-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, S8ZpTG7Xj2/2/UWabAycMgnkxk+vEQjMBiO+SWzG9iLAeI974nXBWvM/ULfNuUk0 vhRauv/0tOBHxQWOule3FA== 0000912057-00-024610.txt : 20000516 0000912057-00-024610.hdr.sgml : 20000516 ACCESSION NUMBER: 0000912057-00-024610 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDWARDS LIFESCIENCES CORP CENTRAL INDEX KEY: 0001099800 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15525 FILM NUMBER: 633538 BUSINESS ADDRESS: STREET 1: 17221 RED HILL AVE CITY: IRVINE STATE: CA ZIP: 92614 BUSINESS PHONE: 9492502500 MAIL ADDRESS: STREET 1: 17221 RED HILL AVE CITY: IRVINE STATE: CA ZIP: 92614 FORMER COMPANY: FORMER CONFORMED NAME: CVG CONTROLLED INC DATE OF NAME CHANGE: 19991126 10-Q 1 10-Q - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-15525 ------------------------ EDWARDS LIFESCIENCES CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 36-4316614 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE EDWARDS WAY, IRVINE, CALIFORNIA 92614 (formerly 17221 Red Hill Avenue, Irvine, California) (Zip Code) (Address of principal executive offices) (949) 250-2500 (Registrant's telephone number, including area code)
------------------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ______ No __X*__ * Registrant's Registration Statement on Form 10, as amended, under the Securities Exchange Act of 1934 was declared effective on March 21, 2000. Prior thereto, the Registrant's business was reported as a division of Baxter International Inc. The number of shares of the registrant's Common Stock, par value $1.00 per share, outstanding as of April 28, 2000, the latest practicable date, was 58,088,826 shares. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 TABLE OF CONTENTS
PAGE NUMBER ----------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Combined Condensed Balance Sheets........................... 2 Combined Condensed Statements of Income..................... 3 Combined Condensed Statements of Cash Flows................. 4 Notes to Combined Condensed Financial Statements............ 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings........................................... 21 Item 6. Exhibits and Reports on Form 8-K............................ 21 Signature............................................................. 22 Exhibits.............................................................. 23
1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) COMBINED CONDENSED BALANCE SHEETS (UNAUDITED) (IN MILLIONS, EXCEPT SHARE DATA)
MARCH 31, DECEMBER 31, 2000 1999 --------- ------------ ASSETS CURRENT ASSETS Cash...................................................... $ 6 $ -- Accounts receivables, net................................. 132 155 Inventories............................................... 156 182 Short-term deferred income taxes.......................... 9 9 Prepaid expenses and other current assets................. 15 10 ------ ------ Total current assets.................................... 318 356 Property, plant and equipment, net.......................... 205 226 Goodwill and other intangibles, net......................... 829 839 Other assets................................................ 29 16 ------ ------ $1,381 $1,437 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities.................. $ 122 $ 156 Short-term debt........................................... 210 -- ------ ------ Total current liabilities............................... 332 156 ------ ------ Long-term debt.............................................. 319 -- Other....................................................... 47 57 Commitments and Contingencies STOCKHOLDERS' EQUITY Common stock, $1 par value, authorized 350,000,000 shares, 58,088,826 shares outstanding........................... 58 -- Additional contributed capital............................ 264 -- Retained earnings......................................... 392 418 Investment by Baxter International Inc., net.............. -- 833 Accumulated other comprehensive loss...................... (31) (27) ------ ------ Total stockholders' equity.............................. 683 1,224 ------ ------ $1,381 $1,437 ====== ======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE COMBINED CONDENSED FINANCIAL STATEMENTS. 2 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) COMBINED CONDENSED STATEMENTS OF INCOME (UNAUDITED) (IN MILLIONS)
THREE MONTHS ENDED MARCH 31, ---------------------- 2000 1999 -------- -------- Net sales................................................... $226 $221 Cost of goods sold.......................................... (118) (113) ---- ---- Gross profit................................................ 108 108 ---- ---- Selling, general and administrative expenses.............. 60 58 Research and development expenses......................... 14 12 Goodwill amortization..................................... 9 9 Non-recurring spin-off expenses........................... 1 -- ---- ---- 84 79 ---- ---- Operating income............................................ 24 29 Other (expense) income.................................... (1) 1 ---- ---- Income before provision for income taxes.................... 23 30 Provision for income taxes.................................. (6) (8) ---- ---- Net income.................................................. $ 17 $ 22 ==== ====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE COMBINED CONDENSED FINANCIAL STATEMENTS. 3 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) COMBINED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN MILLIONS)
THREE MONTHS ENDED MARCH 31, ------------------------- 2000 1999 -------- -------- (BRACKETS DENOTE CASH OUTFLOWS) CASH FLOWS PROVIDED BY OPERATING ACTIVITIES Net income................................................ $ 17 $22 Adjustments Depreciation and amortization........................... 21 22 Other................................................... (4) -- Changes in operating assets and liabilities, net of effect from de-consolidation (Note 1) Accounts receivable..................................... 5 23 Inventories............................................. 5 (4) Accounts payable and accrued liabilities................ (18) (7) Other................................................... (11) (7) ---- --- Net cash provided by operating activities................. 15 49 ---- --- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures...................................... (10) (11) Purchase of convertible debentures........................ (13) -- Investment in unconsolidated affiliate.................... (4) -- ---- --- Net cash used in investing activities................... (27) (11) ---- --- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of short-term debt................. 210 -- Proceeds from issuance of long-term debt.................. 319 -- Investment by Baxter International Inc.................... (511) (38) ---- --- Net cash provided by (used in) financing activities..... 18 (38) ---- --- Net increase in cash........................................ 6 -- Cash at beginning of period................................. -- -- ---- --- Cash at end of period....................................... $ 6 $-- ==== === Supplemental disclosure of noncash activity De-consolidation of Japan business (Note 1)............... $ 43 ====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE COMBINED CONDENSED FINANCIAL STATEMENTS. 4 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS MARCH 31, 2000 (UNAUDITED) 1. DESCRIPTION OF BUSINESS Edwards Lifesciences Corporation (Edwards Lifesciences or the Company) was incorporated under the original name of CVG Controlled Inc. in Delaware on September 10, 1999, as a subsidiary of Baxter International Inc. (Baxter). On March 31, 2000 (the Distribution Date), Baxter transferred its cardiovascular business (the Edwards Lifesciences Business) to Edwards Lifesciences in connection with a tax-free spin-off by Baxter of the Edwards Lifesciences Business. The spin-off was effected on the Distribution Date through a distribution of 58.1 million shares of Edwards Lifesciences Common Stock (the Distribution) to Baxter stockholders of record on March 29, 2000, resulting in Edwards Lifesciences operating as an independent entity commencing April 1, 2000 with publicly traded common stock. The Company has authorized the issuance of 50 million shares of preferred stock, par value $.01 per share. No shares of preferred stock have been issued. No historical earnings per share data is presented as the Edwards Lifesciences earnings were part of Baxter's earnings through the close of business on March 31, 2000. Baxter has no ownership interest in Edwards Lifesciences after March 31, 2000, but will perform certain services for Edwards Lifesciences pursuant to various agreements that are outlined in Note 7. However, unless released by third parties, Baxter may remain liable for certain lease and other obligations and liabilities that are transferred to and assumed by Edwards Lifesciences. Edwards Lifesciences is obligated to indemnify Baxter for liabilities related to those transferred obligations and liabilities. Subsequent to the Distribution, the cardiovascular business in Japan is being operated pursuant to a joint venture under which a Japanese subsidiary of Baxter retains ownership of the Japanese business assets, but a subsidiary of Edwards Lifesciences holds a 90% profit interest. Edwards Lifesciences has an option to purchase the Japanese business assets that may be exercised no earlier than 28 months following the Distribution Date and no later than 60 months following the Distribution Date. The Japanese operations are consolidated in the accompanying historical combined condensed statement of income, consistent with the treatment of the Company's operations while a part of Baxter. Subsequent to the Distribution, Edwards Lifesciences recognizes as sales its shipments into the joint venture and utilizes the equity method of accounting to record its interest in the operations of the joint venture. Since the Distribution was effective upon the close of business on March 31, 2000, all adjustments to reflect the capitalization and operation of the Company as an independent entity as of March 31, 2000 have been reflected in the historical combined condensed balance sheet as of March 31, 2000. Edwards Lifesciences is a global leader in providing the manufacturing, marketing and selling of a comprehensive line of products and services to treat late-stage cardiovascular disease. Edwards Lifesciences' sales are categorized in four main product areas: (a) cardiac surgery, (b) critical care, (c) vascular and (d) perfusion products and services. Edwards Lifesciences' CARDIAC SURGERY portfolio is comprised of products relating to heart-valve therapy, mechanical cardiac assist, and cannulae and cardioplegia products used during open-heart surgery. Edwards Lifesciences is the world's leader in, and has been a pioneer in the development and commercialization of, tissue valves and repair products used to replace or repair a patient's diseased or defective heart valve. In the CRITICAL CARE area, Edwards Lifesciences is a world leader in hemodynamic monitoring systems that are used to measure a patient's heart function, and central venous access products for fluid and drug delivery. Edwards Lifesciences' 5 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (UNAUDITED) 1. DESCRIPTION OF BUSINESS (CONTINUED) VASCULAR product lines include a line of balloon catheter-based products, surgical clips and inserts, angioscopy equipment, and artificial implantable grafts, as well as an endovascular system that is used to treat less invasively life-threatening abdominal aortic aneurysms. In the PERFUSION PRODUCTS AND SERVICES category, Edwards Lifesciences designs, develops, manufactures and markets a diverse line of disposable products used during cardiopulmonary bypass procedures, including oxygenators, blood containers, filters and related devices, as well as bypass equipment. Edwards Lifesciences also is the world's leading provider of perfusion services, employing more than 400 certified perfusionists who perform an aggregate of more than 50,000 perfusion cases for open heart surgery per year. 2. FINANCIAL INFORMATION The unaudited interim combined condensed financial statements of Edwards Lifesciences use Baxter's historical bases in the assets, liabilities and historical results of operations of the cardiovascular business, operated primarily as a division of Baxter, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These interim combined condensed financial statements should be read in conjunction with the combined financial statements and notes included in the Company's Registration Statement on Form 10, as amended with the Securities and Exchange Commission on April 5, 2000 (the Form 10). In the opinion of management, the interim combined condensed financial statements reflect all adjustments necessary for a fair presentation of the interim periods. All such adjustments are of a normal, recurring nature. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. 3. PRO FORMA INFORMATION The following unaudited pro forma combined condensed statement of income for the three months ended March 31, 2000 presents the combined results of Edwards Lifesciences assuming that the transactions contemplated by the Distribution had been completed as of January 1, 2000. The unaudited pro forma information has been prepared utilizing the historical combined condensed financial statements of Edwards Lifesciences. 6 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (UNAUDITED) 3. PRO FORMA INFORMATION (CONTINUED) EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME (UNAUDITED) (IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 2000 ------------------------------------------------------ PRO FORMA ADJUSTMENTS ----------------------- JAPAN ON AN EQUITY HISTORICAL BASIS OTHERS PRO FORMA ---------- --------- -------- --------- Net sales............................................ $ 226 $(29)(a) $ 197 Cost of goods sold................................... (118) 12 (a) (106) ----- ---- ------ Gross profit......................................... 108 (17) 91 ----- ---- ------ Selling, general and administrative expenses....... 60 (12)(a) $ 5 (b) 53 Research and development expenses.................. 14 (1)(a) 13 Goodwill amortization.............................. 9 9 Non-recurring spin-off expenses.................... 1 1 Other income....................................... -- (4)(a) (4) ----- ---- ---- ------ 84 (17) 5 72 ----- ---- ---- ------ Operating income..................................... 24 -- (5) 19 Interest expense................................... -- (7)(c) (7) Other expense...................................... (1) (1) ----- ---- ---- ------ Income before income taxes........................... 23 -- (12) 11 Provision for income taxes........................... (6) 3 (d) (3) ----- ---- ---- ------ Net income........................................... $ 17 $ -- $ (9) $ 8 ===== ==== ==== ====== Share information: Pro forma net income per share Basic............................................ $ 0.14 Diluted.......................................... $ 0.14 Weighted average number of common shares outstanding Basic............................................ 58.2(e) Diluted.......................................... 58.2(e)
- ------------------------ PRO FORMA ADJUSTMENTS (a) To reflect the Edwards Lifesciences Japanese operations on an equity basis (Note 1). (b) To reflect estimated incremental costs associated with being an independent public company, including costs associated with corporate administrative services such as accounting, tax, treasury, 7 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (UNAUDITED) 3. PRO FORMA INFORMATION (CONTINUED) risk management, insurance, legal, stockholder relations and human resources. The Company's historical combined condensed financial statements include all costs incurred by Baxter on behalf of the Company. However, there will be incremental and continuing costs directly attributable to the spin-off, as there will be a loss of certain synergies and benefits of economies of scale that existed while Edwards Lifesciences was part of Baxter. Management estimated such incremental costs utilizing Baxter's historical headcount and cost analysis, and the Company's organization chart. The following is a summary of the estimated annual incremental costs by significant function (in millions): Accounting, tax and legal................................... $ 2 Insurance and risk management............................... 1 Human resources............................................. 1 Treasury, stockholder relations and other costs............. 1 --- Total..................................................... $ 5 ===
(c) To reflect the estimated interest expense which would have been incurred by Edwards Lifesciences based on the incurrence of $529 million of debt at a weighted-average interest rate of approximately 5%. An increase or decrease of 0.2 points in the weighted-average interest rate would result in a per annum increase or decrease in interest expense of approximately $1 million. (d) To reflect the estimated tax impact at statutory rates, for pro forma adjustments (b) and (c), as well as the estimated impact of different tax rates available to Edwards Lifesciences as a stand-alone company. (e) Pro forma net income per share is computed as if 58.2 million common shares of Edwards Lifesciences had been outstanding for the three months ended March 31, 2000 (comprised of 58.1 million common shares of Edwards Lifesciences distributed to Baxter shareholders on the Distribution Date and approximately 0.1 million common shares of Edwards Lifesciences to be distributed to Edwards Lifesciences' hourly employees subsequent to the Distribution Date). 4. INVENTORIES Inventories consisted of the following:
MARCH 31, DECEMBER 31, 2000 1999 --------- ------------ (IN MILLIONS) Raw materials......................................... $ 28 $ 29 Work in process....................................... 30 28 Finished products..................................... 98 125 ---- ---- Total inventories..................................... $156 $182 ==== ====
8 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (UNAUDITED) 5. CREDIT FACILITIES During March 2000, Edwards Lifesciences entered into two unsecured revolving credit agreements (the Credit Facilities), providing for up to an aggregate of $650 million in borrowings in multiple currencies. Borrowings currently bear interest at the London interbank offering rate (LIBOR) plus 1.25%, which includes a facility fee. One of the credit agreements provides for short-term borrowings up to an aggregate of $430 million and expires on March 30, 2005. The other credit agreement provides for short-term borrowings up to an aggregate of $220 million and expires on March 29, 2001. As of March 31, 2000, approximately $319 million and $210 million were outstanding under the $430 million and the $220 million credit agreements, respectively. The weighted average interest on borrowings outstanding at March 31, 2000 was approximately 5%. Edwards Lifesciences will pay a facility fee, regardless of available or outstanding borrowings, currently at an annual rate of .20% for the $430 million credit agreement, and .175% for the $220 million credit agreement. The Credit Facilities contain various financial and other covenants of Edwards Lifesciences, including a maximum leverage ratio and a minimum interest coverage ratio. All amounts outstanding under the $430 million credit agreement have been classified as long-term obligations, as these short-term borrowings will continue to be refinanced pursuant to this credit agreement. 6. COMPREHENSIVE INCOME The reconciliation of net income to comprehensive income is as follows:
THREE MONTHS ENDED MARCH 31, ---------------------- 2000 1999 -------- -------- (IN MILLIONS) Net Income.................................................. $17 $22 Other comprehensive loss: Currency translation adjustments.......................... (4) (3) --- --- Comprehensive income........................................ $13 $19 === ===
7. RELATED PARTY TRANSACTIONS During the three months ended March 31, 2000 and 1999, Baxter provided to the Edwards Lifesciences Business certain legal, treasury, employee benefit, insurance and administrative services. Charges for these services were based on actual costs incurred by Baxter. The bases for the amounts charged to Edwards Lifesciences varied depending on the nature of the service, but generally were determined using headcount, sales, payroll, square footage or other appropriate data, or were determined based on actual utilization of services. Management believes that the bases used for allocating service charges are reasonable. However, the terms of these transactions may differ from those that would result from transactions with unrelated third parties or had Edwards Lifesciences performed these functions on its own. 9 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (UNAUDITED) 7. RELATED PARTY TRANSACTIONS (CONTINUED) During the three months ended March 31, 2000 and 1999, Edwards Lifesciences participated in a centralized cash management program administered by Baxter. Short-term advances from Baxter or excess cash sent to Baxter have been treated as an adjustment to the "Investment by Baxter International Inc., net" account as of and through the respective balance sheet dates. No interest is charged on this balance. The following table summarizes the charges from Baxter for the above-mentioned services, as recorded in Edwards Lifesciences Combined Condensed Statements of Income:
THREE MONTHS ENDED MARCH 31, ---------------------- 2000 1999 -------- -------- (IN MILLIONS) Cost of goods sold.......................................... $2 $2 Selling, general and administrative expenses................ 10 11 Research and development expenses........................... 1 1
Effective on the Distribution Date, Baxter and Edwards Lifesciences entered into a series of administrative services agreements pursuant to which Baxter and Edwards Lifesciences will continue to provide, for a specified period of time, certain administrative services that each entity historically has provided to the other. These agreements require the parties to pay each other a fee that approximates the actual costs of these services. Additionally, subsequent to March 31, 2000, Edwards Lifesciences will have continuing relationships with Baxter as a customer and supplier for certain products. 8. SUBSEQUENT EVENTS As of March 31, 2000, Edwards Lifesciences held two interest bearing convertible debentures totaling $12.5 million from Sangamo Biosciences, Inc. (Sangamo). On April 6, 2000, in connection with the closing of Sangamo's initial public offering, the entire outstanding principal amount of the debentures, together with all accrued and unpaid interest thereon, were converted into common stock of Sangamo at its initial public offering price in accordance with the original terms of the convertible debentures. Edwards Lifesciences' equity ownership in Sangamo does not result in it being able to exercise significant influence over Sangamo's operations. Management of Edwards Lifesciences will report its investment in Sangamo's common stock as available-for-sale securities. On April 3, 2000, the Company granted options to purchase shares of Edwards Lifesciences Common Stock under the Edwards Lifesciences Long-Term Incentive Stock Plan (the Plan). The Plan includes two stock option programs: Founders Options and Edwards Conversion Options. The Founders Options were awarded to all salaried employees of the Company, and permit the purchase of approximately 5.7 million shares at an exercise price of $13.875, the fair market value at the date of grant. The Founders Options vest 30% after two years, the balance after three years. The Edwards Conversion Options permit the purchase of approximately 2.4 million shares at an exercise price based upon an equitable conversion of the exercise price under the Baxter stock option plan, with reference 10 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (UNAUDITED) 8. SUBSEQUENT EVENTS (CONTINUED) to the when-issued price of the Company's stock and the closing price of Baxter's common stock on March 31, 2000. The Edwards Conversion Options retained the vesting periods under the Baxter stock option plan, resulting in various vesting periods through September 2001. On April 3, 2000, Edwards Lifesciences also granted to certain hourly employees 125,000 shares of the Company's common stock, valued at $1.7 million, which will be recorded as compensation expense in the second quarter ended June 30, 2000. 9. LEGAL PROCEEDINGS Upon the Distribution, Edwards Lifesciences assumed the defense of certain Baxter litigation involving cases and claims related to the Edwards Lifesciences business. Edwards Lifesciences has not been named as a defendant in such matters but will be defending and indemnifying Baxter for all related expenses and potential liabilities. It is possible that Edwards Lifesciences may be added as a defendant in these cases and claims. The cases and claims relate primarily to products and services currently or formerly manufactured or performed, as applicable, by Edwards Lifesciences. Such cases and claims raise difficult and complex factual and legal issues and are subject to many uncertainties and complexities, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. Accordingly, in certain cases, Edwards Lifesciences is not able to estimate the amount of its liabilities with respect to such matters. Upon resolution of any pending legal matters, Edwards Lifesciences may incur charges in excess of presently established reserves. While such a charge could have a material adverse impact on Edwards Lifesciences' net income or net cash flows in the period in which it is recorded or paid, management believes that no such charge would have a material adverse effect on Edwards Lifesciences' combined financial position. Furthermore, Edwards Lifesciences operates in an industry susceptible to significant product liability claims. In recent years, there has been an increased public interest in product liability claims for implanted or other medical devices. These claims may be brought by individuals seeking relief for themselves or, increasingly, by groups seeking to represent a class. In addition, product liability claims may be asserted against Edwards Lifesciences in the future arising out of events not known to management at the present time. Management believes that Edwards Lifesciences' risk management practices, including insurance coverage, are adequate to protect against potential product and professional liability losses. Edwards Lifesciences is also subject to various environmental laws and regulations both within and outside of the United States. The operations of Edwards Lifesciences, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential impact of compliance with environmental protection laws, management believes that such compliance will not have a material impact on Edwards Lifesciences' financial position, results of operations or liquidity. 11 EDWARDS LIFESCIENCES CORPORATION (FORMERLY A DIVISION OF BAXTER INTERNATIONAL INC.) NOTES TO COMBINED CONDENSED FINANCIAL STATEMENTS (CONTINUED) MARCH 31, 2000 (UNAUDITED) 10. SEGMENT INFORMATION The Company manages its business on the basis of one reportable segment. Edwards Lifesciences' products and services share similar distribution channels and customers and are sold principally to hospitals and physicians. Management evaluates its various global product portfolios on a revenue basis, which is presented below, and profitability is generally evaluated on an enterprise-wide basis due to shared infrastructures. Edwards Lifesciences' principal markets are the United States, Europe and Japan. Geographic area data includes net sales based on product shipment destination and long-lived asset data is presented based upon physical location.
FOR THE THREE MONTHS ENDED MARCH 31, ---------------------- 2000 1999 -------- -------- (IN MILLIONS) NET SALES BY GEOGRAPHIC AREA United States............................................... $125 $125 Japan....................................................... 46 43 Other countries............................................. 55 53 ---- ---- Totals...................................................... $226 $221 ==== ==== NET SALES BY MAJOR PRODUCT AND SERVICE AREA Cardiac Surgery............................................. $ 79 $ 76 Critical Care............................................... 61 60 Vascular.................................................... 15 15 Perfusion Products and Services............................. 60 60 Other....................................................... 11 10 ---- ---- Totals...................................................... $226 $221 ==== ====
MARCH 31, DECEMBER 31, 2000 1999 --------- ------------ LONG-LIVED ASSETS BY GEOGRAPHIC AREA United States............................................... $194 $196 Other countries............................................. 11 30 --------- ------------ Totals...................................................... $205 $226 ========= ============
Sales to Allegiance Corporation, a subsidiary of Cardinal Health, Inc., represented approximately 15% and 12% of the Company's total net sales in the three months ended March 31, 2000 and 1999, respectively. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis presents the factors that had a material effect on the results of operations of Edwards Lifesciences during the three months ended March 31, 2000 and 1999. Also discussed is Edwards Lifesciences' financial position as of March 31, 2000. You should read this discussion in conjunction with the historical and pro forma combined condensed financial statements and related notes thereto included elsewhere in this Form 10-Q. OVERVIEW Edwards Lifesciences provides a comprehensive line of products and services to treat late-stage cardiovascular disease. Edwards Lifesciences' sales are categorized in four main product areas: cardiac surgery, critical care, vascular, and perfusion products and services. In addition, Edwards Lifesciences offers a diverse grouping of product lines comprised mostly of select distributed products that are sold in international markets, and miscellaneous pharmaceutical products. Edwards Lifesciences is headquartered in Irvine, California, and supplies its products and services to customers in more than 80 countries, both through direct sales and distributor relationships. Edwards Lifesciences' products are manufactured in locations throughout the world, including Brazil, the Dominican Republic, Japan, The Netherlands, Puerto Rico, Switzerland, and the United States. Edwards Lifesciences' CARDIAC SURGERY portfolio is comprised of products relating to heart-valve therapy, mechanical cardiac assist, and cannulae and cardioplegia products used during open-heart surgery. Edwards Lifesciences is the world's leader in, and has been a pioneer in the development and commercialization of, tissue valves and repair products used to replace or repair a patient's diseased or defective heart valve. In the CRITICAL CARE area, Edwards Lifesciences is a world leader in hemodynamic monitoring systems used to measure a patient's heart function, and central venous access products for fluid and drug delivery. Edwards Lifesciences' VASCULAR product lines include a line of balloon catheter-based products, surgical clips and inserts, angioscopy equipment, and artificial implantable grafts, as well as an endovascular system that is used to treat less invasively life-threatening abdominal aortic aneurysms. In the PERFUSION PRODUCTS AND SERVICES category, Edwards Lifesciences designs, develops, manufactures and markets a diverse line of disposable products used during cardiopulmonary bypass procedures, including oxygenators, blood containers, filters and related devices, as well as bypass equipment. Edwards Lifesciences also is the world's leading provider of perfusion services, employing more than 400 certified perfusionists who perform an aggregate of more than 50,000 perfusion cases for open heart surgery per year. Cardiovascular disease is the leading cause of death in the world. Edwards Lifesciences believes that there is a continual and growing need for the treatment of cardiovascular disease primarily due to the aging population, the progressive nature of the disease, and the continued economic development of countries around the world that allows for additional funds to be allocated for the treatment of chronic health conditions. Edwards Lifesciences' business strategy is to develop, manufacture and market products and services that result in improved therapeutic outcomes for patients with late-stage cardiovascular disease. Edwards Lifesciences plans to aggressively expand its leading product offerings and develop new products and therapies that improve the quality of patient care and reduce overall treatment costs. The health-care marketplace continues to be competitive. There has been consolidation in Edwards Lifesciences' customer base and among its competitors, which has resulted in pricing and market share pressures. Edwards Lifesciences has experienced increases in its labor and material costs, which are primarily influenced by general inflationary trends. Competitive market conditions have minimized inflation's impact on the selling prices of Edwards Lifesciences' products and services. Management expects these trends to continue. 13 RESULTS OF OPERATIONS NET SALES TRENDS The following is a summary of domestic and international net sales:
THREE MONTHS ENDED MARCH 31, ------------------------- 2000 1999 -------- -------- (DOLLARS IN MILLIONS) United States.............................................. $125 $125 % INCREASE IN 2000....................................... 0% International.............................................. 101 96 % INCREASE IN 2000....................................... 5.2% ---- ---- Total net sales............................................ $226 $221 ==== ==== % INCREASE IN 2000....................................... 2.3%
The increase in net sales was primarily due to an increase in sales of cardiac surgery products. The international increase was driven by strong sales within Japan, partially offset by weaker sales within Europe. Net sales within product lines were impacted by fluctuations in foreign currency exchange rates, primarily the movement of the U.S. dollar against the Euro and the Japanese yen. The net impact of changes in foreign currency exchange rates did not have a material effect on total net sales. The impact of foreign currency exchange rate fluctuations on net sales would not necessarily be indicative of the impact on net income due to the corresponding effect of foreign currency exchange rate fluctuations on operating costs and expenses and Edwards Lifesciences' hedging activities. For more information, see "Currency Risk" below. The following is a summary of net sales by product line:
THREE MONTHS ENDED MARCH 31, ----------------------- 2000 1999 -------- -------- (DOLLARS IN MILLIONS) Cardiac surgery............................................ $79.0 $75.6 % INCREASE IN 2000....................................... 4.5% Critical care.............................................. 61.5 60.6 % INCREASE IN 2000....................................... 1.5% Vascular................................................... 14.6 14.9 % DECREASE IN 2000....................................... (2.0%) Perfusion products and services............................ 59.8 60.0 % DECREASE IN 2000....................................... (.3%) Other...................................................... 11.1 9.9 % INCREASE IN 2000....................................... 12.1% ----- ----- Total net sales............................................ $ 226 $ 221 ===== ===== % INCREASE IN 2000....................................... 2.3%
CARDIAC SURGERY Excluding the impact of foreign currency exchange rate fluctuations, net sales of cardiac surgery products would have increased 6.4% for the three months ended March 31, 2000. The growth in this product line resulted primarily from double-digit growth in pericardial tissue valves and heart valve repair products, offset primarily by a decline in porcine tissue valves. Management expects that its 14 heart-valve therapy products will continue to serve as a key driver of Edwards Lifesciences' sales growth. CRITICAL CARE Excluding the impact of foreign currency exchange rate fluctuations, net sales of critical care products would have increased .7% for the three months ended March 31, 2000. The growth was due primarily to an increased demand for Advanced Venous Access products and continued penetration of the hemofiltration market. Critical Care products have been, and are expected to continue to be, significant contributors to Edwards Lifesciences' total sales. Management believes that future sales growth of Critical Care products could be negatively impacted by global pricing pressures, including anticipated decreased governmental reimbursement in Japan. VASCULAR Excluding the impact of foreign currency exchange rate fluctuations, net sales of vascular products would have been flat for the three months ended March 31, 2000. Edwards Lifesciences has made a significant commitment to the development of endovascular grafts, which are used to treat potentially life-threatening abdominal aortic aneurysms (AAA) through a minimally invasive approach. In 1999, Edwards Lifesciences commercially launched its Lifepath AAA Endovascular Graft System in Europe and Australia, which is expected to add to future sales growth. Edwards Lifesciences is conducting clinical trials in the United States and expects to obtain FDA regulatory approval within the next two years. On April 21, 2000, the Company announced that it temporarily suspended clinical trials and sales of its Lifepath AAA Endovascular Graft System following the discovery of cases in which the product's wireform had fractured. The Company has undertaken a prompt review of all Lifepath AAA cases and is in the process of determining if any further action is required. PERFUSION PRODUCTS AND SERVICES Excluding the impact of foreign currency exchange rate fluctuations, net sales of perfusion products and services would have decreased 1% for the three months ended March 31, 2000. Management believes that the decrease in sales of perfusion products and services was due primarily to a continued slowing in the number of coronary artery bypass graft procedures on a worldwide basis as well as significant continuing pricing pressures. Management believes that the slowdown in the number of traditional coronary bypass graft procedure surgeries has been caused by increased acceptance of newer, less-invasive procedures such as coronary stenting, which often eliminates or defers the need for cardiac surgery. Additionally, there has been an increase in the number of heart surgeries performed "off-pump" (the surgery which is performed on a beating heart without cardiopulmonary bypass) and this trend has reduced the need for perfusion services and the use of many traditional perfusion products manufactured and sold by Edwards Lifesciences. OTHER Other sales include a diverse grouping of product lines comprised primarily of select distributed products that are sold in international regions, and miscellaneous pharmaceutical products. This category of sales, which generally represents less than ten percent of Edwards Lifesciences' total sales, has fluctuated based on the timing of new or terminated distribution agreements, foreign currency exchange rate fluctuations, and other factors and events. 15 JOINT VENTURE IN JAPAN Subsequent to the Distribution, the cardiovascular business in Japan is being operated pursuant to a joint venture under which a Japanese subsidiary of Baxter retains ownership of the Japanese business assets, but a subsidiary of Edwards Lifesciences holds a 90% profit interest. Edwards Lifesciences will have an option to purchase the Japanese business assets that may be exercised no earlier than 28 months following the Distribution Date and no later than 60 months following the Distribution Date. The Japanese operations are consolidated in the accompanying historical Combined Condensed Statements of Income, consistent with the historical treatment of the Company's operations while a part of Baxter. Subsequent to the Distribution, Edwards Lifesciences recognizes as sales its shipments into the joint venture and utilizes the equity method of accounting to record its interest in the operations of the joint venture. On a pro forma basis, sales and other income statement amounts have been adjusted to reflect the Japanese operations on this basis, resulting in pro forma sales of $197 million for the three months ended March 31, 2000 and 1999 (see further pro forma information in Note 3 of Notes to Combined Condensed Financial Statements). GROSS MARGIN
THREE MONTHS ENDED MARCH 31, ------------------------ 2000 1999 --------- -------- Gross margin percentage................................... 47.6% 49.0% DECREASE IN 2000........................................ (1.4 pts.)
Excluding the impact of foreign currency exchange rate fluctuations, the gross margin percentage would have decreased .4 points for the three months ended March 31, 2000. The decrease in the gross margin percentage was due primarily to costs associated with the relocation of certain manufacturing operations during the year 2000 and pricing pressures within the industry, partially offset by increased sales of higher-margin cardiac surgery products. Reflecting the Japanese operations on the equity method, the pro forma gross margin percentage was 46.1% and 47.2% for the three months ended March 31, 2000 and 1999, respectively. SELLING, GENERAL AND ADMINISTRATIVE (S, G + A) EXPENSES
THREE MONTHS ENDED MARCH 31, ----------------------- 2000 1999 -------- -------- S, G + A expenses as a percentage of sales.................. 26.4% 26.2% INCREASE IN 2000.......................................... .2 pts.
Excluding the impact of foreign currency exchange rate fluctuations, S, G + A expenses as a percentage of sales would have been 26.7% and 26.2% for the three months ended March 31, 2000 and 1999, respectively. This increase is due primarily to additional personnel costs associated with the Company's operation as an independent company commencing April 1, 2000. Reflecting the Japanese operations on the equity method, the pro forma S, G + A expenses as a percentage of sales would have been 24.7% and 24.5% for the three months ended March 31, 2000 and 1999, respectively. 16 RESEARCH AND DEVELOPMENT EXPENSES
THREE MONTHS ENDED MARCH 31, ----------------------- 2000 1999 -------- -------- (DOLLARS IN MILLIONS) Research and development expenses.......................... $13.8 $12.6 % INCREASE IN 2000....................................... 10% Research and development expenses as a percentage of sales.................................................... 6.1% 5.7%
Edwards Lifesciences is engaged in ongoing research and development to introduce new products, to maximize the effectiveness, ease of use, safety and reliability of its existing products and to expand the applications of its products as appropriate. The increase in research and development expenses for the three months ended March 31, 2000 reflects Edwards Lifesciences' strong commitment to bolster its research and development activities in the future with the goal of developing and commercializing new innovative products and therapies that enhance performance and patient quality of life and address cost-containment issues. SPIN-OFF RELATED EXPENSES In connection with the spin-off of Edwards Lifesciences from Baxter, certain non-recurring costs totaling $1.4 million were incurred by Edwards Lifesciences during the three months ended March 31, 2000. These costs primarily related to (1) the coordination and implementation of the transaction and (2) the recruitment of personnel to perform new corporate administrative functions. Management expects to incur additional non-recurring spin-off related expenses throughout 2000, estimated to be approximately $14-16 million. As an independent stand-alone company, the Company may also be unable to obtain goods, services and technology at prices and on terms as favorable as those it obtained prior to the Distribution. OTHER (EXPENSE) INCOME The decrease in Other (Expense) Income results primarily from $2.7 million of net insurance proceeds associated with hurricane damage at one of the Company's manufacturing facilities during 1999. INCOME TAXES The effective income tax rate for Edwards Lifesciences was approximately 26% for the three months ended March 31, 2000 and 1999. The Company expects this rate will continue during the year 2000. LIQUIDITY AND CAPITAL RESOURCES Management will assess Edwards Lifesciences' liquidity in terms of its overall ability to mobilize cash to support ongoing business levels and to fund its growth. Historically, Edwards Lifesciences has generated sufficient cash to satisfy its normal operating cash and capital requirements, and is expected to continue to do so in the future. Cash flows provided by operating activities for three months ended March 31, 2000 decreased approximately $34 million due primarily to reduced accounts receivable collections, increased payments to vendors, and lower earnings. Included in cash flows provided by operating activities for 1999 was approximately $25 million related to insurance proceeds associated with hurricane damage at one of the Company's manufacturing facilities, and approximately $8 million in additional proceeds relating to 17 the sale of certain trade receivables in Japan to an independent financial institution. An insignificant loss was recognized on the sale of receivables. Uses of cash for investing activities included the purchase of convertible debentures (see further information in Note 8 of Notes to Combined Condensed Financial Statements) and an investment in an unconsolidated affiliate. Capital expenditures have remained relatively constant. As of the Distribution Date, Edwards Lifesciences had the Credit Facilities in place for $650 million and had borrowed $529 million against the Credit Facilities (see further information in Note 5 of Notes to Combined Condensed Financial Statements). The proceeds of the Credit Facilities were used to repay intercompany debt to Baxter, satisfy initial working capital requirements, and execute asset transfers from Baxter. The Company incurred approximately $3 million of fees during the three months ended March 31, 2000 associated with obtaining the Credit Facilities. In addition to the Credit Facilities, Management believes that it has sufficient cash flows from operations and financial flexibility to attract long-term capital to fund short-term and long-term growth objectives. However, no assurances can be given that such long-term capital will be available to Edwards Lifesciences on favorable terms, or at all. EURO CONVERSION On January 1, 1999, the European Economic and Monetary Union created and introduced the Euro, the official single Eurocurrency for the eleven participating member countries. A transition period is currently in effect which began January 1, 1999 and will continue through December 31, 2001, during which time transactions will be executed in both the Euro and the member countries' individual currencies. Effective January 1, 2002, Euro bank notes will be introduced and as of July 1, 2002, the Euro will be the sole legal tender of the European Economic and Monetary Union countries. Edwards Lifesciences has appointed a team of individuals to address all issues associated with the conversion to the Euro and expects to be prepared for such conversion as of the designated dates. At the time Edwards Lifesciences switches to using the Euro as the sole functional currency for the affected regions, certain modifications that are primarily related to information systems will be required. The costs associated with preparing for the conversion and continued use of the Euro will be expensed as incurred and are not expected to be material to Edwards Lifesciences' financial position, results of operations or cash flows. The ultimate impact on Edwards Lifesciences' business, including the impact on the competitive environment in which Edwards Lifesciences operates, is currently unknown. NEW ACCOUNTING AND DISCLOSURE STANDARD In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is effective for all quarters of fiscal years beginning after June 15, 2000. This Statement requires that all derivatives be recorded in the balance sheet as either assets or liabilities and be measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. Management is in the process of evaluating this standard and has not yet determined the future impact of this Statement on Edwards Lifesciences' combined financial position or results of operations. CURRENCY RISK Edwards Lifesciences operates on a global basis and therefore is subject to the exposure resulting from foreign currency exchange rate fluctuations. These exposures arise from transactions denominated in foreign currencies, primarily from translation of results of operations from outside the United States. 18 Additionally, such exposures may change over time as changes occur in Edwards Lifesciences' international operations. For all periods presented, Edwards Lifesciences has been considered in Baxter's overall risk management strategy. As part of this strategy, Baxter managed its foreign currency exchange rate risk to an acceptable level based on management's judgment of the appropriate trade-off between risk, opportunity and costs. With respect to Edwards Lifesciences' currency risks, Baxter primarily utilized options to hedge these exposures. As a stand-alone company, Edwards Lifesciences manages its exposure to foreign currency fluctuations to minimize earnings and cash flow volatility associated with foreign exchange rate changes. In order to reduce the risk of foreign currency exchange rate fluctuations, Edwards Lifesciences has established a policy of hedging a substantial portion of its expected foreign currency denominated cash flow from operations. The instruments that Edwards Lifesciences uses for hedging are readily marketable traded forward contracts and options with financial institutions. Edwards Lifesciences expects that the changes in fair value of such contracts will have a high correlation to the price changes in the related hedged cash flow. Edwards Lifesciences does not expect that the risk of transaction gains or losses from changes in the fair value of its foreign exchange position will be material because most transactions will occur in either the functional currency or in a currency that has a high correlation to the functional currency. The principal currencies that Edwards Lifesciences will hedge are the Japanese Yen and the Euro, which present the primary risk of loss. Any gains and losses on these hedge contracts are expected to offset changes in the value of the related exposures. Edwards Lifesciences will enter into foreign currency transactions only to the extent that foreign currency exposure exists; it will not enter into foreign currency transactions for speculative purposes. FORWARD-LOOKING STATEMENTS This Form 10-Q and other materials filed or to be filed by Edwards Lifesciences with the SEC (as well as information included in oral statements or other written statements made, or to be made, by Edwards Lifesciences) contain, or will contain, disclosures that are "forward-looking statements." Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as "may," "believe," "will," "expect," "project," "estimate," "anticipate," "plan," or "continue." These forward-looking statements address, among other things, strategic objectives and the anticipated effects of the Distribution. These forward-looking statements are based on the current plans and expectations of management and are subject to a number of uncertainties and risks that could significantly affect current plans and expectations and the future financial condition and results of Edwards Lifesciences. These factors include, but are not limited to: - the highly competitive nature of the health care industry; - the efforts of insurers, health care providers and others to contain health care costs; - possible changes in United States or foreign programs that may further limit reimbursements to health care providers and insurers; - changes in federal, state or local regulation affecting the health care industry; - the possible enactment of federal or state health care reform; - the departure of key executive officers from Edwards Lifesciences; - claims and legal actions relating to product liability; - fluctuations in the market value of Edwards Lifesciences common stock; - changes in accounting practices; 19 - changes in general economic conditions and foreign currency fluctuations; - product demand and risks associated with industry acceptance; - new product development and commercialization; and - other risk factors described above. As a consequence, current plans, anticipated actions and future financial conditions and results may materially differ from those expressed in any forward-looking statements made by or on behalf of Edwards Lifesciences. Shareholders are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this Form 10-Q. 20 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Upon the Distribution, Edwards Lifesciences assumed the defense of certain Baxter litigation involving cases and claims related to the Edwards Lifesciences Business. Edwards Lifesciences has not been named as a defendant in such matters but will be defending and indemnifying Baxter for all related expenses and potential liabilities. It is possible that Edwards Lifesciences may be added as a defendant in these cases and claims. The cases and claims relate primarily to products and services currently or formerly manufactured or performed, as applicable, by Edwards Lifesciences. Such cases and claims raise difficult and complex factual and legal issues and are subject to many uncertainties and complexities, including, but not limited to, the facts and circumstances of each particular case or claim, the jurisdiction in which each suit is brought, and differences in applicable law. Accordingly, in certain cases, Edwards Lifesciences is not able to estimate the amount of its liabilities with respect to such matters. Upon resolution of any pending legal matters, Edwards Lifesciences may incur charges in excess of presently established reserves. While such a charge could have a material adverse impact on Edwards Lifesciences' net income or net cash flows in the period in which it is recorded or paid, management believes that no such charge would have a material adverse effect on Edwards Lifesciences' combined financial position. Furthermore, Edwards Lifesciences operates in an industry susceptible to significant product liability claims. In recent years, there has been an increased public interest in product liability claims for implanted or other medical devices. These claims may be brought by individuals seeking relief for themselves or, increasingly, by groups seeking to represent a class. In addition, product liability claims may be asserted against Edwards Lifesciences in the future arising out of events not known to management at the present time. Management believes that Edwards Lifesciences' risk management practices, including insurance coverage, are adequate to protect against potential product and professional liability losses. Edwards Lifesciences is also subject to various environmental laws and regulations both within and outside of the United States. The operations of Edwards Lifesciences, like those of other medical device companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. While it is difficult to quantify the potential impact of compliance with environmental protection laws, management believes that such compliance will not have a material impact on Edwards Lifesciences' financial position, results of operations or liquidity. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index hereto. 21 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EDWARDS LIFESCIENCES CORPORATION (Registrant) Date: May 15, 2000 By: /s/ BRUCE J. BENTCOVER ------------------------------------------ Bruce J. Bentcover CORPORATE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
22 EXHIBITS FILED WITH SECURITIES AND EXCHANGE COMMISSION
NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 3.1* Amended and Restated Certificate of Incorporation of Edwards Lifesciences Corporation 3.2* Amended and Restated Bylaws of Edwards Lifesciences Corporation 3.3* Form of Certificate of Designation for Edwards Lifesciences Corporation Series A Junior Participating Preferred Stock (included as Exhibit A to Exhibit 10.9) 4.1* Specimen form of certificate representing Edwards Lifesciences Corporation common stock 10.1* Agreement and Plan of Reorganization, dated March 31, 2000 between Edwards Lifesciences Corporation and Baxter International Inc. 10.2* Tax Sharing Agreement, dated March 31, 2000 between Edwards Lifesciences Corporation and Baxter International Inc. 10.3* Edwards Lifesciences Corporation Long-Term Stock Incentive Compensation Program 10.4* Edwards Lifesciences Corporation Change in Control Severance Agreement 10.5* Employment Agreement For Michael A. Mussallem 10.6* Edwards Lifesciences Corporation Employee Stock Purchase Plan for United States Employees 10.7* Edwards Lifesciences Corporation Deferred Compensation Plan 10.8* Edwards Lifesciences Corporation Chief Executive Officer Change in Control Severance Agreement 10.9* Rights Agreement between Edwards Lifesciences Corporation and EquiServe Trust Company, N.A, as Rights Agent, dated as of March 31, 2000 10.10* Services and Distribution Agreement between Edwards Lifesciences LLC, as successor in interest to Baxter Healthcare Corporation, and Allegiance Healthcare Corporation, dated as of October 1, 1996. CONFIDENTIAL INFORMATION APPEARING IN THIS DOCUMENT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH SECTION 24(b) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED AND RULE 24b-2 PROMULGATED THEREUNDER. OMITTED INFORMATION HAS BEEN REPLACED WITH ASTERISKS. 10.11* Form of Employment Agreement 10.12* Form of Consulting Agreement 10.13* Form of Outgoing Confidentiality Agreement 10.14* Edwards Lifesciences Corporation Nonemployee Directors and Consultants Stock Incentive Program 10.15* Edwards Lifesciences Corporation Employee Stock Purchase Plan for International Employees 10.16* Tokumei Kumiai Agreement by and between Baxter Limited and Edwards Lifesciences Finance Limited, dated as of April 1, 2000 10.17* Option Agreement by and between Baxter Limited and Edwards Lifesciences Limited, dated as of April 1, 2000 10.18* Japan Distribution Agreement by and between Baxter Limited and Edwards Lifesciences LLC, dated as of April 1, 2000
23
NUMBER DESCRIPTION OF EXHIBIT - ------ ---------------------- 10.19 Five Year Credit Agreement dated as of March 30, 2000, among Edwards Lifesciences Corporation, a Delaware corporation; the Swiss Borrowers; the Japanese Borrowers; the Lenders from time to time party hereto, The Chase Manhattan Bank, as Administrative Agent; Chase Manhattan International Limited, as London Agent; The Fuji Bank, Limited, as the Tokyo Agent; Bank One, N.A., as Syndication Agent; and Credit Suisse First Boston, as Documentation Agent. 10.20 364-Day Credit Agreement dated as of March 30, 2000, among Edwards Lifesciences Corporation, a Delaware corporation (the "Company"); the Lenders from time to time party hereto; The Chase Manhattan Bank, as Administrative Agent; Bank One, N.A., as Syndication Agent; and Credit Suisse First Boston, as Documentation Agent. 10.21 Edwards Lifesciences Corporation Severance Pay Plan 21.1* Subsidiaries of Edwards Lifesciences Corporation 27.1* Financial Data Schedule--December 31, 1999 27.2* Financial Data Schedule--December 31, 1998 27.3* Financial Data Schedule--December 31, 1997 27.4 Financial Data Schedule--March 31, 2000
- ------------------------ * Incorporated by reference from Registrant's Registration Statement on Form 10, as amended, under the Securities Exchange Act of 1934. 24 EX-10.19 2 EXHIBIT 10.19 EXHIBIT 10.19 CONFORMED COPY ================================================================================ FIVE YEAR CREDIT AGREEMENT dated as of March 30, 2000 among EDWARDS LIFESCIENCES CORPORATION as Borrower The Lenders Party Hereto THE CHASE MANHATTAN BANK as Administrative Agent CHASE MANHATTAN INTERNATIONAL LIMITED as London Agent THE FUJI BANK, LIMITED as Tokyo Agent BANK ONE, N.A. as Syndication Agent and CREDIT SUISSE FIRST BOSTON as Documentation Agent --------------------------- CHASE SECURITIES INC. as Arranger ================================================================================
TABLE OF CONTENTS Page ARTICLE I DEFINITIONS SECTION 1.01. Defined Terms.............................................................................1 SECTION 1.02. Classification of Loans and Borrowings...................................................20 SECTION 1.03. Terms Generally..........................................................................20 SECTION 1.04. Accounting Terms; GAAP...................................................................20 SECTION 1.05. Exchange Rates...........................................................................21 SECTION 1.06. Redenomination of Certain Foreign Currencies.............................................21 ARTICLE II THE CREDITS SECTION 2.01. Commitments..............................................................................22 SECTION 2.02. Loans and Borrowings.....................................................................22 SECTION 2.03. Requests for Revolving Borrowings........................................................24 SECTION 2.04. Competitive Bid Procedure................................................................25 SECTION 2.05. Letters of Credit........................................................................27 SECTION 2.06. Funding of Borrowings....................................................................32 SECTION 2.07. Repayment of Borrowings; Evidence of Debt................................................32 SECTION 2.08. Interest Elections.......................................................................33 SECTION 2.09. Termination and Reduction of Commitments.................................................35 SECTION 2.10. Increase in Commitments .................................................................35 SECTION 2.11. Prepayment of Loans......................................................................37 SECTION 2.12. Fees.....................................................................................38 SECTION 2.13. Interest.................................................................................39 SECTION 2.14. Alternate Rate of Interest...............................................................41 SECTION 2.15. Increased Costs..........................................................................41 SECTION 2.16. Break Funding Payments...................................................................42 SECTION 2.17. Taxes....................................................................................43 SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Setoffs...............................44 SECTION 2.19. Mitigation Obligations; Replacement of Lenders...........................................46 SECTION 2.20. Designation of Swiss Borrowers and Japanese Borrowers....................................47 2 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01. Corporate Existence and Standing.........................................................47 SECTION 3.02. Authorization; No Violation..............................................................47 SECTION 3.03. Governmental Consents....................................................................48 SECTION 3.04. Validity.................................................................................48 SECTION 3.05. Litigation...............................................................................48 SECTION 3.06. Financial Statements; No Material Adverse Change.........................................48 SECTION 3.07. Investment Company Act...................................................................48 SECTION 3.08. Regulation U.............................................................................48 SECTION 3.09. Environmental Matters....................................................................49 SECTION 3.10. Disclosure...............................................................................49 SECTION 3.11. Year 2000 Compliance.....................................................................49 SECTION 3.12. Subsidiary Guarantors....................................................................49 SECTION 3.13. Solvency.................................................................................49 ARTICLE IV CONDITIONS SECTION 4.01. Effective Date...........................................................................50 SECTION 4.02. Each Credit Event........................................................................51 SECTION 4.03. Initial Credit Event for each Swiss Borrower and Japanese Borrower.......................51 ARTICLE V AFFIRMATIVE COVENANTS SECTION 5.01. Payment of Taxes, Etc. ..................................................................52 SECTION 5.02. Maintenance of Insurance.................................................................52 SECTION 5.03. Preservation of Existence, Etc. .........................................................52 SECTION 5.04. Compliance with Laws, Etc. ..............................................................52 SECTION 5.05. Keeping of Books.........................................................................52 SECTION 5.06. Inspection...............................................................................52 SECTION 5.07. Reporting Requirements...................................................................52 SECTION 5.08. Use of Proceeds and Letters of Credit....................................................54 SECTION 5.09. Guarantee Requirement....................................................................54 ARTICLE VI NEGATIVE COVENANTS SECTION 6.01. Subsidiary Debt..........................................................................54 SECTION 6.02. Liens, Etc. .............................................................................55 3 SECTION 6.03. Sale and Leaseback Transactions..........................................................58 SECTION 6.04. Merger, Etc. ............................................................................58 SECTION 6.05. Change in Business.......................................................................58 SECTION 6.06. Certain Restrictive Agreements...........................................................58 SECTION 6.07. Leverage Ratio...........................................................................58 SECTION 6.08. Interest Coverage Ratio..................................................................59 SECTION 6.09. Spin-Off.................................................................................59 ARTICLE VII Events of Default.......................................................................................59 ARTICLE VIII The Agents..............................................................................................62 ARTICLE IX Collection Allocation Mechanism.........................................................................64 ARTICLE X Guarantee...............................................................................................65 ARTICLE XI MISCELLANEOUS SECTION 11.01. Notices.................................................................................67 SECTION 11.02. Waivers; Amendments.....................................................................67 SECTION 11.03. Expenses; Indemnity; Damage Waiver......................................................69 SECTION 11.04. Successors and Assigns..................................................................70 SECTION 11.05. Survival................................................................................72 SECTION 11.06. Counterparts; Integration; Effectiveness................................................72 SECTION 11.07. Severability............................................................................73 SECTION 11.08. Right of Setoff.........................................................................73 SECTION 11.09. Governing Law; Jurisdiction; Consent to Service of Process..............................73 SECTION 11.10. Waiver of Jury Trial....................................................................74 SECTION 11.11. Headings................................................................................74 SECTION 11.12. Confidentiality.........................................................................74 SECTION 11.13. Conversion of Currencies................................................................75 SECTION 11.14. Termination of Covenants................................................................75 SCHEDULES: Schedule 1.01 -- Subsidiary Guarantors Schedule 2.01 -- Lenders and Commitments 4 Schedule 2.17 -- Payment Instructions Schedule 6.01 -- Debt of Material Subsidiaries Schedule 6.02 -- Security Interests EXHIBITS: Exhibit A-1 -- Form of Borrowing Subsidiary Agreement Exhibit A-2 -- Form of Borrowing Subsidiary Termination Exhibit B -- Form of Assignment and Acceptance Exhibit C -- Form of Subsidiary Guarantee Agreement Exhibit D -- Form of Indemnity, Subrogation and Contribution Agreement Exhibit E-1 -- Form of Opinion of Counsel for the Company Exhibit E-2 -- Form of Opinion of General Counsel of the Company Exhibit F -- Form of Baxter Letter
FIVE YEAR CREDIT AGREEMENT dated as of March 30, 2000, among EDWARDS LIFESCIENCES CORPORATION, a Delaware corporation (the "Company"); the SWISS BORROWERS (as defined herein); the JAPANESE BORROWERS (as defined herein) (the Company, the Swiss Borrowers and the Japanese Borrowers being collectively called the "Borrowers"); the LENDERS from time to time party hereto; THE CHASE MANHATTAN BANK, as Administrative Agent; CHASE MANHATTAN INTERNATIONAL LIMITED, as London Agent; THE FUJI BANK, LIMITED, as the Tokyo Agent; BANK ONE, N.A., as Syndication Agent; and CREDIT SUISSE FIRST BOSTON, as Documentation Agent. The Company has requested the Lenders (such term and each other capitalized term used and not otherwise defined herein having the meaning assigned to it in Article I) to extend credit in the form of (a) US Tranche Commitments under which the Company may obtain Loans in US Dollars and one or more Designated Foreign Currencies in an aggregate principal amount at any time outstanding that will not result in the sum of the US Tranche Revolving Exposures and the Competitive Loan Exposures exceeding $330,000,000, (b) Swiss Tranche Commitments under which the Swiss Borrowers may obtain Loans in Swiss Francs or Euros and the Company may obtain Loans in US Dollars in an aggregate principal amount at any time outstanding that will not result in the Swiss Tranche Exposure exceeding $50,000,000, (c) Japanese Tranche Commitments under which the Japanese Borrowers may obtain Loans in Yen and the Company may obtain Loans in US Dollars in an aggregate principal amount at any time outstanding that will not result in the Japanese Tranche Exposure exceeding $50,000,000 and (d) Letters of Credit in US Dollars in an aggregate stated amount at any time outstanding up to $25,000,000. The Company has also requested the Lenders to provide a procedure pursuant to which the Borrowers may invite the Lenders to bid on an uncommitted basis on short-term Loans to the Borrowers. The proceeds of borrowings hereunder and under the 364-Day Credit Agreement on the Initial Borrowing Date in an aggregate amount of up to $550,000,000 are to be used to pay Baxter for assets transferred to the Company in connection with the Spin-Off or to repay intercompany debt owed to Baxter and outstanding immediately prior to the Spin-Off; proceeds of the other borrowings hereunder, and the Letters of Credit issued hereunder, are to be used for general corporate purposes of the Borrowers and their subsidiaries. The Lenders are willing to establish the credit facilities referred to in the preceding paragraph upon the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms have the meanings specified below: 2 "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, in its capacity as administrative agent for the Lenders hereunder. "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "AFFILIATE" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "AGENTS" means, collectively, the Administrative Agent, the London Agent and the Tokyo Agent. "AGREEMENT CURRENCY" has the meaning assigned to such term in Section 11.13(b). "ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "APPLICABLE AGENT" means (a) with respect to a Loan, Borrowing or Letter of Credit denominated in US Dollars, and with respect to any payment hereunder that does not relate to a particular Loan or Borrowing, the Administrative Agent, (b) with respect to a Eurocurrency or Fixed Rate Loan or Eurocurrency or Fixed Rate Borrowing denominated in any Designated Foreign Currency, the London Agent and (c) with respect to a TIBOR or Yen Base Rate Revolving Loan or Borrowing, the Tokyo Agent. "APPLICABLE RATE" means, for any day, with respect to (i) any Loan of any Type or (ii) the facility fees payable hereunder, as the case may be, the applicable rate per annum set forth under the appropriate caption in the table below, based upon the Leverage Ratio as of the most recent determination date:
=================== ========================== ================== ===================== ================== LIBOR/TIBOR/ FACILITY YEN BASE RATE ABR SPREAD LEVERAGE FEE (BASIS SPREAD (BASIS (BASIS POINTS CATEGORY RATIO POINTS PER ANNUM) POINTS PER ANNUM) PER ANNUM) =================== ========================== ================== ===================== ================== Category 1 < 2.25 15.0 60.0 0 - =================== ========================== ================== ===================== ================== Category 2 > 2.25 and < 2.75 17.5 82.5 0 - =================== ========================== ================== ===================== ================== Category 3 > 2.75 and < 3.25 20.0 105.0 25.0 - =================== ========================== ================== ===================== ================== 3 Category 4 > 3.25 22.5 127.5 50.0 =================== ========================== ================== ===================== ==================
Except as set forth below, the Leverage Ratio used on any date to determine the Applicable Rate shall be that in effect at the end of the most recent fiscal quarter for which financial statements shall have been delivered pursuant to Section 5.07(a) or (b); PROVIDED that if any financial statements required to have been delivered under Section 5.07(a) or (b) shall not at any time have been delivered, the Applicable Rate shall, until such financial statements shall have been delivered, be determined by reference to Category 4 in the Table above. "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 11.04), and accepted by the Administrative Agent, in the form of Exhibit B or any other form approved by the Administrative Agent. "ATTRIBUTABLE DEBT" means, in connection with any Sale and Leaseback Transaction, the present value (discounted in accordance with GAAP at the discount rate implied in the lease) of the obligations of the lessee for rental payments during the term of the lease. "BAXTER" means Baxter International Inc., a Delaware corporation and, prior to the Spin-Off, the owner of all the issued and outstanding capital stock of the Company. "BOARD" means the Board of Governors of the Federal Reserve System of the United States of America. "BORROWER" means the Company, any Swiss Borrower or any Japanese Borrower. "BORROWING" means Loans (including one or more Competitive Loans) of the same Class, Type and currency, made, converted or continued on the same date and, in the case of Eurocurrency Loans, TIBOR Loans or Fixed Rate Loans, as to which a single Interest Period is in effect. "BORROWING MINIMUM" means (a) in the case of a Borrowing denominated in US Dollars, $5,000,000 and (b) in the case of a Borrowing denominated in any Designated Foreign Currency, the smallest amount of such Foreign Currency that (i) is an integral multiple of 1,000,000 units (or, in the case of Sterling, 500,000 units) of such currency and (ii) has a US Dollar Equivalent in excess of $5,000,000. "BORROWING MULTIPLE" means (a) in the case of a Borrowing denominated in US Dollars, $1,000,000 and (b) in the case of a Borrowing denominated in any Foreign Currency, 1,000,000 units (or, in the case of Sterling, 500,000 units) of such currency. "BORROWING REQUEST" means a request by a Borrower for a Revolving Borrowing in accordance with Section 2.03. 4 "BORROWING SUBSIDIARY AGREEMENT" means a Borrowing Subsidiary Agreement substantially in the form of Exhibit A-1. "BORROWING SUBSIDIARY TERMINATION" means a Borrowing Subsidiary Termination substantially in the form of Exhibit A-2. "BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; PROVIDED, that (a) when used in connection with a Eurocurrency Loan or in connection with a Fixed Rate Loan denominated in a Designated Foreign Currency, the term "BUSINESS DAY" shall also exclude any day on which banks are not open for dealings in deposits in the applicable currency in the London interbank market, (b) when used in connection with a TIBOR Loan, a Yen Base Rate Loan or a Eurocurrency or Fixed Rate Loan denominated in a Designated Foreign Currency, the term "BUSINESS DAY" shall also exclude any day on which banks are not open for dealings in deposits in the applicable Designated Foreign Currency in the principal financial center of the country of such Designated Foreign Currency, and (c) when used in connection with a Loan denominated in Euro, the term "BUSINESS DAY" shall also exclude any day on which the TARGET payment system is not open for the settlement of payments in Euro. "CALCULATION DATE" means the last Business Day of each calendar month. "CAM" shall mean the mechanism for the allocation and exchange of interests in the Tranches and collections thereunder established under Article IX. "CAM EXCHANGE" shall mean the exchange of the Lender's interests provided for in Article IX. "CAM EXCHANGE DATE" shall mean the date on which any event referred to in paragraph (g) of Article VII shall occur in respect of the Company. "CAM PERCENTAGE" shall mean, as to each Lender, a fraction, expressed as a decimal, of which (a) the numerator shall be the aggregate US Dollar Equivalent (determined on the basis of Exchange Rates prevailing on the CAM Exchange Date) of the Specified Obligations owed to such Lender and such Lender's participation in undrawn amounts of Letters of Credit immediately prior to the CAM Exchange Date and (b) the denominator shall be the aggregate US Dollar Equivalent (as so determined) of the Specified Obligations owed to all the Lenders and the aggregate undrawn amount of outstanding Letters of Credit immediately prior to such CAM Exchange Date. "CHANGE IN CONTROL" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) of shares representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Company; or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Company by 5 Persons who were not (i) directors of the Company on the date hereof, (ii) nominated by the board of directors of the Company or (iii) appointed by directors so nominated. "CHANGE IN LAW" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank or by any lending office of such Lender or by such Lender's or Issuing Bank's holding company with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "CHASE" means The Chase Manhattan Bank and its successors. "CLASS", when used in reference to (a) any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are US Tranche Revolving Loans, Competitive Loans, Swiss Tranche Revolving Loans or Japanese Tranche Revolving Loans, and (b) any Commitment, refers to whether such Commitment is a US Tranche Commitment, a Swiss Tranche Commitment or a Japanese Tranche Commitment. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. "COMMITMENT" means a US Tranche Commitment, a Swiss Tranche Commitment or a Japanese Tranche Commitment. "COMPANY" has the meaning assigned to such term in the heading of this Agreement. "COMPETITIVE BID" means an offer by a Lender to make a Competitive Loan in accordance with Section 2.04. "COMPETITIVE BID RATE" means, with respect to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid. "COMPETITIVE BID REQUEST" means a request for Competitive Bids in accordance with Section 2.04. "COMPETITIVE BORROWING" means a Borrowing comprised of Competitive Loans. "COMPETITIVE LOAN" means a Loan made pursuant to Section 2.04. Each Competitive Loan shall be a Eurocurrency Loan or a Fixed Rate Loan. "COMPETITIVE LOAN EXPOSURE" means, with respect to any Lender at any time, the sum of (a) the aggregate principal amount of the outstanding Competitive Loans of such Lender denominated in US Dollars and (b) the sum of the US Dollar Equivalents of the aggregate 6 principal amounts of the outstanding Competitive Loans of such Lender denominated in Designated Foreign Currencies. "CONFIDENTIAL INFORMATION MEMORANDUM" means the Confidential Information Memorandum dated February 2000 distributed to the Lenders, together with the appendices thereto, as amended through the date hereof. "CONSOLIDATED EBITDA" means, for any period, the consolidated net income of the Company and its consolidated Subsidiaries for such period PLUS, to the extent deducted in computing such consolidated net income for such period, the sum (without duplication) of (a) income tax expense, (b) Consolidated Interest Expense and (c) depreciation and amortization expense, MINUS, to the extent added in computing such consolidated net income for such period, (a) consolidated interest income and (b) extraordinary gains. Anything contained in this definition or elsewhere in this Agreement to the contrary notwithstanding, in calculating Consolidated EBITDA for any four fiscal-quarter period during which the Spin-Off shall have occurred, the Specified Charges shall be excluded. "CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest expense of the Company and the consolidated Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including (a) the amortization of debt discounts to the extent included in interest expense in accordance with GAAP, (b) the amortization of all fees (including fees with respect to interest rate protection agreements or other interest rate hedging arrangements) payable in connection with the incurrence of Debt to the extent included in interest expense in accordance with GAAP and (c) the portion of any rents payable under capital leases allocable to interest expense in accordance with GAAP. "CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets that would be included on a consolidated balance sheet of the Company and the consolidated Subsidiaries (and which shall reflect the deduction of applicable reserves) after deducting therefrom all current liabilities of the Company and the consolidated Subsidiaries and all Intangible Assets. "CONSOLIDATED TOTAL ASSETS" means the total amount of assets that would be included on a consolidated balance sheet of the Company and the consolidated Subsidiaries. "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto. "DEBT" means, without duplication, (a) indebtedness for borrowed money or for the deferred purchase price of property or services carried as indebtedness on the consolidated balance sheet of the Company and the consolidated Subsidiaries (b) obligations of the Company and the consolidated Subsidiaries as lessee under leases that, in accordance with GAAP, are recorded as capital leases, (c) obligations of the Company and the consolidated Subsidiaries under direct or indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, 7 indebtedness or obligations of others of the kinds referred to in clauses (a) and (b) above (including actual or contingent liabilities in respect of letters of credit issued to support such indebtedness or other obligations), (d) indebtedness or obligations of the kinds referred to in clauses (a), (b) and (c) above of the unconsolidated Subsidiaries and (e) solely for purposes of Article VII hereof, obligations under interest rate, foreign exchange rate or other hedging agreements. The term "Debt" shall not include the undrawn face amount of any letter of credit issued for the account of the Company or any Subsidiary in the ordinary course of the Company's or such Subsidiary's business (other than any letter of credit referred to in clause (c) above), but shall include the reimbursement obligation owing from time to time by the Company or any of the consolidated Subsidiaries in respect of drawings made under any letter of credit in the event reimbursement is not made immediately following the applicable drawing. For purposes of Article VII, the "principal amount" of the obligations of the Company or any Subsidiary in respect of any hedging agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Company or such Subsidiary would be required to pay if such hedging agreement were terminated at such time. "DEFAULT" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "DESIGNATED FOREIGN CURRENCY" means Euros, Sterling, Swiss Francs, Yen and any other currency (other than US Dollars) approved in writing by the US Tranche Lenders that shall be freely traded and exchangeable into US Dollars in the London interbank market, and for which a LIBO Rate may be determined, at the time of such approval. "DESIGNATED AMOUNT" means, at any time, the sum of (a) the aggregate outstanding principal amount at such time of Debt of Material Subsidiaries (other than Subsidiary Guarantors) that is permitted under clause (d) of Section 6.01, (b) the aggregate outstanding investment or claim held at such time by purchasers, assignees or other transferees of (or of interests in) Receivables sold under clause (iv) of Section 6.02(l), (c) the aggregate outstanding principal amount at such time of Secured Debt permitted under the last paragraph of Section 6.02 and (d) the aggregate amount at such time of the Attributable Debt in respect of Sale and Leaseback Transactions permitted under Section 6.03. "EFFECTIVE DATE" means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 11.02). "EMU LEGISLATION" means the legislative measures of the European Union for the introduction of, changeover to or operation of the Euro in one or more member states. "ENVIRONMENTAL LAWS" means all federal, state, local and foreign laws, rules and regulations relating to the release, emission, disposal, storage and related handling of waste materials, pollutants and hazardous substances. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 8 "EURO" or "E" means the single currency of the European Union as constituted by the Treaty on European Union and as referred to in the EMU Legislation. "EUROCURRENCY", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the LIBO Rate. "EVENT OF DEFAULT" has the meaning assigned to such term in Article VII. "EXCHANGE RATE" means on any day, with respect to any Designated Foreign Currency, the rate at which such Designated Foreign Currency may be exchanged into US Dollars, as set forth at approximately 11:00 a.m., London time, on such day on the Reuters World Currency Page for such Designated Foreign Currency. In the event that such rate does not appear on any Reuters World Currency Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed upon by the Administrative Agent and the Company, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such Designated Foreign Currency are then being conducted, at or about 10:00 a.m., local time, on such date for the purchase of US Dollars for delivery two Business Days later; PROVIDED that if at the time of any such determination, for any reason, no such spot rate is being quoted, the Administrative Agent, after consultation with the Company, may use any reasonable method it deems appropriate to determine such rate, and such determination shall be presumed correct absent manifest error. "EXCLUDED TAXES" means, with respect to any Lender or the Issuing Bank, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America (or any political subdivision thereof), or by the jurisdiction under which such recipient is organized or in which its principal office or any lending office from which it makes Loans hereunder is located, (b) any branch profit taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above, (c) in the case of a US Tranche Lender (other than a Lender that becomes a US Tranche Lender by operation of the CAM), any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction to the extent such tax is in effect and would apply as of the date such US Tranche Lender becomes a party to this Agreement or relates to payments received by a new lending office designated by such US Tranche Lender and is in effect and would apply at the time such lending office is designated, (d) in the case of a Swiss Tranche Lender (other than a Lender that becomes a Swiss Tranche Lender by operation of the CAM), any withholding tax that is imposed (i) by Switzerland (or any political subdivision thereof) on payments by a Swiss Borrower from an office within such jurisdiction or (ii) by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction, in either case to the extent such tax is in effect and would apply as of the date such Swiss Tranche Lender becomes a party to this Agreement or relates to payments received by a new lending office designated by such Swiss Tranche Lender and is in effect and would apply at the time such 9 lending office is designated, (e) in the case of a Japanese Tranche Lender (other than a Lender that becomes a Japanese Tranche Lender by operation of the CAM), any withholding tax that is imposed (i) by Japan (or any political subdivision thereof) on payments by a Japanese Borrower from an office within such jurisdiction or (ii) by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction, in either case to the extent such tax is in effect and would apply as of the date such Japanese Tranche Lender becomes a party to this Agreement or relates to payments received by a new lending office designated by such Japanese Tranche Lender and is in effect and would apply at the time such lending office is designated or (f) any withholding tax that is attributable to such Lender's failure to comply with Section 2.17(e), except, in the case of clause (c), (d) or (e) above, to the extent that (i) such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the applicable Borrower with respect to such withholding tax pursuant to Section 2.17(a) or (ii) such withholding tax shall have resulted from the making of any payment to a location other than the office designated by the Applicable Agent or such Lender for the receipt of payments of the applicable type from the applicable Borrower. "EXPOSURE" means, with respect to any Lender, such Lender's US Tranche Revolving Exposure, Competitive Loan Exposure, Swiss Tranche Exposure and Japanese Tranche Exposure. "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. "FIXED RATE" means, with respect to any Competitive Loan (other than a Eurocurrency Competitive Loan), the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid. "FIXED RATE REVOLVING LOAN" means a Competitive Loan bearing interest at a Fixed Rate. "FOREIGN SUBSIDIARY" means any Subsidiary that is not incorporated under the laws of the United States or its territories or possessions. "FORM 10" means the Amended Form 10 filed by the Company with the Securities and Exchange Commission on March 15, 2000. "GAAP" means generally accepted accounting principles in the United States of America. 10 "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government. "GUARANTEE REQUIREMENT" means, at any time, that (a) the Subsidiary Guarantee Agreement (or a supplement referred to in Section 15 thereof) shall have been executed by each Material Subsidiary (other than any Foreign Subsidiary) existing at such time, shall have been delivered to the Administrative Agent and shall be in full force and effect and (b) the Indemnity, Subrogation and Contribution Agreement (or a supplement referred to in Section 12 thereof) shall have been executed by the Company and each Subsidiary Guarantor, shall have been delivered to the Administrative Agent and shall be in full force and effect. "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes. "INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" means an Indemnity, Subrogation and Contribution Agreement substantially in the form of Exhibit D, made by the Company and the Subsidiary Guarantors in favor of the Administrative Agent for the benefit of the Lenders. "INITIAL BORROWING DATE" means the date of the initial Borrowing hereunder. "INTANGIBLE ASSETS" means all assets of the Company and the consolidated Subsidiaries that would be treated as intangibles in conformity with GAAP on a consolidated balance sheet of the Company and the consolidated Subsidiaries. "INTEREST COVERAGE RATIO" means, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period. "INTEREST ELECTION REQUEST" means a request by the relevant Borrower to convert or continue a Revolving Borrowing in accordance with Section 2.08. "INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the last day of each March, June, September and December, (b) with respect to any Eurocurrency Loan, TIBOR Loan or Yen Base Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing or TIBOR Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days' duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days' duration after the first day of such Interest Period, and any other dates specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing. 11 "INTEREST PERIOD" means, (i) with respect to any Eurocurrency Borrowing, Yen Base Rate Borrowing or TIBOR Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the relevant Borrower may elect and (ii) with respect to any Fixed Rate Borrowing, the period (which shall not be less than 7 days or more than 360 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; PROVIDED that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Borrowing or TIBOR Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing or TIBOR Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made, and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "ISSUING BANK" means the Chase Manhattan Bank, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. "JAPANESE BORROWER" means any Japanese Subsidiary that has been designated as such pursuant to Section 2.20 and that has not ceased to be a Japanese Borrower as provided in such Section. "JAPANESE SUBSIDIARY" means any Subsidiary that is incorporated or otherwise organized in Japan. "JAPANESE TRANCHE COMMITMENT" means, with respect to each Japanese Tranche Lender, the commitment of such Japanese Tranche Lender to make Japanese Tranche Revolving Loans pursuant to Section 2.01(c), expressed as an amount representing the maximum aggregate amount of such Japanese Tranche Lender's Japanese Tranche Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.04. The initial amount of each Japanese Tranche Lender's Japanese Tranche Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which Japanese Tranche Lender shall have assumed its Japanese Tranche Commitment, as applicable. The aggregate amount of the Japanese Tranche Commitments on the date hereof is $50,000,000. "JAPANESE TRANCHE EXPOSURE" means, with respect to any Japanese Tranche Lender at any time, such Lender's Japanese Tranche Percentage of the sum of the US Dollar Equivalents of the principal amounts of the outstanding Japanese Tranche Revolving Loans. 12 "JAPANESE TRANCHE LENDER" mean a Lender with a Japanese Tranche Commitment. "JAPANESE TRANCHE PERCENTAGE" means, with respect to any Japanese Tranche Lender, the percentage of the total Japanese Tranche Commitments represented by such Lender's Japanese Tranche Commitment. If the Japanese Tranche Commitments have terminated or expired, the Japanese Tranche Percentages shall be determined based upon the Japanese Tranche Commitments most recently in effect, giving effect to any assignments. "JAPANESE TRANCHE REVOLVING BORROWING" means a Borrowing comprised of Japanese Tranche Revolving Loans. "JAPANESE TRANCHE REVOLVING LOAN" means a Loan made by a Japanese Tranche Lender pursuant to Section 2.01(c). Each Japanese Tranche Revolving Loan made to the Company shall be denominated in US Dollars and shall be a Eurocurrency Loan or an ABR Loan, and each Japanese Tranche Revolving Loan made to a Japanese Borrower shall be denominated in Yen and shall be a TIBOR Loan or a Yen Base Rate Loan. "JUDGMENT CURRENCY" has the meaning assigned to such term in Section 11.13(b). "LC DISBURSEMENT" means a payment made by the Issuing Bank in respect of a Letter of Credit. "LC EXPOSURE" means at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time and (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Company or the applicable Subsidiary at such time. The LC Exposure of any US Tranche Lender at any time shall be such Lender's US Tranche Percentage of the aggregate LC Exposure. "LENDERS" means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance or as provided in Section 2.10, other than any such Person that shall have ceased to be a party hereto pursuant to an Assignment and Acceptance. "LETTER OF CREDIT" means any letter of credit issued pursuant to this Agreement on behalf of Lenders holding US Tranche Commitments. "LEVERAGE RATIO" means, at any time, the ratio of (a) Total Debt at such time to (b) Consolidated EBITDA for the most recent period of four consecutive fiscal quarters of the Company ended at or prior to such time. "LIBO RATE" means, with respect to any Eurocurrency Borrowing for any Interest Period, the rate per annum determined by the Applicable Agent at approximately 11:00 a.m., London time, on the Quotation Day for such Interest Period by reference to the British Bankers' Association Interest Settlement Rates for deposits in the currency of such 13 Borrowing (as reflected on the applicable Telerate screen), for a period equal to such Interest Period; PROVIDED that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, "LIBO Rate" shall mean the interest rate per annum determined by the Applicable Agent to be the average of the rates per annum at which deposits in the currency of such Borrowing are offered for such Interest Period to major banks in the London interbank market by Chase at approximately 11:00 a.m., London time, on the Quotation Day for such Interest Period. "LOAN DOCUMENTS" means this Agreement, each Borrowing Subsidiary Agreement, each Borrowing Subsidiary Termination, the Subsidiary Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and each Letter of Credit and promissory note delivered pursuant to this Agreement. "LOAN PARTIES" means the Borrowers and the Subsidiary Guarantors. "LOANS" means the loans made by the Lenders to the Borrowers pursuant to this Agreement. "LOCAL TIME" means (a) with respect to a Loan, Borrowing or Letter of Credit denominated in US Dollars, New York City time, (b) with respect to a Eurocurrency or Fixed Rate Loan or Eurocurrency or Fixed Rate Borrowing denominated in any Designated Foreign Currency, London time and (c) with respect to a TIBOR or Yen Base Rate Revolving Loan or Borrowing, Tokyo time. "LONDON AGENT" means Chase Manhattan International Limited. "MARGIN" means, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be added to or subtracted from the LIBO Rate to determine the rate of interest applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid. "MATERIAL SUBSIDIARY" means (a) any Swiss Borrower or Japanese Borrower, (b) any Subsidiary that directly or indirectly owns or Controls any Material Subsidiary and (c) any other Subsidiary (i) the net revenues of which for the most recent period of four fiscal quarters of the Company for which audited financial statements have been delivered pursuant to Section 5.01 were greater than 5% of the Company's consolidated net revenues for such period or (ii) the net tangible assets of which as of the end of such period were greater than 5% of Consolidated Net Tangible Assets as of such date; PROVIDED that if at any time the aggregate amount of the net revenues or net tangible assets of all Subsidiaries that are not Material Subsidiaries for or at the end of any period of four fiscal quarters exceeds 5% of the Company's consolidated net revenues for such period or 5% of Consolidated Net Tangible Assets as of the end of such period, the Company (or, in the event the Company has failed to do so within 10 days, the Administrative Agent) shall designate sufficient Subsidiaries as "Material Subsidiaries" to eliminate such excess, and such designated Subsidiaries shall for all purposes of this Agreement constitute Material Subsidiaries. For purposes of making the determinations required by this definition, revenues and assets of Foreign Subsidiaries shall be converted into US Dollars at the rates used in 14 preparing the consolidated balance sheet of the Company included in the applicable financial statements. "MATURITY DATE" means March 30, 2005. "OBLIGATIONS" means (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans made to any Borrower, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of reimbursement of disbursements, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties under this Agreement and the other Loan Documents, and (b) unless otherwise agreed upon in writing by the applicable Lender party thereto, the due and punctual payment and performance of all obligations of the Company or any Subsidiary, monetary or otherwise, under each interest rate hedging Agreement relating to Obligations referred to in the preceding clause (a) entered into with any counterparty that was a Lender (or an Affiliate thereof) at the time such hedging agreement was entered into. "OTHER TAXES" means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "PRIME RATE" means the rate of interest per annum publicly announced from time to time by The Chase Manhattan Bank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "QUOTATION DAY" means, with respect to any Eurocurrency Borrowing and any Interest Period, the day on which it is market practice in the relevant interbank market for prime banks to give quotations for deposits in the currency of such Borrowing for delivery on the first day of such Interest Period. If such quotations would normally be given by prime banks on more than one day, the Quotation Day will be the last of such days. "REGISTER" has the meaning set forth in Section 11.04. 15 "RELATED FUND" means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "RELATED PARTIES" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, trustees, agents and advisors of such Person and such Person's Affiliates. "REQUIRED LENDERS" means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time; PROVIDED that, for purposes of declaring the Loans to be due and payable pursuant to Article VII, and for all purposes after the Loans become due and payable pursuant to Article VII or the Commitments expire or terminate, the outstanding Competitive Loans of the Lenders shall be included in their respective Revolving Credit Exposures in determining the Required Lenders. "RESET DATE" has the meaning set forth in Section 1.05(a). "REVOLVING AVAILABILITY PERIOD" means the period from and including the Effective Date to but excluding the earlier of the Maturity Date and the date of termination of the Commitments. "REVOLVING BORROWING" means a Borrowing comprised of US Tranche Revolving Loans, Swiss Tranche Revolving Loans or Japanese Tranche Revolving Loans. "REVOLVING CREDIT EXPOSURE" means a US Tranche Revolving Exposure, a Swiss Tranche Exposure or a Japanese Tranche Exposure. "REVOLVING LOAN" means any US Tranche Revolving Loan, Swiss Tranche Revolving Loan or Japanese Tranche Revolving Loan. "SALE AND LEASEBACK TRANSACTION" means any arrangement whereby the Company or a Material Subsidiary, directly or indirectly, shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred. "SECURED DEBT" means Debt or any other obligation or liability of the Company or any Material Subsidiary the payment of which is secured by a Security Interest. "SECURITY INTEREST" means any lien, security interest, mortgage or other charge or encumbrance of any kind, title retention device, pledge or any other type of preferential arrangement, upon or with respect to any property of the Company or any Material Subsidiary, whether now owned or hereafter acquired. 16 "SPECIFIED CHARGES" means costs related to the Spin-Off and related restructuring charges accrued during the fiscal quarter in which the Spin-Off occurs or during the next seven succeeding fiscal quarters not to exceed $100,000,000 (and the cash amount of which does not exceed $50,000,000). "SPECIFIED OBLIGATIONS" means Obligations consisting of the principal of and interest on Loans, reimbursement obligations in respect of LC Disbursements, and fees. "SPIN-OFF" means the distribution by Baxter, on or about April 1, 2000, of all the issued and outstanding capital stock of the Company to the existing shareholders of Baxter on the terms and with the results described in the Form 10. "STATUTORY RESERVE RATE" means, with respect to any currency, a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve, liquid asset or similar percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority of the United States or of the jurisdiction of such currency or any jurisdiction in which Loans in such currency are made to which banks in such jurisdiction are subject for any category of deposits or liabilities customarily used to fund loans in such currency or by reference to which interest rates applicable to Loans in such currency are determined. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans and TIBOR Loans shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under any applicable law, rule or regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "STERLING" or "L" means the lawful money of the United Kingdom. "SUBSIDIARY" means, with respect to any Person, any entity with respect to which such Person alone owns, such Person or one or more of its subsidiaries together own, or such Person and any Person Controlling such Person together own, in each case directly or indirectly, capital stock or other equity interests having ordinary voting power to elect a majority of the members of the Board of Directors of such corporation or other entity or having a majority interest in the capital or profits of such corporation or other entity. "SUBSIDIARY" means any subsidiary of the Company. "SUBSIDIARY GUARANTEE AGREEMENT" means a Subsidiary Guarantee Agreement substantially in the form of Exhibit C, made by the Subsidiary Guarantors in favor of the Administrative Agent for the benefit of the Lenders. "SUBSIDIARY GUARANTORS" means each Person listed on Schedule 1.01 and each other Person that becomes party to a Subsidiary Guarantee Agreement as a Subsidiary Guarantor, and the permitted successors and assigns of each such Person. 17 "SWISS BORROWER" means any Swiss Subsidiary that has been designated as such pursuant to Section 2.20 and that has not ceased to be a Swiss Borrower as provided in such Section. "SWISS SUBSIDIARY" means any Subsidiary that is incorporated or otherwise organized in Switzerland. "SWISS FRANCS" or "SF" means the lawful money of Switzerland. "SWISS TRANCHE COMMITMENT" means, with respect to each Swiss Tranche Lender, the commitment of such Swiss Tranche Lender to make Swiss Tranche Revolving Loans pursuant to Section 2.01(b), expressed as an amount representing the maximum aggregate amount of such Swiss Tranche Lender's Swiss Tranche Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.04. The initial amount of each Swiss Tranche Lender's Swiss Tranche Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Swiss Tranche Lender shall have assumed its Swiss Tranche Commitment, as applicable. The aggregate amount of the Swiss Tranche Commitments on the date hereof is $50,000,000. "SWISS TRANCHE EXPOSURE" means, with respect to any Swiss Tranche Lender at any time, such Lender's Swiss Tranche Percentage of the sum of the US Dollar Equivalents of the principal amounts of the outstanding Swiss Tranche Revolving Loans. "SWISS TRANCHE LENDER" mean a Lender with a Swiss Tranche Commitment. "SWISS TRANCHE PERCENTAGE" means, with respect to any Swiss Tranche Lender, the percentage of the total Swiss Tranche Commitments represented by such Lender's Swiss Tranche Commitment. If the Swiss Tranche Commitments have terminated or expired, the Swiss Tranche Percentages shall be determined based upon the Swiss Tranche Commitments most recently in effect, giving effect to any assignments. "SWISS TRANCHE REVOLVING BORROWING" means a Borrowing comprised of Swiss Tranche Revolving Loans. "SWISS TRANCHE REVOLVING LOAN" means a Loan made by a Swiss Tranche Lender pursuant to Section 2.01(b). Each Swiss Tranche Revolving Loan made to the Company shall be denominated in US Dollars and shall be a Eurocurrency Loan or an ABR Loan, and each Swiss Tranche Revolving Loan made to a Swiss Borrower shall be denominated in Swiss Francs and shall be a Eurocurrency Loan. "TAXES" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. "364-DAY CREDIT AGREEMENT" means the 364-Day Credit Agreement dated as of the date hereof among the Company, the Lenders from time to time party thereto, the 18 Administrative Agent and the Syndication Agent and Documentation Agent named in the heading of this Agreement. "TIBO RATE" means, with respect to any TIBOR Borrowing for any Interest Period, the interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) for deposits for a maturity most nearly comparable to such Interest Period in Yen appearing on Telerate Screen page 17097 (or on any successor or substitute page of such service providing rate quotations comparable to those currently provided on such page of such service, as determined by the Tokyo Agent from time to time for purposes of providing quotations of interest rates in the Tokyo interbank market) at approximately 11:00 a.m., Tokyo time, two Business Days prior to the commencement of such Interest Period. In the event that such rate is not available at such time for any reason, then the "TIBO RATE" with respect to such TIBOR Borrowing for such Interest Period shall be the rate at which deposits for a maturity most nearly comparable to such Interest Period in Yen are offered by the principal Tokyo office of the Tokyo Agent in immediately available funds in the Tokyo interbank market at approximately 11:00 a.m., Tokyo time, two Business Days prior to the commencement of such Interest Period. "TIBOR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the TIBO Rate. "TOKYO AGENT" means The Fuji Bank, Limited. "TOTAL DEBT" means, at any date, all Debt of the Company and its consolidated Subsidiaries at such date to the extent such Debt should be reflected on a consolidated balance sheet of the Company at such date in accordance with GAAP. "TRANCHE" means a category of Commitments and extensions of credit thereunder. For purposes hereof, each of the following comprise a separate Tranche: (i) the US Tranche Commitments, the US Tranche Revolving Loans and the Competitive Loans, (ii) the Swiss Tranche Commitments and the Swiss Tranche Revolving Loans and (iii) the Japanese Tranche Commitments and the Japanese Tranche Revolving Loans. "TRANSACTIONS" means the execution, delivery and performance by the Loan Parties of the Loan Documents, the borrowing of Loans and the use of the proceeds thereof and the issuance of Letters of Credit hereunder. "TRANSFER ASSETS" means (a) when referring to the Company, the conveyance, transfer, lease or other disposition (whether in one transaction or in a series of transactions) of all or substantially all of the assets of the Company or of the Company and its Subsidiaries taken as a whole, and (b) when referring to a Subsidiary, the conveyance, transfer, lease or other disposition (whether in one transaction or in a series of transactions) of all or substantially all of the assets of such Subsidiary. "TYPE", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by 19 reference to the LIBO Rate, the TIBO Rate, the Alternate Base Rate, the Yen Base Rate or a Fixed Rate. "UNFUNDED LIABILITIES" means, in the case of a single employer pension benefit plan which is covered by Title IV of ERISA, the amount, if any, by which the present value of all vested benefits accrued to the date of determination under such plan exceeds the fair market value of all assets of such plan allocable to such benefits as of such date, and, in the case of a multiemployer pension plan, the withdrawal liability of the Company and the Subsidiaries. "US CORPORATION" means a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia. "US DOLLAR EQUIVALENT" means, on any date of determination, (a) with respect to any amount in US Dollars, such amount, and (b) with respect to any amount in any Designated Foreign Currency, the equivalent in US Dollars of such amount, determined by the Administrative Agent pursuant to Section 1.05 using the Exchange Rate with respect to such Designated Foreign Currency at the time in effect under the provisions of such Section. "US DOLLARS" or "$" means the lawful money of the United States of America. "US TRANCHE COMMITMENT" means, with respect to each US Tranche Lender, the commitment of such US Tranche Lender to make US Tranche Revolving Loans pursuant to Section 2.01(a), expressed as an amount representing the maximum aggregate amount of such US Tranche Lender's US Tranche Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.04. The initial amount of each US Tranche Lender's US Tranche Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such US Tranche Lender shall have assumed its US Tranche Commitment, as applicable. The aggregate amount of the US Tranche Commitments on the date hereof is $330,000,000. "US TRANCHE LENDER" mean a Lender with a US Tranche Commitment. "US TRANCHE PERCENTAGE" means, with respect to any US Tranche Lender, the percentage of the total US Tranche Commitments represented by such Lender's US Tranche Commitment. If the US Tranche Commitments have terminated or expired, the US Tranche Percentages shall be determined based upon the US Tranche Commitments most recently in effect, giving effect to any assignments. "US TRANCHE REVOLVING BORROWING" means a Borrowing comprised of US Tranche Revolving Loans. "US TRANCHE REVOLVING EXPOSURE" means, with respect to any US Tranche Lender at any time, the sum at such time, without duplication, of (a) such Lender's US Tranche Percentage of the sum of the US Dollar Equivalents of the principal amounts of the outstanding US Tranche Revolving Loans, plus (b) the aggregate amount of such Lender's LC Exposure. 20 "US TRANCHE REVOLVING LOAN" means a Loan made by a US Tranche Lender pursuant to Section 2.01(a). Each US Tranche Revolving Loan denominated in US Dollars shall be a Eurocurrency Loan or an ABR Loan, and each US Tranche Revolving Loan denominated in a Designated Foreign Currency shall be a Eurocurrency Loan. "YEN" or "Y" refers to the lawful money of Japan. "YEN BASE RATE" means, with respect to any Yen Base Rate Revolving Borrowing for any Interest Period, the rate of interest per annum publicly announced from time to time by the Tokyo Agent as its short-term prime rate in effect at its principal office in Tokyo; each change in the Yen Base Rate shall be effective from and including the date such change is publicly announced as being effective. SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of this Agreement, Loans may be classified and referred to by Class (E.G., a "US Tranche Revolving Loan") or by Type (E.G., a "Eurocurrency Loan") or by Class and Type (E.G., a "Eurocurrency US Tranche Revolving Loan"). Borrowings also may be classified and referred to by Class (E.G., a "US Tranche Revolving Borrowing") or by Type (E.G., a "US Tranche Eurocurrency Borrowing") or by Class and Type (E.G., a "Eurocurrency US Tranche Revolving Borrowing"). SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder" and words of similar import shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.04. ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP as in effect from time to time; PROVIDED that if the Company notifies the Administrative Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Required Lenders request an amendment to any provision hereof for such purpose), 21 regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. SECTION 1.05. EXCHANGE RATES. (a) Not later than 10:00 a.m., New York City time, on each Calculation Date, the Administrative Agent shall (i) determine the Exchange Rate as of such Calculation Date with respect to each Designated Foreign Currency and (ii) give written notice thereof to the Lenders and the Company. The Exchange Rates so determined shall become effective on the first Business Day immediately following the relevant Calculation Date (a "RESET DATE"), shall remain effective until the next succeeding Reset Date, and shall for all purposes of this Agreement (other than Section 11.13 or any other provision expressly requiring the use of a current Exchange Rate) be the Exchange Rates employed in converting any amounts between US Dollars and Designated Foreign Currencies. (b) Not later than 5:00 p.m., New York City time, on each Reset Date and each date on which Revolving Loans denominated in any Designated Foreign Currency are made, the Administrative Agent shall (i) determine the aggregate amount of the US Dollar Equivalents of the principal amounts of the Revolving Loans of each Class denominated in Designated Foreign Currencies (after giving effect to any Revolving Loans made or repaid on such date) and (ii) notify the Lenders and the Company of the results of such determination. SECTION 1.06. REDENOMINATION OF CERTAIN FOREIGN CURRENCIES. (a) Each obligation of any party to this Agreement to make a payment denominated in the national currency unit of any member state of the European Union that adopts the Euro as its lawful currency after the date hereof shall be redenominated into Euro at the time of such adoption (in accordance with the EMU Legislation). If, in relation to the currency of any such member state, the basis of accrual of interest expressed in this Agreement in respect of that currency shall be inconsistent with any convention or practice in the London Interbank Market for the basis of accrual of interest in respect of the Euro, such expressed basis shall be replaced by such convention or practice with effect from the date on which such member state adopts the Euro as its lawful currency; PROVIDED that if any Borrowing in the currency of such member state is outstanding immediately prior to such date, such replacement shall take effect, with respect to such Borrowing, at the end of the then current Interest Period. (b) Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify to be appropriate to reflect the adoption of the Euro by any member state of the European Union and any relevant market conventions or practices relating to the Euro. 22 ARTICLE II THE CREDITS SECTION 2.01. COMMITMENTS. (a) Subject to the terms and conditions set forth herein, each US Tranche Lender agrees to make US Tranche Revolving Loans to the Company from time to time during the Revolving Availability Period in US Dollars or any Designated Foreign Currency in an aggregate principal amount at any time outstanding that will not result in (i) such Lender's US Tranche Revolving Exposure exceeding its US Tranche Commitment or (ii) the aggregate amount of the Lenders' US Tranche Revolving Exposures and Competitive Loan Exposures exceeding the aggregate amount of the US Tranche Commitments. (b) Subject to the terms and conditions set forth herein, each Swiss Tranche Lender agrees to make Swiss Tranche Revolving Loans to the Swiss Borrowers in Swiss Francs or Euros and to the Company in US Dollars in an aggregate principal amount at any time outstanding that will not result in (i) such Lender's Swiss Tranche Exposure exceeding its Swiss Tranche Commitment or (ii) the aggregate amount of the Lenders' Swiss Tranche Exposures exceeding the aggregate amount of the Swiss Tranche Commitments. (c) Subject to the terms and conditions set forth herein, each Japanese Tranche Lender agrees to make Japanese Tranche Revolving Loans to the Japanese Borrowers in Yen and to the Company in US Dollars in an aggregate principal amount at any time outstanding that will not result in (i) such Lender's Japanese Tranche Exposure exceeding its Japanese Tranche Commitment or (ii) the aggregate amount of the Lenders' Japanese Tranche Exposures exceeding the aggregate amount of the Japanese Tranche Commitments. SECTION 2.02. LOANS AND BORROWINGS. (a) Each US Tranche Revolving Loan shall be made as part of a Borrowing consisting of US Tranche Revolving Loans made by the US Tranche Lenders ratably in accordance with their respective US Tranche Commitments. Each Swiss Tranche Revolving Loan shall be made as part of a Borrowing consisting of Swiss Tranche Revolving Loans made by the Swiss Tranche Lenders ratably in accordance with their respective Swiss Tranche Commitments. Each Japanese Tranche Revolving Loan shall be made as part of a Borrowing consisting of Japanese Tranche Revolving Loans made by the Japanese Tranche Lenders ratably in accordance with their respective Japanese Tranche Commitments. Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.04. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; PROVIDED that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required hereunder. (b) Subject to Section 2.14, (i) each US Tranche Revolving Borrowing shall be comprised entirely of (A) in the case of a Borrowing denominated in US Dollars, Eurocurrency Loans or ABR Loans and (B) in the case of a Borrowing denominated in a Designated Foreign Currency, Eurocurrency Loans, in each case as the Company may request in accordance herewith; (ii) each Swiss Tranche Revolving Borrowing shall be comprised entirely of (A) in the case of a Borrowing denominated in Swiss Francs or Euros, Eurocurrency Loans and, (B) in the 23 case of a Borrowing denominated in US Dollars, Eurocurrency Loans or ABR Loans, in each case as the applicable Borrower may request in accordance herewith; (iii) each Japanese Tranche Revolving Borrowing shall be comprised entirely of (A) in the case of a Borrowing denominated in Yen, TIBOR Loans or Yen Base Rate Loans and (B) in the case of a Borrowing denominated in US Dollars, Eurocurrency Loans or ABR Loans, in each case as the applicable Borrower may request in accordance herewith; and (iv) each Competitive Borrowing shall be comprised entirely of Eurocurrency Loans or Fixed Rate Loans, in each case as the applicable Borrower may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 2.14, 2.15, 2.16 and 2.17 shall apply to such Affiliate to the same extent as to such Lender); PROVIDED that any exercise of such option shall not affect the obligation of the applicable Borrower to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Borrowing, such Borrowing shall be in an aggregate amount that is at least equal to the Borrowing Minimum and an integral multiple of the Borrowing Multiple; PROVIDED that (i) an ABR Revolving Borrowing may be made in an aggregate amount that is equal to the aggregate available US Tranche Commitments, Swiss Tranche Commitments or Japanese Tranche Commitments, as the case may be and (ii) a Yen Base Rate Revolving Borrowing may be made in an aggregate amount that is equal to the aggregate available Japanese Tranche Commitments. Borrowings of more than one Type and Class may be outstanding at the same time; PROVIDED that there shall not at any time be more than a total of (i) twelve US Tranche Eurocurrency Revolving Borrowings outstanding, (ii) six Swiss Tranche Eurocurrency Revolving Borrowings outstanding or (iii) six Japanese Tranche TIBOR or Eurocurrency Revolving Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, no Borrower shall be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. 24 SECTION 2.03. REQUESTS FOR REVOLVING BORROWINGS. To request a Revolving Borrowing, the applicable Borrower, or the Company on behalf of the applicable Borrower, shall notify the Applicable Agent of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 12:00 noon, Local Time, three Business Days before the date of the proposed Borrowing, (b) in the case of a TIBOR Borrowing, not later than 5:00 p.m., Local Time, four Business Days before the date of the proposed Borrowing, (c) in the case of an ABR Borrowing, not later than 12:00 noon, Local Time, one Business Day before the date of the proposed Borrowing and (d) in the case of a Yen Base Rate Revolving Borrowing, not later than 12:00 noon, Local Time, two Business Days before the date of the proposed Borrowing; PROVIDED that any such notice of an ABR Revolving Borrowing to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e) may be given not later than 12:00 noon, Local Time, on the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a written Borrowing Request in a form approved by the Applicable Agent and signed by the applicable Borrower, or by the Company on behalf of the applicable Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: (i) the Borrower requesting such Borrowing (or on whose behalf the Company is requesting such Borrowing); (ii) whether the requested Borrowing is to be a US Tranche Revolving Borrowing, a Swiss Tranche Revolving Borrowing or a Japanese Tranche Revolving Borrowing; (iii) the currency and aggregate principal amount of the requested Borrowing; (iv) the date of the requested Borrowing, which shall be a Business Day; (v) the Type of the requested Borrowing; (vi) in the case of a Eurocurrency Borrowing, TIBOR Borrowing or Yen Base Rate Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; (vii) the location and number of the relevant Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and (ix) in the case of a Borrowing in a Foreign Currency, the location from which payments of the principal and interest on such Borrowing will be made. If no currency is specified with respect to any requested Eurocurrency Revolving Borrowing, then the relevant Borrower shall be deemed to have selected US Dollars. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be (i) in the case of a Borrowing denominated in US Dollars, an ABR Borrowing, (ii) in the case of a Borrowing by a Swiss Borrower denominated in Swiss Francs, a Eurocurrency Borrowing, (iii) in the case of a 25 Borrowing by a Japanese Borrower denominated in Yen, a Yen Base Rate Revolving Borrowing and (iv) in the case of any other Borrowing, a Eurocurrency Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Borrowing or TIBOR Borrowing, then the relevant Borrower shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Applicable Agent shall advise each Lender that will make a Loan as part of the requested Borrowing of the details thereof and of the amount of the Loan to be made by such Lender as part of the requested Borrowing. SECTION 2.04. COMPETITIVE BID PROCEDURE. (a) Subject to the terms and conditions set forth herein, from time to time during the Revolving Availability Period the Company may request Competitive Bids for Competitive Loans in US Dollars or one or more Designated Foreign Currencies and may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans; PROVIDED that the sum of the US Tranche Revolving Exposures and Competitive Loan Exposures at any time shall not exceed the aggregate amount of the Lenders' US Tranche Commitments. To request Competitive Bids, the Company shall notify the Applicable Agent of such request by telephone, (i) in the case of a Eurocurrency Competitive Borrowing or a Fixed Rate Competitive Borrowing denominated in a Designated Foreign Currency, not later than 12:00 noon, Local Time, four Business Days before the date of the proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Revolving Borrowing denominated in US Dollars, not later than 12:00 noon, Local Time, one Business Day before the date of the proposed Competitive Borrowing. Not more than three Competitive Bid Requests may be submitted on the same day, and a Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request unless any and all such previous Competitive Bid Requests shall have been withdrawn or all Competitive Bids received in response thereto rejected. Each telephonic Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a written Competitive Bid Request in a form approved by the Applicable Agent and signed by the Company. Each such telephonic and written Competitive Bid Request shall specify the following information in compliance with Section 2.02: (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether the requested Borrowing is to be denominated in US Dollars or a Designated Foreign Currency (specifying such Designated Foreign Currency, if applicable); (iv) whether such Borrowing is to be a Eurocurrency Borrowing or a Fixed Rate Revolving Borrowing; (v) the Interest Period to be applicable to such Borrowing, which shall be a period contemplated by the definition of the term "Interest Period"; 26 (vi) the location and number of the Company's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.06; and (vii) in the case of any Borrowing in a Designated Foreign Currency, the location from which payments of the principal of and interest on such Borrowing will be made. If no election as to the currency of a Borrowing is specified in any Competitive Bid Request, then the Company shall be deemed to have requested a Borrowing in US Dollars. Promptly following receipt of a Competitive Bid Request in accordance with this Section, the Applicable Agent shall notify the Lenders of the details thereof by telecopy, inviting the US Tranche Lenders to submit Competitive Bids. (b) Each US Tranche Lender may (but shall not have any obligation to) make one or more Competitive Bids to the Company in response to a Competitive Bid Request. Each Competitive Bid by a Lender must be in a form approved by the Applicable Agent and must be received by the Applicable Agent by telecopy, (i) in the case of a Eurocurrency Competitive Borrowing or a Fixed Rate Competitive Borrowing denominated in a Designated Foreign Currency, not later than 11:00 a.m., Local Time, three Business Days before the date of the proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Revolving Borrowing denominated in US Dollars, not later than 9:30 a.m., Local Time, on the date of the proposed Competitive Borrowing. Competitive Bids that do not conform to the form approved by the Applicable Agent may be rejected by the Applicable Agent, and the Applicable Agent shall notify the applicable Lender as promptly as practicable. Each Competitive Bid shall specify (i) the principal amount (which shall be in an amount that is at least equal to the Borrowing Minimum and an integral multiple of the Borrowing Multiple, and which may equal the entire principal amount of the Competitive Borrowing requested by the Company) of the Competitive Loan or Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Loan or Loans (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Loan and the last day thereof. (c) The Applicable Agent shall promptly notify the Company by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the US Tranche Lender that shall have made such Competitive Bid. (d) Subject only to the provisions of this paragraph, the Company may accept or reject any Competitive Bid. The Company shall notify the Applicable Agent by telephone, confirmed by telecopy in a form approved by the Applicable Agent, whether and to what extent it has decided to accept or reject each Competitive Bid, (i) in the case of a Eurocurrency Competitive Borrowing or a Fixed Rate Competitive Borrowing denominated in a Designated Foreign Currency, not later than 12:00 noon, Local Time, three Business Days before the date of the proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Revolving Borrowing denominated in US Dollars, not later than 10:30 a.m., Local Time, on the date of the proposed Competitive Borrowing; PROVIDED that (i) the failure of the Company to give such notice shall be deemed to be a rejection of each Competitive Bid, (ii) the Company shall not accept a Competitive Bid made at a particular Competitive Bid Rate if such Borrower rejects a 27 Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by the Company shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, the Company may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of at least the Borrowing Minimum and an integral multiple of the Borrowing Multiple; PROVIDED FURTHER that if a Competitive Loan must be in an amount less than the Borrowing Minimum because of the provisions of clause (iv) above, such Competitive Loan may be for a minimum of $1,000,000 (or, in the case of an Designated Foreign Currency Competitive Loan, the smallest amount of such Alternate Currency that (i) is an integral multiple of 1,000,000 units (or, in the case of Sterling, 500,000 units) of such currency and (ii) has a US Dollar Equivalent in excess of $1,000,000), and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of the Borrowing Multiple in a manner determined by the Company. A notice given by the Company pursuant to this paragraph shall be irrevocable. (e) The Applicable Agent shall promptly notify each bidding US Tranche Lender by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted. (f) If the Applicable Agent or one of its Affiliates shall elect to submit a Competitive Bid in its capacity as a US Tranche Lender, it shall submit such Competitive Bid directly to the Company at least one quarter of an hour earlier than the time by which the other Lenders are required to submit their Competitive Bids to the Applicable Agent pursuant to paragraph (b) of this Section. SECTION 2.05. LETTERS OF CREDIT. (a) GENERAL. Subject to the terms and conditions set forth herein, the Company may request the issuance (or the amendment, renewal or extension) of Letters of Credit denominated in US Dollars, in any case in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Availability Period. In the event of any form of letter of credit application or other agreement submitted by the Company or any other Borrower to, or entered into by the Company or any other Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control. (b) NOTICE OF ISSUANCE, AMENDMENT, RENEWAL, EXTENSION; CERTAIN CONDITIONS. To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Company shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension) a notice requesting the issuance of a Letter of Credit, 28 or identifying the Letter of Credit to be amended, renewed or extended, the date of issuance, amendment, renewal or extension (which shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit. If requested by the Issuing Bank, the Company also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit the Company or the applicable Borrower shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension the LC Exposure shall not exceed $25,000,000 and (ii) the aggregate US Tranche Revolving Exposures will not exceed the aggregate US Tranche Commitments. (c) EXPIRATION DATE. Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date. (d) PARTICIPATIONS. By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the US Tranche Lenders, the Issuing Bank hereby grants to each US Tranche Lender, and each US Tranche Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such US Tranche Lender's US Tranche Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each US Tranche Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's US Tranche Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Company on the date due as provided in paragraph (e) of this Section or of any reimbursement payment required to be refunded to the Company for any reason. Each US Tranche Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the US Tranche Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. (e) REIMBURSEMENT. If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Company shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement, not later than 1:00 p.m., New York City time, on the date that such LC Disbursement is made, if the Company shall have received notice of such LC Disbursement prior to 11:00 a.m., New York City time, on such date, or, if such notice has not been received by the Company prior to such time on such date, then not later than 1:00 p.m., New York City time, on (A) the Business Day that the Company receives such notice, if such notice is received prior to 11:00 a.m., New York City time, on the day of receipt, or (B) the Business Day immediately following the day that the Company receives such notice, if such notice is not received prior to such time on the day of receipt. If the Company 29 fails to make such payment when due then, upon notice from the applicable Issuing Bank to the Company and the Administrative Agent, the Administrative Agent shall notify each US Tranche Lender of the applicable LC Disbursement, the payment then due from the Company in respect thereof and such Lender's US Tranche Percentage, thereof. Promptly following receipt of such notice, each US Tranche Lender shall pay to the Administrative Agent its US Tranche Percentage of the payment then due from the Company in the same manner as provided in Section 2.06 with respect to Loans made by such US Tranche Lender (and Section 2.06 shall apply, MUTATIS MUTANDIS, to the payment obligations of the US Tranche Lenders), and the Administrative Agent shall promptly pay to the applicable Issuing Bank the amounts so received by it from the US Tranche Lenders. Promptly following receipt by the Administrative Agent of any payment from the Company pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that US Tranche Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such US Tranche Lenders and the Issuing Bank as their interests may appear. Any payment made by a US Tranche Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement shall not constitute a Loan and shall not relieve the Company of its obligation to reimburse such LC Disbursement. 30 (f) OBLIGATIONS ABSOLUTE. The Company's obligations to reimburse LC Disbursements as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement or any other Loan Document, or any term or provision herein or therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section, constitute a legal or equitable discharge of, or provide a right of set-off against, the Company's obligations hereunder. None of the Administrative Agent, the US Tranche Lenders or the Issuing Bank, or any of their Related Parties, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; PROVIDED that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Company to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Company to the extent permitted by applicable law) suffered by the Company that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or wilful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit. (g) DISBURSEMENT PROCEDURES. The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Company by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; PROVIDED that any failure to give or delay in giving such notice shall not relieve the Company of its obligation to reimburse the Issuing Bank and the US Tranche Lenders with respect to any such LC Disbursement. (h) INTERIM INTEREST. If the Issuing Bank shall make any LC Disbursement, then, unless the Company shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest, for each day from and 31 including the date such LC Disbursement is made to but excluding the date that the Company reimburses such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans; PROVIDED that, at all times after the Company fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, Section 2.13(g) shall apply. Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any US Tranche Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such US Tranche Lender to the extent of such payment. (i) REPLACEMENT OF THE ISSUING BANK. The Issuing Bank may be replaced at any time by written agreement among the Company, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Company shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. (j) CASH COLLATERALIZATION. If the US Tranche Commitments shall be terminated on the Business Day that the Company receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, US Tranche Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Company shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the US Tranche Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; PROVIDED that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Company described in clause (f) or (g) of Article VII. Such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the obligations of the Company under this Agreement. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Company's risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Company for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of US Tranche Lenders with LC Exposures representing greater than 50% 32 of the total LC Exposure) be applied to satisfy other obligations of the Company under this Agreement. If the Company is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount (to the extent not applied as aforesaid) shall be returned to them within three Business Days after all Events of Default have been cured or waived. SECTION 2.06. FUNDING OF BORROWINGS. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in the applicable currency by 11:00 a.m., Local Time, to the account of the Applicable Agent most recently designated by it for such purpose for Loans of such Class and currency by notice to the applicable Lenders. The Applicable Agent will make such Loans available to the relevant Borrower by promptly crediting the amounts so received, in like funds, to an account of such Borrower maintained by the Applicable Agent (i) in New York City, in the case of Loans denominated in US Dollars (ii) in London, in the case of Eurocurrency or Fixed Rate Loans denominated in any Designated Foreign Currency and (iii) in Tokyo, in the case of TIBOR or Yen Base Rate Revolving Loans; PROVIDED that US Tranche Revolving Loans made to finance the reimbursement of an LC Disbursement shall be remitted by the Administrative Agent to the Issuing Bank. (b) Unless the Applicable Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Applicable Agent such Lender's share of such Borrowing, the Applicable Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the relevant Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Applicable Agent, then the applicable Lender and such Borrower severally agree to pay to the Applicable Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to such Borrower to but excluding the date of payment to the Applicable Agent, at (i) in the case of such Lender, the rate reasonably determined by the Applicable Agent to be the cost to it of funding such amount or (ii) in the case of such Borrower, the interest rate applicable to the subject Loan. If such Lender pays such amount to the Applicable Agent, then such amount shall constitute such Lender's Loan included in such Borrowing and the Applicable Agent shall return to such Borrower any amount (including interest) paid by such Borrower to the Applicable Agent pursuant to this paragraph. SECTION 2.07. REPAYMENT OF BORROWINGS; EVIDENCE OF DEBT. (a) Each Borrower hereby unconditionally promises to pay to the Applicable Agent for the accounts of the applicable Lenders (i) the then unpaid principal amount of each Revolving Borrowing of such Borrower on the Maturity Date and (ii) the then unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable thereto. Each Borrower agrees to repay the principal amount of each Loan made to such Borrower and the accrued interest thereon in the currency of such Loan. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each 33 Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class, Type and currency thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the amount of any sum received by any Agent hereunder for the accounts of the Lenders and each Lender's share thereof. Each of the London Agent and the Tokyo Agent shall furnish to the Administrative Agent, promptly after the making of any Loan or Borrowing with respect to which it is the Applicable Agent or the receipt of any payment of principal or interest with respect to any such Loan or Borrowing, information with respect thereto that will enable the Administrative Agent to maintain the accounts referred to in the preceding sentence. The Administrative Agent shall notify in writing the London Agent or the Tokyo Agent, as applicable, promptly after the making of any Loan or Borrowing with respect to which it is the Applicable Agent or the receipt of payment of any principal with respect to any such Loan or Borrowing. (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the existence and amounts of the obligations recorded therein; PROVIDED that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of any Borrower to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans of any Class made by it to any Borrower be evidenced by a promissory note. In such event, each applicable Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by each such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 11.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.08. INTEREST ELECTIONS. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing or TIBOR Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the relevant Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Borrowing or TIBOR Borrowing, may elect Interest Periods therefor, all as provided in this Section and on terms consistent with the other provisions of this Agreement. A Borrower may elect different options with respect to different portions of an affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Revolving Borrowing. 34 (b) To make an election pursuant to this Section, a Borrower, or the Company on its behalf, shall notify the Applicable Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Applicable Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the relevant Borrower, or the Company on its behalf. Notwithstanding any contrary provision herein, this Section shall not be construed to permit any Borrower to (i) change the currency of any Borrowing, (ii) elect an Interest Period for Eurocurrency Loans or TIBOR Loans that does not comply with Section 2.02(d) or (iii) convert any Borrowing to a Borrowing of a Type not available under the Class of Commitments pursuant to which such Borrowing was made. (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) the Type of the resulting Borrowing; and (iv) if the resulting Borrowing is to be a Eurocurrency Borrowing or a TIBOR Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurocurrency Borrowing or a TIBOR Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's duration. (d) Promptly following receipt of an Interest Election Request, the Applicable Agent shall advise each Lender holding a Loan to which such request relates of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the relevant Borrower fails to deliver a timely Interest Election Request with respect to a Eurocurrency Borrowing or TIBOR Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period, such Borrowing shall (i) in the case of a Borrowing denominated in US Dollars, be converted to an ABR Borrowing, (ii) in the case of a Japanese Tranche Revolving Borrowing denominated in Yen, be converted into a Yen Base Rate Revolving Borrowing and 35 (iii) in the case of any other Eurocurrency Borrowing, become due and payable on the last day of such Interest Period. SECTION 2.09. TERMINATION AND REDUCTION OF COMMITMENTS. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date; PROVIDED that the Commitments shall terminate at 5:00 p.m., New York City time, on May 15, 2000, if the Initial Borrowing Date shall not have occurred prior to such time. (b) The Company may at any time terminate, or from time to time reduce, the Commitments of any Class; PROVIDED that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum, (ii) the Company shall not terminate or reduce the US Tranche Commitments if, after giving effect to any concurrent prepayment of the US Tranche Revolving Loans in accordance with Section 2.11, the sum of the aggregate US Tranche Revolving Exposures and the aggregate Competitive Loan Exposures would exceed the aggregate US Tranche Commitments, (iii) the Company shall not terminate or reduce the Swiss Tranche Commitments if, after giving effect to any concurrent prepayment of the Swiss Tranche Revolving Loans in accordance with Section 2.11, the aggregate Swiss Tranche Exposures would exceed the aggregate Swiss Tranche Commitments and (iv) the Company shall not terminate or reduce the Japanese Tranche Commitments if, after giving effect to any concurrent prepayment of the Japanese Tranche Revolving Loans in accordance with Section 2.11, the aggregate Japanese Tranche Exposures would exceed the aggregate Japanese Tranche Commitments. (c) The Company shall notify the Administrative Agent of any election to terminate or reduce the Commitments of any Class under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying the effective date of such election. Promptly following receipt of any such notice, the Administrative Agent shall advise the other Agents and the applicable Lenders of the contents thereof. Each notice delivered by the Company pursuant to this Section shall be irrevocable; PROVIDED that a notice of termination of the Commitments delivered by the Company may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the applicable Lenders in accordance with their respective Commitments of such Class. SECTION 2.10. INCREASE IN COMMITMENTS. (a) The Company may, by written notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request that the total US Tranche Commitments, Swiss Tranche Commitments or Japanese Tranche Commitments be increased by an amount not less than $25,000,000 for any such increase; PROVIDED that after giving effect to any such increase the sum of the total Commitments and the commitments under the 364-Day Credit Agreement shall not exceed $1,000,000,000. Such notice shall set forth the amount of the requested increase in the total US Tranche Commitments, Swiss Tranche Commitments or Japanese Tranche Commitments, as the case may be, and the date on which such increase is requested to become effective (which shall be not less 36 than 30 Business Days or more than 60 days after the date of such notice), and shall offer each Lender the opportunity to increase its Commitment by its US Tranche Percentage, Swiss Tranche Percentage or Japanese Tranche Percentage, as the case may be, of the proposed increased amount. Each Lender shall, by notice to the Company and the Administrative Agent given not more than 10 Business Days after the date of the Company's notice, either agree to increase its applicable Commitment by all or a portion of the offered amount (each Lender so agreeing being an "INCREASING LENDER") or decline to increase its applicable Commitment (and any Lender that does not deliver such a notice within such period of 10 Business Days shall be deemed to have declined to increase its Commitment) (each Lender so declining or deemed to have declined being a "NON-INCREASING LENDER"). In the event that, on the 10th Business Day after the Company shall have delivered a notice pursuant to the first sentence of this paragraph, the Lenders shall have agreed pursuant to the preceding sentence to increase their Commitments by an aggregate amount less than the increase in the total Commitments requested by the Company, the Company may arrange for one or more banks or other financial institutions (any such bank or other financial institution being called an "AUGMENTING LENDER"), which may include any Lender, to extend US Tranche Commitments, Swiss Tranche Commitments or Japanese Tranche Commitments, as the case may be, or increase their existing US Tranche Commitments, Swiss Tranche Commitments or Japanese Tranche Commitments, as the case may be, in an aggregate amount equal to the unsubscribed amount; PROVIDED that each Augmenting Lender, if not already a Lender hereunder, shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and the Borrowers and each Augmenting Lender shall execute all such documentation as the Administrative Agent shall reasonably specify to evidence the Commitment of such Augmenting Lender and/or its status as a Lender hereunder. Any increase in the total US Tranche Commitments, Swiss Tranche Commitments or Japanese Tranche Commitments, as the case may be, may be made in an amount which is less than the increase requested by the Company if the Company is unable to arrange for, or chooses not to arrange for, Augmenting Lenders. (b) On the effective date (the "INCREASE EFFECTIVE DATE") of any increase in the total US Tranche Commitments, Swiss Tranche Commitments or Japanese Tranche Commitments pursuant to this Section 2.10 (the "COMMITMENT INCREASE"), (i) the aggregate principal amount of the US Tranche Revolving Loans, Swiss Tranche Revolving Loans or Japanese Tranche Revolving Loans, as the case may be, outstanding (the "INITIAL LOANS") immediately prior to giving effect to the Commitment Increase on the Increase Effective Date shall be deemed to be paid, (ii) each Increasing Lender and each Augmenting Lender that shall have been a US Tranche Lender, Swiss Tranche Lender or Japanese Tranche Lender, as the case may be, prior to the Commitment Increase shall pay to the Administrative Agent or another Agent designated by the Administrative Agent for such purpose in same day funds an amount equal to the difference between (A) the product of (1) such Lender's US Tranche Percentage, Swiss Tranche Percentage or Japanese Tranche Percentage, as the case may be (calculated after giving effect to the Commitment Increase), multiplied by (2) the amount of the Subsequent Borrowings (as hereinafter defined) and (B) the product of (1) such Lender's US Tranche Percentage, Swiss Tranche Percentage or Japanese Tranche Percentage, as the case may be (calculated without giving effect to the Commitment Increase), multiplied by (2) the amount of the Initial Loans, (iii) each Augmenting Lender that shall not have been a Lender prior to the Commitment Increase shall pay to the Administrative Agent or another Agent designated by the 37 Administrative Agent for such purpose in same day funds an amount equal to the product of (1) such Augmenting Lender's US Tranche Percentage, Swiss Tranche Percentage or Japanese Tranche Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, and (iv) after the Administrative Agent or other Agent receives the funds specified in clauses (ii) and (iii) above, the Administrative Agent or such other Agent shall pay to each Non-Increasing Lender the portion of such funds that is equal to the difference between (A) the product of (1) such Non-Increasing Lender's US Tranche Percentage, Swiss Tranche Percentage or Japanese Tranche Percentage (calculated without giving effect to the Commitment Increase) multiplied by (2) the amount of the Initial Loans, and (B) the product of (1) such Non-Increasing Lender's US Tranche Percentage, Swiss Tranche Percentage or Japanese Tranche Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, (v) after the effectiveness of the Commitment Increase, the applicable Borrowers shall be deemed to have made new Borrowings (the "SUBSEQUENT BORROWINGS") in an aggregate principal amount equal to the aggregate principal amount of the Initial Loans and of the types and for the Interest Periods specified in a Borrowing Request delivered to the Administrative Agent in accordance with Section 2.04, (vi) each Non-Increasing Lender, each Increasing Lender and each Augmenting Lender shall be deemed to hold its US Tranche Percentage, Swiss Tranche Percentage or Japanese Tranche Percentage, as the case may be, of each Subsequent Borrowing (each calculated after giving effect to the Commitment Increase) and (vii) the applicable Borrowers shall pay each Increasing Lender and each Non-Increasing Lender any and all accrued but unpaid interest on the Initial Loans. The deemed payments made pursuant to clause (i) above in respect of each Eurocurrency Loan or TIBOR Loan shall be subject to indemnification by the Borrowers pursuant to the provisions of Section 2.16 if the Increase Effective Date occurs other than on the last day of the Interest Period relating thereto and breakage costs result. (c) Increases and new Commitments created pursuant to this Section 2.10 shall become effective on the date specified in the notice delivered by the Company pursuant to the first sentence of paragraph (a) above. (d) Notwithstanding the foregoing, no increase in the Commitments of any Class (or in any Commitment of any Lender) or addition of an Augmenting Lender shall become effective under this Section unless, (i) on the date of such increase, the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied and the Administrative Agent shall have received a certificate to that effect dated such date and executed by the chief financial officer of the Company, and (ii) the Administrative Agent shall have received (with sufficient copies for each of the Lenders) documents consistent with those delivered on the Effective Date under clauses (b) and (c) of Section 4.01 as to the corporate power and authority of the applicable Borrowers to borrow hereunder after giving effect to such increase. SECTION 2.11. PREPAYMENT OF LOANS. (a) Any Borrower shall have the right at any time and from time to time to prepay any Borrowing of such Borrower in whole or in part, subject to prior notice in accordance with paragraph (d) of this Section; PROVIDED, that Competitive Loans may be prepaid only with the consent of the Lenders making such Loans. 38 (b) If the aggregate Exposures of any Class shall exceed the aggregate Commitments of such Class (reduced, in the case of the US Tranche Commitments, by the aggregate amount of the US Tranche Lenders' Competitive Loan Exposures), then (i) on the last day of any Interest Period for any Eurocurrency Revolving Borrowing or TIBOR Borrowing of such Class and (ii) on any other date in the event ABR Revolving Borrowings or Yen Base Rate Revolving Borrowings shall be outstanding under such Class, the applicable Borrowers shall prepay Revolving Loans or Competitive Loans of such Class in an amount equal to the lesser of (A) the amount necessary to eliminate such excess (after giving effect to any other prepayment of Loans on such day) and (B) the amount of the applicable Borrowings referred to in clause (i) or (ii), as applicable. If, on any Reset Date, the aggregate amount of the Exposures of any Class shall exceed 105% of the aggregate Commitments of such Class (reduced, in the case of the US Tranche Commitments, by the aggregate amount of the US Tranche Lenders' Competitive Loan Exposures), then the applicable Borrowers shall, not later than the next Business Day, prepay one or more Borrowings of such Class in an aggregate principal amount sufficient to eliminate such excess. (c) Prior to any optional or mandatory prepayment of Borrowings hereunder, the applicable Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (d) of this Section. (d) The applicable Borrower, or the Company on behalf of the applicable Borrower, shall notify the Applicable Agent by telephone (confirmed by telecopy) of any prepayment of a Borrowing hereunder (i) in the case of a Eurocurrency Borrowing, not later than 11:00 a.m., Local Time, three Business Days before the date of such prepayment, (b) in the case of a TIBOR Borrowing, not later than 5:00 p.m., Local Time, four Business Days before the date of such prepayment, and (c) in the case of an ABR Borrowing or a Yen Base Rate Revolving Borrowing, not later than 11:00 a.m., Local Time, one Business Day before the date of such prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; PROVIDED that, if a notice of optional prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.09(c), then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.09(c). Promptly following receipt of any such notice, the Applicable Agent shall advise the applicable Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.13 and (ii) break funding payments pursuant to Section 2.16. SECTION 2.12. FEES. (a) The Company agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the Applicable Rate on the daily amount of the Commitments of such Lender (whether used or unused) during the period from and including the date hereof to but excluding the date on which the last of such Commitments terminates; PROVIDED that, if such Lender continues to have any Exposure of any Class after its Commitment of such Class terminates, then such facility fee shall continue to accrue on the daily amount of such Lender's Exposure of such Class to but excluding the date on 39 which such Lender ceases to have any such Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year, commencing on the first such date to occur after the date hereof, and on the date on which all the Commitments shall have terminated and the Lenders shall have no further Exposures. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing facility fees with respect to US Tranche Commitments, a US Tranche Commitment of a Lender shall be deemed to be used to the extent of the outstanding US Tranche Revolving Loans and the LC Exposure of such Lender. (b) The Company agrees to pay (i) to the Administrative Agent for the account of each US Tranche Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the Applicable Rate used to determine the interest rate applicable to US Tranche Eurocurrency Revolving Loans on the daily amount of such US Tranche Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date hereof to but excluding the later of the date on which such US Tranche Lender's US Tranche Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of .0625% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date hereof to but excluding the later of the date of termination of the US Tranche Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued under this paragraph through and including the last day of March, June, September and December of each year shall be payable on such last day, commencing on the first such date to occur after the date hereof; PROVIDED that all such fees shall be payable on the date on which the US Tranche Commitments terminate and any such fees accruing after the date on which the US Tranche Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All participation fees and fronting fees payable under this paragraph shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (c) The Company agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Company and the Administrative Agent. (d) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of facility fees, to the Lenders. Fees paid shall not be refundable under any circumstances. SECTION 2.13. INTEREST. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate. 40 (b) The Loans comprising each Yen Base Rate Borrowing shall bear interest at the Yen Base Rate plus the Applicable Rate. (c) The Loans comprising each Eurocurrency Borrowing shall bear interest (i) in the case of a Eurocurrency Revolving Borrowing, at the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate, or (ii) in the case of a Eurocurrency Competitive Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the Margin applicable to such Loan. (d) The Loans comprising each TIBOR Borrowing shall bear interest at the TIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate. (e) Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan. (f) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee payable by any Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% per annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) above. (g) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; PROVIDED that (i) interest accrued pursuant to paragraph (g) above shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Revolving Loan or TIBOR Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (h) All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest on Borrowings denominated in Sterling and Yen and (ii) interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Yen Base Rate, LIBO Rate or TIBO Rate shall be determined by the Applicable Agent, and such determination shall be conclusive absent manifest error. 41 SECTION 2.14. ALTERNATE RATE OF INTEREST. If prior to the commencement of any Interest Period for a Eurocurrency Borrowing or TIBOR Borrowing denominated in any currency: (a) the Applicable Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate or the TIBO Rate, as the case may be, for such Interest Period; or (b) the Applicable Agent is advised by a majority in interest of the Lenders that would participate in such Borrowing that the LIBO Rate or the TIBO Rate, as the case may be, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; then the Applicable Agent shall give notice thereof to the applicable Borrower and the applicable Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Applicable Agent notifies the applicable Borrower and the applicable Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing denominated in such currency to, or continuation of any Revolving Borrowing denominated in such currency as, a Eurocurrency Borrowing or TIBOR Borrowing, as the case may be, shall be ineffective, and any Eurocurrency Borrowing or TIBOR Borrowing, as the case may be, denominated in such currency that is requested to be continued shall be repaid on the last day of the then current Interest Period applicable thereto, and (ii) any Borrowing Request for a Eurocurrency Revolving Borrowing or TIBOR Borrowing, as the case may be, denominated in such currency shall be ineffective. SECTION 2.15. INCREASED COSTS. (a) If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender or the Issuing Bank; or (ii) impose on any Lender or the Issuing Bank or the London or Tokyo interbank market any other condition affecting this Agreement or Eurocurrency Loans or TIBOR Loans made by such Lender or any Letter of Credit or participations therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan or TIBOR Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then the Company will pay or cause the other Borrowers to pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank for such additional costs incurred or reduction suffered. 42 (b) If any Lender or the Issuing Bank reasonably determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or Issuing Bank's capital or on the capital of such Lender's or Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time the Company will pay or cause the other Borrowers to pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered. (c) Each Lender or the Issuing Bank shall determine the amount or amounts necessary to compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company, as the case may be, as specified in paragraph (a) or (b) of this Section using the methods customarily used by it for such purpose (and if such Lender or the Issuing Bank uses more than one such method, the method used hereunder shall be that which most accurately determines such amount or amounts). A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company, as the case may be, as specified in paragraph (a) or (b) of this Section, and setting forth in reasonable detail the calculations used by such Lender or the Issuing Bank to determine such amount, shall be delivered to the Company and shall be conclusive absent manifest error. The Company shall pay or cause the other Borrowers to pay to such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 15 Business Days after receipt thereof. (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; PROVIDED that the Company shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and delivers a certificate with respect thereto as provided in paragraph (c) above; PROVIDED FURTHER that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. SECTION 2.16. BREAK FUNDING PAYMENTS. In the event of (a) the payment of any principal of any Eurocurrency Loan, TIBOR Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan or TIBOR Loan to a Loan of a different Type or Interest Period other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.11(d) and is revoked in accordance therewith), or (d) the assignment or deemed assignment of any 43 Eurocurrency Loan, TIBOR Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Company pursuant to Section 2.19 or the CAM Exchange, then, in any such event, the applicable Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan or TIBOR Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the LIBO Rate or TIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate such Lender would bid were it to bid, at the commencement of such period, for deposits in the applicable currency of a comparable amount and period from other banks in the London or Tokyo interbank market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, and setting forth in reasonable detail the calculations used by such Lender to determine such amount or amounts, shall be delivered to the applicable Borrower and shall be conclusive absent manifest error. The applicable Borrower shall pay such Lender the amount shown as due on any such certificate within 15 Business Days after receipt thereof. SECTION 2.17. TAXES. (a) Any and all payments by or on account of any Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; PROVIDED that if any Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent, the London Agent, the Tokyo Agent or the applicable Lender or Issuing Bank, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Loan Parties shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The relevant Borrower shall indemnify the Administrative Agent, the London Agent, the Tokyo Agent and each Lender and the Issuing Bank, within 15 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by such Agent or such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of any Borrower hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability setting forth in reasonable detail the circumstances giving rise thereto and the calculations used by such Lender to determine the amount thereof 44 delivered to the Company by a Lender or the Issuing Bank, or by an Agent, on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by any Borrower to a Governmental Authority, such Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Company (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Company as will permit such payments to be made without withholding or at a reduced rate; PROVIDED that such Lender has received written notice from the Company advising it of the availability of such exemption or reduction and containing all applicable documentation. (f) Each Lender, on the date it becomes a Lender hereunder, will designate lending offices for the Loans to be made by it such that, on such date, it will not be liable for (i) in the case of a US Tranche Lender, any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction, (ii) in the case of a Swiss Tranche Lender, any withholding tax that is imposed (A) by Switzerland (or any political subdivision thereof) on payments by a Swiss Borrower from an office within such jurisdiction or (B) by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction, or (iii) in the case of a Japanese Tranche Lender, any withholding tax that is imposed (A) by Japan (or any political subdivision thereof) on payments by a Japanese Borrower from an office within such jurisdiction or (B) by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction. SECTION 2.18. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SETOFFS. (a) Each Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 12:00 noon, Local Time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Applicable Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Applicable Agent to the applicable account specified in Schedule 2.17 or, in any such case, to such other account as the Applicable Agent shall from time to time specify in a notice delivered to the Company; PROVIDED that payments to be made directly to the Issuing Bank as expressly provided herein and payments pursuant to Sections 2.15, 2.16, 2.17 and 11.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein (it being agreed that the Borrowers will be deemed to have satisfied 45 their obligations with respect to payments referred to in this proviso if they shall make such payments to the persons entitled thereto in accordance with instructions provided by the Administrative Agent; the Administrative Agent agrees to provide such instructions upon request, and no Borrower will be deemed to have failed to make such a payment if it shall transfer such payment to an improper account or address as a result of the failure of the Administrative Agent to provide proper instructions). The Applicable Agent shall distribute any such payments received by it for the account of any Lender or other Person promptly following receipt thereof at the appropriate lending office or other address specified by such Lender or other Person. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder of principal or interest in respect of any Loan or LC Disbursement shall be made in the currency of such Loan or LC Disbursement; all other payments hereunder and under each other Loan Document shall be made in US Dollars. Any payment required to be made by an Agent hereunder shall be deemed to have been made by the time required if such Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by such Agent to make such payment. Any amount payable by any Agent to one or more Lenders in the national currency of a member state of the European Union that has adopted the Euro as its lawful currency shall be paid in Euro. (b) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on its US Tranche Revolving Loans, Swiss Tranche Revolving Loans, Japanese Tranche Revolving Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its US Tranche Revolving Loans, Swiss Tranche Revolving Loans, Japanese Tranche Revolving Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the US Tranche Revolving Loans, Swiss Tranche Revolving Loans, Japanese Tranche Revolving Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of their respective US Tranche Revolving Loans, Swiss Tranche Revolving Loans, Japanese Tranche Revolving Loans and participations in LC Disbursements and accrued interest thereon; PROVIDED that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to the Company or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. 46 (c) Unless the Applicable Agent shall have received notice from the relevant Borrower prior to the date on which any payment is due for the account of all or certain of the Lenders or the Issuing Bank hereunder that such Borrower will not make such payment, the Applicable Agent may assume that such Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the applicable Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if such Borrower has not in fact made such payment, then each of the applicable Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Applicable Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Applicable Agent, at a rate determined by the Applicable Agent in accordance with banking industry practices on interbank compensation. (d) If any Lender shall fail to make any payment required to be made by it to any Agent pursuant to this Agreement, then the Agents may, in their discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by them for the account of such Lender to satisfy such Lender's obligations to the Agents until all such unsatisfied obligations are fully paid. SECTION 2.19. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If any Lender requests compensation under Section 2.15, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Company hereby agrees to pay all reasonable, direct, out-of-pocket costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If any Lender requests compensation under Section 2.15, or if any Loan Party is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender defaults in its obligation to fund Loans hereunder, then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.04), all its interests, rights and obligations under the Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); PROVIDED that (i) the Company shall have received the prior written consent of the Administrative Agent (and if a Revolving Commitment is being assigned, the Issuing Bank), which consent shall not be unreasonably withheld and (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee or the Company. A Lender shall not be required to make any such assignment and delegation if, 47 prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply. SECTION 2.20. DESIGNATION OF SWISS BORROWERS AND JAPANESE BORROWERS. The Company may at any time and from time to time designate any Swiss Subsidiary as a Swiss Borrower, or designate any Japanese Subsidiary as a Japanese Borrower, by delivery to the Administrative Agent of a Borrowing Subsidiary Agreement executed by such Subsidiary and the Company, and upon such delivery such Subsidiary shall for all purposes of this Agreement be a Swiss Borrower or a Japanese Borrower, as the case may be, and a party to this Agreement until the Company shall have executed and delivered to the Administrative Agent a Borrowing Subsidiary Termination with respect to such Subsidiary, whereupon such Subsidiary shall cease to be a Swiss Borrower or a Japanese Borrower, as the case may be, and a party to this Agreement. Notwithstanding the preceding sentence, no Borrowing Subsidiary Termination will become effective as to any Swiss Borrower or Japanese Borrower at a time when any principal of or interest on any Loan to such Swiss Borrower or Japanese Borrower shall be outstanding hereunder, PROVIDED that such Borrowing Subsidiary Termination shall be effective to terminate the right of such Swiss Borrower or Japanese Borrower, as the case may be, to make further Borrowings under this Agreement. As soon as practicable upon receipt of a Borrowing Subsidiary Agreement, the Administrative Agent shall send a copy thereof to each Lender. SECTION 2.21. DESIGNATION OF ADDITIONAL BORROWERS. The Company may, with the consent of the Required Lenders, add one or more Material Subsidiaries which are not Foreign Subsidiaries as borrowers of U.S. Tranche Revolving Loans on the same terms and conditions as the Company, PROVIDED that the Company guarantees all Obligations of such additional borrowers on terms no less favorable to the Lenders than the guarantee set forth in Article X of this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES The Company and each other Borrower represents and warrants as follows: SECTION 3.01. CORPORATE EXISTENCE AND STANDING. The Company and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite authority to conduct its business in each jurisdiction in which the failure so to qualify would have a material adverse effect on the business, properties, assets, operations or condition (financial or otherwise) of the Company. SECTION 3.02. AUTHORIZATION; NO VIOLATION. The Transactions are within each Loan Party's corporate or partnership powers, have been duly authorized by all necessary corporate or partnership action, and do not contravene (i) any Loan Party's charter, by-laws or other constitutive documents or (ii) any law or any contractual restriction binding on or affecting any Loan Party. 48 SECTION 3.03. GOVERNMENTAL CONSENTS. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and performance by the Loan Parties of this Agreement or the other Loan Documents. SECTION 3.04. VALIDITY. This Agreement is, and the other Loan Documents when delivered will be, the legal, valid and binding obligations of the Loan Parties party thereto, enforceable against such Loan Parties in accordance with their respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). SECTION 3.05. LITIGATION. There is no pending or, to the best of the knowledge of the Borrowers, threatened action or proceeding affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator, which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Company and the Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document, other than any actions or proceedings disclosed in the Form 10 (but only to the extent there has been no worsening of such actions or proceedings which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Company and the Subsidiaries, taken as a whole). SECTION 3.06. FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. (a) The consolidated balance sheet at December 31, 1999, and the related consolidated statements of income and stockholder's equity for the fiscal year then ended of the Company and its consolidated Subsidiaries, copies of which have been furnished to each Lender, present fairly the financial position of the Company and its consolidated Subsidiaries at December 31, 1999, and the results of the operations and changes in financial position of the Company and its consolidated Subsidiaries for the fiscal year then ended, in conformity with GAAP consistently applied. (b) As of the date hereof there has been, since December 31, 1999, no material adverse change in the business, operations or financial condition of the Company and the Subsidiaries, taken as a whole (it being understood that a change to the equity method in accounting for the assets, liabilities and results of operations of the Company's Japanese Subsidiaries will not constitute such a material adverse change). SECTION 3.07. INVESTMENT COMPANY ACT. The Company is not (i) an "investment company," (ii) a company "controlled" by an "investment company" which is registered under the Investment Company Act of 1940, as amended, or (iii) to the best knowledge of the Company, a company "controlled" by any other "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 3.08. REGULATION U. Neither the Company nor any of the Subsidiaries is engaged in the business of purchasing or carrying Margin Stock. The value of the Margin Stock owned directly or indirectly by the Company or any Subsidiary which is subject to any 49 arrangement hereunder is less than an amount equal to 25% of the value of all assets of the Company and/or such Subsidiary subject to such arrangement (as described in the definition of "Indirectly Secured" in Section 221.2 of Regulation U issued by the Board of Governors of the Federal Reserve System). SECTION 3.09. ENVIRONMENTAL MATTERS. The operations of the Company and each Material Subsidiary comply in all material respects with all Environmental Laws, the noncompliance with which would materially adversely affect the business of the Company or the ability of the Company to obtain credit on commercially reasonable terms. SECTION 3.10. DISCLOSURE. None of the Confidential Information Memorandum, the Form 10 or any other written information prepared and furnished by or on behalf of the Loan Parties to any Agent or Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains as of the date thereof (or, in the case of any such information that is not dated, the earliest date on which such information is furnished to the Administrative Agent or any Lender) any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED that, with respect to projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. SECTION 3.11. YEAR 2000 COMPLIANCE. There has not occurred, and the Company does not expect that there will occur, any material disruption in the operations or business systems of the Company and the Subsidiaries resulting from the inability of computer systems of the Company and the Subsidiaries or equipment containing embedded microchips to recognize or properly process dates in or following the year 2000. SECTION 3.12. SUBSIDIARY GUARANTORS. The Subsidiary Guarantors include all the Material Subsidiaries, other than Foreign Subsidiaries. SECTION 3.13. SOLVENCY. As of the Initial Borrowing Date, after giving effect to the Borrowings hereunder on such date and the distributions to Baxter and other transactions related to the Spin-Off, (a) the fair value of the assets of the Company and the Subsidiaries, at a fair valuation, will exceed their debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of the Company and the Subsidiaries will be greater than the amount that will be required to pay the probable liability in respect of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Company and the Subsidiaries will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d)the Company and the Subsidiaries will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the completion of the Spin-Off. 50 ARTICLE IV CONDITIONS SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions has been satisfied (or waived in accordance with Section 11.02): (a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) The Administrative Agent shall have received favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of (i) Sidley & Austin, special counsel for the Company, substantially in the form of Exhibit E-1, and (ii) the General Counsel of the Company, substantially in the form of Exhibit E-2. Each Loan Party hereby requests such counsel to deliver such opinions. (c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the formation, existence and good standing of the Loan Parties and the authorization of the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel. (d) The Administrative Agent shall have received (i) a certificate, dated the Effective Date and signed by the chief financial officer of the Company, confirming that all the conditions set forth in this Section 4.01 and in paragraphs (a) and (b) of Section 4.02 have been satisfied. (e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent an invoice with respect thereto shall have been received by the Company not fewer than five Business Days (or such lesser number of days as the Company shall agree) prior to the Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder or under any other Loan Document. (f) The Guarantee Requirement shall be satisfied. (g) The Administrative Agent shall have received a letter from Baxter in the form of Exhibit F hereto. The Administrative Agent shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of 51 the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 11.02) on or prior to May 15, 2000. SECTION 4.02. EACH CREDIT EVENT. The obligation of each Lender to make a Loan on the occasion of each Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions: (a) The representations and warranties of the Loan Parties set forth in the Loan Documents shall be true and correct on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, other than representations which are given as of a particular date, in which case the representation shall be true and correct as of that date. (b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, and the application of the proceeds thereof, no Default shall have occurred and be continuing. Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section. SECTION 4.03. INITIAL CREDIT EVENT FOR EACH SWISS BORROWER AND JAPANESE BORROWER. The obligation of each Lender to make Loans to any Swiss Borrower or Japanese Borrower is subject to the satisfaction of the following conditions: (a) The Administrative Agent (or its counsel) shall have received such Borrower's Borrowing Subsidiary Agreement duly executed by all parties thereto. (b) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the formation, existence and good standing of such Borrower, the authorization of the Transactions insofar as they relate to such Borrower and any other legal matters relating to such Borrower, its Borrowing Subsidiary Agreement or such Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel. ARTICLE V AFFIRMATIVE COVENANTS Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, each Borrower covenants and agrees with the Lenders that it will: 52 SECTION 5.01. PAYMENT OF TAXES, ETC. Pay and discharge, and cause each Material Subsidiary to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its income, profit or property, and (ii) all lawful claims which, if unpaid, might by law become a lien upon its property; PROVIDED, HOWEVER, that neither the Company nor any Material Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim which is being contested in good faith and by proper proceedings and with respect to which the Company shall have established appropriate reserves in accordance with GAAP. SECTION 5.02. MAINTENANCE OF INSURANCE. Maintain, and cause each Material Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by (or, as applicable, self-insure in a manner and to an extent not inconsistent with conventions observed by) companies engaged in similar businesses and owning similar properties in the same general areas in which the Company or such Material Subsidiary operates. SECTION 5.03. PRESERVATION OF EXISTENCE, ETC. Preserve and maintain, and cause each Material Subsidiary to preserve and maintain, its corporate, limited liability company or partnership existence, rights (charter and statutory), and franchises, except as otherwise permitted by Section 6.04. SECTION 5.04. COMPLIANCE WITH LAWS, ETC. Comply, and cause each Material Subsidiary to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including, without limitation, all Environmental Laws), noncompliance with which would materially adversely affect the business of the Company and the Subsidiaries or the ability of the Company to obtain credit on commercially reasonable terms. SECTION 5.05. KEEPING OF BOOKS. Keep, and cause each Material Subsidiary to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each Material Subsidiary in accordance with GAAP consistently applied. SECTION 5.06. INSPECTION. Permit, and cause each Material Subsidiary to permit, the Administrative Agent, and its representatives and agents, to inspect any of the properties, corporate books and financial records of the Company and its Material Subsidiaries, to examine and make copies of the books of account and other financial records of the Company and its Material Subsidiaries, and to discuss the affairs, finances and accounts of the Company and its Material Subsidiaries with, and to be advised as to the same by, their respective officers or directors, at such reasonable times during normal business hours and intervals as the Administrative Agent may reasonably designate. SECTION 5.07. REPORTING REQUIREMENTS. Furnish to the Administrative Agent in sufficient copies for distribution to each Lender: (a) As soon as available and in any event within 55 days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated balance sheet 53 of the Company and the consolidated Subsidiaries as of the end of such quarter and a consolidated statement of income and changes in financial position (or consolidated statement of cash flow, as the case may be) of the Company and the consolidated Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, certified by the chief financial officer of the Company; (b) As soon as available and in any event within 100 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and the consolidated Subsidiaries as of the end of such year and a consolidated statement of income and stockholder's equity and changes in financial position of the Company and the consolidated Subsidiaries for such fiscal year and accompanied by (A) a report of PricewaterhouseCoopers LLC, independent public accountants of the Company, or other independent public accountants of nationally recognized standing, on the results of their examination of the consolidated annual financial statements of the Company and the consolidated Subsidiaries, which report shall be unqualified or shall be otherwise reasonably acceptable to the Required Lenders; PROVIDED that such report may set forth qualifications to the extent such qualifications pertain solely to changes in GAAP from earlier accounting periods, the implementation of which changes (with the concurrence of such accountants) is reflected in the financial statements accompanying such report, and (B) a certificate of such accountants substantially in the form of Exhibit 5.07(b); (c) Promptly after the sending or filing thereof, copies of all reports which the Company files with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including, without limitation, all such reports that disclose material litigation pending against the Company or any Material Subsidiary or any material noncompliance with any Environmental Law on the part of the Company or any Material Subsidiary; (d) Together with the financial statements required pursuant to clauses (i) and (ii) above, a certificate signed by the chief financial officer of the Company (A) stating that no Default exists or, if any does exist, stating the nature and status thereof and describing the action the Company proposes to take with respect thereto and (B) demonstrating, in reasonable detail, the calculations used by such officer to determine compliance with the financial covenants contained in Sections 6.07 and 6.08; (e) With respect to each fiscal year for which the Company shall have an aggregate Unfunded Liability of $10,000,000 or more for all of its single employer pension benefit plans covered by Title IV of ERISA and all multiemployer pension benefit plans covered by Title IV of ERISA to which the Company has an obligation to contribute, as soon as available, and in any event within ten months after the end of such fiscal year, a statement of Unfunded Liabilities of each such plan, certified as correct by an actuary enrolled in accordance with regulations under ERISA and a statement of estimated withdrawal liability as of the most recent plan year end as customarily prepared by the trustees under the multiemployer plans to which the Company has an obligation to contribute; 54 (f) As soon as possible, and in any event within 30 days after the occurrence of each event the Company knows is or may be a reportable event (as defined in Section 4043 of ERISA, but excluding any reportable event with respect to which the 30 day reporting requirement has been waived) with respect to any plan with an Unfunded Liability in excess of $10,000,000, a statement signed by the chief financial officer of the Company describing such reportable event and the action which the Company proposes to take with respect thereto; (g) As soon as possible, and in any event within five Business Days after the Company shall become aware of the occurrence of each Default, which Default is continuing on the date of such statement, a statement of the chief financial officer of the Company setting forth details of such Default or event and the action which the Company proposes to take with respect thereto; and (h) From time to time, such other information as to the business and financial condition of the Company and the Subsidiaries and their compliance with the Loan Documents as any Agent, or any Lender through the Administrative Agent, may reasonably request. SECTION 5.08. USE OF PROCEEDS AND LETTERS OF CREDIT. Use the proceeds of Borrowings hereunder and the Letters of Credit for the purposes referred to in the recitals to this Agreement, and not for any purpose that would entail a violation of any applicable law or regulation (including, without limitation, Regulations U and X of the Board). With respect to any Borrowing the proceeds of which shall be used to purchase or carry Margin Stock, the applicable Borrower shall include in the Borrowing Request for such Borrowing such information as shall enable the Lenders and the Borrowers to determine that they are in compliance with such Regulations U and X. SECTION 5.09. GUARANTEE REQUIREMENT. Cause the Guarantee Requirement to be satisfied at all times. ARTICLE VI NEGATIVE COVENANTS Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, each Borrower covenants and agrees with the Lenders that it will not: SECTION 6.01. SUBSIDIARY DEBT. Permit any Material Subsidiary that is not a Subsidiary Guarantor to create, incur, assume or permit to exist any Debt, except: (a) Debt created hereunder; 55 (b) Debt existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Debt that do not increase the outstanding principal amount thereof; (c) Debt to the Company or any other Subsidiary; and (d) other Debt; PROVIDED that the Designated Amount does not at any time exceed 10% of Consolidated Total Assets. SECTION 6.02. LIENS, ETC. Suffer to exist, create, assume or incur, or permit any Material Subsidiary to suffer to exist, create, assume or incur, any Security Interest, or assign, or permit any Material Subsidiary to assign, any right to receive income, in each case to secure Debt or any other obligation or liability, other than: (a) any Security Interest to secure Debt or any other obligation or liability of any Material Subsidiary to the Company; (b) mechanics', materialmen's, carriers' or other like liens arising in the ordinary course of business (including construction of facilities) in respect of obligations which are not due or which are being contested in good faith and for which reasonable reserves have been established; (c) any Security Interest arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation which is required by law or governmental regulation as a condition to the transaction of any business, or the exercise of any privilege, franchise or license; (d) Security Interests for taxes, assessments or governmental charges or levies not yet delinquent or Security Interests for taxes, assessments or governmental charges or levies already delinquent but the validity of which is being contested in good faith and for which reasonable reserves have been established; (e) Security Interests (including judgment liens) arising in connection with legal proceedings so long as such proceedings are being contested in good faith and, in the case of judgment liens, execution thereon is stayed; (f) landlords' liens on fixtures located on premises leased by the Company or a Material Subsidiary in the ordinary course of business; (g) Security Interests arising in connection with contracts and subcontracts with or made at the request of the United States of America, any state thereof, or any department, agency or instrumentality of the United States of America or any state thereof for obligations not yet delinquent; 56 (h) any Security Interest arising by reason of deposits to qualify the Company or a Material Subsidiary to conduct business, to maintain self-insurance, or to obtain the benefit of, or comply with, laws; (i) any purchase money Security Interest claimed by sellers of goods on ordinary trade terms provided that no financing statement has been filed to perfect such Security Interest; (j) any Security Interest existing as of the date hereof and set forth on Schedule 6.02, and the extension thereof to additions, extensions, or improvements to the property subject to the Security Interest which does not arise as a result of borrowing money or the securing of Debt or other obligation or liability created, assumed or incurred after such date; (k) Security Interests on (i) property of a corporation or firm existing at the time such corporation is merged or consolidated with the Company or any Subsidiary or at the time of a sale, lease or other disposition of the properties of a corporation or a firm as an entirety (or the properties of a corporation or firm comprising a product line or line of business, as an entirety) or substantially as an entirety to the Company or a Subsidiary; or (ii) property comprising machinery, equipment or real property acquired by the Company or any of its Material Subsidiaries, which Security Interests shall have existed at the time of such acquisition and secure obligations assumed by the Company or such Material Subsidiary in connection with such acquisition; PROVIDED that the Debt or other obligations or liabilities secured by Security Interests of the type described in this paragraph (k) shall not either (i) have been created in anticipation of such merger, consolidation, sale, lease or other disposition or in contemplation of such acquisition or (ii) at any time exceed an aggregate amount equal to $30,000,000; (l) Security Interests arising in connection with the sale, assignment or other transfer by the Company or any Material Subsidiary of accounts receivable, lease receivables or other payment obligations (any of the foregoing being a "RECEIVABLE") owing to the Company or such Material Subsidiary or any interest in any of the foregoing (together in each case with any collections and other proceeds thereof and any collateral, guarantees or other property or claims in favor of the Company or such Material Subsidiary supporting or securing payment by the obligor thereon of any such Receivables), in each case whether such sale, assignment or other transfer constitutes a "true sale" or a secured financing for accounting, tax or any other purpose; PROVIDED that either (i) such sale, assignment or other transfer shall have been made as part of a sale of the business out of which the applicable Receivables arose, (ii) such sale, assignment or other transfer is made in the ordinary course of business and is for the purpose of collection only, (iii) such sale, assignment or other transfer is made in connection with an agreement on the part of the assignee thereof to render performance under the contract that has given rise to such Receivable, or (iv) in the case of any other sale, assignment or transfer, the Designated Amount does not at any time exceed 10% of Consolidated Total Assets; 57 (m) Security Interests securing non-recourse obligations in connection with leveraged or single-investor lease transactions; (n) Security Interests securing the performance of any contract or undertaking made in the ordinary course of business (as such business is currently conducted) other than for the payment of Debt; (o) any Security Interest granted by any Material Subsidiary; PROVIDED, that (i) the principal business and assets of such Material Subsidiary are located in Puerto Rico or are located outside of the United States, its other territories and possessions, (ii) the property of such Material Subsidiary which is subject to such Security Interest is a parcel of real property, a manufacturing plant, manufacturing equipment, a warehouse, or an office building hereafter acquired, constructed, developed or improved by such Material Subsidiary, and (iii) such Security Interest is created prior to or contemporaneously with, or within 120 days after (x) in the case of acquisition of such property, the completion of such acquisition and (y) in the case of the construction, development or improvement of such property, the later to occur of the completion of such construction, development or improvement or the commencement of operations, use or commercial production (exclusive of test and start-up periods) of such property, and such Security Interest secures or provides for the payment of all or any part of the acquisition cost of such property or the cost of construction, development or improvement thereof, as the case may be; (p) any Security Interest in deposits or cash equivalent investments pledged with a financial institution for the sole purpose of implementing a hedging or financing arrangement commonly known as a "back-to-back" loan arrangement, provided in each case that neither the assets subject to such Security Interest nor the Debt incurred in connection therewith are reflected on the consolidated balance sheet of the Company; or (q) any extension, renewal or refunding (or successive extensions, renewals or refundings) in whole or in part of any Debt or any other obligation or liability secured by any Security Interest referred to in the foregoing paragraphs (a) through (p), PROVIDED that the principal amount of Debt or any other obligation or liability secured by such Security Interest shall not exceed the principal amount outstanding immediately prior to such extension, renewal or refunding, and that the Security Interest securing such Debt or other obligation or liability shall be limited to the property which, immediately prior to such extension, renewal or refunding secured such Debt or other obligation or liability and additions to such property; and PROVIDED FURTHER that the principal amount of Debt or any other obligation or liability secured by such Security Interest shall continue to be taken into account for purposes of computing the amount of Debt or any other obligation or liability that may be secured under any applicable basket provided for in the foregoing paragraphs (a) through (p). Notwithstanding the foregoing provisions of this Section, the Company and the Material Subsidiaries may, at any time, suffer to exist, issue, incur, assume and guarantee Secured Debt (in addition to Secured Debt permitted to be secured under the foregoing 58 paragraphs (a) through (k) and (m) through (q)); PROVIDED that the Designated Amount does not at any time exceed 10% of Consolidated Total Assets. SECTION 6.03. SALE AND LEASEBACK TRANSACTIONS. Enter into or be party to, or permit any Material Subsidiary to enter into or be party to, any Sale and Leaseback Transaction unless after giving effect thereto the Designated Amount does not exceed 10% of Consolidated Total Assets. SECTION 6.04. MERGER, ETC. (a) Permit the Company to merge or consolidate with or into, or Transfer Assets (other than pursuant to the transactions giving rise to the Specified Charges) to, any Person, except that the Company may (i) merge or consolidate with any US Corporation, including any Subsidiary that is a US Corporation, and (ii) Transfer Assets to any Subsidiary which is a US Corporation; PROVIDED, in each case described in clause (i) and (ii) above, that (A) immediately after giving effect to such transaction, no Default shall have occurred and be continuing and (B) in the case of any merger or consolidation to which the Company shall be a party, the survivor of such merger or consolidation shall be the Company. (b) Permit any Material Subsidiary to merge or consolidate with or into, or Transfer Assets (other than pursuant to the transactions giving rise to the Specified Charges) to, any Person unless (i) immediately after giving effect to such transaction, no Default shall have occurred and be continuing and (ii) if either constituent corporation in such merger or consolidation, or the transferor of such assets, is a Subsidiary Guarantor, the surviving or resulting corporation or the transferee of such assets, as the case may be, shall be a Subsidiary Guarantor. SECTION 6.05. CHANGE IN BUSINESS. Permit the Company or any Material Subsidiary to engage to any material extent in any business other than the medical devices, supplies and services businesses (but excluding the management of institutional health care providers such as hospitals, nursing homes, and long-term care facilities). SECTION 6.06. CERTAIN RESTRICTIVE AGREEMENTS. Permit the Company or any Material Subsidiary to enter into any contract or other agreement that would limit the ability of any Material Subsidiary to pay dividends or make loans or advances to, or to repay loans or advances from, the Company or any other Subsidiary; PROVIDED that nothing in this section shall prohibit (a) covenants or agreements entered into in connection with the incurrence of secured Debt permitted hereunder that restrict the transfer of collateral securing such Debt or (b) agreements entered into in connection with sales of Receivables that govern the application of proceeds of sold Receivables. SECTION 6.07. LEVERAGE RATIO. Permit the Leverage Ratio at any time to exceed set forth below opposite such period: PERIOD RATIO through 12/30/00 3.75:1.00 12/31/00 through 12/30/01 3.50:1.00 59 12/31/01 through 12/30/02 3.25:1.00 12/31/02 and thereafter 3.00:1.00 SECTION 6.08. INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio for any period of four consecutive fiscal quarters ending during any period set forth below to be less than the ratio set forth below opposite such period PERIOD RATIO through 12/30/00 4.00:1.00 12/31/00 through 12/30/01 4.25:1.00 12/31/01 through 12/30/02 4.50:1.00 12/31/02 and thereafter 4.75:1.00 SECTION 6.09. SPIN-OFF. Permit the Spin-Off to be completed other than on terms and with results consistent in all material respects with the information contained in the Form 10 and the Confidential Information Memorandum (including the pro forma financial information and projections contained therein). ARTICLE VII EVENTS OF DEFAULT If any of the following events ("EVENTS OF DEFAULT") shall occur and be continuing: (a) Any Borrower shall fail to (i) pay any interest or fee due hereunder and such default continues for five days, or (ii) pay any amount of principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when due hereunder; or (b) Any representation or warranty made or deemed made by the Company or any other Loan Party (or any of their respective officers) in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or (c) The Company or any Material Subsidiary shall fail to maintain its corporate, limited liability company or partnership existence as required by Section 5.03, or the Company or any Material Subsidiary shall fail to perform or observe any term, covenant or agreement contained in Article VI (other than Section 6.02 insofar as such failure results from a nonconsensual Security Interest) of this Agreement on its part to be performed or observed; or (d) The Company or any Subsidiary shall (i) fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document on its part to be performed or observed (other than those failures or breaches referred to in paragraphs (a), 60 (b) and (c) above) and any such failure shall remain unremedied for 30 days after written notice thereof has been given to the Company by the Administrative Agent at the request of any Lender; or (e) Either (i) the Company or any Material Subsidiary shall fail to pay any amount of principal of, interest on or premium with respect to, any Debt (other than the Loans) of the Company or such Subsidiary outstanding under one or more instruments or agreements when due (whether at scheduled maturity or by required prepayment, acceleration, demand or otherwise) and (A) such Debt shall be in an aggregate principal amount not less than $10,000,000 and such failure shall continue beyond the greater of 15 days and the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or (B) such Debt shall be in an aggregate principal amount not less than $20,000,000 and such failure shall continue beyond the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or (ii) any other event shall occur or condition shall exist with respect to any Debt (other than the Loans) of the Company or such Subsidiary outstanding under one or more instruments or agreements if the effect of such event or condition is (or will after the lapse of any grace period be) to cause, or to permit the holder or holders of such debt (or any trustee or agent on their behalf) to cause, such Debt to become due, or to require such Debt to be prepaid (other than by a scheduled prepayment), prior to the stated maturity thereof and (A) such Debt shall be in an aggregate principal amount not less than $10,000,000 and such failure shall continue beyond the greater of 15 days and the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or (B) such Debt shall be in an aggregate principal amount not less than $20,000,000 and such failure shall continue beyond the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or (f) The Company or any Material Subsidiary shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally; or (g) The Company or any Material Subsidiary shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Company or such Material Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debt under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property; or the Company or any such Material Subsidiary shall take corporate action to authorize any of the actions set forth above in this paragraph (f); PROVIDED that, in the case of any such proceeding filed or commenced against the Company or any Material Subsidiary, such event shall not constitute an "Event of Default" hereunder unless either (i) the same shall have remained undismissed or unstayed for a period of 60 days, (ii) an order for relief shall have been entered against the Company or such Material Subsidiary under the federal bankruptcy laws as now or hereafter in effect or (iii) the Company or such Material Subsidiary shall have taken corporate action consenting to, approving or acquiescing in the commencement or maintenance of such proceeding; or (h) Any judgment or order for the payment of money shall be rendered against the Company or any Material Subsidiary and (i) either (A) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (B) there shall be any period of 61 10 consecutive days, in the case of a judgment or order rendered or entered by a court located in the United States, its territories and Puerto Rico, or 30 consecutive days, in the case of any other court, during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect, and (ii) the amount of such judgment or order, when aggregated with the amount of all other such judgments and orders described in this subsection (h), shall exceed $20,000,000; (i) Either (i) the Pension Benefit Guaranty Corporation shall terminate any single-employer plan (as defined in Section 4001(b)(2) of ERISA) that provides benefits for employees of the Company or any Material Subsidiary and such plan shall have an Unfunded Liability in an amount in excess of $5,000,000 at such time or (ii) withdrawal liability shall be assessed against the Company or any Material Subsidiary in connection with any multiemployer plan (whether under Section 4203 or Section 4205 of ERISA) and such withdrawal liability shall be an amount in excess of $5,000,000; or (j) the guarantee of any Subsidiary Guarantor that is a Material Subsidiary under the Subsidiary Guarantee Agreement or the Company's guarantee under Article X shall not be (or shall be asserted by the Company or any Subsidiary Guarantor not to be) valid or in full force and effect; or (k) a Change of Control shall have occurred. then, in any such event but subject to the next sentence, the Administrative Agent shall at the request, or may with the consent, of the Required Lenders, by notice to the Company, (i) declare the obligation of each Lender to make Loans hereunder to be terminated, whereupon the same shall forthwith terminate and/or (ii) declare the entire unpaid principal amount of the Loans, all interest accrued and unpaid thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Loans, all such accrued interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrowers; PROVIDED, that in the case of any Competitive Bid Note, the unpaid principal amount thereof, and all interest accrued and unpaid thereon, shall not be declared to be due and payable pursuant to the foregoing clause (ii) without the consent of the holder of such Competitive Bid Note. In the event of the occurrence of an Event of Default under clause (f) or (g) of this Article VII, (A) the obligation of each Lender to make Loans shall automatically be terminated and (B) the Loans, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by each Borrower. 62 ARTICLE VIII THE AGENTS In order to expedite the transactions contemplated by this Agreement, the Persons named in the heading of this Agreement are hereby appointed to act as Administrative Agent, London Agent and Tokyo Agent on behalf of the Lenders and the Issuing Bank. Each of the Lenders, each assignee of any Lender and the Issuing Bank hereby irrevocably authorizes the Agents to take such actions on behalf of such Lender or assignee or the Issuing Bank and to exercise such powers as are delegated to the Agents by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. The Administrative Agent and, to the extent expressly provided herein, the other Agents are hereby expressly authorized by the Lenders and the Issuing Bank, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders and the Issuing Bank all payments of principal of and interest on the Loans and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender or the Issuing Bank its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Company of any Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Company or any other Loan Party pursuant to this Agreement or the other Loan Documents as received by the Administrative Agent. Without limiting the generality of the foregoing, the Administrative Agent is hereby expressly authorized to release any Subsidiary Guarantor from its obligations under the Subsidiary Guarantee Agreement in the event that all the capital stock of such Guarantor shall be sold, transferred or otherwise disposed of to a Person other than the Company or an Affiliate of the Company in a transaction permitted by Section 6.04. With respect to the Loans made by it hereunder, each Agent in its individual capacity and not as Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not an Agent, and the Agents and their Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Company or any Subsidiary or other Affiliate thereof as if it were not an Agent. The Agents shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise upon receipt of notice in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 11.02), and (c) except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose, and no Agent shall be liable for the failure to disclose, any information relating to the Company or any of its Subsidiaries that is communicated to or obtained by the institution serving as Agent or any of its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall 63 be necessary under the circumstances as provided in Section 11.02) or in the absence of its own gross negligence or wilful misconduct. No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by a Borrower (in which case such Agent shall give written notice to each other Lender), and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to such Agent. Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for any Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by such Agent. Each Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of each Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent. Subject to the appointment and acceptance of a successor Agent as provided in this paragraph, any Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Company. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Company, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. After the Agent's resignation hereunder, the provisions of this Article and Section 11.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent. 64 Each Lender agrees (a) to reimburse the Agents, on demand, in the amount of its pro rata share (based on the amount of its Loans and available Commitments hereunder) of any expenses incurred for the benefit of the Lenders by the Agents, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, that shall not have been reimbursed by the Company or any other Loan Party and (b) to indemnify and hold harmless each Agent and any of its Related Parties, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against it in its capacity as Agent or any of them in any way relating to or arising out of this Agreement or any other Loan Document or action taken or omitted by it or any of them under this Agreement or any other Loan Document, to the extent the same shall not have been reimbursed by the Company or any other Loan Party; PROVIDED that no Lender shall be liable to an Agent or any such other indemnified Person for any portion of such liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of such Agent or any of its directors, officers, employees or agents. Each US Tranche Lender agrees to reimburse each of the Issuing Bank and its directors, officers, employees and agents, in each case, to the same extent and subject to the same limitations as provided above for the Agents. Each Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Agents or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. ARTICLE IX COLLECTION ALLOCATION MECHANISM On the CAM Exchange Date, (i) the Commitments shall automatically and without further act be terminated as provided in Article VII and (ii) the Lenders shall automatically and without further act be deemed to have exchanged interests in the Specified Obligations under the Tranches (and participations in the undrawn amounts of Letters of Credit) such that, in lieu of the interest of each Lender in the Specified Obligations under each Tranche in which it shall participate as of such date (including the principal, reimbursement, interest and fee obligations of each Credit Party in respect of each such Tranche) and, if such Lender shall be a US Tranche Lender, such Lender's participation in undrawn Letters of Credit, such Lender shall own an interest equal to such Lender's CAM Percentage in the Specified Obligations under each of the Tranches (including the principal, reimbursement, interest and fee obligations of each Credit Party in respect of each such Tranche) and hold a participation in the undrawn amount of 65 each outstanding Letter of Credit equal to its CAM Percentage thereof. Each Lender, each person acquiring a participation from any Lender as contemplated by Section 11.02 and each Borrower hereby consents and agrees to the CAM Exchange. Each Borrower and each Lender agrees from time to time to execute and deliver to the Administrative Agent all such promissory notes and other instruments and documents as the Administrative Agent shall reasonably request to evidence and confirm the respective interests and obligations of the Lenders after giving effect to the CAM Exchange, and each Lender agrees to surrender any promissory notes originally received by it in connection with its Loans hereunder to the Administrative Agent against delivery of any promissory notes so executed and delivered; PROVIDED, HOWEVER, that the failure of any Borrower to execute or deliver or of any Lender to accept any such promissory note, instrument or document shall not affect the validity or effectiveness of the CAM Exchange. On the CAM Exchange Date, each Lender whose funded Exposures after giving effect to the CAM Exchange shall exceed its funded Exposures before giving effect thereto shall pay to the Administrative Agent the amount of such excess in the applicable currency or currencies, and the Administrative Agent shall pay to each of the other Lenders, out of the amount so received by it, the amount by which such Lender's funded Exposures before giving effect to the CAM Exchange exceeds such funded Exposures after giving effect thereto. ARTICLE X GUARANTEE In order to induce the Lenders to extend credit to the other Borrowers hereunder, the Company hereby irrevocably and unconditionally guarantees, as a primary obligor and not merely as a surety, the payment when and as due of the Obligations of such other Borrowers. The Company further agrees that the due and punctual payment of such Obligations may be extended or renewed, in whole or in part, without notice to or further assent from it, and that it will remain bound upon its guarantee hereunder notwithstanding any such extension or renewal of any such Obligation. The Company waives presentment to, demand of payment from and protest to any Borrower of any of the Obligations, and also waives notice of acceptance of its obligations and notice of protest for nonpayment. The obligations of the Company hereunder shall not be affected by (a) the failure of any Agent or Lender to assert any claim or demand or to enforce any right or remedy against any Loan Party under the provisions of this Agreement, any other Loan Document or otherwise; (b) any extension or renewal of any of the Obligations; (c) any rescission, waiver, amendment or modification of, or release from, any of the terms or provisions of this Agreement, or any other Loan Document or agreement; (d) any default, failure or delay, wilful or otherwise, in the performance of any of the Obligations; or (e) any other act, omission or delay to do any other act which may or might in any manner or to any extent vary the risk of the Company or otherwise operate as a discharge of a guarantor as a matter of law or equity or which would impair or eliminate any right of the Company to subrogation. The Company further agrees that its agreement hereunder constitutes a guarantee of payment when due (whether or not any bankruptcy or similar proceeding shall have stayed the 66 accrual or collection of any of the Obligations or operated as a discharge thereof) and not merely of collection, and waives any right to require that any resort be had by any Agent or Lender to any balance of any deposit account or credit on the books of any Agent or Lender in favor of any Borrower or any other Person. The obligations of the Company hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever, by reason of the invalidity, illegality or unenforceability of any of the Obligations, any impossibility in the performance of any of the Obligations or otherwise. The Company further agrees that its obligations hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by any Agent or Lender upon the bankruptcy or reorganization of any Borrower or otherwise. In furtherance of the foregoing and not in limitation of any other right which any Agent or Lender may have at law or in equity against the Company by virtue hereof, upon the failure of any other Borrower to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice of prepayment or otherwise, the Company hereby promises to and will, upon receipt of written demand by any Agent or Lender, forthwith pay, or cause to be paid, to the applicable Agent or Lender in cash an amount equal to the unpaid principal amount of such Obligations then due, together with accrued and unpaid interest thereon. The Company further agrees that if payment in respect of any Obligation shall be due in a currency other than US Dollars and/or at a place of payment other than New York and if, by reason of any Change in Law, disruption of currency or foreign exchange markets, war or civil disturbance or other event, payment of such Obligation in such currency or at such place of payment shall be impossible or, in the reasonable judgment of any Agent or Lender, not consistent with the protection of its rights or interests, then, at the election of the Administrative Agent, the Company shall make payment of such Obligation in US Dollars (based upon the applicable Exchange Rate in effect on the date of payment) and/or in New York, and shall indemnify each Agent and Lender against any losses or reasonable out-of-pocket expenses that it shall sustain as a result of such alternative payment. Upon payment by the Company of any sums as provided above, all rights of the Company against any Borrower arising as a result thereof by way of right of subrogation or otherwise shall in all respects be subordinated and junior in right of payment to the prior indefeasible payment in full of all the Obligations owed by such Borrower to the Agents and the Lenders. Nothing shall discharge or satisfy the liability of the Company hereunder except the full performance and payment of the Obligations. 67 ARTICLE XI MISCELLANEOUS SECTION 11.01. NOTICES. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to any Borrower, to 17221 Red Hill Avenue, Irvine, California 92614, Attention of Daniel M. Gallagher (Telecopy No. (949) 250-2275); (b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Anne Bowles (Telecopy No. (212) 552-7500), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, NY 10019, Attention of Steve Rochford (Telecopy No. (212) 270-5135); (c) if to the London Agent, to it at Chase Manhattan International Limited, Trinity Tower, 9 Thomas More Street, London, England E19YT Attention of Loans Agency Division (Telecopy No. 011-44-171-777-2360); with a copy to the Administrative Agent as provided in paragraph (b) above; (d) if to the Tokyo Agent, to it at The Fuji Bank, Limited, International Business Division, 1-5-5 Otemachi, Chiyoda-k, Tokyo, Japan, Attention of Shinya Tanno, (Telecopy No. 011-81-3-3201-1591); with a copy to the Administrative Agent as provided in paragraph (b) above (e) if to the Issuing Bank, to it at the Chase Manhattan Bank, One Chase Manhattan Plaza, New York, New York 10081 Attention of Victor Quinones (Telecopy No. (212) 552-7500); and (f) if to any Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. SECTION 11.02. WAIVERS; AMENDMENTS. (a) No failure or delay by any Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be 68 permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time. (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company and the Required Lenders or by the Company and the Administrative Agent with the consent of the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; PROVIDED that no such agreement shall (i) increase any Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender adversely affected thereby, (iii) postpone the date of any scheduled payment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender (it being understood that the addition of new tranches of loans or commitments that may be extended under this Agreement shall not be deemed to alter such pro rata sharing of payments), (v) change any of the provisions of this Section or the definition of "Required Lenders" or any other provision of any Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be) (except, in each case, to provide for new tranches of loans or commitments that may be extended under this Agreement), (vi) release the Company or all or substantially all the Subsidiary Guarantors from, or limit or condition, its or their obligations under Article X or the Subsidiary Guarantee Agreement, without the written consent of each Lender, (vii) change any provisions of Article IX without the written consent of each Lender, or (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those of Lenders holding Loans of any other Class without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each adversely affected Class; PROVIDED FURTHER that (A) no such agreement shall amend, modify or otherwise affect the rights or duties of any Agent or the Issuing Bank hereunder or under any other Loan Document without the prior written consent of such Agent or the Issuing Bank, as the case may be, and (B) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the US Tranche Lenders (but not the Swiss Tranche Lenders or the Japanese Tranche Lenders), the Swiss Tranche Lenders (but not the Japanese Tranche Lenders or the US Tranche Lenders), or the Japanese Tranche Lenders (but not the US Tranche Lenders or the Swiss Tranche Lenders) may be effected by an agreement or agreements in writing entered into by the Company and requisite percentage in interest of the affected Class of Lenders. For 69 avoidance of doubt, the addition of borrowers as provided in Section 2.21 shall require the consent of the Required Lenders. SECTION 11.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Company shall pay (i) all reasonable out-of-pocket expenses incurred by the Agents and their Affiliates, including the reasonable fees, charges and disbursements of counsel for the Agents, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated, (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and (iii) all reasonable out-of-pocket expenses incurred by any Agent, the Issuing Bank or any Lender, including the reasonable fees, charges and disbursements of any counsel, for any Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with any Loan Document, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. (b) The Company shall indemnify each Agent, the Issuing Bank and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, liabilities, reasonable out-of-pocket costs or expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) any transaction or proposed transaction (whether or not consummated) in which any proceeds of any borrowing hereunder are applied or proposed to be applied, directly or indirectly, by the Company or any Subsidiary, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit, or (iii) the execution, delivery or performance by the Company and the Subsidiaries of the Loan Documents, or any actions or omissions of the Company or any Subsidiary in connection therewith; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, liabilities, costs or expenses shall have resulted from the gross negligence or wilful misconduct of such Indemnitee or the violation by such Indemnitee of any law or court order applicable to it. (c) To the extent that the Company fails to pay any amount required to be paid by it to any Agent or the Issuing Bank under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to such Agent or the Issuing Bank, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; PROVIDED that the unreimbursed loss, liability, cost or expense, as the case may be, was incurred by or asserted against such Agent or the Issuing Bank in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum (without duplication) of the total Exposures and unused Commitments at the time. 70 (d) To the extent permitted by applicable law, no Borrower shall assert, and each Borrower hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. (e) All amounts due under this Section shall be payable within 15 Business Days after receipt by the Company of a reasonably detailed invoice therefor. SECTION 11.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), the Related Parties of each of the Agents, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans or other amounts at the time owing to it); PROVIDED that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Related Fund of any Lender, each of the Company and the Administrative Agent (and in the case of an assignment of all or a portion of a US Tranche Commitment or any Lender's obligations in respect of its LC Exposure, the Issuing Bank) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), (ii) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Related Fund of any Lender or an assignment of the entire remaining amount of the assigning Lender's Commitments and outstanding Loans, the amount of the Commitments and outstanding Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Company and the Administrative Agent otherwise consent, (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 (provided, that if such assignment is an assignment of commitments or Loans under the Japanese Tranche, the processing and recordation fee shall be paid to the Tokyo Agent), and (iv) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and PROVIDED FURTHER that any consent of the Company otherwise required under this paragraph shall not be required if an Event of Default referred to in clause (f) or (g) of Article VII has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have 71 the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 11.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. (c) The Administrative Agent, acting for this purpose as an agent of each Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the "REGISTER"). The entries in the Register shall be conclusive, and the Borrowers, the Administrative Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Company, the Issuing Bank and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender may, without the consent of any Borrower or the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); PROVIDED that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i), (ii), (iii) or (vi) of the first proviso to Section 11.02(b) that affects such Participant. Subject to paragraph (f) of this Section, each Borrower agrees that each Participant shall be entitled to the 72 benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. (f) A Participant shall not be entitled to receive any greater payment under Section 2.15 or 2.17 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Company's prior written consent. A Participant shall not be entitled to the benefits of Section 2.17 unless the Company is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 2.17(e) as though it were a Lender. (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or, in the case of a Lender that is an investment fund, to the trustee under the indenture to which such fund is a party, and this Section shall not apply to any such pledge or assignment of a security interest; PROVIDED that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 11.05. SURVIVAL. All covenants, agreements, representations and warranties made by the Loan Parties herein or in any other Loan Document or in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto or thereto and shall survive the execution and delivery of this Agreement and any other Loan Document and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that any Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.15, 2.16, 2.17, 11.03 and 11.12 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof. SECTION 11.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the 73 Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 11.07. SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 11.08. RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final and in whatever currency denominated) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of any Borrower against any of and all the obligations of such Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. SECTION 11.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York. (b) Each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against any Borrower or its properties in the courts of any jurisdiction. (c) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the 74 parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 11.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 11.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 11.11. HEADINGS. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 11.12. CONFIDENTIALITY. Each Agent, the Issuing Bank and each Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors, to Related Funds' directors and officers and to any direct or indirect contractual counterparty in swap agreements (it being understood that each Person to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) to the extent required or advisable in the judgment of counsel in connection with any suit, action or proceeding relating to the enforcement of rights of the Agents or the Lenders against the Borrowers under this Agreement or any other Loan Document, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Company or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section of which such Agent or Lender is aware or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Company other than as a result of a breach of this Section of which such Agent or Lender is aware. For the purposes of this Section, "INFORMATION" means all information received from the Company 75 relating to the Company or its business, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Company other than as a result of a breach of this Section of which such Agent or Lender is aware. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 11.13. CONVERSION OF CURRENCIES. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given. (b) The obligations of each Borrower in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the "APPLICABLE CREDITOR") shall, notwithstanding any judgment in a currency (the "JUDGMENT CURRENCY") other than the currency in which such sum is stated to be due hereunder (the "AGREEMENT CURRENCY"), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, such Borrower agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Borrowers contained in this Section 11.13 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder. SECTION 11.14. TERMINATION OF COVENANTS. Notwithstanding any other provision in this Agreement, at any time when the Commitments shall have terminated and no Loans shall be outstanding but Letters of Credit are still outstanding, if the Borrowers shall post cash collateral in an amount equal to the LC Exposure, the Borrowers shall no longer be required to comply with the covenants set forth in Article V or Article VI of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. EDWARDS LIFESCIENCES CORP. by /s/ Michael A. Mussallem ---------------------------- Name: Michael A. Mussallem Title: President THE CHASE MANHATTAN BANK, individually and as Administrative Agent and Issuing Bank, by /s/ Robert Anastasio ---------------------------- Name: Robert Anastasio Title: Vice President CHASE MANHATTAN INTERNATIONAL LIMITED, as London Agent, by /s/ David Bell ----------------------------- Name: David Bell Title: Assistant Treasurer CREDIT SUISSE FIRST BOSTON by /s/ William S. Lutkins ---------------------------- Name: William S. Lutkins Title: Vice President by /s/ Thomas G. Muoio ---------------------------- Name: Thomas G. Muoio Title: Vice President THE FUJI BANK, LIMITED, individually and as Tokyo Agent, by /s/ Y. Takeshima ---------------------------- Name: Y. Takeshima Title: General Manager THE FUJI BANK, LIMITED by /s/ Takeyuki Kuroki ---------------------------- Name: Takeyuki Kuroki Title: Vice President and Senior Team Leader BANK OF TOKYO-MITSUBISHI CHICAGO BRANCH, by /s/ Hisashi Miyashiro ---------------------------- Name: Hisashi Miyashiro Title: Deputy General Manager BANK OF TOKYO-MITSUBISHI ICHIGAYA BRANCH, by /s/ Itaru Ando ---------------------------- Name: Itaru Ando Title: General Manager, Ichigaya Branch UBS AG, STAMFORD BRANCH by /s/ Robert H. Riley III ------------------------------------- Name: Robert H. Riley III Title: Executive Director by /s/ Wilfred Saint ------------------------------------- Name: Wilfred Saint Title: Associate Director, Loan Portfolio Support, US UBS AG, ZURICH (Swiss Tranche Lender) by /s/ Wilfred Saint ------------------------------------- Name: Wilfred Saint Title: Associate Director, Loan Portfolio Support, US by /s/ Dorothy McKinley ------------------------------------- Name: Dorothy McKinley Title: Associate Director, Loan Portfolio Support, US DEUTSCHE BANK AG, NEW YORK BRANCH AND/ OR CAYMAN ISLANDS BRANCH by /s/ Iain Stewart ------------------------------------- Name: Iain Stewart Title: Vice President by /s/ Annette Walter ------------------------------------- Name: Annette Walter Title: Associate FIRST UNION NATIONAL BANK, by /s/ Ann M. Dodd ------------------------------------- Name: Ann M. Dodd Title: SVP NATIONAL AUSTRALIA BANK LIMITED., by /s/ Susan R. Julien ------------------------------------- Name: Susan R. Julien Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Robert Bottamedi ------------------------------------- Name: Robert Bottamedi Title: Vice President FLEET NATIONAL BANK, by /s/ Walter J. Marullo ------------------------------------- Name: Walter J. Marullo Title: Vice President BANK OF AMERICA, N.A. by /s/ F. Scott Singhoff ------------------------------------- Name: F. Scott Singhoff Title: Managing Director GOLDMAN SACHS & CO., by /s/ Doug Hendersen ------------------------------------- Name: Doug Hendersen Title: Managing Director WACHOVIA BANK, by /s/ Debra L. Coheley ------------------------------------- Name: Debra L. Coheley Title: Senior Vice President BBV INTERNATIONAL INVESTMENT CORPORATION by /s/ Tomas Rosario ------------------------------------- Name: Tomas Rosario Title: Executive Vice President BANK ONE, NA by /s/ Joseph Perdenza ------------------------------------- Name: Joseph Perdenza Title: Assistant Vice President BANK OF NOVA SCOTIA, by /s/ R. P. Reynolds ------------------------------------- Name: R. P. Reynolds Title: Director ABN AMRO BANK, by /s/ Paul K. Stimpfl ------------------------------------- Name: Paul K. Stimpfl Title: Group Vice President by /s/ Mitsoo Iravani ------------------------------------- Name: Mitsoo Iravani Title: Assistant Vice President EX-10.20 3 EXHIBIT 10.20 EXHIBIT 10.20 CONFORMED COPY ============================================================================== 364-DAY CREDIT AGREEMENT dated as of March 30, 2000 among EDWARDS LIFESCIENCES CORPORATION as Borrower The Lenders Party Hereto THE CHASE MANHATTAN BANK as Administrative Agent BANK ONE, N.A. as Syndication Agent and CREDIT SUISSE FIRST BOSTON as Documentation Agent --------------------------- CHASE SECURITIES INC. as Arranger ============================================================================== TABLE OF CONTENTS
Page ARTICLE I DEFINITIONS SECTION 1.01. Defined Terms.............................................................................1 SECTION 1.02. Classification of Loans and Borrowings...................................................13 SECTION 1.03. Terms Generally..........................................................................13 SECTION 1.04. Accounting Terms; GAAP...................................................................14 ARTICLE II THE CREDITS SECTION 2.01. Commitments..............................................................................14 SECTION 2.02. Loans and Borrowings.....................................................................14 SECTION 2.03. Requests for Revolving Borrowings........................................................15 SECTION 2.04. Competitive Bid Procedure................................................................15 SECTION 2.05. Funding of Borrowings....................................................................18 SECTION 2.06. Repayment of Borrowings; Evidence of Debt................................................18 SECTION 2.07. Interest Elections.......................................................................19 SECTION 2.08. Termination, Reduction and Extension of Commitments......................................20 SECTION 2.09. Increase in Commitments .................................................................21 SECTION 2.10. Prepayment of Loans......................................................................23 SECTION 2.11. Fees.....................................................................................24 SECTION 2.12. Interest.................................................................................24 SECTION 2.13. Alternate Rate of Interest...............................................................25 SECTION 2.14. Increased Costs..........................................................................25 SECTION 2.15. Break Funding Payments...................................................................27 SECTION 2.16. Taxes....................................................................................27 SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Setoffs...............................28 SECTION 2.18. Mitigation Obligations; Replacement of Lenders...........................................30 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.01. Corporate Existence and Standing.........................................................30 SECTION 3.02. Authorization; No Violation..............................................................31 SECTION 3.03. Governmental Consents....................................................................31 SECTION 3.04. Validity.................................................................................31 SECTION 3.05. Litigation...............................................................................31 SECTION 3.06. Financial Statements; No Material Adverse Change.........................................31 2 SECTION 3.07. Investment Company Act...................................................................31 SECTION 3.08. Regulation U.............................................................................32 SECTION 3.09. Environmental Matters....................................................................32 SECTION 3.10. Disclosure...............................................................................32 SECTION 3.11. Year 2000 Compliance.....................................................................32 SECTION 3.12 Subsidiary Guarantors....................................................................32 SECTION 3.13 Solvency.................................................................................32 ARTICLE IV CONDITIONS SECTION 4.01. Effective Date...........................................................................33 SECTION 4.02. Each Credit Event........................................................................34 ARTICLE V AFFIRMATIVE COVENANTS SECTION 5.01. Payment of Taxes, Etc. ..................................................................34 SECTION 5.02. Maintenance of Insurance.................................................................34 SECTION 5.03. Preservation of Existence, Etc. .........................................................35 SECTION 5.04. Compliance with Laws, Etc. ..............................................................35 SECTION 5.05. Keeping of Books.........................................................................35 SECTION 5.06. Inspection...............................................................................35 SECTION 5.07. Reporting Requirements...................................................................35 SECTION 5.08. Use of Proceeds..........................................................................37 SECTION 5.09. Guarantee Requirement....................................................................37 ARTICLE VI NEGATIVE COVENANTS SECTION 6.01. Subsidiary Debt..........................................................................37 SECTION 6.02. Liens, Etc. .............................................................................37 SECTION 6.03. Sale and Leaseback Transactions..........................................................40 SECTION 6.04. Merger, Etc. ............................................................................40 SECTION 6.05. Change in Business.......................................................................41 SECTION 6.06. Certain Restrictive Agreements...........................................................41 SECTION 6.07. Leverage Ratio...........................................................................41 SECTION 6.08. Interest Coverage Ratio..................................................................41 SECTION 6.09 Spin-Off.................................................................................41 3 ARTICLE VII Events of Default.......................................................................................42 ARTICLE VIII The Administrative Agent................................................................................44 ARTICLE IX MISCELLANEOUS SECTION 9.01. Notices..................................................................................47 SECTION 9.02. Waivers; Amendments......................................................................47 SECTION 9.03. Expenses; Indemnity; Damage Waiver.......................................................48 SECTION 9.04. Successors and Assigns...................................................................49 SECTION 9.05. Survival.................................................................................51 SECTION 9.06. Counterparts; Integration; Effectiveness.................................................52 SECTION 9.07. Severability.............................................................................52 SECTION 9.08. Right of Setoff..........................................................................52 SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process...............................52 SECTION 9.10. Waiver of Jury Trial.....................................................................53 SECTION 9.11. Headings.................................................................................53 SECTION 9.12. Confidentiality..........................................................................53 SECTION 9.13. Conversion of Currencies.................................................................54
SCHEDULES: Schedule 1.01 -- Subsidiary Guarantors Schedule 2.01 -- Lenders and Commitments Schedule 2.17 -- Payment Instructions Schedule 6.01 -- Debt of Material Subsidiaries Schedule 6.02 -- Security Interests
EXHIBITS: Exhibit A -- Form of Assignment and Acceptance Exhibit B -- Form of Subsidiary Guarantee Agreement Exhibit C -- Form of Indemnity, Subrogation and Contribution Agreement Exhibit D-1 -- Form of Opinion of Counsel for the Company Exhibit D-2 -- Form of Opinion of General Counsel of the Company Exhibit E -- Form of Side Letter from Baxter
364-DAY CREDIT AGREEMENT dated as of March 30, 2000, among EDWARDS LIFESCIENCES CORPORATION, a Delaware corporation (the "Company"); the LENDERS from time to time party hereto; THE CHASE MANHATTAN BANK, as Administrative Agent; BANK ONE, N.A., as Syndication Agent; and CREDIT SUISSE FIRST BOSTON, as Documentation Agent. The Company has requested the Lenders (such term and each other capitalized term used and not otherwise defined herein having the meaning assigned to it in Article I) to extend credit in the form of a revolving credit facility under which the Company may obtain Loans in US Dollars in an aggregate principal amount at any time outstanding that will not result in the sum of the Revolving Exposures and the Competitive Loan Exposures exceeding $220,000,000. The Company has also requested the Lenders to provide a procedure pursuant to which the Company may invite the Lenders to bid on an uncommitted basis on short-term Loans to the Company. The proceeds of borrowings hereunder and under the Five Year Credit Agreement on the Initial Borrowing Date in an aggregate amount of up to $550,000,000 are to be used to pay Baxter for assets transferred to the Company in connection with the Spin-Off or to repay intercompany debt owed to Baxter and outstanding immediately prior to the Spin-Off; proceeds of the other borrowings hereunder are to be used for general corporate purposes of the Company and their subsidiaries. The Lenders are willing to establish the credit facility referred to in the preceding paragraph upon the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms have the meanings specified below: "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate. "ADMINISTRATIVE AGENT" means The Chase Manhattan Bank, in its capacity as administrative agent for the Lenders hereunder. "ADMINISTRATIVE QUESTIONNAIRE" means an Administrative Questionnaire in a form supplied by the Administrative Agent. "AFFILIATE" means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "AGREEMENT CURRENCY" has the meaning assigned to such term in Section 9.13(b). 2 "ALTERNATE BASE RATE" means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "APPLICABLE RATE" means, for any day, with respect to (i) any Loan of any Type or (ii) the facility fees payable hereunder, as the case may be, the applicable rate per annum set forth under the appropriate caption in the table below, based upon the Leverage Ratio as of the most recent determination date:
=================== ========================== ================== ===================== ================== FACILITY ABR SPREAD LEVERAGE FEE (BASIS LIBOR SPREAD (BASIS (BASIS POINTS CATEGORY RATIO POINTS PER ANNUM) POINTS PER ANNUM) PER ANNUM) =================== ========================== ================== ===================== ================== =================== ========================== ================== ===================== ================== Category 1 < 2.25 12.5 62.5 0 =================== ========================== ================== ===================== ================== Category 2 > 2.25 and < 2.75 15.0 85.0 0 =================== ========================== ================== ===================== ================== Category 3 > 2.75 and < 3.25 17.5 107.5 25.0 =================== ========================== ================== ===================== ================== Category 4 > 3.25 20.0 130.0 50.0 =================== ========================== ================== ===================== ==================
Except as set forth below, the Leverage Ratio used on any date to determine the Applicable Rate shall be that in effect at the end of the most recent fiscal quarter for which financial statements shall have been delivered pursuant to Section 5.07(a) or (b); PROVIDED that if any financial statements required to have been delivered under Section 5.07(a) or (b) shall not at any time have been delivered, the Applicable Rate shall, until such financial statements shall have been delivered, be determined by reference to Category 4 in the Table above. "ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 9.04), and accepted by the Administrative Agent, in the form of Exhibit A or any other form approved by the Administrative Agent. "ATTRIBUTABLE DEBT" means, in connection with any Sale and Leaseback Transaction, the present value (discounted in accordance with GAAP at the discount rate implied in the lease) of the obligations of the lessee for rental payments during the term of the lease. "BAXTER" means Baxter International Inc., a Delaware corporation and, prior to the Spin-Off, the owner of all the issued and outstanding capital stock of the Company. "BOARD" means the Board of Governors of the Federal Reserve System of the United States of America. 3 "BORROWING" means Loans (including one or more Competitive Loans) of the same Class and Type, made, converted or continued on the same date and, in the case of Eurocurrency Loans or Fixed Rate Loans, as to which a single Interest Period is in effect. "BORROWING MINIMUM" means $5,000,000. "BORROWING MULTIPLE" means $1,000,000. "BORROWING REQUEST" means a request by a Borrower for a Revolving Borrowing in accordance with Section 2.03. "BUSINESS DAY" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed; PROVIDED, that when used in connection with a Eurocurrency Loan, the term "BUSINESS DAY" shall also exclude any day on which banks are not open for dealings in deposits in US Dollars in the London interbank market. "CHANGE IN CONTROL" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the Securities and Exchange Commission thereunder as in effect on the date hereof) of shares representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding capital stock of the Company; or (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Company by Persons who were not (i) directors of the Company on the date hereof, (ii) nominated by the board of directors of the Company or (iii) appointed by directors so nominated. "CHANGE IN LAW" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or by any lending office of such Lender or by such Lender's holding company with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. "CHASE" means The Chase Manhattan Bank and its successors. "CLASS", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans or Competitive Loans. "CODE" means the Internal Revenue Code of 1986, as amended from time to time. "COMMITMENT" means, with respect to each Lender, the commitment of such Lender to make Revolving Loans pursuant to Section 2.01, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Exposure hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to 4 Section 9.04. The initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Commitment, as applicable. The aggregate amount of the Commitments on the date hereof is $220,000,000. "COMPANY" has the meaning assigned to such term in the heading of this Agreement. "COMPETITIVE BID" means an offer by a Lender to make a Competitive Loan in accordance with Section 2.04. "COMPETITIVE BID RATE" means, with respect to any Competitive Bid, the Margin or the Fixed Rate, as applicable, offered by the Lender making such Competitive Bid. "COMPETITIVE BID REQUEST" means a request for Competitive Bids in accordance with Section 2.04. "COMPETITIVE BORROWING" means a Borrowing comprised of Competitive Loans. "COMPETITIVE LOAN" means a Loan made pursuant to Section 2.04. Each Competitive Loan shall be a Eurocurrency Loan or a Fixed Rate Loan. "COMPETITIVE LOAN EXPOSURE" means, with respect to any Lender at any time, the aggregate principal amount of the outstanding Competitive Loans of such Lender. "CONFIDENTIAL INFORMATION MEMORANDUM" means the Confidential Information Memorandum dated February 2000 distributed to the Lenders, together with the appendices thereto, as amended through the date hereof. "CONSOLIDATED EBITDA" means, for any period, the consolidated net income of the Company and its consolidated Subsidiaries for such period PLUS, to the extent deducted in computing such consolidated net income for such period, the sum (without duplication) of (a) income tax expense, (b) Consolidated Interest Expense and (c) depreciation and amortization expense, MINUS, to the extent added in computing such consolidated net income for such period, (a) consolidated interest income and (b) extraordinary gains. Anything contained in this definition or elsewhere in this Agreement to the contrary notwithstanding, in calculating Consolidated EBITDA for any four fiscal-quarter period during which the Spin-Off shall have occurred, the Specified Charges shall be excluded. "CONSOLIDATED INTEREST EXPENSE" means, for any period, the interest expense of the Company and the consolidated Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, including (a) the amortization of debt discounts to the extent included in interest expense in accordance with GAAP, (b) the amortization of all fees (including fees with respect to interest rate protection agreements or other interest rate hedging arrangements) payable in connection with the incurrence of Debt to the extent included in interest expense in accordance with GAAP and (c) the portion of any rents payable under capital leases allocable to interest expense in accordance with GAAP. 5 "CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets that would be included on a consolidated balance sheet of the Company and the consolidated Subsidiaries (and which shall reflect the deduction of applicable reserves) after deducting therefrom all current liabilities of the Company and the consolidated Subsidiaries and all Intangible Assets. "CONSOLIDATED TOTAL ASSETS" means the total amount of assets that would be included on a consolidated balance sheet of the Company and the consolidated Subsidiaries. "CONTROL" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto. "DEBT" means, without duplication, (a) indebtedness for borrowed money or for the deferred purchase price of property or services carried as indebtedness on the consolidated balance sheet of the Company and the consolidated Subsidiaries (b) obligations of the Company and the consolidated Subsidiaries as lessee under leases that, in accordance with GAAP, are recorded as capital leases, (c) obligations of the Company and the consolidated Subsidiaries under direct or indirect guarantees in respect of, and obligations (contingent or otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) and (b) above (including actual or contingent liabilities in respect of letters of credit issued to support such indebtedness or other obligations), (d) indebtedness or obligations of the kinds referred to in clauses (a), (b) and (c) above of the unconsolidated Subsidiaries and (e) solely for purposes of Article VII hereof, obligations under interest rate, foreign exchange rate or other hedging agreements. The term "Debt" shall not include the undrawn face amount of any letter of credit issued for the account of the Company or any Subsidiary in the ordinary course of the Company's or such Subsidiary's business (other than any letter of credit referred to in clause (c) above), but shall include the reimbursement obligation owing from time to time by the Company or any of the consolidated Subsidiaries in respect of drawings made under any letter of credit in the event reimbursement is not made immediately following the applicable drawing. For purposes of Article VII, the "principal amount" of the obligations of the Company or any Subsidiary in respect of any hedging agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Company or such Subsidiary would be required to pay if such hedging agreement were terminated at such time. "DEFAULT" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default. "DESIGNATED AMOUNT" means, at any time, the sum of (a) the aggregate outstanding principal amount at such time of Debt of Material Subsidiaries (other than Subsidiary Guarantors) that is permitted under clause (d) of Section 6.01, (b) the aggregate outstanding investment or claim held at such time by purchasers, assignees or other transferees of (or of interests in) Receivables sold under clause (iv) of Section 6.02(l), (c) the aggregate outstanding 6 principal amount at such time of Secured Debt permitted under the last paragraph of Section 6.02 and (d) the aggregate amount at such time of the Attributable Debt in respect of Sale and Leaseback Transactions permitted under Section 6.03. "EFFECTIVE DATE" means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02). "ENVIRONMENTAL LAWS" means all federal, state, local and foreign laws, rules and regulations relating to the release, emission, disposal, storage and related handling of waste materials, pollutants and hazardous substances. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. "EUROCURRENCY", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the LIBO Rate. "EVENT OF DEFAULT" has the meaning assigned to such term in Article VII. "EXCLUDED TAXES" means, with respect to any Lender, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America (or any political subdivision thereof), or by the jurisdiction under which such recipient is organized or in which its principal office or any lending office from which it makes Loans hereunder is located, (b) any branch profit taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction described in clause (a) above, (c) any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction to the extent such tax is in effect and would apply as of the date such Lender becomes a party to this Agreement or relates to payments received by a new lending office designated by such Lender and is in effect and would apply at the time such lending office is designated, (d) any withholding tax that is attributable to such Lender's failure to comply with Section 2.16(e), except, in the case of clause (c) above, to the extent that (i) such Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the applicable Company with respect to such withholding tax pursuant to Section 2.16(a) or (ii) such withholding tax shall have resulted from the making of any payment to a location other than the office designated by the Administrative Agent or such Lender for the receipt of payments of the applicable type from the Company. "FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. 7 "FIVE-YEAR CREDIT AGREEMENT" means the Five-Year Credit Agreement dated as of the date hereof among the Company, the Lenders from time to time party thereto, the Administrative Agent, the London Agent, Tokyo Agent and Zurich Agent named therein and the Syndication Agent and Documentation Agent named in the heading of this Agreement. "FIXED RATE" means, with respect to any Competitive Loan (other than a Eurocurrency Competitive Loan), the fixed rate of interest per annum specified by the Lender making such Competitive Loan in its related Competitive Bid. "FIXED RATE REVOLVING LOAN" means a Competitive Loan bearing interest at a Fixed Rate. "FOREIGN SUBSIDIARY" means any Subsidiary that is not incorporated under the laws of the United States or its territories or possessions. "FORM 10" means the Amended Form 10 filed by the Company with the Securities and Exchange Commission on March 15, 2000. "GAAP" means generally accepted accounting principles in the United States of America. "GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government. "GUARANTEE REQUIREMENT" means, at any time, that (a) the Subsidiary Guarantee Agreement (or a supplement referred to in Section 15 thereof) shall have been executed by each Subsidiary (other than any Foreign Subsidiary) existing at such time, shall have been delivered to the Administrative Agent and shall be in full force and effect and (b) the Indemnity, Subrogation and Contribution Agreement (or a supplement referred to in Section 12 thereof) shall have been executed by the Company and each Subsidiary Guarantor, shall have been delivered to the Administrative Agent and shall be in full force and effect. "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes. "INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT" means an Indemnity, Subrogation and Contribution Agreement substantially in the form of Exhibit C, made by the Company and the Subsidiary Guarantors in favor of the Administrative Agent for the benefit of the Lenders. "INITIAL BORROWING DATE" means the date of the initial Borrowing hereunder. "INTANGIBLE ASSETS" means all assets of the Company and the consolidated Subsidiaries that would be treated as intangibles in conformity with GAAP on a consolidated balance sheet of the Company and the consolidated Subsidiaries. 8 "INTEREST COVERAGE RATIO" means, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period. "INTEREST ELECTION REQUEST" means a request by the relevant Company to convert or continue a Revolving Borrowing in accordance with Section 2.07. "INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan, the last day of each March, June, September and December, (b) with respect to any Eurocurrency Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurocurrency Borrowing with an Interest Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period and (c) with respect to any Fixed Rate Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate Borrowing with an Interest Period of more than 90 days' duration (unless otherwise specified in the applicable Competitive Bid Request), each day prior to the last day of such Interest Period that occurs at intervals of 90 days' duration after the first day of such Interest Period, and any other dates specified in the applicable Competitive Bid Request as Interest Payment Dates with respect to such Borrowing. "INTEREST PERIOD" means, (i) with respect to any Eurocurrency Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the relevant Company may elect and (ii) with respect to any Fixed Rate Borrowing, the period (which shall not be less than 7 days or more than 360 days) commencing on the date of such Borrowing and ending on the date specified in the applicable Competitive Bid Request; PROVIDED that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurocurrency Borrowing only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a Eurocurrency Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made, and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. "JUDGMENT CURRENCY" has the meaning assigned to such term in Section 9.13(b). "LENDERS" means the Persons listed on Schedule 2.01 and any other Person that shall have become a party hereto pursuant to an Assignment and Acceptance or as provided in Section 2.09, other than any such Person that shall have ceased to be a party hereto pursuant to an Assignment and Acceptance. 9 "LEVERAGE RATIO" means, at any time, the ratio of (a) Total Debt at such time to (b) Consolidated EBITDA for the most recent period of four consecutive fiscal quarters of the Company ended at or prior to such time. "LIBO RATE" means, with respect to any Eurocurrency Borrowing for any Interest Period, the rate per annum determined by the Applicable Agent at approximately 11:00 a.m., London time, on the Quotation Day for such Interest Period by reference to the British Bankers' Association Interest Settlement Rates for deposits in US Dollars (as reflected on the applicable Telerate screen), for a period equal to such Interest Period; PROVIDED that, to the extent that an interest rate is not ascertainable pursuant to the foregoing provisions of this definition, "LIBO Rate" shall mean the interest rate per annum determined by the Administrative Agent to be the average of the rates per annum at which deposits in US Dollars are offered for such Interest Period to major banks in the London interbank market by Chase at approximately 11:00 a.m., London time, on the Quotation Day for such Interest Period. "LOAN DOCUMENTS" means this Agreement, the Subsidiary Guarantee Agreement, the Indemnity, Subrogation and Contribution Agreement and each promissory note delivered pursuant to this Agreement. "LOAN PARTIES" means the Company and the Subsidiary Guarantors. "LOANS" means the loans made by the Lenders to the Company pursuant to this Agreement. "MARGIN" means, with respect to any Competitive Loan bearing interest at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be added to or subtracted from the LIBO Rate to determine the rate of interest applicable to such Loan, as specified by the Lender making such Loan in its related Competitive Bid. "MATERIAL SUBSIDIARY" means (a) any Subsidiary that directly or indirectly owns or Controls any Material Subsidiary and (b) any other Subsidiary (i) the net revenues of which for the most recent period of four fiscal quarters of the Company for which audited financial statements have been delivered pursuant to Section 5.01 were greater than 5% of the Company's consolidated net revenues for such period or (ii) the net tangible assets of which as of the end of such period were greater than 5% of Consolidated Net Tangible Assets as of such date; PROVIDED that if at any time the aggregate amount of the net revenues or net tangible assets of all Subsidiaries that are not Material Subsidiaries for or at the end of any period of four fiscal quarters exceeds 5% of the Company's consolidated net revenues for such period or 5% of Consolidated Net Tangible Assets as of the end of such period, the Company (or, in the event the Company has failed to do so within 10 days, the Administrative Agent) shall designate sufficient Subsidiaries as "Material Subsidiaries" to eliminate such excess, and such designated Subsidiaries shall for all purposes of this Agreement constitute Material Subsidiaries. For purposes of making the determinations required by this definition, revenues and assets of Foreign Subsidiaries shall be converted into US Dollars at the rates used in preparing the consolidated balance sheet of the Company included in the applicable financial statements. 10 "MATURITY DATE" means the first anniversary of the Termination Date. "OBLIGATIONS" means (a) the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans made to the Company, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Loan Parties under this Agreement and the other Loan Documents, and (b) unless otherwise agreed upon in writing by the applicable Lender party thereto, the due and punctual payment and performance of all obligations of the Company or any Subsidiary, monetary or otherwise, under each interest rate hedging Agreement relating to Obligations referred to in the preceding clause (a) entered into with any counterparty that was a Lender (or an Affiliate thereof) at the time such hedging agreement was entered into. "OTHER TAXES" means any and all present or future recording, stamp, documentary, excise, transfer, sales, property or similar taxes, charges or levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document. "PERCENTAGE" means, with respect to any Lender, the percentage of the total Commitments represented by such Lender's Commitment. If the Commitments have terminated or expired, the Percentages shall be determined based upon the Commitments most recently in effect, giving effect to any assignments. "PERSON" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity. "PRIME RATE" means the rate of interest per annum publicly announced from time to time by The Chase Manhattan Bank as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. "QUOTATION DAY" means, with respect to any Eurocurrency Borrowing and any Interest Period, the day on which it is market practice in the relevant interbank market for prime banks to give quotations for deposits in US Dollars for delivery on the first day of such Interest Period. If such quotations would normally be given by prime banks on more than one day, the Quotation Day will be the last of such days. "REGISTER" has the meaning set forth in Section 9.04. "RELATED FUND" means, with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in bank loans and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. 11 "RELATED PARTIES" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees, trustees, agents and advisors of such Person and such Person's Affiliates. "REQUIRED LENDERS" means, at any time, Lenders having Revolving Credit Exposures and unused Commitments representing more than 50% of the sum of the total Revolving Credit Exposures and unused Commitments at such time; PROVIDED that, for purposes of declaring the Loans to be due and payable pursuant to Article VII, and for all purposes after the Loans become due and payable pursuant to Article VII or the Commitments expire or terminate, the outstanding Competitive Loans of the Lenders shall be included in their respective Revolving Credit Exposures in determining the Required Lenders. "REVOLVING AVAILABILITY PERIOD" means the period from and including the Effective Date to but excluding the earlier of the Termination Date and the date of termination of the Commitments. "REVOLVING BORROWING" means a Borrowing comprised of Revolving Loans. "REVOLVING EXPOSURE" means, with respect to any Lender at any time, such Lender's Percentage of the aggregate principal amount of the outstanding Revolving Loans. "REVOLVING LOAN" means a Loan made by a Lender pursuant to Section 2.01(a). Each Revolving Loan shall be a Eurocurrency Loan or an ABR Loan. "SALE AND LEASEBACK TRANSACTION" means any arrangement whereby the Company or a Material Subsidiary, directly or indirectly, shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred. "SECURED DEBT" means Debt or any other obligation or liability of the Company or any Material Subsidiary the payment of which is secured by a Security Interest. "SECURITY INTEREST" means any lien, security interest, mortgage or other charge or encumbrance of any kind, title retention device, pledge or any other type of preferential arrangement, upon or with respect to any property of the Company or any Material Subsidiary, whether now owned or hereafter acquired. "SPECIFIED CHARGES" means costs related to the Spin-Off and related restructuring charges accrued during the fiscal quarter in which the Spin-Off occurs or the next succeeding seven fiscal quarters in an aggregate amount not to exceed $100,000,000 (and the cash amount of which does not exceed $50,000,000). 12 "SPIN-OFF" means the distribution by Baxter, on or about April 1, 2000, of all the issued and outstanding capital stock of the Company to the existing shareholders of Baxter on the terms and with the results described in the Form 10. "STATUTORY RESERVE RATE" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve, liquid asset or similar percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by any Governmental Authority of the United States for any category of deposits or liabilities customarily used to fund loans or by reference to which interest rates applicable to Loans in such currency are determined. Such reserve, liquid asset or similar percentages shall include those imposed pursuant to Regulation D of the Board. Eurocurrency Loans shall be deemed to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under any applicable law, rule or regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. "SUBSIDIARY" means, with respect to any Person, any entity with respect to which such Person alone owns, such Person or one or more of its subsidiaries together own, or such Person and any Person Controlling such Person together own, in each case directly or indirectly, capital stock or other equity interests having ordinary voting power to elect a majority of the members of the Board of Directors of such corporation or other entity or having a majority interest in the capital or profits of such corporation or other entity. "SUBSIDIARY" means any subsidiary of the Company. "SUBSIDIARY GUARANTEE AGREEMENT" means a Subsidiary Guarantee Agreement substantially in the form of Exhibit B, made by the Subsidiary Guarantors in favor of the Administrative Agent for the benefit of the Lenders. "SUBSIDIARY GUARANTORS" means each Person listed on Schedule 1.01 and each other Person that becomes party to a Subsidiary Guarantee Agreement as a Subsidiary Guarantor, and the permitted successors and assigns of each such Person. "TAXES" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority. "TERMINATION DATE" means March 29, 2001, or the latest date to which the Termination Date shall have been extended pursuant to Section 2.08(d). "TOTAL DEBT" means, at any date, all Debt of the Company and its consolidated Subsidiaries at such date to the extent such Debt should be reflected on a consolidated balance sheet of the Company at such date in accordance with GAAP. "TRANSACTIONS" means the execution, delivery and performance by the Loan Parties of the Loan Documents, the borrowing of Loans and the use of the proceeds thereof. 13 "TRANSFER ASSETS" means (a) when referring to the Company, the conveyance, transfer, lease or other disposition (whether in one transaction or in a series of transactions) of all or substantially all of the assets of the Company or of the Company and its Subsidiaries taken as a whole, and (b) when referring to a Subsidiary, the conveyance, transfer, lease or other disposition (whether in one transaction or in a series of transactions) of all or substantially all of the assets of such Subsidiary. "TYPE", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the LIBO Rate, the Alternate Base Rate or a Fixed Rate. "UNFUNDED LIABILITIES" means, in the case of a single employer pension benefit plan which is covered by Title IV of ERISA, the amount, if any, by which the present value of all vested benefits accrued to the date of determination under such plan exceeds the fair market value of all assets of such plan allocable to such benefits as of such date, and, in the case of a multiemployer pension plan, the withdrawal liability of the Company and the Subsidiaries. "US CORPORATION" means a corporation organized and existing under the laws of the United States, any state thereof or the District of Columbia. "US DOLLARS" or "$" means the lawful money of the United States of America. SECTION 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For purposes of this Agreement, Loans may be classified and referred to by Class (E.G., a "Revolving Loan") or by Type (E.G., a "Eurocurrency Loan") or by Class and Type (E.G., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and referred to by Class (E.G., a "Revolving Borrowing") or by Type (E.G., a "Eurocurrency Borrowing") or by Class and Type (E.G., a "Eurocurrency Revolving Borrowing"). SECTION 1.03. TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person's successors and assigns, (c) the words "herein", "hereof" and "hereunder" and words of similar import shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (e) the words "asset" and "property" shall be construed to have the same meaning 14 and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. SECTION 1.04. ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP as in effect from time to time; PROVIDED that if the Company notifies the Administrative Agent that the Company requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Company that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. ARTICLE II THE CREDITS SECTION 2.01. COMMITMENTS. Subject to the terms and conditions set forth herein, each Lender agrees to make Revolving Loans to the Company from time to time during the Revolving Availability Period in US Dollars in an aggregate principal amount at any time outstanding that will not result in (i) such Lender's Revolving Exposure exceeding its Commitment or (ii) the aggregate amount of the Lenders' Revolving Exposures and Competitive Loan Exposures exceeding the aggregate amount of the Commitments. SECTION 2.02. LOANS AND BORROWINGS. (a) Each Revolving Loan shall be made as part of a Borrowing consisting of Revolving Loans made by the Lenders ratably in accordance with their respective Commitments. Each Competitive Loan shall be made in accordance with the procedures set forth in Section 2.04. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; PROVIDED that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender's failure to make Loans as required hereunder. (b) Subject to Section 2.13, (i) each Revolving Borrowing shall be comprised entirely of Eurocurrency Loans or ABR Loans and (ii) each Competitive Borrowing shall be comprised entirely of Eurocurrency Loans or Fixed Rate Loans, in each case as the Company may request in accordance herewith. Each Lender at its option may make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan (and in the case of an Affiliate, the provisions of Sections 2.13, 2.14, 2.15 and 2.16 shall apply to such Affiliate to the same extent as to such Lender); PROVIDED that any exercise of such option shall not affect the obligation of the Company to repay such Loan in accordance with the terms of this Agreement. (c) At the commencement of each Interest Period for any Borrowing, such Borrowing shall be in an aggregate amount that is at least equal to the Borrowing Minimum and 15 an integral multiple of the Borrowing Multiple; PROVIDED that (i) an ABR Revolving Borrowing may be made in an aggregate amount that is equal to the aggregate available Commitments. Borrowings of more than one Type and Class may be outstanding at the same time; PROVIDED that there shall not at any time be more than a total of 12 Eurocurrency Revolving Borrowings outstanding. (d) Notwithstanding any other provision of this Agreement, the Company shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. SECTION 2.03. REQUESTS FOR REVOLVING BORROWINGS. To request a Revolving Borrowing, the Company shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurocurrency Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of the proposed Borrowing, and (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Company. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02: (i) the aggregate principal amount of the requested Borrowing; (ii) the date of the requested Borrowing, which shall be a Business Day; (iii) the Type of the requested Borrowing; (iv) in the case of a Eurocurrency Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; and (v) the location and number of the Company's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05. If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, then the Company shall be deemed to have selected an Interest Period of one month's duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender that will make a Loan as part of the requested Borrowing of the details thereof and of the amount of the Loan to be made by such Lender as part of the requested Borrowing. SECTION 2.04. COMPETITIVE BID PROCEDURE. (a) Subject to the terms and conditions set forth herein, from time to time during the Revolving Availability Period the Company may request Competitive Bids for Competitive Loans in US Dollars and may (but shall not have any obligation to) accept Competitive Bids and borrow Competitive Loans; PROVIDED 16 that the sum of the Revolving Exposures and Competitive Loan Exposures at any time shall not exceed the aggregate amount of the Lenders' Commitments. To request Competitive Bids, the Company shall notify the Administrative Agent of such request by telephone, (i) in the case of a Eurocurrency Competitive Borrowing, not later than 12:00 noon, New York City time, four Business Days before the date of the proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Revolving Borrowing, not later than 12:00 noon,New York City time, one Business Day before the date of the proposed Competitive Borrowing. Not more than three Competitive Bid Requests may be submitted on the same day, and a Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request unless any and all such previous Competitive Bid Requests shall have been withdrawn or all Competitive Bids received in response thereto rejected. Each telephonic Competitive Bid Request shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Competitive Bid Request in a form approved by the Administrative Agent and signed by the Company. Each such telephonic and written Competitive Bid Request shall specify the following information in compliance with Section 2.02: (i) the aggregate amount of the requested Borrowing; (ii) the date of such Borrowing, which shall be a Business Day; (iii) whether such Borrowing is to be a Eurocurrency Borrowing or a Fixed Rate Revolving Borrowing; (iv) the Interest Period to be applicable to such Borrowing, which shall be a period contemplated by the definition of the term "Interest Period"; and (v) the location and number of the Company's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05. Promptly following receipt of a Competitive Bid Request in accordance with this Section, the Administrative Agent shall notify the Lenders of the details thereof by telecopy, inviting the Lenders to submit Competitive Bids. (b) Each Lender may (but shall not have any obligation to) make one or more Competitive Bids to the Company in response to a Competitive Bid Request. Each Competitive Bid by a Lender must be in a form approved by the Administrative Agent and must be received by the Administrative Agent by telecopy, (i) in the case of a Eurocurrency Competitive Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Revolving Borrowing, not later than 9:30 a.m., New York City time, on the date of the proposed Competitive Borrowing. Competitive Bids that do not conform to the form approved by the Administrative Agent may be rejected by the Administrative Agent, and the Administrative Agent shall notify the applicable Lender as promptly as practicable. Each Competitive Bid shall specify (i) the principal amount (which shall be in an amount that is at least equal to the Borrowing Minimum and an integral multiple of the Borrowing Multiple, and which may equal the entire principal amount of the Competitive Borrowing requested by the Company) of the Competitive Loan or 17 Loans that the Lender is willing to make, (ii) the Competitive Bid Rate or Rates at which the Lender is prepared to make such Loan or Loans (expressed as a percentage rate per annum in the form of a decimal to no more than four decimal places) and (iii) the Interest Period applicable to each such Loan and the last day thereof. (c) The Administrative Agent shall promptly notify the Company by telecopy of the Competitive Bid Rate and the principal amount specified in each Competitive Bid and the identity of the Lender that shall have made such Competitive Bid. (d) Subject only to the provisions of this paragraph, the Company may accept or reject any Competitive Bid. The Company shall notify the Administrative Agent by telephone, confirmed by telecopy in a form approved by the Administrative Agent, whether and to what extent it has decided to accept or reject each Competitive Bid, (i) in the case of a Eurocurrency Competitive Borrowing or a Fixed Rate Competitive Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of the proposed Competitive Borrowing and (ii) in the case of a Fixed Rate Revolving Borrowing, not later than 10:30 a.m., New York City time, on the date of the proposed Competitive Borrowing; PROVIDED that (i) the failure of the Company to give such notice shall be deemed to be a rejection of each Competitive Bid, (ii) the Company shall not accept a Competitive Bid made at a particular Competitive Bid Rate if the Company rejects a Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by the Company shall not exceed the aggregate amount of the requested Competitive Borrowing specified in the related Competitive Bid Request, (iv) to the extent necessary to comply with clause (iii) above, the Company may accept Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid, and (v) except pursuant to clause (iv) above, no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of at least the Borrowing Minimum and an integral multiple of the Borrowing Multiple; PROVIDED FURTHER that if a Competitive Loan must be in an amount less than the Borrowing Minimum because of the provisions of clause (iv) above, such Competitive Loan may be for a minimum of $1,000,000, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of the Borrowing Multiple in a manner determined by the Company. A notice given by the Company pursuant to this paragraph shall be irrevocable. (e) The Administrative Agent shall promptly notify each bidding Lender by telecopy whether or not its Competitive Bid has been accepted (and, if so, the amount and Competitive Bid Rate so accepted), and each successful bidder will thereupon become bound, subject to the terms and conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted. (f) If the Administrative Agent or one of its Affiliates shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the Company at least one quarter of an hour earlier than the time by which the other Lenders are 18 required to submit their Competitive Bids to the Administrative Agent pursuant to paragraph (b) of this Section. SECTION 2.05. FUNDING OF BORROWINGS. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds in the applicable currency by 11:00 a.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose for Loans of such Class by notice to the applicable Lenders. The Administrative Agent will make such Loans available to the Company by promptly crediting the amounts so received, in like funds, to an account of the Company maintained by the Administrative Agent in New York City. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Company a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Company severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Company to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the rate reasonably determined by the Administrative Agent to be the cost to it of funding such amount or (ii) in the case of the Company, the interest rate applicable to the subject Loan. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing and the Administrative Agent shall return to the Company any amount (including interest) paid by the Company to the Administrative Agent pursuant to this paragraph. SECTION 2.06. REPAYMENT OF BORROWINGS; EVIDENCE OF DEBT. (a) The Company hereby unconditionally promises to pay to the Administrative Agent for the accounts of the applicable Lenders (i) the then unpaid principal amount of each Revolving Borrowing on the Maturity Date and (ii) the then unpaid principal amount of each Competitive Loan on the last day of the Interest Period applicable thereto. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Company to such Lender resulting from each Loan made by such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder. (c) The Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Company to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the accounts of the Lenders and each Lender's share thereof. 19 (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the existence and amounts of the obligations recorded therein; PROVIDED that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligation of the Company to repay the Loans in accordance with the terms of this Agreement. (e) Any Lender may request that Loans of any Class made by it to the Company be evidenced by a promissory note. In such event, the Company shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans evidenced by each such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns). SECTION 2.07. INTEREST ELECTIONS. (a) Each Revolving Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurocurrency Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Company may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurocurrency Borrowing, may elect Interest Periods therefor, all as provided in this Section and on terms consistent with the other provisions of this Agreement. The Company may elect different options with respect to different portions of an affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Revolving Borrowing. (b) To make an election pursuant to this Section, the Company shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Company were requesting a Revolving Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Company. Notwithstanding any contrary provision herein, this Section shall not be construed to permit the Company to elect an Interest Period for Eurocurrency Loans that does not comply with Section 2.02(d). (c) Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02: (i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing); 20 (ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; (iii) the Type of the resulting Borrowing; and (iv) if the resulting Borrowing is to be a Eurocurrency Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period". If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Company shall be deemed to have selected an Interest Period of one month's duration. (d) Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender holding a Loan to which such request relates of the details thereof and of such Lender's portion of each resulting Borrowing. (e) If the Company fails to deliver a timely Interest Election Request with respect to a Eurocurrency Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period, such Borrowing shall be converted to an ABR Borrowing. SECTION 2.08. TERMINATION, REDUCTION AND EXTENSION OF COMMITMENTS. (a) Unless previously terminated, the Commitments shall terminate on the Termination Date; PROVIDED that the Commitments shall terminate at 5:00 p.m., New York City time, on May 15, 2000, if the Initial Borrowing Date shall not have occurred prior to such time. (b) The Company may at any time terminate, or from time to time reduce, the Commitments; PROVIDED that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of the Borrowing Multiple and not less than the Borrowing Minimum and (ii) the Company shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the sum of the aggregate Revolving Exposures and the aggregate Competitive Loan Exposures would exceed the aggregate Commitments. (c) The Company shall notify the Administrative Agent of any election to terminate or reduce the Commitments of any Class under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying the effective date of such election. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Company pursuant to this Section shall be irrevocable; PROVIDED that a notice of termination of the Commitments delivered by the Company may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Company (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. 21 Each reduction of the Commitments of any Class shall be made ratably among the applicable Lenders in accordance with their respective Commitments. (d) The Company may, by notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders) given not less than 60 days and not more than 75 days prior to the Termination Date at any time in effect, request that the Lenders extend the Termination Date for an additional period of not more than 364 days as specified in such notice. Each Lender shall, by notice to the Company and the Administrative Agent given not earlier than the 30th day and not later than the 25th day prior to the Termination Date then in effect, advise the Company whether or not it agrees to such extension on the terms set forth in such notice. Any Lender that has not so advised the Company and the Administrative Agent by such day shall be deemed to have declined to agree to such extension. If the Company shall have requested and Lenders representing at least more than 50% of the aggregate Commitments shall have agreed to an extension of the Termination Date, then the Termination Date shall be extended for the additional period and on the terms specified in the Company's notice. The decision to agree or withhold agreement to any extension of the Termination Date hereunder shall be at the sole discretion of each Lender. The Commitment of any Lender that has declined to agree to any requested extension of the Termination Date (a "Non-Extending Lender") shall terminate on the Termination Date in effect prior to giving effect to any such extension (the "Existing Termination Date"), and the principal amount of any outstanding Loans made by such Lender, together with any accrued interest thereon, and any accrued fees and other amounts payable to or for the account of such Lender hereunder, shall be due and payable on the Existing Termination Date. Notwithstanding the foregoing provisions of this paragraph, (i) the Company shall have the right, pursuant to Section 2.18(b), to replace a Non-Extending Lender with a Lender or other financial institution that will agree to an extension of the Termination Date and (ii) the Company shall have the right, any time prior to the Existing Termination Date, to withdraw its request for an extension under paragraph (b) above by notice to the Administrative Agent (which shall promptly deliver a notice to each Lender), in which case the Commitments of all the Lenders will terminate on the Existing Termination Date and the Maturity Date applicable to all the Loans (including Loans of Non-Extending Lenders) will be the first anniversary of the Existing Termination Date. SECTION 2.09. INCREASE IN COMMITMENTS. (a) The Company may, by written notice to the Administrative Agent (which shall promptly deliver a copy to each of the Lenders), request that the total Commitments be increased by an amount not less than $25,000,000 for any such increase; PROVIDED that after giving effect to any such increase the sum of the total Commitments and the commitments under the Five-Year Credit Agreement shall not exceed $1,000,000,000. Such notice shall set forth the amount of the requested increase in the total Commitments and the date on which such increase is requested to become effective (which shall be not less than 30 Business Days or more than 60 days after the date of such notice), and shall offer each Lender the opportunity to increase its Commitment by its Percentage of the proposed increased amount. Each Lender shall, by notice to the Company and the Administrative Agent given not more than 10 Business Days after the date of the Company's notice, either agree to increase its Commitment by all or a portion of the offered amount (each Lender so agreeing being an "INCREASING LENDER") or decline to increase its Commitment (and any Lender that does not deliver such a notice within such period of 10 Business Days shall be deemed to have declined to increase its Commitment) (each Lender so declining or deemed to have declined being a "NON- 22 INCREASING LENDER"). In the event that, on the 10th Business Day after the Company shall have delivered a notice pursuant to the first sentence of this paragraph, the Lenders shall have agreed pursuant to the preceding sentence to increase their Commitments by an aggregate amount less than the increase in the total Commitments requested by the Company, the Company may arrange for one or more banks or other financial institutions (any such bank or other financial institution being called an "AUGMENTING LENDER"), which may include any Lender, to extend Commitments or increase their existing Commitments in an aggregate amount equal to the unsubscribed amount; PROVIDED that each Augmenting Lender, if not already a Lender hereunder, shall be subject to the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and the Company and each Augmenting Lender shall execute all such documentation as the Administrative Agent shall reasonably specify to evidence the Commitment of such Augmenting Lender and/or its status as a Lender hereunder. Any increase in the total Commitments may be made in an amount which is less than the increase requested by the Company if the Company is unable to arrange for, or chooses not to arrange for, Augmenting Lenders. (b) On the effective date (the "INCREASE EFFECTIVE DATE") of any increase in the total Commitments pursuant to this Section 2.09 (the "COMMITMENT INCREASE"), (i) the aggregate principal amount of the Revolving Loans outstanding (the "INITIAL LOANS") immediately prior to giving effect to the Commitment Increase on the Increase Effective Date shall be deemed to be paid, (ii) each Increasing Lender and each Augmenting Lender that shall have been a Lender prior to the Commitment Increase shall pay to the Administrative Agent or another Agent designated by the Adminstrative Agent for such purpose in same day funds an amount equal to the difference between (A) the product of (1) such Lender's Percentage (calculated after giving effect to the Commitment Increase), multiplied by (2) the amount of the Subsequent Borrowings (as hereinafter defined) and (B) the product of (1) such Lender's Percentage (calculated without giving effect to the Commitment Increase), multiplied by (2) the amount of the Initial Loans, (iii) each Augmenting Lender that shall not have been a Lender prior to the Commitment Increase shall pay to the Administrative Agent or another Agent designated by the Administrative Agent for such purpose in same day funds an amount equal to the product of (1) such Augmenting Lender's Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, and (iv) after the Administrative Agent or other Agent receives the funds specified in clauses (ii) and (iii) above, the Administrative Agent or such other Agent shall pay to each Non-Increasing Lender the portion of such funds that is equal to the difference between (A) the product of (1) such Non-Increasing Lender's Percentage (calculated without giving effect to the Commitment Increase) multiplied by (2) the amount of the Initial Loans, and (B) the product of (1) such Non-Increasing Lender's Percentage (calculated after giving effect to the Commitment Increase) multiplied by (2) the amount of the Subsequent Borrowings, (v) after the effectiveness of the Commitment Increase, the Company shall be deemed to have made new Borrowings (the "SUBSEQUENT BORROWINGS") in an aggregate principal amount equal to the aggregate principal amount of the Initial Loans and of the types and for the Interest Periods specified in a Borrowing Request delivered to the Administrative Agent in accordance with Section 2.04, (vi) each Non-Increasing Lender, each Increasing Lender and each Augmenting Lender shall be deemed to hold its Percentage of each Subsequent Borrowing (each calculated after giving effect to the Commitment Increase) and (vii) the Company shall pay each Increasing Lender and each Non-Increasing Lender any and all accrued but unpaid interest on the 23 Initial Loans. The deemed payments made pursuant to clause (i) above in respect of each Eurocurrency Loan shall be subject to indemnification by the Company pursuant to the provisions of Section 2.15 if the Increase Effective Date occurs other than on the last day of the Interest Period relating thereto and breakage costs result. (c) Increases and new Commitments created pursuant to this Section 2.09 shall become effective on the date specified in the notice delivered by the Company pursuant to the first sentence of paragraph (a) above. (d) Notwithstanding the foregoing, no increase in the Commitments (or in any Commitment of any Lender) or addition of an Augmenting Lender shall become effective under this Section unless, (i) on the date of such increase, the conditions set forth in paragraphs (a) and (b) of Section 4.02 shall be satisfied and the Administrative Agent shall have received a certificate to that effect dated such date and executed by the chief financial officer of the Company, and (ii) the Administrative Agent shall have received (with sufficient copies for each of the Lenders) documents consistent with those delivered on the Effective Date under clauses (b) and (c) of Section 4.01 as to the corporate power and authority of the Company to borrow hereunder after giving effect to such increase. SECTION 2.10. PREPAYMENT OF LOANS. (a) The Company shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with paragraph (d) of this Section; PROVIDED, that Competitive Loans may be prepaid only with the consent of the Lenders making such Loans. (b) If the aggregate Revolving Exposures shall exceed the aggregate Commitments (reduced, in the case of the Commitments, by the aggregate amount of the Lenders' Competitive Loan Exposures), then (i) on the last day of any Interest Period for any Eurocurrency Revolving Borrowing and (ii) on any other date in the event ABR Revolving Borrowings shall be outstanding, the Company shall prepay Revolving Loans or Competitive Loans in an amount equal to the lesser of (A) the amount necessary to eliminate such excess (after giving effect to any other prepayment of Loans on such day) and (B) the amount of the applicable Borrowings referred to in clause (i) or (ii), as applicable. (c) Prior to any optional or mandatory prepayment of Borrowings hereunder, the Company shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to paragraph (d) of this Section. (d) The Company shall notify the Administrative Agent by telephone (confirmed by telecopy) of any prepayment of a Borrowing hereunder (i) in the case of a Eurocurrency Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of such prepayment and (b) in the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of such prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid; PROVIDED that, if a notice of optional prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.08(c), then such notice of prepayment may be revoked if such notice of termination is 24 revoked in accordance with Section 2.08(c). Promptly following receipt of any such notice, the Administrative Agent shall advise the applicable Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.12 and (ii) break funding payments pursuant to Section 2.15. SECTION 2.11. FEES. (a) The Company agrees to pay to the Administrative Agent for the account of each Lender a facility fee, which shall accrue at the Applicable Rate on the daily amount of the Commitment of such Lender (whether used or unused) during the period from and including the date hereof to but excluding the date on which the Commitment of such Lender terminates; PROVIDED that, if such Lender continues to have any Revolving Exposure after its Commitment terminates, then such facility fee shall continue to accrue on the daily amount of such Lender's Revolving Exposure to but excluding the date on which such Lender ceases to have any such Revolving Exposure. Accrued facility fees shall be payable in arrears on the last day of March, June, September and December of each year, commencing on the first such date to occur after the date hereof, and on the date on which all the Commitments shall have terminated and the Lenders shall have no further Revolving Exposures. All facility fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). (b) The Company agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Company and the Administrative Agent. (c) All fees payable hereunder shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, in the case of facility fees, to the Lenders. Fees paid shall not be refundable under any circumstances. SECTION 2.12. INTEREST. (a) The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Rate. (b) The Loans comprising each Eurocurrency Borrowing shall bear interest (i) in the case of a Eurocurrency Revolving Borrowing, at the LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate, or (ii) in the case of a Eurocurrency Competitive Loan, at the LIBO Rate for the Interest Period in effect for such Borrowing plus (or minus, as applicable) the Margin applicable to such Loan. (c) Each Fixed Rate Loan shall bear interest at the Fixed Rate applicable to such Loan. (d) Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee payable by the Company hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% per 25 annum plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) above. (h) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; PROVIDED that (i) interest accrued pursuant to paragraph (g) above shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurocurrency Revolving Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion. (i) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. SECTION 2.13. ALTERNATE RATE OF INTEREST. If prior to the commencement of any Interest Period for a Eurocurrency Borrowing: (a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the LIBO Rate, as the case may be, for such Interest Period; or (b) the Administrative Agent is advised by a majority in interest of the Lenders that would participate in such Borrowing that the LIBO Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; then the Administrative Agent shall give notice thereof to the Company and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Company and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing to, or continuation of any Revolving Borrowing as, a Eurocurrency Borrowing shall be ineffective, and any Eurocurrency Borrowing shall be repaid on the last day of the then current Interest Period applicable thereto, and (ii) any Borrowing Request for a Eurocurrency Revolving Borrowing shall be ineffective. SECTION 2.14. INCREASED COSTS. (a) If any Change in Law shall: 26 (i) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender; or (ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurocurrency Loans made by such Lender or participations therein; and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurocurrency Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise), then the Company will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. (b) If any Lender reasonably determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's policies and the policies of such Lender's holding company with respect to capital adequacy), then from time to time the Company will pay to such Lender such additional amount or amounts as will compensate such Lender or such Lender's holding company for any such reduction suffered. (c) Each Lender shall determine the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section using the methods customarily used by it for such purpose (and if such Lender uses more than one such method, the method used hereunder shall be that which most accurately determines such amount or amounts). A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section, and setting forth in reasonable detail the calculations used by such Lender to determine such amount, shall be delivered to the Company and shall be conclusive absent manifest error. The Company shall pay to such Lender the amount shown as due on any such certificate within 15 Business Days after receipt thereof. (d) Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's right to demand such compensation; PROVIDED that the Company shall not be required to compensate a Lender pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies the Company of the Change in Law giving rise to such increased costs or reductions and delivers a certificate with respect thereto as provided in paragraph (c) above; PROVIDED FURTHER that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. 27 SECTION 2.15. BREAK FUNDING PAYMENTS. In the event of (a) the payment of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurocurrency Loan to a Loan of a different Type or Interest Period other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.10(d) and is revoked in accordance therewith), or (d) the assignment or deemed assignment of any Eurocurrency Loan or Fixed Rate Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Company pursuant to Section 2.18, then, in any such event, the Company shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have accrued on the principal amount of such Loan had such event not occurred, at the LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest that would accrue on such principal amount for such period at the interest rate such Lender would bid were it to bid, at the commencement of such period, for deposits in US Dollars of a comparable amount and period from other banks in the London interbank market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section, and setting forth in reasonable detail the calculations used by such Lender to determine such amount or amounts, shall be delivered to the Company and shall be conclusive absent manifest error. The Company shall pay such Lender the amount shown as due on any such certificate within 15 Business Days after receipt thereof. SECTION 2.16. TAXES. (a) Any and all payments by or on account of the Company hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; PROVIDED that if the Company shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Administrative Agent or the applicable Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Company shall make such deductions and (iii) the Company shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) In addition, the Loan Parties shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) The Company shall indemnify the Administrative Agent and each Lender, within 15 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender on or with respect to any payment by or on account of any obligation of the Company hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) and any penalties, interest and reasonable expenses arising 28 therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability setting forth in reasonable detail the circumstances giving rise thereto and the calculations used by such Lender to determine the amount thereof delivered to the Company by a Lender or by the Administrative Agent, on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. (d) As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Company to a Governmental Authority, the Company shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent. (e) Any Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Company is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Company (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by the Company as will permit such payments to be made without withholding or at a reduced rate; PROVIDED that such Lender has received written notice from the Company advising it of the availability of such exemption or reduction and containing all applicable documentation. (f) Each Lender, on the date it becomes a Lender hereunder, will designate lending offices for the Loans to be made by it such that, on such date, it will not be liable for any withholding tax that is imposed by the United States of America (or any political subdivision thereof) on payments by the Company from an office within such jurisdiction. SECTION 2.17. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SETOFFS. (a) The Company shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon, New York City time, on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent to the applicable account specified in Schedule 2.17 or, in any such case, to such other account as the Administrative Agent shall from time to time specify in a notice delivered to the Company; PROVIDED that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein (it being agreed that the Company will be deemed to have satisfied its obligations with respect to payments referred to in this proviso if it shall make such payments to the persons entitled thereto in accordance with instructions provided by the Administrative Agent; the Administrative Agent agrees to provide such instructions upon request, and the Company will not be deemed to have failed to make such a payment if it shall transfer such payment to an improper account or address as a result of the failure of the Administrative Agent to provide proper instructions). The Administrative Agent shall distribute any such payments received by it for the account of any 29 Lender or other Person promptly following receipt thereof at the appropriate lending office or other address specified by such Lender or other Person. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in US Dollars. Any payment required to be made by the Administrative Agent hereunder shall be deemed to have been made by the time required if the Administrative Agent shall, at or before such time, have taken the necessary steps to make such payment in accordance with the regulations or operating procedures of the clearing or settlement system used by it to make such payment. (b) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on its Revolving Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of their respective Revolving Loans; PROVIDED that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Company pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Company or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Company consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Company rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Company in the amount of such participation. (d) Unless the Administrative Agent shall have received notice from the Company prior to the date on which any payment is due for the account of all or certain of the Lenders hereunder that the Company will not make such payment, the Administrative Agent may assume that the Company has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the applicable Lenders, as the case may be, the amount due. In such event, if the Company has not in fact made such payment, then each of the applicable Lenders severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at a rate determined by the Administrative Agent in accordance with banking industry practices on interbank compensation. (e) If any Lender shall fail to make any payment required to be made by it to any Agent pursuant to this Agreement, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by it for 30 the account of such Lender to satisfy such Lender's obligations to the Administrative Agent until all such unsatisfied obligations are fully paid. SECTION 2.18. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS. (a) If any Lender requests compensation under Section 2.14, or if the Company is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Company hereby agrees to pay all reasonable, direct, out-of-pocket costs and expenses incurred by any Lender in connection with any such designation or assignment. (b) If any Lender requests compensation under Section 2.14, or if any Loan Party is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, or if any Lender defaults in its obligation to fund Loans hereunder, or if any Lender fails to agree to an extension of the Termination Date as provided in Section 2.08(d), then the Company may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 9.04), all its interests, rights and obligations under the Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); PROVIDED that (i) the Company shall have received the prior written consent of the Administrative Agent, which consent shall not be unreasonably be withheld and (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee or the Company. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Company to require such assignment and delegation cease to apply. ARTICLE III REPRESENTATIONS AND WARRANTIES The Company represents and warrants as follows: SECTION 3.01. CORPORATE EXISTENCE AND STANDING. The Company and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite authority to conduct its business in each jurisdiction in which the failure so to qualify would have a material adverse effect on the business, properties, assets, operations or condition (financial or otherwise) of the Company. 31 SECTION 3.02. AUTHORIZATION; NO VIOLATION. The Transactions are within each Loan Party's corporate or partnership powers, have been duly authorized by all necessary corporate or partnership action, and do not contravene (i) any Loan Party's charter, by-laws or other constitutive documents or (ii) any law or any contractual restriction binding on or affecting any Loan Party. SECTION 3.03. GOVERNMENTAL CONSENTS. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required for the due execution, delivery and performance by the Loan Parties of this Agreement or the other Loan Documents. SECTION 3.04. VALIDITY. This Agreement is, and the other Loan Documents when delivered will be, the legal, valid and binding obligations of the Loan Parties party thereto, enforceable against such Loan Parties in accordance with their respective terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally and to the effect of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). SECTION 3.05. LITIGATION. There is no pending or, to the best of the knowledge of the Company, threatened action or proceeding affecting the Company or any of its Subsidiaries before any court, governmental agency or arbitrator, which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Company and the Subsidiaries, taken as a whole, or which purports to affect the legality, validity or enforceability of this Agreement or any other Loan Document, other than any actions or proceedings disclosed in the Form 10 (but only to the extent there has been no worsening of such actions or proceedings which could reasonably be expected to have a material adverse effect on the financial condition or operations of the Company and the Subsidiaries, taken as a whole). SECTION 3.06. FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. (a) The consolidated balance sheet at December 31, 1999, and the related consolidated statements of income and stockholder's equity for the fiscal year then ended of the Company and its consolidated Subsidiaries, copies of which have been furnished to each Lender, present fairly the financial position of the Company and its consolidated Subsidiaries at December 31, 1999, and the results of the operations and changes in financial position of the Company and its consolidated Subsidiaries for the fiscal year then ended, in conformity with GAAP consistently applied. (b) As of the date hereof there has been, since December 31, 1999, no material adverse change in the business, operations or financial condition of the Company and the Subsidiaries, taken as a whole (it being understood that a change to the equity method in accounting for the assets, liabilities and results of operations of the Company's Japanese Subsidiaries will not constitute such a material adverse change). SECTION 3.07. INVESTMENT COMPANY ACT. The Company is not (i) an "investment company," (ii) a company "controlled" by an "investment company" which is registered under the Investment Company Act of 1940, as amended, or (iii) to the best knowledge 32 of the Company, a company "controlled" by any other "investment company" within the meaning of the Investment Company Act of 1940, as amended. SECTION 3.08. REGULATION U. Neither the Company nor any of the Subsidiaries is engaged in the business of purchasing or carrying Margin Stock. The value of the Margin Stock owned directly or indirectly by the Company or any Subsidiary which is subject to any arrangement hereunder is less than an amount equal to 25% of the value of all assets of the Company and/or such Subsidiary subject to such arrangement (as described in the definition of "Indirectly Secured" in Section 221.2 of Regulation U issued by the Board of Governors of the Federal Reserve System). SECTION 3.09. ENVIRONMENTAL MATTERS. The operations of the Company and each Material Subsidiary comply in all material respects with all Environmental Laws, the noncompliance with which would materially adversely affect the business of the Company or the ability of the Company to obtain credit on commercially reasonable terms. SECTION 3.10. DISCLOSURE. None of the Confidential Information Memorandum, the Form 10 or any other written information prepared and furnished by or on behalf of the Loan Parties to any Agent or Lender in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains as of the date thereof (or, in the case of any such information that is not dated, the earliest date on which such information is furnished to the Administrative Agent or any Lender) any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; PROVIDED that, with respect to projected financial information, the Company represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. SECTION 3.11. YEAR 2000 COMPLIANCE. There has not occurred, and the Company does not expect that there will occur, any material disruption in the operations or business systems of the Company and the Subsidiaries resulting from the inability of computer systems of the Company and the Subsidiaries or equipment containing embedded microchips to recognize or properly process dates in or following the year 2000. SECTION 3.12. SUBSIDIARY GUARANTORS. The Subsidiary Guarantors include all the Material Subsidiaries, other than Foreign Subsidiaries. SECTION 3.13. SOLVENCY. As of the Initial Borrowing Date, after giving effect to the Borrowings hereunder on such date and the distributions to Baxter and other transactions related to the Spin-Off, (a) the fair value of the assets of the Company and the Subsidiaries, at a fair valuation, will exceed their debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of the Company and the Subsidiaries will be greater than the amount that will be required to pay the probable liability in respect of their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) the Company and the Subsidiaries will be able to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute 33 and matured; and (d)the Company and the Subsidiaries will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the completion of the Spin-Off. ARTICLE IV CONDITIONS SECTION 4.01. EFFECTIVE DATE. The obligations of the Lenders to make Loans hereunder shall not become effective until the date on which each of the following conditions has been satisfied (or waived in accordance with Section 9.02): (a) The Administrative Agent (or its counsel) shall have received from each party hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement. (b) The Administrative Agent shall have received favorable written opinions (addressed to the Administrative Agent and the Lenders and dated the Effective Date) of (i) Sidley & Austin, special counsel for the Company, substantially in the form of Exhibit D-1, and (ii) the General Counsel of the Company, substantially in the form of Exhibit D-2. Each Loan Party hereby requests such counsel to deliver such opinions. (c) The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the formation, existence and good standing of the Loan Parties and the authorization of the Transactions, all in form and substance satisfactory to the Administrative Agent and its counsel. (d) The Administrative Agent shall have received (i) a certificate, dated the Effective Date and signed by the chief financial officer of the Company, confirming that all the conditions set forth in this Section 4.01 and in paragraphs (a) and (b) of Section 4.02 have been satisfied. (e) The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to the extent an invoice with respect thereto shall have been received by the Company not fewer than five Business Days (or such lesser number of days as the Company shall agree) prior to the Effective Date, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder or under any other Loan Document. (f) The Guarantee Requirement shall be satisfied. (g) The Administrative Agent shall have received a letter from Baxter in the form of Exhibit E. 34 The Administrative Agent shall notify the Company and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 9.02) on or prior to May 15, 2000. SECTION 4.02. EACH CREDIT EVENT. The obligation of each Lender to make a Loan on the occasion of each Borrowing is subject to the satisfaction of the following conditions: (a) The representations and warranties of the Loan Parties set forth in the Loan Documents shall be true and correct on and as of the date of such Borrowing, other than representations which are given as of a particular date, in which case the representation shall be true and correct as of that date. (b) At the time of and immediately after giving effect to such Borrowing and the application of the proceeds thereof, no Default shall have occurred and be continuing. Each Borrowing shall be deemed to constitute a representation and warranty by the Company on the date thereof as to the matters specified in paragraphs (a) and (b) of this Section. ARTICLE V AFFIRMATIVE COVENANTS Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Company covenants and agrees with the Lenders that it will: SECTION 5.01. PAYMENT OF TAXES, ETC. Pay and discharge, and cause each Material Subsidiary to pay and discharge, before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies imposed upon it or upon its income, profit or property, and (ii) all lawful claims which, if unpaid, might by law become a lien upon its property; PROVIDED, HOWEVER, that neither the Company nor any Material Subsidiary shall be required to pay or discharge any such tax, assessment, charge or claim which is being contested in good faith and by proper proceedings and with respect to which the Company shall have established appropriate reserves in accordance with GAAP. SECTION 5.02. MAINTENANCE OF INSURANCE. Maintain, and cause each Material Subsidiary to maintain, insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by (or, as applicable, self-insure in a manner and to an extent not inconsistent with conventions observed by) companies engaged in similar businesses and owning similar properties in the same general areas in which the Company or such Material Subsidiary operates. 35 SECTION 5.03. PRESERVATION OF EXISTENCE, ETC. Preserve and maintain, and cause each Material Subsidiary to preserve and maintain, its corporate, limited liability company or partnership existence, rights (charter and statutory), and franchises, except as otherwise permitted by Section 6.04. SECTION 5.04. COMPLIANCE WITH LAWS, ETC. Comply, and cause each Material Subsidiary to comply, with the requirements of all applicable laws, rules, regulations and orders of any Governmental Authority (including, without limitation, all Environmental Laws), noncompliance with which would materially adversely affect the business of the Company and the Subsidiaries or the ability of the Company to obtain credit on commercially reasonable terms. SECTION 5.05. KEEPING OF BOOKS. Keep, and cause each Material Subsidiary to keep, proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each Material Subsidiary in accordance with GAAP consistently applied. SECTION 5.06. INSPECTION. Permit, and cause each Material Subsidiary to permit, the Administrative Agent, and its representatives and agents, to inspect any of the properties, corporate books and financial records of the Company and its Material Subsidiaries, to examine and make copies of the books of account and other financial records of the Company and its Material Subsidiaries, and to discuss the affairs, finances and accounts of the Company and its Material Subsidiaries with, and to be advised as to the same by, their respective officers or directors, at such reasonable times during normal business hours and intervals as the Administrative Agent may reasonably designate. SECTION 5.07. REPORTING REQUIREMENTS. Furnish to the Administrative Agent in sufficient copies for distribution to each Lender: (a) As soon as available and in any event within 55 days after the end of each of the first three quarters of each fiscal year of the Company, a consolidated balance sheet of the Company and the consolidated Subsidiaries as of the end of such quarter and a consolidated statement of income and changes in financial position (or consolidated statement of cash flow, as the case may be) of the Company and the consolidated Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, certified by the chief financial officer of the Company; (b) As soon as available and in any event within 100 days after the end of each fiscal year of the Company, a consolidated balance sheet of the Company and the consolidated Subsidiaries as of the end of such year and a consolidated statement of income and stockholder's equity and changes in financial position of the Company and the consolidated Subsidiaries for such fiscal year and accompanied by (A) a report of PricewaterhouseCoopers LLC, independent public accountants of the Company, or other independent public accountants of nationally recognized standing, on the results of their examination of the consolidated annual financial statements of the Company and the consolidated Subsidiaries, which report shall be unqualified or shall be otherwise reasonably acceptable to the Required Lenders; PROVIDED that such report may set forth 36 qualifications to the extent such qualifications pertain solely to changes in GAAP from earlier accounting periods, the implementation of which changes (with the concurrence of such accountants) is reflected in the financial statements accompanying such report, and (B) a certificate of such accountants substantially in the form of Exhibit 5.07(b); (c) Promptly after the sending or filing thereof, copies of all reports which the Company files with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including, without limitation, all such reports that disclose material litigation pending against the Company or any Material Subsidiary or any material noncompliance with any Environmental Law on the part of the Company or any Material Subsidiary; (d) Together with the financial statements required pursuant to clauses (i) and (ii) above, a certificate signed by the chief financial officer of the Company (A) stating that no Default exists or, if any does exist, stating the nature and status thereof and describing the action the Company proposes to take with respect thereto and (B) demonstrating, in reasonable detail, the calculations used by such officer to determine compliance with the financial covenants contained in Sections 6.07 and 6.08; (e) With respect to each fiscal year for which the Company shall have an aggregate Unfunded Liability of $10,000,000 or more for all of its single employer pension benefit plans covered by Title IV of ERISA and all multiemployer pension benefit plans covered by Title IV of ERISA to which the Company has an obligation to contribute, as soon as available, and in any event within ten months after the end of such fiscal year, a statement of Unfunded Liabilities of each such plan, certified as correct by an actuary enrolled in accordance with regulations under ERISA and a statement of estimated withdrawal liability as of the most recent plan year end as customarily prepared by the trustees under the multiemployer plans to which the Company has an obligation to contribute; (f) As soon as possible, and in any event within 30 days after the occurrence of each event the Company knows is or may be a reportable event (as defined in Section 4043 of ERISA, but excluding any reportable event with respect to which the 30 day reporting requirement has been waived) with respect to any plan with an Unfunded Liability in excess of $10,000,000, a statement signed by the chief financial officer of the Company describing such reportable event and the action which the Company proposes to take with respect thereto; (g) As soon as possible, and in any event within five Business Days after the Company shall become aware of the occurrence of each Default, which Default is continuing on the date of such statement, a statement of the chief financial officer of the Company setting forth details of such Default or event and the action which the Company proposes to take with respect thereto; and (h) From time to time, such other information as to the business and financial condition of the Company and the Subsidiaries and their compliance with the Loan 37 Documents as any Agent, or any Lender through the Administrative Agent, may reasonably request. SECTION 5.08. USE OF PROCEEDS. Use the proceeds of Borrowings hereunder for the purposes referred to in the recitals to this Agreement, and not for any purpose that would entail a violation of any applicable law or regulation (including, without limitation, Regulations U and X of the Board). With respect to any Borrowing the proceeds of which shall be used to purchase or carry Margin Stock, the Company shall include in the Borrowing Request for such Borrowing such information as shall enable the Lenders and the Company to determine that they are in compliance with such Regulations U and X. SECTION 5.09. GUARANTEE REQUIREMENT. Cause the Guarantee Requirement to be satisfied at all times. ARTICLE VI NEGATIVE COVENANTS Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder have been paid in full, the Company covenants and agrees with the Lenders that it will not: SECTION 6.01. SUBSIDIARY DEBT. Permit any Material Subsidiary that is not a Subsidiary Guarantor to create, incur, assume or permit to exist any Debt, except: (a) Debt created hereunder; (b) Debt existing on the date hereof and set forth in Schedule 6.01 and extensions, renewals and replacements of any such Debt that do not increase the outstanding principal amount thereof; (c) Debt to the Company or any other Subsidiary; and (d) other Debt; PROVIDED that the Designated Amount does not at any time exceed 10% of Consolidated Total Assets. SECTION 6.02. LIENS, ETC. Suffer to exist, create, assume or incur, or permit any Material Subsidiary to suffer to exist, create, assume or incur, any Security Interest, or assign, or permit any Material Subsidiary to assign, any right to receive income, in each case to secure Debt or any other obligation or liability, other than: (a) any Security Interest to secure Debt or any other obligation or liability of any Material Subsidiary to the Company; 38 (b) mechanics', materialmen's, carriers' or other like liens arising in the ordinary course of business (including construction of facilities) in respect of obligations which are not due or which are being contested in good faith and for which reasonable reserves have been established; (c) any Security Interest arising by reason of deposits with, or the giving of any form of security to, any governmental agency or any body created or approved by law or governmental regulation which is required by law or governmental regulation as a condition to the transaction of any business, or the exercise of any privilege, franchise or license; (d) Security Interests for taxes, assessments or governmental charges or levies not yet delinquent or Security Interests for taxes, assessments or governmental charges or levies already delinquent but the validity of which is being contested in good faith and for which reasonable reserves have been established; (e) Security Interests (including judgment liens) arising in connection with legal proceedings so long as such proceedings are being contested in good faith and, in the case of judgment liens, execution thereon is stayed; (f) landlords' liens on fixtures located on premises leased by the Company or a Material Subsidiary in the ordinary course of business; (g) Security Interests arising in connection with contracts and subcontracts with or made at the request of the United States of America, any state thereof, or any department, agency or instrumentality of the United States of America or any state thereof for obligations not yet delinquent; (h) any Security Interest arising by reason of deposits to qualify the Company or a Material Subsidiary to conduct business, to maintain self-insurance, or to obtain the benefit of, or comply with, laws; (i) any purchase money Security Interest claimed by sellers of goods on ordinary trade terms provided that no financing statement has been filed to perfect such Security Interest; (j) any Security Interest existing as of the date hereof and set forth on Schedule 6.02, and the extension thereof to additions, extensions, or improvements to the property subject to the Security Interest which does not arise as a result of borrowing money or the securing of Debt or other obligation or liability created, assumed or incurred after such date; (k) Security Interests on (i) property of a corporation or firm existing at the time such corporation is merged or consolidated with the Company or any Subsidiary or at the time of a sale, lease or other disposition of the properties of a corporation or a firm as an entirety (or the properties of a corporation or firm comprising a product line or line of 39 business, as an entirety) or substantially as an entirety to the Company or a Subsidiary; or (ii) property comprising machinery, equipment or real property acquired by the Company or any of its Material Subsidiaries, which Security Interests shall have existed at the time of such acquisition and secure obligations assumed by the Company or such Material Subsidiary in connection with such acquisition; PROVIDED that the Debt or other obligations or liabilities secured by Security Interests of the type described in this paragraph (k) shall not either (i) have been created in anticipation of such merger, consolidation, sale, lease or other disposition or in contemplation of such acquisition or (ii) at any time exceed an aggregate amount equal to $30,000,000; (l) Security Interests arising in connection with the sale, assignment or other transfer by the Company or any Material Subsidiary of accounts receivable, lease receivables or other payment obligations (any of the foregoing being a "RECEIVABLE") owing to the Company or such Material Subsidiary or any interest in any of the foregoing (together in each case with any collections and other proceeds thereof and any collateral, guarantees or other property or claims in favor of the Company or such Material Subsidiary supporting or securing payment by the obligor thereon of any such Receivables), in each case whether such sale, assignment or other transfer constitutes a "true sale" or a secured financing for accounting, tax or any other purpose; PROVIDED that either (i) such sale, assignment or other transfer shall have been made as part of a sale of the business out of which the applicable Receivables arose, (ii) such sale, assignment or other transfer is made in the ordinary course of business and is for the purpose of collection only, (iii) such sale, assignment or other transfer is made in connection with an agreement on the part of the assignee thereof to render performance under the contract that has given rise to such Receivable, or (iv) in the case of any other sale, assignment or transfer, the Designated Amount does not at any time exceed 10% of Consolidated Total Assets; (m) Security Interests securing non-recourse obligations in connection with leveraged or single-investor lease transactions; (n) Security Interests securing the performance of any contract or undertaking made in the ordinary course of business (as such business is currently conducted) other than for the payment of Debt; (o) any Security Interest granted by any Material Subsidiary; PROVIDED, that (i) the principal business and assets of such Material Subsidiary are located in Puerto Rico or are located outside of the United States, its other territories and possessions, (ii) the property of such Material Subsidiary which is subject to such Security Interest is a parcel of real property, a manufacturing plant, manufacturing equipment, a warehouse, or an office building hereafter acquired, constructed, developed or improved by such Material Subsidiary, and (iii) such Security Interest is created prior to or contemporaneously with, or within 120 days after (x) in the case of acquisition of such property, the completion of such acquisition and (y) in the case of the construction, development or improvement of such property, the later to occur of the completion of such construction, development or improvement or the commencement of operations, use 40 or commercial production (exclusive of test and start-up periods) of such property, and such Security Interest secures or provides for the payment of all or any part of the acquisition cost of such property or the cost of construction, development or improvement thereof, as the case may be; (p) any Security Interest in deposits or cash equivalent investments pledged with a financial institution for the sole purpose of implementing a hedging or financing arrangement commonly known as a "back-to-back" loan arrangement, provided in each case that neither the assets subject to such Security Interest nor the Debt incurred in connection therewith are reflected on the consolidated balance sheet of the Company; or (q) any extension, renewal or refunding (or successive extensions, renewals or refundings) in whole or in part of any Debt or any other obligation or liability secured by any Security Interest referred to in the foregoing paragraphs (a) through (p), PROVIDED that the principal amount of Debt or any other obligation or liability secured by such Security Interest shall not exceed the principal amount outstanding immediately prior to such extension, renewal or refunding, and that the Security Interest securing such Debt or other obligation or liability shall be limited to the property which, immediately prior to such extension, renewal or refunding secured such Debt or other obligation or liability and additions to such property; and PROVIDED FURTHER that the principal amount of Debt or any other obligation or liability secured by such Security Interest shall continue to be taken into account for purposes of computing the amount of Debt or any other obligation or liability that may be secured under any applicable basket provided for in the foregoing paragraphs (a) through (p). Notwithstanding the foregoing provisions of this Section, the Company and the Material Subsidiaries may, at any time, suffer to exist, issue, incur, assume and guarantee Secured Debt (in addition to Secured Debt permitted to be secured under the foregoing paragraphs (a) through (k) and (m) through (q)); PROVIDED that the Designated Amount does not at any time exceed 10% of Consolidated Total Assets. SECTION 6.03. SALE AND LEASEBACK TRANSACTIONS. Enter into or be party to, or permit any Material Subsidiary to enter into or be party to, any Sale and Leaseback Transaction unless after giving effect thereto the Designated Amount does not exceed 10% of Consolidated Total Assets. SECTION 6.04. MERGER, ETC. (a) Permit the Company to merge or consolidate with or into, or Transfer Assets (other than pursuant to the transactions giving rise to the Specified Charges) to, any Person, except that the Company may (i) merge or consolidate with any US Corporation, including any Subsidiary that is a US Corporation, and (ii) Transfer Assets to any Subsidiary which is a US Corporation; PROVIDED, in each case described in clause (i) and (ii) above, that (A) immediately after giving effect to such transaction, no Default shall have occurred and be continuing and (B) in the case of any merger or consolidation to which the Company shall be a party, the survivor of such merger or consolidation shall be the Company. 41 (b) Permit any Material Subsidiary to merge or consolidate with or into, or Transfer Assets (other than pursuant to the transactions giving rise to the Specified Charges) to, any Person unless (i) immediately after giving effect to such transaction, no Default shall have occurred and be continuing and (ii) if either constituent corporation in such merger or consolidation, or the transferor of such assets, is a Subsidiary Guarantor, the surviving or resulting corporation or the transferee of such assets, as the case may be, shall be a Subsidiary Guarantor. SECTION 6.05. CHANGE IN BUSINESS. Permit the Company or any Material Subsidiary to engage to any material extent in any business other than the medical devices, supplies and services businesses (but excluding the management of institutional health care providers such as hospitals, nursing homes, and long-term care facilities). SECTION 6.06. CERTAIN RESTRICTIVE AGREEMENTS. Permit the Company or any Material Subsidiary to enter into any contract or other agreement that would limit the ability of any Material Subsidiary to pay dividends or make loans or advances to, or to repay loans or advances from, the Company or any other Subsidiary; PROVIDED that nothing in this section shall prohibit (a) covenants or agreements entered into in connection with the incurrence of secured Debt permitted hereunder that restrict the transfer of collateral securing such Debt or (b) agreements entered into in connection with sales of Receivables that govern the application of proceeds of sold Receivables. SECTION 6.07. LEVERAGE RATIO. Permit the Leverage Ratio at any time to exceed set forth below opposite such period: Period Ratio ------ ----- through 12/30/00 3.75:1.00 12/31/00 through 12/30/01 3.50:1.00 12/31/01 through 12/30/02 3.25:1.00 12/31/02 and thereafter 3.00:1.00 SECTION 6.08. INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio for any period of four consecutive fiscal quarters ending during any period set forth below to be less than the ratio set forth below opposite such period Period Ratio ------ ----- through 12/30/00 4.00:1.00 12/31/00 through 12/30/01 4.25:1.00 12/31/01 through 12/30/02 4.50:1.00 12/31/02 and thereafter 4.75:1.00 SECTION 6.09. SPIN-OFF. Permit the Spin-Off to be completed other than on terms and with results consistent in all material respects with the information contained in the 42 Form 10 and the Confidential Information Memorandum (including the pro forma financial information and projections contained therein). ARTICLE VII EVENTS OF DEFAULT If any of the following events ("EVENTS OF DEFAULT") shall occur and be continuing: (a) The Company shall fail to (i) pay any interest or facility fee due hereunder and such default continues for five days, or (ii) pay any amount of principal of any Loan when due hereunder; or (b) Any representation or warranty made or deemed made by the Company or any other Loan Party (or any of their respective officers) in connection with this Agreement or any other Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or (c) The Company or any Material Subsidiary shall fail to maintain its corporate, limited liability company or partnership existence as required by Section 5.03, or the Company or any Material Subsidiary shall fail to perform or observe any term, covenant or agreement contained in Article VI (other than Section 6.02 insofar as such failure results from a nonconsensual Security Interest) of this Agreement on its part to be performed or observed; or (d) The Company or any Subsidiary shall (i) fail to perform or observe any other term, covenant or agreement contained in this Agreement or any other Loan Document on its part to be performed or observed (other than those failures or breaches referred to in paragraphs (a), (b) and (c) above) and any such failure shall remain unremedied for 30 days after written notice thereof has been given to the Company by the Administrative Agent at the request of any Lender; or (e) Either (i) the Company or any Material Subsidiary shall fail to pay any amount of principal of, interest on or premium with respect to, any Debt (other than the Loans) of the Company or such Subsidiary outstanding under one or more instruments or agreements when due (whether at scheduled maturity or by required prepayment, acceleration, demand or otherwise) and (A) such Debt shall be in an aggregate principal amount not less than $10,000,000 and such failure shall continue beyond the greater of 15 days and the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or (B) such Debt shall be in an aggregate principal amount not less than $20,000,000 and such failure shall continue beyond the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or (ii) any other event shall occur or condition shall exist with respect to any Debt (other than the Loans) of the Company or such Subsidiary outstanding under one or more instruments or agreements if the effect of such event or condition is (or will after the lapse of any grace period be) to cause, or to permit the holder or holders of such debt (or any trustee or agent on their 43 behalf) to cause, such Debt to become due, or to require such Debt to be prepaid (other than by a scheduled prepayment), prior to the stated maturity thereof and (A) such Debt shall be in an aggregate principal amount not less than $10,000,000 and such failure shall continue beyond the greater of 15 days and the applicable grace period, if any, specified in the agreement or instrument relating to such Debt or (B) such Debt shall be in an aggregate principal amount not less than $20,000,000 and such failure shall continue beyond the applicable grace period, if any, specified in the agreement or instrument relating to such Debt; or (f) The Company or any Material Subsidiary shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally; or (g) The Company or any Material Subsidiary shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Company or such Material Subsidiary seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debt under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, or other similar official for it or for any substantial part of its property; or the Company or any such Material Subsidiary shall take corporate action to authorize any of the actions set forth above in this paragraph (f); PROVIDED that, in the case of any such proceeding filed or commenced against the Company or any Material Subsidiary, such event shall not constitute an "Event of Default" hereunder unless either (i) the same shall have remained undismissed or unstayed for a period of 60 days, (ii) an order for relief shall have been entered against the Company or such Material Subsidiary under the federal bankruptcy laws as now or hereafter in effect or (iii) the Company or such Material Subsidiary shall have taken corporate action consenting to, approving or acquiescing in the commencement or maintenance of such proceeding; or (h) Any judgment or order for the payment of money shall be rendered against the Company or any Material Subsidiary and (i) either (A) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (B) there shall be any period of 10 consecutive days, in the case of a judgment or order rendered or entered by a court located in the United States, its territories and Puerto Rico, or 30 consecutive days, in the case of any other court, during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect, and (ii) the amount of such judgment or order, when aggregated with the amount of all other such judgments and orders described in this subsection (h), shall exceed $20,000,000; (i) Either (i) the Pension Benefit Guaranty Corporation shall terminate any single-employer plan (as defined in Section 4001(b)(2) of ERISA) that provides benefits for employees of the Company or any Material Subsidiary and such plan shall have an Unfunded Liability in an amount in excess of $5,000,000 at such time or (ii) withdrawal liability shall be assessed against the Company or any Material Subsidiary in connection with any multiemployer plan (whether under Section 4203 or Section 4205 of ERISA) and such withdrawal liability shall be an amount in excess of $5,000,000; or 44 (j) the guarantee of any Subsidiary Guarantor that is a Material Subsidiary under the Subsidiary Guarantee Agreement shall not be (or shall be asserted by the Company or any Subsidiary Guarantor not to be) valid or in full force and effect; or (k) a Change of Control shall have occurred. then, in any such event but subject to the next sentence, the Administrative Agent shall at the request, or may with the consent, of the Required Lenders, by notice to the Company, (i) declare the obligation of each Lender to make Loans hereunder to be terminated, whereupon the same shall forthwith terminate and/or (ii) declare the entire unpaid principal amount of the Loans, all interest accrued and unpaid thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Loans, all such accrued interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company; PROVIDED, that in the case of any Competitive Bid Note, the unpaid principal amount thereof, and all interest accrued and unpaid thereon, shall not be declared to be due and payable pursuant to the foregoing clause (ii) without the consent of the holder of such Competitive Bid Note. In the event of the occurrence of an Event of Default under clause (f) or (g) of this Article VII, (A) the obligation of each Lender to make Loans shall automatically be terminated and (B) the Loans, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Company. ARTICLE VIII THE ADMINISTRATIVE AGENT In order to expedite the transactions contemplated by this Agreement, the Person named in the heading of this Agreement is hereby appointed to act as Administrative Agent on behalf of the Lenders. Each of the Lenders, including each assignee of any Lender, hereby irrevocably authorizes the Agent to take such actions on behalf of such Lender or assignee and to exercise such powers as are delegated to the Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. The Administrative Agent is hereby expressly authorized by the Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans and all other amounts due to the Lenders hereunder, and promptly to distribute to each Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Company of any Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender copies of all notices, financial statements and other materials delivered by the Company or any other Loan Party pursuant to this Agreement or the other Loan Documents as received by the Administrative Agent. Without limiting the generality of the foregoing, the Administrative Agent is hereby expressly authorized to release any Subsidiary Guarantor from its obligations under the Subsidiary Guarantee Agreement in the event that all the capital stock of 45 such Guarantor shall be sold, transferred or otherwise disposed of to a Person other than the Company or an Affiliate of the Company in a transaction permitted by Section 6.04. With respect to the Loans made by it hereunder,the Administrative Agent in its individual capacity and not as Administrative Agent shall have the same rights and powers as any other Lender and may exercise the same as though it were not the Administrative Agent, and the Administrative Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Company or any Subsidiary or other Affiliate thereof as if it were not the Administrative Agent. The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall have no duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that the Administrative Agent is required to exercise upon receipt of notice in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02), and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall have no duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Company or any of its Subsidiaries that is communicated to or obtained by the institution serving as the Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 9.02) or in the absence of its own gross negligence or wilful misconduct. The Administrative Agent shall not be deemed to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Company (in which case the Agent shall give written notice to each other Lender), and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Company), independent accountants and other experts selected by it, and shall not 46 be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Administrative Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding paragraphs shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the Company. Upon any such resignation, the Required Lenders shall have the right, in consultation with the Company, to appoint a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a bank with an office in New York, New York, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent. Each Lender agrees (a) to reimburse the Administrative Agent, on demand, in the amount of its pro rata share (based on the amount of its Loans and available Commitments hereunder) of any expenses incurred for the benefit of the Lenders by the Administrative Agent, including counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, that shall not have been reimbursed by the Company or any other Loan Party and (b) to indemnify and hold harmless the Administrative Agent and any of its Related Parties, on demand, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against it in its capacity as Administrative Agent or any of them in any way relating to or arising out of this Agreement or any other Loan Document or action taken or omitted by it or any of them under this Agreement or any other Loan Document, to the extent the same shall not have been reimbursed by the Company or any other Loan Party; PROVIDED that no Lender shall be liable to the Administrative Agent or any such other indemnified Person for any portion of such liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or wilful misconduct of the Administrative Agent or any of its directors, officers, employees or agents. 47 Each Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder. ARTICLE IX MISCELLANEOUS SECTION 9.01. NOTICES. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Company, to 17221 Red Hill Avenue, Irvine, California 92614, Attention of the Daniel M. Gallagher (Telecopy No. (949) 250-2275); (b) if to the Administrative Agent, to The Chase Manhattan Bank, Loan and Agency Services Group, One Chase Manhattan Plaza, 8th Floor, New York, New York 10081, Attention of Anne Bowles (Telecopy No. (212) 552-7500), with a copy to The Chase Manhattan Bank, 270 Park Avenue, New York, NY 10019, Attention of Steve Rochford (Telecopy No. (212) 270-5135); (c) if to any Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. SECTION 9.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be 48 permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time. (b) Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Company and the Required Lenders or by the Company and the Administrative Agent with the consent of the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the consent of the Required Lenders; PROVIDED that no such agreement shall (i) increase any Commitment of any Lender without the written consent of such Lender, (ii) reduce the principal amount of any Loan or reduce the rate of interest thereon, or reduce any fees payable hereunder, without the written consent of each Lender adversely affected thereby, (iii) postpone the date of any scheduled payment of the principal amount of any Loan, or any interest thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment, without the written consent of each Lender affected thereby, (iv) change Section 2.17(b) or (c) in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender (it being understood that the addition of new tranches of loans or commitments that may be extended under this Agreement shall not be deemed to alter such pro rata sharing of payments), (v) change any of the provisions of this Section or the definition of "Required Lenders" or any other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender (except, in each case, to provide for new commitments that may be extended under this Agreement), or (vi) release the Company or all or substantially all the Subsidiary Guarantors from, or limit or condition, its or their obligations under Article X or the Subsidiary Guarantee Agreement, without the written consent of each Lender; PROVIDED FURTHER that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent hereunder or under any other Loan Document without the prior written consent of the Administrative Agent. SECTION 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Company shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements of counsel for the Administrative Agent, in connection with the syndication of the credit facilities provided for herein, the preparation and administration of this Agreement or the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the reasonable fees, charges and disbursements of any counsel for the Administrative Agent orany Lender, in connection with the enforcement or protection of its rights in connection with any Loan Document, including its rights under this Section, or in connection with the Loans made 49 hereunder, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans. (b) The Company shall indemnify the Administrative Agent and each Lender, and each Related Party of any of the foregoing Persons (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, liabilities, reasonable out-of-pocket costs or expenses, including the reasonable fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) any transaction or proposed transaction (whether or not consummated) in which any proceeds of any borrowing hereunder are applied or proposed to be applied, directly or indirectly, by the Company or any Subsidiary or (ii) the execution, delivery or performance by the Company and the Subsidiaries of the Loan Documents, or any actions or omissions of the Company or any Subsidiary in connection therewith; PROVIDED that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, liabilities, costs or expenses shall have resulted from the gross negligence or wilful misconduct of such Indemnitee or the violation by such Indemnitee of any law or court order applicable to it. (c) To the extent that the Company fails to pay any amount required to be paid by it to the Administrative Agent under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Administrative Agent such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; PROVIDED that the unreimbursed loss, liability, cost or expense, as the case may be, was incurred by or asserted against the Administrative Agent in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum (without duplication) of the total Revolving Exposures and unused Commitments at the time. (d) To the extent permitted by applicable law, the Company shall not assert, and the Company hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof. (e) All amounts due under this Section shall be payable within 15 Business Days after receipt by the Company of a reasonably detailed invoice therefor. SECTION 9.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Company may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by the Company without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Related Parties of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. 50 (b) Any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans or other amounts at the time owing to it); PROVIDED that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Related Fund of any Lender, each of the Company and the Administrative Agent must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), (ii) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Related Fund of any Lender or an assignment of the entire remaining amount of the assigning Lender's Commitments and outstanding Loans, the amount of the Commitments and outstanding Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Company and the Administrative Agent otherwise consent, (iii) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500, and (iv) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and PROVIDED FURTHER that any consent of the Company otherwise required under this paragraph shall not be required if an Event of Default referred to in clause (f) or (g) of Article VII has occurred and is continuing. Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 9.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section. (c) The Administrative Agent, acting for this purpose as an agent of the Company, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "REGISTER"). The entries in the Register shall be conclusive, and the Companys, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Company and any Lender, at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and 51 Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph. (e) Any Lender may, without the consent of the Company or the Administrative Agent, sell participations to one or more banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); PROVIDED that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Company, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; PROVIDED that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i), (ii), (iii) or (vi) of the first proviso to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of this Section, the Company agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. (f) A Participant shall not be entitled to receive any greater payment under Section 2.14 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Company's prior written consent. A Participant shall not be entitled to the benefits of Section 2.16 unless the Company is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Company, to comply with Section 2.16(e) as though it were a Lender. (g) Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or, in the case of a Lender that is an investment fund, to the trustee under the indenture to which such fund is a party, and this Section shall not apply to any such pledge or assignment of a security interest; PROVIDED that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. SECTION 9.05. SURVIVAL. All covenants, agreements, representations and warranties made by the Loan Parties herein or in any other Loan Document or in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto or thereto and shall survive the execution and delivery of this Agreement and any other Loan Document and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent or any Lender may have 52 had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement or any other Loan Document is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Sections 2.14, 2.15, 2.16, 9.03 and 9.12 and Article VIII shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans and the Commitments or the termination of this Agreement or any other Loan Document or any provision hereof or thereof. SECTION 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. SECTION 9.07. SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 9.08. RIGHT OF SETOFF. If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of the Company against any of and all the obligations of such Company now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have. SECTION 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York. 53 (b) The Company hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Company or its properties in the courts of any jurisdiction. (c) The Company hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 9.11. HEADINGS. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 9.12. CONFIDENTIALITY. The Administrative Agent and each Lender agrees to maintain the confidentiality of the Information (as defined below), except that 54 Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors, to Related Funds' directors and officers and to any direct or indirect contractual counterparty in swap agreements (it being understood that each Person to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) to the extent required or advisable in the judgment of counsel in connection with any suit, action or proceeding relating to the enforcement of rights of the Administrative Agent, the Lenders or the Company under this Agreement or any other Loan Document, (f) subject to an agreement containing provisions substantially the same as those of this Section, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (g) with the consent of the Company or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section of which the Administrative Agent or such Lender is aware or (ii) becomes available to the Administrative Agent or any Lender on a nonconfidential basis from a source other than the Company other than as a result of a breach of this Section of which the Administrative Agent or such Lender is aware. For the purposes of this Section, "INFORMATION" means all information received from the Company relating to the Company or its business, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Company other than as a result of a breach of this Section of which the Administrative Agent or such Lender is aware. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 9.13. CONVERSION OF CURRENCIES. (a) If, for the purpose of obtaining judgment in any court, it is necessary to convert a sum owing hereunder in one currency into another currency, each party hereto agrees, to the fullest extent that it may effectively do so, that the rate of exchange used shall be that at which in accordance with normal banking procedures in the relevant jurisdiction the first currency could be purchased with such other currency on the Business Day immediately preceding the day on which final judgment is given. (b) The obligations of the Company in respect of any sum due to any party hereto or any holder of the obligations owing hereunder (the "APPLICABLE CREDITOR") shall, notwithstanding any judgment in a currency (the "JUDGMENT CURRENCY") other than the currency in which such sum is stated to be due hereunder (the "AGREEMENT CURRENCY"), be discharged only to the extent that, on the Business Day following receipt by the Applicable Creditor of any sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may in accordance with normal banking procedures in the relevant jurisdiction purchase the Agreement Currency with the Judgment Currency; if the amount of the Agreement Currency so purchased is less than the sum originally due to the Applicable Creditor in the Agreement Currency, the Company agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Applicable Creditor against such loss. The obligations of the Company contained in this Section 9.13 shall survive the termination of this Agreement and the payment of all other amounts owing hereunder. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. EDWARDS LIFESCIENCES CORP. by /s/ Michael A. Mussallem ----------------------------- Name: Michael A. Mussalem Title: President THE CHASE MANHATTAN BANK, individually and as Administrative Agent, by /s/ Robert Anastasio ----------------------------- Name: Robert Anastasio Title: Vice President CREDIT SUISSE FIRST BOSTON, by /s/ William S. Lutkins ----------------------------- Name: William S. Lutkins Title: Vice President by /s/ Thomas G. Muoio ----------------------------- Name: Thomas G. Muoio Title: Vice President THE FUJI BANK, LIMITED, by /s/ Takeyuki Kuroki ----------------------------- Name: Takeyuki Kuroki Title: Vice President and Senior Team Leader BANK OF TOKYO-MITSUBISHI, LTD. CHICAGO BRANCH, by /s/ Hisashi Miyashiro ----------------------------- Name: Hisashi Miyashiro Title: Deputy General Manager UBS AG STAMFORD BRANCH, by /s/ Robert H. Riley, III ----------------------------- Name: Robert H. Riley, III Title: Executive Director by /s/ Wilfred Saint ----------------------------- Name: Wilfred Saint Title: Associate Director, Loan Portfolio Support, US DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR CAYMAN ISLANDS BRANCH by /s/ Iain Stewart ----------------------------- Name: Iain Stewart Title: Vice President by /s/ Annette Walter ----------------------------- Name: Annette Walter Title: Associate FIRST UNION NATIONAL BANK, by /s/ Ann M. Dodd ----------------------------- Name: Ann M. Dodd Title: SVP NATIONAL AUSTRALIA BANK LIMITED., by /s/ Susan R. Julien ----------------------------- Name: Susan R. Julien Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK, by /s/ Robert Bottamedi ----------------------------- Name: Robert Bottamedi Title: Vice President FLEET NATIONAL BANK, by /s/ Walter J. Marullo ----------------------------- Name: Walter J. Marullo Title: Vice President BANK OF AMERICA, N.A. by /s/ F. Scott Singhoff ----------------------------- Name: F. Scott Singhoff Title: Managing Director GOLDMAN SACHS & CO., by /s/ Doug Hendersen ----------------------------- Name: Doug Hendersen Title: Managing Director WACHOVIA BANK, by /s/ Debra L. Coheley ----------------------------- Name: Debra L. Coheley Title: Senior Vice President BBV INTERNATIONAL INVESTMENT CORPORATION by /s/ Tomas Rosario ----------------------------- Name: Tomas Rosario Title: Executive Vice President BANK ONE, NA by /s/ Joseph Perdenza ----------------------------- Name: Joseph Perdenza Title: Assistanct Vice President THE BANK OF NOVA SCOTIA, by /s/ R. P. Reynolds ----------------------------- Name: R. P. Reynolds Title: Director ABN AMRO BANK, by /s/ Paul K. Stimpfl ----------------------------- Name: Paul K. Stimpfl Title: Group Vice President by /s/ Mitsoo Iravani ----------------------------- Name: Mitsoo Iravani Title: Assistant Vice President EX-10.21 4 EXHIBIT 10.21 EXHIBIT 10.21 EDWARDS LIFESCIENCES CORPORATION SEVERANCE PAY PLAN (Effective April 1, 2000) EDWARDS LIFESCIENCES CORPORATION SEVERANCE PAY PLAN TABLE OF CONTENTS
PAGE ---- ARTICLE I PURPOSE........................................................1 ARTICLE II DEFINITIONS...................................................1 Section 2.1. Definitions................................................1 (a) Company...........................................................1 (b) Effective Date....................................................1 (c) Eligible Employee.................................................1 (d) Employer..........................................................2 (e) Excluded Division or Facility.....................................2 (f) 401k Earnings.....................................................2 (g) Monthly Compensation..............................................2 (h) Months of Service.................................................3 (i) Plan..............................................................3 (j) Plan Administrator................................................3 (k) Plan Year.........................................................3 (l) Severance Benefits................................................3 (m) Severance Pay.....................................................3 (n) Termination.......................................................3 Section 2.2. Gender and Number..........................................4 ARTICLE III METHOD OF FUNDING............................................4 ARTICLE IV PAYMENT OF SEVERANCE PAY AND BENEFITS...........................5 Section 4.1. Qualification for Severance Pay............................5 Section 4.2. Severance Pay for Eligible Employees.......................5 Section 4.3. Payment of Severance Pay...................................6 Section 4.4. Severance Benefits.........................................6 (a) Vacation..........................................................6 (b) Floating Holidays.................................................7 (c) Bonuses and Variable Pay..........................................7 Section 4.5. Forfeiture of Severance Pay for Cause......................7 ARTICLE V ADMINISTRATION OF PLAN.........................................7 Section 5.1. General....................................................7 Section 5.2. Regulations................................................7 Section 5.3. Claims Procedure...........................................7 ARTICLE VI AMENDMENT OR TERMINATION OF PLAN..............................8 ARTICLE VII MISCELLANEOUS................................................9 Section 7.1. Limitation on Rights.......................................9 Section 7.2. Headings...................................................9
ii Section 7.3. Severability...............................................9 Section 7.4. Governing Law..............................................9 Section 7.5. Successors and Assigns.....................................9 Section 7.6. Administration.............................................9 EXHIBIT A...............................................................10
iii EDWARDS LIFESCIENCES CORPORATION SEVERANCE PAY PLAN Edwards Lifesciences Corporation hereby adopts this Plan, to be known as the "Edwards Lifesciences Corporation Severance Pay Plan." ARTICLE I PURPOSE The purpose of this Plan is to provide qualifying Eligible Employees with Severance Pay in accordance with the provisions set forth below. This Plan supersedes and replaces all previous severance or separation pay plans, policies, or arrangements maintained by any Employer, other than as set forth herein. ARTICLE II DEFINITIONS SECTION 2.1. DEFINITIONS. When used in this Plan, the words and phrases below have the following meanings unless the context clearly otherwise requires: (a) "COMPANY" shall mean Edwards Lifesciences Corporation, or any successor or successors; (b) "EFFECTIVE DATE" shall mean April 1, 2000; (c) "ELIGIBLE EMPLOYEE" shall mean any individual employed in a domestic facility who is either: (1) a regular full-time employee of an Employer; or (2) a part-time employee of an Employer who is scheduled to work at least 20 hours per week for such Employer; but excluding: (i) any employee who is not on the U.S. payroll of an Employer; (ii) any employee covered by a collective bargaining agreement (unless participation in the Plan is provided for in such collective bargaining agreement); (iii) any leased or temporary employee; 1 (iv) any employee who refuses to accept another position either within the Company or with a successor employer; (v) any employee whose job is outsourced to an employer who is not a member of the controlled group; provided such employee is offered a position with such employer, regardless of the terms and conditions of such offer; (vi) sunset employees (employee who are hired for a specific period of time); and (vi) employees who fail to return from a leave of absence in a timely manner (including but not limited to those employees who are on medical or disability leave and fail to return to work in a timely manner after they have been determined to no longer be disabled). (d) "EMPLOYER" shall mean the Company (but only with respect to employees who are not employed by an Excluded Division or Facility), and each affiliated domestic corporation. (e) "EXCLUDED DIVISION OR FACILITY" shall mean the divisions and/or facilities of the Company to which the Plan does not apply and which are listed on Schedule A hereto. This Schedule A may be updated from time to time to reflect a listing of Excluded Divisions or Facilities or special adoption dates for previously Excluded Divisions or Facilities that become Employers. (f) "401k EARNINGS" shall mean eligible compensation as defined by the Edwards Lifesciences Corporation 401(k) Savings and Investment Plan. (g) "MONTHLY COMPENSATION" shall mean the Eligible Employee's monthly base salary as in effect on the date that the individual's employment as an active employee ceases. For purposes of the preceding sentence, "monthly base compensation" shall mean: (1) in the case of a salaried Eligible Employee, such employee's monthly base salary; (2) in the case of an hourly Eligible Employee, such employee's hourly rate (plus any shift differential) multiplied by the number of regularly scheduled hours in a normal work week multiplied by 4.3; (3) in the case of a commissioned sales representative, the greater of: (i) such employee's prior year's 401k Earnings, divided by 12; or (ii) such employee's Year-to-Date 401k Earnings, annualized and divided by twelve; and (4) in the case of a Perfusionist and Perfusion Service Managers, 2 (i) such employee's year to date eligible earnings (salary and other regular pay, including manager pay and procedure based pay), annualized and divided by twelve. Year-to-Date 401k Earnings shall be calculated no greater than 30 days prior to the employee's date of Termination. (h) "MONTHS OF SERVICE" shall mean the most recent period of consecutive, continuous employment ending on the Eligible Employee's Termination date during which the Eligible Employee is: (i) entitled to payment by the Employer for the performance of duties; (ii) entitled to payment by the Employer for a period of time during which the Eligible Employee does not perform duties due to vacation, holiday, jury duty, a leave of absence of not more than six months for medical purposes or disability, or any other approved leave of absence; or (iii) on an unpaid leave of absence approved by the Employer, including a leave of absence for military duty. Only full months of employment are counted in determining Months of Service. Months will not be prorated. For purposes of the above, months of service with the Company's predecessor corporation, Baxter International Inc. and its eligible affiliates, shall be included in the determination if the Eligible Employee was an employee of the predecessor corporation on March 31, 2000 and transferred to the Employer pursuant to the spin-off of the Employer from the predecessor corporation. (i) "PLAN" shall mean the "Edwards Lifesciences Corporation Severance Pay Plan." (j) "PLAN ADMINISTRATOR" shall mean the Company or the Plan Administrative Committee of the Company, if the Company's board of directors has delegated to such Committee the authority to serve as Plan Administrator, who shall be responsible for the general administration of the Plan. (k) "PLAN YEAR" shall mean calendar year. (l) "SEVERANCE BENEFITS" shall mean continued coverage under certain of the Employer's employee benefit plans and employment policies as set forth in Section 4.4 herein. (m) "SEVERANCE PAY" shall mean the sums payable as set forth in Article IV herein. (n) "TERMINATION" for purposes of this Plan shall mean the dismissal of an Eligible Employee from active employment by an Employer following the Effective Date by reason of: (1) a decision by an Employer to eliminate such Eligible Employee's employment position; or (2) a decision by an Employer to reduce the size of the Employer's work force. 3 Termination, for purposes of this Plan, shall not mean termination of employment with an Employer for any reason other than as set forth in (1) and (2) above, including, but not limited to: (i) the Eligible Employee's voluntary termination of employment with the Employer, including termination due to retirement; (ii) the Eligible Employee's termination of employment with the Employer upon the sale, assignment, transfer, conveyance or other disposition of the Employer's business and/or all or a part of its assets if the employee is offered employment by a purchaser or successor after the transaction is consummated; (iii) the dismissal of the Eligible Employee by an Employer for any action which, in the sole judgment of the Employer, is for cause including, but not limited to, violation of the Employer's policies and procedures, an act of fraud or dishonesty affecting or involving the Employer, or breach of a material provision of such Employee's employment agreement or other similar agreement with the Employer; (iv) the transfer of the Eligible Employee from employment by an Employer to comparable employment, as determined in the sole judgment of the Employer, by another Employer or a subsidiary or other affiliate thereof; (v) the death of the Eligible Employee while an employee of an Employer; (vi) layoff, meaning involuntary dismissal by an Employer for a period of time that the Employer, in its sole judgment, expects to be less than six-months in duration; or such other time period as set forth in an applicable recall policy not to exceed six months. (vii) a decision by an Employer that an Eligible Employee does not meet the performance requirements of his or her job assignment. SECTION 2.2. GENDER AND NUMBER. The masculine gender whenever used herein shall be deemed to include the feminine gender, and the singular may include the plural, unless the context clearly indicates to the contrary. ARTICLE III METHOD OF FUNDING An Employer shall pay Severance Pay from current operating funds. No property of an Employer is or shall be, by reason of this Plan, held in trust for any employee of an Employer, nor shall any person have any interest in or any lien or prior claim upon any property of an Employer, by reason of the Plan, or an Employer's obligation to make payments hereunder. 4 ARTICLE IV PAYMENT OF SEVERANCE PAY AND BENEFITS SECTION 4.1. QUALIFICATION FOR SEVERANCE PAY. An Eligible Employee for whom a Termination occurs shall qualify for Severance Pay as provided in Section 4.2. SECTION 4.2. SEVERANCE PAY FOR ELIGIBLE EMPLOYEES. (a) HOURLY, SALARIED NONEXEMPT EMPLOYEES OR EXEMPT EMPLOYEES WITH PAY GROUPING E OR BELOW (INCLUDING COMMISSIONED SALES REPRESENTATIVES). Severance Pay for a qualifying Eligible Employee who is an hourly, salaried nonexempt employee or exempt employee With Pay Grouping E or Below (including commissioned salespersons) as of the date the Eligible Employee's severance benefit is calculated shall be an amount equal to: (1) Monthly Compensation multiplied by 1.0; plus (2) 2% of his or her Monthly Compensation multiplied by; (3) the number of full Months of Service which such Eligible Employee has completed as of the date of Termination. (b) EXEMPT EMPLOYEES PAY GROUPING F AND G. Severance Pay for a qualifying Eligible Employee who is an exempt employee Pay Grouping F and G as of the date the Eligible Employee's severance benefit is calculated shall be an amount equal to: (1) Monthly Compensation multiplied by 1.5; plus (2) 4% of his or her Monthly Compensation multiplied by the number of full Months of Service which such Eligible Employee has completed as of the date of Termination. (c) Eligible Employee's age 40 and over shall be granted an additional age factor allowance. The additional age factor formula is equal to 2% multiplied by each year the Eligible Employee is age 40 and over. The formula is then multiplied by the Eligible Employee's Severance Pay as determined pursuant to Section 4.2(a) or Section 4.2(b), as appropriate, to calculate the additional age factor allowance. This allowance shall be added to the Eligible Employee's Severance Pay as provided in this Section 4.2. (d) LIMITATION ON SEVERANCE PAY. Notwithstanding anything in this Plan to the contrary, an Eligible Employee's Severance Pay shall not exceed two times such employee's annual compensation during the twelve-month period immediately preceding the employee's Termination date. For purposes of the preceding sentence, "annual compensation" shall mean W-2 compensation the total of all compensation, including, but not limited to, wages, salary and any other benefit of monetary value, whether paid in the form of cash or otherwise, which was paid as consideration for such Eligible Employee's service for an Employer during such twelve-month period which constitute "wages" for federal income tax purposes properly reported on the Eligible Employee's Federal Income Tax Withholding Statement (Form W-2), or which would have been so paid at such Eligible Employee's rate of compensation if he or she had worked a full year. 5 SECTION 4.3. PAYMENT OF SEVERANCE PAY Subject to Section 4.5., an Eligible Employee's Severance Pay shall be paid in installments commencing as soon as administratively practicable following the Eligible Employee's Termination. Severance Pay installments shall be completed with the 24 months following the Eligible Employees Termination. The installment is calculated by taking the amount of the Eligible Employees Severance Pay and dividing it by the amount of pay they would receive in their regular pay cycle. Severance Pay shall be reduced by withholdings and deductions required under all applicable federal, state and local or other laws or regulations and by other applicable reductions. In the case of any person who while receiving Severance Pay becomes hired by an Employer or a non-participating affiliate of an Employer, Severance Pay shall be suspended as of the first pay period for which such person is scheduled to work. In the case of any person who: (a) previously terminated employment with an Employer under circumstances entitling him or her to Severance Pay; (b) is hired by an Employer as a regular employee during the one-year period beginning on such person's Termination date; and (c) becomes entitled to Severance Pay again as a result of such person's subsequent termination of employment with an Employer. Such Eligible Employee's Severance Pay shall be determined based on his or her original date of hire by the Employer (adjusted for any period of time during which such person was not employed by an Employer) and shall be reduced by the amount of any Severance Pay already received by such Eligible Employee. For purposes of this paragraph "Employer" includes an Excluded Division or Facility. In the case of any person who: (a) previously terminated employment with an Employer under circumstances entitling him or her to Severance Pay; (b) is hired by an Employer as a regular employee after the one-year period beginning on such person's Termination date; and (c) becomes entitled to Severance Pay again as a result of such person's subsequent termination of employment with an Employer. Such Eligible Employee's Severance Pay shall be determined taking into account only Months of Service since the date as of which he or she became rehired by an Employer. For purposes of this paragraph "Employer" includes an Excluded Division or Facility. SECTION 4.4. SEVERANCE BENEFITS. Any Eligible Employee for whom a Termination occurs shall receive Severance Benefits following the date of his or her Termination as follows: (a) VACATION. An Eligible Employee shall be paid for all unused vacation time as of the date of Termination. 6 (b) FLOATING HOLIDAYS. An Eligible Employee shall forfeit any unused floating holidays as of the date of Termination. (c) OTHER BENEFITS. An Eligible Employee may receive other benefits in accordance with the provisions of the applicable benefit program. SECTION 4.5. FORFEITURE OF SEVERANCE PAY FOR CAUSE. If, after an Eligible Employee's Termination qualifying the Employee for Severance Pay as provided in Section 4.2., the Employer discovers that the Eligible Employee engaged in conduct during his or her employment with the Employer which, if previously known to the Employer, would have provided a basis for a dismissal of the Eligible Employee for "cause" (as defined in Section 2.1. (n)(iii)), all installment payments of Severance Pay shall cease without prior notice to the Eligible Employee, and the Eligible Employee shall forfeit his or her right to further payments under the Plan. ARTICLE V ADMINISTRATION OF PLAN SECTION 5.1. GENERAL. The Plan shall be administered by the Plan Administrator. The Plan Administrator may delegate any of his or her administrative duties, including, without limitation, duties with respect to the processing, review, investigation, approval and payment of Severance Pay and provision of Severance Benefits, to designated individuals or committees. The Company shall be the "administrator" and a "named fiduciary" under the Plan for purposes of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). SECTION 5.2. REGULATIONS. The Plan Administrator shall promulgate any rules and regulations which he or she deems necessary in order to carry out the purposes of the Plan or to interpret the terms and conditions of the Plan; provided, however, that no rule, regulation or interpretation shall be contrary to the provisions of the Plan. The rules, regulations and interpretations made by the Plan Administrator shall be final and binding on any employee or former employee of an Employer or any successor in interest of either. SECTION 5.3. CLAIMS PROCEDURE. The Plan Administrator shall determine the rights of any employee or former employee of an Employer to any Severance Pay and Severance Benefits hereunder. The Plan Administrator has the sole and absolute power and authority to interpret and apply the provisions of this Plan to a particular circumstance, make all factual and legal determinations, construe uncertain or disputed terms and make eligibility and benefit determinations (including, without limitation, determining whether a Termination under the Plan has occurred) in such manner and to such extent as the Plan Administrator in his or her sole discretion may determine. Any employee or former employee of an Employer who believes that he or she is entitled to receive Severance Pay and Severance Benefits under the Plan, including Severance Pay and Severance Benefits other than those initially determined by the Plan Administrator, may file a claim in writing with the Plan Administrator. No later than 90 days after the receipt of the claim the Plan Administrator shall either allow or deny the claim in writing. A denial of a claim, in whole or in part, shall be written in a manner calculated to be understood by the claimant and shall include: (a) the specific reason or reasons for the denial; 7 (b) specific reference to pertinent Plan provisions on which the denial is based; (c) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (d) an explanation of the claim review procedure. A claimant whose claim is denied (or his or her duly authorized representative) may within 60 days after receipt of the denial of his or her claim: (a) request a review upon written application to the Administrative Committee or its designee; (b) review pertinent documents; and (c) submit issues and comments in writing. The Administrative Committee, or its designee, shall notify the claimant of his or her decision on review within 60 days after receipt of a request for review unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of a request for review. Notice of the decision on review shall be in writing. The Administrative Committee decision on review shall be final and binding on any claimant or any successor in interest. ARTICLE VI AMENDMENT OR TERMINATION OF PLAN Notwithstanding anything in the Plan to the contrary, the Company's Corporate Vice President of Human Resources or other designated officer of the Company shall have the right at any time, and without prior or other approval of any employee or former employee, and without prior notice, to change, modify, amend or terminate the Plan in any particular or particulars whatsoever. This right shall be unlimited, even if exercised in anticipation of specific action taken by the Company or a specific event upon which benefits would otherwise be provided under the Plan. All such changes, modifications, amendments or terminations may be retroactive to any date up to and including the Effective Date of this Plan, and shall be retroactive to such Effective Date unless other provisions are specifically made; provided, however, that no such amendment, modification, change or termination shall adversely affect any Severance Pay or Severance Benefit under the Plan previously paid, or payable to an Eligible Employee following a Termination that occurred prior to such amendment, modification, change or termination. 8 ARTICLE VII MISCELLANEOUS SECTION 7.1. LIMITATION ON RIGHTS. The Plan is strictly a voluntary undertaking on the part of the Employers and shall not be deemed to constitute a contract between any Employer and any Eligible Employee. Participation in the Plan shall not give any Eligible Employee the right to be retained in the service of the Employer or any rights to any benefits whatsoever, except to the extent specifically set forth herein. SECTION 7.2. HEADINGS. Headings of Articles and Sections in this instrument are for convenience only, and do not constitute any part of the Plan. SECTION 7.3. SEVERABILITY. If any provision of this Plan or the rules and regulations made pursuant to the Plan are held to be invalid or illegal for any reason, such illegality or invalidity shall not affect the remaining portions of this Plan. SECTION 7.4. GOVERNING LAW. The Plan shall be construed and enforced in accordance with ERISA and the laws of the State of California to the extent such laws are not preempted by ERISA. SECTION 7.5. SUCCESSORS AND ASSIGNS. This Plan shall be binding upon and inure to the benefit of the Employers and their successors and assigns and shall be binding upon and inure to the benefit of an Eligible Employee and his or her legal representatives, heirs and assigns. No rights, obligations or liabilities of an Eligible Employee hereunder shall be assignable without the prior written consent of the Employer. In the event of the death of an Eligible Employee after Termination and prior to receipt of Severance Pay to which he or she is entitled hereunder, such Severance Pay shall be paid to his or her estate. SECTION 7.6. ADMINISTRATION: The Plan shall be administrated on a Plan Year basis. Executed this 1st day of April, 2000. EDWARDS LIFESCIENCES CORPORATION By: /s/ Robert C. Reindl ------------------------------------ Its: Corporate Vice President ----------------------------------- Human Resources 9 EXHIBIT A EXCLUDED DIVISIONS OR FACILITIES SPECIAL ADOPTION DATES 10 EX-27.4 5 EXHIBIT 27.4
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM EDWARDS LIFESCIENCES CORP. COMBINED CONDENSED BALANCE SHEET AT MARCH 31, 2000, COMBINED CONDENSED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND COMBINED CONDENSED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0001099800 EDWARDS LIFESCIENCES CORPORATION 1,000,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 6 0 132 0 156 318 205 0 1,381 332 0 0 0 58 625 1,381 226 226 118 202 1 0 0 23 6 17 0 0 0 17 0 0 PRO FORMA EPS BASIC AND DILUTED ARE $0.14
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