ofix-8k_20180731.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 31, 2018

 

 

ORTHOFIX MEDICAL INC.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

 

0-19961

 

98-1340767

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

 

 

 

 

3451 Plano Parkway

Lewisville, Texas

 

75056

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (214) 937-2000

 

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 1.01.  Entry into a Material Definitive Agreement.

On July 31, 2018, Orthofix Medical Inc. (formerly Orthofix International N.V.) (the “Company”), through its subsidiaries Orthofix Holdings, Inc. (“Orthofix Holdings”), Victory Medical Limited (“Victory Medical”) and Orthofix International B.V. (“Orthofix B.V.”, and collectively with Orthofix Holdings and Victory Medical, the “Borrowers”), entered into a First Amended and Restated Credit Agreement (the “Restated Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPMorgan”), as Administrative Agent, and certain lender parties thereto.  The Restated Credit Agreement provides for a $125 million secured revolving credit facility maturing on August 31, 2020 (the “Facility”), and amends and restates the Credit Agreement, dated as of August 31, 2015 (as amended, the “Original Credit Agreement”), among Orthofix Holdings and Victory Medical, as borrowers, the Company and certain subsidiaries of the Company, as guarantors, JPMorgan, as Administrative Agent, and the lenders party thereto.  As of the date hereof, the Borrowers have not made any borrowings under the Restated Credit Agreement.

The Restated Credit Agreement is substantially the same as the Original Credit Agreement, except for certain amendments to, among other things, (i) effectuate the domestication of the Company from a Curaçao company to a Delaware corporation, (ii) limit the pledge by the Company and each domestic subsidiary of the Company of equity interests in their respective first tier foreign subsidiaries to 65% of the voting interests in such foreign subsidiaries, (iii) limit the guarantee and joint and several obligations of each subsidiary guarantor that is a foreign subsidiary so that such foreign subsidiary guarantors are only providing guarantees, or are jointly and severally obligated, for obligations of other foreign subsidiaries, and (iv) limit the secured obligations that are secured by collateral provided by subsidiary guarantors that are foreign subsidiaries to secured obligations of foreign subsidiaries.

Borrowings under the Restated Credit Agreement may be used for, among other things, working capital and other general corporate purposes of the Company and certain of its subsidiaries (including permitted acquisitions and permitted payments of dividends and other distributions).  The Facility is available in US Dollars with up to $50 million of the Facility available to be borrowed in Euros and Pounds Sterling (the “Agreed Currencies”).  The Facility further permits up to $50 million to be utilized for the issuance of letters of credit in the Agreed Currencies.  The Borrowers have the ability to increase the amount of the Facility, which increases may take the form of increases to the revolving credit commitments or the issuance of new term A loans, by an aggregate amount of up to $50 million upon satisfaction of certain conditions precedent and receipt of additional commitments by one or more existing or new lenders.

Borrowings under the Facility bear interest at a floating rate, which will be, at the Borrowers option, either LIBOR plus an applicable margin ranging from 1.75% to 2.5% or a base rate plus an applicable margin ranging from 0.75% to 1.5% (in each case subject to adjustment based on the Company’s total leverage ratio).  An unused fee ranging from 0.25% to 0.4% (subject to adjustment based on the Company’s total leverage ratio) is payable quarterly in arrears based on the daily amount of the undrawn portion of each lender’s revolving credit commitments under the Facility.  Fees are payable on outstanding letters of credit at a rate equal to the applicable margin for LIBOR loans, plus certain customary fees payable solely to the issuer of the letter of credit.

The Company and certain of its existing and future U.S., UK and Dutch domiciled subsidiaries (collectively, the “Guarantors”) are required to guarantee the repayment of the Borrowers’ obligations under the Restated Credit Agreement (subject to the limitations described above).  The obligations of the Borrowers and each of the Guarantors with respect to the Restated Credit Agreement are secured by a pledge of substantially all of the personal property assets of the Borrowers and each of the Guarantors, including accounts receivables, deposit accounts, intellectual property, investment property, inventory, equipment and equity interests in its subsidiaries.   The Restated Credit Agreement contains customary affirmative and negative covenants, including limitations on the Company’s and its subsidiaries ability to incur additional debt, grant or permit additional liens, make investments and acquisitions, merge or consolidate with others, dispose of assets, pay dividends and distributions, pay subordinated indebtedness and enter into affiliate transactions.    In addition, the Restated Credit Agreement contains financial covenants requiring the Company on a consolidated basis to maintain, as of the last day of any fiscal quarter, a total leverage ratio of not more than 3.0 to 1.0 and an interest coverage ratio of at least 3.0 to 1.0.  The Restated Credit Agreement also includes events of default customary for facilities of this type and upon the occurrence of such events of default, subject to customary cure rights, all outstanding loans under the Facility may be accelerated and/or the lenders’ commitments terminated.

The Restated Credit Agreement contains customary representations, warranties and covenants of the Company, the Borrowers and the Guarantors.  These representations and warranties have been made solely for the benefit of the lenders and such representations and warranties should not be relied on by any other person, including investors.  In addition, such representations and warranties (i) have been qualified by disclosures made to the lenders in connection with the agreement, (ii) are subject to the materiality standards contained in the agreement which may differ from what may be viewed as material by investors and (iii) were made only as of the date of the agreement or such other date as is specified in the agreement.

The foregoing description does not constitute a complete summary of the terms of the Restated Credit Agreement and is qualified in its entirety by reference to the full text of the Restated Credit Agreement, which is filed as Exhibit 10.1 to this Form 8-K and incorporated herein by reference.

 


 

 

Item 2.02.

Results of Operations and Financial Condition.

On August 6, 2018, the “Company issued a press release announcing, among other things, its financial results for the fiscal quarter ended June 30, 2018. A copy of the press release is furnished herewith as Exhibit 99.1 and attached hereto.

The information furnished in this Item 2.02, including the exhibit furnished herewith as Exhibit 99.1, will not be treated as “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or into another filing under the Exchange Act, unless that filing expressly incorporates by reference this Item 2.02 of this report.

Item 5.02.  Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 31, 2018, the Company, through its subsidiary Orthofix AG, entered into an amended and restated employment contract with Davide Bianchi (the “Amended and Restated Employment Contract”).

Under the Amended and Restated Employment Contract, Mr. Bianchi’s employment relationship with the Company remains governed by Swiss law.  The Amended and Restated Employment Contract memorializes Mr. Bianchi’s current cash compensation levels, and provides that such levels may be adjusted in the future as determined by the Compensation Committee.  The agreement contains non-competition and non-solicitation covenants effective so long as Mr. Bianchi is an employee and, in the case of the non-solicitation provisions, for a period of twelve months after employment is terminated. The agreement also contains confidentiality and assignment of inventions provisions that last indefinitely. The parties also remain party to a non-competition agreement governing post-termination periods.

The term of the Amended and Restated Employment Contract will continue until the earlier of (1) termination by either party in accordance with the terms of the agreement or (2) automatically (a) at the end of the month in which the Mr. Bianchi reaches the age of 65 or (b) at the end of the day on which Mr. Bianchi receives an early retirement pension or a full pension for disability. Mr. Bianchi’s primary business office shall be his home residence in Switzerland, provided, however, that he shall also from time-to-time perform services from the Company’s offices in Lewisville, Texas and Verona, Italy, and from such other locations as are agreed by the Company and him.

The foregoing summary is qualified in its entirety by reference to the texts of the Amended and Restated Employment Contract, which is attached and filed herewith as Exhibits 10.2 and is incorporated herein by reference.

Item 7.01

Regulation FD Disclosure.

The press release furnished as Exhibit 99.1 also provides an update on the Company’s business outlook, that is intended to be within the safe harbor provided by the Private Securities Litigation Reform Act of 1995 (the “Act”) as comprising forward looking statements within the meaning of the Act.

The information furnished in this Item 7.01, including the exhibit furnished herewith as Exhibit 99.1, will not be treated as “filed” for the purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section. This information will not be deemed incorporated by reference into any filing under the Securities Act, or into another filing under the Exchange Act, unless that filing expressly incorporates by reference this Item 7.01 of this report.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

 

Exhibits

 

 

 

10.1

 

First Amended and Restated Credit Agreement, dated as of July 31, 2018, among Orthofix Holdings, Inc., Victory Medical Limited, Orthofix International B.V., Orthofix Medical Inc. and certain subsidiaries of Orthofix Medical Inc. as guarantors, the several banks and other financial institutions as may from time to time become parties thereunder as lenders, and JPMorgan Chase, N.A., as administrative agent.

 

 

 

10.2

 

Amended and Restated Employment Contract, dated July 31, 2018 between Orthofix AG and Davide Bianchi.

 

 

 

99.1

 

Press Release, dated August 6, 2018.

 

 


 

SIGNATURES

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 hereunto duly authorized.

 

 

Orthofix Medical Inc.

 

 

By:

 

 

/s/ Kimberley A. Elting

 

 

 

Kimberley A. Elting

Chief Legal and Administrative Officer

 

 

Date: August 6, 2018

 

ofix-ex101_33.htm

Exhibit 10.1

 

FIRST AMENDED AND RESTATED CREDIT AGREEMENT

 

Dated as of July 31, 2018

 

 

among

 

ORTHOFIX HOLDINGS, INC.

VICTORY MEDICAL LIMITED

and

ORTHOFIX INTERNATIONAL B.V.

as Borrowers

 

ORTHOFIX MEDICAL INC. (formerly known as Orthofix International N.V.)

AND CERTAIN OF ITS SUBSIDIARIES PARTY HERETO

as Guarantors

 

THE LENDERS FROM TIME TO TIME PARTY HERETO

 

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

BBVA COMPASS

SUNTRUST BANK

as Syndication Agents

 

BANK OF AMERICA, N.A.

BANK OF THE WEST

as Documentation Agents

 

DNB CAPITAL LLC

as Senior Managing Agent

________________________________________

 

JPMORGAN CHASE BANK, N.A.

BBVA COMPASS

SUNTRUST ROBINSON HUMPHREY, INC.

 

Joint Lead Arrangers and Joint Bookrunners

________________________________________

 

 


 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE I DEFINITIONS

 

1

 

 

 

 

 

SECTION 1.01.

 

Defined Terms

 

1

SECTION 1.02.

 

Classification of Loans and Borrowings

 

40

SECTION 1.03.

 

Terms Generally

 

40

SECTION 1.04.

 

Accounting Terms; GAAP

 

41

SECTION 1.05.

 

Pro Forma Adjustments for Acquisitions and Dispositions

 

41

SECTION 1.06.

 

Status of Obligations

 

41

 

 

 

 

 

ARTICLE II THE CREDITS

 

42

 

 

 

 

 

SECTION 2.01.

 

Commitments

 

42

SECTION 2.02.

 

Loans and Borrowings

 

42

SECTION 2.03.

 

Requests for Borrowings

 

43

SECTION 2.04.

 

Swingline Loans

 

44

SECTION 2.05.

 

Letters of Credit

 

45

SECTION 2.06.

 

Funding of Borrowings

 

50

SECTION 2.07.

 

Interest Elections

 

51

SECTION 2.08.

 

Termination and Reduction of Commitments; Increase in Commitments

 

52

SECTION 2.09.

 

Repayment of Loans; Evidence of Debt

 

55

SECTION 2.10.

 

Prepayment of Loans

 

55

SECTION 2.11.

 

Fees

 

57

SECTION 2.12.

 

Interest

 

58

SECTION 2.13.

 

Market Disruption and Alternate Rate of Interest

 

59

SECTION 2.14.

 

Increased Costs

 

60

SECTION 2.15.

 

Break Funding Payments

 

61

SECTION 2.16.

 

Taxes

 

62

SECTION 2.17.

 

Payments Generally; Allocation of Proceeds; Sharing of Set‑offs

 

67

SECTION 2.18.

 

Mitigation Obligations; Replacement of Lenders

 

70

SECTION 2.19.

 

Defaulting Lenders

 

71

SECTION 2.20.

 

Returned Payments

 

72

SECTION 2.21.

 

Banking Services and Swap Agreements

 

72

SECTION 2.22.

 

Determination of Dollar Amounts

 

73

SECTION 2.23.

 

Judgment Currency

 

73

SECTION 2.24.

 

Illegality

 

73

SECTION 2.25.

 

Uncommitted Orthofix-Italy Non-Pro Rata Tranche Sub-Facility

 

74

 

 

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES

 

75

 

 

 

 

 

SECTION 3.01.

 

Organization; Powers

 

75

SECTION 3.02.

 

Authorization; Enforceability

 

75

SECTION 3.03.

 

Governmental Approvals; No Conflicts

 

75

SECTION 3.04.

 

Financial Condition; No Material Adverse Change

 

76

SECTION 3.05.

 

Properties, etc

 

76

SECTION 3.06.

 

Litigation and Environmental Matters

 

77

SECTION 3.07.

 

Compliance with Laws and Agreements; No Default

 

77

SECTION 3.08.

 

Investment Company Status

 

79

SECTION 3.09.

 

Taxes

 

80

SECTION 3.10.

 

ERISA and Foreign Pension Plans

 

80

i


 

SECTION 3.11.

 

Disclosure

 

81

SECTION 3.12.

 

Other Agreements; Material Agreements

 

81

SECTION 3.13.

 

Solvency

 

81

SECTION 3.14.

 

Insurance

 

82

SECTION 3.15.

 

Capitalization; Subsidiaries; Intercompany Loans

 

82

SECTION 3.16.

 

Security Interest in Collateral

 

82

SECTION 3.17.

 

Employment Matters

 

83

SECTION 3.18.

 

Federal Reserve Regulations

 

83

SECTION 3.19.

 

Use of Proceeds

 

83

SECTION 3.20.

 

No Burdensome Restrictions

 

83

SECTION 3.21.

 

Anti-Corruption Laws and Sanctions

 

83

SECTION 3.22.

 

Fraud and Abuse

 

84

SECTION 3.23.

 

Licensing and Accreditation

 

84

SECTION 3.24.

 

Other Regulatory Protection

 

84

SECTION 3.25.

 

Reimbursement From Third Party Payors

 

85

SECTION 3.26.

 

Material Agreements

 

85

SECTION 3.27.

 

Affiliate Transactions

 

85

SECTION 3.28.

 

Common Enterprise

 

85

SECTION 3.29.

 

Foreign Subsidiaries

 

86

SECTION 3.30.

 

Classification as Senior Indebtedness

 

86

SECTION 3.31.

 

Tax Shelter Regulations

 

87

SECTION 3.32.

 

EEA Financial Institution

 

87

SECTION 3.33.

 

Existing ABN AMRO Credit Documents

 

87

 

 

 

ARTICLE IV CONDITIONS

 

88

 

 

 

SECTION 4.01.

 

Effective Date

 

88

SECTION 4.02.

 

Each Credit Event

 

90

SECTION 4.03.

 

Conditions to Borrowing

 

91

 

 

 

ARTICLE V AFFIRMATIVE COVENANTS

 

91

 

 

 

SECTION 5.01.

 

Financial Statements and Other Information

 

91

SECTION 5.02.

 

Notices of Material Events

 

93

SECTION 5.03.

 

Existence; Conduct of Business

 

95

SECTION 5.04.

 

Payment of Obligations

 

95

SECTION 5.05.

 

Maintenance of Properties

 

95

SECTION 5.06.

 

Books and Records; Inspection Rights

 

95

SECTION 5.07.

 

Compliance with Laws and Material Contractual Obligations

 

96

SECTION 5.08.

 

Use of Proceeds

 

96

SECTION 5.09.

 

Accuracy of Information

 

97

SECTION 5.10.

 

Insurance

 

97

SECTION 5.11.

 

Appraisals

 

97

SECTION 5.12.

 

Casualty and Condemnation

 

97

SECTION 5.13.

 

Additional Collateral; Further Assurances

 

98

SECTION 5.14.

 

Environmental Covenant

 

99

SECTION 5.15.

 

Post-Closing Matters

 

99

SECTION 5.16.

 

Foreign Collateral

 

99

 

 

 

ARTICLE VI NEGATIVE COVENANTS

 

100

 

 

 

SECTION 6.01.

 

Indebtedness

 

100

SECTION 6.02.

 

Liens

 

102

ii


 

SECTION 6.03.

 

Fundamental Changes

 

103

SECTION 6.04.

 

Investments, Loans, Advances, Guarantees and Acquisitions

 

105

SECTION 6.05.

 

Asset Sales

 

107

SECTION 6.06.

 

Sale and Leaseback Transactions

 

108

SECTION 6.07.

 

Swap Agreements

 

109

SECTION 6.08.

 

Restricted Payments; Certain Payments of Indebtedness

 

109

SECTION 6.09.

 

Transactions with Affiliates

 

110

SECTION 6.10.

 

Restrictive Agreements

 

110

SECTION 6.11.

 

Amendment of Material Documents

 

110

SECTION 6.12.

 

Financial Covenants

 

111

SECTION 6.13.

 

Accounts

 

111

SECTION 6.14.

 

Domestic Subsidiaries

 

111

 

 

 

ARTICLE VII EVENTS OF DEFAULT

 

111

 

 

 

ARTICLE VIII The ADMINISTRATIVE AGENT

 

115

 

 

 

 

 

SECTION 8.01.

 

Appointment

 

115

SECTION 8.02.

 

Rights as a Lender

 

116

SECTION 8.03.

 

Duties and Obligations

 

116

SECTION 8.04.

 

Reliance

 

116

SECTION 8.05.

 

Actions through Sub-Agents

 

116

SECTION 8.06.

 

Resignation

 

117

SECTION 8.07.

 

Non-Reliance

 

117

SECTION 8.08.

 

Other Agency Titles

 

118

SECTION 8.09.

 

Not Partners or Co-Venturers; Administrative Agent as Representative of the Secured Parties

 

118

SECTION 8.10.

 

ERISA

 

119

 

 

 

ARTICLE IX MISCELLANEOUS

 

121

 

 

 

 

 

SECTION 9.01.

 

Notices

 

121

SECTION 9.02.

 

Waivers; Amendments

 

123

SECTION 9.03.

 

Expenses; Indemnity; Damage Waiver

 

127

SECTION 9.04.

 

Successors and Assigns

 

130

SECTION 9.05.

 

Survival

 

133

SECTION 9.06.

 

Counterparts; Integration; Effectiveness; Electronic Execution

 

133

SECTION 9.07.

 

Severability

 

134

SECTION 9.08.

 

Right of Setoff

 

134

SECTION 9.09.

 

Governing Law; Jurisdiction; Consent to Service of Process

 

134

SECTION 9.10.

 

WAIVER OF JURY TRIAL

 

135

SECTION 9.11.

 

Headings

 

135

SECTION 9.12.

 

Confidentiality

 

135

SECTION 9.13.

 

Several Obligations; Nonreliance; Violation of Law

 

137

SECTION 9.14.

 

USA PATRIOT Act

 

137

SECTION 9.15.

 

Disclosure

 

137

SECTION 9.16.

 

Appointment for Perfection

 

137

SECTION 9.17.

 

Interest Rate Limitation

 

137

SECTION 9.18.

 

Marketing Consent

 

137

SECTION 9.19.

 

No Fiduciary Duty, etc

 

138

SECTION 9.20.

 

No Other Duties, Etc

 

138

SECTION 9.21.

 

Protected Health Information

 

138

SECTION 9.22.

 

Acknowledgement and Consent to Bail-In of EEA Financial Institutions

 

139

iii


 

SECTION 9.23.

 

Amendment and Restatement

 

139

 

 

 

ARTICLE X LOAN GUARANTY

 

140

 

 

 

 

 

SECTION 10.01.

 

Guaranty

 

140

SECTION 10.02.

 

Guaranty of Payment

 

140

SECTION 10.03.

 

No Discharge or Diminishment of Loan Guaranty

 

140

SECTION 10.04.

 

Defenses Waived

 

141

SECTION 10.05.

 

Rights of Subrogation

 

141

SECTION 10.06.

 

Reinstatement; Stay of Acceleration

 

141

SECTION 10.07.

 

Information

 

142

SECTION 10.08.

 

Termination

 

142

SECTION 10.09.

 

Taxes

 

142

SECTION 10.10.

 

Maximum Liability

 

143

SECTION 10.11.

 

Contribution

 

143

SECTION 10.12.

 

Liability Cumulative

 

144

SECTION 10.13.

 

Keepwell

 

144

 

 

 

ARTICLE XI THE BORROWER REPRESENTATIVE

 

144

 

 

 

 

 

SECTION 11.01.

 

Appointment; Nature of Relationship

 

144

SECTION 11.02.

 

Powers

 

145

SECTION 11.03.

 

Employment of Agents

 

145

SECTION 11.04.

 

Notices

 

145

SECTION 11.05.

 

Successor Borrower Representative

 

145

SECTION 11.06.

 

Execution of Loan Documents

 

145

SECTION 11.07.

 

Reporting

 

145

 


iv


 

 

SCHEDULES:

Commitment Schedule

Schedule 3.05 – Properties etc.

Schedule 3.06 – Disclosed Matters

Schedule 3.07 – Compliance with Health Care Laws

Schedule 3.12 – Material Agreements

Schedule 3.14 – Insurance

Schedule 3.15 – Capitalization and Subsidiaries

Schedule 3.21 – Anti-Corruption Laws and Sanctions

Schedule 3.27 – Affiliate Transactions

Schedule 5.15 – Post-Closing Matters

Schedule 6.01 – Existing Indebtedness

Schedule 6.01(a) – Intercompany Loans

Schedule 6.02 – Existing Liens

Schedule 6.04 – Existing Investments

Schedule 6.10 – Existing Restrictions

Schedule 6.13 - Accounts

EXHIBITS:

Exhibit A – Assignment and Assumption

Exhibit B – Compliance Certificate

Exhibit C – Joinder Agreement

Exhibit D-1 – U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Exhibit D-2 – U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)

Exhibit D-3 – U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Exhibit D-4 – U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)

 

 

v


 

FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated as of July 31, 2018 (as it may be amended or modified from time to time, this "Agreement"), among ORTHOFIX HOLDINGS, INC., a Delaware corporation ("U.S. Borrower"), VICTORY MEDICAL LIMITED, a company formed under the laws of England and Wales ("Victory"), ORTHOFIX INTERNATIONAL B.V., a company incorporated under the laws of the Netherlands ("Orthofix B.V.") as Borrowers, the other Loan Parties party hereto, the Lenders party hereto from time to time, JPMORGAN CHASE BANK, N.A., as Administrative Agent, Swingline Lender and Issuing Bank and JPMorgan Chase Bank, N.A. and Compass Bank d/b/a BBVA Compass ("BBVA Compass") as Joint Lead Arrangers and Joint Bookrunners.

The Borrowers, the other loan parties party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent, entered into a Credit Agreement dated as of August 31, 2015 (as amended or modified, the "Existing Agreement").

The Borrowers and the other parties hereto wish to amend and restate the Existing Agreement, to, among other things, reflect and accommodate the conversation of Orthofix Medical Inc., a Delaware corporation and formerly Orthofix International N.V., a corporation formed under the laws of Curacao, to a Delaware corporation and the transactions entered into in connection therewith, subject to the terms and conditions set forth herein.

The Borrowers, the other Loan Parties, the Administrative Agent and the Required Lenders agree to amend and restate the Existing Agreement in its entirety 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, is bearing interest at a rate determined by reference to the Alternate Base Rate.

"Acceptable Communication" has the meaning assigned to such term in Section 2.03.

"Account" has the meaning assigned to such term in the Security Agreement.

"Account Debtor" means any Person obligated on an Account.

"Acquisition" means any transaction, or any series of related transactions, consummated on or after the Effective Date, by which any Orthofix Entity (a) acquires any division, line of business or other business unit of any Person or all or substantially all of the assets of any Person, whether through purchase of assets, merger or otherwise or (b) directly or indirectly acquires (in one transaction or as the most recent transaction in a series of transactions) at least a majority (in number of votes) of the Equity Interests of a Person which has ordinary voting power for the election of directors or other similar management personnel of a Person (other than Equity Interests having such power only by reason of the happening of a contingency) or a majority of the outstanding Equity Interests of a Person (such Person or such division, line of business or other business unit of a Person the subject of the Acquisition referred to herein as the "Target").

 

First Amended and Restated Credit Agreement (Orthofix), Page 1


 

"Adjusted LIBO Rate" means, with respect to any Eurocurrency Borrowing for any Interest Period or for any ABR Borrowing that accrues interest based upon the Adjusted LIBO Rate, an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to (a) the Eurocurrency Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

"Administrative Agent" means JPMorgan Chase Bank, N.A. (and its subsidiaries and Affiliates), in its capacity as administrative agent for the Lenders hereunder and any successor thereto appointed pursuant to Section 8.06.

"Administrative Agent's Office" means the Administrative Agent's address and, as appropriate, account as set forth in Section 9.01, or such other address or account as the Administrative Agent may from time to time notify to the Borrower Representative and the Lenders.

"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 specified Person.

"Aggregate Revolving Exposure" means, at any time, the aggregate Revolving Exposure of all the Lenders at such time (with the Swingline Exposure and the LC Exposure of each Lender calculated assuming that that all of the Lenders have funded their participations in all Swingline Loans and Letters of Credit outstanding at such time).

"Agreed Currencies" means (a) Dollars and (b) so long as such currency is freely transferable and convertible into Dollars (i) Euro and (ii) Pounds Sterling.

"Alternate Base Rate" means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1%, and (c) the Adjusted LIBO Rate for a one-month Interest Period for Dollars on such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1%, provided that for the purpose of this definition, the Adjusted LIBO Rate for any day shall be based on the LIBOR Screen Rate (or if the LIBOR Screen Rate is not available for such one month Interest Period, the Interpolated Rate) at approximately 11:00 a.m. London time on such day.  Any change in the Alternate Base Rate due to a change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate for Dollars shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or the Adjusted LIBO Rate, respectively.  If the Alternate Base Rate is being used as an alternate rate of interest pursuant to Section 2.13 hereof, then the Alternate Base Rate shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above.  For the avoidance of doubt, if the Alternate Base Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

"Anti-Corruption Laws" means all laws, rules, and regulations of any jurisdiction applicable to any Orthofix Entity or any of their Affiliates from time to time concerning or relating to bribery or corruption.

"Applicable Foreign Loan Party Documents" has the meaning assigned to such term in Section 3.29.

 

First Amended and Restated Credit Agreement (Orthofix), Page 2


 

"Applicable Percentage" means, at any time with respect to any Lender, a percentage equal to a fraction the numerator of which is such Lender's Commitment at such time and the denominator of which is the aggregate Commitments at such time (provided that, if the Commitments have terminated or expired, the Applicable Percentages shall be determined based upon such Lender's share of the Aggregate Revolving Exposure at such time); provided that, in accordance with Section 2.19, so long as any Lender shall be a Defaulting Lender, such Defaulting Lender's Commitment shall be disregarded in the calculations above.

"Applicable Rate" means, for any day, with respect to any Loan, or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption "ABR Spread", " Eurocurrency Spread" or "Commitment Fee Rate", as the case may be, based upon the Company's Total Leverage Ratio as of the most recent determination date, provided that until the first fiscal quarter ending after the Effective Date, the "Applicable Rate" shall be the applicable rates per annum set forth below in Category 4:

Total Leverage

Ratio

 

ABR Spread

Eurocurrency

Spread

Commitment Fee Rate

Category 1

2.50 to 1.00

1.50%

2.50%

0.40%

Category 2

< 2.50 to 1.00 but

1.75 to 1.00

1.25%

2.25%

0.35%

Category 3

< 1.75 to 1.00 but

1.00 to 1.00

1.00%

2.00%

0.30%

Category 4

< 1.00 to 1.00

0.75%

1.75%

0.25%

Notwithstanding the foregoing, if the Company or the Borrowers fail to deliver the annual or quarterly consolidated financial statements required to be delivered by them pursuant to Section 5.01, then the Total Leverage Ratio shall be deemed to be in Category 1 during the period from the expiration of the time for delivery thereof until such consolidated financial statements are delivered.

If at any time the Administrative Agent determines that the financial statements upon which the Applicable Rate was determined were incorrect (whether based on a restatement, fraud or otherwise), the Borrowers shall be required to retroactively pay any additional amount that the Borrowers would have been required to pay if such financial statements had been accurate at the time they were delivered.

"Approved Fund" has the meaning assigned to the term in Section 9.04(b).

"Arrangers" means JPMorgan Chase Bank, N.A. and BBVA Compass.

"Assignment and Assumption" means an assignment and assumption agreement 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 substantially the form of Exhibit A or any other form approved by the Administrative Agent.

"Availability" means, at any time, an amount equal to (a) the aggregate Commitments minus (b) the Aggregate Revolving Exposure (calculated, with respect to any Defaulting Lender, as if such Defaulting Lender had funded its Applicable Percentage of all outstanding Borrowings).

 

First Amended and Restated Credit Agreement (Orthofix), Page 3


 

"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.

"Bail-In Action" means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.

"Bail-In Legislation" means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.

"Banking Services" means each and any of the following bank services provided to any of the Orthofix Entities by JPMorgan Chase Bank and/or any Lender and/or any of their Affiliates and/or any Person that at the time of entering into any agreement in respect of such bank services was a Lender or an Affiliate of a Lender: (a) credit cards for commercial customers (including, without limitation, "commercial credit cards" and purchasing cards), (b) stored value cards, (c) merchant processing services, and (d) treasury management services (including, without limitation, controlled disbursement, automated clearinghouse transactions, return items, any direct debit scheme or arrangement, overdrafts and interstate depository network services and cash pooling services).

"Banking Services Obligations" means any and all obligations of the Orthofix Entities, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor) in connection with Banking Services.

"Bank Levy" means (a) the UK Bank Levy or (b) any bank levy of any jurisdiction other than the UK which does not differ materially from the proposals for the design of levies on financial institutions as set out by the International Monetary Fund in the paper "A fair and substantial contribution by the financial sector" published in June 2010 and which is charged wholly or mainly by reference to the balance sheet (including any consolidated balance sheet of any group of which the Administrative Agent or a Lender forms part) of the Administrative Agent or a Lender and/or any member of a group of which the Administrative Agent or a Lender forms part.

"Bankruptcy Event" means, with respect to any Person, when such Person becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver (including in respect of the Netherlands a curator), conservator, trustee, administrator  (including in respect of the Netherlands a bewindvoerder or a stille bewindvoerder), custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment or in respect of the Netherlands, bankruptcy (faillissement), dissolution (ontbinding) moratorium (surseance van betaling) and emergency regulation (noodregeling), provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person by a Governmental Authority or instrumentality thereof, unless such ownership interest results in or provides such Person with immunity from the jurisdiction of courts within the U.S. or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Governmental Authority or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person

"Beneficial Owner" means, with respect to any U.S. federal withholding Tax, the beneficial owner, for U.S. federal income tax purposes, to whom such Tax relates.

 

First Amended and Restated Credit Agreement (Orthofix), Page 4


 

"Beneficial Ownership Certification" means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.

"Beneficial Ownership Regulation" means 31 C.F.R. § 1010.230.

"Benefit Plan" means any of (a) an "employee benefit plan" (as defined in ERISA) that is subject to Title I of ERISA, (b) a "plan" as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such "employee benefit plan" or "plan".

"Board" means the Board of Governors of the Federal Reserve System of the U.S.

"Borrower" or "Borrowers" means, individually or collectively, the U.S. Borrower, the UK Borrower and the Dutch Borrower.

"Borrower DTTP Filing" means an HM Revenue & Customs' Form DTTP2, duly completed and filed by the relevant Borrower within the applicable time limit, which contains the scheme reference number and jurisdiction of tax residence provided by the Lender to such Borrower and the Administrative Agent.

"Borrower Representative" has the meaning assigned to such term in Section 11.01.

"Borrowing" means (a) Revolving Loans of the same Type, made, converted or continued on the same date and, in the case of Eurocurrency Loans, as to which a single Interest Period is in effect, and (b) a Swingline Loan.

"Borrowing Request" means a request by the Borrower Representative for a Borrowing in accordance with Section 2.03.

"Burdensome Restrictions" means any consensual encumbrance or restriction of the type described in clause (a) or (b) of Section 6.10.

"Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized to close under the laws of, or are in fact closed in, New York City, New York; provided that (a) if such day relates to any Eurocurrency Loan or a Letter of Credit denominated in a Foreign Currency, the term "Business Day" shall also exclude any day on which banks are not open for dealings in the applicable Agreed Currency in the London interbank market or (other than in respect of Borrowings denominated in Dollars or Euro) the principal financial center of such Agreed Currency, and (b) when used in connection with a Eurocurrency Loan or a Letter of Credit denominated in Euro, the term "Business Day" shall also exclude any day on which the TARGET2 payment system is not open for the settlement of payments in Euro.

"BVIII" means Orthofix III B.V., a company incorporated under the laws of the Netherlands.

"Capital Expenditures" means, without duplication, any expenditure or commitment to expend money for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a consolidated balance sheet of the Company and its Subsidiaries prepared in accordance with GAAP.

 

First Amended and Restated Credit Agreement (Orthofix), Page 5


 

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

"CFC" means a Subsidiary that is a "controlled foreign corporation" under Section 957 of the Code.

"CF Rate" has the meaning assigned to such term in Section 2.13(a).

"CHAMPVA" means, collectively, the Civilian Health and Medical Program of the Department of Veterans Affairs, and all laws, rules, regulations, manuals, orders, guidelines or requirements (whether or not having the force of law) pertaining to such program, in each case as the same may be amended, supplemented or otherwise modified from time to time.

"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 SEC thereunder as in effect on the date hereof), of Equity Interests representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests 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 neither (i) nominated or approved by the board of directors of the Company nor (ii) appointed by directors so nominated or approved; or (c) the acquisition of direct or indirect Control of the Company by any Person or group; or (d) the Company shall cease to own, directly or indirectly, free and clear of all Liens or other encumbrances (other than Liens and encumbrances (x) arising under the Loan Documents or (y) described under clause (a) of the definition of Permitted Encumbrances), 100% of the outstanding voting Equity Interests of the Borrowers on a fully diluted basis; or (e) except as permitted by Section 6.03, the Company shall cease to own, directly or indirectly, free and clear of all Liens or other encumbrances (other than Liens and encumbrances (x) arising under the Loan Documents or (y) described under clause (a) of the definition of Permitted Encumbrances), 100% of the outstanding voting Equity Interests of any of the Subsidiary Guarantors (other than the Borrowers); or (f) the acquisition of direct or indirect Control of the Company, any Borrower or any other Loan Party, or (g) except as specifically permitted by the terms of this Agreement, the acquisition of direct or indirect Control of any of the other direct or indirect Subsidiaries of the Company that are not Subsidiary Guarantors.

"Change in Law" means the occurrence after the date of this Agreement (or, with respect to any Issuing Bank or Lender, such later date on which such Issuing Bank or Lender becomes a party to this Agreement) of any of the following: (a) the adoption of or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.14(b), by any lending office of such Lender or by such Lender's or the Issuing Bank's holding company, if any) with any request, guideline, requirement or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in the implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the U.S. or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a "Change in Law", regardless of the date enacted, adopted, issued or implemented.

 

First Amended and Restated Credit Agreement (Orthofix), Page 6


 

"Charges" has the meaning assigned to such term in Section 9.17.

"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 Swingline Loans.

"CMS" means The Centers for Medicare and Medicaid Services of the U.S. Department of Health and Human Services, and any Governmental Authority successor thereto.

"Code" means the Internal Revenue Code of 1986, as amended from time to time.

"Colgate" means Colgate Medical Limited, a company formed under the laws of England and Wales.

"Collateral" means (a) any and all property owned, leased or operated by a Person subject to a security interest or Lien in favor of the Administrative Agent, on behalf of itself and the Lenders and other Secured Parties, pursuant to the Collateral Documents and (b) any and all other property of any Orthofix Entity, now existing or hereafter acquired, that may at any time be, become or intended to be, subject to a security interest or Lien in favor of the Administrative Agent, on behalf of itself and the Lenders and other Secured Parties, to secure the Secured Obligations but which in no event described in clause (a) or (b) above will include any Excluded Asset.

"Collateral Access Agreement" has the meaning assigned to such term in the Security Agreement.

"Collateral Documents" means, collectively, the Security Agreements and any other agreements, instruments and documents executed in connection with this Agreement that are intended to either create, perfect or evidence Liens to secure all or any portion of the Secured Obligations or intended to create or evidence Guarantees of all or any portion of the Secured Obligations, including, without limitation, all other security agreements, pledge agreements, collateral assignments, loan agreements, notes, guarantees, subordination agreements, pledges, powers of attorney, consents, assignments, contracts, fee letters, notices, leases, financing statements and all other written matter whether theretofore, now or hereafter executed by any Loan Party or any Subsidiary and delivered to the Administrative Agent.

"Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans in the Agreed Currencies and to acquire participations in Letters of Credit and Swingline Loans hereunder, expressed as an amount representing the maximum aggregate permitted Dollar Amount of such Lender's Revolving Exposure hereunder, as such commitment may be reduced or increased from time to time pursuant to (a) Section 2.08 and (b) assignments by or to such Lender pursuant to Section 9.04.  The initial Dollar Amount of each Lender's Commitment is set forth on the Commitment Schedule, or in the Assignment and Assumption pursuant to which such Lender shall have assumed its Commitment, as applicable.  The initial aggregate amount of the Lenders' Commitments is $125,000,000.

"Commitment Increase" has the meaning assigned to the term in Section 2.08(e).

"Commitment Schedule" means the Schedule attached hereto identified as such.

"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

"Communications" has the meaning assigned to such term in Section 9.01(d).

 

First Amended and Restated Credit Agreement (Orthofix), Page 7


 

"Company" means Orthofix Medical Inc., a Delaware corporation, the parent company of the Borrowers (f/k/a Orthofix International N.V., a Curacao corporation).

"Compliance Certificate" means a compliance certificate prepared in accordance with Section 5.01(c) in substantially the form of Exhibit B or any other form approved of by the Administrative Agent.

"Compliance Period" has the meaning assigned to such term in Section 5.16.

"Compliant Dividends" means dividends made by the direct and indirect Subsidiaries of the Company to their direct equity holders that are also Subsidiaries of the Company so long as (i) the intent and result of the payment of all such dividends by the Subsidiaries of the Company is to reach the Company, and (ii) any direct or indirect Subsidiary of the Company that is not a Guarantor and that receives any such dividend must immediately distribute the full amount of such dividend received by it as a dividend or distribution to its direct equity holders, within one (1) Business Day after, in the case of each transfer, its receipt of such dividend (or such longer period as the Administrative Agent may agree in writing in its discretion).

"Computation Date" has the meaning specified in Section 2.22.

"Confidential Healthcare Information" has the meaning specified in Section 9.21.

"Connection Income Taxes" means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes.

"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.

"Credit Party" means the Administrative Agent, each Issuing Bank, each Swingline Lender or any other Lender; and "Credit Parties" means all or any combination of the foregoing as appropriate in the context used.

"CRR" means regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012.

"Debtor Relief Laws" means the Bankruptcy Code of the U.S., and all other liquidation, conservatorship, bankruptcy, debtor assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the U.S. or other applicable jurisdiction from time to time in effect.

"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.

"Defaulting Lender" means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swingline Loans or (iii) pay over to any Credit Party any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent and the Borrower Representative in writing that such failure is the result of such Lender's good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified any Borrower or any Credit

 

First Amended and Restated Credit Agreement (Orthofix), Page 8


 

Party in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender's good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a Loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within three Business Days after request by a Credit Party or the Borrower Representative, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swingline Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon such Credit Party's receipt of such certification in form and substance satisfactory to it and the Administrative Agent, or (d) has become the subject of (A) a Bankruptcy Event or (B) a Bail-In Action.  Any determination by the Administrative Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 2.19(d)) upon delivery of written notice of such determination to the Borrower Representative, each Issuing Bank, the Swingline Lender and each Lender.

"Disclosed Matters" means the actions, suits, proceedings and environmental matters disclosed on Schedule 3.06.

"Disqualified Equity Interests" means any Equity Interest which, by its terms (or by the terms of any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon the happening of any event or condition (a) matures (excluding any maturity that occurs as the result of an optional redemption or repurchase by the issuer thereof) or is mandatorily redeemable (other than solely for Qualified Equity Interests), pursuant to a sinking fund obligation or otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the Loans and all other Secured Obligations under the Loan Documents that are accrued and payable and the termination of the aggregate Commitments and all outstanding Letters of Credit), (b) is redeemable at the option of the holder thereof (other than solely for Qualified Equity Interests), in whole or in part (except as a result of a change of control or asset sale, so long as in each case any and all rights of the holders thereof upon the occurrence of any such change of control or asset sale event shall be subject to the Payment in Full of all Obligations), (c) provides for the scheduled payments of dividends in cash (other than to the extent such dividends are equal to the amount of Taxes payable that are directly attributable to the operations of the business of such Person), or (d) is or becomes convertible into or exchangeable for Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, prior to the date that is 91 days after the Maturity Date.

"Document" has the meaning assigned to such term in the Security Agreement.

"Dollar Amount", of any amount, means, at the time of determination thereof, (a) if such amount is expressed in Dollars, such amount, (b) if such amount is expressed in a Foreign Currency, the equivalent of such amount in Dollars determined by using the rate of exchange for the purchase of the Dollars with the Foreign Currency in the London foreign exchange market at or about 11:00 a.m. London time (or New York time, as applicable) on a particular day as displayed by ICE Data Services as the "ask price", or as displayed on such other information service which publishes that rate of exchange from time to time in place of ICE Data Services (or if such service ceases to be available, the equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deems appropriate in its sole discretion) and (c) if such amount is denominated in any other currency, the equivalent of such amount in Dollars as determined by the Administrative Agent using any method of determination it deems appropriate in its sole discretion.

"Dollars", "USD" or "$" means the lawful money of the U.S.

 

First Amended and Restated Credit Agreement (Orthofix), Page 9


 

"Domestic Non-Loan Party" means any Non-Loan Party that is organized under the laws of the U.S., or any state or commonwealth thereof or under the laws of the District of Columbia (other than any Subsidiary domiciled in Puerto Rico).

"Domestic Subsidiary" means any Subsidiary that is organized under the laws of the U.S., or any state or commonwealth thereof or under the laws of the District of Columbia (other than any Subsidiary domiciled in Puerto Rico).

"Dutch Borrower" means Orthofix B.V.

"Dutch Borrower Sublimit" means a Dollar Amount equal to $75,000,000.  The Dutch Borrower Sublimit is a part of, and not in addition to, the Revolving Commitment.

"Dutch Treaty Lender" means a Lender which is entitled under a double taxation agreement with The Netherlands to claim a reduction of Dutch withholding tax.

"EBITDA" means, for any period, Net Income for such period

plus

(a)     without duplication and to the extent deducted in determining Net Income for such period, the sum of, in each case, for such period:

(i)     Interest Expense,

(ii)     the aggregate amount of all income tax expense on the consolidated statements of income of the Company and its Subsidiaries,

(iii)     all amounts attributable to depreciation and amortization expense,

(iv)     any extraordinary, unusual or non-recurring non-cash charges, expenses or losses,

(v)     non-cash stock option and other equity-based compensation expenses,

(vi)     charges, losses, expenses or lost profits to the extent indemnified, insured or reimbursed by a third party, including expenses covered by indemnification provisions in connection with any Acquisition or disposition permitted by this Agreement and lost profits covered by business interruption insurance, in each case, in an amount not to exceed such amount actually reimbursed for such period,

(vii)     letter of credit fees (except to the extent such amount is included in clause (i) above),

(viii)     transaction expenses and other costs, fees and charges relating to (x) the loan transactions consummated under this Agreement and the Loan Documents on the Effective Date, so long as such amounts are incurred prior to September 30, 2018 and (y) the loan transactions consummated under the Second Amendment and Limited Consent to Credit Agreement, dated as of December 8, 2017, by and among the Borrowers, the other Loan Parties party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent on the Second Amendment and Limited Consent Effective Date (as defined therein), so long as such amounts are incurred prior to December 31, 2017,

 

First Amended and Restated Credit Agreement (Orthofix), Page 10


 

(ix)     any non-cash non-recurring costs or charges associated with any modification or termination of pension and post-retirement employee benefit plans,

(x)     goodwill and other intangible impairment charges,

(xi)     any other non-cash charges, including any non-cash expense relating to the vesting of warrants, the granting of stock appreciation rights, stock options or restricted stock, or resulting from the application of purchase accounting associated with any future acquisitions or dispositions, non-cash losses under hedging agreements, and non-cash losses in such period due solely to fluctuations in currency values and any related tax effects (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item that was paid in a prior period),

(xii)     cash charges for Settlement Amounts and non-cash reserve or accrual charges for expected future Settlement Amounts not to exceed $7,500,000 in the aggregate,

(xiii)     amortization or write-off of deferred financing costs,

(xiv)     (A) non-recurring transaction fees, costs and expenses incurred, or amortization thereof, in connection with, to the extent permitted hereunder, any acquisition or other investment, any disposition, any casualty or condemnation event or any issuance of Equity Interests, in each case, whether or not consummated, including non-recurring non-capitalized cash expenses incurred in connection with the consummation of any Acquisition or any proposed Acquisition that ultimately fails to close or is abandoned,

(B)     restructuring costs, integration costs, retention, recruiting, relocation and signing bonuses and expenses, severance costs, systems establishment costs, costs associated with the establishment of new information technology systems, costs associated with office and facility openings, closings and consolidations, and

(C)      costs and expenses of outside legal counsel, accounting advisors and consultants and other professionals in each case related to (x) the Company's remediation of internal control weaknesses and deficiencies, (y) the investigation of the Division of Enforcement of the Securities and Exchange Commission into certain Company accounting matters (including the Company's prior restatement of prior period financial results and a related independent review by the Audit Committee of the Company's Board of Directors), and (z) the securities class action litigation currently pending in the United States District Court for the Southern District of New York arising out of the foregoing matters,

provided that the aggregate amount of all addbacks pursuant to this clause (xiv) shall not exceed 5.0% of EBITDA in any four fiscal quarter period before giving effect to such addbacks, and

(xv)     any cash reimbursement payments received during such period in respect of items described in clause (b)(iii) taken in a prior period, provided that, each of the forgoing clauses shall in each case exclude any non-cash charge in respect of an item that was included in Net Income in a prior period and any non-cash charge that relates to the write-down or write-off of Inventory,

 

First Amended and Restated Credit Agreement (Orthofix), Page 11


 

minus

(b)     without duplication and to the extent included in Net Income, in each case for such period:

(i)      the aggregate amount of all income tax benefit on the consolidated statements of income of the Company and its Subsidiaries,

(ii)      any cash payments made during such period in respect of non-cash charges described in clause (a)(xi) taken in a prior period, and

(iii)     any extraordinary, unusual or non-recurring gains and any non-cash items of income (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period), all calculated for the Company and its Subsidiaries on a consolidated basis in accordance with GAAP.

"ECP" means an "eligible contract participant" as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulations promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC.

"EEA Financial Institution" means (a) any institution established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

"EEA Member Country" means any of the member states of the European Union, Iceland, Liechtenstein, and Norway

"EEA Resolution Authority" means any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

"Effective Date" means the date on which the conditions specified in Section 4.01 are satisfied (or waived in accordance with Section 9.02).

"Electronic Signature" means an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

"Electronic System" means any electronic system, including e-mail, e-fax, Intralinks®, ClearPar®, Debt Domain, Syndtrak and any other Internet or extranet-based site, whether such electronic system is owned, operated or hosted by the Administrative Agent and the Issuing Bank and any of its respective Related Parties or any other Person, providing for access to data protected by passcodes or other security system.

"Environmental Laws" means all foreign and domestic laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, Release or threatened Release of any Hazardous Material or to health and safety matters.

 

First Amended and Restated Credit Agreement (Orthofix), Page 12


 

"Environmental Liability" means any liability, contingent or otherwise (including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), of any Orthofix Entity directly or indirectly resulting from or based upon (a) any violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) any exposure to any Hazardous Materials, (d) the Release or threatened Release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.

"Equipment" has the meaning assigned to such term in the Security Agreement.

"Equity Interests" means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any of the foregoing.

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time.

"ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Company or any of its direct or indirect Subsidiaries, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

"ERISA Event" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30‑day notice period is waived); (b) the failure to satisfy the "minimum funding standard" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by any Orthofix Entity or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any Orthofix Entity or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by any Orthofix Entity or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal of any Orthofix Entity or any ERISA Affiliate from any Plan or Multiemployer Plan; or (g) the receipt by any Orthofix Entity or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from any Orthofix Entity or any ERISA Affiliate of any notice, concerning the imposition upon any Orthofix Entity or any ERISA Affiliate of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, in critical status, or in reorganization, within the meaning of Title IV of ERISA.

"EU Bail-In Legislation Schedule" means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

"Euro", "euro" or "" means the single currency of the participating member states of the European Union.

"Eurocurrency", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, bear interest at a rate determined by reference to the Eurocurrency Rate.

 

First Amended and Restated Credit Agreement (Orthofix), Page 13


 

"Eurocurrency Rate" means, with respect to any Eurocurrency Borrowing in any Agreed Currency for any applicable Interest Period, the LIBOR Screen Rate as of the Specified Time on the Quotation Day for such Agreed Currency and such Interest Period; provided that, if the applicable Screen Rate shall not be available at such time for such Interest Period (an "Impacted Interest Period") with respect to the applicable Agreed Currency, then the Eurocurrency Rate shall be the Interpolated Rate, subject to Section 2.13 in the event that the Administrative Agent shall conclude that it shall not be possible to determine such Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error).  Notwithstanding the above, to the extent that "Eurocurrency Rate" or "Adjusted LIBO Rate" is used in connection with an ABR Borrowing, such rate shall be determined as modified by the definition of Alternate Base Rate.

"Event of Default" has the meaning assigned to such term in Article VII.

"Excluded Assets" means, collectively:

(a)     assets as to which the Administrative Agent and the Borrower Representative agree in writing that the cost of creating or perfecting a pledge of, or a security interest in, such assets is excessive in relation to the value of the security to be afforded thereby;

(b)      any fee owned real property and any leasehold rights and interests in real property (other than interests resulting from Collateral Access Agreements);

(c)      any motor vehicles and other assets subject to certificates of title to the extent a Lien thereon cannot be perfected by the filing of a UCC financing statement or equivalent;

(d)     any rights or interest in any lease, contract, license or license agreement covering personal property or real property and/or such assets subject thereto, so long as under the terms of such lease, contract, license or license agreement, or requirement of law with respect thereto, the grant of a security interest or Lien therein for the benefit of the Secured Parties (1) is prohibited, (2) would give any other party to such lease, contract, license or license agreement, instrument or indenture the right to terminate its obligations thereunder, or (3) is permitted only with the consent of another party (including, without limitation, any Governmental Authority) (or would render such lease, contract, license or license agreement cancelled, invalid or unenforceable) and such prohibition has not been or is not waived or the consent of the other party to such lease, contract, license or license agreement has not been or is not otherwise obtained; provided, that, this exclusion shall in no way be construed to apply if any such prohibition is unenforceable under the UCC or any other requirement of law (including any Debtor Relief Law) or so as to limit, impair or otherwise affect the unconditional continuing security interests in and Liens for the benefit of the Secured Parties upon any rights or interests in or to monies due or to become due under any such lease, contract, license or license agreement (including any receivables) and provided further that, with respect to any lease, contract, license or license agreement entered into after the Effective Date, the Loan Parties shall use commercially reasonable efforts to permit Liens for the benefit of the Secured Parties on each such lease, contract, license or license agreement and avoid prohibitions of the types described in clauses (1) through (3) above;

(e)     any application for registration of a trademark filed in the United States Patent and Trademark Office on an intent to use basis to the extent that the grant of a security interest in any such trademark application would adversely affect the validity or enforceability or result in cancellation or voiding of such trademark application, provided, however, that such trademark applications shall no longer be considered Excluded Assets upon the filing of a Statement of Use or an Amendment to Allege Use has been filed and accepted in the United States Patent and Trademark Office;

 

First Amended and Restated Credit Agreement (Orthofix), Page 14


 

(f)     Excluded Deposit Accounts;

(g)      any assets that are subject to a Lien permitted under Section 6.02(d) if the contract or other agreement in which the Lien is granted (or the documentation providing for the Indebtedness secured thereby) prohibits the creation of any other Lien on such assets; provided, that immediately upon the ineffectiveness, lapse or termination of any such Lien permitted under Section 6.02(d), such assets shall no longer be considered Excluded Assets and the Collateral shall include all such rights and interest in such assets as if such Lien permitted under Section 6.02(d) had never been in effect;

(h)      voting Equity Interests in excess of 65% of the total voting Equity Interests in any Orthofix Entity that is also (i) a Foreign Subsidiary of a U.S. Loan Party, (ii) a CFC, (iii) a Domestic Subsidiary whose immediate parent is a CFC or (iv) any Subsidiary where all or substantially all of the assets of that Subsidiary (directly or through Subsidiaries) consists of Equity Interests of one or more Foreign Subsidiaries that are CFCs; provided, that the foregoing exclusions shall, with respect to any Foreign Subsidiary (or Domestic Subsidiary of a CFC) that is a CFC at the time of grant of such pledge or hypothecation, automatically cease to apply at any time such Foreign Subsidiary is not a CFC;

(i)      any treasury stock of the Company or other margin stock (within the meaning of Regulation U of the Board), in each case, unless the Lenders have made any necessary filings with the Board in connection therewith; and

(j)      Equity Interests in partnerships, joint ventures and non-Wholly-Owned Subsidiaries if and for so long as the terms of any applicable organizational document, joint venture agreement, partnership or shareholders' agreement of such Person existing on the Effective Date prohibit the creation of any other Lien on such Equity Interests (or with respect to any partnership, joint venture or non-Wholly-Owned Subsidiary acquired after the Effective Date, as of the date of such acquisition; provided the terms of any such organizational document, joint venture agreement, partnership or shareholders' agreement was not entered into in connection with or anticipation of such acquisition).

"Excluded Deposit Accounts" means any deposit account (a) held at any banking institution in a jurisdiction other than the U.S., England or Wales, (b) established solely as a payroll account and other zero-balance disbursement account, (c)  held in a fiduciary capacity and established in connection with employee benefit plans in the ordinary course of business or pursuant to applicable legal requirements or (d) escrow accounts established in connection with Permitted Acquisitions or Investments.

"Excluded Swap Obligation" means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor's failure for any reason to constitute an ECP at the time the Guarantee of such Guarantor or the grant of such security interest becomes or would become effective with respect to such Swap Obligation.  If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

"Excluded Taxes" means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient: (a) Taxes imposed on, or calculated by reference to, or measured by net income (however denominated) received or receivable, franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized  under the laws of, or having its principal office or, if different, being treated as resident for tax purposes,

 

First Amended and Restated Credit Agreement (Orthofix), Page 15


 

or in the case of any Lender, its applicable lending office located in, or having a permanent establishment and/or permanent representative to which income under this Agreement is attributed in respect of amounts received or receivable that are effectively attributable to such permanent establishment and/or permanent representative (within the meaning of the OECD Model Tax Convention), or under the laws of the Netherlands to the extent such Taxes becomes payable as a result of such Recipient having a substantial interest (aanmerkelijk belang) in the Dutch Borrower as laid down in the Netherlands Income Tax Act 2001 (Wet inkomstenbelasting 2001) or, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. Federal, Dutch and United Kingdom withholding Taxes (excluding (x) the portion of United Kingdom withholding Taxes with respect to which the applicable Lender is a UK Treaty Lender, (y) the portion of Dutch withholding Taxes with respect to which the applicable Lender is a Dutch Treaty Lender and (z) United Kingdom withholding Taxes on payments made by any guarantor under any guarantee of the obligations)  imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan, Letter of Credit or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan, Letter of Credit or Commitment (other than pursuant to an assignment request by the Borrowers under Section 2.18(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 2.16, amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender acquired the applicable interest in a Loan, Letter of Credit or Commitment or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient's failure to comply with Section 2.16(f) or (g)(i), (d) any U.S. federal withholding Taxes imposed under FATCA and (e) any Bank Levy.

"Existing Agreement" has the meaning given to it in the preamble of this Agreement.

"FATCA" means Sections 1471 through 1474 of the Code as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code and any law, regulation, rule, promulgation, or official agreement implementing an official government agreement with respect to the foregoing.

"FDA" means the Food and Drug Administration.

"Federal Funds Effective Rate" means, for any day, the rate calculated by the NYFRB based on such day's federal funds transactions by depository institutions (as determined in such manner as the NYFRB shall set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as the federal funds effective rate, provided that if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

"Fee Letter" means, collectively, (a) the fee letter, dated August 6, 2015, by and among the U.S Borrower, Victory, JPMorgan Chase Bank, N.A. and J.P. Morgan Securities LLC, (b) the fee letter, dated August 6, 2015, by and among the U.S. Borrower, Victory and BBVA Compass and (c) any other fee letter executed by any one or more of the Orthofix Entities from time to time providing for the payment of fees in connection with the Transactions.

"Financial Officer" means the chief financial officer, principal accounting officer, vice president of tax and treasury, or treasurer, in each case of the Company or the U.S. Borrower, or any other natural person designated and authorized by the Board of Directors of the U.S. Borrower to act as the representative of the Borrower Representative, so long as in each case evidence of such appointment together with a duly completed and executed incumbency certificate with respect to such person, acceptable to the Administrative Agent in its reasonable discretion, is delivered to the Administrative Agent prior to such person's inclusion in this definition of "Financial Officer".

 

First Amended and Restated Credit Agreement (Orthofix), Page 16


 

"Financial Statements" has the meaning assigned to such term in Section 5.01.

"Foreign Collateral Trigger Event" means, the last day of any fiscal quarter on which (i) the Total Leverage Ratio exceeds 2.00:1.00, (ii) the Total Leverage Ratio exceeded 2.00:1.00 on the immediately preceding fiscal quarter end and (iii) the percentage of EBITDA that is attributable to the results of the aggregate Foreign Unperfected Subsidiaries exceeds 30% of EBITDA.

"Foreign Currencies" means Agreed Currencies other than Dollars.

"Foreign Currency Payment Office" of the Administrative Agent means, for each Foreign Currency, the office, branch, affiliate or correspondent bank of the Administrative Agent for such currency as specified from time to time by it, in the case of the Administrative Agent by notice to the Borrower Representative and each Lender.

"Foreign Lender" means (a) if a Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if a Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which such Borrower is resident for tax purposes.

"Foreign Pension Plan" means any plan, scheme, fund (including any superannuation fund) or other similar program established, sponsored or maintained outside the U.S. by any Orthofix Entity primarily for the benefit of employees of such Orthofix Entity residing outside the U.S., which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code.

"Foreign Perfected Subsidiary" means a Foreign Subsidiary which respect to which each component of both clauses (a) and (b) is true: (a) such Foreign Subsidiary is a Loan Party that has (i) become a Loan Guarantor, (ii) granted perfected Liens to the Administrative Agent on substantially all of its assets (other than Excluded Assets) in the jurisdiction of its incorporation or formation, which such Liens must be first priority Liens except as permitted by Section 6.02, (iii) executed all Loan Documents and made such other filings, registrations, certifications and taken such other commercially reasonable actions (as determined by the Administrative Agent) to grant and/or perfect such Liens, or in connection with becoming a Loan Guarantor, including, but not limited to, Collateral Documents and other documents and instruments governed by the laws of its jurisdiction of incorporation or formation, or governed by the laws of the location of any of its assets and properties, in each case as deemed reasonably necessary or advisable by the Administrative Agent in order for such Foreign Subsidiary to grant and/or perfect such Liens, or in connection with becoming a Loan Guarantor, and other items as the Administrative Agent may reasonably request in connection therewith and taken all other commercially reasonable actions (as determined by the Administrative Agent) of the type contemplated by Section 5.13 (including opinions of counsel), and (b) the immediate parent of such Foreign Subsidiary has (i) pledged the Equity Interests of such Foreign Subsidiaries pursuant to Collateral Documents and other documents and instruments governed by, and perfected under the laws of both the U.S. and the jurisdiction of organization of such Foreign Subsidiary, (ii) executed all Loan Documents and made such other filings, registrations, certifications and taken such other commercially reasonable actions (as determined by the Administrative Agent) to grant/or perfect such Liens, including, but not limited to, Collateral Documents and other documents and instruments governed by the laws of both the U.S. and such Foreign Subsidiary’s jurisdiction of incorporation or formation, and other items as the Administrative Agent may reasonably request in connection therewith and (iii) taken all other commercially reasonable actions (as determined by the Administrative Agent) of the type contemplated by Section 5.13 (including opinions of counsel).

 

First Amended and Restated Credit Agreement (Orthofix), Page 17


 

"Foreign Subsidiary" means each Subsidiary other than a Domestic Subsidiary.

"Foreign Unperfected Subsidiary" means each Foreign Subsidiary that is not a Foreign Perfected Subsidiary.

"FTC" means the Federal Trade Commission .

"Funding Account" has the meaning assigned to such term in Section 4.01(h).

"GAAP" means generally accepted accounting principles in the U.S.

"Governmental Authority" means the government of the U.S., any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including, without limitation, any supra national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision) or any successor or similar authority to any of the foregoing.

"Guarantee" of or by any Person (the "guarantor") means any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation  of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation or to purchase (or to advance or supply funds for the purchase of) any security for the payment thereof, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) as an account party in respect of any letter of credit or letter of guaranty issued to support such Indebtedness or obligation; provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business.

"Guaranteed Obligations" has the meaning assigned to such term in Section 10.01.

"Guarantors" means all Loan Guarantors and all other entities and Persons, including, without limitation, any Orthofix Entity not already a Loan Party, who have delivered an Obligation Guaranty, and the term "Guarantor" means each or any one of them individually.

"Hazardous Materials" means:  (a) any substance, material, or waste that is included within the definitions of "hazardous substances," "hazardous materials," "hazardous waste," "toxic substances," "toxic materials," "toxic waste," or words of similar import in any Environmental Law; (b) those substances listed as hazardous substances by the U.S. Department of Transportation (or any successor agency) (49 C.F.R. 172.101 and amendments thereto) or by the Environmental Protection Agency (or any successor agency) (40 C.F.R. Part 302 and amendments thereto); and (c) any substance, material, or waste that is petroleum, petroleum-related, or a petroleum by-product, asbestos or asbestos‑containing material, polychlorinated biphenyls, flammable, explosive, radioactive, freon gas, radon, or a pesticide, herbicide, or any other agricultural chemical.

 

First Amended and Restated Credit Agreement (Orthofix), Page 18


 

"Health Care Laws" means, collectively, any and all domestic and foreign, federal, state or local laws, rules, regulations, orders, administrative manuals, guidelines and requirements relating to any of the following: (a) fraud and abuse (including the following statutes, as amended, modified or supplemented from time to time and any successor statutes thereto and regulations promulgated from time to time thereunder: the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C. § 1395nn and §1395(q)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the federal health care program exclusion provisions (42 U.S.C. § 1320a-7), the Civil Monetary Penalties Act (42 U.S.C. § 1320a-7a), the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173) and the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the Heath Care and Education Reconciliation Act of 2010 (P.L. 111-152)); (b) any Medical Reimbursement Program; (c) the licensure or regulation of healthcare providers, suppliers, professionals, facilities or payors (including the DMEPOS Supplier Standards established by the Health Care Financing Administration and all statutes and regulations administered by the FDA); (d) the provision of, or payment for, health care services, items or supplies; (e) quality, safety certification and accreditation standards and requirements administered by a Governmental Authority; (f) the billing, coding or submission of claims or collection of accounts receivable or refund of overpayments; (g) HIPAA; (h) the practice of medicine and other health care professions or the organization of medical or professional entities; (i) fee-splitting prohibitions; (j) requirements for maintaining domestic or foreign, federal, state and local tax-exempt status of any Orthofix Entity; (k) charitable trusts or charitable solicitation laws; (l) health planning or rate-setting laws, including laws regarding certificates of need and certificates of exemption; and (m) any and all other applicable domestic or foreign, federal, state or local health care laws, rules, codes, regulations, manuals, orders, ordinances, professional or ethical rules, administrative guidance and requirements, as the same may be amended, modified or supplemented from time to time.

"Health Care Permits" means any and all permits, licenses, authorizations, certificates, consents, registrations, certificates of need, accreditations and plans of third-party accreditation agencies (such as the Community Health Accreditation Program and The Joint Commission) that are (a) necessary to enable any Orthofix Entity to provide services, participate in and receive payment under any Medical Reimbursement Program or other Third Party Payor Arrangement, as applicable, or otherwise continue to conduct its business as it is conducted on the Effective Date, or (b) required under any Health Care Law.

"HIPAA" means (a) the Health Insurance Portability and Accountability Act of 1996; (b) the Health Information Technology for Economic and Clinical Health Act (Title XIII of the American Recovery and Reinvestment Act of 2009); (c) the Omnibus Final Rule, and (d) any foreign or domestic, federal, state and local laws regulating the privacy and/or security of individually identifiable information, in each case as the same may be amended, modified or supplemented from time to time, any successor statutes thereto, and any and all rules or regulations promulgated from time to time thereunder.

"HHS" means the U.S. Department of Health and Human Services and any successor thereof.

"HMRC DT Treaty Passport scheme" means the Board of H.M. Revenue and Customs Double Taxation Treaty Passport scheme.

"Immaterial Subsidiary" means each Subsidiary of the Company that has assets with a book value of less than the Dollar Amount of $500,000.  

"Impacted Interest Period" has the meaning assigned to such term in the definition of "Eurocurrency Rate".

"Incremental Amendment" has the meaning assigned to the term in Section 2.08(f).

 

First Amended and Restated Credit Agreement (Orthofix), Page 19


 

"Incremental Commitments" has the meaning assigned to the term in Section 2.08(e).

"Incremental Lender" has the meaning assigned to the term in Section 2.08(f).

"Incremental Term A Loan" has the meaning assigned to the term in Section 2.08(e).

"Incremental Term A Loan Commitment" has the meaning assigned to the term in Section 2.08(e).

"Indebtedness" of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, including without limitation, intercompany advances, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person (other than customary reservations or retentions of title under agreements with suppliers entered into in the ordinary course of business), (e) all obligations of such Person in respect of the deferred purchase price of property or services (excluding (i) current accounts payable incurred in the ordinary course of business, (ii) deferred compensation funded into applicable trust arrangements and (iii) earnouts), (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the Indebtedness secured thereby has been assumed (the amount of such Indebtedness being the lesser of (i) the principal amount of such Indebtedness and (ii) the book value of all assets subject to such Lien), (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in respect of bankers' acceptances, (k) obligations under any earn‑out in connection with any Acquisition or other Investment permitted hereunder, provided such earnout has been earned and is due to be paid as of the date of determination, (l) any other Off‑Balance Sheet Liability, and (m) obligations, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (i) any and all Swap Agreements, and (ii) any and all cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction.  The Indebtedness of any Person shall include the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person's ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.  For the avoidance of doubt, "Indebtedness" of an Orthofix Entity will include, without duplication, all Intercompany Loans of such Orthofix Entity.

"Indemnified Taxes" means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document and (b) to the extent not otherwise described in the foregoing clause (a), Other Taxes.

"Indemnitee" has the meaning assigned to such term in Section 9.03(b).

"Ineligible Institution" has the meaning assigned to such term in Section 9.04(b).

"Information" has the meaning assigned to such term in Section 9.12.

"Intercompany Loans" means those intercompany loans between any Orthofix Entities and listed on Schedule 6.01(a) existing on the Effective Date  and each subsequent intercompany loan between any Orthofix Entities permitted to be incurred under the terms of Section 6.01.

 

First Amended and Restated Credit Agreement (Orthofix), Page 20


 

"Interest Coverage Ratio" means, for any period, the ratio of (a) EBITDA for such period minus Unfinanced Capital Expenditures (excluding Capital Expenditures representing the purchase price for any Permitted Acquisition or similar Investment permitted by Section 6.04) for such period to (b) cash Interest Expense for such period.

"Interest Election Request" means a request by the Borrower Representative to convert or continue a Borrowing in accordance with Section 2.07.

"Interest Expense" means, with reference to any period, total interest expense (including that attributable to Capital Lease Obligations) of the Company and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Company and its Subsidiaries (including all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptances and net costs under Swap Agreements in respect of interest rates, to the extent such net costs are allocable to such period in accordance with GAAP), calculated for the Company and its Subsidiaries on a consolidated basis for such period in accordance with GAAP, but excluding (a) deferred financing fees and (b) amendment fees.

"Interest Payment Date" means (a) with respect to any ABR Loan (other than a Swingline Loan), the last Business Day of each calendar quarter and the Maturity Date, (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 the Maturity Date, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid and the Maturity Date.

"Interest Period" means 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 (or, with the consent of each Lender, twelve (12) months) thereafter, as the Borrowers may elect; provided, that (a) 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 (b) 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.

"Interpolated Rate" means, at any time, for any Interest Period and any Agreed Currency, the rate per annum (rounded to the same number of decimal places as the LIBOR Screen Rate) determined by the Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be equal to the rate that results from interpolating on a linear basis between: (a) the LIBOR Screen Rate for the longest period (for which the LIBOR Screen Rate is available for the applicable Agreed Currency) that is shorter than the Impacted Interest Period and (b) the LIBOR Screen Rate for the shortest period (for which the LIBOR Screen Rate is available for the applicable Agreed Currency) that exceeds the Impacted Interest Period, in each case, at of the Specified Time on the Quotation Day for such Interest Period; provided that, if any Interpolated Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

"Inventory" has the meaning assigned to such term in the Security Agreement.

 

First Amended and Restated Credit Agreement (Orthofix), Page 21


 

"Investments" has the meaning assigned to such term in Section 6.04.

"IRS" means the U.S. Internal Revenue Service.

"Issuing Bank" means, individually and collectively, each of JPMorgan Chase Bank, in its capacity as the issuer of Letters of Credit hereunder, and any other Revolving Lender from time to time designated by the Borrower Representative as an Issuing Bank, with the consent of such Revolving Lender and the Administrative Agent, and their respective successors in such capacity as provided in Section 2.05(i).  Any Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by its Affiliates, in which case the term "Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate (it being agreed that such Issuing Bank shall, or shall cause such Affiliate to, comply with the requirements of Section 2.05 with respect to such Letters of Credit).  At any time there is more than one Issuing Bank, all singular references to the Issuing Bank shall mean any Issuing Bank, either Issuing Bank, each Issuing Bank, the Issuing Bank that has issued the applicable Letter of Credit, or both (or all) Issuing Banks, as the context may require.

"Issuing Bank Sublimit" means, as of the Effective Date, the Dollar Amount of $25,000,000 in the case of JPMorgan Chase Bank; provided that any Issuing Bank shall be permitted at any time to increase or reduce its Issuing Bank Sublimit, subject to the consent of the Borrower Representative, upon providing five (5) days' prior written notice thereof to the Administrative Agent and the Borrowers.

"Italy Sub-Facility Amendment Documentation" has the meaning assigned to such term in Section 2.25(c).

"Italy Sub-Facility Commitment" means, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Italy Sub-Facility Loans in Euros to Orthofix-Italy, expressed as an amount representing the maximum aggregate permitted Dollar Amount of such Lender's Revolving Italy Sub-Facility Loans, as such commitment may be reduced or increased from time to time in accordance herewith and with the Italy Sub-Facility Amendment Documentation.

"Italy Sub-Facility Lenders" means Lenders with an Italy Sub-Facility Commitment.

"Italy Uncommitted Sub-Facility" has the meaning assigned to such term in Section 2.25(a).

"Joinder Agreement" means a Joinder Agreement in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

"JPMorgan Chase Bank" means JPMorgan Chase Bank, N.A., a national banking association, in its individual capacity, and its successors.

"LC Collateral Account" has the meaning assigned to such term in Section 2.05(j).

"LC Disbursement" means any payment made by an Issuing Bank pursuant to a Letter of Credit.

"LC Exposure" means, at any time, the Dollar Amount of the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of any Borrower.  The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage of the aggregate LC Exposure at such time.

 

First Amended and Restated Credit Agreement (Orthofix), Page 22


 

"Lenders" means the Persons listed on the Commitment Schedule and any other Person that shall have become a Lender hereunder pursuant to Section 2.08 or an Assignment and Assumption, or an amendment to this Agreement, other than any such Person that ceases to be a Lender hereunder pursuant to an Assignment and Assumption or an amendment to this Agreement.  Unless the context otherwise requires, the term "Lenders" includes the Swingline Lender and the Issuing Bank.

"Lending Office" means, as to any Lender, the office or offices of such Lender described as such in such Lender's Administrative Questionnaire, or such other office or offices as a Lender may from time to time notify the Borrower Representative and the Administrative Agent.

"Letters of Credit" means standby letters of credit issued pursuant to this Agreement, and the term "Letter of Credit" means any one of them or each of them singularly, as the context may require.  Letters of Credit may be issued in any Agreed Currency, subject to the Maximum Foreign Currency Amount.

"LIBOR Screen Rate" means, for any day and time, with respect to any Eurocurrency Borrowing for any Interest Period or for any ABR Borrowing, the London interbank offered rate as administered by ICE Benchmark Administration (or any other Person that takes over the administration of such rate) for such Agreed Currency for a period equal in length to such Interest Period as displayed on such day and time on pages LIBOR01 or LIBOR02 of the Reuters screen that displays such rate (or, in the event such rate does not appear on a Reuters page or screen, on any successor or substitute page on such screen that displays such rate, or on the appropriate page of such other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion); provided that, if the LIBOR Screen Rate shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

"Lien" means, with respect to any asset, (a) any mortgage, deed of trust, lien, pledge, hypothecation, encumbrance, charge, retention of title arrangement, right of retention, right to reclaim goods, and, in general, any right in rem, created for the purpose of granting security or any security interest in, on or of such asset, (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

"Loan Documents" means, collectively, (i) this Agreement, each amendment, consent, waiver and/or other modification to, consent to or waiver of, any of the terms of this Agreement, (ii) each promissory note issued pursuant to this Agreement, (iii) each Letter of Credit application and any agreements between any Borrower and the Issuing Bank regarding the Issuing Bank's Issuing Bank Sublimit or the respective rights and obligations between such Borrower and the Issuing Bank in connection with the issuance of Letters of Credit, (iv) each Collateral Document, (v) the Loan Guaranty and each Obligation Guaranty, (vi) that certain Indemnity in respect of Pledged Shares, to JPMorgan Chase Bank, N.A as Administrative Agent, Swingline Lender and Issuing Bank and the Lenders, from Orthofix Limited, Colgate and Swiftsure Medical Limited, dated August 31, 2015, (vii) each other agreement, instrument, document and certificate identified in Section 4.01 executed by or on behalf of any Loan Party or any other Guarantor or any employee of a Loan Party or any employee of any Guarantor in favor of, the Administrative Agent or any Lender and including each other pledge, issued in connection with the other Loan Documents, (viii) any UCC filing, power of attorney, consent, assignment, contract, notice, letter of credit agreement and (ix) each other agreement, instrument, document, certificate and other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party and/or any Guarantor (or any employee of any Loan Party and/or any other Guarantor), and delivered to the Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby (other than any Swap Agreement and any agreement entered into

 

First Amended and Restated Credit Agreement (Orthofix), Page 23


 

in respect of Banking Services).  Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

"Loan Guarantor" means each Loan Party.

"Loan Guaranty" means Article X of this Agreement.

"Loan Parties" means, collectively, the Company, the Borrowers, the Subsidiary Guarantors and any other Person who becomes a party to this Agreement pursuant to a Joinder Agreement and their respective successors and assigns, and the term "Loan Party" shall mean any one of them or all of them individually, as the context may require.

"Loans" means the loans and advances made by the Lenders pursuant to this Agreement, including Swingline Loans.

"Local Time" means (a) in the case of a Loan, Borrowing or LC Disbursement denominated in Dollars, New York City time, and (b) in the case of a Loan, Borrowing or LC Disbursement denominated in a Foreign Currency, local time (it being understood that such local time shall mean London, England time unless otherwise notified by the Administrative Agent).

"Material Adverse Effect" means a material adverse effect on (a) the business, assets, operations or condition, financial or otherwise, of the Orthofix Entities taken as a whole, (b) the ability of the Loan Parties (taken as a whole) to perform their obligations under the Loan Documents, (c) any material portion of the Collateral, or the Administrative Agent's Liens (on behalf of itself and the other Secured Parties) on any material portion of the Collateral or the priority of such Liens, or (d) the validity or enforceability of any of the Loan Documents or the rights or remedies of the Administrative Agent, the Issuing Bank or the Lenders under any of the Loan Documents (except with respect to Liens on Collateral perfected by possession, but only to the extent that the Administrative Agent has not obtained, or does not maintain, possession of such collateral).

"Material Agreement" means any contract or other arrangement, whether written or oral, to which any Loan Party is a party as to which the breach, nonperformance, cancellation or failure to renew by any party thereto could reasonably be expected to have a Material Adverse Effect.

"Material Domestic Subsidiary" means a Domestic Subsidiary of the Company that is not an Immaterial Subsidiary.  Upon consummation of any Permitted Acquisition, the Company shall determine whether any Domestic Subsidiaries of the Company formed or acquired in connection with such Permitted Acquisition or the Subsidiary consummating such Permitted Acquisition (if not already a Material Domestic Subsidiary) would qualify as a Material Domestic Subsidiary pursuant to the criteria set forth above.  If any of such Subsidiaries so qualifies as a Material Domestic Subsidiary, it shall be deemed to be a Material Domestic Subsidiary as of the date of consummation of such Permitted Acquisition.

"Material Indebtedness" means Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements, of any one or more of the Company and its Subsidiaries in an aggregate principal amount exceeding $3,000,000 (or the Dollar Amount thereof in any Foreign Currency).  For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the Company or any of its Subsidiaries in respect of any Swap 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 Swap Agreement were terminated at such time.

 

First Amended and Restated Credit Agreement (Orthofix), Page 24


 

"Material Intellectual Property" means any trademarks, tradenames, copyrights, patents and other intellectual property with a book value of $100,000 or more.

"Maturity Date" means August 31, 2020 (if the same is a Business Day, or if not then the immediately next succeeding Business Day), or any earlier date on which the Commitments are reduced to zero or otherwise terminated pursuant to the terms hereof.

"Maximum Foreign Currency Amount" means $50,000,000.

"Maximum Rate" has the meaning assigned to such term in Section 9.17.

"Medicaid" means that means-tested entitlement program under Title XIX, P.L. 89-87, of the Social Security Act, which provides Federal grants to States for medical assistance based on specific eligibility criteria, as set forth at Section 1396, et seq. of Title 42 of the U.S. Code, as amended, and any statute succeeding thereto.

"Medicaid Certification" means recognition by a state agency or other such entity administering a particular state's Medicaid program that a health care provider or supplier is in compliance with all the conditions of participation set forth in the appropriate state and federal Medicaid Regulations.

"Medicaid Provider Agreement" means an agreement entered into between a state agency or other such entity administering the Medicaid program and a health care provider or supplier under which the health care provider or supplier agrees to provide services for Medicaid patients in accordance with the terms of the agreement and Medicaid Regulations.

"Medicaid Regulations" means (a) all Federal statutes (whether set forth in Title XIX of the Social Security Act or elsewhere) affecting the medical assistance program established by Title XIX of the Social Security Act and any statues succeeding thereto, (b) all applicable provisions of all Federal rules, regulations, manuals and orders of all Governmental Authorities promulgated pursuant to or in connection with the statues described in clause (a) above and all Federal administrative, reimbursement and other guidelines of all Governmental Authorities having the force of law promulgated pursuant to or in connection with the statues described in clause (a) above, (c) all state statutes and plans for medical assistance enacted in connection with the statutes and provisions described in clauses (a) and (b) above, and (d) all applicable provisions of all rules, regulations, manuals and orders of all Governmental Authorities promulgated pursuant to or in connection with the statutes described in clause (c) above and all state administrative, reimbursement and other guidelines of all Governmental Authorities having the force of law promulgated pursuant to or in connection with the statutes described in clause (c) above, in each case as may be amended, supplemented or otherwise modified from time to time.

"Medical Reimbursement Programs" means (a) Medicare, (b) Medicaid, (c) the Federal Employees Health Benefit Program under 5 U.S.C. §§ 8902 et seq., (d) TRICARE, (e) CHAMPVA, (f) any other federal, state or foreign program that provides reimbursement for Medical Services or (g) if applicable within the context of this Agreement, any agent, administrator, administrative contractor, intermediary or carrier for any of the foregoing.

"Medical Services" means medical and health care items, services or supplies provided to a patient, including medical equipment, physician services, nurse and therapist services, dental services, hospital services, skilled nursing facility services, comprehensive outpatient rehabilitation services, home health care services, residential and out-patient behavioral healthcare services, and other medicine or health care equipment or items provided by an Orthofix Entity to a patient, hospital or other medical entity or Person for a valid and proper medical or health purpose.

 

First Amended and Restated Credit Agreement (Orthofix), Page 25


 

"Medicare Certification" means recognition by CMS or an entity under contract with CMS that the health care provider or supplier is in compliance with all of the conditions of participation set forth in the Medicare Regulations.

"Medicare Provider Agreement" means an agreement entered into between CMS or other such entity administering the Medicare program on behalf of CMS, and a health care provider or supplier under which the health care provider or supplier agrees to provide services for Medicare patients in accordance with the terms of the agreement and Medicare Regulations.

"Medicare" means that government-sponsored entitlement program under Title XVIII, P.L. 89-87, of the Social Security Act, which provides for a health insurance system for eligible elderly and disabled individuals, as set forth at Section 1395, et seq. of Title 42 of the U.S. Code, as amended, and any statute succeeding thereto.

"Medicare Regulations"  means, collectively, all Federal statutes (whether set forth in Title XVIII of the Social Security Act or elsewhere) affecting the health insurance program for the aged and disabled established by Title XVIII of the Social Security Act and any statutes succeeding thereto; together with all applicable provisions of all rules, regulations, manuals and orders and administrative, reimbursement and other guidelines having the force of law of all Governmental Authorities (including, without limitation, HHS, CMS, the OIG, or any person succeeding to the functions of any of the foregoing) promulgated pursuant to or in connection with any of the foregoing having the force of law, as each may be amended, supplemented or otherwise modified from time to time.

"Moody's" means Moody's Investors Service, Inc.

"Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

"Net Income" means, for any period, the consolidated net income (or loss) from continuing operations determined for the Company and its Subsidiaries, on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) except as provided in Section 1.05, the income (or deficit) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Company or any of its Subsidiary, (b) the income (or deficit) of any Person (other than a Subsidiary) in which the Company or any Subsidiary has an ownership interest, except to the extent that any such income is actually received by the Company or such Subsidiary in the form of dividends or similar distributions and (c) the undistributed earnings of a Non‑Loan Party, to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation (other than under any Loan Document) or Requirement of Law applicable to such Subsidiary.

"Net Proceeds" means, with respect to any event, (a) the cash proceeds received in respect of such event including (i) in the case of a casualty, insurance proceeds and (ii) in the case of a condemnation or similar event, condemnation awards and similar payments, minus (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer or other disposition of an asset (including pursuant to a sale and leaseback transaction or a casualty or a condemnation or similar proceeding), the amount of all payments required to be made as a result of such event to repay Indebtedness (other than Loans) secured by such asset or otherwise subject to mandatory prepayment as a result of such event and (iii) the amount of all Taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer of the Borrower Representative).

 

First Amended and Restated Credit Agreement (Orthofix), Page 26


 

"Non-Consenting Lender" has the meaning assigned to such term in Section 9.02(h).

"Non-Loan Party" means an Orthofix Entity that is not a Loan Party.

"Non-Loan Party Available Funds" means, on any date of determination, $30,000,000 minus the sum of (a) the aggregate Dollar Amount of all Investments by Loan Parties constituting investments in Equity Interests of Non-Loan Parties made under Section 6.04(c), plus (b) without duplication, the aggregate principal Dollar Amount of all Investments by Loan Parties constituting loans and advances made by one or more Loan Parties to one or more Non-Loan Parties under Section 6.04(d) outstanding on such date of determination, plus (c) without duplication, the aggregate Dollar Amount of all Investments by one or more Loan Parties constituting Guarantees made by one or more Loan Parties of Indebtedness of one or more Non-Loan Parties under Section 6.04(e) outstanding on such date of determination, plus (d) the aggregate Dollar Amount of all sales, transfers and dispositions of assets (i) where a Loan Party is the transferor and the transferee is a Non-Loan Party and/or (ii) where a U.S. Loan Party is the transferor and the transferee is a Loan Party that is a Foreign Subsidiary, in each case made under Section 6.05(b) from the Effective Date through and including such date of determination, plus (e) without duplication, the aggregate Dollar Amount of all Restricted Payments made under Section 6.08(f) by one or more Loan Parties to one or more Non-Loan Parties from the Effective Date through and including such date of determination, plus (f) the aggregate amount of all LC Exposure outstanding on such date of determination as a result of Letters of Credit issued to support the obligations of Non-Loan Parties under Section 2.05, plus (g) without duplication, the aggregate Dollar Amount of Indebtedness constituting Swap Agreement Obligations owed by one or more Loan Parties to one or more Non-Loan Parties incurred under Section 6.01(k) and outstanding on such date of determination.

"NYFRB" means the Federal Reserve Bank of New York.

"NYFRB Rate" means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day(or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term "NYFRB Rate" means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

"Obligated Party" has the meaning assigned to such term in Section 10.02.

"Obligation Guaranty" means any Guarantee of all or any portion of the Secured Obligations executed and delivered to the Administrative Agent for the benefit of the Secured Parties by a guarantor who is not a Loan Party.

"Obligations" means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilities of any of the Loan Parties, or any of the other Orthofix Entities to any of the Lenders, the Administrative Agent, the Issuing Bank or any indemnified party, individually or collectively, existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising by contract, operation of law or otherwise, in connection with this Agreement or any of the other Loan Documents or in respect of any of the Loans made or reimbursement or other obligations incurred thereunder or any of the Letters of Credit or other instruments at any time evidencing any thereof.

 

First Amended and Restated Credit Agreement (Orthofix), Page 27


 

"OFAC" means the Office of Foreign Assets Control of the U.S. Department of the Treasury.

"Off-Balance Sheet Liability" of a Person means (a) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (b) any indebtedness, liability or obligation under any so-called "synthetic lease" transaction entered into by such Person, or (c) any indebtedness, liability or obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person (other than operating leases).

"OIG" means the Office of Inspector General of HHS and any successor thereof.

"Other Connection Taxes" means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Taxes (other than a connection arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to, or enforced, any Loan Document), or sold or assigned an interest in any Loan, Letter of Credit, Commitment or any Loan Document.

"Orthofix B.V." has the meaning assigned to such term in the preamble.

"Orthofix Entity" means on any date of determination, the Company and each of its direct and indirect domestic and foreign Subsidiaries, including, without limitation, each of the Borrowers and the other Loan Parties.

"Orthofix-Italy" means Orthofix S.r.l., a company formed under the laws of Italy.

"Orthofix II B.V." means Orthofix II B.V., a company incorporated under the laws of the Netherlands.

"Orthofix Limited" means Orthofix Limited, a company formed under the laws of the United Kingdom.

"OSHA" means the Occupational Safety and Health Administration.

"Other Taxes" means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 2.18).

"Overnight Bank Funding Rate" means, for any day, the rate comprised of both overnight federal funds and overnight eurocurrency borrowings denominated in Dollars by U.S. managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on its public website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

"Parent" means, with respect to any Lender, any Person as to which such Lender is, directly or indirectly, a subsidiary.

"Participant" has the meaning assigned to such term in Section 9.04(c).

 

First Amended and Restated Credit Agreement (Orthofix), Page 28


 

"Participant Register" has the meaning assigned to such term in Section 9.04(c).

"Payment in Full of all Obligations" means all Commitments shall have expired or been terminated and the principal of and interest on each Loan and all fees, expenses and other amounts payable under any Loan Document shall have been paid in full (other than contingent obligations with respect to which no claim has been asserted) and all Letters of Credit shall have expired or terminated (other than Letters of Credit as to which other arrangements with respect thereto satisfactory to Administrative Agent and the applicable Issuing Bank in their sole discretion shall have been made), in each case without any pending draw, and all LC Disbursements shall have been reimbursed.

"PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions.

"Permitted Acquisition" means any Acquisition or any series of related Acquisitions by the Company, the U.S. Borrower or any Domestic Subsidiary that is a Loan Party, or any Wholly Owned Domestic Subsidiary that will become a Loan Party, in a transaction that satisfies each of the following requirements:

(a)     there shall exist no Default both immediately before, and after giving effect to, such Acquisition;

(b)     such Acquisition is not a hostile or contested acquisition;

(c)     the Target is (i) in the case of any Acquisition of Equity Interests, organized under applicable U.S. and state laws, or applicable laws of England and Wales or the Netherlands, and (ii) not engaged, directly or indirectly, in any line of business other than the businesses in which the Company and its Subsidiaries are engaged on the Effective Date and any business activities that are substantially similar, related, or incidental thereto;

(d)     both before and after giving effect to such Acquisition and the Loans (if any) requested to be made in connection therewith, each of the representations and warranties in the Loan Documents is true and correct (except any such representation or warranty which relates to a specified prior date);

(e)     to the extent the total consideration of any Permitted Acquisition is in excess of $10,000,000 or the proceeds of a Revolving Loan will be used to fund such Acquisition, as soon as available, but not less than ten (10) Business Days prior to such Acquisition (or such shorter period as may be agreed to by the Administrative Agent in its discretion), the Borrower Representative has provided the Administrative Agent (i) notice of such Acquisition together with a reasonably detailed description of the material terms of such Permitted Acquisition (including, without limitation, the purchase price and method and structure of payment) and of each Target, (ii) to the extent available, financial statements of the Target for the previous two years and year-to-date financial statements of the Target and (iii) a copy of all other business and financial information reasonably requested by the Administrative Agent including pro forma financial statements, statements of cash flow, and Availability projections;

(f)     if such Acquisition is an acquisition of the Equity Interests of a Person, such Acquisition is structured so that such Target shall become a direct or indirect Wholly Owned Domestic Subsidiary of the U.S. Borrower and a Loan Party;

 

First Amended and Restated Credit Agreement (Orthofix), Page 29


 

(g)     if such Acquisition is an acquisition of assets, such Acquisition is structured so that a Borrower or another U.S. Loan Party or a Wholly Owned Domestic Subsidiary that will become a Loan Party upon consummation of the Acquisition shall acquire such assets;

(h)     if such Acquisition is an acquisition of Equity Interests, such Acquisition will not result in any violation of Regulation U of the Board;

(i)     if such Acquisition involves a merger or a consolidation involving (i) a Borrower or the Company, such Borrower or the Company, as applicable, shall be the surviving Person, (ii) a Subsidiary Guarantor, a Wholly Owned Subsidiary that is a Loan Party domiciled in the same country as such Subsidiary Guarantor shall be the surviving Person, or (iii) any other Loan Party (other than a Borrower, the Company or a Subsidiary Guarantor), the surviving Person shall be a Loan Party or become a Loan Party upon consummation of the Acquisition;

(j)     the total consideration (including without limitation, cash, assumed Indebtedness, earnout payments and any other deferred payment but excluding any consideration in the form of Equity Interests of the Company) paid for portions of Acquisitions of a Target involving assets situated outside the U.S., including but not limited to foreign subsidiaries of such Target, together with all outstanding investments made under Section 6.04(m), shall not exceed the Dollar Amount of $15,000,000 in the aggregate over the term of this Agreement.

(k)     in connection with an Acquisition of the Equity Interests of any Person, all Liens on property of such Person shall be terminated unless the Administrative Agent and the Required Lenders in their sole discretion consent otherwise, and in connection with an Acquisition of the assets of any Person, all Liens on such assets shall be terminated, except in each case to the extent permitted to exist under Section 6.02;

(l)     the Borrowers shall certify to the Administrative Agent (and provide the Administrative Agent with a pro forma calculation in form and substance reasonably satisfactory to the Administrative Agent) that, after giving pro-forma effect to the completion of such Acquisition the Total Leverage Ratio shall be less than 2.5 to 1.00 for the most recently completed four fiscal quarter period prior to such Acquisition;

(m)     all actions required to be taken with respect to any newly acquired or formed Wholly Owned Subsidiary of a Borrower or a Loan Party, as applicable, required under Section 5.13 shall have been taken; and

(n)     the Borrower Representative shall have delivered to the Administrative Agent an executed copy of the acquisition agreement (including all schedules and exhibits thereto) and all other material agreements (together with a list, prepared in good faith by the Borrower Representative, of all other executed agreements among an Orthofix Entity, the sellers of a Target, the Target, or an Affiliate of the Target) and material instruments executed by any Orthofix Entity relating to such Acquisition, no later than five (5) Business Days after such Acquisition is consummated.

"Permitted Encumbrances" means:

(a)     Liens imposed by law for Taxes that are not yet due or as to which the period of grace, if any, related thereto has not expired or are being contested in compliance with Section 5.04;

 

First Amended and Restated Credit Agreement (Orthofix), Page 30


 

(b)      carriers', warehousemen's, mechanics', materialmen's, repairmen's and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than sixty (60) days or which are being contested in good faith by appropriate proceedings; provided that adequate reserves with respect thereto are maintained on the books of the Company or any of its Subsidiaries, as the case may be, in conformity with GAAP;

(c)     pledges and deposits made in the ordinary course of business in compliance with workers' compensation, unemployment insurance and other social security laws or regulations;

(d)     deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(e)     judgment Liens in respect of judgments that do not constitute an Event of Default under clause (k) of Article VII or Liens securing appeal or other surety bonds related to such judgments; and

(f)     easements, zoning restrictions, rights-of-way, minor defects or irregularities in title and similar encumbrances on real property imposed by law or arising in the ordinary course of business that do not secure any monetary obligations and do not materially detract from the value of the affected property or materially interfere with the ordinary conduct of business of any Orthofix Entity; provided that the term "Permitted Encumbrances" shall not include any Lien securing Indebtedness, except with respect to clause (e) above.

"Permitted Investments" means:

(a)     direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the U.S. (or by any agency or instrumentality thereof to the extent such obligations are backed by the full faith and credit of the U.S.), in each case maturing within one year from the date of acquisition thereof;

(b)     readily marketable direct obligations issued by any state of the U.S. or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year from the date of acquisition thereof and having, at the time of the acquisition thereof, a rating of at least P-1 from Moody's or at least A-1 from S&P;

(c)     investments in commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition, a rating of at least "Prime-1" (or the then equivalent grade) by Moody's or at least "A-1" (or the then equivalent grade) by S&P;

(d)     investments in certificates of deposit, bankers' acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, a Lender or any domestic office of any commercial bank organized under the laws of the U.S. or any state thereof which has a combined capital and surplus and undivided profits of not less than $500,000,000;

(e)     fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial institution satisfying the criteria described in clause (d) above;

 

First Amended and Restated Credit Agreement (Orthofix), Page 31


 

(f)     money market funds that (i) comply with the criteria set forth in Securities and Exchange Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by Moody's and (iii) have portfolio assets of at least $5,000,000,000; and

(g)     with respect to investments made by any Foreign Subsidiary, foreign investments substantially comparable to any of the foregoing in connection with the managing of cash of any such Foreign Subsidiary.

"Permitted Lender" means: (i) until an interpretation of the term "public" as referred to in the CRR is published by the relevant Governmental Authority, an entity that qualifies as a professional market party as defined in Section 1:1 of the Dutch Act on Financial Supervision (Wet op het financieel toezicht); and (ii) following the publication of the interpretation of the term "public" as referred to in the CRR by the relevant Governmental Authority, an entity that does not qualify as forming part of the "public" as referred to in the CRR and the rules promulgated thereunder.

"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

"Pounds Sterling", "GBP" or "£" means the lawful money of the United Kingdom.

"Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

"Platform" means Debt Domain, Intralinks®, Syndtrak or a substantially similar electronic transmission system.

"Prepayment Event" means any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of any Loan Party or Orthofix-Italy with a fair value immediately prior to such event equal to or greater than the Dollar Amount of $2,000,000.

"Prime Rate" means the rate of interest per annum publicly announced from time to time by JPMorgan Chase Bank as its prime rate in effect at office located at 270 Park Avenue, New York, New York; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective.

"Projections" has the meaning assigned to such term in Section 5.01(e).

"Protected Health Information" means "protected health information" as defined under 45 C.F.R. 160.103, as amended from time to time.

"Public-Sider" means a Lender whose representatives may trade in securities of the Company or its controlling person or any of its Subsidiaries while in possession of the financial statements provided by the Company under the terms of this Agreement.

"PTE" means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

 

First Amended and Restated Credit Agreement (Orthofix), Page 32


 

"Qualified ECP Guarantor" means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Loan Guaranty or grant of the relevant security interest becomes or would become effective with respect to such Swap Obligation or such other person as constitutes an "eligible contract participant" under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an "eligible contract participant" at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

"Qualified Equity Interests" means any Equity Interests that are not Disqualified Equity Interests.

"Quotation Day" means, with respect to any Eurocurrency Borrowing for any Interest Period, (i) if the currency is Pounds Sterling, the first day of such Interest Period, (ii) if the currency is Euro, two TARGET2 Days before the first day of such Interest Period, (iii) for any other currency, two Business Days prior to the commencement of such Interest Period the Business Day, unless, in each case, market practice differs in the relevant market where the Eurocurrency Rate for such currency is to be determined, in which case the Quotation Day will be determined by the Administrative Agent in accordance with market practice in such market (and if quotations would normally be given on more than one day, then the Quotation Day will be the last of those days).

"RCP" has the meaning assigned to such term in Section 5.07.

"Real Property" means all real property that was, is now or may hereafter be owned, occupied or otherwise controlled by any Orthofix Entity pursuant to any contract of sale, lease or other conveyance of any legal interest in any real property to any Orthofix Entity.

"Recipient" means, as applicable, (a) the Administrative Agent, (b) any Lender and (c) any Issuing Bank, or any combination thereof (as the context requires).

"Reference Banks" means, in relation to Loans denominated in any Agreed Currency such banks that have consented to act as a reference bank as may be appointed by the Administrative Agent in consultation with the Borrower Representative.

"Reference Bank Rate" means the arithmetic mean of the rates (rounded upwards to four decimal places) supplied to the Administrative Agent at its request by the Reference Banks (as the case may be) as of the Specified Time on the Quotation Day for Loans in the applicable currency and the applicable Interest Period:

(a)     in relation to Loans denominated in Euros, as the rate which the relevant Reference Bank in relation to Euros, as the rate which the relevant Reference Bank assesses to be the rate at which Euro interbank term deposits in euros and for the relevant period are offered for spot value (T+2) by one prime bank to another prime bank within the EMU zone; and

(b)     in relation to Loans in any currency other than Euros, as the rate at which the relevant Reference Bank could borrow funds in the London interbank market in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers in reasonable market size in that currency and for that period.

"Refinance Indebtedness" has the meaning assigned to such term in Section 6.01(f).

"Register" has the meaning assigned to such term in Section 9.04.

 

First Amended and Restated Credit Agreement (Orthofix), Page 33


 

"Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, partners, members, trustees, employees, agents, administrators, managers, representatives and advisors of such Person and such Person's Affiliates.

"Release" means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, migrating, disposing, or dumping of any substance into the environment.

"Report" means reports prepared by the Administrative Agent or another Person showing the results of appraisals, field examinations or audits pertaining to the assets of the Company and its Subsidiaries from information furnished by or on behalf of the Borrowers and the Company, after the Administrative Agent has exercised its rights of inspection pursuant to this Agreement, which Reports may be distributed to the Lenders by the Administrative Agent.

"Required Lenders" means, at any time, Lenders (other than Defaulting Lenders) having Revolving Exposure and unused Commitments representing more than 50% of the sum of the Aggregate Revolving Exposure 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, then, as to each Lender, clause (a) of the definition of Swingline Exposure shall only be applicable for purposes of determining its Revolving Exposure to the extent such Lender shall have funded its participation in the outstanding Swingline Loans.

"Requirement of Law" means, with respect to any Person, (a) the charter, articles or certificate of organization or incorporation and bylaws or operating, management or partnership agreement, or other organizational or governing documents of such Person and (b) any domestic or foreign statute, law (including common law), treaty, rule, regulation, code, ordinance, order, decree, writ, judgment, injunction or determination of any arbitrator or court or other Governmental Authority (including Environmental Laws and Health Care Laws), in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

"Responsible Officer" means any executive officer or director of any Loan Party, including without limitation, any Financial Officer.

"Restricted Payment" means any of the following:  (i) any dividend or other distribution (whether in cash, securities or other property) with respect to any Equity Interest in any of the Orthofix Entities, (ii) any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any Equity Interests of any of the Orthofix Entities, (iii) any option, warrant or other right to acquire any Equity Interests in any of the Orthofix Entities, (iv) any payment with respect to any earnout obligations or (v) any payment or prepayment of principal of, premium, if any, or interest on, redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Indebtedness, including without limitation, Intercompany Loans owed by any Loan Party.

"Revolving Exposure" means, with respect to any Lender, at any time, the sum of the aggregate outstanding principal Dollar Amount of the sum of such Lender's Revolving Loans, its LC Exposure and Swingline Exposure at such time.

"Revolving Italy Sub-Facility Loans" means revolving loans made to Orthofix-Italy pursuant to the Italy Sub-Facility Amendment Documentation.

 

First Amended and Restated Credit Agreement (Orthofix), Page 34


 

"Revolving Lender" means, as of any date of determination, a Lender with a Commitment or, if the aggregate Commitments have terminated or expired, a Lender with Revolving Exposure.

"Revolving Loan" means a Loan made pursuant to Section 2.01.

"S&P" means Standard & Poor's Ratings Services, a Standard & Poor's Financial Services LLC business.

"Sanctioned Country" means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea, Sudan and Syria).

"Sanctioned Person" means, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State or by the United Nations Security Council, the European Union or any European Union member state, Her Majesty's Treasury of the United Kingdom, or other relevant sanctions authority, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).

"Sanctions" means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty's Treasury of the United Kingdom, or other relevant sanctions authority.

"SEC" means the Securities and Exchange Commission of the U.S.

"Secured Obligations" means all Obligations, together with all (a) Banking Services Obligations and (b) Swap Agreement Obligations; provided, however, that the definition of "Secured Obligations" shall not create any guarantee by any Guarantor of (or grant of security interest by any Guarantor to support, as applicable) any Excluded Swap Obligations of such Guarantor for purposes of determining any obligations of any Guarantor.

"Secured Parties" means (a) the Administrative Agent, (b) the Lenders, (c) each Issuing Bank, (d) each provider of Banking Services, to the extent the Banking Services Obligations in respect thereof constitute Secured Obligations, (e) each counterparty to any Swap Agreement, to the extent the obligations thereunder constitute Secured Obligations, (f) the beneficiaries of each indemnification obligation undertaken by any Loan Party or any other Person under any Loan Document, and (g) the successors and assigns of each of the foregoing.

"Security Agreement" means (a) that certain First Amended and Restated Pledge and Security Agreement (including any and all supplements thereto), dated as of the date hereof, among certain of the Loan Parties and the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, (b) that certain Debenture (including any and all supplements, amendments or amendments and restatements thereto), dated as of December 8, 2017 among Orthofix Limited and the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, (c) that certain Debenture (including any and all supplements, amendments or amendments and restatements thereto), dated as of August 31, 2015 among the UK Borrower and the UK Subsidiaries party thereto and the Administrative Agent, for the benefit of the Administrative Agent and the other Secured Parties, (d) that certain Omnibus Pledge Agreement, dated as of December 8, 2017, among the Dutch Borrower and Orthofix II B.V. and the Administrative Agent, for the benefit of the Administrative Agent and the

 

First Amended and Restated Credit Agreement (Orthofix), Page 35


 

other Secured Parties, and (e) any other charge, mortgage, security assignment, pledge or security agreement entered into, after the date of this Agreement by any other Loan Party (as required by this Agreement or any other Loan Document) or any other Person for the benefit of the Administrative Agent and the other Secured Parties, in each case as may be amended, restated, supplemented or otherwise modified from time to time.

"Settlement Amounts" shall mean the amount of any civil or criminal fines, penalties, judgments, damages, forfeitures or other amounts payable (including attorney fees and expenses) in connection with the resolution and settlement of the any legal or regulatory matters by the Borrowers or Guarantors; provided that the resolution of the such matters shall not cause or result in a Material Adverse Effect.

"Specified Time" means as of 11:00 a.m., London time.

"Statement" has the meaning assigned to such term in Section 2.17(g).

"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, fees or similar requirements (including any marginal, special, emergency or supplemental reserves or other requirements) established by any central bank, monetary authority, the Board, the Financial Conduct Authority, the Prudential Regulation Authority, the European Central Bank or other Governmental Authority for any category of deposits or liabilities customarily used to fund loans in the applicable currency, expressed in the case of each such requirement as a decimal.  Such reserve, liquid asset, fees or similar requirements shall include without limitation those imposed pursuant to Regulation D of the Board.  Eurocurrency Loans shall be deemed to be subject to such reserve, liquid asset, fee or similar 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, including without limitation Regulation D of the Board or any comparable regulation.  The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve, liquid asset, fee or similar requirement.

"Subordinated Indebtedness" of a Person means any Indebtedness of such Person, the payment of which is subordinated to payment of the Secured Obligations to the written reasonable satisfaction of the Administrative Agent.

"Subordination Provisions" has the meaning assigned to such term in clause (t) of Article VII.

"subsidiary" means, with respect to any Person (the "parent") at any date, any corporation, limited liability company, partnership, association or other entity, the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (b) that is, as of such date, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent, including in respect of any company or corporation incorporated in the Netherlands a 'dochtermaatschappij' within the meaning of Section 2:24a of the Dutch Civil Code (regardless of whether the shares or voting rights in the shares in such company are held directly or indirectly through another 'dochtermaatschappij').

 

First Amended and Restated Credit Agreement (Orthofix), Page 36


 

"Subsidiary" means any direct or indirect subsidiary of the Company, a Borrower or a Loan Party, as applicable.  In this Agreement and in each Loan Document, each reference to a Subsidiary that does not specify the applicable parent company is a reference to a Subsidiary of the Company.

"Subsidiary Guarantors" means each Subsidiary that from time to time provides a Loan Guaranty.  As of the Effective Date, the Subsidiary Guarantors are the Borrowers, Orthofix II B.V., Orthofix Limited, BVIII, Colgate, Orthofix Inc., Osteogenics Inc., AMEI Technologies Inc., Neomedics, Inc., Blackstone Medical, Inc. and Spinal Kinetics LLC.

"Swap Agreement" means any agreement with respect to any swap, forward, spot, future, credit default or derivative transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar plan providing for payments only on account of services provided by current or former directors, officers, employees or consultants of the Company or its Subsidiaries shall be a Swap Agreement.

"Swap Agreement Obligations" means any and all obligations of the Orthofix Entities, whether absolute or contingent and howsoever and whensoever created, arising, evidenced or acquired (including all renewals, extensions and modifications thereof and substitutions therefor), under (a) any Swap Agreement permitted hereunder with JPMorgan Chase Bank, any Lender or any Affiliate of JPMorgan Chase Bank or a Lender or any Person that was a Lender or an Affiliate of a Lender at the time such Swap Agreement was entered into, and (b) any cancellations, buy backs, reversals, terminations or assignments of any Swap Agreement transaction permitted hereunder with JPMorgan Chase Bank, any Lender or any Affiliate of JPMorgan Chase Bank or a Lender or any Person that was a Lender or an Affiliate of a Lender at the time such Swap Agreement was entered into.

"Swap Obligation" means, with respect to any Guarantor, any obligation to pay or perform under any agreement, contract or transaction that constitutes a "swap" within the meaning of section 1a(47) of the Commodity Exchange Act or any rules or regulations promulgated thereunder.

"Swingline Commitment" means the obligation of the Swingline Lender to make Swingline Loans in an aggregate principal amount not to exceed $25,000,000.

"Swingline Exposure" means, at any time, the aggregate principal amount of all Swingline Loans outstanding at such time.  The Swingline Exposure of any Revolving Lender at any time shall be the sum of (a) its Applicable Percentage of the total Swingline Exposure at such time other than with respect to any Swingline Loans made by such Revolving Lender in its capacity as the Swingline Lender and (b) the principal amount of all Swingline Loans made by such Revolving Lender in its capacity as the Swingline Lender outstanding at such time (less the amount of participations funded by the other Lenders in such Swingline Loans).

"Swingline Lender" means JPMorgan Chase Bank, in its capacity as lender of Swingline Loans hereunder.  Any consent required of the Administrative Agent or the Issuing Bank shall be deemed to be required of the Swingline Lender and any consent given by JPMorgan Chase Bank in its capacity as Administrative Agent or Issuing Bank shall be deemed given by JPMorgan Chase Bank in its capacity as Swingline Lender as well.

"Swingline Loan" means a Loan made pursuant to Section 2.04.

"Target" has the meaning assigned to such term in the definition of "Acquisition".

 

First Amended and Restated Credit Agreement (Orthofix), Page 37


 

 

"TARGET2" means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilizes a single shared platform and which was launched on November 19, 2007 (or, if such payment system ceases to be operative, such other payment system (if any) reasonably determined by the Administrative Agent to be a suitable replacement) for the settlement of payments in Euro.

"TARGET2 Day" means a day that TARGET2 is open for the settlement of payments in euro.

"Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), value added taxes (including value added tax as provided for in the Dutch Value Added Tax Act 1968 (Wet op de Omzetbelasting 1968)), or any other goods and services, use or sales taxes, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

"the Netherlands" means the European part of the Kingdom of The Netherlands.

"Third Party Payor" means (a) a commercial medical insurance company, health maintenance organization, employer, professional provider organization or other third party payor that reimburses providers for Medical Services provided to individual patients, (b) a nonprofit medical insurance company (such as the Blue Cross, Blue Shield entities), (c) the U.S. government or a political subdivision thereof (including, without limitation, CMS), or any state, county or municipality or department, agency or instrumentality thereof, that is responsible for payment of an Account, chattel paper or general intangible under any Medical Reimbursement Program, or any agent, administrator, intermediary or carrier for the foregoing, making payments under a Medical Reimbursement Program and (d) any other domestic or foreign government or Governmental Authority, a political subdivision thereof or any municipality or department, agency or instrumentality thereof, that is responsible for payment of an Account, chattel paper or general intangible under any Medical Reimbursement Program, or any agent, administrator, intermediary or carrier for the foregoing, making payments under a Medical Reimbursement Program.

"Third Party Payor Arrangement" shall mean a written agreement or arrangement with a Third Party Payor pursuant to which the Third Party Payor pays all or a portion of the charges of any Orthofix Entity for providing Medical Services.

"Total Indebtedness" means, at any date, the aggregate principal amount of all Indebtedness (other than Indebtedness described in clauses (k) and (m) of the definition thereof unless (i) in the case of Indebtedness described in clause (k) thereof, the amount of such earnout has been earned, is due to be paid as of the date of determination and remains due and payable after the applicable date of payment or (ii) in the case of Indebtedness described in clause (m) thereof, such Indebtedness is reflected on the balance sheet of the Company as a liability in accordance with GAAP) determined for the Company and its Subsidiaries on a consolidated basis at such date, in accordance with GAAP.

"Total Leverage Ratio" means, on any date, the ratio of (a) Total Indebtedness on such date to (b) EBITDA for the period of four consecutive fiscal quarters ended on or most recently prior to such date.

"Transactions" means the execution, delivery and performance by the Borrowers and the other Loan Parties of this Agreement and the other Loan Documents, as applicable, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and the issuance of Letters of Credit hereunder.

 

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"TRICARE" means, collectively, the program of medical benefits covering former and active members of the uniformed services and certain of their dependents (including TRICARE Prime, TRICARE Extra and TRICARE Standard), financed and administered by the HHS, and all laws, rules, regulations, manuals, orders, guidelines or requirements (whether or not having the force of law) pertaining to such program, in each case as the same may be amended, supplemented or otherwise modified from time to time.

"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 Eurocurrency Rate or the Alternate Base Rate.

"UCC" means the Uniform Commercial Code as in effect from time to time in the State of New York or in any other state, the laws of which are required to be applied in connection with the issue of perfection of security interests.

"UK" and "United Kingdom" mean the United Kingdom of Great Britain and Northern Ireland.

"UK Bank Levy" means the bank levy provided for in Section 73 and Schedule 19 of the English law Finance Act 2011.

"UK Borrower" means (a) Victory and (b) any other Borrower (i) that is organized or formed under the laws of the United Kingdom or (ii) payments from which under this Agreement or any other Loan Document are subject to withholding Taxes imposed by the laws of the United Kingdom.

"UK Subsidiary" means any Subsidiary that is organized under the laws of the United Kingdom; provided, that, in this Agreement and in each Loan Document, each reference to a UK Subsidiary that does not specify the applicable parent company is a reference to a UK Subsidiary of Orthofix Limited.

"UK Treaty Lender" means a Lender which is entitled under a double taxation agreement with the United Kingdom to claim a reduction in United Kingdom withholding tax.

"Unfinanced Capital Expenditures" means, for any period, Capital Expenditures made during such period which are not financed from the proceeds of any Indebtedness (other than the Revolving Loans; it being understood and agreed that, to the extent any Capital Expenditures are financed with Revolving Loans, such Capital Expenditures shall be deemed Unfinanced Capital Expenditures) or issuance of Equity Interests; provided that "Unfinanced Capital Expenditures" shall not include (a) expenditures in respect of normal replacements and maintenance which are properly charged to current operations, (b) expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds paid on account of the loss of or damage to the assets being replaced or restored, (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced or (iii) from the net cash proceeds of dispositions permitted hereunder, or (c) expenditures made as a tenant as leasehold improvements during such period to the extent reimbursed by the landlord during such period.

"Unliquidated Obligations" means, at any time, any Secured Obligations (or portion thereof) that are contingent in nature or unliquidated at such time, including any Secured Obligation that is:  (i) an obligation to reimburse a bank for drawings not yet made under a letter of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in nature at such time; or (iii) an obligation to provide collateral to secure any of the foregoing types of obligations.

"U.S." means the United States of America.

 

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"U.S. Borrower" has the meaning assigned to such term in the preamble.

"U.S. Loan Parties" means the Company, the U.S. Borrower and each other Loan Party that is a Domestic Subsidiary.

"U.S. Person" means a "United States person" within the meaning of Section 7701(a)(30) of the Code.

"U.S. Tax Compliance Certificate" has the meaning assigned to such term in Section 2.16(f)(ii)(B)(3).

"USA PATRIOT Act" means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.

"Victory" has the meaning assigned to such term in the preamble.

"Wholly Owned" means, with respect to a Subsidiary of a Person, a Subsidiary of such Person all of the outstanding Equity Interests of which are owned by such Person and/or by one or more wholly owned Subsidiaries of such Person.

"Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

"Write-Down and Conversion Powers" means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.

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 "law" shall be construed as referring to all statutes, rules, regulations, codes and other laws (including official rulings and interpretations thereunder having the force of law or with which affected Persons customarily comply) and all judgments, orders and decrees of all Governmental Authorities.  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, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (b) any definition of or reference to any statute, rule or regulation shall be construed as referring thereto as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor laws), (c) any reference herein to any Person shall be construed to include such Person's successors and assigns (subject to any restrictions on assignments set forth herein) and, in the case of any Governmental Authority, any

 

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other Governmental Authority that shall have succeeded to any or all functions thereof, (d) 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, (e) 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, (f) any reference in any definition to the phrase "at any time" or "for any period" shall refer to the same time or period for all calculations or determinations within such definition, and (g) 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 after the date hereof there occurs any change in GAAP or in the application thereof on the operation of any provision hereof and the Borrower Representative notifies the Administrative Agent that the Borrowers request an amendment to any provision hereof to eliminate the effect of such change in GAAP or in the application thereof (or if the Administrative Agent notifies the Borrower Representative 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.  Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Financial Accounting Standards Board Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of the Company or any Subsidiary at "fair value", as defined therein and (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Financial Accounting Standards Board Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof.

SECTION 1.05.Pro Forma Adjustments for Acquisitions and Dispositions .  To the extent a Borrower or any Subsidiary makes any Acquisition permitted pursuant to Section 6.04 or disposition of assets outside the ordinary course of business permitted by Section 6.05 during the period of four fiscal quarters of the Company most recently ended, the Total Leverage Ratio shall be calculated after giving pro forma effect thereto (including pro forma adjustments arising out of events which are directly attributable to the Acquisition or the disposition of assets, are factually supportable and are expected to have a continuing impact, in each case as determined on a basis consistent with Article 11 of Regulation S-X of the Securities Act of 1933, as amended, as interpreted by the SEC, and as certified by a Financial Officer of such Borrower), as if such Acquisition or such disposition (and any related incurrence, repayment or assumption of Indebtedness) had occurred in the first day of such four-quarter period.

SECTION 1.06.Status of Obligations .  In the event that any Borrower, any other Loan Party or any other Orthofix Entity shall at any time issue or have outstanding any Subordinated Indebtedness, such Borrower shall take or cause such other Loan Party or Orthofix Entity to take all such actions as shall be necessary to cause the Secured Obligations to constitute senior indebtedness (however denominated) in respect of such Subordinated Indebtedness and to enable the Administrative Agent and the Lenders to have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness.  Without

 

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limiting the foregoing, the Secured Obligations are hereby designated as "senior indebtedness" and as "designated senior indebtedness" and words of similar import under and in respect of any indenture or other agreement or instrument under which any Subordinated Indebtedness of an Orthofix Entity is outstanding and are further given all such other designations as shall be required under the terms of any such Subordinated Indebtedness in order that the Lenders may have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness.

ARTICLE II

The Credits

SECTION 2.01.Commitments .  Subject to the terms and conditions set forth herein, each Lender severally (and not jointly) agrees to make Revolving Loans in Agreed Currencies to the Borrowers from time to time during the Availability Period in an aggregate principal amount that will not result (after giving effect to any application of proceeds of such Borrowing pursuant to Section 2.09(a)) in (a) such Lender's Revolving Exposure exceeding such Lender's Commitment, (b) the amount of the Aggregate Revolving Exposure denominated in Foreign Currencies exceeding the Maximum Foreign Currency Amount or (c) the Aggregate Revolving Exposure exceeding the aggregate Commitments; provided, that the aggregate outstanding principal Dollar Amount of all Revolving Loans made to the Dutch Borrower shall not at any time exceed the Dutch Borrower Sublimit.  Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.  

SECTION 2.02.Loans and Borrowings .

(a)Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective Commitments of the applicable Class.  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. ABR Loans may only be borrowed by the U.S. Borrower and must be in Dollars.  Swingline Loans (i) may only be borrowed by the U.S. Borrower, (ii) must be ABR Loans made in Dollars, and (iii) shall be made in accordance with the procedures set forth in Section 2.04.

(b)Subject to Section 2.13, each Revolving Borrowing shall be comprised entirely of ABR Loans denominated in Dollars or Eurocurrency Loans in the designated Agreed Currency as the Borrower Representative may request in accordance herewith, provided that all Revolving Borrowings made on the Effective Date must be made as ABR Borrowings but may be converted into Eurocurrency Borrowings in accordance with Section 2.07.  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 Borrowers to repay such Loan in accordance with the terms of this Agreement.

(c)At the commencement of each Interest Period for any Eurocurrency Borrowing denominated in Dollars, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000.  At the commencement of each Interest Period for any Eurocurrency Borrowing denominated in Euros, such Borrowing shall be in an aggregate amount that is an integral multiple of €500,000 and not less than €1,000,000.  At the commencement of each Interest Period for any Eurocurrency Borrowing denominated in Pounds Sterling, such Borrowing shall be in an

 

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aggregate amount that is an integral multiple of £500,000 and not less than £1,000,000.  At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not less than $1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.05(e).  Each Swingline Loan shall be in an amount that is an integral multiple of $100,000 and not less than $100,000, provided that a Swingline Loan may be in the aggregate amount that is required to finance the reimbursement of an LC Disbursement denominated in Dollars as contemplated by Section 2.05(e).   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 ten (10) Eurocurrency Borrowings outstanding.

(d)Notwithstanding any other provision of this Agreement, the Borrowers 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 Borrowings .  To request a Borrowing, the Borrower Representative shall notify the Administrative Agent of such request at the appropriate office set forth in Section 9.01, either in writing (delivered by hand, fax or other electronic communication to which the Administrative Agent has agreed to in writing (an "Acceptable Communication")) in any form approved by the Administrative Agent and signed by the Borrower Representative or, in the case of Borrowings by the U.S. Borrower in Dollars, by telephone (a) in the case of a Eurocurrency Borrowing denominated in Dollars, not later than 12:00 noon Local Time, three Business Days before the date of the proposed Borrowing, (b) in the case of a Eurocurrency Borrowing denominated in a Foreign Currency, not later than 12:00 noon Local Time, four Business Days before the date of the proposed Borrowing or (c) in the case of an ABR Borrowing, not later than noon, Local Time, on 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 10:00 a.m., Local Time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request for a Borrowing by the U.S. Borrower in Dollars shall be irrevocable and shall be confirmed promptly by hand delivery, fax or Acceptable Communication to the Administrative Agent of a written Borrowing Request in a form approved by the Administrative Agent and signed by the Borrower Representative.  No telephonic request may be made with respect to (x) any Borrowing in a Foreign Currency or (y) the U.K. Borrower.  Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.01:

(i)the Class of Borrowing, the aggregate amount of the requested Borrowing, and a breakdown of the separate wires comprising such Borrowing;

(ii)name of the applicable Borrower(s);

(iii)the date of such Borrowing, which shall be a Business Day;

(iv)whether such Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing;

(v)in the case of a Eurocurrency Borrowing, the Agreed Currency applicable thereto;

(vi)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."

 

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If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing by the U.S. Borrower in Dollars.  If no Interest Period is specified with respect to any requested Eurocurrency Borrowing, then the applicable Borrower(s) shall be deemed to have selected an Interest Period of one month's duration.  If no Borrower is specified, then the requested Borrowing shall be deemed to be requested by the U.S. Borrower.  Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing.

SECTION 2.04.Swingline Loans .

(a)Subject to the terms and conditions set forth herein, from time to time during the Availability Period, the Swingline Lender agrees to make Swingline Loans denominated in Dollars to the U.S. Borrower, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding the Swingline Lender's Swingline Commitment, (ii) the Swingline Lender's Revolving Exposure exceeding its Commitment, or (iii) the Aggregate Revolving Exposures exceeding the aggregate Commitments; provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan.  Within the foregoing limits and subject to the terms and conditions set forth herein, the U.S. Borrower may borrow, prepay and reborrow Swingline Loans.  To request a Swingline Loan, the Borrower Representative shall notify the Administrative Agent of such request by telephone (confirmed by fax or Acceptable Communication), not later than 2:00 p.m., Local Time, on the day of a proposed Swingline Loan.  Each such notice shall be irrevocable and shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan.  The Administrative Agent will promptly advise the Swingline Lender of any such notice received from the Borrower Representative.  The Swingline Lender shall make each Swingline Loan available to the U.S. Borrower by means of (i) a credit to the Funding Account(s), (ii) a wire transfer of funds upon the written instruction of the Borrower Representative and including specific wiring information required by the Swingline Lender with respect to making any such wire, (iii) in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e), by remittance to the Issuing Bank, and (iv) in the case of repayment of another Loan or fees or expenses as provided by Section 2.17(c), by remittance to the Administrative Agent to be distributed to the Lenders, on the requested date of such Swingline Loan.

(b)The Swingline Lender may by written notice given to the Administrative Agent require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding.  Such notice shall specify the aggregate amount of Swingline Loans in which the Revolving Lenders will participate.  Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender's Applicable Percentage of such Swingline Loan or Loans.  Each Revolving Lender hereby absolutely and unconditionally agrees, promptly upon receipt of such notice from the Administrative Agent (and in any event, if such notice is received by 11:00 a.m., Local Time, on a Business Day no later than 4:00 p.m., Local Time on such Business Day and if received after 11:00 a.m., Local Time, "on a Business Day" shall mean no later than 9:00 a.m. Local Time on the immediately succeeding Business Day), to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Applicable Percentage of such Swingline Loan or Loans.  Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.  Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent

 

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shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders.  The Administrative Agent shall notify the Borrower Representative of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender.  Any amounts received by the Swingline Lender from the Borrowers (or other party on behalf of the Borrowers) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or to the Administrative Agent, as applicable, if and to the extent such payment is required to be refunded to the U.S. Borrower for any reason.  The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve the Borrowers of any default in the payment thereof.

(c)Any Swingline Lender may be replaced at any time by written agreement among the Borrower Representative, the Administrative Agent, the replaced Swingline Lender and the successor Swingline Lender.  The Administrative Agent shall notify the Lenders of any such replacement of a Swingline Lender.  At the time any such replacement shall become effective, the Borrowers shall pay all unpaid interest accrued for the account of the replaced Swingline Lender pursuant to Section 2.12(a).  From and after the effective date of any such replacement, (x) the successor Swingline Lender shall have all the rights and obligations of the replaced Swingline Lender under this Agreement with respect to Swingline Loans made thereafter and (y) references herein to the term "Swingline Lender" shall be deemed to refer to such successor or to any previous Swingline Lender, or to such successor and all previous Swingline Lenders, as the context shall require.  After the replacement of a Swingline Lender hereunder, the replaced Swingline Lender shall remain a party hereto and shall continue to have all the rights and obligations of a Swingline Lender under this Agreement with respect to Swingline Loans made by it prior to its replacement, but shall not be required to make additional Swingline Loans.

SECTION 2.05.Letters of Credit .

(a)General.  Subject to the terms and conditions set forth herein, the Borrower Representative, on behalf of a Borrower, may request the issuance of standby Letters of Credit denominated in an Agreed Currency as the applicant thereof for the support of the obligations of the Company or any Subsidiary thereof, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period; provided that Letters of Credit issued to support the obligations of Non-Loan Parties may only be issued to the extent of Non-Loan Party Available Funds on the date of issuance.  In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrowers to, or entered into by the Borrowers with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.  Each Borrower unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the support of any Subsidiary's obligations as provided in the first sentence of this paragraph, such Borrower will be fully responsible for the reimbursement of LC Disbursements in accordance with the terms hereof, the payment of interest thereon and the payment of fees due under Section 2.11(b) to the same extent as if it were the sole account party in respect of such Letter of Credit (each Borrower hereby irrevocably waiving any defenses that might otherwise be available to it as a guarantor or surety of the obligations of such Subsidiary that is an account party in respect of any such Letter of Credit).  Notwithstanding anything herein to the contrary, the Issuing Bank shall have no obligation hereunder to issue, and shall not issue, any Letter of Credit (i) the proceeds of which would be made available to any Person (A) to fund any activity or business of or with any Sanctioned Person, or in any Sanctioned Country, or (B) in any manner that would result in a violation of any Sanctions by any party to this

 

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Agreement, (ii) if any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any Requirement of Law relating to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Effective Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Effective Date and which the Issuing Bank in good faith deems material to it, or (iii) if the issuance of such Letter of Credit would violate one or more policies of the Issuing Bank applicable to letters of credit generally; provided that, notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines, requirements or directives thereunder or issued in connection therewith or in the implementation thereof, and (y) all requests, rules, guidelines, requirements or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the U.S. or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed not to be in effect on the Effective Date for purposes of clause (ii) above, regardless of the date enacted, adopted, issued or implemented.

(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 Borrower Representative shall hand deliver or fax (or transmit by other electronic communication to which the Issuing Bank has agreed to in writing) to the Issuing Bank and the Administrative Agent (reasonably in advance of the requested date of issuance, amendment, renewal or extension, but in any event no less than three Business Days) a notice requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended, renewed or extended, and specifying 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 (which such amount shall not be less than the Dollar Amount of $50,000.00), the Agreed Currency applicable thereto, 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 applicable Borrower 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 Borrowers shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the sum of (x) the Dollar Amount of the aggregate undrawn amount of all outstanding Letters of Credit issued by the Issuing Bank at such time plus (y) the Dollar Amount of the aggregate amount of all LC Disbursements made by the Issuing Bank that have not yet been reimbursed by or on behalf of the applicable Borrower shall not exceed its Issuing Bank Sublimit, (ii) no Revolving Lender's Revolving Exposure shall exceed its Commitment; (iii) the Aggregate Revolving Exposure shall not exceed the aggregate Commitments and (iv) the aggregate outstanding principal Dollar Amount of the sum of all Eurocurrency Loans in Foreign Currencies plus LC Exposures in Foreign Currencies shall not exceed the Maximum Foreign Currency Amount.  The Borrowers may, at any time and from time to time, reduce the Issuing Bank Sublimit of any Issuing Bank with the consent of such Issuing Bank; provided that the Borrowers shall not reduce the Issuing Bank Sublimit of any Issuing Bank if, after giving effect to such reduction, the conditions set forth in clauses (i) through (iv) above shall not be satisfied.  Notwithstanding the foregoing or anything to the contrary contained herein, no Issuing Bank shall be obligated to issue or modify any Letter of Credit if, immediately after giving effect thereto, the outstanding LC Exposure in respect of all Letters of Credit issued by such Person and its Affiliates would exceed such Issuing Bank's Issuing Bank Sublimit.  

 

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(c)Expiration Date.  Each Letter of Credit shall expire (or be subject to termination or non-renewal by notice from the Issuing Bank to the beneficiary thereof) 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, including, without limitation, any automatic renewal provision, one year after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date (unless the Borrowers have entered into arrangements satisfactory to the Issuing Bank to cash collateralize any such Letter of Credit).

(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 Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit.  In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrowers on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to the Borrowers for any reason.  Each Revolving 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 Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e)Reimbursement.  If an Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, (i) the U.S. Borrower shall reimburse such LC Disbursement and (ii) each Borrower other than the U.S. Borrower shall reimburse such LC Disbursement, but only to the extent that such LC Disbursement is attributable to a Foreign Subsidiary of the Company, in each case by paying to the Administrative Agent an amount equal to such LC Disbursement in the applicable Agreed Currency not later than 11:00 a.m., Local Time, on (i) the Business Day that the Borrower Representative receives notice of such LC Disbursement, if such notice is received prior to 9:00 a.m., Local time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower Representative receives such notice, if such notice is received after 9:00 a.m., Local time, on the day of receipt; provided that, if such LC Disbursement denominated in U.S. Dollars and is greater than or equal to $100,000, the U.S. Borrower may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 or 2.04 that such payment be financed with an ABR Revolving Borrowing or Swingline Loan in the amount of such LC Disbursement and, to the extent so financed, the Borrowers' obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing or Swingline Loan.  If the Borrowers fail to make such payment when due, the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from the Borrowers in respect thereof, and such Lender's Applicable Percentage thereof.  Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its Applicable Percentage in the applicable Agreed Currency of the payment then due from the Borrowers, in the same manner as provided in Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders.  Promptly following receipt by the Administrative Agent of any payment from the Borrowers pursuant to this paragraph, the Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank, as their interests may appear.  Any payment made by a Revolving Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC Disbursement

 

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(other than the funding of ABR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and shall not relieve the Borrowers of their obligation to reimburse such LC Disbursement.  If the Borrowers' reimbursement of, or obligation to reimburse, any amounts in any Foreign Currency would subject a Credit Party to any stamp duty, ad valorem charge or similar tax that would not be payable if such reimbursement were made or required to be made in Dollars, the Borrowers shall, at their option, either (x) pay the amount of any such tax requested by such Credit Party or (y) reimburse each LC Disbursement made in such Foreign Currency in Dollars, in an amount equal to the Dollar Amount of such LC Disbursement on the date such LC Disbursement is made.

(f)Obligations Absolute.  The Borrowers' obligation 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 term or provision therein or herein, (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) any 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 setoff against, the Borrowers' obligations hereunder.  None of the Administrative Agent, the Revolving 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 Borrowers to the extent of any direct damages (as opposed to special, indirect, consequential or punitive damages, claims in respect of which are hereby waived by the Borrowers to the extent permitted by applicable law) suffered by any Borrower 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, bad faith or willful 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.  For the avoidance of doubt, no Foreign Subsidiary of the Company shall have any obligation to reimburse LC Disbursements attributable to the Company or any Domestic Subsidiary thereof.

(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 Borrower Representative by telephone (confirmed by fax or other electronic communication to which the Issuing Bank has agreed to in writing) 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

 

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the Borrowers of their obligation to reimburse the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement.

(h)Interim Interest.  If the Issuing Bank shall make any LC Disbursement, then, unless the Borrowers 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 including the date such LC Disbursement is made to but excluding the date that the Borrowers reimburse such LC Disbursement, at the rate per annum then applicable to ABR Revolving Loans (or if such LC Disbursement is denominated in a Foreign Currency, the rate determined by the Administrative Agent in accordance with banking industry rules and conventions on interbank compensation for such Foreign Currency plus the then effective Applicable Rate with respect to Eurocurrency Loans) and such interest shall be due and payable on the date when such reimbursement is due; provided that, if the Borrowers fail to reimburse such LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.12(c) 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 Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be for the account of such 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 Borrower Representative, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank.  The Administrative Agent shall notify the Revolving Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become effective, the Borrowers shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.11(b).  From and after the effective date of any such replacement, (x) 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 (y) 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 then outstanding and issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j)Cash Collateralization.  If any Event of Default shall occur and be continuing, on the Business Day that the Borrower Representative receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the aggregate LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, the Borrowers shall deposit in an account with the Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving Lenders (the "LC Collateral Account"), an amount in cash equal to 105% of the amount of the LC Exposure as of such date plus 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 any Borrower described in clause (h) or (i) of Article VII.  The Borrowers also shall deposit cash collateral in accordance with this paragraph as and to the extent required by Section 2.10(c) or Section 2.19.  Each such deposit shall be held by the Administrative Agent as collateral for the payment and performance of the Secured Obligations.  The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the LC Collateral Account and the Borrowers hereby grant the Administrative Agent a security interest in the LC Collateral Account and all moneys or other assets on deposit therein or credited thereto.  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 Borrowers' risk and expense, such deposits shall not bear interest.  Interest or profits, if any, on such

 

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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 Borrowers for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than 50% of the aggregate LC Exposure), be applied to satisfy other Secured Obligations.  If the Borrowers are 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 the Borrowers within three (3) Business Days after all such Events of Default have been cured or waived as confirmed in writing by the Administrative Agent.

(k)Issuing Bank Reports to the Administrative Agent.  Unless otherwise agreed by the Administrative Agent, each Issuing Bank shall, in addition to its notification obligations set forth elsewhere in this Section, report in writing to the Administrative Agent (i) periodic activity (for such period or recurrent periods as shall be requested by the Administrative Agent) in respect of Letters of Credit issued by such Issuing Bank, including all issuances, extensions, amendments and renewals, all expirations and cancelations and all disbursements and reimbursements, (ii) reasonably prior to the time that such Issuing Bank issues, amends, renews or extends any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the stated amount of the Letters of Credit issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed), (iii) on each Business Day on which such Issuing Bank makes any LC Disbursement, the date and amount of such LC Disbursement, (iv) on any Business Day on which a Borrower fails to reimburse an LC Disbursement required to be reimbursed to such Issuing Bank on such day, the date of such failure and the amount of such LC Disbursement, and (v) on any other Business Day, such other information as the Administrative Agent shall reasonably request as to the Letters of Credit issued by such Issuing Bank.

(l)LC Exposure Determination.  For all purposes of this Agreement, the amount of a Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at the time of determination.

SECTION 2.06.Funding of Borrowings .

(a)Each Lender shall make each Loan to be made by such Lender hereunder on the proposed date thereof by wire transfer of immediately available funds in the requested Agreed Currency by 1:00 p.m., Local Time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders in an amount equal to such Lender's Applicable Percentage; provided that and Swingline Loans shall be made as provided in Section 2.04.  The Administrative Agent will make such Loans available to the Borrower Representative by promptly crediting the amounts so received, in like funds, to the Funding Account(s); provided that ABR Revolving Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.05(e) shall be remitted by the Administrative Agent to the Issuing Bank.

(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 applicable Borrower a corresponding amount.  In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the

 

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Administrative Agent, then the applicable Lender and the Borrowers 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 applicable Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrowers, the interest rate applicable to ABR Revolving Loans.  If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender's Loan included in such Borrowing.

SECTION 2.07.Interest Elections .

(a)Each 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 Borrower Representative 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.  The Borrower Representative may elect different options with respect to different portions of the 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 Borrowing.  Notwithstanding anything herein to the contrary, Eurocurrency Loans in an Agreed Currency may be converted and/or continued only as Eurocurrency Loans in the same Agreed Currency.  This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

(b)To make an election pursuant to this Section, the Borrower Representative 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 Borrowers were requesting a 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, fax or Acceptable Communication to the Administrative Agent of a written Interest Election Request in a form approved by the Administrative Agent and signed by the Borrower Representative.

(c)Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

(i)the name of the applicable Borrower and 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)whether the resulting Borrowing is to be an ABR Borrowing or a Eurocurrency Borrowing, and if a Eurocurrency Borrowing, the applicable Agreed Currency; and

(iv)if the resulting Borrowing is 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".

 

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(v)If any such Interest Election Request requests a Eurocurrency Borrowing but does not specify an Interest Period, then the Borrowers 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 of the applicable Class of the details thereof and of such Lender's portion of each resulting Borrowing.

(e)If the Borrower Representative 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 any such Borrowing (i) denominated in Dollars shall be converted to an ABR Borrowing, and (ii) denominated in a Foreign Currency shall be made as a Eurocurrency Loan in the same Agreed Currency with an interest period of one month.  Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower Representative, then, so long as an Event of Default is continuing (i) no outstanding Borrowing in Dollars may be converted to or continued as a Eurocurrency Borrowing and (ii) unless repaid, each Eurocurrency Borrowing denominated in Dollars shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

(f)Notwithstanding anything herein to the contrary, Eurocurrency Loans in an Agreed Currency may be converted and/or continued only as Eurocurrency Loans in the same Agreed Currency.

SECTION 2.08.Termination and Reduction of Commitments; Increase in Commitments .

(a)Unless previously terminated, the Commitments shall terminate on the Maturity Date.

(b) The Borrowers may at any time terminate the Commitments upon (i) the payment in full of all outstanding Revolving Loans and LC Disbursements, together with accrued and unpaid interest thereon, (ii) the cancellation and return of all outstanding Letters of Credit (or alternatively, with respect to each such Letter of Credit, the furnishing to the Administrative Agent of a cash deposit (or at the discretion of the Administrative Agent a backup standby letter of credit satisfactory to the Administrative Agent and the Issuing Bank) in an amount equal to 105% of the LC Exposure as of such date), (iii) the payment in full of the accrued and unpaid fees, and (iv) the payment in full of all reimbursable expenses and other Obligations together with accrued and unpaid interest thereon (other than contingent obligations that have not yet been asserted); provided, that the Borrowers shall not terminate or reduce the Commitments if, after giving effect thereto and to any concurrent prepayments hereunder, the Aggregate Revolving Exposure would exceed the aggregate Commitments.

(c)The Borrowers may 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 $100,000 and not less than $5,000,000 and (ii) the Borrowers 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 Aggregate Revolving Exposure would exceed the aggregate Commitments.

(d)The Borrower Representative shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) or (c) of this Section at least three (3) Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof.  Promptly following receipt of any notice, the Administrative Agent shall

 

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advise the Lenders of the contents thereof.  Each notice delivered by the Borrower Representative pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by the Borrower Representative may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by the Borrower Representative (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.  Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments.

(e)The Borrowers shall have the right to request (i) one or more increases in the Commitments (each a "Commitment Increase") and/or (ii) one or more incremental term a loan commitments (each an "Incremental Term A Loan Commitment" and together with any Commitment Increase, the "Incremental Commitments") to make incremental term a loans (each an "Incremental Term A Loan") by obtaining (x) additional Commitments or (y) Incremental Term A Loan Commitments, either from one or more of the Lenders or another lending institution, provided that (A) any such request for an Incremental Commitment shall be in a minimum Dollar Amount of $5,000,000, (B) after giving effect thereto, the sum of the total of all such Commitment Increases and Incremental Term A Loan Commitments does not exceed the Dollar Amount of $50,000,000, (C) (x) the Administrative Agent and (y) in the case of any Commitment Increase, each Swingline Lender and each Issuing Bank have approved the identity of any such new Lender and consented to its becoming a Lender, (D) any such new Lender that will be a (x) Revolving Lender has agreed to, and is capable of, funding in each of the Agreed Currencies in accordance with the terms hereof and (y) Lender with an Incremental Term A Loan Commitment has agreed to, and is capable of, funding in the Agreed Currency of such Incremental Term A Loan in accordance with the terms of such Incremental Term A Loan, (E) any such new Lender assumes all of the rights and obligations of a Revolving Lender or a Lender with an Incremental Term A Loan Commitment, as applicable, hereunder and (F) the procedures described in Section 2.08(f) have been satisfied.  Each Incremental Commitment shall constitute Obligations of the Borrowers and shall be guaranteed and treated the same in all other respects as the other extensions of credit on a pari passu basis.  Nothing contained in this Section 2.08 shall constitute, or otherwise be deemed to be, a commitment on the part of any Lender to increase its Commitment or make an Incremental Term A Loan Commitment hereunder at any time.

(f)Any amendment hereto in connection with or to effectuate such Incremental Commitments (an "Incremental Amendment") shall be in form and substance satisfactory to the Administrative Agent and shall only require the written signatures of the Administrative Agent, the Borrowers and each Lender with an Incremental Commitment (each, an "Incremental Lender"), subject only to the approval of Required Lenders if any Commitment Increase or addition of an Incremental Term A Loan Commitment would cause the aggregate Commitments and Incremental Term A Loan Commitments to exceed $175,000,000 in the aggregate.  As a condition precedent to the effectiveness of each such Incremental Amendment, the Borrowers shall deliver to the Administrative Agent (i) a certificate of each Loan Party signed by an authorized officer of such Loan Party (A) certifying and attaching the resolutions adopted by such Loan Party approving or consenting to such Incremental Amendment, and (B) in the case of the Borrowers, certifying that, before and after giving effect to such Incremental Amendment (1) the representations and warranties contained in Article III and the other Loan Documents are true and correct in all material respects (provided, that any representation or warranty which is subject to any materiality qualifier shall be required to be true and correct in all respects), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, (2) no Default exists, and (3) the Borrowers are in compliance (assuming such Incremental Commitment is drawn in full and after giving effect to other pro forma adjustments events) with the covenants contained in Section 6.12 on a pro forma basis as of the end of the most recent four consecutive fiscal quarter period ended on or prior to such date (as if the incurrence of such Incremental Commitment had occurred on the first day of such four fiscal quarter period), (ii) legal opinions and documents and instruments consistent with those delivered on the

 

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Effective Date, to the extent requested by the Administrative Agent, and (iii) such other items as reasonably requested by the Administrative Agent and its counsel (including counsel in foreign jurisdictions) in connection with any UK Borrower, Dutch Borrower, any Foreign Currency or otherwise as reasonably deemed necessary or advisable by the Administrative Agent.

(g)In the case of each Incremental Term A Loan (the terms of which shall be set forth in the relevant Incremental Amendment):

(i)such Incremental Term A Loan will (x) mature in a manner reasonably acceptable to the Incremental Lenders making such Incremental Term A Loans and the Borrowers, but will not in any event have a maturity date that is earlier than the Maturity Date and (y) amortize in a manner reasonably acceptable to the Incremental Lenders making such Incremental Term A Loans and the Borrowers, provided that the resultant weighted average life of such Incremental Term A Loan shall be not be less than half of the remaining tenor of the revolving facility;

(ii)the Applicable Rate and pricing grid, if applicable, for such Incremental Term A Loan shall be determined by the applicable Incremental Lenders and the Borrowers and shall be consistent with then current market conditions; provided that in the event that the total all in interest rate margins for any Incremental Term A Loans that are incurred on or prior to the date that is 18 months after the Effective Date are higher than the interest rate margins for the Revolving Loans by more than (in any case) 50 basis points, then the interest rate margins for the Revolving Loans shall be increased to the extent necessary so that such interest rate margins are equal to the interest rate margins for such Incremental Term A Loans;

(iii)the proceeds of such Incremental Term A Loan shall be used for general corporate purposes (including Permitted Acquisitions and Restricted Payments permitted pursuant to Section 6.08); and

(iv)except as provided above, all other terms and conditions applicable to any Incremental Term A Loan, to the extent not substantially consistent (taken as a whole) with the terms and conditions of this Agreement prior to giving effect thereto, shall be reasonably satisfactory to the Administrative Agent and the Borrowers (but in no event, except as provided above, shall such terms and conditions be more restrictive, taken as a whole, than those set forth in this Agreement and any other Loan Document);

(h)On the effective date of any such Incremental Amendment, (i) any Incremental Lender increasing or  (or, in the case of any newly added Incremental Lender, extending) its Commitment shall make available to the Administrative Agent such amounts in immediately available funds in such Agreed Currencies as the Administrative Agent shall determine, for the benefit of the other Lenders, as being required in order to cause, after giving effect to such increase or addition and the use of such amounts to make payments to such other Lenders, each Lender's portion of the outstanding Revolving Loans in the various Agreed Currencies of all the Lenders to equal its revised Applicable Percentage of such outstanding Revolving Loans in the various Agreed Currencies, and the Administrative Agent shall make such other adjustments among the Lenders with respect to the Revolving Loans then outstanding and amounts of principal, interest, commitment fees and other amounts paid or payable with respect thereto as shall be necessary, in the opinion of the Administrative Agent, in order to effect such reallocation and (ii) the Borrowers shall be deemed to have repaid and reborrowed all outstanding Revolving Loans as of the date of any increase (or addition) in the Commitments (with such reborrowing to consist of the Types of Revolving Loans, with related Interest Periods if applicable, specified in a notice delivered by the Borrower Representative, in accordance with the requirements of Section 2.03).  The deemed payments made pursuant to clause (ii) of the immediately preceding sentence shall be accompanied by payment of all accrued interest on the amount prepaid and, in respect of each

 

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Eurocurrency Loan, shall be subject to indemnification by the Borrowers pursuant to the provisions of Section 2.15 if the deemed payment occurs other than on the last day of the related Interest Periods.  Within a reasonable time after the effective date of any increase or addition, the Administrative Agent shall, and is hereby authorized and directed to, revise the Commitment Schedule to reflect such increase or addition and shall distribute such revised Commitment Schedule to each of the Lenders and the Borrower Representative, whereupon such revised Commitment Schedule shall replace the old Commitment Schedule and become part of this Agreement.

SECTION 2.09.Repayment of Loans; Evidence of Debt .

(a)The Borrowers hereby unconditionally promise to pay (i) to the Administrative Agent for the account of each Revolving Lender the then unpaid principal amount of each Revolving Loan on the Maturity Date, and (ii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Maturity Date and the fifth Business Day after such Swingline Loan is made; provided that on each date that a Revolving Loan is made in Dollars, the Borrowers shall repay all Swingline Loans then outstanding and the proceeds of any such Revolving Loan shall be applied by the Administrative Agent to repay any Swingline Loans outstanding.  All Borrowings shall be repaid and prepaid in the Agreed Currency in which they were originally denominated.

(b)Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of the Borrowers 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, if any, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof.

(d)The entries made in the accounts maintained pursuant to paragraph (b) or (c) of this Section shall be conclusive absent manifest error 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 Borrowers to repay the Loans in accordance with the terms of this Agreement.

(e)Any Lender may request that Loans made by it be evidenced by a promissory note.  In such event, the Borrowers 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 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 2.10.Prepayment of Loans .

(a)The Borrowers 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 and, if applicable, payment of any break funding expenses under Section 2.15.  All Borrowings shall be repaid and prepaid in the Agreed Currency in which they were originally denominated.

 

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(b)In the event and on each occasion that any Net Proceeds are received by or on behalf of any Loan Party or Orthofix-Italy in respect of any Prepayment Event, the Borrowers shall, immediately after such Net Proceeds are received by such Person, prepay the Obligations and cash collateralize the LC Exposure as set forth in Section 2.10(c) below in an aggregate amount equal to 100% of such Net Proceeds, provided that, in the case of any event described in the definition of the term "Prepayment Event", if the Borrower Representative shall deliver to the Administrative Agent a certificate of a Financial Officer to the effect that the such Orthofix Entity intends to apply the Net Proceeds from such event (or a portion thereof specified in such certificate), within 270 days after receipt of such Net Proceeds, to acquire (or replace or rebuild) real property, equipment or other tangible assets (excluding inventory) to be used in the business of such Orthofix Entities, and certifying that no Default has occurred and is continuing, then no prepayment shall be required pursuant to this paragraph in respect of the Net Proceeds specified in such certificate, provided that to the extent of any such Net Proceeds that have not been so applied by the end of such 270-day period, a prepayment shall be required at such time in an amount equal to such Net Proceeds that have not been so applied; provided further that the Borrowers shall not be permitted to make elections to use Net Proceeds to acquire (or replace or rebuild) real property, equipment or other tangible assets (excluding inventory) with respect to Net Proceeds in any fiscal year in an aggregate amount in excess of the Dollar Amount of $25,000,000.

(c)If at any time, (i) other than as a result of fluctuations in currency exchange rates, the sum of the aggregate principal amount of the Aggregate Revolving Exposure exceeds the aggregate Commitments, (ii) other than as a result of fluctuations in currency exchange rates, the aggregate Dollar Amount of all Eurocurrency Loans and LC Exposures denominated in Foreign Currencies exceeds the Maximum Foreign Currency Amount, (iii) solely as a result of fluctuations in currency exchange rates, the aggregate principal amount of the Aggregate Revolving Exposure, as of the most recent Computation Date, exceeds one hundred five percent (105%) of the aggregate Commitments, or (iv) solely as a result of fluctuations in currency exchange rates, the aggregate Dollar Amount of all Eurocurrency Loans denominated in Foreign Currencies and LC Exposures denominated in Foreign Currencies exceeds 105% of the Maximum Foreign Currency Amount, the Borrowers shall immediately repay Borrowings or cash collateralize LC Exposure in accordance with the procedures set forth in Section 2.05(j) in an aggregate principal amount sufficient to cause (x) the amount of the Aggregate Revolving Exposure to be less than or equal to the aggregate Commitments and (y) the aggregate Dollar Amount of all Eurocurrency Loans denominated in Foreign Currencies and LC Exposure in Foreign Currencies to be less than or equal to the Maximum Foreign Currency Amount.   In each case proceeding in this clause (c), the Dollar Amount of each such calculation shall be calculated, with respect to Loans and LC Exposure denominated in Foreign Currencies, as of the most recent Computation Date with respect to each such Loans and LC Exposure.

(d)All prepayments required to be made pursuant to Section 2.10(b) shall be applied, first to prepay the Swingline Loans if such prepayment is made in Dollars, second to repay Revolving Loans in the applicable Agreed Currency with a corresponding Dollar Amount reduction in the aggregate Commitments in connection with the required prepayment of Net Proceeds in any fiscal year in an aggregate amount in excess of the Dollar Amount of $25,000,000 and third to cash collateralize outstanding LC Exposure.

(e)The Borrower Representative shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by fax) of any prepayment under this Section:  (i) in the case of prepayment of a Eurocurrency Borrowing, not later than 10:00 a.m., Local Time, three (3) Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 10:00 a.m., Local Time, on the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., Local Time, on the date of 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

 

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prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.08, then such notice of prepayment may be revoked if such notice of termination is revoked in accordance with Section 2.08.  Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Revolving Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type and Agreed Currency as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment.  Each prepayment of a Borrowing shall be applied ratably to the applicable Loans in the Agreed Currency included in the prepaid Borrowing, or the Dollar Amount thereof shall be applied or converted to a different Agreed Currency and applied ratably among Loans as determined by the Administrative Agent.  Prepayments shall be accompanied by (i) accrued interest to the extent required by Section 2.12 and (ii) break funding payments to the extent required by Section 2.15.

SECTION 2.11.Fees .

(a)The Borrowers agree to pay to the Administrative Agent a commitment fee for the account of each Revolving Lender, which shall accrue at the Applicable Rate on the daily amount of the undrawn portion of the Commitment of such Lender during the period from and including the Effective Date to but excluding the date on which the Lenders' Commitments terminate; provided that, if such Lender continues to have any Revolving Exposure (excluding Revolving Loans) after its Commitment terminates, then such commitment fee shall continue to accrue on the daily amount of such Lender's Revolving Exposure from and including the date on which its Commitment terminates to but excluding the date on which such Lender ceases to have any Revolving Exposure; it being understood that the LC Exposure of a Lender shall be included and the Swingline Exposure of a Lender shall be excluded in the drawn portion of the Commitment of such Lender for purposes of calculating the commitment fee.  Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Commitments terminate, commencing on the first such date to occur after the date hereof.  All commitment 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 Borrowers agree to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Rate used to determine the interest rate applicable to Eurocurrency Revolving Loans on the average daily Dollar Amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender's Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Banks a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily Dollar Amount of the LC Exposure attributable to Letters of Credit issued by such Issuing Bank (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the aggregate Commitments and the date on which there ceases to be any LC Exposure, as well as each Issuing Bank's standard fees and commissions with respect to the issuance, amendment, cancellation, negotiation, transfer, presentment, renewal or extension of any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the date on which the aggregate Commitments terminate and any such fees accruing after the date on which the aggregate Commitments terminate shall be payable on demand.  Any other fees payable to the Issuing Banks pursuant to this paragraph shall be payable within ten (10) days after written demand therefor.  All participation fees and fronting 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).

 

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(c)The Borrowers agree to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrowers and the Administrative Agent.

(d)All fees payable hereunder shall be paid on the dates due, in immediately available funds in Dollars, to the Administrative Agent (or to the Issuing Bank, in the case of fees payable to it) for distribution, in the case of commitment fees and participation fees, to the Lenders entitled thereto.  Fees paid shall not be refundable under any circumstances.

SECTION 2.12.Interest .

(a)The Loans comprising each ABR Borrowing (including each Swingline Loan) shall bear interest at the Alternate Base Rate plus the Applicable Rate.

(b)The Loans comprising each Eurocurrency Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing for such Agreed Currency plus the Applicable Rate.

(c)Notwithstanding the foregoing, during the occurrence and continuance of an Event of Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the Borrower Representative (which notice may be revoked at the option of the Required Lenders notwithstanding any provision of Section 9.02 requiring the consent of "each Lender affected thereby" for reductions in interest rates), declare that (i) all Loans shall bear interest at 2% plus the rate otherwise applicable to such Loans as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount outstanding hereunder, such amount shall accrue at 2% plus the rate applicable to such fee or other obligation as provided hereunder, in each case, from and after the date of such declaration until such Event of Default is timely cured or waived in writing by the requisite Lenders hereunder in accordance with Section 9.02.

(d)Accrued interest on each Loan (for ABR Loans, accrued through the last day of the prior calendar month) shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the aggregate Commitments; provided that (i) interest accrued pursuant to paragraph (c) of this Section 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 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 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.

(e)All interest hereunder shall be computed on the basis of a year of 360 days, except that (i) interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate and (ii) computations of interest for Borrowings denominated in Pounds Sterling 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, Adjusted LIBO Rate or Eurocurrency Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error.

 

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SECTION 2.13.Market Disruption and Alternate Rate of Interest .  

(a)If at the time that the Administrative Agent shall seek to determine the LIBOR Screen Rate on the Quotation Day for any Interest Period for a Eurocurrency Borrowing the LIBOR Screen Rate shall not be available for such Interest Period and/or for the applicable Agreed Currency with respect to such Eurocurrency Borrowing for any reason and the Administrative Agent shall determine that it is not possible to determine the Interpolated Rate (which conclusion shall be conclusive and binding absent manifest error), then the applicable Reference Bank Rate shall be the Eurocurrency Rate for such Interest Period for such Eurocurrency Borrowing; provided that if any Reference Bank Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement; provided, further, however, that if less than two Reference Banks shall supply a rate to the Administrative Agent for purposes of determining the Eurocurrency Rate for such Eurocurrency Borrowing, (i) if such Borrowing shall be requested in Dollars, then such Borrowing shall be made as an ABR Borrowing and (ii) if such Borrowing shall be requested in any Foreign Currency, the Eurocurrency Rate shall be equal to an interest rate reasonably determined by the Administrative Agent, after consultation with the Borrower Representative and the applicable Lenders, to compensate the applicable Lenders for such Loan in such currency for the applicable period (from whatever source and using whatever methodologies the Administrative Agent and such Lenders may select in their reasonable discretion) (such rate, the "CF Rate").

(b)If prior to the commencement of any Interest Period for a Eurocurrency Borrowing:

(i)the Administrative Agent determines (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the Eurocurrency Rate, as applicable (including, without limitation, because the LIBOR Screen Rate is not available or published on a current basis), for a Loan in the applicable Agreed Currency or for the applicable Interest Period; or

(ii)the Administrative Agent is advised by the Required Lenders that the Adjusted LIBO Rate or the Eurocurrency Rate, as applicable, for a Loan in the applicable Agreed Currency or for the applicable Interest Period will not adequately and fairly reflect the cost to such Lenders (or Lender) of making or maintaining their Loans (or its Loan) included in such Borrowing for such Interest Period, then the Administrative Agent shall give notice thereof to the Borrower Representative and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, (A) any Interest Election Request that requests the conversion of any Eurocurrency Borrowing to, or continuation of any Eurocurrency Borrowing in the applicable Agreed Currency or for the applicable Interest Period, as the case may be, shall be ineffective, (B) if such Borrowing is requested in Dollars, such Borrowing shall be made as an ABR Borrowing and (C) if such Borrowing is requested in any Foreign Currency, then the Eurocurrency Rate for such Eurocurrency Borrowing shall be at the CF Rate; provided, further that if the circumstances giving rise to such notice affect only one Type of Borrowings, then the other Type of Borrowings shall be permitted.

 

(c)If at any time the Administrative Agent determines (which determination shall be conclusive absent manifest error) that (i) the circumstances set forth in clause (b)(i) have arisen and such circumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (b)(i) have not arisen but the supervisor for the administrator of the LIBOR Screen Rate or a Governmental Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the LIBOR Screen Rate shall no longer be used for determining interest rates for loans, then

 

First Amended and Restated Credit Agreement (Orthofix), Page 59


 

the Administrative Agent and the Borrower Representative shall endeavor to establish an alternate rate of interest to the LIBO Rate that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time, and the Administrative Agent, the Borrowers and the other Loan Parties shall enter into an amendment to this Agreement to reflect such alternate rate of interest and such other related changes to this Agreement as may be applicable.  Notwithstanding anything to the contrary in Section 9.02, such amendment shall become effective without any further action or consent of any other party to this Agreement so long as the Administrative Agent shall not have received, within five Business Days of the date notice of such alternate rate of interest is provided to the Lenders, a written notice from the Required Lenders of each Class stating that such Required Lenders object to such amendment.  Until an alternate rate of interest shall be determined in accordance with this clause (c) (but, in the case of the circumstances described in clause (ii) of the first sentence of this Section 2.13(c), only to the extent the LIBOR Screen Rate the Agreed Currency such Interest Period is not available or published at such time on a current basis), (x) 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 (y) if any Borrowing Request requests a Eurocurrency Revolving Borrowing, such Borrowing shall be made as an ABR Borrowing; provided that, if such alternate rate of interest shall be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.

(d)Notwithstanding the satisfaction of all conditions referred to in Article II with respect to any Loan in any Foreign Currency, if there shall occur on or prior to the date of such Loan any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which would in the reasonable opinion of the applicable Borrower, the Administrative Agent or the Required Lenders make it impracticable for the Eurocurrency Loans comprising such Loan to be denominated in such Foreign Currency specified by the applicable Borrower, then the Administrative Agent shall forthwith give notice thereof to such Borrower and the Revolving Lenders or such Borrower shall give notice thereof to the Revolving Lenders, as the case may be, and such Eurocurrency Loans shall not be denominated in such Foreign Currency but shall be made on such date in Dollars, in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount of the Foreign Currency specified in the related Borrowing Request, as ABR Loans, unless the applicable Borrower notifies the Administrative Agent at least one Business Day before such date that (a) it elects not to borrow on such date or (b) it elects to borrow on such date in a different Agreed Currency, as the case may be, in which the denomination of such Eurocurrency Loans would in the opinion of the Administrative Agent and the Required Lenders be practicable and in an aggregate principal amount equal to the Dollar Amount of the aggregate principal amount off the Foreign Currency specified in the related Borrowing Request.

SECTION 2.14.Increased Costs .  (a) If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit, liquidity or similar requirement (including any compulsory loan requirement, insurance charge or other assessment) against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank; or

(ii)impose on any Lender or the Issuing Bank or the London interbank market or any other applicable market, any other condition, cost or expense (other than Taxes) affecting this Agreement or any of the Loans made by such Lender or any Letter of Credit or participation therein; or

 

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(iii)subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (b) through (e) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, continuing, converting into or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank or such other Recipient of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender, the Issuing Bank or such other Recipient hereunder (whether of principal, interest or otherwise), then, upon the request of such Lender, Issuing Bank or other Recipient, the Borrowers will pay to such Lender, the Issuing Bank or such other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, the Issuing Bank or such other Recipient, as the case may be, for such additional costs incurred or reduction suffered.

(b)If any Lender or the Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement, the Commitments of or the Loans made by, or participations in Letters of Credit or Swingline Loans 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 the 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 and liquidity), then from time to time the Borrowers will 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)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 its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower Representative and shall be conclusive absent manifest error; provided, however, notwithstanding anything to the contrary in this Section 2.14, in the case of any Change in Law, it shall be a condition to a Lender's or Issuing Bank's exercise of its rights, if any, under this Section 2.14, that such Lender or Issuing Bank shall generally be exercising similar rights with respect to other similarly situated borrowers under similar agreements to the extent contractually permitted to do so and allowed to do so under applicable law.  The Borrowers shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within ten (10) 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 Borrowers 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 Representative of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; 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 2.15.Break Funding Payments .  In the event of (a) the payment of any principal of any Eurocurrency Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default or as a result of any prepayment pursuant to Section 2.10),

 

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(b) the conversion of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurocurrency Loan on the date specified in any notice delivered pursuant hereto (regardless of whether such notice may be revoked under Section 2.08(d) and is revoked in accordance therewith) and in the applicable Agreed Currency, or (d) the assignment of any Eurocurrency Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower Representative pursuant to Section 2.19 or Section 9.02(i), then, in any such event, the Borrowers shall compensate each Lender for the loss, cost and expense (other than lost profits) 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 which would have accrued on the principal amount of such Eurocurrency Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Eurocurrency 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 Eurocurrency Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.  A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower Representative and shall be conclusive absent manifest error.  The Borrowers shall pay such Lender the amount shown as due on any such certificate within ten (10) days after receipt thereof.

SECTION 2.16.Taxes .

(a)Withholding Taxes; Gross-Up; Payments Free of Taxes.  Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be made without deduction or withholding for any Taxes, except as required by applicable law.  If any applicable law (as determined in the good faith discretion of an applicable withholding agent) requires the deduction or withholding of any Tax from any such payment by a withholding agent, then the applicable withholding agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 2.16), the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made.

(b)Payment of Other Taxes by Loan Parties.  The Loan Parties shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for, Other Taxes.

(c)Evidence of Payment.  As soon as practicable after any payment of Taxes by any Loan Party to a Governmental Authority pursuant to this Section 2.16, the Borrower Representative 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.

(d)Indemnification by the Loan Parties.  (i) The U.S. Loan Parties shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto,

 

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whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority and (ii) the non-U.S. Loan Parties shall jointly and severally indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) attributable to the Foreign Subsidiaries of the Company payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower Representative by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

(e)Indemnification by the Lenders.  Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of Section 9.04(c) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to such Lender from any other source against any amount due to the Administrative Agent under this paragraph (e).

(f)Status of Lenders.

(i)Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Borrower Representative and the Administrative Agent, at the time or times reasonably requested by the Borrower Representative or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower Representative or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if reasonably requested by the Borrower Representative or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower Representative or the Administrative Agent as will enable the Borrower Representative or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 2.16(f)(ii)(A), (ii)(B) and (ii)(D) below) shall not be required if in the Lender's reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

 

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(ii)Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Person,

(A)any Lender that is a U.S. Person shall deliver to the Borrower Representative and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower Representative or the Administrative Agent), an executed IRS Form W‑9 certifying that such Lender is exempt from U.S. federal backup withholding tax;

(B)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower Representative and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower Representative or the Administrative Agent), whichever of the following is applicable:

(1)in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the U.S. is a party (x) with respect to payments of interest under any Loan Document, an executed IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "interest" article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E or IRS Form W-8BEN establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "business profits" or "other income" article of such tax treaty;

(2)in the case of a Foreign Lender claiming that its extension of credit will generate U.S. effectively connected income, an executed IRS Form W‑8ECI;

(3)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit D-1 or any other form approved by the Administrative Agent to the effect that such Foreign Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10 percent shareholder" of a Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Code (a "U.S. Tax Compliance Certificate") and (y) an executed IRS Form W‑8BEN-E or IRS Form W-8BEN; or

(4)to the extent a Foreign Lender is not the Beneficial Owner, an executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E, IRS Form W‑8BEN, a U.S. Tax Compliance Certificate substantially in the form of Exhibit D‑2 or any other form approved by the Administrative Agent or Exhibit D‑3 or any other form approved by the Administrative Agent, IRS Form W-9, and/or other certification documents from each Beneficial Owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit D-4 or any other form approved by the Administrative Agent on behalf of each such direct and indirect partner;

(C)any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower Representative and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower Representative or the Administrative Agent), executed originals of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower Representative or the Administrative Agent to determine the withholding or deduction required to be made; and

 

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(D)if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower Representative and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower Representative or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower Representative or the Administrative Agent as may be necessary for the Borrower Representative and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment.  Solely for purposes of this clause (D), "FATCA" shall include any amendments made to FATCA after the date of this Agreement.  For purposes of determining withholding Taxes imposed under FATCA, from and after the Effective Date, the Borrowers and the Administrative Agent shall treat (and the Lenders hereby authorize the Administrative Agent to treat) this Agreement as not qualifying as a "grandfathered obligation" within the meaning of Treasury Regulation Section 1.1471-2(b)(2)(i).

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower Representative and the Administrative Agent in writing of its legal inability to do so.

(g)Additional United Kingdom Withholding Tax Matters.

(i)Subject to clause (ii) below, each Lender and each UK Borrower which makes a payment to such Lender shall cooperate in completing any procedural formalities necessary for such UK Borrower to obtain authorization to make such payment without withholding or deduction for Taxes imposed under the laws of the United Kingdom.

(ii)(A) A Lender on the Effective Date that (x) holds a passport under the HMRC DT Treaty Passport scheme and (y) wishes such scheme to apply to this Agreement, shall provide its scheme reference number and its jurisdiction of tax residence to each UK Borrower and the Administrative Agent; (B) a Lender which becomes a Lender hereunder after the Effective Date that (x) holds a passport under the HMRC DT Treaty Passport scheme and (y) wishes such scheme to apply to this Agreement, shall provide its scheme reference number and its jurisdiction of tax residence to each UK Borrower and the Administrative Agent, and (C) upon satisfying either clause (A) or (B) above, such Lender shall have satisfied its obligation under paragraph (g)(i) above.

(iii)If a Lender has confirmed its scheme reference number and its jurisdiction of tax residence in accordance with paragraph (g)(ii) above, the UK Borrower shall make a Borrower DTTP filing with respect to such Lender, and shall promptly provide such Lender with a copy of such filing; provided that, if:

(A)the UK Borrower making a payment to such Lender has not made a Borrower DTTP Filing in respect of such Lender; or

(B)the UK Borrower making a payment to such Lender has made a Borrower DTTP Filing in respect of such Lender but:

(1)such Borrower DTTP Filing has been rejected by HM Revenue & Customs; or

 

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(2)HM Revenue & Customs has not given such UK Borrower authority to make payments to such Lender without a deduction for tax within 60 days of the date of such Borrower DTTP Filing; and in each case, such UK Borrower has notified that Lender in writing of either (1) or (2) above, then such Lender and such UK Borrower shall co-operate in completing any additional procedural formalities necessary for such UK Borrower to obtain authorization to make that payment without withholding or deduction for Taxes imposed under the laws of the United Kingdom.

(iv)If a Lender has not confirmed its scheme reference number and jurisdiction of tax residence in accordance with paragraph (g)(ii) above, no UK Borrower shall make a Borrower DTTP Filing or file any other form relating to the HMRC DT Treaty Passport scheme in respect of that Lender's Commitment or its participation in any Loan or other Revolving Exposure unless the Lender otherwise agrees.

(v)Each UK Borrower shall, promptly on making a Borrower DTTP Filing, deliver a copy of such Borrower DTTP Filing to the Administrative Agent for delivery to the relevant Lender.

(vi)Each Lender shall notify each UK Borrower and the Administrative Agent whether it is (a) a UK Treaty Lender, (b) a Lender which is entitled to be paid without United Kingdom withholding tax for other reasons or (c) a lender which must be paid subject to United Kingdom withholding tax and will promptly notify each UK Borrower and the Administrative Agent if there is any change in such status (for example  if it determines in its sole discretion that it has ceased to be entitled to claim the benefits of an income tax treaty to which the United Kingdom is a party with respect to payments made by any UK Borrower hereunder).

(h)Additional Dutch Withholding Tax Matters. Each Lender and each Dutch Borrower which makes a payment to such Lender shall cooperate in completing any procedural formalities necessary for such Dutch Borrower to obtain authorization to make such payment without withholding or deduction for Taxes imposed under the laws of The Netherlands.

(i)Obtaining Certain Refunds.  If a Loan Party makes a deduction or withholds sums in relation to Taxes imposed under the laws of the United Kingdom or the Netherlands and Section 2.16(a) applies to increase the amount of the payment to a UK Treaty Lender or a Dutch Treaty Lender from that Loan Party, that Loan Party shall promptly provide that UK Treaty Lender or Dutch Treaty Lender, as applicable, with an executed original H.M. Revenue & Customs or Dutch tax authorities tax deduction certificates (if applicable) evidencing the relevant deduction or withholding of such Taxes. The UK Treaty Lender or Dutch Treaty Lender, as applicable, shall, within a reasonable period following receipt of such certificate, apply to H.M. Revenue & Customs or the Dutch tax authorities for a refund of the amount of that tax deduction and, upon receipt by the UK Treaty Lender or Dutch Treaty Lender, as applicable, of such amount from H.M. Revenue & Customs or the Dutch tax authorities, Section 2.16(j) below shall apply in relation thereto to the extent that such refund is attributable to the increase in the amount paid by the relevant Loan Party pursuant to Section 2.16(a) above.

(j)Treatment of Certain Refunds.  If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.16 (including by the payment of additional amounts pursuant to this Section 2.16), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.16 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund).  Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified

 

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party the amount paid over pursuant to this paragraph (j) (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (j), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (j) the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts giving rise to such refund had never been paid.  This paragraph (j) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

(k)Survival.  Each party's obligations under this Section 2.16 shall survive the resignation or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

(l)Defined Terms.  For purposes of this Section 2.16, the term "Lender" includes any Issuing Bank and the term "applicable law" includes FATCA.

SECTION 2.17.Payments Generally; Allocation of Proceeds; Sharing of Set‑offs .

(a)The Borrowers shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Sections 2.14, 2.15 or 2.16, or otherwise) (x) in the case of payments denominated in Dollars, at the Administrative Agent's Office and in immediately available funds, without set-off or counterclaim, not later than 2:00 p.m. Local Time on the date specified herein and (y) in the case of payments denominated in a Foreign Currency, at its Foreign Currency Payment Office for such Foreign Currency, at the Administrative Agent's Office and in immediately available funds, without set-off or counterclaim, not later than 2:00 p.m. Local Time on the date specified herein; provided, that payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.14, 2.15, 2.16 and 9.03 shall be made directly to the Persons entitled thereto.  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.  The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof.  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, except as otherwise expressly provided herein, be made in the currency of such Loan or LC Disbursement, and all other payments hereunder and under each other Loan Document shall be made in Dollars.  Notwithstanding the foregoing provisions of this Section, if, after the making of any Borrowing or LC Disbursement in any Foreign Currency, currency control or exchange regulations are imposed in the country which issues such Foreign Currency with the result that such Foreign Currency no longer exists or the Borrowers are not able to make payment to the Administrative Agent for the account of the Lenders in such Foreign Currency, then all payments to be made by the Borrowers hereunder in such Foreign Currency shall instead be made when due in an equivalent amount of the currency that replaced such Foreign Currency or, if no such replacement currency exists, in Dollars in an amount equal to the Dollar Amount (as of the date of repayment) of such payment due, it being the intention of the parties hereto that the Borrowers take all risks of the imposition of any such currency control or exchange regulations.

 

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(b)If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties (in the Dollar Amount of such funds received, if necessary).  Any proceeds of Collateral or payments from any of the Guarantors received by the Administrative Agent (i) not constituting a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the Borrowers) or (ii) after an Event of Default has occurred and is continuing and the Administrative Agent so elects or the Required Lenders so direct, shall be applied ratably first, to pay any fees, indemnities, or expense reimbursements including amounts then due to the Administrative Agent, the Swingline Lender and the Issuing Bank from the Borrowers (other than in connection with Banking Services Obligations or Swap Agreement Obligations), second, to pay any fees or expense reimbursements then due to the Lenders from the Borrowers (other than in connection with Banking Services Obligations or Swap Agreement Obligations), third, to pay interest then due and payable on the Loans and unreimbursed LC Disbursements ratably, fourth, to pay an amount to the Administrative Agent equal to one hundred five percent (105%) of the aggregate LC Exposure, to be held as cash collateral for such Obligations, fifth to prepay principal on the Loans and unreimbursed LC Disbursements and to pay any amounts owing with respect to Swap Agreement Obligations up to and including the amount most recently provided to the Administrative Agent pursuant to Section 2.21, ratably, sixth to the payment of any amounts owing in respect of Banking Services Obligations up to and including the amount most recently provided to the Administrative Agent pursuant to Section 2.21, and seventh, to the payment of any other Secured Obligation due to the Administrative Agent or any Lender from the Borrowers or any other Orthofix Entity in connection with the Transactions. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrower Representative, or unless a Default is in existence, neither the Administrative Agent nor any Lender shall apply any payment which it receives to any Eurocurrency Loan of a Class, except (i) on the expiration date of the Interest Period applicable thereto, or (ii) in the event, and only to the extent, that there are no outstanding ABR Loans of the same Class and, in any such event, the Borrowers shall pay the break funding payment required in accordance with Section 2.15.  Further, notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, (A) each Security Agreement executed by a non-U.S. Loan Party shall only secure the Secured Obligations of each other Foreign Subsidiary of the Company, (B) no payments from or proceeds of Collateral pledged by the non-U.S. Loan Parties or any Foreign Subsidiaries shall be applied to pay any Secured Obligations of any U.S. Loan Party and (C) the payments from and proceeds of Collateral pledged by the U.S. Loan Parties shall be applied, first, to the Secured Obligations owing by the U.S. Loan Parties in accordance with this paragraph (b) until paid in full, and then the remainder of such proceeds shall be applied to the Secured Obligations owing by the non-U.S. Loan Parties in accordance with this paragraph (b) until paid in full.  The Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Secured Obligations.

Notwithstanding the foregoing, (i) Secured Obligations arising under Banking Services Obligations or Swap Agreement Obligations shall be excluded from the application described above and paid in clause seventh if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may have reasonably requested from the applicable provider of such Banking Services or Swap Agreements and (ii) no amounts received by the Administrative Agent or any Lender from any Loan Party that is not a Qualified ECP Guarantor shall be applied in partial or complete satisfaction of any Excluded Swap Obligations.

 

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(c)At the election of the Administrative Agent, all payments of principal, interest, LC Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all reimbursement for fees, costs and expenses pursuant to Section 9.03), and other sums payable under the Loan Documents, may be paid from the proceeds of Borrowings made hereunder, whether made following a request by the Borrower Representative pursuant to Section 2.03 or 2.04 or a deemed request as provided in this Section.  The Borrowers hereby irrevocably authorize the Administrative Agent to make a Borrowing for the purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any other amount due under the Loan Documents and agree that all such amounts charged shall constitute Loans (including Swingline Loans), and that all such Borrowings shall be deemed to have been requested pursuant to Sections 2.03 or 2.04, as applicable.  The Borrowers, Lenders, Issuing Banks and Swingline Lenders hereby irrevocably authorize the Administrative Agent, in its sole discretion as of any date from time to time, to convert as of such date any payment received by it in any Agreed Currency or to be made by it in any Agreed Currency into the equivalent amount (using the methodology of the Dollar Amount) of any another Agreed Currency, in each case to effectuate any one or more of the provisions of this Agreement.

(d)If, except as otherwise expressly provided herein, 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 any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other similarly situated Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by all such Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements and Swingline 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 Borrowers pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment or sale of a participation in any of its Loans or participations in LC Disbursements and Swingline Loans to any assignee or participant, other than to the Borrowers 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 such Borrower in the amount of such participation.

(e)Unless the Administrative Agent shall have received notice from the Borrower Representative prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrowers will not make such payment, the Administrative Agent may assume that the Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due.  In such event, if the Borrowers have not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative 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 Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

 

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(f)If any Lender shall fail to make any payment required to be made by it hereunder, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit of the Administrative Agent, the Swingline Lender or the Issuing Bank to satisfy such Lender's obligations hereunder until all such unsatisfied obligations are fully paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and application to, any future funding obligations of such Lender hereunder.  Application of amounts pursuant to clauses (i) and (ii) above shall be made in such order as may be determined by the Administrative Agent in its discretion.

(g)The Administrative Agent may from time to time provide the Borrowers with account statements or invoices with respect to any of the Secured Obligations (the "Statements").  The Administrative Agent is under no duty or obligation to provide Statements, which, if provided, will be solely for the Borrowers' convenience.  Statements may contain estimates of the amounts owed during the relevant billing period, whether of principal, interest, fees or other Secured Obligations.  If the Borrowers pay the full amount indicated on a Statement on or before the due date indicated on such Statement, the Borrowers shall not be in default of payment with respect to the billing period indicated on such Statement; provided, that acceptance by the Administrative Agent, on behalf of the Lenders, of any payment that is less than the total amount actually due at that time (including but not limited to any past due amounts) shall not constitute a waiver of the Administrative Agent's or the Lenders' right to receive payment in full at another time.

SECTION 2.18.Mitigation Obligations; Replacement of Lenders .

(a)If any Lender requests compensation under Section 2.14, or if the Borrowers are required to pay any Indemnified Taxes or additional amounts 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 Sections 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 Borrowers hereby agree to pay all reasonable 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 the Borrowers are required to pay any Indemnified Taxes or additional amounts to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, or if any Lender gives a notice pursuant to Section 2.24, or if any Lender becomes a Defaulting Lender, then the Borrowers may, at their 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 (other than its existing rights to payments pursuant to Sections 2.14 or 2.16) and obligations under this Agreement and the other 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 Borrowers shall have received the prior written consent of the Administrative Agent (and in circumstances where its consent would be required under Section 9.04, the Issuing Bank and the Swingline Lender), which consent shall not unreasonably be withheld or delayed, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and funded participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be

 

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made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments.  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 Borrowers to require such assignment and delegation cease to apply.

SECTION 2.19.Defaulting Lenders .

Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a)fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender pursuant to Section 2.11(a);

(b)such Defaulting Lender shall not have the right to vote on any issue on which voting is required (other than to the extent expressly provided in Section 9.02(b)) and the Commitment and Revolving Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder or under any other Loan Document; provided that, except as otherwise provided in Section 9.02, this clause (b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender or each Lender directly affected thereby;

(c)if any Swingline Exposure or LC Exposure exists at the time such Lender becomes a Defaulting Lender then:

(i)all or any part of the Swingline Exposure and LC Exposure of such Defaulting Lender (other than the portion of such Swingline Exposure referred to in clause (b) of the definition of such term) shall be reallocated among the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to the extent that such reallocation does not, as to any non-Defaulting Lender, cause such non-Defaulting Lender's Revolving Exposure to exceed its Commitment;

(ii)if the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrowers shall within one (1) Business Day following notice by the Administrative Agent (x) first, prepay such Swingline Exposure and (y) second, cash collateralize, for the benefit of the Issuing Bank, the Borrowers' obligations corresponding to such Defaulting Lender's LC Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) in accordance with the procedures set forth in Section 2.05(j) for so long as such LC Exposure is outstanding;

(iii)if the Borrowers cash collateralize any portion of such Defaulting Lender's LC Exposure pursuant to clause (ii) above, the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.11(b) with respect to such Defaulting Lender's LC Exposure during the period such Defaulting Lender's LC Exposure is cash collateralized;

(iv)if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Sections 2.11(a) and 2.11(b) shall be adjusted in accordance with such non-Defaulting Lenders' Applicable Percentages; and

(v)if all or any portion of such Defaulting Lender's LC Exposure is neither reallocated nor cash collateralized pursuant to clause (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Bank or any other Lender hereunder, all letter of credit fees payable under Section 2.11(b) with respect to such Defaulting Lender's LC Exposure shall be payable to the Issuing Bank until and to the extent that such LC Exposure is reallocated and/or cash collateralized; and

 

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(d)so long as such Lender is a Defaulting Lender, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend, renew, extend or increase any Letter of Credit, unless it is satisfied that the related exposure and such Defaulting Lender's then outstanding LC Exposure will be 100% covered by the Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrowers in accordance with Section 2.19(c), and Swingline Exposure related to any such newly made Swingline Loan or LC Exposure related to any newly issued or increased Letter of Credit shall be allocated among non‑Defaulting Lenders in a manner consistent with Section 2.19(c)(i) (and such Defaulting Lender shall not participate therein).

If (i) a Bankruptcy Event or a Bail-In Action with respect to the Parent of any Lender shall occur following the date hereof and for so long as such event shall continue or (ii) the Swingline Lender or the Issuing Bank has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Swingline Lender shall not be required to fund any Swingline Loan and the Issuing Bank shall not be required to issue, amend or increase any Letter of Credit, unless the Swingline Lender or the Issuing Bank, as the case may be, shall have entered into arrangements with the Borrowers or such Lender, satisfactory to the Swingline Lender or the Issuing Bank, as the case may be, to defease any risk to it in respect of such Lender hereunder.

In the event that each of the Administrative Agent, the Borrowers, the Swingline Lender and the Issuing Bank agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC Exposure of the Lenders shall be readjusted to reflect the inclusion of such Lender's Commitment and on the date of such readjustment such Lender shall purchase at par such of the Loans of the other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

SECTION 2.20.Returned Payments .  If, after receipt of any payment which is applied to the payment of all or any part of the Obligations (including a payment effected through exercise of a right of setoff), the Administrative Agent or any Lender is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust funds, or for any other reason (including pursuant to any settlement entered into by the Administrative Agent or such Lender in its discretion), then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if such payment or proceeds had not been received by the Administrative Agent or such Lender.  The provisions of this Section 2.20 shall be and remain effective notwithstanding any contrary action which may have been taken by the Administrative Agent or any Lender in reliance upon such payment or application of proceeds.  The provisions of this Section 2.20 shall survive the termination of this Agreement.

SECTION 2.21.Banking Services and Swap Agreements .  Each Lender or Affiliate thereof providing Banking Services for, or having Swap Agreements with, any Orthofix Entity, shall deliver to the Administrative Agent, promptly after entering into such Banking Services or Swap Agreements, written notice setting forth the aggregate amount of all Banking Services Obligations and Swap Agreement Obligations of such Orthofix Entity or Affiliate thereof to such Lender or Affiliate (whether matured or unmatured, absolute or contingent).  In furtherance of that requirement, each such Lender or Affiliate thereof shall furnish the Administrative Agent, from time to time after a significant change therein or upon a request therefor, a summary of the amounts due or to become due in respect of such Banking Services Obligations and Swap Agreement Obligations.  The most recent information provided to the Administrative Agent shall be used in determining which tier of the waterfall, contained in Section 2.17(b), such Banking Services Obligations and/or Swap Agreement Obligations will be placed.

 

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SECTION 2.22.              Determination of Dollar Amounts .  The Administrative Agent will determine the Dollar Amount of:

(a)each Eurocurrency Loan in a Foreign Currency as of the date two Business Days prior to the date of such Borrowing or, if applicable, the date of conversion to or any continuation of any Borrowing as a Eurocurrency Loan in a Foreign Currency;

(b)the LC Exposure as of the date of each request for the issuance of any Letter of Credit in a Foreign Currency;

(c)all outstanding Loans in a Foreign Currency and the LC Exposure in a Foreign Currency on and as of the last Business Day of each calendar quarter and on any other Business Day elected by the Administrative Agent in its discretion or upon instruction by the Required Lenders; and

(d)each LC Disbursement made in a Foreign Currency on the date such LC Disbursement is made by the Issuing Bank.

Each day upon or as of which the Administrative Agent determines the Dollar Amounts as described in the preceding clauses (a), (b) and (c) is herein described as a "Computation Date" with respect to each Borrowing, Letter of Credit or LC Exposure for which a Dollar Amount is determined on or as of such day.

 

SECTION 2.23.Judgment Currency .  If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due from the Borrowers hereunder in the currency expressed to be payable herein (the "specified currency ") into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which the Administrative Agent could, in accordance with normal banking procedures applicable to arm's length transactions, purchase the specified currency with such other currency at the Administrative Agent's main New York City office on the Business Day immediately preceding that on which final, non-appealable judgment is given.  The obligations of the Borrowers in respect of any sum due to any Credit Party hereunder shall, notwithstanding any judgment in a currency other than the specified currency, be discharged only to the extent that on the Business Day following receipt by such Credit Party of any sum adjudged to be so due in such other currency such Credit Party may in accordance with normal, reasonable banking procedures purchase the specified currency with such other currency.  If the amount of the specified currency so purchased is less than the sum originally due to such Credit Party in the specified currency, the Borrowers agree, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify such Credit Party against such loss, and if the amount of the specified currency so purchased exceeds (a) the sum originally due to any Credit Party in the specified currency and (b) any amounts shared with other Lenders as a result of allocations of such excess as a disproportionate payment to such Lender under Section 2.17, such Credit Party agrees to remit such excess to the Borrowers.

SECTION 2.24.Illegality .  If any Lender reasonably determines that any Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to (a) perform any of its obligations hereunder or under any other Loan Document, (b) issue, make, maintain or fund Loans or its participation in any Loan (whether denominated in Dollars or a Foreign Currency), or (c) issue, make, maintain, fund, determine interest rates or charge interest with respect to any extension of credit under this Agreement or any of the Loan Documents, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, the applicable Agreed Currency in the London interbank market, then, on notice thereof by such Lender to the Borrower Representative through the Administrative Agent,

 

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any obligation of such Lender to make or continue such Loans or to convert to such Type of Loans shall be suspended until such Lender notifies the Administrative Agent and the Borrowers that the circumstances giving rise to such determination no longer exist.  Upon receipt of such notice, the Borrowers shall, upon demand from such Lender (with a copy to the Administrative Agent), prepay or, if applicable, convert all affected Eurocurrency Loans denominated in Dollars of such Lender to it to ABR Loans, and to repay all affected Loans in any Agreed Currency, either on the last day of the Interest Period, therefor, if such Lender may lawfully continue to maintain such Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such Loans.  Upon any such prepayment or conversion, the Borrowers shall also pay accrued interest on the amount so prepaid or converted.  The Borrowers shall have the rights in respect of any such Lender specified in Section 2.18.

SECTION 2.25.Uncommitted Orthofix-Italy Non-Pro Rata Tranche Sub-Facility .  

(a)The Borrowers may at any time, upon not less than 10 Business Days' notice from the Borrower Representative to the Administrative Agent (or such shorter period as may be agreed by the Administrative Agent in its sole discretion), request that one or more of the Lenders or another lending institution provide Italy Sub-Facility Commitments to Orthofix-Italy in an maximum aggregate amount of up to the Dollar Amount of $10,000,000 (the "Italy Uncommitted Sub-Facility"); provided that (i) the Commitments will be reduced by the Dollar Amount of the Italy Uncommitted Sub‑Facility and (ii) the Maximum Foreign Currency Amount shall be reduced by the amount of the Italy Sub-Facility Commitments.

(b)Subject to the approval of the Administrative Agent, the Swingline Lender and the Issuing Bank, the Borrowers may invite additional lending institutions to become Lenders under the Italy Uncommitted Sub-Facility, provided that (i) any such new lender has agreed to, and is capable of, funding to Orthofix-Italy in Euros in accordance with the terms hereof and (ii) any such new lender assumes all of the rights and obligations of a "Lender" hereunder with respect to the Italy Uncommitted Sub-Facility.  Nothing contained in this Section 2.25 shall (x) constitute, or otherwise be deemed to be, a commitment on the part of any Lender to provide an Italy Sub-Facility Commitment hereunder at any time or (y) require any Lender to purchase a participation in the Italy Uncommitted Sub-Facility at any time.

(c)To effectuate the Italy Uncommitted Sub-Facility, the Borrower Representative, Orthofix-Italy, the Administrative Agent and the Italy Sub-Facility Lenders shall execute and deliver an amendment to this Agreement, and/or an intercreditor agreement, or equivalent documentation in form and substance reasonably satisfactory to the Administrative Agent (the "Italy Sub-Facility Amendment Documentation").  Notwithstanding anything set forth in Section 9.02 to the contrary, the Italy Sub‑Facility Amendment Documentation and any amendment to any other Loan Documents in connection with or to effectuate the Italy Uncommitted Sub-Facility shall be in form and substance reasonably satisfactory to the Administrative Agent and shall only require the written signatures of the Administrative Agent, the Borrower Representative, Orthofix-Italy and each Italy Sub-Facility Lender.  The Italy Sub-Facility Amendment Documentation shall provide that the obligations under the Italy Uncommitted Sub-Facility will be included in the Obligations and the Secured Obligations, and Guarantors will guaranty, and the Collateral will secure, all Secured Obligations (including all amounts under the Italy Uncommitted Sub-Facility) on a pari passu basis (including equivalent treatment in any proceeds waterfall).  Each of the Lenders hereby authorize and direct the Administrative Agent to enter into, if deemed necessary or desirable by the Administrative Agent, in its discretion, an intercreditor agreement on behalf of all Lenders and the other holders of the Secured Obligations, and bind such Lenders and such holders to such intercreditor agreement providing for the pari passu treatment of the Italy Uncommitted Sub-Facility under the Guarantors' guaranties and the Collateral Documents. Except for the terms set forth in this Section 2.25 and mechanics and pricing applicable to the Italy Uncommitted Sub-Facility, provisions of the Revolving Italy Sub-Facility Loans will be substantially the same as the Revolving Loans.

 

First Amended and Restated Credit Agreement (Orthofix), Page 74


 

(d)The parties hereto acknowledge and agree that prior to Orthofix-Italy becoming entitled to utilize the Italy Uncommitted Sub-Facility (i)(A) the Administrative Agent shall have received on behalf of the Italy Sub-Facility Lenders such supporting resolutions, incumbency certificates, opinions of counsel and other documents or information, in form, content and scope reasonably satisfactory to the Administrative Agent, as may be required by the Administrative Agent and the Italy Sub-Facility Lenders in their sole discretion, (B) documentation and information required by regulatory authorities under applicable "know your customer" and anti-money laundering rules and regulations, including, without limitation, the USA PATRIOT Act, to the extent such documentation or information is requested by the Administrative Agent on behalf of such Lenders and (C) notes signed by Orthofix-Italy to the extent any such Lenders so require, and (ii) each such Lender shall have met all necessary regulatory and licensing requirements and internal policy requirements and shall be legally permitted to make Revolving Italy Sub-Facility Loans in the jurisdiction in which Orthofix-Italy is organized.

ARTICLE III

Representations and Warranties

Each Borrower and each other Loan Party represents and warrants to the Lenders that (and where applicable, agrees):

SECTION 3.01.Organization; Powers .  Each Orthofix Entity (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, except in the case of any Non-Loan Party, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, (b) has all requisite power and authority to carry on its business as now conducted and (c) is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except, with respect to the Orthofix Entities that are not Borrowers, where the failure to be qualified to do business in, and be in good standing in, every jurisdiction where such qualification is required, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.02.Authorization; Enforceability .  The Transactions are within each Loan Party's organizational powers and (a) have been duly authorized by all necessary organizational actions and, if required, actions by equity holders and (b) will not result in a suspension or revocation of, or limitation on, any material certificate of authority, license, permit, authorization or other approval applicable to the business, operations or properties of any Borrower or any other Loan Party or Orthofix Entity to the extent such suspension, revocation or limitation materially adversely affects the business of the Orthofix Entities, taken as a whole, or the ability of the Orthofix Entities, taken as a whole, to participate in, or contract with, any material Medical Reimbursement Program.  Each Loan Document to which each Loan Party is a party has been duly executed and delivered by such Loan Party and constitutes a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03.Governmental Approvals; No Conflicts .  The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except such as have been obtained or made and are in full force and effect and except for filings necessary to perfect Liens created pursuant to the Loan Documents, (b) will not violate any Requirement of Law applicable to any Loan Party or any other Orthofix Entity, (c) will not violate or result in a default under any indenture, material agreement or other material instrument binding upon any Loan Party or any other Orthofix Entity or the assets of any Loan Party or other Orthofix Entity, or give

 

First Amended and Restated Credit Agreement (Orthofix), Page 75


 

rise to a right thereunder to require any payment to be made by any Loan Party or any other Orthofix Entity, and (d) will not result in the creation or imposition of any Lien on any asset of any Loan Party or any other Orthofix Entity, except Liens created pursuant to the Loan Documents.

SECTION 3.04.Financial Condition; No Material Adverse Change .

(a)The Company has heretofore furnished to the Lenders (i) its consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal year ended December 31, 2017, reported on by Ernst & Young LLP, independent public accountants, and (ii) its consolidated balance sheet and statements of income, stockholders equity and cash flows as of and for the fiscal quarter and the portion of the fiscal year ended March 31, 2018, certified by its Financial Officer.  Such financial statements (including the footnotes thereto) present fairly, in all material respects, the financial position and results of operations and cash flows of the Company and its consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to normal year-end audit adjustments, if applicable, and the absence of footnotes in the case of the statements referred to in clause (ii) above.  

(b)No event, change or condition has occurred that has had, or could reasonably be expected to have, a Material Adverse Effect, since December 31, 2017.

SECTION 3.05.Properties, etc .

(a)As of the date of this Agreement, Schedule 3.05 sets forth (i) the address of each parcel of real property that is owned or leased by the Loan Parties and (ii) the location of any tangible personal property of the Loan Parties located in the U.S., England or Wales with a fair market value in excess of the Dollar Amount of $250,000 (other than trade show booths and related assets, tangible personal property in transit or out for repair, held by sales representatives or customers or on consignment with third parties).  On the Effective Date, each of such leases and subleases that is material to the business of such Loan Party is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any party to any such lease or sublease exists.  On each date after the Effective Date, each of such leases and subleases is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any party to any such lease or sublease exists, except where the failure to be valid and enforceable or the existence of such default, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect.  Each Orthofix Entity has good and indefeasible title to, or valid leasehold interests in, all of its material real and personal property.  The real and personal property of each Orthofix Entity is free of all Liens other than those permitted by Section 6.02.

(b)NeoMedics, Inc. owns no tangible or intangible personal or real property.  The Dutch Borrower, Orthofix II B.V., the UK Borrower and each UK Subsidiary (unless such UK Subsidiary is a Loan Party and its assets are pledged as Collateral) is a holding company, owning no tangible or intangible personal or real property except the Equity Interests described on Schedule 3.15 and cash and assets incidental to conducting and facilitating intercompany lending and investments and activities related to the ownership of its Subsidiaries.

(c)Each Orthofix Entity owns, or is licensed to use, all material trademarks, tradenames, copyrights, patents and other intellectual property necessary to its business as currently conducted.  A correct and complete list of all registrations and applications of Material Intellectual Property owned by a Loan Party (including the title, counterparty and licensed Material Intellectual Property for any exclusive inbound written licenses to which any Loan Party is a party), as of the date of this Agreement, is set forth on Schedule 3.05.  The use of any Material Intellectual Property by each such

 

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Loan Party does not infringe in any material respect upon the rights of any other Person in a manner that could reasonably be expected to materially and adversely affect a material portion of the operations of such Loan Party.  Each Loan Party's rights to any Material Intellectual Property that is necessary to its business as currently conducted are not subject to any licensing agreement or similar arrangement, except as disclosed on Schedule 3.05.

SECTION 3.06.Litigation, Health Care and Environmental Matters .

(a)As of the Effective Date, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority (including, but not limited to those regulatory agencies responsible for licensing, accrediting or issuing Medicare or Medicaid certifications) pending against or, to the knowledge of any Loan Party, threatened in writing against or adversely affecting any Orthofix Entity, (x) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (y) that purports to affect the legality, validity or enforceability of any Loan Document, any material provision thereof or the consummation of the Transactions, other than the Disclosed Matters set forth on Schedule 3.06.  On each date after the Effective Date, there are no actions, suits or proceedings by or before any arbitrator or Governmental Authority (including, but not limited to those regulatory agencies responsible for licensing, accrediting or issuing Medicare or Medicaid certifications) pending against or, to the knowledge of any Loan Party, threatened against or affecting any Orthofix Entity (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that purports to affect the legality, validity or enforceability of any Loan Document, any material provision thereof or the consummation of the Transactions.  

(b)

(i)as of the Effective Date, no Orthofix Entity has received notice of any claim with respect to any material Environmental Liability or knows of any basis for any material Environmental Liability, except for the Disclosed Matters, and

(ii)except with respect to any matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, no Orthofix Entity (A) has failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law or (B) has become subject to any Environmental Liability.

(c)Since the date of this Agreement, there has been no change in the status of the Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

SECTION 3.07.Compliance with Laws and Agreements; No Default .  Except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, each Orthofix Entity is in compliance with (i) all Requirements of Law applicable to it or its property and (ii) all indentures, agreements and other instruments binding upon it or its property.  No Default has occurred and is continuing.  Without limiting the generality of the foregoing, each of the Loan Parties represents that:

(a)Each Orthofix Entity is in compliance in all material respects with all Health Care Laws and requirements of Third Party Payor Arrangements applicable to it and its assets, business or operations.

 

First Amended and Restated Credit Agreement (Orthofix), Page 77


 

(b)Each Orthofix Entity holds in full force and effect (without default, violation or noncompliance) all material Health Care Permits necessary for it to own, lease, sublease or operate its assets and facilities and to conduct its business and operations as presently conducted (including to obtain reimbursement under all Third Party Payor Arrangements in which it participates). No circumstance exists or event has occurred which could reasonably be expected to result in the suspension, revocation, termination, restriction, limitation, modification or non-renewal of any material Health Care Permit.

(c)Each Orthofix Entity has timely filed or caused to be timely filed all material cost reports and other material reports of every kind whatsoever required by any Medical Reimbursement Program or Third Party Payor Arrangement to have been filed or made with respect to the operations of the Loan Parties. There are no material claims, actions or appeals pending before any Third Party Payor, CMS, any administrative contractor, intermediary or carrier or any other Governmental Authority with respect to any Medical Reimbursement Programs, material cost reports or material claims filed by any Loan Party, or any material disallowance by any Third Party Payor or Governmental Authority in connection with any audit of such cost reports. No Orthofix Entity (i) has retained an overpayment received from, or failed to refund any amount due to any Medical Reimbursement Program or other Third Party Payor in violation, in any material respect, of any Health Care Law or Third Party Payor Arrangement, or (ii) has received written notice of, or has knowledge of, any material overpayment or material refunds due to any Third Party Payor or Medical Reimbursement Program.

(d)Each Orthofix Entity is in compliance in all material respects with HIPAA.  Further, in each arrangement that is a business associate arrangement under HIPAA, each Orthofix Entity has: (i) entered into a written business associate agreement (as such term is defined under the HIPAA regulations) that meets the requirements of HIPAA in all material respects, (ii) at all times complied in all material respects with such business associate agreements in respect of the HIPAA privacy or security standards, and (iii) at no time experienced, had or received a report of a material unauthorized use or disclosure of Protected Health Information (as defined in the HIPAA regulations) or material privacy or security breach or other material privacy or security incident within the meaning of HIPAA.

(e)Except as set forth on Schedule 3.07, no Orthofix Entity, nor any owner, officer, director, partner, agent or managing employee of any Orthofix Entity, is a party to or bound by any individual integrity agreement, corporate integrity agreement, corporate compliance agreement, deferred prosecution agreement, or other formal or informal agreement with any Governmental Authority concerning compliance with any Health Care Laws, any Medical Reimbursement Programs or the requirements of any Health Care Permit.

(f)(i) To the knowledge of any Responsible Officer, there is no Orthofix Entity or individual employed by any such Orthofix Entity who may reasonably be expected to have criminal culpability or to be excluded or suspended from participation in any Medical Reimbursement Program for their corporate or individual actions or failures to act where such culpability, exclusion and/or suspension has or could be reasonably expected to result in a Material Adverse Effect; and (ii) there is no member of management continuing to be employed by any Orthofix Entity who may reasonably be expected to have individual culpability for matters under investigation by any Governmental Authority where such culpability has or could reasonably be expected to result in a Material Adverse Effect unless such member of management has been, within a reasonable period of time after discovery of such actual or potential culpability, either suspended or removed from positions of responsibility related to those activities under challenge by the Governmental Authority;

(g)current billing policies, arrangements, protocols and instructions comply with expressly stated requirements of Medical Reimbursement Programs and are administered by properly trained personnel except where any such failure to comply could not reasonably be expected to result in a Material Adverse Effect;

 

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(h)current medical director compensation arrangements and other arrangements with referring physicians comply with domestic and foreign, federal and state self-referral and anti-kickback laws, including without limitation the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)), the Stark Law (42 U.S.C. § 1395nn and §1395(q)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), except where any such failure to comply could not reasonably be expected to result in a Material Adverse Effect;

(i)none of the Orthofix Entities is currently, nor has in the past been subject to any domestic or foreign, federal, state, local governmental or private payor civil or criminal inspections, investigations, inquiries or audits involving and/or related to its activities, except for routine inspections, investigations, inquiries or audits in the ordinary course not anticipated to result in a Material Adverse Effect and other inspections, investigations, inquiries or audits that could not reasonably be expected to result in a Material Adverse Effect;

(j)except as set forth on Schedule 3.07 or in materials previously provided to the Administrative Agent's counsel, no Orthofix Entity nor any owner, officer, director, partner, agent or managing employee or Person with a "direct or indirect ownership interest" (as that phrase is defined in 42 C.F.R. § 420.201) in any Orthofix Entity, (i) has been excluded from any Medical Reimbursement Program or from participation in a Federal Health Care Program (as that term is defined in 42 U.S.C. §1320a-7b) or had a civil monetary penalty assessed pursuant to 42 U.S.C. § 1320a-7; (ii) has been convicted (as that term is defined in 42 C.F.R. §1001.2) of any of those offenses described in 42 U.S.C. §1320a-7b or 18 U.S.C. §§669, 1035, 1347 or 1518, including, without limitation any of the following categories of offenses: (A) criminal offenses relating to the delivery of an item or service under any state or federal health care program (as that term is defined in 42 U.S.C. §1320a-7b) or healthcare benefit program (as that term is defined in 18 U.S.C. §24b) or any foreign health care program or foreign health care benefit program, (B) criminal offenses under domestic or foreign, federal or state law relating to patient neglect or abuse in connection with the delivery of a healthcare item or service, (C) criminal offenses under laws relating to fraud and abuse, theft, embezzlement, false statements to third parties, money laundering, kickbacks, breach of fiduciary responsibility or other financial misconduct in connection with the delivery of a healthcare item or service or with respect to any act or omission in a program operated by or financed in whole or in part by any domestic or foreign, federal, state or local governmental agency, (D) laws relating to the interference with or obstruction of any investigations into any criminal offenses described in this clause (e), or (E) criminal offenses under laws relating to the unlawful manufacturing, distribution, prescription or dispensing of a controlled substance; or (iii) is, to the knowledge of any Responsible Officer, involved or named in a Governmental Authority or U.S. Attorney complaint made or any other action taken pursuant to the False Claims Act under 31 U.S.C. §§3729-3731 or qui tam action brought pursuant to 31 U.S.C. §3729 et seq; and

(k)each Orthofix Entity is in compliance in all material respects with any applicable laws or regulations of the U.S., the UK, the European Union and, to the extent the laws of which are substantially similar to U.S. law, any other Governmental Authority, in each case relating to money laundering or terrorist financing, including, without limitation, the Bank Secrecy Act, 31 U.S.C. sections 5301 et seq.; the USA Patriot Act; Laundering of Monetary Instruments, 18 U.S.C. section 1956; Engaging in Monetary Transactions in Property Derived from Specified Unlawful Activity, 18 U.S.C. section 1957; the Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations, 31 C.F.R. Part 103; and any similar laws or regulations of such Governmental Authorities currently in force or hereafter enacted.

SECTION 3.08.Investment Company Status .  No Orthofix Entity is an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940.

 

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SECTION 3.09.Taxes .  Each Orthofix Entity, as applicable, has timely filed or caused to be filed all federal, state, material foreign and other material Tax returns and reports required to have been filed and has paid or caused to be paid all federal, state, material foreign and other material Taxes required to have been paid by it, except such Taxes (i) that are not yet delinquent or (ii) that are being contested in good faith by appropriate proceedings and for which such Orthofix Entity, as applicable, has set aside on its books adequate reserves.  No tax liens have been filed and no claims are being asserted with respect to any such taxes against a material portion of the Collateral, except such tax liens that constitute Permitted Encumbrances.

SECTION 3.10.              ERISA and Foreign Pension Plans .  

(a)On the Effective Date, no ERISA Event has occurred or is reasonably expected to occur.  On each date after the Effective Date, no ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.  As of the Effective Date, the present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed the fair market value of the assets of such Plan.

(b)On the Effective Date, each Foreign Pension Plan is in compliance with all Requirements of Law applicable thereto and the respective requirements of the governing documents for such plan.  On each date after the Effective Date, each Foreign Pension Plan is in compliance with all Requirements of Law applicable thereto and the respective requirements of the governing documents for such plan except to the extent such non-compliance could not reasonably be expected to result in a Material Adverse Effect.  With respect to each Foreign Pension Plan, (i) on the Effective Date, no Orthofix Entity, its Affiliates or any of its directors, officers, employees or agents has engaged in a transaction, or other act or omission (including entering into this Agreement or any Loan Document and any act done or to be done in connection with this Agreement or any Loan Document), that has subjected, or could reasonably be expected to subject, such Orthofix Entity, directly or indirectly, to any penalty (including any tax or civil penalty), fine, claim or other liability (including any liability under a contribution notice or financial support direction (as those terms are defined in the United Kingdom Pensions Act 2004), or any liability or amount payable under section 75 or 75A of the United Kingdom Pensions Act 1995) and there are no facts or circumstances which may give rise to any such penalty, fine, claim, or other liability, and (ii) on each date after the Effective Date, no Orthofix Entity, its Affiliates or any of its directors, officers, employees or agents has engaged in a transaction, or other act or omission (including entering into this Agreement or any Loan Document and any act done or to be done in connection with this Agreement or any Loan Document), that has subjected, or could reasonably be expected to subject, such Orthofix Entity, directly or indirectly, to any penalty (including any tax or civil penalty), fine, claim or other liability (including any liability under a contribution notice or financial support direction (as those terms are defined in the United Kingdom Pensions Act 2004), or any liability or amount payable under section 75 or 75A of the United Kingdom Pensions Act 1995) that could reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect and there are no facts or circumstances which may give rise to any such penalty, fine, claim, or other liability.  With respect to each Foreign Pension Plan, reserves have been established in the financial statements furnished to the Administrative Agent in respect of any unfunded liabilities in accordance with applicable law or, where required, in accordance with ordinary accounting practices in the jurisdiction in which such Foreign Pension Plan is maintained.  The aggregate unfunded liabilities, with respect to such Foreign Pension Plans could not reasonably be expected to result in a Material Adverse Effect and as of the Effective Date, there are no unfunded liabilities with respect to all such Foreign Pension Plans.  On the Effective Date, there are no actions, suits or claims (other than routine claims for benefits) pending or threatened against any Orthofix Entity or any of its Affiliates with respect to any Foreign Pension Plan.  

 

First Amended and Restated Credit Agreement (Orthofix), Page 80


 

On the Effective Date, there are no actions, suits or claims (other than routine claims for benefits) pending or threatened against any Orthofix Entity or any of its Affiliates with respect to any Foreign Pension Plan which could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

(c)As of the Effective Date, that such Loan Party is not and will not be using "plan assets" (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments.

SECTION 3.11.Disclosure .  

(a)The Loan Parties have disclosed to the Lenders all agreements, instruments and corporate or other restrictions to which any Orthofix Entity is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.  None of the reports, financial statements, certificates or other written information (other than the projections, other forward looking information and information of a general economic or general industry nature) furnished by or on behalf of any Orthofix Entity to the Administrative Agent or any Lender in connection with the negotiation of this Agreement or any other Loan Document (taken as a whole and as modified or supplemented by other information so furnished) contains when furnished any material misstatement of fact or omits to state any material fact necessary to make the statements therein (taken as a whole), in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected financial information, the Loan Parties represent only that such information was prepared in good faith based upon assumptions believed by the Loan Parties to be reasonable at the time delivered and, if such projected financial information was delivered prior to the Effective Date, as of the Effective Date (it being recognized by the Lenders that any projections as to future events are not to be viewed as facts or factual information and that actual results during the period or periods covered by any such projections may differ from the projected results, and such differences may be material).

(b)As of the Effective Date, to the best knowledge of each Borrower, the information included in the Beneficial Ownership Certification provided on or prior to the Effective Date to any Lender in connection with this Agreement is true and correct in all respects.

SECTION 3.12.Other Agreements; Material Agreements .  

(a)No Orthofix Entity is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Medicaid Provider Agreement, Medicare Provider Agreement or other agreement or instrument to which such Person is a party, which default has resulted in, or if not remedied within any applicable grace period could result in, the revocation, termination, cancellation or material suspension of Medicaid Certification or Medicare Certification of any such Person.

(b)All Material Agreements as of the date of this Agreement are listed on Schedule 3.12.  No Orthofix Entity is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (i) any Material Agreement or (ii) any agreement or instrument evidencing or governing Material Indebtedness.  

SECTION 3.13.Solvency .  (a) Immediately after giving effect to the consummation of the Transactions to occur on the Effective Date, (i) the fair value of the assets of the Loan Parties, taken as a whole, at a fair valuation, will exceed their consolidated debts and liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the property of the Loan Parties, taken as a whole, will be greater than the amount that will be required to pay the probable liability of their consolidated debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become

 

First Amended and Restated Credit Agreement (Orthofix), Page 81


 

absolute and matured; (iii) the Loan Parties, taken as a whole, will be able to pay their consolidated debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Loan Parties, taken as a whole, will not have unreasonably small capital with which to conduct the business in which they are engaged as such business is now conducted and is proposed to be conducted after the Effective Date.

(b)The Loan Parties, taken as a whole, do not intend to, nor will they permit any other Orthofix Entity, taken as a whole with all other Orthofix Entities to, and the Loan Parties, taken as a whole, do not believe that they or any other Orthofix Entity, taken as a whole with all other Orthofix Entities, will, incur debts beyond their ability to pay such debts as they mature, taking into account the timing of and amounts of cash to be received by the Loan Parties or any such Orthofix Entity and the timing of the amounts of cash to be payable on or in respect of their consolidated Indebtedness or the Indebtedness of any such Orthofix Entity.

SECTION 3.14.Insurance .  Schedule 3.14 sets forth a description of all insurance maintained by or on behalf of each of the Loan Parties as of the Effective Date.  As of the Effective Date, all premiums in respect of such insurance have been paid.  The insurance maintained by or on behalf of the each of the Orthofix Entities is adequate and is customary for companies engaged in the same or similar businesses operating in the same or similar locations.

SECTION 3.15.Capitalization; Subsidiaries; Intercompany Loans .  

(a)Schedule 3.15 sets forth as of the Effective Date (i) the type of entity of the Company, (ii) a true and complete listing of each class of the Company's issued and outstanding Equity Interests, of which all of such Equity Interests are validly issued, fully paid and non-assessable, (iii) a correct and complete list of the name of each Subsidiary, (iv) a true and complete listing of each class of each of the Subsidiaries' issued and outstanding Equity Interests, of which all of such Equity Interests are owned beneficially and of record by the Persons identified on Schedule 3.15, and (v) the type of entity of each Subsidiary.  All of the issued and outstanding Equity Interests owned by any Orthofix Entity have been (to the extent such concepts are relevant with respect to such ownership interests) duly authorized and validly issued and are fully paid and non-assessable.  

(b)All Intercompany Loans as of the Effective Date (i) are described on Schedule 6.01(a), (ii) in the case of any such Intercompany Loans owed by any Loan Party to a Non-Loan Party, constitute Subordinated Indebtedness and (iii) in the case of any such Intercompany Loan owed to any such Loan Party (x) are evidenced by duly completed and executed promissory notes in form reasonably satisfactory to the Administrative Agent, and (y) as of the Effective Date will be delivered to the Administrative Agent together with an executed allonge in form reasonably satisfactory to the Administrative Agent.

SECTION 3.16.Security Interest in Collateral .  The provisions of the Collateral Documents create legal and valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and such Liens constitute perfected and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the applicable Loan Party and all third parties, and having priority over all other Liens on the Collateral except in the case of (a) Liens permitted under Section 6.02 and (b) Liens perfected only by possession (including possession of any certificate of title), to the extent the Administrative Agent has not obtained or does not maintain possession of such Collateral.

 

First Amended and Restated Credit Agreement (Orthofix), Page 82


 

SECTION 3.17.               Employment Matters .  

(a)As of the Effective Date, (i) there are no strikes, lockouts or slowdowns against any Orthofix Entity pending or, to the knowledge of any Responsible Officer of any Loan Party, threatened, (ii) the hours worked by and payments made to employees of the Orthofix Entities have not been in violation, in any material respect, of the Fair Labor Standards Act or any other applicable federal, state, local or foreign law dealing with such matters and (iii) all payments due from any Orthofix Entity, or for which any claim may be made against any Orthofix Entity, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books, in all material respects, of such Orthofix Entity.

(b)After the Effective Date, except as could not reasonably be expected to have a Material Adverse Effect, (i) there are no strikes, lockouts or slowdowns against any Orthofix Entity pending or, to the knowledge of any Responsible Officer of any Loan Party, threatened, (ii) the hours worked by and payments made to employees of the Orthofix Entities have not been in violation of the Fair Labor Standards Act or any other applicable federal, state, local or foreign law dealing with such matters and (iii) all payments due from any Orthofix Entity, or for which any claim may be made against any Orthofix Entity, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such Orthofix Entity.

SECTION 3.18.Federal Reserve Regulations .  No part of the proceeds of any Loan or Letter of Credit has been used or will be used, whether directly or indirectly, to purchase or carry any margin stock (within the meaning of Regulation U of the Board), to extend credit to others for purposes of purchasing or carrying any margin stock or for any other purpose that entails a violation of any of Regulations T, U and X of the Board.  No Orthofix Entity is engaged and will not engage, principally or as one of its important activities, in the business of purchasing or carrying margin stock, or extending credit for the purpose of purchasing or carrying margin stock.  Following the application of the proceeds of each Borrowing or drawing under each Letter of Credit, not more than 25% of the value of the assets (either of the Borrowers only or of the Company and its Subsidiaries on a consolidated basis) will be margin stock.

SECTION 3.19.Use of Proceeds .  The proceeds of the Loans have been used and will be used, whether directly or indirectly as set forth in Section 5.08.

SECTION 3.20.No Burdensome Restrictions .  No Orthofix Entity is subject to any Burdensome Restrictions except Burdensome Restrictions permitted under Section 6.10.

SECTION 3.21.Anti-Corruption Laws and Sanctions .  Each Orthofix Entity has implemented and maintains in effect policies and procedures designed to ensure compliance by each such Orthofix Entity and its respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and, except as set forth on Schedule 3.21, each such Orthofix Entity and its respective officers and employees and, to the knowledge of the Loan Parties, each such Orthofix Entity's directors and agents, are in compliance with Anti‑Corruption Laws and applicable Sanctions and are not knowingly engaged in any activity that would reasonably be expected to result in any Orthofix Entity being designated as a Sanctioned Person.  None of (a) any Orthofix Entity or any of their respective directors, officers or employees, or (b) to the knowledge of any Loan Party or its Subsidiaries, any agent of any Orthofix Entity that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person.  No Borrowing or Letter of Credit, use of proceeds, Transaction or other transaction contemplated by this Agreement or the other Loan Documents will violate any Anti-Corruption Law or applicable Sanctions.

 

First Amended and Restated Credit Agreement (Orthofix), Page 83


 

SECTION 3.22.               Fraud and Abuse .  To the knowledge of any Responsible Officer, no Orthofix Entity has, nor has any of their officers or directors, engaged in any activities which are prohibited under federal Medicare and Medicaid statutes, 42 U.S.C. § 1320a‑7b, or 42 U.S.C. § 1395nn, any other foreign or domestic statute related to any Medical Reimbursement Program or the regulations promulgated pursuant to such statutes or related domestic or foreign, federal, state or local statutes or regulations, or which are prohibited by binding rules of professional conduct, including but not limited to the following:  (a) knowingly and willfully making or causing to be made a false statement or representation of a material fact in any applications for any benefit or payment; (b) knowingly and willfully making or causing to be made any false statement or representation of a material fact for use in determining rights to any benefit or payment; (c) failing to disclose knowledge by a claimant of the occurrence of any event affecting the initial or continued right to any benefit or payment on its own behalf or on behalf of another with the intent to secure such benefit or payment fraudulently; (d) knowingly and willfully soliciting or receiving any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind or offering to pay such remuneration (i) in return for referring an individual to a Person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part by Medicare, Medicaid or other applicable Third Party Payors, or (ii) in return for purchasing, leasing or ordering or arranging for or recommending the purchasing, leasing or ordering of any good, facility, service, or item for which payment may be made in whole or in part by Medicare, Medicaid or other applicable Third Party Payors, except in each case for any such prohibited activity that could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.23.Licensing and Accreditation .  

(a)On the Effective Date, each of the Orthofix Entities has, to the extent applicable or required in connection with the business of such Orthofix Entity:  (i) obtained and maintains in good standing all material required licenses; (ii) to the extent reasonably determined to be material to the business of such Orthofix Entity in the industry in which it is engaged, obtained and maintains accreditation from all generally recognized accrediting agencies; (iii) obtained and maintains Medicaid Certification and Medicare Certification; and (iv) entered into and maintains in good standing its Medicare Provider Agreement and its Medicaid Provider Agreement, and all such required licenses are in full force and effect on the date hereof and have not been revoked or suspended or otherwise limited, and

(b)On each date after the Effective Date, each of the Orthofix Entities has, to the extent applicable:  (i) obtained and maintains in good standing all required licenses; (ii) to the extent prudent and customary in the industry in which it is engaged, obtained and maintains accreditation from all generally recognized accrediting agencies; (iii) obtained and maintains Medicaid Certification and Medicare Certification; and (iv) entered into and maintains in good standing its Medicare Provider Agreement and its Medicaid Provider Agreement, except in each case to the extent the absence of such license, accreditation, certification or good standing could not reasonably be expected to have a Material Adverse Effect.  All such required licenses are in full force and effect on the date hereof and have not been revoked or suspended or otherwise limited, except in each case to the extent such revocation, suspension or other limitation could not reasonably be expected to have a Material Adverse Effect.

SECTION 3.24.Other Regulatory Protection .  

(a)As of the Effective Date,

(i)none of the Orthofix Entities manufactures pharmaceutical products and each Orthofix Entity is in compliance in all material respects with all applicable rules, regulations and other requirements of the FDA, the FTC, OSHA the Consumer Product Safety Commission, the U.S. Customs Service and the U.S. Postal Service and all other state, federal or foreign regulatory authorities, or jurisdictions in which any of the Orthofix Entities do business or distribute and market products, and

 

First Amended and Restated Credit Agreement (Orthofix), Page 84


 

(ii)neither the FDA, the FTC, OSHA, the Consumer Product Safety Commission, nor any other such regulatory authority has requested (or, to the knowledge of any Responsible Officer, are considering requesting) any product recalls or other enforcement actions.

(b)On each date after the Effective Date,

(i)none of the Orthofix Entities manufactures pharmaceutical products and each Orthofix Entity is in compliance with all applicable rules, regulations and other requirements of the FDA, the FTC, OSHA the Consumer Product Safety Commission, the U.S. Customs Service and the U.S. Postal Service and all other state, federal or foreign regulatory authorities, or jurisdictions in which any of the Orthofix Entities do business or distribute and market products, except to the extent that any such noncompliance, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and

(ii)neither the FDA, the FTC, OSHA, the Consumer Product Safety Commission, nor any other such regulatory authority has requested (or, to the knowledge of any Responsible Officer, are considering requesting) any product recalls or other enforcement actions that (a) if not complied with, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect and (b) with which the Orthofix Entities have not complied within the time period allowed.

SECTION 3.25.Reimbursement From Third Party Payors .  The accounts receivable of the Orthofix Entities have been and will continue to be adjusted to reflect the reimbursement policies (both those most recently published in writing as well as those not in writing which have been verbally communicated) of Third Party Payors in all material respects.  In particular, accounts receivable relating to Third Party Payors do not and shall not exceed amounts any obligee is entered to receive under any capitation arrangement, fee schedule, discount formula, cost‑based reimbursement or other adjustment or limitation to its usual charges in all material respects.

SECTION 3.26.Material Agreements .  No Orthofix Entity is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in (a) except as set forth in clause (b) below, any agreement or instrument to which any such Person is a party, which default, individually or in the aggregate, has, or if not remedied within any applicable grace period could reasonably be expected to have, a Material Adverse Effect or (b) any Medicaid Provider Agreement, Medicare Provider Agreement or other agreement or instrument to which such Person is a party, which default has resulted in, or if not remedied within any applicable grace period could result in, the revocation, termination, cancellation or material suspension of Medicaid Certification or Medicare Certification of any such Person.

SECTION 3.27.Affiliate Transactions .  Except as set forth on Schedule 3.27, as of the Effective Date, there are no (a) Intercompany Loans or (b) supply agreements or arrangements that involve an obligation of any Loan Party owing to any Non-Loan Party or any other Affiliate of any Orthofix Entity.

SECTION 3.28.Common Enterprise .  Each Loan Party expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (a) successful operations of each of the other Loan Parties and (b) the credit extended by the Lenders to the Borrowers hereunder, both in their separate capacities and as members of the group of companies.  Each Loan Party has determined that execution, delivery, and performance of this Agreement and any other Loan Documents to be executed by such Loan Party is within its purpose, in furtherance of its direct and/or indirect business interests, will be of direct and indirect benefit to such Loan Party, and is in its best interest.

 

First Amended and Restated Credit Agreement (Orthofix), Page 85


 

SECTION 3.29.Foreign Subsidiaries .  

(a)Each Foreign Subsidiary of the Company is subject to civil and commercial laws, rules and regulations, including without limitation, with respect to its obligations under the Loan Documents to which it is a party (collectively, the "Applicable Foreign Loan Party Documents"), and the execution, delivery and performance by such Foreign Subsidiary of the Company of the Applicable Foreign Loan Party Documents constitute and will constitute private and commercial acts and not public or governmental acts.  No Foreign Subsidiary of the Company nor any of its property has any immunity from suit, execution, attachment or jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of the jurisdiction in which such Foreign Subsidiary of the Company is organized and existing, including but without limitation, with respect to its obligations under the Applicable Foreign Loan Party Documents.

(b)On the Effective Date, the Applicable Foreign Loan Party Documents are in proper legal form under the laws, rules and regulations of the jurisdiction in which such Foreign Subsidiary of the Company is organized and existing for the enforcement thereof against such Foreign Subsidiary of the Company under the laws, rules and regulations of such jurisdiction, and to ensure the legality, validity, enforceability, priority or admissibility in evidence of the Applicable Foreign Loan Party Documents, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.  On the Effective Date, it is not necessary to ensure the legality, validity, enforceability, priority or admissibility in evidence of the Applicable Foreign Loan Party Documents that the Applicable Foreign Loan Party Documents be filed, registered or recorded with, or executed or notarized before, any court or other authority in the jurisdiction in which any Foreign Subsidiary of the Company is organized and existing or that any registration charge or stamp or similar tax be paid on or in respect of the Applicable Foreign Loan Party Documents or any other document, except for (i) any such filing, registration, recording, execution or notarization as has been made, will be made by the Administrative Agent or counsel acting for the Administrative Agent, or is not required to be made until the Applicable Foreign Loan Party Document or any other document is sought to be enforced and (ii) any charge or tax as has been timely paid.

(c)On the Effective Date, there is no Tax imposed by any Governmental Authority in or of the jurisdiction in which such Foreign Subsidiary of the Company is organized and existing either (i) on or by virtue of the execution or delivery of the Applicable Foreign Loan Party Documents or (ii) on any payment to be made by such Foreign Subsidiary of the Company pursuant to the Applicable Foreign Loan Party Documents, except as has been disclosed to the Administrative Agent in writing.

(d)On the Effective Date, the execution, delivery and performance of the Applicable Foreign Loan Party Documents executed by such Foreign Subsidiary of the Company are, under applicable foreign exchange control regulations of the jurisdiction in which such Foreign Subsidiary of the Company is organized and existing, not subject to any notification or authorization except (i) such as have been made or obtained or (ii) such as cannot be made or obtained until a later date (provided that any notification or authorization described in clause (ii) shall be made or obtained as soon as is reasonably practicable).  

SECTION 3.30.Classification as Senior Indebtedness .  The Secured Obligations constitute "Senior Indebtedness" under and as may be defined in any agreement governing any outstanding Subordinated Indebtedness and the subordination provisions set forth in each such agreement are legally valid and enforceable against the parties thereto.

 

First Amended and Restated Credit Agreement (Orthofix), Page 86


 

SECTION 3.31.Tax Shelter Regulations .  No Borrower intends to treat the Transactions as being a "reportable transaction" (within the meaning of Treasury Regulation Section 1.6011 4).  In the event any Borrower determines to take any action inconsistent with such intention, the Borrower Representative will promptly notify the Administrative Agent thereof.  If the Borrower Representative so notifies the Administrative Agent, each Borrower acknowledges that one or more of the Lenders may treat its Loans and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112 1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such treasury regulation.

SECTION 3.32.EEA Financial Institutions .  No Loan Party is an EEA Financial Institution.

SECTION 3.33.Existing ABN AMRO Credit Documents .  (a) The commitments of each of the Original Agent (as defined below), the Successor Agent (as defined below) and each lender under the ABN Credit Agreement terminated prior to December 31, 2003, (b) the ABN Credit Agreement and each other ABN Credit Document was terminated and discharged prior to December 31, 2003, (c) all monetary obligations and indebtedness (the "ABN Obligations") to the Original Agent, the Successor Agent, each other secured party or any of their respective successors and assigns evidenced by the ABN Credit Documents were concurrently and indefeasibly repaid in full and irrevocably and unconditionally satisfied, released, discharged and terminated, and (d) all charges, Liens and other security interests of the Original Agent, the Successor Agent, each other secured party and each of their respective successors and assigns in the property of the Company, the Dutch Borrower, or any other Orthofix Entity in which the Company, the Dutch Borrower, or any other Orthofix Entity previously granted to the Original Agent, the Successor Agent, any other secured party or any of their respective successors and assigns to secure all or any portion of the ABN Obligations under the ABN Credit Documents and all guarantees of the ABN Obligations, were concurrently, irrevocably and unconditionally, terminated (opgezegd), waived (afstand gedaan), satisfied, released and discharged in full, in accordance with the applicable laws and in compliance with the relevant ABN Credit Documents.

As used in this Section 3.33, the following terms have the meanings specified below:

"ABN Assignment" means that certain Assignment of Pledged Interest in Orthofix International B.V., dated as of December 17, 1999, by and between the Original Agent and the Successor Agent.

"ABN Credit Agreement" means that certain Credit Agreement dated as of August 21, 1995 by and among National Westminster Bank Plc., New York and Nassau Branches (the "Original Agent"), ABN AMRO Bank N.V., New York Branch and each of its successors and assigns (the "Successor Agent"), Orthofix Inc., as borrower, and the Company, as amended, amended and restated, supplemented or otherwise modified from time to time.

"ABN Credit Documents" means, collectively, the ABN Credit Agreement, the Deed of Pledge, the ABN Assignment and all related instruments, documents and agreements.

"Deed of Pledge" means that certain Deed of Pledge and Transfer of the Right to Vote, dated as of September 26, 1995, by the Company to the Original Agent.

 

First Amended and Restated Credit Agreement (Orthofix), Page 87


 

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 is satisfied (or waived in accordance with Section 9.02 or otherwise agreed to be delivered on a post-closing basis as provided in Section 4.03 or Section 5.15):

(a)Credit Agreement and Loan Documents.  The Administrative Agent (or its counsel) shall have received (i) from each party hereto either (A) a counterpart of this Agreement signed on behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may include fax or other electronic transmission of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement, (ii) certificates representing the Equity Interests of the Borrowers and any other entity pledged pursuant to the Security Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor and (iii) except as set forth on Schedule 5.15, duly executed copies of the Loan Documents and such other certificates, documents, instruments and agreements as the Administrative Agent shall reasonably request in connection with the transactions contemplated by this Agreement and the other Loan Documents, including any promissory notes requested by a Lender pursuant to Section 2.09 payable to the order of each such requesting Lender, and written opinions addressed to the Administrative Agent, the Issuing Bank and the Lenders of the Loan Parties' U.S. counsel, UK counsel and Dutch counsel (provided that the Administrative Agent's counsel shall provide the UK and Dutch opinions), in each case acceptable to the Administrative Agent.

(b)Financial Statements and Projections.  The Lenders shall have received (i) audited consolidated financial statements of the Company for the 2013 and 2014 fiscal years, (ii) unaudited consolidating financial statements of the Company for the 2014 fiscal year, (iii) unaudited interim consolidated and consolidating financial statements for each of the Company, for the fiscal quarters ended March 31, 2015 and June 30, 2015, and such financial statements shall not, in the reasonable judgment of the Administrative Agent, reflect any material adverse change in the consolidated financial condition of the Loan Parties, as reflected in the audited, consolidated financial statements described in clause (i) of this paragraph and (iv) satisfactory Projections through August 31, 2019.

(c)Closing Certificates; Certified Certificate of Incorporation; Good Standing Certificates.  The Administrative Agent shall have received (i) a certificate of each Loan Party, dated the Effective Date and executed by any officer, director, manager or member of such Loan Party (or directors in the case of a Loan Party incorporated in England and Wales), which shall (A) certify the resolutions of its Board of Directors, members or other body authorizing the execution, delivery and performance of the Loan Documents to which it is a party, (B) identify by name and title and bear the signatures of the officers of such Loan Party authorized to sign the Loan Documents to which it is a party and, in the case of a Borrower, its Financial Officers or directors, and (C) contain appropriate attachments, including the charter, articles or certificate of organization or incorporation of each Loan Party certified, where applicable, by the relevant authority of the jurisdiction of organization of such Loan Party and a true and correct copy of its bylaws or operating, management or partnership agreement, or other organizational or governing documents, and (ii) a good standing certificate or comparable instrument for each Loan Party from its jurisdiction of organization.

(d)No Default Certificate.  The Administrative Agent shall have received a certificate, signed by the a Financial Officer of each Borrower, dated as of the Effective Date (i) stating that no Default has occurred and is continuing, (ii) stating that the representations and warranties

 

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contained in the Loan Documents are true and correct as of such date in all material respects as of such date, except that any representation and warranty which by its terms is made as of a specified date shall be true and correct in all material respects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall be true and correct in all respects, and (iii) certifying as to any other factual matters as may be reasonably requested by the Administrative Agent.

(e)Fees.  The Lenders and the Administrative Agent shall have received all fees required to be paid under any Fee Letter, and all other fees and expenses required to be reimbursed for which invoices have been presented (including the reasonable fees and expenses of legal counsel), before the Effective Date.  All such amounts may be paid with proceeds of Loans made on the Effective Date and will be reflected in the funding instructions given by the Borrower Representative to the Administrative Agent on or before the Effective Date.

(f)Lien Searches.  The Administrative Agent shall have received the results of a recent lien search in the jurisdiction of organization of each Loan Party reasonably requested by the Administrative Agent, and each jurisdiction reasonably requested by the Administrative Agent where assets of the Loan Parties, or such Loan Parties are located, and such search shall reveal no Liens on any of the assets of the Loan Parties except as permitted by Section 6.02.

(g)Credit Termination.  The Administrative Agent shall have received satisfactory evidence Indebtedness (including contingent Indebtedness) not permitted to exist under Section 6.01 has been repaid in full and all commitments for all such Indebtedness have been terminated.

(h)Funding Account.  The Administrative Agent shall have received a notice setting forth the deposit account of the Borrowers (the "Funding Account") to which the Administrative Agent is authorized by the Borrowers to transfer the proceeds of any Borrowings requested or authorized pursuant to this Agreement.

(i)Solvency.  The Administrative Agent shall have received a solvency certificate signed by a Financial Officer dated the Effective Date in form and substance reasonably satisfactory to the Administrative Agent.

(j)Insurance.  The Administrative Agent shall have received evidence of insurance coverage for each of the Loan Parties in form, scope, and substance reasonably satisfactory to the Administrative Agent and otherwise in compliance with the terms of this Agreement and the Security Agreement.

(k)Priority.  Subject to Sections 4.03 and 5.15 and Liens permitted by Section 6.02 and to the extent required by the Collateral Documents, the Administrative Agent shall have received evidence satisfactory to it of a first and prior lien on all Collateral, including without limitation, Intercompany Loans owing to any Loan Party listed on Schedule 6.01(a).

(l)Legal Due Diligence.  The Administrative Agent and its counsel, including without limitation, U.S. and UK counsel, shall have completed all legal due diligence, the results of which shall be satisfactory to Administrative Agent in its sole discretion.

(m)USA PATRIOT Act, Etc.  (i) The Administrative Agent and Lenders shall have received (x) at least five (5) days prior to the Effective Date, all documentation and other information regarding the Borrowers requested in connection with applicable "know your customer" and anti-money laundering rules and regulations, including the USA PATRIOT Act, to the extent request in writing of the

 

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Borrowers at least ten (10) days prior to the Effective Date and (y) a properly completed and signed IRS Form W-8 or W-9, as applicable, for each Loan Party, and (ii) to the extent any Loan Party qualifies as a "legal entity customer" under the Beneficial Ownership Regulation, at least five (5) days prior to the Effective Date, any Lender that has requested, in a written notice to a Loan Party as least ten (10) days prior to the Effective Date, a Beneficial Ownership Certification in relation to such Loan Party, shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).

(n)Other Documents.  The Administrative Agent shall have received such other documents as the Administrative Agent, the Issuing Bank, any Lender or their respective counsel may have reasonably requested other than those items to be delivered post-closing in accordance with Sections 4.03 and 5.15.

The Administrative Agent shall notify the Borrowers, the Lenders and the Issuing Bank of the Effective Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the obligations of 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 9.02) at or prior to 2:00 p.m., Local Time, on September 30, 2018 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

SECTION 4.02.Each Credit Event .  The obligation of each Lender to make a Loan on the occasion of any 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 in all material respects with the same effect as though made 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 (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date, and that any representation or warranty which is subject to any materiality qualifier shall be required to be true and correct in all respects).

(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, no Default shall have occurred and be continuing.

(c)In the case of a Borrowing to be denominated in a Foreign Currency, there shall not have occurred any change in national or international financial, political or economic conditions or currency exchange rates or exchange controls which in the reasonable opinion of the Administrative Agent, the Required Lenders (in the case of any Loans to be denominated in a Foreign Currency) or the Issuing Bank  (in the case of any Letter of Credit to be denominated in an Foreign Currency) would make it impracticable for such Borrowing to be denominated in the relevant Foreign Currency.

(d)After giving effect to any Borrowing or the issuance, amendment, renewal or extension of any Letter of Credit, Availability shall not be less than zero.

(e)       After giving effect to any Borrowing, the aggregate outstanding principal Dollar Amount of all Revolving Loans made to the Dutch Borrower shall not exceed the Dutch Borrower Sublimit.

 

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(f)       No event shall have occurred and no condition shall exist which has or could be reasonably expected to have a Material Adverse Effect.

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 Borrowers on the date thereof as to the matters specified in paragraphs (a), (b), (d) and (e) of this Section.

SECTION 4.03.Conditions to Borrowing .  The obligation of each Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is further subject to the satisfaction of the following conditions:

(a)the delivery of the good standing certificate from the state of Delaware of Orthofix Medical Inc. on or before August 3, 2018;

(b)the delivery of a written opinion addressed to the Administrative Agent, the Issuing Bank and the Lenders of the Loan Parties' Dutch counsel (provided that the Administrative Agent's counsel shall provide the Dutch opinions) on or before August 3, 2018; and

(c)the delivery of all Security Agreements, to the extent not previously delivered, executed by or on behalf of the Company, the Dutch Borrower, BVIII and Orthofix II B.V. on or before August 3, 2018.

ARTICLE V

Affirmative Covenants

Until the Payment in Full of all Obligations, each Loan Party executing this Agreement covenants and agrees, jointly and severally with all of the other Loan Parties, with the Lenders that:

SECTION 5.01.Financial Statements and Other Information .  The Borrower Representative will furnish to the Administrative Agent:

(a)within ninety (90) days after the end of each fiscal year of the Company and the Borrowers, (x) the Company's audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by Ernst & Young LLP, any other  independent public accountants of recognized national standing or otherwise acceptable to the Required Lenders (without a "going concern" or like qualification, commentary or exception, and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, accompanied by any management letter prepared by said accountant, and (y) the Company's unaudited consolidating balance sheet and related statement of operations as of the end of and for such year, and

(b)within sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of the Company, (i) its consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of such fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by a Financial Officer of the Borrower Representative as presenting fairly in all

 

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material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and if applicable, the absence of footnotes and (ii) its consolidating balance sheet and related statements of operations as of the end of and for such fiscal quarter and the then elapsed portion of such fiscal year;

(c)concurrently with any delivery of financial statements under clause (a) or (b) above (collectively or individually, as the context requires, the "Financial Statements"), a certificate of a Financial Officer of the Borrower Representative in substantially the form of Exhibit B or any other form approved by the Administrative Agent (i) certifying as presenting fairly in all material respects the financial condition and results of operations of the Company and its consolidated Subsidiaries on a consolidated and consolidating basis in accordance with GAAP consistently applied, (subject to normal year-end audit adjustments and if applicable, the absence of footnotes except with respect to the audited statements), (ii) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (iii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.12(a) and (b), (iv) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 3.04 and, if any such change has occurred, specifying the effect of such change on the Financial Statements accompanying such certificate; (v) setting forth either a list that identifies each Domestic Subsidiary of the Company that is an Immaterial Subsidiary as of the date of delivery of such Compliance Certificate or a confirmation that there is no change in such information since the later of the Effective Date or the date of the last such list, (vi) setting forth either a list that identifies each Material Domestic Subsidiary of the Company that is an not Wholly Owned as of the date of delivery of such Compliance Certificate or a confirmation that there is no change in such information since the later of the Effective Date or the date of the last such list and (vii) setting forth reasonably detailed calculations demonstrating (A) the amount of the Non-Loan Party Available Funds on such date of delivery and the amount of other Investments outstanding as permitted by clauses (h), (k), (l) and (m) of Section 6.04, (B) the amount of Indebtedness outstanding permitted by Section 6.01(l) and any Liens securing such Indebtedness permitted by Section 6.02(g), and (C) the amount of assets and properties sold, leased, transferred or disposed for such period and over the term of this Agreement permitted by Section 6.05(f);

(d)concurrently with any delivery of Financial Statements under clause (a) above, a certificate of the accounting firm that reported on such Financial Statements stating whether they obtained knowledge during the course of their examination of such Financial Statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines);

(e)as soon as available, but in any event no later than sixty (60) days after the end of each fiscal year of the Company, a copy of the detailed annual budget (including a projected consolidated balance sheet, income statement and cash flow statement and consolidating income statement) of the Company, presented on a quarterly basis with respect to the consolidated income statement only and on an annual basis with respect to all other items, of the upcoming fiscal year (the "Projections"), together with a summary of the material assumptions made in preparation of such annual budget or plan and otherwise in form reasonably satisfactory to the Administrative Agent;

(f)promptly and in any event within ten (10) days after the same become publicly available and without duplication of any documents or information delivered pursuant to another clause of this Section 5.01 or Section 5.02, copies of all periodic and other reports, proxy statements and other material information filed by the Company or any other Orthofix Entity with the SEC, or any Governmental Authority succeeding to any or all of the functions of the SEC, or with any national securities exchange, as the case may be;

 

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(g)promptly following any request therefor, copies of any detailed audit reports and final management letters submitted to the board of directors (or the audit committee of the board of directors) of the Company by independent accountants in connection with the accounts or books of any Orthofix Entity or any of their Subsidiaries, or any audit of any of them;

(h)promptly following any request therefor, (i) such other information regarding the operations, material changes in ownership of Equity Interests of the Company, business affairs and financial condition of any Orthofix Entity, or compliance with the terms of this Agreement, as the Administrative Agent or any Lender may reasonably request, including a detailed listing of all changes to Intercompany Loans and any other intercompany advances or transfers made (A) among the Orthofix Entities, (B) among the Loan Parties, (C) between (x) any one or more Loan Parties and (y) any one or more Non-Loan Parties and (D) between (x) any one or more Orthofix Entities and (y) any one or more Affiliates of any Orthofix Entity and (ii) information and documentation reasonably requested by the Administrative Agent or any Lender for purposes of compliance with applicable "know your customer" and anti-money laundering rules and regulations, including the Patriot Act and the Beneficial Ownership Regulation; and

(i)promptly after any request therefor by the Administrative Agent or any Lender, copies of (i) any documents described in Section 101(k)(1) of ERISA that the Company or any ERISA Affiliate may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l)(1) of ERISA that the Company or any ERISA Affiliate may request with respect to any Multiemployer Plan; provided that if the Company or any ERISA Affiliate has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Company or the applicable ERISA Affiliate shall promptly make a request for such documents and notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof.

The Company represents and warrants that it, its controlling Person and any Subsidiary, in each case, if any, files its financial statements with the SEC and/or makes its financial statements available to potential holders of its 144A securities, and, accordingly, the Company hereby (x) authorizes the Administrative Agent to make the financial statements to be provided under Section 5.01(a)(i) and (ii) and Section 5.01(b) above, along with the Loan Documents, available to Public-Siders and (y) agrees that at the time such financial statements are provided hereunder, they shall already have been made available to holders of its securities.  The Company will not request that any other material be posted to Public-Siders without expressly representing and warranting to the Administrative Agent in writing that such materials do not constitute material non-public information within the meaning of the federal securities laws or that the Company has no outstanding publicly traded securities, including 144A securities.  In no event shall the Administrative Agent post compliance certificates or budgets to Public-Siders.

Documents required to be delivered pursuant to Section 5.01(a), (b), (f) and (g) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (x) on which the Company posts such documents, or provides a link thereto on the Company's website; or (y) on which such documents are posted on the Company's behalf on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access (whether a commercial, third party website or whether sponsored by the Administrative Agent); provided that the Borrower Representative shall notify (by facsimile or electronic mail) the Administrative Agent of the posting of any such documents (who shall then give notice of any such posting to the Lenders) and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents or provides a link thereto.  

SECTION 5.02.Notices of Material Events .  The Borrower Representative will furnish to the Administrative Agent prompt (but in any event within any time period that may be specified below)(for distribution to each Lender) written notice upon any Responsible Officer of the Loan Parties becoming aware of the following:

(a)the occurrence of any Default;

 

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(b)receipt of any notice of any investigation by a Governmental Authority or any litigation or proceeding commenced or threatened in writing against any Orthofix Entity that (i) alleges criminal misconduct by any Orthofix Entity (except to the extent disclosure of such investigation is prohibited by applicable Law or court order), (ii) alleges the violation of, or seeks to impose remedies against any Orthofix Entity under, any Environmental Law or related Requirement of Law, or seeks to impose Environmental Liability, that could reasonably be expected to have a Material Adverse Effect; (iii) asserts liability on the part of any Orthofix Entity in excess of the Dollar Amount of $2,000,000 in respect of any tax, fee, assessment, or other governmental charge, (iv) involves any material product recall with respect to any Orthofix Entity or (v) could reasonably be expected to have a Material Adverse Effect;

(c)the occurrence of (i) any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Orthofix Entities in an aggregate amount exceeding the Dollar Amount of $500,000, (ii) the United Kingdom Pensions Regulator issuing a financial support direction or a contribution notice (as those terms are defined in the United Kingdom Pensions Act 2004) in relation to any Foreign Pension Plan, (iii) any amount being due to any Foreign Pension Plan pursuant to Section 75 or 75A of the United Kingdom Pensions Act 1995, and/or (iv) an amount becoming payable under section 75 or 75A of the United Kingdom Pensions Act of 1995;

(d)any involvement of any Orthofix Entity in a pending civil or criminal investigation, criminal action or civil action, proposed debarment, exclusion or other sanctioning action related to any Federal, state, local or foreign healthcare program;

(e)the institution of any investigation or proceeding against any Orthofix Entity to suspend, revoke or terminate or which may reasonably be expected to result in the termination of any Medicaid Provider Agreement, Medicaid Certification, Medicare Provider Agreement, Medicare Certification, material Health Care Permit or exclusion from any Medical Reimbursement Program or Third Party Payor Arrangement;

(f)receipt of any notice from National Westminster Bank Plc., New York and Nassau Branches, ABN AMRO Bank N.V., New York Branch or any of their respective successors and assigns, any affiliate of any of the foregoing or any other Person (i) asserting any claims over any assets of the Company, the Dutch Borrower or any other Orthofix Entity related to the ABN Obligations (as such term is defined in Section 3.33 of this Agreement) or any other Indebtedness owed to such Person or (ii) asserting that the ABN Obligations or any other Indebtedness or other obligations owing to National Westminster Bank Plc., New York and Nassau Branches, ABN AMRO Bank N.V., New York Branch or any of their respective successors and assigns are secured, in whole or in part, by any Lien or other security interest granted pursuant to any ABN Credit Document or otherwise;

(g)any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect; and

(h)any change in the information provided in the Beneficial Ownership Certification delivered to such Lender that would result in a change to the list of beneficial owners identified in such certification.

Each notice delivered under this Section shall be accompanied by a statement of a Financial Officer or other executive officer of the Borrower Representative setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

 

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SECTION 5.03.              Existence; Conduct of Business .  Each Loan Party will, and will cause each other Orthofix Entity to, (a) do or cause to be done all things necessary to preserve, renew and keep in full force and effect its (i) legal existence under the laws of the jurisdiction of its organization and (ii) the rights, qualifications, licenses, permits, franchises, governmental authorizations, intellectual property rights, licenses and permits material to the conduct of its business (including Health Care Permits), (b) maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 and (c) carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and reasonably related or incidental fields of enterprise thereto.

SECTION 5.04.Payment of Obligations .  Each Loan Party will, and will cause each Orthofix Entity to, pay or discharge (a) all Material Indebtedness and (b) all other material liabilities and obligations, including Taxes, before the same shall become delinquent or in default, except, in the case of clause (b) where (i) the validity or amount thereof is being contested in good faith by appropriate proceedings, (ii) such Orthofix Entity has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (iii) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect; provided, however, that each Loan Party will, and will cause each Orthofix Entity to, remit withholding taxes and other payroll taxes to appropriate government taxing authorities as and when claimed to be due, notwithstanding the foregoing exceptions.

SECTION 5.05.Maintenance of Properties .  Each Loan Party will, and will cause each Orthofix Entity to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear and casualty and condemnation events excepted.

SECTION 5.06.Books and Records; Inspection Rights .  Each Loan Party will, and will cause each Orthofix Entity to, (a) keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities and (b) permit any representatives designated by the Administrative Agent (including employees of the Administrative Agent, or any consultants, accountants, lawyers, agents and appraisers retained by the Administrative Agent), upon reasonable prior notice, to visit and inspect its properties, conduct at the Orthofix Entities' premises field examinations of the Orthofix Entity's assets, liabilities, books and records, including examining and making extracts from its books and records, environmental assessment reports and Phase I or Phase II studies, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested; provided, however, that (i) so long as no Default or Event of Default has occurred and is continuing, the Borrowers shall only be obligated to pay the expenses of the Administrative Agent in connection with one such visit, inspection and discussion per fiscal year and (ii) when an Event of Default exists the Administrative Agent or any Lender (or any of their respective representatives or independent contractors) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and without advance notice.  The Administrative Agent and the Lenders shall give the Company the opportunity to participate in any discussions with the Company's independent public accountants; provided that the Administrative Agent and/or the Lenders shall give the Company not less than ten (10) Business Days' notice prior to initiating discussions with the Company's independent public accountants.  Notwithstanding the foregoing, no Orthofix Entity shall be required to disclose (a) any materials subject to a confidentiality obligation binding upon such Orthofix Entity to the extent such disclosure would violate such obligation or (b) any communications protected by attorney-client privilege the disclosure or inspection of which would waive such privilege.  The Loan Parties acknowledge that subject to Section 9.12, the Administrative Agent, after exercising its rights of inspection, may prepare and distribute to the Lenders certain Reports pertaining to the Orthofix Entities' assets for internal use by the Administrative Agent and the Lenders.

 

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SECTION 5.07.              Compliance with Laws and Material Contractual Obligations .  Each Loan Party will, and will cause each Orthofix Entity to, (a) comply in all material respects with each Requirement of Law applicable to it or its property (including without limitation Environmental Laws, Titles XVIII and XIX of the Social Security Act, Medicare Regulations, Medicaid Regulations, Health Care Laws and the Health Insurance Portability Act of 1996) and requirements of Third Party Payor Arrangements, (b) obtain and maintain all material licenses, permits, certifications and approvals of all applicable Governmental Authorities as are required for the conduct of its business as currently conducted and herein contemplated, including without limitation professional licenses, appropriate Health Care Permits (including, as applicable, Health Care Permits necessary for it to be eligible to receive payment and compensation from and to participate in any Third Party Payor Arrangements), Medicaid Certifications and Medicare Certifications, (c) perform in all material respects its obligations under material agreements to which it is a party, except, in each case, where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect and (d) keep and maintain, in all material respects,  all records required to be maintained by any Governmental Authority or otherwise under, or in compliance with, any Health Care Law.  Specifically, but without limiting the foregoing, and except where any such failure to comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect:  (x) billing policies, arrangements, protocols and instructions shall comply with reimbursement requirements under Medicare, Medicaid and other Medical Reimbursement Programs and Third Party Payor Arrangements and shall be administered by properly trained personnel; and (y) medical director compensation arrangements and other arrangements with referring physicians shall comply with applicable Health Care Laws.  Each Orthofix Entity will maintain in effect and enforce policies and procedures designed to ensure compliance by such Orthofix Entity and its respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.  Each Orthofix Entity shall maintain a corporate and health care regulatory compliance program ("RCP") which addresses the requirements of Health Care Laws, including without limitation fraud and abuse and HIPAA, and includes at least the following components: (i) standards of conduct and procedures that describe compliance policies regarding laws with an emphasis on prevention of fraud and abuse; (ii) a specific officer within high-level personnel identified as having overall responsibility for compliance with such standards and procedures; (iii) training and education programs which effectively communicate the compliance standards and procedures to employees and agents, including fraud and abuse laws and illegal billing practices; (iv) auditing and monitoring systems and reasonable steps for achieving compliance with such standards and procedures including publicizing a reporting system to allow employees and other agents to anonymously report criminal or suspect conduct and potential compliance problems; (v) disciplinary guidelines and consistent enforcement of compliance policies including discipline of individuals responsible for the failure to detect violations of the RCP; and (vi) mechanisms to immediately respond to detected violations of the RCP. Each Orthofix Entity shall modify such RCPs from time to time, as may be reasonably necessary to ensure continuing compliance with all applicable Health Care Laws. Upon reasonable request, the Administrative Agent (and/or their consultants) shall be permitted to review such RCPs.

SECTION 5.08.Use of Proceeds .

(a)The proceeds of the Loans and the Letters of Credit will be used only for working capital and other general corporate purposes of the Borrowers (including Permitted Acquisitions, Investments permitted pursuant to Section  6.04 and Restricted Payments permitted pursuant to Section 6.08).  No part of the proceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board, including Regulations T, U and X.  Letters of Credit will be issued only to support transactions of the Loan Parties entered into in the ordinary course of business.

 

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(b)The Borrowers will not request any Borrowing or Letter of Credit, and no Borrower shall use, and each Borrower shall procure that each of its Subsidiaries and other Orthofix Entities and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (a) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (b) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the U.S. or in a European Union member state, or (c) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

SECTION 5.09.Accuracy of Information .  The Loan Parties will ensure that any information, including financial statements or other documents (other than Projections, other forward looking information and information of a general economic nature), furnished to the Administrative Agent or the Lenders in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof or waiver hereunder or thereunder (taken as a whole and as modified or supplemented by other information so  furnished) contains when furnished no material misstatement of fact or omits to state any material fact necessary to make the statements therein (taken as a whole), in the light of the circumstances under which they were made, not misleading; provided that, with respect to the Projections, the Loan Parties will cause the Projections to be prepared in good faith based upon assumptions believed to be reasonable at the time delivered (it being recognized by the Lenders that any projections as to future events are not to be viewed as facts or factual information and that actual results during the period or periods covered by any such Projections may differ from projected results, and such differences may be material).

SECTION 5.10.Insurance .  Each Loan Party will, and will cause each Orthofix Entity to, maintain with financially sound and reputable carriers (a) insurance in such amounts and against such risks (including loss or damage by fire and loss in transit; theft, burglary, pilferage, larceny, embezzlement, and other criminal activities; business interruption; and general liability) and such other hazards, as is customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations and (b) all insurance required pursuant to the Collateral Documents.  The Borrowers will furnish to the Lenders, upon request of the Administrative Agent, but no less frequently than annually, information in reasonable detail as to the insurance so maintained.

SECTION 5.11.Appraisals .  At any time after the occurrence of and during the continuation of an Event of Default that the Administrative Agent requests, each Loan Party will, and will cause each Orthofix Entity to, provide the Administrative Agent with appraisals or updates thereof of their assets as requested by the Administrative Agent, including, without limitation, Inventory, Equipment and Real Property, from an appraiser selected and engaged by the Administrative Agent, and prepared on a basis satisfactory to the Administrative Agent, such appraisals and updates to include, without limitation, information required by any applicable Requirement of Law; provided, however, that no more than one such appraisal per calendar year shall be at the sole expense of the Borrowers.

SECTION 5.12.Casualty and Condemnation .  The Borrower Representative will

(a)(i) furnish to the Administrative Agent and the Lenders prompt written notice of any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of the Collateral or interest therein under power of eminent domain or by condemnation or similar proceeding and (ii) will ensure that, if applicable, the Net Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of this Agreement and the Collateral Documents; and

 

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(b)furnish to the Administrative Agent and the Lenders prompt written notice of any casualty or other insured damage to any material portion of the tangible and intangible assets and properties of Subsidiaries (other than Immaterial Subsidiaries) not constituting Collateral, or the commencement of any action or proceeding for the taking of any material portion o