Exhibit 10.1
Execution Copy
CREDIT AGREEMENT
dated as of
August 12, 2011
among
BLUELINX BUILDING PRODUCTS CANADA LTD.
as Borrower
and
THE LENDERS FROM TIME TO TIME PARTIES HERETO
as Lenders
and
CIBC ASSET-BASED LENDING INC.
as Agent

 

 

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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of August 12, 2011 and is entered into among
BLUELINX BUILDING PRODUCTS CANADA LTD., as Borrower, the Lenders from time to
time parties hereto, as Lenders, and CIBC Asset-Based Lending Inc., as Agent.
RECITALS
A. The Lenders have agreed to provide certain credit facilities to the Borrower.
NOW THEREFORE, in consideration of the mutual conditions and agreements set
forth in this Agreement and for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms As used in this Agreement, the following terms have the
meanings specified below:
“Acceptance Fee” means a fee payable by the Borrower to the Agent for the
account of a Lender in Canadian Dollars with respect to the acceptance of a
Bankers Acceptance or the making of a BA Equivalent Loan, calculated on the face
amount of the Bankers Acceptance or the BA Equivalent Loan at a rate per annum
equal to the Applicable Margin from time to time in effect on the basis of the
actual number of days in the applicable Contract Period (including the date of
acceptance and excluding the date of maturity) and a year of 365 days, (it being
agreed that the Applicable Margin in respect of a BA Equivalent Loan is
equivalent to the Applicable Margin otherwise applicable to the BA Borrowing
which has been replaced by the making of such BA Equivalent Loan pursuant to
Section 2.11(h)).
“Access Agreement” means an access and use agreement executed by the Parent and
by the Parent Credit Facility Lender, providing to the Agent access and use of
the books and records of the Parent and providing for the Parent to continue to
provide certain services under the Services Agreement which agreement shall be
in form and substance satisfactory to all parties thereto, acting reasonably.
“Accounts” means, in respect of each Credit Party, all of such Credit Party’s
now existing and future: (a) accounts (as defined in the PPSA), and any and all
other receivables (whether or not specifically listed on schedules furnished to
the Agent), including all accounts created by, or arising from, all of such
Credit Party’s sales, leases, loans, rentals of goods or renditions of services
to its customers, including those accounts arising under any of such Credit
Party’s trade names or styles, or through any of such Credit Party’s divisions;
(b) any and all instruments, documents, bills of exchange, notes or any other
writing that evidences a monetary obligation and chattel paper (including
electronic chattel paper) (all as defined in the PPSA); (c) unpaid seller’s or
lessor’s rights (including rescission, replevin, reclamation, repossession and
stoppage in transit) relating to the foregoing or arising therefrom;

 

 

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(d) rights to any goods represented by any of the foregoing, including rights to
returned, reclaimed or repossessed goods; (e) reserves and credit balances
arising in connection with or pursuant hereto; (f) guarantees, indemnification
rights, supporting obligations, payment intangibles, tax refunds and letter of
credit rights; (g) insurance policies or rights relating to any of the
foregoing; (h) intangibles pertaining to any and all of the foregoing (including
all rights to payment, including those arising in connection with bank and
non-bank credit cards), and including books and records and any electronic media
and software relating thereto; (i) notes, deposits or property of borrowers or
other account debtors securing the obligations of any such borrowers or other
account debtors to such Credit Party; (j) cash and non cash proceeds (as defined
in the PPSA) of any and all of the foregoing; and (k) all monies and claims for
monies now or hereafter due and payable in connection with any and all of the
foregoing or otherwise.
“Acquisition” means any transaction, or any series of related transactions,
consummated after the Effective Date, by which any Credit Party, directly or
indirectly, by means of a take-over bid, tender offer, amalgamation, merger,
purchase of assets or otherwise (a) acquires any business or all or
substantially all of the assets of any Person engaged in any business,
(b) acquires control of securities of a Person engaged in a business
representing more than 50% of the ordinary voting power for the election of
directors or other governing position if the business affairs of such Person are
managed by a board of directors or other governing body, (c) acquires control of
more than 50% of the ownership interest in any Person engaged in any business
that is not managed by a board of directors or other governing body, or
(d) otherwise acquires Control of a Person engaged in a business.
“Action Request” means any request received by any Credit Party or any of its
Subsidiaries from any Governmental Authority under any Environmental Law whereby
such Governmental Authority requests that it take action or steps or do acts or
things in respect of any property or assets in the charge, management or control
of such Credit Party to remediate a matter which is not or is alleged not to be
in compliance with all Environmental Laws.
“Adjusted Tangible Net Worth” means, for the Credit Parties on a consolidated
basis, the excess of total consolidated assets over total consolidated
liabilities, as determined in accordance with GAAP on a consistent basis,
provided, however, that the determination of total consolidated assets shall
exclude (i) all goodwill, organizational expenses, research and development
expenses, trade marks, trade mark applications, trade names, copyrights,
patents, patent applications, licenses and rights in any thereof, and other
similar intangibles, (ii) all prepaid expenses, deferred charges or unamortized
debt discount and expense, (iii) all reserves carried and not deducted from
consolidated assets, (iv) Equity Securities of, obligations or other securities
of, or capital contributions to, or investments in, any Subsidiary, (v)
securities which are not readily marketable, (vi) cash held in a sinking fund or
other analogous fund established for the purpose of redemption, retirement or
prepayment of Equity Securities or Indebtedness, (vii) any write-up in the book
value of any asset resulting from a revaluation thereof after the acquisition
thereof by the Borrower or any Credit Party, as the case may be, and (viii) any
items not included in clauses (i) through (vii) above which are treated as
intangibles under GAAP.
“Administrative Questionnaire” means an administrative questionnaire in a form
supplied by the Agent.

 

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“Affiliate” means, (a) any Person which, directly or indirectly, Controls, is
Controlled by or is under common Control with any other Person; (b) any Person
which beneficially owns or holds, directly or indirectly, 10% or more of any
class of voting stock or equity interest (including partnership interests) of
any other Person; (c) any Person, 10% or more of any class of the voting stock
(or if such Person is not a corporation, 10% or more of the equity interest,
including partnership interests) of which is beneficially owned or held,
directly or indirectly, by any other Person; or (d) any Person related within
the meaning of the ITA to any such Person and includes any “Affiliate” within
the meaning specified in the Canada Business Corporations Act on the date
hereof.
“Agent” means CIBC Asset-Based Lending Inc., in its capacity as Agent for the
Lenders hereunder, or any successor Agent appointed pursuant to Section 8.9.
“Agreement” means this credit agreement and the schedules and exhibits hereto
and any amendments, restatements, supplements or other modifications to this
credit agreement or the schedules or exhibits made at any time and from time to
time.
“Applicable Law” means all federal, provincial, municipal, foreign and
international statutes, acts, codes, ordinances, decrees, treaties, rules,
regulations, municipal by-laws, judicial or arbitral or administrative or
ministerial or departmental or regulatory judgments, orders, decisions, rulings
or awards or any provisions of the foregoing, including general principles of
common and civil law and equity, and all policies, practices and guidelines of
any Governmental Authority binding on or affecting the Person referred to in the
context in which such word is used (including, in the case of tax matters, any
accepted practice or application or official interpretation of any relevant
taxation authority).
“Applicable Margin” means, with respect to any Loan, the applicable rate per
annum, expressed as a percentage, set forth in the relevant column of the table
below:

      BA Borrowing or LIBO Rate Loan   Canadian Prime Loan or Base Rate Loan
Applicable Margin   Applicable Margin 2.50%   1.00%

“Applicable Percentage” means with respect to any Lender, the percentage of the
total Commitments represented by such Lender’s Commitment. If any Commitments
have terminated or expired, the Applicable Percentages in respect of the
terminated or expired Commitments shall be determined based upon the relevant
Commitments most recently in effect (i.e., prior to their termination or
expiry), giving effect to any assignments.
“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.4), and accepted by the Agent, in the form of Exhibit I or any
other form approved by the Agent.

 

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“Authorization” means, with respect to any Person, any authorization, order,
permit, approval, grant, licence, consent, right, franchise, privilege,
certificate, judgment, writ, injunction, award, determination, direction,
decree, by-law, rule or regulation of any Governmental Authority having
jurisdiction over such Person, whether or not having the force of Applicable
Law.
“Availability Reserves” means, as of any date of determination, such amounts as
the Agent may from time to time establish and revise in its Permitted Discretion
reducing the Borrowing Base which would otherwise be available to the Borrower
under the lending formulas provided for herein (a) to reflect criteria, events,
conditions, contingencies or risks which, as determined by the Agent in its
Permitted Discretion, do or may affect either (i) any component of the Borrowing
Base or its value, (ii) the assets, business, operations, industry, financial
performance, financial condition or prospects of the Credit Parties, or
(iii) the security interests and other rights of the Agent in the Collateral
(including the enforceability, perfection and priority thereof, or the
realization thereon), or (b) to reflect the Agent’s reasonable belief that any
collateral report or financial information furnished by or on behalf of the
Borrower to the Agent is or may have been incomplete, inaccurate or misleading,
or (c) in respect of any state of facts which the Agent determines constitutes a
Default or an Event of Default. Without limiting the foregoing, the Agent, in
its Permitted Discretion, may establish and/or increase Availability Reserves
(but without duplication) in respect of: (a) (i) rental payments or similar
charges for any of the leased premises of any Credit Party or other collateral
locations where Inventory or books or records are kept for which the relevant
Credit Party has not delivered to the Agent a landlord’s waiver or bailee’s
letter substantially in the form attached hereto as Exhibits G and H,
respectively, plus (ii) any other fees or charges owing by any Credit Party to
any applicable warehousemen or third party processor (all as determined by the
Agent in its reasonable business judgement); (b) any reserve established by the
Agent on account of statutory claims, deemed trusts, or inventory subject to
rights of suppliers under Section 81.1 of the BIA (generally known as the
“30-day goods” rule) or under any other Applicable Law; (c) liabilities of any
Credit Party under any Blocked Account Agreement, (d) employee or employee
benefit related liabilities and any other claims which may have priority over
the claims of the Agent and the Lenders, including Priority Payables;
(e) liabilities arising under or in respect of any Pension Plan which, if not
paid, could result in a Lien on any of the assets of any Credit Party,
(f) claims by Her Majesty in Right of Canada made pursuant to Section 224(1.2)
or 224(1.3) of the ITA, (g) claims pursuant to any provision of the Canada
Pension Plan or the Employment Insurance Act (Canada) that refers to subsection
224(1.2) of the ITA and provides for the collection of a contribution (as
defined in the Canada Pension Plan), or employee’s premium or employer’s premium
(as defined in the Employment Insurance Act (Canada)), or a premium under
Part VII.1 of that Act, and of any related interest, penalties or other amounts,
(h) claims pursuant to any provision of provincial legislation that has a
similar purpose to subsection 224(1.2) of the ITA, or that refers to that
subsection, to the extent that it provides for the collection of a sum, and of
any related interest, penalties or other amounts, where the sum has been
withheld or deducted by a person from a payment to another person and is in
respect of a tax similar in nature to the income tax imposed on individuals
under the ITA or is of the same nature as a contribution under the Canada
Pension Plan if the province is a “province providing a comprehensive pension
plan” as defined in subsection 3(1) of the Canada Pension Plan and the
provincial legislation establishes a “provincial pension plan” as defined in
that subsection; (i) Cash Management Reserves, (j) Bank Product Reserves,
(k) royalties payable to Persons who are not Credit Parties in respect of
licensed merchandise, if applicable, and (l) and such other reserves as the
Agent may at any time or times deem necessary in its Permitted Discretion as a
result of (x) negative forecasts and/or trends in the Borrower’s business,
operations, industry, prospects, profits, operations or financial condition or
assets or (y) other issues, circumstances or facts that could otherwise
negatively impact the Borrower, its business, operations, industry, prospects,
profits, operations or financial condition or assets.

 

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“BA Borrowing” means a Borrowing comprised of one or more Bankers Acceptances or
BA Equivalent Loans. For greater certainty, unless the context requires
otherwise, all provisions of this Agreement which are applicable to Bankers
Acceptances are also applicable, mutatis mutandis, to BA Equivalent Loans.
“BA Equivalent Loan” is defined in Section 2.11(h).
“Bankers Acceptance” and “B/A” mean an instrument denominated in Canadian
Dollars, drawn by the Borrower and accepted by a Lender in accordance with this
Agreement, and includes a “depository note” within the meaning of the Depository
Bills and Notes Act (Canada) and a bill of exchange within the meaning of the
Bills of Exchange Act (Canada).
“Bank Products” means any services or facilities provided to any Credit Party by
any Lender or any of its Affiliates on account of (a) each Swap Agreement that
is entered into after the Effective Date with any counterparty that is a Credit
Party at the time such Swap Agreement is entered into, (b) leasing (but only to
the extent that the Borrower and the Credit Party furnishing such lease notify
the Agent in writing that such leases are to be deemed Bank Products hereunder),
and (c) factoring arrangements, but excluding Cash Management Services.
“Bank Product Reserves” means such reserves as the Agent may from time to time
determine in its Permitted Discretion as being appropriate to reflect the
liabilities and obligations of the Credit Parties with respect to Bank Products
then provided or outstanding; provided that in the event that any counterparty
to a Swap Agreement requires that the Credit Parties provide cash collateral to
secure such Swap Agreement, the amount of the Bank Product Reserve imposed by
the Agent with respect to such Swap Agreement shall take into consideration the
amount of such cash collateral.
“Base Rate” means, on any day, the annual rate of interest equal to the greater
of (i) the annual rate of interest announced from time to time by CIBC and in
effect as its base rate at its principal office in Toronto, Ontario on such day
for determining interest rates on U.S. Dollar-denominated commercial loans made
in Canada, and (ii) the LIBO Rate based on an Interest Period of 30 days plus
1.00%. The Base Rate is a rate set by CIBC based upon various factors including
CIBC’s cost and desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans; however, CIBC may price
loans at, above or below such announced rate.
“Base Rate Borrowing” means a Borrowing comprised of one or more Base Rate
Loans.

 

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“Base Rate Loan” means a Loan denominated in U.S. Dollars made by the Lenders to
the Borrower hereunder pursuant to a drawdown, rollover or conversion of a Loan
on which interest is payable upon the Base Rate.
“BIA” means the Bankruptcy and Insolvency Act (Canada), as amended from time to
time (or any successor statute).
“Blocked Account Agreement” has the meaning set out in Section 2.17(d).
“Blocked Accounts” has the meaning set out in Section 2.17(d).
“Borrower” means BlueLinx Building Products Canada Ltd., a British Columbia
corporation.
“Borrowing” means any availment of the Credit, which includes a Loan and the
issuance of a Letter of Credit Guarantee in accordance with Section 2.18 (or,
after a CIBC ABL Reorganization Date, the issuance of a Letter of Credit in
accordance with Section 2.18A), the issuance of an F/X Guarantee in accordance
with Section 2.19 (or, after a CIBC ABL Reorganization Date, the entry into an
F/X Contract in accordance with Section 2.19A), and a Borrowing includes a
rollover or conversion of any outstanding Loan and the provision of any Loan as
required for the Agent to honour any obligations pursuant to any Letter of
Credit, Letter of Credit Guarantee, F/X Contract or F/X Guarantee.
“Borrowing Base” means, at any time, an amount (which may not be less than zero)
equal to the sum of (i) 90% of the aggregate amount of all Eligible Accounts
(insured by EDC or another insurer satisfactory to the Agent, acting reasonably
or owed by investment grade debtors approved in writing by the Agent), plus
(ii) 85% of all other Eligible Accounts, plus (iii) the lesser of (A) 65% of the
lower of cost or fair market value of all Eligible Inventory, and (B) 85% of the
appraised net orderly liquidation value of all Eligible Inventory, minus (iv) an
amount equal to all Priority Payables, minus (v) an amount equal to all other
Availability Reserves, minus (vi) an availability block of (A) $500,000 if the
Access Agreement is delivered on or before the Effective Date, or (B) $1,000,000
until the Access Agreement is delivered and $500,000 thereafter if the Access
Agreement is delivered after the Effective Date.
“Borrowing Base Report” means the report of the Borrower concerning the amount
of the Borrowing Base, to be delivered pursuant to Section 5.1, substantially in
the form attached as Exhibit A.
“Borrowing Request” means a request by the Borrower for a Borrowing
substantially in the form of Exhibit B.
“Business Day” means any day that is not (i) a Saturday, Sunday or other day on
which commercial banks in Vancouver, British Columbia, Atlanta, Georgia and
Toronto, Ontario are authorized or required by Applicable Law to remain closed,
and (ii) in the case of any U.S. Dollar-denominated Borrowing, any other day on
which commercial banks in New York, New York are authorized or required by
Applicable Law to remain closed, and (iii) in the case of any LIBO Rate Loan any
other day on which commercial banks in London, England are authorized or
required by Applicable Law to remain closed.

 

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“Canadian Dollars”, “Dollars”, “Cdn.$” and “$” refer to lawful money of Canada.
“Canadian $ Equivalent” means, on any day, the amount of Canadian Dollars that
the Agent could purchase, in accordance with its normal practice, with a
specified amount of another currency based on the spot rate at which Canadian
Dollars are offered at the start of such day by CIBC in Toronto, Ontario.
“Canadian Prime Borrowing” means a Borrowing comprised of one or more Canadian
Prime Loans.
“Canadian Prime Loan” means a Loan denominated in Canadian Dollars made by the
Lenders to the Borrower hereunder pursuant to a drawdown, rollover or conversion
of a Loan which bears interest at a rate based upon the Canadian Prime Rate.
“Canadian Prime Rate” means, the rate of interest equal to the greater of
(i) the annual rate of interest publicly announced from time to time by CIBC as
its reference rate of interest for loans made in Canadian Dollars to Canadian
customers and designated as its “prime” rate, and (ii) the 30-day CDOR Rate plus
1.00%. The Canadian Prime Rate is a rate set by CIBC based upon various factors
including CIBC’s costs and desired return, general economic conditions and other
factors and is used as a reference point for pricing some loans. However, CIBC
may price loans at, above or below such announced rate.
“Capital Expenditures” means all payments due or accruing due (whether or not
paid) during a Fiscal Year in respect of the cost (including expenditures on
materials, contract labour and direct labour, but excluding expenditures
properly chargeable to repairs and maintenance in accordance with GAAP) of any
fixed asset or improvement, or replacement, substitution, or addition thereto,
which have a useful life of more than one (1) year, including, without
limitation, those arising in connection with the direct or indirect acquisition
of such assets by way of increased product or service charges or offset items or
in connection with Capital Leases.
“Capital Lease” means any lease of Property that, in accordance with GAAP, is
required to be capitalized on the consolidated balance sheet of the Credit
Parties.
“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.
“Cash Management Reserves” means such reserves as the Agent, from time to time,
determines in its Permitted Discretion as being appropriate to reflect the
reasonably anticipated liabilities and obligations of the Credit Parties with
respect to Cash Management Services then provided or outstanding.

 

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“Cash Management Services” means any one or more of the following types of
services or facilities provided to any Credit Party by a Lender or any of its
Affiliates: (a) ACH transactions, (b) cash management services, including
controlled disbursement services, treasury, depository, overdraft, and
electronic funds transfer services, (c) foreign exchange facilities, (d) credit
card processing services, (e) credit or debit cards, and (f) purchase cards (but
only to the extent that, prior to the occurrence and continuance of any Default
or Event of Default, the Borrower and the Credit Party issuing such purchase
cards notify the Agent in writing that such purchase cards are to be deemed Cash
Management Services hereunder).
“CDOR Rate” means, on any day and for any period, an annual rate of interest
equal to the average rate applicable to Canadian Dollar bankers’ acceptances for
the applicable period appearing on the “Reuters Screen CDOR Page” (as defined in
the International Swaps and Derivatives Association, Inc. 2000 definitions, as
modified and amended from time to time), rounded to the nearest 1/100th of 1%
(with .005% being rounded up), at approximately 10:00 a.m., Toronto time, on
such day, or if such day is not a Business Day, then on the immediately
preceding Business Day, provided that if such rate does not appear on the
Reuters Screen CDOR Page on such day as contemplated, then the CDOR Rate on such
day shall be calculated as the rate for such period applicable to Canadian
Dollar bankers’ acceptances quoted by CIBC as of 10:00 a.m., Toronto time, on
such day or, if such day is not a Business Day, then on the immediately
preceding Business Day.
“Change in Control” means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group of Persons acting
jointly or otherwise in concert, other than the Parent or any direct or indirect
Subsidiary of the Parent, of Equity Securities representing 100% of the
aggregate ordinary voting power represented by the issued and outstanding Equity
Securities of the Borrower; (b) the occupation of a majority of the seats (other
than vacant seats) on the board of directors of the Borrower by Persons who were
neither (i) nominated by the board of directors of the Borrower nor
(ii) appointed by directors so nominated; or (c) the acquisition of direct or
indirect Control of the Borrower by any Person or group of Persons acting
jointly or otherwise in concert, other than the Parent or any direct or indirect
Subsidiary of the Parent.
“Change in Law” means (i) the adoption of any new Applicable Law after the date
of this Agreement, (ii) any change in any existing Applicable Law or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement, or (iii) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 2.12(b), by any lending office of such Lender or
Issuing Bank or by such Lender’s or such Issuing Bank’s holding company, if any)
with any request, guideline or directive (whether or not having the force of
law, but in the case of a request, guideline or directive not having the force
of law, being a request, guideline or directive with which persons customarily
comply) of any Governmental Authority made or issued after the date of this
Agreement.
“CIBC” means Canadian Imperial Bank of Commerce and its successors.
“CIBC ABL Reorganization” means a transaction or a series of transactions
(including an assignment transaction, a winding-up, an amalgamation or any other
form of transaction or series of transactions) under which the rights and
obligations of CIBC Asset-Based Lending Inc. under this Agreement and the other
Loan Documents become the rights and obligations of CIBC.

 

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“CIBC ABL Reorganization Date” means the date on which a CIBC ABL Reorganization
shall have occurred.
“Collateral” means the property described in and subject to the Liens,
privileges, priorities and security interests purported to be created by any
Security Document.
“Commitment” means, with respect to each Lender, the commitment(s) of such
Lender to make Loans hereunder as such commitment may be reduced from time to
time pursuant to Sections 2.6 and/or 2.9, and as such commitments may be reduced
or increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.4. The initial amount(s) of each Lender’s Commitment(s)
are set forth on Schedule A, or in the Assignment and Assumption pursuant to
which such Lender shall have assumed its Commitment(s), as applicable. The
initial aggregate amount of the Commitments is Cdn.$10,000,000.
“Consolidated Net Income” means, for any period, the net income on a
consolidated basis of the Borrower and its consolidated Subsidiaries; provided,
however, that Consolidated Net Income shall not include or take into account:

  (i)   any net income of any Subsidiary which is subject to restrictions,
directly or indirectly, on the payment of dividends or the making of
distributions, directly or indirectly, to the Borrower, except that (A) subject
to the exclusion contained in clauses (iii) and (iv) below, the Borrower’s
equity in the net income of any such Subsidiary for such period shall be
included in such Consolidated Net Income up to the aggregate amount of cash that
could have been distributed by such Subsidiary consistent with such restriction
during such period to the Borrower or another Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution paid to
another Subsidiary, to the limitation contained in this clause), and (B) the
Borrower’s equity in a net loss of any such Subsidiary for such period shall be
included in determining such Consolidated Net Income;

  (iii)   any gain (or loss) realized upon the sale or other disposition of any
assets of the Borrower or any Subsidiary (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed of in
the ordinary course of business and any gain (or loss) realized upon the sale or
other disposition of any capital stock of any Person;     (iv)   extraordinary
gains or losses;

  (v)   nonrecurring gains or losses, to the extent approved by the Agent in its
Permitted Discretion; and     (vi)   the effect of a change in GAAP.

 

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“Contract Period” means the term of any BA Equivalent Loan selected by the
Borrower in accordance with Section 2.3(a)(iv) commencing on the date of such BA
Equivalent Loan and expiring on a Business Day which shall be either one month,
two months, or three months thereafter (or such other terms as may be requested
by the Borrower and approved by the Lenders advancing such BA Equivalent Loan);
provided that (i) subject to subparagraph (ii) below, each such period shall be
subject to such extensions or reductions as may be determined by the Agent to
ensure that each Contract Period will expire on a Business Day, and (ii) no
Contract Period shall extend beyond the Maturity Date.
“Control” means, in respect of a particular Person, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ability to exercise voting power,
by contract or otherwise. “Controlling” and “Controlled” have meanings
correlative thereto.
“Cover” means, at any time, an amount equal to 105% of the aggregate amount of
Bankers Acceptances, Letter of Credit Exposure and F/X Exposure at such time and
such amount shall be paid by the Borrower to the Agent and retained by the Agent
in a collateral account maintained by the Agent at its Payment Office and
collaterally assigned to the Agent as security until such time as the applicable
Bankers Acceptances, Letters of Credit or F/X Contracts shall have expired or
matured and Reimbursement Obligations, if any, with respect thereto shall have
been fully satisfied; provided that if any such Reimbursement Obligations are
not satisfied when due hereunder, the Agent may apply any or all amounts in such
collateral account in satisfaction of any or all such Reimbursement Obligations.
“Credit Party” means the Borrower, each Guarantor and any other Person which is
a party to a Loan Document (other than the Agent and the Lenders).
“Credit” means the Cdn.$10,000,000 revolving credit facility established
pursuant to the Commitments of the Lenders.
“DBRS” shall mean Dominion Bond Rating Service Limited, or its successor.
“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 (as reasonably determined by the Agent)
that (a) has failed to fund any portion of the Loans, participations in Letters
of Credit required to be funded by it hereunder within one Business Day of the
date required to be funded by it hereunder, (b) has otherwise failed to pay over
to the Agent or any other Lender any other amount required to be paid by it
hereunder within one Business Day of the date when due, (c) has failed, within
three (3) Business Days after request by the Agent, to confirm that it will
comply with the terms of this Agreement relating to its Commitments, provided
that such Lender shall cease to be a Defaulting Lender under this clause
(c) upon the Agent’s receipt of such confirmation, or (d) has been declared
insolvent by any Governmental Authority pursuant to a court order or become the
subject of a bankruptcy or insolvency proceeding.

 

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“Discount Proceeds” means, for any Bankers Acceptance (or, as applicable, any BA
Equivalent Loan), an amount (rounded to the nearest whole cent, and with
one-half of one cent being rounded up) calculated on the applicable date of
Borrowing by multiplying:

  (i)   the face amount of the Bankers Acceptance (or, as applicable, the
undiscounted amount of the BA Equivalent Loan); by

  (ii)   the quotient of one divided by the sum of one plus the product of:

  (A)   the Discount Rate (expressed as a decimal) applicable to such Bankers
Acceptance (or as applicable, such BA Equivalent Loan), multiplied by

  (B)   a fraction, the numerator of which is the Contract Period of the Bankers
Acceptance (or, as applicable, the BA Equivalent Loan) and the denominator of
which is 365,

with such quotient being rounded up or down to the nearest fifth decimal place,
and with .000005 being rounded up.
“Discount Rate” means, with respect to either a Bankers Acceptance for a
particular Contract Period being purchased by a Lender on any day or a BA
Equivalent Loan being made by a Lender on any day, (i) for any Lender which is a
Schedule I chartered bank under the Bank Act (Canada), the CDOR Rate on such day
for such Contract Period; and (ii) for any other Lender, the lesser of
(a) the CDOR Rate on such day for such Contract Period, plus 0.10%, and
(b) the percentage discount rate quoted by such Lender as the percentage
discount rate at which such Lender would, in accordance with its normal
practices, at or about 10:00 a.m. on such date, be prepared to purchase bankers’
acceptances or make BA Equivalent Loans having a face amount and term comparable
to the face amount and term of such Bankers Acceptance or a BA Equivalent Loan,
as applicable.
“EBITDA” means, for the Credit Parties on a consolidated basis and for any
period, without duplication, an amount equal to the Consolidated Net Income for
such period less any non-cash income included in Consolidated Net Income, plus
to the extent deducted from Consolidated Net Income, Interest Expense,
depreciation, depletion and impairment, amortization expense and income tax
expenses. For greater certainty, EBITDA for any period shall be determined after
the payment of all management and employee bonuses and non-arm’s length
consulting fees for such period.
“EDC ” means Export Development Corporation (Canada) and its successors and
assigns.
“Effective Date” means the date on which all of the conditions specified in
Section 4.1 are satisfied or waived in accordance with Section 9.2, as confirmed
by the making of the first Loan under this Agreement.

 

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“Eligible Account” means, at any time, the invoice amount (which shall be the
Canadian $ Equivalent at such time of any amount denominated in U.S.$) owing on
each Account of a Credit Party (net of any credit balance, returns, trade
discounts, contras, unapplied cash, unbilled amounts, tax refunds that have not
yet been received or retention or finance charges or any other dilutive factors)
which meet such standards of eligibility as the Agent shall establish from time
to time in its Permitted Discretion; provided that, in any event, no account
shall be deemed an Eligible Account unless each of the following statements is
accurate and complete (and by including such Account in any computation of the
applicable Borrowing Base, the Borrower shall be deemed to represent and warrant
to the Agent, each Issuing Bank and the Lenders the accuracy and completeness of
such statements and the compliance of each such Account with each such other
eligibility standard established by the Agent):
(1) Such Account is a binding and valid obligation of the obligor thereon and is
in full force and effect;
(2) Such Account is evidenced by an invoice and is payable in either Canadian
Dollars or U.S. Dollars;
(3) Such Account is genuine as appearing on its face or as represented in the
books and records of the Borrower or the applicable Credit Party;
(4) Such Account is free from claims regarding rescission, cancellation or
avoidance, whether by operation of Applicable Law or otherwise;
(5) Payment of such Account is less than 90 days past the original invoice date
thereof and less than 60 days past the original due date thereof;
(6) Such Account is net of concessions, offset, deduction, contras, returns,
chargebacks or understandings with the obligor thereon that in any way could
reasonably be expected to adversely affect the payment of, or the amount of,
such Account;
(7) The Agent on behalf of the Lenders, has a first-priority perfected Lien
covering such Account and such Account is, and at all times will be, free and
clear of all other Liens other than Permitted Liens;
(8) The obligor on such Account is not an Affiliate or a director, officer or
employee of any Credit Party;
(9) Such Account arose in the ordinary course of business of the Credit Party
out of the sale of goods or services by the Credit Party;
(10) Such Account is not payable by an obligor in respect of which 50% or more
(by amount) of the total aggregate Accounts owed to the Credit Party by such
obligor or any of its Affiliates are more than 90 days past the original invoice
date thereof or more than 60 days past the original due date thereof;
(11) All consents, licenses, approvals or authorizations of, or registrations or
declarations with, any Governmental Authority required to be obtained, effected
or given in connection with the execution, delivery and performance of such
Account by each party obligated thereunder, or in connection with the
enforcement and collection thereof by the Agent, have been duly obtained,
effected or given and are in full force and effect;

 

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(12) The obligor on such Account is not an individual, and is not the subject of
any bankruptcy or insolvency proceeding, does not have a trustee or receiver
appointed for all or a substantial part of its property, has not made an
assignment for the benefit of creditors, admitted its inability to pay its debts
as they mature, suspended its business or initiated negotiations regarding a
compromise of its debt with its creditors, and the Agent, in its Permitted
Discretion, is otherwise satisfied with the credit standing of such obligor;
(13) The chief executive office of the obligor of such Account is located in the
United States of America or Canada and the obligor of such Account is organized
and existing under the laws of the United States of America or a state thereof
or the federal laws of Canada, a province or territory thereof, or if the
obligor is not so organized and existing, such Account is covered under letters
of credit or export/import insurance provided by the EDC (or such other provider
of letters of credit or import/export insurance as shall be agreed to in writing
by the Agent and with security provided to the Agent in respect thereof (all to
the satisfaction of the Agent) on terms and in a manner reasonably satisfactory
to the Agent;
(14) The obligor of such Account is not a Governmental Authority, if the
enforceability or effectiveness against such Governmental Authority of an
assignment of such Account is subject to any precondition which has not been
fulfilled;
(15) In respect of an Account arising from the sale of goods, the subject goods
have been completed, sold and shipped, on a true sale basis on open account, or
subject to contract, and not on consignment, on approval, on a “sale or return”
basis, or on a “bill and hold” or “pre-sale” basis or subject to any other
repurchase or return agreement; no material part of the subject goods has been
returned, rejected, lost or damaged; and such Account is not evidenced by
chattel paper or a promissory note or an instrument of any kind, unless such
chattel paper, promissory note or other instrument has been delivered to the
Agent and is subject to a Lien under the Security Documents;
(16) Each of the representations and warranties set forth herein and in the Loan
Documents with respect to such Account is true and correct on such date;
(17) A cheque, promissory note, draft, trade acceptance or other instrument has
not been received with respect to such Account (or with respect to any other
account due from the same account debtor), presented for payment and returned
uncollected for any reason;
(18) Such Account is not in respect of a volume rebate;
(19) Such Account is not a pre-billed account or an account arising from
progress billing;

 

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(20) The assignment (whether absolutely or by way of security) of such Account
is not limited or restricted by the terms of the contract evidencing or relating
to such Account or, if assignment of such Account is so restricted, such
limitation or restriction has been complied with and the laws of the
jurisdiction(s) governing the validity of such assignment do not provide that
such limitation or restriction is ineffective as against the secured creditor
with a security interest therein; and
(21) Such Account is not an Account which the Agent, in the exercise of its good
faith credit discretion, has determined to be ineligible for any other reason,
including the Agent’s determination that the prospect of the collection of such
Account is impaired or that the Account may not be paid because of the account
debtor’s inability to pay or any other reason as may be customary either in the
commercial lending industry or in the lending practices of the Agent.
provided that, if at any time the aggregate amount of all Eligible Accounts owed
to a Credit Party by a particular obligor or its Affiliates exceeds 10% of the
aggregate amount of all Eligible Accounts at such time owed to such Credit Party
(determined without giving effect to any reduction in Eligible Accounts pursuant
to this proviso), then, unless the Accounts of such obligors and its Affiliates
are insured pursuant to credit insurance acceptable to the Agent which has been
assigned to the Agent in form acceptable to the Agent, the amount of such
Accounts in excess of 10% of such aggregate amount of all Eligible Accounts
shall be excluded in determining the aggregate amount of all Eligible Accounts
at such time.
“Eligible Assignee” means (a) another Lender, (b) with respect to any Lender,
any Affiliate of that Lender, (c) any commercial bank having total assets of
$25,000,000,000 or more, (d) any (i) trust company, savings bank, savings and
loan association or similar financial institution, or (ii) insurance company
engaged in the business of writing insurance which, in either case (A) has total
assets of $25,000,000,000 or more, (B) is engaged in the business of lending
money and extending credit under credit facilities substantially similar to
those extended under this Agreement, (C) is operationally and procedurally able
to meet the obligations of a Lender hereunder to the same degree as a commercial
bank, and (e) any other financial institution (including a mutual fund or other
fund) having total assets of $25,000,000,000 or more which meets the
requirements set forth in subclauses (B) and (C) of clause (d) above.
“Eligible Inventory” means, at any time with respect to a Credit Party, all
Inventory of such Credit Party valued in Canadian Dollars on a lower of Standard
Cost or market basis in accordance with GAAP, with detailed calculations of
lower of cost or market to occur on at least a monthly basis, which meets such
standards of eligibility as the Agent shall establish from time to time in its
Permitted Discretion; provided that, in any event, no Inventory shall be deemed
Eligible Inventory unless each of the following statements is accurate and
complete (and by including such Inventory in any computation of the applicable
Borrowing Base, the Borrower shall be deemed to represent and warrant to the
Agent, each Issuing Bank and the Lenders the accuracy and completeness of such
statements and the compliance of such Inventory with each such other eligibility
standard established by the Agent):
(1) Such Inventory is in good condition, merchantable, meets all standards
imposed by any Governmental Authority having regulatory authority over it or its
use and/or sale and is not obsolete and is either currently usable or currently
saleable in the normal course of business of a Credit Party and does not include
packaging materials;

 

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(2) Such Inventory is

  (a)   in the possession of such Credit Party and located on real property
owned or leased by such Credit Party within Canada or is in transit between such
properties (provided that if such Inventory is located on real property leased
by such Credit Party, the landlord of such real property shall have executed and
delivered to the Agent a landlord waiver substantially in the form attached
hereto as Exhibit G (or otherwise in form and substance satisfactory to the
Agent), or the Agent shall have been advised that such Inventory is located on
leased property and been given the opportunity to establish Availability
Reserves in respect thereof), or

  (b)   in the possession of a bailee within Canada and such bailee shall have
executed and delivered to the Agent, a bailee letter substantially in the form
attached hereto as Exhibit H (or otherwise in form and substance satisfactory to
the Agent), or the Agent shall have been advised that such Inventory is in the
possession of a bailee and been given the opportunity to establish Availability
Reserves in respect thereof, or

  (c)   in the possession of a consignee within Canada unless (A) the consignee
shall have executed and delivered a waiver satisfactory to the Agent, (B) such
Inventory is traceable and identifiable and not commingled with the consignee’s
other inventory, (C) all necessary PPSA filings have been made against the
consignee and (D) not more than an aggregate of $500,000 of the Eligible
Inventory is comprised of such consigned Inventory;

(3) Each of the representations and warranties set forth in the Loan Documents
with respect to such Inventory is true and correct on such date;
(4) The Agent on behalf of the Lenders, has a first-priority perfected Lien
covering such Inventory, and such Inventory is, and at all times will be, free
and clear of all Liens other than Permitted Liens;
(5) Such Inventory does not include goods (i) that are not owned by such Credit
Party, (ii) that are held by such Credit Party pursuant to a consignment
agreement, or (iii) that are special order goods or discontinued goods;
(6) Such Inventory is not subject to repossession under the BIA except to the
extent the applicable vendor has entered into an agreement with the Agent, in
form and substance reasonably satisfactory to the Agent, waiving its right to
repossession;
(7) Such Inventory does not consist of store room materials, supplies, parts,
samples, prototypes, or packing and shipping materials;
(8) Such Inventory does not consist of goods that are discontinued, obsolete,
expired, slow-moving or returned, rejected or repossessed or used goods taken in
trade;

 

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(9) Such Inventory is not evidenced by negotiable documents of title unless
delivered to the Agent with endorsements and insurance, as applicable, on all
terms and conditions satisfactory to the Agent;
(10) Such Inventory does not constitute Hazardous Materials;
(11) Such Inventory is covered by casualty insurance;
(12) Such Inventory is not Inventory which the Agent has determined in the
exercise of its Permitted Discretion that the Agent may not sell or otherwise
dispose of in accordance with the terms of the applicable Security Documents
without infringing upon the rights of another Person or violating any contract
with any other Person; and(or otherwise in form and substance satisfactory to
the Agent);
(13) Such Inventory is not covered by a negotiable document of title, unless
such document has been delivered to Agent with all necessary endorsements, free
and clear of all Liens except those in favour of Agent on behalf of the Lenders;
and
(14) Such Inventory is not Inventory which the Agent, in the exercise of its
good faith credit discretion, determines to be not acceptable for any other
reasons, including those which are customary either in the commercial lending
industry or in the lending practices of the Agent.
“Environmental Laws” means all Applicable Laws relating in any way to the
environment, preservation or reclamation of natural resources, the generation,
use, handling, collection, treatment, storage, transportation, recovery,
recycling, release, threatened release or disposal of any Hazardous Material, or
to health and safety matters.
“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of any Credit Party directly or indirectly resulting
from or based upon (a) violation of any Environmental Laws, (b) the generation,
use, handling, collection, treatment, storage, transportation, recovery,
recycling or disposal of any Hazardous Materials, (c) 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.
“Equity Securities” means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and non-voting) of, such Person’s capital, whether
outstanding on the date hereof or issued after the date hereof, including any
interest in a partnership, limited partnership or other similar Person and any
beneficial interest in a trust, and any and all rights, warrants, debt
securities, options or other rights exchangeable for or convertible into any of
the foregoing.
“ETA” means Part IX of the Excise Tax Act (Canada) as amended from time to time
(or any successor statute).
“Event of Default” has the meaning set out in Section 7.1.

 

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“Excess Availability” means, as of any date, the remainder of (a) the Borrowing
Base as of such date, less (b) the aggregate outstanding balance of the
Indebtedness of the Credit Parties hereunder as of such date (including, without
duplication, the aggregate Letter of Credit Exposure and the aggregate F/X
Exposure as of such date). Excess Availability shall always be determined on the
basis that all debts and obligations shall be current, and all accounts payable
shall be handled in the normal course of the Credit Parties’ business consistent
with its past practices.
“Excluded Taxes” means, with respect to the Agent, any Lender or any other
recipient (in this definition, (a “recipient”) of any payment to be made by or
on account of any obligation of the Borrower hereunder, income or franchise
Taxes imposed on (or measured by) such recipient’s taxable income or capital
Taxes imposed on (or measured by) such recipient’s taxable capital, in each case
by Canada, or by the jurisdiction under the Applicable Laws of which such
recipient is organized or in which its principal office is located.
“Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans and, without
duplication, its Letter of Credit Exposure and F/X Exposure at such time.
“Facility Fee” has the meaning ascribed thereto in the Commitment Letter.
“Federal Funds Effective Rate” means, for any day, the per annum rate equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System of the United States of America arranged
by Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Board
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal funds brokers of recognized standing
selected by it.
“Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
“Fiscal Quarter” means any fiscal quarter of the Borrower.
“Fiscal Year” means any fiscal year of the Borrower.
“Fixed Charge Coverage Ratio” means, as of the last day of any fiscal month, the
ratio of (a) without duplication, the sum of (i) EBITDA for the Rolling Period
ended on that date minus non-financed Capital Expenditures made by the Borrower
during such Rolling Period to (b) the sum of (i) Interest Expense of the Credit
Party for such Rolling Period plus (ii) the aggregate of all dividends,
distributions and principal payments on Indebtedness made by the Credit Party
during such Rolling Period plus (iii) income taxes paid in cash or cash
equivalents by the Credit Party during such Rolling Period. For the purposes of
calculating the Fixed Charge Coverage Ratio, Interest Expense will be annualized
each fiscal month until the completion of twelve fiscal months.
“F/X Bank” means Canadian Imperial Bank of Commerce.

 

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“F/X Contract” means (i) before a CIBC ABL Reorganization Date, a currency
exchange transaction or agreement or any option with respect to any such
transaction now existing or hereafter entered into between the Borrower and the
Agent or between the Borrower and the F/X Bank with the assistance of the Agent
in accordance with Section 2.19; or (ii) after a CIBC ABL Reorganization Date, a
currency exchange transaction or agreement or any option with respect to any
such transaction now existing or hereafter entered into between the Borrower and
the F/X Bank in accordance with Section 2.19A.
“F/X Contract Sub-Line” means the amount of the commitment by the Agent and the
Lenders hereunder, in an aggregate amount of up to but not exceeding U.S.$
250,000 (or the Cdn. $ Equivalent thereof) to assist the Borrower in obtaining
F/X Contracts from the F/X Bank pursuant to Section 2.19 or, after a CIBC ABL
Reorganization Date, pursuant to Section 2.19A.
“F/X Exposure” means, at any time, and subject to the F/X Contract Sub-Line, the
sum of: (a) the amount determined by the Agent (at its sole discretion with
consideration given to any determinations provided to the Agent by the F/X Bank)
to be the credit risk associated with all outstanding F/X Contracts, plus
(b) the aggregate amount of all Reimbursement Obligations in respect of all F/X
Guarantees and/or F/X Contracts at such time. The F/X Exposure of any Lender at
any time shall be its Applicable Percentage of the total F/X Exposure at such
time with the total of all such F/X Exposure of all Lenders not to exceed the
F/X Contract Sub-Line. Any F/X Exposure denominated in any currency other than
Canadian Dollars shall be the Cdn.$ Equivalent thereof.
“F/X Guarantee” means a letter of indemnity (which is acceptable to the F/X Bank
and the Agent) or such other form of guarantee or indemnity agreement which is
acceptable to the F/X Bank and the Agent, supporting F/X Contracts between the
Borrower and the F/X Bank provided the maximum principal amounts of all F/X
Guarantees in aggregate do not exceed the F/X Contract Sub-Line.
“F/X Transaction” means any currency exchange transaction or agreement or any
option with respect to any such transaction or agreement entered into between
the Borrower and any other counterparty.
“GAAP” means at any particular time with respect to any Credit Party, generally
accepted accounting principles as in effect at such time in the United States,
consistently applied; provided, however, that, if employment of more than one
principle shall be permissible at such time in respect of a particular
accounting matter, “GAAP” shall refer to the principle which is then employed by
the applicable Credit Party with the concurrence of its independent public or
chartered accountants, who are acceptable to the Agent provided further that,
for the purposes of determining compliance with the financial covenants herein,
“GAAP” means GAAP as at the date hereof.
“Governmental Authority” means the Government of Canada, any other nation or any
political subdivision thereof, whether provincial, state, territorial or local,
and any agency, authority, instrumentality, regulatory body, court, central
bank, fiscal or monetary authority or other authority regulating financial
institutions, and any other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to any
such government, including the Bank Committee on Banking Regulation and
Supervisory Practices of the Bank of International Settlements.

 

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“GST” means the goods and services tax and all other amounts payable under the
ETA or any similar legislation in any other jurisdiction of Canada, including
QST and HST.
“Guarantee” of or by any Person (in this definition, 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 (in this definition, the “primary credit party”) 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 (whether in the form of a loan, advance, stock purchase, capital
contribution or otherwise), (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 solvency, or any other balance sheet, income statement or other
financial statement condition or liquidity of the primary credit party so as to
enable the primary credit party to pay such Indebtedness or other obligation,
(d) as an account party in respect of any letter of credit or letter of
guarantee issued to support such Indebtedness or other obligation, or (e) to
purchase, sell or lease (as lessor or lessee) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of
such Indebtedness or to assure the holder of such Indebtedness against loss.
“Guarantor” means each Person which has executed and delivered to the Agent, for
the benefit of the Lenders, a guarantee substantially in the form attached
hereto as Exhibit C.
“Hazardous Materials” means any substance, product, liquid, waste, pollutant,
chemical, contaminant, insecticide, pesticide, gaseous or solid matter, organic
or inorganic matter, fuel, micro-organism, ray, odour, radiation, energy,
vector, plasma, constituent or material which (a) is or becomes listed,
regulated or addressed under any Environmental Laws, or (b) is, or is deemed to
be, alone or in any combination, hazardous, hazardous waste, toxic, a pollutant,
a deleterious substance, a contaminant or a source of pollution or contamination
under any Environmental Laws, including, asbestos or asbestos-containing
materials, petroleum and polychlorinated biphenyls, including petroleum or
petroleum distillates, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Laws.
“HST” means all amounts payable as harmonized sales tax in the Provinces of
British Columbia, Ontario, Nova Scotia, Newfoundland and New Brunswick under the
ETA.

 

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“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, (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, (e) all obligations of such Person in respect of the
deferred purchase price of property or services (excluding current accounts
payable incurred in the ordinary course of business), (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, (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 guarantee, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (k) the net amount
of obligations of such Person (determined on a mark-to-market basis) on account
of foreign exchange transactions or interest rate swap transactions, and (l) all
obligations of such Person to purchase, redeem, retire, defease or otherwise
acquire for value (other than for other Equity Securities) any Equity Securities
of such Person, valued, in the case of redeemable Equity Securities, at the
greater of voluntary or involuntary liquidation preference, plus accrued and
unpaid dividends. The Indebtedness of any Person shall include the Indebtedness
of any other entity (including any partnership in which such Person is a general
or limited 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.
“Indemnified Taxes” means all Taxes other than Excluded Taxes.
“Indemnitee” has the meaning set out in Section 9.3(b).
“Interest Expense” shall mean, for any period, the total interest expense of the
Borrower and its Subsidiaries on a consolidated basis, plus, to the extent not
included in such total interest expense, and to the extent incurred by the
Borrower or any of its Subsidiaries, (i) interest expense attributable to
Capital Lease Obligations of the Borrower or its Subsidiaries, (ii) amortization
of debt discount or financing fees, (iii) capitalized interest, (iv) non-cash
interest expense, (v) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers’ acceptance financing, (vi) net
costs associated with Swap Agreements (including amortization of fees),
(vii) standby fees , (viii) preferred stock dividends in respect of all
preferred stock issued by the Borrower or a Subsidiary and held by Persons other
than the Borrower or a Subsidiary, and (ix) interest actually paid by the
Borrower or any Subsidiary on any Indebtedness of any other Person.
“Interest Payment Date” means, in the case of any Canadian Prime Borrowing or
Base Rate Borrowing, the first Business Day of each month, and in the case of
any LIBO Rate Borrowing, at the end of any Interest Period.
“Interest Period” means, with respect to a LIBO Rate Borrowing, the period
commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is 30, 60 or 90 days thereafter, as
the Borrower may elect; provided that (i) if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended to the
immediately succeeding Business Day unless 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, (ii) any Interest Period 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, (iii) no Interest Period shall extend beyond any date that any
principal payment or prepayment is scheduled to be due unless the aggregate
principal amount of (A) Canadian Prime Borrowings and Base Rate Borrowings and
(B) BA Borrowings and LIBO Rate Borrowings which have Interest Periods or
Contract Periods which will expire on or before such date, less the aggregate
amount of any other principal payments or prepayments due during such Interest
Period, is equal to or in excess of the amount of such principal payment or
prepayment, and (iv) no Interest Period shall extend beyond the Maturity Date.
For purposes hereof, the date of a Borrowing initially shall be the date on
which such Borrowing is made and, in the case of a converted or continued
Borrowing, thereafter shall be the effective date of the most recent conversion
or continuation of such Borrowing.

 

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“Inventory” means, in respect of each Credit Party, all of such Credit Party’s
present and hereafter acquired inventory (as defined in the PPSA) and including
all merchandise, inventory and goods, and all additions, substitutions and
replacements thereof, wherever located, together with all goods and materials
used or usable in manufacturing, processing, packaging or shipping same in all
stages of production from raw materials through work in process to finished
goods, and all “stores” inventory or “operating and maintenance supplies”
inventory, and all proceeds of any thereof (of whatever sort).
“Investment” means, as applied to any Person (the “investor”), any direct or
indirect purchase or other acquisition by the investor of, or a beneficial
interest in, Equity Securities of any other Person, including any exchange of
Equity Securities for Indebtedness, or any direct or indirect loan, advance
(other than advances to employees for moving and travel expenses, drawing
accounts and similar expenditures in the ordinary course of business) or capital
contribution by the investor to any other Person, including all Indebtedness and
Accounts owing to the investor from such other Person that did not arise from
sales or services rendered to such other Person in the ordinary course of the
investor’s business, or any direct or indirect purchase or other acquisition of
bonds, notes, debentures or other debt securities of, any other Person. The
amount of any Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment minus any amounts (a) realized upon the disposition of assets
comprising an Investment (including the value of any liabilities assumed by any
Person other than the Borrower or any Credit Party in connection with such
disposition), (b) constituting repayments of Investments that are loans or
advances or (c) constituting cash returns of principal or capital thereon
(including any dividend, redemption or repurchase of equity that is accounted
for, in accordance with GAAP, as a return of principal or capital).
“Issuing Bank” means, prior to a CIBC ABL Reorganization Date, the bank issuing
Letters of Credit for the Borrower with the assistance of the Agent in
accordance with Section 2.18, or, on or after a CIBC ABL Reorganization Date,
the bank issuing a Letter of Credit for the Borrower in accordance with
Section 2.18A.
“ITA” means the Income Tax Act (Canada) as amended from time to time (or any
successor statute).

 

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“Lender” means any Lender having a Commitment hereunder and/or a Revolving Loan
outstanding hereunder.
“Lender Affiliate” means, with respect to any Lender, an Affiliate of such
Lender.
“Lenders” means the Persons listed as lenders on Schedule A (and includes their
respective successors) and any other Person that shall have become a party
hereto pursuant to an Assignment and Assumption, other than any such Person that
ceases to be a party hereto pursuant to an Assignment and Assumption.
“Letter of Credit” means, prior to a CIBC ABL Reorganization Date, a letter of
credit issued by the Issuing Bank for or on behalf of the Borrower with the
assistance of the Agent in accordance with Section 2.18; or, on or after a CIBC
ABL Reorganization date, a letter of credit issued by the Issuing Bank for or on
behalf of the Borrower in accordance with Section 2.18A.
“Letter of Credit Exposure” means, at any time and subject to the Letter of
Credit Sub-Line, the sum of: (a) the aggregate face amount of all outstanding
Letters of Credit at such time, plus (b) the aggregate amount of all
Reimbursement Obligations in respect of all Letter of Guarantees at such time.
The Letter of Credit Exposure of any Lender at any time shall be its Applicable
Percentage of the total Letter of Credit Exposure at such time with the total of
all such Letter of Credit Exposure of all Lenders not to exceed the Letter of
Credit Sub-Line. Any Letter of Credit Exposure denominated in U.S. Dollars shall
be the Cdn.$ Equivalent thereof.
“Letter of Credit Guarantee” means the agreement for the substitution of
applicants or such other form of guarantee or indemnity agreement which is
acceptable to the Issuing Bank and the Agent, supporting the issuance of Letters
of Credit by the Issuing Bank provided the aggregate amount of all such Letters
of Credit issued and to be issued shall not exceed the Letter of Credit
Sub-Line.
“Letter of Credit Sub-Line” means the amount of the commitment by the Agent and
the Lenders hereunder, in an aggregate amount up to but not exceeding $500,000,
to assist the Borrower in obtaining Letters of Credit.
“LIBO Rate” means, for any Interest Period, the rate for U.S. Dollar borrowings
appearing on Page 3750 of the Telerate Service or Page LIBOR01 of the Reuters
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service providing rate quotations comparable
to those currently provided on such page of such Service, as determined by the
Agent from time to time for purposes of providing quotations of interest rates
applicable to U.S. Dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for U.S. Dollar deposits with
a maturity comparable to such Interest Period. In the event that such rate is
not available at such time for any reason, then the “LIBO Rate” for such
Interest Period shall be the rate at which U.S. Dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of CIBC in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.

 

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“LIBO Rate Borrowing” means a Borrowing comprised of one or more LIBO Rate
Loans.
“LIBO Rate Loan” means a Loan denominated in U.S. Dollars made by the Lenders to
the Borrower hereunder pursuant to a drawdown, rollover or conversion of a Loan
which bears interest at a rate based upon the LIBO Rate.
“Lien” means, (a) with respect to any asset, any mortgage, deed of trust, lien,
pledge, hypothec, hypothecation, encumbrance, charge, security interest, royalty
interest, trust, deemed trust, adverse claim, defect of title or right of set
off in, on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease, title retention agreement or
consignment agreement (or any financing lease having substantially the same
economic effect as any of the foregoing) relating to any asset, (c) in the case
of securities, any purchase option, call or similar right of a third party with
respect to such securities, (d) any netting arrangement, defeasance arrangement
or reciprocal fee arrangement, and (e) any other arrangement having the effect
of providing security.
“Loan” means any loan made by the Lenders to the Borrower pursuant to this
Agreement.
“Loan Documents” means this Agreement, the Security Documents, the Blocked
Account Agreement, the Borrowing Requests, the Borrowing Base Reports, and any
other document, instrument or agreement (other than participation, agency or
similar agreements among the Lenders or between any Lender and any other bank or
creditor with respect to any indebtedness or obligations of any Credit Party
hereunder or thereunder) now or hereafter entered into in connection with this
Agreement (including any F/X Contracts), as such documents, instruments or
agreements may be amended, modified or supplemented from time to time.
“Material Adverse Change” means any event, development or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect.
“Material Adverse Effect” means a material adverse effect on (a) the business,
assets, operations, profitability, prospects or condition, financial or
otherwise, of the Credit Parties, or (b) the validity or enforceability of any
of the Loan Documents, the priority of the Liens created thereby or the rights
and remedies of the Agent and the Lenders thereunder or (c) any Material
Contract, or (d) the value of the Collateral taken as a whole.
“Material Contract” means (a) the contracts, licences and agreements listed and
described on Schedule 3.18, and (b) any other contract, licence or agreement
(i) to which any Credit Party is a party or bound, (ii) which is material to, or
necessary in, the operation of the business of any Credit Party, and (iii) which
a Credit Party cannot promptly replace by an alternative and comparable contract
with comparable commercial terms.
“Material Indebtedness” means any Indebtedness (other than the Loans) of any one
or more of the Credit Parties in an aggregate principal amount exceeding
Cdn.$250,000.

 

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“Maturity Date” means the third anniversary of the Effective Date (or, if such
third anniversary is not a Business Day, the next Business Day thereafter).
“Obligations” means, with respect to any Credit Party, all obligations,
liabilities and Indebtedness of such Credit Party to the Agent, the Lenders or a
Lender with respect to the principal of and interest on the Loans and the
payment or performance of all other obligations, liabilities and Indebtedness of
such Credit Party to the Agent, the Lenders or a Lender hereunder or arising
under or pursuant to any one or more of the other Loan Documents or with respect
to the Loans, including (i) all reimbursement and indemnity obligations of such
Credit Party to the Agent, the Lenders or a Lender hereunder or in connection
with any Letter of Credit, Letter of Credit Guarantee, F/X Contract, F/X
Guarantee or otherwise, (ii) all interest (including all interest that accrues
after the commencement of any case or proceeding by or against a Credit Party
under any federal, provincial or state bankruptcy, insolvency, receivership or
similar law, whether or not allowed in such case or proceeding), and all
charges, expenses, fees, legal fees, filing fees and any other sums chargeable
to such Credit Party hereunder, under another Loan Document, or under any other
agreement or instrument with the Agent, Lenders, F/X Bank or Issuing Bank, and
(iii) all obligations of such Credit Party to the Agent, a Lender, the Lenders
or any of their respective Affiliates in respect of any Cash Management
Services.
“Out-of-Pocket Expenses” means all of the Agent’s reasonable present and future
expenses incurred relative to this Agreement or any other Loan Documents,
whether incurred heretofore or hereafter, which reasonable expenses shall
include, without being limited to: the reasonable cost of retaining external
legal counsel, record searches, all costs and expenses incurred by the Agent in
opening bank accounts, depositing cheques, receiving and transferring funds, and
wire transfer charges, any charges imposed on the Agent due to returned items
and “insufficient funds” of deposited cheques and the Agent’s standard fees
relating thereto, any amounts paid by, incurred by or charged to, the Agent by
the Issuing Bank under a Letter of Credit or a Letter of Credit Guarantee, by
the F/X Bank under an F/X Contract or F/X Guarantee or the reimbursement
agreements related thereto, applications for Letters of Credit , F/X Contracts
or other like document which pertain either directly or indirectly to such
Letters of Credit or F/X Contracts and the Agent’s standard fees relating to the
Letters of Credit, F/X Contracts and any drafts thereunder, reasonable travel,
lodging and similar expenses of the Agent’s personnel (or any of its agents) in
connection with inspecting and monitoring the Collateral from time to time at
reasonable intervals hereunder, any applicable reasonable counsel fees and
disbursements, fees and taxes relative to the filing of financing statements,
and all expenses, costs and fees set forth incurred by or imposed on the Agent
by reason of the exercise of any of its rights and remedies under this Agreement
or any of the other Loan Documents.
“Parent” means BlueLinx Corporation.
“Parent Credit Facility” means any credit facility extended to the Parent,
including without limitation the Wells Fargo Facilities.
“Parent Credit Facility Lender” means any agent, on behalf of the lenders
thereunder, or any lender (in the case of a bilateral facility) under any Parent
Credit Facility, including without limitation Wells Fargo.

 

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“Participant” has the meaning set out in Section 9.4.
“Payment Office” means the Agent’s office located at 207 Queen’s Quay West,
Suite 705, Toronto, Ontario, M5J 1A7, Attention: Chief Credit Officer (or such
other office or individual as the Agent may hereafter designate in writing to
the other parties hereto).
“Pension Plan” means any pension or other employee benefit plan (including any
plan subject to the Pension Benefits Standards Act (British Columbia), as
amended from time to time (or any successor statute) in respect of which (i) is
maintained by any Credit Party or Related Party, (ii) any Credit Party or
Related Party makes, has made or is required to make (at any time during the
five (5) calendar years preceding the date of this Agreement) contributions in
respect of its employees, or (iii) any other plan with respect to which any
Credit Party or any Related Party has incurred or may incur liability, including
contingent liability either to such plan or to any Person, administration or
Governmental Authority.
“Permitted Discretion” means a determination made in good faith and in the
exercise of reasonable (from a perspective of a secured asset based lender)
business judgment taking into account the customary practices of the Agent.
“Permitted Investments” means:

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

(b)   investments in certificates of deposit, bankers’ acceptances and time
deposits maturing within 180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit accounts issued or
offered by, any Schedule I bank under the Bank Act (Canada).

“Permitted Liens” means:

(a)   Liens in favour of the Agent, for and on behalf of the Lenders for the
obligations of the Borrower or any other Credit Party under or pursuant to the
Loan Documents;

(b)   Liens granted by a Credit Party in favour of another Credit Party in order
to secure any of its indebtedness to such other Credit Party, provided that such
Liens are subject to assignment, subordination and postponement arrangements
satisfactory to the Agent;

(c)   Purchase Money Liens securing Indebtedness and Liens to secure Capital
Lease Obligations, in each case only to the extent permitted by Section 6.1(f);

(d)   Liens imposed by any Governmental Authority for Taxes not yet due and
delinquent or which are being contested in good faith in compliance with
Section 5.3, and, during such period during which such Liens are being so
contested, such Liens shall not be executed on or enforced against any of the
assets of any Credit Party;

 

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(e)   carrier’s, warehousemen’s, mechanics’, materialmen’s, repairmen’s,
construction and other like Liens arising by operation of Applicable Law,
arising in the ordinary course of business, which are not overdue for a period
of more than 30 days or which are being contested in good faith and by
appropriate proceedings, and, during such period during which such Liens are
being so contested, such Liens shall not be executed on or enforced against any
of the assets of any Credit Party, provided in each case that the applicable
Credit Party shall have set aside on its books reserves deemed adequate therefor
and not resulting in qualification by auditors;

(f)   statutory Liens incurred or pledges or deposits made under worker’s
compensation, unemployment insurance and other social security legislation;

(g)   Liens or deposits to secure the performance of bids, tenders, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature (other than for borrowed money)
incurred in the ordinary course of business

(h)   servitudes, easements, rights-of-way, restrictions and other similar
encumbrances on real property imposed by Applicable Law or incurred in the
ordinary course of business and encumbrances consisting of zoning or building
restrictions, easements, licenses, restrictions on the use of property or minor
imperfections in title thereto which, in the aggregate, are not material, and
which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of the
Credit Parties;

(i)   Liens of or resulting from any judgment or award, the time for the appeal
or petition for rehearing of which shall not have expired, or in respect of
which the Credit Parties shall at any time in good faith be prosecuting an
appeal or proceeding for review and in respect of which a stay of execution
pending such appeal or proceeding for review shall have been secured;

(j)   undetermined or inchoate Liens and charges arising or potentially arising
under statutory provisions which have not at the time been filed or registered
in accordance with Applicable Law or of which written notice has not been duly
given in accordance with Applicable Law or which although filed or registered,
relate to obligations not due or delinquent;

(k)   the rights reserved to or vested in Governmental Authorities by statutory
provisions or by the terms of leases, licenses, franchises, grants or permits,
which affect any land, to terminate the leases, licenses, franchises, grants or
permits or to require annual or other periodic payments as a condition of the
continuance thereof;

(l)   securities to public utilities or to any municipalities or Governmental
Authorities or other public authorities when required by such utilities,
municipalities or Governmental Authorities or such other public authorities in
connection with the supply of services or utilities to a Credit Party;

 

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(m)   Liens or covenants restricting or prohibiting access to or from lands
abutting on controlled access highways or covenants affecting the use to which
lands may be put; provided that, in the case of a Credit Party such Liens or
covenants do not materially and adversely affect the use of such lands by the
Credit Party;

(n)   Liens consisting of royalties payable with respect to any asset or
property of a Credit Party existing as of the Effective Date; provided that the
existence of any such Lien on any material property or asset of a Credit Party
shall have been disclosed in writing to the Lenders prior to the Effective Date;

(o)   Liens securing reimbursement obligations relating to letters of credit
issued pursuant to this Agreement, provided that the value of the collateral
subject to any such Lien does not exceed the amount of the related reimbursement
obligation;

(p)   statutory Liens incurred or pledges or deposits made in favour of a
Governmental Authority to secure the performance of obligations of a Credit
Party under Environmental Laws to which any assets of such Credit Party are
subject, provided that such Liens have not become enforceable;

(q)   a Lien granted by a Credit Party to a landlord to secure the payment of
arrears of rent in respect of leased properties in the Province of Quebec leased
from such landlord, provided that such Lien is limited to the assets located at
or about such leased properties;

(r)   any Lien existing on any property or asset prior to the acquisition
thereof by a Credit Party or existing on any property or asset of any Person
that becomes a Credit Party after the date hereof prior to the time such Person
becomes a Credit Party; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Credit Party, as the case may be, (ii) such Lien shall not apply to any other
property or assets of such Credit Party, and (iii) such Lien shall secure only
those obligations which it secures on the date of such acquisition or the date
such Person becomes a Credit Party, as the case may be; and

(s)   any extension, renewal or replacement of any of the foregoing; provided,
however, that the Liens permitted hereunder shall not be extended to cover any
additional Indebtedness of the Credit Parties or their property (other than a
substitution of like property), except Liens in respect of Capital Lease
Obligations and Purchase Money Liens as permitted by (c) above.

“Person” includes any natural person, corporation, company, limited liability
company, unlimited liability company, trust, joint venture, association,
incorporated organization, partnership, Governmental Authority or other entity.
“PPSA” means the Personal Property Security Act (British Columbia), as amended
from time to time (or any successor statute) or similar legislation of any other
jurisdiction the laws of which are required by such legislation to be applied in
connection with the issue, perfection, enforcement, validity or effect of
security interests.

 

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“Priority Payables” means, with respect to any Person, any amount payable by
such Person which is secured by a Lien which ranks or is capable of ranking
prior to or pari passu with the Liens created by the Security Documents in
respect of any Eligible Accounts or Eligible Inventory, including amounts owing
for wages, vacation pay, severance pay, employee deductions, Wage Earner
Protection Program Act (Canada) obligations, sales tax, excise tax, Tax payable
pursuant to the ETA (net of GST input credits), income tax, workers
compensation, government royalties, pension fund obligations (including any
pension deficit), Canadian Pension and other Pension Plan obligations, real
property tax and other statutory or other claims that have or may have priority
over, or rank pari passu with, such Liens created by the Security Documents.
“Property” means any interest in any kind of property or asset, whether real
(including chattels real), personal or mixed, movable or immovable, tangible or
intangible.
“Purchase Money Lien” means a Lien taken or reserved in equipment to secure
payment of all or part of its purchase price, provided that such Lien
(i) secures an amount not exceeding the purchase price of such personal
property, (ii) extends only to such personal property and its proceeds, and
(iii) is granted prior to or within 30 days after the purchase of such personal
property.
“QST” means the Quebec sales tax imposed pursuant to an Act respecting the
Québec sales tax.
“Register” has the meaning set out in Section 9.4(c).
“Reimbursement Obligations” means, at any date, the sum of the outstanding
obligations of the Borrower to reimburse the Agent at such time to the extent
that the Agent is obligated to reimburse (a) the Issuing Bank at such time
pursuant to any Letter of Credit Guarantee and (b) the F/X Bank at such time
pursuant to any F/X Guarantee.
“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the respective directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.
“Release” is to be broadly interpreted and shall include an actual or potential
discharge, deposit, spill, leak, pumping, pouring, emission, emptying,
injection, escape, leaching, seepage or disposal of any Hazardous Materials
which is or may be in breach of any Environmental Laws.
“Repayment Notice” means a notice in the form of Exhibit J;
“Required Lenders” means, at any time, Lenders having Commitments which
represent, in the aggregate, more than 50% of the aggregate amount of the
Commitments of all the Lenders under the Credit.
“Responsible Officer” means, with respect to any Person, the chairman, the
president, any vice president, the chief executive officer, the chief operating
officer or the treasurer, and, in respect of financial or accounting matters,
any Financial Officer of such Person; unless otherwise specified, all references
herein to a Responsible Officer mean a Responsible Officer of the Borrower.

 

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“Restricted Payment” shall mean, with respect to any Person, any payment by such
Person (i) of any dividends on any of its Equity Securities, (ii) on account of,
or for the purpose of setting apart any property for a sinking or other
analogous fund for, the purchase, redemption, retirement or other acquisition of
any of its Equity Securities or any warrants, options or rights to acquire any
Equity Securities, or the making by such Person of any other distribution in
respect of any of its Equity Securities, (iii) of any principal of or interest
or premium on or of any amount in respect of a sinking or analogous fund or
defeasance fund for any Indebtedness of such Person ranking in right of payment
subordinate to any liability of such Person under the Loan Documents, (iv) of
any principal of or interest or premium on or of any amount in respect of a
sinking or analogous fund or defeasance fund for any Indebtedness of such Person
to a shareholder of such Person or to an Affiliate of a shareholder of such
Person, (v) in respect of an Investment, or (vi) of any management, consulting
or similar fee or any bonus payment or comparable payment, or by way of gift or
other gratuity, to any Affiliate of such Person or to any director or officer
thereof.
“Revolving Loan” has the meaning set out in Section 2.1.
“Rolling Period” means, as at the end of any fiscal month, such fiscal month
taken together with the eleven immediately preceding fiscal months.
“Scheduled Capital Expenditures” means Capital Expenditures of the Borrower and
the Credit Parties permitted for any Fiscal Year pursuant to Section 6.14.
“Security Documents” means the agreements, documents or instruments described or
referred to in Section 4.1 and Section 5.11 (including, to the extent such
Section describes an amendment, the agreement, document or instrument amended
thereby) and any and all other agreements, documents or instruments now or
hereafter executed and delivered by any Credit Party or any other Person as
security for the payment or performance of all or part of the obligations of the
Borrower (or such Credit Party or other Person) hereunder or under any other
Loan Documents, as any of the foregoing may have been, or may hereafter be,
amended, modified or supplemented.
“Services Agreement” means the services agreement dated December 15, 2010
between the Borrower and the Parent, as it may be amended, restated,
supplemented or otherwise modified from time to time.
“Settlement Date” means the date, which shall be weekly, or more frequently at
the discretion of the Agent upon the occurrence of an Event of Default or a
continuing decline or increase of the Loans, that the Agent and the Lenders
shall settle among themselves so that (a) the Agent shall not at any time have,
as the agent for the Lenders, any money at risk, and (b) on such Settlement Date
each Lender shall be responsible for its pro rata amount of the Revolving Loan,
calculated on the basis of each of their Applicable Percentages in respect of
the outstanding Exposure as at such date, provided that each Settlement Date
shall be a Business Day.

 

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“Standard Cost” means the standard cost of Inventory determined in accordance
with the applicable Credit Party’s published GAAP compliant inventory policy,
consistently applied, and excludes any portion of cost representing intercompany
profit or gain in the case of Inventory acquired from an Affiliate of any Credit
Party.
“Subsidiary” means, with respect to any Person (in this definition, the
“parent”) at any date, any other Person 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 Person (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, in each case by the
parent or one or more Subsidiaries of the parent or by the parent and one or
more Subsidiaries of the parent.
“Swap Agreement” means any agreement with respect to any swap, forward, future
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.
“Swap Transaction” means any transaction or agreement entered into between the
Borrower and any other counterparty with respect to any swap, forward, future or
derivative transaction or agreement 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.
“Taxes” means all taxes, charges, fees, levies, imposts and other assessments,
including all income, sales, use, goods and services, harmonized, value added,
capital, capital gains, alternative, franchise, net worth, branch transfer, land
transfer, profits, withholding, payroll, employer health, excise, stamp,
documentary, real property and personal property taxes, and any other taxes,
customs duties, fees, assessments, or similar charges in the nature of a tax,
including Canada Pension Plan and provincial pension plan contributions,
unemployment insurance payments and workers’ compensation premiums, together
with any instalments with respect thereto, and any interest, fines and penalties
with respect thereto, imposed by any Governmental Authority (including federal,
state, provincial, territorial, municipal and foreign Governmental Authorities),
and whether disputed or not.
“Transactions” means the execution, delivery and performance by the Borrower of
this Agreement and the other Loan Documents, the borrowing of Loans, the use of
the proceeds thereof and the issuance of Letters of Credit and the entering into
of F/X Contracts hereunder.

 

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“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 Canadian Prime Rate, the CDOR Rate, the Base
Rate, the LIBO Rate, or is a Letter of Credit.
“UCC” means the Uniform Commercial Code as in effect from time to time for the
applicable State in question.
“U.S. Dollars” and “U.S.$” refer to lawful money of the United States of
America.
“U.S.$ Equivalent” means, on any day, the amount of U.S. Dollars that the Agent
could purchase, in accordance with its normal practice, with a specified amount
of Canadian Dollars based on the spot rate at which U.S. Dollars are offered at
the start of such day by CIBC in Toronto, Ontario.
“Violation Notice” means any notice received by any Credit Party from any
Governmental Authority under any Environmental Law that the applicable Credit
Party or any of its property and assets is not in compliance with the
requirements of any Environmental Law.
“Wells Fargo” means Wells Fargo Bank N.A. (as successor to Wachovia Bank,
National Association), as agent.
“Wells Fargo Facilities” means the credit facilities established pursuant to the
Amended and Restated Loan and Security Agreement dated August 4, 2006 between
Wells Fargo, as agent, the Parent, Bluelinx Florida LP, and Bluelinx Services
Inc., as borrowers, Bluelinx Florida Holding No. 1 Inc., Bluelinx Florida
Holding No. 2 Inc., BLX Texas Acquisition I LLC, and BLX Texas Acquisition II
LLC, as guarantors, and the financial institutions party thereto as lenders, as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time.
1.2 Classification of Loans and Borrowings For purposes of this Agreement, Loans
may be classified and referred to by Type (e.g., a “Canadian Prime Rate Loan”)
and Borrowings also may be classified and referred to by Type (e.g., a “Canadian
Prime Rate Borrowing”).
1.3 Terms Generally The definitions of terms herein shall apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include”, “includes” and “including” shall be deemed to
be followed by the phrase “without limitation”. The word “will” shall be
construed to have the same meaning and effect as the word ‘shall”. The word “or”
is disjunctive; the word “and” is conjunctive. The word “shall” is mandatory;
the word “may” is permissive. The words “to the knowledge of” means, when
modifying a representation, warranty or other statement of any Person, that the
fact or situation described therein is known by the Person (or, in the case or a
Person other than a natural Person, known by the Responsible Officer of that
Person) making the representation, warranty or other statement, or with the
exercise of reasonable due diligence under the circumstances (in accordance with
the standard of what a reasonable Person in similar circumstances would have
done) would have been known by the Person (or, in the case of a Person other
than a natural Person, would have been known by such Responsible Officer of that
Person). Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any statute or any section thereof shall, unless
otherwise expressly stated, be deemed to be a reference to such statute or
section as amended, restated or re-enacted from time to time, (c) any reference
herein to any Person shall be construed to include such Person’s successors and
permitted assigns, (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, and
(f) 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.

 

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1.4 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. All calculations of the components of the
financial information for the purposes of determining compliance with the
financial ratios and financial covenants contained herein shall be made on a
basis consistent with GAAP in existence as at the date of this Agreement and
used in the preparation of the consolidated financial statements of the Borrower
referred to in Section 5.1(a), and all calculations with respect to inventory
shall use the same method for inventory valuation as used in the preparation of
the Borrower’s financial statements on the date hereof. Upon the adoption by the
Borrower of International Financial Reporting Standards, or in the event of a
change in GAAP, the Borrower and the Agent shall negotiate in good faith to
revise (if appropriate) such ratios and covenants to give effect to the
intention of the parties under this Agreement as at the Effective Date, and any
new ratio or covenant shall be subject to approval by the Required Lenders. In
the event that such negotiation is unsuccessful, all calculations thereafter
made for the purpose of determining compliance with the financial ratios and
financial covenants contained herein shall be made on a basis consistent with
GAAP in existence as at the Effective Date.
1.5 Time All time references herein shall, unless otherwise specified, be
references to local time in Toronto, Ontario. Time is of the essence of this
Agreement and the other Loan Documents.
1.6 Permitted Liens Any reference in any of the Loan Documents to a Permitted
Lien is not intended to subordinate or postpone, and shall not be interpreted as
subordinating or postponing, or as any agreement to subordinate or postpone, any
Lien created by any of the Loan Documents to any Permitted Lien.

 

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1.7 Interpretation Clause (Québec) For purposes of any assets, liabilities or
entities located in the Province of Québec and for all other purposes pursuant
to which the interpretation or construction of this Agreement may be subject to
the laws of the Province of Québec or a court or tribunal exercising
jurisdiction in the Province of Québec, (a) “personal property” shall be deemed
to include “movable property”, (b) “real property” shall be deemed to include
“immovable property”, (c) “tangible property” shall be deemed to include
“corporeal property”, (d) “intangible property” shall be deemed to include
“incorporeal property”, (e) “security interest”, “mortgage” and “lien” shall be
deemed to include a “hypothec”, “prior claim” and a resolutory clause, (f) all
references to filing, registering or recording under the PPSA or UCC shall be
deemed to include publication under the Civil Code of Québec, (g) all references
to “perfection” of or “perfected” liens or security interest shall be deemed to
include a reference to an “opposable” or “set up” lien or security interest as
against third parties, (h) any “right of offset”, “right of setoff” or similar
expression shall be deemed to include a “right of compensation”, (i) “goods”
shall be deemed to include “corporeal movable property” other than chattel
paper, documents of title, instruments, money and securities, (j) an “agent”
shall be deemed to include a “mandatary”, (k) “construction liens” shall be
deemed to include “legal hypothecs”; (l) “joint and several” shall be deemed to
include solidary; (m) “gross negligence or wilful misconduct” shall be deemed to
be “intentional or gross fault”; (n) “beneficial ownership” shall be deemed to
include “ownership on behalf of another as mandatary”; (o) “servitude” shall be
deemed to include easement; (p) “priority” shall be deemed to include “prior
claim”; (q) “survey” shall be deemed to include “certificate of location and
plan”; (r) “state” shall be deemed to include “province”; (s) “fee simple title”
shall be deemed to include “absolute ownership”. The parties hereto confirm that
it is their wish that this Agreement and any other document executed in
connection with the transactions contemplated herein be drawn up in the English
language only and that all other documents contemplated thereunder or relating
thereto, including notices, may also be drawn up in the English language only.
Les parties aux présentes confirment que c’est leur volonté que cette convention
et les autres documents de crédit soient rédigés en langue anglaise seulement et
que tous les documents, y compris tous avis, envisages par cette convention et
les autres documents peuvent être rédigés en la langue anglaise seulement.
1.8 Currency Unless otherwise specified in this Agreement, all references to
currency (without further description) are to lawful money of Canada.
ARTICLE 2
THE CREDITS
2.1 Commitments Subject to the terms and conditions set forth herein, each
Lender commits to make Loans (each such Loan made under this Section 2.1, a
“Revolving Loan”) to the Borrower from time to time during the period commencing
on the Effective Date and ending on the Maturity Date (each such commitment, a
“Commitment”) in an aggregate principal amount up to the amount set forth beside
such Lender’s name in Schedule A under the heading “Commitment”, provided that a
Lender shall not be required to extend further credit hereunder if any further
extension of credit made by such Lender as requested by the Borrower would
result in (i) such Lender’s Exposure exceeding such Lender’s Commitment, or
(ii) the sum of the total Exposure exceeding either the total Commitment or the
Borrowing Base. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, repay and reborrow
Revolving Loans. In addition, the Borrower may, on at least ten (10) days’ prior
written notice to the Agent, from time to time request a permanent increase in
the Commitment in an aggregate principal amount of up to $5,000,000, provided
that (i) no increase in the Commitments shall be made if a Default or an Event
of Default shall have occurred and be continuing or would result after giving
effect to such increase, (ii) each such increase shall be in a minimum principal
amount of $1,000,000, (iii) the Borrower shall pay to the Agent, for the account
of the Lenders, a one-time fee in an amount equal to 0.5 % of the amount of each
such Commitment increase, (iv) the aggregate principal amount of all such
Commitment increases shall not exceed $5,000,000, and (v) no Lender shall be
obligated to increase its Commitment. The pro rata share of each Lender’s
Commitment hereunder shall automatically increase as a result of any permitted
increase in the Commitment hereunder, and Schedule A shall be amended to reflect
any such permitted increase.

 

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2.2 Loans and Borrowings
(a) Each Revolving Loan shall be made as part of a Borrowing consisting of
Revolving Loans made by the Lenders rateably in accordance with their respective
Commitments. 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.
(b) Subject to the Letter of Credit Sub-Line limitation, the F/X Contract
Sub-Line limitation, the Borrowing Base limitations and the other limitations on
Loans and Borrowings as provided in this Agreement, each Borrowing shall be
comprised entirely of Canadian Prime Loans, Bankers Acceptances, BA Equivalent
Loans, Base Rate Loans, LIBO Rate Loans and/or the delivery of Letters of Credit
Guarantees or F/X Guarantees as the Borrower may request in accordance herewith.
For greater certainty, from and after a CIBC ABL Reorganization Date, Borrowing
with respect to Letters of Credit or F/X Contracts shall be governed by
Sections 2.18A or 2.19A, as applicable, and not by Sections 2.18 or 2.19.
(c) Each Lender may at its option make any LIBO Rate Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided that any exercise of such option shall not result in any increased
costs for the Borrower or affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement. At the commencement of each
Interest Period for any LIBO Rate Borrowing, such Borrowing shall be in an
aggregate amount that is an integral multiple of $250,000 and not less than
$500,000. At the commencement of each Contract Period for any BA Borrowing, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$250,000 and not less than $500,000. Borrowings of more than one Type may be
outstanding at the same time; provided that there shall not at any time be more
than a total of five BA Borrowings or five LIBO Rate Borrowings outstanding.

 

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2.3 Requests for Borrowings
(a) The initial Borrowings hereunder on the Effective Date in respect of the
Credit shall be Canadian Prime Borrowings. Thereafter, to request a Borrowing,
the Borrower shall notify the Agent of such request by written Borrowing Request
(i) in the case of a LIBO Rate Borrowing, not later than 11:00 a.m., Toronto
time, three Business Days before the date of the proposed Borrowing, (ii) in the
case of a BA Borrowing, not later than 11:00 a.m., Toronto time, two Business
Days before the date of the proposed Borrowing, or (iii) in the case of a
Canadian Prime Borrowing or a Base Rate Borrowing, not later than 12:00 p.m.,
Toronto time, on the date of the proposed Borrowing; or (ii) in the case of the
issuance of a Letter of Credit Guarantee in accordance with Section 2.18 (or,
after a CIBC ABL Reorganization Date, a Letter of Credit in accordance with
Section 2.18A) or the issuance of an F/X Guarantee in accordance with
Section 2.19 (or, after a CIBC ABL Reorganization Date, the entry into an F/X
Contract in accordance with Section 2.19A), not later than 11:00 a.m., Toronto
time, five (5) Business Days before the date of the proposed Borrowing. The
Agent and each Lender are entitled to rely and act upon any written Borrowing
Request given or purportedly given by the Borrower, and the Borrower hereby
waives the right to dispute the authenticity and validity of any such request or
resulting transaction once the Agent or any Lender has advanced funds or
arranged for the issuance of a Letter a Credit Guarantee based on such written
Borrowing Request. Each such written Borrowing Request shall be substantially in
the form of Exhibit B and shall specify the following information:

  (i)   the aggregate amount of each requested Borrowing and the Type thereof;  
  (ii)   the date of such Borrowing, which shall be a Business Day;

  (iii)   whether such Borrowing is to be a Canadian Prime Borrowing, a BA
Borrowing, a Base Rate Borrowing, a LIBO Rate Borrowing, or the issuance of a
Letter of Credit Guarantee in accordance with Section 2.18 (or, after a CIBC ABL
Reorganization Date, a Letter of Credit in accordance with Section 2.18A) or the
issuance of an F/X Guarantee in accordance with Section 2.19 (or, after a CIBC
ABL Reorganization Date, the entry into an F/X Contract in accordance with
Section 2.19A);

  (iv)   in the case of a LIBO Rate Borrowing, the initial Interest Period to be
applicable thereto, which shall be a period contemplated by the definition of
the term “Interest Period”, and in the case of a BA Borrowing, the initial
Contract Period to be applicable thereto, which shall be a period contemplated
by the definition of the term “Contract Period”; and

  (v)   the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of this Agreement.

(b) If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be a Canadian Prime Borrowing (if denominated in Canadian
Dollars) or a Base Rate Borrowing (if denominated in U. S. Dollars). If no
currency is specified, the Borrowing shall be denominated in Canadian Dollars.
If no Interest Period is specified with respect to any requested LIBO Rate
Borrowing, then the Borrower shall be deemed to have selected an Interest Period
of a one month duration. If no Contract Period is specified with respect to any
requested BA Borrowing, then the Borrower shall be deemed to have selected a
Contract Period of a one month duration.

 

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(c) Each Borrowing initially shall be of the Type specified in the applicable
Borrowing Request. Thereafter, the Borrower may elect to convert a Borrowing to
a different Type or to continue such Borrowing and, in the case of (i) a LIBO
Rate Borrowing, may elect a new Interest Period therefor, or (ii) a BA
Borrowing, may elect a new Contract Period therefor, all as provided in this
Section 2.3(c). The Borrower 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 in accordance with their Applicable Percentage, and the Loans
comprising each such portion shall be considered a separate Borrowing. To make
an election pursuant to this Section 2.3(c), the Borrower shall notify the Agent
of such election in the manner and by the time that a Borrowing Request would be
required under Section 2.3(a) if the Borrower were requesting a Borrowing of the
Type resulting from such election to be made on the effective date of such
election. In addition to the information specified in Section 2.3(a), each
Borrowing Request shall specify the Borrowing to which such 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.
(d) In the absence of a timely and proper election with regard to (i) LIBO Rate
Borrowings, the Borrower shall be deemed to have elected to convert such LIBO
Rate Borrowings to Base Rate Borrowings on the last day of the Interest Period
of the relevant LIBO Rate Borrowings, and (ii) BA Borrowings, the Borrower shall
be deemed to have elected to convert such BA Borrowings to Canadian Prime
Borrowings on the last day of the Contract Period of the relevant BA Borrowings.
(e) The Agent shall not incur any liability to the Borrower as a result of
acting in accordance with any notice or request referred to in this Section 2.3,
which notice or request the Agent believes in good faith to have been given by
an officer duly authorized by the Borrower to request Loans on its behalf or for
otherwise acting in good faith under this Section 2.3, and the crediting of
Loans to the Borrower’s disbursement accounts, or transmittal to such Person or
other bank account as the Borrower shall direct, shall conclusively establish
the obligation of the Borrower to repay such Loans as provided herein. Nothing
herein shall, however, release or be deemed to release the Agent in respect of
its gross negligence or wilful misconduct.
(f) Except to the extent otherwise permitted to the contrary hereunder, any
Borrowing Request made pursuant to in this Section 2.3 shall be irrevocable and
the Borrower shall be bound to borrow the funds requested therein in accordance
therewith.
2.4 Funding of Borrowings
(a) Each Lender shall make each Loan to be made by it hereunder on the proposed
date thereof by wire transfer of immediately available funds by 12:00 noon,
Toronto time, to the account of the Agent most recently designated by it for
such purpose by notice to the Lenders. The Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower and designated by the Borrower in the applicable
Borrowing Request. Prior to a CIBC ABL Reorganization Date, the Borrower shall
satisfy Reimbursement Obligations promptly as they arise by way of a request for
a Loan and all Loans made hereunder to satisfy Reimbursement Obligations: (i) in
respect of any Letter of Credit Guarantee shall be remitted by the Agent to the
Issuing Bank in accordance with such Letter of Credit Guarantee (unless the
Issuing Bank has already been fully reimbursed directly by the Borrower in
respect of drawings under the Letter of Credit which is the subject of such
Letter of Credit Guarantee), and (ii) in respect of any F/X Guarantee shall be
remitted by the Agent to the F/X Bank in accordance with such F/X Guarantee
(unless the F/X Bank has already been fully reimbursed directly by the Borrower
in respect of all such losses in respect of the F/X Contract which is the
subject of such F/X Guarantee). After a CIBC ABL Reorganization Date, the
Borrower shall satisfy Reimbursement Obligations promptly as they arise by way
of a request for a Loan and all Loans made hereunder to satisfy Reimbursement
Obligations: (i) in respect of any Letter of Credit shall be remitted by the
Agent to the Issuing Bank in accordance with such Letter of Credit (unless the
Issuing Bank has already been fully reimbursed directly by the Borrower in
respect of drawings under the Letter of Credit), and (ii) in respect of any F/X
Contract shall be remitted by the Agent to the F/X Bank in accordance with such
F/X Contract (unless the F/X Bank has already been fully reimbursed directly by
the Borrower in respect of all such losses in respect of the F/X Contract).

 

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(b) The Agent may, upon notice given by the Agent no later than 12:00 p.m.
Toronto time on any Settlement Date, request each Lender to make, and each
Lender hereby agrees to make, a Revolving Loan in an amount equal to such
Lender’s Applicable Percentage (calculated with respect to the aggregate
Commitments then outstanding) of the aggregate amount of the Revolving Loans
made by the Agent from the preceding Settlement Date to the date of such notice.
Each Lender’s obligation to make the Revolving Loans and to make the settlements
pursuant to this Section 2.4 shall not be affected by any circumstance,
including (i) any set-off, counterclaim, recoupment, defence or other right
which any such Lender or the Borrower may have against the Agent, the Borrower,
any Lender or any other Person for any reason whatsoever; (ii) any adverse
change in the condition (financial or otherwise) of the Borrower; or (iii) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing. Without limiting the liability and obligation of each Lender
to make such advances, the Borrower authorizes the Agent to charge the
Borrower’s loan account to the extent amounts received from the Lenders are not
sufficient to repay in full the amount of any such deficiency. To the extent
that any Lender has failed to fund all such payments and Revolving Loans, the
Agent shall be entitled to set off the funding short-fall against that Lender’s
pro rata share of all payments received from the Borrower.
(c) The Agent, for the account of the Lenders, shall disburse all amounts to the
Borrower and shall handle all collections. It is understood that for purposes of
advances to the Borrower and for purposes of this Section 2.4, the Agent is
using the funds of the Agent.
(d) Unless the Agent shall have been notified in writing by any Lender prior to
any advance to the Borrower that such Lender will not make the amount which
would constitute its share of the Borrowing on such date available to the Agent,
the Agent may assume that such Lender shall make such amount available to the
Agent on a Settlement Date, and the Agent may, in reliance upon such assumption,
make available to the Borrower a corresponding amount. A certificate of the
Agent submitted to any Lender with respect to any amount owing under this
Section 2.4 shall be conclusive, absent manifest error. If such Lender’s share
of such Borrowing is not in fact made available to the Agent by such Lender on
the Settlement Date, the Agent shall be entitled to recover such amount with
interest thereon at the rate per annum applicable to Revolving Loans hereunder,
on demand, from the Borrower without prejudice to any rights which the Agent may
have against such Lender hereunder. Nothing contained in this shall relieve any
Lender which has failed to make available its Applicable Percentage of any
borrowing hereunder from its obligation to do so in accordance with the terms
hereof. Nothing contained herein shall be deemed to obligate the Agent to make
available to the Borrower the full amount of a requested advance when the Agent
has any notice (written or otherwise) that any of the Lenders will not advance
its Applicable Percentage thereof.

 

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(e) On the Settlement Date, the Agent and the Lenders shall each remit to the
other, in immediately available funds, all amounts necessary so as to ensure
that, as of the Settlement Date, the Lenders shall have their Applicable
Percentage share of all outstanding Obligations.
(f) The Agent shall forward to each Lender, at the end of each fiscal month, a
copy of the account statement rendered by the Agent to the Borrower.
(g) The Agent shall, after receipt of any interest and fees earned under this
Agreement, promptly remit to the Lenders their Applicable Percentage of any
(i) fees they are entitled to receive, and (ii) interest computed at the rate
and as provided for in this Agreement on all outstanding amounts advanced by the
Lenders on each Settlement Date, prior to adjustment, that are subsequent to the
last remittance by the Agent to the Lenders of such interest amounts.
2.5 Interest
(a) The Loans comprising each Canadian Prime Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of
365 days or 366 days, as the case may be) at a rate per annum equal to the
Canadian Prime Rate plus the Applicable Margin from time to time in effect. The
Loans comprising each BA Borrowing shall bear interest (computed in advance on
the basis of the actual number of days in the relevant Contract Period over a
year of 365 days or 366 days, as the case may be) at a rate per annum equal to
the BA Rate plus the Applicable Margin from time to time in effect. The Loans
comprising each Base Rate Borrowing shall bear interest (computed on the basis
of the actual number of days elapsed over a year of 365 days at a rate per annum
equal to the Base Rate plus the Applicable Margin from time to time in effect.
The Loans comprising each LIBO Rate Borrowing shall bear interest (computed on
the basis of the actual number of days in the relevant Interest Period over a
year of 360 days) at the LIBO Rate for the Interest Period in effect for such
LIBO Rate Borrowing plus the Applicable Margin. The Loans comprising each BA
Borrowing shall be subject to the Acceptance Fee which shall be payable as set
out in Section 2.11
(b) If a Default or an Event of Default has occurred and is continuing, all
amounts outstanding hereunder (including, without duplication, all Loans and all
Letter of Credit Exposure and F/X Exposure) shall bear interest, after as well
as before judgment, at a rate per annum equal to 2% plus the rate otherwise
applicable to such Loan or, in the case of any amount not constituting principal
or interest on a Loan, at a rate equal to 2% plus the rate otherwise applicable
to, in the case of Canadian Dollar amounts, Canadian Prime Loans, or in the case
of U.S. Dollar amounts, Base Rate Loans.
(c) Accrued interest on each Loan shall be payable in arrears on the earlier of
(i) each applicable Interest Payment Date, and (ii) the date of termination of
the Commitments. In addition, in the event of any repayment or prepayment of any
Loan, accrued interest on the principal amount repaid or prepaid shall be
payable on the date of such repayment or prepayment.

 

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(d) All interest hereunder shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). Any Loan that is
repaid on the same day on which it is made shall bear interest for one day. The
applicable Canadian Prime Rate, Base Rate, LIBO Rate or BA Rate shall be
determined by the Agent, and such determination shall be conclusive absent
manifest error.
(e) For the purposes of the Interest Act (Canada) and disclosure thereunder,
whenever any interest or any fee to be paid hereunder or in connection herewith
is to be calculated on the basis of a 360-day or 365-day year, the yearly rate
of interest to which the rate used in such calculation is equivalent is the rate
so used multiplied by the actual number of days in the calendar year in which
the same is to be ascertained and divided by 360 or 365, as applicable. The
rates of interest under this Agreement are nominal rates, and not effective
rates or yields. The principle of deemed reinvestment of interest does not apply
to any interest calculation under this Agreement.
(f) If any provision of this Agreement would oblige the Borrower to make any
payment of interest or other amount payable to any Lender in an amount or
calculated at a rate which would be prohibited by any Applicable Law or would
result in a receipt by that Lender of “interest” at a “criminal rate” (as such
terms are construed under the Criminal Code (Canada)), then, notwithstanding
such provision, such amount or rate shall be deemed to have been adjusted with
retroactive effect to the maximum amount or rate of interest, as the case may
be, as would not be so prohibited by Applicable Law or so result in a receipt by
that Lender of “interest” at a “criminal rate”, such adjustment to be effected,
to the extent necessary (but only to the extent necessary), as follows:

  (i)   first, by reducing the amount or rate of interest required to be paid to
the affected Lender under Section 2.5; and

  (ii)   thereafter, by reducing any fees, commissions, costs, expenses,
premiums and other amounts required to be paid to the affected Lender which
would constitute interest for purposes of section 347 of the Criminal Code
(Canada).

2.6 Termination and Reduction of Commitments
(a) Unless previously terminated and subject to any earlier demand for payment
upon the occurrence of an Event of Default, the Commitments shall terminate on
the Maturity Date.
(b) The Borrower may, upon five Business Days prior irrevocable written notice
to the Agent, permanently cancel the Commitments without penalty. The Agent
shall promptly notify each Lender of the receipt by the Agent of any such
notice. Notwithstanding the termination of this Agreement, until all Obligations
are irrevocably and indefeasibly paid and performed in full, the Credit Parties
shall remain bound by the terms of this Agreement and under the Loan Documents
and shall not be relieved of any of their Obligations and the Agent and Lenders
shall retain all their rights and remedies hereunder and under the Loan
Documents (including, without limitation, in all then existing and after-arising
Collateral). Pending a final accounting, the Agent may withhold any balances in
the Borrower’s loan account to cover all of the Obligations, whether absolute or
contingent, including cash reserves for any contingent Obligations, including an
amount equal to 105% of the face amount of any Letters of Credit outstanding as
of the effective date of termination of this Agreement.

 

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(c) Unless the Commitments have been previously terminated, upon the occurrence
of the Maturity Date in respect of any Lender, the Commitment thereof shall be
permanently reduced to an amount equal to the amount of the Loans made by such
Lender at such date and the Commitment shall be permanently reduced by an amount
equal to such reduction of such Commitment.
(d) Subject to the other terms and conditions of this Agreement and unless the
Commitments have been earlier terminated, the Commitments shall be available
hereunder from the Effective Date until the Maturity Date.
2.7 Repayment of Loans. The Borrower hereby unconditionally promises to pay to
the Agent for the account of each Lender the then unpaid principal amount of
each Revolving Loan and all other Obligations on the earlier of the Maturity
Date and the date that the Commitment is terminated pursuant to Section 2.6(b)
or Section 7.1.
2.8 Evidence of Debt
(a) Each Lender shall maintain in accordance with its usual practice an account
or accounts evidencing the Indebtedness of the Borrower to such Lender resulting
from each Borrowing made by such Lender hereunder, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(b) The Agent shall maintain accounts in which it shall record (i) the amount of
each Borrowing made hereunder, the Type thereof and, in the cases of BA
Borrowings and LIBO Rate Loans, the relevant Contract Period or Interest Period,
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from the Borrower to each Lender hereunder, and
(iii) the amount of any sum received by the Agent hereunder for the account of
the Lenders and each Lender’s share thereof.
(c) The entries made in the accounts maintained pursuant to Sections 2.8(a) and
(b) shall be conclusive evidence (absent manifest error) of the existence and
amounts of the obligations recorded therein and shall be admissible in any
action or proceeding arising therefrom; provided that the failure of any Lender
or the Agent to maintain such accounts or any error therein shall not in any
manner affect the obligation of the Borrower to repay the Borrowings in
accordance with the terms of this Agreement. In the event of a conflict between
the records maintained by the Agent and any Lender, the records maintained by
the Agent shall govern.

 

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2.9 Prepayments
(a) Mandatory Borrowing Base Prepayments. If at any time the aggregate Exposure
of all Lenders is in excess of (i) the Borrowing Base or (ii) the total
Commitment, the Borrower shall immediately pay to the Agent, for the account of
the Lenders, the amount of such excess to be applied (i) first, in satisfaction
of all Reimbursement Obligations, if any, outstanding at such time, (ii) second,
as a prepayment of the Revolving Loans, and (iii) third, as Cover for any
remaining Bankers Acceptances, Letter of Credit Exposure and F/X Exposure in an
amount of such remaining excess.
(b) Application of Cover Amount. The amount of Cover required pursuant to
Section 2.9(a)(iii) or following the occurrence and continuance of an Event of
Default shall be paid by the Borrower to the Agent and retained by the Agent in
a collateral account maintained by the Agent at its Payment Office and
collaterally assigned to, or charged in favour of, the Agent as security until
such time as the applicable Letters of Credit and F/X Contracts shall have
expired or matured and Reimbursement Obligations, if any, with respect thereto
shall have been fully satisfied; provided that if any such Reimbursement
Obligations are not satisfied when due hereunder, the Agent may apply any or all
amounts in such collateral account in satisfaction of any or all such
Reimbursement Obligations.
(c) Currency Fluctuations. If, at any time, the Canadian $ Equivalent of the
Loans made by any Lender to the Borrower under any Credit exceeds the Commitment
of such Lender under such Credit (any such excess being referred to in this
Section as an “Excess Amount”), then the Borrower will forthwith repay to the
Agent, for the account of each applicable Lender, an amount equal to the Excess
Amount with respect to such Lender. The Agent shall request repayment of any
Excess Amount forthwith upon request therefor by any Lender, but the Agent is
not otherwise required to monitor Excess Amount levels or to request repayment
thereof.
(d) Voluntary Prepayment. The Borrower may, upon delivery of a Repayment Notice
to the Agent (delivered in accordance with the notice periods applicable to
delivery of a Borrowing Request under Section 2.3(a)), prepay all or any part of
a Canadian Prime Borrowing, or Base Rate Borrowing, BA Borrowing or LIBO Rate
Borrowing (provided that any such prepayment of part of a BA Borrowing or a LIBO
Rate Borrowing, and any BA Borrowing or LIBO Rate Borrowing not repaid by such
partial payment, shall be in amounts contemplated by Section 2.2(c)), provided
that a BA Borrowing or LIBO Rate Borrowing or part thereof may only be repaid on
the last day of the Contract Period or Interest Period, as the case may be. Each
Repayment Notice delivered hereunder shall be irrevocable. No prepayment under
this Section 2.9(d) shall permanently reduce or terminate any of the
Commitments.
(e) Notice by Agent. Upon receipt of any prepayment or Repayment Notice pursuant
to this Section 2.9, the Agent shall promptly notify each applicable Lender of
the contents thereof and of such Lender’s Applicable Percentage of such
prepayment. Each Repayment Notice provided by the Borrower in respect of any
permanent repayment or prepayment hereunder shall be in the form of Exhibit J
and shall be irrevocable at such time as the Agent or any Lender has commenced
taking any action pursuant to any such prepayment notice.

 

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2.10 Fees
(a) The Borrower shall pay to the Agent for the account of and distribution to
each Lender rateably in accordance with each such Lender’s Applicable
Percentage, in Canadian Dollars, an unused line fee (the “Unused Line Fee”) for
the period commencing on the Effective Date to and including the Maturity Date
(or such earlier date as the Commitments shall have been terminated entirely)
computed at a rate of 0.25% per annum on the average daily excess amount of the
aggregate Commitments over the aggregate Exposure (but excluding, solely for the
purpose of this Section 2.10, any F/X Exposure). The Unused Line Fees on the
Commitments shall be calculated monthly in arrears on the last Business Day of
each calendar month (and on the date on which the Commitments terminate) and
each such calculated amount shall be payable on the first Business Day of the
immediately following calendar month (or on the date on which the Commitments
terminate, as the case may be). All Unused Line Fees shall be computed on the
basis of a year of 365 or 366 days, as the case may be, and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).
(b) Prior to a CIBC ABL Reorganization Date, the Borrower agrees to pay to the
Agent for the account of each Lender rateably in accordance with each Lender’s
Applicable Percentage, a guarantee fee (a “Letter of Credit Guarantee Fee”) with
respect to the provision of Letter of Credit Guarantees. After a CIBC ABL
Reorganization Date, the Borrower agrees to pay to the Agent for the account of
each Lender rateably in accordance with each Lender’s Applicable Percentage, a
fee (a “Letter of Credit Fee”) with respect to the provision of Letter of
Credit. Each Letter of Credit Guarantee Fee and each Letter of Credit Fee shall
accrue and be payable at the rate of 1.75% per annum, in the case of documentary
Letters of Credit or documentary Letters of Guarantee, or 2.50% per annum, in
the case of stand-by Letters of Credit and stand-by Letters of Guarantee, on the
average daily amount of the Letter of Credit Exposure during the period from and
including the Effective Date (or the date on which any Letter of Credit Exposure
first exists to but excluding the latter of: (i) the date of termination of the
Commitments and (ii) the date on which there ceases to be any Letter of Credit
Exposure. All such Letter of Credit Guarantee Fees and Letter of Credit Fee
shall be calculated monthly in arrears on the last Business Day of each calendar
month (and on the date on which the Commitments terminate) and each such
calculated amount shall be payable on the first Business Day of the immediately
following calendar month (or on the date on which the Commitments terminate, as
the case may be); provided that all Letter of Credit Guarantee Fees and Letter
of Credit Fees, together with all Standard Letter of Credit Fees (as defined
below), accruing after the date on which the Commitments terminate shall be
payable on demand. All Letter of Credit Guarantee Fees and Letter of Credit Fees
payable pursuant to this Section 2.10(b) shall be computed on the basis of a
year of 365 or 366 days, as the case may be, and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day). The
Borrower also agrees to pay to the Agent, for the account of the Issuing Bank,
the Issuing Bank’s standard fees (the “Standard Letter of Credit Fees”) with
respect to the issuing, administration, handling, amendment, renewal or
extension of any Letter of Credit or processing of drawings thereunder. Such
standard fees shall be payable within 10 days after demand by the Agent or the
Issuing Bank.

 

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(c) The Borrower agrees to pay to the Agent, for its own account, on the
Effective Date a loan facility fee equal to 0.50% of the amount of the aggregate
Commitments.
(d) The Borrower agrees to pay to the Agent, for its own account, on the
Effective Date and on the first Business Day of each calendar month thereafter a
collateral management fee equal to $1,500 per month, which the Borrower
acknowledges and agrees shall be fully earned when paid.
(e) The Borrower agrees to pay to the Agent, for its own account, the Agent’s
standard charges, fees, costs and expenses for its field examinations,
verifications and audits in an amount equal to $1,200 per person per day plus
such field examiner’s and auditor’s out-of-pocket expenses.
(f) The Borrower agrees to pay to the Agent, for its own account, fees payable
in the amounts and at the times separately agreed upon in writing between the
Borrower and the Agent, if applicable.
(g) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Agent, for its own account or for distribution to the
Lenders or CIBC, as the case may be. Fees paid shall not be refundable except in
the case of manifest error in the calculation of any fee payment.
2.11 BA Borrowings
(a) Subject to the terms and conditions of this Agreement, the Borrower may
request a Borrowing by presenting drafts for acceptance and purchase as Bankers
Acceptances by the Lenders.
(b) No Contract Period with respect to a BA Borrowing shall extend beyond the
Maturity Date. The Borrower shall not be entitled to obtain or roll over any BA
Borrowings at any time that a Default or an Event of Default has occurred and is
continuing.
(c) To facilitate availment of BA Borrowings, the Borrower hereby appoints each
Lender as its attorney to sign and endorse on its behalf (in accordance with a
Borrowing Request relating to a BA Borrowing), in handwriting or by facsimile or
mechanical signature as and when deemed necessary by such Lender, blank forms of
Bankers Acceptances in the form requested by such Lender. In this respect, it is
each Lender’s responsibility to maintain an adequate supply of blank forms of
Bankers Acceptances for acceptance under this Agreement. The Borrower recognizes
and agrees that all Bankers Acceptances signed and/or endorsed by a Lender on
behalf of the Borrower shall bind the Borrower as fully and effectually as if
signed in the handwriting of and duly issued by the proper signing officers of
the Borrower. Each Lender is hereby authorized (in accordance with a Borrowing
Request relating to a BA Borrowing) to issue such Bankers Acceptances endorsed
in blank in such face amounts as may be determined by such Lender; provided that
the aggregate amount thereof is equal to the aggregate amount of Bankers
Acceptances required to be accepted and purchased by such Lender. No Lender
shall be liable for any damage, loss or other claim arising by reason of any
loss or improper use of any such instrument except the gross negligence or
wilful misconduct of the Lender or its officers, employees, agents or
representatives. Each Lender shall maintain a record with respect to Bankers
Acceptances (i) received by it in blank hereunder, (ii) voided by it for any
reason, (iii) accepted and purchased by it hereunder, and (iv) cancelled at
their respective maturities. On request by or on behalf of the Borrower, a
Lender shall cancel all forms of Bankers Acceptances which have been pre-signed
or pre-endorsed on behalf of the Borrower and which are held by such Lender and
are not required to be issued in accordance with the Borrower’s irrevocable
notice. Alternatively, the Borrower agrees that, at the request of the Agent,
the Borrower shall deliver to the Agent a “depository note” which complies with
the requirements of the Depository Bills and Notes Act (Canada), and consents to
the deposit of any such depository note in the book-based debt clearance system
maintained by the Canadian Depository for Securities.

 

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(d) Drafts of the Borrower to be accepted as Bankers Acceptances hereunder shall
be signed as set out in this Section 2.11. Notwithstanding that any person whose
signature appears on any Bankers Acceptances may no longer be an authorized
signatory for any Lender or the Borrower at the date of issuance of a Bankers
Acceptances, such signature shall nevertheless be valid and sufficient for all
purposes as if such authority had remained in force at the time of such issuance
and any such Bankers Acceptances so signed shall be binding on the Borrower.
(e) Promptly following receipt of a Borrowing Request specifying a Borrowing by
way of Bankers Acceptances, the Agent shall so advise the Lenders and shall
advise each Lender of the aggregate face amount of the Bankers Acceptances to be
accepted by it and the applicable Contract Period (which shall be identical for
all Lenders). The aggregate face amount of the Bankers Acceptances to be
accepted by the Lenders shall be in a minimum aggregate amount of Cdn.$500,000
and shall be a whole multiple of Cdn.$250,000, and such face amount shall be in
the Lenders’ pro rata portions of such Borrowing, provided that the Agent may in
its sole discretion increase or reduce any Lender’s portion of such BA Borrowing
to the nearest Cdn.$100,000 without reducing the overall Commitments.
(f) Upon acceptance of a Bankers Acceptance by a Lender, such Lender shall
purchase, or arrange for the purchase of, each Bankers Acceptance from the
Borrower at the Discount Rate for such Lender applicable to such Bankers
Acceptance accepted by it and provide to the Agent the Discount Proceeds
therefor for the account of the Borrower. The Acceptance Fee payable by the
Borrower to a Lender under Section 2.5 in respect of each Bankers Acceptance
accepted by such Lender shall be set off against the Discount Proceeds payable
by such Lender under this Section 2.11.
(g) Each Lender may at any time and from time to time hold, sell, rediscount or
otherwise dispose of any or all Bankers Acceptances accepted and purchased by
it.
(h) If a Lender is not a chartered bank under the Bank Act (Canada) or if a
Lender notifies the Agent in writing that it is otherwise unable to accept
Bankers Acceptances, such Lender will, instead of accepting and purchasing
Bankers Acceptances, make a Loan (a “BA Equivalent Loan”) to the Borrower in the
amount and for the same term as the draft which such Lender would otherwise have
been required to accept and purchase hereunder. Each such Lender will provide to
the Agent the Discount Proceeds of such BA Equivalent Loan for the account of
the Borrower. Each such BA Equivalent Loan will bear interest at the same rate
which would result if such Lender had accepted (and been paid an Acceptance Fee)
and purchased (on a discounted basis) a Bankers Acceptance for the relevant
Contract Period (it being the intention of the parties that each such BA
Equivalent Loan shall have the same economic consequences for the Lenders and
the Borrower as the Bankers Acceptance which such BA Equivalent Loan replaces).
All such interest shall be paid in advance on the date such BA Equivalent Loan
is made, and will be deducted from the principal amount of such BA Equivalent
Loan in the same manner in which the Discount Proceeds of a Bankers Acceptance
would be deducted from the face amount of the Bankers Acceptance. Subject to
repayment requirements, on the last day of the relevant Contract Period for such
BA Equivalent Loan, the Borrower shall be entitled to convert each such BA
Equivalent Loan into another type of Loan, or to roll over each such BA
Equivalent Loan into another BA Equivalent Loan, all in accordance with the
applicable provisions of this Agreement.

 

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(i) With respect to each BA Borrowing, at or before 10:00 a.m. two Business Days
before the last day of the Contract Period of such BA Borrowing, the Borrower
shall notify the Agent by irrevocable telephone notice, followed by a notice of
rollover on the same day, if the Borrower intends to issue Bankers Acceptances
on such last day of the Contract Period to provide for the payment of such
maturing BA Borrowing. If the Borrower fails to notify the Agent of its
intention to issue Banker’s Acceptances on such last day of the Contract Period,
the Borrower shall provide payment to the Agent on behalf of the Lenders of an
amount equal to the aggregate face amount of such BA Borrowing on the last day
of the Contract Period of thereof. If the Borrower fails to make such payment,
such maturing Bankers Acceptances shall be deemed to have been converted on the
last day of the Contract Period into a Canadian Prime Loan in an amount equal to
the face amount of such Bankers Acceptances.
(j) The Borrower waives presentment for payment and any other defence to payment
of any amounts due to a Lender in respect of a Bankers Acceptances accepted and
purchased by it pursuant to this Agreement which might exist solely by reason of
such Bankers Acceptances being held, at the maturity thereof, by such Lender in
its own right, and the Borrower agrees not to claim any days of grace if such
Lender, as holder, sues the Borrower on the Bankers Acceptances for payment of
the amount payable by the Borrower thereunder. On the last day of the Contract
Period of a Bankers Acceptances, or such earlier date as may be required or
permitted pursuant to the provisions of this Agreement, the Borrower shall pay
the Lender that has accepted and purchased such Bankers Acceptances the full
face amount of such Bankers Acceptances and, after such payment, the Borrower
shall have no further liability in respect of such Bankers Acceptances and such
Lender shall be entitled to all benefits of, and be responsible for all payments
due to third parties under, such Bankers Acceptances.
(k) If a Lender grants a participation in a portion of its rights under this
Agreement to a participant under Section 9.4(e), then, in respect of any BA
Borrowing, a portion thereof may, at the option of such Lender, be by way of
Bankers Acceptance accepted by such Participant. In such event, the Borrower
shall upon request of the Agent or the Lender granting the participation execute
and deliver a form of Bankers Acceptance undertaking in favour of such
Participant for delivery to such participant.
(l) Except as required by any Lender upon the occurrence of an Event of Default,
no BA Borrowing may be repaid by the Borrower prior to the expiry date of the
Contract Period applicable to such BA Borrowing; provided, however, that the
Borrower may defease any BA Borrowing by depositing with the Agent an amount
that is sufficient to repay such BA Borrowing on the expiry date of the Contract
Period applicable to such BA Borrowing.

 

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2.12 Increased Costs; Illegality; Alternate Rate of Interest
(a) If any Change in Law shall:

  (i)   impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender; or

  (ii)   impose on any Lender or the Issuing Bank or the London interbank market
any other condition affecting this Agreement (including the imposition on any
Lender of, or any change to, any Indemnified Tax or other charge with respect to
its LIBO Rate Loans or any Letter of Credit or participation therein, or its
obligation to make LIBO Rate Loans or any Letter of Credit);

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Loan (or of maintaining its obligation to
make any such Loan) or to increase the cost to such Lender of participating in,
issuing or maintaining any Letter of Credit or any Loan or to reduce the amount
of any sum received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the Borrower will pay to such Lender,
such additional amount or amounts as will compensate such Lender, for such
additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender’s capital or on the capital of such Lender’s holding company, if any, as
a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level below that which such Lender or such Lender’s holding
company could have achieved but for such Change in Law (taking into
consideration such Lender’s policies and the policies of such Lender’s holding
company with respect to capital adequacy) and such Lender’s desired return on
capital, then from time to time the Borrower will pay to such Lender, such
additional amount or amounts as will compensate such Lender or such Lender’s
holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender as specified in Sections 2.12(a) or (b), together with a
brief description of the Change of Law, shall be delivered to the Borrower, and
shall be conclusive absent manifest error. In preparing any such certificate, a
Lender shall be entitled to use averages and to make reasonable estimates, and
shall not be required to “match contracts” or to isolate particular
transactions. The Borrower shall pay such Lender the amount shown as due on any
such certificate within 10 days after receipt thereof.

 

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(d) Failure or delay on the part of any Lender to demand compensation pursuant
to this Section 2.12 shall not constitute a waiver of such Lender’s right to
demand such compensation.
(e) In the event that any Lender shall have determined (which determination
shall be reasonably exercised and shall, absent manifest error, be final,
conclusive and binding upon all parties) at any time that the current or
reasonably expected foreign currency markets are unusually unstable or that the
making or continuance of any Loan denominated in a currency other than Canadian
Dollars has become unlawful or materially restricted as a result of compliance
by such Lender in good faith with any Applicable Law, or by any applicable
guideline or order (whether or not having the force of law and whether or not
failure to comply therewith would be unlawful), then, in any such event, such
Lender shall give prompt notice (by telephone and confirmed in writing) to the
Borrower and to the Agent of such determination (which notice the Agent shall
promptly transmit to the other Lenders). Upon the giving of the notice to the
Borrower referred to in this Section 2.12(e), the Borrower’s right to request
(by continuation, conversion or otherwise), and such Lender’s obligation to
make, Loans denominated in a currency other than Canadian Dollars shall be
immediately suspended, and thereafter any requested Borrowing of Loans
denominated in a currency other than Canadian Dollars shall, as to such Lender
only, be deemed to be a request for a Canadian Prime Loan, and if the affected
Loan or Loans are then outstanding, the Borrower shall immediately, or if
permitted by Applicable Law, no later than the date permitted thereby, upon at
least one Business Day prior written notice to the Agent and the affected
Lender, convert each such Loan denominated in a currency other than Canadian
Dollars into a Canadian Prime Loan, provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 2.12(e).
(f) If prior to the commencement of any Interest Period for a LIBO Rate
Borrowing:

  (i)   the Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the LIBO Rate for such Interest Period; or

  (ii)   the Agent is advised by the Required Lenders that the LIBO Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans included in such Borrowing for such
Interest Period;

then the Agent shall give notice thereof to the Borrower and the Lenders by
telephone or telecopy as promptly as practicable thereafter and, until the Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such
notice no longer exist, (i) any Interest Election Request that requests the
conversion of any Borrowing to, or continuation of any Borrowing as, a LIBO Rate
Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a
LIBO Rate Borrowing, such Borrowing shall be made as a Base Rate Borrowing;
provided that (A) if the circumstances giving rise to such notice do not affect
all the Lenders, then requests by the Borrower for LIBO Rate Borrowings may be
made to Lenders that are not affected thereby, and (B) if the circumstances
giving rise to such notice affect only one Type of Borrowings, then the other
Type of Borrowings shall be permitted.

 

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2.13 Break Funding Payments. In the event of (a) the failure by the Borrower to
borrow, convert, continue or prepay any Loan on the date specified in any notice
delivered by the Borrower pursuant hereto, or (b) the payment or conversion of
any principal of any BA Borrowing or LIBO Rate Loan other than on the last day
of a Contract Period or, as applicable, Interest Period applicable thereto
(including as a result of an Event of Default), or (c) the prepayment or
conversion of any BA Borrowing or LIBO Rate Loan other than on the last day of
the Interest Period applicable thereto, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense attributable to such
event. A certificate of any Lender setting forth any amount or amounts that such
Lender is entitled to receive pursuant to this Section 2.13 shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within
10 days after receipt thereof.
2.14 Taxes
(a) Any and all payments by or on account of any obligation of the Borrower
hereunder shall be made free and clear of and without deduction or withholding
for any Indemnified Taxes; provided that if the Borrower shall be required to
deduct or withhold any Indemnified Taxes from such payments, then (i) the sum
payable shall be increased as necessary so that, after making all required
deductions or withholdings (including deductions or withholdings applicable to
additional sums payable under this Section 2.14), the Agent, or Lender (as the
case may be) receives an amount equal to the sum it would have received had no
such deduction or withholding been made, (ii) the Borrower shall make such
deduction or withholding, and (iii) the Borrower shall pay to the relevant
Governmental Authority in accordance with Applicable Law the full amount
deducted or withheld.
(b) In addition to the payments by the Borrower required by 2.14(a), the
Borrower shall pay any and all present or future stamp or documentary Taxes or
any other excise or property Taxes, charges or similar levies arising from any
payment made hereunder or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement to the relevant Governmental Authority
in accordance with Applicable Law.
(c) The Borrower shall indemnify the Agent, and each Lender, within 10 days
after written demand therefor, for the full amount of any Indemnified Taxes paid
by the Agent, such Lender, as the case may be, on or with respect to any payment
by or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes imposed or asserted on or attributable to amounts payable
under this Section 2.14) and any penalties, interest and 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 by a Lender, or by the Agent on its own behalf or on behalf of a
Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes by the
Borrower to a Governmental Authority, the Borrower shall deliver to the 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 Agent.

 

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(e) If the Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes as to which it has been indemnified by the
Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section 2.14 and, in the Agent’s or such Lender’s opinion, such
refund amount is both reasonably identifiable and quantifiable by it without
involving it in an unacceptable administrative burden, it shall pay over such
refund amount to the Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by the Borrower under this Section 2.14 with
respect to the Taxes giving rise to such refund, and only to the extent that the
Agent or Lender, as applicable, is satisfied that it may do so without prejudice
to its right, as against the relevant Governmental Authority, to retain such
refund), net of all out-of-pocket expenses of the Agent or such Lender and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the
request of the Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Agent or such Lender if the Agent or such Lender
is required to repay such refund to such Governmental Authority. Nothing herein
contained shall (i) interfere with the right of the Agent or any Lender to
arrange its affairs in whatever manner it thinks fit and, in particular, no
Lender shall be under any obligation to claim relief for tax purposes on its
corporate profits or otherwise, or to claim such relief in priority to any other
claims, reliefs, credits or deductions available to it, or (ii) require the
Agent or any Lender to make available its tax returns (or any other information
relating to its Taxes which it deems confidential) to the Borrower or any other
Person.
2.15 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
(a) The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or amounts payable in respect of
Reimbursement Obligations, amounts payable under any of Sections 2.12, 2.13 or
2.14, or amounts otherwise payable hereunder) prior to 12:00 noon, Toronto time,
on the date when due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Agent at the Payment Office, except that payments pursuant
to any indemnities contained herein shall be made directly to the Persons
entitled thereto. The 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, provided
that, in the case of any payment with respect to a LIBO Rate Loan, the date for
payment shall be advanced to the next preceding Business Day if the next
succeeding Business Day is in a subsequent calendar month. All payments under
this Section 2.15 in respect of LIBO Rate Loans and Base Rate Loans shall be
made in U.S. Dollars. All other payments under this Section 2.15 shall be made
in Canadian Dollars. The Borrower hereby authorizes the Agent to debit the
Borrower’s loan account to effect any payment due to the Lenders or the Agent
pursuant to this Agreement. Any resulting overdraft in such account shall be
payable by the Borrower to the Agent in same day funds.

 

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(b) If at any time insufficient funds are received by and available to the Agent
to pay fully all amounts of principal, interest, fees, amounts payable in
respect of Reimbursement Obligations, amounts payable under any of
Sections 2.12, 2.13 or 2.14 and other amounts payable hereunder, any available
funds shall be applied (i) first, to pay any fees, indemnities or expense
reimbursements then due to the Agent from the Borrower, (ii) second, to pay any
fees or expense reimbursements then due to the Lenders from the Borrower,
(iii) third, to pay interest due in respect of all Revolving Loans, (iv) fourth,
to pay or prepay principal of the Revolving Loans and unpaid Reimbursement
Obligations and (v) fifth, to the payment of any other Obligation due to the
Agent or any Lender by the Borrower, including amounts payable under any of
Sections 2.12, 2.13 or 2.14 and other amounts otherwise payable hereunder.
(c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on or fees
in respect of any of its Revolving Loans or its share of Reimbursement
Obligations resulting in such Lender receiving payment of a greater proportion
of the aggregate amount of any principal of or interest on or fees in respect of
any of its Revolving Loans or participations in Reimbursement Obligations than
the proportion to which it is entitled, then the Lender receiving such greater
proportion shall purchase (for cash at face value) participations in the
Revolving Loans or participations in Reimbursement Obligations owed to other
Lenders (as the case may be) to the extent necessary so that the benefit of all
such payments shall be shared by the Lenders rateably taking into account each
of the Applicable Percentages in respect of each Lender; 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) this Section 2.15(c) shall not apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this Agreement or any
payment obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in Reimbursement Obligations
to any assignee or participant, other than to the Borrower or other Credit Party
or any Affiliate thereof (as to which the provisions of this paragraph shall
apply). The 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 the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Agent shall have received written notice from the Borrower prior
to the date on which any payment is due to the Agent for the account of the
Lenders hereunder that the Borrower will not make such payment, the Agent may
assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders,
the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders, severally agrees to repay to the Agent
forthwith on demand the amount so distributed to such Lender with interest
thereon, for each day from and including the date such amount is distributed to
it to but excluding the date of payment to the Agent, at the applicable rate for
Canadian Prime Loans (if such amount is denominated in Canadian Dollars) or the
applicable rate for Base Rate Loans (if such amount is denominated in U.S.
Dollars).

 

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(e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.15(d), then the Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Agent for the account of such Lender to satisfy such Lender’s
obligations under such Section 2.15(d) until all such unsatisfied obligations
are fully paid.
(f) Nothing in this Agreement shall be deemed to obligate any Lender to obtain
the funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.
2.16 Currency Indemnity. If, for the purposes of obtaining judgment in any court
in any jurisdiction with respect to this Agreement or any other Loan Document,
it becomes necessary to convert into a particular currency (the “Judgment
Currency”) any amount due under this Agreement or under any other Loan Document
in any currency other than the Judgment Currency (the “Currency Due”), then
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which judgment is given. For this purpose “rate of exchange”
means the rate at which the Agent is able, on the relevant date, to purchase the
Currency Due with the Judgment Currency in accordance with its normal practice
at its head office in Toronto, Ontario. In the event that there is a change in
the rate of exchange prevailing between the Business Day before the day on which
the judgment is given and the date of receipt by the Agent of the amount due,
the Borrower will, on the date of receipt by the Agent, pay such additional
amounts, if any, or be entitled to receive reimbursement of such amount, if any,
as may be necessary to ensure that the amount received by the Agent on such date
is the amount in the Judgment Currency which when converted at the rate of
exchange prevailing on the date of receipt by the Agent is the amount then due
under this Agreement or such other Loan Document in the Currency Due. If the
amount of the Currency Due which the Agent is so able to purchase is less than
the amount of the Currency Due originally due to it, the Borrower shall
indemnify and save the Agent and the Lenders harmless from and against all loss
or damage arising as a result of such deficiency. This indemnity shall
constitute an obligation separate and independent from the other obligations
contained in this Agreement and the other Loan Documents, shall give rise to a
separate and independent cause of action, shall apply irrespective of any
indulgence granted by the Agent from time to time and shall continue in full
force and effect notwithstanding any judgment or order for a liquidated sum in
respect of an amount due under this Agreement or any other Loan Document or
under any judgment or order.
2.17 Collection of Accounts
(a) Each Credit Party shall, and shall cause each other Credit Party to, at its
expense, enforce, collect and receive all amounts owing on its Accounts in the
ordinary course of its business and any proceeds it so receives shall be subject
to the terms hereof. Any proceeds received by a Credit Party in respect of
Accounts, and any cheques, cash, credit card sales and receipts, notes or other
instruments or property received by a Credit Party with respect to any
Collateral, shall be held by such Credit Party in trust or as mandatary for the
Agent, separate from such Credit Party’s own property and funds, and promptly
turned over to the Agent with proper assignments or endorsements by deposit to
the Blocked Accounts.

 

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(b) Each Credit Party shall, and shall cause each other Credit Party to:
(i) irrevocably authorize and direct any bank which maintains any Credit Party’s
initial receipt of cash, cheques and other items to promptly wire transfer all
available funds to a Blocked Account; and (ii) advise all such banks of the
Agent’s security interest in such funds. The Borrower shall, and shall cause
each other Credit Party to, provide the Agent with prior written notice of any
and all deposit accounts opened or to be opened subsequent to the Effective
Date. All amounts received by the Agent in payment of Accounts will be credited
to the Blocked Account when the Agent is advised by its bank of its receipt of
“collected funds” at the Agent’s bank account in Toronto, Ontario on the
Business Day of such advise if advised no later than 12:00 noon, Toronto time,
or on the next succeeding Business Day if so advised after 12:00 noon, Toronto
time. No cheques, drafts or other instrument received by the Agent shall
constitute final payment to the Agent unless and until such instruments have
actually been collected.
(c) After any Default or Event of Default that is continuing and upon the
request of the Agent, the Borrower shall, and shall cause each Credit Party to:
(i) indicate on all of its invoices that funds should be delivered to and
deposited in a lock box or a Blocked Account, as applicable; and (ii) direct all
of its account debtors to deposit any and all proceeds of Collateral into the
lock boxes or the Blocked Accounts, as applicable.
(d) Each Credit Party shall, and shall cause each other Credit Party to,
establish and maintain, in its own respective name and at its expense, deposit
accounts and lock boxes with such banks as are acceptable to the Agent (the
“Blocked Accounts”) into which the Borrower shall promptly cause to be
deposited: (i) all proceeds of Collateral received by any Credit Party,
including all amounts payable to any Credit Party from credit card issuers and
credit card processors, and (ii) all amounts on deposit in deposit accounts used
by any Credit Party at each of its locations, all as further provided in
Section 2.17(b). The banks at which the Blocked Accounts are established and the
applicable Credit Parties shall enter into three-party agreements, in form and
substance satisfactory to the Agent (the “Blocked Account Agreements”),
providing that, among other things, all cash, cheques and items received or
deposited in the Blocked Accounts are subject to Liens in favour of the Agent,
that the depository bank has no Lien upon, or right of set off against, the
Blocked Accounts and any cash, cheques, items, wires or other funds from time to
time on deposit therein, except as otherwise provided in the Blocked Account
Agreements, and that on a daily basis the depository bank will wire, or
otherwise transfer, in immediately available funds, all funds received or
deposited into the Blocked Accounts to such bank account as the Agent may from
time to time designate for such purpose. The Borrower hereby confirms and agrees
that all amounts deposited in such Blocked Accounts and any other funds received
and collected by the Agent, whether as proceeds of Inventory or other Collateral
or otherwise, shall be subject to the Liens in favour of the Agent. Concurrently
with the establishment by any Credit Party after the date hereof of any bank
account, such Credit Party shall provide the Agent with an amended Schedule 3.27
reflecting such new account.

 

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(e) The parties hereto hereby acknowledge, confirm and agree that the
implementation of the cash management arrangements is a contractual right
provided to the Agent and the Lenders hereunder in order for the Agent and the
Lenders to manage and monitor their collateral position and not a proceeding for
enforcement or recovery of a claim, or pursuant to, or an enforcement of, any
security or remedies whatsoever, that the cash management arrangements
contemplated herein are critical to the structure of the lending arrangements
contemplated herein, that the Lenders are relying on the Borrower’s
acknowledgement, confirmation and agreement with respect to such cash management
arrangements in making accommodations of credit available to the Borrower and in
particular that any accommodations of credit are being provided by the Lenders
to the Borrower strictly on the basis of a borrowing base calculation to fully
support and collateralize any such accommodations of credit hereunder.
(f) The parties hereto hereby acknowledge, confirm and agree that the Blocked
Accounts will not be activated unless the Borrower fails to maintain Excess
Availability above $1,000,000 at any time or a Default has occurred which has
not been waived.
2.18 Letters of Credit Prior to a CIBC ABL Reorganization Date, in order to
assist the Borrower in establishing Letters of Credit with the Issuing Bank, the
Borrower has requested the Agent and the Agent has agreed to execute a Letter of
Credit Guarantee subject to the following terms and conditions:
(a) Within the limits of the Commitments and the Borrowing Base, and the other
limitations contained in this Agreement, the Agent shall assist the Borrower in
obtaining Letters of Credit, denominated in Canadian Dollars or U.S. Dollars, in
an amount not to exceed the outstanding amount of the Letter of Credit Sub-Line.
The Agent’s assistance for amounts in excess of the limitation set forth herein
shall at all times and in all respects be in the Agent’s sole discretion. It is
understood that the term, form and purpose of each Letter of Credit and all
documentation in connection therewith, and any amendments, modifications or
extensions thereof, must be mutually acceptable to the Agent, the Issuing Bank
and the Borrower. Any and all outstanding Letter of Credit Guarantees shall be
reserved dollar for dollar from the Borrowing Base as an Availability Reserve.
Upon the expiry of a Letter of Credit Guarantee, amounts reserved as an
Availability Reserve in respect of such Letter of Credit Guarantee, as the case
may be, shall no longer be reserved from the Borrowing Base as an Availability
Reserve.
(b) The Agent shall have the right, without notice to the Borrower, to charge
the Borrower’s loan account with the amount of any and all indebtedness,
liability or obligation of any kind incurred by the Agent under the Letter of
Credit Guarantees at the earlier of (a) payment by the Agent under the Letter of
Credit Guarantee; or (b) the occurrence and continuance of an Event of Default,
unless the Borrower has provided Cover to the Agent in an amount equal to the
face amount of such Letter of Credit Guarantees. Any amount so charged to the
Borrower’s loan account shall be deemed a Canadian Prime Rate Loan or a Base
Rate Loan hereunder, depending on the currency of the Borrower’s payment
obligation thereunder, and shall incur interest at the rate provided in Section
2.5.

 

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(c) The Borrower unconditionally indemnifies the Agent and holds the Agent
harmless from any and all loss, claim or liability incurred by the Agent arising
from any transactions or occurrences relating to Letters of Credit established
or opened for the Borrower’s account, the collateral relating thereto and any
drafts or acceptances thereunder, and all Obligations thereunder, including any
such loss or claim due to any errors, omissions, negligence, misconduct or
action taken by any Issuing Bank, other than for any such loss, claim or
liability arising out of the gross negligence or willful misconduct by the Agent
under the Letter of Credit Guarantee. This indemnity shall survive termination
of this Agreement. The Borrower agrees that any charges incurred by the Agent
for the Borrower’s account from the Issuing Bank shall be conclusive upon the
Agent and may be charged to the Borrower’s loan account.
(d) The Agent shall not be responsible for: (a) the existence, character,
quality, quantity, condition, packing, value or delivery of the goods purporting
to be represented by any documents; (b) any difference or variation in the
character, quality, quantity, condition, packing, value or delivery of the goods
from that expressed in the documents; (c) the validity, sufficiency or
genuineness of any documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (d) the time, place, manner or order in
which shipment is made; partial or incomplete shipment, or failure or omission
to ship any or all of the goods referred to in the Letters of Credit or
documents; (e) any deviation from instructions; (f) delay, default, or fraud by
the shipper and/or anyone else in connection with the goods or the shipping
thereof; or (g) any breach of contract between the shipper or vendors and the
Borrower.
(e) Each of the Credit Parties agrees that any action taken by the Agent, if
taken in good faith, or any action taken by any Issuing Bank, under or in
connection with the Letters of Credit, the Letter of Credit Guarantees, the
drafts or acceptances, or the Collateral, shall be binding on the Credit Parties
and shall not result in any liability whatsoever of the Agent to any Credit
Party, except to the extent of gross negligence or wilful misconduct of the
Agent. In furtherance thereof, the Agent shall have the full right and authority
to: (a) clear and resolve any questions of non compliance of documents; (b) give
any instructions as to acceptance or rejection of any documents or goods;
(c) execute any and all steamship or airways guarantees (and applications
therefor), indemnities or delivery orders; (d) grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and (e) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances
or Letters of Credit Guarantees; all in the Agent’s sole discretion. The Issuing
Bank shall be entitled to comply with and honor any and all such documents or
instruments executed by or received solely from the Agent, all without any
consent from any Credit Party. In addition, without the Agent’s express consent
and endorsement in writing, each of the Credit Parties agrees: (a) not to
(i) execute any applications for steamship or airway guarantees, indemnities or
delivery orders; (ii) grant any extensions of the maturity of, time of payment
for, or time of presentation of, any drafts, acceptances or documents; or
(iii) agree to any amendments, renewals, extensions, modifications, changes or
cancellations of any of the terms or conditions of any of the applications,
Letters of Credit, drafts or acceptances or Letters of Credit Guarantees; and
(b) upon the occurrence and during the continuance of an Event of Default, not
to (i) clear and resolve any questions of non compliance of documents, or
(ii) give any instructions as to acceptances or rejection of any documents or
goods.

 

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(f) Each of the Credit Parties shall, and shall cause each other Credit Party
to: (a) procure any necessary import, export or other licenses or certificates
for the import or handling of the Collateral; (b) comply with all Applicable Law
in regard to the shipment and importation of the Collateral, or the financing
thereof; and (c) deliver to the Agent any certificates in that regard that the
Agent may at any time request to be furnished. In connection herewith, the
Borrower warrants and represents that all shipments made under any such Letters
of Credit are in accordance with Applicable Law of the countries in which the
shipments originate and terminate, and are not prohibited by any such Applicable
Law. Each of the Credit Parties assumes all risk, liability and responsibility
for, and agrees to pay and discharge, all present and future local, provincial,
state, federal or foreign Taxes, duties, or levies with respect to such
Collateral. Any embargo, restriction, laws, customs or regulations of any
country, state, city, or other political subdivision, where the Collateral is or
may be located, or wherein payments are to be made, or wherein drafts may be
drawn, negotiated, accepted, or paid, shall be solely the Borrower’s risk,
liability and responsibility.
(g) Upon any payments made to the Issuing Bank under the Letter of Credit
Guarantee, the Agent shall acquire by subrogation, any rights, remedies, duties
or obligations granted or undertaken by the Borrower to the Issuing Bank in any
application for Letters of Credit, any standing agreement relating to Letters of
Credit or otherwise, all of which shall be deemed to have been granted to the
Agent and apply in all respects to the Agent and shall be in addition to any
rights, remedies, duties or obligations contained herein.
(h) If any Event of Default shall occur and be continuing, on the Business Day
that the Borrower receives notice from the Agent or the Required Lenders
demanding the deposit of Cover, the Borrower shall deposit in an account with
the Agent, in the name of the Agent and for the benefit of the Lenders, an
amount in cash equal to the Letter of Credit Exposure as of such date plus any
accrued and unpaid interest thereon. Such deposit shall be held by the Agent as
collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Agent and at the Borrower’s risk
and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account
shall be applied by the Agent to reimburse the Issuing Bank for disbursements
pursuant to Letters of Credit 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 Borrower for the Letter of Credit Exposure at such time or,
if the maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default that is continuing, such amount (to the extent not applied
as aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived.
(i) For greater certainty, all Obligations of the Credit Parties in respect of
Letter of Credit Guarantees continue notwithstanding the occurrence of a CIBC
ABL Reorganization Date.

 

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2.18A Letters of Credit After a CIBC ABL Reorganization Date, all matters
relating to the issuance of new Letters of Credit shall be governed by this
Section 2.18A:
(a) Within the limits of the Commitments and the Borrowing Base, and the other
limitations contained in this Agreement, the Borrower may obtain Letters of
Credit from the Issuing Bank, denominated in Canadian Dollars or U.S. Dollars,
in an amount not to exceed the outstanding amount of the Letter of Credit
Sub-Line. The issuance of Letters of Credit for amounts in excess of the
limitation set forth herein shall at all times and in all respects be in the
Agent’s sole discretion. It is understood that the term, form and purpose of
each Letter of Credit and all documentation in connection therewith, and any
amendments, modifications or extensions thereof, must be mutually acceptable to
the Agent, the Issuing Bank and the Borrower. Any and all outstanding Letters of
Credit shall be reserved dollar for dollar from the Borrowing Base as an
Availability Reserve. Upon the expiry of a Letter of Credit, amounts reserved as
an Availability Reserve in respect of such Letter of Credit shall no longer be
reserved from the Borrowing Base as an Availability Reserve. Each Letter of
Credit shall expire at or prior to the close of business on the earlier of
(i) the date one year after the date of the issuance of such Letter of Credit
(or, in the case of any renewal or extension thereof, one year after such
renewal or extension) and (ii) the date that is five Business Days prior to the
Maturity Date.
(b) 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 Lenders, the Issuing Bank hereby grants to each Lender, and
each 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 Lender hereby absolutely and
unconditionally agrees to pay to the Agent, for the account of the Issuing Bank,
such Lender’s Applicable Percentage of each disbursement made by the Issuing
Bank and not reimbursed by the Borrower on the date due, or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations 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. If the
Issuing Bank shall make any disbursement in respect of a Letter of Credit, the
Borrower shall reimburse such disbursement by paying to the Agent an amount
equal to such disbursement not later than 12:00 noon, on the date that such
disbursement is made, if the Borrower shall have received notice of such
disbursement prior to 10:00 a.m., on such date, or, if such notice has not been
received by the Borrower prior to such time on such date, then not later than
12:00 noon, on (i) the Business Day that the Borrower receives such notice, if
such notice is received prior to 10:00 a.m., on the day of receipt, or (ii) the
Business Day immediately following the day that the Borrower received such
notice, if such notice is not received prior to such time on the day of receipt.
In the alternative, the Agent shall have the right, without notice to the
Borrower, to charge the Borrower’s loan account with the amount of any and all
indebtedness, liability or obligation of any kind incurred by the Issuing Bank
or the Agent under any Letter of Credit at the earlier of (a) payment by the
Issuing Bank under any Letter of Credit; or (b) the occurrence and continuance
of an Event of Default, unless the Borrower has provided Cover to the Agent in
an amount equal to the face amount of all Letters of Credit. Any amount so
charged to the Borrower’s loan account shall be deemed a Canadian Prime Rate
Loan or a Base Rate Loan hereunder, depending on the currency of the Borrower’s
payment obligation thereunder, and shall incur interest at the rate provided in
Section 2.5.

 

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(c) The Borrower unconditionally indemnifies the Agent and the Issuing Bank and
holds the Agent and the Issuing Bank harmless from any and all loss, claim or
liability incurred by the Issuing Bank or the Agent arising from any
transactions or occurrences relating to Letters of Credit established or opened
for the Borrower’s account, the collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations thereunder, including any such loss
or claim due to any errors, omissions, negligence, misconduct or action taken by
the Issuing Bank, other than for any such loss, claim or liability arising out
of the gross negligence or willful misconduct by the Agent under the Letter of
Credit. This indemnity shall survive termination of this Agreement. The Borrower
agrees that any charges incurred by the Issuing Bank or the Agent in respect of
any Letter of Credit shall be for the Borrower’s account and may be charged to
the Borrower’s loan account.
(d) The Issuing Bank and the Agent shall not be responsible for: (a) the
existence, character, quality, quantity, condition, packing, value or delivery
of the goods purporting to be represented by any documents; (b) any difference
or variation in the character, quality, quantity, condition, packing, value or
delivery of the goods from that expressed in the documents; (c) the validity,
sufficiency or genuineness of any documents or of any endorsements thereon, even
if such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (d) the time, place, manner or order in
which shipment is made; partial or incomplete shipment, or failure or omission
to ship any or all of the goods referred to in the Letters of Credit or
documents; (e) any deviation from instructions; (f) delay, default, or fraud by
the shipper and/or anyone else in connection with the goods or the shipping
thereof; or (g) any breach of contract between the shipper or vendors and the
Borrower.
(e) Each of the Credit Parties agrees that any action taken by the Issuing Bank
or the Agent, if taken in good faith, under or in connection with any Letter of
Credit, the drafts or acceptances, or the Collateral, shall be binding on the
Credit Parties and shall not result in any liability whatsoever of the Issuing
Bank or the Agent to any Credit Party. In furtherance thereof, the Issuing Bank
shall have the full right and authority to: (a) clear and resolve any questions
of non compliance of documents; (b) give any instructions as to acceptance or
rejection of any documents or goods; (c) execute any and all steamship or
airways guarantees (and applications therefor), indemnities or delivery orders;
(d) grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and (e) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letters of Credit, drafts
or acceptances; all in the sole discretion of the Issuing Bank. The Issuing Bank
shall be entitled to comply with and honor any and all such documents or
instruments, all without any consent from any Credit Party. In addition, without
the Issuing Bank’s express consent and endorsement in writing, each of the
Credit Parties agrees: (a) not to (i) execute any applications for steamship or
airway guarantees, indemnities or delivery orders; (ii) grant any extensions of
the maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or (iii) agree to any amendments, renewals,
extensions, modifications, changes or cancellations of any of the terms or
conditions of any of the applications, Letters of Credit, drafts or acceptances
or Letters of Credit Guarantees; and (b) upon the occurrence and during the
continuance of an Event of Default, not to (i) clear and resolve any questions
of non compliance of documents, or (ii) give any instructions as to acceptances
or rejection of any documents or goods.

 

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(f) Each of the Credit Parties shall, and shall cause each other Credit Party
to: (a) procure any necessary import, export or other licenses or certificates
for the import or handling of the Collateral; (b) comply with all Applicable Law
in regard to the shipment and importation of the Collateral, or the financing
thereof; and (c) deliver to the Issuing Bank or the Agent any certificates in
that regard that the Agent may at any time request to be furnished. In
connection herewith, the Borrower warrants and represents that all shipments
made under any such Letters of Credit are in accordance with Applicable Law of
the countries in which the shipments originate and terminate, and are not
prohibited by any such Applicable Law. Each of the Credit Parties assumes all
risk, liability and responsibility for, and agrees to pay and discharge, all
present and future local, provincial, state, federal or foreign Taxes, duties,
or levies with respect to such Collateral. Any embargo, restriction, laws,
customs or regulations of any country, state, city, or other political
subdivision, where the Collateral is or may be located, or wherein payments are
to be made, or wherein drafts may be drawn, negotiated, accepted, or paid, shall
be solely the Borrower’s risk, liability and responsibility.
(g) The Issuing Bank may be replaced at any time by written agreement among the
Borrower, the Agent, the replaced Issuing Bank and the successor Issuing Bank.
The Agent shall notify the Lenders of any such replacement of the Issuing Bank.
At the time any such replacement shall become effective, the Borrower shall pay
all unpaid fees accrued for the account of the replaced Issuing Bank. From and
after the effective date of any such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of the Issuing Bank under this
Agreement with respect to Letters of Credit to be issued thereafter, and
(ii) references herein to the term “Issuing Bank” shall be deemed to refer to
such successor or to any previous Issuing Bank, or to such successor and all
previous Issuing Banks, as the context shall require. After the replacement of
an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.
(h) If any Event of Default shall occur and be continuing, on the Business Day
that the Borrower receives notice from the Agent or the Required Lenders
demanding the deposit of Cover, the Borrower shall deposit in an account with
the Agent, in the name of the Agent and for the benefit of the Lenders, an
amount in cash equal to the Letter of Credit Exposure as of such date plus any
accrued and unpaid interest thereon. Such deposit shall be held by the Agent as
collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Agent and at the Borrower’s risk
and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account
shall be applied by the Agent to reimburse the Issuing Bank for disbursements
pursuant to Letters of Credit 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 Borrower for the Letter of Credit Exposure at such time or,
if the maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is required to
provide an amount of cash collateral hereunder as a result of the occurrence of
an Event of Default, such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.

 

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2.19 F/X Contracts Prior to a CIBC ABL Reorganization Date, in order to assist
the Borrower in entering into F/X Contracts with the F/X Bank, the Borrower has
requested the Agent to execute an F/X Guarantee subject to the following terms
and conditions:
(a) Within the limits of the Commitments and the Borrowing Base and the other
limitations as contained in this Agreement, the Agent shall assist the Borrower
in obtaining F/X Contracts in an amount such that the F/X Exposure does not to
exceed the outstanding amount of the F/X Contract Sub-Line. The Agent’s
assistance for amounts in excess of the limitation set forth herein shall at all
times and in all respects be in the Agent’s sole discretion. The term, form and
purpose of the F/X Contract and all confirmations and other documentation in
connection therewith, and any amendments, modifications or extensions thereof,
must be mutually acceptable to the Agent, the F/X Bank and the Borrower. Any and
all outstanding F/X Guarantees shall be reserved dollar for dollar from the
Borrowing Base as an Availability Reserve. Upon the expiry of an F/X Guarantee,
amounts reserved as an Availability Reserve in respect of such F/X Guarantee
shall no longer be reserved from the Borrowing Base as an Availability Reserve.
(b) The Agent shall have the right, without notice to the Borrower, to charge
the Borrower’s loan account with the amount of any and all indebtedness,
liability or obligation of any kind incurred by the Agent under any F/X
Guarantee at such time which is the earlier of (a) payment by the Agent under
the F/X Guarantee; or (b) the occurrence and continuance of an Event of Default,
unless the Borrower has provided Cover to the Agent. Any amount charged to
Borrower’s loan account shall be deemed a Canadian Prime Loan or a Base Rate
Loan hereunder, depending on the currency of the Borrower’s payment obligation
in respect of such F/X Guarantee thereunder, and shall incur interest at the
rate provided in Section 2.5.
(c) Each of the Credit Parties unconditionally indemnifies the Agent and holds
the Agent harmless from any and all loss, claim or liability incurred by the
Agent arising from any transactions or occurrences relating to F/X Contracts ,
the collateral relating thereto, and all Obligations thereunder, including any
such loss or claim due to any errors, omissions, negligence, misconduct or
action taken by the F/X Bank, other than for any such loss, claim or liability
arising out of the gross negligence or wilful misconduct of the Agent under the
F/X Guarantee. This indemnity shall survive termination of this Agreement. The
Borrower agrees that any charges incurred by the Agent for the Borrower’s
account by the F/X Bank shall be conclusive on the Agent and may be charged to
the Borrower’s loan account.

 

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(d) Each of the Credit Parties agrees that any action taken by the Agent, if
taken in good faith, or any action taken by the F/X Bank, under or in connection
with the F/X Contracts, any F/X Guarantee or the Collateral, shall be binding on
the Credit Parties and shall not result in any liability whatsoever of the Agent
or any Lender to any Credit Party.
(e) Upon any payments made to the F/X Bank under any F/X Guarantee, the Agent
shall acquire by subrogation, any rights, remedies, duties or obligations
granted or undertaken by the Borrower to the F/X Bank in any application for F/X
Contracts, any standing agreement relating to F/X Contracts or otherwise, all of
which shall be deemed to have been granted to the Agent and apply in all
respects to the Agent and shall be in addition to any rights, remedies, duties
or obligations contained herein. All rights, remedies, duties and obligations
shall be secured automatically by the Liens arising under the Security
Documents.
(f) For greater certainty, all Obligations of the Credit Parties in respect of
F/X Guarantees continue notwithstanding the occurrence of a CIBC ABL
Reorganization Date.
2.19A F/X Contracts After a CIBC ABL Reorganization Date, all matters relating
to the entry into F/X Contracts with the F/X Bank shall be governed by this
Section 2.19A:
(a) Within the limits of the Commitments and the Borrowing Base and the other
limitations as contained in this Agreement, the Borrower may obtain F/X
Contracts in an amount such that the F/X Exposure does not to exceed the
outstanding amount of the F/X Contract Sub-Line. The entry into F/X Contracts
for amounts in excess of the limitation set forth herein shall at all times and
in all respects be in the Agent’s sole discretion. The term, form and purpose of
the F/X Contract and all confirmations and other documentation in connection
therewith, and any amendments, modifications or extensions thereof, must be
mutually acceptable to the Agent, the F/X Bank and the Borrower. Any and all
outstanding F/X Contracts shall be reserved dollar for dollar from the Borrowing
Base as an Availability Reserve. Upon the expiry of an F/X Contracts and payment
in full in respect thereof, amounts reserved as an Availability Reserve in
respect of such F/X Guarantee shall no longer be reserved from the Borrowing
Base as an Availability Reserve.
(b) The Agent shall have the right, without notice to the Borrower, to charge
the Borrower’s loan account with the amount of any and all indebtedness,
liability or obligation of any kind incurred by the Agent or the F/X Bank under
any F/X Contract at such time which is the earlier of (a) payment by the Agent
under the F/X Contract; or (b) the occurrence and continuance of an Event of
Default, unless the Borrower has provided Cover to the Agent. Any amount charged
to Borrower’s loan account shall be deemed a Canadian Prime Loan or a Base Rate
Loan hereunder, depending on the currency of the Borrower’s payment obligation
in respect of such F/X Contract, and shall incur interest at the rate provided
in Section 2.5.
(c) Each of the Credit Parties unconditionally indemnifies the Agent and the F/X
Bank and holds the Agent harmless from any and all loss, claim or liability
incurred by the Agent or the F/X Bank arising from any transactions or
occurrences relating to F/X Contracts , the collateral relating thereto, and all
Obligations thereunder, including any such loss or claim due to any errors,
omissions, negligence, misconduct or action taken by the F/X Bank, other than
for any such loss, claim or liability arising out of the gross negligence or
wilful misconduct of the Agent or the F/X Bank, as applicable. This indemnity
shall survive termination of this Agreement. The Borrower agrees that any
charges incurred by the Agent or the F/X Bank, as applicable, are for the
Borrower’s account and may be charged to the Borrower’s loan account.

 

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(d) Each of the Credit Parties agrees that any action taken by the Agent, if
taken in good faith, or any action taken by the F/X Bank, under or in connection
with the F/X Contracts or the Collateral, shall be binding on the Credit
Parties, and shall not result in any liability whatsoever of the Agent or any
Lender to any Credit Party, except in instances of gross negligence or wilful
misconduct on the part of the Agent.
(e) All rights, remedies, duties and obligations of the Credit Parties in
respect of F/X Contracts shall be secured automatically by the Liens arising
under the Security Documents.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Lenders to enter into this Agreement, to
make any Loans hereunder and to issue any Letters of Credit hereunder, each
Credit Party hereby represents and warrants to the Agent and each Lender that
each statement set forth in this Article 3 is true and correct on the date
hereof, and will be true and correct on the date of each Borrowing (except for
those statements which relate solely to an earlier date), on the date each
Letter of Credit is requested hereunder (except for those statements which
relate solely to an earlier date) and on the date each Letter of Credit is
issued hereunder (except for those statements which relate solely to an earlier
date):
3.1 Organization; Powers. The Borrower and each other Credit Party is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
3.2 Authorization; Enforceability The Transactions are within each Credit
Party’s corporate powers and have been duly authorized by all necessary
corporate and, if required, shareholder action. This Agreement and the other
Loan Documents have been duly executed and delivered by the Borrower and each
other Credit Party thereto and constitute legal, valid and binding obligations
of the Borrower and each other Credit Party thereto, enforceable in accordance
with their terms, subject to applicable bankruptcy, insolvency, reorganisation,
moratorium or other Applicable Laws affecting creditors’ rights generally and
subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.
3.3 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, (b) will not violate any Applicable Law or the charter,
by-laws or other organizational documents of the Borrower or any other Credit
Party or any order of any Governmental Authority, (c) will not violate or result
in a default under any indenture, agreement or other instrument binding upon the
Borrower or any other Credit Party or their respective assets, or give rise to a
right thereunder to require any payment to be made by the Borrower or any other
Credit Party, and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any other Credit Party, except for any Lien
arising in favour of the Agent, for the benefit of the Lenders, under the Loan
Documents.

 

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3.4 Financial Condition; No Material Adverse Effect
(a) The Borrower has furnished to the Lenders its consolidated balance sheets
and statements of income, retained earnings and changes in financial position as
of and for the Fiscal Years ended December 31, 2008, December 31, 2009 and
December 31, 2010, and as of and for the fiscal month and the portion of the
Fiscal Year ended April 30, 2011. Such financial statements present fairly, in
all material respects, the consolidated financial position and results of
operations and cash flows of the Borrower as of such dates and for such periods
in accordance with GAAP, subject to year end audit adjustments and the absence
of footnotes in the case of the monthly statements referred to above.
(b) Since December 31, 2010, there has been no event, development or
circumstance that has had or could reasonably be expected to have a Material
Adverse Effect.
(c) All information (including that disclosed in all financial statements)
pertaining to the Borrower and the other Credit Parties (other than projections)
(in this Section 3.4(c), the “Information”) that has been or will be made
available to the Lenders, or the Agent by the Borrower or any representative of
the Borrower and the other Credit Parties, taken as a whole, is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made. The projections that have been or will be made available to
the Lenders, or the Agent by the Borrower or any representative of the Borrower
have been or will be prepared in good faith based upon reasonable assumptions.
(d) The Borrower has delivered to the Lenders its unaudited pro forma
consolidated balance sheet and statements of income as of December 31, 2010,
prepared giving effect to the Transactions as if they had occurred, with respect
to such balance sheet, on such date and, with respect to such other financial
statements, on the first day of the 12-month period ending on such date. Such
pro forma financial statements have been prepared in good faith by the Borrower,
are based on assumptions which are believed by the Borrower on the date hereof
and on the Effective Date to be reasonable, are based on the best information
available to the Borrower as of the date of delivery thereof, accurately reflect
all adjustments required to be made to give effect to the Transactions and
present fairly on a pro forma basis the estimated consolidated financial
position of the Borrower and its consolidated Subsidiaries as of such date and
for such period, assuming that the Transactions had actually occurred at such
date or at the beginning of such period, as the case may be.
3.5 Litigation There are no actions, suits, counterclaims or proceedings
(including any Tax-related matter) by any Person or investigation by any
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened in writing against or affecting the Borrower or any of the other
Credit Parties (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 involve this Agreement, any other Loan Document, or the Transactions.

 

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3.6 Compliance with Applicable Laws and Agreements The Borrower and each other
Credit Party is in compliance with all Applicable Laws applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. Neither the Borrower nor any other Credit Party has violated or failed
to obtain any Authorization necessary to the ownership of any of its property or
assets or the conduct of its business, which violation or failure could
reasonably be expected to have (in the event that such a violation or failure
were asserted by any Person through appropriate action) a Material Adverse
Effect.
3.7 Ownership As at the Effective Date, the registered and beneficial holder of
all of the Equity Securities of the Borrower is the Parent.
3.8 Taxes The Borrower and each other Credit Party has timely filed or caused to
be filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it (including all
instalments with respect to the current period) and has made adequate provision
for Taxes for the current period, except Taxes that are being contested in good
faith by appropriate proceedings and for which the Borrower or such other Credit
Party, as applicable, has set aside on its books adequate reserves.
3.9 Titles to Real Property The Borrower and each other Credit Party have
indefeasible fee simple title to their respective owned real properties (or in
Quebec, immoveable properties), and with respect to leased real properties,
indefeasible title to the leasehold estate with respect thereto, pursuant to
valid and enforceable leases, free and clear of all Liens except Permitted
Liens.
3.10 Titles to Personal Property. The Borrower and each other Credit Party have
title to their respective owned personal property (or in Quebec, moveable
properties), and with respect to leased personal property, title to the
leasehold estate with respect thereto, pursuant to valid and enforceable leases,
free and clear of all Liens except Permitted Liens.
3.11 Pension Plans. The Pension Plans are, with the exception of a supplemental
retirement plan for eligible employees, duly registered under the ITA and any
other Applicable Laws which require registration, have been administered in
accordance with the ITA and such other Applicable Laws and no event has occurred
which could reasonably be expected to cause the loss of such registered status,
except to the extent that any failure to do so could not reasonably be expected
to have a Material Adverse Effect. All material obligations of the Borrower and
each other Credit Party (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with the
Pension Plans and the funding agreements therefor have been performed on a
timely basis, except to the extent that any failure to do so could not
reasonably be expected to have a Material Adverse Effect. There are no
outstanding disputes concerning the assets of the Pension Plans or any benefit
plans. No promises of benefit improvements under the Pension Plans or any
benefit plans have been made except where such improvement could not reasonably
be expected to have a Material Adverse Effect. All contributions or premiums
required to be made or paid by the Borrower and each other Credit Party to the
Pension Plans or any benefit plans have been made on a timely basis in
accordance with the terms of such plans and all Applicable Laws. There have been
no improper withdrawals or applications of the assets of the Pension Plans or
any benefit plans. As of the date hereof, each of the Pension Plans is fully
funded on a solvency basis and going concern basis (using actuarial methods and
assumptions which are consistent with the valuations last filed with the
applicable Governmental Authorities and which are consistent with GAAP).

 

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  (i)   For any Pension Plan or fund, and for any other employee benefit plan
which is a defined contribution plan requiring the Borrower or any Subsidiary to
contribute thereto, or to deduct from payments to any individual and pay such
deductions into or to the credit of such Pension Plan or fund, all required
employer contributions have been properly withheld by the Borrower or such
Subsidiary and fully paid into the funding arrangements for the applicable
Pension Plan or fund,

  (ii)   for any Pension Plan or fund and for any other employee benefit plan
which is a defined benefit plan (“Defined Benefit Plan”), in each case of the
Borrower or any Subsidiary: (A) each such Pension Plan or fund or Defined
Benefit Plan is fully funded on both a solvency basis and a going concern basis,
(B) the most recent actuarial valuations in respect thereof are disclosed to the
agent in writing, (C) no material changes have occurred since the date of such
actuarial valuations which could reasonably be expected to materially adversely
affect the conclusions of the actuary concerning the funding of any Defined
Benefit Plan, and (D) all payments and contributions required to be remitted or
paid to or in respect of each such Pension Plan or fund or Defined Benefit Plan,
including special payments and any other payments in respect of any funding
deficiencies or shortfalls, have been remitted or paid to or in respect of each
such plan in a timely fashion, in accordance with the terms of the plan and all
Applicable Law, and

  (iii)   any assessments owed to the Pension Benefits Guarantee Fund
established under the Pension Benefits Standards Act (British Columbia), or
other assessments or payments required under similar legislation in any other
jurisdiction, have been paid when due.

None of the Borrower, or any Credit Party or any of their respective Affiliates
is subject to the United States Employee Retirement Income Security Act of 1974,
as amended.
3.12 Disclosure The Borrower has disclosed to the Agent all agreements,
instruments and corporate or other restrictions to which it or any other Credit
Party 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 representations or warranties made by any Credit Party in
the Loan Documents as of the date such representations and warranties are made
or deemed made, and none of the statements contained in any exhibit, report,
statement or certificate furnished by or on behalf of any Credit Party in
connection with the Loan Documents, contains any untrue statement of a material
fact or omits any material fact necessary to be stated therein to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.

 

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3.13 Defaults Neither the Borrower nor any other Credit Party is in default nor
has any event or circumstance occurred which, but for the passage of time or the
giving of notice, or both, would constitute a default (in any respect that would
have a Material Adverse Effect) under any loan or credit agreement, indenture,
mortgage, deed of trust, security agreement or other instrument or agreement
evidencing or pertaining to any Indebtedness of or Lien against the Borrower or
any other Credit Party, or under any material agreement or instrument to which
the Borrower or any other Credit Party is a party or by which the Borrower or
any other Credit Party is bound. No Default has occurred and is continuing.
3.14 Casualties; Taking of Properties Since December 31, 2010, neither the
business nor the properties of the Borrower or any other Credit Party have been
affected in a manner that has had, or could reasonably be expected to have, a
Material Adverse Effect.
3.15 Subsidiaries and Jurisdictions As of the Effective Date, Schedule 3.15
correctly sets forth the (i) names, (ii) form of legal entity, (iii) Equity
Securities issued and outstanding, (iv) Equity Securities owned by each Credit
Party or a Subsidiary of such Credit Party (and specifying such owner), and
(v) jurisdictions of organization of all Credit Parties and their Subsidiaries.
Schedule 3.15 correctly sets out the jurisdictions in which each of the Credit
Parties carries on business, maintains its books and records or has tangible
assets. Except as described in Schedule 3.15, as of the Effective Date, the
Credit Parties directly or indirectly do not own any Equity Securities or debt
security which is convertible, or exchangeable, for Equity Securities of any
other Person. Unless otherwise indicated in Schedule 3.15, as of the Effective
Date, all of the outstanding Equity Securities of each Credit Party is directly
or indirectly owned of record and beneficially by the Borrower, there are no
outstanding options, warrants or other rights to purchase Equity Securities of
any such Credit Party, and all such Equity Securities so owned are duly
authorized, validly issued, fully paid and non-assessable, and were issued in
compliance with all applicable federal, provincial or foreign securities and
other Applicable Laws, and are free and clear of all Liens, except for Permitted
Liens.
3.16 Insurance All policies of fire, liability, workers’ compensation, casualty,
flood, business interruption and other forms of insurance owned or held by the
Borrower or any other Credit Party are (a) sufficient for compliance with all
requirements of Applicable Law and of all agreements to which the Borrower or
any other Credit Party is a party, (b) are valid, outstanding and enforceable
policies, (c) provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as are
usually insured against in the same general area by Persons engaged in the same
or a similar business to the assets and operations of the Borrower and each
other Credit Party, (d) will not in any way be adversely affected by, or
terminate or lapse by reason of, the Transactions, and (e) are held in the name
of a Credit Party. All such material policies are in full force and effect, all
premiums with respect thereto have been paid in accordance with their respective
terms, and no notice of cancellation or termination has been received with
respect to any such policy. Neither the Borrower nor any other Credit Party
maintains any formalized self-insurance program with respect to its assets or
operations or material risks with respect thereto. The certificate of insurance
delivered to the Agent pursuant to Section 4.1(f) contains an accurate and
complete description of all material policies of insurance owned or held by the
Borrower and each other Credit Party on the Effective Date.

 

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3.17 Solvency Neither the Borrower nor any other Credit Party is an “insolvent
person” within the meaning of the BIA.
3.18 Material Contracts Schedule 3.18 sets out all Material Contracts as of the
Effective Date. A true and complete copy of each Material Contract has been
delivered to the Agent as of the Effective Date. Each of the Material Contracts
is in full force and effect. Neither the Borrower nor any other Credit Party is
in default under or in breach of any term or condition of any Material Contract
that would have, either individually or in the aggregate, a Material Adverse
Effect, nor is the Borrower or any other Credit Party aware of any material
default under or material breach of any term or condition of any Material
Contract by any other party thereto. No contract to which the Borrower or any
other Credit Party is a party contains any material provisions which impose
burdensome or onerous obligations on the Borrower or such other Credit Party
which are inconsistent with prudent commercial activity by the Borrower or such
other Credit Party.
3.19 Environmental Matters
(a) Environmental Laws. Neither any property of the Borrower or any other Credit
Party nor the operations conducted thereon violate any applicable order of any
court or Governmental Authority or any Environmental Laws, which violation could
reasonably be expected to result in remedial obligations having a Material
Adverse Effect, assuming disclosure to the applicable Governmental Authority of
all material relevant facts, conditions and circumstances, if any, pertaining to
the relevant property.
(b) Notices and Permits. All notices, permits, licenses or similar
authorizations, if any, required to be obtained or filed by the Borrower or any
other Credit Party in connection with the operation or use of any and all
property of the Borrower or any other Credit Party, including but not limited to
past or present treatment, transportation, storage, disposal or Release of
Hazardous Materials into the environment, have been duly obtained or filed,
except to the extent the failure to obtain or file such notices, permits,
licenses or similar authorizations could not reasonably be expected to have a
Material Adverse Effect, or which could not reasonably be expected to result in
remedial obligations having a Material Adverse Effect, assuming disclosure to
the applicable Governmental Authority of all material relevant facts, conditions
and circumstances, if any, pertaining to the relevant property.
(c) Hazardous Substances Carriers. All Hazardous Materials generated at any and
all property of the Borrower or any other Credit Party have been treated,
transported, stored and disposed of only in accordance with all Environmental
Laws applicable to them, except to the extent the failure to have such Hazardous
Materials transported, treated or disposed by such carriers could not reasonably
be expected to have a Material Adverse Effect, and only at treatment, storage
and disposal facilities maintaining valid permits under applicable Environmental
Laws, which carriers and facilities have been and are, to the Borrower’s
knowledge, operating in compliance with such permits, except to the extent the
failure to have such Hazardous Materials treated, transported, stored or
disposed at such facilities, or the failure of such carriers or facilities to so
operate, could not reasonably be expected to have a Material Adverse Effect or
which could not reasonably be expected to result in remedial obligations having
a Material Adverse Effect, assuming disclosure to the applicable Governmental
Authority of all material relevant facts, conditions and circumstances, if any,
pertaining to the relevant property.

 

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(d) Hazardous Materials Disposal. The Borrower and the other Credit Parties have
taken all reasonable steps necessary to determine and have determined that no
Hazardous Materials have been disposed of or otherwise released and there has
been no threatened Release of any Hazardous Materials on or to any property of
the Borrower or any other Credit Party other than in compliance with
Environmental Laws, except to the extent the failure to do so could not
reasonably be expected to have a Material Adverse Effect or which could not
reasonably be expected to result in remedial obligations having a Material
Adverse Effect, assuming disclosure to the applicable Governmental Authority of
all material relevant facts, conditions and circumstances, if any, pertaining to
the relevant property.
(e) No Contingent Liability. The Borrower and the other Credit Parties have no
material contingent liability in connection with any Release or threatened
Release of any Hazardous Materials into the environment other than such
contingent liabilities at any one time and from time to time which could
reasonably be expected to exceed $250,000 and for which adequate reserves for
the payment thereof as required by GAAP have been provided, or which could
reasonably be expected to result in remedial obligations having a Material
Adverse Effect, assuming disclosure to the applicable Governmental Authority of
all relevant facts, conditions and circumstances, if any, pertaining to such
Release or threatened Release.
3.20 Employee Matters Except as set forth on Schedule 3.20, as of the Effective
Date, none of the Borrower or any of the other Credit Parties, nor any of their
respective employees, is subject to any collective bargaining agreement. There
are no strikes, slowdowns, work stoppages or controversies pending or, to the
best knowledge of the Borrower, threatened against the Borrower or any other
Credit Party, or their respective employees, which could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
Except as set forth in Schedule 3.20, as of the Effective Date, none of the
Borrower nor any other Credit Party is subject to an employment contract
providing for a fixed term of employment or providing for special payments on
termination of employment. Each of the Borrower and the other Credit Parties has
withheld from each payment to each of their respective officers, directors and
employees the amount of all Taxes, including income tax, Canada pension plan,
employment insurance and other payments and deductions required to be withheld
therefrom, and has paid the same to the proper taxation or other receiving
authority in accordance with Applicable Law. None of the Borrower nor any other
Credit Party is subject to any claim by or liability to any of their respective
officers, directors or employees for salary (including vacation pay) or benefits
which would rank in whole or in part pari passu with or prior to the Liens
created by the Security Documents, other than Permitted Liens to the extent
reserved for as Priority Payables of any Credit Party.
3.21 Fiscal Year The Fiscal Year of each Credit Party is referenced in
Schedule 3.21.

 

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3.22 Intellectual Property Rights The Borrower and each Credit Party is the
registered and beneficial owner of, with good and marketable title, free of all
licenses, franchises and Liens other than Permitted Liens, to all patents,
patent applications, trade marks, trade mark applications, trade names, service
marks, copyrights, industrial designs, integrated circuit topographies, or other
rights with respect to the foregoing and other similar property, used in or
necessary for the present and planned future conduct of its business, without
any conflict with the rights of any other Person, other than for such conflicts
as could not reasonably be expected to have a Material Adverse Effect. There are
no material patents, trade marks, trade names, service marks, copyrights,
industrial designs, integrated circuit topographies, and other similar rights
owned or licensed by the Borrower or any other Credit Party, and all rights of
the Borrower and each other Credit Party to the use of any patents, trade marks,
trade names, service marks, copyrights, industrial designs, integrated circuit
topographies, or other similar rights (collectively, the “Intellectual Property
Rights”). No material claim has been asserted and is pending by any Person with
respect to the use by the Borrower or any other Credit Party of any intellectual
property or challenging or questioning the validity, enforceability or
effectiveness of any intellectual property necessary for the conduct of the
business of the Borrower or any other Credit Party. Except as could not
reasonably be expected to have a Material Adverse Effect, (i) the Borrower and
each other Credit Party has the exclusive right to use the intellectual property
which the Borrower (or each other Credit Party) owns, (ii) all applications and
registrations for such intellectual property are current, and (iii) to the
knowledge of the Borrower and the other Credit Parties, the conduct of the
Borrower’s and each other Credit Party’s business does not infringe the
intellectual property rights of any other Person.
3.23 Residency of Borrower for Tax Purposes Each of the Credit Parties is a
resident of Canada for tax purposes.
3.24 Restricted Payments No Restricted Payment has been declared, paid, or made
upon or in respect of Equity Securities of any Credit Party except as expressly
permitted hereby.
3.25 Indebtedness None of the Credit Parties nor any of their Subsidiaries has
any Indebtedness except (a) the Obligations, (b) the Indebtedness set forth in
the most recent financial statements delivered to the Agent, or the notes
thereto, (c) Tax obligations (including deferred Taxes), trade payables and
other contractual obligations arising in the ordinary course of business as
carried on by the Credit Parties and their Subsidiaries since the date of such
financial statements, and (d) Indebtedness created in accordance with
Section 6.1.
3.26 Workers’ Compensation None of the Credit Parties has any unpaid workers’
compensation or like obligations except as are being incurred, and paid on a
current basis in the ordinary course of business, and there are no proceedings,
claims, actions, orders or investigations of any Governmental Authority relating
to workers’ compensation outstanding, pending or, to their knowledge, threatened
relating to them or any of their employees or former employees which could
reasonably be expected to have a Material Adverse Effect.
3.27 Bank Accounts Schedule 3.27 contains a complete and accurate list of all
bank accounts maintained by the Credit Parties with any bank or other financial
institution as of the Effective Date.

 

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3.28 Real Property and Leases Schedule 3.28 hereto is a correct and complete
list of all real property owned by each Credit Party, all leases and subleases
of real property or personal property by any Credit Party, as lessee or
sublessee, and all leases and subleases of real property or personal property by
any Credit Party, as lessor or sublessor. 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.
3.29 Further Real Property Matters.
(a) Except as advised in writing to the Agent, no investigation or proceeding of
any Governmental Authority is pending in respect of real property owned by any
of the Credit Parties. No part of any such real property has been condemned,
taken or expropriated by any Governmental Authority, federal, state, provincial,
municipal or any other competent authority which could reasonably be expected to
have a Material Adverse Effect.
(b) Except as advised in writing to the Agent, all present uses in respect of
any real property of the Credit Parties may lawfully be continued and all
permitted uses are satisfactory for the Credit Parties’ current and intended
purposes; and
(c) No Inventory is located at any leased real property of the Credit Parties
except as indicated in Schedule 3.28.
3.30 Corporate Name; Prior Transactions None of the Credit Parties has during
the five (5) years preceding the Effective Date been known by or used any other
corporate or business name, or been a party to any amalgamation, merger or
consolidation, or acquired all or substantially all of the assets of any Person
or acquired any of its or their Property out of the ordinary course of business.
There are no trade names or styles under which any Credit Party sells Inventory
or create Accounts or to which instruments in payment of Accounts may be made
payable.
3.31 Brokers No broker or finder acting on behalf of any Credit Party or
Affiliate thereof brought about the obtaining, making or closing of the
Commitments or the Loans, and no Credit Party or Affiliate thereof has any
obligation to any Person in respect of any finder’s or brokerage fees in
connection therewith.
3.32 Customer and Trade Relations As of the Effective Date, there exists no
actual or, to the knowledge of any Credit Party, threatened in writing of any
termination or cancellation of, or any material adverse modification or change
in the business relationship of any Credit Party with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of such Credit Party or the business
relationship of any Credit Party with any supplier material to its operations.

 

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ARTICLE 4
CONDITIONS
4.1 Effective Date The obligations of the Lenders to make Loans or provide a
Letter of Credit Guarantee or an F/X Guarantee (or, after a CIBC ABL
Reorganization Date, to issue a Letter of Credit or to enter into an F/X
Contract) shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.2):
(a) Credit Agreement. The Agent (or its counsel), each Lender, and the Issuing
Bank shall have received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of each party hereto, or (ii) written evidence
satisfactory to the Agent (which may include facsimile transmission of a signed
signature page of this Agreement) that each such party has signed a counterpart
of this Agreement.
(b) Legal Opinions. The Agent shall have received a favourable written opinion
of counsel to the Borrower and the Credit Parties, substantially in the form of
Exhibit D, and covering such other matters relating to the Borrower, the Credit
Parties, this Agreement, the other Loan Documents, or the Transactions as the
Lenders shall reasonably request (together with copies of all factual
certificates and legal opinions delivered to such counsel in connection with
such opinion upon which counsel has relied). The Agent shall also have received
favourable written opinions of such special and local counsel as may be required
by the Agent (together with copies of all factual certificates and legal
opinions delivered to such counsel in connection with such opinion upon which
such counsel has relied). The Borrower hereby requests each such counsel to
deliver such opinions and supporting materials. All opinions and certificates
referred to in this Section 4.1(b) shall be addressed to the Agent and the
Lenders and dated the Effective Date.
(c) Corporate Certificates. The Agent shall have received:

  (i)   certified copies of the resolutions of the Board of Directors of the
Borrower, and any other Credit Party which is a party to any Loan Document,
dated as of the Effective Date, and approving, as appropriate, the Loans, this
Agreement and the other Loan Documents, and all other documents, if any, to
which the Borrower or such other Credit Party is a party and evidencing
corporate authorization with respect to such documents; and

  (ii)   a certificate of the secretary, an assistant secretary or treasurer of
the Borrower, and any other Credit Party which is a party to any Loan Document,
dated as of the Effective Date, and certifying (A) the name, title and true
signature of each officer of such Person authorized to execute this Agreement
and the other Loan Documents to which it is a party, (B) the name, title and
true signature of each officer of such Person authorized to provide the
certifications required pursuant to this Agreement, including certifications
required pursuant to Section 5.1 and Borrowing Requests, and (C) that attached
thereto is a true and complete copy of the articles of incorporation and bylaws
of the Borrower, and any other Credit Party which is a party to any Loan
Document, as amended to date, and a recent certificate of status, certificate of
compliance, good standing certificate or analogous certificate.

 

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(d) Closing Conditions Certificate. The Agent shall have received a certificate,
dated the Effective Date and signed by a Responsible Officer of the Borrower,
confirming compliance with the financial covenants set forth in Section 5.12 and
with the conditions set forth in Section 4.2(a) and (b).
(e) Fees. The Agent and the Lenders shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all legal fees and other
Out-of-Pocket Expenses required to be reimbursed or paid by the Borrower
hereunder or under any other Loan Document.
(f) Insurance. The Agent shall have received a certificate of insurance
coverage, naming CIBC Asset-Based Lending Inc., as agent, as first loss payee
dated not more than 30 days prior to the Effective Date, evidencing that the
Borrower and the Credit Parties are carrying insurance in accordance with
Section 5.9 hereof.
(g) Inventory Control Systems; Appraisal; Field Audit; Opening Availability. The
Agent shall have reviewed and be satisfied with the Collateral, the inventory
control systems, the books and records and the reporting capability of the
Credit Parties. The Agent shall have received appraisals, completed by a
reputable and independent appraisal firm at the expense of the Borrower,
determining the net orderly liquidation value of the Inventory of the Credit
Parties. In addition, the Agent shall have received the results of an updated
field audit, and the Borrowing Base on the Effective Date shall be sufficient in
value, as determined by Agent, to provide Borrower with Excess Availability,
after giving effect to the extensions of credit to be made hereunder on the
Effective Date (on a pro forma basis, with trade payables being paid currently,
and expenses and liabilities being paid in the ordinary course of business and
without acceleration of sales or deterioration of working capital) of at least
(i) $2,100,000 if the Access Agreement has been delivered on or before the
Effective Date or (ii) $1,600,000 if the Access Agreement has not been
delivered.
(h) No Cessation of Financing Market. There shall have not been occurred and be
continuing on the Effective Date any general banking moratorium or any practical
cessation in the bank or private debt financing markets, and there shall not
have been introduced any material governmental restrictions imposed on lending
institutions, which materially affect the type of lending transactions
contemplated by this Agreement.
(i) Execution and Delivery of Documentation. The Borrower and any other Credit
Party which is a party to any Loan Document shall have duly authorized, executed
and delivered all documents, including Loan Documents, required hereunder, all
in form and substance satisfactory to the Agent, acting reasonably, and all of
the Security Documents shall have been registered in all offices in which, in
the opinion of the Agent or its counsel, registration is necessary or of
advantage to preserve the priority of the Liens intended to be created thereby,
and duplicate copies of such Security Documents bearing or accompanied by
appropriate endorsements or certificates of registration shall have been
delivered to the Agent. The Agent shall have received and be satisfied with the
results of all legal due diligence including without limitation personal
property, bankruptcy, execution and other searches conducted by the Agent and
its counsel with respect to the Borrower and any other Credit Party in all
jurisdictions selected by the Agent and its counsel. The Agent shall have
received and be satisfied with all estoppel letters, acknowledgements, waivers,
subordinations, postponements, discharges, priority agreements and
inter-creditor and non-disturbance agreements as the Agent may reasonably
require to ensure its first priority, subject to Permitted Liens, over and
unfettered access to, the Collateral or, at the Permitted Discretion of the
Agent, have implemented Availability Reserves in connection therewith.

 

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(j) Security Documents. The Agent shall have received:

  (i)   a general security agreement executed by the Borrower in favour of the
Agent, as agent for the Lenders, dated as of the Effective Date and in form and
substance satisfactory to the Agent, constituting a first-priority Lien on all
property from time to time of the Borrower, subject to no Liens except Permitted
Liens;

  (ii)   a collateral assignment of the Services Agreement executed by the
Borrower and the Parent in favour of the Agent, as agent for the Lenders, dated
as of the Effective Date and in form and substance satisfactory to the Agent;

  (iii)   a debenture executed by the Borrower in favour of the Agent, as agent
for the Lenders, in form and substance satisfactory to the Agent (the “Quebec
Debenture”);

  (iv)   as security for the Obligations, a pledge agreement in respect of the
Quebec Debenture granted by the Borrower in favour of the Agent, as agent for
the Lenders, in form and substance satisfactory to the Agent; and

  (v)   as security for payment of the Quebec Debenture, a deed of hypothec
granted by the Borrower in favour of CIBC Asset-Based Lending Inc., as fondé de
pouvoir within the meaning of article 2692 of the Civil Code of Quebec,
constituting a first ranking hypothec over the universality of the Borrower’s
assets, present and future, movable and immobable, corporeal and incorporeal,
the whole in form and substance satisfactory to CIBC Asset-Based Lending Inc.,
as fondé de pouvoir within the meaning of article 2692 of the Civil Code of
Quebec;

provided that if any of the foregoing documents are not suitable for use in any
jurisdiction, the Borrower shall provide to the Agent alternative document(s)
with substantially equivalent substantive effect and which are suitable for use
in such jurisdiction.
(k) Landlord Waivers; Bailee Letters. The Agent shall have received (i) executed
copies of a landlord waiver, in form and substance satisfactory to the Agent,
acting reasonably, from each landlord of Real Property where any Collateral of
any of the Credit Parties is located and (ii) bailee letters, in form and
substance satisfactory to the Agent, from each bailee who is in possession of
any Collateral of any of the Credit Parties, or the Agent has been given the
opportunity to establish Availability Reserves acceptable to the Agent in
respect of the applicable Inventory.

 

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(l) Regulatory Approval; Consents; Waivers. The Agent and the Lenders shall be
satisfied, acting reasonably, that all material Authorizations required in
connection with the Transactions contemplated hereby have been obtained and are
in full force and effect, and that all consents and waivers required to
consummate the Transactions have been obtained, to the extent that consummation
of the Transactions would otherwise be restricted or prohibited under the terms
of any Material Contract to which the Borrower or any other Credit Party is a
party, or by which it is bound, in each case without the imposition of any
burdensome provisions.
(m) Delivery of Financial Statements. The Agent and the Lenders shall have
received and be satisfied with the financial statements described in
Section 3.4(a) and unaudited consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries (pro forma as of the Effective Date).
(n) No Material Adverse Change. The Agent and the Lenders shall be satisfied
that, since December 31, 2010, there has not been a Material Adverse Change.
(o) Indebtedness. The Transactions contemplated in this Agreement and the other
Loan Documents shall not have caused any event or condition to occur which has
resulted, or which will result, in any Material Indebtedness becoming due prior
to its scheduled maturity or that permits (with or without the giving of notice,
the lapse of time, or both) the holder or holders of any Material Indebtedness
or any trustee or agent on its or their behalf to cause any Material
Indebtedness to become due, or to require the prepayment, repurchase, redemption
or defeasance thereof, prior to its scheduled maturity, or which will result in
the creation of any Liens under any Indebtedness.
(p) Blocked Account/Cash Management Systems. The Agent shall have received
evidence satisfactory to the Agent that, as of the Effective Date, blocked
account and cash management systems complying with Section 2.17 have been
established and are currently being maintained in the manner set forth in such
Section 2.17, and the Agent shall have received copies of duly executed
tri-party blocked account and other control agreements satisfactory to the
Agent, acting reasonably, with the banks and other Persons as required by
Section 5.13.
(q) Material Contracts. The Agent and the Lenders shall be satisfied with the
terms and conditions of each of the Material Contracts.
(r) Cancellation of Existing Credit Lines. The Agent shall have received one or
more pay off letters, in form and substance satisfactory to the Agent,
confirming that the Borrower shall have repaid all amounts outstanding under its
existing credit lines, and that all such existing credit lines shall have been
cancelled permanently.
(s) Capitalization Arrangement. The Lenders shall be satisfied with the capital
structure of the Borrower, that the Borrower is solvent, and that the Borrower
has sufficient working capital to pay its debts as they become due.

 

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(t) Background Checks. The Agent shall have received and be satisfied with the
results of the background checks conducted on the key senior management and
principals of the Credit Parties.
(u) Judgments/Litigation. The Agent shall be satisfied that there are no
judgments outstanding, and no legal or administrative proceedings (including in
any court arbitrator or any Governmental Authority) pending or threatened except
as expressly permitted hereunder which could reasonably be expected to give rise
to a Material Adverse Effect.
(v) Compliance with Securities Legislation. The Agent shall have received and be
satisfied with evidence of the Credit Parties’ compliance with any disclosure
requirements under any applicable securities legislation, as applicable.
(w) KYC. Each of the Lenders will have received all documentation and other
information requested by it in connection with applicable “know your customer”
bank policies and AML Legislation.
(x) No Material Change to Information. No event, circumstance or development
shall have occurred which in the opinion of the Lenders is inconsistent in any
material and adverse respect with any information or other matter previously
disclosed to the Lenders by or on behalf of the Borrower, any of the Guarantors
or any of their affiliates, representatives or advisors.
(y) Other Documentation. The Agent and the Lenders shall have received such
other documents and instruments as are customary for transactions of this type
or as they may reasonably request.
The obligations of the Lenders to make Loans or provide a Letter of Credit
Guarantee hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 9.2) at or prior to 3:00
p.m., Toronto time, on August 12, 2011 (and, in the event such conditions are
not so satisfied or waived by such time, the Commitments shall terminate at such
time). The conditions set forth in Section 4.1 are for the exclusive benefit of
the Lenders, and may be waived by the Lenders in accordance with Section 9.2 at
any time and from time to time, with or without further conditions.
4.2 Each Credit Event The obligation of the Agent (on behalf of the Lenders) to
make any Loan or provide a Letter of Credit Guarantee or an F/X Guarantee (or,
after a CIBC ABL Reorganization Date, the obligation of the Issuing Bank to
issue a Letter of Credit or the obligation of the F/X Bank to enter into an F/X
Contract) on the occasion of any Borrowing, (including on the occasions of the
initial Borrowings hereunder), is subject to the satisfaction of the following
conditions:
(a) the representations and warranties of the Borrower set forth in this
Agreement shall be true and correct on and as of the date of each such Borrowing
(including the date of issuance, amendment, renewal or extension of such Letter
of Credit, as applicable) as if made on such date (except where such
representation or warranty refers to a different date);

 

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(b) at the time of and immediately after giving effect to such Borrowing
(including the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable), no Default or Event of Default shall have occurred and
be continuing; and
(c) the Agent shall have received a Borrowing Request in the manner and within
the time period required by Section 2.3; and
(d) except as may be otherwise agreed to from time to time by the Agent and the
Borrower in writing, after giving effect to the extension of credit requested to
be made by the Borrower on such date, the aggregate Exposure will not exceed the
lesser of (i) the Commitments, or (ii) an amount equal to the Borrowing Base.
Each Borrowing, including each issuance, amendment, renewal or extension of a
Letter of Credit, shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the accuracy of the matters specified in
paragraphs (a) and (b) above. This requirement does not apply on the conversion
or rollover of an existing Borrowing provided that the aggregate outstanding
Borrowings will not be increased as a consequence thereof.
ARTICLE 5
AFFIRMATIVE COVENANTS
From (and including) the Effective Date until the Commitments have expired or
been terminated and the principal of and interest on each Loan and all fees
payable hereunder shall have been paid in full and all Letters of Credit and
Letter of Credit Guarantees, F/X Contracts and F/X Guarantees shall have expired
and been terminated and all Reimbursement Obligations have been satisfied by the
Borrower, the Borrower and each other Credit Party covenants and agrees with the
Lenders that:
5.1 Financial Statements and Other Information The Borrower will furnish to the
Agent and each Lender:
(a) as soon as available and in any event within 90 days after the end of each
Fiscal Year of the Borrower, its consolidated balance sheet and related
statements of income, retained earnings and changes in financial position as of
the end of and for such Fiscal Year, setting forth in each case in comparative
form the figures for the previous Fiscal Year, all prepared on a review
engagement basis by Ernst & Young LLP or other independent auditors of
recognized national standing (without a “going concern” or like qualification 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 Borrower and its Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
(b) as soon as available and in any event within 30 days after the end of each
fiscal month, its unaudited consolidated balance sheet and related statements of
income, retained earnings and changes in financial position as of the end of
such month and the then elapsed portion of the Fiscal Year which includes such
fiscal month, 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 Responsible Officer as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit
adjustments;

 

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(c) concurrently with the financial statements required pursuant to
Sections 5.1(a) and (b) above, a certificate of the Borrower, signed by a
Responsible Officer in the form of Exhibit K;
(d) copies of each management letter issued to the Borrower by its auditors
promptly following consideration or review thereof by the Board of Directors of
the Borrower, or any committee thereof (together with any response thereto
prepared by the Borrower);
(e) promptly after the same become publicly available, copies of all periodic
and other reports, proxy statements and other materials filed by the Borrower or
any other Credit Party with any securities commission, stock exchange or similar
entity, and all materials distributed out of the ordinary course by the Borrower
to its shareholders and which relate to matters in which any Lender or the
Agent, in such capacities, can reasonably be expected to have an interest;
(f) promptly upon the request of the Agent, and in any event no less frequently
than the tenth Business Day of each fiscal month, (together with a copy of all
or any part of the following reports requested by any Lender in writing after
the Effective Date), a Borrowing Base Report, as of the last day of the
immediately preceding fiscal month, accompanied by such supporting detail and
documentation as shall be requested by the Agent it is reasonable discretion
including:

  (i)   an accounts receivable aging (including both summary and detail format)
showing Accounts outstanding, aged from due date as follows: current, 1 to
30 days past due, 31 to 60 days past due, 61 to 90 days past due, and 91 days or
more past due, accompanied by such supporting detail and documentation as shall
be requested by the Agent in its reasonable discretion, including the ledger for
disputed/legal accounts and the name and contact information of each account
debtor but only, in the case of contact information only, during a field
examination, if a Default or Event of Default has occurred or if, in the Agent’s
reasonable discretion, a Default or an Event of Default is imminent;

  (ii)   a calculation of the Accounts which would not meet the criteria of an
Eligible Account Receivable;

  (iii)   a copy of the internally generated month end cash receipts and
collections electronically generated report;

  (iv)   Borrower prepared reconciliation of the cash receipts electronically
generated report to the Blocked Accounts following activation of the Blocked
Accounts;

 

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  (v)   a detailed, monthly, Inventory listing of the Borrower and each Credit
Party by location, type and product group with a supporting perpetual Inventory
report, in each case, accompanied by such supporting detail and documentation as
shall be requested by the Agent in its reasonable discretion; such summaries and
reports shall include the dollar value thereof both at cost, determined on a
first-in, first out basis, and at fair market value;

  (vi)   a calculation and report as to the Inventory which does not meet the
definition of Eligible Inventory; and     (vii)   detailed monthly accounts
payable aging.

(g) weekly, on the second Business Day of each week for the prior week:

  (i)   a weekly Borrowing Base Report that reflects the Accounts and Inventory
as at the last business day of the previous week together with a report of
Priority Payables as at such date;

  (ii)   a copy of the internally generated weekly sales electronically
generated report and invoice register;

  (iii)   a copy of the internally generated weekly credit memo electronically
generated report (or sales electronically generated report if included there);

  (iv)   a copy of the internally generated weekly debit memo electronically
generated report (or the sales electronically generated report if included
there); and

  (v)   a copy of the internally generated weekly cash receipts and collections
electronically generated report.

(h) at the request of the Agent, monthly within 30 days of the last day of each
fiscal month:

  (i)   a copy of the internally generated general ledger report as at the month
end;

  (ii)   Borrower prepared reconciliation of the cash receipts electronically
generated report to the blocked depository account;

  (iii)   a reconciliation of Accounts aging to the general ledger and to the
financial statement as at the month end;

  (iv)   a reconciliation of the monthly inventory perpetual listing to the
general ledger and to the financial statement as at the month end; and

 

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  (v)   copies of all material correspondence, actuarial valuation reports and
other filings with any pension regulators or the applicable Governmental
Authority to which such correspondence, reports and filings must be sent
(including any filings furnished to the trustee under any Pension Plan and any
valuation reports prepared by the Borrower’s actuary and confirming that all
contributions to be made in respect of the Pension Plans have been made when
due).

(i) such other reports designating, identifying and describing the Accounts and
Inventory as required by the Agent and on a more frequent basis as the Agent may
reasonably request in its reasonable credit discretion;
(j) the results of each physical verification, if any, that the Borrower may
have made, or caused any other Person to have made on its behalf, of all or any
portion of its Inventory, within 30 Business Days of completion of any such
physical verification (and, if a Default or an Event of Default has occurred and
be continuing, the Borrower shall, upon the request of the Agent, conduct, and
deliver the results of, such physical verifications as the Agent may require);
(k) such appraisals of the assets of the Borrower and the Credit Parties as the
Agent may request at any time, such appraisals to be conducted at the expense of
the Borrower by an appraiser that is acceptable to the Agent, and shall be in
scope, form and substance acceptable to the Agent; provided that (i) if no
Default or Event of Default has occurred during a Fiscal Year of the Borrower
and Excess Availability exceeds $1,000,000 at all times during such Fiscal Year,
then the Borrower will only be liable for the expense of up to one (1) such
appraisals that are requested by the Agent in such Fiscal Year and (ii) if no
Default or Event of Default has occurred during a Fiscal Year of the Borrower
but Excess Availability is less than $1,000,000 at any time during such Fiscal
Year, then the Borrower will only be liable for the expense of up to two
(2) such appraisals that are requested by the Agent in such Fiscal Year;
(l) promptly after the Borrower learns of the receipt or occurrence of any of
the following, a certificate of the Borrower, signed by a Responsible Officer,
specifying (i) any official notice of any violation, possible violation,
non-compliance or possible non-compliance, or claim made by any Governmental
Authority pertaining to all or any part of the properties of the Borrower or any
other Credit Party which could reasonably be expected to have a Material Adverse
Effect, (ii) any event which constitutes a Default or Event of Default, together
with a detailed statement specifying the nature thereof and the steps being
taken to cure such Default or Event of Default, (iii) the receipt of any notice
from, or the taking of any other action by, the holder of any promissory note,
debenture or other evidence of Indebtedness of the Borrower or any other Credit
Party in an amount in excess of Cdn.$250,000 with respect to an actual or
alleged default, together with a detailed statement specifying the notice given
or other action taken by such holder and the nature of the claimed default and
what action the Borrower or the relevant Subsidiary is taking or proposes to
take with respect thereto, (iv) any default or non-compliance of any party to
any of the Loan Documents with any of the terms and conditions thereof or any
notice of termination or other proceedings or actions which could reasonably be
expected to adversely affect any of the Loan Documents, (v) the creation,
dissolution, merger or acquisition of any Subsidiary of the Borrower, (vi) any
event or condition not previously disclosed to the Agent, which violates any
Environmental Law and which could potentially, in the Borrower’s reasonable
judgment, have a Material Adverse Effect, (vii) any material amendment to,
termination of, or material default under a Material Contract or any execution
of, or material amendment to, termination of, or material default under, any
material collective bargaining agreement, and (viii) any other event,
development or condition which may reasonably be expected to have a Material
Adverse Effect;

 

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(m) promptly after the occurrence thereof, notice of the institution of or any
material adverse development in any action, suit or proceeding or any
governmental investigation or any arbitration before any court or arbitrator or
any Governmental Authority or official against the Borrower or any other Credit
Party or any of its or their Subsidiaries or any material property of any
thereof which could reasonably be expected to have a Material Adverse Effect;
(n) promptly after the filing thereof with any Governmental Authority (if
requested by the Agent), copies of each annual and other report (including
applicable schedules and actuarial reports) with respect to each Pension Plan of
the Borrower or any other Credit Party or any trust created thereunder;
(o) at the cost of the Borrower, a report or reports of an independent
collateral field examiner (which collateral field examiner may be the Agent or
an Affiliate thereof) approved (i) by the Borrower, whose approval shall not be
unreasonably withheld, and (ii) by the Agent with respect to the Eligible
Accounts and Eligible Inventory components included in the Borrowing Base. The
Agent may (and, at the direction of the Required Lenders, shall) request such
reports or additional reports as it (or the Required Lenders) shall reasonably
deem necessary; provided that (i) if no Default or Event of Default has occurred
during a Fiscal Year of the Borrower and Excess Availability exceeds $1,000,000
at all times during such Fiscal Year, then the Borrower will only be liable for
the expense of up to two (2) such reports that are requested by the Agent in
such Fiscal Year and (ii) if no Default or Event of Default has occurred during
a Fiscal Year of the Borrower but Excess Availability is less than $1,000,000 at
any time during such Fiscal Year, then the Borrower will only be liable for the
expense of up to three (3) such reports that are requested by the Agent in such
Fiscal Year;
(p) upon renewal of any insurance policy or upon request by the Agent, a copy of
an insurance certificate summarizing the terms of such policy, and upon request
by the Agent, copies of the applicable policies;
(q) on or before the earlier of the 10th day after approval by the Board of
Directors of the Borrower and the 30th day before each Fiscal Year end, an
annual budget of the Borrower and the other Credit Parties on a consolidated and
consolidating basis (consolidating on the basis of principal lines of business
of the Borrower and the other Credit Parties), approved by the Board of
Directors of the Borrower, setting forth in reasonable detail and on a monthly
basis the projected revenues and expenses (including capital expenditures) of
the Borrower for the following Fiscal Year, it being recognized by the Lenders
that projections as to future results are not to be viewed as fact and that the
actual results for the period or periods covered by such projections may differ
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(r) concurrently with any delivery of financial statements under Section 5.1(a)
or (b) above, a certificate of a Responsible Officer of the Borrower (i) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the financial statements referred to in Section 5.1(a) and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate, (ii) identifying all its Subsidiaries
existing on the date of such certificate and indicating, for each such
Subsidiary, and whether such Subsidiary is a Guarantor and whether such
Subsidiary was formed or acquired since the end of the previous fiscal month and
(iii) identifying any parcels of real property or improvements thereto that have
been acquired by any Credit Party since the end of the previous fiscal month.
5.2 Existence; Conduct of Business
(a) Each Credit Party will do or cause to be done all things necessary to
preserve, renew and keep in full force and effect its legal existence (subject
only to Section 6.3).
(b) Each Credit Party will obtain, preserve, renew and keep in full force and
effect any and all rights, licenses, permits, privileges and franchises material
to the conduct of its business.
5.3 Payment of Obligations Each Credit Party will pay its obligations, including
Tax liabilities, that, if not paid, could result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such other Credit Party has set aside on its
books adequate reserves with respect thereto in accordance with GAAP, and
(c) the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
5.4 Maintenance of Properties Each Credit Party will keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
5.5 Books and Records; Inspection Rights Each Credit Party will 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. Each
Credit Party will permit any representatives designated by the Agent or any
Lender, upon 48 hours prior notice, to visit and inspect its properties, to
examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants,
during business hours (prior to an Event of Default that is continuing or any
time thereafter) and as often as reasonably requested. No such notice will be
required if there is an Event of Default that has occurred and is continuing.
5.6 Compliance with Applicable Laws and Material Contracts Each Credit Party
will comply with all Applicable Laws and orders of any Governmental Authority
applicable to it or its property and with all of its material contractual
obligations, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Credit Party shall modify, amend or alter its certificate or articles
of incorporation without 30 days prior written notice to the Agent in the case
of a name change, change of jurisdiction or any other change adverse to the
Agent or the Lenders.

 

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5.7 Use of Proceeds and Letters of Credit The proceeds of the Revolving Loans
will be used for working capital and other general corporate purposes of the
Borrower. Letters of Credit will be issued only to support any activity of the
Borrower or any other Credit Party that is in keeping with the Borrower’s
business and subject to the internal policies of the Issuing Bank.
5.8 Further Assurances Each Credit Party will cure promptly any defects in the
execution and delivery of the Loan Documents, including this Agreement. Upon
request, each Credit Party will, at its expense, as promptly as practical,
execute and deliver to the Agent, all such other and further documents,
agreements and instruments in compliance with or performance of the covenants
and agreements of the Borrower or any other Credit Party in any of the Loan
Documents, including this Agreement, or to further evidence and more fully
describe the Collateral, or to correct any omissions in any of the Loan
Documents, or more fully to state the security obligations set out herein or in
any of the Loan Documents, or to perfect, protect or preserve any Liens created
pursuant to any of the Loan Documents, or to make any recordings, to file any
notices, or obtain any consents, all as may be necessary or appropriate in
connection therewith, in the judgment of the Agent, acting reasonably.
5.9 Insurance Each Credit Party shall maintain insurance on its property and
assets under such policies of insurance, with such insurance companies, in such
reasonable amounts and covering such insurable risks as are at all times
reasonably satisfactory to the Agent. All such policies are subject to the
rights of any holders of Permitted Liens holding claims senior to the Agent, to
be made payable to the Agent, to the extent required herein, in case of loss,
under a standard non contributory “mortgagee”, “lender” or “secured party”
clause and are to contain such other provisions as the Agent may require to
fully protect the Agent’s interest in the property and assets subject to the
Liens in favour of the Agent and to any payments to be made under such policies.
All original policies (or true copies thereof) which relate to Collateral are to
be delivered to the Agent, with the loss payable endorsement in the Agent’s
favour, and shall provide for not less than thirty (30) days prior written
notice to the Agent of the exercise of any right of cancellation. Upon the
occurrence and continuance of an Event of Default which is not waived in writing
by the Agent, the Agent shall, subject to the rights of any holders of Permitted
Liens holding claims senior to the Agent, have the sole right, in the name of
the Agent, the Borrower or any other applicable Credit Party, to file claims
under any insurance policies, to receive, receipt and give acquittance for any
payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies. If any part of the Collateral is lost
or damaged by fire or other casualty and the insurance proceeds for such loss or
damage is less than or equal to $250,000, such insurance proceeds shall be paid
to the Borrower. Notwithstanding the foregoing, to the extent such insurance
proceeds are received by the Agent, the Agent shall promptly, and in any event
within one (1) Business Day of receipt, remit such insurance proceeds to the
applicable Credit Party. If any part of the Collateral is lost or damaged by
fire or other casualty and the insurance proceeds for such loss or damage is
greater than $250,000, such insurance proceeds shall be paid to the Borrower,
and provided that the applicable Credit Party has sufficient business
interruption insurance to replace the lost profits of any of its facilities, the
Borrower may irrevocably elect (by delivering written notice to the Agent) to
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repair or restore such Collateral to substantially the equivalent condition
prior to such fire or other casualty as set forth herein. If such election is
not made by the Borrower, insurance proceeds shall be used by the Borrower to
repay outstanding Revolving Loans. Notwithstanding the foregoing, to the extent
that such insurance proceeds are received by the Agent, the Agent shall
promptly, and in any event within one (1) Business Day of receipt, remit such
insurance proceeds to the Borrower to be applied in accordance with this
Section 5.9. If the Borrower does not, or cannot, elect to use the insurance
proceeds as set forth above, or if the Agent believes that the applicable Credit
Party will not be able to timely replace, repair or restore such Collateral to
substantially the equivalent condition prior to such fire or other casualty, the
Agent may, subject to the rights of any holders of Permitted Liens holding
claims senior to the Agent in respect of such insurance proceeds, (i) if no
Event of Default has occurred and is continuing, apply the insurance proceeds to
the payment of any Revolving Loans until paid in full and (b) if an Event of
Default has occurred and is continuing, apply the insurance proceeds to the
Obligations in such manner and in such order as the Agent may reasonably elect.
Upon the occurrence and during the continuance of an Event of Default, all
insurance proceeds in respect of any Collateral shall be paid to the Agent. The
Agent may apply such insurance proceeds to the Obligations in such manner as it
may deem advisable in its sole discretion. In the event the Borrower fails to
provide the Agent with timely evidence, acceptable to the Agent, of the
maintenance of insurance coverage required pursuant to this Section 5.9, or in
the event that any Credit Party fails to maintain such insurance, the Agent may
purchase or otherwise arrange for such insurance, but at the Borrower’s expense
and without any responsibility on the Agent’s part for: (i) obtaining the
insurance; (ii) the solvency of the insurance companies; (iii) the adequacy of
the coverage; or (iv) the collection of claims. The insurance acquired by the
Agent may, but need not, protect the Borrower’s or any other Credit Party’s
interest in the Collateral, and therefore such insurance may not pay claims
which the Borrower may have with respect to the Collateral or pay any claim
which may be made against the Borrower in connection with the Collateral. In the
event the Agent purchases, obtains or acquires insurance covering all or any
portion of the Collateral, the Borrower shall be responsible for all of the
applicable costs of such insurance, including premiums, interest (at the
applicable interest rate for Revolving Loans set forth in Section 2.5), fees and
any other charges with respect thereto, until the effective date of the
cancellation or the expiration of such insurance. The Agent may charge all of
such premiums, fees, costs, interest and other charges to the Borrower’s loan
account. The Borrower hereby acknowledges that the costs of the premiums of any
insurance acquired by the Agent may exceed the costs of insurance which the
Borrower may be able to purchase on its own. In the event that the Agent
purchases such insurance, the Agent will promptly, and in any event within
fifteen (15) days, notify the Borrower of said purchase.
5.10 Operation and Maintenance of Property Each Credit Party will, manage and
operate its business or cause its business to be managed and operated (i) in
accordance with prudent industry practice in all material respects and in
compliance in all material respects with the terms and provisions of all
applicable licenses, leases, contracts and agreements, and (ii) in compliance
with all Applicable Laws of the jurisdiction in which such businesses are
carried on, and all Applicable Laws of every other Governmental Authority from
time to time constituted to regulate the ownership, management and operation of
such businesses, except where a failure to so manage and operate would not have
a Material Adverse Effect.

 

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5.11 Additional Subsidiaries; Additional Liens If, at any time on or after the
Effective Date, the Borrower or any other Credit Party creates or acquires an
additional Subsidiary or in some other fashion becomes the holder of any Equity
Securities of a new Subsidiary, then to the extent permitted by Applicable Law,
the Borrower and the other Credit Parties will cause such new Subsidiary to
immediately execute and deliver to the Agent a guarantee, and security
agreements, hypothecs and other security-related documents covering such new
Subsidiary’s Inventory, Accounts and other Collateral, all in form and substance
satisfactory to the Agent, acting reasonably. In addition, if at any time on or
after the Effective Date, the Borrower or any other Credit Party has Inventory,
Accounts or other Collateral located in any jurisdiction in which the Agent does
not hold duly perfected security in respect of the Inventory, Accounts or other
Collateral of such Credit Party in such jurisdiction, the applicable Credit
Party shall give notice to the Agent of those facts. If the Agent, acting
reasonably, determines that it is practical to perfect security in such
jurisdiction, the applicable Credit Party shall promptly execute all such
security agreements, hypothecs and other security-related documents covering
such Credit Party’s Inventory, Accounts or other Collateral in such
jurisdiction, all in form and substance satisfactory to the Agent, acting
reasonably, and shall take all such action as may reasonably be required to
ensure that the Liens in favour of the Agent in respect of the Inventory,
Accounts or other Collateral of such Credit Party located in such jurisdiction
are duly perfected. In connection with the execution and delivery of any
guarantee, security agreement, intellectual property security agreements,
hypothecs or related document pursuant to this Section, the Borrower and each
other Credit Party will cause to be delivered to the Agent such corporate
resolutions, certificates, legal opinions and such other related documents and
registrations as shall be reasonably requested by the Agent and consistent with
the relevant forms and types thereof delivered on the Effective Date or as shall
be otherwise reasonably acceptable to the Agent. Each guarantee, security
agreement, intellectual property security agreements, hypothecs and other
documents delivered pursuant to this Section shall be deemed to be a Security
Document from and after the date of execution thereof. For greater certainty,
the Credit Parties acknowledge that, to the extent that Collateral is located in
a jurisdiction in which the Agent does not hold duly perfected security in such
Collateral in such jurisdiction, such Collateral is not eligible for inclusion
in the Borrowing Base. Approval of the Required Lenders is required to include
an additional Subsidiary in the Borrowing Base.
5.12 Adjusted Tangible Net Worth Covenant The Borrower will, at all times
maintain the Adjusted Tangible Net Worth of the Borrower and its Subsidiaries at
a level not less than $3,868,000, being 85% of the Adjusted Tangible Net Worth
of the Borrower and its Subsidiaries on the Effective Date. Adjusted Tangible
Net Worth of the Borrower and its Subsidiaries on the Effective Date shall be
determined on the Effective Date by the Borrower in a manner acceptable to the
Agent. The Borrower’s compliance with this Section 5.12 shall be tested monthly.
5.13 Post Closing Undertakings Borrower will ensure that all post closing
undertakings as set forth in Schedule 5.13 (collectively, the “Undertakings”)
have been satisfied within the time periods set forth therein and any failure to
satisfy any of the Undertakings within the applicable time periods shall
constitute an Event of Default.

 

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5.14 Environmental Laws Each of the Borrower and the other Credit Parties will
conduct its business in compliance in all material respects with all
Environmental Laws applicable to it or them, including those relating to the
Credit Parties’ generation, handling, use, storage and disposal of Hazardous
Materials. Each of the Borrower and the other Credit Parties will take prompt
and appropriate action to respond to any non-compliance or alleged
non-compliance with Environmental Laws and the Borrower shall regularly report
to the Agent on such response. Without limiting the generality of the foregoing,
whenever any Credit Party gives notice to the Agent pursuant to
Section 5.1(l)(vi) and the Agent so requests, the Credit Parties shall, at the
applicable Credit Party’s expense:
(a) cause an independent environmental engineer acceptable to the Agent in its
reasonable discretion to conduct such tests of the site where the non-compliance
or alleged non-compliance with Environmental Laws has occurred, and prepare and
deliver to the Agent a report setting forth the results of such tests, a
proposed plan for responding to any environmental problems described therein,
and an estimate of the costs thereof;
(b) provide to the Agent a supplemental report of such engineer whenever the
scope of the environmental problem, or the Credit Party’s, and any other
Person’s response thereto or the estimated costs thereof, shall change. Such
reports shall also be addressed to the Agent and the Lenders and shall, as
requested by the Agent, set out the results of such engineers’ review of, among
other things:

  (i)   the internal policies and procedures of the Credit Parties relating to
environmental regulatory compliance to ensure that all appropriate steps are
being taken by or on behalf of the Credit Parties to comply in all material
respects with all applicable requirements of Environmental Laws;

  (ii)   the progress of compliance satisfaction, capital expenditures required
to effect remedial steps and compliance deficiencies;

  (iii)   all other environmental audit reports which the Credit Parties or any
predecessor has commissioned in the normal conduct of its business which relate
to the subject matter of such notice; and

  (iv)   all environmental reports which have been commissioned by or made
available to a Credit Party in connection with new acquisitions, and the
engineers’ report and recommendations on results of tests performed or samples
taken by it during the course of its review, irregularities or steps which may
be taken to ensure continued compliance, as well as such other matters as the
Borrower and/or the Agent may reasonably request from time to time.

 

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5.15 Landlords’ Agreement, Mortgagee Agreements, Bailee Letters and Real Estate
Purchases Each Credit Party shall use commercially reasonable efforts to obtain
a landlord’s agreement, mortgagee agreement or bailee letter, as applicable,
from the lessor of each leased property, mortgagee of owned property or bailee
with respect to any warehouse, processor or converter facility or other location
where Collateral is stored or located, which agreement or letter shall contain a
waiver or subordination of all Liens or claims that the landlord, mortgagee or
bailee may assert against the Collateral at that location, and shall otherwise
be reasonably satisfactory in form and substance to the Agent. With respect to
such locations or warehouse space leased or owned as of the Effective Date and
thereafter, if the Agent has not received a landlord or mortgagee agreement or
bailee letter as of the Effective Date (or, if later, as of the date such
location is acquired or leased), Borrower’s Eligible Inventory at that location
shall, in the Agent’s discretion, be excluded from the Borrowing Base or be
subject to such Reserves as may be established by Agent in its reasonable credit
judgment. After the Effective Date, no real property or warehouse space shall be
leased or acquired (which is subject to a mortgage) by any Credit Party and no
Inventory shall be shipped to a processor or converter under arrangements
established after the Effective Date without the prior written consent of the
Agent (provided that no consent shall be required where a landlord consent
waiver substantially in the form attached hereto as Exhibit G or otherwise in
form and substance satisfactory to the Agent, acting reasonably, has been
provided in respect of the applicable location or Availability Reserves
acceptable to the Agent have been established in respect of such Inventory) or,
unless and until a satisfactory landlord agreement, mortgagee agreement or
bailee letter, as appropriate, shall first have been obtained with respect to
such location. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located.
5.16 Canadian Pension Plans The Borrower will administer the Canadian Pension
Plans in accordance with the requirements of the applicable pension plan texts,
funding agreements, any other documents governing the Canadian Pension Plans,
the ITA and applicable federal or provincial pension benefits legislation except
for any non-compliance which would not reasonably be expected to have a Material
Adverse Effect. The Borrower shall, and shall cause its Subsidiaries to,
promptly provide the Agent with any documentation relating to any of the
Canadian Pension Plans as the Agent may request. The Borrower shall, and shall
cause its Subsidiaries to, notify the Agent within thirty (30) days of: (i) a
material increase in the obligations, liabilities and indebtedness of any of the
Canadian Pension Plans; and (ii) commencing payment of contributions to a
Canadian Pension Plan to which the Borrowers had not previously been
contributing.
5.17 Collateral Monitoring and Review Upon the request of the Agent, after 48
hours (prior to the occurrence of an Event of Default that is continuing) notice
and during normal business hours, the Borrower will permit the Agent or
professionals (including, consultants, accountants, and/or appraisers) retained
by the Agent to conduct appraisals, commercial finance examinations and other
evaluations, including, of (i) the Credit Parties’ practices in the computation
of the Borrowing Base, and (ii) the assets included in the Borrower Base and
financial information such as, but not limited to, sales, gross margins,
payables, accruals and reserves, related to the calculation of the Borrowing
Base. In connection with any inventory appraisal and commercial finance
examination relating to the computation of the Borrowing Base, the Borrower
shall make such adjustments to the calculation of the Borrowing Base as the
Agent shall reasonably require in its Permitted Discretion based upon the terms
of this Agreement and the results of such inventory appraisal and commercial
finance examination.

 

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5.18 Physical Inventories The Borrower will cause physical inventories and
periodic cycle counts to be undertaken, at the expense of the Credit Parties, in
each case consistent with past practices (but in no event less frequently than
one physical inventory per Fiscal Year), conducted by such inventory takers and
following such methodology as is consistent with the immediately preceding
inventory or as otherwise may be satisfactory to the Agent in its Permitted
Discretion. The Agent, at the expense of the Credit Parties, may participate in
and/or observe each scheduled physical count of Inventory which is undertaking
on behalf of any Credit Party. The Credit Parties, within thirty (30) days
following the completion of any such inventory, shall provide the Agent with a
reconciliation of the results of such inventory (as well as of any other
physical inventory or cycle counts undertaken by a Credit Party) and shall post
such results to the Credit Parties’ stock ledgers and general ledgers, as
applicable.
5.19 Application under the CCAA The Borrower acknowledges that its business and
financial relationships with the Agent and the Lenders are unique from its
relationship with any other of its creditors. The Borrower agrees that it shall
not file any plan of arrangement under the Companies’ Creditors Arrangement Act
(the “CCAA Plan”) which provides for, or would permit, directly or indirectly,
the Agent or the Lenders to be classified in the same class with any other
creditor of the Credit Parties for purposes of such CCAA Plan.
ARTICLE 6
NEGATIVE COVENANTS
From (and including) the Effective Date until the Commitments have expired or
been terminated and the principal of and interest on each Loan and all fees
payable hereunder shall have been paid in full and all Letters of Credit, Letter
of Credit Guarantees and Reimbursement Obligations have been satisfied by the
Borrower, the Borrower and each Credit Party covenants and agrees with the
Lenders that:
6.1 Indebtedness No Credit Party will create, incur, assume or permit to exist
any Indebtedness, except:
(a) any Indebtedness created hereunder;
(b) any Indebtedness of one Credit Party to another Credit Party;
(c) any Indebtedness of a Credit Party to the Parent that is subordinated and
postponed on terms satisfactory to the Agent;
(d) any Guarantee by a Credit Party of Indebtedness of any other Credit Party;
(e) any Indebtedness of the Credit Parties incurred under Purchase Money Liens
or Capital Lease Obligations in an aggregate amount not exceeding Cdn. $500,000
for all Credit Parties;
(f) any Indebtedness of any Person that becomes a Credit Party after the date
hereof, provided that (i) such Indebtedness exists at the time such Person
becomes a Credit Party and is not created in contemplation of or in connection
with such Person becoming a Credit Party, and (ii) the aggregate principal
amount of Indebtedness permitted by this clause (f) shall not exceed Cdn.
$500,000 at any time outstanding;
(g) any Indebtedness in respect of trade letters of credit or Letters of Credit;
and

 

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(h) any Indebtedness in respect of Swap Agreements entered into in compliance
with Section 6.5, provided that the aggregate notional amounts under all such
Swap Agreements shall not exceed $2,000,000.
6.2 Liens No Credit Party will, and no Credit Party will permit any Credit Party
to, create, incur, assume or permit to exist any Lien on any property or asset
now owned or hereafter acquired by any Credit Party or assign or sell any income
or revenues (including Accounts of the Credit Parties) or rights in respect of
any thereof, except Permitted Liens.
6.3 Fundamental Changes.
(a) No Credit Party will merge into or amalgamate or consolidate with any other
Person, or permit any other Person to merge into or amalgamate or consolidate
with it, or sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions) all or substantially all of its assets, or all or
any of the Equity Securities of any of its Subsidiaries (in each case, whether
now owned or hereafter acquired), or liquidate or dissolve without the prior
written consent of the Agent, not to be unreasonably withheld.
(b) No Credit Party will engage to any material extent in any material business
other than businesses of the type conducted by the Credit Party on the date of
execution of this Agreement and businesses reasonably related thereto.
6.4 Investments, Loans, Advances, Guarantees and Acquisitions Each Credit Party
will not purchase, hold or acquire (including pursuant to any amalgamation with
any Person that was not a Credit Party prior to such amalgamation) any Equity
Securities, evidences of indebtedness or other securities (including any option,
warrant or other right to acquire any of the foregoing) of, make or permit to
exist any loans or advances to, Guarantee any obligations of, or make or permit
to exist any Investment or any other interest in, any other Person, or purchase
or otherwise acquire (in one transaction or a series of transactions) any assets
of any other Person or otherwise make an Acquisition, except:
(a) Investments by a Credit Party in the Equity Securities of any other Credit
Party;
(b) loans or advances made by one Credit Party to any other Credit Party;
(c) Guarantees constituting Indebtedness permitted by Section 6.1; and
(d) Permitted Investments.
6.5 Swap Transactions No Credit Party will enter into any Swap Transaction or
engage in any transactions in respect thereof, except (i) Swap Transactions
entered into by the Borrower to hedge or mitigate risks to which the Borrower or
any other Credit Party has actual exposure (other than those in respect of
Equity Securities), (ii) Swap Transactions entered into in order to effectively
cap, collar or exchange interest rates (from fixed to floating rates, from one
floating rate to another floating rate or otherwise) with respect to any
interest-bearing liability or investment of the Borrower or any other Credit
Party, and (iii) F/X Contracts entered into pursuant to Section 2.19 or
Section 2.19A, as applicable.

 

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6.6 Restricted Payments No Credit Party will declare, pay or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, except
(a) the Borrower may declare and pay dividends with respect to its Equity
Securities payable solely in additional Equity Securities, provided that no
Default or Event of Default has occurred and is continuing or would result
therefrom;
(b) any Credit Party (other than the Borrower) may declare and pay dividends to
the Borrower or any other Credit Party (other than the Borrower) and any Credit
Party (other than the Borrower) may redeem or repurchase its own Equity
Securities, provided that no Default or Event of Default has occurred and is
continuing or would result therefrom;
(c) the Borrower may make Restricted Payments pursuant to and in accordance with
stock option plans, profit sharing plans and/or other benefit plans for
management or employees of the Borrower and the other Credit Parties, provided
that the aggregate amount of cash payments made by the Borrower and the other
Credit Parties in any Fiscal Year pursuant to all such stock option plans,
profit sharing plans and other compensation benefit plans shall not exceed Cdn.$
250,000 and no Default or Event of Default has occurred and is continuing or
would result therefrom;
(d) the Borrower may declare and pay dividends to the Parent (the “Parent
Dividends”), provided that:

  (i)   the aggregate amount of Parent Dividend paid by the Borrower must not
exceed 100% of the Borrower’s annual Consolidated Net Income in any Fiscal Year;

  (ii)   Excess Availability must be equal to or higher than $1,000,000 for
sixty days prior to the payment of any Parent Dividends and for sixty days
thereafter;

  (iii)   the Fixed Charge Coverage Ratio, calculated on a pro-forma trailing
twelve month basis taking into account the payment of the Parent Dividends, must
be equal to or higher than 1.0:1; and

  (iv)   no Default or Event of Default has occurred and is continuing or would
result from payment of the Parent Dividend; and

(e) the Borrower may declare and pay a dividend of $1,349,000 on the Effective
Date, provided that no Default or Event of Default has occurred and is
continuing or would result therefrom.

 

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6.7 Transactions with Affiliates No Credit Party will sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
of its Affiliates, except (a) in the ordinary course of business at prices and
on terms and conditions not less favourable to the Credit Party than could be
obtained on an arm’s-length basis from unrelated third parties, (b) transactions
between or among the Credit Parties not involving any other Affiliate, and
(c) any Restricted Payment permitted by Section 6.6. The foregoing restrictions
shall not apply to: (i) the payment of reasonable and customary fees to
directors of the Credit Party, (ii) any other transaction with any employee,
officer or director of a Credit Party pursuant to employee profit sharing and/or
benefit plans and compensation and non-competition arrangements in amounts
customary for corporations similarly situated to the Credit Party and entered
into in the ordinary course of business and approved by the board of directors
of the Credit Party, or (iii) any reimbursement of reasonable out-of-pocket
costs incurred by an Affiliate of the Credit Party on behalf of or for the
account of the Credit Party.
6.8 Repayment of Debt No Credit Party will repay, prepay, redeem, repurchase,
defease or otherwise make any payment on account of any Indebtedness for
borrowed money except for (a) payment on account of Indebtedness owing to the
Agent or the Lenders under this Agreement, (b) any payment consented to in
writing by the Required Lenders, and (c) payment on account of Indebtedness for
borrowed money permitted by Section 6.1, the repayment of which is not
restricted by Section 6.6.
6.9 Restrictive Agreements No Credit Party will directly or indirectly, enter
into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrower or any Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, (b) the ability of a Credit Party to pay dividends or
other distributions with respect to any Equity Securities or with respect to, or
measured by, its profits or to make or repay loans or advances to the Borrower
or any other Credit Party or to provide a Guarantee of any Indebtedness of the
Borrower or any other Credit Party, (c) the ability of the Borrower or any other
Credit Party to make any loan or advance to the Borrower or any of the other
Credit Parties, or (d) the ability of the Borrower or any other Credit Party to
sell, lease or transfer any of its property to the Borrower or any other Credit
Party; provided that (i) the foregoing shall not apply to restrictions and
conditions imposed by Applicable Law or by this Agreement, (ii) the foregoing
shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary of the Borrower pending such sale, provided
such restrictions and conditions apply only to the Subsidiary of the Borrower
that is to be sold and such sale is permitted hereunder, (iii) clause (a) of the
foregoing shall not apply to restrictions or conditions imposed by any agreement
relating to secured Indebtedness permitted by this Agreement if such
restrictions or conditions apply only to the property or assets securing such
Indebtedness, and (iv) clause (a) of the foregoing shall not apply to customary
provisions in leases and other ordinary course contracts restricting the
assignment thereof.
6.10 Sales and Leasebacks No Credit Party will enter into any arrangement,
directly or indirectly, with any Person whereby the Credit Party shall sell or
transfer any property, whether now owned or hereafter acquired, and whereby the
Credit Party shall then or thereafter rent or lease as lessee such property or
any part thereof or other property which the Credit Party intends to use for
substantially the same purpose or purposes as the property sold or transferred.

 

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6.11 Pension Plan Compliance No Credit Party will (a) terminate any Pension Plan
in a manner, or take any other action with respect to any Pension Plan, which
could reasonably be expected to result in any material liability of any Credit
Party, (b) fail to make full payment when due of all amounts which, under the
provisions of any Pension Plan, agreement relating thereto or Applicable Law,
the Credit Party is required to pay as contributions thereto, except where the
failure to make such payments could not reasonably be expected to have a
Material Adverse Effect, (c) permit to exist any material accumulated funding
deficiency, whether or not waived, with respect to any Pension Plan,
(d) contribute to or assume an obligation to contribute to any “multi-employer
pension plan” as such term is defined in the Pension Benefits Standards Act
(British Columbia) or any Pension Plan not disclosed to the Agent on the
Effective Date, (e) acquire an interest in any Person if such Person sponsors,
maintains or contributes to, or at any time in the six-year period preceding
such acquisition has sponsored, maintained, or contributed to any Pension Plan;
(f) permit, or allow any other Credit Party to permit, the actuarial present
value of the benefit liabilities (computed on an accumulated benefit obligation
basis in accordance with GAAP) under all Pension Plans in the aggregate to
exceed the current value of the assets of all Pension Plans in the aggregate
that are allocable to such benefit liabilities, in each case only to the extent
such liabilities and assets relate to benefits to be paid to employees of the
Credit Parties.
6.12 Sale or Discount of Receivables No Credit Party will discount or sell (with
or without recourse) any of its Accounts.
6.13 Unconditional Purchase Obligations No Credit Party will enter into or be a
party to, any material contract for the purchase of materials, supplies or other
property or services, if such contract requires that payment be made by it
regardless of whether or not delivery of such materials, supplies or other
property or services is ever made, provided that this Section 6.13 shall not
restrict the ability of any Credit Party to enter into any such contract in the
ordinary course of its business to the extent that the materials, supplies or
other property or services which are the subject matter of such contract are
reasonably expected to be used by the applicable Credit Party in the ordinary
course of its business.
6.14 Capital Expenditures No Credit Party will make Capital Expenditures in any
period for the Credit Parties on a consolidated basis in excess of 120% of the
budgeted Capital Expenditures for such period, as set forth in the most recent
capital expenditure budget delivered to and approved by the Agent, acting
reasonably.
6.15 No Amendments to Material Contracts No Credit Party will amend, modify or
terminate (or waive any provision of or provide any consent under), any Material
Contract in a manner which may reasonably be expected to have a Material Adverse
Effect.
6.16 Location of Assets No Credit Party will change its chief executive office,
the location of its books and records or the location of its assets from the
locations set forth in Schedule 3.15 without providing prior written notice to
the Agent.

 

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ARTICLE 7
EVENTS OF DEFAULT
7.1 Events of Default It shall constitute an event of default (“Event of
Default”) if any one or more of the following shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any Letter of Credit when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee or any
other amount (other than an amount referred to in clause (a) above) payable
under this Agreement, within three Business Days after the same shall become due
and payable;
(c) any representation or warranty made or deemed made by or on behalf of any
Credit Party in or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, or in any report, certificate,
financial statement or other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, shall prove to have been incorrect when made or deemed to be made;
(d) any Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in Section 5.1(l)(ii) (notices of Defaults or Events of
Default), 5.2(a), 5.7, 5.12 or in Article 6 (or in any comparable provision of
any other Loan Document) and in the case of Section 6.2 only, such failure has
not been remedied within 10 Business Days;
(e) any Credit Party shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in clauses
(a), (b) or (d) above) or any other Loan Document, and such failure shall
continue unremedied for a period of 30 days after notice thereof from the Agent
to the Borrower (which notice will be given at the request of any Lender);
(f) any Credit Party shall fail to make any payment whether of principal or
interest, and regardless of amount, in respect of any Material Indebtedness,
when and as the same shall become due and payable within three Business Days
after same shall become due and payable;

 

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(g) any event or condition occurs that results in any Material Indebtedness
becoming due prior to its scheduled maturity or that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of any Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
provided that this Section 7.1(g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or
assets securing such Indebtedness so long as the proceeds of such sale or
transfer are sufficient to, and are applied to, reduce such secured Indebtedness
to nil;
(h) any event of default occurs in respect of any Parent Credit Facility or any
Material Contract;
(i) Parent terminates or ceases to perform the Services Agreement, unless the
Borrower can demonstrate to the Agent’s satisfaction, acting reasonably, that it
or a third party acceptable to the Agent, acting reasonably, can otherwise
perform the services addressed in the Services Agreement;
(j) any Credit Party:

  (i)   becomes insolvent, or generally does not or becomes unable to pay its
debts or meet its liabilities as the same become due, or admits in writing its
inability to pay its debts generally, or declares any general moratorium on its
indebtedness, or proposes a compromise or arrangement between it and any class
of its creditors;

  (ii)   commits an act of bankruptcy under the BIA, or makes an assignment of
its property for the general benefit of its creditors under the BIA, or makes a
proposal (or files a notice of its intention to do so) under the BIA;

  (iii)   institutes any proceeding seeking to adjudicate it an insolvent, or
seeking liquidation, dissolution, winding-up, reorganization, compromise,
arrangement, adjustment, protection, moratorium, relief, stay of proceedings of
creditors generally (or any class of creditors), or composition of it or its
debts or any other relief, under any federal, provincial or foreign Applicable
Law now or hereafter in effect relating to bankruptcy, winding-up, insolvency,
reorganization, receivership, plans of arrangement or relief or protection of
debtors (including the BIA, the Companies’ Creditors Arrangement Act (Canada),
the United States Bankruptcy Code and any applicable corporations legislation)
or at common law or in equity, or files an answer admitting the material
allegations of a petition filed against it in any such proceeding;

  (iv)   applies for the appointment of, or the taking of possession by, a
receiver, interim receiver, receiver/manager, sequestrator, conservator,
custodian, administrator, trustee, liquidator or other similar official for it
or any substantial part of its property; or

 

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  (v)   threatens to do any of the foregoing, or takes any action, corporate or
otherwise, to approve, effect, consent to or authorize any of the actions
described in this Section 7.1(j) or in Section 7.1(k), or otherwise acts in
furtherance thereof or fails to act in a timely and appropriate manner in
defense thereof,

(k) any petition is filed, application made or other proceeding instituted
against or in respect of any Credit Party:

  (i)   seeking to adjudicate it an insolvent;     (ii)   seeking a receiving
order against it under the BIA;

  (iii)   seeking liquidation, dissolution, winding-up, reorganization,
compromise, arrangement, adjustment, protection, moratorium, relief, stay of
proceedings of creditors generally (or any class of creditors), or composition
of it or its debts or any other relief under any federal, provincial or foreign
Applicable Law now or hereafter in effect relating to bankruptcy, winding-up,
insolvency, reorganization, receivership, plans of arrangement or relief or
protection of debtors (including the BIA, the Companies’ Creditors Arrangement
Act (Canada) or the United States Bankruptcy Code and any applicable
corporations legislation) or at common law or in equity; or

  (iv)   seeking the entry of an order for relief or the appointment of, or the
taking of possession by, a receiver, interim receiver, receiver/manager,
sequestrator, conservator, custodian, administrator, trustee, liquidator or
other similar official for it or any substantial part of its property;

and such petition, application or proceeding continues undismissed, or unstayed
and in effect, for a period of 30 days after the institution thereof, provided
that if an order, decree or judgment is granted or entered (whether or not
entered or subject to appeal) against the Credit Party thereunder in the
interim, such grace period will cease to apply, and provided further that if the
Credit Party files an answer admitting the material allegations of a petition
filed against it in any such proceeding, such grace period will cease to apply;
(l) any other event occurs which, under the Applicable Laws of any applicable
jurisdiction, has an effect which is comparable to any of the events referred to
in either of Sections 7.1(j) or (k);
(m) one or more judgments for the payment of money in a cumulative amount in
excess of Cdn.$250,000 (or its then equivalent in any other currency) in the
aggregate is rendered against the Borrower, any other Credit Party or any
combination thereof and the Borrower or the other Credit Party has not
(i) provided for its discharge in accordance with its terms within 30 days from
the date of entry thereof, or (ii) procured a stay of execution thereof within
30 days from the date of entry thereof and within such period, or such longer
period during which execution of such judgment has not been stayed, appealed
such judgment and caused the execution thereof to be stayed during such appeal,
provided that if enforcement and/or realization proceedings are lawfully
commenced in respect thereof in the interim, such grace period will cease to
apply;

 

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(n) any property of any Credit Party having a fair market value in excess of
Cdn.$250,000 (or its then equivalent in any other currency) in the aggregate is
seized (including by way of execution, attachment, garnishment, levy or
distraint), or any Lien thereon securing Indebtedness in excess of Cdn.$250,000
(or its then equivalent in any other currency) is enforced, or such property has
become subject to any charging order or equitable execution of a Governmental
Authority, or any writ of execution or distress warrant exists in respect of the
Borrower, any other Credit Party or the property of any of them, or any sheriff
or other Person becomes lawfully entitled by operation of law or otherwise to
seize or distrain upon such property and in any case such seizure, enforcement,
execution, attachment, garnishment, distraint, charging order or equitable
execution, or other seizure or right, continues in effect and is not released or
discharged for more than 45 days or such longer period during which entitlement
to the use of such property continues with the Credit Party (as the case may
be), and the Credit Party (as the case may be) is contesting the same in good
faith and by appropriate proceedings, provided that if the property is removed
from the use of the Credit Party (as the case may be), or is sold, in the
interim, such grace period will cease to apply;
(o) one or more final judgments, not involving the payment of money and not
otherwise specified in this Section 7.1(o), has been rendered against any Credit
Party, the result of which could reasonably be expected to result in a Material
Adverse Effect, so long as the Credit Party (as the case may be) has not
(i) provided for its discharge in accordance with its terms within 30 days from
the date of entry thereof, or (ii) procured a stay of execution thereof within
30 days from the date of entry thereof and within such period, or such longer
period during which execution of such judgment has been stayed, appealed such
judgment and caused the execution thereof to be stayed during such appeal,
provided that if enforcement and/or realization proceedings are lawfully
commenced in respect thereof in the interim, such grace period will cease to
apply;
(p) this Agreement, any other Loan Document or any material obligation or other
provision hereof or thereof at any time for any reason terminates or ceases to
be in full force and effect and a legally valid, binding and enforceable
obligation of any Credit Party, is declared to be void or voidable or is
repudiated, or the validity, binding effect, legality or enforceability hereof
or thereof is at any time contested by any Credit Party, or any Credit Party
denies that it has any or any further liability or obligation hereunder or
thereunder or any action or proceeding is commenced to enjoin or restrain the
performance or observance by any Credit Party of any material terms hereof or
thereof or to question the validity or enforceability hereof or thereof, or at
any time it is unlawful or impossible for any Credit Party to perform any of its
material obligations hereunder or thereunder;
(q) any Lien purported to be created by any Security Document shall cease to be,
or shall be asserted by any Credit Party not to be, a valid, perfected, first
priority (except as otherwise expressly provided in this Agreement or such
Security Document) Lien in Collateral with a fair market value or book value
(whichever is greater) in excess, individually or in the aggregate, of $250,000;

 

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(r) a Material Adverse Change shall occur;
(s) a Change in Control shall occur;
(t) if any Credit Party or any of its Subsidiaries violates any Environmental
Law which results in an Action Request, Violation Notice or other notice or
control order or cancellation of any license or certificate or approval, that
results in any disruption of any Credit Party’s business or that could
reasonably be expected to have a Material Adverse Effect;
(u) any event or condition shall occur or exist with respect to a Pension Plan
that could, in the Lenders’ good faith judgment, subject any Credit Party to any
tax, penalty or other liabilities under Applicable Laws which could reasonably
be expected to give rise to a Material Adverse Effect;
then, and in every such event, and at any time thereafter during the continuance
of such event or any other such event, the Agent may, and at the request of the
Required Lenders shall, by notice to the Borrower, take any or all of the
following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately,
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind except as set forth earlier in this paragraph, all
of which are hereby waived by the Borrower, (iii) apply any amounts outstanding
to the credit of the Borrower to repayment of all amounts outstanding under this
Agreement, and (iv) declare any or all of the Security Documents to be
immediately enforceable.
7.2 Remedies.
(a) If an Event of Default has occurred and is continuing, the Agent may, in its
discretion, and shall, at the direction of the Required Lenders, do one or more
of the following at any time or times and in any order, without notice to or
demand on the Borrower: (i) reduce the Commitments, or the advance rates against
Eligible Accounts and/or Eligible Inventory used in computing the Borrowing
Base, or reduce one or more of the other elements used in computing the
Borrowing Base; (ii) restrict the amount of or refuse to make Revolving Loans;
(iii) restrict or refuse to provide Letters of Credit, Letter of Credit
Guarantees, F/X Contracts and F/X Guarantees; (iv) terminate the Commitments;
(v) declare any or all Obligations to be immediately due and payable; and (vi)
pursue its other rights and remedies under the Loan Documents and applicable law
and equity.

 

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(b) If an Event of Default has occurred and is continuing and without limiting
any rights or remedies arising under the Security Documents, (i) the Agent shall
have for the benefit of the Lenders, in addition to all other rights of the
Agent and the Lenders, the rights and remedies of a secured party under
applicable law (including, as applicable, the PPSA, Civil Code of Quebec and the
UCC) in the jurisdiction where the Collateral is located and all rights and
remedies provided for in the Loan Documents; (ii) the Agent may, at any time,
take possession of the Collateral and keep it on the Borrower’s or any
Guarantor’s premises, at no cost to the Agent or any Lender, or remove any part
of it to such other place or places as the Agent may desire, or the Borrower or
any Guarantor shall, upon the Agent’s demand, at the Borrower’s cost, assemble
the Collateral and make it available to the Agent at a place convenient to the
Agent; and (iii) the Agent may sell and deliver any Collateral at public or
private sales, for cash, upon credit or otherwise, at such prices and upon such
terms as the Agent deems advisable, in its sole discretion, and may postpone or
adjourn any sale of the Collateral by an announcement at the time and place of
sale or of such postponed or adjourned sale without giving a new notice of sale.
Without in any way requiring notice to be given in the following manner, the
Borrower and each of the Guarantors agree that any notice by the Agent of sale,
disposition or other intended action hereunder or in connection herewith,
whether required by the PPSA, Civil Code of Quebec and the UCC or otherwise,
shall constitute reasonable notice to the Borrower and Guarantors if such notice
is mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least fifteen (15) days
prior to such action to the Borrower’s address specified in or pursuant to
Section 9.1. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to the Borrower or any
Guarantor. If the Agent seeks to take possession of all or any portion of the
Collateral by judicial process, the Borrower and each of the Guarantors
irrevocably waives: (A) the posting of any bond, surety or security with respect
thereto which might otherwise be required; (B) any demand for possession prior
to the commencement of any suit or action to recover the Collateral; and (C) any
requirement that the Agent retain possession and not dispose of any Collateral
until after trial or final judgment. The Borrower and each of the Guarantors
agree that the Agent and Lenders have no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any Person. The Agent is
hereby granted a license or other right to use, without charge, all of the
Borrower’s and each Guarantor’s Property, whether or not constituting
Collateral, including its real estate, Equipment and Intellectual Property
Rights (including labels, patents, copyrights, name, trade secrets, trade names,
trademarks, and advertising matter, or any similar property), in completing
production of, advertising or selling any Collateral, and the Borrower’s and
Guarantors’ rights under all licenses and all franchise agreements shall inure
to the Agent’s benefit for such purpose. The proceeds of sale shall be applied
first to all expenses of sale, including legal fees, and then to the
Obligations. The Agent will return any excess to the Borrower and Guarantors and
the Borrower shall remain liable for any deficiency.
(c) If an Event of Default has occurred and is continuing, to the maximum extent
permitted by law, the Borrower and each of the Guarantors hereby waive all
rights to notice and hearing prior to the exercise by the Agent of the Agent’s
rights to repossess the Collateral without judicial process or to reply, attach
or levy upon the Collateral without notice or hearing.
ARTICLE 8
THE AGENT
8.1 Appointment of Agent Each Lender hereby designates CIBC Asset-Based Lending
Inc. as Agent to act as herein specified and as specified in the other Loan
Documents. Each Lender hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of the Loan Documents and to exercise
such powers and to perform such duties thereunder as are specifically delegated
to or required of the Agent by the terms thereof and such other powers as are
reasonably incidental thereto. The Agent may perform any of its duties hereunder
by or through its agents or employees.

 

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8.2 Limitation of Duties of Agent The Agent shall have no duties or
responsibilities except those expressly set forth with respect to the Agent in
this Agreement and as specified in the other Loan Documents. Neither the Agent
nor any of its Related Parties shall be liable for any action taken or omitted
by it hereunder or in connection herewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent shall be mechanical
and administrative in nature; the Agent shall not have, by reason of this
Agreement or the other Loan Documents, a fiduciary relationship in respect of
any Lender. Nothing in this Agreement or the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose upon the Agent any
obligations in respect of this Agreement except as expressly set forth herein.
The Agent shall be under no duty to take any discretionary action permitted to
be taken by it pursuant to this Agreement or the other Loan Documents unless it
is requested in writing to do so by the Required Lenders.
8.3 Lack of Reliance on the Agent.
(a) Independent Investigation. Independently, and without reliance upon the
Agent, each Lender, to the extent it deems appropriate, has made and shall
continue to make (i) its own independent investigation of the financial
condition and affairs of the Borrower or any other Credit Party in connection
with the taking or not taking of any action in connection herewith, and (ii) its
own appraisal of the creditworthiness of the Borrower or any other Credit Party,
and, except as expressly provided in this Agreement and the other Loan
Documents, the Agent shall have no duty or responsibility, either initially or
on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before the
consummation of the Transactions or at any time or times thereafter.
(b) Agent Not Responsible. The Agent shall not be responsible to any Lender for
any recitals, statements, information, representations or warranties herein or
in any document, certificate or other writing delivered in connection herewith
or for the execution, effectiveness, genuineness, validity, enforceability,
collectability, priority or sufficiency of this Agreement or the other Loan
Documents or the financial condition of the Borrower and any of the other Credit
Parties or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement or
the other Loan Documents, or the financial condition of the Borrower and any of
the other Credit Parties, or the existence or possible existence of any Default
or Event of Default.
8.4 Certain Rights of the Agent If the Agent shall request instructions from the
Lenders or the Required Lenders (as the case may be) with respect to any act or
action (including the failure to act) in connection with this Agreement or the
other Loan Documents, the Agent shall be entitled to refrain from such act or
taking such action unless and until the Agent shall have received written
instructions from the Lenders or the Required Lenders, as applicable, and the
Agent shall not incur liability to any Person by reason of so refraining.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against the Agent as a result of the Agent acting or refraining from
acting under this Agreement and the other Loan Documents in accordance with the
instructions of the Required Lenders, or, to the extent required by Section 9.2,
all of the Lenders.

 

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8.5 Reliance by Agent The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, statement,
certificate, telex, teletype or facsimile message, electronic mail, cablegram,
radiogram, order or other documentary teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person. The Agent may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
8.6 Indemnification of Agent To the extent the Agent is not reimbursed and
indemnified by the Borrower, each Lender will reimburse and indemnify the Agent,
in proportion to its aggregate Applicable Percentage, for and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including reasonable counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement or any other Loan Document;
provided that no Lender shall be liable to the Agent for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent’s gross negligence (it
being acknowledged that ordinary negligence does not necessarily constitute
gross negligence) or willful misconduct.
8.7 The Agent in its Individual Capacity With respect to its obligations under
this Agreement and the Loans made by it, CIBC Asset-Based Lending Inc., in its
capacity as a Lender hereunder, shall have the same rights and powers hereunder
as any other Lender and may exercise the same as though it were not performing
the duties, if any, specified herein; and the terms “Lenders”, “Required
Lenders”, and any similar terms shall, unless the context clearly otherwise
indicates, include CIBC Asset-Based Lending Inc., in its capacity as a Lender
hereunder. The Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust, financial advisory or other business with
the Borrower or any affiliate of the Borrower as if it were not performing the
duties, if any, specified herein, and may accept fees and other consideration
from the Borrower for services in connection with this Agreement and otherwise
without having to account for the same to the Lenders.
8.8 May Treat Lender as Owner The Borrower and the Agent may deem and treat each
Lender as the owner of the Loans recorded on the Register maintained pursuant to
Section 9.4(c) for all purposes hereof until a written notice of the assignment
or transfer thereof shall have been filed with the Agent. Any request, authority
or consent of any Person who at the time of making such request or giving such
authority or consent is the owner of a Loan shall be conclusive and binding on
any subsequent owner, transferee or assignee of such Loan.

 

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8.9 Successor Agent.
(a) Agent Resignation. The Agent may resign at any time by giving written notice
thereof to the Lenders, the Issuing Bank and the Borrower. Upon any such
resignation, the Required Lenders shall have the right, upon five Business Days’
notice to the Borrower, to appoint a successor Agent, subject to the approval of
the Borrower, such approval not to be unreasonably withheld, provided that the
Borrower’s consent shall not be required with respect to the appointment of CIBC
as Agent in connection with a CIBC ABL Reorganization. If no successor Agent
shall have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 30 days after the retiring Agent’s giving of notice of
resignation, then, upon five Business Days’ notice to the Borrower, the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent (subject to
approval of the Borrower, such approval not to be unreasonably withheld), which
shall be a financial institution organized under the laws of Canada having a
combined capital and surplus of at least Cdn.$100,000,000 or having a parent
company with combined capital and surplus of at least Cdn.$100,000,000; provided
that if the Agent shall notify the Borrower and the Lenders that no qualifying
Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (1) the retiring Agent shall
be discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any security held by the Agent on behalf
of the Lenders under any of the Loan Documents, the retiring Agent shall
continue to hold such security until such time as a successor Agent is
appointed) and (2) all payments, communications and determinations provided to
or to be made by, to or though the Agent shall instead be made by or to each
Lender directly, until such time as the Required Lenders appoint a successor
Agent, as provided for above in the preceding paragraph.
(b) Rights, Powers, etc. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent’s resignation or
removal hereunder as Agent, the provisions of this Article 8 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement.
8.10 No Independent Legal Action by Lenders No Lender may take any independent
legal action to enforce any obligation of the Borrower hereunder. Each Lender
hereby acknowledges that, to the extent permitted by Applicable Law, the
Security Documents and the remedies provided thereunder to the Lenders are for
the benefit of the Lenders collectively and acting together and not severally,
and further acknowledges that each Lender’s rights hereunder and under the
Security Documents are to be exercised collectively, not severally, by the Agent
upon the decision of the Required Lenders. Accordingly, notwithstanding any of
the provisions contained herein or in the Security Documents, each of the
Lenders hereby covenants and agrees that it shall not be entitled to take any
action hereunder or thereunder, including any declaration of default hereunder
or thereunder, but that any such action shall be taken only by the Agent with
the prior written agreement of the Required Lenders, provided that,
notwithstanding the foregoing, in the absence of instructions from the Lenders
(or the Required Lenders) and where in the sole opinion of the Agent the
exigencies of the situation so warrant such action, the Agent may without notice
to or consent of the Lenders (or the Required Lenders) take such action on
behalf

 

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of the Lenders as it deems appropriate or desirable in the interests of the
Lenders. Each Lender hereby further covenants and agrees that upon any such
written consent being given by the Required Lenders, it shall co-operate fully
with the Agent to the extent requested by the Agent, and each Lender further
covenants and agrees that all proceeds from the realization of or under the
Security Documents, to the extent permitted by Applicable Law, are held for the
benefit of all of the Lenders and shall be shared among the Lenders rateably in
accordance with this Agreement, and each Lender acknowledges that all costs of
any such realization (including all amounts for which the Agent is required to
be indemnified under the provisions hereof) shall be shared among the Lenders
rateably in accordance with this Agreement. Each Lender covenants and agrees to
do all acts and things and to make, execute and deliver all agreements and other
instruments, so as to fully carry out the intent and purpose of this Section and
each Lender hereby covenants and agrees that it shall not seek, take, accept or
receive any security for any of the obligations and liabilities of the Borrower
hereunder or under the other Loan Documents, or any other document, instrument,
writing or agreement ancillary hereto or thereto, other than such security as is
provided hereunder or thereunder, and that it shall not enter into any agreement
with any of the parties hereto or thereto relating in any manner whatsoever to
the Credit(s), unless all of the Lenders shall at the same time obtain the
benefit of any such security or agreement, as the case may be.
8.11 Notice of Default The Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default, unless the Agent shall
have received written notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default”. The Agent will notify the Lenders of its
receipt of any such notice. Subject to Section 8.4, the Agent shall take such
action with respect to such Default or Event of Default as may be requested by
the Required Lenders in accordance with this Agreement in pursuing any rights or
remedies under the Loan Documents or at law or in equity; provided, however,
that unless and until the Agent has received any such request, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable.
8.12 Agency for Perfection Each Lender hereby appoints each other Lender as
agent for the purpose of perfecting the Lenders’ security interest in assets
which can be perfected only by possession. Should any Lender (other than the
Agent) obtain possession of any such Collateral, such Lender shall notify the
Agent thereof, and, promptly upon the Agent’s request therefor, shall deliver
such Collateral to the Agent or in accordance with the Agent’s instructions.
8.13 Payments by Agent to Lenders All payments to be made by the Agent to the
Lenders shall be made by bank wire transfer or internal transfer of immediately
available funds to each Lender pursuant to wire transfer instructions delivered
in writing to the Agent on or prior to the Effective Date (or if such Lender is
an assignee, on the applicable Assignment and Transfer), or pursuant to such
other wire transfer instructions as each party may designate for itself by
written notice to the Agent. Concurrently with each such payment, the Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Revolving Loans or otherwise.
8.14 Concerning the Collateral and the Related Loan Documents Each Lender
authorizes and directs the Agent to enter into this Agreement and the other Loan
Documents for the rateable benefit and obligation of the Agent and the Lenders.
Each Lender agrees that any action taken by the Agent or Required Lenders, as
applicable, in accordance with the terms of this Agreement or the other Loan
Documents, and the exercise by the Agent or the Required Lenders, as applicable,
of their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.

 

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8.15 Field Audit and Examination Reports; Disclaimer by Lenders By signing this
Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report
(each a “Report” and collectively, “Reports”) prepared by the Agent;
(b) expressly agrees and acknowledges that the Agent (i) makes no representation
or warranty as to the accuracy of any Report, or (ii) shall not be liable for
any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that the Agent or other party performing any audit or
examination will inspect only specific information regarding the Borrower and/or
Guarantors and will rely significantly upon the Borrower’s and Guarantor’s books
and records, as well as on representations of the Borrower’s and Guarantor’s
personnel;
(d) agrees to keep all Reports confidential and strictly for its internal use,
and not to distribute, except to its participants, or use any Report in any
other manner; and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold the Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to the Borrower, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of
the Borrower; and (ii) to pay and protect, and indemnify, defend and hold the
Agent and any such other Lender preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses and other amounts
(including counsel’s costs) incurred by the Agent and any such other Lender
preparing a Report as the direct or indirect result of any third parties who
might obtain all or part of any Report through the indemnifying Lender.

 

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8.16 Quebec Security For greater certainty, and without limiting the powers of
the Agent or any other Person acting as an agent or mandatary for the Agent
hereunder or under any of the other Loan Documents, the Borrower hereby
acknowledges that, for purposes of holding any security granted by the Borrower
or any Subsidiary or other Credit Party on property pursuant to the laws of the
Province of Quebec to secure obligations of the Borrower or any Subsidiary or
other Credit Party under any bond or debenture, CIBC Asset-Based Lending Inc.
shall be the holder of an irrevocable power of attorney (fondé de pouvoir)
(within the meaning of the Civil Code of Quebec) for all present and future
Lenders and Issuing Banks and in particular for all present and future holders
of any such bond or debenture. Each Lender and Issuing Bank hereby irrevocably
constitutes, to the extent necessary, CIBC Asset-Based Lending Inc. as the
holder of an irrevocable power of attorney (fondé de pouvoir) (within the
meaning of Article 2692 of the Civil Code of Quebec) in order to hold security
granted by the Borrower or any Subsidiary or other Credit Party in the Province
of Quebec to secure the obligations of the Borrower or any Subsidiary or other
Credit Party under any bond or debenture. Each assignee of a Lender or Issuing
Bank shall be deemed to have confirmed and ratified the constitution of CIBC
Asset-Based Lending Inc. as the holder of such irrevocable power of attorney
(fondé de pouvoir) by execution of an Assignment and Assumption or any other
document pursuant to which they become a party to this Agreement.
Notwithstanding the provisions of section 32 of the An Act respecting the
special powers of legal persons (Quebec), CIBC Asset-Based Lending Inc. may
acquire and be the holder of any bond or debenture. The Borrower hereby
acknowledges that such bond or debenture constitutes a title of indebtedness, as
such term is used in Article 2692 of the Civil Code of Quebec. The execution by
CIBC Asset-Based Lending Inc. as fondé de pouvoir of any deeds of hypothec or
other documents prior to the date hereof is hereby ratified and confirmed. Each
Lender and Issuing Bank also agree that the Agent may hold any bond or debenture
issued by the Borrower, any Subsidiary or other Credit Party, including as named
bondholder or debentureholder or as pledge on their behalf in accordance with
Article 2705 of the Civil Code of Quebec. CIBC Asset-Based Lending Inc. acting
as fondé de pouvoir shall have the same rights, powers, immunities, indemnities
and exclusions from liability as are prescribed in favour of the Agent in this
Agreement, which shall apply mutatis mutandis to CIBC Asset-Based Lending Inc.
acting as fondé de pouvoir. Without limitation, the provisions of this
Section 8.16 shall apply mutatis mutandis to the resignation and appointment of
a successor to CIBC Asset-Based Lending Inc. acting as fondé de pouvoir.

 

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ARTICLE 9
MISCELLANEOUS
9.1 Notices (a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by facsimile in each case to the addressee, as follows:

  (i)   if to the Borrower or any other Credit Party:

Suite 224-1024 Rideway Avenue
Coquitlam, BC V3J1S5
Attention: Operations Manager
Fax: (604) 931-7032
With a copy to:
BlueLinx Corporation
4300 Wildwood Parkway
Atlanta, GA 30339
Attention: Sara E. Epstein, Senior Counsel
Fax: 770.953.7008

  (ii)   if to the Agent:

CIBC ASSET-BASED LENDING INC., as Agent
207 Queen’s Quay West, Suite 705
Toronto, Ontario M5J 1A7
Attention: Team Leader, Portfolio Management
Facsimile: (416) 507-5100
(iii) if to any Lender or any Issuing Bank, to it at its address (or facsimile
number) set forth opposite its name in the execution page(s) of this Agreement
or the applicable Assignment and Assumption Agreement, as the case may be.
(b) Any notice received by the Borrower from the Agent shall be deemed also to
have been received by each other Credit Party. Any notice received by the Agent
from the Borrower shall be deemed to have been received by each Lender. Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the Agent. The
Agent or the Borrower may, in its discretion, agree to accept notices and other
communication to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
(c) Any party hereto may change its address or facsimile number for notices and
other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
9.2 Waivers; Amendments.
(a) No failure or delay by the Agent or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
Section 9.2(b), and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without limiting the
generality of the foregoing, the making of a Loan or issuance of a Letter of
Credit shall not be construed as a waiver of any Default, regardless of whether
the Agent or any Lender may have had notice or knowledge of such Default at the
time.

 

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(b) Neither this Agreement nor any other Loan Document (or any provision hereof
or thereof) may be waived, amended or modified except pursuant to an agreement
or agreements in writing entered into by the Borrower and the Required Lenders
or by the Borrower and the Agent with the consent of the Required Lenders (and
for greater certainty, any such waiver, amendment or modification shall not
require any consent or other agreement of any Credit Party other than the
Borrower, notwithstanding that any such Credit Party may be a party to this
Agreement or any other Loan Document); provided that no such agreement shall:

  (i)   increase the amount or extend the expiry date of any Commitment of any
Lender;

  (ii)   reduce the principal amount of any Loan or reduce the rate of interest
or any fee applicable to any Loan;

  (iii)   postpone the scheduled date of payment of the principal amount of any
Loan, or any interest thereon, or any fees payable in respect thereof, or reduce
the amount of, waive or excuse any such payment, or postpone the scheduled date
of expiration of any Commitment;

  (iv)   change any aspect of this Agreement in a manner that would alter the
pro rata sharing of payments required herein;

  (v)   change any of the provisions of this Section 9.2 or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder;     (vi)   waive any
Event of Default under Section 7.1(j), (k) or (l); or

  (vii)   release the Borrower or any other Credit Party from any material
obligations under the Security Documents and other instruments contemplated by
this Agreement, release or discharge any of the Liens arising under the Security
Documents, permit the creation of any Liens, other than Permitted Liens, on any
of the assets subject to the Liens arising under the Security Documents, lower
the priority of any Lien arising under any of the Security Documents, or lower
the priority of any payment obligation of the Borrower or any other Credit Party
under any of the Loan Documents;

 

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in each case without the prior written consent of each Lender; or, in the case
of the matters referred to in clauses (i), (ii), (iii) and (iv), without the
prior written consent of each Lender directly affected thereby and provided
further that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Agent hereunder, without the prior written consent of
the Agent. For greater certainty, the Agent may release and discharge the Liens
constituted by the Security Documents to the extent necessary to enable the
Borrower to complete any asset sale which is not prohibited by this Agreement or
the other Loan Documents.
9.3 Expenses; Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable Out-of-Pocket Expenses incurred by
the Agent and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Agent and all applicable Taxes, in connection
with the syndication of the credit facilities provided for herein and the
preparation and administration of this Agreement and the other Loan Documents,
(ii) all reasonable Out-of-Pocket Expenses incurred by the Agent and its
Affiliates, including the reasonable fees, charges and disbursements of counsel
for the Agent and applicable Taxes, in connection with any amendments,
modifications or waivers of the provisions hereof or of any of the other Loan
Documents, (whether or not the transactions contemplated hereby or thereby shall
be consummated), and (iii) all Out-of-Pocket Expenses incurred by the Agent or
any Lender, including the fees, charges and disbursements of any counsel for the
Agent or any Lender and all applicable Taxes, in connection with the enforcement
or protection of their rights in connection with this Agreement, including its
rights under this Section, or in connection with the Loans made hereunder,
including all such Out-of-Pocket Expenses incurred during any workout,
restructuring or negotiations in respect of such Loans.
(b) Each Credit Party shall indemnify the Agent and each Lender, as well as each
Related Party and each assignee of any of the foregoing Persons (each such
Person and each such assignee being called an “Indemnitee”) against, and hold
each Indemnitee harmless from, any and all losses, claims, cost recovery
actions, damages, expenses and liabilities of whatsoever nature or kind (a
“Claim”) and all Out-of-Pocket Expenses and all applicable Taxes to which any
Indemnitee may become subject arising out of or in connection with (i) the
execution or delivery of the Loan Documents or any agreement or instrument
contemplated thereby, the performance by the parties thereto of their respective
obligations thereunder, and the consummation of the Transactions or any other
transactions thereunder, (ii) any Loan, Letter of Credit or F/X Contract or any
actual or proposed use of the proceeds therefrom, including any refusal by the
Issuing Bank to honour a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply with
the terms of such Letter of Credit, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the
Borrower or any other Credit Party, or any Environmental Liability related in
any way to the Borrower or any other Credit Party, (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory and
regardless of whether any Indemnitee is a party thereto, (v) any other aspect of
this Agreement and the other Loan Documents, or (vi) the enforcement of any
Indemnitee’s rights hereunder and any related investigation, defence,
preparation of defence, litigation and enquiries; provided that such indemnity
shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence (it being acknowledged that ordinary negligence does not
necessarily constitute gross negligence) or wilful misconduct of or material
breach of this Agreement by such Indemnitee.

 

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(c) To the extent that the Borrower fails to pay any amount required to be paid
under Sections 9.3(a) or (b), each Lender severally agrees to pay to the Agent
such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Agent, in its capacity as such.
(d) The Credit Parties shall not assert, and hereby waive (to the fullest extent
permitted by Applicable Law), any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, any Loan Document, or any agreement or instrument contemplated thereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) Any inspection of any property of the Borrower or any other Credit Party
made by or through the Agent or any Lender is for purposes of administration of
the Credits only, and neither the Borrower nor any other Credit Party is
entitled to rely upon the same (whether or not such inspections are at the
expense of the Borrower).
(f) By accepting or approving anything required to be observed, performed,
fulfilled or given to the Agent or the Lenders pursuant to the Loan Documents,
neither the Agent nor the Lenders shall be deemed to have warranted or
represented the sufficiency, legality, effectiveness or legal effect of the
same, or of any term, provision or condition thereof, and such acceptance or
approval thereof shall not constitute a warranty or representation to anyone
with respect thereto by the Agent or the Lenders.
(g) The relationship between the Borrower and the Agent and the Lenders is, and
shall at all times remain, solely that of borrower and lenders. Neither the
Agent nor the Lenders shall under any circumstance be construed to be partners
or joint venturers of the Borrower or its Affiliates. Neither the Agent nor the
Lenders shall under any circumstance be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with the Borrower or its
Affiliates, or to owe any fiduciary duty to the Borrower or its Affiliates.
Neither the Agent nor the Lenders undertake or assume any responsibility or duty
to the Borrower or its Affiliates to select, review, inspect, supervise, pass
judgment upon or inform the Borrower or its Affiliates of any matter in
connection with their property or the operations of the Borrower or its
Affiliates. The Borrower and its Affiliates and all shareholders and all direct
and indirect shareholders of the Credit Parties shall rely entirely upon their
own judgment with respect to such matters, and any review, inspection,
supervision, exercise of judgment or supply of information undertaken or assumed
by the Agent or the Lenders in connection with such matters is solely for the
protection of the Agent and the Lenders, and neither the Borrower nor any other
Person is entitled to rely thereon.

 

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(h) The Agent and the Lenders shall not be responsible or liable to any Person
for any loss, damage, liability or claim of any kind relating to injury or death
to Persons or damage to Property caused by the actions, inaction or negligence
of the Borrower or any other Credit Party and/or their Affiliates and/or any
Shareholder and/or any direct or indirect shareholder of any Credit Party; each
Credit Party hereby indemnifies and holds the Agent and the Lenders harmless
from any such loss, damage, liability or claim.
(i) This Agreement is made for the purpose of defining and setting forth certain
obligations, rights and duties of the Borrower, the Agent and the Lenders in
connection with the Loans, and is made for the sole benefit of the Borrower,
each other Credit Party, the Agent and the Lenders, and the Agent’s and each
Lender’s successors and assigns. Except as provided in Sections 9.3(a) or (b)
and 9.4, no other Person shall have any rights of any nature hereunder or by
reason hereof.
(j) All amounts due under this Section 9.3 shall be payable not later than five
Business Days after written demand therefor.
9.4 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void), and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Agent and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this
Agreement.
(b) Any Lender may assign to one or more Persons all or a portion of its rights
and obligations under this Agreement and the other Loan Documents (including all
or a portion of its Commitments and the Loans at the time owing to it); provided
that (i) except in the case of an assignment of any Commitment to an assignee
that is a Lender with a Commitment immediately prior to giving effect to such
assignment, each of the Agent and the Borrower must give its prior written
consent to such assignment (which consent shall not be unreasonably withheld or
delayed) by the Borrower; and provided further that (ii) notwithstanding clause
(i) immediately above, the Borrower’s consent shall not be required with respect
to any assignment made at any time after the occurrence and during the
continuance of an Event of Default, or in connection with any assignment by a
Lender to an Affiliate of such Lender, (iii) except in the case of an assignment
to a Lender or a Lender Affiliate or an assignment of the entire remaining
amount of the assigning Lender’s Commitment, the amount of the Commitment of the
assigning Lender subject to each such assignment (determined as of the date on
which the Assignment and Assumption relating to such assignment is delivered to
the Agent) shall not be less than Cdn.$1,000,000 (or, in the case of a U.S.
Dollar-denominated Commitment, the U.S. $ Equivalent of Cdn.$1,000,000), unless
each of the Borrower and the Agent otherwise consent in writing and the amount
held by each Lender after each such assignment shall not be less than

 

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Canadian $1,000,000 (or, in the case of a U.S. Dollar-denominated Commitment,
the U.S. $ Equivalent of Cdn.$1,000,000), unless each of the Borrower and the
Agent otherwise consent in writing, (iv) each partial assignment in respect of a
Commitment and the related Loans shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement in respect of such Commitment and the related Loans, (v) the
parties to each assignment shall execute and deliver to the Agent an Assignment
and Assumption, together with (except in the case of an assignment to a Lender
or a Lender Affiliate) a processing and recordation fee of Cdn.$3,500, payable
by the assigning Lender, and (vi) the assignee, if it shall not be a Lender,
shall deliver to the Agent an Administrative Questionnaire. The Agent shall
provide the Borrower and each Lender with written notice of any change in (or
new) address of a Lender disclosed in an Administrative Questionnaire. Subject
to acceptance and recording thereof pursuant to Section 9.4(d), from and after
the effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, shall have all of the rights and obligations
of a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Assumption, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.12, 2.13, and
2.14 and 9.3). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this Section 9.4 shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with Section 9.4(e).
(c) The Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices in Toronto, Ontario a copy of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitment of, and principal amount of the
Loans and the amount of the Reimbursement Obligations owing to, each Lender
pursuant to the terms hereof from time to time (the “Register”). The entries in
the Register shall be conclusive, and the Borrower, the Agent, and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement. The
Register shall be available for inspection by the Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Assumption executed by
an assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in Section 9.4(b) and any written
consent to such assignment required by Section 9.4(b), the Agent shall accept
such Assignment and Assumption and record the information contained therein in
the Register. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this Section 9.4(d).

 

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(e) Any Lender may, without notice to the Borrower or the consent of the
Borrower or the Agent, sell participations to one or more Persons (a
“Participant”) in all or a portion of such Lender’s rights and obligations under
this Agreement and the other Loan Documents (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, and (iii) the Borrower, the Agent, and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver described in the first proviso to Section 9.2(b) that
affects such Participant. Subject to Section 9.4(f), the Borrower agrees that
each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and
2.14 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to this Section 9.4(e). To the extent permitted by
Applicable Law, each Participant also shall be entitled to the benefits of
Section 9.8 as though it were a Lender, provided that such Participant agrees to
be subject to Section 2.15(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment under
Section 2.13 or 2.14 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.
(g) Any Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and Section 9.4 shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
9.5 Survival All covenants, agreements, representations and warranties made by
the Borrower herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. Sections 2.12, 2.13, 2.14 and 9.3 and Article 8 shall
survive and remain in full force and effect, regardless of the consummation of
the Transactions, the repayment of the Loans, the expiration or termination of
the Letters of Credit and the Commitments or the termination of this Agreement
or any provision hereof.

 

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9.6 Counterparts; Integration; Effectiveness This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract. This Agreement, the other Loan Documents and
any separate letter agreements with respect to fees payable to the Agent,
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in
Section 4.1, this Agreement shall become effective when it shall have been
executed by the Agent and when the Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Delivery of an
executed original counterpart of a signature page of this Agreement by facsimile
or other electronically scanned method of delivery shall be as effective as
delivery of a manually executed original counterpart of this Agreement.
9.7 Severability Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
affecting the validity, legality and enforceability of the remaining provisions
hereof, and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
9.8 Right of Set-Off If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by Applicable Law,
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of any Credit
Party against any of and all of the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of set off)
which such Lender may have.
9.9 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the
Laws of the Province of British Columbia.
(b) The Borrower hereby irrevocably and unconditionally submits, for itself and
its property, to the non-exclusive jurisdiction of the Courts of the Province of
British Columbia, and any appellate court thereof, in any action or proceeding
arising out of or relating to this Agreement, or any other Loan Document or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in British Columbia. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Applicable Law. Nothing
in this Agreement shall affect any right that the Agent or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or
any other Loan Document against the Borrower or its properties in the courts of
any other jurisdiction.

 

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(c) The Borrower hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to in this
Section 9.9. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by Applicable Law, any forum non conveniens defence to
the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 9.1. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by Applicable Law.
9.10 WAIVER OF JURY TRIAL EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
9.11 Headings Article and Section headings and the Table of Contents used herein
are for convenience of reference only, are not part of this Agreement and shall
not affect the construction of, or be taken into consideration in interpreting,
this Agreement.
9.12 Confidentiality Each of the Agent and each Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to each of their, and each of their Affiliates’, directors,
officers, employees, agents and advisors, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any rating agency, regulatory authority or other Governmental Authority, or
their legal counsel, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement or to any Parent Facility Lender, (e) in connection with the
exercise of any remedies under any Loan Document or any suit, action or
proceeding relating to any Loan Document or the enforcement of rights
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any actual or prospective assignee of or
Participant (or such assignee’s or Participant’s advisors) in any of its rights
or obligations under this Agreement, or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) any financial institution (other than as
otherwise identified in this Section 9.12), credit reporting agency or credit
bureau, (h) any Person with whom the Borrower or any other Credit Party may have
or proposes to have financial dealings, or (i) with the consent of the Borrower
. For greater certainty, the Borrower and each of the Credit Parties
acknowledges that from time to time as a result of the ownership of the Agent by
Canadian

 

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Imperial Bank of Commerce (“CIBC”), the Borrower or any other Credit Party may
request the Agent to facilitate the provision of certain financial services
offered by CIBC (the “CIBC Services”). In such circumstances, CIBC policies and
procedures (“CIBC’s Policies”) will apply in respect of all transactions
undertaken by CIBC in connection with the provision of the CIBC Services,
including any required due diligence investigation and related business approval
processes conducted in respect of the Borrower and the other Credit Parties. In
such circumstances, it may be prudent, necessary or cost effective for the Agent
to provide to CIBC information regarding the Borrower or any other Credit Party
that is in the possession or control of the Agent solely for the purpose of
facilitating compliance with CIBC’s Policies. The Borrower and each of the
Credit Parties consents to the disclosure of Information by the Agent to CIBC
for the purpose of facilitating compliance with CIBC’s Policies. For the
purposes of this Section, “Information” means all information received from the
Borrower or any Credit Party relating to the Borrower, any of the Credit
Parties, or their respective businesses, other than Information that is (i) is
or becomes publicly available other than as a result of a breach of this
Section, (ii) any such information that is or becomes available to the Agent,
the Issuing Bank, any Lender or CIBC on a non-confidential basis prior to
disclosure by the Borrower, or (iii) was already in the possession of the Agent,
the Issuing Bank, or any Lender or CIBC prior to its disclosure by the Borrower
or any other Credit Party; or (iv) marked “non-confidential” (or such other
words or expression having the same or similar meaning by the Borrower or any
other Credit Party. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information, acting prudently.
9.13 Press Releases and Related Materials Each Credit Party agrees that neither
it nor its Affiliates will in the future issue any press releases or other
public disclosure using the name of the Agent or any of the Lenders or referring
to this Agreement, or the other Loan Documents without at least two (2) Business
Days’ prior notice to the Agent or the applicable Lender unless (and only to the
extent that) such Credit Party or Affiliate is required to do so under law and
then, in any event, such Credit Party or Affiliate will consult with the Agent
or the applicable Lender before issuing such press release or other public
disclosure. Each Credit Party consents to the publication by the Agent or any
Lender of advertising material relating to the financing transactions
contemplated by this Agreement using its name, product photographs, logo or
trademark. The Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements. Notwithstanding the foregoing, the parties confirm that the Parent
shall not be bound by the provisions of this Section 9.13.
9.14 Anti-Money Laundering Legislation.
(a) The Borrower acknowledges that, pursuant to the Proceeds of Crime (Money
Laundering) and Terrorist Financing Act (Canada) and other applicable anti-money
laundering, anti-terrorist financing, government sanction and “know your client”
Laws (collectively, including any guidelines or orders thereunder, “AML
Legislation”), the Lenders and the Agent may be required to obtain, verify and
record information regarding the Borrower, its directors, authorized signing
officers, direct or indirect shareholders or other Persons in control of the
Borrower, and the transactions contemplated hereby. The Borrower shall promptly
provide all such information, including supporting documentation and other
evidence, as may be reasonably requested by any Lender or the Agent, or any
prospective assignee or participant of a Lender or the Agent, in order to comply
with any applicable AML Legislation, whether now or hereafter in existence.

 

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(b) If the Agent has ascertained the identity of the Borrower or any authorized
signatories of the Borrower for the purposes of applicable AML Legislation, then
the Agent:

  (i)   shall be deemed to have done so as an agent for each Lender, and this
Agreement shall constitute a “written agreement” in such regard between each
Lender and the Agent within the meaning of applicable AML Legislation; and

  (ii)   shall provide to each Lender copies of all information obtained in such
regard without any representation or warranty as to its accuracy or
completeness.

Notwithstanding the preceding sentence and except as may otherwise be agreed in
writing, each of the Lenders agrees that the Agent has no obligation to
ascertain the identity of the Borrower or any authorized signatories of the
Borrower on behalf of any Lender, or to confirm the completeness or accuracy of
any information it obtains from the Borrower or any such authorized signatory in
doing so.
9.15 Defaulting Lenders.
(a) If a Lender becomes a Defaulting Lender, then, in addition to the rights and
remedies that may be available to the Agent and the other Lenders or any other
party at law or in equity, and not an limitation thereof, (i) such Defaulting
Lender’s right to participate in the administration of, or decision-making
rights related to, the Obligations in respect of Required Lender votes, this
Agreement or the other Loan Documents shall be suspended during the pendency of
such failure or refusal, (ii) a Defaulting Lender shall be deemed to have
permanently (unless reinstated as set forth below) assigned, without further
consideration, any and all payments due to it from the Credit Parties, whether
on account of outstanding Loans, interest, fees or otherwise, to the remaining
non-Defaulting Lenders for application to, and reduction of, their proportionate
shares of all outstanding Obligations until, as a result of application of such
assigned payments the Lenders’ respective Applicable Percentages of all
outstanding Obligations shall have returned to those in effect immediately prior
to such delinquency and without giving effect to the non-payment causing such
delinquency, or (ii) at the option of the Agent, any amount payable to such
Defaulting Lender hereunder (whether on account of principal, interest, fees or
otherwise) shall, in lieu of being distributed to such Defaulting Lender, be
retained by the Agent as cash collateral for, and applied by the Agent to,
defaulted and future funding obligations of the Defaulting Lender in respect of
any Loan or existing or future participating interest in any Letter of Credit.
The Defaulting Lender’s decision-making and participation rights and rights to
payments as set forth in clauses (i) and (ii) hereinabove shall be restored only
upon (a) the payment by the Defaulting Lender of its Applicable Percentage of
any Obligations, any participation obligation, or expenses as to whether it is
delinquent, together with interest thereon at a rate equal to the Canadian Prime
Rate (for Canadian Dollar amounts) or the Base Rate (for US Dollar amounts) from
time to time in effect from the date when originally due until the date upon
which any such amounts are actually paid and (b) receipt by the Agent and the
Borrower of a certification by such Defaulting Lender of its ability and intent
to comply with the provisions of this Agreement going forward.

 

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(b) The non-Defaulting Lenders shall also have the right, but not the
obligation, in their respective, sole and absolute discretion, to cause the
termination and assignment, without any further action by the Defaulting Lender
for no cash consideration (pro rata, based on the respective Commitments of
those Lenders electing to exercise such right), of the Defaulting Lender’s
Commitment to fund future advances. Upon any such purchase of the Commitment of
any Defaulting Lender, the Defaulting Lender’s share in future extensions of
Credit and its rights under the Loan Documents with respect thereto (but not
with respect to then outstanding Obligations owed to the Defaulting Lender)
shall terminate on the date of purchase, and the Defaulting Lender shall
promptly execute all documents reasonably requested to surrender and transfer
such interest, including, if so requested, an Assignment and Assumption.
(c) Each Defaulting Lender shall indemnify the Agent and each non-Defaulting
Lender from and against any and all loss, damage or expenses, including
reasonable legal fees and funds advanced by the Agent or by any non-Defaulting
Lender, on account of a Defaulting Lenders’ failure to timely fund its
Applicable Percentage of a Loan or to otherwise perform its obligations under
the Loan Documents.
9.16 No Strict Construction The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favouring or disfavouring any party by virtue of the
authorship of any provisions of this Agreement.
9.17 Paramountcy In the event of any inconsistency between the provisions of
this Agreement and the provisions of any other Loan Document, the provisions of
this Agreement shall prevail.
9.18 LIMITATION OF LIABILITY NO CLAIM MAY BE MADE BY THE BORROWER, ANY
GUARANTOR, ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, OR AGENTS OF ANY OF THEM FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR
BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND THE BORROWER,
EACH GUARANTOR, EACH LENDER AND THE AGENT HEREBY WAIVES, RELEASES AND AGREES NOT
TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR
NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOUR.

 

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9.19 Language The parties herein have expressly requested that this Agreement
and all related documents be drawn up in the English language. À la demande
expresse des parties aux présentes, cette convention et tout document y afférent
ont été rédigés en langue anglaise.
[Balance of page left blank; signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

              Address:   BLUELINX BUILDING PRODUCTS CANADA LTD.       Attention:
           
Facsimile No.:
  By:   /s/ H. Douglas Goforth
 
Name: H. Douglas Goforth    
 
      Title: Treasurer    

      SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF AUGUST 12, 2011 BETWEEN
CIBC ASSET-BASED LENDING INC., AS AGENT AND BLUELINX BUILDING PRODUCTS CANADA
LTD.

 

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              Address:   CIBC ASSET-BASED LENDING INC., as Agent and as Lender  
    Attention:            
Facsimile No.:
  By:   /s/ Joseph Arnone
 
Name: Joseph Arnone    
 
      Title: Authorized Signatory    
 
           
 
  By:   /s/ Donald Rogers
 
Name: Donald Rogers    
 
      Title: Authorized Signatory    

      SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF AUGUST 12, 2011 BETWEEN
CIBC ASSET-BASED LENDING INC., AS AGENT AND BLUELINX BUILDING PRODUCTS CANADA
LTD.

 

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TABLE OF CONTENTS

              Page  
 
       
ARTICLE 1 DEFINITIONS
    1  
1.1 Defined Terms
    1  
1.2 Classification of Loans and Borrowings
    31  
1.3 Terms Generally
    31  
1.4 Accounting Terms; GAAP
    32  
1.5 Time
    32  
1.6 Permitted Liens
    32  
1.7 Interpretation Clause (Québec)
    33  
1.8 Currency
    33  
ARTICLE 2 THE CREDITS
    33  
2.1 Commitments
    33  
2.2 Loans and Borrowings
    34  
2.3 Requests for Borrowings
    35  
2.4 Funding of Borrowings
    36  
2.5 Interest
    38  
2.6 Termination and Reduction of Commitments
    39  
2.7 Repayment of Loans
    40  
2.8 Evidence of Debt
    40  
2.9 Prepayments
    41  
2.10 Fees
    42  
2.11 BA Borrowings
    43  
2.12 Increased Costs; Illegality; Alternate Rate of Interest
    46  
2.13 Break Funding Payments
    48  
2.14 Taxes
    48  
2.15 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
    49  
2.16 Currency Indemnity
    51  
2.17 Collection of Accounts
    51  
2.18 Letters of Credit
    53  
2.18A Letters of Credit
    56  
2.19 F/X Contracts
    59  
2.19A F/X Contracts
    60  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
    61  
3.1 Organization; Powers
    61  
3.2 Authorization; Enforceability
    61  
3.3 Governmental Approvals; No Conflicts
    61  
3.4 Financial Condition; No Material Adverse Effect
    62  
3.5 Litigation
    62  
3.6 Compliance with Applicable Laws and Agreements
    63  
3.7 Ownership
    63  
3.8 Taxes
    63  
3.9 Titles to Real Property
    63  
3.10 Titles to Personal Property
    63  
3.11 Pension Plans
    63  
3.12 Disclosure
    64  
3.13 Defaults
    65  
3.14 Casualties; Taking of Properties
    65  
3.15 Subsidiaries and Jurisdictions
    65  
3.16 Insurance
    65  
3.17 Solvency
    66  
3.18 Material Contracts
    66  
3.19 Environmental Matters
    66  
3.20 Employee Matters
    67  
3.21 Fiscal Year
    67  
3.22 Intellectual Property Rights
    68  
3.23 Residency of Borrower for Tax Purposes
    68  
3.24 Restricted Payments
    68  
3.25 Indebtedness
    68  
3.26 Workers’ Compensation
    68  
3.27 Bank Accounts
    68  
3.28 Real Property and Leases
    69  
3.29 Further Real Property Matters
    69  
3.30 Corporate Name; Prior Transactions
    69  
3.31 Brokers
    69  
3.32 Customer and Trade Relations
    69  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
ARTICLE 4 CONDITIONS
    70  
4.1 Effective Date
    70  
4.2 Each Credit Event
    74  
ARTICLE 5 AFFIRMATIVE COVENANTS
    75  
5.1 Financial Statements and Other Information
    75  
5.2 Existence; Conduct of Business
    80  
5.3 Payment of Obligations
    80  
5.4 Maintenance of Properties
    80  
5.5 Books and Records; Inspection Rights
    80  
5.6 Compliance with Applicable Laws and Material Contracts
    80  
5.7 Use of Proceeds and Letters of Credit
    81  
5.8 Further Assurances
    81  
5.9 Insurance
    81  
5.10 Operation and Maintenance of Property
    82  
5.11 Additional Subsidiaries; Additional Liens
    83  
5.12 Adjusted Tangible Net Worth Covenant
    83  
5.13 Post Closing Undertakings
    83  
5.14 Environmental Laws
    84  
5.15 Landlords’ Agreement, Mortgagee Agreements, Bailee Letters and Real Estate
Purchases
    85  
5.16 Canadian Pension Plans
    85  
5.17 Collateral Monitoring and Review
    85  
5.18 Physical Inventories
    86  
5.19 Application under the CCAA
    86  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
ARTICLE 6 NEGATIVE COVENANTS
    86  
6.1 Indebtedness
    86  
6.2 Liens
    87  
6.3 Fundamental Changes
    87  
6.4 Investments, Loans, Advances, Guarantees and Acquisitions
    87  
6.5 Swap Transactions
    87  
6.6 Restricted Payments
    88  
6.7 Transactions with Affiliates
    89  
6.8 Repayment of Debt
    89  
6.9 Restrictive Agreements
    89  
6.10 Sales and Leasebacks
    89  
6.11 Pension Plan Compliance
    90  
6.12 Sale or Discount of Receivables
    90  
6.13 Unconditional Purchase Obligations
    90  
6.14 Capital Expenditures
    90  
6.15 No Amendments to Material Contracts
    90  
6.16 Location of Assets
    90  
ARTICLE 7 EVENTS OF DEFAULT
    91  
7.1 Events of Default
    91  
7.2 Remedies
    95  
ARTICLE 8 THE AGENT
    96  
8.1 Appointment of Agent
    96  
8.2 Limitation of Duties of Agent
    97  
8.3 Lack of Reliance on the Agent
    97  
8.4 Certain Rights of the Agent
    97  
8.5 Reliance by Agent
    98  
8.6 Indemnification of Agent
    98  
8.7 The Agent in its Individual Capacity
    98  
8.8 May Treat Lender as Owner
    98  
8.9 Successor Agent
    99  
8.10 No Independent Legal Action by Lenders
    99  
8.11 Notice of Default
    100  
8.12 Agency for Perfection
    100  
8.13 Payments by Agent to Lenders
    100  
8.14 Concerning the Collateral and the Related Loan Documents
    100  
8.15 Field Audit and Examination Reports; Disclaimer by Lenders
    101  
8.16 Quebec Security
    102  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
ARTICLE 9 MISCELLANEOUS
    103  
9.1 Notices
    103  
9.2 Waivers; Amendments
    103  
9.3 Expenses; Indemnity; Damage Waiver
    105  
9.4 Successors and Assigns
    107  
9.5 Survival
    109  
9.6 Counterparts; Integration; Effectiveness
    110  
9.7 Severability
    110  
9.8 Right of Set-Off
    110  
9.9 Governing Law; Jurisdiction; Consent to Service of Process
    110  
9.10 WAIVER OF JURY TRIAL
    111  
9.11 Headings
    111  
9.12 Confidentiality
    111  
9.13 Press Releases and Related Materials
    112  
9.14 Anti-Money Laundering Legislation
    112  
9.15 Defaulting Lenders
    113  
9.16 No Strict Construction
    114  
9.17 Paramountcy
    114  
9.18 LIMITATION OF LIABILITY
    114  
9.19 Language
    115