties’ business (except that any such
settlement by the Sellers of a Third Party Claim shall be made only in
accordance with Section 7.5(d)). 
Any reasonable third party expenses incurred by the Purchaser
Indemnified Parties in performing their obligations under the preceding
sentence shall be Losses arising out of the related Multiple Source of Recovery
Matter.

 

(f)            If,
after having fully exhausted their indemnification rights against the Old
Aircast Sellers in accordance with this Section 7.6: (i) the Purchaser
Indemnified Parties have not recovered from the Old Aircast Sellers an amount
equal to their aggregate indemnifiable Losses with respect to the underlying
Multiple Source of Recovery Matter, then the Purchaser Indemnified Parties may
provide another Notice of Claim pursuant to Section 7.4(a)
concerning such Multiple Source of Recovery Matter (a “Second MSRM Notice of
Claim”), which shall specify the amount of unrecovered indemnifiable Losses
and the other information required under Section 7.4(a), and the
procedures set forth in this Article VII shall thereafter apply
with respect to such indemnification claim (with any Indemnity and Earnout
Escrow Funds amount reserved in response to the corresponding Initial MSRM
Notice of Claim and not released from reservation pursuant to the following
provisions of this Section 7.6(f) available for recovery by the
Purchaser Indemnified Parties with respect to the Second MSRM Notice of Claim);
and (ii) if applicable, the Purchaser Indemnified Parties have recovered from
the Old Aircast Sellers any amount more than zero with respect to the underlying
Multiple Source of Recovery Matter, then concurrently with delivery of the
Second MSRM Notice of Claim the Purchaser Indemnified Parties shall deliver
written instructions directing the Escrow Agent to release (A) from reservation
under the Indemnity and Earnout Escrow Agreement, if such instructions are
delivered during the Indemnity and Earnout Escrow Period, or (B) to the
Sellers, if such instructions are delivered after the end of the Indemnity and
Earnout Escrow Period, that portion of the Indemnity and Earnout Escrow Funds
reserved in response to the corresponding Initial MSRM Notice of Claim
recovered from the Old Aircast Sellers, together with any interest and income
thereon (to the extent such interest and income is not applied to the fees and
expenses of the Escrow Agent as provided in the Indemnity and Earnout Escrow
Agreement).  If the Stockholder
Representative believes that any Purchaser Indemnified Party has failed to
provide a Second MSRM Notice of Claim within thirty (30) days after it has
fully exhausted its rights against the Old Aircast Sellers, the Stockholder
Representative may at any time thereafter, but prior to the receipt of a Second
MSRM Notice of Claim, deliver a notice to the

 

58

 

Purchaser stating that the Purchaser
Indemnified Parties have failed to deliver a Second MSRM Notice of Claim and
identify the Multiple Source of Recovery Matter to which such failure
relates.  If the Purchaser Indemnified
Parties fail to deliver a Second MSRM Notice of Claim within twenty (20)
Business Days after such notice from the Stockholder Representative, the
Stockholder Representative may thereafter instruct the Escrow Agent to release
the Indemnity and Earnout Escrow Funds reserved in response to the
corresponding Initial MSRM Notice of Claim (I) from reservation under the
Indemnity and Earnout Escrow Agreement, if such instructions are delivered
during the Indemnity and Earnout Escrow Period, or (II) to the Sellers, if such
instructions are delivered after the end of the Indemnity and Earnout Escrow
Period.

 

(g)           To
the extent that, after having received from the Sellers under this Article VII
recovery (whether from the Indemnity and Earnout Escrow Funds or otherwise) of
any amount with respect to an Multiple Source of Recovery Matter, any Purchaser
Indemnified Party subsequently receives any recovery from the Old Aircast
Sellers with respect to such Multiple Source of Recovery Matter (including as a
result of aggregate claims against the Old Aircast Sellers exceeding the
thresholds set forth in Section 9.4(b) of the Aircast Asset Purchase
Agreement), such Purchaser Indemnified Party shall promptly remit to the
Sellers (or to the Escrow Agent to be held pursuant to the Indemnity and
Earnout Escrow Agreement, if such recovery occurs prior to the end of the
Indemnity and Earnout Escrow Period) the amount by which the aggregate amount
recovered by the Purchaser Indemnified Parties from the Old Aircast Sellers and
the Sellers with respect to such Multiple Source of Recovery Matter exceeds the
Losses incurred by the Purchaser Indemnified Parties with respect to such
Multiple Source of Recovery Matter (up to the amount previously received from
the Sellers).

 

7.7           Insurance
Proceeds.  The Purchaser agrees to,
and to cause its Affiliates (including the Company and the Company
Subsidiaries, following the Closing) to: (a) in good faith, diligently seek
recovery, at its or their own expense (which shall be a Loss), of all insurance
proceeds from insurers with respect to all Losses with respect to which any
Purchaser Indemnified Party makes a claim for indemnification under this Article VII;
and (b) keep the Stockholder Representative informed of all material matters
related thereto.  To the extent that the
Purchaser or any of its Affiliates (including the Company and the Company
Subsidiaries, following the Closing) receives any amount under insurance
coverage with respect to a matter for which it has previously obtained payment
in indemnification under this Article VII, the Purchaser shall, as
soon as reasonably practicable after receipt of such insurance proceeds, pay
and reimburse to the Escrow Agent (if such reimbursement is to be delivered
during the Indemnity and Earnout Escrow Period) or to the Sellers (if such
reimbursement is to be delivered after the end of the Indemnity and Earnout
Escrow Period), for any prior indemnification payment (up to the amount of the
insurance proceeds, less any premium increases directly attributable thereto).  Any amount paid to the Sellers pursuant to
this Section 7.7 shall be paid to each Seller in the proportion that the
number of Shares owned by such Seller immediately prior to the Closing bears to
the aggregate number of Shares owned by all the Sellers immediately prior to the
Closing.

 

7.8           Mitigation
of Damages.  Each Indemnified Party
shall be required to use commercially reasonable efforts to mitigate, to the
fullest extent reasonably practicable, the amount of any Losses for which a
claim for indemnification is made under this Article VII and,
notwithstanding anything to the contrary in this Article VII, the
Indemnifying Party shall not be required hereunder to provide indemnification
with respect to any Losses resulting from failure of any Indemnified Party to
use such commercially reasonable efforts.

 

59

 

7.9           Subrogation.  Upon making any payment for Losses of an
Indemnified Party under this Article VII, the Indemnifying Party
will, to the extent of such payment, be subrogated to all rights of the
Indemnified Party against any third party with respect to the Loss to which the
payment relates; provided, however, with respect
to the Sellers such subrogation shall not apply to (a) rights against any
Significant Customer or Significant Supplier or (b) rights against any
insurance provider except pursuant to occurrence-based policies or tail
coverage for claims-made policies issued to the Company or any of the Company
Subsidiaries prior to the Closing.  In
addition to any other obligation under this Agreement, the Indemnified Party
agrees to duly execute and deliver, upon request of the Indemnifying Party, all
instruments reasonably necessary to evidence and perfect any subrogation rights
granted pursuant to this Section 7.9.

 

7.10         Limitations.  Notwithstanding anything to the contrary in
this Article VII, in no event will any Indemnified Party be
entitled to receive indemnification under this Article VII for
Losses relating to any matter for any consequential or punitive damages other
than to the extent that an Indemnified Party is seeking to obtain through
indemnification reimbursement of Losses resulting from a consequential or
punitive damage award against it in a Third Party Claim.

 

7.11         Tax
Treatment of Seller Indemnification Payments.  Any indemnification payments made by the
Sellers pursuant to this Article VII (including by release from the
Indemnity and Earnout Escrow Funds) shall be treated for all Tax purposes as
reductions to the Purchase Price paid for the Shares.

 

7.12         Exclusive
Remedy.

 

(a)           Notwithstanding
anything to the contrary in this Agreement or otherwise, but subject to Section
7.12(b), following the Closing, except for claims arising out of the
matters described in clauses (A) through (D) of Section 7.3
(for which the Purchaser may seek any remedy available to it in law or in
equity, but subject to the limitations set forth in Sections 7.1, 7.3,
7.7, 7.8, 7.9 and 7.10 and Article X),
and subject to the Purchaser’s right to specifically enforce the provisions of Sections
1.1, 1.3 and 1.6 and each agreement and covenant in Article V
or Article X that by its terms is to be performed in whole or in
part after the Closing, (i) the Sellers shall have no liability of any kind to
the Purchaser or any other Purchaser Indemnified Party, subject only to the
Purchaser’s right to bring indemnification claims pursuant to this Article VII
solely against the Indemnity and Earnout Escrow Funds in accordance with Section
1.4 and the Indemnity and Earnout Escrow Agreement (but with respect to the
matters described in clause (E) of Section 7.3, subject to the
additional indemnification rights expressly set forth in Section 7.3),
which shall be the sole and exclusive remedy of the Purchaser Indemnified
Parties for breach of any representations and warranties or covenants and
agreements contained in this Agreement; and (ii) the Purchaser, on behalf of
itself and all other Purchaser Indemnified Parties, hereby irrevocably waives
any right to any other remedy for any breach of any representations and
warranties and covenants and agreements contained in this Agreement.  After the Closing, except for matters for
which specific performance is an appropriate remedy, the Sellers’ sole and
exclusive remedy with respect to any breach of this Agreement by Purchaser or
its Subsidiaries shall be the indemnification provided by this Article VII.  Without limiting the generality of the preceding
two sentences of this Section 7.12(a), the rights and claims waived by
the Purchaser and the Purchaser Indemnified Parties, on the one hand, and the
Sellers, on the other hand, under this Section 7.12(a) include claims
for contribution or other rights of recovery arising out of or relating to any
Environmental Law

 

60

 

(whether
now or hereinafter in effect), claims for breach of contract,
breach of representations and warranties, negligent misrepresentation and all
other claims for breach of duty.

 

(b)           Notwithstanding
anything to the contrary in Section 7.12(a), if and to the extent that,
during the Indemnity and Earnout Escrow Period, it is determined that the
Purchaser is entitled to a payment under this Article VII and,
solely as a result of payment from the Indemnity and Earnout Escrow Funds
either with respect to a breach of the representations and warranties set forth
in Section 2.3 or pursuant to Section 1.6, there are not
then sufficient Indemnity and Earnout Escrow Funds to satisfy the full amount
of such payment, the Sellers shall each be required to pay to the Purchaser in
full satisfaction of such payment obligation, by wire transfer of immediately
available funds or interbank transfer to the Purchaser’s account, their
respective pro rata portions of
an amount equal to the lesser of: (i) the sum of the Sellers’ Share and the
amount of any Losses subject to prior payments from the Indemnity and Earnout
Escrow Funds with respect to a breach of the representations and warranties set
forth in Section 2.3; or (ii) the amount by which the Indemnity and
Earnout Escrow Funds were insufficient to satisfy the full amount of such
payment.

 

7.13         Conflict
of Interest.  The Purchaser waives
and will not assert, and agrees to cause the Company and the Company
Subsidiaries to waive and to not assert after the Closing, any conflict of
interest arising out of the representation, after the Closing (the “Post-Closing
Representation”), of any Seller or the Stockholder Representative, or any
officer, director, principal or managing member of a general partner or
managing member of a Seller or the Stockholder Representative (any such Person,
a “Designated Person”) in any matter involving this Agreement and
the transactions contemplated hereby, by Kelley Drye & Warren LLP
(the “Current Representation”). 
Notwithstanding the foregoing, if after the Closing Purchaser discovers
facts materially different from those made available to Purchaser regarding
services performed by counsel to Sellers on behalf of the Company (and in
particular, if such counsel was involved in matters that are the basis of a
Third Party Claim against the Company or a Company Subsidiary), then Purchaser
may assert a conflict of interest arising from such newly discovered facts with
respect to the matters in question.

 

ARTICLE
VIII

TERMINATION

 

8.1           Termination.  This Agreement may be terminated at any time
prior to the Closing Date:

 

(a)           By
the written agreement of the Purchaser and the Stockholder Representative;

 

(b)           By
either the Purchaser or the Stockholder Representative, if the Closing shall
not have occurred on or before November 15, 2006 (or such other date to which
the Purchaser and the Stockholder Representative may agree in writing) (the “End
Date”); provided, however,
that the right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose breach of any provision of this
Agreement shall have caused, or resulted in, the failure of the Closing Date to
occur on or before the End Date;

 

(c)           By the Purchaser if
there shall be in effect any litigation commenced by a Governmental Entity that
would be reasonably likely to have a Purchaser Material Adverse Effect

 

61

 

or that would enjoin, restrain or prohibit
the consummation of the transactions contemplated by this Agreement; provided, however, that such litigation shall not have been
dismissed, settled or otherwise cured within fifteen (15) days after written
notice has been provided by Purchaser to the Stockholder Representative of its
intent to terminate this Agreement;

 

(d)           By
the Purchaser, upon a breach of any representation and warranty, covenant or
agreement of a Seller or the Sellers set forth in this Agreement or if any
representation and warranty of a Seller or the Sellers set forth in this
Agreement shall become untrue, in either case such that the conditions set
forth in Sections 6.1(a), (b), (c) or (d) (as
applicable) would not be satisfied as of the time of such breach or as of the
time such representation and warranty shall have become untrue; provided, however, that if such breach or
untruth is curable by such Seller or the Sellers, as applicable, prior to the
End Date through the exercise of commercially reasonable efforts, then the
Purchaser may not terminate this Agreement under this Section 8.1(d)
prior to thirty (30) days following written notice having been provided by the
Purchaser to such Seller or the Sellers, as applicable, of such breach (and
then only if such breach or untruth has not been cured); or

 

(e)           By
the Stockholder Representative, upon a breach of any representation and
warranty, covenant or agreement of the Purchaser set forth in this Agreement or
if any representation and warranty of the Purchaser set forth in this Agreement
shall become untrue, in either case such that the conditions set forth in Sections 6.2(a)
or (b) (as applicable) would not be satisfied as of the time of such
breach or as of the time such representation and warranty shall have become
untrue; provided, however, that
if such breach or untruth is curable by the Purchaser prior to the End Date
through the exercise of commercially reasonable efforts, then the Stockholder
Representative may not terminate this Agreement under this Section 8.1(e)
prior to thirty (30) days following written notice having been provided by the
Stockholder Representative to the Purchaser of such breach (and then only if
such breach or untruth has not been cured).

 

A termination made in accordance with Section
8.1(b), (c), (d) or (e) shall be effective upon
delivery of a notice of termination by the terminating party to each other
party (subject to the cure periods in Sections 8.1(c), (d) and (e),
which notice shall refer to the provision of this Section 8.1 pursuant
to which such termination is made.

 

8.2           Effect
of Termination.  In the event of the
termination of this Agreement pursuant to the provisions of Section 8.1,
this Agreement shall become void and have no effect, without any liability to
any party or any of its directors, officers, representatives, stockholders or
Affiliates in respect hereof; provided, however,
that (x) any such termination shall not affect the parties’ respective rights
and obligations under Section 5.8 (regarding publicity), Article X,
the Confidentiality Agreement and this Section 8.2 and (y) if such
termination results from the (i) willful failure of a party to perform a
covenant or agreement set forth in this Agreement or (ii) willful breach by a
party of any of its representations and warranties set forth in this Agreement,
such party shall be fully liable for any and all Losses incurred or suffered by
the other parties as a result of such willful failure or willful breach.  The provisions of this Section 8.2
shall survive any termination of this Agreement.  If this Agreement is terminated as provided
herein:

 

(a)           the
Purchaser shall return to the Stockholder Representative all documents and
other materials received from the Sellers, the Company, any Company Subsidiary
or any of their respective Affiliates, agents and representatives (including
all copies of or materials developed from any such documents or other
materials) relating to the transactions contemplated hereby,

 

62

 

whether obtained before or after the
execution hereof, or shall destroy the same and deliver an officers certificate
signed by the Purchaser’s chief financial officer confirming the destruction
thereof;

 

(b)           each
Seller shall, and the Sellers shall cause the Company and the Company
Subsidiaries to, return to the Purchaser all documents and other materials
received from the Purchaser or any of its Affiliates, agents and
representatives (including all copies of or materials developed from any such
documents or other materials) relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, or shall destroy the
same and deliver a certificate signed by an authorized representative of such
Seller, the Company or the Company Subsidiaries, as applicable, confirming the
destruction thereof;

 

(c)           all
confidential information received by the Purchaser with respect to the Sellers,
the Company and the Company Subsidiaries and their respective Affiliates shall
be treated in accordance with the Confidentiality Agreement, which shall remain
in full force and effect notwithstanding the termination of this Agreement; and

 

(d)           all
confidential information received by the Sellers, the Company and the Company
Subsidiaries with respect to the Purchaser and its Affiliates shall be treated
in the same manner as Purchaser Information under Section 5.5(c).

 

ARTICLE IX

DEFINITIONS

 

9.1           Definition
of Certain Terms.  The terms defined
in this Article IX, whenever used in this Agreement (including in
the Seller Disclosure Schedule and the Purchaser Disclosure Schedule), shall
have the respective meanings indicated below for all purposes of this
Agreement.

 

“280G Consent” has the meaning set
forth in Section 5.4(f).

 

“Adjustment Date Conversion Ratios”
has the meaning set forth in Section 1.3(b).

 

“Affiliate” means, with respect to any
Person, a Person that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with
such Person, with “control” (including the terms “controlled by” and “under
common control with”) meaning the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of a Person,
whether through the ownership of voting securities, by contract or credit
arrangement, as trustee or executor, or otherwise.

 

“Aggregate Balance Amount” has the
meaning set forth in Section 1.3(b).

 

“Agreement” means this Stock Purchase
Agreement, including the Exhibits and Schedules hereto, as amended,
supplemented and modified from time to time in accordance with its provisions.

 

“Aircast Asset Purchase Agreement” means
the Asset Purchase Agreement, dated as of October 31, 2004, among Old Aircast
Inc., Old Aircast LLC and Aircast US Opco, as the same is in effect on the date
hereof.

 

63

 

“Aircast Intermediate Holdco” means
Aircast Holding Company LLC, a Delaware limited liability company (formerly AI
Holding Company LLC).

 

“Aircast US Opco” means Aircast LLC, a
Delaware limited liability company (formerly AI Asset Acquisition Company LLC).

 

“Alternative Transaction” has the
meaning set forth in Section 5.6.

 

“Applicable Laws” has the meaning set
forth in Section 2.15.

 

“Audited Financial Statements” has the
meaning set forth in Section 2.5.

 

“Business” means the
business of the Company and the Company Subsidiaries distributing and selling
medical devices for the functional management of joint injuries, fractures and
edema, as conducted by the Company and the Company Subsidiaries as of the date
of this Agreement.

 

“Business Day” means each
Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which
banking institutions in New York, New York or San Diego County, California, are
authorized or obligated by law or executive order to close.

 

“Business Intellectual Property” has
the meaning set forth in Section 2.11.

 

“Capped Employment Taxes” means Employment Taxes for which there
is a maximum taxable wage base.

 

“CERCLA” has the meaning set forth in Section 2.16(d).

 

“Closing” has the meaning set forth in
Section 1.2(a).

 

“Closing Date” has the meaning set
forth in Section 1.2(a).

 

“Closing Memorandum” means the
memorandum delivered by the Stockholder Representative pursuant to Section 1.2(b)
which shall set forth, to the extent reasonably available to the Stockholder
Representative:  (a) the name of each
Person to receive a payment under Section 1.2(b) at the Closing and
of the members of management and employees to whom payments will be made
pursuant to Section 1.2(b)(v), (b) the amount payable to each such
Person and (c) the payment instructions for each such Person and the amount of
the Retention Program Escrow Deposit; and to which shall be appended (I) pay
off letters for the Funded Debt referred to in Section 1.2(b)(i), (II)
invoices of the advisors, legal counsel, accountants and other professionals
for the fees and expenses to be paid at the Closing pursuant to Sections 1.2(b)(iii)
(A) and (B) and Sections 1.2(b)(iv)(A) and (B),
respectively, (III) a schedule of the amounts referred to in Section
1.2(b)(v), on a per person basis and (IV) a statement of the relative
participation of each Seller in amounts paid to the Sellers as the Purchase
Price.

 

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

 

“Common Stock” has the meaning set
forth in Recital A.

 

64

 

“Company” has the meaning set forth in
Recital A.

 

“Company Permits” has the meaning set
forth in Section 2.18.

 

“Company Subsidiaries” means all
Subsidiaries of the Company, and includes their respective successors and
assigns.

 

“Confidentiality Agreement” has the
meaning set forth in Section 5.5(a).

 

“Contract” means any written
agreement, contract, commitment, instrument, undertaking or arrangement that is
binding, in whole or in part, upon the parties thereto.

 

“Credit Agreements” means: (a) the
First Lien Credit Agreement, dated as of December 7, 2004, among Aircast
Intermediate Holdco, Aircast US Opco, the “Lenders” thereunder (the “First
Lien Lenders”) and Credit Suisse First Boston, as “Administrative Agent”
and “Collateral Agent” for the First Lien Lenders, and all agreements,
instruments and other documents delivered thereunder or in connection
therewith; and (b) the Second Lien Credit Agreement, dated as of December 7,
2004, among Aircast Intermediate Holdco, Aircast US Opco, the “Lenders” thereunder
(the “Second Lien Lenders”) and Credit Suisse First Boston, as “Administrative
Agent” and “Collateral Agent” for the Second Lien Lenders, and all agreements,
instruments and other documents delivered thereunder or in connection
therewith.

 

“Credit Opportunities Stockholder” has
the meaning set forth in the preamble.

 

“Current Representation” has the
meaning set forth in Section 7.13.

 

“Delaware Courts” has the meaning set
forth in Section 10.12(a).

 

“Designated Person” has the meaning
set forth in Section 7.13.

 

“DLJ” has the meaning set forth in the
preamble.

 

“DLJ Stockholders” has the meaning set
forth in the preamble.

 

“DOJ” has the meaning set forth in Section
5.4(c).

 

“Earnout Obligations” has the meaning
set forth in Section 1.6(a).

 

“Earnout Obligors” has the meaning set
forth in Section 1.6(a).

 

“Earnout-Related Costs” has the
meaning set forth in Section 1.2(b)(ii).

 

“Employee” and “Employees” have
the meaning set forth in Section 5.9(a).

 

“Employee Plan” has the meaning set
forth in Section 2.14(a).

 

“Employees’ Withholding Taxes” has the
meaning set forth in Section 1.2(b)(v).

 

65

 

“Employment Taxes” means federal
Social Security, Medicare and Unemployment (FUTA) Taxes and similar Taxes under
foreign, state and local Law.

 

“End Date” has the meaning set forth
in Section 8.1(b).

 

“Enforcement Action” means any fines,
injunctions, civil or criminal penalties, recalls, seizures, detentions or
suspensions.

 

“Environmental Claim” means any
Proceeding, demand, claim, notice of violation or potential responsibility,
cause of action or complaint alleged or asserted by any Person arising out of
or relating to: (a) any actual or alleged violation of any Environmental Law;
(b) any Hazardous Substance, from any abatement, disposal, Release, threatened
Release, removal, remedial, corrective, or other response action in connection
with a Hazardous Substance, Environmental Law, or from any actual or alleged
damage, injury, threat, or harm to health, safety, natural resources, or the
environment, regardless of whether such matter is now known or unknown, or how
or when such matter occurred or is discovered; or (c) any Person’s incurrence
of costs, expenses, losses or damages of any kind whatsoever in connection with
the presence or Release of Hazardous Substances.

 

“Environmental Law” means any U.S.
federal, state, county, regional, foreign or local law, statute, rule,
regulation, code, ordinance, order, decree or judgment relating to:  (a) the manufacture, transport, use,
treatment, storage, disposal of Hazardous Substances, Release or threat of
Release; (b) pollution or the protection of human health, safety or the
environment as they relate to Hazardous Substances or the environment
(including natural resources, air, and surface or subsurface land or waters);
or (c) natural resources, including laws relating to Releases or threats of
Releases or otherwise relating to the manufacture, processing, distribution,
use, presence, production, treatment, storage, disposal, transport, or handling
of Hazardous Substances, including the Federal Water Pollution Control Act (33
U.S.C. §1251 et seq.), RCRA, the Safe Drinking Water Act (42 U.S.C. §3000(f) et
seq.), the Toxic Substances Control Act (15 U.S.C. §2601 et seq.), the Clean
Air Act (42 U.S.C. §7401 et seq.), CERCLA, and other similar state and local
statutes, and any regulations promulgated thereto.

 

“Environmental Permits” has the
meaning set forth in Section 2.16 (b).

 

“EPA” has the meaning set forth in Section
2.16(c).

 

“Equitable Exceptions” means any limitations on the enforceability of
obligations resulting from: (a) bankruptcy, insolvency, reorganization,
moratorium or other requirements of Laws, Orders or equitable principles now or
hereafter in effect relating to or affecting the enforcement of creditors’
rights or debtors’ obligations generally; and (b) as to the remedy of specific
performance and injunctive and other forms of equitable relief, the imposition
of equitable defenses and the discretion of the Judicial Authority before which
any Proceeding therefor may be brought.

 

“ERISA” means the Employee Retirement
Income Security Act of 1974, as amended.

 

66

 

“ERISA Affiliate” means any trade or
business (whether or not incorporated) which, together with the Company or any
Company Subsidiary (or their respective successors), is or would have been at
any date of determination occurring since the formation of the Company and the
Company Subsidiaries, treated as a single employer under Section 414 of
the Code.

 

“Escrow Agent” has the meaning set
forth in Section 1.2(b)(vi).

 

“FDA” has the meaning set forth in Section
2.21(a).

 

“Financial Statement Parties” has the
meaning set forth in Section 2.5.

 

“Financial Statements” has the meaning
set forth in Section 2.5.

 

“Foreign Plan” has the meaning set
forth in Section 2.14(d).

 

“Former Real Property” has the meaning
set forth in Section 2.16(a).

 

“FTC” has the meaning set forth in Section
5.4(c).

 

“Funded Debt” means: (a) all Indebtedness
of the Company and the Company Subsidiaries under the Credit Agreement and the
Subordinated Notes; and (b) any other Indebtedness for borrowed money of the
Company or any Company Subsidiary (including obligations under the related
Interest Rate Swap Agreements and the Interest Rate Cap Agreement between
Aircast Intermediate Holdco and Wachovia Bank, N.A., and Credit Suisse First
Boston International, as counterparties).

 

“GAAP” means United States generally
accepted accounting principles in effect as of the date of this Agreement.

 

“Governmental Authority” means any:
(a) federal, state, regional, county, city, municipal or local government,
whether foreign or domestic; (b) governmental or quasi-governmental authority
of any nature, including any regulatory or administrative agency, commission,
department, board, bureau, court, tribunal, arbitrator, arbitral body, agency,
branch, official entity or other administrative or regulatory body obtaining
authority from any of the foregoing, including courts, public utilities, sewer
authorities and any supra-national organization, state, county, city or other
political subdivision; or (c) other Person exercising or entitled to exercise
any administrative, executive, judicial, legislative, police, regulatory or
taxing authority or power of any nature.

 

“Hazardous Substance” means any
hazardous substance as defined in 42 U.S.C. § 9601(14), any hazardous
waste as defined by 42 U.S.C. §6903(5), any pollutant or contaminant as defined
by 42 U.S.C. §9601(33), any toxic substance, oil or hazardous material or other
chemical or substance (including, without limitation, any petroleum product or
by-product, asbestos in any form, polychlorinated biphenyls, urea formaldehyde
or perchlorate) regulated by or forming the basis of liability under any
applicable Environmental Laws, or any other material or substance that is
listed or classified as hazardous pursuant to any applicable Environmental Law.

 

67

 

“HSR Act” means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.

 

“Indebtedness” means, as to any
Person, (a) all indebtedness to any other Person for borrowed money; (b) all
obligations evidenced by bonds, debentures, notes or other instruments; (c) all
obligations upon which interest charges are customarily paid or owed (other
than trade payables incurred in the ordinary course of business); (d)
capitalized lease obligations, synthetic lease obligations, sale leaseback
obligations and other similar indebtedness obligations, whether secured or
unsecured; and (e) all such indebtedness of any other Person which is directly
or indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured against loss, but not including, for the
purposes of each of the foregoing clauses (a) through and including (e),
any inter-company payables or other obligations solely among such Person and
any direct or indirect Subsidiary or Subsidiaries of such Person.

 

“Indemnification Cap” has the meaning
set forth in Section 7.3.

 

“Indemnification Deductible” has the
meaning set forth in Section 7.3.

 

“Indemnified Officers or Directors”
has the meaning set forth in Section 5.11(a).

 

“Indemnified Party” has the meaning
set forth in Section 7.4(a).

 

“Indemnifying Party” has the meaning
set forth in Section 7.4(a).

 

“Indemnity and Earnout Escrow Agreement”
has the meaning set forth in Section 1.4.

 

“Indemnity and Earnout Escrow Deposit”
has the meaning set forth in Section 1.2(b)(vi).

 

“Indemnity and Earnout Escrow Funds”
has the meaning set forth in Section 1.4.

 

“Indemnity and Earnout Escrow Period”
has the meaning set forth in Section 1.4.

 

“Individual Seller’s Knowledge” means:
(a) with respect to the Tailwind Stockholders, except as set forth on Section
9.1(a) of the Seller Disclosure Schedule, the actual knowledge, after
reasonable inquiry, of Douglas Karp, Lawrence Sorrel, Geoffrey Raker or Jeffrey
Calhoun; (b) with respect to the DLJ Stockholders, the actual knowledge of
Edward Johnson; and (c) with respect to the Credit Opportunities Stockholder,
the actual knowledge of Bennett Goodman.

 

“Initial MSRM Notice of Claim” has the
meaning set forth in Section 7.6(c).

 

“Intellectual Property”  means any patents, utility models, industrial
designs, trademarks, service marks, trade names, domain names, copyrights,
trade secrets, know how, technology and inventions and any registrations or
applications for registration of any of the foregoing.

 

68

 

“IRS” means the Internal Revenue
Service.

 

“ISRA” means the New Jersey Industrial
Site Recovery Act, NJSA §§13:1 K-6, et seq.

 

“Judicial Authority” means any court,
arbitrator, special master, receiver, tribunal or similar body of any kind,
whether foreign or domestic (including any Governmental Authority exercising
judicial powers or functions of any kind).

 

“Knowledge of the Sellers” means the
actual knowledge of Thomas Crowley, Joseph Milano, Fabian McCarthy, Johan de
Ruiter and William Devitt, in each case after inquiry by such individual to his
direct reports with respect to the matter in question, and the actual knowledge
of Douglas Karp, Lawrence Sorrel, Geoffrey Raker and Jeffrey Calhoun.

 

“Knowledge of the Purchaser” means the
actual knowledge, after
reasonable inquiry,
of Leslie H. Cross, Vickie L. Capps, Donald M. Roberts, Luke Faulstick and Lou
Ruggiero.

 

“Law” means any treaty, statute, law,
ordinance, regulation, Order or rule issued, promulgated or entered by or with
any Governmental Authority, or, as to the Purchaser only, any securities
exchange on which the securities of the Purchaser or its parent company are
listed from time to time.

 

“Leased Real Property” has the meaning
set forth in Section 2.12.

 

“Lien” means any mortgage, pledge,
deed of trust, hypothecation, claim, security interest, title defect,
encumbrance, burden, charge or other similar restriction, lease, sublease,
claim, title retention agreement, option, easement, covenant, encroachment or
other adverse claim.

 

“Loss” means any claim, liability,
shortage, damage, diminution in value, settlement, deficiency, expense
(including reasonable attorneys’ and accountants’ fees), assessment, Tax, or
loss of any kind.

 

“Management Members’ Withholding Taxes”
has the meaning specified in Section 1.2(b)(v).

 

“Material Adverse Effect” means a
material adverse effect on the business, operations, properties, Liabilities or
results of operations of the Company and the Company Subsidiaries, taken as a
whole; provided, however, that in
no event shall any change or effect resulting from the occurrence, after the
date of this Agreement, of any of the following be considered a Material
Adverse Effect: (a) any change in general economic or political conditions or
changes affecting the industry generally in which the Company or any Company
Subsidiary operates; (b) any natural disaster, any act of terrorism, sabotage,
military action or war (whether or not declared) or any other social or
political disruption, in each case including any escalation or worsening
thereof, which does not have a disproportionate impact on the Company and the
Company Subsidiaries, taken as a whole, as compared to the industry generally
in which the Company or any Company Subsidiary operates; (c) any adverse
change arising from or relating to any change in accounting requirements
applicable to the Company or any Company Subsidiary; (d) any adverse

 

69

 

change arising from or relating
to any change in Laws described in Section 9.1(b) of the Seller
Disclosure Schedule; (e) the announcement of this Agreement or the transactions
contemplated by this Agreement, not made in breach of the terms of this
Agreement, or other communication by the Purchaser of its plans or intentions
with respect to the Company or any Company Subsidiary; or (f) any actions
taken by the Purchaser, the Sellers, the Stockholder Representative, the Company
or any Company Subsidiary taken pursuant to (and without breach of) this
Agreement.

 

“Multiple Source of Recovery Matter”
has the meaning set forth in Section 7.6(b).

 

“NJDEP” means New Jersey Department of
Environmental Protection.

 

“Negative Bank Cash Difference Amount”
has the meaning set forth in Section 1.3(b).

 

“Notice of Claim” has the meaning set
forth in Section 7.4(a).

 

“OFAC” has the meaning set forth in Section
2.15.

 

“Old Aircast Inc.” means ANKL, Inc.
(formerly Aircast Incorporated), a New Jersey corporation.

 

“Old Aircast LLC” means ANKL
International Sales, L.L.C. (formerly Aircast International Sales, L.L.C.), a
New Jersey limited liability company.

 

“Old Aircast Parties” has the meaning
set forth in Section 2.16(d).

 

“Old Aircast Sellers” has the meaning
set forth in Section 1.6(a).

 

“Oral
Contract” means any oral agreement, contract, commitment, instrument,
undertaking or arrangement that is binding, in whole or in part, upon the
Company or any of the Company Subsidiaries parties thereto.

 

“Order” means any judgment, writ,
decree, directive, decision, injunction, ruling, award or order (including any
consent decree or cease and desist order) of any kind of any Governmental
Authority or Judicial Authority.

 

“Organizational Documents” of a Person
means: (a) its articles of incorporation, certificate of incorporation,
certificate of formation or similar document(s) filed with a Governmental
Authority, which filing forms or organizes the Person; and (b) its bylaws,
limited liability company operating agreement, partnership agreement, trust
agreement or similar document(s), whether or not filed with a Governmental
Authority, which organize or govern the internal affairs of such Person, in the
case of each of clause (a) and (b) above, as amended to date and in effect at
the time in question.

 

“Owned Real Property” has the meaning
set forth in Section 2.12.

 

“Parachute Payments” has the meaning
set forth in Section 5.4(f).

 

70

 

“PBGC” has the meaning set forth in Section
2.14(b).

 

“Permit” means any permit, license,
authorization, registration, franchise, approval, certificate, variance, waiver
or other authorization, approval, consent, clearance or similar right issued,
granted or obtained by or from any Governmental Authority.

 

“Permitted Disclosure Recipients” has
the meaning set forth in Section 5.5(c).

 

“Permitted Liens” means: (a) Liens
disclosed in Section 9.1(c) of the Seller Disclosure Schedule, (b) Liens
expressly disclosed in the Financial Statements, including the notes thereto;
(c) Liens for Taxes that are being contested in good faith and for which
appropriate reserves have been established on the Financial Statements or that
are not yet due; (d) Liens arising under workers’ compensation, unemployment
insurance, social security, retirement or similar legislation; (e) purchase
money Liens other than those related to Funded Debt; (f) mechanic’s,
materialmen’s, carrier’s, repairer’s and other similar Liens arising or
incurred in the ordinary course of business or that are not yet due and payable
or that are being contested in good faith; (g) easements, rights of way,
encroachments and restrictions, zoning ordinances and other similar
encumbrances affecting the Owned Real Property or the Leased Real Property that
would be shown on, or disclosed by, a current title report or survey, and which
individually or in the aggregate, do not materially interfere with the use or
possession by the Company or any Company Subsidiary of any of the Owned Real Property
or the Leased Real Property; and (h) statutory Liens in favor of lessors
arising in connection with any property leased to the Company or any Company
Subsidiary which, individually or in the aggregate, are not material and do not
materially interfere with the use or possession by the Company or any Company
Subsidiary of any of the Owned Real Property or the Leased Real Property.

 

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

 

“Positive Bank Cash Difference Amount”
has the meaning set forth in Section 1.3(b).

 

“Post-Closing Representation” has the
meaning set forth in Section 7.13(a).

 

“Post-December 7th Losses”
has the meaning set forth in Section 7.6(b).

 

“Pre-Closing Period” has the meaning
set forth in Section 5.1(a).

 

“Pre-December 7th Losses”
has the meaning set forth in Section 7.6(b).

 

“Preferred Stock” has the meaning set
forth in Recital A.

 

“Proceeding”
means any action, suit, arbitration, mediation, litigation or hearing involving
any Governmental Authority or Judicial Authority.

 

“Products”
means the products of the Company and the Company Subsidiaries, which are
listed in Section 9.1(d) of the Seller Disclosure Schedule.

 

71

 

“Purchase Price” has the meaning set
forth in Section 1.2(b)(viii).

 

“Purchaser” has the meaning set forth
in the preamble.

 

“Purchaser Documents” has the meaning
set forth in Section 4.1(a).

 

“Purchaser Disclosure Schedule” means
the disclosure schedule setting forth exceptions to the representations and
warranties made by the Purchaser in Article IV, captioned in
accordance with Section 9.2, which is incorporated by reference into
this Agreement and thereby made a part hereof.

 

“Purchaser Indemnified Party” has the
meaning set forth in Section 7.2(a).

 

“Purchaser Information” has the
meaning set forth in Section 5.5(c).

 

“Purchaser Material Adverse Effect”
means a material adverse effect on the business, operations, properties,
Liabilities or results of operations of the Purchaser, the Company and the
Company Subsidiaries, taken as a whole and giving effect to the transactions
contemplated hereby.

 

“RCRA” means Resource Conservation and Recovery Act (42 U.S.C.
§6901 et seq).

 

 

 

“Real
Estate Leases” means each Contract under which the Company or any Company
Subsidiary leases any Leased Real Property.

 

“Release” means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, migration, leaching,
placing, discarding, dumping or disposing of any Hazardous Substances into the
environment (including the abandonment of barrels, containers or other closed
receptacles containing any Hazardous Substances).

 

 

 

“Required
Consents” has the meaning set forth in Section 2.2(b).

 

“Reservation Objection Notice” has the
meaning set forth in Section 7.6(d).

 

“Retention Program” has the meaning
set forth in Section 5.9(c).

 

“Retention Program Escrow Agreement”
has the meaning set forth in Section 1.5.

 

“Retention Program Escrow Deposit”
means that portion of $16,390,000 that is allocated to the Retention Program by
the Stockholder Representative prior to the Closing.

 

“Retention Program Escrow Funds” has
the meaning set forth in Section 1.5.

 

“Retention Program Escrow Period” has
the meaning set forth in Section 1.5.

 

“Sale Bonus Program” has the meaning
set forth in Section 5.9(b).

 

“Second MSRM Notice of Claim” has the
meaning set forth in Section 7.6(f).

 

“Securities Act” means the Securities
Act of 1933, as amended.

 

72

 

“Seller” and “Sellers” have the
meanings set forth in the preamble.

 

“Seller Disclosure Schedule” means the
disclosure schedule setting forth certain information and exceptions to the
representations and warranties made by the Sellers in Article II
and Article III, captioned in accordance with Section 9.2,
and covenants and agreements made by the Sellers set forth elsewhere in this
Agreement, which is incorporated by reference into this Agreement thereby and
made a part hereof.

 

“Seller Documents” has the meaning set
forth in Section 2.2(a).

 

“Seller Indemnified Party” has the
meaning set forth in Section 7.2(c).

 

“Seller Representatives” has the
meaning set forth in Section 5.6.

 

“Sellers’ Share” has the meaning set
forth in Section 1.6(a).

 

“Senior Management” means Thomas
Crowley, Roger Martin, Fabian McCarthy, Johan de Ruiter, Ajey Atre and William
Devitt.

 

“Settlement Agreement” has the meaning
set forth in Section 1.6(e).

 

“Settlement Closing” has the meaning
set forth in Section 1.6(e).

 

“Settlement Payment” has the meaning
set forth in Section 1.6(a).

 

“Shares” has the meaning set forth in Recital
A.

 

“Significant Contracts” has the
meaning set forth in Section 2.10.

 

“Significant Customers” has the
meaning set forth in Section 2.8.

 

“Significant Suppliers” has the
meaning set forth in Section 2.8.

 

“Special Representations and Warranties”
has the meaning set forth in Section 7.1(a).

 

“Stockholder Representative” has the
meaning set forth in the preamble.

 

“Stock Purchase” has the meaning set
forth in Recital B.

 

“Stub Period Audit Expenses” has the
meaning set forth in Section 10.1(a).

 

“Subordinated Notes” means: (a) the
Subordinated Note, dated as of December 7, 2004, in the aggregate original
principal amount of $13,950,128.76,
issued by Aircast Intermediate Holdco to Old Aircast Inc.; and (b) the
Subordinated Note, dated as of December 7, 2004, in the aggregate original
principal amount of $1,799,871.24,
issued by Aircast Intermediate Holdco to Old Aircast LLC, in each case pursuant
to the Aircast Asset Purchase Agreement.

 

73

 

“Subsidiary” means, with respect to
any Person, any other Person (other than a natural person), whether
incorporated or unincorporated, of which at least a majority of the securities
or ownership interests having by their terms ordinary voting power to elect a
majority of the board of directors or other Persons performing similar functions
is directly or indirectly owned or controlled by the first Person or by one or
more of its respective Subsidiaries.

 

“Subsidiary Asset Purchase Agreements”
means the Subsidiary Asset Purchase Agreements referred to in, and executed
pursuant to, the Aircast Asset Purchase Agreement.

 

“Tailwind Stockholders” has the
meaning set forth in the preamble.

 

“Tax” or “Taxes” means any
federal, state, local or foreign net or gross income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium (including
taxes under Code Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax, governmental fee or
like assessment, together with any interest and penalties, additions to tax or
additional amounts imposed by any Governmental Authority.

 

“Tax Authority” means any Governmental
Authority with responsibility for Taxes.

 

“Tax Return” means all returns,
reports, forms, declarations, statements, estimated returns, claims for refund
and information returns supplied or required to be supplied to a Tax Authority
relating to Taxes.

 

“Third Party Claim” has the meaning
set forth in Section 7.5(a).

 

“Transaction Consideration” has the
meaning set forth in Section 1.2(b).

 

“Transfer Taxes” has the meaning set
forth in Section 5.10.

 

“TWCP” has the meaning set forth in
the preamble.

 

“Twelve Month Calculation” has the meaning set
forth in Section 1.6(f).

 

“Unaudited Financial Statements” has
the meaning set forth in Section 2.5.

 

“WARN Act” means the United States
Worker Adjustment and Retraining Act, 29 U.S.C. §2101, et seq., and the rules and regulations
promulgated thereunder from time to time.

 

“Welfare Plan” has the meaning set
forth in Section 2.14(a).

 

9.2           Disclosure
Schedules.  The parties acknowledge
and agree that any exception to a representation and warranty contained in this
Agreement that is disclosed in any section of the Seller Disclosure Schedule or
the Purchaser Disclosure Schedule under the caption referencing such
representation and warranty shall be deemed to also be an exception to each
other representation and warranty of the Sellers or the Purchaser (as
applicable) contained in this Agreement to the

 

74

 

extent that it would be readily apparent to the Purchaser or the Seller
(as applicable) that such exception is applicable to such other representation
and warranty.  Certain information set
forth in the Seller Disclosure Schedule and the Purchaser Disclosure Schedule
is included therein solely for informational purposes and may not be required
to be disclosed pursuant to this Agreement, and the disclosure of any
information shall not be deemed to constitute an acknowledgment or admission
that such information is required to be disclosed in connection with the
representations and warranties made by the Sellers or the Purchaser, as the
case may be, in this Agreement or that it is material, nor shall such
information be deemed to establish a standard of materiality.

 

ARTICLE X

GENERAL PROVISIONS

 

10.1         Expenses.

 

(a)           Except
as otherwise specifically provided for in this Agreement: (i) as between the
Purchaser and the Sellers, the Purchaser, on the one hand, and the Sellers, on
the other hand, shall bear their respective expenses, costs and fees (including
attorneys’, auditors’ and financing fees, if any) incurred in connection with the
transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and compliance herewith, whether or not the Closing
is consummated; and (ii) the Sellers shall cause the Company and the Company
Subsidiaries to pay all of their respective expenses, costs and fees (including
attorneys’ and auditors’ fees, if any) incurred prior to the Closing in
connection with the transactions contemplated hereby.  Notwithstanding the foregoing, the parties
agree and acknowledge that within ten (10) Business Days after the execution
and delivery of this Agreement the Purchaser shall pay to the Company the
amount set forth in Section 10.1(a) of the Seller Disclosure Schedule,
as reimbursement of the cost and expenses incurred by the Company and the
Company Subsidiaries in connection with preparation of the Audited Financial
Statements that are not related to work that would in any event be required in
connection with the audit of Aircast Intermediate Holdco and its Subsidiaries
for the full 2005 fiscal year financial statements (the “Stub Period Audit
Expenses”), and, as between the Purchaser and the Sellers, the Stub Period
Audit Expenses shall be the responsibility of the Purchaser and shall not be
the responsibility of the Sellers, the Company or any Company Subsidiary.

 

(b)           If
after the closing the Company or any Company Subsidiary receives an invoice or
demand for payment of fees and expenses from any advisor, legal counsel,
accountant or other professional for services performed to the Company or a
Company Subsidiary prior to the Closing, which amount would have been paid at
the Closing pursuant to Section 1.2(b)(iii)(A) or (B) or (iv)(A)
or (B) had such fees and expenses been identified prior to the Closing,
the Purchaser shall promptly notify the Sellers of such unpaid fees and
expenses, which notice will be accompanied by a copy of such invoice or demand
for payment.  (For purposes of this Section
10.1(b), notice properly given to the Stockholder Representative will be
deemed to also be notice to each Seller.) 
The Sellers shall thereafter assume full responsibility for the payment
of such fees and expenses, and if the Company or any Company Subsidiary is
thereafter compelled to pay any such amount, each of the Sellers shall within five
(5) Business Days after receipt from the Purchaser of notice of such compelled
payment, which notice shall be accompanied by reasonable evidence of the amount
paid and the obligation to make such payment, pay to the Company or a Company
Subsidiary, as directed by the Purchaser, that portion of such fees and
expenses paid by the Company or such Company Subsidiary which corresponds to
the portion of the Shares held by such

 

75

 

Seller immediately prior to the Closing in
relation to the Shares held by all of the Sellers immediately prior to the
Closing.  The aggregate amount so paid
shall be treated for all Tax purposes as a reduction of the Purchase Price
pursuant to the last sentence of Section 1.2(b).

 

10.2         Further
Actions.  Subject to the terms and
conditions of this Agreement, at any time and from time to time after the
Closing, each of the parties, at its own cost and expense, in good faith and in
a timely manner, shall use its respective commercially reasonable efforts to
take or cause to be taken all appropriate actions, do or cause to be done all
things necessary, proper or advisable, and execute, deliver and acknowledge
such documents and other papers as may be required to carry out the provisions
of this Agreement and to give effect to the consummation of the transactions
contemplated by this Agreement.

 

10.3         Notices.  All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if:
(i) delivered personally; (ii) mailed using certified or registered
mail with postage prepaid; or (iii) sent by next-day or overnight mail or
delivery using a nationally recognized overnight courier service, as follows:

 

(a)           if to the Purchaser:

 

dj
Orthopedics, LLC

2985 Scott Street

Vista, CA 92081

Attention: General Counsel

 

with a copy
(which shall not constitute notice) to:

 

Bingham
McCutchen LLP

355 South Grand Avenue

Los Angeles, CA 90071-3106

Attention:  Roger H. Lustberg, Esq.

 

(b)           if to the Tailwind
Stockholders:

 

Tailwind
Management LP

390 Park Avenue, 17th Floor

New York, NY 10022

Attention:  Douglas M. Karp

 

with a copy (which shall not constitute
notice) to:

 

Kelley Drye & Warren LLP

Two Stamford Plaza

281 Tresser Boulevard

Stamford, CT 06901

Attention: John T. Capetta, Esq.

 

76

 

(c)           If
to the DLJ Stockholders:

 

c/o Credit Suisse Private Equity

11 Madison Avenue

New York, NY 10010

Attention: Edward A. Johnson

 

(d)           If
to the Credit Opportunities Stockholder:

 

c/o GSO Capital Partners, L.P.

280 Park Avenue

New York, NY 10017

Attention: Bennett Goodman

 

A party may designate a new address to which
communications shall thereafter be transmitted by providing written notice to
that effect to the other party.  Each
communication transmitted in the manner described in this Section 10.3
shall be deemed to have been provided, received and become effective for all
purposes at the time it shall have been: (x) delivered to the addressee as
indicated by the return receipt (if transmitted by mail) or the affidavit or
receipt of the messenger (if transmitted by personal delivery or courier
service); or (y) presented for delivery to the addressee as so addressed during
normal business hours, if such delivery shall have been rejected, denied or
refused for any reason or, in each case, at such other address as may be
specified in writing to the other parties hereto.

 

10.4         Assignment;
Successors.  This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.  Except as provided in the next sentence of
this Section 10.4, neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned by any party without the prior written
consent of each of the parties.  The
Purchaser shall have the right without the consent of the Sellers but with
prior notice to the Sellers to (a) assign its rights and obligations hereunder
to any Affiliate of the Purchaser and (b) collaterally assign its rights
hereunder to any lender, in each case unless such assignment would delay the
consummation of the transactions contemplated hereby or cause the Purchaser to
have to obtain the consent of any Person to the consummation of the
transactions contemplated hereby (other than the Consents set forth on Section 4.2(b)
of the Purchaser Disclosure Schedule); provided, however,
that no such assignment by the Purchaser shall release the Purchaser from any
of its obligations hereunder.

 

10.5         Amendment.  No
purported amendment or modification to any provision of this Agreement shall be
binding upon the parties to this Agreement unless the Purchaser and the Sellers
have each duly executed and delivered to the other party a written instrument
which states that it constitutes an amendment or modification (as applicable)
to this Agreement and specifies the provision(s) that are being amended or
modified (as applicable).

 

10.6         Waiver.  No
purported waiver of any provision of this Agreement shall be binding upon the
Purchaser, on the one hand, or the Sellers, on the other hand, unless either
the Purchaser (with respect to waivers by the Purchaser) or the Stockholder
Representative (with respect to waivers by the Sellers) has duly executed and
delivered to the Stockholder Representative or the Purchaser (as applicable) a
written instrument which states that it constitutes a waiver of one or

 

77

 

more provisions of this Agreement and specifies the provision(s) that
are being waived.  Any such waiver shall
be effective only to the extent specifically set forth in such written
instrument.  Neither the exercise (from
time to time and at any time) by a party of, nor the delay or failure (at any
time or for any period of time) to exercise, any right, power or remedy shall
constitute a waiver of the right to exercise, or impair, limit or restrict the
exercise of, such right, power or remedy or any other right, power or remedy at
any time and from time to time thereafter. 
No waiver of any right, power or remedy of a party shall be deemed to be
a waiver of any other right, power or remedy of such party or shall, except to
the extent so waived, impair, limit or restrict the exercise of such right,
power or remedy.

 

10.7         Entire
Agreement.  This Agreement (including
the Exhibits and Schedules referred to herein) and the Confidentiality
Agreement constitute the entire agreement and supersede all of the previous or
contemporaneous contracts, representations, warranties and understandings
(whether oral or written) by or between the parties with respect to the subject
matter hereof, including any letter of intent, exclusivity agreement, term
sheet or memorandum of terms entered into or exchanged by the parties.

 

10.8         Severability.  If any provision of this Agreement shall
hereafter be held to be invalid, unenforceable or illegal, in whole or in part,
in any jurisdiction under any circumstances for any reason: (a) such provision
shall be reformed to the minimum extent necessary to cause such provision to be
valid, enforceable and legal while preserving the intent of the parties as
expressed in, and the benefits to such parties provided by, such provision or
(b) if such provision cannot be so reformed, such provision shall be severed
from this Agreement and an equitable adjustment shall be made to this Agreement
(including addition of necessary further provisions to this Agreement) so as to
give effect to the intent as so expressed and the benefits so provided.  Such holding shall not affect or impair the
validity, enforceability or legality of such provision in any other
jurisdiction or under any other circumstances. 
Neither such holding nor such reformation or severance shall affect or
impair the legality, validity or enforceability of any other provision of this
Agreement.

 

10.9         Headings.  The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.

 

10.10       Counterparts.  This Agreement may be signed in any number of
counterparts, each of which (when executed and delivered) shall constitute an
original instrument, but all of which together shall constitute one and the
same instrument, respectively.  This
Agreement shall become effective and be deemed to have been executed and
delivered by each of the parties at such time as counterparts hereto shall have
been executed and delivered by all of parties, regardless of whether all of the
parties have executed the same counterpart. 
Counterparts may be delivered via facsimile or other electronic
transmission and any counterpart so delivered shall be deemed to have been duly
and validly delivered and be valid and effective for all purposes.

 

10.11       Governing
Law.  THIS AGREEMENT SHALL BE
CONSTRUED, PERFORMED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION
(WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
DELAWARE.

 

78

 

10.12       Consent
to Jurisdiction, etc.

 

(a)           EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE DELAWARE CHANCERY
COURT AND ANY APPELLATE COURT THEREFROM OR THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF DELAWARE AND ANY APPELLATE COURT THEREFROM (THE “DELAWARE
COURTS”), IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT RELATING THERETO, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH PROCEEDING
MAY BE HEARD AND DETERMINED IN THE DELAWARE COURTS.  EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW.

 

(b)           EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY OF
THE DELAWARE COURTS.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH PROCEEDING IN ANY
OF THE DELAWARE COURTS.

 

(c)           EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.3.  NOTHING IN THIS AGREEMENT WILL AFFECT THE
RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW.

 

10.13       Waiver
of Punitive and Other Damages and Jury Trial.

 

(a)           THE
PARTIES TO THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO, EXCEPT TO THE EXTENT
OTHERWISE EXPRESSLY PERMITTED BY SECTION 7.10, ANY RIGHT TO RECOVER
PUNITIVE, EXEMPLARY, LOST PROFITS, CONSEQUENTIAL OR SIMILAR DAMAGES IN ANY
PROCEEDING ARISING OUT OF OR RESULTING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

(b)           EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY PROCEEDING ARISING UNDER OR RELATING TO
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN

 

79

 

RESPECT OF ANY PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

(c)           EACH
PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING ARISING UNDER OR
RELATING TO THIS AGREEMENT, SEEK TO ENFORCE EITHER OF THE FOREGOING WAIVERS, (ii) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (iii) IT
MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.13.

 

10.14       Remedies.

 

(a)           Except
as otherwise expressly set forth in Article VII, each of the
parties shall have and retain all rights and remedies, at law or in equity,
including rights to specific performance and injunctive or other equitable
relief, arising out of or relating to a breach or threatened breach of this
Agreement.  Without limiting the
generality of the foregoing, each of the parties acknowledges that money
damages would not be a sufficient remedy for any breach or threatened breach of
this Agreement and that irreparable harm would result if this Agreement were
not specifically enforced.  Therefore,
the rights and obligations of the parties shall be enforceable by a decree of
specific performance issued by any court of competent jurisdiction, and
appropriate injunctive relief may be applied for and granted in connection
therewith, without the necessity of posting a bond or other security or proving
actual damages and without regard to the adequacy of any remedy at law.  A party’s right to specific performance or
injunctive relief shall be in addition to all other legal or equitable remedies
available to such party.

 

(b)           In
any dispute between the Sellers and the Purchaser that results in litigation,
the prevailing party (being the Sellers and the Seller Indemnified Parties, on
the one hand, and the Purchaser and the Purchaser Indemnified Parties, on the
other hand), shall be entitled to reimbursement of the fees and expenses
incurred by the prevailing party in connection with such litigation; and if
none of the parties prevail fully on the merits in such litigation, then each
party shall bear its own fees and expenses in connection with such litigation
unless the Delaware Court designates otherwise in a final non-appealable Order.  If the Indemnified Party is the prevailing
party in any such litigation, or is otherwise awarded fees and expenses by the
Delaware Court in a final non-appealable Order, such fees and expense to which
the Indemnified Party is entitled under the preceding sentence shall be Losses
(but shall not otherwise be Losses for purposes of Article VII).  If the Indemnifying Party is the prevailing
party in any such litigation, or is otherwise awarded fees and expenses by the
Delaware Court in a final non-appealable Order, the Purchaser (if the
Indemnified Party is the Purchaser or a Purchaser Indemnified Party) or the
Sellers (if the Indemnified Party is the Seller or a Seller Indemnified Party)
shall pay such fees and expenses of the prevailing party within ten (10)
Business Days after the Order designating such party as the prevailing party or
awarding fees and expenses to such party becomes final.

 

10.15       Third
Party Beneficiaries.  No Person other
than the Purchaser and the Sellers is, is intended to be, or shall be a
beneficiary of this Agreement, other than the Purchaser Indemnified

 

80

 

Parties, the Seller Indemnified Parties, as provided in Section 5.11(c),
and any permitted successors and assigns of the parties under Section 10.4.

 

10.16       Interpretation.  The language used in this Agreement shall be
deemed to be the language chosen by the parties to express their mutual intent
and no rule of strict construction shall be applied against any party.  Unless otherwise expressly specified in this
Agreement:

 

(a)           the
words “hereof”, “hereby” and “hereunder,” and correlative
words, refer to this Agreement as a whole and not any particular provision;

 

(b)           the
words “include”, “includes” and “including”, and
correlative words, are deemed to be followed by the phrase “without limitation”;

 

(c)           the
word “or” is not exclusive and is deemed to have the meaning “and/or”;

 

(d)           references
in this Agreement to a “party” means the Purchaser, the Stockholder
Representative or any of the Sellers and to the “parties” means the
Purchaser, the Stockholder Representative and the Sellers;

 

(e)           the
masculine, feminine or neuter form of a word includes the other forms of such
word and the singular form of a word includes the plural form of such word;

 

(f)            references
to a Person shall include the successors and assigns thereof;

 

(g)           references
made in this Agreement to an Article, Section, Schedule or Exhibit mean an
Article or Section of, or a Schedule or Exhibit to, this Agreement;

 

(h)           references
to any Contract are to that Contract as amended, modified or supplemented from
time to time in accordance with the terms thereof; and

 

(i)            any
capitalized term used but not defined in a Schedule or Exhibit to this
Agreement shall have the meaning set forth in this Agreement.

 

 

[remainder of this page intentionally left blank; signature page(s)
follow]

 

81

 

IN WITNESS WHEREOF, the parties have entered
into Agreement as of the date written above.

 

	
   

  	
  THE PURCHASER:

  
	
   

  	
   

  	
   

  
	
   

  	
  DJ ORTHOPEDICS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Vickie L. Capps

  
	
   

  	
  Name:  Vickie L. Capps

  
	
   

  	
  Title:  SVP, CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  THE STOCKHOLDER REPRESENTATIVE:

  
	
   

  	
   

  	
   

  
	
   

  	
  TAILWIND MANAGEMENT LP

  
	
   

  	
  By: Tailwind Capital Group
  LLC

  
	
   

  	
  Its: General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Douglas M. Karp

  
	
   

  	
  Name:  Douglas M. Karp

  
	
   

  	
  Title:  Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  THE SELLERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE TAILWIND STOCKHOLDERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  TWCP, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  TWCP CEO
  Founders’ Circle (QP), L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  TWCP CEO
  Founders Circle (AI), L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TWCP-GP LLC,
  as General Partner of each of the limited

  partnerships named above

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TWCP
  HOLDINGS LLC, as Managing Member of

  TWCP-GP LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Douglas M. Karp

  
	
   

  	
  Name:
  Douglas M. Karp

  
	
   

  	
  Title:

  	
   Authorized Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
  THOMAS
  WEISEL CAPITAL MANAGEMENT LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Jack Helfand

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
								

 

82

 

	
   

  	
  THOMAS
  WEISEL CAPITAL PARTNERS

  
	
   

  	
  EMPLOYEE
  FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By: TWCP
  LLC, as General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Douglas M. Karp

  
	
   

  	
  Name:  Douglas M. Karp

  
	
   

  	
  Title:  Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE DLJ STOCKHOLDERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  DLJ GROWTH
  CAPITAL PARTNERS, L.P.

  
	
   

  	
   By: DLJ Growth Capital, Inc.

  
	
   

  	
   Its: Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Edward A. Johnson

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  GCP PLAN
  INVESTORS, L.P.

  
	
   

  	
   By: DLJ LBO Plans Management Corporation

  
	
   

  	
   Its: Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Edward A. Johnson

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE CREDIT OPPORTUNITIES STOCKHOLDER:

  
	
   

  	
   

  	
   

  
	
   

  	
  GSO CREDIT
  OPPORTUNITIES FUND (HELIOS), L.P.

  
	
   

  	
   By: GSO Associates LLC

  
	
   

  	
   Its: General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ George Fan

  
	
   

  	
  Name: George
  Fan

  
	
   

  	
  Title:
  Authorized Signatory

  
							

 

83

 

SCHEDULE A:

 

Sellers

 

	
  Name of Seller

  	
   

  	
  Shares of

  Common Stock

  	
   

  	
  Shares of

  Preferred Stock

  	
   

  
	
  Tailwind
  Stockholders:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TWCP, L.P.

  	
   

  	
  5,026,890

  	
   

  	
  4,524,200

  	
   

  
	
  TWCP CEO
  Founders’ Circle (QP), L.P.

  	
   

  	
  442,453

  	
   

  	
  398,208

  	
   

  
	
  TWCP CEO
  Founders Circle (AI), L.P.

  	
   

  	
  122,753

  	
   

  	
  110,478

  	
   

  
	
  Thomas
  Weisel Capital Management LLC

  	
   

  	
  192,510

  	
   

  	
  173,259

  	
   

  
	
  Thomas
  Weisel Capital Partners Employee Fund, L.P.

  	
   

  	
  40,394

  	
   

  	
  36,355

  	
   

  
	
  DLJ
  Stockholders:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DLJ Growth
  Capital Partners, L.P.

  	
   

  	
  1,616,162

  	
   

  	
  1,454,546

  	
   

  
	
  GCP Plan
  Investors, L.P.

  	
   

  	
  383,838

  	
   

  	
  345,454

  	
   

  
	
  Credit
  Opportunities Stockholder:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  GSO Credit
  Opportunities Fund (Helios), L.P.

  	
   

  	
  500,000

  	
   

  	
  450,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]