SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT Dated as of March 1, 2006 among

E XHIBIT 10.18

 

SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT

Dated as of March 1, 2006

among

RESMED CORP.

RESMED EAP HOLDINGS INC.,

AND

SERVO MAGNETICS INC.,

AS BORROWERS,

RESMED INC.,

AS GUARANTOR,

THE LENDERS HEREIN NAMED

and

UNION BANK OF CALIFORNIA, N.A.,

as Administrative Agent

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SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT

Dated as of March 1, 2006

THIS SECOND AMENDED AND RESTATED REVOLVING LOAN AGREEMENT (this “Agreement”) is entered into by and among ResMed Corp., a Minnesota corporation (“ResMed”), RESMED EAP HOLDINGS INC., a Delaware corporation (“Holdings”), and SERVO MAGNETICS INC., a Delaware corporation (“SMI”; ResMed, Holdings and SMI are sometimes referred to herein individually as a “Borrower,” and collectively, as “Borrowers”), each lender whose name is set forth on the signature pages of this Agreement and each lender that may hereafter become a party to this Agreement pursuant to Section  12.8 (collectively, the “Lenders” and individually, a “Lender”), and Union Bank of California, N.A., as Administrative Agent, with reference to the following facts:

RECITALS

A. ResMed and Holdings (“Existing Borrowers”), on the one hand, and Union Bank of California, N.A. (“Union Bank”), on the other, are parties to that certain First Amended and Restated Loan Agreement dated as of November 1, 2005, as amended (collectively, the “Existing Loan Agreement”), pursuant to which Union Bank provided various credit facilities to Existing Borrowers (collectively, the “Existing Credit Facilities”).

B. Borrowers, the Lenders and the Administrative Agent wish to enter into this Agreement, pursuant to which the Existing Credit Facilities are amended and restated, and the Lenders will provide the Loan described herein to Borrowers, a portion of the proceeds of which Loan will be utilized by Borrowers to refinance Existing Borrowers’ outstanding obligations to Union Bank in connection with the Existing Credit Facilities, and a portion of which will be utilized for Borrowers’ working capital needs and other general corporate purposes.

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

Article 1.

DEFINITIONS AND ACCOUNTING TERMS

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

“ Accounts ” means all “accounts,” as such term is defined in the UCC, now owned or hereafter acquired by any Person, including (a) all accounts receivable, other receivables, book debts and other forms of obligations ( other than forms of obligations evidenced by “chattel paper,” “documents” or “instruments” (as such terms are defined in the UCC)), whether arising out of goods sold or services rendered by it or from any other transaction ( including any such obligations that may be characterized as an account or contract right under the UCC), (b) all purchase orders or receipts for goods or services, (c) all rights to any goods represented by any of the foregoing ( including unpaid sellers’ rights of rescission, replevin, reclamation and stoppage in transit and rights to returned,

 

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reclaimed or repossessed goods), (d) all monies due or to become due to such Person under all purchase orders and contracts for the sale of goods or the performance of services or both by such Person or in connection with any other transaction (whether or not yet earned by performance on the part of such Person) now or hereafter in existence, including the right to receive the proceeds of said purchase orders and contracts, and (e) all collateral security and guaranties of any kind, now or hereafter in existence, given by any Person with respect to any of the foregoing.

“ Acquisition ” means any transaction, or any series of related transactions, consummated after the Closing Date, by which Borrower and/or any of its Subsidiaries directly or indirectly (a) acquires any ongoing business or all or substantially all of the assets of any Person engaged in any ongoing business, whether through a purchase of assets, a merger or otherwise, (b) acquires control of securities of a Person engaged in an ongoing business representing more than 50% of the ordinary voting power for the election of directors or other governing position if the business affairs of such Person are managed by a board of directors or other governing body or (c) acquires control of more than 50% of the interests having, directly or indirectly, power to direct or cause the direction of management or policies of any partnership, joint venture, limited liability company, business trust or other Person engaged in an ongoing business that is not managed by a board of directors or other governing body.

“ Administrative Agent ” means Union Bank when acting in its capacity as the Administrative Agent under any of the Loan Documents, or any successor Administrative Agent.

“ Administrative Agent’s Office ” means the Administrative Agent’s address as set forth on the signature pages of this Agreement, or such other address as the Administrative Agent hereafter may designate by written notice to Borrower Representative and the Lenders.

“ Advance ” means any advance made or to be made by any Lender to Borrower Representative as provided in Article 2 , and includes each Alternate Base Rate Advance, Eurodollar Rate Advance and Treasuries Rate Advance.

“ Affiliate ” means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (and the correlative terms, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise); provided that, so long as Parent is publicly traded, the foregoing shall not include the shareholders of Parent.

“ Agreement ” means this Second Amended and Restated Revolving Loan Agreement, either as originally executed or as it may from time to time be supplemented, modified, amended, restated or extended.

 

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“ Aggregate Effective Amount ” means, as of any date of determination and with respect to all Letters of Credit then outstanding, the sum of (a) the aggregate effective face amounts of all such Letters of Credit not then paid by the Issuing Lender plus (b) the aggregate amounts paid by the Issuing Lender under such Letters of Credit not then reimbursed to the Issuing Lender by Borrower pursuant to Section  2.5(d) and not the subject of Advances made pursuant to Section  2.5(e) .

“ Alternate Base Rate ” means, as of any date of determination, the rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to the higher of (a) the Prime Rate in effect on such date and (b) the Federal Funds Rate in effect on such date plus  ¹ / 2 of 1% (50 basis points).

“ Alternate Base Rate Advance ” means an Advance under the Revolving Commitment made hereunder and specified to be an Alternate Base Rate Advance in accordance with Article 2 .

“ Alternate Base Rate Loan ” means a Revolving Loan made hereunder and specified to be an Alternate Base Rate Loan in accordance with Article 2 .

“ Applicable Alternate Base Rate Margin ” means, for each Pricing Period, the interest rate margin set forth below (expressed in basis points per annum) opposite the Applicable Pricing Level for that Pricing Period:

 

“ Applicable Commitment Fee Rate ” means one-eighth of one percent (0.125%).

“ Applicable Eurodollar Rate Margin ” means, for each Pricing Period, the interest rate margin set forth below (expressed in basis points per annum) opposite the Applicable Pricing Level for that Pricing Period:

 

 

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“ Applicable Pricing Level ” means, for each Pricing Period, the pricing level set forth below opposite the Leverage Ratio as of the last day of the Fiscal Quarter most recently ended prior to the commencement of that Pricing Period:

 

provided that (i) in the event that Borrower does not deliver a Pricing Certificate with respect to any Pricing Period prior to the commencement of such Pricing Period, then until such Pricing Certificate is delivered, the Applicable Pricing Level for that Pricing Period shall be Pricing Level IV, and (ii) if any Pricing Certificate is subsequently determined to be in error, then any resulting change in the Applicable Pricing Level shall be made retroactively to the beginning of the relevant Pricing Period.

“ Applicable Treasuries Rate Margin ” means, for each Pricing Period, the interest rate margin set forth below (expressed in basis points per annum) opposite the Applicable Pricing Level for that Pricing Period:

 

“ Arranger ” means Union Bank.

“ Banking Day ” means any Monday, Tuesday, Wednesday, Thursday or Friday, other than a day on which banks are authorized or required to be closed in California or New York.

“ Borrower Representative ” means ResMed.

“ Capital Expenditure ” means any expenditure by any Credit Party for or related to fixed assets or purchased intangibles that is treated as a capital expenditure under GAAP, including any amount which is required to be treated as an asset subject to a Capital Lease Obligation. The amount of Capital Expenditures in respect of fixed assets purchased or constructed by any Credit Party in any fiscal period shall be net of (a) any net sales proceeds received during such fiscal period by Borrower or such Subsidiary for

 

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fixed assets sold by Borrower or such Subsidiary and (b) any casualty insurance or condemnation proceeds received during such fiscal period by Borrower or such Subsidiary for casualties or condemnations to fixed assets and applied (or to be applied) to the repair or replacement thereof.

“ Capital Lease Obligations ” means all monetary obligations of a Person under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease.

“ Cash ” means, when used in connection with any Person, all monetary and non monetary items owned by that Person that are treated as cash in accordance with GAAP, consistently applied.

“ Cash Equivalents ” means, when used in connection with any Person, that Person’s Investments in:

(a) Government Securities due within one year after the date of the making of the Investment;

(b) readily marketable direct obligations of any State of the United States of America or any political subdivision of any such State or any public agency or instrumentality thereof given on the date of such Investment a credit rating of at least Aa by Moody’s Investors Service, Inc. or AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), in each case due within one year from the making of the Investment;

(c) certificates of deposit issued by, bank deposits in, Eurodollar deposits through, bankers’ acceptances of, and repurchase agreements covering Government Securities executed by any Lender or any bank incorporated under the Laws of the United States of America, any State thereof or the District of Columbia and having on the date of such Investment combined capital, surplus and undivided profits of at least $250,000,000, or total assets of at least $5,000,000,000, in each case due within one year after the date of the making of the Investment;

(d) certificates of deposit issued by, bank deposits in, Eurodollar deposits through, bankers’ acceptances of, and repurchase agreements covering Government Securities executed by any Lender or any branch or office located in the United States of America of a bank incorporated under the Laws of any jurisdiction outside the United States of America having on the date of such Investment combined capital, surplus and undivided profits of at least $500,000,000, or total assets of at least $15,000,000,000, in each case due within one year after the date of the making of the Investment;

(e) repurchase agreements covering Government Securities executed by a broker or dealer registered under Section 15(b) of the Securities Exchange Act of 1934, as amended, having on the date of the Investment capital of at least $50,000,000, due within 90 days after the date of the making of the Investment; provided that the maker of the Investment receives written confirmation of the transfer to it of record

 

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ownership of the Government Securities on the books of a “primary dealer” in such Government Securities or on the books of such registered broker or dealer, as soon as practicable after the making of the Investment;

(f) readily marketable commercial paper or other debt securities issued by corporations doing business in and incorporated under the Laws of the United States of America or any State thereof or of any corporation that is the holding company for a bank described in clause ( c ) or ( d ) above given on the date of such Investment a credit rating of at least P-2 by Moody’s Investors Service, Inc. or A-2 by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), in each case due within one year after the date of the making of the Investment;

(g) “money market preferred stock” issued by a corporation incorporated under the Laws of the United States of America or any State thereof (i) given on the date of such Investment a credit rating of at least Aa by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), in each case having an investment period not exceeding 50 days or (ii) to the extent that investors therein have the benefit of a standby letter of credit issued by a Lender or a bank described in clauses ( c ) or ( d ) above; provided that (y) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (z) the aggregate amount of all such Investments does not exceed the greater of (A) $15,000,000 or (B) ten percent (10%) of aggregate Cash Equivalents;

(h) a readily redeemable “money market mutual fund” sponsored by a bank described in clause ( c ) or ( d ) hereof, or a registered broker or dealer described in clause ( e ) hereof, that has and maintains an investment policy limiting its investments primarily to instruments of the types described in clauses ( a ) through ( g ) hereof and given on the date of such Investment a credit rating of at least Aa by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.); and

(i) corporate notes or bonds having an original term to maturity of not more than one year issued by a corporation incorporated under the Laws of the United States of America, or a participation interest therein; provided that (i) corporate notes or bonds issued by such corporation is given on the date of such Investment a credit rating of at least Aa by Moody’s Investors Service, Inc. and AA by Standard & Poor’s Rating Group (a division of McGraw Hill, Inc.), (ii) the amount of all such Investments issued by the same issuer does not exceed $5,000,000 and (iii) the aggregate amount of all such Investments does not exceed the greater of (A) $15,000,000 or (B) ten percent (10%) of aggregate Cash Equivalents.

“ Cash Income Taxes ” means, with respect to any fiscal period, taxes on or measured by the income of Borrower that are paid or currently payable in Cash by Borrower during that fiscal period.

“ Cash Interest Expense ” means Interest Expense that is paid or currently payable in Cash.

 

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“ Certificate ” means a certificate signed by a Senior Officer or Responsible Official (as applicable) of the Person providing the certificate.

“ Change in Control ” means (a) any transaction or series of related transactions in which any Unrelated Person or two or more Unrelated Persons acting in concert acquire beneficial ownership (within the meaning of Rule 13d 3(a)(1) under the Securities Exchange Act of 1934, as amended), directly or indirectly, of 35% or more of the outstanding Common Stock, (b) any Credit Party consolidates with or merges into another Person or conveys, transfers or leases its properties and assets substantially as an entirety to any Person or any Person consolidates with or merges into any Credit Party, in either event pursuant to a transaction in which the outstanding Common Stock is changed into or exchanged for cash, securities or other property, with the effect that any Unrelated Person becomes the beneficial owner, directly or indirectly, of 35% or more of the outstanding Common Stock, (c) during any period of 24 consecutive months, individuals who at the beginning of such period constituted the board of directors of Parent (together with any new or replacement directors whose election by the board of directors, or whose nomination for election, was approved by a vote of at least a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for reelection was previously so approved) cease for any reason to constitute a majority of the directors then in office or (d) a “change in control” as defined in any document governing Indebtedness for borrowed money of any Credit Party in excess of $15,000,000 which gives the holders of such Indebtedness the right to accelerate or otherwise require payment of such Indebtedness prior to the maturity date thereof. For purposes of the foregoing, the term “ Unrelated Person ” means any Person other than (i) Parent, with respect to any Borrower, or (ii) an employee stock ownership plan or other employee benefit plan covering the employees of any the Credit Parties and their Subsidiaries.

“ Closing Date ” means the time and Banking Day on which the conditions set forth in Section  8.1 are satisfied or waived. The Administrative Agent shall notify Borrower Representative and the Lenders of the date that is the Closing Date.

“ Closing Date Lenders ” means Union Bank of California, N.A.

“ Code ” means the Internal Revenue Code of 1986, as amended or replaced and as in effect from time to time.

“ Collateral ” means all of the collateral covered by the Collateral Documents.

“ Collateral Documents ” means, collectively, the Security Agreements, the Parent Guaranty, the Real Estate Documents, and any other security agreement, pledge agreement, deed of trust, mortgage, notice to or acknowledgment of a registrar or depositary institution, control agreement or other collateral security agreement executed and delivered by any Credit Party or any other Party (and executed by any third party whose signature is necessary) to secure the Obligations, in each case, either as originally executed or as the same may from time to time be supplemented, modified, amended, restated, extended or supplanted.

 

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“ Commitment Assignment and Acceptance ” means a commitment assignment and acceptance substantially in the form of Exhibit A .

“ Common Stock ” means the common stock of any Credit Party, or any successor of such Credit Party.

“ Compliance Certificate ” means a certificate in the form of Exhibit B , properly completed and signed by a Senior Officer of Borrower Representative.

“ Contractual Obligation ” means, as to any Person, any material provision of any outstanding security issued by that Person or of any material agreement, instrument or undertaking to which that Person is a party or by which it or any of its Property is bound.

“ Convertible Notes ” means those certain 4% Convertible Subordinated Notes issued by Parent under the Indenture dated as of June 20, 2001 between Parent and American Stock Transfer & Trust Company, as trustee.

“ Credit Party ” means any or all, as the context dictates, of the Borrowers and Parent.

“ Credit Party Subordinated Obligations ” means any Indebtedness of any Credit Party that (a) does not have any scheduled principal payment, mandatory principal prepayment or sinking fund payment due prior to the date that is one year after the Revolving Loan Maturity Date, (b) is not secured by any Lien on any Property of any Credit Party or any of their Subsidiaries, (c) is not guarantied by any Credit Party or any of their Subsidiaries (other than guaranties of lease or other customarily guaranteed obligations of its Subsidiaries by Parent in the ordinary course of business, and except as may otherwise expressly be permitted hereunder), (d) is subordinated by its terms in right of payment to the Obligations pursuant to provisions reasonably acceptable to the Requisite Lenders, (e) is subject to such financial and other covenants and events of defaults as may be reasonably acceptable to the Requisite Lenders and (f) is subject to customary interest blockage and delayed acceleration provisions as may be reasonably acceptable to the Requisite Lenders.

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

“ Default ” means any event that, with the giving of any applicable notice or passage of time specified in Section  9.1 , or both, would be an Event of Default.

“ Default Rate ” means the sum of (a) any incremental interest rate then in effect pursuant to Section  3.1(e) plus (b) the interest rate prescribed in Section  3.7 .

“ Designated Deposit Account ” means a deposit account to be maintained by ResMed with Union Bank of California, N.A. or one of its Affiliates, as from time to time

 

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designated by Borrower Representative by written notification to the Administrative Agent.

“ Designated Eurodollar Market ” means, with respect to any Eurodollar Rate Loan, the London Eurodollar Market.

“ Disqualified Stock ” means any capital stock, warrants, options or other rights to acquire capital stock (but excluding any debt security which is convertible, or exchangeable, for 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, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the Revolving Loan Maturity Date.

“ Disposition ” means the sale, transfer or other disposition in any single transaction or series of related transactions of any asset, or group of related assets, of any Credit Party (a) which asset or assets constitute a line of business or substantially all the assets of such Credit Party or (b) the aggregate amount of the Net Cash Sales Proceeds of such assets is more than $5,000,000, other than (i) inventory or other assets sold or otherwise disposed of in the ordinary course of business of such Credit Party, (ii) equipment sold or otherwise disposed of where substantially similar equipment in replacement thereof has theretofore been acquired, or thereafter within 180 days is acquired, by such Credit Party and (iii) obsolete or other assets which such Credit Party determines in good faith are no longer useful in the business of such Credit Party.

“ Distribution ” means, with respect to any shares of capital stock or any warrant or option to purchase an equity security or other equity security issued by a Person, (a) the retirement, redemption, purchase or other acquisition for Cash or for Property by such Person of any such security (other than Permitted Stock Repurchases), (b) the payment by such Person of any dividend in Cash or in Property on or with respect to any such security, (c) any Investment by such Person in the holder of 5% or more of any such security if a purpose of such Investment is to avoid characterization of the transaction as a Distribution and (d) any other payment in Cash or Property by such Person constituting a distribution under applicable Laws with respect to such security.

“ DLA ” means DLA Piper Rudnick Gray Cary US LLP.

“ Dollars ” or “ $ ” means United States of America dollars.

“ Domestic Subsidiary ” means a Subsidiary of a Person organized under the laws of (or a political subdivision thereof) the United States of America; provided that the foregoing shall not include either ResMed Germany or ResMed Holdings.

“ EBITDA ” means, with respect to any fiscal period, and any Person, the sum of (a) Net Income for that period, plus (b) any non-operating non recurring loss (not to exceed $2,000,000) reflected in such Net Income, minus (c) any non-operating non recurring gain (not to exceed $2,000,000) reflected in such Net Income, plus (d) Interest Expense of such Person for that period, plus (e) payment or provision for income taxes,

 

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plus (f) depreciation, amortization and all other non-cash expenses of such Person (including but not limited to expenses actually taken in connection with equity-based compensation or awards pursuant to Financial Accounting Standard 123R) for that period, in each case as determined in accordance with GAAP, consistently applied.

“ Eligible Assignee ” means (a) another Lender, (b) with respect to any Lender, any Affiliate of that Lender, (c) any commercial bank having total assets of $1,000,000,000 or more, (d) any (i) savings bank, savings and loan association or similar financial institution or (ii) insurance company engaged in the business of writing insurance which, in either case (A) has total assets of $1,000,000,000 or more, (B) is engaged in the business of lending money and extending credit under credit facilities substantially similar to those extended under this Agreement and (C) is operationally and procedurally able to meet the obligations of a Lender hereunder to the same degree as a commercial bank and (e) any other financial institution ( including a mutual fund or other fund) having total assets of $1,000,000,000 or more which meets the requirements set forth in subclauses (B) and (C) of clause (d) above; provided that each Eligible Assignee must either (aa) be organized under the Laws of the United States of America, any State thereof or the District of Columbia or be organized under the Laws of the Cayman Islands or any country which is a member of the Organization for Economic Cooperation and Development, or a political subdivision of such a country, and (i) act hereunder through a branch, agency or funding office located in the United States of America and (ii) be exempt from withholding of tax on interest and deliver the documents related thereto pursuant to Section  12.21 .

“ ERISA ” means the Employee Retirement Income Security Act of 1974, and any regulations or rulings issued pursuant thereto, as amended or replaced and as in effect from time to time.

“ ERISA Affiliate ” means each Person (whether or not incorporated) which is required to be aggregated with any Credit Party pursuant to Section 414 of the Code.

“ Eurodollar Banking Day ” means any Banking Day on which dealings in Dollar deposits are conducted by and among banks in the Designated Eurodollar Market.

“ Eurodollar Lending Office ” means, as to each Lender, its office or branch so designated by written notice to Borrower Representative and the Administrative Agent as its Eurodollar Lending Office. If no Eurodollar Lending Office is designated by a Lender, its Eurodollar Lending Office shall be its office at its address for purposes of notices hereunder.

“ Eurodollar Market ” means a regular established market located outside the United States of America by and among banks for the solicitation, offer and acceptance of Dollar deposits in such banks.

“ Eurodollar Obligations ” means eurocurrency liabilities, as defined in Regulation D or any comparable regulation of any Governmental Agency having jurisdiction over any Lender.

 

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“ Eurodollar Period ” means, as to each Eurodollar Rate Loan, the period commencing on the date specified by Borrower Representative pursuant to Section  2.1(b) and ending 1, 2, 3, 6 or 12 months (or, with the written consent of all of the Lenders, any other period) thereafter, as specified by Borrower Representative in the applicable Request for Loan; provided that:

(a) The first day of any Eurodollar Period shall be a Eurodollar Banking Day;

(b) Any Eurodollar Period that would otherwise end on a day that is not a Eurodollar Banking Day shall be extended to the immediately succeeding Eurodollar Banking Day unless such Eurodollar Banking Day falls in another calendar month, in which case such Eurodollar Period shall end on the immediately preceding Eurodollar Banking Day; and

(c) No Eurodollar Period shall extend beyond the Revolving Loan Maturity Date.

“ Eurodollar Rate ” means, with respect to any Eurodollar Rate Loan, the average of the interest rates per annum (rounded upward, if necessary, to the next 1/16 of 1%) at which deposits in Dollars are offered to the Administrative Agent in the Designated Eurodollar Market at or about 11:00 a.m. local time in the Designated Eurodollar Market, two (2) Eurodollar Banking Days before the first day of the applicable Eurodollar Period in an aggregate amount approximately equal to the amount of the Advance to be made by the Administrative Agent with respect to such Eurodollar Rate Loan and for a period of time comparable to the number of days in the applicable Eurodollar Period.

“ Eurodollar Rate Advance ” means an Advance made hereunder and specified to be a Eurodollar Rate Advance in accordance with Article 2 .

“ Eurodollar Rate Loan ” means a Loan made hereunder and specified to be a Eurodollar Rate Loan in accordance with Article 2 .

“ Event of Default ” shall have the meaning provided in Section  9.1 .

“ Existing Credit Facilities ” shall have the meaning provided in the recitals to this Agreement.

“ Existing Letters of Credit ” means the letters of credit, if any, outstanding on the Closing Date and listed on Schedule 2.4 .

“ Existing Loan Agreement ” shall have the meaning provided in the recitals to this Agreement.

“ Federal Funds Rate ” means, as of any date of determination, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, “H.15(519)”) for such date opposite the caption “Federal Funds (Effective)”. If for any relevant date such

 

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rate is not yet published in H.15(519), the rate for such date will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Lender of New York (including any such successor, the “Composite 3:30 p.m. Quotation”) for such date under the caption “Federal Funds Effective Rate”. If on any relevant date the appropriate rate for such date is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such date will be the arithmetic mean of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York City time) on that date by each of three leading brokers of Federal funds transactions in New York City selected by the Administrative Agent. For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Federal Funds Rate shall be effective as of the opening of business on the effective date of such change.

“ Fiscal Quarter ” means the fiscal quarter of the Credit Parties ending on each September 30, December 31, March 31 and June 30.

“ Fiscal Year ” means the fiscal year of the Credit Parties ending on each June 30.

“ Fixed Charge Coverage Ratio ” means, as of the last day of any Fiscal Quarter, the ratio of (a) EBITDA of Parent and its Subsidiaries, on a consolidated basis, for the fiscal period consisting of the four (4) Fiscal Quarters ended on that date minus Capital Expenditures made by Parent and its Subsidiaries on a consolidated basis during such fiscal period to (b) the sum of (i) Interest Expense of Parent and its Subsidiaries on a consolidated basis for such fiscal period plus (ii) Cash Income Taxes of Parent and its Subsidiaries on a consolidated basis with respect to such fiscal period plus (iii) Cash dividends on Parent’s Common Stock paid during such period plus (iv) the current portion of long-term debt of Parent and its Subsidiaries on a consolidated basis on such date (provided that, notwithstanding the presentation by KPMG, LLP (or other independent public accountants of recognized standing selected by Parent) to the contrary, that portion of the Indebtedness owing by (x) Borrowers to Agent and Lenders hereunder, and (y) ResMed Limited to HSBC, due more than one year from any date of determination shall not constitute “current portion of long-term debt”) plus (v) the current portion of long-term Capital Lease Obligations of Parent and its Subsidiaries on a consolidated basis on such date.

“ Foreign Subsidiary ” means a Subsidiary of a Person, which Subsidiary is organized under the Laws of a country (or political subdivision thereof) other than the United States of America.

“ GAAP ” means, as of any date of determination, accounting principles (a) set forth as generally accepted in then currently effective Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants, (b) set forth as generally accepted in then currently effective Statements of the Financial Accounting Standards Board or (c) that are then approved by such other entity as may be approved by a significant segment of the accounting profession in the United States of America. The term “ consistently applied ,” as used in connection therewith, means that the accounting

 

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principles applied are consistent in all material respects with those applied at prior dates or for prior periods.

“ Government Securities ” means readily marketable (a) direct full faith and credit obligations of the United States of America or obligations guaranteed by the full faith and credit of the United States of America and (b) obligations of an agency or instrumentality of, or corporation owned, controlled or sponsored by, the United States of America that are generally considered in the securities industry to be implicit obligations of the United States of America.

“ Governmental Agency ” means (a) any international, foreign, federal, state, county or municipal government, or political subdivision thereof, (b) any governmental or quasi governmental agency, authority, board, bureau, commission, department, instrumentality or public body or (c) any court or administrative tribunal of competent jurisdiction.

“ Guaranty Obligation ” means, as to any Person, any (a) guarantee by that Person of Indebtedness of, or other obligation performable by, any other Person or (b) assurance given by that Person to an obligee of any other Person with respect to the performance of an obligation by, or the financial condition of, such other Person, whether direct, indirect or contingent, including any purchase or repurchase agreement covering such obligation or any collateral security therefor, any agreement to provide funds (by means of loans, capital contributions or otherwise) to such other Person, any agreement to support the solvency or level of any balance sheet item of such other Person or any “keep well” or other arrangement of whatever nature given for the purpose of assuring or holding harmless such obligee against loss with respect to any obligation of such other Person; provided, however , that the term Guaranty Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guaranty Obligation in respect of Indebtedness shall be deemed to be an amount equal to the stated or determinable amount of the related Indebtedness (unless the Guaranty Obligation is limited by its terms to a lesser amount, in which case to the extent of such amount) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by the Person in good faith. The amount of any other Guaranty Obligation shall be deemed to be zero unless and until the amount thereof has been (or in accordance with Financial Accounting Standards Board Statement No. 5 should be) quantified and reflected or disclosed in the consolidated financial statements of Parent.

“ Hazardous Materials ” means substances defined as “hazardous substances” pursuant to the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601 et seq., or as “hazardous”, “toxic” or “pollutant” substances or as “solid waste” pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. § 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq., or as “friable asbestos” pursuant to the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq. or any other applicable Hazardous Materials Law, in each case as such Laws are amended from time to time.

 

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“ Hazardous Materials Laws ” means all Laws governing the treatment, transportation or disposal of Hazardous Materials applicable to any of the Real Property.

“ HSBC ” means HSBC Bank Australia Limited ABN 48 006 434 162, in its capacity as security trustee of the ResMed Group Security Trust.

“ HSBC Agreements ” means one or more intercreditor agreements, in each case by and among HSBC, Administrative Agent and the affected Credit Party (as described therein), in form and content reasonably acceptable to Administrative Agent.

“ Indebtedness ” means, as to any Person (without duplication), (a) indebtedness of such Person for borrowed money or for the deferred purchase price of Property ( excluding trade and other accounts payable in the ordinary course of business in accordance with ordinary trade terms), including (but without duplication) any Guaranty Obligation for any such indebtedness, (b) indebtedness of such Person of the nature described in clause ( a ) that is non recourse to the credit of such Person but is secured by assets of such Person, to the extent of the fair market value of such assets as determined in good faith by such Person, (c) Capital Lease Obligations of such Person, (d) indebtedness of such Person arising under bankers’ acceptance facilities or under facilities for the discount of accounts receivable of such Person, (e) any direct or contingent obligations of such Person under letters of credit issued for the account of such Person and (f) any net obligations of such Person under Interest Rate Protection Agreements.

“ Initial Pricing Period ” means the period from the Closing Date through March 31, 2006, provided that in the event that Borrower Representative has not delivered the financial statements and compliance certificate with respect to the Fiscal Quarter ended December 31, 2005 to the Administrative Agent pursuant to Section 7.1(a) and Section 7.2 on or prior to March 31, 2006, the Initial Pricing Period shall be extended until the date which is 45 days after the end of the Fiscal Quarter during which such financial statements and compliance certificate are delivered to the Administrative Agent.

“ Intangible Assets ” means assets that are considered intangible assets under GAAP, including customer lists, goodwill, covenants not to compete, copyrights, trade names, trademarks, licenses and patents.

“ Interest Expense ” means, with respect to any Person and as of the last day of any fiscal period, the sum of (a) all interest, fees, charges and related expenses (in each case as such expenses are calculated according to GAAP) paid or payable (without duplication) for that fiscal period by that Person to a lender in connection with borrowed money ( including any obligations for fees, charges and related expenses payable to the issuer of any letter of credit) or the deferred purchase price of assets that are considered “interest expense” under GAAP plus (b) the portion of rent paid or payable (without duplication) for that fiscal period by that Person under Capital Lease Obligations that should be treated as interest in accordance with Financial Accounting Standards Board Statement No. 13.

 

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“ Interest Rate Protection Agreement ” means a written agreement between any Person and one or more financial institutions providing for “swap”, “cap”, “collar” or other interest rate protection with respect to any Indebtedness.

“ Investment ” means, when used in connection with any Person, any investment by or of that Person, whether by means of purchase or other acquisition of stock or other securities of any other Person or by means of a loan, advance creating a debt, capital contribution, guaranty or other debt or equity participation or interest in any other Person, including any partnership and joint venture interests of such Person. The amount of any Investment shall be the amount actually invested ( minus any return of capital with respect to such Investment which has actually been received in Cash or has been converted into Cash), without adjustment for subsequent increases or decreases in the value of such Investment.

“ Issuing Lender ” means Union Bank.

“ Kearny Mesa Property ” means that certain property owned by ResMed and commonly know as “4665, 4773, and 4711 Paramount Drive, Poway, California.”

“ Laws ” means, collectively, all international, foreign, federal, state and local statutes, treaties, rules, regulations, ordinances, codes and administrative or judicial precedents of, in each case, a Governmental Agency.

“ Lender ” means each lender whose name is set forth in the signature pages of this Agreement and each lender which may hereafter become a party to this Agreement pursuant to Section  12.8 .

“ Letters of Credit ” means (a) the Existing Letters of Credit and (b) any of the Standby Letters of Credit issued by the Issuing Lender under the Revolving Commitment pursuant to Section  2.5 , either as originally issued or as the same may be supplemented, modified, amended, renewed, extended or supplanted.

“ Leverage Ratio ” means, as of the last day of any Fiscal Quarter, the ratio of (a) all Indebtedness of Parent and its Subsidiaries on a consolidated basis on that date to (b) EBITDA of Parent and its Subsidiaries on a consolidated basis for the fiscal period consisting of the four (4) Fiscal Quarters ended on that date.

“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, lien or charge of any kind, whether voluntarily incurred or arising by operation of Law or otherwise, affecting any Collateral, including any conditional sale or other title retention agreement, any lease in the nature of a security interest, and/or the filing of any financing statement ( other than a precautionary financing statement with respect to a lease that is not in the nature of a security interest) under the Uniform Commercial Code or comparable Law of any jurisdiction with respect to any Collateral.

“ Loan ” means the aggregate of the Advances made at any one time by the Lenders pursuant to Section  2.1 .

 

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“ Loan Documents ” means, collectively, this Agreement, the Notes, the Collateral Documents, and any other agreements of any type or nature hereafter executed and delivered by any Credit Party to the Administrative Agent or to any Lender in any way relating to or in furtherance of this Agreement, in each case either as originally executed or as the same may from time to time be supplemented, modified, amended, restated, extended or supplanted.

“ Margin Stock ” means “margin stock” as such term is defined in Regulation U.

“ Material Adverse Effect ” means any set of circumstances or events which (a) has had or is reasonably expected to have any material adverse effect whatsoever upon the validity or enforceability of any Loan Document, (b) has been or is reasonably expected to be material and adverse to the business or condition (financial or otherwise) of Parent and its Significant Subsidiaries, taken as a whole, or (c) has materially impaired or is reasonably expected to materially impair the ability of the Credit Parties to perform the Obligations.

“ Multiemployer Plan ” means any employee benefit plan of the type described in Section 4001(a)(3) of ERISA to which any Credit Party or any of its ERISA Affiliates contributes or is obligated to contribute.

“ Negative Pledge ” means a Contractual Obligation which contains a covenant binding on any Person that prohibits Liens on any of such Person’s Property, other than (a) any such covenant contained in a Contractual Obligation granting or relating to a particular Lien which affects only the Property that is the subject of such Lien and (b) any such covenant that does not apply to Liens securing the Obligations.

“ Net Cash Sales Proceeds ” means, with respect to any Disposition, the sum of (a) the Cash proceeds received by or for the account of any Credit Party from such Disposition plus (b) the amount of Cash received by or for the account of any Credit Party upon the sale, collection or other liquidation of any proceeds that are not Cash from such Disposition, in each case net of (i) any amount required to be paid to any Person owning an interest in the assets disposed of, (ii) any amount applied to the repayment of Indebtedness secured by a Lien permitted under Section  6.9 on the asset disposed of, (iii) any transfer, income or other taxes payable as a result of such Disposition, (iv) professional fees and expenses, fees due to any Governmental Agency, broker’s commissions and other out-of-pocket costs of sale actually paid to any Person that is not an Affiliate of any Credit Party attributable to such Disposition and (v) any reserves established in accordance with GAAP in connection with such Disposition.

“ Net Income ” means, with respect to any fiscal period, the consolidated net income of the Credit Parties and their Subsidiaries for that period, determined in accordance with GAAP, consistently applied.

“ Non-Credit Party Subordinated Obligations ” means any Indebtedness of any non-Credit Party Subsidiary of Parent that (a) is not guarantied by any Credit Party (other than guaranties of lease or other customarily guaranteed obligations of its Subsidiaries by

 

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Parent in the ordinary course of business, and except as may otherwise expressly be permitted hereunder), and (b) is subordinated by its terms (or operation of law) in right of payment to the Obligations.

“ Norwest Property ” means that certain manufacturing facility in Australia, commonly referred to as 1 Elizabeth MacArthur Drive, Bella Vista, NSW Australia, owned by ResMed Ltd., a Wholly-Owned Subsidiary of ResMed Holdings.

“ Note ” means any of the Revolving Notes, and “ Notes ” means, collectively, the Revolving Notes.

“ Obligations ” means all present and future obligations of every kind or nature of any Credit Party at any time and from time to time owed to the Administrative Agent or the Lenders or any one or more of them, in each case under any one or more of the Loan Documents, whether due or to become due, matured or unmatured, liquidated or unliquidated, or contingent or noncontingent, including obligations of performance as well as obligations of payment, and including interest that accrues after the commencement of any proceeding under any Debtor Relief Law by or against any Credit Party.

“ Opinion of Counsel ” means the favorable written legal opinion of counsel to Parent and Borrowers, together with copies of factual certificates and legal opinions, if any, delivered to such counsel in connection with such opinion upon which such counsel has relied.

“ Parent ” means ResMed Inc., a Delaware corporation and owner, directly or indirectly, of 100% of the issued and outstanding capital stock of Borrowers.

“ Parent Guaranty ” means the Continuing Guaranty and Pledge Agreement to be executed and delivered pursuant to Article 8 by Parent, in the form of Exhibit D , either as originally executed or as it may from time to time be supplemented, modified, amended, extended or supplanted.

“ Parent, on a Consolidated Basis ” means Parent and such Subsidiaries of Parent as are required, in accordance with GAAP with respect to that level of materiality affecting Parent or such Subsidiaries, as the context of this Agreement requires, to be reflected in Parent’s filings with the Securities and Exchange Commission.

“ Party ” means any Person other than the Administrative Agent and the Lenders, which now or hereafter is a party to any of the Loan Documents.

“ PBGC ” means the Pension Benefit Guaranty Corporation or any successor thereof established under ERISA.

“ Pension Plan ” means any “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a Multiemployer Plan, which is subject to Title IV of ERISA and is maintained by any Credit Party or to which any Credit Party contributes or has an obligation to contribute.

 

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“ Permitted Acquisition ” means any Acquisition by any Person (as applicable, the “acquiror”) of all or substantially all of the assets and/or capital stock of another Person engaged in the same or a similar line of business as that of the acquiror (the “target”), provided that Borrower Representative shall have provided the Administrative Agent at least two (2) weeks prior written notice of such Acquisition, and (x) with respect to any Acquisition in which total Cash consideration from Parent and its Subsidiaries for such Acquisition is greater than $10,000,000 but less than or equal to $50,000,000 in any Fiscal Year, together with at least three (3) years of historical financial information relating to the target (to the extent available) and such other documentation pertaining to the Acquisition, including pro-forma quarterly projections, as the Administrative Agent may reasonably request; and (y) with respect to any Acquisition in which total Cash consideration from Parent and its Subsidiaries for such Acquisition is greater than $50,000,000 in any Fiscal Year, (i) such Acquisition shall have been approved by the board of directors of the target; (ii) the pro-forma balance sheets and combining projections (including pro-forma financial covenant ratios) provided by Borrower Representative to the Administrative Agent shall have demonstrated that, after giving effect to such Acquisition, (A) Borrowers (and Parent, as applicable) would have been in compliance with the financial covenants set forth in Sections  6.12 , 6.13 , 6.14 , 6.15 and 6.16 of this Agreement throughout the period of the four (4) Fiscal Quarters most recently ended prior to the date of such Acquisition and (B) Borrowers (and Parent, as applicable) would remain in compliance with such financial covenants for the period of four (4) Fiscal Quarters immediately following the date of such Acquisition; (iii) the terms and conditions of any and all seller purchase-money financing provided to the acquiror in connection with such Acquisition shall be acceptable to the Administrative Agent and the Lenders in their reasonable discretion; and (iv) total Cash consideration from Parent and its Subsidiaries for such Acquisitions shall not exceed (A) $50,000,000 in the aggregate in any Fiscal Year, and (B) $200,000,000 in the aggregate during the term of this Agreement, in each case, without Administrative Agent’s prior written consent, not to be unreasonably withheld; and, in each of clause (x) and (y), provided no Default or Event of Default shall exist at the time of such Acquisition or occur after giving effect to such Acquisition.

“ Permitted Encumbrances ” means:

(a) inchoate Liens incident to construction on or maintenance of Property; or Liens incident to construction on or maintenance of Property now or hereafter filed of record for which adequate reserves have been set aside (or deposits made pursuant to applicable Law) and which are being contested in good faith by appropriate proceedings and have not proceeded to judgment, provided that, by reason of nonpayment of the obligations secured by such Liens, no such Property is subject to a material impending risk of loss or forfeiture;

(b) Liens for taxes and assessments on Property which are not yet past due; or Liens for taxes and assessments on Property for which adequate reserves have been set aside (to the extent required by GAAP) and are being contested in good faith by appropriate proceedings and have not proceeded to judgment, provided that, by reason of nonpayment of the obligations secured by such Liens, no such Property is subject to a material impending risk of loss or forfeiture;

 

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(c) defects and irregularities in title to any Property which in the aggregate do not materially impair the fair market value or use of the Property for the purposes for which it is or may reasonably be expected to be held;

(d) easements, exceptions, reservations, or other agreements for the purpose of pipelines, conduits, cables, wire communication lines, power lines and substations, streets, trails, walkways, drainage, irrigation, water, and sewerage purposes, dikes, canals, ditches, the removal of oil, gas, coal, or other minerals, and other like purposes affecting Property which in the aggregate do not materially burden or impair the fair market value or use of such Property for the purposes for which it is or may reasonably be expected to be held;

(e) rights reserved to or vested in any Governmental Agency to control or regulate, or obligations or duties to any Governmental Agency with respect to, the use of any Property;

(f) present or future zoning laws and ordinances or other laws and ordinances restricting the occupancy, use, or enjoyment of Property;

(g) statutory Liens, other than those described in clauses ( a ) or ( b ) above, arising in the ordinary course of business with respect to obligations which are not delinquent or are being contested in good faith, provided that, if delinquent, adequate reserves have been set aside with respect thereto (to the extent required by GAAP) and, by reason of nonpayment, no Property is subject to a material impending risk of loss or forfeiture;

(h) covenants, conditions, and restrictions affecting the use of Property which in the aggregate do not materially impair the fair market value or use of the Property for the purposes for which it is or may reasonably be expected to be held;

(i) rights of tenants under leases and rental agreements covering Property entered into in the ordinary course of business of the Person owning such Property;

(j) Liens consisting of pledges or deposits to secure obligations under workers’ compensation laws or similar legislation, including Liens of judgments thereunder which are not currently dischargeable;

(k) Liens consisting of deposits of Property to secure bids made with respect to, or performance of, contracts ( other than contracts creating or evidencing an extension of credit to the depositor);

(l) Liens consisting of any right of offset, or statutory bankers’ lien, on bank deposit accounts maintained in the ordinary course of business so long as such bank deposit accounts are not established or maintained for the purpose of providing such right of offset or bankers’ lien;

 

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(m) Liens consisting of deposits of Property to secure statutory obligations of a Credit Party or its Subsidiaries;

(n) Liens consisting of deposits of Property to secure (or in lieu of) surety, appeal or customs bonds; and

(o) Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 9.1(i);

(p) Nonconsensual Liens, without duplication for Liens described herein, arising in the ordinary course of Borrowers’ business or by operation of law, which are not past due or which are being contested in good faith by appropriate proceedings and for which reserves have been established (to the extent required by GAAP), provided the same purport to secure an amount not to exceed $1,000,000 in the aggregate during the term of this Agreement;

(q) Liens created by or resulting from any litigation or legal proceeding in the ordinary course of business which is currently being contested in good faith by appropriate proceedings, provided that, adequate reserves have been set aside (to the extent required by GAAP) and no material Property is subject to a material impending risk of loss or forfeiture; and

(r) Liens in favor of the Administrative Agent.

“ Permitted Right of Others ” means a Right of Others consisting of (a) an interest ( other than a legal or equitable co ownership interest, an option or right to acquire a legal or equitable co ownership interest and any interest of a ground lessor under a ground lease), that does not materially impair the fair market value or use of Property for the purposes for which it is or may reasonably be expected to be held, (b) an option or right to acquire a Lien that would be a Permitted Encumbrance, (c) the subordination of a lease or sublease in favor of a financing entity and (d) a license, or similar right, of or to Intangible Assets granted in the ordinary course of business.

“ Permitted Stock Repurchases ” means the repurchase by Parent of its capital stock for value, provided that such repurchase is (a) approved by Parent’s Board of Directors and (b) disclosed in writing to Administrative Agent prior to the execution thereof.

“ Person ” means any individual or entity, including a trustee, corporation, limited liability company, general partnership, limited partnership, joint stock company, trust, estate, unincorporated organization, business association, firm, joint venture, Governmental Agency, or other entity.

“ Pledged Collateral ” means (a) the certificates evidencing 100% of the shares of capital stock held by (i) Parent in the Borrowers and any Significant Domestic Subsidiary

 

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of Parent, and (ii) any Borrower in all Significant Domestic Subsidiaries of such Borrower.

“ Poway Property ” means that certain property owned by ResMed and commonly known as “14040 Danielson Street, Poway, California 92064-6857.”

“ Pricing Certificate ” means a certificate substantially in the form of Exhibit E , properly completed and signed by a Senior Officer of Borrower Representative.

“ Pricing Period ” means (a) the Initial Pricing Period and (b) subsequent to the Initial Pricing Period, (i) the period commencing on the first day following the last day of the Initial Pricing Period and ending on the 45th day following the next ending Fiscal Quarter and (ii) thereafter, each period commencing, as the case may be, (A) on May 16 and ending August 15, (B) on August 16 and ending November 15, (C) on November 16 and ending February 15, and (D) on February 16 and ending May 15.

“ Prime Rate ” means the rate of interest publicly announced from time to time by the Administrative Agent in San Francisco, California (or other headquarters city of the Administrative Agent), as its “reference rate.” The “reference rate” is one of several base rates used by the Administrative Agent and serves as the basis upon which effective rates of interest are calculated for loans and other credits making reference thereto. The “reference rate” is not necessarily the lowest base interest rate used by the Administrative Agent. The “reference rate” is evidenced by the recording thereof after its announcement in such internal publication or publications as the Administrative Agent may designate. Any change in the Prime Rate announced by the Administrative Agent shall take effect at the opening of business on the day specified in the public announcement of such change.

“ Projections ” means the projected financial information to be prepared by the Credit Parties and furnished to the Lenders hereunder as a condition to closing.

“ Property ” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.

“ Pro Rata Share ” means, with respect to each Lender, the percentage of the Revolving Commitment set forth opposite the name of that Lender on Schedule 1.1 , as such percentage may be increased or decreased pursuant to a Commitment Assignment and Acceptance executed in accordance with Section  12.8 .

“ Quarterly Payment Date ” means each March 31, June 30, September 30 and December 31, commencing with March 31, 2006.

“ Real Estate Documents ” means that certain Second Amendment to Deed of Trust and Assignment of Rents, Security Agreement and Fixture Filing, and that certain Environmental Compliance Agreement, each with respect to the Poway Property, and those certain leasehold mortgages and/or landlord waivers, or other appropriate waivers/consents from the owner/lessor of any Real Property not owned by any Borrower or any Subsidiary at which any of the Collateral is now or hereafter located for the purpose of perfecting the Administrative Agent’s (on behalf of Lenders) Liens as first

 

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priority Liens (subject to Permitted Encumbrances) in, and of providing access to, such Collateral; each in form and substance reasonably satisfactory to the Administrative Agent and the Closing Date Lenders.

“ Real Property ” means, as of any date of determination, all real property then or theretofore owned, leased or occupied by any of any Credit Party.

“ Regulation D ” means Regulation D, as at any time amended, of the Board of Governors of the Federal Reserve System, or any other regulation in substance substituted therefor.

“ Regulation U ” means Regulation U, as at any time amended, of the Board of Governors of the Federal Reserve System, or any other regulation in substance substituted therefor.

“ Request for Letter of Credit ” means a written request for a Letter of Credit substantially in the form of Exhibit F , signed by a Responsible Official of Borrower Representative and properly completed to provide all information required to be included therein.

“ Request for Loan ” means a written request for a Loan substantially in the form of Exhibit G , signed by a Responsible Official of Borrower Representative and properly completed to provide all information required to be included therein.

“ Requirement of Law ” means, as to any Person, the articles or certificate of incorporation and by laws or other organizational or governing documents of such Person, and any Law, or judgment, award, decree, writ or determination of a Governmental Agency, in each case applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.

“ Requisite Lenders ” means (a) as of any date of determination if the Revolving Commitment is then in effect, Lenders having in the aggregate 66-2/3% or more of the Revolving Commitment then in effect and (b) as of any date of determination if the Revolving Commitment has then been suspended or terminated and there is then any Indebtedness evidenced by the Notes, Lenders holding Notes evidencing in the aggregate 66-2/3% or more of the aggregate Indebtedness then evidenced by the Notes, and, in any event, not less than two (2) Lenders (unless there shall then be but one Lender).

“ ResMed Germany ” means ResMed Germany, Inc., an entity incorporated under the laws of Delaware and resident of Germany, and a Wholly-Owned Subsidiary of Parent.

“ ResMed Holdings ” means ResMed Holdings Ltd., an entity organized under the laws of Australia and Delaware, and a Wholly-Owned Subsidiary of Parent.

“ ResMed Verwaltung ” means ResMed GmbH Verwaltung, an entity organized under the laws of Germany, and a Wholly-Owned Subsidiary of Parent.

 

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“ Responsible Official ” means (a) any Senior Officer of any Credit Party and (b) any other responsible official of any Credit Party so designated in a written notice thereof from a Senior Officer to the Administrative Agent. The Lenders shall be entitled to conclusively rely upon any document or certificate that is signed or executed by a Responsible Official of any Credit Party or any of their Subsidiaries as having been authorized by all necessary corporate, partnership and/or other action on the part of such Credit Party or such Subsidiary.

“ Revolving Commitment ” means, subject to Section  2.6 and Section  2.7 , (a) $75,000,000 from the Closing Date through the day before the first anniversary of the Closing Date; (b) $70,000,000 from the first anniversary of the Closing Date through the day before the second anniversary of the Closing Date; (c) $65,000,000 from the second anniversary of the Closing Date though the day before the third anniversary of the Closing Date; and (d) $55,000,000 thereafter. The respective Pro Rata Shares of the Lenders with respect to the Revolving Commitment are set forth in Schedule 1.1 .

“ Revolving Loan ” means a Loan made under the Revolving Commitment.

“ Revolving Loan Maturity Date ” means March 1, 2011.

“ Revolving Note ” means any of the promissory notes made by Borrowers to a Lender evidencing Advances under that Lender’s Pro Rata Share of the Revolving Commitment, substantially in the form of Exhibit H , either as originally executed or as the same may from time to time be supplemented, modified, amended, renewed, extended or supplanted.

“ Right of Others ” means, as to any Property in which a Person has an interest, any legal or equitable right, title or other interest (other than a Lien) held by any other Person in that Property, and any option or right held by any other Person to acquire any such right, title or other interest in that Property, including any option or right to acquire a Lien; provided , however , that (a) no covenant restricting the use or disposition of Property of such Person contained in any Contractual Obligation of such Person and (b) no provision contained in a contract creating a right of payment or performance in favor of a Person that conditions, limits, restricts, diminishes, transfers or terminates such right shall be deemed to constitute a Right of Others.

“ Security Agreements ” means the security agreements to be executed and delivered pursuant to Article 8 by each Borrower, in the form of Exhibit I , either as originally executed or as it may from time to time be supplemented, modified, amended, extended or supplanted.

“ Senior Officer ” means (a) the chief executive officer, (b) the president, (c) any executive vice president, (d) the chief financial officer, (e) the controller or (f) the treasurer, in each case of any Credit Party.

“ Significant Domestic Subsidiary ” means a Significant Subsidiary that is not a Foreign Subsidiary of Parent. For clarification, neither ResMed Germany nor ResMed Holdings is a “Significant Domestic Subsidiary.”

 

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“ Significant Subsidiary ” means a Subsidiary that either (i) had net income for the Fiscal Year then most recently ended in excess of 10% of Net Income for such Fiscal Year or (ii) had assets in excess of 10% of the total assets of Parent and its Subsidiaries on a consolidated basis as at the end of the Fiscal Year then most recently ended.

“ Solvent ” means, as of any date of determination, and as to any Person, that on such date: (a) the fair valuation of the assets of such Person is greater than the fair valuation of such Person’s probable liability in respect of existing debts; (b) such Person does not intend to, and does not believe that it will, incur debts beyond such Person’s ability to pay as such debts mature; (c) such Person is not engaged in a business or transaction, and is not about to engage in a business or transaction, which would leave such Person with assets remaining which would constitute unreasonably small capital after giving effect to the nature of the particular business or transaction; and (d) such Person is generally paying its debts as they become due. For the purpose of the foregoing (1) the “fair valuation” of any assets means the amount realizable within a reasonable time, either through collection or sale, of such assets at their regular market value, which is the amount obtainable by a capable and diligent businessman from an interested buyer willing to purchase such assets within a reasonable time under ordinary circumstances; and (2) the term “debts” includes any legal liability whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent.

“ Special Eurodollar Circumstance ” means the application or adoption after the Closing Date of any Law or interpretation, or any change therein or thereof, or any change in the interpretation or administration thereof by any Governmental Agency, central bank or comparable authority charged with the interpretation or administration thereof, or compliance by any Lender or its Eurodollar Lending Office with any request or directive (whether or not having the force of Law) of any such Governmental Agency, central bank or comparable authority.

“ Standby Letter of Credit ” means each Letter of Credit issued by the Issuing Lender under the Revolving Commitment pursuant to Section  2.5 to support the payment or performance of an obligation by a Borrower.

“ Stockholders’ Equity ” means, as of any date of determination and with respect to any Person, the consolidated stockholders’ equity of the Person as of that date determined in accordance with GAAP; provided that there shall be excluded from Stockholders’ Equity any amount attributable to Disqualified Stock.

“ Subsidiary ” means, as of any date of determination and with respect to any Person, any corporation, limited liability company or partnership (whether or not, in any case, characterized as such or as a “joint venture”), whether now existing or hereafter organized or acquired: (a) in the case of a corporation or limited liability company, of which a majority of the securities having ordinary voting power for the election of directors or other governing body (other than securities having such power only by reason of the happening of a contingency) are at the time beneficially owned by such Person and/or one or more Subsidiaries of such Person, or (b) in the case of a partnership,

 

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of which a majority of the partnership or other ownership interests are at the time beneficially owned by such Person and/or one or more of its Subsidiaries.

“ Tangible Net Worth ” means, as of any date of determination, the difference between (a) the sum of (i) Stockholders’ Equity of Parent and its Subsidiaries on such date and (ii) Subordinated Obligations outstanding on such date, and (b) the sum of material (as disclosed on Parent’s consolidated financial statements) (i) Intangible Assets of Parent and its Subsidiaries on such date, (ii) organizational expenses and (iii) monies due from Affiliates (including officers, shareholders and directors) of Parent and its Subsidiaries on such date.

“ to the best knowledge of ” means, when modifying a representation, warranty or other statement of any Person, that the fact or situation described therein is known by the Person (or, in the case of a Person other than a natural Person, known by a Responsible Official of that Person) making the representation, warranty or other statement, or with the exercise of reasonable due diligence under the circumstances (in accordance with the standard of what a reasonable Person in similar circumstances would have done) would have been known by the Person (or, in the case of a Person other than a natural Person, would have been known by a Responsible Official of that Person).

“ Treasuries Rate ” means a per annum rate of interest based on the percentage yield on U.S. Treasury securities, plus a margin, set by Union Bank in its discretion on the Closing Date, related to the general cost of corporate borrowing for a term comparable to the term of the Loan, plus Lenders’ costs, including the cost, if any, of reserve requirements and FDIC assessments.

“ Treasuries Rate Advance ” means an Advance made hereunder and specified to be a Treasuries Rate Advance in accordance with Article 2 .

“ Treasuries Rate Loan ” means a Loan made hereunder and specified to be a Treasuries Rate Loan in accordance with Article 2 .

“ Type ”, when used with respect to any Loan or Advance, means the designation of whether such Loan or Advance is an Alternate Base Rate Loan or Advance, a Eurodollar Rate Loan or Advance or a Treasuries Rate Loan or Advance.

“ UCC ” means the Uniform Commercial Code as the same may from time to time be enacted and in effect in the State of California; provided that, in the event by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of any Lien of the Lenders on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of California, the term “ UCC ” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions.

“ Union Bank ” has the meaning set forth in the recitals to this Agreement.

 

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“ Wholly-Owned Subsidiary ” means a Subsidiary of any Person, 100% of the capital stock or other equity interest of which is owned, directly or indirectly, by such Person, except for director’s qualifying shares required by applicable Laws.

1.2 Use of Defined Terms . Any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any one or more of the members of the relevant class.

1.3 Accounting Terms . All accounting terms not specifically defined in this Agreement shall be construed in conformity with, and all financial data required to be submitted by this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, except as otherwise specifically prescribed herein. In the event that GAAP changes during the term of this Agreement such that the covenants contained in Sections 6.12 through  6.16 , inclusive, would then be calculated in a different manner or with different components, (a) the Credit Parties and the Lenders agree to amend this Agreement in such respects as are necessary to conform those covenants as criteria for evaluating the Credit Parties’ financial condition to substantially the same criteria as were effective prior to such change in GAAP and (b) the Credit Parties shall be deemed to be in compliance with the covenants contained in the aforesaid Sections if and to the extent that the Credit Parties would have been in compliance therewith under GAAP as in effect immediately prior to such change, but shall have the obligation to deliver each of the materials described in Article 7 to the Administrative Agent and the Lenders, on the dates therein specified, with financial data presented in a manner which conforms with GAAP as in effect immediately prior to such change.

1.4 Rounding . Any financial ratios required to be maintained by the Credit Parties pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed in this Agreement and rounding the result up or down to the nearest number (with a round up if there is no nearest number) to the number of places by which such ratio is expressed in this Agreement.

1.5 Exhibits and Schedules . All Exhibits and Schedules to this Agreement, either as originally existing or as the same may from time to time be supplemented, modified or amended, are incorporated herein by this reference. A matter disclosed on any Schedule shall be deemed disclosed on all Schedules.

1.6 References to “the Credit Parties and their Subsidiaries ”. Any reference herein to the “Credit Parties and its Subsidiaries” or the like shall refer solely to such Credit Party during such times, if any, as such Credit Party shall have no Subsidiaries.

1.7 Miscellaneous Terms . The term “or” is disjunctive; the term “and” is conjunctive. The term “shall” is mandatory; the term “may” is permissive. Masculine terms also apply to females; feminine terms also apply to males. The term “including” is by way of example and not limitation.

 

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Article 2.

LOANS AND LETTERS OF CREDIT

2.1 Loans General .

(a) Subject to the terms and conditions set forth in this Agreement, at any time and from time to time from the Closing Date through the Revolving Loan Maturity Date, each Lender shall, pro rata according to that Lender’s Pro Rata Share of the then applicable Revolving Commitment, make Advances to Borrower Representative under the Revolving Commitment in such amounts as Borrower Representative may request that do not result in the sum of (i) the aggregate principal amount outstanding under the Revolving Notes and (ii) the Aggregate Effective Amount of all outstanding Letters of Credit to exceed the Revolving Commitment. Subject to the limitations set forth herein, Borrowers may borrow, repay and reborrow under the Revolving Commitment without premium or penalty.

(b) Subject to the next sentence, each Loan shall be made pursuant to a Request for Loan which shall specify the requested (i) date of such Loan, (ii) type of Loan, (iii) amount of such Loan, and (iv) in the case of a Eurodollar Rate Loan, the Eurodollar Period for such Loan. Unless the Administrative Agent has notified, in its sole and absolute discretion, Borrower Representative to the contrary, a Loan may be requested by telephone by a Responsible Official of Borrower Representative, in which case Borrower Representative shall confirm such request by promptly delivering a Request for Loan (conforming to the preceding sentence) in person or by telecopier to the Administrative Agent. The Administrative Agent shall incur no liability whatsoever hereunder in acting upon any telephonic request for Loan purportedly made by a Responsible Official of Borrower Representative, and Borrowers hereby agree to indemnify the Administrative Agent from any loss, cost, expense or liability as a result of so acting.

(c) Promptly following receipt of a Request for Loan, the Administrative Agent shall notify each Lender by telephone or telecopier (and if by telephone, promptly confirmed by telecopier) of the date and type of the Loan, the applicable Eurodollar Period, and that Lender’s Pro Rata Share of the Loan. Not later than 12:00 p.m., California time, on the date specified for any Loan (which must be a Banking Day), each Lender shall make its Pro Rata Share of the Loan in immediately available funds available to the Administrative Agent at the Administrative Agent’s Office. Upon satisfaction or waiver of the applicable conditions set forth in Article 8 , all Advances shall be credited on that date in immediately available funds to the Designated Deposit Account.

(d) Unless the Requisite Lenders otherwise consent, each Alternate Base Rate Loan and each Treasuries Rate Loan shall be not less than $1,000,000 and in an integral multiple of $500,000 and each Eurodollar Rate Loan shall be not less than $1,000,000 and in an integral multiple of $500,000.

 

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(e) The Advances made by each Lender under the Revolving Commitment shall be evidenced by that Lender’s Revolving Note.

(f) A Request for Loan shall be irrevocable upon the Administrative Agent’s first notification thereof.

(g) If no Request for Loan (or telephonic request for Loan referred to in the second sentence of Section  2.1(b) , if applicable) has been made within the requisite notice periods set forth in Section  2.2 , 2.3 or 2.4 prior to the end of the Eurodollar Period for any outstanding Eurodollar Rate Loan, then on the last day of such Eurodollar Period, such Eurodollar Rate Loan shall be automatically converted into an Alternate Base Rate Loan in the same amount.

2.2 Alternate Base Rate Loans . Each request by Borrower Representative for an Alternate Base Rate Loan shall be made pursuant to a Request for Loan (or telephonic or other request for loan referred to in the second sentence of Section  2.1(b) , if applicable) received by the Administrative Agent, at the Administrative Agent’s Office, not later than 10:00 a.m. California time, on the date (which must be a Banking Day) immediately prior to the date of the requested Alternate Base Rate Loan. All Loans shall constitute Alternate Base Rate Loans unless properly designated as a Eurodollar Rate Loan or a Treasuries Rate Loan pursuant to Section 2.3 or 2.4.

2.3 Eurodollar Rate Loans .

(a) Each request by Borrower Representative for a Eurodollar Rate Loan shall be made pursuant to a Request for Loan (or telephonic or other request for Loan referred to in the second sentence of Section  2.1(b) , if applicable) received by the Administrative Agent, at the Administrative Agent’s Office, not later than 10:00 a.m., California time, at least three (3) Eurodollar Banking Days before the first day of the applicable Eurodollar Period.

(b) On the date which is two (2) Eurodollar Banking Days before the first day of the applicable Eurodollar Period, the Administrative Agent shall confirm its determination of the applicable Eurodollar Rate (which determination shall be conclusive in the absence of manifest error) and promptly shall give notice of the same to Borrower Representative and the Lenders by telephone or telecopier (and if by telephone, promptly confirmed by telecopier).

(c) Unless the Administrative Agent and the Requisite Lenders otherwise consent, no more than five (5) Eurodollar Rate Loans shall be outstanding at any one time.

(d) No Eurodollar Rate Loan may be requested during the continuation of a Default or Event of Default.

(e) Nothing contained herein shall require any Lender to fund any Eurodollar Rate Advance in the Designated Eurodollar Market.

 

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2.4 Treasuries Rate Loans . Each request by Borrower Representative for a Treasuries Rate Loan shall be made pursuant to a Request for Loan (or telephonic or other request for loan referred to in the second sentence of Section  2.1(b) , if applicable) received by the Administrative Agent, at the Administrative Agent’s Office, not later than 10:00 a.m. California time, on the date (which must be a Banking Day) immediately prior to the date of the requested Treasuries Rate Loan.

2.5 Letters of Credit .

(a) The Existing Letters of Credit described in Schedule 2.4 shall be Letters of Credit for all purposes under this Agreement. Subject to the terms and conditions hereof, at any time and from time to time from the Closing Date through the Revolving Loan Maturity Date, the Issuing Lender shall issue such Letters of Credit under the Revolving Commitment as Borrower Representative may request by a Request for Letter of Credit; provided that (i) giving effect to all such Letters of Credit, the sum of (A) the aggregate principal amount outstanding under the Revolving Notes plus (B) the Aggregate Effective Amount of all outstanding Letters of Credit, does not exceed the then applicable Revolving Commitment and (ii) the Aggregate Effective Amount under all outstanding Letters of Credit does not exceed $10,000,000. Each Letter of Credit shall be in a form acceptable to the Issuing Lender. Unless all the Lenders otherwise consent in a writing delivered to the Administrative Agent, the term of any Letter of Credit shall not exceed one (1) year or extend beyond the Revolving Loan Maturity Date.

(b) Each Request for Letter of Credit shall be submitted to the Issuing Lender, with a copy to the Administrative Agent, at least two (2) Banking Days prior to the date upon which the related Letter of Credit is proposed to be issued. The Administrative Agent shall promptly notify the Issuing Lender whether such Request for Letter of Credit, and the issuance of a Letter of Credit pursuant thereto, conforms to the requirements of this Agreement. Upon issuance of a Letter of Credit, the Issuing Lender shall promptly notify the Administrative Agent, and the Administrative Agent shall promptly notify the Lenders, of the amount and terms thereof.

(c) Upon the issuance of a Letter of Credit, each Lender shall be deemed to have purchased a pro rata participation in such Letter of Credit from the Issuing Lender in an amount equal to that Lender’s Pro Rata Share. Without limiting the scope and nature of each Lender’s participation in any Letter of Credit, to the extent that the Issuing Lender has not been reimbursed by Borrowers for any payment required to be made by the Issuing Lender under any Letter of Credit, each Lender shall, pro rata according to its Pro Rata Share, reimburse the Issuing Lender through the Administrative Agent promptly upon demand for the amount of such payment. The obligation of each Lender to so reimburse the Issuing Lender shall be absolute and unconditional and shall not be affected by the occurrence of an Event of Default or any other occurrence or event. Any such reimbursement shall not relieve or otherwise impair the obligation of Borrowers to reimburse the Issuing Lender for the amount of any payment made by the Issuing Lender under any Letter of Credit together with interest as hereinafter provided.

 

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(d) Borrowers agree to pay to the Issuing Lender through the Administrative Agent an amount equal to any payment made by the Issuing Lender with respect to each Letter of Credit within one (1) Banking Day after demand made by the Issuing Lender therefor, together with interest on such amount from the date of any payment made by the Issuing Lender at the rate applicable to Alternate Base Rate Loans for two (2) Banking Days and thereafter at the Default Rate. The principal amount of any such payment shall be used to reimburse the Issuing Lender for the payment made by it under the Letter of Credit and, to the extent that the Lenders have not reimbursed the Issuing Lender pursuant to Section 2.5(c) , the interest amount of any such payment shall be for the account of the Issuing Lender. Each Lender that has reimbursed the Issuing Lender pursuant to Section 2.5(c) for its Pro Rata Share of any payment made by the Issuing Lender under a Letter of Credit shall thereupon acquire a pro rata participation, to the extent of such reimbursement, in the claim of the Issuing Lender against Borrowers for reimbursement of principal and interest under this Section 2.5(d) and shall share, in accordance with that pro rata participation, in any principal payment made by Borrowers with respect to such claim and in any interest payment made by Borrowers (but only with respect to periods subsequent to the date such Lender reimbursed the Issuing Lender) with respect to such claim.

(e) Borrower Representative may, pursuant to a Request for Loan, request that Advances be made pursuant to Section  2.1(a) to provide funds for the payment required by Section  2.5(d) and, for this purpose, the conditions precedent set forth in Article 8 shall not apply. The proceeds of such Advances shall be paid directly to the Issuing Lender to reimburse it for the payment made by it under the Letter of Credit.

(f) If Borrowers fail to make the payment required by Section  2.5(d) within the time period therein set forth, in lieu of the reimbursement to the Issuing Lender under Section  2.5(c) the Issuing Lender may (but is not required to), without notice to or the consent of Borrowers, instruct the Administrative Agent to cause Advances to be made by the Lenders under the Revolving Commitment in an aggregate amount equal to the amount paid by the Issuing Lender with respect to that Letter of Credit and, for this purpose, the conditions precedent set forth in Article 8 shall not apply. The proceeds of such Advances shall be paid directly to the Issuing Lender to reimburse it for the payment made by it under the Letter of Credit.

(g) The issuance of any supplement, modification, amendment, renewal, or extension to or of any Letter of Credit shall be treated in all respects the same as the issuance of a new Letter of Credit.

(h) The obligation of Borrowers to pay to the Issuing Lender the amount of any payment made by the Issuing Lender under any Letter of Credit shall be absolute, unconditional, and irrevocable, subject only to performance by the Issuing Lender of its obligations to Borrowers under Uniform Commercial Code Section 5109. Without limiting the foregoing, Borrowers’ obligations shall not be affected by any of the following circumstances:

 

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(i) any lack of validity or enforceability prior to its stated expiration date of the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto;

(ii) any amendment or waiver of or any consent to departure from the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto, with the consent of Borrowers;

(iii) the existence of any claim, setoff, defense, or other rights which any Borrower may have at any time against the Issuing Lender, the Administrative Agent or any Lender, any beneficiary of the Letter of Credit (or any persons or entities for whom any such beneficiary may be acting) or any other Person, whether in connection with the Letter of Credit, this Agreement, or any other agreement or instrument relating thereto, or any unrelated transactions;

(iv) any demand, statement, or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement therein being untrue or inaccurate in any respect whatsoever so long as any such document appeared substantially to comply with the terms of the Letter of Credit;

(v) payment by the Issuing Lender in good faith under the Letter of Credit against presentation of a draft or any accompanying document which does not strictly comply with the terms of the Letter of Credit;

(vi) the existence, character, quality, quantity, condition, packing, value or delivery of any Property purported to be represented by documents presented in connection with any Letter of Credit or any difference between any such Property and the character, quality, quantity, condition, or value of such Property as described in such documents;

(vii) the time, place, manner, order or contents of shipments or deliveries of Property as described in documents presented in connection with any Letter of Credit or the existence, nature and extent of any insurance relative thereto;

(viii) the solvency or financial responsibility of any party issuing any documents in connection with a Letter of Credit;

(ix) any failure or delay in notice of shipments or arrival of any Property;

(x) any error in the transmission of any message relating to a Letter of Credit not caused by the Issuing Lender, or any delay or interruption in any such message;

 

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(xi) any error, neglect or default (other than gross negligence or willful misconduct) of any correspondent of the Issuing Lender in connection with a Letter of Credit;

(xii) any consequence arising from acts of God, war, insurrection, civil unrest, disturbances, labor disputes, emergency conditions or other similar causes beyond the control of the Issuing Lender;

(xiii) so long as the Issuing Lender in good faith determines that the contract or document appears substantially to comply with the terms of the Letter of Credit, the form, accuracy, genuineness or legal effect of any contract or document referred to in any document submitted to the Issuing Lender in connection with a Letter of Credit; and

(xiv) where the Issuing Lender has acted in good faith and observed general banking usage, any other circumstances whatsoever.

(i) The Issuing Lender shall be entitled to the protection accorded to the Administrative Agent pursuant to Section  10.6 , with all necessary changes.

(j) The Uniform Customs and Practice for Documentary Credits, as published in its most current version by the International Chamber of Commerce, shall be deemed a part of this Section and shall apply to all Letters of Credit to the extent not inconsistent with applicable Law.

2.6 Voluntary Reduction of Revolving Commitment . Borrowers shall have the right, at any time and from time to time, without penalty or charge, except breakage with respect to Eurodollar Rate Loans, upon at least five (5) Banking Days’ prior written notice by a Responsible Official of Borrower Representative to the Administrative Agent, voluntarily to reduce, permanently and irrevocably, in aggregate principal amounts in an integral multiple of $500,000 but not less than $5,000,000, or to terminate, all or a portion of the then undisbursed portion of the Revolving Commitment. The Administrative Agent shall promptly notify the Lenders of any reduction or termination of the Revolving Commitment under this Section.

2.7 Optional Termination of Revolving Commitment . Following the occurrence of a Change in Control, the Requisite Lenders may in their sole and absolute discretion elect, during the thirty (30) day period immediately subsequent to the later of (a) such occurrence or (b) the earlier of (i) receipt of Borrower Representative’s written notice to the Administrative Agent of such occurrence or (ii) if no such notice has been received by the Administrative Agent, the date upon which the Administrative Agent has actual knowledge thereof, to terminate the Revolving Commitment, in which case the Revolving Commitment shall be terminated, and all outstanding Loans shall be repaid, effective on the date which is thirty (30) days subsequent to written notice from the Administrative Agent to Borrower Representative thereof.

2.8 Administrative Agent’s Right to Assume Funds Available for Advances . Unless the Administrative Agent shall have been notified by any Lender no later than 10:00 a.m. on the Banking Day of the proposed funding by the Administrative Agent of any Loan that such

 

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Lender does not intend to make available to the Administrative Agent such Lender’s portion of the total amount of such Loan, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of the Loan and the Administrative Agent may, in reliance upon such assumption, make available to Borrower Representative a corresponding amount. If the Administrative Agent has made funds available to Borrower Representative based on such assumption and such corresponding amount is not in fact made available to the Administrative Agent by such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on demand from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent promptly shall notify Borrower Representative and Borrower Representative shall pay such corresponding amount to the Administrative Agent. The Administrative Agent also shall be entitled to recover from such Lender interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to Borrower Representative to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to the daily Federal Funds Rate. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its share of the Revolving Commitment or to prejudice any rights which the Administrative Agent or Borrowers may have against any Lender as a result of any default by such Lender hereunder.

2.9 Collateral . The Obligations shall be secured by a first priority (subject to Liens permitted by Section  6.9 ) perfected Lien on the Collateral pursuant to the Security Agreements.

2.10 Audits; Appraisals . Credit Parties acknowledge that the Administrative Agent may conduct or obtain, at Lenders’ expense (unless an Event of Default has occurred and is continuing, in which case at Borrowers’ expense), periodic audits ( e.g. , audits of Accounts, books and records, accounting systems, etc.) and appraisals at such intervals as the Administrative Agent may reasonably require; provided , however , that, unless an Event of Default has occurred and is continuing (in which case there shall be no limit on the number of audits that the Administrative Agent may conduct), the Administrative Agent shall conduct no more than one (1) such audit per calendar year.

2.11 Borrower Representative . Each Borrower hereby designates Borrower Representative as its representative and agent on its behalf for the purposes of issuing notices and requests for Loans, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents. Borrower Representative hereby accepts such appointment. Administrative Agent and each Lender may regard any notice or other communication pursuant to any Loan Document from Borrower Representative as a notice or communication from all Borrowers. Each warranty, covenant, agreement and undertaking made on its behalf by Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

 

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Article 3.

PAYMENTS AND FEES

3.1 Principal and Interest .

(a) Interest shall be payable on the outstanding daily unpaid principal amount of each Advance from the date thereof until payment in full is made and shall accrue and be payable at the rates set forth or provided for herein before and after Default, before and after maturity, before and after judgment, and before and after the commencement of any proceeding under any Debtor Relief Law, with interest on overdue interest at the Default Rate to the fullest extent permitted by applicable Laws.

(b) Interest accrued on each Alternate Base Rate Loan shall be due and payable on each Quarterly Payment Date. Except as otherwise provided in Sections  3.1(e) and 3.8 , the unpaid principal amount of any Alternate Base Rate Loan shall bear interest at a fluctuating rate per annum equal to the Alternate Base Rate plus the Applicable Alternate Base Rate Margin. Each change in the interest rate under this Section  3.1(b) due to a change in the Alternate Base Rate shall take effect simultaneously with the corresponding change in the Alternate Base Rate.

(c) Interest accrued on each Eurodollar Rate Loan which is for a term of three months or less shall be due and payable on the last day of the related Eurodollar Period. Interest accrued on each other Eurodollar Rate Loan shall be due and payable on the date which is three months after the date such Eurodollar Rate Loan was made (and, in the event that all of the Lenders have approved a Eurodollar Period of longer than six months, every three months thereafter through the last day of the Eurodollar Period) and on the last day of the related Eurodollar Period. Except as otherwise provided in Sections  3.1(e) and 3.8 , the unpaid principal amount of any Eurodollar Rate Loan shall bear interest at a rate per annum equal to the Eurodollar Rate for that Eurodollar Rate Loan plus the Applicable Eurodollar Rate Margin.

(d) Interest accrued on each Treasuries Rate Loan shall be due and payable on each Quarterly Payment Date. Except as otherwise provided in Sections  3.1(e) and 3.8 , the unpaid principal amount of any Treasuries Rate Loan shall bear interest at a fixed rate per annum equal to the Treasuries Rate in effect on the date such Treasuries Rate Loan is made plus the Applicable Treasuries Rate Margin. Each change in the interest rate under this Section  3.1(d) due to a change in the Treasuries Rate shall take effect simultaneously with the corresponding change in the Treasuries Rate.

(e) During the existence of an Event of Default, the Loans shall bear interest at a rate per annum equal to the sum of (i) the interest rate specified in Section  3.1(b) ,