Document:

Exhibit 4.2

 

Execution Copy

 

REGISTRATION RIGHTS AGREEMENT

 

by and among

 

Encore
Medical Finance LLC

Encore Medical Finance Corp.

 

and

 

The Guarantors listed on Schedule A hereto

 

and

 

Banc of America Securities LLC

 

and

 

Credit Suisse Securities (USA) LLC

 

Dated as of November 3, 2006

 

 

REGISTRATION
RIGHTS AGREEMENT

 

This
Registration Rights Agreement (this “Agreement”) is made and entered
into as of November 3, 2006, by and among Encore Medical Finance LLC, a
Delaware limited liability company (“Encore LLC”), and Encore Medical
Finance Corp., a Delaware corporation wholly owned by Encore LLC (“Encore
Corp.”, and together with Encore LLC, the “Issuers”), the Guarantors
listed on Schedule A hereto (the “Guarantors”), and Banc of America
Securities LLC and Credit Suisse Securities (USA) LLC (collectively, the “Initial
Purchasers”), who have agreed to purchase the Issuers’ 11 3/4% Senior
Subordinated Notes due 2014 (the “Initial Notes”) and the related
guarantees (the “Initial Guarantees”) pursuant to the Purchase Agreement
(as defined below).

 

This
Agreement is made pursuant to the Purchase Agreement, dated as of October 30,
2006 (the “Purchase Agreement”), by and among Grand Slam Acquisition
Corp. and the Initial Purchasers, as amended by the Joinder Agreement to the
Purchase Agreement, dated as of the date hereof, by the Issuers and the
Guarantors, (i) for the benefit of the Initial Purchasers and (ii) for the
benefit of the holders from time to time of the Notes (as hereinafter defined)
(including the Initial Purchasers). In order to induce the Initial Purchasers
to purchase the Initial Notes, the Issuers and the Guarantors have agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement is a condition to the obligations of the Initial
Purchasers set forth in Section 5(g) of the Purchase Agreement.

 

The
parties hereby agree as follows:

 

SECTION
1. Definitions. As used in this Agreement,
the following capitalized terms shall have the following meanings:

 

Broker-Dealer:  Any broker or dealer
registered under the Exchange Act.

 

Business Day:  Any
day other than a Saturday, Sunday or U.S. federal holiday or a day on which
banking institutions in the City of New York are authorized or obligated to be
closed.

 

Closing
Date:  The date of this
Agreement.

 

Commission:  The Securities and Exchange
Commission.

 

Consummate:  An Exchange Offer shall be
deemed “Consummated” for purposes of this Agreement upon the delivery by the
Issuers to the Registrar under the Indenture of Exchange Notes in the same
aggregate principal amount as the aggregate principal amount of Initial Notes
that were tendered by Holders thereof pursuant to the Exchange Offer.

 

Exchange
Act:  The Securities
Exchange Act of 1934, as amended.

 

 

Exchange
Guarantees:  The
guarantees to be issued by the Guarantors, relating to the Exchange Notes.

 

Exchange
Notes:  The 11 3/4%
Senior Subordinated Notes due 2014, of the same series under the Indenture as
the Initial Notes, to be issued to Holders in exchange for Transfer Restricted
Securities pursuant to this Agreement.

 

Exchange
Offer:  The
registration by the Issuers and the Guarantors under the Securities Act of the
Exchange Notes pursuant to a Registration Statement pursuant to which the
Issuers and the Guarantors offer the Holders of all outstanding Transfer
Restricted Securities the opportunity to exchange all such outstanding Transfer
Restricted Securities held by such Holders for Exchange Notes and the Exchange
Guarantees in an aggregate principal amount equal to the aggregate principal
amount of the Transfer Restricted Securities tendered in such exchange offer by
such Holders.

 

Exchange
Offer Registration Statement:  The
Registration Statement relating to the Exchange Offer, including the related Prospectus.

 

Holders:  As defined in Section 2(b)
hereof.

 

Indemnified
Holder:  As defined in
Section 8(a) hereof.

 

Indenture:  The Indenture, dated as of
November 3, 2006, among the Issuers, the Guarantors and The Bank of New
York, as trustee (the “Trustee”), pursuant to which the Notes are to be
issued, as such Indenture may be amended or supplemented from time to time in
accordance with the terms thereof.

 

Initial
Guarantees:  As defined
in the preamble hereto.

 

Initial
Notes:  As defined in
the preamble hereto.

 

Initial
Placement Date:  The
date of the issuance and sale by the Issuers of the Initial Notes to the
Initial Purchasers pursuant to the Purchase Agreement.

 

Initial
Purchasers:  As defined
in the preamble hereto.

 

Interest
Payment Date:  As
defined in the Indenture and the Notes.

 

NASD:  The National Association of
Securities Dealers, Inc.

 

Notes:  The Initial Notes and the
Exchange Notes.

 

Person:  An individual, partnership,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.

 

Private
Exchange:  As defined
in Section 3(c) hereof.

 

Private
Exchange Notes:  As
defined in Section 3(c) hereof.

 

2

 

Prospectus:  The prospectus included in
a Registration Statement, as amended or supplemented by any prospectus
supplement and by all other amendments thereto, including post-effective
amendments, and all material incorporated by reference into such Prospectus.

 

Registration
Statement:  Any
registration statement of the Issuers and the Guarantors relating to (a) an
offering of Exchange Notes pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.

 

Securities
Act:  The Securities
Act of 1933, as amended.

 

Shelf
Registration Statement:  As
defined in Section 4 hereof.

 

Transfer
Restricted Securities:  Each
Initial Note and the related Initial Guarantees, until the earliest to occur of
(a) the date on which such Initial Note and the related Initial Guarantees are
exchanged in the Exchange Offer and entitled to be resold to the public by the
Holder thereof without complying with the prospectus delivery requirements of
the Securities Act, (b) the date on which such Initial Note and the related
Initial Guarantees have been effectively registered under the Securities Act
and disposed of in accordance with a Shelf Registration Statement, (c) the date
on which such Initial Note and the related Initial Guarantees are distributed
to the public pursuant to Rule 144 under the Securities Act or by a
Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein) and (d) the date on which such Initial Note and the
related Initial Guarantees may be resold without restriction pursuant to
Rule 144(k) under the Securities Act.

 

Trust
Indenture Act:  The
Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa 77bbbb) as in effect on
the date of the Indenture.

 

Underwritten
Registration or Underwritten Offering:  A
registration in which securities of the Issuers are sold to an underwriter for
reoffering to the public.

 

SECTION
2. Securities Subject to This Agreement.

 

(a)           Transfer
Restricted Securities. The securities entitled to the benefits of
this Agreement are the Transfer Restricted Securities.

 

(b)           Holders of
Transfer Restricted Securities. A Person is deemed to be a holder of
Transfer Restricted Securities (each, a “Holder”) whenever such Person
owns Transfer Restricted Securities.

 

SECTION
3. Registered Exchange Offer.

 

(a)           Unless the Exchange
Offer shall not be permissible under applicable law or Commission policy (after
the procedures set forth in Section 6(a) below have been complied with), the
Issuers and the Guarantors shall (i) prepare and file with the Commission
an Exchange Offer Registration Statement under the Securities Act,
(ii) use their reasonable efforts to cause such Exchange Offer
Registration Statement to become effective under the Securities Act,
(iii) in

 

3

 

connection with the foregoing, to file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Securities Act and (C) all necessary filings in
connection with the registration and qualification of the Exchange Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of
such Registration Statement, to commence the Exchange Offer. The Exchange Offer
shall be on the appropriate form permitting registration of the Exchange Notes
to be offered in exchange for the Transfer Restricted Securities and to permit
resales of Notes held by Broker-Dealers as contemplated by Section 3(c) below.

 

(b)           The Issuers and the
Guarantors shall use their reasonable best efforts to cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20
Business Days after the date notice of the Exchange Offer is mailed to the
Holders. The Issuers and the Guarantors shall cause the Exchange Offer to
comply with all applicable federal and state securities laws. No securities
other than the Notes shall be included in the Exchange Offer Registration
Statement. The Issuers and the Guarantors shall use commercially reasonable
efforts to cause the Exchange Offer to be Consummated on or before the 360th
day following the Initial Placement Date (or October 29, 2007).

 

(c)           If, prior to
consummation of the Exchange Offer, the Initial Purchasers hold any Initial
Notes acquired by them that have the status of an unsold allotment in the
initial distribution, the Issuers, upon the request of the Initial Purchasers,
shall simultaneously with the delivery of the Exchange Notes issue and deliver
to the Initial Purchasers, in exchange (the “Private Exchange”) for such
Initial Notes held by any such Holder, a like principal amount of notes (the “Private
Exchange Notes”) of the Issuers, guaranteed by the Guarantors, that are
identical in all material respects to the Exchange Notes except for the
placement of a restrictive legend on such Private Exchange Notes. The Private
Exchange Notes shall be issued pursuant to the same indenture as the Exchange
Notes and bear the same CUSIP number as the Exchange Notes if permitted by the
CUSIP Service Bureau.

 

(d)           The Issuers shall
indicate in a “Plan of Distribution” section contained in the Prospectus
forming a part of the Exchange Offer Registration Statement that any
Broker-Dealer who holds Initial Notes that are Transfer Restricted Securities
and that were acquired for its own account as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from the Issuers), may exchange such Initial Notes
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an “underwriter” within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resales of the Exchange Notes received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such “Plan of Distribution”
section shall also contain all other information with respect to such resales
by Broker-Dealers that the Commission may require in order to permit such
resales pursuant thereto, but such “Plan of Distribution” shall not name any
such Broker-Dealer or disclose the amount of Notes held by any such

 

4

 

Broker-Dealer except to the extent required by the
Commission as a result of a change in policy after the date of this Agreement.

 

The
Issuers and the Guarantors shall use their reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for resales of Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities
or other trading activities, and to ensure that it conforms with the
requirements of this Agreement, the Securities Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period
ending on the earlier of (i) 90 days from the date on which the Exchange
Offer Registration Statement is declared effective, (ii) the date on which a
Broker-Dealer is no longer required to deliver a prospectus in connection with
market-making or other trading activities and (iii) the date on which all the
Notes covered by such Exchange Offer Registration Statement have been sold
pursuant to such Exchange Offer Registration Statement.

 

The
Issuers shall provide sufficient copies of the latest version of such
Prospectus to Broker-Dealers promptly upon request at any time during such
90-day (or shorter as provided in the foregoing sentence) period in order to
facilitate such resales.

 

SECTION
4. Shelf Registration.

 

(a)           Shelf
Registration. If (1) because of any change in law or in currently
prevailing interpretations of the staff of the Commission, the Issuers are not
permitted to effect the Exchange Offer, (2) the Exchange Offer is not
consummated within 360 days following the Initial Placement Date, (3) any
holder of Private Exchange Notes so requests in writing to the Issuers at any
time within 30 days after the consummation of the Exchange Offer, or
(4) in the case of any Holder that participates in the Exchange Offer,
such Holder does not receive Exchange Securities on the date of the exchange
that may be sold without restriction under state and federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Issuers within the meaning of the Securities Act) and so notifies the Issuers
within 30 days after such Holder first becomes aware of such restrictions, in
the case of each of clauses (1) to and including clause (4) of this sentence,
then, upon such Holder’s request, the Issuers and the Guarantors shall:

 

(x)            use
their reasonable best efforts to file a shelf registration statement pursuant
to Rule 415 under the Securities Act, which may be an amendment to the Exchange
Offer Registration Statement (in either event, the “Shelf Registration
Statement”) as soon as practicable after the filing obligation arises,
which Shelf Registration Statement shall provide for resales of all Transfer
Restricted Securities the Holders of which shall have provided the information
required pursuant to Section 4(b) hereof; and

 

(y)           use
commercially reasonable efforts to cause such Shelf Registration Statement to
be declared effective promptly by the Commission.

 

The
Issuers and the Guarantors shall use their reasonable best efforts to keep such
Shelf Registration Statement continuously effective, supplemented and amended
as required by the provisions of Sections 6(b) and (c) hereof to the extent
necessary to ensure that it is available for

 

5

 

resales of Notes by the Holders of Transfer Restricted
Securities entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Securities Act and the
policies, rules and regulations of the Commission as announced from time to
time, until the earliest of (i) two years after the Initial Placement Date of
the Initial Notes, (ii) such time as all of the Initial Notes have been sold
thereunder or (iii) the date upon which all Initial Notes covered such Shelf
Registration Statement become eligible for resale, without regard to volume,
manner of sale or other restrictions contained in Rule 144(k) under the
Securities Act (or any successor rule) (the “Effectiveness Period”). Notwithstanding
anything to the contrary in this Agreement, at any time, the Issuers may delay
the filing of any Shelf Registration Statement or delay or suspend the
effectiveness thereof, for a reasonable period of time, but not in excess of 60
consecutive days or more than three (3) times during any calendar year (each, a
“Shelf Suspension Period”), if the Board of Directors of Encore LLC
determines reasonably and in good faith that the filing of any such Initial
Shelf Registration Statement or the continuing effectiveness thereof would
require the disclosure of non-public material information that, in the
reasonable judgment of the Board of Directors of Encore LLC, would be
detrimental to the Issuers if so disclosed or would otherwise materially
adversely affect a financing, acquisition, disposition, merger or other material
transaction or such action is required by applicable law.

 

(b)           Provision by
Holders of Certain Information in Connection with the Shelf Registration
Statement. No Holder of Transfer Restricted Securities may include
any of its Transfer Restricted Securities in any Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes to the
Issuers in writing, within 20 Business Days after receipt of a request
therefor, such information as the Issuers may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. Each Holder as to which any Shelf Registration
Statement is being effected agrees to furnish promptly to the Issuers all
information required to be disclosed in order to make the information
previously furnished to the Issuers by such Holder not materially misleading.

 

SECTION
5. Additional Interest. If (a) the
Exchange Offer has not been Consummated or a Shelf Registration Statement has
not been declared effective by the Commission on or prior to the 360th
day after the Initial Placement Date, or (b) if applicable, a Shelf
Registration Statement has been declared effective but shall thereafter cease
to be effective during the Effectiveness Period (other than because of the sale
of all of the Transfer Restricted Securities registered thereunder), then
additional interest (“Additional Interest”) shall accrue on the
principal amount of the Notes at a rate of 0.25% per annum (which rate will be
increased by an additional 0.25% per annum for each subsequent 90-day period
that such Additional Interest continues to accrue; provided
that the rate which such Additional Interest accrues may in no event exceed
1.00% per annum) (such Additional Interest to be calculated by the Issuers)
commencing on the (x) 361st day after the Initial Placement Date, in
the case of clause (a) above, or (y) the day such Shelf Registration ceases to
be effective in the case of clause (b) above; provided,
however, that upon the exchange of the
Exchange Notes for all Transfer Restricted Securities tendered, or upon the
effectiveness of the applicable Shelf Registration Statement which had ceased
to remain effective, Additional Interest on the Notes in respect of which such
events relate as a result of such clause (or the relevant subclause thereof),
as the case may be, shall cease to accrue. Notwithstanding any other provisions
of this Section 5, the Issuers shall not be obligated to pay Additional
Interest provided in this Section 5 during a Shelf Suspension Period permitted
by Section 4(a) hereof.

 

6

 

SECTION
6. Registration Procedures.

 

(a)           Exchange
Offer Registration Statement. In connection with the Exchange Offer,
the Issuers and the Guarantors shall comply with all of the provisions of
Section 6(c) below, shall use their best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:

 

(i)            If
in the reasonable opinion of counsel to the Issuers there is a question as to
whether the Exchange Offer is permitted by applicable law and it is advisable
to do so, the Issuers and the Guarantors hereby agree to seek a no-action
letter or other favorable decision from the Commission allowing the Issuers and
the Guarantors to Consummate an Exchange Offer for such Initial Notes. The
Issuers and the Guarantors each hereby agree to pursue the issuance of such a
decision to the Commission staff level but shall not be required to take action
to effect a change of Commission policy. The Issuers and the Guarantors each
hereby agree, however, to (A) participate in telephonic conferences with the
Commission, (B) deliver to the Commission staff an analysis prepared by counsel
to the Issuers setting forth the legal bases, if any, upon which such counsel
has concluded that such an Exchange Offer should be permitted and (C)
diligently pursue a resolution by the Commission staff of such submission.

 

(ii)           As
a condition to its participation in the Exchange Offer pursuant to the terms of
this Agreement, each Holder of Transfer Restricted Securities shall furnish,
upon the request of the Issuers, prior to the Consummation thereof, a written
representation to the Issuers (which may be contained in the letter of
transmittal contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an affiliate of the Issuers, (B) it is not engaged
in, and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the Exchange Notes to be
issued in the Exchange Offer and (C) it is acquiring the Exchange Notes in its
ordinary course of business. In addition, all such Holders of Transfer
Restricted Securities shall otherwise cooperate in the Issuers’ preparations
for the Exchange Offer. Each Holder, including any Holder that is a
Broker-Dealer, shall acknowledge and agree that any such Holder using the
Exchange Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley & Co., Inc. (available June 5, 1991) and Exxon
Capital Holdings Corporation (available May 13, 1988), as interpreted in the
Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar
no-action letters (which may include any no-action letter obtained pursuant to
clause (i) above), and (2) must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction and that such a secondary resale transaction should be
covered by an effective registration statement containing the selling security
holder information required by Item 507 or 508, as applicable, of Regulation
S-K if the resales are of Exchange Notes obtained by such Holder in exchange
for Initial Notes acquired by such Holder directly from the Issuers.

 

(b)           Shelf
Registration Statement. In connection with the Shelf Registration
Statement, the Issuers and the Guarantors shall comply with all the provisions
of Section 6(c) below.

 

7

 

(c)           General
Provisions. In connection with any Registration Statement and any
Prospectus required by this Agreement to permit the sale or resale of Transfer
Restricted Securities (including, without limitation, any Registration Statement
and the related Prospectus required to permit resales of Notes by
Broker-Dealers), the Issuers and the Guarantors shall:

 

(i)            use
their reasonable best efforts to keep such Registration Statement continuously
effective and provide all requisite financial statements including, if required
by the Securities Act or any regulation thereunder, financial statements of the
Guarantors; upon the occurrence of any event that would cause any such
Registration Statement or the Prospectus contained therein (A) to contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading or (B) not to be effective and
usable for resale of Transfer Restricted Securities during the period required
by this Agreement, the Issuers and the Guarantors shall file promptly an
appropriate amendment to such Registration Statement or supplement to the
Prospectus or document incorporated by reference, in the case of clause (A),
correcting any such misstatement or omission, and, in the case of an amendment,
use their reasonable best efforts to cause such amendment to be declared
effective and such Registration Statement and the related Prospectus to become
usable for their intended purpose(s) as soon as practicable thereafter;

 

(ii)           prepare
and file with the Commission such amendments and post-effective amendments to
the Registration Statement as may be necessary to keep the Registration
Statement effective for the applicable period set forth in Section 3 or 4
hereof; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act, and to comply fully with the applicable provisions of Rules 424
and 430A under the Securities Act, as applicable, in a timely manner; and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration Statement or
supplement to the Prospectus;

 

(iii)          advise the underwriter(s), if any, and
selling Holders promptly and, if requested by such Persons, confirm such advice
in writing, (A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement
under the Securities Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted Securities for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any of the preceding purposes, and (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement thereto, or
any document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading. If at any
time the Commission shall issue any stop

 

8

 

order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
Blue Sky laws, the Issuers and the Guarantors shall use their reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;

 

(iv)          furnish
without charge to counsel for the Initial Purchasers, each selling Holder named
in any Registration Statement, and each of the underwriter(s), if any, at least
one copy before filing with the Commission of any Registration Statement or any
Prospectus included therein or any amendments or supplements to any such
Registration Statement or Prospectus (including, if requested in writing by any
such Person, all documents incorporated by reference after the initial filing
of such Registration Statement, if not available on the Commission’s EDGAR
database), which Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or Prospectus
will be subject to the review of the Initial Purchasers and such Holders and
underwriter(s) in connection with such sale, if any, for a reasonable period,
and the Issuers will not file any such Registration Statement or Prospectus or
any amendment or supplement to any such Registration Statement or Prospectus to
which the Initial Purchasers or the underwriter(s), if any, shall reasonably
object in writing after the receipt thereof (such objection to be deemed timely
made upon confirmation of telecopy transmission within such period). The
objection of an Initial Purchaser or an underwriter, if any, shall be deemed to
be reasonable if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains an untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein not misleading;

 

(v)           make
reasonably available for inspection by the Initial Purchasers, any managing
underwriter participating in any disposition pursuant to such Registration
Statement and any attorney or accountant retained by such Initial Purchaser or
any of the underwriter(s), all material financial and other records, pertinent
corporate documents and properties of the Issuers and the Guarantors and cause
the Issuers’ and the Guarantors’ officers and employees to supply all
information reasonably requested by any such Holder, underwriter, attorney or
accountant in connection with such Registration Statement subsequent to the
filing thereof and prior to its effectiveness, in each case, as shall be
reasonably necessary to enable such persons to conduct an investigation within
the meaning of Section 11 of the Securities Act; provided,
however, (A) that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by Shearman & Sterling LLP and on behalf of any other parties
by one counsel designated by and on behalf of such other parties as described
in Section 7 hereof, and (B) that any information that is reasonably and in
good faith designated by the Issuers in writing as confidential at the time of
delivery of such information shall be kept confidential by the Initial
Purchasers, the Holders, or any such underwriter, attorney, accountant or other
agent, unless (1) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities, (2) disclosure of such information is required by law (including
any disclosure requirements pursuant to federal securities laws in connection
with the filing of such Registration Statement or the use of any Prospectus),
(3) such information becomes generally available to the public other than as a
result of a disclosure or failure

 

9

 

to safeguard such information by such person or (4)
such information becomes available to such Initial Purchaser, Holder,
underwriter, attorney, accountant or other agent from a source other than the
Issuers and such source is not known, after due inquiry, by the relevant
Initial Purchaser, Holder, underwriter, attorney, accountant or other agent to
be bound by a confidentiality agreement or is not otherwise under a duty of
trust to the Issuers.

 

(vi)          if
requested in writing by any selling Holders or the underwriter(s), if any,
promptly incorporate in any Registration Statement or Prospectus, pursuant to a
supplement or post-effective amendment if necessary, such information as such
selling Holders and underwriter(s), if any, may reasonably request to have
included therein, including, without limitation, information relating to the “Plan
of Distribution” of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being sold to
such underwriter(s), the purchase price being paid therefor and any other terms
of the offering of the Transfer Restricted Securities to be sold in such
offering; and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after the Issuers are notified
of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;

 

(vii)         use commercially reasonable efforts to confirm
that the ratings assigned to the Initial Notes will apply to the Transfer
Restricted Securities covered by the Registration Statement, if so requested by
the Holders of a majority in aggregate principal amount of Notes covered
thereby or the underwriter(s), if any;

 

(viii)        furnish to each selling Holder and each of the
underwriter(s), if any, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment thereto,
including financial statements and schedules and, if requested in writing, all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);

 

(ix)           deliver
to each selling Holder and each of the underwriter(s), if any, without charge,
as many copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably may request; the
Issuers and the Guarantors hereby consent to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto;

 

(x)            enter
into such agreements (including an underwriting agreement), make such
representations and warranties, and take all such other actions in connection
therewith in order to expedite or facilitate the disposition of the Transfer
Restricted Securities pursuant to any Shelf Registration Statement contemplated
by this Agreement, all to such extent as may be reasonably requested by an
Initial Purchaser or by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any Shelf
Registration Statement contemplated by this Agreement; and, whether or not an
underwriting agreement is entered into and whether or not such registration is
an Underwritten Registration, the Issuers and the Guarantors shall:

 

10

 

(A)          furnish
to the Initial Purchasers, each selling Holder and each underwriter, if any, in
such substance and scope as they may request and as are customarily made by
issuers to underwriters in primary underwritten offerings, upon the date of the
effectiveness of the Shelf Registration Statement:

 

(1)           a
certificate, dated the date of the effectiveness of the Shelf Registration
Statement signed by (y) the President or any Vice President and (z) a principal
financial or accounting officer of each of the Issuers, confirming, as of the
date thereof, the matters set forth in paragraphs (i), (ii) and (iii) of
Section 5(e) of the Purchase Agreement and such other matters as such parties
may reasonably request;

 

(2)           an
opinion, dated the date of the effectiveness of the Shelf Registration
Statement of counsel for the Issuers and the Guarantors, in form, scope and
substance reasonably satisfactory to the managing underwriter, addressed to the
underwriters covering the matters customarily covered in opinions, reasonably
requested in underwritten offerings, and in any event including a statement to
the effect that such counsel has participated in conferences with officers and
other representatives of the Issuers and the Guarantors, representatives of the
independent public accountants for the Issuers and the Guarantors, the Initial
Purchasers’ representatives and the Initial Purchasers’ counsel in connection
with the preparation of such Registration Statement and the related Prospectus
and have considered the matters required to be stated therein and the
statements contained therein, although such counsel has not independently
verified the accuracy, completeness or fairness of such statements; and that
such counsel advises that, on the basis of the foregoing (relying as to
materiality to a large extent upon facts provided to such counsel by officers
and other representatives of the Issuers and the Guarantors and without
independent check or verification), no facts came to such counsel’s attention
that caused such counsel to believe that the Shelf Registration Statement, at
the time such Registration Statement or any post-effective amendment thereto
became effective contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus contained in such
Registration Statement as of its date contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. Without limiting the foregoing, such counsel may state
further that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial data included in any
Registration Statement contemplated by this Agreement or the related
Prospectus; and

 

(3)           customary
comfort letters, dated as of the date of the effectiveness of the Shelf
Registration Statement in form, scope and

 

11

 

substance reasonably satisfactory to the managing
underwriter from (a) the Issuers’ and the Guarantors’ independent accountants
and (b) the independent accountants of any other Person for which financial
statements are included in or incorporated by reference in to such Shelf
Registration Statement, in the customary form and covering matters of the type
customarily covered in comfort letters by underwriters in connection with
primary underwritten offerings;

 

(B)           set
forth in full or incorporate by reference in the underwriting agreement, if
any, the indemnification provisions and procedures of Section 8 hereof with
respect to all parties to be indemnified pursuant to said Section; and

 

(C)           deliver
such other documents and certificates as may be reasonably requested by such
parties to evidence compliance with clause (A) above and with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Issuers or the Guarantors pursuant to this clause (x), if any.

 

If at any time the representations and warranties of
the Issuers and the Guarantors contemplated in clause (A)(1) above cease to be
true and correct, the Issuers or the Guarantors shall so advise the Initial
Purchasers and the underwriter(s), if any, and each selling Holder promptly and,
if requested by such Persons, shall confirm such advice in writing;

 

(xi)           prior
to any public offering of Transfer Restricted Securities, cooperate with the
selling Holders, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Transfer Restricted
Securities under the securities or Blue Sky laws of such jurisdictions as the
selling Holders or underwriter(s) may reasonably request and do any and all
other acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however, that neither the Issuers nor the
Guarantors shall be required to register or qualify as a foreign corporation
where it is not then so qualified or to take any action that would subject it
to the service of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction where
it is not then so subject;

 

(xii)          shall issue, upon the request of any Holder
of Initial Notes covered by and sold pursuant to the Shelf Registration
Statement, Exchange Notes, having an aggregate principal amount equal to the
aggregate principal amount of Initial Notes surrendered to the Issuers by such
Holder in exchange therefor; such Exchange Notes to be registered in the name
of the purchaser of such Notes; in return, the Initial Notes held by such
Holder shall be surrendered to the Issuers for cancellation;

 

(xiii)         cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and enable such Transfer Restricted Securities
to be in such denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least two Business Days prior to any
sale of Transfer Restricted Securities made by such underwriter(s);

 

12

 

(xiv)        use commercially reasonable efforts to cause
the Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (viii) above;

 

(xv)         if
any fact or event contemplated by clause (c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;

 

(xvi)        provide a CUSIP number for all Transfer
Restricted Securities not later than the effective date of the Registration
Statement and provide the Trustee under the Indenture with printed certificates
for the Transfer Restricted Securities which are in a form eligible for deposit
with the Depository Trust Issuers;

 

(xvii)       cooperate and assist in any filings required to
be made with the NASD and in the performance of any due diligence investigation
by any underwriter (including any “qualified independent underwriter”) that is required
to be retained in accordance with the rules and regulations of the NASD, and
use their reasonable best efforts to cause such Registration Statement to
become effective and approved by such governmental agencies or authorities as
may be necessary to enable the Holders selling Transfer Restricted Securities
to consummate the disposition of such Transfer Restricted Securities;

 

(xviii)      otherwise use their reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and make
generally available to the Issuers’ security holders, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158 (which
need not be audited) for the twelve-month period (A) commencing at the end of
any fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm or best efforts Underwritten Offering or (B) if not sold
to underwriters in such an offering, beginning with the first month of the
Issuers’ first fiscal quarter commencing after the effective date of the
Registration Statement;

 

(xix)         cause the Indenture to be qualified under the
Trust Indenture Act not later than the effective date of the first Registration
Statement required by this Agreement, and, in connection therewith, cooperate
with, and cause the Guarantors to cooperate with, the Trustee and the Holders
of Notes to effect such changes to the Indenture as may be required for such
Indenture to be so qualified in accordance with the terms of the Trust
Indenture Act; and to execute, and cause the Guarantors to execute, and use
their reasonable best efforts to cause the Trustee to execute, all documents
that may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and

 

(xx)          provide
promptly to each Holder upon request each document filed with the Commission
pursuant to the requirements of Section 13 and Section 15 of the Exchange Act.

 

13

 

Each
Holder shall agree by acquisition of a Transfer Restricted Security that, upon
receipt of any notice from the Issuers of the existence of any fact of the kind
described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder’s receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing (the “Advice”) by the Issuers that the
use of the Prospectus may be resumed, and has received copies of any additional
or supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Issuers, each Holder will deliver to the Issuers (at the
Issuers’ expense) all copies, other than permanent file copies then in such
Holder’s possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Issuers shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4
hereof, as applicable, shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or
shall have received the Advice; however, no such extension shall be taken into
account in determining whether Additional Interest is due pursuant to Section 5
hereof or the amount of such Additional Interest.

 

SECTION
7. Registration Expenses.

 

(a)           All expenses incident
to the Issuers’ or the Guarantors’ performance of or compliance with this
Agreement will be borne by the Issuers and the Guarantors, regardless of
whether a Registration Statement becomes effective, including without limitation:  (i) all registration and filing fees and
expenses (including filings made by the Initial Purchasers or Holders with the
NASD (and, if applicable, the fees and expenses of any “qualified independent
underwriter” and its counsel that may be required by the rules and regulations
of the NASD)); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing
(including printing of Prospectuses), messenger and delivery services and
telephone; (iv) all fees and disbursements of counsel for the Issuers, the
Guarantors and, subject to Section 7(b) below, the Holders of Transfer
Restricted Securities; (v) all fees and disbursements of independent certified
public accountants of the Issuers and the Guarantors (including the expenses of
any special audit and comfort letters required by or incident to such
performance); and (vi) all fees and expenses of the trustee and the
exchange agent and their counsel.

 

The
Issuers and the Guarantors will, in any event, bear their internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expenses of any annual
audit and the fees and expenses of any Person, including special experts,
retained by the Issuers or the Guarantors.

 

(b)           In connection with any
Shelf Registration Statement required by this Agreement, the Issuers and the
Guarantors will reimburse the Initial Purchasers and the Holders of Transfer
Restricted Securities being registered pursuant to the Shelf Registration
Statement, as applicable, for the reasonable fees and disbursements of not more
than one counsel, who shall be Shearman & Sterling LLP or such other
counsel as may be chosen by the Holders of a majority in principal amount of
the Transfer Restricted Securities for whose benefit such Shelf Registration
Statement is being prepared.

 

14

 

SECTION
8. Indemnification.

 

(a)           The Issuers agrees and
the Guarantors, jointly and severally, agree to indemnify and hold harmless (i)
each Holder and (ii) each person, if any, who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder
(any of the persons referred to in this clause (ii) being hereinafter referred
to as a “controlling person”) and (iii) the respective officers,
directors, partners,employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an “Indemnified Holder”), to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, judgments, actions and expenses (including without limitation and
as incurred, reimbursement of all reasonable costs of investigating, preparing,
pursuing, settling, compromising, paying or defending any claim or action, or
any investigation or proceeding by any governmental agency or body, commenced
or threatened, including the reasonable fees and expenses of counsel to any
Indemnified Holder), joint or several, directly or indirectly caused by,
related to, based upon, arising out of or in connection with any untrue
statement or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except (i) insofar as such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or omission or alleged untrue statement or
omission that is made in reliance upon and in conformity with information
relating to any of the Holders furnished in writing to the Issuers and the
Guarantors by any of the Holders expressly for use therein and (ii) with
respect to any untrue statement or omission or alleged untrue statement or
omission of material fact made in any preliminary prospectus relating to a Shelf
Registration Statement, the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any Holder from whom the Person asserting
any such losses, claims, damages, or liabilities purchased the Notes concerned
if the Issuers or the Guarantors sustain the burden of proving that (x) a
prospectus relating to such Notes was required to be delivered by such Holder
under the Securities Act in connection with such purchase, (y) such Holder sold
the Notes to a Person whom such Holder failed to send or give, at or prior to
the written confirmation of the sale of such Notes, a copy of the final
prospectus (as amended or supplemented) and (z) any loss, claim, damage or
liability of such Holder results solely from an untrue statement or omission or
alleged untrue statement or omission of material fact contained in or omitted
from such preliminary prospectus which was corrected in the final prospectus
and such final prospectus was provided by the Issuers and the Guarantors to
such Holder sufficiently in advance of the closing of such sale to allow for
distribution of the final prospectus in a timely manner. This indemnity
agreement shall be in addition to any liability which the Issuers or any
Guarantor may otherwise have.

 

In
case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Issuers or any Guarantor, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Issuers and
the Guarantors in writing (provided that
the failure to give such notice shall not relieve the Issuers or the Guarantors
of their respective obligations pursuant to this Agreement except to the extent
they are materially prejudiced as a proximate result of such failure). In case
any such action is brought against any Indemnified Holder and such Indemnified
Holder seeks or intends to seek indemnity from the Issuers or the Guarantors,
the Issuers or the Guarantors will

 

15

 

be entitled to participate in and, to the extent that
it shall elect, jointly with all other indemnifying parties similarly notified,
by written notice delivered to the Indemnified Holder promptly after receiving
the aforesaid notice from such Indemnified Holder, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Holder;
provided, however, if the defendants in any such action include both the
Indemnified Holder and the Issuers or the Guarantor and the Indemnified Holder
shall have reasonably concluded (based on the advice of counsel) that a
conflict may arise between the positions of the Issuers or the Guarantors and
the Indemnified Holder in conducting the defense of any such action or that
there may be legal defenses available to it and/or other Indemnified Holders
which are different from or additional to those available to the Issuers or the
Guarantors, the Indemnified Holder or Holders shall have the right to select
separate counsel to assume such legal defenses and to otherwise participate in
the defense of such action on behalf of such Indemnified Holder or Holders. Upon
receipt of notice from the Issuers or Guarantors to such Indemnified Holder of
the Issuers’ or the Guarantors’ election so to assume the defense of such
action and approval by the Indemnified Holder of counsel, the Issuers or the
Guarantors will not be liable to such Indemnified Holder under this Section 8
for any legal or other expenses subsequently incurred by such Indemnified
Holder in connection with the defense thereof unless (i) the Indemnified Holder
shall have employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Issuers or the
Guarantors shall not be liable for the expenses of more than one separate
counsel (together with local counsel), approved by the Issuers or the
Guarantors, representing the Indemnified Holders who are parties to such
action) or (ii) the Issuers or the Guarantors shall not have employed counsel
satisfactory to the Indemnified Holder to represent the Indemnified Holder
within a reasonable time after notice of commencement of the action, in each of
which cases the fees and expenses of counsel shall be at the expense of the
Issuers or the Guarantors. It is understood and agreed that the Issuers or the
Guarantors shall not, in connection with any proceeding or related proceeding
in the same jurisdiction, be liable for the reasonable fees and expenses of
more than one separate firm (together with any local counsel) for all
Indemnified Holders. Each Indemnified Holder, as a condition to indemnification
hereunder, shall use all reasonable efforts to cooperate with the Issuers or
the Guarantors in the defense of any such action or claim. The Issuers shall
not be liable for any settlement of any such action or proceeding effected
without the Issuers’ prior written consent, but if settled with such consent or
there be a final judgment for the plaintiff, the Issuers and the Guarantors
agree to indemnify and hold harmless any Indemnified Holder from and against
any loss, claim, damage, liability or expense by reason of such settlement or
judgment. The Issuers and the Guarantors shall not, without the prior written
consent of each Indemnified Holder, settle or compromise or consent to the
entry of judgment in or otherwise seek to terminate any pending or threatened
action, claim, litigation or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not any Indemnified Holder is
a party thereto), unless such settlement, compromise, consent or termination
includes an unconditional release of each Indemnified Holder from all liability
arising out of such action, claim, litigation or proceeding.

 

(b)           Each Holder of Transfer
Restricted Securities shall, severally and not jointly, indemnify and hold
harmless the Issuers, the Guarantors and their respective officers, directors,
partners, employees, representatives and agents, and any person controlling
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) the Issuers and the Guarantors, and the respective officers,
directors, partners, employees, representatives and agents of each such person,
to the same extent as the foregoing indemnity from the Issuers and the

 

16

 

Guarantors to each of the Indemnified Holders, but
only with respect to claims and actions based on information relating to such
Holder furnished in writing by such Holder expressly for use in any
Registration Statement. In case any action or proceeding shall be brought
against the Issuers, the Guarantors, any such controlling person, or their
respective officers, directors, partners, employees, representatives and agents
in respect of which indemnity may be sought against a Holder of Transfer
Restricted Securities, such Holder shall have the rights and duties given the
Issuers and the Guarantors and the Issuers, the Guarantors, such controlling
person and their respective officers, directors, partners, employees,
representatives and agents shall have the rights and duties given to each
Indemnified Holder by Section 8(a). In no event shall the liability of any
selling Holder hereunder be greater in amount than the dollar amount of the
proceeds received by such Holder upon the sale of the Notes giving rise to such
indemnification obligation.

 

(c)           If the indemnification provided for
in this Section 8 is unavailable to an indemnified party under Section 8(a) or
Section 8(b) hereof (other than by reason of exceptions provided in those
Sections, including by reason of failure to notify the Issuers and the
Guarantors of indemnification obligations thereunder to the extent that they
are materially prejudiced as a proximate result of such failure) in respect of
any losses, claims, damages, liabilities, judgments, actions or expenses
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to reflect the
relative benefits received by the Issuers and the Guarantors, on the one hand,
and the Holders, on the other hand, from the Initial Placement (which in the
case of the Issuers shall be deemed to be equal to the total gross proceeds
from the Initial Placement as set forth on the cover page of the Offering
Memorandum) or if such allocation is not permitted by applicable law, the
relative fault of the Issuers and the Guarantors on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
fault of the Issuers on the one hand and of the Indemnified Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Issuers or by
the Indemnified Holder and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in the second paragraph of Section 8(a), any legal
or other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.

 

The
Issuers and the Guarantors agree and each Holder of Transfer Restricted
Securities shall agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the

 

17

 

provisions of this Section 8, none of the Holders (and
its related Indemnified Holders) shall be required to contribute, in the
aggregate, any amount in excess of the amount by which the net proceeds
received by such Holder from the sale of the Notes pursuant to a Registration
Statement exceeds the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. 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 Holders’ obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Initial Notes held by each of the Holders hereunder and not joint.

 

SECTION
9. Rule 144A. The Issuers and the
Guarantors each hereby agrees with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available to any Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
from such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Securities Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.

 

SECTION
10. Participation in Underwritten Registrations. No
Holder may participate in any Underwritten Registration hereunder unless such
Holder (a) agrees to sell such Holder’s Transfer Restricted Securities on the
basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of
such underwriting arrangements.

 

SECTION
11. Selection of Underwriters. The Holders
of Transfer Restricted Securities covered by the Shelf Registration Statement
who desire to do so may sell such Transfer Restricted Securities in an
Underwritten Offering. In any such Underwritten Offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
the Transfer Restricted Securities included in such offering; provided that such investment bankers and managers must be
reasonably satisfactory to the Issuers.

 

SECTION
12. Miscellaneous.

 

(a)           Remedies. The
Issuers and the Guarantors each hereby agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agree to waive the defense in any
action for specific performance that a remedy at law would be adequate.

 

(b)           No Inconsistent Agreements.
The Issuers will not, and will cause the Guarantors not to, on or
after the date of this Agreement enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. Neither the
Issuers nor any of the Guarantors has entered into any agreement granting any
registration rights with respect to its securities to any Person pursuant to
which any such Person would have the right to include any securities in any
Registration Statement to be filed with the Commission as required under this
Agreement. The rights granted to the Holders hereunder do not in any way conflict
with and are not inconsistent

 

18

 

with the rights granted to the holders of the Issuers’
securities under any agreement in effect on the date hereof.

 

(c)           Adjustments Affecting the
Notes. The Issuers and the Guarantors will not take any action, or
permit any change to occur, with respect to the Notes that would materially and
adversely affect their ability to Consummate the Exchange Offer.

 

(d)           Amendments and Waivers. The
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof may not be
given unless the Issuers have obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does not
affect directly or indirectly the rights of other Holders whose securities are
not being tendered pursuant to such Exchange Offer may be given by the Holders
of a majority of the outstanding principal amount of Transfer Restricted
Securities being tendered or registered; provided that, with respect to any
matter that directly or indirectly affects the rights of the Initial Purchasers
hereunder, the Issuers shall obtain the written consent of the Initial
Purchasers with respect to which such amendment, qualification, supplement,
waiver, consent or departure is to be effective.

 

(e)           Notices. All
notices and other communications provided for or permitted hereunder shall be
made in writing by hand-delivery, first-class mail (registered or certified,
return receipt requested), telex, telecopier, or air courier guaranteeing
overnight delivery:

 

(i)            if
to a Holder, at the address set forth on the records of the Registrar under the
Indenture, with a copy to the Registrar under the Indenture; and

 

(ii)           If to the Initial Purchasers:

 

c/o Banc of America
Securities LLC

9 West 57th Street

New York, New York 10019

Facsimile:  (212) 583-8567

Attention:  Legal Department

 

with a copy to:

 

Shearman & Sterling
LLP

599 Lexington Avenue

New York, New York 10022

Facsimile:  (646) 848-7293

Attention:  Andrew R. Schleider

 

If to the Issuers or the
Guarantors:

 

c/o Encore Medical
Corporation

9800 Metric Blvd.

Austin, Texas 78758

 

19

 

Facsimile:  (512) 832-6310

Attention:  Harry L. Zimmerman

 

with a copy to:

 

Simpson Thacher &
Bartlett LLP

425 Lexington Avenue

New York, New York 10017

Facsimile:  (212) 455-2502

Attention:  Richard Fenyes

 

All
such notices and communications shall be deemed to have been duly given:  at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and on the next Business Day, if timely delivered to an air
courier guaranteeing overnight delivery.

 

Copies
of all such notices, demands or other communications shall be concurrently
delivered by the Person giving the same to the Trustee at the address specified
in the Indenture.

 

(f)            Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including without limitation and without the
need for an express assignment, subsequent Holders of Transfer Restricted
Securities; provided, however, that this Agreement
shall not inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign acquired Transfer
Restricted Securities from such Holder.

 

(g)           Counterparts. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

 

(h)           Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

(i)            Governing Law. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.

 

(j)            Severability. In
the event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

 

(k)           Entire Agreement. This
Agreement together with the Purchase Agreement and the Indenture (as defined in
the Purchase Agreement) is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth

 

20

 

or referred to herein with respect to the registration
rights granted by the Issuers and the Guarantors with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.

 

21

 

IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
written above.

 

 

	
   

  	
  ENCORE
  MEDICAL FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENCORE
  MEDICAL FINANCE CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENCORE
  MEDICAL LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENCORE
  MEDICAL, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  

 

22

 

	
   

  	
  ENCORE
  MEDICAL IHC, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENCORE
  MEDICAL ASSET CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENCORE
  MEDICAL GP, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ENCORE
  MEDICAL PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPI,
  INC.

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary and Assistant Treasurer

  

 

Registration Rights Agreement

 

 

	
   

  	
  EMPI
  CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary, Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPI
  SALES CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary, Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPEX
  TECHNOLOGIES LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary, Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECTRA
  BRACE, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/
  Harry L. Zimmerman

  	
   

  
	
   

  	
  Name:
  Harry L. Zimmerman

  
	
   

  	
  Title: Executive Vice President-General Counsel,
  Secretary, Assistant Treasurer

  

 

Registration Rights Agreement

 

 

The
foregoing Registration Rights Agreement is hereby confirmed and accepted as of
the date first above written:

 

 

BANC OF AMERICA SECURITIES LLC

CREDIT SUISSE SECURITIES (USA) LLC

 

 

By:
BANK OF AMERICA SECURITIES LLC

On behalf of itself and the other Initial Purchaser

 

 

	
  By

  	
  /s/ Lex Maultsby

  	
   

  
	
   

  	
  Authorized Signatory

  

 

 

Registration
Rights Agreement

 

 

SCHEDULE A

 

Guarantors

 

	
  Subsidiary

  	
   

  	
  Jurisdiction of Organization

  
	
  Encore Medical Finance Corp.

  	
   

  	
  Delaware

  
	
  Encore Medical LLC

  	
   

  	
  Delaware

  
	
  Encore Medical, L.P.

  	
   

  	
  Delaware

  
	
  Encore Medical IHC, Inc.

  	
   

  	
  Delaware

  
	
  Encore Medical Asset Corporation

  	
   

  	
  Nevada

  
	
  Encore Medical GP, Inc.

  	
   

  	
  Nevada

  
	
  Encore Medical Partners, Inc.

  	
   

  	
  Nevada

  
	
  Empi, Inc.

  	
   

  	
  Minnesota

  
	
  Empi Corp.

  	
   

  	
  Minnesota

  
	
  Empi Sales Corp.

  	
   

  	
  Minnesota

  
	
  Compex Technologies LLC

  	
   

  	
  Minnesota

  
	
  Spectra Brace, Ltd.

  	
   

  	
  Kentucky

  
	
  Empi Europe GmbH

  	
   

  	
  Germany

  
	
  Empi Germany GmbH

  	
   

  	
  Germany

  
	
  Ormed GmbH & Co. Kg

  	
   

  	
  Germany

  
	
  Ormed Ortho GmbH

  	
   

  	
  Germany

  
	
  Chattanooga Europe, B.V.B.A.

  	
   

  	
  Belgium

  
	
  Compex SA

  	
   

  	
  Switzerland

  
	
  Compex Medical SA

  	
   

  	
  Switzerland

  
	
  Compex Sport SA

  	
   

  	
  Switzerland

  
	
  Compex SAS

  	
   

  	
  France

  
	
  Compex Medical GmbH

  	
   

  	
  Germany

  
	
  Medi-Compex Iberica Srl

  	
   

  	
  Spain

  
	
  Compex Italia Srl

  	
   

  	
  Italy

  
	
  Encore Orthopedics FSC Limited

  	
   

  	
  Jamaica

  
	
  Ormed spol s.r.o.

  	
   

  	
  CzechoslovakiaExhibit 4.3

 

EXECUTION VERSION

 

 

 

 

 

CREDIT AGREEMENT

 

Dated as of November 3, 2006

 

among

 

ENCORE MEDICAL FINANCE
LLC,

as Borrower,

 

ENCORE MEDICAL HOLDINGS
LLC,

 

BANK OF AMERICA, N.A.,

as Administrative Agent, Swing Line Lender and L/C Issuer,

 

THE OTHER LENDERS PARTY
HERETO,

 

CREDIT SUISSE SECURITIES
(USA) LLC,

as Syndication Agent,

 

GENERAL ELECTRIC CAPITAL
CORPORATION,

as Documentation Agent,

 

and

 

BANC OF AMERICA
SECURITIES LLC and

CREDIT SUISSE SECURITIES (USA) LLC,

as Lead Arrangers and Book Runners

 

 

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
   

  	
   

  
	
  Definitions and
  Accounting Terms

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01 Defined
  Terms

  	
   

  	
  3

  
	
  SECTION 1.02 Other
  Interpretive Provisions

  	
   

  	
  45

  
	
  SECTION 1.03 Accounting
  Terms

  	
   

  	
  45

  
	
  SECTION 1.04 Rounding

  	
   

  	
  46

  
	
  SECTION 1.05 References
  to Agreements, Laws, Etc

  	
   

  	
  46

  
	
  SECTION 1.06 Times of
  Day

  	
   

  	
  46

  
	
  SECTION 1.07 Timing of
  Payment of Performance

  	
   

  	
  46

  
	
  SECTION 1.08 Currency
  Equivalents Generally

  	
   

  	
  46

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
   

  
	
  The Commitments and
  Credit Extensions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01 The Loans

  	
   

  	
  47

  
	
  SECTION 2.02
  Borrowings, Conversions and Continuations of Loans

  	
   

  	
  47

  
	
  SECTION 2.03 Letters of
  Credit

  	
   

  	
  49

  
	
  SECTION 2.04 Swing Line
  Loans

  	
   

  	
  57

  
	
  SECTION 2.05
  Prepayments

  	
   

  	
  60

  
	
  SECTION 2.06
  Termination or Reduction of Commitments

  	
   

  	
  63

  
	
  SECTION 2.07 Repayment
  of Loans

  	
   

  	
  64

  
	
  SECTION 2.08 Interest

  	
   

  	
  64

  
	
  SECTION 2.09 Fees

  	
   

  	
  65

  
	
  SECTION 2.10
  Computation of Interest and Fees

  	
   

  	
  65

  
	
  SECTION 2.11 Evidence
  of Indebtedness

  	
   

  	
  66

  
	
  SECTION 2.12 Payments
  Generally

  	
   

  	
  66

  
	
  SECTION 2.13 Sharing of
  Payments

  	
   

  	
  68

  
	
  SECTION 2.14
  Incremental Credit Extensions

  	
   

  	
  69

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  	
   

  
	
  Taxes, Increased Costs
  Protection and Illegality

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01 Taxes

  	
   

  	
  71

  
	
  SECTION 3.02 Illegality

  	
   

  	
  73

  
	
  SECTION 3.03 Inability
  to Determine Rates

  	
   

  	
  74

  
	
  SECTION 3.04 Increased
  Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans

  	
   

  	
  74

  
	
  SECTION 3.05 Funding
  Losses

  	
   

  	
  75

  
	
  SECTION 3.06 Matters
  Applicable to All Requests for Compensation

  	
   

  	
  76

  
	
  SECTION 3.07
  Replacement of Lenders under Certain Circumstances

  	
   

  	
  77

  
	
  SECTION 3.08 Survival

  	
   

  	
  78

  

 

i

 

	
  ARTICLE IV

  	
   

  	
   

  
	
  Conditions Precedent to
  Credit Extensions

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01 Conditions
  of Initial Credit Extension

  	
   

  	
  78

  
	
  SECTION 4.02 Conditions
  to All Credit Extensions

  	
   

  	
  81

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
   

  
	
  Representations and
  Warranties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01 Existence,
  Qualification and Power; Compliance with Laws

  	
   

  	
  82

  
	
  SECTION 5.02
  Authorization; No Contravention

  	
   

  	
  82

  
	
  SECTION 5.03
  Governmental Authorization; Other Consents

  	
   

  	
  82

  
	
  SECTION 5.04 Binding
  Effect

  	
   

  	
  82

  
	
  SECTION 5.05 Financial
  Statements; No Material Adverse Effect

  	
   

  	
  83

  
	
  SECTION 5.06 Litigation

  	
   

  	
  84

  
	
  SECTION 5.07 No Default

  	
   

  	
  84

  
	
  SECTION 5.08 Ownership
  of Property; Liens

  	
   

  	
  84

  
	
  SECTION 5.09
  Environmental Compliance

  	
   

  	
  84

  
	
  SECTION 5.10 Taxes

  	
   

  	
  85

  
	
  SECTION 5.11 ERISA
  Compliance

  	
   

  	
  85

  
	
  SECTION 5.12
  Subsidiaries; Equity Interests

  	
   

  	
  86

  
	
  SECTION 5.13 Margin
  Regulations; Investment Company Act

  	
   

  	
  86

  
	
  SECTION 5.14 Disclosure

  	
   

  	
  86

  
	
  SECTION 5.15 Solvency

  	
   

  	
  87

  
	
  SECTION 5.16
  Subordination of Junior Financing

  	
   

  	
  87

  
	
  SECTION 5.17 Labor
  Matters

  	
   

  	
  87

  
	
  SECTION 5.18 Food and
  Drug

  	
   

  	
  87

  
	
  SECTION 5.19 Clinical
  Trials

  	
   

  	
  87

  
	
  SECTION 5.20 State Food
  and Drug Laws

  	
   

  	
  87

  
	
  SECTION 5.21 HIPAA

  	
   

  	
  88

  
	
  SECTION 5.22 Medicare,
  Medicaid and Fraud and Abuse

  	
   

  	
  88

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
   

  
	
  Affirmative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01 Financial
  Statements

  	
   

  	
  88

  
	
  SECTION 6.02
  Certificates; Other Information

  	
   

  	
  90

  
	
  SECTION 6.03 Notices

  	
   

  	
  92

  
	
  SECTION 6.04 Payment of
  Obligations

  	
   

  	
  92

  
	
  SECTION 6.05
  Preservation of Existence, Etc

  	
   

  	
  92

  
	
  SECTION 6.06
  Maintenance of Properties

  	
   

  	
  92

  
	
  SECTION 6.07
  Maintenance of Insurance

  	
   

  	
  93

  
	
  SECTION 6.08 Compliance
  with Laws

  	
   

  	
  93

  
	
  SECTION 6.09 Books and
  Records

  	
   

  	
  93

  
	
  SECTION 6.10 Inspection
  Rights

  	
   

  	
  93

  
	
  SECTION 6.11 Covenant
  to Guarantee Obligations and Give Security

  	
   

  	
  93

  
	
  SECTION 6.12 Compliance
  with Environmental Laws

  	
   

  	
  95

  

 

ii

 

	
  SECTION 6.13 Further
  Assurances

  	
   

  	
  95

  
	
  SECTION 6.14
  Designation of Subsidiaries

  	
   

  	
  96

  
	
  SECTION 6.15 Compliance
  with FDA Laws

  	
   

  	
  97

  
	
  SECTION 6.16 Compliance
  with HIPAA and Fraud and Abuse Laws

  	
   

  	
  97

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
   

  
	
  Negative Covenants

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 7.01 Liens

  	
   

  	
  97

  
	
  SECTION 7.02
  Investments

  	
   

  	
  100

  
	
  SECTION 7.03
  Indebtedness

  	
   

  	
  103

  
	
  SECTION 7.04
  Fundamental Changes

  	
   

  	
  107

  
	
  SECTION 7.05
  Dispositions

  	
   

  	
  109

  
	
  SECTION 7.06 Restricted
  Payments

  	
   

  	
  110

  
	
  SECTION 7.07 Change in
  Nature of Business

  	
   

  	
  113

  
	
  SECTION 7.08
  Transactions with Affiliates

  	
   

  	
  113

  
	
  SECTION 7.09 Burdensome
  Agreements

  	
   

  	
  113

  
	
  SECTION 7.10 Use of
  Proceeds

  	
   

  	
  114

  
	
  SECTION 7.11 Financial
  Covenants

  	
   

  	
  114

  
	
  SECTION 7.12 Accounting
  Changes

  	
   

  	
  115

  
	
  SECTION 7.13
  Prepayments, Etc. of Indebtedness

  	
   

  	
  115

  
	
  SECTION 7.14 Equity
  Interests of the Company and Restricted Subsidiaries

  	
   

  	
  116

  
	
  SECTION 7.15 Holding
  Company

  	
   

  	
  116

  
	
  SECTION 7.16 Capital
  Expenditures.

  	
   

  	
  116

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  	
   

  
	
  Events Of Default and
  Remedies

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 8.01 Events of
  Default

  	
   

  	
  117

  
	
  SECTION 8.02 Remedies
  Upon Event of Default

  	
   

  	
  119

  
	
  SECTION 8.03 Exclusion
  of Immaterial Subsidiaries

  	
   

  	
  120

  
	
  SECTION 8.04
  Application of Funds

  	
   

  	
  120

  
	
  SECTION 8.05 Company’s
  Right to Cure

  	
   

  	
  121

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  	
   

  
	
  Administrative Agent
  and Other Agents

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01
  Appointment and Authorization of Agents

  	
   

  	
  122

  
	
  SECTION 9.02 Delegation
  of Duties

  	
   

  	
  123

  
	
  SECTION 9.03 Liability
  of Agents

  	
   

  	
  123

  
	
  SECTION 9.04 Reliance
  by Agents

  	
   

  	
  123

  
	
  SECTION 9.05 Notice of
  Default

  	
   

  	
  124

  
	
  SECTION 9.06 Credit
  Decision; Disclosure of Information by Agents

  	
   

  	
  124

  
	
  SECTION 9.07
  Indemnification of Agents

  	
   

  	
  125

  
	
  SECTION 9.08 Agents in
  their Individual Capacities

  	
   

  	
  125

  
	
  SECTION 9.09 Successor
  Agents

  	
   

  	
  126

  
	
  SECTION 9.10
  Administrative Agent May File Proofs of Claim

  	
   

  	
  126

  

 

iii

 

	
  SECTION 9.11 Collateral
  and Guaranty Matters

  	
   

  	
  127

  
	
  SECTION 9.12 Other
  Agents; Arrangers and Managers

  	
   

  	
  128

  
	
  SECTION 9.13
  Appointment of Supplemental Administrative Agents

  	
   

  	
  128

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  	
   

  
	
  Miscellaneous

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 10.01
  Amendments, Etc

  	
   

  	
  129

  
	
  SECTION 10.02 Notices
  and Other Communications; Facsimile Copies

  	
   

  	
  131

  
	
  SECTION 10.03 No
  Waiver; Cumulative Remedies

  	
   

  	
  132

  
	
  SECTION 10.04 Attorney
  Costs, Expenses and Taxes

  	
   

  	
  132

  
	
  SECTION 10.05
  Indemnification by the Company

  	
   

  	
  133

  
	
  SECTION 10.06 Payments
  Set Aside

  	
   

  	
  134

  
	
  SECTION 10.07
  Successors and Assigns

  	
   

  	
  134

  
	
  SECTION 10.08
  Confidentiality

  	
   

  	
  138

  
	
  SECTION 10.09 Setoff

  	
   

  	
  139

  
	
  SECTION 10.10 Interest
  Rate Limitation

  	
   

  	
  139

  
	
  SECTION 10.11
  Counterparts

  	
   

  	
  140

  
	
  SECTION 10.12
  Integration

  	
   

  	
  140

  
	
  SECTION 10.13 Survival
  of Representations and Warranties

  	
   

  	
  140

  
	
  SECTION 10.14
  Severability

  	
   

  	
  140

  
	
  SECTION 10.15 Tax Forms

  	
   

  	
  140

  
	
  SECTION 10.16 No
  Advisory or Fiduciary Responsibility

  	
   

  	
  142

  
	
  SECTION 10.17 GOVERNING
  LAW

  	
   

  	
  143

  
	
  SECTION 10.18 WAIVER OF
  RIGHT TO TRIAL BY JURY

  	
   

  	
  143

  
	
  SECTION 10.19 Binding
  Effect

  	
   

  	
  144

  
	
  SECTION 10.20
  Electronic Execution of Assignments

  	
   

  	
  144

  
	
  SECTION 10.21 USA
  PATRIOT Act

  	
   

  	
  144

  

 

iv

 

	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  Guarantors

  
	
  1.01A

  	
   

  	
  Unrestricted Subsidiaries

  
	
  1.01B

  	
   

  	
  Mortgaged Properties

  
	
  1.01C

  	
   

  	
  Excluded Subsidiaries

  
	
  1.01D

  	
   

  	
  Foreign Subsidiaries

  
	
  2.01

  	
   

  	
  Commitments

  
	
  4.01(a)(x)

  	
   

  	
  Assets at Encore Medical

  
	
  5.08

  	
   

  	
  Real Property

  
	
  5.09

  	
   

  	
  Environmental Matters

  
	
  5.10

  	
   

  	
  Taxes

  
	
  5.11

  	
   

  	
  ERISA Compliance

  
	
  5.12

  	
   

  	
  Subsidiaries and Other Equity Investments

  
	
  5.18

  	
   

  	
  Food and Drug

  
	
  5.20

  	
   

  	
  State Food and Drug Laws

  
	
  7.01(b)

  	
   

  	
  Existing Liens

  
	
  7.02(f)

  	
   

  	
  Existing Investments

  
	
  7.03(b)

  	
   

  	
  Existing Indebtedness

  
	
  7.05(l)

  	
   

  	
  Dispositions

  
	
  7.08

  	
   

  	
  Transactions with Affiliates

  
	
  7.09

  	
   

  	
  Existing Restrictions

  
	
  10.02

  	
   

  	
  Administrative Agent’s Office, Certain Addresses for
  Notices

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Form of

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Loan Notice

  
	
  B

  	
   

  	
  Swing Line Loan Notice

  
	
  C-1

  	
   

  	
  Term Note

  
	
  C-2

  	
   

  	
  Revolving Credit Note

  
	
  D

  	
   

  	
  Compliance Certificate

  
	
  E

  	
   

  	
  Assignment and Assumption

  
	
  F

  	
   

  	
  Guaranty

  
	
  G-1

  	
   

  	
  Security Agreement

  
	
  G-2

  	
   

  	
  Intellectual Property Security Agreement

  
	
  H

  	
   

  	
  Deed of Trust

  
	
  I

  	
   

  	
  Opinion Matters — Counsel to Loan Parties

  

 

i

 

CREDIT AGREEMENT

 

This
CREDIT AGREEMENT (“Agreement”)
dated as of November 3, 2006, among ENCORE MEDICAL FINANCE LLC, a Delaware
limited liability company, (the “Company”),
ENCORE MEDICAL HOLDINGS LLC, a Delaware limited liability company (“Holdings”), BANK OF AMERICA, N.A., as Administrative Agent,
Swing Line Lender and an L/C Issuer, each lender from time to time party hereto
(collectively, the “Lenders” and
individually, a “Lender”), BANC OF AMERICA
SECURITIES LLC, as Arranger and Book Runner, CREDIT SUISSE SECURITIES (USA)
LLC, as Arranger, Book Runner and Syndication Agent, and GENERAL ELECTRIC
CAPITAL CORPORATION, as Documentation Agent.

 

Pursuant
to the Merger Agreement (as this and other capitalized terms used in these
preliminary statements are defined in Section 1.01 below), Merger Sub shall be
merged with Encore Medical, with Encore Medical as the surviving corporation
(the “Merger”).

 

The
Company has requested that simultaneously with the consummation of the Merger,
the Lenders extend credit to the Company in the form of (i) Term Loans in an
initial aggregate amount of $350,000,000 and (ii) a Revolving Credit Facility
in an initial aggregate amount of $50,000,000. The Revolving Credit Facility
will include a sub-limit for the making of one or more Swing Line Loans and for
the issuance of one or more Letters of Credit from time to time.

 

The
proceeds of the Term Loans in an aggregate amount of $340,000,000 and the
Revolving Credit Loans made on the Closing Date, together with the proceeds of
(i) the issuance of the New Notes and (ii) the Equity Contribution, will be
used to finance the Debt Prepayment and to pay the Merger Consideration and the
Transaction Expenses. The proceeds of the Term Loans in an aggregate amount of
$10,000,000 will be used to finance a portion of the acquisition (the “Post-Closing Acquisition”) of a privately-held medical
device company located outside of the United States and to pay fees and
expenses incurred in connection therewith. The Post-Closing Acquisition is
expected to close by November 30, 2006. The proceeds of Revolving Credit Loans
incurred on or after the Closing Date will be used for working capital and
other general corporate purposes of the Company and its Subsidiaries, including
the financing of Permitted Acquisitions. Swing Line Loans and Letters of Credit
will be used for general corporate purposes of the Company and its
Subsidiaries.

 

The
applicable Lenders have indicated their willingness to lend, and the L/C
Issuers have indicated their willingness to issue Letters of Credit, in each
case, on the terms and subject to the conditions set forth herein.

 

In
consideration of the mutual covenants and agreements herein contained, the
parties hereto covenant and agree as follows:

 

2

 

ARTICLE I

 

Definitions and Accounting Terms

 

SECTION
1.01  Defined Terms. As used in
this Agreement, the following terms shall have the meanings set forth below:

 

“Acquired Annual Capital Expenditure Amount” has the meaning
set forth in Section 7.16(a).

 

“Acquired EBITDA” means, with respect to any Acquired Entity
or Business or any Converted Restricted Subsidiary for any period, the amount
for such period of Consolidated EBITDA of such Acquired Entity or Business or
such Converted Restricted Subsidiary (determined as if references to the
Company and the Restricted Subsidiaries in the definition of Consolidated
EBITDA were references to such Acquired Entity or Business and its Subsidiaries
or to such Converted Restricted Subsidiary and its Subsidiaries), all as
determined on a consolidated basis for such Acquired Entity or Business.

 

“Acquired Entity or Business” has the meaning set forth in
the definition of the term “Consolidated EBITDA”.

 

“Act” has the meaning set forth in Section 10.21.

 

“Additional Lender” has the meaning set forth in Section
2.14(a).

 

“Administrative Agent” means Bank of America, N.A., in its
capacity as administrative agent under any of the Loan Documents, or any
successor administrative agent.

 

“Administrative Agent’s Office” means the Administrative
Agent’s address and, as appropriate, account as set forth on Schedule 10.02 or
such other address or account as the Administrative Agent may from time to time
notify the Company and the Lenders.

 

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

 

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

 

“Agent-Related Persons” means the Agents, together with their
respective Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.

 

3

 

“Agents” means, collectively, the Administrative Agent, the
Collateral Agent, the Syndication Agent, the Documentation Agent and the
Supplemental Administrative Agents (if any).

 

“Aggregate Commitments” means the Commitments of all the
Lenders.

 

“Aggregate Credit Exposures” means, at any time, the sum of
(a) the unused portion of each Revolving Credit Commitment then in effect and
(b) the Total Outstandings at such time.

 

“Agreement” has the meaning set forth in the introductory
paragraph hereof.

 

“Applicable Rate” means (a) until delivery of financial
statements for the first full fiscal quarter commencing on or after the Closing
Date pursuant to Section 6.01, 2.50% per annum in the case of Eurodollar Rate
Loans and Letter of Credit fees, 1.50% per annum in the case of Base Rate Loans
and 0.50% per annum in the case of Commitment Fees and (b) thereafter (i) in
the case of the Term Loans, 2.50% per annum in the case of Eurodollar Rate
Loans and 1.50% per annum in the case of Base Rate Loans or if the Total
Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Administrative Agent pursuant to Section 6.02(b) is less than or equal
to 5.5:1, in the case of Eurodollar Rate Loans, 2.25% per annum, and in the
case of Base Rate Loans, 1.25% per annum, and (ii) in the case of Revolving
Credit Loans, Letter of Credit fees and Commitment Fees, the following
percentages per annum, based upon the Total Leverage Ratio as set forth in the
most recent Compliance Certificate received by the Administrative Agent
pursuant to Section 6.02(b):

 

	
  Applicable Rate

  	
   

  
	
  Pricing 

  Level

  	
   

  	
  Total Leverage 

  Ratio

  	
   

  	
  Eurodollar 

  Rate and

  Letter of 

  Credit Fees

  	
   

  	
  Base Rate

  	
   

  	
  Commitment 

  Fee

  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1

  	
   

  	
  < 4.5:1

  	
   

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  	
  0.375

  	
  %

  
	
  2

  	
   

  	
  3
  4.5:1 but < 5.5:1

  	
   

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  	
  0.500

  	
  %

  
	
  3

  	
   

  	
  3
  5.5:1

  	
   

  	
  2.50

  	
  %

  	
  1.50

  	
  %

  	
  0.500

  	
  %

  

 

Any increase or decrease in the Applicable Rate
resulting from a change in the Total Leverage Ratio shall become effective as
of the first Business Day immediately following the date a Compliance
Certificate is delivered pursuant to Section 6.02(b); provided
that at the option of the Required Lenders, the highest Pricing Level shall
apply (x) as of the first Business Day after the date on which a Compliance
Certificate was required to have been delivered but was not delivered, and
shall continue to so apply to and including the date on which such Compliance
Certificate is so delivered (and thereafter the Pricing Level otherwise determined
in accordance with this definition shall apply) and (y) as of the first
Business Day after an Event of Default under Section 8.01(a) shall have
occurred and be continuing, and shall continue to so apply to but excluding the
date on which such Event of Default is cured or waived (and thereafter the
Pricing Level otherwise determined in accordance with this definition shall
apply).

 

4

 

“Appropriate Lender” means, at any time, (a) with respect to
Loans of any Class, the Lenders of such Class, (b) with respect to Letters of
Credit, (i) the relevant L/C Issuers and (ii) with respect to any Letters of
Credit issued pursuant to Section 2.03(a), the Revolving Credit Lenders and (c)
with respect to the Swing Line Facility, (i) the Swing Line Lender and (ii) if
any Swing Line Loans are outstanding pursuant to Section 2.04(a), the Revolving
Credit Lenders.

 

“Approved Bank” has the meaning specified in clause (c) of
the definition of “Cash Equivalents”.

 

“Approved Fund” means, with respect to any Lender, any Fund
that is administered, advised or managed by (a) such Lender, (b) an Affiliate
of such Lender or (c) an entity or an Affiliate of an entity that administers,
advises or manages such Lender.

 

“Arrangers” means Banc of America Securities LLC and Credit
Suisse Securities (USA) LLC, each in its capacity as a lead arranger and book
runner.

 

“Assignees” has the meaning set forth in Section 10.07(b).

 

“Assignment and Assumption” means an Assignment and
Assumption substantially in the form of Exhibit E.

 

“Attorney Costs” means and includes all reasonable fees,
expenses and disbursements of any law firm or other external legal counsel.

 

“Attributable Indebtedness” means, on any date, in respect of
any Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP.

 

“Audited Financial Statements” means the audited consolidated
balance sheets of Encore Medical and its Subsidiaries as of each of December
31, 2005, 2004 and 2003, and the related audited consolidated statements of
operations, stockholders’ equity and cash flows for Encore Medical and its
Subsidiaries for the fiscal years ended December 31, 2005, 2004 and 2003, respectively.

 

“Auto-Renewal Letter of Credit” has the meaning set forth in
Section 2.03(b)(iii).

 

“Bank of America” means Bank of America, N.A. and its
successors.

 

“Base Rate” means for any day a fluctuating rate per annum
equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the
rate of interest in effect for such day as publicly announced from time to time
by Bank of America as its “prime rate.” 
The “prime rate” is a rate set by Bank of America based upon various
factors including Bank of America’s costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate. Any change
in such rate announced by Bank of America shall take effect at the opening of
business on the day specified in the public announcement of such change.

 

5

 

“Base Rate Loan” means a Loan that bears interest based on
the Base Rate.

 

“Borrower” means the Company.

 

“Borrowing” means a Revolving Credit Borrowing, a Swing Line
Borrowing, or a Term Borrowing, as the context may require.

 

“Business Day” means any day other than a Saturday, Sunday or
other day on which commercial banks are authorized to close under the Laws of,
or are in fact closed in, the state where the Administrative Agent’s Office is
located and, if such day relates to any Eurodollar Rate Loan, any such day on
which dealings in Dollar deposits are conducted by and between banks in the London
interbank eurodollar market.

 

“Capital Expenditures” means, for any period, the aggregate
of (a) all expenditures (whether paid in cash or accrued as liabilities) by the
Company and the Restricted Subsidiaries during such period that, in conformity
with GAAP, are or are required to be included as additions during such period
to property, plant or equipment reflected in the consolidated balance sheet of
the Company and the Restricted Subsidiaries and (b) all Capitalized Lease
Obligations incurred by the Company and the Restricted Subsidiaries during such
period and recorded on the balance sheet as such in accordance with GAAP; provided that the term “Capital Expenditures” shall not
include (i) expenditures made in connection with the replacement, substitution,
restoration or repair of assets to the extent financed with (x) insurance
proceeds paid on account of the loss of or damage to the assets being replaced,
restored or repaired or (y) awards of compensation arising from the taking by
eminent domain or condemnation of the assets being replaced, (ii) the purchase
price of equipment that is purchased simultaneously with the trade-in of
existing equipment to the extent that the gross amount of such purchase price
is reduced by the credit granted by the seller of such equipment for the
equipment being traded in at such time, (iii) the purchase of plant, property
or equipment to the extent financed with the proceeds of Dispositions that are
not required to be applied to prepay Term Loans pursuant to Section 2.05(b)(ii),
(iv) expenditures that constitute any part of Consolidated Lease Expense, (v)
expenditures that are accounted for as capital expenditures by the Company or
any Restricted Subsidiary and that actually are paid for by a Person other than
the Company or any Restricted Subsidiary and for which neither the Company nor
any Restricted Subsidiary has provided or is required to provide or incur,
directly or indirectly, any consideration or obligation to such Person or any
other Person (whether before, during or after such period), (vi) the book value
of any asset owned by the Company or any Restricted Subsidiary prior to or
during such period to the extent that such book value is included as a capital
expenditure during such period as a result of such Person reusing or beginning
to reuse such asset during such period without a corresponding expenditure
actually having been made in such period; provided that
(x) any expenditure necessary in order to permit such asset to be reused shall
be included as a Capital Expenditure during the period in which such
expenditure actually is made and (y) such book value shall have been included
in Capital Expenditures when such asset was originally acquired, or (vii)
expenditures that constitute Permitted Acquisitions and expenditures made in
connection with the Transactions.

 

6

 

“Capitalized Leases” means, as applied to any Person, all
leases of property that have been or should be, in accordance with GAAP,
recorded as capitalized leases on the balance sheet (excluding the footnotes
thereto).

 

“Cash Collateral” has the meaning specified in Section
2.03(g).

 

“Cash Collateral Account” means a blocked account at Bank of
America (or another commercial bank selected in compliance with Section 9.09)
in the name of the Administrative Agent and under the sole dominion and control
of the Administrative Agent, and otherwise established in a manner satisfactory
to the Administrative Agent.

 

“Cash Collateralize” has the meaning specified in Section
2.03(g).

 

“Cash Equivalents” means any of the following types of
Investments, to the extent owned by the Company or any Restricted Subsidiary:

 

(a)           Dollars, Euros or, in the case of any
Foreign Subsidiary, such local currencies held by it from time to time in the
ordinary course of business;

 

(b)           readily marketable obligations issued
or directly and fully guaranteed or insured by the government or any agency or
instrumentality of (i) the United States or (ii) any member nation of
the European Union, having average maturities of not more than 12 months from
the date of acquisition thereof; provided that
the full faith and credit of the United States or a member nation of the
European Union is pledged in support thereof;

 

(c)           time deposits with, or insured
certificates of deposit or bankers’ acceptances of, any commercial bank that
(i)  is a Lender or (ii) (A) is organized under the Laws of the
United States, any state thereof, the District of Columbia or any member nation
of the Organization for Economic Cooperation and Development or is the
principal banking Subsidiary of a bank holding company organized under the Laws
of the United States, any state thereof, the District of Columbia or any member
nation of the Organization for Economic Cooperation and Development, and is a
member of the Federal Reserve System, and (B) has combined capital and surplus
of at least $250,000,000 (any such bank in the foregoing clauses (i) or
(ii) being an “Approved Bank”),
in each case with average maturities of not more than 12 months from the date
of acquisition thereof;

 

(d)           commercial paper and variable or
fixed rate notes issued by an Approved Bank (or by the parent company thereof)
or any variable or fixed rate note issued by, or guaranteed by, a corporation
rated A-2 (or the equivalent thereof) or better by S&P or P-2 (or the
equivalent thereof) or better by Moody’s, in each case with average maturities
of not more than 12 months from the date of acquisition thereof;

 

(e)           repurchase agreements entered into by
any Person with a bank or trust company (including any of the Lenders) or
recognized securities dealer, in each case, having capital and surplus in
excess of $250,000,000 for direct obligations issued by or fully guaranteed or
insured by the government or any agency or instrumentality of (i) the 

 

7

 

United States or
(ii) any member nation of the European Union, in which such Person shall
have a perfected first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of at least 100%
of the amount of the repurchase obligations;

 

(f)            securities with average maturities
of 12 months or less from the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or territory or
by any foreign government having an investment grade rating from either S&P
or Moody’s (or the equivalent thereof);

 

(g)           Investments with average maturities
of 12 months or less from the date of acquisition in money market funds rated
AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the
equivalent thereof) or better by Moody’s;

 

(h)           instruments equivalent to those
referred to in clauses (a) through (g) above denominated in Euros or any other
foreign currency comparable in credit quality and tenor to those referred to
above and customarily used by corporations for cash management purposes in any
jurisdiction outside the United States to the extent reasonably required in
connection with any business conducted by any Restricted Subsidiary organized
in such jurisdiction; and

 

(i)            Investments, classified in
accordance with GAAP as current assets of the Company or any Restricted
Subsidiary, in money market investment programs which are registered under the
Investment Company Act of 1940 or which are administered by financial
institutions having capital of at least $250,000,000, and, in either case, the
portfolios of which are limited such that substantially all of such investments
are of the character, quality and maturity described in clauses (a) through (h)
of this definition.

 

“Cash Management Bank” means any Person that is an Agent, a
Lender or an Affiliate of an Agent or a Lender at the time it provides any Cash
Management Services.

 

“Cash Management Obligations” means obligations owed by
Holdings, the Company or any Restricted Subsidiary to any Agent, Lender or any
Affiliate of an Agent or a Lender in respect of any Cash Management Services,
including overdraft and related liabilities arising therefrom.

 

“Cash Management Services” means treasury, depository and
cash management services (including in respect of liabilities arising from
purchase cards, travel and entertainment cards or other card services) or any
automated clearing house transfers of funds.

 

“Casualty Event” means any event that gives rise to the
receipt by Holdings, the Company or any Restricted Subsidiary of any insurance
proceeds or condemnation awards in respect of any equipment, fixed assets or
real property (including any improvements thereon) to replace or repair such
equipment, fixed assets or real property.

 

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

 

8

 

“CERCLIS” means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.

 

“Change of Control” means the earliest to occur of (a) the
Permitted Holders ceasing to have the power, directly or indirectly, to vote or
direct the voting of securities having a majority of the ordinary voting power
for the election of directors of Holdings; provided that
the occurrence of the foregoing event shall not be deemed a Change of Control
if,

 

(i)    any time prior to the consummation of a
Qualifying IPO, and for any reason whatsoever, (A) the Permitted Holders
otherwise have the right, directly or indirectly, to designate (and do so
designate) a majority of the board of directors of Holdings at such time or (B)
the Permitted Holders own, directly or indirectly, of record and beneficially,
a majority of the outstanding voting Equity Interests of Holdings, or

 

(ii)   at any time after the consummation of a
Qualifying IPO, and for any reason whatsoever, (A) no “person” or “group” (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but
excluding any employee benefit plan of such person or group and its
Subsidiaries, and any Person acting in its capacity as trustee, agent or other
fiduciary or administrator of any such plan), excluding the Permitted Holders,
shall become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under
such Act), directly or indirectly, of more than the greater of (x) thirty-five
percent (35%) of the then outstanding voting Equity Interests of Holdings and
(y) the percentage of the then outstanding voting stock of Holdings owned,
directly or indirectly, beneficially by the Permitted Holders, and (B) during
each period of twelve (12) consecutive months, the board of directors of
Holdings shall consist of a majority of the Continuing Directors; or

 

(b)           any “Change of Control” (or any
comparable term) in any document pertaining to the New Notes or any Junior
Financing with an aggregate outstanding principal amount in excess of the
Threshold Amount; or

 

(c)           at any time prior to a Qualifying IPO
of the Company, the Company ceasing to be a directly or indirectly wholly owned
Subsidiary of Holdings.

 

“Class” (a) when used with respect to Lenders, refers to
whether such Lenders are Revolving Credit Lenders or Term Lenders, (b) when
used with respect to Commitments, refers to whether such Commitments are Revolving
Credit Commitments or Term Commitments and (c) when used with respect to Loans
or a Borrowing, refers to whether such Loans, or the Loans comprising such
Borrowing, are Revolving Credit Loans or Term Loans.

 

“Closing Date” means the first date all the conditions
precedent in Section 4.01 are satisfied or waived in accordance with Section
10.01.

 

“Code” means the U.S. Internal Revenue Code of 1986, as
amended, and rules and regulations related thereto.

 

“Collateral” means all the “Collateral” as defined in any
Collateral Document and shall include the Mortgaged Properties.

 

9

 

“Collateral Agent” means Bank of America, in its capacity as
collateral agent under any of the Loan Documents, or any successor collateral
agent.

 

“Collateral and Guarantee Requirement” means, at any time,
the requirement that:

 

(a)  the Administrative Agent shall have received
each Collateral Document required to be delivered on the Closing Date pursuant
to Section 4.01(a)(ii) or pursuant to Section 6.11 at such time, duly executed
by each Loan Party thereto;

 

(b)  all Obligations shall have been
unconditionally guaranteed by Holdings and each Restricted Subsidiary that is a
Domestic Subsidiary and not an Excluded Subsidiary (each, a “Guarantor” and collectively, the “Guarantors”);

 

(c)  all guarantees issued or to be issued in
respect of the New Notes (i) shall be subordinated to the Guarantees to the
same extent that the New Notes are subordinated to the Obligations and (ii)
shall provide for their automatic release upon a release of the corresponding
Guarantee;

 

(d)  the Obligations and the Guarantees shall have
been secured by a first-priority security interest in (i) all the Equity
Interests of the Company and (ii) all Equity Interests (other than Equity
Interests of Unrestricted Subsidiaries and any Equity Interest of any
Restricted Subsidiary pledged to secure Indebtedness permitted under Section
7.03(g)) of each wholly owned Subsidiary directly owned by the Company or any
Guarantor; provided that pledges of Equity
Interests of each Foreign Subsidiary shall be limited to 65% of the issued and
outstanding Equity Interests of each wholly-owned Foreign Subsidiary that is
directly owned by Holdings, the Company or any Domestic Subsidiary of Holdings
that is a Guarantor;

 

(e)  except to the extent otherwise permitted
hereunder or under any Collateral Document, the Obligations and the Guarantees
shall have been secured by a security interest in, and mortgages on,
substantially all tangible and intangible assets of Holdings, the Company and
each other Guarantor (including accounts (other than deposit accounts or other
bank or securities accounts), inventory, equipment, investment property,
contract rights, intellectual property, other general intangibles, owned (but
not leased) real property and proceeds of the foregoing), in each case, with
the priority required by the Collateral Documents; provided
that security interests in real property shall be limited to the Mortgaged
Properties;

 

(f)  none of the Collateral shall be subject to
any Liens other than Liens permitted by Section 7.01; and

 

(g)  the Collateral Agent shall have received (i)
counterparts of a Mortgage, with respect to each owned property described on
Schedule 1.01B hereto or required to be delivered pursuant to Section 6.11 (the
“Mortgaged Properties”) duly executed
and delivered by the record owner of such property, (ii) a policy or policies
of title insurance issued (or binding commitments to issue) by a nationally
recognized title insurance company insuring the Lien of each such Mortgage as a
valid Lien on the property

 

10

 

described therein,
free of any other Liens except as expressly permitted by Section 7.01, together
with such endorsements, coinsurance and reinsurance as the Administrative Agent
may reasonably request, and (iii) to the extent such items are in the
possession of, or under the control of, the Company, such existing surveys,
existing abstracts, existing appraisals, legal opinions and other documents as
the Administrative Agent may reasonably request with respect to any such
Mortgaged Property.

 

The
foregoing definition shall not require the creation or perfection of pledges of
or security interests in, or the obtaining of title insurance or surveys with
respect to, particular assets if and for so long as, in the reasonable judgment
of the Administrative Agent (confirmed in writing by notice to the Company),
the cost of creating or perfecting such pledges or security interests in such
assets or obtaining title insurance or surveys in respect of such assets shall
be excessive in view of the benefits to be obtained by the Lenders therefrom.
The Administrative Agent may grant extensions of time for the perfection of security
interests in or the obtaining of title insurance with respect to particular
assets (including extensions beyond the Closing Date for the perfection of
security interests in the assets of the Loan Parties on such date) where it
reasonably determines, in consultation with the Company, that perfection cannot
be accomplished without undue effort or expense by the time or times at which
it would otherwise be required by this Agreement or the Collateral Documents.

 

Notwithstanding
the foregoing provisions of this definition or anything in this Agreement or
any other Loan Document to the contrary, (a) with respect to leases of real
property entered into by the Company or any other Guarantor, such Person shall
not be required to take any action with respect to the creation or perfection
of security interests with respect to such leases and (b) Liens required to be
granted from time to time pursuant to the Collateral and Guarantee requirement
shall be subject to exceptions and limitations set forth in the Collateral
Documents as in effect on the Closing Date and, to the extent appropriate in
the applicable jurisdiction, as agreed between the Administrative Agent and the
Company.

 

“Collateral Documents” means, collectively, the Security
Agreement, the Intellectual Property Security Agreement, the Mortgages, each of
the mortgages, Security Agreement Supplements, IP Security Agreement
Supplements, security agreements, pledge agreements or other similar agreements
delivered to the Administrative Agent and the Secured Parties pursuant to
Section 6.11 or Section 6.13, and each of the other agreements,
instruments or documents that creates or purports to create a Lien in favor of
the Collateral Agent for the benefit of the Secured Parties.

 

“Commitment” means a Term Commitment or a Revolving Credit
Commitment, as the context may require.

 

“Company” has the meaning set forth in the introductory
paragraph to this Agreement.

 

“Compensation Period” has the meaning specified in
Section 2.12(c)(ii).

 

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

 

11

 

“Consolidated EBITDA” means, for any period, the Consolidated
Net Income for such period, plus:

 

(a)           without duplication
and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts
for such period:

 

(i)            total interest expense and, to the
extent not reflected in such total interest expense, any losses on hedging
obligations or other derivative instruments entered into for the purpose of
hedging interest rate risk, net of interest income and gains on such hedging
obligations, and costs of surety bonds in connection with financing activities,

 

(ii)           provision
for federal, state, local, foreign and provincial taxes based on income,
profits or capital of Holdings, the Company and the Restricted Subsidiaries,
including franchise, gross receipts and similar taxes and any withholding taxes paid or accrued
during such period,

 

(iii)          depreciation
and amortization (including amortization of deferred financing fees),

 

(iv)          Non-Cash Charges,

 

(v)           extraordinary losses and unusual or non-recurring charges (including any
unusual or non-recurring operating expenses attributable to the implementation of cost savings initiatives
or any extraordinary losses and unusual or non-recurring charges or expenses
attributable to legal and judgment settlements), severance, relocation costs,
and curtailments or modifications to pension and post-retirement employee
benefit plans,

 

(vi)          restructuring charges, accruals or reserves (including restructuring
costs related to acquisitions prior to or on or after the date hereof and to
closure/consolidation of facilities),

 

(vii)         any
deductions attributable to
minority interests,

 

(viii)        the
amount of (A) management and monitoring fees and related expenses paid to the
Sponsor pursuant to the Sponsor Management Agreement dated as of the Closing
Date, and (B) other consulting and advisory fees and related expenses paid to the
Sponsor to the extent permitted hereunder,

 

(ix)           any
costs or expenses incurred by Holdings, the Company or a Restricted Subsidiary
pursuant to any management
equity plan or stock option plan or any other management or employee benefit
plan or agreement or any stock subscription or shareholder agreement, to the
extent that such costs or expenses are funded with contributions to the capital
of Holdings or the Company or net cash proceeds of an issuance of Equity
Interests of the Company (other than Disqualified Equity Interests),

 

12

 

(x)            an
amount not to exceed $5,500,000 for retention incentive compensation paid or
payable to executive officers of Holdings (or any direct or indirect parent
thereof) or the Company on or around the Closing Date;

 

(xi)           the
amount of net cost savings projected by Holdings or the Company in good faith
to be realized as a result of specified actions taken or expected to be taken during or prior to such period
(which cost savings shall be added to Consolidated EBITDA until fully realized
and calculated on a pro forma basis as though such cost savings had been
realized on the first day of such period), net of the amount of actual benefits
realized during such period from such actions; provided
that (A) such cost savings are reasonably identifiable and factually
supportable, (B) such actions were begun to have been taken or expected to have
been begun to be taken prior to the date that is twenty-four months after the
Closing Date; provided that with respect to any
action expected to have begun to be taken, the underlying action shall actually
have begun to be taken prior to the date on which a Compliance Certificate
shall be required to be delivered pursuant to Section 6.02(b) for the fiscal
quarter in which the relevant cost savings shall have been added back pursuant
to this clause (xi), (C) no cost savings shall be added pursuant to this clause
(xi) to the extent duplicative of any expenses or charges relating to such cost
savings that are included in clause (vi) above with respect to such period and
(D) the aggregate amount of cost savings that are added back pursuant to this
clause (xi) shall include only those cost savings expected to be realized
within twelve months of taking such action,

 

less

 

(b)           without duplication and to the extent included in
arriving at such Consolidated Net Income, the sum of the following amounts for
such period:

 

(i)            extraordinary gains and unusual or
non-recurring gains,

 

(ii)           non-cash gains (excluding any non-cash gain to the extent it represents
the reversal of an accrual or reserve for a potential cash item that reduced
Consolidated EBITDA in any prior period),

 

(iii)          gains on asset sales (other than asset sales in the ordinary course of
business),

 

(iv)          any net after-tax income from the early extinguishment of Indebtedness or
hedging obligations or other derivative instruments, and

 

(v)           all gains from investments recorded using the equity method,

 

in each case, as
determined on a consolidated basis for Holdings, the Company and the Restricted
Subsidiaries in accordance with GAAP;

 

provided that, to the extent
included in Consolidated Net Income,

 

13

 

(i)            there
shall be excluded in determining Consolidated EBITDA currency translation gains
and losses related to currency remeasurements of Indebtedness (including the
net loss or gain resulting from hedging agreements for currency exchange risk),

 

(ii)           there shall be excluded in determining Consolidated EBITDA for any period
any adjustments resulting from the application of Statement of Financial
Accounting Standards No. 133, and

 

(c)           there shall be
included in determining Consolidated EBITDA for any period, without
duplication, (A) the Acquired EBITDA of any Person, property, business or asset
acquired by the Company or any Restricted Subsidiary during such period (but
not the Acquired EBITDA of any related Person, property, business or assets to
the extent not so acquired), to the extent not subsequently sold, transferred
or otherwise disposed by the Company or such Restricted Subsidiary (each such
Person, property, business or asset acquired and not subsequently so disposed
of, including pursuant to the Transactions and the Post-Closing Acquisition, an
“Acquired Entity or Business”) and the Acquired EBITDA of any
Unrestricted Subsidiary that is converted into a Restricted Subsidiary during
such period (each, a “Converted Restricted
Subsidiary”), based on the actual Acquired EBITDA of such Acquired
Entity or Business or such Converted Restricted Subsidiary, as applicable, for
such period (including the portion thereof occurring prior to such acquisition
or conversion) and (B) for the purposes of Section 7.11 and Sections 2.14,
6.14, 7.02(i), 7.02(n), 7.03(g), 7.03(h) and 7.03(r), an adjustment in respect
of each Acquired Entity or Business or of each Converted Restricted Subsidiary
equal to the amount of the Pro Forma Adjustment with respect to such Acquired
Entity or Business or of such Converted Restricted Subsidiary for such period
(including the portion thereof occurring prior to such acquisition or
conversion) as specified in a certificate executed by a Responsible Officer and
delivered to the Administrative Agent and (C) for purposes of determining the
Total Leverage Ratio or Interest Coverage Ratio (each to be defined) only,
there shall be excluded in determining Consolidated EBITDA for any period the
Disposed EBITDA of any Person, property, business, product, product line or
asset sold, transferred or otherwise disposed of, closed or classified as
discontinued operations by the Company or any Restricted Subsidiary during such
period (each such Person, property, business or asset so sold or disposed of, a
“Sold Entity or Business”), based on the actual Disposed EBITDA of
such Sold Entity or Business for such period (including the portion thereof
occurring prior to such sale, transfer or disposition).

 

For the purpose of the definition of Consolidated EBITDA, “Non-Cash Charges”
means (a) losses on asset sales, disposals or abandonments, (b) any impairment
charge or asset write-off related to intangible assets, long-lived assets, and
investments in debt and equity securities pursuant to GAAP, (c) all losses from
investments recorded using the equity method, (d) stock-based awards
compensation expense, and (e) other non-cash charges (provided
that if any non-cash charges referred to in this clause (e) represent an
accrual or reserve for potential cash items in any future period, the cash
payment in respect thereof in such future period shall be subtracted from
Consolidated EBITDA to such extent, and excluding amortization of a prepaid
cash item that was paid in a prior period).

 

14

 

“Consolidated Interest Expense” means, for any period, the
sum of (i) the cash interest expense (including that attributable to
Capitalized Lease Obligations), net of cash interest income, of Holdings, the
Company and the Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP, with respect to all outstanding Indebtedness of Holdings,
the Company and the Restricted Subsidiaries, including all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing and net costs under hedging agreements, (ii) any
cash payments made during such period in respect of obligations referred to in
clause (b) below relating to Funded Debt that were amortized or accrued in a
previous period (other than any such obligations resulting from the discounting
of Indebtedness in connection with the application of purchase accounting in
connection with the Transaction or any Permitted Acquisition), but excluding,
however, (a) amortization of deferred financing costs debt issuance costs, commissions,
fees and expenses and any other amounts of non-cash interest, (b) the accretion
or accrual of discounted liabilities during such period, (c) non-cash interest
expense attributable to the movement of the mark-to-market valuation of
obligations under hedging agreements or other derivative instruments pursuant
to Statement of Financial Accounting Standards No. 133, (d) any one-time cash
costs associated with breakage in respect of hedging agreements for interest
rates, and (e) all non-recurring cash interest expense consisting of liquidated
damages for failure to timely comply with registration rights obligations and
financing fees, all as calculated on a consolidated basis in accordance with
GAAP; provided that for purposes
of Section 7.11 and Sections 2.14, 6.14, 7.02(i), 7.02(n), 7.03(g), 7.03(h) and
7.03(r), (A) there shall be included in determining Consolidated Interest
Expense for any period the cash interest expense (or income) of any Acquired
Entity or Business acquired during such period and of any Converted Restricted
Subsidiary converted during such period, based on the cash interest expense (or
income) of such Acquired Entity or Business or of such Converted Restricted
Subsidiary, in either case for such period (including the portion thereof
occurring prior to such acquisition or conversion) assuming any Indebtedness
incurred or repaid in connection with any such acquisition had been incurred or
repaid on the first day of such period and (B) there shall be excluded from
determining Consolidated Interest Expense for any period the cash interest
expense (or income) of any Sold Entity or Business disposed of during such
period, based on the cash interest expense (or income) relating to any
Indebtedness relieved, retired, redeemed or repaid in connection with any such
disposition of such Sold Entity or Business for such period (including the
portion thereof occurring prior to such disposal) assuming such debt relieved,
retired, redeemed or repaid in connection with such disposition had been relieved,
retired, redeemed or repaid on the first day of such period. Notwithstanding
anything to the contrary contained herein, for purposes of determining
Consolidated Interest Expense for any period ending prior to the first
anniversary of the Closing Date, Consolidated Interest Expense shall be an
amount equal to actual Consolidated Interest Expense from the Closing Date
through the date of determination multiplied by a fraction the numerator of
which is 365 and the denominator of which is the number of days from the
Closing Date through the date of determination.

 

“Consolidated Lease Expense” means, for any period, all
rental expenses of Holdings, the Company and the Restricted Subsidiaries during
such period under operating leases for real or personal property (including in
connection with sale-leaseback transactions permitted by Section 7.05(f)),
excluding real estate taxes, insurance costs and common area maintenance
charges and net of sublease income, other than (a) obligations under vehicle
leases entered into in the ordinary course of business, (b) all such rental
expenses associated with assets

 

15

 

acquired pursuant to the Transaction, the Post-Closing
Acquisition and pursuant to a Permitted Acquisition to the extent such rental
expenses relate to operating leases in effect at the time of (and immediately
prior to) such acquisition and related to periods prior to such acquisition and
(c) all Capitalized Lease Obligations, all as determined on a consolidated
basis in accordance with GAAP.

 

“Consolidated Net Income” means, for any period, the net
income (loss) of Holdings, the Company and the Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP, excluding,
without duplication, (a) extraordinary items for such period, (b) the
cumulative effect of a change in accounting principles during such period to
the extent included in Consolidated Net Income, (c) Transaction Expenses, (d)
any fees, expenses, (including pre-transaction payments or other compensation
made to employees of an acquired business) incurred during such period, or any
amortization thereof for such period, in connection with any acquisition,
investment, asset disposition, issuance or repayment of debt, issuance of
equity securities, refinancing transaction or amendment or other modification
of any debt instrument (in each case, including, without limitation, any such
transaction consummated prior to the Closing Date, on or after the Closing Date
and any such transaction undertaken but not completed) and any charges or
non-recurring merger costs incurred during such period as a result of any such
transaction, (e) any income (loss) for such period attributable to the early
extinguishment of Indebtedness, hedging agreements or other derivative
transactions and (f) accruals and reserves that are recorded within twelve
months after the closing date of any acquisition (including the Transactions)
that are so required to be recorded as a result of the transaction in
accordance with GAAP. There shall be excluded from Consolidated Net Income for
any period the purchase accounting effects of adjustments to property and
equipment, software, inventory, in-process research and development, and other
intangible assets and deferred revenue in component amounts required or
permitted by GAAP and related authoritative pronouncements (including the
effects of such adjustments pushed down to Holdings, the Company and the
Restricted Subsidiaries), as a result of the Transactions, any acquisition
consummated prior to the Closing Date, any Permitted Acquisitions, or the
amortization or write-off of any amounts thereof.

 

“Consolidated Total Debt” means, as of any date of
determination, (a) the aggregate principal amount of indebtedness of Holdings,
the Company and the Restricted Subsidiaries outstanding on such date,
determined on a consolidated basis in accordance with GAAP (but excluding the
effects of any discounting of indebtedness resulting from the application of
purchase accounting in connection with the Transaction or any Permitted
Acquisition (including the Post-Closing Acquisition)), consisting of
indebtedness for borrowed money, Capitalized Lease Obligations and debt
obligations evidenced by promissory notes or similar instruments, minus
(b) the aggregate amount of all cash and Cash Equivalents (in each case, free
and clear of all Liens, other than nonconsensual Liens permitted by
Section 7.01 and Liens permitted by Section 7.01(a), Section 7.01(r)
and clauses (i) and (ii) of Section 7.01(s)) included in the consolidated
balance sheet of Holdings, the Company and the Restricted Subsidiaries as of
such date.

 

“Consolidated Working Capital” means, at any date, the excess
of (a) the sum of all amounts (other than cash and Cash Equivalents) that
would, in conformity with GAAP, be set forth opposite the caption “total
current assets” (or any like caption) on a consolidated

 

16

 

balance sheet of Holdings, the Company and the
Restricted Subsidiaries at such date over (b) the sum of all amounts that
would, in conformity with GAAP, be set forth opposite the caption “total
current liabilities” (or any like caption) on a consolidated balance sheet of
Holdings, the Company and the Restricted Subsidiaries on such date, including
deferred revenue but excluding, without duplication, (i) the current portion of
any Funded Debt, (ii) all Indebtedness consisting of Loans and obligations in
respect of Letters of Credit to the extent otherwise included therein, (iii)
the current portion of interest and (iv) the current portion of current and
deferred income taxes.

 

“Continuing Directors” means the directors of Holdings on the
Closing Date, as elected or appointed after giving effect to the Merger and the
other transactions contemplated hereby, and each other director, if, in each
case, such other directors’ nomination for election to the board of directors
of Holdings (or the Company after a Qualifying IPO of the Company) is
recommended by a majority of the then Continuing Directors or such other
director receives the vote of the Permitted Holders in his or her election by
the stockholders of Holdings (or the Company after a Qualifying IPO of the
Company).

 

“Contract Consideration” has the meaning set forth in the
definition of “Excess Cash Flow”.

 

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

 

“Control” has the meaning specified in the definition of “Affiliate.”

 

“Converted Restricted Subsidiary” has the meaning set forth
in the definition of a “Consolidated EBITDA”.

 

“Credit Extension” means each of the following:  (a) a Borrowing and (b) an L/C Credit
Extension.

 

“Cumulative Excess Cash Flow” has the meaning set forth in
Section 7.06(h).

 

“Debt Issuance” means the issuance by any Person and its
Subsidiaries of any Indebtedness for borrowed money.

 

“Debt Prepayment” means the prepayment by the Company or one
of its Subsidiaries on the Closing Date of any Indebtedness outstanding under
the Existing Credit Agreement and the redemption of any Existing Notes in
connection with the Tender Offer and Consent Solicitation.

 

“Debtor Relief Laws” means the Bankruptcy Code of the United
States, and all other liquidation, conservatorship, bankruptcy, assignment for
the benefit of creditors, moratorium, rearrangement, receivership, insolvency,
reorganization, or similar debtor relief Laws of the United States or other
applicable jurisdictions from time to time in effect and affecting the rights
of creditors generally.

 

17

 

“Default” means any event or condition that constitutes an
Event of Default or that, with the giving of any notice, the passage of time,
or both, would be an Event of Default.

 

“Default Rate” means an interest rate equal to (a) the Base
Rate plus (b) the Applicable Rate, if any, applicable to Base Rate Loans plus
(c) 2.0% per annum; provided that
with respect to a Eurodollar Rate Loan or a Letter of Credit fee, the Default
Rate shall be an interest rate equal to the interest rate (including any
Applicable Rate) otherwise applicable to such Loan or Letter of Credit, as the
case may be, plus 2.0% per annum, in each case, to the fullest extent permitted
by applicable Laws.

 

“Defaulting Lender” means any Lender that (a) has failed to
fund any portion of the Term Loans, Revolving Credit Loans, participations in
L/C Obligations or participations in Swing Line Loans required to be funded by
it hereunder within one (1) Business Day of the date required to be funded by
it hereunder, unless the subject of a good faith dispute or subsequently cured,
(b) has otherwise failed to pay over to the Administrative Agent or any other
Lender any other amount required to be paid by it hereunder within one (1)
Business Day of the date when due, unless the subject of a good faith dispute
or subsequently cured, or (c) has been deemed insolvent or become the subject
of a bankruptcy or insolvency proceeding.

 

“Designated Non-Cash Consideration” means the fair market
value of non-cash consideration received by the Company or a Restricted
Subsidiary in connection with a Disposition pursuant to Section 7.05(k)
that is designated as Designated Non-Cash Consideration pursuant to a
certificate of a Responsible Officer, setting forth the basis of such valuation
(which amount will be reduced by the fair market value of the portion of the
non-cash consideration converted to cash or Cash Equivalents within 180 days
following the consummation of the applicable Disposition).

 

“Disposed EBITDA” means, with respect to any Sold Entity or
Business for any period, the amount for such period of Consolidated EBITDA of
such Sold Entity or Business (determined as if references to the Company and
the Restricted Subsidiaries in the definition of Consolidated EBITDA (and in
the component definitions used therein) were references to such Sold Entity or
Business and its Subsidiaries), all as determined on a consolidated basis for
such Sold Entity or Business.

 

“Disposition” or “Dispose” means
the sale, transfer, license, lease or other disposition (including any sale and
leaseback transaction) of any property or the sale or disposition of Equity
Interests by any Person, including any sale, assignment, transfer or other
disposal, with or without recourse, of any notes or accounts receivable or any
rights and claims associated therewith; provided that “disposition”
and “dispose” shall not be deemed to include any issuance by Holdings of any of
its Equity Interests to another Person.

 

“Disqualified Equity Interests” means any Equity Interest
which, by its terms (or by the terms of any security or other Equity Interests
into which it is convertible or for which it is exchangeable), or upon the
happening of any event or condition (a) matures or is mandatorily redeemable
(other than solely for Qualified Equity Interests and other than as a result of
a change of control or asset sale event), pursuant to a sinking fund obligation
or otherwise (except as a result of a change of control or asset sale so long
as any rights of the

 

18

 

holders thereof upon the occurrence of a change of
control or asset sale event shall be subject to the prior repayment in full of
the Loans and all other Obligations that are accrued and payable and the
termination of the Commitments), (b) is redeemable at the option of the holder
thereof (other than solely for Qualified Equity Interests and other than as a
result of a change of control or asset sale so long as any rights of the holders
thereof upon the occurrence of a change of control or asset sale event shall be
subject to the prior repayment in full of the Loans and all other Obligations
that are accrued and payable and the termination of the Commitments), in whole
or in part, (c) provides for the scheduled payments of dividends in cash, or
(d) is or becomes convertible into or exchangeable for Indebtedness or any
other Equity Interests that would constitute Disqualified Equity Interests, in
each case, prior to the date that is ninety-one (91) days after the Maturity
Date of the Term Loans.

 

“Documentation Agent” means General Electric Capital
Corporation, in its capacity as documentation agent under this Agreement.

 

“Dollar” and “$” mean lawful
money of the United States.

 

“Domestic Subsidiary” means any Subsidiary that is organized
under the Laws of the United States, any state thereof or the District of
Columbia.

 

“Eligible Assignee” means any Assignee permitted by and
consented to in accordance with Section 10.07(b).

 

“EMU Legislation” means the legislative measures of the
European Council for the introduction of, changeover to or operation of a
single or unified European currency.

 

“Encore Medical” means, prior to giving effect to the Merger,
Encore Medical Corporation, a Delaware corporation, and after giving effect to
the Merger, the surviving entity thereof.

 

“Environmental Laws” means any and all Federal, state, local,
and foreign statutes, Laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution, the protection of the
environment, natural resources, or, to the extent relating to exposure to
Hazardous Materials, human health or to the release of any materials into the
environment, including those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.

 

“Environmental Liability” means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of the Company, any other Loan
Party or any of their respective Subsidiaries 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.

 

19

 

“Environmental Permit” means any permit, approval,
identification number, license or other authorization required under any
Environmental Law.

 

“Equity Contribution” means, collectively, the contribution,
directly or indirectly, by the Equity Investors of an aggregate amount of cash
(together with the aggregate value of options to purchase Equity Interests of
Encore Medical held by Management Stockholders that are rolled over in
connection with the Transactions) to Merger Sub at least equal to 35% of the
Merger Costs.

 

“Equity Interests” means, with respect to any Person, all of
the shares, interests, rights, participations or other equivalents (however
designated) of capital stock of (or other ownership or profit interests or
units in) such Person and all of the warrants, options or other rights for the
purchase, acquisition or exchange from such Person of any of the foregoing
(including through convertible securities).

 

“Equity Investors” means the Sponsor and the Management
Stockholders.

 

“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 is under common control with any Loan Party within the
meaning of Section 414 of the Code or Section 4001 of ERISA.

 

“ERISA Event” means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by any Loan Party or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations that is treated as such a withdrawal under
Section 4062(e) of ERISA; (c) a complete or partial withdrawal by any Loan
Party or any ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of intent
to terminate, the treatment of a Plan amendment as a termination under Sections
4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or Multiemployer
Plan; or (f) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon any Loan Party or any ERISA Affiliate.

 

“Euro” and “EUR” means the
lawful currency of the Participating Member States introduced in accordance
with EMU Legislation.

 

“Eurodollar Rate” means for any Interest Period with respect
to a Eurodollar Rate Loan, the rate per annum equal to the British Bankers
Association LIBOR Rate (“BBA LIBOR”), as published by Reuters (or the rate appearing
on Page 3750 of the Dow Jones Market Service) at approximately 11:00 a.m.,
London time, two (2) Business Days prior to the commencement of such Interest Period,
for Dollar deposits (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period. If such rate is not available
at such time for any reason, then the “Eurodollar Rate” for such Interest
Period shall be the rate at

 

20

 

which deposits in Dollars for delivery on the first
day of such Interest Period in Same Day Funds in the approximate amount of the
Eurodollar Rate Loan being made, continued or converted by Bank of America and
with a term equivalent to such Interest Period would be offered by Bank of
America’s London Branch to major banks in the London interbank eurodollar
market at their request at approximately 4:00 p.m. (London time) two (2)
Business Days prior to the commencement of such Interest Period.

 

“Eurodollar Rate Loan” means a Loan that bears interest at a
rate based on the Eurodollar Rate.

 

“Event of Default” has the meaning specified in
Section 8.01.

 

“Excess Cash Flow” means, for any period, an amount equal to
the excess of:

 

(a)           the sum, without duplication, of:

 

(i)            Consolidated Net Income for such
period,

 

(ii)           an amount equal to the amount of all
non-cash charges to the extent deducted in arriving at such Consolidated Net
Income,

 

(iii)          decreases in Consolidated Working
Capital and long-term account receivables and increases in the long-term
portion of deferred revenue for such period (other than any such decreases or
increases arising from acquisitions or dispositions of property by Holdings, the
Company and the Restricted Subsidiaries completed during such period), and

 

(iv)          an amount equal to the aggregate net
non-cash loss on dispositions of property by Holdings, the Company and the
Restricted Subsidiaries during such period (other than dispositions of property
in the ordinary course of business) to the extent deducted in arriving at such
Consolidated Net Income; over

 

(b)           the sum, without duplication, of:

 

(i)            an amount equal to the amount of all
non-cash credits included in arriving at such Consolidated Net Income and cash
charges included in clauses (a) through (f) of the definition of Consolidated
Net Income,

 

(ii)           without duplication of amounts
deducted pursuant to clause (xi) below in prior fiscal years, the amount of
Capital Expenditures made in cash or accrued during such period, except to the
extent that such Capital Expenditures were financed with the proceeds of
Indebtedness of Holdings, the Company or the Restricted Subsidiaries,

 

(iii)          the aggregate amount of all principal
payments of Indebtedness of Holdings, the Company and the Restricted
Subsidiaries (including (A) the principal component of payments in respect of
Capitalized Lease Obligations and (B) the amount of any mandatory prepayment of
Term Loans pursuant to Section 2.05(b)(ii) to the extent

 

21

 

required due to a
disposition of property that resulted in an increase to Consolidated Net Income
and not in excess of the amount of such increase but excluding (X) all other
prepayments of Term Loans and (Y) all prepayments of Revolving Credit Loans and
Swing Line Loans) made during such period (other than in respect of any
revolving credit facility to the extent there is not an equivalent permanent
reduction in commitments thereunder), except to the extent financed with the
proceeds of other Indebtedness of Holdings or the Restricted Subsidiaries,

 

(iv)          an amount equal to the aggregate net
non-cash gain on dispositions of property by Holdings, the Company and the
Restricted Subsidiaries during such period (other than dispositions of property
in the ordinary course of business) to the extent included in arriving at such
Consolidated Net Income,

 

(v)           increases in Consolidated Working
Capital and long-term account receivables and decreases in long-term portion of
deferred revenue for such period (other than any such increases arising from
acquisitions or dispositions of property by Holdings, the Company and the
Restricted Subsidiaries during such period),

 

(vi)          cash payments by Holdings, the Company
and the Restricted Subsidiaries during such period in respect of long-term
liabilities of Holdings, the Company and the Restricted Subsidiaries other than
Indebtedness,

 

(vii)         without duplication of amounts deducted
pursuant to clause (xi) below in prior fiscal years, the amount of Investments
and acquisitions made during such period to the extent that such Investments
and acquisitions were financed with internally generated cash flow of Holdings,
the Company and the Restricted Subsidiaries,

 

(viii)        the amount of Restricted Payments paid
during such period to the extent such Restricted Payments were financed with
internally generated cash flow of Holdings, the Company and the Restricted
Subsidiaries,

 

(ix)           the aggregate amount of expenditures
actually made by Holdings, the Company and the Restricted Subsidiaries in cash
during such period (including expenditures for the payment of financing fees)
to the extent that such expenditures are not expensed during such period,

 

(x)            the aggregate amount of any premium,
make-whole or penalty payments actually paid in cash by Holdings, the Company
and the Restricted Subsidiaries during such period that are required to be made
in connection with any prepayment of Indebtedness,

 

(xi)           without duplication of amounts deducted
from Excess Cash Flow in prior periods, the aggregate consideration required to
be paid in cash by Holdings, the Company or any of the Restricted Subsidiaries
pursuant to binding contracts (the “Contract Consideration”)
entered into prior to or during such period relating to Permitted Acquisitions
or Capital Expenditures to be consummated or made during the period of four
consecutive fiscal quarters of Holdings following the end of such period; provided that to the extent the aggregate amount of internally
generated cash actually

 

22

 

utilized to
finance such Permitted Acquisitions or Capital Expenditures during such period
of four consecutive fiscal quarters is less than the Contract Consideration, the
amount of such shortfall shall be added to the calculation of Excess Cash Flow
at the end of such period of four consecutive fiscal quarters, and

 

(xii)          the amount of cash taxes or tax
distributions paid in such period to the extent they exceed the amount of tax
expense deducted in determining Consolidated Net Income for such period.

 

“Exchange Act” means the Securities Exchange Act of 1934, as
amended.

 

“Exchange Rate” means on any day with
respect to any currency other than Dollars, the rate at which such currency may
be exchanged into Dollars, as set forth at approximately 11:00 a.m. (London
time) on such day on the Reuters World Currency Page for such currency; in the
event that such rate does not appear on any Reuters World Currency Page, the
Exchange Rate shall be determined by reference to such other publicly available
service for displaying exchange rates as may be agreed upon by the
Administrative Agent and the Company, or, in the absence of such agreement,
such Exchange Rate shall instead be the arithmetic average of the spot rates of
exchange of the Administrative Agent in the market where its foreign currency
exchange operations in respect of such currency are then being conducted, at or
about 10:00 a.m. (New York City time) on such date for the purchase of Dollars
for delivery two Business Days later.

 

“Excluded Subsidiary” means (a) any Subsidiary that is not a
wholly owned Subsidiary, (b) each Subsidiary listed on Schedule 1.01C hereto,
(c) any Subsidiary that is prohibited by applicable Law from guaranteeing the
Obligations, (d) any Domestic Subsidiary that is a Subsidiary of a Foreign
Subsidiary, (e) any Restricted Subsidiary acquired pursuant to a Permitted
Acquisition financed with secured Indebtedness incurred pursuant to
Section 7.03(g) and each Restricted Subsidiary thereof that guarantees
such Indebtedness; provided that
each such Restricted Subsidiary shall cease to be an Excluded Subsidiary under
this clause (e) if such secured Indebtedness is repaid or becomes unsecured or
if such Restricted Subsidiary ceases to guarantee such secured Indebtedness, as
applicable, and (f) any other Subsidiary with respect to which, in the
reasonable judgment of the Administrative Agent (confirmed in writing by notice
to the Company), the cost or other consequences (including any adverse tax
consequences) of providing a Guarantee shall be excessive in view of the
benefits to be obtained by the Secured Parties therefrom.

 

“Existing Credit Agreement” means the Credit Agreement dated
as of October 4, 2004, among Encore Medical IHC, Inc., Encore Medical, Bank of
America, N.A., as administrative agent, swing line lender and letter of credit
issuer, and the other lenders party thereto.

 

“Existing Notes” means the $165,000,000 in aggregate
principal amount of Encore Medical IHC, Inc.’s 9.750% senior subordinated notes
due 2012.

 

“Existing Notes Documentation” means the Existing Notes, the
Existing Notes Indenture and all other documents executed and delivered with
respect to the Existing Notes.

 

23

 

“Existing Notes Indenture” means the Indenture for the
Existing Notes, dated as of October 4, 2004.

 

“Existing Notes Indenture Amendment” has the meaning provided
in Section 4.01(e)(i).

 

“Facility” means the Term Loans, the Revolving Credit
Facility, the Swing Line Sublimit or the Letter of Credit Sublimit, as the
context may require.

 

“Federal Funds Rate” means, for any day, the rate per annum
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank on the
Business Day next succeeding such day; provided that
(a) if such day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding Business Day as
so published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) charged to Bank of America on such day on such
transactions as determined by the Administrative Agent.

 

“Fee Letter” refers to the Fee Letter dated June 30, 2006 and
the Administrative Agency Letter dated October 24, 2006.

 

“Foreign Lender” has the meaning specified in
Section 10.15(a)(i).

 

“Foreign Subsidiary” means any direct or indirect Restricted
Subsidiary of the Company which (a) is not a Domestic Subsidiary or (b) is set
forth on Schedule 1.01D.

 

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

 

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

 

“Funded Debt” means all indebtedness of any Person for
borrowed money that matures more than one year from the date of its creation or
matures within one year from such date that is renewable or extendable, at the
option of such Person, to a date more than one year from such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from such date,
including Indebtedness in respect of the Loans.

 

“GAAP” means generally accepted accounting principles in the
United States of America, as in effect from time to time; provided,
however, that if the Company notifies the Administrative Agent that
the Company requests an amendment to any provision hereof to eliminate the
effect of any change occurring after the Closing Date in GAAP or in the
application thereof on the operation of such provision (or if the
Administrative Agent notifies the Company that the Required Lenders request an
amendment to any provision hereof for such purpose),

 

24

 

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.

 

“Governmental Authority” means any nation or government, any
state or other political subdivision thereof, any agency, authority,
instrumentality, regulatory body, court, administrative tribunal, central bank
or other entity exercising executive, legislative, judicial, taxing, regulatory
or administrative powers or functions of or pertaining to government.

 

“Granting Lender” has the meaning specified in
Section 10.07(h).

 

“Guarantee” means, as to any Person, without duplication, (a)
any obligation, contingent or otherwise, of such Person guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other monetary
obligation payable by another Person (the “primary obligor”) in any manner,
whether directly or indirectly, and including any obligation of such Person,
direct or indirect, (i) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other monetary obligation, (ii) to
purchase or lease property, securities or services for the purpose of assuring
the obligee in respect of such Indebtedness or other monetary obligation of the
ability of the primary obligor to make payment of such Indebtedness or other
monetary obligation, (iii) to maintain working capital, equity capital or any
other financial statement condition or liquidity or level of income or cash
flow of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other monetary obligation, or (iv) entered into for the purpose
of assuring in any other manner the obligee in respect of such Indebtedness or
other monetary obligation of the ability of the primary obligor to make payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), or (b) any Lien on any assets of such Person securing any Indebtedness
or other monetary obligation of any other Person, whether or not such
Indebtedness or other monetary obligation is assumed by such Person (or any
right, contingent or otherwise, of any holder of such Indebtedness to obtain
any such Lien); provided that the term “Guarantee”
shall not include endorsements for collection or deposit, in either case in the
ordinary course of business, or customary and reasonable indemnity obligations
in effect on the Closing Date or entered into in connection with any acquisition
or Disposition of assets permitted under this Agreement (other than such
obligations with respect to Indebtedness). The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith. The term “Guarantee” as a verb has a corresponding
meaning.

 

“Guarantors” has the meaning set forth in the definition of “Collateral
and Guarantee Requirement”.

 

“Guaranty” means, collectively, (a) the Guaranty made by the
Guarantors in favor of the Administrative Agent on behalf of the Secured
Parties, substantially in the form of Exhibit F and (b) each other guaranty and
guaranty supplement delivered pursuant to Section 6.11.

 

25

 

“Hazardous Materials” means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or
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.

 

“Hedge Bank” means any Person that is an Agent, a Lender or
an Affiliate of an Agent or a Lender at the time it enters into a Secured Hedge
Agreement, in its capacity as a party thereto.

 

“Holdings” has the meaning set forth in the introductory
paragraph to this Agreement.

 

“Honor Date” has the meaning specified in
Section 2.03(c)(i).

 

“Immaterial Subsidiary” means each Restricted Subsidiary that
is not a Material Subsidiary.

 

“Incremental Amendment” has the meaning set forth in
Section 2.14(a).

 

“Incremental Facility Closing Date” has the meaning set forth
in Section 2.14(a).

 

“Incremental Term Loans” has the meaning set forth in
Section 2.14(a).

 

“Indebtedness” means, as to any Person at a particular time,
without duplication, all of the following, whether or not included as
indebtedness or liabilities in accordance with GAAP:

 

(a)           all indebtedness of such Person for
borrowed money and all indebtedness of such Person evidenced by bonds,
debentures, notes, loan agreements or other similar instruments;

 

(b)           the maximum amount (after giving
effect to any prior drawings or reductions which may have been reimbursed) of
all letters of credit (including standby and commercial), bankers’ acceptances,
bank guaranties, surety bonds, performance bonds and similar instruments issued
or created by or for the account of such Person;

 

(c)           net obligations of such Person under
any hedging agreement;

 

(d)           all obligations of such Person to pay
the deferred purchase price of property or services (other than (i) trade
accounts payable in the ordinary course of business and (ii) any earn-out
obligation until such obligation becomes a liability on the balance sheet of
such Person in accordance with GAAP);

 

(e)           indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by
such Person (including indebtedness arising under conditional sales or other
title retention agreements and mortgage, industrial revenue

 

26

 

bond, industrial
development bond and similar financings), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse;

 

(f)            all Attributable Indebtedness;

 

(g)           all obligations of such Person in
respect of Disqualified Equity Interests; and

 

(h)           all Guarantees of such Person in
respect of any of the foregoing.

 

For all purposes hereof, the Indebtedness of any
Person shall (A) include the Indebtedness of any partnership or joint venture
(other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, except
to the extent such Person’s liability for such Indebtedness is otherwise
limited and only to the extent such Indebtedness would be included in the
calculation of Consolidated Total Debt and (B) in the case of Holdings, the
Company and its Subsidiaries, exclude all intercompany Indebtedness having a
term not exceeding 364 days (inclusive of any roll-over or extensions of terms)
and made in the ordinary course of business consistent with past practice. The
amount of any net obligation under any hedging agreement on any date shall be
deemed to be the Swap Termination Value thereof as of such date. The amount of
Indebtedness of any Person for purposes of clause (e) shall be deemed to be
equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness and (ii) the fair market value of the property encumbered
thereby as determined by such Person in good faith.

 

“Indemnified Liabilities” has the meaning set forth in
Section 10.05.

 

“Indemnitees” has the meaning set forth in
Section 10.05.

 

“Information” has the meaning specified in
Section 10.08.

 

“Intellectual Property Security Agreement” means,
collectively, the Intellectual Property Security Agreement, executed by the
Loan Parties substantially in the form of Exhibit G-2, together with each other
intellectual property security agreement executed and delivered pursuant to
Section 6.11.

 

“Interest Coverage Ratio” means, with respect to Holdings,
the Company and the Restricted Subsidiaries on a consolidated basis, as of the
end of any fiscal quarter of Holdings for the Test Period ending on such date,
the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense.

 

“Interest Payment Date” means, (a) as to any Loan other than
a Base Rate Loan, the last day of each Interest Period applicable to such Loan
and the Maturity Date of the Facility under which such Loan was made; provided that if any Interest Period for a Eurodollar Rate
Loan exceeds three months, the respective dates that fall every three months
after the beginning of such Interest Period shall also be Interest Payment
Dates; and (b) as to any Base Rate Loan (including a Swing Line Loan), the last
Business Day of each March, June, September and December and the Maturity Date
of the Facility under which such Loan was made.

 

27

 

“Interest Period” means, as to each Eurodollar Rate Loan, the
period commencing on the date such Eurodollar Rate Loan is disbursed or
converted to or continued as a Eurodollar Rate Loan and ending on the date one,
two, three or six months thereafter, or to the extent available to each Lender
of such Eurodollar Rate Loan, nine or twelve months or less than one month
thereafter, as selected by the Company in its Loan Notice; provided
that:

 

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

 

(b)           any Interest Period that begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at the end of
such Interest Period; and

 

(c)           no Interest Period shall extend
beyond the Maturity Date of the Facility under which such Loan was made.

 

“Investment” means, as to any Person, any direct or indirect
acquisition or investment by such Person, whether by means of (a) the purchase
or other acquisition of Equity Interests or debt or other securities of another
Person, (b) a loan, advance or capital contribution to, Guarantee or assumption
of Indebtedness of, or purchase or other acquisition of any other debt or
equity participation or interest in, another Person, including any partnership
or joint venture interest in such other Person (excluding, in the case of
Holdings and its Subsidiaries, intercompany loans, advances, or Indebtedness
having a term not exceeding 364 days (inclusive of any roll-over or extensions
of terms) and made in the ordinary course of business consistent with past
practice) or (c) the purchase or other acquisition (in one transaction or a
series of transactions) of all or substantially all of the property and assets
or business of another Person or assets constituting a business unit, line of
business or division of such Person. For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment. For the
avoidance of doubt, it is understood that the following shall not constitute “Investments”
hereunder: (a) acquisitions of equipment to be used in the business of the
Company or any of its Subsidiaries, so long as the acquisition costs thereof
constitute Capital Expenditures permitted hereunder and (b) acquisitions of
inventory in the ordinary course of business of the Company and its
Subsidiaries.

 

“IP Security Agreement Supplement” has the meaning specified
in the Intellectual Property Security Agreement.

 

“IRS” means the United States Internal Revenue Service.

 

“Junior Financing” has the meaning specified in
Section 7.13(a).

 

“Junior Financing Documentation” means any documentation
governing any Junior Financing.

 

28

 

“Laws” means, collectively, all international, foreign,
Federal, state and local statutes, treaties, rules, guidelines, regulations,
ordinances, codes and administrative or judicial precedents or authorities,
including the interpretation or administration thereof by any Governmental
Authority charged with the enforcement, interpretation or administration
thereof, and all applicable administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any Governmental
Authority, in each case whether or not having the force of law.

 

“L/C Advance” means, with respect to each Revolving Credit
Lender, such Lender’s funding of its participation in any L/C Borrowing in
accordance with its Pro Rata Share.

 

“L/C Borrowing” means an extension of credit resulting from a
drawing under any Letter of Credit which has not been reimbursed on the date
when made or refinanced as a Revolving Credit Borrowing.

 

“L/C Credit Extension” means, with respect to any Letter of
Credit, the issuance thereof or extension of the expiry date thereof, or the
renewal or increase of the amount thereof.

 

“L/C Disbursement” means a payment or disbursement made by an
L/C Issuer pursuant to a Letter of Credit.

 

“L/C Issuer” means Bank of America and any other Lender that
becomes an L/C Issuer in accordance with Section 2.03(l) or 10.07(j) in its
capacity as an issuer of Letters of Credit hereunder, or any successor issuer
of Letters of Credit hereunder.

 

“L/C Obligations” means, as at any date of determination, the
aggregate undrawn amount of all outstanding Letters of Credit plus the
aggregate of all Unreimbursed Amounts, including all L/C Borrowings.

 

“Lender” has the meaning specified in the introductory
paragraph to this Agreement and, as the context requires, includes an L/C
Issuer and the Swing Line Lender, and their respective successors and assigns
as permitted hereunder, each of which is referred to herein as a “Lender.”

 

“Lending Office” means, as to any Lender, the office or
offices of such Lender described as such in such Lender’s Administrative
Questionnaire, or such other office or offices as a Lender may from time to
time notify the Company and the Administrative Agent.

 

“Letter of Credit” means any Existing Letter of Credit or any
letter of credit issued hereunder. A Letter of Credit may be a commercial
letter of credit or a standby letter of credit.

 

“Letter of Credit Application” means an application and
agreement for the issuance or amendment of a Letter of Credit in the form from
time to time in use by the relevant L/C Issuer.

 

29

 

“Letter of Credit Expiration Date” means the day that is
three (3) Business Days prior to the scheduled Maturity Date then in effect for
the Revolving Credit Facility (or, if such day is not a Business Day, the next
preceding Business Day).

 

“Letter of Credit Sublimit” means an amount equal to the
lesser of (a) $20,000,000 and (b) the aggregate amount of the Revolving
Credit Commitments. The Letter of Credit Sublimit is part of, and not in
addition to, the Revolving Credit Facility.

 

“Lien” means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge, or
preference, priority or other security interest or preferential arrangement of
any kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title
to real property, and any Capitalized Lease having substantially the same
economic effect as any of the foregoing).

 

“Loan” means an extension of credit by a Lender to the
Company under Article 2 in the form of a Term Loan, a Revolving Credit Loan or
a Swing Line Loan.

 

“Loan Documents” means, collectively, (i) this Agreement,
(ii) the Notes, (iii) the Guaranty, (iv) the Collateral Documents,
(v) the Fee Letter, and (vi) each Letter of Credit Application.

 

“Loan Notice” means a notice of (a) a Term Borrowing, (b) a
Revolving Credit Borrowing, (c) a conversion of Loans from one Type to the
other, or (d) a continuation of Eurodollar Rate Loans, pursuant to Section
2.02(a), which, if in writing, shall be substantially in the form of Exhibit A.

 

“Loan Parties” means, collectively, the Company and each
Guarantor.

 

“Management Stockholders” means the members of management of
Holdings, the Company or its Subsidiaries who are investors or option holders
in Holdings or any direct or indirect parent thereof.

 

 “Master Agreement”
has the meaning specified in the definition of “Swap Contract.”

 

“Material Adverse Change” means changes, events,
circumstances, conditions, occurrences, developments or effects that,
individually or in the aggregate, have or would reasonably be expected to have
a material adverse effect on the business, properties, assets, liabilities,
condition (financial or otherwise) or results of operations of Encore Medical
and its Subsidiaries, taken as a whole, or that would reasonably be expected to
prevent Encore Medical from consummating the transactions contemplated by the
Merger Agreement; provided, however, that none of
the following, either individually or in the aggregate, shall be deemed to
constitute, or be taken into account in determining whether there has been or
will be, a Material Adverse Change:  (i)
a change in the trading price of any of Encore Medical’s securities, in and of
itself; (ii) reductions in regulatory reimbursement rates affecting the Encore
Medical taking effect after the execution of the Merger Agreement and the
effects, changes, events, circumstances and conditions resulting therefrom;
(iii) changes in GAAP or applicable laws after

 

30

 

the execution of the Merger Agreement; (iv) changes,
events, circumstances, conditions, occurrences, developments or effects
resulting from the announcement of the execution of the Merger Agreement or of
the pendency of the Merger; (v) changes, events, circumstances, conditions,
occurrences, developments or effects resulting from compliance by Encore
Medical with the terms of, or the taking of any action specifically required to
be taken in, the Merger Agreement (other than the consummation of the Merger
itself); (vi) changes, events, circumstances, conditions, occurrences,
developments or effects or conditions affecting the business in which Encore
Medical and its Subsidiaries operate generally; (vii) changes in economic,
financial or political conditions generally; (viii) any act of terrorism or war
(whether or not declared); (ix) any failure by Encore Medical and its
Subsidiaries, in and of itself, to meet projections, budgets or forecasts or
published revenue or earnings predictions; and (x) any reclassifications,
restructuring charges, non-recurring charges, increases in reserves and
writeoffs of, to or in the financial statements of Encore Medical and/or Compex
S.A. described in (and up to the amount set forth in) Section 7.2(d)(ii) of the
Merger Agreement, except, in the case of clauses (ii), (vi), (vii) and (viii)
above, to the extent such changes, events, circumstances, conditions,
occurrences, developments or effects have a materially disproportionate adverse
effect on Encore Medical and its Subsidiaries as compared to other persons
engaged in the same business.

 

“Material Adverse Effect” means (a) a material adverse effect
on the business, operations, assets, liabilities (actual or contingent) or
financial condition of the Company and its Subsidiaries, taken as a whole, (b)
a material adverse effect on the ability of the Company or the Loan Parties
(taken as a whole) to perform their respective payment obligations under any
Loan Document to which the Company or any of the Loan Parties is a party or (c)
a material adverse effect on the rights and remedies of the Lenders under any
Loan Document.

 

“Material Subsidiary” shall mean, at any date of
determination, each Restricted Subsidiary of the Company (a) whose total assets
at the last day of the Test Period ending on the last day of the most recent
fiscal period for which financial statements have been delivered pursuant to
Section 6.01 were equal to or greater than 5% of the Total Assets of the
Company and the Restricted Subsidiaries at such date or (b) whose gross
revenues for such Test Period were equal to or greater than 5% of the
consolidated gross revenues of the Company and the Restricted Subsidiaries for
such period, in each case determined in accordance with GAAP.

 

“Maturity Date” means (a) with respect to the Revolving
Credit Facility, November 3, 2012 and (b) with respect to the Term Loans
November 3, 2013.

 

“Maximum Rate” has the meaning specified in
Section 10.10.

 

“Merger” has the meaning set forth in the preliminary
statements to this Agreement.

 

“Merger Agreement” means the Agreement and Plan of Merger
dated as of June 30, 2006, among Grand Slam Holdings, LLC, Merger Sub and
Encore Medical.

 

“Merger Consideration” means the total funds required to
consummate the Merger.

 

31

 

“Merger Costs” means collectively, the
Merger Consideration, the Debt Repayment and the Transaction Expenses.

 

“Merger Sub” means Grand Slam Acquisition Corp., a Delaware
corporation.

 

“Moody’s” means Moody’s Investors Service, Inc. and any
successor thereto.

 

“Mortgage” means, collectively, the deeds of trust, trust
deeds and mortgages made by the Loan Parties in favor or for the benefit of the
Collateral Agent on behalf of the Secured Parties substantially in the form of
Exhibit H (with such changes as may be customary to account for local Law
matters), and any other mortgages executed and delivered pursuant to
Section 6.11.

 

“Mortgage Policies” has the meaning specified in
Section 6.13(b)(ii).

 

“Mortgaged Properties” has the meaning specified in paragraph
(g) of the definition of Collateral and Guarantee Requirement.

 

“Multiemployer Plan” means any employee benefit plan of the
type described in Section 4001(a)(3) of ERISA, to which any Loan Party or
any ERISA Affiliate makes or is obligated to make contributions, or during the
preceding five plan years, has made or been obligated to make contributions.

 

“Net Cash Proceeds” means:

 

(a)           with respect to the Disposition of
any asset by Holdings, the Company or any Restricted Subsidiary or any Casualty
Event, the excess, if any, of (i) the sum of cash and Cash Equivalents
received in connection with such Disposition or Casualty Event (including any
cash or Cash Equivalents received by way of deferred payment pursuant to, or by
monetization of, a note receivable or otherwise, but only as and when so
received and, with respect to any Casualty Event, any insurance proceeds or
condemnation awards in respect of such Casualty Event actually received by or
paid to or for the account of Holdings, the Company or any Restricted
Subsidiary) over (ii) the sum of (A) the principal amount, premium or penalty,
if any, interest and other amounts on any Indebtedness that is secured by the
asset subject to such Disposition or Casualty Event and that is required to be
repaid (and is timely repaid) in connection with such Disposition or Casualty
Event (other than Indebtedness under the Loan Documents), (B) the out-of-pocket
expenses (including attorneys’ fees, investment banking fees, survey costs,
title insurance premiums, and related search and recording charges, transfer
taxes, deed or mortgage recording taxes, other customary expenses and
brokerage, consultant and other customary fees) actually incurred by Holdings,
the Company or such Restricted Subsidiary in connection with such Disposition
or Casualty Event, (C) taxes paid or reasonably estimated to be actually
payable in connection therewith, and (D) any reserve for adjustment in respect
of (x) the sale price of such asset or assets established in accordance with
GAAP and (y) any liabilities associated with such asset or assets and retained
by Holdings, the Company or any Restricted Subsidiary after such sale or other
disposition thereof, including pension and other post-employment benefit
liabilities and liabilities related to environmental matters or against any
indemnification obligations

 

32

 

associated with
such transaction and it being understood that “Net Cash Proceeds” shall include
any cash or Cash Equivalents (i) received upon the Disposition of any
non-cash consideration received by Holdings, the Company or any Restricted
Subsidiary in any such Disposition and (ii) upon the reversal (without the
satisfaction of any applicable liabilities in cash in a corresponding amount)
of any reserve described in clause (D) of the preceding sentence or, if such
liabilities have not been satisfied in cash and such reserve is not reversed
within three hundred and sixty-five (365) days after such Disposition or
Casualty Event, the amount of such reserve; provided that
(x) no net cash proceeds calculated in accordance with the foregoing realized
in a single transaction or series of related transactions shall constitute Net
Cash Proceeds unless such net cash proceeds shall exceed $5,000,000 and (y) no
such net cash proceeds shall constitute Net Cash Proceeds under this clause (a)
in any fiscal year until the aggregate amount of all such net cash proceeds in
such fiscal year shall exceed $10,000,000 (and thereafter only net cash
proceeds in excess of such amount shall constitute Net Cash Proceeds under this
clause (a)); and

 

(b)           with respect to the incurrence or
issuance of any Indebtedness by Holdings, the Company or any Restricted
Subsidiary, the excess, if any, of (i) the sum of the cash received in
connection with such incurrence or issuance over (ii) the investment
banking fees, underwriting discounts, commissions, costs and other
out-of-pocket expenses and other customary expenses, incurred by Holdings, the
Company or such Restricted Subsidiary in connection with such incurrence or
issuance.

 

“New Notes” means the Senior Subordinated Notes.

 

“New Notes Documentation” means the New Notes, and all
documents executed and delivered with respect to the New Notes, including the
Senior Subordinated Notes Indenture.

 

“Non-Cash Charges” has the meaning set forth in the
definition of the term “Consolidated EBITDA”.

 

“Non-Consenting Lender” has the meaning specified in
Section 3.07(d).

 

“Nonrenewal Notice Date” has the meaning specified in
Section 2.03(b)(iii).

 

“Note” means a Term Note or a Revolving Credit Note, as the
context may require.

 

“Notice of Intent to Cure” has the meaning specified in
Section 6.02(b).

 

“Not Otherwise Applied” means, with reference to any amount
of net proceeds of any transaction or event or of Excess Cash Flow, that such
amount (a) was not required to be applied to prepay the Loans pursuant to
Section 2.05(b), and (b) was not previously applied in determining the
permissibility of a transaction under the Loan Documents where such
permissibility was (or may have been) contingent on receipt of such amount or
utilization of such amount for a specified purpose. The Company shall promptly
notify the Administrative Agent of any application of such amount as
contemplated by (b) above.

 

33

 

“NPL” means the National Priorities List under CERCLA.

 

“Obligations” means all (x) advances to, and debts,
liabilities, obligations, covenants and duties of, any Loan Party and its
Subsidiaries arising under any Loan Document or otherwise with respect to any
Loan or Letter of Credit, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising and including interest and fees that accrue after the
commencement by or against any Loan Party or its Subsidiaries of any proceeding
under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding, (y) obligations of any Loan Party and its Subsidiaries arising
under any Secured Hedge Agreement and (z) Cash Management Obligations. Without
limiting the generality of the foregoing, the Obligations of the Loan Parties
under the Loan Documents (and of their Subsidiaries to the extent they have
obligations under the Loan Documents) include (a) the obligation (including
guarantee obligations) to pay principal, interest, Letter of Credit
commissions, reimbursement obligations, charges, expenses, fees, Attorney
Costs, indemnities and other amounts payable by any Loan Party or its
Subsidiaries under any Loan Document and (b) the obligation of any Loan Party
or any of its Subsidiaries to reimburse any amount in respect of any of the
foregoing that any Lender, in its sole discretion, may elect to pay or advance
on behalf of such Loan Party or such Subsidiary. Notwithstanding the foregoing,
(i) the obligations of the Company or any Subsidiary under any Secured Hedge
Agreement and the Cash Management Obligations shall be secured and guaranteed
pursuant to the Collateral Documents and the Guaranty only to the extent that,
and for so long as, the other Obligations are so secured and guaranteed and
(ii) any release of Collateral or Guarantors effected in the manner permitted
by this Agreement shall not require the consent of the holders of obligations
under the Secured Hedge Agreements or the holders of the Cash Management
Obligations.

 

“Organization Documents” means, (a) with respect to any
corporation, the certificate or articles of incorporation and the bylaws (or
equivalent or comparable constitutive documents with respect to any non-U.S.
jurisdiction); (b) with respect to any limited liability company, the
certificate or articles of formation or organization and operating agreement;
and (c) with respect to any partnership, joint venture, trust or other form of
business entity, the partnership, joint venture or other applicable agreement
of formation or organization, if applicable, and any agreement, instrument,
filing or notice with respect thereto filed in connection with its formation or
organization with the applicable Governmental Authority in the jurisdiction of
its formation or organization and, if applicable, any certificate or articles
of formation or organization of such entity.

 

“Other Taxes” has the meaning specified in
Section 3.01(b).

 

“Outstanding Amount” means (a) with respect to the Term
Loans, Revolving Credit Loans and Swing Line Loans on any date, the outstanding
principal amount thereof after giving effect to any borrowings and prepayments
or repayments of Term Loans, Revolving Credit Loans (including any refinancing
of outstanding unpaid drawings under Letters of Credit or L/C Credit Extensions
as a Revolving Credit Borrowing) and Swing Line Loans, as the case may be,
occurring on such date; and (b) with respect to any L/C Obligations on any
date, the outstanding amount thereof on such date after giving effect to any
L/C Credit Extension occurring on such date and any other changes thereto as of
such date, including as a result of any

 

34

 

reimbursements of outstanding unpaid drawings under
any Letters of Credit (including any refinancing of outstanding unpaid drawings
under Letters of Credit or L/C Credit Extensions as a Revolving Credit
Borrowing) or any reductions in the maximum amount available for drawing under
Letters of Credit taking effect on such date.

 

“Participant” has the meaning specified in
Section 10.07(e).

 

“Participating Member State” means each state so described in
any EMU Legislation.

 

“PBGC” means the Pension Benefit Guaranty Corporation.

 

“Pension Plan” means any “employee pension benefit plan” (as
such term is defined in Section 3(2) of ERISA), other than a Multiemployer
Plan, that is subject to Title IV of ERISA and is sponsored or maintained by
any Loan Party or any ERISA Affiliate or to which any Loan Party or any ERISA
Affiliate contributes or has an obligation to contribute, or in the case of a
multiple employer or other plan described in Section 4064(a) of ERISA, has
made contributions at any time during the immediately preceding five (5) plan
years.

 

“Permitted Acquisition” has the meaning specified in
Section 7.02(i) and shall include, for the avoidance of doubt, the
Post-Closing Acquisition.

 

“Permitted Equity Issuance” means any sale or issuance of any
Qualified Equity Interests of Holdings (or any direct or indirect parent of
Holdings) (and, after a Qualifying IPO, of the Company) to the extent permitted
hereunder.

 

“Permitted Holders” means the Equity Investors other than the
Management Stockholders to the extent that the amount of the outstanding voting
stock of Holdings (or any direct or indirect parent thereof) owned beneficially
or of record by such Management Stockholders in the aggregate at any time
exceeds ten percent (10%) of the total amount of the outstanding voting stock
of Holdings (or any direct or indirect parent thereof) at such time.

 

“Permitted Holdings Debt” has the meaning specified in
Section 7.03(r).

 

“Permitted Refinancing” means, with respect to any Person,
any modification, refinancing, refunding, renewal or extension of any
Indebtedness of such Person; provided that
(a) the principal amount (or accreted value, if applicable) thereof does not
exceed the principal amount (or accreted value, if applicable) of the
Indebtedness so modified, refinanced, refunded, renewed or extended except by
an amount equal to unpaid accrued interest and premium thereon plus other
reasonable amount paid, and fees and expenses reasonably incurred, in
connection with such modification, refinancing, refunding, renewal or extension
and by an amount equal to any existing commitments unutilized thereunder, (b)
other than with respect to a Permitted Refinancing in respect of Indebtedness
permitted pursuant to Section 7.03(e), such modification, refinancing,
refunding, renewal or extension has a final maturity date equal to or later
than the final maturity date of, and has a Weighted Average Life to Maturity
equal to or greater than the Weighted Average Life to Maturity of, the
Indebtedness being modified, refinanced, refunded, renewed or extended, (c)
other than with respect to a Permitted Refinancing in respect of Indebtedness
permitted pursuant to Section 7.03(e), at the time thereof, no Event of
Default shall

 

35

 

have occurred and be continuing, and (d) if such
Indebtedness being modified, refinanced, refunded, renewed or extended is
Indebtedness permitted pursuant to Section 7.03(b), 7.03(t) or 7.13(a),
(i) to the extent such Indebtedness being modified, refinanced, refunded, renewed
or extended is subordinated in right of payment to the Obligations, such
modification, refinancing, refunding, renewal or extension is subordinated in
right of payment to the Obligations on terms at least as favorable to the
Lenders as those contained in the documentation governing the Indebtedness
being modified, refinanced, refunded, renewed or extended, (ii) the terms
and conditions (including, if applicable, as to collateral but excluding as to
subordination, interest rate and redemption premium) of any such modified,
refinanced, refunded, renewed or extended Indebtedness, taken as a whole, are
not materially less favorable to the Loan Parties or the Lenders than the terms
and conditions of the Indebtedness being modified, refinanced, refunded, renewed
or extended; provided that a certificate of a
Responsible Officer delivered to the Administrative Agent at least five
Business Days prior to the incurrence of such Indebtedness, together with a
reasonably detailed description of the material terms and conditions of such
Indebtedness or drafts of the documentation relating thereto, stating that the
Company has determined in good faith that such terms and conditions satisfy the
foregoing requirement shall be conclusive evidence that such terms and conditions
satisfy the foregoing requirement unless the Administrative Agent notifies the
Company within such five Business Day period that it disagrees with such
determination (including a reasonable description of the basis upon which it
disagrees) and (iii) such modification, refinancing, refunding, renewal or
extension is incurred by the Person who is the obligor of the Indebtedness
being modified, refinanced, refunded, renewed or extended.

 

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

 

“Plan” means any “employee benefit plan” (as such term is
defined in Section 3(3) of ERISA) established by any Loan Party or, with
respect to any such plan that is subject to Section 412 of the Code or
Title IV of ERISA, any ERISA Affiliate.

 

“Pledged Debt” has the meaning specified in the Security
Agreement.

 

“Pledged Equity” has the meaning specified in the Security
Agreement.

 

“Post-Closing Acquisition” has the meaning set forth in the
preliminary statements to this Agreement.

 

“Post-Acquisition Period” means, with respect to any
Specified Transaction, the period beginning on the date such Specified
Transaction is consummated and ending on the last day of the sixth full
consecutive fiscal quarter immediately following the date on which such
Specified Transaction is consummated.

 

“Post-Transaction Period” means, with respect to the
Transaction, the period beginning on the Closing Date and ending on the last
day of the fourth full consecutive fiscal quarter immediately following the
Closing Date.

 

“Principal L/C Issuer” means any L/C Issuer
that has issued Letters of Credit having an aggregate Outstanding Amount in
excess of $500,000.

 

36

 

“Pro Forma Adjustment” means, for any Test Period that
includes all or any part of a fiscal quarter included in any Post-Acquisition
Period or Post-Transaction Period, with respect to the Acquired EBITDA of the
applicable Acquired Entity or Business or of the applicable Converted
Restricted Subsidiary or the Consolidated EBITDA of Holdings and its Restricted
Subsidiaries, the pro forma increase or decrease in such Acquired EBITDA or
such Consolidated EBITDA, as the case may be, projected by Holdings or the
Company in good faith as a result of (a) actions that have begun to be taken or
are expected to have been begun to be taken prior to or during such
Post-Acquisition Period or such Post-Transaction Period, as applicable, for the
purposes of realizing reasonably identifiable and factually supportable cost
savings or (b) any additional costs incurred prior to or during such
Post-Acquisition Period or such Post-Transaction Period, in each case in
connection with the combination of the operations of such Acquired Entity or
Business or of such Converted Restricted Subsidiary with the operations of the
Company and the Restricted Subsidiaries; provided that,
so long as such actions have begun to be taken or are expected to have been
begun to be taken prior to or during such Post-Acquisition Period or such
Post-Transaction Period, as applicable, or such costs are incurred prior to
such Post-Acquisition Period or such Post-Transaction Period or during such
Post-Acquisition Period or such Post-Acquisition Period,  as applicable, the cost savings related to
such actions or such additional costs, as applicable, it may be assumed, for
purposes of projecting such pro forma increase or decrease to such
Acquired EBITDA or such Consolidated EBITDA, as the case may be, that such cost
savings will be realizable during the entirety of such Test Period, or such
additional costs, as applicable, will be incurred during the entirety of such
Test Period; provided, further, that any such
pro forma increase or decrease to such Acquired EBITDA or such Consolidated
EBITDA, as the case may be, shall be without duplication for cost savings or
additional costs already included in such Acquired EBITDA or such Consolidated
EBITDA, as the case may be, for such Test Period; provided,
further, that with respect to any action expected to have begun to
be taken, the underlying action shall actually have begun to be taken prior to
the date on which a Compliance Certificate shall be required to be delivered
pursuant to Section 6.02(b) for the fiscal quarter in which the relevant cost
saving shall have been included in the Acquired EBITDA or Consolidated EBITDA,
as applicable.

 

“Pro Forma Balance Sheet” has the meaning set forth in
Section 5.05(a)(ii).

 

“Pro Forma Basis”, “Pro Forma Compliance”
and “Pro Forma Effect” mean, with respect to
compliance with any test or covenant hereunder, that (A) to the extent
applicable, the Pro Forma Adjustment shall have been made and (B) all Specified
Transactions and the following transactions in connection therewith shall be
deemed to have occurred as of the first day of the applicable period of
measurement in such test or covenant: 
(a) income statement items (whether positive or negative) attributable
to the property or Person subject to such Specified Transaction, (i) in
the case of a Disposition of all or substantially all Equity Interests in any
Subsidiary of the Company or any division, product line, or facility used for
operations of the Company or any of its Subsidiaries, shall be excluded, and
(ii) in the case of a Permitted Acquisition or Investment described in the
definition of  “Specified Transaction”,
shall be included, (b) any retirement of Indebtedness, and (c) any Indebtedness
incurred or assumed by the Company or any of the Restricted Subsidiaries in
connection therewith and if such Indebtedness has a floating or formula rate,
shall have an implied rate of interest for the applicable period for purposes
of this definition determined by utilizing the rate which is or would be in
effect with respect to such Indebtedness as at the relevant date of
determination;

 

37

 

provided that, without
limiting  the application of the Pro
Forma Adjustment pursuant to (A) above, the foregoing pro forma adjustments may
be applied to any such test or covenant solely to the extent that such
adjustments are consistent with the definition of Consolidated EBITDA and give
effect to events (including operating expense reductions) that are (i) (x)
directly attributable to such transaction, (y) expected to have a continuing
impact on the Company and the Restricted Subsidiaries and (z) factually
supportable or (ii) otherwise consistent with the definition of Pro Forma
Adjustment.

 

“Pro Forma Financial Statements” has the meaning set forth in
Section 5.05(a)(ii).

 

“Pro Rata Share” means, with respect to each Lender at any
time a fraction (expressed as a percentage, carried out to the ninth decimal
place), the numerator of which is the amount of the Commitment of such Lender
under the applicable Facility or Facilities at such time and the denominator of
which is the amount of the Aggregate Commitments of all Lenders under the
applicable Facility or Facilities at such time; provided
that if such Commitment has been terminated, then the Pro Rata Share of each
Lender shall be determined based on the Pro Rata Share of such Lender
immediately prior to such termination and after giving effect to any subsequent
assignments made pursuant to the terms hereof.

 

“Projections” shall have the meaning set forth in
Section 6.01(c).

 

“Qualified Equity Interests” means any Equity Interests that
are not Disqualified Equity Interests.

 

“Qualifying IPO” means the issuance by Holdings, any direct
or indirect parent of Holdings or the Company of its common Equity Interests in
an underwritten primary public offering (other than a public offering pursuant
to a registration statement on Form S-8) pursuant to an effective registration
statement filed with the SEC in accordance with the Securities Act (whether
alone or in connection with a secondary public offering).

 

“Refinanced Term Loans” has the meaning specified in
Section 10.01.

 

“Register” has the meaning set forth in
Section 10.07(d).

 

“Replacement Term Loans” has the meaning specified in
Section 10.01.

 

“Reportable Event” means any of the events set forth in
Section 4043(c) of ERISA or the regulations issued thereunder, other than
events for which the thirty (30) day notice period has been waived.

 

“Request for Credit Extension” means (a) with respect to a
Borrowing, conversion or continuation of Term Loans or Revolving Credit Loans,
a Loan Notice, (b) with respect to an L/C Credit Extension, a Letter of Credit
Application, and (c) with respect to a Swing Line Loan, a Swing Line Loan
Notice.

 

“Required Lenders” means, as of any date of determination,
Lenders having more than 50% of the sum of the (a) Total Outstandings (with the
aggregate amount of each

 

38

 

Lender’s risk participation and funded participation
in L/C Obligations and Swing Line Loans being deemed “held” by such Lender for
purposes of this definition), (b) aggregate unused Term Commitments and (c)
aggregate unused Revolving Credit Commitments; provided
that the unused Term Commitment and unused Revolving Credit Commitment of, and
the portion of the Total Outstandings held or deemed held by, any Defaulting
Lender shall be excluded for purposes of making a determination of Required
Lenders.

 

“Responsible Officer” means the chief executive officer,
president, executive vice president, vice president, chief financial officer,
treasurer or assistant treasurer or other similar officer of a Loan Party and,
as to any document delivered on the Closing Date, any secretary or assistant secretary
of a Loan Party. Any document delivered hereunder that is signed by a
Responsible Officer of a Loan Party shall be conclusively presumed to have been
authorized by all necessary corporate, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively
presumed to have acted on behalf of such Loan Party.

 

“Restricted Payment” means any dividend or other distribution
(whether in cash, securities or other property) with respect to any Equity
Interest of Holdings, the Company or any Restricted 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,
defeasance, acquisition, cancellation or termination of any such Equity
Interest, or on account of any return of capital to Holdings or the Company’s
stockholders, partners or members (or the equivalent Persons thereof).

 

“Restricted Subsidiary” means any Subsidiary of the Company
other than an Unrestricted Subsidiary.

 

“Revolving Commitment Increase” has the meaning set forth in
Section 2.14(a).

 

“Revolving Commitment Increase Lender” has the meaning set
forth in Section 2.14(a).

 

“Revolving Credit Borrowing” means a borrowing consisting of
simultaneous Revolving Credit Loans of the same Type and, in the case of
Eurodollar Rate Loans, having the same Interest Period made by each of the
Revolving Credit Lenders pursuant to Section 2.01(b).

 

“Revolving Credit Commitment” means, as to each Revolving
Credit Lender, its obligation to (a) make Revolving Credit Loans to the Company
pursuant to Section 2.01(b), (b) purchase participations in L/C
Obligations in respect of Letters of Credit and (c) purchase participations in
Swing Line Loans, in an aggregate principal amount at any one time outstanding
not to exceed the amount set forth, and opposite such Lender’s name on Schedule
2.01 under the caption “Revolving Credit Commitment” or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement including if applicable pursuant to Section 2.14. The aggregate
Revolving Credit Commitments of all Revolving Credit Lenders shall be $50,000,000
on the Closing Date, as such amount may be adjusted from time to time in
accordance with the terms of this Agreement including if applicable pursuant to
Section 2.14.

 

39

 

“Revolving Credit Exposure” means, as to each Revolving
Credit Lender, the sum of the outstanding principal amount of such Revolving
Credit Lender’s Revolving Credit Loans at such time and its Pro Rata Share of
the L/C Obligations and the Swing Line Obligations at such time.

 

“Revolving Credit Facility” means, at any time, the aggregate
amount of the Revolving Credit Lenders’ Revolving Credit Commitments at such
time.

 

“Revolving Credit Lender” means, at any time, any Lender that
has a Revolving Credit Commitment at such time.

 

“Revolving Credit Loan” has the meaning specified in
Section 2.01(b).

 

“Revolving Credit Note” means a promissory note of the
Company payable to any Revolving Credit Lender or its registered assigns, in
substantially the form of Exhibit C-2 hereto, evidencing the aggregate
Indebtedness of the Company to such Revolving Credit Lender resulting from the
Revolving Credit Loans made by such Revolving Credit Lender.

 

“Rollover Amount” has the meaning set forth in
Section 7.16(b).

 

“S&P” means Standard & Poor’s Ratings Services, a
division of The McGraw-Hill Companies, Inc., and any successor thereto.

 

“Same Day Funds” means immediately available funds.

 

“SEC” means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.

 

“Secured Hedge Agreement” means any Swap Contract permitted
under Article 7 that is entered into by and between any Loan Party or any
Restricted Subsidiary and any Hedge Bank.

 

“Secured Parties” means, collectively, the Administrative
Agent, the Collateral Agent, the Lenders, the Hedge Banks, the Cash Management
Banks, the Supplemental Administrative Agent and each co-agent or sub-agent
appointed by the Administrative Agent from time to time pursuant to
Section 9.01(c).

 

“Securities Act” means the Securities Act of 1933, as
amended.

 

“Security Agreement” means, collectively, the Security
Agreement executed by the Loan Parties, substantially in the form of Exhibit
G-1, together with each other security agreement supplement executed and
delivered pursuant to Section 6.11.

 

“Security Agreement Supplement” has the meaning specified in
the Security Agreement.

 

“Senior Subordinated Notes” means $200,000,000 in aggregate
principal amount of the Company’s 11.75% senior subordinated notes due 2014.

 

40

 

“Senior Subordinated Notes Indenture” means the Indenture for
the Senior Subordinated Notes, dated as of November 3, 2006.

 

“Sold Entity or Business” has the meaning set forth in the
definition of the term “Consolidated EBITDA”.

 

“Solvent” and “Solvency” mean,
with respect to any Person on any date of determination, that on such date (a)
the fair value of the property of such Person is greater than the total amount
of liabilities, including contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (c) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person’s ability to pay such debts and liabilities as they mature and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person’s property would constitute
an unreasonably small capital. The amount of contingent liabilities at any time
shall be computed as the amount that, in the light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

 

“SPC” has the meaning specified in Section 10.07(h).

 

“Specified Transaction” means, with respect to any period,
any Investment, Disposition, incurrence or repayment of Indebtedness,
Restricted Payment, Subsidiary designation, Incremental Term Loan or Revolving
Commitment Increase that by the terms of this Agreement requires “Pro Forma
Compliance” with a test or covenant hereunder or requires such test or covenant
to be calculated on a “Pro Forma Basis”.

 

“Sponsors” means The Blackstone Group and its Affiliates, but
not including, however, any portfolio companies of any of the foregoing.

 

“Sponsor Management Agreement” means the Transaction and
Monitoring Fee Agreement between the Sponsor and Encore Medical.

 

“Sponsor Termination Fees” means the one-time payment under
the Sponsor Management Agreement of a termination fee to the Sponsor and its
Affiliates in the event of either a Change of Control or the completion of a Qualifying
IPO.

 

“Subsidiary” of a Person means a corporation, partnership,
joint venture, limited liability company or other business entity of which a
majority of the shares of securities or other interests having ordinary voting
power for the election of directors or other governing body (other than
securities or interests having such power only by reason of the happening of a
contingency) are at the time beneficially owned, or the management of which is
otherwise controlled, directly, or indirectly through one or more
intermediaries, or both, by such Person. Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall refer to a
Subsidiary or Subsidiaries of the Company.

 

“Subsidiary Guarantor” means, collectively, the Subsidiaries
of the Company that are Guarantors.

 

41

 

“Successor Company” has the meaning specified in
Section 7.04(d).

 

“Supplemental Administrative Agent” has the meaning specified
in Section 9.13 and “Supplemental Administrative Agents” shall have the
corresponding meaning.

 

“Swap Contract” means (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index
transactions, interest rate options, forward foreign exchange transactions, cap
transactions, floor transactions, collar transactions, currency swap
transactions, cross-currency rate swap transactions, currency options, spot
contracts, or any other similar transactions or any combination of any of the
foregoing (including any options to enter into any of the foregoing), whether
or not any such transaction is governed by or subject to any master agreement,
and (b) any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed
by, any form of master agreement published by the International Swaps and
Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master Agreement.

 

“Swap Termination Value” means, in respect of any one or more
Swap Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contract has been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined based upon
one or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

 

“Swing Line Borrowing” means a borrowing of a Swing Line Loan
pursuant to Section 2.04.

 

“Swing Line Facility” means the revolving credit facility
made available by the Swing Line Lender pursuant to Section 2.04.

 

“Swing Line Lender” means Bank of America, in its capacity as
provider of Swing Line Loans, or any successor swing line lender hereunder.

 

“Swing Line Loan” has the meaning specified in
Section 2.04(a).

 

“Swing Line Loan Notice” means a notice of a Swing Line
Borrowing pursuant to Section 2.04(b), which, if in writing, shall be
substantially in the form of Exhibit B.

 

“Swing Line Obligations” means, as at any date of
determination, the aggregate principal amount of all Swing Line Loans
outstanding.

 

42

 

“Swing Line Sublimit” means an amount equal to the lesser of
(a) $20,000,000 and (b) the aggregate amount of the Revolving Credit
Commitments. The Swing Line Sublimit is part of, and not in addition to, the
Revolving Credit Commitments.

 

“Syndication Agent” means Credit Suisse Securities (USA) LLC,
as syndication agent under this Agreement.

 

“Taxes” has the meaning specified in Section 3.01(a).

 

“Tender Offer and Consent Solicitation” has
the meaning specified in Section 4.01(e)(i).

 

“Term Borrowing” means a borrowing consisting of simultaneous
Term Loans of the same Type and, in the case of Eurodollar Rate Loans, having
the same Interest Period made by each of the Term Lenders pursuant to
Section 2.01.

 

“Term Commitment” means, as to each Term Lender, its
obligation to make a Term Loan to the Company pursuant to Section 2.01(a)
in an aggregate amount not to exceed the amount set forth opposite such Lender’s
name on Schedule 2.01(a) under the caption “Term Commitment” or in the Assignment
and Assumption pursuant to which such Term Lender becomes a party hereto, as
applicable, as such amount may be adjusted from time to time in accordance with
this Agreement. The initial aggregate amount of the Term Commitments is
$350,000,000.

 

“Term Lender” means, at any time, any Lender that has a Term
Commitment or a Term Loan at such time.

 

“Term Loan” means a Loan made pursuant to
Section 2.01(a).

 

“Term Note” means a promissory note of the Company payable to
any Term Lender or its registered assigns, in substantially the form of Exhibit
C-1 hereto, evidencing the aggregate Indebtedness of the Company to such Term
Lender resulting from the Term Loans made by such Term Lender.

 

“Test Period” in effect at any time shall mean the most
recent period of four consecutive fiscal quarters of Holdings ended on or prior
to such time (taken as one accounting period) in respect of which financial
statements for each quarter or fiscal year in such period have been or are
required to be delivered pursuant to Section 6.01(a) or (b); provided that the Test Period ended June 30, 2007 shall mean
the fiscal quarter of Encore Medical ended September 30, 2006 together with the
three fiscal quarters of Holdings ended December 31, 2006, March 31, 2007
and June 30, 2007, respectively.

 

“Total Assets” means, as of any date of determination of any
Person means the total amount of all assets of the Company and its Restricted
Subsidiaries determined on a consolidated basis.

 

“Threshold Amount” means $15,000,000.

 

43

 

“Total Leverage Ratio” means, with respect to any Test
Period, the ratio of (a) Consolidated Total Debt as of the last day of
such Test Period to (b) Consolidated EBITDA for such Test Period.

 

“Total Outstandings” means, at any time, the sum of (i) 
the aggregate Outstanding Amount of all Loans at such time and (ii) the
aggregate Outstanding Amount of all L/C Obligations at such time.

 

“Tranche” means a category of Commitments or Credit
Extensions thereunder. For purposes hereof, each of the following comprises a
separate Tranche:  (a) the unused
Revolving Commitments, (b) the outstanding Revolving Credit Loans and L/C
Obligations in respect of Letters of Credit and (c) the outstanding Term Loans.

 

“Transaction” means, collectively, (a) the Equity
Contribution, (b) the Merger, (c) the issuance of the New Notes, (d) the
consummation of the Tender Offer and Consent Solicitation, (e) the refinancing
of the Existing Credit Agreement and the termination of all commitments thereunder,
(f) the funding of the Term Loans in an aggregate amount of $340,000,000 and up
to $20,000,000 of Revolving Credit Loans on the Closing Date, (g) the
consummation of any other transactions in connection with the foregoing, and
(h) the payment of the fees and expenses incurred in connection with any of the
foregoing (for the avoidance of doubt the term “Transaction” shall not include
the Post-Closing Acquisition, the financing thereof or the payment of fees and
expenses in connection therewith).

 

“Transaction Expenses” means any fees or expenses incurred or
paid by Grand Slam Holdings, LLC, Encore Medical, Holdings (or any direct or
indirect parents thereof), the Company or any Restricted Subsidiary in
connection with the Transaction, this Agreement and the other Loan Documents
and the transactions contemplated hereby and thereby (but not to include any
fees and expenses related to the Post-Closing Acquisition).

 

“Type” means, with respect to a Loan, its character as a Base
Rate Loan or a Eurodollar Rate Loan.

 

“Unaudited Financial Statements” has the meaning set forth in
Section 4.01(g).

 

“Uniform Commercial Code” means the Uniform Commercial Code
as the same may from time to time be in effect in the State of New York or the
Uniform Commercial Code (or similar code or statute) of another jurisdiction,
to the extent it may be required to apply to any item or items of Collateral.

 

“United States” and “U.S.” mean the
United States of America.

 

“U.S.
Lender” has the meaning set forth in Section 10.15(b).

 

“Unreimbursed Amount” has the meaning set forth in
Section 2.03(c)(i).

 

“Unrestricted Subsidiary” means (i) each Subsidiary of
the Company listed on Schedule 1.01A and (ii) any Subsidiary of the
Company designated by the board of directors of Holdings as an Unrestricted
Subsidiary pursuant to Section 6.14 subsequent to the date hereof.

 

44

 

“Weighted Average Life to Maturity” means, when applied to
any Indebtedness at any date, the number of years obtained by dividing:  (i) the sum of the products obtained by
multiplying (a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payments of principal, including payment at
final maturity, in respect thereof, by (b) the number of years (calculated to
the nearest one-twelfth) that will elapse between such date and the making of
such payment; by (ii) the then outstanding principal amount of such
Indebtedness.

 

“wholly owned” means, with respect to a Subsidiary of a
Person, a Subsidiary of such Person all of the outstanding Equity Interests of
which (other than (x) director’s qualifying shares and (y) shares issued to
foreign nationals to the extent required by applicable Law) are owned by such
Person and/or by one or more wholly owned Subsidiaries of such Person.

 

SECTION 1.02  Other
Interpretive Provisions.  With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

 

(a)           The meanings of defined terms are equally
applicable to the singular and plural forms of the defined terms.

 

(b)           (i) 
The words “herein,” “hereto,” “hereof” and “hereunder” and words of
similar import when used in any Loan Document shall refer to such Loan Document
as a whole and not to any particular provision thereof.

 

(ii)           Article, Section,
Exhibit and Schedule references are to the Loan Document in which such
reference appears.

 

(iii)          The term “including”
is by way of example and not limitation.

 

(iv)          The term “documents”
includes any and all instruments, documents, agreements, certificates, notices,
reports, financial statements and other writings, however evidenced, whether in
physical or electronic form.

 

(c)           In the computation of periods of time
from a specified date to a later specified date, the word “from” means “from
and including;” the words “to” and “until” each mean “to but excluding;” and
the word “through” means “to and including.”

 

(d)           Section headings herein and in
the other Loan Documents are included for convenience of reference only and
shall not affect the interpretation of this Agreement or any other Loan
Document.

 

SECTION 1.03  Accounting
Terms.  (a)  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all financial
data (including financial ratios and other financial calculations) required to
be submitted pursuant to this Agreement shall be prepared in conformity with,
GAAP, applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed herein.

 

45

 

(b)           Notwithstanding anything to the
contrary herein, for purposes of determining compliance with any test or
covenant contained in this Agreement with respect to any period during which
any Specified Transaction occurs, the Total Leverage Ratio and Interest
Coverage Ratio shall be calculated with respect to such period and such
Specified Transaction on a Pro Forma Basis.

 

SECTION 1.04  Rounding.  Any
financial ratios required to be maintained by the Company pursuant to this
Agreement (or required to be satisfied in order for a specific action to be
permitted under this Agreement) shall be calculated by dividing the appropriate
component by the other component, carrying the result to one place more than
the number of places by which such ratio is expressed herein and rounding the
result up or down to the nearest number (with a rounding-up if there is no
nearest number).

 

SECTION 1.05  References
to Agreements, Laws, Etc.  Unless otherwise expressly provided
herein, (a) references to Organization Documents, agreements (including the
Loan Documents) and other contractual instruments shall be deemed to include
all subsequent amendments, restatements, extensions, supplements, replacements
and other modifications thereto, but only to the extent that such amendments,
restatements, extensions, supplements, replacements and other modifications are
permitted by any Loan Document; and (b) references to any Law shall include all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting such Law.

 

SECTION 1.06  Times
of Day.  Unless otherwise specified, all references herein to
times of day shall be references to Eastern time (daylight or standard, as
applicable).

 

SECTION 1.07  Timing
of Payment of Performance.  When the payment of any obligation or
the performance of any covenant, duty or obligation is stated to be due or
performance required on a day which is not a Business Day, the date of such
payment (other than as described in the definition of Interest Period) or
performance shall extend to the immediately succeeding Business Day.

 

SECTION 1.08  Currency
Equivalents Generally.  For purposes of determining compliance with
Sections 7.01, 7.02 and 7.03 with respect to any amount of obligations, Liens,
Indebtedness or Investment in a currency other than Dollars, no Default shall
be deemed to have occurred solely as a result of changes in rates of exchange
occurring after the time such obligations, Liens, Indebtedness or Investment is
incurred; provided that, for the
avoidance of doubt, the foregoing provisions of this Section 1.08 shall
otherwise apply to such Sections, including with respect to determining whether
any obligations, Liens Indebtedness or Investment may be incurred at any time
under such Sections. For purposes of determining compliance under Sections
7.02, 7.05, 7.06 and 7.11, any amount in a currency other than Dollars will be
converted to Dollars based on the average Exchange Rate for such currency for
the most recent twelve-month period immediately prior to the date of
determination determined in a manner consistent with that used in calculating
Consolidated EBITDA for the applicable period; provided,
however, that the foregoing shall
not be deemed to apply to the determination of any amount of Indebtedness.

 

46

 

ARTICLE II

 

The Commitments and Credit
Extensions

 

SECTION 2.01  The
Loans.  (a)  The Term Borrowings.
Subject to the terms and conditions set forth herein, each Term Lender
severally agrees to make to the Company a single loan in an amount equal to
such Term Lender’s Term Commitment on the Closing Date. Amounts borrowed under
this Section 2.01(a) and repaid or prepaid may not be reborrowed. Term
Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided
herein.

 

(b)           The Revolving Credit Borrowings.
Subject to the terms and conditions set forth herein each Revolving Credit
Lender severally agrees to make loans to the Company (each such loan, a “Revolving Credit Loan”) from time to time,
on any Business Day until the Maturity Date with respect to the Revolving
Credit Facility, in an aggregate principal amount not to exceed at any time
outstanding the amount of such Lender’s Revolving Credit Commitment; provided that after giving effect to any Revolving Credit
Borrowing, (i) the aggregate Outstanding Amount of the Revolving Credit Loans
of any Lender, plus such Lender’s Pro Rata Share of the Outstanding Amount of
all L/C Obligations, plus such Lender’s Pro Rata Share of the Outstanding
Amount of all Swing Line Loans shall not exceed such Lender’s Revolving Credit
Commitment and (ii) the aggregate principal amount of Revolving Credit
Loans made on the Closing Date shall not exceed $20,000,000. Within the limits
of each Lender’s Revolving Credit Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this Section 2.01(b),
prepay under Section 2.05, and reborrow under this Section 2.01(b).
Revolving Credit Loans may be Base Rate Loans or Eurodollar Rate Loans, as
further provided herein.

 

SECTION 2.02  Borrowings,
Conversions and Continuations of Loans.  (a)  Each Term
Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans or
Revolving Credit Loans from one Type to the other, and each continuation of
Eurodollar Rate Loans shall be made upon the Company’s irrevocable notice to
the Administrative Agent, which may be given by telephone. Each such notice
must be received by the Administrative Agent not later than 11:00 a.m.
(i) three (3) Business Days prior to the requested date of any Borrowing
of, or continuation of, Eurodollar Rate Loans or any conversion of Base Rate
Loans to Eurodollar Rate Loans, and (ii) one (1) Business Day before the
requested Borrowing Date of Base Rate Loans or conversion of any Eurodollar
Loan to Base Rate Loans. Each telephonic notice by the Company pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to the
Administrative Agent of a written Loan Notice, appropriately completed and
signed by a Responsible Officer of the Company. Each Borrowing of, conversion
to or continuation of Eurodollar Rate Loans shall be in a principal amount of
$1,000,000 or a whole multiple of $500,000 in excess thereof. Except as
provided in Sections 2.03(c) and 2.04(c), each Borrowing of or conversion to
Base Rate Loans shall be in a principal amount of $500,000 or a whole multiple
of $100,000 in excess thereof. Each Loan Notice (whether telephonic or written)
shall specify (i) whether the Company is requesting a Term Borrowing, a
Revolving Credit Borrowing, a conversion of Term Loans or Revolving Credit
Loans from one Type to the other, or a continuation of Eurodollar Rate Loans,
(ii) the requested date of the Borrowing, conversion or continuation, as
the case may be (which shall be a Business Day), (iii) the principal
amount of Loans to be borrowed, converted or continued, (iv) the Type of Loans
to be borrowed or to

 

47

 

which existing Term Loans or Revolving Credit Loans are to be
converted, and (v) if applicable, the duration of the Interest Period with
respect thereto. If the Company fails to specify a Type of Loan in a Loan
Notice or fails to give a timely notice requesting a conversion or
continuation, then the applicable Term Loans or Revolving Credit Loans shall be
made as, or converted to, Base Rate Loans. Any such automatic conversion to
Base Rate Loans shall be effective as of the last day of the Interest Period
then in effect with respect to the applicable Eurodollar Rate Loans. If the
Company requests a Borrowing of, conversion to, or continuation of Eurodollar
Rate Loans in any such Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one (1) month.

 

(b)           Following receipt of a Loan Notice,
the Administrative Agent shall promptly notify each Lender of the amount of its
Pro Rata Share of the applicable Class of Loans, and if no timely notice of a
conversion or continuation is provided by the Company, the Administrative Agent
shall notify each Lender of the details of any automatic conversion to Base
Rate Loans or continuation described in Section 2.02(a). In the case of
each Borrowing, each Appropriate Lender shall make the amount of its Loan
available to the Administrative Agent in Same Day Funds at the Administrative
Agent’s Office not later than 1:00 p.m. on the Business Day specified in the
applicable Loan Notice. Upon satisfaction of the applicable conditions set
forth in Section 4.02 (and, if such Borrowing is the initial Credit
Extension, Section 4.01), the Administrative Agent shall make all funds so
received available to the Company in like funds as received by the
Administrative Agent either by (i) crediting the account of the Company on
the books of Bank of America with the amount of such funds or (ii) wire
transfer of such funds, in each case in accordance with instructions provided
to (and reasonably acceptable to) the Administrative Agent by the Company; provided that if, on the date the Loan Notice with respect
to such Borrowing is given by the Company, there are L/C Borrowings
outstanding, then the proceeds of such Borrowing shall be applied, first, to
the payment in full of any such L/C Borrowings, and second, to the Company as
provided above.

 

(c)           Except as otherwise provided herein,
a Eurodollar Rate Loan may be continued or converted only on the last day of an
Interest Period for such Eurodollar Rate Loan unless the Company pays the
amount due, if any, under Section 3.05 in connection therewith. During the
existence of an Event of Default, the Required Lenders may require that no
Loans be converted to or continued as Eurodollar Rate Loans.

 

(d)           The Administrative Agent shall
promptly notify the Company and the Lenders of the interest rate applicable to
any Interest Period for Eurodollar Rate Loans upon determination of such
interest rate. The determination of the Eurodollar Rate by the Administrative
Agent shall be conclusive in the absence of manifest error. At any time that
Base Rate Loans are outstanding, the Administrative Agent shall notify the Company
and the Lenders of any change in Bank of America’s prime rate used in
determining the Base Rate promptly following the public announcement of such
change. All computations of interest hereunder shall be made in accordance with
Section 2.08 and Section 2.10 hereunder

 

(e)           After giving effect to all Term
Borrowings, all Revolving Credit Borrowings, all conversions of Term Loans or
Revolving Credit Loans from one Type to the other, and all continuations of
Term Loans or Revolving Credit Loans as the same Type, there shall not be more
than ten (10) Interest Periods in effect.

 

48

 

(f)            The failure of any Lender to make
the Loan to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, hereunder to make its Loan on the date of
such Borrowing, but no Lender shall be responsible for the failure of any other
Lender to make the Loan to be made by such other Lender on the date of any
Borrowing.

 

SECTION 2.03  Letters
of Credit.  (a)  The Letter of Credit
Commitment. (i) Subject to the terms and conditions set forth
herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the
other Revolving Credit Lenders set forth in this Section 2.03, (1) from
time to time on any Business Day during the period from the Closing Date until
the Letter of Credit Expiration Date, to issue Letters of Credit denominated in
Dollars for the account of the Company (provided,
that a Letter of Credit may be issued hereunder at the request of the Company
for the account of any Subsidiary of the Company and such Letter of Credit
shall be deemed for all purposes hereunder to be for the account of the
Company) and to amend or renew Letters of Credit previously issued by it, in
accordance with Section 2.03(b), and (2) to honor drafts under the Letters
of Credit and (B) the Revolving Credit Lenders severally agree to participate
in Letters of Credit issued pursuant to this Section 2.03; provided that no L/C Issuer shall be obligated to make any
L/C Credit Extension with respect to any Letter of Credit, and no Lender shall
be obligated to participate in any Letter of Credit if as of the date of such
L/C Credit Extension, (y) the Revolving Credit Exposure of any Lender would
exceed such Lender’s Revolving Credit Commitment or (z) the Outstanding Amount
of the L/C Obligations would exceed the Letter of Credit Sublimit. Within the
foregoing limits, and subject to the terms and conditions hereof, the Company’s
ability to obtain Letters of Credit shall be fully revolving, and accordingly
the Company may, during the foregoing period, obtain Letters of Credit to
replace Letters of Credit that have expired or that have been drawn upon and
reimbursed.

 

(ii)           An L/C Issuer shall
be under no obligation to issue any Letter of Credit if:

 

(A)          any order, judgment
or decree of any Governmental Authority or arbitrator shall by its terms
purport to enjoin or restrain such L/C Issuer from issuing such Letter of
Credit, or any Law applicable to such L/C Issuer or any directive (whether or
not having the force of law) from any Governmental Authority with jurisdiction
over such L/C Issuer shall prohibit, or direct that such L/C Issuer refrain
from, the issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon such L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which such L/C Issuer is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon such L/C Issuer any unreimbursed loss, cost or expense which was
not applicable on the Closing Date (for which the L/C Issuer is not otherwise
compensated hereunder);

 

(B)           subject to
Section 2.03(b)(iii), the expiry date of such requested Letter of Credit would
occur more than twelve months after the date of issuance or last renewal,
unless the Required Lenders have approved such expiry date;

 

(C)           the expiry date of
such requested Letter of Credit would occur after the Letter of Credit
Expiration Date, unless the relevant L/C Issuer has approved such expiry date,
but so long as the Revolving Credit Lenders are no longer

 

49

 

obligated to
reimburse the relevant L/C Issuer beyond such date unless all Revolving Lenders
have approved such expiry date;

 

(D)          the issuance of such
Letter of Credit would violate any Laws binding upon the L/C Issuer; or

 

(E)           such Letter of
Credit is in an initial amount less than $100,000.

 

(iii)          An L/C Issuer shall
be under no obligation to amend any Letter of Credit if (A) such L/C Issuer
would have no obligation at such time to issue such Letter of Credit in its
amended form under the terms hereof, or (B) the beneficiary of such Letter of
Credit does not accept the proposed amendment to such Letter of Credit.

 

(iv)          Each L/C Issuer
shall act on behalf of the Lenders with respect to any Letters of Credit issued
by it and the documents associated therewith, and each L/C Issuer shall have
all of the benefits and immunities (A) provided to the Administrative Agent in
Article IX with respect to any acts taken or omissions suffered by such L/C
Issuer in connection with Letters of Credit issued by it or proposed to be
issued by it and any Letter of Credit Application (and any other document, agreement
or instrument entered into by such L/C Issuer and the Company or in favor of
such L/C Issuer) pertaining to such Letters of Credit as fully as if the term “Administrative
Agent” as used in Article IX included such L/C Issuer with respect to such acts
or omissions, and (B) as additionally provided herein with respect to each L/C
Issuer.

 

(b)           Procedures for Issuance
and Amendment of Letters of Credit; Auto-Renewal Letters of Credit.
(i) Each Letter of Credit shall be issued or amended, as the case may be,
upon the request of the Company delivered to an L/C Issuer (with a copy to the
Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Company.
Such Letter of Credit Application must be received by the relevant L/C Issuer
and the Administrative Agent not later than 11:00 a.m. at least two (2)
Business Days prior to the proposed issuance date or date of amendment, as the
case may be; or, in each case, such later date and time as relevant L/C Issuer
may agree in a particular instance in its sole discretion. In the case of a
request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail reasonably satisfactory to the relevant
L/C Issuer:  (a) the proposed issuance
date of the requested Letter of Credit (which shall be a Business Day); (b) the
amount thereof; (c) the expiry date thereof; (d) the name and address of the
beneficiary thereof; (e) the documents to be presented by such beneficiary in
case of any drawing thereunder; (f) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; and (g) such
other matters as the relevant L/C Issuer may reasonably request. In the case of
a request for an amendment of any outstanding Letter of Credit, such Letter of
Credit Application shall specify in form and detail reasonably satisfactory to
the relevant L/C Issuer (1) the Letter of Credit to be amended; (2) the
proposed date of amendment thereof (which shall be a Business Day); (3) the
nature of the proposed amendment; and (4) such other matters as the relevant
L/C Issuer may reasonably request.

 

50

 

(ii)           Promptly after
receipt of any Letter of Credit Application, the relevant L/C Issuer will
confirm with the Administrative Agent (by telephone or in writing) that the
Administrative Agent has received a copy of such Letter of Credit Application
from the Company and, if not, such L/C Issuer will provide the Administrative
Agent with a copy thereof. Upon receipt by the relevant L/C Issuer of
confirmation from the Administrative Agent that the requested issuance or
amendment is permitted in accordance with the terms hereof, then, subject to
the terms and conditions hereof, such L/C Issuer shall, on the requested date,
issue a Letter of Credit for the account of the Company or enter into the
applicable amendment, as the case may be. Immediately upon the issuance of each
Letter of Credit, each Revolving Credit Lender shall be deemed to, and hereby
irrevocably and unconditionally agrees to, purchase from the relevant L/C
Issuer a risk participation in such Letter of Credit in an amount equal to the
product of such Lender’s Pro Rata Share times the amount of such Letter of
Credit.

 

(iii)          If the Company so
requests in any applicable Letter of Credit Application, the relevant L/C
Issuer shall agree to issue a Letter of Credit that has automatic renewal
provisions (each, an “Auto-Renewal Letter of
Credit”); provided that
any such Auto-Renewal Letter of Credit must permit the relevant L/C Issuer to
prevent any such renewal at least once in each twelve month period (commencing
with the date of issuance of such Letter of Credit) by giving prior notice to
the beneficiary thereof not later than a day (the “Nonrenewal Notice Date”) in each such twelve month period to
be agreed upon at the time such Letter of Credit is issued. Unless otherwise
directed by the relevant L/C Issuer, the Company shall not be required to make
a specific request to the relevant L/C Issuer for any such renewal. Once an
Auto-Renewal Letter of Credit has been issued, the Lenders shall be deemed to
have authorized (but may not require) the relevant L/C Issuer to permit the
renewal of such Letter of Credit at any time to an expiry date not later than
the Letter of Credit Expiration Date; provided that
the relevant L/C Issuer shall not permit any such renewal if (A) the relevant
L/C Issuer has determined that it would have no obligation at such time to
issue such Letter of Credit in its renewed form under the terms hereof (by
reason of the provisions of Section 2.03(a)(ii) or otherwise), or (B)
it has received notice (which may be by telephone or in writing) on or before
the day that is five (5) Business Days before the Nonrenewal Notice Date from
the Administrative Agent, any Revolving Credit Lender or the Company that one
or more of the applicable conditions specified in Section 4.02 is not then
satisfied.

 

(iv)          Promptly after its
delivery of any Letter of Credit or any amendment to a Letter of Credit to an
advising bank with respect thereto or to the beneficiary thereof, the L/C
Issuer will also deliver to the Company and the Administrative Agent a true and
complete copy of such Letter of Credit or amendment.

 

(c)           Drawings and
Reimbursements; Funding of Participations. (i) Upon receipt
from the beneficiary of any Letter of Credit of any notice of a drawing under
such Letter of Credit, the relevant L/C Issuer shall notify promptly the
Company and the Administrative Agent thereof. Not later than 11:00 a.m. on the
Business Day immediately following any payment by an L/C Issuer under a Letter
of Credit (each such date, an “Honor Date”),
the Company shall reimburse such L/C Issuer through the Administrative Agent in
an amount equal to the amount of such drawing; provided
that if such reimbursement is not made on the

 

51

 

respective date of payment by the L/C Issuer,
the Company shall pay interest on such amount at a rate per annum equal to the
Applicable Rate then in effect in respect of Base Rate Loans from the date of
such payment until such Business Day. If the Company fails to so reimburse such
L/C Issuer by such time, unless the Company shall have notified the
Administrative Agent and the relevant L/C Issuer prior to 11:00 a.m. on the
Honor Date that the Company intends to reimburse the L/C Issuer for the amount
of the unreimbursed drawing (the “Unreimbursed
Amount”) with funds other than proceeds of Revolving Credit Loans,
the Administrative Agent shall promptly notify each Appropriate Lender of the
Honor Date, the Unreimbursed Amount, and the amount of such Appropriate Lender’s
Pro Rata Share thereof. In such event, the Company shall be deemed to have requested
a Revolving Credit Borrowing of Base Rate Loans to be disbursed on the Honor
Date in an amount equal to the Unreimbursed Amount, without regard to the
minimum and multiples specified in Section 2.02 for the principal amount
of Base Rate Loans but subject to the amount of the unutilized portion of the
Revolving Credit Commitments of the Appropriate Lenders and the conditions set
forth in Section 4.02 (other than the delivery of a Loan Notice). Any
notice given by an L/C Issuer or the Administrative Agent pursuant to this
Section 2.03(c)(i) may be given by telephone if immediately confirmed
in writing; provided that the lack of such an
immediate confirmation shall not affect the conclusiveness or binding effect of
such notice.

 

(ii)           Each Appropriate Lender
(including any Lender acting as an L/C Issuer) shall upon any notice pursuant
to Section 2.03(c)(i) make funds available to the Administrative
Agent for the account of the relevant L/C Issuer at the Administrative Agent’s
Office for payments in an amount equal to its Pro Rata Share of the
Unreimbursed Amount not later than 1:00 p.m. on the Business Day specified in
such notice by the Administrative Agent, whereupon, subject to the provisions
of Section 2.03(c)(iii), each Appropriate Lender that so makes funds
available shall be deemed to have made a Base Rate Loan to the Company in such
amount. The Administrative Agent shall remit the funds so received to the
relevant L/C Issuer.

 

(iii)          With respect to any
Unreimbursed Amount that is not fully refinanced by a Revolving Credit
Borrowing of Base Rate Loans because the conditions set forth in
Section 4.02 cannot be satisfied or for any other reason, the Company
shall be deemed to have incurred from the relevant L/C Issuer an L/C Borrowing
in the amount of the Unreimbursed Amount that is not so refinanced, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the Default Rate. In such event, each Appropriate Lender’s
payment to the Administrative Agent for the account of the relevant L/C Issuer
pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of
its participation in such L/C Borrowing and shall constitute an L/C Advance
from such Lender in satisfaction of its participation obligation under this
Section 2.03.

 

(iv)          Until each
Appropriate Lender funds its Revolving Credit Loan or L/C Advance pursuant to
this Section 2.03(c) to reimburse the relevant L/C Issuer for any amount
drawn under any Letter of Credit, interest in respect of such Lender’s Pro Rata
Share of such amount shall be solely for the account of the relevant L/C
Issuer.

 

52

 

(v)           Each Revolving
Credit Lender’s obligation to make Revolving Credit Loans or L/C Advances to
reimburse an L/C Issuer for amounts drawn under Letters of Credit, as
contemplated by this Section 2.03(c), shall be absolute and unconditional and
shall not be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right which such Lender may have
against the relevant L/C Issuer, the Company or any other Person for any reason
whatsoever; (B) the occurrence or continuance of a Default, or (C) any other
occurrence, event or condition, whether or not similar to any of the foregoing;
provided that each Revolving Credit
Lender’s obligation to make Revolving Credit Loans pursuant to this Section
2.03(c) is subject to the conditions set forth in Section 4.02 (other than
delivery by the Company of a Loan Notice ). No making of an L/C Advance shall
relieve or otherwise impair the obligation of the Company to reimburse the
relevant L/C Issuer for the amount of any payment made by such L/C Issuer under
any Letter of Credit, together with interest as provided herein.

 

(vi)          If any Revolving Credit
Lender fails to make available to the Administrative Agent for the account of
the relevant L/C Issuer any amount required to be paid by such Lender pursuant
to the foregoing provisions of this Section 2.03(c) by the time specified in
Section 2.03(c)(ii), such L/C Issuer shall be entitled to recover from such
Lender (acting through the Administrative Agent), on demand, such amount with
interest thereon for the period from the date such payment is required to the
date on which such payment is immediately available to such L/C Issuer at a
rate per annum equal to the greater of the Federal Funds Rate and a rate
determined by such L/C Issuer in accordance with banking industry rules on
interbank compensation. A certificate of the relevant L/C Issuer submitted to
any Revolving Credit Lender (through the Administrative Agent) with respect to
any amounts owing under this Section 2.03(c)(vi) shall be conclusive absent
manifest error.

 

(d)           Repayment of
Participations. (i) If, at any time after an L/C Issuer has made
a payment under any Letter of Credit and has received from any Revolving Credit
Lender such Lender’s L/C Advance in respect of such payment in accordance with
Section 2.03(c), the Administrative Agent receives for the account of such
L/C Issuer any payment in respect of the related Unreimbursed Amount or
interest thereon (whether directly from the Company or otherwise, including
proceeds of Cash Collateral applied thereto by the Administrative Agent), the
Administrative Agent will distribute to such Lender its Pro Rata Share thereof
(appropriately adjusted, in the case of interest payments, to reflect the
period of time during which such Lender’s L/C Advance was outstanding) in the
same funds as those received by the Administrative Agent.

 

(ii)           If any payment
received by the Administrative Agent for the account of an L/C Issuer pursuant
to Section 2.03(c)(i) is required to be returned under any of the circumstances
described in Section 10.06 (including pursuant to any settlement entered into
by such L/C Issuer in its discretion), each Appropriate Lender shall pay to the
Administrative Agent for the account of such L/C Issuer its Pro Rata Share
thereof on demand of the Administrative Agent, plus interest thereon from the
date of such demand to the date such amount is returned by such Lender, at a
rate per annum equal to the Federal Funds Rate from time to time in effect.

 

53

 

(e)           Obligations Absolute.
The obligation of the Company to reimburse the relevant L/C Issuer for each
drawing under each Letter of Credit issued by it and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances, including the following:

 

(i)            any lack of
validity or enforceability of such Letter of Credit, this Agreement, or any
other agreement or instrument relating thereto;

 

(ii)           the existence of
any claim, counterclaim, setoff, defense or other right that any Loan Party may
have at any time against any beneficiary or any transferee of such Letter of
Credit (or any Person for whom any such beneficiary or any such transferee may
be acting), the relevant L/C Issuer or any other Person, whether in connection
with this Agreement, the transactions contemplated hereby or by such Letter of
Credit or any agreement or instrument relating thereto, or any unrelated
transaction;

 

(iii)          any draft, demand,
certificate or other document presented under such Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; or any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under such Letter of Credit;

 

(iv)          any payment by the
relevant L/C Issuer under such Letter of Credit against presentation of a draft
or certificate that does not strictly comply with the terms of such Letter of
Credit; or any payment made by the relevant L/C Issuer under such Letter of
Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law;

 

(v)           any exchange,
release or nonperfection of any Collateral, or any release or amendment or
waiver of or consent to departure from the Guaranty or any other guarantee, for
all or any of the Obligations of any Loan Party in respect of such Letter of
Credit; or

 

(vi)          any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing, including any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Loan Party;

 

provided that the foregoing shall
not excuse any L/C Issuer from liability to the Company to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are waived by the Company to the extent permitted by applicable Law) suffered
by the Company that are caused by such L/C Issuer’s gross negligence or willful
misconduct when determining whether drafts and other documents presented under
a Letter of Credit comply with the terms thereof.

 

(f)            Role of L/C Issuers.
Each Lender and the Company agree that, in paying any drawing under a Letter of
Credit, the relevant L/C Issuer shall not have any responsibility to obtain any
document (other than any sight draft, certificates and documents expressly
required

 

54

 

by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuers,
any Agent-Related Person nor any of the respective correspondents, participants
or assignees of any L/C Issuer shall be liable to any Lender for (i) any action
taken or omitted in connection herewith at the request or with the approval of
the Lenders or the Required Lenders, as applicable; (ii) any action taken or
omitted in the absence of gross negligence or willful misconduct; or (iii) the
due execution, effectiveness, validity or enforceability of any document or
instrument related to any Letter of Credit or Letter of Credit Application. The
Company hereby assumes all risks of the acts or omissions of any beneficiary or
transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall
not, preclude the Company’s pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. None
of the L/C Issuers, any Agent-Related Person, nor any of the respective correspondents,
participants or assignees of any L/C Issuer, shall be liable or responsible for
any of the matters described in clauses (i) through (vi) of Section 2.03(e); provided that anything in such clauses to the contrary
notwithstanding, the Company may have a claim against an L/C Issuer, and such
L/C Issuer may be liable to the Company, to the extent, but only to the extent,
of any direct, as opposed to consequential or exemplary, damages suffered by
the Company which the Company proves were caused by such L/C Issuer’s willful
misconduct or gross negligence or such L/C Issuer’s willful or grossly
negligent failure to pay under any Letter of Credit after the presentation to
it by the beneficiary of a sight draft and certificate(s) strictly complying with
the terms and conditions of a Letter of Credit. In furtherance and not in
limitation of the foregoing, each L/C Issuer may accept documents that appear
on their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary, and no L/C Issuer
shall be responsible for the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign a Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason.

 

(g)           Cash Collateral.
(i) If an L/C Issuer has honored any full or partial drawing request under
any Letter of Credit and such drawing has resulted in an L/C Borrowing and the
conditions set forth in Section 4.02 to a Revolving Credit Borrowing
cannot then be met, (ii) if, as of the Letter of Credit Expiration Date,
any Letter of Credit may for any reason remain outstanding and partially or
wholly undrawn, (iii) if any Event of Default occurs and is continuing and
the Administrative Agent or the Required Lenders, as applicable, require the
Company to Cash Collateralize the L/C Obligations pursuant to
Section 8.02(c) or (iv) an Event of Default set forth under Section 8.01(f)
occurs and is continuing, then the Company shall Cash Collateralize the then
Outstanding Amount of all L/C Obligations (in an amount equal to such
Outstanding Amount determined as of the date of such L/C Borrowing or the
Letter of Credit Expiration Date, as the case may be), and shall do so not
later than 2:00 P.M., New York City time, on (x) in the case of the immediately
preceding clauses (i) through (iii), (1) the Business Day that the Company
receives notice thereof, if such notice is received on such day prior to 12:00
Noon, New York City time, or (2) if clause (1) above does not apply, the
Business Day immediately following the day that the Company receives such
notice and (y) in the case of the immediately preceding clause (iv), the
Business Day on which an Event of Default set forth under Section 8.01(f)
occurs or, if such day is not a Business Day, the Business Day immediately
succeeding such day. For purposes hereof, “Cash
Collateralize” means to pledge and deposit with or deliver to the
Administrative Agent, for the benefit of the relevant L/C Issuer and the

 

55

 

Lenders, as collateral for the L/C
Obligations, cash or deposit account balances (“Cash Collateral”) pursuant to documentation in form and
substance reasonably satisfactory to the Administrative Agent and the relevant
L/C Issuer (which documents are hereby consented to by the Lenders).
Derivatives of such term have corresponding meanings. The Company hereby grants
to the Administrative Agent, for the benefit of the L/C Issuers and the
Lenders, a security interest in all such cash, deposit accounts and all
balances therein and all proceeds of the foregoing. Cash Collateral shall be
maintained in blocked accounts at Bank of America and may be invested in
readily available Cash Equivalents. If at any time the Administrative Agent
determines that any funds held as Cash Collateral are subject to any right or
claim of any Person other than the Administrative Agent (on behalf of the
Secured Parties) or that the total amount of such funds is less than the
aggregate Outstanding Amount of all L/C Obligations, the Company will,
forthwith upon demand by the Administrative Agent, pay to the Administrative
Agent, as additional funds to be deposited and held in the deposit accounts at
Bank of America as aforesaid, an amount equal to the excess of (a) such
aggregate Outstanding Amount over (b) the total amount of funds, if any, then
held as Cash Collateral that the Administrative Agent reasonably determines to
be free and clear of any such right and claim. Upon the drawing of any Letter
of Credit for which funds are on deposit as Cash Collateral, such funds shall
be applied, to the extent permitted under applicable Law, to reimburse the
relevant L/C Issuer. To the extent the amount of any Cash Collateral exceeds
the then Outstanding Amount of such L/C Obligations and so long as no Event of
Default has occurred and is continuing, the excess shall be refunded to the
Company.

 

(h)           Letter of Credit Fees.
The Company shall pay to the Administrative Agent for the account of each
Revolving Credit Lender in accordance with its Pro Rata Share a Letter of
Credit fee for each Letter of Credit issued pursuant to this Agreement equal to
the Applicable Rate times the daily maximum amount then available to be drawn
under such Letter of Credit (whether or not such maximum amount is then in
effect under such Letter of Credit if such maximum amount increases
periodically pursuant to the terms of such Letter of Credit). Such Letter of
Credit fees shall be computed on a quarterly basis in arrears. Such Letter of
Credit fees shall be due and payable on the first Business Day after the end of
each March, June, September and December, commencing with the first such date
to occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand. If there is any change in the
Applicable Rate during any quarter, the daily maximum amount of each Letter of
Credit shall be computed and multiplied by the Applicable Rate separately for
each period during such quarter that such Applicable Rate was in effect.

 

(i)            Fronting Fee and
Documentary and Processing Charges Payable to L/C Issuer. The
Company shall pay directly to each L/C Issuer for its own account a fronting
fee with respect to each Letter of Credit issued by it equal to 0.125% per
annum (or such other amount as is agreed in a separate writing between the
relevant L/C Issuer and the Company) of the daily maximum amount then available
to be drawn under such Letter of Credit (whether or not such maximum amount is
then in effect under such Letter of Credit if such maximum amount increases
periodically pursuant to the terms of such Letter of Credit). Such fronting
fees shall be computed on a quarterly basis in arrears. Such fronting fees
shall be due and payable on the first Business Day after the end of each March,
June, September and December, commencing with the first such date to occur
after the issuance of such Letter of Credit, on the Letter of Credit Expiration
Date and thereafter on demand. In addition, the Company shall pay directly to
each

 

56

 

L/C Issuer for its own account the customary
issuance, presentation, amendment and other processing fees, and other standard
costs and charges, of such L/C Issuer relating to letters of credit as from
time to time in effect. Such customary fees and standard costs and charges are
due and payable within ten (10) Business Days of demand and are nonrefundable.

 

(j)            Conflict with Letter of
Credit Application. Notwithstanding anything else to the contrary in
this Agreement, in the event of any conflict between the terms hereof and the
terms of any Letter of Credit Application, the terms hereof shall control.

 

(k)           Reporting. Each
L/C Issuer will report in writing to the Administrative Agent (i) on the first
Business Day of each calendar month, the aggregate face amount of Letters of
Credit issued by it and outstanding as of the last Business Day of the
preceding calendar month, (ii) on or prior to each Business Day on which such
L/C Issuer expects to issue, amend, renew or extend any Letter of Credit, the
date of such issuance or amendment, and the aggregate face amount of Letters of
Credit to be issued, amended, renewed or extended by it and outstanding after
giving effect to such issuance, amendment, renewal or extension (and such L/C
Issuer shall advise the Administrative Agent on such Business Day whether such
issuance, amendment, renewal or extension occurred and whether the amount
thereof changed), (iii) on each Business Day on which such L/C Issuer makes any
L/C Disbursement, the date and amount of such L/C Disbursement and (iv) on any
Business Day on which the Borrower fails to reimburse an L/C Disbursement required
to be reimbursed to such L/C Issuer on such day, the date and amount of such
failure

 

(l)            Addition
of an L/C Issuer. A Revolving Credit Lender or an Affiliate thereof
may become an additional L/C Issuer hereunder pursuant to a written agreement
among the Company, the Administrative Agent and such Revolving Credit Lender.
The Administrative Agent shall notify the Revolving Credit Lenders of any such
additional L/C Issuer.

 

(m)          Letter of Credit Amounts.
Unless otherwise specified herein, the amount of a Letter of Credit at any time
shall be deemed to be the stated amount of such Letter of Credit in effect at
such time; provided, however,
that with respect to any Letter of Credit that, by its terms or the terms of
any document related thereto, provides for one or more automatic increases in
the stated amount thereof, the amount of such Letter of Credit shall be deemed
to be the maximum stated amount of such Letter of Credit after giving effect to
all such increases, whether or not such maximum stated amount is in effect at
such time.

 

SECTION 2.04  Swing
Line Loans.  (a)  The Swing Line.
Subject to the terms and conditions set forth herein, the Swing Line Lender
agrees to make loans (each such loan, a “Swing Line Loan”)
to the Company from time to time on any Business Day (other than the Closing
Date) until the Maturity Date in respect of the Revolving Credit Facility in an
aggregate amount not to exceed at any time outstanding the amount of the Swing
Line Sublimit, notwithstanding the fact that such Swing Line Loans, when
aggregated with the Pro Rata Share of the Outstanding Amount of Revolving
Credit Loans and L/C Obligations of the Lender acting as Swing Line Lender, may
exceed the amount of such Lender’s Revolving Credit Commitment; provided that, after giving effect to any Swing Line Loan,
the aggregate Outstanding Amount of the Revolving Credit Loans of any Lender,
plus such Lender’s Pro Rata Share of the Outstanding Amount of all L/C
Obligations, plus such Lender’s Pro Rata Share of the Outstanding Amount of

 

57

 

all Swing Line Loans shall not exceed such Lender’s Revolving Credit
Commitment then in effect; provided, further,
that the Company shall not use the proceeds of any Swing Line Loan to refinance
any outstanding Swing Line Loan. Within the foregoing limits, and subject to
the other terms and conditions hereof, the Company may borrow under this
Section 2.04, prepay under Section 2.05, and reborrow under this
Section 2.04. Each Swing Line Loan shall be a Base Rate Loan. Immediately
upon the making of a Swing Line Loan, each Revolving Credit Lender shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Swing Line Lender a risk participation in such Swing Line Loan in an amount
equal to the product of such Lender’s Pro Rata Share times the amount of such
Swing Line Loan.

 

(b)           Borrowing Procedures. Each
Swing Line Borrowing shall be made upon the Company’s irrevocable notice to the
Swing Line Lender and the Administrative Agent, which may be given by
telephone. Each such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the requested borrowing date,
and shall specify (i) the amount to be borrowed, which shall be a minimum
of $100,000, and (ii) the requested borrowing date, which shall be a
Business Day. Each such telephonic notice must be confirmed promptly by
delivery to the Swing Line Lender and the Administrative Agent of a written
Swing Line Loan Notice, appropriately completed and signed by a Responsible
Officer of the Company. Promptly after receipt by the Swing Line Lender of any
telephonic Swing Line Loan Notice, the Swing Line Lender will confirm with the
Administrative Agent (by telephone or in writing) that the Administrative Agent
has also received such Swing Line Loan Notice and, if not, the Swing Line
Lender will notify the Administrative Agent (by telephone or in writing) of the
contents thereof. Unless the Swing Line Lender has received notice (by telephone
or in writing) from the Administrative Agent (including at the request of any
Revolving Credit Lender) prior to 2:00 p.m. on the date of the proposed Swing
Line Borrowing (A) directing the Swing Line Lender not to make such Swing Line
Loan as a result of the limitations set forth in the proviso to the first
sentence of Section 2.04(a), or (B) that one or more of the applicable
conditions specified in Section 4.02 is not then satisfied, then, subject
to the terms and conditions hereof, the Swing Line Lender will, not later than
3:00 p.m. on the borrowing date specified in such Swing Line Loan Notice, make
the amount of its Swing Line Loan available to the Company.

 

(c)           Refinancing of Swing Line
Loans. (i) The Swing Line Lender at any time in its sole and absolute
discretion may request, on behalf of the Company (which hereby irrevocably
authorizes the Swing Line Lender to so request on its behalf), that each
Revolving Credit Lender make a Base Rate Loan in an amount equal to such Lender’s
Pro Rata Share of the amount of Swing Line Loans then outstanding. Such request
shall be made in writing (which written request shall be deemed to be a Loan
Notice for purposes hereof) and in accordance with the requirements of
Section 2.02, without regard to the minimum and multiples specified
therein for the principal amount of Base Rate Loans, but subject to the
unutilized portion of the aggregate Revolving Credit Commitments and the
conditions set forth in Section 4.02. The Swing Line Lender shall furnish
the Company with a copy of the applicable Loan Notice promptly after delivering
such notice to the Administrative Agent. Each Revolving Credit Lender shall
make an amount equal to its Pro Rata Share of the amount specified in such Loan
Notice available to the Administrative Agent in Same Day Funds for the account
of the Swing Line Lender at the Administrative Agent’s Office not later than
1:00 p.m. on the day specified in such Loan Notice, whereupon, subject to
Section 2.04(c)(ii), each Revolving Credit Lender that

 

58

 

so makes funds available shall be deemed to
have made a Base Rate Loan to the Company in such amount. The Administrative
Agent shall remit the funds so received to the Swing Line Lender.

 

(ii)           If for any reason
any Swing Line Loan cannot be refinanced by such a Revolving Credit Borrowing
in accordance with Section 2.04(c)(i), the request for Base Rate Loans
submitted by the Swing Line Lender as set forth herein shall be deemed to be a
request by the Swing Line Lender that each of the Revolving Credit Lenders fund
its risk participation in the relevant Swing Line Loan and each Revolving
Credit Lender’s payment to the Administrative Agent for the account of the
Swing Line Lender pursuant to Section 2.04(c)(i) shall be deemed
payment in respect of such participation.

 

(iii)          If any Revolving
Credit Lender fails to make available to the Administrative Agent for the
account of the Swing Line Lender any amount required to be paid by such Lender
pursuant to the foregoing provisions of this Section 2.04(c) by the time
specified in Section 2.04(c)(i), the Swing Line Lender shall be entitled
to recover from such Lender (acting through the Administrative Agent), on
demand, such amount with interest thereon for the period from the date such
payment is required to the date on which such payment is immediately available
to the Swing Line Lender at a rate per annum equal to the greater of the
Federal Funds Rate and a rate determined by the Swing Line Lender in accordance
with banking industry rules on interbank compensation. A certificate of the
Swing Line Lender submitted to any Lender (through the Administrative Agent)
with respect to any amounts owing under this clause (iii) shall be
conclusive absent manifest error.

 

(iv)          Each Revolving
Credit Lender’s obligation to make Revolving Credit Loans or to purchase and
fund risk participations in Swing Line Loans pursuant to this
Section 2.04(c) shall be absolute and unconditional and shall not be
affected by any circumstance, including (A) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Swing
Line Lender, the Company or any other Person for any reason whatsoever, (B) the
occurrence or continuance of a Default, or (C) any other occurrence, event or
condition, whether or not similar to any of the foregoing; provided
that each Revolving Credit Lender’s obligation to make Revolving Credit Loans
pursuant to this Section 2.04(c) is subject to the conditions set forth in
Section 4.02. No such funding of risk participations shall relieve or
otherwise impair the obligation of the Company to repay Swing Line Loans,
together with interest as provided herein.

 

(d)           Repayment of
Participations. (i) At any time after any Revolving Credit
Lender has purchased and funded a risk participation in a Swing Line Loan, if
the Swing Line Lender receives any payment on account of such Swing Line Loan,
the Swing Line Lender will distribute to such Lender its Pro Rata Share of such
payment (appropriately adjusted, in the case of interest payments, to reflect
the period of time during which such Lender’s risk participation was funded) in
the same funds as those received by the Swing Line Lender.

 

(ii)           If any payment
received by the Swing Line Lender in respect of principal or interest on any
Swing Line Loan is required to be returned by the Swing Line Lender under any
of the circumstances described in Section 10.06 (including pursuant to any

 

59

 

settlement
entered into by the Swing Line Lender in its discretion), each Revolving Credit
Lender shall pay to the Swing Line Lender its Pro Rata Share thereof on demand
of the Administrative Agent, plus interest thereon from the date of such demand
to the date such amount is returned, at a rate per annum equal to the Federal
Funds Rate. The Administrative Agent will make such demand upon the request of
the Swing Line Lender.

 

(e)           Interest for Account of
Swing Line Lender. The Swing Line Lender shall be responsible for
invoicing the Company for interest on the Swing Line Loans. Until each
Revolving Credit Lender funds its Base Rate Loan or risk participation pursuant
to this Section 2.04 to refinance such Lender’s Pro Rata Share of any
Swing Line Loan, interest in respect of such Pro Rata Share shall be solely for
the account of the Swing Line Lender.

 

(f)            Payments Directly to Swing
Line Lender. The Company shall make all payments of principal and
interest in respect of the Swing Line Loans directly to the Swing Line Lender.

 

SECTION 2.05  Prepayments.  (a)  Optional.
(i) The Company may, upon notice to the Administrative Agent, at any time
or from time to time voluntarily prepay Term Loans and Revolving Credit Loans
in whole or in part without premium or penalty; provided
that (1) such notice must be received by the Administrative Agent not later
than 11:00 a.m. (A) three (3) Business Days prior to any date of prepayment of
Eurodollar Rate Loans and (B) one (1) Business Day prior to any date of
prepayment of Base Rate Loans; (2) any prepayment of Eurodollar Rate Loans
shall be in a principal amount of $1,000,000 or a whole multiple of $500,000 in
excess thereof; and (3) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then
outstanding. Each such notice shall specify the date and amount of such
prepayment and the Class(es) and Type(s) of Loans to be prepaid. The
Administrative Agent will promptly notify each Appropriate Lender of its
receipt of each such notice, and of the amount of such Lender’s Pro Rata Share
of such prepayment. If such notice is given by a Borrower, the Borrower shall
make such prepayment and the payment amount specified in such notice shall be
due and payable on the date specified therein. Any prepayment of a Eurodollar
Rate Loan shall be accompanied by all accrued interest thereon, together with
any additional amounts required pursuant to Section 3.05. Each prepayment
of the Loans pursuant to this Section 2.05(a) shall be paid to the
Appropriate Lenders in accordance with their respective Pro Rata Shares.

 

(ii)           The Company may,
upon notice to the Swing Line Lender (with a copy to the Administrative Agent),
at any time or from time to time, voluntarily prepay Swing Line Loans in whole
or in part without premium or penalty; provided that
(1) such notice must be received by the Swing Line Lender and the
Administrative Agent not later than 1:00 p.m. on the date of the prepayment, and
(2) any such prepayment shall be in a minimum principal amount of $100,000 or a
whole multiple of $100,000 in excess thereof or, if less, the entire principal
amount thereof then outstanding. Each such notice shall specify the date and
amount of such prepayment. If such notice is given by the Company, the Company
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein.

 

60

 

(iii)          Notwithstanding anything to the
contrary contained in this Agreement, the Company may rescind any notice of
prepayment under Section 2.05(a)(i)or 2.05(a)(ii) if such prepayment
would have resulted from a refinancing of all of the Facilities, which refinancing
shall not be consummated or shall otherwise be delayed.

 

(b)           Mandatory. (i) Within five (5)
Business Days after financial statements have been delivered pursuant to
Section 6.01(a) and the related Compliance Certificate has been delivered
pursuant to Section 6.02(b), the Company shall cause to be offered to be
prepaid in accordance with clause (ix) below, an aggregate principal amount of
Term Loans in an amount equal to (A) 50% of Excess Cash Flow, if any, for the
fiscal year covered by such financial statements (commencing with the fiscal
year ended December 31, 2007) minus (B) the sum of (i) all
voluntary prepayments of Term Loans during such fiscal year and (ii) all
voluntary prepayments of Revolving Credit Loans during such fiscal year to the extent
the Revolving Credit Commitments are permanently reduced by the amount of such
payments, in the case of each of the immediately preceding clauses (i) and
(ii), to the extent such prepayments are not funded with the proceeds of
Indebtedness; provided that the percentage of
Excess Cash Flow specified in clause (A) shall be reduced in respect of a
fiscal year to an amount equal to 25% of Excess Cash Flow, if any, if the Total
Leverage Ratio as of the last day of such fiscal year covered by such financial
statements was less than 5.50 and greater than or equal to 4.25:1; provided,  further, that
no payment of any Loans shall be required under this
Section 2.05(b)(i) in respect of a fiscal year if the Total Leverage
Ratio as of the last day of such fiscal year covered by such financial
statements was less than 4.25:1.

 

(ii)           (A)  If (x) Holdings, the
Company or any of Restricted Subsidiary Disposes of any property or assets
(other than any Disposition of any property or assets permitted by
Section 7.05(a), (b), (c), (d) (to the extent constituting a Disposition
by any Restricted Subsidiary to a Loan Party), (e), (g), (h), or (i)) or (y)
any Casualty Event occurs, which in the aggregate results in the realization or
receipt by Holdings, the Company or such Restricted Subsidiary of Net Cash
Proceeds, the Company shall cause to be offered to be prepaid in accordance
with clause (ix) below on or prior to the date which is ten (10) Business Days
after the date of the realization or receipt of such Net Cash Proceeds an
aggregate principal amount of Term Loans in an amount equal to 100% of all Net
Cash Proceeds received; provided that
no such prepayment shall be required pursuant to this
Section 2.05(b)(ii)(A) with respect to such portion of such Net Cash
Proceeds that the Company shall have, on or prior to such date, given written
notice to the Administrative Agent of its intent to reinvest in accordance with
Section 2.05(b)(ii)(B) (which notice may only be provided if no Event of
Default has occurred and is then continuing);

 

(B)           With respect to any
Net Cash Proceeds realized or received with respect to any Disposition (other
than any Disposition specifically excluded from the application of
Section 2.05(b)(ii)(A)) or any Casualty Event, at the option of the
Company the Company may reinvest all or any portion of such Net Cash Proceeds
in its business within (x) fifteen (15) months following receipt of such Net
Cash Proceeds or (y) if the Company enters into a legally binding commitment to
reinvest such Net Cash Proceeds within fifteen (15) months following receipt
thereof, within the later of (1) one hundred and eighty (180)

 

61

 

days of the
date of such legally binding commitment and (2) fifteen (15) months
following receipt of such Net Cash Proceeds; provided
that (i) so long as an Event of Default shall have occurred and
be continuing, the Company (x) shall not be permitted to make any such
reinvestments (other than pursuant to a legally binding commitment that the Company
entered into at a time when no Event of Default is continuing) and (y) shall
not be required to apply such Net Cash Proceeds which have been previously
applied to prepay Revolving Loans to the prepayment of Term Loans until such
time as the relevant investment period has expired and no Event of Default is
continuing and (ii) if any Net Cash Proceeds are no longer intended to be
or cannot be so reinvested at any time after delivery of a notice of
reinvestment election, an amount equal to any such Net Cash Proceeds shall be
offered to be applied in accordance with clause (ix) below within five (5)
Business Days after the Company reasonably determines that such Net Cash
Proceeds are no longer intended to be or cannot be so reinvested to the
prepayment of the Term Loans as set forth in this Section 2.05.

 

(iii)          If Holdings, the Company or any
Restricted Subsidiary incurs or issues any Indebtedness not expressly permitted
to be incurred or issued pursuant to Section 7.03, the Company shall cause
to be offered to be prepaid in accordance with clause (ix) below an aggregate
principal amount of Term Loans in an amount equal to 100% of all Net Cash
Proceeds received therefrom on or prior to the date which is five (5) Business
Days after the receipt of such Net Cash Proceeds.

 

(iv)          If for any reason the aggregate
Revolving Credit Exposures at any time exceeds the aggregate Revolving Credit
Commitments then in effect, the Company shall promptly prepay or cause to be
promptly prepaid Revolving Credit Loans and Swing Line Loans and/or Cash
Collateralize the L/C Obligations in an aggregate amount equal to such excess; provided that the Company shall not be required to Cash
Collateralize the L/C Obligations pursuant to this Section 2.05(b)(iv)
unless after the prepayment in full of the Revolving Credit Loans and Swing
Line Loans such aggregate Outstanding Amount exceeds the aggregate Revolving
Credit Commitments then in effect.

 

(v)           If the Post-Closing Acquisition is
not completed by November 30, 2006, the Company shall prepay or cause to be
prepaid Term Loans in an aggregate principal amount of $10,000,000 plus the
accrued interest on such amount on or prior to December 15, 2006.

 

(vi)          (A) Each prepayment of Term Loans
pursuant to this Section 2.05(b) shall be applied in direct order of
maturity to repayments thereof required pursuant to Section 2.07(a); and
(B) each such prepayment shall be paid to the Lenders in accordance with
their respective Pro Rata Shares, subject to clause (vii) of this Section 2.05(b).

 

(vii)         The Company shall notify the
Administrative Agent in writing of any mandatory prepayment of Term Loans
required to be made pursuant to clauses (i) through (v) of this
Section 2.05(b) at least three (3) Business Days prior to the date of such
prepayment. Each such notice shall specify the date of such prepayment and
provide a reasonably detailed calculation of the amount of such prepayment. The

 

62

 

Administrative Agent will promptly notify each
Appropriate Lender of the contents of the Company’s prepayment notice and of
such Appropriate Lender’s Pro Rata Share of the prepayment.

 

(viii)        Funding Losses, Etc. All
prepayments under this Section 2.05 shall be made together with, in the
case of any such prepayment of a Eurodollar Rate Loan on a date other than the
last day of an Interest Period therefor, any amounts owing in respect of such
Eurodollar Rate Loan pursuant to Section 3.05. Notwithstanding any of the
other provisions of Section 2.05(b), so long as no Event of Default shall
have occurred and be continuing, if any prepayment of Eurodollar Rate Loans is
required to be made under this Section 2.05(b), other than on the last day
of the Interest Period therefor, in lieu of making any payment pursuant to this
Section 2.05(b) in respect of any such Eurodollar Rate Loan, the Company may,
in its sole discretion, deposit the amount of any such prepayment otherwise
required to be made thereunder into a Cash Collateral Account until the last
day of such Interest Period, at which time the Administrative Agent shall be
authorized (without any further action by or notice to or from the Company or
any other Loan Party) to apply such amount to the prepayment of such Loans in
accordance with this Section 2.05(b). Upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent shall also be
authorized (without any further action by or notice to or from the Company or
any other Loan Party) to apply such amount to the prepayment of the outstanding
Loans in accordance with this Section 2.05(b).

 

(ix)           Term Opt-out of Prepayment. With respect to each prepayment
of Term Loans required pursuant to Section 2.05(b), (A) the Company will, not
later than the date specified in Sections 2.05(b)(i), (ii), or (iii) for
offering to make such prepayment, give the Administrative Agent telephonic
notice (promptly confirmed in writing) requesting that the Administrative Agent
provide notice of such prepayment to each Lender of Term Loans, (B) the
Administrative Agent shall provide notice of such prepayment to each Lender of
Term Loans, (C) each Lender of Term Loans will have the right to refuse any
such prepayment by giving written notice of such refusal to the Administrative
Agent within five Business Days after such Lender’s receipt of notice from the
Administrative Agent of such offer of prepayment (and the Company shall not
prepay any such Term Loans until the date that is specified in clause (D)
below), and (D) the Company will make all such prepayments not so refused upon
the sixth Business Day after the Administrative Agent has provided such notice
of prepayment and (E) any prepayment refused by Lenders of Term Loans may be
retained by the Company.

 

SECTION 2.06  Termination
or Reduction of Commitments.  Optional. (a)  The Company may, upon written notice to the
Administrative Agent, terminate the unused Commitments of any Class, or from
time to time permanently reduce the unused Commitments of any Class; provided that (i) any such notice shall be received by
the Administrative Agent one (1) Business Day prior to the date of
termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $1,000,000 or any whole multiple of $500,000 in excess
thereof and (iii) if, after giving effect to any reduction of the
Commitments, the Letter of Credit Sublimit or the Swing Line Sublimit exceeds
the amount of the Revolving Credit Facility, such sublimit shall be
automatically reduced by the amount of such excess. The amount of any such
Commitment reduction shall not be applied to the Letter of Credit Sublimit or
the Swing Line

 

63

 

Sublimit unless otherwise specified by the Company. Notwithstanding the
foregoing, the Company may rescind or postpone any notice of termination of the
Commitments if such termination would have resulted from a refinancing of all
of the Facilities, which refinancing shall not be consummated or otherwise
shall be delayed.

 

(b)           Mandatory. The
Term Commitment of each Term Lender shall be automatically and permanently
reduced to zero upon the making of such Term Lender’s Term Loans pursuant to
Section 2.01(a).

 

(c)           Application of Commitment
Reductions; Payment of Fees. The Administrative Agent will promptly
notify the Lenders of any termination or reduction of unused portions of the
Letter of Credit Sublimit, the Swing Line Sublimit or the unused Commitments of
any Class under this Section 2.06. Upon any reduction of unused
Commitments of any Class, the Commitment of each Lender of such Class shall be
reduced by such Lender’s Pro Rata Share of the amount by which such Commitments
are reduced (other than the termination of the Commitment of any Lender as
provided in Section 3.07). All commitment fees accrued until the effective
date of any termination of the Aggregate Commitments shall be paid on the
effective date of such termination.

 

SECTION 2.07  Repayment
of Loans.  (a)  Term Loans. The
Company shall repay to the Administrative Agent for the ratable account of the
Term Lenders (i) on the last Business Day of each March, June, September
and December, commencing with the first such date to occur after the Closing
Date, an aggregate amount equal to 0.25% of the aggregate principal amount of
all Term Loans outstanding on the Closing Date (which payments shall be reduced
as a result of, and after giving effect to, the application of prepayments in
accordance with the order of priority set forth in Section 2.05) and
(ii) on the Maturity Date for the Term Loans, the aggregate principal
amount of all Term Loans outstanding on such date.

 

(b)           Revolving Credit Loans.
The Company shall repay to the Administrative Agent for the ratable account of
the Appropriate Lenders on the Maturity Date for the Revolving Credit Facility
the aggregate principal amount of all of its Revolving Credit Loans outstanding
on such date.

 

(c)           Swing Line Loans. The
Company shall repay its Swing Line Loans on the earlier to occur of
(i) the date five (5) Business Days after such Loan is made and
(ii) the Maturity Date for the Revolving Credit Facility.

 

SECTION 2.08  Interest.  (a)  Subject
to the provisions of Section 2.08(b), (i) each Eurodollar Rate Loan
shall bear interest on the outstanding principal amount thereof for each
Interest Period at a rate per annum equal to the Eurodollar Rate for such
Interest Period plus the Applicable Rate; (ii) each Base Rate Loan shall
bear interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable Rate
and (iii) each Swing Line Loan shall bear interest on the outstanding
principal amount thereof from the applicable borrowing date at a rate per annum
equal to the Base Rate plus the Applicable Rate for Revolving Credit Loans.

 

64

 

(b)           The Company shall pay interest on
past due amounts hereunder at a fluctuating interest rate per annum at all
times equal to the Default Rate to the fullest extent permitted by applicable
Laws. Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.

 

(c)           Interest on each Loan shall be due
and payable in arrears on each Interest Payment Date applicable thereto and at
such other times as may be specified herein. Interest hereunder shall be due
and payable in accordance with the terms hereof before and after judgment, and
before and after the commencement of any proceeding under any Debtor Relief
Law.

 

(d)           All computations of interest
hereunder shall be made in accordance with Section 2.10.

 

SECTION 2.09  Fees.  In
addition to certain fees described in Sections 2.03(h) and (i):

 

(a)           Commitment Fee.
The Company shall pay to the Administrative Agent for the account of each
Revolving Credit Lender in accordance with its Pro Rata Share, a commitment fee
equal to the Applicable Rate with respect to commitment fees times the actual
daily amount by which the aggregate Revolving Credit Commitment exceeds the sum
of (A) Outstanding Amount of Revolving Credit Loans and (B) the Outstanding
Amount of L/C Obligations; provided that
any commitment fee accrued with respect to any of the Commitments of a
Defaulting Lender during the period prior to the time such Lender became a
Defaulting Lender and unpaid at such time shall not be payable by the Company
so long as such Lender shall be a Defaulting Lender except to the extent that
such commitment fee shall otherwise have been due and payable by the Company
prior to such time; and provided, further,
that no commitment fee shall accrue on any of the Commitments of a Defaulting
Lender so long as such Lender shall be a Defaulting Lender. The commitment fee
shall accrue at all times from the date hereof until the Maturity Date for the
Revolving Credit Facility, including at any time during which one or more of
the conditions in Article 4 is not met, and shall be due and payable quarterly
in arrears on the last Business Day of each March, June, September and
December, commencing with the first such date to occur after the Closing Date,
and on the Maturity Date for the Revolving Credit Facility. The commitment fee
shall be calculated quarterly in arrears, and if there is any change in the
Applicable Rate during any quarter, the actual daily amount shall be computed
and multiplied by the Applicable Rate separately for each period during such
quarter that such Applicable Rate was in effect.

 

(b)           Other Fees. The
Company shall pay to the Agents such fees as shall have been separately agreed
upon in writing in the amounts and at the times so specified. Such fees shall
be fully earned when paid and shall not be refundable for any reason whatsoever
(except as expressly agreed between the Company and the applicable Agent).

 

SECTION 2.10  Computation
of Interest and Fees.  All computations of interest for Base Rate
Loans when the Base Rate is determined by Bank of America’s “prime rate” shall
be made on the basis of a year of three hundred and sixty-five (365) days and
actual days elapsed. All other computations of fees and interest shall be made
on the basis of a three

 

65

 

hundred and sixty (360) day year and actual days elapsed. Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid; provided that any Loan that is
repaid on the same day on which it is made shall, subject to
Section 2.12(a), bear interest for one (1) day. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

 

SECTION 2.11  Evidence
of Indebtedness.  (a)  The Credit Extensions made by
each Lender shall be evidenced by one or more accounts or records maintained by
such Lender and evidenced by one or more entries in the Register maintained by
the Administrative Agent, acting solely for purposes of Treasury Regulation
Section 5f.103-1(c), as agent for the Company, in each case in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent and each Lender shall be prima facie evidence absent
manifest error of the amount of the Credit Extensions made by the Lenders to
the Company and the interest and payments thereon. Any failure to so record or
any error in doing so shall not, however, limit or otherwise affect the
obligation of the Company hereunder to pay any amount owing with respect to the
Obligations. In the event of any conflict between the accounts and records
maintained by any Lender and the accounts and records of the Administrative
Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Company shall
execute and deliver to such Lender (through the Administrative Agent) a Note
payable to such Lender, which shall evidence such Lender’s Loans in addition to
such accounts or records. Each Lender may attach schedules to its Note and
endorse thereon the date, Type (if applicable), amount and maturity of its
Loans and payments with respect thereto.

 

(b)           In addition to the accounts and
records referred to in Section 2.11(a), each Lender and the Administrative
Agent shall maintain in accordance with its usual practice accounts or records
and, in the case of the Administrative Agent, entries in the Register,
evidencing the purchases and sales by such Lender of participations in Letters
of Credit and Swing Line Loans. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts
and records of any Lender in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.

 

(c)           Entries made in good faith by the
Administrative Agent in the Register pursuant to Sections 2.11(a) and (b), and
by each Lender in its account or accounts pursuant to Sections 2.11(a) and (b),
shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from the
Company to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement and the other Loan
Documents, absent manifest error; provided that
the failure of the Administrative Agent or such Lender to make an entry, or any
finding that an entry is incorrect, in the Register or such account or accounts
shall not limit or otherwise affect the obligations of the Company under this
Agreement and the other Loan Documents.

 

SECTION 2.12  Payments
Generally.  (a)  All payments to be made by the Company
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff. Except as otherwise expressly provided herein, all
payments by the 

 

66

 

Company hereunder shall be made to the Administrative Agent, for the
account of the respective Lenders to which such payment is owed, at the
applicable Administrative Agent’s Office in Dollars and in Same Day Funds not
later than 2:00 p.m. on the date specified herein. The Administrative Agent
will promptly distribute to each Lender its Pro Rata Share (or other applicable
share as provided herein) of such payment in like funds as received by wire
transfer to such Lender’s Lending Office. All payments received by the
Administrative Agent after 2:00 p.m. shall be deemed received on the next
succeeding Business Day and any applicable interest or fee shall continue to
accrue.

 

(b)           If any payment to be made by the
Company shall come due on a day other than a Business Day, payment shall be
made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be; provided that, if such extension would cause payment of
interest on or principal of Eurodollar Rate Loans to be made in the next
succeeding calendar month, such payment shall be made on the immediately
preceding Business Day.

 

(c)           Unless the Company or any Lender has
notified the Administrative Agent, prior to the date any payment is required to
be made by it to the Administrative Agent hereunder, that the Company or such
Lender, as the case may be, will not make such payment, the Administrative
Agent may assume that the Company or such Lender, as the case may be, has
timely made such payment and may (but shall not be so required to), in reliance
thereon, make available a corresponding amount to the Person entitled thereto.
If and to the extent that such payment was not in fact made to the
Administrative Agent in Same Day Funds, then:

 

(i)            if the Company
failed to make such payment, each Lender shall forthwith on demand repay to the
Administrative Agent the portion of such assumed payment that was made
available to such Lender in Same Day Funds, together with interest thereon in
respect of each day from and including the date such amount was made available
by the Administrative Agent to such Lender to the date such amount is repaid to
the Administrative Agent in Same Day Funds at the Federal Funds Rate from time
to time in effect; and

 

(ii)           if any Lender
failed to make such payment, such Lender shall forthwith on demand pay to the
Administrative Agent the amount thereof in Same Day Funds, together with
interest thereon for the period from the date such amount was made available by
the Administrative Agent to the Company to the date such amount is recovered by
the Administrative Agent (the “Compensation
Period”) at a rate per annum equal to the Federal Funds Rate from
time to time in effect. When such Lender makes payment to the Administrative
Agent (together with all accrued interest thereon), then such payment amount
(excluding the amount of any interest which may have accrued and been paid in
respect of such late payment) shall constitute such Lender’s Loan included in
the applicable Borrowing. If such Lender does not pay such amount forthwith
upon the Administrative Agent’s demand therefor, the Administrative Agent may
make a demand therefor upon the Company, and the Company shall pay such amount
to the Administrative Agent, together with interest thereon for the
Compensation Period at a rate per annum equal to the rate of interest
applicable to the applicable Borrowing. Nothing herein shall be deemed to
relieve any Lender from its obligation to fulfill its

 

67

 

Commitment or
to prejudice any rights which the Administrative Agent or the Company may have
against any Lender as a result of any default by such Lender hereunder.

 

A
notice of the Administrative Agent to any Lender or the Company with respect to
any amount owing under this Section 2.12(c) shall be conclusive, absent
manifest error.

 

(d)           If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided
in the foregoing provisions of this Article 2, and such funds are not made
available to the Company by the Administrative Agent because the conditions to
the applicable Credit Extension set forth in Article 4 are not satisfied or waived
in accordance with the terms hereof, the Administrative Agent shall return such
funds (in like funds as received from such Lender) to such Lender, without
interest.

 

(e)           The obligations of the Lenders
hereunder to make Loans and to fund participations in Letters of Credit and
Swing Line Loans are several and not joint. The failure of any Lender to make
any Loan or to fund any such participation on any date required hereunder shall
not relieve any other Lender of its corresponding obligation to do so on such
date, and no Lender shall be responsible for the failure of any other Lender to
so make its Loan or purchase its participation.

 

(f)            Nothing herein shall be deemed to
obligate any Lender to obtain the funds for any Loan in any particular place or
manner or to constitute a representation by any Lender that it has obtained or
will obtain the funds for any Loan in any particular place or manner.

 

(g)           Whenever any payment received by the
Administrative Agent under this Agreement or any of the other Loan Documents is
insufficient to pay in full all amounts due and payable to the Administrative
Agent and the Lenders under or in respect of this Agreement and the other Loan
Documents on any date, such payment shall be distributed by the Administrative
Agent and applied by the Administrative Agent and the Lenders in the order of
priority set forth in Section 8.04. If the Administrative Agent receives
funds for application to the Obligations of the Loan Parties under or in
respect of the Loan Documents under circumstances for which the Loan Documents
do not specify the manner in which such funds are to be applied, the
Administrative Agent may, but shall not be obligated to, elect to distribute
such funds to each of the Lenders in accordance with such Lender’s Pro Rata
Share of the sum of (a) the Outstanding Amount of all Loans outstanding at such
time and (b) the Outstanding Amount of all L/C Obligations outstanding at such
time, in repayment or prepayment of such of the outstanding Loans or other
Obligations then owing to such Lender.

 

SECTION 2.13  Sharing
of Payments.  If, other than as expressly provided elsewhere
herein, any Lender shall obtain on account of the Loans made by it, or the
participations in L/C Obligations and Swing Line Loans held by it, any payment
(whether voluntary, involuntary, through the exercise of any right of setoff,
or otherwise) in excess of its ratable share (or other share contemplated
hereunder) thereof, such Lender shall immediately (a) notify the Administrative
Agent of such fact, and (b) purchase from the other Lenders such participations
in the Loans made by them and/or such subparticipations in the participations
in L/C Obligations or Swing Line Loans held by them, as the case may be, as
shall be necessary to cause such purchasing Lender to share the excess payment
in respect of such Loans or such

 

68

 

participations, as the case may be, pro rata with each of them; provided that if all or any portion of such excess payment
is thereafter recovered from the purchasing Lender under any of the
circumstances described in Section 10.06 (including pursuant to any
settlement entered into by the purchasing Lender in its discretion), such
purchase shall to that extent be rescinded and each other Lender shall repay to
the purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender’s ratable share (according to the proportion of
(i) the amount of such paying Lender’s required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered, without further interest thereon. The Company agrees that any
Lender so purchasing a participation from another Lender may, to the fullest
extent permitted by applicable Law, exercise all its rights of payment
(including the right of setoff, but subject to Section 10.09) with respect
to such participation as fully as if such Lender were the direct creditor of
the Company in the amount of such participation. The Administrative Agent will
keep records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased under this Section 2.13 and will in each
case notify the Lenders following any such purchases or repayments. Each Lender
that purchases a participation pursuant to this Section 2.13 shall from
and after such purchase have the right to give all notices, requests, demands,
directions and other communications under this Agreement with respect to the
portion of the Obligations purchased to the same extent as though the
purchasing Lender were the original owner of the Obligations purchased.

 

SECTION 2.14  Incremental
Credit Extensions.  (a)  The Company may at any time or
from time to time after the Closing Date, by notice to the Administrative Agent
(whereupon the Administrative Agent shall promptly deliver a copy to each of
the Lenders), request (a) one or more additional tranches of term loans (the “Incremental Term Loans”) or (b) one or more increases in the
amount of the Revolving Credit Commitments (each such increase, a “Revolving Commitment Increase”); provided
that (i) both at the time of any such request and upon the effectiveness
of any Incremental Amendment referred to below, no Default or Event of Default
shall exist and at the time that any such Incremental Term Loan is made (and
after giving effect thereto) no Default or Event of Default shall exist and
(ii) the Company shall be in compliance with each of the covenants set
forth in Section 7.11 determined on a Pro Forma Basis as of the date of
such Incremental Term Loan or Revolving Commitment Increase and the last day of
the most recent Test Period, in each case, as if such Incremental Term Loans or
Revolving Commitment Increases, as applicable, had been outstanding on the last
day of such fiscal quarter of the Company for testing compliance therewith.
Each tranche of Incremental Term Loans and each Revolving Commitment Increase
shall be in an aggregate principal amount that is not less than $20,000,000 (provided that such amount may be less than $20,000,000 if
such amount represents all remaining availability under the limit set forth in
the next sentence). Notwithstanding anything to the contrary herein, the
aggregate amount of the Incremental Term Loans and the Revolving Commitment
Increases shall not exceed $150,000,000. Each tranche of Incremental Term Loans
(a) shall rank pari passu in right of payment
and of security with the Revolving Credit Loans and the Term Loans, (b) shall
not mature earlier than the Maturity Date with respect to the Term Loans, (c)
shall have a Weighted Average Life to Maturity of no less than the Weighted
Average Life to Maturity then in effect for the Term Loans and (d) except as
set forth above, shall be treated substantially the same as the Term Loans (in
each case, including with respect to mandatory and voluntary prepayments); provided that (i) the terms and conditions applicable
to Incremental Term Loans may be materially different from those of the Term
Loans

 

69

 

to the extent such differences are reasonably acceptable to the
Arrangers and (ii) the interest rates and amortization schedule applicable
to the Incremental Term Loans shall be determined by the Company and the
lenders thereof. Each notice from the Company pursuant to this
Section shall set forth the requested amount and proposed terms of the
relevant Incremental Term Loans or Revolving Commitment Increases. Incremental
Term Loans may be made, and Revolving Commitment Increases may be provided, by
any existing Lender (and each existing Term Lender will have the right, but not
an obligation, to make a portion of any Incremental Term Loan, and each
existing Revolving Credit Lender will have the right, but no obligation, to
provide a portion of any Revolving Commitment Increase, in each case on terms
permitted in this Section 2.14 and otherwise on terms reasonably
acceptable to the Administrative Agent) or by any other bank or other financial
institution (any such other bank or other financial institution being called an
“Additional Lender”); provided that the Administrative Agent and each Principal
L/C Issuer (in the case of a Revolving Commitment Increase) shall have
consented (not to be unreasonably withheld) to such Lender’s or Additional
Lender’s making such Incremental Term Loans or providing such Revolving
Commitment Increases if such consent would be required under
Section 10.07(b) for an assignment of Loans or Revolving Credit
Commitments, as applicable, to such Lender or Additional Lender. Commitments in
respect of Incremental Term Loans and Revolving Commitment Increases shall
become Commitments (or in the case of a Revolving Commitment Increase to be provided
by an existing Revolving Credit Lender, an increase in such Lender’s applicable
Revolving Credit Commitment) under this Agreement pursuant to an amendment (an “Incremental Amendment”) to this Agreement and, as
appropriate, the other Loan Documents, executed by Holdings, the Company, each
Lender agreeing to provide such Commitment, if any, each Additional Lender, if
any, and the Administrative Agent. The Incremental Amendment may, without the
consent of any other Lenders, effect such amendments to this Agreement and the
other Loan Documents as may be necessary or appropriate, in the reasonable
opinion of the Administrative Agent and the Company, to effect the provisions
of this Section. The effectiveness of (and, in the case of any Incremental
Amendment for an Incremental Term Loan, the borrowing under) any Incremental
Amendment shall be subject to the satisfaction on the date thereof (each, an “Incremental Facility Closing Date”) of each of the
conditions set forth in Section 4.02 (it being understood that all
references to “the date of such Credit Extension” or similar language in such
Section 4.02 shall be deemed to refer to the effective date of such
Incremental Amendment) and such other conditions as the parties thereto shall
agree. The Company will use the proceeds of the Incremental Term Loans and
Revolving Commitment Increases for any purpose not prohibited by this
Agreement. No Lender shall be obligated to provide any Incremental Term Loans
or Revolving Commitment Increases, unless it so agrees. Upon each increase in
the Revolving Credit Commitments pursuant to this Section, each Revolving
Credit Lender immediately prior to such increase will automatically and without
further act be deemed to have assigned to each Lender providing a portion of the
Revolving Commitment Increase (each a “Revolving Commitment
Increase Lender”) in respect of such increase, and each such
Revolving Commitment Increase Lender will automatically and without further act
be deemed to have assumed, a portion of such Revolving Credit Lender’s
participations hereunder in outstanding Letters of Credit and Swing Line Loans
such that, after giving effect to each such deemed assignment and assumption of
participations, the percentage of the aggregate outstanding
(i) participations hereunder in Letters of Credit and
(ii) participations hereunder in Swing Line Loans held by each Revolving
Credit Lender (including each such Revolving Commitment Increase Lender) will
equal the percentage of the

 

70

 

aggregate Revolving Credit Commitments of all Revolving Credit Lenders
represented by such Revolving Credit Lender’s Revolving Credit Commitment and
(b) if, on the date of such increase, there are any Revolving Credit Loans
outstanding, such Revolving Credit Loans shall on or prior to the effectiveness
of such Revolving Commitment Increase be prepaid from the proceeds of
additional Revolving Credit Loans made hereunder (reflecting such increase in
Revolving Credit Commitments), which prepayment shall be accompanied by accrued
interest on the Revolving Credit Loans being prepaid and any costs incurred by
any Lender in accordance with Section 3.05. The Administrative Agent and
the Lenders hereby agree that the minimum borrowing, pro rata
borrowing and pro rata payment requirements
contained elsewhere in this Agreement shall not apply to the transactions
effected pursuant to the immediately preceding sentence.

 

(b)           This Section 2.14 shall
supersede any provisions in Section 2.13 or 10.01 to the contrary.

 

ARTICLE III

 

Taxes, Increased Costs Protection
and Illegality

 

SECTION 3.01  Taxes.  (a)  Except
as provided in this Section 3.01, any and all payments by the Company (the
term Company under Article 3 being deemed to include any Subsidiary for whose
account a Letter of Credit is issued) to or for the account of any Agent or any
Lender under any Loan Document shall be made free and clear of and without
deduction for any and all present or future taxes, duties, levies, imposts,
deductions, assessments, fees, withholdings or similar charges, and all
liabilities (including additions to tax, penalties and interest) with respect
thereto, excluding, in the case of each Agent and each Lender, taxes imposed on
or measured by its net income or overall gross income (including branch
profits), and franchise (and similar) taxes imposed on it in lieu of net income
taxes, by the jurisdiction (or any political subdivision thereof) under the
Laws of which such Agent or such Lender, as the case may be, is organized or maintains
a Lending Office, and all liabilities (including additions to tax, penalties
and interest) with respect thereto (all such non-excluded taxes, duties,
levies, imposts, deductions, assessments, fees, withholdings or similar
charges, and liabilities being hereinafter referred to as “Taxes”).
If the Company shall be required by any Laws to deduct any Taxes or Other Taxes
from or in respect of any sum payable under any Loan Document to any Agent or
any Lender, (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 3.01), each of such Agent and
such Lender receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Company shall make such deductions,
(iii) the Company shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable Laws, and
(iv) within thirty (30) days after the date of such payment (or, if receipts or
evidence are not available within thirty (30) days, as soon as possible
thereafter), the Company shall furnish to such Agent or Lender (as the case may
be) the original or a certified copy of a receipt evidencing payment thereof to
the extent such a receipt is issued therefor, or other written proof of payment
thereof that is reasonably satisfactory to the Administrative Agent. If the
Company fails to pay any Taxes or Other Taxes when due to the appropriate
taxing authority or fails to remit to any Agent or any Lender the required
receipts or other required documentary evidence, the Company shall indemnify
such Agent and such Lender

 

71

 

for any incremental taxes, interest or penalties that may become
payable by such Agent or such Lender arising out of such failure.

 

(b)           In addition, the Company agrees to
pay any and all present or future stamp, court or documentary taxes and any
other excise, property, intangible or mortgage recording taxes or charges or
similar levies which arise from any payment made under any Loan Document or
from the execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, any Loan Document (hereinafter referred to as “Other Taxes”).

 

(c)           The Company agrees to indemnify each
Agent and each Lender for (i) the full amount of Taxes and Other Taxes
(including any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 3.01) paid by such Agent and such
Lender and (ii) any liability (including additions to tax, penalties,
interest and expenses) arising therefrom or with respect thereto, in each case
whether or not such Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority; provided
such Agent or Lender, as the case may be, provides the Company with a written
statement thereof setting forth in reasonable detail the basis and calculation
of such amounts. Payment under this Section 3.01(c) shall be made within
thirty (30) days after the date such Lender or such Agent makes a demand
therefor.

 

(d)           The Company shall not be required
pursuant to this Section 3.01 to pay any additional amount to, or to
indemnify, any Lender or Agent, as the case may be, to the extent that such
Lender or such Agent becomes subject to United States withholding taxes
subsequent to the Closing Date (or, if later, the date such Lender or Agent
becomes a party to this Agreement) as a result of a change in the place of
organization of such Lender or Agent or a change in the Lending Office of such
Lender, except to the extent that any such change is requested or required in
writing by the Company (and provided that nothing in this clause (d) shall
be construed as relieving the Company from any obligation to make such payments
or indemnification with respect to United States withholding taxes in the event
of a change in Lending Office or place of organization that precedes a change
in Law to the extent such withholding taxes result from a change in Law).

 

(e)           Notwithstanding anything else herein
to the contrary, if a Lender or an Agent is subject to United States
withholding tax at a rate in excess of zero percent at the time such Lender or
such Agent, as the case may be, first becomes a party to this Agreement,
withholding tax imposed by such jurisdiction at such rate shall be considered
excluded from Taxes unless and until such Lender or Agent, as the case may be,
provides the appropriate forms certifying that a lesser rate applies, whereupon
withholding tax at such lesser rate only shall be considered excluded from
Taxes for periods governed by such forms; provided that,
if at the date of the Assignment and Assumption pursuant to which a Lender
becomes a party to this Agreement, the Lender assignor was entitled to payments
under clause (a) of this Section 3.01 in respect of United States withholding
tax with respect to interest paid at such date, then, to such extent, the term
Taxes shall include (in addition to withholding taxes that may be imposed in
the future or other amounts otherwise includable in Taxes) withholding tax, if
any, applicable with respect to the Lender assignee on such date.

 

72

 

(f)            If any Lender or Agent determines,
in its reasonable discretion, that it has received a refund in respect of any
Taxes or Other Taxes as to which indemnification or additional amounts have
been paid to it by the Company pursuant to this Section 3.01, it shall
promptly remit such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Company under this Section 3.01 with
respect to the Taxes or Other Taxes giving rise to such refund plus any
interest included in such refund by the relevant taxing authority attributable
thereto) to the Company, net of all out-of-pocket expenses of the Lender or
Agent, as the case may be and without interest (other than any interest paid by
the relevant taxing authority with respect to such refund); provided that the Company, upon the request of the Lender or
Agent, as the case may be, agrees promptly to return such refund to such party
in the event such party is required to repay such refund to the relevant taxing
authority. Such Lender or Agent, as the case may be, shall, at the Company’s
request, provide the Company with a copy of any notice of assessment or other
evidence of the requirement to repay such refund received from the relevant
taxing authority (provided that such Lender or
Agent may delete any information therein that such Lender or Agent deems
confidential). Nothing herein contained shall interfere with the right of a
Lender or Agent to arrange its tax affairs in whatever manner it thinks fit nor
oblige any Lender or Agent to claim any tax refund or to make available its tax
returns or disclose any information relating to its tax affairs or any
computations in respect thereof.

 

(g)           Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 3.01(a) or
(c) with respect to such Lender it will, if requested by the Company, use
commercially reasonable efforts (subject to such Lender’s overall internal
policies of general application and legal and regulatory restrictions) to
designate another Lending Office for any Loan or Letter of Credit affected by
such event; provided that such efforts are made on
terms that, in the sole judgment of such Lender, cause such Lender and its
Lending Office(s) to suffer no economic, legal or regulatory disadvantage; and provided, further, that nothing in this Section 3.01(g)
shall affect or postpone any of the Obligations of the Company or the rights of
such Lender pursuant to Section 3.01(a) or (c).

 

SECTION 3.02  Illegality.  If
any Lender determines that any Law has made it unlawful, or that any Governmental
Authority has asserted that it is unlawful, for any Lender or its applicable
Lending Office to make, maintain or fund Eurodollar Rate Loans, or to determine
or charge interest rates based upon the Eurodollar Rate, then, on notice
thereof by such Lender to the Company through the Administrative Agent, any
obligation of such Lender to make or continue Eurodollar Rate Loans or to
convert Base Rate Loans to Eurodollar Rate Loans shall be suspended until such
Lender notifies the Administrative Agent and the Company that the circumstances
giving rise to such determination no longer exist. Upon receipt of such notice,
the Company shall upon demand from such Lender (with a copy to the
Administrative Agent), prepay or, if applicable, convert all Eurodollar Rate
Loans of such Lender to Base Rate Loans, either on the last day of the Interest
Period therefor, if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or promptly, if such Lender may not lawfully
continue to maintain such Eurodollar Rate Loans. Upon any such prepayment or
conversion, the Company shall also pay accrued interest on the amount so
prepaid or converted and all amounts due, if any, in connection with such
prepayment or conversion under Section 3.05. Each Lender agrees to
designate a different Lending Office if such designation will avoid the need
for such

 

73

 

notice and will not, in the good faith judgment of such Lender,
otherwise be materially disadvantageous to such Lender.

 

SECTION 3.03  Inability
to Determine Rates.  If the Required Lenders determine that for
any reason adequate and reasonable means do not exist for determining the
Eurodollar Rate for any requested Interest Period with respect to a proposed
Eurodollar Rate Loan, or that the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Rate Loan does not adequately and
fairly reflect the cost to such Lenders of funding such Loan, or that Dollar
deposits are not being offered to banks in the London interbank eurodollar
market for the applicable amount and the Interest Period of such Eurodollar
Rate Loan, the Administrative Agent will promptly so notify the Company and
each Lender. Thereafter, the obligation of the Lenders to make or maintain
Eurodollar Rate Loans shall be suspended until the Administrative Agent (upon
the instruction of the Required Lenders) revokes such notice. Upon receipt of
such notice, the Company may revoke any pending request for a Borrowing of,
conversion to or continuation of Eurodollar Rate Loans or, failing that, will
be deemed to have converted such request into a request for a Borrowing of Base
Rate Loans in the amount specified therein.

 

SECTION 3.04  Increased
Cost and Reduced Return; Capital Adequacy; Reserves on Eurodollar Rate Loans.  (a)  If
any Lender determines that as a result of the introduction of or any change in
or in the interpretation of any Law, in each case after the date hereof, or
such Lender’s compliance therewith, there shall be any increase in the cost to
such Lender of agreeing to make or making, funding or maintaining Eurodollar
Rate Loans or (as the case may be) issuing or participating in Letters of
Credit, or a reduction in the amount received or receivable by such Lender in
connection with any of the foregoing (excluding for purposes of this
Section 3.04(a) any such increased costs or reduction in amount resulting
from (i) Taxes or Other Taxes (as to which Section 3.01 shall
govern), (ii) changes in the basis of taxation of overall net income or
overall gross income (including branch profits), and franchise (and similar)
taxes imposed in lieu of net income taxes, by the United States or any foreign
jurisdiction or any political subdivision of either thereof under the Laws of
which such Lender is organized or maintains a Lending Office, and
(iii) reserve requirements contemplated by Section 3.04(c)), then
from time to time within fifteen (15) days after demand by such Lender setting
forth in reasonable detail such increased costs (with a copy of such demand to
the Administrative Agent given in accordance with Section 3.06), the
Company shall pay to such Lender such additional amounts as will compensate
such Lender for such increased cost or reduction.

 

(b)           If any Lender determines that the
introduction of any Law regarding capital adequacy or any change therein or in
the interpretation thereof, in each case after the date hereof, or compliance
by such Lender (or its Lending Office) therewith, has the effect of reducing
the rate of return on the capital of such Lender or any corporation controlling
such Lender as a consequence of such Lender’s obligations hereunder (taking
into consideration its policies with respect to capital adequacy and such
Lender’s desired return on capital to a level below that which such Lender or
its parent could have achieved but for such introduction, change or
interpretation), then from time to time upon demand of such Lender setting
forth in reasonable detail the charge and the calculation of such reduced rate
of return (with a copy of such demand to the Administrative Agent given in
accordance with Section 3.06), the Company shall pay to such Lender such
additional amounts as will compensate such Lender for such reduction within
fifteen (15) days after receipt of such demand.

 

74

 

(c)           The Company shall pay to each Lender,
(i) as long as such Lender shall be required to maintain reserves with
respect to liabilities or assets consisting of or including Eurodollar funds or
deposits, additional interest on the unpaid principal amount of each Eurodollar
Rate Loan equal to the actual costs of such reserves allocated to such Loan by
such Lender (as determined by such Lender in good faith, which determination
shall be conclusive in the absence of manifest error), and (ii) as long as
such Lender shall be required to comply with any reserve ratio requirement or
analogous requirement of any other central banking or financial regulatory
authority imposed in respect of the maintenance of the Commitments or the
funding of the Eurodollar Rate Loans, such additional costs (expressed as a
percentage per annum and rounded upwards, if necessary, to the nearest five
decimal places) equal to the actual costs allocated to such Commitment or Loan
by such Lender (as determined by such Lender in good faith, which determination
shall be conclusive absent manifest error) which in each case shall be due and
payable on each date on which interest is payable on such Loan, provided the
Company shall have received at least fifteen (15) days’ prior notice (with a
copy to the Administrative Agent) of such additional interest or cost from such
Lender. If a Lender fails to give written notice fifteen (15) days prior to the
relevant Interest Payment Date, such additional interest or cost shall be due
and payable fifteen (15) days from receipt of such notice.

 

(d)           Failure or delay on the part of any
Lender to demand compensation pursuant to this Section 3.04 shall not
constitute a waiver of such Lender’s right to demand such compensation, provided that the Company shall not be required to
compensate a Lender pursuant to Section 3.04(a), (b) or (c) for any such
increased cost or reduction incurred more than one hundred and eighty (180)
days prior to the date that such Lender demands, or notifies the Company in
writing of its intention to demand, compensation therefor; provided,
further, that, if the circumstance
giving rise to such increased cost or reduction is retroactive, then such
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

 

(e)           If any Lender requests compensation
under this Section 3.04, then such Lender will, if requested by the
Company, use commercially reasonable efforts to designate another Lending
Office for any Loan or Letter of Credit affected by such event; provided that such efforts are made on terms that, in the
reasonable judgment of such Lender, cause such Lender and its Lending Office(s)
to suffer no material economic, legal or regulatory disadvantage; and provided, further, that nothing in this Section 3.04(e)
shall affect or postpone any of the Obligations of the Company or the rights of
such Lender pursuant to Section 3.04(a), (b), (c) or (d).

 

SECTION 3.05  Funding
Losses.  Upon written demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Company shall promptly compensate
such Lender for and hold such Lender harmless from any loss, cost or expense
incurred by it as a result of:

 

(a)           any continuation, conversion, payment
or prepayment of any Loan other than a Base Rate Loan on a day other than the
last day of the Interest Period for such Loan (whether voluntary, mandatory,
automatic, by reason of acceleration, or otherwise); or

 

75

 

(b)           any failure by the Company (for a
reason other than the failure of such Lender to make a Loan) to prepay, borrow,
continue or convert any Loan other than a Base Rate Loan on the date or in the
amount notified by the Company;

 

including any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were
obtained.

 

For
purposes of calculating amounts payable by the Company to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it at the Eurodollar Rate for such Loan by a
matching deposit or other borrowing in the London interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.

 

SECTION 3.06  Matters
Applicable to All Requests for Compensation.  (a)  Any
Agent or any Lender claiming compensation under this Article 3 shall deliver a
certificate to the Company setting forth the additional amount or amounts to be
paid to it hereunder which shall be conclusive in the absence of manifest
error. In determining such amount, such Agent or such Lender may use any
reasonable averaging and attribution methods.

 

(b)           With respect to any Lender’s claim
for compensation under Section 3.01, 3.02, 3.03 or 3.04, the Company shall
not be required to compensate such Lender for any amount incurred more than one
hundred and eighty (180) days prior to the date that such Lender notifies the
Company of the event that gives rise to such claim; provided
that, if the circumstance giving rise to such claim is retroactive, then such
180-day period referred to above shall be extended to include the period of
retroactive effect thereof. If any Lender requests compensation by the Company
under Section 3.04, the Company may, by notice to such Lender (with a copy
to the Administrative Agent), suspend the obligation of such Lender to make or
continue from one Interest Period to another Eurodollar Rate Loans, or to convert
Base Rate Loans into Eurodollar Rate Loans, until the event or condition giving
rise to such request ceases to be in effect (in which case the provisions of
Section 3.06(c) shall be applicable); provided that
such suspension shall not affect the right of such Lender to receive the
compensation so requested.

 

(c)           If the obligation of any Lender to
make or continue from one Interest Period to another any Eurodollar Rate Loan,
or to convert Base Rate Loans into Eurodollar Rate Loans shall be suspended
pursuant to Section 3.06(b) hereof, such Lender’s Eurodollar Rate Loans
shall be automatically converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for such Eurodollar Rate Loans (or, in the case
of an immediate conversion required by Section 3.02, on such earlier date
as required by Law) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Section 3.01, 3.02, 3.03 or 3.04
hereof that gave rise to such conversion no longer exist:

 

(i)            to the extent that
such Lender’s Eurodollar Rate Loans have been so converted, all payments and
prepayments of principal that would otherwise be applied to such Lender’s
Eurodollar Rate Loans shall be applied instead to its Base Rate Loans; and

 

76

 

(ii)           all Loans that
would otherwise be made or continued from one Interest Period to another by
such Lender as Eurodollar Rate Loans shall be made or continued instead as Base
Rate Loans, and all Base Rate Loans of such Lender that would otherwise be
converted into Eurodollar Rate Loans shall remain as Base Rate Loans.

 

(d)           If any Lender gives notice to the
Company (with a copy to the Administrative Agent) that the circumstances
specified in Section 3.01, 3.02, 3.03 or 3.04 hereof that gave rise to the
conversion of such Lender’s Eurodollar Rate Loans pursuant to this
Section 3.06 no longer exist (which such Lender agrees to do promptly upon
such circumstances ceasing to exist) at a time when Eurodollar Rate Loans made
by other Lenders are outstanding, such Lender’s Base Rate Loans shall be
automatically converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Rate Loans, to the extent necessary
so that, after giving effect thereto, all Loans held by the Lenders holding
Eurodollar Rate Loans and by such Lender are held pro rata (as to principal
amounts, interest rate basis, and Interest Periods) in accordance with their
respective Commitments.

 

SECTION 3.07  Replacement
of Lenders under Certain Circumstances.  (a)  If at any
time (i) the Company becomes obligated to pay additional amounts or
indemnity payments described in Section 3.01 or Section 3.04 as a
result of any condition described in such Sections or any Lender ceases to make
Eurodollar Rate Loans as a result of any condition described in
Section 3.02 or Section 3.04, (ii) any Lender becomes a
Defaulting Lender or (iii) any Lender becomes a Non-Consenting Lender,
then the Company may, on ten (10) Business Days’ prior written notice to the
Administrative Agent and such Lender, replace such Lender by causing such
Lender to (and such Lender shall be obligated to) assign pursuant to
Section 10.07(b) (with the assignment fee to be paid by the Company in
such instance) all of its rights and obligations under this Agreement to one or
more Eligible Assignees; provided that
neither the Administrative Agent nor any Lender shall have any obligation to
the Company to find a replacement Lender or other such Person; and provided, further, that (A) in the case of any such
assignment resulting from a claim for compensation under Section 3.04 or
payments required to be made pursuant to Section 3.01, such assignment
will result in a reduction in such compensation or payments and (B) in the case
of any such assignment resulting from a Lender becoming a Non-Consenting
Lender, the applicable Eligible Assignees shall have agreed to the applicable
departure, waiver or amendment of the Loan Documents.

 

(b)           Any Lender being replaced pursuant to
Section 3.07(a) above shall (i) execute and deliver an Assignment and
Assumption with respect to such Lender’s Commitment and outstanding Loans and
participations in L/C Obligations and Swing Line Loans, and (ii) deliver
any Notes evidencing such Loans to the Company or Administrative Agent.
Pursuant to such Assignment and Assumption, (A) the assignee Lender shall
acquire all or a portion, as the case may be, of the assigning Lender’s
Commitment and outstanding Loans and participations in L/C Obligations and
Swing Line Loans, (B) all obligations of the Company owing to the assigning
Lender relating to the Loans and participations so assigned shall be paid in
full by the assignee Lender to such assigning Lender concurrently with such
assignment and assumption and (C) upon such payment and, if so requested by the
assignee Lender, delivery to the assignee Lender of the appropriate Note or
Notes executed by the Company, the assignee Lender shall become a Lender
hereunder and the assigning Lender shall cease to constitute a Lender hereunder
with respect to such assigned Loans, Commitments and participations, except

 

77

 

with respect to indemnification provisions
under this Agreement, which shall survive as to such assigning Lender.

 

(c)           Notwithstanding anything to the
contrary contained above, any Lender that acts as an L/C Issuer may not be
replaced hereunder at any time that it has any Letter of Credit outstanding
hereunder unless arrangements reasonably satisfactory to such L/C Issuer
(including the furnishing of a back-up standby letter of credit in form and
substance, and issued by an issuer reasonably satisfactory to such L/C Issuer
or the depositing of cash collateral into a cash collateral account in amounts
and pursuant to arrangements reasonably satisfactory to such L/C Issuer) have
been made with respect to each such outstanding Letter of Credit and the Lender
that acts as the Administrative Agent may not be replaced hereunder except in
accordance with the terms of Section 9.09.

 

(d)           In the event that (i) the
Company or the Administrative Agent has requested that the Lenders consent to a
departure or waiver of any provisions of the Loan Documents or agree to any
amendment thereto, (ii) the consent, waiver or amendment in question
requires the agreement of all affected Lenders in accordance with the terms of
Section 10.01 or all the Lenders with respect to a certain Class of the
Loans and (iii) the Required Lenders have agreed to such consent, waiver
or amendment, then any Lender who does not agree to such consent, waiver or
amendment shall be deemed a “Non-Consenting
Lender.”

 

SECTION 3.08  Survival.  All
of the Company’s obligations under this Article 3 shall survive termination of
the Aggregate Commitments and repayment of all other Obligations hereunder.

 

ARTICLE IV

 

Conditions Precedent to Credit
Extensions

 

SECTION 4.01  Conditions
of Initial Credit Extension.  The obligation of each Lender to
make its initial Credit Extension hereunder is subject to satisfaction of the
following conditions precedent:

 

(a)           The Administrative Agent’s receipt of
the following, each of which shall be originals or facsimiles (followed
promptly by originals) unless otherwise specified, each properly executed by a
Responsible Officer of the signing Loan Party, each in form and substance
reasonably satisfactory to the Administrative Agent and its legal counsel:

 

(i)            executed
counterparts of this Agreement and the Guaranty;

 

(ii)           each Collateral
Document, duly executed by each Loan Party thereto, together with:

 

(A)          certificates, if any,
representing the Pledged Equity referred to therein accompanied by undated
stock powers executed in blank and instruments evidencing the Pledged Debt
indorsed in blank;

 

78

 

(B)           to the extent
required under the Collateral and Guarantee Requirement, opinions of local
counsel for the Loan Parties in states in which the Mortgaged Properties are
located, with respect to the enforceability and perfection of the Mortgages and
any related fixture filings in form and substance reasonably satisfactory to
the Administrative Agent; and

 

(C)           evidence that all
other actions, recordings and filings that the Administrative Agent may deem
reasonably necessary to satisfy the Collateral and Guarantee Requirement shall
have been taken, completed or otherwise provided for in a manner reasonably
satisfactory to the Administrative Agent;

 

(iii)          such certificates
of resolutions or other action and incumbency certificates of Responsible
Officers of each Loan Party as the Administrative Agent may reasonably require
evidencing the identity, authority and capacity of each Responsible Officer
thereof authorized to act as a Responsible Officer in connection with the
execution and delivery this Agreement and the other Loan Documents to which
such Loan Party is a party or is to be a party on the Closing Date;

 

(iv)          opinions from (A)
Simpson Thatcher & Bartlett LLP, New York counsel to the Loan Parties
substantially in the form of Exhibit I, (B) Reed Smith LLP, special regulatory
counsel to the Loan Parties, (C) Faegre & Benson LLP, Minnesota counsel to
certain Loan Parties and (D) Rice Silbey, Reuter & Sullivan, LLP, Nevada
counsel to certain Loan Parties;

 

(v)           a certificate signed
by a Responsible Officer of the Company certifying that since December 31,
2005, except as set forth in Section 3.7 of the Company Disclosure Schedule (as
defined in the Merger Agreement) or except as set forth in the Filed Company
SEC Reports (as defined in the Merger Agreement) there has been no change,
event, circumstance, condition, occurrence, development or effect, that
indirectly or in the aggregate has had or would reasonably be expected to have
a Material Adverse Change;

 

(vi)          a certificate
attesting to the Solvency of the Loan Parties (taken as a whole) on the Closing
Date after giving effect to the Transaction, from the Chief Financial Officer
of the Company;

 

(vii)         evidence that all
insurance (including title insurance) required to be maintained pursuant to the
Loan Documents has been obtained and is in effect and that the Administrative
Agent has been named as loss payee under each insurance policy with respect to
such insurance as to which the Administrative Agent shall have requested to be
so named;

 

(viii)        certified copies of
the Merger Agreement, duly executed by the parties thereto, together with all
material agreements, instruments and other documents delivered in connection
therewith as the Administrative Agent shall reasonably request, each including
certification by a Responsible Officer of Encore Medical that such documents
are in full force and effect as of the Closing Date; and

 

79

 

(ix)           a Loan Notice or
Letter of Credit Application, as applicable, relating to the initial Credit
Extension.

 

(x)            a certificate
signed by a Responsible Officer of Encore Medical on the Closing Date
certifying that Encore Medical holds no material assets other than those set
forth on Schedule 4.01(a)(x).

 

(b)           All fees and expenses required to be
paid hereunder and invoiced before the Closing Date shall have been paid in
full in cash.

 

(c)           Prior to or simultaneously with the
initial Credit Extension, (i) the Equity Contribution shall have been
funded in full; and (ii) the Merger shall be consummated in
accordance with the terms of the Merger Agreement and in compliance with
applicable material Laws and regulatory approvals, and no provision of the
Merger Agreement shall have been waived, amended, supplemented or otherwise
modified to the extent material and adverse to the interests of the Lenders
without the consent of the Arrangers, which consent shall not be unreasonably
withheld or delayed.

 

(d)           Prior to or simultaneously with the
initial Credit Extensions, the Company shall have received at least
$200,000,000 in gross cash proceeds from the issuance of the New Notes.

 

(e)           (i)  Prior to the date of
the initial Credit Extension hereunder, Encore Medical shall have commenced
tender offers and consent solicitations with respect to the Existing Notes (the
“Tender Offer and Consent
Solicitation”) pursuant to which, inter alia, consents shall have
been solicited to proposed amendments (the “Existing
Notes Indenture Amendment”) to the Existing Notes Indenture, which
amendments shall, inter  alia, provide for the substantial
elimination of the covenants contained in the Existing Notes Indenture.

 

(ii)           Prior to or
simultaneously with the initial Credit Extension, holders of at least a
majority of the aggregate outstanding principal amount of the Existing Notes
shall have validly tendered, and not withdrawn, their Existing Notes and
provided their consent pursuant to, and in accordance with the requirements of,
the Tender Offer and Consent Solicitation.

 

(f)            Prior to or simultaneously with the
initial Credit Extensions, the Company shall have terminated the Existing
Credit Agreement, all Liens granted thereunder shall have been terminated and
taken all other necessary actions such that, after giving effect to the
Transaction, (i) Holdings and its Subsidiaries shall have outstanding no
Indebtedness or preferred Equity Interests other than (A) the Loans and L/C
Obligations, (B) the New Notes, (C) any Existing Notes that have not been
purchased by the Company pursuant to the tender offer related to such Existing
Notes and (D) Indebtedness listed on Schedule 7.03(b) and (ii) the Company
shall have outstanding no Equity Interests (or securities convertible into or
exchangeable for Equity Interests or rights or options to acquire Equity Interests)
other than common stock owned by Holdings and preferred stock owned by
Holdings, with terms and conditions reasonably acceptable to the Arrangers to
the extent material to the interests of the Lenders.

 

80

 

(g)           The Arrangers and the Lenders shall
have received (i) the Audited Financial Statements and (ii) unaudited
consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of Encore Medical and its Subsidiaries for each
subsequent fiscal quarter ended at least forty-five (45) days before the
Closing Date (collectively, the “Unaudited
Financial Statements”), which financial statements described in
clauses (i) and (ii)(A) shall be prepared in accordance with GAAP.

 

(h)           The Arrangers and the Lenders shall
have received the Pro Forma Financial Statements.

 

SECTION 4.02  Conditions
to All Credit Extensions.  The obligation of each Lender to honor
any Request for Credit Extension (other than a Loan Notice requesting only a conversion
of Loans to the other Type, or a continuation of Eurodollar Rate Loans) is
subject to the following conditions precedent:

 

(a)           The representations and warranties of
the Company and each other Loan Party contained in Article 5 or any other Loan
Document shall be true and correct in all material respects on and as of the
date of such Credit Extension, except for such representations and warranties
expressly stated to relate to a specific earlier date, in which case such
representations and warranties shall be true and correct in all material
respects as of such earlier date; provided, that
any representation and warranty that is qualified as to “materiality,” “Material
Adverse Effect” or similar language shall be true and correct in all respects
on such respective dates and provided, further,
that, in the case of the initial Credit Extension, such representations and
warranties shall be limited to the Specified Representations. For purposes of
this Section 4.02(a), the Specified Representations shall mean the
representations and warranties set forth in clauses (a) and (b) of Section
5.01, Section 5.02 (but not clauses (a), (b) or (c) thereof), and Sections
5.04, 5.13 and 5.16.

 

(b)           With respect to any request for an
Extension of Credit to occur after the Closing Date, no Default shall exist, or
would result from such proposed Credit Extension or from the application of the
proceeds therefrom.

 

(c)           The Administrative Agent and, if
applicable, the relevant L/C Issuer or the Swing Line Lender shall have received
a Request for Credit Extension in accordance with the requirements hereof.

 

Each
Request for Credit Extension (other than a Loan Notice requesting only a
conversion of Loans to the other Type or a continuation of Eurodollar Rate
Loans) submitted by the Company shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.

 

ARTICLE V

 

Representations and Warranties

 

The
Company represents and warrants to the Agents and the Lenders that:

 

81

 

SECTION 5.01  Existence,
Qualification and Power; Compliance with Laws.  Each Loan Party
and each of its Subsidiaries (a) is a Person duly organized or formed, validly
existing and in good standing under the Laws of the jurisdiction of its
incorporation or organization, (b) has all requisite power and authority to
(i) own or lease its assets and carry on its business and (ii) in the
case of the Loan Parties only, execute, deliver and perform its obligations
under the Loan Documents to which it is a party, (c) is duly qualified and in
good standing under the Laws of each jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such
qualification, (d) is in compliance with all Laws, orders, writs, injunctions
and orders and (e) has all requisite governmental licenses, authorizations,
consents and approvals to operate its business as currently conducted; except
in each case referred to in clause (c), (d) or (e), to the extent that failure
to do so could not reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.02  Authorization;
No Contravention.  The execution, delivery and performance by
each Loan Party of each Loan Document to which such Person is a party, and the
consummation of the Transaction and the Post-Closing Acquisition, are within
such Loan Party’s corporate or other powers, have been duly authorized by all
necessary corporate or other organizational action, and do not and will not (a)
contravene the terms of any of such Person’s Organization Documents,
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under (other than as permitted by Section 7.01), or
require any payment to be made under (i) (x) any Existing Notes
Documentation or (y) any other Contractual Obligation to which such Person is a
party or affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any material order, injunction, writ or decree of any
Governmental Authority or any arbitral award to which such Person or its
property is subject; or (c) violate any Law; except with respect to any
conflict, breach or contravention or payment (but not creation of Liens)
referred to in clause (b)(i) or (c) of this Section 5.02, to the extent that
such conflict, breach, contravention or payment could not reasonably be
expected to have a Material Adverse Effect.

 

SECTION 5.03  Governmental
Authorization; Other Consents.  No material approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document, (b) the
grant by any Loan Party of the Liens granted by it pursuant to the Collateral
Documents, (c) the perfection or maintenance of the Liens created under the Collateral
Documents (including the priority thereof) or (d) the exercise by the
Administrative Agent or any Lender of its rights under the Loan Documents or
the remedies in respect of the Collateral pursuant to the Collateral Documents,
except for (i) filings necessary to perfect the Liens on the Collateral
granted by the Loan Parties in favor of the Secured Parties, (ii) the
approvals, consents, exemptions, authorizations, actions, notices and filings
which have been duly obtained, taken, given or made and are in full force and
effect and (iii) those approvals, consents, exemptions, authorizations or
other actions, notices or filings, the failure of which to obtain or make could
not reasonably be expected to have a Material Adverse Effect.

 

SECTION 5.04  Binding
Effect.  This Agreement and each other Loan Document has been
duly executed and delivered by each Loan Party that is party thereto. This
Agreement and each other Loan Document constitutes, a legal, valid and binding
obligation of such Loan

 

82

 

Party, enforceable against each Loan Party that is party thereto in
accordance with its terms, except as such enforceability may be limited by
Debtor Relief Laws and by general principles of equity.

 

SECTION 5.05  Financial
Statements; No Material Adverse Effect.  (a) (i)  The Audited Financial Statements and the
Unaudited Financial Statements fairly present in all material respects the
financial condition of Encore Medical and its Subsidiaries as of the dates
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the periods covered
thereby, except as otherwise expressly noted therein, subject, in the case of
the Unaudited Financial Statements, to changes resulting from audit, normal
year-end adjustments and absence of footnotes. During the period from December
31, 2005 to and including the Closing Date, there has been (i) no sale,
transfer or other disposition by Encore Medical or any of its Subsidiaries of
any material part of the business or property of Encore Medical or any of its
Subsidiaries, taken as a whole and (ii) no purchase or other acquisition
by Encore Medical or any of its Subsidiaries of any business or property
(including any Equity Interests of any other Person) material in relation to
the consolidated financial condition of Encore Medical and its Subsidiaries, in
each case, which is not reflected in the foregoing financial statements or in
the notes thereto has not otherwise been disclosed in writing to the Lenders
prior to the Closing Date or in any public filing made by Encore Medical with
the SEC.

 

(ii)           The unaudited pro forma consolidated balance sheet of the Company and its
Subsidiaries as at July 1, 2006 (including the notes thereto) (the “Pro Forma Balance Sheet”) and the unaudited
pro forma consolidated statement of
operations of the Company and its Subsidiaries for the most recent fiscal year,
the six-months ended July 1, 2006 and the 12-month period ending on July
1, 2006 (together with the Pro Forma Balance Sheet, the “Pro Forma Financial Statements”), copies of
which have heretofore been furnished to the Administrative Agent for further
delivery to each Lender, have been prepared giving effect (as if such events
had occurred on such date or at the beginning of such periods, as the case may
be) to the Transaction and all other transactions that would be required to be
given pro forma effect by Regulation S-X promulgated under the Exchange Act
(including other adjustments consistent with the definition of Pro Forma
Adjustment or as otherwise agreed between the Company and the Administrative
Agent, but not the transactions contemplated to occur in connection with the
Post-Closing Acquisition or the financing thereof). The Pro Forma Financial
Statements have been prepared in good faith, based on assumptions believed by
the Company to be reasonable as of the date of delivery thereof, and present
fairly in all material respects on a pro forma basis
and in accordance with GAAP the estimated financial position of the Company and
its Subsidiaries as at July 1, 2006 and their estimated results of operations
for the periods covered thereby, assuming that the events specified in the
preceding sentence had actually occurred at such date or at the beginning of
the periods covered thereby.

 

(b)           Since the Closing Date, there has
been no event or circumstance, either individually or in the aggregate, that
has had or could reasonably be expected to have a Material Adverse Effect.

 

83

 

(c)           The forecasts of consolidated balance
sheets, income statements and cash flow statements of the Company and its
Subsidiaries for each fiscal year ending after the Closing Date until the
seventh anniversary of the Closing Date, copies of which have been furnished to
the Administrative Agent prior to the Closing Date, have been prepared in good
faith on the basis of the assumptions stated therein, which assumptions were
believed to be reasonable at the time of preparation of such forecasts, it
being understood that actual results may vary from such forecasts and that such
variations may be material.

 

SECTION 5.06  Litigation.  There
are no actions, suits, proceedings, claims or disputes pending or, to the
knowledge of the Company, threatened in writing or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, by or against the
Company or any of its Subsidiaries or against any of their properties or
revenues that either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

SECTION 5.07  No
Default.  Neither the Company nor any Subsidiary is in default
under or with respect to, or a party to, any Contractual Obligation (other than
Contractual Obligations in respect of Indebtedness) that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

SECTION 5.08  Ownership
of Property; Liens.  Set forth on Schedule 5.08 hereto is a
complete list of all real property owned by any Loan Party or any of its
Subsidiaries with a book value in excess of $3,000,000 as of the date hereof,
showing as of the date hereof the relevant jurisdiction thereof. Each Loan
Party and each of its Subsidiaries has good record and marketable title in fee
simple to, or valid leasehold interests in, or easements or other limited
property interests in, all real property necessary in the ordinary conduct of
its business, free and clear of all Liens except for minor defects in title that
do not materially interfere with its ability to conduct its business or to
utilize such assets for their intended purposes and Liens permitted by
Section 7.01 and except where the failure to have such title could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

SECTION 5.09  Environmental
Compliance.  (a)  There are no claims, actions, suits,
or proceedings alleging potential liability or responsibility for violation of,
or otherwise relating to, any Environmental Law that could, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(b)           Except as specifically disclosed in
Schedule 5.09(b) or except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (i) none of
the properties currently or formerly owned, leased or operated by any Loan
Party or any of its Subsidiaries is listed or proposed for listing on the NPL
or on the CERCLIS or any analogous foreign, state or local list or is adjacent
to any such property; (ii) there are no and never have been any
underground or aboveground storage tanks or any surface impoundments, septic
tanks, pits, sumps or lagoons in which Hazardous Materials are being or have
been treated, stored or disposed on any property currently owned, leased or
operated by any Loan Party or any of its Subsidiaries or, to its knowledge, on
any property formerly owned or operated by any Loan Party or any of its
Subsidiaries; (iii) there is no asbestos or asbestos-containing material
on any property currently owned or operated by any Loan Party or any of its
Subsidiaries; and (iv) Hazardous Materials have not been released, discharged
or disposed of by any Person on any

 

84

 

property currently or formerly owned, leased
or operated by any Loan Party or any of its Subsidiaries and Hazardous
Materials have not otherwise been released, discharged or disposed of by any of
the Loan Parties and their Subsidiaries at any other location.

 

(c)           The properties owned, leased or
operated by the Company and the Subsidiaries do not contain any Hazardous
Materials in amounts or concentrations which (i) constitute, or
constituted a violation of, (ii) require remedial action under, or
(iii) could give rise to liability under, Environmental Laws, which
violations, remedial actions and liabilities, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect.

 

(d)           Except as specifically disclosed in
Schedule 5.09(d), neither the Company nor any of its Subsidiaries is
undertaking, and has not completed, either individually or together with other
potentially responsible parties, any investigation or assessment or remedial or
response action relating to any actual or threatened release, discharge or
disposal of Hazardous Materials at any site, location or operation, either
voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law except for such investigation or
assessment or remedial or response action that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

 

(e)           All Hazardous Materials generated,
used, treated, handled or stored at, or transported to or from, any property
currently or formerly owned or operated by any Loan Party or any of its
Subsidiaries have been disposed of in a manner not reasonably expected to
result, individually or in the aggregate, in a Material Adverse Effect.

 

(f)            Except as would not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect, none of the Loan Parties and their Subsidiaries has contractually
assumed any liability or obligation under or relating to any Environmental Law.

 

SECTION 5.10  Taxes.  Except
as set forth in Schedule 5.10 or except as could not, either individually or in
the aggregate, reasonably be expected to result in a Material Adverse Effect,
the Company and its Subsidiaries have filed all Federal and state and other tax
returns and reports required to be filed, and have paid all Federal and state
and other taxes, assessments, fees and other governmental charges levied or
imposed upon them or their properties, income or assets otherwise due and
payable, except those (a) which are not overdue by more than thirty (30) days
or (b) which are being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been provided in
accordance with GAAP.

 

SECTION 5.11  ERISA
Compliance.  (a)  Except as set forth in Schedule
5.11(a) or as could not, either individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect, each Plan is in compliance in
with the applicable provisions of ERISA, the Code and other Federal or state
Laws.

 

(b)           (i) No ERISA Event has occurred
during the five year period prior to the date on which this representation is
made or deemed made with respect to any Pension Plan; (ii) no Pension Plan
has an “accumulated funding deficiency” (as defined in Section 412 of the

 

85

 

Code), whether or not waived;
(iii) neither any Loan Party nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect
to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither any Loan Party nor any ERISA
Affiliate has incurred, or reasonably expects to incur, any liability (and no
event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Sections 4201 or 4243 of ERISA
with respect to a Multiemployer Plan; and (v) neither any Loan Party nor any
ERISA Affiliate has engaged in a transaction that could be subject to Sections
4069 or 4212(c) of ERISA, except, with respect to each of the foregoing clauses
of this Section 5.11(b), as could not reasonably be expected, individually
or in the aggregate, to result in a Material Adverse Effect.

 

SECTION 5.12  Subsidiaries;
Equity Interests.  As of the Closing Date, neither Holdings nor
any Loan Party has any Subsidiaries other than those specifically disclosed in
Schedule 5.12, and all of the outstanding Equity Interests in Material
Subsidiaries have been validly issued, are fully paid and nonassessable and all
Equity Interests owned by Holdings or a Loan Party are owned free and clear of
all Liens except (i) those created under the Collateral Documents and
(ii) any nonconsensual Lien that is permitted under Section 7.01. As
of the Closing Date, Schedule 5.12 (a) sets forth the name and jurisdiction of
each Subsidiary, (b) sets forth the ownership interest of Holdings, the Company
and any other Subsidiary in each Subsidiary, including the percentage of such
ownership and (c) identifies each Subsidiary the Equity Interests of which are
required to be pledged on the Closing Date pursuant to the Collateral and
Guarantee Requirement.

 

SECTION 5.13  Margin
Regulations; Investment Company Act.  (a)  The Company is not engaged and will not
engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U issued
by the FRB), or extending credit for the purpose of purchasing or carrying
margin stock, and no proceeds of any Borrowings or drawings under any Letter of
Credit will be used for any purpose that violates Regulation U.

 

(b)           None of the Company, any Person
Controlling the Company, or any Subsidiary is or is required to be registered
as an “investment company” under the Investment Company Act of 1940.

 

SECTION 5.14  Disclosure.  No
report, financial statement, certificate or other written information furnished
by or on behalf of any Loan Party to any Agent or any Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or any other Loan Document (as modified or supplemented by
other information so furnished) when taken as a whole contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not materially misleading; provided that,
with respect to projected financial information and pro forma financial
information, the Company represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time of
preparation; it being understood that such projections may vary from actual
results and that such variances may be material.

 

86

 

SECTION 5.15  Solvency.  On
the Closing Date after giving effect to the Transaction, the Loan Parties, on a
consolidated basis, are Solvent.

 

SECTION 5.16  Subordination
of Junior Financing.  The Obligations are “Senior Debt,” “Senior
Indebtedness,” “Guarantor Senior Debt” or “Senior Secured Financing” (or any
comparable term) under, and as defined in, any Junior Financing Documentation.

 

SECTION 5.17  Labor
Matters.  Except as, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect: 
(a) there are no strikes or other labor disputes against any of
Holdings, the Company or its Subsidiaries pending or, to the knowledge of
Holdings or the Company, threatened; (b) hours worked by and payment made to
employees of each of Holdings, the Company or its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Laws dealing
with such matters; and (c) all payments due from any of Holdings, the Company
or its Subsidiaries on account of employee health and welfare insurance have
been paid or accrued as a liability on the books of the relevant party.

 

SECTION 5.18  Food
and Drug.  Set forth on Schedule 5.18 is a correct and complete
list as of the Closing Date of all permits, licenses, and approvals that are
required under the Laws of the United States Food and Drug Administration (the “FDA”) (the “FDA Laws”) for the operation of the business of the Company
and its Subsidiaries (collectively, the “FDA
Permits”) the failure of which to obtain could reasonably be
expected to result in a Material Adverse Effect. Except as could not reasonably
be expected to result in a Material Adverse Effect, the Company and/or its
Subsidiaries have all requisite FDA Permits and such FDA Permits (a) are valid
and in full force and effect, (b) have not been reversed, stayed, set aside,
annulled, or suspended and (c) are not subject to any conditions or
requirements that are not generally imposed on the holders thereof. The Company
and/or its Subsidiaries are in compliance with all applicable FDA Laws,
including, without limitation, current good manufacturing practice requirements except as could not reasonably be expected
to result in a Material Adverse Effect.

 

SECTION 5.19  Clinical
Trials.  Except as could not reasonably be expected to result in
a Material Adverse Effect:  (a) the
Company and its Subsidiaries have received all investigational exemptions from
the FDA (including investigational device exemptions and investigational new
drug exemptions) for all products requiring such exemptions (the “Investigational Exemptions”)
and (b) such products (i) are being used by the Company and its Subsidiaries in
clinical investigations, trials, studies and otherwise in accordance with the
terms of the applicable Investigational Exemption, and (ii) have not been and
are not being sold or distributed outside the terms of such Investigational
Exemptions.

 

SECTION 5.20  State
Food and Drug Laws.

 

(a)           Set
forth on Schedule 5.20 is a correct and complete list as of the Closing Date of
all licenses, permits, authorizations, consents, clearances, and other
approvals (collectively, the “State Permits”) that are required for the operation of the
business of the Company and its Subsidiaries under the Laws of each state (the “State Laws”) in
which the Company and its Subsidiaries transact business, the failure of which
to obtain could reasonably be expected to result in a Material Adverse Effect.

 

87

 

(b)           Except as could not reasonably be
expected to result in a Material Adverse Effect, each of the Company and its
Subsidiaries have all requisite State Permits and such State Permits (i) are
valid and in full force and effect, (ii) have not been reversed, stayed, set
aside, annulled, or suspended, and (iii) are not subject to any conditions or
requirements that are not generally imposed on the holders thereof.

 

SECTION 5.21  HIPAA.  Except
as could not reasonably be expected to result in a Material Adverse Effect, to
the extent the Company or any of its Subsidiaries is a “covered entity” as
defined in the Privacy Regulations (45 CFR 160.103) promulgated pursuant to the
Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) or the
Company or any of its Subsidiaries are subject to or covered by the so called “Administrative
Simplification” provisions of HIPAA, the Company and its Subsidiaries are
HIPAA-Compliant. For purposes hereof, “HIPAA-Compliant” shall mean that the
Company or its Subsidiaries, as the case may be, is or will be in compliance in
all material respects with each of the applicable requirements of the so-called
“Administrative Simplification” provisions of HIPAA on and as of each date that
any part thereof, or any final rule or regulations thereunder, becomes
effective in accordance with its or their terms, as the case may be.

 

SECTION 5.22  Medicare,
Medicaid and Fraud and Abuse.

 

(a)           Except
as could not reasonably be expected to result in a Material Adverse Effect, the
Company and each of its Subsidiaries that bill the Medicare program are in
compliance with the conditions of participation imposed by the Social Security
Act of 1935, as amended, and the U.S. Secretary of Health and Human Services. Except
as could not reasonably be expected to result in a Material Adverse Effect, the
Company and its Subsidiaries, as the case may be, have a Medicare provider or
supplier agreement and a Medicare provider or supplier number in effect
covering each location at which the Company and its Subsidiaries, as the case
may be, accepts Medicare patients. Except as could not reasonably be expected
to result in a Material Adverse Effect, the Company and its Subsidiaries have a
Medicaid provider agreement and Medicaid provider number in force in each state
in which the Company or its Subsidiaries bill the Medicaid program.

 

ARTICLE VI

 

Affirmative Covenants

 

So
long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied (other than Obligations under Secured Hedge Agreements, Cash
Management Obligations or contingent indemnification obligations not then due
and payable), or any Letter of Credit shall remain outstanding (unless such
Letters of Credit shall have been collateralized on terms and conditions
reasonably satisfactory to the relevant L/C Issuers following termination of
the Commitment), each of Holdings and the Company shall, and shall (except in
the case of the covenants set forth in Sections 6.01, 6.02 and 6.03) cause each
Restricted Subsidiary to:

 

SECTION 6.01  Financial
Statements.  Deliver to the Administrative Agent for prompt
further distribution to each Lender:

 

88

 

(a)                                  as
soon as available, but in any event within ninety (90) days after the end of
each fiscal year of Holdings (or, in the case of the financial statements for
the fiscal year ending December 31, 2006, on or before the date that is 120
days after the end of such fiscal year), a consolidated balance sheet of
Holdings and its Subsidiaries as at the end of such fiscal year, and the
related consolidated statements of income or operations, stockholders’ equity
and cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
prepared in accordance with GAAP, audited and accompanied by a report and
opinion of KPMG, LLP or any other independent registered public accounting firm
of nationally recognized standing, which report and opinion shall be prepared
in accordance with generally accepted auditing standards and shall not be
subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit;

 

(b)                                 as
soon as available, but in any event within forty-five (45) days after the end
of each of the first three (3) fiscal quarters of each fiscal year of Holdings
(or, in the case of the financial statements for the fiscal quarter ending
March 31, 2007 and June 30, 2007, on or before the date which is 60 days after
the end of such fiscal quarter), a consolidated balance sheet of Holdings and
its Subsidiaries as at the end of such fiscal quarter, and the related
consolidated statements of income or operations, stockholders’ equity and cash
flows for such fiscal quarter and for the portion of the fiscal year then
ended, setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail and certified by
a Responsible Officer of Holdings as fairly presenting in all material respects
the financial condition, results of operations, stockholders’ equity and cash
flows of Holdings and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes;

 

(c)                                  as
soon as available, and in any event no later than ninety (90) days after the
end of each fiscal year of Holdings (or in the case of the detailed
consolidated budget for the fiscal year 2007, on or before the date that is 120
days after the end of fiscal year 2006), a detailed consolidated budget for the
following fiscal year (including a projected consolidated balance sheet of
Holdings and its Subsidiaries as of the end of the following fiscal year, the
related consolidated statements of projected cash flow and projected income and
a summary of the material underlying assumptions applicable thereto), and, as
soon as available, significant revisions, if any, of such budget and
projections with respect to such fiscal year (collectively, the “Projections”), which Projections shall in
each case be accompanied by a certificate of a Responsible Officer stating that
such Projections are based on reasonable estimates, information and assumptions
and that such Responsible Officer has no reason to believe that such
Projections are incorrect or misleading in any material respect; and

 

(d)                                 simultaneously
with the delivery of each set of consolidated financial statements referred to
in Sections 6.01(a) and 6.01(b) above, the related consolidating financial
statements reflecting the adjustments necessary to eliminate the accounts of
Unrestricted Subsidiaries (if any) from such consolidated financial statements.

 

Notwithstanding the foregoing, the obligations in
paragraphs (a) and (b) of this Section 6.01 may be satisfied with respect
to financial information of Holdings and the Restricted Subsidiaries by furnishing
(A) the applicable financial statements of Encore Medical (or any other direct
or 

 

89

 

indirect parent of Holdings) or (B) Holdings’ or
Encore Medical’s (or any other direct or indirect parent thereof), as
applicable, Form 10-K or 10-Q, as applicable, filed with the SEC; provided that, with respect to each of clauses (A) and (B),
(i) to the extent such information relates to Encore Medical (or another
parent of Holdings), such information is accompanied by consolidating
information that explains in reasonable detail the differences between the
information relating to Encore Medical (or such parent), on the one hand, and
the information relating to Holdings and the Restricted Subsidiaries on a standalone
basis, on the other hand and (ii) to the extent such information is in
lieu of information required to be provided under Section 6.01(a), such
materials are accompanied by a report and opinion of KPMG, LLP or any other
independent registered public accounting firm of nationally recognized
standing, which report and opinion shall be prepared in accordance with
generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception
as to the scope of such audit.

 

SECTION 6.02  Certificates;
Other Information. Deliver to the Administrative Agent for prompt further
distribution to each Lender:

 

(a)                                  no
later than five (5) days after the delivery of the financial statements referred
to in Section 6.01(a), a certificate of its independent registered public
accounting firm certifying such financial statements and stating that in making
the examination necessary therefor no knowledge was obtained of an Event of
Default resulting from a violation of Section 7.11 or, if any such Event
of Default shall exist, stating the nature and status of such event;

 

(b)                                 no
later than five (5) days after the delivery of the financial statements
referred to in Section 6.01(a) and (b), a duly completed Compliance
Certificate signed by a Responsible Officer of Holdings or the Company and, if
such Compliance Certificate demonstrates an Event of Default resulting from a
violation of Section 7.11, any of the Equity Investors may deliver,
together with such Compliance Certificate, notice of their intent to cure (a “Notice of Intent to Cure”) such Event of
Default pursuant to Section 8.05; provided that
the delivery of a Notice of Intent to Cure, in and of itself without the
corresponding application of proceeds from a Permitted Equity Issuance pursuant
to Section 8.05, shall in no way affect or alter the occurrence, existence or
continuation of any such Event of Default or the rights, benefits, powers and
remedies of the Administrative Agent and the Lenders under any Loan Document;

 

(c)                                  promptly
after the same are publicly available, copies of all annual, regular, periodic
and special reports and registration statements which Holdings or the Company
files with the SEC or with any Governmental Authority that may be substituted
therefor (other than amendments to any registration statement (to the extent
such registration statement, in the form it became effective, is delivered),
exhibits to any registration statement and, if applicable, any registration
statement on Form S-8) and in any case not otherwise required to be delivered
to the Administrative Agent pursuant hereto;

 

(d)                                 promptly
after the furnishing thereof, copies of any material requests or material
notices received by any Loan Party (other than in the ordinary course of
business) or material statements or material reports furnished to any holder of
debt securities of any Loan 

 

 

90

 

Party or of any of its Subsidiaries pursuant
to the terms of any Existing Notes Documentation, New Notes Documentation or
Junior Financing Documentation in a principal amount greater than the Threshold
Amount and not otherwise required to be furnished to the Lenders pursuant to
any other clause of this Section 6.02;

 

(e)                                  together
with the delivery of each Compliance Certificate pursuant to
Section 6.02(b), (i) a report setting forth the information required
by Section 3.03(c) of the Security Agreement or confirming that there has
been no change in such information since the Closing Date or the date of the
last such report), and (ii) a list of each Subsidiary that identifies each
Subsidiary as a Restricted or an Unrestricted Subsidiary as of the date of
delivery of such Compliance Certificate; and

 

(f)                                    such
additional information regarding the business, legal, financial or corporate
affairs of any Loan Party or any Subsidiary, or compliance with the terms of
the Loan Documents, as the Administrative Agent or any Lender through the
Administrative Agent may from time to time reasonably request in writing.

 

Documents
required to be delivered pursuant to Section 6.01(a), (b), (c) or
Section 6.02(d) (to the extent any such documents are included in
materials otherwise filed with the SEC) may be delivered electronically and if
so delivered, shall be deemed to have been delivered on the date (i) on
which Holdings or the Company posts such documents, or provides a link thereto
on Encore Medical’s, Holdings’ or the Company’s website on the Internet at the
website address listed on Schedule 10.02; or (ii) on which such documents
are posted on Holdings or the Company’s behalf on IntraLinks/IntraAgency or
another relevant website, if any, to which each Lender and the Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent); provided
that:  (i) upon written request by
the Administrative Agent, Holdings or the Company shall deliver paper copies of
such documents to the Administrative Agent for further distribution to each
Lender until a written request to cease delivering paper copies is given by the
Administrative Agent and (ii) Holdings or the Company shall notify (which
may be by facsimile or electronic mail) the Administrative Agent of the posting
of any such documents and provide to the Administrative Agent by electronic
mail electronic versions (i.e., soft copies) of such documents. Notwithstanding
anything contained herein, in every instance Holdings or the Company shall be
required to provide paper copies of the Compliance Certificates required by
Section 6.02(b) to the Administrative Agent. Each Lender shall be solely
responsible for timely accessing posted documents or requesting delivery of
paper copies of such documents from the Administrative Agent and maintaining its
copies of such documents.

 

The
Company hereby acknowledges that (a) the Administrative Agent and/or the
Arrangers will make available to the Lenders and the L/C Issuers materials
and/or information provided by or on behalf of Holdings or the Company
hereunder (collectively, “Borrower Materials”) by posting the Borrower Materials on
IntraLinks or another similar electronic system (the “Platform”) and
(b) certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to receive
material non-public information with respect to the Company or its securities)
(each, a “Public
Lender”). Holdings and the Company hereby agree to make all Borrower
Materials that Holdings and the Company intend to be made available to Public
Lenders clearly and conspicuously designated as “PUBLIC”. By designating
Borrower 

 

 

91

 

Materials as “PUBLIC”, Holdings and the Company
authorize such Borrower Materials to be made available to a portion of the
Platform designated “Public Investor,” which is intended to contain only
information that is either publicly available or not material information
(though it may be sensitive and proprietary) with respect to Holdings, the
Company or their securities for purposes of United States Federal and state
securities laws. Notwithstanding the foregoing, neither Holdings nor the
Company shall be under any obligation to mark any Borrower Materials “PUBLIC”.

 

SECTION 6.03  Notices.
Promptly after obtaining knowledge thereof, notify the Administrative Agent:

 

(a)                                  of
the occurrence of any Default;

 

(b)                                 of
any matter that has resulted or could reasonably be expected to result in a
Material Adverse Effect, including arising out of or resulting from
(i) breach or non-performance of, or any default or event of default
under, a Contractual Obligation of any Loan Party or any Subsidiary,
(ii) any dispute, litigation, investigation, proceeding or suspension
between any Loan Party or any Subsidiary and any Governmental Authority,
(iii) the commencement of, or any material development in, any litigation
or proceeding affecting any Loan Party or any Subsidiary, including pursuant to
any applicable Environmental Laws or the assertion or occurrence of any
noncompliance by any Loan Party or as any of its Subsidiaries with, or
liability under, any Environmental Law or Environmental Permit, or (iv) the
occurrence of any ERISA Event.

 

Each
notice pursuant to this Section shall be accompanied by a written
statement of a Responsible Officer of the Company (x) that such notice is being
delivered pursuant to Section 6.03(a) or (b) (as applicable) and (y)
setting forth details of the occurrence referred to therein and stating what
action the Company has taken and proposes to take with respect thereto.

 

SECTION 6.04  Payment
of Obligations. Pay, discharge or otherwise satisfy as the same shall
become due and payable, all its obligations and liabilities in respect of
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property, except, in each case, to
the extent the failure to pay or discharge the same could not reasonably be
expected to have a Material Adverse Effect.

 

SECTION 6.05  Preservation
of Existence, Etc. (a)  Preserve, renew and maintain in full
force and effect its legal existence under the Laws of the jurisdiction of its
organization except in a transaction permitted by Section 7.04 or 7.05 and
(b) take all reasonable action to maintain all rights, privileges (including
its good standing), permits, licenses and franchises necessary or desirable in
the normal conduct of its business, except in the case of each of clauses (a)
and (b) above (i) to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect or (ii) pursuant to a
transaction permitted by Section 7.02, 7.04 or 7.05.

 

SECTION 6.06  Maintenance
of Properties. Except if the failure to do so could not reasonably be
expected to have a Material Adverse Effect, (a) maintain, preserve and protect
all of its material properties and equipment necessary in the operation of its
business in good working order, repair and condition, ordinary wear and tear
excepted and casualty or 

 

 

92

 

condemnation excepted, and (b) make all necessary
renewals, replacements, modifications, improvements, upgrades, extensions and
additions thereof or thereto in accordance with prudent industry practice.

 

SECTION 6.07  Maintenance
of Insurance. Maintain with financially sound and reputable insurance
companies, insurance with respect to its properties and business against loss
or damage of the kinds customarily insured against by Persons engaged in the
same or similar business, of such types and in such amounts (after giving
effect to any self-insurance reasonable and customary for similarly situated
Persons engaged in the same or similar businesses as the Company and the
Restricted Subsidiaries) as are customarily carried under similar circumstances
by such other Persons.

 

SECTION 6.08  Compliance
with Laws. Comply in all material respects with the requirements of all
Laws and all orders, writs, injunctions and decrees applicable to it or to its
business or property, except if the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.09  Books
and Records. Maintain proper books of record and account, in which entries
that are full, true and correct in all material respects and are in conformity
with GAAP consistently applied shall be made of all material financial
transactions and matters involving the assets and business of the Company or
such Subsidiary, as the case may be.

 

SECTION 6.10  Inspection
Rights. Permit representatives and independent contractors of the
Administrative Agent and each Lender to visit and inspect any of its
properties, to examine its corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants, all
at the reasonable expense of the Company and at such reasonable times during
normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Company; provided that,
excluding any such visits and inspections during the continuation of an Event
of Default, only the Administrative Agent on behalf of the Lenders may exercise
rights of the Administrative Agent and the Lenders under this Section 6.10
and the Administrative Agent shall not exercise such rights more often than two
(2) times during any calendar year absent the existence of an Event of Default
and only one (1) such time shall be at the Company’s expense; provided, further, that when an Event of Default exists, the
Administrative Agent or any Lender (or any of their respective representatives
or independent contractors) may do any of the foregoing at the expense of the
Company at any time during normal business hours and upon reasonable advance
notice. The Administrative Agent and the Lenders shall give the Company the
opportunity to participate in any discussions with the Company’s independent
public accountants.

 

SECTION 6.11  Covenant
to Guarantee Obligations and Give Security. At the Company’s expense, take
all action necessary or reasonably requested by the Administrative Agent to
ensure that the Collateral and Guarantee Requirement continues to be satisfied,
including:

 

 

93

 

(a)                                  upon
the formation or acquisition of any new direct or indirect wholly owned
Domestic Subsidiary (in each case, other than an Unrestricted Subsidiary or an
Excluded Subsidiary) by any Loan Party or the designation in accordance with
Section 6.14 of any existing direct or indirect wholly owned Domestic
Subsidiary as a Restricted Subsidiary (other than an Excluded Subsidiary):

 

(i)                                     within
thirty (30) days after such formation, acquisition or designation or such
longer period as the Administrative Agent may agree in its discretion:

 

(A)                              cause
each such Restricted Subsidiary that is required to become a Guarantor under
the Collateral and Guarantee Requirement to furnish to the Administrative Agent
a description of the real properties owned by such Restricted Subsidiary that
have a book value in excess of $3,000,000 in detail reasonably satisfactory to
the Administrative Agent;

 

(B)                                cause
each such Restricted Subsidiary that is required to become a Guarantor pursuant
to the Collateral and Guarantee Requirement to duly execute and deliver to the
Administrative Agent or the Collateral Agent (as appropriate) Mortgages,
Security Agreement Supplements, Intellectual Property Security Agreements,
Guaranties and other security agreements and documents (including, with respect
to Mortgages, the documents listed in Section 6.13(b)), in the case of
such other security agreements and documents as reasonably requested by and in
form and substance reasonably satisfactory to the Administrative Agent
(consistent with the Mortgages, Security Agreement, Intellectual Property
Security Agreements and other security agreements in effect on the Closing
Date), in each case granting Liens required by the Collateral and Guarantee
Requirement;

 

(C)                                (x)
cause each such Restricted Subsidiary that is required to become a Guarantor
pursuant to the Collateral and Guarantee Requirement to deliver any and all
certificates representing Equity Interests (to the extent certificated) that
are required to be pledged pursuant to the Collateral and Guarantee
Requirement, accompanied by undated stock powers or other appropriate
instruments of transfer executed in blank and instruments evidencing the
intercompany Indebtedness held by such Restricted Subsidiary and required to be
pledged pursuant to the Collateral Documents, indorsed in blank to the
Collateral Agent and (y) cause each direct parent of such Restricted Subsidiary
to deliver any and all certificates representing the outstanding Equity
Interests (to the extent certificated) of such Restricted Subsidiary that are
required to be pledged pursuant to the Collateral and Guarantee Requirement,
accompanied by undated stock powers or other appropriate instruments of
transfer executed in blank and instruments evidencing the intercompany
Indebtedness issued by such Restricted Subsidiary and required to be pledged in
accordance with the Collateral Documents, indorsed in blank to the Collateral
Agent;

 

(D)                               take
and cause such Restricted Subsidiary to take whatever action (including the
recording of Mortgages, the filing of Uniform Commercial Code 

 

 

94

 

financing
statements and delivery of stock and membership interest certificates) may be
necessary in the reasonable opinion of the Administrative Agent to vest in the
Administrative Agent (or in any representative of the Administrative Agent
designated by it) valid Liens required by the Collateral and Guarantee
Requirement, enforceable against all third parties in accordance with their
terms, except as such enforceability may be limited by Debtor Relief Laws and
by general principles of equity,

 

(ii)                                  within
thirty (30) days after the reasonable request therefor by the Administrative
Agent, deliver to the Administrative Agent a signed copy of an opinion,
addressed to the Administrative Agent and the other Secured Parties, of counsel
for the Loan Parties reasonably acceptable to the Administrative Agent as to
such matters set forth in this Section 6.11(a) as the Administrative Agent
may reasonably request, and

 

(iii)                               as
promptly as practicable after the request therefor by the Administrative Agent,
deliver to the Administrative Agent with respect to each parcel of real
property that is owned by such Restricted Subsidiary and has a book value in
excess of $3,000,000, to the extent such items are in the possession of, or under
the control of, the Company, any existing title reports, surveys or
environmental assessment reports.

 

(b)                                 after
the Closing Date, concurrently with (x) the acquisition of any material
personal property by any Loan Party, or (y) the acquisition of any owned real
property by any Loan Party with a book value in excess of $3,000,000, and such
personal property or owned real property shall not already be subject to a
perfected Lien pursuant to the Collateral Documents, the Company shall give
notice thereof to the Administrative Agent and promptly thereafter shall cause
such assets to be subjected to a Lien to the extent required by the Collateral
and Guarantee Requirement and will take, or cause the relevant Loan Party to
take, such actions as shall be necessary or reasonably requested by the
Administrative Agent to grant and perfect or record such Lien, including, as
applicable, the actions referred to in Section 6.13(b) with respect to
real property.

 

SECTION 6.12  Compliance
with Environmental Laws. Except, in each case, to the extent that the
failure to do so could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, comply, and take all reasonable
actions to cause all lessees and other Persons operating or occupying its
properties to comply with all applicable Environmental Laws and Environmental
Permits; obtain and renew all Environmental Permits necessary for its
operations and properties; and, in each case to the extent required by
Environmental Laws, conduct any investigation, study, sampling and testing, and
undertake any cleanup, removal, remedial or other action necessary to remove
and clean up all Hazardous Materials from any of its properties, in accordance
with the requirements of all Environmental Laws.

 

SECTION 6.13  Further
Assurances. (a)  Promptly upon reasonable request by the
Administrative Agent (i) correct any material defect or error that may be
discovered in the execution, acknowledgment, filing or recordation of any
Collateral Document or other document or instrument relating to any Collateral,
and (ii) do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register any and all such further acts, deeds,
certificates, 

 

 

95

 

assurances and other instruments as the Administrative
Agent may reasonably request from time to time in order to carry out more
effectively the purposes of the Collateral Documents.

 

(b)                                 In
the case of any real property referred to in Section 6.11(b), provide the
Administrative Agent with Mortgages with respect to such owned real property
within thirty (30) days of the acquisition of such real property, together
with:

 

(i)                                     evidence
that counterparts of the Mortgages have been duly executed, acknowledged and
delivered and are in form suitable for filing or recording in all filing or
recording offices that the Administrative Agent may deem reasonably necessary
or desirable in order to create a valid and subsisting perfected Lien on the
property described therein in favor of the Administrative Agent or the
Collateral Agent (as appropriate) for the benefit of the Secured Parties and
that all filing and recording taxes and fees have been paid or otherwise
provided for in a manner reasonably satisfactory to the Administrative Agent;

 

(ii)                                  fully
paid American Land Title Association Lender’s Extended Coverage title insurance
policies or the equivalent or other form available in each applicable
jurisdiction (the “Mortgage Policies”)
in form and substance, with endorsements and in amount, reasonably acceptable
to the Administrative Agent (not to exceed the value of the real properties
covered thereby), issued, coinsured and reinsured by title insurers reasonably
acceptable to the Administrative Agent, insuring the Mortgages to be valid
subsisting Liens on the property described therein, free and clear of all
defects and encumbrances, subject to Liens permitted by Section 7.01, and
providing for such other affirmative insurance (including endorsements for
future advances under the Loan Documents) and such coinsurance and direct
access reinsurance as the Administrative Agent may reasonably request;

 

(iii)                               opinions
of local counsel for the Loan Parties in states in which the real properties
are located, with respect to the enforceability and perfection of the Mortgages
and any related fixture filings in form and substance reasonably satisfactory
to the Administrative Agent; and

 

(iv)                              such
other evidence that all other actions that the Administrative Agent may
reasonably deem necessary or desirable in order to create valid and subsisting
Liens on the property described in the Mortgages has been taken.

 

SECTION 6.14  Designation
of Subsidiaries. The board of directors of Holdings may at any time
designate any Restricted Subsidiary as an Unrestricted Subsidiary or any
Unrestricted Subsidiary as a Restricted Subsidiary; provided
that (i) immediately before and after such designation, no Default shall
have occurred and be continuing, (ii) immediately after giving effect to
such designation, the Company and the Restricted Subsidiaries shall be in
compliance, on a Pro Forma Basis, with the covenants set forth in
Section 7.11 (and, as a condition precedent to the effectiveness of any
such designation, the Company shall deliver to the Administrative Agent a
certificate setting forth in reasonable detail the calculations demonstrating
such compliance), (iii) the Company may not be designated as an
Unrestricted Subsidiary and, (iv) no Subsidiary may be designated as an
Unrestricted Subsidiary if it is a “Restricted Subsidiary” for 

 

 

96

 

the purpose of the the New Notes or any Junior
Financing, as applicable, and (v) no Restricted Subsidiary may be designated as
an Unrestricted Subsidiary if it was previously designated an Unrestricted
Subsidiary. The designation of any Subsidiary as an Unrestricted Subsidiary
shall constitute an Investment by the Company therein at the date of
designation in an amount equal to the net book value of the Company’s (as
applicable) investment therein. The designation of any Unrestricted Subsidiary
as a Restricted Subsidiary shall constitute the incurrence at the time of
designation of any Indebtedness or Liens of such Subsidiary existing at such
time.

 

SECTION 6.15  Compliance
with FDA Laws. Conduct its business in compliance in all material respects
with all FDA laws and State Laws applicable to it, except if the failure to
comply therewith could not reasonably be expected to have a Material Adverse
Effect.

 

SECTION 6.16  Compliance
with HIPAA and Fraud and Abuse Laws. Conduct its business in compliance in
all material respects with all HIPAA and the Federal False Claims Act (31
U.S.C. § 3729), the regulations promulgated pursuant to such federal statute,
and related state and local statutes and regulations applicable to it except if
the failure to comply therewith could not reasonably be expected to have in a
Material Adverse Effect.

 

ARTICLE VII

 

Negative Covenants

 

So
long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder which is accrued and payable shall remain unpaid or
unsatisfied (other than Obligations under Secured Hedge Agreements, Cash
Management Obligations or contingent indemnification obligations not then due and
payable), or any Letter of Credit shall remain outstanding (unless such Letters
of Credit shall have been collateralized on terms and conditions reasonably
satisfactory to the relevant L/C Issuers following the termination of the
Commitments), Holdings and the Company shall not, nor shall they permit any of
their Restricted Subsidiaries to, directly or indirectly:

 

SECTION 7.01  Liens.
Create, incur, assume or suffer to exist any Lien upon any of its property,
assets or revenues, whether now owned or hereafter acquired, other than the
following:

 

(a)                                  Liens
pursuant to any Loan Document;

 

(b)                                 Liens
existing on the date hereof and listed on Schedule 7.01(b) and any
modifications, replacements, renewals or extensions thereof; provided that (i) the Lien does not extend to any
additional property other than (A) after-acquired property that is affixed or
incorporated into the property covered by such Lien or financed by Indebtedness
permitted under Section 7.03, and (B) proceeds and products thereof, and (ii) the
renewal, extension or refinancing of the obligations secured or benefited by
such Liens is permitted by Section 7.03;

 

(c)                                  Liens
for taxes, assessments or governmental charges which are not overdue for a
period of more than thirty (30) days or which are being contested in good faith
and 

 

 

97

 

by appropriate proceedings diligently
conducted, if adequate reserves with respect thereto are maintained on the
books of the applicable Person in accordance with GAAP;

 

(d)                                 statutory
Liens of landlords, carriers, warehousemen, mechanics, materialmen, repairmen,
construction contractors or other like Liens arising in the ordinary course of
business which secure amounts not overdue for a period of more than thirty (30)
days or if more than thirty (30) days overdue, are unfiled and no other action
has been taken to enforce such Lien or which are being contested in good faith
and by appropriate proceedings diligently conducted, if adequate reserves with
respect thereto are maintained on the books of the applicable Person in
accordance with GAAP;

 

(e)                                  (i) pledges
or deposits in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other social security legislation and
(ii) pledges and deposits in the ordinary course of business securing
liability for reimbursement or indemnification obligations of (including
obligations in respect of letters of credit or bank guarantees for the benefit
of) insurance carriers providing property, casualty or liability insurance to
Holdings, the Company or any Restricted Subsidiary;

 

(f)                                    deposits
to secure the performance of bids, trade contracts, governmental contracts and
leases (other than indebtedness for borrowed money), statutory obligations, surety,
stay, customs and appeal bonds, performance bonds and other obligations of a
like nature (including those to secure health, safety and environmental
obligations) incurred in the ordinary course of business;

 

(g)                                 easements,
rights-of-way, restrictions, encroachments, protrusions and other similar
encumbrances and minor title defects affecting real property which, in the
aggregate, do not in any case materially interfere with the ordinary conduct of
the business of the Company and its Restricted Subsidiaries, taken as a whole;

 

(h)                                 Liens
securing judgments for the payment of money not constituting an Event of
Default under Section 8.01(h);

 

(i)                                     Liens
securing Indebtedness permitted under Section 7.03(e); provided that (i) such Liens attach concurrently with
or within two hundred and seventy (270) days after the acquisition, repair,
replacement, construction or improvement (as applicable) of the property
subject to such Liens, (ii) such Liens do not at any time encumber any
property except for accessions to such property other than the property
financed by such Indebtedness and the proceeds and the products thereof and
(iii) with respect to Capitalized Leases, such Liens do not at any time
extend to or cover any assets (except for accessions to such assets) other than
the assets subject to such Capitalized Leases; provided
that individual financings of equipment provided by one lender may be cross
collateralized to other financings of equipment provided by such lender;

 

(j)                                     leases,
licenses, subleases or sublicenses granted to others in the ordinary course of
business which do not (i) interfere in any material respect with the
business of the Company and its Restricted Subsidiaries, taken as a whole or
(ii) secure any Indebtedness;

 

 

98

 

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

 

(l)                                     Liens
(i) of a collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection, (ii) attaching to
commodity trading accounts or other commodities brokerage accounts incurred in
the ordinary course of business; and (iii) in favor of a banking
institution arising as a matter of law encumbering deposits (including the
right of set-off) and which are within the general parameters customary in the
banking industry;

 

(m)                               Liens
(i) on cash advances in favor of the seller of any property to be acquired
in an Investment permitted pursuant to Section 7.02(g), (i) or (n) to
be applied against the purchase price for such Investment, and
(ii) consisting of an agreement to Dispose of any property in a
Disposition permitted under Section 7.05, in each case, solely to the
extent such Investment or Disposition, as the case may be, would have been
permitted on the date of the creation of such Lien;

 

(n)                                 Liens
on property of any Restricted Subsidiary that is not a Loan Party securing
Indebtedness of the applicable Restricted Subsidiary permitted under Section
7.03;

 

(o)                                 Liens
existing on property at the time of its acquisition or existing on the property
of any Person at the time such Person becomes a Restricted Subsidiary (other
than by designation as a Restricted Subsidiary pursuant to Section 6.14),
in each case after the date hereof (other than Liens on the Equity Interests of
any Person that becomes a Restricted Subsidiary); provided that
(i) such Lien was not created in contemplation of such acquisition or such
Person becoming a Restricted Subsidiary, (ii) such Lien does not extend to
or cover any other assets or property (other than the proceeds or products
thereof and other than after-acquired property subjected to a Lien securing
Indebtedness and other obligations incurred prior to such time and which
Indebtedness and other obligations are permitted hereunder that require,
pursuant to their terms at such time, a pledge of after-acquired property, it
being understood that such requirement shall not be permitted to apply to any
property to which such requirement would not have applied but for such
acquisition), and (iii) the Indebtedness secured thereby is permitted
under Section 7.03(e), (g), or (k);

 

(p)                                 any
interest or title of a lessor, sublessor, licensor, sublicensor under leases,
subleases, licenses or sublicenses entered into by the Company or any of the
Restricted Subsidiaries in the ordinary course of business;

 

(q)                                 Liens
arising out of conditional sale, title retention, consignment or similar arrangements
for sale of goods entered into by the Company or any of the Restricted
Subsidiaries in the ordinary course of business permitted by this Agreement;

 

(r)                                    Liens
deemed to exist in connection with Investments in repurchase agreements under
Section 7.02;

 

(s)                                  Liens
that are contractual rights of set-off (i) relating to the establishment
of depository relations with banks not given in connection with the issuance of
Indebtedness, 

 

 

99

 

(ii) relating to pooled deposit, sweep
accounts, or automatic clearing house accounts of Holdings, the Company or any
Restricted Subsidiary to permit satisfaction of overdraft or similar
obligations incurred in the ordinary course of business of Holdings, the
Company and the Restricted Subsidiaries or (iii) relating to purchase
orders and other agreements entered into with customers of Holdings, the
Company or any Restricted Subsidiary in the ordinary course of business;

 

(t)                                    Liens
solely on any cash earnest money deposits made by Holdings, the Company or any
of the Restricted Subsidiaries in connection with any letter of intent or
purchase agreement permitted hereunder;

 

(u)                                 (i)
Liens placed upon the Equity Interests of any Restricted Subsidiary acquired
pursuant to a Permitted Acquisition to secure Indebtedness incurred pursuant to
Section 7.03(g) in connection with such Permitted Acquisition and
(ii) Liens placed upon the assets of such Restricted Subsidiary and any of
its Subsidiaries to secure a Guarantee by such Restricted Subsidiary and its
Subsidiaries of any such Indebtedness incurred pursuant to
Section 7.03(g);

 

(v)                                 any
modification, replacements, renewals of any Liens permitted by clauses (i), (o)
and (u); provided that (i) the Lien does not
extend to any additional property other than (A) after-acquired property that
is affixed or incorporated into the property covered by such Lien or financed
by Indebtedness permitted under Section 7.03, and (B) proceeds and products
thereof, and (ii) the renewal, extension or refinancing of the obligations
secured or benefited by such Liens is permitted by Section 7.03;

 

(w)                               ground
leases or subleases in respect of real property on which facilities owned,
leased or subleased by the Company or any of its Subsidiaries are located; and

 

(x)                                   other
Liens securing Indebtedness or other obligations outstanding in an aggregate
amount not to exceed $12,500,000.

 

SECTION 7.02  Investments.
Make or hold any Investments, except:

 

(a)                                  Investments
by the Company or a Restricted Subsidiary in assets that were Cash Equivalents
when such Investment was made;

 

(b)                                 loans
or advances to officers, directors and employees of Holdings (or any direct or
indirect parent thereof), the Company and the Restricted Subsidiaries (i) for
reasonable and customary business-related travel, entertainment, relocation and
analogous ordinary business purposes of the Borrower and the Restricted
Subsidiaries, (ii) in connection with such Person’s purchase of Equity
Interests of Holdings (or any direct or indirect parent thereof) (provided that the amount of such loans and advances shall be
contributed to the Company in cash as common equity), and (iii) for purposes
not described in the foregoing clauses (i) and (ii), in an aggregate principal
amount at any time outstanding not exceeding $4,000,000;

 

(c)                                  Investments
(i) by Holdings, the Company or any Restricted Subsidiary in any Loan
Party, (ii) by any Restricted Subsidiary that is not a Loan Party in any
other such Restricted Subsidiary that is also not a Loan Party, or (iii) by
Holdings, the Company or any 

 

 

100

 

Restricted Subsidiary (A) in any Restricted
Subsidiary that is not a Loan Party; provided that
the aggregate amount of such Investments by Loan Parties in Restricted Subsidiaries
that are not Loan Parties (together with, but without duplication of, (x) the
aggregate consideration paid in respect of Permitted Acquisitions of Persons
that do not become Loan Parties pursuant to Section 7.02(i)(B) and (y) the
aggregate amount of indebtedness of a Restricted Subsidiary who is not a Loan
Party incurred pursuant to, and outstanding at any time under, Section 7.03(g)
and clause (z) of Section 7.03(h)) shall not exceed $40,000,000 in any
fiscal year and $100,000,000 in the aggregate during the term of this Agreement
(it being understood that the limitation on Indebtedness described in clause
(y) above in any fiscal year shall refer to the amount of Indebtedness incurred
in such fiscal year and not the amount of Indebtedness at any time outstanding
thereunder) (net of any return representing a return of capital in respect of
any such Investment), (B) in any Restricted Subsidiary that is not a Loan
Party, constituting an exchange of Equity Interests of such Restricted
Subsidiary for Indebtedness of such Restricted Subsidiary or (C) constituting
Guarantees of Indebtedness or other monetary obligations of Restricted
Subsidiaries that are not Loan Parties owing to any Loan Party;

 

(d)                                 Investments
consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course
of business, and Investments received in satisfaction or partial satisfaction
thereof from financially troubled account debtors and other credits to
suppliers in the ordinary course of business;

 

(e)                                  Investments
consisting of Liens, Indebtedness, fundamental changes, Dispositions and
Restricted Payments permitted under Sections 7.01, 7.03, 7.04, 7.05 and 7.06,
respectively;

 

(f)                                    Investments
(i) existing or contemplated on the date hereof and set forth on Schedule
7.02(f) and any modification, replacement, renewal, reinvestment or extension
thereof and (ii) existing on the date hereof by Holdings, the Company or
any Restricted Subsidiary in the Company or any other Restricted Subsidiary and
any modification, renewal or extension thereof; provided
that the amount of the original Investment is not increased except by the terms
of such Investment or as otherwise permitted by this Section 7.02;

 

(g)                                 Investments
in Swap Contracts permitted under Section 7.03;

 

(h)                                 promissory
notes and other noncash consideration received in connection with Dispositions
permitted by Section 7.05;

 

(i)                                     the
purchase or other acquisition of property and assets or businesses of any
Person or of assets or Equity Interests in a Person (including as a result of a
merger or consolidation and including the Post-Closing Acquisition); provided that, with respect to each purchase or other
acquisition made pursuant to this Section 7.02(i) (each, a “Permitted Acquisition”):

 

(A)                              subject
to clause (B) below, such purchase or acquisition shall result in the issuer of
such Equity Interests or the entity acquiring such property, assets or
businesses, as the case may be, becoming a Restricted Subsidiary (if such
entity is not a Restricted Subsidiary prior thereto) and, to the extent
required 

 

 

101

 

under the
Collateral and Guarantee Requirement, a Guarantor, and such purchase or
acquisition shall result in the Collateral Agent being granted a security
interest in any such Equity Interests or assets so acquired to the extent
required by Section 6.11, within the times specified therein;

 

(B)                                the
aggregate amount of consideration paid in respect of acquisitions of Persons
that do not become Loan Parties (together with, but without duplication of, (x)
the aggregate amount of all Investments in Restricted Subsidiaries that are not
Loan Parties pursuant to Section 7.02(c)(iii)(A) and (y) the aggregate amount
of indebtedness of a Restricted Subsidiary who is not a Loan Party incurred
pursuant to, and outstanding at any time under, Section 7.03(g) and clause (z)
of Section 7.03(h)) shall not exceed $40,000,000 in any fiscal year and
$100,000,000 in the aggregate during the term of this Agreement (it being
understood that the limitation on Indebtedness described in clause (y) above in
any fiscal year shall refer to the amount of Indebtedness incurred in such
fiscal year and not the amount of Indebtedness at any time outstanding
thereunder) (net of any return representing a return of capital in respect of
any such Investment);

 

(C)                                the
acquired property, assets, business or Person is in the same or related line of
business as the Company and its Subsidiaries;

 

(D)                               (1)
immediately before and immediately after giving Pro Forma Effect to any such
purchase or other acquisition, no Default shall have occurred and be continuing
and (2) immediately after giving effect to such purchase or other acquisition,
the Company and the Restricted Subsidiaries shall be in Pro Forma Compliance
with all of the covenants set forth in Section 7.11, such compliance to be
determined on the basis of the financial information most recently delivered to
the Collateral Agent and the Lenders pursuant to Section 6.01(a) or (b) as
though such purchase or other acquisition had been consummated as of the first
day of the fiscal period covered thereby and evidenced by a certificate from
the Chief Financial Officer of the Company demonstrating such compliance
calculation in reasonable detail; and

 

(E)                                 the
Company shall have delivered to the Administrative Agent, on behalf of the
Lenders, no later than five (5) Business Days after the date on which any such
purchase or other acquisition is consummated, a certificate of a Responsible
Officer, in form and substance reasonably satisfactory to the Administrative
Agent, certifying that all of the requirements set forth in this Section
7.02(i) have been satisfied or will be satisfied on or prior to the consummation
of such purchase or other acquisition;

 

(j)                                     the
Transaction;

 

(k)                                  Investments
in the ordinary course of business consisting of Article 3 endorsements for
collection or deposit and Article 4 customary trade arrangements with customers
consistent with past practices;

 

 

102

 

(l)                                     Investments
(including debt obligations and Equity Interests) received in connection with
the bankruptcy or reorganization of suppliers and customers or in settlement of
delinquent obligations of, or other disputes with, customers and suppliers
arising in the ordinary course of business or upon the foreclosure with respect
to any secured Investment or other transfer of title with respect to any
secured Investment;

 

(m)                               loans
and advances to Holdings (or any direct or indirect parent thereof) in lieu of,
and not in excess of the amount of (after giving effect to any other loans,
advances or Restricted Payments in respect thereof), Restricted Payments to the
extent permitted to be made to Holdings (or such parent) in accordance with
Section 7.06(g), (h) or (i);

 

(n)                                 so
long as immediately after giving effect to any such Investment, no Default has
occurred and is continuing and the Company and the Restricted Subsidiaries will
be in Pro Forma Compliance with the covenants set forth in Section 7.11,
other Investments that do not exceed $50,000,000 in the aggregate, net of any
return representing return of capital in respect of any such investment and
valued at the time of the making thereof; provided that,
such amount shall be increased by (i) the Net Cash Proceeds of Permitted
Equity Issuances (other than Permitted Equity Issuances made pursuant to
Section 8.05) that are Not Otherwise Applied and (ii) if, as of the
last day of the immediately preceding Test Period (after giving Pro Forma
Effect to such Investments) the Total Leverage Ratio is 5.50:1 or less, the
amount of Cumulative Excess Cash Flow that is Not Otherwise Applied;

 

(o)                                 advances
of payroll payments to employees in the ordinary course of business;

 

(p)                                 Investments
to the extent that payment for such Investments is made solely with capital
stock of Holdings (or the Company after a Qualifying IPO of the Company);

 

(q)                                 Investments
held by a Restricted Subsidiary acquired after the Closing Date or of a
corporation merged into the Company or merged or consolidated with a Restricted
Subsidiary in accordance with Section 7.04 after the Closing Date to the
extent that such Investments were not made in contemplation of or in connection
with such acquisition, merger or consolidation and were in existence on the
date of such acquisition, merger or consolidation;

 

(r)                                    Guarantees
by Holdings, the Company or any Restricted Subsidiary of leases (other than
Capitalized Leases) or of other obligations that do not constitute
Indebtedness, in each case entered into in the ordinary course of business; and

 

(s)                                  loans
and advances to independent sales Persons against commissions in an aggregate
amount at any time outstanding not to exceed $4,000,000;

 

provided that no Investment in an
Unrestricted Subsidiary that would otherwise be permitted under this
Section 7.02 shall be permitted hereunder to the extent that any portion
of such Investment is used to make any prepayments, redemptions, purchases, defeasances
and other payments in respect of Junior Financings.

 

SECTION 7.03  Indebtedness.
Create, incur, assume or suffer to exist any Indebtedness, except:

 

 

103

 

(a)                                  Indebtedness
of Holdings, the Company and any of its Subsidiaries under the Loan Documents;

 

(b)                                 (i) Indebtedness
outstanding on the date hereof and listed on Schedule 7.03(b) and any Permitted
Refinancing thereof and (ii) intercompany Indebtedness outstanding on the
date hereof;

 

(c)                                  Guarantees
by Holdings, the Company and  the
Restricted Subsidiaries in respect of Indebtedness of the Company or any
Restricted Subsidiary otherwise permitted hereunder; provided
that (A) no Guarantee by any Restricted Subsidiary of any Existing Note, New
Note, or Junior Financing shall be permitted unless such Restricted Subsidiary
shall have also provided a Guarantee of the Obligations substantially on the
terms set forth in the Guaranty and (B) if the Indebtedness being Guaranteed is
subordinated to the Obligations, such Guarantee shall be subordinated to the
Guarantee of the Obligations on terms at least as favorable to the Lenders as
those contained in the subordination of such Indebtedness;

 

(d)                                 Subject
to Section 7.02(c), Indebtedness of Holdings, the Company or any Restricted
Subsidiary owing to Holdings, the Company or any other Restricted Subsidiary; provided that, all such Indebtedness of any Loan Party owed
to any Person that is not a Loan Party shall be subject to the subordination
terms set forth in Section 5.03 of the Security Agreement;

 

(e)                                  (i) Attributable
Indebtedness and other Indebtedness (including Capitalized Leases) financing
the acquisition, construction, repair, replacement or improvement of fixed or
capital assets; provided that such Indebtedness
is incurred concurrently with or within two hundred and seventy (270) days
after the applicable acquisition, construction, repair, replacement or
improvement, (ii) Attributable Indebtedness arising out of sale-leaseback
transactions permitted by Section 7.05(f) and (iii) any Permitted
Refinancing of any Indebtedness set forth in the immediately preceding clauses
(i) and (ii);

 

(f)                                    Indebtedness
in respect of Swap Contracts designed to hedge against interest rates, foreign
exchange rates or commodity pricing risks incurred in the ordinary course of
business and not for speculative purposes;

 

(g)                                 Indebtedness
of Holdings, the Company and the Restricted Subsidiaries (i) assumed in
connection with any Permitted Acquisition or (ii) incurred to finance a
Permitted Acquisition, in each case, that is secured only by the assets or
business acquired in the applicable Permitted Acquisition (including any
acquired Equity Interests) and so long as both immediately prior and after
giving effect thereto, (A) no Default shall exist or result therefrom, (B) the
Company and the Restricted Subsidiaries will be in Pro Forma Compliance with
the covenants set forth in Section 7.11, and (C) the aggregate principal
amount of such Indebtedness and all Indebtedness resulting from any Permitted
Refinancing thereof at any time outstanding pursuant to this paragraph (g) does
not exceed $40,000,000; provided that
the aggregate amount of Indebtedness of Persons that are not Loan Parties
incurred pursuant to, and outstanding at any time under, this clause (g) (and
any Permitted Refinancing thereof) and clause (z) of Section 7.03(h) below,
when combined with, but without duplication of, the aggregate amount of
Investments made pursuant to Section 7.02(c)(iii)(A) and Section 7.02(i)(B), shall
not exceed 

 

 

104

 

$40,000,000 in any fiscal year and
$100,000,000 in the aggregate during the term of this Agreement (it being
understood that the limitation on Indebtedness described in this proviso shall
refer to the amount of Indebtedness incurred in such fiscal year and not the
amount of Indebtedness at any time outstanding thereunder);

 

(h)                                 (i) Indebtedness
of Holdings, the Company and the Restricted Subsidiaries (A) assumed in
connection with any Permitted Acquisition; provided that
(x) such Indebtedness is not incurred in contemplation of such Permitted
Acquisition and (y) the aggregate principal amount of all Indebtedness assumed
in reliance on this sub-clause (A) (excluding for purposes of the basket
calculation in this clause (y), however, any such Indebtedness that is
unsecured and subordinated and otherwise satisfies the requirements of clauses
(v), (w)(1), (x) and (y) of the proviso below) does not exceed $20,000,000 at
any time outstanding, or (B) incurred to finance a Permitted Acquisition and
(ii) any Permitted Refinancing of either of the foregoing; provided, in each case that such Indebtedness and all
Indebtedness resulting from any Permitted Refinancing thereof (v) is unsecured
or is subordinated to the Obligations on terms no less favorable to the Lenders
than the subordination terms set forth in the Senior Subordinated Notes
Indenture as of the Closing Date, (w) both immediately prior and after giving
effect thereto, (1) no Default shall exist or result therefrom and, (2) the
Company and the Restricted Subsidiaries will be in Pro Forma Compliance with
the covenants set forth in Section 7.11, (x) matures after, and does not
require any scheduled amortization or other scheduled payments of principal
prior to, the Maturity Date of the Term Loans (it being understood that such
Indebtedness may have mandatory prepayment, repurchase or redemptions
provisions satisfying the requirement of clause (y) hereof), (y) has terms and
conditions (other than interest rate, redemption premiums and subordination
terms), taken as a whole, that are not materially less favorable to the Company
as the terms and conditions of the New Notes as of the Closing Date; provided that a certificate of a Responsible Officer delivered
to the Administrative Agent at least five Business Days prior to the incurrence
of such Indebtedness, together with a reasonably detailed description of the
material terms and conditions of such Indebtedness or drafts of the
documentation relating thereto, stating that the Company has determined in good
faith that such terms and conditions satisfy the foregoing requirement shall be
conclusive evidence that such terms and conditions satisfy the foregoing
requirement unless the Administrative Agent notifies the Company within such
five Business Day period that it disagrees with such determination (including a
reasonable description of the basis upon which it disagrees); and (z) with
respect to such Indebtedness described in the immediately preceding clause (B),
such Indebtedness is either incurred by the Company or a Guarantor or, if such
Indebtedness is incurred by a Restricted Subsidiary that is not a Loan Party,
the aggregate amount of such Indebtedness of Persons that are not Loan Parties
incurred pursuant to, and outstanding at any time under, this clause (z) (and
any Permitted Refinancing thereof) and Section 7.03(g) shall not exceed, when
combined with, but without duplication of, the aggregate amount of Investments
made pursuant to Section 7.02(c)(iii)(A) and Section 7.02(i)(B), $40,000,000 in
any fiscal year and $100,000,000 in the aggregate during the term of this
Agreement (it being understood that the limitation on Indebtedness described in
this clause (z) shall refer to the amount of Indebtedness incurred in such
fiscal year and not the amount of Indebtedness at any time outstanding
thereunder);

 

(i)                                     Indebtedness
representing deferred compensation to employees of Holdings (or any direct or
indirect parent thereof), the Company and the Restricted Subsidiaries incurred
in the ordinary course of business;

 

 

105

 

(j)                                     Indebtedness
to current or former officers, directors and employees, their respective
estates, spouses or former spouses to finance the purchase or redemption of
Equity Interests of Holdings (or any direct or indirect parent thereof)
permitted by Section 7.06;

 

(k)                                  Indebtedness
incurred by Holdings, the Company or the Restricted Subsidiaries in a Permitted
Acquisition, any other Investment expressly permitted hereunder or any
Disposition constituting indemnification obligations or obligations in respect
of purchase price or other similar adjustments;

 

(l)                                     Indebtedness
consisting of obligations of Holdings, the Company or the Restricted
Subsidiaries under deferred compensation or other similar arrangements incurred
by such Person in connection with the Transaction and Permitted Acquisitions or
any other Investment expressly permitted hereunder;

 

(m)                               Cash
Management Obligations and other Indebtedness in respect of netting services,
overdraft protections, automatic clearinghouse arrangements and similar arrangements
in each case in connection with deposit accounts;

 

(n)                                 Indebtedness
in an aggregate principal amount not to exceed $50,000,000 at any time
outstanding;

 

(o)                                 Indebtedness
consisting of (a) the financing of insurance premiums or (b) take-or-pay obligations
contained in supply arrangements, in each case, in the ordinary course of
business;

 

(p)                                 Indebtedness
incurred by the Company or any of the Restricted Subsidiaries in respect of
letters of credit, bank guarantees, bankers’ acceptances or similar instruments
issued or created in the ordinary course of business, including in respect of
workers compensation claims, health, disability or other employee benefits or
property, casualty or liability insurance or self-insurance or other
Indebtedness with respect to reimbursement-type obligations regarding workers
compensation claims; provided that
any reimbursement obligations in respect thereof are reimbursed within 30 days
following the incurrence thereof;

 

(q)                                 obligations
in respect of performance, bid, appeal and surety bonds and performance and
completion guarantees and similar obligations provided by the Company or any of
the Restricted Subsidiaries or obligations in respect of letters of credit,
bank guarantees or similar instruments related thereto, in each case in the
ordinary course of business or consistent with past practice;

 

(r)                                    unsecured
Indebtedness of Holdings (“Permitted Holdings
Debt”) (i) that is not subject to any Guarantee by the Company
or any Restricted Subsidiary, (ii) that will not mature prior to the date
that is ninety-one (91) days after the Maturity Date of the Term Loans,
(iii) that has no scheduled amortization or payments of principal (it
being understood that such Indebtedness may have mandatory prepayment,
repurchase or redemption provisions satisfying the requirements of clause (v)
hereof), (iv) that does not require any payments in cash of interest or other
amounts in respect of the principal thereof prior to the date that is
ninety-one (91) days after the Maturity Date of the Term Loans, and (v) that
has mandatory prepayment, repurchase or redemption, covenant, default and
remedy provisions customary for senior discount notes of an 

 

106

 

issuer that is the parent of a borrower under
senior secured credit facilities, and in any event, with respect to covenant,
default and remedy provisions, no more restrictive than those set forth in the
Senior Subordinated Notes Indenture as of the Closing Date, taken as a whole
(other than provisions customary for senior discount notes of a holding
company); provided that a certificate of a
Responsible Officer delivered to the Administrative Agent at least five
Business Days prior to the incurrence of such Indebtedness, together with a
reasonably detailed description of the material terms and conditions of such
Indebtedness or drafts of the documentation relating thereto, stating that the
Company has determined in good faith that such terms and conditions satisfy the
foregoing requirement shall be conclusive evidence that such terms and
conditions satisfy the foregoing requirement unless the Administrative Agent
notifies the Company within such five Business Day period that it disagrees
with such determination (including a reasonable description of the basis upon
which it disagrees); provided, further,
that any such Indebtedness shall constitute Permitted Holdings Debt only if (1)
both before and after giving effect to the issuance or incurrence thereof, no
Default shall have occurred and be continuing and (2) the Company and the
Restricted Subsidiaries will be in Pro Forma Compliance with the covenants set
forth in Section 7.11 (it being understood that any capitalized or
paid-in-kind or accreted principal on such Indebtedness is not subject to this
proviso);

 

(s)                                  Indebtedness
supported by a Letter of Credit, in a principal amount not to exceed the face
amount of such Letter of Credit;

 

(t)                                    Indebtedness
in respect of the New Notes and any Permitted Refinancing thereof; and

 

(u)                                 all
premiums (if any), interest (including post-petition interest), fees, expenses,
charges and additional or contingent interest on obligations described in
clauses (a) through (t) above.

 

SECTION 7.04  Fundamental
Changes. Merge, dissolve, liquidate, consolidate with or into another
Person, or Dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except that:

 

(a)                                  any
Restricted Subsidiary may merge with (i) the Company (including a merger,
the purpose of which is to reorganize the Company into a new jurisdiction); provided that (x) the Company shall be the continuing or
surviving Person and such merger does not result in the Company ceasing to be
incorporated under the Laws of the United States, any state thereof or the
District of Columbia, or (ii) any one or more other Restricted
Subsidiaries; provided that when any Restricted
Subsidiary that is a Loan Party is merging with another Restricted Subsidiary,
a Loan Party shall be the continuing or surviving Person;

 

(b)                                 (i) any
Subsidiary that is not a Loan Party may merge or consolidate with or into any
other Subsidiary that is not a Loan Party and (ii) any Subsidiary may liquidate
or dissolve or change its legal form if (x) Holdings or the Company determines
in good faith that such action is in the best interests of Holdings or the
Company and its Subsidiaries and if not materially disadvantageous to the
Lenders and (y) to the extent such Restricted Subsidiary is a Loan Party, any
assets or business not otherwise disposed of or transferred in accordance with 

 

 

107

 

Section 7.02 or 7.05 or, in the case of any
such business, discontinued, shall be transferred to or otherwise owned or
conducted by another Loan Party after giving effect to such liquidation or
dissolution;

 

(c)                                  any
Restricted Subsidiary may Dispose of all or substantially all of its assets
(upon voluntary liquidation or otherwise) to the Company or to another
Restricted Subsidiary; provided that
if the transferor in such a transaction is a Guarantor or the Company, then
(i) the transferee must either be the Company or a Guarantor or
(ii) to the extent constituting an Investment, such Investment must be a
permitted Investment in or Indebtedness of a Restricted Subsidiary which is not
a Loan Party in accordance with Sections 7.02 and 7.03, respectively;

 

(d)                                 so
long as no Default exists or would result therefrom, the Company may merge or
consolidate with any other Person; provided that
(i) the Company shall be the continuing or surviving corporation or
(ii) if the Person formed by or surviving any such merger or consolidation
is not the Company (any such Person, the “Successor
Company”), (A) the Successor Company shall be an entity organized or
existing under the laws of the United States, any state thereof, the District
of Columbia or any territory thereof, (B) the Successor Company shall expressly
assume all the obligations of the Company under this Agreement and the other
Loan Documents to which the Company is a party pursuant to a supplement hereto
or thereto in form reasonably satisfactory to the Administrative Agent, (C)
each Guarantor, unless it is the other party to such merger or consolidation,
shall have by a supplement to the Guaranty confirmed that its Guarantee shall
apply to the Successor Company’s obligations under this Agreement, (D) each
Guarantor, unless it is the other party to such merger or consolidation, shall
have by a supplement to the Security Agreement confirmed that its obligations
thereunder shall apply to the Successor Company’s obligations under this
Agreement, (E) each mortgagor of a Mortgaged Property, unless it is the other
party to such merger or consolidation, shall have by an amendment to or
restatement of the applicable Mortgage confirmed that its obligations
thereunder shall apply to the Successor Company’s obligations under this
Agreement, and (F) the Company shall have delivered to the Administrative Agent
an officer’s certificate and an opinion of counsel, each stating that such
merger or consolidation and such supplement to this Agreement or any Collateral
Document preserves the enforceability of this Agreement, the Guaranty and the
Collateral Documents and the perfection of the Liens under the Collateral
Documents; provided, further, that if the foregoing
are satisfied, the Successor Company will succeed to, and be substituted for,
the Company under this Agreement;

 

(e)                                  so
long as no Default exists or would result therefrom, any Restricted Subsidiary
may merge with any other Person in order to effect an Investment permitted
pursuant to Section 7.02; provided that
the continuing or surviving Person shall be a Restricted Subsidiary, which
together with each of its Restricted Subsidiaries, shall have complied with the
requirements of Section 6.11;

 

(f)                                    so
long as no Default exists or would result therefrom, a merger, dissolution,
liquidation, consolidation or Disposition, the purpose of which is to effect a
Disposition permitted pursuant to Section 7.05.

 

 

108

 

SECTION 7.05  Dispositions.
Make any Disposition or enter into any agreement to make any Disposition,
except:

 

(a)                                  Dispositions
of obsolete or worn out property, whether now owned or hereafter acquired, in
the ordinary course of business and Dispositions of property no longer used or
useful in the conduct of the business of the Company and the Restricted
Subsidiaries;

 

(b)                                 Dispositions
of inventory and immaterial assets in the ordinary course of business;

 

(c)                                  Dispositions
of property to the extent that (i) such property is exchanged for credit
against the purchase price of similar replacement property or (ii) the
proceeds of such Disposition are promptly applied to the purchase price of such
replacement property;

 

(d)                                 Dispositions
of property to the Company or to a Restricted Subsidiary; provided that
if the transferor of such property is a Guarantor or the Company (i) the
transferee thereof must either be the Company or a Guarantor or (ii) to
the extent such transaction constitutes an Investment, such transaction is
permitted under Section 7.02;

 

(e)                                  Dispositions
permitted by Sections 7.04 and 7.06 and Liens permitted by Section 7.01;

 

(f)                                    Dispositions
of property pursuant to sale-leaseback transactions; provided
that (i) with respect to such property owned by the Company and its
Restricted Subsidiaries on the Closing Date, the fair market value of all
property so Disposed of after the Closing Date (taken together with the
aggregate book value of all property Disposed of pursuant to
Section 7.05(k)) shall not exceed 5.0% of Total Assets and (ii) with
respect to such property acquired by the Company or any Restricted Subsidiary
after the Closing Date, the applicable sale-leaseback transaction occurs within
two hundred and seventy (270) days after the acquisition or construction (as
applicable) of such property;

 

(g)                                 Dispositions
of Cash Equivalents;

 

(h)                                 Dispositions
of accounts receivable in connection with the collection or compromise thereof;

 

(i)                                     leases,
subleases, licenses or sublicenses (including the provision of software under
an open source license), in each case in the ordinary course of business and
which do not materially interfere with the business of Holdings, the Company
and the Restricted Subsidiaries, taken as a whole;

 

(j)                                     transfers
of property subject to Casualty Events upon receipt of the Net Cash Proceeds of
such Casualty Event;

 

(k)                                  Dispositions
of property not otherwise permitted under this Section 7.05; provided that (i) at the time of such Disposition
(other than any such Disposition made pursuant to a legally binding commitment
entered into at a time when no Default exists), no Default shall exist or would
result from such Disposition, (ii) the aggregate book value of all
property 

 

 

109

 

Disposed of in reliance on this clause (k)
(taken together with the aggregate fair market value of all property Disposed
of pursuant to Section 7.05(f)) shall not exceed 5.0% of Total Assets and
(iii) with respect to any Disposition pursuant to this clause (k) for a
purchase price in excess of $5,000,000, the Company or a Restricted Subsidiary
shall receive not less than 75% of such consideration in the form of cash or
Cash Equivalents (in each case, free and clear of all Liens at the time
received, other than nonconsensual Liens permitted by Section 7.01 and
Liens permitted by Section 7.01(r) and clauses (i) and (ii) of
Section 7.01(s)); provided, however,
that for the purposes of this clause (iii), (A) any liabilities (as shown on
the Company’s or such Restricted Subsidiary’s most recent balance sheet
provided hereunder or in the footnotes thereto) of the Company or such
Restricted Subsidiary, other than liabilities that are by their terms
subordinated to the payment in cash of the Obligations, that are assumed by the
transferee with respect to the applicable Disposition and for which the Company
and all of the Restricted Subsidiaries shall have been validly released by all
applicable creditors in writing, (B) any securities received by the Company or
such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received) within 180 days following the closing of the applicable Disposition
and (C) any Designated Non-Cash Consideration received by the Company or such
Restricted Subsidiary in respect of such Disposition having an aggregate fair
market value, taken together with all other Designated Non-Cash Consideration
received pursuant to this clause (C) that is at that time outstanding, not in
excess of 1.5% of Total Assets at the time of the receipt of such Designated
Non-Cash Consideration, with the fair market value of each item of Designated
Non-Cash Consideration being measured at the time received and without giving
effect to subsequent changes in value, shall be deemed to be cash;

 

(l)                                     Dispositions
listed on Schedule 7.05(l); and

 

(m)                               Dispositions
of Investments in joint ventures to the extent required by, or made pursuant to
customary buy/sell arrangements between, the joint venture parties set forth in
joint venture arrangements and similar binding arrangements.

 

provided that any Disposition of
any property pursuant to this Section 7.05 (except pursuant to Sections
7.05(e) and except for Dispositions from a Loan Party to another Loan Party),
shall be for no less than the fair market value of such property at the time of
such Disposition. To the extent any Collateral is Disposed of as expressly
permitted by this Section 7.05 to any Person other than Holdings, the
Company or any Restricted Subsidiary, such Collateral shall be sold free and
clear of the Liens created by the Loan Documents, and the Administrative Agent
or the Collateral Agent, as applicable, shall be authorized to take any actions
deemed appropriate in order to effect the foregoing.

 

SECTION 7.06  Restricted
Payments. Declare or make, directly or indirectly, any Restricted Payment,
except:

 

(a)                                  each
Restricted Subsidiary may make Restricted Payments to the Company and to other
Restricted Subsidiaries (and, in the case of a Restricted Payment by a
non-wholly owned Restricted Subsidiary, to the Company and any other Restricted
Subsidiary and to each other owner of Equity Interests of such Restricted
Subsidiary based on their relative ownership interests of the relevant class of
Equity Interests);

 

 

110

 

(b)                                 Holdings,
the Company and each Restricted Subsidiary may declare and make Restricted
Payments payable solely in the Equity Interests (other than Disqualified Equity
Interests not otherwise permitted by Section 7.03) of such Person;

 

(c)                                  Restricted
Payments made on the Closing Date to consummate the Transaction;

 

(d)                                 to
the extent constituting Restricted Payments, Holdings, the Company and the
Restricted Subsidiaries may enter into and consummate transactions expressly
permitted by any provision of Section 7.02, 7.04 or 7.08 other than
Section 7.08(f);

 

(e)                                  repurchases
of Equity Interests in Holdings (or any direct or indirect parent thereof), the
Company or any Restricted Subsidiary deemed to occur upon exercise of stock
options or warrants if such Equity Interests represent a portion of the
exercise price of such options or warrants;

 

(f)                                    Holdings
(or the Company after a Qualifying IPO of the Company) may pay (or make
Restricted Payments to allow any direct or indirect parent thereof to pay) for
the repurchase, retirement or other acquisition or retirement for value of Equity
Interests of Holdings (or of any such parent of Holdings or of the Company
after a Qualifying IPO of the Company) by any future, present or former
employee or director of Holdings (or any direct or indirect parent of Holdings)
or any of its Subsidiaries pursuant to any employee or director equity plan,
employee or director stock option plan or any other employee or director
benefit plan or any agreement (including any stock subscription or shareholder
agreement) with any employee or director of Holdings or any of its
Subsidiaries; provided that the aggregate
amount of Restricted Payments made pursuant to this clause (f) shall not exceed
$5,000,000 in any calendar year (which shall increase to $10,000,000 subsequent
to the consummation of a Qualifying IPO) (with unused amounts in any calendar
year being carried over to succeeding calendar years subject to a maximum of
$10,000,000 in any calendar year or $20,000,000 subsequent to the consummation
of a Qualifying IPO, respectively);

 

(g)                                 the
Company and its Restricted Subsidiaries may make Restricted Payments to
Holdings:

 

(i)                                     the
proceeds of which will be used to pay (or to make Restricted Payments to allow
any direct or indirect parent of Holdings to pay) the tax liability to each
relevant jurisdiction in respect of consolidated, combined, unitary or
affiliated returns for the relevant jurisdiction of Holdings (or such parent)
attributable to Holdings, the Company or its Subsidiaries determined as if the
Company and its Subsidiaries filed separately;

 

(ii)                                  the
proceeds of which shall be used by Holdings to pay (or to make Restricted
Payments to allow any direct or indirect parent of Holdings to pay) its
operating expenses incurred in the ordinary course of business and other
corporate overhead costs and expenses (including administrative, legal,
accounting and similar expenses provided by third parties), which are
reasonable and customary and incurred in the ordinary course of business, in an
aggregate amount not to exceed $2,000,000 in any fiscal year plus any
reasonable and customary indemnification claims made by directors 

 

 

111

 

or officers of
Holdings (or any parent thereof) attributable to the ownership or operations of
the Company and its Subsidiaries;

 

(iii)                               the
proceeds of which shall be used by Holdings to pay (or to make Restricted
Payments to allow any direct or indirect parent of Holdings to pay) management
and monitoring fees to the extent permitted by Section 7.08(e) and related
indemnities and reasonable expenses and franchise taxes and other fees, taxes
and expenses required to maintain its (or any of its direct or indirect
parents’) corporate existence;

 

(iv)                              the
proceeds of which shall be used by Holdings to make Restricted Payments
permitted by this Section 7.06;

 

(v)                                 to
finance any Investment permitted to be made pursuant to Section 7.02; provided that (A) such Restricted Payment shall be made
substantially concurrently with the closing of such Investment and (B) Holdings
shall, immediately following the closing thereof, cause (1) all property
acquired (whether assets or Equity Interests) to be contributed to the Company
or its Restricted Subsidiaries or (2) the merger (to the extent permitted in
Section 7.04) of the Person formed or acquired into the Company or its
Restricted Subsidiaries in order to consummate such Permitted Acquisition, in
each case, in accordance with the requirements of Section 6.11; and

 

(vi)                              the
proceeds of which shall be used by Holdings to pay (or to make Restricted Payments
to allow any direct or indirect parent thereof to pay) fees and expenses (other
than to Affiliates) related to any unsuccessful equity or debt offering
permitted by this Agreement;

 

(h)                                 in
addition to the foregoing Restricted Payments and so long as no Default shall
have occurred and be continuing or would result therefrom, the Company may make
additional Restricted Payments to Holdings the proceeds of which may be
utilized by Holdings to make additional Restricted Payments, in an aggregate
amount, together with the aggregate amount of (1) prepayments, redemptions,
purchases, defeasances and other payments in respect of Junior Financings made
pursuant to Section 7.13(a)(v) and (2) loans and advances to Holdings made
pursuant to Section 7.02(m) in lieu of Restricted Payments permitted by
this clause (i), not to exceed the sum of (i) $5,000,000, (ii) the
aggregate amount of the Net Cash Proceeds of Permitted Equity Issuances (other
than Permitted Equity Issuances made pursuant to Section 8.05) that are
Not Otherwise Applied and (iii) if the Total Leverage Ratio as of the last
day of the immediately preceding Test Period (after giving Pro Forma Effect to
such additional Restricted Payments) is 5.50:1 or less, the amount of
Cumulative Excess Cash Flow that is Not Otherwise Applied. For the purpose of
this Agreement, “Cumulative Excess Cash Flow”
means the sum of Excess Cash Flow (but not less than zero in any period) for
the fiscal year ending on December 31, 2007 and Excess Cash Flow for each
succeeding and completed fiscal year; and

 

(i)                                     Holdings
or the Company may make Restricted Payments with the proceeds of the issuance
of Indebtedness of Holdings.

 

 

112

 

SECTION 7.07  Change
in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Company
and the Restricted Subsidiaries on the date hereof or any business reasonably
related or ancillary thereto.

 

SECTION 7.08  Transactions
with Affiliates. Enter into any transaction of any kind with any Affiliate
of the Company, whether or not in the ordinary course of business, other than
(a) transactions among Loan Parties or any Restricted Subsidiary or any entity
that becomes a Restricted Subsidiary as a result of such transaction, (b) on
terms substantially as favorable to Holdings, the Company or such Restricted
Subsidiary as would be obtainable by Holdings (or any direct or indirect parent
thereof), the Company or such Restricted Subsidiary at the time in a comparable
arm’s-length transaction with a Person other than an Affiliate, (c) the payment
of fees and expenses related to the Transaction, (d) the issuance of Equity
Interests to the management of Holdings, the Company or any of its Subsidiaries
in connection with the Transaction, (e) the payment of management and
monitoring fees to the Sponsors in an aggregate amount in any fiscal year not
to exceed the amount permitted to be paid pursuant to the Sponsor Management
Agreement as in effect on the date hereof and any Sponsor Termination Fees not
to exceed the amount set forth in the Sponsor Management Agreement as in effect
on the date hereof and related indemnities and reasonable expenses, (f) equity
issuances, repurchases, retirements or other acquisitions or retirements of
Equity Interests by Holdings (or any direct or indirect parent thereof)
permitted under Section 7.06, (g) loans and other transactions by
Holdings, the Company and the Restricted Subsidiaries to the extent permitted
under Article 7, (h) employment and severance arrangements between Holdings (or
any direct or indirect parent thereof), the Company and the Restricted
Subsidiaries and their respective directors, officers and employees in the
ordinary course of business of Holdings, the Company and the Restricted
Subsidiaries, (i) payments by Holdings (and any direct or indirect parent
thereof), the Company and the Restricted Subsidiaries pursuant to the tax
sharing agreements among Holdings (and any such parent thereof), the Company and
the Restricted Subsidiaries on customary terms to the extent attributable to
the ownership or operation of the Company and the Restricted Subsidiaries, (j)
the payment of customary fees and reasonable out of pocket costs to, and
indemnities provided on behalf of, directors, officers and employees of
Holdings (or any direct or indirect parent thereof), the Company and the
Restricted Subsidiaries in the ordinary course of business to the extent
attributable to the ownership or operation of Holdings (or such parent
thereof), the Company and the Restricted Subsidiaries, (k) transactions
pursuant to permitted agreements in existence on the Closing Date and set forth
on Schedule 7.08 or any amendment thereto to the extent such an amendment is
not adverse to the Lenders in any material respect, (l) dividends, redemptions
and repurchases permitted under Section 7.06, and (m) customary payments
by Holdings (or any direct or indirect parent thereof), the Company and any
Restricted Subsidiaries to the Sponsors made for any financial advisory,
financing, underwriting or placement services or in respect of other investment
banking activities (including in connection with acquisitions or divestitures),
which payments are approved by the majority of the members of the board of
directors or a majority of the disinterested members of the board of directors
of Holdings (or any direct or indirect parent thereof) or the Company, in good
faith.

 

SECTION 7.09  Burdensome
Agreements. Enter into or permit to exist any Contractual Obligation (other
than this Agreement or any other Loan Document) that limits the ability of (a)
any Restricted Subsidiary of the Company that is not a Guarantor to make
Restricted Payments to the Company or any Guarantor or (b) the Company or any
Loan Party to 

 

 

113

 

create, incur, assume or suffer to exist Liens on
property of such Person for the benefit of the Secured Parties with respect to
the Facilities and the Obligations or under the Loan Documents; provided that the foregoing clauses (a) and (b) shall not
apply to Contractual Obligations which (i) (x) exist on the date hereof
and (to the extent not otherwise permitted by this Section 7.09) are
listed on Schedule 7.09 hereto and (y) to the extent Contractual Obligations
permitted by clause (x) are set forth in an agreement evidencing Indebtedness,
are set forth in any agreement evidencing any permitted renewal, extension or
refinancing of such Indebtedness so long as such renewal, extension or refinancing
does not expand the scope of such Contractual Obligation, (ii) are binding
on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes
a Restricted Subsidiary of the Company, so long as such Contractual Obligations
were not entered into solely in contemplation of such Person becoming a
Restricted Subsidiary of the Company; provided, further,
that this clause (ii) shall not apply to Contractual Obligations that are
binding on a Person that becomes a Restricted Subsidiary pursuant to Section 6.14,
(iii) represent Indebtedness of a Restricted Subsidiary of the Company
which is not a Loan Party which is permitted by Section 7.03, (iv) arise
in connection with any Disposition permitted by Section 7.05, (v) are
customary provisions in joint venture agreements and other similar agreements
applicable to joint ventures permitted under Section 7.02 and applicable
solely to such joint venture entered into in the ordinary course of business,
(vi) are negative pledges and restrictions on Liens in favor of any holder
of Indebtedness permitted under Section 7.03 but solely to the extent any
negative pledge relates to the property financed by or the subject of such
Indebtedness (and excluding in any event any Indebtedness constituting any
Junior Financing), (vii) are customary restrictions on leases, subleases,
licenses or asset sale agreements otherwise permitted hereby so long as such
restrictions relate to the assets subject thereto, (viii) comprise
restrictions imposed by any agreement relating to secured Indebtedness
permitted pursuant to Section 7.03(e) or 7.03(g) to the extent that such
restrictions apply only to the property or assets securing such Indebtedness
or, in the case of Indebtedness incurred pursuant to Section 7.03(g) only,
to the Restricted Subsidiaries incurring or guaranteeing such Indebtedness,
(ix) are customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of the Company or any Restricted Subsidiary, (x)
are customary provisions restricting assignment of any agreement entered into
in the ordinary course of business, (xi) are restrictions on cash or other
deposits imposed by customers under contracts entered into in the ordinary
course of business and (xii) are imposed by Law or by any Governmental
Authority.

 

SECTION 7.10  Use
of Proceeds. Use the proceeds of any Credit Extension, whether directly or
indirectly, in a manner inconsistent with the uses set forth in the preliminary
statements to this Agreement.

 

SECTION 7.11  Financial
Covenants. (a)  Total Leverage Ratio.
Permit the Total Leverage Ratio as of the last day of any Test Period
(beginning with the Test Period ending on June 30, 2007) to be greater than the
ratio set forth below opposite the last day of such Test Period:

 

114

 

	
  Fiscal Year

  	
   

  	
  First Quarter

  End

  	
   

  	
  Second Quarter End

  	
   

  	
  Third Quarter End

  	
   

  	
  Fourth Quarter End

  	
   

  
	
  2007

  	
   

  	
  —

  	
   

  	
  8.00:1

  	
   

  	
  8.00:1

  	
   

  	
  8.00:1

  	
   

  
	
  2008

  	
   

  	
  8.00:1

  	
   

  	
  7.50:1

  	
   

  	
  7.50:1

  	
   

  	
  7.25:1

  	
   

  
	
  2009

  	
   

  	
  7.25:1

  	
   

  	
  6.50:1

  	
   

  	
  6.50:1

  	
   

  	
  6.50:1

  	
   

  
	
  2010

  	
   

  	
  6.50:1

  	
   

  	
  5.50:1

  	
   

  	
  5.50:1

  	
   

  	
  5.50:1

  	
   

  
	
  2011

  	
   

  	
  5.50:1

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  
	
  2012

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  
	
  2013

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  	
  4.75:1

  	
   

  

 

(b)                                 Interest Coverage Ratio. Permit the Interest Coverage Ratio
for any Test Period (beginning with the Test Period ending on June 30, 2007) to
be less than the ratio set forth below opposite the last day of such Test
Period:

 

	
  Fiscal Year

  	
   

  	
  First Quarter

  End

  	
   

  	
  Second Quarter End

  	
   

  	
  Third Quarter End

  	
   

  	
  Fourth Quarter End

  	
   

  
	
  2007

  	
   

  	
  —

  	
   

  	
  1.25:1

  	
   

  	
  1.25:1

  	
   

  	
  1.25:1

  	
   

  
	
  2008

  	
   

  	
  1.35:1

  	
   

  	
  1.35:1

  	
   

  	
  1.50:1

  	
   

  	
  1.50:1

  	
   

  
	
  2009

  	
   

  	
  1.50:1

  	
   

  	
  1.60:1

  	
   

  	
  1.60:1

  	
   

  	
  1.60:1

  	
   

  
	
  2010

  	
   

  	
  1.60:1

  	
   

  	
  1.70:1

  	
   

  	
  1.70:1

  	
   

  	
  1.70:1

  	
   

  
	
  2011

  	
   

  	
  1.70:1

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  
	
  2012

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  
	
  2013

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  	
  1.80:1

  	
   

  

 

SECTION 7.12  Accounting
Changes. Make any change in fiscal year; provided,
however, that the Company may, upon written notice to the
Administrative Agent, change its fiscal year to any other fiscal year
reasonably acceptable to the Administrative Agent, in which case, the Company
and the Administrative Agent will, and are hereby authorized by the Lenders to,
make any adjustments to this Agreement that are necessary to reflect such
change in fiscal year.

 

SECTION 7.13  Prepayments,
Etc. of Indebtedness. (a)  Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner (it
being understood that payments of regularly scheduled interest shall be
permitted) the Senior Subordinated Notes, any subordinated Indebtedness
incurred under Section 7.03(h) or any other Indebtedness that is required
to be subordinated to the Obligations pursuant to the terms of the Loan
Documents (collectively, “Junior Financing”)
or make any payment in violation of any subordination terms of any Junior
Financing Documentation, except (i) the refinancing thereof with the Net
Cash Proceeds of any Indebtedness (to the extent such Indebtedness constitutes
a Permitted Refinancing and, if applicable, is permitted pursuant to
Section 7.03(h)), to the extent not required to prepay any Loans or
Facility pursuant to Section 2.05(b), or of any Indebtedness of Holdings,
(ii) the conversion of any Junior Financing to Equity Interests (other
than Disqualified Equity Interests) of Holdings or any of its direct or
indirect parents, (iii) the prepayment of Indebtedness of the Company or
any Restricted Subsidiary to the Company or any Restricted Subsidiary to the
extent permitted by the Collateral Documents and (iv) prepayments, redemptions,
purchases, defeasances and other payments in respect of Junior Financings prior
to their scheduled maturity in an aggregate amount, together with the aggregate
amount of (1) Restricted Payments made pursuant to
Section 7.06(h) and (2) loans and advances to Holdings made pursuant
to Section 7.02(m), not to exceed the sum of (i) $5,000,000,
(ii) the amount of the Net Cash Proceeds of Permitted Equity Issuances
(other than Permitted Equity Issuances made 

 

 

115

 

pursuant to Section 8.05) made within eighteen
(18) months prior thereto that are Not Otherwise Applied and (iii) if, as
of the last day of the immediately preceding Test Period (after giving Pro
Forma Effect to such prepayments, redemptions, purchases, defeasances and other
payments) the Total Leverage Ratio is 5.50:1 or less, the amount of Cumulative
Excess Cash Flow that is Not Otherwise Applied.

 

(b)                                 Amend,
modify or change in any manner materially adverse to the interests of the
Lenders any term or condition of any Junior Financing Documentation.

 

SECTION 7.14  Equity
Interests of the Company and Restricted Subsidiaries. Permit any Domestic
Subsidiary that is a Restricted Subsidiary to be a non-wholly owned Subsidiary,
except (i) as a result of or in connection with a dissolution, merger,
consolidation or Disposition of a Restricted Subsidiary permitted by
Section 7.04, 7.05 or an Investment in any Person permitted under
Section 7.02 or (ii) so long as such Restricted Subsidiary continues
to be a Guarantor.

 

SECTION 7.15  Holding
Company. In the case of Holdings,  conduct, transact or otherwise
engage in any business or operations other than (i) its ownership of the Equity
Interests of the Company, (ii) the maintenance of its legal existence, including
the ability to incur fees, costs and expenses relating to such maintenance,
(iii) participating in tax, accounting and other administrative matters as a
member of the consolidated group of Encore Medical, Holdings and the Company,
(iv) the performance of the Loan Documents, (v) any public offering of its
common stock or any other issuance of its Equity Interests not prohibited by
Article 7, including incurring the costs, fees and expenses related thereto,
(vi) any transaction that Holdings is permitted to enter into or consummate
under this Article 7, including making any Restricted Payment permitted by
Section 7.06 or holding any cash received in connection with Restricted
Payments made by the Company in accordance with Section 7.06 pending application
thereof by Holdings in the manner contemplated by Section 7.06, (vii) incurring
fees, costs and expenses relating to overhead and general operations including
professional fees for legal, tax and accounting issues, (viii) providing
indemnification to officers and directors and as otherwise permitted in Article
7 and (ix) activities incidental to the businesses or activities described in
clauses (i) to (viii) of this Section 7.15.

 

SECTION
7.16  Capital Expenditures.

 

(a)                                  Make
any Capital Expenditure except for Capital Expenditures not exceeding, in the
aggregate for the Company and the Restricted Subsidiaries during each fiscal
year set forth below (or in the case of fiscal year 2006, during the fourth
quarter of such fiscal year), the amount set forth opposite such fiscal year or
fiscal quarter, as the case may be:

 

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4th Quarter 2006

  	
   

  	
  $

  	
  4,100,000

  	
   

  
	
  2007

  	
   

  	
  $

  	
  17,500,000

  	
   

  
	
  2008

  	
   

  	
  $

  	
  19,400,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  21,400,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  23,600,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  26,000,000

  	
   

  
	
  2012

  	
   

  	
  $

  	
  27,900,000

  	
   

  
	
  2013

  	
   

  	
  $

  	
  29,300,000

  	
   

  
						

 

116

 

; provided that
the amount of Capital Expenditures permitted to be made in respect of any
fiscal year or fiscal quarter, as the case may be, shall be increased after the
consummation of any Permitted Acquisition in an amount equal to 7.5% of the pro
forma aggregate consolidated revenues of the Acquired Entity or Business so
acquired during the fiscal year or fiscal quarter, as the case may be, of such
Acquired Entity or Business beginning after such Permitted Acquisition (such
amount, the “Acquired Annual Capital Expenditure Amount”).

 

(b)                                 Notwithstanding
anything to the contrary contained in clause (a) above, to the extent that the
aggregate amount of Capital Expenditures made by the Company and the Restricted
Subsidiaries in any fiscal year or in any fiscal quarter, as the case may be,
pursuant to Section 7.16(a) is less than the maximum amount of Capital
Expenditures permitted by Section 7.16(a) with respect to such fiscal year
or such fiscal quarter, as the case may be, the amount of such difference (the
“Rollover Amount”) may be carried
forward and used to make Capital Expenditures in the two succeeding fiscal
years; provided that Capital Expenditures in
any fiscal year shall be counted against the base amount set forth in
Section 7.16(a) with respect to such fiscal year prior to being counted
against any Rollover Amount available with respect to such fiscal year.

 

ARTICLE VIII

 

Events Of Default and Remedies

 

SECTION 8.01  Events
of Default. Any of the following shall constitute an Event of Default:

 

(a)                                  Non-Payment. The Company or any other Loan Party fails to
pay (i) when and as required to be paid herein, any amount of principal of
any Loan, or (ii) within five (5) Business Days after the same becomes
due, any interest on any Loan or any other amount payable hereunder or with
respect to any other Loan Document; or

 

(b)                                 Specific Covenants. The Company fails to perform or observe
any term, covenant or agreement contained in any of Sections 6.03(a) or 6.05(a)
(solely with respect to Holdings and the Company) or Article 7; provided that any Event of Default under Section 7.11
is subject to cure as contemplated by Section 8.05; or

 

(c)                                  Other Defaults. Any Loan Party fails to perform or observe
any other covenant or agreement (not specified in Section 8.01(a) or (b)
above) contained in any Loan Document on its part to be performed or observed
and such failure continues unremedied for thirty (30) days after receipt by the
Company of written notice thereof from the Administrative Agent; or

 

(d)                                 Representations and Warranties. Any representation,
warranty, certification or statement of fact made or deemed made by or on
behalf of the Company or any 

 

 

117

 

other Loan Party herein, in any other Loan
Document, or in any document required to be delivered in connection herewith or
therewith shall be incorrect or misleading in any material respect when made or
deemed made; or

 

(e)                                  Cross-Default. Any Loan Party or any Restricted Subsidiary
(A) fails to make any payment beyond the applicable grace period with respect
thereto, if any (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness (other than
Indebtedness hereunder) having an aggregate principal amount of not less than
the Threshold Amount, or (B) fails to observe or perform any other agreement or
condition relating to any such Indebtedness or any other event occurs (other
than, with respect to Indebtedness consisting of Swap Agreements, termination
events or equivalent events pursuant to the terms of such Swap Agreements), the
effect of which default or other event is to cause, or to permit the holder or
holders 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 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; provided that this clause (e)(B) shall
not apply to secured Indebtedness that becomes due as a result of the voluntary
sale or transfer of the property or assets securing such Indebtedness, if such
sale or transfer is permitted hereunder and under the documents providing for
such Indebtedness; or

 

(f)                                    Insolvency Proceedings, Etc. Any Loan Party or any of the
Restricted Subsidiaries institutes or consents to the institution of any
proceeding under any Debtor Relief Law, or makes an assignment for the benefit
of creditors; or applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator, administrator,
administrative receiver or similar officer for it or for all or any material
part of its property; or any receiver, trustee, custodian, conservator,
liquidator, rehabilitator, administrator, administrative receiver or similar
officer is appointed without the application or consent of such Person and the
appointment continues undischarged or unstayed for sixty (60) calendar days; or
any proceeding under any Debtor Relief Law relating to any such Person or to
all or any material part of its property is instituted without the consent of
such Person and continues undismissed or unstayed for sixty (60) calendar days,
or an order for relief is entered in any such proceeding; or

 

(g)                                 Attachment. Any writ or warrant of attachment or execution
or similar process is issued or levied against all or any material part of the
property of the Loan Parties, taken as a whole, and is not released, vacated or
fully bonded within sixty (60) days after its issue or levy; or

 

(h)                                 Judgments. There is entered against any Loan Party or any
Restricted Subsidiary a final judgment or order for the payment of money in an
aggregate amount exceeding the Threshold Amount (to the extent not covered by
independent third-party insurance as to which the insurer has been notified of
such judgment or order and has not denied 
coverage) and such judgment or order shall not have been satisfied,
vacated, discharged or stayed or bonded pending an appeal for a  period of sixty (60) consecutive days; or

 

(i)                                     ERISA. (i) An ERISA Event occurs with respect to a
Pension Plan or Multiemployer Plan which has resulted or could reasonably be
expected to result in liability of 

 

 

118

 

any Loan Party under Title IV of ERISA in an
aggregate amount which could reasonably be expected to result in a Material
Adverse Effect, or (ii) any Loan Party or any ERISA Affiliate fails to pay
when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of
ERISA under a Multiemployer Plan in an aggregate amount which could reasonably
be expected to result in a Material Adverse Effect; or

 

(j)            Invalidity
of Loan Documents. Any material provision of any Loan Document, at
any time after its execution and delivery and for any reason other than as
expressly permitted hereunder or thereunder (including as a result of a
transaction permitted under Section 7.04 or 7.05) or as a result of acts
or omissions by the Administrative Agent or any Lender or the satisfaction in
full of all the Obligations, ceases to be in full force and effect; or any Loan
Party contests in writing the validity or enforceability of any provision of
any Loan Document; or any Loan Party denies in writing that it has any further
liability or obligation under any Loan Document (other than as a result of
repayment in full of the Obligations and termination of the Aggregate
Commitments), or purports in writing to revoke or rescind any Loan Document; or

 

(k)           Change of
Control. There occurs any Change of Control; or

 

(l)            Collateral
Documents. (i) Any Collateral Document after delivery thereof
pursuant to Section 4.01 or 6.11 shall for any reason (other than pursuant
to the terms thereof including as a result of a transaction permitted under
Section 7.04 or 7.05) cease to create a valid and perfected lien, with the
priority required by the Collateral Documents, (or other security purported to
be created on the applicable Collateral) on and security interest in any
material portion of the Collateral purported to be covered thereby, subject to
Liens permitted under Section 7.01, except to the extent that any such
loss of perfection or priority results from the failure of the Administrative
Agent or the Collateral Agent to maintain possession of certificates actually
delivered to it representing securities pledged under the Collateral Documents
or to file Uniform Commercial Code continuation statements and except as to Collateral
consisting of real property to the extent that such losses are covered by a
lender’s title insurance policy and such insurer has not denied coverage, or
(ii) any of the Equity Interests of the Company ceasing to be pledged
pursuant to the Security Agreement free of Liens other than Liens created by
the Security Agreement or any nonconsensual Liens arising solely by operation
of Law; or

 

(m)          Junior
Financing Documentation. (i) Any of the Obligations of the Loan
Parties under the Loan Documents for any reason shall cease to be “Senior
Indebtedness” (or any comparable term) or “Senior Secured Financing” (or any
comparable term) under, and as defined in any Junior Financing Documentation or
(ii) the subordination provisions set forth in any Junior Financing
Documentation shall, in whole or in part, cease to be effective or cease to be
legally valid, binding and enforceable against the holders of any Junior
Financing, if applicable.

 

SECTION 8.02  Remedies
Upon Event of Default. If any Event of Default occurs and is continuing,
the Administrative Agent may and, at the request of the Required Lenders, shall
take any or all of the following actions:

 

119

 

(a)           declare the commitment
of each Lender to make Loans and any obligation of the L/C Issuers to make L/C
Credit Extensions to be terminated, whereupon such commitments and obligation
shall be terminated;

 

(b)           declare the unpaid
principal amount of all outstanding Loans, all interest accrued and unpaid thereon,
and all other amounts owing or payable hereunder or under any other Loan
Document to be immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
by the Company;

 

(c)           require that the
Company Cash Collateralize the L/C Obligations (in an amount equal to the then
Outstanding Amount thereof); and

 

(d)           exercise on behalf of
itself and the Lenders all rights and remedies available to it and the Lenders
under the Loan Documents or applicable Law;

 

provided that upon the occurrence
of an actual or deemed entry of an order for relief with respect to the Company
under the Bankruptcy Code of the United States, the obligation of each Lender
to make Loans and any obligation of the L/C Issuers to make L/C Credit
Extensions shall automatically terminate, the unpaid principal amount of all
outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Company to Cash
Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender.

 

SECTION 8.03  Exclusion
of Immaterial Subsidiaries. Solely for the purpose of determining whether a
Default has occurred under clause (f) or (g) of Section 8.01, any
reference in any such clause to any Restricted Subsidiary or Loan Party shall
be deemed not to include any Restricted Subsidiary affected by any event or
circumstances referred to in any such clause that did not, as of the last day
of the most recent completed fiscal quarter of the Company, have assets with a
value in excess of 5% of the consolidated total assets of the Company and the
Restricted Subsidiaries and did not, as of the four quarter period ending on
the last day of such fiscal quarter, have revenues exceeding 5% of the total
revenues of the Company and the Restricted Subsidiaries (it being agreed that
all Restricted Subsidiaries affected by any event or circumstance referred to
in any such clause shall be considered together, as a single consolidated
Restricted Subsidiary, for purposes of determining whether the condition
specified above is satisfied).

 

SECTION 8.04  Application
of Funds. After the exercise of remedies provided for in Section 8.02
(or after the Loans have automatically become immediately due and payable and
the L/C Obligations have automatically been required to be Cash Collateralized
as set forth in the proviso to Section 8.02), any amounts received on
account of the Obligations shall be applied by the Administrative Agent in the
following order:

 

First,
to payment of that portion of the Obligations constituting fees, indemnities,
expenses and other amounts (other than principal and interest, but including
Attorney Costs payable under Section 10.04 and amounts payable under
Article 3) payable to the Administrative Agent in its capacity as such;

 

120

 

Second,
to payment of that portion of the Obligations constituting fees, indemnities
and other amounts (other than principal and interest) payable to the Lenders
(including Attorney Costs payable under Section 10.05 and amounts payable
under Article 3), ratably among them in proportion to the amounts described in
this clause Second payable to them;

 

Third,
to payment of that portion of the Obligations constituting accrued and unpaid
interest on the Loans and L/C Borrowings, ratably among the Lenders in
proportion to the respective amounts described in this clause Third payable to
them;

 

Fourth,
to payment of that portion of the Obligations constituting unpaid principal of
the Loans and L/C Borrowings, the Swap Termination Value under Secured Hedge
Agreements and the Cash Management Obligations, ratably among the Lenders and
the other Secured Parties in proportion to the respective amounts described in
this clause Fourth held by them;

 

Fifth,
to the Administrative Agent for the account of the L/C Issuers, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit;

 

Sixth,
to the payment of all other Obligations of the Loan Parties that are due and
payable to the Administrative Agent and the other Secured Parties on such date,
ratably based upon the respective aggregate amounts of all such Obligations
owing to the Administrative Agent and the other Secured Parties on such date;
and

 

Last,
the balance, if any, after all of the Obligations have been indefeasibly paid
in full, to the Company or as otherwise required by Law.

 

Subject to Section 2.03(c) and to the extent an
Event of Default shall be continuing at such time, amounts used to Cash
Collateralize the aggregate undrawn amount of Letters of Credit pursuant to
clause Fifth above shall be applied to satisfy
drawings under such Letters of Credit as they occur. If any amount remains on
deposit as Cash Collateral after all Letters of Credit have either been fully
drawn or expired, such remaining amount shall be applied to the other
Obligations, if any, in the order set forth above and, if no Obligations remain
outstanding, to the Company.

 

SECTION 8.05  Company’s
Right to Cure. (a)  Notwithstanding anything to the contrary
contained in Section 8.01, in the event of any Event of Default under any
covenant set forth in Section 7.11 and until the expiration of the tenth
(10th) day after the date on which financial statements are required to be
delivered with respect to the applicable fiscal quarter hereunder, Holdings (or
any direct or indirect parent of Holdings) or the Company may engage in a
Permitted Equity Issuance to any of the Equity Investors and apply the amount
of the Net Cash Proceeds thereof to increase Consolidated EBITDA with respect
to such applicable quarter; provided that
such Net Cash Proceeds (i) are actually received by the Company (including
through capital contribution of such Net Cash Proceeds to the Company) no later
than ten (10) days after the date on which financial statements are required to
be delivered with respect to such fiscal quarter hereunder, (ii) are Not
Otherwise Applied, and (iii) do not exceed the aggregate amount necessary
to cure such Event of Default under Section 7.11 for any applicable period.

 

121

 

The parties hereby acknowledge that this
Section 8.05(a) may not be relied on for purposes of calculating any
financial ratios other than as applicable to Section 7.11 and shall not
result in any adjustment to any amounts other than the amount of the
Consolidated EBITDA referred to in the immediately preceding sentence.

 

(b)           In each period of four
fiscal quarters, there shall be at least two (2) consecutive fiscal quarters in
which no cure set forth in Section 8.05(a) is made.

 

ARTICLE IX

 

Administrative Agent and Other
Agents

 

SECTION 9.01  Appointment
and Authorization of Agents. (a)  Each Lender hereby irrevocably
appoints, designates and authorizes the Administrative Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Notwithstanding
any provision to the contrary contained elsewhere herein or in any other Loan
Document, the Administrative Agent shall have no duties or responsibilities,
except those expressly set forth herein, nor shall the Administrative Agent
have or be deemed to have any fiduciary relationship with any Lender or participant,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent. Without limiting the
generality of the foregoing sentence, the use of the term “agent” herein and in
the other Loan Documents with reference to any Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable Law. Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.

 

(b)           Each L/C Issuer shall
act on behalf of the Lenders with respect to any Letters of Credit issued by it
and the documents associated therewith, and each such L/C Issuer shall have all
of the benefits and immunities (i) provided to the Agents in this Article
9 with respect to any acts taken or omissions suffered by such L/C Issuer in
connection with Letters of Credit issued by it or proposed to be issued by it
and the applications and agreements for letters of credit pertaining to such
Letters of Credit as fully as if the term “Agent” as used in this Article 9 and
in the definition of “Agent-Related Person” included such L/C Issuer with
respect to such acts or omissions, and (ii) as additionally provided
herein with respect to such L/C Issuer.

 

(c)           The Administrative
Agent shall also act as the “collateral agent” under the Loan Documents, and
each of the Lenders (in its capacities as a Lender, Swing Line Lender (if
applicable), L/C Issuer (if applicable) and a potential Hedge Bank) hereby
irrevocably appoints and authorizes the Administrative Agent to act as the
agent of (and to hold any security interest created by the Collateral Documents
for and on behalf of or on trust for) such Lender for purposes of acquiring,
holding and enforcing any and all Liens on Collateral granted by any of the
Loan Parties to secure any of the Obligations, together with such powers and
discretion as are reasonably incidental thereto. In this connection, the
Administrative Agent, as “collateral agent” (and any co-agents, sub-agents and
attorneys-in-fact appointed by the Administrative Agent 

 

122

 

pursuant to Section 9.02 for purposes of
holding or enforcing any Lien on the Collateral (or any portion thereof)
granted under the Collateral Documents, or for exercising any rights and
remedies thereunder at the direction of the Administrative Agent), shall be
entitled to the benefits of all provisions of this Article 9 (including,
Section 9.07, as though such co-agents, sub-agents and attorneys-in-fact
were the “collateral agent” under the Loan Documents) as if set forth in full
herein with respect thereto.

 

(d)           Except as provided in
Sections 9.09 and 9.11, the provisions of this Article IX are solely for
the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and
neither the Borrower nor any other Loan Party shall have rights as a third
party beneficiary of any of such provisions.

 

SECTION 9.02  Delegation
of Duties. The Administrative Agent may execute any of its duties under
this Agreement or any other Loan Document (including for purposes of holding or
enforcing any Lien on the Collateral (or any portion thereof) granted under the
Collateral Documents or of exercising any rights and remedies thereunder) by or
through agents, employees or attorneys-in-fact including for the purpose of any
Borrowings, such sub-agents as shall be deemed necessary by the Administrative
Agent and shall be entitled to advice of counsel and other consultants or
experts concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent or
sub-agent or attorney-in-fact that it selects in the absence of gross
negligence or willful misconduct (as determined in the final judgment of a
court of competent jurisdiction).

 

SECTION 9.03  Liability
of Agents. No Agent-Related Person shall (a) be liable for any action taken
or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct, as determined by
the final judgment of a court of competent jurisdiction, in connection with its
duties expressly set forth herein), or (b) be responsible in any manner to any
Lender or participant for any recital, statement, representation or warranty
made by any Loan Party or any officer thereof, contained herein or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under
or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or the perfection or priority of any Lien
or security interest created or purported to be created under the Collateral
Documents, or for any failure of any Loan Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender or participant to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or
to inspect the properties, books or records of any Loan Party or any Affiliate
thereof.

 

SECTION 9.04  Reliance
by Agents. (a)  Each Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, communication, signature,
resolution, representation, notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message, electronic mail message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to any Loan
Party),

 

123

 

independent accountants and other experts selected by
such Agent. Each Agent shall be fully justified in failing or refusing to take
any action under any Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Each Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Required Lenders (or such greater number of Lenders as may be expressly
required hereby in any instance) and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.

 

(b)           For purposes of
determining compliance with the conditions specified in Section 4.01, each
Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

 

SECTION 9.05  Notice
of Default. The Administrative Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default, except with respect to defaults in
the payment of principal, interest and fees required to be paid to the
Administrative Agent for the account of the Lenders, unless the Administrative
Agent shall have received written notice from a Lender or the Company referring
to this Agreement, describing such Default and stating that such notice is a “notice
of default.”  The Administrative Agent
will notify the Lenders of its receipt of any such notice. The Administrative
Agent shall take such action with respect to any Event of Default as may be
directed by the Required Lenders in accordance with Article 8; provided that unless and until the Administrative Agent has
received any such direction, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default as it shall deem advisable or in the best
interest of the Lenders.

 

SECTION 9.06  Credit
Decision; Disclosure of Information by Agents. Each Lender acknowledges
that no Agent-Related Person has made any representation or warranty to it, and
that no act by any Agent hereafter taken, including any consent to and
acceptance of any assignment or review of the affairs of any Loan Party or any
Affiliate thereof, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Lender as to any matter, including whether
Agent-Related Persons have disclosed material information in their possession. Each
Lender represents to each Agent that it has, independently and without reliance
upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Loan Parties and their respective Subsidiaries, and all
applicable bank or other regulatory Laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Company and the other Loan Parties hereunder. Each
Lender also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement

 

124

 

and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company and the other Loan Parties. Except for notices,
reports and other documents expressly required to be furnished to the Lenders
by any Agent herein, such Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of any of the Loan Parties or any of their respective
Affiliates which may come into the possession of any Agent-Related Person.

 

SECTION 9.07  Indemnification
of Agents. Whether or not the transactions contemplated hereby are
consummated, the Lenders shall indemnify upon demand each Agent-Related Person
(to the extent not reimbursed by or on behalf of any Loan Party and without
limiting the obligation of any Loan Party to do so), pro rata, and hold
harmless each Agent-Related Person from and against any and all Indemnified
Liabilities incurred by it; provided that
no Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting from such Agent-Related
Person’s own gross negligence or willful misconduct, as determined by the final
judgment of a court of competent jurisdiction; provided
that no action taken in accordance with the directions of the Required Lenders
(or such other number or percentage of the Lenders as shall be required by the
Loan Documents) shall be deemed to constitute gross negligence or willful
misconduct for purposes of this Section 9.07. In the case of any
investigation, litigation or proceeding giving rise to any Indemnified
Liabilities, this Section 9.07 applies whether any such investigation,
litigation or proceeding is brought by any Lender or any other Person. Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that the Administrative Agent is not reimbursed
for such expenses by or on behalf of the Company. The undertaking in this
Section 9.07 shall survive termination of the Aggregate Commitments, the
payment of all other Obligations and the resignation of the Administrative
Agent.

 

SECTION 9.08  Agents in their Individual Capacities.
Bank of America and its Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, acquire Equity Interests in and
generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with each of the Loan Parties and their
respective Affiliates as though Bank of America were not the Administrative
Agent or an L/C Issuer hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding any Loan Party or
its Affiliates (including information that may be subject to confidentiality
obligations in favor of such Loan Party or such Affiliate) and acknowledge that
the Administrative Agent shall be under no obligation to provide such
information to them. With respect to its Loans, Bank of America shall have the
same rights and powers under this Agreement as any other Lender and may
exercise such rights and powers as though it were not the Administrative Agent
or an L/C Issuer, and the terms “Lender” and “Lenders” include Bank of America
in its individual capacity.

 

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SECTION 9.09  Successor
Agents. The Administrative Agent may resign as the Administrative Agent
upon thirty (30) days’ notice to the Lenders and the Company. If the
Administrative Agent resigns under this Agreement, the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be consented to by the Company at all times other than
during the existence of an Event of Default under Section 8.01(f) or (g)
(which consent of the Company shall not be unreasonably withheld or delayed). If
no successor agent is appointed prior to the effective date of the resignation
of the Administrative Agent, the Administrative Agent may appoint, after
consulting with the Lenders and the Company, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
the Person acting as such successor agent shall succeed to all the rights,
powers and duties of the retiring Administrative Agent and the term “Administrative
Agent,” shall mean such successor administrative agent and/or supplemental
administrative agent, as the case may be, and the retiring Administrative Agent’s
appointment, powers and duties as the Administrative Agent shall be terminated.
After the retiring Administrative Agent’s resignation hereunder as the
Administrative Agent, the provisions of this Article 9 and Sections 10.04 and
10.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was the Administrative Agent under this Agreement. If no
successor agent has accepted appointment as the Administrative Agent by the
date which is thirty (30) days following the retiring Administrative Agent’s
notice of resignation, the retiring Administrative Agent’s resignation shall
nevertheless become effective and the Lenders shall perform all of the duties
of the Administrative Agent hereunder until such time, if any, as the Required
Lenders appoint a successor agent as provided for above. Upon the acceptance of
any appointment as the Administrative Agent hereunder by a successor and upon
the execution and filing or recording of such financing statements, or
amendments thereto, and such amendments or supplements to the Mortgages, and
such other instruments or notices, as may be necessary or desirable, or as the
Required Lenders may request, in order to (a) continue the perfection of the
Liens granted or purported to be granted by the Collateral Documents or (b)
otherwise ensure that the Collateral and Guarantee Requirement is satisfied,
the Administrative Agent shall thereupon succeed to and become vested with all
the rights, powers, discretion, privileges, and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under the Loan Documents. After the retiring
Administrative Agent’s resignation hereunder as the Administrative Agent, the
provisions of this Article 9 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as the Administrative Agent.

 

SECTION 9.10  Administrative
Agent May File Proofs of Claim. In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to any Loan
Party, the Administrative Agent (irrespective of whether the principal of any
Loan or L/C Obligation shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent shall
have made any demand on the Company) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

 

(a)           to file and prove a
claim for the whole amount of the principal and interest owing and unpaid in
respect of the Loans, L/C Obligations and all other Obligations that are owing
and unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and the Administrative Agent (including
any claim for the

 

126

 

reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and
their respective agents and counsel and all other amounts due the Lenders and
the Administrative Agent under Sections 2.03(h) and (i), 2.09 and 10.04)
allowed in such judicial proceeding; and

 

(b)           to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same;

 

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender to make such payments to the
Administrative Agent and, in the event that the Administrative Agent shall
consent to the making of such payments directly to the Lenders, to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Agents and their respective agents and
counsel, and any other amounts due the Administrative Agent under Sections 2.09
and 10.04.

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Obligations or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

SECTION 9.11  Collateral
and Guaranty Matters. The Lenders irrevocably agree:

 

(a)           that any Lien on any
property granted to or held by the Administrative Agent or the Collateral Agent
under any Loan Document shall be automatically released (i) upon termination of
the Aggregate Commitments and payment in full of all Obligations (other than
(x) obligations under Secured Hedge Agreements, (y) Cash Management Obligations
and (z) contingent indemnification obligations not yet accrued and payable) and
the expiration or termination of all Letters of Credit (unless such Letters of
Credit have been collateralized on terms and conditions reasonably satisfactory
to the relevant L/C Issuers following termination of the Commitments), (ii) at
the time the property subject to such Lien is transferred or to be transferred
as part of or in connection with any transfer permitted hereunder or under any
other Loan Document to any Person other than Holdings, the Company or any
Subsidiary Guarantor, (iii) subject to Section 10.01, if the release of such
Lien is approved, authorized or ratified in writing by the Required Lenders, or
(iv) if the property subject to such Lien is owned by a Guarantor, upon release
of such Guarantor from its obligations under its Guaranty pursuant to clause
(c) below;

 

(b)           to release or
subordinate any Lien on any property granted to or held by the Administrative
Agent or the Collateral Agent under any Loan Document to the holder of any Lien
on such property that is permitted by Section 7.01(i) or (o);

 

(c)           that any Guarantor
shall be automatically released from its obligations under the Guaranty if such
Person ceases to be a Restricted Subsidiary as a result of a transaction or
designation permitted hereunder (including as a result of a Guarantor being
redesignated as an

 

127

 

Unrestricted Subsidiary); provided that no such release shall occur if such Guarantor
continues to be a guarantor in respect of the New Notes or any Junior
Financing; and

 

Upon
request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to
release any Guarantor from its obligations under the Guaranty pursuant to this
Section 9.11. In each case as specified in this Section 9.11, the
Administrative Agent will (and each Lender irrevocably authorizes the
Administrative Agent to), at the Company’s expense, execute and deliver to the
applicable Loan Party such documents as such Loan Party may reasonably request
to evidence the release or subordination of such item of Collateral from the
assignment and security interest granted under the Collateral Documents, or to
evidence the release of such Guarantor from its obligations under the Guaranty,
in each case in accordance with the terms of the Loan Documents and this
Section 9.11.

 

SECTION 9.12  Other
Agents; Arrangers and Managers. (i) None of the Lenders or other Persons
identified on the facing page or signature pages of this Agreement as a “syndication
agent,” “documentation agent,” “joint bookrunner” or “arranger” (other than as
set forth in clause (ii)) shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Lenders as such. Without limiting the foregoing, none of the Lenders or other
Persons so identified shall have or be deemed to have any fiduciary
relationship with any Lender. Each Lender acknowledges that it has not relied,
and will not rely, on any of the Lenders or other Persons so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder; and (ii) with respect to the duties of the Arrangers under Sections
2.14, 4.01, 6.02 and 10.02, the Arrangers shall have all rights and powers of
the Agent set forth in this Article 9, including, without limitation under
Sections 9.01, 9.02, 9.03, 9.04, 9.07 and 9.08.

 

SECTION 9.13  Appointment
of Supplemental Administrative Agents. (a)  It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any Law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the
enforcement of any of the Loan Documents, or in case the Administrative Agent
deems that by reason of any present or future Law of any jurisdiction it may
not exercise any of the rights, powers or remedies granted herein or in any of
the other Loan Documents or take any other action which may be desirable or
necessary in connection therewith, the Administrative Agent is hereby
authorized to appoint an additional individual or institution selected by the
Administrative Agent in its sole discretion as a separate trustee, co-trustee,
administrative agent, collateral agent, administrative sub-agent or
administrative co-agent (any such additional individual or institution being
referred to herein individually as a “Supplemental
Administrative Agent” and collectively as “Supplemental
Administrative Agents”).

 

(b)           In the event that the
Administrative Agent appoints a Supplemental Administrative Agent with respect
to any Collateral, (i) each and every right, power, privilege or duty
expressed or intended by this Agreement or any of the other Loan Documents to
be exercised by or vested in or conveyed to the Administrative Agent with
respect to such Collateral shall be exercisable by and vest in such
Supplemental Administrative Agent to the extent, and

 

128

 

only to the extent, necessary to enable such
Supplemental Administrative Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such duties with
respect to such Collateral, and every covenant and obligation contained in the
Loan Documents and necessary to the exercise or performance thereof by such
Supplemental Administrative Agent shall run to and be enforceable by either the
Administrative Agent or such Supplemental Administrative Agent, and
(ii) the provisions of this Article 9 and of Sections 10.04 and 10.05 that
refer to the Administrative Agent shall inure to the benefit of such
Supplemental Administrative Agent and all references therein to the Administrative
Agent shall be deemed to be references to the Administrative Agent and/or such
Supplemental Administrative Agent, as the context may require.

 

(c)           Should any instrument
in writing from the Company, Holdings or any other Loan Party be required by any
Supplemental Administrative Agent so appointed by the Administrative Agent for
more fully and certainly vesting in and confirming to him or it such rights,
powers, privileges and duties, the Company or Holdings, as applicable, shall,
or shall cause such Loan Party to, execute, acknowledge and deliver any and all
such instruments promptly upon request by the Administrative Agent. In case any
Supplemental Administrative Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights, powers, privileges
and duties of such Supplemental Administrative Agent, to the extent permitted
by Law, shall vest in and be exercised by the Administrative Agent until the
appointment of a new Supplemental Administrative Agent.

 

ARTICLE X

 

Miscellaneous

 

SECTION 10.01  Amendments,
Etc. Except as otherwise set forth in this Agreement (including pursuant to
Section 2.14), no amendment, modification, supplement or waiver of any
provision of this Agreement or any other Loan Document, and no consent to any
departure by the Company or any other Loan Party therefrom, shall be effective
unless in writing signed by the Required Lenders and the Company or the
applicable Loan Party, as the case may be, and each such amendment,
modification, supplement, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided that, no such amendment, modification, supplement, waiver
or consent shall:

 

(a)           extend or increase the
Commitment of any Lender without the written consent of each Lender directly
affected thereby (it being understood that a waiver of any condition precedent
set forth in Section 4.02 or the waiver of any Default, mandatory
prepayment or mandatory reduction of the Commitments shall not constitute an
extension or increase of any Commitment of any Lender);

 

(b)           postpone any date
scheduled for, or reduce the amount of, any payment of principal or interest
under Section 2.07 or 2.08 without the written consent of each Lender
directly affected thereby, it being understood that the waiver of (or amendment
to the terms of) any mandatory prepayment of the Term Loans shall not
constitute a postponement of any date scheduled for the payment of principal or
interest;

 

129

 

(c)           reduce the principal
of, or the rate of interest specified herein on, any Loan or L/C Borrowing, or
(subject to clause (iii) of the second proviso to this Section 10.01)
any fees or other amounts payable hereunder or under any other Loan Document
without the written consent of each Lender directly affected thereby, it being
understood that any change to the definition of Total Leverage Ratio, Interest
Coverage Ratio or in the component definitions of each thereof shall not constitute
a reduction in the rate; provided that,
only the consent of the Required Lenders shall be necessary to amend the
definition of “Default Rate” or to waive any obligation of the Company to pay
interest or Letter of Credit fees at the Default Rate;

 

(d)           change any provision of
this Section 10.01, the definition of “Required Lenders” or “Pro Rata
Share” or Sections 2.05(b)(vi)(B), 2.06(c), 8.04 or 2.13 without the
written consent of each Lender affected thereby;

 

(e)           other than in a
transaction permitted under Section 7.04 or 7.05, release all or
substantially all of the Collateral in any transaction or series of related
transactions, without the written consent of each Lender;

 

(f)            other than in
connection with a transaction permitted under Section 7.04 or 7.05,
release all or substantially all of the aggregate value of the Guarantees,
without the written consent of each Lender;

 

and provided, further,
that (i) no amendment, waiver or consent shall, unless in writing and
signed by each L/C Issuer in addition to the Lenders required above, affect the
rights or duties of an L/C Issuer under this Agreement or any Letter of Credit
Application relating to any Letter of Credit issued or to be issued by it;
(ii) no amendment, waiver or consent shall, unless in writing and signed
by the Swing Line Lender in addition to the Lenders required above, affect the
rights or duties of the Swing Line Lender under this Agreement; (iii) no
amendment, waiver or consent shall, unless in writing and signed by the Administrative
Agent in addition to the Lenders required above, affect the rights or duties
of, or any fees or other amounts payable to, the Administrative Agent under
this Agreement or any other Loan Document; (iv) Section 10.07(h) may not
be amended, waived or otherwise modified without the consent of each Granting
Lender all or any part of whose Loans are being funded by an SPC at the time of
such amendment, waiver or other modification; and (v) the consent of Lenders
holding more than 50% of any Class of Commitments shall be required with
respect to any amendment that by its terms adversely affects the rights of such
Class in respect of payments hereunder in a manner different than such
amendment affects other Classes. Notwithstanding anything to the contrary
herein, no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the Commitment of such
Lender may not be increased or extended without the consent of such Lender (it
being understood that any Commitments or Loans held or deemed held by any
Defaulting Lender shall be excluded for a vote of the Lenders hereunder
requiring any consent of the Lenders).

 

Notwithstanding
the foregoing, this Agreement may be amended (or amended and restated) with the
written consent of the Required Lenders, the Administrative Agent and the
Company (a) to add one or more additional credit facilities to this Agreement
and to permit the extensions of credit from time to time outstanding thereunder
and the accrued interest and fees in respect thereof to share ratably in the
benefits of this Agreement and the other Loan Documents

 

130

 

with the Term Loans and the Revolving Credit Loans and
the accrued interest and fees in respect thereof and (b) to include
appropriately the Lenders holding such credit facilities in any determination
of the Required Lenders.

 

In
addition, notwithstanding the foregoing, this Agreement may be amended with the
written consent of the Administrative Agent, the Company and the Lenders
providing Replacement Term Loans (as defined below) to permit the refinancing
of all outstanding Term Loans (“Refinanced Term Loans”)
with a replacement term loan tranche (“Replacement Term Loans”)
hereunder; provided that (a) the aggregate
principal amount of such Replacement Term Loans shall not exceed the aggregate
principal amount of such Refinanced Term Loans, (b) the Applicable Rate for
such Replacement Term Loans shall not be higher than the Applicable Rate for
such Refinanced Term Loans, (c) the Weighted Average Life to Maturity of such
Replacement Term Loans shall not be shorter than the Weighted Average Life to
Maturity of such Refinanced Term Loans at the time of such refinancing (except
to the extent of nominal amortization for periods where amortization has been
eliminated as a result of prepayment of the applicable Term Loans) and (d) all
other terms applicable to such Replacement Term Loans shall be substantially
identical to, or no less favorable to the Lenders providing such Replacement
Term Loans than, those applicable to such Refinanced Term Loans, except to the
extent necessary to provide for covenants and other terms applicable to any
period after the latest final maturity of the Term Loans in effect immediately
prior to such refinancing.

 

Notwithstanding
anything to the contrary contained in Section 10.01, in consultation with
the Administrative Agent, the Company and the Arrangers may without the input
or consent of the Lenders, effect amendments to this Agreement and the other
Loan Documents as may be necessary or appropriate in the opinion of the
Arrangers to effect the provisions of Section 2.14.

 

SECTION 10.02  Notices
and Other Communications; Facsimile Copies. (a)  General. Unless otherwise expressly provided herein, all
notices and other communications provided for hereunder or under any other Loan
Document shall be in writing (including by facsimile transmission). All such
written notices shall be mailed, faxed or delivered to the applicable address,
facsimile number or electronic mail address, and all notices and other
communications expressly permitted hereunder to be given by telephone shall be
made to the applicable telephone number, as follows:

 

(i)            if
to the Company, the Administrative Agent, an L/C Issuer or the Swing Line
Lender, to the address, facsimile number, electronic mail address or telephone
number specified for such Person on Schedule 10.02 or to such other address,
facsimile number, electronic mail address or telephone number as shall be
designated by such party in a notice to the other parties; and

 

(ii)           if
to any other Lender, to the address, facsimile number, electronic mail address
or telephone number specified in its Administrative Questionnaire or to such
other address, facsimile number, electronic mail address or telephone number as
shall be designated by such party in a notice to the Company, the Administrative
Agent, the L/C Issuers and the Swing Line Lender.

 

131

 

All such notices and other communications shall be
deemed to be given or made upon the earlier to occur of (i) actual receipt
by the relevant party hereto and (ii) (A) if delivered by hand or by
courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered
by mail, four (4) Business Days after deposit in the mails, postage prepaid;
(C) if delivered by facsimile, when sent and receipt has been confirmed by
telephone; and (D) if delivered by electronic mail (which form of delivery is
subject to the provisions of Section 10.02(c)), when delivered; provided that notices and other communications to the Administrative
Agent, the L/C Issuers and the Swing Line Lender pursuant to Article 2 shall
not be effective until actually received by such Person. In no event shall a
voice mail message be effective as a notice, communication or confirmation
hereunder.

 

(b)           Effectiveness
of Facsimile or other Electronic Documents and Signatures. Loan
Documents may be transmitted and/or signed by facsimile or other electronic
transmission (i.e. a “pdf” or “tif”). The effectiveness of any such documents
and signatures shall, subject to applicable Law, have the same force and effect
as manually signed originals and shall be binding on all Loan Parties, the
Agents and the Lenders.

 

(c)           Reliance by
Agents and Lenders. The Administrative Agent and the Lenders shall
be entitled to rely and act upon any notices (including telephonic Loan Notices
and Swing Line Loan Notices) purportedly given by or on behalf of the Company
even if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof. The Company shall indemnify
each Agent-Related Person and each Lender from all losses, costs, expenses and
liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Company in the absence of gross
negligence or willful misconduct. All telephonic notices to the Administrative
Agent may be recorded by the Administrative Agent, and each of the parties
hereto hereby consents to such recording.

 

SECTION 10.03  No
Waiver; Cumulative Remedies. No failure by any Lender or the Administrative
Agent to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder or under any other Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided, and provided under
each other Loan Document, are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Law.

 

SECTION 10.04  Attorney
Costs, Expenses and Taxes. The Company agrees (a) if the Closing Date
occurs, to pay or reimburse the Administrative Agent, Syndication Agent, and
the Arrangers for all reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation, syndication and execution of this
Agreement and the other Loan Documents, and any amendment, waiver, consent or
other modification of the provisions hereof and thereof (whether or not the
transactions contemplated thereby are consummated), and the consummation and
administration of the transactions contemplated hereby and thereby, including
all Attorney Costs of Shearman & Sterling LLP and such local counsel in any
material jurisdiction retained with your consent, and (b) to pay or reimburse the
Administrative Agent, the

 

132

 

Syndication Agent, the Arrangers and each Lender for
all out-of-pocket costs and expenses incurred in connection with the
enforcement of any rights or remedies under this Agreement or the other Loan
Documents (including all such costs and expenses incurred during any legal
proceeding, including any proceeding under any Debtor Relief Law, and including
all Attorney Costs of counsel to the Administrative Agent). The foregoing costs
and expenses shall include all reasonable search, filing, recording and title
insurance charges and fees and taxes related thereto. The agreements in this
Section 10.04 shall survive the termination of the Aggregate Commitments
and repayment of all other Obligations. All amounts due under this
Section 10.04 shall be paid within ten (10) Business Days of receipt by
the Company of an invoice relating thereto setting forth such expenses in
reasonable detail. If any Loan Party fails to pay when due any costs, expenses
or other amounts payable by it hereunder or under any Loan Document, such
amount may be paid on behalf of such Loan Party by the Administrative Agent in
its sole discretion.

 

SECTION 10.05  Indemnification
by the Company. Whether or not the transactions contemplated hereby are
consummated, the Company shall indemnify and hold harmless each Agent-Related
Person, each Lender and their respective Affiliates, directors, officers,
employees, counsel, agents, trustees, investment advisors and attorneys-in-fact
(collectively, the “Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with (a)
the execution, delivery, enforcement, performance or administration of any Loan
Document or any other agreement, letter or instrument delivered in connection
with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) any Commitment, Loan or Letter of Credit
or the use or proposed use of the proceeds therefrom (including any refusal by an
L/C Issuer 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), or (c) any actual or alleged presence or
release of Hazardous Materials on or from any property currently or formerly
owned or operated by the Company, any Subsidiary or any other Loan Party, or
any Environmental Liability related in any way to the Company, any Subsidiary
or any other Loan Party, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory (including any investigation of, preparation
for, or defense of any pending or threatened claim, investigation, litigation
or proceeding) and regardless of whether any Indemnitee is a party thereto (all
the foregoing, collectively, the “Indemnified Liabilities”),
in all cases, whether or not caused by or arising, in whole or in part, out of
the negligence of the Indemnitee; provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such liabilities, obligations, losses, damages, penalties, claims, demands,
actions, judgments, suits, costs, expenses or disbursements resulted from the
gross negligence or willful misconduct of such Indemnitee or of any Affiliate,
director, officer, employee, counsel, agent or attorney-in-fact of such
Indemnitee. No Indemnitee shall be liable for any damages arising from the use
by others of any information or other materials obtained through IntraLinks or
other similar information transmission systems in connection with this Agreement,
nor shall any Indemnitee or any Loan Party have any liability for any special, punitive,
indirect or consequential damages relating to this Agreement or any other Loan
Document or arising out of its activities in connection herewith or therewith
(whether before or

 

133

 

after the Closing Date). In the case of an
investigation, litigation or other proceeding to which the indemnity in this
Section 10.05 applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by any Loan Party, its
directors, stockholders or creditors or an Indemnitee or any other Person,
whether or not any Indemnitee is otherwise a party thereto and whether or not
any of the transactions contemplated hereunder or under any of the other Loan
Documents is consummated. All amounts due under this Section 10.05 shall
be paid within ten (10) Business Days after written demand therefor; provided, however, that such Indemnitee shall promptly
refund such amount to the extent that there is a final judicial or arbitral
determination that such Indemnitee was not entitled to indemnification or
contribution rights with respect to such payment pursuant to the express terms
of this Section 10.05. The agreements in this Section 10.05 shall
survive the resignation of the Administrative Agent, the replacement of any
Lender, the termination of the Aggregate Commitments and the repayment,
satisfaction or discharge of all the other Obligations.

 

SECTION 10.06  Payments
Set Aside. To the extent that any payment by or on behalf of the Company is
made to any Agent or any Lender, or any Agent or any Lender exercises its right
of setoff, and such payment or the proceeds of such setoff or any part thereof
is subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by such
Agent or such Lender in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any proceeding under any Debtor Relief Law
or otherwise, then (a) to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such setoff had
not occurred, and (b) each Lender severally agrees to pay to the Administrative
Agent upon demand its applicable share of any amount so recovered from or
repaid by any Agent, plus interest thereon from the date of such demand to the
date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect.

 

SECTION 10.07  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, except that neither
Holdings nor the Company may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender and no
Lender may assign or otherwise transfer any of its rights or obligations
hereunder except (i) to an Eligible Assignee, (ii) by way of
participation in accordance with the provisions of Section 10.07(e),
(iii) by way of pledge or assignment of a security interest subject to the
restrictions of Section 10.07(g) or (iv) to an SPC in accordance with the
provisions of Section 10.07(h) (and any other attempted assignment or
transfer by any party hereto shall be null and void). 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, Participants to the extent provided in Section 10.07(e)
and, to the extent expressly contemplated hereby, the Indemnitees) 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 (“Assignees”)
all or a portion of its rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans (including for purposes of
this Section 10.07(b), participations in L/C Obligations and in Swing

 

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Line Loans) at the time owing to it) with the
prior written consent (such consent not to be unreasonably withheld or delayed)
of:

 

(A)          the
Company; provided that no consent
of the Company shall be required for an assignment to a Lender, an Affiliate of
a Lender, an Approved Fund or, if an Event of Default under
Section 8.01(a), (f) or (g) has occurred and is continuing, any Assignee;

 

(B)           the
Administrative Agent; provided
that no consent of the Administrative Agent shall be required for an assignment
(i) of all or any portion of a Term Loan to a Lender, an Affiliate of a
Lender or an Approved Fund or (ii) to an Agent or an Affiliate of an
Agent;

 

(C)           each
Principal L/C Issuer at the time of such assignment; provided that no consent of the Principal L/C Issuers shall
be required for any assignment of a Term Loan or any assignment to an Agent or
an Affiliate of an Agent; and

 

(D)          the
Swing Line Lender; provided that
no consent of the Swing Line Lender shall be required for any assignment of a
Term Loan or any assignment to an Agent or an Affiliate of an Agent.

 

(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 Commitment
or Loans of any Class, the amount of the 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 $5,000,000 (in the case of each
Revolving Credit Facility), or $1,000,000 (in the case of a Term Loan) unless
each of the Company and the Administrative Agent otherwise consents; provided that (1) no such consent of the
Company shall be required if an Event of Default under Section 8.01(a),
(f) or (g) has occurred and is continuing and (2) such amounts shall be
aggregated in respect of each Lender and its Affiliates or Approved Funds, if
any;

 

(B)           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 (however, such processing and recordation fee may be waived by
the Administrative Agent); and

 

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

 

This
paragraph (b) shall not prohibit any Lender from assigning all or a portion of
its rights and obligations among separate Facilities on a non-pro rata basis.

 

135

 

(c)           Subject to acceptance and recording
thereof by the Administrative Agent pursuant to Section 10.07(d), from and
after the effective date specified in each Assignment and Assumption, the
Eligible Assignee thereunder shall be a party to this Agreement 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 3.01, 3.04, 3.05, 10.04 and 10.05 with respect to facts
and circumstances occurring prior to the effective date of such assignment). Upon
request, and the surrender by the assigning Lender of its Note, the Company (at
its expense) shall execute and deliver a Note to the assignee Lender. Any
assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this clause (c) 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 Section 10.07(e).

 

(d)           The Administrative Agent, acting
solely for this purpose as an agent of the Company, shall maintain at the
Administrative Agent’s Office 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 Commitments of, and principal amounts (and related
interest amounts) of the Loans, L/C Obligations (specifying the Unreimbursed
Amounts), L/C Borrowings and amounts due under Section 2.03, owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, absent manifest error, and the Company, the Agents and the
Lenders shall 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 Company, any Agent and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.

 

(e)           Any Lender may at any time, without
the consent of, or notice to, the Company or the Administrative Agent, the L/C
Issuers or the Swing Line Lender, sell participations to any Person (other than
a natural person) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans
(including such Lender’s participations in L/C Obligations and/or Swing Line
Loans) owing to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Company, the
Agents 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 the other Loan Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or the
other Loan Documents; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.01 that directly
affects such Participant. Subject to Section 10.07(f), the Company agrees
that each Participant shall be entitled to the benefits of Sections 3.01, 3.04
and 3.05 to the same extent as if it were a Lender and had

 

136

 

acquired its interest by assignment pursuant
to Section 10.07(c) but shall not be entitled to recover greater amounts
under such Sections than the selling Lender would be entitled to recover. To
the extent permitted by applicable Law, each Participant also shall be entitled
to the benefits of Section 10.09 as though it were a Lender; provided that such Participant agrees to be subject to
Section 2.13 as though it were a Lender.

 

(f)            A Participant shall not be entitled
to receive any greater payment under Section 3.01, 3.04 or 3.05 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 Company’s prior written consent. A
Participant shall not be entitled to the benefits of Section 3.01 unless
the Company is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Company, to comply with Section 10.15
as though it were a Lender.

 

(g)           Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement (including under its Note, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

 

(h)           Notwithstanding anything to the
contrary contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle identified
as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Company (an “SPC”)
the option to provide all or any part of any Loan that such Granting Lender
would otherwise be obligated to make pursuant to this Agreement; provided that (i) nothing herein shall constitute a
commitment by any SPC to fund any Loan, and (ii) if an SPC elects not to
exercise such option or otherwise fails to make all or any part of such Loan,
the Granting Lender shall be obligated to make such Loan pursuant to the terms
hereof. Each party hereto hereby agrees that (i) neither the grant to any
SPC nor the exercise by any SPC of such option shall increase the costs or
expenses or otherwise increase or change the obligations of the Company under
this Agreement (including its obligations under Section 3.01, 3.04 or
3.05), (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and
(iii) the Granting Lender shall for all purposes, including the approval
of any amendment, waiver or other modification of any provision of any Loan
Document, remain the lender of record hereunder. The making of a Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if, such Loan were made by such Granting Lender. Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to,
but without prior consent of the Company and the Administrative Agent and with
the payment of a processing fee of $3,500, assign all or any portion of its
right to receive payment with respect to any Loan to the Granting Lender and
(ii) disclose on a confidential basis any non-public information relating
to its funding of Loans to any rating agency, commercial paper dealer or
provider of any surety or Guarantee or credit or liquidity enhancement to such
SPC.

 

(i)            Notwithstanding anything to the
contrary contained herein, (1) any Lender may in accordance with applicable Law
create a security interest in all or any portion of the

 

137

 

Loans owing to it and the Note, if any, held
by it and (2) any Lender that is a Fund may create a security interest in all
or any portion of the Loans owing to it and the Note, if any, held by it to the
trustee for holders of obligations owed, or securities issued, by such Fund as
security for such obligations or securities; provided
that unless and until such trustee actually becomes a Lender in compliance with
the other provisions of this Section 10.07, (i) no such pledge shall
release the pledging Lender from any of its obligations under the Loan
Documents and (ii) such trustee shall not be entitled to exercise any of
the rights of a Lender under the Loan Documents even though such trustee may
have acquired ownership rights with respect to the pledged interest through
foreclosure or otherwise.

 

(j)            Notwithstanding anything to the
contrary contained herein, any L/C Issuer or the Swing Line Lender may, upon
thirty (30) days’ notice to the Company and the Lenders, resign as an L/C
Issuer or the Swing Line Lender, respectively; provided
that on or prior to the expiration of such 30-day period with respect to such
resignation, the relevant L/C Issuer or the Swing Line Lender shall have
identified a successor L/C Issuer or Swing Line Lender reasonably acceptable to
the Company willing to accept its appointment as successor L/C Issuer or Swing
Line Lender, as applicable. In the event of any such resignation of an L/C
Issuer or the Swing Line Lender, the Company shall be entitled to appoint from
among the Lenders willing to accept such appointment a successor L/C Issuer or
Swing Line Lender hereunder; provided that
no failure by the Company to appoint any such successor shall affect the
resignation of the relevant L/C Issuer or the Swing Line Lender, as the case
may be, except as expressly provided above. If an L/C Issuer resigns as an L/C
Issuer, it shall retain all the rights and obligations of an L/C Issuer
hereunder with respect to all Letters of Credit outstanding as of the effective
date of its resignation as an L/C Issuer and all L/C Obligations with respect
thereto (including the right to require the Lenders to make Base Rate Loans or
fund risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)). If
the Swing Line Lender resigns as Swing Line Lender, it shall retain all the rights
of the Swing Line Lender provided for hereunder with respect to Swing Line
Loans made by it and outstanding as of the effective date of such resignation,
including the right to require the Lenders to make Base Rate Loans or fund risk
participations in outstanding Swing Line Loans pursuant to Section 2.04(c).

 

SECTION 10.08  Confidentiality.
Each of the Agents and the Lenders agrees to maintain the confidentiality of
the Information, except that Information may be disclosed (a) to its Affiliates
and its and its Affiliates’ directors, officers, employees, trustees,
investment advisors and agents, including accountants, 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
Governmental 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) subject to an
agreement containing provisions substantially the same as those of this
Section 10.08 (or as may otherwise be reasonably acceptable to the
Company), to any pledgee referred to in Section 10.07(g), counterparty to
a Swap Contract, Eligible Assignee of or Participant in, or any prospective
Eligible Assignee of or Participant in, any of its rights or obligations under
this Agreement; (f) with the written consent of the Company; (g) to the extent
such Information becomes publicly available other than as a result of a breach
of this Section 10.08; (h) to any Governmental Authority or examiner
(including the National Association of Insurance Commissioners or any other
similar organization) regulating any

 

138

 

Lender; or (i) to any rating agency when required
by it (it being understood that, prior to any such disclosure, such rating
agency shall undertake to preserve the confidentiality of any Information
relating to the Loan Parties received by it from such Lender). In addition, the
Agents and the Lenders may disclose the existence of this Agreement and
information about this Agreement to market data collectors, similar service
providers to the lending industry, and service providers to the Agents and the
Lenders in connection with the administration and management of this Agreement,
the other Loan Documents, the Commitments, and the Credit Extensions. For the
purposes of this Section 10.08, “Information”
means all information received from any Loan Party relating to any Loan Party
or its business, other than any such information that is publicly available to
any Agent or any Lender prior to disclosure by any Loan Party other than as a
result of a breach of this Section 10.08; provided that,
in the case of information received from a Loan Party after the date hereof,
such information is clearly identified at the time of delivery as confidential
or (ii) is delivered pursuant to Section 6.01, 6.02 or 6.03 hereof.

 

SECTION 10.09  Setoff.
In addition to any rights and remedies of the Lenders provided by Law, upon the
occurrence and during the continuance of any Event of Default, each Lender and
its Affiliates is authorized at any time and from time to time, without prior notice
to the Company or any other Loan Party, any such notice being waived by the
Company (on its own behalf and on behalf of each Loan Party and its
Subsidiaries) to the fullest extent permitted by applicable Law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other Indebtedness at any time owing by, such
Lender and its Affiliates to or for the credit or the account of the respective
Loan Parties and their Subsidiaries against any and all Obligations owing to
such Lender and its Affiliates hereunder or under any other Loan Document, now
or hereafter existing, irrespective of whether or not such Agent or such Lender
or Affiliate shall have made demand under this Agreement or any other Loan
Document and although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Company and the Administrative Agent in
writing after any such set off and application made by such Lender; provided that the failure to give such notice shall not
affect the validity of such setoff and application. The rights of the
Administrative Agent and each Lender under this Section 10.09 are in
addition to other rights and remedies (including other rights of setoff) that
the Administrative Agent and such Lender may have.

 

SECTION 10.10  Interest
Rate Limitation. Notwithstanding anything to the contrary contained in any
Loan Document, the interest paid or agreed to be paid under the Loan Documents
shall not exceed the maximum rate of non-usurious interest permitted by
applicable Law (the “Maximum Rate”).
If any Agent or any Lender shall receive interest in an amount that exceeds the
Maximum Rate, the excess interest shall be applied to the principal of the
Loans or, if it exceeds such unpaid principal, refunded to the Company. In
determining whether the interest contracted for, charged, or received by an
Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent
permitted by applicable Law, (a) characterize any payment that is not principal
as an expense, fee, or premium rather than interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

 

139

 

SECTION 10.11  Counterparts.
This Agreement and each other Loan Document may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery by facsimile
transmission or other electronic transmission (i.e. a “pdf” or “tif”) of an
executed counterpart of a signature page to this Agreement and each other Loan
Document shall be effective as delivery of an original executed counterpart of
this Agreement and such other Loan Document. The Agents may also require that
any such documents and signatures delivered by facsimile transmission or other
electronic transmission be confirmed by a manually signed original thereof; provided that the failure to request or deliver the same
shall not limit the effectiveness of any document or signature delivered by
facsimile transmission or other electronic transmission.

 

SECTION 10.12  Integration.
This Agreement, together with the other Loan Documents, comprises the complete
and integrated agreement of the parties on the subject matter hereof and
thereof and supersedes all prior agreements, written or oral, on such subject
matter. In the event of any conflict between the provisions of this Agreement
and those of any other Loan Document, the provisions of this Agreement shall
control; provided that the inclusion of
supplemental rights or remedies in favor of the Agents or the Lenders in any
other Loan Document shall not be deemed a conflict with this Agreement. Each
Loan Document was drafted with the joint participation of the respective
parties thereto and shall be construed neither against nor in favor of any
party, but rather in accordance with the fair meaning thereof.

 

SECTION 10.13  Survival
of Representations and Warranties. All representations and warranties made
hereunder and in any other Loan Document or other document delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. Such representations and warranties
have been or will be relied upon by each Agent and each Lender, regardless of
any investigation made by any Agent or any Lender or on their behalf and
notwithstanding that any Agent or any Lender may have had notice or knowledge
of any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied (other than Obligations under Secured Hedge
Agreements, Cash Management Obligations or contingent indemnification
obligations not then due and payable) or any Letter of Credit shall remain
outstanding.

 

SECTION 10.14  Severability.
If any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, the legality, validity and enforceability of
the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby. The invalidity of a provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.

 

SECTION 10.15  Tax
Forms. (a)  (i) Each Lender and Agent that is not a “United
States person” within the meaning of Section 7701(a)(30) of the Code
(each, a “Foreign Lender”) shall deliver to the
Company and the Administrative Agent, on or prior to the date which is ten (10)
Business Days after the Closing Date (or upon accepting an assignment of an interest
herein), two duly signed, properly completed copies of either IRS Form W-8BEN
or any successor thereto (relating to such Foreign Lender and entitling it to
an exemption from, or reduction of, United States withholding tax on all
payments to be made to such Foreign Lender by the Company or any other Loan
Party pursuant to this Agreement or any other Loan

 

140

 

Document) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Foreign Lender by the Company or
any other Loan Party pursuant to this Agreement or any other Loan Document) or
such other evidence reasonably satisfactory to the Company and the
Administrative Agent that such Foreign Lender is entitled to an exemption from,
or reduction of, United States withholding tax, including any exemption
pursuant to Section 871(h) or 881(c) of the Code, and in the case of a
Foreign Lender claiming such an exemption under Section 881(c) of the
Code, a certificate that establishes in writing to the Company and the
Administrative Agent that such Foreign Lender is not (i) a “bank” as
defined in Section 881(c)(3)(A) of the Code, (ii) a 10-percent
stockholder within the meaning of Section 871(h)(3)(B) of the Code, or
(iii) a controlled foreign corporation related to the Company with the
meaning of Section 864(d) of the Code. Thereafter and from time to time at
the request of the Company in writing, each such Foreign Lender shall (A)
promptly submit to the Company and the Administrative Agent such additional
duly completed and signed copies of one or more of such forms or certificates
(or such successor forms or certificates as shall be adopted from time to time
by the relevant United States taxing authorities) as may then be available under
then current United States Laws and regulations to avoid, or such evidence as
is reasonably satisfactory to the Company and the Administrative Agent of any
available exemption from, or reduction of, United States withholding taxes in
respect of all payments to be made to such Foreign Lender by the Company or
other Loan Party pursuant to this Agreement, or any other Loan Document, in
each case, (1) on or before the date that any such form, certificate or other
evidence expires or becomes obsolete, (2) after the occurrence of any event
requiring a change in the most recent form, certificate or evidence previously
delivered by it to the Company and the Administrative Agent and (3) from time
to time thereafter if reasonably requested by the Company or the Administrative
Agent, and (B) promptly notify the Company and the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.

 

(ii)           Each Foreign
Lender, to the extent it does not act or ceases to act for its own account with
respect to any portion of any sums paid or payable to such Foreign Lender under
any of the Loan Documents (for example, in the case of a typical participation
by such Foreign Lender), shall deliver to the Company and the Administrative
Agent on the date when such Foreign Lender ceases to act for its own account
with respect to any portion of any such sums paid or payable, and at such other
times as may be necessary in the determination of the Company or the
Administrative Agent (in either case, in the reasonable exercise of its
discretion), (A) two duly signed completed copies of the forms or statements
required to be provided by such Foreign Lender as set forth above, to establish
the portion of any such sums paid or payable with respect to which such Foreign
Lender acts for its own account that is not subject to United States
withholding tax, and (B) two duly signed completed copies of IRS Form W-8IMY
(or any successor thereto), together with any information such Foreign Lender
chooses to transmit with such form, and any other certificate or statement of
exemption required under the Code, to establish that such Foreign Lender is not
acting for its own account with respect to a portion of any such sums payable
to such Foreign Lender.

 

(iii)          The Company shall
not be required to pay any additional amount or any indemnity payment under
Section 3.01 to (A) any Foreign Lender if such Foreign Lender shall have
failed to satisfy the foregoing provisions of this Section 10.15(a), or
(B) any

 

141

 

U.S. Lender if
such U.S. Lender shall have failed to satisfy the provisions of
Section 10.15(b); provided that
(i) if such Lender shall have satisfied the requirement of this or
Section 10.15(b), as applicable, on the date such Lender became a Lender
or ceased to act for its own account with respect to any payment under any of
the Loan Documents, nothing in this Section 10.15(a) or
Section 10.15(b) shall relieve the Company of its obligation to pay any
amounts pursuant to Section 3.01 in the event that, as a result of any
change in any applicable Law, treaty or governmental rule, regulation or order,
or any change in the interpretation, administration or application thereof,
such Lender is no longer properly entitled to deliver forms, certificates or
other evidence at a subsequent date establishing the fact that such Lender or
other Person for the account of which such Lender receives any sums payable
under any of the Loan Documents is not subject to withholding or is subject to
withholding at a reduced rate and (ii) nothing in this
Section 10.15(a) shall relieve the Company of its obligation to pay any
amounts pursuant to Section 3.01 in the event that the requirements of
Section 10.15(a)(ii) have not been satisfied if the Company is entitled,
under applicable Law, to rely on any applicable forms and statements required
to be provided under this Section 10.15 by the Foreign Lender that does
not act or has ceased to act for its own account under any of the Loan
Documents, including in the case of a typical participation.

 

(iv)          The Administrative
Agent may deduct and withhold any taxes required by any Laws to be deducted and
withheld from any payment under any of the Loan Documents.

 

(b)           Each Lender and Agent that is a “United
States person” within the meaning of Section 7701(a)(30) of the Code
(each, a “U.S. Lender”) shall
deliver to the Administrative Agent and the Company two duly signed, properly
completed copies of IRS Form W-9 on or prior to the Closing Date (or on or
prior to the date it becomes a party to this Agreement), certifying that such
U.S. Lender is entitled to an exemption from United States backup withholding
tax, or any successor form. If such U.S. Lender fails to deliver such forms,
then the Administrative Agent may withhold from any payment to such U.S. Lender
an amount equivalent to the applicable backup withholding tax imposed by the
Code.

 

SECTION 10.16  No
Advisory or Fiduciary Responsibility. In connection with all aspects of
each transaction contemplated hereby, the Company and each other Loan Party
acknowledge and agree that:  (i) the
Facilities provided hereunder on the date hereof and any arranging of the
Facilities by the Arrangers prior to the date hereof are arm’s-length commercial
transactions between the Company and each other Loan Party on the one hand, and
the Administrative Agent and the Arrangers on the other hand, and the Company
and each other Loan Party are capable of evaluating and understanding, and
understand and accept the terms, risks and conditions of the transactions
contemplated hereby; (ii) in connection with the process leading to such
transactions prior to the date hereof, the Administrative Agent and the
Arrangers have been acting solely as principals and are not the financial
advisors, agents or fiduciaries, for the Company or any other Loan Party; (iii)
neither the Administrative Agent nor any Arranger has assumed an advisory,
agency or fiduciary responsibility in favor of the Company or any other Loan
Party with respect to any of the transactions contemplated hereby or the
process leading thereto and neither the Administrative Agent nor any Arranger,
in their capacity as such, has any obligation to the Company or any other Loan
Party with respect to the transactions

 

142

 

contemplated hereby except those obligations expressly
set forth herein and in the other Loan Documents; (iv) the Administrative Agent
and the Arrangers and their respective Affiliates may be engaged in a broad
range of transactions that involve interests that differ from the Company and
the other Loan Parties and neither the Administrative Agent nor any Arranger
has any obligation to disclose any of such interests by virtue of any advisory,
agency or fiduciary relationship; and (v) the Administrative Agent and the
Arrangers have not provided any legal, accounting, regulatory or tax advice
with respect to any of the transactions contemplated hereby prior to the date
hereof and each of the Company and the other Loan Parties has consulted its own
legal, accounting, regulatory and tax advisors to the extent it has deemed
appropriate.

 

SECTION 10.17  GOVERNING
LAW. (a)  THIS AGREEMENT AND EACH OTHER LOAN DOCUMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.

 

(b)           ANY LEGAL ACTION OR PROCEEDING
ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO
ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF
NEW YORK SITTING IN NEW YORK CITY OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER, HOLDINGS, EACH AGENT AND EACH LENDER CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE
BORROWER, HOLDINGS, EACH AGENT AND EACH LENDER IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED THERETO.

 

SECTION 10.18  WAIVER
OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER ANY LOAN DOCUMENT OR IN ANY WAY CONNECTED WITH OR RELATED
OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT
TO ANY LOAN DOCUMENT, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR
OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION 10.18 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

 

143

 

SECTION 10.19  Binding
Effect. This Agreement shall become effective when it shall have been
executed by the Company and Holdings and the Administrative Agent shall have
been notified by each Lender, Swing Line Lender and L/C Issuer that each such
Lender, Swing Line Lender and L/C Issuer has executed it and thereafter shall
be binding upon and inure to the benefit of the Company, each Agent and each
Lender and their respective successors and assigns, except that the Company
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Lenders except as permitted by
Section 7.04.

 

SECTION 10.20  Electronic
Execution of Assignments. The words “execution,” “signed,” “signature,” and
words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form,
each of which shall be of the same legal effect, validity or enforceability as
a manually executed signature or the use of a paper-based recordkeeping system,
as the case may be, to the extent and as provided for in any applicable law,
including the Federal Electronic Signatures in Global and National Commerce
Act, the New York State Electronic Signatures and Records Act, or any other
similar state laws based on the Uniform Electronic Transactions Act.

 

SECTION 10.21  USA
PATRIOT Act. Each Lender hereby notifies the Company that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is
required to obtain, verify and record information that identifies the Company,
which information includes the name and address of the Company and other
information that will allow such Lender to identify the Company in accordance
with the Act.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT
BLANK.]

 

144

 

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

 

	
   

  	
  ENCORE MEDICAL FINANCE LLC,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ Harry Zimmerman

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title:

  
					

 

145

 

	
   

  	
  ENCORE MEDICAL HOLDINGS LLC,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ Harry Zimmerman

  	
   

  
	
   

  	
    Name:

  
	
   

  	
    Title:

  
					

 

146

 

	
   

  	
  BANK OF AMERICA, N.A.,
  as Administrative

  Agent, L/C Issuer, Swing Line Lender and Lender

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ Alysa Trakas

  	
   

  
	
   

  	
    Name: Alysa Trakas

  
	
   

  	
    Title: Vice President

  
					

 

147

 

	
   

  	
  BANC OF AMERICA SECURITIES LLC,

  as Arranger and Book Runner

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ K. James Pirouz

  	
   

  
	
   

  	
    Name: K. James Pirouz

  
	
   

  	
    Title: Principal

  
					

 

148

 

	
   

  	
  CREDIT SUISSE, CAYMAN ISLANDS
  BRANCH,

  as Lender

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ David Dodd

  	
   

  
	
   

  	
    Name: David Dodd

  
	
   

  	
    Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ Mikhail Faybousovich

  	
   

  
	
   

  	
    Name: Mikhail Faybousovich

  
	
   

  	
    Title: Associate

  
					

 

149

 

	
   

  	
  CREDIT SUISSE SECURITIES (USA)
  LLC,

  as Syndication Agent, Arranger and Book Runner,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ Richard B. Corey

  	
   

  
	
   

  	
    Name: Richard B. Corey

  
	
   

  	
    Title: Managing Director

  
					

 

150

 

	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION, as Documentation Agent and as

  Lender,

  
	
   

  	
   

  
	
   

  	
  by

  	
   

  
	
   

  	
  /s/ Peter B. Zone

  	
   

  
	
   

  	
    Name: Peter B. Zone

  
	
   

  	
    Title: Its Duly Authorized Signatory

  
					

 

151

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