Advanced Medical Optics (EYE)

2.06 Mandatory Prepayments.

(a) The Borrower shall promptly (and in any event within five (5) Business Days) after receipt of the Net Cash Proceeds by the Borrower or any of its Subsidiaries from (i) the Disposition of any assets of the Borrower or any of its Subsidiaries (other than any Disposition of assets pursuant to clause (a), (b), (c), (d), (e), (g), (h) or (k) of Section 8.05) for an aggregate amount of $40,000,000 or more after the Closing Date (provided however that the Net Cash Proceeds of any Dispositions of assets pursuant to Section 8.05(f) shall not be considered for purposes of the $40,000,000 threshold and an amount equal to such Net Cash Proceeds shall be promptly and in any event within five (5) Business Days after receipt thereof used to prepay the Term Loans in the manner set forth below), (ii) the incurrence or issuance by the Borrower or any of its Subsidiaries of any Indebtedness or Preferred Stock (other than Indebtedness or Preferred Stock incurred or issued pursuant to clause (a), (b), (c), (d)(i), (e), (f), (g), (i), (j), (k), (l), (m), (n), (o), (p) or (q) of Section 8.03), and (iii) any Extraordinary Receipt received by or paid to or for the account of the Borrower or any of its Subsidiaries in an aggregate amount of $30,000,000 or more in any Fiscal Year and not otherwise included in clause (i) or (ii) above, prepay an aggregate principal amount of the Term Loans in an amount equal to 100% of the amount of such Net Cash Proceeds. Each such prepayment shall be applied to the Term Loans (applied first to the principal amortization payments due on the repayment dates set forth in Section 2.08(b) occurring within the 12 months following such prepayment in direct order of maturity and second ratably to the remaining principal amortization payments scheduled for the other repayment dates set forth in Section 2.08(b)).

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With respect to any Net Cash Proceeds (I) realized under a Disposition described in clause (i) above (other than Net Cash Proceeds realized in connection with the Disposition of assets pursuant to Section 8.05(f), which shall not be subject to the reinvestment rights set forth in this sentence) or (II) described in clause (iii) above, at the option of the Borrower (as elected by the Borrower in writing to the Administrative Agent no later than five (5) Business Days after the receipt of any related Net Cash Proceeds), and so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may reinvest all or any portion of such Net Cash Proceeds in assets useful in the business of the Borrower and its Subsidiaries so long as within 365 days after the receipt of such Net Cash Proceeds, such reinvestment shall have been consummated (with any such reinvestments being subject to the terms of this Agreement); provided further, however, that any Net Cash Proceeds not so reinvested after such 365-day period shall be immediately applied to the prepayment of the Loans as set forth above. Furthermore, in the case of each Fiscal Year (commencing with the Fiscal Year ending December 31, 2007; provided, however that solely with respect to the Fiscal Year ending December 31, 2007, Excess Cash Flow shall only be measured from the Closing Date to December 31, 2007), not later than five Business Days after the date on which the financial statements referred to in Section 7.01(a) for such Fiscal Year are required to be delivered to the Administrative Agent, the Borrower shall prepay the Term Loans (applied first to the principal amortization payments due on the repayment dates set forth in Section 2.08(b) occurring within the 12 months following such prepayment in direct order of maturity and second ratably to the remaining principal amortization payments scheduled for the other repayment dates set forth in Section 2.08(b)) in an amount equal to (x) 50% of Excess Cash Flow for such Fiscal Year minus (y) the aggregate principal amount of Term Loans voluntarily prepaid pursuant to Section 2.05 and Revolving Credit Loans voluntarily prepaid pursuant to Section 2.05 (to the extent accompanied by a reduction of the Revolving Credit Commitments in an equal amount pursuant to Section 2.07), in each case during such Fiscal Year (excluding the aggregate principal amount of any such voluntary prepayments made with the proceeds of any financings with respect to such prepayments); provided that (A) the percentage referred to above in this sentence shall be reduced to 25% if the Consolidated Total Leverage Ratio as of the end of such Fiscal Year is no greater than 3.50 to 1.00 but greater than 2.50 to 1.0 and (B) no prepayment using any percentage of Excess Cash Flow shall be required pursuant to this sentence if the Consolidated Total Leverage Ratio as of the end of such Fiscal Year is no greater than 2.50 to 1.00.

(b) If for any reason the Revolving Credit Outstandings at any time exceed the Revolving Credit Facility then in effect, the Borrower shall immediately prepay Revolving Credit Loans, Swing Line Loans and L/C Borrowings and/or Cash Collateralize the L/C Obligations (other than the L/C Borrowings) in an aggregate amount equal to such excess; provided, however, that the Borrower shall not be required to Cash Collateralize the L/C Obligations pursuant to this Section 2.06(b) unless after the prepayment in full of the Revolving Credit Loans, the Swing Line Loans and the L/C Borrowings the Revolving Credit Outstandings exceed the Revolving Credit Facility then in effect.

(c) The Borrower shall, on each Business Day, Cash Collateralize the L/C Obligations in an amount (if any) equal to the amount by which the L/C Obligations exceeds the Letter of Credit Sublimit on such Business Day.

(d) Prepayments of the Revolving Credit Facility made pursuant to clause (b) above shall be first applied ratably to the L/C Borrowings and the Swing Line Loans until such L/C Borrowings and Swing Line Loans are paid in full, second applied ratably to the Revolving Credit Loans then outstanding until such Loans are paid in full and third used to Cash Collateralize the remaining L/C Obligations. Upon the drawing of any Letter of Credit that has been Cash Collateralized, the funds held as Cash Collateral shall be applied (without any further action by or notice to or from the Borrower or any other Loan Party) to reimburse the L/C Issuer or Revolving Credit Lenders, as applicable.

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(e) If as of any Determination Date (i) the Dollar Equivalent of the Revolving Credit Outstandings exceeds the Revolving Credit Facility then in effect, (ii) the Dollar Equivalent of the Outstanding Amount of all Revolving Credit Loans denominated in a Foreign Currency exceeds the Foreign Currency Sublimit then in effect or (iii) the Dollar Equivalent of all L/C Obligations exceeds the Letter of Credit Sublimit, in each case, the Borrower shall, on such Determination Date, prepay Revolving Credit Loans denominated in Foreign Currencies and/or Cash Collateralize Letters of Credit denominated in a Foreign Currency in an aggregate amount equal to such excess; provided that to the extent that the Borrower has a Swap Contract with a counterparty reasonably acceptable to the Administrative Agent for the Foreign Currency of such Revolving Credit Loan or Letter of Credit, such Swap Contract shall be considered in making the calculation in this clause (e).

(f) Within the parameters of the applications set forth above, prepayments shall be applied first to Base Rate Loans and then to Eurocurrency Rate Loans. All prepayments under this Section 2.06 shall be made together with accrued interest to the date of such prepayment on the principal amount prepaid, together with any additional amounts required to Section 3.05. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.06 shall be in excess of the amount of the Base Rate Loans at the time outstanding (an “Excess Amount”), only the portion of the amount of such prepayment as is equal to the amount of such outstanding Base Rate Loans shall be immediately prepaid and, at the election of the Borrower, the Excess Amount shall be either (A) deposited in an escrow account on terms satisfactory to the Administrative Agent and applied to the prepayment of Eurocurrency Rate Loans on the last day of the then next-expiring Interest Period for Eurocurrency Rate Loans; provided that (i) interest in respect of such Excess Amount shall continue to accrue thereon at the rate provided hereunder for the Loans which such Excess Amount is intended to repay until such Excess Amount shall have been used in full to repay such Loans and (ii) at any time while a Default has occurred and is continuing, the Administrative Agent may, and upon written direction from the Required Lenders shall, apply any or all proceeds then on deposit to the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid immediately, together with any amounts owing to the Lenders under Section 3.05.