AMENDMENT AND WAIVER NO. 4 TO
THE CREDIT AGREEMENT
Dated as of December 20,
2005
AMENDMENT AND WAIVER NO. 4 TO THE CREDIT AGREEMENT (this
“ Amendment ”) among ENCORE MEDICAL IHC,
INC., a Delaware corporation (the “ Borrower
”), ENCORE MEDICAL CORPORATION, a Delaware corporation
(“ Holdings ”), the banks, financial
institutions and other institutional lenders parties to the Credit
Agreement referred to below (collectively, the “
Lenders ”) and BANK OF AMERICA, N.A., as
Administrative Agent (in such capacity, the “
Administrative Agent ”).
(1) WHEREAS,
the Borrower, Holdings, the Lenders and the Administrative Agent
have entered into a Credit Agreement dated as of October 4,
2004, as amended by Letter Amendment and Waiver No. 1, dated as of
February 14, 2005, Amendment and Waiver No. 2, dated as
of May 5, 2005 and Letter Amendment No. 3, dated as of
July 21, 2005 (such Credit Agreement, as so amended, the
“ Credit Agreement ”). Capitalized terms
not otherwise defined in this Amendment have the same meanings as
specified in the Credit Agreement;
(2) WHEREAS,
the Borrower has requested that the Lenders amend and waive certain
provisions to the Credit Agreement as described below and
including, without limitation, an increase of the Revolving Credit
Commitments; and
(3) WHEREAS,
the Lenders have agreed, subject to the terms and conditions
hereinafter set forth, to amend and waive certain provisions to the
Credit Agreement as set forth below.
NOW,
THEREFORE, in consideration of the premises and for other good and
valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION
1. Amendments to the Credit Agreement . The Credit Agreement
is, effective as of the date hereof and subject to the satisfaction
of the conditions precedent set forth in Section 3 hereof, hereby
amended as follows:
(a) Section 1.01
of the Credit Agreement is hereby amended as follows:
(i) By deleting,
in clause (iv) of the definition of “ Consolidated
EBITDA ” the amounts “$10,000,000” and
“$5,000,000” and by replacing such amounts with,
respectively, the amounts “$20,000,000” and
“$15,000,000”.
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(ii) By deleting
in the definition of “ Consolidated EBITDA
” clause (vi) thereof and by inserting the following
clause (vi) in its place:
“(vi)
restructuring and integration costs incurred (A) in connection
with the Transaction through December 31, 2005;
provided that the maximum amount of costs incurred under
this subclause (A) shall not exceed $5,000,000, and
(B) in connection with the Compex Acquisition through the date
that is twelve months after the Fourth Amendment Effective Date;
provided that the maximum amount of costs incurred under
this subclause (B) shall not exceed
$7,500,000,”
(iii) By deleting
in the definition of “ Consolidated EBITDA
” clause (viii) thereof and by inserting the following
clause (viii) in its place:
“(viii)
transaction fees and expenses related to (A) attempted or
completed acquisitions (other than the Transaction) up to a maximum
aggregate amount of $2,500,000 during any period of four
consecutive Fiscal Quarters, and (B) the Compex Acquisition up
to a maximum aggregate amount of $4,500,000,”
(iv) By inserting
at the end of the definition of “ Revolving Credit
Commitment ” the following phrase: “;
provided , however , that upon the Compex Acquisition
Closing Date the Revolving Credit Commitments shall be increased by
the commitments set forth on Schedule 2.01(a)
hereto.”
(v) By
inserting the following new definitions therein in the appropriate
alphabetical order:
“
Compex Acquisition ” means the acquisition by
the Borrower of all of the Equity Interests in Compex Technologies,
Inc. a Minnesota corporation pursuant to that certain stock
purchase agreement dated as of November 11, 2005 and entered
into by and among Holdings, Encore-Snow Acquisition Corp. and
Compex Technologies, Inc.; provided that, after giving
effect to such acquisition, Compex Technologies, Inc. shall be a
wholly-owned direct Subsidiary of the Borrower.
“
Compex Acquisition Closing Date ” means the
date Compex Technologies, Inc. merges with and into Encore-Snow
Acquisition Corp. as part of the Compex Acquisition, it being
understood that the Compex Acquisition Closing Date shall occur on
or before June 30, 2006.
“
Fourth Amendment ” means the Amendment
No. 4, dated as of December 20, 2005, to this Agreement
among the Borrower, Holdings, the Lenders party thereto and the
Administrative Agent.
“
Fourth Amendment Effective Date ” has the
meaning specified in Section 2 of the Fourth
Amendment.
(b)
Section 7.03(i)(D) of the Credit Agreement is hereby amended
by deleting therein the amounts “$7,500,000” and
“$15,000,000” and by replacing such amounts with,
respectively, the amounts “$15,000,000” and
“$30,000,000”.
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Section 7.11
of the Credit Agreement is hereby amended by deleting therein the
schedule of Capital Expenditures and by replacing such schedule
with the following schedule:
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“Fiscal
Year
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Amount
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$
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11,100,000
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$
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13,800,000
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$
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13,000,000
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$
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14,200,000
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$
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15,700,000
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$
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17,300,000
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$
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19,000,000
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”
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(c) A new
Schedule 2.01(a) is added to the Credit Agreement in
the form of Schedule I to this Amendment.
SECTION
2. Waiver . Compliance by Holdings and its Subsidiaries with
the limitations set forth in Section 7.03(i)(D) of the Credit
Agreement, with respect to the limits on total cash consideration
that may be paid by or on behalf of Holdings and its Subsidiaries
for any purchase or acquisition of the type described in
Section 7.03(i) of the Credit Agreement of no more than
$15,000,000 after giving effect to the amendment set forth in
Section 1(b) above for any single transaction, is on and as of the
Fourth Amendment Effective Date hereby waived by the Lenders,
solely to the extent and for the purpose of permitting the Compex
Acquisition and the repayment of debt of Compex Technologies, Inc.,
assoc
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