Document:

EXHIBIT
10.43

 

EIGHTH
AMENDMENT TO

CREDIT AND SECURITY AGREEMENT

 

THIS EIGHTH
AMENDMENT TO CREDIT AND SECURITY AGREEMENT (this “Amendment”), dated as
of November 6, 2003, is entered into between WELLS FARGO BUSINESS CREDIT, INC.,
a Minnesota corporation (the “Lender”), and NATURADE, INC., a Delaware
corporation (the “Borrower”).

 

RECITALS

 

A.                                   The
Borrower and the Lender have entered into a Credit and Security Agreement dated
as of January 27, 2000, as amended by that certain First Amendment to Credit
and Security Agreement dated as of November 16, 2000, by that certain Second
Amendment to Credit and Security Agreement dated as of January 3, 2001, by that
certain Third Amendment to Credit and Security Agreement dated as of May 14,
2001, that certain Fourth Amendment to Credit and Security Agreement dated as
of December 20, 2001, that certain Fifth Amendment to Credit and Security
Agreement dated as of September 19, 2002 (the “Fifth Amendment”), that
certain Sixth Amendment to Credit and Security Agreement and Waiver dated as of
March 24, 2003, and that certain Seventh Amendment to Credit and Security
Agreement and Waiver dated as of April 15, 2003 (as amended, the “Credit
Agreement”).  Capitalized terms used
herein have the meanings given to them in the Credit Agreement unless otherwise
specified.

 

B.                                     The
Lender is willing to amend the Credit Agreement pursuant to the terms and
conditions set forth herein.  The
Borrower is entering into this Amendment with the understanding and agreement
that, except as specifically provided herein, none of the Lender’s rights or
remedies as set forth in the Credit Agreement is being waived or modified by
the terms of this Amendment.

 

AMENDMENT

 

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

 

Amendments to Credit Agreement.

 

The first
sentence of Section 2.6 is hereby amended and restated to read in its entirety
as follows:

 

“This Agreement and the other Loan Documents shall become effective as
of January 27, 2000 and shall continue in full force and effect for a term
ending on March 31, 2004 (the “Maturity Date”), unless earlier
terminated by Lender or Borrower pursuant to the terms hereof.

 

1

 

Release of the Availability Reserve.  The Availability Reserve established in the
amount of $175,000 pursuant to the Fifth Amendment is hereby released as of the
date hereof.

 

Amendment Fee.  The Borrower shall pay to Lender in cash as of the date hereof a
fully earned, non-refundable fee in the amount of Twenty Thousand Dollars
($20,000) in consideration of Lender’s execution of this Amendment (the “Amendment
Fee”)

 

Release; Covenant Not to Sue.

 

The Borrower
hereby absolutely and unconditionally releases and forever discharges the
Lender, and any and all participants, parent corporations, subsidiary
corporations, affiliated corporations, insurers, indemnitors, successors and
assigns thereof, together with all of the present and former directors,
officers, agents and employees of any of the foregoing (each a “Released
Party”), from any and all claims, demands or causes of action of any kind,
nature or description, whether arising in law or equity or upon contract or
tort or under any state or federal law or otherwise, which the Borrower has
had, now has or has made claim to have against any such person for or by reason
of any act, omission, matter, cause or thing whatsoever arising from the
beginning of time to and including the date of this Amendment, whether such
claims, demands and causes of action are matured or unmatured or known or
unknown.  It is the intention of the
Borrower in providing this release that the same shall be effective as a bar to
each and every claim, demand and cause of action specified, and in furtherance
of this intention it waives and relinquishes all rights and benefits under
Section 1542 of the Civil Code of the State of California, which provides:

 

“A GERENAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MIGHT HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.”

 

The Borrower
acknowledges that it may hereafter discover facts different from or in addition
to those now known or believed to be true with respect to such claims, demands,
or causes of action and agrees that this instrument shall be and remain
effective in all respects notwithstanding any such differences or additional
facts.  The Borrower understands,
acknowledges and agrees that the release set forth above may be pleaded as a
full and complete defense and may be used as a basis for an injunction against
any action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such release.

 

The Borrower,
on behalf of itself and its successors, assigns, and other legal
representatives, hereby absolutely, unconditionally and irrevocably, covenants
and agrees with and in favor of each Released Party above that it will not sue
(at law, in equity, in any regulatory proceeding or otherwise) any Released
Party on the basis of any claim released, remised and discharged by Borrower
pursuant to the above release.  If the
Borrower or any of its successors, assigns or other legal representations
violates the foregoing covenant, the Borrower, for itself and its successors,
assigns and legal representatives, agrees to pay, in addition to such other
damages

 

2

 

as any Released Party may
sustain as a result of such violation, all attorneys’ fees and costs incurred
by such Released Party as a result of such violation.

 

No Other Changes.  Except as explicitly amended by this Amendment, all of the terms
and conditions of the Credit Agreement shall remain in full force and effect
and shall apply to any advance or letter of credit thereunder.

 

Conditions Precedent.  This Amendment shall be effective when the
Lender shall have received each of the following in substance and form
acceptable to the Lender in its sole discretion:

 

the Amendment Fee;

 

this Amendment executed by the Borrower and the Lender in a sufficient
number or original counterparts for distribution to the parties hereto;

 

the representations and warranties set forth herein and in the Loan
Agreement must be true and correct; and

 

all other documents and legal matters in connection with the
transaction contemplated by this Amendment shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to the
Lender.

 

Representations and Warranties.  The Borrower hereby represents and warrants
to the Lender as follows:

 

The Borrower
has all requisite power and authority to execute this Amendment and to perform
all of its obligations hereunder, and this Amendment has been duly executed and
delivered by the Borrower and constitutes the legal, valid and binding
obligation of the Borrower, enforceable in accordance with its terms.

 

The execution,
delivery and performance by the Borrower of this Amendment have been duly
authorized by all necessary corporate action and do not (i) require any
authorization, consent or approval by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
(ii) violate any provision of any law, rule or regulation or of any order,
writ, injunction or decree presently in effect, having applicability to the
Borrower, or the articles of incorporation or by-laws of the Borrower, or
(iii) result in a breach of or constitute a default under any indenture or
loan or credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound or
affected.

 

All of the
representations and warranties contained in the Credit Agreement are correct on
and as of the date hereof as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an earlier
date.

 

This Amendment
has been entered into without force or duress, of the free will of
Borrower.  Borrower’s decision to enter
into this Amendment is a fully informed decision and

 

3

 

Borrower is aware of all legal
and other ramifications of such decision. 
Borrower has read and understands this Amendment, has consulted with and
been represented by legal counsel in connection herewith, and has been advised
by its counsel of its rights and obligations hereunder and thereunder.

 

No Waiver. 
The execution of this Amendment and acceptance of any other documents
related hereto shall not be deemed to be a waiver of any Event of Default under
the Credit Agreement or breach, default or event of default under any other
Financing Agreement, whether or not known to the Lender and whether or not
existing on the date of this Amendment.

 

Costs and Expenses.  The Borrower hereby reaffirms its agreement under the Credit
Agreement to pay or reimburse the Lender on demand for all costs and expenses
incurred by the Lender in connection with the Loan Documents, including without
limitation all reasonable fees and disbursements of legal counsel.  Without limiting the generality of the
foregoing, the Borrower specifically agrees to pay all fees and disbursements
of counsel to the Lender for the services performed by such counsel in
connection with the preparation of this Amendment and the documents and
instruments incidental hereto.  The
Borrower hereby agrees that the Lender may, at any time or from time to time in
its sole discretion and without further authorization by the Borrower, make a
loan to the Borrower under the Credit Agreement, or apply the proceeds of any
loan, for the purpose of paying any such fees, disbursements, costs and
expenses.

 

Integration. 
This Amendment, together with the other Loan Documents, incorporates all
negotiations of the parties hereto with respect to the subject matter hereof
and is the final expression and agreement of the parties hereto with respect to
the subject matter hereof.

 

Choice of Law.  The validity of this Amendment, its construction, interpretation
and enforcement, the rights of the parties hereunder, shall be determined
under, governed by, and construed in accordance with the internal laws of the
State of California governing contracts only to be performed in that State.

 

Reference to and Effect on the Loan Documents.

 

Upon and after the effectiveness of this Amendment, each reference in
the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of
like import referring to the Credit Agreement, and each reference in all other
documents or agreements related thereto, including the other Loan Documents, to
“the Credit Agreement”, “thereof” or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement as
modified and amended hereby.

 

To the extent that any terms and conditions in any of the Loan
Documents or any documents or agreements related thereto shall contradict or be
in conflict with any terms or conditions of the Credit Agreement, after giving
effect to this Amendment, such terms and conditions are hereby deemed modified
or amended accordingly to reflect the terms and conditions of the Credit
Agreement as modified or amended hereby.

 

4

 

Miscellaneous.  This Amendment and the acknowledgment attached hereto may be
executed by facsimile and in any number of counterparts, each of which when so
executed and delivered shall be deemed an original and all of which
counterparts, taken together, shall constitute one and the same instrument.

 

Submission of Amendment.  The submission of this Amendment to the
parties or their agents or attorneys for review or signature does not
constitute a commitment by Lender to waive any of its rights and remedies under
the Loan Documents, and this Amendment shall have no binding force or effect
until all of the conditions to the effectiveness of this Amendment have been
satisfied as set forth herein.

 

[Signatures follow on next page.]

 

5

 

IN WITNESS
WHEREOF, the parties have entered into this Amendment as of the date first
above written.

 

	
   

  	
   

  	
  NATURADE, INC.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Bill D. Stewart

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Bill D. Stewart

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  	
   

  
	
   

  	
   

  	
  WELLS FARGO BUSINESS CREDIT, INC.,

  
	
   

  	
   

  	
  a Minnesota corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   /s/ Tom Makowski

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tom Makowski

  	
   

  
	
   

  	
   

  	
  Title:

  	
  AVP

  	
   

  
											

 

6Exhibit - 10.1

 

 

 

CREDIT AGREEMENT

 

among

 

DJ ORTHOPEDICS, LLC,

as Borrower,

 

DJ ORTHOPEDICS, INC.,

 

THE LENDERS NAMED HEREIN,

 

WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent,

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Syndication Agent,

 

and

 

BANK OF AMERICA, N.A.,

BANK OF THE WEST

and

UNION BANK OF CALIFORNIA, N.A.,

as Documentation Agents

 

 

$130,000,000 Senior Secured Credit Facilities

 

 

WACHOVIA CAPITAL MARKETS, LLC

Sole Bookrunner and Sole Lead Arranger

 

 

Dated as of November 26, 2003

 

 

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE I

  	
   

  
	
   

  	
   

  
	
  DEFINITIONS

  	
   

  
	
   

  	
   

  
	
  1.1

  	
  Defined Terms

  	
   

  
	
  1.2

  	
  Accounting
  Terms

  	
   

  
	
  1.3

  	
  Other Terms; Construction.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
   

  	
   

  
	
  AMOUNT AND TERMS OF THE LOANS

  	
   

  
	
   

  	
   

  
	
  2.1

  	
  Commitments.

  	
   

  
	
  2.2

  	
  Borrowings.

  	
   

  
	
  2.3

  	
  Disbursements;
  Funding Reliance; Domicile of Loans.

  	
   

  
	
  2.4

  	
  Evidence of Debt; Notes.

  	
   

  
	
  2.5

  	
  Termination and Reduction of Commitments and Swingline Commitment.

  	
   

  
	
  2.6

  	
  Mandatory Payments and Prepayments.

  	
   

  
	
  2.7

  	
  Voluntary Prepayments.

  	
   

  
	
  2.8

  	
  Interest.

  	
   

  
	
  2.9

  	
  Fees

  	
   

  
	
  2.10

  	
  Interest
  Periods

  	
   

  
	
  2.11

  	
  Conversions and Continuations.

  	
   

  
	
  2.12

  	
  Method of Payments; Computations.

  	
   

  
	
  2.13

  	
  Recovery of Payments.

  	
   

  
	
  2.14

  	
  Use
  of Proceeds

  	
   

  
	
  2.15

  	
  Pro Rata Treatment.

  	
   

  
	
  2.16

  	
  Increased Costs; Change in Circumstances;
  Illegality; etc.

  	
   

  
	
  2.17

  	
  Taxes.

  	
   

  
	
  2.18

  	
  Compensation

  	
   

  
	
  2.19

  	
  Replacement of Lenders; Mitigation of
  Costs.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
   

  	
   

  
	
  LETTERS OF CREDIT

  	
   

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Issuance

  	
   

  
	
  3.2

  	
  Notices

  	
   

  
	
  3.3

  	
  Participations

  	
   

  
	
  3.4

  	
  Reimbursement

  	
   

  
	
  3.5

  	
  Payment by Revolving Loans

  	
   

  
	
  3.6

  	
  Payment to Revolving Credit Lenders

  	
   

  
	
  3.7

  	
  Obligations Absolute

  	
   

  
	
  3.8

  	
  Cash Collateral Account

  	
   

  

 

i

 

	
  3.9

  	
  Effectiveness

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
   

  	
   

  
	
  CONDITIONS OF BORROWING

  	
   

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Conditions of Initial Borrowing

  	
   

  
	
  4.2

  	
  Conditions
  of All Borrowings

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
   

  	
   

  
	
  REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Corporate Organization and Power

  	
   

  
	
  5.2

  	
  Authorization; Enforceability

  	
   

  
	
  5.3

  	
  No
  Violation

  	
   

  
	
  5.4

  	
  Governmental and Third-Party Authorization;
  Permits

  	
   

  
	
  5.5

  	
  Litigation

  	
   

  
	
  5.6

  	
  Taxes

  	
   

  
	
  5.7

  	
  Subsidiaries

  	
   

  
	
  5.8

  	
  Full
  Disclosure

  	
   

  
	
  5.9

  	
  Margin Regulations

  	
   

  
	
  5.10

  	
  No Material Adverse Effect

  	
   

  
	
  5.11

  	
  Financial Matters.

  	
   

  
	
  5.12

  	
  Ownership of Properties

  	
   

  
	
  5.13

  	
  ERISA.

  	
   

  
	
  5.14

  	
  Environmental Matters

  	
   

  
	
  5.15

  	
  Compliance with Laws

  	
   

  
	
  5.16

  	
  Intellectual Property

  	
   

  
	
  5.17

  	
  Regulated Industries

  	
   

  
	
  5.18

  	
  Insurance

  	
   

  
	
  5.19

  	
  Material Contracts

  	
   

  
	
  5.20

  	
  Deposit
  Accounts

  	
   

  
	
  5.21

  	
  Security Documents.

  	
   

  
	
  5.22

  	
  Labor
  Relations

  	
   

  
	
  5.23

  	
  BGS
  Acquisition.

  	
   

  
	
  5.24

  	
  No Burdensome Restrictions

  	
   

  
	
  5.25

  	
  Certain Tax Matters

  	
   

  
	
  5.26

  	
  OFAC;
  PATRIOT Act.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
   

  	
   

  
	
  AFFIRMATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Financial Statements

  	
   

  
	
  6.2

  	
  Other Business and Financial Information

  	
   

  
	
  6.3

  	
  Existence; Franchises; Maintenance of
  Properties

  	
   

  
	
  6.4

  	
  Compliance with Laws

  	
   

  

 

ii

 

	
  6.5

  	
  Payment of Obligations

  	
   

  
	
  6.6

  	
  Insurance

  	
   

  
	
  6.7

  	
  Maintenance of Books and Records; Inspection

  	
   

  
	
  6.8

  	
  Interest Rate Protection

  	
   

  
	
  6.9

  	
  Permitted Acquisitions

  	
   

  
	
  6.10

  	
  Creation or Acquisition of Subsidiaries

  	
   

  
	
  6.11

  	
  Additional Security

  	
   

  
	
  6.12

  	
  Environmental Laws

  	
   

  
	
  6.13

  	
  PATRIOT Act Compliance

  	
   

  
	
  6.14

  	
  Further Assurances

  	
   

  
	
  6.15

  	
  Post-Closing Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
   

  	
   

  	
   

  
	
  FINANCIAL COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Total Leverage Ratio

  	
   

  
	
  7.2

  	
  Senior Leverage Ratio

  	
   

  
	
  7.3

  	
  Interest Coverage Ratio

  	
   

  
	
  7.4

  	
  Fixed Charge Ratio

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
   

  	
   

  	
   

  
	
  NEGATIVE COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Merger; Consolidation

  	
   

  
	
  8.2

  	
  Indebtedness

  	
   

  
	
  8.3

  	
  Liens

  	
   

  
	
  8.4

  	
  Asset Dispositions

  	
   

  
	
  8.5

  	
  Investments

  	
   

  
	
  8.6

  	
  Restricted Payments.

  	
   

  
	
  8.7

  	
  Transactions with Affiliates

  	
   

  
	
  8.8

  	
  Lines
  of Business.

  	
   

  
	
  8.9

  	
  Sale-Leaseback Transactions

  	
   

  
	
  8.10

  	
  Certain Amendments

  	
   

  
	
  8.11

  	
  Limitation on Certain Restrictions

  	
   

  
	
  8.12

  	
  No Other Negative Pledges

  	
   

  
	
  8.13

  	
  Fiscal
  Year

  	
   

  
	
  8.14

  	
  Accounting Changes

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
   

  	
   

  	
   

  
	
  EVENTS OF DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Events
  of Default

  	
   

  
	
  9.2

  	
  Remedies: Termination of Commitments,
  Acceleration, etc.

  	
   

  
	
  9.3

  	
  Remedies:
  Set-Off

  	
   

  

 

iii

 

	
  ARTICLE X

  	
   

  
	
   

  	
   

  	
   

  
	
  THE ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Appointment

  	
   

  
	
  10.2

  	
  Nature
  of Duties

  	
   

  
	
  10.3

  	
  Exculpatory Provisions

  	
   

  
	
  10.4

  	
  Reliance by Administrative Agent

  	
   

  
	
  10.5

  	
  Non-Reliance on Administrative Agent and
  Other Lenders

  	
   

  
	
  10.6

  	
  Notice
  of Default

  	
   

  
	
  10.7

  	
  Indemnification

  	
   

  
	
  10.8

  	
  The Administrative Agent in its Individual
  Capacity

  	
   

  
	
  10.9

  	
  Successor Administrative Agent

  	
   

  
	
  10.10

  	
  Collateral Matters.

  	
   

  
	
  10.11

  	
  Issuing Lender and Swingline Lender

  	
   

  
	
  10.12

  	
  Other
  Agents, Managers

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  11.1

  	
  Fees
  and Expenses

  	
   

  
	
  11.2

  	
  Indemnification

  	
   

  
	
  11.3

  	
  Governing Law; Consent to Jurisdiction

  	
   

  
	
  11.4

  	
  Waiver of Jury Trial

  	
   

  
	
  11.5

  	
  Notices.

  	
   

  
	
  11.6

  	
  Amendments,
  Waivers, etc

  	
   

  
	
  11.7

  	
  Assignments,
  Participations.

  	
   

  
	
  11.8

  	
  No Waiver

  	
   

  
	
  11.9

  	
  Successors and Assigns

  	
   

  
	
  11.10

  	
  Survival

  	
   

  
	
  11.11

  	
  Severability

  	
   

  
	
  11.12

  	
  Construction

  	
   

  
	
  11.13

  	
  Confidentiality

  	
   

  
	
  11.14

  	
  Counterparts; Effectiveness

  	
   

  
	
  11.15

  	
  Disclosure of Information

  	
   

  
	
  11.16

  	
  Entire
  Agreement

  	
   

  

 

EXHIBITS

 

	
  Exhibit A-1

  	
  Form of Term
  Note

  
	
  Exhibit A-2

  	
  Form of
  Revolving Note

  
	
  Exhibit A-3

  	
  Form of
  Swingline Note

  
	
  Exhibit B-1

  	
  Form of
  Notice of Borrowing

  
	
  Exhibit B-2

  	
  Form of
  Notice of Swingline Borrowing

  
	
  Exhibit B-3

  	
  Form of
  Notice of Conversion/Continuation

  
	
  Exhibit B-4

  	
  Form of
  Letter of Credit Notice

  

 

iv

 

	
  Exhibit C

  	
  Form of
  Compliance Certificate

  
	
  Exhibit D

  	
  Form of
  Assignment and Acceptance

  
	
  Exhibit E

  	
  Form of
  Security Agreement

  
	
  Exhibit F

  	
  Form of
  Pledge Agreement

  
	
  Exhibit G

  	
  Form of
  Guaranty Agreement

  
	
  Exhibit H

  	
  Form of
  Financial Condition Certificate

  

 

SCHEDULES

 

	
  Schedule
  1.1(a)

  	
  Commitments
  and Notice Addresses

  
	
  Schedule
  1.1(b)

  	
  BGS EBITDA

  
	
  Schedule 5.1

  	
  Jurisdictions
  of Organization

  
	
  Schedule 5.4

  	
  Consents and
  Approvals

  
	
  Schedule 5.5

  	
  Litigation

  
	
  Schedule 5.7

  	
  Subsidiaries

  
	
  Schedule
  5.12

  	
  Real
  Property Interests

  
	
  Schedule
  5.14

  	
  Environmental
  Matters

  
	
  Schedule
  5.16

  	
  Intellectual
  Property

  
	
  Schedule
  5.18

  	
  Insurance
  Coverage

  
	
  Schedule
  5.19

  	
  Material
  Contracts

  
	
  Schedule
  5.26

  	
  Deposit
  Accounts

  
	
  Schedule 8.2

  	
  Indebtedness

  
	
  Schedule 8.3

  	
  Liens

  
	
  Schedule 8.5

  	
  Investments

  
	
  Schedule 8.7

  	
  Transactions
  with Affiliates

  

 

v

 

CREDIT
AGREEMENT

 

THIS CREDIT AGREEMENT,
dated as of the 26th day of November, 2003, is made among DJ ORTHOPEDICS, LLC, a
Delaware limited liability company (the “Borrower”), DJ ORTHOPEDICS, INC., a Delaware
corporation (the “Parent”), the Lenders (as hereinafter defined), WACHOVIA
BANK, NATIONAL ASSOCIATION, as Administrative Agent for the Lenders,
WELLS
FARGO BANK, NATIONAL ASSOCIATION, as Syndication Agent for the
Lenders, and BANK OF AMERICA, N.A., BANK OF THE WEST and UNION BANK
OF CALIFORNIA, N.A., as Documentation Agents for the Lenders.

 

BACKGROUND
STATEMENT

 

The Borrower
has requested that the Lenders make available to the Borrower term loan
facilities in the aggregate principal amount of $100,000,000 and a revolving
credit facility in the aggregate principal amount of $30,000,000.  The Borrower will use the proceeds of these
facilities as provided in Section 2.14.  The Lenders are willing to make available to
the Borrower the credit facilities described herein subject to and on the terms
and conditions set forth in this Agreement.

 

AGREEMENT

 

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

 

ARTICLE I

DEFINITIONS

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Applicable
Percentage” shall mean, at any time from and after the Closing Date, the
applicable percentage (i) to be added to the Base Rate for purposes of
determining the Adjusted Base Rate and (ii) to be added to the LIBOR Rate
for purposes of determining the Adjusted LIBOR Rate, in each case as determined
under the following matrix with reference to the Total Leverage Ratio (provided
that the Applicable Percentage for Swingline Loans at any time shall be equal
to (i) the Applicable Percentage at such time for Revolving Loans that are
Base Rate Loans minus (ii) 0.50%):

 

2

 

	
   

  	
   

  	
   

  	
   

  	
  Revolving
  Loans and Swingline Loans

  	
   

  	
  Term Loans

  	
   

  
	
  Level

  	
   

  	
  Total

  Leverage
  Ratio

  	
   

  	
  Applicable

  LIBOR
  Margin

  	
   

  	
  Applicable
  Base

  Rate Margin

  	
   

  	
  Applicable

  LIBOR
  Margin

  	
   

  	
  Applicable Base

  Rate Margin

  	
   

  
	
  I

  	
   

  	
  Greater
  than or equal to 3.75 to 1.0

  	
   

  	
  3.50

  	
  %

  	
  2.50

  	
  %

  	
  2.75

  	
  %

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  Less
  than 3.75 to 1.0 but greater than or equal to 3.25 to 1.0

  	
   

  	
  3.25

  	
  %

  	
  2.25

  	
  %

  	
  2.75

  	
  %

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  Less
  than 3.25 to 1.0 but greater than or equal to 2.75 to 1.0

  	
   

  	
  3.00

  	
  %

  	
  2.00

  	
  %

  	
  2.75

  	
  %

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IV

  	
   

  	
  Less
  than 2.75 to 1.0

  	
   

  	
  2.75

  	
  %

  	
  1.75

  	
  %

  	
  2.75

  	
  %

  	
  1.75

  	
  %

  

 

On each
Adjustment Date (as hereinafter defined), the Applicable Percentage for all
Loans shall be adjusted effective as of such Adjustment Date (based upon the
calculation of the Total Leverage Ratio as of the last day of the Reference
Period to which such Adjustment Date relates) in accordance with the above
matrix; provided, however, that, notwithstanding the foregoing or
anything else herein to the contrary, if at any time the Borrower shall have
failed to deliver any of the financial statements as required by Sections 6.1(b)
or 6.1(c), as the case may be, or
the Compliance Certificate as required by Section 6.2(a), then at all times from
and including the fifth (5th) Business Day following the date on
which such statements and Compliance Certificate are required to have been
delivered until the date on which the same shall have been delivered, each
Applicable Percentage shall be determined based on Level I above
(notwithstanding the actual Total Leverage Ratio).  For purposes of this definition, “Adjustment Date” shall
mean, with respect to any Reference Period of the Borrower beginning with the
Reference Period ending as of the last day of the fourth fiscal quarter of
fiscal year 2003, the day of (or, if such day is not a Business Day, the next
succeeding Business Day) delivery by the Borrower in accordance with Section 6.1(b)
or Section 6.1(c),
as the case may be, of (i) financial statements as of the end of and for
such Reference Period and (ii) a duly completed Compliance Certificate
with respect to such Reference Period. 
From the Closing Date until the first Adjustment Date requiring a change
in any Applicable Percentage as provided herein, each Applicable Percentage
shall be based on Level II above.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

“BGS
Acquisition” shall mean the acquisition of the BGS Business by the Borrower
pursuant to the BGS Asset Purchase Agreement.

 

“BGS Asset
Purchase Agreement” shall mean the Asset Purchase Agreement, dated as of
October 8, 2003, by and among OrthoLogic and the Borrower, as amended,
modified, restated or supplemented from time to time in accordance with the
terms of this Agreement.

 

“BGS
Business” shall mean the “Business” (as defined in the BGS Asset Purchase
Agreement).

 

“BGS EBITDA”
shall mean the “EBITDA” calculations set forth for the BGS Business on Schedule 1.1(b).

 

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

 

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

 

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

 

4

 

“Business
Day” shall mean (i) any day other than a Saturday or Sunday, a legal
holiday or a day on which commercial banks in Charlotte, North Carolina or New
York, New York are authorized or required by law to be closed and (ii) in
respect of any determination relevant to a LIBOR Loan, any such day that is
also a day on which trading in Dollar deposits is conducted by banks in London,
England in the London interbank Eurodollar market.

 

“Capital
Expenditures” shall mean, for any period, the aggregate amount (whether
paid in cash or accrued as a liability) that would, in accordance with GAAP, be
included on the consolidated statement of cash flows of the Parent and its
Subsidiaries for such period as additions to equipment, fixed assets, real
property or improvements or other capital assets (including, without
limitation, Capital Lease Obligations); provided, however, that
Capital Expenditures shall not include any such expenditures (i) for
replacements and substitutions for capital assets, to the extent made with the
proceeds of insurance in accordance with Section 2.6(e), (ii) for
replacements and substitutions for capital assets, to the extent made with
proceeds from the sale, exchange or other disposition of assets as permitted
under Sections 8.4(iv),
8.4(ii) or 8.4(v), or (iii) included within the
Acquisition Amount of any Permitted Acquisition.

 

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

 

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

 

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

 

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

 

“Cash Equivalents”
shall mean (i) securities issued or unconditionally guaranteed or insured
by the United States of America or any agency or instrumentality thereof,
backed by the full faith and credit of the United States of America and
maturing within one year from the date of acquisition, (ii) commercial
paper issued by any Person organized under the laws of the United States of
America, maturing within 180 days from the date of acquisition and, at the time
of acquisition, having a rating of at least A-1 or the equivalent thereof by
Standard & Poor’s Ratings Services or at least P-1 or the equivalent
thereof by Moody’s Investors Service, Inc., (iii) time deposits and
certificates of deposit maturing within 180 days from the date of issuance and
issued by a bank or trust company organized under the laws of the United States
of America

 

5

 

or any state thereof
(y) that has combined capital and surplus of at least $500,000,000 or
(z) that has (or is a subsidiary of a bank holding company that has) a
long-term unsecured debt rating of at least A or the equivalent thereof by
Standard & Poor’s Ratings Services or at least A2 or the equivalent thereof
by Moody’s Investors Service, Inc., (iv) repurchase obligations with a
term not exceeding thirty (30) days with respect to underlying securities of
the types described in clause (i) above entered into with any bank or
trust company meeting the qualifications specified in clause (iii) above,
and (v) money market funds at least ninety-five percent (95%) of the
assets of which are continuously invested in securities of the foregoing types.

 

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

 

“Class”
shall have the meaning given to such term in Section 2.2(a).

 

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

 

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

 

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

 

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

 

“Consolidated
Cash Interest Expense” shall mean, for any Reference Period, Consolidated
Interest Expense for such Reference Period to the extent paid (or required to
be paid) in cash, but excluding amounts paid in connection with the closing of
this Agreement and treated as deferred financing charges under GAAP; provided,
however, that (i) Consolidated Cash Interest Expense for the four
fiscal quarter period ending on the last day of the fourth fiscal quarter of
fiscal year 2003 shall be calculated as Consolidated Cash Interest Expense for
the fourth fiscal quarter of fiscal year 2003 multiplied by 4;
(ii) Consolidated Cash Interest Expense for the four fiscal quarter period
ending on the last day of the first fiscal quarter of fiscal year 2004 shall be
calculated as Consolidated Cash Interest Expense for the period of two fiscal
quarters ending on such date multiplied by 2; and
(iii) Consolidated Cash Interest Expense for the four fiscal quarter
period ending on the last day of the second fiscal quarter of fiscal year 2004
shall be calculated as Consolidated Cash Interest Expense for the period of
three fiscal quarters ending on such date multiplied by 4/3; and provided
further that for purposes of the calculations in clauses (i) through
(iii) above, interest on the Senior Subordinated Notes shall be included on an
accrual basis only.

 

6

 

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

 

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

 

“Consolidated
EBITDA” shall mean, for any Reference Period, the aggregate of
(i) Consolidated Net Income for such Reference Period, plus
(ii) the sum (without duplication) of (A) Consolidated Interest
Expense, (B) federal, state, local and other taxes on or determined by
reference to income, (C) depreciation and amortization, (D) noncash
charges related to Hedge Agreements, (E) noncash expenses resulting from
the grant of stock options to any director, officer or employee of any Credit
Party pursuant to a written plan or agreement, (F) nonrecurring losses,
charges and expenses incurred in connection with (I) the BGS Acquisition and
the transactions contemplated by this Agreement (including fees and expenses
paid in connection with the BGS Acquisition, this Agreement and the
transactions contemplated hereby not to exceed $7,000,000) and (II) Permitted
Acquisitions to the extent such losses, charges and expenses are approved by
the Administrative Agent, and (G) other noncash charges (excluding noncash
charges relating to accounts receivable or inventories) in an aggregate amount
not to exceed $10,000,000 for any fiscal year, in each case under
clauses (A) through (G) above to the extent taken into account in the
calculation of Consolidated Net Income for such Reference Period and all
calculated in accordance with GAAP, minus (iii) noncash gains related
to Hedge Agreements, to the extent taken into account in the calculation of
Consolidated Net Income for such Reference Period and calculated in accordance
with GAAP; provided that if the Borrower or any Subsidiary has made any
Permitted Acquisition or any Asset Disposition outside the ordinary course of
business permitted by Section 8.4 during the relevant
Reference Period for determining Consolidated EBITDA, Consolidated EBITDA for
the relevant Reference Period (1) shall be calculated after giving pro
forma effect thereto, as if such Permitted Acquisition or Asset Disposition
(and any related incurrence, repayment or assumption of Indebtedness, with any
new Indebtedness being deemed to be amortized over the relevant period in
accordance with its terms, and assuming that any Revolving Loans borrowed in
connection with such Permitted Acquisition are repaid with excess cash balances
when available) had occurred on the first day of such Reference Period, but in
the case of a Permitted Acquisition, only so long as the results of the
business being acquired are supported by financial statements or other
financial data reasonably acceptable to the Administrative Agent, and
(2) may include operating expense reductions for such Reference Period
resulting from any Permitted Acquisition that is being given pro forma effect
to the extent that such operating expense reductions (y) would be
permitted pursuant to Article XI of Regulation S-X under the Securities
Act or (z) have been approved by the Required Lenders; and provided further that, notwithstanding the foregoing provisions of this
definition, the portion of Consolidated EBITDA attributable to the BGS Business
for the first three fiscal quarters and the tenth fiscal month of fiscal year
2003 shall be the BGS EBITDA for such period as set forth on Schedule 1.1(b).

 

7

 

“Consolidated
Fixed Charges” shall mean, for any Reference Period, the aggregate (without
duplication) of the following, all determined on a consolidated basis for the
Parent and its Subsidiaries in accordance with GAAP for such Reference Period:
(a) Consolidated Cash Interest Expense, (b) aggregate cash tax
expense for such Reference Period, (c) cash Capital Expenditures for such
Reference Period, (d) the aggregate (without duplication) of all scheduled
payments of principal on Funded Debt (with respect to the Term Loans, as set
forth in Section 2.6(a)) required to have been made by the
Parent and its Subsidiaries during such Reference Period (whether or not such
payments are actually made), including scheduled principal payments with
respect to any Seller Subordinated Indebtedness, (e) the aggregate of all
cash payments made by the Parent and its Subsidiaries during such period in
respect of Contingent Purchase Price Obligations, and (f) the aggregate of
all amounts paid by the Parent or any of its Subsidiaries during such Reference
Period as dividends or distributions in respect of its Capital Stock or to
purchase, redeem, retire or otherwise acquire its Capital Stock.

 

“Consolidated
Funded Senior Debt” shall mean, as of any date of determination, the
aggregate (without duplication) of all Funded Debt of the Parent and its
Subsidiaries as of such date that does not constitute Subordinated
Indebtedness, determined on a consolidated basis in accordance with GAAP.

 

“Consolidated
Interest Expense” shall mean, for any Reference Period, the sum
(without duplication) of (i) total interest expense of the Parent and its
Subsidiaries for such Reference Period in respect of Consolidated Total Funded
Debt (including, without limitation, all such interest expense accrued or
capitalized during such Reference Period, whether or not actually paid during
such Reference Period), determined on a consolidated basis in accordance with
GAAP, (ii) all net amounts payable under or in respect of Hedge
Agreements, to the extent paid or accrued by the Parent and its Subsidiaries
during such Reference Period, and (iii) all recurring unused commitment
fees and other ongoing fees in respect of Funded Debt (including the unused
fees and letter of credit fees provided for under Section 2.9) paid, accrued or capitalized by the Parent
and its Subsidiaries during such Reference Period.

 

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

 

8

 

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

 

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

 

“Contingent
Purchase Price GAAP Amount” shall mean, at any time, the Contingent
Purchase Price Obligation liability that, in accordance with GAAP, should be
recorded as a liability on the balance sheet, or (without duplication) an
expense on the income statement, of the Parent and its Subsidiaries.

 

“Contingent
Purchase Price Obligations” shall mean any earnout obligations or similar
deferred or contingent purchase price obligations of the Borrower or any of its
Subsidiaries incurred or created in connection with an Acquisition.

 

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

 

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

 

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

 

“Credit
Documents” shall mean this Agreement, the Notes, the Letters of Credit, the
Fee Letter, the Security Agreement, the Pledge Agreement, the Guaranty
Agreement, any Mortgages, any other Security Documents, and all other
agreements, instruments, documents and certificates

 

9

 

now or hereafter executed and
delivered to the Administrative Agent or any Lender by or on behalf of the
Borrower or any other Credit Party with respect to this Agreement, in each case
as amended, modified, supplemented or restated from time to time, but specifically
excluding any Hedge Agreement to which the Borrower and any Lender or Affiliate
of any Lender are parties.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Documentation
Agents” shall mean Bank of America, N.A., Bank of the West and Union Bank
of California, N.A. in their capacity as such under Section 10.12, and their
respective successors and permitted assigns in such capacity.

 

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

 

10

 

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

 

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

 

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

 

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

 

11

 

arrangements approved by the
Board of Directors of the Parent, or (v) any issuance of Capital Stock of
the Parent in a Permitted Senior Subordinated Note Redemption.

 

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

 

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

 

“ERISA
Event” shall mean any of the following with respect to a Plan or
Multiemployer Plan, as applicable: 
(i) a Reportable Event, (ii) a complete or partial withdrawal
by the Borrower or any ERISA Affiliate from a Multiemployer Plan that results
in liability under Section 4201 or 4204 of ERISA, or the receipt by the
Borrower or any ERISA Affiliate of notice from a Multiemployer Plan that it is
in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under Section 4041A of
ERISA, (iii) the distribution by the Borrower or any ERISA Affiliate under
Section 4041 of ERISA of a notice of intent to terminate any Plan or the
taking of any action to terminate any Plan, (iv) the commencement of
proceedings by the PBGC under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Plan, or the receipt by
the Borrower or any ERISA Affiliate of a notice from any Multiemployer Plan
that such action has been taken by the PBGC with respect to such Multiemployer
Plan, (v) the institution of a proceeding by any fiduciary of any
Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce Section 515
of ERISA, which is not dismissed within thirty (30) days, (vi) the
imposition upon the Borrower or any ERISA Affiliate of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, or the imposition or threatened imposition of any
Lien upon any assets of the Borrower or any ERISA Affiliate as a result of any
alleged failure to comply with the Internal Revenue Code or ERISA in respect of
any Plan, (vii) the engaging in or otherwise becoming liable for a
nonexempt Prohibited Transaction by the Borrower or any ERISA Affiliate, or a
violation of the applicable requirements of Section 404 or 405 of ERISA or
the exclusive benefit rule under Section 401(a) of the Internal Revenue
Code by any fiduciary of any Plan for which the Borrower or any of its ERISA
Affiliates may be directly or indirectly liable, in each case under this
clause (vii) which has resulted or could reasonably be expected to result
in liability of the Borrower and its ERISA Affiliates in excess of $250,000,
(viii) the occurrence with respect to any Plan of any “accumulated funding
deficiency” (within the meaning of Section 302 of ERISA and
Section 412 of the Internal Revenue Code), whether or not waived, or (ix) the
adoption of an amendment to any Plan that, pursuant to Section 401(a)(29)
of the Internal Revenue Code or Section 307 of ERISA, would result in the
loss of tax-exempt status of the trust of which such Plan is a part if the
Borrower or an ERISA Affiliate fails to timely provide security to such Plan in
accordance with the provisions of such sections.

 

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

 

12

 

“Excess
Cash Flow” shall mean, for any fiscal year of the Parent, (a) the sum
of (i) Consolidated EBITDA for such fiscal year (determined by adding back
thereto, but without duplication, any amounts deducted in the calculation of
Consolidated EBITDA for such fiscal year that were paid, incurred or accrued in
violation of any of the provisions of this Agreement), (ii) an amount
equal to any decrease in Consolidated Working Capital from the first day to the
last day of such fiscal year and (iii) to the extent included in the
calculation of Consolidated EBITDA, the amount of any cash or noncash loss
recognized and included in the Net Cash Proceeds of an Asset Disposition which
has been applied as a prepayment of the Loans pursuant to Section 2.6(f), minus
(b) the sum (without duplication) of (i) Consolidated Interest
Expense in respect of Indebtedness permitted hereunder to the extent paid in
cash during such fiscal year, (ii) aggregate taxes of the Parent and its
Subsidiaries to the extent paid in cash during such fiscal year,
(iii) except to the extent financed with proceeds from the issuance of
Indebtedness or equity securities, Capital Expenditures to the extent permitted
hereunder and to the extent paid in cash during such fiscal year,
(iv) scheduled payments of principal on the Term Loans made during such
fiscal year, (v) optional prepayments on the Term Loans made during such
fiscal year, (vi) optional prepayments on the Revolving Loans made during
such fiscal year that are accompanied by a corresponding permanent reduction in
the Revolving Credit Commitments, (vii) scheduled or mandatory principal
payments on Funded Debt (other than the Loans and Reimbursement Obligations)
made during such fiscal year to the extent permitted under this Agreement
(other than in respect of any revolving credit facility to the extent not
accompanied by a corresponding permanent reduction in the commitments
thereunder), provided that the aggregate amount of any such mandatory
prepayments that may be added back pursuant to this clause in calculating
Excess Cash Flow shall not exceed $1,500,000 for any fiscal year during the
term of this Agreement, (viii) except to the extent financed with proceeds
from the issuance of Indebtedness or equity securities, the amount of any cash
consideration paid during such fiscal year pursuant to Permitted Acquisitions,
(ix) to the extent included in the calculation of Consolidated EBITDA, the
amount of any cash or noncash gain recognized and included in the Net Cash
Proceeds of an Asset Disposition which has been applied as a prepayment of the
Loans pursuant to Section 2.6(f) and (x) an amount
equal to any increase in Consolidated Working Capital from the first day to the
last day of such fiscal year.

 

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

 

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

 

“Existing
Senior Bank Facilities” shall have the meaning given to such term in Section 4.1(i).

 

“Federal
Funds Rate” shall mean, for any period, a fluctuating per annum interest
rate (rounded upwards, if necessary, to the nearest 1/100 of one percentage
point) equal for each day during such period to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the

 

13

 

Federal Reserve Bank of New
York, or if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day on such transactions received by the
Administrative Agent from three federal funds brokers of recognized standing
selected by the Administrative Agent.

 

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

 

“Fee Letter”
shall mean the letter from the Administrative Agent and the Arranger to the
Borrower, dated October 8, 2003, as amended and restated on
November 18, 2003, relating to certain fees payable by the Borrower in
respect of the transactions contemplated by this Agreement, as further amended,
modified, restated or supplemented from time to time.

 

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

 

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

 

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

 

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

 

“Fixed
Charge Coverage Ratio” shall mean, as of the last day of any Reference
Period ending on the last day of a fiscal quarter, the ratio of
(i) Consolidated EBITDA for such Reference Period to
(ii) Consolidated Fixed Charges for such Reference Period.

 

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

 

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

 

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

 

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

 

“Governmental
Authority” shall mean any nation or government, any state or other
political subdivision thereof and any central bank thereof, any municipal,
local, city or county government, and any entity exercising executive,
legislative, judicial, regulatory or

 

14

 

administrative functions of or
pertaining to government, and any corporation or other entity owned or
Controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

 

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

 

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

 

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

 

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

 

15

 

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

 

“Indebtedness”
shall mean, with respect to any Person (without duplication), (i) all
obligations of such Person for borrowed money, (ii) all obligations of
such Person evidenced by notes, bonds, debentures or similar instruments, or
upon which interest payments are customarily made, (iii) the maximum
stated or face amount of all letters of credit and bankers’ acceptances issued
or created for the account of such Person and, without duplication, all drafts
drawn thereunder (to the extent unreimbursed), (iv) all obligations of
such Person to pay the deferred purchase price of property or services
(excluding trade payables incurred in the ordinary course of business and not
more than 90 days past due, provided that up to $500,000 of trade
payables of the Borrower and its Subsidiaries that are more than 90 days past
due may be excluded from “Indebtedness” hereunder), including any Contingent
Purchase Price GAAP Amounts, (v) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by such Person, (vi) all Capital Lease Obligations of
such Person, (vii) all Disqualified Capital Stock issued by such Person,
with the amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends, if any
(for purposes hereof, the “maximum fixed repurchase price” of any Disqualified
Capital Stock that does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Agreement, and if such
price is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in
good faith by the board of directors or other governing body of the issuer of
such Disqualified Capital Stock), (viii) the principal balance outstanding
and owing by such Person under any synthetic lease, tax retention operating
lease or similar off-balance sheet financing product, (ix) all Guaranty
Obligations of such Person with respect to Indebtedness of another Person,
(x) the net termination obligations of such Person under any Hedge
Agreements, calculated as of any date as if such agreement or arrangement were
terminated as of such date, and (xi) all indebtedness of the types
referred to in clauses (i) through (x) above (A) of any partnership
or unincorporated joint venture in which such Person is a general partner or
joint venturer to the extent such Person is liable therefor or (B) secured
by any Lien on any property or asset owned or held by such Person regardless of
whether or not the indebtedness secured thereby shall have been incurred or
assumed by such Person or is nonrecourse to the credit of such Person, the
amount thereof being equal to the value of the property or assets subject to
such Lien.

 

“Intellectual
Property” shall mean (i) all inventions (whether or not patentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissues,
continuations, continuations-in-part, divisions, revisions, extensions, and
reexaminations thereof, (ii) all trademarks, service marks, trade dress,
logos, trade names, and corporate names, together with all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (iii) all copyrightable works and all copyrights (registered
and unregistered), (iv) all trade secrets and confidential information
(including, without limitation, financial, business and marketing

 

16

 

plans and customer and supplier
lists and related information), (v) all computer software and software
systems (including, without limitation, data, databases and related documentation),
(vi) all Internet web sites and domain names, (vii) all technology,
know-how, processes and other proprietary rights, and (viii) all licenses
or other agreements to or from third parties regarding any of the foregoing.

 

“Interest
Coverage Ratio” shall mean, as of the last day of any Reference Period
ending on the last day of a fiscal quarter, the ratio of (i) Consolidated
EBITDA for such Reference Period to (ii) Consolidated Cash Interest
Expense for such Reference Period.

 

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

 

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

 

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

 

“Investor”
shall mean J.P. Morgan DJ Partners, LLC, a Delaware limited liability company.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Letter of
Credit Subcommitment” shall mean $10,000,000.

 

17

 

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

 

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

 

“LIBOR Rate”
shall mean, with respect to each LIBOR Loan comprising part of the same
Borrowing for any Interest Period, an interest rate per annum obtained by
dividing (i) (y) the rate of interest (rounded upward, if necessary,
to the nearest 1/16 of one percentage point) appearing on Telerate Page 3750
(or any successor page) or (z) if no such rate is available, the rate of
interest determined by the Administrative Agent to be the rate or the
arithmetic mean of rates (rounded upward, if necessary, to the nearest 1/16 of
one percentage point) at which Dollar deposits in immediately available funds
are offered to first-tier banks in the London interbank Eurodollar market, in
each case under (y) and (z) above at approximately 11:00 a.m., London
time, two (2) Business Days prior to the first day of such Interest Period for
a period substantially equal to such Interest Period and in an amount
substantially equal to the amount of Wachovia’s LIBOR Loan comprising part of
such Borrowing, by (ii) the amount equal to 1.00 minus the Reserve
Requirement (expressed as a decimal) for such Interest Period.

 

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

 

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

 

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

 

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

 

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

 

“Material
Credit Party” shall mean the Parent, the Borrower, and any Subsidiary which
constitutes at least 5% (10% for any Foreign Subsidiary) of the consolidated
revenues or net income, or the total assets, of the Borrower and its
Subsidiaries taken as a whole.

 

18

 

“Mortgage”
shall mean any mortgage, deed of trust, deed to secure debt, collateral
assignment of lease or similar agreement or instrument pursuant to which any
Credit Party grants in favor of the Administrative Agent, for its benefit and
the benefit of the Lenders, a security interest in and Lien upon any fee or
leasehold interest in real property owned by it, as amended, modified, restated
or supplemented from time to time.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

19

 

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

 

“OrthoLogic”
shall mean OrthoLogic Corp., a Delaware corporation.

 

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

 

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

 

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

 

“Payment
Office” shall mean the office of the Administrative Agent designated on Schedule 1.1(a) under the heading
“Instructions for wire transfers to the Administrative Agent,” or such other
office as the Administrative Agent may designate to the Lenders and the
Borrower for such purpose from time to time.

 

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

 

“Permitted
Acquisition” shall mean (A) any Acquisition with respect to which all
of the following conditions are satisfied: 
(i) each business acquired shall be within the permitted lines of
business described in Section 8.8, (ii) any Capital
Stock given as consideration in connection therewith shall be Capital Stock of
the Parent, (iii) in the case of an Acquisition involving the acquisition
of control of Capital Stock of any Person, immediately after giving effect to
such Acquisition such Person (or the surviving Person, if the Acquisition is
effected through a merger or consolidation) shall be a Subsidiary of the
Borrower, (iv) the Person to be acquired (or its board of directors or
equivalent governing body) has not (y) announced it will oppose such
Acquisition or (z) commenced any action which alleges that such
Acquisition violates, or will violate, any Requirement of Law, and (v) all
of the conditions and requirements of Sections 6.9 and 6.10 applicable to such
Acquisition are satisfied; or (B) any other Acquisition to which the
Required Lenders (or the Administrative Agent on their behalf) shall have given
their prior written consent (which consent may be in their sole discretion and
may be given subject to such additional terms and conditions as the Required
Lenders shall establish) and with respect to which all of the conditions and
requirements set forth in this definition and in Sections 6.9 and 6.10, and in or pursuant to
any such consent, have been satisfied or waived in writing by the Required
Lenders (or the Administrative Agent on their behalf); provided that
with respect to each Permitted Acquisition (and, in any event, in order to
qualify as a “Permitted Acquisition”):

 

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

 

(b)           so
long as (i) the Total Leverage Ratio (as set forth in the Compliance
Certificate then most recently delivered to the Administrative Agent and the
Lenders) is greater than 3.0 to 1.0 (after giving pro forma effect to such
Acquisition) and (ii) the

 

20

 

Acquisition Amount with respect thereto is greater than $5,000,000, the
Person or business acquired shall have a positive EBITDA, determined on a pro
forma basis for the period of twelve fiscal months most recently ended as if
such Permitted Acquisition had been consummated on the first day of such period
and calculated in the same manner as Consolidated EBITDA is calculated for the
Borrower and its Subsidiaries (which determination by the Borrower, together
with supporting financial statements of the acquired Person or business and a
schedule of adjustments, shall be delivered to the Lenders);

 

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

 

(d)           the
Acquisition Amount with respect thereto (y) shall not exceed $20,000,000,
and (z) together with the aggregate of the Acquisition Amounts for all
other Permitted Acquisitions consummated during the same fiscal year of the
Borrower, shall not exceed $30,000,000 (including for this purpose, without
duplication, all Contingent Purchase Price Obligations incurred by the Borrower
or its Subsidiaries in connection with previous Permitted Acquisitions which
have been paid during such fiscal year and any Contingent Purchase Price
Reserve Amounts then outstanding); and

 

(e)           the
Acquisition Amount for any Permitted Acquisition involving assets situated
outside of the United States of America or the Capital Stock of Persons
organized outside the United States of America (y) shall not exceed
$15,000,000, and (z) together with the aggregate of the Acquisition
Amounts for all such other Permitted Acquisitions consummated during the term of
this Agreement, shall not exceed $25,000,000.

 

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

 

“Permitted
Senior Subordinated Note Redemption” shall mean the purchase, redemption,
retirement or other acquisition by the Borrower of the Senior Subordinated
Notes (including payment of accrued interest and any applicable prepayment
premium associated therewith) to the extent made with Net Cash Proceeds from
the issuance of Capital Stock of the Parent, provided that the Total
Leverage Ratio (as set forth in the Compliance Certificate then most recently
delivered to the Administrative Agent and the Lenders) is less than or equal to
3.0 to 1.0 (without giving pro forma effect to such purchase, redemption,
retirement or acquisition of the Senior Subordinated Notes).

 

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

 

21

 

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

 

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

 

“Pro Forma
Balance Sheet” shall have the meaning given to such term in Section 4.1(o).

 

“Pro Forma
Closing EBITDA” shall mean Consolidated EBITDA for fiscal year 2003, calculated
based on the combined annualized results, year-to-date through the last day of
the tenth fiscal month of fiscal year 2003, of (i) the BGS Business (with
the basis for such annualized calculation being the adjusted stand-alone
results of the BGS Business for such ten-month period) and (ii) the Parent
and its Subsidiaries (with the basis for such annualized calculation being
their consolidated actual results for such ten-month period without giving pro
forma effect to the BGS Acquisition).

 

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

 

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

 

“Qualified
Equity Issuance” shall mean an underwritten public offering of common
Capital Stock of the Parent pursuant to an effective registration statement
(other than on Form S-8) filed with the Securities and Exchange Commission
under the Securities Act, that results in gross cash proceeds to the Parent of
at least $35,000,000, but excluding any such offering to the extent the Net
Cash Proceeds therefrom are applied to fund (i) a Permitted Senior
Subordinated Note Redemption or (ii) a Permitted Acquisition, but in the
case of this clause (ii), only so long as the Total Leverage Ratio (as set
forth in the Compliance Certificate then most recently delivered to the
Administrative Agent and the Lenders) is less than or equal to 3.0 to 1.0
without giving pro forma effect to such Permitted Acquisition.

 

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

 

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

 

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

 

22

 

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

 

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

 

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

 

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

 

“Required
Lenders” shall mean, at any time, the Lenders holding outstanding Loans
(excluding Swingline Loans) and unutilized Commitments (or, after the
termination of the Revolving Credit Commitments, outstanding Loans, Letter of
Credit Exposure and participations in outstanding Swingline Loans) representing
at least a majority of the aggregate, at such time, of all outstanding Loans
(excluding Swingline Loans) and unutilized Commitments (or, after the
termination of the Revolving Credit Commitments, the aggregate at such time of
all outstanding Loans, Letter of Credit Exposure and participations in
outstanding Swingline Loans).

 

“Required
Revolving Credit Lenders” shall mean, at any time, the Revolving Credit
Lenders holding outstanding Revolving Loans and Unutilized Revolving Credit
Commitments (or, after the termination of the Revolving Credit Commitments,
outstanding Revolving Loans, Letter of Credit Exposure and participations in
outstanding Swingline Loans) representing at least a majority of the aggregate,
at such time, of all outstanding Revolving Loans and Unutilized Revolving
Credit Commitments (or, after the termination of the Revolving Credit
Commitments, the aggregate at such time of all outstanding Revolving Loans,
Letter of Credit Exposure and participations in outstanding Swingline Loans).

 

“Requirement
of Law” shall mean, with respect to any Person, the charter, articles or
certificate of organization or incorporation and bylaws or other organizational
or governing documents of such Person, and any statute, law, treaty, rule,
regulation, order, decree, writ, injunction or determination of any arbitrator
or court or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject or otherwise pertaining to any or all of the transactions
contemplated by this Agreement and the other Credit Documents.

 

“Reserve
Requirement” shall mean, with respect to any Interest Period, the reserve
percentage (expressed as a decimal and rounded upwards, if necessary, to the
next higher 1/100th of 1%) in effect from time to time during such
Interest Period, as provided by the Federal Reserve Board, applied for
determining the maximum reserve requirements (including, without

 

23

 

limitation, basic,
supplemental, marginal and emergency reserves) applicable to Wachovia under
Regulation D with respect to “Eurocurrency liabilities” within the meaning of
Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

24

 

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

 

“Security
Documents” shall mean the Security Agreement, the Pledge Agreement and all
other pledge or security agreements, Mortgages, assignments or other similar
agreements or instruments executed and delivered by any Credit Party pursuant
to Section 6.10
or 6.11
or otherwise in connection with the transactions contemplated hereby, in each
case as amended, modified, restated or supplemented from time to time.

 

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

 

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

 

“Senior
Subordinated Note Indenture” shall mean the Indenture, dated as of
June 30, 1999, among the Senior Subordinated Note Issuers, the Parent (as
successor by merger to Donjoy, L.L.C.), and the Bank of New York, as Trustee,
under which the Senior Subordinated Note Issuers issued the Senior Subordinated
Notes, as amended, modified, restated or supplemented from time to time in
accordance with the terms of this Agreement.

 

“Senior
Subordinated Note Issuers” shall mean, collectively, the Borrower and DJ
Orthopedics Capital Corporation, a Delaware corporation.

 

“Senior
Subordinated Notes” shall mean the 12-5/8% Senior Subordinated Notes due
2009 issued pursuant to the Senior Subordinated Note Indenture in the aggregate
principal amount of $75,000,000, as amended, modified, restated or supplemented
from time to time in accordance with the terms of this Agreement.

 

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

 

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

 

“Subsidiary”
shall mean, with respect to any Person, any corporation or other Person of
which more than fifty percent (50%) of the outstanding Capital Stock having
ordinary voting power to elect a majority of the board of directors, board of
managers or other governing body of such Person, is at the time, directly or
indirectly, owned or controlled by such Person and one or

 

25

 

more of its other Subsidiaries
or a combination thereof (irrespective of whether, at the time, securities of
any other class or classes of any such corporation or other Person shall or
might have voting power by reason of the happening of any contingency).  When used without reference to a parent
entity, the term “Subsidiary” shall be deemed to refer to a Subsidiary of the
Borrower.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Syndication
Agent” shall mean Wells Fargo Bank, National Association, in its capacity
as such under Section 10.12, and its successors and permitted assigns
in such capacity.

 

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

 

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

 

“Term Loan
Commitment” shall mean, with respect to any Lender at any time, the
commitment of such Lender to make Term Loans in an aggregate principal amount
up to the amount set forth opposite such Lender’s name on Schedule 1.1(a) under the caption
“Term Loan Commitment” or, if such Lender has entered into one or more
Assignment and Acceptances, the amount set forth for such Lender at such time
in the Register maintained by the Administrative

 

26

 

Agent pursuant to Section 11.7(b) as such Lender’s “Term Loan
Commitment,” as such amount may be reduced at or prior to such time pursuant to
the terms hereof.

 

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

 

“Term
Loan Maturity Date” shall mean May 15, 2009; provided that if more
than $15,000,000 in aggregate principal amount of the Senior Subordinated Notes
is outstanding on January 2, 2009, the Term Loan Maturity Date shall, on
January 2, 2009, automatically be changed to January 2, 2009 (notwithstanding
that one or more amortization payments may be scheduled as coming due after
such date under Section 2.6(a)).

 

“Term
Note” shall mean, with respect to any Term Lender requesting the same, the
promissory note of the Borrower in favor of such Term Lender evidencing the
Term Loan made by such Lender pursuant to Section 2.1(a), in substantially the form of Exhibit A-1, together
with any amendments, modifications and supplements thereto, substitutions
therefor and restatements thereof.

 

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

 

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

 

“Type”
shall have the meaning given to such term in Section 2.2(a).

 

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

 

“Unutilized
Revolving Credit Commitment” shall mean, with respect to any Revolving
Credit Lender at any time, such Lender’s Revolving Credit Commitment at such
time less the sum of (i) the aggregate principal amount of
all Revolving Loans made by such Lender that are outstanding at such time,
(ii) such Lender’s Letter of Credit Exposure at such time and
(iii) such Lender’s Swingline Exposure at such time.

 

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

 

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

 

27

 

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

 

1.2           Accounting Terms.  Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder shall be
prepared in accordance with, GAAP applied on a basis consistent with the most
recent audited consolidated financial statements of the Borrower delivered to
the Lenders prior to the Closing Date; provided that if the Borrower
notifies the Administrative Agent that it wishes to amend any financial
covenant in Article VII to eliminate the effect of any change in GAAP
on the operation of such covenant (or if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend Article VII for such
purpose), then the Borrower’s compliance with such covenant shall be determined
on the basis of GAAP as in effect immediately before the relevant change in
GAAP became effective, until either such notice is withdrawn or such covenant
is amended in a manner satisfactory to the Borrower and the Required Lenders.

 

1.3           Other
Terms; Construction.

 

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

 

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

 

(c)           The words “hereof,” “herein” and
“hereunder” and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.

 

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

 

ARTICLE II

 

AMOUNT AND TERMS OF THE LOANS

2.1           Commitments.

 

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

 

28

 

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

 

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

 

2.2           Borrowings.

 

(a)           The Term Loans and Revolving Loans
(each, together with the Swingline Loans, a “Class” of Loan) shall, at
the option of the Borrower and subject to the terms and conditions of this
Agreement, be either Base Rate Loans or LIBOR Loans (each, a “Type” of
Loan), provided that (i) all Loans comprising the same Borrowing
shall, unless otherwise specifically provided herein, be of the same Type, and
(ii) no LIBOR Loans may be borrowed at any time prior to the third (3rd)
Business Day after the Closing Date. 
The Swingline Loans shall be made and maintained as Base Rate Loans at
all times.

 

(b)           In order to make a Borrowing (other
than (x) Borrowings of Swingline Loans, which shall be made pursuant to Section 2.2(d),
(y) Borrowings for the purpose of repaying Refunded Swingline Loans, which
shall be made pursuant to Section 2.2(e), and
(z) Borrowings involving continuations or conversions of outstanding
Loans, which shall be made pursuant to Section 2.11), the Borrower will give
the Administrative Agent written notice not later than 11:00 a.m., Charlotte
time, three (3) Business Days prior to each Borrowing to be comprised of LIBOR
Loans and one (1) Business Day prior to each Borrowing to be comprised of Base
Rate Loans; provided, however, that requests for the Borrowing of
the Term Loans and any Revolving

 

29

 

Loans to be made on the Closing Date may, at the discretion of the
Administrative Agent, be given with less advance notice than as specified
hereinabove.  Each such notice (each, a
“Notice of Borrowing”) shall be irrevocable, shall be given in the form
of Exhibit B-1
and shall specify (1) the aggregate principal amount, Class and initial
Type of the Loans to be made pursuant to such Borrowing, (2) in the case
of a Borrowing of LIBOR Loans, the initial Interest Period to be applicable
thereto, and (3) the requested Borrowing Date, which shall be a Business
Day.  Upon its receipt of a Notice of
Borrowing, the Administrative Agent will promptly notify each applicable Lender
of the proposed Borrowing. 
Notwithstanding anything to the contrary contained herein:

 

(i)            the aggregate principal amount of
the Borrowing of Term Loans shall be in the amount of the aggregate Term Loan
Commitments;

 

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

 

(iii)          if the Borrower shall have failed to
designate the Type of Loans comprising a Borrowing, the Borrower shall be
deemed to have requested a Borrowing comprised of Base Rate Loans; and

 

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

 

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

 

(d)           In order to make a Borrowing of a
Swingline Loan (other than borrowings pursuant to any loan sweep product or
other cash management arrangement in effect between the Borrower and the
Swingline Lender, which shall be effected as provided thereunder), the Borrower
will give the Administrative Agent (and the Swingline Lender, if the Swingline
Lender is not also the Administrative Agent) written notice not later than
11:00 a.m., Charlotte time, on the date of such Borrowing.  Each such notice (each, a “Notice of
Swingline Borrowing”) shall be given in the form of Exhibit B-2, shall be
irrevocable and shall specify (i) the principal amount of the Swingline
Loan to be made pursuant to such Borrowing (which shall not be less than
$200,000 and, if greater, shall be in an integral multiple of $100,000 in
excess thereof (or, if

 

30

 

less, in the amount of the Unutilized Swingline Commitment)) and
(ii) the requested Borrowing Date, which shall be a Business Day.  Not later than 1:00 p.m., Charlotte time, on
the requested Borrowing Date, the Swingline Lender will make available to the
Administrative Agent at the Payment Office an amount, in Dollars and in
immediately available funds, equal to the amount of the requested Swingline
Loan.  To the extent the Swingline Lender
has made such amount available to the Administrative Agent as provided
hereinabove, the Administrative Agent will make such amount available to the
Borrower in accordance with Section 2.3(a) and in like funds as
received by the Administrative Agent.

 

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

 

(f)            If, as a result of any bankruptcy,
insolvency or similar proceeding with respect to the Borrower, Revolving Loans
are not made pursuant to Section 2.2(e) in an amount sufficient
to repay any amounts owed to the Swingline Lender in respect of any outstanding
Swingline Loans, or if the Swingline Lender is otherwise precluded for any
reason from giving a notice on behalf of the Borrower as provided for
hereinabove, the Swingline Lender shall be deemed to have sold without
recourse, representation or warranty (except for the absence of Liens thereon
created, incurred or suffered to exist by, through or under the Swingline
Lender), and each

 

31

 

Revolving Credit Lender shall be deemed to have purchased and hereby
agrees to purchase, a participation in such outstanding Swingline Loans in an
amount equal to its ratable share (based on the proportion that its Revolving
Credit Commitment bears to the aggregate Revolving Credit Commitments at such
time) of the unpaid amount thereof together with accrued interest thereon.  Upon one (1) Business Day’s prior notice
from the Swingline Lender, each Revolving Credit Lender (other than the
Swingline Lender) will make available to the Administrative Agent at the
Payment Office an amount, in Dollars and in immediately available funds, equal
to its respective participation.  To the
extent the Revolving Credit Lenders have made such amounts available to the
Administrative Agent as provided hereinabove, the Administrative Agent will
make the aggregate of such amounts available to the Swingline Lender in like
funds as received by the Administrative Agent. 
In the event any such Revolving Credit Lender fails to make available to
the Administrative Agent the amount of such Lender’s participation as provided
in this Section 2.2(f),
the Swingline Lender shall be entitled to recover such amount on demand from
such Lender, together with interest thereon for each day from the date such
amount is required to be made available for the account of the Swingline Lender
until the date such amount is made available to the Swingline Lender at the
Federal Funds Rate for the first three (3) Business Days and thereafter at the
Adjusted Base Rate applicable to Revolving Loans.  Promptly following its receipt of any payment by or on behalf of
the Borrower in respect of a Swingline Loan, the Swingline Lender will pay to
each Revolving Credit Lender that has acquired a participation therein such
Lender’s ratable share of such payment.

 

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

 

2.3           Disbursements;
Funding Reliance; Domicile of Loans.

 

(a)           The Borrower hereby authorizes the
Administrative Agent to disburse the proceeds of each Borrowing in accordance
with the terms of any written instructions from any Authorized Officer of the
Borrower, provided that the Administrative Agent shall not be obligated
under any circumstances to forward amounts to any account not listed in an
Account Designation Letter.  The
Borrower may at any time deliver to the Administrative Agent an Account
Designation Letter listing any additional accounts or deleting any accounts
listed in a previous Account Designation Letter.

 

(b)           Unless the Administrative Agent has
received, prior to 1:00 p.m., Charlotte time, on the relevant Borrowing Date,
written notice from a Lender that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion, if any, of the relevant

 

32

 

Borrowing, the Administrative Agent may assume that such Lender has
made such portion available to the Administrative Agent in immediately
available funds on such Borrowing Date in accordance with the applicable
provisions of Section 2.2, and the Administrative Agent may, in
reliance upon such assumption, but shall not be obligated to, make a
corresponding amount available to the Borrower on such Borrowing Date.  If and to the extent that such Lender shall
not have made such portion available to the Administrative Agent, and the
Administrative Agent shall have made such corresponding amount available to the
Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, (i) in the case of such Lender, at the
Federal Funds Rate, and (ii) in the case of the Borrower, at the rate of
interest applicable at such time to the Type and Class of Loans comprising such
Borrowing, as determined under the provisions of Section 2.8.  If such Lender shall repay to the
Administrative Agent such corresponding amount, such amount shall constitute
such Lender’s Loan as part of such Borrowing for purposes of this
Agreement.  The failure of any Lender to
make any Loan required to be made by it as part of any Borrowing shall not
relieve any other Lender of its obligation, if any, hereunder to make its Loan
as part of such Borrowing, but no Lender shall be responsible for the failure
of any other Lender to make the Loan to be made by such other Lender as part of
any Borrowing.

 

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

 

2.4           Evidence of
Debt; Notes.

 

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

 

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

 

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

 

33

 

the Borrower to repay (with applicable interest) the Loans made to the
Borrower by such Lender in accordance with the terms of this Agreement.

 

(d)           The Loans of each Class made by each
Lender shall, if requested by the applicable Lender (which request shall be
made to the Administrative Agent), be evidenced (i) in the case of Term
Loans, by a Term Note appropriately completed in substantially the form of Exhibit A-1, (ii) in the case of Revolving
Loans, by a Revolving Note appropriately completed in substantially the form of
Exhibit A-2,
and (iii) in the case of the Swingline Loans, by a Swingline Note
appropriately completed in substantially the form of Exhibit A-3, in each
case executed by the Borrower and payable to the order of such Lender.  Each Note shall be entitled to all of the
benefits of this Agreement and the other Credit Documents and shall be subject
to the provisions hereof and thereof.

 

2.5           Termination
and Reduction of Commitments and Swingline Commitment.

 

(a)           The Term Loan Commitments shall be
automatically and permanently terminated concurrently with the making of the
Term Loans on the Closing Date (or on December 15, 2003, if the Closing Date
shall not have occurred on or prior to such date).  The Revolving Credit Commitments shall be automatically and
permanently terminated on the Revolving Credit Termination Date (or on December
15, 2003, if the Closing Date shall not have occurred on or prior to such
date), unless sooner terminated pursuant to any other provision of this Section 2.5
or Section 9.2.  The Swingline Commitment shall be
automatically and permanently terminated on the Swingline Maturity Date (or on
December 15, 2003, if the Closing Date shall not have occurred on or prior to
such date), unless sooner terminated pursuant to any other provision of this Section 2.5
or Section 9.2.

 

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

 

(c)           Each reduction of the Revolving
Credit Commitments pursuant to this Section shall be applied ratably among the
Revolving Credit Lenders according to their respective Revolving Credit
Commitments.  Notwithstanding any
provision of this Agreement to the contrary, any reduction of the Revolving
Credit Commitments pursuant to this Section 2.5 that has the effect of
reducing the aggregate Revolving Credit Commitments to an amount less than

 

34

 

the amount of the Swingline Commitment at such time shall result in an
automatic corresponding reduction of the Swingline Commitment to the amount of
the aggregate Revolving Credit Commitments (as so reduced), without any further
action on the part of the Borrower or the Swingline Lender.

 

2.6           Mandatory
Payments and Prepayments.

 

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

 

	
  Date

  	
   

  	
  Payment
  Amount

  	
   

  
	
  March 31,
  2004

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  June 30,
  2004

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  September
  30, 2004

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  December 31,
  2004

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  March 31,
  2005

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  June 30,
  2005

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  September
  30, 2005

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  December 31,
  2005

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  March 31,
  2006

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  June 30,
  2006

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  September
  30, 2006

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  December 31,
  2006

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  March 31,
  2007

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  June 30,
  2007

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  September
  30, 2007

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  December 31,
  2007

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  March 31,
  2008

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  June 30,
  2008

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  September
  30, 2008

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  December 31,
  2008

  	
   

  	
  $

  	
  1,250,000

  	
   

  
	
  March 31,
  2009

  	
   

  	
  $

  	
  37,500,000

  	
   

  
	
  Term Loan
  Maturity Date

  	
   

  	
  $

  	
  37,500,000

  	
   

  

 

(b)           Except to the extent due or paid
sooner pursuant to the provisions of this Agreement, (i) the aggregate
outstanding principal of the Term Loans shall be due and payable in full on the
Term Loan Maturity Date (as such date may be changed in accordance with the
definition of “Term Loan Maturity Date”), (ii) the aggregate outstanding
principal of the Revolving Loans shall be due and payable in full on the
Revolving Credit Maturity Date, and (iii) the aggregate outstanding
principal of the Swingline Loans shall be due and payable in full on the
Swingline Maturity Date.

 

(c)           In the event that, at any time, the
Aggregate Revolving Credit Exposure (excluding the aggregate amount of any
Swingline Loans to be repaid with proceeds of

 

35

 

Revolving Loans made on the date of determination) shall exceed the
aggregate Revolving Credit Commitments at such time (after giving effect to any
concurrent termination or reduction thereof), the Borrower will immediately
prepay the outstanding principal amount of the Swingline Loans and, to the
extent of any excess remaining after prepayment in full of outstanding
Swingline Loans, the outstanding principal amount of the Revolving Loans in the
amount of such excess; provided that, to the extent such excess amount
is greater than the aggregate principal amount of Swingline Loans and Revolving
Loans outstanding immediately prior to the application of such prepayment, the
amount so prepaid shall be retained by the Administrative Agent and held in the
Cash Collateral Account as cover for Letter of Credit Exposure, as more
particularly described in Section 3.8, and thereupon such cash
shall be deemed to reduce the aggregate Letter of Credit Exposure by an
equivalent amount.

 

(d)           Promptly upon (and in any event not
later than one (1) Business Day after) its receipt thereof, the Borrower will
prepay the outstanding principal amount of the Loans in an amount equal to 100%
of the Net Cash Proceeds from any Equity Issuance (other than a Qualified
Equity Issuance), 100% of the Net Cash Proceeds from any Debt Issuance and 50%
of the Net Cash Proceeds from any Qualified Equity Issuance, and will deliver
to the Administrative Agent, concurrently with such prepayment, a certificate
signed by a Financial Officer of the Borrower in form and substance
satisfactory to the Administrative Agent and setting forth the calculation of
such Net Cash Proceeds.

 

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

 

36

 

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

 

(g)           Concurrently with the delivery of its
annual financial statements after the end of each fiscal year, beginning with
delivery of the annual financial statements for fiscal year 2004, and in any
event not later than ninety (90) days after the last day of each such fiscal
year, the Borrower will prepay the outstanding principal amount of the Loans in
an amount equal to 75% of Excess Cash Flow, if any, for such fiscal year and
will deliver to the Administrative Agent, concurrently with such prepayment, a
certificate signed by a Financial Officer of the Borrower in form and substance
satisfactory to the Administrative Agent and setting forth the calculation of
such Excess Cash Flow; provided, however, that in the event the
Total Leverage Ratio is equal to or less than 3.0 to 1.0 as of the last day of
any such fiscal year, the prepayment required under this Section 2.6(g) shall be
an amount equal to 50% of Excess Cash Flow, if any, for such fiscal year.

 

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

 

37

 

of the Interest Period applicable thereto shall be made together with
all amounts required under Section 2.18 to be paid as a
consequence thereof.

 

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

 

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

 

2.7           Voluntary
Prepayments.

 

(a)           At any time and from time to time,
the Borrower shall have the right to prepay the Loans, in whole or in part,
without premium or penalty (except as provided in clause (iii) below),
upon written notice given to the Administrative Agent not later than 11:00
a.m., Charlotte time, three (3) Business Days prior to each intended prepayment
of LIBOR Loans and one (1) Business Day prior to each intended prepayment of
Base Rate Loans (other than Swingline Loans, which may be prepaid on a same-day
basis), provided that (i) each partial prepayment of LIBOR Loans
shall be in an aggregate principal amount of not less than $1,000,000 or, if
greater, an integral multiple of $500,000 in excess thereof, and each partial
prepayment of Base Rate Loans shall be in an aggregate principal amount of not
less than $500,000 or, if greater, an integral multiple of $100,000 in excess
thereof ($200,000 and $100,000, respectively, in the case of Swingline Loans),
(ii) no partial prepayment of LIBOR Loans made pursuant to any single
Borrowing shall reduce the aggregate outstanding principal amount of the
remaining LIBOR Loans under such Borrowing to less than $1,000,000 or to any
greater amount not an integral multiple of $500,000 in excess thereof, and
(iii) unless made together with all amounts required under Section 2.18
to be paid as a consequence of such prepayment, a prepayment of a LIBOR Loan
may be made only on the last day of the Interest Period applicable
thereto.  Each such notice shall specify
the proposed date of such prepayment and the aggregate principal amount, Class
and Type of the Loans to be prepaid (and, in the case of LIBOR Loans, the
Interest Period of the Borrowing pursuant to which made), and shall be
irrevocable and shall bind the Borrower to make such prepayment on the terms
specified therein, provided that a notice of prepayment in full of the
Revolving Loans delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, a public
offering of Capital Stock of the Parent or

 

38

 

a sale of all or substantially all the assets or Capital Stock of the
Borrower or the Parent (whether by merger or otherwise), in which case such
notice may be revoked by the Borrower (by notice to the Administrative Agent on
or prior to the specified effective date) if such condition is not satisfied (provided
that the Borrower shall be obligated to pay all amounts required under Section 2.18
to be paid as a consequence of the failure to make such prepayment).  Revolving Loans and Swingline Loans (but not
Term Loans) prepaid pursuant to this Section 2.7(a) may be reborrowed,
subject to the terms and conditions of this Agreement.  In the event the Administrative Agent
receives a notice of prepayment under this Section, the Administrative Agent
will give prompt notice thereof to the Lenders; provided that if such
notice has also been furnished to the Lenders, the Administrative Agent shall
have no obligation to notify the Lenders with respect thereto.

 

(b)           Each prepayment of the Term Loans
made pursuant to Section 2.7(a) shall be applied to the remaining
scheduled principal payments as directed by the Borrower; provided that
if the Borrower shall fail to furnish direction, such prepayment shall be
applied to the remaining scheduled principal payments on a pro rata basis.  Each prepayment of the Loans made pursuant
to Section 2.7(a)
shall be applied ratably among the Lenders holding the Loans being prepaid, in
proportion to the principal amount held by each.

 

2.8           Interest.

 

(a)           The Borrower will pay interest in
respect of the unpaid principal amount of each Loan, from the date of Borrowing
thereof until such principal amount shall be paid in full, (i) at the
Adjusted Base Rate, as in effect from time to time during such periods as such
Loan is a Base Rate Loan, and (ii) at the Adjusted LIBOR Rate, as in
effect from time to time during such periods as such Loan is a LIBOR Loan.

 

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

 

39

 

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

 

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

 

(ii)           in respect of each LIBOR Loan
(including any LIBOR Loan or portion thereof paid or prepaid pursuant to the
provisions of Section 2.6, except as provided hereinbelow), in arrears
(y) on the last Business Day of the Interest Period applicable thereto
(subject to the provisions of Section 2.10(iv)) and (z) in
addition, in the case of a LIBOR Loan with an Interest Period having a duration
of six months or longer, on each date on which interest would have been payable
under clause (y) above had successive Interest Periods of three months’
duration been applicable to such LIBOR Loan; provided, that in the event
all LIBOR Loans made pursuant to a single Borrowing are repaid or prepaid in
full, then accrued interest in respect of such LIBOR Loans shall be payable
together with such repayment or prepayment on the date thereof; and

 

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

 

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

 

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

 

40

 

the Reserve Requirement) shall, absent manifest error, be conclusive
and binding on all parties hereto.

 

2.9           Fees.  The
Borrower agrees to pay:

 

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

 

(b)           To the Administrative Agent, for the
account of each Revolving Credit Lender, a commitment fee for each calendar
quarter (or portion thereof) for the period from the date of this Agreement to
the Revolving Credit Termination Date, at a per annum rate of 0.50% on such
Lender’s ratable share (based on the proportion that its Revolving Credit
Commitment bears to the aggregate Revolving Credit Commitments) of the average
daily aggregate Unutilized Revolving Credit Commitments (excluding
clause (iii) of the definition thereof for purposes of this Section 2.9(b)
only), payable in arrears (i) on the last Business Day of each calendar
quarter, beginning with the first such day to occur after the Closing Date, and
(ii) on the Revolving Credit Termination Date;

 

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

 

(d)           To the Issuing Lender, for its own
account, a facing fee for each calendar quarter (or portion thereof) in respect
of all Letters of Credit outstanding during such quarter, at a per annum rate
of 0.25% on the daily average aggregate Stated Amount of such Letters of
Credit, payable in arrears (i) on the last Business Day of each calendar
quarter, beginning with the first such day to occur after the Closing Date, and
(ii) on the later of the Revolving Credit Termination Date and the date of
termination of the last outstanding Letter of Credit;

 

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

 

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

 

2.10         Interest Periods.  Concurrently with the giving of a Notice of Borrowing or Notice
of Conversion/Continuation in respect of any Borrowing (whether in respect of
Term Loans or

 

41

 

Revolving Loans) comprised of Base Rate Loans to be converted into, or
LIBOR Loans to be continued as, LIBOR Loans, the Borrower shall have the right
to elect, pursuant to such notice, the interest period (each, an “Interest
Period”) to be applicable to such LIBOR Loans, which Interest Period shall,
at the option of the Borrower, be a one, two, three or six-month period; provided,
however, that:

 

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

 

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

 

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

 

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

 

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

 

(vi)          the Borrower may not select any
Interest Period that expires (y) after the Term Loan Maturity Date, with
respect to Term Loans that are to be maintained as LIBOR Loans, or
(z) after the Revolving Credit Maturity Date, with respect to Revolving
Loans that are to be maintained as LIBOR Loans;

 

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

 

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

 

42

 

2.11         Conversions
and Continuations.

 

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

 

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

 

2.12         Method
of Payments; Computations.

 

(a)           All payments by the Borrower
hereunder shall be made without setoff, counterclaim or other defense, in
Dollars and in immediately available funds to the Administrative Agent, for the
account of the Lenders entitled to such payment or the Swingline

 

43

 

Lender, as the case may be (except as otherwise expressly provided
herein as to payments required to be made directly to the Issuing Lender or the
Lenders) at the Payment Office prior to 12:00 noon, Charlotte time, on the date
payment is due.  Any payment made as
required hereinabove, but after 12:00 noon, Charlotte time, shall be deemed to
have been made on the next succeeding Business Day.  If any payment falls due on a day that is not a Business Day,
then such due date shall be extended to the next succeeding Business Day
(except that in the case of LIBOR Loans to which the provisions of Section 2.10(iv)
are applicable, such due date shall be the next preceding Business Day), and
such extension of time shall then be included in the computation of payment of
interest, fees or other applicable amounts.

 

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

 

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

 

(d)           All computations of interest and fees
hereunder (including computations of the Reserve Requirement) shall be made on
the basis of a year consisting of (i) in the case of interest on Base Rate
Loans, 365/366 days, as the case may be, or (ii) in all other instances,
360 days;

 

44

 

and in each case under (i) and (ii) above, with regard to the actual
number of days (including the first day, but excluding the last day) elapsed.

 

2.13         Recovery
of Payments.

 

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

 

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

 

2.14         Use of Proceeds. 
The proceeds of the Loans shall be used (i) to finance a portion of
the consideration to be paid to OrthoLogic in connection with the BGS
Acquisition, (ii) to repay the Existing Senior Bank Facilities in full,
(iii) to pay or reimburse fees and expenses in connection with the BGS
Acquisition and the transactions contemplated by this Agreement, and
(iv) to provide for working capital and general corporate purposes and in
accordance with the terms and provisions of this Agreement (including, without
limitation, to finance Permitted Acquisitions in accordance with the terms and
provisions of this Agreement).

 

2.15         Pro Rata
Treatment.

 

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

 

(b)           Each Lender agrees that if it shall
receive any amount hereunder (whether by voluntary payment, realization upon
security, exercise of the right of setoff or banker’s lien, counterclaim or
cross action, or otherwise, other than pursuant to Section 2.16(a), 2.16(b),

 

45

 

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

 

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

 

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

 

46

 

additional amounts as shall compensate such Lender for such increase in
costs or reduction in return.

 

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

 

(c)           If, on or prior to the first day of
any Interest Period, (y) the Administrative Agent shall have determined
that adequate and reasonable means do not exist for ascertaining the applicable
LIBOR Rate for such Interest Period or (z) the Administrative Agent shall
have received written notice from the Required Lenders of their determination
that the rate of interest referred to in the definition of “LIBOR Rate” upon
the basis of which the Adjusted LIBOR Rate for LIBOR Loans for such Interest
Period is to be determined will not adequately and fairly reflect the cost to
such Lenders of making or maintaining LIBOR Loans during such Interest Period,
the Administrative Agent will forthwith so notify the Borrower and the Lenders.  Upon such notice, (i) all then
outstanding LIBOR Loans shall automatically, on the expiration date of the
respective Interest Periods applicable thereto (unless then repaid in full), be
converted into Base Rate Loans, (ii) the obligation of the Lenders to make,
to convert Base Rate Loans into, or to continue, LIBOR Loans shall be suspended
(including pursuant to the Borrowing to which such Interest Period applies),
and (iii) any Notice of Borrowing or Notice of Conversion/Continuation
given at any time thereafter with respect to LIBOR Loans shall be deemed to be
a request for Base Rate Loans, in each case until the Administrative Agent or
the Required Lenders, as the case may be, shall have determined that the
circumstances giving rise to such suspension no longer exist (and the Required
Lenders, if making such determination, shall have so notified the
Administrative Agent), and the Administrative Agent shall have so notified the
Borrower and the Lenders.

 

(d)           Notwithstanding any other provision
in this Agreement, if, at any time after the date hereof and from time to time,
any Lender shall have determined in good faith that the introduction of or any
change in any applicable law, rule or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance with any guideline or
request from any such Governmental Authority (whether or not having the force
of law), has or would have the effect of making it unlawful for such Lender to
make or to continue to make or maintain LIBOR Loans, such Lender will forthwith
so notify the Administrative Agent and the Borrower.  Upon such notice, (i) each of such Lender’s then outstanding
LIBOR Loans shall automatically, on the expiration

 

47

 

date of the respective Interest Period applicable thereto (or, to the
extent any such LIBOR Loan may not lawfully be maintained as a LIBOR Loan until
such expiration date, upon such notice) and to the extent not sooner prepaid,
be converted into a Base Rate Loan, (ii) the obligation of such Lender to
make, to convert Base Rate Loans into, or to continue, LIBOR Loans shall be
suspended (including pursuant to any Borrowing for which the Administrative Agent
has received a Notice of Borrowing but for which the Borrowing Date has not
arrived), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR
Loans shall, as to such Lender, be deemed to be a request for a Base Rate Loan,
in each case until such Lender shall have determined that the circumstances
giving rise to such suspension no longer exist and shall have so notified the
Administrative Agent, and the Administrative Agent shall have so notified the
Borrower.

 

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

 

2.17         Taxes.

 

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

 

48

 

(b)           The Borrower will indemnify the
Administrative Agent and each Lender for the full amount of Taxes (including,
without limitation, any Taxes imposed by any jurisdiction on amounts payable
under this Section 2.17) paid by the Administrative Agent or such
Lender, as the case may be, and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes were correctly or legally asserted. 
This indemnification shall be made within 30 days from the date the
Administrative Agent or such Lender, as the case may be, makes written demand
therefor.  Such written demand shall set
forth in reasonable detail the amount of Taxes payable and the calculation
thereof and shall be conclusive and binding absent manifest error, provided
such determination is made in good faith.

 

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

 

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

 

49

 

jurisdiction, and has not been treated as a bank for purposes of any
tax, securities law or other filing or submission made to any governmental
authority, any application made to a rating agency or qualification for any
exemption from any tax, securities law or other legal requirements, (y) is
not a 10-percent shareholder for purposes of Section 881(c)(3)(B) of the Internal
Revenue Code and (z) is not a controlled foreign corporation receiving
interest from a related person for purposes of Section 881(c)(3)(C) of the
Internal Revenue Code, together with two accurate and properly completed
original signed copies of Internal Revenue Service Form W-8BEN (or successor
form).  Each such Non-U.S. Lender
further agrees to deliver to each of the Administrative Agent and the Borrower
additional copies of each such relevant form on or before the date that such
form expires or becomes obsolete or after the occurrence of any event
(including a change in its applicable Lending Office) requiring a change in the
most recent forms so delivered by it, in each case certifying that such
Non-U.S. Lender is entitled to an exemption from or a reduction of withholding
or deduction for or on account of United States federal income taxes in
connection with payments under this Agreement or any of the other Credit
Documents, unless an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required, which event renders all such forms
inapplicable or the exemption or reduction to which such forms relate
unavailable and such Non-U.S. Lender notifies the Administrative Agent and the
Borrower that it is not entitled to receive payments without or at a reduced
rate of deduction or withholding of United States federal income taxes.  Each such Non-U.S. Lender will promptly
notify the Administrative Agent and the Borrower of any changes in
circumstances that would modify or render invalid any claimed exemption or
reduction.

 

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

 

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

 

50

 

(including as a consequence of acceleration of the maturity of the
Loans pursuant to Section 9.2), (iii) if any
prepayment of any LIBOR Loan is not made on any date specified in a notice of
prepayment given by the Borrower or (iv) as a consequence of any other
failure by the Borrower to make any payments with respect to any LIBOR Loan
when due hereunder.  Calculation of all
amounts payable to a Lender under this Section 2.18 shall be made as though
such Lender had actually funded its relevant LIBOR Loan through the purchase of
a Eurodollar deposit bearing interest at the LIBOR Rate in an amount equal to
the amount of such LIBOR Loan, having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund its
LIBOR Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this Section 2.18.  A certificate (which shall be in reasonable
detail) showing the bases for the determinations set forth in this Section 2.18
by any Lender as to any additional amounts payable pursuant to this Section 2.18
shall be submitted by such Lender to the Borrower either directly or through
the Administrative Agent. 
Determinations set forth in any such certificate made in good faith for
purposes of this Section 2.18 of any such losses, expenses or liabilities
shall be conclusive absent manifest error, provided such determination was made
in good faith.

 

2.19         Replacement of Lenders; Mitigation
of Costs.

 

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

 

51

 

been, or is concurrently being, paid), including, without limitation,
amounts payable under Sections 2.16(a), 2.16(b) and 2.17
which give rise to the replacement of such Replaced Lender and amounts payable
under Section 2.18
as a result of the actions required to be taken under this Section 2.19, shall be
paid in full by the Borrower to the Replaced Lender on or prior to the
Replacement Effective Date.

 

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

 

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

 

ARTICLE III

 

LETTERS OF CREDIT

 

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

 

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

 

52

 

Revolving Credit Exposure, would exceed the aggregate
Revolving Credit Commitments at such time;

 

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

 

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

 

3.2           Notices.  Whenever the Borrower desires the issuance
of a Letter of Credit, the Borrower will give the Issuing Lender written notice
with a copy to the Administrative Agent not later than 11:00 a.m., Charlotte
time, three (3) Business Days (or such shorter period as is acceptable to the
Issuing Lender in any given case) prior to the requested date of issuance
thereof.  Each such notice (each, a “Letter
of Credit Notice”) shall be irrevocable, shall be given in the form of Exhibit B-4
and shall specify (i) the requested date of issuance, which shall be a
Business Day, (ii) the requested Stated Amount and expiry date of the
Letter of Credit, and (iii) the name and address of the requested
beneficiary or beneficiaries of the Letter of Credit.  The Borrower will also complete any application procedures and
documents reasonably required by the Issuing Lender in connection with the
issuance of any Letter of Credit.  Upon
its issuance of any Letter of Credit, the Issuing Lender will promptly notify
the Administrative Agent of such issuance, and the Administrative Agent will
give prompt notice thereof to each Revolving Credit Lender.  The renewal or extension of any outstanding
Letter of Credit shall, for purposes of this Article III, be treated
in all respects as the issuance of a new Letter of Credit.

 

3.3           Participations.  Immediately upon the issuance of any Letter
of Credit, the Issuing Lender shall be deemed to have sold and transferred to
each Revolving Credit Lender, and each Revolving Credit Lender shall be deemed
irrevocably and unconditionally to have purchased and received from the Issuing
Lender, without recourse or warranty (except for the absence of Liens

 

53

 

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

 

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

 

3.5           Payment
by Revolving Loans.  In the
event that the Issuing Lender makes any payment under any Letter of Credit and
the Borrower shall not have timely satisfied in full its

 

54

 

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

 

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

 

55

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)           Any other circumstance or event
whatsoever, including, without limitation, any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Borrower or
a guarantor; provided that nothing in the foregoing shall be deemed to
excuse the Issuing Lender from liability to the Borrower to the extent of any
damages suffered by the

 

56

 

Borrower that are caused by the
Issuing Lender’s gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction.

 

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

 

3.8           Cash
Collateral Account.  At any time
and from time to time (i) after the occurrence and during the continuance
of an Event of Default, the Administrative Agent may, and at the direction or
with the consent of the Required Lenders shall, require the Borrower to deliver
to the Administrative Agent such additional amount of cash as is equal to 105%
of the aggregate Letter of Credit then outstanding (whether or not any
beneficiary under any Letter of Credit shall have drawn or be entitled at such
time to draw thereunder) plus all accrued and unpaid interest and fees thereon
and (ii) in the event of a prepayment under Section 2.6(c) or Section 2.6(h),
the Administrative Agent will retain such amount as may then be required to be
retained, such amounts in each case under clauses (i) and (ii) above to be
held by the Administrative Agent in a cash collateral account (the “Cash
Collateral Account”).  The Borrower
hereby grants to the Administrative Agent, for the benefit of the Issuing
Lender and the Lenders, a Lien upon and security interest in the Cash
Collateral Account and all amounts held therein from time to time as security
for Letter of Credit Exposure, and for application to the Borrower’s
Reimbursement Obligations as and when the same shall arise.  The Administrative Agent shall have
exclusive dominion and control, including the exclusive right of withdrawal,
over such account.  Other than any
interest on the investment of such amounts in Cash Equivalents, which
investments shall be made at the direction of the Borrower (unless a Default or
Event of Default shall have occurred and be continuing, in which case the
determination as to investments shall be made at the option and in the discretion
of the Administrative Agent), amounts in the Cash Collateral Account shall not
bear interest.  Interest and profits, if
any, on such investments shall accumulate in such account.  In the event of a drawing, and subsequent
payment by the Issuing Lender, under any Letter of Credit at any time during
which any amounts are held in the Cash Collateral Account, the Administrative
Agent will deliver to the Issuing Lender an amount equal to the Reimbursement
Obligation created as a result of such payment

 

57

 

(or, if the amounts so held are
less than such Reimbursement Obligation, all of such amounts) to reimburse the
Issuing Lender therefor.  Any amounts
remaining in the Cash Collateral Account (including interest) after the
expiration of all Letters of Credit and reimbursement in full of the Issuing
Lender for all of its obligations thereunder shall be held by the
Administrative Agent, for the benefit of the Borrower, to be applied against
the Obligations in such order and manner as the Administrative Agent may
direct.  If the Borrower is required to
provide cash collateral pursuant to Section 2.6(c), such amount (including
interest), to the extent not applied as aforesaid, shall be returned to the
Borrower on demand, provided that after giving effect to such return
(i) the Aggregate Revolving Credit Exposure would not exceed the aggregate
Revolving Credit Commitments at such time and (ii) no Default or Event of
Default shall have occurred and be continuing at such time.  If the Borrower is required to provide cash
collateral as a result of an Event of Default, such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower within three (3)
Business Days after all Events of Default have been cured or waived.

 

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

 

ARTICLE IV

 

CONDITIONS
OF BORROWING

 

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

 

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

 

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

 

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

 

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

 

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

 

58

 

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

 

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

 

(b)                                 The
Administrative Agent shall have received a certificate, signed by the
president, the chief executive officer or the chief financial officer of the
Parent, in form and substance reasonably satisfactory to the Administrative
Agent, certifying that (i) as of the Closing Date, all representations and
warranties of the Credit Parties contained in this Agreement and the other
Credit Documents qualified as to materiality are true and correct and those not
so qualified are true and correct in all material respects, both immediately
before and after giving effect to the consummation of the BGS Acquisition and
the transactions contemplated hereby (except to the extent any such
representation or warranty is expressly stated to have been made as of a specific
date, in which case such representation or warranty is true and correct (if
qualified as to materiality) or true and correct in all material respects (if
not so qualified), in each case as of such date), (ii) no Default or Event
of Default has occurred and is continuing, both immediately before and after
giving effect to the consummation of the BGS Acquisition and the transactions
contemplated hereby, (iii) both immediately before and after giving effect
to the consummation of the BGS Acquisition and the transactions contemplated
hereby, no Material Adverse Effect has occurred since December 31, 2002, and
there exists no event, condition or state of facts that could reasonably be
expected to result in a Material Adverse Effect, and (iv) all conditions
to the initial extensions of credit hereunder set forth in this Section 4.1
and in Section 4.2
have been satisfied or waived as required hereunder.

 

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

 

59

 

complete copy of resolutions
adopted by the board of directors (or similar governing body) of such Credit
Party, authorizing the execution, delivery and performance of this Agreement
and the other Credit Documents to which it is a party, and as to the incumbency
and genuineness of the signature of each officer of such Credit Party executing
this Agreement or any of such other Credit Documents, and attaching all such
copies of the documents described above.

 

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

 

(e)                                  All
approvals, permits and consents of any Governmental Authorities or other
Persons (including the stockholders of, and lenders to, OrthoLogic) required in
connection with the execution and delivery of this Agreement, the other Credit
Documents and the BGS Asset Purchase Agreement and the consummation of the
transactions contemplated hereby and thereby shall have been obtained, without
the imposition of conditions that are not acceptable to the Administrative Agent,
and all related filings, if any, shall have been made, and all such approvals,
permits, consents and filings shall be in full force and effect and the
Administrative Agent shall have received such copies thereof as it shall have
reasonably requested; all applicable waiting periods shall have expired without
any adverse action being taken or threatened by any Governmental Authority
having jurisdiction; and no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before, and no
order, injunction or decree shall have been entered by, any court or other
Governmental Authority, in each case to enjoin, restrain or prohibit, to obtain
substantial damages in respect of, or to impose materially adverse conditions
upon, this Agreement, any of the other Credit Documents or the BGS Asset
Purchase Agreement, or the consummation of the BGS Acquisition or that could
reasonably be expected to have a Material Adverse Effect.

 

(f)                                    The
approval of the BGS Asset Purchase Agreement by the Borrower’s board of
directors shall not have been withdrawn or modified in a manner adverse to the
Lenders; and the Administrative Agent shall be satisfied that, prior to or
substantially concurrently with the making of the initial Loans hereunder, the
BGS Acquisition shall have been consummated in accordance with the terms of the
BGS Asset Purchase Agreement and all other applicable documentation and in
compliance with all applicable law and regulatory approvals, without any
amendment or waiver of any material condition or other provision thereof except
as approved by the Administrative Agent.

 

(g)                                 The
Administrative Agent shall be satisfied that (i) the aggregate purchase
price for the BGS Acquisition will not exceed $93,000,000 (without taking into
account any assumed liabilities or post-closing working capital adjustment to
the purchase price), and (ii) aggregate fees and expenses payable by or on
behalf of the Borrower in connection with the BGS Acquisition and the
transactions contemplated hereby will not exceed $7,000,000.

 

60

 

(h)                                 The
Administrative Agent shall have received a certificate of a Financial Officer
of the Borrower satisfactory to it, demonstrating that the consummation by the
Borrower of the transactions contemplated hereby and the making of the initial
Loans hereunder on the Closing Date will be permitted under Section 4.03
of the Senior Subordinated Note Indenture.

 

(i)                                     Concurrently
with the making of the initial Loans hereunder, (i) all principal,
interest and other amounts outstanding under the Borrower’s existing senior
bank credit facilities (the “Existing Senior Bank Facilities”) shall be
repaid and satisfied in full and all guarantees by the Credit Parties relating
thereto extinguished, (ii) all commitments to extend credit under the
agreements and instruments relating to the Existing Senior Bank Facilities
shall be terminated, and (iii) any Liens securing the Existing Senior Bank
Facilities shall be released and any related filings (including UCC financing
statements, mortgages, and intellectual property filings) terminated of record
(or arrangements satisfactory to the Administrative Agent made therefor), and
the Administrative Agent shall have received evidence of the foregoing
satisfactory to it.

 

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

 

(k)                                  With
respect to the “Purchased Assets” (as defined in the BGS Asset Purchase
Agreement), the Administrative Agent shall have received such lien releases
(including a lien release letter or other agreement and UCC-3 financing
statement partial releases) from the lenders under OrthoLogic’s senior bank
credit facility (or the agent thereunder on their behalf) as it may have
requested.

 

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

 

(m)                               Since
December 31, 2002, both immediately before and after giving effect to the
consummation of the BGS Acquisition and the transactions contemplated hereby,
there shall not have occurred (i) a Material Adverse Effect or
(ii) any event, condition or state of facts that could reasonably be
expected to have a Material Adverse Effect.

 

(n)                                 The
Borrower shall have paid (i) to the Arranger and Wachovia, the fees
required under the Fee Letter to be paid to them on the Closing Date, in the
amounts due and payable on the Closing Date as required by the terms thereof,
(ii) to the Administrative Agent, the initial payment of the annual administrative
fee described in the Fee Letter, and (iii) all other fees and reasonable
expenses of the Arranger, the Administrative Agent and the Lenders required

 

61

 

hereunder or under any other
Credit Document to be paid on or prior to the Closing Date (including
reasonable fees and expenses of counsel) in connection with this Agreement and
the other Credit Documents.

 

(o)                                 The
Administrative Agent shall have received (i) copies of the audited
financial statements referred to in Section 5.11(a) and a Financial
Condition Certificate, (ii) the Projections, (iii) unaudited
consolidated financial statements of the Parent and its Subsidiaries and the
BGS Business as of the last day of the month most recently ended prior to the
Closing Date for which such financial statements are available, and
(iv) an unaudited consolidated opening balance sheet of the Parent and its
Subsidiaries as of the last day of the tenth fiscal month of fiscal year 2003,
giving pro forma effect to the consummation of the BGS Acquisition, the
repayment of the Existing Senior Bank Facilities, the initial extensions of
credit made under this Agreement and the payment of transaction fees and
expenses related to the foregoing, all as if such events had occurred on such
date (the “Pro Forma Balance Sheet”), all of which shall be in form and
substance satisfactory to the Administrative Agent.

 

(p)                                 The
Administrative Agent shall be satisfied that, on a pro forma basis after giving
effect to the consummation of the BGS Acquisition, the repayment of the
Existing Senior Bank Facilities, the initial extensions of credit made under
this Agreement, and the payment of transaction fees and expenses related to the
foregoing, all as if such transactions had occurred on the date of the Pro
Forma Balance Sheet, (i) Pro Forma Closing EBITDA is not less than
$50,100,000, and (iii) Consolidated Total Funded Debt is not greater than
Pro Forma Closing EBITDA multiplied by 3.7; and the Administrative Agent
shall have received a certificate of a Financial Officer of the Borrower as to
the foregoing, together with supporting documentation, all in form and
substance satisfactory to the Administrative Agent.

 

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

 

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

 

(s)                                  Each
of the Administrative Agent and each Lender shall have received such other
documents, certificates, opinions and instruments in connection with the
transactions contemplated hereby as it shall have reasonably requested.

 

4.2                                 Conditions of All Borrowings.  The obligation of each Lender to make any
Loans hereunder, including the initial Loans (but excluding Revolving Loans
made for the purpose of repaying Refunded Swingline Loans pursuant to Section 2.2(e)),
and the obligation of the

 

62

 

Issuing Lender to issue any
Letters of Credit hereunder, is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date or date of issuance:

 

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

 

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

 

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

 

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

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

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

 

5.1                                 Corporate Organization and Power.  Each Credit Party (i) is a corporation
or a limited liability company duly organized or formed, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
formation, as the case may be (which jurisdictions, as of the Closing Date, are
set forth on Schedule 5.1), (ii) has the full corporate or
limited liability company power and authority to execute, deliver and perform
the Credit Documents to which it is or will be a party, to own and hold its
property and to engage in its business as presently conducted, and (iii) is
duly qualified to do business as a foreign corporation or limited liability
company and is in good standing in each jurisdiction where the nature of its
business or the ownership of its properties requires it to be so qualified,
except where the failure

 

63

 

to be so qualified,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

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

 

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

 

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

 

5.5                                 Litigation. 
Except as specified in Schedule 5.5, there are no actions,
investigations, suits or proceedings pending or, to the knowledge of the
Borrower, threatened, at

 

64

 

 

law, in equity or in
arbitration, before any court, other Governmental Authority, arbitrator or
other Person, (i) against or affecting any Credit Party or any of their
respective properties that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect, or (ii) with respect to this
Agreement, any of the other Credit Documents, the BGS Asset Purchase Agreement
or any of the transactions contemplated hereby or thereby.

 

5.6                                 Taxes.  Each
Credit Party has timely filed all federal, state, local and foreign tax returns
and reports required to be filed by it and has paid, prior to the date on which
penalties would attach thereto or a Lien would attach to any of the properties
of a Credit Party if unpaid, all taxes, assessments, fees and other charges
levied upon it or upon its properties that are shown thereon as due and
payable, other than those that are not yet delinquent or that are being
contested in good faith and by proper proceedings and for which adequate
reserves have been established in accordance with GAAP.  Such returns accurately reflect in all
material respects all liability for taxes of the Credit Parties for the periods
covered thereby.  As of the Closing
Date, there is no ongoing audit or examination or, to the knowledge of the Borrower,
other investigation by any Governmental Authority of the tax liability of any
of the Credit Parties, and there is no material unresolved claim by any
Governmental Authority concerning the tax liability of any Credit Party for any
period for which tax returns have been or were required to have been filed,
other than unsecured claims for which adequate reserves have been established
in accordance with GAAP.  As of the
Closing Date, no Credit Party has waived or extended or has been requested to
waive or extend the statute of limitations relating to the payment of any
taxes.  Notwithstanding the foregoing,
with respect to any state, local, or foreign sales tax returns or reports, the
payment or transfer to the applicable authority of any sales taxes, or any
audits, or examinations, or waivers or extensions of statutes of limitations
with respect thereto, the representations in this Section 5.6 are true
except to the extent that the failure of any such representations to be true
could not reasonably be expected to have a Material Adverse Effect.

 

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

 

5.8                                 Full Disclosure.  All factual information heretofore, contemporaneously or
hereafter furnished in writing to the Administrative Agent, the Arranger or any
Lender by or on behalf of any Credit Party for purposes of or in connection
with this Agreement and the transactions contemplated hereby is or will be true
and accurate in all material respects on the date as of which such information
is dated or certified (or, if such information has been updated, amended or
supplemented, on the date as of which any such update, amendment or supplement
is dated or certified) and not made incomplete by omitting to state a material
fact necessary to

 

65

 

make the statements contained
herein and therein, in light of the circumstances under which such information
was provided, not misleading; provided that, with respect to
projections, budgets and other estimates, except as specifically represented in
Section 5.11(c),
the Parent and the Borrower represent only that such information was prepared
in good faith based upon assumptions believed to be reasonable at the
time.  As of the Closing Date, there is
no fact known to any Credit Party that has, or could reasonably be expected to
have, a Material Adverse Effect, which fact has not been set forth herein, in
the financial statements of the Parent and its Subsidiaries or the BGS Business
furnished to the Administrative Agent and/or the Lenders, or in any
certificate, opinion or other written statement made or furnished by the
Borrower to the Administrative Agent and/or the Lenders.

 

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

 

5.10                           No Material Adverse Effect.  There has been no Material Adverse Effect
since December 31, 2002, and there exists no event, condition or state of facts
that could reasonably be expected to result in a Material Adverse Effect.

 

5.11                           Financial Matters.

 

(a)                                  The
Borrower has heretofore furnished to the Administrative Agent copies of
(i) the audited consolidated balance sheets of the Parent and its
Subsidiaries as of December 31, 2002, 2001 and 2000, in each case with the
related statements of income, cash flows and stockholders’ equity for the
fiscal years then ended, together with the opinion of Ernst & Young LLP
thereon, (ii) the unaudited consolidated balance sheet of the Parent and
its Subsidiaries as of the last day of the third fiscal quarter of fiscal year
2003, and the related statements of income, cash flows and stockholders’ equity
for the nine-month period then ended, (iii) the unaudited consolidated
balance sheet of the Parent and its Subsidiaries as of the last day of the
tenth fiscal month of fiscal year 2003, and the related statements of income
and cash flows for the ten-month period then ended, and (iv) the unaudited
consolidated balance sheet of the BGS Business as of the last day of each of
the third fiscal quarter and tenth fiscal month of fiscal year 2003, and the
related statement of income for the periods then ended, furnished to the
Borrower by OrthoLogic.  Such financial
statements have been prepared in accordance with GAAP (subject, with respect to
the unaudited financial statements, to the absence of notes required by GAAP
and to normal year-end adjustments and,
in the case of the BGS Business financial statements, on the assumption that
the BGS Business was a separate business entity reportable in accordance with
GAAP) and present fairly in all material respects the financial
condition of the Parent and its Subsidiaries (on a consolidated basis) or the
BGS Business, as the case may be, as of the respective dates thereof and the
results of operations of the Parent and its Subsidiaries (on a consolidated
basis) or the BGS Business, as the case may be, for the respective periods then
ended.  Except as fully reflected in the
most recent financial statements referred to above and the notes thereto, there
are no material liabilities or obligations with respect to the Parent and its
Subsidiaries or (to the extent being assumed by the Borrower in the BGS
Acquisition) the BGS

 

66

 

Business of any nature
whatsoever (whether absolute, contingent or otherwise and whether or not due)
that are required in accordance with GAAP to be reflected in such financial
statements and that are not so reflected.

 

(b)                                 The
Pro Forma Balance Sheet gives pro forma effect to the consummation of the BGS
Acquisition, the repayment of the Existing Senior Bank Facilities, the initial
extensions of credit made under this Agreement, and the payment of transaction
fees and expenses related to the foregoing, all as if such events had occurred
on the date as of which the Pro Forma Balance Sheet is prepared.  The Pro Forma Balance Sheet has been
prepared in accordance with the requirements of Regulation S-X under the
Exchange Act, is based on stated assumptions made in good faith and having a
reasonable basis set forth therein, and presents fairly in all material
respects the consolidated financial condition of the Parent and its
Subsidiaries on an unaudited pro forma basis as of the date set forth therein
after giving effect to the consummation of the transactions described above.

 

(c)                                  The
Parent has prepared, and has heretofore furnished to the Administrative Agent a
copy of, projected consolidated balance sheets and statements of income and
cash flows of the Parent and its Subsidiaries (consisting of balance sheets and
statements of income and cash flows prepared by the Parent on an annual basis)
through the end of fiscal year 2009, giving effect to the consummation of the
BGS Acquisition, the repayment of the Existing Senior Bank Facilities, the
initial extensions of credit made under this Agreement, and the payment of
transaction fees and expenses related to the foregoing (the “Projections”).  In the good faith opinion of management of
the Parent, the assumptions used in the preparation of the Projections were
fair, complete and reasonable when made and continue to be fair, complete and
reasonable as of the date hereof.  The
Projections have been prepared in good faith by the executive and financial personnel
of the Parent, are complete and represent a reasonable estimate of the future
performance and financial condition of the Parent and its Subsidiaries, subject
to the uncertainties and approximations inherent in any projections.

 

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

 

5.12                           Ownership of Properties.  Each Credit Party (i) has good and
marketable title to all real property owned by it, (ii) holds interests as
lessee under valid leases in full force and effect with respect to all material
leased real and personal property used in connection with its business, and
(iii) has good title to all of its other material properties and assets
reflected in the most recent financial statements referred to in Section 5.11(a)
(except as sold or otherwise disposed of since the date thereof in the ordinary
course of business), in each case free and clear of all Liens other than
Permitted Liens.  Schedule 5.12(a) lists,
as of the Closing Date and after

 

67

 

giving effect to the BGS
Acquisition, all Realty of the Credit Parties, indicating in each case the
identity of the owner, the address of the property, the nature of use of the
premises, and whether such interest is a leasehold or fee ownership interest.

 

5.13                           ERISA.

 

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

 

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

 

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

 

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

 

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

 

68

 

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

 

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

 

5.16                           Intellectual Property.  Each Credit Party owns, or has the legal
right to use, all Intellectual Property necessary for it to conduct its
business as currently conducted.  Schedule 5.16
lists, as of the Closing Date and after giving effect to the BGS Acquisition,
all registered Intellectual Property owned by any Credit Party.  No claim has been asserted or is pending by
any Person challenging or questioning the use of any such Intellectual Property
or the validity or effectiveness of any such Intellectual Property, nor does
the Borrower know of any such claim, and to the knowledge of the Borrower, the
use of such Intellectual Property by any Credit Party does not infringe on the known
rights of any Person, except for such claims and infringements that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

 

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

 

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

 

69

 

5.19                           Material Contracts.  Schedule 5.19 lists, as of the Closing Date and after
giving effect to the BGS Acquisition, each contract or other agreement to which
any Credit Party is a party, by which any Credit Party or its properties is
bound or to which any Credit Party is subject, in each case the termination or
cancellation of which, or default thereunder or breach thereof by any Credit
Party, could reasonably be expected to have a Material Adverse Effect
(collectively, “Material Contracts”), and also indicates the parties
thereto.  As of the Closing Date and
after giving effect to the BGS Acquisition, (i) each Material Contract is
in full force and effect and is enforceable by each Credit Party that is a
party thereto in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally, by general or equitable principles
or by principles of good faith and fair dealing, and (ii) no Credit Party
or, to the knowledge of the Borrower, any other party thereto is in breach of
or default under any Material Contract in any material respect or has given
notice of termination or cancellation of any Material Contract.

 

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

 

5.21                           Security Documents.

 

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

 

(b)                                 The
provisions of each Mortgage (whether executed and delivered prior to or on the
Closing Date or thereafter) are and will be effective to create in favor of the
Administrative Agent, for its benefit and the benefit of the Lenders, a valid
and enforceable security interest in and Lien upon all right, title and
interest of each Credit Party that is a party thereto in and to the mortgaged
premises described therein, and upon (i) the initial extension of credit
hereunder and

 

70

 

(ii) the filing of such
Mortgage in the applicable real property recording office, such security
interest and Lien shall constitute a fully perfected and first priority
security interest in and Lien upon such right, title and interest of such
Credit Party in and to such mortgaged premises, in each case prior and superior
to the rights of any other Person and subject only to Permitted Liens.

 

5.22                           Labor Relations.  No Credit Party is engaged in any unfair labor practice within
the meaning of the National Labor Relations Act of 1947, as amended.  As of the Closing Date, there is (i) no
unfair labor practice complaint before the National Labor Relations Board, or
grievance or arbitration proceeding arising out of or under any collective
bargaining agreement, pending or, to the knowledge of the Borrower, threatened,
against any Credit Party, (ii) no strike, lock-out, slowdown, stoppage,
walkout or other labor dispute pending or, to the knowledge of the Borrower,
threatened, against any Credit Party, and (iii) to the knowledge of the
Borrower, no petition for certification or union election or union organizing
activities taking place with respect to any Credit Party.  As of the Closing Date, there are no
collective bargaining agreements or Multiemployer Plans covering the employees
of the Credit Parties.

 

5.23                           BGS
Acquisition.

 

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

 

(b)                                 The
subordination provisions contained in the Senior Subordinated Note Indenture
and in the Senior Subordinated Notes are enforceable against the Borrower and
the holders of the Senior Subordinated Notes, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors’ rights generally, by general or equitable principles
or by principles of good faith and fair dealing, and the Borrower hereby
designates all of the Obligations as “Designated Senior Indebtedness” within
the meaning of such term in the Senior Subordinated Note Indenture.

 

71

 

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

 

5.25                           Certain Tax Matters.  The Borrower does not intend to treat the
Loans and/or Letters of Credit and related transactions as being a “reportable
transaction” (within the meaning of Treasury Regulation section 1.6011-4).  In the event the Borrower determines to take
any action inconsistent with such intention, it will promptly notify the
Administrative Agent thereof.  The
Borrower acknowledges that the Administrative Agent and/or one or more of the
Lenders may treat the Loans and/or Letters of Credit and related transactions
as part of a transaction that is subject to Treasury Regulation section
1.6011-4 or section 301.6112-1, and the Administrative Agent and such Lender or
Lenders, as applicable, may file such IRS forms or maintain such lists and
other records as they may determine are required by such Treasury Regulations.

 

5.26                           OFAC; PATRIOT Act.

 

(a)                                  No
Credit Party (i) is or will become a Person whose property or interests in
property are blocked or subject to blocking pursuant to Section 1 of
Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism
(66 Fed. Reg. 49079 (2001)), (ii) engages or will engage in any dealings
or transactions prohibited by Section 2 of such Executive Order, or be
otherwise associated with any such Person in any manner violative of
Section 2, or (iii) will otherwise become a Person on the list of
Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other OFAC regulation or executive order.

 

(b)                                 The
Credit Parties are in compliance in all material respects with the PATRIOT
Act.  No part of the proceeds of the
Loans hereunder will be used, directly or indirectly, for any payments to any
governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.

 

ARTICLE VI

 

AFFIRMATIVE
COVENANTS

 

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

 

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

 

(a)                                  As
soon as available and in any event within thirty (30) days after the end of
each fiscal month, beginning with the eleventh fiscal month of fiscal year 2003
or any earlier month for which such financial statements were not delivered as
of the Closing Date and continuing for

 

72

 

eleven fiscal months thereafter
(or, if earlier, until the date on which the Borrower delivers to the
Administrative Agent and the Lenders financial statements and a Compliance
Certificate indicating a Total Leverage Ratio of less than 3.0 to 1.0 as of the
last day of the period covered thereby), unaudited consolidated balance sheets
of the Parent and its Subsidiaries as of the end of such fiscal month and
unaudited consolidated statements of income and cash flows for the Parent and
its Subsidiaries for the fiscal month then ended and for that portion of the
fiscal year then ended, in each case setting forth comparative consolidated
figures as of the end of and for the corresponding period in the preceding
fiscal year together with comparative budgeted figures for the fiscal period
then ended, all in reasonable detail and prepared in accordance with GAAP
(subject to the absence of notes required by GAAP and subject to normal
year-end adjustments) applied on a basis consistent with that of the preceding
month or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such month;

 

(b)                                 As
soon as available and in any event within fifty (50) days after the end of each
of the first three fiscal quarters of each fiscal year, beginning with the
first fiscal quarter of fiscal year 2004, an unaudited consolidated balance
sheet (and, to the extent available, an unaudited consolidating balance sheet
with respect to the BGS Business) of the Parent and its Subsidiaries as of the
end of such fiscal quarter and unaudited consolidated statements of income and cash
flows for the Parent and its Subsidiaries (and, to the extent available, an
unaudited consolidating statement of income with respect to the BGS Business)
for the fiscal quarter then ended and for that portion of the fiscal year then
ended, in each case setting forth comparative consolidated (or consolidating,
if applicable) figures as of the end of and for the corresponding period in the
preceding fiscal year together with comparative budgeted figures for the fiscal
year then ended, all in reasonable detail and prepared in accordance with GAAP
(subject to the absence of notes required by GAAP and subject to normal
year-end adjustments) applied on a basis consistent with that of the preceding
quarter or containing disclosure of the effect on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such quarter; and

 

(c)                                  As
soon as available and in any event within 100 days after the end of each fiscal
year, beginning with fiscal year 2003, an audited consolidated balance sheet
(and, to the extent available, an unaudited consolidating balance sheet with
respect to the BGS Business) of the Parent and its Subsidiaries as of the end
of such fiscal year and the related audited consolidated statements of income,
cash flows and stockholders’ equity (and, to the extent available, an unaudited
consolidating statement of income with respect to the BGS Business) for the
Parent and its Subsidiaries for the fiscal year then ended, including the notes
thereto, in each case setting forth comparative figures as of the end of and
for the preceding fiscal year together with comparative budgeted figures for
the fiscal year then ended, all in reasonable detail and (with respect to the
audited statements) certified by Ernst & Young LLP or another independent
certified public accounting firm of recognized national standing reasonably
acceptable to the Administrative Agent, together with a report thereon by such
accountants that is not qualified as to going concern or scope of audit and to
the effect that such financial statements present fairly in all material
respects the consolidated financial condition and results of operations of the
Parent and its Subsidiaries as of the dates and for the periods indicated in accordance
with GAAP applied on a basis consistent with that of the preceding year or
containing disclosure of the effect

 

73

 

on the financial condition or
results of operations of any change in the application of accounting principles
and practices during such year.

 

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

 

(a)                                  Concurrently
with each delivery of the financial statements described in Sections 6.1(b)
and
6.1(c), a Compliance Certificate with respect to the period covered
by the financial statements being delivered thereunder, executed by a Financial
Officer of the Parent, together with a Covenant Compliance Worksheet reflecting
the computation of the financial covenants set forth in Article VII as of the
last day of the period covered by such financial statements;

 

(b)                                 Concurrently
with each delivery of the financial statements described in Section 6.1(c),
a certificate executed by a Financial Officer of the Parent in form and
substance reasonably satisfactory to the Administrative Agent and setting forth
the calculation of Excess Cash Flow for such fiscal year;

 

(c)                                  As
soon as available and in any event within thirty (30) days after the
commencement of each fiscal year, beginning with the 2004 fiscal year, a
consolidated operating budget for the Parent and its Subsidiaries for the
succeeding fiscal year (prepared on a quarterly basis), consisting of a
consolidated balance sheet and consolidated statements of income and cash
flows, together with a certificate of a Financial Officer of the Parent to the
effect that such budget has been prepared in good faith based on estimates and
assumptions believed to be reasonable; and as soon as available from time to
time thereafter, any modifications or revisions to or restatements of such
budget;

 

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

 

(e)                                  Promptly
upon the sending, filing or receipt thereof, copies of (i) all financial
statements, reports, notices and proxy statements that the Parent shall send or
make available generally to its shareholders, (ii) all regular, periodic
and special reports, registration statements and prospectuses (other than on
Form S-8) that any Credit Party shall render to or file with the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. or
any national securities exchange, and (iii) all press releases and other
statements made available generally by the Parent to the public concerning
material developments in the business of the Parent and its Subsidiaries;

 

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

 

(i)                                     the
occurrence of any Default or Event of Default, together with a written
statement of a Responsible Officer of the Parent specifying the nature of such
Default or

 

74

 

Event of
Default, the period of existence thereof and the action that the Parent has
taken and proposes to take with respect thereto;

 

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

 

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

 

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

 

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

 

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

 

75

 

(vii)                           any
other matter or event that has, or could reasonably be expected to have, a
Material Adverse Effect, together with a written statement of a Responsible
Officer of the Parent setting forth the nature and period of existence thereof
and the action that the affected Credit Parties have taken and propose to take
with respect thereto;

 

(g)                                 Promptly
after the Borrower has notified the Administrative Agent of any intention by
the Borrower to treat the Loans and/or Letters of Credit and related
transactions as being a “reportable transaction” (within the meaning of
Treasury Regulation section 1.6011-4), a duly completed copy of IRS Form 8886
or any successor form; and

 

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

 

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

 

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

 

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

 

76

 

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

 

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

 

6.8                                 [Reserved.].

 

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

 

(a)                                  Not
less than ten (10) Business Days prior to the consummation of any Permitted
Acquisition, the Borrower shall have delivered to the Administrative Agent and
each Lender the following (but with respect to any Permitted Acquisition having
an Acquisition Amount less than $5,000,000 (or $10,000,000, in the event Total
Leverage Ratio is less than 3.0 to 1.0 after giving pro forma effect to such
Permitted Acquisition), only the certificate and supporting calculations
described in clause (v) below):

 

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

 

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

 

77

 

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

 

(iv)                              with
respect to any such Permitted Acquisition in which any Contingent Purchase
Price Obligations or Seller Subordinated Indebtedness shall be incurred by the
Borrower or any other Credit Party, a copy of the most recent draft of the
acquisition agreement (including schedules and exhibits thereto, to the extent
available) and other material documents (including the documentation evidencing
such Contingent Purchase Price Obligations or Seller Subordinated
Indebtedness); and

 

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

 

(b)                                 As
soon as reasonably practicable after the consummation of any Permitted
Acquisition, the Borrower will deliver to the Administrative Agent and each
Lender true and correct copies of the fully executed acquisition agreement
(including schedules and exhibits thereto) and other material documents and
closing papers delivered in connection therewith, together with (in the case of
any Permitted Acquisition having an Acquisition Amount less than $5,000,000 (or
$10,000,000, in the event Total Leverage Ratio is less than 3.0 to 1.0 after
giving pro forma effect to such Permitted Acquisition) the items described in
clauses (i) and (ii) of Section 6.9(a).

 

(c)                                  The
consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by the Borrower that (except as shall have been
approved in writing by the Required Lenders) all conditions thereto set forth
in this Section 6.9
and in the description furnished under Section 6.9(a)(i) have been satisfied,
that the same is permitted in accordance with the terms of this Agreement, and
that the matters certified to by the Financial Officer of the Borrower in the
certificate referred to in Section 6.9(a)(v) are, to the best of
such Financial Officer’s knowledge, true and correct in all material respects
as of the date such certificate is given, which representation and warranty
shall be deemed to be a representation and warranty as

 

78

 

of the date thereof for all
purposes hereunder, including, without limitation, for purposes of Sections 4.2
and 9.1.

 

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

 

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

 

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

 

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

 

provided that, with respect to any Foreign
Subsidiary, (i) the Capital Stock of such Foreign Subsidiary will not be
required to be pledged to the extent (but only to the extent) that (y) such
Foreign Subsidiary is a Subsidiary of a Foreign Subsidiary or (z) such
pledge exceeds sixty-five percent (65%) of the voting Capital Stock of such
Foreign Subsidiary, unless and to the extent

 

79

 

that the pledge of greater than sixty-five percent (65%) of the voting
Capital Stock of such Foreign Subsidiary would not cause any adverse tax
consequences to the Borrower (other than that which would be de minimis), and
(ii) such Foreign Subsidiary will not be required to become a Subsidiary
Guarantor or become a party to the Security Agreement (and the documents,
certificates, opinions and other items required under Section 6.10(c) shall
not be required with respect to such Foreign Subsidiary) if doing so would
cause adverse tax consequences to the Borrower (other than that which would be
de minimis).

 

6.11                           Additional Security.  Each of the Parent and the Borrower will,
and will cause each of its Subsidiaries to, grant to the Administrative Agent,
for the benefit of the Lenders, from time to time security interests, mortgages
and other Liens in and upon such of its assets and properties as are not
covered by the Security Documents executed and delivered on the Closing Date or
pursuant to Section 6.10 and as may be reasonably requested from time
to time by the Required Lenders (including, without limitation, a Mortgage with
respect to owned interests in real property but excluding leased real
property), but subject to the proviso at the end of Section 6.10.  Such security interests, mortgages and Liens
shall be granted pursuant to documentation in form and substance reasonably
satisfactory to the Administrative Agent and shall constitute valid and
perfected security interests and Liens, subject to no Liens other than
Permitted Liens.  Without limitation of
the foregoing, (i) the Borrower shall use its commercially reasonable efforts
to deliver to the Administrative Agent, not later than 15 days after the
Closing Date, a landlord agreement from the landlord of the Borrower’s Vista,
California facility, in form and substance satisfactory to the Administrative
Agent and (ii) in connection with the grant of any Mortgage, the Borrower will,
and will cause each applicable Subsidiary to, at the Borrower’s expense, prepare,
obtain and deliver to the Administrative Agent any environmental assessments,
appraisals, surveys, title insurance and other matters or documents as the
Administrative Agent may reasonably request or as may be required under
applicable banking laws and regulations.

 

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

 

6.13                           PATRIOT Act Compliance.  Each of the Parent and the Borrower will,
and will cause each of its Subsidiaries to, provide, to the extent commercially
reasonable, such information and take such actions as are reasonably requested
by the Administrative Agent or any Lender in order to assist the Administrative
Agent and the Lenders in maintaining compliance with the PATRIOT Act.

 

80

 

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

 

6.15                           Post-Closing Matters.

 

(a)                                  Within
60 days after the Closing Date, the Borrower shall have executed and delivered
to the Administrative Agent a Pledge Agreement Without Transmission of
Possession (Contrato
de Prenda sin Transmision de Posesión) with respect to the equipment
and inventory of the Borrower located in Mexico, together with an opinion of
Mexican counsel and such other documents and certificates as the Administrative
Agent shall reasonably request, all in form and substance satisfactory to the
Administrative Agent.

 

(b)                                 Within
120 days after the Closing Date, the Borrower shall have executed and delivered
to the Administrative Agent a pledge agreement effective under German law to
pledge to the Administrative Agent 65% of the voting Capital Stock of dj
Orthopedics Deutschland GmbH, together with an opinion of German counsel and
such other documents and certificates as the Administrative Agent shall
reasonably request, all in form and substance satisfactory to the
Administrative Agent.

 

ARTICLE VII

 

FINANCIAL
COVENANTS

 

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

 

7.1                                 Total Leverage Ratio.  The Borrower will not permit the Total
Leverage Ratio as of the last day of any fiscal quarter, beginning with the
fourth fiscal quarter of fiscal year 2003, to be greater than the ratio set
forth below opposite such fiscal quarter (or opposite the period that includes
such fiscal quarter): 

 

	
  Period

  	
   

  	
  Maximum Total

  Leverage Ratio

  	
   

  
	
  4th
  FQ of FY 2003

  	
   

  	
  4.0 : 1.0

  	
   

  
	
  1st
  FQ of FY 2004 through and including 2nd FQ of FY 2004

  	
   

  	
  3.75 : 1.0

  	
   

  
	
  3rd
  FQ of FY 2004 through and including 4th FQ of FY 2004

  	
   

  	
  3.5 : 1.0

  	
   

  

 

81

 

	
  Period

  	
   

  	
  Maximum Total

  Leverage Ratio

  	
   

  
	
  1st
  FQ of FY 2005 through and including 4th FQ of FY 2005

  	
   

  	
  3.25 : 1.0

  	
   

  
	
  1st
  FQ of FY 2006 through and including 4th FQ of FY 2006

  	
   

  	
  3.0 : 1.0

  	
   

  
	
  1st
  FQ of FY 2007 and thereafter

  	
   

  	
  2.5 : 1.0

  	
   

  

 

7.2                                 Senior Leverage Ratio.  The Borrower will not permit the Senior
Leverage Ratio as of the last day of any fiscal quarter, beginning with the
fourth fiscal quarter of fiscal year 2003, to be greater than the ratio set
forth below opposite such fiscal quarter (or opposite the period that includes
such fiscal quarter): 

 

	
  Period

  	
   

  	
  Maximum
  Senior

  Leverage Ratio

  	
   

  
	
  4th
  FQ of FY 2003

  	
   

  	
  2.5 : 1.0

  	
   

  
	
  1st
  FQ of FY 2004 through and including 4th FQ of FY 2004

  	
   

  	
  2.25 : 1.0

  	
   

  
	
  1st
  FQ of FY 2005 through and including 2nd FQ of FY 2006

  	
   

  	
  2.0 : 1.0

  	
   

  
	
  3rd
  FQ of FY 2006 and thereafter

  	
   

  	
  1.75 : 1.0

  	
   

  

 

7.3                                 Interest Coverage Ratio.  The Borrower will not permit the Interest
Coverage Ratio as of the last day of any fiscal quarter, beginning with the
fourth fiscal quarter of fiscal year 2003, to be less than the ratio set forth
below opposite such fiscal quarter (or opposite the period that includes such
fiscal quarter):

 

	
  Period

  	
   

  	
  Minimum
  Interest

  Coverage Ratio

  	
   

  
	
  4th
  FQ of FY 2003 through and including 4th FQ of FY 2005

  	
   

  	
  3.0 : 1.0

  	
   

  
	
  Thereafter

  	
   

  	
  3.5 : 1.0

  	
   

  

 

7.4                                 Fixed Charge Ratio.  The Borrower will not permit the Fixed
Charge Coverage Ratio as of the last day of any fiscal quarter, beginning with
the fourth fiscal quarter of fiscal year 2003, to be less than the ratio set
forth below opposite such fiscal quarter (or opposite the period that includes
such fiscal quarter):

 

82

 

	
  Period

  	
   

  	
  Minimum
  Fixed

  Charge Coverage

  Ratio

  	
   

  
	
  4th
  FQ of FY 2003 and thereafter

  	
   

  	
  1.5 : 1.0

  	
   

  

 

ARTICLE VIII

 

NEGATIVE
COVENANTS

 

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

 

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

 

(i)                                     any
Wholly Owned Subsidiary of the Borrower may merge or consolidate with, or be
liquidated into, (x) the Borrower (so long as the Borrower is the
surviving or continuing entity) or (y) any other Wholly Owned Subsidiary
(so long as, if either constituent entity is a Subsidiary Guarantor, the surviving
or continuing entity is a Subsidiary Guarantor), and in each case so long as no
Default or Event of Default has occurred and is continuing or would result
therefrom;

 

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

 

(iii)                               the
Borrower may merge or consolidate with another Person (other than another
Credit Party), so long as (x) the Borrower is the surviving entity,
(y) such merger or consolidation constitutes a Permitted Acquisition and
the applicable conditions and requirements of Sections 6.9 and 6.10
are satisfied, and (z) no Default or Event of Default has occurred and is
continuing or would result therefrom; and

 

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

 

83

 

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

 

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

 

(ii)                                  Indebtedness
under the Senior Subordinated Notes in an aggregate principal amount at any
time outstanding not exceeding the aggregate of (y) $75,000,000 minus
(z) the aggregate of any principal payments or prepayments (if any) made
with respect to the Senior Subordinated Notes, and any renewals, replacements,
refinancings or extensions thereof that are on economic and other terms no more
onerous to the Borrower in any material respect and that do not increase the
outstanding principal amount thereof, result in an earlier final maturity date
or decreased weighted average life thereof, add (or make materially more
restrictive) any covenant or event of default, or otherwise contain any
subordination terms or other material terms less favorable to the Lenders than
the corresponding terms of the Senior Subordinated Notes as in effect as of the
date hereof;

 

(iii)                               subordinated
guarantees of the Senior Subordinated Notes by the Parent and the Subsidiaries
of the Borrower party to the Senior Subordinated Note Indenture, as set forth
in the Senior Subordinated Note Indenture;

 

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

 

(v)                                 Indebtedness
of the Borrower and its Subsidiaries incurred solely to finance the
acquisition, construction or improvement of any equipment, real property or
other fixed assets in the ordinary course of business (or assumed or acquired
by the Borrower and its Subsidiaries in connection with a Permitted Acquisition
or other transaction permitted under this Agreement), including Indebtedness in
respect of Capital Lease Obligations, and any renewals, replacements,
refinancings or extensions thereof, provided that all such Indebtedness
shall not exceed $15,000,000 in aggregate principal amount outstanding at any
one time;

 

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

 

84

 

(vii)                           Indebtedness
of the Borrower under Hedge Agreements required pursuant to, and entered into
in accordance with, Section 6.8 or under other Hedge
Agreements entered into in the ordinary course of business to manage existing
or anticipated interest rate or foreign currency risks and not for speculative
purposes;

 

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

 

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

 

(x)                                   unsecured
Indebtedness issued after the Closing Date by the Borrower or any of its
Subsidiaries to sellers in connection with Permitted Acquisitions (including
Indebtedness consisting of Contingent Purchase Price Obligations), in an
aggregate principal amount not exceeding $10,000,000 outstanding at any time, provided
that such Indebtedness (A) is fully subordinated in right and time of
payment to the Obligations on terms and conditions reasonably acceptable to the
Administrative Agent, and (B) shall have covenants and undertakings that
are no more restrictive than those contained herein and shall not be
cross-defaulted to this Agreement (but may be cross-accelerated) (the
Indebtedness described in this paragraph, “Seller Subordinated Indebtedness”);
and Guaranty Obligations of the Parent in respect of Seller Subordinated
Indebtedness permitted hereunder, provided that such Guaranty
Obligations comply with clauses (A) and (B) above;

 

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

 

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

 

(xiii)                          other
unsecured Indebtedness of the Borrower and its Subsidiaries not exceeding
$10,000,000 in aggregate principal amount outstanding at any time; provided
that the aggregate principal amount of Indebtedness of Foreign Subsidiaries
incurred pursuant to this Section 8.2(xiii) outstanding at any
time shall not exceed $5,000,000.

 

8.3                                 Liens.  Each of
the Parent and the Borrower will not, and will not permit or cause any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist, any

 

85

 

Lien upon or with respect to
any part of its property or assets, whether now owned or hereafter acquired, or
file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
state or under any similar recording or notice statute, or agree to do any of
the foregoing, other than the following (collectively, “Permitted Liens”):

 

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

 

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

 

(iii)                               Liens
imposed by law, such as Liens of carriers, warehousemen, mechanics, materialmen
and landlords, incurred in the ordinary course of business for sums not
constituting borrowed money that are not overdue for a period of more than
sixty (60) days or that are being contested in good faith (and by appropriate
proceedings, except with respect to claims not exceeding $250,000 in the
aggregate at any time) and for which adequate reserves have been established in
accordance with GAAP (if so required);

 

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

 

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

 

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

 

(vii)                           Liens
securing the Indebtedness permitted under Section 8.2(v), provided that
(x) any such Lien shall attach to the property being acquired, constructed
or improved with such Indebtedness concurrently with or within one hundred
eighty (180) days after the acquisition (or completion of construction or
improvement) or the

 

86

 

refinancing
thereof by the Borrower or such Subsidiary, (y) the amount of the
Indebtedness secured by such Lien shall not exceed 100% of the cost to the
Borrower or such Subsidiary of acquiring, constructing or improving the
property and any other assets then being financed solely by the same financing
source, and (z) any such Lien shall not encumber any other property of the
Borrower or any of its Subsidiaries except assets then being financed solely by
the same financing source and proceeds thereof;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)                                     the
sale or other disposition of inventory and Cash Equivalents in the ordinary
course of business;

 

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

 

87

 

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

 

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

 

(v)                                 the
sale or other disposition of assets (other than the Capital Stock of
Subsidiaries) outside the ordinary course of business for fair value and for
consideration at least 66-2/3% of which consists of cash or Cash Equivalents, provided
that (x) the aggregate amount of Net Cash Proceeds from all such sales or
dispositions that are consummated during any fiscal year shall not exceed
$5,000,000, (y) such Net Cash Proceeds shall, to the extent required hereunder,
be reinvested or applied to the prepayment of the Loans in accordance with the
provisions of Section 2.6(f), and (z) no Default or Event of
Default shall have occurred and be continuing or would result therefrom.  For purposes of this Section 8.4, the
following shall be deemed to be cash: 
(a) the assumption of any liabilities of the Borrower or any
Subsidiary Guarantor with respect to, and the release of the Borrower or such
Subsidiary Guarantor from all liability in respect of, any Indebtedness of the
Borrower or the Subsidiaries permitted hereunder (in the amount of such
Indebtedness) that is due and payable within one year of the consummation of
such disposition and (b) securities received by the Borrower or any
Subsidiary Guarantor from the transferee that are immediately convertible into
cash without breach of their terms or the agreement pursuant to which they were
purchased and that are promptly converted by the Borrower or such Subsidiary
Guarantor into cash.

 

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

 

(i)                                     Investments
consisting of Cash Equivalents;

 

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

 

(iii)                               Investments
consisting of loans and advances to employees, officers or directors of the
Parent and its Subsidiaries in the ordinary course of business not

 

88

 

exceeding $1,500,000 at
any time outstanding, provided that loans for the purpose of acquiring
Capital Stock of the Parent the Net Cash Proceeds of which Equity Issuance are
contributed to the capital of the Borrower or used to acquire Capital Stock of
the Borrower shall not be subject to such limit;

 

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

 

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

 

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

 

(vii)                           Investments
of the Borrower under Hedge Agreements required pursuant to, and entered into
in accordance with, Section 6.8 or under other Hedge
Agreements entered into in the ordinary course of business to manage existing
or anticipated interest rate or foreign currency risks and not for speculative
purposes;

 

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

 

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

 

(x)                                   Investments
by the Borrower in Foreign Subsidiaries (including, without limitation, capital
contributions made to any Foreign Subsidiary, loans made to any Foreign
Subsidiary, and Guarantee Obligations with respect to obligations of any such
Foreign Subsidiary) made after the Closing Date in an aggregate amount not
exceeding $5,000,000 at any time outstanding for all such Investments;

 

(xi)                                the
BGS Acquisition;

 

(xii)                             Permitted
Acquisitions; and

 

(xiii)                          other
Investments of the Borrower and its Subsidiaries not otherwise permitted under
this Section 8.5
(including joint ventures, but excluding Investments in Foreign Subsidiaries)
in an aggregate amount not exceeding $6,000,000 at any time outstanding for all
such Investments.

 

89

 

8.6                                 Restricted Payments.

 

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

 

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

 

(ii)                                  the
Borrower may make dividend payments or other distributions to the Parent in
amounts equal to amounts required for the Parent to pay United States federal,
state and local income taxes to the extent such taxes are attributable to the
income of the Borrower and its Subsidiaries;

 

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

 

(iv)                              the
Borrower may declare and make dividend payments and other distributions to the
Parent to enable the Parent to pay ordinary and reasonable holding company
operating expenses; and

 

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

 

(b)                                 Each
of the Parent and the Borrower will not, and will not permit or cause any of
its Subsidiaries to, make (or give any notice in respect of) any payment or
prepayment of principal on, or interest, fees or premium (if any) with respect
to, the Senior Subordinated Notes or any other Subordinated Indebtedness, or
directly or indirectly make any redemption (including pursuant to any change of
control or asset disposition provision), retirement, defeasance or other
acquisition for value of any of the Senior Subordinated Notes or any other
Subordinated Indebtedness, or make any deposit or otherwise set aside funds for
any of the foregoing purposes; provided, however, that,
(i) the Borrower may make scheduled payments of interest with respect to
the Senior Subordinated Notes to the extent made or paid in accordance with the
terms and conditions of the Senior Subordinated Note Indenture (including
applicable subordination provisions), (ii) the Borrower and its
Subsidiaries may make scheduled principal

 

90

 

and interest payments on any Seller Subordinated
Indebtedness incurred or issued pursuant to (and in accordance with the terms
of) Section 8.2(x)
and any Subordinated Indebtedness existing on the Closing Date and described in
Schedule 8.2, in each case in accordance with the
terms of such Indebtedness (including any subordination provisions thereof),
(iii) the Borrower may effect a Permitted Senior Subordinated Note
Redemption, and (iv) the Borrower may replace or refinance the Senior
Subordinated Notes as permitted under Section 8.2(ii).

 

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

 

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

 

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

 

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

 

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

 

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

 

8.8           Lines of
Business.

 

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

 

(b)           Notwithstanding the provisions of Section 8.8(a) or any other provision of this Agreement,
the Parent shall not (i) hold any assets other than the Capital Stock of
the Borrower, cash and Cash Equivalents and rights under employment agreements
and written employment arrangements, (ii) have any liabilities other than
(A) liabilities under and as permitted by the Credit Documents,
(B) tax liabilities in the ordinary course of business,
(C) liabilities under employment agreements and written employment arrangements
and (D) corporate,

 

91

 

administrative and operating expenses in the ordinary
course of business, or (iii) engage in any business other than
(A) owning the Capital Stock of the Borrower and activities incidental to such
ownership and to its public company status, and (B) acting as a guarantor
of the Obligations hereunder and granting to the Administrative Agent, for the
benefit of the Lenders, a security interest in and Lien upon its assets
pursuant to the Security Documents to which it is a party.

 

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

 

8.10         Certain Amendments.  Each of the Parent and the Borrower will not, and will not permit
or cause any of its Subsidiaries to, (i) amend, modify or waive, or permit the
amendment, modification or waiver of, any provision of any of the Senior
Subordinated Notes, the Senior Subordinated Note Indenture or any other
Subordinated Indebtedness, the effect of which would be (a) to increase the
principal amount due thereunder or provide for any mandatory prepayments not
already provided for by the terms thereof, (b) to shorten or accelerate the
time of payment of any amount due thereunder, (c) to increase the applicable
interest rate or amount of any fees or costs due thereunder, (d) to amend any
of the subordination provisions thereunder (including any of the definitions
relating thereto), (e) to make any covenant or event of default therein more
restrictive or add any new covenant or event of default, (f) to grant any
security or collateral to secure payment thereof, or (g) to effect any change
in the rights or obligations of the Credit Parties thereunder or of the holders
thereof that, in the reasonable determination of the Administrative Agent,
would be adverse in any material respect to the rights or interests of the
Lenders, (ii) breach or otherwise violate any of the subordination provisions
applicable to the Senior Subordinated Notes or any other Subordinated
Indebtedness, including, without limitation, restrictions against payment of
principal and interest thereon, (iii) designate any Indebtedness other than the
Obligations as “Designated Senior Indebtedness” within the meaning of the
Senior Subordinated Note Indenture, or (iv) amend, modify or change any
provision of its articles or certificate of incorporation or formation, bylaws,
operating agreement or other applicable formation or organizational documents,
as applicable, or the terms of any class or series of its Capital Stock, other
than in a manner that could not reasonably be expected to adversely affect the
Lenders in any material respect (provided that the Borrower shall give
the Administrative Agent and the Lenders notice of any such amendment,
modification or change, together with certified copies thereof).

 

92

 

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

 

8.12         No Other Negative Pledges.  Each of the Parent and the Borrower will
not, and will not permit or cause any of its Subsidiaries to, enter into or
suffer to exist any agreement or restriction that, directly or indirectly,
prohibits or conditions the creation, incurrence or assumption of any Lien upon
or with respect to any part of its property or assets, whether now owned or
hereafter acquired, or agree to do any of the foregoing, except (in the case of
clause (b) above only) for such agreements or restrictions existing under or by
reason of (i) this Agreement and the other Credit Documents, (ii) applicable
Requirements of Law, (iii) any agreement or instrument creating a Permitted
Lien (but only to the extent such agreement or restriction applies to the
assets subject to such Permitted Lien), (iv) customary provisions in leases and
licenses of real or personal property entered into by the Borrower or any
Subsidiary as lessee or licensee in the ordinary course of business,
restricting the granting of Liens therein or in property that is the subject
thereof, (v) customary restrictions and conditions contained in any agreement
relating to the sale of assets (including Capital Stock of a Subsidiary)
pending such sale, provided that such restrictions and conditions apply
only to the assets being sold and such sale is permitted under this Agreement,
(vi) customary provisions in joint venture agreements entered into by the
Borrower or any Subsidiary in the ordinary course of business, and (vii) the
Senior Subordinated Note Indenture as in effect as of the date hereof.

 

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

 

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

 

93

 

ARTICLE IX

 

EVENTS OF DEFAULT

 

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

 

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

 

(b)           The Borrower or any other Credit
Party shall (i) fail to observe, perform or comply with any condition,
covenant or agreement contained in any of Sections 2.14, 6.2(f)(i), 6.3(i),
6.8,
6.9 or 6.10
or in Articles VII
or VIII
or (ii) fail to observe, perform or comply with any condition, covenant or
agreement contained in any of Sections 6.1 or 6.2 (other than Section 6.2(f)(i))
and (in the case of this clause (ii) only) such failure shall continue
unremedied for a period of five (5) days after the earlier of (y) the date
on which a Responsible Officer of the Borrower acquires knowledge thereof and
(z) the date on which written notice thereof is delivered by the
Administrative Agent or any Lender to the Borrower;

 

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

 

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

 

(e)           The Borrower or any other Credit
Party shall (i) fail to pay when due (whether by scheduled maturity,
acceleration or otherwise and after giving effect to any applicable grace
period) (y) any principal of or interest on any Indebtedness (other than
the Indebtedness incurred pursuant to this Agreement or a Hedge Agreement)
having an aggregate principal amount of at least $5,000,000 or (z) any
termination or other payment under any Hedge Agreement covering a notional
amount of Indebtedness of at least $5,000,000 or (ii) fail to observe,
perform or comply with any condition, covenant or agreement contained in any
agreement or instrument evidencing

 

94

 

or relating to any such Indebtedness, or any other event
shall occur or condition exist in respect thereof, and the effect of such
failure, event or condition is to cause, or permit the holder or holders of
such Indebtedness (or a trustee or agent on its or their behalf) to cause (with
or without the giving of notice, lapse of time, or both), without regard to any
subordination terms with respect thereto, such Indebtedness to become due, or
to be prepaid, redeemed, purchased or defeased, prior to its stated maturity;

 

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

 

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

 

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

 

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

 

(j)            Any ERISA Event shall occur or exist
with respect to any Plan or Multiemployer Plan and, as a result thereof,
together with all other ERISA Events then existing, any Credit Party

 

95

 

and its ERISA Affiliates have incurred, or could
reasonably be expected to incur, liability (including liability to any one or
more Plans or Multiemployer Plans or to the PBGC (or to any combination
thereof)) in excess of $1,000,000;

 

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

 

(l)            Any of the following shall occur:

 

(i)            The Parent shall cease to own
directly 100% of the issued and outstanding Capital Stock of the Borrower;

 

(ii)           Any Person or group of Persons acting
in concert as a partnership or other group (other than Investor and its
Affiliates) shall have become, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases or otherwise, the beneficial
owner (within the meaning given to such term in Rule 13d-3 under the Exchange
Act), directly or indirectly, of Capital Stock of the Parent having 25% or more
of the Total Voting Power of the Parent and at such time Investor and its
Affiliates are the beneficial owners (defined as provided above), directly or
indirectly, of Capital Stock of the Parent having a lesser percentage of the
Total Voting Power of the Parent than such other Person or group of Persons;

 

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

 

(iv)          a Change of Control (as defined in the
Senior Subordinated Note Indenture) shall have occurred under the Senior
Subordinated Note Indenture.

 

9.2           Remedies:
Termination of Commitments, Acceleration, etc.  Upon and at any time after the occurrence and during the
continuance of any Event of Default, the Administrative Agent shall at the
direction, or may with the consent, of the Required Lenders, take any or all of
the following actions at the same or different times:

 

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

 

96

 

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

 

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

 

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

 

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

 

9.3           Remedies: Set-Off.  In addition to all other rights and remedies available under the
Credit Documents or applicable law or otherwise, upon and at any time after the
occurrence and during the continuance of any Event of Default, each Lender or
any of its Affiliates may, and each is hereby authorized by the Borrower, at
any such time and from time to time, to the fullest extent permitted by
applicable law, without presentment, demand, protest or other notice of any
kind, all of which are hereby knowingly and expressly waived by the Borrower
(on behalf of itself and the other Credit Parties) to set off and to apply any
and all deposits (general or special, time or demand, provisional or final) and
any other property at any time held (including at any branches or agencies,
wherever located), and any other indebtedness at any time owing, by such Lender
or Affiliate to or for the credit or the account of the Borrower or any other
Credit Party against any or all of the Obligations to such Lender or Affiliate
now or hereafter existing, whether or not such Obligations may be contingent or
unmatured, the Borrower (on behalf of itself and the other Credit Parties)
hereby granting to each Lender a continuing security interest in and Lien upon
all such deposits and other property as security for such Obligations.  Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such set-

 

97

 

off and application; provided, however, that the failure
to give such notice shall not affect the validity of such set-off and
application.

 

ARTICLE X

 

THE ADMINISTRATIVE AGENT

 

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

 

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

 

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

 

98

 

Agreement or any other Credit Document or the existence or possible
existence of any Default or Event of Default, or to inspect the properties,
books or records of the Borrower or any other Credit Party.

 

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

 

10.5         Non-Reliance on Administrative
Agent and Other Lenders.  Each
Lender expressly acknowledges that neither the Administrative Agent nor any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates has
made any representation or warranty to it and that no act by the Administrative
Agent or any such Person hereinafter taken, including any review of the affairs
of the Borrower and the other Credit Parties, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender.  Each Lender represents to the Administrative
Agent that (i) it has, independently and without reliance upon the Administrative
Agent or any other Lender and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, properties, financial and other condition and
creditworthiness of the Borrower and the other Credit Parties and made its own
decision to enter into this Agreement and extend credit to the Borrower
hereunder, and (ii) it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action
hereunder and under the other Credit Documents and to make such investigation
as it deems necessary to inform itself as to the business, prospects,
operations, properties, financial and other condition and creditworthiness of
the Borrower and the other Credit Parties. 
Except as expressly provided in this Agreement and the other Credit
Documents, the Administrative Agent shall have no duty or responsibility,
either

 

99

 

initially or on a continuing basis, to provide any
Lender with any credit or other information concerning the business, prospects,
operations, properties, financial or other condition or creditworthiness of the
Borrower, the other Credit Parties or any other Person that may at any time
come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.

 

10.6         Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the
Administrative Agent shall have received written notice from the Borrower or a Lender
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a “notice of default.”  In the event that the Administrative Agent receives such a
notice, the Administrative Agent will give notice thereof to the Lenders as
soon as reasonably practicable; provided, however, that if any
such notice has also been furnished to the Lenders, the Administrative Agent
shall have no obligation to notify the Lenders with respect thereto.  The Administrative Agent shall (subject to Sections 10.4 and 11.6) take such action with respect to such
Default or Event of Default as shall reasonably be directed by the Required
Lenders; provided that, unless and until the Administrative Agent shall
have received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders except to the extent that this Agreement
expressly requires that such action be taken, or not be taken, only with the
consent or upon the authorization of the Required Lenders or all of the
Lenders.

 

10.7         Indemnification.  To the extent the Administrative Agent is
not reimbursed by or on behalf of the Borrower, and without limiting the
obligation of the Borrower to do so, the Lenders agree (i) to indemnify the
Administrative Agent and its officers, directors, employees, agents,
attorneys-in-fact and Affiliates, ratably in proportion to their respective
percentages as used in determining the Required Lenders as of the date of
determination, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, reasonable attorneys’ fees and expenses) or disbursements
of any kind or nature whatsoever that may at any time (including, without
limitation, at any time following the repayment in full of the Loans and the
termination of the Letters of Credit and the Commitments) be imposed on,
incurred by or asserted against the Administrative Agent in any way relating to
or arising out of this Agreement or any other Credit Document or any documents
contemplated by or referred to herein or the transactions contemplated hereby
or thereby or any action taken or omitted by the Administrative Agent under or
in connection with any of the foregoing, and (ii) to reimburse the
Administrative Agent upon demand, ratably in proportion to their respective
percentages as used in determining the Required Lenders as of the date of
determination, for any reasonable expenses incurred by the Administrative Agent
in connection with the preparation, negotiation, execution, delivery,
administration, amendment, modification, waiver or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement or any of the other Credit
Documents (including, without limitation, reasonable attorneys’ fees and
expenses and compensation of agents and employees paid for services rendered on
behalf of the Administrative Agent hereunder and/or the Lenders); provided,
however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent

 

100

 

determined by a court of competent jurisdiction by
final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of the party to be indemnified.

 

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

 

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

 

10.10       Collateral
Matters.

 

(a)           The Administrative Agent is hereby
authorized on behalf of the Lenders, without the necessity of any notice to or
further consent from the Lenders, from time to time (but without any
obligation) to take any action with respect to the Collateral and the Security
Documents that

 

101

 

may be deemed by the Administrative Agent in its
discretion to be necessary or advisable to perfect and maintain perfected the
Liens upon the Collateral granted pursuant to the Security Documents.

 

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

 

10.11       Issuing Lender and Swingline Lender.  The provisions of this Article X (other than Sections 10.9 and 10.10) shall apply to the Issuing Lender
and the Swingline Lender mutatis  mutandis to the same extent as
such provisions apply to the Administrative Agent.

 

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

 

ARTICLE XI

 

MISCELLANEOUS

 

11.1         Fees and Expenses.  The Borrower agrees (i) whether or not the transactions
contemplated by this Agreement shall be consummated, to pay upon demand all
reasonable out-of-pocket costs and expenses of the Administrative Agent and the
Arranger (including, without limitation, the reasonable fees and expenses of
counsel to the Administrative Agent and the Arranger) in connection with the
preparation, negotiation, execution, delivery and syndication of this Agreement
and the other Credit Documents and any amendment, modification or waiver hereof
or thereof or consent with respect hereto or thereto, (ii) after the occurrence
and during the continuance of an Event of Default, to pay upon demand all
reasonable out-of-pocket costs and expenses of the Administrative Agent and
each Lender (including, without limitation, reasonable attorneys’ fees and
expenses) in connection with (y) any refinancing or restructuring

 

102

 

of the credit arrangements provided under this
Agreement, whether in the nature of a “work-out,” in any insolvency or
bankruptcy proceeding or otherwise and whether or not consummated, and
(z) the enforcement, attempted enforcement or preservation of any rights
or remedies under this Agreement or any of the other Credit Documents, whether
in any action, suit or proceeding (including any bankruptcy or insolvency
proceeding) or otherwise, and (iii) to pay and hold the Administrative
Agent, the Arranger and each Lender harmless from and against all liability for
any intangibles, documentary, stamp or other similar taxes, fees and excises,
if any, including any interest and penalties, and any finder’s or brokerage
fees, commissions and expenses (other than any fees, commissions or expenses of
finders or brokers engaged by the Administrative Agent or any Lender), that may
be payable in connection with the transactions contemplated by this Agreement
and the other Credit Documents.

 

11.2         Indemnification.  The Borrower agrees, whether or not the transactions contemplated
by this Agreement shall be consummated, to indemnify and hold the
Administrative Agent, the Arranger and each Lender and each of their respective
directors, officers, employees, agents and Affiliates (each, an “Indemnified
Person”) harmless from and against any and all claims, losses, damages,
obligations, liabilities, penalties, costs and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) of any kind or nature
whatsoever, whether direct, indirect or consequential (collectively, “Indemnified
Costs”), that may at any time be imposed on, incurred by or asserted
against any such Indemnified Person as a result of, arising from or in any way
relating to the preparation, execution, performance, enforcement of or
preservation of rights under this Agreement or any of the other Credit
Documents, any of the transactions contemplated herein or therein or any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loans or Letters of Credit (including,
without limitation, in connection (i) with the actual or alleged generation,
presence, storage, treatment, disposal, transport, discharge or release of any
Hazardous Substances on, in, to or from any real property at any time owned,
operated or leased by any Credit Party, (ii) any other Environmental Claims and
(iii) any violation of or liability under any Environmental Law), or any
action, suit or proceeding (including any inquiry or investigation) by any
Person, whether threatened or initiated, related to any of the foregoing, and
in any case whether or not such Indemnified Person is a party to any such
action, proceeding or suit or a subject of any such inquiry or investigation; provided,
however, that no Indemnified Person shall have the right to be
indemnified hereunder for any Indemnified Costs to the extent determined by a
court of competent jurisdiction by final and nonappealable judgment to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person.  All of the foregoing
Indemnified Costs of any Indemnified Person shall be paid or reimbursed by the
Borrower, as and when incurred and upon demand; but shall be repaid to the
Borrower by any Indemnified Person who is finally determined to be not entitled
to indemnification hereby as provided in the proviso to the preceding
sentence.  To the extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnified Person, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement
or any of the other Credit Documents, any of the transactions contemplated
herein or therein or any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loans or Letters of
Credit.

 

103

 

11.3         Governing Law; Consent to
Jurisdiction.  THIS AGREEMENT
AND THE OTHER CREDIT DOCUMENTS SHALL (EXCEPT AS MAY BE EXPRESSLY OTHERWISE PROVIDED
IN ANY CREDIT DOCUMENT) BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF
THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE OF LAW AND
CONFLICTS OF LAW RULES); PROVIDED THAT EACH LETTER OF CREDIT SHALL BE GOVERNED
BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OR RULES DESIGNATED
IN SUCH LETTER OF CREDIT OR, IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE
INTERNATIONAL STANDBY PRACTICES OF THE INTERNATIONAL CHAMBER OF COMMERCE, AS IN
EFFECT FROM TIME TO TIME (THE “ISP”), AND, AS TO MATTERS NOT GOVERNED BY
THE ISP, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW, BUT EXCLUDING ALL OTHER CHOICE
OF LAW AND CONFLICTS OF LAW RULES). 
EACH OF THE PARENT AND THE BORROWER HEREBY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF ANY STATE COURT WITHIN MECKLENBURG COUNTY, NORTH CAROLINA, OR
ANY FEDERAL COURT LOCATED WITHIN THE WESTERN DISTRICT OF THE STATE OF NORTH
CAROLINA FOR ANY PROCEEDING INSTITUTED HEREUNDER OR UNDER ANY OF THE OTHER
CREDIT DOCUMENTS, OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY
OF THE OTHER CREDIT DOCUMENTS, OR ANY PROCEEDING TO WHICH THE ADMINISTRATIVE
AGENT, THE ARRANGER OR ANY LENDER, THE PARENT OR THE BORROWER IS A PARTY,
INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF, OR IN CONNECTION WITH ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE ADMINISTRATIVE AGENT, THE ARRANGER OR ANY LENDER, THE PARENT OR
THE BORROWER.  EACH OF THE PARENT AND
THE BORROWER IRREVOCABLY AGREES TO BE BOUND (SUBJECT TO ANY AVAILABLE RIGHT OF
APPEAL) BY ANY JUDGMENT RENDERED OR RELIEF GRANTED THEREBY AND FURTHER WAIVES
ANY OBJECTION THAT IT MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE
OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY SUCH PROCEEDING.  EACH OF THE PARENT AND THE BORROWER CONSENTS
THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO
IT AT THE ADDRESS SET FORTH IN SECTION 11.5,
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS,
PROPER POSTAGE PREPAID AND PROPERLY ADDRESSED. 
NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT TO SERVE LEGAL PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF THE ADMINISTRATIVE
AGENT, THE ARRANGER OR ANY LENDER TO BRING ANY ACTION OR PROCEEDING AGAINST THE
PARENT OR THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.

 

11.4         Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ITS RESPECTIVE RIGHTS TO
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION

 

104

 

ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OF THE OTHER CREDIT DOCUMENTS TO WHICH IT IS A PARTY.

 

11.5         Notices.

 

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

 

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

 

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

 

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

 

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

 

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

 

105

 

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

 

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

 

(b)           unless agreed to by all of the
Lenders, (i) except as may be otherwise specifically provided in this
Agreement or in any other Credit Document, release all or substantially all of
the Collateral, release any Guarantor from its obligations under the Guaranty
Agreement, (ii) change the percentage of the aggregate Commitments or of
the aggregate unpaid principal amount of the Loans, or the number or percentage
of Lenders, that shall be required for the Lenders or any of them to take or
approve, or direct the Administrative Agent to take, any action hereunder
(including as set forth in the definition of “Required Lenders”),
(iii) change any other provision of this Agreement or any of the other
Credit Documents requiring, by its terms, the consent or approval of all the
Lenders for such amendment, modification, waiver, discharge, termination or
consent, (iv) change or waive any provision of Section 2.15, any other provision of this Agreement or
any other Credit Document requiring pro rata treatment of any Lenders, or
this Section 11.6, or (v) increase or extend any
Commitment of any Lender (it being understood that a waiver of any condition
precedent set forth in Section 4.2 or of any Default or Event
of Default or mandatory reduction in the Commitments, if agreed to by the
Required Lenders, Required Revolving Credit Lenders or all Lenders (as may be
required hereunder with respect to such waiver), shall not constitute such an
increase);

 

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

 

(d)           unless agreed to by the Required
Revolving Credit Lenders, (i) except for any such changes to which Section 11.6(a)
applies, change any provision of Article III or any terms or provisions
of any Letter of Credit or any supporting documentation relating thereto (it
being understood that no consent of any other Lender or the Administrative
Agent is required), or 

 

106

 

(ii) amend, modify or waive any condition
precedent to any Borrowing of Revolving Loans or issuance of a Letter of Credit
set forth in Section 4.2 (including in connection with any waiver of
an existing Default or Event of Default); and

 

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

 

and provided  further that (i) if any amendment,
modification, waiver or consent would adversely affect the holders of Loans of
a particular Class (the “affected Class”) relative to holders of Loans
of another Class (including, without limitation, by way of reducing the
relative proportion of any payments, prepayments or Commitment reductions to be
applied for the benefit of holders of Loans of the affected Class under Sections 2.6(d)
through 2.6(g)), then such
amendment, modification, waiver or consent shall require the consent of Lenders
holding at least a majority of the aggregate outstanding principal amount of
all Loans (and unutilized Commitments, if any) of the affected Class, and
(ii) the Fee Letter may only be amended or modified, and any rights thereunder
waived, in a writing signed by the parties thereto.

 

11.7         Assignments, Participations.

 

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

 

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

 

(ii)           except in the case of an assignment
to a Lender, an Affiliate of a Lender or an Approved Fund with respect to a
Lender, without the written consent (to be evidenced by its counterexecution of
the relevant Assignment and Acceptance and not to be unreasonably withheld or
delayed) of each of the Administrative Agent and, so long as no Default or
Event of Default has occurred and is continuing, the Borrower, no such
assignment shall be in an aggregate principal amount (determined as of the date
of the Assignment and Acceptance with respect to such assignment) less than
(x) in the case of Term Loans, $1,000,000 (or, if less, the full amount of
the assigning Lender’s outstanding Term Loans), provided that, for
purposes of this clause (x), a series of assignments by any Lender, its
Affiliates and its Approved Funds on or about the same day to several Assignees
that are Affiliates of one another or are related as Approved Funds shall be
deemed to be a single assignment, (y) in the case of Revolving Credit Commitments,
$2,500,000 (or, if less, the entire Revolving Credit Commitment of the
assigning Lender), or (z) in the case of Swingline Loans, the entire
Swingline Commitment and the full amount of the outstanding Swingline Loans;
and

 

107

 

(iii)          the parties to each such assignment
will execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance and will pay a
nonrefundable processing fee of $3,500 to the Administrative Agent for its own
account; provided that any series of assignments by any Lender, its
Affiliates and its Approved Funds on or about the same day to several Assignees
that are Affiliates of one another or are related as Approved Funds shall be
deemed to be a single assignment for purposes of calculating such processing
fee.

 

Upon such execution, delivery, acceptance and recording of the
Assignment and Acceptance, from and after the effective date specified therein,
(A) the Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of the
assigning Lender hereunder with respect thereto and (B) the assigning
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights (other than rights under the provisions of this Agreement and the other
Credit Documents relating to indemnification or payment of fees, costs and
expenses, to the extent such rights relate to the time prior to the effective
date of such Assignment and Acceptance) and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of such assigning Lender’s rights and obligations
under this Agreement, such Lender shall cease to be a party hereto, except that
such assigning Lender shall continue to be entitled to the protections of Sections 2.16(a),
2.16(b), 2.17, 11.1 and 11.2 for matters arising
during the periods while it was a Lender hereunder).  The terms and provisions of each Assignment and Acceptance shall,
upon the effectiveness thereof, be incorporated into and made a part of this
Agreement, and the covenants, agreements and obligations of each Lender set
forth therein shall be deemed made to and for the benefit of the Administrative
Agent and the other parties hereto as if set forth at length herein.

 

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

 

(c)           Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an Assignee and,
if required, counterexecuted by the Borrower and the Issuing Lender, together
with the processing fee referred to in Section 11.7(a), the Administrative
Agent will (i) accept such Assignment and Acceptance, (ii) on or as
of the effective date thereof, record the information contained therein in the
Register and (iii) give notice thereof to the Borrower and the
Lenders.  If requested by or on behalf
of the Assignee, the Borrower, at its own expense, will execute and deliver to
the Administrative Agent a new Note or Notes to the order of the Assignee (and,
if the assigning Lender has retained any portion of its rights and obligations
hereunder, to the order of the assigning Lender), prepared in accordance

 

108

 

with the applicable provisions of Section 2.4 as necessary
to reflect, after giving effect to the assignment, the Commitments and/or
outstanding Loans, as the case may be, of the Assignee and (to the extent of
any retained interests) the assigning Lender, in substantially the form of Exhibits A-1,
A-2, A-3 and/or A-4, as applicable.  The Administrative Agent will return
canceled Notes to the Borrower.  At the
time of each assignment pursuant to this Section 11.7 to a Person that is a
Non-U.S. Lender and is not already a Lender hereunder, the assignee Lender
shall provide to the Borrower and the Administrative Agent the appropriate
Internal Revenue Service forms described in Section 2.17.

 

(d)           Each Lender may, without the consent
of the Borrower, the Administrative Agent or any other Lender, sell to one or
more other Persons (each, a “Participant”) participations in all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the outstanding Loans made by
it and its participations in Letters of Credit); provided, however,
that (i) such Lender’s obligations under this Agreement shall remain
unchanged and such Lender shall remain solely responsible for the performance
of such obligations, (ii) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement, and
no Lender shall permit any Participant to have any voting rights or any right
to control the vote of such Lender with respect to any amendment, modification,
waiver, consent or other action hereunder or under any other Credit Document
(except as to actions described in Section 11.6(a) and clauses (i) and
(ii) of Section 11.6(b)
that affect such Participant or the Lender selling the participation), and
(iv) no Participant shall have any rights under this Agreement or any of
the other Credit Documents, each Participant’s rights against the granting
Lender in respect of any participation to be those set forth in the
participation agreement, and all amounts payable by the Borrower hereunder
shall be determined as if such Lender had not granted such participation.  Notwithstanding the foregoing, each Participant
shall have the rights of a Lender for purposes of Sections 2.16(a), 2.16(b),
2.17,
2.18 and 9.3, and shall be entitled to the benefits
thereto, to the extent that the Lender granting such participation would be
entitled to such benefits if the participation had not been made, provided
that no Participant shall be entitled to receive any greater amount pursuant to
any of such Sections than the Lender granting such participation would have
been entitled to receive in respect of the amount of the participation made by
such Lender to such Participant had such participation not been made.

 

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

 

(f)            Any Lender or participant may, in
connection with any assignment, participation, pledge or proposed assignment,
participation or pledge pursuant to this Section 11.7, disclose to

 

109

 

the Assignee, Participant or pledgee or proposed
Assignee, Participant or pledgee any information relating to the Borrower and
its Subsidiaries furnished to it by or on behalf of any other party hereto, provided
that such Assignee, Participant or pledgee or proposed Assignee, Participant or
pledgee agrees in writing to keep such information confidential to the same
extent required of the Lenders under Section 11.13.

 

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

 

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

 

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

 

11.10       Survival.  All representations, warranties and
agreements made by or on behalf of the Borrower or any other Credit Party in
this Agreement and in the other Credit Documents shall survive the execution
and delivery hereof or thereof, the making and repayment of the Loans and the
issuance and repayment of the Letters of Credit.  In addition, notwithstanding anything herein or under applicable
law to the contrary, the provisions of this Agreement and the

 

110

 

other Credit Documents relating to indemnification or
payment of costs and expenses, including, without limitation, the provisions of
Sections 2.16(a),
2.16(b), 2.17, 2.18,  10.7, 11.1 and 11.2, shall survive the
payment in full of all Loans and Letters of Credit, the termination of the
Commitments and all Letters of Credit, and any termination of this Agreement or
any of the other Credit Documents.

 

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

 

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

 

11.13       Confidentiality.  Each of the Administrative Agent and each Lender agrees to keep
confidential, pursuant to its customary procedures for handling confidential
information of a similar nature and in accordance with safe and sound banking
practices, all nonpublic information provided to it by or on behalf of the
Borrower or any other Credit Party in connection with this Agreement or any
other Credit Document; provided, however, that each of the
Administrative Agent and each Lender may disclose such information (i) to its
Affiliates, and to its and its Affiliates’ respective directors, officers,
partners, employees, agents, auditors, counsel and other advisors so long such
parties are informed of the confidential nature of such information and
instructed to keep such information confidential, (ii) at the demand or request
of any bank regulatory authority, court or other Governmental Authority having
or asserting jurisdiction over the Administrative Agent or such Lender or any
of their respective Affiliates, as may be required pursuant to subpoena or
other legal process, or otherwise in order to comply with any applicable
Requirement of Law, (iii) in connection with the exercise of any remedies
hereunder or under any other Credit Document or any Hedge Agreement or any
action or proceeding relating to this Agreement, any other Credit Document or
any Hedge Agreement or the enforcement of rights hereunder or thereunder, (iv)
to the Administrative Agent, the Arranger or any other Lender, (v) to the
extent the same has become available to the Administrative Agent or any Lender
on a nonconfidential basis from a source other than the Borrower or has become
publicly available other than as a result of a breach of this Agreement, (vi)
subject to an agreement containing provisions substantially the same as those
in this Section, to any actual or prospective counterparty (or its advisors) to
any swap or derivative transaction relating to the Borrower and its obligations
hereunder, (vii) with the consent of the Borrower, and (viii) pursuant to and
in accordance with the provisions of Section
11.7(f).  Notwithstanding
anything herein to the contrary, the information subject to this Section 11.13 shall not include, and the
Borrower, the other Credit Parties, the Administrative Agent, each Lender and
the respective Affiliates of each of the foregoing (and the respective
partners, directors, officers, employees, agents, advisors and other
representatives of each of the foregoing and their Affiliates) may disclose to
any and all Persons, without limitation of any kind, (a) any

 

111

 

information with respect to the U.S. federal and state
income tax treatment of the transactions contemplated hereby and any facts that
may be relevant to understanding such tax treatment, which facts shall not
include for this purpose the names of the parties or any other Person named
herein, or information that would permit identification of the parties or such
other Persons, or any pricing terms or other nonpublic business or financial
information that is unrelated to such tax treatment or facts, and (b) all
materials of any kind (including opinions or other tax analyses) relating to
such tax treatment or facts that are provided to any of the Persons referred to
above.

 

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

 

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

 

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

 

112

 

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

 

 

	
   

  	
  DJ ORTHOPEDICS, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DJ ORTHOPEDICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

(signatures continued)

 

S-1

 

	
   

  	
  WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing
  Lender and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-2

 

	
   

  	
   

  	
  WELLS FARGO
  BANK, NATIONAL

  ASSOCIATION, as Syndication Agent and as a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

S-3

 

	
   

  	
  BANK OF AMERICA, N.A., as Documentation

  Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-4

 

	
   

  	
  BANK OF THE WEST, as Documentation Agent

  and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-5

 

	
   

  	
  UNION BANK OF CALIFORNIA, N.A., as

  Documentation Agent and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-6

 

	
   

  	
  COMERICA BANK, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-7

 

	
   

  	
  GENERAL ELECTRIC CAPITAL

  CORPORATION, as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  

 

S-8

 

Schedule
1.1(a)

 

Commitments and

Notice Addresses

 

 

	
  Lender

  	
   

  	
  Term Loan

  Commitment

  	
   

  	
  Revolving
  Credit

  Commitment

  	
   

  
	
  Wachovia
  Bank, National Association

  	
   

  	
  $

  	
  90,000,000.00

  	
   

  	
  $

  	
  6,000,000.00

  	
   

  
	
  Wells Fargo
  Bank, National Association

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  
	
  Bank of
  America, N.A.

  	
   

  	
  $

  	
  0

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  
	
  Bank of the
  West

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  
	
  Union Bank
  of California, N.A.

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  
	
  Comerica
  Bank

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  
	
  General
  Electric Capital Corporation

  	
   

  	
  $

  	
  2,000,000.00

  	
   

  	
  $

  	
  4,000,000.00

  	
   

  
	
  Total

  	
   

  	
  $

  	
  100,000,000.00

  	
   

  	
  $

  	
  30,000,000.00

  	
   

  

 

 

Notice Addresses

 

 

	
  Lender

  	
   

  	
  Address

  
	
  Wachovia Bank, National Association

  	
   

  	
  Instructions for wire transfers to the Administrative Agent:

  

  Wachovia Bank, National Association

  ABA Routing No. 053000219

  Charlotte, North Carolina

  Account Number:  5000000018246

  Account Name:  dj Orthopedics,
  LLC

  Attention:  Syndication Agency Services

  
Address for notices as a Lender:

  Wachovia Bank, National Association

  One Wachovia Center, 6th Floor

  301 South College Street

  Charlotte, North Carolina 
  28288-0760

  Attention:  Glenn Edwards

  Telephone:  (704) 383-3810

  Telecopy:  (704) 374-4793

  

  Lending Office:

  

  Wachovia Bank, National Association

  Charlotte Plaza Building

  201 South College Street, 8th Floor NC0680

  Charlotte, North Carolina 
  28288

  Attention:  Syndication Agency Services

  Telephone:  (704) 383-3721

  Telecopy:  (704) 383-0288

  

 

 

	
  Wells Fargo Bank, National Association

  	
   

  	
  Address for notices as a Lender:

  

  Wells Fargo Bank, National Association

  111 W. Ocean Blvd., Suite 300

  Long Beach, CA 90802

  Attention:  William Hutchinson

  Telephone:  (562) 628-2111

  Telecopy:  (562) 437-6698

  

  Lending Office:

  

  Wells Fargo Bank, National Association

  201 Third St. 8th Floor

  San Francisco, CA  94163

  Attention:  Judy Chan

  Telephone:  (415) 477-5433

  Telecopy:  (415) 979-0675

  

 

 

	
  Bank of America, N.A.

  	
   

  	
  Address for notices as a Lender:

  

  Bank of America, N.A.

  450 B Street Suite 1500

  San Diego, CA 92101

  Attention:  Susan J. Pepping

  Telephone:  (619) 515-7518

  Telecopy:  (619) 515-7524

  

  Lending Office:

  

  Bank of America, N.A.

  333 S. Beaudry Ave 11th Floor

  Los Angeles, CA 90017-1466

  Attention:  Susan J. Pepping

  Telephone:  (619) 515-7518

  Telecopy:  (619) 515-7524

  

 

 

	
  Bank of the West

  	
   

  	
  Address for notices as a Lender:

  

  Bank of the West

  1280 Fourth Avenue

  San Diego, CA 92101

  Attention:  Alyssa Lange

  Telephone:  (619) 235-2564

  Telecopy:  (619) 595-1918

  

  Lending Office:

  

  Bank of the West

  1280 Fourth Avenue

  San Diego, CA 92101

  Attention:  Alyssa Lange

  Telephone:  (619) 235-2564

  Telecopy:  (619) 595-1918

  

 

 

	
  Union Bank of California, N.A.

  	
   

  	
  Address for notices as a Lender:

  

  Union Bank of California, N.A

  530 ‘B’ Street, 4th Floor

  San Diego, California 92101

  Attention:  Douglas S. Lambell

  Telephone:  (619) 230-3029

  Telecopy:  (619) 230-3766

  

  Lending Office:

  

  Union Bank of California, N.A

  530 ‘B’ Street, 4th Floor

  San Diego, California 92101

  Attention:  Douglas S. Lambell

  Telephone:  (619) 230-3029

  Telecopy:  (619) 230-3766

  

 

 

	
  Comerica Bank

  	
   

  	
  Address for notices as a Lender:

  

  Comerica Bank

  701 B Street #600

  San Diego, California 92101

  Attention:  Stephen M. Cusato, SVP

  Telephone:  619-338-1501

  Telecopy:  (619) 234-2234

  

  Lending Office:

  

  Comerica Bank

  701 B Street #600

  San Diego, California 92101

  Attention:  Stephen M. Cusato, SVP

  Telephone:  619-338-1501

  Telecopy:  (619) 234-2234

  

 

 

	
  General Electric Capital Corporation

  	
   

  	
  Address for notices as a Lender:

  

  General Electric Capital Corporation

  500 W. Monroe Street, 29th Floor

  Chicago, IL 60611

  Attention:  Matthew Nels

  Telephone:  (312) 441-7697

  Telecopy:  (312) 441-7598

  

  Lending Office:

  

  General Electric Capital Corporation

  500 W. Monroe Street, 29th Floor

  Chicago, IL 60611

  Attention:  Matthew Nels

  Telephone:  (312) 441-7697

  Telecopy:  (312) 441-7598

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00059-of-00352.parquet"}]]