Document:

Amended and Restated Note and Equity Purchase Agreement

 Exhibit 4.7 
  
 First Amended and Restated Note and Equity Purchase Agreement, by and between Encore Medical Corporation and CapitalSource Finance LLC,
dated September 26, 2003 

  
 FIRST AMENDED AND RESTATED 
 NOTE AND EQUITY PURCHASE AGREEMENT 
  
 by and between 
  
 ENCORE MEDICAL CORPORATION, 
  

ITS SUBSIDIARIES LISTED ON 
 THE
SIGNATURE PAGES HERETO, 
  
 and 
  
 CAPITALSOURCE FINANCE LLC, 
 AS AGENT AND PURCHASER 
  
 September 26, 2003 
  

 TABLE OF CONTENTS 
  

	 ARTICLE 1 DEFINITIONS
	  	2
				
	 	 	 1.1
	  	 CERTAIN DEFINITIONS
	  	2
	 	 	 1.2
	  	 ACCOUNTING PRINCIPLES
	  	19
	 	 	 1.3
	  	 OTHER DEFINITIONAL PROVISIONS; CONSTRUCTION
	  	19
		
	 ARTICLE 2 ISSUE AND SALE OF SECURITIES
	  	19
				
	 	 	 2.1
	  	 AUTHORIZATION AND ISSUANCE OF THE
NOTE
	  	19
	 	 	 2.2
	  	 AUTHORIZATION AND ISSUANCE OF
WARRANT
	  	20
	 	 	 2.3
	  	 DRAWS
	  	20
	 	 	 2.4
	  	 THE CLOSING
	  	21
		
	 ARTICLE 3 REPAYMENT OF THE NOTE
	  	21
				
	 	 	 3.1
	  	 INTEREST RATE
	  	21
	 	 	 3.2
	  	 REPAYMENT OF THE NOTES
	  	21
	 	 	 3.3
	  	 OPTIONAL PREPAYMENT OF NOTE
	  	21
	 	 	 3.4
	  	 NOTICE OF OPTIONAL PREPAYMENT
	  	22
	 	 	 3.5
	  	 MANDATORY PREPAYMENT
	  	22
	 	 	 3.6
	  	 HOME OFFICE PAYMENT
	  	23
	 	 	 3.7
	  	 TAXES
	  	23
	 	 	 3.8
	  	 MAXIMUM LAWFUL RATE
	  	24
	 	 	 3.9
	  	 CAPITAL ADEQUACY
	  	24
	 	 	 3.10
	  	 CERTAIN WAIVERS
	  	24
		
	 ARTICLE 4 CONDITIONS
	  	25
				
	 	 	 4.1
	  	 CONDITIONS TO CLOSING
	  	25
	 	 	 4.2
	  	 CONDITIONS TO DRAWS
	  	28
	 	 	 4.3
	  	 WAIVER
	  	30
		
	 ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
	  	30
				
	 	 	 5.1
	  	 REPRESENTATIONS AND WARRANTIES OF LOAN
PARTIES
	  	30
		
	 ARTICLE 6 TRANSFER OF SECURITIES
	  	41
				
	 	 	 6.1
	  	 RESTRICTED SECURITIES
	  	41
	 	 	 6.2
	  	 LEGENDS; PURCHASER'S REPRESENTATIONS
	  	41
	 	 	 6.3
	  	 TRANSFER OF NOTES
	  	42
	 	 	 6.4
	  	 REPLACEMENT OF LOST SECURITIES
	  	42
	 	 	 6.5
	  	 NO OTHER REPRESENTATIONS AFFECTED
	  	42
		
	 ARTICLE 7 COVENANTS
	  	43
				
	 	 	 7.1
	  	 AFFIRMATIVE COVENANTS
	  	43
	 	 	 7.2
	  	 NEGATIVE COVENANTS
	  	51
	 	 	 7.3
	  	 FINANCIAL COVENANTS
	  	59
		
	 ARTICLE 8 EVENTS OF DEFAULT
	  	60
				
	 	 	 8.1
	  	 EVENTS OF DEFAULT
	  	60
	 	 	 8.2
	  	 CONSEQUENCES OF EVENT OF DEFAULT
	  	63
	 	 	 8.3
	  	 SECURITY
	  	64
	 	 	 8.4
	  	 SET-OFF
	  	64
		
	 ARTICLE 9 AGENCY PROVISIONS
	  	65
				
	 	 	 9.1
	  	 THE AGENT
	  	65
	 	 	 9.2
	  	 CONSENTS
	  	70

				
	 	 	 9.3
	  	 DISSEMINATION OF INFORMATION
	  	70
		
	 ARTICLE 10 MISCELLANEOUS
	  	71
				
	 	 	 10.1
	  	 SUCCESSORS AND ASSIGNS; PARTICIPANTS
	  	71
	 	 	 10.2
	  	 MODIFICATIONS AND AMENDMENTS
	  	72
	 	 	 10.3
	  	 NO IMPLIED WAIVERS; WRITING REQUIRED;
WAIVERS
	  	72
	 	 	 10.4
	  	 REIMBURSEMENT OF EXPENSES
	  	72
	 	 	 10.5
	  	 HOLIDAYS
	  	73
	 	 	 10.6
	  	 NOTICES
	  	73
	 	 	 10.7
	  	 EFFECTIVENESS AND SURVIVAL
	  	74
	 	 	 10.8
	  	 GOVERNING LAW
	  	74
	 	 	 10.9
	  	 COOPERATION IN DISCOVERY AND
LITIGATION
	  	75
	 	 	 10.10
	  	 JURY TRIAL WAIVER
	  	75
	 	 	 10.11
	  	 SEVERABILITY
	  	75
	 	 	 10.12
	  	 HEADINGS
	  	76
	 	 	 10.13
	  	 GENERAL INDEMNITY
	  	76
	 	 	 10.14
	  	 ENVIRONMENTAL INDEMNITY
	  	76
	 	 	 10.15
	  	 COUNTERPARTS
	  	77
	 	 	 10.16
	  	 INTEGRATION
	  	77
	 	 	 10.17
	  	 SUBORDINATION
	  	78
	 	 	 10.18
	  	 LENDER APPROVALS
	  	78
	 	 	 10.19
	  	 LENDER DUTIES
	  	78
	 	 	 10.20
	  	 APPLICATION OF PAYMENTS
	  	78
	 	 	 10.21
	  	 CONFIDENTIALITY AND PUBLICITY
	  	78
	 	 	 10.22
	  	 ACKNOWLEDGEMENT
	  	79
	 	 	 10.23
	  	 RELEASE OF COLLATERAL
	  	79
	 	 	 10.24
	  	 RIGHTS AND REMEDIES
	  	79
	 	 	 10.25
	  	 RIGHTS AND REMEDIES NOT EXCLUSIVE
	  	80
	 	 	 10.26
	  	 WAIVER OF CONSEQUENTIAL AND PUNITIVE
DAMAGES
	  	80
	 	 	 10.27
	  	 SUBROGATION
	  	81
	 	 	 10.28
	  	 POWER OF ATTORNEY
	  	81
	 	 	 10.29
	  	 ACKNOWLEDGEMENT OF JOINT AND SEVERAL
LIABILITY
	  	81
	 	 	 10.30
	  	 SEAL AND EFFECTIVE DATE
	  	82
	 	 	 10.31
	  	 RESTATEMENT AND RELEASE
	  	82
	 	 	 10.32
	  	 JOINDER
	  	82

  

 ii 

 FIRST AMENDED AND RESTATED 
 NOTE AND EQUITY PURCHASE AGREEMENT 
  
 $24,000,000 First Amended and Restated Senior Subordinated Notes of the Loan 
 Parties 
 Due September 26, 2008 
  
 Warrant to Purchase 
 up to 2,198,614 Shares of Common Stock of Parent 
  
 THIS FIRST AMENDED AND RESTATED NOTE AND EQUITY PURCHASE AGREEMENT (this “Agreement”), dated as of September 26, 2003 is by and between ENCORE MEDICAL CORPORATION (the “Parent”), the subsidiaries
of Parent listed on the signature pages attached hereto (together with the Parent, collectively, the “Loan Parties”), and CAPITALSOURCE FINANCE LLC, a Delaware limited liability company (“CapitalSource”), as Agent and Purchaser
(each as defined herein). Capitalized terms used and not defined elsewhere in this Agreement are defined in Article 1. 
  
 RECITALS 
  
 A. The Loan Parties (excluding Encore MP) and CapitalSource entered into that certain Note and Equity Purchase Agreement dated as of February 8, 2002 (as
amended prior to the date hereof, the “Initial Purchase Agreement”), pursuant to which the Loan Parties (excluding EncoreMP) issued Senior Subordinated Notes to the Purchaser in the aggregate principal amount of $24,000,000 for the
financing of the Acquisition (the “Initial Notes”). 
  
 B. In order to induce the Purchaser to purchase the Initial Notes to be issued pursuant to the Initial Purchase Agreement, the Parent issued and sold to the Purchaser or Holder, in connection with the purchase of such Initial Notes, a
warrant exercisable for up to an aggregate of 2,198,614 shares of Common Stock of the Parent, subject to the terms and conditions set forth in the Initial Purchase Agreement and the Warrant. 
  
 C. The parties desire to amend and restate the terms of the Initial Purchase
Agreement and related documents to provide for additional loans in the aggregate principal amount of up to $24,000,000 and to make such other changes as are provided herein and therein. 
  
 NOW, THEREFORE, the parties hereto, in consideration of the premises and their mutual covenants and agreements herein set
forth and intending to be legally bound hereby, covenant and agree as follows: 

 ARTICLE 1 
 DEFINITIONS 
  
 1.1 Certain
Definitions. In addition to other words and terms defined elsewhere in this Agreement, the following words and terms have the meanings set forth below (and such meanings shall be equally applicable to both the singular and plural form of the
terms defined, as the context may require): 
  
 “Account” and “Accounts” have the meanings specified in the Security Agreements. 
  
 “Acquisition” shall mean the purchase by Parent of all of the outstanding Capital Stock of Chattanooga Group, Inc. 
  
 “Affiliate” means with respect to any Person, any other Person that
is directly or indirectly controlling, controlled by or under common control with such Person or entity or any of its Subsidiaries, and the term “control” (including the terms “controlled by” and “under common control
with”) means having, directly or indirectly, the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities or by contract or otherwise. Without limiting the foregoing, the
ownership of ten percent (10%) or more of the voting securities of a Person shall be deemed to constitute control and, notwithstanding anything to the contrary herein, neither the Agent, the Purchaser nor the Holder nor any of their respective
Affiliates shall be deemed to be Affiliates of the Loan Parties by virtue of the transactions contemplated in this Agreement. 
  
 “Agent” means CapitalSource, in its capacity as administrative agent and collateral agent for the Purchasers, and any successor administrative
agent. 
  
 “Agreement” means this First Amended and
Restated Note and Equity Purchase Agreement, as the same may be further amended, restated, supplemented or otherwise modified from time to time. 
  
 “Business” means the principal business of the Loan Parties as set forth in Section 5.1(c) herein and as such shall continue to be conducted
following the purchase and sale of the Securities. 
  
 “Business Day” means any day other than a Saturday, Sunday or other day on which banking institutions in New York are authorized or required by law to close. 
  
 “By-laws” means the by-laws, partnership agreement, operating agreement or analogous instrument governing the
operations of each of the Loan Parties, as applicable, including all amendments and supplements thereto. 
  
 “Capital Expenditures” means, for any period of determination, the sum (without duplication) of capital expenditures and payments under
Capitalized Leases and other expenditures that are or should be treated as capital expenditures under GAAP, in each case of the Loan Parties for such period determined and consolidated in accordance with GAAP. 
  

 2 

 “Capital Stock” means any and all corporate stock, units, shares, partnership interests,
membership interests, equity interests, rights, securities, or other equivalent evidences of ownership (howsoever designated) issued by any Person. 
  
 “Capitalized Leases” means, with respect to any Person, leases of (or other agreements conveying the right to use) any property (whether real,
personal or mixed) by such Person as lessee that, in accordance with GAAP (as defined in Section 1.2 hereof), either would be required to be classified and accounted for as capital leases on a balance sheet of such Person or otherwise be disclosed
as such in a note to such balance sheet. 
  
 “CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9604, et seq.), as amended, and rules, regulations, standards guidelines and publications issued thereunder. 
  
 “Change of Control” means the occurrence of any of the following:

  
 (a) except as otherwise expressly permitted
by this Agreement, the adoption of a plan relating to the liquidation, dissolution or winding-up of any Loan Party; 
  
 (b) any transaction or series of related transactions resulting in the sale or issuance of securities or any rights to securities of the
Parent by the Parent representing in the aggregate more than 50% of its issued and outstanding voting securities, on a fully diluted basis, or any transaction or series of related transactions resulting in the sale, transfer, assignment or other
conveyance or disposition of any securities or any rights to securities of the Parent by any holder or holders thereof representing in the aggregate more than 50% of the issued and outstanding voting securities of the Parent on a fully diluted basis
and the receipt of any consideration in connection therewith; 
  
 (c) a merger, consolidation, reorganization, recapitalization or share exchange in which the stockholders of the Parent immediately prior to such transaction receive, in exchange for securities of the Parent owned by
them, cash, property or securities of the resulting or surviving entity and as a result thereof Persons who were holders of voting securities of the Parent hold less than 50% of the Capital Stock, calculated on a fully diluted basis, of the
resulting corporation entitled to vote in the election of directors; 
  
 (d) a sale, transfer or other disposition of 30% or more of the assets of the Loan Parties, on a consolidated basis, other than in the ordinary course of business; 
  
 (e) any sale or issuance or series of sales or issuances of
the Common Stock or any other voting security (or security convertible into, exchangeable for, or exercisable for any other voting security) of the Parent within a 12-month period that results in a transfer of more than 50% of the issued and
outstanding shares of voting stock of the Parent or a transfer of more than 50% of the voting power of the Parent; 
  

 3 

 (f) the initial public offering of securities by any Loan Party (other than the Parent)
other than an offering of securities for an employee benefit plan on SEC Form S-8 or a successor form; 
  
 (g) any Loan Party ceases to directly own and control 100% of the outstanding Capital Stock of each of its Subsidiaries (other than as a
result of the merger of two Loan Parties); 
  
 (h) a majority of the members of the Parent’s Board of Directors do not constitute Continuing Directors; 
  
 (i) the hiring or termination of any of the president, chief executive officer, or executive vice president/general counsel of the Parent
without the consent of CapitalSource; and/or 
  
 (j) any “change in/of control” or “sale” or “disposition” or similar event as defined in any document governing Indebtedness of any Loan Party which gives the holder of such indebtedness the right to accelerate
or otherwise require payment of such Indebtedness prior to the maturity date thereof. 
  
 “Charter Documents” means the Articles of Incorporation, Certificate of Incorporation, certificate of limited partnership, certificate of limited liability company, charter or analogous organic instrument
filed with the appropriate Governmental Authorities of each of the Loan Parties, as applicable, including all amendments and supplements thereto. 
  
 “Closing” means the closing of the amendment and restatement of the Initial Purchase Agreement and the Initial Notes pursuant to this Agreement.

  
 “Closing Date” means the date and time determined
pursuant to Section 2.4 hereof. 
  
 “Code” means the
Internal Revenue Code of 1986, as amended. 
  
 “Collateral” means, collectively and individually, all collateral and/or security granted, and/or securities pledged, to the Agent, for the benefit of the Agent and the Purchasers, by the Loan Parties pursuant to the Purchase
Documents and Security Documents. 
  
 “Common Stock”
means the common stock, $0.001 par value, of the Parent. 
  
 “Condition” means any condition that results in or otherwise relates to any Environmental Liabilities. 
  

 4 

 “Continuing Director” means any member of the Board of Director of the Parent who is a director
of the Parent on the Closing Date. 
  
 “Copyright Security
Agreement” means any Copyright Security Agreement, dated as of February 8, 2002 or any date subsequent thereto, executed and delivered by a Loan Party to the Agent, for the benefit of the Agent and the Purchasers, to evidence and perfect the
Agent’s security interest in such Loan Party’s present and future copyrights and related licenses and rights, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Covered Financing” means the issuance of any Indebtedness of any
Loan Party for borrowed money. “Covered Financing” shall exclude any financing the sole purpose of which is to refinance, repay or redeem the Notes, any financing provided by the seller as part of an acquisition permitted hereby, any
Capitalized Leases permitted hereby and any loans from one Loan Party to another Loan Party. 
  
 “Debt to EBITDA Ratio” means, at any date of determination, for the Loan Parties on a consolidated basis, the ratio of (i) Total Debt on such date, to (ii) the EBITDA for the Measurement Period ending on
such date (taken as one accounting period). 
  
 “Default” means any event or condition that, but for the giving of notice or the lapse of time, or both, would constitute an Event of Default. 
  
 “Disqualified Stock” means, with respect to any Person, any Capital Stock which 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 (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock or (iii) is redeemable at the option of the holder thereof, in whole or in part, in each case on or prior to the first anniversary of the stated maturity of the Notes. 
  
 “Distribution” has the meaning assigned to such term in Section
7.2(h) hereof. 
  
 “Draw” shall mean a borrowing under
the Notes. 
  
 “Draw Date” shall mean the Business Day
upon which any proposed Draw is to be made and which shall, with respect to each Permitted Acquisition, be the date upon which such Permitted Acquisition is to be consummated. 
  
 “Draw Notice” shall mean a Draw Notice substantially in the form of Exhibit B hereto. 
  
 “EBITDA” means for any period, without duplication, the total of
the following for the Loan Parties on a consolidated basis, each calculated for such period: Net Income plus (i) Interest Expense, (ii) taxes on income, (iii) depreciation expense, (iv) amortization expense, (v) in each case as acceptable to the
Agent, all other non-cash, 
  

 5 

 
non-recurring charges and expenses excluding accruals for cash expenses made in the ordinary course of business, and (vi) gain or loss from any sale of
assets other than sales in the ordinary course of business, all of the foregoing determined in accordance with GAAP. For purposes of calculating EBITDA with respect to any Measurement Period, (A) acquisitions that have been made by such Person and
its Subsidiaries, including through mergers or consolidations and including any related financing transactions, during the Measurement Period shall be deemed to have occurred on the first day of the Measurement Period; provided, however, that only
the actual historical results of operations of the Persons so acquired, without adjustment for pro forma expense savings or revenue increases, shall be used for such calculation; and (B) for purposes of calculating Debt to EBITDA Ratio and Minimum
EBITDA only, the EBITDA of such Person and its Subsidiaries attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed of prior to the end of such Measurement Period, shall be excluded.

  
 “Encore Asset Corporation” means Encore Medical
Asset Corporation, a Nevada corporation, and its successors and assigns. 
  
 “Encore GP” means Encore Medical GP, Inc., a Nevada corporation, and its successors and assigns. 
  
 “Encore Limited” means Encore Medical, L.P., a Delaware limited partnership, and its successors and assigns. 
  
 “Encore MP” means Encore Medical Partners, Inc., a Nevada
corporation, and its successors and assigns. 
  
 “Environmental Laws” means any Laws which address, are related to or are otherwise concerned with environmental, health or safety issues, including any Laws relating to any emissions, releases or discharges of Pollutants into
ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, handling, clean-up or control of Pollutants or any exposure or impact on worker
health and safety. 
  
 “Environmental Liabilities” means
any costs, obligations or liabilities (including any claims, suits or other assertions of obligations or liabilities) that are: 
  
 (a) related to environmental, health or safety issues (including on-site or off-site contamination by Pollutants of surface or subsurface
soil or water, and occupational safety and health); and 
  
 (b) based upon or related to (i) any provision of past, present or future United States or foreign Environmental Law (including CERCLA and RCRA) or common law, or (ii) any judgment, order, writ, decree, permit or
injunction imposed by any court, administrative agency, tribunal or otherwise. 
  

 6 

 The term “Environmental Liabilities” includes: (i) fines, penalties, judgments, awards,
settlements, losses, damages (including foreseeable and unforeseeable consequential damages), costs, fees (including attorneys’ and consultants’ fees), expenses and disbursements; (ii) defense, investogatory and other responses to any
action of any Governmental Authorities or any administrative or judicial action (including claims, notice letters, complaints, and other assertions of liability); and (iii) financial responsibility for (1) cleanup costs and injunctive relief,
including any Removal, Remedial or other Response actions, and natural resource damages, and (2) any other compliance or remedial measures. 
  
 “Environmental Lien” means a Lien in favor of any Governmental Authority for (a) any liability under Environmental Laws or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Pollutant into the environment. 
  
 “EPA” means the United States Environmental Protection Agency and any governmental body or agency succeeding to the functions thereof.

  
 “Equipment” has the meaning specified in the
Security Agreement. 
  
 “ERISA” means the Employee
Retirement Income Security Act of 1974, as the same may from time to time be amended, and the rules and regulations of any governmental agency or authority, as from time to time in effect, promulgated thereunder. 
  
 “ERISA Affiliate” means any Person required at any relevant time to
be aggregated with the Parent or any of its Subsidiaries under Sections 414(b), (c), (m) or (o) of the Code. 
  
 “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) a withdrawal by a Loan Party or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA,
(c) a complete or partial withdrawal by a Loan Party or any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization or insolvent, (d) the filing of a notice of intent to terminate, the treatment of a
Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or the termination, insolvency, or reorganization of a Multiemployer Plan, (e) the occurrence of an
event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multiemployer Plan, or (f) the imposition of any
liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Loan Party or any ERISA Affiliate. 
  

 7 

 “Event of Default” means any of the events of default described in Section 8.1 hereof.

  
 “Fair Valuation” shall mean the determination of the
value of the consolidated assets of a Person on the basis of the amount which may be realized by a willing seller within a reasonable time through collection or sale of such assets at market value on a going concern basis to an interested buyer who
is willing to purchase under ordinary selling conditions in an arm’s length transaction. 
  
 “FDA Laws” means the laws, rules and regulations of the United States Food and Drug Administration that are applicable to the Loan Parties. 
  
 “FDA Permits” means all permits, licenses and approvals that are required under the FDA Laws for the operation of
the Loan Parties’ business. 
  
 “FEIN” means
Federal Employer Identification Number. 
  
 “Financing
Statements” means such financing statements and other instruments as the Agent shall require in order to perfect and maintain the continued perfection of the security interest created by the Security Documents, each in form and substance
satisfactory to the Agent. 
  
 “Fiscal Quarter” or
“fiscal quarter” means one of the four quarters, consisting of a period of 4 weeks plus 4 weeks plus 5 weeks, in a Fiscal Year, with the first Fiscal Quarter beginning on the first day of a Fiscal Year and the last Fiscal Quarter ending on
December 31 of such Fiscal Year. 
  
 “Fiscal Year” or
“fiscal year” means each twelve month period ending on December 31 of each year. 
  
 “Fixed Charge Coverage Ratio” shall mean, at any date of determination, for the Loan Parties on a consolidated basis, the ratio of (i) EBITDA, less (a) Capital Expenditures, and (b) the cash amount of
taxes paid for the Measurement Period ending on such date taken as one accounting period and (c) the cash amount of Distributions paid by any Loan Party, to (ii) the sum of (a) the cash amount of Interest Expense paid and (b) principal payments made
or required to be made on any and all Indebtedness of the Loan Parties (excluding (A) principal payments on the Revolving Loans (as defined in the Senior Credit Agreement in effect on the date hereof), (B) the $2,000,000 principal prepayment on the
term portion of the Senior Debt made on August 13, 2003, and (C) the principal prepayments in the aggregate amount of $25,047,883.20 on the Initial Notes made during the third quarter of 2003. 
  
 “GAAP” has the meaning assigned to such term in Section 1.2 hereof.

  
 “Governmental Authorities” means any federal, state,
foreign or municipal court or other governmental department, commission, board, bureau, agency or instrumentality, governmental or quasi-governmental, domestic or foreign. 
  

 8 

 “Guarantor” means each entity that becomes a Guarantor under a Guaranty Agreement. 

 
 “Guaranty” means any guaranty of the payment or performance of
any Indebtedness or other obligation and any other arrangement whereby credit is extended to one obligor on the basis of any promise of another Person, whether that promise is expressed in terms of an obligation to pay the Indebtedness of such
obligor, or to purchase an obligation owed by such obligor, or to purchase goods and services from such obligor pursuant to a take-or-pay contract, or to maintain the capital, working capital, solvency or general financial condition of such obligor,
whether or not any such arrangement is reflected on the balance sheet of such other Person, firm or corporation, or referred to in a footnote thereto, but shall not include endorsements of items for collection in the ordinary course of business. For
the purpose of all computations made under this Agreement, the amount of a Guaranty in respect of any obligation shall be deemed to be equal to the maximum aggregate amount of such obligation or, if the Guaranty is limited to less than the full
amount of such obligation, the maximum aggregate potential liability under the terms of the Guaranty. 
  
 “Guaranty Agreement(s)” means, collectively and individually (as applicable), the Parent Guaranty Agreement and the Subsidiary Guaranty
Agreement. 
  
 “Holder” shall mean the Person designated
by a Purchaser to hold the Warrant and to whom and in whose name the Warrant shall be issued at the Closing. 
  
 “Indebtedness” means, for any Person at the time of any determination, without duplication, all obligations, contingent or otherwise, of such
Person that, in accordance with GAAP on a consolidated basis, should be classified upon the balance sheet of such Person as indebtedness, but in any event including: (i) all obligations for borrowed money, (ii) all obligations arising from
installment purchases of property or representing the deferred purchase price of property or services in respect of which such Person is liable, contingently or otherwise, as obligor or otherwise (other than trade payables and other current
liabilities incurred in the ordinary course of business on terms customary in the trade), (iii) all obligations evidenced by notes, bonds, debentures, acceptances or instruments, or arising out of letters of credit or bankers’ acceptances
issued for such Person’s account, (iv) all obligations, whether or not assumed, secured by any Lien or payable out of the proceeds or production from any property or assets now or hereafter owned or acquired by such Person in an amount equal to
the lesser of (a) such obligation and (b) the fair market value of such property if such obligation had not been assumed, (v) all obligations for which such Person is obligated pursuant to a Guaranty, (vi) the capitalized portion of lease
obligations under Capitalized Leases, (vii) all obligations for which such Person is obligated pursuant to any Interest Rate Protection Agreements or derivative agreements or arrangements, (viii) all obligations of such Person upon which interest
charges are customarily paid or accrued, (ix) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Capital Stock in such Person or any other Person, (x) all obligations of such Person,
actual or contingent, as an account party in respect of letters of credit or similar facilities and bankers’ acceptances, and (xi) all obligations of any partnership or joint venture as to which such Person is or may become personally liable to
the extent such obligations are deemed to be liabilities under GAAP. 
  

 9 

 “Interest Expense” shall mean, for any period, total interest expense (including attributable
to conditional sales contracts, Capitalized Leases and other title retention agreements) in accordance with GAAP of the Loan Parties on a consolidated basis with respect to all outstanding Indebtedness including capitalized interest, but excluding
commissions, discounts and other fees owed with respect to letters of credit and bankers’ acceptance financing and net costs under Interest Rate Protection Agreements. 
  
 “Interest Rate Protection Agreement” means any interest rate swap, interest rate cap, interest rate collar or
other interest rate hedging agreement or arrangement. 
  
 “Inventory” has the meaning specified in the Security Agreement. 
  
 “Investment” as applied to any Person means the amount paid or agreed to be paid or loaned, advanced or contributed to other Persons, and in any event shall include (i) any direct or indirect purchase or
other acquisition of any notes, obligations, instruments, stock, securities or ownership interest (including partnership interests and joint venture interests) and (ii) any capital contribution, loan or extension of credit to any other Person.

  
 “Investment Property” has the meaning specified in
the Security Agreements. 
  
 “Investor Rights Agreement”
means the Investor Rights Agreement dated as of February 8, 2002, executed by the Holder and the Parent, as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof. 
  
 “IRS” means the Internal Revenue Service and any governmental body
or agency succeeding to the functions thereof. 
  
 “Junior
Subordination Agreement(s)” means, individually or collectively, as the case may be, those certain Junior Subordination Agreements dated as of February 8, 2002 between the Agent and each Junior Lender, as the same may be amended, restated,
supplemented or otherwise modified from time to time. 
  
 “Junior Lender(s)” means, individually or collectively, as the case may be, CF Holdings, Ltd., Wright Medical, Kimberly-Clark, Steve C. Roy, John D. Hodgeman, Michael R. Rutkin, Mark J. Rutkin, David Strode and Ralph Renick, Jr.

  
 “Junior Notes” means the promissory notes of the
Loan Parties to the Junior Lenders in the aggregate original principal amount of $8,559,864. 
  
 “Key Management” shall mean Jack Cahill, Paul Chapman, Kenneth W. Davidson, Scott Klosterman and Harry L. Zimmerman. 
  

“Laws” means all U.S. and foreign federal, state or local statutes, laws, rules, regulations, ordinances, codes, policies, rules of common
law, and the like of any Governmental Authority, now or hereafter in effect, including any judicial or administrative interpretations thereof, and any judicial or administrative orders, consents, decrees or judgments. 
  

 10 

 “Lien” means any security interest, lien, pledge, bailment, mortgage, hypothecation, deed of
trust, conditional sales, Capitalized Lease and title retention agreement (including any lease in the nature thereof), charge, encumbrance or other similar arrangement or interest in real or personal property, now owned or hereafter acquired,
whether such interest is based on common law, statute or contract and in the case of any securities, any purchase option, call or similar right of a third party with respect to such securities. 
  
 “Life Insurance” has the meaning assigned to such term in Section
4.1(e) hereof. 
  
 “Loan Parties” has the meaning set
forth in the Preamble. 
  
 “Manage” and
“Management” means generation, production, handling, distribution, processing, use, storage, treatment, operation, transportation, recycling, reuse and/or disposal, as those terms are defined in CERCLA, RCRA and other Environmental Laws
(including as those terms are further defined, construed, or otherwise used in rules, regulations, standards, guidelines and publications issued pursuant to, or otherwise in implementation of, such Environmental Laws). 
  
 “Material Adverse Effect” or “Material Adverse Change”
shall mean any event, condition or circumstance or set of events, conditions or circumstances or any change(s) which (i) has, had or could reasonably be expected to have any material adverse effect upon or change in the validity or enforceability of
any Purchase Document, (ii) has been or could reasonably be expected to be material and adverse to the value, condition, use or availability of any of the Collateral and/or to the business, operations, prospects, properties, assets, liabilities or
condition of the Loan Parties, either individually or taken as a whole, or (iii) has materially impaired or could reasonably be expected to materially impair the ability of any Loan Party to perform the Obligations or to consummate the transactions
under the Purchase Documents executed by such Person or the rights and remedies of Purchaser. 
  
 “Measurement Date” has the meaning assigned to such term in Section 7.3 hereof. 
  
 “Measurement Period” means the twelve month period ending on a Measurement Date. 
  
 “Mortgage” means and includes any mortgage, deed of trust, deed to secure debt, assignment, or other instrument
executed and delivered by any Loan Party to or for the benefit of the Agent by which the Agent, for the benefit of the Agent and the Purchasers, acquires a Lien on any Real Estate or a collateral assignment of such Loan Party’s interest under a
lease of Real Estate, and any amendment, modification, or supplement thereto. 
  

 11 

 “Multiemployer Plan” means a multiemployer plan (within the meaning of Section 3(37) of ERISA)
that is maintained for the benefit of the employees of the Loan Parties or any ERISA Affiliate. 
  
 “Net Income” means, for any period, the net income (or loss) of the Loan Parties on a consolidated basis for such period taken as a single
accounting period, after deduction of all expenses, taxes and other proper charges (which charges include, without limitation, (i) the income (or loss) of any Person in which any other Person (other than any Loan Party) has a joint interest, except
to the extent of the amount of dividends or other distributions actually paid in cash to a Loan Party by such Person during such period, (ii) the income (or loss) of any Person accrued prior to the date it becomes a Loan Party or is merged into or
consolidated with a Loan Party or that Person’s assets are acquired by a Loan Party, (iii) the income of any Subsidiary of any Loan Party (that is not a Loan Party itself) to the extent that the declaration or payment of dividends or similar
distributions of that income by that Subsidiary is not at the time permitted by operation of the terms of the charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary, (iv)
any gain arising from any write-up on the book value of any asset, and (v) any gain arising from the acquisition of debt or equity securities of any Loan Party or from cancellation or forgiveness of Indebtedness of any Loan Party, all as determined
in accordance with GAAP). 
  
 “Notes” has the meaning
set forth in Section 2.1 hereof. 
  
 “Obligations” means
all loans, advances, debts, principal, interest (including any interest that, but for the provisions of the Bankruptcy Code would have accrued), contingent reimbursement obligations with respect to outstanding letters of credit, premiums,
liabilities, obligations, fees, charges, costs, lease payments, guaranties, covenants, and duties of any kind and description owing by any of the Loan Parties to the Purchaser pursuant to or evidenced by the Purchase Documents and irrespective of
whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising, and including all interest not paid when due and all expenses (including any fees or expenses that, but
for the provisions of the Bankruptcy Code, would have accrued) that any of the Loan Parties are required to pay or reimburse by the Purchase Documents, by law, or otherwise. Any reference in the Purchase Documents to the Obligations shall include
all amendments, changes, extensions, modifications, renewals, replacements, substitutions, and supplements, thereto and thereof, as applicable, both prior and subsequent to any insolvency proceeding. 
  
 “Orderly Liquidation Value” means, with respect to Inventory or
Equipment of any Loan Party, the orderly liquidation value thereof as determined in a manner acceptable to the Agent by an experienced and reputable appraiser acceptable to the Agent, net of all costs of liquidation thereof. 
  
 “Parent” has the meaning assigned to such term in the Preamble
hereto. 
  

 12 

 “Parent Guaranty Agreement” means the Parent Guaranty Agreement dated as of February 8, 2002
executed by the Parent in favor of the Purchasers, as the same may be amended, restated, supplemented or otherwise modified from time to time. 
  
 “Parent Security Agreement” means the Security Agreement dated as of February 8, 2002 between the Parent and the Agent, for the benefit of the
Agent and the Purchasers, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Patent Security Agreement” means any Patent Security Agreement dated as of February 8, 2002 or any subsequent date, executed and delivered by a
Loan Party to the Agent, for the benefit of the Agent and the Purchasers, to evidence and perfect the Agent’s security interest in such Loan Party’s present and future patents and related licenses and rights, as such agreement may be
amended, restated, or otherwise modified from time to time. 
  
 “PBGC” means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA, or any other governmental agency, department or instrumentality succeeding to the functions thereof. 
  
 “Pension Plan” means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which any Loan Party or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time
during the immediately preceding five (5) plan years. 
  
 “Permit” shall mean collectively all licenses, leases, powers, permits, franchises, certificates, authorizations, approvals and other rights. 
  

“Permitted Acquisition” shall have the meaning set forth in Section 7.2(k). 
  
 “Permitted Acquisition Documents” means the documents listed below which are required to be delivered to the Agent
concurrently with each Permitted Acquisition which is to be funded in part or in whole from the proceeds of a Draw, each in form and substance satisfactory to Agent: 
  
 (a) copies of final executed stock or asset purchase agreement, merger agreement or other agreement
evidencing such Permitted Acquisition and all other information, agreements, instruments, certificates or evidence requested by Agent and/or which reflect that all conditions precedent to the completion of such acquisition shall have been satisfied;

  
 (b) if such Permitted Acquisition is to be
made by or result in a Subsidiary of the Parent that has not previously joined in the Purchase Documents, copies of all applicable Purchase Documents, in the form to be provided by the Agent, pursuant to which such Subsidiary joins this Agreement
and the other Purchase Documents and grants a perfected security interest in its assets pursuant to the Security Documents; 
  

 13 

 (c) evidence satisfactory to the Agent that: (i) all conditions precedent to the
acquisition have been satisfied or waived; (ii) all necessary regulatory approvals to the consummation of the acquisition have been obtained; (iii) no litigation exists relating to the acquisition; and (iv) contemporaneously with the Loan
Parties’ receipt of the proceeds of any Draw, the acquisition has been consummated in full; and 
  
 (d) such other closing documents to be delivered pursuant to the relevant acquisition documents and financial information with respect to
the entity or business being acquired as Agent may request. 
  
 “Permitted Distribution” means any Distribution by a Loan Party to a Loan Party, provided, that no Default or Event of Default exists at the time of, or after giving effect to, any such Distribution. 
  
 “Permitted Liens” has the meaning assigned to such term in Section
7.2(b) hereof. 
  
 “Person” means any individual,
partnership, limited partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental entity or department, agency or political subdivision thereof. 

 
 “Plan” means any employee benefit plan (within the meaning of
Section 3(3) of ERISA), other than a Multiemployer Plan, established or maintained by any of the Loan Parties or any ERISA Affiliate. 
  
 “Pollutant” shall include any “hazardous substance” and any “pollutant or contaminant” as those terms are defined in CERCLA;
any “hazardous waste” as that term is defined in RCRA; and any “hazardous material” as that term is defined in the Hazardous Materials Transportation Act (49 U.S.C. § 1801 et seq.), as amended (including as
those terms are further defined, construed, or otherwise used in rules, regulations, standards, guidelines and publications issued pursuant to, or otherwise in implementation of, said Environmental Laws); and including without limitation any
petroleum product or byproduct, solvent, flammable or explosive material, radioactive material, asbestos, polychlorinated biphenyls (PCBs), dioxins, dibenzofurans, heavy metals, and radon gas; and including any other substance or material that is
reasonably determined to present a threat, hazard or risk to human health or the environment. 
  
 “Prime Rate” means the annual rate of interest as quoted from time to time by Citibank, N.A. as its base rate, and if a range of rates is listed, the highest such rate; provided that such rate is not
necessarily the best rate offered to Citibank’s customers; provided further that should such practice change or should the Agent be unable to determine such rate, the “Prime Rate” shall be such other indication of the prevailing prime
rate of interest as may reasonably be chosen by the Agent; provided further, that each change in the fluctuating interest rate shall take effect simultaneously with the corresponding change in the Prime Rate. 
  

 14 

 “Properties and Facilities” means all of the material assets and properties used by or useful
to the Loan Parties in the Business. 
  
 “Proprietary
Rights” means all patents, trademarks, trade names, service marks, copyrights, inventions, production methods, licenses, formulas, know-how and trade secrets, regardless of whether such are registered with any Governmental Authorities,
including applications therefor. 
  
 “Purchase
Documents” means this Agreement, the Notes, the Warrant, the Investor Rights Agreement, the Subordination Agreement, the Junior Subordination Agreements, the Life Insurance, any Draw Notice and the Security Documents and all other agreements,
instruments and documents delivered in connection herewith or therewith and/or contemplated hereby or thereby, including, without limitation, each document listed or contemplated on a closing checklist of even date herewith and all other agreements,
instruments, documents and other written matter now or hereafter executed by any Person in connection with any of the Obligations, in each case as any or all of the foregoing may be supplemented, modified or amended from time to time. 
  
 “Purchaser(s)” means CapitalSource and, to the extent provided in
Section 6.2, any successor or assignee of all or any part of the Securities. 
  
 “RCRA” means the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), as amended, and all rules, regulations, standards, guidelines, and publications issued thereunder.

  
 “Real Estate” means, with respect to any Person, all
of such Person’s now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds, and future interests, together with all of such Person’s now or hereafter owned or leased interests in the
improvements thereon, the fixtures attached thereto, and the easements appurtenant thereto. 
  
 “Release” means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration of a Pollutant into the indoor or outdoor environment or into or out
of any Real Estate or other property, including the movement of Pollutants through or in the air, soil, surface water, groundwater, or Real Estate or other property. 
  
 “Removal,” “Remedial” and “Response” actions shall include the types of activities covered by
CERCLA, RCRA, and other comparable Environmental Laws, and whether the activities are those which might be taken by a government entity or those which a government entity or any other person might seek to require of waste generators, handlers,
distributors, processors, users, storers, treaters, owners, operators, transporters, recyclers, reusers, disposers, or other persons under “removal,” “remedial,” or other “response” actions. 
  

 15 

 “Reportable Event” means any of the events which are reportable under Section 4043 of ERISA and
the regulations promulgated thereunder, other than an occurrence for which the thirty (30) day notice contained in 29 C.F.R. § 2615.3(a) is waived. 
  
 “Required Purchasers” means the Purchasers holding Notes representing at least 51% of the aggregate principal amount outstanding under all of
the Notes. 
  
 “SEC” means the Securities and Exchange
Commission and any governmental body or agency succeeding to the functions thereof. 
  
 “Securities” has the meaning assigned to such term in Section 2.2. 
  
 “Securities Act” means the Securities Act of 1933, as amended. 
  
 “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 “Security Agreements” means, collectively or individually (as
appropriate) the Parent Security Agreement and the Subsidiary Security Agreement. 
  
 “Security Documents” means the Security Agreements, the Mortgages, the Guaranty Agreements, the Copyright Security Agreement, the Patent Security Agreement, the Trademark Security Agreement, the Financing
Statements, and all other documents, instruments and other materials necessary to create or perfect the security interests created or pursuant to this Agreement or any of the Security Documents, as the same may be amended, restated, supplemented or
otherwise modified from time to time. 
  
 “Senior Agent”
means Bank of America, National Association, as agent under the Senior Credit Agreement. 
  
 “Senior Credit Agreement” means that certain Credit Agreement by and among the Loan Parties (excluding Encore MP), the Senior Agent and the Senior Lenders dated as of February 8, 2002, as such may be amended
or modified from time to time but only as and to the extent permitted hereunder and under the Subordination Agreement. 
  
 “Senior Debt” means any and all of the following, now or hereafter existing or arising: (a) all principal of, and premium, if any, and interest
on, the Revolving Loans (as defined in the Senior Credit Agreement) (including, without limitation, any interest accruing thereon at the legal rate after the commencement of any bankruptcy proceeding and any additional interest that would have
accrued thereon but for the commencement of such proceeding), (b) all reimbursement and other obligations under or in connection with any letter of credit issued by any Senior Lender or any affiliate of Senior Lender, for the benefit of the Loan
Parties, or any of them, (c) all obligations of any Loan Party under or in respect of any interest rate exchange agreement, interest rate swap agreement or other similar agreement entered into in respect of all or any portion of the Senior Debt
referred to in clause (a) above, (d) all other indebtedness, obligations and liabilities of any Loan Party to the Senior Agent or any Senior Lender, the issuer of any letter of credit 
  

 16 

 
under the Senior Credit Agreement or any other holder of any such indebtedness or obligations, whether now existing or hereafter incurred or created, under
or with respect to the Senior Credit Agreement or any agreement executed and delivered in connection therewith, (including, without limitation, claims for indemnity or damages arising thereunder or with respect thereto), (e) all indebtedness and
obligations arising in connection with any refinancings, replacements or increases of any of the foregoing, whether with Senior Lenders, or any of them, and whether in the same, lesser or greater amount, and (f) any amendments, modifications or
refinancings of any of the foregoing, provided, that: (i) the principal amount of the Senior Debt (including the outstanding face amount of letters of credit but excluding “Bank Products” as defined by the Senior Credit Agreement)
may not exceed $28,000,000; and (ii) such amendments, modifications or refinancings do not: (A) extend the final maturity of the Senior Debt to a date that is later than the date which is 120 days prior to the end of the Term or (B) add any new
financial performance covenant. 
  
 “Senior Financing”
means, collectively, the secured revolving loans of the Loan Parties made by Senior Lender pursuant to the Senior Credit Agreement in an aggregate amount not to exceed $28,000,000. 
  
 “Senior Lenders” shall mean the Lenders under and as defined in the Senior Credit Agreement. 
  
 “Solvent” means, when used with respect to any Person, that at the
time of determination: (a) the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including contingent liabilities); (b) the present fair saleable value of its assets is greater than its probable liability on
its existing debts as such debts become absolute and matured; (c) it is then able and expects to be able to pay its debts (including contingent debts and other commitments) as they mature; and (d) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted. For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or matured liability. 
  
 “Stock Pledge Agreement(s)” means, individually or collectively, as the case may be, the Stock Pledge Agreement dated as of February 8, 2002,
executed and delivered by each Loan Party to the Agent, for the benefit of the Agent and the Purchasers, to evidence and perfect the Agent’s security interest in the Capital Stock of certain of Subsidiaries held by the Loan Party. 

 
 “Subordination Agreement” means that certain Second Amended and
Restated Subordination and Intercreditor Agreement of even date herewith between the Senior Agent, the Loan Parties and the Purchaser, as the same may be amended, restated, supplemented or otherwise modified from time to time. 
  
 “Subsidiary” of any Person means any other Person of which the
outstanding Capital Stock possessing a majority of voting power in the election of directors or managers (otherwise than as the result of a default) is owned or controlled by such first Person directly or indirectly through Subsidiaries. 

 

 17 

 “Subsidiary Guaranty Agreement” means the Subsidiary Guaranty Agreement dated as of February 8,
2002 executed by each Subsidiary of the Parent in favor of the Purchasers, as the same may be amended, restated, supplemented or otherwise modified from time to time. 
  
 “Subsidiary Security Agreement” means the Security Agreement dated as of February 8, 2002 between the Loan
Parties, other than the Parent and Encore MP, and the Agent, for the benefit of the Agent and the Purchasers, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Term” shall mean the period commencing on the Closing Date and
ending on September 26, 2008 (i.e., the five year anniversary of the Closing Date). 
  
 “Total Debt” shall mean, at any date of determination, for Loan Parties on a consolidated basis, the total Indebtedness on such date plus the aggregate liquidation value of all Disqualified Stock of the Loan
Parties. 
  
 “Treasury Stock Method” has the meaning as
defined in FAS 128 as promulgated by the Financial Accounting Standards Board. 
  
 “Trademark Security Agreement” means any Trademark Security Agreement dated as of February 8, 2002 or any subsequent date, executed and delivered by a Loan Party to the Agent, for the benefit of the Agent
and the Purchasers, to evidence and perfect the Agent’s security interest in such Loan Party’s present and future trademarks and related licenses and rights, as such agreement may be amended, restated, or otherwise modified from time to
time. 
  
 “Transactions” means the incurrence of debt
and the issuance of securities in connection therewith and all other transactions contemplated by the Purchase Documents, any Permitted Acquisition Documents, and/or the Senior Credit Agreement. 
  
 “UCC” shall mean the Uniform Commercial Code as in effect in the
State of Maryland from time to time. 
  
 “Underlying
Securities” means (i) the securities issued or issuable upon exercise of the Warrant, and (ii) any equity securities issued or issuable with respect to the securities referred to in clause (i) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation or other reorganization. 
  
 “Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. 
  

 18 

 “UST” means an underground storage tank, including as that term is defined, construed and
otherwise used in RCRA and in rules, regulations, standards, guidelines and publications issued pursuant to RCRA and comparable state and local laws. 
  
 “Warrant” has the meaning assigned to such term in Section 2.2. 
  
 “Warrant Shares” means all shares of the Parent’s common stock issuable upon exercise of the Warrant.

  
 1.2 Accounting Principles. The character or amount of
any asset, liability, capital account or reserve and of any item of income or expense to be determined, and any consolidation or other accounting computation to be made, and the construction of any definition containing a financial term, pursuant to
this Agreement shall be determined or made in accordance with generally accepted accounting principles in the United States of America consistently applied (“GAAP”), unless such principles are inconsistent with the express requirements of
this Agreement. 
  
 1.3 Other Definitional Provisions;
Construction. Whenever the context so requires, neuter gender includes the masculine and feminine, the singular number includes the plural and vice versa. 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 in any particular provision of this agreement, and references to section, article, annex, schedule, exhibit and like references are references to this
Agreement unless otherwise specified. A Default or Event of Default shall “continue” or be “continuing” until such Default or Event of Default has been cured or waived by the Agent. References in this Agreement to any Persons
shall include such Person’s successors and permitted assigns. Other terms contained in this Agreement (which are not otherwise specifically defined herein) shall have meanings provided in Article 9 of the Maryland Uniform Commercial Code on the
date hereof to the extent the same are used or defined therein. 
  
 ARTICLE 2 
 ISSUE AND SALE OF SECURITIES 
  
 2.1 Authorization and Issuance of the Note. On February 8, 2002, the Loan Parties issued and sold to the Purchaser the Initial Notes in
denominations of $10,000,000, $8,000,000, $3,000,000 and $3,000,000. The Loan Parties acknowledge and agree with the Purchaser that as of September 26, 2003, the aggregate amount of the Obligations owing by the Loan Parties to the Purchaser under
the Initial Notes is $22,969.60. Each of the Loan Parties has duly authorized the issuance and sale to the Purchaser of Senior Subordinated Notes of the Loan Parties in an aggregate principal amount of up to $24,000,000 due at the end of the Term
(unless required to be prepaid before then pursuant to the terms of this Agreement), in form and substance satisfactory to the Agent (collectively with the Initial Notes and any notes issued in substitution therefor or upon any division thereof
pursuant to this Agreement or otherwise, the “Notes”). The Notes shall be substantially in the form attached hereto as Exhibit A. 
  

 19 

 2.2 Authorization and Issuance of Warrant. On February 8, 2002, the Parent issued and sold to the
Holder a stock purchase warrant (the “Initial Warrant”) evidencing Holder’s right to acquire up to an aggregate of 2,198,614 shares of Common Stock of Parent. Prior to the date hereof, the Initial Warrant was returned to the Parent
and the Parent issued a new warrant (collectively, including any warrant issued in substitution therefor or upon any partial exercise thereof pursuant to this Agreement, the Warrant or otherwise, the “Warrant”) to the Holder, a copy of
which is attached hereto as Exhibit C, evidencing Holder’s right to acquire up to an aggregate of 1,648,960 shares of Common Stock of Parent. The Notes, Warrant and Shares (as defined in the Warrant) are sometimes referred to herein
collectively as the “Securities.” 
  
 2.3 Draws.

  
 (a) Subject to the terms and conditions set
forth in this Agreement, on each Draw Date after the date hereof, the Purchaser agrees to loan to the Loan Parties the amount of the Draw so requested by the Loan Parties; provided, however, that (i) the aggregate principal amount of
all Draws made during the Term shall never exceed $24,000,000 and (ii) the principal amount of any Draw shall be in integral multiples of One Million Dollars ($1,000,000). The loan evidenced by the Notes is not a revolving credit facility and may
not be drawn, repaid and redrawn. Any repayments of principal on the Loan shall be applied to permanently reduce the principal amount of the Notes. The Notes shall evidence the aggregate Indebtedness of the Loan Parties to the Purchaser resulting
from Draws from time to time. The Purchaser hereby is authorized, but is not obligated, to enter the amount of the Purchaser’s funding of each Draw and the outstanding principal of the Notes and the amount of each payment or prepayment of
principal and interest thereon on the reverse of or on an attachment to the applicable Note. Draws may be made by Agent in its sole discretion for the payment of interest on the Notes and other Obligations on the date when due. The Loan Parties
shall use the Draws for costs incurred in Permitted Acquisitions and to fund their obligations incurred in the purchase of inventory or generation of receivables. 
  
 (b) So long as no Default or Event of Default shall have occurred and be continuing, the Loan Parties may
give Agent irrevocable written notice requesting a Draw by delivering to Agent not later than 4 p.m. (New York City time) a completed Draw Notice, which Draw Notice shall specify the proposed Draw Date of such Draw. Upon receipt of a Draw Notice,
Agent shall designate a Draw Date that is within fifteen (15) calendar days of its receipt thereof. On each Draw Date, the Loan Parties irrevocably authorize Agent to disburse the proceeds of the requested Draw to the applicable account(s) of the
Loan Parties specified in the applicable Draw Notice, in all cases for credit to the Loan Parties (or to such other account as to which such Loan Parties shall instruct Agent in writing) via Federal funds wire transfer no later than 1:00 p.m. New
York City time. 
  

 20 

 2.4 The Closing . Delivery of the Notes (the “Closing”) shall be made at the offices of
Piper Rudnick LLP in Baltimore, Maryland and on such date as may be mutually agreeable to the Loan Parties and the Purchaser. The date and time of the Closing as finally determined pursuant to this Section 2.4 are referred to herein as the
“Closing Date.” Each Note shall be issued in the name of the Purchaser or in such other name or names and in such permitted denomination or denominations as the Purchaser may request in writing on or prior to the Closing Date. 

 
 ARTICLE 3 
 REPAYMENT OF THE NOTE 
  
 3.1 Interest Rate. The Loan Parties, jointly and severally, covenant and agree to make payments to each Purchaser of accrued interest on the Note held by such Purchaser on the first Business Day of each month
commencing on October 1, 2003. The Notes will bear interest on the outstanding principal amount thereof at a rate equal to the greater of (i) twelve percent (12%), and (ii) the Prime Rate plus three percent (3.0%); provided that prior to the second
Draw Date interest on the outstanding principal amount of the Notes will be at a rate equal to the Prime Rate plus two percent (2%). Interest on the Notes will be computed on the basis of a year of 360 days, composed of twelve 30-day months, and the
actual number of days elapsed. 
  
 3.2 Repayment of the
Notes. The Loan Parties, jointly and severally, covenant and agree to repay to each Purchaser the unpaid principal balance of the Note held by such Purchaser in full, together with all accrued and unpaid interest, fees and other amounts and
Obligations due under the Purchase Documents on the last day of the Term or upon demand or acceleration pursuant to this Agreement. 
  
 3.3 Optional Prepayment of Note. 
  
 (a) Subject to the terms of this Section 3.3, the Loan Parties may prepay to the Purchasers the outstanding principal amount of the Notes
in full, together with all accrued and unpaid interest, fees and other amounts and Obligations due under the Purchase Documents, plus the following applicable prepayment fees, expressed as a percentage of any principal being prepaid: 
  

	 If Prepaid During the Following Periods:

	  	Prepayment Fee

	 
	 For any prepayment on or after September 26, 2003 and before September 26, 2004
	  	3.0	%
		
	 For any prepayment on or after September 26, 2004 and before September 26, 2005
	  	1.5	%
		
	 For any prepayment on or after September 26, 2005
	  	No premium	 

  

 21 

 (b) All such prepayments shall be applied to the outstanding principal in the inverse
order of maturity after application of such prepayment to any accrued interest and prepayment premium payable in connection therewith. Notwithstanding any provision to the contrary, the prepayment fees calculated pursuant to this Section 3.3 shall
be due and payable upon any voluntary or mandatory prepayment of the Notes and upon acceleration as set forth in Section 8.2 hereof. 
  
 3.4 Notice of Optional Prepayment. If the Loan Parties elect to prepay the Notes pursuant to Section 3.3 hereof, the Loan Parties shall give notice
of such prepayment to the Agent and the Purchasers not less than thirty (30) days or more than ninety (90) days prior to the date fixed for prepayment, specifying (a) the date on which such prepayment is to be made, (b) the total amount of the
Obligations to be prepaid on such date, and (c) the premium, if any, and accrued interest applicable to the prepayment. Such notice shall be accompanied by a certificate of the Chairman of the Board of Directors, the President or the Vice President
and of the Treasurer of the Parent that such prepayment is being made in compliance with Section 3.3. Notice of prepayment having been so given, the aggregate principal amount of the Notes, together with all accrued interest and premium, if any,
thereon and all other Obligations, shall become due and payable on the prepayment date set forth in such notice. Any offer made by the Loan Parties pursuant to Section 3.3 shall be irrevocable after delivery of notice as set forth in this Section
3.4. 
  
 3.5 Mandatory Prepayment. If any Loan Party incurs
any Indebtedness except for Permitted Indebtedness or receives payments of insurance proceeds (other than proceeds used to repair or replace fixed assets of a Loan Party as permitted under the Senior Credit Agreement), then it shall apply 100% of
the proceeds thereof to the prepayment of (i) the Senior Debt to the extent provided in the Senior Credit Agreement or (ii) the Obligations on a pro rata basis in the following order and manner: first, to the payment of any and all unpaid charges,
expenses and fees under the Purchase Documents, then to any unpaid interest on the Notes, and then to the unpaid principal balance owed under the Purchase Documents, together with all prepayment fees in accordance with Section 3.3, such payment to
be applied at such time as the Agent shall decide in its sole discretion. If any Loan Party receives any payment of proceeds under the Life Insurance, then it shall apply 100% of the proceeds thereof to the prepayment of the Obligations on a pro
rata basis in the following order and manner: first, to the payment of any and all unpaid charges, expenses and fees under the Purchase Documents, then to any unpaid interest on the Notes, and then to the unpaid principal balance owed under the
Purchase Documents, such payment to be applied at such time as the Agent shall decide in its sole discretion. 
  

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 3.6 Home Office Payment. The Loan Parties will pay all sums becoming due on the Notes for
principal, premium, if any, and interest and all other Obligations to the Purchasers by the method and at the address specified for such purpose in Annex A, or by such other method or at such other address as each Purchaser shall have from
time to time specified to the Loan Parties in writing for such purpose, without the presentation or surrender of such Notes or the making of any notation thereon, except that upon written request of the Loan Parties made concurrently with or
reasonably promptly after indefeasible payment or prepayment in full of the Notes, the Purchasers shall surrender such Notes for cancellation, reasonably promptly after such request, to the Loan Parties at their principal executive office. Unless
indicated otherwise by any Purchaser in writing, all payments made by Loan Parties shall be made only by wire transfer on the date when due, without offset or counterclaim, in U.S. Dollars, in immediately available funds to such account as may be
indicated in writing by each Purchaser to the Loan Parties from time to time. Any such payment received after 2:00 p.m., New York City Time, on the date when due shall be deemed received on the following Business Day. 
  
 3.7 Taxes. Any and all payments by the Loan Parties hereunder or under
the Notes or Warrant or other Purchase Documents that are made to or for the benefit of the Purchasers or the Holders shall be made free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges
or withholdings and penalties, interests and all other liabilities with respect thereto (collectively, “Taxes”), excluding taxes imposed on any Purchaser’s or Holder’s net income or capital and franchise taxes imposed on any of
them by the jurisdiction under the laws of which any of them is organized or any political subdivision thereof (all such nonexcluded Taxes being hereinafter referred to as “Covered Taxes”). If any of the Loan Parties shall be required by
law to deduct any Covered Taxes from or in respect of any sum payable hereunder or under any Note, Warrant or other Purchase Documents to any Purchaser or Holder, the sum payable shall be increased as may be necessary so that after making all
required deductions of Covered Taxes (including deductions of Covered Taxes applicable to additional sums payable under this paragraph), such Purchaser or Holder, as applicable, receives an amount equal to the sum it would have received had no such
deductions been made. The Loan Parties shall make such deductions and the Loan Parties shall pay the full amount so deducted to the relevant taxation authority or other authority in accordance with applicable law. In addition, the Loan Parties agree
to pay any present or future stamp, documentary, excise, privilege, intangible or similar levies that arise at any time or from time to time from any payment made under any and all Purchase Documents or from the execution or delivery by the Loan
Parties or from the filing or recording or maintenance of, or otherwise with respect to the exercise by Purchaser or Holder of their respective rights under any and all Purchase Documents (collectively, “Other Taxes”). The Loan Parties
will indemnify each Purchaser and Holder for the full amount of Covered Taxes imposed on or with respect to amounts payable hereunder and Other Taxes, and any liability (including penalties, interest and expenses) arising therefrom or with respect
thereto. Payment of this indemnification shall be made within thirty (30) days from the date any Purchaser or Holder provides the Loan Parties with a certificate certifying and setting forth in reasonable detail the calculation thereof as to the
amount and type of such Taxes. Any such certificates 
  

 23 

 
submitted by any Purchaser or Holder in good faith to the Loan Parties shall, absent manifest error, be final, conclusive and binding on all parties. The
obligation of the Loan Parties under this Section 3.7 shall survive the payment of the Notes, exercise of the Warrant and the termination of this Agreement and any other Purchase Documents. Within thirty (30) days after the Loan Parties having
received a receipt for payment of Covered Taxes and/or Other Taxes, the Loan Parties shall furnish to Purchaser, the original or certified copy of a receipt evidencing payment thereof. 
  
 3.8 Maximum Lawful Rate. This Agreement, the Notes and the other Purchase Documents (other than the Warrant) are
hereby limited by this Section 3.8. In no event, whether by reason of acceleration of the maturity of the amounts due hereunder or otherwise, shall interest and fees contracted for, charged, received, paid or agreed to be paid to the Purchasers
under the Notes and other Purchase Documents (other than the Warrant) exceed the maximum amount permissible under such applicable law. If, from any circumstance whatsoever, interest and fees would otherwise be payable to the Purchasers in excess of
the maximum amount permissible under such applicable law, the interest and fees shall be reduced to the maximum amount permitted under applicable law. If from any circumstance, any Purchaser shall have received anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any excess of interest shall be applied to the reduction of the principal amount of the Notes, in such manner as may be determined by the Agent, and not to the payment of fees
or interest, or if such excessive interest exceeds the unpaid balance of the principal amount of the Notes, such excess shall be refunded to the Loan Parties. 
  

3.9 Capital Adequacy. If, after the date hereof, either the introduction of or any change of the interpretation of any law or the compliance by
any Purchaser or Holder with any guideline or request from any Governmental Authority (whether or not having the force of law) has or would have the effect of reducing the rate of return on the capital or assets of such Purchaser and/or Holder as a
consequence of, as determined by such Purchaser or Holder in its sole discretion, the existence of any Purchaser’s or Holder’s obligations under this Agreement or any other Purchase Documents, then, upon demand by such Purchaser or Holder,
the Loan Parties immediately shall pay to such Purchaser or Holder, as applicable, from the time as specified thereby, additional amounts sufficient to compensate such Purchaser or Holder, as applicable, in light of such circumstances. The
obligations of the Loan Parties under this Section 3.9 shall survive the payment of the Notes and other Obligations, the exercise of the Warrant and the termination of this Agreement and the other Purchase Documents. 
  
 3.10 Certain Waivers. The Loan Parties unconditionally waive (a) any
rights to presentment, demand, protest or (except as expressly required hereby) notice of any kind, and (b) any rights of rescission, setoff, counterclaim or defense to payment under the Notes, Warrant, the Purchase Documents or otherwise that the
Loan Parties may have or claim against any Purchaser or Holder or any prior Purchaser or Holder. 
  

 24 

 ARTICLE 4 
 CONDITIONS 
  
 4.1 Conditions
to Closing. The obligations of the Purchaser under this Agreement are subject to the satisfaction, prior to or at the Closing, of the following conditions: 
  

(a) Representations and Warranties True. The representations and warranties contained in Article 5 hereof shall be true and
correct in all material respects at and as of the Closing Date as though then made, except to the extent of changes caused by the Transactions expressly contemplated herein. 
  
 (b) Material Adverse Change. There will have been no Material Adverse Effect or Material Adverse
Change since December 31, 2002, and there shall be no liabilities or obligations of any nature which, individually or in the aggregate, would reasonably be likely to have a Material Adverse Effect. 
  
 (c) Purchase Documents. The Loan Parties shall have
delivered to the Agent all Purchase Documents to which they are a party, each duly executed by an authorized officer of such Person and the other parties thereto (other than the Purchaser). 
  
 (d) Permitted Acquisition Documents. To the extent
that the proceeds of the Draw are to be used for a Permitted Acquisition, the Loan Parties shall have delivered to the Agent all Permitted Acquisition Documents to which they are a party, each duly executed by an authorized officer of such Person
and the other parties thereto. 
  
 (e) Life
Insurance. The Loan Parties shall have delivered to the Agent a life insurance policy paid annually and issued by a carrier reasonably acceptable to the Agent insuring the life of Kenneth W. Davidson in the amount of $3,000,000, and, naming the
Agent, for the benefit of the Agent and the Purchasers, as the sole beneficiary (collectively, the “Life Insurance”). As set forth in the Subordination Agreement, the Senior Lender shall have no rights in, and shall not be named as
beneficiary, loss payee or additional insured on, the Life Insurance. 
  
 (f) Closing Documents. The Loan Parties will have delivered or caused to be delivered to the Agent all of the following documents in form and substance satisfactory to the Agent: 
  
 (i) an irrevocable written notice requesting a Draw in
accordance with Section 2.3(b) in the aggregate amount principal amount of $5,000,000, substantially in the form attached hereto as Exhibit D; 
  

 25 

 (ii) one or more Notes (as designated by the Agent pursuant to Section 2.1) in aggregate
original principal amount as set forth herein duly completed and executed by the Parent; 
  
 (iii) certificates of good standing dated not more than 90 days prior to the Closing Date for each of the Loan Parties issued by their
respective jurisdictions of organization and each jurisdiction where they are qualified to operate as a foreign corporation, or its equivalent; 
  
 (iv) a copy of the Charter Documents of each of the Loan Parties, certified by the appropriate governmental official of the jurisdiction
of its organization as of a date not more than 10 days prior to the Closing Date; 
  
 (v) a copy of the By-laws of each of the Loan Parties, certified as of the Closing Date by the secretary, assistant secretary, manager or
general partner, as applicable, of each respective Loan Party; 
  
 (vi) a certificate of the secretary, assistant secretary, manager or general partner of each of the Loan Parties, certifying as to the names and true signatures of the officers or other authorized person of the
respective Loan Party authorized to sign this Agreement and the other Purchase Documents to be delivered by the respective Loan Party; 
  
 (vii) copies of the resolutions duly adopted by the each of the Loan Party’s board of directors, general partners, board of managers
or other governing body, authorizing the execution, delivery and performance by the respective Loan Party of this Agreement and the other Purchase Documents to which the respective Loan Party is a party and the consummation of all the Transactions,
certified as of the Closing Date by the secretary, assistant secretary, manager or general partner of the respective Loan Party; 
  
 (viii) a certificate dated as of the Closing Date from an officer, general partner or manager of each of the Loan Parties stating that the
conditions specified in this Section 4.1 have been fully satisfied or waived by the Agent; 
  
 (ix) one or more opinions of Jackson Walker LLP, counsel to the Loan Parties, in form and substance satisfactory to the Agent; and

  
 (x) such other documents relating to the
Transactions contemplated by this Agreement as the Agent or its counsel may reasonably request. 
  
 (g) Purchaser’s Fees and Expenses. On the Closing Date, the Loan Parties shall have paid all other the fees, charges and
expenses payable by the Loan Parties pursuant to the Purchase Documents on or prior to the Closing Date, including those payable pursuant to Section 10.4. 
  

 26 

 (h) Legal Investment. On the Closing Date, the issuance of the Notes to the
Purchaser shall not be prohibited by any applicable Law of any Governmental Authority (including, without limitation, Regulations T, U or X of the Board of Governors of the Federal Reserve System) as a result of the promulgation or enactment thereof
or any changes therein, or change in the interpretation thereof by any Governmental Authority, subsequent to the date of this Agreement. 
  
 (i) Proceedings. All proceedings taken or required to be taken in connection with the transactions contemplated hereby to be
consummated at or prior to the Closing and all documents incident thereto will be satisfactory in form and substance to the Agent and its counsel. 
  
 (j) No Default. Each of the representations and warranties made by the Loan Parties in or pursuant to this Agreement and/or any
other Purchase Document shall be accurate, no Default or Event of Default shall have occurred or be continuing or exist or result from the consummation of the Transactions. 
  
 (k) Availability. The Loan Parties shall have Availability (as defined in the Senior Credit
Agreement) in an amount equal to or greater than $2,000,000 on the Closing Date after giving affect to the payment of (a) prior Indebtedness, (b) all fees payable to Purchaser under the terms of this Agreement and (c) all costs and expenses arising
as a result of the Transactions contemplated by this Agreement, the Senior Credit Agreement and any other Purchase Document to which the Loan Parties are party, and the Agent shall have received satisfactory evidence thereof. 
  
 (l) Consents. All in form and substance satisfactory
to the Agent in its sole discretion, the Agent shall have received such consents, approvals and agreements from such third parties as are necessary or desirable with respect to (i) the Purchase Documents and/or the Transactions, and/or (ii) claims
against any Loan Party or the Collateral. All corporate and other proceedings, documents, instruments and other legal matters in connection with the Transactions (including, but not limited to, those relating to corporate and capital structures of
Loan Parties) shall be reasonably satisfactory to the Agent. thereof. 
  
 (m) Senior Financing. The amendment of the Senior Financing shall have been consummated simultaneously with the Transactions contemplated hereby, all in form and substance satisfactory to the Agent, in the
Agent’s sole discretion, and the Agent shall have been provided copies of all such agreements, instruments and documents delivered in connection therewith. 
  

 27 

 4.2 Conditions to Draws. The obligations of the Purchaser to fund Draws are subject to the
satisfaction, prior to or at the applicable Draw Date, of the following conditions: 
  
 (a) Representations and Warranties True. The representations and warranties contained in Article 5 hereof shall be true and correct
in all material respects at and as of the Draw Date as though then made. 
  
 (b) Material Adverse Change. There will have been no Material Adverse Effect or Material Adverse Change since December 31, 2002, and there shall be no liabilities or obligations of any nature which,
individually or in the aggregate, would reasonably be likely to have a Material Adverse Effect. 
  
 (c) Purchase Documents. The Loan Parties shall have delivered to the Agent all Purchase Documents to which they are a party, each
duly executed by an authorized officer of such Person and the other parties thereto (other than the Purchaser). 
  
 (d) Closing Documents. The Loan Parties will have delivered or caused to be delivered to the Agent all of the following documents
in form and substance satisfactory to the Agent: 
  
 (i) unless previously provided to the Agent within the six month period immediately preceding the Draw Date, certificates of good standing dated not more than 10 days prior to the Draw Date for each of the Loan Parties issued by their
respective jurisdictions of organization and each jurisdiction where they are qualified to operate as a foreign corporation, or its equivalent; 
  
 (ii) to the extent that there has been a change in any Charter Document since the immediately prior Draw Date, a copy of the Charter
Documents of each of the Loan Parties, certified by the appropriate governmental official of the jurisdiction of its organization as of a date not more than 10 days prior to the Draw Date; 
  
 (iii) to the extent that there has been a change in any
By-Laws since the immediately prior Draw Date, a copy of the By-laws of each of the Loan Parties, certified as of the Draw Date by the secretary, assistant secretary, manager or general partner, as applicable, of each respective Loan Party;

  
 (iv) to the extent that there has been a
change in the persons authorized to sign the Purchase Documents to be delivered by any Loan Party since the immediately prior Draw Date, a certificate of the secretary, assistant secretary, manager or general partner of each of the Loan Parties,
certifying as to the names and true signatures of the officers or other authorized person of the respective Loan Party authorized to sign this Agreement and the other Purchase Documents to be delivered by the respective Loan Party; 
  

 28 

 (v) to the extent that such Draw has not been previously authorized by resolutions duly
adopted by the each of the Loan Party’s board of directors, general partners, board of managers or other governing body, copies of the resolutions duly adopted by the each of the Loan Party’s board of directors, general partners, board of
managers or other governing body, authorizing the execution, delivery and performance by the respective Loan Party of this Agreement and the other Purchase Documents to which the respective Loan Party is a party and the consummation of all the
Transactions, certified as of the Draw Date by the secretary, assistant secretary, manager or general partner of the respective Loan Party; 
  
 (vi) a certificate dated as of the Draw Date from an officer, general partner or manager of each of the Loan Parties stating that the
conditions specified in this Section 4.2 have been fully satisfied or waived by the Agent; 
  
 (vii) a certificate dated as of the Draw Date from the chief financial officer of the Parent attaching in reasonable detail computations
and financial statements prepared on a pro forma basis of the Loan Parties immediately prior to and after giving effect to such loan and the use of the proceeds thereof demonstrating compliance with the requirements of Section 7.3 as of the
last day of the last full calendar quarter ending immediately prior to the Draw Date as if such loan and use of proceeds thereof were effective on the first day of the relevant period; and 
  
 (viii) such other documents relating to the Draw or the
Transactions contemplated by this Agreement as the Agent or its counsel may reasonably request. 
  
 (e) Purchaser’s Fees and Expenses. On the Draw Date, the Loan Parties shall have paid all other the fees, charges and expenses
payable by the Loan Parties pursuant to the Purchase Documents on or prior to the Draw Date, including those payable pursuant to Section 10.4 (and the Loan Parties hereby authorize the Purchaser to deduct from the aggregate proceeds of such Draw all
such amounts). 
  
 (f) Legal Investment.
On the Draw Date, the issuance of the Notes to the Purchaser shall not be prohibited by any applicable Law of any Governmental Authority (including, without limitation, Regulations T, U or X of the Board of Governors of the Federal Reserve System)
as a result of the promulgation or enactment thereof or any changes therein, or change in the interpretation thereof by any Governmental Authority, subsequent to the date of this Agreement. 
  

 29 

 (g) Proceedings. All proceedings taken or required to be taken in connection with
the transactions contemplated hereby to be consummated at or prior to the Draw Date and all documents incident thereto will be satisfactory in form and substance to the Agent and its counsel. 
  
 (h) No Default. Each of the representations and
warranties made by the Loan Parties in or pursuant to this Agreement and/or any other Purchase Document shall be accurate, no Default or Event of Default shall have occurred or be continuing or exist or result from the consummation of the
Transactions. 
  
 (i) Availability. The
Loan Parties shall have Availability (as defined in the Senior Credit Agreement) in an amount equal to or greater than $2,000,000 on the Draw Date after giving affect to the payment of (a) prior Indebtedness, (b) all fees payable to Purchaser under
the terms of this Agreement, (c) all costs and expenses arising as a result of the Transactions contemplated by this Agreement, the Senior Credit Agreement and any other Purchase Document to which the Loan Parties are party, and the Agent shall have
received satisfactory evidence thereof, and (d) all costs and expenses, if any, arising as a result of the transactions contemplated by the Permitted Acquisition Documents, and the Agent shall have received satisfactory evidence thereof. 

 
 (j) Consents. All in form and substance
satisfactory to the Agent in its sole discretion, the Agent shall have received such consents, approvals and agreements from such third parties as are necessary or desirable with respect to (i) the Purchase Documents and/or the Transactions, and/or
(ii) claims against any Loan Party or the Collateral. All corporate and other proceedings, documents, instruments and other legal matters in connection with the Transactions (including, but not limited to, those relating to corporate and capital
structures of Loan Parties) shall be reasonably satisfactory to the Agent. 
  
 4.3 Waiver. Any condition specified in Section 4.1 or 4.2 may be waived by the Agent; provided that no such waiver will be effective against the Agent or the Purchaser unless it is set forth in a writing
executed by the Agent. 
  
 ARTICLE 5 
 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES 
  
 5.1 Representations and Warranties of Loan Parties. As a material inducement to the Purchasers to enter into this Agreement and consummate the
Transactions, the Loan Parties, jointly and severally, hereby represent and warrant to the Agent and the Purchasers as follows: 
  
 (a) Authorization, Validity, and Enforceability of this Agreement and the other Loan Documents; No Conflicts. Each Loan Party has
the power and authority to execute, deliver, and perform this Agreement and the other Purchase Documents to which it is a party, to incur the Obligations, and to grant to the 

  

 30 

 
Agent Liens upon the Collateral. Each Loan Party has taken all necessary action (including obtaining approval of its stockholders, partners, general
partner(s), members, or other applicable equity owners, if necessary) to authorize its execution, delivery, and performance of this Agreement and the other Purchase Documents to which it is a party. This Agreement and the other Purchase Documents
have been duly executed and delivered by each Loan Party, and constitute the legal, valid, and binding obligations of each Loan Party, enforceable against it in accordance with their respective terms without defense, setoff, or counterclaim, except
as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights of creditors generally and to the effect of general principles of equity whether applied by a court of law or
equity. No Loan Party is a party to any judgment, order or decree or any agreement, document or instrument, or subject to any restriction, which would materially adversely affect its ability to execute and deliver, or perform under, any Purchase
Document or to pay the Obligations. Each Loan Party’s execution, delivery, and performance of this Agreement and the other Purchase Documents to which it is a party do not and will not conflict with, or constitute a violation or breach of, or
constitute a default under, or result in or require the creation or imposition of any Lien upon the property of any Loan Party by reason of the terms of (a) any contract, mortgage, Lien, lease, agreement, indenture, document, or instrument
(including, without limitation, the Senior Credit Agreement, or any agreements entered into in connection therewith) to which such Loan Party is a party or which is binding upon it, (b) any requirement of the Laws applicable to such Loan Party, or
(c) the Charter Documents of such Loan Party. The Loan Parties’ entering into this Agreement and incurrence of the Obligations is not prohibited under the Senior Credit Agreement. 
  
 (b) Validity and Priority of Security Interest. The provisions of this Agreement, the Mortgages, and
the other Purchase Documents create legal and valid Liens on all the Collateral in favor of the Agent, for the benefit of the Agent and the Purchaser, and such Liens constitute perfected and continuing Liens on the Collateral, securing the
Obligations, enforceable against the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral (a) except in the case of Liens described in Section 7.2(b)(i), (b)(ii) and (b)(v) of the definition of
Permitted Liens to the extent any such Liens would have priority over the Agent’s Liens pursuant to any requirement of the Laws and (b) except for Liens in certificated vehicles, and Liens perfected only by possession to the extent the Agent
have not obtained or do not maintain possession of such Collateral. 
  
 (c) Business; Corporate Name; Prior Transactions. The Loan Parties are primarily engaged in the business of designing, manufacturing and marketing orthopedic implants, orthopedic soft goods, patient safety
devices, pressure care products, joint and limb supports, braces and other orthopedic and rehabilitation products (the “Business”). Except as set forth on Schedule 5.1(c), no Loan Party has, during the past five (5) years, been
known by or used any 

  

 31 

 
other corporate or fictitious name, or been a party to any merger or consolidation, or acquired all or substantially all of the assets of any Person, or
acquired any of its property outside of the ordinary course of business. No Loan Party has ever been known by or used any of the following names: Encore Medical Products, Inc., Encore Medical Supply, Encore Medical, Inc. a Michigan corporation,
Encore Medical Staffing, Encore Medical Systems, Inc., Encore Medical Systems, Ltd., Encore Medical Technologies, Inc. and Encore Med Corp d/b/a Encore Med on Swan. 
  
 (d) Capitalization; Subsidiaries. 
  
 (i) Schedule 5.1(d) is a correct and complete list of the name and relationship to the Parent of each and all of the
Parent’s Subsidiaries. Schedule 5.1(d) sets forth, as of the Closing Date, a true and complete listing of each class of authorized Capital Stock of each Subsidiary of the Parent, of which all of such issued shares are validly issued,
outstanding, fully paid and non-assessable, and (y) in the case of the Capital Stock of each such Subsidiary, is owned beneficially and of record by the Persons identified on Schedule 5.1(d) and (z) in the case of the Capital Stock of the
Parent, each of the Persons owning, directly or indirectly, beneficially and of record, five percent (5.0%) or more of the outstanding Capital Stock of the Parent. The Capitalization Table included as part of Schedule 5.1(d) is true and
correct in all material respects. 
  
 (ii) The Parent and each of
its Subsidiaries is duly incorporated, formed, or organized and validly existing in good standing under the laws of its state or other jurisdiction of incorporation, formation, or organization set forth on Schedule 5.1(d). The location of the
chief executive office of the Parent and each of its Subsidiaries is at the address set forth with respect to each such Person on Schedule 5.1(d). The Parent and each of its Subsidiaries is qualified to do business and in good standing (as
applicable) in each of the jurisdictions set forth on Schedule 5.1(d), as applicable, which are the only jurisdictions in which qualification is necessary for it to own or lease its property and conduct its business. The Parent and each of
its Subsidiaries has all requisite power and authority to conduct its business and own its property. 
  
 (iii) As of September 1, 2003, the Warrant Shares constituted approximately 4.4% of issued and outstanding Common Stock of the Parent as calculated on an
as-converted, fully diluted basis calculated using the Treasury Stock Method. Except as set forth on Schedule 5.1(d), (A) as of the Closing Date or the Draw Date, as applicable, other than the Warrant, none of the Loan Parties will have
outstanding (y) any Capital Stock or other equity securities or securities convertible or exchangeable for any shares of its Capital Stock or other equity securities, or (z) any rights or options to subscribe for or to purchase its Capital Stock or
other equity securities or any stock or securities convertible into or exchangeable for its Capital Sock or other equity securities; and (B) as of the Closing Date or the Draw Date, as applicable, none of the Loan Parties will be subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its Capital Stock, except as set forth herein or in the Warrant. All of the outstanding shares of each Loan Party’s Capital Stock are and will be

  

 32 

 
validly issued, fully paid and nonassessable. Upon issuance pursuant to the terms of the Warrant, the Warrant Shares will be validly issued, fully paid and
nonassessable. None of the Loan Parties has violated any applicable federal or state securities laws in connection with the offer, sale or issuance of any of its Capital Stock, and the offer, sale and issuance of the Securities and the Underlying
Securities hereunder and under the Warrant do not require or are exempt from registration under the Securities Act or any applicable state securities Laws. Except as set forth on Schedule 5.1(d), there are no agreements among any Loan
Party’s stockholders with respect to the voting or transfer of Parent’s Capital Stock. There are no statutory or contractual preemptive or similar rights with respect to the issuance of the Warrant or the Warrant Shares. 
  
 (iv) Except as set forth on Schedule 5.1(d), the Loan Parties do not
own, or hold any rights to acquire, any shares of stock or any other security or interest in any other Person. 
  
 (e) Financial Statements and Projections. 
  

(i) The Parent has delivered to the Agent and the Purchaser the audited balance sheet and related statements of income, retained earnings, cash flow,
and changes in stockholders’ equity for the Parent and its Subsidiaries as of December 31, 2002, and for the Fiscal Year then ended, accompanied by the report thereon of the Parent’s independent certified public accountants, KPMG LLP and
the unaudited balance sheet and related statements of income, retained earnings, cash flow, and changes in stockholders’ equity for the Parent and its Subsidiaries as of July 26, 2003. All such financial statements have been prepared in
accordance with GAAP and fairly present the financial position of the Parent and its Subsidiaries as at the dates thereof and their results of operations for the periods then ended (except with respect to the unaudited financial statements, for the
absence of applicable footnotes and subject to normal year-end adjustments). 
  
 (ii) Accuracy of Financial Statements. The Loan Parties do not have any liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the financial statements or in the
notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of the Loan Parties which may cause a Material Adverse Effect. 
  
 (f) Solvency. Each Loan Party is Solvent prior to and after giving effect to the Transactions and
shall remain Solvent during the term of this Agreement. 
  
 (g) Indebtedness. After giving effect to the Transactions, the Loan Parties have no Indebtedness, except (a) the Obligations, (b) Indebtedness described on Schedule 5.1(g), and (c) the Senior Debt. There
has occurred no breach, default or event of default under any document evidencing any such Indebtedness or any fact, circumstance, condition or event which, with the giving of notice or passage of time or both, would constitute or result in a
breach, default or event of default thereunder. Except to the extent set forth in the Subordination 

  

 33 

 
Agreement or as set forth on Schedule 5.1(g), the Obligations are not subordinated in any way to any other obligations of any Loan Party or to the
rights of any other Person. 
  
 (h)
Distributions. Since December 31, 2002, no Distribution has been declared, paid, or made upon or in respect of any Capital Stock of the Parent. 
  
 (i) Real Estate; Leases. As of the Closing Date or the Draw Date, as applicable, Schedule 5.1(i) sets forth a correct and
complete list of all Real Estate owned by each Loan Party, all leases and subleases of real or personal property by each Loan Party as lessee or sublessee (other than leases of personal property as to which it is lessee or sublessee for which the
value of such personal property in the aggregate is less than $150,000), and all leases and subleases of real or personal property by each Loan Party as lessor, or sublessor. Each of such leases and subleases is valid and enforceable in accordance
with its terms and is in full force and effect, and no material default by any party to any such lease or sublease exists. Each Loan Party has good and marketable title in fee simple to the Real Estate identified on Schedule 5.1(i) as owned
by such Loan Party, or valid leasehold interests in all Real Estate designated therein as “leased” by such Loan Party, and each Loan Party has good, indefeasible, and merchantable title to all of its other property reflected on the most
recent financial statements delivered to the Agent and the Purchaser, except as disposed of in the ordinary course of business since the date thereof, free of all Liens except Permitted Liens. 
  
 (j) Proprietary Rights. Schedule 5.1(j) sets
forth a correct and complete list of all of each Loan Party’s Proprietary Rights. None of the Proprietary Rights listed in Schedule 5.1(j) is subject to any licensing agreement or similar arrangement except as set forth on Schedule
5.1(j). The Proprietary Rights described on Schedule 5.1(j) constitute all of the property of such type necessary to the current and anticipated future conduct of the Loan Parties’ business. To the best of each Loan Party’s
knowledge, no slogan or other advertising device, product, process, method, substance, part, or other material now employed, or now contemplated to be employed, by any Loan Party infringes in any material respect upon any rights held by any other
Person. No claim or litigation regarding any of the foregoing is, to the knowledge of any Loan Party, pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard, or code is pending
or, to the knowledge of any Loan Party, proposed, which, in either case, could reasonably be expected to have a Material Adverse Effect. 
  
 (k) Trade Names. All trade names or styles under which any Loan Party will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule 5.1(k). 
  
 (l) Litigation. There is no pending, or to the best of any Loan Party’s knowledge threatened, action, suit, proceeding, or
counterclaim by any Person, or investigation by any Governmental Authority, or any basis for any of the foregoing, which could reasonably be expected to have a Material Adverse Effect. 
  

 34 

 (m) Labor Disputes. As of the Closing Date or the Draw Date, as applicable, (a)
there is no collective bargaining agreement or other labor contract covering employees of any Loan Party, (b) no such collective bargaining agreement or other labor contract is scheduled to expire during the term of this Agreement, (c) no union or
other labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of employees of any Loan Party or for any similar purpose, and (d) there is no pending or (to the best of any Loan Party’s knowledge)
threatened, strike, work stoppage, material unfair labor practice claim, or other material labor dispute against or affecting any Loan Party or its employees. 
  

(n) Environmental Laws. 
  
 (i) Each Loan Party has complied in all material respects with all Environmental Laws and no Loan Party nor any of its presently or previously owned Real
Estate or presently conducted or prior operations, is subject to any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any potential
liabilities and costs or remedial action arising from the Release or threatened Release of a Pollutant. 
  
 (ii) Each Loan Party has obtained all permits necessary for its current operations under Environmental Laws, and all such permits are in good standing,
and each Loan Party is in compliance with all material terms and conditions of such permits. 
  
 (iii) No Loan Party nor to the best of any Loan Party’s knowledge any of its predecessors in interest has in violation of any Environmental Law stored, treated, or disposed of any hazardous waste (as defined
pursuant to 40 CFR Part 261 or any equivalent Environmental Law). 
  
 (iv) No Loan Party has received any summons, complaint, order, or similar written notice indicating that it is not currently in compliance with, or that any Governmental Authority is investigating its compliance with, any Environmental Laws
or that it is or may be liable to any other Person as a result of a Release or threatened Release of a Pollutant. 
  
 (v) To the best of each Loan Party’s knowledge, none of the present or past operations of any Loan Party is the subject of any investigation by any
Governmental Authority evaluating whether any remedial action is needed to respond to a Release or threatened Release of a Pollutant. 
  
 (vi) There is not now, nor to the best of any Loan Party’s knowledge has there ever been, on or in the Real Estate of any Loan Party in violation of
Environmental Laws: 
  

 35 

 (a) any underground storage tanks or surface impoundments, 
  
 (b) any asbestos-containing material, or 
  
 (c) any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical
transformers, or other equipment. 
  
 (vii) No Loan Party has
filed any notice under any requirement of Environmental Law reporting a spill or accidental and unpermitted Release or discharge of a Pollutant into the environment. 
  
 (viii) No Loan Party has entered into any negotiations or settlement agreements with any Person (including the prior owner
of its property) imposing material obligations or liabilities on any Loan Party with respect to any remedial action in response to the Release of a Pollutant or environmentally related claim. 
  
 (ix) None of the products manufactured, distributed, or sold by any Loan
Party contains asbestos containing material. 
  
 (x) No
Environmental Lien has attached to the Real Estate of any Loan Party. 
  
 (o) No Violation of Law. No Loan Party is in violation of any Law, statute, regulation, ordinance, judgment, order, or decree applicable to it, including which violation could reasonably be expected to have a
Material Adverse Effect. 
  
 (p) No
Default. No default, breach or noncompliance exists under or with respect to the Senior Credit Agreement or any of the documents entered into in connection therewith. No Loan Party is in default with respect to any other note, indenture, loan
agreement, mortgage, lease, deed, or other agreement to which such Loan Party is a party or by which it is bound, which default could reasonably be expected to have a Material Adverse Effect. 
  
 (q) ERISA Compliance. 
  
 (i) Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code, and other federal or state law. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the best knowledge of each Loan Party, nothing
has occurred which would cause the loss of such qualification. Each Loan Party and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of
any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan. 
  

 36 

 (ii) There are no pending or, to the best knowledge of any Loan Party, threatened claims, actions, or
lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. 
  
 (iii) Except for instances, if any, which together do not give rise to liability in excess of $1,000,000 in the aggregate, (i) no ERISA Event has
occurred or is reasonably expected to occur, (ii) no Pension Plan has any Unfunded Pension Liability, (iii) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA), (iv) no Loan Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice
under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan, and (v) no Loan Party nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069
or 4212(c) of ERISA. 
  
 (r) Taxes. Each
Loan Party has filed all federal and other tax returns and reports required to be filed (or appropriate extensions have been timely filed), and has paid all federal and other taxes, assessments, fees, and other governmental charges levied or imposed
upon it or its properties, income, or assets otherwise due and payable unless such unpaid taxes and assessments would constitute a Permitted Lien. 
  
 (s) Regulated Entities. No Loan Party nor any Person controlling any Loan Party is an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. No Loan Party is a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company Act of 1935, or a regulated entity under the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or law, or any other federal or state statute or regulation limiting its ability to incur indebtedness. 
  
 (t) Use of Proceeds; Margin Regulations. The Loan Parties will use the proceeds from Draws under the Notes as permitted under
Section 2.3(a). No Loan Party is engaged in the business of buying or selling margin stock as such term is defined in Regulation T, U, or X of the Federal Reserve Board (“Margin Stock”) or extending credit for the purpose of buying or
carrying Margin Stock. 
  
 (u) No Material
Adverse Change. No Material Adverse Effect has occurred since the latest date of the Financial Statements delivered to the Purchaser referenced in Section 5.1(e). 
  

 37 

 (v) Full Disclosure. None of the representations or warranties made by any Loan
Party in the Purchase Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any exhibit, report, statement, or certificate furnished by or on behalf of any Loan Party in
connection with the Purchase Documents (including the offering and disclosure materials delivered by or on behalf of any Loan Party to the Purchaser prior to the Closing Date), contains any untrue statement of a material fact or omits any material
fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. 
  
 (w) Material Agreements. As of the Closing Date or
the Draw Date, as applicable, Schedule 5.1(w) sets forth all material agreements and contracts (other than the Purchase Documents) of any Loan Party which are required to be publicly disclosed pursuant to any requirement of the Laws since the
date of the Parent’s last quarterly report. No Loan Party is in default in the performance, observance or fulfillment of any material obligation, covenant or condition contained in any agreement, document or instrument to which it is a party or
to which any of its properties or assets are subject, which default, if not remedied within any applicable grace or cure period could reasonably be expected to have a Material Adverse Effect, nor is there any event, fact, condition or circumstance
which, with notice or passage of time or both, would constitute or result in a conflict, breach, default or event of default under, any of the foregoing which, if not remedied within any applicable grace or cure period could reasonably be expected
to have a Material Adverse Effect. 
  
 (x)
Bank Accounts. As of the Closing Date or the Draw Date, as applicable, Schedule 5.1(x) contains a complete and accurate list of all bank accounts maintained by each Loan Party with any bank or other financial institution. 

 
 (y) Governmental Authorization. No approval,
consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or other Person is necessary or required in connection with the execution, delivery, or performance by, or enforcement against, any Loan
Party of this Agreement or any other Purchase Document except for those which have been duly obtained by the Loan Parties, copies of which have been provided to the Agent, and for filing of financing statements and the Mortgages. 
  
 (z) Investment Property. 
  
 (i) Schedule 5.1(z) sets forth a correct and complete list of all
Investment Property owned by each Loan Party. Each Loan Party is the legal and beneficial owner of such Investment Property, as so reflected, free and clear of any Lien (other than Permitted Liens), and has not sold, granted any option with respect
to, assigned or transferred, or otherwise disposed of any of its rights or interest therein. 
  

 38 

 (ii) To the extent any Loan Party is the owner of or becomes the issuer of any Investment Property that
is Collateral (each such Person which issues any such Investment Property being referred to herein as an “Issuer”): (i) the Issuer’s shareholders that are Loan Parties and the ownership interest of each such shareholder are as
set forth on Schedule 5.1(d), and each such shareholder is the registered owner thereof on the books of the Issuer; (ii) the Issuer acknowledges the Agent’ Lien; (iii) to the extent required to perfect the Agent’ Liens, such
security interest, collateral assignment, lien, and pledge in favor of the Agent has been registered on the books of the Issuer for such purpose as of the date hereof; and (iv) the Issuer is not aware of any liens, restrictions, or adverse claims
which exist on any such Investment Property other than the Agent’s Lien. 
  
 (aa) Common Enterprise. The successful operation and condition of each Loan Party is dependent on the continued successful performance of the functions of the group of Loan Parties as a whole and the successful
operation of each Loan Party is dependent on the successful performance and operation of each other Loan Party. Each Loan Party expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be
expected to derive benefit), directly and indirectly, from successful operations of the Parent and each of the other Loan Parties. Each Loan Party expects to derive benefit (and the boards of directors or other governing body of each such Loan Party
have determined that it may reasonably be expected to derive benefit), directly and indirectly, from the credit extended by the Purchaser to the Loan Parties hereunder, both in their separate capacities and as members of the group of companies. Each
Loan Party has determined that execution, delivery, and performance of this Agreement and any other Purchase Documents to be executed by such Loan Party is within its purpose, will be of direct and indirect benefit to such Loan Party, and is in its
best interest. 
  
 (bb) Senior Financing.
The Senior Credit Agreement, as amended pursuant to Section 4.1(m), has been duly executed and delivered by each party thereto and the transactions contemplated thereby have been consummated to the extent contemplated thereunder pursuant to the
terms thereof, and the terms and conditions of the Senior Credit Agreement constitute the valid and binding obligations of each party thereto, enforceable in accordance with their terms. 
  
 (cc) Intentionally Omitted. 
  
 (dd) Side Agreements. Neither the Loan Parties nor any Affiliate of the Loan Parties nor any
director, officer or employee of the Loan Parties or any of their Affiliates, respectively, has entered into, as of the date hereof, any side agreement, either oral or written, with any individual or business, pursuant to which the director,
officer, employee, Loan Parties or Affiliate agreed to do anything beyond the requirements of the formal, written contracts executed by the Loan Parties and disclosed to Purchaser herein. 
  
 (ee) Broker’s or Finder’s Commissions.
Except as set forth on Schedule 5.1(ee), no broker’s or finder’s or placement fee or commission will be 
  

 39 

 
payable to any broker or agent engaged by the Loan Parties or any of its officers, directors or agents with respect to any of the Transactions, except for
fees payable to Purchaser. The Loan Parties agree to indemnify Purchaser and hold Purchaser harmless from against any claim, demand or liability for broker’s or finder’s or placement fees or similar commissions, whether or not payable by
the Loan Parties, alleged to have been incurred in connection with such transactions, other than any broker’s or finder’s fees payable to Persons engaged by Purchaser without the knowledge of the Loan Parties. 
  
 (ff) Affiliate Transactions. Except as set forth on
Schedule 5.1(ff), there are no existing or proposed agreements, arrangements, understandings or transactions between any Loan Party and any of the officers, members, managers, directors, stockholders, partners, other interest holders,
employees or Affiliates of any Loan Party or any members of their respective immediate families, and none of the foregoing Persons are directly or indirectly, indebted to or have any direct or indirect ownership, partnership or voting interest in,
any Affiliate of any Loan Party or any Person with which any Loan Party has a business relationship or which competes with any Loan Party (except that any such Persons may own stock in (but not exceeding two (2%) percent of the outstanding capital
stock of) any publicly traded company that may compete with a Loan Party. 
  
 (gg) Insurance. Each Loan Party has in full force and effect such insurance policies as are customary in its industry and as may be required pursuant to this Agreement, including (without limitation) adequate
product liability insurance. 
  
 (hh) Food and
Drug. Set forth on Schedule 5.1(hh) is a correct and complete list of (i) all permits, licenses and approvals that are required under the FDA Laws for the operation of the Loan Parties’ business (collectively, the “FDA
Permits”). Each Loan Party has all applicable FDA Permits, all of which (A) are valid and in full force and effect, (B) have not been reversed, stayed, set aside, annulled or suspended, (C) are not subject to any conditions or requirements that
are not generally imposed on the holders thereof, and (iii) constitute the only licenses, permits, authorizations, consents and approvals required from FDA for the operation of the Loan Party’s business as currently conducted and as
contemplated in the Purchase Documents. Without limitation on the foregoing representations and warranties in this Section 5.1(hh): 
  
 (i) Each Loan Party is in material compliance with all applicable FDA Laws, including (without limitation) current good manufacturing
practice requirements; 
  
 (ii) Each Loan Party
is registered with the FDA, to the extent such registration is required by any FDA regulations, and each Loan Party’s products, to the extent required by the FDA Laws, have been approved by the FDA or are the subject of a premarket notification
to FDA and order from FDA declaring such product to be substantially equivalent to a legally marketed predicate device, to the extent such approval or premarket notification is required by FDA regulations; 
  

 40 

 (iii) Each Loan Party has investigational exemptions for all products requiring such
exemptions, and such products have not been and are not being sold or distributed outside the terms of such investigational exemptions; 
  
 (iv) Except as set forth on Schedule 5.1(hh), there have been no “recalls,” “product corrections,”
“removals,” “corrections,” “market withdrawals” or “stock recoveries” as such terms are defined in the regulations promulgated under the Federal Food, Drug and Cosmetic Act with respect to the products during
the five-year period preceding the date hereof; 
  
 (v) There are currently no adverse regulatory compliance issues or actions pending with the FDA and no FDA GMP audits conducted at any of the Loan Parties’ facilities have resulted in any material adverse compliance enforcement
actions; and 
  
 (vi) Schedule 5.1(hh)
contains a list of each Loan Party that has received an ISO 9001 certification and “CE” certification. 
  
 (vii) Except as set forth on Schedule 5.1(hh), there are no product liability claims pending, nor to the best knowledge of the Loan
Parties, threatened against any of the Loan Parties. 
  
 (viii) No Loan Party is required to obtain any Permits that are required by any Governmental Authority of the State of Tennessee having similar authority to or purview of FDA. 
  
 (ii) Initial Purchase Agreement. All representations and warranties of the Loan Parties to the Agent
and the Purchasers set forth in Article 5 in the Initial Purchase Agreement were true and correct as of February 8, 2002, the closing date for the Initial Purchase Agreement. 
  
 ARTICLE 6 
 TRANSFER OF SECURITIES 
  
 6.1 Restricted
Securities. The Purchaser acknowledges that the Securities have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available,
and that the Loan Parties are not required to register the Securities except as set forth in the Warrant. 
  
 6.2 Legends; Purchaser’s Representations. The Purchaser represents and warrants, for itself and for the Holder, to the Loan Parties that each
of Purchaser and the 
  

 41 

 
Holder is an “accredited investor” within the meaning of Rule 501(a) under the Securities Act and is acquiring the Securities for investment for
its own account, with no present intention of dividing its participation with others (except for a potential transfer or transfers of the Securities to an Affiliate or Affiliates of Purchaser) or reselling or otherwise distributing the same in
violation of the Securities Act or any applicable state securities laws. The Loan Parties may place an appropriate legend on the Securities owned by the Purchaser or the Holder concerning the restrictions set forth in this Article 6. Upon the
assignment or transfer by any Purchaser or Holder or any of their successors or assignees of all or any part of the Securities, the term “Purchaser” or “Holder” as used herein shall thereafter mean, to the extent thereof, the
then holder or holders of such Securities, or portion thereof. 
  
 6.3 Transfer of Notes. Subject to Section 6.2 hereof, a holder of a Security may transfer such Security to a new holder, or may exchange such Security for Securities of different denominations (but, with respect to the Note, in no
event of denominations of less than $100,000 in original principal amount), by surrendering such Security to the Loan Parties duly endorsed for transfer or accompanied by a duly executed instrument of transfer naming the new holder (or the current
holder if submitted for exchange only), together with written instructions for the issuance of one or more new Securities specifying the respective principal amounts of each new Security, the name of each new holder and each address therefor and the
federal tax identification number of each new holder. The Loan Parties shall simultaneously deliver to such holder or its designee such new Securities, shall mark the surrendered Securities as canceled and shall provide notice of such transfer to
the Agent. In lieu of the foregoing procedures, a holder may assign a Security (in whole but not in part) to a new holder by sending written notice to the Loan Parties and the Agent of such assignment specifying the new holder’s name and
address; in such case, the Loan Parties shall promptly acknowledge such assignment in writing to both the old and new holder. The Loan Parties shall not be required to recognize any subsequent holder of a Security unless and until the Loan Parties
have received reasonable assurance that all applicable transfer taxes have been paid. 
  
 6.4 Replacement of Lost Securities. Upon receipt of evidence reasonably satisfactory to the Loan Parties of the mutilation, destruction, loss or theft of any Securities and the ownership thereof, the Loan
Parties shall, upon the written request of the holder of such Securities, execute and deliver in replacement thereof new Securities in the same form, in the same original principal amount and dated the same date as the Securities so mutilated,
destroyed, lost or stolen; and such Securities so mutilated, destroyed, lost or stolen shall then be deemed no longer outstanding hereunder. If the Securities being replaced have been mutilated, they shall be surrendered to the Loan Parties; and if
such replaced Securities have been destroyed, lost or stolen, such holder shall furnish the Loan Parties with an indemnity in writing to save it harmless in respect of such replaced Security. 
  
 6.5 No Other Representations Affected. Nothing contained in this
Article 6 shall limit the full force or effect of any representation, agreement or warranty made in any Purchase Document or in connection therewith to the Agent or to any Purchaser or Holder. 
  

 42 

 ARTICLE 7 
 COVENANTS 
  
 7.1 Affirmative
Covenants. The Loan Parties, jointly and severally, covenant that, so long as all or any of the Obligations or any interest thereon shall remain outstanding, the Loan Parties shall: 
  
 (a) Existence. Do or cause to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence and to maintain its qualification and good standing in all jurisdictions where the failure to do so might reasonably be expected to have a Material Adverse Effect. 
  
 (b) Businesses and Properties; Compliance with Laws.
At all times (i) do or cause to be done all things necessary to preserve, renew and keep in full force and effect the rights, licenses, registrations, Permits, certifications, approvals, consents, franchises, patents, copyrights, trademarks,
Proprietary Rights and trade names, and any other trade names which may be material to the conduct of their businesses; (ii) comply in all material respects with all Laws and regulations applicable to the operation of such business, including but
not limited to, all Environmental Laws and all closure and post-closure obligations and financing and bonding obligations thereunder, whether now in effect or hereafter enacted and with all other applicable Laws, (iii) take all action which may be
required to obtain, preserve, renew and extend all rights, patents, copyrights, trademarks, tradenames, franchises, registrations, certifications, approvals, consents, licenses, Permits, Proprietary Rights and any other authorizations which may be
material to the operation of such business, (iv) maintain, preserve and protect all property material to the conduct of such business, and (v) except for obsolete or worn out equipment, keep their property in good repair, working order and condition
and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted at all
times. 
  
 (c) Insurance. Maintain
insurance required by the Purchase Documents, the Senior Credit Agreement and/or any other agreement to which any Loan Party is a party or is otherwise bound, including but not limited to: (i) the Life Insurance until the Obligations have been
indefeasibly repaid in full; (ii) coverage on their insurable properties (including all inventory, equipment and real property) against the perils of fire, theft and burglary; (iii) public liability; (iv) workers’ compensation; (v) business
interruption; (vi) product liability and environmental; and (vii) such other risks as are customary with companies similarly situated and in the same or similar business as that of the Loan Parties or are otherwise required by applicable law or any
agreements to which any of the 

  

 43 

 
Loan Parties is a party or subject, in all cases under policies issued by financially sound and reputable insurers acceptable to the Agent in such amounts
either as are customary with companies similarly situated and in the same or similar business or as are required under such laws or agreements. Each of the Loan Parties shall pay all insurance premiums payable by it and shall deliver the policy or
policies of such insurance (or certificates of insurance with copies of such policies) to the Agent. All insurance policies of the Loan Parties shall contain endorsements, in form and substance reasonably satisfactory to the Agent, providing that
the insurance shall not be cancelable except upon thirty (30) days’ prior written notice to the Agent and the Purchasers. The Agent, for the benefit of the Agent and the Purchasers, shall be shown as a loss payee and an additional named insured
party under all such insurance policies, subordinate to the rights of the Senior Agent as provided in the Subordination Agreement. The Agent, for the benefit of the Agent and the Purchasers, shall be shown as a loss payee and an additional named
insured party under all such insurance policies and as sole beneficiary on the Life Insurance. 
  
 (d) Obligations and Taxes. Pay and discharge promptly when due all taxes, assessments and governmental charges or levies imposed
upon them or upon their income or profits or in respect of their properties before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might give rise to
Liens or charges upon such properties or any part thereof; provided, however, that the Loan Parties shall not be required to pay and discharge or to cause to be paid and discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate proceedings, and the Loan Parties shall have set aside on their books adequate reserves with respect thereto and such contest operates to suspend collection of the contested
tax, assessment, charge levy or claim and enforcement of a Lien. 
  
 (e) Financial Statements; Reports. Furnish to the Agent and the Purchasers: 
  
 (i) Annual Statements. Within 90 days after the end of each fiscal year, a balance sheet and statements of operations,
stockholders’ equity and cash flows of the Loan Parties on a consolidated and consolidating basis showing the financial condition of the Loan Parties as of the close of such year and the results of operations during such year, all the foregoing
financial statements (other than the consolidating statements) to be audited by a firm of independent certified public accountants of recognized national standing acceptable to the Agent and accompanied by an opinion of such accountants without
material exceptions or qualifications. 
  
 (ii)
Quarterly and Monthly Statements. Within 30 calendar days after the end of each calendar month (45 days in the case of a month that is the end of one of the first three fiscal quarters in a fiscal year), 

  

 44 

 
financial statements (including a balance sheet and cash flow and income statements) showing the financial condition and results of operations of the Loan
Parties on a consolidated and consolidating basis as of the end of each such fiscal quarter and/or month, as applicable, and for the then elapsed portion of the current fiscal year, together with comparisons to the corresponding periods in the
preceding year and the budget for such periods, accompanied by a certificate of an officer that such financial statements have been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective
financial statements for the corresponding date and period in the previous fiscal year. 
  
 (iii) Format; Management Report; Certificate of Compliance: Each fiscal year and quarterly balance sheet, operations statement and
cash flow statement furnished pursuant to subsections (i) and (ii) of this 7.1(e) shall be accompanied by (A) a written narrative report by the management of the Loan Parties explaining material developments and trends in the Business and such
financial statements, and (B) a written certificate signed by the Loan Parties’ chief financial officer to the effect that no Default or Event of Default has occurred during the period(s) covered by such statements or, if any such Default or
Event of Default has occurred during such period(s), setting forth a description of such Default or Event of Default and specifying the action, if any, taken by the Loan Parties to remedy the same, and a compliance certificate showing the Loan
Parties’ compliance with the covenants set forth in Section 7.3. 
  
 (iv) Accountant Reports. Promptly upon the receipt thereof, copies of all reports, if any, submitted to the Loan Parties by their independent certified public accountants in connection with each annual, interim
or special audit or review of the financial statements of the Loan Parties made by such accountants, including but not limited to, any comment letter submitted by such accountants to management in connection with any annual review. 
  
 (v) Projections. As soon as available, but in no
event later than thirty (30) days prior to the beginning of each fiscal year of the Loan Parties, a projection of the Loan Parties’ balance sheet, and income, retained earnings, stockholders’ equity and cash flow statements, respectively,
for the following one (1) fiscal year and comparable actual and budgeted figures for the current fiscal year; and within ten (10) days after any material update or amendment of any such plan or forecast, a copy of such update or amendment, including
a description of and reasons for such update or amendment. Each such projection, update or amendment shall be accompanied by a written certificate signed by the Loan Parties’ chief financial officer to the effect that it has been prepared on
the basis of the Loan Parties’ historical financial statements and 

  

 45 

 
records, together with the assumptions set forth in such projection and that it reflects expectations, after reasonable analysis, of the Loan Parties’
management as to the matters set forth therein. 
  
 (vi) Filings. (A) Any and all filings made by any Loan Party with the SEC or otherwise pursuant to the Securities Act and/or Securities Exchange Act, (B) copies of the Loan Parties’ federal income tax returns and any amendments
thereto filed with the IRS, and (C) any other information that is provided by any Loan Party to its stockholders generally. 
  
 (vii) Other Financings. (i) A copy of any borrowing certificate submitted or received pursuant to the Senior Credit Agreement
immediately following any audit or appraisal conducted by or on behalf of Senior Lenders and (ii) copies of all statements, reports and notices furnished to any other Person pursuant to the terms of any indenture, loan or creditor or similar
agreement (including, without limitation, the Senior Credit Agreement and other documents evidencing the Senior Financing) and not otherwise required to be furnished to the Agent and the Purchasers pursuant to this Agreement. 
  
 (viii) Additional Information. Promptly, from time to
time, such other information regarding the compliance by the Loan Parties with the terms of the Purchase Documents or the affairs, operations or condition (financial or otherwise) of the Loan Parties as the Agent may reasonably request and that is
capable of being obtained, produced or generated by the Loan Parties or of which the Loan Parties have knowledge. 
  
 (f) Litigation and Other Notices. Give the Agent and the Purchasers prompt written notice of the following: 
  
 (i) Orders; Injunctions. The issuance by any court or
Governmental Authority of any injunction, order, decision or other restraint prohibiting, or having the effect of prohibiting, the making of any loan or the initiation of any litigation or similar proceeding seeking any such injunction, order or
other restraint. 
  
 (ii) Litigation. The
notice, filing or commencement of any action, suit or proceeding against any of the Loan Parties whether at law or in equity or by or before any court or any Federal, state, municipal or other Governmental Authority and that, if adversely determined
against any of the Loan Parties, could result in uninsured liability in excess of $50,000 in the aggregate. 
  

 46 

 (iii) Environmental Matters. (i) Any release or threatened release of any
Pollutant required to be reported to any Federal, state or local governmental or regulatory agency under any applicable Environmental Laws, (ii) any Removal, Remedial or Response action taken by any of the Loan Parties or any other Person in
response to any Pollutant in, at, on or under, a part of or about any of the Loan Parties’ properties or any other property, (iii) any violation by any of the Loan Parties of any Environmental Law, in each case, that could result in a Material
Adverse Effect, or (iv) any notice, claim or other information that any of the Loan Parties might be subject to an Environmental Liability. 
  
 (iv) Default; Collateral. Any Default or Event of Default, specifying the nature and extent thereof and the action (if any) that is
proposed to be taken with respect thereto. Any matter(s) affecting the value, enforceability or collectability of any of the Collateral, including, without limitation, claims or disputes in the amount of $150,000 or more, singly or in the aggregate,
in existence at any one time. Any notice given by any Loan Party to or received from any other lender of any Loan Party accompanied by a copy of such notice Any filing, recording or assessment of any material federal, state, local or foreign tax
lien against the Collateral or any Loan Party. 
  
 (v) Material Adverse Effect. Any Material Adverse Change or any development in the business or affairs of any of the Loan Parties that could have a Material Adverse Effect. 
  
 (vi) Put Rights. The exercise of any “put”
right by any shareholder or holder of any equity security of any Loan Party representing more than 2% of the outstanding Capital Stock of such Loan Party or any warrant or option or security convertible into any equity security of any Loan Party
representing more than 2% of the outstanding Capital Stock of such Loan Party. 
  
 (vii) Board Materials. Written notice of each regular meeting of each Loan Party’s Board of Directors at least 30 days in
advance of such meeting and prior written notice of each special meeting of each of the Loan Party’s Board of Directors on the date on which the members of the Board of Directors are notified of such meeting. In addition, the Loan Parties will
send the Agent copies of all reports and materials provided to members of the Board of Directors at meetings or otherwise. 
  
 (viii) Change of Control. At least 20 days prior written notice of any plan to institute a Change of Control 
  
 (ix) Contingent Liability. After becoming aware of
any actual or potential contingent liability in excess of $250,000 or which could reasonably be expected to have, or has resulted in, a Material Adverse Effect. 
  

 47 

 (g) Board Rights. The Parent shall permit one authorized representative of the
Purchasers to attend and participate (without the right to vote) in all meetings of its board of directors and any committee thereof, whether in person, by telephone or otherwise, and shall provide such representative with such notice and other
information with respect to such meetings as are delivered to the directors of the Parent. At any time that the aggregate principal amount outstanding under the Notes exceeds $5,000,000, the Parent shall pay such representatives’ reasonable
travel expenses (including, without limitation, the cost of airfare, meals and lodging) in connection with the attendance of such meetings. 
  
 (h) ERISA. Comply in all material respects with the applicable provisions of ERISA and the provisions of the Code relating thereto
and furnish to the Agent and the Purchasers if requested (i) as soon as possible, and in any event within thirty (30) days after the Loan Parties know or have reason to know thereof, notice of (A) the establishment by the Loan Parties of any Plan,
(B) the commencement by the Loan Parties of contributions to a Multiemployer Plan, (C) any failure by the Loan Parties or any of their ERISA Affiliates to make contributions required by Section 302 of ERISA (whether or not such requirement is waived
pursuant to Section 303 of ERISA), (D) the occurrence of any Reportable Event with respect to any Plan or Multiemployer Plan for which the reporting requirement is not waived, together with a statement of an officer setting forth details as to such
Reportable Event and the action which the Loan Parties propose to take with respect thereto, together with a copy of the notice of such Reportable Event given to the PBGC if any such notice was provided by the Loan Parties, or (E) the occurrence of
any ERISA Event, and (ii) promptly after receipt thereof, a copy of any notice the Loan Parties may receive from the PBGC relating to the intention of the PBGC to terminate any Plan or Multiemployer Plan, or to appoint a trustee to administer any
Plan or Multiemployer Plan, and (iii) promptly after receipt thereof, a copy of any notice of withdrawal liability from any Multiemployer Plan. 
  
 (i) Maintaining Records; Access to Premises and Inspections. Maintain financial records in accordance with generally accepted
practices and, upon reasonable notice, at all reasonable times and as often as the Agent or a Purchaser may reasonably request (and at any time after the occurrence and during the continuation of a Default or Event of Default), permit any authorized
representative designated by the Agent or a Purchaser to visit and inspect the properties and financial records of the Loan Parties and to make extracts from such financial records, all at the Loan Parties’ reasonable expense at any time the
aggregate principal amount outstanding under the Notes exceeds $5,000,000, and permit any authorized representative designated by the Agent or a Purchaser to discuss the affairs, finances and conditions of the Loan Parties with the Loan
Parties’ chief financial officer and such other officers as the Loan Parties shall deem appropriate, and the Loan Parties’ independent public accountants. 
  

 48 

 (j) Future Financings. If any Loan Party desires to undertake any Covered
Financing, then, prior to doing so, such Loan Party shall be obligated to first comply with following requirements: 
  
 (i) Such Loan Party shall provide written notice to the Agent and the Purchasers of its intention to pursue a Covered Financing, together
with such information concerning the Covered Financing as the Agent may reasonably request to enable to the Purchasers to propose the material terms and conditions under which the Purchasers would offer to provide such Covered Financing (the
“Material Terms and Conditions”). 
  
 (ii) For a period of 15 Business Days after receipt of such notice and information, the Purchasers shall have the exclusive option, but not the obligation, to propose Material Terms and Conditions under which the Purchasers would offer to
provide such Covered Financing by delivering written notice to the Loan Party, setting forth the Material Terms and Conditions. Failure by the Purchasers to make an offer within such time period shall be deemed an election by the Purchasers not to
provide the Covered Financing. 
  
 (iii) If the
Loan Party agrees to accept an offer of the Purchasers to provide the Covered Financing by delivering written notice of such acceptance to the Agent and the Purchasers within 15 Business Days after receipt of the Material Terms and Conditions, then
the Loan Party and the Purchasers agree to use their best efforts to negotiate and execute definitive agreements within 45 days of such acceptance. Failure by the Loan Party to accept such offer within such 15 day period shall be deemed an election
by the Loan Party not to accept the offer. If more than one Purchaser desires to provide such financing, the Purchasers shall participate therein on a pro rata basis. A Purchaser’s pro rata share, for purposes of this subsection (iii), shall
equal a fraction, the numerator of which is the amount outstanding under the Purchaser’s Note and the denominator of which is the aggregate amount outstanding under all of the Notes held by all Purchasers exercising their rights to participate
in the Covered Financing under this subsection (iii). 
  
 (iv) If the Loan Party does not accept the offer of the Purchasers, the Loan Party shall thereafter be free for a period of 120 days to obtain the Covered Financing from a third party offeror, pursuant to terms and conditions that are not
substantially similar to or more adverse to the Loan Party than the Material Terms and Conditions, without any further obligations hereunder in connection with such Covered Financing. 
  
 (k) Consents. The Loan Parties shall obtain and deliver to the Agent and the Purchasers from time to
time all required consents, approvals and agreements from such third parties as the Agent or a Purchaser shall determine are necessary or desirable and that are satisfactory to the Agent or Purchaser with 

  

 49 

 
respect to (i) the Purchase Documents and the Transactions, (ii) claims against any Loan Party or the Collateral, and/or (iii) any agreements, consents,
documents or instruments to which any Loan Party is a party or by which any properties or assets of any Loan Party or any of the Collateral is or are bound or subject (except where the failure to obtain such consent, approval or agreement could not
reasonably be expected to result in a Material Adverse Effect). 
  
 (l) Payment of Obligations; Other Obligations. The Loan Parties absolutely and unconditionally promise to pay, when due and payable pursuant hereto, principal, interest and all other amounts and Obligations
payable hereunder or under any other Purchase Document, without any right of rescission, setoff, counterclaim or defense for any reason against any Purchaser and without any deduction whatsoever, including any deduction for taxes, set-off,
recoupment or counterclaim, notwithstanding any damage to, defects in or destruction of the Collateral or any other event, including obsolescence of any property or improvements. Each Loan Party shall (i) except as limited pursuant to the Purchase
Documents, materially perform in accordance with its terms each contract, agreement or other arrangement to which it is a party or by which it or any of its properties or assets is bound, except where the failure to comply, pay or perform could not
reasonably be expected to have a Material Adverse Effect, (ii) except as limited pursuant to the Purchase Documents, pay, discharge or otherwise satisfy at or before maturity (subject to applicable grace periods and, in the case of trade payables,
to ordinary course payment practices) all of its material obligations and liabilities, except when the amount or validity thereof is being contested in good faith by appropriate proceedings and such reserves as the Agent may deem proper and
necessary shall have been made, and (iii) to the extent not inconsistent with the Security Documents, (A) if Liens other than Permitted Liens exist, take, execute and deliver all actions, documents and instruments necessary to release and terminate
such Liens, (B) execute, obtain, deliver, file, register and/or record any and all financing statements, continuation statements, stock powers, instruments and other documents, or cause the execution, filing, registration, recording or delivery of
any and all of the foregoing, that are necessary or required under Law or otherwise or reasonably requested by the Agent to be executed, filed, registered, obtained, delivered or recorded to create, maintain, perfect, preserve, validate or otherwise
protect the pledge of the Collateral to the Agent and the Agent’s perfected Lien thereon (and each Loan Party irrevocably grants the Agent the right, at the Agent’s option, to file any or all of the foregoing), (C) maintain, or cause to be
maintained, at all times, the pledge of the Collateral to the Agent and the Agent’s perfected Lien thereon, and (D) defend the Collateral and the Agent’s perfected Lien thereon against all claims and demands of all Persons (other than
Persons with Permitted Liens) at any time claiming the same or any interest therein adverse to the Agent or the Purchasers, and pay all reasonable costs and expenses (including, without limitation, in-house documentation and diligence fees and legal
expenses and reasonable attorneys’ fees and expenses) in connection with such defense, which may at the Agent’s discretion be added to the Obligations. 
  

 50 

 (m) Further Assurances; Post Closing. Each Loan Party shall (i) within five (5)
Business Days after the Agent’s or Purchaser’s demand, take such further actions, use reasonable efforts to obtain such consents and approvals and duly execute and deliver such further agreements, assignments, instructions or documents as
the Agent or Purchaser may request with respect to the purposes, terms and conditions of the Purchase Documents and the consummation of the Transactions, whether before, at or after the performance and/or consummation of the Transactions or the
occurrence of a Default or Event of Default, (ii) without limiting and notwithstanding any other provision of any Purchase Document, execute and deliver, or cause to be executed and delivered, such agreements and documents, and take or cause to be
taken such actions, and otherwise perform, observe and comply with such obligations, as are set forth on the “Post Closing Schedule,” and (iii) upon the exercise by the Agent, any Purchaser or any of its Affiliates of any power, right,
privilege or remedy pursuant to any Purchase Document or under applicable law or at equity which requires any consent, approval, registration, qualification or authorization of any Governmental Authority, execute and deliver, or cause the execution
and delivery of, all applications, certificates, instruments and other documents that may be so required for such consent, approval, registration, qualification or authorization. Without limiting the foregoing, upon the exercise by the Agent, any
Purchaser or any of its Affiliates of any right or remedy under any Purchase Document in connection with which any Person requires any consent, approval or registration with, consent, qualification or authorization by, then each Loan Party shall
execute and deliver, or cause the execution and delivery of, all applications, certificates, instruments and other documents that such other Person requires the Agent, the Purchaser or its Affiliate to obtain for itself or on its behalf for any such
consent, approval, registration, qualification or authorization. 
  
 7.2 Negative Covenants. The Loan Parties, jointly and severally, covenant that, so long as all or any of the Obligations or any interest thereon shall remain outstanding, without the prior written consent of the Agent: 
  
 (a) Indebtedness. None of the Loan Parties shall
create, incur, assume guarantee or be or remain liable for, contingently or otherwise, or suffer to exist any Indebtedness, except the following (collectively, “Permitted Indebtedness”): 
  
 (i) Indebtedness under this Agreement; 
  
 (ii) Senior Debt; 
  
 (iii) unsecured Indebtedness incurred in the ordinary course
of business with respect to customer deposits, trade payables and other unsecured current liabilities not the result of borrowing and not evidenced by any note or other evidence of indebtedness; 
  
 (iv) Indebtedness as set forth on the Permitted Indebtedness
Schedule attached hereto as Schedule 7.2(a) and any refundings, renewals, 

  

 51 

 
or extensions of any such Indebtedness, provided that (i) the principal amount thereof is not increased, (ii) the Liens, if any, securing such refunded,
renewed, or extended Indebtedness do not attach to any assets in addition to those assets as of the Closing Date, if any, securing the Indebtedness to be refunded, renewed, or extended, (iii) no Person that is not an obligor or guarantor of such
Indebtedness as of the Closing Date shall become an obligor or guarantor thereof, and (iv) the terms of such refunding, renewal, or extension are, in the Agent’s reasonable discretion, no less favorable to such Loan Party, the Agent, or the
Purchasers than the original Indebtedness; 
  
 (v) intercompany Indebtedness among the Loan Parties, provided that any such Indebtedness shall be on terms acceptable to the Agent; and 
  
 (vi) obligations under Capitalized Leases and purchase money Indebtedness for Equipment acquired in the ordinary course of the business,
provided that (i) the Liens securing such Capitalized Leases and purchase money Indebtedness shall attach only to the Equipment acquired by the incurrence of such Capitalized Leases and purchase money Indebtedness and (ii) the aggregate amount of
such Indebtedness (including all Capitalized Leases at any time outstanding) outstanding does not exceed $2,000,000 at any time. 
  
 Notwithstanding any provision to the contrary, none of the Loan Parties shall incur any Indebtedness after the Closing Date that is subordinate or junior
in right of payment to any Senior Debt unless such Indebtedness by its terms is subordinated to the Notes or the guarantee of the Loan Parties, in each case in form and substance satisfactory to the Agent. 
  
 (b) Negative Pledge; Liens. None of the Loan Parties
shall create, incur, assume or suffer to exist any Lien of any kind on any of their properties or assets of any kind, except the following (collectively, “Permitted Liens”): 
  
 (i) Liens created in connection with the Senior Debt and the Purchase Documents; 
  
 (ii) Liens for or priority claims imposed by law that are
incidental to the conduct of business or the ownership of properties and assets (including mechanic’s, warehousemen’s, attorneys’ and statutory landlords’ liens) and deposits, pledges or liens to secure statutory obligations,
surety or appeal bonds or other liens of like general nature incurred in the ordinary course of business and not in connection with the borrowing of money; provided, however, that in each case, the obligation secured is not overdue, or, if overdue,
is being contested in good faith and adequate reserves have been set up by the Loan Parties as the case may be; and provided, further, that the Lien and security interest provided in the Security Documents or any portion thereof created or intended
to be created thereby is not, in the opinion of the Agent, unreasonably jeopardized thereby; 
  

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 (iii) Liens securing the payments of taxes, assessments and governmental charges or
levies incurred in the ordinary course of business that either (a) are not delinquent, or (b) are being contested in good faith by appropriate legal or administrative proceedings and as to which adequate reserves have been set aside on their books,
and so long as during the period of any such contest, the Loan Parties shall suffer no loss of any privilege of doing business or any other right, power or privilege necessary or material to the operation of the Business; 
  
 (iv) Liens listed on the Permitted Encumbrances Schedule
attached hereto as Schedule 7.2(b); 
  
 (v) Liens constituting encumbrances in the nature of reservations, exceptions, encroachments, easements, rights of way, covenants running with the land, and other similar title exceptions or encumbrances affecting any Real Estate, provided
that any such Liens do not in the aggregate materially detract from the value of such Real Estate or materially interfere with its use in the ordinary conduct of a Loan Party’s business; 
  
 (vi) Liens which secure Capitalized Leases or constitute
purchase money Liens on Equipment acquired in the ordinary course of the business with respect solely to Indebtedness permitted under Section 7.2(a)(vi); 
  
 (vii) Liens arising from judgments and attachments in connection with court proceedings not in excess of $250,000, provided that the
attachment or enforcement of such Liens would not result in an Event of Default hereunder and such Liens are being contested in good faith by appropriate proceedings, adequate financial reserves have been established on the applicable Loan
Party’s books and records in accordance with GAAP, no material property is subject to a material risk of loss or forfeiture, the claims in respect of such Liens are fully covered by insurance (subject to ordinary and customary deductibles), and
a stay of execution pending appeal or proceeding for review is in effect; and 
  
 (viii) extensions, renewals and replacements of Liens referred to in clauses (i) through (vii) of this Section 7.2(b); provided, however, that any such extension, renewal or replacement Lien shall be limited to the
property or assets covered by the Lien extended, renewed or replaced and that the obligations secured by any such extension, renewal or replacement Lien shall be in an amount not greater than the amount of the obligations secured by the Lien
extended, renewed or replaced. 
  

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 (c) Contingent Liabilities. Except for the Guaranty Agreements and guarantees of
the Senior Debt as contemplated by Section 7.2(a)(ii) above, none of the Loan Parties shall be or become liable for or subject or party to any mortgage, note, indenture, indemnity or Guarantee of, with respect to or evidencing any Indebtedness of
any other Person other than another Loan Party, except for the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business. 
  
 (d) Leases. At no point shall the sum of the aggregate amount of annualized payments on operating
leases of the Loan Parties during any Fiscal Year exceed $1,200,000. 
  
 (e) Capital Expenditures. The Loan Parties shall not make or commit to make any payments in any Fiscal Year on account of the purchase or lease of any assets that if purchased would constitute fixed assets or
that if leased would constitute a Capitalized Lease, that in the aggregate would cost more than $5,500,000 for each Fiscal Year. 
  
 (f) Mergers, Purchase of Assets; Sale of Assets, etc. None of the Loan Parties shall merge into or consolidate or combine with any
other Person, or purchase, lease or otherwise acquire (in one transaction or a series of related transactions) all or any part of the property or assets of any Person other than purchases or other acquisitions of inventory, materials, leases,
property and equipment in the ordinary course of business and Permitted Acquisitions; provided that any Loan Party (other than the Parent) may merge or consolidate with the Parent or another Loan Party (provided that the Parent is the survivor of
any such merger or consolidation with which it is a party). None of the Loan Parties shall sell, transfer, lease, license or otherwise dispose of any of its assets, including the Collateral, provided that, so long as no Default or Event of Default
exists or would result therefrom, a Loan Party may enter into (i) sales or other dispositions of Inventory sold in the ordinary course of business and (ii) provided that the Parent provides the Agent and the Purchasers with prior written notice,
sales and other dispositions of Equipment and Real Estate if (A) the Orderly Liquidation Value of such Equipment and the appraised fair market value of such Real Estate does not exceed $2,000,000 in the aggregate (net of the related sales costs, if
any, of such Equipment and Real Estate) during the term of this Agreement for all of the Loan Parties, collectively, (B) the Orderly Liquidation Value of such Equipment and the appraised fair market value of such Real Estate does not exceed
$1,000,000 in the aggregate (net of the related sales costs, if any, of such Equipment and Real Estate) for all of the Loan Parties, collectively, during any period of four consecutive fiscal quarters, (C) the Agent shall have received written
notice of any such sale or disposition involving Equipment with an Orderly Liquidation Value and Real Estate having an appraised fair market value in excess of $250,000, and (D) the cash consideration received by the applicable Loan Party at the
time of any such sale or other disposition shall be not less than fifty percent (50%) of the total consideration received. 
  

 54 

 (g) Affiliate Transactions. Except as provided in Schedule 5.1(ff), none of
the Loan Parties shall make any loan or advance or other payment to any director, officer or employee of the Loan Parties or any of their Affiliates, or enter into or be a party to any transaction or arrangement with any Affiliate of the Loan
Parties, including, without limitation, the purchase from, sale to or exchange of property with, any merger or consolidation with or into, or the rendering of any service by or for, any such Affiliate, except pursuant to the reasonable requirements
of the Loan Parties’ business and upon fair and reasonable terms no less favorable to the Loan Parties than would be obtained in a comparable arm’s-length transaction with a Person other than an Affiliate. Notwithstanding any provision of
any Purchase Document, no Loan Party shall make or suffer to exist any payment (other than the payment of salaries to employees in the ordinary course of business without any increase after such event) or transaction permitted under this Section
7.2(g) if a Default or Event of Default has occurred and is continuing or would result therefrom. None of the Loan Parties shall pay any management, consulting, investment banking or similar fee or compensation to any Affiliate of any Loan Party.

  
 (h) Dividends and Stock Purchases.
Except for Permitted Distributions, none of the Loan Parties shall directly or indirectly, without the consent of the Agent: (i) make, declare or pay any dividends (in cash or other property other than a dividend on Capital Stock of any shares of
Capital Stock (or any options or warrants for, or other rights with respect to, such Capital Stock) of the same class) on, or purchase, acquire, redeem or retire any Capital Stock of any class, whether now or hereafter outstanding, (ii) make any
distribution of any kind on their outstanding Capital Stock of any class, whether now or hereafter outstanding, (iii) make, declare or pay any other payment of any kind to any of their stockholders or Affiliates (including any redemption, purchase
or acquisition of, whether in cash or in property, securities or a combination thereof, any partnership interests or capital accounts or warrants, options or any of their other securities), or (iv) set aside any sum for any such purpose other than
for such dividends, distributions or payments paid solely to other Loan Parties (each, a “Distribution”); provided, however, that this Section 7.2(h) shall not apply to any provision of the Warrant or any “put” right
thereunder or with respect to the Warrant or the Underlying Securities. 
  
 (i) Advances, Investments and Loans. None of the Loan Parties shall purchase, or hold beneficially any stock, other securities or evidences of Indebtedness of, or make or permit to exist any loan, Guaranty or
advance to, or make any Investment or acquire any interest whatsoever in, any other Person (including, but not limited to, the formation or acquisition of any Subsidiaries), except: 
  
 (i) securities issued or directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof having maturities of not more than six months from the date of acquisition; 
  

 55 

 (ii) United States dollar-denominated time deposits, certificates of deposit and bankers
acceptances of any bank or any bank whose short-term debt rating from Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc. (“S&P”), is at least A-1 or the equivalent or from Moody’s Investors
Service, Inc. (“Moody’s”) is at least P-1 or the equivalent with maturities of not more than one year from the date of acquisition; 
  
 (iii) commercial paper with a rating of at least A-1 or the equivalent by S&P or at least P-1 or the equivalent by Moody’s
maturing within six months after the date of acquisition; 
  
 (iv) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within six months from the date of
acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody’s; 
  
 (v) Investments in money market funds substantially all the assets of which are comprised of securities of the types described in clauses
(i) through (iv) above; 
  
 (vi) deposit accounts
maintained in accordance with any loan agreement evidencing the Senior Debt; 
  
 (vii) Investments (including debt obligations) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business; 
  
 (viii) receivables owing to the Loan Parties created or acquired in the ordinary course of business and payable on customary trade terms of the Loan Parties; 
  
 (ix) deposits made in the ordinary course of business
consistent with past practices to secure the performance of leases or in connection with bidding on government contracts; 
  
 (x) advances to employees in the ordinary course of business for business expenses; provided, however, that the aggregate amount of such
advances at any time outstanding shall not exceed $20,000; 
  

 56 

 (xi) securities issued by other Loan Parties and Investments constituting intercompany
loans between Loan Parties; 
  
 (xii) Investments
in respect of Interest Rate Protection Agreements entered into in the ordinary course of business and not for speculative purposes; 
  
 (xiii) Investments listed on the Permitted Investment Schedule attached hereto as Schedule 7.2(i); 
  
 (xiv) advances to independent sales Persons against
commissions in an aggregate amount at any time not exceeding $2,250,000; 
  
 (xv) Permitted Acquisitions; and 
  
 (xvi) other Investments in an aggregate amount at any time not exceeding $500,000. 
  
 (j) Use of Proceeds. None of the Loan Parties shall use any proceeds from the sale of the Securities hereunder (i) other than as
contemplated in Section 5.1(t) or (ii) directly or indirectly, for the purposes of purchasing or carrying any “margin securities” within the meaning of Regulations T, U or X promulgated by the Board of Governors of the Federal Reserve
Board or for the purpose of arranging for the extension of credit secured, directly or indirectly, in whole or in part by collateral that includes any “margin securities.” 
  
 (k) Acquisitions. None of the Loan Parties shall acquire all of Capital Stock or all or substantially
all of the assets of any Person or any business or business unit of such Person unless the Loan Party making such acquisition complies with all of the following (each, a “Permitted Acquisition”): 
  
 (i) No Event of Default shall exist prior to or will be
caused as a result of such acquisition; 
  
 (ii)
The Loan Parties shall have provided to the Purchaser the Permitted Acquisition Documents for such acquisition; 
  
 (iii) The Loan Parties shall have provided to the Agent with at least 15 calendar days prior written notice of such acquisition, such
notice to include (A) a description of the assets or stock to be acquired, (B) the price and terms of such acquisition, (C) in reasonable detail, computations and financial statements demonstrating that, immediately prior to and after giving effect
to such acquisition, the Loan Parties shall be in compliance with Section 7.3 on a pro forma basis as of the last day of the last full calendar quarter ending immediately prior to such acquisition as if such acquisition were effective on the
first day of the relevant period and (D) such other information with respect thereto as the Agent may request (For purposes of this Section 7.2(k), the pro forma computations shall be with reference to the actual financial results of the Loan
Parties and the Person being acquired, with only such adjustments as may be approved by the Agent); and 
  

 57 

 (iv) In the event an acquisition of Capital Stock, the applicable Loan Party shall
possess the power to direct or cause the direction of the management or policies of such entity and has the right to elect a majority of the members of the board of directors of such entity. 
  
 (l) Sale and Lease-Back Transactions. No Loan Party
shall enter into any arrangement, directly or indirectly, with any Person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or thereafter acquired, and thereafter in a related
transaction rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the property being sold or transferred. 
  
 (m) Prepayments; Payments to Junior Lenders. Except for the Senior Debt, the Notes or Indebtedness
owed to the Parent from another Loan Party, no Loan Party shall prepay any Indebtedness for borrowed money. So long as an Event of Default has occurred and is continuing, no Loan Party shall make any payment to any Junior Lender in respect of the
Junior Notes. 
  
 (n) Amendment of Charter
Documents. None of the Loan Parties shall amend, terminate, modify or waive or agree to the amendment, modification or waiver of any material term or provision of their respective Charter Documents or Bylaws. 
  
 (o) Subsidiaries. None of the Loan Parties shall
establish or acquire any Subsidiary unless such subsequently acquired or organized Subsidiary (i) is a wholly-owned Subsidiary of a Loan Party, (ii) joins this Agreement and the other Purchase Documents as a Loan Party, in form and substance
satisfactory to Agent, and (iii) Agent shall have received, in form and substance satisfactory to Agent, such documents and information as Agent shall deem necessary to evidence the validity and enforceability of and compliance with this Agreement
and the Purchase Documents against such Subsidiary and the other Loan Parties and the perfection of Liens in favor of the Agent, for itself and the benefit of the Purchaser, on the assets of such Subsidiary (including, without limitation, charter
and good standing documents, opinions of counsel, lien searches and such other documents as the Purchaser may request). 
  
 (p) Business. None of the Loan Parties shall engage, directly or indirectly, in any business other than the Business. 

 
 (q) Fiscal Year; Accounting. None of the Loan
Parties shall change its Fiscal Year from ending on December 31 of each year or method of accounting (other than immaterial changes in methods), except as required by GAAP. 
  

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 (r) Establishment of New or Changed Business Locations. None of the Loan Parties
shall (i) relocate its principal executive offices or other facilities without providing not less than thirty (30) days advance written notice to the Agent or (ii) establish new business locations or store any inventory or other assets or Collateral
at a location not set forth on the “Name and Location Schedule” (Schedule 7.2(r)) unless such location is established in the ordinary course of business and is added to the Name and Location Schedule not less than thirty (30) days
thereafter. In no event shall any of the Collateral with a fair market value in excess of $3,000,000 be located outside the continental United States. Prior to moving any Collateral to any location not owned by a Loan Party, the Loan Parties shall
obtain and deliver to the Agent an agreement, in form and substance acceptable to the Agent, pursuant to which the owner of such location shall subordinate any rights which it may have or thereafter obtain in any of the Collateral to the rights and
Liens of the Agent, for the benefit of the Agent and the Purchasers, and allow the Agent access to the Collateral in order to remove the Collateral from such location. 
  
 (s) Changed or Additional Business Names; FEIN. None of the Loan Parties shall change its corporate
name or FEIN or establish new or additional trade names without providing not less than thirty (30) days advance written notice to the Agent and the Purchasers. 
  
 (t) Life Insurance and Other Restrictions. No Loan Party shall (i) amend, modify, restate or change
the Life Insurance in any material respect (including, without limitation, with respect to amounts of coverage, beneficiaries and/or loss payees and additional insured), (ii) enter into any agreement or arrangements which would restrict in any
material respect its ability to fulfill its Obligations under the Purchase Documents, (iii) amend, alter or suspend or terminate or make provisional in any material way, any Permit, (iv) wind up, liquidate or dissolve (voluntarily or involuntarily)
or commence or suffer any proceedings seeking or that would result in any of the foregoing (provided that a Loan Party (other than the Parent) may wind-up, liquidate or dissolve if its property is transferred to the Parent or another Loan Party), or
(v) sell, lease, transfer, pledge, assign or otherwise dispose of any Collateral or any interest therein (except as permitted under the Purchase Documents). 
  
 7.3 Financial Covenants. The Loan Parties, jointly and severally, covenant that, so long as all or any part of Obligations or any
interest thereon shall remain outstanding, they shall maintain and comply with the following, on a consolidated basis at the end of each fiscal quarter (each such date being a “Measurement Date”): 
  
 (a) Minimum EBITDA. As measured on each Measurement
Date for the Measurement Period ending on such Measurement Date, EBITDA shall not be less than: 
  

 59 

	 Measurement Date

	  	Minimum EBITDA

	 The last day of the 3rd Fiscal Quarter of Fiscal Year 2003
	  	11,400,000
	 December 31, 2003
	  	11,400,000
	 The last day of each Fiscal Quarter of Fiscal Year 2004
	  	12,400,000
	 The last day of each Fiscal Quarter of Fiscal Year 2005
	  	14,400,000
	 The last day of each Fiscal Quarter thereafter
	  	14,900,000

  
 (b)
Debt to EBITDA Ratio (Total Debt/EBITDA). As measured on each Measurement Date for the Measurement Period ending on such Measurement Date, the Debt to EBITDA Ratio shall not exceed 3.50 to 1.00. 
  
 (c) Fixed Charge Coverage Ratio. As measured on each
Measurement Date for the Measurement Period ending on such Measurement Date, the Fixed Charge Coverage Ratio shall not be less than: 
  

	 Measurement Date

	  	Ratio

	 The last day of the 3rd Fiscal Quarter of Fiscal Year 2003
	  	1.02 to 1.00
	 December 31, 2003
	  	1.15 to 1.00
	 The last day of the 1st Fiscal Quarter of Fiscal Year 2004
	  	1.25 to 1.00
	 The last day of each Fiscal Quarter thereafter
	  	1.50 to 1.00

  
 ARTICLE 8 

EVENTS OF DEFAULT 
  
 8.1 Events of Default. An Event of Default means the occurrence of one or more of the following described events: 
  
 (a) any Loan Party shall default in the payment of (i)
interest on the Note within three (3) days after its due date, or (ii) principal of the Note and/or any other Obligation when due, whether at maturity, upon notice of prepayment in accordance with this Agreement, upon any scheduled payment date or
by acceleration or otherwise; 
  
 (b) (i) any
Loan Party shall default under or breach any agreement under which any Indebtedness in an aggregate principal amount of $250,000 or more is created, assumed, secured or guaranteed and such default or breach (A) entitles the holder of such
Indebtedness to accelerate the maturity of such Indebtedness, (B) occurs at the final maturity of the obligations thereunder, or (C) results in the other party thereto terminating such agreement or refusing to renew such agreement pursuant to an
automatic renewal right therein, (ii) any default or breach occurs, which is not cured or waived, in the performance, observance or fulfillment of any provision contained in any material agreement, contract, document or instrument to which any Loan
Party is a party or to which any of 

  

 60 

 
their respective properties or assets are subject or bound (as determined by the Agent in its sole discretion) and such default or breach continues for more
than any applicable grace period or permits the other party thereto to terminate such agreement, setoff any amounts or otherwise reduce or limit any amounts owed by such other party thereunder or take any action against any Loan Party, or (iii) any
Indebtedness of any Loan Party in excess of $250,000 is declared to be due and payable or is required to be prepaid (other than by a regularly scheduled payment) prior to the stated maturity thereof, or any obligation of such Person for the payment
of Indebtedness (other than the Obligations) is not paid when due or within any applicable grace period, or any such obligation becomes or is declared to be due and payable before the expressed maturity thereof, or there occurs an event which, with
the giving of notice or lapse of time, or both, would cause any such obligation to become, or allow any such obligation to be declared to be, due and payable; 
  

(c) any representation or warranty in any Purchase Document made by any Loan Party, or any certificate or financial statement furnished
pursuant to the provisions hereof, shall prove to have been false or misleading in any material respect as of the time made or furnished or deemed made or furnished (except to the extent already qualified by materiality, in which case it shall be
true and correct in all respects and shall not be false or misleading in any respect); 
  
 (d) any Loan Party or other party thereto other than Purchaser shall be in violation, breach or default of, or shall fail to perform,
observe or comply with any covenant, obligation or agreement set forth in, any Purchase Document and such violation, breach, default or failure shall not be cured within the applicable period set forth in the applicable Purchase Document;
provided that, with respect to the affirmative covenants set forth in Article VII (other than Section 7.1(a) (for which there shall be no cure) there shall be a fifteen (15) calendar day cure period commencing from the earlier of (i) Receipt
by such Person of written notice of such breach, default, violation or failure, and (ii) the time at which such Person or any authorized officer thereof knew or became aware, or should have known or been aware, of such failure, violation, breach or
default; 
  
 (e) (i) a default or event of
default shall occur under any of the other Purchase Documents beyond any applicable notice or cure periods, or (ii) receipt by the Agent or any Purchaser of any notice from any Loan Party that it is attempting to terminate or limit any portion of
its obligations under any Purchase Document; 
  
 (f) a proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of any Loan Party in an involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of any Loan Party or for any substantial part of its property, or for the winding-up or liquidation of
their affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of 60 days; 
  

 61 

 (g) any Loan Party shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of any Loan Party or for any substantial part of their property, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay their debts as they become
due, or shall take any action in furtherance of any of the foregoing; 
  
 (h) both the following events shall occur; (i) a Reportable Event, the occurrence of which would have a Material Adverse Effect which could cause the imposition of a Lien under Section 4068 of ERISA, shall have
occurred with respect to any Plan or Plans; and (ii) the aggregate amount of the then “current liability” (as defined in Section 412(l)(7) of the Internal Revenue Code of 1986, as amended) of all accrued benefits under such Plan or Plans
exceeds the then current value of the assets allocable to such benefits by more than $500,000 at such time; 
  
 (i) a final judgment which, with other undischarged final judgments against any and all Loan Parties, exceeds an aggregate of $250,000
(excluding judgments to the extent the applicable Loan Party is fully insured or the deductible or retention limit does not exceed $250,000 and with respect to which the insurer has assumed responsibility in writing), shall have been entered against
any Loan Party if, within thirty (30) days after the entry thereof, such judgment shall not have been discharged or execution thereof stayed pending appeal, or if, within thirty (30) days after the expiration of any such stay, such judgment shall
not have been discharged; 
  
 (j) any Purchase
Document shall at any time after the Closing Date cease for any reason to be in full force and effect or shall cease to create perfected security interests in favor of the Agent, for the benefit of the Agent and the Purchasers, in the Collateral
subject or purported to be subject thereto, subject to no other Liens other than Permitted Liens, or any Lien created thereunder ceases to constitute a perfected Lien in accordance with the terms thereof or the Agent ceases to have a perfected lien
in any of the Collateral or such Collateral shall have been transferred to any Person without the prior written consent of the Agent; 
  
 (k) (i) any Change of Control occurs or any agreement or commitment to cause or that may result in any such Change of Control is entered
into, (ii) any Material Adverse Effect or Material Adverse Change occurs or is reasonably expected to occur, or (iii) any Loan Party ceases any portion of its business operations as currently conducted; 
  

 62 

 (l) The Agent or any Purchaser receives any indication or evidence that any Loan Party
may have directly or indirectly been engaged in any type of activity which, in the Agent or Purchaser’s determination, might result in forfeiture of all or any material part of the Collateral to any Governmental Authority which shall have
continued unremedied for a period of 10 calendar days after written notice from the Agent or Purchaser, except where contested in good faith by proper proceedings diligently pursued where a stay of enforcement is in effect; 
  
 (m) any uninsured damage to, or loss, theft or destruction
of, any portion of the Collateral occurs which could reasonably be expected to cause a Material Adverse Effect and is not adequately covered by insurance; 
  
 (n) any Loan Party or any of their respective directors (other than outside directors) or senior officers is criminally indicted or
convicted of any felony under any Law; 
  
 (o)
the issuance of any process for levy, attachment or garnishment or execution upon or prior to any judgment against any Loan Party or any of the Collateral or the issuance of any injunction against any Loan Party which enjoins or restrains any of the
Loan Parties from continuing to conduct any material part of such Loan Party’s business affairs; or 
  
 (p) any Loan Party does, or enters into or becomes a party to any agreement or commitment to do, or cause to be done, any of the things
described in this Article VIII or otherwise prohibited by any Purchase Document (subject to any cure periods set forth therein); 
  
 8.2 Consequences of Event of Default. 
  
 (a) Bankruptcy. If an Event of Default specified in paragraphs (f) or (g) of Section 8.1 hereof shall occur, the unpaid balance of
the Notes, interest accrued thereon and all other liabilities and Obligations of the Loan Parties to the Purchasers under the Purchase Documents shall be immediately due and payable, without presentment, demand, protest or (except as expressly
required hereby) notice of any kind, all of which are hereby expressly waived. 
  
 (b) Other Defaults. If any other Event of Default shall occur, the Agent may at its option (and shall at the written direction of
the Required Purchasers), by written notice to the Loan Parties, declare the entire unpaid balance of the Notes, and interest accrued thereon and all other liabilities and Obligations of the Loan Parties under the Purchase Documents to be forthwith
due and payable, and the same shall thereupon become immediately due and payable, without presentment, demand, protest or (except as expressly required hereby) notice of any kind, all of which are hereby expressly waived, anything contained herein
or in any other Purchase Document to the contrary notwithstanding. The Agent may (and shall at the written direction of the Required Purchasers), by notice to the Parent, rescind and annual any declaration of an Event of Default or acceleration of
maturity under this paragraph (b) prior to the indefeasible payment in full of the outstanding Notes. 
  

 63 

 (c) Penalty Interest. Following the occurrence and during the continuance of any
Event of Default, the Purchasers shall be entitled to receive, to the extent permitted by applicable law, interest on the outstanding principal of, and premium and overdue interest, if any, on, the Notes at a rate per annum equal to the interest
rate thereon (determined as provided in this Agreement) plus 300 basis points. 
  
 (d) Premium. In the event of any acceleration of Notes pursuant to this Section 8.2, the Loan Parties shall also pay to the
Purchasers (in addition to the then outstanding principal, accrued interest and other Obligations pursuant to the terms of the Purchase Documents), as yield maintenance for the loss of bargain and not as a penalty, the prepayment premium that would
otherwise be payable upon any voluntary prepayment of the Notes pursuant to Section 3.3 of this Agreement as if the Notes were voluntarily prepaid on the date of such Event of Default. 
  
 8.3 Security. Payments of principal of, and premium, if any, and interest on, the Notes and all other Obligations of
the Loan Parties under the Purchase Documents are secured pursuant to the terms of the Security Documents. 
  
 8.4 Set-off. Upon the occurrence and during the continuance of any Event of Default, each Purchaser is hereby authorized at any time and from time
to time without notice to any Loan Party (any such notice being expressly waived by such Loan Party) and, to the fullest extent permitted by law, to set off and to apply any and all balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or moneys at any time held and other indebtedness or amounts at any time owing by such Purchaser to or for the account of such Loan Party against any and all of the Obligations of the Loan Parties now or hereafter
existing under this Agreement, any other Purchase Document or any other agreement or instrument delivered by such Loan Party to such Purchaser in connection therewith, whether or not such Purchaser shall have made any demand hereunder or thereunder
and although such obligations may be contingent or unmatured. The rights of the Purchasers under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which they may have. A Purchaser
shall give the Loan Party notice of any set-off hereunder after such set-off has occurred. 
  

 64 

 ARTICLE 9 
 AGENCY PROVISIONS 
  
 9.1 The
Agent. 
  
 (a) Appointment. Each
Purchaser hereby designates and appoints CapitalSource as the administrative agent and the collateral agent, under this Agreement and the other Purchase Documents, and each Purchaser hereby irrevocably authorizes CapitalSource, as the administrative
agent and the collateral agent for such Purchaser, to take such action or to refrain from taking such action on its behalf under the provisions of this Agreement and the other Purchase Documents and to exercise such powers and perform such duties as
are delegated to the Agent by the terms of this Agreement and the other Purchase Documents, together with such other powers as are reasonably incidental thereto. The Agent agrees to act as such on the conditions contained in this Article 9. The
provisions of this Article 9 are solely for the benefit of the Agent and the Purchasers, and no Loan Party shall have rights as a third-party beneficiary of any of the provisions hereof, except as expressly set forth in this Article 9. The Agent may
perform any of its duties hereunder, or under the Purchase Documents, by or through its agents or employees. 
  
 (b) Nature of Duties. In performing its functions and duties under this Agreement, the Agent is acting solely on behalf of the
Purchasers and its duties are administrative in nature and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for the Purchasers, other than as expressly set forth herein and in
the other Purchase Documents, or Loan Parties. The Agent shall have no duties, obligations or responsibilities except those expressly set forth in this Agreement or in the other Purchase Documents. The Agent shall not have by reason of this
Agreement a fiduciary relationship in respect of any Purchaser. Except for information, notices, reports, and other documents expressly required to be furnished to the Purchasers by the Agent hereunder or given to the Agent for the account of or
with copies for the Purchasers, each Purchaser shall make its own independent investigation of the financial condition and affairs of the Loan Parties in connection with the extension of credit hereunder and shall make its own appraisal of the
creditworthiness of the Loan Parties, and the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Purchaser with any credit or other information with respect thereto, whether coming into its
possession before the Closing Date or at any time or times thereafter. If the Agent seeks the consent or approval of any Purchasers to the taking or refraining from taking any action hereunder, then the Agent shall send prior written notice thereof
to each Purchaser. The Agent shall promptly notify (in writing) each Purchaser any time that the applicable percentage of the Purchasers have instructed the Agent to act or refrain from acting pursuant hereto. 
  
 (c) Rights, Exculpation, Etc. Neither the Agent nor
any of its officers, directors, managers, members, equity owners, employees or agents shall be liable 

  

 65 

 
to any Purchaser for any action lawfully taken or omitted by them hereunder or under any of the other Purchase Documents, or in connection herewith or
therewith. Notwithstanding the foregoing, the Agent shall be obligated on the terms set forth herein for performance of its express duties and obligations hereunder, and the Agent shall be liable with respect to its own gross negligence or willful
misconduct. The Agent shall not be liable for any apportionment or distribution of payments made by it in good faith, and if any such apportionment or distribution is subsequently determined to have been made in error, the sole recourse of any
Purchaser to whom payment was due but not made shall be to recover from other Purchasers any payment in excess of the amount to which they are determined to be entitled (and such other Purchasers hereby agree to return to such Purchaser any such
erroneous payments received by them). In performing its functions and duties hereunder, the Agent shall exercise the same care which it would in dealing with loans for its own account. The Agent shall not be responsible to any Purchaser for any
recitals, statements, representations or warranties made by Loan Parties herein or for the execution, effectiveness, genuineness, validity, enforceability, collectability, or sufficiency of this Agreement or any of the other Purchase Documents or
the transactions contemplated thereby, or for the financial condition of the Loan Parties. The Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions, or conditions of this
Agreement or any of the Purchase Documents or the financial condition of the Loan Parties, or the existence or possible existence of any Default or Event of Default. The Agent may at any time request instructions from the Purchasers with respect to
any actions or approvals which by the terms of this Agreement or of any of the other Purchase Documents the Agent is permitted or required to take or to grant, and the Agent shall be absolutely entitled to refrain from taking any action or to
withhold any approval and shall not be under any liability whatsoever to any Person for refraining from taking any action or withholding any approval under any of the Purchase Documents until it shall have received such instructions from the
applicable percentage of the Purchasers. Without limiting the foregoing, no Purchaser shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting under this Agreement or any of the other
Purchase Documents in accordance with the instructions of the applicable percentage of the Purchasers and notwithstanding the instructions of the Purchasers, the Agent shall have no obligation to take any action if it, in good faith believes that
such action exposes the Agent or any of its officers, directors, managers, members, equity owners, employees or agents to any personal liability unless the Agent receives an indemnification reasonably satisfactory to it from the Purchasers with
respect to such action. 
  
 (d) Reliance.
The Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message or other communication (including any writing, telex, telecopy or telegram) believed by it in good faith to be
genuine and correct and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the other Purchase Documents and its duties hereunder or thereunder, upon advice of legal counsel,
independent accountants, and other experts selected by the Agent in its sole discretion. 
  

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 (e) Indemnification. Each Purchaser, severally and not jointly, agrees to
reimburse and indemnify the Agent and its officers, directors, managers, members, equity owners, employees and agents (to the extent not reimbursed by the Loan Parties), ratably according to the principal portion of the Notes held by such Purchaser
in relation to the principal portion of the outstanding Notes, as in effect on the date on which indemnification is sought under this subsection, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses, advances, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against the Agent or any of its officers, directors, managers, members, equity owners, employees or agents in any
way relating to or arising out of this Agreement or any of the other Purchase Documents or any action taken or omitted by the Agent under this Agreement or any of the other Purchase Documents; provided, however, that no Purchaser shall
be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, advances or disbursements resulting from the Agent’s gross negligence or willful misconduct. The
obligations of the Purchasers under this Article 9 shall survive the payment in full of the Obligations and the termination of this Agreement. 
  
 (f) CapitalSource Individually. With respect to the Notes issued to it, CapitalSource shall have and may exercise the same rights
and powers hereunder and under the other Purchase Documents and is subject to the same obligations and liabilities as and to the extent set forth herein and the other Purchase Documents as any other Purchaser. The terms “the Purchasers” or
any similar terms shall, unless the context clearly otherwise indicates, include CapitalSource in its individual capacity as a Purchaser. CapitalSource may lend money to, and generally engage in any kind of banking, trust or other business with the
Loan Parties or any subsidiary of the Loan Parties as if it were not acting as the Agent pursuant hereto. 
  
 (g) Successor the Agent. 
  
 (i) Resignation. The Agent may resign from the performance of all its functions and duties hereunder at any time by giving at least thirty (30)
days’ prior written notice to the Loan Parties and the Purchasers. Such resignation shall take effect upon the acceptance by a successor the Agent of appointment pursuant to clause (ii) below or as otherwise provided below. 
  
 (ii) Appointment of Successor. Upon any such notice of resignation
pursuant to paragraph (g)(i) above, the Purchasers shall appoint a successor Agent. If a successor Agent shall not have been so appointed within said thirty (30) day period, the retiring Agent, upon notice to Loan Parties, may, on behalf of the
Purchasers, 

  

 67 

 
then appoint a successor Agent who shall serve as the Agent until such time as the Purchasers appoint a successor Agent as provided above. If no successor
Agent has been appointed pursuant to the foregoing within said thirty (30) day period, the resignation shall become effective and the Purchasers shall thereafter perform all the duties of the Agent hereunder, until such time, if any, as the
Purchasers appoint a successor Agent as provided above. 
  
 (iii)
Successor Agent. Upon the acceptance of any appointment as the Agent under the Purchase Documents by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of
the retiring Agent, and, upon the earlier of such acceptance or the effective date of the retiring Agent’s resignation, the retiring Agent shall be discharged from its duties and obligations under the Purchase Documents, except that any
indemnity rights or other rights in favor of such retiring Agent shall continue. After any retiring Agent’s resignation as the Agent under the Purchase Documents, the provisions of this Article 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent under the Purchase Documents. 
  
 (h) Collateral Matters. 
  
 (i) Collateral. Each Purchaser agrees that any action taken by the Agent or the Purchasers in accordance with the provisions of this Agreement or
of the other Purchase Documents relating to the Collateral, and the exercise by the Agent or the Purchasers of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and
binding upon all of the Purchasers and the Agent. Without limiting the generality of the foregoing, the Agent shall have the sole and exclusive right and authority to (i) act as the disbursing and collecting agent for the Purchasers with respect to
all payments and collections arising in connection herewith and with the Purchase Documents in connection with the Collateral; (ii) execute and deliver each Purchase Document relating to the Collateral and accept delivery of each such agreement
delivered by the Loan Parties; (iii) act as collateral agent for the Purchasers for purposes of the perfection of all security interests and Liens created by such agreements and all other purposes stated therein; (iv) manage, supervise and otherwise
deal with the Collateral; (v) take such action as is necessary or desirable to maintain the perfection and priority of the security interests and Liens created or purported to be created by the Purchase Documents relating to the Collateral, and (vi)
except as may be otherwise specifically restricted by the terms hereof or of any other Purchase Document, exercise all remedies given to such Agent and the Purchasers with respect to the Collateral under the Purchase Documents relating thereto,
applicable law or otherwise. 
  
 (ii) Release of
Collateral. The Purchasers hereby irrevocably authorize the Agent, at its option and in its discretion, to release any Lien granted to or held by the Agent for the benefit of the Purchasers upon any property covered by this Agreement or the
Purchase Documents (A) upon termination of this Agreement and payment and satisfaction in full of all Obligations; (B) constituting property being sold or 

  

 68 

 
disposed of if the Loan Parties certify to the Agent that the sale or disposition is made in compliance with the provisions of this Agreement (and the Agent
may rely in good faith conclusively on any such certificate, without further inquiry); or (C) constituting property leased to any of the Loan Parties under a lease which has expired or been terminated in a transaction permitted under this Agreement
or is about to expire and which has not been, and is not intended by the Loan Parties to be, renewed or extended. 
  
 (iii) Confirmation of Authority; Execution of Releases. Without in any manner limiting the Agent’s authority to act without any specific or
further authorization or consent by the Purchasers (as set forth in Section 9.1(h)(i) and (ii)), each Purchaser agrees to confirm in writing, upon request by the Parent, the authority to release any property covered by this Agreement or the Purchase
Documents conferred upon the Agent under Section 9.1(h)(ii). So long as no Event of Default is then continuing, upon receipt by the Agent of confirmation from the requisite percentage of the Purchasers, of its authority to release any particular
item or types of property covered by this Agreement or the Purchase Documents, and upon at least five (5) Business Days prior written request by Loan Parties, the Agent shall (and is hereby irrevocably authorized by the Purchasers to) execute such
documents as may be necessary to evidence the release of the Liens granted to the Agent for the benefit of the Purchasers herein or pursuant hereto upon such Collateral; provided, however, that (A) the Agent shall not be required to
execute any such document on terms which, in the Agent’s opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (B) such release
shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of the Loan Parties in respect of), all interests retained by the Loan Parties, including, without limitation, the proceeds of any sale, all of
which shall continue to constitute part of the property covered by this Agreement or the Purchase Documents. 
  
 (iv) Absence of Duty. The Agent shall have no obligation whatsoever to any Purchaser or any other Person to assure that the property covered by
this Agreement or the Purchase Documents exists or is owned by the Loan Parties or is cared for, protected or insured or has been encumbered or that the Liens granted to the Agent on behalf of the Purchasers herein or pursuant hereto have been
properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to the Agent in this Section 9.1(h) or in any of the Purchase Documents, it being understood and agreed that in respect of the property covered by this Agreement or the
Purchase Documents or any act, omission, or event related thereto, the Agent may act in any manner it may deem appropriate, in its discretion, given the Agent’s own interest in property covered by this Agreement or the Purchase Documents as one
of the Purchasers and that the Agent shall have no duty or liability whatsoever to any of the other the Purchasers; provided, that the Agent shall exercise the same care which it would in dealing with loans for its own account.
Notwithstanding the foregoing, the Agent shall be liable with respect to its own gross negligence or willful misconduct. 
  

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 (i) Agency for Perfection. Each Purchaser hereby appoints the Agent as agent for
the purpose of perfecting the Purchasers’ security interest in Collateral which, in accordance with Article 9 of the UCC in any applicable jurisdiction, can be perfected only by possession. Should any Purchaser (other than the Agent) obtain
possession of any such Collateral, such Purchaser shall notify the Agent thereof, and, promptly upon the Agent’s request therefor, shall deliver such Collateral to the Agent or in accordance with the Agent’s instructions. 
  
 (j) Exercise of Remedies. Except as set forth in
Section 8.4, each Purchaser agrees that it will not have any right individually to enforce or seek to enforce this Agreement or any Purchase Document or to realize upon any Collateral, it being understood and agreed that such rights and remedies may
be exercised only by the Agent. 
  
 9.2 Consents.

  
 (a) In the event the Agent requests the
consent of a Purchaser and does not receive a written denial thereof within five (5) Business Days after such Purchaser’s receipt of such request, then such Purchaser will be deemed to have given such consent so long as such request contained a
notice stating that such failure to respond within five (5) business days would be deemed to be a consent by such Purchaser. 
  
 (b) In the event the Agent requests the consent of a Purchaser in a situation where such Purchaser’s consent would be required and
such consent is denied, then the Agent may, at its option, require such Purchaser to assign the Notes held by such Purchaser to Agent for a price equal to the then outstanding principal amount thereof plus accrued and unpaid interest and fees
due such Purchaser, which interest and fees will be paid when collected from the Loan Parties. In the event that the Agent elects to require any Purchaser to assign its interest to the Agent pursuant to this Section 9.2, the Agent will so notify
such Purchaser in writing within forty-five (45) days following such Purchaser’s denial, and such Purchaser will assign its interest to the Agent no later than five (5) days following receipt of such notice. 
  
 9.3 Dissemination of Information. The Agent will distribute promptly
to each Purchaser copies of all notices, schedules, reports, projections, financial statements, agreements and other material and other information, including, but not limited to, financial and reporting information received from the Loan Parties or
generated by a third party (and excluding only internal information generated by CapitalSource for its own use as a Purchaser or as Agent), as provided for in this Agreement and the other Purchase Documents as received by the Agent. The Agent shall
promptly give notice to the Purchasers of the receipt or sending of any notice, schedule, report, projection, financial statement or other document or information pursuant to this Agreement or any of the other Purchase Documents and shall promptly
forward a copy thereof to each Purchaser. 

  

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The Agent shall request information from the Loan Parties as the Purchasers may request from time to time. The Agent shall not be liable to the Purchasers
for any failure to comply with its obligations under this Section 9.3, except to the extent that such failure is attributable to the Agent’s gross negligence or willful misconduct. 
  
 ARTICLE 10 
 MISCELLANEOUS 
  
 10.1 Successors and Assigns;
Participants. 
  
 (a) This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that (i) the Loan Parties may not assign or transfer their rights hereunder or any interest herein or delegate their duties hereunder,
and (ii) each Purchaser shall have the right to assign its rights hereunder and under the other Purchase Documents and, in accordance with Article 6, under the Securities in accordance with Article 6. No rights are intended to be created under any
Purchase Document for the benefit of any third party donee, creditor or incidental beneficiary of any Loan Party. Nothing contained in any Purchase Document shall be construed as a delegation to Purchaser of any other Person’s duty of
performance. 
  
 (b) Each Purchaser may at any
time sell participations in all or any part of its rights and obligations under this Agreement and the other Purchase Documents (including the Notes) to one or more Persons (a “Participant”). In the event of any such sale by a Purchaser of
a participation to a Participant, such Purchaser’s obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Purchaser shall remain solely responsible for the performance thereof, such Purchaser shall
remain the holder of any such Note for all purposes under this Agreement and the other Purchase Documents and the Loan Parties and the Agent shall continue to deal solely and directly with such Purchaser in connection with such Purchaser’s
rights and obligations under this Agreement and the other Purchase Documents. Notwithstanding any other provision set forth in this Agreement, any Purchaser may at any time create a security interest in all or any portion of its rights under this
Agreement, including, without limitation, the Notes held by it. The Loan Parties agree to use commercially reasonable efforts to assist any Purchaser in assigning or selling participations in all or any part of any Notes made by such Purchaser to
another Person identified by such Purchaser. Each Purchaser may furnish any information concerning the Loan Parties in the possession of such Purchaser from time to time to assignees and participants (including prospective assignees and
participants). 
  
 (c) Notwithstanding anything
in this Agreement to the contrary, there shall be no limitation or restriction on CapitalSource’s ability to assign, pledge or otherwise transfer any Purchase Document to any lender or financing or funding source of CapitalSource or
CapitalSource’s affiliates. 
  

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 10.2 Modifications and Amendments. The provisions of this Agreement may be modified, waived or
amended, but only by a written instrument signed by each of the Loan Parties to be bound thereby, the Agent and the Required Purchasers. 
  
 10.3 No Implied Waivers; Writing Required; Waivers. No delay or failure in exercising any right, power or remedy under the Purchase Documents shall
affect or operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or
remedy. Any waiver, permit, consent or approval of any kind or character of any breach or default under the Purchase Documents or any such waiver of any provision or condition of the Purchase Documents must be in writing and shall be effective only
to the extent in such writing specifically set forth. No course of action or dealing, renewal, release or extension of any provision of any Purchase Document, or single or partial exercise of any such provision, or delay, failure or omission on the
Agent’s or a Purchaser’s part in enforcing any such provision shall affect the liability of any Loan Party or operate as a waiver of such provision or affect the liability of any Loan Party or preclude any other or further exercise of such
provision. Notwithstanding any other provision of any Purchase Document, by consummating the Transactions, the Agent and the Purchasers do not waive any breach of any representation or warranty of under any Purchase Document, and all of the
Agent’s and the Purchaser’s claims and rights resulting from any such breach or misrepresentation are specifically reserved. Except as expressly provided for herein, each Loan Party hereby waives demand, presentment, protest, all defenses
with respect to any and all instruments and all notices and demands of any description. Each Loan Party hereby waives any and all defenses and counterclaims it may have or could interpose in any action or procedure brought by the Agent to obtain an
order of court recognizing the assignment of, or Lien of the Agent, for the benefit of the Agent and the Purchasers, in and to, any Collateral covered by the Security Documents. 
  
 10.4 Reimbursement of Expenses. The Loan Parties upon demand shall pay or reimburse the Agent and any Purchaser for
all fees and expenses incurred or payable by the Agent, any Purchaser and/or its Affiliates (including, without limitation, documentation and diligence fees and expenses, all search, audit, appraisal, recording, professional and filing fees and
expenses and all other out-of-pocket charges and expenses (including, without limitation, UCC and judgment and tax lien searches and UCC filings and fees for post-Closing UCC and judgment and tax lien searches and wire transfer fees and audit
expenses and reasonable attorneys’ fees and expenses), from time to time (i) in any effort to enforce, protect or collect payment of any Obligation or to enforce any Purchase Document or any related agreement, document or instrument, (ii) in
connection with entering into, negotiating, preparing, reviewing and executing the Purchase Documents and/or any related agreements, documents or instruments, (iii) arising in any way out of administration of the Obligations, (iv) in connection with
instituting, maintaining, preserving, enforcing and/or foreclosing the Purchase Documents or on the Agent’s Liens in any Collateral or securities pledged under the Purchase Documents or in collection of the Notes or Obligations, whether through
judicial proceedings or otherwise, (v) in defending or prosecuting any actions, claims or 

  

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proceedings arising out of or relating to the Agent or any Purchaser’s transactions with Loan Parties, (vi) in seeking, obtaining or receiving any
advice with respect to its rights and obligations under any Purchase Document and any related agreement, document or instrument, and/or (vii) in connection with any modification, restatement, supplement, amendment, waiver or extension of any
Purchase Document and/or any related agreement, document or instrument. All of the foregoing shall be part of the Obligations. If the Agent, any Purchaser or any of its Affiliates uses in-house counsel for any purpose under any Purchase Document for
which Loan Parties are responsible to pay or indemnify, Loan Parties expressly agree that their Obligations include reasonable charges for such work commensurate with the fees that would otherwise be charged by outside legal counsel selected by the
Agent, such Purchaser or such Affiliate in its sole discretion for the work performed. 
  
 10.5 Holidays. Whenever any payment or action to be made or taken hereunder or under the Notes or Warrant or any other Purchase Document shall be stated to be due on a day which is not a Business Day, such
payment or action shall be made or taken on the next following Business Day, and such extension of time shall be included in computing interest or fees, if any, in connection with such payment or action. 
  
 10.6 Notices. All notices and other communications given to or made
upon any party hereto in connection with any Purchase Document shall be in writing and shall be given at such party’s address set forth below, or at such other address as such party may hereafter specify in a notice given in the manner required
under this Section 10.6, and shall be given only by, and shall be deemed to have been received upon (each, a “Receipt”): (i) registered or certified mail, return receipt requested, on the date on which such received as indicated in such
return receipt, (ii) delivery by a nationally recognized overnight courier, one (1) Business Day after deposit with such courier, or (iii) facsimile or electronic transmission, in each case upon telephone or further electronic communication from the
recipient acknowledging receipt (whether automatic or manual from recipient), as applicable: 
  
 to any of the Loan Parties: 
  
 c/o Encore Medical Corporation 
 9800 Metric Blvd. 
 Austin, Texas 78758 
 Attn: Harry Zimmerman 
 Telephone: (512) 834-6208 
 Fax: (512) 834-6310 
 E-Mail: harry_zimmerman@encoremed.com 
  
 with a copy to: 
  
 Jackson Walker L.L.P. 
 100 Congress Avenue, Suite 110 
 Austin, Texas 78701 
  

 73 

 Attn: Lawrence A. Waks, Esq. 
 Telephone: (512) 236-2222 
 Fax: (512) 236-2002 
 E-Mail: lwaks@jw.com 
  
 to the Purchasers or the Agent: 
  
 c/o CapitalSource Finance LLC 
 4445 Willard Avenue, 12th Floor 
 Chevy Chase, MD 20815 
 Attention: Corporate Finance Group, Portfolio Manager 
 Telephone: (301) 841-2700 
 FAX: (301) 841-2313 
 E-Mail: jpeterson@capitalsource.com 
  
 10.7 Effectiveness and Survival. This Agreement shall continue in full
force and effect until the full performance and indefeasible payment in cash of all Obligations pursuant to the provisions herein. Notwithstanding any other provision of any Purchase Document, no termination of this Agreement shall affect the
Agent’s or any Purchaser’s rights or any of the Obligations existing as of the effective date of such termination, and the provisions of the Purchase Documents shall continue to be fully operative until the Obligations have been fully
performed and indefeasibly paid in cash in full. The Liens granted to the Agent under the Security Documents and the Financing Statements filed pursuant thereto and the rights and powers of the Agent shall continue in full force and effect until all
of the Obligations have been fully performed and indefeasibly paid in full in cash. All representations, warranties, covenants and agreements of the Loan Parties contained herein or made in writing in connection herewith or in any Purchase Document
shall survive the execution and delivery and, if applicable, termination of this Agreement and the purchase of the Notes and Warrant and shall continue in full force and effect so long as any Note is outstanding and until payment in full and
performance of all of the Loan Parties’ Obligations hereunder or thereunder. All obligations relating to indemnification hereunder shall survive any termination of this Agreement and shall continue for the length of any applicable statute of
limitations. The obligations and provisions of Sections 10.3, 10.4, 10.7, 10.10, 10.13, 10.14 and 10.21 shall survive termination of the Purchase Documents and any payment, in full or in part, of the Obligations. 
  
 10.8 Governing Law. This Agreement and any other Purchase Document
which by its terms does not include a governing law provision shall be governed by and construed in accordance with the internal laws of the State of Maryland without giving effect to its choice of law provisions. Any judicial proceeding against any
Loan Party with respect to the Obligations, any Purchase Document or any related agreement may be brought in any federal or state court of competent jurisdiction located in the State of Maryland. By execution and delivery of each Purchase Document
to which it is a party, each Loan Party (i) accepts the non-exclusive jurisdiction of the aforesaid courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii) waives personal 

  

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service of process, (iii) agrees that service of process upon it may be made by certified or registered mail, return receipt requested, pursuant to Section
10.6 hereof, and (iv) waives any objection to jurisdiction and venue of any action instituted hereunder and agrees not to assert any defense based on lack of jurisdiction or venue or forum non conveniens. Nothing shall affect the right of the Agent
or any Purchaser to serve process in any manner permitted by law or shall limit the right of the Agent or any Purchaser to bring proceedings against any Loan Party in the courts of any other jurisdiction having jurisdiction. Any judicial proceedings
against the Agent or any Purchaser involving, directly or indirectly, the Obligations, any Purchase Document or any related agreement shall be brought only in a federal or state court located in the State of Maryland. All parties acknowledge that
they participated in the negotiation and drafting of this Agreement and that, accordingly, no party shall move or petition a court construing this Agreement to construe it more stringently against one party than against any other. 
  
 10.9 Cooperation in Discovery and Litigation. In any litigation,
arbitration or other dispute resolution proceeding relating to any Purchase Document, each Loan Party waives any and all defenses, objections and counterclaims it may have or could interpose with respect to (i) any of its and its affiliates’
directors, officers, employees or agents being deemed to be employees or managing agents of the Loan Parties for purposes of all applicable law or court rules regarding the production of witnesses by notice for testimony (whether in a deposition, at
trial or otherwise), (ii) the Agent’s or any Purchaser’s counsel examining any such individuals as if under cross-examination and using any discovery deposition of any of them as if it were an evidence deposition, and/or (iii) using all
commercially reasonable efforts to produce in any such dispute resolution proceeding, at the time and in the manner requested by the Agent or any Purchaser, all Persons, documents (whether in tangible, electronic or other form) and/or other things
under its control and relating to the dispute. 
  
 10.10 Jury
Trial Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH ANY PURCHASE DOCUMENT OR ARISING UNDER THE
PURCHASE DOCUMENTS OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THE PURCHASE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY. 
  
 10.11 Severability. If any provision of any Purchase Document is adjudicated to be invalid under applicable laws or regulations, such provision
shall be inapplicable to the extent of such invalidity without affecting the validity or enforceability of the remainder of the Purchase Documents which shall be given effect so far as possible. 
  

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 10.12 Headings. The captions in the Purchase Documents are intended for convenience and reference
only and shall not affect the meaning or interpretation of the Purchase Documents. 
  
 10.13 General Indemnity. The Loan Parties, jointly and severally, hereby agree to indemnify, defend and hold harmless the Agent and its affiliates, each Purchaser and its affiliates and each of its and their
respective managers, members, officers, employees, affiliates, agents, representatives, successors, assigns, accountants and attorneys (collectively, the “Indemnified Persons”) from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, reasonable fees and disbursements of counsel and in-house documentation and diligence fees and legal
expenses) which may be imposed on, incurred by or asserted against any Indemnified Person with respect to or arising out of, or in any litigation, proceeding or investigation instituted or conducted by any Person with respect to any aspect of, or
any transaction contemplated by or referred to in, or any matter related to, any Purchase Document or any agreement, document or transaction contemplated thereby, or from any act of, or omission by, the Loan Parties or their Affiliates or any
officer, director, employee, agent or representative of the Loan Parties or their Affiliates with respect to the Transactions, the Purchase Documents, the Notes, Warrant, Charter Documents, the Bylaws or any agreements entered into in connection
with any such agreements, instruments or documents, whether or not such Indemnified Person is a party thereto, except to the extent that any of the foregoing arises out of the gross negligence or willful misconduct of such Indemnified Person. To the
extent that the foregoing undertakings may be unenforceable for any reason, the Loan Parties agree to make the maximum contribution to the payment and satisfaction of indemnified liabilities set forth in this Section 10.13 which is permissible under
applicable law. If any Indemnified Person uses in-house counsel for any purpose for which any Loan Party is responsible to pay or indemnify, the Loan Parties expressly agree that their indemnification obligations include reasonable charges for such
work commensurate with the fees that would otherwise be charged by outside legal counsel selected by such Indemnified Person in its sole discretion for the work performed. 
  
 10.14 Environmental Indemnity. The Loan Parties, and their successors and assigns, jointly and severally, hereby
release and discharge, and agree to defend, indemnify and hold harmless the Indemnified Persons from and against any and all Environmental Liabilities, whenever and by whomever asserted, to the extent that such Environmental Liabilities are based
upon, or otherwise relate to: (a) any Condition at any time in, at, on, under, a part of, involving or otherwise related to the Properties and Facilities (including any of the properties, materials, articles, products, or other things included in or
otherwise a part of the Properties and Facilities); (b) any action or failure to act of any Person, including any prior owner or operator of the Properties and Facilities (including any of the properties, materials, articles, products, or other
things included in 

  

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or otherwise a part of the Properties and Facilities), involving or otherwise related to the Properties and Facilities or operations of the Loan Parties; (c)
the Management of any Pollutant, material, article or product (including Management of any material, article or product containing a Pollutant) in any physical state and at any time, involving or otherwise related to the Properties and Facilities or
any property covered by clause (d) (including Management either from the Properties and Facilities or from any property covered by clause (d), and Management to, at, involving or otherwise related to the Properties and Facilities or any property
covered by clause (d)); (d) Conditions, and actions or failures to act, in, at, on, under, a part of, involving or otherwise related to any property other than the Properties and Facilities, which property was, at or prior to the Closing Date, (i)
acquired, held, sold, owned, operated, leased, managed, or divested by, or otherwise associated with, (A) the Loan Parties, (B) any of the Loan Parties’ Affiliates, or (C) any predecessor or successor organization of those identified in (A) or
(B); or (ii) engaged in any tolling, contract manufacturing or processing, or other similar activities for, with, or on behalf of the Loan Parties; (e) any violation of or noncompliance with or the assertion of any Lien under the Environmental Laws,
(f) the presence of any toxic or hazardous substances, wastes or contaminants on, at or from the past and present properties and facilities, including, without limitation, human exposure thereto; (g) any spill, release, discharge or emission
affecting the past and present properties and facilities, whether or not the same originates or emanates from such properties and facilities or any contiguous real estate, including, without limitation, any loss of value of such properties and
facilities as a result thereof; or (h) a misrepresentation in any representation or warranty or breach of or failure to perform any covenant made by the Loan Parties in this Agreement. This indemnity and agreement to defend and hold harmless shall
survive any termination or satisfaction of the Notes and/or exercise of the Warrant and/or the sale, assignment or foreclosure thereof or the sale, transfer or conveyance of all or part of the past and present properties and facilities or any other
circumstances which might otherwise constitute a legal or equitable release or discharge, in whole or in part, of the Loan Parties under the Notes. 
  
 10.15 Counterparts. The Purchase Documents (other than the Warrant) may be executed in one or more counterparts (which taken together, as
applicable, shall constitute one and the same instrument) and by facsimile transmission, which facsimile signatures shall be considered original executed counterparts. Each party to this Agreement agrees that it will be bound by its own facsimile
signature and that it accepts the facsimile signature of each other party. 
  
 10.16 Integration. This Agreement and the other Purchase Documents to which Loan Parties are a party set forth the entire understanding of the parties hereto with respect to all matters contemplated hereby and
thereby and supersede all previous agreements and understandings among them concerning such matters. No statements or agreements, oral or written, made prior to or at the signing hereof, shall vary, waive or modify the written terms hereof. Each
party hereto acknowledges that it has been advised by counsel in connection with the negotiation and execution of this Agreement and is not relying upon oral representations or statements inconsistent with the terms and provisions hereof.

  

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 10.17 Subordination. The Note is subordinate in the manner and to the extent set forth in the
Subordination Agreement, and each holder of the Note, by its acceptance thereof, acknowledges and agrees to be bound by the provisions of the Subordination Agreement. 
  
 10.18 Lender Approvals. Unless expressly provided herein to the contrary, any approval, consent, waiver or
satisfaction of the Agent or the Purchasers with respect to any matter that is subject of any Purchase Document may be granted or withheld by the Agent or the Purchasers in their sole and absolute discretion. Except as expressly provided herein, to
the extent that (i) the terms of this Agreement or any of the other Purchase Documents require the consent, action or approval of the Purchasers, (ii) the Loan Parties seek an amendment to or termination of any of the terms of this Agreement or any
of the Purchase Documents, or (iii) the Loan Parties seek a waiver of any right granted to the Purchasers under this Agreement or any of the Purchase Documents, such consent, approval, action, termination, amendment or waiver shall be made by the
Required Purchasers. Notwithstanding any provision of this Section 10.18 to the contrary, the Purchasers shall not, without the prior written consent and approval of all of the affected Purchasers, amend, modify, terminate or obtain a waiver of any
provision of this Agreement or any of the Purchase Documents, which will have the effect of (i) reducing the principal amount of any Notes or of any payment required to be made to the Purchasers hereunder, or modifying the terms of a payment or
prepayment thereof; (ii) reducing the interest rate on the Notes or extending the time for payment of interest under any Notes; or (iii) releasing any Loan Party or other obligor from any Obligation under this Agreement or any of the other Purchase
Documents. 
  
 10.19 Lender Duties. Neither the Agent nor
any Purchaser shall have any responsibility for or obligation or duty with respect to any of the Collateral or any matter or proceeding arising out of or relating thereto, including, without limitation, any obligation or duty to collect any sums due
in respect thereof or to protect or preserve any rights pertaining thereto. 
  
 10.20 Application of Payments. To the extent that any payment made or received with respect to the Obligations is subsequently invalidated, determined to be fraudulent or preferential, set aside or required to
be repaid to a trustee, Loan Party in possession, receiver, custodian or any other Person under any Law, common law or equitable cause or any other law, then the Obligations intended to be satisfied by such payment shall be revived and shall
continue as if such payment had not been received by the Purchasers. 
  
 10.21 Confidentiality and Publicity. Except to the extent required by applicable laws or regulations, each Loan Party agrees, and agrees to cause each of its Affiliates, (i) not to transmit or disclose any provision of any Purchase
Document to any Person (other than to its advisors and officers on a need-to-know basis) without the Agent’s prior written consent and (ii) to inform all Persons of the confidential nature of the Purchase Documents and to direct them not to
disclose the same to any other Person and to require 

  

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each of them to be bound by these provisions; provided that, to any such disclosure required to the SEC, the Loan Party agrees to request and use its best
efforts to obtain confidential treatment of such information to the extent permitted by applicable law. The Agent and each Purchaser reserves the right to review and approve all materials that any Loan Party or any of their Affiliates prepares that
contain such Purchaser’s name or describe or refer to any Purchase Document, any of the terms thereof or any of the transactions contemplated thereby. No Loan Party shall, or shall permit any of its Affiliates to, use the Agent’s or any
Purchaser’s name (or the name of any of the Agent’s or such Purchaser’s Affiliates) in connection with any of its business operations; provided that the Loan Parties may disclose the Purchaser’s name and the aggregate principal
amount of the Notes outstanding to prospective purchasers of debt or equity securities of a Loan Party so long as the Loan Party informs such prospective purchasers of the confidential nature of such information and directs them not to disclose the
same to any other Person. Nothing contained in any Purchase Document is intended to permit or authorize any Loan Party or any of their Affiliates to contract on behalf of the Agent or any Purchaser.  
  
 10.22 Acknowledgement. Each of Encore GP, Encore Limited, Encore Asset
Corporation and Encore MP acknowledges and agrees that as a direct or indirect subsidiary of Parent, it will benefit from the execution, delivery and performance by the Purchasers of the Purchase Documents and the purchase of the Notes by the
Purchasers and that the proceeds of the Notes constitute valuable consideration thereto and irrevocably appoints the Parent as its agent for all purposes relevant to the Purchase Documents. 
  
 10.23 Release of Collateral. Promptly following full performance and
satisfaction and indefeasible payment in full in cash of all Obligations and the termination of this Agreement, the Liens created under the Security Document shall terminate and the Agent shall execute and deliver such documents, at Loan
Parties’ expense, as are necessary to release the Agent’s Liens in the Collateral and shall return the Collateral to Loan Parties. The Agent shall not be deemed to have made any representation or warranty with respect to any such
Collateral so delivered except that such Collateral is free and clear, on the date of such delivery, of any and all Liens arising from the Agent’s own acts. 
  
 10.24 Rights and Remedies. In addition to the acceleration provisions set forth in Article 8 above, upon the
occurrence and continuation of an Event of Default, the Agent shall have the right to exercise any and all rights, options and remedies provided for in any Purchase Document, under the UCC or at law or in equity, including, without limitation, the
right to (i) apply any property of any Loan Party held by the Agent or any Purchaser to reduce the Obligations, (ii) foreclose the Liens created under the Purchase Documents, (iii) realize upon, take possession of and/or sell any Collateral or
securities pledged, with or without judicial process, (iv) exercise all rights and powers with respect to the Collateral as any Loan Party might exercise, (v) collect and send notices regarding the Collateral, with or without judicial process, (vi)
by its own means or with judicial 

  

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assistance, enter any premises at which Collateral and/or pledged securities are located, or render any of the foregoing unusable or dispose of the
Collateral and/or pledged securities on such premises without any liability for rent, storage, utilities, or other sums, and no Loan Party shall resist or interfere with such action, (vii) at Loan Parties’ expense, require that all or any part
of the Collateral be assembled and made available to the Agent at any place designated by the Agent, and/or (viii) relinquish or abandon any Collateral or securities pledged or any Lien thereon. Notwithstanding any provision of any Purchase
Document, the Purchasers , in their sole discretion, shall have the right, at any time that any Loan Party fails to do so or fails to perform any of its agreements or covenants in any Purchase Document (including those with respect to compliance
with applicable Laws), and from time to time, without prior notice, to: (i) obtain insurance covering any of the Collateral to the extent required hereunder; (ii) discharge taxes or Liens on any of the Collateral that are in violation of any
Purchase Document unless Loan Parties are in good faith with due diligence by appropriate proceedings contesting those items; (iii) pay for the performance of such agreements or covenants and/or (iv) pay for the maintenance, protection and
preservation of the Collateral and the Agent’s perfected, priority security interests and Liens therein. Such expenses and advances shall be added to the Obligations until reimbursed to the Purchasers and shall be secured by the Collateral, and
such payments by the Purchasers shall not be construed as a waiver by any Purchaser of any Event of Default or any other rights or remedies of the Agent or the Purchasers. Each Loan Party agrees that notice received by it at least ten (10) calendar
days before the time of any intended public sale, or the time after which any private sale or other disposition of any Collateral is to be made, shall be deemed to be reasonable notice of such sale or other disposition. If permitted by applicable
law, any perishable Collateral which threatens to speedily decline in value or which is sold on a recognized market may be sold immediately by Purchaser without prior notice to any Loan Party. At any sale or disposition of any Collateral or
securities pledged, any Purchaser may (to the extent permitted by applicable law) purchase all or any part thereof free from any right of redemption by any Loan Party, which right is hereby waived and released. 
  
 10.25 Rights and Remedies not Exclusive. The Agent shall have the
right in its sole discretion (or at the written direction of the Required Purchasers) to determine which rights, Liens and/or remedies the Agent may at any time pursue, relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of the Agent’s or Purchaser’s rights, Liens or remedies under any Purchase Document, applicable law or equity. The enumeration of any rights and remedies in any Purchase Document is not intended to be exhaustive, and
all rights and remedies of the Agent or the Purchasers described in any Purchase Document are cumulative and are not alternative to or exclusive of any other rights or remedies which the Agent or the Purchasers otherwise may have. The partial or
complete exercise of any right or remedy shall not preclude any other further exercise of such or any other right or remedy. 
  
 10.26 Waiver of Consequential and Punitive Damages. Each of the Loan Parties, the Agent and the Purchasers hereby waive to the fullest extent
permitted by law all claims to consequential and punitive damages in any lawsuit or other legal action 

  

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brought by any of them against any other of them in respect of any claim among or between any of them arising under this Agreement, the other Purchase
Documents, or any other agreement or agreements between or among any of them at any time, including any such agreements, whether written or oral, made or alleged to have been made at any time prior to the Closing Date, and all agreements made
hereafter or otherwise, and any and all claims arising under common law or under any statute of any state or the United States of America, including any thereof in contract, tort, strict liability or otherwise, whether any such claims be now
existing or hereafter arising, now known or unknown. In making this waiver, the Agent, the Purchasers and the Loan Parties acknowledge and agree that there shall be no claims for consequential or punitive damages made by the Agent or the Purchasers
against any Loan Party and there shall be no claims for consequential or punitive damages made against the Agent or the Purchasers by any Loan Party. The Agent, the Purchasers and the Loan Parties acknowledge and agree that this waiver of claims for
consequential damages and punitive damages is a material element of the consideration for this Agreement. 
  
 10.27 Subrogation. No payment or prepayment of any amount by any Purchaser or any other Person shall entitle any Person to be subrogated to the
rights of the Purchasers under any Purchase Document unless and until the Obligations have been fully performed and paid irrevocably in cash and the Notes has been terminated. 
  
 10.28 Power of Attorney. The Agent is hereby irrevocably made, constituted and appointed the true and lawful attorney
for Loan Parties (without requiring Loan Parties to act as such) with full power of substitution to do the following: (i) upon the occurrence and continuation of an Event of Default, endorse the name of any such Person upon any and all checks,
drafts, money orders and other instruments for the payment of money that are payable to such Person and constitute collections on such Person’s accounts; (ii) execute in the name of Loan Parties any financing statements, schedules, assignments,
instruments, documents, and statements that they are obligated to give the Agent or the Purchasers under any of the Purchase Documents; and (iii) do such other and further acts and deeds in the name of Loan Parties that the Agent may deem necessary
or desirable to enforce, make, create, maintain, continue or perfect the Agent’s security interest or lien or rights in any Collateral. 
  
 10.29 Acknowledgement of Joint and Several Liability. Each Loan Party acknowledges that all Loan Parties are jointly and severally liable for all
of the Obligations. Each Loan Party expressly (i) understands, agrees and acknowledges that Loan Parties are all affiliated entities by common ownership, (ii) understands, agrees and acknowledges that Purchaser will be lending against, and relying
on a Lien upon, all of the Loan Parties’ assets even though the proceeds from the sale of the Notes may not be advanced directly to a particular Loan Party, (iii) understands, agrees and acknowledges that each Loan Party will nonetheless
benefit by the Transactions, and (iv) understands, agrees and acknowledges that all of the representations, warranties, covenants, obligations, conditions, agreements and other terms contained in the Purchase Documents shall be applicable to and
binding upon each Loan Party. 
  

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 10.30 Seal and Effective Date. This Agreement is an instrument executed under seal and is to be
considered effective and enforceable as of the date set forth on the first page hereof, independent of the date of actual execution. 
  
 10.31 Restatement and Release. Pursuant to Section 10.2 of the Initial Purchase Agreement, the parties hereto hereby amend and restate, in its
entirety, the Initial Purchase Agreement by execution and delivery of this Agreement. Each Loan Party acknowledges that the Purchaser and the Holder have fulfilled all of their obligations under the Purchase Documents and hereby releases and forever
discharges the Purchaser and the Holder and their representatives, agents, employees, attorneys, successors, directors, officers, parents, affiliates, assigns, and subsidiaries (collectively the “Released Parties”) of, to, and from any and
all claims, defenses, actions, causes of action, suits, controversies, agreements, provisions, and demands in law or in equity, known or unknown which the Loan Parties ever had, now have, or may have arising from or relating to the Purchase
Documents, against or related to the Released Parties, through the date of this Agreement. The Loan Parties agree to assume the risk of any and all unknown, unanticipated or misunderstood claims which are released hereby. The Loan Parties represent
and warrant that each has no defenses, set-offs, claims, or counterclaims with respect to its liabilities, obligations, and indebtedness to the Purchaser as set forth in the Notes, and to the extent that the Loan Parties have any defenses, set-offs,
claims, or counterclaims, the Loan Parties hereby affirmatively waive any such claim. Each Loan Party acknowledges and agrees that the security interests granted to the Purchaser under the Security Documents have not been terminated or adversely
effected notwithstanding the execution of this Agreement, the prepayment of the Initial Notes and/or any other action taken by any Loan Party and/or the Purchaser prior to or on the date hereof. 
  
 10.32 Joinder. Encore MP hereby joins this Agreement and the other
Purchase Documents as a Loan Party and agrees to take such further actions, use reasonable efforts to obtain such consents and approvals and duly execute and deliver such further agreements, assignments, instructions or documents as the Agent or
Purchaser may request with respect to the purposes, terms and conditions of the Purchase Documents and the consummation of the Transactions, whether before, at or after the performance and/or consummation of the Transactions or the occurrence of a
Default or Event of Default. 
  
 [SIGNATURES APPEAR ON FOLLOWING
PAGE] 
  
 *     *     *

  

 82 

 IN WITNESS WHEREOF, the parties hereto have executed this First Amended and Restated Note and Equity
Purchase Agreement as of the day and year first above written. 
  

	LOAN PARTIES:
	
	 ENCORE MEDICAL CORPORATION

		
	 By:
	 	 /s/    Harry L. Zimmerman
  

	 	 	 Name:  Harry L. Zimmerman

	 	 	 Title:    Executive VP-General Counsel

	
	 ENCORE MEDICAL ASSET CORPORATION

		
	 By:
	 	 /s/    Harry L. Zimmerman
  

	 	 	 Name:  Harry L. Zimmerman

	 	 	 Title:    Executive VP-General Counsel

	
	 ENCORE MEDICAL GP, INC.

		
	 By:
	 	 /s/    Harry L. Zimmerman
  

	 	 	 Name:  Harry L. Zimmerman

	 	 	 Title:    Executive VP-General Counsel

	
	 ENCORE MEDICAL, L.P.

	 By: Encore Medical GP, Inc., its sole General Partner

		
	 By:
	 	 /s/    Harry L. Zimmerman
  

	 	 	 Name:  Harry L. Zimmerman

	 	 	 Title:    Executive VP-General Counsel

	
	 ENCORE MEDICAL PARTNERS, INC.

		
	 By:
	 	 /s/    Harry L. Zimmerman
  

	 	 	 Name:  Harry L. Zimmerman

	 	 	 Title:    Executive VP-General Counsel

	PURCHASER/AGENT:
	
	 CAPITALSOURCE FINANCE LLC

		
	 By:
	 	 /s/    Joseph Turitz
  

	 	 	 Name:  Joseph Turitz

	 	 	 Title:    Associate General Counsel

 EXHIBIT A 
  
 Form of Note 
  
 (see attached) 

 EXHIBIT B 
  

Form of Draw Notice 
  
 DATED AS OF            , 200     
  
 Pursuant to the First Amended and Restated Note and Equity Purchase Agreement
dated as of September             , 2003 (as amended from time to time, the “Agreement”), by and between ENCORE MEDICAL CORPORATION, a Delaware corporation
(the “Parent”), the subsidiaries of Parent listed on the signature page thereto (together with the Parent, collectively, the “Loan Parties”), and CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company (“CapitalSource”), as Agent and Purchaser: 
  
 (1) In accordance with Section 2.3(c) of the Agreement, the Loan Parties hereby irrevocably request from Agent a Draw pursuant to the Agreement for the purposes of
                     in the aggregate principal amount of $            
(increments of $1,000,000) (a “Requested Draw”) to be made on a proposed Draw Date of             , 200    , which day is a Business Day
not less than 15 calendar days after Purchaser’s receipt of this Draw Notice. Such Requested Draw shall be dispersed to              (the “Receiving Loan
Party”) via wire transfer to account             . 
  
 (2) In connection with the Requested Draw, the Receiving Loan Party has provided to Agent, all deliverables, materials and other information required to
be provided to Agent in connection with such Draw pursuant to the terms and provisions of the Agreement, including any applicable Permitted Acquisition Documents. 
  
 (3) Immediately after giving effect to the Requested Draw, the aggregate principal amount of all Draws made during the Term
will equal $            , which amount does not exceed $24,000,000. 
  
 (4) The certifications, representations, calculations and statements herein will be true and correct as of the date hereof and on the Draw Date.

  
 (5) All conditions and provisions of Section 4.2 and,
to the extent the Requested Draw is being made in connection with a Permitted Acquisition, Section 7.2(k) of the Agreement will be fully satisfied as of the Draw Date. 
  
 (6) Capitalized terms which are not defined herein shall have the meaning given them in the Agreement. 
  
 {Signatures appear on the following page.} 

 IN WITNESS WHEREOF, the undersigned have caused this Draw Notice to be executed as of the day first
written above. 
  

	LOAN PARTIES:
	
	 ENCORE MEDICAL CORPORATION

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 	 	 Name:
	 	 Harry L. Zimmerman

	 	 	 Title:
	 	 Executive VP-General Counsel

	
	 ENCORE MEDICAL ASSET CORPORATION

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 	 	 Name:
	 	 Harry L. Zimmerman

	 	 	 Title:
	 	 Executive VP-General Counsel

	
	 ENCORE MEDICAL GP, INC.

		
	 By:
	 	 /s/ Harry L Zimmerman

	 	 	 Name:
	 	 Harry L. Zimmerman

	 	 	 Title:
	 	 Executive VP-General Counsel

	
	 ENCORE MEDICAL, L.P.

	 By: Encore Medical GP, Inc., its sole General Partner

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 	 	 Name:
	 	 Harry L. Zimmerman

	 	 	 Title:
	 	 Executive VP-General Counsel

	
	 ENCORE MEDICAL PARTNERS, INC.

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 	 	 Name:
	 	 Harry L. Zimmerman

	 	 	 Title:
	 	 Executive VP-General Counsel

	PURCHASER/AGENT:
	
	 CAPITALSOURCE FINANCE LLC

		
	 By:
	 	 /s/    Joseph Turitz
  

	 	 	 Name:  Joseph Turitz

	 	 	 Title:    Associate General Counsel

 EXHIBIT C 
  

Warrant 
  
 (see attached) 

 EXHIBIT D 
  
 Form of Initial Draw Notice 
  
 (see attached) 

 ANNEX A 
  
 INFORMATION RELATING TO PURCHASER 
  
 Name and Address of Purchaser 
  
 CAPITALSOURCE FINANCE LLC 
 4445 Willard Avenue, 12th Floor 
 Chevy Chase, MD 20815

 Attention: Corporate Finance Group, Portfolio Manager 
 Telephone: (301) 841-2700 
 FAX: (301) 841-2313 
 E-Mail: jpeterson@capitalsource.com 
  
 All payments to be by wire: 
  
 Bank:
Bank of America, Baltimore, MD 
 ABA #: 052001633 
 Account #: 00393939662 
 Account Name: CapitalSource Funding, LLC-CFG 
 Reference: Encore 

 POST-CLOSING SCHEDULE 
  
 The following conditions required by the terms of this Agreement which will not be completed by the Closing Date.
Performance of the following conditions shall be completed within the time frames set forth below. 
  

	 	1.	 	Within 30 days of the Closing Date, new control agreements, in form and substance satisfactory to the Agent and in favor of the Agent, shall be executed and delivered by each bank
with which any Loan Party maintains a deposit account and the applicable Loan Party. 

  

	 	2.	 	Within 30 days of the Closing Date, a certificate of foreign qualification issued by each of the State of Georgia and the State of California shall be delivered to the Agent by
Encore Medical, L.P. 

  
 The failure by Loan Parties
to provide any of the foregoing within the time frames specified shall constitute an Event of Default under this Agreement.Amended and Restated Credit Facility

 Exhibit 4.8 
  
 Amended and Restated Credit Agreement, by and among Bank of America, N.A. and Encore Medical Corporation, dated September 26, 2003

 AMENDED AND RESTATED CREDIT AGREEMENT 
  
 Dated as of September 26, 2003 
  
  
 among 
  
 THE FINANCIAL INSTITUTIONS NAMED HEREIN, 
 as the Lenders, 
  
 BANK OF
AMERICA, NATIONAL ASSOCIATION, 
 as the Agent, 
  
 ENCORE MEDICAL CORPORATION 
 and 
 ITS SUBSIDIARIES PARTY HERETO, 
 as the
Borrowers 
  
 BANK OF AMERICA, NATIONAL ASSOCIATION 
 Lead Arranger and Syndication Agent 

 TABLE OF CONTENTS 
  

	 ARTICLE 1
	 	 REVOLVING LOANS AND LETTERS OF CREDIT
	  	1
	         Section 1.1
	 	 Total Facility
	  	1
	         Section 1.2
	 	 Revolving Loans.
	  	2
	         Section 1.3
	 	 Reserved.
	  	5
	         Section 1.4
	 	 Letters of Credit.
	  	5
	         Section 1.5
	 	 Bank Products
	  	10
	         Section 1.6
	 	 Existing Letters of Credit
	  	10
			
	 ARTICLE 2
	 	 INTEREST AND FEES
	  	10
	         Section 2.1
	 	 Interest.
	  	10
	         Section 2.2
	 	 Continuation and Conversion Elections.
	  	11
	         Section 2.3
	 	 Maximum Interest Rate
	  	12
	         Section 2.4
	 	 Unused Line Fee
	  	14
	         Section 2.5
	 	 Letter of Credit Fee
	  	14
	         Section 2.6
	 	 Other Fees
	  	14
			
	 ARTICLE 3
	 	 PAYMENTS AND PREPAYMENTS
	  	15
	         Section 3.1
	 	 Revolving Loans
	  	15
	         Section 3.2
	 	 Termination of Total Facility
	  	15
	         Section 3.3
	 	 Reserved.
	  	15
	         Section 3.4
	 	 Prepayments.
	  	15
	         Section 3.5
	 	 LIBOR Rate Revolving Loan Prepayments
	  	16
	         Section 3.6
	 	 Payments by the Borrowers.
	  	16
	         Section 3.7
	 	 Payments as Revolving Loans
	  	16
	         Section 3.8
	 	 Apportionment, Application, and Reversal of Payments
	  	16
	         Section 3.9
	 	 Indemnity for Returned Payments
	  	17
	         Section 3.10
	 	 The Agent’s and the Lenders’ Books and Records; Monthly Statements
	  	17
			
	 ARTICLE 4
	 	 TAXES, YIELD PROTECTION, AND ILLEGALITY
	  	18
	         Section 4.1
	 	 Taxes.
	  	18
	         Section 4.2
	 	 Illegality.
	  	19
	         Section 4.3
	 	 Increased Costs and Reduction of Return.
	  	20
	         Section 4.4
	 	 Funding Losses
	  	20
	         Section 4.5
	 	 Inability to Determine Rates
	  	21
	         Section 4.6
	 	 Certificates of the Agent
	  	21
	         Section 4.7
	 	 Survival
	  	21
			
	 ARTICLE 5
	 	 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
	  	21
	         Section 5.1
	 	 Books and Records
	  	21
	         Section 5.2
	 	 Financial Information
	  	21
	         Section 5.3
	 	 Notices to the Agent and the Lenders
	  	25

  

 i 

	 ARTICLE 6
	  	 GENERAL WARRANTIES AND REPRESENTATIONS
	  	27
	         Section 6.1
	  	 Authorization, Validity, and Enforceability of this Agreement and the other Loan Documents; No Conflicts
	  	28
	         Section 6.2
	  	 Validity and Priority of Security Interest
	  	28
	         Section 6.3
	  	 Reserved.
	  	28
	         Section 6.4
	  	 Corporate Name; Prior Transactions
	  	28
	         Section 6.5
	  	 Capitalization; Subsidiaries
	  	29
	         Section 6.6
	  	 Financial Statements and Projections.
	  	29
	         Section 6.7
	  	 Solvency
	  	29
	         Section 6.8
	  	 Debt
	  	29
	         Section 6.9
	  	 Distributions
	  	30
	         Section 6.10
	  	 Real Estate; Leases
	  	30
	         Section 6.11
	  	 Proprietary Rights
	  	30
	         Section 6.12
	  	 Trade Names
	  	30
	         Section 6.13
	  	 Litigation
	  	30
	         Section 6.14
	  	 Labor Matters
	  	30
	         Section 6.15
	  	 Environmental Laws.
	  	31
	         Section 6.16
	  	 No Violation of Law
	  	32
	         Section 6.17
	  	 No Default
	  	32
	         Section 6.18
	  	 ERISA Compliance.
	  	32
	         Section 6.19
	  	 Taxes
	  	33
	         Section 6.20
	  	 Regulated Entities
	  	33
	         Section 6.21
	  	 Use of Proceeds; Margin Regulations
	  	33
	         Section 6.22
	  	 No Material Adverse Change
	  	33
	         Section 6.23
	  	 Full Disclosure
	  	33
	         Section 6.24
	  	 Material Agreements
	  	33
	         Section 6.25
	  	 Bank Accounts
	  	34
	         Section 6.26
	  	 Governmental Authorization
	  	34
	         Section 6.27
	  	 Investment Property.
	  	34
	         Section 6.28
	  	 Common Enterprise
	  	34
	         Section 6.29
	  	 Subordinated Debt Documents
	  	35
	         Section 6.30
	  	 Side Agreements
	  	35
	         Section 6.31
	  	 Affiliate Transactions
	  	35
	         Section 6.32
	  	 Food and Drug
	  	35
	         Section 6.33
	  	 Tax Shelter Regulations
	  	36
			
	 ARTICLE 7
	  	 AFFIRMATIVE AND NEGATIVE COVENANTS
	  	36
	         Section 7.1
	  	 Taxes and Other Obligations
	  	36
	         Section 7.2
	  	 Legal Existence and Good Standing
	  	37
	         Section 7.3
	  	 Compliance with Law and Agreements; Maintenance of Licenses
	  	37
	         Section 7.4
	  	 Maintenance of Property; Inspection of Property.
	  	37
	         Section 7.5
	  	 Insurance.
	  	38
	         Section 7.6
	  	 Insurance and Condemnation Proceeds
	  	38
	         Section 7.7
	  	 Environmental Laws.
	  	39
	         Section 7.8
	  	 Compliance with ERISA
	  	39
	         Section 7.9
	  	 Mergers, Consolidations, or Sales
	  	39
	         Section 7.10
	  	 Distributions; Capital Change; Restricted Investments
	  	40

  

 ii 

	         Section 7.11
	  	 Transactions Resulting in a Material Adverse Effect
	  	40
	         Section 7.12
	  	 Guaranties
	  	40
	         Section 7.13
	  	 Debt
	  	40
	         Section 7.14
	  	 Prepayment
	  	41
	         Section 7.15
	  	 Transactions with Affiliates
	  	41
	         Section 7.16
	  	 Investment Banking and Finder’s Fees
	  	41
	         Section 7.17
	  	 Business Conducted
	  	41
	         Section 7.18
	  	 Liens
	  	41
	         Section 7.19
	  	 Sale and Leaseback Transactions
	  	42
	         Section 7.20
	  	 New Subsidiaries
	  	42
	         Section 7.21
	  	 Fiscal Year
	  	42
	         Section 7.22
	  	 Capital Expenditures
	  	42
	         Section 7.23
	  	 Minimum EBITDA
	  	42
	         Section 7.24
	  	 Fixed Charge Coverage Ratio
	  	43
	         Section 7.25
	  	 Total Debt to EBITDA Ratio
	  	43
	         Section 7.26
	  	 Reserved.
	  	43
	         Section 7.27
	  	 Leases
	  	43
	         Section 7.28
	  	 Use of Proceeds
	  	43
	         Section 7.29
	  	 Lenders as Depository
	  	44
	         Section 7.30
	  	 Guaranties
	  	44
	         Section 7.31
	  	 Additional Collateral; Further Assurances.
	  	44
			
	 ARTICLE 8
	  	 CONDITIONS OF LENDING
	  	45
	         Section 8.1
	  	 Conditions Precedent to Making of Revolving Loans on the Closing Date
	  	45
	         Section 8.2
	  	 Conditions Precedent to Each Revolving Loan
	  	48
			
	 ARTICLE 9
	  	 DEFAULT; REMEDIES
	  	49
	         Section 9.1
	  	 Events of Default
	  	49
	         Section 9.2
	  	 Remedies.
	  	52
			
	 ARTICLE 10
	  	 TERM AND TERMINATION
	  	54
	         Section 10.1
	  	 Term and Termination
	  	54
			
	 ARTICLE 11
	  	 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
	  	54
	         Section 11.1
	  	 Amendments and Waivers.
	  	54
	         Section 11.2
	  	 Assignments; Participations.
	  	55
			
	 ARTICLE 12
	  	 THE ADMINISTRATIVE AGENT
	  	58
	         Section 12.1
	  	 Appointment and Authorization
	  	58
	         Section 12.2
	  	 Delegation of Duties
	  	58
	         Section 12.3
	  	 Liability of the Agent
	  	58
	         Section 12.4
	  	 Reliance by the Agent
	  	59
	         Section 12.5
	  	 Notice of Default
	  	59
	         Section 12.6
	  	 Credit Decision
	  	59
	         Section 12.7
	  	 Indemnification
	  	60

  

 iii 

	         Section 12.8
	 	 The Agent in Individual Capacity
	  	60
	         Section 12.9
	 	 Successor Agent
	  	60
	         Section 12.10
	 	 Withholding Tax.
	  	61
	         Section 12.11
	 	 Collateral Matters.
	  	62
	         Section 12.12
	 	 Restrictions on Actions by the Lenders; Sharing of Payments.
	  	63
	         Section 12.13
	 	 Agency for Perfection
	  	64
	         Section 12.14
	 	 Payments by the Agent to the Lenders
	  	64
	         Section 12.15
	 	 Settlement.
	  	64
	         Section 12.16
	 	 Letters of Credit; Intra-Lender Issues.
	  	68
	         Section 12.17
	 	 Concerning the Collateral and the Related Loan Documents
	  	70
	         Section 12.18
	 	 Field Audit and Examination Reports; Disclaimer by the Lenders
	  	70
	         Section 12.19
	 	 Relation Among the Lenders
	  	71
			
	 ARTICLE 13
	  	 MISCELLANEOUS
	  	71
	         Section 13.1
	 	 No Waivers; Cumulative Remedies
	  	71
	         Section 13.2
	 	 Severability
	  	71
	         Section 13.3
	 	 Governing Law; Choice of Forum; Service of Process.
	  	71
	         Section 13.4
	 	 Waiver of Jury Trial
	  	72
	         Section 13.5
	 	 Survival of Representations and Warranties
	  	73
	         Section 13.6
	 	 Other Security and Guaranties
	  	73
	         Section 13.7
	 	 Fees and Expenses
	  	73
	         Section 13.8
	 	 Notices
	  	74
	         Section 13.9
	 	 Waiver of Notices
	  	74
	         Section 13.10
	 	 Binding Effect
	  	75
	         Section 13.11
	 	 Indemnity of the Agent and the Lenders by the Borrowers.
	  	76
	         Section 13.12
	 	 Limitation of Liability
	  	77
	         Section 13.13
	 	 Final Agreement
	  	77
	         Section 13.14
	 	 Counterparts
	  	77
	         Section 13.15
	 	 Captions
	  	78
	         Section 13.16
	 	 Right of Setoff
	  	78
	         Section 13.17
	 	 Confidentiality.
	  	78
	         Section 13.18
	 	 Conflicts with other Loan Documents
	  	79
	         Section 13.19
	 	 Joint and Several Liability
	  	79
	         Section 13.20
	 	 Contribution and Indemnification Among the Borrowers
	  	80
	         Section 13.21
	 	 Agency of the Parent for each Obligated Party
	  	81
	         Section 13.22
	 	 Additional Borrowers and Guarantors
	  	81
	         Section 13.23
	 	 Express Waivers By the Borrowers In Respect of Cross Guaranties and Cross Collateralization
	  	81
	         Section 13.24
	 	 Amendment and Restatement
	  	82

  

 iv 

 EXHIBITS: 
  

	 Exhibit A
	 	-	  	 Form of Revolving Loan Note

	 Exhibit B
	 	-	  	 Form of Borrowing Base Certificate

	 Exhibit C
	 	-	  	 Form of Compliance Certificate

	 Exhibit D
	 	-	  	 Form of Notice of Borrowing

	 Exhibit E
	 	-	  	 Form of Notice of Conversion/Continuation

	 Exhibit F
	 	-	  	 Form of Assignment and Acceptance

	 Exhibit G
	 	-	  	 Form of Autoborrow Agreement

			
	 SCHEDULES:
	 	 	  	 
			
	 Schedule 6.4
	 	-	  	 Prior Names

	 Schedule 6.5
	 	-	  	 Capitalization; Subsidiaries

	 Schedule 6.8
	 	-	  	 Debt

	 Schedule 6.10
	 	-	  	 Real Estate; Leases

	 Schedule 6.11
	 	-	  	 Proprietary Rights

	 Schedule 6.12
	 	-	  	 Trade Names

	 Schedule 6.24
	 	-	  	 Material Agreements

	 Schedule 6.25
	 	-	  	 Bank Accounts

	 Schedule 6.27
	 	-	  	 Investment Property

	 Schedule 6.31
	 	-	  	 Affiliate Transactions

	 Schedule 6.32
	 	-	  	 Food and Drug

	 Schedule A-1
	 	-	  	 Commitments

	 Schedule A-2
	 	-	  	 Permitted Liens

	 Schedule A-3
	 	-	  	 Stock Option Programs

	 Schedule A-4
	 	-	  	 EBITDA

  
  

 v 

 AMENDED AND RESTATED CREDIT AGREEMENT 
  
 This Amended and Restated Credit Agreement, dated as of September 26, 2003 (“Agreement”), among the
financial institutions from time to time parties hereto (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a “Lender” and collectively as the
“Lenders”), Bank of America, National Association, with an office at 901 Main Street, 67th Floor, Dallas, Texas 75202, as administrative agent for the Lenders (in its capacity as administrative agent, the “Agent”),
and Encore Medical Corporation, a Delaware corporation, and each of its Subsidiaries party hereto. 
  
 RECITALS: 
  
 A. Capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in Annex A which is attached hereto and incorporated herein. The rules of construction contained in Annex A
shall govern the interpretation of this Agreement, and all Annexes, Exhibits, and Schedules attached hereto are incorporated herein by reference. 
  
 B. The Borrowers (excluding Encore Medical Partners), the Lenders, and the Agent are parties to that certain Credit Agreement dated as of February 8, 2002
(as amended, the “Original Credit Agreement”). 
  
 C. The Borrowers have requested that the Lenders and the Agent amend and restate the Original Credit Agreement in its entirety and make available to the Borrowers a revolving line of credit for loans and letters of credit in the aggregate
principal amount of up to $25,000,000, which extensions of credit the Borrowers will use for the purposes permitted by Section 7.28. 
  
 D. The Lenders have agreed to amend and restate the Original Credit agreement and to make available to the Borrowers a revolving credit and letter of
credit facility upon the terms and conditions set forth in this Agreement. 
  
 NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the Lenders, the Agent, and
the Borrowers hereby agree as follows. 
  
 ARTICLE 1 
  
 REVOLVING LOANS AND LETTERS OF CREDIT 
  
 Section 1.1 Total Facility. Subject to all of the terms and conditions
of this Agreement, the Lenders agree to make available a total credit facility of up to $25,000,000 (the “Total Facility”) for use by any one or more of the Borrowers from time to time during the term of this Agreement. The Total
Facility shall be composed of a revolving line of credit consisting of Revolving Loans and Letters of Credit as described in Section 1.2 and Section 1.4. 
  

 Page 1 

 Section 1.2 Revolving Loans. 
  
 (a) Amounts. Subject to the satisfaction of the conditions precedent set forth in Article 8,
each Lender severally, but not jointly, agrees, upon a Borrower’s request from time to time on any Business Day during the period from the Closing Date to the Termination Date, to make revolving loans (the “Revolving Loans”) to
the Borrowers in amounts not to exceed such Lender’s Pro Rata Share of the Availability, except for Non-Ratable Loans and Autoborrow Loans. The Lenders, however, in their unanimous discretion, may elect to make Revolving Loans or issue or
arrange to have issued Letters of Credit in excess of the Availability or the Borrowing Base on one or more occasions, but if they do so, neither the Agent nor the Lenders shall be deemed thereby to have changed the limits of the Availability or the
Borrowing Base or to be obligated to exceed such limits on any other occasion. If the Aggregate Revolver Outstandings would exceed the Borrowing Base after giving effect to any Borrowing, the Lenders may refuse to make or may otherwise restrict the
making of Revolving Loans and the issuance of Letters of Credit as the Lenders determine until such excess has been eliminated. 
  
 (b) Revolving Loan Notes. The Borrowers shall execute and deliver to each Lender a promissory note to evidence the Revolving Loans
of that Lender (each a “Revolving Loan Note” and, collectively, the “Revolving Loan Notes”). Each Revolving Loan Note shall be in the principal amount of the applicable Lender’s Pro Rata Share of the
Commitments, dated as of the Closing Date or the date of any assignment of a portion of any Lender’s Revolving Loans, and substantially in the form of Exhibit A. Each Revolving Loan Note shall represent the obligation of the Borrowers to
pay the amount of the applicable Lender’s Pro Rata Share of the Commitments, or, if less, such Lender’s Pro Rata Share of the aggregate unpaid principal amount of all Revolving Loans to the Borrowers together with interest thereon as
prescribed in this Agreement. The entire unpaid balance of the Revolving Loans and all other non-contingent Obligations shall be immediately due and payable in full in immediately available funds on the Termination Date. 
  
 (c) Procedure for Borrowing. 
  
 (i) Each Borrowing of Revolving Loans, excluding Autoborrow
Loans, shall be made upon a Borrower’s irrevocable written notice delivered to the Agent in the form of a notice of borrowing in the form attached hereto as Exhibit D (a “Notice of Borrowing”), which must be received by
the Agent prior to 11:00 a.m. (Dallas, Texas time) (y) three Business Days prior to the requested Funding Date, in the case of LIBOR Rate Revolving Loans and (z) on the requested Funding Date, in the case of Base Rate Revolving Loans, specifying:

  
 (A) the amount of the Borrowing, which in
the case of LIBOR Rate Revolving Loans shall be in an amount that is not less than $1,000,000 or an integral multiple of $100,000 in excess thereof or in the case of Base Rate Revolving Loans shall be in an amount that is not less than $100,000 or
an integral multiple of $10,000 in excess thereof; 
  

 Page 2 

 (B) the requested Funding Date, which shall be a Business Day; 
  
 (C) whether the Revolving Loans requested are to be Base
Rate Revolving Loans or LIBOR Rate Revolving Loans; provided that if such Borrower fails to specify whether any Revolving Loans are to be Base Rate Revolving Loans or LIBOR Rate Revolving Loans, such request shall be deemed a request for Base
Rate Revolving Loans; 
  
 (D) the duration of
the Interest Period if the requested Revolving Loans are to be LIBOR Rate Revolving Loans; provided that if such Borrower fails to select the duration of the Interest Period with respect to any requested LIBOR Rate Revolving Loans, such
Borrower shall be deemed to have requested such Revolving Loans be made as LIBOR Rate Revolving Loans with an Interest Period of one month in duration; and 
  
 (E) whether the proceeds of such Borrowing are to be deposited to the Designated Account or sent by wire transfer to a third party, in
which case such Borrower shall provide the Agent with wire transfer instructions satisfactory to the Agent; 
  
 provided, however, that with respect to the Borrowing to be made on the Closing Date, such Borrowing will consist of Base Rate Revolving
Loans only. 
  
 (ii) With respect to any request
for Base Rate Revolving Loans, excluding Autoborrow Loans, in lieu of delivering a Notice of Borrowing, a Borrower may give the Agent telephonic notice of such request for advances to the Designated Account not later than the required time specified
in clause (i) preceding. The Agent at all times shall be entitled to rely on such telephonic notice in making any such Revolving Loans, regardless of whether any written confirmation is received by the Agent. 
  
 (iii) The Borrowers shall have no right to request a LIBOR
Rate Revolving Loan while a Default or an Event of Default exists. 
  
 (iv) Autoborrow Loans shall be made pursuant to the agreement attached hereto as Exhibit G (the “Autoborrow Agreement”) and shall only be available as Base Rate Revolving Loans. 
  
 (d) Disbursement; Reliance Upon Authority. The
Borrowers shall deliver to the Agent, prior to the Closing Date, a notice setting forth the deposit account of the Borrowers (the “Designated Account”) to which the Agent is authorized by the Borrowers to transfer the proceeds of
the Revolving Loans requested hereunder. The Borrowers may designate a replacement Designated Account from time to time by written notice to the Agent; provided that Autoborrow Loans shall only be made as specified in the Autoborrow Agreement
and may be refused at any time in the sole discretion of the Bank. Any designation by the Borrowers of the Designated Account 

  

 Page 3 

 
must be reasonably acceptable to the Agent. The Agent is entitled to rely conclusively on any individual’s request for Revolving Loans on behalf of a
Borrower, so long as the proceeds thereof are to be transferred to the Designated Account or according to such other instructions as may be provided to the Agent pursuant to Section 1.2(c)(i)(E). The Agent shall have no duty to verify the
identity of any individual representing himself or herself as a person authorized by any Borrower to make such requests on its behalf. 
  
 (e) No Liability. The Agent shall not incur any liability to the Borrowers as a result of acting upon any notice referred to in
Section 1.2(c) and Section 1.2(d), which the Agent reasonably believes to have been given by an officer or other person duly authorized by a Borrower to request Revolving Loans on its behalf or for otherwise acting under this
Section 1.2. The crediting of Revolving Loans to the Designated Account, or wire transfer to such Person as a Borrower shall direct, shall conclusively establish the obligation of the Borrowers to repay such Revolving Loans as provided
herein. 
  
 (f) Notice Irrevocable. Any
Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to Section 1.2(c) shall be irrevocable and the Borrowers shall be bound to borrow the funds requested therein in accordance therewith. 
  
 (g) The Agent’s Election. Subject to the
requirements of Section 1.2(i), promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof) other than a request for LIBOR Rate Revolving Loans, the Agent shall elect in its discretion to have the terms of
Section 1.2(h) or Section 1.2(i) apply to such requested Borrowing. If the Bank declines in its sole discretion to make a Non-Ratable Loan pursuant to Section 1.2(i) the terms of Section 1.2(h) shall apply to the
requested Borrowing. 
  
 (h) Making of
Revolving Loans. If the Agent elects to have the terms of this Section 1.2(h) apply to a requested Borrowing or if the requested Borrowing is for a LIBOR Rate Revolving Loan, then promptly after receipt of a Notice of Borrowing or
telephonic notice in lieu thereof, the Agent shall notify the Lenders by telecopy or telephone of the requested Borrowing. Each Lender shall transfer its Pro Rata Share of the requested Borrowing to the Agent in immediately available funds, to the
account from time to time designated by the Agent, not later than 12:00 noon (Dallas, Texas time) on the applicable Funding Date. After the Agent’s receipt of all proceeds of such requested Borrowing, the Agent shall make the proceeds of such
requested Borrowing available to the applicable Borrower on the applicable Funding Date by transferring same day funds to the Designated Account; provided, however, except as may otherwise be provided by this Agreement, the amount of
Revolving Loans so made on any date shall not exceed the Availability on such date. 
  
 (i) Making of Non-Ratable Loans. Each Revolving Loan made solely by the Bank pursuant to this Section 1.2(i) is referred to
hereinafter as a “Non-Ratable Loan”, and such Revolving Loans are collectively referred to as the “Non-Ratable Loans.” Each Non-Ratable Loan shall be subject to all the terms and conditions applicable to other
Revolving Loans except that all payments thereon shall be payable to the Bank solely for 

  

 Page 4 

 
its own account. The aggregate amount of Non-Ratable Loans outstanding at any time shall not exceed $5,000,000. Subject to the second proviso of Section
11.1(a), the Agent shall not request the Bank to make any Non-Ratable Loan if (A) the Agent has received written notice from any Lender that one or more of the applicable conditions precedent set forth in Article 8 will not be satisfied
on the requested Funding Date for the applicable Borrowing or (B) the requested Borrowing would exceed the Availability on the applicable Funding Date. The Non-Ratable Loans shall be secured by the Agent’s Liens in and to the Collateral and
shall constitute Base Rate Revolving Loans and Obligations hereunder. 
  
 (j) Making of Autoborrow Loans. Each Autoborrow Loan shall be subject to all the terms and conditions applicable to other Revolving Loans except that all payments thereon shall be payable to the Bank solely for
its own account. The aggregate amount of Autoborrow Loans outstanding at any time shall not exceed $5,000,000. Subject to the second proviso of Section 11.1(a), the Agent shall request the Bank to discontinue making Autoborrow Loans, and the
Bank shall discontinue making Autoborrow Loans, if (A) the Agent has received written notice from any Lender that one or more of the applicable conditions precedent set forth in Article 8 will not be satisfied on the requested Funding Date
for the applicable Borrowing or (B) the requested Borrowing would exceed the Availability on the applicable Funding Date. The Autoborrow Loans shall be secured by the Agent’s Liens in and to the Collateral and shall constitute Base Rate
Revolving Loans and Obligations hereunder. 
  
 Section 1.3
Reserved. 
  
 Section 1.4 Letters of Credit.

  
 (a) Agreement to Issue or Cause to
Issue. Subject to the terms and conditions of this Agreement, the Agent agrees to cause the Letter of Credit Issuer to issue for the account of any of the Borrowers (whether one or more) one or more commercial/documentary and standby letters of
credit (each a “Letter of Credit” and collectively, the “Letters of Credit”) from time to time during the term of this Agreement. 
  
 (b) Amounts; Outside Expiration Date. The Agent shall not have any obligation to issue or cause to be
issued any Letter of Credit at any time if: (i) the maximum face amount of the requested Letter of Credit is greater than the Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn amount of the requested Letter of Credit and all
commissions, fees, and charges due from such Borrower in connection with the opening thereof would exceed the Availability at such time; or (iii) such Letter of Credit has an expiration date later than 30 days prior to the Stated Termination Date or
more than twelve calendar months from the date of issuance for standby letters of credit and six calendar months from the date of issuance for commercial/documentary letters of credit, provided that any Letter of Credit issued hereunder may
include an “evergreen” or automatic renewal provision of the type referenced in Section 1.4(d)(iii) without contravening the requirement contained in this Section 1.4(b)(iii). 
  

 Page 5 

 (c) Other Conditions. In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Article 8, the obligation of the Agent to cause to be issued any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner reasonably satisfactory to the
Agent: 
  
 (i) the Borrowers shall have delivered
to the Letter of Credit Issuer, at such times and in such manner as the Letter of Credit Issuer may prescribe, an application in form and substance satisfactory to the Letter of Credit Issuer and reasonably satisfactory to the Agent for the issuance
of the Letter of Credit and such other documents as may be required pursuant to the terms thereof, and the form, terms, and purpose of the proposed Letter of Credit shall be satisfactory to the Agent and the Letter of Credit Issuer (provided
that in the event any term of such application or any other document is inconsistent with the terms of this Agreement and the Letter of Credit Issuer is either the same Person as the Agent or any Lender then the terms of this Agreement shall be
controlling); and 
  
 (ii) as of the date of
issuance, no order of any court, arbitrator, or Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and
no law, rule, or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of such proposed Letters of Credit. 
  

(d) Issuance of Letters of Credit. 
  
 (i) Request for Issuance. Any Borrower that wishes to cause the issuance of a Letter of Credit must notify the Agent of such
request for issuance at least three Business Days prior to the proposed issuance date. Such notice shall be irrevocable and must specify the original face amount of the Letter of Credit requested, the Business Day of issuance of such requested
Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the Business Day on which the requested Letter of Credit is to expire, the purpose for which such Letter of Credit is to be issued, and the beneficiary of
the requested Letter of Credit. The applicable Borrower shall attach to such notice the proposed form of the Letter of Credit. 
  
 (ii) Responsibilities of the Agent; Issuance. The Agent shall determine, as of the Business Day immediately preceding the requested
issuance date of the Letter of Credit set forth in the notice from a Borrower pursuant to Section 1.4(d)(i), (A) the amount of the Unused Letter of Credit Subfacility and (B) the Availability as of such date. If the face amount of the
requested Letter of Credit is not greater than the Unused Letter of Credit Subfacility and the amount of such requested Letter of Credit and all commissions, fees, and charges due from the Borrower in connection with the opening thereof does not
exceed the 

  

 Page 6 

 
Availability, the Agent shall cause the Letter of Credit Issuer to issue the requested Letter of Credit on the requested issuance date so long as the other
conditions hereof are met. 
  
 (iii)
Extensions and Amendments. The Agent shall not be obligated to cause the Letter of Credit Issuer to extend or amend any Letter of Credit issued pursuant hereto unless the requirements of this Section 1.4 are met as though a new Letter
of Credit were being requested and issued. With respect to any Letter of Credit which contains any “evergreen” or automatic renewal provision, each Lender shall be deemed to have consented to any such extension or renewal unless such
Lender shall have provided to the Agent, written notice that it declines to consent to any such extension or renewal at least 30 days prior to the date on which the Letter of Credit Issuer is entitled to decline to extend or renew the Letter of
Credit, provided that, notwithstanding the foregoing, if all of the requirements of this Section 1.4 are met and no Default or Event of Default has occurred and is continuing, no Lender may decline to consent to any such extension or
renewal. 
  
 (e) Payments Pursuant to Letters
of Credit. 
  
 (i) Payment of Letter of
Credit Obligations. The Borrowers agree to reimburse the Letter of Credit Issuer immediately for any draw under any Letter of Credit and to pay the Letter of Credit Issuer the amount of all other charges and fees payable to the Letter of Credit
Issuer under or in connection with any Letter of Credit immediately when due, irrespective of any claim, setoff, defense, or other right which any Borrower may have at any time against the Letter of Credit Issuer or any other Person. Each drawing
under any Letter of Credit shall constitute a request by the Borrower for whose account such Letter of Credit was issued for a Borrowing of a Base Rate Revolving Loan in the amount of such drawing. The Funding Date with respect to such Borrowing
shall be the date of such drawing. 
  
 (ii)
Existing Letters of Credit. All amounts payable by any Borrower in respect of any Existing Letter of Credit are hereby reaffirmed and continued in full force and effect. All obligations of any Borrower for payment in respect of any
obligations in respect of Existing Letters of Credit, are hereby renewed, continued, and reaffirmed under the terms of this Agreement and the other Loan Documents. 
  
 (f) Indemnification; Exoneration; Power of Attorney. 
  
 (i) Indemnification. In addition to amounts payable
as elsewhere provided in this Section 1.4, each Borrower agrees to protect, indemnify, pay, and save the Lenders, the Agent, and the Letter of Credit Issuer harmless from and against any and all claims, demands, liabilities, damages, losses,
costs, charges, and expenses (including reasonable attorneys’ fees) which any Lender, the Agent, or the Letter of Credit Issuer may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit. The
Borrowers’ obligations under this Section 1.4(f) shall survive payment of all other Obligations. 
  

 Page 7 

 (ii) Assumption of Risk by the Borrowers. As among the Borrowers, the Lenders, the
Agent, and the Letter of Credit Issuer, the Borrowers assume all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the
foregoing, the Lenders, the Agent, and the Letter of Credit Issuer shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness, or legal effect of any document submitted by any Person in connection with the application
for and issuance of and presentation of drafts with respect to any of the Letters of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent, or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign any Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (C) the failure
of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the
proceeds thereof; (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any consequences arising from causes beyond the control of the Lenders or the Agent, including any
act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority; or (I) the Letter of Credit Issuer’s honor of a draw for which the draw or any certificate fails to
comply in any respect with the terms of the Letter of Credit, provided that the foregoing shall not absolve the Letter of Credit Issuer for any matter described in this clause (I) caused by the Letter of Credit Issuer’s gross
negligence or intentional misconduct. None of the foregoing shall affect, impair, or prevent the vesting of any rights or powers of the Agent, any Lender, or the Letter of Credit Issuer under this Section 1.4(f). 
  
 (iii) Exoneration. Without limiting the foregoing, no
action or omission whatsoever by the Agent or any Lender (excluding any Lender in its capacity as the Letter of Credit Issuer) under or in connection with any of the Letters of Credit or any related matters shall result in any liability of the Agent
or any Lender to any Borrower, or relieve such Borrower of any of its obligations hereunder to any such Person. 
  
 (iv) Rights Against Letter of Credit Issuer. Nothing contained in this Agreement is intended to limit any Borrower’s rights,
if any, with respect to the Letter of Credit Issuer which arise as a result of the letter of credit application and related documents executed by and between such Borrower and the Letter of Credit Issuer. 
  

 Page 8 

 (v) Account Party. Each Borrower hereby authorizes and directs the Letter of
Credit Issuer to name any Borrower as the “Account Party” in any Letter of Credit and to deliver to the Agent all instruments, documents, and other writings and property received by the Letter of Credit Issuer pursuant to each such Letter
of Credit, and to accept and rely upon the Agent’s instructions and agreements with respect to all matters arising in connection with each such Letter of Credit or the application therefor. 
  
 (vi) Power of Attorney. In connection with all
Inventory financed by any Letter of Credit, each Borrower hereby appoints the Agent, or the Agent’s designee, as its attorney, with full power and authority: (A) to sign and/or endorse such Borrower’s name upon any warehouse or other
receipts; (B) to sign such Borrower’s name on bills of lading and other negotiable and non-negotiable documents; (C) to clear Inventory through customs in the Agent’s or such Borrower’s name, and to sign and deliver to customs
officials powers of attorney in such Borrower’s name for such purpose; (D) to complete in such Borrower’s or the Agent’s name, any order, sale, or transaction, obtain the necessary documents in connection therewith, and collect the
proceeds thereof; and (E) to do such other acts and things as are necessary in order to enable the Agent to obtain possession or control of such Inventory and to obtain payment of the Obligations. Neither the Agent nor its designee, as such
Borrower’s attorney, will be liable for any acts or omissions, nor for any error of judgment or mistakes of fact or law other than for gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until all
Obligations have been paid and satisfied. 
  
 (vii) Control of Inventory. In connection with all Inventory financed by Letters of Credit, the Borrowers will, at the Agent’s request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses, or others
receiving or holding cash, checks, Inventory, documents, or instruments in which the Agent holds a security interest to deliver them to the Agent and/or subject to the Agent’s order, and if they shall come into any Borrower’s possession,
to deliver them, upon request, to the Agent in their original form. The Borrowers shall also, at the Agent’s request, designate the Agent as the consignee on all bills of lading and other negotiable and non-negotiable documents. 
  
 (g) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 1.4(b) and Section 10.1, any Letter of Credit is outstanding upon the termination of this Agreement, then upon such termination the Borrowers shall deposit with the Agent, for the benefit of
the Agent and the Lenders, with respect to each such Letter of Credit then outstanding, as the Agent in its discretion shall specify, either (i) a standby letter of credit (a “Supporting Letter of Credit”), in form and substance
satisfactory to the Agent, issued by an issuer satisfactory to the Agent in an amount equal to the greatest amount for which such Letter of Credit may be drawn plus any fees and expenses associated with such Letter of Credit, under which
Supporting Letter of Credit the Agent is entitled to draw amounts necessary to reimburse the Agent and the Lenders for payments to be made by the Agent and the Lenders under such Letter of Credit and any fees and expenses associated with such Letter
of Credit or (ii) cash in an amount 

  

 Page 9 

 
necessary to reimburse the Agent and the Lenders for payments to be made by the Agent and the Lenders under such Letter of Credit and any fees and expenses
associated with such Letter of Credit. Such Supporting Letter of Credit or deposit of cash shall be held by the Agent, for the benefit of the Agent and the Lenders, as security for, and to provide for the payment of, the aggregate undrawn amount of
such Letters of Credit remaining outstanding. 
  
 Section 1.5
Bank Products. Any Borrower may request and the Agent may, in its sole and absolute discretion, arrange for any Borrower to obtain Bank Products from the Bank or the Bank’s Affiliates although no Borrower is required to do so. To the
extent Bank Products are provided by an Affiliate of the Bank, the Borrowers agree to indemnify and hold the Agent, the Bank, and the Lenders harmless from any and all costs and obligations now or hereafter incurred by the Agent, the Bank, or any of
the Lenders which arise from any indemnity given by the Agent to its Affiliates related to such Bank Products; provided, however, nothing contained herein is intended to limit any Borrower’s rights, with respect to the Bank or its
Affiliates, if any, which arise as a result of the execution of documents by and between such Borrower and the Bank or its Affiliates which relate to Bank Products. The agreement contained in this Section shall survive termination of this Agreement.
Each Borrower acknowledges and agrees that the obtaining of Bank Products from the Bank or the Bank’s Affiliates (a) is in the sole and absolute discretion of the Bank or the Bank’s Affiliates and (b) is subject to all rules and
regulations of the Bank or the Bank’s Affiliates. 
  
 Section
1.6 Existing Letters of Credit. On and after the Closing Date, the Existing Letters of Credit, if any, and related payment obligations (a) shall be deemed to have been issued under, and the payment obligations in respect thereof shall be
governed by and have the benefits of, this Agreement and the other Loan Documents, provided that in the event any provision of any agreement between such Borrower and the Bank is inconsistent with this Agreement, the terms of this Agreement
shall control and (b) shall be deemed included as Letters of Credit and payment obligations under the terms of this Agreement. 
  
 ARTICLE 2 
  
 INTEREST AND FEES 
  
 Section 2.1 Interest. 
  
 (a)
Interest Rates. Subject to Section 2.3, all outstanding Obligations shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on accrued interest thereon not paid when due) from the date
made until paid in full in cash at a rate determined by reference to the Base Rate or the LIBOR Rate, as applicable, plus the Applicable Margin as set forth below, but not to exceed the Maximum Rate. Any of the Revolving Loans, excluding
Autoborrow Loans, may be converted into, or continued as LIBOR Rate Revolving Loans, subject to and in the manner provided in Section 2.2. If at any time Revolving Loans are outstanding with respect to which a Borrower has not delivered to
the Agent a notice specifying the basis for determining the interest rate applicable thereto in accordance herewith, such Revolving Loans shall be Base Rate Revolving Loans and bear interest at a rate 

  

 Page 10 

 
determined by reference to the Base Rate until notice to the contrary has been given to the Agent in accordance with this Agreement and such notice has
become effective. Except as otherwise provided herein, the outstanding Obligations shall bear interest as follows: 
  
 (i) for all Base Rate Revolving Loans and other Obligations (other than LIBOR Rate Revolving Loans) at a fluctuating per annum rate equal
to the lesser of (A) the Base Rate, plus the Applicable Margin or (B) the Maximum Rate; and 
  
 (ii) For all LIBOR Rate Revolving Loans at a per annum rate equal to the lesser of (A) the LIBOR Rate, plus the Applicable Margin
or (B) the Maximum Rate. 
  
 Each change in the Base Rate shall
be reflected in the interest rate described in clause (i) preceding as of the effective date of such change. Subject to Section 2.3, all interest charges shall be computed on the basis of a year of 360 days and actual days elapsed
(which results in more interest being paid than if computed on the basis of a 365-day year). 
  
 (b) Default Rate. During the existence of any Default or Event of Default if the Agent or the Majority Lenders in their discretion
so elect, then, while any such Default or Event of Default exists, the Obligations shall bear interest at a rate per annum equal to the lesser of (i) the Default Rate applicable thereto or (ii) the Maximum Rate. 
  
 (c) Interest Periods. After giving effect to any
Borrowing, continuation, or conversion of any LIBOR Rate Revolving Loan, there may not be more than six different Interest Periods in effect hereunder. 
  
 Section 2.2 Continuation and Conversion Elections. 
  
 (a) A Borrower may upon irrevocable written notice to the Agent in accordance with Section 2.2(b), other than with respect to any
Autoborrow Loans: 
  
 (i) elect, as of any
Business Day, in the case of Base Rate Revolving Loans to convert any such Base Rate Revolving Loans (or any part thereof in an amount not less than $1,000,000, or that is in an integral multiple of $100,000 in excess thereof) into LIBOR Rate
Revolving Loans; 
  
 (ii) elect, as of any
Business Day subject to Section 4.4, in the case of LIBOR Rate Revolving Loans to convert any such LIBOR Rate Revolving Loans (or any part thereof not being continued pursuant to clause (iii) following) into Base Rate Revolving
Loans; or 
  
 (iii) elect, as of the last day of
the applicable Interest Period, to continue any LIBOR Rate Revolving Loans having Interest Periods expiring on such day (or any part thereof in an amount not less than $1,000,000, or that is in an integral multiple of $100,000 in excess thereof) as
LIBOR Rate Revolving 

  

 Page 11 

 
Loans; provided that if at any time the aggregate amount of LIBOR Rate Revolving Loans in respect of any Borrowing is reduced, by payment, prepayment,
or conversion of part thereof to be less than $1,000,000, such LIBOR Rate Revolving Loans shall, effective as of the expiration date of the applicable Interest Period, automatically convert into Base Rate Revolving Loans; provided,
further, that if the notice shall fail to specify the duration of the Interest Period of any LIBOR Rate Revolving Loans, such Interest Period shall be one month. 
  
 provided, that if at any time the aggregate amount of LIBOR Rate Revolving Loans in respect of any Borrowing is
reduced, by payment, prepayment, or conversion of part thereof to be less than $1,000,000, such LIBOR Rate Revolving Loans shall automatically convert into Base Rate Revolving Loans; provided, further, that if the notice shall fail to
specify the duration of the Interest Period of any LIBOR Rate Revolving Loan to result from any such continuation or conversion, such Interest Period shall be one month in duration. 
  
 (b) The Borrowers shall deliver a notice of continuation/conversion in the form of Exhibit E (a
“Notice of Continuation/Conversion”) to the Agent not later than 11:00 a.m. (Dallas, Texas time) at least three Business Days in advance of the Continuation/Conversion Date, if any Revolving Loans, excluding Autoborrow Loans, are to
be converted into or continued as LIBOR Rate Revolving Loans and specifying: 
  
 (i) the proposed Continuation/Conversion Date; 
  
 (ii) the Revolving Loans (or portions thereof) and the aggregate amount of such Revolving Loans to be converted or continued; 

 
 (iii) the type of Revolving Loans resulting from the
proposed conversion or continuation; and 
  
 (iv)
the duration of the requested Interest Period, provided, however, the Borrowers may not select an Interest Period that ends after the Stated Termination Date. 
  
 (c) If upon the expiration of any Interest Period applicable to LIBOR Rate Revolving Loans, the Borrowers
have failed to timely select a new Interest Period to be applicable to such LIBOR Rate Revolving Loans or if any Default or Event of Default then exists, the Borrowers shall be deemed to have elected to convert such LIBOR Rate Revolving Loans into
Base Rate Revolving Loans effective as of the expiration date of such Interest Period. 
  
 (d) The Agent will promptly notify each Lender of its receipt of a Notice of Continuation/Conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts of the Revolving Loans with respect to which such notice was given held by each Lender. 
  
 Section 2.3 Maximum Interest Rate. In no event shall any Interest Rate provided for in this Agreement exceed the
Maximum Rate. If any Interest Rate, absent the limitation set forth 

  

 Page 12 

 
in this Section 2.3, would otherwise exceed the Maximum Rate, then such Interest Rate shall be the Maximum Rate, and, if in the future, such Interest
Rate would otherwise be less than the Maximum Rate, then such Interest Rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been
limited by the Maximum Rate. In the event that, upon payment in full of the Obligations, the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section
2.3, have been paid or accrued if the Interest Rate otherwise set forth in this Agreement had at all times been in effect, then the Borrowers shall, to the extent permitted by Requirements of Law, pay the Agent, for the account of the Lenders,
an amount equal to the excess of (a) the lesser of (i) the amount of interest which would have been paid or accrued if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have been paid or accrued had the
interest rate otherwise set forth in this Agreement, at all times, been in effect over (b) the amount of interest actually paid or accrued under this Agreement. Each of the Agent, each Lender, and each Borrower acknowledges, agrees, and declares
that it is its intention to expressly comply with all Requirements of Law in respect of limitations on the amount or rate of interest that can legally be contracted for, charged, or received under or in connection with the Loan Documents.
Notwithstanding anything to the contrary contained in any Loan Document (even if any such provision expressly declares that it controls all other provisions of the Loan Documents), in no contingency or event whatsoever shall the amount of interest
(including the aggregate of all charges, fees, benefits, or other compensation which constitutes interest under any Requirement of Law) under the Loan Documents paid by any Borrower, received by the Agent, the Letter of Credit Issuer, or any Lender,
agreed to be paid by any Borrower, or requested or demanded to be paid by the Agent, the Letter of Credit Issuer, or any Lender, exceed the Maximum Rate, and all provisions of the Loan Documents in respect of the contracting for, charging, or
receiving compensation for the use, forbearance, or detention of money shall be limited as provided by this Section 2.3. In the event any such interest is paid to the Agent, the Letter of Credit Issuer, or any Lender by the Borrowers, or any
of them, in an amount or at a rate which would exceed the Maximum Rate, the Agent, the Letter of Credit Issuer, or such Lender, as the case may be, shall automatically apply such excess to any unpaid amount of the Obligations other than interest, in
the inverse order of maturity, or if the amount of such excess exceeds said unpaid amount, such excess shall be paid to the paying Borrowers or Borrower, as applicable. All interest paid, or agreed to be paid, by any Borrower, or taken, reserved, or
received by the Agent, the Letter of Credit Issuer, or any Lender, shall be amortized, prorated, spread, and allocated in respect of the Obligations throughout the full term of this Agreement. Notwithstanding any provision contained in any of the
Loan Documents, or in any other related documents executed pursuant hereto, neither the Agent, the Letter of Credit Issuer, nor any Lender shall ever be entitled to charge, receive, take, reserve, collect, or apply as interest any amount which,
together with all other interest under the Loan Documents would result in a rate of interest under the Loan Documents in excess of the Maximum Rate and, in the event the Agent, the Letter of Credit Issuer, or any Lender ever charges, receives,
takes, reserves, collects, or applies any amount in respect of the Borrowers, or any of them, that otherwise would, together with all other interest under the Loan Documents, be in excess of the Maximum Rate, such amount shall automatically be
deemed to be applied in reduction of the unpaid principal balance of the Obligations and, if such principal balance is paid in full, any remaining excess shall forthwith be paid to the applicable Borrowers or Borrower. The Borrowers, the Agent, the
Letter of Credit Issuer, and 

  

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the Lenders shall, to the maximum extent permitted under any Requirement of Law, (A) characterize any non-principal payment as a standby fee, commitment fee,
prepayment charge, delinquency charge, expense, or reimbursement for a third-party expense rather than as interest and (B) exclude prepayments, acceleration, and the effects thereof. Nothing in any Loan Document shall be construed or so operate as
to require or obligate the Borrowers, or any of them, to pay any interest, fees, costs, or charges greater than is permitted by any Requirement of Law. Subject to the foregoing, the Borrowers hereby agree that the actual effective rate of interest
from time to time existing under the Loan Documents, including all amounts agreed to by the Borrowers or charged or received by the Agent, the Letter of Credit Issuer, or the Lenders pursuant to and in accordance with the Loan Documents, which may
be deemed to be interest under any Requirement of Law, shall be deemed to be a rate which is agreed to and stipulated by the Borrowers and the Lenders in accordance with Requirements of Law. 
  
 Section 2.4 Unused Line Fee. Subject to Section 2.3, until the
Revolving Loans have been paid in full and this Agreement terminated, the Borrowers agree to pay to the Agent, for the account of the Lenders, in accordance with their respective Pro Rata Shares, on the last day of each March, June, September, and
December and on the Termination Date, an unused line fee (the “Unused Line Fee”) equal to the Applicable Margin for the unused line fee percentage as provided by the definition of Applicable Margin multiplied by the amount by
which the Maximum Revolver Amount exceeded the sum of the average daily outstanding amount of the Revolving Loans and the average daily undrawn face amount of all outstanding Letters of Credit during the immediately preceding calendar quarter or
shorter period if calculated for the first calendar quarter after the Closing Date or on the Termination Date. Subject to Section 2.3, the Unused Line Fee shall be computed on the basis of a 360 day year for the actual number of days elapsed.
For purposes of calculating the Unused Line Fee pursuant to this Section 2.4, any payment received by the Agent (if received prior to 2:00 p.m. Dallas, Texas time) shall be deemed to be credited to the Borrowers’ Loan Account on the date
such payment is received by the Agent. 
  
 Section 2.5 Letter
of Credit Fee. Subject to Section 2.3, the Borrowers agree to pay to the Agent, for the account of the Lenders, in accordance with their respective Pro Rata Shares, for each Letter of Credit, a fee (the “Letter of Credit
Fee”) equal to the Letter of Credit Fee Percentage, or during the existence of any Default or Event of Default the Default Rate with respect to Letters of Credit, multiplied by the undrawn face amount of each Letter of Credit,
plus all out-of-pocket costs, fees, and expenses incurred by the Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to any Letter of Credit, which costs, fees, and expenses shall include a
“fronting fee” in an amount equal to 0.25% of the face amount of such Letter of Credit, payable to the Letter of Credit Issuer on the date of issuance of each Letter of Credit. The Letter of Credit Fee shall be payable monthly in arrears
on the first day of each month following any month in which a Letter of Credit was issued and/or in which a Letter of Credit remained outstanding and on the Termination Date. Subject to Section 2.3, the Letter of Credit Fee shall be computed
on the basis of a 360 day year for the actual number of days elapsed. 
  
 Section 2.6 Other Fees. Subject to Section 2.3, the Borrowers agree to pay the Agent all other fees and expenses as set forth in the Agent’s Letter. 
  

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 ARTICLE 3 
  
 PAYMENTS AND PREPAYMENTS 
  
 Section 3.1 Revolving Loans. The Borrowers shall repay the outstanding principal balance of the Revolving Loans, together with all other
Obligations, including all accrued and unpaid interest thereon, on the Termination Date. The Borrowers may prepay the Revolving Loans at any time and reborrow subject to the terms of this Agreement; provided that with respect to any LIBOR
Rate Revolving Loans prepaid prior to the expiration date of the Interest Period applicable thereto, the Borrowers shall pay to the Agent, for the account of the Lenders, the amounts described in Section 4.4. In addition, and without limiting
the generality of the foregoing, upon demand the Borrowers shall pay to the Agent, for account of the Lenders, the aggregate amount by which the Aggregate Revolver Outstandings exceed the lesser of the Borrowing Base or the Maximum Revolver Amount.
Accrued interest on the Revolving Loans shall be due and payable in arrears (a) in the case of Base Rate Revolving Loans, (i) on the last day of each March, June, September, and December and (ii) on the Termination Date and (b) in the case of LIBOR
Rate Revolving Loans and with respect to each such Revolving Loan (i) on the last day of the Interest Period with respect thereto and (ii) on the Termination Date. 
  
 Section 3.2 Termination of Total Facility. The Borrowers may terminate this Agreement upon at least 10 Business Days
prior written notice thereof to the Agent and the Lenders, upon (a) the payment in full of all outstanding Revolving Loans, together with accrued and unpaid interest thereon, and the cancellation and return of all outstanding Letters of Credit (or
alternatively, subject to Section 10.1, with respect to each such Letter of Credit, the furnishing to the Agent, in the Agent’s discretion, of a Supporting Letter of Credit or cash deposit, in each case in amounts and in the manner
required by Section 1.4(g)), (b) the payment in full in cash of all reimbursable expenses and other Obligations together with accrued and unpaid interest thereon, and (c) the payment in full of any amount due under Section 3.5.

  
 Section 3.3 Reserved. 
  
 Section 3.4 Prepayments. 
  
 (a) The Borrowers may prepay the principal of the Revolving
Loans, other than Autoborrow Loans, in whole or in part, at any time and from time to time in an amount not less than $500,000 or an amount that is an integral multiple of $50,000 in excess thereof with respect to Base Rate Revolving Loans, or in an
amount not less than $1,000,000 or an amount that is an integral multiple of $100,000 in excess thereof with respect to LIBOR Rate Revolving Loans. The Borrowers shall prepay the Autoborrow Loans as specified in the Autoborrow Agreement. 

 
 (b) Immediately upon receipt by any Borrower or its
Subsidiaries of proceeds of any asset disposition (excluding proceeds of asset dispositions permitted by Section 7.9(a)), such Borrower shall prepay the Revolving Loans in an amount equal to all such proceeds, net of (i) commissions and other
reasonable and customary transaction costs, fees, and expenses properly attributable to such transaction and payable by such Borrower in connection therewith (in each case, paid to non-Affiliates), (ii) transfer taxes, 

  

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(iii) amounts payable to holders of senior Liens (to the extent such Liens constitute Permitted Liens hereunder), if any, and (iv) an appropriate reserve for
income taxes in accordance with GAAP in connection therewith (“Net Proceeds”). Any such prepayment shall be applied in accordance with Section 3.8. 
  
 (c) No provision contained in this Section 3.4 shall constitute a consent to an asset disposition
that is otherwise not permitted by the terms of this Agreement. 
  
 Section 3.5 LIBOR Rate Revolving Loan Prepayments. In connection with any prepayment, if any LIBOR Rate Revolving Loans are prepaid prior to the expiration date of the Interest Period applicable thereto, the Borrowers shall pay to
the Agent, for the benefit of the Lenders, the amounts described in Section 4.4. 
  
 Section 3.6 Payments by the Borrowers. 
  
 (a) All payments to be made by the Borrowers shall be made without setoff, recoupment, or counterclaim. Unless otherwise expressly provided herein, all payments by the Borrowers shall be made to the Agent, for the
account of the Lenders, and shall be made in Dollars and in immediately available funds, no later than 2:00 p.m. (Dallas, Texas time) on the date specified herein. Any payment received by the Agent after such time shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall continue to accrue. 
  
 (b) Subject to the provisions set forth in the definition of Interest Period, whenever any payment is due on a day other than a Business
Day, such payment shall be due on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be. 
  
 Section 3.7 Payments as Revolving Loans. At the election of the Agent, all payments of principal, interest,
reimbursement obligations in connection with Letters of Credit, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for expenses pursuant to Section 13.7), and other sums payable under the Loan Documents,
may be paid with the proceeds of Revolving Loans made hereunder whether made following a request by the Borrowers pursuant to Section 1.2 or pursuant to a deemed request as provided in this Section 3.7. The Borrowers hereby irrevocably
authorize the Agent to charge the Loan Account for the purpose of paying all amounts from time to time due under the Loan Documents, including, without limitation, reimbursing expenses pursuant to Section 13.7, and agree that all such amounts
charged shall constitute Revolving Loans (including Non-Ratable Loans) and that all such Revolving Loans shall be deemed to have been requested pursuant to Section 1.2. 
  
 Section 3.8 Apportionment, Application, and Reversal of Payments. Principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid principal balance of the Revolving Loans to which such payments relate held by each Lender) and payments of the fees shall, as applicable, be apportioned ratably among the Lenders,
except for fees payable solely to the Agent and the Letter of Credit Issuer and except as provided in Section 11.1(b). All payments shall be remitted to the Agent and all such payments not relating to principal or interest of specific
Revolving Loans, or not constituting payment of specific fees, 

  

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and all proceeds of any Borrower’s Accounts or any other Collateral received by the Agent, shall be applied, ratably, subject to the provisions of this
Agreement, first, to pay any fees, indemnities, or expense reimbursements, then due to the Agent from the Borrowers, second, to pay any fees or expense reimbursements then due to the Lenders from the Borrowers, third, to pay
interest due in respect of the Revolving Loans, including the Non-Ratable Loans and Autoborrow Loans, fourth, to pay or prepay principal of the Non-Ratable Loans and Autoborrow Loans, fifth, to pay or prepay principal of the Revolving
Loans (other than the Non-Ratable Loans and Autoborrow Loans) and unpaid reimbursement obligations in respect of Letters of Credit, sixth, to pay an amount to the Agent equal to 100% of the aggregate undrawn face amount of all outstanding
Letters of Credit and the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit, and seventh, to the payment of any other Obligation, including any amount relating to Bank Products, due to the Agent or any
Lender by the Borrowers. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by a Borrower, or unless an Event of Default is in existence, neither the Agent nor any Lender shall apply any payment which it
receives to any LIBOR Rate Revolving Loan, except (a) on the expiration date of the Interest Period applicable to any such LIBOR Rate Revolving Loan or (b) in the event, and only to the extent, that there are no outstanding Base Rate Revolving Loans
and, in any event, the Borrowers shall pay the LIBOR breakage losses in accordance with Section 4.4. The Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and
payments to any portion of the Obligations. 
  
 Section 3.9
Indemnity for Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of the Obligations, the Agent, any Lender, the Bank, or any Affiliate of the Bank is for any reason compelled to surrender
such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by the Agent or such Lender and the
Borrowers shall be liable to pay to the Agent and the Lenders, and each Borrower hereby indemnifies the Agent and the Lenders and holds the Agent and the Lenders harmless for the amount of such payment or proceeds surrendered. The provisions of this
Section 3.9 shall be and remain effective notwithstanding any contrary action which may have been taken by the Agent or any Lender in reliance upon such payment or application of proceeds, and any such contrary action so taken shall be
without prejudice to the Agent’s and the Lenders’ rights under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final and irrevocable. The provisions of this Section
3.9 shall survive the termination of this Agreement. 
  
 Section 3.10 The Agent’s and the Lenders’ Books and Records; Monthly Statements. The Agent shall record the principal amount of the Revolving Loans owing to each Lender, the undrawn face amount of all outstanding Letters of
Credit and the aggregate amount of unpaid reimbursement obligations outstanding with respect to the Letters of Credit from time to time on its books. In addition, each Lender may note the date and amount of each payment or prepayment of principal of
such Lender’s Revolving Loans in its books and records. Failure by the Agent or any Lender to make any such notation shall not affect the obligations of the 

  

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Borrowers with respect to the Revolving Loans or the Letters of Credit. The Borrowers agree that the Agent’s and each Lender’s books and records
showing the Obligations and the transactions pursuant to this Agreement and the other Loan Documents shall be admissible in any action or proceeding arising therefrom, and shall constitute presumptive proof thereof, irrespective of whether any
Obligation is also evidenced by a promissory note or other instrument. The Agent will provide to the Borrowers a monthly statement of Revolving Loans, payments, and other transactions pursuant to this Agreement. Such statement shall be deemed
correct, accurate, and binding on the Borrowers and an account stated (except for reversals and reapplications of payments made as provided in Section 3.8 and corrections of errors discovered by the Agent), unless a Borrower notifies the
Agent in writing to the contrary within 30 days after such statement is rendered. In the event a timely written notice of objections is given by a Borrower, only the items to which exception is expressly made will be considered to be disputed by the
Borrowers. 
  
 ARTICLE 4 
  
 TAXES, YIELD PROTECTION, AND ILLEGALITY 
  
 Section 4.1 Taxes. 
  
 (a) Any and all payments by the Borrowers, or any of them,
to the Agent or any Lender under this Agreement and any other Loan Document shall be made free and clear of, and without deduction or withholding for, any Taxes. In addition, the Borrowers shall pay all Other Taxes. 
  
 (b) The Borrowers agree to indemnify and hold harmless the
Agent and each Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 4.1) paid by the Agent or any Lender and any liability (including
penalties, interest, additions to tax, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days after the
date the Agent or any Lender makes written demand therefor. 
  
 (c) If the Borrowers shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to the Agent or any Lender, then: 
  
 (i) the sum payable shall be increased as necessary so that
after making all required deductions and withholdings (including, without limitation, deductions and withholdings applicable to additional sums payable under this Section 4.1) the Agent or such Lender, as the case may be, receives an amount
equal to the sum it would have received had no such deductions or withholdings been made; 
  
 (ii) the Borrowers shall make such deductions and withholdings; 
  

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 (iii) the Borrowers shall pay the full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with any applicable Requirement of Law; and 
  
 (iv) the Borrowers shall also pay to the Agent, for the account of each Lender, or each Lender at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to preserve the after-tax yield such Lender would have received if such Taxes or Other Taxes had not been imposed. 
  
 (d) Within 30 days after the date of any payment by the Borrowers of Taxes or Other Taxes, the Borrowers
shall furnish the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent. 
  
 (e) If the Borrowers are required to pay additional amounts to the Agent or any Lender pursuant to Section 4.1(c), then the
applicable Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its lending office so as to eliminate any such additional payment by the Borrowers which may thereafter accrue, if such
change in the judgment of such Lender is not otherwise disadvantageous to such Lender. 
  
 Section 4.2 Illegality. 
  
 (a) If any Lender determines that the introduction of any Requirement of Law, or any change in any Requirement of Law, or in the interpretation or administration of any Requirement of Law, has made it unlawful, or
that any central bank or other Governmental Authority has asserted that it is unlawful, for such Lender or its applicable lending office to make LIBOR Rate Revolving Loans, then, on notice thereof by such Lender to the Borrowers through the Agent,
any obligation of such Lender to make LIBOR Rate Revolving Loans shall be suspended until such Lender notifies the Agent and the Borrowers that the circumstances giving rise to such determination no longer exist. 
  
 (b) If a Lender determines that it is unlawful to maintain
any LIBOR Rate Revolving Loan, the Borrowers shall, upon receipt of notice of such fact and demand from such Lender (with a copy to the Agent), prepay in full such LIBOR Rate Revolving Loans of such Lender then outstanding, together with accrued and
unpaid interest thereon and amounts required under Section 4.4, either on the last day of the Interest Period thereof, if such Lender may lawfully continue to maintain such LIBOR Rate Revolving Loans to such day, or immediately, if such
Lender may not lawfully continue to maintain such LIBOR Rate Revolving Loans. If the Borrowers are required to so prepay any LIBOR Rate Revolving Loans, then concurrently with such prepayment, the Borrowers shall borrow from the affected Lender, in
the amount of such repayment, a Base Rate Revolving Loan. 
  

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 Section 4.3 Increased Costs and Reduction of Return. 
  
 (a) If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or regulation or (ii) the compliance by such Lender with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or making, funding, or maintaining any LIBOR Rate Revolving Loans, then the Borrowers shall be liable for, and shall from time to time, upon demand (with a copy of such demand to
be sent to the Agent), pay to the Agent for the account of such Lender, additional amounts as are sufficient to compensate such Lender for such increased costs. 
  
 (b) If any Lender shall have determined that (i) the introduction of any Capital Adequacy Regulation, (ii)
any change in any Capital Adequacy Regulation, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof,
or (iv) compliance by such Lender or any corporation or other entity controlling such Lender with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation
or other entity controlling such Lender and (taking into consideration such Lender’s or such corporation’s or other entity’s policies with respect to capital adequacy and such Lender’s desired return on capital) determines that
the amount of such capital is increased as a consequence of its Commitment, loans, credits, or obligations under this Agreement, then, upon demand of such Lender to the Borrowers through the Agent, the Borrowers shall pay to such Lender, from time
to time as specified by such Lender, additional amounts sufficient to compensate such Lender for such increase. 
  
 Section 4.4 Funding Losses. The Borrowers shall reimburse each Lender and hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of: 
  
 (a) the
failure of the Borrowers to make on a timely basis any payment of principal of any LIBOR Rate Revolving Loan; 
  
 (b) the failure of the Borrowers to (i) borrow any requested LIBOR Rate Revolving Loan, (ii) continue any LIBOR Rate Revolving Loan, or
(iii) convert a Base Rate Revolving Loan to a LIBOR Rate Revolving Loan after any Borrower has given (or is deemed to have given) a Notice of Borrowing or a Notice of Continuation/Conversion with respect thereto (except as permitted by Section
4.5); or 
  
 (c) the prepayment or other
payment (including after acceleration thereof) of any LIBOR Rate Revolving Loans on a day that is not the last day of the relevant Interest Period; 
  
 including, without limitation, any expense or loss of interest income for the unexpired portion of the Interest Period resulting from the liquidation or reemployment of
the affected funds or from fees payable to terminate the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by any Lender in connection with the foregoing. 

  

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 Section 4.5 Inability to Determine Rates. If the Agent determines that for any reason adequate and
reasonable means do not exist for determining the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate Revolving Loan, or that the LIBOR Rate for any requested Interest Period with respect to a proposed LIBOR Rate
Revolving Loan does not adequately and fairly reflect the cost to the Lenders of funding such Revolving Loan, the Agent will promptly so notify the Borrowers and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Rate
Revolving Loans hereunder shall be suspended until the Agent revokes such notice in writing. Upon receipt of a notice pursuant to the first sentence of this Section, the Borrowers may revoke any Notice of Borrowing or Notice of
Continuation/Conversion then submitted by any of them. If the Borrowers do not revoke any such Notice of Borrowing or Notice of Continuation/Conversion, the Lenders shall make, convert, or continue the Revolving Loans, as proposed by the Borrowers,
in the amount specified in the applicable notice submitted by a Borrower, but such Revolving Loans shall be made, converted, or continued as Base Rate Revolving Loans instead of LIBOR Rate Revolving Loans. 
  
 Section 4.6 Certificates of the Agent. If any Lender claims
reimbursement or compensation under this Article 4, the Agent shall determine the amount thereof and shall deliver to the Borrowers (with a copy to the affected Lender) a certificate setting forth in reasonable detail the amount payable to
the affected Lender, and such certificate shall be conclusive and binding on the Borrowers in the absence of manifest error. 
  
 Section 4.7 Survival. The agreements and obligations of the Borrowers in this Article 4 shall survive the payment of all other Obligations.

  
 ARTICLE 5 
  
 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES 
  
 Section 5.1 Books and Records. The Borrowers shall maintain, at all
times, correct and complete books, records, and accounts in which complete, correct, and timely entries are made of their transactions in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered
pursuant to Section 5.2(a). The Borrowers shall, by means of appropriate entries, reflect in such accounts and in all Financial Statements proper liabilities and reserves for all taxes and proper provision for depreciation and amortization of
property and bad debts, all in accordance with GAAP. The Borrowers shall maintain at all times books and records pertaining to the Collateral in such detail, form, and scope as the Agent or any Lender (through the Agent) shall reasonably require,
including, but not limited to, records of (a) all payments received and all credits and extensions granted with respect to the Accounts, (b) the return, rejection, repossession, stoppage in transit, loss, damage, or destruction of any Inventory, and
(c) all other dealings affecting the Collateral. 
  
 Section 5.2
Financial Information. The Borrowers shall promptly furnish to the Agent, all such information regarding the Borrowers’ financial and business affairs as the Agent or any Lender (through the Agent) may reasonably request. Without
limiting the foregoing, the 

  

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Borrowers will furnish, or cause to be furnished, to the Agent the following, in sufficient copies for distribution by the Agent to each Lender, in such
detail as the Agent or the Lenders (through the Agent) shall request: 
  
 (a) The Borrowers will furnish, or cause to be furnished, as soon as available, but in any event not later than 90 days after the close of each Fiscal Year, consolidated audited and consolidating unaudited balance
sheets and statements of income, cash flow, and stockholders’ equity for the Parent and its Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting forth in each case in comparative form figures for the previous Fiscal
Year, all in reasonable detail, fairly presenting the financial position and the results of operations of the Parent and its Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared in accordance with GAAP. Such Financial
Statements shall be examined in accordance with generally accepted auditing standards by and, in the case of such Financial Statements performed on a consolidated basis, accompanied by a report thereon, unqualified in any respect, of independent
certified public accountants of national standing selected by the Parent. The Parent, simultaneously with retaining such independent public accountants to conduct such annual audit, shall send a letter to such accountants, with a copy to the Agent
and the Lenders, notifying such accountants that one of the primary purposes for retaining such accountants’ services and having audited financial statements prepared by such accountants is for use by the Agent and the Lenders. Each Borrower
hereby authorizes the Agent to communicate directly with its certified public accountants and, by this provision, authorizes those accountants to disclose to the Agent any and all financial statements and other supporting financial documents and
schedules relating to the Borrowers and to discuss directly with the Agent the finances and affairs of the Borrowers. The Agent will endeavor to notify the Parent prior to or contemporaneously with initiating any such communication (such
notification to suffice for any such communication and any subsequent communications reasonably related thereto), provided, that the Agent shall have no liability for any delay or failure in making any such notification. 
  
 (b) The Borrowers will furnish or cause to be furnished, as
soon as available, but in any event not later than 45 days after the end of each Fiscal Quarter of the Parent, consolidated and consolidating unaudited balance sheets of the Parent and its Subsidiaries as at the end of such Fiscal Quarter, and
consolidated and consolidating unaudited statements of income and cash flow for the Parent and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the Fiscal Year to the end of such Fiscal Quarter, all in reasonable
detail, fairly presenting the financial position and results of operations of the Parent and its Subsidiaries as at the date thereof and for such periods, and, in each case, in comparable form, figures for the corresponding period in the prior
Fiscal Year and in the Borrowers’ budget, and prepared in accordance with GAAP (other than for presentation of footnotes and subject to normal year-end audit adjustments) applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 5.2(a). The Parent shall certify by a certificate signed by its chief financial officer that all such Financial Statements have been prepared in accordance with GAAP and present fairly, subject to normal year-end
adjustments, the financial position of the Parent and its Subsidiaries as at the dates thereof and its results of operations for the periods then ended. 
  

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 (c) The Borrowers will furnish or cause to be furnished, with each of the annual audited
Financial Statements delivered pursuant to Section 5.2(a), and with each of the unaudited Financial Statements delivered pursuant to Section 5.2(b), a certificate of the chief financial officer of the Parent in the form of Exhibit
C (a “Compliance Certificate”) (i) setting forth in reasonable detail the calculations required to establish the Borrowers’ compliance with the covenants set forth in Section 7.22 through Section 7.27 during
the period covered by such Financial Statements and as at the end thereof and (ii) stating that, except as explained in reasonable detail in such certificate, (A) all of the representations and warranties of the Borrowers contained in this Agreement
and the other Loan Documents are correct and complete in all material respects as at the date of such certificate as if made at such time, except for those that speak as of a particular date, (B) the Borrowers are, at the date of such certificate,
in compliance in all material respects with all of their respective covenants and agreements in this Agreement and the other Loan Documents, (C) no Default or Event of Default then exists or existed during the period covered by such Financial
Statements, (D) describing and analyzing in reasonable detail all material trends, changes, and developments in each and all such Financial Statements, and (E) explaining the variances of the figures in the corresponding budgets and prior Fiscal
Year Financial Statements. If such certificate discloses that a representation or warranty is not correct or complete, or that a covenant has not been complied with, or that a Default or Event of Default existed or exists, such certificate shall set
forth what action the Borrowers have taken or propose to take with respect thereto. 
  
 (d) The Borrowers will furnish, or cause to be furnished, not less than 30 days nor more than 60 days prior to the beginning of each
Fiscal Year, annual forecasts prepared by the Parent (to include forecasted consolidated and consolidating balance sheets and statements of income and cash flow) for the Parent and its Subsidiaries as at the end of and for each Fiscal Quarter of
such Fiscal Year. At the time of making any notification to the Agent pursuant to Section 5.3(h) the Borrowers will provide to the Agent such amendments, supplements or updates to any such forecasts as are necessary to cause such forecasts to
represent the Borrowers’ good faith estimate of the future financial performance of the Borrowers for the periods following the date of any such notification. 
  
 (e) The Borrowers will furnish, or cause to be furnished, promptly after filing with the PBGC and the IRS, a
copy of each annual report or other filing filed with respect to each Plan of any Borrower, if any. 
  
 (f) The Borrowers will furnish, or cause to be furnished, promptly upon the filing thereof, copies of all reports, if any, to or other
documents filed by the Parent or any of its Subsidiaries with the Securities and Exchange Commission under the Exchange Act, and all reports, notices, or statements sent or received by the Parent or any of its Subsidiaries to or from the holders of
any equity interests of the Parent or any of its Subsidiaries (other than (i) routine or non-material communications sent by shareholders 

  

 Page 23 

 
of the Parent to the Parent or (ii) non-material communications sent by any of the Parent’s Subsidiaries to the Parent or any of the Parent’s
Subsidiaries) or of any Debt of the Parent or any of its Subsidiaries registered under the Securities Act of 1933 or to or from the trustee under any indenture under which the same is issued. 
  
 (g) The Borrowers will furnish, or cause to be furnished, as
soon as available, but in any event not later than fifteen days after any Borrower’s receipt thereof, a copy of all management reports and management letters prepared by any independent certified public accountants of the Parent or any other
Borrower. 
  
 (h) The Borrowers will furnish, or
cause to be furnished, promptly after their preparation, copies of any and all proxy statements, financial statements, and reports which the Parent makes available to its shareholders or any holder of any Debt. 
  
 (i) If requested by the Agent, the Borrowers will furnish,
or cause to be furnished promptly after filing with the IRS, a copy of each federal income tax return filed by any Borrower. 
  
 (j) The Borrowers will furnish, or cause to be furnished, as soon as available, but in any event within 30 days of the end of each Fiscal
Quarter and any other Fiscal Period in which the Aggregate Revolver Outstandings exceeded 75.0% of the Maximum Revolver Amount during such Fiscal Period, a Borrowing Base Certificate and supporting information in connection therewith. 
  
 (k) The Borrowers shall provide, or cause to be provided, to
the Agent the following documents, in form reasonably satisfactory to the Agent, within fifteen days of any request by the Agent: (i) a schedule of each Borrower’s accounts receivable created since the last such schedule which (A) shall be as
of the date of the most recent Borrowing Base Certificate delivered to the Agent, (B) shall be reconciled to the most recent Borrowing Base Certificate delivered to the Agent and such Borrower’s general ledger, and (C) shall set forth a
detailed aged final balance of all then existing accounts receivable specifying the names, addresses and balances due for each Account Debtor obligated on an account receivable so listed; (ii) an aging of each Borrower’s accounts payable; (iii)
a schedule identifying each location, if any, where any Collateral is located with a sales representative, agent, contractor or other Person under any bailee, consignee or warehouse arrangement, in each case setting forth, as of the last Business
Day of the immediately preceding Fiscal Period, (A) the name and address of each such sales representative, agent, contractor or other Person and a description of the nature of any such arrangement and (B) the cost of such Inventory and the net book
value of Fixed Assets at each such location, and including a representation that all actions have been taken to comply with Section 2.12(a) of the Security Agreements, as applicable, with respect to such Inventory; (iv) a current summary
report of aged balances for each Account Debtor; (v) a schedule of Inventory itemizing and describing the kind, type and quantity of all Inventory, the cost thereof, and the location thereof; (vi) copies of invoices in connection with each
Borrower’s Accounts, customer statements, credit memos, remittance advices and reports, deposit slips, and shipping and delivery documents in connection with each Borrower’s Accounts and for Equipment acquired by each 

  

 Page 24 

 
Borrower, purchase orders, and invoices; (vii) a statement of the balance of each of the Intercompany Accounts; (viii) such other reports as to the
Collateral as the Agent shall reasonably request from time to time; and (ix) with the delivery of each of the foregoing, a certificate of the Borrowers executed by a Responsible Officer of the Parent on behalf of all of the Borrowers certifying as
to the accuracy and completeness of the foregoing. If any of the Borrowers’ records or reports of the Collateral are prepared by an accounting service or other agent, each Borrower hereby authorizes, and shall cause each other Borrower to
authorize, such service or agent to deliver such records, reports, and related documents to the Agent, for distribution to the Lenders. 
  
 (l) The Borrowers will furnish, or cause to be furnished, copies of all statements, reports, notices, documents, and certificates
furnished pursuant to the CapitalSource Subordinated Debt Agreement and not otherwise furnished to the Agent and/or the Lenders pursuant to this Agreement. 
  
 (m) The Borrowers will furnish, or cause to be furnished, such additional information as the Agent and/or any Lender may from time to time
reasonably request regarding the financial and business affairs of any Borrower or any Subsidiary of any Borrower. 
  
 (n) Promptly after the Borrower has notified the Agent of any intention by the Borrower to treat the Revolving Loans and/or Letters of
Credit and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4), the Borrowers will furnish to the Agent and each Lender a duly completed copy of IRS Form 8886 or any
successor form. 
  
 Section 5.3 Notices to the Agent and the
Lenders. The Borrowers shall notify the Agent and the Lenders in writing of the following matters at the following times: 
  
 (a) immediately after becoming aware of any Default or Event of Default; 
  
 (b) immediately after becoming aware of the assertion by the holder of any Capital Stock of the Parent or
the holder of any Debt of any Borrower that a default exists with respect thereto or that any Borrower is not in compliance with the terms thereof, or the written threat or commencement by such holder of any enforcement action because of such
asserted default or non-compliance; 
  
 (c)
immediately after becoming aware of any event or circumstance which could have, or has resulted in, a Material Adverse Effect; 
  
 (d) immediately after becoming aware of any pending or threatened (in writing) action, suit, proceeding, or counterclaim by any Person, or
any pending or threatened (in writing) investigation by a Governmental Authority, with respect to any amount in excess of $250,000 or which could reasonably be expected to have, or has resulted in, a Material Adverse Effect; 
  

 Page 25 

 (e) immediately after becoming aware of any actual of potential contingent liability in
excess of $250,000 or which could reasonably be expected to have, or has resulted in, a Material Adverse Effect; 
  
 (f) immediately after becoming aware of any pending or threatened (in writing) strike, work stoppage, unfair labor practice claim, or
other labor dispute affecting any Borrower which could have, or has resulted in, a Material Adverse Effect; 
  
 (g) immediately after becoming aware of any violation of any law, statute, regulation, or ordinance of a Governmental Authority affecting
any Borrower which could have, or has resulted in, a Material Adverse Effect; 
  
 (h) immediately after becoming aware that any material assumption on which the Borrowers prepared and presented the Latest Projections is no longer valid; 
  
 (i) immediately after receipt of any notice of any violation by any Borrower of any Environmental Law which
could reasonably be expected to have, or has resulted in, a Material Adverse Effect or that any Governmental Authority has asserted in writing that any Borrower is not in compliance with any Environmental Law or is investigating any Borrower’s
compliance therewith; 
  
 (j) immediately after
receipt of any written notice that any Borrower is or may be liable to any Person as a result of the Release or threatened Release of any Contaminant or that any Borrower is subject to investigation by any Governmental Authority evaluating whether
any remedial action is needed to respond to the Release or threatened Release of any Contaminant which, in either case, is reasonably likely to give rise to liability in excess of $250,000; 
  
 (k) immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of any Borrower; 
  
 (l) immediately upon any change in any Borrower’s name as it appears in the state of its organization, state of organization, type of entity, organizational identification number, locations of Collateral (other
than Collateral referenced in clause (i)(C) of Section 5.2(k)), or trade names under which such Borrower will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, in each case at least
30 days prior thereto; 
  
 (m) within three
Business Days after any Borrower or any ERISA Affiliate knows or has reason to know, that an ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and, when known, any action taken or
threatened by the IRS, the DOL, or the PBGC with respect thereto; 
  
 (n) upon request, or, in the event that such filing reflects a significant change with respect to the matters covered thereby, within three Business Days after the filing thereof with the PBGC, the DOL, or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series), including Schedule B thereto, filed with the PBGC, the DOL, or the IRS with respect to each Plan, (ii) a copy of each funding waiver 

  

 Page 26 

 
request filed with the PBGC, the DOL, or the IRS with respect to any Plan and all communications received by any Borrower or any ERISA Affiliate from the
PBGC, the DOL, or the IRS with respect to such request, and (iii) a copy of each other filing or notice filed with the PBGC, the DOL, or the IRS, with respect to each Plan by either any Borrower or any ERISA Affiliate; 
  
 (o) upon request, copies of each actuarial report for any
Plan or Multi-employer Plan and annual report for any Multi-employer Plan, and within three Business Days after receipt thereof by any Borrower or any ERISA Affiliate, copies of the following: (i) any notices of the PBGC’s intention to
terminate a Plan or to have a trustee appointed to administer such Plan; (ii) any favorable or unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the Code; or (iii) any notice from a
Multi-employer Plan regarding the imposition of withdrawal liability; 
  
 (p) within three Business Days after the occurrence thereof: (i) any changes in the benefits of any existing Plan which increase any Borrower’s annual costs with respect thereto by an amount in excess of
$500,000, or the establishment of any new Plan or the commencement of contributions to any Plan to which any Borrower or any ERISA Affiliate was not previously contributing; or (ii) any failure by any Borrower or any ERISA Affiliate to make a
required installment or any other required payment in excess of $200,000 under Section 412 of the Code on or before the due date for such installment or payment; 
  
 (q) within three Business Days after any Borrower or any ERISA Affiliate knows or has reason to know that
any of the following events has or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan intends to terminate a Multi-employer Plan; or (iii) the PBGC has instituted or
will institute proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan; 
  
 (r) immediately upon becoming aware of any default or event of default or other breach or failure to perform under (a) any Subordinated
Debt, Subordinated Note, or other Subordinated Debt Documents or (b) any claim is asserted against a Borrower alleging any occurrence described in clause (a) preceding; and 
  
 (s) immediately upon commencement of any proceedings contesting any tax, fee, assessment, or other
governmental change in excess of $50,000. 
  
 Each notice given under this Section
shall describe the subject matter thereof in reasonable detail, and shall set forth the action that any Borrower or any ERISA Affiliate, as applicable, has taken or proposes to take with respect thereto. 
  
 ARTICLE 6 
  
 GENERAL WARRANTIES AND REPRESENTATIONS 
  
 Each Obligated Party warrants and represents to the Agent and the Lenders as follows: 
  

 Page 27 

 Section 6.1 Authorization, Validity, and Enforceability of this Agreement and the other Loan
Documents; No Conflicts. Each Borrower has the power and authority to execute, deliver, and perform this Agreement and the other Loan Documents to which it is a party, to incur the Obligations, and to grant to the Agent Liens upon the
Collateral. Each Borrower has taken all necessary action (including obtaining approval of its stockholders, partners, general partner(s), members, or other applicable equity owners, if necessary) to authorize its execution, delivery, and performance
of this Agreement and the other Loan Documents to which it is a party. This Agreement and the other Loan Documents have been duly executed and delivered by each Borrower, and constitute the legal, valid, and binding obligations of each Borrower,
enforceable against it in accordance with their respective terms without defense, setoff, or counterclaim, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws at the time in effect affecting the rights
of creditors generally and to the effect of general principles of equity whether applied by a court of law or equity. Each Borrower’s execution, delivery, and performance of this Agreement and the other Loan Documents to which it is a party do
not and will not conflict with, or constitute a violation or breach of, or constitute a default under, or result in or require the creation or imposition of any Lien upon the property of any Borrower by reason of the terms of (a) any contract,
mortgage, Lien, lease, agreement, indenture, document, or instrument (including, without limitation, the Subordinated Debt Documents or any agreements entered into in connection therewith) to which such Borrower is a party or which is binding upon
it, (b) any Requirement of Law applicable to such Borrower, or (c) the certificate or articles of incorporation, bylaws, limited liability company or partnership agreement, or other organizational or constituent documents, as the case may be, of
such Borrower. The Borrowers’ entering into this Agreement and incurrence of the Obligations resulting from each Borrowing is not prohibited under any Subordinated Debt. 
  
 Section 6.2 Validity and Priority of Security Interest. The provisions of this Agreement, the Mortgages, and the
other Loan Documents create legal and valid Liens on all the Collateral in favor of the Agent, for the benefit of the Agent and the Lenders, and such Liens constitute perfected and continuing Liens on the Collateral, securing the Obligations,
enforceable against the applicable Borrower and all third parties, and having priority over all other Liens on the Collateral (a) except in the case of Liens described in clause (d), clause (e), and clause (f) of the definition
of Permitted Liens to the extent any such Liens would have priority over the Agent’s Liens pursuant to any Requirement of Law and (b) except for Liens in certificated vehicles, and Liens perfected only by possession to the extent the Agent has
not obtained or does not maintain possession of such Collateral. 
  
 Section 6.3 Reserved. 
  
 Section 6.4 Corporate
Name; Prior Transactions. Except as set forth on Schedule 6.4, no Borrower has, during the past five years, been known by or used any other corporate or fictitious name, or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property outside of the ordinary course of business. No Borrower has ever been known by or used any of the following names: Encore Medical Products, Inc., Encore Medical Supply,
Encore Medical, Inc. a Michigan corporation, Encore Medical Staffing, Encore Medical Systems, Inc., Encore Medical Systems, Ltd., Encore Medical Technologies, Inc., and Encore Med Corp d/b/a Encore Med on Swan. 
  

 Page 28 

 Section 6.5 Capitalization; Subsidiaries. Schedule 6.5 is a correct and complete list of
the name and relationship to the Parent of each and all of the Parent’s Subsidiaries. Schedule 6.5 sets forth, as of the Closing Date, a true and complete listing of each class of authorized Capital Stock of each Subsidiary of the
Parent, of which all of such issued shares are validly issued, outstanding, fully paid and non-assessable, and (a) in the case of the Capital Stock of each such Subsidiary, is owned beneficially and of record by the Persons identified on Schedule
6.5 and (b) in the case of the Capital Stock of the Parent, each of the Persons owning, directly or indirectly, beneficially and of record, 5.0% or more of the outstanding Capital Stock of the Parent. The Parent and each of its Subsidiaries is
duly incorporated, formed, or organized and validly existing in good standing under the laws of its state or other jurisdiction of incorporation, formation, or organization set forth on Schedule 6.5. The location of the chief executive office
of the Parent and each of its Subsidiaries is at the address set forth with respect to each such Person on Schedule 6.5. The Parent and each of its Subsidiaries is qualified to do business and in good standing (as applicable) in each of the
jurisdictions set forth on Schedule 6.5, as applicable, which are the only jurisdictions in which qualification is necessary for it to own or lease its property and conduct its business. The Parent and each of its Subsidiaries has all
requisite power and authority to conduct its business and own its property. 
  
 Section 6.6 Financial Statements and Projections. 
  
 (a) The Parent has delivered to the Agent and the Lenders the audited balance sheet and related statements of income, retained earnings,
cash flow, and changes in stockholders’ equity for the Parent and its Subsidiaries as of December 31, 2002, and for the Fiscal Year then ended, accompanied by the report thereon of the Parent’s independent certified public accountants,
KPMG LLP and the unaudited balance sheet and related statements of income and cash flow for the Parent and its Subsidiaries dated June 28, 2003. All such financial statements have been prepared in accordance with GAAP and fairly present the
financial position of the Parent and its Subsidiaries as at the dates thereof and their results of operations for the periods then ended (except with respect to the financial statements dated June 28, 2003, for the absence of applicable footnotes
and subject to normal year-end adjustments). 
  
 (b) The Latest Projections when submitted to the Agent and the Lenders as required herein represent the Borrowers’ good faith estimate of the future financial performance of the Borrowers for the periods set forth therein, except as
may have been notified to the Agent pursuant to Section 5.3(g). The Latest Projections have been prepared on the basis of the assumptions set forth therein, which the Borrowers believe are fair and reasonable in light of current and
reasonably foreseeable business conditions at the time submitted to the Agent and the Lenders. 
  
 Section 6.7 Solvency. Each Borrower is Solvent prior to and after giving effect to the Borrowings to be made on the Closing Date and the issuance of the Letters of Credit to be issued on the Closing Date
(including the inclusion of each Existing Letter of Credit as a Letter of Credit hereunder). 
  
 Section 6.8 Debt. After giving effect to the making of the Revolving Loans to be made on the Closing Date and the issuance of the Letters of Credit to be issued on the Closing 

  

 Page 29 

 
Date (including the inclusion of each Existing Letter of Credit as a Letter of Credit hereunder), the Borrowers have no Debt, except (a) the Obligations, (b)
Debt described on Schedule 6.8, (c) the Subordinated Debt, and (d) other Debt entered into after the Closing Date as permitted by Section 7.13 and reflected in the Financial Statements delivered pursuant to Section 5.2.

  
 Section 6.9 Distributions. As of the Closing Date,
since June 28, 2003, no Distribution has been declared, paid, or made upon or in respect of any Capital Stock of the Parent. 
  
 Section 6.10 Real Estate; Leases. As of the Closing Date, Schedule 6.10 sets forth a correct and complete list of all Real Estate owned by
each Borrower, all leases and subleases of real or personal property by each Borrower as lessee or sublessee (other than leases of personal property as to which it is lessee or sublessee for which the value of such personal property in the aggregate
is less than $150,000), and all leases and subleases of real or personal property by each Borrower as lessor, or sublessor. Each of such leases and subleases is valid and enforceable in accordance with its terms and is in full force and effect, and
no material default by any party to any such lease or sublease exists. Each Borrower has good and indefeasible title in fee simple to the Real Estate identified on Schedule 6.10 as owned by such Borrower, or valid leasehold interests in all
Real Estate designated therein as “leased” by such Borrower, and each Borrower has good, indefeasible, and merchantable title to all of its other property reflected on the June 28, 2003 Financial Statements delivered to the Agent and the
Lenders, except as disposed of in the ordinary course of business since the date thereof, free of all Liens except Permitted Liens. 
  
 Section 6.11 Proprietary Rights. Schedule 6.11 sets forth a correct and complete list of all of each Borrower’s Proprietary Rights.
None of the Proprietary Rights listed in Schedule 6.11 is subject to any licensing agreement or similar arrangement except as set forth on Schedule 6.11. The Proprietary Rights described on Schedule 6.11 constitute all of the
property of such type necessary to the current and anticipated future conduct of the Borrowers’ business. To the best of each Borrower’s knowledge, no slogan or other advertising device, product, process, method, substance, part, or other
material now employed, or now contemplated to be employed, by any Borrower infringes in any material respect upon any rights held by any other Person. No claim or litigation regarding any of the foregoing is, to the knowledge of any Borrower,
pending or threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard, or code is pending or, to the knowledge of any Borrower, proposed, which, in either case, could reasonably be expected
to have a Material Adverse Effect. 
  
 Section 6.12 Trade
Names. All trade names or styles under which any Borrower will sell Inventory or create Accounts, or to which instruments in payment of Accounts may be made payable, are listed on Schedule 6.12. 
  
 Section 6.13 Litigation. There is no pending, or to the best of any
Borrower’s knowledge threatened, action, suit, proceeding, or counterclaim by any Person, or investigation by any Governmental Authority, or any basis for any of the foregoing, which could reasonably be expected to have a Material Adverse
Effect. 
  
 Section 6.14 Labor Matters. As of the Closing
Date, (a) there is no collective bargaining agreement or other labor contract covering employees of any Borrower, (b) no such 

  

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collective bargaining agreement or other labor contract is scheduled to expire during the term of this Agreement, (c) no union or other labor organization is
seeking to organize, or to be recognized as, a collective bargaining unit of employees of any Borrower or for any similar purpose, and (d) there is no pending or (to the best of any Borrower’s knowledge) threatened, strike, work stoppage,
material unfair labor practice claim, or other material labor dispute against or affecting any Borrower or its employees. 
  
 Section 6.15 Environmental Laws. 
  
 (a) Each Borrower has complied in all material respects with all Environmental Laws and no Borrower nor any of its presently or previously
owned Real Estate or presently conducted or prior operations, is subject to any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from the Release or threatened Release of a Contaminant. 
  
 (b) Each Borrower has obtained all permits necessary for its current operations under Environmental Laws, and all such permits are in good
standing, and each Borrower is in compliance with all material terms and conditions of such permits. 
  
 (c) No Borrower nor to the best of any Borrower’s knowledge any of its predecessors in interest has in violation of any Environmental
Law stored, treated, or disposed of any hazardous waste (as defined pursuant to 40 CFR Part 261 or any equivalent Environmental Law). 
  
 (d) No Borrower has received any summons, complaint, order, or similar written notice indicating that it is not currently in compliance
with, or that any Governmental Authority is investigating its compliance with, any Environmental Laws or that it is or may be liable to any other Person as a result of a Release or threatened Release of a Contaminant. 
  
 (e) To the best of each Borrower’s knowledge, none of
the present or past operations of any Borrower is the subject of any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a Release or threatened Release of a Contaminant. 
  
 (f) There is not now, nor to the best of any Borrower’s
knowledge has there ever been, on or in the Real Estate of any Borrower in violation of Environmental Laws: 
  
 (i) any underground storage tanks or surface impoundments, 
  
 (ii) any asbestos-containing material, or 
  
 (iii) any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical transformers, or other
equipment. 
  

 Page 31 

 (g) No Borrower has filed any notice under any requirement of Environmental Law reporting
a spill or accidental and unpermitted Release or discharge of a Contaminant into the environment. 
  
 (h) No Borrower has entered into any negotiations or settlement agreements with any Person (including the prior owner of its property)
imposing material obligations or liabilities on any Borrower with respect to any remedial action in response to the Release of a Contaminant or environmentally related claim. 
  
 (i) None of the products manufactured, distributed, or sold by any Borrower contains asbestos containing
material. 
  
 (j) No Environmental Lien has
attached to the Real Estate of any Borrower. 
  
 Section 6.16
No Violation of Law. No Borrower is in violation of any law, statute, regulation, ordinance, judgment, order, or decree applicable to it which violation could reasonably be expected to have a Material Adverse Effect. 
  
 Section 6.17 No Default. No default, breach, or noncompliance exists
under or with respect to any of the Subordinated Debt or any of the documents entered into in connection therewith. No Borrower is in default with respect to any other note, indenture, loan agreement, mortgage, lease, deed, or other agreement to
which such Borrower is a party or by which it is bound, which default could reasonably be expected to have a Material Adverse Effect. 
  
 Section 6.18 ERISA Compliance. 
  
 (a) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the best knowledge of the Borrower, nothing has occurred which would cause the loss of such qualification. Each
Borrower and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been
made with respect to any Plan. 
  
 (b) There are
no pending or, to the best knowledge of any Borrower, threatened claims, actions, or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. 
  
 (c) Except for instances, if any, which together do not give
rise to liability in excess of $1,000,000 in the aggregate, (i) no ERISA Event has occurred or is reasonably expected to occur, (ii) no Pension Plan has any Unfunded Pension Liability, (iii) no Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA), (iv) no Borrower nor any ERISA 

  

 Page 32 

 
Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan, and (v) no Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

  
 Section 6.19 Taxes. Each Borrower has filed all federal
and other tax returns and reports required to be filed (or appropriate extensions have been timely filed), and has paid all federal and other taxes, assessments, fees, and other governmental charges levied or imposed upon it or its properties,
income, or assets otherwise due and payable unless such unpaid taxes and assessments would constitute a Permitted Lien. 
  
 Section 6.20 Regulated Entities. No Borrower nor any Person controlling any Borrower is an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment Company Act of 1940. No Borrower is a “holding company” or a “subsidiary company” of a “holding company” or an
“affiliate” of a “holding company” or a “public utility” within the meaning of the Public Utility Holding Company Act of 1935, or a regulated entity under the Federal Power Act, the Interstate Commerce Act, any state
public utilities code or law, or any other federal or state statute or regulation limiting its ability to incur indebtedness. 
  
 Section 6.21 Use of Proceeds; Margin Regulations. The proceeds of the Revolving Loans are to be used solely for the purposes specified in
Section 7.28. No Borrower is engaged in the business of buying or selling Margin Stock or extending credit for the purpose of buying or carrying Margin Stock. 
  
 Section 6.22 No Material Adverse Change. No Material Adverse Effect has occurred since the latest date of the
Financial Statements delivered to the Lenders referenced in Section 6.6. 
  
 Section 6.23 Full Disclosure. None of the representations or warranties made by any Borrower in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement, or certificate furnished by or on behalf of any Borrower in connection with the Loan Documents, contains any untrue statement of a material fact or omits any material fact required to be stated
therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. 
  
 Section 6.24 Material Agreements. As of the Closing Date, Schedule 6.24 sets forth all material agreements and
contracts (other than the Loan Documents) of any Borrower which are required to be publicly disclosed pursuant to any Requirement of Law since the date of the Parent’s quarterly report for the Fiscal Quarter ended June 28, 2003. No Borrower is
in default in the performance, observance, or fulfillment of any material obligation, covenant, or condition contained in any agreement, document, or instrument to which it is a party or to which any of its properties or assets are subject, which
default, if not remedied within any applicable grace or cure period could reasonably be expected to have a Material Adverse Effect, nor is there any event, fact, condition or circumstance which, with notice or passage of time or both, would 

  

 Page 33 

 
constitute or result in a conflict, breach, default, or event of default under, any of the foregoing which, if not remedied within any applicable grace or
cure period could reasonably be expected to have a Material Adverse Effect. 
  
 Section 6.25 Bank Accounts. As of the Closing Date, Schedule 6.25 contains a complete and accurate list of all bank accounts maintained by each Borrower with any bank or other financial institution.

  
 Section 6.26 Governmental Authorization. No approval,
consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or other Person is necessary or required in connection with the execution, delivery, or performance by, or enforcement against, any
Borrower of this Agreement or any other Loan Document except for those which have been duly obtained by the Borrowers, copies of which have been provided to the Agent, and for filing of financing statements and the Mortgages. 
  
 Section 6.27 Investment Property. 
  
 (a) Schedule 6.27 sets forth a correct and complete
list of all Investment Property owned by each Borrower. Each Borrower is the legal and beneficial owner of such Investment Property, as so reflected, free and clear of any Lien (other than Permitted Liens), and has not sold, granted any option with
respect to, assigned or transferred, or otherwise disposed of any of its rights or interest therein. 
  
 (b) To the extent any Borrower is the owner of or becomes the issuer of any Investment Property that is Collateral (each such Person which
issues any such Investment Property being referred to herein as an “Issuer”): (i) the Issuer’s shareholders that are Borrowers and the ownership interest of each such shareholder are as set forth on Schedule 6.5, and
each such shareholder is the registered owner thereof on the books of the Issuer; (ii) the Issuer acknowledges the Agent’s Lien; (iii) to the extent required to perfect the Agent’s Liens, such security interest, collateral assignment,
lien, and pledge in favor of the Agent has been registered on the books of the Issuer for such purpose as of the date hereof; and (iv) the Issuer is not aware of any liens, restrictions, or adverse claims which exist on any such Investment Property
other than the Agent’s Lien. 
  
 Section 6.28 Common
Enterprise. The successful operation and condition of each of the Borrowers is dependent on the continued successful performance of the functions of the group of Borrowers as a whole and the successful operation of each Borrower is dependent on
the successful performance and operation of each other Borrower. Each of the Borrowers expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and
indirectly, from successful operations of the Parent and each of the other Borrowers. Each Borrower expects to derive benefit (and the boards of directors or other governing body of each such Borrower have determined that it may reasonably be
expected to derive benefit), directly and indirectly, from the credit extended by the Lenders to the Borrowers hereunder, both in their separate capacities and as members of the group of companies. Each Borrower has determined that execution,
delivery, and performance of this Agreement and any other Loan Documents to be executed by such Borrower is within its purpose, will be of direct and indirect benefit to such Borrower, and is in its best interest. 
  

 Page 34 

 Section 6.29 Subordinated Debt Documents. The Parent has delivered to the Agent true and correct
copies of the Subordinated Debt Documents. The Parent has the corporate power and authority to enter into the Subordinated Debt Documents and to issue the Subordinated Notes and incur the Subordinated Debt evidenced thereby. The issuance by the
Parent of the Subordinated Notes is exempt from registration under applicable federal and state securities laws. 
  
 Section 6.30 Side Agreements. No Borrower nor any Affiliate of any Borrower nor any director, officer, or employee of any Borrower or any Affiliate
of any Borrower, respectively, has entered into, as of the date hereof, any side agreement, either oral or written, with any individual or business, pursuant to which any such Borrower, or any director, officer, employee, or Affiliate thereof agreed
to do anything beyond the requirements of the formal, written contracts executed by the Borrowers and disclosed to the Agent herein. 
  
 Section 6.31 Affiliate Transactions. Except as set forth on Schedule 6.31, there are no existing or proposed agreements, arrangements,
understandings or transactions between any Borrower and any of the officers, members, managers, directors, stockholders, partners, other interest holders, employees or Affiliates of any Borrower or any members of their respective immediate families,
and none of the foregoing Persons are directly or indirectly, indebted to or have any direct or indirect ownership, partnership or voting interest in, any Affiliate of any Borrower or any Person with which any Borrower has a business relationship or
which competes with any Borrower (except that any such Persons may own stock in (but not exceeding 2.0% of the outstanding capital stock of) any publicly traded company that may compete with a Borrower. 
  
 Section 6.32 Food and Drug. Set forth on Schedule 6.32 is a
correct and complete list of (a) all permits, licenses, and approvals that are required under the laws, rules, and regulations of the United States Food and Drug Administration that are applicable to the Borrowers (the “FDA Laws”)
for the operation of the Borrowers’ business (collectively, the “FDA Permits”). Each Borrower has all applicable FDA Permits, all of which (a) are valid and in full force and effect, (b) have not been reversed, stayed, set
aside, annulled, or suspended, (c) are not subject to any conditions or requirements that are not generally imposed on the holders thereof, and (d) constitute the only licenses, permits, authorizations, consents, and approvals required from United
States Food and Drug Administration (the “FDA”) for the operation of the Borrowers’ business as currently conducted and as contemplated by the Loan Documents. Without limitation on the foregoing representations and warranties
in this Section 6.32: 
  
 (a) each
Borrower is in material compliance with all applicable FDA Laws, including, without limitation, current good manufacturing practice requirements; 
  
 (b) each Borrower is registered with the FDA, to the extent such registration is required by any FDA regulations, and each Borrower’s
products, to the extent required by the FDA Laws, have been approved by the FDA or are the subject of a premarket notification to the FDA and order from the FDA declaring such product to be substantially equivalent to a legally marketed predicate
device, to the extent such approval or premarket notification is required by FDA regulations; 
  

 Page 35 

 (c) each Borrower has investigational exemptions for all products requiring such
exemptions, and such products have not been and are not being sold or distributed outside the terms of such investigational exemptions; 
  
 (d) except as set forth on Schedule 6.32, there have been no “recalls,” “product corrections,”
“removals,” “corrections,” “market withdrawals,” or “stock recoveries” as such terms are defined in the regulations promulgated under the Federal Food, Drug and Cosmetic Act with respect to the products during
the five-year period preceding the date hereof; 
  
 (e) there are currently no adverse regulatory compliance issues or actions pending with the FDA and no FDA GMP audits conducted at any of the Borrowers’ facilities have resulted in any material adverse compliance enforcement actions;

  
 (f) Schedule 6.32 contains a list of
each Borrower that has received an ISO 9001 certification and ACE” certification; 
  
 (g) except as set forth on Schedule 6.32, there are no product liability claims pending, nor to the best knowledge of the
Borrowers, threatened against any of the Borrowers; and 
  
 (h) no Borrower is required to obtain any permit, license, lease, power, franchise, certificate, authorization, approval, or other right required by any Governmental Authority. 
  
 Section 6.33 Tax Shelter Regulations. The Borrowers do not intend to
treat the Revolving Loans and/or Letters of Credit as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In the event any Borrower determines to take any action inconsistent with such intention,
it will promptly notify the Agent thereof. If any Borrower so notifies the Agent, the Borrowers acknowledge that one or more of the Lenders may treat the Revolving Loans and/or the Borrowers’ interest in Non-Ratable Loans and/or Letters of
Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation. 
  
 ARTICLE 7 
  
 AFFIRMATIVE AND NEGATIVE COVENANTS 
  

Each Borrower covenants to the Agent and each Lender that so long as any of the Obligations remain outstanding or this Agreement is in effect each
Borrower will keep and perform each of the following covenants: 
  
 Section 7.1 Taxes and Other Obligations. Except as otherwise permitted by the terms of this Agreement, each Borrower shall (a) file when due all tax returns and other reports which 

  

 Page 36 

 
it is required to file, (b) pay, or provide for the payment, when due, of all taxes, fees, assessments, and other governmental charges against it or upon its
property, income, and franchises, make all required withholding and other tax deposits, and establish adequate reserves for the payment of all such items, and provide to the Agent and the Lenders (through the Agent), upon request, satisfactory
evidence of its timely compliance with the foregoing, and (c) pay when due all Debt owed by it and all claims of materialmen, mechanics, carriers, warehousemen, landlords, processors, and other like Persons, and all other indebtedness owed by it and
perform and discharge in a timely manner all other obligations undertaken by it; provided, however, such Borrower need not pay any tax, fee, assessment, or governmental charge (w) which it is contesting in good faith by appropriate
proceedings diligently pursued, (x) for which it has established proper reserves as required under GAAP, (y) for which no Lien (other than a Permitted Lien) results from such non-payment, and (z) with respect to which any such tax, fee, assessment,
or governmental charge in excess of $50,000, such Borrower has notified the Agent in writing of any contest described in clause (w) preceding. 
  
 Section 7.2 Legal Existence and Good Standing. Except with respect to any Borrower that merges into or consolidates with another Borrower as
allowed by Section 7.9, each Borrower shall maintain its legal existence and its qualification and good standing in all jurisdictions in which the failure to maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect. 
  
 Section 7.3
Compliance with Law and Agreements; Maintenance of Licenses. Each Borrower shall comply in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal
Fair Labor Standards Act and all Environmental Laws). Each Borrower shall obtain and maintain all licenses, permits, franchises, and governmental authorizations necessary to own its property and to conduct its business as conducted on the Closing
Date. No Borrower shall modify, amend, or alter its certificate or articles of incorporation, bylaws, limited liability company operating agreement, limited partnership agreement, or other similar constituent documents other than in a manner which
does not adversely affect the rights of the Lenders or the Agent under this Agreement or any of the other Loan Documents. 
  
 Section 7.4 Maintenance of Property; Inspection of Property. 
  
 (a) Each Borrower shall maintain all of its property necessary and useful in the conduct of its business, in
good operating condition and repair, ordinary wear and tear excepted. 
  
 (b) The Borrowers shall permit representatives and independent contractors of the Agent (accompanied by any Lender which so elects with the consent of the Agent) to visit and inspect any of its properties, to examine
its corporate, financial, and operating records, and make copies thereof or abstracts therefrom and to discuss its affairs, finances, and accounts with its directors, officers, and independent public accountants, at such reasonable times during
normal business hours and as soon as may be reasonably desired, upon reasonable advance notice to such Borrower; provided, however, when an Event of Default exists, the Agent or any Lender may do any of the foregoing at the expense of
the Borrowers at any reasonable time and without advance notice. The costs of any such visits and inspections shall be paid by the Borrowers as provided in Section 13.7. 
  

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 Section 7.5 Insurance. 
  
 (a) Each Borrower shall maintain with financially sound and reputable insurers having a rating of at least
A+ or better by Best Rating Guide, insurance against: (i) loss or damage by fire with extended coverage; (ii) theft, burglary, pilferage, and loss in transit; (iii) public liability and third party property damage; (iv) larceny, embezzlement, or
other criminal liability; (v) business interruption; and (vi) such other hazards or of such other types as is customary for Persons engaged in the same or similar business as such Borrower, all such insurance as the Agent, in its discretion, or
acting at the direction of the Majority Lenders, shall specify, in amounts, and under policies acceptable to the Agent and the Majority Lenders. Without limiting the foregoing, in the event that any improved Real Estate covered by a Mortgage is
determined to be located within an area that has been identified by the Director of the Federal Emergency Management Agency as a Special Flood Hazard Area (“SFHA”), the applicable Borrower shall purchase and maintain flood insurance on
such Real Estate and any Equipment and Inventory located on such Real Estate. The amount of such flood insurance will be reasonably determined by the Agent, and shall, at a minimum, comply with applicable federal regulations as required by the Flood
Disaster Protection Act of 1973, as amended. Each Borrower shall also maintain flood insurance for its Inventory and Equipment which is, at any time, located in a SFHA. 
  
 (b) For each of the insurance policies issued as required by this Section 7.5, each Borrower shall
cause the Agent, for the benefit of the Agent and the Lenders, to be named as secured party or mortgagee and sole loss payee or additional insured, in a manner acceptable to the Agent. Each policy of insurance shall contain a clause or endorsement
requiring the insurer to give not less than 30 days prior written notice to the Agent in the event of cancellation of such policy for any reason whatsoever and a clause or endorsement stating that the interest of the Agent shall not be impaired or
invalidated by any act or neglect of the insured Person or the owner of any premises for purposes more hazardous than are permitted by such policy. All premiums for such insurance shall be paid by the Borrowers when due, and certificates of
insurance and, if requested by the Agent or any Lender (through the Agent), photocopies of the policies shall be delivered to the Agent, in each case, in sufficient quantity for distribution by the Agent to each of the Lenders. If any Borrower fails
to procure (or cause to be procured) such insurance or to pay the premiums therefor when due, the Agent may, and at the direction of the Majority Lenders shall, do so from the proceeds of Revolving Loans. 
  
 Section 7.6 Insurance and Condemnation Proceeds. Each Borrower shall
promptly notify the Agent and the Lenders of any material loss, damage, or destruction to the Collateral, whether or not covered by insurance. The Agent is hereby authorized to directly collect all insurance and condemnation proceeds in respect of
Collateral and, in any event, the Borrowers shall deliver all such proceeds to the Agent for application to the Obligations in the manner provided for in Section 3.8. 
  

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 Section 7.7 Environmental Laws. 
  
 (a) Each Borrower shall conduct its business in compliance with all Environmental Laws applicable to it,
including those relating to the generation, handling, use, storage, and disposal of any Contaminant. Each Borrower shall take prompt and appropriate action to respond to any non-compliance with Environmental Laws and shall regularly report to the
Agent on such response. 
  
 (b) Without limiting
the generality of the foregoing, the Borrowers shall submit to the Agent and the Lenders annually, commencing on the first Anniversary Date, and on each Anniversary Date thereafter, an update of the status of each environmental compliance or
liability issue concerning any Borrower or any of their respective properties or operations (whether past or present), if any. The Agent or any Lender may request, in which case the Borrowers will promptly furnish or cause to be furnished to the
Agent, copies of technical reports prepared by any Borrower and its communications with any Governmental Authority to determine whether such Borrower is proceeding reasonably to correct, cure, or contest in good faith any alleged non-compliance or
environmental liability. Each Borrower shall, at the Agent’s or the Majority Lenders’ request and at such Borrower’s expense, (i) retain an independent environmental engineer acceptable to the Agent to evaluate any site, including
tests if appropriate, where the non-compliance or alleged non-compliance with Environmental Laws has occurred and prepare and deliver to the Agent, in sufficient quantity for distribution by the Agent to the Lenders, a report setting forth the
results of such evaluation, a proposed plan for responding to any environmental problems described therein, and an estimate of the costs thereof and (ii) provide to the Agent, in sufficient quantity for distribution by the Agent to the Lenders, a
supplemental report of such engineer whenever the scope of the environmental problems (if any), or the response thereto or the estimated costs thereof, shall increase in any material respect. 
  
 Section 7.8 Compliance with ERISA. Each Borrower shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code, and other federal or state law; (b) cause each Plan which is qualified under Section 401(a) of
the Code to maintain such qualification; (c) make all required contributions to any Plan subject to Section 412 of the Code; (d) not engage in a prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan; and
(e) not engage in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 
  
 Section 7.9 Mergers, Consolidations, or Sales. Other than sales of Inventory in the ordinary course of business, no Borrower shall enter into any transaction of merger, reorganization, or consolidation, or
transfer, sell, assign, license, lease, or otherwise dispose of all or any part of its property, or wind up, liquidate or dissolve, or agree to do any of the foregoing; provided that notwithstanding the foregoing or any other provision of
this Agreement, as long as no Default or Event of Default exists or would result therefrom and provided the Parent gives the Agent and the Lenders prior written notice: 
  
 (a) a Borrower, other than the Parent, may wind-up, dissolve, or liquidate if (i) its property is
transferred to the Parent or another Borrower and (ii) the Person acquiring such property complies with its obligations under Section 7.30 and Section 7.31 hereof and Section 2.3 of the Security Agreement simultaneously with
such acquisition; 
  

 Page 39 

 (b) a Borrower, other than the Parent, may merge or consolidate with the Parent or
another Borrower (provided the Parent is the survivor of any such merger or consolidation to which it is a party); and 
  
 (c) Subject to Section 3.4, a Borrower may enter into sales or other dispositions of its property consisting of: 
  
 (i) Equipment and Real Estate if (A) the Orderly Liquidation
Value of such Equipment and the appraised fair market value of such Real Estate does not exceed $2,000,000 in the aggregate (net of the related sales costs, if any, of such Equipment and Real Estate) during the term of this Agreement for all of the
Borrowers, collectively, (B) the Orderly Liquidation Value of such Equipment and the appraised fair market value of such Real Estate does not exceed $1,000,000 in the aggregate (net of the related sales costs, if any, of such Equipment and Real
Estate) for all of the Borrowers, collectively, during any period of four consecutive Fiscal Quarters, (C) the Agent shall have received written notice of any such sale or disposition involving Equipment with an Orderly Liquidation Value and Real
Estate having an appraised fair market value in excess of $250,000, and (D) the cash consideration received by the applicable Borrower at the time of any such sale or other disposition shall be not less than 50% of the total consideration received;
and 
  
 (ii) subject to Section 3.4, sales
allowed by Section 7.19. 
  
 The inclusion of proceeds in the definition of
Collateral shall not be deemed to constitute the Agent’s or any Lender’s consent to any sale or other disposition of the Collateral except as expressly permitted herein. 
  
 Section 7.10 Distributions; Capital Change; Restricted Investments. No Borrower shall (a) directly or indirectly
declare or make, or incur any liability to make, any Distribution, except Permitted Distributions, (b) make any change in its capital structure which could have a Material Adverse Effect, or (c) make any Restricted Investment. 
  
 Section 7.11 Transactions Resulting in a Material Adverse Effect. No
Borrower shall enter into any transaction which could be reasonably expected to result in a Material Adverse Effect. 
  
 Section 7.12 Guaranties. No Borrower shall make, issue, or become liable on any Guaranty, except Guaranties of the Debt allowed under Section
7.13. 
  
 Section 7.13 Debt. No Borrower shall incur or
maintain any Debt, other than: (a) the Obligations; (b) the Debt described on Schedule 6.8; (c) Capital Leases of Equipment and purchase money secured Debt incurred to purchase Equipment; provided that (i) the Liens securing such
Capital Leases and purchase money secured Debt shall attach only to the Equipment acquired by the incurrence of such Capital Leases and purchase money secured Debt 

  

 Page 40 

 
and (ii) the aggregate amount of such Debt (including all Capital Leases at any time outstanding) outstanding does not exceed $2,000,000 at any time; (d)
Debt evidencing a refunding, renewal, or extension of the Debt described on Schedule 6.8 and in clause (c) preceding; provided that (i) the principal amount thereof is not increased, (ii) the Liens, if any, securing such
refunded, renewed, or extended Debt do not attach to any assets in addition to those assets, if any, securing the Debt to be refunded, renewed, or extended, (iii) no Person that is not an obligor or guarantor of such Debt as of the Closing Date
shall become an obligor or guarantor thereof, and (iv) the terms of such refunding, renewal, or extension are, in the Agent’s reasonable discretion, no less favorable to such Borrower, the Agent, or the Lenders than the original Debt; (e) the
Subordinated Debt in an aggregate principal amount outstanding at any time not in excess of $24,000,000; and (f) other unsecured Debt in an aggregate principal amount outstanding at any time not in excess of $2,000,000. 
  
 Section 7.14 Prepayment. No Borrower shall voluntarily prepay any Debt
except (a) the Obligations or (b) the Subordinated Notes to the extent permitted pursuant to Section 2 of the Intercreditor Agreement. 
  
 Section 7.15 Transactions with Affiliates. Except as set forth below, no Borrower shall, sell, transfer, distribute, or pay any money or property,
including, but not limited to, any fees or expenses of any nature (including, but not limited to, any fees or expenses for management services), to any Affiliate that is not a Borrower, or lend or advance money or property to any Affiliate that is
not a Borrower, or invest in (by capital contribution or otherwise) or purchase or repurchase any Capital Stock or indebtedness, or any property, of any Affiliate that is not a Borrower, or become liable on any Guaranty of the indebtedness,
dividends, or other obligations of any Affiliate that is not a Borrower. Notwithstanding the foregoing, if no Default or Event of Default is in existence or would result therefrom, any Borrower may engage in transactions with an Affiliate in the
ordinary course of such Borrower’s business consistent with past practices and upon terms no less favorable to such Borrower than would be obtained in a comparable arm’s-length transaction with a third party who is not an Affiliate.

  
 Section 7.16 Investment Banking and Finder’s Fees.
No Borrower shall pay or agree to pay, or reimburse any other party with respect to, any investment banking or similar or related fee, underwriter’s fee, finder’s fee, or broker’s fee to any Person in connection with this Agreement
other than pursuant to the Agent’s Letter. The Borrowers shall defend and indemnify the Agent and the Lenders against and hold them harmless from (a) all claims of any Person that any Borrower is obligated to pay any such fees and (b) all costs
and expenses (including reasonable attorneys’ fees) incurred by the Agent and/or any Lender in connection therewith. 
  
 Section 7.17 Business Conducted. The Borrowers shall not engage, directly or indirectly, in any line of business other than the businesses in which
the Borrowers are engaged on the Closing Date and any business activities that are substantially similar, related, or incidental thereto. 
  
 Section 7.18 Liens. No Borrower shall create, incur, assume, or permit to exist any Lien on any property now owned or hereafter acquired by it,
except Permitted Liens. Other than as set forth in this Agreement or in connection with the creation or incurrence of any Debt under Section 7.13(c) no Borrower will enter into or become subject to any Negative Pledge; provided 

  

 Page 41 

 
that any Negative Pledge entered into in connection with the creation of Debt under Section 7.13(c) shall be limited to the property subject to the
purchase money Lien securing such Debt. 
  
 Section 7.19 Sale
and Leaseback Transactions. No Borrower shall, directly or indirectly, enter into any arrangement with any Person providing for such Borrower to lease or rent property that such Borrower has sold or will sell or otherwise transfer to such
Person. 
  
 Section 7.20 New Subsidiaries. No Borrower
shall, without the written consent of the Agent and the Majority Lenders, directly or indirectly, organize, create, acquire, or permit to exist any Subsidiary other than those listed in Schedule 6.5. Without limiting the foregoing, promptly
upon creation or acquisition of any Subsidiary of a Borrower, such Borrower shall propose to the Agent that such new Subsidiary become, and with the Agent’s and the Majority Lenders’ consent pursuant to Section 11.1 and Section
13.22 cause such Subsidiary to become a Borrower, and a Guarantor hereunder. 
  
 Section 7.21 Fiscal Year. No Borrower shall, without the written consent of the Agent and the Majority Lenders, change the last day of its Fiscal Year. 
  
 Section 7.22 Capital Expenditures. No Borrower shall make or commit to
make any payments in any Fiscal Year on account of the purchase or lease of any assets that if purchased would constitute fixed assets or that if leased would constitute a Capital Lease, that in the aggregate for all of the Borrowers would exceed
$5,500,000 during any Fiscal Year. 
  
 Section 7.23 Minimum
EBITDA. The Borrowers shall not permit EBITDA, determined for the Parent and its Subsidiaries on a consolidated basis, for the preceding four Fiscal Quarters of the Parent, to be less than the amounts specified for the applicable dates as
follows: 
  

	 Fiscal Quarter End

	  	Minimum EBITDA

	The last day of the third and fourth Fiscal Quarters of the Fiscal Year ending December 31, 2003	  	$	11,500,000
		
	The last day of the each Fiscal Quarter of the Fiscal Year ending December 31, 2004	  	$	12,500,000
		
	The last day of the each Fiscal Quarter of the Fiscal Year ending December 31, 2005	  	$	14,500,000
		
	The last day of the first Fiscal Quarter of the Fiscal Year ending December 31, 2006 and each Fiscal Quarter ending thereafter	  	$	15,000,000

  

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 Section 7.24 Fixed Charge Coverage Ratio. The Borrowers shall not permit the Fixed Charge Coverage
Ratio, determined for the Parent and its Subsidiaries on a consolidated basis, as of the last day of any Fiscal Quarter, to be less than the amounts specified for the applicable dates as follows: 
  

	 Fiscal Quarter End

	  	Minimum Fixed Charge
Coverage Ratio

	 The last day of the third Fiscal Quarter of the Fiscal Year ending December 31, 2003
	  	1.02 to 1.00
		
	 The last day of the fourth Fiscal Quarter of the Fiscal Year ending December 31, 2003
	  	1.15 to 1.00
		
	 The last day of the first Fiscal Quarter of the Fiscal Year ending December 31, 2004
	  	1.25 to 1.00
		
	The last day of the second Fiscal Quarter of the Fiscal Year ending December 31, 2004, and the last day of each Fiscal Quarter ending thereafter	  	1.50 to 1.00

  
 Section 7.25 Total
Debt to EBITDA Ratio. Total Debt to EBITDA Ratio. The Borrowers shall not permit the ratio of Total Debt to EBITDA, determined for the Parent and its Subsidiaries on a consolidated basis, as of the last day of any Fiscal Quarter, to be greater
than 3.50 to 1.00. 
  
 Section 7.26 Reserved. 

 
 Section 7.27 Leases. At no time shall the sum of the aggregate
amount of annualized payments on operating leases of the Borrowers during any Fiscal Year exceed $1,200,000. 
  
 Section 7.28 Use of Proceeds. The Borrowers shall use the proceeds of the Revolving Loans for capital expenditures, acquisitions, working capital,
and other lawful corporate purposes (not otherwise prohibited by this Agreement) in the ordinary course of business, and shall not use any portion of the Revolving Loan proceeds, directly or indirectly, (i) to buy or carry any Margin Stock, (ii) to
repay or otherwise refinance indebtedness of the Borrowers or others incurred to buy or carry any Margin Stock, (iii) to extend credit for the purpose of buying or carrying any Margin Stock, (iv) to acquire any security in any transaction that is
subject to Section 13 or 14 of the Exchange Act or (v) to make any payment under or in respect of any Subordinated Debt if any Default or Event of Default is in existence, or would exist after giving effect to such Revolving Loan, or if, after
giving effect to such Revolving Loan, Availability would be less than $0. 
  

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 Section 7.29 Lenders as Depository. Each Borrower shall maintain the Bank as its principal
depository bank, including for the maintenance of operating, administrative, cash management, collection activity, and other deposit accounts for the conduct of its business. 
  
 Section 7.30 Guaranties. Each Borrower, including any Person which becomes a Borrower after the Closing Date pursuant
to the terms of this Agreement, shall guarantee payment and performance of the Obligations (other than Obligations owing by itself and excluding Existing Obligations in the case of any such guarantee by a Newly Obligated Borrower) pursuant to a
Guaranty Agreement in form and substance satisfactory to the Agent, duly executed by each such Borrower. Each Borrower acknowledges and expressly agrees with the Agent and each Lender that the Guaranty by such Borrower is required solely as a
condition to, and is given solely as inducement for and in consideration of, credit or accommodations extended or to be extended under the Loan Documents to any or all of the other Borrowers and is not required or given as a condition of extensions
of credit to such Borrower. 
  
 Section 7.31 Additional
Collateral; Further Assurances. 
  
 (a)
Subject to Requirements of Law, each Borrower shall cause any Subsidiary of the Parent to, upon the request of the Agent, (i) grant Liens to the Agent, for the benefit of the Agent and the Lenders, pursuant to such documents as the Agent may
reasonably deem necessary and deliver such property, documents, and instruments as the Agent may request to perfect the Liens of the Agent in any property of such Subsidiary (ii) execute a Guaranty of the Obligations, in form and substance
satisfactory to the Agent, and (iii) in connection with the foregoing requirements, or either of them, deliver to the Agent all items of the type required by Section 8.1(a) (as applicable). Upon execution and delivery of such Loan Documents
and other instruments, certificates, and agreements, such Subsidiary shall automatically become a Borrower hereunder and thereupon shall have all of the rights, benefits, duties, and obligations in such capacity under the Loan Documents. 

 
 (b) In the event that any Borrower shall obtain executed
“Junior Subordination Agreements” from any “Junior Lenders” as required by Section 7.1(m) of the CapitalSource Subordinated Debt Agreement, such Borrower shall do so only on the condition that the Debt of such Borrower to such
Junior Lenders is subordinated to the Obligations to at least the same extent as the Subordinated Debt is subordinated to the Obligations, in each case on terms and conditions satisfactory to the Agent in its absolute discretion. 
  
 (c) Without limiting the foregoing, the Borrowers shall, and
shall cause each of the Parent’s Subsidiaries to, execute and deliver, or cause to be executed and delivered, to the Agent such documents and agreements, and shall take or cause to be taken such actions as the Agent may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents. 
  

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 ARTICLE 8 
  
 CONDITIONS OF LENDING 
  
 Section 8.1 Conditions Precedent to Making of Revolving Loans on the Closing Date. The obligation of the Lenders to make the initial Revolving
Loans on the Closing Date, and the obligation of the Agent to cause the Letter of Credit Issuer to issue any Letter of Credit on the Closing Date, are subject to the following conditions precedent having been satisfied in a manner satisfactory to
the Agent and each Lender: 
  
 (a) The Agent
shall have received each of the following documents, all of which shall be satisfactory in form and substance to the Agent and the Lenders: 
  
 (i) certified copies of the certificate of incorporation, certificate of limited partnership, or comparable organizational document of
each of the Borrowers, with all amendments, if any, certified by the appropriate Governmental Authority of the state of each Borrower’s organization or formation, and the bylaws, regulations, operating agreement, limited partnership agreement,
or similar governing agreement or document of each Borrower, in each case certified by the corporate secretary, general partner, or comparable authorized representative of such Borrower, as applicable as being true and correct and in effect on the
Closing Date; 
  
 (ii) certificates of incumbency
and specimen signatures with respect to each individual authorized to execute and deliver this Agreement and the other Loan Documents on behalf of each Borrower and each other Person executing any document, certificate, or instrument to be delivered
in connection with this Agreement and the other Loan Documents and, in the case of each Borrower, to request Borrowings and the issuance of Letters of Credit; 
  

(iii) a certificate evidencing the existence of each Borrower, and certificates evidencing the good standing of each Borrower, as
applicable, in the jurisdiction of its organization and in each other jurisdiction in which it is required to be qualified as a foreign business entity to transact its business as presently conducted; 
  
 (iv) certified copies of all action taken by each Borrower
and each other Person executing any document, certificate, or instrument to be delivered in connection with this Agreement and the other Loan Documents to authorize the execution, delivery, and performance of this Agreement, the other Loan
Documents, and, with respect to the Borrowers, the Borrowings and the issuance of Letters of Credit; 
  
 (v) a certificate of each Borrower signed by a Responsible Officer: (A) stating that all of the representations and warranties made or
deemed to be made under this Agreement are true and correct as of the Closing Date, after giving effect to the Revolving Loans to be made at such time and the application 

  

 Page 45 

 
of the proceeds thereof and the issuance of any Letter(s) of Credit at such time, (B) stating that no Default or Event of Default exists, (C) specifying the
account of the Borrowers which is the Designated Account, (D) certifying as to such other factual matters as may be reasonably requested by the Agent, and (E) attaching true and correct copies of the Subordinated Debt Documents; 
  
 (vi) with respect to any Letter of Credit to be issued, all
documentation required by Section 1.4, duly executed; 
  
 (vii) a Revolving Note payable to the order of each Lender in the amount of its Commitment with respect thereto, duly executed and delivered by each Borrower, complying with the requirements of Section 1.2(b)
and Section 1.3(c); 
  
 (viii) UCC
financing statements and/or amendments to existing UCC financing statements (to the extent required) with respect to all Collateral as may be requested by the Agent, duly executed by the respective Borrowers, in all jurisdictions that the Agent may
deem necessary or desirable in order to perfect the Agent’s Lien therein and acknowledgment copies of proper financing statements, duly filed on or before the Closing Date under the UCC in each jurisdiction the Agent deems necessary or
desirable in order to perfect the Agent’s Liens; 
  
 (ix) duly executed UCC termination statements or assignments and such other instruments, in form and substance satisfactory to the Agent, as shall be necessary to terminate and satisfy all Liens on the property of the Borrowers except
Permitted Liens; 
  
 (x) a Copyright Security
Agreement, a Patent Security Agreement, and a Trademark Security Agreement, as applicable, with respect to all Proprietary Rights, if any, owned by any Borrower which must be registered with any Governmental Authority to perfect the Agent’s
Liens in such Proprietary Rights, duly executed by each Borrower, as applicable; 
  
 (xi) each Guaranty Agreement, duly executed and delivered by each Person required pursuant to Section 7.30; 
  
 (xii) the Security Agreements duly executed by each Borrower
as applicable; 
  
 (xiii) the Autoborrow
Agreement duly executed by each Borrower; 
  
 (xiv) (A) stock certificates and stock powers (duly executed in blank) for all Capital Stock (to the extent certificated) in each Subsidiary of the Parent, together with acknowledgments executed by the respective issuers thereof, in form
and substance satisfactory to the Agent and (B) ”control” agreements (pursuant to the UCC), each duly executed, as the Agent may request with respect to any other Investment Property listed in Schedule 6.27; 
  

 Page 46 

 (xv) the following with respect to each parcel of Real Estate owned by any Borrower:

  
 (A) a Mortgage in proper form for recording
in the jurisdiction in which such Real Estate covered thereby is located; 
  
 (B) ALTA or other mortgagee’s title policies, in form and substance satisfactory to the Agent, with respect to the Real Estate subject to the Mortgages; 
  
 (C) an environmental site assessment, in compliance with
applicable Requirements of Law, prepared by a credentialed environmental consultant acceptable to the Agent; 
  
 (D) a boundary survey prepared and certified to the Agent by a credentialed surveyor acceptable to the Agent; and 
  
 (E) such other information, documentation, and
certifications, in form and substance satisfactory to the Agent, as may be required by the Agent; 
  
 (xvi) [Reserved] 
  
 (xvii) a landlord’s or mortgagee’s waiver and consent agreement, or if the Agent consents, a landlord’s or mortgagee’s
subordination and consent agreement, in form and substance reasonably acceptable to the Agent, duly executed on behalf of each landlord or mortgagee, as the case may be, of Real Estate on which any Collateral is located (provided that the
Agent may, in its discretion, establish a Reserve with respect to any Collateral located on any Real Estate for which the Agent has not received an acceptable waiver and consent or subordination and consent agreement); 
  
 (xviii) signed opinions of counsel for the Borrowers,
opining as to such matters in connection with the transactions contemplated by this Agreement as the Agent may reasonably request, each such opinion to be in a form, scope, and substance satisfactory to the Agent, the Lenders, and their respective
counsel; 
  
 (xix) the Agent shall have received
evidence, in form, scope, and substance, reasonably satisfactory to the Agent, of all insurance coverage as required by this Agreement; and 
  
 (xx) such other documents and instruments as the Agent or any Lender (through the Agent) may reasonably request. 
  
 (b) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct. 
  

 Page 47 

 (c) No Default or Event of Default shall exist or would exist after giving effect to the
Revolving Loans to be made and the Letters of Credit to be issued. 
  
 (d) The Borrowers shall have paid all fees and expenses of the Agent and the Attorney Costs incurred in connection with any of the Loan Documents and the transactions contemplated thereby to the extent invoiced.

  
 (e) All proceedings taken in connection with
the execution of this Agreement, the other Loan Documents, and all documents and papers relating thereto shall be satisfactory in form, scope, and substance to the Agent and the Lenders. 
  
 (f) Without in any way limiting Section 2.3 of the Security Agreements, the Agent shall have received
any warehouse receipts, consent and control agreements, subordination agreements, or other documentation the Agent determines in its sole discretion are necessary to perfect the Agent’s Liens in any Inventory or other Collateral in the
possession of any warehouseman. 
  
 (g) Without
limiting the generality of the items described above, each of the Borrowers and each other Person guaranteeing or securing payment of the Obligations shall have delivered or caused to be delivered to the Agent (in form and substance reasonably
satisfactory to the Agent), the financial statements, instruments, resolutions, documents, agreements, certificates, opinions and other items required by the Agent and the Lenders (through the Agent). 
  
 The acceptance by the Borrowers of any Revolving Loans made or Letters of Credit issued on
the Closing Date shall be deemed to be a representation and warranty made by the Borrowers to the effect that all of the conditions precedent to the making of such Revolving Loans or issuance of such Letters of Credit have been satisfied, with the
same effect as delivery to the Agent and the Lenders of a certificate signed by a Responsible Officer of the Borrowers, dated the Closing Date, to such effect. Execution and delivery to the Agent by a Lender of a counterpart of this Agreement shall
be deemed confirmation by such Lender that (x) all conditions precedent in this Section 8.1 have been fulfilled to the satisfaction of such Lender, (y) the decision of such Lender to execute and deliver to the Agent an executed counterpart of
this Agreement was made by such Lender independently and without reliance on the Agent or any other Lender as to the satisfaction of any condition precedent set forth in this Section 8.1, and (z) all documents sent to such Lender for
approval, consent, or satisfaction were acceptable to such Lender. 
  
 Section 8.2 Conditions Precedent to Each Revolving Loan. The obligation of the Lenders to make each Revolving Loan, including the initial Revolving Loans on the Closing Date, and the obligation of the Agent to cause the Letter of
Credit Issuer to issue any Letter of Credit shall be subject to the further conditions precedent that on and as of the date of any such extension of credit the following statements shall be true, and the acceptance by the Borrowers of any extension
of credit shall be deemed to be a statement to the effect set forth in clause (a), clause (b), and clause (c) following with the same effect as the delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer of the Borrowers, dated the date of such extension of credit, stating that: 
  
 (a) the representations and warranties contained in this Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such date, other than any such representation or warranty which relates to a specified prior date and except to the extent the Agent and the Lenders have been notified in
writing by the Borrowers that any representation or warranty is not correct and the Majority Lenders have explicitly waived in writing compliance with such representation or warranty; 
  

 Page 48 

 (b) no event has occurred and is continuing, or would result from such extension of
credit, which constitutes a Default or an Event of Default; 
  
 (c) no event has occurred and is continuing, or would result from such extension of credit, which has had or would have a Material Adverse Effect; and 
  
 (d) The Agent shall have received satisfactory evidence that the Agent has a valid, exclusive (other than
Permitted Liens), and perfected first priority security interest, lien, collateral assignment, and pledge as of such date in all Collateral as security for all Obligations (excluding Existing Obligations in the case of property owned by a Newly
Obligated Borrower), to the extent any such Liens may be perfected under the UCC (but excluding any Liens on vehicles for which a certificate of title has been issued and Liens perfected solely by possession, but only to the extent the Agent has not
requested perfection of its Liens in such vehicles or possession of such Collateral), in each case in form and substance satisfactory to the Agent; provided that upon the Agent’s request, the Borrowers shall provide any additional
agreement, document, instrument, certificate, or other item relating to any other Collateral as may be required for perfection under any Requirement of Law. 
  
 Except as provided by Section 11.1(a), no Borrowing or issuance of any Letter of Credit shall exceed the Availability, provided, however, that the
foregoing conditions precedent are not conditions to the requirement for each Lender participating in or reimbursing the Bank or the Agent for such Lenders’ Pro Rata Share of any Non-Ratable Loan made in accordance with the provisions of
Section 1.2(i) or Autoborrow Loan made in accordance with the Autoborrow Agreement. 
  
 ARTICLE 9 
  
 DEFAULT; REMEDIES

  
 Section 9.1 Events of Default. It shall constitute an
event of default (“Event of Default”) if any one or more of the following shall occur for any reason: 
  
 (a) any failure by the Borrowers to pay the principal of or interest or premium on any of the Obligations or any fee or other amount owing
hereunder when due, whether upon demand or otherwise; 
  
 (b) any representation or warranty made or deemed made by any Borrower in this Agreement or in any other Loan Document, any Financial Statement, or any certificate furnished by any Borrower at any time to the Agent or any Lender shall prove
to be untrue in any material respect as of the date on which made, deemed made, or furnished; 
  

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 (c) any default shall occur in the 
  
 (i) observance or performance of any of the covenants and
agreements contained in clauses (a), (b), (c), (d), (g), (j), and (k) of Section 5.2, Section 7.2 (insofar as it requires the preservation of the existence of the Borrowers), or
Section 7.9 through Section 7.30, 
  
 (ii) observance or performance of any of the covenants and agreements contained in clauses (e), (f), (h), (i), and (l) of Section 5.2, Section 5.3, or Section 7.31 and such default
shall continue for five days or more, or 
  
 (iii) observance or performance of any of the other covenants or agreements contained in this Agreement other than as referenced in clause (a), clause (b), clause (i), and clause (ii) preceding, clause
(d) and clause (r) following, and any other Loan Document, or any other agreement entered into at any time to which any Borrower and the Agent or any Lender are party (including in respect of any Bank Products) and such default shall
continue for more than fifteen days, or if any such agreement or document shall terminate (other than in accordance with its terms or the terms hereof or with the written consent of the Agent and the Majority Lenders) or become void or unenforceable
without the written consent of the Agent and the Majority Lenders; 
  
 (d) any default shall occur with respect to any Debt (other than the Obligations) of the Borrowers in an outstanding principal amount which exceeds $250,000, or under any agreement or instrument under or pursuant to
which any such Debt may have been issued, created, assumed, or guaranteed by any Borrower, and such default shall continue for more than the period of grace, if any, therein specified, if the effect thereof (with or without the giving of notice or
further lapse of time or both) is to accelerate or to permit the holders of any such Debt to accelerate, the maturity of any such Debt, or any such Debt shall be declared due and payable or be required to be prepaid (other than by a regularly
scheduled required prepayment) prior to the stated maturity thereof; 
  
 (e) any Borrower shall (i) file a voluntary petition in bankruptcy or file a voluntary petition or an answer or otherwise commence any action or proceeding seeking reorganization, arrangement, or readjustment of its
debts or for any other relief under the Bankruptcy Code or under any other bankruptcy or insolvency act or law, state or federal, now or hereafter existing, or consent to, approve of, or acquiesce in, any such petition, action, or proceeding, (ii)
apply for or acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee, or similar officer for it or for all or any part of its property, (iii) make an assignment for the benefit of its creditors, or
(iv) be unable generally to pay its debts as they become due; 
  

 Page 50 

 (f) an involuntary petition or proposal shall be filed or an action or proceeding
otherwise commenced seeking reorganization, arrangement, consolidation, or readjustment of the debts of any Borrower or for any other relief under the Bankruptcy Code or under any other bankruptcy or insolvency act or law, state or federal, now or
hereafter existing and such petition or proceeding shall not be dismissed within 30 days after the filing or commencement thereof or an order of relief (or comparable order under any other Requirement of Law) against any Borrower shall be entered
with respect thereto; 
  
 (g) a receiver,
assignee, liquidator, sequestrator, custodian, monitor, trustee, or similar officer for any Borrower or for all or any part of its property shall be appointed or a warrant of attachment, execution, or similar process shall be issued against any part
of the property of any Borrower; 
  
 (h) any
Borrower shall file a certificate of dissolution under any Requirement of Law or shall be liquidated, dissolved, or wound-up (except in a transaction allowed under Section 7.9) or shall commence or have commenced against it any action or
proceeding for dissolution, winding-up, or liquidation, or shall take any corporate action in furtherance thereof; 
  
 (i) all or any material part of the property of any Borrower shall be nationalized, expropriated, condemned, seized, or otherwise
appropriated, or custody or control of such property or of any Borrower shall be assumed by any Governmental Authority or any court of competent jurisdiction at the instance of any Governmental Authority, except where contested in good faith by
proper proceedings diligently pursued where a stay of enforcement is in effect; 
  
 (j) any Loan Document, including any Guaranty of the Obligations, shall be terminated, revoked, or declared void or invalid or
unenforceable or challenged by any Borrower or any other obligor or any material provision of any Loan Document for any reason ceases to be valid, binding, and enforceable in accordance with its terms; 
  
 (k) one or more judgments, orders, decrees, or arbitration
awards is entered against any Borrower involving liability in the aggregate for all of the Borrowers (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related or
unrelated series of transactions, incidents, or conditions, of $250,000 or more, and the same shall remain unsatisfied, unvacated, and unstayed pending appeal for a period of 30 days after the entry thereof; 
  
 (l) any loss, theft, damage, or destruction of any item or
items of Collateral or other property of any Borrower occurs which could reasonably be expected to cause a Material Adverse Effect and is not adequately covered by insurance; 
  
 (m) there is filed against any Borrower any action, suit, or proceeding under any federal or state
racketeering statute (including the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit, or proceeding (i) is not dismissed within 120 days and (ii) could reasonably be expected to result in the confiscation or forfeiture
of any material portion of the Collateral; 
  

 Page 51 

 (n) for any reason other than the failure of the Agent to take any action available to it
to maintain perfection of the Agent’s Liens pursuant to the Loan Documents, any Loan Document ceases to be in full force and effect or any Lien with respect to any material portion of any Collateral intended to be secured thereby ceases to be,
or is not, valid, perfected, and prior to all other Liens (other than Permitted Liens which are expressly permitted to have priority over the Agent’s Liens) or is terminated, revoked, or declared void; 
  
 (o) (i) an ERISA Event shall occur with respect to a Pension
Plan or Multi-employer Plan which has resulted or could reasonably be expected to result in liability of any Borrower under Title IV of ERISA to the Pension Plan, Multi-employer Plan, or the PBGC in an aggregate amount in excess of $500,000; (ii)
the aggregate amount of Unfunded Pension Liability among all Pension Plans at any time exceeds $500,000; or (iii) any Borrower or any ERISA Affiliate shall fail to pay when due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multi-employer Plan in an aggregate amount in excess of $500,000; 
  
 (p) there occurs a Change of Control; 
  
 (q) there occurs an event having a Material Adverse Effect; 
  
 (r) any breach, noncompliance, default or event of default (however defined), or other violation occurs
under any of the Subordinated Debt Documents. 
  
 Section
9.2 Remedies. 
  
 (a) If a Default or an
Event of Default exists, the Agent may, in its discretion, and shall, at the direction of the Majority Lenders, do one or more of the following at any time or times and in any order, without notice to or demand on any Borrower: (i) reduce the
Maximum Revolver Amount, or the advance rates against Eligible Accounts and/or Eligible Inventory used in computing the Borrowing Base, or reduce or increase one or more of the other elements used in computing the Borrowing Base; (ii) restrict the
amount of or refuse to make Revolving Loans; and (iii) restrict or refuse to provide Letters of Credit. If an Event of Default exists, the Agent shall, at the direction of the Majority Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times and in any order, without notice to or demand on any Borrower: (A) terminate the Commitments and this Agreement; (B) declare any or all Obligations to be immediately due and payable;
provided, however, that upon the occurrence of any Event of Default described in Section 9.1(e), Section 9.1(f), Section 9.1(g), or Section 9.1(h), the Commitments shall automatically and immediately expire
and all Obligations shall automatically become immediately due and payable without notice or demand of any kind; (C) require the Borrower to cash collateralize all outstanding Obligations outstanding with respect to Letters of Credit; and (D) pursue
its other rights and remedies under the Loan Documents and applicable law. 
  

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 (b) If an Event of Default has occurred and is continuing: (i) the Agent shall have, for
the benefit of the Agent and the Lenders, in addition to all other rights of the Agent and the Lenders, the rights and remedies of a secured party under the Loan Documents and the UCC; (ii) the Agent may, at any time, take possession of the
Collateral and keep it on any Borrower’s premises, at no cost to the Agent or any Lender, or remove any part of it to such other place or places as the Agent may desire, or any Borrower shall, upon the Agent’s demand, at such
Borrower’s cost, assemble the Collateral and make it available to the Agent at a place reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any Collateral at public or private sales, for cash, upon credit, or otherwise,
at such prices and upon such terms as the Agent deems advisable, in its sole discretion, and may, if the Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an announcement at the time and place of sale or of such postponed
or adjourned sale without giving a new notice of sale. Without in any way requiring notice to be given in the following manner, each Borrower agrees that any notice by the Agent of sale, disposition, or other intended action hereunder or in
connection herewith, whether required by the UCC or otherwise, shall constitute reasonable notice to the Borrowers if such notice is mailed by registered or certified mail, return receipt requested, postage prepaid, or is delivered personally
against receipt, at least ten days prior to such action to the Borrowers’ address specified in or pursuant to Section 13.8. If any Collateral is sold on terms other than payment in full at the time of sale, no credit shall be given
against the Obligations until the Agent or the Lenders receive payment, and if the buyer defaults in payment, the Agent may resell the Collateral without further notice to any Borrower. In the event the Agent seeks to take possession of all or any
portion of the Collateral by judicial process, each Borrower irrevocably waives: (A) the posting of any bond, surety, or security with respect thereto which might otherwise be required; (B) any demand for possession prior to the commencement of any
suit or action to recover the Collateral; and (C) any requirement that the Agent retain possession and not dispose of any Collateral until after trial or final judgment. Each Borrower agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Agent is hereby granted a license or other right to use, without charge, each Borrower’s labels, patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of, advertising, or selling any Collateral, and each Borrower’s rights under all licenses and all franchise agreements shall inure to the Agent’s benefit for such
purpose. The proceeds of sale shall be applied first to all expenses of sale, including Attorney Costs, and then to the Obligations. The Agent will return any excess to the Borrowers and the Borrowers shall remain liable for any deficiency.

  
 (c) If an Event of Default occurs and is
continuing, each Borrower hereby waives all rights to notice and hearing prior to the exercise by the Agent of the Agent’s rights to repossess the Collateral without judicial process or to replevy, attach, or levy upon the Collateral without
notice or hearing. 
  

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 ARTICLE 10 
  
 TERM AND TERMINATION 
  
 Section 10.1 Term and Termination. The term of this Agreement shall end on the Stated Termination Date unless sooner terminated in accordance with
the terms hereof. The Agent upon direction from the Majority Lenders may terminate this Agreement, without notice to the Borrowers, during the existence of an Event of Default. Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including all unpaid principal, accrued and unpaid interest, and any early termination or prepayment fees or penalties but excluding indemnification obligations to the extent no claim with respect thereto has been
asserted and remains unsatisfied) shall become immediately due and payable and the Borrowers shall immediately arrange for the cancellation and return of all Letters of Credit then outstanding. Notwithstanding the termination of this Agreement,
until all Obligations are indefeasibly paid and performed in full in cash, the Borrowers shall remain bound by the terms of this Agreement and the other Loan Documents and shall not be relieved of any of their Obligations hereunder or under any
other Loan Document, and the Agent and the Lenders shall retain all their rights and remedies hereunder and under the other Loan Documents (including, without limitation, the Agent’s Liens in and all rights and remedies with respect to all then
existing and after-arising Collateral). 
  
 ARTICLE 11 

 
 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS 
  
 Section 11.1 Amendments and Waivers. 
  
 (a) No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any departure by any Borrower therefrom, shall be effective unless the same shall be in writing and signed by the Majority Lenders (or by the Agent at the written request of the
Majority Lenders) and the Borrowers (which may be evidenced by the signature of the Parent pursuant to Section 13.21) and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders and the Borrowers and acknowledged by the Agent, do any of the following: 
  
 (i) increase or extend the Commitment of any Lender;

  
 (ii) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of principal, interest, fees (other than fees payable to the Agent solely for the Agent’s benefit), or other amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document; 
  
 (iii) reduce the principal of, or
the rate of interest specified herein on any Revolving Loan, or any fees or other amounts payable hereunder or under any other Loan Document; 
  

 Page 54 

 (iv) change the percentage of the Commitments or of the aggregate unpaid principal amount
of the Revolving Loans which is required for the Lenders or any of them to take any action hereunder; 
  
 (v) increase any of the percentages set forth in the definition of the Borrowing Base; 
  
 (vi) amend this Section 11.1 or any provision of this
Agreement providing for consent or other action by all of the Lenders; 
  
 (vii) release Collateral other than as permitted by Section 12.11; 
  
 (viii) change the definition of “Majority Lenders”; or 
  
 (ix) increase the Maximum Revolver Amount or the Letter of Credit Subfacility; 
  
 provided, however, the Agent may, in its sole discretion and
notwithstanding the limitations contained in clause (v) and clause (ix) preceding and any other terms of this Agreement, make Non-Ratable Loans in accordance with Section 1.2(i) and Autoborrow Loans in accordance with the
Autoborrow Agreement and, provided, further, that no amendment, waiver, or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent under this Agreement or any other Loan Document and,
provided, further, that Schedule A-1 (“Commitments”) may be amended from time to time by the Agent alone to reflect assignments of Commitments in accordance herewith. 
  
 (b) If any fees are paid to the Lenders as consideration for
amendments, waivers, or consents with respect to this Agreement, at the Agent’s election, such fees may be paid only to those Lenders that agree to such amendments, waivers, or consents within the time specified for submission thereof.

  
 (c) If, in connection with any proposed
amendment, waiver, or consent (a “Proposed Change”) requiring the consent of all of the Lenders, the consent of the Majority Lenders is obtained, but the consent of the other Lenders is not obtained (any such Lender whose consent is
not obtained as described in this clause (c) being referred to as a “Non-Consenting Lender”), then, so long as the Agent is not a Non-Consenting Lender, at the Borrowers’ request the Agent (in its individual capacity as
a Lender) or an Eligible Assignee (with the Agent’s approval) shall have the right (but not the obligation) to purchase from each Non-Consenting Lender, and each Non-Consenting Lender agrees that it shall sell, such Non-Consenting Lender’s
Commitments for an amount equal to the principal balances thereof and all accrued interest and fees with respect thereto through the date of sale pursuant to an Assignment and Acceptance, without premium or discount. 
  
 Section 11.2 Assignments; Participations. 
  
 (a) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably withheld) and, so long as no Default or Event of Default exists, of the Borrower (which consent shall not be unreasonably be withheld), assign and 

  

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delegate to one or more Eligible Assignees (provided that no consent of the Agent or the Borrower shall be required in connection with any assignment
and delegation by a Lender to an Affiliate of such Lender) (each an “Assignee”) all, or any ratable part of all, of the Revolving Loans, the Commitments, and the other rights and obligations of such Lender hereunder, in a minimum
amount of $5,000,000 (provided that, unless an assignor Lender has assigned and delegated all of its Revolving Loans and Commitments, no such assignment and/or delegation shall be permitted unless, after giving effect thereto, such assignor
Lender retains a Commitment in a minimum amount of $5,000,000); provided, however, that the Borrowers and the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee
until (i) written notice of such assignment, together with payment instructions, addresses, and related information with respect to the Assignee, shall have been given to the Borrowers and the Agent by such Lender and the Assignee; (ii) such Lender
and its Assignee shall have delivered to the Borrower and the Agent an Assignment and Acceptance in the form of Exhibit F (an “Assignment and Acceptance”) together with any Revolving Note or Revolving Notes subject to such
assignment, and (iii) the assignor Lender or Assignee has paid to the Agent a processing fee in the amount of $3,500. The Borrowers agree to promptly execute and deliver new or replacement Revolving Notes as reasonably requested by the Agent to
evidence assignments of the Revolving Loans and Commitments in accordance herewith. 
  
 (b) From and after the date that the Agent notifies the assignor Lender that it has received an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations, including, but not limited to, the obligation to participate in Letters of Credit have been assigned
to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights 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 an
assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto). 
  
 (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements,
warranties, or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of this Agreement or any other Loan Document furnished pursuant hereto or the
attachment, perfection, or priority of any Lien granted by the Borrowers to the Agent or any Lender in the Collateral; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial
condition of the Borrowers or the performance or observance by any Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that it has received a copy of this 

  

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Agreement, together with such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such Assignee will, independently and without reliance upon the Agent, such assigning Lender, or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Agreement; (v) such Assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the
Agent by the terms hereof, together with such powers, including the discretionary rights and incidental power, as are reasonably incidental thereto; and (vi) such Assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by it as a Lender. 
  
 (d) Immediately upon satisfaction of the requirements of Section 11.2(a), this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender pro
tanto. 
  
 (e) Any Lender may at any time sell to
one or more Participants participating interests in any Revolving Loans, the Commitment of that Lender, and the other interests of that Lender (the “originating Lender”) hereunder and under the other Loan Documents; provided,
however, that (i) the originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Borrowers and the Agent
shall continue to deal solely and directly with the originating Lender in connection with the originating Lender’s rights and obligations under this Agreement and the other Loan Documents, and (iv) no Lender shall transfer or grant any
participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document except the matters set forth in Section 11.1(a)(i), Section
11.1(a)(ii), and Section 11.1(a)(iii), and (v) all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation, except that, if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this
Agreement to the same extent and subject to the same limitation as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. 
  
 (f) Notwithstanding any other provision in this Agreement, any Lender may at any time create a security
interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Board or U.S. Treasury Regulation 31 CFR ‘203.14, and such
Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law. 
  

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 ARTICLE 12 
  
 THE ADMINISTRATIVE AGENT 
  
 Section 12.1 Appointment and Authorization. Each Lender hereby designates and appoints the Bank (acting in its capacity as the Agent) as its agent
under this Agreement and the other Loan Documents and each Lender hereby irrevocably authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. The Agent agrees to act as such on the express conditions contained in this
Article 12. Without limiting the foregoing, each Lender acknowledges and confirms that the Agent’s execution and delivery of the Intercreditor Agreement is sufficient to bind all of the Lenders thereto and that such Lender is expressly
intended to be treated as, and shall be entitled to be treated as, a third party beneficiary thereto. The provisions of this Article 12 are solely for the benefit of the Agent and the Lenders and the Borrowers shall have no rights as a third
party beneficiary of any of the provisions contained herein other than as expressly provided in Section 12.10 and Section 12.11. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. Without limiting the generality of the foregoing sentence, the use of the term “Agent”
in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and
is intended to create or reflect only an administrative relationship between independent contracting parties. Except as expressly otherwise provided in this Agreement, the Agent shall have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking or refraining from taking any actions which the Agent is expressly entitled to take or assert under this Agreement and the other Loan Documents, including (a) the determination of the
applicability of ineligibility criteria with respect to the calculation of the Borrowing Base and (b) the exercise of remedies pursuant to Section 9.2, and any action so taken or not taken shall be deemed consented to by the Lenders.

  
 Section 12.2 Delegation of Duties. The Agent may
execute any of its duties under this Agreement or any other Loan Document by or through agents, employees, or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence or willful misconduct. 
  
 Section 12.3 Liability of the Agent. None of the Agent-Related Persons shall (a) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any
of the Lenders for any recital, statement, representation, or warranty made by any Borrower or Affiliate of any Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement, or
other document referred to or provided for 

  

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in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness,
enforceability, or sufficiency of this Agreement or any other Loan Document, or for any failure of any Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any
obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of any
Borrower or any Borrower’s Affiliates. 
  
 Section 12.4
Reliance by the Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex, or telephone message, statement,
or other document or conversation believed by it to be genuine and correct and to have been signed, sent, or made by the proper Person or Persons, and upon advice and statements of legal counsel (including, without limitation, counsel to any
Borrower), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or
concurrence of the Majority Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Lenders (or all
Lenders if so required by Section 11.1) and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders. 
  
 Section 12.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Event of Default, unless the Agent shall have received written notice from a Lender or a Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “Notice of default.”
The Agent will notify the Lenders of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Majority Lenders in accordance with Article 9; provided,
however, that unless and until the Agent has received any such request, the 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. 
  
 Section 12.6 Credit Decision. Each Lender
acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by the Agent hereinafter taken, including any review of the affairs of the Borrowers and their Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon any Agent-Related Person and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition, and creditworthiness of the Borrowers and their Affiliates, and all applicable bank regulatory
laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem 

  

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appropriate at the time, continue to make its own credit analysis, appraisals, and decisions in taking or not taking action under this Agreement and the
other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition, and creditworthiness of the Borrowers. Except for notices, reports, and
other documents expressly herein required to be furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations,
property, financial and other condition, or creditworthiness of any Borrower which may come into the possession of any of the Agent-Related Persons. 
  
 Section 12.7 Indemnification. WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED HEREBY ARE CONSUMMATED, THE LENDERS SHALL UPON DEMAND INDEMNIFY THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE BORROWERS AND WITHOUT LIMITING THE OBLIGATION OF THE BORROWERS TO DO SO), IN ACCORDANCE WITH THEIR PRO RATA SHARES, FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES;
PROVIDED, HOWEVER, THAT NO LENDER SHALL BE LIABLE FOR THE PAYMENT TO THE AGENT-RELATED PERSONS OF ANY PORTION OF SUCH INDEMNIFIED LIABILITIES (AS DEFINED HEREIN) RESULTING SOLELY FROM SUCH PERSON’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its Pro Rata Share of any costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent in connection with the preparation,
execution, delivery, administration, modification, amendment, or enforcement (whether through negotiations, legal proceedings, or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document,
or any document contemplated by or referred to herein, to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrowers. The undertaking in this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent. 
  
 Section 12.8 The
Agent in Individual Capacity. The Bank and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in, and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with any Borrower and its Affiliates as though the Bank were not the Agent hereunder and without notice to or consent of the Lenders. The Bank or its Affiliates may receive information regarding any Borrower or its
Affiliates and Account Debtors (including information that may be subject to confidentiality obligations in favor of any such Borrower or Affiliate), and the Lenders acknowledge that the Agent and the Bank shall be under no obligation to provide
such information to the Lenders. With respect to its Revolving Loans, the Bank as a Lender shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent, and the terms
“Lender” and “Lenders” include the Bank in its individual capacity. 
  
 Section 12.9 Successor Agent. The Agent may resign as Agent upon at least 30 days prior notice to the Lenders and the Borrowers, such resignation to be effective upon the acceptance of a successor agent to its
appointment as the Agent. In the event the Bank sells all of its Commitments and Revolving Loans as part of a sale, transfer, or other disposition by the 

  

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Bank of substantially all of its loan portfolio, the Bank shall resign as the Agent and such purchaser or transferee shall become the successor Agent
hereunder. Subject to the foregoing, if the Agent resigns (the “resigning Agent”) under this Agreement, the Majority Lenders, with the consent of the Borrowers if no Default or Event of Default exists, which consent shall not be
unreasonably withheld, shall appoint from among the Lenders a successor agent for the Lenders (the “successor Agent”). If no successor Agent is appointed prior to the effective date of the resignation of the resigning Agent, the resigning
Agent may appoint, after consulting with the Lenders and the Borrowers, a successor Agent from among the Lenders. Upon the acceptance of its appointment as the successor Agent, the successor Agent shall succeed to all the rights, powers, and duties
of the resigning Agent and the term “Agent” shall mean the successor Agent and the resigning Agent’s appointment, powers, and duties as the Agent shall be terminated. After any resigning Agent’s resignation hereunder as the
Agent, the provisions of this Article 12 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement. 
  
 Section 12.10 Withholding Tax. 
  
 (a) If any Lender is a “foreign corporation, partnership, or trust” within the meaning of the Code
and such Lender claims exemption from, or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the Agent, to deliver to the Agent and the Parent: 
  
 (i) if such Lender claims an exemption from, or a reduction
of, withholding tax under a U.S. tax treaty, two properly completed and executed IRS Forms W-8BEN and W-8ECI before the payment of any interest in the first calendar year and before the payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement; 
  
 (ii) if such Lender claims that interest paid under this Agreement is exempt from U.S. withholding tax because it is effectively connected with a U.S. trade or business of such Lender, two properly completed and
executed copies of IRS Form W-8ECI before the payment of any interest is due in the first taxable year of such Lender and in each succeeding taxable year of such Lender during which interest may be paid under this Agreement, and IRS Form W-9; and

  
 (iii) such other form or forms as may be
required under the Code or other laws of the U.S. as a condition to exemption from, or reduction of, U.S. withholding tax. 
  
 Such Lender agrees to promptly notify the Agent and the Parent of any change in circumstances which would modify or render invalid any claimed exemption
or reduction. 
  
 (b) If any Lender claims
exemption from, or reduction of, withholding tax under a U.S. tax treaty by providing IRS Form W-8BEN and such Lender sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations owing to such Lender, such Lender
agrees to notify the Agent and the Parent of the percentage 

  

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amount in which it is no longer the beneficial owner of Obligations owing to such Lender. To the extent of such percentage amount, the Agent and the Parent
will treat such Lender’s IRS Form W-8BEN as no longer valid. 
  
 (c) If any Lender claiming exemption from U.S. withholding tax by filing IRS Form W-8ECI with the Agent sells, assigns, grants a participation in, or otherwise transfers all or part of the Obligations owing to such
Lender, such Lender agrees to undertake sole responsibility for complying with the withholding tax requirements imposed by Sections 1441 and 1442 of the Code. 
  

(d) If any Lender is entitled to a reduction in the applicable withholding tax, the Agent or any Borrower may withhold from any
interest payment to such Lender an amount equivalent to the applicable withholding tax after taking into account such reduction. If the forms or other documentation required by clause (a) preceding are not delivered to the Agent and the
Parent, then the Agent or any Borrower may withhold from any interest payment to such Lender not providing such forms or other documentation an amount equivalent to the applicable withholding tax. 
  
 (e) If the IRS or any other Governmental Authority of the
U.S. or other jurisdiction asserts a claim that the Agent or any Borrower did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Agent or any Borrower of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify the Agent or any Borrower fully for
all amounts paid, directly or indirectly, by the Agent or any Borrower as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section 12.10,
together with all costs and expenses (including Attorney Costs). The obligation of the Lenders under this clause (e) shall survive the payment of all Obligations and the resignation or replacement of the Agent. 
  
 Section 12.11 Collateral Matters. 
  
 (a) The Lenders hereby irrevocably authorize the Agent, at
its option and in its sole discretion, to release any Agent’s Liens upon any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full of all Revolving Loans and reimbursement obligations in respect of Letters
of Credit, and the termination of all outstanding Letters of Credit (whether or not any of such obligations are due) and all other Obligations; (ii) constituting property being sold or disposed of if the Borrower disposing of such property certifies
to the Agent that the sale or disposition is made in compliance with Section 7.9 (and the Agent may rely conclusively on any such certificate, without further inquiry); (iii) constituting property in which no Borrower owned any interest at
the time the Lien was granted or at any time thereafter; or (iv) constituting property leased to a Borrower under a lease which has expired or been terminated in a transaction permitted under this Agreement. Upon request by the Agent or the
Borrowers at any time, the Lenders will confirm in writing the Agent’s authority to release any Agent’s Liens upon particular types or items of Collateral pursuant to this Section 12.11. 
  

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 (b) Upon receipt by the Agent of any authorization required pursuant to Section
12.11(a) from the Lenders of the Agent’s authority to release any Agent’s Liens upon particular types or items of Collateral, and upon at least five Business Days prior written request by the Borrowers, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Agent’s Liens upon such Collateral; provided, however, that (i) the Agent shall not be required to execute any
such document on terms which, in the Agent’s opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in
any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Borrowers in respect of) all interests retained by the Borrowers, including the proceeds of any sale, all of
which shall continue to constitute part of the Collateral. 
  
 (c) The Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by any Borrower or is cared for, protected, or insured or has been encumbered, or that the
Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure, or
fidelity, or to continue exercising, any of the rights, authorities, and powers granted or available to the Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion given the Agent’s own interest in the Collateral in its capacity as one of the Lenders and that the Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing. 
  
 Section
12.12 Restrictions on Actions by the Lenders; Sharing of Payments. 
  
 (a) Each of the Lenders agrees that it shall not, without the express consent of all Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon the request of all Lenders, setoff against the
Obligations, any amounts owing by such Lender to any Borrower or any accounts of any Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so by the Agent,
take or cause to be taken any action to enforce its rights under this Agreement or against any Borrower, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any
of the Collateral. 
  
 (b) If at any time or
times any Lender shall receive (i) by payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments with respect to the Obligations owing to such Lender arising under, or relating to, this Agreement or the other Loan
Documents, except for any such proceeds or payments received by such Lender from the Agent pursuant to the terms of this Agreement, or (ii) payments from the 

  

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Agent in excess of such Lender’s ratable portion of all such distributions by the Agent, such Lender shall promptly (A) turn the same over to the Agent,
in kind, and with such endorsements as may be required to negotiate the same to the Agent, or in same day funds, as applicable, for the account of all of the Lenders and for application to the Obligations in accordance with the applicable provisions
of this Agreement, or (B) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other Lenders so that such excess payment received shall be applied ratably as among the Lenders in accordance
with their Pro Rata Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases of participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery
of the excess payment. 
  
 Section 12.13 Agency for
Perfection. Each Lender hereby appoints each other Lender as agent for the purpose of perfecting Liens, for the benefit of the Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC or any other Requirement of Law can be
perfected only by possession. Should any Lender (other than the Agent) obtain possession of any such Collateral, such Lender shall notify the Agent thereof, and, promptly upon the Agent’s request therefor shall deliver such Collateral to the
Agent or otherwise deal with such Collateral in accordance with the Agent’s instructions. 
  
 Section 12.14 Payments by the Agent to the Lenders. All payments to be made by the Agent to the Lenders shall be made by bank wire transfer or internal transfer of immediately available funds to each Lender
pursuant to wire transfer instructions delivered in writing to the Agent on or prior to the Closing Date (or if such Lender is an Assignee, delivered with or in the applicable Assignment and Acceptance), or pursuant to such other wire transfer
instructions as each party may designate for itself by written notice to the Agent. Concurrently with each such payment, the Agent shall identify whether such payment (or any portion thereof) represents principal, premium, or interest on the
Revolving Loans or otherwise. Unless the Agent receives notice from the Borrowers prior to the date on which any payment is due to the Lenders that the Borrowers will not make such payment in full as and when required, the Agent may assume that the
Borrowers have made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Agent, each Lender shall repay to the Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal
Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid. 
  
 Section 12.15 Settlement. 
  
 (a) Each Lender’s funded portion of the Revolving Loans is intended by the Lenders to be equal at all times to such Lender’s Pro
Rata Share of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent, the Bank, and the Lenders agree (which agreement shall not be for the benefit of or enforceable by the 

  

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Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Revolving Loans,
including the Non-Ratable Loans and Autoborrow Loans shall take place on a periodic basis in accordance with the following provisions: 
  
 (i) The Agent shall request settlement (a “Settlement”) with the Lenders on at least a weekly basis, or on a more
frequent basis at the Agent’s election, (A) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan and (B) with respect to payments received, in each case, by notifying the Lenders of such requested Settlement by telecopy,
telephone, or other similar form of transmission, of such requested Settlement, no later than 1:00 p.m. (Dallas, Texas time) on the date of such requested Settlement (the “Settlement Date”). Each Lender (other than the Bank in the
case of the Non-Ratable Loans) shall transfer the amount of such Lender’s Pro Rata Share of the outstanding principal amount of the Non-Ratable Loans with respect to which Settlement is requested to the Agent, to such account of the Agent as
the Agent may designate, not later than 2:00 p.m. (Dallas, Texas time), on the Settlement Date applicable thereto. Settlements may occur during the continuation of a Default or an Event of Default and whether or not the applicable conditions
precedent set forth in Article 8 have then been satisfied. Such amounts transferred to the Agent shall be applied against the amounts of the applicable Non-Ratable Loans and, together with the portion of such Non-Ratable Loans representing
the Bank’s Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders, respectively. If any such amount is not transferred to the Agent by any Lender on the Settlement Date applicable thereto, the Agent shall be entitled to
recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three days from and after the Settlement Date and thereafter at the Interest Rate then applicable to the Base Rate Revolving Loans
on behalf of the Bank with respect to each outstanding Non-Ratable Loan. The Agent may, in its sole discretion, request a Settlement with respect to the Autoborrow Loans in accordance with the provisions of this clause (i). 
  
 (ii) Notwithstanding the foregoing, not more than one
Business Day after demand is made by the Agent (whether before or after the occurrence of a Default or an Event of Default and regardless of whether the Agent has requested a Settlement with respect to a Non-Ratable Loan or Autoborrow Loan), each
other Lender (A) shall irrevocably and unconditionally purchase and receive from the Bank or the Agent, as applicable, without recourse or warranty, an undivided interest and participation in such Non-Ratable Loan or Autoborrow Loan equal to such
Lender’s Pro Rata Share of such Non-Ratable Loan or Autoborrow Loan and (B) if Settlement has not previously occurred with respect to such Non-Ratable Loans and Autoborrow Loans, upon demand by the Bank or the Agent, as applicable, shall pay to
the Bank or the Agent, as applicable, as the purchase price of such participation an amount equal to 100% of such Lender’s Pro Rata Share of such Non-Ratable Loans and Autoborrow Loans. If such amount is not in fact transferred to the Agent by
any Lender, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate for the first three days from and after such demand and thereafter at the Interest Rate then
applicable to Base Rate Revolving Loans. 
  

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 (iii) From and after the date, if any, on which any Lender purchases an undivided
interest and participation in any Non-Ratable Loan or Autoborrow Loan pursuant to clause (ii) preceding, the Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all
proceeds of Collateral received by the Agent in respect of such Non-Ratable Loan or Autoborrow Loan. 
  
 (iv) Between Settlement Dates the Agent may pay over to the Bank any payments received by the Agent, which in accordance with the terms of
this Agreement would be applied to the reduction of the Revolving Loans, for application to the Bank’s Revolving Loans including Non-Ratable Loans and Autoborrow Loans. If, as of any Settlement Date, collections received since the then
immediately preceding Settlement Date have been applied to the Bank’s Revolving Loans (other than to Non-Ratable Loans and Autoborrow Loans in which a Lender has not yet funded its purchase of a participation pursuant to clause (ii)
preceding), as provided for in the previous sentence, the Bank shall pay to the Agent for the accounts of the Lenders, to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement Dates, the Bank with respect to Non-Ratable Loans and Autoborrow Loans and each Lender with respect to the Revolving Loans
other than Non-Ratable Loans and Autoborrow Loans, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the actual average daily amount of funds employed by the Bank, the Agent, and the other Lenders.

  
 (v) Unless the Agent has received written
notice from a Lender to the contrary, the Agent may assume that the applicable conditions precedent set forth in Article 8 have been satisfied and the requested Borrowing will not exceed the Availability on any Funding Date for a Revolving
Loan. 
  
 (b) The Lenders’ Failure to
Perform. All Revolving Loans (other than Non-Ratable Loans and Autoborrow Loans) shall be made by the Lenders simultaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure
by any other Lender to perform its obligation to make any Revolving Loans hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligation to make any Revolving
Loans hereunder, (ii) no failure by any Lender to perform its obligation to make any Revolving Loans hereunder shall excuse any other Lender from its obligation to make any Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several. 
  

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 (c) Defaulting Lenders. Unless the Agent receives notice from a Lender on or prior
to the Closing Date or, with respect to any Borrowing after the Closing Date, at least one Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to the Agent such Lender’s Pro
Rata Share of such Borrowing, the Agent may assume that each Lender has made such amount available to the Agent in immediately available funds on the Funding Date. Furthermore, the Agent may, in reliance upon such assumption, make available to the
Borrowers on such date a corresponding amount. If any Lender has not transferred its full Pro Rata Share to the Agent in immediately available funds and if the Agent has transferred a corresponding amount to the Borrowers on the Business Day
following such Funding Date the applicable Lender shall make such amount available to the Agent, together with interest at the Federal Funds Rate for that day. A notice by the Agent submitted to any Lender with respect to amounts owing shall be
conclusive, absent manifest error. If each Lender’s full Pro Rata Share is transferred to the Agent as required, the amount transferred to the Agent shall constitute such Lender’s Revolving Loan for all purposes of this Agreement. If any
such amount is not transferred to the Agent on the Business Day following the Funding Date, the Agent will notify the Borrowers of such failure to fund and, upon demand by the Agent, the Borrowers shall pay such amount to the Agent for the
Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the Interest Rate applicable at the time to the Revolving Loans comprising that particular Borrowing. The
failure of any Lender to make any Revolving Loan on any Funding Date (any such Lender, prior to the cure of such failure, being hereinafter referred to as a “Defaulting Lender”) shall not relieve any other Lender of its obligation
hereunder to make a Revolving Loan on such Funding Date. No Lender shall be responsible for any other Lender’s failure to advance such other Lenders’ Pro Rata Share of any Borrowing. 
  
 (d) Retention of Defaulting Lender’s Payments.
The Agent shall not be obligated to transfer to a Defaulting Lender any payments made by any Borrower to the Agent for the Defaulting Lender’s benefit, nor shall a Defaulting Lender be entitled to the sharing of any payments hereunder. Amounts
payable to a Defaulting Lender shall instead be paid to or retained by the Agent. In its discretion, the Agent may loan the Borrowers the amount of all such payments received or retained by it for the account of such Defaulting Lender. Any amounts
so loaned to the Borrowers shall bear interest at the rate applicable to Base Rate Revolving Loans and for all other purposes of this Agreement shall be treated as if they were Revolving Loans, provided, however, that for purposes of
voting or consenting to matters with respect to the Loan Documents and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender”. Until a Defaulting Lender cures its failure to fund its Pro Rata Share of any
Borrowing (i) such Defaulting Lender shall not be entitled to any portion of the Unused Line Fee and (ii) the Unused Line Fee shall accrue in favor of the Lenders which have funded their respective Pro Rata Shares of such requested Borrowing and
shall be allocated among such performing Lenders ratably based upon their relative Commitments. This Section shall remain effective with respect to such Lender until such time as the Defaulting Lender shall no longer be in default of any of its
obligations under this Agreement. The terms of this Section shall not be construed to increase or otherwise affect the Commitment of any Lender, or relieve or excuse the performance by any Borrower of its duties and obligations hereunder.

  

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 (e) Removal of Defaulting Lender. At the Borrowers’ request, the Agent or an
Eligible Assignee reasonably acceptable to the Agent and the Borrowers shall have the right (but not the obligation) to purchase from any Defaulting Lender, and each Defaulting Lender shall, upon such request, sell and assign to the Agent or such
Eligible Assignee, all of the Defaulting Lender’s outstanding Commitments hereunder. Such sale shall be consummated promptly after the Agent has arranged for a purchase by the Agent or an Eligible Assignee pursuant to an Assignment and
Acceptance, and at a price equal to the outstanding principal balance of the Defaulting Lender’s Revolving Loans, plus accrued interest and fees, without premium or discount. 
  
 Section 12.16 Letters of Credit; Intra-Lender Issues. 
  
 (a) Notice of Letter of Credit Balance. On each Settlement Date, the Agent shall notify each Lender
of the issuance of all Letters of Credit since the prior Settlement Date. 
  
 (b) Participations in Letters of Credit. 
  
 (i) Purchase of Participations. Immediately upon issuance of any Letter of Credit in accordance with Section 1.4(d), each
Lender shall be deemed to have irrevocably and unconditionally purchased and received without recourse or warranty, an undivided interest and participation equal to such Lender’s Pro Rata Share of the face amount of such Letter of Credit in
connection with the issuance of such Letter of Credit (including all obligations of the Borrower for whose account such Letter of Credit was issued, and any security therefor or guaranty pertaining thereto). 
  
 (ii) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from a Borrower on account of reimbursement obligations in respect of a Letter of Credit as to which the Agent has previously received for the account of the Agent or the Letter of Credit Issuer payment from a
Lender, the Agent shall promptly pay to such Lender such Lender’s Pro Rata Share of such payment from such Borrower. Each such payment shall be made by the Agent on the next Settlement Date. 
  
 (iii) Documentation. Upon the request of any Lender,
the Agent shall furnish to such Lender copies of any Letter of Credit, reimbursement agreements executed in connection therewith, applications for any Letter of Credit, and such other documentation as may reasonably be requested by such Lender.

  
 (iv) Obligations Irrevocable. The
obligation of each Lender to make payments to the Agent with respect to any Letter of Credit or with respect to their participation therein or with respect to the Revolving Loans made as a result of a drawing under a Letter of Credit and the
obligation of the Borrowers to make payments to the Agent, for the account of the Lenders, with respect to any Letter of Credit shall be irrevocable and shall not be subject to any qualification or exception whatsoever, including any of the
following circumstances: 
  
 (A) any lack of
validity or enforceability of this Agreement or any of the other Loan Documents; 
  

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 (B) the existence of any claim, setoff, defense, or other right which any Borrower may
have at any time against a beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), any Lender, the Agent, the Letter of Credit Issuer, or any other Person, whether
in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between such Borrower or any other Person and the beneficiary named in any Letter of
Credit); 
  
 (C) any draft, certificate, or any
other document presented under any 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; 
  
 (D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan Documents; 
  
 (E) the occurrence of any Default or Event of Default; or 
  
 (F) the failure of the Borrowers to satisfy the applicable conditions precedent set forth in Article 8. 
  
 (c) Recovery or Avoidance of Payments; Refund of Payments
in Error. In the event any payment by or on behalf of any Borrower received by the Agent with respect to any Letter of Credit and distributed by the Agent to the Lenders on account of their respective participations therein is thereafter set
aside, avoided, or recovered from the Agent in connection with any receivership, liquidation, or bankruptcy proceeding, the Lenders shall, upon demand by the Agent, pay to the Agent their respective Pro Rata Shares of such amount set aside, avoided,
or recovered, together with interest at the rate required to be paid by the Agent upon the amount required to be repaid by it. Unless the Agent receives notice from the Borrowers prior to the date on which any payment is due to the Lenders that the
Borrowers will not make such payment in full as and when required, the Agent may assume that the Borrowers have made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrowers have not made such payment in full to the Agent, each Lender shall repay to the Agent on
demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate for each day from the date such amount is distributed to such Lender until the date repaid. 
  

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 (d) Indemnification by the Lenders. To the extent not reimbursed by the Borrowers
and without limiting the obligations of the Borrowers hereunder, the Lenders agree to indemnify the Letter of Credit Issuer ratably in accordance with their respective Pro Rata Shares, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including reasonable attorneys’ fees) or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against the Letter of Credit Issuer in any way
relating to or arising out of any Letter of Credit or the transactions contemplated thereby or any action taken or omitted by the Letter of Credit Issuer under any Letter of Credit or any Loan Document in connection therewith; provided that
no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of the Person to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the Letter of Credit
Issuer promptly upon demand for its Pro Rata Share of any costs or expenses payable by any Borrower to the Letter of Credit Issuer, to the extent that the Letter of Credit Issuer is not promptly reimbursed for such costs and expenses by a Borrower.
The agreement contained in this Section shall survive payment in full of all other Obligations. 
  
 Section 12.17 Concerning the Collateral and the Related Loan Documents. Each Lender authorizes and directs the Agent to enter into the other Loan
Documents, for the ratable benefit and obligation of the Agent and the Lenders. Each Lender agrees that any action taken by the Agent or the Majority Lenders in accordance with the terms of this Agreement or the other Loan Documents, and the
exercise by the Agent or the Majority Lenders of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. The Lenders acknowledge that the
Revolving Loans (including the Non-Ratable Loans and Autoborrow Loans), the Bank Products (including any Hedge Agreements), and all interest, fees, and expenses hereunder constitute one Debt, secured pari passu by all of the Collateral. 

 
 Section 12.18 Field Audit and Examination Reports; Disclaimer by the
Lenders. By signing this Agreement, each Lender: 
  
 (a) is deemed to have requested that the Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “Report” and collectively, the “Reports”)
prepared by or on behalf of the Agent; 
  
 (b)
expressly agrees and acknowledges that neither the Bank nor the Agent (i) makes any representation or warranty as to the accuracy of any Report, or (ii) shall be liable for any information contained in any Report; 
  
 (c) expressly agrees and acknowledges that the Reports are
not comprehensive audits or examinations, that the Agent, the Bank, or any other party performing any audit or examination will inspect only specific information regarding the Borrowers and will rely significantly upon the Borrowers’ books and
records, as well as on representations of the Borrowers’ personnel; 
  

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 (d) agrees to keep all Reports confidential and strictly for its internal use, and not to
distribute except to its participants, or use any Report in any other manner; and 
  
 (e) without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Agent and
any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of the Borrowers; and (ii) to pay and protect, and indemnify, defend, and
hold the Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses, and other amounts (including Attorney Costs) incurred by the Agent and any such other Lender preparing
a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender. 
  
 Section 12.19 Relation Among the Lenders. The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of,
or (except as otherwise set forth herein in case of the Agent) authorized to act for, any other Lender. 
  
 ARTICLE 13 
  
 MISCELLANEOUS 
  
 Section 13.1 No Waivers; Cumulative
Remedies. No failure by the Agent or any Lender to exercise any right, remedy, or option under this Agreement or any present or future supplement hereto, or in any other agreement between or among any Borrower and the Agent and/or any Lender, or
delay by the Agent or any Lender in exercising the same, will operate as a waiver thereof. Subject to Section 11.1, no waiver by the Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically
stated. No waiver by the Agent or the Lenders on any occasion shall affect or diminish the Agent’s and each Lender’s rights thereafter to require strict performance by the Borrowers of any provision of this Agreement. The Agent and the
Lenders may proceed directly to collect the Obligations without any prior recourse to the Collateral. The Agent’s and each Lender’s rights under this Agreement will be cumulative and not exclusive of any other right or remedy which the
Agent or any Lender may have. 
  
 Section 13.2
Severability. The illegality or unenforceability of any provision of this Agreement, any other Loan Document, or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement, any other Loan Document, or any instrument or agreement required hereunder. 
  
 Section 13.3 Governing Law; Choice of Forum; Service of Process. 
  
 (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS 

  

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PROVISIONS, PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET
FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF TEXAS; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 
  
 (b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
TEXAS OR OF THE U.S. LOCATED IN DALLAS COUNTY, TEXAS, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT, AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE BORROWERS, THE AGENT, AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING (i) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS
FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS. 
  
 (c) EACH BORROWER AGREES THAT ITS PROPER ADDRESS FOR SERVICE OF PROCESS BY MAIL AUTHORIZED BY ANY APPLICABLE REQUIREMENT OF LAW SHALL BE
THE ADDRESS AS SET FORTH IN SECTION 13.8. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.  
  
 Section 13.4 Waiver of Jury Trial. EACH OF THE BORROWERS, THE LENDERS,
AND THE AGENT IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING, OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH OF THE
BORROWERS, THE LENDERS, AND THE AGENT AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE 

  

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FOREGOING, EACH OF THE PARTIES FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION,
COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 
  
 Section 13.5 Survival of Representations and Warranties. All representations and warranties of the Borrowers contained in this Agreement shall survive the execution, delivery, and acceptance thereof by the
parties, notwithstanding any investigation by the Agent or the Lenders or their respective agents. 
  
 Section 13.6 Other Security and Guaranties. The Agent may, without notice or demand and without affecting the Borrowers’ obligations
hereunder, from time to time: (a) take from any Person and hold collateral (other than the Collateral) for the payment of all or any part of the Obligations and exchange, enforce, or release such collateral or any part thereof; and (b) accept and
hold any endorsement or guaranty of payment of all or any part of the Obligations and release or substitute any such endorser or guarantor, or any Person who has given any Lien in any other collateral as security for the payment of all or any part
of the Obligations, or any other Person in any way obligated to pay all or any part of the Obligations. 
  
 Section 13.7 Fees and Expenses. Each Borrower agrees to pay to the Agent, for its benefit, on demand, all reasonable costs and expenses that the
Agent pays or incurs in connection with the negotiation, preparation, syndication, consummation, administration, enforcement, and termination of this Agreement or any of the other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses
(including Attorney Costs) for any amendment, supplement, waiver, consent, or subsequent closing in connection with the Loan Documents and the transactions contemplated thereby; (c) costs and expenses of lien and title searches, title insurance, and
environmental audits; (d) taxes, fees, and other charges for recording the Mortgages, filing financing statements and continuations, and other actions to perfect, protect, and continue the Agent’s Liens (including costs and expenses paid or
incurred by the Agent in connection with the consummation of this Agreement); (e) sums paid or incurred to pay any amount or take any action required of any Borrower under the Loan Documents that such Borrower fails to pay or take; (f) costs of
appraisals, inspections, and verifications of the Collateral, including travel, lodging, and meals for field examinations and inspections of the Collateral and the Borrowers’ operations by the Agent, plus the Agent’s then customary
charge for field examinations and audits and the preparation of reports thereof (such charge is currently $800 per day (or portion thereof) for each Person retained or employed by the Agent with respect to each field examination or audit);
provided that the Borrowers shall be required to pay the cost of any such field examinations and inspections not more than once in any calendar year and wherever an Event of Default exists; and (g) costs and expenses of forwarding loan
proceeds, collecting checks and other items of payment, and of preserving and protecting the Collateral. In addition, the Borrowers agree to pay costs and expenses incurred by the Agent (including Attorney Costs) to the Agent, for its benefit, on
demand, paid or incurred to obtain payment of the Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the Collateral, and 

  

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otherwise enforce the provisions of the Loan Documents, or to defend any claims made or threatened against the Agent or any Lender arising out of the
transactions contemplated hereby (including preparations for and consultations concerning any such matters). The foregoing shall not be construed to limit any other provisions of the Loan Documents regarding costs and expenses to be paid by the
Borrowers. All of the foregoing costs and expenses shall be charged to the Borrowers’ Loan Account as Revolving Loans as described in Section 3.7. 
  

Section 13.8 Notices. Except as otherwise provided herein, all notices, demands, and requests that any party is required or elects to give to
any other party shall be in writing, or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including, but not limited to, delivery by overnight mail or
courier service, (b) four days after it shall have been mailed by U.S. mail, first class, certified or registered, with postage prepaid, or (c) in the case of notice by such a telecommunications device, when properly transmitted, in each case
addressed to the party to be notified as follows: 
  
 If to
the Agent or to the Bank: 
  
 Bank of
America, National Association 
 901 Main Street, 67th Floor 
 Dallas, TX 75202 
 Attention: Daniel Penkar 
 Telecopy No.: (214) 209-3140 
  
 If to any Obligated Party: 
  
 c/o Encore Medical Corporation 
 9800 Metric Blvd. 
 Austin, TX 78758 
 Attention: Harry Zimmerman 
 Telecopy No.: (512) 834-6310 
  
 or to such other address as each party may designate for itself by like notice. For purposes of providing any notice to a Lender, such notice shall be delivered to such
Lender at the address for notice of such Lender set forth on the signature pages of this Agreement or on the most recent Assignment and Acceptance to which such Lender is a party. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration, or other communication to the persons designated above to receive copies shall not adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration, or other communication.

  
 Section 13.9 Waiver of Notices. Unless otherwise
expressly provided herein, each Borrower waives presentment, notice of demand or dishonor, protest as to any instrument, notice of intent to accelerate the Obligations, and notice of acceleration of the Obligations, as well as any and all other
notices to which it might otherwise be entitled. No notice to or demand on any Borrower which the Agent or any Lender may elect to give shall entitle any Borrower to any or further notice or demand in the same, similar, or other circumstances.

  

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 Section 13.10 Binding Effect. The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective representatives, successors, and assigns of the parties hereto; provided, however, that no interest herein may be assigned by any Borrower without the prior written consent of the Agent and each Lender.
The rights and benefits of the Agent and the Lenders hereunder shall, if such Persons so agree, inure to any party acquiring any interest in the Obligations or any part thereof. Additionally, each Lender, including, without limitation, any Lender
which becomes a party hereto after the Closing Date, agrees that the terms, conditions, covenants, and other agreements contained in the Intercreditor Agreement (and any amendments or modifications thereto) are binding and enforceable against such
Lender with the same force and effect as if such Lender were a party thereto and that the Agent is fully authorized and directed to enter into the Intercreditor Agreement (and any amendments or modifications thereto) on behalf of such Lender. Each
Lender agrees to fully comply with each and every term of the Intercreditor Agreement, including, without limitation, provisions requiring the Lenders to transfer and assign their Obligations to the “Junior Creditor” (as defined in the
Intercreditor Agreement) upon the occurrence of certain events as specified in the Intercreditor Agreement. 
  

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 Section 13.11 Indemnity of the Agent and the Lenders by the Borrowers. 
  
 (a) EACH BORROWER AGREES TO DEFEND, INDEMNIFY, AND HOLD THE
AGENT-RELATED PERSONS, AND EACH LENDER AND EACH OF ITS RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, AND ATTORNEYS-IN-FACT (EACH, AN “INDEMNIFIED PERSON”) HARMLESS FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES, AND DISBURSEMENTS (INCLUDING ATTORNEY COSTS) OF ANY KIND OR NATURE WHATSOEVER WHICH MAY AT ANY TIME (INCLUDING AT ANY TIME FOLLOWING REPAYMENT
OF THE REVOLVING LOANS AND THE TERMINATION, RESIGNATION, OR REPLACEMENT OF THE AGENT OR REPLACEMENT OF ANY LENDER) BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH PERSON IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY
DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN, OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR ANY ACTION TAKEN OR OMITTED BY ANY SUCH PERSON UNDER OR IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING WITH RESPECT TO ANY INVESTIGATION, LITIGATION, OR
PROCEEDING (INCLUDING ANY INSOLVENCY PROCEEDING OR APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE REVOLVING LOANS OR THE USE OF THE PROCEEDS THEREOF, WHETHER OR NOT ANY INDEMNIFIED PERSON IS A
PARTY THERETO (ALL THE FOREGOING, COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”); PROVIDED THAT THE BORROWERS SHALL HAVE NO OBLIGATION HEREUNDER TO ANY INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES RESULTING SOLELY
FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PERSON. THE AGREEMENTS IN THIS SECTION 13.11 SHALL SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS. 
  
 (b) EACH BORROWER AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS THE AGENT AND THE LENDERS FROM ANY LOSS OR
LIABILITY DIRECTLY OR INDIRECTLY ARISING OUT OF THE USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF A HAZARDOUS SUBSTANCE RELATING TO ANY BORROWERS’ OPERATIONS, BUSINESS, OR
PROPERTY. THIS INDEMNITY WILL APPLY WHETHER THE HAZARDOUS SUBSTANCE IS ON, UNDER, OR ABOUT ANY BORROWER’S PROPERTY OR OPERATIONS OR PROPERTY LEASED TO ANY BORROWER. THE INDEMNITY INCLUDES BUT IS NOT LIMITED TO REASONABLE ATTORNEY FEES AND
EXPENSES. THE INDEMNITY EXTENDS TO THE AGENT AND THE LENDERS, THEIR AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS, AND ASSIGNS. AS USED IN THIS CLAUSE (b), “HAZARDOUS
SUBSTANCES” MEANS ANY SUBSTANCE, MATERIAL, OR WASTE THAT IS 
  

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OR BECOMES DESIGNATED OR REGULATED AS “TOXIC,” “HAZARDOUS,” “POLLUTANT,” OR “CONTAMINANT” OR A SIMILAR DESIGNATION OR
REGULATION UNDER ANY FEDERAL, STATE, OR LOCAL LAW (WHETHER UNDER COMMON LAW, STATUTE, REGULATION, OR OTHERWISE) OR JUDICIAL OR ADMINISTRATIVE INTERPRETATION OF SUCH, INCLUDING PETROLEUM OR NATURAL GAS. THIS INDEMNITY WILL SURVIVE REPAYMENT OF ALL
OTHER OBLIGATIONS. 
  
 Section 13.12 Limitation of
Liability. NO CLAIM MAY BE MADE BY ANY BORROWER, ANY LENDER, OR OTHER PERSON AGAINST ANY BORROWER, THE AGENT, ANY LENDER, OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS, OR ATTORNEYS-IN-FACT OF ANY OF THEM
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH BORROWER AND EACH LENDER HEREBY WAIVES, RELEASES, AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN
ITS FAVOR. 
  
 Section 13.13 Final Agreement. This
Agreement and the other Loan Documents are intended by the Borrowers, the Agent, and the Lenders to be the final, complete, and exclusive expression of the agreement between them. This Agreement and the other Loan Documents supersede any and all
prior oral or written agreements relating to the subject matter hereof and thereof. No modification, rescission, waiver, release, or amendment of any provision of this Agreement or any other Loan Document shall be made, except by a written agreement
signed by the Borrowers and a duly authorized officer of each of the Agent and the Majority Lenders or all of the Lenders, as applicable. 
  
 THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 
  
 Section 13.14 Counterparts. This Agreement and the other Loan Documents may be executed in any number of counterparts, and by the Agent, each Lender, and the Borrowers in separate counterparts, each of which
shall be an original, but all of which shall together constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached
to the same document and a telecopy of any such executed signature page shall be valid as an original. 
  

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 Section 13.15 Captions. The captions contained in this Agreement and the other Loan Documents are
for convenience of reference only, are without substantive meaning and should not be construed to modify, enlarge, or restrict any provision. 
  
 Section 13.16 Right of Setoff. In addition to any rights and remedies of the Lenders provided by law, if an Event of Default exists or the
Revolving Loans have been accelerated, each Lender is authorized at any time and from time to time, without prior notice to the Borrowers, any such notice being waived by the Borrowers to the fullest extent permitted by law, to setoff and apply any
and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender or any Affiliate of such Lender to or for the credit or the account of the Borrowers against
any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Agent or such Lender shall have made demand under this Agreement or any other Loan Document and although such Obligations may be contingent
or unmatured. Each Lender agrees promptly to notify the Borrowers and the Agent after any such setoff and application made by such Lender; provided, however, the failure to give such notice shall not affect the validity of such setoff
and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SETOFF, BANKER’S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN
UNANIMOUS CONSENT OF THE LENDERS. 
  

	Section	 	13.17 Confidentiality. 

  
 (a) Each Borrower hereby consents that the Agent and each Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the name and address of the Borrowers and a general description of the Borrowers’ business and may use each Borrower’s name in advertising and other promotional
material. 
  
 (b) Each Lender severally agrees to
take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as “confidential” or “secret” by any Borrower and provided to the Agent or such Lender by or on behalf of
any Borrower, under this Agreement or any other Loan Document, except to the extent that such information (i) was or becomes generally available to the public other than as a result of disclosure by the Agent or such Lender, or (ii) was or becomes
available on a nonconfidential basis from a source other than a Borrower, provided that such source is not bound by a confidentiality agreement with a Borrower known to the Agent or such Lender; provided, however, that the Agent
and any Lender may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which the Agent or such Lender is subject or in connection with an examination of the Agent or such Lender by any such
Governmental Authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or
proceeding (including, but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or their respective Affiliates may be party; (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under
any other Loan Document; (F) to the Agent’s 
  

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or such Lender’s independent auditors, accountants, attorneys, and other professional advisors; (G) to any prospective Participant or Assignee, actual
or potential, provided that such prospective Participant or Assignee agrees to keep such information confidential to the same extent required of the Agent and the Lenders hereunder; (H) as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which any Borrower is party or is deemed party with the Agent or such Lender; and (I) to its Affiliates. 
  
 Section 13.18 Conflicts with other Loan Documents. Unless otherwise expressly provided in this Agreement (or in another Loan Document by specific
reference to the applicable provision contained in this Agreement), if any provision contained in this Agreement conflicts with any provision of any other Loan Document, the provision contained in this Agreement shall govern and control. 

 
 Section 13.19 Joint and Several Liability. All Revolving Loans,
upon funding, shall be deemed to be jointly funded to and received by the Borrowers. Each Borrower jointly and severally agrees to pay, and shall be jointly and severally liable under this Agreement for, all Obligations (excluding Existing
Obligations in the case of a Newly Obligated Borrower), regardless of the manner or amount in which proceeds of Revolving Loans are used, allocated, shared, or disbursed by or among the Borrowers themselves, or the manner in which the Agent and/or
any Lender accounts for such Revolving Loans or other extensions of credit on its books and records. Each Borrower shall be liable for all amounts due to the Agent and/or any Lender under this Agreement, regardless of which Borrower actually
receives Revolving Loans or other extensions of credit hereunder or the amount of such Revolving Loans and extensions of credit received or the manner in which the Agent and/or such Lender accounts for such Revolving Loans or other extensions of
credit on its books and records. Each Borrower’s Obligations with respect to Revolving Loans and other extensions of credit made to it, and such Borrower’s Obligations arising as a result of the joint and several liability of such Borrower
hereunder, with respect to Revolving Loans made to the other Borrowers hereunder, shall be separate and distinct obligations, but all such Obligations shall be primary obligations of such Borrower. The Borrowers acknowledge and expressly agree with
the Agent and each Lender that the joint and several liability of each Borrower is required solely as a condition to, and is given solely as inducement for and in consideration of, credit or accommodations extended or to be extended under the Loan
Documents to any or all of the other Borrowers and is not required or given as a condition of extensions of credit to such Borrower. Each Borrower’s obligations under this Agreement and as an obligor under a Guaranty Agreement shall be separate
and distinct obligations. Each Borrower’s obligations under this Agreement shall, to the fullest extent permitted by law, be unconditional irrespective of (i) the validity or enforceability, avoidance, or subordination of the Obligations of any
other Borrower or of any promissory note or other document evidencing all or any part of the Obligations of any other Borrower, (ii) the absence of any attempt to collect the Obligations from any other Borrower, any Guarantor, or any other security
therefor, or the absence of any other action to enforce the same, (iii) the waiver, consent, extension, forbearance, or granting of any indulgence by the Agent and/or any Lender with respect to any provision of any instrument evidencing the
Obligations of any other Borrower or Guarantor, or any part thereof, or any other agreement now or hereafter executed by any other Borrower or Guarantor and delivered to the Agent and/or any Lender, (iv) the failure by the Agent and/or any Lender to
take any steps to perfect and maintain its security interest in, or to 
  

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preserve its rights to, any security or collateral for the Obligations of any other Borrower or Guarantor, (v) the Agent’s and/or any Lender’s
election, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security interest by any other Borrower, as debtor-in-possession under Section 364 of
the Bankruptcy Code, (vii) the disallowance of all or any portion of the Agent’s and/or any Lender’s claim(s) for the repayment of the Obligations of any other Borrower under Section 502 of the Bankruptcy Code, or (viii) any other
circumstances which might constitute a legal or equitable discharge or defense of a guarantor or of any other Borrower. With respect to any Borrower’s Obligations arising as a result of the joint and several liability of the Borrowers hereunder
with respect to Revolving Loans or other extensions of credit made to any of the other Borrowers hereunder, such Borrower waives, until the Obligations shall have been paid in full and this Agreement shall have been terminated, any right to enforce
any right of subrogation or any remedy which the Agent and/or any Lender now has or may hereafter have against any other Borrower, any endorser or any Guarantor of all or any part of the Obligations, and any benefit of, and any right to participate
in, any security or collateral given to the Agent and/or any Lender to secure payment of the Obligations or any other liability of any Borrower to the Agent and/or any Lender. Upon any Event of Default, the Agent may proceed directly and at once,
without notice, against any Borrower to collect and recover the full amount, or any portion of the Obligations, without first proceeding against any other Borrower or any other Person, or against any security or collateral for the Obligations. Each
Borrower consents and agrees that the Agent shall be under no obligation to marshal any assets in favor of any Borrower or against or in payment of any or all of the Obligations. 
  
 Section 13.20 Contribution and Indemnification Among the Borrowers. Each Borrower is obligated to repay the
Obligations as joint and several obligors under this Agreement. To the extent that any Borrower shall, under this Agreement as a joint and several obligor, repay any of the Obligations constituting Revolving Loans made to another Borrower hereunder
or other Obligations incurred directly and primarily by any other Borrower (an “Accommodation Payment”), then the Borrower making such Accommodation Payment shall be entitled to contribution and indemnification from, and be
reimbursed by, each of the other Borrowers in an amount, for each of such other Borrowers, equal to a fraction of such Accommodation Payment, the numerator of which fraction is such other Borrower’s Allocable Amount and the denominator of which
is the sum of the Allocable Amounts of all of the Borrowers. As of any date of determination, the “Allocable Amount” of each Borrower shall be equal to the maximum amount of liability for Accommodation Payments which could be
asserted against such Borrower hereunder without (a) rendering such Borrower “insolvent” within the meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2
of the Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such Borrower with unreasonably small capital or assets, within the meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or
(c) leaving such Borrower unable to pay its debts as they become due within the meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All rights and claims of contribution, indemnification, and
reimbursement under this Section shall be subordinate in right of payment to the prior payment in full of the Obligations. The provisions of this Section shall, to the extent expressly inconsistent with any provision in any Loan Document, supersede
such inconsistent provision. 
  

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 Section 13.21 Agency of the Parent for each Obligated Party. Each of the other Borrowers
irrevocably appoints the Parent as its agent for all purposes relevant to this Agreement, including the giving and receipt of notices and execution and delivery of all documents, instruments, and certificates contemplated herein (including, without
limitation, execution and delivery to the Agent of Borrowing Base Certificates, Notices of Borrowing, and Notices of Continuation/Conversion) and all modifications hereto. Any acknowledgment, consent, direction, certification, or other action which
might otherwise be valid or effective only if given or taken by all or any of the Borrowers or acting singly, shall be valid and effective if given or taken only by the Parent, whether or not any of the other Borrowers joins therein, and the Agent
and the Lenders shall have no duty or obligation to make further inquiry with respect to the authority of the Parent under this Section 13.21, provided that nothing in this Section 13.21 shall limit the effectiveness of, or the
right of the Agent and the Lenders to rely upon, any notice (including without limitation a Notice of Borrowing or a Notice of Continuation/Conversion), document, instrument, certificate, acknowledgment, consent, direction, certification, or other
action delivered by any Borrower pursuant to this Agreement. 
  
 Section 13.22 Additional Borrowers and Guarantors. Addition of any Person as a Borrower or Guarantor to this Agreement is subject to approval of the Agent and the Majority Lenders, and may be conditioned upon such requirements as
they may determine in their discretion, including, without limitation, (a) the furnishing of such financial and other information as the Agent or any such Lender (through the Agent) may request; (b) approval by all appropriate approval authorities
of the Agent and each such Lender (through the Agent); (c) execution and delivery by the Borrowers, such Person, the Agent, and the Majority Lenders of such agreements and other documentation (including, without limitation, an amendment to this
Agreement or any other Loan Document), and the furnishing by such Person or any of the Borrowers of such certificates, opinions, and other documentation, as the Agent and any such Lender may request. Neither the Agent nor any Lender shall have any
obligation to approve any such Person for addition as a party to this Agreement. 
  
 Section 13.23 Express Waivers By the Borrowers In Respect of Cross Guaranties and Cross Collateralization. Each Borrower agrees as follows: 
  
 (a) Each Borrower hereby waives: (i) notice of acceptance of this Agreement; (ii) notice of the making of
any Revolving Loans, the issuance of any Letter of Credit, or any other financial accommodations made or extended under the Loan Documents or the creation or existence of any Obligations; (iii) notice of the amount of the Obligations, subject,
however, to such Borrower’s right to make inquiry of the Agent to ascertain the amount of the Obligations at any reasonable time; (iv) notice of any adverse change in the financial condition of any other Borrower or of any other fact that might
increase such Borrower’s risk with respect to such other Borrower under the Loan Documents; (v) notice of presentment for payment, demand, protest, and notice thereof as to any promissory notes or other instruments among the Loan Documents; and
(vii) all other notices (except if such notice is specifically required to be given to such Borrower hereunder or under any of the other Loan Documents to which such Borrower is a party) and demands to which such Borrower might otherwise be
entitled; 
  

 Page 81 

 (b) Each Borrower hereby waives the right by statute or otherwise to require the Agent or
any Lender to institute suit against any other Borrower or to exhaust any rights and remedies which the Agent or any Lender has or may have against any other Borrower. Each Borrower further waives any defense arising by reason of any disability or
other defense of any other Borrower (other than the defense that the Obligations shall have been fully and finally performed and indefeasibly paid) or by reason of the cessation from any cause whatsoever of the liability of any such Borrower in
respect thereof. 
  
 (c) Each Borrower hereby
waives and agrees not to assert against the Agent, any Lender, or the Letter of Credit Issuer: (i) any defense (legal or equitable), setoff, counterclaim, or claim which such Borrower may now or at any time hereafter have against any other Borrower
or any other party liable under the Loan Documents; (ii) any defense, setoff, counterclaim, or claim of any kind or nature available to any other Borrower against the Agent, any Lender, the Bank, or the Letter of Credit Issuer, arising directly or
indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Obligations or any security therefor; (iii) any right or defense arising by reason of any claim or defense based upon an election of remedies
by the Agent, any Lender, the Bank, or the Letter of Credit Issuer under any applicable law; (iv) the benefit of any statute of limitations affecting any other Borrower’s liability hereunder; 
  
 (d) Each Borrower consents and agrees that, without notice
to or by such Borrower and without affecting or impairing the obligations of such Borrower hereunder, the Agent may (subject to any requirement for consent of any of the Lenders to the extent required by this Agreement), by action or inaction: (i)
compromise, settle, extend the duration or the time for the payment of, or discharge the performance of, or may refuse to or otherwise not enforce the Loan Documents; (ii) release all or any one or more parties to any one or more of the Loan
Documents or grant other indulgences to any other Borrower in respect thereof; (iii) amend or modify in any manner and at any time (or from time to time) any of the Loan Documents; or (iv) release or substitute any Person liable for payment of the
Obligations, or enforce, exchange, release, or waive any security for the Obligations or any Guaranty of the Obligations; 
  
 Each Borrower represents and warrants to the Agent and the Lenders that such Borrower is currently informed of the financial condition of all other Borrowers and all
other circumstances which a diligent inquiry would reveal and which bear upon the risk of nonpayment of the Obligations. Each Borrower further represents and warrants that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Borrower agrees that neither the Agent, any Lender, the Bank, nor the Letter of Credit Issuer has any responsibility to inform any Borrower of the financial condition of any other Borrower or of any other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations. 
  
 Section 13.24 Amendment and Restatement. This Agreement is in amendment and restatement of the Original Credit Agreement. All “Obligations” under the Original Credit Agreement hereby are renewed and continued, and hereafter
shall be governed, by this Agreement. All existing “Loan Documents” (as defined in the Original Credit Agreement) previously executed in connection with the Original Credit Agreement shall constitute Loan Documents under this Agreement and
shall continue in full force and effect and any and all 
  

 Page 82 

 
references therein to the Original Credit Agreement (regardless of terminology) shall be deemed to refer to and mean this Agreement. The Borrowers, the
Agent, and the Lenders ratify and confirm each of the Loan Documents entered into prior to the Closing Date (but excluding the Original Credit Agreement) and agree that such Loan Documents continue to be legal, valid, binding, and enforceable in
accordance with their respective terms, except as such Loan Documents are modified by this Agreement or any other agreement entered into concurrently herewith. Without limiting the generality of the foregoing and notwithstanding anything in any Loan
Document to the contrary, the Borrowers, the Agent, and the Lenders agree and acknowledge that the term “Obligations” as used in any Loan Document (including, without limitation, the Parent Guaranty, the Subsidiary Guaranty, the Parent
Security Agreement, the Subsidiary Security Agreement, the Mortgages, the Revolving Loan Note, the Copyright Security Agreement, the Patent Security Agreement, and the Trademark Security Agreement) means the “Obligations” as defined
herein. 
  
 [Remainder of page intentionally left blank]

  

 Page 83 

 IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above written.

  

	 BORROWERS:

	
	 ENCORE MEDICAL CORPORATION

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 Name:
	 	 Harry L. Zimmerman

	 Title:
	 	 Executive VP-General Counsel

	
	 ENCORE MEDICAL GP, INC.

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 Name:
	 	 Harry L. Zimmerman

	 Title:
	 	 Executive VP-General Counsel

	
	 ENCORE MEDICAL ASSET
 CORPORATION

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 Name:
	 	 Harry L. Zimmerman

	 Title:
	 	 Executive VP-General Counsel

	
	 ENCORE MEDICAL L.P.

		
	         By:
	 	 Encore Medical GP, Inc.,

	 	 	 general partner

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 Name:
	 	 Harry L. Zimmerman

	 Title:
	 	 Executive VP-General Counsel

  

 Page 84 

	 ENCORE MEDICAL PARTNERS, INC.

		
	 By:
	 	 /s/ Harry L. Zimmerman

	 Name:
	 	 Harry L. Zimmerman

	 Title:
	 	 Executive VP-General Counsel

  

 Page 85 

	 AGENT:

	
	 BANK OF AMERICA, NATIONAL ASSOCIATION

		
	 By:
	 	 /s/    Daniel Penkar

	 Name:
	 	     Daniel Penkar

	 Title:
	 	     Senior Vice President

  

 Page 86 

	 LENDERS:

	
	 BANK OF AMERICA, NATIONAL ASSOCIATION

		
	 By:
	 	 /s/    Daniel Penkar

	 Name:
	 	     Daniel Penkar

	 Title:
	 	     Senior Vice President

	
	 Address for Notices:

	
	 Bank of America, National Association

	 901 Main Street, 67th Floor

	 Dallas, Texas 75202

	 Attn: Daniel Penkar

	 Telecopy: (214) 209-3140

  
  

 Page 87 

 ANNEX A 
 to 
 Credit Agreement 
  

Definitions, Accounting Terms, and Interpretive Provisions 
  
 DEFINITIONS: 
  
 Capitalized terms wherever used in the Loan Documents shall have the following respective meanings (unless otherwise defined therein): 
  
 “Account” and “Accounts” have the meanings
specified in the Security Agreement. 
  
 “Accommodation
Payment” has the meaning specified in Section 13.20. 
  
 “Account Debtor” means each Person obligated in any way on or in connection with an Account, Chattel Paper, or General Intangibles (including a payment intangible). 
  
 “ACH Transactions” means any cash management or related
services including, without limitation, the automated clearinghouse transfer of funds by the Bank for the account of any Borrower pursuant to agreement or overdrafts. 
  
 “Affiliate” means, as to any Person (the “subject Person”), any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with, the subject Person or which owns, directly or indirectly, 5.0% or more of the outstanding Capital Stock of the subject Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract, or otherwise.

  
 “Agent” means the Bank, solely in its
capacity as administrative agent for the Lenders, and any successor administrative agent. 
  
 “Agent-Related Persons” means the Agent, together with its Affiliates, and the officers, directors, employees, counsel, representatives, agents, and attorneys-in-fact of the Agent and its Affiliates.

  
 “Agent’s Letter” means that certain
letter agreement, dated as of the Closing Date, among the Borrowers and the Agent as such letter agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Agent’s Liens” means the Liens in the Collateral granted to the Agent, for the benefit of the
Lenders, the Bank, and the Agent pursuant to this Agreement and the other Loan Documents. 
  
 “Aggregate Revolver Outstandings” means, at any time, the sum of (a) the unpaid balance of the Revolving Loans, (b) 100% of the aggregate undrawn face amount of all outstanding Letters of Credit, and
(c) the aggregate amount of any unpaid reimbursement obligations in respect of Letters of Credit. 
  

 Page 1 

 “Agreement” means the Credit Agreement to which this Annex A is attached, as
amended, restated, or otherwise modified from time to time. 
  
 “Anniversary Date” means an anniversary of the Closing Date. 
  
 “Applicable Margin” means, as of the Closing Date: 
  
 (a) with respect to Base Rate Revolving Loans and all other Obligations (other than LIBOR Rate Revolving Loans and the Unused Line Fee),
0.25%; 
  
 (b) with respect to LIBOR Rate
Revolving Loans, 1.75%; and 
  
 (c) with respect
to the unused line fee percentage, 0.375%; 
  
 in each case
subject to adjustment from time to time thereafter to the applicable percentage specified corresponding to the ratio of Total Debt to EBITDA, as set forth below, respectively: 
  

	 Total Debt to EBITDA Ratio

	  	 Base Rate
 Revolving Loans

	 	 	LIBOR Rate
Revolving
Loans

	 
	 Less than 2.50 to 1.00
	  	0.25	%	 	1.75	%
	 Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00
	  	1.00	%	 	2.50	%
	 Greater than or equal to 3.00 to 1.00
	  	1.50	%	 	3.00	%

  
 For the purpose of determining any
such adjustments to the Applicable Margin, the Total Debt to EBITDA Ratio shall be determined, beginning with the Fiscal Quarter ending December 31, 2003, based upon the Financial Statements of the Parent and its Subsidiaries for the immediately
preceding four Fiscal Quarters of the Parent, and for each Fiscal Quarter of the Parent ending thereafter, delivered to the Agent and the Lenders as required by Section 5.2(a) (with respect to the Financial Statements for the last Fiscal
Quarter of each Fiscal Year) or Section 5.2(b) (with respect to the Financial Statements for each of the other Fiscal Quarters of each Fiscal Year), and any such adjustment, if any, shall become effective prospectively on and after the first
day of the calendar month after the date of delivery of such Financial Statements to the Agent and the Lenders. Concurrently with the delivery of such Financial Statements, the Parent shall deliver to the Agent and the Lenders a certificate, signed
by its chief financial officer, setting forth in reasonable detail the basis for the continuance of, or any change in, the Applicable Margin. In the event the Borrowers fail to timely deliver any such Financial Statements, in addition to any other
remedy provided for in this Agreement, the Applicable Margin shall be deemed to be equal to the highest level set forth in the preceding table, until the first day of the first calendar month 
  

 Page 2 

 following the delivery of such Financial Statements at which time the Applicable Margin shall be determined,
prospectively, in accordance with the terms hereof. If a Default or Event of Default exists at the time any reduction in the Applicable Margin is to be implemented, such reduction shall not occur until the first day of the first calendar month
following the date on which such Default or Event of Default is waived or cured. 
  
 “Assignee” has the meaning specified in Section 11.2(a). 
  
 “Assignment and Acceptance” has the meaning specified in Section 11.2(a). 
  
 “Attorney Costs” means and includes all reasonable fees, expenses, and disbursements of any law firm or
other counsel engaged by the Agent and the reasonably allocated costs and expenses of internal legal services of the Agent. 
  
 “Autoborrow Agreement” has the meaning specified in Section 1.2(c). 
  
 “Autoborrow Loans” means Revolving Loans made by the Bank to a Borrower pursuant to the terms of this
Agreement and the Autoborrow Agreement. 
  
 “Availability” means, at any time (a) the lesser of (i) the Maximum Revolver Amount or (ii) the Borrowing Base, minus (b) Reserves other than Reserves deducted in the calculation of the Borrowing Base, minus
(c) the Aggregate Revolver Outstandings. 
  
 “Bank” means Bank of America, National Association, a national banking association, or any successor entity thereto. 
  
 “Bank Products” means any one or more of the following types of services or facilities extended to any Borrower by the Bank or any
Affiliate of the Bank in reliance on the Bank’s agreement to indemnify such Affiliate: (a) credit cards; (b) ACH Transactions; (c) cash management, including, without limitation, controlled disbursement services; and (d) Hedge Agreements.

  
 “Bank Product Reserves” means all reserves
which the Agent from time to time establishes in its sole reasonable discretion for the Bank Products then provided or outstanding. 
  
 “Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. ‘ 101 et seq.). 
  
 “Base Rate” means, for any day, the rate of interest in
effect for such day as publicly announced from time to time by the Bank in Charlotte, North Carolina as its “prime rate” (the “prime rate” being a rate set by the Bank based upon various factors including the Bank’s costs
and desired return, general economic conditions, and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate). Any change in the prime rate announced by the Bank shall take
effect at the opening of business on the day specified in the public announcement of such change. Each Interest Rate based upon the Base Rate shall be adjusted simultaneously with any change in the Base Rate. 
  
 “Base Rate Revolving Loan” means a Revolving Loan during any
period in which it bears interest based on the Base Rate. 
  

 Page 3 

 “Borrower” means, separately and individually, any of the Parent, Encore Limited, Encore
GP, Encore Asset Corporation, Encore Medical Partners, and any other Person who becomes a party to this Agreement as a “Borrower” pursuant to the terms hereof, jointly, severally, and collectively, and “Borrowers” means
more than one or all of the foregoing Persons, jointly, severally, and collectively, as the context requires. 
  
 “Borrowing” means a borrowing hereunder consisting of Revolving Loans made on the same day by the Lenders to the Borrowers, or any of
them, or by the Bank (in the case of a Borrowing funded by Non-Ratable Loans), or the issuance of a Letter of Credit hereunder. 
  
 “Borrowing Base” means, at any time, an amount equal to the lesser of (a) the Maximum Revolver Amount or (b) the sum of, without
duplication, (i) 85.0% of the Net Amount of Eligible Accounts, plus (ii) 50.0% of the lower of cost (on a first-in, first-out basis) or market value of Eligible Inventory, minus (iii) Reserves from time to time established by the Agent
in its reasonable credit judgment. 
  
 “Borrowing Base
Certificate” means a certificate by a Responsible Officer of the Borrowers, or the Parent on behalf of the Borrowers, substantially in the form of Exhibit B (or another form acceptable to the Agent) setting forth the calculation of
the Borrowing Base, including a calculation of each component thereof (including to the extent a Borrower has received notice of any Reserve from the Agent, any of the Reserves included in such calculation pursuant to clause (b) of the
definition of Borrowing Base), all in such detail as shall be reasonably satisfactory to the Agent. All calculations of the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall originally be made by the
Borrowers, or the Parent on behalf of the Borrowers, and certified to the Agent; provided that the Agent shall have the right to review and adjust, in the exercise of its reasonable credit judgment, any such calculation (a) to reflect its
reasonable estimate of declines in value of any of the Collateral described therein, and (b) to the extent that such calculation is not in accordance with this Agreement. 
  
 “Business Day” means (a) any day that is not a Saturday, Sunday, or a day on which banks in Dallas, Texas
or Charlotte, North Carolina are required or permitted to be closed, and (b) with respect to all notices, determinations, fundings, and payments in connection with the LIBOR Rate or LIBOR Rate Revolving Loans, any day that is a Business Day pursuant
to clause (a) preceding and that is also a day on which trading in Dollars is carried on by and between banks in the London interbank market. 
  
 “Capital Adequacy Regulation” means any guideline, request, or directive of any central bank or other Governmental Authority, or any
other law, rule, or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. 
  
 “Capital Expenditures” means, for any period of determination, the sum (without duplication) of capital
expenditures and payments under Capital Leases and other expenditures that are or should be treated as capital expenditures under GAAP, in each case of the Borrowers for such period determined and consolidated in accordance with GAAP. 
  

 Page 4 

 “Capital Lease” means, with respect to any Person, leases of (or other agreements
conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee that, in accordance with GAAP, either would be required to be classified and accounted for as capital leases on a balance sheet of such Person or
otherwise be disclosed as such in a note to such balance sheet. 
  
 “CapitalSource Subordinated Debt Agreement” means the First Amended and Restated Note and Equity Purchase Agreement, dated concurrently herewith, among the Borrowers and CapitalSource Finance LLC, as agent and purchaser, as
such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Capital Stock” means any and all corporate stock, units, shares, partnership interests, membership interests, equity interests, rights, securities, or other equivalent evidences of ownership
(howsoever designated) issued by any Person. 
  
 “Change
of Control” means the occurrence of any of the following: (a) except as allowed by Section 7.9, the adoption of a plan relating to the liquidation or dissolution of the Parent or any other Borrower; (b) the acquisition by any Person
or group (as such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) (other than any Person or group owning greater than 20.0% of a direct or indirect interest of the voting power of the voting stock of the Parent
on the Closing Date) of a direct or indirect majority in interest (more than 50.0%) of the voting power of the voting stock of the Parent by way of merger or consolidation or otherwise; (c) during any period of twelve consecutive calendar months,
individuals (i) who were members of the Management Group of the Parent on the first day of such period, or (ii) whose election or nomination for election to the Management Group of the Parent was recommended or approved by at least a majority of the
Management Group then still in office who were members of the Management Group of the Parent on the first day of such period, or whose election or nomination for election was so approved, shall cease to constitute a majority of the Management Group
of the Parent; (d) except as allowed by Section 7.9, any Borrower (other than the Parent) shall cease to be a Wholly-Owned Subsidiary of the Parent; or (e) the hiring or termination of any of the president, chief executive officer, or
executive vice president/general counsel of the Parent without the consent of the Majority Lenders. 
  
 “Chattel Paper” has the meaning specified in the Security Agreement. 
  
 “Closing Date” means the date of this Agreement as specified in the introductory paragraph. 
  
 “Code” means the Internal Revenue Code of 1986, as amended
from time to time and any successor statute and the regulations promulgated thereunder. 
  
 “Collateral” means (a) all of the “Collateral”, as such term is defined in the Security Agreements, (b) all owned Real Estate of any Borrower; (c) all other personal property at any time
subject to the Agent’s Liens; and (d) all accessions to, substitutions for and replacements, products and proceeds of any of the foregoing, including, but not limited to, proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the foregoing. 
  

 Page 5 

 “Commitment” means, at anytime with respect to a Lender, the principal amount set forth
beside such Lender’s name under the heading “Commitment” on Schedule A-1 or on the signature page of the most recent Assignment and Acceptance to which such Lender is a party, as such Commitment may be adjusted from time to
time in accordance with the provisions of Section 11.2, and “Commitments” means, collectively, the aggregate amount of the Commitments of all of the Lenders. 
  
 “Compliance Certificate’ has the meaning specified in Section 5.2(c). 
  
 “Contaminant” means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”), or any constituent of any such substance or waste.

  
 “Continuation/Conversion Date” means the
effective date of (a) any conversion of LIBOR Rate Revolving Loans to Base Rate Revolving Loans or of Base Rate Revolving Loans to LIBOR Rate Revolving Loans or (b) any continuation of LIBOR Rate Revolving Loans as LIBOR Rate Revolving Loans.

  
 “Copyright Security Agreement” means any
Copyright Security Agreement executed and delivered by a Borrower to the Agent, for the benefit of the Agent and the Lenders, to evidence and perfect the Agent’s security interest in such Borrower’s present and future copyrights and
related licenses and rights, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Debt” means, without duplication, with respect to any Person (the “subject Person”) all liabilities, obligations, and
indebtedness of the subject Person to any other Person, of any kind or nature, now or hereafter owing, arising, due, or payable, howsoever evidenced, created, incurred, acquired, or owing, whether primary, secondary, direct, contingent, fixed, or
otherwise, consisting of indebtedness for borrowed money or the deferred purchase price of property, excluding trade payables, but including, without in any way limiting the generality of the foregoing: (a) in the case of the Borrowers, the
Obligations; (b) all indebtedness, liabilities, and obligations of any Person secured by any Lien on the subject Person’s property, even if the subject Person shall not have assumed or become liable for the payment thereof; provided,
however, that all such indebtedness, liabilities, and obligations which are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of the
subject Person prepared in accordance with GAAP; (c) all indebtedness, liabilities, and obligations created or arising under any Capital Lease or conditional sale or other title retention agreement with respect to property used or acquired by the
subject Person, even if the rights and remedies of the lessor, seller, or lender thereunder are limited to repossession of such property; provided, however, that all such indebtedness, liabilities, and obligations which are limited in
recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of the subject Person prepared in accordance with GAAP; (d) all indebtedness, liabilities, and obligations
under Guaranties; and (e) the present value (discounted at the Base Rate) of lease payments due under synthetic leases. 
  

 Page 6 

 “Default” means any event or circumstance which, with the giving of notice, the lapse of
time, or both, would (if not cured, waived, or otherwise remedied during such time) constitute an Event of Default. 
  
 “Default Rate” means a fluctuating per annum interest rate at all times equal to the sum of (a) the otherwise applicable Interest Rate,
plus (b) 2.00% per annum. Each Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate. In addition, with respect to Letters of Credit, the Default Rate shall mean the Letter of Credit Fee Percentage,
plus 2.00% per annum. 
  
 “Defaulting
Lender” has the meaning specified in Section 12.15(c). 
  
 “Deposit Accounts” has the meaning specified in the Security Agreements. 
  
 “Designated Account” has the meaning specified in Section 1.2(d). 
  
 “Distribution” means, with respect to any Person (other than a natural person): (a) the payment or making
of any dividend or other distribution of property in respect of such Person’s Capital Stock (or any options or warrants for, or other rights with respect to, such Capital Stock) of such Person, other than distributions solely in such
Person’s Capital Stock (or any options or warrants for, or other rights with respect to, such Capital Stock) of the same class; or (b) the redemption or other acquisition by such Person of any Capital Stock (or any options or warrants for, or
other rights with respect to, such Capital Stock) of such Person. 
  
 “Disqualified Stock” means, with respect to any Person, any Capital Stock which 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
(a) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (b) is convertible or exchangeable for Debt or Disqualified Stock, or (c) is redeemable at the option of the holder thereof, in whole or in part, in each
case on or prior to the first anniversary of the stated maturity of the Subordinated Notes. 
  
 “Documents” has the meaning specified in the Security Agreements. 
  
 “DOL” means the United States Department of Labor or any successor department or agency. 
  
 “Dollar” and “$” means dollars in the
lawful currency of the U.S. Unless otherwise specified, all payments under this Agreement shall be made in Dollars. 
  
 “EBITDA” means for any period, without duplication, the total of the following for the Borrowers on a consolidated basis, each calculated
for such period: Net Income plus (a) Interest Expense, (b) taxes on income, (c) depreciation expense, (d) amortization expense, (e) in each case as acceptable to the Agent, all other non-cash, non-recurring charges and expenses excluding
accruals for cash expenses made in the ordinary course of business, and (f) gain or loss from any sale of assets other than sales in the ordinary course of business, all of the foregoing determined in accordance with GAAP. For purposes of
calculating EBITDA with respect to any four consecutive Fiscal Quarters, (i) acquisitions that have been made by any Borrower and its Subsidiaries, including through mergers or consolidations and including any related financing 
  

 Page 7 

 transactions, during such four Fiscal Quarters shall be deemed to have occurred on the first day of such four Fiscal
Quarters; provided, however, that only the actual historical results of operations of the Persons so acquired, without adjustment for pro forma expense savings or revenue increases, shall be used for such calculation; and (ii) for
purposes of calculating the ratio of Total Debt to EBITDA and minimum EBITDA only, the EBITDA of any Borrower and its Subsidiaries attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses disposed
of prior to the end of such four Fiscal Quarters, shall be excluded. 
  
 “Eligible Accounts” means the Accounts of a Borrower which the Agent in the exercise of its reasonable commercial discretion determines to be Eligible Accounts. Without limiting the discretion of the Agent to establish
other criteria of ineligibility, Eligible Accounts shall not, unless the Agent in its sole discretion elects, include any Account: 
  
 (a) with respect to which more than 90 days have elapsed since the date of the original invoice therefor or which is more than 60 days
past due; 
  
 (b) with respect to which any of
the representations, warranties, covenants, and agreements contained in any Security Agreement are incorrect or have been breached; 
  
 (c) with respect to which Account (or any other Account due from the applicable Account Debtor), in whole or in part, a check, promissory
note, draft, trade acceptance, or other instrument for the payment of money has been received, presented for payment, and returned uncollected for any reason; 
  

(d) which represents a progress billing (as hereinafter defined) or as to which the applicable Borrower has extended the time for
payment without the consent of the Agent (for the purposes hereof, “progress billing” means any invoice for goods sold or leased or services rendered under a contract or agreement pursuant to which the Account Debtor’s obligation to
pay such invoice is conditioned upon such Borrower’s completion of any further performance under such contract or agreement); 
  
 (e) with respect to which any one or more of the following events has occurred to the Account Debtor on such Account: (i) death or
judicial declaration of incompetency of such Account Debtor who is a natural person; (ii) the filing by or against such Account Debtor of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the Bankruptcy Code or any other bankruptcy, insolvency, or similar laws of the U.S., any state or territory thereof, or any foreign jurisdiction, now or hereafter in effect; (iii) the making of any
general assignment by such Account Debtor for the benefit of creditors; (iv) the appointment of a receiver or trustee for such Account Debtor or for any of the assets of the Account Debtor, including, without limitation, the appointment of or taking
possession by a “custodian,” as defined in the Bankruptcy Code; (v) the institution by or against such Account Debtor of any other type of insolvency proceeding (under the Bankruptcy Code or otherwise) or of any formal or informal
proceeding for the dissolution or liquidation of, settlement of claims against, or winding up of affairs of, 
  

 Page 8 

 such Account Debtor; (vi) the sale, assignment, or transfer of all or any material part of the assets of
such Account Debtor; (vii) the nonpayment generally by such Account Debtor of its debts as they become due; or (viii) the cessation of the business of such Account Debtor as a going concern; 
  
 (f) if 50.0% or more of the aggregate Dollar amount of
outstanding Accounts owed at such time by the Account Debtor thereon is classified as ineligible pursuant to the other provisions of this definition; 
  
 (g) owed by an Account Debtor which (i) does not maintain its chief executive office in the U.S., except to the extent that such Account
is owed by an Account Debtor which maintains its chief executive office in the United Kingdom or Canada (other than the Province of Newfoundland) and such Account is secured or payable by a letter of credit or credit insurance satisfactory to the
Agent in its discretion, (ii) is not organized under the laws of the U.S. or any political subdivision, or state thereof, except to the extent that such Account is owed by an Account Debtor which is organized under the laws of the United Kingdom or
Canada (other than the Province of Newfoundland) and such Account is secured or payable by a letter of credit or credit insurance satisfactory to the Agent in its discretion, or (iii) is the government of any foreign country or sovereign state, or
of any state, province, municipality, or other political subdivision thereof, or of any department, agency, public corporation, or other instrumentality thereof, except to the extent that such Account is secured or payable by a letter of credit or
credit insurance satisfactory to the Agent in its discretion; 
  
 (h) owed by an Account Debtor which is an Affiliate or employee of such Borrower; 
  
 (i) except as provided in clause (k) following, with respect to which either the perfection, enforceability, or validity of the
Agent’s Liens in such Account, or the Agent’s right or ability to obtain direct payment to the Agent of the proceeds of such Account, is governed by any federal, state, or local statutory requirements other than those of the UCC;

  
 (j) owed by an Account Debtor to which a
Borrower, is indebted in any way, or which is subject to any right of setoff or recoupment by the Account Debtor, unless the Account Debtor has entered into an agreement acceptable to the Agent to waive setoff rights, or if the Account Debtor
thereon has disputed liability or made any claim with respect to any other Account due from such Account Debtor, but in each such case only to the extent of such indebtedness, setoff, recoupment, dispute, or claim; 
  
 (k) owed by the government of the U.S., or any department,
agency, public corporation, or other instrumentality thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31 U.S.C. § 3727 et seq.), and any other steps necessary to perfect the Agent’s Liens therein, have been
complied with to the Agent’s satisfaction with respect to such Account; 
  

 Page 9 

 (l) owed by any state, municipality, or other political subdivision of the U.S., or any
department, agency, public corporation, or other instrumentality thereof and as to which the Agent’s Lien therein is not or cannot be perfected; 
  
 (m) which represents a sale on a bill-and-hold, guaranteed sale, sale and return, sale on approval, consignment, or other repurchase or
return basis; 
  
 (n) which is evidenced by a
promissory note or other instrument or by chattel paper; 
  
 (o) with respect to which the prospect of collection of such Account is impaired or such Account may not be paid by reason of the Account Debtor’s financial inability to pay; 
  
 (p) with respect to which the Account Debtor is located in
any state requiring the filing of a Notice of Business Activities Report or similar report in order to permit such Borrower to seek judicial enforcement in such state of payment of such Account, unless such Borrower has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent report for the then current year; 
  
 (q) which arises out of a sale not made in the ordinary course of such Borrower’s business; 
  
 (r) with respect to which the goods giving rise to such
Account have not been shipped and delivered to and accepted by, or have been rejected or objected to by, the Account Debtor or the services giving rise to such Account have not been performed by such Borrower, and, if applicable, accepted by the
Account Debtor, or the Account Debtor revokes its acceptance of such goods or services; 
  
 (s) owed by an Account Debtor, or group of affiliated Account Debtors, which is obligated to the Borrowers respecting Accounts the
aggregate unpaid balance of which exceeds 50.0% of the aggregate unpaid balance of all Accounts owed to the Borrowers at such time by all of the Borrowers’ Account Debtors, but only to the extent of such excess; 
  
 (t) which is not subject to a first priority and perfected
security interest in favor of the Agent, for the benefit of the Agent and the Lenders; and 
  
 (u) with respect to which such Borrower has deemed such Account as uncollectible or has any reason to believe that such Account is
uncollectible. 
  
 If any Account at any time ceases to be an Eligible Account,
then such Account shall promptly be excluded from the calculation of the Borrowing Base. 
  
 “Eligible Assignee” means (a) a commercial bank, commercial finance company, or other lender having total assets in excess of $1,000,000,000, (b) any Lender listed on the signature pages of this
Agreement, (c) any Affiliate of any Lender, and (d) if an Event of Default has occurred and is continuing, any Person reasonably acceptable to the Agent. 
  

 Page 10 

 “Eligible Inventory” means Inventory of a Borrower which meets all of the following
requirements: 
  
 (a) such Inventory is owned by
a Borrower, and is not held by a Borrower on consignment; 
  
 (b) such Inventory is subject to the Agent’s Liens, which are perfected as to such Inventory, and is subject to no other Lien whatsoever (other than the Liens described in clause (e) or clause (i)
of the definition of Permitted Liens; provided that such Permitted Liens (i) are junior in priority to the Agent’s Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Agent to realize on or
obtain the full benefit of the Collateral); 
  
 (c) such Inventory does not consist of chemicals, samples, prototypes, supplies, or packing and shipping materials; 
  
 (d) such Inventory is in good condition, is not unmerchantable, and meets all standards imposed by any Governmental Authority having
regulatory authority over such goods or their use or sale; 
  
 (e) such Inventory is not obsolete, defective, returned, repossessed, or used goods taken in trade; 
  
 (f) such Inventory is located inside the U.S. (and is not in transit from vendors or suppliers); 
  
 (g) [Reserved] 
  
 (h) if such Inventory contains or bears any Proprietary
Rights licensed to a Borrower by any Person, the Agent shall be satisfied that it may sell or otherwise dispose of such Inventory in accordance with the terms of the applicable Security Agreement and Section 9.2 without infringing the rights
of the licensor of such Proprietary Rights or violating any contract with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the existing license
agreement), and, if the Agent deems it necessary, such Borrower shall deliver to the Agent a consent or sublicense agreement from such licensor in form and substance acceptable to the Agent; 
  
 (i) such Inventory is readily marketable in the ordinary
course of business; 
  
 (j) such Inventory is
reflected in the details of a current perpetual inventory report; 
  
 (k) such Inventory is currently (i) either usable or salable, at prices approximating at least cost, in the normal course of such Borrower’s business, and for each stock keeping unit (“SKU”) part
number, items of such SKU part number have either (A) been available for sale by a Borrower for at least the immediately preceding twelve Fiscal Periods and at least one item of Inventory of that SKU part number has 

  

 Page 11 

 
been sold by a Borrower to a customer during such immediately preceding twelve Fiscal Periods, or (B) been available for sale by a Borrower for less than the
immediately preceding twelve Fiscal Periods or (ii) is work-in-process or raw materials; and 
  
 (l) such Inventory consists of orthopedic soft goods, rehabilitation products, and implants or work-in-process or raw materials.

  
 If any Inventory at any time ceases to be Eligible Inventory, such Inventory
shall promptly be excluded from the calculation of the Borrowing Base. 
  
 “Encore Asset Corporation” means Encore Medical Asset Corporation, a Nevada corporation, and its successors and assigns. 
  
 “Encore GP” means Encore Medical GP, Inc., a Nevada corporation, and its successors and assigns. 
  
 “Encore Limited” means Encore Medical, L.P., a Delaware
limited partnership, and its successors and assigns. 
  
 “Encore Medical Partners” means Encore Medical Partners, Inc., a Nevada corporation, and its successors and assigns. 
  
 “Environmental Compliance Reserve” means any reserve which the Agent establishes from time to time in its reasonable discretion after
prior written notice to the Borrowers for amounts that are reasonably likely to be expended by a Borrower in order for such Borrower and its operations and property (a) to comply with any notice from a Governmental Authority asserting material
non-compliance with Environmental Laws or (b) to correct any such material non-compliance identified in a report delivered to the Agent and the Lenders pursuant to Section 7.7. 
  
 “Environmental Laws” means all federal, state, or local laws, statutes, common law duties, rules,
regulations, ordinances, and codes, together with all administrative orders, directed duties, licenses, authorizations, and permits of, and agreements with, any Governmental Authority, in each case relating to environmental, health, safety, and land
use matters. 
  
 “Environmental Lien” means a
Lien in favor of any Governmental Authority for (a) any liability under Environmental Laws or (b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the
environment. 
  
 “Equipment” has the meaning
specified in the Security Agreements. 
  
 “ERISA”
means the Employee Retirement Income Security Act of 1974, and regulations promulgated thereunder. 
  
 “ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with a Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code). 
  

 Page 12 

 “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) a
withdrawal by a Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated
as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or partial withdrawal by a Borrower or any ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan is in reorganization or insolvent, (d) the filing of
a notice of intent to terminate, the treatment of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or the termination, insolvency, or reorganization of
a Multi-employer Plan, (e) the occurrence of an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or
Multi-employer Plan, or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon a Borrower or any ERISA Affiliate. 
  
 “Event of Default” has the meaning specified in Section
9.1. 
  
 “Exchange Act” means the Securities
Exchange Act of 1934, and regulations promulgated thereunder. 
  
 “Existing Letter of Credit” means each “Letter of Credit” (as defined in the Original Credit Agreement) issued by the Bank and outstanding on the Closing Date. 
  
 “Existing Obligations” means, with respect to a Newly
Obligated Borrower, any Obligations which are outstanding and unpaid as of the time such Newly Obligated Borrower becomes a Borrower. 
  
 “Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1.00%) equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding
such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day and (b) if no
such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on such day on such transactions as determined by the Agent. 
  
 “Federal Reserve Board” means the Board of Governors of the
Federal Reserve System or any successor thereto. 
  
 “Financial Statements” means, according to the context in which used, the financial statements referred to in Section 5.2 and Section 6.6 or any other financial statements required to be given to the Agent or
the Lenders pursuant to this Agreement. 
  

 Page 13 

 “Fiscal Period” means one of three fiscal periods in a Fiscal Quarter each of which is
approximately one month in duration. There are twelve Fiscal Periods in a Fiscal Year. 
  
 “Fiscal Quarter” means one of four quarters, consisting of a period of four weeks, plus four weeks, plus five weeks, in a Fiscal Year, with the first of such quarters beginning on the
first day of a Fiscal Year and the last of such quarters ending on December 31 of such Fiscal Year. 
  
 “Fiscal Year” means, with respect to any Borrower, such Borrower’s fiscal year for financial accounting purposes. The current Fiscal
Year of the Parent will end on December 31, 2003. 
  
 “Fixed Assets” means, with respect to each Borrower, the Equipment and Real Estate of such Borrower. 
  
 “Fixed Charge Coverage Ratio” means, at any date of determination, for the Borrowers on a consolidated basis for the preceding four
Fiscal Quarters, the ratio of (a) the sum of (i) EBITDA, minus (ii) the sum of (A) Capital Expenditures, plus (B) the cash amount of taxes paid, plus (C) the cash amount of Distributions paid by any Borrower, to (b) the sum of
(i) the cash amount of Interest Expense paid, plus (ii) principal payments made or required to be made on any and all Debt of the Borrowers, other than the Revolving Loans and excluding the payments made on (A) August 15, 2003 on the Term
Loans (as defined in the Original Credit Agreement) and (B) August 14, 2003, August 22, 2003, and September 11, 2003 on the Debt outstanding under the CapitalSource Subordinated Debt Agreement. 

 
 “Funding Date” means the date on which a Borrowing
occurs. 
  
 “GAAP” means generally accepted
accounting principles and practices set forth from time to time in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which are applicable to the circumstances as of the Closing Date. 
  
 “General Intangibles” has the meaning specified in the
Security Agreements. 
  
 “Governmental Authority”
means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory, or administrative functions
of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. 
  
 “Guarantor” means each Person executing a Guaranty Agreement, and “Guarantors” means two
or more of such Persons, collectively. 
  
 “Guaranty” means, with respect to any Person, all obligations of such Person which in any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or performance of any indebtedness,
dividend, or other obligations of any other Person 

  

 Page 14 

 
(the “guaranteed obligations”), or assure or in effect assure the holder of the guaranteed obligations against loss in respect thereof, including
any such obligations incurred through an agreement, contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition; or (c) to lease property or to purchase any debt or equity securities or other property or services. 
  
 “Guaranty Agreement” means, collectively and individually (as applicable), the Parent Guaranty and the
Subsidiary Guaranty. 
  
 “Hedge Agreement” means
any and all transactions, agreements, or documents now existing or hereafter entered into, which provide for an interest rate, credit, commodity, or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency
rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging a Person’s exposure to fluctuations in interest or exchange rates, loan, credit exchange, security, or
currency valuations, or commodity prices. 
  
 “Indemnified
Liabilities” has the meaning specified in Section 13.11(a). 
  
 “Indemnified Person” has the meaning specified in Section 13.11(a). 
  
 “Instruments” has the meaning specified in the Security Agreements. 
  
 “Intercompany Accounts” means all assets and liabilities, however arising, which are due to the Parent or a
Subsidiary of the Parent from, which are due from the Parent or a Subsidiary of the Parent to, or which otherwise arise from any transaction by the Parent or a subsidiary of the Parent with, any Affiliate of the Parent or a Subsidiary of the Parent.

  
 “Intercreditor Agreement” means that certain
Second Amended and Restated Subordination and Intercreditor Agreement, dated concurrently herewith, among the Agent, the Borrowers, the Lenders, and CapitalSource Finance LLC, as such agreement may be amended, restated, or otherwise modified from
time to time. 
  
 “Interest Expense” shall mean,
for any period, total interest expense (including interest expense attributable to conditional sales contracts, Capital Leases and other title retention agreements) in accordance with GAAP of the Borrowers on a consolidated basis with respect to all
outstanding Debt including PIK Interest (as defined in the CapitalSource Subordinated Debt Agreement and capitalized interest, but excluding commissions, discounts, and other fees owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Hedge Agreements. 
  
 “Interest Period” means, with respect to any LIBOR Rate Revolving Loan, the period commencing on the Funding Date of such Revolving Loan or on the Continuation/Conversion Date on which such Revolving Loan is continued as or
converted into a LIBOR Rate Revolving Loan, and ending on the date one, two, or three months thereafter as selected by a Borrower in its Notice of Borrowing or Notice of Continuation/Conversion, provided that: 
  
 (a) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the following Business Day unless the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the
preceding Business Day; 
  

 Page 15 

 (b) any Interest Period pertaining to a LIBOR Rate Revolving Loan that begins on the last
Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period;
and 
  
 (c) no Interest Period shall extend
beyond the Stated Termination Date. 
  
 “Interest
Rate” means each or any of the interest rates, including the Default Rate, set forth in Section 2.1. 
  
 “Inventory” has the meaning specified in the Security Agreements. 
  
 “Investment Property” has the meaning specified in the Security Agreements. 
  
 “IRS” means the Internal Revenue Service and any
Governmental Authority succeeding to any of its principal functions under the Code. 
  
 “Issuer” has the meaning prescribed for such term in Section 6.27(b). 
  
 “Latest Projections” means: (a) on the Closing Date and thereafter until the Agent receives new projections pursuant to Section
5.2(d), the projections of the Borrowers’ financial condition, results of operations, and cash flows, in each case for the Fiscal Years ending December 31, 2003 through and including December 31, 2008 delivered to the Agent prior to the
Closing Date; and (b) thereafter, the projections most recently received by the Agent pursuant to Section 5.2(d). 
  
 “Lender” and “Lenders” have the meanings specified in the introductory paragraph hereof and shall include the Bank to
the extent of any Non-Ratable Loan outstanding; provided that no such Non-Ratable Loan shall be taken into account in determining any Lender’s Pro Rata Share. 
  
 “Letter of Credit” has the meaning specified in Section 1.4(a). 
  
 “Letter of Credit Fee” has the meaning specified in
Section 2.5. 
  
 “Letter of Credit Fee
Percentage” means with respect to any Letter of Credit issued hereunder and the Existing Letters of Credit, on any date of determination, a per annum percentage equal to the Applicable Margin for LIBOR Rate Revolving Loans, plus
0.25% as of such date of determination. 
  
 “Letter of
Credit Issuer” means the Bank, any Affiliate of the Bank, or any other financial institution that issues any Letter of Credit pursuant to this Agreement. 
  

 Page 16 

 “Letter of Credit Subfacility” means $1,000,000. 
  
 “LIBOR Rate” means, for any Interest Period, with respect to
LIBOR Rate Revolving Loans, the rate of interest per annum determined pursuant to the following formula: 
  

	LIBOR Rate =	  	LIBOR Base Rate
	  	

	  	1.00 – LIBOR Reserve Percentage
		
	Where,	  	 
	
	“Eurodollar Reserve Percentage” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, rounded upward to the next
1/100th of 1.00%) in effect on such day applicable to member banks under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental, or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The LIBOR Rate for each outstanding LIBOR Rate Revolving Loan shall be adjusted automatically as of the effective date of any
change in the Eurodollar Reserve Percentage.
	
	“Offshore Base Rate” means the rate per annum appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits
in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period. If for any reason such rate is not available, the Offshore Base Rate shall be, for
any Interest Period, the rate per annum appearing on Reuters Screen LIBO Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for
a term comparable to such Interest Period; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates. If for any reason none of the foregoing
rates is available, the Offshore Base Rate shall be, for any Interest Period, the rate per annum determined by the Agent as the rate of interest at which Dollar deposits in the approximate amount of the LIBOR Rate Revolving Loan comprising part of
such Borrowing would be offered by the Bank’s London Branch to major banks in the offshore Dollar market at their request at or about 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period.

  
  
 “LIBOR Rate Revolving Loan” means a Revolving Loan during any period in which it bears interest based on the LIBOR Rate. 
  
 “Lien” means (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute, or contract, and including a security interest, charge, claim, or lien arising from a 

  

 Page 17 

 
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment, or bailment for security purposes, (b) to the extent not included under clause (a) preceding, any reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction, lease, or other
title exception or encumbrance affecting property, and (c) any contingent or other agreement to provide any of the foregoing. 
  
 “Loan Account” means the loan account of the Borrowers, which account shall be maintained by the Agent. 
  
 “Loan Documents” means, collectively, this Agreement, the
Revolving Loan Notes, the Security Agreements, the Mortgages, the Copyright Security Agreement, the Patent Security Agreement, the Trademark Security Agreement, the Parent Guaranty, the Subsidiary Guaranty, the Autoborrow Agreement, the
Intercreditor Agreement, and any other agreements, instruments, and documents heretofore, now or hereafter evidencing, securing, guaranteeing, or otherwise relating to the Obligations, the Collateral, or any other aspect of the transactions
contemplated by this Agreement. 
  
 “Majority
Lenders” means at any time Lenders whose Pro Rata Shares aggregate more than 50.0% of the aggregate Pro Rata Shares. 
  
 “Management Group” means, as of any date of determination, the board of directors, board of managers, or similar constituency having
management authority in respect of an entity under any Requirement of Law. 
  
 “Margin Stock” means “margin stock” as such term is defined in Regulation T, U, or X of the Federal Reserve Board. 
  
 “Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the
value, condition, use or availability of any of the Collateral and/or the operations, business, properties, condition (financial or otherwise), or prospects of any Borrower, the Collateral, or any guarantor of the Obligations, (b) a material
impairment of the ability of any Borrower or any Affiliate of such Borrower to perform under any Loan Document to which it is a party, or (c) a material adverse effect upon the legality, validity, binding effect, or enforceability against any
Borrower of any Loan Document to which it is a party. 
  
 “Maximum Rate” means, at any time, the maximum rate of interest the Lenders may lawfully contract for, charge, or receive in respect of the Obligations as allowed by any Requirement of Law. For purposes of determining the
Maximum Rate under the Requirements of Law of the State of Texas, the applicable rate ceiling shall be (a) the “weekly ceiling” described in and computed in accordance with the provisions of Section 303.003 of the Texas Finance Code, as
amended or (b) if the parties subsequently contract as allowed by any Requirement of Law, the “quarterly ceiling” or the “Annualized ceiling” computed pursuant to Section 303.008 of the Texas Finance Code, as amended;
provided, however, that at any time the “weekly ceiling”, the “quarterly ceiling”, or the “Annualized ceiling” shall be less than 18.0% per annum or more than 24.0% per annum, the provisions of Section
303.009(a) and Section 303.009(b) of the Texas Finance Code, as amended, shall control for purposes of such determination, as applicable. 
  

 Page 18 

 “Maximum Revolver Amount” means $25,000,000. 
  
 “Mortgage” means and includes any mortgage, deed of trust,
deed to secure debt, assignment, or other instrument executed and delivered by any Borrower to or for the benefit of the Agent by which the Agent, for the benefit of the Agent and the Lenders, acquires a Lien on any Real Estate or a collateral
assignment of such Borrower’s interest under a lease of Real Estate, and any amendment, modification, or supplement thereto. 
  
 “Multi-employer Plan” means a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time
during the current calendar year or the immediately preceding six calendar years contributed to by a Borrower or any ERISA Affiliate. 
  
 “Negative Pledge” means any agreement, contract, or other arrangement whereby any Borrower is prohibited from, or would otherwise be in
default as a result of, creating, assuming, incurring, or suffering to exist, directly or indirectly, any Lien on any of its assets in favor of the Agent under the Loan Documents. 
  
 “Net Amount of Eligible Accounts” means, at any time, the gross amount of Eligible Accounts less sales,
excise, or similar taxes, and less returns, discounts, claims, credits, allowances, accrued rebates, offsets, deductions, counterclaims, disputes, and other defenses of any nature at any time issued, owing, granted, outstanding, available, or
claimed. 
  
 “Net Income” means, for any period,
the net income (or loss) of the Borrowers on a consolidated basis for such period taken as a single accounting period, after deduction of all expenses, taxes and other proper charges, which charges include, without limitation, each of the following
determined in accordance with GAAP: 
  
 (a) the
income (or loss) of any Person in which any other Person (other than any Borrower) has a joint interest, except to the extent of the amount of dividends or other distributions actually paid in cash to a Borrower by such Person during such period;

  
 (b) the income (or loss) of any Person
accrued prior to the date it becomes a Borrower or is merged into or consolidated with a Borrower or that Person’s assets are acquired by a Borrower; 
  
 (c) the income of any Subsidiary of any Borrower (that is not a Borrower itself) to the extent that the declaration or payment of
dividends or similar distributions of that income by that Subsidiary is not at the time permitted by operation of the terms of the charter or any agreement, instrument, judgment, decree, order, statue, rule or governmental regulation applicable to
that Subsidiary; 
  
 (d) any gain arising from
any write-up on the book value of any asset; and 
  
 (e) any gain arising from the acquisition of debt or equity securities of any Borrower or from cancellation or forgiveness of Debt of any Borrower. 
  

 Page 19 

 “Net Proceeds” has the meaning specified in Section 3.4(b). 
  
 “Newly Obligated Borrower” means each Person, if any, who
becomes party to this Agreement as a Borrower effective as of any date after the Closing Date. 
  
 “Non-Ratable Loan” and “Non-Ratable Loans” have the respective meanings specified in Section 1.2(i). 
  
 “Notice of Borrowing” has the meaning specified in Section 1.2(c). 
  
 “Notice of Continuation/Conversion” has the meaning
specified in Section 2.2(b). 
  
 “Obligations” means all present and future loans, advances, liabilities, obligations, covenants, duties, and debts owing by the Borrowers, or any of them, to the Agent and/or any Lender, arising under or pursuant to this
Agreement or any of the other Loan Documents, whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, acceptance, loan, guaranty, indemnification, or
otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, charges, expenses, fees, reasonable attorneys’ fees, filing fees, and
any other sums chargeable to any Borrower hereunder or under any of the other Loan Documents. “Obligations” includes, without limitation, (a) all debts, liabilities, and obligations now or hereafter arising from or in connection with the
Letters of Credit and (b) all debts, liabilities, and obligations now or hereafter arising from or in connection with Bank Products; provided, however, that notwithstanding the foregoing, in the case of and with regard to or in
connection with any Newly Obligated Party, the term “Obligations,” wherever in any manner used in the Loan Documents, excludes Existing Obligations. 
  

“Orderly Liquidation Value” means, with respect to Inventory or Equipment of any Borrower, the orderly liquidation value thereof as
determined in a manner acceptable to the Agent by an experienced and reputable appraiser acceptable to the Agent, net of all costs of liquidation thereof. 
  
 “Original Credit Agreement” has the meaning specified in Recital B of this Agreement. 
  
 “Other Taxes” means any present or future stamp or
documentary taxes or any other excise or property taxes, charges, or similar levies (excluding, in the case of each Lender and the Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by each Lender’s or
the Agent’s net income or capital) which arise from any payment made hereunder or from the execution, delivery, or registration of, or otherwise with respect to, this Agreement or any other Loan Documents. 
  
 “Parent” means Encore Medical Corporation, a Delaware
corporation, and its successors and assigns. 
  
 “Parent
Guaranty” means an agreement of Guaranty executed by the Parent pursuant to Section 7.30. 
  

 Page 20 

 “Parent Security Agreement” means the Security Agreement, dated concurrently herewith,
between the Parent and the Agent, for the benefit of the Agent and the Lenders, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Participant” means any commercial bank, financial institution, or other Person not an Affiliate of the
Borrowers who shall have been granted the right by any Lender to participate in the financing provided by such Lender under this Agreement, and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

  
 “Patent Security Agreement” means the Patent
Security Agreement, dated as of the Closing Date or any subsequent date, executed and delivered by a Borrower to the Agent, for the benefit of the Agent and the Lenders, to evidence and perfect the Agent’s security interest in such
Borrower’s present and future patents and related licenses and rights, as such agreement may be amended, restated, or otherwise modified from time to time. 
  

“PBGC” means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to the functions thereof. 

 
 “Pension Plan” means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which any Borrower or any ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multi-employer Plan has made contributions
at any time during the immediately preceding five plan years. 
  
 “Permitted Acquisition” means an acquisition of the Capital Stock of a Person which constitutes all or substantially all of the issued and outstanding Capital Stock of such Person or any acquisition of property which
constitutes a significant or material portion of an existing business of a Person by any Borrower in a transaction that satisfies each of the following requirements: 
  
 (a) such acquisition is not a hostile or contested acquisition; 
  
 (b) the business acquired in connection with such
acquisition is (i) located in the U.S., (ii) organized under Requirements of Law of the U.S., and (iii) not engaged, directly or indirectly, in any line of business other than the businesses permitted pursuant to Section 7.17; 
  
 (c) both before and after giving effect to such acquisition
and the Revolving Loans (if any) requested to be made in connection therewith, each of the representations and warranties in the Loan Documents is true and correct (except (i) any such representation or warranty which relates to a specified prior
date, and (ii) to the extent the Agent and the Lenders have been notified in writing by the Borrowers that any representation or warranty is not correct and the Majority Lenders have explicitly waived in writing compliance with such representation
or warranty) and no Default or Event of Default exists or will exist or would result therefrom; 
  
 (d) (i) as soon as available, but not less than 30 days prior to such acquisition, the Borrowers have given the Agent (A) notice of such
acquisition (B) a copy of all business and financial information reasonably requested by the Agent, and (C) a 

  

 Page 21 

 
certificate of the Parent’s chief financial officer certifying (and showing the calculations therefor in reasonable detail) that the Obligated Parties
would be in compliance with the covenants set forth in Section 7.23 through Section 7.27 on a pro forma basis before and after giving effect to such acquisition and (ii) as soon as available, the information provided to the board of
directors of the Parent with respect to such acquisition; 
  
 (e) the aggregate cash consideration paid in connection with any such acquisition does not exceed $1,000,000 and the aggregate cash consideration paid in connection with all such acquisitions during any twelve month
period does not exceed $2,500,000; 
  
 (f) if
such acquisition is an acquisition of the Capital Stock of a Person, the acquisition is structured so that the Borrower making such acquisition shall acquire not less than 80.0% of the voting control of the acquired Person and, (if applicable)
subject to Section 13.22, the acquired Person shall become a Borrower, or a Guarantor but not a Borrower, pursuant to the terms of this Agreement; 
  
 (g) no Obligated Party shall, as a result of or in connection with any such acquisition, assume or incur any direct or contingent
liabilities (whether relating to environmental, tax, litigation, or other matters) that could reasonably be expected, as of the date of such acquisition, to result in the existence or occurrence of a Material Adverse Effect; 
  
 (h) in connection with an acquisition of the Capital Stock
of any Person, all Liens on the Accounts, Inventory, Deposit Accounts, and General Intangibles of such Person shall be terminated, and in connection with an acquisition of the assets of any Person, all Liens on such assets which consist of Accounts,
Inventory, Deposit Accounts, and General Intangibles shall be terminated; and 
  
 (i) no Default or Event of Default exists or would result therefrom. 
  
 “Permitted Distribution” means any of the following Distributions, provided, that no Default or Event of Default exists at the
time of, or after giving effect to, any such Distribution: (a) any Distribution by a Borrower to a Borrower, (b) any conversion by the holders of the Series A Preferred Stock issued by the Parent, pursuant to the Certificate of Designations,
Preferences and Limitations of Series A Preferred Stock of Encore Medical Corporation filed on June 7, 2001 (the “Certificate of Designation”), to common stock of the Parent in accordance with the terms of the Certificate of
Designation, (c) any warrants issued to lenders who are providing financing to any of the Borrowers in exchange for the issuance of such warrants, provided, that all Debt incurred in connection with such financing (i) constitutes Subordinated
Debt, (ii) is otherwise not prohibited by this Agreement, and (iii) in each case is in form and substance satisfactory to the Agent and the Lenders. 
  
 “Permitted Liens” means: 
  
 (a) the Agent’s Liens; 
  

 Page 22 

 (b) Liens, if any, which are described on Schedule A-2 (“Permitted
Liens”) on the Closing Date and Liens resulting from the refinancing of the related Debt, provided that such refinancing is on the same or substantially similar terms, the Debt secured thereby shall not be increased, and the Liens
shall not cover any additional property; 
  
 (c)
(i) Liens for taxes, fees, assessments, or other charges of a Governmental Authority which are not delinquent or (ii) statutory Liens for taxes, fees, assessments, or other charges of a Governmental Authority amounts in an amount not to exceed
$250,000; provided that the payment of any such fees, assessments, taxes, and other charges under this clause (ii) which are past due and delinquent is being contested in good faith and by appropriate proceedings diligently pursued and
as to which adequate financial reserves have been established in accordance with GAAP on the applicable Borrower’s books and records and a stay of enforcement of any such Lien is in effect; 
  
 (d) Liens consisting of deposits made in the ordinary course
of business in connection with, or to secure payment of, obligations under worker’s compensation, unemployment insurance, social security, and other similar laws, or to secure the performance of bids, tenders, or contracts (other than for the
repayment of Debt) or to secure indemnity, performance, or other similar bonds for the performance of bids, tenders, or contracts (other than for the repayment of Debt) or to secure statutory obligations (other than liens arising under ERISA or
Environmental Liens) or surety or appeal bonds, or to secure indemnity, performance, or other similar bonds; 
  
 (e) Liens securing the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords, and other similar Persons,
provided that if any such Lien arises from the nonpayment of such claims or demands when due, such claims or demands do not exceed $150,000 in the aggregate; 
  
 (f) Liens constituting encumbrances in the nature of reservations, exceptions, encroachments, easements,
rights of way, covenants running with the land, and other similar title exceptions or encumbrances affecting any Real Estate, provided that any such Liens do not in the aggregate materially detract from the value of such Real Estate or
materially interfere with its use in the ordinary conduct of a Borrower’s business; 
  
 (g) Liens which constitute purchase money Liens and secure Debt permitted under clause (c) of Section 7.13; 
  
 (h) Liens arising from judgments and attachments in
connection with court proceedings not in excess of $250,000, provided that the attachment or enforcement of such Liens would not result in an Event of Default hereunder and such Liens are being contested in good faith by appropriate
proceedings, adequate financial reserves have been established on the applicable Borrower’s books and records in accordance with GAAP, no material property is subject to a material risk of loss or forfeiture, the claims in respect of such Liens
are fully covered by insurance (subject to ordinary and customary deductibles), and a stay of execution pending appeal or proceeding for review is in effect; and 

  

 Page 23 

 (i) Liens created in connection with the CapitalSource Subordinated Debt Agreement,
provided that such Liens (A) are junior in priority and subordinate to the Agent’s Liens, (B) do not impair directly or indirectly the ability of the Agent to realize on or obtain full benefit of the Collateral, and (C) shall not cover
any property of the Borrowers except as provided for on the Closing Date; 
  
 provided that (i) none of such Liens listed in clause (b) through clause (h) preceding may attach to any Accounts, (ii) none of such Liens listed in clause (b) through clause (h) preceding, other than such
Liens of a type and to the extent provided by clause (e) preceding, may attach to any Inventory owned by a Borrower, and (iii) none of such Liens listed in clause (e) preceding shall be a “Permitted Lien” to the extent that
any such Lien attaches to any Inventory owned by a Borrower and the aggregate amount of claims or demands under clause (e) against all Borrowers exceeds $250,000. 
  
 “Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture,
trust, unincorporated organization, association, corporation, Governmental Authority, or any other entity. 
  
 “Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower sponsors or maintains or to which any
Borrower makes, is making, or is obligated to make contributions and includes any Pension Plan. 
  
 “Proprietary Rights” has the meaning specified in the Security Agreements. 
  
 “Pro Rata Share” means, with respect to a Lender, a fraction (expressed as a percentage), the numerator of
which is the amount of such Lender’s Commitment and the denominator of which is the sum of the amounts of all of the Lenders’ Commitments, or if no Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which
is the amount of Obligations owed to such Lender and the denominator of which is the aggregate amount of the Obligations owed to the Lenders, in each case giving effect to a Lender’s participation in Non-Ratable Loans. 
  
 “Real Estate” means, with respect to any Person, all of such
Person’s now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds, and future interests, together with all of such Person’s now or hereafter owned or leased interests in the
improvements thereon, the fixtures attached thereto, and the easements appurtenant thereto. 
  
 “Release” means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching, or migration of a Contaminant into the indoor or outdoor environment or into
or out of any Real Estate or other property, including the movement of Contaminants through or in the air, soil, surface water, groundwater, or Real Estate or other property. 
  
 “Report” has the meaning specified in Section 12.18(a). 
  
 “Reportable Event” means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC. 
  

 Page 24 

 “Requirement of Law” means, as to any Person, any law (statutory or common), treaty,
rule, or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. 
  
 “Reserves” means reserves that limit the availability of
credit hereunder, consisting of reserves against Availability, Eligible Accounts, or Eligible Inventory, established by the Agent from time to time in the Agent’s reasonable credit judgment. Without limiting the generality of the foregoing, the
following reserves shall be deemed to be a reasonable exercise of the Agent’s credit judgment: (a) Bank Product Reserves; (b) a reserve for accrued, unpaid interest on the Obligations; (c) reserves for rent at leased locations subject to
statutory or contractual landlord liens; (d) reserves for Inventory shrinkage; (e) Environmental Compliance Reserves; (f) customs charges; (g) dilution; and (h) warehousemen’s or bailees’ charges. 
  
 “Responsible Officer” means, with respect to any Borrower,
the chief executive officer or the president, or any other officer having substantially the same authority and responsibility, or, with respect to compliance with financial covenants and the preparation of Borrowing Base Certificates, the chief
financial officer or the treasurer of such Borrower, or any other officer having substantially the same authority and responsibility. 
  
 “Restricted Investment” means, with respect to any Borrower, any acquisition of property by such Borrower in exchange for cash or other
property, whether in the form of an acquisition of Capital Stock, debt, or other indebtedness or obligation, or the purchase or acquisition of any other assets or property, or a loan, advance, capital contribution, or subscription (each of the
foregoing an “Investment”), except the following: (a) acquisitions of Equipment to be used in the business of such Borrower so long as the acquisition costs thereof constitute Capital Expenditures permitted hereunder; (b)
acquisitions of Inventory in the ordinary course of business of such Borrower; (c) acquisitions of other current assets acquired in the ordinary course of business of such Borrower; (d) Investments in direct obligations of the U.S., or any agency
thereof, or obligations guaranteed by the U.S., provided that such obligations mature within six months from the date of acquisition thereof; (e) Investments in certificates of deposit maturing within one year from the date of acquisition,
bankers’ acceptances, Eurodollar bank deposits, or overnight bank deposits, in each case issued by, created by, or with a bank or trust company organized under the laws of the U.S. or any state thereof having capital and surplus aggregating at
least $100,000,000; (f) Investments in commercial paper given a rating of “A1” or better by Standard & Poor’s Corporation or “P1” or better by Moody’s Investors Service, Inc. and maturing not more than 90 days from
the date of creation thereof; and (g) Investments in Hedge Agreements entered into for the purpose of interest payable under this Agreement; (h) Investments in mutual funds substantially all of the assets of which are comprised of securities of the
types described in clause (d), clause (e), and clause (f) preceding; (i) Investments consisting of intercompany loans between any Borrower and another Borrower; (j) advances to independent sales Persons against commissions in an
aggregate amount at any time not exceeding $2,250,000; and (k) other Investments not listed in clause (a) through clause (j) preceding in an aggregate amount at any time not exceeding $500,000. 
  
 “Revolving Loans” has the meaning specified in Section
1.2 and includes each Non-Ratable Loan and Autoborrow Loan. 
  

 Page 25 

 “Revolving Loan Note” and “Revolving Loan Notes” have the meanings
specified in Section 1.2(b). 
  
 “Security
Agreement” means, collectively and individually (as applicable) the Parent Security Agreement and the Subsidiary Security Agreement. 
  
 “Settlement” and “Settlement Date” have the meanings specified in Section 12.15(a)(i). 
  
 “Solvent” means, when used with respect to any Person, that
at the time of determination: 
  
 (a) the assets
of such Person, at a fair valuation, are in excess of the total amount of its debts (including contingent liabilities); 
  
 (b) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become
absolute and matured; 
  
 (c) it is then able and
expects to be able to pay its debts (including contingent debts and other commitments) as they mature; and 
  
 (d) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. 
  
 For purposes of determining whether a Person is Solvent, the amount of any contingent
liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. 
  
 “Stated Termination Date” means September 26, 2006.

  
 “Subordinated Debt” means all indebtedness,
liabilities, and obligations owing by the Borrower pursuant to the Subordinated Debt Documents. 
  
 “Subordinated Debt Documents” means collectively, (a) the CapitalSource Subordinated Debt Agreement, the Subordinated Notes, the
Intercreditor Agreement, and all other agreements, certificates, documents, and instruments executed or delivered by the parties thereto in connection with the CapitalSource Subordinated Debt Agreement and the Subordinated Notes and (b) all other
agreements, certificates, documents, and instruments executed or delivered by a Borrower evidencing unsecured Debt of such Borrower which has maturities and terms, and which is subordinated to payment of the Obligations in a manner approved in
writing by the Agent and the Majority Lenders, and in each such case described in clause (a) and clause (b) preceding, any renewals, modifications, or amendments thereof which are approved in writing by the Agent and the Majority
Lenders. 
  
 “Subordinated Notes” means,
collectively, the certain Senior Subordinated Notes executed and delivered by the Borrowers payable to CapitalSource Finance LLC in the original aggregate principal amount not in excess of $24,000,000, pursuant to the terms of the CapitalSource
Subordinated Debt Agreement and “Subordinated Note” means any of such Senior Subordinated Notes. 
  

 Page 26 

 “Subsidiary” means, with respect to any Person (the “subject Person”), any
corporation, association, partnership, limited liability company, joint venture, or other business entity of which more than 50.0% of the voting Capital Stock or other Capital Stock, is owned or controlled directly or indirectly by the subject
Person, or one or more of the Subsidiaries of the subject Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of a Borrower. 
  
 “Subsidiary Guaranty” means an agreement of Guaranty as
required to be executed by the Subsidiaries of the Parent pursuant to Section 7.20, Section 7.30, and Section 7.31, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Subsidiary Security Agreement” means the Security
Agreement, dated concurrently herewith, between the Borrowers, other than the Parent, and the Agent, for the benefit of the Agent and the Lenders, as such agreement may be amended, restated, or otherwise modified from time to time. 
  
 “Supporting Letter of Credit” has the meaning specified in
Section 1.4(g). 
  
 “Taxes” means any and
all present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto, excluding, in the case of the Agent and each Lender, such taxes (including income taxes or franchise taxes) as are imposed
on or measured by the Agent’s or such Lender’s net income in the jurisdiction (whether federal, state, or local and including any political subdivision thereof) under the laws of which the Agent or such Lender, as the case may be, is
organized or maintains a lending office. 
  
 “Termination
Date” means the earliest to occur of (a) the Stated Termination Date, (b) the date the Total Facility is terminated either by the Borrowers pursuant to Section 3.2 or by the Majority Lenders pursuant to Section 9.2, and (c)
the date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this Agreement. 
  
 “Total Debt” shall mean, at any date of determination, for the Borrowers on a consolidated basis, the total Debt on such date,
plus the aggregate liquidation value of all Disqualified Stock of the Borrowers. 
  
 “Total Facility” has the meaning specified in Section 1.1. 
  
 “Trademark Security Agreement” means the Trademark Security Agreement, dated as of the Closing Date or any subsequent date, executed and
delivered by a Borrower to the Agent, for the benefit of the Agent and the Lenders, to evidence and perfect the Agent’s security interest in such Borrower’s present and future trademarks and related licenses and rights, as such agreement
may be amended, restated, or otherwise modified from time to time. 
  
 “UCC” means the Uniform Commercial Code (or any successor statute), as in effect from time to time, of the State of Texas or of any other state the laws of which are required as a result thereof to be applied in connection
with the issue of perfection of security interests; provided that to the extent that the UCC is used to define any term herein or in any other documents and such term is defined differently in different Articles or Divisions of the UCC, the
definition of such term contained in Article or Division 9 shall govern. 
  

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 “Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year. 
  
 “Unused Letter of Credit Subfacility” means an amount equal
to the Letter of Credit Subfacility, minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit, plus, without duplication, (b) the aggregate unpaid reimbursement obligations with respect to all Letters of
Credit. 
  
 “Unused Line Fee” has the meaning
specified in Section 2.4. 
  
 “U.S.” means
the United States of America. 
  
 “Wholly-Owned
Subsidiary” when used to determine the relationship of a Subsidiary to a Person, means a Subsidiary all of the issued and outstanding Capital Stock (other than directors’ qualifying shares) of which shall at the time be owned by such
Person or one or more of such Person’s Wholly-Owned Subsidiaries or by such Person and one or more of such Person’s Wholly-Owned Subsidiaries. 
  
 ACCOUNTING TERMS: 
  
 Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given to such term in
accordance with GAAP, and all financial computations in this Agreement shall be computed, unless otherwise specifically provided herein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the
preparation of the Financial Statements. 
  
 INTERPRETIVE
PROVISIONS: 
  
 Wherever used in this Agreement, 

 
 (a) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms. Terms used herein that are defined in the UCC and are not otherwise defined herein shall have the meanings specified therefor in the UCC. 
  
 (b) The words “hereof,” “herein,”
“hereunder,” and similar words refer to this Agreement as a whole and not to any particular provision of this Agreement. Section, Schedule, and Exhibit references are to this Agreement unless otherwise specified. The term
“documents” includes any and all instruments, documents, agreements, certificates, indentures, notices, and other writings, however evidenced. The term “including” is not limiting and means “including, without
limitation.” In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including,” the words “to” and “until” each mean “to but
excluding” and the word “through” means “to and including.” The word “or” is not exclusive. The words “hereof,” “herein,” “hereunder” and similar words refer to the Agreement as a
whole and not to any particular provision of the Agreement; and Subsection, Section, Schedule, and Exhibit references are to the Agreement unless otherwise specified. 
  

 Page 28 

 (c) Unless otherwise expressly provided herein, (i) references to agreements (including
this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments, restatements, and other modifications thereto, but only to the extent such amendments, restatements, and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting the statute or
regulation. 
  
 (d) The captions and headings of
this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. 
  
 (e) This Agreement and the other Loan Documents may use several different limitations, tests, or measurements to regulate the same or
similar matters. All such limitations, tests, and measurements are cumulative and shall each be performed in accordance with their terms. 
  
 (f) For purposes of Section 9.1, a breach of a financial covenant contained in Section 7.22 through Section 7.27
shall be deemed to have occurred as of any date of determination thereof by the Agent or as of the last day of any specified measuring period, regardless of when the Financial Statements reflecting such breach are delivered to the Agent and the
Lenders. 
  
 (g) This Agreement and the other
Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, each Lender, and the Borrowers and are the products of all parties. Accordingly, this Agreement and the other Loan Documents shall not be construed
against the Agent, the Lender, or the Borrowers merely because of their respective involvement in their preparation. 
  

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