Document:

Exhibit
10.1

 

Stock
Purchase Agreement

 

Endocardial Solutions, Inc.

1350 Energy Lane, Suite 110

St. Paul, Minnesota 55108

 

The undersigned (the “Investor”),
hereby confirms its agreement with you as follows:

 

1.             This
Stock Purchase Agreement (the “Agreement”) is made as of the date set
forth below among Endocardial Solutions, Inc., a Delaware corporation (the “Company”),
and the Investor.

 

2.             The
Company has authorized the sale and issuance of 1,732,029 shares (the “Shares”)
of common stock of the Company, $.01 par value per share (the “Common Stock”),
to certain investors in a private placement (the “Offering”).

 

3.             The
Company and the Investor agree that the Investor will purchase from the Company
and the Company will issue and sell to the Investor
           Shares at a
purchase price of $4.25 per Share, or an aggregate purchase price of
$                                ,
pursuant to the Terms and Conditions for Purchase of Shares attached hereto as
Annex I and incorporated herein by this reference as if fully set forth
herein.  Unless otherwise requested by
the Investor in Exhibit A, certificates representing the Shares purchased by
the Investor will be registered in the Investor’s name and address as set forth
below.

 

4.             The
Investor represents that, except as set forth below, (a) it has had no
position, office or other material relationship within the past three years
with the Company or its affiliates, (b) neither it, nor any group of which it
is a member or to which it is related, beneficially owns (including the right
to acquire or vote) any securities of the Company and (c) it has no direct or
indirect affiliation or association with any National Association of Securities
Dealers, Inc. (“NASD”) member. 
Exceptions:

 

 

(If no exceptions, write “none.” 
If left blank, response will be deemed to be “none.”)

 

Please confirm that the
foregoing correctly sets forth the agreement between us by signing in the space
provided below for that purpose.

 

	
   

  	
  Dated as of:  August      ,
  2003

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “INVESTOR”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGREED AND
  ACCEPTED:

  Endocardial Solutions, Inc.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
									

 

1

 

Annex I

 

Terms and Conditions for Purchase of Shares

 

1.                                      Agreement
to Sell and Purchase the Shares; Subscription Date.

 

1.1          Purchase and Sale.  At the Closing (as defined in Section 2),
the Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and conditions hereinafter set forth, the number of
Shares set forth in paragraph 3 of the Stock Purchase Agreement to which these
Terms and Conditions for Purchase of Shares are attached as Annex I and at the
purchase price set forth in such paragraph.

 

1.2          Other Investors.  As part of the Offering, the Company
proposes to also enter into a Stock Purchase Agreement with certain other
investors (the “Other Investors”), and the Company expects to complete sales
of Shares to them.  (The Investor and
the Other Investors are hereinafter sometimes collectively referred to as the “Investors,”
and this Agreement and the Stock Purchase Agreements executed by the Other
Investors are hereinafter sometimes collectively referred to as the “Agreements.”)  The Company may accept executed Agreements
from Investors for the purchase of Shares commencing upon the date on which the
Company provides the Investors with the proposed purchase price per Share and
concluding upon the date (the “Subscription Date”) on which the Company
has notified U.S. Bancorp Piper Jaffray Inc. (in its capacity as placement
agent for the Shares, the “Placement Agent”) in writing that it is no
longer accepting Agreements for the purchase of Shares in the Offering (which
shall not be later than the Closing Date). 
Each Investor must complete the Stock Purchase Agreement, the Stock
Certificate Questionnaire (attached as Exhibit A hereto) and the Investor
Questionnaire (attached as Exhibit B hereto) in order to purchase Shares in the
Offering.

 

1.3          Placement Agent Fee.  Investor acknowledges that the Company
intends to pay the Placement Agent a fee in respect of the sale of Shares to
the Investor.

 

The Company shall indemnify and hold harmless the
Investor from and against all fees, commissions or other payments owing by the
Company to the Placement Agent or any other person or firm acting on behalf of
the Company hereunder.

 

2.                                      Delivery
of the Shares at Closing.  The
completion of the purchase and sale of the Shares (the “Closing”) shall occur at a
place and time, no later than August
       , 2003 (the “Closing Date”), to be
specified by the Company and the Placement Agent, and of which the Investors
will be notified in advance by the Placement Agent.  At the Closing, the Company shall deliver to the Investor one or
more stock certificates representing the number of Shares set forth in
paragraph 3  of the Stock Purchase
Agreement, each such certificate to be registered in the name of the Investor
or, if so indicated on the Stock Certificate Questionnaire attached hereto as
Exhibit A, in the name of a nominee designated by the Investor provided that,
if requested by the Investor, stock certificates representing such Shares shall
be delivered in escrow to such Investor’s agent prior to the Closing, to be
held until the completion of the Closing. 
In addition, on or prior to the Closing Date, the Company shall cause
counsel to the Company to deliver to the Investors a legal opinion
substantially in the form attached hereto as Exhibit D.

 

The Company’s obligation to issue and sell the Shares
to the Investor shall be subject to the following conditions, any one or more
of which may be waived by the Company: (a) receipt by the Company of a
certified bank check or wire transfer of funds in the full amount of the
purchase price for the Shares being purchased hereunder as set forth in
paragraph 3 of the Stock Purchase Agreement; (b) completion of purchases and
sales under the Agreements with the Other Investors of not less than
           shares of Common
Stock; and (c) the accuracy of the representations and warranties made by the
Investors and the fulfillment of those undertakings of the Investors to be
fulfilled prior to the Closing.

 

The Investor’s obligation to purchase the Shares shall
be subject to the following conditions, any one or more of which may be waived
by the Investor: (a) the completion by the Company of the purchase and sale to
the Investor and the Other Investors, on the Closing Date, of not less than
                
(         ) shares of Common

 

2

 

Stock; (b) evidence satisfactory to the Investor that
the Shares have been issued to the Investor (which may be in the form of a
facsimile transmission of a copy of the certificate representing the Shares);
(c) the delivery to the Investor by counsel to the Company of a legal opinion
in the form attached hereto as Exhibit D; (d) the representations and
warranties of the Company contained in Section 3 being true and correct on and
as of such Closing with the same effect as though such representations and
warranties had been made on and as of the date of such Closing; (e) the absence
of any order, writ, injunction, judgment or decree that questions the validity
of the Agreements or the right of the Company to enter into such Agreements or
to consummate the transactions contemplated hereby and thereby; and (f) the
delivery to the Investor by the Secretary or Assistant Secretary of the Company
of a certificate stating that the condition specified in part (d) of this
paragraph has been fulfilled.

 

3.                                      Representations,
Warranties and Covenants of the Company. 
Except as otherwise described in the Company’s Annual Report on Form
10-K for the year ended December 31, 2002 (and any amendments thereto
filed prior to the date hereof), the Company’s Proxy Statement for its 2003
Annual Meeting of Stockholders, or the Company’s Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2003 and June 30, 2003 (and any amendments
thereto filed prior to the date hereof) or any of the Company’s Current Reports
on Form 8-K filed since January 1, 2003 (collectively, the “SEC Reports”),
the Company hereby represents and warrants to, and covenants with, the Investor
as of the date hereof and the Closing Date, as follows:

 

3.1          Organization.  Each of the Company and
its Subsidiaries (as defined in Rule 405 under the Securities Act, as amended
(the “Securities
Act”)) is duly incorporated and validly existing in good standing
under the laws of the jurisdiction of its incorporation.  Each of the Company and its Subsidiaries has
full power and authority to own, operate and occupy its properties and to
conduct its business as presently conducted and is registered or qualified to
do business and in good standing in each jurisdiction in which it owns or
leases property or transacts business and where the failure to be so qualified
would have a material adverse effect upon the Company and its Subsidiaries
taken as a whole, or the business, financial condition, properties, operations
or assets of the Company and its Subsidiaries taken as a whole, or the
Company’s ability to perform its obligations under the Agreements (“Material
Adverse Effect”), and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification.

 

3.2          Due Authorization.  The Company has all
requisite power and authority to execute, deliver and perform its obligations
under the Agreements, and the Agreements have been duly authorized and validly
executed and delivered by the Company and constitute legal, valid and binding
agreements of the Company enforceable against the Company in accordance with
their terms, except as rights to indemnity and contribution may be limited by
state or federal securities laws or the public policy underlying such laws,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

 

3.3          Non-Contravention.  The execution and delivery
of the Agreements, the issuance and sale of the Shares to be sold by the
Company under the Agreements, the fulfillment of the terms of the Agreements
and the consummation of the transactions contemplated thereby will not
(A) result in conflict with or constitute a violation of, or default (with
the passage of time or otherwise) under, (i) any bond, debenture, note or
other evidence of indebtedness, or any lease, contract, indenture, mortgage,
deed of trust, loan agreement, joint venture or other agreement or instrument
to which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or their respective properties are bound,
where such conflict, violation or default is reasonably expected to result in a
Material Adverse Effect, (ii) the certificate of incorporation, by-laws or
other organizational documents of the Company or any of its Subsidiaries, or
(iii) any law, administrative regulation, ordinance or order of any court
or governmental agency, arbitration panel or authority binding upon the Company
or any of its Subsidiaries or their respective properties, where such conflict,
violation or default is likely to result in a Material Adverse Effect or
(B) result in the creation or imposition of any lien, encumbrance, claim,
security interest or restriction whatsoever upon any of the material properties
or assets of the Company or any of its Subsidiaries or an acceleration of
indebtedness pursuant to any obligation, agreement or condition contained in
any material bond, debenture, note or any other evidence of indebtedness or any
material indenture, mortgage, deed of trust or any other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which any of them is bound or to which any of the property or assets of the
Company or any of its Subsidiaries is subject. 
No consent,

 

3

 

approval, authorization or
other order of, or registration, qualification or filing with, any regulatory
body, administrative agency, or other governmental body in the United States is
required for the execution and delivery of the Agreements by the Company and
the valid issuance or sale of the Shares by the Company pursuant to the
Agreements, other than such as have been made or obtained, and except for any
filings required to be made under federal or state securities laws.

 

3.4          Capitalization.  The outstanding capital
stock of the Company as of June 30, 2003 is as described in the Company’s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2003.  The Company has not issued any capital stock
since June 30, 2003 other than pursuant to (i) the exercise of
employee stock options under the stock option plans disclosed in the SEC
Reports and (ii) the exercise of rights under the Company’s Employee Stock
Purchase Plan disclosed in the SEC Reports. 
The Shares to be sold pursuant to the Agreements have been duly
authorized, and when issued and paid for in accordance with the terms of the
Agreements, will be duly and validly issued, fully paid and nonassessable.  The outstanding shares of capital stock of
the Company have been duly and validly issued and are fully paid and
nonassessable, have been issued in compliance with the registration
requirements of federal and state securities laws, and were not issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities.  Except for options
issued under the Company’s stock option plans, warrants outstanding as
described in the SEC Reports and rights under the Company’s Employee Stock
Purchase Plan or Rights Agreement with Wells Fargo Bank Minnesota (formerly
Norwest Bank Minnesota) as Rights Agent, there are no outstanding rights
(including, without limitation, preemptive rights), warrants or options to
acquire, or instruments convertible into or exchangeable for, any unissued
shares of capital stock or other equity interest in the Company, or any
contract, commitment, agreement, understanding or arrangement of any kind, in
either case to which the Company is a party and providing for the issuance or
sale of any capital stock of the Company, any such convertible or exchangeable
securities or any such rights, warrants or options.  Without limiting the foregoing, no preemptive right, co-sale
right, registration right, right of first refusal or other similar right exists
with respect to the issuance and sale of the Shares, except as provided in the
Agreements.  There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Common Stock to which the Company is a party. 
Other than one share held by the Chief Executive Officer of the Company
for compliance with local law, the Company owns the entire equity interest in
the Subsidiaries, free and clear of any pledge, lien, security interest,
encumbrance, claim or equitable interest.

 

3.5          Legal Proceedings.  There is no material legal
or governmental proceeding pending, or to the knowledge of the Company,
threatened, to which the Company or any of its Subsidiaries is a party or of
which the business or property of the Company or any of its Subsidiaries is
subject that is required to be disclosed and that is not so disclosed in the
SEC Reports.  Neither the Company nor
any of its Subsidiaries is a party to the provisions of any injunction,
judgment, decree or order of any court, regulatory body, administrative agency
or other government body which is material to the business or operation of the
Company and its Subsidiaries, taken as a whole.

 

3.6          No Violations.  Neither the Company nor
any of its Subsidiaries is in violation of its certificate of incorporation,
bylaws or other organizational documents, or in violation of any law,
administrative regulation, ordinance or order of any court or governmental
agency, arbitration panel or authority applicable to the Company or any of its
Subsidiaries, which violation, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect, nor is the Company or any of its
Subsidiaries in default (and there exists no condition which, with the passage
of time or otherwise, would constitute a default) in the performance of any
bond, debenture, note or any other evidence of indebtedness or any indenture,
mortgage, deed of trust or any other material agreement or instrument to which
the Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound or by which the property of the Company or any
of its Subsidiaries is bound, which default is reasonably likely to have a
Material Adverse Effect.

 

3.7          Governmental Permits, Etc.  With the exception of the
matters which are dealt with separately in Sections 3.1, 3.11, 3.12 and 3.21,
each of the Company and its Subsidiaries has all necessary franchises,
licenses, certificates and other authorizations from any foreign, federal,
state or local government or governmental agency, department or body that are
currently necessary for the operation of the business of the Company and its
Subsidiaries as currently conducted, except where the failure to currently
possess such franchises, licenses, certificates and other authorizations is not
reasonably be expected to have a Material Adverse Effect.

 

4

 

3.8          Intellectual
Property.

 

(a)           Except for matters
which are not reasonably likely to have a Material Adverse Effect, (i) each of
the Company and its Subsidiaries has ownership of, or a license or other legal
right to use, all patents, copyrights, trade secrets, trademarks, customer
lists, designs, manufacturing or other processes, computer software, systems, data
compilation, research results or other proprietary rights used in the business
of the Company or its Subsidiaries (collectively, “Intellectual Property”) and
(ii) all of the Intellectual Property owned by the Company or its Subsidiaries
consisting of patents, registered trademarks and registered copyrights have
been duly registered in, filed in or issued by the United States Patent and
Trademark Office, the United States Register of Copyrights or the corresponding
offices of other jurisdictions and have been maintained and renewed in
accordance with all applicable provisions of law and administrative regulations
in the United States and/or such other jurisdictions.

 

(b)           Except for matters
which are not reasonably likely to have a Material Adverse Effect, all material
licenses or other material agreements under which (i) the Company or any of its
Subsidiaries employs rights in Intellectual Property, or (ii) the Company or
any of its Subsidiaries has granted rights to others in Intellectual Property
owned or licensed by the Company or any of its Subsidiaries, are in full force
and effect, and there is no default by the Company or any of its Subsidiaries
with respect thereto.

 

(c)           The Company
believes that it has taken all steps reasonably required in accordance with
sound business practice and business judgment to establish and preserve the
Company’s ownership of all material Intellectual Property owned by the Company
or its Subsidiaries.

 

(d)           Except for matters
which are not reasonably likely to have a Material Adverse Effect, to the
knowledge of the Company, (i) the present business, activities and products of
the Company and its Subsidiaries do not infringe any intellectual property of
any other person; (ii) neither the Company nor any of its Subsidiaries is
making unauthorized use of any confidential information or trade secrets of any
person; and (iii) the activities of any of the employees on behalf of the
Company or any of its Subsidiaries do not violate any agreements or
arrangements related to confidential information or trade secrets of persons
other than the Company or its Subsidiaries or restricting any such employee’s
engagement in business activities of any nature.

 

(e)           No proceedings are
pending, or to the knowledge of the Company, threatened, which challenge the
rights of the Company or any of its Subsidiaries in respect of the Company’s or
any of its Subsidiaries’ right to the use of the Intellectual Property, except
for matters which are not reasonably likely to have a Material Adverse Effect.

 

3.9          Financial Statements.  The consolidated financial
statements of the Company and the related notes contained in the SEC Reports
present fairly and accurately in all material respects, in accordance with
generally accepted accounting principles, the consolidated financial position
of the Company and its Subsidiaries as of the dates indicated, and the results
of their operations, cash flows and the changes in stockholders’ equity for the
periods therein specified, subject, in the case of unaudited financial
statements for interim periods, to normal year-end audit adjustments.  Such consolidated financial statements
(including the related notes) have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods therein specified, except that unaudited financial statements may not
contain all footnotes required by generally accepted accounting principles.

 

3.10        No Material Adverse Change.  Except as disclosed in the SEC Reports or in
Section 3.6, since June 30, 2003, there has not been (i) a change
that has had or is reasonably likely to have a Material Adverse Effect, (ii)
any obligation, direct or contingent, that is material to the Company or any of
its Subsidiaries considered as one enterprise, incurred by the Company or any
of its Subsidiaries, except obligations incurred in the ordinary course of
business, (iii) any dividend or distribution of any kind declared, paid or made
on the capital stock of the Company or any of its Subsidiaries, or (iv) any
loss or damage (whether or not insured) to the physical property of the Company
or any of its Subsidiaries which has been sustained which has a Material
Adverse Effect.

 

5

 

3.11        Nasdaq Compliance.  The Company’s Common Stock
is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and is listed on the Nasdaq National Market
(the “Nasdaq
Stock Market”), and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from the Nasdaq Stock Market.  The
issuance of the Shares does not require shareholder approval, including,
without limitation, pursuant to the Nasdaq Marketplace Rules.

 

3.12        Reporting Status.  The Company has timely made all filings
required under the Exchange Act during the 12 months preceding the date of this
Agreement, and all of those documents complied in all material respects with
the Securities and Exchange Commission’s (the “SEC”) requirements as of
their respective filing dates, and the information contained therein as of the
respective dates thereof did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances under which they were
made not misleading.  The Company is
currently eligible to register the resale of Common Stock in a secondary
offering on a registration statement on Form S-3 under the Securities Act.

 

3.13        No Manipulation of Stock.  The Company has not taken
and will not, in violation of applicable law, take any action outside the
ordinary course of business designed to or that might reasonably be expected to
cause or result in unlawful manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.

 

3.14        Accountants.  Ernst & Young LLP, who expressed their
opinion with respect to the consolidated financial statements to be
incorporated by reference from the Company’s Annual Report on Form 10-K for the
year ended December 31, 2002 into the Registration Statement (as defined
below) and the prospectus which forms a part thereof (the “Prospectus”), have
advised the Company that they are, and to the knowledge of the Company they
are, independent accountants as required by the Securities Act and the rules
and regulations promulgated thereunder (the “Rules and Regulations”).

 

3.15        Contracts.  Except for matters which are not reasonably
likely to have a Material Adverse Effect, the contracts listed as exhibits to
the SEC Reports that are material to the Company, other than those contracts
that are substantially or fully performed or expired by their terms, are in
full force and effect on the date hereof, and none of the Company, its
Subsidiaries nor, to the Company’s knowledge, any other party to such contracts
is in breach of or default under any of such contracts.

 

3.16        Taxes.  Except for matters which are not reasonably
expected to have a Material Adverse Effect, the Company has filed all necessary
federal, state and foreign income and franchise tax returns and has paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of a
tax deficiency which has been asserted or threatened against the Company.

 

3.17        Transfer Taxes.  On the Closing Date, all stock transfer or
other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares hereunder will be, or will
have been, fully paid or provided for by the Company and the Company will have
complied with all laws imposing such taxes.

 

3.18        Investment Company.  The Company is not an “investment company”
or an “affiliated person” of, or “promoter” or “principal underwriter” for an
investment company, within the meaning of the Investment Company Act of 1940,
as amended.

 

3.19        Insurance.  The Company and its Subsidiaries maintain
insurance of the types and in the amounts that the Company reasonably believes
is adequate for their businesses, including, but not limited to, insurance
covering real and personal property owned or leased by the Company and its
Subsidiaries against theft, damage, destruction, acts of vandalism and all
other risks customarily insured against by similarly situated companies, all of
which insurance is in full force and effect.

 

6

 

3.20        Offering Materials.  The Company has not in the past nor will it
hereafter take any action to sell, offer for sale or solicit offers to buy any
securities of the Company which would bring the offer or sale of the Shares as
contemplated by this Agreement within the provisions of Section 5 of the
Securities Act.

 

3.21        Listing.  The Company shall comply with all
requirements of the NASD with respect to the issuance of the Shares and the
prompt listing thereof on the Nasdaq Stock Market, as well as the continued
maintenance of such listing.

 

3.22        Related Party Transactions.  Except as disclosed in the SEC Reports, no
transaction has occurred between or among the Company, or any of its
Subsidiaries and their affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that with the passage of time will
be required to be disclosed pursuant to Section 13, 14 or 15(d) of the Exchange
Act.

 

3.23        Books and Records.  The books, records and accounts of the
Company and its Subsidiaries accurately and fairly reflect, in reasonable
detail, the transactions in, and dispositions of, the assets of, and the
operations of, the Company and its Subsidiaries.  The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

 

3.24        Disclosure.  The Company confirms that neither it nor any
other Person acting on its behalf has provided Investor, or will provide
Investor without Investor’s written consent, with any information that
constitutes or might constitute material, nonpublic information, except the
material terms and conditions of this transaction, including the provisions of
the Agreement, which shall be fully disclosed pursuant to Section 6.6 hereof,
or Suspension Notices pursuant to Section 6.2(c). The Company understands and
confirms that Investor will rely on the foregoing representations in effecting
transactions in securities of the Company.

 

4.                                      Representations,
Warranties and Covenants of the Investor.

 

4.1          Investor Knowledge and Status.  The Investor, solely on behalf of itself,
represents and warrants to, and covenants with, the Company that: (i) the
Investor is an “accredited investor” as defined in Regulation D under the
Securities Act, is knowledgeable, sophisticated and experienced in making, and
is qualified to make decisions with respect to, investments in securities
presenting an investment decision like that involved in the purchase of the
Shares, and has requested, received, reviewed and considered all information it
deemed relevant in making an informed decision to purchase the Shares; (ii) the
Investor understands that the Shares are “restricted securities” and have not
been registered under the Securities Act and is acquiring the number of Shares
set forth in paragraph 3 of the Stock Purchase Agreement in the ordinary course
of its business and for its own account for investment only, has no present
intention of distributing any of such Shares and has no arrangement or
understanding with any other persons regarding the distribution of such Shares
(this representation and warranty not constituting a covenant by the Investor
to hold the Shares for any minimum period of time or limiting the Investor’s
right to sell Shares at any time pursuant to the Registration Statement or
otherwise); (iii) the Investor will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Shares except in
compliance with the Securities Act, applicable state securities laws and the
respective rules and regulations promulgated thereunder; (iv) the Investor has
answered all questions in paragraph 3 of the Stock Purchase Agreement and the
Investor Questionnaire attached hereto as Exhibit B for use in preparation of
the Registration Statement and the answers thereto are true and correct as of
the date hereof and will be true and correct as of the Closing Date; (v) the
Investor will notify the Company promptly of any change in any of such
information until such time as the Investor has sold all of its Shares or until
the Company is no longer required to keep the Registration Statement effective;
and (vi) the Investor has, in connection with its decision to purchase the
number of Shares set forth in paragraph 3 of the Stock Purchase Agreement,
relied only upon the representations and warranties of the Company contained
herein and all publicly available information

 

7

 

disclosed by the Company.  Investor understands that the issuance of
the Shares to the Investor has not been registered under the Securities Act, or
registered or qualified under any state securities law in reliance on specific
exemptions therefrom, which exemptions may depend upon, among other things, the
bona fide nature of the Investor’s investment intent as expressed herein and
the information provided in the Investor Questionnaire.

 

4.2          International Actions.  The Investor acknowledges, represents and
agrees that no action has been or will be taken in any jurisdiction outside the
United States by the Company or the Placement Agent that would permit an
offering of the Shares, or possession or distribution of offering materials in
connection with the issue of the Shares, in any jurisdiction outside the United
States.  If the Investor is located
outside the United States, it has or will take all actions necessary for the
sale of the Shares to comply with all applicable laws and regulations in each
foreign jurisdiction in which it purchases, offers, sells or delivers Shares or
has in its possession or distributes any offering material, in all cases at its
own expense.

 

4.3          Registration Required.  The Investor hereby covenants with the
Company not to make any sale of the Shares without complying with the
provisions of this Agreement, including Section 6.2 hereof, and without
effectively causing the prospectus delivery requirement under the Securities
Act to be satisfied (unless the Investor is selling such Shares in a
transaction not subject to the prospectus delivery requirement), and the
Investor acknowledges that the certificates evidencing the Shares will be
imprinted with a legend that prohibits their transfer except in accordance
therewith.  The Investor acknowledges
that as set forth in, and subject to the provisions of, Section 6.2, there may
occasionally be times when the Company, based on the advice of its counsel,
determines that it must suspend the use of the Prospectus forming a part of the
Registration Statement until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the SEC or
until the Company has amended or supplemented such Prospectus.

 

4.4          Power and Authority.  The Investor further represents and warrants
to, and covenants with, the Company that (i) the Investor has full right,
power, authority and capacity to enter into this Agreement and to consummate
the transactions contemplated hereby and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement, and (ii)
this Agreement constitutes a valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law) and except as the indemnification agreements of the
Investors herein may be legally unenforceable.

 

4.5          Short Positions.  The Investor will not use any of the Shares
acquired pursuant to this Agreement to cover any short position in the Common
Stock if doing so would be in violation of applicable securities laws.

 

4.6          No Investment, Tax or Legal Advice.  The Investor understands that nothing in the
SEC Reports, this Agreement, or any other materials presented to the Investor
in connection with the purchase and sale of the Shares constitutes legal, tax
or investment advice.  The Investor has
consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its purchase
of Shares.

 

4.7          Confidential Information.  The Investor covenants that from the date
hereof it will maintain in confidence all material terms and conditions of this
transaction and the receipt and content of any Suspension Notice (as defined in
Section 6.2(c)) until such information (a) becomes generally publicly available
other than through a violation of this provision by the Investor or its agents
or (b) is required to be disclosed in legal proceedings (such as by
deposition, interrogatory, request for documents, subpoena, civil investigation
demand, filing with any governmental authority or similar process); provided,
however, that the foregoing obligation is subject to Investor’s consent to
receive such information as provided in Section 3.24; provided, further, that
before making any disclosure in reliance on this Section 4.7, the Investor will
give the Company at least 15 days prior written notice (or such shorter period
as required by law) specifying the circumstances giving rise thereto and will
furnish only that portion of the non-public information which is legally
required and will exercise its best efforts to obtain reliable assurance that
confidential treatment will be accorded any non-public information so
furnished.

 

8

 

4.8          Acknowledgments Regarding Placement
Agent.  The Investor
acknowledges that the Placement Agent has acted solely as placement agent for
the Company in connection with the Offering of the Shares by the Company.

 

5.                                      Survival
of Representations, Warranties and Agreements. 
Notwithstanding any investigation made by any party to this
Agreement or by the Placement Agent, all covenants, agreements, representations
and warranties made by the Company and the Investor herein shall survive the
execution of this Agreement, the delivery to the Investor of the Shares being
purchased and the payment therefor.

 

6.                                      Registration
of the Shares; Compliance with the Securities Act.

 

6.1          Registration
Procedures and Expenses.  The
Company shall:

 

(a)           subject to receipt
of necessary information from the Investors reasonably requested by the
Company, prepare and file with the SEC, within ten (10) business days after the
Closing Date, a registration statement on Form S-3 (the “Registration Statement”) to
enable the resale of the Shares by the Investors from time to time through the
automated quotation system of the Nasdaq Stock Market or in
privately-negotiated transactions, and provide the Investor at least two (2)
business days to review and provide comments to the Registration Statement
before filing with the SEC;

 

(b)           use its best
efforts, subject to receipt of necessary information from the Investor
reasonably requested by the Company, to cause the Registration Statement to
become effective as soon as practicable, but in no event later than sixty (60)
days after the Registration Statement is filed by the Company. The Company
shall notify each representative of the Investor listed on the signature page
to the Stock Purchase Agreement, if any, of the effectiveness of the
Registration Statement on the day that the SEC declares the Registration
Statement effective.  If the
Registration Statement has not been declared effective by the SEC on or before
the date that is 90 days after the Closing Date (the “Required Effective Date”),
the Company shall, on the 91st day 
and each 30th day thereafter, make a payment to the Investor
as partial compensation for such delay 
(the “Late Registration Payments”) equal to 1% of the purchase price
paid for the Shares purchased by the Investor and not previously sold by the
Investor  (but in no event to exceed 8%
in the aggregate) until the Registration Statement is declared effective by the
SEC. The Late Registration Payments will be prorated on a daily basis during
each 30 day period and will be paid to the Investor by wire transfer or check
within five business days after the earlier of (i) the end of each 30 day
period following the Required Effective Date or (ii) the effective date of
the Registration Statement;

 

(c)           use its best
efforts to prepare and file with the SEC such amendments and supplements to the
Registration Statement and the Prospectus used in connection therewith as may
be necessary to keep the Registration Statement current and effective for a
period not exceeding, with respect to each Investor’s Shares purchased
hereunder, the earlier of (i) the second anniversary of the Closing Date, (ii)
the date on which the Investor may sell all Shares then held by the Investor
without restriction by the volume limitations of Rule 144(e) of the Securities
Act or (iii) such time as all Shares purchased by such Investor in this
Offering have been sold pursuant to a registration statement, and to notify
each Investor promptly upon the Registration Statement and each post-effective
amendment thereto, being declared effective by the SEC;

 

(d)           furnish to the
Investor with respect to the Shares registered under the Registration Statement
such number of copies of the Registration Statement, Prospectuses (including
supplemental prospectuses) and preliminary versions of the Prospectus filed
with the SEC (“Preliminary Prospectuses”) in conformity with the requirements
of the Securities Act and such other documents as the Investor may reasonably
request, in order to facilitate the public sale or other disposition of all or
any of the Shares by the Investor;

 

(e)           file documents
required of the Company for normal blue sky clearance in states specified in
writing by the Investor; provided, however, that the Company shall not be
required to qualify to do business or consent to service of process in any
jurisdiction in which it is not now so qualified or has not so consented;

 

9

 

(f)            bear all expenses
(other than underwriting discounts and commissions, if any) in connection with
the procedures in paragraph (a) through (e) of this Section 6.1 and the
registration of the Shares pursuant to the Registration Statement; and

 

(g)           advise the
Investors, promptly after it receives notice or obtains knowledge of the issuance
of any stop order by the SEC delaying or suspending the effectiveness of the
Registration Statement or of the initiation of any proceeding for that purpose;
and it will promptly use its commercially reasonable efforts to prevent the
issuance of any stop order or to obtain its withdrawal at the earliest possible
moment if such stop order should be issued.

 

With a view to making available to the Investor the
benefits of Rule 144 (or its successor rule) and any other rule or regulation
of the SEC that may at any time permit the Investor to sell Shares to the
public without registration, the Company covenants and agrees to:  (i) make and keep public information
available, as those terms are understood and defined in Rule 144, until the
earlier of (A) such date as all of the Investor’s Shares may be resold pursuant
to Rule 144(k) or any other rule of similar effect or (B) such date as all of
the Investor’s Shares shall have been resold; (ii) file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and under the Exchange Act; and (iii) furnish to the Investor
upon request, as long as the Investor owns any Shares, (A) a written statement
by the Company that it has complied with the reporting requirements of the
Securities Act and the Exchange Act, (B) a copy of the Company’s most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail the Investor of
any rule or regulation of the SEC that permits the selling of any such Shares
without registration.

 

It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 6.1 that the
Investor shall furnish to the Company such information regarding itself, the
Shares to be sold by Investor, and the intended method of disposition of such
securities as shall be reasonably required to effect the registration of the
Shares.

 

The Company understands that the Investor disclaims
being an underwriter, but the Investor being deemed an underwriter by the SEC
shall not relieve the Company of any obligations it has hereunder.

 

6.2                               Transfer
of Shares After Registration; Suspension.

 

(a)           The Investor agrees
that it will not effect any disposition of the Shares or its right to purchase
the Shares that would constitute a sale within the meaning of the Securities
Act other than transactions exempt from the registration requirements of the
Securities Act, except as contemplated in the Registration Statement referred
to in Section 6.1 and as described below, and that it will promptly notify the
Company of any changes in the information set forth in the Registration
Statement regarding the Investor or its plan of distribution.

 

(b)           Except in the event
that paragraph (c) below applies, the Company shall: (i) if deemed necessary by
the Company, prepare and file from time to time with the SEC a post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or a supplement or amendment to any document incorporated therein by
reference or file any other required document so that such Registration
Statement will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and so that, as thereafter delivered to
purchasers of the Shares being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; (ii)
provide the Investor copies of any documents filed pursuant to Section
6.2(b)(i); and (iii) upon request, inform each Investor who so requests that
the Company has complied with its obligations in Section 6.2(b)(i) (or that, if
the Company has filed a post-effective amendment to the Registration Statement
which has not yet been declared effective, the Company will notify the Investor
to that effect, will use its reasonable efforts to secure the effectiveness of
such post-effective amendment as promptly as possible and will promptly notify
the Investor pursuant to Section 6.2(b)(i) hereof when the amendment has become
effective).

 

10

 

(c)           Subject to
paragraph (d) below, in the event: (i) of any request by the SEC or any other
federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration
Statement or related Prospectus or for additional information; (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Shares for sale in any
jurisdiction or the initiation of any proceeding for such purpose; or (iv) of
any event or circumstance which necessitates the making of any changes in the
Registration Statement or Prospectus, or any document incorporated or deemed to
be incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and that in the case of the Prospectus, it
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; then the Company shall promptly deliver a certificate in writing to
the Investor (the “Suspension Notice”) to the effect of the
foregoing (but not including any information which constitutes material
non-public information other than notice that one of the foregoing events has
occurred) and, upon receipt of such Suspension Notice, the Investor will
refrain from selling any Shares pursuant to the Registration Statement (a “Suspension”)
until the Investor’s receipt of copies of a supplemented or amended Prospectus
prepared and filed by the Company, or until it is advised in writing by the
Company that the current Prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated
by reference in any such Prospectus.  In
the event of any Suspension, the Company will use its reasonable best efforts
to cause the use of the Prospectus so suspended to be resumed as soon as
reasonably practicable after delivery of a Suspension Notice to the
Investors.  In addition to and without
limiting any other remedies (including, without limitation, at law or at
equity) available to the Investor, the Investor shall be entitled to specific
performance in the event that the Company fails to comply with the provisions
of this Section 6.2(c).

 

(d)           Notwithstanding the
foregoing paragraphs of this Section 6.2, the Company shall use its best
efforts to ensure that the Investor shall not be prohibited from selling Shares
under the Registration Statement as a result of Suspensions on more than two
occasions of not more than 30 days in any twelve month period.  If a Suspension is in effect for more than
60 days (consecutive or non-consecutive) in any twelve-month period, the
Company shall, on the 61st day of the Suspension and each 30th
day thereafter, make payments to the Investor as partial compensation for such
delay  until the Suspension is
lifted.  The amount of the payments made
to the Investor will be equal to 1% of the purchase price paid for the Shares
purchased by the Investor and not previously sold by the Investor for each 30
days that sales cannot be made under the effective Registration Statement (but
in no event to exceed 8% in the aggregate) beyond the period allowed by the
previous sentence.  The number of Shares
not previously sold as specified in the previous sentence shall be determined
as of the end of the respective 30 day period. 
These payments will be prorated on a daily basis during the 30 day
period and will be paid to the Investor by check within five business days
following the later of the end of each month as to which payment is due
hereunder or two business days after the Investor has delivered to the Company
such information with respect to the number of Shares not previously sold by
the Investor (together with reasonable supporting documentation) as reasonably
requested by the Company.

 

(e)           If a Suspension is
not then in effect, the Investor may sell Shares under the Registration
Statement, provided that it arranges for delivery of a current Prospectus to
the transferee of such Shares.  Upon
receipt of a request therefor, the Company will provide an adequate number of
current Prospectuses to the Investor and to any other parties requiring such
Prospectuses.

 

(f)            In the event of a
sale of Shares by the Investor pursuant to the Registration Statement, unless
such requirement is waived by the Company in writing, the Investor must also
deliver to the Company’s transfer agent, with a copy to the Company, a
Certificate of Subsequent Sale substantially in the form attached hereto as
Exhibit C, so that the shares may be properly transferred.

 

(g)           The Company agrees that it shall, immediately
prior to the Registration Statement being declared effective, deliver to its transfer
agent an opinion letter of counsel, opining that at any time the Registration
Statement is effective, the transfer agent shall issue, in connection with the
sale of the Shares,

 

11

 

certificates
representing such Shares without restrictive legend, provided the Shares are to
be sold pursuant to the prospectus contained in the Registration Statement and
the transfer agent receives a Certificate of Subsequent Sale in the form
attached hereto as Exhibit C.  Upon
receipt of such opinion, the Company shall cause the transfer agent to confirm,
for the benefit of the Investor, that no further opinion of counsel is required
at the time of transfer in order to issue such Shares without restrictive
legend.

 

In the event of any sale of the Shares in
accordance with this Agreement, the restrictive legend shall be removed and the
Company shall issue a certificate without such legend to the purchaser of any
such Shares, if (a) the sale of such Shares is registered under the
Registration Statement (including registration pursuant to Rule 415 under the
Securities Act); (b) the holder has provided the Company with an opinion of
counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of such
Shares may be made without registration under the Securities Act; or (c) such
Shares are sold in compliance with Rule 144 under the Securities Act.

 

6.3                               Indemnification.  For the purpose of this Section 6.3:

 

(a)           the term “Selling
Stockholder” shall include the Investor and each person, if any, who
controls the Investor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act;

 

(b)           the term “Registration
Statement” shall include any final Prospectus, exhibit, supplement
or amendment included in or relating to, and any document incorporated by
reference in, the Registration Statement (or deemed to be a part thereof)
referred to in Section 6.1; and

 

(c)           the term “untrue statement”
shall include any untrue statement or alleged untrue statement, or any omission
or alleged omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

 

(i)            The Company agrees
to indemnify and hold harmless each Selling Stockholder (including its
investment advisor, auditors and legal counsel) from and against any losses,
claims, damages or liabilities to which such Selling Stockholder may become
subject (under the Securities Act or otherwise) insofar as such losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon (i) any untrue statement of a material fact contained in
the Registration Statement, (ii) any inaccuracy in the representations and
warranties of the Company contained in the Agreement or the failure of the
Company to perform its obligations hereunder or (iii) any failure by the
Company to fulfill any undertaking included in the Registration Statement, and
the Company will reimburse such Selling Stockholder for any reasonable legal
expense or other actual accountable out of pocket expenses reasonably incurred
in investigating, defending or preparing to defend any such action, proceeding
or claim, provided, however, that the Company shall not be liable in any such
case to the extent that such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Selling Stockholder specifically for use in
preparation of the Registration Statement or the failure of such Selling
Stockholder to comply with its covenants and agreements contained in Sections
4.1, 4.2, 4.3 or 6.2 hereof or any statement or omission in any Prospectus that
is corrected in any subsequent Prospectus that was delivered to the Selling
Stockholder prior to the pertinent sale or sales by the Selling Stockholder.

 

(ii)           The Investor agrees
to indemnify and hold harmless the Company (and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
each officer of the Company who signs the Registration Statement and each
director of the Company) from and against any losses, claims, damages or
liabilities to which the Company (or any such officer, director or controlling
person) may become subject (under the Securities Act or otherwise), insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, (i) any failure to comply
with the covenants and agreements contained in Section 4.1, 4.2, 4.3 or 6.2 hereof,
or (ii) any untrue statement of a material fact contained in the Registration
Statement if such untrue statement was made in reliance upon and in conformity

 

12

 

with written information
furnished by or on behalf of the Investor specifically for use in preparation
of the Registration Statement, and the Investor will reimburse the Company (or
such officer, director or controlling person), as the case may be, for any
reasonable legal expense or other actual accountable out-of-pocket expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim.  The
Investor’s obligation to indemnify the Company pursuant to this Section
6.3(d)(ii) shall be limited to the extent the net amount of the proceeds
received by the Investor from the sale of the Shares pursuant to the
Registration Statement exceeds the amount paid for such Shares pursuant to this
Agreement.

 

(iii)         Promptly after
receipt by any indemnified person of a notice of a claim or the beginning of
any action in respect of which indemnity is to be sought against an
indemnifying person pursuant to this Section 6.3, such indemnified person shall
notify the indemnifying person in writing of such claim or of the commencement
of such action, but the omission to so notify the indemnifying party will not
relieve it from any liability which it may have to any indemnified party under
this Section 6.3 (except to the extent that such omission materially and
adversely affects the indemnifying party’s ability to defend such action) or
from any liability otherwise than under this Section 6.3.  Subject to the provisions hereinafter
stated, in case any such action shall be brought against an indemnified person,
the indemnifying person shall be entitled to participate therein, and, to the
extent that it shall elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party,
shall be entitled to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified person. 
After notice from the indemnifying person to such indemnified person of
its election to assume the defense thereof (unless it has failed to assume the
defense thereof and appoint counsel reasonably satisfactory to the indemnified
party), such indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof, provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate, in the
reasonable opinion of counsel to the indemnified person, for the same counsel
to represent both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
however, that no indemnifying person shall be responsible for the fees and
expenses of more than one separate counsel (together with appropriate local
counsel) for all indemnified parties. 
In no event shall any indemnifying person be liable in respect of any
amounts paid in settlement of any action unless the indemnifying person shall
have approved the terms of such settlement; provided that such consent shall
not be unreasonably withheld.  No
indemnifying person shall, without the prior written consent of the indemnified
person, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified person is or could reasonably have been a party and
indemnification could have been sought hereunder by such indemnified person,
unless such settlement includes an unconditional release of such indemnified
person from all liability on claims that are the subject matter of such
proceeding.

 

(iv)          If the
indemnification provided for in this Section 6.3 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (d)(i) or
(d)(ii) above in respect of any losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Investor on the other
in connection with the statements or omissions or other matters which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations.  The relative fault shall be determined by
reference to, among other things, in the case of an untrue statement, whether
the untrue statement relates to information supplied by the Company on the one
hand or the Investor on the other and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement.  The Company and the Investor
agree that it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation (even if the Investors
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred to above in this subsection (d). 
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof) referred
to above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.  Notwithstanding the provisions of this subsection (d), the Investor
shall not be required to contribute any amount in excess of the amount by which
the net amount received by the Investor from the sale of the Shares to which
such loss relates exceeds the amount of any damages which the Investor has
otherwise been required to pay

 

13

 

by reason of such untrue
statement.  No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. 
The Investors’ obligations in this subsection to contribute are several
in proportion to their sales of Shares to which such loss relates and not joint.

 

(v)            The parties to
this Agreement hereby acknowledge that they are sophisticated business persons
who were represented by counsel during the negotiations regarding the
provisions hereof including, without limitation, the provisions of this Section
6.3, and are fully informed regarding said provisions.  They further acknowledge that the provisions
of this Section 6.3 fairly allocate the risks in light of the ability of the
parties to investigate the Company and its business in order to assure that
adequate disclosure is made in the Registration Statement as required by the
Securities Act and the Exchange Act.

 

6.4                               Termination
of Conditions and Obligations.  The
conditions precedent imposed by Section 4 or this Section 6 upon the
transferability of the Shares shall cease and terminate as to any particular
number of the Shares when such Shares shall have been effectively registered
under the Securities Act and sold or otherwise disposed of in accordance with
the intended method of disposition set forth in the Registration Statement
covering such Shares or at such time as an opinion of counsel satisfactory to
the Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.

 

6.5                               Information
Available.  So long as the
Registration Statement is effective covering the resale of Shares owned by the
Investor, the Company will furnish (or to the extent such information is
available electronically through the Company’s filings with the SEC, the
Company will make available) to the Investor:

 

(a)           as soon as
practicable after it is available, one copy of (i) its Annual Report to
Stockholders (which Annual Report shall contain financial statements audited in
accordance with generally accepted accounting principles by a national firm of
certified public accountants) and (ii) if not included in substance in the
Annual Report to Stockholders, its Annual Report on Form 10-K (the foregoing,
in each case, excluding exhibits);

 

(b)           upon the reasonable
request of the Investor, all exhibits excluded by the parenthetical to
subparagraph (a)(ii) of this Section 6.5 as filed with the SEC and all other
information that is made available to stockholders; and

 

(c)           upon the reasonable
request of the Investor, an adequate number of copies of the Prospectuses to supply
to any other party requiring such Prospectuses; and the Company, upon the
reasonable request of the Investor, will meet with the Investor or a
representative thereof at the Company’s headquarters to discuss all information
relevant for disclosure in the Registration Statement covering the Shares and
will otherwise reasonably cooperate with the Investor conducting an
investigation for the purpose of reducing or eliminating the Investor’s
exposure to liability under the Securities Act, including the reasonable
production of information at the Company’s headquarters; provided, that the
Company shall not be required to disclose any confidential information to or
meet at its headquarters with the Investor until and unless the Investor shall
have entered into a confidentiality agreement in form and substance reasonably
satisfactory to the Company with the Company with respect thereto.

 

6.6                               Public
Statements.  The Company agrees to
disclose the existence of the Offering and the material terms thereof in a manner
satisfying the requirements of Regulation FD on or before the Closing
Date.  The Company will not issue any
public statement, press release or any other public disclosure listing Investor
as one of the purchasers of the Shares without Investor’s prior written
consent, except as may be required by applicable law or rules of any exchange
on which the Company’s securities are listed.

 

7.                                      Notices.  All notices, requests, consents and
other communications hereunder shall be in writing, shall be mailed (A) if within
domestic United States by first-class registered or certified airmail, or
nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International
Federal Express (or comparable service) or facsimile, and shall be deemed given
(i) if delivered by first-class registered or certified mail domestic, three
business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one (1) business day after so mailed, (iii) if delivered by
International

 

14

 

Federal Express (or comparable
service), two (2) business days after so mailed, (iv) if delivered by
facsimile, upon electric confirmation of receipt and shall be delivered as
addressed as follows:

 

(a)                                  if
to the Company, to:

 

Endocardial Solutions,
Inc.

1350 Energy Lane, Suite 110

St. Paul, MN 55108

Attention:      J. Robert Paulson, Jr.

Telephone:    (651) 523-6900

Telecopy:      (651) 644-7897

 

with a copy mailed to: 

Dorsey & Whitney LLP

Suite 1500

50 South Sixth Street

Minneapolis, MN 55402

Attention:      Ken Cutler

Telephone:    (612) 340-2740

Telecopy:      (612) 340-7800

 

(b)                                  if
to the Investor, at its address and to the attention of the person listed, if
any, on the signature page to the Stock Purchase Agreement, or at such other
address or addresses as may have been furnished to the Company in writing in
accordance with this Section 7.

 

8.                                      Changes.  This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Investor.

 

9.                                      Headings.  The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.

 

10.                               Severability.  If any provision contained in this
Agreement is determined to be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

 

11.                               Governing
Law.  This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State
of Delaware, without giving effect to the principles of conflicts of law.

 

12.                               Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.

 

13.                               Independent
Nature of Investors.   The
obligations of each Investor under any Agreement are several and not joint with
the obligations of any other Investor, and no Investor shall be responsible in
any way for the performance of the obligations of any other Investor under any
Agreement. The decision of each Investor to purchase Shares as part of the
Offering has been made by such Investor independently of any other
Investor.  Nothing contained herein, and
no action taken by any Investor pursuant hereto, shall be deemed to constitute
the Investors as a partnership, an association, a joint venture or any other
kind of entity, or create a presumption that the Investors are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Offering. Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement.

 

15Exhibit
4.1

 

 

AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT

 

dated as of

 

August 27, 2003

 

among

 

WATER PIK, INC.,

LAARS, INC.

and

WATER PIK TECHNOLOGIES
CANADA, INC.,

as Borrowers,

 

The Lenders Party Hereto,

 

The Canadian Lenders
Party Hereto,

 

JPMORGAN CHASE BANK,
TORONTO BRANCH

as Canadian Agent,

 

BANK ONE, NA,

as Syndication Agent

 

and

 

JPMORGAN CHASE BANK,

as Administrative Agent
and Collateral Agent

and Arranger

 

 

 

TABLE OF CONTENTS

 

	
   

  
	
  ARTICLE
  I Definitions

  
	
  SECTION 1.01. DEFINED TERMS

  
	
  SECTION 1.02. CLASSIFICATION OF LOANS AND
  BORROWINGS

  
	
  SECTION 1.03. TERMS GENERALLY

  
	
  SECTION 1.04. ACCOUNTING TERMS; GAAP

  
	
  SECTION 1.05. CALCULATIONS

  
	
   

  
	
  ARTICLE
  II The Credits

  
	
  SECTION 2.01. REVOLVING LOAN COMMITMENTS

  
	
  SECTION 2.02. LOANS AND BORROWINGS

  
	
  SECTION 2.03. REQUESTS FOR BORROWINGS

  
	
  SECTION 2.04. LETTERS OF CREDIT

  
	
  (a)   General

  
	
  (b) Notice of Issuance, Amendment, Renewal,
  Extension; Certain Conditions

  
	
  (c) Expiration Date

  
	
  (d) Participations

  
	
  (e) Reimbursement

  
	
  (f) Obligations Absolute

  
	
  (g) Disbursement Procedures

  
	
  (h) Interim Interest

  
	
  SECTION 2.05. FUNDING OF BORROWINGS

  
	
  SECTION 2.06. INTEREST/CONTRACT ELECTIONS

  
	
  SECTION 2.07. TERMINATION AND REDUCTION OF
  COMMITMENTS

  
	
  SECTION 2.08. REPAYMENT OF LOANS; EVIDENCE
  OF DEBT

  
	
  SECTION 2.09. PREPAYMENT OF LOANS

  
	
  SECTION 2.10. FEES

  
	
  SECTION 2.11. INTEREST

  
	
  SECTION 2.11A.  INTEREST ACT DISCLOSURE

  
	
  SECTION 2.12. ALTERNATE RATE OF INTEREST

  
	
  SECTION 2.13. INCREASED COSTS

  
	
  SECTION 2.14. BREAK FUNDING PAYMENTS

  
	
  SECTION 2.15. TAXES

  
	
  SECTION 2.16. PAYMENTS GENERALLY; PRO RATA
  TREATMENT; SHARING OF SET-OFFS

  
	
  SECTION 2.17. MITIGATION OBLIGATIONS

  
	
  SECTION 2.18. BANKERS’ ACCEPTANCES

  
	
   

  
	
  ARTICLE
  III Representations and Warranties

  
	
  SECTION 3.01. EXISTENCE AND POWER

  
	
  SECTION 3.02. CORPORATE AND GOVERNMENTAL
  AUTHORIZATION; NO CONTRAVENTION

  
	
  SECTION 3.03. BINDING EFFECT

  

 

i

 

	
  SECTION 3.04. FINANCIAL INFORMATION

  
	
  SECTION 3.05. LITIGATION

  
	
  SECTION 3.06. COMPLIANCE WITH ERISA AND
  APPLICABLE CANADIAN PENSION LAWS

  
	
  SECTION 3.07. TAXES

  
	
  SECTION 3.08. ENVIRONMENTAL COMPLIANCE

  
	
  SECTION
  3.09. PROPERTIES

  
	
  SECTION 3.10. COMPLIANCE WITH LAWS AND
  AGREEMENTS

  
	
  SECTION 3.11. INVESTMENT AND HOLDING
  COMPANY STATUS

  
	
  SECTION 3.12. FULL DISCLOSURE

  
	
  SECTION 3.13. SECURITY INTEREST

  
	
  SECTION 3.14. SOLVENCY

  
	
  SECTION 3.15. EMPLOYEE MATTERS

  
	
  SECTION 3.16. USE OF PROCEEDS

  
	
  SECTION 3.17. SUBSIDIARIES

  
	
  SECTION 3.18. NO CHANGE IN CREDIT CRITERIA
  OR COLLECTION POLICIES

  
	
   

  
	
  ARTICLE
  IV Conditions

  
	
  SECTION 4.01. EFFECTIVE DATE

  
	
  SECTION 4.02. EACH CREDIT EVENT

  
	
   

  
	
  ARTICLE
  V Affirmative Covenants

  
	
  SECTION 5.01. INFORMATION

  
	
  SECTION 5.02. MAINTENANCE OF PROPERTY;
  INSURANCE

  
	
  SECTION 5.03. COMPLIANCE WITH LAWS

  
	
  SECTION 5.04. INSPECTION OF PROPERTY, BOOKS
  AND RECORDS

  
	
  SECTION 5.05. USE OF PROCEEDS

  
	
  SECTION 5.06. ENVIRONMENTAL MATTERS

  
	
  SECTION 5.07. TAXES

  
	
  SECTION 5.08. SECURITY INTERESTS

  
	
  SECTION 5.09. EXISTENCE; CONDUCT OF
  BUSINESS

  
	
  SECTION 5.10. LITIGATION AND OTHER NOTICES

  
	
  SECTION 5.11. ADDITIONAL GRANTORS AND
  GUARANTORS

  
	
  SECTION 5.12. MAINTAIN OPERATING ACCOUNTS

  
	
  SECTION 5.13. REAL ESTATE FACILITY

  
	
  SECTION 5.14. LANDLORD WAIVERS

  
	
   

  
	
  ARTICLE
  VI Negative Covenants

  
	
  SECTION 6.01. INDEBTEDNESS

  
	
  SECTION 6.02. LIENS

  
	
  SECTION 6.03. FUNDAMENTAL CHANGES

  
	
  SECTION 6.04. INVESTMENTS, LOANS, ADVANCES,
  GUARANTEES AND ACQUISITIONS

  
	
  SECTION 6.05. PREPAYMENT OR MODIFICATION OF
  INDEBTEDNESS; MODIFICATION OF OPERATING DOCUMENTS

  
	
  SECTION 6.06. RESTRICTED PAYMENTS

  
	
  SECTION 6.07. TRANSACTIONS WITH AFFILIATES

  

 

ii

 

	
  SECTION 6.08. RESTRICTIVE AGREEMENTS

  
	
  SECTION 6.09. CAPITAL EXPENDITURES

  
	
  SECTION 6.10. LEVERAGE RATIO

  
	
  SECTION 6.11. FIXED CHARGE COVERAGE

  
	
  SECTION 6.12. RENTAL OBLIGATIONS.

  
	
  SECTION 6.13. CONSULTING FEES.

  
	
   

  
	
  ARTICLE
  VII Events of Default

  
	
   

  
	
  ARTICLE
  VIII The Administrative Agent and the Canadian Agent

  
	
   

  
	
  N
  IX Miscellaneous

  
	
  SECTION 9.01. NOTICES

  
	
  SECTION 9.02. WAIVERS; AMENDMENTS

  
	
  SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE
  WAIVER

  
	
  SECTION 9.04. SUCCESSORS AND ASSIGNS

  
	
  SECTION 9.05. SURVIVAL

  
	
  SECTION 9.06. COUNTERPARTS; INTEGRATION;
  EFFECTIVENESS

  
	
  SECTION 9.07. SEVERABILITY

  
	
  SECTION 9.08. RIGHT OF SETOFF

  
	
  SECTION 9.09. GOVERNING LAW; JURISDICTION;
  CONSENT TO SERVICE OF PROCESS

  
	
  SECTION 9.10. WAIVER OF JURY TRIAL

  
	
  SECTION 9.11. HEADINGS

  
	
  SECTION 9.12. CONFIDENTIALITY

  
	
  SECTION 9.13. INTEREST RATE LIMITATION

  
	
  SECTION 9.14. REPAYMENT DUE TO EXCHANGE
  RATE FLUCTUATIONS

  
	
  SECTION 9.15. JUDGMENT CURRENCY

  

 

iii

 

	
  SCHEDULES

  	
   

  	
   

  
	
  Schedule 1.01

  	
  —

  	
  Revolving Loan Commitments

  
	
  Schedule 1.02

  	
  —

  	
  Canadian Participating Lenders

  
	
  Schedule 1.03

  	
  —

  	
  Existing Letters of Credit

  
	
  Schedule 3.05

  	
  —

  	
  Disclosed Matters as to Litigation

  
	
  Schedule 3.08

  	
  —

  	
  Disclosed Matters as to Environmental Compliance

  
	
  Schedule 3.17

  	
  —

  	
  Subsidiaries

  
	
  Schedule 5.01(i)

  	
  —

  	
  Borrowing Base Certificate

  
	
  Schedule 6.01

  	
  —

  	
  Existing Indebtedness

  
	
  Schedule 6.02

  	
  —

  	
  Existing Liens

  
	
  Schedule 6.04

  	
  —

  	
  Existing Investments

  
	
  Schedule 6.08

  	
  —

  	
  Existing Restrictions

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
  Exhibit A

  	
  —

  	
  Form of Assignment and Assumption

  
	
  Exhibit B

  	
  —

  	
  Form of Opinion of Borrower’s Counsel

  
	
  Exhibit C

  	
  —

  	
  Form of Promissory Note

  

 

iv

 

AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT dated as of August 27, 2003, among WATER PIK,
INC., a Delaware corporation, LAARS, INC., a Delaware corporation, WATER PIK
TECHNOLOGIES CANADA, INC., a Canadian federal corporation, the LENDERS party
hereto, the CANADIAN LENDERS party hereto, JPMORGAN CHASE BANK, Toronto Branch,
as Canadian Agent, and BANK ONE, NA, as Syndication Agent, JPMORGAN CHASE BANK,
as Administrative and Collateral Agent and Arranger.

 

Water Pik, Inc. (“Water
Pik”), Laars, Inc. (“Laars”), and the Lenders are parties to the
Restated Credit Agreement, dated as of November 29, 1999 (as in effect on
the date hereof, the “Existing Credit Agreement”) providing for loans to
be made to Water Pik and Laars in the principal amount not exceeding
$60,000,000.  Water Pik Technologies
Canada, Inc. (“WP Canada”) wishes to become a party to the Existing
Credit Agreement as a borrower, and the parties intend to provide for loans to
be made to Water Pik, Laars and WP Canada in a principal amount not to exceed
$80,000,000.

 

The Borrowers, the
Lenders and the Administrative Agent have agreed to amend and restate the
Existing Credit Agreement to provide for such amendments on the terms set forth
in this Agreement, which Agreement shall become effective upon the satisfaction
of certain conditions precedent set forth herein.

 

It is the intent of the
parties hereto that this Agreement not constitute a novation of the obligations
and liabilities existing under the Existing Credit Agreement or evidence
payment of all or any such obligations and liabilities, that this Agreement
restate in its entirety the Existing Credit Agreement, and that from and after
the Closing Date the Existing Credit Agreement be of no further force or effect
except as to evidence the incurrence of the obligations thereunder.

 

The Borrowers have
applied to the Lenders for Loans (such terms and all other capitalized terms
used in this paragraph having the respective meanings ascribed to such terms
hereinafter) up to an aggregate principal amount not in excess of $80,000,000
at any time outstanding at any time and from time to time during the
Availability Period.  The proceeds of
the Loans shall be used for the Borrowers’ and their Subsidiaries’ working
capital, to refinance existing Indebtedness on the Effective Date, Permitted
Acquisitions, stock repurchases and dividends permitted hereunder and general
corporate purposes.  The Borrowers and
Guarantors will provide Collateral in accordance with the provisions of this
Agreement and the other Financing Documents. 
The Lenders are severally, and not jointly, willing to extend such Loans
to the Borrowers subject to the terms and conditions hereinafter set forth.
Accordingly, in consideration of the mutual covenants contained herein and
subject to the satisfaction of the conditions set forth herein, the Borrowers,
the Lenders, the Canadian Lenders, the Administrative Agent, the Canadian Agent
and the Syndication Agent hereby agree as follows:

 

 

ARTICLE I

 

Definitions

 

Section 1.01.                 Defined Terms.  As used in this Agreement, the following
terms have the meanings specified below:

 

“ABR”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.

 

“Acceptance Fee”
means the fee payable in Canadian Dollars by WP Canada to a Canadian Lender in
respect of each Bankers’ Acceptance accepted or purchased by such Canadian
Lender as a condition of such acceptance or purchase, computed in accordance
with Section 2.18.

 

“Acceptance Fee Rate”
means at any time the Applicable Rate in respect of a BA Loan.

 

“Adjusted LIBO Rate”
means, with respect to any Eurodollar Borrowing for any Interest Period, an
interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.

 

“Administrative Agent”
means JPMorgan Chase Bank, in its capacity as administrative agent and
collateral agent for the Lenders hereunder or any successor appointed pursuant
to Article VIII.

 

“Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied by
the Administrative Agent.

 

“Affiliate” means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

 

“Alternate Base Rate”
means (1) in the case of a Loan to a US Borrower, for any day, a rate per
annum equal to the greatest of (a) the Prime Rate in effect on such day,
(b) the Base CD Rate in effect on such day plus 1% and (c) the
Federal Funds Effective Rate in effect on such day plus 1⁄2 of 1% or (2) in
the case of a Canadian Loan to WP Canada, at any time of determination, the
greater of (a) the US Base Rate; and (b) the Federal Funds Effective
Rate plus 1% per annum.  Any change in
the Alternate Base Rate due to a change in the Prime Rate, the Base CD Rate,
the Federal Funds Effective Rate or the US Base Rate shall be effective from and
including the effective date of such change in the Prime Rate, the Base CD
Rate, the Federal Funds Effective Rate or US Base Rate, respectively.

 

“Applicable Canadian
Pension Laws” means any law (statutory or common), rule, regulation,
guideline, directive, order or notice of any Canadian federal or provincial (or
other political subdivision thereof) governmental authority or any entity
exercising executive,

 

2

 

legislative,
judicial, regulatory or administrative functions pertaining to, having
jurisdiction over or affecting any pension plan or other employee benefit plan.

 

“Applicable Rate” means, for any date of
determination with respect to any ABR Loan, CPR Loan, Eurodollar Loan or BA
Loan or with respect to the Revolving Credit Commitment Fee, the rate as set
forth below that corresponds to the Leverage Ratio of Holdings and its
subsidiaries on a consolidated basis as of the last day of, and for, the four
consecutive fiscal quarters most recently ended prior to such date of
determination for which financial statements shall have been delivered to the
Administrative Agent as required pursuant to Sections 5.01(a) or (b)
hereof, together with the corresponding compliance certificate required pursuant
to Section 5.01(g)(iii) hereof; provided that the rate shall not
change until three (3) Business Days after the receipt of such financial
statements and certificate; provided  further (A) if Water
Pik on behalf of the Borrowers shall fail to timely deliver such statements and
certificates for any such fiscal quarter or year end period or (B) during
the continuance of an Event of Default, then the Applicable Rate with respect
to ABR Loans, CPR Loans, Eurodollar Loans and BA Loans shall be determined for
the period (x) from and including the date upon which such financial
statements and certificate were required to be delivered to but excluding the
date upon which financial statements and a certificate complying with
Section 5.01(a) or (b) and Section 5.01(g)(iii), or
(y) from and including the date from which such Event of Default shall
have occurred but excluding the date upon which such Event of Default is cured
or waived as if the applicable Leverage Ratio of Holdings and its subsidiaries
was greater than 3.50:1.00:

 

	
  Leverage Ratio

  	
   

  	
  ABR/CPR

  Loans

  	
   

  	
  Eurodollar/BA

  Loans

  	
   

  	
  Revolving
  Credit

  Commitment Fee

  	
   

  
	
  Greater than
  3.50:1.00

  	
   

  	
  1.00

  	
  %

  	
  2.50

  	
  %

  	
  0.50

  	
  %

  
	
  Less than or
  equal to 3.50:1.00 but greater than 3.00:1.00

  	
   

  	
  0.75

  	
  %

  	
  2.25

  	
  %

  	
  0.50

  	
  %

  
	
  Less than or
  equal to 3.00:1.00 but greater than 2.00:1.00

  	
   

  	
  0.50

  	
  %

  	
  1.75

  	
  %

  	
  0.375

  	
  %

  
	
  Less than or
  equal to 2.00:1.00 but greater than 1.50:1.00

  	
   

  	
  0.375

  	
  %

  	
  1.50

  	
  %

  	
  0.25

  	
  %

  
	
  Less than or
  equal to 1.50:1.00

  	
   

  	
  0.25

  	
  %

  	
  1.25

  	
  %

  	
  0.15

  	
  %

  

 

On the Effective Date the
Applicable Rate shall be as follows: 
(x) with respect to Loans that are Eurodollar Loans or BA Loans,
1.50%, (y) with respect to Loans that are ABR Loans or CPR Loans, 0.375%
and (z) with respect to the Revolving Credit Commitment Fee, 0.25%; each
shall thereafter be adjusted after delivery of the September 30, 2003 financial
statements in accordance with the provisions hereof.

 

“Assessment Rate”
means, for any day, the annual assessment rate in effect on such day that is
payable by a member of the Bank Insurance Fund classified as “well-capitalized”
and within supervisory subgroup ”B” (or a comparable successor risk
classification) within the meaning of 12 C.F.R. Part 327 (or any successor
provision) to the Federal Deposit Insurance Corporation for insurance by such
Corporation of time deposits made in dollars at the

 

3

 

offices
of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.

 

“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by
Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.

 

“Availability”
means at any time (i) the lesser at such time of (x) the Commitment
and (y) the Borrowing Base minus all Availability Reserves and
Dilution Reserves, minus (ii) the sum at such time of (x) the
unpaid principal balance of the Loans plus all accrued interest, fees and expenses
and (y) the LC Exposure.

 

“Availability Period”
means the period from and including the Effective Date to but excluding the
earlier of the Maturity Date and the date of termination of the Commitment.

 

“Availability Reserves”
means, as of any date of determination, such reserves in amounts as the
Administrative Agent may from time to time establish and revise (upward or
downward) in good faith in accordance and consistent with practices in the
commercial finance industry generally: 
(a) to reflect events, conditions, contingencies or risks which, as
determined by the Administrative Agent, do, or are reasonably likely to,
materially adversely affect either (i) the Collateral or its value or
(ii) the security interests and other rights of the Administrative Agent
or any Lender in the Collateral (including the enforceability, perfection and
priority thereof), (b) to reflect the Administrative Agent’s belief that
any collateral report or financial information furnished by or on behalf of the
Borrowers is or may have been incomplete, inaccurate or misleading in any
material respect, (c) in respect of any state of facts which the
Administrative Agent determines in good faith constitutes a Default,
(d) to reflect any Derivative Obligations or (e) to reflect any Potential
Preferred Claims.

 

“BA”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, were made by way of purchase by a Canadian Lender of
Bankers’ Acceptances.

 

“BA Loan” means a
Loan in Canadian Dollars to WP Canada by a Canadian Lender by way of the
purchase by each Canadian Lender, or the issuance to a Canadian Lender of a
Bankers’ Acceptance.

 

“BA Period” shall
mean, with respect to a Bankers’ Acceptance, the term of days of such Bankers’
Acceptance, if Bankers’ Acceptances are selected by WP Canada in accordance
with Section 2.03, commencing on the date of such Bankers’ Acceptance and
expiring on a Business Day, which term shall be for 30, 60, 90 or 180 days, in
each case subject to availability.

 

“BA Purchase Price”
means, in respect of any Bankers’ Acceptance being purchased by or issued to a
Canadian Lender on any day, an amount expressed in Canadian Dollars (rounded to
the nearest whole Canadian cent, and with one-half of one Canadian cent being
rounded up) calculated on such day by multiplying:

 

4

 

(a)                                  the
Face Amount of such Bankers’ Acceptance, by

 

(i)                                     the
quotient equal to one divided by the sum of one plus the product of:

 

(A)                              the
Discount Rate (expressed as a decimal) applicable to such Bankers’ Acceptance;
and

 

(B)                                a
fraction, the numerator of which is the number of days in the term of such
Bankers’ Acceptance and the denominator of which is 365,

 

with such quotient being rounded up or down to the
nearest fifth decimal place and .000005 being rounded up,

 

less the amount of the
Acceptance Fee payable to such Canadian Lender in respect of such Bankers’
Acceptance.

 

“Bank Act Security”
means security granted by WP Canada to each of the Canadian Lenders and the
Canadian Participating Lenders (charging its goods, wares and merchandise)
pursuant to section 427 of the Bank Act pursuant to such Canadian Lender’s
or the Canadian Participating Lender’s standard form documentation therefor.

 

“Bankers’ Acceptance”
means a Draft of WP Canada denominated in Canadian Dollars which has been
accepted by a Canadian Lender pursuant to Section 2.18 or, with respect to any
Canadian Lender which is not able to accept banker’s acceptances means a
non-interest bearing promissory note of WP Canada denominated in Canadian
Dollars completed and issued to each such other Lender pursuant to Section
2.18.

 

“Base CD Rate”
means the sum of (a) the Three-Month Secondary CD Rate multiplied by the
Statutory Reserve Rate plus (b) the Assessment Rate.

 

“Board” means the
Board of Governors of the Federal Reserve System of the United States of
America.

 

“Borrowers” means each of Water Pik, Laars and
WP Canada.

 

“Borrowing” means
Loans of the same Type, made, converted or continued on the same date and, in
the case of Eurodollar Loans, as to which a single Interest Period is in
effect.

 

“Borrowing Base”
shall have the meaning assigned to such term in Section 2.01.

 

“Borrowing Request”
means a request by the Borrowers or a Borrower for a Borrowing in accordance
with Section 2.03.

 

“Business Day”
means any day that is not a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to remain closed; provided
that, when used in connection with a Eurodollar Loan, the term “Business Day”
shall

 

5

 

also
exclude any day on which banks are not open for dealings in dollar deposits in
the London interbank market; provided, further, that, when used
in connection with a Canadian Loan or a Letter of Credit for the account of WP
Canada, the term “Business Day” shall also exclude any day on which
commercial banks in Toronto, Ontario are authorized or required by law to
remain closed.

 

“Canadian Agent”
means JPMorgan Chase Bank, Toronto Branch, in its capacity as Canadian agent
for the Lenders and the Canadian Lenders hereunder or any successor appointed
pursuant to Article VIII.

 

“Canadian Availability”
means at any time (i) the lesser at such time of (x) the Canadian
Maximum Amount and (y) the Canadian Borrowing Base, minus
(ii) the sum at such time of (x) the aggregate amount of Canadian
Exposure plus all accrued interest, fees and expenses and (y) all
Availability Reserves and Dilution Reserves attributable to WP Canada.

 

“Canadian Benefit
Plans” means the Canadian Plans and the Canadian Pension Plans.

 

“Canadian Borrowing
Base” shall have the meaning assigned to such term in Section 2.01.

 

“Canadian Dollar
Equivalent” means, for any amount at any time expressed in United States
(U.S.) dollars, the amount of Canadian Dollars that could be sold at the Bank
of Canada noon spot rate of exchange at such time in order to purchase such
amount of U.S. dollars.

 

“Canadian Dollars” shall mean lawful money of
Canada.

 

“Canadian Exposure”
means, at any time, with respect to each Canadian Participating Lender, such
Lender’s actual share of the Canadian Loans outstanding at such time plus the
LC Exposure related to Letters of Credit issued for the account of WP Canada.

 

“Canadian Lenders”
means JPMorgan Chase Bank, Toronto Branch and any other Person resident in
Canada or any Canadian branch of an authorized foreign bank deemed (for
purposes of Part XIII of the Income Tax Act (Canada)) to be resident in Canada
that shall have become a party hereto pursuant to an Assignment and Assumption
that includes a commitment to make Canadian Loans, other than any such Person
that has a commitment to make Canadian Loans that ceases to be a party hereto
pursuant to an Assignment and Assumption.

 

“Canadian Loans”
means collectively (or individually as the context suggests) advances by a
Canadian Lender to WP Canada as CPR Loans, BA Loans, ABR Loans and
Eurodollar Loans.

 

“Canadian Maximum
Amount” means $10,000,000 (or the Canadian Dollar Equivalent thereof),
which comprises part of the aggregate Commitment.

 

“Canadian Obligations”
shall have the meaning assigned to such term in Section 2.08(f).

 

6

 

“Canadian
Participating Lender” means each Lender acquiring from one or more of the
Canadian Lenders a participation in Canadian Loans and LC Exposure related to
Letters of Credit issued for the account of WP Canada and identified as such in
Schedule 1.02 (such Lenders initially being JPMorgan Chase Bank funding through
its Toronto branch and Bank One, NA funding through its Canada branch, both of
which are Canadian branches of an authorized foreign bank deemed to be resident
in Canada).  Such participations shall
be pro rata based on such Canadian Participating Lender’s Revolving Loan
Commitment as compared to the aggregate amount of Revolving Loan Commitments of
all Canadian Participating Lenders.

 

“Canadian Pension Plan”
means any pension plan established by Holdings, WP Canada or any subsidiary of
either of them under Canadian federal or provincial law for the benefit of
employees of the Canadian Borrower or any subsidiary thereof.

 

“Canadian Pension
Regulator” means any governmental authority, tribunal, office, government
agency or board or any other entity exercising executive, legislative,
judicial, regulatory or administrative functions pertaining to or relating to
any Applicable Canadian Pension Laws.

 

“Canadian Plan”
means any employee benefit plan (other than a Canadian Pension Plan)
established or maintained by or for the benefit of WP Canada or any subsidiary
thereof for the benefit of their respective employees.

 

“Canadian Prime Rate”
means the annual rate of interest in effect from time to time equal to the
greater of:  (i) the floating
annual rate of interest established from time to time by the Canadian Agent, as
the reference rate it will use for purposes of determining rates of interest it
will charge on Canadian Dollar loans to customers in Canada and (ii) the
CDOR Rate plus 1% per annum.

 

“Canadian Support
Collateral” shall have the meaning assigned to such term in Section
2.01(b).

 

“Capital Expenditures”
means all expenditures for the acquisition or leasing (pursuant to a capital
lease) of assets or additions to equipment (including replacements, capitalized
repairs and improvements) which should be capitalized under GAAP.

 

“Capital Lease Obligations” of any Person means
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.

 

“Casualty Event”
means, with respect to any property of any of the Borrowers or any of their
Subsidiaries, any loss of title with respect to such property or any loss or
damage to or destruction of, or any condemnation or other taking (including by
any Governmental Authority) of, such property or any interruption of the
business of any of the Borrowers or any Subsidiary which is covered by business
interruption insurance.

 

7

 

“CDOR Rate” means
on any day the annual rate of interest which is the rate determined as being
the arithmetic average of the quotations of all institutions listed in respect
of the “BA 1 Month” rate for Canadian Dollar denominated bankers’
acceptances displayed and identified as such on the CDOR Page of the Reuters
Screen as of 10:00 a.m. Toronto, Ontario local time on such day and, if
such day is not a Business Day, then on the immediately preceding Business Day
(as adjusted by the Canadian Agent after 10:00 a.m. Toronto, Ontario local
time, with notice to WP Canada, to reflect any error in a posted rate of
interest or in the posted average annual rate of interest).  If such rates are not available on the
Reuters Screen CDOR Page on any particular day, then the CDOR Rate on that day
shall be calculated as the arithmetic mean of the 30 day rates applicable to
Canadian Dollar denominated bankers’ acceptances quoted by the Canadian Agent
and two other financial institutions (selected and agreed upon between the
Canadian Agent and WP Canada) as of 10:00 a.m. Toronto, Ontario local time
on such day, or if such day is not a Business Day, then on the immediately
preceding Business Day.

 

“CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended.

 

“Change in Control”
means (i) any person (as such term is defined in Section 13(d)(3) of
the Securities Exchange Act of 1934 as amended (the “Exchange Act”)) or group
of related persons, together with affiliates thereof, becomes the “beneficial
owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange
Act), directly or indirectly, of more than 30% of Equity Interests with voting
power of Holdings; or (ii) Holdings shall cease to own 100% of the Equity
Interests with voting power of each of the Borrowers (or the Borrower surviving
a merger of the Borrowers).

 

“Change in Law”
means (a) the adoption or effectiveness of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after or in effect after the date of this Agreement or
(c) compliance by any Lender or Canadian Lender or the Issuing Bank (or,
for purposes of Section 2.13(b), by any lending office of such Lender,
Canadian Lender or Issuing Bank or by such Lender’s or Canadian Lender’s or the
Issuing Bank’s holding company, if any) with any request, guideline or
directive (whether or not having the force of law) of any Governmental
Authority made, issued or becoming effective after the date of this Agreement.

 

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

 

“Collateral” means
all collateral on which a Lien is granted or purported to be granted pursuant
to any Financing Document.

 

“Commitment” means
the aggregate amount of the Revolving Loan Commitments of all Lenders.  The initial amount of the Commitment is
$80,000,000.

 

“Control” means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

 

8

 

“CPR”, when used
in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Canadian Prime Rate.

 

“Cross-Border Security
Notice” shall have the meaning assigned to such term in Section 2.01(g).

 

“Customer” means
and includes the account debtor or obligor with respect to any Receivable.

 

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

 

“Derivative
Obligations” means every obligation of a Person under any forward contract,
futures contract, swap, option or other financing agreement or arrangement
(including, without limitation, caps, floors, collars and similar agreements),
the value of which is dependent upon interest rates, currency or exchange rates
or valuations.

 

“Dilution Reserve”
means a reserve of 1% for each one percent that the dilution percentage
determined in any field examination conducted by the Administrative Agent
exceeds 10% up to 15% and an additional reserve of 2% for each one percent that
such dilution percentage as so determined exceeds 15%.  The applicable Dilution Reserve is
multiplied by the Net Amount of Eligible Receivables for each Receivables
Grantor.

 

“Disclosed Matters”
means the actions, suits and proceedings and the environmental matters
disclosed in Schedules 3.05 and 3.08.

 

“Discount” means,
with respect to any Bankers’ Acceptance, the difference between the Face Amount
and the BA Purchase Price of such Bankers’ Acceptance.

 

“Discount Rate”
means on any day, as applicable to any Bankers’ Acceptances with the same
maturity date being purchased by any Canadian Lender on such day, the per annum
percentage discount rate (rounded upward, if necessary, to the nearest 0.01%),
calculated as the aggregate of: 
(i) the average discount rate applicable to Canadian Dollar bankers
acceptances appearing on the CDOR page of the Reuters Screen (or such other
page as may from time to time replace such page on that service for the purpose
of displaying quotations for bankers acceptances accepted by leading Canadian
financial institutions) at or about 10:00 am on such day, having a maturity
date comparable to the maturity date of such Bankers’ Acceptances to be issued
and purchased plus 0.10% per annum provided that if, on such day, such rate is
not available on the CDOR page of the Reuters Screen at such time, the Discount
Rate for each such Canadian Lender means the actual discount rate established
in accordance with its normal practices at or about 10:00 am on the date
of issue, for bankers acceptances having a maturity date and a Face Amount
comparable to the maturity date and Face Amount of the relevant Bankers’
Acceptances.

 

“dollars” or “$” refers to lawful money
of the United States of America.

 

9

 

“Draft” means at
any time (a) a bill of exchange, within the meaning of the Bills of Exchange Act (Canada), drawn by
the Canadian Borrower on a Canadian Lender and bearing such distinguishing
letters and numbers as such Canadian Lender may determine, but which at such
time has not been completed and/or accepted by such Canadian Lender, or
(b) a depository bill within the meaning of the Depository Bills and Notes Act (Canada).

 

“Early Buy Program
Receivable” shall mean a Receivable arising from a domestic or Canadian
sale made by Laars during the months of September through February pursuant to
its early buy program requiring the Customer to make payment in three or more
equal monthly installments which are concluded by the end of June for United
States based Customers and by the end of July for Canadian based Customers.

 

“EBITDA” means
with respect to Holdings for any period (a) the sum of (i) Net
Income, (ii) Interest Expense, (iii) Federal, state, local and
foreign income taxes and (iv) depreciation and amortization and other
non-cash items properly deductible in determining Net Income, in each case on a
consolidated basis for Holdings and its subsidiaries for such period,
calculated on a consolidated basis in accordance with GAAP, minus
(b) non-cash items properly added in determining Net Income for such
period.

 

“Effective Date”
means the date on which the conditions specified in Section 4.01 are
satisfied (or waived in accordance with Section 9.02).

 

“Eligible Assignee”
means, with respect to any assignment of the rights, interest and obligations
of a Lender hereunder, a Person that is at the time of such assignment
(a) already a Lender hereunder (whether as an original party to this
Agreement or as the assignee of another Lender), (b) a successor by
operation of law to the commercial lending business of the assigning Lender,
(c) an affiliate of a Lender, or (d) any other person that has been
consented to in writing as an Eligible Assignee by the Borrowers and the
Administrative Agent, provided however that in the case of a Canadian Lender an
“Eligible Assignee” must be a Person resident in Canada or a Canadian branch of
an authorized foreign bank deemed to be resident in Canada.

 

“Eligible Inventory”
means inventory of an Inventory Grantor comprised solely of raw materials and
finished goods (and specifically excluding work in process, supplies and
packaging costs) which is, in the reasonable opinion of the Administrative
Agent, not obsolete, slow-moving or unmerchantable and is and at all times
shall continue to be acceptable to the Administrative Agent in all respects; provided,
however, that Eligible Inventory shall in no event include inventory
which (i) is on consignment, is not in conformity with the representations
and warranties made by the Borrower under the Financing Documents or is
not located at one of the addresses for locations of Collateral set forth on
Annex C to the Security Agreement and with respect to which the Administrative
Agent has not been granted and has not perfected a valid, first priority
security interest subject to Permitted Encumbrances (it being hereby agreed
that to the extent applicable the Administrative Agent may, in its sole
discretion, require that a landlord waiver be obtained with respect to any
leased location in order that the applicable Inventory may be eligible, provided,
however, that Eligible Inventory may include up to $500,000 of
Inventory, in the aggregate at any time, located at locations where no landlord
waiver has been obtained (all such locations being set forth on Annex C to the
Security Agreement), (ii) which is in transit or (iii) has been
returned or rejected by a Customer and is determined to be unmerchantable.

 

10

 

Standards
of eligibility may be fixed and revised from time to time solely by the
Administrative Agent in the Administrative Agent’s reasonable business judgment
based upon its lending practices consistent with practices customary in the
commercial finance industry generally. 
In determining eligibility, the Administrative Agent may, but need not,
rely on reports and schedules furnished by an Inventory Grantor, but reliance
by the Administrative Agent thereon from time to time shall not be deemed to
limit the right of the Administrative Agent to revise standards of eligibility
at any time as to both present and future inventory of the Inventory
Grantors.  If the inventory is sold
under a licensed trademark, for such inventory to constitute Eligible
Inventory, the Administrative Agent shall have entered into a licensor waiver
letter, in form and substance satisfactory to the Administrative Agent, with
the licensor with respect to the rights of the Administrative Agent to use the
trademark to sell or otherwise dispose of such inventory.

 

“Eligible Receivables”
means Receivables created by a Receivables Grantor in the ordinary course of
business arising out of the sale or lease of goods or rendition of services by
a Receivables Grantor, which are and at all times shall continue to be
reasonably acceptable to the Administrative Agent in all respects.  Standards of eligibility may be fixed and
revised from time to time solely by the Administrative Agent in the
Administrative Agent’s reasonable business judgment based upon its lending
practices consistent with practices customary in the commercial finance
industry generally.  In general, without
limiting the foregoing, a Receivable shall in no event be deemed to be an
Eligible Receivable unless: 
(a) all payments due on the Receivable have been invoiced and the
underlying goods shipped or services performed, as the case may be; (b) the
payment due on the Receivable is not more than 90 days past the invoice date or
in the case of an Early Buy Program Receivable each installment payment has
been made when due; (c) the payments due on more than 50% of all
Receivables (other than Early Buy Program Receivables) from the same Customer
are less than 90 days past the invoice date; (d) the Receivable arose from
a completed and bona fide transaction (and with respect to a sale of goods, a
transaction in which title has passed to the Customer) which requires no
further act under any circumstances on the part of the applicable Receivables
Grantor or any other Person in order to cause such Receivable to be payable in
full by the Customer; (e) the Receivable is in full conformity with the representations
and warranties made by the applicable Receivables Grantor to the Administrative
Agent and the Lenders with respect thereto and is free and clear of all
security interests and Liens of any nature whatsoever other than any security
interest deemed to be held by the applicable Receivables Grantor or any
security interest created pursuant to the Security Agreement or permitted by
Section 6.02 hereof; (f) the Receivable constitutes an “account” or
“chattel paper” (to the extent the original thereof is in the possession of the
Administrative Agent) within the meaning of the Uniform Commercial Code or
Personal Property Security Act (Ontario) or equivalent legislation of the state
or province in which the applicable Receivables Grantor is located; (g) the
Customer has not asserted that the Receivable, and the applicable Receivables
Grantor is not aware that the Receivable, arises out of a bill and hold,
consignment or progress billing arrangement or is subject to any setoff,
contras, net-out contract, offset, deduction, dispute, credit, counterclaim or
other defense arising out of the transactions represented by the Receivables or
independently thereof and the Customer has finally accepted the goods from the
sale out of which the Receivable arose and has not objected to its liability
thereon or returned, rejected or repossessed any of such goods, except for
complaints made or goods returned in the ordinary course of business for which,
in the case of goods returned, goods of equal or greater value have been shipped
in return; (h) the Receivable

 

11

 

arose
in the ordinary course of business of the applicable Receivables Grantor;
(i) the Customer is not (x) the United States government or the
government of any state or political subdivision thereof or therein, or any
agency or department of any thereof (unless there has been full compliance to
the satisfaction of the Administrative Agent with any applicable assignment of
claims statute), (y) an Affiliate of Holdings, the applicable Receivables
Grantor or any subsidiary of any thereof or a supplier or creditor of the
applicable Receivables Grantor or any subsidiary thereof (provided that such
Receivable shall only be ineligible to the extent of amounts payable by such applicable
Receivables Grantor or subsidiary to such supplier or outstanding to such
creditor) or (z) Her Majesty the Queen in Right of Canada or any
department, agency or instrumentality thereof (unless the applicable
Receivables Grantor has complied fully to the satisfaction of the
Administrative Agent with the Financial Administration Act (Canada), as
amended) or Her Majesty the Queen in Right of any Province of Canada or any
department, agency or instrumentality thereof, or any Crown corporation or other
government or governmental body if such Receivables cannot be the object of a
valid first ranking security interest; (j) the Customer is a United States
or Canadian person or an obligor in the United States or Canada or an obligor
located in another jurisdiction if the applicable Receivable is covered by a
letter of credit or credit insurance in favor of, or assigned to, the
Administrative Agent in form and substance satisfactory to the Administrative
Agent; (k) the Receivable complies with all material requirements of all
applicable laws and regulations, whether Federal, state or local (including,
without limitation, usury laws and laws, rules and regulations relating to
truth in lending, fair credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy); (l) to the
knowledge of the applicable Receivables Grantor, the Receivable is in full
force and effect and constitutes a legal, valid and binding obligation of the
Customer enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium and other similar
laws affecting the enforcement of creditors’ rights generally and by general
equity principles; (m) the Receivable is denominated in and provides for
payment by the Customer in dollars (unless a currency swap or similar hedge
approved by the Administrative Agent has been entered into with respect to such
Receivable the effect of which is to cause payment to be denominated in
dollars) and is payable within the United States; (n) the Receivable has
not been and is not required to be charged off or written off as uncollectible
in accordance with GAAP or the customary business practices of the applicable
Receivables Grantor; (o) the Administrative Agent on behalf of the Lenders
possesses a valid, perfected first priority security interest in such
Receivable as security for payment of the Obligations (as defined in the
Security Agreement); (p) the Receivable is not with respect to a Customer
located in New Jersey, Minnesota, West Virginia or any other state denying
creditors access to its courts in the absence of a Notice of Business
Activities Report or other similar filing, unless the applicable Receivables
Grantor either has qualified as a foreign corporation authorized to transact
business in such state or has filed a Notice of Business Activities Report or
similar filing with the applicable state agency for the then current year;
(q) an event as described in paragraph (g) or (h) of Article VII
has not occurred with respect to the Customer; and (r) the Administrative
Agent is satisfied with the credit standing of the Customer in relation to the
amount of credit extended. 
Notwithstanding the foregoing, all Receivables of any single Customer
which, in the aggregate, exceed 10% (or 20% in the case of Lowes, Target
Stores, Home Depot and Bed Bath and Beyond or 25% in the case of South Central
Pool Supply or WalMart, provided that in each case the Administrative
Agent shall be satisfied, in its sole discretion, that the financial condition
of the relevant Customer at such time has not significantly

 

12

 

deteriorated
since the Effective Date as determined by the Administrative Agent, in its sole
discretion, from whatever sources are available to the Administrative Agent, of
the total Eligible Receivables of all Receivables Grantors collectively at the
time of any such determination shall be deemed not to be Eligible Receivables
to the extent of such excess.

 

“Environmental Laws”
means all laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the management,
release or threatened release of any Hazardous Materials or to health and
safety matters.

 

“Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrowers or any Subsidiary directly or indirectly
resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.

 

“Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity ownership
interests in a Person, and any warrants, options or other rights entitling the
holder thereof to purchase or acquire any such equity interest.

 

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

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with
the Borrower, is treated as a single employer under Section 414(b) or (c)
of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.

 

“ERISA Event”
means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by any
Borrower or any of their respective Affiliates of any liability under
Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by any Borrower or any of their respective ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by any Borrower or any of their respective
ERISA Affiliates of any liability with respect to the withdrawal or partial
withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by any
Borrower or any of their respective ERISA Affiliates of any notice, or the
receipt by any Multiemployer Plan from any Borrower or any of

 

13

 

their
respective ERISA Affiliates of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV
of ERISA.

 

“Eurodollar”, when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.

 

“Event of Default” has the meaning assigned to
such term in Article VII.

 

“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, any Canadian
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of a Borrower hereunder, (a) income or
franchise taxes imposed on (or measured by) its net income by the United States
of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which a Borrower is located and
(c) in the case of a Foreign Lender, any withholding tax that is imposed
on amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office) or is
attributable to such Foreign Lender’s failure to comply with
Section 2.15(e), except to the extent that such Foreign Lender (or its
assignor, if any) was entitled at the time of designation of a new lending office
(or assignment), to receive additional amounts from the Borrowers with respect
to such withholding tax pursuant to Section 2.15(a)

 

“Existing Letter of
Credit” means any letter of credit that (a) was issued under the Existing
Credit Agreement by an Issuing Bank, (b) is outstanding on the Effective Date
and (c) is listed in Schedule 1.03.

 

“Face Amount”
means in respect of a Bankers’ Acceptance, the amount stated therein to be
payable to the holder thereof on its maturity.

 

“Facility Letter”
means the letter agreement among the Borrowers, the Canadian Agent and the
Administrative Agent effective on the Effective Date authorizing certain
employees to handle certain of the credit operations contemplated by this
Agreement.

 

“Federal Funds
Effective Rate” means, for any day, the weighted average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if necessary, to the next
1/100 of 1%) of the quotations for such day for such transactions received by
the Administrative Agent from three Federal funds brokers of recognized
standing selected by it.

 

“Fee Letter” means
the proposal letter dated June 19, 2003 among the Borrowers and the
Administrative Agent which, among other things, sets forth certain fees to be
paid by the Borrowers to the Administrative Agent.

 

14

 

“Financial Officer”
means the chief financial officer, principal accounting officer, treasurer,
assistant treasurer, controller or assistant controller of a Borrower.

 

“Financing Documents”
means this Agreement (including the Schedules and Exhibits hereto), the Notes
evidencing Loans, the Security Agreement, any Guarantee and any other agreement
hereafter created to which the Borrowers or any Guarantor is a party that
provides for collateral security for any of the obligations of the Borrowers or
any such Guarantor under any of the foregoing.

 

“Fixed Charge Coverage
Ratio” means, with respect to Holdings and its subsidiaries for any period,
the ratio of (i) Net Cash Flow to (ii) Fixed Charge Expense.

 

“Fixed Charge Expense”
means, with respect to Holdings and its subsidiaries for any period, the
aggregate of (i) regularly scheduled principal payments of Indebtedness
(including, without limitation, Subordinated Indebtedness) made or to be made
by Holdings and its subsidiaries during such period and (ii) dividends and
other distributions (including management fees) during such period, in each
case on a consolidated basis in accordance with GAAP.

 

“Foreign Lender”
means, with respect to a US Borrower, any Lender that is not organized under
the laws of the United States of America and, with respect to WP Canada, any
Lender that is not organized under the laws of, and resident in, or deemed to
be resident in, Canada.  For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction, and
Canada and each province and territory thereof shall be deemed to constitute a
single jurisdiction.

 

“Funded Debt”
means, with respect to Holdings as of the date of determination thereof, all
Indebtedness (including Subordinated Indebtedness) of Holdings and its
subsidiaries on a consolidated basis outstanding at such time (including the
current portion thereof) which matures more than one year after the date of
calculation, and any such Indebtedness maturing within one year from such date
of calculation (including amounts outstanding in the final year of any Funded
Debt) which is renewable or extendable at the option of the obligor to a date
more than one year from such date and including in any event the Loans.

 

“GAAP” means
generally accepted accounting principles in the United States of America.

 

“Governmental
Authority” means the government of the United States of America, Canada,
any other nation or any political subdivision thereof, whether state,
provincial or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.

 

“Guarantee” of or
by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of)

 

15

 

such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase
or lease property, securities or services for the purpose of assuring the owner
of such Indebtedness or other obligation of the payment thereof, (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account
party in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.

 

“Guarantor” means,
collectively, Holdings, each Subsidiary executing and delivering a Guarantee of
the Obligations on the Effective Date and each Subsidiary which becomes a
Guarantor after the Effective Date.

 

“Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.

 

“Holdings” means
Water Pik Technologies, Inc., a Delaware corporation, together with its
successors and assigns.

 

“Indebtedness” of
any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind,
(b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property
acquired by such Person, (e) all obligations of such Person in respect of
the deferred purchase price of property or services (excluding accounts payable
incurred in the ordinary course of business which are not in dispute and are
not overdue beyond such period as is commercially reasonable for such Person’s
business), (f) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien on property owned or acquired by such Person, whether
or not the Indebtedness secured thereby has been assumed, (g) all
Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person and obligations in respect of synthetic leases,
(i) all obligations, contingent or otherwise, of such Person as an account
party in respect of letters of credit and letters of guaranty, (j) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances, (k) the redemption price of all redeemable preferred stock of
such Person, but only to the extent that such stock is redeemable at the option
of the holder or requires sinking fund or similar payments at any time prior to
the Maturity Date and (1) all Derivative Obligations.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a result
of such Person’s ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person is
not liable therefor.

 

16

 

“Indemnified Taxes” means Taxes other than
Excluded Taxes.

 

“Interest/BA Election
Request” means a request by any Borrower to convert or continue a Borrowing
in accordance with Section 2.06.

 

“Interest Expense”
means, with respect to Holdings for any period, the interest expense of
Holdings and its subsidiaries during such period determined on a consolidated
basis in accordance with GAAP, and shall in any event include, without
limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees payable in connection with the incurrence of Indebtedness
to the extent included in interest expense, (iii) the portion of any
Capitalized Lease Obligation allocable to interest expense, (iv) all fixed
and all calculable dividend payments on preferred stock, and (v) payments
of interest expense in kind.

 

“Interest Payment Date”
means (a) with respect to any ABR Loan and any CPR Loan, the first day of
each month for the prior month then ended and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months’ duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period; provided, however,
with respect to any “Loans” under the Existing Credit Agreement not being
repaid but remaining outstanding under this Agreement, Interest Payment Date
shall mean the next “Interest Payment Date” under the Existing Credit
Agreement.

 

“Interest Period”
means, with respect to any Eurodollar Borrowing, the period commencing on the
date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter; provided,
that (i) if any Interest Period would end on a day other than a Business
Day, such Interest Period shall be extended to the next succeeding Business Day
unless, such next succeeding Business Day would fall in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day and (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest
Period.  For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and thereafter
shall be the effective date of the most recent conversion or continuation of
such Borrowing.

 

“Internal Revenue Code”
means the Internal Revenue Code of 1986, as amended, or any successor statute.

 

“Inventory Grantor”
means Water Pik, Laars and Jandy Industries, Inc. on a combined basis and WP
Canada and any other after-acquired subsidiary of any Borrower which complies
with Section 5.11 hereof and as to which the Administrative Agent has
completed a field examination to its satisfaction.

 

“Investments” has the meaning assigned to such term
in Section 6.04.

 

“Issuing Bank”
means the issuer of a Letter of Credit, which if not JPMorgan Chase Bank, shall
be a commercial bank satisfactory to the Administrative Agent and the

 

17

 

Borrowers;
provided that a Letter of Credit issued at the request and for the account of
WP Canada shall be issued by a Canadian bank or Canadian branch of an
authorized foreign bank.  An Issuing
Bank may, in its discretion but subject to the foregoing proviso, arrange for
one or more Letters of Credit to be issued by Affiliates of the Issuing Bank,
in which case the term “Issuing Bank” shall include any such Affiliate with
respect to Letters of Credit issued by such Affiliate.  The Administrative Agent hereby agrees to notify
the Borrowers of the identity of any Issuing Bank if other than JPMorgan Chase
Bank or one of its Affiliates.

 

“Laars” means
Laars, Inc., a Delaware corporation, together with its successors and assigns.

 

“LC Disbursement”
means a payment made by the Issuing Bank pursuant to a Letter of Credit or a
payment made by the Administrative Agent in respect of an LC Guaranty.

 

“LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount
of all LC Disbursements that have not yet been reimbursed by or on behalf of
any of the Borrowers at such time.  The
LC Exposure of any Lender at any time shall be its pro rata (based on its
Revolving Loan Commitment) share of the total LC Exposure at such time.

 

“LC Guaranty”
means the guaranty delivered by the Administrative Agent on behalf of the
Lenders to the Issuing Bank of the Borrowers’ reimbursement obligation under
the Issuing Bank’s reimbursement agreement, the application for the Letter of
Credit with respect thereto and any other like document.

 

“Lenders” means
the Persons listed on Schedule 1.01 and any other Person that shall have become
a party hereto pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

 

“Letter of Credit”
means any letter of credit issued, or deemed to have been issued, pursuant to
this Agreement, including each Existing Letter of Credit.

 

“Leverage Ratio”
with respect to Holdings means the ratio of (i) Funded Debt as at such
date to (ii) EBITDA for the period of four fiscal quarters most recently
ended on or prior to such date.

 

“LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, an interest
rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to
the rate at which dollar deposits approximately equal in principal amount to
the Administrative Agent’s or the Canadian Agent’s portion, as the case may be,
of such Eurodollar Borrowing and for a maturity equal to the applicable
Interest Period are offered in immediately available funds to the principal
London office of the Administrative Agent in the London interbank market at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
first day of such Interest Period.

 

“Lien” means, with
respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title

 

18

 

retention
agreement (or any financing lease having substantially the same economic effect
as any of the foregoing) relating to such asset and (c) in the case of
securities, any purchase option, call or similar right of a third party with
respect to such securities.

 

“Loans” means the
loans made by the Lenders to the Borrowers pursuant to this Agreement,
including, without limitation, unless the context otherwise so requires,
Canadian Loans.

 

“Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
operations, prospects or condition, financial or otherwise, of the Borrowers
and their Material Subsidiaries, taken as a whole, (b) the ability of the
Borrowers and the Guarantors, taken as a whole, to perform any of their
obligations under this Agreement and the other Financing Documents,
(c) the rights of or benefits available to the Lenders, the Canadian Agent
or the Administrative Agent under this Agreement and the other Financing
Documents, or (d) the Administrative Agent’s Lien or Canadian Agent’s Lien
on any material portion of the Collateral or the priority of such Lien (subject
to Permitted Encumbrances and as otherwise permitted under Section 6.02
hereof).

 

“Material Indebtedness”
means Indebtedness (other than the Loans and Letters of Credit) of any one or
more of the Borrowers and their Subsidiaries in an aggregate principal amount
exceeding $1,000,000.  For purposes of
determining Material Indebtedness, the “principal amount” of the obligations of
a Borrower or any Subsidiary in respect of any Derivative Obligation at any
time shall be the maximum aggregate amount (giving effect to any netting
agreements) that such Borrower or such Subsidiary would be required to pay if
such Derivative Obligation were terminated at such time.

 

“Material Subsidiary”
means any Subsidiary either (x) whose total assets (based on book value)
exceed $2,000,000 or (y) whose Net Income in any fiscal year exceeds
$500,000.  On the Effective Date, Jandy
Industries, Inc. and Water Pik International, Inc. are Material Subsidiaries.

 

“Maturity Date” means December 1, 2007.

 

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

 

“Net Amount of
Eligible Inventory” means, at any time, without duplication, the aggregate
value, less warranty reserves, computed at the lower of cost (on a FIFO basis)
and current market value, of Eligible Inventory of the Inventory Grantors.

 

“Net Amount of
Eligible Receivables” means, at any time, without duplication, the gross
amount of Eligible Receivables at such time less to the extent included in
Eligible Receivables, (i) sales, excise or similar taxes, (ii) warranty
reserves, accrued rebates and accrued co-op advertising and (iii) to the
extent not otherwise excluded from Eligible Receivables, returns, discounts,
claims, credits, rebates and allowances of any nature at any time issued,
owing, granted, outstanding, available to or claimed by the Customers in
respect of such Eligible Receivables.

 

19

 

“Net Cash Flow”
means, with respect to Holdings for any period, computed for Holdings and its
subsidiaries on a consolidated basis, without duplication of addition or
subtraction of items, (A) the sum for such period of (i) Net Income,
(ii) depreciation and amortization, (iii) the change (expressed as a
positive number in the event of an increase or a negative number in the event
of a decrease) in deferred tax liabilities, (iv) other noncash items properly
deducted in arriving at Net Income and (v) the change (expressed as a negative
number in the event of an increase or a positive number in the event of a decrease),
if any, in deferred tax assets minus (B) all non-financed Capital Expenditures
during such period.

 

“Net Income” means
with respect to Holdings for any period, the consolidated income (or loss) of
Holdings and its subsidiaries for such period which shall be an amount equal to
net revenues and other proper items of income for Holdings less (without
duplication) any and all items treated as expenses less Federal, state,
local and foreign income taxes, but excluding any extraordinary gains or losses
or any gains or losses from the sale or disposition of assets other than in the
ordinary course of business, all computed and calculated in accordance with
GAAP.

 

“Net Proceeds”
means (a) with respect to the sale or other disposition of any asset the
excess, if any, of (i) the aggregate amount received in cash (including
any cash received by way of deferred payment pursuant to a note receivable,
other non-cash consideration or otherwise, but only as and when such cash is so
received) in connection with such sale or other disposition, over (ii) the
sum of (A) the amount of any Indebtedness which is secured by any such
asset or which is required to be, and is, repaid in connection with the sale or
other disposition thereof (other than Indebtedness hereunder), (B) the
reasonable out-of-pocket expenses and fees incurred with respect to legal,
investment banking, brokerage, advisor and accounting and other professional
fees, sales commissions and disbursements and all other reasonable fees,
expenses and charges, in each case actually incurred in connection with such
sale or disposition, (C) all income and transfer taxes payable in
connection with such sale or other disposition, whether actually paid or
estimated to be payable in cash in connection with such disposition or the
payment of dividends or the making of other distributions of the proceeds
thereof and (D) reserves, required to be established in accordance with
GAAP or the definitive agreements relating to such disposition, with respect to
such disposition, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations; (b) with
respect to the issuance, sale or other disposition of any stock or debt
securities the excess of (i) the aggregate amount received in cash
(including any cash received by way of deferred payment pursuant to a note
receivable, other non-cash consideration or otherwise, but only as and when
such cash is so received) in connection with such issuance, sale or other
disposition, over (ii) the sum of (A) the reasonable fees,
commissions, discounts and other out-of-pocket expenses including, without
limitation, related legal, investment banking and accounting fees and
disbursements incurred in connection with such issuance, sale or other
disposition, and (B) all income and transfer taxes payable in connection
with such issuance, sale or other disposition, whether payable at such time or
thereafter; and (c) with respect to a Casualty Event, the aggregate amount
of proceeds received with respect to such Casualty Event, over the sum of
(i) the reasonable expenses incurred in connection therewith,
(ii) the amount of any Indebtedness (other than Indebtedness hereunder)
secured by any asset affected thereby and required to be,

 

20

 

and in
fact, repaid in connection therewith and (iii) all income and transfer
taxes payable, whether actually paid or estimated to be payable, in connection
therewith.

 

“Note” means any
of the promissory notes executed pursuant to Section 2.08(e), as amended,
modified, supplemented, renewed or extended from time to time.

 

“Obligations” has
the meaning assigned to such term in Section 2.08(f) hereof.

 

“Other Taxes”
means any and all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement.

 

“Participant” has
the meaning assigned to such term in Section 9.04 hereof.

 

“PBGC” means the
Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.

 

“Permitted
Acquisitions” means the acquisition by any Borrower of all or substantially
all of the assets or stock of any person engaged in a business which is
reasonably related to that of the Borrower making such acquisition, which
acquisition is approved by the Board of Directors and stockholders, if
required, of the acquiree and is not otherwise hostile; provided that
both before and immediately after giving effect to any such acquisition no
Default exists; provided  further that the total consideration
(including, without limitation, assumed Indebtedness, cash, securities or other
property) for all such acquisitions shall not exceed $10,000,000 in any
calendar year (except during 2003 such amount shall not include acquisitions
made prior to the Effective Date) unless (i) the Borrowers provide at
least thirty (30) days prior written notice to the Administrative Agent of the
proposed acquisition, (ii) both before and immediately after giving effect
to a proposed acquisition, Availability shall not be less than $7,500,000, (iii) the
Leverage Ratio of Holdings and its subsidiaries on a Consolidated basis shall
not be greater than 4.00:1.00 and (iv) the ratio of Funded Debt (less
Subordinated Indebtedness) to EBITDA of Holdings and its subsidiaries on a
Consolidated basis shall not be greater than 3.75 to 1.00, with both the
Leverage Ratio and Funded Debt to EBITDA calculated on a pro forma and going
forward basis (based on the projections delivered pursuant to
Section 5.01(g) hereof, as supplemented for the current fiscal year and
the two subsequent fiscal years) (all such compliance to be confirmed by an
officer’s certificate in a form satisfactory to the Administrative Agent
delivered to the Administrative Agent together with the notice required by
clause (i) above and also on the date of consummation of such proposed
acquisition).  For purposes hereof, “pro
forma basis” shall mean the recalculation of the applicable financial covenants
as if the proposed acquiree (or the business related to the assets to be
acquired from the proposed acquiree) were Consolidated with Holdings for the
twelve months immediately preceding the date of such acquisition, with such
adjustments as may be approved by the Administrative Agent.  Prior to the consummation of each proposed
Permitted Acquisition (and to the extent the Borrowers are required to give
prior notice to the Administrative Agent as set forth above, together with such
notice), the Borrowers shall deliver to the Administrative Agent financial
statements (for the three prior years, if available), projections supplemental
to those delivered pursuant to Section 5.01(g), revised to give effect to
the proposed Permitted

 

21

 

Acquisition,
all instruments, documents, certificates, Lien searches, resolutions and
opinions which in the reasonable discretion of the Administrative Agent are
required to maintain compliance with the provisions of this Agreement,
including, without limitation, Section 5.11 hereof and such other
information which the Administrative Agent may reasonably request.  To the extent the Borrowers are required to
provide the Administrative Agent with prior written notice of a proposed
Permitted Acquisition as set forth above, the Administrative Agent shall
promptly undertake a review of the information delivered with such notice and
shall expeditiously inform the Borrowers as to whether the required criteria
has been satisfied.

 

“Permitted Encumbrances” means:

 

(a)                                  Liens
imposed by law for taxes, assessments and governmental charges or levies that
are not yet due or are being contested in compliance with Section 5.07;

 

(b)                                 carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
compliance with Section 5.07 and (ii) landlord’s Liens arising by
operation of law which are subordinated to the Liens in favor of the
Administrative Agent and the Canadian Agent;

 

(c)                                  pledges
and deposits made in the ordinary course of business in compliance with
workers’ compensation, unemployment insurance and other social security laws or
regulations or letters of credit or guarantees issued in respect thereof other
than Liens imposed by ERISA;

 

(d)                                 deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business or letters of
credit or guarantees issued in respect thereof;

 

(e)                                  judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (j) of Article VII;

 

(f)                                    easements,
zoning restrictions, rights-of-way and similar encumbrances on real property imposed
by law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrowers or any Subsidiary;

 

(g)                                 liens
arising from UCC or Personal Property Security Act financing statements in
respect of leases permitted by this Agreement;

 

(h)                                 liens
in favor of custom and revenue authorities arising as a matter of law to secure
payment of custom duties in connection with the importation of goods so long as
such Liens attach only to the imported goods; and

 

(i)                                     liens
in favor of vendors of goods arising as a matter of law securing the payment of
the purchase price therefor so long as such Liens attach only to the purchased
goods.

 

22

 

provided
that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness.

 

“Permitted Investments” means:

 

(a)                                  direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America);

 

(b)                                 investments
in commercial paper having, at the date of acquisition thereof, the highest
credit rating obtainable from Standard & Poor’s or from Moody’s Investors
Service, Inc.;

 

(c)                                  investments
in certificates of deposit, banker’s acceptances and time deposits issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any domestic office of any commercial bank organized under the laws
of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

 

(d)                                 investments
in money market mutual funds having portfolio assets in excess of
$2,000,000,000 that comply with the criteria set forth in Securities and
Exchange Commission Rule 2a-7 under the Investment Company Act of 1940 and are
rated AAA by Standard & Poor’s and Aaa by Moody’s Investors Service, Inc.;

 

(e)                                  fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above;

 

(f)                                    securities
with maturities of one year or less from the date of acquisition issued or
fully guaranteed by any state, commonwealth or territory of the United States
of America, or any political subdivision or taxing authority thereof, and rated
at least A by Standard & Poor’s or Moody’s Investors Service, Inc.; and

 

(g)                                 with
respect to any Person organized or conducting operations outside of the United
States, investments denominated in the currency of the jurisdiction in which
such Person is organized or conducting business which are similar to the items
specified in clauses (a) through (f) above (other than the nationality of the
governmental or non-governmental issuer or counterparty involved).

 

“Permitted
Overadvances” means (i) involuntary overadvances that may result from
time to time due to the fact that any borrowing formulas set forth in the
Financing Documents were unintentionally exceeded (whether at the time of any
Loan or at the time of the issuance of any Letter of Credit or otherwise) for
any reason (other than the Administrative Agent’s gross negligence or willful
misconduct), including Collateral believed to be eligible in fact being or
becoming ineligible and the return of uncollected checks or other items applied
to the reduction of the Loans, Letters of Credit or other obligations, and
overadvances made by the Administrative Agent or the Canadian Agent without
Lenders’ consent for up to two weeks after discovering the unintentional
overadvance, provided that the Administrative Agent or the

 

23

 

Canadian
Agent, as applicable, does not during that period voluntarily increase the
amount by which the borrowing formulas had been exceeded as of the start of
that period, and (ii) voluntary overadvances made by the Administrative
Agent or the Canadian Agent in its sole discretion which shall (x) not
cause the aggregate outstanding Loans and LC Exposure to exceed the Commitment,
(y) not cause the Loans and LC Exposure to exceed Availability by an
amount in excess of $1,000,000 at any one time outstanding, and (z) not be
outstanding beyond the date that is ten (10) days after the first voluntary
overadvance is made during such overadvance period, or (z) be with the
consent of all Lenders.  To the extent
any Permitted Overadvances are made, each Lender shall bear its pro rata (based
on its Revolving Loan Commitment) share of the US Obligations comprised therein
and each Canadian Participating Lender shall bear its share of the Canadian
Obligations comprised therein.

 

“Permits” has the
meaning assigned to such term in Section 3.08(i) hereof.

 

“Person” means any
natural person, corporation, limited liability company, trust, joint venture, association,
company, partnership, Governmental Authority or other entity.

 

“Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or
Section 302 of ERISA, and in respect of which any Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an “employer” as defined in Section 3(5) of
ERISA.

 

“Potential Preferred
Claims” means at any time the aggregate of all Canadian federal and
provincial statutory payables of WP Canada overdue and all such statutory
payables coming due for the period of three months with respect to unemployment
insurance, Canada Pension Plan, income tax employee withholdings, goods and
services and retail sales taxes, vacation pay and all other payables in respect
of which any statutory lien or trust arises in connection therewith.

 

“Prime Rate” means
the rate of interest per annum publicly announced from time to time by JPMorgan
Chase Bank as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.

 

“Receivables”
means and includes all of a Person’s accounts, instruments, documents, chattel
paper and general intangibles, whether secured or unsecured, whether now
existing or hereafter created or arising, and whether or not specifically
assigned to the Administrative Agent or the Canadian Agent for its own benefit
and/or the ratable benefit of the Lenders.

 

“Receivables Grantor”
means Water Pik, Laars, Jandy Industries, Inc. and, at such time as the
Administrative Agent has a perfected first priority security interest in its
Receivables (subject only to Permitted Encumbrances), Waterpik International,
Inc., on a combined basis and WP Canada and any other after-acquired subsidiary
of any Borrower which complies with Section 5.11 hereof and as to which
the Administrative Agent has completed a field examination to its satisfaction.

 

24

 

“Register” has the meaning set forth in
Section 9.04.

 

“Regulation U”
means Regulation U of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.

 

“Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.

 

“Required Lenders”
means, at any time, Lenders holding Revolving Loan Commitments representing at
least 51% of the Commitment or, if the Commitment has been terminated, Lenders
holding Loans (which for purposes hereof shall include the participations of
Canadian Participating Lenders (without duplication)) and LC Exposure
representing at least 51% of the unpaid principal amount of Loans and LC
Exposure, in each case, all after giving effect to the terms of
Section 2.16(g).

 

“Restricted Payment”
means any dividend or other distribution (whether in cash securities or other
property) with respect to any Equity Interests in a Borrower or any Subsidiary,
or any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such Equity
Interests or any option, warrant or other right to acquire any such Equity
Interests.

 

“Revolving Credit
Commitment Fee” has the meaning set forth in Section 2.10(a).

 

“Revolving Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans, its Canadian Exposure and
its LC Exposure at such time.

 

“Revolving Loan
Commitment” means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit and
Canadian Loans hereunder, expressed as an amount representing the maximum
aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to
Section 2.07 or Section 2.09 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04.  The initial amount
of each Lender’s Revolving Loan Commitment is set forth on Schedule 1.01,
or in the Assignment and Assumption pursuant to which such Lender shall have
assumed its Revolving Loan Commitment, as applicable.  Effective upon the assignment of an interest pursuant to
Section 9.04, Schedule 1.01 may be amended by the Administrative
Agent to reflect such assignment.

 

“Security Agreement”
means, collectively, the Omnibus Pledge and Security Agreement dated as of the
date hereof, by and among the US Borrowers, the Guarantors and the
Administrative Agent, for its own benefit and for the ratable benefit of the
Lenders, the Movable Hypothec dated as of the date hereof by WP Canada in favor
of each of the Canadian Lenders and each Issuing Bank issuing Letters of Credit
for the account of WP Canada and the Canadian Participating Lenders and the
General Security Agreement dated as of the date hereof by and

 

25

 

among
WP Canada, the Administrative Agent and the Canadian Agent, each as amended,
modified or supplemented from time to time and the Bank Act Security.

 

“Security Interests”
means the security interests in the Collateral granted under the Security
Agreement to secure the Secured Obligations (as defined therein).

 

“Statutory Reserve
Rate” means a fraction (expressed as a decimal), the numerator of which is
the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board to which the Administrative Agent is subject (a) with respect to the
Base CD Rate, for new negotiable nonpersonal time deposits in dollars of over
$100,000 with maturities approximately equal to three months, (b) with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board).  Such reserve percentages shall include those
imposed pursuant to such Regulation D. 
Eurodollar Loans shall be deemed to constitute eurocurrency funding and
to be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to any
Lender under such Regulation D or any comparable regulation.  The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.

 

“Stock Acquisition and
Retention Program” means the Stock Acquisition and Retention Program of
Holdings.

 

“Subordinated
Indebtedness” means, with respect to the Borrowers, Indebtedness
subordinated in right of payment to the Borrowers’ and Guarantors’ monetary
obligations under this Agreement or the other Financing Documents (as
applicable) upon terms satisfactory to and approved in writing by the Required
Lenders.

 

“subsidiary”
means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent’s consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other
entity (a) of which securities or other ownership interests representing
more than 50% of the equity or more than 50% of the ordinary voting power or,
in the case of a partnership, more than 50% of the general partnership interests
are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.

 

“Subsidiary” means any subsidiary of a
Borrower.

 

“Taxes” means any
and all present or future taxes, levies, imposts, duties, deductions, charges
or withholdings imposed by any Governmental Authority.

 

“Three-Month Secondary
CD Rate” means, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such
day is not a Business Day, the next preceding Business Day) by the Board
through the public

 

26

 

information
telephone line of the Federal Reserve Bank of New York (which rate will, under
the current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day) or, if such rate is
not so reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day is not a Business Day, on the
next preceding Business Day) by the Administrative Agent from three negotiable
certificate of deposit dealers of recognized standing selected by it.

 

“Transactions”
means the execution, delivery and performance by the Borrowers of this Agreement,
the borrowing of Loans, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder.

 

“Type”, when used
in reference to any Loan or Borrowing, refers to whether the rate of interest
on such Loan, or on the Loans comprising such Borrowing, is determined by
reference to the Adjusted LIBO Rate, the Alternate Base Rate, the Canadian
Prime Rate or by way of purchase of Bankers’ Acceptances.

 

“US Base Rate”
means the annual rate of interest announced by the Canadian Agent and in effect
as its base rate at its principal office in Toronto, Ontario on such day for
determining rates of interest it will charge on U.S. dollar-denominated
commercial loans made in Canada.

 

“US Borrowers” means each of Water Pik and
Laars.

 

“US Obligations”
shall have the meaning assigned to such term in Section 2.08(f).

 

“Water Pik” means
Water Pik, Inc., a Delaware corporation, together with its successors and
assigns.

 

“WP Canada” means
Water Pik Technologies Canada, Inc., a Canadian federal corporation, together
with its successors and assigns.

 

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.

 

Section 1.02.                 Classification
of Loans and Borrowings.  For
purposes of this Agreement, Loans may be classified and referred to by Type (e.g.,
a “Eurodollar Loan”).  Borrowings
also may be classified and referred to by Type (e.g., an “ABR
Borrowing”).

 

Section 1.03.                 Terms
Generally.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the phrase
“without limitation”.  The word “will”
shall be construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such

 

27

 

agreement,
instrument or other document as from time to time amended, supplemented or otherwise
modified (subject to any restrictions on such amendments, supplements or
modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and assigns,
(c) the words “herein”, “hereof’ and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not
to any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.

 

Section 1.04.                 Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrowers that the Required Lenders request an amendment to any provision
hereof for such purpose), regardless of whether any such notice is given before
or after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.  In calculating compliance with any of the
financial covenants (and related definitions), any amounts taken into account
in making such calculations that were paid, incurred or accrued in violation of
any provision of this Agreement shall be added back or deducted, as applicable,
in order to determine compliance with such covenants.

 

Section 1.05.                 Calculations.  Except where specifically noted, all
calculations herein shall be made in dollars, using the Canadian Dollar
Equivalent to the extent necessary.

 

ARTICLE II

 

The Credits

 

Section 2.01.                 Revolving Loan Commitments.  (a)  Subject to the terms and
conditions set forth herein, each Lender (other than the Canadian Lenders)
agrees to make Loans to the US Borrowers from time to time during the
Availability Period in an aggregate principal amount that will not result in
such Lender’s Revolving Credit Exposure exceeding such Lender’s Revolving Loan
Commitment.  Notwithstanding the
foregoing, the aggregate principal amount of Loans outstanding at any time to
the US Borrowers shall not exceed (1) the lesser of (A) the
Commitment and (B) an amount equal to the sum of (i) up to
eighty percent (80%) of the Net Amount of Eligible Receivables, plus
(ii) until such time as the Administrative Agent shall have received an inventory
appraisal, in form and substance satisfactory to it, establishing the net
orderly liquidation value of Eligible Inventory, up to fifty percent (50%) of
the Net Amount of Eligible Inventory and thereafter, the greater of (a) up
to eighty-five percent (85%) of the net orderly liquidation value of Eligible
Inventory and (b) up to fifty percent (50%) of the Net Amount of Eligible
Inventory (this clause (1)(B) referred to herein as the “Borrowing Base”)

 

28

 

minus (2) the LC Exposure at
such time (not to exceed $10,000,000 at any time) minus (3) the
Canadian Loans at such time. 
Notwithstanding any other provisions of this Agreement, in computing the
Borrowing Base for purposes of compliance with this Agreement, Eligible
Inventory of WP Canada and Eligible Receivables of WP Canada shall not be
included in the foregoing computations until WP Canada has delivered the
Cross-Border Security Notice in accordance with Section 2.01(g) and the
Administrative Agent shall have determined to its reasonable satisfaction that
such Inventory and Receivables of WP Canada qualifies as Eligible Inventory and
Eligible Receivables (including, without limitation, evidence of filing a
Movable Hypothec in Quebec, Canada with respect to the Canadian Support
Collateral) and the US Borrowers shall be deemed to borrow against Eligible
Inventory and Eligible Receivables of Water Pik, Laars and Jandy before being
entitled to borrow against and request that WP Canada deliver such a Cross-Border
Security Notice for purposes of the US Borrowers borrowing against Eligible
Inventory and Eligible Receivables of WP Canada.

 

(b)                                 Subject
to the terms and conditions set forth herein, each Canadian Lender agrees to
make Canadian Loans to WP Canada from time to time during the Availability
Period in an aggregate principal amount that will not result in any Canadian
Lender’s or Canadian Participating Lender’s Canadian Exposure exceeding its
share of the Canadian Maximum Amount. 
Notwithstanding the foregoing, the aggregate principal amount of Loans
outstanding at any time to WP Canada shall not exceed (1) the lesser of
(A) the Canadian Maximum Amount and (B) an amount equal to the
sum of (i) up to eighty percent (80%) of the Net Amount of Eligible Receivables
of WP Canada, plus (ii) until such time as the Administrative Agent
shall have received an inventory appraisal, in form and substance satisfactory
to it, establishing the net orderly liquidation value of the Eligible
Inventory, up to fifty percent (50%) of the Net Amount of the Eligible
Inventory of WP Canada and thereafter, the greater of (a) up to
eighty-five percent (85%) of the net orderly liquidation value of Eligible
Inventory of WP Canada and (b) up to fifty percent (50%) of the Net Amount
of Eligible Inventory of WP Canada, minus (iii) the Net Amount of
Eligible Inventory of WP Canada and Net Amount of Eligible Receivables of WP
Canada, if any, being used to support Loans made to, and Letters of Credit
issued for the account of, any one or more of the US Borrowers (this clause
(iii) referred to herein as the “Canadian Support Collateral”) (this
clause (1)(B) referred to herein as the “Canadian Borrowing Base”) minus
(2) the LC Exposure related to Letters of Credit issued for the account of
WP Canada at such time.

 

(c)                                  The
Borrowing Base and the Canadian Borrowing Base will be computed monthly, or
more often upon the occurrence and during the continuance of an Event of
Default, or at any time that Availability is less than $5,000,000 as may reasonably
be requested by the Administrative Agent or the Canadian Agent, and compliance
certificates from a Financial Officer of Water Pik, on behalf of the Borrowers,
presenting its computation will be delivered to the Administrative Agent in
accordance with Section 5.01(i) hereof. 
The net orderly liquidation value of Eligible Inventory shall be
established at such time after the Effective Date as the Administrative Agent
receives an inventory appraisal, in form and substance satisfactory to it.  If by reason of any subsequent appraisals
conducted pursuant to Section 5.04 such net orderly liquidation value
shall change, the Administrative Agent may adjust such value, upward or
downward, consistent with the results of such appraisals.

 

29

 

(d)                                 Subject
to the provisions of this Section 2.01, the Borrowers may borrow, repay
(or prepay) and reborrow Loans, on and after the date hereof through the
Availability Period, subject to the terms, provisions and limitations set forth
herein, including, without limitation, the requirement that no Loan shall be
made hereunder if the amount thereof exceeds the Availability outstanding at
such time (in each case, after giving effect to the application of the proceeds
of such Loan) and no Canadian Loans shall be made hereunder if the amount
thereof exceeds the Canadian Availability outstanding at such time (in each
case, after giving effect to the application of the proceeds of such Canadian
Loan).

 

(e)                                  In
no event shall the total of all Loans plus LC Exposure exceed the Commitment.

 

(f)                                    In
no event shall the total of all Canadian Loans plus LC Exposure related to
Letters of Credit issued for the account of WP Canada exceed the Canadian
Maximum Amount.

 

(g)                                 Notwithstanding
any other provision of this Agreement, until WP Canada delivers to the
Administrative Agent and the Canadian Agent a notice (the “Cross-Border
Security Notice”) indicating that in accordance with Section 2.08(f) of
this Agreement each of the US Obligations thereafter incurred by the US
Borrowers and any of them shall thereafter be secured by the Canadian Support
Collateral, (i) none of the assets, property or undertaking of WP Canada
(including without limitation its Eligible Inventory and Eligible Receivables)
shall secure any US Obligations and (ii) WP Canada shall have no liability or
obligation to the US Borrowers and any of them in respect of any US
Obligations, except to the extent expressly provided for in this Agreement.

 

Section 2.02.                 Loans and Borrowings.  (a)  Each Loan shall be made as
part of a Borrowing consisting of Loans made by the relevant Lenders ratably in
accordance with their respective Revolving Loan Commitments.  The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Revolving Loan Commitments of the Lenders
are several and no Lender shall be responsible for any other Lender’s failure
to make Loans as required.

 

(b)                                 Subject
to Section 2.06, each Borrowing by the US Borrowers shall be comprised
entirely of ABR Loans or Eurodollar Loans as the US Borrowers may request in
accordance herewith, and each Borrowing by WP Canada shall be comprised
entirely of CPR Loans or BA Loans in Canadian Dollars or ABR Loans or
Eurodollar Loans in dollars, as WP Canada may request in accordance
herewith.  Each Lender and Canadian
Lender at its option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided
that any Eurodollar Loan to WP Canada must be made by a Canadian Lender and any
exercise of such option shall not affect the obligation of the Borrowers to
repay such Loan in accordance with the terms of this Agreement.

 

(c)                                  At
the commencement of each Interest Period for any Eurodollar Borrowing, such
Borrowing shall be in a minimum amount of $500,000 times the number of Lenders
(in the case of a Eurodollar Borrowing by WP Canada times the number of
Canadian Participating Lenders) and an aggregate amount that is an integral
multiple of $100,000, or the

 

30

 

Canadian
Dollar Equivalent thereof.  At the time
that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount
that is an integral multiple of $100,000 and not less than $100,000, or the
Canadian Dollar Equivalent thereof (except that the foregoing limitation shall
not be applicable to the extent that the proceeds of such Borrowing are
requested to be disbursed to the Borrowers’ controlled disbursement account
maintained with the Administrative Agent or as WP Canada may otherwise direct);
provided that an ABR Borrowing may be in an aggregate amount that is
equal to the entire unused balance of the Commitment or that is required to
finance the reimbursement of an LC Disbursement as contemplated by
Section 2.04(e).  Borrowings of
more than one Type may be outstanding at the same time; provided that
there shall not at any time be more than a total of seven (7) Eurodollar
Borrowings outstanding.

 

(d)                                 Notwithstanding
any other provision of this Agreement, the Borrowers shall not be entitled to
request, or to elect to convert or continue, any Borrowing if the Interest
Period or BA Period requested with respect thereto would end after the Maturity
Date.

 

Section 2.03.                 Requests for
Borrowings.  To request a Borrowing,
the US Borrowers shall notify the Administrative Agent and WP Canada shall
notify the Canadian Agent (with a copy to the Administrative Agent) of such
request by writing, facsimile or telephone (a) in the case of a Eurodollar
Borrowing or a BA Loan, not later than 1:00 p.m., New York City and
Toronto time, three Business Days before the date of the proposed Borrowing,
(b) in the case of an ABR Borrowing by the US Borrowers, not later than
1:00 p.m., New York City time on the same Business Day of the proposed
Borrowing, or (c) in the case of an ABR Borrowing or a CPR Borrowing by WP
Canada, not later than 11:00 a.m., Toronto time, on the same Business Day of
the proposed Borrowing; provided that any such notice of an ABR
Borrowing to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.04(e) may be given not later than 10:00 a.m., New York City and
Toronto time, on the date of the proposed Borrowing.  Each such Borrowing Request shall be irrevocable and if given by
telephone shall be confirmed (except that no such confirmation will be
required, unless requested by the Administrative Agent or the Canadian Agent,
to the extent the proceeds of such Borrowing are requested, or deemed to be
requested, to be disbursed to Borrowers’ controlled disbursement account
maintained with the Administrative Agent (by each of the US Borrowers) or the
Canadian Agent (by WP Canada), as applicable, in which event borrowing and
repayment procedures shall be in accordance with the cash management
arrangements between such Borrowers and the Administrative Agent or the
Canadian Agent, as applicable, and as contemplated by Section 4.4(b) of
the Security Agreement) promptly by writing or fax to the Administrative Agent
or the Canadian Agent, as applicable, of a written Borrowing Request in a form
approved by the Administrative Agent or the Canadian Agent, as applicable, and
signed by an authorized signer of the applicable Borrowers as set forth in the
Facility Letter.  Each such telephonic
and written Borrowing Request shall specify the following information in
compliance with Section 2.02:

 

(a)                                  the
aggregate amount of the requested Borrowing;

 

(b)                                 the
date of such Borrowing, which shall be a Business Day;

 

31

 

(c)                                  whether
such Borrowing is to be an ABR Borrowing, a Eurodollar Borrowing, a BA Loan or
a CPR Borrowing;

 

(d)                                 in
the case of a Loan being requested by WP Canada, whether such Loan is being
requested in dollars or Canadian Dollars;

 

(e)                                  in
the case of a Eurodollar Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”;

 

(f)                                    in
the case of a BA Loan, the BA Period to be applicable thereto, which shall be a
period contemplated by the definition of the term “BA Period”; and

 

(g)                                 the
location and number of the applicable Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.05.

 

If no election as to the
Type of Borrowing is specified, then the requested Borrowing shall be an ABR
Borrowing, or, in the case of a Canadian Loan requested in Canadian Dollars, a
CPR Borrowing.  If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the
applicable Borrowers shall be deemed to have selected an Interest Period of one
month’s duration.  If no BA Period is
specified with respect to any requested BA Loan, then WP Canada shall be deemed
to have selected a BA Period of 30 days’ duration.  Promptly following receipt of a Borrowing Request in accordance
with this Section, the Administrative Agent or the Canadian Agent, as
applicable, shall advise each applicable Lender of the details thereof and of
the amount of such Lender’s Loan to be made as part of the requested Borrowing.

 

Section 2.04.                 Letters of Credit.  (a)  General.  Subject to the terms and conditions set
forth herein, the US Borrowers may request the issuance of Letters of Credit
for the account of any US Borrower and WP Canada may request the issuance of
Letters of Credit for its own account, each in a form reasonably acceptable to
the Administrative Agent or the Canadian Agent, as applicable, and the
applicable Issuing Bank, at any time and from time to time during the
Availability Period.  In the event of
any inconsistency between the terms and conditions of this Agreement and the
terms and conditions of any form of letter of credit application or other
agreement submitted by any Borrower to, or entered into by any Borrower with,
the Issuing Bank relating to any Letter of Credit, the terms and conditions of
this Agreement shall control.

 

(b)                                 Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of
Credit (or the amendment, renewal or extension of an outstanding Letter of
Credit), the applicable Borrower shall hand deliver or telecopy (or transmit by
electronic communication, if arrangements for doing so have been approved by
the applicable Issuing Bank) to the applicable Issuing Bank and the
Administrative Agent or Canadian Agent, as applicable (reasonably in advance of
the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with paragraph (c)
of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be

 

32

 

necessary
to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the
relevant Borrower also shall submit a letter of credit application on the
Issuing Bank’s standard form in connection with any request for a Letter of
Credit.  If the Issuing Bank is not a
Lender hereunder, then, if requested by the Issuing Bank, the Administrative
Agent or Canadian Agent, as applicable, shall join in the application for
Letters of Credit issued by such Issuing Bank, and/or guarantee payment or
performance of the Letters of Credit of such Issuing Bank and any drafts
thereunder through the issuance of an LC Guaranty, thereby lending the
Administrative Agent’s or Canadian Agent’s, as applicable, credit to that of
the relevant Borrowers.  A Letter of
Credit shall be issued, amended, renewed or extended only if (and upon
issuance, amendment, renewal or extension of each Letter of Credit the relevant
Borrowers shall be deemed to represent and warrant that), after giving effect
to such issuance, amendment, renewal or extension (i) the LC Exposure
shall not exceed $10,000,000 and (ii) after giving effect to the issuance,
amendment, renewal or extension of such Letter of Credit, Availability shall
not be less than zero.

 

(c)                                  Expiration
Date.  Each Letter of Credit shall
expire at or prior to the close of business on the earlier of
(i) (1) in the case of a documentary Letter of Credit, the date
180 days after the date of issuance of such Letter of Credit and
(2) in the case of a standby Letter of Credit, the date one year after the
date of issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension); provided
that a standby Letter of Credit may provide that its expiration date shall be
automatically extended (but not beyond the date specified in clause (ii) below)
to a date not more than one year after the then outstanding expiration date
unless, at least a specified number of days prior to such then existing
expiration date, the Issuing Bank shall have given the beneficiary thereof
notice, in a form that may be specified in such Letter of Credit, that such
expiration date shall not be so extended, and (ii) the date that is thirty
Business Days prior to the Maturity Date.

 

(d)                                 Participations.  (i) 
By the issuance of a Letter of Credit or an LC Guaranty (or an amendment
to a Letter of Credit increasing the amount thereof or of the related LC
Guaranty) for the account of a US Borrower and without any further action on
the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to
each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit or LC Guaranty, as applicable, equal to
such Lender’s pro rata (based on its Revolving Loan Commitment) portion of the
aggregate amount available to be drawn under such Letter of Credit or LC
Guaranty, as applicable.  In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s pro rata (based on its Revolving
Loan Commitment) portion of each LC Disbursement made by the Issuing Bank or
the Administrative Agent and not reimbursed by the US Borrowers on the date due
as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrowers for any reason.  Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit and LC Guaranties is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or LC Guaranty or the occurrence and
continuance of a Default or reduction or termination of the Commitment, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.

 

33

 

(ii)                                  By
the issuance of a Letter of Credit or an LC Guaranty (or an amendment to a
Letter of Credit increasing the amount thereof or of the related LC Guaranty)
for the account of WP Canada and without any further action on the part of the
Issuing Bank or the Canadian Lenders, the Issuing Bank hereby grants to each Canadian
Lender, and each Canadian Lender hereby acquires from the Issuing Bank, a
participation, and each Canadian Participating Lender hereby acquires from the
Canadian Lenders, a subparticipation, in such Letter of Credit or LC Guaranty,
as applicable, and the aggregate amount of all such participations and
subparticipations shall be equal to the aggregate amount available to be drawn
under such Letter of Credit or LC Guaranty, as applicable.  In consideration and in furtherance of the
foregoing, each Canadian Lender, and each Canadian Participating Lender, hereby
absolutely and unconditionally agrees to pay to the Canadian Agent, for the
account of the Issuing Bank, each LC Disbursement made by the Issuing Bank or
the Canadian Agent and not reimbursed by WP Canada on the date due as provided
in paragraph (e) of this Section, or of any reimbursement payment required
to be refunded to WP Canada for any reason. 
Each Canadian Lender, and each Canadian Participating Lender,
acknowledges and agrees that its obligation to acquire participations or
subparticipations, as applicable, pursuant to this paragraph in respect of
Letters of Credit and LC Guaranties is absolute and unconditional and shall not
be affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or LC Guaranty or the occurrence and
continuance of a Default or reduction or termination of the Commitment, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.

 

(e)                                  Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit or the Administrative Agent or
Canadian Agent, as applicable, shall make any LC Disbursement in respect of an
LC Guaranty, the US Borrowers, in the case of Letters of Credit issued for any
one of their account, or WP Canada, in the case of Letters of Credit issued for
its account, shall reimburse such LC Disbursement by paying to the
Administrative Agent or the Canadian Agent, as applicable, an amount equal to
such LC Disbursement not later than 12:00 noon, New York City and Toronto time,
on the date that such LC Disbursement is made, if the relevant Borrower shall
have received notice of such LC Disbursement prior to 10:00 a.m., New York City
and Toronto time, on such date, or, if such notice has not been received by
such Borrower prior to such time on such date, then not later than 12:00 noon,
New York City and Toronto time, on (i) the Business Day that such Borrower
receives such notice, if such notice is received prior to 10:00 a.m., New York
City and Toronto time, on the day of receipt, or (ii) the Business Day
immediately following the day that such Borrower receives such notice, if such
notice is not received prior to such time on the date of receipt; provided
that, if such LC Disbursement is not less than $100,000, the applicable
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 that such payment be financed with an ABR
Borrowing.  If the applicable Borrowers
fail to make such payment when due, the Administrative Agent or the Canadian
Agent, as applicable, shall notify each applicable Lender of the applicable LC
Disbursement, the payment then due from the applicable Borrowers in respect
thereof and such Lender’s portion thereof in accordance with paragraph (d)
above.  Promptly following receipt of
such notice, each applicable Lender shall pay to the Administrative Agent or
the Canadian Agent, as applicable, its pro rata (based on its Revolving Loan
Commitment) portion of the payment then due from the applicable Borrowers, in
the same manner as provided in Section 2.05 with respect to Loans made by
such Lender (and Section 2.05 shall apply, mutatis  mutandis,
to the payment obligations

 

34

 

of the
Lenders), and the Administrative Agent or the Canadian Agent, as applicable,
shall promptly pay to the applicable Issuing Bank or the Administrative Agent,
as applicable, the amounts so received by it from the Lenders.  Promptly following receipt by the
Administrative Agent or the Canadian Agent, as applicable, of any payment from
the applicable Borrowers pursuant to this paragraph, the Administrative Agent
or the Canadian Agent, as applicable, shall distribute such payment to the
applicable Issuing Bank or to the Administrative Agent, or, to the extent that
Lenders have made payments pursuant to this paragraph to reimburse the Issuing
Bank, then to such Lenders and the Issuing Bank or the Administrative Agent as
their interests may appear.  Any payment
made by a Lender pursuant to this paragraph to reimburse the Issuing Bank or
the Administrative Agent for any LC Disbursement (other than the funding of ABR
Loans as contemplated above) shall not constitute a Loan and shall not relieve
the applicable Borrowers of their obligation to reimburse such LC Disbursement.

 

(f)                                    Obligations
Absolute.  The Borrowers’
obligations to reimburse LC Disbursements as provided in paragraph (e) of
this Section shall, to the fullest extent permitted under applicable law, be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability
of any Letter of Credit, any LC Guaranty or this Agreement, or any term or
provision therein, (ii) any draft or other document presented under a
Letter of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect (other than
under circumstances which constitute gross negligence or willful misconduct on
the part of the Issuing Bank as finally determined by a court of competent
jurisdiction), (iii) payment of the Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply with the
terms of such Letter of Credit (other than under circumstances which constitute
gross negligence or willful misconduct on the part of the Issuing Bank as
finally determined by a court of competent jurisdiction), or (iv) any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section, constitute a
legal or equitable discharge of, or provide a right of setoff against, the
Borrowers’ obligations hereunder.  None
of the Administrative Agent, the Canadian Agent, the Lenders, the Canadian
Lenders or the Issuing Bank, nor any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer
of any Letter of Credit or LC Guaranty or any payment or failure to make any
payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit or LC Guaranty (including any document
required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of
the Issuing Bank; provided that the foregoing shall not be construed to
excuse the Issuing Bank from liability to the applicable Borrowers to the extent
of any direct damages (as opposed to consequential damages, claims in respect
of which are hereby waived by the Borrowers to the extent permitted by
applicable law) suffered by the applicable Borrowers that are caused by the
Issuing Bank’s failure to exercise care when determining whether drafts and
other documents presented under a Letter of Credit comply with the terms
thereof.  The parties hereto expressly
agree that, in the absence of gross negligence or wilful misconduct on the part
of the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have exercised care in each
such determination.  In furtherance of
the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents

 

35

 

presented
which appear on their face to be in compliance with the terms of a Letter of
Credit, the Issuing Bank may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further investigation,
regardless of any notice or information to the contrary, or refuse to accept
and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.

 

(g)                                 Disbursement
Procedures.  The Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit.  The Issuing Bank shall promptly notify the
Administrative Agent or the Canadian Agent, as applicable, and the applicable
Borrowers by telephone (confirmed by telecopy) of such demand for payment and
whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided
that any failure to give or delay in giving such notice shall not relieve the
applicable Borrowers of their obligation to reimburse the Issuing Bank and the
applicable Lenders with respect to any such LC Disbursement.

 

(h)                                 Interim
Interest.  If the Issuing Bank or
the Administrative Agent or Canadian Agent, as applicable, shall make any LC
Disbursement, then, unless the applicable Borrowers shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the applicable
Borrowers reimburse such LC Disbursement, at the rate per annum then applicable
to ABR Loans; provided that, if the applicable Borrowers fail to
reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.11(d) shall apply.  Interest accrued pursuant to this paragraph shall be for the
account of the Issuing Bank, the Administrative Agent or the Canadian Agent, as
applicable, as the case may be, except that interest accrued on and after the
date of payment by any Lender pursuant to paragraph (c) of this Section to
reimburse the Issuing Bank, the Administrative Agent or the Canadian Agent, as
applicable, shall be for the account of such Lender to the extent of such
payment.

 

Section 2.05.                 Funding of Borrowings.  (a)  Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 noon, New York City and
Toronto time, to the account of the Administrative Agent (or the Canadian Agent
in the case of a Canadian Loan by the Canadian Lenders) most recently
designated by it for such purpose by notice to such Lenders.  The Administrative Agent or the Canadian
Agent, as applicable will make such Loans available to the applicable Borrowers
by promptly crediting the amount so received, in like funds, to an account of
the Borrowers maintained with the Administrative Agent in New York City
and designated by the Borrowers (or, in the case of Canadian Loans, an account
of WP Canada designated by WP Canada) either one Business Day prior to the
Effective Date or in the applicable Borrowing Request; provided that ABR
Loans made to finance the reimbursement of an LC Disbursement as provided
in Section 2.04(e) shall be remitted by the Administrative Agent or
Canadian Agent, as applicable,  to the
Issuing Bank or as otherwise set forth in Section 2.04(e).

 

(b)                                 Upon
the making of a Canadian Loan by the Canadian Lenders and without further
action on the part of the Lenders, the Canadian Lenders hereby grant to each
Canadian Participating Lender, and each such Canadian Participating Lender
hereby acquires from the Canadian Lenders, a participation in such Canadian
Loan, and each such Canadian

 

36

 

Participating
Lender shall fund such participation in accordance with paragraph (a) above as
if such participation were a Loan being made by such Canadian Participating
Lender hereunder.  All provisions of
this Article II shall be applicable to each such participation as if each such
participation were a Loan made by such Canadian Participating Lender.  Each Canadian Participating Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Canadian Loan is absolute and unconditional and
shall not be affected by any circumstances whatsoever, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever.

 

(c)                                  Unless
the Administrative Agent shall have received notice from a Lender or the
Canadian Agent shall have received notice from a Canadian Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent or the Canadian Agent, as applicable, such Lender’s or
Canadian Lender’s share of such Borrowing, the Administrative Agent or the
Canadian Agent, as the case may be, may assume that such Lender or Canadian
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available
to the Borrowers a corresponding amount. 
In such event, if a Lender or Canadian Lender has not in fact made its
share of the applicable Borrowing available to the Administrative Agent or the
Canadian Agent, as relevant, then, without limiting any rights against the
defaulting Lender or Canadian Lender, the applicable Lender or Canadian Lender
and the Borrowers severally agree to pay to the Administrative Agent or the
Canadian Agent, as applicable, forthwith on demand such corresponding amount
with interest thereon, for each day from and including the date such amount is
made available to the applicable Borrower to but excluding the date of payment
to the Administrative Agent or the Canadian Agent, at an annual rate of
interest equal to:  (i) in the case
of such Lender, the greater of the Federal Funds Effective Rate and a rate determined
by the Administrative Agent in accordance with banking industry rules on
interbank compensation (or, in the case of a Canadian Loan, the Canadian
Agent’s cost of funding the amount of such payment) or (ii) in the case of
the Borrowers, the interest rate applicable to ABR Loans.  If such Lender or Canadian Lender pays such
amount to the Administrative Agent or the Canadian Agent, then such amount
shall constitute such Lender’s or Canadian Lender’s Loan included in such
Borrowing.

 

Section 2.06.                 Interest/Contract Elections.  (a)  Each ABR Borrowing on the
Effective Date shall be at the Alternate Base Rate and each CPR Borrowing on
the Effective Date shall be at the Canadian Prime Rate and each thereafter
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request, and, in the case of a BA Loan shall have
an initial BA Period as specified in such Borrowing Request.  A Borrower may elect to convert such a
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurodollar Borrowing or a BA Loan, may elect Interest Periods or BA Periods
therefor, as applicable, all as provided in this Section.  A Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each
such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.

 

(b)                                 To
make an election pursuant to this Section, a Borrower shall notify the
Administrative Agent (or the Canadian Agent in the case of Canadian Loans) of
such election in

 

37

 

writing
or by facsimile transmission or by telephone (confirmed in writing or by fax)
by the time that a Borrowing Request would be required under Section 2.03
if the Borrower were requesting a Borrowing of the Type resulting from such
election to be made on the effective date of such election.  Each such telephonic Interest/BA Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent (or the Canadian Agent in the case of
Canadian Loans) of a written Interest/BA Election Request in a form approved by
the Administrative Agent or the Canadian Agent, as applicable, and signed by
the Borrower.

 

(c)                                  Each
telephonic and written Interest/BA Election Request shall specify the following
information in compliance with Section 2.02;

 

(i)                                     the
Borrowing to which such Interest/BA Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);

 

(ii)                                  the
effective date of the election made pursuant to such Interest/BA Election
Request, which shall be a Business Day;

 

(iii)                               whether
the resulting Borrowing is to be an ABR Borrowing. a Eurodollar Borrowing, a BA
Loan or a CPR Borrowing; and

 

(iv)                              if
the resulting Borrowing is a Eurodollar Borrowing or a BA Loan, the Interest
Period or BA Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the term
“Interest Period”.

 

If any such Interest/BA
Election Request requests a Eurodollar Borrowing but does not specify an
Interest Period, then the Borrower shall be deemed to have selected an Interest
Period of one month’s duration.  If no
BA Period is specified with respect to any requested BA Loan, then the Borrower
shall be deemed to have selected a BA Period of 30 days’ duration.

 

(d)                                 Promptly
following receipt of an Interest/BA Election Request, the Administrative Agent
or the Canadian Agent, as applicable, shall advise each applicable Lender or
Canadian Lender of the details thereof and of such Lender’s or Canadian
Lender’s portion of each resulting Borrowing.

 

(e)                                  If
the relevant Borrower fails to deliver a timely Interest/BA Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein,
at the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing.  If WP Canada fails to
deliver a timely Interest/BA Election Request with respect to a BA Loan prior
to the end of the BA Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such BA Period such Borrowing shall be
converted to a CPR Borrowing. 
Notwithstanding any contrary provision hereof, if an Event of Default
has occurred and is continuing and the Administrative Agent or the Canadian
Agent, at the request of the Required Lenders, so notifies

 

38

 

the
applicable Borrowers, then, so long as an Event of Default is continuing
(i) no request may be made for a Eurodollar Borrowing or BA Loan and no
outstanding Borrowing may be converted to or continued as a Eurodollar
Borrowing or BA Loan and (ii) each Eurodollar Borrowing, unless repaid as
provided herein, shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto and each BA Loan, unless repaid as provided
herein, shall be converted to a CPR Borrowing at the end of the BA Period
applicable thereto.

 

Section 2.07.                 Termination and Reduction of
Commitments.  (a)  Unless
previously terminated, the Commitment shall terminate on the Maturity Date.

 

(b)                                 The
Borrowers may at any time terminate, or from time to time reduce, the
Commitment; provided that (i) each reduction of the Commitment
shall be in an amount that is an integral multiple of $100,000 and not less
than $500,000 and (ii) the Borrowers shall not terminate or reduce the
Commitment if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.09, Availability would be less than zero.

 

(c)                                  The
Borrowers shall notify the Administrative Agent of any election to terminate or
reduce the Commitment under paragraph (b) of this Section at least three
Business Days prior to the effective date of such termination or reduction,
specifying such election and the effective date thereof.  Promptly following receipt of any notice,
the Administrative Agent shall advise the applicable Lenders of the contents
thereof.  Each notice delivered by the
Borrowers pursuant to this Section shall be irrevocable; provided that a
notice of termination of the Commitment delivered by the Borrowers may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrowers (by
notice to the Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied.  Any
termination or reduction of the Commitment shall be permanent.  Each reduction of the Commitment shall be
made ratably among the Lenders with Revolving Loan Commitments in accordance
with their respective Revolving Loan Commitments.

 

(d)                                 The
Commitment shall automatically and permanently reduce to the extent required by
the provisions of Section 2.09. 
Each such reduction of the Commitment shall be made ratably among the
Lenders with Revolving Loan Commitments in accordance with their respective
Revolving Loan Commitments.

 

Section 2.08.                             Repayment
of Loans; Evidence of Debt. 
(a)  WP Canada hereby unconditionally promises to pay to the
Canadian Agent for the account of the Canadian Lenders the then unpaid
principal amount of each Canadian Loan on the Maturity Date and each of the US
Borrowers hereby unconditionally promise to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each other Loan
on the Maturity Date.

 

(b)                                 Each
Lender and Canadian Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the relevant Borrowers to
such Lender and Canadian Lender resulting from each Loan made by it, including
the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.

 

39

 

(c)                                  The
Administrative Agent, (and the Canadian Agent in the case of WP Canada), shall
maintain accounts in which it shall record (i) the amount of each Loan
made hereunder, the Type thereof and the Interest Period or BA Period
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Lender and
Canadian Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent and the Canadian Agent hereunder for the account of each
Lender and Canadian Lender and each such Lender’s share thereof.

 

(d)                                 The
entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima  facie evidence of the existence
and amounts of the obligations recorded therein; provided that the
failure of any Lender, any Canadian Lender, the Canadian Agent or the
Administrative Agent to maintain such accounts or any error therein shall not
in any manner affect the obligation of the Borrowers to repay the Loans in
accordance with the terms of this Agreement.

 

(e)                                  The
Loans of each Lender representing US Obligations shall be evidenced by a
promissory note substantially in the form of Exhibit C (each, a “Note”).  The US Borrowers shall execute and deliver
to each Lender a Note or Notes payable to the order of such Lender with blanks
completed to the satisfaction of such Lender.

 

(f)                                    Each
of the Borrowers agrees and acknowledges as follows:  (i) each of the US Borrowers is a co-borrower hereunder and shall
be jointly and severally liable with the other US Borrowers for the payment of
the principal of and interest on the Loans, the LC Exposure, the Revolving
Credit Commitment Fee, all other fees and all other amounts payable under this
Agreement and the other Financing Documents (including, without limitation,
interest accruing after the filing of a petition or commencement of a case by
or with respect to any Borrower seeking relief under any applicable federal,
state or provincial laws pertaining to bankruptcy, reorganization, arrangement,
moratorium, readjustment of debts, dissolution, liquidation or other debtor
relief, specifically including 11 U.S.C. Section 101 et seq.,
the Bankruptcy and Insolvency Act (Canada) and the Companies Creditors
Arrangement Act (Canada), each as amended from time to time and any successor
statute thereof and any fraudulent transfer and fraudulent conveyance laws,
whether or not the claim for such interest is allowed in such proceeding) and
any permitted Derivative Obligations (collectively, the “Obligations”),
(ii) WP Canada shall be liable for the payment of the principal of and interest
on the Canadian Loans, the LC Exposure related to Letters of Credit issued for
the account of WP Canada, and all other fees and amounts payable under this
Agreement and the other Financing Documents relating to the Canadian Loans and
such LC Exposure (including, without limitation, interest accruing after the
filing of a petition or commencement of a case by or with respect to WP Canada
seeking relief under any applicable federal, state or provincial laws
pertaining to bankruptcy, reorganization, arrangement, moratorium, readjustment
of debts, dissolution, liquidation or other debtor relief, specifically
including 11 U.S.C. Section 101 et  seq., the Bankruptcy and
Insolvency Act (Canada) and the Companies Creditors Arrangement Act (Canada),
each as amended from time to time and any successor statute thereof and any
fraudulent transfer and fraudulent conveyance laws, whether or not the claim
for such interest is allowed in such proceeding) and any permitted Derivative
Obligations entered into for the benefit or account of WP Canada (collectively,
the “Canadian Obligations” and, the Obligations other than the Canadian
Obligations, are referred to herein as the “US Obligations”) and (iii)

 

40

 

each of
the Obligations shall be secured by all of the Collateral; provided that
the US Obligations shall be secured by the Collateral provided by WP Canada
only after WP Canada has delivered the Cross-Border Security Notice pursuant to
Section 2.01(g) and only to the extent of the Canadian Support Collateral and
only to the extent of the US Obligations incurred or arising thereafter.  All credits extended to any of the Borrowers
or requested by any of the Borrowers shall be deemed to be credits extended for
each of the US Borrowers.  Each of the
US Borrowers hereby authorizes the other to effectuate Loans or Letters of
Credit on its behalf.  Notwithstanding
anything to the contrary contained in this Agreement or any of the other
Financing Documents, the Administrative Agent, the Canadian Agent, the Issuing
Bank, the Canadian Lenders and the Lenders shall be entitled to rely upon any
request, notice or other communication received by them from any of the
Borrowers on behalf of all Borrowers, and shall be entitled to treat their
giving of any notice hereunder to any of the Borrowers as notice to each and
all Borrowers.  Each of the Borrowers
agrees that its liability provided for in this paragraph (f) shall not be
impaired or affected by any modification, supplement, extension or amendment or
any contract or agreement to which the other Borrowers may hereafter agree
(other than an agreement signed by the Administrative Agent and the Lenders
specifically releasing such liability), nor by any delay, extension of time,
renewal, compromise or other indulgence granted by the Administrative Agent,
the Canadian Agent, any Canadian Lender or any Lender with respect to any of
the Obligations, nor by any other agreements or arrangements whatsoever with
the other Borrowers or with any other person, each of the Borrowers hereby
waiving all notice of such delay, extension, release, substitution, renewal,
compromise or other indulgence, and hereby consenting to be bound thereby as
fully and effectually as if it had expressly agreed thereto in advance.  The liability of each of the Borrowers is
direct and unconditional as to all of the Obligations for which such Borrower
is obligated, and may be enforced without requiring the Administrative Agent,
the Canadian Agent, any Canadian Lender or any Lender first to resort to any
other right, remedy or security, including any right to bring an action against
any other Borrower.  Each of the
Borrowers hereby expressly waives promptness, diligence, notice of acceptance
and any other notice with respect to any of the Obligations and any requirement
that the Administrative Agent, the Canadian Agent, any Canadian Lender or any
Lender protect, secure, perfect or insure any Lien or any property subject
thereto or exhaust any right or take any action against any of the Borrowers or
any other person or any collateral. 
Each of the Borrowers hereby irrevocably subordinates and makes junior
to the Obligations each of the other Borrower’s “claims” (as defined in
Section 101(5) of the Bankruptcy Code) to which such Borrowers are or
would be entitled by virtue of the provisions of this subsection (f) or the
performance of such Borrower’s obligations thereunder including, without
limitation, any right of subrogation (whether contractual, under
Section 509 of the Bankruptcy Code or otherwise), reimbursement,
contribution, exoneration or similar right, or indemnity, or any right of
recourse to security for any of the Obligations unless and until all of the
Obligations to the Administrative Agent, the Canadian Agent, the Canadian
Lenders and the Lenders have been indefeasibly paid in full.

 

Section 2.09.                 Prepayment of Loans.  (a)  The Borrowers shall have the
right at any time and from time to time to prepay any Borrowing (other than a
BA Loan) in whole or in part, subject to prior notice in accordance with
paragraph (b) of this Section; provided, however, the US
Borrowers shall make prepayments of the Loans from time to time such that the
Availability equals or exceeds zero at all times, and/or WP Canada shall make
prepayments of

 

41

 

the Canadian Loans from time to time such that the Canadian
Availability equals or exceeds zero at all times .

 

(b)                                 The
Borrowers (or any Borrower) shall notify the Administrative Agent (and the
Canadian Agent in the case of a Canadian Loan) by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 2:00 p.m., New York City and Toronto time
three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing or a CPR Borrowing, not later than 2:00 p.m.,
New York City and Toronto time, one Business Day before the date of
prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a
notice of prepayment is given under the circumstances in which a conditional
notice of termination of the Commitment is permitted as contemplated by
Section 2.07, then such notice of prepayment may be revoked if such notice
of termination is revoked in accordance with Section 2.07.  Promptly following receipt of any such
notice relating to a Borrowing, the Administrative Agent or the Canadian Agent,
as applicable, shall advise the applicable Lenders or Canadian Lenders of the
contents thereof.  Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in
the case of an advance of a Borrowing of the same Type as provided in
Section 2.02 (except that the foregoing shall not be applicable
(i) to the extent that the payment is made from the operation of
Borrowers’ controlled disbursement account maintained with the Administrative
Agent or the Canadian Agent, (ii) to a prepayment in full of the aggregate
principal amount of a Borrowing then outstanding or (iii) to a prepayment
of Loans required to be made pursuant to the proviso to paragraph (a) of this
Section).  Each prepayment of a
Borrowing shall be applied ratably to the Loans included in the prepaid
Borrowing.  Prepayments shall be
accompanied by accrued interest to the extent required by Section 2.11.

 

(c)                                  Within
three (or in the case of clause (i) below, 30) Business Days of (i) the
sale or other disposition (including, without limitation, those arising from a
Casualty Event in an amount in excess of $100,000) of any assets of the
Borrowers or any of their Subsidiaries (other than dispositions permitted
pursuant to Section 6.03(c)(i) or (ii)), (ii) the consummation of the
issuance of any equity interests of Holdings, the Borrowers or any subsidiary
(other than (x) equity interests of any Subsidiary issued to the Borrowers
or any other Subsidiary in accordance with the terms hereof or (y) equity
interests of the Borrowers issued to Holdings) or (iii) the consummation
of the issuance of any debt securities of Holdings, the Borrowers or any
Subsidiary (other than Indebtedness permitted pursuant to Section 6.01),
the Borrowers shall make a mandatory prepayment of the Loans in an amount equal
to 100% of the Net Proceeds received, any prepayment to be applied in
accordance with paragraph (d) (and to the extent practicable, Net Proceeds
attributable to WP Canada shall first be applied to Canadian Loans and
thereafter to the other Loans), provided that no prepayment on account
of any asset sale or disposition referred to in clause (i) shall be required
under this subparagraph (c) if the Borrowers inform the Administrative Agent
(or WP Canada informs the Canadian Agent) no later than 30 days following the
receipt of any Net Proceeds from such asset sale or disposition of their or
their Subsidiary’s good faith intention to apply such Net Proceeds to the
acquisition of other assets or property consistent with the business permitted
to be conducted pursuant to Section 6.03(b) (including by way of
Investment) within 180 days following the receipt of such Net Proceeds, with
the amount of such Net Proceeds unused after such 180 day period being applied
to the Loans in accordance with paragraph (d).

 

42

 

(d)                                 Each
prepayment of Loans required by paragraph (c) of this Section shall be made
ratably among the Loans of the Lenders (or among the Canadian Loans in the case
of a prepayment by WP Canada), and such prepayments shall be made with respect
to such Types of Loans as the Borrowers may specify by notice to the
Administrative Agent or Canadian Agent at or before the time of such prepayment
and shall be applied to prepay the Loans comprising each such Type pro rata; provided
that, if no such timely specification is given by the Borrowers, such payment
shall be allocated to such Type or Types as the Administrative Agent or
Canadian Agent may determine.  In the
case of a prepayment under clause (i) of paragraph (c) above (other than a sale
or other disposition resulting in less than $3,000,000 in Net Proceeds or a
disposition permitted pursuant to Section 6.03(c)(iii)(x)), after all
Loans have been repaid in full, then the Commitment shall be permanently reduced
ratably among the Revolving Loan Commitments of the Lenders to the extent of
all additional Net Proceeds in accordance with Section 2.07(d).

 

Section 2.10.                 Fees.  (a)  The US Borrowers
agree to pay to the Administrative Agent for the account of each Lender a commitment
fee (the “Revolving Credit Commitment Fee”), which shall accrue at the
Applicable Rate on the daily amount of the unused Revolving Loan Commitment of
such Lender during the period from and including the Effective Date to but
excluding the date on which such Revolving Loan Commitment terminates.  Accrued Revolving Credit Commitment Fees
shall be payable quarterly in arrears on the first day of January, April, July
and October of each year and on the date on which the Revolving Loan
Commitments terminate, commencing on the first such date to occur after the
date hereof.  All Revolving Credit
Commitment Fees shall be computed on the basis of a year of 365 days and shall
be payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

(b)                                 (i) 
The US Borrowers agree to pay to the Administrative Agent for the account of
each Lender, and WP Canada agrees to pay to the Canadian Agent for the account
of each Canadian Participating Lender, a participation fee with respect to its
participation in Letters of Credit for the account of such Borrower(s), which
shall accrue for each day during the period from and including the Effective
Date to but excluding the later of the date on which such Lender’s Revolving
Loan Commitment terminates and the date on which such Lender ceases to have any
LC Exposure, at 0.25% less than the Applicable Rate with respect to interest on
Eurodollar Loans for such day on the average daily amount of such Lender’s LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) and (ii) the Borrowers agree to pay to the applicable
Issuing Bank a fronting fee, which shall accrue at a rate of 0.25% per annum on
the average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Commitment and the date on which there ceases to be any LC
Exposure, as well as the applicable Issuing Bank’s standard fees with respect
to the issuance, amendment, renewal or extension of any Letter of Credit or
processing of drawings thereunder. 
Participation fees and fronting fees accrued through and including the
last day of March, June, September and December of each year shall be payable
on the third Business Day following such last day, commencing on the first such
date to occur after the Effective Date; provided that all such fees
shall be payable on the date on which the Commitment terminates and any such
fees accruing after the date on which the Commitment terminates shall be
payable on demand.  Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable to the
Issuing Bank on demand.  All
participation fees and fronting fees shall be computed on the basis of a year
of 365 days and shall

 

43

 

be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

(c)                                  The
US Borrowers agree to pay to the Administrative Agent and WP Canada agrees to
pay to the Canadian Agent, for its own account, fees in the amounts set forth
in the Fee Letter and any other fees in the amounts and at the times separately
agreed upon in writing among the Borrowers and the Administrative Agent and/or
the Canadian Agent.

 

(d)                                 All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent or the Canadian Agent, as applicable, (or to
the Issuing Bank, in the case of fees payable to it) for distribution, in the
case of commitment fees and participation fees, to the Lenders.  Absent any error in the calculation thereof,
fees paid shall not be refundable under any circumstances.

 

Section 2.11.                 Interest.  (a)  The Loans comprising each ABR
Borrowing shall bear interest for each day on which any principal of such Loans
remains outstanding at the Alternate Base Rate for such day plus the Applicable
Rate for such day.

 

(b)                                 The
Loans comprising each Eurodollar Borrowing shall bear interest for each day
during each Interest Period applicable thereto at the Adjusted LIBO Rate for
such Interest Period plus the Applicable Rate for such day.

 

(c)                                  The
Loans comprising each CPR Borrowing shall bear interest for each day in which
any principal of such Loans remains outstanding at the Canadian Prime Rate for
such day plus the Applicable Rate for such day.

 

(d)                                 Notwithstanding
the foregoing, if a Default shall have occurred and be continuing, then unless
and until such Default shall have been cured or waived, all outstanding Loans
shall bear interest, after as well as before judgment, at a rate per annum
equal to 2% plus the rate otherwise applicable to such Loan as provided in the
preceding paragraphs of this Section.

 

(e)                                  Accrued
interest on each Loan shall be payable in arrears on each Interest Payment Date
for such Loan, on the Maturity Date and, upon termination of the Commitment; provided
that (i) interest accrued pursuant to paragraph (c) of this Section shall
be payable on demand, (ii) in the event of any repayment or prepayment of
any Eurodollar Loan, accrued interest on the principal amount repaid or prepaid
shall be payable on the date of such repayment or prepayment and (iii) in
the event of any conversion of any Eurodollar Loan prior to the end of the
current Interest Period therefor, accrued interest on such Eurodollar Loan
shall be payable on the effective date of such conversion.

 

(f)                                    All
interest hereunder shall be computed on the basis of a year of 360 days, except
that interest computed by reference to the Alternate Base Rate or the Canadian
Prime Rate shall be computed on the basis of a year of 365 days (or 366 in a
leap year), and in each case shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).  The applicable Alternate Base Rate, Adjusted
LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and the
applicable Canadian Prime Rate shall

 

44

 

be
determined by the Canadian Agent, and each such determination shall be
conclusive absent manifest error.

 

Section 2.11A.  Interest Act Disclosure.  For the purposes of the Interest Act (Canada), where in this
Agreement a yearly rate or percentage of interest or a fee is calculated on the
basis of a year of 360 or 365 days, the yearly rate or percentage of interest
to which such rate or fee is equivalent is the said rate or fee multiplied by
the actual number of days in the year for which such calculation is made and
divided 360 or 365, as the case may be.

 

The rates of interest and
Applicable Rates specified in this Agreement are nominal rates and not
effective rates or yields and the parties hereto acknowledge that there is a
material distinction between the nominal and effective rates of interest, that
they are capable of making the calculations necessary to compare such rates and
that the principle of deemed reinvestment of interest shall not apply to any
calculations of interest hereunder.

 

Section 2.12.                 Alternate Rate
of Interest.  If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

 

(a)                                  the
Administrative Agent or the Canadian Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means
do not exist for ascertaining the Adjusted LIBO Rate, for such Interest Period;
or

 

(b)                                 the
Administrative Agent is advised by the Required Lenders that the Adjusted LIBO
Rate, for such Interest Period will not adequately and fairly reflect the cost
to such Lenders of making or maintaining their Loans included in such Borrowing
for such Interest Period;

 

then the Administrative
Agent shall give notice thereof to the Borrowers and the Lenders and Canadian
Lenders by telephone or telecopy, as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders and
Canadian Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest/BA Election Request that requests the conversion
of any Borrowing to, or continuation of any Borrowing as, a Eurodollar
Borrowing shall be ineffective and (ii) if any Borrowing Request or
Interest/BA Election Request requests a Eurodollar Borrowing, such Borrowing
shall be made as an ABR Borrowing.

 

Section 2.13.                 Increased Costs.  (a)  If any Change in Law shall:

 

(i)                                     impose,
modify or deem applicable any reserve, special deposit liquidity, cash margin,
capital, assessment or similar requirement against assets or deposits with or
for the account of, or credit extended by, any Lender or Canadian Lender
(except any such reserve requirement reflected in the Adjusted LIBO Rate) or
the Issuing Bank; or

 

(ii)                                  impose
on any Lender or Canadian Lender or the Issuing Bank or the London interbank
market any other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit or participation therein;

 

45

 

and the result of any of
the foregoing shall be to increase the cost to such Lender or Canadian Lender
of making or maintaining any Eurodollar Loan or BA Loan (or of maintaining its
obligation to make any such Eurodollar Loan or BA Loan) or to increase the cost
to such Lender or the Issuing Bank of participating in, issuing or maintaining
any Letter of Credit or to reduce the amount of any sum received or receivable
by such Lender or the Issuing Bank hereunder (whether of principal, interest or
otherwise with respect to its Eurodollar Loans, its BA Loans or its maintenance
of, or participation in, Letters of Credit), then the applicable Borrowers will
pay to such Lender or Canadian Lender or the Issuing Bank, as the case may be,
such additional amount or amounts as will compensate such Lender or the Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.

 

(b)                                 If
any Lender or Canadian Lender or the Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender’s, Canadian Lender’s or the Issuing Bank’s
capital or on the capital of such Lender’s, Canadian Lender’s or the Issuing
Bank’s holding company, if any, as a consequence of this Agreement or the Loans
made by, or participations in Letters of Credit held by, such Lender, Canadian
Lender or the Letters of Credit issued by the Issuing Bank, to a level below
that which such Lender, Canadian Lender or the Issuing Bank or such Lender’s,
Canadian Lender’s or the Issuing Bank’s holding company could have achieved but
for such Change in Law (taking into consideration such Lender’s, Canadian
Lender’s or the Issuing Bank’s policies and the policies of such Lender’s,
Canadian Lender’s or the Issuing Bank’s holding company with respect to capital
adequacy), then from time to time the Borrowers will pay to such Lender,
Canadian Lender or the Issuing Bank, as the case may be, such additional amount
or amounts as will compensate such Lender, Canadian Lender or the Issuing Bank
or such Lender’s, Canadian Lender’s or the Issuing Bank’s holding company for
any such reduction suffered.

 

(c)                                  A
certificate of a Lender, Canadian Lender or the Issuing Bank setting forth in
reasonable detail the calculation of the amount or amounts necessary to
compensate such Lender, Canadian Lender or the Issuing Bank or its holding
company, as the case may be, as specified in paragraph (a) or (b) of this
Section shall be delivered to the applicable Borrowers and shall be conclusive
absent manifest error.  The applicable
Borrowers shall pay such Lender, Canadian Lender or the Issuing Bank, as the
case may be, the amount shown as due on any such certificate within ten (10)
days after the receipt thereof.

 

(d)                                 Failure
or delay on the part of any Lender, Canadian Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s, Canadian Lender’s or the Issuing Bank’s right to demand such
compensation; provided that the applicable Borrowers shall not be
required to compensate a Lender or the Issuing Bank pursuant to this Section
for any increased costs or reductions incurred more than 180 days prior to the
date that such Lender or the Issuing Bank, as the case may be, notifies the
applicable Borrowers of the Change in Law giving rise to such increased costs
or reductions and of such Lender’s, Canadian Lender’s or the Issuing Bank’s
intention to claim compensation therefor; provided  further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 180-day period referred to above shall be extended to
include the period of retroactive effect thereof.

 

46

 

Section 2.14.                 Break Funding
Payments.  In the event of
(a) the payment of any principal of any Eurodollar Loan other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default) or of any BA Loan other than on the last day of a BA Period,
(b) the conversion of any Eurodollar Loan or BA Loan other than on the
last day of the Interest Period or BA Period applicable thereto or (c) the
failure to borrow, convert, continue or prepay any Eurodollar Loan or BA Loan
on the date specified in any notice delivered pursuant hereto (regardless of
whether such notice may be revoked under Section 2.09(b) and is revoked in
accordance therewith), then, in any such event, the applicable Borrowers shall
compensate each applicable Lender for the loss, cost and expense attributable
to such event.  In the case of a Eurodollar
Loan, such loss, cost or expense to any applicable Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of
(i) the amount of interest which would have accrued on the principal
amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that
would have been applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement of
such period, for dollar deposits of a comparable amount and period from other
banks in the eurodollar market.  A
certificate of any Lender setting forth in reasonable detail any amount or
amounts that such Lender is entitled to receive pursuant to this Section shall
be delivered to the applicable Borrowers and shall be conclusive absent
manifest error.  The applicable
Borrowers shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof. 
Notwithstanding the foregoing, the Borrowers shall not be required to
make any prepayment of a Eurodollar Borrowing or a BA Loan pursuant to
Section 2.09(c) until the last day of the Interest Period or BA Period
with respect thereto so  long  as an amount equal to such
prepayment is deposited by the applicable Borrowers into a cash collateral
account with the Administrative Agent or the Canadian Agent, as applicable, and
applied to such prepayment on the last day of such Interest Period.

 

Section 2.15.                 Taxes.  (a) Any and all payments by or on
account of any obligation of the Borrowers hereunder shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrowers shall be required to deduct any Indemnified Taxes or
Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Canadian Lender or Issuing Bank (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers shall make such deductions and
(iii) the Borrowers shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 

(b)                                 In
addition, the Borrowers shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law.

 

(c)                                  The
Borrowers shall indemnify the Administrative Agent, the Canadian Agent, each
Lender, each Canadian Lender and the Issuing Bank, within 30 days after written
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
paid by the Administrative Agent, the Canadian Agent, such Lender or the
Issuing Bank, as the case may be,

 

47

 

on or
with respect to any payment by or on account or in lieu of payment of, or in
satisfaction of any obligation of the Borrowers hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) and any penalties, interest and reasonable
expenses arising therefrom or with respect thereto, whether or not such
Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted
by the relevant Governmental Authority. 
A certificate as to the amount of such payment or liability delivered to
the Borrowers by a Lender, Canadian Lender or the Issuing Bank, or by the
Administrative Agent or the Canadian Agent on their own behalf or on behalf of
a Lender, Canadian Lender or the Issuing Bank, shall be conclusive absent
manifest error.

 

(d)                                 As
soon as practicable after any payment of Indemnified Taxes or Other Taxes by
the Borrowers to a Governmental Authority, the applicable Borrowers shall
deliver to the Administrative Agent or the Canadian Agent, as applicable, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of the return reporting such payment or other
evidence of such payment reasonably satisfactory to the Administrative Agent.

 

(e)                                  Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which a Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to such Borrower (with a copy to
the Administrative Agent or the Canadian Agent, as applicable), at the time or
times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by such
Borrower as will permit such payments to be made without withholding or at a
reduced rate.

 

(f)                                    If
the Administrative Agent or Canadian Agent, as applicable, or a Lender or
Canadian Lender determines, in its sole discretion, that it has received a
refund, rebate or reduction of any Taxes or Other Taxes as to which it has been
indemnified by the Borrowers or with respect to which the Borrowers have paid
additional amounts pursuant to this Section 2.15, it shall pay over such
refund to the Borrowers, as applicable (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrowers under this
Section 2.15 with respect to the Taxes or Other Taxes giving rise to such
refund); provided, that the Borrowers, upon the request of the Administrative
Agent or Canadian Agent, as applicable, or such Lender or Canadian Lender,
agree to repay the amount paid over to the Borrowers (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to
the Administrative Agent or Canadian Agent, as applicable, or such Lender or
Canadian Lender in the event that the Administrative Agent or such Lender or
Canadian Lender is required to repay such refund to such Governmental
Authority.  This section shall not be
construed to require the Administrative Agent or any Lender to make available
its tax returns (or other information relating to its taxes which it deems
confidential) to the Borrowers or any other Person.

 

(g)                                 Notwithstanding
anything to the contrary in this Agreement (except to the extent applicable,
Sections 2.15(e) and (f) above and Section 2.15(h) below), WP Canada, if it is
required to deduct or withhold any Taxes (whether Indemnified Taxes or Other
Taxes) from any payments to be made by it to the Administrative Agent, the
Canadian Agent, the Issuing Bank or to a Canadian Lender or any of the Lenders,
shall:  (i) increase or gross up
the amount of such payment as necessary so that after making all required
deductions or withholdings (including

 

48

 

deductions or withholdings applicable to additional sums payable under
this section) the Administrative Agent, the Canadian Agent, the Canadian Lender
and such Lenders(s) and Issuing Bank (as the case may be) receives an amount
equal to the sum that it would have received had no such deduction or
withholding been made, (ii) make such deduction or withholding and (iii) pay
and remit the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable laws.

 

(h)                                 Each
Lender, the Canadian Lenders, the Canadian Agent and the Administrative Agent
shall use reasonable efforts (consistent with legal and regulatory
restrictions) to avoid or minimize any amounts which might otherwise be payable
pursuant to this Section 2.15 (including seeking refunds of any amounts that
are reasonably believed to not have been correctly or legally asserted); provided,
however, that such efforts shall not include the taking of any actions
by such Lender, the Canadian Lenders, the Canadian Agent or the Administrative
Agent that would result in any tax, costs or other expense to such Lender, the
Administrative Agent or the Administrative Agent (other than a tax, cost or
other expense for which such Lender, the Canadian Lenders or the Administrative
Agent shall have been reimbursed or indemnified by the Borrowers pursuant to
this Agreement or otherwise) or any action which would or might, in the
reasonable opinion of such Lender, the Canadian Lenders, the Canadian Agent or
the Administrative Agent, have an adverse effect upon its business, operations,
or financial condition or otherwise be disadvantageous to such Lender, the Canadian
Lenders, the Canadian Agent or the Administrative Agent.

 

Section 2.16.                 Payments Generally; Pro Rata
Treatment; Sharing of Set-offs. 
(a)  The Borrowers shall make each payment required to be made
by it hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.13, 2.14 or 2.15, or
otherwise) prior to 1:00 p.m., New York City and Toronto time to the
Administrative Agent in the case of the US Borrowers or in the case of WP Canada
to the Canadian Agent, on the date when due, in immediately available funds,
without set-off or counterclaim.  Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent or the Canadian Agent, as applicable, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon.  The Administrative
Agent or the Canadian Agent may, but shall not be required to, charge, when due
and payable, the Borrowers’ account maintained with the Administrative Agent or
the Canadian Agent for all interest, principal and Revolving Credit Commitment
Fees or other amounts owing to the Administrative Agent, the Issuing Bank or
the Lenders on or with respect to this Agreement, the Loans or any other Financing
Document.  All such payments shall be
made to the Administrative Agent at its offices at 1166 Avenue of the Americas,
New York, New York, except payments with respect to Canadian Loans which shall
be made to the Canadian Agent at its offices at 200 Bay Street, Suite 1800,
Royal Bank Plaza, South Tower, Toronto, Ontario, payments to be made directly
to the Issuing Bank as expressly provided herein and payments pursuant to
Sections 2.13, 2.14, 2.15 and 9.03 which shall be made directly to the Persons
entitled thereto.  The Administrative
Agent and the Canadian Agent shall distribute any such payments received by it
for the account of any other Person to the appropriate recipient promptly
following receipt thereof.  If any
payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension; provided that, in the case of any prepayment of
principal of or interest on any

 

49

 

Eurodollar Loan, if such next succeeding Business Day would fall in the
next calendar month, the date for payment shall instead be the next preceding
Business Day.  All payments hereunder
shall be made in Canadian and U.S. dollars, as applicable.

 

(b)                                 If
at any time insufficient funds are received by and available to the
Administrative Agent or the Canadian Agent, as applicable, to pay fully all amounts
of principal, unreimbursed LC Disbursements, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.

 

(c)                                  Each
payment to the Administrative Agent by each of the US Borrowers of principal
of, or interest on, outstanding Loans or on account of any other Obligations
owing by any one or more of the US Borrowers to the Lenders, and each payment
to the Canadian Agent by WP Canada of principal of, or interest on, outstanding
Loans or on account of any other Obligations owing by WP Canada to the Canadian
Lenders shall, respectively, be applied and distributed pro rata:  on receipt by the Administrative Agent to
the Lenders in proportion to the outstanding US Obligations owing to each
Lender by the US Borrowers; and on receipt by the Canadian Agent to the
Canadian Lenders in proportion to the outstanding Canadian Obligations owing to
each Canadian Lender by WP Canada (and redistributed to the Canadian
Participating Lenders).

 

(d)                             (i)  If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Loans to the US Borrowers or
participations in LC Disbursements owing by the US Borrowers resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of
such Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving
such greater proportion shall purchase (for cash at face value) participations
in the Loans to the US Borrowers and participations in LC Disbursements owing by
the US Borrowers of other Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Lenders ratably in accordance with
the aggregate amount of principal of and accrued interest on their respective
Loans to the US Borrowers and participations in LC Disbursements owing by the
US Borrowers;

 

(ii)                                if
any Canadian Lender or Canadian Participating Lender shall, by exercising any
right of set-off or counterclaim or otherwise, obtain payment in respect of any
principal of or interest on any of its Canadian Loans or participations, as the
case may be, or participations or subparticipations, as the case may be, in LC
Disbursements owing by WP Canada resulting in such Canadian Lender or Canadian
Participating Lender receiving payment of a greater proportion of the aggregate
amount of such Loans, participations and/or subparticipations, as applicable,
and accrued interest thereon than the proportion received by any other Canadian
Lender or Canadian Participating Lender, then the

 

50

 

Canadian Lender or
Canadian Participating Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Canadian Loans and
participations in LC Disbursements owing by WP Canada to other Canadian Lenders
or Canadian Participating Lenders to the extent necessary so that the benefit
of all such payments shall be shared by the Canadian Lenders and the Canadian
Participating Lenders ratably in accordance with the aggregate amount of
principal and accrued interest on their respective Canadian Loans,
participations therein and in LC Disbursements owing by WP Canada and/or
subparticipations therein, as applicable;

 

provided
that (i) if any such participations are purchased and all or any portion
of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall not be construed
to apply to any payment made by the Borrowers pursuant to and in accordance
with the express terms of this Agreement or any payment obtained by a
Lender,  Canadian Lender or Canadian
Participating Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrowers or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph (c) shall
apply).  The Borrowers consent to the
foregoing and agree, to the extent they may effectively do so under applicable
law, that any Lender or Canadian Participating Lender acquiring a participation
pursuant to the foregoing arrangements may exercise against the Borrowers
rights of set-off and counterclaim with respect to such participation as fully
as if such Lender, Canadian Lender or Canadian Participating Lender were a
direct creditor of the Borrowers in the amount of such participation.

 

(e)                                  If
following the occurrence of an Event of Default and the termination of the
Commitments and the pro rata sharing provided for in Section 2.16(d) above:

 

(i)                                     the
Lenders (the “Purchasing US Lenders”) shall have obtained payment
hereunder (whether voluntary, involuntary, through the exercise of any right of
set-off, distribution by the Administrative Agent or otherwise) on account of
the US Obligations owing to them and the effect or result thereof is that
the aggregate amount of US Obligations owing to such Lenders that have
been repaid is proportionately higher than the aggregate amount of Canadian
Obligations owing to the Canadian Participating Lenders by WP Canada that have
been repaid, the Purchasing US Lenders shall forthwith unconditionally purchase
from the Canadian Participating Lenders by payment to the Canadian Agent for
distribution by it ratably to the Canadian Participating Lenders, such
participations in the Loans made by the Canadian Participating Lenders as shall
be necessary to cause the Purchasing US Lenders to share such excess
payment with each of the Canadian Participating Lenders (such excess to be
shared among the Canadian Participating Lenders in proportion to the respective
outstanding Canadian Obligations owed to each Canadian Participating Lender by
WP Canada);

 

(ii)                                  the
Canadian Participating Lenders (the “Purchasing Canadian Lenders”) shall
have obtained payment hereunder (whether voluntary,

 

51

 

involuntary, through the
exercise of any right of set-off, distribution by the Canadian Agent or
otherwise) on account of the Canadian Obligations owing to them and the effect
or result thereof is that the aggregate amount of Canadian Obligations owing to
the Canadian Participating Lenders that have been repaid is proportionately higher
than the aggregate amount of US Obligations owing to the Lenders by the
US Borrowers that have been repaid, the Purchasing Canadian Lenders shall
forthwith unconditionally purchase from the Lenders by payment to the
Administrative Agent for distribution by it ratably to the Lenders, such
participations in the Loans made by the Lenders to the US Borrowers as shall be
necessary to cause the Purchasing Canadian Lenders to share such excess payment
with each of the Lenders (such excess to be shared among the Lenders in
proportion to the respective outstanding US Obligations owed to each
Lender by the US Borrowers);

 

provided
that if all or any portion of such excess payment is thereafter required to be
repaid or returned by such Purchasing US Lenders or Purchasing Canadian
Lenders, each purchase by way of participation from such other Lenders shall be
rescinded and such other Lenders shall repay to such Purchasing Lenders the
purchase price to the extent of its pro rata share of such amount.  The Borrowers agree that any purchasing
lender may, to the fullest extent permitted by law and in accordance with the
terms of this Agreement, exercise all its rights of payment recovery (including
the right of set-off) with respect to such participation as fully as if the
purchasing lender were a direct creditor of the Borrowers in the amount of such
participation.

 

(f)                                    Unless
the Administrative Agent or the Canadian Agent shall have received notice from
the Borrowers prior to the date on which any payment is due to the
Administrative Agent or the Canadian Agent for the account of the Lenders, the
Canadian Lenders or the Issuing Bank hereunder that the Borrowers will not make
such payment, the Administrative Agent or the Canadian Agent, as the case may
be, may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to
the Lenders, the Canadian Lenders or the Issuing Bank, as the case may be, the
amount due.  In such event, if the
Borrowers have not in fact made such payment, then each of the Lenders or the
Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent or the Canadian Agent, as applicable, forthwith on demand
the amount so distributed to such Lender or Issuing Bank with interest thereon,
for each day from and including the date such amount is distributed to it to
but excluding the date of payment to the Administrative Agent or the Canadian
Agent, as applicable, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

 

(g)                                 If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.04(d) or (e), 2.05(c) or 2.16(c) or (d), then the Administrative
Agent (or the Canadian Agent in the case of Canadian Loans) may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent (or the Canadian Agent) for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.  Until such Lender’s unsatisfied obligations
are fully paid, such Lender shall be excluded from any determination of
Required Lenders under this Agreement.

 

52

 

Section 2.17.                 Mitigation
Obligations.  If any Lender or
Canadian Lender requests compensation under Section 2.13, or if any
Borrower is required to pay any additional amount to any Lender or Canadian
Lender or any Governmental Authority for the account of any such Lender
pursuant to Section 2.15, then such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the reasonable judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable
pursuant to Section 2.13 or 2.15, as the case may be, in the future and
(ii) would not subject such Lender to any unreimbursed cost or expense and
would not otherwise be disadvantageous to such Lender.  The Borrowers hereby agree to pay all
reasonable costs and expenses incurred by any Lender or Canadian Lender in
connection with any such designation or assignment.

 

Section 2.18.                 Bankers’ Acceptances.  (a) 
WP Canada shall pay each Canadian Lender the Acceptance Fee on the Face
Amount of each Bankers’ Acceptance accepted by such Canadian Lender
hereunder.  Such fee shall be paid upon
acceptance by such Canadian Lender of such Bankers’ Acceptance and if such
Canadian Lender purchases such Bankers’ Acceptance shall be deducted from the
BA Purchase Price otherwise available to WP Canada.  Each determination by the Canadian Agent of the Acceptance Fee
and BA Purchase Price applicable to any Bankers’ Acceptance shall, in the
absence of manifest error, be final, conclusive and binding on WP Canada and
the Canadian Lenders.

 

(b)                                 The
Canadian Lenders shall not accept any Draft or Banker’s Acceptance presented
for purchase or issuance pursuant to this Agreement which:

 

(i)                                     is
drawn on or which matures on a day which is not a Business Day;

 

(ii)                                   matures
subsequent to the Maturity Date;

 

(iii)                                has
a BA Period exceeding 180 days;

 

(iv)                               is
denominated in any currency other than Canadian Dollars;

 

(v)                                  is
less than $100,000 (Cdn.) or not in whole integral multiples thereof;

 

(vi)                               is
not otherwise in a form reasonably satisfactory to the relevant Canadian
Lender; or

 

(vii)                            in
respect of which WP Canada has not then paid the applicable Acceptance Fee in
the manner provided herein (unless WP Canada has requested that the Canadian
Lender purchase, and the Canadian Lender has agreed to purchase such Banker’s
Acceptances in which case the Acceptance Fee shall be deducted from the BA
Purchase Price therefor).

 

(c)                                  WP
Canada hereby renounces, and shall not claim or request or require any Canadian
Lender to claim, any days of grace for the payment of any Bankers’ Acceptances.

 

53

 

WP
Canada waives presentment for payment and any other defense to payment of any
amounts due to a Canadian Lender in respect of a Bankers’ Acceptance accepted
or purchased by, or issued to, such Canadian Lender pursuant to this Agreement
which might exist solely by reason of such Bankers’ Acceptance being held, at
the maturity thereof, by such Canadian Lender in its own right.

 

(d)                                 Upon
acceptance of a Draft presented by WP Canada, WP Canada shall sell Bankers’
Acceptances to the Canadian Lenders at the BA Purchase Price therefor and, once
purchased, the Canadian Lenders shall credit the Discount to WP Canada’s
account maintained with the Canadian Agent or as WP Canada may otherwise
direct.  The Acceptance Fee payable by
WP Canada to the Canadian Lenders in respect of each Bankers’ Acceptance
accepted and purchased by the Canadian Lenders shall be deducted from the BA
Purchase Price therefor otherwise payable by the Canadian Lenders.

 

(e)                                  Bankers’
Acceptances purchased by a Canadian Lender hereunder may be held by it for its
own account until the maturity date or sold, discounted or otherwise disposed
of by it at any time prior thereto to a Canadian resident or an authorized
foreign bank deemed to be resident in Canada, in such Lender’s sole
discretion.  WP Canada hereby
unconditionally agrees to pay to the Canadian Agent (for the benefit of the
relevant Canadian Lenders or as they may otherwise direct) on the maturity date
(whether at stated maturity, by acceleration hereunder or otherwise) of each
Bankers’ Acceptance, the aggregate Face Amount of each then maturing Bankers’
Acceptance and in this regard, WP Canada hereby authorizes the Canadian Agent
and each Canadian Lender to debit any account of WP Canada with the Canadian
Agent or such Canadian Lender with the amount(s) required to pay the full Face
Amount of such Bankers’ Acceptance, notwithstanding the fact that such Bankers’
Acceptance may be held by such Canadian Lender in its own right at
maturity.  The obligation of WP Canada
to reimburse and pay the Canadian Lenders for then maturing Bankers’
Acceptances may be satisfied (provided no Default has occurred and is
continuing and provided that there is sufficient Canadian Availability and
provided that the other conditions precedent for a Loan are complied with) by
WP Canada requesting, in accordance with and subject to this Agreement either
that:  (x) a Loan which is a CPR
Loan equal to the Face Amount of all then maturing Bankers’ Acceptances be made
to it by the Canadian Lenders or (y) new Bankers’ Acceptances be issued,
accepted by the Canadian Lenders and purchased by the Canadian Lenders at the
BA Purchase Price thereof in sufficient amounts to repay the Face Amount of the
then maturing Bankers’ Acceptances.  WP
Canada acknowledges and agrees that any and all Financing Documents now or
hereafter held by the Canadian Agent for the payment of all or any portion of
the Obligations shall be held by the Canadian Agent as continuing collateral
security for, among other things, repayment of the Obligations of WP Canada to
the Canadian Lenders in respect of all Bankers’ Acceptances.

 

(f)                                    To
facilitate the acceptance by the Canadian Lenders of Drafts to be Bankers’
Acceptances as contemplated by this Agreement, WP Canada shall, at the request
of any Canadian Lender, supply such Canadian Lender with such number of Drafts
as such Canadian Lender may reasonably request in form reasonably acceptable to
such Canadian Lender, duly executed by WP Canada.  Each Canadian Lender shall exercise such care in the custody and
safekeeping of such Drafts as such Canadian Lender gives to similar property
owned by them.  Drafts to be accepted as
Bankers’ Acceptances shall be signed by an officer or officers of WP Canada who
are duly authorized by WP Canada to execute the Bankers’ Acceptances on

 

54

 

behalf
of WP Canada.  The signatures on behalf
of WP Canada may be mechanically reproduced in facsimile, and any such
signatures shall be binding on WP Canada as if such signatures had been
manually inscribed by the persons or other parties duly authorized to sign on
behalf of WP Canada.  Notwithstanding
that any one or more individuals or other parties whose manual or facsimile
signature appears on any bill as a signatory on behalf of WP Canada, may no
longer hold office or be an authorized signatory at the date of such bill or at
the date of its acceptance by the Canadian Lenders hereunder or at any time
thereafter, any Bankers’ Acceptances signed as aforesaid on behalf of WP Canada
shall be valid and binding upon WP Canada and the Canadian Lenders shall be
entitled to rely on the most recent certificates of signing authority delivered
to them by WP Canada, until the Canadian Agent receives notice in writing of a
change of authorized signatures (with sample signatures of such authorized
signatories).

 

(g)                                 No
Canadian Lender shall be responsible or liable for its failure to accept a
Bankers’ Acceptance or purchase a Draft or Banker’s Acceptance if the cause of
such failure is, in whole or in part, due to the failure of WP Canada to
provide duly executed and endorsed Drafts to such Canadian Lender on a timely
basis, pursuant to a request for the supply of such Drafts delivered to WP
Canada in accordance with this Section, nor shall any Canadian Lender be liable
for any damage, loss or other claim arising by reason of any loss or improper
use of any Bankers’ Acceptance except loss or improper use arising by reason of
the gross negligence or wilful misconduct of such Canadian Lender, its
officers, employees, agents or representatives.  Each Canadian Lender shall maintain a record with respect to
Drafts (i) received by it from WP Canada in blank hereunder,
(ii) voided by it for any reason, (iii) accepted or purchased by it
hereunder, (iv) executed by it hereunder, and (v) cancelled at their
respective maturities.

 

(h)                                 As
an alternative to WP Canada executing and delivering presigned Drafts pursuant
to subparagraph (f) above, WP Canada may, at its option, execute and deliver a
Bankers’ Acceptance power of attorney to a Canadian Lender, in a form
acceptable to such Canadian Lender.

 

(i)                                     Subject
to the following subparagraph (j), no prepayment of any Bankers’ Acceptance may
be made by WP Canada to any Canadian Lender or the Canadian Agent prior to the
maturity date of such Bankers’ Acceptance.

 

(j)                                     Upon
the occurrence and continuance of an Event of Default, notwithstanding the date
of maturity of any outstanding Bankers’ Acceptances, WP Canada shall pay to the
Canadian Agent on behalf of the Canadian Lenders forthwith upon demand by the
Canadian Agent, an amount equivalent to the amount or amounts required to pay:

 

(i)                                     on
maturity, the Face Amount of all outstanding Bankers’ Acceptances which the
Canadian Lenders are required to honor; and

 

(ii)                                  all
unpaid Acceptance Fees, if any, owed to the Canadian Lenders

 

and, except for any
amount payable in respect of unpaid Acceptance Fees, all such amounts shall be
deposited into an interest-bearing cash collateral account to be held by the
Canadian Agent as additional security for payment of the Face Amount of such
outstanding Bankers’ Acceptances upon maturity and accrued interest on such
cash collateral, at the option of the Canadian Agent,

 

55

 

may either be credited to
WP Canada or applied against any Obligations which continues to be outstanding.

 

(k)                                  Without
limiting Section 2.03, upon receipt by the Canadian Agent of a drawdown
notice or conversion notice from WP Canada for BA Loans, the Canadian Agent
shall notify the Canadian Lenders of the amount of BA Loans requested and the
BA Period thereof.  Each Canadian Lender
agrees to accept and purchase the Bankers’ Acceptances comprising such BA Loan
subject to the terms of this Agreement.

 

(l)                                     If
the Canadian Agent or any Canadian Lender determines in good faith, acting
reasonably, which determination shall be final, conclusive and binding upon WP
Canada and notifies WP Canada that, (i) by reason of circumstances or
changes affecting the market for bankers’ acceptances it is no longer possible
to establish the Discount Rate or (ii) the market for bankers’ acceptances
no longer exists, is too weak to allow for the sale or trading of bankers
acceptances requested to be issued pursuant to this Agreement, or
(iii) any change to the present, or the introduction of any future, legal
requirement or any guideline, directive, policy, request or requirement with
which it is customary for a Canadian Lender to comply (whether or not having
the force of law) of any Governmental Authority, or in the interpretation or
application thereof by any Governmental Authority, has made it unlawful for a
Canadian Lender to make, fund, or maintain or to give effect to its obligations
in respect of any BA Loan as contemplated hereby, then:

 

(i)                                     the
right of WP Canada to request BA Loans shall be suspended until the Canadian
Agent or such Canadian Lender determines that the circumstances causing such
suspension no longer exist and the Canadian Agent so notifies WP Canada; and

 

(ii)                                  any
drawdown notice or conversion notice for any BA Loan which is outstanding shall
be deemed to constitute a request for a CPR Loan.

 

ARTICLE III

 

Representations and Warranties

 

Each of
the Borrowers represents and warrants to the Lenders that:

 

Section 3.01.                 Existence and
Power.  Each of the Borrowers is a
corporation organized, validly existing and in good standing under the laws of
the State of Delaware, in the case of Water Pik and Laars, and Canada, in the
case of WP Canada, and has all necessary powers required to carry on its
business as now conducted and, except where the failure to do so could not be
reasonably expected to result in a Material Adverse Effect, is qualified to do
business in, and is in good standing in, every jurisdiction where such
qualification is required.

 

Section 3.02.                 Corporate and
Governmental Authorization; No Contravention.  The execution, delivery and performance by each of the Borrowers
of the Financing Documents to which it is a party are within its corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any Governmental Authority (except
as contemplated by the Security Agreement) and do not contravene, or

 

56

 

constitute
a default under, any provision of material applicable law or material
regulation or of its charter or bylaws or of any material agreement, judgment,
injunction, order, decree or other material instrument binding upon each or
result in the creation or imposition of any Lien on any material asset of any
Borrower or any of its Subsidiaries (except the Security Interests).

 

Section 3.03.                 Binding Effect.  This Agreement and the other Financing
Documents to which it is a party constitute valid and binding agreements of
each Borrower, in each case enforceable in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or moratorium or other similar laws relating to the
enforcement of creditors’ rights generally and by general equitable principles.

 

Section 3.04.                 Financial Information.  (a)  The Borrowers have heretofore
furnished to the Administrative Agent financial statements of Holdings for the
(i) six month period ended June 30, 2003, prepared by management and (ii)
for the fiscal years ended 1999 through 2002, prepared by management and
audited by Ernst & Young LLP, independent public
accountants.  Such financial statements
present fairly in all material respects the financial condition and results of
operations of Holdings on a consolidated basis as of the dates and for the
periods indicated, and such financial statements disclose in accordance with
GAAP all liabilities of the Borrowers as of the dates thereof.

 

(b)                                 The
Borrowers have heretofore furnished to the Administrative Agent quarterly for
the 2003 fiscal year, and annually for the 2004 and 2005 fiscal years,
projected income statements, balance sheets and cash flows, together with a
schedule demonstrating prospective compliance with all financial covenants, all
in form and substance reasonably satisfactory to the Lenders in their good
faith judgment, all such projections disclosing all assumptions made by the
Borrowers in formulating such projections and giving effect to the
Transactions.  The projections are based
upon reasonable estimates and assumptions, all of which are reasonable in light
of the conditions which existed at the time the projections were made, have
been prepared on the basis of the assumptions stated therein, and reflect as of
the Effective Date the good faith estimate of the Borrowers of the results of
operations and other information projected therein, provided that no
representation is made that the assumptions will prove to be correct.

 

(c)                                  Since
June 30, 2003, there has been no material adverse change in the business,
prospects, assets, operations or financial condition of the Borrowers and their
consolidated Subsidiaries, considered as a whole.

 

Section 3.05.                 Litigation.  Except for the Disclosed Matters, there is
no action, suit or proceeding pending against, or to the knowledge of the
Borrowers threatened against or affecting, the Borrowers or any of their
Subsidiaries before any arbitrator or any Governmental Authority, that
(i) could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect, or (ii) which would in any material
respect draw into question the enforceability of any of the Financing
Documents, taken as a whole.

 

Section 3.06.                 Compliance
with ERISA and Applicable Canadian Pension Laws.  Each Borrower and its Subsidiaries and each ERISA Affiliate has
fulfilled its obligations under

 

57

 

the
minimum funding standards of ERISA and the Internal Revenue Code with respect
to each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code with respect to each Plan, and has
not incurred any liability under Title IV of ERISA (i) to the PBGC other
than a liability to the PBGC for premiums under Section 4007 of ERISA or
(ii) in respect of a Multiemployer Plan which has not been discharged in
full when due.  All Canadian Pension Plans
comply, in all material respects, with their terms and the provisions of
Applicable Canadian Pension Laws; all necessary governmental approvals have
been obtained which are material to Holdings and each applicable subsidiary in
respect to the operation of its Canadian Pension Plans; no notice of intent to
terminate any Canadian Pension Plan has been filed or given by any party or
governmental body, including, without limitation, any Canadian Pension
Regulator; no event has occurred or condition exists which might constitute
grounds for termination of any Canadian Pension Plan which termination would
result in a Material Adverse Effect with respect to Holdings or the applicable
subsidiary or that might result in the incurrence by Holdings or any such subsidiary
of any material liability, fine or penalty; and no actions, suits or claims are
pending or to the knowledge of WP Canada reasonably expected to be asserted
against any Canadian Pension Plan or the assets of any Canadian Pension Plan
other than routine claims for benefits. 
The amount of all unfunded liabilities under each Canadian Pension Plan,
and of any going concern, unfunded actuarial liability, past service unfunded
actuarial liability or solvency deficiency (if any) do not have and could not
reasonably be expected to have, a Material Adverse Effect.

 

Section 3.07.                 Taxes.  To the extent applicable, each Borrower and
its Subsidiaries has filed all United States Federal and Canadian income tax
returns and all other material tax returns which are required to be filed by it
and has paid all taxes stated to be due in such returns or pursuant to any
assessment received by it, except for taxes the amount, applicability or
validity of which is being contested in good faith by appropriate proceedings.  The charges, accruals and reserves on the
books of the Borrowers and their Subsidiaries in respect of taxes or other
similar governmental charges, additions to taxes and any penalties and interest
thereon are, in the opinion of the Borrowers, adequate.

 

SECTION 3.08.                 Environmental
Compliance.  (a)  Except
for Disclosed Matters,

 

(i)                                     the
Borrowers and their Subsidiaries have, obtained, or made timely application
for, all permits, certificates, licenses, approvals, registrations and other
authorizations (collectively “Permits”) which are required under all applicable
Environmental Laws and are necessary for their operations and are in compliance
with the terms and conditions of all such Permits, except where the failure to
obtain such Permits or to comply with their terms would not have, individually
or in the aggregate, a Material Adverse Effect;

 

(ii)                                  no
notice, notification, demand, request for information, citation, summons,
complaint or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending, or to the Borrowers’
knowledge, threatened by any governmental entity or other Person with respect
to any (A) alleged violation by the Borrowers or any Subsidiary of any
Environmental Law, (B) alleged failure by the Borrowers or any Subsidiary
to have any Permits required in connection with the conduct of its business or
to

 

58

 

comply with the terms and
conditions thereof, (C) any generation, treatment, storage, recycling,
transportation or disposal of any Hazardous Materials or (D) release of
Hazardous Materials, except where such event or events would not have,
individually or in the aggregate, a Material Adverse Effect;

 

(iii)                               to
the knowledge of the Borrowers, all oral or written notifications of a release
of Hazardous Materials required to be filed under any applicable Environmental
Law have been filed or are in the process of being filed by or on behalf of the
Borrowers or any Subsidiary;

 

(iv)                              no
property now owned or leased by the Borrowers or any Subsidiary and, to the
knowledge of the Borrowers, no such property previously owned or leased or any
property to which the Borrowers or any Subsidiary has, directly or indirectly,
transported or arranged for the transportation of any Hazardous Materials, is
listed or, to the Borrowers’ knowledge, proposed for listing, on the National
Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined in
CERCLA) or any similar state list or is the subject of federal, state,
provincial or local enforcement actions or, to the knowledge of the Borrowers,
other investigations which may lead to claims against the Borrowers or any
Subsidiary for clean-up costs, remedial work, damage to natural resources or
personal injury claims, including, but not limited to, claims under CERCLA,
except where such listings or investigations would not have, individually or in
the aggregate, a Material Adverse Effect;

 

(v)                                 there
are no Liens under or pursuant to any applicable Environmental Laws on any real
property or other assets owned or leased by the Borrowers or any Subsidiary,
and no government actions have been taken or, to the knowledge of the
Borrowers, are in process which could subject any of such properties or assets
to such Liens.

 

(b)                                 For
purposes of this Section, the terms “Borrowers” and “Subsidiary” shall include
any business or business entity (including a corporation) which is a
predecessor, in whole or in part, of the Borrowers or any Subsidiary.

 

Section 3.09.                 Properties.  (a)  Each of the Borrowers and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.

 

(b)                                 To
the knowledge of the Borrowers, each of the Borrowers and its Subsidiaries
owns, or is licensed to use, all trademarks, trade names, copyrights, patents
and other intellectual property material to its business, and the use thereof
by such Borrower and its Subsidiaries does not, to the knowledge of the
Borrowers, infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.

 

59

 

Section 3.10.                 Compliance
with Laws and Agreements.  Each of
the Borrowers and its Subsidiaries is in compliance with all laws, regulations
and orders of any Governmental Authority applicable to it or its property and
all indentures, agreements and other instruments binding upon it or its
property, and each has all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted,
except where the failure to do so could not reasonably be expected to result in
a Material Adverse Effect.

 

Section 3.11.                 Investment and
Holding Company Status.  None of the
Borrowers nor any of their Subsidiaries is (a) an “investment company” as
defined in, or subject to regulation under, the Investment Company Act of 1940
or (b) a “holding company” as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.

 

Section 3.12.                 Full
Disclosure.  All information
furnished by the Borrowers to the Administrative Agent, the Canadian Agent or
any Lender or Canadian Lender for purposes of or in connection with this
Agreement or any of the Transactions is, taken as whole and in light of the
circumstances under which such information is furnished, true and accurate in
all material respects on the date as of which such information is furnished,
and true and accurate in all material respects on the date as of which such
information is stated or certified.  It
is understood that the foregoing is limited to the extent that
(i) projections have been made in good faith by the management of the
Borrowers and in the view of the Borrowers’ management are reasonable in light
of all information known to management as of the Effective Date, and
(ii) no representation or warranty is made as to whether the projected
results will be realized.

 

Section 3.13.                 Security
Interest. The Security Agreement creates and grants to the Administrative
Agent (or the Canadian Agent as applicable) or the Canadian Lenders or Canadian
Participating Lenders (as relevant), for its own benefit and for the benefit of
the Lenders, a legal, valid and perfected first priority (except as permitted
pursuant to Section 6.02 hereof) Lien in the Collateral identified
therein.  Such Collateral is not subject
to any other Liens whatsoever, except Liens permitted by Section 6.02
hereof.

 

Section 3.14.                 Solvency.  (a)  The fair salable value of the
business of the Borrowers and their consolidated Subsidiaries is not less than
the amount that will be required to be paid on or in respect of the probable
liability on the existing debts and other liabilities (including contingent
liabilities) of the Borrowers and their consolidated Subsidiaries, as they
become absolute and mature.

 

(b)                                 The
assets of the Borrowers and their Subsidiaries do not constitute unreasonably
small capital for the Borrowers and their Subsidiaries to carry out their
business as now conducted and as proposed to be conducted including the capital
needs of the Borrowers and their Subsidiaries, taking into account the
particular capital requirements of the business conducted by the Borrowers and
their Subsidiaries and projected capital requirements and capital availability
thereof.

 

(c)                                  Neither
the Borrowers nor any of their Subsidiaries intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be received by the Borrowers and any of their Subsidiaries,
and of amounts to be payable on or in respect of debt of the Borrowers and any
of their Subsidiaries).

 

60

 

(d)                                 Neither
the Borrowers nor any of their Subsidiaries believes that final judgments
against them in actions for money damages presently pending will be rendered at
a time when, or in an amount such that, they will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into account the
maximum reasonable amount of such judgments in any such actions and the
earliest reasonable time at which such judgments might be rendered).  The cash flow of the Borrowers and their
consolidated Subsidiaries, after taking into account all other anticipated uses
of the cash of the Borrowers and their consolidated Subsidiaries (including the
payments on or in respect of debt referred to in paragraph (c) of this
Section), will at all times be sufficient to pay all such judgments promptly in
accordance with their terms.

 

Section 3.15.                 Employee
Matters.  There are no strikes,
slowdowns, work stoppages or controversies pending or, to the knowledge of the
Borrowers threatened between the Borrowers and their respective Subsidiaries
and their respective employees, other than employee grievances arising in the
ordinary course of business, none of which could have, either individually or
in the aggregate, a Material Adverse Effect.

 

Section 3.16.                 Use of
Proceeds.  All proceeds of each
Borrowing under the Commitment shall be used to provide for working capital
requirements, repayment of Indebtedness on the Effective Date, Permitted
Acquisitions, stock repurchases and dividends permitted under Section 6.06
hereof and general corporate purposes.

 

Section 3.17.                 Subsidiaries.  As of the Effective Date, the Borrowers have
no Subsidiaries except as set forth on Schedule 3.17, all of which are
wholly-owned and are Material Subsidiaries.

 

Section 3.18.                 No Change in
Credit Criteria or Collection Policies. 
There has been no material change in credit criteria or collection
policies concerning Receivables of the Borrowers and their Subsidiaries since
December 31, 2002.

 

ARTICLE IV

 

Conditions

 

Section 4.01.                 Effective Date.  The obligations of the Lenders or Canadian
Lenders to make Loans and of the Issuing Bank to issue Letters of Credit
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with
Section 9.02):

 

(a)                                  The
Administrative Agent (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.

 

(b)                                 The
Administrative Agent shall have received a favorable written opinion or
opinions (addressed to the Administrative Agent, the Canadian Agent, the
Canadian Lenders and the Lenders and dated the Effective Date) of Morrison
& Foerster LLP, McCarthy Tetrault

 

61

 

LLP and
the General Counsel for Holdings and the Borrowers, counsel for the Borrowers,
substantially in the forms included in Exhibit B, and covering such other
matters relating to the Borrowers, this Agreement or the Transactions as the
Required Lenders shall reasonably request including, without limitation, the
power and capacity of WP Canada to grant security on its property, assets and
undertaking for the Obligations of the US Borrowers to the Lenders.  The Borrowers hereby request such counsel to
deliver such opinions.

 

(c)                                  The
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrowers and any Guarantors,
the authorization of the Transactions and any other legal matters relating to
the Borrowers and any Guarantors, this Agreement or the Transactions, all in
form and substance reasonably satisfactory to the Administrative Agent and its
counsel.

 

(d)                                 The
Administrative Agent shall have received a certificate of the Borrowers, dated
the Effective Date and signed by the President, a Vice President or a Financial
Officer of each Borrower, confirming compliance with the conditions set forth
in paragraphs (a) and (b) of Section 4.02.

 

(e)                                  The
Administrative Agent shall have received all fees and other amounts due and
payable, on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Borrowers hereunder.

 

(f)                                    The
Administrative Agent (or its counsel) shall have received the other Financing
Documents, all in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.

 

(g)                                 With
respect to any Liens not permitted pursuant to Section 6.02 hereof, the
Administrative Agent shall have received termination statements in form and
substance satisfactory to it.

 

(h)                                 Each
document (including, without limitation, each Uniform Commercial Code financing
statement, each personal property security registration financing statement and
each registration under the Quebec Register of Moveable and Real Rights)
required by law or requested by the Administrative Agent or the Canadian Agent
to be filed, registered or recorded in order to create in favor of the
Administrative Agent for its own benefit and for the benefit of the Lenders a first
priority perfected Lien in the Collateral, subject to the Liens permitted by
Section 6.02, shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, or arrangements reasonably satisfactory to the
Administrative Agent and the Canadian Agent for the filing, registering or
recording thereof shall have been made.

 

(i)                                     The
Administrative Agent shall have received the results of a search of tax and
other Liens, judgments and of the Uniform Commercial Code or other filings made
with respect to the Borrowers and each other grantor of Collateral in the
jurisdictions in which the Borrowers and each such grantor is doing business
and/or in which any Collateral is located, and

 

62

 

in
which Uniform Commercial Code or other filings have been, or are to be, made
against the Borrowers, and each such grantor pursuant to paragraph (h)
above.

 

(j)                                     The
Administrative Agent shall have received and determined to be in form and
substance satisfactory to it:

 

(i)                                     the
most recent (dated within thirty (30) days of the Effective Date) aging of
accounts receivable of the Borrowers;

 

(ii)                                  an
opening Borrowing Base and evidence that the Borrowers have not less than
$5,000,000 Availability on the Effective Date after giving effect to the
transactions occurring on that Date;

 

(iii)                               a
copy of a field examination of the Borrowers’ and their Subsidiaries’ books and
records;

 

(iv)                              evidence
of the compliance by the Borrowers with Section 5.02(b) hereof;

 

(v)                                 the
financial statements described in Section 3.04 hereof;

 

(vi)                              evidence
of the repayment in full of, or the existence of arrangements reasonably
satisfactory to the Administrative Agent for the repayment in full of, existing
credit arrangements with respect to the Collateral and the termination of all
commitments to lend thereunder, and the termination of all security interests
securing such Indebtedness; and

 

(vii)                           the
Facility Letter.

 

(k)                                  The
Administrative Agent shall have had the opportunity to conduct a pre-closing
audit with respect to WP Canada.

 

(l)                                     The
Borrowers shall have executed and delivered to the Administrative Agent a
disbursement authorization letter with respect to the disbursement of the
proceeds of the Loans made on the Effective Date, which shall provide for
sufficient funds to repay in full all obligations owed to any Person exiting
the Existing Credit Agreement and not joining in this Agreement as a Lender.

 

(m)                               The
Administrative Agent shall have received such other documents, and completed
such other reviews, including, without limitation, material leases (including,
without limitation, the obtaining of landlord waivers) and contracts,
litigation and taxes, as the Administrative Agent or its counsel shall
reasonably deem necessary.

 

The Administrative Agent
shall notify the Borrowers, the Lenders, the Canadian Lender and the Canadian
Agent of the Effective Date, and such notice shall be conclusive and
binding.  Notwithstanding the foregoing,
the obligations of such Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section 9.02) at
or prior to 3:00 p.m., New York

 

63

 

City time, on September
2, 2003 (and, in the event such conditions are not so satisfied or waived, the
Commitment shall terminate at such time).

 

Section 4.02.                 Each Credit
Event.  The obligation of any Lender
or Canadian Lender to make a Loan on the occasion of any Borrowing, and of the
Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject
to the satisfaction on such date of the following conditions:

 

(a)                                  The
representations and warranties of the Borrowers set forth in this Agreement
shall be true and correct on and as of the date of such Borrowing or the date
of issuance, amendment, renewal or extension of such Letter of Credit, as
applicable; provided that any such representations and warranties that by their
express terms are made as of a specific date shall be true and correct as of
such specific date.

 

(b)                                 At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing and the Borrowers
shall otherwise be in compliance with the provisions of Section 2.01 or
2.04(b), as applicable.

 

Each Borrowing and each issuance,
amendment, renewal or extension of a Letter of Credit shall be deemed to
constitute a representation and warranty by the Borrowers on the date thereof
as to the matters specified in paragraphs (a) and (b) of this Section.

 

ARTICLE V

 

Affirmative Covenants

 

Until the Commitment has
expired or been terminated and the principal of and interest on each Loan and
all fees payable hereunder have been paid in full and all Letters of Credit
have expired or been terminated and all LC Disbursements have been reimbursed,
the Borrower covenants and agrees with the Lenders that:

 

Section 5.01.                 Information.  Water Pik, on behalf of the Borrowers, will
furnish to the Administrative Agent and the Canadian Agent and each of the
Lenders:

 

(a)                                  within
90 days after the end of each fiscal year, (i) a consolidated balance
sheet and consolidated income statement showing the financial position of
Holdings and its subsidiaries as of the close of such fiscal year and the
results of their operations during such year, and (ii) a consolidated
statement of shareholders’ equity and a consolidated statement of cash flow, as
of the close of such fiscal year, comparing such financial position and results
of operations to such financial condition and results of operations for the comparable
period during the immediately preceding fiscal year, all the foregoing
financial statements to be audited by independent public accountants acceptable
to the Administrative Agent (which report shall not contain any going concern
or similar qualification or exception as to scope), and together with
supplemental consolidating balance sheets and statements of income and cash
flow prepared by the Financial Officer of Holdings presented fairly in relation
to such audited financial statements taken as a whole and together with
management’s discussion and analysis as filed with the Securities and Exchange
Commission;

 

64

 

(b)                                 within
45 days after the end of each of the first three fiscal quarters of each fiscal
year of Holdings, (i) unaudited consolidated and consolidating balance
sheets of Holdings and its subsidiaries as of the end of such fiscal quarter,
together with the related consolidated and consolidating statements of income
for such fiscal quarter and for the portion of Holdings’ fiscal year ended at
the end of such fiscal quarter and the related consolidated statements of cash
flows and consolidated changes in shareholders’ equity for the portion of
Holdings’ fiscal year ended at the end of such fiscal quarter, setting forth in
comparative form the corresponding financial information from the projections
for the applicable period provided under paragraph (h) below and in comparative
form the corresponding financial information as at the end of, and for, the
corresponding fiscal quarter of Holdings’ prior fiscal year and the portion of
Holdings’ prior fiscal year ended at the end of such corresponding fiscal
quarter, in each case certified by a Financial Officer of Holdings as
presenting fairly in all material respects the financial position and results
of operations and cash flow of Holdings and its subsidiaries in accordance with
GAAP (except the absence of footnote disclosure), in each case subject to
normal year-end audit adjustments, and, solely for the last month of each
fiscal quarter for such quarter then ending, management’s discussion and
analysis as filed with the Securities and Exchange Commission;

 

(c)                                  within
35 days after the end of each month (i) unaudited consolidated and
consolidating balance sheets and income statements showing the financial
position and results of operations of Holdings and its subsidiaries as of the
end of each such month, (ii) a consolidated statement of shareholders’
equity and (iii) a consolidated and consolidating statement of cash flow,
in each case for the month just ended and for the period commencing at the end
of the immediately preceding Fiscal Year and ending with the last day of such
month, and comparing such financial position and results of operations to the projections
for the applicable period provided under paragraph (h) below and to the results
for the comparable period during the immediately preceding Fiscal Year,
prepared by the Financial Officer of Holdings, presenting fairly, in all
material respects, the financial position and results of operations of Holdings
and its subsidiaries and prepared in accordance with GAAP (except the absence
of footnote disclosure), in each case subject to normal year-end audit
adjustments;

 

(d)                                 concurrently
with any delivery under (a) or (b), a certificate of the firm or Person
referred to therein (x) which certificate shall, in the case of the
certificate of a Financial Officer of Holdings, certify that to the best of his
or her knowledge no Default has occurred (including calculations demonstrating
compliance, as of the dates of the financial statements being furnished, with
the covenants set forth in Sections 6.09, 6.10 and 6.11 hereof) and, if such a
Default has occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto and (y) which
certificate, in the case of the certificate furnished by the independent public
accountants referred in paragraph (a) above, may be limited to accounting
matters and disclaim responsibility for legal interpretations, but shall in any
event state that to the best of such accountants’ knowledge, as of the dates of
the financial statements being furnished no Default has occurred under any of
the covenants set forth in Sections 6.09, 6.10, 6.11 and 6.12 hereof and, if
such a Default has occurred, specifying the nature and extent thereof; provided,
however, that any certificate delivered concurrently with (a) above
shall be accompanied by a supplemental certificate confirming the accuracy of
the accountants’ certificate (and shall in any event include calculations
demonstrating compliance

 

65

 

with
the covenants set forth in Sections 6.09, 6.10 and 6.11 hereof) and signed
by a Financial Officer of Holdings;

 

(e)                                  promptly
after the same become publicly available, copies of such registration
statements, annual, periodic and other reports, and such proxy statements and
other information, if any, as shall be filed by Holdings or any of its
subsidiaries with the Securities and Exchange Commission pursuant to the
requirements of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, if any;

 

(f)                                    if
a Default shall have occurred and be continuing, with any delivery under (a)
above, a management letter prepared by the independent public accountants who
reported on the financial statements delivered under (a) above, with respect to
the internal audit and financial controls of Holdings and its subsidiaries and at
the request of the Administrative Agent, copies of all such management letters
not previously delivered to the Administrative Agent;

 

(g)                                 (i) 
within 20 days of the end of each fiscal month, an aging schedule of
Receivables (setting forth the Early Buy Program Receivables apart from other
Receivables) and accounts payable listing, provided, however,
upon the occurrence and continuance of a Default or at any time that
Availability is less than $5,000,000, then the foregoing shall be delivered as
often (including daily) as the Administrative Agent may request; (ii) (A)
within 35 days after the end of each fiscal year, or more often as the
Administrative Agent may reasonably request, a current customer list which
shall include addresses and (B) within 35 days after the end of each fiscal
quarter, an update to such customer list reflecting the new customers and
(iii) concurrently with any delivery under (a) or (b) above, a certificate
signed by a Financial Officer of the Borrowers calculating the Applicable Rate
test as of the date of the financial statements being furnished, in each case
in form and detail satisfactory to the Administrative Agent;

 

(h)                                 within
45 days after the beginning of each fiscal year, a summary of business plans
and financial operation projections (including, without limitation, with
respect to Capital Expenditures) for the Borrowers and their Subsidiaries for
such fiscal year (including monthly balance sheets, statements of income and of
cash flow) and annual projections for the following two years prepared by
management and in form, substance and detail (including, without limitation,
principal assumptions provided separately in writing) satisfactory to the
Administrative Agent;

 

(i)                                     within
20 days after the end of each fiscal month, a certificate substantially in the
form of Schedule 5.01(i) hereto executed by a Financial Officer of the
Borrowers demonstrating compliance as at the end of each month with the
Availability requirements, which shall include a Borrowing Base calculation and
inventory designation, provided, however, upon the occurrence and
continuance of a Default or at any time that Availability is less than
$5,000,000, then the foregoing shall be delivered as often (including daily) as
the Administrative Agent may reasonably request;

 

(j)                                     within
20 days after the end of each month, an aging schedule of the payables of each
Borrower and its subsidiaries, a copy of the bank statement of each Borrower
with respect to each lock-box account and such other sales, collections, debit and
credit

 

66

 

adjustments
schedules as the Administrative Agent may request, provided, however,
upon the occurrence and continuance of a Default or at any time that
Availability is less than $5,000,000, then such schedules shall be delivered as
often (including daily) as the Administrative Agent may reasonably request;

 

(k)                                  promptly
upon becoming aware thereof, notice to the Administrative Agent of the
occurrence of any Default then continuing;

 

(l)                                     promptly
upon becoming aware thereof, notice to the Administrative Agent of the breach
by any party of any material agreement with any of the Borrowers; and

 

(m)                               such
other information as the Administrative Agent, the Canadian Agent, any Canadian
Lender or any Lender may reasonably request.

 

Section 5.02.                 Maintenance of Property; Insurance.  (a)                         
The Borrowers will keep, and will cause each Subsidiary to keep, all property
useful and necessary in its business as then conducted in good working order
and condition, ordinary wear and tear excepted.

 

(b)                                 The
Borrowers will (i) keep their insurable properties adequately insured at
all times by financially sound and reputable insurers, (ii) maintain such
other insurance, to such extent and against such risks, including fire and
other risks insured against by extended coverage, as its customary with
companies similarly situated and in the same or similar businesses, provided,
however, that such insurance shall insure the property of the Borrowers
against all risk of physical damage, including, without limitation, loss by
fire, explosion, theft, fraud and such other casualties as may be reasonably
satisfactory to the Administrative Agent, but in no event at any time in an
amount less than the replacement value of the Collateral, (iii) maintain
in full force and effect public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by any Borrowers
or any of their subsidiaries, in such amount as the Administrative Agent shall
reasonably deem necessary, (iv) maintain product liability and business
interruption insurance to such extent as is customary with companies similarly
situated and in the same or similar businesses (and to the extent business
interruption insurance is so maintained, assign such insurance to the
Administrative Agent or the Canadian Agent, as applicable, for its own benefit
and the benefit of the applicable Lenders and Canadian Lenders), and
(v) maintain such other insurance as may be required by law or as may be
reasonably requested by the Administrative Agent for purposes of assuring
compliance with this Section 5.02(b). 
All insurance covering tangible personal property subject to a Lien in
favor of the Administrative Agent for its benefit and for the benefit of the
Lenders granted pursuant to the Security Agreement shall provide that, in the
case of each separate loss the full amount of insurance proceeds shall be
payable to the Administrative Agent or Canadian Agent or both of them, as
applicable, and shall further provide for at least 30 days’ prior written
notice to the Administrative Agent or Canadian Agent or both of them, as
applicable, of the cancellation or substantial modification thereof.  The Administrative Agent or the Canadian
Agent or both of them, as applicable, shall be named as an additional insured
on all other insurance.

 

Section 5.03.                 Compliance
with Laws.  The Borrowers will
comply, and cause each Subsidiary to comply, with all applicable laws,
ordinances, rules, regulations, and

 

67

 

requirements
of governmental authorities (including, without limitation, Environmental Laws,
ERISA and the rules and regulations thereunder and Applicable Canadian Pension
Laws) except where failure to comply would not have a Material Adverse Effect,
or where the necessity of compliance therewith is being contested in good faith
by appropriate proceedings.

 

Section 5.04.                 Inspection of
Property, Books and Records.  The
Borrowers will keep, and will cause each Subsidiary to keep, proper books of
record and account reflecting its business and activities; and will permit, and
will cause each Subsidiary to permit, representatives of any Lender at such
Lender’s expense to visit and inspect any of their respective properties, to
examine and make abstracts from any of their respective books and records and
to discuss their respective affairs, finances and accounts with their
respective officers, senior employees and independent public accountants, all
during normal business hours and as often as may reasonably be desired;
provided that the Borrowers may, at their option, have one or more employees or
representatives present at any such inspection, examination or discussion.  At the Borrowers’ expense, the
Administrative Agent (x) shall have the right to audit, up to one time
each fiscal year (two times in any fiscal year if at any time the Leverage Ratio
of Holdings and its subsidiaries on a consolidated basis exceeds 3.00:1.00, or
as often as it may request upon the occurrence and continuance of an Event of
Default), the existence and condition of the Collateral and to review
compliance with the Financing Documents and (y) shall have the right to
retain an inventory appraiser to appraise the inventory Collateral (1) once
each fiscal year if clause (ii) of the definition of Borrowing Base is being
calculated based on the net orderly liquidation value of Eligible Inventory or
(2) as often as it may reasonably request upon the occurrence and continuance
of an Event of Default or if Availability is less than $5,000,000.

 

Section 5.05.                 Use of
Proceeds.  The proceeds of the Loans
made under this Agreement will be used by the Borrowers for working capital and
Capital Expenditures, Permitted Acquisitions, stock repurchases and dividends
permitted by Section 6.06 and general corporate purpose and on the
Effective Date to repay Indebtedness. 
None of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying any
“margin stock” within the meaning of Regulation U.

 

Section 5.06.                 Environmental
Matters.  The Borrowers will
promptly give to the Lenders notice in writing of any complaint, order,
citation or notice of violation with respect to, or if the Borrowers becomes
aware of, (i) the existence or alleged existence of a violation of any
applicable Environmental Law, (ii) any release into the environment,
(iii) the commencement of any cleanup pursuant to or in accordance with
any applicable Environmental Law of any Hazardous Materials, (iv) any
property of the Borrowers or any Subsidiary that is or will be subject to a
Lien imposed pursuant to any Environmental Law, and (v) any proposed acquisitions
or leasing of property, which, in each of cases (i) through
(v) above, individually or in the aggregate, would have a Material Adverse
Effect.

 

Section 5.07.                 Taxes.  The Borrowers will, and will cause each of
its Subsidiaries to, pay and discharge promptly when due all taxes, assessments
and governmental charges or levies imposed upon the Borrowers and their
Subsidiaries or upon their respective income or profits or in respect of their
respective properties before the same shall become delinquent or in default, as
well as all lawful claims for labor, materials and supplies or otherwise,
which, if unpaid, would give rise to Liens upon such properties or any part
thereof; provided, however,

 

68

 

that such
payment and discharge shall not be required with respect to (i) any such
tax, assessment, charge, levy or claim so long as the validity or amount
thereof shall be contested in good faith by appropriate proceedings and the
applicable party, shall have set aside on its books adequate reserves with
respect thereto, and such contest operates to suspend collection of the
contested tax, assessment, charge, levy or claims and enforcement of a Lien or
(ii) any tax, assessment, charge, levy or claims, the failure to pay and
discharge when due which, individually or in the aggregate would not have a
Material Adverse Effect.

 

Section 5.08.                 Security
Interests.  The Borrowers will at
all times take, or cause to be taken, all actions necessary to maintain the
Security Interests as valid and perfected Liens, first priority Liens, subject
only to Liens permitted under Section 6.02, and supply all information to
the Administrative Agent necessary for such maintenance.

 

Section 5.09.                 Existence;
Conduct of Business.  The Borrowers
will, and will cause each of their Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.

 

Section 5.10.                 Litigation and
Other Notices.  The Borrowers will
give the Administrative Agent prompt written notice of the following:

 

(a)                                  the
issuance by any court or Governmental Authority of any injunction, order,
decision or other restraint prohibiting, or having the effect of prohibiting,
the making of the Loans, or invalidating, or having the effect of invalidating,
any provision of this Agreement or the other Financing Documents that would
materially adversely affect the Lenders’ ability to enforce any payment
obligations hereunder, or the initiation of any litigation or similar
proceeding seeking any such injunction, order, decision or other restraint;

 

(b)                                 the
filing or commencement of any action, suit or proceeding against the Borrowers
or any of their Subsidiaries, whether at law or in equity or by or before any
arbitrator or Governmental Authority, (i) which is material and is brought
by or on behalf of any Governmental Authority, or in which injunctive or other
equitable relief is sought or (ii) as to which it is probable (within the
meaning of Statement of Financial Accounting Standards No. 5) that there
will be an adverse determination and which, if adversely determined, would
(A) reasonably be expected to result in liability of any Borrower or a
Subsidiary thereof in an aggregate amount of $750,000 or more, not reimbursable
by insurance, or (B) materially impairs the right of any Borrower or a
Subsidiary thereof to perform its material obligations under this Agreement,
any Note or any other Financing Document to which it is a party;

 

(c)                                  any
Default, specifying the nature and extent thereof and the action (if any) which
is proposed to be taken with respect thereto;

 

(d)                                 notices
given or received (with copies thereof) with respect to any Subordinated
Indebtedness; and

 

69

 

(e)                                  any
development in the business or affairs of any Borrower or any of its
Subsidiaries which has had or which is likely to have, in the reasonable
judgment of the Borrower, a Material Adverse Effect.

 

Section 5.11.                 Additional
Grantors and Guarantors.  The
Borrowers will, and will cause their Subsidiaries to, promptly inform the
Administrative Agent of the creation or acquisition of any direct or indirect
Subsidiary (subject to the provisions of Section 6.04) and cause each
direct or indirect Material Subsidiary not in existence on the date hereof to
enter into a Guarantee in form and substance satisfactory to the Administrative
Agent, and to execute the Security Agreement, as applicable, as a grantor, and
cause the direct parent of each such Material Subsidiary to pledge all of the
equity interests of such Material Subsidiary pursuant to the Security Agreement
and cause each such Material Subsidiary to pledge its accounts receivable and
all other assets pursuant to the Security Agreement.  In connection therewith, the Borrowers or any applicable Material
Subsidiary shall provide such resolutions, certificates and opinions of counsel
as shall be reasonably requested by the Administrative Agent.

 

Section 5.12.                 Maintain
Operating Accounts.  The Borrowers
will, and will cause each of their Subsidiaries to, maintain all of its
operating accounts and cash management arrangements (including the
establishment of lockboxes) with the Administrative Agent (or the Canadian
Agent) or with other financial institutions approved by the Administrative
Agent to the extent provided for in the Security Agreement and on terms (which
shall include obtaining (a) within six months after the Effective Date in the
case of such accounts in Canada, and (b) within sixty days after the Effective
Date in the case of such accounts in the United States, blocked account
agreements or tri-party lockbox agreements) satisfactory to the Administrative
Agent in its reasonable discretion.

 

Section 5.13.                 Real Estate
Facility.  The Borrowers will
deliver to the Administrative Agent, no later than 90 days after the Effective
Date, an amendment amending, in a manner satisfactory to the Administrative
Agent, the financial covenants contained in the Section titled Negative
Covenants in the Loan Agreement dated October 22, 2001 by and between Water
Pik, Laars and U.S. Bank National Association.

 

Section 5.14.                 Landlord
Waivers.  The Borrowers will deliver
to the Administrative Agent, no later than 60 days after the Effective Date,
landlord waiver agreements in form and substance reasonably satisfactory to the
Administrative Agent for the leased properties located at (i) 2735 N.W. 63rd
Street, Fort Lauderdale, Florida, (ii) Boucherville - Bldg. 2, 110 Rue de
Lauzen, Boucherville, Quebec and (iii) Boucherville - Bldg. 1, 240 Industriel Boul.,
Boucherville, Quebec.

 

ARTICLE VI

 

Negative Covenants

 

Until the Commitments
have expired or terminated and the principal of and interest on each Loan and
all fees payable hereunder have been paid in full and all Letters of Credit
have expired or been terminated and all LC Disbursements have been reimbursed
and all

 

70

 

Derivative
Obligations with any Lender have been terminated, the Borrowers covenant and
agree with the Lenders that:

 

Section 6.01.                 Indebtedness.  The Borrowers will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

 

(a)                                  Indebtedness
created under the Financing Documents;

 

(b)                                 Indebtedness
existing on the date hereof and set forth in Schedule 6.01;

 

(c)                                  Indebtedness
of the Borrowers or any Subsidiary incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including Capital
Lease Obligations and any Indebtedness assumed in connection with the
acquisition of any such assets or secured by a Lien on any such assets prior to
the acquisition thereof; provided that (i) such Indebtedness is
incurred prior to or within 90 days after such acquisition or the completion of
such construction or improvement and (ii) the aggregate principal amount
of Indebtedness permitted by this clause (c) shall be in compliance with
Section 6.09;

 

(d)                                 Indebtedness
of any Person that becomes a Subsidiary after the date hereof, in accordance
with the terms hereof, provided that such Indebtedness exists at the
time such Person becomes a Subsidiary and is not created in contemplation of or
in connection with such Person becoming a Subsidiary and provided, further,
that the Borrowers do not become liable for any such Indebtedness;

 

(e)                                  Indebtedness
of the Borrowers or any Subsidiary as an account party in respect of trade
letters of credit issued in the ordinary course of business;

 

(f)                                    Indebtedness
among the Borrowers and their wholly-owned Subsidiaries which are Guarantors arising
as a result of intercompany loans;

 

(g)                                 Guarantees
permitted by Section 6.04;

 

(h)                                 Indebtedness
subject to Liens permitted under Section 6.02(a) through (f);

 

(i)                                     Indebtedness
owing to any insurance company in connection with the financing of any insurance
premiums permitted by such insurance company in the ordinary course of
business;

 

(j)                                     Subordinated
Indebtedness in connection with Permitted Acquisitions;

 

(k)                                  other
unsecured Indebtedness (and if by Guarantee, without duplicate counting of the
amount guaranteed and the underlying Indebtedness) in an aggregate principal
amount not exceeding $3,000,000 at any time outstanding;

 

(l)                                     additional
Indebtedness in an amount not to exceed $5,000,000 under the real estate
facility with U.S. Bank National Association described on Schedule 6.01 on
terms no less favorable to the Lenders, with covenants that are no more
restrictive than that of the original Indebtedness as amended as required by
Section 5.13;

 

71

 

(m)                               Indebtedness
to trade creditors incurred in the ordinary course of business;

 

(n)                                 Derivative
Obligations in an aggregate principal amount (determined as provided in the
definition of Material Indebtedness) not to exceed $3,500,000 at any time,
entered into in the ordinary course of business and not for speculative
purposes; and

 

(o)                                 extensions,
renewals and replacements of Indebtedness permitted by clauses (a) through (n)
above that do not increase the outstanding principal amount thereof or interest
thereon or fees related thereto and otherwise on terms no less favorable to the
Lenders, with covenants that are no more restrictive, than that of the original
Indebtedness.

 

Section 6.02.                 Liens.  The Borrowers will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:

 

(a)                                  Permitted
Encumbrances;

 

(b)                                 any
Lien on any property or asset of the Borrowers or any Subsidiary existing on
the date hereof and set forth in Schedule 6.02; provided that
(i) such Lien shall not apply to any other property or asset of the
Borrowers or any Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof or the interest rate thereon or fees related thereto (except pursuant
to the instrument creating such Lien) and are on substantially similar terms,
and, to the extent that such terms include compliance with financial covenants,
such financial covenants shall be no more restrictive than those of the
original secured obligations;

 

(c)                                  any
Lien existing on any property or asset prior to the acquisition thereof by the
Borrowers or any Subsidiary or existing on any property or asset of any Person
that becomes a Subsidiary after the date hereof prior to the time such Person
becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any
other property or assets of the Borrowers or any Subsidiary and (iii) such
Lien shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may be
and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof or interest thereon or fees related
thereto or otherwise alter the terms of such Lien in any material respect;

 

(d)                                 Liens
on fixed or capital assets acquired, constructed or improved by the Borrowers or
any Subsidiary; provided that (i) such security interests secure
Indebtedness permitted by clause (c) of Section 6.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to
or within 90 days after such acquisition or the completion of such construction
or improvement or are incurred to extend, renew or refinance such Liens and
Indebtedness incurred within such 90 day period, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets (including transaction
costs and indemnities customarily secured by a Lien of such type) and

 

72

 

(iv) such
security interests shall not apply to any other property or assets of the
Borrowers or any Subsidiary;

 

(e)                                  Liens
created by the Financing Documents in favor of the Administrative Agent, the
Canadian Agent, the Lenders, the Canadian Lenders and the Canadian
Participating Lenders;

 

(f)                                    Liens
securing obligations with respect to letters of credit permitted under
Section 6.01(e), provided that such Liens shall not apply to any
property other than the goods financed or paid for with the proceeds of such
letters of credit and documents of title in respect thereof; and

 

(g)                                 licenses,
leases or subleases permitted hereunder granted to others not interfering in
any material respect in the business of the Borrowers or any of their
Subsidiaries.

 

Section 6.03.                 Fundamental Changes.  (a)  The Borrowers will not, and
will not permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with any of
them, or sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions) any of their assets, or the stock or other equity
units of any of its Subsidiaries (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve.

 

(b)                                 Each
Borrower will not, and will not permit any of its Subsidiaries to,
(i) engage to any material extent in any business other than businesses of
the type conducted by such Borrower and its Subsidiaries on the date hereof and
businesses reasonably related thereto or (ii) change its fiscal year.

 

(c)                                  Notwithstanding
the foregoing, the Borrowers and their Subsidiaries may:

 

(i)                                     make
purchases and sales of inventory in the ordinary course;

 

(ii)                                  make
(x) sales of assets that secure Indebtedness permitted under Section
6.01(b) in the ordinary course and (y) sales of worn out, obsolete, scrap
or surplus assets;

 

(iii)                               make
(x) a sale or sales of the Aquia product line, including equipment, inventory,
intellectual property and other assets used solely in connection with or
otherwise related to such product line and (y) sales of other assets that do not
constitute Collateral and do not secure Indebtedness permitted under Section
6.01(b);

 

(iv)                              make
Capital Expenditures permitted by Section 6.09;

 

(v)                                 liquidate
Permitted Investments;

 

(vi)                              make
Investments and Guarantees permitted by Section 6.04;

 

73

 

(vii)                           so long
as at the time thereof and immediately after giving effect thereto no Default
shall have occurred and be continuing, make the merger or consolidation of any
Subsidiary of a Borrower incorporated in the United States with or into such
Borrower in which no person other than such Borrower receives consideration and
the Administrative Agent in its sole discretion is satisfied that the surviving
person has assumed all obligations of the person merging with or consolidating
into such surviving person and that there has been no Material Adverse Effect
with respect to the Collateral;

 

(viii)                        so long as
at the time thereof and immediately after giving effect thereto no Default
shall have occurred and be continuing, and provided that the Required Lenders
have given their prior written consent to do so, which consent may be withheld
for any reason by the Required Lenders in their sole discretion, make the
merger or consolidation of any or all Borrowers with or into Holdings; and

 

(ix)                                so
long as at the time thereof and immediately after giving effect thereto no
Default shall have occurred and be continuing, and provided that the Required
Lenders have given their prior written consent to do so, which consent shall
not be unreasonably withheld, make the merger or consolidation of any Borrower
with or into any other Borrower.

 

(x)                                   make
Permitted Acquisitions; provided that the Administrative Agent shall
have had the opportunity to perform a field examination and appraisal through
its examiners or through representatives that it may retain with respect to the
assets being acquired pursuant to such acquisition in order to determine
whether any adjustments should be made to the Borrowing Base prior to the
inclusion of any such acquired assets in the Borrowing Base;

 

(xi)                                dissolve
Water Pik Technologies Foreign Sales Corporation;

 

(xii)                             upon
prior written notice to the Administrative Agent and the Canadian Agent, change
the fiscal year of Holdings, the Borrowers and their subsidiaries; provided
that all such entities shall have the same fiscal year end;

 

(xiii)                          create a
captive insurance company solely for the purpose of managing its insurance risk
and cost, capitalized at levels appropriate and customary for the formation of
a captive insurance company given the levels of risk and coverages to be
insured thereby and on other terms reasonably satisfactory to the
Administrative Agent; and

 

(xiv)                         make
dispositions of assets resulting from a Casualty Event.

 

Section
6.04.                 Investments,
Loans, Advances, Guarantees and Acquisitions.  Each Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger)
any capital stock, evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any

 

74

 

loans
or advances to, Guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any
other Person constituting a business unit (collectively, “Investments”),
except:

 

(a)                                  Permitted
Investments and Investments that were Permitted Investments when made;

 

(b)                                 Investments
outstanding on the Effective Date and, in the case of any such Investment in an
amount exceeding $100,000, identified in Schedule 6.04, and any renewals,
amendments and replacements thereof that do not increase the amount thereof;

 

(c)                                  Guarantees
constituting Indebtedness permitted by Section 6.01;

 

(d)                                 indemnities
made and surety bonds issued in the ordinary course of business;

 

(e)                                  indemnities
made in the Financing Documents;

 

(f)                                    Investments
by a Borrower, in its wholly-owned Subsidiaries in existence on the Effective
Date, but not any increases therein and in Persons that become wholly-owned
Subsidiaries pursuant to a Permitted Acquisition;

 

(g)                                 Guarantees
made in the ordinary course of business; provided that such Guarantees
are not of Indebtedness for borrowed money except to the extent permitted
pursuant to Section 6.01 and otherwise could not in the aggregate
reasonably be expected to have a Material Adverse Effect;

 

(h)                                 (other
than loans made to employees of Holdings or any of its subsidiaries pursuant to
the Stock Acquisition and Retention Program which shall consist of non-cash
advances to such employees and shall have no negative financial impact on
Holdings or any of its subsidiaries) advances, loans or extensions of credit by
the Borrowers or any Subsidiary in compliance with applicable laws to officers,
directors, employees and agents of the Borrowers or any Subsidiary (i) in
the ordinary course of business for travel, entertainment or relocation
expenses not to exceed $1,000,000 in the aggregate at any one time outstanding
and (ii) relating to indemnification or reimbursement of such officers,
directors, employees and agents in respect of liabilities relating to their
service in such capacities;

 

(i)                                     Investments
received in connection with the bankruptcy or reorganization of suppliers and
customers and in settlement of delinquent obligations of, and other disputes
with, customers and supplier arising in the ordinary course of business;

 

(j)                                     accounts,
chattel paper and notes receivable arising from the sale or lease of goods or
the performance of services in the ordinary course of business;

 

(k)                                  Capital
Expenditures and Liens not prohibited by this Agreement;

 

75

 

(l)                                     Investments
in non-cash consideration received in connection with a permitted sale of
assets (subject to the granting of a Lien as required by the Security
Documents);

 

(m)                               Investments
in a captive insurance company (which may be made by Holdings or any of its
subsidiaries) to be formed after the Effective Date to the extent permitted by
Section 6.03(c)(xiii);

 

(n)                                 Investments
consisting of loans, advances and other investments in partnerships, joint
ventures and similar investments with persons that are not Affiliates of the
Borrowers so long as the aggregate principal amount thereof at any time
outstanding shall not exceed $3,000,000; and

 

(o)                                 other
Investments not permitted under the foregoing clauses (a) through (n) in an
aggregate amount at any time outstanding not to exceed $250,000.

 

Notwithstanding anything
to the contrary set forth herein, the Borrowers’ Executive Deferred Compensation
Plan shall not be considered an Investment of the Borrowers and shall not be
subject to this Section 6.04.

 

Section 6.05.                 Prepayment or Modification of
Indebtedness; Modification of Operating Documents.  (a)  The Borrowers will not, and
will not permit any of their Subsidiaries to, directly or indirectly prepay,
redeem, purchase or retire any Indebtedness, including without limitation, any
Subordinated Indebtedness, other than Indebtedness incurred hereunder.

 

(b)                                 The
Borrowers will not, and will not permit any of their Subsidiaries to, modify,
amend or otherwise alter the terms and provisions of any Subordinated
Indebtedness.

 

(c)                                  The
Borrowers will not, and will not permit any of their Subsidiaries to, modify,
amend or alter their operating agreements, certificates or articles of
incorporation or other constitutive documents or preferred stock/certificates
of designations.

 

Section 6.06.                 Restricted
Payments.  The Borrowers will not,
and will not permit any of their Subsidiaries to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, except, so long as
no Default shall be continuing or would occur after giving effect to the
following (a) any Borrower may declare and pay cash dividends with respect
to its Equity Interests payable solely in additional Equity Interests,
(b) the Borrowers may declare and pay dividends or otherwise transfer
funds to Holdings to permit Holdings to acquire shares of its common stock
and/or declare and pay dividends with respect to its Equity Interests; provided
that Restricted Payments made pursuant to this clause (b) shall not exceed
$10,000,000 in the aggregate during any fiscal year unless (i) average
Availability for the thirty (30) day period immediately prior to the date of
such Restricted Payment and (ii) Availability on the date of such
Restricted Payment, in each case, both before and immediately after giving
effect to such Restricted Payment, shall be at least $10,000,000, (c) any
Borrower may pay taxes owed by the Consolidated entity as and when such taxes
are due and may pay corporate overhead of the Consolidated entity in an amount
not to exceed $1,000,000 in any fiscal year, and (d) Subsidiaries may
declare and pay dividends ratably with respect to their Equity Interests.

 

76

 

Section 6.07.                 Transactions
with Affiliates.  The Borrowers will
not, and will not permit any of their Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with,
any of their Affiliates, except (a) on terms and conditions not less
favorable to a Borrower or such Subsidiary than could be obtained on an
arm’s-length basis from unrelated third parties, (b) transactions between
or among a Borrower and its wholly-owned Subsidiaries not involving any other
Affiliate, (c) any Restricted Payment permitted by Section 6.06,
(d) loans and advances to officers, directors, employees and agents
permitted under Section 6.04(h), (e) fees and compensation paid to,
and customary indemnity and reimbursement provided on behalf of, officers,
directors, employees and agents of the Borrowers or any of their Subsidiaries
and (f) employment agreements entered into by the Borrowers or any of
their Subsidiaries in the ordinary course of business.

 

Section 6.08.                 Restrictive
Agreements.  The Borrowers will not,
and will not permit any of their Subsidiaries to, directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrowers or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital
stock or to make or repay loans or advances to the Borrowers or any other
Subsidiary or to Guarantee Indebtedness of the Borrowers or any other
Subsidiary; provided that (i) the foregoing shall not apply to
restrictions and conditions imposed by law or by this Agreement, (ii) the
foregoing shall not apply to restrictions and conditions existing on the date
hereof identified on Schedule 6.08 (but shall apply to any amendment or
modification expanding the scope or duration of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions
and conditions contained in agreements relating to the sale of a Subsidiary or
any asset pending such sale, provided such restrictions and conditions apply
only to the Subsidiary or asset that is to be sold and such sale is permitted
hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to Liens permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets subject to such permitted Lien and (v) clause (a) of the
foregoing shall not apply to customary provisions in leases, licenses and other
contracts restricting the assignment thereof.

 

Section 6.09.                 Capital
Expenditures.  The Borrowers will
not permit the aggregate amount of payments made for Capital Expenditures of
Holdings and its subsidiaries on a consolidated basis, including Capitalized
Lease Obligations and Indebtedness secured by Liens permitted under
Section 6.02(d) hereof, to exceed $20,000,000 in any calendar year.

 

Section 6.10.                 Leverage Ratio.  The Borrowers will not permit the Leverage
Ratio for any four consecutive fiscal quarter period commencing with the period
ending September 30, 2003 to be greater than 4.00:1.00.

 

Section 6.11.                 Fixed Charge
Coverage.  The Borrowers will not
permit the Fixed Charge Coverage Ratio for any four consecutive fiscal quarter
period commencing with the period ending September 30, 2003 to be less than
1.25:1.00.

 

77

 

Section 6.12.                 Rental Obligations.  The Borrower will not, and will not permit
any of its Subsidiaries to, incur, create, assume or permit to exist, in
respect of leases of real and personal property (other than finance leases),
rental obligations or other commitments thereunder to make any direct or
indirect payment, whether as rent or otherwise, for fixed or minimum rentals,
percentage rentals, property taxes, or insurance premiums, except in the
ordinary course of business.

 

Section 6.13.                 Consulting
Fees.  The Borrower will not, and
will not permit any of its Subsidiaries to, pay any management, consulting or
other similar fee to Holdings, any subsidiary thereof or any Subsidiary of any
Borrower, or to any Affiliate of Holdings, any of its subsidiaries or of the
Borrowers or any of the Borrowers’ Subsidiaries.

 

ARTICLE VII

 

Events of Default

 

If any of the following events (“Events of Default”)
shall occur:

 

(a)                                  any
of the Borrowers shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or otherwise;

 

(b)                                 any
of the Borrowers shall fail to pay any interest on any Loan, the Revolving
Credit Commitment Fee or any other fee or any other amount (other than an
amount referred to in clause (a) of this Article) payable under this
Agreement or any other Financing Document, when and as the same shall become
due and payable;

 

(c)                                  any
representation or warranty made or deemed made by the Borrowers or a Guarantor
in the Financing Documents, or in any report, certificate, financial statement
or other document furnished pursuant to the Financing Documents, shall prove to
have been incorrect in any material respect as of the date when made or deemed
made;

 

(d)                                 any
of the Borrowers shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.01, 5.02 (with respect to insurance),
5.04 (with respect to audits), 5.05, 5.08, 5.09 (with respect to a Borrower’s
existence), 5.10(c), 5.12 or 5.13 or in Article VI;

 

(e)                                  any
of the Borrowers shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in
clause (a), (b) or (d) of this Article) or any other Financing Document,
and such failure shall continue unremedied for a period of 20 days;

 

(f)                                    any
Borrower or any Subsidiary or Guarantor (i) fails to make any payment when
due (whether by scheduled maturity, required prepayment, acceleration, demand,
or otherwise) in respect of any Material Indebtedness (other than Indebtedness
hereunder), or (ii) fails to observe or perform any other agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating

 

78

 

thereto,
or any other event occurs, the effect of which default or other event is to
cause, or to permit the holder or holders or the beneficiary or beneficiaries
of such Indebtedness (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, with the giving of notice if
required, such Indebtedness to be demanded or to become due or to be
repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an
offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior
to its stated maturity, or cash collateral in respect thereof to be demanded;

 

(g)                                 an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect
of any Borrower or any Subsidiary or Guarantor or its debts, or of a
substantial part of its assets, under any U.S. or Canadian Federal, state or
foreign bankruptcy, insolvency, winding up, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for any Borrower or
any Subsidiary or Guarantor or for a substantial part of its assets, and, in
any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for 30 days;

 

(h)                                 any
Borrower or any Subsidiary or Guarantor shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any United States or Canadian Federal, state or foreign
bankruptcy, insolvency, winding up, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in clause (g) of this Article, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for any Borrower or any Subsidiary or Guarantor or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or
(vi) take any action for the purpose of effecting any of the foregoing;

 

(i)                                     any
Borrower or any Subsidiary shall become unable, admit in writing its inability
or fail generally to pay its debts as they become due;

 

(j)                                     one
or more judgments for the payment of money in an aggregate amount in excess of
$750,000 (not covered by insurance where the carrier has accepted
responsibility) shall be rendered against any Borrower, any Subsidiary or any
combination thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any
material assets of any Borrower or any Subsidiary to enforce any such judgment;

 

(k)                                  an
ERISA Event shall have occurred that, in the opinion of the Required Lenders,
when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in a Material Adverse Effect;

 

(l)                                     there
occurs (i) any event which constitutes a material breach of terms of any
Canadian Pension Plan maintained by Holdings or any of its subsidiaries, or a
breach of the Income Tax Act (Canada)
or Applicable Canadian Pension Laws with respect to any Canadian Pension Plan,
and includes a failure to act which constitutes such a breach or (ii) any
complete or

 

79

 

partial
withdrawal or proposed complete or partial withdrawal of monies by Holdings or
any of its subsidiaries from a Canadian Pension Plan other than in accordance
with Applicable Canadian Pension Laws or any complete or partial withdrawal or
proposed complete or partial withdrawal by Holdings or any of its subsidiaries
from such Canadian Pension Plan (such that such Person would purport to be
released, whether in whole or in part, from its obligations under such Canadian
Pension Plan) other than in accordance with Applicable Canadian Pension Laws or
(iii) any event which could result in the complete or partial termination
or proposed complete or partial termination of any Canadian Pension Plan,
whether by declaration of a Canadian Pension Regulator or otherwise; other than
in accordance with applicable Canadian Pension Laws or (iv) any “solvency
deficiency”, as defined and determined in accordance with Regulation 909 under
the Pensions Benefit Act (Ontario) or any other similar deficiency under other
Applicable Canadian Pension Laws;

 

(m)                               a
Change in Control shall occur;

 

(n)                                 any
of the Financing Documents shall for any reason cease to be, or shall be
asserted by any Person obligated thereunder not to be, a legal, valid and
binding obligation of such Person, including, without limitation, the improper
filing by such Person of an amendment or termination statement relating to a
filed financing statement describing the Collateral, or any Lien on any
material portion of the Collateral purported to be created by any of such
Financing Documents shall for any reason cease to be, or be asserted by any
Person granting any such Lien not to be a valid, first priority perfected Lien
(except to the extent otherwise permitted under any of the Financing
Documents);

 

(o)                                 any
material damage to, or loss, theft or destruction of, any material Collateral,
whether or not insured, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty continuing for more
than 30 consecutive days beyond the coverage of any applicable business
interruption insurance, if in the case of any of the foregoing, any such event
or circumstance could reasonably be expected to have a Material Adverse Effect;

 

(p)                                 the
filing of any Lien for taxes or notice of levy if any such event would
reasonably be expected to result in a Material Adverse Effect;

 

then, and in every such
event (other than an event with respect to any Borrowers described in
clause (g) or (h) of this Article), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrowers, take any one or more of
the following actions, at the same or different times:  (i) terminate the Commitment, and
thereupon the Commitment shall terminate immediately, (ii) declare the
Loans then outstanding to be due and payable in whole (or in part, in which
case any principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrowers,
(iii) require that the Borrowers deposit cash collateral to the extent of
the L/C Exposure or (iv) exercise any other rights or remedies available
under the Financing Documents or applicable law; and in case of

 

80

 

any event with respect to
any Borrowers described in clause (g) or (h) of this Article, the
Commitment shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrowers accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrowers.

 

ARTICLE VIII

 

The Administrative Agent and the Canadian Agent

 

Each of the Lenders, the
Canadian Lenders and each Issuing Bank hereby irrevocably appoints:  (i) the Administrative Agent as its agent
both as administrative agent and collateral agent for collateral granted by
each of the Borrowers and Guarantors (other than WP Canada) and described in
the Security Agreement granted by them and authorizes the Administrative Agent
to take such actions on its behalf and to exercise such powers as are delegated
to the Administrative Agent by the terms hereof and the other Financing
Documents, together with such actions and powers as are reasonably incidental
thereto and (ii) the Canadian Agent as its Canadian administrative agent and
collateral agent for collateral granted by WP Canada and described in the
Security Agreement granted by it and authorizes the Canadian Agent to take such
actions on its behalf and to exercise such powers as are delegated to the
Canadian Agent by the terms hereof and the other Financing Documents, together
with such actions and powers as are reasonably incidental thereto.

 

Each of the banks serving
as the Administrative Agent and as the Canadian Agent hereunder and under the
other Financing Documents shall have the same rights and powers in its capacity
as a Lender as any other Lender and may exercise the same as though it were not
the Administrative Agent or the Canadian Agent and such bank and its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
business with any Borrower or any Subsidiary or other Affiliate thereof as if
it were not the Administrative Agent or the Canadian Agent hereunder.

 

The Administrative Agent
and the Canadian Agent, respectively, shall not have any duties or obligations
except those expressly set forth herein or in the other Financing
Documents.  Without limiting the
generality of the foregoing, (a) the Administrative Agent and the Canadian
Agent shall not be subject to any fiduciary or other implied duties, regardless
of whether a Default has occurred and is continuing, (b) the
Administrative Agent and the Canadian Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or thereby that the
Administrative Agent or the Canadian Agent is required to exercise in writing
by the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary under the circumstances as provided in Section 9.02),
and (c) except as expressly set forth herein, the Administrative Agent and
the Canadian Agent shall not have any duty to disclose, and shall not be liable
for any failure to disclose, any information relating to the Borrowers or any
of their Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or Canadian Agent or any of their Affiliates in any capacity.  The Administrative Agent and the Canadian
Agent shall not be liable for any action taken or not taken by it with the
consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall

 

81

 

be
necessary under the circumstances as provided in Section 9.02) or in the
absence of its own gross negligence or wilful misconduct.  The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrowers or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or
in connection with this Agreement, (ii) the contents or accuracy of any
certificate, report or other document delivered hereunder or in connection
herewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative
Agent.  In the event that the
Administrative Agent receives any such written notice of default described
above, the Administrative Agent shall give prompt notice thereof to the Lenders.

 

The Administrative Agent
and the Canadian Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person.  The Administrative Agent and the Canadian Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon.  The Administrative Agent and
the Canadian Agent may consult with legal counsel (who may be counsel for the
Borrowers), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

 

The Administrative Agent
and the Canadian Agent may perform any and all of its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent or the Canadian Agent, as the case may be.  The Administrative Agent and the Canadian
Agent and any such sub-agent may perform any and all its duties and exercise
its rights and powers through their respective Related Parties.  The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and the Canadian Agent and any such sub-agent, and shall
apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as Administrative
Agent and Canadian Agent.

 

With respect to the
release of Collateral, the Lenders hereby irrevocably authorize each of the
Administrative Agent and the Canadian Agent, at its option and in its
discretion, to release any Lien granted to or held by the Administrative Agent
or the Canadian Agent upon any property covered by this Agreement or the other
Financing Documents (i) upon termination or expiration of the Commitment,
the payment and satisfaction of all obligations arising with respect to the
Loans, all fees and expenses, the expiration or termination of all the Letters
of Credit and the reimbursement of all LC Disbursements; (ii) constituting
property being sold or disposed of in compliance with the provisions of the
Financing Documents (and the Administrative Agent and the Canadian Agent may
rely in good faith conclusively on any certificate stating that the property is
being sold or disposed of in compliance with the provisions of the Financing
Documents, without further inquiry) or (iii) constituting Collateral and the

 

82

 

proceeds
thereof having a value not in excess of $3,000,000 during the term of this
Agreement (provided the Net Proceeds realized are applied in accordance with
Sections 2.09(c) and (d) hereof); provided, however, that
(x) the Administrative Agent and the Canadian Agent shall not be required
to execute any release on terms which, in the Administrative Agent’s or
Canadian Agent’s opinion, would expose the Administrative Agent or the Canadian
Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (y) such
release shall not in any manner discharge, affect or impair any Liens upon all
interests retained, all of which shall continue to constitute part of the
property covered by the Financing Documents.

 

With respect to
perfecting security interests in Collateral which, in accordance with Article 9
of the Uniform Commercial Code or any comparable provision of any Lien
perfection statute in any applicable jurisdiction, can be perfected only by
possession, each Lender hereby appoints each other Lender, and each Canadian
Lender hereby appoints each other Canadian Lender, its agent for the purpose of
perfecting such interest.  Should any
Lender or Canadian Lender (other than the Administrative Agent or the Canadian
Agent) obtain possession of any such Collateral, such Lender shall notify the
Administrative Agent and each Canadian Lender shall notify the Canadian Agent,
and, promptly upon the Administrative Agent’s or Canadian Agent’s request,
shall deliver such Collateral to the Administrative Agent or the Canadian
Agent, as applicable, or in accordance with the Administrative Agent’s or
Canadian Agent’s instructions.  Each
Lender and each Canadian Lender agrees that it will not have any right
individually to enforce or seek to enforce this Agreement or any other Financing
Document or to realize upon any Collateral for the Loans, it being understood
and agreed that such rights and remedies may be exercised only by or with the
approval of the Administrative Agent or in respect of WP Canada, the Canadian
Agent.

 

In the event that a
petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation or similar
law is filed by or against any Borrower or any other Person obligated under the
Financing Document, the Administrative Agent is authorized, to the fullest
extent permitted by applicable law, to file a proof of claim on behalf of
itself and the Lenders in such proceeding for the total amount of obligations
owed by such Person.  With respect to any
such proof of claim which the Administrative Agent may file, each Lender
acknowledges that without reliance on such proof of claim, such Lender shall
make its own evaluation as to whether an individual proof of claim must be
filed in respect of such obligations owed to such Lender and, if so, take the
steps necessary to prepare and timely file such individual claim.

 

Subject to the
appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying
the Canadian Agent, the Lenders, the Issuing Bank and the Borrowers.  Upon any such resignation, the Required
Lenders shall have the right, with the approval of the Borrowers (not to be
unreasonably withheld, except that no such approval shall be required upon the
occurrence and continuance of an Event of Default), to appoint a
successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of
the Lenders and the Issuing Bank, appoint a successor Administrative Agent
which shall be a bank with an office in New York, New York, or an

 

83

 

Affiliate
of any such bank with such an office. 
Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall 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.  The fees payable
by the Borrowers to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrowers and
such successor.  After the
Administrative Agent’s resignation hereunder, the provisions of this Article
and Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in
respect of any actions taken or omitted to be taken by any of them while it was
acting as Administrative Agent.

 

Subject to the
appointment and acceptance of a successor Canadian Agent as provided in this
paragraph, the Canadian Agent may resign at any time by notifying the
Administrative Agent, the Lenders, the Issuing Bank and the Borrowers.  Upon any such resignation, the Required
Lenders shall have the right, with the approval of the Borrowers (not to be
unreasonably withheld, except that no such approval shall be required upon the
occurrence and continuance of an Event of Default), to appoint a
successor.  If no successor shall have
been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Canadian Agent gives notice of
its resignation, then the retiring Canadian Agent may, on behalf of the Lenders
and the Issuing Bank, appoint a successor Canadian Agent which shall be a
Canadian bank or a Canadian branch of an authorized foreign bank with an office
in Toronto, Ontario.  Upon the
acceptance of its appointment as Canadian Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Canadian Agent, and the retiring Canadian
Agent shall be discharged from its duties and obligations hereunder.  The fees payable by the Borrowers to a
successor Canadian Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrowers and such successor.  After the Canadian Agent’s resignation
hereunder, the provisions of this Article and Section 9.03 shall continue
in effect for the benefit of such retiring Canadian Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Canadian Agent.

 

Each Lender acknowledges
that it has, independently and without reliance upon the Administrative Agent,
the Canadian Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent, the Canadian Agent or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any related agreement or any document
furnished hereunder or thereunder.  Each
Lender acknowledges the potential conflict of interest of each other Lender as
a result of Lenders holding disproportionate interests in the Loans, and
expressly consents to and waives any claim based upon such conflict of
interest.

 

The parties hereto agree
that the title Syndication Agent is honorary and confers no duty upon such
agent except as a Lender hereunder.

 

84

 

ARTICLE IX

 

Miscellaneous

 

Section 9.01.                 Notices.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail (provided that certified or
registered mail shall not be used during a postal strike) or sent by telecopy,
as follows:

 

(a)                                  if
to all or any of the Borrowers, to them at Water Pik Technologies, Inc.,
23 Corporate Plaza, Suite 246, Newport Beach, CA 92660, Attention of
Victor C. Streufert (Telecopy No. 949-719-6472) with copies for
informational purposes only to Elaine Levin, Esq., Preston Gates & Ellis,
1900 Main Street, Suite 600, Irvine, CA 92614-7319 (Telecopy No.
949-253-0902);

 

(b)                                 if
to the Administrative Agent, to JPMorgan Chase Bank, 1166 Avenue of the
Americas, 16th Floor New York, NY 10036, Attention of WPTI Account Executive,
Account Officer (Telecopy No. 212-899-2929) with copies for information
purposes only to Jeffrey M. Epstein, Esq., Kaye Scholer LLP,
425 Park Avenue, New York, New York 10022 (Telecopy No. 212-836-6475);

 

(c)                                  if
to the Canadian Agent or the Canadian Lender, to JPMorgan Chase Bank, Toronto
Branch, 200 Bay Street, Suite 1800, Royal Bank Plaza, South Tower,
Toronto, Ontario M5J 2J2, Attention of Amanda Vidulich (Telecopy No.
416-981-9128); and

 

(d)                                 if
to any other Lender, to it at its address (or telecopy number) set forth in its
Administrative Questionnaire.

 

(e)                                  Notices
and other communications to the Lenders and the Canadian Lenders hereunder may
be delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall
not apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent, the Canadian Agent (if applicable) and the applicable
Lender or Canadian Lender.  The Administrative
Agent, the Canadian Agent or the Borrowers may, in their discretion, agree to
accept notices and other communications to each hereunder by electronic
communications pursuant to procedures approved by them; provided that
approval of such procedures may be limited to particular notices or
communications.

 

(f)                                    Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All notices and other communications given
to any party hereto in accordance with the provisions of this Agreement shall
be deemed to have been given on the date of receipt.

 

Section 9.02.                 Waivers; Amendments.  (a)                                               
No failure or delay by the Administrative Agent, the Canadian Agent, the
Issuing Bank, any Canadian Lender or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of

 

85

 

steps to enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or power.  The rights and remedies of the
Administrative Agent, the Canadian Agent, the Issuing Bank, the Canadian Lender
and the Lenders hereunder are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. 
No waiver of any provision of this Agreement or consent to any departure
by the Borrowers therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) of this Section, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given.  Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Administrative Agent, the Canadian Agent, any Canadian Lender, any Lender
or the Issuing Bank may have had notice or knowledge of such Default at the
time.

 

(b)                                 Neither
this Agreement nor any provision hereof nor any provision of any other
Financing Document may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrowers and the Required
Lenders or by the Borrowers and the Administrative Agent and/or the Canadian
Agent with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Revolving Loan Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal
amount of any Loan, Note or LC Disbursement or reduce the rate of interest
thereon, or reduce any fees payable hereunder, without the written consent of
each Lender directly affected thereby, (iii) postpone the Maturity Date or
the scheduled date of payment of the principal amount of any Loan (other than
pursuant to Section 2.09(c) hereof) or LC Disbursement, or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or
excuse any such payment or postpone the scheduled date of expiration of any
Revolving Loan Commitment, without the written consent of each Lender directly
affected thereby, (iv) change Section 2.16(b), (d) or (e) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) increase any percentage
contained in the definition of Borrowing Base, release all or a material
portion of the Collateral or make overadvances other than Permitted
Overadvances without the written consent of each Lender, (vi) release any
Guarantee (other than in accordance with its terms) without the written consent
of each Lender or (vii) change any of the provisions of this
Section or the definition of “Required Lenders” or any other provision
hereof specifying the number or percentage of Lenders required to waive, amend
or modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided  further
that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent, the Canadian Agent or the Issuing Bank
hereunder without the prior written consent of the Administrative Agent, the
Canadian Agent or the Issuing Bank, as the case may be.

 

Section 9.03.                 Expenses; Indemnity; Damage Waiver.  (a)              The
Borrowers shall pay (i) all reasonable out-of-pocket expenses incurred by
the Administrative Agent, the Canadian Agent, and their respective Affiliates,
including the reasonable fees, charges and disbursements of counsel on a
solicitor and his own client basis for the Administrative Agent,  the Canadian Agent in connection with the
syndication of the credit facilities provided for herein, the preparation of
this Agreement or any amendments, modifications or waivers requested by the
Borrowers of the provisions hereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit

 

86

 

or any demand for payment thereunder and (iii) during the
continuance of a Default, all out-of-pocket expenses incurred by the Administrative
Agent, the Canadian Agent, the Issuing Bank, any Canadian Lender or any Lender,
including the fees, charges and disbursements of any counsel on a solicitor and
his own client basis for the Administrative Agent, the Canadian Agent, the
Issuing Bank, any Canadian Lender or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made
or Letters of Credit and LC Guaranties issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans, Letters of Credit or LC Guaranties.

 

(b)                                 The
Borrowers shall indemnify the Administrative Agent, the Canadian Agent, the
Issuing Bank, each Canadian Lender and each Lender, and each Related Party of
any of the foregoing Persons (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the reasonable fees,
charges and disbursements of any counsel on a solicitor and his own client
basis for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any agreement or instrument contemplated hereby,
the performance by the parties hereto of their respective obligations hereunder
or the consummation of the Transactions or any other transactions contemplated
hereby, (ii) any Loan or Letter of Credit or the use of the proceeds
therefrom (including any refusal by the Issuing Bank to honor a demand for
payment under a Letter of Credit if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on
or from any property owned or operated by the Borrowers or any of their
Subsidiaries, or any Environmental Liability related in any way to the
Borrowers or any of their Subsidiaries, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort or any other theory and regardless
of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claim, damages, liabilities or related expenses are determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or wilful misconduct of such Indemnitee.

 

(c)                                  To
the extent that the Borrowers fail to pay any amount required to be paid by it
to the Administrative Agent, the Canadian Agent or the Issuing Bank under paragraph
(a) or (b) of this Section, each Lender severally agrees to pay to
the Administrative Agent, the Canadian Agent or the Issuing Bank, as the case
may be, such Lender’s pro rata share (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought and based upon
the outstanding principal balance of the Revolving Credit Exposure) of such
unpaid amount; provided that the unreimbursed expense or indemnified
loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent, the Canadian Agent or
the Issuing Bank in its capacity as such.

 

(d)                                 To
the extent permitted by applicable law, the Borrowers shall not assert, and
hereby waive, any claim against any Indemnitee, 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 agreement or instrument

 

87

 

contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.

 

(e)                                  All
amounts due under this Section shall be payable promptly after written demand
therefor.

 

Section 9.04.                 Successors and Assigns.  (a)   The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank resident in the same jurisdiction that issues any
Letter of Credit), except that (i) the Borrowers may not assign or
otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the
Borrowers without such consent shall be null and void), (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section and (iii) no Canadian Lender may assign or
otherwise transfer its rights or obligations hereunder without the prior
written consent of each Lender, the Canadian Agent and the Administrative Agent
(and any attempted assignment or transfer by a Canadian Lender without such
consent shall be null and void), except to an Eligible Assignee that is
authorized or legally entitled to do business in Canada.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including an
Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Canadian Agent, the Issuing Bank, the Canadian
Lenders and the Lenders) any legal or equitable right, remedy or claim under or
by reason of this Agreement.

 

(b)                                 (i)                                     Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Revolving Loan Commitment and
the Loans at the time owing to it) with the prior written consent (such consent
not to be unreasonably withheld) of:

 

(A)                              the
Borrowers, provided that no consent of the Borrowers shall be required
for an assignment to an Eligible Assignee or, if an Event of Default under
Article VII has occurred and is continuing, any other assignee; and

 

(B)                                the
Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment to an assignee that is a Lender
immediately prior to giving effect to such assignment; provided that in
the case of the Canadian Exposure, the assignee is an Eligible Assignee
authorized or legally entitled to do business in Canada.

 

(ii)                                  Assignments
shall be subject to the following additional conditions:

 

(A)                              except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Revolving
Loan Commitment or Loans, the amount of the

 

88

 

Revolving Loan Commitment or Loans of the assigning
Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $10,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, provided that
no such consent of the Borrower shall be required if an Event of Default under
Article VII has occurred and is continuing;

 

(B)                                each
partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;

 

(C)                                the
parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation
fee of $3,500;

 

(D)                               any
assignment by a Canadian Participating Lender to the extent of its Canadian
Exposure must be a Person that is resident in Canada or an authorized foreign
bank deemed to be resident in Canada provided that any such assignment after an
Event of Default has occurred and is continuing may be to any Person; and

 

(E)                                 the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.

 

(iii)                               Subject to acceptance
and recording thereof pursuant to paragraph (b)(iv) of this Section, from and
after the effective date specified in each Assignment and Assumption the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15
and 9.03).  Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this Section 9.04 shall be treated for purposes of this Agreement as
a sale by such Lender of a participation in such rights and obligations in
accordance with paragraph (c) of this Section.

 

(iv)                              The
Administrative Agent, acting for this purpose as an agent of the Borrowers,
shall maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Revolving Loan Commitment of, and principal amount of
the Loans and LC Disbursements owing to, each Lender pursuant to the terms
hereof from time to time (the “Register”).  The entries in the Register shall be conclusive, and the
Borrowers, the Administrative Agent, the Canadian Agent, the Issuing Bank and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof 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,
the Issuing Bank and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.

 

89

 

(v)                                 Upon
its receipt of a duly completed Assignment and Assumption executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of this Section,
any Note or Notes subject to such assignment and any written consent to such
assignment required by paragraph (b) of this Section, the Administrative Agent
shall accept such Assignment and Assumption and record the information
contained therein in the Register.  No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.  Upon notice to the Borrowers, at the
Borrowers’ expense, the Borrowers shall execute and deliver to the
Administrative Agent in exchange for such surrendered Notes, new Notes to the
order of the assignee in an amount equal to the portion of the Commitment
assumed by it pursuant to such Assignment and Assumption and, if the assigning
Lender has retained any Revolving Loan Commitment hereunder, new Notes to the
order of the assigning Lender in an amount equal to the Revolving Loan
Commitment retained by it hereunder.

 

(c)                                  (i)                                     Any
Lender may, without the consent of the Borrowers, the Administrative Agent, the
Canadian Agent or the Issuing Bank, sell participations to one or more banks or
other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Revolving Loan Commitment and the Loans owing to it); provided that
(A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (C) the Borrowers, the
Administrative Agent, the Canadian Agent, the Issuing Bank 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.  Any agreement or instrument pursuant to
which a Lender sells such a participation shall provide that such Lender shall
retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such
Participant.  Subject to paragraph
(c)(ii) of this Section, the Borrowers agree, to the fullest extent permitted
under applicable law, that each Participant shall be entitled to the benefits
of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a Lender
and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.  To the extent permitted
by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees
to be subject to Section 2.16(d) as though it were a Lender.

 

(ii)                                  A
Participant shall not be entitled to receive any greater payment under
Section 2.13 or 2.15 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrowers’
prior written consent.  A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.15 unless the Borrowers are notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrowers, to comply with Section 2.15(e) as though it were
a Lender.

 

(d)                                 Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement and the Notes issued to such Lender
to secure

 

90

 

obligations
of such Lender, including any pledge or assignment to secure obligations to a
Federal Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

Section 9.05.                 Survival.  All covenants, agreements, representations and
warranties made by the Borrowers herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans and the issuance of any Letters of Credit regardless of any investigation
made by any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Canadian Agent, the Issuing Bank, any Canadian Lender
or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any accrued
interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitment has not expired or terminated.  The provisions of Sections 2.13, 2.14,
2.15 and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Letters of
Credit and the Commitment or the termination of this Agreement or any provision
hereof.

 

Section 9.06.                 Counterparts;
Integration; Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement, the other Financing
Documents and any separate letter agreements with respect to fees payable to
the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof.  Except as provided in
Section 4.01, this Agreement shall become effective when it shall have
been executed by the Administrative Agent and the Canadian Agent and when the
Administrative Agent and the Canadian Agent shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of
a manually executed counterpart of this Agreement.

 

Section 9.07.                 Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof, and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 9.08.                 Right of
Setoff.  If an Event of Default
shall have occurred and be continuing, each Lender and each of its Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general

 

91

 

or
special, time or demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or for the credit
or the account of the Borrowers or their Subsidiaries against any of and all
the obligations of the Borrowers or their Subsidiaries now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured.  The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

 

Section 9.09.                 GOVERNING LAW; Jurisdiction;
Consent to Service of Process. 
(a)  THIS AGREEMENT, IN
ACCORDANCE WITH SECTION 5-1401 OF THE GENERAL OBLIGATION LAW OF THE STATE OF
NEW YORK, SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF
THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

 

(b)                                 Each
of the Borrowers hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the Supreme Court of the
State of New York sitting in New York County and of the United States District
Court for the Southern District of New York, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.  Furthermore, WP Canada
hereby irrevocably attorns to the non-exclusive jurisdiction of the courts of
the Province of Ontario in connection with any dispute or matter arising out of
any Financing Document involving the Canadian Agent or a Canadian Lender
provided that the Canadian Agent or such Canadian Lender shall be entitled to
commence actions in the courts of any other jurisdictions for the purposes of
enforcing rights and remedies under any of the Financing Documents.  Nothing in this Agreement shall affect any
right that the Administrative Agent, the Canadian Agent, the Issuing Bank or
any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against the Borrowers or its properties in the courts of any
jurisdiction.

 

(c)                                  Each
of the Borrowers 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 suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in paragraph (b)
of this Section.  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 action or
proceeding in any such court.

 

(d)                                 Each
party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

 

92

 

Section 9.10.                 WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 9.11.                 Headings.  Article and Section headings and the Table
of Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

 

Section 9.12.                 Confidentiality.  Each of the Administrative Agent, the
Canadian Agent, the Issuing Bank, the Canadian Lenders and the Lenders agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, rating
agencies, portfolio management servicers, legal counsel and other advisors (it
being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any
regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement, (g) with the
consent of the Borrowers or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, the
Canadian Agent, the Issuing Bank, or any Canadian Lender, or any Lender on a
nonconfidential basis from a source other than the Borrowers.  Notwithstanding the foregoing, each of the
Administrative Agent, the Canadian Agent, the Issuing Bank, the Canadian
Lenders and the Lenders may disclose to any and all Persons, without limitation
of any kind, the tax treatment and tax structure of the Transactions and all
materials of any kind (including opinions and tax analysis) that have been
provided to such Persons relating to the tax treatment and tax structure of the
Transactions.  For the purposes of this
Section, “Information” means all information received from the Borrowers relating
to the Borrowers or their businesses, other than any such information that is
available to the Administrative Agent, the Canadian Agent, the Issuing Bank, or
any Canadian Lender, or any Lender on a nonconfidential basis prior to
disclosure by the Borrowers; provided that, in the case of information
received from the Borrowers after the date hereof, such information is clearly
identified at the time of delivery as confidential.  Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the

 

93

 

confidentiality
of such Information as such Person would accord to its own confidential information.

 

Section 9.13.                 Interest Rate
Limitation.  Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated
as interest on such Loan under applicable law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or
periods shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

 

Section 9.14.                 Repayment Due
to Exchange Rate Fluctuations.  WP
Canada acknowledges that the maximum amount of Loans available to be made to it
hereunder are expressed in dollars and that fluctuations in the value of
Canadian Dollars against dollars may diminish the amount of Credit available to
WP Canada.  The Canadian Agent shall
from time to time determine the principal amount of the Canadian Obligations
outstanding and if the aggregate of any part thereof expressed in dollars
(including both absolute and contingent indebtedness and liability of WP Canada
in respect of BA Advances and Eurodollar Loans) exceeds the maximum amount of
such part permitted by this Agreement, WP Canada shall, within two (2) Business
Days after written notice by the Canadian Agent repay and thereby reduce the
principal amount of such part or parts of the Obligations in respect of the
Canadian Loans to the maximum principal amount thereof permitted hereunder.

 

Section 9.15.                 Judgment
Currency.  If in the recovery by the
Administrative Agent, the Canadian Agent, any Canadian Lender or any Lender of
any of Obligations owing by any of the Borrowers in any currency, judgment can
only be obtained in another currency and because of changes in the exchange
rate of such currencies between the date of judgment and payment in full of
such judgment, the recovery under the judgment differs from receipt by the
Administrative Agent, the Canadian Agent, the Canadian Lender or the Lender of
the full amount of such Obligations, the US Borrowers or WP Canada, as
applicable, shall pay any shortfall to the Administrative Agent, Canadian Agent
or such Lender, as applicable, and such shortfall can be claimed by the
Administrative Agent, the Canadian Agent or such Lender, as applicable, against
the US Borrowers or WP Canada, as applicable, as an alternative or additional
cause of action.

 

94

 

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

 

	
   

  	
  WATER PIK, INC., Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C STREUFERT

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Victor C. Streufert

  
	
   

  	
   

  	
  Title:

  	
  Vice President - Finance

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LAARS, INC., Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C STREUFERT

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Victor C. Streufert

  
	
   

  	
   

  	
  Title:

  	
  Vice President - Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WATER PIK TECHNOLOGIES CANADA, INC.,

  Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ VICTOR C STREUFERT

  	
   

  
	
   

  	
   

  	
  Name :

  	
  Victor C. Streufert

  
	
   

  	
   

  	
  Title:

  	
  Vice President - Finance

  
									

 

 

	
   

  	
  JPMORGAN CHASE BANK, TORONTO

  BRANCH, individually and as Canadian Agent

  and Canadian Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRISTINE CHAN

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Christine Chan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, individually and as

  Administrative and Collateral Agent, and as

  Arranger

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ DONNA M. DIFORIO

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Donna M DiForio

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
									

 

 

	
   

  	
  BANK ONE, NA, with its main office in Chicago,

  Illinois, as Syndication Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SANAT B. PATEL

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sanet B. Patel

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK ONE, NA, CANADA BRANCH

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ STEVEN VOIGT

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Steven Voigt

  
	
   

  	
   

  	
  Title:

  	
  Director

  
						

 

 

	
   

  	
  PNC BANK, NATIONAL ASSOCIATION, as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SANDRA SHA KENYON

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Sandra Sha Kenyon

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						

 

 

	
   

  	
  UNION BANK OF CALIFORNIA, N.A.,

  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JAMES HEIM

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James Heim

  
	
   

  	
   

  	
  Title:

  	
  Vice President

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